Background
In 2024, the Federal Communications Commission revised its regulation of communications services provided to incarcerated people after Congress enacted the Martha Wright-Reed Just and Reasonable Communications Act. Among other measures, the FCC adopted rate caps, prohibited providers from paying “site commissions” to correctional authorities, and preempted state and local laws requiring those payments. The agency distinguished site commissions from reimbursement for correctional facilities’ used-and-useful costs of enabling communications services.
States, Louisiana sheriffs, service providers, and nonprofit organizations filed petitions challenging different parts of the 2024 order. After oral argument, the FCC issued a 2025 order that revised its rate-cap calculations. The providers then requested dismissal of their petitions, the states conceded that some challenges were moot, and the nonprofits maintained several challenges. The First Circuit addressed the remaining claims while reserving overlapping rate-cap issues for consideration with pending challenges to the 2025 order.
The Court’s Holding
The First Circuit rejected the states’ statutory and administrative-law challenges to the site-commission provisions. It held that the states had not shown that the FCC lacked authority under 47 U.S.C. § 201(b) to prohibit site-commission payments. The states also failed to overcome the FCC’s determination that interstate and intrastate aspects of those payments could not practicably be separated. Because the FCC acted within its authority, the court also upheld its preemption of state and local requirements that conflicted with the prohibition.
The court further held that the FCC reasonably explained its decision to prohibit site commissions, including why eliminating them was unlikely to reduce access to communications services. It dismissed the states’ constitutional challenge to the FCC’s structure for lack of statutory jurisdiction because the issue had not been presented to the agency as required by 47 U.S.C. § 405(a), and it declined to recognize a futility exception to that exhaustion requirement.
In the consolidated proceeding, the court dismissed the providers’ petitions at their request, dismissed parts of the states’ petitions as moot or jurisdictionally barred, and denied the remaining state claims. It also denied the nonprofits’ challenges to alternate pricing plans and disclosure rules, while holding their challenges to the treatment of safety-and-security and correctional-facility costs in abeyance for resolution alongside challenges to the FCC’s 2025 order.
Key Takeaways
- The FCC may prohibit site-commission payments under § 201(b) where interstate and intrastate aspects of the payment practice cannot practicably be separated.
- The FCC may preempt state and local requirements that conflict with a valid federal prohibition on site commissions.
- Section 405(a)’s issue-exhaustion requirement barred the states’ constitutional challenge because they had not first presented it to the FCC, and the court recognized no futility exception.
Why It Matters
The decision preserves the FCC’s central effort to prevent payments to correctional authorities from increasing the communications costs borne by incarcerated people and their families. It also confirms that the agency’s interstate authority can reach inseparable intrastate practices and support conflict preemption.
The ruling does not resolve every dispute over the FCC’s revised regulatory framework. Challenges concerning the costs incorporated into the rate caps remain in abeyance and will be considered with the petitions contesting the FCC’s 2025 order.