# Appendix — Sprint Nextel Corp. Corp. v. National Association of State Utility Consumer Advocates (No. 06-1184) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386016_2225%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 2007 ## Text No. OFFICE OF THE CLERK In the Supreme Court of the United States SPRINT NEXTEL CORPORATION AND T-MOBILE USA, INC. Petitioners, NATIONAL ASSOCIATION OF STATE UTILITY CONSUMER ADVOCATES, ET AL. Respondents. On Petition for a Writ of Certiorari to the United States Court of Appeals for the Eleventh Circuit APPENDIX TO PETITION FOR A WRIT OF CERTIORARI LEONARD J. KENNEDY CHRISTOPHER J. WRIGHT* SPRINT NEXTEL CORPORATION TIMOTHY J. SIMEONE 2001 Edmund Halley Drive STEPHANIE WEINER Reston, VA 2019] HARRIS, WILTSHIRE & GRANNIS LLP THOMAS J. SUGRUE 1200 Eighteenth Street. N.W. T-MOBILE USA, INC. Washington, DC 20036 401 9th Street, NW, Suite 550 = (202) 730-1300 Washington, DC 20004 * Counsel of Record TABLE OF CONTENTS Page Appendix A (Eleventh Circuit opinion, filed July 31, aces ciara cbacativeennmseamabammpbieiies la Appendix B (order denying rehearing en banc, filed Ns i aia ier acialinc cia hae erasiaininenncidanentobes 34a Appendix C (order on petition for panel rehearing, Sh RETR e eae: SSeS ne 36a Appendix D (FCC Decision, rel. Mar. 18, 2006) ........ 38a Appendix E (Peck v. Cingular Wireless, LLC, W.D. Washington, filed Oct. 24, 2006) ......... es seseeeseees 14la Appendix F (Peck v. Cingular Wireless, LLC, W.D. Washington, filed Nov. 30, 2006) ...........cccesseseees 149a Appendix G (Hesse v. Sprint Spectrum, L.P., W.D. Washington, filed Jan. 18, 2007) ......... ec eeeeeeeeees lS5la Appendix H (letter from Indiana State Utility Commission, dated Aug. 1, 2003) 00... eee eeeeeeeee 159a yo BE Bet adl & 5» | SERN nn nnn l6la la APPENDIX A UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT Nos. 05-11682 AND 05-12601 NATIONAL ASSOCIATION OF STATE UTILITY CONSUMER ADVOCATES, PETITIONER NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS, INTERVENOR-PETITIONER V. FEDERAL COMMUNICATIONS COMMISSION, RESPONDENT AT&T CORPORATION, CINGULAR WIRELESS, INC.., LEAP WIRELESS INTERNATIONAL, INC., NEXTEL COMMUNICATIONS, INC., SPRINT CORPORATION, T-MOBILE USA, INC., VERIZON, CELLULAR TELECOMMUNICATIONS AND INTERNET ASSOCIATION, INTERVENORS-RESPONDENTS VERMONT PUBLIC SERVICE BOARD, PETITIONER Vv. FEDERAL COMMUNICATIONS COMMISSION, RESPONDENT July 31, 2006, Filed 2a Petitions for Review of Decisions of the Federal Communications Commission. Before: BLACK, PRYOR and COX, Circuit Judges. PRYOR, Circuit Judge. OPINION The key issue presented in this petition for review is whether the Federal Communications Commission exceeded its authority, under section 332(c)(3)(A) of the Communications Act of 1934, when it issued an order that preempted the states from requiring or prohibiting the use of line items in customer billing for cellular wireless services. 47 U.S.C. § 332(c)(3)(A); see Truth-in-Billing and Billing Format, Nat'l Ass'n of State Util. Consumer Advocates’ Petition for Declaratory Ruling Regarding Truth-in-Billing, 20 F.C.C.R. 6448 (2005) [hereinafter “Second Report and Order” or “the Order”]. The Commission argues, on the one hand, that the regulation of line-item billing involves “rates charged” for cellular wireless services, which is the exclusive province of federal regulation. 47 U.S.C. § 332(c)(3)(A). Representatives of state interests argue, on the other hand, that the regulation of line-item billing involves “other terms and conditions” of cellular wireless services, which are regulable by the states. /d. This appeal also addresses three threshold issues: (1) whether, under the Hobbs Act, 28 U.S.C. § 2344, this Court lacks subject matter jurisdiction to review the petition filed by the Vermont Public Service Board (the Vermont Board); (2) whether the Nationa! Association of Regulatory Utility Commissioners (the State Utility Regulators) may participate as an intervenor: and (3) whether the National Association of 3a State Utility Consumer Advocates (the State Consumer Advocates) has standing to petition for review. As to the threshold issues, we dismiss the petition of the Vermont Board because it is not a “party aggrieved” by the Second Report and Order, but we allow the State Utility Regulators to continue as an intervenor and deny the motion to dismiss the petition of the State Consumer Advocates, which have standing as a consumer of wireless service. On the key issue, we grant the petitions for review because we conclude that the Commission exceeded its authority when it preempted the states from requiring or prohibiting the use of line items. The scope of federal authority to regulate “rates” or “entry” does not include the presentation of line items on cellular wireless bills. 47 U.S.C. . § 332(c)(3)(A). This billing practice is a matter of “other terms and conditions” that Congress intended to be regulable by the states. /d. I. BACKGROUND The State Consumer Advocates filed a petition with the Commission that requested a prohibition on the use of line items by cellular wireless carriers unless the line item is mandated by state or federal law. In response to this petition, the Commission issued an order that amended the Truth-in- Billing Rules of the Commission, preempted the states from requiring or prohibiting the use of line items in customer billing for wireless service, and proposed further rulemaking to preempt the states from the regulation of billing practices of wireless service providers. The State Consumer Advocates and the Vermont Board petition for review of the Order by the Commission. Sprint Nextel Corp. and Cingular Wireless LLC (collectively, the Carriers) intervene in support of the Commission, and the State Utility Regulators intervene in support of the Vermont Board. To explain the context of this appeal, we address three 4a preliminary matters. We first describe the enactment and amendment of the Communications Act and _ the promulgation of the Truth-in-Billing Rules. We next discuss the petition for declaratory ruling filed by the State Consumer Advocates and the Second Report and Order issued by the Commission in response to that petition. We then discuss motions filed by the Carriers and the Commission to dismiss the petitions of the Vermont Board and the State Consumer Advocates. A. The Communications Act of 1934 and the Truth-in-Billing Rules The Communications Act of 1934, 47 U.S.C. §§ 151 to 615b, was enacted “for the purpose of regulating interstate and foreign commerce in communication by wire and radio.” Id. § 151. The Act vested the Commission with the authority to regulate radio frequencies used in wireless services. Id. § 303. In 1993, Congress amended the Communications Act to create a new regulatory class called “commercial mobile radio service,’ which is “any mobile service [] that is provided for profit and makes interconnected service available [] to the public or [] to such classes of eligible users as to be effectively available to a substantial portion of the public.” /d. § 332(d)(1). The amendment granted the federal government exclusive authority to regulate the “rates charged” and “entry” of wireless carriers. See id. § 332(c)(3)(A). Although the states were prohibited from regulating “rates” or “entry,” the amendment provided that the states could continue to regulate “other terms and conditions” of wireless service. /d. § 332(c)(3)(A). In May 1999, in response to a growing concern with consumer fraud in the provision of telecommunications services. the Commissicn promulgated the Truth-in-Billing Rules. /n the Matter of Truth-in-Billing and Billing Format. 14 F.C.C.R. 7492 (1999) [hereinafter “First Report and 5a Order”. The stated purpose of the Rules was “to ensure that consumers are provided with basic information they need to make informed choices in a competitive telecommunications marketplace, while at the same time protecting themselves from unscrupulous competitors.” /d. at 7493-94. The Truth- in-Billing Rules required consumer telephone bills to (1) “be clearly organized, clearly identify the service provider, and highlight any new providers”; (2) “contain full and non- misleading descriptions of charges”; and (3) “contain clear and conspicuous disclosure of any information the consumer may need to make inquiries about, or contest charges, on the bill.” Id. at 7496 5. The Commission exempted wireless service providers from severai of these rules, id. at 7501-02 44 13-19, but the Cermmissicn required, among other things, “(1) that the name mf the service provider associated with each charge be clearly identified on the bill: and (2) that each bill should prominently display a telephone number that customers may call free-of-charge in order to inquire or dispute any charge comfained on the bill.” Jd. at 7502 § 15. The Commission soughi further comment on whether the Truth-in-Billing Rules should be applied to wireless service providers. /d. at 75354 68. EB. The State Consumer Advocates and the Second Report and Order The State Consumer Advocates “are state agencies designated by laws of their respective jurisdictions to represent the interests of utility consumers before regulatory agencies and in the courts.” The State Consumer Advocates petitioned the Commission for a declaratory ruling that prohibited wireless telecommunications carners “from imposing any separate line item or surcharge on a customer's bill that was not mandxed or authorized by federal. state or local law.” Second Repos and Order, 20 F.C.C.R. at 6449 4 6a 1. A line item is “a discrete charge identified separately on an end user’s bill.” Jd at 6462 § 30. According to the State Consumer Advocates, the use of line items that were not required by federal or state law violated the Truth-in-Billing Rules and the Communications Act because these line items “do not allow customers to accurately assess what they are being billed for or permit customers to determine whether the amounts charged conform to the price charged for service.” Id. at 6454 § 13 n.32. In response to the request for a declaratory ruling filed by the State Consumer Advocates, the Commission issued a notice that solicited comments regarding the petition. The notice stated that the Commission “seeks comment,” about whether telecommunications carriers should be prohibited from “imposing monthly line-item charges, surcharges or other fees on customers bills unless such charges have been expressly mandated by a regulated agency.” Nat'l Ass’n of State Util. Consumer Advocates’ Petition for Declaratory Ruling Regarding Truth-in-Billing, 19 F.C.C.R. 9541 (2004) (public notice). Comments were submitted by wireless carriers. the State Utility Regulators, the State Consumer Advocates. and individual consumers. Many consumers submitted brief comments that expressed confusion and dissatisfaction with their monthly telephone bills. After the public comment period closed, during the so- called “permit but disclose” proceedings, see 47 C.F.R. § 1.1206, the Commission received ex parte presentations and letters. On March 3, 2005, the State Utility Regulators provided notice of oral and written ex parte communications with the members of the Commission. Also on March 3, the Vermont Board sent an ex parte letter addressed to the five members of the Commission. On March 4, the permit-but- disclose period closed, and communications with the Commission were no longer permitted. See id. § 1.1203. On that date. the Vermont Board electronically filed notice of the Ta ex parte letter it had sent on March 3, but the Clerk of the Commission excluded the letter because it “was received during the Sunshine Agenda period, and is associated with, but not made part of the record.” On March 18, 2005, the Commission issued its conclusions in an Order that addressed three issues. First, in a “Second Report and Order,” the Commission amended or clarified the Truth-in-Billing Rules and applied these rules to wireless service providers. Second Report and Order, 20 F.C.C.R. at 6454-58 9§ 14-20. Second, in a “Declaratory Ruling,” the Commission denied the petition filed by the State Consumer Advocates and preempted the states from requiring or prohibiting the use of line items on monthly telephone bills by wireless service providers. /d. at 6458- 6467 *§ 21-36. Third, the Commission requested a “Second Further Notice of Proposed Rulemaking” that proposed to adopt new rules in the billing practices of wireless service providers. /d. at 6467-6478 4] 37-57. As to the first issue, the Commission reviewed the history of the Truth-in-Billing Rules and concluded “that [wireless service providers] should no longer be exempt from [the] requirement that billing descriptions be brief, clear, non- misleading and in plain language.” Jd. at 6456 4 16; see also 47 C.F.R. § 64.2401(b). The Commission found that “the increasing number of consumer complaints to this Commission and state regulatory agencies regarding wireless billing practices provides empirical evidence that application of the truth-in-billing rules to [wireless service providers] is necessary and in the public interest.” Second Report and Order, 20 F.C.C.R. at 6457 §€ 18. The Commission “emphasize[d]” that the application of the truth-in-billing rules to wireless service providers did not “limit[] states” authority to enforce their own generally applicable consumer protection laws. to the extent such laws do not require or prohibit use of line items.” /d. at 6458 4 20. 8a As to the second issue, the Commission denied the petition filed by the State Consumer Advocates because “nothing in the 7ruth-in-Billing Order prohibits carriers from using non-misleading line items.” /d. at 6458-59 4 23. Although the Commission found that consumers and state regulatory agencies were confused about the use of line items, the Commission “recognize[d] that overbroad state regulations . . . may frustrate our federal rules and the federal objective of minimizing regulatory burdens on the competitive [wireless service provider] industry.” /d at 6459-60 § 24. The Commission stated that “it is permissible for carriers to recover [regulatory] costs so long as they do so in a manner that complies” with the Truth-in-Billing Rules, but “it is a misleading practice for carriers to state or imply that a charge is required by the government when it is the carriers’ business decision as to whether and how much of such costs they choose to recover directly from consumers through a separate line item charge.” /d. at 6460-61 {| 26— 27. The Commission also concluded that “state regulations requiring or prohibiting the use of line items . . . constitute rate regulation and . . . are preempted under section 332(c\(3)(A)” of the Act. Jd. at 6462 § 30. The Commission explained that “rates.” included “rate levels,” “rate structures.” and “rate elements.” /d. at 6462-63 4 30. After describing line items as a “rate element,” the Commission reasoned that the prohibition or requirement of line items “directly affect[s] the manner in which the [wireless service provider] structures its rates.” /d. at 6463 4¥ 30-31. The Commission distinguished the ability of the states to mandate or prohibit line items from the ability to impose taxes, state universal service support charges, and other disclosure laws, which the Commission left undisturbed. /d. at 6464-65 ©€ 32-33. The Commission explained that “requiring or prohibiting the use of line items” has a “direct 9a effect” on the ability of wireless service providers to structure rates, but other state regulations have an “indirect effect . . . on a company’s behavior.” /d. at 6466 § 34 (quoting Wireless Consumers Alliance Order, 15 F.C.C.R. 17,021, 17,034 4 23 (2000}). The Commission stated that it “may not always be clear” whether line item regulation is preempted by section 332(c)(3)(A), and it was necessary to look to the “substance, {and] not merely the form of the line item.” /d. The Commission premised its decision to preempt state regulation on “the pro-competitive, deregulatory framework for [wireless service providers] prescribed by Congress.” /d. at 6466 § 35. The Commission stated, “Congress has directed that the rate relationships between [wireless service] providers and their customers be governed ‘by the mechanisms of the competitive marketplace.’” /d. (quoting Wireless Consumers Alliance Order, 15 F.C.C.R. at 17,032- 33 4§ 20-21)). Because wireless service providers “have come to structure their offerings on a national or regional basis,” state laws that prohibit or require the use of line items would result in a “patchwork of inconsistent rules” that “conflict[s] with federal policies.” /d. As to the third issue, the Commission solicited comments about “the role of states in regulating billing” and “other truth-in-billing issues.” /d. at 6468 {| 37. The Commission sought comments about whether other state regulation of billing practices was preempted by the Communications Act. Id. at 6474 § 50. The Commission explained that “limiting state regulation of . . . billing practices [by wireless service providers] . . . will eliminate the inconsistent state regulation that is spreading across the country, making nationwide service more expensive for carriers to provide and raising the cost of service to consumers.” Jd. at 6475 4 52. The State Consumer Advocates and the Vermont Board filed petitions for review of the Order. The State Utility 10a Regulators intervened in support of the Vermont Board. Sprint Nextel and Cingular Wireless, public corporations that provide cellular wireless services, intervened in support of the Commission. C. Motions Filed After the Petition for Review After the State Consumer Advocates and the Vermont Board petitioned for review of the Order, the Commission moved to dismiss both the petitions of the State Consumer Advocates and the Vermont Board. The Commission argued that the State Consumer Advocates lacked standing to petition for review on behalf of its members because the State Consumer Advocates failed to establish that “at least one of its members meets the minimal Article III prerequisites for standing to sue.” The Commission contended that we lacked subject matter jurisdiction to consider the petition cf the Vermont Board because it was not a party to the agency proceedings under the Hobbs Act. 28 U.S.C. § 2344. The Carriers supported the motion to dismiss of the Commission. The Vermont Board responded that it was a “party aggrieved” because it had participated in the proceedings, 28 U.S.C. § 2344, or alternatively, was a party because the Commission “expressly subjected the [the Vermont Board] to its Order.” First. the Vermont Board argued that it had participated in the Commission proceedings because it both submitted comments in the first Truth-in-Billing Order, which had the same agency docket number, and sent an ex parte letter to the Commissioners on March 3 that was deemed untimely by the Clerk of the Commission. The Vermont Board moved to correct the administrative record by including the ex parte letter. Second, the Vermont Board argued that even if it had failed to participate in the agency proceedings. it could petition for review because it was “directly bound” by the Order. The State Consumer Advocates responded that their lla association. has standing to challenge the Order either on behalf of its members or as a consumer of wireless service. The State Consumer Advocates argued that they have associational standing because the members of the State Consumer Advocates are charged by state sidtutes “to advocate on behalf of consumers.” In support of this argument, the State Consumer Advocates submitted affidavits from three individual members of the State Consumer Advocates who are consumers of wireless telecommunications service. The affidavits stated that the preemption Order “will make it difficult to enact... new state laws . . . that are necessary to protect wireless customers from unreasonable, misleading, deceptive or illegal line item fees and charges.” The State Consumer Advocates attached the affidavit of John Perkins, the President of the State Consumer Advocates, who testified, “NASUCA is itself a consumer of telephone services . . . . All of the monthly bills for service received by [the State Consumer Advocates] contain line items.” In response to these arguments, the Commission moved to withdraw the motion to dismiss the State Consumer Advocates, but continued to move for dismissal of the Vermont Board. The Carriers then submitted their own motion to dismiss the petiticn of the State Consumer Advocates on the same grounds the Commission had argued in its withdrawn motion. We granted the motion by the Coramission to withdraw its motion to dismiss the petition of the State Consumer Advocates, and we ordered that the motions to dismiss the petitions of the State Consumer Advocates and the Vermont Board be carried with the case. The motion of the Vermont Board to correct the administrative record was also carried with the case. Il. STANDARD OF REVIEW We review our subject matter jurisdiction de novo. ]2a Williams v. Best Buy Co., 269 F.3d 1316, 1319 (11th Cir. 2001). We review whether a party has standing to challenge an order de novo. Bochese v. Town of Ponce Inlet, 405 F.3d 964, 975 (11th Cir.), cert. denied _ US. __, 126 S. Ct. 377 (2005). We review the authority of the Commission to regulate under the Communications Act based on the standard enunciated in Chevron U.S.A. v. Natural Resource Defense Council, 467 U.S. 837, 842-43, 104 S. Ct. 2778, 2781 (1984). Iii. DISCUSSION Before we address the petitions for review, we must consider issues about our jurisdiction. We first address whether the Vermont Board is a “party aggrieved” by the Order under the Hobbs Act. 27 U.S.C. § 2344. Because we conclude that the Vermont Board is not a party aggrieved, we next consider whether the State Utility Regulators may continue as intervenors. We then address whether the State Consumer Advocates have standing to petition for review of the Order. After we conclude that the State Consumer Advocates and the State Utility Regulators have standing, we then turn to the merits of the petitions for review: whether section 322(c)(3)(A) expressly preempted the ability of the states to require or prohibit the use of line items by wireless service providers. A. The Yermont Board Is Not a “Party Aggrieved” Under the Hobbs Act. The Communications Act provides, “Any proceeding to enjoin. set aside. annul, or suspend any order of the [Commission] . . . shall be brought as provided by and in the manner prescribed in” the Hobbs Act. 47 U.S.C. § 407(a). The Hobbs Act vests exclusive jurisdiction in the courts of appeals to “determine the validity of [] all final orders of the {Commission].” 28 U.S.C. § 2342. “Any party aggrieved by the final order may . . . file a petition to review the order . . . 13a .” Id. § 2344. “A ‘party aggrieved’ is one who participated in the agency proceeding.” Ala. Power Co. v. FCC, 311 F.3d 1357, 1366 (11th Cir. 2002). A nonparty to the proceeding of the Commission must file a petition for reconsideration as a condition precedent to judicial review of the Order. 47 U.S.C. § 40S(a). The Vermont Board presents three arguments that it is a “party aggrieved” by the Order. 28 U.S.C. § 2344. First, the Vermont Board contends that, because it participated in the First Report and Order, which shares the same docket number as the Second Report and Order, it has participated in the proceedings. Second, the Vermont Board argues that it is a “party aggrieved” because it submitted an ex parte letter to the members of the Commission, which the Vermont Board alleges was erroneously excluded from the administrative record. As part of this argument, the Vermont Board moves to correct the administrative record by including the ex parte communication. Third, the Vermont Board argues that even if it did not participate in the proceedings, it may challenge the Order because it is subject to the Order and its arguments challenge the authority of the Commission. We address each argument in turn and conclude that each argument fails. 1. Participation in the First Report and Order Does Not Render the Vermont Board a “Party Aggrieved.” The Vermont Board argues that the comments it submitted in the proceedings for the First Report and Order confer party status on it to petition for review. Because the docket number for the First Report and Order. Docket No. 98-170. is the same as the Second Report and Order, the Vermont Board argues that it is a “party aggrieved” under the Hobbs Act. We disagree. The reliance by the Vermont Board on the docket number to argue that it is a “party aggrieved” by the Second Report l4a and Order is misplaced. Under the Hobbs Act, “[a]ny party aggrieved by the final order” may petition for review. 28 U.S.C. § 2344. Although the First and Second Orders and Report share the same docket number, the Hobbs Act confers party status on those who participated in proceedings that led to the Order under review. See Ala. Power Co., 311 F.3d at 1366. The Vermont Board is not a “party aggrieved by the final order” because the Vermont Board petitions for review of the Second Report and Order. 28 U.S.C. § 2344. Regardless of the docket number assigned to the preeeeding. the Vermont Board had to be a participant in the proceedings that led to the Second Report and Order to be a “party aggrieved.” Jd. The comments that the Vermont Board submitted in the proceedings that led to the First Report and Order are immaterial: those comments make the Vermont Board a “party aggrieved by” the First Report and Order, but they do not make the Vermont Board a “party aggrieved by” the Second Report and Order. Jd.; see Simmons v. ICC, 716 F.2d 40, 45 (D.C. Cir. 1983) (stating that the petitioner was not a “party aggrieved” where the petitioner participated in a proceeding that was “procedurally and _ substantially independent” from the challenged order). 2. The Ex Parte Letter Submitted by the Vermont Board Failed to Comply with Regulations Issued by the Commission. The Vermont Board also contends that it participated in the Commission proceeding because it submitted an ex parte letter that it asserts was erroneously excluded from the administrative record. The Commission did not include the letter in the administrative record because the Vermont Board electronically submitted notice of the letter during the “Sunshine” period when no communication was allowed with the Commissioners. See 47 C.F.R. 1.1203(a). The Vermont 15a Board moves to correct the administrative record by including the letter. We address the motion filed by the Vermont Board before we consider whether the ex parte letter is sufficient to confer the Vermont Board with party status. We have discretion to correct the administrative record to “supply any omission from the record or correct a misstatement.” Fed. R. App. P. 16(b). An administrative record consists of “the order sought to be reviewed or enforced, the findings or reports on which it is based, and the pleadings, evidence and proceedings before the agency.” Fed. R. App. P. 16(a). We may deny a motion to correct the record where, among other reasons, the proffered item does not fall within the definition of the record, see Deukmejian v. Nuclear Regulatory Comm'n, 751 F.2d 1287, 1324 (D.C. Cir. 1984), the proffered item is immaterial or incomplete, Ala. Tissue Ctr. of Univ. of Ala. v. Sullivan, 975 F.2d 373, 376 (7th Cir. 1992), or the agency did not have the opportunity to consider the evidence. see Altawil v. INS, 179 F.3d 791, 792 (9th Cir. 1999). The regulations of the Commission provide that ex parte presentations are allowed during the permit-but-disclose period of the agency proceeding. 47 C.F.R. § 1.1206(a). Ex parte presentations shall be included in the administrative record if the presentation includes a cover letter and “shall clearly identify the proceeding to which it relates, including the docket number, if any, shall indicate that two copies have been submitted to the Secretary, and must be labeled as an ex parte presentation.” 47 C.F.R. § 1.1206(b)(1). To be considered. ex parte communications must comply with these provisions. See id. § 1.1206(a). The Vermont Board concedes that its electronic submission on March 4 failed to include a cover letter to explain that it provided notice for the March 3 ex parte letter. l6a There was no way for the Commission to discern that the letter electronically filed on March 4 disclosed an ex parte communication that timely had been submitted to the five Commissioners. Because the electronic subinission failed to identify that it disclosed an ex parte letter submitted on March 3, it is not properly part of the record that the agency should have included. 47 C.F.R. § 1.1206(b)(1) (stating that the cover letter that provides notice “must be labeled as an ex parte presentation”); see Deukmejian, 751 F.2d at 1324 (“In discharging their obligation to monitor agency action, courts review a record compiled by the agency and containing its rationale and supporting findings . . . .”). The Commission followed its regulations when it excluded the ex parte letter from the administrative record. We deny the motion to supplement the record with the ex parte letter. “We must give substantial deference to an agency ’s interpretation of its own regulations,” Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512, 114 S. Ct. 2381, 1286 (1994), and the Commission was not “arbitrary and capricious” when it excluded the letter from the administrative record, 5 U.S.C. § 706(2)(A). The Vermont Board did not “participate in the proceedings” by submitting the letter. Ala. Power Co., 311 F.3d at 1366. 3. No Exception Exists to Allow the Vermont Board to Petition for Review of the Order. The Vermont Board alternatively argues that, even if it did not participate in the proceedings, it is a party entitled to petition for review of the Order for two reasons. First, the Vermont Board contends that it is a “party aggrieved” because it 1s subject to the Order. Second, the Vermont Board argues that “party status is not . . . required when the agency has acted bevond its authority.” The argument that the Vermont Board may petition for review because it is subject to the Order fails because the 17a Vermont Board misunderstands the scope of our jurisdiction. The Hobbs Act confers the courts of appeals with subject matter jurisdiction to review the orders of administrative agencies. “Since petitioners were never parties to the rulemaking proceedings, this court simply does not have jurisdiction over their claim.” Gage v. U.S. Atomic Energy Comm'n, 479 F.2d 1214, 1218 (D.C. Cir. 1973). The cases cited by the Vermont Board are inapposite because they involve the extension of personal jurisdiction, Gilchrist v. Gen. Elec. Cap. Corp., 262 F.3d 295, 300-01 (4th Cir. 2001), R.M.S. Titanic, Inc. v. Haver, 171 F.3d 943, 955 (4th Cir. 1999), or the relaxation of prudential standing requirements, Devlin v. Scardalletti, 536 U.S. 1, 7-8, 122 S. Ct. 2005, 2009-10 (2002). These cases do not allow a court to expand the statutory grant of subject matter jurisdiction to review an agency decision. The argument that a petitioner need not be a party when the petitioner challenges the authority of an administrative agency runs contrary to our precedent. We have held that “[a] ‘party aggrieved” is one who participated in the agency proceeding.” Ala. Power Co., 311 F.3d at 1366. In support of its argument, the Vermont Board cites two decisions from the Fifth Circuit, see Wales Transp., Inc. v. ICC, 728 F.2d 774, 776 n.1 (Sth Cir. 1984); Am. Trucking Ass’ns, Inc. v. ICC, 673 F.2d 82, 84 n.4 (Sth Cir. 1982), but we are bound by our decision that a petitioner must be a “party aggrieved” without regard to the type of challenge the petitioner seeks to bring. Ala. Power Co., 311 F.3d at 1366; cf Baros v. Tex. Mexican Ry. Co., 400 F.3d 228, 238 n.24 (Sth Cir. 2005) (stating that the exception to party status discussed in American Trucking Ass'ns has been “squarely rejected by some of our sister circuits’): see also Erie-Niagara Rail Steering Comm. v. Surface Transp. Bd., 167 F.3d 111, 112 (2d Cir. 1999) (concluding that the discussion in American Trucking Ass ‘ns is dictum and Wales Transportation erroneously relied on 18a American Trucking Ass’ns). The Vermont Board is not a “party aggrieved” entitled to petition for review of the Order by the Commission. We grant the motion by the Commission to dismiss the petition of the Vermont Board. Neither the participation of the Vermont Board in the First Report and Order nor the ex parte letter that was procedurally deficient confer party status on the Vermont Board, and no exception excuses the failure of the Vermont Board to participate in the proceedings of the — Commission. We lack jurisdiction to consider the petition filed by the Vermont Board. B. The State Utility Regulators May Proceed As an Intervenor. Although we dismiss the Vermont Board, the State Utility Regulators may continue as an intervenor. “Intervention . . . cannot create jurisdiction if none existed before.” 7C Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1917, at 457-58 (2d ed. 1986), but we have discretion to “treat intervention as a separate action, especially when the intervenor has an independent basis for jurisdiction,” Atkins v. State Bd. of Educ. of N.C., 418 F.2d 874, 875 (4th Cir. 1969) (per curiam); see 7C Wright, Miller & Kane, Federal Practice and Procedure § 1917, at 458-59; see also Fuller v. Volk, 351 F.2d 323, 328-29 (3d Cir. 1965). Because the State Utility Regulators participated in the proceedings by submitting comments and notice of ex parte communications, the State Utility Regulators have independently established their status as “party aggrieved.” 28 U.S.C. § 2344. We exercise our discretion to allow the State Utility Regulators to continue in the petition for review. C. The State Consumer Advocates Have Standing to Petition for Review. The Constitution of the United States limits the subject matter jurisdiction of federal courts to “Cases” and 19a “Controversies.” U.S. Const., Art. IIIf § 2. “[T]he core component of standing is an essential and unchanging part of the case-or-controversy requirement of Article III.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S. Ct. 2130, 2136 (1992). The minimum requirements for constitutional standing are “injury in fact,” “a causal connection between the injury and the conduct complained of,” and that the “injury will be redressed by a favorable decision.” Jd. at 560- 61, 112 S. Ct. at 2136. On a motion to dismiss, “general factual allegations of injury resulting from the defendant’s conduct may suffice.” Jd. at 561, 112 S. Ct. at 2137. The Carriers move to dismiss the State Consumer Advocates for failure to establish associational standing. The Carriers contend that the State Consumer Advocates cannot establish that at least one of their members has suffered particularized injury and only the member agencies of the State Consumer Advocates have the authority to petition for review. The State Consumer Advocates argue that we need not address this argument because they have standing on an alternative ground. The State Consumer Advocates argue that they need not rely on associational] standing because they are a consumer of wireless telecommunications services that receives bills. The affidavit submitted by the State Consumer Advocates from the President of their organization stated, “NASUCA is itself a consumer of telephone services, both wireline and wireless. It presently has wireline service with Verizon and AT&T and wireless service with Verizon Wireless. All of the monthly bills for service received by NASUCA contain line items.” The State Consumer Advocates have established “general factual allegations of injury resulting from the defendant's conduct.” Lujan, 504 U.S. at 561, 112 S. Ct. at 2136. The State Consumer Advocates contend that, because the preemption of the Commission affects the ability of the states 20a to regulate the disclosure of charges on consumer wireless bills, the Order adversely affects the interests of the State Consumer Advocates as a consumer of wireless service. The complaints of the State Consumer Advocates are redressable by granting the petition and vacating the Order of the Commission. That disposition would allow the states to require or prohibit the use of line items by wireless service providers, which the State Consumer Advocates contend would protect consumers from fraud. The Carriers argue that the State Consumer Advocates may not rely on their status as a consumer of wireless service as a basis for standing because the State Consumer Advocates “chose not to base [their] right to seek review on [their] own receipt of phone bills” in the petition for review. We disagree. When ruling on motions to dismiss for lack of standing, federal courts may consider affidavits and other factual materials in the record. See Lujan yv. Nat'l Wildlife Fed’n, 497 U.S. 871, 881. 110 S. Ct. 3177, 3185 (1990) (considering affidavits submitted in response to a motion for summary judgment to establish standing); FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 233, 110 S. Ct. 596, 609 (1990). overruled in part on other grounds by City of Littleton v. Z.J. Gifts D-4, LLC, 541 U.S. 774, 124 S. Ct. 2219 (2004) (“[S]tanding . . . must affirmatively appear in the record.” (internal quotations and citations omitted) (emphasis added)). Because the State Consumer Advocates have established standing to petition for review as a consumer of wireless service through the affidavit of their President. we deny the motion by the Carriers. We next turn to the merits of the petitions for review filed by the State Utility Regulators and the State Consumer Advocates. D. The Commission Exceeded Its Authority When It Preempted State Regulation of Line-Item Billing Under Section 332(c)(3){A). 2la “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof . . . shall be the supreme Law of the Land[,]... any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.” U.S. Const. Art VI. “The Supremacy Clause of Art. VI of the Constitution provides Congress with the power to pre-empt state law.” La. Pub. Serv. Comm'n v. FCC, 476 U.S. 355, 368, 106 S. Ct. 1890, 1898 (1986). “[A] federal agency acting within the scope of its congressionally delegated authority may pre-empt state regulation.” Jd. at 369, 106 S. Ct. at 1887-88. “Where Congress has directed an administrator to exercise his discretion, his judgments are subject to judicial review only to determine whether he has exceeded his statutory authority or acted arbitrarily.” Fid. Fed. Sav. & Loan v. De la Cuesta, 458 U.S. 141, 153-54, 102 S. Ct. 3014, 3022-23 (1982) (quoting United States v. Shimer, 367 U.S. 374, 381-82, 81 S. Ct. 1554, 1560 (1960)). Where a federal agency preempts state law, “the inquiry becomes whether the federal agency has properly exercised its own delegaied authority rather than simply whether Congress has properly exercised the legislative power.” New York v. FCC, 486 U.S. 57, 68, 108 $. Ct. 1637, 1642 (1988). “Federal regulations have no less pre-emptive effect than federal statutes.” Fid Fed. Sav. & Loan. 458 U.S. at 153, 102 S. Ct. at 3022. Federal law may preempt state law in three ways. First, express “[p|re-emption occurs when Congress, in enacting a federal statute. expresses a clear intent to pre-empt state law.” La. Pub. Serv. Comm'n, 476 U.S. at 368, 106 S. Ct. at 1898. Second. conflict preemption occurs “when there is outright or actual conflict between federal and state law.” /d. Third, field preemption occurs “where compliance with both federal and state law is in effect physically impossible.” Jd. “[T]he categories of preemption are not rigidly distinct . . . field pre- emption may be understood as a species of conflict pre- 22a emption.” Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363, 373, 120 S. Ct. 2288, 2294 (2000); see Caleb Nelson, Preemption, 86 Va. L. Rev. 225, 262 (2000). oes [T]he purpose of Congress is the ultimate touchstone’ of pre-emption analysis.” Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516, 112 S. Ct. 2608, 2617 (1992) (plurality opinion) (quoting Malone v. White Motor Corp., 435 U.S. 497, 504, 98 S. Ct. 1185 (1978)). “[A]ny understanding of the scope of a pre-emption statute must rest primarily on a fair understanding of congressional purpose.” Medtronic, Inc. v. Lohr, 518 U.S. 470, 485-86, 116 S. Ct. 2240, 2250 (1996). “Congress’ intent may be ‘explicitly stated in the statute’s language or implicitly contained in its structure and purpose.’” Jd. (quoting Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S. Ct. 1305 (1977)). Courts interpret the text of the statute and apply traditional cannons of statutory construction to discern the intent of Congress. See MCI Telecomms. Corp. v. Am. Tel. & Tel. Co., 512 U.S. 218, 229, 114 S. Ct. 2223, 2231 (1994); see, eg. La. Pub. Serv. Comm'n, 476 U.S. at 369, 106 S. Ct. at 1899. “When we consider issues that arise under the Supremacy Clause . . . , we start with the assumption that the historic police powers of the states are not superseded by federal law unless preemption is the clear and manifest purpose of Congress.” Cliff v. Payco Gen. Am. Credits, Inc., 363 F.3d 1113, 1122 (11th Cir. 2004). “Although the Constitution makes a few of the federal government’s powers exclusive, the states retain concurrent authority over most of the areas in which the federal government can act.” Nelson, supra, at 225. We accordingly presume that “Congress does not cavalierly pre-empt state[]law.” Medtronic, Inc., 518 U.S. at 485, 116 S. Ct. at 2250. “[FJederal regulation of a field of commerce should not be deemed preemptive of state regulatory power in the absence of persuasive reasons— either that the nature of the regulated subject matter permits 23a no other conclusion, or that the Congress has unmistakably so ordained.” Fla. Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142, 83 S. Ct. 1210, 1217 (1963). Although the presumption against preemption cannot trump our review of the Order under Chevron, this presumption guides our understanding of the statutory language that preserves the power of the States to regulate “other terms and conditions.” See Smiley v. Citibank, N.A., 517 U.S. 735, 743-44, 116 S. Ct. at 1730, 1735 (1996). We apply these principles to determine whether Congress granted the Commission authority to preempt the state regulation of line item billing. In the Second Report and Order, the Commission preempted state regulation of line-item billing based on the express language of the Communications Act. See 20 F.C.C.R. at 6462-63 § 30, 6466 § 35. The Commission concluded that the language of section 332(c)(3)(A) of the Communications Act “‘prohibit[s] states from prescribing, setting or fixing rates’ of wireless service providers.” /d. at 6462 § 30 (quoting Pittencrief Commc'ns, Inc., 13 F.C.C.R. 1735, 1745 (1997)). The Commission explained that “le|fforts by individual states to regulate [wireless service providers’] rates through line item requirements . . . would be inconsistent with the federal policy of a uniform, national and deregulatory framework” of the Communications Act. /d. at 6467 § 35. “When a court reviews an agency’s construction of the statute which it administers, it is confronted with two questions.” Chevron U.S.A., 467 U.S. at 842-43, 104 S. Ct. at 2781. First, we consider “whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear... . the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.” /d. To determine if “Congress has directly spoken to the precise question at issue.” id, courts interpret the language of the statute and apply traditional cannons of 24a statutory construction, see MC] Telecomms. Corp., 512 U.S. at 229, 114 S. Ct. at 2231. “The construction put on a statute by the agency charged with administering it is entitled to deference by the courts, and ordinarily that construction will be affirmed if it has a reasonable basis in law{, b]ut the courts are the final authorities on issues of statutory construction.” SEC v. Sloan, 436 U.S. 103, 118, 98 S. Ct. 1701, 1712 (1978) (internal citations and quotations omitted); see also Chevron U.S.A., 467 U.S. at 842-43, 104 S. Ct. at 2781-82. Second, “if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.” Chevron U.S.A., 437 U.S. at 843, 104 S. Ct. at 2782 (emphasis added). To determine whether a term within a statute is ambiguous, we consider the context in which the term is used. See MCI Telecomms. Corp., 512 U.S. at 226, 114 S. Ct. at 2229 (explaining that Chevron deference applied because “contextual indications” created ambiguity in the term “modify”). The interpretation of an ambiguous statute by an administrative agency is “given controlling weight unless [it is] arbitrary, capricious, or manifestly contrary to the statute.” Jd. at 843-44, 104 S. Ct. at 2782. “Unexplained inconsistency is . . . a reason for holding an interpretation to be an arbitrary and capricious change from agency practice.” Nar’) Cable & Telecomms. Ass’n v. Brand X Internet Servs... _ U.S. __, 125 S. Ct. 2688, 2699 (June 27, 2005). The Commission premised the preemption of state regulation of line item billing on the language of section 332(c)(3)(A). That: provision states that “no State or local government shall have any authority to regulate the entry of or the rates charged by any commercial mobile service, except that this paragraph shall not prohibit a State from regulating the other terms and conditions of commercial mobile services.” 47 U.S.C. § 332(c)(3 (A). The Commission 25a found that “Congress did not specifically define ‘rates,’ ‘entry, or other key terms in section 332(c)(3)(A),” but explained that “rate regulation extends to regulation of ‘rate levels and ‘rate structures’ for” wireless service providers. Second Report and Order, 20 F.C.C.R. at 6462-63 4 30 (citing Sw. Bell Mobile Sys., Inc., 14 F.C.C.R. 19,898, 19,906—07 €| 18~20(1999)). The Commission reasoned that the “type of state regulations in question reveals that many directly affect [wireless service providers’] rates and rate structures in a manner that amounts to rate regulation.” /d. at 6463 4 31. We disagree with this reasoning. The language of section 332(c)(3)(A) unambiguously preserved the ability of the States to regulate the use of line items in cellular wireless bills. Although the term “rates charged” is not defined in the Communications Act, the meaning of this term is clear in this context. A straightforward reading of the complementary phrases “regulate entry of or the rates charged” and “other terms and conditions,” 47 U.S.C. § 332(c)(3)(A). evidences the “clear and manifest purpose of Congress” to leave the regulation of line items to the states, Cliff, 363 F.3d at 1122. A “rate.” as defined by the Oxford English Dictionary, is “(t]he amount of a charge or payment . . . having relation to some other amount or basis of calculation.” Oxford English Dictionary (2d ed. 1989). Other dictionaries define a “rate” as “la]n amount paid or charged for a good or service,” Black's Law Dictionary 1268 (7th ed. 1999), or “a charge per unit of a public-service commodity.” Merriam-Webster Online Dictionary. available at www.mw.com/cgi-bin/dictionary (last visited June 27. 2006). “[A]s a basic rule of statutory interpretation. we read the statute using the normal meanings of its words.” Horton Homes, Inc. v. United States, 357 F.3d 1209, 1211 (11th Cir. 2004) (quoting Consol. Bank, N.A. v. Dep't of Treas. 118 F.3d 1461, 1463 (11th Cir. 1997)). “In the absence of an indication to the contrary. words in a statute 26a are assumed to bear their ‘ordinary, contemporary, common meaning.” Walters v. Metro. Ed. Enters., Inc., 519 U.S. 202, 207, 117 S. Ct. 660, 664 (1997) (quoting Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P ship, 507 U.S. 380, 388, 113 S. Ct. 1489, 1494 (1993)). The prohibition or requirement of a line item affects the presentation of the charge on the user’s bill, but it does not affect the amount that a user is charged for service. State regulations of line items regulate the billing practices of cellular wireless providers, not the charges that are imposed on the consumer. Because the presentation of line items on a bill is not a “charge or payment” for service, Oxford English Dictionary (2d ed. 1989), it is an “other term or condition” regulable by the states, 47 U.S.C. § 332(c)(3)(A). The Commission argues that the Second Report and Order is consistent with its previous decisions because the prohibition or requirement of line items “directly affect[s] [wireless service providers’] rates and rate structures in a manner that. amounts to rate regulation.” Second Report and Order, 20 F.C.C.R. at 6463 4 31. According to the Commission, section 332(c)(3)(A) prohibits the state regulation of “rate structures” and “rate levels.” /d. at 6462- 63 § 30. The Commission contends that state regulation of the use of line items “directly intrudes upon the carrier's ability to set rates and establish rate structures for [wireless] service.” This argument fails. In the Second Report and Order, the Commission failed to follow the common definition of “rates” employed in its previous decisions. The Commission has stated that “‘rate’ is defined in the dictionary as an ‘amount of payment or charge based on some other amount.’” Sw. Bell Mobile Sys., Inc., 14 F.C.C.R. at 19,901 © 19. The Commission has also ruled that the phrase “rates charged” “‘prohibit[s] states from prescribing, setting or fixing rates’ of wireless service 27a providers.” Cellular Telecomms. Indus. Ass'n v. FCC, 168 F.3d 1332, 1336 (D.C. Cir. 1999) (quoting Pittencrieff Commc'ns., Inc., 13 F.C.C.R. 1735, 1745 4 20 (1997)). Until now, the Commission has consistently applied the distinction between “rates” and “other terms and conditions” to interpret whether a regulation amounts to rate regulation under section 332(c)(3)(A). 47 U.S.C. § 322(c)(3)(A). The Commission has concluded that the states may not regulate the method by which wireless service providers calculate the length of a call because it affects “which services to charge for and how much to charge for these services.” Sw. Bell Mobile Sys., Inc., 14 F.C.C.R. at 19,898 § 1. Consistent with the distinction of “rates” and “other terms and conditions,” the Commission has permitted the states to require wireless service providers “to contribute to state universal service mechanisms.” Pittencrieff, 13 F.C.C.R. at 1741 4 13. A universal service mechanism is a charge imposed by state or federal law on providers of telephone service “to make communications services available to all Americans at affordable rates.” Cellular Telecomms. Indus. Ass'n, 168 F.3d at 1334. Even though universal service charges have an “impact on the rates charged” to consumers, the Commission concluded that “universal service contribution requirement is not, within the plain meaning of the statute, a rate or entry regulation.” Pittencrieff, 13 F.C.C.R. at 1742 49 15, 16. Both decisions by the Commission follow the definition of “rates” in the dictionary as a “charge or a payment.” The Commission, by contrast, has defined a line item on a bill as something for which “a consumer receives no tangible product.” First Report and Order, 14 F.C.C.R. at 7531 4 61. According to the definitions espoused by the Commission, a line item is not a rate because “line-item charges cannot be attributed to individual tangible articles of commerce,” id. at 7531 § 61, but “a ‘rate’ has no significance without the element of service for which it applies,” Sw. Bell Mobile Sys., 28a Inc., 14 F.C.C.R. at 19,901 § 19. The Commission asserts that the state regulation of line items affects “rate structures,” but these regulations do not require a carrier to recover nor prohibit a carrier from recovering a particular cost. These regulations pertain only to the presentation of that cost on customer bills. The Commission also failed adequately to explain its conclusion that a line item falls within the definition of “rates” because the use of line items has an alleged direct effect on rates. In the Second Report and Order, the Commission explained that “requiring or prohibiting the use of line items” has a “direct effect” on the ability of wireless service providers to structure rates, but other state regulations have an “indirect effect . . . on a company’s behavior.” Second Report and Order, 20 F.C.C.R. at 6466 § 34 (quoting Wireless Consumers Alliance Order, 15 F.C.C.R. 17,021, 17,034 § 23 (2000)). The Commission requested further comments because it “recognize[s] that the line between prohibited and permissible state regulations of line items may not always be clear.” /d. (internal quotations and citations omitted). The attempt by the Commission to distinguish the regulation of line items on cellular wireless bills from the imposition of universal service charges is unavailing. That the prohibition or requirement of a line item has some effect on the charge to the consumer does not necessarily place a regulation within the meaning of “rates” and outside the ambit of state regulation of “other terms and conditions.” The Commission argues that rate regulation includes the regulation of “rate structures” and “rate levels,” id. at 6463 4 31. but rate levels and rate structures are still components of “rates.” The inclusion of the specific components “rate levels” or “rate structures” within the general term “rates” does not magically expand the authority of the Commission beyond what the statutory language allows. 29a The Commission has disavowed the argument that a regulation with some effect on prices is per se rate regulation under section 322(c)(3)(A). The Commission, for example, has upheld state regulations that require wireless service providers to contribute to the state-wide universal service fund as an “other term or condition.” Pittencrieff, 13 F.C.C.R. at 1742 9§ 42-43, affd sub nom. Cellular Telecomms. Indus. Ass'n, 168 F.3d at 1332. The Commission, in Pittencrieff, expressly rejected the argument that the imposition of a universal service fee was rate regulation because it “impacts the rates that a [wireless service] provider charges its customers.” Jd. at 1745 4 20. The Commission stated, “The Commission has found the ‘rates charged by’ language to prohibit states from prescribing, setting, or fixing rates of [wireless service] providers. We have not found, however, that it preempts state authority over matters which may have an impact on the costs of doing business for a [wireless service] operator.” Jd. (footnotes omitted). “To equate state action that may increase the cost of doing business with rate regulation would .. . forbid nearly all forms of state regulation, a result at odds with the ‘other terms and conditions’ portion of the first sentence.” Celluiar Telecomms. imdus. Ass'n, 168 F.3d at 1336. aff'g Pittencrieff. 13 ¥.C.C.iR. 1735. If the imposition of a universal service charge has an “indirect” relationship with rates that places it withim the purview of “other terms and conditions.” then requiring or prohibiting the use of line items has an even more attenuated relationship with rates. We can discern no logical distinction between what the Commission terms a “direct effect” caused by the regulation of line items and the alleged “indirect effect” caused by the imposition of universal service charges. Second Report and Order, 20 F.C.C.R. at 6466 § 34. The Commission fails to explain why the imposition of universal service charges, which increases the amount a consumer is charged, is more 30a attenuated to the amount a consumer pays for service than the regulation of line items, which affects the presentation of matters on a bill. The Commission is unable to articulate a logical distinction between these two outcomes. The Commission also contends that the Second Report and Order “is consistent with prior Commission statements equating ‘line items’ with ‘rate elements.’” Second Report and Order, 20 F.C.C.R. at 6463 § 30 & n.83. In support of this argument, the Commission relies on its decision in Federal-State Joint Board of Universal Service, 17 F.C.C.R. 24,952 (2002). In that decision, the Commission ruled that incumbent local exchange carriers may “recover their federal universal service contributions costs through a separate line item” as long as carriers do not “include[] a mark-up above the relevant contribution factor.” /d. at 24,970 ¥ 31. This argument fails for at least two reasons. First, Federal-State Joint Board is inapposite because the authority of the Commission to regulate federal universal service contribution. derives from section 254(d) of the Communications Act, not section 332(c)(3)(A). The decision in Federal-State Joint Board does not govern whether the regulation of line items by the states is preempted under section 332(c)(3)(A). Compare 47 U.S.C. § 254(d) (granting the Commission authority to impose federal universal service charges), with id. § 332(c)(3)(A) (granting the Commission authority to regulate “entry” and “rates”). Second, although the Commission stated in Federal-State Joint Board that a federal universal service contribution is a “rate element” which may be recovered through a line item, id. at 24,979 § 53 n.133, the Commission did not equate the imposition of the universal service contribution with the presentation of the universal service contribution on the bill. Federal-State Joint Board does not equate “line items” with “rate elements.” In the Second Report and Order, the Commission also 3la misconstrued the legislative history of section 332(c)(3)(A). See Second Report and Order, 20 F.C.C.R. at 6464 4 32. The House Committee Report regarding section 332(c)(3)(A) explained that “other terms and conditions” of wireless service, which are regulated by the states, “include such matters as customer billing information and practices and billing disputes and other consumer protection matters.” H.R. Rep. No. 103-111, at 211 (1993), reprinted in 1993 U.S.C.C.A.N. 378, 588. Because “our sole concern is the intent of Congress . . . , it is necessary to look to the administrative and legislative background of the enactment.” United States v. Zacks, 375 U.S. 59, 62, 84 S. Ct. 178, 180 (1963). Contrary to the argument of the Commission, the legislative history shows that Congress intended to leave the authority to regulate line items with the states. The Commission dismisses this statement from the legislative history as unpersuasive because it “nowhere suggests that states may regulate rates in the guise of regulating billing practices.” The Commission explains that although “not all regulation relating to a carrier’s billing and its relationship with customers represents preempted ‘rate regulation,” state regulations that require or prohibit line items are regulation. Second Report and Order, 20 F.C.C.R. at 6464 © 33. The Commission counsels that we should look to the “substance. not merely the form” of the regulation to determine if it has a direct effect on rates. /d. at 6466 § 34 (quoting Wireless Consumers Alliance Order, 15 F.C.C.R. at 17,037 § 28). This argument is flawed for at least two reasons. First, the Second Report and Order belies the contention by the Commission that line items are not a “billing practice.” In the Order, the Commission expressly classifies the use of line items as a “billing practice.” /d. Second, although we agree that the “substance, not merely the form” of a regulation governs whether it is rate regulation, id, the Commission 32a does not articulate the “substance” that distinguishes whether a regulation of line items is a billing practice or rate regulation. The prohibition or requirement of the use of line items on wireless bills involves “billing information and practice,” not “rates.” The interpretation of the term “rates” urged by the Commission deprives the complementary phrase “other terms and conditions” of all meaning. 47 U.S.C. § 332(c)(3)(A). “It is a cardinal principle of statutory construction that a statute ought, upon the whole, to be so construed that, if it can be - prevented, no clause, sentence, or word shall be superfluous, void, or insignificant.” TRW Inc. v. Andrews, 534 U.S. 19, 31, 122 S. Ct. 441, 449 (2001). If the presentation of line items on consumer bills were a matter of “rates” and not an “other term[{] or condition||” of wireless service, then the Commission would be free to preempt virtually any form of state regulation of wireless service, including laws regarding disclosure and consumer protection. 47 USC. § 332(c\(3)(A). Under the interpretation of the Commission, even powers historically retained by the states, such as the imposition of state taxes, would be preempted so long as they impact “how carriers recover [the] costs of doing business.” Cf Dows v. City of Chicago, 78 U.S. (11 Wall.) 108, 110 (1871) (“{T]he modes adopted to enforce the taxes levied [by the states] should be interfered with as little as possible.”). The failure of the Commission to delineate the proper scope of rate regulation allows the Commission indefinitely to expand its authority without regard to the mandate by Congress that “other terms and conditions” remain the realm of state regulation. 47 U.S.C. § 332(c)(3)(A). The interpretation by the Commission that the prohibition or requirement of line items is expressly preempted by the language of section 332(c)(3)(A) is not supported by the common definition of “rates.” A “rate.” as defined in the dictionary and previous decisions by the Commission, is 33a “(t]he amount of a charge or payment.” Oxford English Dictionary (2d ed. 1989); see Sw. Bell Mobile Sys., Inc., 14 F.C.C.R. at 19,901 4 19. Because the regulation of line-item billing is not rate regulation, the express language of section 332(c)(3)(A) of the Communications Act does not preempt state regulations that require or prohibit the use of line items on cellular wireless bills. IV. CONCLUSION We GRANT the motion to dismiss the petition of the Vermont Board for lack of subject matter jurisdiction. We DENY the motion by the Vermont Board to correct the administrative record. We also DENY the: motion by the Carriers to dismiss the petition of the State Consumer Advocates for lack of standing. Because the Communications Act allows the states to regulate line item billing for wireless services, we GRANT the petitions for review filed by the State Consumer Advocates and the State Utility Regulators and VACATE the Second Report and Order. 34a APPENDIX B UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT Nos. 05-11682 AND 05-12601 NATIONAL ASSOCIATION OF STATE UTILITY CONSUMER ADVOCATES, PETITIONER, NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS, INTERVENTOR-PETITIONER, ¥, FEDERAL COMMUNICATIONS COMMISSION, RESPONDENT, AT&T CORPORATION, CINGULAR WIRELESS, INC., LEAP WIRELESS INTERNATIONAL, INC., NEXTEL COMMUNICATIONS, INC., SPRINT CORPORATION, T-MOBILE USA, INC., VERIZON, CELLULAR TELECOMMUNICATIONS AND INTERNET ASSOCIATION, INTERVENORS-RESPONDENTS VERMONT PUBLIC SERVICE BOARD. PETITIONER V. FEDERAL COMMUNICATIONS COMMISSION, RESPONDENT. Nov. 29, 2006, Filed 1th Cir. 19, F.2d ___). (Opinion 35a On Petition for Rehearing En Banc. Petitions for Review of Decisions of the Federal Communications Commission. Before: BLACK, PRYOR and COX, Circuit Judges. PER CURIAM: No Judge in regular active service on the Court having requested that the Court be polled on rehearing en banc (Rule 35, Federal Rules of Appellate Procedure), the Petitions for Rehearing in En Banc are denied. ENTERED FOR THE COURT: eo “= UNITED STATESCIRCUITAUDGE / 36a APPENDIX C UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT No. 05-11682 NATIONAL ASSOCIATION OF STATE UTILITY CONSUMER ADVOCATES, PETITIONER. NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS, INTERVENOR-PETITIONER. V. FEDERAL COMMUNICATIONS COMMISSION, RESPONDENT, AT&T CORPORATION, CINGULAR WIRELESS, INC., LEAP WIRELESS INTERNATIONAL, INC., NEXTEL COMMUNICATIONS, INC., SPRINT CORPORATION, T-MOBILE USA, INC.. VERIZON, CELLULAR TELECOMMUNICATIONS AND INTERNET ASSOCIATION, INTER VENORS-RESPONDENTS Oct. 3, 2006. Filed On Petitions for Panel Rehearing. Petition for Review of a Decision of the Federal Communications Commission. 37a Before BLACK, PRYOR and COX, Circuit Judges. PER CURIAM: Upon consideration of the petitions for panel rehearing filed by the Federal Communications Commission and the Intervenors-Respondents, the opinion filed in this case on July 31, 2006, and published at 457 F.3d 1238, is modified in one respect. The final sentence of the opinion is deleted, and in its place the following is inserted: Because the Communications Act allows the States to regulate line item billing for wireless services, we GRANT the petitions for review filed by the.State Consumer Advocates and the State Utility Regulators, VACATE the preemption ruling set forth in the Declaratory Ruling in the Second Report and Order, and REMAND the case to the Commission. In all other respects, the petitions for pane! rehearing are DENIED. 38a APPENDIX D BEFORE THE FEDERAL COMMUNICATIONS COMMISSION WASHINGTON, D.C. 20554 CC DOCKET No. 98-170 IN THE MATTER OF TRUTH-IN-BILLING AND BILLING FORMAT CG DOCKET No 04-208 NATIONAL ASSOCIATION OF STATE UTILITY CONSUMER ADVOCATES’ PETITION FOR DECLARATORY RULING REGARDING TRUTH-IN-BILLING SECOND REPORT AND ORDER, DECLARATORY RULING, AND SECOND FURTHER NOTICE OF PROPOSED RULFMAKING Adopted: Merch 10, 2005 Released: March 18, 2005 Comment Date: 30 days after publication in the Federal Register. Reply Comment Date: 60 days after publication in the Federal Register. By the Conimission: Chairman Powell and Commissioner Abernathy issuing separate statements; Commissioners Copps and Adelstein 39a approving in part, dissenting in part, and issuing separate statements. I. INTRGQDUCTION 1. In this item, we address a Petition for Declaratory Ruling filed by the National Association of State Utility Consumer Advocates (NASUCA) seeking to prohibit telecommunications carriers from imposing any separate line item or surcharge on a customers’ bill that was not mandated or authorized by federal, state or local law.' In light of the significant consumer concerns with the billing practices of wireless and other interstate providers raised in this proceeding and outstanding issues from the 1999 Truth-in- Billing Order and Further Notice, we also take this opportunity to reiterate certain aspects of our existing rules and policies affecting billing for telephone service. Specifically, we: 1) remove the existing exemption for Commercial Mobile Radio Service (CMRS) carriers from 47 C.F.R. § 64.2401(b) — requiring that billing descriptions be brief, clear, non-misleading and in plain language; 2) reiterate that non-misleading line items are permissible under our rules; 3) reiterate that it is misleading to represent discretionary line item charges in any manner that suggests such line items are taxes or charges required by the government; 4) “jarify that the burden rests upon the carrier ' Petition for Declaratory Ruling, filed by National Association of State Utility Consumer Advocates’ (March 30, 2004) (NASUCA Petition). NASUCA is an association of 44 consumer advocates designated by the laws of their respective states to represent the interests of utility consumers before state and federal regulators and in the courts. * Truth-in-Billing and Billing Format, First Report and Order and Further Notice of Proposed Rulemaking, CC Docket No. 98- 170, 14 FCC Red 7492 (1999) (Truth-in-Billing Order and/or Further Notice). 40a to demonstrate that any line item that purports to recover a specific governmental or regulatory program fee conforms to the amount authorized by the government to be collected; and 5) clarify that state regulations requiring or prohibiting the use of line items for CMRS constitute rate regulation and are preempted under section 332(c)(3)(A). 2. In addition, in a Further Notice of Proposed Rulemaking, we propose and seek comment on certain measures to facilitate the ability of telephone consumers to make informed choices among competitive telecommunications service offerings. In particular, we: 1) tentatively conclude that where carriers choose to list charges in separate line items on their customers’ bills, government mandated charges must be placed in a section of the bill separate from all other charges; 2) seek comment on the distinction between government “mandated” and other charges; 3) seek comment on whether it is unreasonable to combine federal regulatory charges into a single line item; and 4) tentatively conclude that carriers must disclose the full rate, including any non-mandated line items and a reasonable estimate of government mandated surcharges, to the consumer at the point of sale, and that such disclosure must occur before the customer signs any contract for the carrier’s services. In an effort to address the potential for balkanized state regulation of CMRS and other interstate carrier billing practices, we also tentatively conclude that the Commission should reverse its prior holding permitting states to enact and enforce telecommunications carrier-specific truth-in-billing rules, and that the Commission should preempt inconsistent state regulation. We emphasize, however, that no action we propose will limit states’ ability to enforce their own generally applicable consumer protection laws. ~ 3. | We believe that the truth-in-billing rules proposed herein and the clarifications we make will allow consumers to better understand their telephone bills, compare service 4la offerings, and thereby promote a more efficient competitive marketplace. As the Commission noted in 1998 when it initiated the Truth-in-Billing proceeding, the proper functioning of competitive markets is predicated on consumers having access to accurate, meaningful information in a format that they can understand.’ Unless consumers are adequately informed about the service choices available to them and are able to make reasonable price comparisons between service offerings, they are unlikely to be able to take full advantage of the benefits of competitive forces. Il. BACKGROUND A. The Truth-in-Billing Orders 4. In 1999, the Commission released the Truth-in- Billing Order to address concerns that there was growing consumer confusion’ relating to billing for telecommunications service and an increase in the number of entities willing to take advantage of this confusion. Consistent with sections 201(b) and 258 of the Communications Act of 1934, as amended (the “Act”),* the Commission adopted “broad, binding principles to promote truth-in-billing rather than mandate detailed rules that would rigidly govern the details or format of carrier billing * See Truth-in-Billing and Billing Format, CC Docket No. 98- 170, Notice of Proposed Rulemaking, 13 FCC Red 18176 (1998). * Section 201(b) requires that common carriers’ “practices ... for and in connection with ... communications service. shall be just and reasonable, and any such ... practice ... that is unjust or unreasonable is hereby declared to be unlawful ...”. 47 U.S.C. § 201(b). Section 258(a) makes it unlawful for any telecommunications carrier to "submit or execute a change in a subscriber's selection of a provider of telephone exchange service or telephone toll service except in accordance with such verification procedures as the Commission shall prescribe.” 47 U.S.C. § 258. 42a practices.” 5. The Commission stated that these truth-in-billing principles should apply to all carriers, including wireless carriers.° In general, the principles require: 1) that consumer telephone bills be clearly organized, clearly identify the service provider, and highlight any new providers; 2) that bills contain full and non-misleading descriptions of charges that appear therein; and 3) that bills contain clear and conspicuous disclosure of any information the consumer may need to make inquiries about, or contest charges on the bill.’ The Commission incorporated these principles into rules “because we intend for these obligations to be enforceable to the same degree as other rules.”* However, most of the details regarding compliance with these obligations were left to the carriers to satisfy in a manner that best fit their own specific needs and those of their customers. At that time, the Commission determined that, although the principles and section 201(b) applied to all carriers, it would be appropriate to exempt CMRS carriers from three of the codified rules because they were deemed either inapplicable or unnecessary in the CMRS context.’ In a Further Notice, however, the Commission sought comment on whether these rules should apply to CMRS carriers in the future." * See Truth-in-Billing Order, 14 FCC Red at 7498, para. 9. ° Jd. at 7501, para 13. ” Id. at 7496, para 5. * Id. at 7499, para. 9; see 47 C.F.R. §§ 64.2400 and 2401. ” Truth-in-Billing Order, 14 FCC Red at 7501, para. 15. See also 47 C.F.R. § 64.2400(b). '° Truth-in-Billing Further Notice, 14 FCC Red at 7535, para. 68. In the Further Notice, the Commission also proposed standard labels for line items for charges associated with federal regulation. 43a 6. On March 29, 2000, the Commission modified some of the Truth-in-Billing requirements in an Order on Reconsideration.'' In addition, the Commission clarified that where an entity bundles a number of services, some of which may be provided by different carriers, as a single package offered by a single company, such offering may be listed on a telephone bill as a single offering. '” B. Joint Advertising Statement 7. On March 1, 2000, the Commission released a Joint Policy Statement with the Federal Trade Commission (FTC) to provide carriers with guidance about how principles of truthful advertising apply in the long distance service The Commission tentatively concluded that the following labels would be appropriate: "Long Distance Access" to identify charges related to interexchange carriers’ costs for access to the networks of local exchange carriers; "Federal Universal Service" to describe line items seeking to recover universal service contributions; and "Number Portability” to describe charges relating to local number portability. The Commission asked for comments on these proposed labels and alternatives. Jd. at 7537, para 71. '' Truth-in-Billing and Billing Format, CC Docket No. 98-170, Order on Reconsideration, 15 FCC Red 6023 (2000). Specifically, the Reconsideration Order: 1) modified the requirement for identification of new service providers to apply only te subscribed services for which the provider places periodic charges on the bill (i.e. not per-transaction basis such as dial-around or directory assistance—although those still have to be separated by provider): and 2) modified the “contact” requirement to ailow for other electronic means in addition to the toll-free number, in limited cases where the customer does not receive a paper copy of the bill (for example billed by e-mail or Internet). "> Id. at 6027, para. 9. 44a marketplace.'? The Commission explained that the need to address such issues arose from a proliferation of advertisements for dial-around numbers, long-distance calling plans, and other new telecommunications services; combined with an increase in the number of complaints regarding how these services were promoted.'* In addition, the Joint Policy Statement noted that the FCC found that unfair and deceptive marketing practices by common carriers constitute unjust and unreasonable practices under section 201(b) of the Act.'° The Commission and FTC provided specific examples of misrepresentations in advertisements for long-distance service and material information that carriers should clearly and conspicuously disclose in such advertisements to comply with section 201(b).'° 'S See Joint FCC/FTC Policy Statement For the Advertising of Dial-Around And Other Long-Distance Services To Consumers, File No. 00-72, 15 FCC Red 8654 (2000) (Joint Policy Statement). '* Id. at 8655, para. 3. '* Id. at para. 4. '° See id. at 8657-69, paras. 11-32. For example, the Statement provided the following example of misleading advertising: A 30-second television advertisement for a long-distance calling plan features a spokesperson who on three occasion states that calls on the plan are “10¢ a minute anytime.” In addition, a graphic reading “10¢ a minute anytime” is depicted twice during the ad. In fact, the 10¢ a minute rate requires the payment of a $5.95 monthly fee. The only disciosure of the monthly fee is through a visual superscript at the end of the ad. Especially because the triggering representation—that calls on the plan are “10¢ a minute anytime”—was made both orally and visually, the visual superscript would likely be less effective in disclosing the monthly fee than had the same information been conveyed both orally and visually. 45a C. Universal Service Contribution Order 8. In 2002, the Commission released the Universal Service Fund Contribution Order (USF Contribution Order), which examined the reasonableness of a line item that purported to describe Universal Service fees under section 201(b).!’ The amount of the Universal Service line item imposed by carriers on customers often varied from the contribution factor used to calculate the carriers’ actual obligation to the fund. The Commission noted that an analysis of federal universal service line-item charges across industry segments revealed that such charges often bore little or no relationship to the amount of the assessment.'* The Commission stated that to the extent that carriers recover Joint Policy Statement, Example #20. '’ See generally Federal-State Joint Board On Universal Service, CC Docket No. 96-45, 1998 Biennial Regulatory Review - Streamlined Contributor Reporting Requirements Associated With Administration of Telecommunications Relay Service, North American Numbering Plan, Local Number Portability, and Universal Service Support Mechanisms, CC Docket No. 98-17], Telecommunications Services for Individuals with Hearing and Speech Disabilities and the Americans with Disabilities Act of 1990, CC Docket No. 90-571, Administration of the North American Numbering Plan and North American Numbering Plan Cost Recovery Contribution Factor and Fund Size, CC Docket No. 92-237, Number Resource Optimization, CC Docket No. 99-200, Telephone Number Portability, CC Docket No. 95-116, Truth-In- Billing and Billing Format, CC Docket No. 98-170, Report and Order and Second Further Notice of Proposed Rulemaking, 17 FCC Red 24952, 24979, para. 44 (2002) (USF Contribution Order). '§ Id. at 24977. para 47. “We are concerned, however, that the flexibility provided under our current rules may have enabled some companies to include other completely unrelated costs in their federal universal service line items.” /d. at 24978, para 49. 46a their contribution costs through a separate line item on customer bills, they must accurately describe the nature of the charge.'” 9. The Commission found it was “unreasonable” under section 201(b) for carriers to characterize administrative and other costs as part of regulatory fees or universal service charges. The Commission stated that such costs are no different than other costs associated with the business of providing telecommunications service and, although they could be recovered through rates or other line item charges, it is unreasonable to describe an amount as a universal service regulatory fee when that amount varies from the contribution factor.”° Carriers, therefore, are prohibited from including administrative costs in line items that are “characterized as federal umiversal service contribution recovery charges.” 10. The Commission stated that the elimination of mark-ups in carrier universal service line items would alleviate end user confusion and frustration, and “foster a more competitive market by better enabling customers to comparison shop among carriers.” The Commission also concluded that this action would further the goal of “promoting transparency for the end user in order to facilitate informed customer choice.”” Finally, the Commission declined at that time to mandate a specific label for federal universal service line-items, but said it would monitor the "9 Id. at para. 51. © Id. at 24980, para 54. "" Id. 2? Id. at 24978, para 50. 8 Id. 47a . : 4 order’s effect on carrier practices.” D. State and Industry Actions 11. In 2003, the wireless industry developed the CTIA Consumer Code to facilitate the provision of accurate information between consumers and wireless service providers.” Over 30 wireless service providers, including many national providers, are signatories to the Code. In relevant part, the Code requires that signatory carriers “Disclose Rates and Terms of Service to Consumers.” ”° Among the disclosures mandated by that provision is the disclosure of “the amount or range of any .. . fees or surcharges that are collected and retained by the carrier.” In addition, the Code requires that carriers separately identify carrier charges from taxes on billing statements.”’ 12. In July 2004, Attorneys General from 32 states entered into settlement agreements with Verizon Wireless, Cingular Wireless, and Sprint PCS regarding allegations of misleading advertisements and unclear disclosures relating to *4 Td. at 24983, para 65 25 “See http://www.ctia.org/wireless_consumers/consumer_code/index.cf m. © CTIA Code, Item One. "? CTIA Code, Item Six: On customers” bills. carriers will distinguish (a) monthly charges for service and features, and other charges collected and retained by the carrier, from (b) taxes, fees and other charges collected by the carrier and remitted to federal, state, or local governments. Carriers will not label cost recovery fees or charges as taxes. 48a service agreement terms and wireless coverage areas.”* Specifically, with regard to consumer bills, carriers agreed to separate “taxes, fees, and other charges that [they are] required to collect directly from Consumers and remit to federal, state, or local governments, or to third parties authorized by such governments, for the administration of government programs” from monthly charges and all other discretionary charges, except when the taxes, fees and other charges are bundled into a single rate with monthly charges for service and all other discretionary charges.” The carriers also agreed to not represent, expressly or by implication, that the discretionary costs recovery fees are taxes. ° In addition, the carriers agreed to make point of sale disclosures describing all charges appearing on consumers’ bills.?! E. NASUCA Petition 13. On March 30, 2004, NASUCA filed a Petition for Declaratory Ruling in the Truth-in-Billing and Billing Format Docket urging the Commission to address what it describes as the growing problem of consumer confusion with telephone bills. Specifically, NASUCA requested that ’8 See Letter from Kathryn A. Zachem, Counsel for Verizon Wireless. to Marlene H. Dortch, FCC, dated Jan. 10, 2005 (Attachment — Assurance of Voluntary Compliance) (Verizon AVC). The thirty two states include: Alabama, Arkansas, Colorado, Delaware, Georgia, Hawaii, Idaho, Illinois, lowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Tennessee, Texas, Virginia, Wisconsin and Wyoming. *’ Verizon AVC at 14, para. 36(a). * Id. at para. 36(b). *' Id. at 5-9, paras. 17-23. 49a the Commission clarify that telecommunications carriers — both wireline and wireless — are prohibited from imposing line-item charges, surcharges or other fees on customers’ bills unless those charges are expressly mandated or authorized by a federal or state law. NASUCA argues that allowing the inclusion of line items that are not mandated or authorized by the government violates the truth-in-billing principles and rules and both section 201(b) and 202 of the Act. In addition, NASUCA argues that the amount of any such government mandated charge must conform to the amount expressly authorized by federal, state, or local governmental authority. NASUCA’s Petition sets forth numerous examples of line item charges imposed by interexchange (IXC) and wireless carriers that it contends are misleading or unreasonable.” On May 25, 2004, the Consumer & Governmental Affairs Bureau issued a public notice seeking comment on the Petition in a newly created CG Docket 04-208. In addition to numerous individual consumers, more than 40 parties filed comments in response to the Petition. lil. SECOND REPORT AND ORDER A. Background 14. In the Truth-in-Billing Order, the Commission concluded that the broad principles adopted to promote truth- in-billing should apply to all telecommunications carriers, * See NASUCA Petition at 18-23, 29 (contending that, for example, surcharges identified as “regulatory assessment fees,” “carrier cost recovery charges,” “interstate access surcharge,” “universal connectivity charge,” and “primary carrier charge” do not allow customers to accurately assess what they are being billed for or permit customers to determine whether the amounts charged conform to the price charged for service). 50a both wireline and wireless.*? The Commission noted that these principles represent fundamental statements of fair and reasonable practices. The Commission therefore rejected the argument that certain classes of carriers should be wholly exempt from complying with the truth-in-billing guidelines solely because competition exists in the market which they operate? In the wireline context, the Commission incorporated these principles and guidelines into rules for enforcement purposes “after considering an extensive record of both the nature and volume of customer complaints, as well as substantial information about wireline billing practices.””° 15. In the wireless context, however, the Commission found that the record did not reflect the same high volume of customer complaints, nor did the record indicate that CMRS billing practices failed to provide consumers with the clear and non-misleading information they need to make informed choices.*° The Commission therefore exempted CMRS carriers from the truth-in-billing rule that requires charges contained on telephone bills to be accompanied by a brief, clear, non-misleading, plain language description of the * Truth-in-Billing Order, 14 FCC Red at 7501, para. 13 (“[ljike wireline carriers, wireless carriers also should be fair, clear, and truthful in their billing practices”). * Id. *S Jd. at para. 15. *© Jd. at 7502, para. 16. The Commission also noted that notwithstanding the decision not to apply these guidelines to CMRS providers, that such providers remain subject to the reasonableness and nondiscrimination requirements of sections 201 and 202, “and our decision here in no way diminishes such obligations as they may relate to billing practices of CMRS carriers.” See Truth-in-Billing Order, 14 FCC Red at 7502, para. 19. Sla service or services rendered.*’ In addition, the Commission found certain of the truth-in-billing rules inapplicable to CMRS.** In a Further Notice of Proposed Rulemaking, the Commission sought comment on whether the truth-in-billing rules adopted in the wireline context should apply to CMRS carriers in order to protect consumers.*” The Commission reiterated that all consumers expect and should receive bills that are fair, clear, and truthful, but sought further comment on whether such a problem existed in the wireless context, and to what extent the presence of a competitive market is relevant to consumers’ ability to protect themselves from the harms that the truth-in-billing rules were designed to address.“ The majority of commenters, representing primarily CMRS providers, responded that the lack of billing complaints against wireless providers along with the competitive nature of the wireless industry should indicate that it is not necessary to apply these rules to CMRS."' The ” See 47 C.F.R. §§ 64.2400(b), 64.2401(b). ** For example, because CMRS carriers are excluded from equal access obligations, the Commission concluded that CMRS carriers will seldom need to indicate a new long distance service provider on their bill. See Truth-in-Billing Order, 14 FCC Rcd at 7502, para. 16. The Commission concluded that CMRS carriers must comply with two of the truth-in-billing rules: 1) that the name of the service provider associated with each charge be clearly identified: and 2) that each bill should prominently display a telephone number that customers may call free-of-charge in order to inquire or dispute any charge contained on the bill. See 47 C.F.R. § 64.2401(a)(1) and (d). °° Truth-in-Billing Further Notice, 14 FCC Red at 7535-36, paras. 68-70. *° Id. at paras. 68-69. *! See, e.g.. Bell Atlantic Mobile 1999 Comments at 3; CTIA 1999 Comments at 5; PCIA 1999 Comments 4-5. 52a California Public Utilities Commission, on the other hand, argued that section 64.2401(b) of our rules is so fundamental that it should apply to all telecommunications carriers, including CMRS carriers.” Finally, responding to the Commission’s suggestion that parties address _ the applicability of a section 10 forbearance analysis,”’ a few commenters suggested that the Commission should consider forbearing the truth-in-billing requirements to CMRS carriers. B. Discussion 16. We conclude that CMRS carriers should no longer be exempt from 47 C.F.R. § 64.2401(b)’s requirement that billing descriptions be brief, clear, non-misleading and in plain language. In creating this exemption in 1999, the ” See Cal PUC July 26, 1999 Comments (also maintaining that 47 C.F.R. § 64.2401(a)(2) and (c) should apply to CMRS carriers, the former in the event a CMRS carrier bills for charges for two or more carriers, and the latter in the event a CMRS carrier also bills for charges for basic local service). ** Truth-in-Billing Order, 14 FCC Red at 7535, para. 69. * See, e.g., Omnipoint 1999 Comments at 5; PCIA 1999 Comments at 8. Neither Omnipoint nor PCIA suggest that they were formally petitioning the Commission for forbearance under section 10(c) of the Act. Section 10(c) establishes a one-year statutory deadline for Commission action on forbearance petitions, and provides that a petitioning party’s requested relief is “deemed granted” if the Commission does not act within that timeframe. See 47 U.S.C. § 160(c). The Commission did not treat these comments as petitions filed under section 10(c), nor did any party subsequently suggest that the procedure under section 10(c) had been triggered. Accordingly, while we discuss these parties’ comments regarding forbearance below, we do not recognize their comments as triggering the requirements of section 10(c) and do not recognize the relief as having been granted by operation of law. 53a Commission relied upon the fact that the record did not indicate a high volume of complaints in the CMRS context.*” The Commission’s more recent data indicates that complaints regarding wireless “billing & rates” and “marketing & advertising” have increased significantly since that time. For exampie, in 1999, the Commission received only a few dozen complaints regarding wireless billing.“© In 2004, the Commission received approximately 18,000 complaints about wireless carrier practices in these categories.*’ This trend is supported by the recent comments of a number of states and consumers in this proceeding.** Although we acknowledge that this increase may be due in part to the significant increase in wireless subscribers since 1999, we also believe it is demonstrative of consumer confusion and dissatisfaction with current billing practices. 17. We disagree with those commenters that argue that CMRS providers should be exempted from this requirement * Truth-in-Billing Order, 14 FCC Red at 7501-02, para. 16. *© See id. at 7564, Concurring Statement of Commissioner Michael K. Powell. " See First and Second Quarterly Report on Informal Consumer Inquiries and Complaints (rel. Feb. 11, 2005); Third and Fourth Quarterly Report on Informal Consumer Inquiries and Complaints (rel. Match 4, 2005). See also 2003 Quarterly Report on Informal Consumer Inquiries and Complaints (rel. May 10, 2003; Sept. 12, 2003; Nov. 20, 2003 and June 10, 2004). Complaints filed in the categories of “billing and rates” and “marketing and advertising” constituted over one-half of the total complaints filed against wireless providers in 2003. * See. e.g.. Cal. PUC Comments at 6-7; Texas OAG Comments at 2: Consumers Union Comments at 3; Joseph Canfora Comments at 1; John Gantz Comments at 1; Nancy Murray Comments at |. 54a because they operate in a competitive marketplace.” The Commission specifically rejected this argument in the 7ruth- in-Billing Order noting that, as competition evolves, the provision of clear and truthful bills is paramount to efficient operation of the marketplace.’ Although we agree that a robustly competitive marketplace provides the best incentive for carriers to meet the needs of their customers and affords dissatisfied customers with an opportunity to change carriers, we also recognize that some providers in a competitive market may engage in misconduct in ways that are not easily rectified through voluntary actions by the industry.°! As the Commission emphasized in the Truth-in-Billing Order, one of the fundamental goals of the truth-in-billing principles is to provide consumers with clear, well-organized, and non- misleading information so that they will be able to reap the advantages of competitive markets.” We believe that making the requirements of 47 C.F.R. § 64.2401(b) mandatory for CMRS will help to ensure that wireless consumers receive the information that they require to make informed decisions in a competitive marketplace. 18. For the reasons discussed above, we also do not ” See, e. g., AT&T Wireless Comments at 2: CTIA Comments at 8; PCIA 1999 Comments at 5. © See Ti ruth-in-Billing Order, 14 FCC Red at 7501, para. 14. *! See also Personal Communications Industry Association's Broadband Personal Communications Services Alliance's Petition for Forbearance for Broadband Personal Communications Services, WT Docket No. 98-100, Memorandum Opinion and Order and Notice of Proposed Rulemaking, 13 FCC Red 16857, 16868 at para. 23 (PCIA Forbearance Order) (1998) (“[a]ssuming all relevant product and geographic markets become substantially competitive, moreover, carriers may still be able to treat some customers in an unjust, unreasonable, or discriminatory manner”). * Truth-in-Billing Order, 14 FCC Rcd at 7501, para. 14. / 55a believe it would be appropriate to forbear from applying the truth-in-billing rules to CMRS carriers. We find that the record before us does not reflect that all three statutory criteria established under section 10 have been satisfied. Specifically, the record does not reflect that these requirements are unnecessary to ensure that the charges and practices of carriers are just and reasonable, or that forbearance is consistent with the public interest. To the contrary, the increasing number of consumer complaints to this Commission and state regulatory agencies regarding wireless billing practices provides empirical evidence that application of the truth-in-billing rules to CMRS carriers is necessary and in the public interest. It is critical for consumers to receive accurate billing information from their carriers to take full advantage of the benefits of a competitive marketplace. We also note that the Commission declined to forbear from the application of sections 201 and 202 of the Act to broadband Personal Communications Service (PCS), concluding that those sections “lie at the heart of consumer protection under the Act.”*? In the PCIA Forbearance Order, the Commission noted that it had never previously refrained from enforcing sections 201 and 202 against common carriers, even when competition exists in a market.” 19. The Commission already has concluded that the truth-in-billing principles, including the principle that billing descriptions be brief, clear, non-misleading and in plain language, apply to both wireline and wireless.°> The Commission also noted that CMRS billing practices remain ** See PCIA Forbearance Order, 13 FCC. ee at 16865, para. 15. ™ Jd. at 16866, para. 17. ™ Truth-in-Billing Order, 14 FCC Red at 7501, para. 14. 56a subject to the reasonableness and _ nondiscrimination requirements of sections 201 and 202 of the Act.°° Thus, we do not believe that making this requirement mandatory will constitute a significant new regulatory burden on CMRS providers, including smaller providers.°’ We believe that eliminating the exemption from 47 C.F.R. § 64.2401(b) for CMRS providers will remove any ambiguity regarding the necessity of CMRS carriers to provide clear and non- misleading billing information to their customers. In addition, CMRS carners are put on notice that the Commission intends to review complaints regarding unclear or misleading billing descriptions, and may take enforcement action under this rule as appropriate based on such complaints or other evidence of non-compliance. 20. Though we remove the exemption from 47 C.F.R. § 64.2401(b) for CMRS providers, and thereby erase any ambiguity regarding the necessity of CMRS carriers to provide clear and non-misleading billing information to their customers under our rules, we recognize that states may wish to play a role in enforcing rules against CMRS and other interstate carriers providing misleading billing information. At a minimum, we emphasize that no action that we take in this Second Report and Order and the Declaratory Ruling below limits states’ authority to enforce their own generally applicable consumer protection laws, to the extent such laws do not require or prohibit use of line items, nor limits a State's ability to assess taxes or create, for example, a state- specific universal service fund to which carriers must *° Id. at 7502, para. 19. >’ See Cingular Comments at 7-11 (contending that Cingular is already in compliance); Leap Comments at 9-11] (fees meet truth- in-billing requirements); Verizon Wireless Comments (bills comply with federal law even though Verizon Wireless is not subject to truth-in-billing rules). 57a contribute. In the Second Further Notice below, we seek comment on specifically where to draw the line between the Commission’s jurisdiction and states’ jurisdiction over the billing practices of CMRS and other interstate carriers. IV. DECLARATORY RULING A. Background 21. In its Petition for Declaratory Ruling, NASUCA raises concerns about the use of line items on consumer telephone bills. NASUCA contends that, in some cases, the exact nature of the line items are often unclear from the descriptions, and the line items are characterized in a way that could mislead consumers into believing these charges are government mandated charges. Further, NASUCA contends that the descriptions of such line items often have little or no relationship to the actual charge listed on the bill. 22. NASUCA_requests that the Commission prohibit telecommunications carriers — both wireline and wireless - from imposing monthly line-item charges, surcharges or other fees on customers’ bills unless such charges expressly have been mandated or authorized by a regulatory agency.°® NASUCA does not object to line items for “government mandated fees.” nor does it object to “government authorized fees.” NASUCA argues that allowing the inclusion of line items that are not mandated or authorized by the government violates the Truth-in-Billing principles and rules, the USF Contribution Order. and both sections 201(b) and 202 of the Act. ** NASUCA asks that if we deem a Petition for Declaratory Ruling to be procedurally lacking for their proposals, that we instead initiate a new rulemaking. B. Discussion 1. NASUCA Petition 23. We deny NASUCA’s request for a Declaratory Ruling prohibiting telecommunications carriers from imposing any line items or charges that have not been authorized or mandated by the government. There is no general prohibition against the use of line items on telephone bills under our rules or the Act. As NASUCA has acknowledged, nothing in the Truth-in-Billing Order prohibits carriers from using non-misleading line items.” To the contrary, the USF Contribution Order states that while carriers cannot include administrative costs under the umbrella of regulatory charges, they may recover such costs through their rates or “other line items.”© The truth-in- billing rules require that charges contained on telephone bills be accompanied by a brief, clear, non-misleading, plain language description of the service or services rendered.°' If carriers choose to offer descriptions of various charges in the form of line items, however, there is nothing in the existing Truth-in-Billing requirements to prevent them from doing »° See generally Truth-in-Billing Order, 14 FCC Red 7492; see also NASUCA Petition at 8, and n.16. See also AT&T Comment at 5 (no Commission order or rule that prohibits impositions of line-item charges). °° See USF Contribution Order, 17 FCC Rcd at 24979. para. 55. See also Sprint Comments at 6 (citing the USF Contribution Order and E911 proceeding); USTA-Comments at 4 (the only unresolved matter is how to standardize line items); Verizon Comments at 3-5 (the Commission has expressly authorized the recovery of specific line item surcharges in Commission proceedings such as the USF Contribution Order, and proceeding regarding Local Number Portability fees); BellSouth Comments at 5 (NASCUA has failed to show a controversy or uncertainty). °' 47 C.F.R. § 64.2401(b). 59a so.” Nor do we believe there is any basis to conclude that such a practice is “unreasonable” under section 201(b). As several commenters have noted, the provision of accurate and non-misleading information on a telephone bill may be useful information to the consumer in better understanding the charges associated with their service and making informed cost comparisons between carriers.” In sum, we reiterate that carriers are not prohibited per se under our existing Truth-in-Billing rules or the Act from including non- misleading line items on telephone bills.™ 24. Commenters in this docket have supplied evidence that there is considerable consumer confusion regarding telephone bills and even possible abuse of line item °° See Sprint Comments at 15 and AT&T Comments at 10, 13 (the Commission left it up to the carriers to decide how to meet Truth-in-Billing requirements). °° See, e.g., CTIA Comments at 3; Giobal Crossing Comments at 2; Verizon Wireless Comments at 14. ** We note that this finding does not alter the role of any other specific prohibition or restriction on the use of line items. For example, this Commission has prohibited line items for interstate Telephone Relay Service (TRS) costs. See Telecommunications Services for Individuals with Hearing and Speech Disabilities, and the Americans with Disabilities Act of 1990, CC Docket No. 90- 571, Order on Reconsideration, Second Report and Order, and Further Notice of Proposed Rulemaking, 8 FCC Red 1802, 1806, para. 22 (1993). See also Report and Order and Request for Comments, 6 FCC Red 4657, 4664, para. 34; Telecommunications Relay Services and Speech-to-Speech Services for Individuals with Hearing and Speech Disabilities, CC Docket No. 98-67, Order, 19 FCC Red 12224. 12228 n.33 (2004). As noted infra, we intend to revisit the prohibition on line items referring to interstate TRS in a future proceeding in a separate docket that will take into consideration the policy objectives outlined in this proceeding. 60a 65 charges.” Both the Texas Office of the Attorney General ® See, e.g., TURN & UCAN Comments at 4 (contending that there has been a proliferation of deceptive, misleading charges). The National Consumers League says that complaints about billing descriptions have increased, prompting the group to create a link on their website regarding “Understanding Your Phone Bill,” but the group has difficulty keeping this up-to-date with the vague line items (Consumers League Comments at 4-5). Consumers Union, the National Consumer Law Center, and the Massachusetts Union of Public Housing Tenants say the truth-in-billing principles have failed to clean up the clutter and to help consumers make informed choices about their service (Consumers Union Comments at 4). Ohio PUC describes consumer confusion over vague charges that appear to be regulatory in origin, such as “Government Assessment” charges (Ohio PUC Comments at 8-10). Indiana URC contends that the practice of placing extra charges not expressly mandated or clearly disclosed on customer bills is misleading and does not comport with the spirit of the Act (Indiana URC Comments at 2). The lowa UB says that it is difficult to determine if the surcharge is recovering only what the actual regulatory costs are to that carrier or operating costs; thus, the true cost of service is obscured, which makes it difficult for a consumer to make cost-based comparisons between competing service providers (lowa UB Comments at 2). The Texas OAG states: “The State of Texas has received countless bills containing instances of regulatory fees and surcharges purporting to recover ‘regulatory’ or ‘administrative’ costs, but which upon further analysis are nothing other than regular operating expenses, such as those incurred by any other business” (Texas OAG Comments at 2). The commenting “Rural Wireline Carriers” contend that some of them provide interexchange services in competition with carriers that impose misleading line item surcharges described in NASUCA’s Petition (RWC Comments at 2). Massachusetts OAG contends that market forces alone are not sufficient to ensure that consumers are not deceived and can make accurate price comparisons (Massachusetts OAG Comments at 2). Teletruth provides details of a two-year investigation into consumer phone bills by Teletruth and New Networks Institute, a market research 6la and the Iowa Utilities Board, for example, note that increasing amounts of their resources are devoted to reviewing various surcharges, in response to consumer complaints.” We recognize that the provision of accurate information on consumer telephone bills is among one of the most important issues for telecommunications consumers. In particular, we are concerned that some carriers may be disguising rate increases in the form of separate line item charges and implying that such charges are necessitated by governmental action. As a result, we take this opportunity to reiterate, and provide some additional clarifications to, our existing rules, and we seek further comment on additional proposals below that we believe would be beneficial in ensuring that consumers receive accurate information. We also recognize that overbroad state regulations in this area may frustrate our federal rules and the federal objective of minimizing regulatory burdens on the competitive CMRS industry. Moreover, we note that in establishing the regulatory framework for CMRS, Congress expressly assigned certain tasks, including rate regulation, to the federal government. Accordingly, we also discuss the roles of federal and state authority in this area, and identify those types of state regulations that expressly are preempted by the Act. 2. Application of Section 201(b) to Line Items 25. Section 201(b) of the Act requires that all charges, practices, classifications. and reguiations for and in firm, and LTC Consulting, a phone bill auditing firm (see generally Teletruth Comments). Several consumer commenters also express discontent with the line item charges on their bills. See, e.g., Jason G. Campbell Comments. °° Texas OAG Comments at 2; lowa UB Comments at 2 (hundreds if not thousands of consumer inquiries concerning current billing practices). 62a conjunction with interstate communications service be just and reasonable, and gives the Commission jurisdiction to enact rules to implement that requirement.” The Commission has concluded that a carrier’s provision of misleading or deceptive billing information is an unjust and unreasonable practice in violation of section 201(b).° 26. Although we have not prohibited carriers from using line items, we reiterate here that all carriers are prohibited from including misleading information on their telephone bills. We believe that it is useful to now provide some additional detail on whether certain practices may be deemed unreasonable or misleading under our rules.” It appears from the record that a common source of consumer confusion derives from the myriad of charges that are assessed by carriers ostensibly to recover costs incurred as a result of specific government action. These regulatory charges generally can be characterized as mandated fees or taxes that the carrier is required to collect from the consumer (e.g., federal excise tax),’” authorized fees that the carrier has the discretion to pass on to the consumer (e.g., universal service), and administrative or other costs that may be associated with the cost of compliance with regulatory requirements. We emphasize that it is permissible for carriers to recover these costs so long as they do so in a manner that complies with our rules. °7 47 U.S.C. § 201(b). | °° See Truth-in-Billing Order, 14 FCC Red at 7560, para. 24. * We emphasize that our statements herein are of general applicability and are not intended to supersede more specific federal rules that may govern the recovery of particular fees. ” See, e.g., 26 U.S.C.A. § 4251(a)(2) (“Payment of [excise] tax. — The tax imposed by this section shall be paid by the person paying for such services”). 63a 27. Consistent with the Commission’s prior findings, we reiterate that it is a misleading practice for carriers to state or imply that a charge is required by the government when it is the carriers’ business decision as to whether and how much of such costs they choose to recover directly from consumers through a separate line item charge.’’ Consumers may be less likely to engage in comparative shopping among service providers if they are led to believe erroneously that certain rates or charges are unavoidable federally mandated amounts from which individual carriers may not deviate.” This prohibition includes not only misleading statements or descriptions, but also placement of the charge on the bill in such a way as to lead a reasonable consumer to believe that the charge has been mandated by the government. For example, because placing a discretionary charge in a section or subsection of the bill that otherwise contains only government required charges or taxes may mislead a reasonable consumer into believing that such charge also is required, such placement is not allowed. We also are concerned that some carriers may be labeling certain non- regulatory line item charges in such a way as to create confusion with regulatory programs. As a result, carries should take great caution in using terms that are most commonly associated with governmental programs to describe other charges that are unrelated to those programs.” 28. Consistent with the Commission’s conclusion in the USF Contribution Order, we reiterate that it is unreasonable "' See Truth-in-Billing Order, \4 FCC Red at 7527. para. 56. ” See id. at 7522-23, para. 49. ” See, e.g., NASUCA Petition at 29-30 (arguing that one carriers’ “TSR Administrative Fee” is designed to be confused with the Telecommunications Relay Service (TRS) charge, and another’s “Universal Connectivity Charge” may be confused with a separate universal service charge on that carrier's bill). 64a and misleading for carriers to include administrative and other costs as part of “regulatory fees or universal service charges” or similar line item labels that imply government mandated charges.“ Although the Commission focused primarily on the universal service charge, we reiterate here that, as the language in that order indicates, this prohibition applies to all regulatory fees. It is our view that these costs are no different than other costs associated with the business of providing telecommunications service and may be recovered through rates or other line item charges.”” Thus, it is an unreasonable practice for carriers to include any costs that do not accurately reflect the carrier’s actual obligation to the specific governmental program that the line item purports to recover. For example, carriers that elect to recover their universal service contribution costs through a separate line item may not mark up the line item above the relevant contribution factor established by the Commission.” As a result, a regulatory line item charge should never exceed any maximum amount or cap established by the government to recover for that specific program. Carriers that are not rate- regulated by this Commission, namely interexchange carriers, CMRS providers, and competitive local exchange carriers will have the same flexibility that exists today to recover legitimate administrative and other costs, and may recover those legitimate administrative and other related costs through rates or other line items. 29. To the extent that a carrier decides to collect a regulatory fee through a separate line item, we clarify that the ”* USF Contribution Order, 17 FCC Red at 24979, para. 54. 75 Id. © See id. at 24978, paras. 49-51 (noting that if the contribution factor is 7.28%, a carrier’s federal universal service line item charge cannot exceed 7.28%). 65a burden rests upon the carrier to demonstrate that the charge imposed on the customer accurately reflects the specific governmental program fee it purports to recover. This burden is satisfied if the carrier demonstrates that the line item charge in question falls within any maximum level allowed by the government for its recovery.”’ In those instances, however, when a carrier is not subject to a maximum cap or other specific guidelines for its recovery, the carrier should be prepared to demonstrate that the cost imposed pursuant to a regulatory line item charge corresponds to the amount remitted to the government or its agent for that program. As discussed above, it is not permissible for a carrier to collect administrative or other charges pursuant to a line item that describes a specific governmental program or fee. Thus, carriers should be able to demonstrate with probative accounting documentation and other relevant evidence that the amounts collected for specific governmental programs and fees equals the amount submitted to the government or its agent for that program. 3. Section 332 30. We find that state regulations requiring or prohibiting the use of line items — defined here to mean a discrete charge identified separately on an end user’s bill — constitute rate regulation and, as such, are preempted under section 332(c)(3)(A) of the Act. This statutory provision states. in relevant part: [N]o State or local government shall have any authority to regulate the entry of or the rates charged by any commercial mobile service or ” See, eg, 47 C.F.R. § 54.712 (“the amount of the federal universal service line-item charge may not exceed the interstate telecommunications portion of that customer’s bill times the relevant contribution factor’). 66a any private mobile service, except that this paragraph shall not prohibit a State from regulating the other terms and conditions of commercial mobile services.” As the D.C. Circuit has recognized, Congress did not specifically define “rates,” “entry,” or other key terms in section 332(c)(3)(A).”” The Commission, however, consistently has interpreted the rate regulation provision of the statute to be broad in scope. The Commission has interpreted this provision to “prohibit states from prescribing, setting or fixing rates” of wireless service providers.*’ The Commission also has made clear that the proscription of state rate regulation extends to regulation of “rate levels” and “rate structures” for CMRS.*' Along these lines, the Commission has found that section 332(c)(3)(A) not only prohibits states from prescribing “how much may be charged” for CMRS, but also prohibits states from prescribing “the rate elements for CMRS” or “specify[ing] which among the CMRS services provided can be subject to charges by CMRS providers.”*’ We also note that our interpretation here is consistent with prior Commission statements equating “line 47 U.S.C. § 332(c)(3)(A) (emphasis added). ” CTIA vy. FCC, 168 F.3d 1332, 1336 (D.C. Cir. 1999). *° Id.. citing Pittencrief Communications, Inc., 13 FCC Red 1735, 1745 (1997) (“Pittencrief Order’). 5! Southwestern Bell Mobile Systems, Inc. Petition for a Declaratory Ruling Regarding the Just and Reasonable Nature of. and State Challenges to, Rates Charged by CMRS Providers when Charging for Incoming Calls and Charging for Calls in Whole- Minute Increments, Memorandum Opinion and Order, 14 FCC Red 19898. 19906-07, paras. 18-20 (1999) (“Southwestern Bell Order’’). *° Id. at 19907, para. 20. 67a items” with “rate elements.”® Recognizing the Commission’s broad prior interpretation of rate regulation and statements about line items, we find that state regulations” requiring or prohibiting line items similarly fall *° For example, in discussing the manner in which federal universal service contributions may be reflected on end users’ bills, the Commission explained that “incumbent local exchange carriers are required to recover their federal universal service contribution costs through a line item, which may be combined for billing purposes with another rate element.” USF Contribution Order, \7 FCC Red at 24979, para. 53 n.133 (emphasis added). And in a prior order on the same subject matter, the Commission approved a plan permitting local phone companies to establish “a separate rate element (e.g. line item)” to recover federal universal service contributions. Access Charge Reform, Price Cap Performance Review for Local Exchange Carriers, Low-Volume Long Distance Users, Federal-State Joint Board on Universal Service, Sixth Report and Order in CC Docket Nos. 96-262 and 94-1, Report and Order in CC Docket No. 99-249, Eleventh Report and Order in CC Docket No. 96-45, 15 FCC Red 12962, 13057-58, paras. 218-19 (2000). “We note that the terms “state regulation” and “state regulatory action” have broad application in the context of section 332. See Wireless Consumers Alliance, Inc. Petition for a Declaratory Ruling Concerning Whether the Provisions of the Communications Act of 1934, as Amended, or the Jurisdiction of the Federal Communications Commission Thereunder, Serve to Preempt State Court [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386016_2225%3A2. Public record. Not legal advice.