Federal Brief Filed in Consolidated First Circuit Review
On April 15, 2025, the Federal Communications Commission (FCC) and the U.S. Department of Justice Antitrust Division filed their joint brief as respondents in the U.S. Court of Appeals for the First Circuit in Case No. 24-8028 (and consolidated cases, RE: MCP 191). The filing defends the Commission's order implementing the Martha Wright-Reed Just and Reasonable Communications Act of 2022, which established comprehensive rate caps and regulatory reforms for Incarcerated People's Communications Services (IPCS).
The consolidated petitions for review involve challenges brought by commercial service providers—including Securus Technologies, LLC and Pay Tel Communications, Inc., supported by intervenor Global Tel*Link (d/b/a ViaPath Technologies)—multiple state attorneys general and sheriffs' associations, and public interest advocacy organizations including Direct Action for Rights and Equality (DARE), the Criminal Justice Reform Clinic, and the Pennsylvania Prison Society.
- Case: No. 24-8028 and consolidated cases (MCP No. 191) in the U.S. Court of Appeals for the First Circuit
- Filing Date: April 15, 2025
- Respondents: Federal Communications Commission and the United States of America
- Statutory Authorities: 47 U.S.C. § 276, 47 U.S.C. § 201(b), and the Martha Wright-Reed Just and Reasonable Communications Act of 2022 (Pub. L. No. 117-338)
Defense of Ratemaking Methodology and Used-and-Useful Framework
The federal respondents argue that the FCC properly exercised its statutory authority under amended section 276(b)(1)(A) of the Communications Act to ensure both that IPCS rates and charges are 'just and reasonable' and that service providers are 'fairly compensated.' To set rate caps across facility tiers, the Commission applied the traditional 'used-and-useful' ratemaking standard, which separates legitimate operating costs that benefit end users from extraneous, imprudent, or unrelated expenses.
The brief explains that Congress expressly authorized the Commission under section 3(b)(1) of the Martha Wright-Reed Act to rely on industry-wide average costs and deleted the former statutory requirement to ensure compensation for 'each and every' call. The FCC established zones of reasonableness based on reported provider cost data from its 2023 Data Collection, setting rate caps that enable providers covering 96 percent of IPCS minutes to recover their reported allowable costs while providing a waiver process for exceptional cases.
- Permanent audio IPCS rate caps set between $0.06 and $0.12 per minute depending on facility size and type (prisons, large jails, medium jails, small jails, and very small jails)
- Interim video IPCS rate caps established between $0.11 and $0.25 per minute
- Rate calculations derived by dividing annual total allowable expenses by total minutes of use, encompassing both billed and unbilled minutes
Assessment of Safety, Security, and Facility Costs
Addressing challenges to its treatment of safety and security expenses, the FCC maintained that it fulfilled its mandate under section 3(b)(2) of the Act to consider costs necessary to provide IPCS. Based on data collected from providers, the Commission categorized safety and security expenses into seven groupings, finding that costs for basic 'communications security services' (such as blocking unapproved call destinations and preventing three-way calls) and CALEA compliance are used and useful to providing communication in a carceral setting.
Conversely, the Commission excluded elective law enforcement support services—such as search warrant processing, investigative monitoring, speech-to-text database indexing, and litigation support—from the lower bounds of rate caps, explaining that such general investigative tools are not required to provide communications services and should be funded directly by correctional institutions rather than through rates charged to incarcerated people and their families.
- Communications security costs represented approximately 34 percent ($179.6 million of $523.6 million) of total reported provider safety and security costs and were included as used and useful
- Excluded non-compensable categories include law enforcement support services, investigative communication recording, keyword monitoring, and voice biometrics
- Facility costs were accounted for via an upper-bound allowance of $0.02 per minute and authorization for providers to reimburse facilities for actual, documented used-and-useful IPCS enablement costs
Prohibition of Site Commissions and Ancillary Fee Reforms
The Commission defended its complete ban on site commissions—payments from providers to correctional facilities that compensate for the transfer of monopoly access. The FCC concluded that site commissions distort competition and exert upward pressure on rates, historically accounting for over 33 percent (and up to 70 percent) of out-of-pocket charges. Invoking express preemption under 47 U.S.C. § 276(c) as well as conflict preemption under section 201(b), the FCC barred contracts requiring or permitting site commissions and preempted conflicting state and local laws.
The filing also defended the elimination of separate ancillary service charges, such as fees for credit card funding, live-agent assistance, and paper statements. The Commission incorporated reasonable ancillary costs directly into per-minute rate caps, eliminating opportunities for double-billing and gamesmanship while ensuring a clearer, more predictable billing structure.
- Prohibited contracts requiring or permitting providers to pay site commissions associated with IPCS
- Preempted state and local mandates requiring site commissions under 47 U.S.C. § 276(c) and § 201(b)
- Banned separate ancillary service fees effective 60 days post-publication while providing a staggered schedule for rate caps and site commission contract revisions
- Declined to preempt lower state-mandated rate caps, determining that federal ceilings do not conflict with lower state ceilings
Procedural, Venue, and Constitutional Arguments
The brief addresses several threshold and constitutional claims. The FCC and DOJ asserted that venue is proper in the First Circuit following the Judicial Panel on Multidistrict Litigation's random lottery selection under 28 U.S.C. § 2112(a)(3). The government rejected provider claims that the lottery was improper, noting that public notice rules under 47 C.F.R. § 1.4(b)(1) tie statutory appeal windows to Federal Register publication.
Finally, the brief argues that the petitioning States' constitutional challenge regarding presidential removal authority under Article II's Take Care Clause is procedurally barred under 47 U.S.C. § 405(a) because it was never presented to the agency during administrative proceedings. Even if considered, the brief explains that 47 U.S.C. § 154(c) sets five-year commissioner terms without statutory removal restrictions, and the States showed no compensable harm or causal link between commissioner tenure and the adoption of the Order under Collins v. Yellin.
- Venue confirmed in the First Circuit under 28 U.S.C. § 2112(a) lottery procedures
- Permitted optional alternate pricing plans (such as monthly flat-rate bundles) subject to consumer safeguards and breakeven requirements
- Constitutional removal challenge deemed barred by 47 U.S.C. § 405(a) administrative exhaustion requirements and unsubstantiated on the merits