Mci Telecommunications Corp. v. American Telephone

• Decision Date: 17 June 1994
• Docket Number: 93356
• Citation: 129 L.Ed.2d 182,512 U.S. 218,114 S.Ct. 2223
• Parties: MCI TELECOMMUNICATIONS CORPORATION, Petitioner, v. AMERICAN TELEPHONE AND TELEGRAPH COMPANY. UNITED STATES, et al., Petitioners v. AMERICAN TELEPHONE AND TELEGRAPH COMPANY et al
• Court: U.S. Supreme Court

512 U.S. 218

114 S.Ct. 2223

129 L.Ed.2d 182

MCI TELECOMMUNICATIONS CORPORATION, Petitioner,

v AMERICAN TELEPHONE AND TELEGRAPH COMPANY.

UNITED STATES, et al., Petitioners

v. AMERICAN TELEPHONE AND TELEGRAPH COMPANY et al.

Nos. 93-356, 93-521.

Supreme Court of the United States

Argued March 21, 1994.

Decided June 17, 1994.

Syllabus ^*

Title 47 U.S.C. § 203(a) requires communications common carriers to file tariffs with the Federal Communications Commission, and § 203(b)(2) authorizes the Commission to "modify any requirement made by or under . . . this section. . . ." Relying on the latter provision, the Commission issued an order determining that its earlier decision to make tariff filing optional for all nondominant long distance carriers was within its authority to "modify." American Telephone and Telegraph Co., the only dominant long distance carrier, filed a motion with the Court of Appeals seeking summary reversal of the Commission's order. The motion was granted on the basis of that court's prior decision determining that the Commission's authorization of permissive detariffing violated § 203(a).

Held: The Commission's permissive detariffing policy is not a valid exercise of its § 203(b)(2) authority to "modify any requirement." Because virtually every dictionary in use now and at the time the statute was enacted defines "to modify" as meaning to change moderately or in minor fashion, the word "modify" must be seen to have a connotation of increment or limitation. That § 203(b)(2) does not contemplate basic or fundamental changes is also demonstrated by the fact that the only exception to it deals with a very minor matter: The Commission may not require the period for giving notice of tariff changes to exceed 120 days. The Commission's permissive detariffing policy cannot be justified as a nonfundamental "modification." The tariff-filing requirement is the heart of the common carrier subchapter of the Communications Act of 1934, and the policy eliminates that requirement entirely for all except one firm in the long-distance sector, and for 40% of all consumers in that sector. Moreover, it is hard to imagine that a condition shared by so many affected parties qualifies as "special" under § 203(b)(2)'s requirement that when the Commission proceeds "by general order" to make a modification, the order can only apply "to special circumstances or conditions." The Commission's interpretation of the statute is therefore not entitled to deference, since it goes beyond the meaning that the statute can bear. That Congress seemed to manifest agreement with the parties' respective interpretations in later legislation is irrelevant; there has been no consistent history of legislation to which one or the other interpretation is essential. Finally, petitioners' argument that their interpretation better serves the Act's broad purpose of promoting efficient telephone service should be addressed to Congress. Pp. ____.

Affirmed.

SCALIA, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and KENNEDY, THOMAS, and GINSBURG, JJ., joined. STEVENS, J., filed a dissenting opinion, in which BLACKMUN and SOUTER, JJ., joined. O'CONNOR, J., took no part in the consideration or decision of the cases.

Christopher J. Wright, for petitioners U.S. et al.

Donald B. Verrilli, Jr., for petitioner MCI Telecommunications Corp.

David W. Carpenter, for respondents.

Justice SCALIA delivered the opinion of the Court.

Section 203(a) of Title 47 of the United States Code requires communications common carriers to file tariffs with the Federal Communications Commission, and § 203(b) authorizes the Commission to "modify" any requirement of § 203. These cases present the question whether the Commission's decision to make tariff filing optional for all nondominant long distance carriers is a valid exercise of its modification authority.

I

Like most cases involving the role of the American Telephone and Telegraph Company (AT & T) in our national telecommunication system, these have a long history. An understanding of the cases requires a brief review of the Commission's efforts to regulate and then deregulate the telecommunications industry. When Congress created the Commission in 1934, AT & T, through its vertically integrated Bell system, held a virtual monopoly over the Nation's telephone service. The Communications Act of 1934, 48 Stat. 1064, as amended, authorized the Commission to regulate the rates charged for communication services to ensure that they were reasonable and non-discriminatory. The requirements of § 203 that common carriers file their rates with the Commission and charge only the filed rate were the centerpiece of the Act's regulatory scheme.

In the 1970's, technological advances reduced the entry costs for competitors of AT & T in the market for long distance telephone service. The Commission, recognizing the feasibility of greater competition, passed regulations to facilitate competitive entry. By 1979, competition in the provision of long distance service was well established, and some urged that the continuation of extensive tariff filing requirements served only to impose unnecessary costs on new entrants and to facilitate collusive pricing. The Commission held hearings on the matter, see Competitive Carrier Notice of Inquiry and Proposed Rulemaking, 77 F.C.C.2d 308 (1979), following which it issued a series of rules that have produced this litigation.

The First Report and Order, 85 F.C.C.2d 1, 20-24 (1980), distinguished between dominant carriers (those with market power) and nondominant carriers—in the long distance market, this amounted to a distinction between AT & T and everyone else—and relaxed some of the filing procedures for nondominant carriers, id., at 30-49. In the Second Report and Order, 91 F.C.C.2d 59 (1982), the Commission entirely eliminated the filing requirement for resellers of terrestrial common carrier services. This policy of optional filing, or permissive detariffing, was extended to all other resellers, and to specialized common carriers, including petitioner MCI Telecommunications Corp., by the Fourth Report and Order, 95 F.C.C.2d 554 (1983),¹ and to virtually all remaining categories of nondominant carriers by the Fifth Report and Order, 98 F.C.C.2d 1191 (1984). Then, in 1985, the Commission shifted to a mandatory detariffing policy, which prohibited nondominant carriers from filing tariffs. See Sixth Report and Order, 99 F.C.C.2d 1020 (1985). The United States Court of Appeals for the District of Columbia Circuit, however, struck down the Sixth Report's mandatory detariffing policy in a challenge brought somewhat ironically as it now appears—by MCI. See MCI Telecommunications Corp. v. FCC, 765 F.2d 1186 (1985) (Ginsburg, J.). The Court of Appeals reasoned that § 203(a)'s command that "[e]very common carrier . . . shall . . . file" tariffs was mandatory. And although § 203(b) authorizes the Commission to "modify any requirement" in the section, the Court of Appeals concluded that that phrase "suggest[ed] circumscribed alterations not, as the FCC now would have it, wholesale abandonment or elimination of a requirement." Id., at 1192.

In the wake of the invalidation of mandatory detariffing by the Court of Appeals, MCI continued its practice of not filing tariffs for certain services, pursuant to the permissive detariffing policy of the Fourth Report and Order. On August 7, 1989, AT & T filed a complaint, pursuant to the third party complaint provision of the Communications Act, 47 U.S.C. § 208(a), which alleged that MCI's collection of unfiled rates violated § 203(a) and (c). MCI responded that the Fourth Report was a substantive rule, and so MCI had no legal obligation to file rates. AT & T rejoined that the Fourth Report and Order was simply a statement of the Commission's non-enforcement policy, which did not immunize MCI from private enforcement actions; and that if the Fourth Report and Order established a substantive rule, it was in excess of statutory authority. The Commission did not take final action on AT & T's complaint until almost two-and-one-half years after its filing. See AT & T Communications v. MCI Telecommunications Corp., 7 FCC Rcd. 807 (1992). It characterized the Fourth Report and Order as a substantive rule and dismissed AT & T's complaint on the ground that MCI was in compliance with that rule. It refused to address, however, AT & T's contention that the rule was ultra vires, announcing instead a proposed rulemaking to consider that question. See Tariff Filing Requirements for Interstate Common Carriers, Notice of Proposed Rulemaking, 7 FCC Rcd. 804 (1992).

AT & T petitioned for review, arguing, inter alia, that the Commission lacked authority to defer to a later rulemaking consideration of an issue which was dispositive of an adjudicatory complaint. The United States Court of Appeals for the District of Columbia Circuit granted the petition for review. See AT & T v. FCC, 978 F.2d 727 (1992) (Silberman, J.). The Court of Appeals characterized the Commission's failure to address its authority to promulgate the permissive detariffing policy as "a sort of administrative law shell game," id., at 731-732. Addressing that question itself, the Court of Appeals concluded that the permissive detariffing policy of the Fourth Report and Order was rendered indefensible by the 1985 MCI decision: "Whether detariffing is made mandatory, as in the Sixth Report, or simply permissive, as in the Fourth Report, carriers are, in either event, relieved of the obligation to file tariffs under section 203(b). That step exceeds the limited authority granted the Commission in section 203(b) to 'modify' requirements of the Act." Id., at 736. The Court of Appeals then remanded the case so that the Commission could award appropriate relief. See id., at 736-737. We denied certiorari. 509 U.S. ----, ----, 113 S.Ct. 3020, ----, 125 L.Ed.2d 709 (1993).

Moving now with...