Federal Appeals Court Affirms Injunction Against Minnesota PUC's Attempt to Regulate VoIP Provider as a Telecommunications Carrier
As expected, the U.S. Court of Appeals for the Eighth Circuit has affirmed the ruling of a federal District Court in Minnesota enjoining the Minnesota Public Utilities Commission (“PUC”) from regulating VoIP service. The Eighth Circuit's decision, released on Dec. 22, 2004, comes on the heels of, and heavily relies on, the FCC's Nov. 12, 2004, decision determining that the FCC has jurisdiction over VoIP services given their interstate character. See Update: Federal Court Halts State Regulation OF VoIP Provider (Oct. 17, 2003)
The Eighth Circuit’s opinion does not analyze the merits of the FCC’s Vonage Order, or the District Court injunction, but simply concludes that the FCC’s Order pre-empting state PUC regulation “dispositively supports the District Court’s injunction.” This conclusion, however, appears to ignore the fact that the District Court based its decision on a finding that Vonage’s VoIP service was an information service, while the FCC expressly declined to make such a finding. Instead, the FCC ruled only that Vonage’s service was interstate, and thus subject to the FCC’s exclusive jurisdiction.
Nevertheless, the Eighth Circuit found the FCC's decision binding on the appellate court and not reviewable in the appeal of the injunction imposed upon the Minnesota PUC. Because the appellate court accorded the FCC Order such broad deference it seems unlikely that any other state commission will be successful in any attempt to regulate VoIP in the short-term. The appeals court further stated that any challenge to the FCC's decision would have to be taken directly from that decision, not through any collateral attack in federal court.
In a related matter, the California PUC filed an appeal of the FCC’s Vonage Order at the Ninth Circuit. Notwithstanding the Eighth Circuit’s broad deference to the FCC, the California PUC’s filing (which was made on the same day the Eighth Circuit ruled) alleges that the Vonage Order exceeds the FCC’s statutory authority and is arbitrary, capricious and an abuse of discretion.
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