Bell Atlantic Telephone Companies v. F.C.C., 97-1432
| Citation | 131 F.3d 1044 |
| Decision Date | 23 December 1997 |
| Docket Number | No. 97-1432,97-1432 |
| Parties | , 10 Communications Reg. (P&F) 494 BELL ATLANTIC TELEPHONE COMPANIES, et al., Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents, AT&T Corporation, et al., Intervenors. |
| Court | United States Courts of Appeals. United States Court of Appeals (District of Columbia) |
On Petition for Review of an Order of the Federal Communications Commission.
Mark L. Evans argued the cause for petitioners, with whom Michael K. Kellogg, Washington, DC, Sean A. Lev, Washington DC, James R. Young, Michael E. Glover, Arlington, VA, and Edward Shakin, Arlington, VA, were on the briefs.
John E. Ingle, Washington, DC, Deputy Associate General Counsel, Federal Communications Commission, argued the cause for respondents, with whom Joel I. Klein, Washington, DC, Acting Assistant Attorney General, U.S. Department of Justice, William E. Kennard, General Counsel at the time the brief was filed, Federal Communications Commission, Christopher J. Wright, Spokane, WA, Deputy General Counsel at the time the brief was filed, Laurel R. Bergold, Washington, DC, Counsel, Catherine G. O'Sullivan, Washington, DC and Nancy C. Garrison, Washington, DC, Attorneys, U.S. Department of Justice, were on the brief.
Anthony C. Epstein, Washington, DC, argued the cause for intervenors MCI Telecommunications Corporation, et al., with whom Mark C. Rosenblum, Basking Ridge, NJ, David W. Carpenter, Peter D. Keisler, Washington, DC, Leon M. Kestenbaum, Washington, DC, Charles C. Hunter, Catherine M. Hannan, Bowie, MD, and Richard S. Whitt were on the brief. Jay C. Keithley, Washington, DC, entered an appearance.
James D. Ellis, Robert M. Lynch, Patricia Diaz Dennis, San Antonio, TX, David F. Brown, Randall E. Cape, San Francisco, CA, Patricia L.C. Mahoney, San Francisco, CA, Martin E. Grambow, Washington, DC, Durward D. Dupre, St. Louis, MO, and Mary W. Marks were on the statement in lieu of brief, filed on behalf of intervenors SBC Communications Inc., et al.
Before: EDWARDS, Chief Judge, TATEL, Circuit Judge and BUCKLEY, Senior Circuit Judge.
Opinion for the Court filed by Chief Judge EDWARDS.
This case arises from a challenge to an Order of the Federal Communications Commission ("Commission") construing a poorly drafted section of the Telecommunications Act of 1996, enacted as 47 U.S.C. § 272. Under the statute, there are two potentially contradictory edicts: first, § 272(a) states that, normally, a Bell Operating Company ("BOC") may not provide origination of most communications services between Local Access and Transport Areas ("interLATA services") except through a separate affiliate; second, § 272(e)(4) states that a BOC "may provide any interLATA ... facilities or services to its interLATA affiliate if such services or facilities are made available to all carriers at the same rates." At first blush, the second provision appears to give back what the first section takes away, i.e., a BOC's ability to provide interLATA origination services in a physically integrated network with its local exchange services. To avoid such an anomalous result, the Commission interpreted § 272(e)(4) to mean that a BOC may provide any interLATA services "it is otherwise authorized to provide," so long as it provides them on a non-discriminatory basis. Second Order on Reconsideration, Implementation of the Non-Accounting Safeguards of Sections 271 and 272 of the Communications Act of 1934, as Amended, 12 FCC Rcd. 8653, 8675 (1997).
Petitioners, the BOCs, argue that the plain meaning of § 272(e)(4) precludes the Commission's interpretation, because the literal meaning of the words "may provide any" operates as an unrestricted affirmative grant of authority for them to deliver integrated interLATA services. This argument confuses "plain meaning" with literalism. The meaning of a statutory provision is its use in the context of the statute as a whole. Here, the language of § 272(e)(4) cannot yield the purported plain meaning advanced by Petitioners, because that meaning would produce marked inconsistencies with § 272(a) and so would violate the context of the statute. Because we find the statute ambiguous and the Commission's interpretation reasonable, we deny the petition for review.
The Telecommunications Act of 1996 ("Act") superseded the consent decree, or "Modification of Final Judgment," that governed the telecommunications industry after the break-up of the AT&T monopoly and the emergence of the regional BOCs. The Act aimed to foster competition at all levels of the industry, including local exchange and interLATA services. In the jargon of the Act, a LATA is bigger than a local exchange and smaller than a region. This case concerns interLATA services, that is, long distance service between any two LATAs, originating within the BOC's service region. InterLATA services represent a significant and sought-after segment of the telecommunications market.
Section 271 of the Act gives the basic framework for BOC provision of interLATA services; a BOC may not deliver interLATA services not authorized therein. 47 U.S.C. § 271(a). The section permits a BOC or its affiliate to provide interLATA services originating inside the states in which the consent decree authorized the BOC to provide wireline services ("in-region states") only with express Commission approval. § 272(b)(1). The approval depends upon several factors, including the requirements of § 272. Commission approval is not required for services originating outside the states in which the consent decree authorized the BOC to provide wireline service, § 272(b)(2), or for so-called incidental interLATA services, § 272(b)(3).
The section in question in this case, 47 U.S.C. § 272, creates a separate affiliate requirement for specified BOC activities. It begins with the heading "In General," under which it specifies that a BOC may not provide certain services "unless it provides [the services] through one or more [separate] affiliates." § 272(a)(1). One of those services requiring provision through a separate affiliate is "[o]rigination of interLATA communications services," with three minor exceptions. § 272(a)(2)(B). The exceptions include incidental interLATA services and interLATA services that originate outside the area in which the BOC was authorized to provide wireline services under the consent decree. § 272(a)(2)(B)(ii). The result is that § 272(a) permits a BOC to provide inregion interLATA origination services only so long as it provides them "through" a separate affiliate. The requirements of separateness, which include independent operations and management, as well as arm's length dealings, are set out in § 272(b). The separate affiliate requirement ceases to apply four years after the Act goes into force. § 272(f)(2).
The interpretive difficulty seen in this case arises because of a subsection headed "Fulfillment of Certain Requests," § 272(e). This subsection first lays out several non-discrimination requirements for a BOC: a BOC must respond to non-affiliate service requests in the same time it does to affiliates, § 272(e)(1); must provide the same facilities to all, § 272(e)(2); and must charge an affiliate at least as much as a non-affiliate, § 272(e)(3). The last portion of the subsection states that a BOC
may provide any interLATA or intraLATA facilities or services to its interLATA affiliate if such services or facilities are made available to all carriers at the same rates and on the same terms and conditions, and so long as the costs are appropriately allocated.
§ 272(e)(4).
The language of § 272(e)(3) indicating that a BOC may provide "any" interLATA services to its affiliate so long as it meets the non-discrimination requirement arguably differs from the requirement of § 272(a) that a BOC may only originate in-region interLATA service through a separate affiliate. In other words, the literal language of § 272(e)(4), read alone, seems to grant a BOC the right to engage in direct provision of "any" interLATA services. So construed, § 272(e)(4) would permit a physically integrated interLATA-local exchange system.
In its First Report and Order, the Commission concluded that § 272(e)(4) was not intended to undercut § 272(a)(2), but merely required non-discrimination for any interLATA services that a BOC was otherwise authorized to provide. First Report and Order, Implementation of the Non-Accounting Safeguards of Sections 271 and 272 of the Communications Act of 1934, as Amended, 11 FCC Rcd. 21905, 22032 (1996). Petitioners challenged the Commission's interpretation before this court, arguing that the plain meaning of § 272(e)(4) expressly permitted physically integrated interLATA services. At the Commission's request, the court remanded for the Commission to consider the plain meaning argument advanced by the BOCs. Bell Atlantic Telephone Cos. v. FCC, No. 97-1067, 1997 WL 307161 (D.C.Cir. Mar. 31, 1997). On remand, the Commission acknowledged the tension between § 272(e)(4) and § 272(a)(2), but rejected the BOCs' plain meaning argument, and reconfirmed its ruling in a detailed exposition. See12 FCC Rcd. at 8665. The BOCs now challenge the Commission's interpretation of the statute as unlawful.
Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), governs review of agency interpretation of a statute which the agency administers. Under the first step of Chevron, the reviewing court "must first exhaust the 'traditional tools of statutory construction' to determine whether Congress has spoken to the precise question at issue." Natural Resources Defense Council, Inc. v. Browner, 57 F.3d 1122, 1125 (D.C.Cir.1995) (quoting Chevron, 467 U.S. at 843 n. 9, 104 S.Ct. at 2782 n. 9). The traditional tools include examination of the statute's text, legislative...
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