FCC Can’t Preempt State Authority on Intrastate Access Rates, Telcos Tell 10th Circuit
The FCC overstepped its bounds when it preempted state authority to set intrastate rates for access and local service, several telcos and state public utility commissions told the 10th U.S. Circuit Court of Appeals in a brief posted Thursday in docket 11-1355. “The Order illegally requires interstate costs to be recovered through local service rates over which Respondent has no jurisdiction,” the telcos and state commissions said of the FCC. An FCC spokesman said the USF/intercarrier compensation order was “legally sound,” and the agency looks forward to defending it in court.
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The petitioners’ brief responded to several statutory arguments by the FCC about the meaning of Section 251 and 252 of the Telecom Act, and what Congress meant by Section 601. The law is clear, the petitioners said: Where a provision can be read in several ways, it must be construed to avoid preemption. Section 251(d)(3) says states have authority over access charges, said the brief. The section said the FCC “shall not preclude the enforcement of any regulation, order, or policy of a State commission that … establishes access and interconnection obligations of local exchange carriers."
The Telecom Act clearly differentiates between access charges and reciprocal compensation, petitioners said. To make the FCC’s argument work, the court would have to reinterpret Section 251(g) in a way that the courts have already rejected, which would be a “ridiculous interpretation,” said NARUC General Counsel Brad Ramsay, lead author on the brief, in an interview.
"Federal courts are unquestionably a favorable forum for a federal litigant,” Ramsay said. “Thomas Jefferson was worried about that at the beginning of the country and his concerns were not overblown.” Courts’ deference on factual issues should in theory not spill over onto legal issues, but it sometimes does, Ramsay said. It’s clear that “Congress did not expect the FCC to specify intercarrier compensation to cover carrier to carrier agreements to provide local competition,” he said: The commission has “a teeny tiny shot glass of an argument, but they're trying to pour six pitchers of argument in a shot glass and it’s not going to work!"
Arlington v. FCC, the Supreme Court case that affirmed the agency’s authority to determine its own jurisdiction where the statutory language is ambiguous (CD May 21 p1), got one brief mention in the petitioners’ reply brief. Arlington “confirms” that an agency may not “confer power upon itself” if the statute “forecloses the agency’s assertion of authority,” petitioners wrote.
Arlington “didn’t change the state of the law one bit,” Ramsay said. The industry had been watching that case closely because there was a “very real possibility” that the court would limit the deference granted to agencies in specific circumstances, he said. The “worst-case scenario is what happened: The law didn’t change.” Ramsay doesn’t think Chevron deference should apply here because the term “reciprocal compensation” has long been clearly defined, and it was clear from the legislative history that Congress understood the distinction between reciprocal compensation and access charges, he said. “The courts can’t ignore that.”