U.S. West v. Fed. Commun. Comm'n

• Decision Date: 18 August 1999
• Docket Number: No. 98-9518,98-9518
• Citation: 182 F.3d 1224
• Parties: (10th Cir. 1999) U.S. WEST, INC., Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION, and UNITED STATES OF AMERICA, Respondents, AIRTOUCH COMMUNICATIONS, INC. (AIRTOUCH); SPRINT CORPORATION; AT&T CORPORATION; SBC COMMUNICATIONS, INC. (SBC); SOUTHWESTERN BELL TELEPHONE COMPANY; PACIFIC BELL; NEVADA BELL; MCI TELECOMMUNICATIONS CORPORATION; COMPETITIVE TELECOMMUNICATIONS ASSOCIATION; COMPETITION POLICY INSTITUTE; BELLSOUTH CORPORATION; FRONTIER CORPORATION, Intervenors, and INFORMATION INDUSTRY ASSOCIATION, Amicus Curiae
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1224

182 F.3d 1224 (10th Cir. 1999)

U.S. WEST, INC., Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION, and UNITED STATES OF AMERICA Respondents, AIRTOUCH COMMUNICATIONS, INC. (AIRTOUCH); SPRINT CORPORATION; AT&T CORPORATION; SBC COMMUNICATIONS, INC. (SBC); SOUTHWESTERN BELL TELEPHONE COMPANY; PACIFIC BELL; NEVADA BELL; MCI TELECOMMUNICATIONS CORPORATION; COMPETITIVE TELECOMMUNICATIONS ASSOCIATION; COMPETITION POLICY INSTITUTE; BELLSOUTH CORPORATION; FRONTIER CORPORATION, Intervenors, and INFORMATION INDUSTRY ASSOCIATION, Amicus Curiae.

No. 98-9518

UNITED STATES COURT OF APPEALS TENTH CIRCUIT

August 18,1999

ON PETITION FOR REVIEW OF AN ORDER OF THE FEDERAL COMMUNICATIONS COMMISSION. (FCC 98-27)

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Laurence H. Tribe, Cambridge, Massachusetts (Jonathan S. Massey, Cambridge, Massachusetts; Dan L. Poole, Robert B. McKenna, and Kathryn Marie Krause, U.S. West, Inc., Washington, D.C.; Charles R. Morgan, M. Robert Sutherland, and A. Kirven Gilbert, III, BellSouth Corp., Atlanta, Georgia; James D. Ellis, Robert M. Lynch, Durward D. Dupre, Michael J. Zpevak, Robert J. Gryzmala, SBC Communications, Inc., Southwestern Bell Telephone Co., Pacific Bell, Nevada Bell, Dallas, Texas, with him on the briefs), appearing for Petitioner and Intervenors BellSouth Corp., SBC Communications, Inc., Southwestern Bell Telephone Co., Pacific Bell and Nevada Bell.

John E. Ingle, Deputy Associate General Counsel, Federal Communications Commission, Washington, D.C. (Christopher J. Wright, General Counsel, and Carl D. Lawson, Counsel, Federal Communications Commission, Washington, D.C., and Frank Hunger, Assistant Attorney General, Mark Stern and Jacob Lewis, Attorneys, United States Department of Justice, Washington, D.C., with him on the brief), appearing for Respondent.

Donald B. Verrilli, Jr., Jenner & Block, Washington, D.C. (Ann M. Kappler, Elizabeth A. Cavanagh, and Elena N. Broder, Jenner & Block, Washington, D.C.; Thomas F. O'Neil, III, Matthew B. Pachman, and Maria L. Woodbridge, MCI Telecommunications, Inc., Washington, D.C.; Genevieve Morelli, Competitive Telecommunications Association, Robert J. Aamoth, Steven A. Augustino, Kelley, Frye & Warren LLP; Jay C. Keithley and Michael B. Fingerhut, Sprint Corp., with him on the brief), appearing for Intervenors MCI Telecommunications, Inc., Sprint Corporation and Competitive Telecommunications Association.

Steven J. Metalitz, Smith & Metalitz, LLP, Washington, D.C., and Charlene B Flick, Information Industry Association, Washington, D.C., filed an amicus curiae brief on behalf of Information Industry Association.

John D. Windhausen, Jr., General Counsel, Competition Policy Institute, Washington, D.C., Glenn B. Manishin, Kenneth R. Boley, and Elise P.W. Kiely, Blumenfeld & Cohen, Washington, D.C., filed a brief for Intervenor Competition Policy Institute.

Before TACHA, EBEL, and BRISCOE, Circuit Judges.

TACHA, Circuit Judge.

Pursuant to 28 U.S.C. § 2342(1) and 47 U.S.C. § 402(a), U.S. West, Inc. petitions for review of a Federal Communication Commission ("FCC") order restricting the use and disclosure of and access to customer proprietary network information ("CPNI"). See Second Report and Order and Further Notice of Proposed Rulemaking: In the Matter of Implementation of the Telecommunications Act of 1996; Telecommunications Carriers' Use of Consumer Proprietary Network Information and Other Customer Information; Implementation of Non-Accounting Safeguards of Sections 271 and 272 of the Communications Act of 1934, as Amended, 63 Fed. Reg. 20,326 (1998) ("CPNI Order"). Petitioner argues that the regulations adopted by the CPNI Order constitute an arbitrary and capricious interpretation of the controlling provisions of 47 U.S.C. § 222 and are impermissible because they violate the First and Fifth Amendments of the United States Constitution. The regulations require telecommunications companies, in most instances, to obtain affirmative approval from a customer before the company can use that customer's CPNI for marketing purposes. We vacate the FCC's CPNI Order, concluding that the FCC failed to adequately consider the constitutional ramifications of the regulations interpreting § 222 and that the regulations violate the First Amendment.

I. Introduction

This case involves classic issues of separation of powers and the courts' necessary role as guardians of constitutional interests. It is seductive for us to view this as just another case of reviewing agency action. However, this case is a harbinger of difficulties encountered in this age of exploding information, when rights bestowed by the United States Constitution must be guarded as vigilantly as in the days of handbills on public sidewalks. In the name of deference to agency action, important civil liberties, such as the First Amendment's protection of speech, could easily be overlooked. Policing the boundaries among constitutional guarantees, legislative mandates, and administrative interpretation is at the heart of our responsibility. This case highlights the importance of that role.

II. Background

The dispute in this case involves regulations the FCC promulgated to implement provisions of 47 U.S.C. § 222, which was enacted as part of the Telecommunications Act of 1996. Section 222, entitled "Privacy of customer information," states generally that "[e]very telecommunications carrier has a duty to protect the confidentiality of proprietary information of, and relating to . . . customers." 47 U.S.C. § 222(a). To effectuate that duty, § 222 places restrictions on the use, disclosure of, and access to certain customer information. At issue here are the FCC's regulations clarifying the privacy requirements for CPNI.¹ The central provision of § 222 dealing with CPNI is § 222(c)(1), which states:

Except as required by law or with the approval of the customer, a telecommunications carrier that receives or obtains customer proprietary network information by virtue of its provision of a telecommunications service shall only use, disclose, or permit access to individually identifiable customer proprietary network information in its provision of (A) the telecommunication service from which such information is derived, or (B) services necessary to, or used in, the provision of such telecommunications service, including the publishing of directories.

Section 222(d) provides three additional exceptions to the CPNI privacy requirements. Those exceptions allow a telecommunications carrier to use, disclose or permit access to CPNI:

(1) to initiate, render, bill, and collect for telecommunications services,

(2) to protect the rights or property of the carrier, or to protect users of those services and other carriers from fraudulent, abusive, or unlawful use of, or subscription to, such services, or

(3) to provide any inbound telemarketing, referral, or administrative services to the customer for the duration of the call, if such call was initiated by the customer and the customer approves of the use of such information to provide such service.

47 U.S.C. § 222(d). Therefore, the essence of the statutory scheme requires a telecommunications carrier to obtain customer approval when it wishes to use, disclose, or permit access to CPNI in a manner not specifically allowed under § 222.

Section 222 is not the first time the government has placed restrictions on telecommunications carriers' use or disclosure of CPNI. Prior to the enactment of § 222, the FCC had imposed CPNI requirements on the enhanced service operations of several major telecommunications carriers. See CPNI Order ¶ 7. The FCC imposed these CPNI requirements primarily to prevent large carriers from gaining a competitive advantage in the unregulated enhanced services markets through the use of CPNI, thereby protecting smaller carriers. See id. In contrast, Congress made § 222, which is much broader in scope than previous CPNI requirements, applicable to all carriers, not just the dominant ones. This suggests that Congress enacted § 222 for a substantially different purpose than previous FCC CPNI requirements.

Faced with the new CPNI restrictions, various telecommunications companies and trade associations sought FCC guidance regarding their obligations under § 222. See id. ¶ 6 & n.25. These requests, along with a petition for a declaratory ruling regarding the interpretation of the term "telecommunication service" under § 222(c)(1), prompted the FCC to commence a rulemaking on May 17, 1996. See id. ¶ 6; In the Matter of Implementation of the Telecommunications Act of 1996: Telecommunication Carriers' Use of Customer Proprietary Network Information and Other Customer Information, Notice of Proposed Rulemaking, 61 Fed. Reg. 26,483 (1996) ("CPNI NPRM"). The CPNI NPRM sought comment on, among other things: "(1) the scope of the phrase 'telecommunications service,' as it is used in section 222(c)(1) . . . ; (2) the requirements for customer approval; and (3) whether the Commission's existing CPNI requirements should be amended in light of section 222." CPNI Order ¶ 6 (citing CPNI NPRM ¶¶ 20-33, 38-42). On February 26, 1998, the FCC released the CPNI Order we now review. The CPNI Order addresses the meaning and scope of § 222 and adopts regulations to implement the statute's CPNI requirements. See 47 C.F.R. pt. 64, subpt. U (1998).

The regulations adopted by the CPNI Order interpret § 222(c)(1) through a framework known as the "total service approach." That approach divides the term "telecommunications service" into three service categories: (1) local; (2) interexchange (which includes most long-distance toll service); and (3) commercial mobile radio service ("CMRS") (which includes mobile or cellular service). See 47 C.F.R. § 64.2005(a). Broadly stated, the regulations permit a telecommunications carrier to use, disclose, or share CPNI for the purpose of marketing products within a category of service...