American Tel. & Tel. Co. v. F.C.C.
| Citation | 978 F.2d 727 |
| Decision Date | 21 January 1993 |
| Docket Number | No. 92-1053,92-1053 |
| Parties | , 137 P.U.R.4th 444 AMERICAN TELEPHONE AND TELEGRAPH COMPANY, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents. US Sprint Communications Company, US West Communications, Inc., Ameritech Operating Companies, MCI Telecommunications Corporation, International Business Machines Corporation, Ad Hoc Telecommunications Users Committee, Intervenors. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Petition for Review of an Order of the Federal Communications Commission.
David W. Carpenter, Chicago, Ill., with whom Peter D. Keisler, Washington, D.C., Francine J. Berry, and Mark C. Rosenblum, Basking Ridge, N.J., were on the brief, for petitioner.
John E. Ingle, Deputy Associate Gen. Counsel, F.C.C., with whom Robert L. Pettit, Gen. Counsel, F.C.C., Laurence N. Bourne, Counsel, F.C.C., Catherine G. O'Sullivan and Robert J. Wiggers, Attys., Dept. of Justice, Washington, D.C., were on the brief, for respondents.
Frank W. Krogh, Donald J. Elardo, Loretta J. Garcia, and Richard M. Singer, Washington, D.C., were on the brief, for intervenor MCI Telecommunications Corp.
James S. Blaszak and Patrick J. Whittle, Washington, D.C., were on the brief, for intervenor Ad Hoc Telecommunications Users Committee.
Leon M. Kestenbaum, H. Richard Juhnke, and Michael B. Fingerhut, Washington, D.C., entered appearances, for intervenor US Sprint Communications Co.
Robert B. McKenna, Denver, Colo., and Lawrence E. Sarjeant, Washington, D.C., entered appearances, for intervenor US WEST Communications, Inc. Alfred Winchell Whittaker, Washington, D.C., and Floyd S. Keene, Hoffman Estates, Ill., entered appearances, for intervenor Ameritech Operating Companies.
J. Roger Wollenberg, William T. Lake and Jonathan Jacob Nadler, Washington, D.C., entered appearances, for intervenor Intern. Business Machines Corp.
Before: WALD, SILBERMAN, and SENTELLE, Circuit Judges.
Opinion for the Court filed by Circuit Judge SILBERMAN.
AT & T petitions for review of an order of the Federal Communications Commission that concluded an investigation into a complaint filed by AT & T in 1989. The complaint alleged that MCI had violated and was continuing to violate section 203 of the Communications Act, 47 U.S.C. § 203 (1988), by charging some customers rates that were not filed with the FCC. The Commission denied AT & T's complaint in part and dismissed it in part without determining whether MCI had violated the Act and ostensibly without addressing the validity of the Commission's Fourth Report and Order, 95 F.C.C.2d 554 (1983), on which MCI had relied to justify its actions. The FCC said that it would postpone reconsideration of the validity of the Report to a rulemaking that it announced at the same time it denied AT & T relief. We hold that it was arbitrary and capricious for the agency to dismiss AT & T's complaint for immediate relief without deciding the question of law it presented. Moreover, we think that in dismissing the complaint the FCC necessarily, if implicitly, assumed the validity of the Fourth Report as a substantive rule. And under our precedent the rule is plainly contrary to section 203. We remand to the Commission for it to reconsider the appropriate relief it should grant AT & T.
Section 203(a) of the Communications Act, 47 U.S.C. § 203(a) (1988), requires that every communications common carrier file its rates with the FCC. 1 AT & T's dispute with MCI and the FCC involves "permissive detariffing," a term used to refer to the FCC's decision to forbear from enforcing the rate filing requirements of section 203 against carriers, including MCI, that the FCC determined to be nondominant in the inter-exchange market (presumably AT & T remains the only "dominant" carrier in the FCC's view). 2 Permissive detariffing's genesis is found in the Competitive Carrier proceeding the FCC initiated in 1979 to determine methods for reducing the regulatory burdens on communications common carriers. See Policy and Rules Concerning Rates for Competitive Common Carrier Services and Facilities Authorizations Therefor, Notice of Inquiry and Proposed Rulemaking, 77 F.C.C.2d 308 (1979). In 1982 in its Second Report and Order, the Commission decided that it would forbear from enforcing section 203(a)'s filing requirements against nondominant resale carriers. See Second Report and Order, 91 F.C.C.2d 59, 71 (1982). And in its 1983 Fourth Report and Order, the Commission extended the policy of forbearance (in other words, permissive detariffing treatment) to "specialized carriers" such as MCI. See Fourth Report and Order, 95 F.C.C.2d 554, 578 (1983).
The Commission, however, went beyond mere forbearance in 1985 in its Sixth Report and Order, 99 F.C.C.2d 1020 (1985), by making detariffing mandatory and by telling non-dominant carriers that it would no longer even accept their rate filings under section 203. For reasons not apparent, MCI, an apparent beneficiary of the Sixth Report, challenged that order in this court on the grounds that the FCC had no authority to eliminate a requirement of the Communications Act. See MCI Telecommunications Corp. v. FCC, 765 F.2d 1186 (D.C.Cir.1985) ("MCI v. FCC "). We vacated the Sixth Report after concluding that it exceeded the Commission's statutory authority. We explicitly did not decide the validity of the earlier Fourth Report and Order, but our decision not to do so was predicated on the assumption that the Fourth Report was (at least arguably) immune from review under Heckler v. Chaney, 470 U.S. 821, 105 S.Ct. 1649, 84 L.Ed.2d 714 (1985), as an exercise of enforcement discretion. See MCI v. FCC, 765 F.2d at 1190 n. 4.
The Commission, in subsequent litigation, did not help to clarify the nature of the Fourth Report. In 1985 the FCC argued that the Fourth Report could be "fairly characterized" as an exercise of the agency's enforcement discretion and that it was thus immune from review. Respondent's Brief at 27, MCI Telecommunications Corp. v. FCC, 799 F.2d 773 (D.C.Cir.1984) (Memorandum Order). In the same brief, however, the Commission referred to the Second and Fourth Reports as rules designed to "exempt" some carriers from the filing requirements of the Act. Id. at 29.
In August 1989, with the FCC's characterization of the Fourth Report apparently still uncertain, AT & T filed a complaint against MCI under section 208 of the Communications Act. Section 208 allows any person injured by a violation of the Act to file a complaint with the Commission, see 47 U.S.C. § 208(a) (1988), 3 and requires the Commission to investigate the complaint and issue an order concluding the inquiry within 12 to 15 months. See id. § 208(b). AT & T claimed that since 1987, MCI had been violating, and continued to violate, section 203(a) by charging certain customers special negotiated rates that it had not filed with the FCC. AT & T sought both damages and a cease and desist order. According to AT & T, MCI's actions injured AT & T by putting AT & T at a competitive disadvantage. While AT & T had to file all of its rates with the Commission, MCI did not, thus not only making it more difficult for AT & T to match MCI's rates, cf. Regular Common Carrier Conference v. United States, 793 F.2d 376, 379 (D.C.Cir.1986), but also enabling MCI and other competitors to entangle AT & T in burdensome proceedings before the Commission by filing oppositions to the rates AT & T filed.
MCI, in response, did not deny AT & T's factual allegations. It relied on the Fourth Report. According to MCI, the Fourth Report was a substantive rule that removed the nondominant carriers' obligation to file all of their rates under section 203(a). AT & T contended, in accordance with our tentative understanding, that the Fourth Report had been merely a statement of the FCC's enforcement policy and therefore MCI still had an independent obligation imposed by statute to file all of its rates. If the Fourth Report were a substantive rule that purported to remove obligations imposed by the statute, AT & T argued, it was invalid under our MCI v. FCC opinion because it exceeded the FCC's statutory authority.
Despite section 208's requirement that the Commission issue an order concluding its investigation into a complaint within 12 months, see 47 U.S.C. § 208(b)(1), AT & T's complaint went unresolved for a good deal longer. The FCC first determined that the complaint raised a broad issue of policy and should be transferred to its policy division. Thereafter, a decision on the complaint was further postponed pending the conclusion of the Commission's rulemaking on Competition in the Interstate Interexchange Marketplace. See Report and Order, 6 F.C.C.Rcd. 5880 (1991). Finally, in October 1991, 25 months after the complaint had been filed, AT & T petitioned this court for a writ of mandamus ordering the Commission to issue a cease and desist order against MCI. We dismissed the petition in January 1992 when the FCC announced that it would issue an order concluding its investigation by January 30, 1992.
On January 28, 1992, the FCC concluded its inquiry but nevertheless declined to decide forthrightly the issue before it. See AT & T Communications v. MCI Telecommunications Corp., 7 F.C.C.Rcd. 807 (1992). Although the Commission, dispelling prior confusion, determined conclusively that the Fourth Report and Order was a substantive rule upon which MCI had properly relied, see id. at 809, it purported not to consider whether the Fourth Report, so interpreted, was valid under the Communications Act. Instead, the Commission said the Fourth Report's "validity" would be better considered in a rulemaking that would afford all interested parties an opportunity to comment. Id. And the Commission announced such a rulemaking on the same day it...
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