People of State of Cal. v. F.C.C.

Decision Date31 January 1996
Docket Number95-70519 and 95-70571,Nos. 94-70197,95-70470,s. 94-70197
Citation75 F.3d 1350
Parties96 Cal. Daily Op. Serv. 671, 96 Daily Journal D.A.R. 1017 The PEOPLE OF the STATE OF CALIFORNIA; Public Utilities Commission of the State of California; Petitioners, Pennsylvania Public Utility Commission ("PAPUC"); Southern California Coalition on Battered Women; Toward Utility Rate Normalization ("TURN"); Consumer Federation of America; Consumer Action; The National Association of Social Workers ("NASW"); The California Alliance Against Domestic Violence; The Family Violence Prevention Fund; Petitioners-Intervenors, v. FEDERAL COMMUNICATIONS COMMISSION; United States of America; Respondents, US West Communications; MCI Telecommunications Corporation; Ad hoc Telecommunications Users Committee ("Committee"); AT & T Corporation; The National Association of Regulatory Utility Commissioners; National Association of Consumer Advocates (NASUCA), Ameritech Operating Companies; Southwestern Bell Telephone Company; Pacific Bell; United States Telephone Association (USTA); BellSouth Corporation; Respondents-Intervenors. The PEOPLE OF the STATE OF CALIFORNIA; Public Utilities Commission of the State of California; Petitioners, Consumer Federation of America; Southern California Coalition on Battered Women; National Association of Regulatory Utility Commissioners ("NARUC"); Toward Utility Rate Normalization ("TURN"); California Alliance Against Domestic Violence; The Family Violence Prevention Fund ("Fund"); Consumer Action; National Association of Social Workers ("NASW") and The Pennsylvania Public Utility Commission ("PAPUC"); Petitioners-Intervenors, v. FEDERAL COMMUNICATIONS COMMISSION; United States of America; Respondents, BellSouth Telecommunications, Inc. ("BellSouth"); Southwestern Bell Telephone Company; National Telephone Cooperative Association; GTE California Incorporated (hereinafter "GTEC"); MCI Telecommunications Corporation; The United States Telephone Association ("USTA"); US West Communications; Ad hoc Telecommunications Users Committee; Respondents-Interven
CourtU.S. Court of Appeals — Ninth Circuit

Mark Fogelman, Public Utilities Commission of the State of California, San Francisco, California; David W. Carpenter, Sidley & Austin, Chicago, Illinois; Robert J. Aamoth, Reed Smith Shaw & McClay, Washington, D.C. (on the briefs), for petitioners.

John P. Stern, William E. Kennard, General Counsel, Daniel M. Armstrong, Associate General Counsel, John E. Ingle, Deputy Associate General Counsel, Federal Communications Commission, Washington, D.C., for respondents.

Thomas J. Long, Toward Utility Rate Normalization, San Francisco, California; Gus T. May, Center for Law in the Public Interest, Los Angeles, California; Roberta M. Ikemi, California Women's Law Center, Los Angeles, California; William Gwire, San Francisco, California; James Bradford Ramsay, National Association of Regulatory Utility Commissioners, Washington, D.C.; Carolyn L. Polowy, National Association of Social Workers, Washington, D.C.; Maureen A. Scott, Pennsylvania Public Utility Commission, Harrisburg, Pennsylvania, (on the briefs), for petitioners-intervenors.

John Gibson Mullan, Kirkland & Ellis, Washington, D.C.; Michael R. Doyen (on the

briefs), Munger, Tolles & Olson, Los Angeles, California, for respondents-intervenors.

Petitions to Review Orders of the Federal Communications Commission.

Before: SCHREODER and ALARCON, Circuit Judges, and WHALEY, * District Judge.

ALARCON, Circuit Judge:

California's Public Utilities Commission ("CPUC") has filed two petitions seeking review of the Federal Communications Commission's ("FCC") decision denying reconsideration of the FCC's rule that subscribers who fail to choose the method to prevent disclosure of their nonpublished 1 telephone numbers, when Caller ID service becomes effective, must be served with a system that requires the customer to dial

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                each time a call is made ("per call blocking") to protect his or her privacy.   CPUC argues that this rule violates federal constitutional rights, and arbitrarily and capriciously preempts the CPUC rule that emergency service organizations and subscribers with nonpublished numbers, who fail to communicate their choice ("default") 2 between per call blocking and a system that blocks disclosure on all calls unless the calling party dials 
                

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("per line blocking"), be served with a system that blocks disclosure on all calls.

AT & T Corporation ("AT & T") and Competitive Telecommunications Association ("CompTel") have filed separate petitions in which they seek review of the denial of their petitions for reconsideration of the FCC's decision requiring telephone carriers using Common Channel Signalling System 7 ("SS7") 3 to deliver calling party numbers ("CPN") without charge (the "free passage" rule) to other telephone carriers.

AT & T and CompTel filed their petitions in the District of Columbia Circuit. The petitions for review filed by CPUC, AT & T, and CompTel were consolidated by the Judicial Panel on Multidistrict Litigation. 4

We conclude that the FCC did not act arbitrarily and capriciously in ruling (1) that the preemption of the CPUC's rule was necessary to prevent negation of a valid FCC regulatory goal, and (2) that the imposition of the per call blocking option on subscribers We have divided the opinion into two parts. In Part One, we review CPUC's challenge to the FCC's preemption of the type of Caller ID blocking service that must be offered to emergency service organizations and subscribers with nonpublished telephone numbers who do not make an election. In Part Two, we consider the claims of AT & T and CompTel that the free passage rule violates the requirements of the Administrative Procedures Act ("APA"), and is arbitrary and capricious. To set the stage for our discussion of these discrete questions, we will summarize the historical facts and procedural steps that preceded this current legal contest.

                with nonpublished numbers and emergency service organizations, who do not make a choice between Caller ID blocking systems, does not violate any federal constitutional right.   We uphold the FCC's free passage rule because the record shows that the FCC examined the relevant evidence and adequately explained all aspects of its decision
                

The provision of telephone services is divided between local exchange carriers ("LECs") and long distance carriers ("IXCs"). LECs generally provide all telephone services within their authorized local calling areas, and the vast majority of intrastate toll calls. The local carriers also provide access to IXCs. Virtually every long distance call originates with one LEC and terminates with another LEC. The IXCs run lines between local calling areas. They pay access fees to LECs to originate and to terminate long distance calls. IXCs earn revenue only when the called party accepts a long distance call. IXCs pay the LECs access fees for each long distance call, however, whether or not it is completed.

With the exception of toll free calls to 800 and 900 numbers, the calling party selects its long distance carrier. In contrast to LECs, however, an IXC does not have a business relationship with residential or commercial customers who receive long distance calls.

Like the LECs, AT & T and many other IXCs have invested in SS7, both by installing it in their own networks, and by establishing SS7 interconnections with LECs to allow the passage of CPN. AT & T reported that its capital investment in SS7 exceeds one billion dollars. Other IXCs, such as CompTel, have not yet installed SS7 systems.

The consolidated cases before this court involve challenges to the FCC's efforts to promote the availability of interstate Caller ID. 5 Caller ID is a service that permits a customer who receives a call to see the number of the person who placed the call unless the calling party blocks disclosure of the number. 6

CPN is transmitted by means of SS7, a relatively new technology. Caller ID service is presently available only on local calls carried by LECs over their SS7 systems. Today, LECs in 47 states and the District of Columbia offer some form of Caller ID for intrastate calls. On June 17, 1992, the CPUC authorized California LECs to offer intrastate Caller ID service. The CPUC decision provides that each subscriber shall have a choice between per call and per line blocking without cost. The CPUC's ruling requires telephone companies to conduct a vigorous notice and education program regarding Caller ID and the available blocking options to protect a subscriber's privacy. 7 The CPUC also determined that emergency service organizations and subscribers who pay monthly charges for nonpublished telephone numbers and do not communicate their choice, will receive per line blocking service. All other subscribers who do not Although the CPUC authorized the introduction of Caller ID for intrastate calls in 1992, LECs in California, including Pacific Bell and GTE California, have not...

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