Appeals Court Grants Partial Stay of FCC Prison Phone Rules

The stay is “absolutely helpful,” said communications lawyer Stephanie Joyce of Arent Fox, representing inmate calling service provider Securus, among the providers challenging the order adopted 2-1 in the summer. “While the stay is in place, we won’t be subject to rate investigation, and we will not be forced to attempt to comply with a rate methodology that has never been explained or defined by the commission,” she said. Judge Janice Brown would have stayed the entire rule, according to a footnote in the court’s order. That could be good for Securus, but it’s hard to say for sure because it depends on whether the panel that issued the stay will be the same one that makes the ultimate decision, Joyce said.

"We are pleased that millions of families will finally see relief from outrageous rates for inmate calling services when the interim rate caps of $0.25 for collect calls and $0.21 for debit calls go into effect in February 2014,” said a joint statement by FCC Chairman Tom Wheeler, and Commissioner Jessica Rosenworcel, who voted for the order, and Mignon Clyburn, the then-acting chairwoman who circulated the order and also voted yes. “These families have been forced to pay exorbitant rates for far too long. Although we are disappointed that the court granted a partial stay on other aspects of the Inmate Calling Services Order, we look forward to a hearing on the merits soon, and to adopting further reforms quickly."

To receive a stay, a party has to show a likelihood of success on the merits, the prospect of “irreparable injury” if relief is withheld, and that the balance of hardships and the public interest favor a stay. “Petitioners have satisfied the stringent requirements for a stay pending court review,” wrote the panel, which included judges Brown, Karen Henderson and Sri Srinivasan.

"I was disappointed that they didn’t just deny the stay entirely, but what they did I think is actually very good for our clients because it caps the rates,” said Georgetown Law Professor Angela Campbell, co-director of the Institute for Public Representation. IPR is representing prisoners and families intervening on behalf of the FCC’s rules. “This just means we go to court now, and while we're in court, the rates are capped,” she said. “I believe the FCC’s going to win at the end of the day, and then the other parts will go into effect as well. But at least we're getting some relief now, and probably all the relief later."

Andrew Schwartzman, co-counsel with Campbell, called the stay a “weird outcome” in that the court stayed the cost-based aspect of the rules but left the hard cap in place. “The heart of the decision was upheld, but the mechanics having to do with the safe harbor or cost-based rates were stayed,” he said. Schwartzman downplayed Brown’s intention to stay the entire rule. “Knowing who it is, I'm not particularly concerned,” he said. “She is a far-right conservative who doesn’t like any rule or regulation, and if you told me that she was going to be on a case I was involved in, I'd tell you that she’s going to rule against the government almost every time.” It’s “unlikely” that the panel hearing the motion will also hear the merits of the case, Schwartzman said. “Usually it gets reassigned to a new panel."

In voting against the order, Commissioner Ajit Pai warned of the legal risks of adopting “de facto rate-of-return regulation,” a Pai spokesman said. “Today, a bipartisan panel of the D.C. Circuit stayed that regulation. We think this demonstrates that the Commission should work together to achieve bipartisan consensus rather than going forward with divisive party-line votes. Commissioner Pai looks forward to working with his colleagues to remedy the legal flaws in the inmate calling order."

"It is important that the court left intact the most important and immediate of the FCC’s reforms,” said Peter Wagner, executive director of the Prison Policy Initiative, which supports the rules. “But I'm disappointed that the court stayed three sections of the FCC’s order, including the section that reined in the fees. That’s of particular concern because that’s where the industry attempts to hide its profits from their correctional facility partners.” Those fees can double the price of a call, Wagner said. “With new fairer rates, Global Tel*Link will make far more from deposit fees than from multiple 15-minute calls.”

Other supporters of the FCC’s lower prison rates applauded the court for leaving in place the interim rates. “The historic victory remains in place,” said Cheryl Leanza, policy adviser at the United Church of Christ. “Once the FCC is able to collect the additional data it needs, these rates will surely come down.” Public Knowledge Senior Vice President Harold Feld said it was “surprising and disappointing that the court stayed requirements that the rates ultimately be cost based.” He said he continues to believe that after “adequate briefing on the issues, the FCC will be upheld and the stay lifted.” The interim caps are set to go into effect Feb. 11, Feld said. The court didn’t set a briefing schedule or date for oral argument.