10th Circuit Throws Out FCC Bans on TRS Provider Lobbying
A federal appeals court rejected two FCC rules designed to protect deaf consumers from unwanted lobbying. Ruling late Thursday on appeals by Sorenson and Purple Communications, the 10th U.S. Circuit Court of Appeals in Denver remanded the telecom relay service rules, calling one unconstitutional and the other arbitrary and capricious under the Administrative Procedures Act. The court dismissed a challenge by Purple to a third rule on abusive marketing practices, because the TRS provider hadn’t sought FCC reconsideration.
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A TRS rule prohibiting providers from using customer data for lobbying or any other purposes besides TRS call handling violates the First Amendment, Judge Michael Murphy wrote in a decision that Judges Deanell Tacha and Timothy Tymkovich signed on to. The ban is “an impairment of providers’ right to engage in political and commercial speech without any showing the restriction is narrowly tailored to advance a significant government interest,” the court said. And a TRS rule banning providers from using revenue received from the interstate TRS fund to lobby customers is “arbitrary and capricious because the FCC provided no explanation for why lobbying was singled out for prohibition,” it said.
Restricting use of customer data for lobbying affects commercial and political speech “because it limits a preferred channel of communication between the speaker and the intended audience,” the decision said. The court rejected the FCC’s argument that the commission can regulate use of the data because it was obtained through participation in a government-funded program. “Here, the government is not directing the use of subsidies, but is instead restricting how providers can use information they collect from customers in the course of providing a federally mandated service,” the court said. Also, the TRS program isn’t “intended to spread a governmental message that would be jeopardized by the provider’ use of data to communicate with customers.”
The FCC can’t tell a TRS provider how to spend subsidy money left over after the company has covered its costs, the court said. The TRS fund doesn’t reimburse providers based on actual costs, instead using a price-cap system that allows providers to keep any money they don’t spend providing service. The system is meant to reward providers that find innovative ways to reduce costs, the court said. Restricting what the provider can do with that “reward” is “inconsistent with the logic of a price cap-based compensation system,” it said. “This reward mechanism is only effective if providers are permitted to decide how to spend those savings.”
“The FCC inadequately explained its restriction on the grounds that lobbying expenditures are inconsistent with the purpose of the TRS Fund,” the court said. And the commission “failed to provide any reason why lobbying expenses are deserving of prohibition when all other business expenditures are permissible.”
Purple Vice President Kelby Brick wouldn’t say whether his company would file a reconsideration petition at the FCC on the challenge that the court dismissed. But he applauded the overall ruling, saying it “moves the industry another step forward in its pursuit of the [American Disabilities Act’s] mandate for functional equivalency.”
Sorenson CEO Pat Nola said the decision would help the company spread video relay service “to as many deaf people as possible.” Claude Stout, executive director of Telecommunications for the Deaf, declined to comment Friday because his lawyers were still reviewing the order. Before the decision, some consumer groups argued that the FCC’s lobbying restrictions were in the “best interest” of TRS customers (CD July 3 p6).