Great Lakes Comnet v. FCC.

• Author: Klein, Stephen
• Position: Competitive local exchange carrier qualification

GREAT LAKES COMNET, INC. V. FCC

823 F.3d 998 (D.C. Cir. 2016)

In May 2016, the United States Court of Appeals for the District of Columbia Circuit decided Great Lakes Comnet v. FCC. (1) The D.C. Circuit found: (1) that Great Lakes Comnet, Inc. (Great Lakes) qualified as a competitive local exchange carrier (CLEC); (2) that the carrier's use of transport facilities in urban areas did not exclude it from the rural exemption; and (3) that remand was appropriate because the FCC failed to demonstrate that an alternative finding was sufficient to sustain its conclusion that Great Lakes was excluded from the exemption. (2)

1. BACKGROUND

   Great Lakes operates as an intermediate carrier in Michigan between local carriers and AT&T's long-distance service. (3) In 2014, AT&T filed a formal complaint with the FCC alleging that Great Lakes was charging access fees that are greater than the benchmark rates imposed on CLECs. (4) The FCC determined that Great Lakes qualified as a CLEC for rate benchmarks and that it did not qualify under the rural exemption to those benchmarks. (5) This case is a petition for review of that order. (6)

2. ANALYSIS

   The Court first determined that Great Lakes qualified as a CLEC for the purpose of benchmark rates under 47 C.F.R. [section] 61.26. (7) Great Lakes argued that intermediate carriers should fall outside the CLEC definition because they do not directly provide any service to end users and therefore the FCC's conclusion to the contrary was "clearly erroneous" under the standard of review developed in Auer v. Robbins. (8) The FCC countered that the regulation only require a CLEC to provide "some of the interstate exchange access services used to send traffic to or from an end user." (9) Additionally, the FCC's 2004 Eighth Report and Order had specifically amended the relevant regulations for the precise purpose of subjecting intermediate carriers to the benchmark rate regulation. (10)

   Great Lakes argued that the canon of surplusage dictated that CLEC definition should be confined to carriers who serve end users directly, and that the FCC's interpretation conflicted with its 2011 Transformation Order. (11) However, the Court determined that the canon did not apply in this case because the regulatory history and text was clear that the CLEC definition did extend to intermediary carriers. (12)

   Additionally, Great Lakes argued that the rate in question conflicts with the 2011 FCC Order, which will transition carriers into a...