                                                                           FILED
                             NOT FOR PUBLICATION                           AUG 21 2013

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U.S. COURT OF APPEALS



                             FOR THE NINTH CIRCUIT


RONAN TELEPHONE COMPANY and                      No. 05-71995
HOT SPRINGS TELEPHONE
COMPANY,                                         FCC No. 05-42

              Petitioners,
                                                 MEMORANDUM*
  v.

FEDERAL COMMUNICATIONS
COMMISSION and UNITED STATES
OF AMERICA,

              Respondents,

T-MOBILE; et al.,

              Respondents-Intervenors.


                     On Petition for Review of an Order of the
                      Federal Communications Commission

                        Argued and Submitted May 7, 2013
                                Portland, Oregon

Before: GOODWIN, REINHARDT, and BERZON, Circuit Judges.




        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
      Ronan Telephone Company and Hot Springs Telephone Company petition

this court to review the FCC’s February 24, 2005 Declaratory Ruling and Report

and Order (the “Order”). We grant the petition and remand.1

      1. The Telecommunications Act of 1996 (“TCA”) ended local telephone

service monopolies and permitted telephone companies “for the first time to

compete with each other for local telephone customers.” AT&T Commc’ns of Cal.,

Inc. v. Pac-West Telecomm, Inc., 651 F.3d 980, 982 (9th Cir. 2011). For

regulatory purposes, the TCA divided local telephone companies into two groups:

incumbent local exchange carriers (“ILECs”), the pre-TCA monopoly actors, and

competitive local exchange carriers (“CLECs”), the post-TCA market entrants. Id.

      2. The TCA opened local telephone markets to the new entrants and

encouraged competition among ILECs and CLECs through a system that imposed

“special obligations on ILECs to mitigate their dominant market position.” Pac-

West, 651 F.3d at 983; Verizon Md., Inc. v. Pub. Serv. Comm’n, 535 U.S. 635, 638

(2002). However, Congress also included exceptions directed toward rural

communities. Thus, many ILECs could be required to negotiate call-termination

rates in good faith and arbitrate rate disputes, preventing them from simply relying

on tariffed charges. See 47 U.S.C. §§ 251(c)(1), 252. But ILECs and other local


      1
    MetroPCS Communications, Inc.’s motion to withdraw as Intervenor is
GRANTED.
telephone companies located in rural communities were specifically permitted to

receive exemptions from the TCA’s negotiation and arbitration requirement, and

they could continue to operate under a tariffed rate regime. Id. §§ 153(44),

251(f)(1)(A).

      3. Unlike the TCA, the Order includes no exceptions, and instead broadly

prohibits all local exchange carriers, including rural carriers, from relying on non-

access traffic tariffs. Yet the FCC did not discuss or analyze the effects of

eliminating these tariffs among rural local exchange carriers. Although the “scope

of review under the arbitrary and capricious standard is narrow and a court is not to

substitute its judgment for that of the agency,” an agency must still “examine the

relevant data and articulate a satisfactory explanation for its action,” and must not

“fail[] to consider an important aspect of the problem.” Motor Vehicle Mfrs. Ass’n

of U.S., Inc., v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43 (1983) (internal

quotation marks omitted). Because the Order does not disclose that the FCC

examined the effects of eliminating non-access traffic tariffs for rural local

telephone companies and the FCC did not explain its order, we remand for further

consideration.

      MOTION TO WITHDRAW AS INTERVENOR GRANTED.

      PETITION GRANTED and REMANDED.


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