FCC Ruling Upheld in Longtime Payphone Dispute
The latest in a nearly 20-year dispute, the U.S. Court of Appeals for the D.C. Circuit upheld (http://1.usa.gov/1ltd6Bf) the FCC 2013 decision not to overturn public utility commission decisions and grant payphone service providers refunds from AT&T and Verizon. In Illinois Public Telecommunications Association v. FCC, IPTA (docket 13-1059), the Independent Payphone Association of New York and the Payphone Association of Ohio had asked the D.C. Circuit to only mandate the companies pay the refunds, or force the companies to give payments they had received from long-distance carriers to the U.S. Treasury.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
Judge Brett Kavanaugh filed the decision. It was supported by Judges Robert Wilkins and Laurence Silberman. It was unclear whether the association would appeal the decision. IPTA attorney Michael Ward wasn’t immediately available for comment. The FCC had no immediate response. AT&T and Verizon applauded the decision in statements. Verizon said it hopes “this decade-plus dispute is finally resolved."
The “FCC and the payphone industry have traveled a long and winding road in implementing Section 276” of the Communications Act, said the ruling. In implementing act provisions barring former Bell operating companies (BOC) from charging discriminatory rates, the FCC had ordered (http://bit.ly/1siasB2) basic phone service rates to meet new national standards, and entrusted state commissions to determine compliance, said court filings. The dispute (CD April 7 p11) arose after BOCs requested an extension to an April 15, 1997, deadline to show compliance with the price standards. In return for letting existing rates continue for a time, a coalition of BOCs said if the rates were later deemed to be too high, the BOCs would refund the difference to the PSPs, the FCC brief said. PSP rate challenges in Illinois, New York and Ohio led to public utility commission rulings that the BOCs’ rates were too high, but for varying reasons the commissions didn’t order refunds be paid to the PSPs, the FCC brief said.
The court Friday rejected the payphone providers’ contention the FCC refund order refusing to overrule the state decisions violated the act’s Section 276(a), which says a BOC “shall not subsidize its payphone service directly or indirectly from its telephone exchange service operations or its exchange access operations.” The court said when there’s a violation, the statute “does not say that refunds are required, or that refunds are not required, or anything at all about refunds. ... Section 276(a)’s silence on refunds is telling given that Congress has expressly specified refund remedies in other sections of the Communications Act of 1934 and related statutes."
The court also rejected payphone providers’ contention that under Section 276(c), FCC regulations pre-empt a state’s when the two are inconsistent, and that the 2013 order opened the door to states granting refunds. “That argument rests on a misreading of the FCC’s Refund Order. The Commission repeatedly explained that states ‘may, but are not required to, order refunds’ for any period in which Bell Operating Companies charged non-compliant rates,” the court said.
The decision also rejected payphone providers’ argument FCC’s reliance on states’ refund decisions constitutes an “unlawful subdelegation” of federal authority to the states. The court said “states do not require any subdelegation of authority from the FCC to adjudicate federal statutory claims. In our federal system, state tribunals have the constitutional authority and duty to apply federal statutes and determine statutorily appropriate remedies.” Quoting from the order, the D.C. Circuit ruled the FCC “reasonably concluded that ’states, as part of their tariff review responsibilities, are well-positioned to resolve refund disputes arising from the tariffs they review.’ ... The FCC recognized that it was not adopting a ’single, federal policy’ governing refunds and that some state-to-state variation would naturally result.” Payphone providers had said the FCC violated the filed-rate doctrine’s prohibition on retroactively changing approved rates, but saying the doctrine has long been a central tenet of telecom law, the court ruled, “it hardly seems unreasonable or arbitrary for the FCC to allow states to invoke that doctrine."
As an alternative to requiring AT&T and Verizon pay the refunds, the payphone providers also asked the court to order the companies to disgorge payments they'd received from long-distance carriers, other than the independent payphone providers, believing the two companies would agree to pay the refunds instead of disgorging the funds, the decision said. It found the payphone providers do not have Article III standing to pursue that claim in the court.