Blanca Tel. Co. v. Fed. Commc'ns Comm'n

• Decision Date: 28 February 2014
• Docket Number: No. 12–1365.,12–1365.
• Citation: 743 F.3d 860
• Parties: BLANCA TELEPHONE COMPANY, et al., Petitioners v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents.
• Court: U.S. Court of Appeals — District of Columbia Circuit

743 F.3d 860

BLANCA TELEPHONE COMPANY, et al., Petitioners

v.FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents.

No. 12–1365.

United States Court of Appeals, District of Columbia Circuit.

Argued Sept. 20, 2013.

Decided Feb. 28, 2014.

Timothy E. Welch argued the cause and filed the briefs for petitioners.

Laurel R. Bergold, Counsel, Federal Communications Commission, argued the cause for respondents. With her on the brief were William J. Baer, Assistant Attorney General, U.S. Department of Justice, Robert B. Nicholson and James J. Fredricks, Attorneys, Sean A. Lev, General Counsel, Federal Communications Commission, Peter Karanjia, Deputy General Counsel, and Jacob M. Lewis, Associate General Counsel.

Before: GARLAND, Chief Judge, and GINSBURG and SENTELLE, Senior Circuit Judges.

GARLAND, Chief Judge:

In 2003, the Federal Communications Commission adopted regulations requiring digital wireless service providers to offer telephone handsets that are compatible with hearing aids. On the September 18, 2006 compliance deadline set by the agency, the three petitioners in this case joined some one hundred other small providers in asking the Commission to waive that deadline. Many of those carriers subsequently came into compliance by January 2007. The three petitioners did not.

In early 2008, the Commission responded to the waiver petitions as a group. Because compliant handsets were not widely available by September 2006, the Commission granted waivers with nunc pro tunc effect to many of the companies that had sought relief—but not to the three petitioners. Following reconsideration in 2012, the Commission again denied waivers for the petitioners. Seeking review of that denial, the petitioners argue that the differential treatment was arbitrary and capricious. They also raise several challenges to the procedural regularity of the Commission's adjudication of their waiver petitions. We reject all of the petitioners' challenges and deny the petition for review.

I

In 1988, Congress enacted the Hearing Aid Compatibility Act to “ensure reasonable access to telephone service by persons with impaired hearing.” 47 U.S.C. § 610(a). Because wireless telephones were not widely used in the late 1980s, Congress exempted them from the statute's requirement that all telephones meet technical standards for compatibility with hearing aids. Id. § 610(b)(2)(A). Presciently imagining a future in which cell phones would become more popular, however, Congress authorized the Federal Communications Commission (FCC) to revoke or limit the exemption if “such revocation or limitation is in the public interest.” Id. § 610(b)(2)(B)(i).

By 2003, the FCC was ready to make that call. In particular, the Commission determined that “wireless service has evolved to become increasingly more important to Americans' safety and quality of life” and that “the need for individuals with hearing disabilities to have access to wireless services has become critical.” In Re Section 68.4(a) of the Commission's Rules Governing Hearing Aid–Compatible Telephones, 18 FCC Rcd. 16753, 16757, ¶ 7 (2003). Acting on that determination, the FCC issued regulations requiring digital wireless telephone manufacturers to make available to wireless service providers—and requiring those providers to offer to customers—hearing aid compatible handsets. See id. at 16754–55, ¶ 3.

Hearing aids function in one of two modes: acoustic coupling or telecoil coupling. In acoustic coupling mode, a hearing aid uses a microphone to amplify all nearby sounds. Id. at 16756, ¶ 5. Talking on a telephone can be difficult with a hearing aid in acoustic coupling mode because the microphone transmits unwanted background noise and can create distracting feedback. For some hearing aid users, telecoil coupling mode is the answer. Telecoil coupling mode switches off a hearing aid's microphone and amplifies only the audio from the person on the other end of the telephone, a process called inductive coupling. Id. ¶¶ 5–6. Before the FCC issued hearing aid compatibility rules for digital wireless telephones, it was difficult for the hearing impaired to find wireless telephones capable of inductive coupling. Id. ¶ 6.

That was all supposed to change by mid–2006. The FCC's 2003 regulations required digital wireless service providers to offer at least two handset models capable of inductive coupling by September 18, 2006. 47 C.F.R. § 20.19(d)(2) (2006). By the time the deadline arrived, however, few providers had complied. Because telephone manufacturers were slow in developing compliant models and submitting them to the Commission for approval, compliant handsets did not trickle down to supplier inventory in time for many service providers to meet the deadline. In Re Section 68.4(a) of the Commission's Rules Governing Hearing Aid–Compatible Telephones, 23 FCC Rcd. 3352, 3357, ¶ 8, 3362, ¶ 16 (2008) [hereinafter Order on Review ]. Smaller service providers like the petitioners here (described by the Commission as “ Tier III” carriers) found it particularly difficult to achieve timely compliance. Id. at 3362, ¶ 16.

On the day of the September 2006 deadline, the three petitioners asked the FCC to waive that deadline. Many other carriers also did so at approximately the same time. Order on Review, 23 FCC Rcd. at 3355, ¶ 5 n. 12. The FCC did not immediately act on those requests. By the close of 2006 the rollout delays limiting availability of the telephones had largely abated, and many carriers had come into compliance. Id. at 3362, ¶ 17.

The three petitioners failed to comply until several months into 2007. CTC Telecom, an Idaho service provider, began offering the required telephones on March 13, 2007. Id. at 3363, ¶ 19. CTC reported that it checked regularly with its supplier about compliant telephones and ordered them when the supplier began stocking the models. Farmers Cellular Telephone Company, an Alabama carrier, similarly reported that it often checked with its existing supplier and purchased compliant telephones when they became available. Farmers complied on June 6, 2007. Id. ¶ 20. Finally, Blanca Telephone Company of Colorado came into compliance on June 20, 2007. Id. ¶ 19.

By the time the FCC addressed the waiver requests in 2008, most carriers seeking waivers had come into compliance. Thus, the Commission had to decide whether to let bygones be bygones or, instead, to penalize some or all cases of tardiness. The FCC chose to penalize some. Applying its general discretionary waiver standard under 47 C.F.R. § 1.925(b), the FCC granted waivers with nunc pro tunc effect only to late-complying carriers that had exhibited “reasonable diligence” in their efforts to comply. Order on Review, 23 FCC Rcd. at 3362, ¶ 17.

The Commission relied upon two factors to gauge whether a carrier's efforts to comply were reasonably diligent. First, it looked to the date of compliance. Because many carriers had complied by January 1, 2007, the FCC concluded that compliance by that date was indicative of the time necessary “to resolve issues involved in identifying, testing, and ultimately selling inductive coupling-compliant handsets.” Id. Second, the FCC examined carriers on a case-by-case basis to determine whether they had actually exhibited reasonable diligence. The FCC determined that a reasonably diligent carrier would, at the very least, have attempted to comply with the hearing aid compatibility rules. See id. at 3368–69, ¶ 34. And although merely relying upon existing vendors to supply compatible handsets may have been a reasonably diligent strategy at first, the Commission concluded that after many months of noncompliance, a reasonably diligent service provider would have begun to search for compliant telephones beyond its existing vendors. Id. at 3364–65, ¶ 22.

The upshot of the Commission's evaluation was that most of the providers to which it granted waivers had come into compliance by January 1, 2007. There were, however, a few exceptions. In one case, the FCC denied a waiver to a carrier that had complied by December 2006. Id. at 3368–69, ¶ 34. Although the FCC regarded pre-January compliance as presumptively indicative of reasonable diligence, that carrier reported that the reason for its late compliance was simple “oversight” on its part. Id. For the FCC, that was not good enough. In another case, the FCC ultimately granted a waiver to a group of carriers (collectively known as the “i wireless” carriers) that did not comply until March 2007. Although the FCC originally denied a waiver to those carriers, upon reconsideration it determined that they had exhibited reasonable diligence in attempting to comply. In particular, the i wireless carriers had contacted a variety of vendors—not just their current suppliers—to find out when different compliant telephones would become available. In addition, the i wireless carriers partially attributed their late compliance to receiving inaccurate information about compatibility requirements from telephone manufacturers. See In Re Section 68.4(a) of the Commission's Rules Governing Hearing Aid–Compatible Telephones, 27 FCC Rcd. 9814, 9819–20, ¶¶ 12–13 (2012) [hereinafter Reconsideration Order ].

In the FCC's view, the three petitioners here did not measure up to either of the benchmarks it established for evaluating reasonable diligence: They complied after January 1, 2007, and they did nothing to obtain compliant telephones beyond contacting their existing vendors. Accordingly, the Commission denied their waiver requests and referred their cases to the FCC's Enforcement Bureau. Order on Review, 23 FCC Rcd. at 3365, ¶ 22.

The petitioners filed a petition for reconsideration, contending that they were being treated unfairly because they were similarly situated to the carriers that had received waivers. They also raised challenges to the procedural regularity of the Commission's adjudication of their waiver petitions. After the...