United States Telecom Association v. Federal Communications Commission

Congress enacted the Telecommunications Act of 1996 (Act), 47 U.S.C. § 151 et seq., to encourage competition in the telecommunications market. The Act gave the Federal Communications Commission (FCC) (defendant) the authority to require incumbent local exchange carriers (ILECs) to unbundle network elements for use by other carriers, including new market entrants known as competitive local exchange carriers (CLECs). Section 251(d)(2) of the Act gave the FCC the discretion to determine which elements to unbundle, provided that the FCC considered whether a decision not to unbundle would impair a CLEC’s ability to offer a particular service. After the FCC’s initial attempts to apply § 251(d)(2) were struck down by the courts, the FCC issued an order adopting a new approach that attempted to base unbundling criteria on a variety of specific market characteristics. Under the order, the FCC subdelegated to state regulatory commissions the authority to make specific determinations about whether CLECs were impaired by a lack of unbundling in specific areas. The FCC’s order gave the states the discretion to define the relevant markets and conduct necessary analyses. The order also provided for FCC review of state decisions, but did not specify when or if the FCC had to respond. The United States Telecom Association and other ILECs (plaintiffs) petitioned the United States Court of Appeals for the District of Columbia Circuit for review, challenging the order on the basis that the FCC’s subdelegation to the state commissions was unlawful.