APPEALS COURT UPHOLDS FCC BIENNIAL REVIEW PROCESS

The cases centered on the Telecom Act requirement that the FCC review telecom regulations every 2 years to determine whether they still were needed in light of competition: (1) Cellco v. FCC (02-1262) challenged the agency’s decision to retain 2 regulations involving international operations of wireless companies. Cellco is Verizon Wireless’s former legal name. (2) Verizon v. FCC (03-1081) challenged the Commission’s 2002 biennial review more generally, for example questioning the standard used to review regulations. Judges Merrick Garland and Raymond Randolph joined in the decision.

Saying the FCC “provided an adequate explanation for retention of the 2 rules challenged,” the court denied Verizon Wireless’s petition. It dismissed the Verizon petition for lack of jurisdiction. Rogers said Verizon had presented essentially the same challenges as Verizon Wireless, and since the court acted on Verizon Wireless, the Verizon petition “no longer presents a substantial federal question.”

Rogers wrote that the cases sought “a narrow interpretation of the word ‘necessary'” as applied to the FCC’s review of regulations: “Because of the chameleon-like nature of the term ‘necessary,’ whose meaning depends on its statutory context, we defer to the Commission’s reasonable interpretation of Sec. 11 [of the Telecom Act] as requiring it to apply the same standard used to adopt regulations to determinations of whether the regulations remain necessary in the public interest.” Rogers’s comment referred to the Act’s requirement that the FCC determine whether any regulations were no longer “necessary in the public interest.” She said “the petitions for review represent another attempt by the same parties and the same counsel to elicit from this court a narrow interpretation of the word ‘necessary’ in the deregulatory context of the 1996 Act.” She said in an earlier case, “Verizon Wireless failed to persuade the court in the related context of the Commission’s forbearance authority.”

Arguing that the FCC had erred in retaining the contested international regulations, Verizon Wireless contended “a strict reading of the term ‘necessary’ is required,” when the FCC weighs whether to keep a rule, the court said. Verizon Wireless cited a dictionary definition of “necessary” as “essential” or “indispensable” to support its position that the FCC didn’t use a strict enough standard, Rogers said. The court disagreed, saying “courts have long recognized that the term ‘necessary’ does not always mean ‘indispensable’ or ‘essential,'” she wrote. The court concluded that “the Commission’s actions in response to the Biennial Reviews indicate that Sec. 11 is working as Congress intended.”

The court compared Fri.’s decision with the earlier Fox and Sinclair court decisions, saying “nothing in our opinions in Fox 1 and Sinclair is to the contrary.” Rogers said “neither Fox 1 nor Sinclair adopted a controlling definition of ‘necessary,’ much less the position that Sec. 11 embodies a presumption in favor of deregulation.”

The decision could have significance for other issues because of its detailed examination of the “necessary standard.” Media Access Project Exec. Dir. Andrew Schwartzman said it could have implications for the current appeal of the FCC’s media ownership rules at the 3rd U.S. Appeals Court, Philadelphia. Schwartzman said the court’s interpretation of “indispensable” could “wipe out the bulk of the broadcasters’ arguments for more deregulation under the Act. They premised their arguments on the idea that necessary means indispensable.” Schwartzman interpreted the ruling to say that the Fox and Sinclair cases didn’t impose on the FCC a duty to imply a presumption in favor of deregulation. Although the ruling isn’t binding on the 3rd Circuit, it could have significant impact, Schwartzman said.