RONAN TELEPHONE COMPANY and HOT SPRINGS TELEPHONE COMPANY v. FEDERAL COMMUNICATIONS COMMISSION and UNITED STATES OF AMERICA

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
RONAN TELEPHONE COMPANY and
HOT SPRINGS TELEPHONE
COMPANY,
Petitioners,
v.
FEDERAL COMMUNICATIONS
COMMISSION and UNITED STATES
OF AMERICA,
Respondents,
T-MOBILE; et al.,
Respondents-Intervenors.
No. 05-71995
FCC No. 05-42
MEMORANDUM*
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.
FILED
AUG 21 2013
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.

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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.

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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.
3

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