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Federal Register / Vol. 86, No. 142 / Wednesday, July 28, 2021 / Rules and Regulations intrastate inmate calling services. In November 2016, the D.C. Circuit also stayed the 2016 ICS Reconsideration Order, pending the outcome of the challenge to the 2015 ICS Order.
14. In 2017, in GTL v. FCC, the D.C.
Circuit vacated the permanent rate caps adopted in the 2015 ICS Order. First, the panel majority held that the Commission lacked the statutory authority to cap intrastate calling services rates. The court explained that the Commissions authority over intrastate calls is, except as otherwise provided by Congress, limited by section 2b of the Act and nothing in section 276 of the Act overcomes this limitation. In particular, section 276
merely directs the Commission to ensure that all providers of calling services to incarcerated people are fairly compensated for their interand intrastate calls, and it is not a general grant of jurisdiction over intrastate ratemaking. The court noted that it need not decide the precise parameters of the Commissions authority under 276.
15. Second, the D.C. Circuit concluded that the Commissions categorical exclusion of site commissions from the calculus used to set inmate calling services rate caps defied reasoned decision making because site commissions obviously are costs of doing business incurred by inmate calling services providers.
The court noted that some site commissions were mandated by state statute, while others were required by state correctional institutions and were thus also a condition of doing business. The court directed the Commission to assess on remand which portions of site commissions might be directly related to the provision of inmate calling services and therefore legitimate, and which are not. The court did not reach the providers remaining arguments that the exclusion of site commissions denies them fair compensation under section 276 and violates the Takings Clause of the Constitution because it forces providers to provide services below cost. Instead, the court stated that the Commission should address these issues on remand when revisiting the categorical exclusion of site commissions. Judge Pillard dissented from this view, noting that site commissions are not legitimate simply because a state demands them.
16. Third, the D.C. Circuit held that the Commissions use of industry-wide averages in setting rate caps was arbitrary and capricious because it lacked justification in the record and was not supported by reasoned decision
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making. Judge Pillard also dissented on this point, noting that the Commission has wide discretion under section 201
of the Act to decide which costs to take into account and to use industry-wide averages that do not necessarily compensate each and every call. More specifically, the court found the Commissions use of a weighted average per-minute cost to be patently unreasonable given that such an approach made calls with above-average costs unprofitable and thus did not fulfill the mandate of 276 that each and every call be fairly compensated.
Additionally, the court found that the 2015 ICS Order advanced an efficiency argumentthat the larger providers can become profitable under the rate caps if they operate more efficientlybased on data from the two smallest firms, which represented less than one percent of the industry, and that the Order did not account for conflicting record data. The court therefore vacated this portion of the 2015 ICS Order.
17. Finally, the court remanded the ancillary service charge caps. The D.C.
Circuit held that the Orders imposition of ancillary fee caps in connection with interstate calls is justified given the Commissions plenary authority to regulate interstate rates under 201b, including practices . . . for and in connection with interstate calls. The court held that the Commission had no authority to impose ancillary fee caps with respect to intrastate calls. Because the court could not discern from the record whether ancillary fees can be segregated between interstate and intrastate calls, it remanded the issue so the Commission could determine whether it could segregate ancillary fee caps on interstate calls which are permissible and on intrastate calls which are impermissible. The court also vacated the video visitation annual reporting requirements adopted in the 2015 ICS
Order.
18. In December 2017, after it issued the GTL v. FCC opinion, the D.C. Circuit in Securus v. FCC ordered the 2016 ICS
Reconsideration Order summarily vacated insofar as it purports to set rate caps on inmate calling service because the revised rate caps in that 2016 Order were premised on the same legal framework and mathematical methodology rejected by the court in GTL v. FCC. The court remanded the remaining provisions of that Order to the Commission for further consideration . . . in light of the disposition of this case and other related cases. As a result of the D.C. Circuits decisions in GTL and Securus, the
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interim rate caps that the Commission adopted in 2013 $0.21 per minute for debit/prepaid calls and $0.25 per minute for collect calls remain in effect for interstate inmate calling services calls.
D. 2020 Rates and Charges Reform Efforts 19. 2020 ICS Order on Remand and Notice. In February 2020, the Wireline Competition Bureau Bureau or WCB
issued a public notice seeking to refresh the record on ancillary service charges in light of the D.C. Circuits remand in GTL v. FCC. This Public Notice was published in the Federal Register. In the Ancillary Services Refresh Public Notice, the Bureau sought comment on whether each permitted inmate calling services ancillary service charge may be segregated between interstate and intrastate calls and, if so, how. The Bureau also sought comment on any steps the Commission should take to ensure, consistent with the D.C.
Circuits opinion, that providers of interstate inmate calling services do not circumvent or frustrate the Commissions ancillary service charge rules. The Bureau also defined jurisdictionally mixed services as services that are capable of communications both between intrastate end points and between interstate end points and sought comment on, among other issues, how the Commission should proceed if any permitted ancillary service is jurisdictionally mixed and cannot be segregated between interstate and intrastate calls.
20. In August 2020, the Commission adopted the 2020 ICS Order on Remand and 2020 ICS Notice. The Commission responded to the courts remands and took action to comprehensively reform inmate calling services rates and charges. First, the Commission addressed the D.C. Circuits directive that the Commission consider whether ancillary service chargesseparate fees that are not included in the per-minute rates assessed for individual inmate calling services callscan be segregated into interstate and intrastate components for the purpose of excluding the intrastate components from the reach of the Commissions rules. The Commission found that ancillary service charges generally are jurisdictionally mixed and cannot be practicably segregated between the interstate and intrastate jurisdictions except in the limited number of cases where, at the time a charge is imposed and the consumer accepts the charge, the call to which the service is ancillary is clearly an intrastate call. As a result,
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