July 14, 2019

Tenth Circuit: Relay Service Rates Set by FCC Not in Violation of Statute and Not Arbitrary and Capricious

The Tenth Circuit Court of Appeals issued its opinion in Sorenson Commc’ns, Inc. v. FCC on Tuesday, October 18, 2011.

The Tenth Circuit denied the petition for review. Petitioner challenges the 2010-2011 rates set by the Federal Communication Commission (FCC) to compensate Video Relay Service providers, including Petitioner. Petitioner claims that the rates are in violation of 47 U.S.C. § 225 and are also  arbitrary and capricious in violation of the Administrative Procedure Act (APA).

Section 225 directs the FCC to ensure the availability of nationwide access to “functionally equivalent” relay service, “to the extent possible and in the most efficient manner, to hearing-impaired and speech-impaired individuals in the United States.” Petitioner alleges that the reimbursement rates set by the FCC’s rates are so low that the result violates these statutory requirements. However, Petitioner has failed to show the FCC’s interpretation of “functionally equivalent” is impermissible under the statute. “Consequently, it has not established that the interim rates violate the functional equivalence requirement of § 225.” In terms of the APA argument, the Court acknowledged its deference when reviewing ratemaking orders because “agency ratemaking is far from an exact science and involves policy determinations in which the agency is acknowledged to have expertise.” As such, the FCC is entitled to substantial deference when adopting interim rates. The Commission provided a sufficient explanation for the action it chose to establish the rates and, under the Court’s deferential review, that is all that is required. The rates were therefore not arbitrary and capricious.

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