DC Circuit Denies Sandwich Isles Challenge to FCC Cut in Undersea Cable Cost Recovery
Judges rejected a Sandwich Isles Communications challenge to an FCC order cutting staff-approved access-charge cost recovery for a Hawaiian Island undersea cable. "The Commission found that the equitable considerations relied upon by the Wireline Bureau’s decision no longer justified recovery…
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of 50 percent of the Paniolo cable costs -- the projected growth never materialized," said the unsigned memorandum and judgment Tuesday of Judges Patricia Millett, Gregory Katsas and Laurence Silberman of the U.S. Court of Appeals for the D.C. Circuit in Sandwich Isles v. FCC, No. 17-1036. "The Commission allowed Sandwich Isles to keep the sums it had received in the past. Prospectively, the Commission found that ... Sandwich Isles could only recover $1.9 million annually from the [National Exchange Carrier] Association’s pool." The judges rejected Sandwich Isles arguments. To the extent it "questions the Commission’s 'used and useful' standard, which is used to determine whether a regulated company’s expenses are justified, its argument can be quickly disposed of. Sandwich Isles is attacking a standard regulatory agencies have been using for decades," the panel said. It said Sandwich Isles' primary argument was against the appropriateness of FCC reversal of bureau funding. "Sandwich Isles regards the Commission’s actions as analogous to the Commission reversing its own position without any supporting reasoning. That simply misunderstands administrative law," the panel said. "The Commission is not bound by the decisions of a subordinate body." Plus, the FCC "reasonably explained its decision," the panel said. At oral argument, the judges questioned some Sandwich Isles assertions (see 1809240031). "To be sure, it is quite troubling, as Petitioner contends, that the Commission sat on its appeal, as well as AT&T’s, for six years," the panel said. "But Petitioner was not injured by the delay -- American ratepayers were. Indeed, since the Commission allowed Petitioner to keep the expenses authorized by the Wireline Bureau through 2016, it actually benefitted by the delay. In another situation such a delay might be intolerable but certainly not in this case." A Sandwich Isles representative didn't comment.