Summary
The D.C. Circuit reviewed FCC rules governing Internet Protocol Captioned Telephone Service, including a $75 equipment price rule and a requirement that captions be turned off by default. The court held that the FCC lacked good cause to bypass notice-and-comment procedures for its interim order and that both challenged final rules were arbitrary and capricious under the Administrative Procedure Act. The court vacated the entire interim order, vacated the two challenged final rules, left the remainder of the final order intact, and remanded for further proceedings.
Topics
Practice areas
Questions Presented
- Whether the FCC had good cause under the Administrative Procedure Act to bypass notice-and-comment procedures when promulgating the Interim Order.
- Whether the FCC's $75 Rule was arbitrary and capricious under the Administrative Procedure Act.
- Whether the FCC's Default-Off Rule was arbitrary and capricious under the Administrative Procedure Act.
- Whether the entire Final Order had to be vacated rather than only the challenged provisions.
Holdings
- The FCC lacked good cause under 5 U.S.C. § 553(b)(3)(B) to bypass notice and comment because the record did not establish an imminent fiscal emergency, that the Fund would run out of money before notice and comment could be completed, or that reasonable alternatives were unavailable.
- The FCC's $75 Rule was arbitrary and capricious because the agency failed to provide evidence that IP CTS technology was being fraudulently used, that a $75 price floor would deter fraud, or that $75 was an appropriate price point.
- The FCC's Default-Off Rule was arbitrary and capricious because the agency failed to address substantial contrary evidence questioning the rule's necessity and efficacy and relied on evidence that did not establish a decline in fraudulent use.
- Only the $75 Rule and Default-Off Rule had to be vacated; the remainder of the Final Order could remain in effect because the unchallenged provisions could function sensibly without the stricken provisions.
Key quotations
“Though no particular catechism is necessary to establish good cause, something more than an unsupported assertion is required.” (at 286)
“Put simply, our review of the record leaves us with more questions than answers.” (at 290)
“As we resolve both challenges on APA grounds, we need not reach the question of whether the two rules run afoul of Title IV of the Americans with Disabilities Act.” (at 294)
Factual background
Sorenson provided Internet Protocol Captioned Telephone Service phones to customers at no charge, with captioning activated by default. The FCC believed that this practice contributed to rapidly increasing demands on the Telecommunications Relay Services Fund. The FCC responded with an Interim Order requiring certain certifications and turning captions off by default, followed by a Final Order establishing a $75 minimum equipment price and a default-off rule with limited exceptions.
Procedural history
The FCC issued an Interim Order without notice and comment, adopting rules concerning the price of IP Captioned Telephone Service equipment and the default captioning setting. It later issued a Final Order, after notice and comment, making most of those rules permanent. Sorenson petitioned for review of both orders, and the petitions were consolidated.
Remand instructions
The court vacated the entire Interim Order, vacated the $75 Rule and Default-Off Rule in the Final Order, left the remainder of the Final Order intact, and remanded to the FCC for further proceedings.