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October 27, 2006, Alert No. 1,477.
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Martin Discusses Chevron Deference, Biennial Reviews and Forbearance

10/26. Federal Communications Commission (FCC) Chairman Kevin Martin gave a speech [7 pages in PDF] in Washington DC.

Kevin MartinMartin (at right) discussed the difficulty of applying a Communications Act (CA) that treats different industry sectors differently, when those sectors are now converging. Second, he discussed the Supreme Court's opinion in Brand X, and especially its holding regarding judicial deference to agency decisions. Third, he discussed Section 11 of the CA, which requires the FCC to conduct biennial reviews of its regulations. Finally, he discussed forbearance under Section 10 of the CA.

Brand X and Chevron Deference. On March 14, 2002, the FCC adopted a Declaratory Ruling and Notice of Proposed Rulemaking [75 pages in PDF]. The Declaratory Ruling (DR) component of this item states that "we conclude that cable modem service, as it is currently offered, is properly classified as an interstate information service, not as a cable service, and that there is no separate offering of telecommunications service."

Brand X, EarthLink, the State of California, and others filed petitions for review of the FCC's order in various federal circuits. These petitions for review were assigned to the 9th Circuit by lottery. The 9th Circuit vacated the DR, without applying the deference to administrative agency decisions required by Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984). It concluded that it was bound by the doctrine of stare decisis to follow its June 22, 2000 opinion in AT&T v. Portland, 216 F.3d 871.

On June 27, 2005, the Supreme Court issued its opinion [59 pages in PDF] in NCTA v. Brand X, reversing the 9th Circuit, and upholding the FCC's determination that cable broadband internet access service is an information service.

Martin focused on those parts of the majority opinion regarding Chevron deference.

He stated that "the Court held that even if a reviewing court had previously construed a statute differently, it must give Chevron deference to an expert agency’s subsequent interpretation unless the statute is subject to only one permissible construction."

"Normally, we are disposed to think judicial interpretations trump those of agencies. But the Court held that ``Before a judicial construction of a statute, whether contained in a precedent or not, may trump an agency’s, the court must hold the statute unambiguously requires the court's construction´´", said Martin.

He added that "The Court's strong reaffirmation of Chevron deference means that an agency’s statutory interpretation may trump an earlier judicial one, and that it may even change its mind about a statute's meaning after its earlier interpretation has been judicially affirmed."

He concluded that "Having the ability to adopt a less burdensome regulatory scheme for broadband services was critical to the Commission from a policy perspective. But I note that I agree with some of the concerns about the breadth of discretion available to our or any administrative agency as a result of this decision."

Biennial Reviews. 47 U.S.C. § 161 provides, in part, that "In every even-numbered year (beginning with 1998), the Commission --- (1) shall review all regulations issued under this chapter in effect at the time of the review that apply to the operations or activities of any provider of telecommunications service; and (2) shall determine whether any such regulation is no longer necessary in the public interest as the result of meaningful economic competition between providers of such service."

This section also provides that "The Commission shall repeal or modify any regulation it determines to be no longer necessary in the public interest."

This section was added to the CA by Section 402 of the Telecommunications Act of 1996. It is also known as section 11.

Martin said that "In construing the meaning of Section 11, the D.C. Circuit has upheld a looser definition of the statutory term ``necessary in the public interest´´ than the language of the statute suggests. The Court accepted the FCC's arguments that the term requires only that a regulation serve the public interest and does not require any higher showing of necessity."

See, for example, February 13, 2004, opinion [24 pages in PDF] of the U.S. Court of Appeals (DCCir) in Cellco Partnership v. FCC, petitions for review of certain parts of the FCC's biennial regulatory reviews. This case is Cellco Partnership, dba Verizon Wireless v. FCC and USA, No. 02-1262, and Verizon Telephone Companies, Inc., et al. v. FCC and USA, respondents, and AT&T and Cingular Wireless, intervenors, No. 03–1080. See also, story titled "Appeals Court Addresses Meaning of "Necessary" in FCC Biennial Review Process" in TLJ Daily E-Mail Alert No. 837, February 16, 2004.

See also, the DC Circuit's June 21, 2002, opinion in Fox Television Stations, Inc. v. FCC, 293 F.3d 537 (2002).

Martin added that "I had dissented from that FCC decision, arguing that Section 11's language requires a showing that a regulation is actually still ``necessary.´´"

Martin has written about the meaning of "necessary" on many occasions. See for example, August 8, 2002 statement [PDF] in WT Docket No. 01-108.

See also, July 16, 2002 statement [4 pages in PDF] in WT Docket No. 01-184 and CC Docket No. 95-116 regarding the meaning of "necessary" in the context of forbearance petitions.

He concluded his discussion of biennial reviews by saying that "The result of this decision gives the Commission substantially more discretion in deciding whether to retain rules, since it is not too difficult to justify a rule as in the public interest. The FCC thus managed to take a tool intended by Congress to impose some rigor on the FCC’s analysis and turned it into more of a procedural hurdle. The Commission only has to explain periodically why regulations on the books are in the public interest."

Forbearance. 47 U.S.C. § 160 provides, in part, that the FCC "shall forbear from applying any regulation or any provision of this chapter to a telecommunications carrier or telecommunications service, or class of telecommunications carriers or telecommunications services, in any or some of its or their geographic markets, if the Commission determines that --- (1) enforcement of such regulation or provision is not necessary to ensure that the charges, practices, classifications, or regulations by, for, or in connection with that telecommunications carrier or telecommunications service are just and reasonable and are not unjustly or unreasonably discriminatory; (2) enforcement of such regulation or provision is not necessary for the protection of consumers; and (3) forbearance from applying such provision or regulation is consistent with the public interest."

The forbearance provision is also referred to as Section 10. It was added to the CA by Section 401 of the Telecommunications Act of 1996.

Martin commented that "Section 10 is unusual in several respects. First, it enables regulated entities to seek relief from otherwise applicable statutory mandates. In the usual course, an agency may not waive a statutory requirement since the agency is subordinate to Congress. But Section 10 delegates to the Commission the authority to forbear from applying sections of the Communications Act to telecommunications carriers and services."

He said that "A second unusual aspect of section 10 is that it provides for the effective repeal of regulations outside the normal practice of notice and comment rulemaking. If the Commission determines that a petition for forbearance meets the three statutory criteria, it is required to forbear from applying the regulation to the telecommunications carrier or service."

He noted the potential of this to decrease transparency. He said that "Although it is the Commission’s usual practice to seek public comment on petitions for forbearance, Section 10 does not expressly require this. Further, although the rule remains in the Code of Federal Regulations, it is no longer operative with respect to the carriers or services specified in the Commission’s forbearance order."

Finally, he discussed the "deemed granted" language in the statute. He said that "forbearance petitions are ``deemed granted´´ unless the Commission denies the petition within one year, a period which the Commission may only extend for an additional three months."

He also related that the FCC "deemed granted" a Verizon petition. On March 21, 2006, the FCC issued a release that states that the FCC, by operation of law granted Verizon's December 20, 2004, petition for forbearance from Title II of the Communications Act, and the FCC's Computer Inquiry rules. See, story titled "FCC Announces that Verizon Petition for Forbearance is Deemed Granted" in TLJ Daily E-Mail Alert No. 1,334, March 22, 2006.

Martin explained that "Verizon had filed a petition for forbearance concerning high capacity services. Due to a vacancy, the FCC had only four Commissioners and could not reach a majority determination on whether to grant or deny the petition. As a result, we were unable to issue a decision by the statutory deadline and the petition was deemed granted by operation of law."

He added that "Some of Verizon's competitors have petitioned for review of this grant, and those petitions are currently pending in the D.C. Circuit. This case raises many unique issues, including whether the court has jurisdiction to review the grant by operation of law since there is no Commission order to review."

8th Circuit Affirms in Connect Communications v. SWBT

10/26. The U.S. Court of Appeals (8thCir) issued its divided opinion [22 pages in PDF] in Connect Communications v. Southwestern Bell, a dispute regarding compensation for ISP bound calls.

Southwestern Bell Telephone (SWBT) is an incumbent local exchange carrier. Connect Communications is a competitive local exchange carrier. The Arkansas Public Service Commission (APSC) approved an interconnection agreement between SWBT and Connect.

SWBT and Connect disputed whether ISP bound calls were local calls subject to reciprocal compensation under the interconnection agreement.

The APSC determined that the ISP bound calls were not local calls under the agreement.

Connect filed a complaint in U.S. District Court (EDArk) against the APSC and its members challenging the determination of the APSC. The District Court upheld the determination of the APSC.

Connect brought the present appeal. The Court of Appeals affirmed the judgment of the District Court.

This case is Connect Communications Corporation v. Southwestern Bell Telephone L.P, Arkansas Public Service Commission, et al., U.S. Court of Appeals for the 8th Circuit, App. Ct. No. 05-3698, an appeal from the U.S. District Court for the Eastern District of Arkansas. Judge Hansen wrote the opinion of the Court of Appeals, in which Judge Benton joined. Judge Bye wrote a dissenting opinion.

Copyright Office Opines that Cellphone Ringtones are Digital Phonorecord Deliveries Under Section 115

10/16. The Copyright Office (CO) issued a Memorandum Opinion [34 pages in PDF] in its proceeding titled "In the Matter of Mechanical and Digital Phonorecord Delivery Rate Adjustment Proceeding". This is also known as the ringtone decision.

The Copyright Royalty Board referred two issues to the CO: "1. Does a ringtone, made available for use on a cellular telephone or similar device, constitute delivery of a digital phonorecord that is subject to statutory licensing under 17 U.S.C. § 115, irrespective of whether the ringtone is monophonic (having only a single melodic line), polyphonic (having both melody and harmony), or a mastertone (a digital sound recording or excerpt thereof)? 2. If so, what are the legal conditions and/or limitations on such statutory licensing?" (Footnote omitted. Hyperlink added.)

The CO concluded that "ringtones (including monophonic and polyphonic ringtones, as well as mastertones) qualify as digital phonorecord deliveries (“DPDs”) as defined in 17 U.S.C. § 115. Apart from meeting the formal requirements of Section 115 (e.g., service of a notice of intention to obtain a compulsory license under Section 115(b)(1), submission of statements of account and royalty payments, etc.), whether a particular ringtone falls within the scope of the statutory license will depend primarily upon whether what is performed is simply the original musical work (or a portion thereof), or a derivative work (i.e., a musical work based on the original musical work but which is recast, transformed, or adapted in such a way that it becomes an original work of authorship and would be entitled to copyright protection as a derivative work)." (Parentheses in original.)

This proceeding is CO Docket No. RF 2006-1

Washington Tech Calendar
New items are highlighted in red.
Friday, October 27

The House will not meet. It may return from it elections recess on Monday, November 13, 2006. The adjournment resolution, HConRes 483, provides for returning on Thursday, November 9, at 2:00 PM.

The Senate will not meet. See, HConRes 483.

9:30 AM - 4:30 PM. Day five of a five day meeting of the U.S.-China Economic and Security Review Commission to conduct a final review of its 2006 annual report to the Congress. The agenda includes discussion of "China's Enforcement of Intellectual Property Rights and Its Production of Counterfeit Goods", "China's Media Control Activities", "The Effect of U.S. and Multilateral Export Controls on China's Military Modernization", and "China's WTO Compliance". See, notice in the Federal Register: October 18, 2006, Vol. 71, No. 201, at Pages 61541-61542. Location: Conference Room 385, Hall of the States, 444 North Capitol Street, NW.

12:00 PM. The Cato Institute will host a panel discussion titled "The Future of the European Common Agricultural Policy and Global Trade Liberalization". The speakers will be Patrick Messerlin (Institut d'Etudes Politiques de Paris), Daniel Griswold (Cato), and Marian Tupy (Cato). See, notice and registration page. Lunch will follow the program. Location: Cato, 1000 Massachusetts Ave., NW.

5:00 PM. Deadline to submit comments to the National Institute of Standards and Technology's (NIST) Computer Security Division regarding its Draft Special Publication 800-98 [126 pages in PDF], titled "Guidance for Securing Radio Frequency Identification (RFID) Systems".

Extended deadline to submit applications to the Department of Commerce's (DOC) International Trade Administration (ITA) to participate in the summit portion of its Business Development Mission to India on November 29-30, 2006. See, notice in the Federal Register: October 2, 2006, Vol. 71, No. 190, at Pages 57923.

Deadline to submit comments to the Small Business Administration (SBA) in response to its proposal to grant a request for a waiver of the nonmanufacturer rule for personal computer manufacturing. See, notice in the Federal Register, October 12, 2006, Vol. 71, No. 197, at Pages 60220-60221.

Monday, October 30

Deadline to submit comments to the National Institute of Standards and Technology's (NIST) Computer Security Division regarding its Draft Special Publication 800-95 [140 pages in PDF], titled "Guide to Secure Web Services".

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to it notice of proposed rulemaking (NPRM) regarding compensation of providers of telecommunications relay services (TRS) from the Interstate TRS Fund. The FCC adopted this item on July 13, 2006, and released it on July 20, 2006. It is FCC 06-106. This proceeding is titled "Telecommunications Relay Services and Speech-to-Speech Services for Individuals With Hearing and Speech Disabilities" and numbered CG Docket No. 03-123. See, notice in the Federal Register, September 13, 2006, Vol. 71, No. 177, at Pages 54009-54017.

Deadline to submit FCC Form 346 to the Federal Communications Commission (FCC). This pertains to low power television (LPTV) and television translator stations' applications for digital companion channels. See, notice in the Federal Register, October 26, 2006, Vol. 71, No. 207, at Pages 62591-62592, and FCC Public Notice  [93 pages in PDF] numbered DA 06-1748, and dated August 31, 2006.

Deadline to submit comments to the Office of the U.S. Trade Representative (OUSTR) regarding the implications for U.S. trade in goods and services of the anticipated enlargement of the European Union (EU) to include Bulgaria and Romania. See, notice in the Federal Register, September 29, 2006, Vol. 71, No. 189, at Pages 57585-57586.

Tuesday, October 31

8:30 AM - 1:00 PM. The Department of Health and Human Services' (DHHS) advisory committee titled "American Health Information Community" will meet. The agenda includes a discussion of the Health Information Technology Standards Panel's standards recommendations. See, notice in the Federal Register, October 12, 2006, Vol. 71, No. 197, at Page 60152. Location: Conference Room 800, Humphrey Building, 200 Independence Ave., SW.

10:00 AM - 5:00 PM. The National Science Foundation's (NSF) Advisory Committee for Cyberinfrastructure will meet. See, notice in the Federal Register, October 17, 2006, Vol. 71, No. 200, at Page 61073. Location: NSF, 4201 Wilson Blvd., Room 375, Arlington, VA.

12:15 - 1:45 PM. The Federal Communications Bar Association's (FCBA) Young Lawyers Committee will a brown bag lunch for the volunteers for the FCBA's November 16 auction. For more information, contact fcbavolunteers06 at gmail dot com, Josh Turner at jturner at wrf dot com or 202-719-4807, Katrina Gleber at kgleber at lsl-law dot com or 202-416-1093, or Christina Langlois at clanglois at nualumni dot com or 703-597-2265. Location: Wiley Rein & Fielding, 1776 K Street, NW.

9:30 AM. The U.S. Court of Appeals (DCCir) will hold an en banc rehearing in Rep. John Boehner v. Rep. Jim McDermott, App. Ct. No. 04-7203. See, March 28, 2006, opinion [23 pages in PDF] of the three judge panel of the Court of Appeals, and story titled "Court of Appeals Holds that Rep. McDermott Violated Wiretap Act" in TLJ Daily E-Mail Alert No. 1,339, March 30, 2006. Location: Courtroom 20, 333 Constitution Ave., NW.

Wednesday, November 1

9:30 AM - 1:00 PM. The Department of Justice's (DOJ) Antitrust Division and the Federal Trade Commission (FTC) will hold another of their series of hearings on single-firm conduct. This hearing will address tying. The speakers will be David Evans (Vice Chairman of LECG Europe), Robin Feldman (Hastings College of the Law), Mark Popofsky (Kaye Scholer), Donald Russell (Robbins Russell), Michael Waldman (Cornell University), Robert Willig (Princeton University). See, notice. Location: Room 432, FTC Headquarters Building, 600 Pennsylvania Ave.,  NW.

8:00 AM - 2:00 PM. The National Science Foundation's (NSF) Advisory Committee for Cyberinfrastructure will meet. See, notice in the Federal Register, October 17, 2006, Vol. 71, No. 200, at Page 61073. Location: NSF, 4201 Wilson Blvd., Room 375, Arlington, VA.

9:00 AM - 5:00 PM. The Federal Communications Bar Association (FCBA) will host a program titled "Communications Law 101". See, registration form [PDF]. Prices vary. Location: Wiley Rein & Fielding, 1776 K St., NW.

12:00 NOON - 3:00 PM. The DC Bar Association will host a panel discussion titled "DR-CAFTA: The United States-Dominican Republic-Central America Free Trade Agreement A Roundtable with the Ambassadors". The price to attend ranges from $15 to $40. For more information, call 202-626-3463. See, notice. Arnold & Porter, 555 12th Street, NW.

5:30 - 7:30 PM. The Federal Communications Bar Association's (FCBA) Young Lawyers Committee will host an event titled "Comm Law 101 Happy Hour". For more information, contact Chris Fedeli at cfedeli at crblaw dot com or 202-828-9874, or Natalie Roisman at nroisman at akingump dot com or 202-887-4493. Location: Restaurant Kolumbia, 1801 K St, NW.

Thursday, November 2

8:00 - 10:00 AM. The Software & Information Industry Association (SIIA) will host an event titled "Federal Enterprise Architecture: Key Strategies Government Agencies Need to Implement for Aligning IT Operations to Accelerate Business Performance". See, notice. Location: Morrison & Foerster, Suite 5500, 2000 Pennsylvania Ave., NW.

8:30 AM - 4:00 PM. The Department of Justice's (DOJ) Global Justice Information Sharing Initiative Federal Advisory Committee will meet. The deadline to register is October 26, 2006. See, notice in the Federal Register, October 26, 2006, Vol. 71, No. 204, at Page 62122. Location: Embassy Suites Hotel, 900 10th Street NW.

9:00 AM - 5:30 PM. The Information Technology Association of America (ITAA) will host a conference titled "Information Security in the Federal Enterprise". Karen Evans (OMB) will be the keynote speaker. The price to attend ranges from free to $400. See, notice and agenda [PDF]. For more information, contact Patti Coen at pcoen at itaa dot org. Location: Computer Services Corporation (CSC), Executive Briefing Center, 3170 Fairview Park Drive, Falls Church, VA.

12:00 NOON - 2:00 PM. The Federal Communications Bar Association's (FCBA) International Telecommunications Committee will host a brown bag lunch titled "VoIP and Broadband Developments in Europe and Asia". The speakers will be Mark Del Bianco (Law Office of Mark Del Bianco), Christian Dippon (NERA Economic Consulting), Peter Waters (Gilbert+Tobin and Arculli Fong & Ng), Karl Weaver (Newport Technologies), and Jean-marc Escalettes (France Telecom Long Distance USA). RSVP by October 30 to Jennifer Ullman at jennifer dot ullman at verizon dot com or 202-515-2432. Location: Skadden Arps, 11th Floor, 1440 New York Ave., NW.

12:00 NOON - 2:00 PM. The DC Bar Association will host a panel discussion titled "Korea-U.S. Free Trade Agreement -- Negotiations Update". The speakers will include Wendy Cutler (chief U.S. negotiator for the Korea US FTA), Seok-young Choi (Minister of Economic Affairs, Embassy of the Republic of Korea), Demetrios Marantis (International Trade Counsel, Democratic Staff, Senate Finance Committee), Myron Brilliant (U.S.-Korea Business Council), and Mary Patricia Michel (McKenna Long & Aldridge). The price to attend ranges from $5 to $25. For more information, call 202-626-3463. See, notice. Location: D.C. Bar Conference Center, 1250 H Street NW, B-1 Level.

Friday, November 3

9:00 AM - 4:00 PM. The Federal Communications Commission's (FCC) Consumer Advisory Committee will meet. See, notice in the Federal Register, October 18, 2006, Vol. 71, No. 201, Page 61470-61471. Location: FCC, 445 12th Street, SW.

9:30 - 11:30 AM. The Department of State's (DOS) International Telecommunication Advisory Committee (ITAC) will meet to discuss the upcoming meeting of the ITU Radiocommunication Sector's Conference Preparatory Meeting (CPM) for the 2007 World Radiocommunication Conference, to be held on February 19 through March 2, 2007 in Geneva, Switzerland. See, notice in the Federal Register, October 10, 2006, Vol. 71, No. 195, at Page 59580. Location: Boeing Company, 1200 Wilson Blvd., Arlington, VA.

EXTENDED TO DECEMBER 4. Deadline to submit comments to the Department of Commerce's (DOC) Bureau of Industry and Security (BIS) regarding its proposed changes to its Export Administration Regulations (EAR) pertaining to exports and reexports of dual-use items to the People's Republic of China (PRC). Dual use items include certain encryption products, information security products, fiber optic products, computers, and software. See, notice in the Federal Register, July 6, 2006, Vol. 71, No. 129, at Pages 38313-38321. See, notice of extension in the Federal Register, October 19, 2006, Vol. 71, No. 202, at Page 61692.

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