United States Cellular Corp. v. Federal Communications Commission

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 15, 2001 Decided June 29, 2001

No. 00-1072

United States Cellular Corporation,

Petitioner

v.

Federal Communications Commission and

United States of America,

Respondents

Association of Public-Safety Communications

Officials-International, Inc., et al.,

Intervenors

Consolidated with

00-1536, 00-1538, 01-1047

On Petitions for Review of Orders of the

Federal Communications Commission

Thomas P. Van Wazer argued the cause for petitioners.

With him on the briefs were James P. Young, Donald J.

Evans and Sylvia Lesse. Stephen G. Kraskin entered an

appearance.

Roberta L. Cook, Counsel, Federal Communications Com-

mission, argued the cause for respondents. With her on the

brief were Christopher J. Wright, General Counsel, John E.

Ingle, Deputy Associate General Counsel, Catherine G. O'Sul-

livan and Andrea Limmer, Attorneys, U.S. Department of

Justice. Daniel M. Armstrong, Associate General Counsel,

Federal Communications Commission, entered an appear-

ance.

Robert M. Gurss and Tamara Y. Brown were on the brief

for intervenor Association of Public-Safety Communications

Officials-International, Inc.

Before: Henderson, Tatel and Garland, Circuit Judges.

Opinion for the Court filed by Circuit Judge Tatel.

Tatel, Circuit Judge: In an effort to speed implementation

of enhanced 911 services for wireless phones, the Federal

Communications Commission removed a provision condition-

ing wireless carriers' obligation to purchase and install the

necessary technology on guaranteed state or local govern-

ment funding. The carriers challenge this decision, arguing

that, among other things, it contravenes the cost causation

principle adopted by this court in Competitive Telecommuni-

cations Association v. FCC, 87 F.3d 522, 529 (D.C. Cir. 1996)

("Comptel"), is arbitrary and capricious, 5 U.S.C. s 706(2)(A),

violates the Regulatory Flexibility Act, 5 U.S.C. ss 601-612,

and amounts to an unconstitutional taking. Finding petition-

ers' arguments either without merit or not properly before us,

we deny the petition for review in its entirety.

I

Over the last thirty years, 911 service has "spread across

the nation and become synonymous with emergency assis-

tance." In re Revision of the Comm'n's Rules to Ensure

Compatibility with Enhanced 911 Emergency Calling Sys.,

11 FCC Rcd 18676 p 3 (1996) ("First Report & Order"). At

its most basic, 911 service involves routing calls to state or

local governmental entities responsible for coordinating emer-

gency response, known as Public Safety Answering Points

("PSAPs"), which dispatch emergency assistance to callers.

Most PSAPs now provide E911--enhanced 911--services for

calls placed from traditional landline phones, using Automatic

Numbering Identification ("ANI") to determine a caller's

phone number and Automatic Location Identification ("ALI")

to pinpoint a caller's location. For landline calls, ALI infor-

mation is typically determined by looking up the caller's

phone number in an address/telephone number database.

Although wireless callers place a large number of 911 calls,

implementing E911 services for wireless phones has proven

more difficult. In June 1994, a group of public safety organi-

zations (including the Association of Public-Safety Communi-

cations Officials ("APCO"), intervenor here) issued an Emer-

gency Access Position Paper highlighting the need to make

E911 services available to wireless callers to "facilitate rapid

and effective contact with emergency services, when and

where needed." Shortly thereafter, the Commission issued a

notice of rulemaking to "ensure that, over time, [wireless

callers would] have the same level of access to 911 emergency

services as [landline] callers," and proposed requiring wire-

less carriers to make both ANI and ALI information available

to PSAPs. In re Revision of the Comm'n's Rules to Ensure

Compatibility With Enhanced 911 Emergency Calling Sys., 9

FCC Rcd 6170 pp 37, 50-52 (1994).

After the comment period ended, APCO and two other

public safety bodies, together with the Cellular Telecommuni-

cations Industry Association ("CTIA"), a trade association of

wireless industry participants, filed with the Commission a

Consensus Agreement addressing wireless E911 implementa-

tion. Among other things, the Agreement proposed a cost

recovery mechanism to fund carrier and PSAP investment in

E911 technology, asking the Commission to condition the

obligation to make these investments on a guarantee of state

or local government funding. The Commission also sought

public comment on this Consensus Agreement.

After receiving comments on its proposal and the Consen-

sus Agreement, the Commission adopted its First Report &

Order, which established a two-phase plan for wireless E911

implementation. Phase I, to have been completed in eighteen

months, required wireless carriers to enable PSAPs to deter-

mine a caller's ANI and the location of the base station or cell

site receiving the 911 call. First Report & Order, 11 FCC

Rcd 18676 at p 10. Wireless carriers had five years to

complete Phase II, which required them to enable PSAPs to

identify a caller's ALI within a specified range. Id. Wireless

carriers can implement Phase II in at least two ways. One is

network-based, determining a caller's location by triangulat-

ing signals from several different cell sites or base stations.

In re Revision of the Comm'n's Rules to Ensure Compatibili-

ty with Enhanced 911 Emergency Calling Sys., 14 FCC Rcd

17388 p 23 (1999) ("Third Report & Order"). The other is

handset-based; it incorporates locating functionality (such as

Global Positioning System technology) into the telephone

itself. Id. at p 18.

Under the Commission's Order, carriers' Phase I and

Phase II obligations would not be triggered until two condi-

tions were met: (1) the carrier had to receive a request for

these services from a PSAP capable of receiving and utilizing

the data; and, responding to the Consensus Agreement's cost

recovery provision, (2) "a mechanism for the recovery of costs

relating to the provision of such services" had to be in place.

First Report & Order, 11 FCC Rcd 18676 at p 11. The

Commission prescribed no particular cost recovery mecha-

nism, however, because "[n]o party dispute[d] the fundamen-

tal notion that carriers must be able to recover their costs of

providing E911 services" and because "an inflexible Federal

prescription would deny carriers and government officials the

freedom to develop innovative cost recovery solutions." Id. at

WW 89-90.

The Commission also responded to comments by rural

wireless carriers that "providing ALI in rural areas may not

be technologically and economically feasible," id. at p 84, and

that carrier cost recovery mechanisms might not fully reim-

burse these higher implementation costs. According to the

rural carriers, a network-based method of providing ALI

would be difficult because, given the configuration of many

rural providers' towers as a "string of pearls" along a high-

way, triangulation would require a large number of additional

towers and equipment. Petitioners' Opening Br. at 17; cf.

Third Report & Order, 14 FCC Rcd 17388 at p 23. They also

claimed they had no alternative, because the handset-based

solution was not yet technologically available. The Commis-

sion concluded that these problems "need not delay adoption

of the general rule" because "[i]n cases where the cost

recovery mechanism for E911 service uniquely disadvantages

a particular carrier, we will ... consider waiver requests."

First Report & Order, 11 FCC Rcd 18676 at p 84.

Reconsidering the First Report & Order, the Commission

reaffirmed its decision not to prescribe a particular cost

recovery mechanism. In re Revision of the Comm'n's Rules

to Ensure Compatibility with Enhanced 911 Emergency Call-

ing Sys., 12 FCC Rcd 22665 WW 143-146 (1997). CTIA filed

for a second reconsideration, asking the Commission to clarify

that state and local governments could not satisfy the carrier

cost recovery requirement by asking carriers to recover their

own costs directly through charges to wireless customers, and

to mandate that the cost recovery mechanisms states and

localities adopt be "competitively neutral." In response, and

after receiving a Joint Status Report filed by the Consensus

Agreement parties (joined by the Wireless Consumers Alli-

ance, Inc.) revealing that Phase I implementation was pro-

ceeding more slowly than planned, the Commission issued a

Public Notice seeking information on whether the carrier cost

recovery requirement was responsible for the delay, and if so,

how to address this problem. Public Notice, Comm'n Seeks

to Facilitate Wireless E911 Implementation and Requests a

Report, 14 FCC Rcd 11138, 11138 (1999). Petitioners United

States Cellular Association ("US Cellular") and the Rural

Cellular Association ("RCA") submitted comments.

In the resulting Second Reconsideration Order, the Com-

mission found that the "prerequisite that there be a carrier

cost recovery mechanism has not expedited the delivery of

E911 service and, if anything, has become and will continue to

be an impediment of E911 service." In re Revision of the

Comm'n's Rules to Ensure Compatibility with Enhanced 911

Emergency Calling Sys., 14 FCC Rcd 20850 p 42 (1999)

("Second Recons. Order"). Although twenty-seven states had

enacted some sort of Phase I cost recovery legislation, id. at

p 34, these services were "scarce, and, in most parts of the

country, nonexistent," id. at p 33. Twenty-three states had

no Phase I cost recovery mechanism in place, and even in the

states that had enacted legislation, the Commission found

that disputes about the adequacy and administration of cost

recovery interfered with Phase I implementation. Id. at p 36.

The Commission further agreed with APCO that, because few

state and local governments had enacted Phase II legislation,

and because the costs of doing so would likely exceed Phase I

costs, carrier cost recovery threatened to become an even

greater obstacle to Phase II implementation. Id. at p 42.

To alleviate these delays, the Commission dropped the

carrier cost recovery requirement, noting that "[wireless]

carriers are not subject to rate regulation, and may adjust

their rates to reflect the cost of providing E911 services

without [Commission] intervention." Id. at p 49. According

to the Commission, passing costs on to consumers is "the

normal way that costs of doing business, including the costs of

complying with government-imposed requirements, are recov-

ered in an industry free of rate regulation." Id. at p 61.

Addressing comments that eliminating the carrier cost

recovery requirement would unfairly discriminate against ru-

ral carriers, the Commission concluded that the record con-

tained insufficient evidence to support the claim that rural

carriers' implementation costs are higher, and that, even if

they are, "it is not clear that such costs should be pooled for

recovery in this competitive, deregulated industry." Id. at

p 57.

Petitioners RCA and Corr Wireless Communications

("Corr") sought further reconsideration of the Second Recon-

sideration Order, contending that the Commission had im-

properly disregarded rural carriers' concerns about cost re-

covery. Corr, a rural carrier, submitted detailed information

on its Phase II implementation costs. The reconsideration

petitions also argued that the Commission's action violates

universal service requirements under 47 U.S.C. s 254 and

amounts to an unconstitutional taking in violation of the Fifth

Amendment. Although petitioners had not made these

claims in the proceedings leading to the Second Reconsidera-

tion Order (in fact, Corr had not even participated in those

proceedings), Corr argued that its failure was excusable

because the Commission had not given adequate notice of the

possibility that it would abandon the carrier cost recovery

requirement. Disagreeing, and finding that commenters had

presented no "new or persuasive evidence" to justify reopen-

ing the proceedings, the Commission denied reconsideration.

In re Revision of the Comm'n's Rules to Ensure Compatibili-

ty with Enhanced 911 Emergency Calling Sys., 15 FCC Rcd

22810 p 8 (2000) ("Fifth Memorandum & Order").

RCA and Corr have now filed a petition for review of the

Commission's decision to deny reconsideration of the Second

Reconsideration Order. All three petitioners also challenge

the Second Reconsideration Order itself, arguing that the

Commission's decision to eliminate the carrier cost recovery

requirement violates this circuit's cost causation principle.

See Comptel, 87 F.3d at 529. They also argue that the

Commission acted arbitrarily and capriciously in violation of

the Administrative Procedure Act and violated both the Reg-

ulatory Flexibility Act and the takings clause of the Fifth

Amendment.

II

We begin with petitioners' contention that eliminating the

carrier cost recovery requirement runs afoul of this circuit's

cost causation principle. In Comptel, we held that when the

Commission sets rates, it "must ... specifically justify any

rate differential that does not reflect cost." 87 F.3d at 529.

In that case, the Commission had established a rate structure

that essentially required large long distance carriers to subsi-

dize smaller ones. Concluding that "the attempt to recover

costs from [long distance carriers] that did not cause those

costs to be incurred would impart the wrong incentives," id.

at 530-31, we vacated the Commission's order. Comptel

based its cost causation principle on both APA section

706(A)(2), which makes unlawful arbitrary and capricious

agency actions, 5 U.S.C. s 706(2)(A), and then-existing ver-

sions of Communications Act sections 201 and 202, which

presently provide that "charges ... for and in connection

with [a] communication service, shall be just and reasonable,"

47 U.S.C. s 201(b), and that "[i]t shall be unlawful for any

common carrier to make any unjust or unreasonable discrimi-

nation in charges ... for or in connection with [a] communi-

cation service," id. s 202(a). See Comptel, 89 F.3d at 529.

Petitioners here argue that neither they nor their customers

caused the E911 costs, and therefore that Comptel prohibits

the Commission from requiring them to pay for the cost of

implementation.

The Commission argues that petitioners may not rely on

the cost causation principle because they failed to raise

Communications Act sections 201 and 202 in the proceedings

before the agency. See 47 U.S.C. s 405(a)(2); Bartholdi

Cable Co. v. FCC, 114 F.3d 274, 279 (D.C. Cir. 1997) (inter-

preting section 405(a)(2) as requiring that the Commission

"be afforded an 'opportunity to pass' on an issue as a condi-

tion of judicial review."). Alternatively, the Commission ar-

gues, even if the cost causation principle were properly

raised, it applies only when the Commission is setting rates.

Petitioners concede their failure to cite Communications Act

sections 201 and 202 in the proceedings before the Commis-

sion, but claim that they have not waived reliance on these

sections because the "issue [was] necessarily implicated by

the argument made to the Commission." Time Warner

Entm't Co. v. FCC, 144 F.3d 75, 80 (D.C. Cir. 1998). Addi-

tionally, they argue that because the cost causation principle

also rests on the APA's prohibition against arbitrary and

capricious agency action, it applies whether or not the Com-

mission is setting rates. We need not resolve these disputes,

however, because even if the cost causation principle applies

outside rate-regulated industries and is properly before us,

petitioners' argument fails.

Petitioners claim that the "cost causer" for wireless E911 is

"clearly" the PSAP: "E911 capabilities are not necessary to

provide wireless service. Rather, carriers are forced to in-

stall these E911 capabilities at the instigation of and for the

use of the PSAPs in their provision of emergency services."

Petitioners' Opening Br. at 28. Compelling carriers rather

than PSAPs to bear financial responsibility for wireless E911

implementation by passing some or all of the costs on to their

customers, petitioners claim, violates the cost causation prin-

ciple. We disagree.

For one thing, PSAPs are not the cost causers for wireless

E911 implementation. As the Commission points out:

Wireless E911 services are provided for the benefit of all

subscribers, to enable them to call and receive prompt

attention from public safety agencies.... It is entirely

rational for subscribers to wireless services to pay

through their charges for the costs the Commission has

required the carriers to incur to upgrade their systems to

include E911 services. Subscribers, after all, are the

ultimate beneficiaries when E911 calls go through and

public safety agencies respond.

Respondent's Br. at 34-35.

Petitioners' argument to the contrary rests on a profound

misunderstanding of PSAPs and their public safety function.

Petitioners seem to think that PSAPs are private busi-

nesses--like commercial ambulance makers, to use petition-

ers' own example--providing for-profit services to the public.

If this were true, petitioners might have a point. But PSAPs

are governmental entities playing a critical role in the provi-

sion of public safety services: in larger urban areas, they are

stand-alone government-funded organizations; in smaller ru-

ral areas, they may be local law enforcement offices. PSAPs

themselves derive no benefit from wireless E911 services;

rather, they provide safety services to benefit the public.

Under the Commission's Order, it is the beneficiaries of these

services who ultimately pay most if not all of the cost of

wireless E911 implementation.

Petitioners argue that wireless customers have not directly

requested carriers to provide them with E911 services. This

is certainly true, but the Commission, as their governmental

representative, has made this request on their behalf. Thus,

in a sense, the Commission itself is the cost causer--it is the

Commission's Order that requires wireless carriers to provide

E911 services in the public interest. Whether the Commis-

sion or the wireless customer is the cost causer, we need not

decide. What's important is that on no plausible theory are

PSAPs the cost causers: their only role is providing 911

service. True, a PSAP request is a precondition of a wireless

carrier's obligation to implement E911 technology, First Re-

port & Order, 11 FCC Rcd 18676 at p 11, but the obligation

itself results from the Commission's Order, and the beneficia-

ry of that obligation is the public.

The public nature of wireless E911 services distinguishes

this case from Comptel. There, the Commission had required

some private businesses (large long-distance carriers) to sub-

sidize others (smaller long-distance carriers). This produced

competitive distortion in the private market, insulating some

inefficient smaller firms from the pressures of the market-

place. Comptel, 87 F.3d at 530. In this case, by contrast,

eliminating the carrier cost recovery requirement produces

no such inefficiencies; it merely imposes the cost of E911

service on its beneficiaries.

Disagreeing, petitioners claim that eliminating the carrier

cost recovery requirement will lead to "inefficient economic

behavior, because [the government is] not required to inter-

nalize the costs of building [E911 capabilities]." Petitioners'

Opening Br. at 29. Petitioners apparently think that, if

governmental entities are not obliged to cover the costs of the

public benefits they impart, they may order safety services

that wireless customers do not really want, or at least do not

want at the price they must pay. This potential "inefficien-

cy," petitioners claim, violates the cost causation principle.

This argument is breathtaking. If petitioners were correct,

the Federal Aviation Administration could not require airlines

to install safety equipment without reimbursing them for

their costs, the Environmental Protection Agency would have

to pay factories for the cost of required pollution-reducing

technology, and the Department of Transportation would

have to pay automobile manufacturers to install safety belts

and air bags. Each of these agencies has "caused" the cost of

its regulatory safety requirements in the same way the

Commission has caused the cost of wireless E911 implemen-

tation. Yet it is ludicrous to suggest that government cannot

pass these costs along to regulated entities.

Attempting to distinguish these sorts of safety regulations

from the Commission's action in this case, petitioners' counsel

observed at oral argument that the Commission has chosen to

implement its wireless E911 mandate not directly, but

through PSAPs. But the manner in which the Commission

chooses to implement its regulations is irrelevant. The fact

remains that the Commission has imposed upon wireless

carriers an obligation to implement a service in the public

interest. Whether it does this directly or with the coopera-

tion of other governmental safety organizations, it has no

obligation to compensate carriers for their costs.

If, as petitioners fear, the government improperly assesses

the public interest--for instance, if consumers would rather

pay less for wireless phones without E911 or cars without

safety belts--the remedy is political, not judicial. Granting

petitioners the relief they seek, moreover, would not neces-

sarily have any impact at all on this so-called inefficiency. If

the carrier cost recovery requirement were still in place, a

state or local government could decide to place a tariff on

wireless service exactly equal to the amount carriers would

have to raise rates to cover the costs of implementation. At

oral argument, petitioners' counsel conceded that such a tariff

would not violate the cost causation principle (if the Commis-

sion could in some way be held responsible for it), because

government would bear the costs of wireless E911 implemen-

tation. Yet any "inefficiency" caused by requiring carriers to

pass implementation costs along to their customers would

result equally from such a state or local tariff.

Petitioners claim that eliminating the carrier cost recovery

requirement produces another competitive distortion: "be-

cause rural carriers' costs of implementing E911 capabilities

are higher per customer than those of predominantly urban

carriers, the [Commission's] rule introduces artificial, [Com-

mission]-created competitive inequalities between rural and

urban carriers." Petitioners' Opening Br. at 30. We are

skeptical, however, that this claim has anything at all to do

with Comptel's cost causation principle. Petitioners do not

argue (nor could they) that the Commission has required

rural carriers to subsidize costs caused by urban ones. In-

stead, petitioners seem to be arguing that, like the rate

structure invalidated in Comptel, the Commission's elimina-

tion of the carrier cost recovery requirement is arbitrary and

capricious because it distorts the competitive marketplace.

But the Commission found insufficient evidence to conclude

that rural carriers' implementation costs are higher. Second

Recons. Order, 14 FCC Rcd 20850 at p 57. Even assuming

that they are, however, it is because (as petitioners recognize)

rural carriers do business in areas with lower population

density. And again, because a cost recovery requirement

could result in tariffs equal in amount to carriers' increased

rates, granting petitioners the relief they seek would not

necessarily alleviate any inequality.

Petitioners presumably hope that a government cost recov-

ery mechanism would pool wireless E911 costs, distributing

them equally among rural and urban carriers. But such

pooling, the Commission found, may itself distort the competi-

tive marketplace: to preserve competition, carriers ought to

be responsible for the potentially greater costs of doing

business in rural areas. Id. Petitioners' solution may thus

create exactly the distortion they seek to avoid.

III

This brings us to petitioners' other APA challenges. They

first argue that the Commission failed to consider alternative

causes of the delay in wireless E911 implementation. In

particular, petitioners point to three alternatives suggested

by commenters: lack of liability protection for wireless carri-

ers and PSAPs; Local Exchange Carriers' failure to fulfil

their obligations; and disputes between carriers and PSAPs

over which technology to use in implementing wireless E911.

The Commission responds that it found the carrier cost

recovery requirement to be a significant cause of delay,

Second Recons. Order, 14 FCC Rcd 20850 at p 38, and that

even if other causes exist, it need not address all wireless

E911 implementation problems at the same time. We agree.

As we said in National Association of Broadcasters v. FCC,

agencies need not address all problems "in one fell swoop."

740 F.2d 1190, 1207 (D.C. Cir. 1984) (citing Williamson v. Lee

Optical Co., 348 U.S. 483, 489 (1955) ("[R]eform may take

place one step at a time, addressing itself to the phase of the

problem which seems most acute to the [regulatory] mind.")).

In any event, and contrary to petitioners' claim, the Commis-

sion did address these alternative explanations, finding that

problems caused by lack of liability protection were mooted

by legislation granting such protection, Second Recons. Or-

der, 14 FCC Rcd 20850 at p 9; that the Telecommunications

Act of 1998 and existing regulations already require Local

Exchange Carriers to fulfill their obligations, id. at p 8; and

that the Commission is available to mediate technology dis-

putes between PSAPs and carriers, id. at p 7.

Petitioners next argue that the Commission failed to con-

sider alternative solutions to the problems posed by the

carrier cost recovery requirement, including drafting more

specific instructions and guidelines on the most disputed cost

recovery issues and permitting carriers to file federal tariffs

to recover their costs. As the Commission points out in its

brief, however, it gave reasons for rejecting both alternatives.

Respondent's Br. at 25-27 (citing Second Recons. Order, 14

FCC Rcd 20850 at WW 49-52). In reply, petitioners, apparent-

ly missing this section of the Commission's brief, not only

reassert that the Commission "simply ignored these propos-

als," Petitioners' Reply Br. at 14, but also make no effort to

argue what they must: that the Commission's reasons for

rejecting these alternatives were inadequate or unsupported

by record evidence. See Comm. for Cmty. Access v. FCC, 737

F.2d 74, 83 (D.C. Cir. 1984).

Petitioners argue that the Commission's decision to elimi-

nate the carrier cost recovery requirement finds no support

in the record because "none of the parties ... (with the

exception of APCO ... ) recommended the elimination of

carrier cost recovery." Petitioners' Opening Br. at 37. But

the Commission has no obligation to take the approach advo-

cated by the largest number of commenters, Natural Res.

Def. Council v. EPA, 822 F.2d 104, 122 n.17 (D.C. Cir. 1987);

indeed, the Commission may adopt a course endorsed by no

commenter. The Commission's only responsibilities are to

respond to comments, 5 U.S.C. s 553, and to choose a reason-

able approach backed up by record evidence, Comm. for

Cmty. Access, 737 F.2d at 83.

Next, petitioners argue that, in eliminating the cost recov-

ery requirement, the Commission "dramatically" departed

from precedent without explanation. Petitioners' Opening

Br. at 38. In particular, they argue, the Commission gave no

reason for abandoning its goal of achieving parity in wireless

and landline services, so these services can "truly be viewed

as substitute[s] by American consumers." In re Revision of

the Comm'n's Rules to Ensure Compatibility with Enhanced

911 Emergency Calling Sys., 14 FCC Rcd 10954 p 4 ("Second

Report & Order"). Because landline carriers typically recov-

er E911 costs by obtaining state authorization to add a

surcharge to customers' bills, petitioners claim that to achieve

parity between landline and wireless phone service, wireless

E911 should be funded through a similar state tariff. But the

Commission's apparent focus in achieving wireless and land-

line parity is not on making funding methods identical, but on

equalizing services available to consumers: one of the Com-

mission's parity goals is to ensure that consumers have access

to E911 services whether they use landline or wireless

phones. Second Report & Order, 14 FCC 10954 at p 4 ("We

expect to continue to explore ways to improve wireless 911

service because the improvement of wireless 911 is an essen-

tial element in applying wireless communications to improv-

ing public safety and hastening the day when wireless and

[landline] can truly be viewed as substitute services by Amer-

ican consumers."). Because the Commission found that carri-

er cost recovery was impeding wireless E911, its action

furthers, not frustrates, the goal of wireless/landline parity.

And as the Commission points out, the difference in funding

mechanisms reflects an important difference in the way each

service is regulated: landline carriers are rate-regulated;

wireless carriers are not. Because landline carriers are

unable to pass E911 implementation costs along to customers,

as wireless carriers can, the Commission had more than

sufficient reason to choose a different E911 implementation

scheme for wireless carriers.

Finally, petitioners argue that the Commission's analysis of

the impact of its Order on rural carriers was arbitrary and

capricious. In response to comments that eliminating the

carrier cost recovery requirement would unduly burden rural

carriers, the Commission found insufficient record evidence to

support commenters' claims that the costs of wireless E911

implementation in rural areas would, in fact, be higher.

Second Recons. Order, 14 FCC Rcd 20850 at p 57. "While

some costs will likely be higher in such areas," the Commis-

sion stated, "other costs may actually be lower, such as

construction costs or other infrastructure needs." Id. In its

brief in this court, the Commission notes that neither RCA

nor US Cellular submitted any specific financial data to

support their claims of higher costs. Without specific evi-

dence, the Commission was entitled to conclude that petition-

ers failed to demonstrate that rural carriers would dispropor-

tionately suffer from eliminating the carrier cost recovery

requirement.

According to petitioners, Corr, a rural carrier, did supply

specific financial data. But Corr submitted this evidence for

the first time in its petition for reconsideration of the Second

Reconsideration Order. Refusing to reopen the proceeding,

Fifth Memorandum & Order, 155 FCC Rcd 22810 at p 30, the

Commission found that Corr had adequate notice of the

possibility that the Commission would drop the carrier cost

recovery requirement, and that Corr had not submitted "new

or persuasive evidence that [the Commission's] conclusions

were in error," id. at p 8. "Where ... the Commission

refuses to reopen a proceeding, what is reviewable is merely

the lawfulness of the refusal," ICC v. Bhd. of Locomotive

Eng'rs, 482 U.S. 270, 278 (1986) (emphasis omitted)--in this

case, the Commission's determination that adequate notice

had been given and its finding that Corr's data did not qualify

as new evidence requiring reconsideration, see Bowman

Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S.

281, 295 (1974) (listing cases discussing agency error in failing

to reopen proceedings to consider new evidence). Because

petitioners offer no challenge to this part of the Commission's

decision, we lack jurisdiction to consider the implications of

Corr's cost data on the Second Reconsideration Order, as

well as other challenges to that order contained in the reject-

ed reconsideration petitions. Bhd. of Locomotive Eng'rs, 482

U.S. at 282.

IV

The Regulatory Flexibility Act obliges federal agencies to

assess the impact of their regulations on small businesses.

See 5 U.S.C. ss 601-612. Petitioners claim that the Commis-

sion failed to fulfill the RFA's requirement to file a final

regulatory flexibility analysis ("FRFA") containing

a description of the steps the agency has taken to

minimize the significant economic impact on small enti-

ties consistent with the stated objectives of applicable

statutes, including a statement of the factual, policy, and

legal reasons for selecting the alternative adopted in the

final rule and why each one of the other significant

alternatives to the rule considered by the agency which

affect the impact on small entities was rejected.

5 U.S.C. s 604(a)(5). Purely procedural, however, RFA sec-

tion 604 requires nothing more than that the agency file a

FRFA demonstrating a "reasonable, good-faith effort to carry

out [RFA's] mandate." Alenco Communications, Inc. v.

FCC, 201 F.3d 608, 625 (5th Cir. 2000). Petitioners dispute

neither that the Commission included a FRFA in its Second

Reconsideration Order, 14 FCC Rcd 20850, 20901 app. C, nor

that this statement addresses all subjects required by the

RFA. Instead, petitioners argue that the Commission's anal-

ysis of the impact its action would have on small carriers and

its dismissal of alternatives was arbitrary. But as we have

already seen, the Commission's analysis of the impact on

small rural carriers, supra at 15-16, and its reasons for

dismissing alternatives to eliminating the carrier cost recov-

ery requirement, supra at 13-14, were entirely reasonable.

Petitioners also argue that the Commission failed to issue

an initial regulatory flexibility analysis as required by RFA

section 603. 5 U.S.C. s 603. Not only did petitioners fail to

raise this argument until their reply brief, see Corson &

Gruman Co. v. NLRB, 899 F.2d 47, 50 n.4 (D.C. Cir. 1990)

("We require petitioners and appellants to raise all of their

arguments in the opening brief to prevent 'sandbagging' of

appellees and respondents and to provide opposing counsel

the chance to respond."), but the RFA expressly prohibits

courts from considering claims of non-compliance with section

603, Allied Local & Reg'l Mfrs. Caucus v. EPA, 215 F.3d 61,

79 (D.C. Cir. 2000).

V

Because petitioners' remaining claims--that the Commis-

sion's action violates the universal service requirements of the

Communications Act, 47 U.S.C. s 254, and the takings clause

of the Fifth Amendment, U.S. Const. amend. V--were raised

only in petitions for reconsideration of the Second Reconsid-

eration Order, thus suffering the same defects as Corr's

submission of cost data, see supra at 15-16, we lack jurisdic-

tion to consider them. We therefore deny the petition for

review in its entirety.

So ordered.