Court Declines to Apply Filed Rate Doctrine to Rates Dictated By Statute

The filed rate doctrine (also called the filed tariff doctrine) is a century-old cornerstone of regulated-industries law that, generally speaking, bars claims where the effect would be to allow a customer to receive service, or the carrier to provide service, on rates, terms, or conditions that differ from the carrier’s tariff filed with the relevant regulatory agency.  Central Office Tel., Inc. v. AT&T Corp., 524 U.S. 214, 222-23 (1998).  The rule is strict and, where it applies, unyielding.  Id.  The recent district court decision in Smith v. FirstEnergy Corp., No. 2:20-cv-03755 et al., 2021 WL 496415 (S.D. Ohio, Feb. 10, 2021), however, declined to apply the filed rate doctrine where the rates at issue were set directly by legislation.

In the summer of 2020, former Speaker of the Ohio House of Representatives Larry Householder and his political associates were indicted for an alleged $60 million-dollar federal racketing conspiracy. The criminal complaint asserted that Householder and others, in exchange for large bribes from FirstEnergy Corp., collaborated to pass House Bill 6 (HB 6), a near billion-dollar nuclear power plant bailout that would benefit FirstEnergy.  HB 6 required that a monthly surcharge be added to ratepayers’ bills (capped at 85 cents for residential customers and $2,400 for commercial customers), along with other adjustments that would increase rates.  Ratepayers sued FirstEnergy on behalf of a proposed class, asserting federal claims under RICO and other statutes and a state-law claim under the Ohio Corrupt Practices Act.  The alleged injury was having to pay costs and fees set forth in HB 6, and the plaintiffs sought both prospective relief (to stop enforcement of HB 6) and retroactive relief for charges already paid as a result of HB 6.

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DOJ Drops Challenge to California Net Neutrality Law; Trade Associations’ Case Now Takes Center Stage

In a significant development for the years-long net neutrality debate, yesterday the U.S. Department of Justice dropped its suit to enjoin California’s net neutrality law (SB 822) (No. 2:18-cv-0660, E.D. Cal.).  The California law reimposes on broadband Internet Service Providers several requirements the Federal Communications Commission (FCC) rescinded in its 2018 Restoring Internet Freedom Order, 33 FCC Rcd 311.  For example, the California law prohibits blocking of lawful content, apps, and services; throttling of Internet traffic; and paid prioritization of traffic, and also contains a general prohibition on unreasonable practices.  The DOJ sued to enjoin the California statute as being conflict-preempted.  Several amici, including groups of scholars and many state Attorneys General, weighed in on both sides, and briefing on the preliminary injunction was complete.  With the new federal administration in place that may have a different view on net neutrality regulation, however, the DOJ elected to bow out of the fight.  But this is not the end.  Several telecommunications/internet trade associations have a separate pending case before the same judge, challenging the statute on preemption and Dormant Commerce Clause grounds, and are to report to the court on Feb. 16 how they wish to proceed in light of the DOJ’s action (No. 2:18-cv-02864, E.D. Cal.).  That case remains especially important as a bellwether, because at least some other states have looked to the California statute as a template for net-neutrality laws.

The other major pending case on a state net neutrality law is in Vermont district court, where major trade associations have challenged a Vermont law and executive order that tie eligibility for state contracts to meeting specified net neutrality requirements (No. 18-00167, D. Vt.).  This type of law, tying net neutrality to eligibility for state contracts rather than imposing duties on all internet providers, is different from California’s and represents the other major flavor of state net neutrality efforts, whether pursued by statute or executive order.  The DOJ did not join the Vermont case.  That case had been stayed pending a ruling on the preliminary injunction request in California, but now should go forward.  The first order of business presumably will be to complete briefing on and decide the State’s pending motion to dismiss for lack of standing, which alleges the plaintiffs have suffered no injury from the state requirements.

FCC Emphasizes Limits On Local Fees For Small-Cell Facilities

Wireless telecom providers have been deploying new small-cell technology and equipment for 5G service across the nation.  Deployment often requires the providers to obtain access to public rights of way to put their small-cell equipment on cities’ or municipalities’ utility poles (or use underground ducts or conduit).  Cities and municipalities, of course, seek compensation for allowing this access to public equipment and rights-of-way.  The FCC addressed this compensation issue in 2018, setting safe-harbor caps on local fees but allowing higher charges if they meet certain requirements.  Accelerating Wireless Broadband Deployment by Removing Barriers to Infrastructure Investment, 33 FCC Rcd 9088 (2018).  The Ninth Circuit upheld that decision in relevant part.  City of Portland v. FCC, 969 F.3d 1020 (9th Cir. 2020).

Clark County, Nevada (home of Las Vegas) adopted an ordinance with annual fees well above the FCC’s safe harbors.  The ordinance required holder of a Master Use License Fee to pay 5% of gross revenues each calendar quarter, plus a Wireless Site License Fee of $700 to $3,960/year/facility (with annual increases of 2%), plus an Annual Inspection Fee of $500 per Small Wireless Facility in county rights-of-way.  Verizon challenged that ordinance at the FCC as being preempted by 47 U.S.C. 253(d) because it effectively prohibited Verzon from providing service.  The FCC, through its Wireless Telecommunications Bureau, recently dismissed Verizon’s complaint without prejudice in light of Clark County having adopted a new ordinance.  Petition for Declaratory Ruling That Clark County, Nevada Ordinance No. 4659 is Unlawful Under Section 253 of the Communications Act as Interpreted by the Federal Communications Commission and is Preempted, WT Docket No. 19-230, DA 21-59 (rel. Jan. 14, 2021).   In doing so, however, the FCC emphasized three key aspects of its rules that certainly will bear on any pending or future disputes between wireless providers and other municipalities that seek to impose fees above the FCC’s safe harbors.  These points appear directed at preventing other state or local authorities from making some of the same arguments Clark County was making.

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