WJG Tel. Co., Inc. v. F. C. C.

• Decision Date: 09 April 1982
• Docket Number: No. 81-1461,81-1461
• Citation: 675 F.2d 386,219 U.S.App.D.C. 367
• Parties: WJG TELEPHONE COMPANY, INC., Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents, American Telephone and Telegraph Co., American Waterways Operators, Inc., River Communications, Inc., Waterway Communications System, Inc., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 386

675 F.2d 386

218 U.S.App.D.C. 367

WJG TELEPHONE COMPANY, INC., Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents American Telephone and Telegraph Co., American Waterways Operators, Inc., River Communications, Inc. Waterway Communications System, Inc., Intervenors.

No. 81-1461.

United States Court of Appeals District of Columbia Circuit.

Argued Jan. 28, 1982.

Decided April 9, 1982.

John M. Ballenger, Lubbock, Tex., for petitioner.

Dennis C. Brown, Washington, D. C., with whom Jeremiah Courtney and Jack R. Smith, Washington, D. C., were on the brief, for intervenor, River Communications, Inc. Michael D. Sullivan, Counsel, F. C. C., Washington, D. C., with whom Stephen A. Sharp, Gen. Counsel, Daniel M. Armstrong, Associate Gen. Counsel, F. C. C., Barry Grossman and Margaret G. Halpern, Attys., Dept. of Justice, Washington, D. C., were on the brief, for respondents.

Martin W. Bercovici, Washington, D. C., with whom Sheila A. Millar, Washington, D. C., was on the brief, for intervenors, American Waterways Operators, Inc. and Waterway Communications System, Inc.

Burton K. Katkin and William V. Catucci, New York City, entered appearances for intervenor, American Tel. and Tel. Co.

Before WALD, MIKVA and GINSBURG, Circuit Judges.

Opinion for the Court filed by Circuit Judge MIKVA.

MIKVA, Circuit Judge:

This is a petition for review of a report and order of the Federal Communications Commission (FCC) allocating 80 radio channels to provide integrated, river-wide communications on the Mississippi River and connecting waterways. Inland Waterways Communications Systems, 84 F.C.C.2d 875 (1981) (Order). WJG Telephone Company, Inc. (WJG), an operator of an existing public coast station, challenges the FCC's rulemaking as arbitrary, capricious, an abuse of discretion, and otherwise not in accordance with law. River Communications, Inc. (Rivercom), a consortium of existing public coast operators that includes WJG, has intervened in support of WJG. We affirm the FCC's decision to move toward the stated goal of an integrated system.

I. BACKGROUND

Ship-to-shore communication on the Mississippi River and connecting waterways is now performed by two kinds of maritime radio services, ¹ which provide a radio link to the overland telephone network so that ships can make and receive telephone calls. The existing maritime radio service is oriented toward "boating localities" where there are concentrations of vessel activity. See 47 C.F.R. §§ 81.3(j) and 81.303(b) (1980). Individual stations need not be interconnected: a caller wishing to reach a particular vessel has to know the general location of the vessel and the nearest public coast station before the call can be completed. ²

The tugboat, towboat, and barge operators of the Mississippi River system have argued for years that current radio service is inadequate. ³ In 1974, an association of tug and barge operators formed Waterway Communications, Inc. (Watercom) to seek relief from the FCC. In response to Watercom's proposals, the FCC issued a notice of proposed rulemaking that set out for comment three alternative plans for increasing the frequencies available for maritime radio service on the Mississippi River. Notice of Proposed Rulemaking, 45 Fed.Reg. 3064 (Jan. 11, 1980).

After evaluating the comments, the Commission issued its report and order finding a detailed plan demonstrating that the proposed system will provide continuity of service along a major portion (more than 60%) of one or more navigable waterways encompassing the Mississippi River System ... to be served by the applicant. Waterways covering less than 150 miles long should be served in their entirety.

                the existence of a need for an Inland Waterways Communications System (IWCS) in the Mississippi River system.  It allocated 80 frequencies, divided into four groups of 20 channels each, so as to allow up to four competing IWCS operators in a given area.  4  The Commission thus approved the concept of "a fully automated, integrated, interconnected, river-wide, maritime communications system on the Mississippi River System."  Order, 84 F.C.C.2d at 875.  It then stated that applicants seeking authorization to operate an IWCS should supplement their applications with
                

Id. at 900.

The FCC denied petitions for reconsideration in December 1981, see 88 F.C.C.2d 678 (1981) (Reconsideration Order), and WJG's petition for review in this court was amended to include review of the second order as well.

II. THE ISSUES PRESENTED

WJG and Rivercom make independent objections to the FCC order. WJG first objects to the "60% percent" rule, contending that requiring any proposed IWCS operator to serve a minimum of 60% of one or more navigable waterways is arbitrary and capricious. WJG argues that the FCC has not explained the purpose of this requirement, failed to give notice that a 60% requirement was under consideration, and acted irrationally in drawing the 60% coverage requirement "virtually from its hat." Brief for Petitioner WJG (WJG Brief) at 31.

The naming of rivers is only of historical consequence, and WJG sees no rational basis for the Commission to conclude that individual rivers should be treated as individual commercial units for the purpose of qualifying prospective applicants for authorization to construct an IWCS.

Id. at 29.

Second, WJG contends that the FCC has failed to consider the anticompetitive impact of its rulemaking on existing public coast stations. It claims, for example, that the 60% rule favors Watercom and will prevent smaller businesses such as WJG from operating a competing IWCS. Finally, WJG urges that the FCC has acted capriciously by failing to "retain jurisdiction in order to prevent or remedy anticompetitive or predatory conduct by the operator or operators of an IWCS." WJG Brief at 39.

Rivercom's objections to the FCC order are more technical. It joins WJG in urging that the Commission failed to consider the anticompetitive effects of its rulemaking, but on two additional grounds. The FCC is said to have acted arbitrarily in failing to adopt an IWCS signalling standard that would allow all IWCS mobile units to transmit and receive signals from any IWCS shore station, and in failing to require that mobile units be capable of compatible operation on all of the 80 channels allocated to IWCS use. Both omissions, Rivercom contends, will give an anticompetitive advantage to the first IWCS licensee by making it unlikely that later entrants can compete for its customers.

III. DISCUSSION

Although the exact genesis of the 60% coverage requirement is unclear, we cannot say the FCC's adoption of this requirement was arbitrary or capricious. It is true that an agency may not pluck a number out of thin air when it promulgates rules in which percentage terms play a critical The 60% coverage requirement adopted by the FCC clearly reflected its conflicting desires that IWCS operators provide continuous, "river-wide" service, and that competition between IWCS operators not be precluded by requiring such broad coverage of the river system that financially weaker organizations would be unable to enter the market. The Commission reasonably compromised these aims by inviting license applications for systems that would cover "a major portion" of one or more waterways; the 60% figure was a reasonable attempt to quantify this term. Moreover, in denying WJG's petition for reconsideration, the Commission responded fully to complaints that the 60% requirement was arbitrary, and has adequately explained its reasons for adopting that requirement. ⁵

role. See, e.g., San Antonio, Texas v. United States, 631 F.2d 831, 852 (D.C.Cir.1980) (7% additive above full costs set aside because figure used with no supporting rationale or justification). When a line has to be drawn, however, the Commission is authorized to make a "rational legislative-type judgment," FCC v. National Citizens Comm. for Broadcasting, 436 U.S. 775, 814, 98 S.Ct. 2096, 2121-2122, 56 L.Ed.2d 697 (1978). If the figure selected by the agency reflects its informed discretion, and is neither patently unreasonable nor "a dictate of unbridled whim," then the agency's decision adequately satisfies the standard of review. Stereo Broadcasters, Inc. v. FCC, 652 F.2d 1026, 1031 (D.C.Cir.1981); see Wawszkiewicz v. Department of the Treasury, 670 F.2d 296, 302-303 (D.C.Cir.1981) (affirming agency's selection of a 75 percent varietal grape content for wine).

It is absurd for WJG to suggest that it has been prejudiced by any lack of notice that a 60% coverage requirement was under consideration. The function of notice and comment rulemaking is to give interested parties "an opportunity to participate" in the rulemaking process, United States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742, 758, 92 S.Ct. 1941, 1951, 32 L.Ed.2d 453 (1972), and inadequate notice may raise serious questions about the agency's decisionmaking. See, e.g., 5 U.S.C. § 553(b) (requirement that agency state terms or substance of proposed rule or description of subjects and issues involved); Weyerhaeuser Co. v. Costle, 590 F.2d 1011, 1027-28 (D.C.Cir.1978). But when the agency promulgates a final rule that departs from the precise wording of the proposed rule, this may simply demonstrate that the parties have been effective in influencing the agency's analysis, the very result contemplated by notice and comment rulemaking. "It is clear that an administrative rule as adopted need not be identical to the proposed version of the rule." Chrysler Corp. v. Dep't of Transportation, 515 F.2d 1053, 1061 (6th Cir. 1975). Notice is sufficient "if it affords interested parties a reasonable opportunity to participate in the rulemaking process," Forester v. Consumer Product Safety Comm'n, 559 F.2d 774, 787 (D.C.Cir.1977), and if the parties have not been "deprived of the opportunity to present relevant information by lack of notice that the...