COURT BACKS FCC REMOVAL OF E911 CARRIER COST RECOVERY CONDITION

D.C. Circuit, in case also heard by Circuit Judges Karen Henderson and Merrick Garland, disagreed with rural carriers that neither they nor their subscribers caused E911 costs. Challengers cited 1996 CompTel decision by D.C. Circuit that centered on rate structure set by FCC that required long distance carriers to subsidize smaller ones. That ruling held that when FCC set rates it had to specifically justify any rate difference that didn’t reflect costs. In E911 case, rural carriers argued that earlier ruling barred FCC from requiring them to pay for implementation costs. They contended that cause of that cost was public safety answering points (PSAPs) that field 911 calls. Under FCC rules, wireless carriers don’t have to deploy E911 capabilities until request is received from PSAP capable of receiving information. Arguments of rural carriers rest “on a profound misunderstanding of PSAPs and their public safety function,” court ruled. Court disagreed with what it called characterization by rural carriers that PSAPs functioned much like private businesses. “If this were true, petitioners might have a point,” Tatel wrote. “But PSAPs are governmental entities playing a critical role in the provision of public safety services.” PSAPs don’t benefit directly from receiving E911 services, but public does, court said. Court said that technically FCC itself, not PSAPs, is cause of E911 costs.

U.S. Cellular, Corr Wireless Communications and Rural Cellular Assn. (RCA) challenged 1999 FCC decision to eliminate cost-recovery mechanism for carriers as precondition to their obligation to furnish E911 caller location services. RCA and Corr challenged FCC decision to deny reconsideration of order that eliminated carrier cost recovery mechanism as precondition. RCA, Corr and U.S. Cellular also sought to overturn order itself, arguing that it violated cost-causation principle at issue in CompTel decision. Rural carriers also contended FCC acted arbitrarily and capriciously in violation of Administrative Procedure Act and “taking” clause of 5th Amendment.

D.C. Circuit did side with FCC on rural carriers’ argument that wireless customers hadn’t directly asked carriers to provide E911 services. Court ruled Commission, as govt. representative of those consumers, made request on their behalf. In strongly worded ruling, court also disagreed with rural contention that eliminating carrier cost recovery requirements would lead to economic inefficiencies. Court said that line of reasoning was that if govt. agencies didn’t have to cover costs of public benefits they provided, they might order public safety services that public didn’t really want. “This argument is breathtaking,” court said. “If petitioners were correct, the Federal Aviation Administration could not require airlines to install safety equipment without reimbursing them for their costs.” Using similar examples of Environmental Protection Agency pollution control requirements and Dept. of Transportation seat belt regulations, court said: “It is ludicrous to suggest that government cannot pass these costs along to regulated entities.” FCC has imposed obligation on wireless carriers to put service in place “in the public interest,” D.C. Circuit said. Whether that was done directly or in cooperation with govt. safety organization, agency “has no obligation to compensate carriers for their costs,” court said.

Assn. of Public-Safety Communications Officials (APCO) attorney Robert Gurss said group, which represents interests of PSAPs, was “very pleased by the decision.” APCO had intervened in case on behalf of FCC. “We were among those who first urged the Commission to revise that rule” on cost-recovery mechanism condition for carriers, he told us. “We believe that it was definitely the right thing to do.”

U.S. Cellular’s Van Wazer said rural carriers took exception to jurisdictional grounds that were part of court’s decision. FCC argued that RCA and U.S. Cellular didn’t submit specific financial data to back up claims that rural carriers, with more spread-out subscriber base, would face higher E911 implementation costs than their urban counterparts. D.C. Circuit said that with “specific evidence,” FCC was entitled to conclude that those carriers hadn’t shown that they would suffer disproportionately from elimination of carrier cost recovery requirement. Small rural carrier Corr said it had submitted specific information. Issue came down to one of timing, D.C. Circuit said, since Corr provided that evidence for first time in its petition for reconsideration of FCC order that eliminated carrier cost recovery requirement. Commission said Corr had sufficient notice that requirement could be dropped and didn’t submit new or persuasive evidence in its reconsideration petition. “Because petitioners offer no challenge to this part of the Commission’s decision, we lack jurisdiction to consider the implications of Corr’s cost data on the second reconsideration order, as well as other challenges to that order contained in the rejected reconsideration petitions,” D.C. Circuit said.

That part of ruling is “very cruel, almost surreal,” Van Wazer said. Rural carriers had filed application for review and FCC asked that appeal be held in abeyance because 2 other petitioners had raised similar arguments. Van Wazer said challengers opposed abeyance motion, but D.C. Circuit granted it on assurances from FCC that it would act on pending petition for reconsideration by Sept. 1, 2000. Rural carriers were upset that court granted abeyance motion that delayed overall appeal only to come back and indicate in ruling that it didn’t have jurisdiction in first place, he said. “It gives the FCC authority to proscribe the jurisdiction of the court,” Van Wazer said. D.C. Circuit said that when FCC refused to reopen proceeding, only issue that was reviewable was lawfulness of refusal itself. Commission had said it found that adequate notice was given to Corr and its data didn’t qualify as “new evidence” requiring reconsideration. D.C. Circuit said rural carriers didn’t offer challenge to that part of FCC decision.

Van Wazer said net effect of ruling was that it appeared to say that except in limited circumstances, “the court doesn’t have jurisdiction to hear arguments raised on reconsideration unless the FCC decides on its own motion to reopen the proceeding. It insulates lots of administrative decisions from judicial review.” As result, U.S. Cellular is strongly considering filing for reconsideration before full D.C. Circuit, based in part on that issue, Van Wazer said.