Qwest Corp. v. F.C.C.

• Decision Date: 23 March 2007
• Docket Number: No. 05-1469.,No. 05-1450.,No. 06-1043.,No. 06-1039.,No. 06-1014.,05-1450.,05-1469.,06-1014.,06-1039.,06-1043.
• Parties: QWEST CORPORATION, Petitioner v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents McLeodUSA Telecommunications Services, Inc., et al., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

482 F.3d 471

QWEST CORPORATION, Petitioner v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents McLeodUSA Telecommunications Services, Inc., et al., Intervenors.

No. 05-1450.

No. 05-1469.

No. 06-1014.

No. 06-1039.

No. 06-1043.

United States Court of Appeals, District of Columbia Circuit.

Argued February 6, 2007.

Decided March 23, 2007.

On Petitions for Review of an Order of the Federal Communications Commission

L. Andrew Tollin argued the cause for petitioner Qwest Corporation. With him on the briefs were Michael Deuel Sullivan and Robert B. McKenna.

David P. Murray and Russell M. Blau argued the cause for CLEC Petitioners. On the briefs were Thomas Jones, Randy J. Branitsky, Richard M. Rindler, Patrick J. Donovan, Joshua M. Bobeck, and Mary C. Albert. Jason D. Oxman entered an appearance.

Joseph R. Palmore, Counsel, Federal Communications Commission, argued the cause for respondents. With him on the brief were Thomas O. Barnett, Assistant Attorney General, U.S. Department of Justice, Catherine G. O'Sullivan and Nancy C. Garrison, Attorneys, Samuel L. Feder, General Counsel, Federal Communications Commission, Eric D. Miller, Deputy General Counsel, John E. Ingle, Deputy Associate General Counsel, and Nandan M. Joshi, Counsel.

L. Andrew Tollin, Michael Deuel Sullivan, Robert B. McKenna, Scott H. Angstreich, Michael E. Glover, and Edward H. Shakin were on the brief for intervenors Qwest Corporation and the Verizon Companies in support of respondents.

David E. Mills and J.G. Harrington were on the brief for intervenor Cox Communications, Inc.

Before: GRIFFITH and KAVANAUGH, Circuit Judges, and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge WILLIAMS.

STEPHEN F. WILLIAMS, Senior Circuit Judge.

Qwest, the incumbent local exchange carrier ("ILEC") in Omaha, Nebraska, petitioned the Federal Communications Commission for forbearance under § 10(c) of the Communications Act, 47 U.S.C. § 160(c), from some of its obligations under §§ 251(c) and 271 of the Act, 47 U.S.C. §§ 251, 271, in the Omaha Metropolitan Statistical Area ("MSA"). The Commission granted the petition in part, relieving Qwest of the duty to provide its competitors access to certain unbundled network elements. In re Petition of Qwest Corporation for Forbearance Pursuant to 47 U.S.C. § 160(c) in the Omaha Metropolitan Statistical Area, 20 FCC Rcd 19,415, 2005 WL 3287482 (2005) ("Order"). Qwest and several competing local exchange carriers ("CLECs") now seek review of various aspects of the Commission's order.

Qwest asserts that the Commission failed to act on its forbearance request before a statutory deadline, and that therefore the petition should have been "deemed granted" in full. The CLEC petitioners, in turn, challenge the Commission's grant of forbearance as to §§ 251(c)(3) and 271(c)(2)(B)(ii), attacking the Commission's interpretation of § 10(d) of the Act as unreasonable and its analysis under § 10(a) and (b) as arbitrary and capricious. Qwest's claim, however, is barred by the exhaustion requirement of 47 U.S.C. § 405(a), a conclusion compelled by In re Core Communications, Inc., 455 F.3d 267 (D.C.Cir.2006) ("Core"). We find the CLECs' claims ill-founded.

* * * * *

Qwest's petition requested forbearance from many of the statutory and regulatory obligations to which it is subject as the incumbent local exchange carrier in the Omaha MSA, including its obligations under § 251(c) and the "competitive checklist" requirements of § 271(c)(2)(B)(i)-(vi) and (xiv). Order, 20 FCC Rcd at 19,416 ¶ 1 n. 2. Section 10 of the Act provides that the Commission "shall forbear from applying any regulation or any provision" if it determines that: (1) the enforcement of such a regulation or provision is not necessary to ensure that rates or services are "just and reasonable and are not unjustly or unreasonably discriminatory"; (2) enforcement is "not necessary for the protection of consumers"; and (3) forbearance from applying such a regulation or provision is "consistent with the public interest." 47 U.S.C. § 160(a)(1)-(3). In evaluating the public interest, the Commission must ask whether forbearance "will promote competitive market conditions." Id. § 160(b). Section 10(d) provides that no petition for forbearance may be granted as to the obligations in §§ 251(c) or 271 until the Commission "determines that those requirements have been fully implemented." Id. § 160(d).

Any petition for forbearance "shall be deemed granted if the Commission does not deny the petition . . . within one year after the Commission receives it," unless the Commission extends the deadline "an additional 90 days." Id. § 160(c). The Commission timely granted itself a 90-day extension and, on the last day of the extended period, issued a news release announcing that it had voted to grant Qwest's petition in part. News Release, FCC Grants Qwest Forbearance Relief in Omaha MSA, Sept. 16, 2005, Joint Appendix at 652. The release stated that the Commission was relieving Qwest of the "obligation to provide unbundled network elements (UNEs) to competitors in 9 of Qwest's 24 wire center service areas," noting "the substantial infrastructure investment made by Cox Communications, Inc. in its competitive network" in the Omaha MSA. Id. The release explained, however, that the Commission was leaving in place the other requirements of § 251(c), as well as the obligation under § 271 to provide wholesale access to local loops, transport, and switching at just and reasonable prices. Id.

The Commission issued the text of its Order on December 2, 2005, stating, anomalously, that its "decision shall be effective on Friday, September 16, 2005." 20 FCC Rcd at 19,471 ¶ 112 & n. 282. As prefigured in the release, the Order granted Qwest forbearance from providing unbundled loops and dedicated transport elements under 47 U.S.C. § 251(c)(3), as well as related obligations in §§ 251(c)(6) and 271. The Commission found those sections to have been "fully implemented" within the meaning of § 10(d). 20 FCC Rcd at 19,439 ¶ 51. The "substantial intermodal competition" provided by Cox's voice-enabled cable plant was "sufficient" to merit forbearance, the Commission held, in light of the continued applicability of other statutory and regulatory provisions designed to promote competition, such as the resale and interconnection requirements under § 251(c)(4), and access to loops, switching, and transport services under § 271(c)(2)(B)(iv)-(vi). 20 FCC Rcd at 19,444, 19,446 ¶¶ 59, 62. The Commission relieved Qwest from the application of certain "dominant carrier" regulations under 47 U.S.C. § 214 and 47 C.F.R. §§ 61.38 & 61.41-.49 (2006) in mass market switched access and mass market broadband Internet access services, but it denied the petition in all other respects. Id. at 19,417 ¶ 2, 19,424 ¶¶ 15-16.

* * * * * *

We begin with Qwest's claim that its petition should have been "deemed granted" under § 10(c) because the Commission's actions (a vote and press release) did not constitute a "den[ial]" under § 10(c).

47 U.S.C. § 405(a) provides that "[t]he filing of a petition for reconsideration shall not be a condition precedent to judicial review of any such order [of the Commission] . . . except where the party seeking such review ... relies on questions of fact or law upon which the Commission . . . has been afforded no opportunity to pass." As we noted in Core, this circuit has "strictly construed" § 405(a), "holding that we generally lack jurisdiction to review arguments that have not first been presented to the Commission." 455 F.3d at 276 (internal quotation marks omitted). While the statute does not require that the Commission's opportunity "be afforded in any particular manner, or by any particular party," Coalition for Noncommercial Media v. FCC, 249 F.3d 1005, 1008 (D.C.Cir. 2001), the Commission must have somehow been put on notice of the problem. Time Warner Entertainment Co. v. FCC, 144 F.3d 75, 79 (D.C.Cir.1998) ("Time Warner").

Qwest acknowledges both the fact that it never raised the issue before the Commission and the principle that failure to do so isn't excused merely because the issue arose unequivocally only at the moment the Commission took action. That principle is clear. In Core, as here, the Commission voted to deny a petition for forbearance and issued a press release within the statutory deadline, publishing its written order only after the deadline had passed; like Qwest, Core then argued, without seeking reconsideration, that its petition should be "deemed granted." 455 F.3d at 274-75. Yet, noting our precedents under § 405(a), we held that "even when a petitioner has no reason to raise an argument until the FCC issues an order that makes the issue relevant, the petitioner must file a petition for reconsideration with the Commission before it may seek judicial review." Id. at 276-77 (internal quotation marks omitted).

Qwest tries to distinguish Core by noting a subtle difference between its claim and Core's. Whereas Core argued that the Commission was bound by § 10(c) to issue a fully fledged explanation of its ruling by the deadline (on pain of the petition's being deemed granted), Qwest argues more modestly that § 10(c) requires simply a "legally effective public notice" with "enough detail about the rulings to allow the parties to alter their course of conduct." Qwest Reply Br. at 5. This situates Qwest's claim (it says) under "step one" in the conventional lexicon of Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), i.e., a claim to which Congress has spoken "directly." By contrast, Qwest locates Core's claim under "step two," pointing to our statement in Core that we would "ordinarily accord deference to the Commission's interpretation of . . . § 160(c)" under Chevron, and that petitioner's failure to have raised its claim before the...