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Recent notable developments include the following:

AB 375 Amending CEQA/Telecom Exemption:

AB 375 was introduced last month by California Assembly Member Cogdill to amend Section 21080 of the Public Resources Code, better known as the California Environmental Quality Act or CEQA. CEQA is the broadest of California’s environmental laws, applying to virtually every public agency in the state, as well as the activities those agencies approve that could potentially affect the environment. Unless a public or private project is exempt, an agency is required to determine its potential for significant environmental effects, and document such review by preparing either a Negative Declaration or an Environmental Impact Report (EIR). This bill would add a new ministerial exemption from CEQA, for minor alterations of structures, facilities, or equipment of a utility providing telecommunications services to the public. – Reported by our real estate, land use and environmental partner Kristen Thall Peters.

AB 375 also includes an exemption from CEQA and EIR requirements, for any construction of telecom utility facilities “if the construction occurs on a publicly owned or maintained right-of-way.” Question whether this favorable, broad CEQA exemption should be amended to cover all franchised or certificated communications provider facilities, not just those of a “utility”.


Wireless Truth-In-Billing and State Preemption:

The FCC released on March 18, 2005 its full-text Declaratory Ruling on Truth-In-Billing for cellular telephone and other wireless communication services. Wireless carriers are now expressly subject to federal rules requiring that billing descriptions be brief, clear, non-misleading and in plain language. It is now deemed misleading for the service provider to identify any discretionary charge to suggest that it is a tax or government mandated charge, rather than the carrier’s attribution of internalized regulatory costs. Importantly, the FCC has determined that state regulations requiring or prohibiting the use of line items when billing wireless services, constitute rate regulation and are therefore preempted. Further elaborations of these rules have also been proposed for public comment as a part of the FCC’s Order. (Declaratory Ruling, etc., FCC 05-55, March 18, 2005) The FCC’s finding that state or local regulation of line-item billing, is rate regulation and therefore preempted by federal rate authority, reflects a logic that could also be applied to non-wireless services (see paragraphs 30-37).


No More “Naked” DSL Unbundling Rules?:

News reports are that the FCC voted at its March 17 meeting (ex-Chairman Powell’s last) to preempt state regulations requiring BellSouth and perhaps other telephone companies, to sell their digital subscriber line (DSL) Internet access service on a “naked” or unbundled, stand alone basis, such as to customers who do not wish to obtain basic telephone service from that company. The FCC’s as-yet unreleased ruling reportedly derives from technical aspects of its telephone deregulation orders, and from treatment of broadband DSL as an interstate information service free of public-utility regulation. Thus, even if the FCC indeed rules that BellSouth and other telephone companies have the right to withhold or cut off DSL service to a customer who doesn’t buy, or cancels, their phone service, such tactics conceivably may still be open to antitrust challenge as improper competitive efforts, consistent with the Covad appellate ruling referenced in our Memo of March 10, 2005.


Federal Class Action Fairness Act:

President Bush has now signed the Class Action Fairness Act of 2005, passed by Congress as Bill S.5 amending civil litigation rules under Title 28, U.S. Code in response to state-court forum shopping and other abuses by the class-action plaintiff’s bar. Under the new federal Act, class-action suits involving 100 plaintiffs or more, with parties from different states, and total damages estimated at more than $5 million, generally must be filed in federal (not state) courts only. In addition, “coupon” settlements will be tightened by basing class plaintiff attorney fee recoveries on the value of coupons actually redeemed, or attorney hours spent, rather than on the nominal face value of classwide coupon settlements. While it is probable that some class actions will be tailored by plaintiffs’ counsel to avoid the federal court requirement, it is hoped that those class actions which are channeled into federal court will then be scrutinized and administered by a more disciplined and demanding federal judiciary than is sometimes found in state-court havens for consumer actions. Unlike California’s Proposition 64 reform of unfair business practices cases, the new federal Act clearly applies by its terms, only prospectively to cases “commenced on or after the date of enactment” in early 2005.


FCC Extends Time for Integrated Set-Top Boxes:

The FCC last week extended the deadline for cable operators to suspend deployment of integrated set-top boxes, for one year to July 2007. After the transition date, consumers would have the right to buy a set-top box, and security access to video programming, separately (and perhaps by that time, with security clearance by online download rather than a card or other access device). (Second Report and Order, FCC 05-76, March 17, 2005)


Political Obscenity or Balloon Malfunction?:

Indecency and obscenity complaints against CNN’s broadcast of the 2004 Democratic National Convention festivities were denied by the FCC last week. Consistent with other recent decisions, the Commission affirmed that CNN and other cable services are not subject to the FCC indecency rules, which clearly apply only to broadcast services. The FCC also unsurprisingly found that CNN’s news coverage, including an event producer’s spontaneous cursing at a balloon malfunction, did not meet the definition of legal obscenity (i.e. speech completely without Constitutional protection). (FCC Order, DA05-717, released March 17, 2005) It remains a curiosity of our era, in any event, that news coverage of a presidential nominating convention has required a governmental enforcement ruling under speech laws.


Regressive Communications Taxes:

Our state and local taxation partner Peter Michaels notes a recent article of scholarly advocacy which reviews state taxes on wireless communications services and finds that they are harmfully “inefficient” as a matter of tax policy. Such taxes burden a service which is relatively important in the budget of the poor as well as the affluent, thereby discouraging consumption and damaging consumer welfare disproportionately to the tax revenue raised. (“Do States Tax Wireless Services Inefficiently? Evidence on the Price Elasticity of Demand”, by Alan Ingraham (American Enterprise Institute) and Gregory Sidak, Virginia Tax Review, Fall 2004). Similar reasoning may apply to cable television and utility user taxes on communications services, as well as to the federal telephone excise tax, a “temporary” artifact of the Spanish-American War which has lasted over 100 years.


Recycling Electronic Waste:

Electronic waste contains hazardous materials in circuit boards, batteries, and cathode ray tubes (“CRTs”). For example, CRT monitors contain an average of four pounds of lead. In response, California recently enacted a groundbreaking electronic waste recycling law that requires consumers to pay an advance recycling fee to retailers, primarily (for now) on CRTs and other video monitors more than 4″ diagonal. The fee is remitted to the State to reimburse recyclers and collectors for the costs of product recovery and recycling. (California Electronic Waste Recycling Act, SB 20 enacting Health & Safety Code Sections 42460 et seq.) Other states and the federal government are now watching to see how the California solution performs. Although there is no current federal legislation specifically governing the recycling of electronic waste, we will likely see some in the near future as the EPA recently sponsored a national electronics meeting to discuss how to boost electronic waste recycling. It will be interesting to see to whom the recycling burden will shift in future legislation (product purchasers, retailers, manufacturers, disposers or taxpayers). In the meantime, it is of note that cell phones, monitors, computers, and other electronic goods all contain a number of toxic substances, the disposition of which may require hazardous waste type handling if local recycling options are not found. – Reported by Kristen Thall Peters


Joys of Broadband:

Thanks to Perry Bradshaw, Associate General Counsel of Meredith Corporation who is the creator of the attached (via email only) photographs of Northern Lights (aurora borealis) seen from Churchill, Manitoba in late winter 2005, reflecting a terrestrial view of solar radiation energizing our upper atmosphere. [Unasked, we say: ©2005 Perry Bradshaw, All Rights Reserved] We hasten to add we have never heard Perry say, “Astronomy is often more exciting than my law practice,” as did Edwin Hubble, Esq. (1928), discoverer of Hubble’s Constant and the Big Bang.

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