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Appeals court stymies bid to regulate high cost of prison phone calls

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Indeed, the opinion was bad for the FCC, particularly on site commissions. On that issue, the District of Columbia Circuit blasted the FCC, saying site commissions “obviously are costs of doing business” because many corrections agencies won’t award contracts without them.

“On the record before us, we simply cannot comprehend the agency’s reasoning,” the court wrote.

Michael Kellogg, an attorney for the prison telecom companies, declined to comment for this article. But Schwartzman says this point of view ignores past FCC decisions.

“Historically, if somebody paid the owner of a 7-Eleven to place a pay phone in the store, the rent that was paid to the owner of the 7-Eleven was considered part of the profit of the phone call,” Schwartzman says. “That’s the way the FCC has historically viewed it, and the court didn’t accept that.”

The court was less flabbergasted, but no more favorable, about the FCC’s authority regarding intrastate calling. Over a dissent by Judge Cornelia Pillard, it found that the “fairly” language in Section 276 doesn’t give the FCC clear authority to ensure fairness to consumers.

Petro of Drinker Biddle says this ignores about two decades of FCC jurisprudence on fairness, a term of art from the Communications Act of 1934’s requirement that rates be “just, fair and reasonable.” After the 1996 act, he says, the FCC spent a lot of time interpreting the disputed section and decided that fair means “fair for both parties to the transaction.”

But Mithun Mansinghani, the Oklahoma solicitor general who represented that state and 10 others as petitioners alongside the telecom companies, says some of the same cases support the narrower, providers-only interpretation of the statute’s call for fairness.

He notes that the 1996 act gave the FCC nine months to implement its fairness mandate. But it took more than 15 years for the commission to apply it to inmate calling rates.

“In implementing the statute, they never thought that what they were trying to do was prevent excessive compensation to pay phone providers,” Mansinghani says. “This was something that was just dreamed up a couple of years ago.”


Under normal circumstances, a federal appeals court confronted with an ambiguous statute might defer to the expertise of the federal agency whose job it is to make rules based on that statute. That’s Chevron deference, an established principle of administrative law.

But because the FCC abandoned its own defense on the question of how to interpret fairly, the District of Columbia Circuit found that Chevron deference didn’t apply. The intervenors argued, when petitioning for en banc review, that this wasn’t warranted because the FCC never formally changed its position.

The majority quickly issued a clarification saying it would have decided the same way using Chevron deference, and the full District of Columbia Circuit denied a rehearing. But the issue might come up again. The intervenors appear to be planning a petition for a writ of certiorari.

The campaign to lower prison calling rates is alive in other areas. Certain issues were remanded to the FCC, which could set off another round of litigation about new rules. At least two class action lawsuits about the high cost of calls from prison are pending.

Although the current Congress is unlikely to give the FCC more regulatory authority, activists may look to state legislatures, which can ban site commissions—and have, in at least eight states.

Wright of the Human Rights Defense Center thinks public opinion would support that if the issue were more widely understood.

“We’re talking about 25 or 35 cents a minute, $15 for a 10-minute call,” he says. “No one [else] in America pays anything remotely close to that.”



Print and initial online versions of "Talk Isn't Cheap," May, should have reported that Oklahoma Solicitor General Mithun Mansinghani represented that state and 10 others as petitioners, alongside telecommunications companies, in a dispute over prison phone rates.

The Journal regrets the error.

This article was published in the May 2018 issue of the ABA Journal with the title "Talk Isn’t Cheap: Appeals court decision stymies attempts to regulate the high price of prison phone calls."

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