1st Circuit Hears Oral Argument on IPCS Case as Carr Proposes New Rules
Providers of incarcerated people's communications services (IPCS) insisted Tuesday at the 1st U.S. Circuit Court of Appeals that the court shouldn’t even be hearing the case challenging a 2024 FCC order -- the 5th Circuit should. Oral argument in the case came the same day that FCC Chairman Brendan Carr circulated a draft order and Further NPRM that would make sweeping changes to IPCS rules approved last year.
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Under Carr's proposal, the commission’s rate-cap-setting methodology would use only billed minutes, “rather than both billed and unbilled minutes to determine the providers’ costs." It would also "incorporate all safety and security measure expenses reported by IPCS providers into the lower bounds of the zones of reasonableness, and create an additional rate cap tier for extremely small jails.” Carr proposed to create a separate interim rate “additive” of 2 cents per minute, “similar to the rate additive adopted by the Commission in 2021, to account for correctional facilities’ expenses."
Carr also proposed new interim audio and video IPCS rate caps that would become effective upon publication in the Federal Register, while delaying compliance until 120 days after publication. The FNPRM seeks comment on permanent rate caps for audio and video IPCS, on a “permanent rate additive or additives for facility cost recovery” and on whether to continue prohibitions against site commission payments and ancillary service charges.
“The goal of today’s action is to establish a regulatory framework that is faithful to the Martha Wright-Reed Act and is also consistent with [a] record that has developed over the last two years,” the draft proposal says. The FCC is seeking “a durable, predictable, and lawful framework that will properly balance our implementation of the dual statutory mandates -- just and reasonable rates for consumers and providers and fair compensation for providers -- and thereby ensure the continued availability of IPCS to incarcerated people and preserve correctional officials’ ability to provide safe and secure access to IPCS.”
1st Circuit Oral Argument
In the court argument (case 24-8028), meanwhile, judges asked Scott Angstreich of Kellogg Hansen, who represented IPCS providers, to address jurisdiction first before discussing the substance of the case.
Securus filed the first petition challenging the FCC's July 2024 IPCS order in the 5th Circuit, where the company is based, and that’s the court that should be hearing the case, Angstreich said. Judges pushed back on that argument at some length, noting that the case was assigned to the 1st Circuit by the Judicial Panel on Multidistrict Litigation, and now Angstreich is asking the court to overrule that assignment.
Providers had hoped for a decision by the 5th Circuit, which is considered the most industry-friendly of the circuits. Instead, the case is being heard by the more middle-of-the-road 1st Circuit before Judges David Barron and Lara Montecalvo, who were appointed by Democratic presidents, and Judge Jeffrey Howard, appointed by President George W. Bush.
“You’re challenging what the [multidistrict] panel did in conducting a lottery,” Barron said. “I think that certainly that we have discretion to transfer” the case, but the court chose to retain jurisdiction, he said. Angstreich seems to believe “that there is some legal problem with us having the case,” Barron said. “Are you saying that we are supposed to say that the panel that conducted the lottery erred?”
Last year's IPCS order was “unlawful for multiple reasons,” Angstreich argued. Parts of the rules had to go through OMB approval and never did, so the FCC doesn’t have final rules governing alternative plans, he said. “We were harmed,” he said. “We sought review in our home circuit. … We should not be knocked out [of that circuit] by incurably premature petitions by people say who say ‘I’m not actually challenging the thing that I’m challenging.’”
Jenner & Block’s Arjun Ramamurti, who represented public interest groups that challenged parts of the order, said that “for decades, incarcerated people and their loved ones have paid egregiously high rates for communications services.” That’s despite “widespread recognition that affordable calling rates benefit incarcerated people, … facilitate successful reentry and improve the safety of correctional facilities.” IPCS providers “exploit monopolies they enjoy over the facilities they serve and charge rates and fees that far exceed their costs of providing service.”
The 1st Circuit has jurisdiction, Ramamurti said, since it was selected when the multidistrict panel correctly ran the lottery. The history of the law is clear that Congress “wanted a very mechanical process to get all of the petitions consolidated in one court,” he said.