Trump Administration Defends Biden-Era Order Limiting Prison-Calling Rates
The FCC and DOJ on Thursday asked the 1st U.S. Circuit Court of Appeals to reject challenges to the FCC’s July order implementing the Martha Wright-Reed Act of 2022, which reduces call rates for people in prisons while establishing interim rate caps for video calls (see 2407180039). The government said the order addresses the monopoly power of incarcerated persons communications services (IPCS) providers to set calling rates.
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
“This case is about agency ratemaking, a tool that Congress has used for more than a century to address monopolistic power,” the brief said. “The monopolists here are companies that provide calling services in prisons and jails.” These companies “have a monopoly in each facility they serve, and they often exploit that economic position by charging rates and fees that greatly exceed the cost of providing calling services.”
Agency rate-making isn’t “an exact science,” the government argued. “It involves ‘pragmatic adjustments’ and ‘a balancing of ... interests’ on the agency’s part: the agency must weigh the interests of ‘investor[s]’ who contribute capital to provide a service against the interests of ‘consumer[s]’ who purchase the service.” The FCC has been balancing those elements for decades, the brief noted.
Here, the FCC “set rate caps for IPCS using a familiar framework (called ‘used and useful’) that it has long used in other ratemaking contexts,” the brief said. It “set caps that account for the actual costs of providing calling services (like security costs unique to IPCS). But it excluded costs that providers need not incur to offer calling services (like payments that prisons and jails at times demand when awarding monopoly contracts).”
The FCC “faithfully exercised its statutory authority and, based on the record before it, reasonably balanced the interests of service providers, ratepaying consumers, and correctional facilities," the government said.
It added that the FCC order was within its power and based on precedent, including the U.S. Supreme Court’s Loper Bright Enterprises v. Raimondo decision a year ago, which limited the deference courts pay to agency decisions (see 2406280043).
The Martha Wright-Reed Act instructed the FCC to ensure that IPCS providers are “fairly compensated” but also that rates are “just and reasonable,” the brief said. “By using these very general terms, Congress gave the Commission flexible ratemaking authority, which easily supports the agency’s use of the ‘used-and-useful’ framework to determine compensable costs.”