Summary
The D.C. Circuit reviewed the FCC’s selection of Telcordia Technologies as the next Local Number Portability Administrator, replacing Neustar. The court held that it had jurisdiction over the consolidated petitions and that the FCC was not required to use notice-and-comment rulemaking for the administrator selection. It further held that the FCC’s neutrality determination, cost analysis, and rejection of Neustar’s second best-and-final offer were not arbitrary and capricious, and denied the petitions for review.
Topics
Practice areas
Questions Presented
- Whether the D.C. Circuit had jurisdiction to review the FCC's March 2015 Order after consolidation with Neustar's petition challenging the FCC's July 2016 final order.
- Whether Section 251 of the Telecommunications Act or the Administrative Procedure Act required the FCC to use notice-and-comment rulemaking to select or recommend a new Local Number Portability Administrator.
- Whether the FCC's determination that Telcordia satisfied neutrality requirements despite being wholly owned by Ericsson was arbitrary, capricious, or contrary to law.
- Whether the FCC's refusal to consider Neustar's unsolicited second best-and-final offer was arbitrary and capricious.
- Whether the FCC's evaluation of bid costs and transition costs was arbitrary and capricious.
Holdings
- The court had jurisdiction because Neustar's second petition challenged the FCC's final July 2016 Order, and consolidation rendered the FCC's finality-based jurisdictional objection moot.
- Section 251 does not require each new Local Number Portability Administrator to be selected or recommended through notice-and-comment rulemaking.
- The FCC's order selecting Telcordia did not qualify as a rule under the APA and therefore did not require notice-and-comment procedures.
- The FCC reasonably determined that Telcordia satisfied the statutory and regulatory neutrality requirements, subject to specified safeguards, and that determination was not arbitrary and capricious.
- The FCC reasonably refused to consider Neustar's unsolicited second best-and-final offer, and that decision was not arbitrary and capricious.
- The FCC's comparative cost analysis, including its consideration of transition costs, was not arbitrary and capricious.
Key quotations
“The FCC “has very broad discretion to decide whether to proceed by adjudication or rulemaking.”” (at 891)
“For these reasons, we hold that § 251 does not mandate that selection or recommendation of an administrator must be done through rulemaking procedures.” (at 893)
“Given all these considerations, the FCC’s Order in this case does not meet the APA’s definition of a rule and does not require a rulemaking.” (at 896)
“For all these reasons, this Court cannot conclude that the FCC’s neutrality determination was arbitrary and capricious.” (at 901)
Factual background
The Telecommunications Act requires the FCC to create or designate impartial entities to administer telecommunications numbering and number portability. Neustar was the incumbent administrator, while Telcordia, a wholly owned subsidiary of Ericsson, competed against Neustar to become the next administrator. The FCC selected Telcordia after evaluating the bids, determining that Telcordia satisfied neutrality requirements subject to safeguards, and concluding that Telcordia's technical, managerial, and cost advantages outweighed transition costs.
Procedural history
The FCC conducted a competitive process to select a successor to Neustar as the Local Number Portability Administrator. The North American Numbering Council recommended Telcordia, and the FCC approved that recommendation in its March 2015 Order, later approving the proposed contract terms in July 2016. Neustar challenged the selection process, the FCC's neutrality determination concerning Telcordia and its parent Ericsson, the cost analysis, and rejection of a second best-and-final offer.