California v. Federal Communications Commission
Opinion of the Court
Before us are the petitions of the California Public Utilities Commission and various providers of local telecommunications services seeking review of certain rules issued by the Federal Communications Commission (FCC or Commission) pursuant to the Telecommunications Act of 1996.
I.
One of Congress’s goals in passing the Telecommunications Act of 1996 was to open the local telephone markets to competition. See Telecommunications Act of 1996, Pub.L. No. 104-104, purpose statement, 110 Stat. 56 (1996). To accomplish this objective, the Act imposes several duties on the current providers of local telecommunications service (known as “incumbent local exchange carriers” or “incumbent LECs”) including the duties to provide competing carriers with interconnection and unbundled access to the incumbents LECs’ networks and to allow competing carriers to resell any telecommunications service that the incumbent LECs provide to their subscribers on a retail basis. 47 U.S.C.A. § 251(c)(2)-(4) (West Supp. 1997).
In the present case, the petitioners challenge several portions of the Commission’s Second Report and Order,
II.
We have jurisdiction to review final orders of the FCC pursuant to 28 U.S.C. § 2342(1) (1994) and 47 U.S.C. § 402(a) (1994). Courts of appeals may set aside agency rules that (1) conflict with the plain meaning of a statute, (2) are unreasonable interpretations of ambiguous statutes, or (3) are the product of arbitrary or capricious action by the agency. See Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-45, 104 S.Ct. 2778, 2781-83, 81 L.Ed.2d 694 (1984).
A. Dialing Parity Rules
The petitioners argue that the FCC exceeded its jurisdiction in promulgating its dialing parity rules, 47 C.F.R. §§ 51.205-51.215. Dialing parity is a technological capability that enables a telephone customer to route a call over the network of the customer’s preselected carrier without having to dial an access code of extra digits. See 47 U.S.C.A. § 153(15). The petitioners claim that the FCC did not have authority to issue these dialing parity rules to the extent that the rules involve intraLATA telecommunications. The petitioners rely heavily on section 2(b) of the Communications Act of 1934, 47 U.S.C. § 152(b) (1994), to support their jurisdictional attack on the FCC’s dialing parity rules. Section 2(b) provides that “nothing in this chapter shall be construed to apply or to give the [FCC] jurisdiction with respect to ... charges, classifications, practices, services, facilities, or regulations for or in connection with intrastate communications service.” Id. The petitioners assert that even though the Commission’s dialing parity rules are not phrased explicitly in terms of “intrastate” or “interstate,” but rather use the terms “intraLATA,” “interLATA,” “local,” and “toll” to describe the telecommunications they regulate, 47 C.F.R. §§ 51.205-51.215, the intraLATA aspects of the rules overwhelmingly pertain to intrastate communications service and are thus beyond the scope of the FCC’s authority. Given the importance of the terminology in this case, we find it necessary initially to explain our understanding of the “LATA” concept and the difference between “local” and “toll” calls.
The acronym “LATA” stands for “local access and transport area,” 47 U.S.C.A. § 153(25), and was initially adopted by the
IntraLATA calls can be either “local” or “toll” calls, but interLATA calls are exclusively “toll” calls. Calls that remain within a caller’s immediate local calling area (a smaller geographic area within a LATA) are intraLATA local calls and are currently made without incurring any additional charge beyond the flat monthly rate that one pays for local phone service. Calls that are completed outside of a caller’s local calling area are “toll” calls and a separate charge or “toll” is incurred for making these calls. See 47 U.S.C.A. § 153(48). A single LATA can and frequently does encompass more than one immediate local calling area. Thus “intra-LATA” is not synonymous with “local.” A call that is completed outside of the caller’s immediate local calling area but within the same LATA is an intraLATA toll call, while a call that is completed outside of both the caller’s immediate local calling area and his or her LATA is an interLATA toll call.
The FCC argues that because the rules refer to “LATAs” and because “LATAs” do not necessarily correspond to state boundaries, section 2(b), which removes intrastate communication services from the FCC’s reach, is not relevant to the issue of the Commission’s authority over dialing parity. Contrary to the FCC’s assertion, however, the different nomenclature used in the FCC’s dialing parity rules neither renders section 2(b) irrelevant nor weakens its effect with respect to this jurisdictional issue. The fact remains that approximately 98% of all intra-LATA calls (local or toll) are intrastate in nature. The FCC itself has acknowledged that the vast majority of intraLATA calls are intrastate and not within its jurisdiction. See Notice of Proposed Rulemaking, In the Matter of Administration of the North American Numbering Plan, 9 FCC Red 2068, 2077 n.93 (1994). More importantly, we believe that section 2(b) preserves intrastate communications for state regulation regardless of what other labels may be applied to these communications. Although section 2(b) does not apply to the portion of intraLATA calls that are interstate in nature, it does apply to the portion of intraLATA calls that are intrastate in nature. Consequently, section 2(b) remains an obstacle that the FCC must overcome in order to save its intraLATA dialing parity rules from the petitioners’ jurisdictional attack.
In Louisiana Pub. Serv. Comm’n v. FCC, 476 U.S. 355, 370, 377, 106 S.Ct. 1890, 1903, 90 L.Ed.2d 369 (1986), the Supreme Court explained that section 2(b) “fences off’ intrastate telecommunications matters from FCC regulation and indicated that the 2(b) fence could be hurdled only by an unambiguous congressional grant of intrastate authority to the FCC or an express amendment to section 2(b) itself. The Court further stated that section 2(b) also operates as a rule of statutory construction requiring that nothing in the Act, which includes the 1996 amendments, be construed to provide the FCC with jurisdiction over intrastate telecommunications service. Id. at 376-77 n. 5, 106 S.Ct. at 1902 n. 5. The FCC and its supporting intervenors initially contend that merely the federal Act’s application to intrastate telecommunications matters is sufficient to supply the Commission with the authority to regulate such matters, even in light of section 2(b). The Commission argues that it has plenary authority
Alternatively, the FCC argues that several statutory provisions supply the Agency with sufficiently straightforward grants of broad intrastate authority to enable the Agency to overcome section 2(b)’s limitation. The Commission claims that subsection 251(d)(1) directly grants the Agency authority to implement all of the requirements in section 251, including the dialing parity provision in subsection 251(b)(3). Subsection 251(d)(1) reads, ‘Within 6 months after February 8, 1996, the Commission shall complete all actions necessary to establish regulations to implement the requirements of this section.” 47 U.S.C A. § 251(d)(1). As we found in Iowa Utils. Bd., 120 F.3d at 794-95, this subsection is merely a time limit on the Commission, directing it to complete expeditiously its rulemaking related to those portions of section 251 that expressly call for the Commission’s involvement. This provision does not authorize the FCC to issue intra-LATA dialing parity rules, because the subsection addressing dialing parity, § 251(b)(3), does not mention the FCC. We also reject the FCC’s argument that its general rule-making authority contained in subsections 201(b), 154(i), and 303(r) of the Communications Act is a legitimate source of jurisdiction for the Commission’s intraLATA dialing parity rules. The FCC’s jurisdiction under section 201 is specifically limited to interstate or foreign communications services. See 47 U.S.C. § 201(a). Meanwhile, subsections 154(i) and 303(r) merely provide the FCC with ancillary authority to promulgate additional regulations that might be required in order for the Commission to meet its principal obligations contained in other provisions of the statute. See id. §§ 154(i), 303(r); California v. FCC, 905 F.2d 1217, 1241 n. 35 (9th Cir. 1990). Neither 154(i) nor 303(r) supplies the FCC with additional substantive authority sufficient to overcome section 2(b).
The group of intervenors supporting the FCC argues that section 160 of the Act, 47 U.S.C.A. § 160, implies that the Commission has authority to issue regulations pursuant to the entire Act because this section allows the Commission to forbear from applying regulations or provisions of the Act. They reason that the power to forbear from regulating necessarily presumes the power to regulate in the first place. While this section does provide the Commission with the power to forbear from applying provisions of the Act, we believe that this power is limited to forbearing from applying those provisions that pertain to interstate telecommunications or the portions of the Act addressing intrastate telecommunications that also specifically call for the FCC’s involvement such as subsection 251(b)(2) (number portability) or subsection 251(c)(4)(B) (prevention of discriminatory conditions on resale). Section 160’s general authorization allowing the FCC to forbear from applying provisions of the Act is not the type of straightforward and unambiguous grant of intrastate authority that lifts the FCC over the section 2(b) fence. When Congress intends to vest the FCC with intrastate authority, it is well aware of how to draft a statute that overcomes section 2(b). In the Telecommunications Act itself, one provision explicitly directs the FCC to “establish a per call compensation plan to ensure that all payphone service providers are fairly compensated for each and every completed intrastate and interstate call using their payphone----” 47 U.S.C. A. § 276(b)(1)(A) (emphasis added). Neither
The FCC’s last hope of justifying its intraLATA dialing parity rules rests with subsection 251(g). Although not expressly addressing dialing parity, subsection 251(g) preserves all of the equal access obligations
Finally, the petitioners point out that subsection 271(e)(2)(B) indicates that state commissions, not the FCC, have the authority to issue intraLATA dialing parity rules. In limiting a state’s ability to require a Bell operating company to implement intraLATA
B. Numbering Administration Rule
The petitioners also challenge the FCC’s method for recouping the costs of establishing numbering administration arrangements. Numbering administration involves the coordination and distribution of all telephone numbers in the United States. In particular, the incumbent LECs target the Commission’s provision that allows carriers to deduct the amounts they pay to other carriers for telecommunications services and facilities from their gross revenues in calculating a carrier’s portion of the costs involved in administering a numbering administration program. See 47 C.F.R. § 52.17(b). The petitioners contend that this rule violates the Act’s requirement that numbering administration costs “be borne by all telecommunications carriers on a competitively neutral basis.” 47 U.S.C.A. § 251(e)(2). The petitioners claim that if state commissions
Article III of the Constitution limits our jurisdiction to deciding actual eases or controversies that are ripe for review.
The basic rationale of the ripeness doctrine is to prevent the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements over administrative policies, and also to protect the agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties.
State of Missouri v. Cuffley, 112 F.3d 1332, 1337 (8th Cir. 1997) (internal quotations and citations omitted). Because the validity of this rule depends on the state commissions’ determinations of the rates that incumbent LECs will be able to charge their competing carriers for interconnection, unbundled access, and other telecommunications services and facilities, and none of those determinations is before us in this proceeding, we find
III.
In sum, we vacate the FCC’s dialing parity rules, 47 C.F.R. §§ 51.205-51.215, but only to the extent that they apply to intraLATA telecommunications and subject to the conditions noted above, see supra note 6 and accompanying text, and we find the Commission’s numbering administration rule, 47 C.F.R. § 52.17, not ripe for review.
. Telecommunications Act of 1996, Pub.L. No. 104-104, 110 Slat. 56 (codified as amended in scattered sections of Title 47, United States Code).
. All references in this opinion to sections and subsections of the Telecommunications Act of 1996 in West's United States Code Annotated (U.S.C.A.) are to the 1997 supplement.
. First Report and Order, Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, CC Docket No. 96-98 (Aug. 8, 1996).
. Second Report and Order, Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, CC Docket No. 96-98 (Aug. 8, 1996) [hereinafter Second Report and Order].
. Dialing parity is considered to be a type of “equal access obligation.” (See Joint Br. of In-lervenors in Support of the FCC at 23-24.)
. Because section 2(b) prevents the FCC from having jurisdiction only over intrastate telecommunications matters, our decision to vacate the FCC’s dialing parity rules does not apply to the extent that the Commission's rules govern the very small percentage of intraLATA, toll, interstate telecommunications. Our vacation order does include, however, the rules’ application to the even smaller percentage of intraLATA, local, interstate calls, despite their interstate nature. See 47 U.S.C. § 221(b); Public Util. Comm’n of Texas v. FCC, 886 F.2d 1325, 1331 n. 5 (D.C.Cir. 1989); North Carolina Utils. Comm’n v. FCC, 552 F.2d 1036, 1045 (4th Cir.), cert. denied, 434 U.S. 874, 98 S.Ct. 222, 54 L.Ed.2d 154 (1977). Because the petitioners limited their challenges to the intraLATA aspects of the FCC's dialing parity rules, we make no determination regarding the validity of the FCC’s dialing parity rules as they apply to interLATA telecommunications.
. We recently held that state commissions have the authority to establish the prices that incumbent LECs may charge their competitors for interconnection, unbundled access, resale of services, and transport and termination of telecommunications traffic. Iowa Utils. Bd., 1997 WL 403401, at *9. Accordingly, the question of whether or not incumbent LECs will be permitted to include numbering administration costs in those prices will be decided by the state commissions.
Reference
- Full Case Name
- The PEOPLE OF THE STATE OF CALIFORNIA The Public Utilities Commission of the State of California, Bell Atlantic Corporation Bellsouth Corporation Pacific Telesis Group SBC Communications, Inc. Maryland Public Service Commission US West, Inc. US Telephone Association Arkansas Public Service Commission ALLTEL Telephone Services Corporation Ameritech Corporation Oregon Public Utility Commission North State Telephone Company Western Alliance Independent Telephone and Telecommunications Alliance Roseville Telephone Company Concord Telephone Company Rock Hill Telephone Company Public Utilities Commission of the State of Hawaii American Public Communications Council, Inc. ICG Telecom Group, Inc. Minnesota Public Utilities Commission Southern New England Telephone Company The Ad Hoc Coalition of Telecommunications Manufacturing Companies Pacific Telecom, Inc. Minnesota Independent Coalition Kentucky Public Service Commission Kansas Corporation Commission Public Service Commission of the State of Wyoming Rhode Island Public Utilities Commission Public Service Commission of Wisconsin State of Texas Alabama Public Service Commission Citizens Telephone Company of Kecksburg New Mexico State Corporation Commission Public Service Commission of the State of Montana GTE Service Corporation Utah Department of Commerce, Division of Public Utilities Public Service Commission of Utah Public Service Commission of the State of South Carolina Tennessee Regulatory Authority Aging Forum, Inc., doing business as National Silver Haired Congress U.S. Coalition on Aging College for Living Council of Silver Haired Legislatures Missouri Alliance of Area Agencies on Aging Missouri Association for the Deaf Missouri Council of the Blind Presidents' Club for Telecommunications Justice Paraquad, Rural Advocates for Independent Living Services for Independent Living Public Utilities Commission of the State of Colorado Department of Public Utilities of the Commonwealth of Massachusetts Oklahoma Corporation Commission Public Service Commission of the State of Connecticut, Department of Public Utility Control New York Telephone Company New England Telephone and Telegraph Company, Intervenors on Appeal v. FEDERAL COMMUNICATIONS COMMISSION United States of America, AT & T Corp. Competitive Telecommunications Association MFS Communications Company, Inc. Airtouch Communications, Inc. Nextlink Communications, L.L.C. Sprint Spectrum, L.P. National Cable Television Association, Inc. MCI Telecommunications Corporation Sprint Corp. Cox Communications, Inc. Vanguard Cellular Systems, Inc. Western Wireless Corporation American Communications Services, Inc. KMC Telecom, Inc. The Competition Policy Institute Association for Local Telecommunications Services Cellular Telecommunications Industry Association GST Telecom, Inc. ACC Corp. General Communication, Inc. Telecommunications Resellers Association Consumer Federation of America Ad Hoc Telecommunications Users Committee Information Technology Industry Council America's Carriers Telecommunication Association Jones Intercable, Inc. Telecommunications, Inc. Teleport Communications Group, Inc. Rural Telecommunications Group Allied Associated Partners Geld Information Systems Pronet, Inc. Winstar Communications, Inc. U.S. One Communications Services Comcast Corporation Frontier Corporation Anaheim, California Public Utilities Department City of Long Beach, California City of Manassas, Virginia Cable & Wireless, Inc. National Association of State Utility Consumer Advocates Time Warner Communications Holdings, Inc. Personal Communications Industry Association Excel Telecommunications, Inc. Worldcom, Inc., Paging Network, Inc. Nextwave Telecom, Inc. Small Cable Business Association Metrocall, Inc. Texas Office of Public Utility Counsel, Intervenors on Appeal, Consumers' Utility Counsel Division, Georgia Governor's Office of Consumer Affairs Honorable John D. Dingell Honorable W.J. (Billy) Tauzin Honorable Rick Boucher Honorable Dennis Hastert, Amici on Behalf of Honorable Thomas J. Bliley, Jr. Honorable Ernest F. Hollings Honorable Ted Stevens Honorable Daniel K. Inouye Honorable Trent Lott Honorable Edward J. Markey, Amici on Behalf of Respondent BELL ATLANTIC-DELAWARE, INC. Bell Atlantic-Maryland, Inc. Bell Atlantic-New Jersey, Inc. Bell Atlantic-Pennsylvania, Inc. Bell Atlantic-Virginia, Inc. Bell Atlantic-Washington, D.C., Inc. Bell Atlantic-West Virginia, Inc., Maryland Public Service Commission SBC Communications, Inc. New York Telephone Company New England Telephone and Telegraph Company US Telephone Association GTE Service Corporation US West, Inc. Bellsouth Corporation Bellsouth Telecommunications, Inc. Ameritech Corporation, Intervenors on Appeal v. FEDERAL COMMUNICATIONS COMMISSION United States of America, Sprint Corp. Competitive Telecommunications Association Telecommunications Resellers Association AT & T Corp. National Cable Television Association, Inc. GST Telecom, Inc. MFS Communications Company, Inc. KMC Telecom, Inc. ACC Corp. Winstar Communications, Inc. MCI Telecommunications Corporation America's Carriers Telecommunication Association Jones Communications, Inc. Airtouch Communications, Inc. Cox Communications, Inc., Intervenors on Appeal PACIFIC TELESIS GROUP, Maryland Public Service Commission SBC Communications, Inc. New York Telephone Company New England Telephone and Telegraph Company US Telephone Association GTE Service Corporation US West, Inc. Bellsouth Corporation Bellsouth Telecommunications, Inc. Ameritech Corporation, Intervenors on Appeal v. FEDERAL COMMUNICATIONS COMMISSION United States of America, Sprint Corp. Competitive Telecommunications Association Telecommunications Resellers Association AT & T Corp. National Cable Television Association, Inc. GST Telecom, Inc. MFS Communications Company, Inc. KMC Telecom, Inc. ACC Corp. Winstar Communications, Inc. MCI Telecommunications Corporation America's Carriers Telecommunication Association Jones Communications, Inc. Airtouch Communications, Inc. Cox Communications, Inc., Intervenors on Appeal SBC COMMUNICATIONS, INC., Maryland Public Service Commission New York Telephone Company New England Telephone and Telegraph Company US Telephone Association GTE Service Corporation US West, Inc. Bellsouth Corporation Bellsouth Telecommunications, Inc. Ameritech Corporation, Intervenors on Appeal v. FEDERAL COMMUNICATIONS COMMISSION United States of America, Sprint Corp. Competitive Telecommunications Association Telecommunications Resellers Association AT & T Corp. National Cable Television Association, Inc. GST Telecom, Inc. MFS Communications Company, Inc. KMC Telecom, Inc. ACC Corp. Winstar Communications, Inc. MCI Telecommunications Corporation America's Carriers Telecommunication Association Jones Communications, Inc. Airtouch Communications, Inc. Cox Communications, Inc., Intervenors on Appeal
- Cited By
- 6 cases
- Status
- Published