# North Carolina Utilities Commission v. Federal Communications Commission

> Court of Appeals for the Fourth Circuit · April 14, 1976 · 537 F.2d 787

URL: https://www.frixlaw.com/law-library/cases/8899350

## Case

- **Full name:** The NORTH CAROLINA UTILITIES COMMISSION, Southeastern Association of Regulatory Utility Commission, Intervenor v. The FEDERAL COMMUNICATIONS COMMISSION and the United States of America, International Telephone and Telegraph Communications, Intervenors CAROLINA TELEPHONE AND TELEGRAPH COMPANY and United Telephone Company of the Carolinas, Inc. v. FEDERAL COMMUNICATIONS COMMISSION and the United States of America, National Retail Merchants Association, Inc., and the North America Telephone Association, Intervenors AMERICAN TELEPHONE AND TELEGRAPH COMPANY and Associated Bell System Companies v. FEDERAL COMMUNICATIONS COMMISSION and the United States of America, National Retail Merchants Association, Inc., Intervenors NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, and Southern Pacific Communications Company, Intervenors UNITED STATES INDEPENDENT TELEPHONE ASSOCIATION v. FEDERAL COMMUNICATIONS COMMISSION, and United States of America, and Southern Pacific Communications Company, Intervenors CONTINENTAL TELEPHONE CORPORATION v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, MCI Telecommunications Corp., Intervenors
- **Court:** Court of Appeals for the Fourth Circuit
- **Decided:** April 14, 1976
- **Citations:** 537 F.2d 787
- **Precedential status:** Published
- **Opinion:** Concurring in part by Widener
- **Judges:** Hastie, Tuttle, Widener
- **Cited by:** 3 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/8899350

## Opinion text

WIDENER, Circuit Judge
(concurring and dissenting):
I respectfully dissent from that part of the court’s opinion which determines that the FCC has primary jurisdiction over the interconnection of customer-provided equipment to the subscriber’s telephone terminal. Should the statutory jurisdictional hurdle be overcome, I would concur in the balance of the opinion.
During the hearings before the House Committee on Interstate and Foreign Commerce and the Senate Committee on Interstate Commerce, it was repeatedly pointed out that § 221(b), 47 U.S.C. § 221 (b), was included in order to protect the jurisdiction of the States over intrastate telephone communications. This section, an intentional subtraction from the then existing power of the Interstate Commerce Commission, was designed to overcome the effects of the Shreveport rate case, 234 U.S. 342 , 34 S.Ct. 833 , 58 L.Ed. 1341 (1914), so far as telephone communications were concerned. See Statement of Dr. Irvin Stewart, member of the interdepartmental committee on communications, Hearings on H.R. 8301 Before the House Committee on Interstate and Foreign Commerce, 73d Cong., 2d Sess. 12, 16-18 (1934) (hereinafter House Hearings); statement of F. B. MacKinnon, President of the United States Independent Telephone Association, House Hearings 248; statement of K. F. Clardy, Chairman of the Legislative Committee of the National Association of Railroad and Utilities Commissioners, House Hearings 74; statement of Andrew R. McDonald, National Association of Railroad and Utilities Commissioners, Hearings on S. 2910 Before the Senate Committee on Interstate Commerce, 73d Cong., 2d Sess. 156 (1934) (hereinafter Senate Hearings).
Congress was well aware that at that time 98% of telephone communications was intrastate. 78 Cong.Rec. 10316 (1934). The FCC states 97% of messages are now intrastate. Telerent, Memo Opinion, p. 11. The House Committee was told the every piece of equipment and every exchange could at any moment be used exclusively, although temporarily, in interstate commerce. See statement of K. F. Clardy, House Hearings 73. This condition is the same today.
State regulatory commissions expressed themselves in favor of the Act because they understood it to safeguard the states from usurpation of power by the FCC. See statement of K. F. Clardy, House Hearings 71-72.
As Senator Dill, Chairman of the Senate Committee, pointed out in response to Mr. Clardy’s statements, “The reason why the State representatives of the State commissions wanted this language [§ 221(b)] in addition to the language of the Interstate Commerce Act — and that has been hopped on, talked about a great deal here, that we have added some language — is that the interpretation placed upon the language of the Interstate Commerce Act in connection with railroads has gone so far that the State commissions fear that this commission, using the same language — that if the same language is used in the law they might override and interfere with State regulations.” Senate Hearings 154.
It was even argued in the Senate Hearings that the bill should be changed to provide for Federal regulation of all facilities used for interstate communication, in order to correspond with the then existing railroad regulation. See Statement of Edward N. Nockels, Legislative Representative of the American Federation of Labor, Senate Hearings 199. Mr. Nockels pointed out that the Act takes away from Federal regulation a large portion of the existing *797 power of the Interstate Commerce Commission. Despite this argument, the wording of the bill remained unchanged, and the taking away of the then existing jurisdiction of the ICC was effected by § 221(b).
In discussing § 221, both the House Report and the Senate Report accompanying S. 3285 state in the same words “Paragraphs (b), (c), and (d) conform to the recommendations of the State commissions, and will enable those commissions, where authorized to do so, to regulate exchange services in metropolitan areas overlapping State lines.” House Report p. 7, Senate Report p. 5.
Senator Dill, Chairman of the Senate Committee on Interstate Commerce, when introducing the bill on the floor of the Senate, pointed out the intent of the bill “to reserve to the State commissions the control of intrastate telephone traffic. We have kept in mind the fact that the Interstate Commerce Commission, through the Shreveport decision and the decisions in other similar cases, has gone so far in the regulation of railroads that the so-called ‘State regulation’ amounts to very little. . [T]he State commission representatives were jealous, in the preparation of this bill, that those rights should be protected; and we have attempted to do that.” 78 Cong.Rec. 8823 (1934) (Italics added).
Likewise, Representative Rayburn, Chairman of the House Committee on Interstate and Foreign Commerce, when introducing the bill, stated, “Paragraph (b) [of § 221] leaves local exchange service to local regulation even where a portion of such local exchange service constitutes interstate communications.” 78 Cong.Rec. 10314 (1934). While it is true both the House and Senate Reports, and both Rep. Rayburn and Sen. Dill indicated that § 221 would take care of the situation where cities are located within two states, the section was incorporated at the request of State commissions, and embodied language which encompassed concerns of the State commissions and of Congress beyond the mere overlapping of telephone exchanges of cities into more than one State. The broad language of § 221(b) bears this out:
“(b) Subject to the provisions of section 301 of this title, nothing in this chapter shall be construed to apply, or to give the Commission jurisdiction, with respect to charges, classifications, practices, services, facilities, or regulations for or in connection with wire, mobile, or point-to-point radio telephone exchange service, or any combination thereof, even though a portion of such exchange service constitutes interstate or foreign communication, in any case where such matters are subject to regulation by a State commission or by local governmental authority.”
I suggest the legislative history does not indicate that this language should be construed to apply only to cities which overlap state lines, rather the fact that the language was included at the vigorous request of the State commissions indicates that the section should be read literally and to deny the FCC jurisdiction over intrastate facilities even though incidentally used in interstate commerce. As Representative Rayburn pointed out, this law does “not apply to a telephone receiving set, or anything like that.” House Hearings 179.
That the statute should be read literally has been affirmed by the FCC in more recent pronouncements. In 1954, language was added to the statute to include in it “mobile, or point-to-point radio telephone exchange service.” The legislative history of this amendment is quite enlightening. See 1954 U.S.Code Congressional and Administrative News, p. 2133 et seq.
The Senate Report on the bill states in a separate sub-heading styled “PURPOSE,” “The purpose of the legislation is to clarify the provisions of the Federal Communications Act with regard to the jurisdiction of the Federal Communications Commission over telephone and telegraph companies which are engaged primarily in intrastate activities and which therefore, should be subject to State and local regulation rather than Federal regulation. . . . The legislation is designed to make certain that *798 the use of radio will not subject to Federal regulation companies engaged primarily in intrastate operations.” The factual problem which brought about the legislation was the installation of mobile telephones in vehicles, farm houses in rural communities, isolated business developments, seasonal resort areas, etc. While stating that the Justice Department made no recommendation as to whether or not the amendments should be passed, the Deputy Attorney General, in an official communication to the Chairman of the Senate Committee on Interstate and Foreign Commerce, stated, as a construction of the legislation, that “[t]he purpose of the measure is to make certain that the use of radio in the communication service by telephone and telegraph companies which are engaged primarily in intrastate activities will not subject them to the jurisdiction of the Federal Communications Commission.”
Of equal or greater interest and authority is the official comment of the Federal Communications Commission to an official inquiry from the Senate Committee on Interstate and Foreign Commerce found at pp. 2135-6 of U.S.Code, Congressional and Administrative News, 1954. Among other comments, the Commission stated “. it would be clear that the Commission would not have regulatory jurisdiction over the services in question had they in fact been conducted by wire.” p. 2136. This is not only a letter from the Chairman of the Commission; 1 it is the act of the Commission itself construing the statute with which we are immediately involved, and was adopted by the Commission December 18, 1953.
We are faced with the situation, as I see it, that the FCC, from 1934 until 1974, construed the statute in question so that it did not have jurisdiction to regulate attachments to intrastate facilities which were subject to State regulation as provided for under § 221(b) of the statute. Certainly, the great weight given an administrative construction of a statute by its administrator must weigh heavily against the position the FCC now takes. Its change of position, after 40 years of construction of the statute denying its own jurisdiction, furnishes no reason to read the statute other than literally and consistently with the construction given to it by Congress at the time it was enacted and by the agency itself for years thereafter.
I think, then, that the statute, § 221(b), means at the least that Congress provided for State regulation of the services, facilities, etc., as mentioned therein as were at that time subject to State regulation, “even though” in the words of the statute 2 the services or facility might incidentally be used in interstate communication as in an exchange astride a State line. 3
I submit the intent of Congress was to establish a regulatory scheme for telephone companies, which envisioned a system of divided jurisdiction, Federal or State, rather than a system of primary jurisdiction, Federal then State, and that the jurisdiction of the State regulatory authorities was intended to be regulated by Congress, not by the whim of the Federal Communications Commission. While the power of Congress to regulate commerce under the Constitution has not been doubted since Gib *799 bons v. Ogden, 9 Wheat. 1 , 6 L.Ed. 23 (1824), that opinion itself points out that Congress may entirely legitimately manifest . .an intention to leave this subject entirely to the States until Congress should think proper to interpose.” 9 Wheat, at 208.
No more reason exists for a federal regulatory commission to assert jurisdiction it does not have than exists for a federal court to do so. It should have “. . .no more right to decline the exercise of jurisdiction which is given than to usurp that which is not given.” Cohens v. Virginia, 6 Wheat. 264, 404 , 5 L.Ed. 267 (1821). The FCC here not only, or even principally, usurps the regulatory authority of the States; it usurps the right of Congress to provide for regulatory jurisdiction.
While the opinion of the court may seem to relegate the precise question of the statutory jurisdiction of the FCC to almost an afterthought, I think it is the most important and very nearly the only issue of real consequence in the case. Jurisdiction carries with it the right to regulate revenue— not only the amount, but who gets it, and its source. Depriving the States of jurisdiction deprives them of the right to regulate, which in turn deprives them of the right to distribute the burden of telephone service among the various classes of customers. As a practical matter, this assertion of federal primacy necessarily and directly affects the intrastate rates which may be charged, jurisdiction of which could not be more clearly reserved to the States. The result we arrive at, then, I suggest was never dreamed of by Congress.
Today, we allow the FCC to regulate only a facility mentioned in the statute as reserved for State regulation, but by approving the principle, we establish precedent of affirming FCC regulation of those matters mentioned in § 221(b) as reserved to the States. No reason would then exist for the FCC not to regulate “charges, classifications, practices, [and] services,” other matters specifically reserved for State regulation by the same statute, and it must now be taken as the law that any continued State regulation of “charges, classifications, practices, [and] services” is by grace of the Federal Communications Commission, not by act of Congress, for we have approved the principle of FCC assertion of primary jurisdiction.
While there may be no doubt that Congress had the power to grant the FCC jurisdiction over intrastate facilities that are used incidentally in interstate commerce, such as the inter-connection of customer provided equipment involved here, as I read the statute and legislative history, Congress specifically declined so to do in the face of some who argued that it should. 4 As Congress did not confer jurisdiction on the Federal Communications Commission, it is not for us to consider whether it should have then, or whether it should now. I think it has not, and any change in the jurisdictional regulatory scheme is a matter for Congress and not for the courts.
. An official letter from the Chairman of the FCC to the Chairman of the Senate Sub-Committee on the Handicapped, who had inquired whether the FCC required the hearing aid industry to provide equipment for the coupling of hearing aids to telephone instruments was to the same effect as the comment on the 1954 amendment. It stated the Act excluded the FCC from “any authority,” and that “such local service matters are subject to the regulatory authority of State commissions in the various States.” 119 Cong.Rec. S 17297, daily ed., Sept. 22, 1973.
. Interestingly enough, see the use of the words “even though” used in a colloquy between F. B. McKinnon, President of the Independent Telephone Association, and the House Committee in the hearings, which corroborates the construction sought by the petitioners here. House Hearings, p. 248. No reason is presented to my satisfaction not to give the words their ordinary meaning.
. The facility involved here admittedly has been subject to State regulation.
. While the opinion of the court relies in part on the creation and existence of the federal-state joint board, a recent decision of the FCC illustrates the utter futility of relying on the FCC to heed the advice of the joint board which had attempted to protect the telephone companies from detrimental economic effect through revenue losses directly brought about by FCC assertion of jurisdiction over attachments to telephone systems. In the Matter of Proposals for New or Revised Classes of Interstate and Foreign Message Toll Telephone Service (MTS) and Wide Area Telephone Service (WATS), FCC Docket 19528 (March 18, 1976).

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/8899350. Public record. Not legal advice.