D.C. Circuit Review – Reviewed: No Net Neutrality … and the Dangers of “Moreover”

by Aaron Nielson — Saturday, May 28, 2016@Aaron_L_Nielson

Everyone, it seems, is waiting for the D.C. Circuit’s “net neutrality” decision. The case was argued last December and so could be decided anytime.* But it wasn’t decided this week. Although the D.C. Circuit’s only opinion this week did involve the FCC, and while it was authored by Judge Tatel, it wasn’t the big one that is destined to rob a lot of D.C. lawyers of their weekends.

The FCC case this week is Great Lakes Comnet, Inc. v. FCC. Here Judge Tatel (joined by Judges Srinivasan and Wilkins) addressed rate regulation. In particular, the FCC concluded that Great Lakes Comnet charged AT&T too much for use of the network. The D.C. Circuit, however, was not persuaded—at least not yet: “Because the Commission failed to adequately explain its conclusion that Great Lakes did not qualify for the Commission’s ‘rural exemption,’ which would have allowed it to charge the challenged rates, we remand that issue to the Commission for further consideration.” (By the way, I like reading Judge Tatel’s opinions. For instance, in explaining how local exchange carriers operate, he used this imagery: “As an example, when a mother calls her son on the other side of the country, the call travels from her LEC’s lines to her long-distance carrier’s lines and then from those lines to the son’s LEC’s lines, across which it travels to the son’s phone. The calling party, here the mother, pays her long-distance carrier for the call, and the long-distance carrier then pays access fees to the mother’s LEC and the son’s LEC.” That’s a nice way to soften a technical discussion.)

Because there are no other opinions this week, and you’ve already set aside your five minutes for this blog post, I’ll block quote part of the Great Lakes opinion (emphasis added and some citations omitted):

The second major dispute in this case concerns whether Great Lakes qualifies as a rural CLEC and thus is exempt from the Commission’s benchmark rate regulations. Commission regulations define a rural CLEC as “a CLEC that does not serve (i.e., terminate traffic to or originate traffic from) any end users” in an urban area. Great Lakes believes it qualifies for the rural CLEC exemption because it serves no urban end users. In its Order, the Commission ruled otherwise, explaining that Great Lakes “stipulate[d] that it has transport facilities in urban areas, including Chicago, Illinois.”Moreover,” the Commission continued, “the 8YY wireless traffic, by its very nature, originates from locations throughout the country, including locations that are ‘urban.’”

The Commission’s first reason is plainly erroneous. Commission regulations exclude a carrier from the exemption if it “serve[s]… any end users” in an urban area, not if it has “transport facilities” in an urban area. The Commission’s second reason—that 8YY calls originate in urban locations—may well have merit. But the use of the word “moreover,” defined by Webster’s as “in addition to what has been said,” Webster’s Third New International Dictionary 1470 (1993), leaves us unable to determine whether the Commission believed this rationale was independently sufficient, such that it would have relied on it even if Great Lakes had no urban transport facilities. See MCI Telecommunications Corp. v. FCC, 917 F.2d 30, 39 (D.C. Cir. 1990) (remanding to the Commission because the court could not “tell from the [Commission’s] order whether it considered [the arguably valid] portion of its explanation … to be independent of the impermissible [portion]”). Confusing matters further, at oral argument Commission counsel advanced still another basis for excluding Great Lakes from the exemption: that intermediate carriers may not qualify for the rural exemption under any circumstances. This too may have merit, but we cannot rely on it either because it appears nowhere in the Commission’s order. Ass’n of Civilian Technicians v. Federal Labor Relations Authority, 269 F.3d 1112, 1117 (D.C. Cir. 2001) (“‘The courts may not accept appellate counsel’s post hoc rationalizations for agency action.’”). Unable to rely on Commission counsel’s post hoc rationale or to decipher the Commission’s reasoning in its Order, we follow our long-established rule that “[w]here the Commission’s failure to address or explain an issue leaves a court unable to understand Commission action, the appropriate course is to remand the case for further explanation.”

Agency drafters beware: “moreover” can be perilous.

* Though it may take a while longer; the Amtrak case was argued in November and not decided until the very end of April. Likewise, ManorCare of Kingston PA, LLC v. NLRB, discussed last week, was argued in October but not decided until May. The D.C. Circuit is a pretty fast court, but complicated cases can take a long time. Here are two free predications about the opinion, however: It will be written by Judge Tatel (because he always authors these opinions, plus he was the most senior active judge on the panel) and at least the majority opinion won’t contain any footnotes.

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About Aaron Nielson

Professor Nielson is an associate professor at Brigham Young University Law School, where he teaches and writes in the areas of administrative law, civil procedure, federal courts, and antitrust. He currently serves as a public member of the Administrative Conference of the United States, a federal agency that studies the administrative process and makes recommendations on ways to improve it. He also co-chairs the Rulemaking Committee of the American Bar Association’s Section of Administrative Law & Regulatory Practice. Previously he chaired the Section's Antitrust & Trade Regulation Committee. Before joining the academy, Professor Nielson was a partner in the Washington, D.C. office of Kirkland & Ellis LLP (where he remains of counsel). He also has served as a law clerk to Justice Samuel A. Alito, Jr. of the U.S. Supreme Court, Judge Janice Rogers Brown of the U.S. Court of Appeals for the D.C. Circuit, and Judge Jerry E. Smith of the U.S. Court of Appeals for the Fifth Circuit. Follow him on Twitter @Aaron_L_Nielson.

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