National Ass'n of State Util. Cons. Adv. V. F.C.C.

• Decision Date: 31 July 2006
• Docket Number: No. 05-11682.,No. 05-12601.,05-11682.,05-12601.
• Citation: 457 F.3d 1238
• Parties: NATIONAL ASSOCIATION OF STATE UTILITY CONSUMER ADVOCATES, Petitioner, National Association of Regulatory Utility Commissioners, Intervenor-Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION, Respondent, AT&T Corporation, Cingular Wireless, Inc., Leap Wireless International, Inc., Nextel Communications, Inc., Sprint Corporation, T-Mobile USA, Inc., Verizon, Cellular Telecommunications and Internet Association, Intervenors-Respondents. Vermont Public Service Board, Petitioner, v. Federal Communications Commission, Respondent.
• Court: U.S. Court of Appeals — Eleventh Circuit

457 F.3d 1238

NATIONAL ASSOCIATION OF STATE UTILITY CONSUMER ADVOCATES, Petitioner, National Association of Regulatory Utility Commissioners, Intervenor-Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION, Respondent, AT&T Corporation, Cingular Wireless, Inc., Leap Wireless International, Inc., Nextel Communications, Inc., Sprint Corporation, T-Mobile USA, Inc., Verizon, Cellular Telecommunications and Internet Association, Intervenors-Respondents.

Vermont Public Service Board, Petitioner, v. Federal Communications Commission, Respondent.

No. 05-11682.

No. 05-12601.

United States Court of Appeals, Eleventh Circuit.

July 31, 2006.

Matthew J. Hardy, Consumer's Utility Counsel, Clare A. McGuire, Governor's Office of Consumer Affairs, Atlanta, GA, Patrick W. Pearlman, Consumer Advocate Div. of WV Pub. Serv. Com'n, Charleston, WV, for Petitioner in No. 05-11682.

Laurel Bergold, Laurence N. Bourne, FCC, Robert B. Nicholson, James J. Fredricks, U.S. Dept. of Justice/Antitrust Div., James Bradford Ramsay, Nat'l Assoc. of Reg. Utility Com'n, Washington, DC, for FCC.

Stacy J. Canan, Michael Robert Schuster, AARP Found. Lit., Washington, DC, Seth E. Mermin, San Francisco, CA, for Amici Curiae.

David L. Lawson, Washington, DC, L. Andrew Tollin, Wilkinson, Barker & Knauer, LLP, James Henry Barker, III, Latham & Watkins, Christopher J. Wright, Harris, Wiltshire & Grannis, LLP, Helgi C. Walker, Andrew G. McBride, Wiley, Rein & Fielding, LLP, Sara F. Leibman, Mintz, Levin, Cohn, Ferris, Glovsky & Popeco, PC, Washington, DC, Joshua E. Swift, William H. Johnson, Verizon, Arlington, VA, Seamus Cotter Duffy, Christopher M. Arfaa, Drinker, Biddle & Reath, LLP, Philadelphia, PA, Maureen A. Scott, AZ Corp. Com'n, Legal Div., Phoenix, AZ, for Intervenors.

Petitions for Review of Decisions of the Federal Communications Commission.

Before BLACK, PRYOR and COX, Circuit Judges.

PRYOR, Circuit Judge:

The key issue presented in this petition for review is whether the Federal Communications Commission exceeded its authority, under section 332(c)(3)(A) of the Communications Act of 1934, when it issued an order that preempted the states from requiring or prohibiting the use of line items in customer billing for cellular wireless services. 47 U.S.C. § 332(c)(3)(A); see Truth-in-Billing and Billing Format, Nat'l Ass'n of State Util. Consumer Advocates' Petition for Declaratory Ruling Regarding Truth-in-Billing, 20 F.C.C.R. 6448 (2005) [hereinafter "Second Report and Order" or "the Order"]. The Commission argues, on the one hand, that the regulation of line-item billing involves "rates charged" for cellular wireless services, which is the exclusive province of federal regulation. 47 U.S.C. § 332(c)(3)(A). Representatives of state interests argue, on the other hand, that the regulation of line-item billing involves "other terms and conditions" of cellular wireless services, which are regulable by the states. Id.

This appeal also addresses three threshold issues: (1) whether, under the Hobbs Act, 28 U.S.C. § 2344, this Court lacks subject matter jurisdiction to review the petition filed by the Vermont Public Service Board (the Vermont Board); (2) whether the National Association of Regulatory Utility Commissioners (the State Utility Regulators) may participate as an intervenor; and (3) whether the National Association of State Utility Consumer Advocates (the State Consumer Advocates) has standing to petition for review. As to the threshold issues, we dismiss the petition of the Vermont Board because it is not a "party aggrieved" by the Second Report and Order, but we allow the State Utility Regulators to continue as an intervenor and deny the motion to dismiss the petition of the State Consumer Advocates, which have standing as a consumer of wireless service.

On the key issue, we grant the petitions for review because we conclude that the Commission exceeded its authority when it preempted the states from requiring or prohibiting the use of line items. The scope of federal authority to regulate "rates" or "entry" does not include the presentation of line items on cellular wireless bills. 47 U.S.C. § 332(c)(3)(A). This billing practice is a matter of "other terms and conditions" that Congress intended to be regulable by the states. Id.

I. BACKGROUND

The State Consumer Advocates filed a petition with the Commission that requested a prohibition on the use of line items by cellular wireless carriers unless the line item is mandated by state or federal law. In response to this petition, the Commission issued an order that amended the Truth-in-Billing Rules of the Commission, preempted the states from requiring or prohibiting the use of line items in customer billing for wireless service, and proposed further rulemaking to preempt the states from the regulation of billing practices of wireless service providers. The State Consumer Advocates and the Vermont Board petition for review of the Order by the Commission. Sprint Nextel Corp. and Cingular Wireless LLC (collectively, the Carriers) intervene in support of the Commission, and the State Utility Regulators intervene in support of the Vermont Board.

To explain the context of this appeal, we address three preliminary matters. We first describe the enactment and amendment of the Communications Act and the promulgation of the Truth-in-Billing Rules. We next discuss the petition for declaratory ruling filed by the State Consumer Advocates and the Second Report and Order issued by the Commission in response to that petition. We then discuss motions filed by the Carriers and the Commission to dismiss the petitions of the Vermont Board and the State Consumer Advocates.

A. The Communications Act of 1934 and the Truth-in-Billing Rules

The Communications Act of 1934, 47 U.S.C. §§ 151 to 615b, was enacted "for the purpose of regulating interstate and foreign commerce in communication by wire and radio." Id. § 151. The Act vested the Commission with the authority to regulate radio frequencies used in wireless services. Id. § 303. In 1993, Congress amended the Communications Act to create a new regulatory class called "commercial mobile radio service," which is "any mobile service [ ] that is provided for profit and makes interconnected service available [ ] to the public or [ ] to such classes of eligible users as to be effectively available to a substantial portion of the public." Id. § 332(d)(1). The amendment granted the federal government exclusive authority to regulate the "rates charged" and "entry" of wireless carriers. See id. § 332(c)(3)(A). Although the states were prohibited from regulating "rates" or "entry," the amendment provided that the states could continue to regulate "other terms and conditions" of wireless service. Id.

In May 1999, in response to a growing concern with consumer fraud in the provision of telecommunications services, the Commission promulgated the Truth-in-Billing Rules. In re Truth-in-Billing and Billing Format, 14 F.C.C.R. 7492 (1999) [hereinafter "First Report and Order"]. The stated purpose of the Rules was "to ensure that consumers are provided with basic information they need to make informed choices in a competitive telecommunications marketplace, while at the same time protecting themselves from unscrupulous competitors." Id. at 7493-94. The Truth-in-Billing Rules required consumer telephone bills to (1) "be clearly organized, clearly identify the service provider, and highlight any new providers"; (2) "contain full and non-misleading descriptions of charges"; and (3) "contain clear and conspicuous disclosure of any information the consumer may need to make inquiries about, or contest charges, on the bill." Id. at 7496 ¶ 5.

The Commission exempted wireless service providers from several of these rules, id. at 7501-02 ¶¶ 13-19, but the Commission required, among other things, "(1) that the name of the service provider associated with each charge be clearly identified on the bill; and (2) that each bill should prominently display a telephone number that customers may call free-of-charge in order to inquire or dispute any charge contained on the bill." Id. at 7502 ¶ 15. The Commission sought further comment on whether the Truth-in-Billing Rules should be applied to wireless service providers. Id. at 7535 ¶ 68.

B. The State Consumer Advocates and the Second Report and Order

The State Consumer Advocates "are state agencies designated by laws of their respective jurisdictions to represent the interests of utility consumers before regulatory agencies and in the courts." The State Consumer Advocates petitioned the Commission for a declaratory ruling that prohibited wireless telecommunications carriers "from imposing any separate line item or surcharge on a customer's bill that was not mandated or authorized by federal, state or local law." Second Report and Order, 20 F.C.C.R. at 6449 ¶ 1. A line item is "a discrete charge identified separately on an end user's bill." Id. at 6462 ¶ 30. According to the State Consumer Advocates, the use of line items that were not required by federal or state law violated the Truth-in-Billing Rules and the Communications Act because these line items "do not allow customers to accurately assess what they are being billed for or permit customers to determine whether the amounts charged conform to the price charged for service." Id. at 6454 ¶ 13 n. 32.

In response to the request for a declaratory ruling filed by the State Consumer Advocates, the Commission issued a notice that solicited comments regarding the petition. The notice stated that the Commission "seeks comment" about whether telecommunications carriers should be prohibited from "imposing monthly line-item charges, surcharges or other fees on customers bills unless such charges have been expressly mandated by a regulated agency." Nat'l Ass'n of State Util. Consumer Advocates' Petition for Declaratory Ruling Regarding Truth-in-Billing, 19 F.C.C.R. 9451, 2004 WL...