Bush administration weighs in on preemption

The Bush administration urged the Supreme Court not to review a lower court decision overturning a Federal Communications Commission rule preempting state regulation of line-items on cellphone bills, but the development could turn out to be only a temporary setback for the mobile-phone industry.
In a long-awaited brief, U.S. Solicitor General Paul Clement told the high court the pro-state ruling by the 11th U.S. Circuit Court of Appeals “does not warrant further review at this time” even though he disagreed with last year’s decision. Line items are intended to recoup carriers’ costs associated with mandates and taxes imposed at the federal, state and local levels. Wireless carriers argue the line-items help consumers better understand what they’re paying for.
The FCC preempted state regulation of wireless line items in 2005, only to lose an appeal in the 11th Circuit brought by the National Association of State Utility Consumer Advocates and the Vermont Public Service Board. The National Association of Regulatory Utility Commissioners was also heavily involved in the litigation.
“The solicitor general’s filing . confirms what we have been saying all along-this is not a decision the Supreme Court needs to review,” said Marsha Smith, president of NARUC. “The solicitor general made the right recommendation, but based on a flawed rationale. We continue to believe that congressional intent was clear. Congress expressly reserves state authority to protect consumers from being misled by cellphone companies’ billing practices. We are optimistic the Supreme Court will choose not to take this case up on the merits.”
Congress in 1993 significantly pre-empted state regulation of mobile-phone carriers, but left some powers to states in the wireless space.
Clement said the FCC is considering other legal avenues for preventing states from meddling with line items on mobile-phone bills. “The court of appeals held only that the agency erroneously interpreted Section 332 (c )(3) to prohibit states from requiring or prohibiting line items on cellular telephone bills,” the U.S. solicitor general’s brief stated. “The court’s interpretation of that one provision of the Communications Act does not foreclose the commission from deciding on remand or in the pending rulemaking whether to preempt state line-item regulation based on other provisions in the statute, or based on a conflict between those regulations and the Communications Act as a whole.”
On a related pre-emption matter, FCC Chairman Kevin Martin recently told the Senate Commerce Committee he does not necessarily agree that early termination fees are part of wireless rates and therefore preempted by federal law. At the same time, Martin said there are possibly other telecom law provisions that could enable the FCC to exert jurisdiction over ETFs.
Cellular industry association CTIA asked the FCC in 2005 to declare that ETFs are a component of mobile-phone rates otherwise off limits to states under the 1993 law. Not only has the mobile-phone industry been unsuccessful to date in lobbying Congress for expanded federal pre-emption, but it now faces the prospect of re-regulation in connection with a Senate wireless consumer protection bill.
“This is an issue that cuts to the heart of what state regulators are all about: protecting consumers,” said Tennessee regulator Ron Jones, chairman of NARUC’s Committee on Consumer Affairs. “We have been on the cutting edge of these issues for over three years and [Thursday’s] filing from the solicitor general, however indirectly, makes clear that’s state regulators remain an important cop on the consumer-protection beat.”