Opposition — California v. Federal Communications Commission

~~ Supreme Court U. T

FILED

5 Nos. 77-406 and 77-434 OCT 17 1977

\ '

IN THE MICHAEL RODAK, JR., CLERK

Supreme Court of the United

OcToBER TERM, 1977

THE PEOPLE OF THE STATE OF CALIFORNIA and

Tue Pvusuic Utiities CoMMISSION OF THE

Srarx oF CALIFORNIA, Petitioners,

V.

FEDERAL COMMUNCATIONS COMMISSION and

THe Untrep States or America, et al., Respondents,

THe NATIONAL ASSOCIATION OF REGuLATORY UTILITY

CoMMISSIONERS, Petitioner,

V.

7 | FEDERAL COMMUNCATIONS COMMISSION and

i Tue Untrep States or America, et al., Respondents.

On Petitions for a Writ of Certiorari to the United States

Court of Appeals for the District of Columbia Circuit

BRIEF FOR THE RESPONDENT SOUTHERN PACIFIC

COMMUNICATIONS COMPANY IN OPPOSITION

TuormMunD A. MILLER

Ricuarp S. Korr

JAMES M. Ton

One Market Plaza

San Franciseo, Cal. 94105

Hersert E. Forrest

5 1250 Connecticut Ave., N. W.

5 Washington, D. C. 20036

3 Attorneys for Respondent

f Southern Pacific

gf Communications Company

5 Sreproz & JonxSO

: 1250 Connecticut Avenue, N.W.

Washington, D.C. 20036

Of Counsel

Pauses or Braun . Avame Partie, Inc., Wasumroron, D. C.

Page

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D. Decision of the Court of Appeals ........... 8

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CITATIONS

Cases:

AT&T and the Associated Bell System Companies, In-

terconnection With Specialized Carriers in Fur-

nishing Interstate Foreign Exchange (FX) Ser-

vice and Common Control Switching Arrangements

(CCSA), 56 F.C.C.2d 14 (1975). Pet.App. 16,

affirmed, People of State of California v. FCC,

* 75-2060 (D.C.Cir. June 20, 1977), Pet.App

„„ bbaahiatldinesueetacain 2, 5, 7, 111 15

Aer v. FCC, 551 F. 2d 1287 (D. C. Cir. 1977) 15

Bell System Tariff — 46 F. C. C. 2d 413 (1974),

affirmed, Bell Tele — Co. of Pennsylvania v.

FCC, 503 F. 2d 1250 (3rd Cir. 1974), cert. denied,

AT&T v. FCC, 422 U.S. 1026 (1975), rehearing

denied, 423 U. 8. 886 n 3, 4

Bell Telephone Co. of Pennsylvania v. FCC, 503 F. 2d

1250 (3rd Cir. 1974), cert. denied, AT&T v. FCC,

422 U.S. 1026 (1975), rehearing denied, 423 US.

GED CH obec c cecvcknviccctiveevcadivcteveses 4,14

ii Citations Continued

Page

Chicago, R. I. & P. Ry. Co. v. Hardwick Farmers Ele-

vator Co., 226 U.S. 426 (1913) ................. 10

Colorado v. United States, 271 U.S. 153 (1926) 10

Interconnection, Jurisdictional Separations and

Rate Structures, 46 F.C.C.2d 214 (1974), 50 F.C.C.

2d 574 (1974), 61 F.C.C.2d 766 (1976) .......... 17

FCC v. RCA Communications, Inc., 346 U.S. 86 (1953) 14

Gibbons v. Ogden, 9 Wheaton (22 U.S.) 1 (1824). 9

Gulf, Colorado & S. F. Ry. Co. v. Hefley, 158 U.S. 98

r a 9

MCI Telecommunications, Inc., Initial Decision, 18

F.C.C.2d 979 (1967), Decision, 18 F.C.C.2d 953

(1969), reconsideration denied, 21 F.C.C.2d 190

rot modifications granted, 27 F.C.C.2d 380 .

„ . .

North Carolina Utilities Commission v. FCC (North

Carolina I), 537 F.2d 787 (4th Cir. 1976), cert.

denied, 429 U.S. 1027 (1976) ....... 4, 9, 12, 13, 14, 15

North Carolina Utilities Commission v. FCC (North

Carolina II), 552 F.2d 1036 (4th Cir. 1977), cert.

denied, No. 76-1675, 46 L.W. 3190 (1977) ....5, *

14,

Pacific Telephone and Telegraph Co. v. Southern Pa-

eifie Communications Co., Decision No. 74167 (Cal.

PU OC Mar. 4, 1975), Pet. App. 55. 5, 16

People of State of California v. FCC, No. 75-2060

(D. C. Cir. June 20, 1977), Pet. App. 11. 1, 2, 9, 15

Proposals for New or Revised Classes of Interstate

and Foreign Message Toll Telephone Service

(MTS) and Wide Area Telephone Service

(WATS), First Report and Order, 56 F.C.C.2d

593 (1975), Second Report and Order, 58 F.C.C.2d

F ¹·—A ? 5

Puerto Rico Telephone Co. v. FCC, 553 F.2d 694

r ˙ u ͤ˙TT— 4, 14

Sherdon v. Dann, 193 Neb. 768, 229 N. W. 2d 531 (1975) 4

Specalized Common Carrier Inquiry, 29 F. C. C. 2d 870

(1971), reconsideration denied, 31 F. C. C. 2d 1106

(1971), affirmed, Washington Utilities & Trans-

portation Commission v. FCC, 513 F.2d 1142 (9th

Citations Continued iii

Page

Cir. 1975), cert. denied, National Assn. of Regu-

latory Utility Commissioners v. FCC, 423 U.S.

, ˙ —ÜwmwA.⁰—w - —-ůͥmw de 2, 5, 17

Telerent Leasing Corp., 45 F. C. C. 2d 304 (1974), af-

firmed, North Carolina Utilities Commission v.

FCC (North Carolina I), 537 F.2d 787 (4th Cir.

1976), cert. denied, 429 U.S. 1027 (1976) ........ 4

Washington Utilities & Transportation Commission

v. FCC, 513 F.2d 1142 (9th Cir. 1975), cert. de-

nied, National Assn. of Regulatory Utility Com-

missioners v. FCC, 423 U.S. 836 (1975) ...... 3, 13, 14

United States v. AT&T, 57 F.Supp. 451 (S. D. N. V.

1944), affirmed, Hotel Astor, Inc. v. United States,

r errr 10

United States v. Southwestern Cable Co., 392 U.S. 157

KKKKKKEEEEFPAAEA ve 10

Srarurxs:

Communications Act of 1934, as amended, 47 U.S.C.

. tb 4, 10, 11

J ee cawbocnecoeses 8,17

Section 2(b), 47 U.S.C. 152(b) ................. 11

Section 221(b), 47 U.S.C. 221(b) .............. 12, 13

Section 402 (a), 47 U.S.C. 402(a) ............... 2

Section 405 (3), 47 U.S.C. 405 (ju 2

28 U.S.C. 1254 (1), 2341, 2344, 2350 2

MISCELLANEOUS:

Hearings on H.R. 8301 Before the House Committee

on Interstate and Foreign Commerce, 73rd Cong.,

L 12

Hearings on S. 2910 Before the Senate Committee on

Interstate Commerce, 73rd Cong., 2d Sess. (1934) 12

Sen. Rept. No. 781, 73rd Cong. 2d Sess. (1934) ...... 1i

IN THE

Supreme Court of the United States

OcToBER TERM, 1977

Nos. 77-406 and 77-434

THE PEOPLE OF THE STATE OF CALIFORNIA and

TRE Pusuiic UTILITIES COMMISSION OF THE

Srark OF CALIFORNIA, Petitioners,

V.

FEDERAL COMMUNCATIONS COMMISSION and

Tue UNITED States or AMERICA, et al., Respondents.

THE NATIONAL ASSOCIATION OF REGULATORY UTILITY

CoMMISSIONERS, Petitioner,

V.

FEDERAL COMMUNCATIONS COMMISSION and

Tae Unirep States oF AMERICA, et al., Respondents.

On Petitions for a Writ of Certiorari to the United States

Court of Appeals for the District of Columbia Circuit

BRIEF FOR THE RESPONDENT SOUTHERN PACIFIC

COMMUNICATIONS COMPANY IN OPPOSITION

The opinion of the Court of Appeals (Pet.App.

1-15) is not yet reported. The memorandum opinion

Pet. App.“ refers to ‘‘ Petitioners’ Joint Appendices’’.

2

and order of the Federal Communications Commis-

sion (Pet. App. 16-44) is reported at 56 F. O. C. 2d 14

(1975),

JURISDICTION

The judgment of the Court of Appeals was entered

on June 20, 1977 (Pet.App. 3). The petition in No.

77-406 was filed on September 15, 1977, and the peti-

tion in No, 77-434 was filed on September 19, 1977.

Tho jurisdiction of this Court is invoked by peti-

tioners under 28 U.S.C, 1254(1) ; Sections 402 (a) and

405(j) of the Communications Act of 1934, as

amended 47 U.S. OC. 402 (a), 405(j); and 28 U.S.C,

2341, 2344, and 2350.

QUESTION PRESENTED

Whether the Federal Communications Commission

possesses and properly asserts statutory authority to

regulate facilities located within one state which are

used to provide both interstate and intrastate com-

mumientions, where the FCC concludes that it is con-

trary to the public interest and technically and prac-

tically difficult to separate the facilities between inter-

state and intrastate communications functions.

STATEMENT

A. Background

In 1971, on the basis of a comprehensive rule mak-

ing proceeding, the FCC adopted a general policy in

favor of the free entry of new common carriers into

the business of providing specialized communications

service.” The FCC reaffirmed its view that the estab-

— —

* Specialized Common Carrier Inquiry, 29 F. C. C. 2d 870 (1971),

reconsideration denied, 31 F. C. C. 2d 1106 (1971),

3

lished carriers, which had earlier manifested ‘‘intran-

sigence’’ towards interconnecting its facilities with

those of the first specialized carrier to make applica-

tion,’ should permit interconnection of intercity and

local distribution facilities on reasonable terms and

conditions to the facilities of the new carriers.“ This

decision was affirmed by the Ninth Circuit."

Thereafter, in 1974, the FCC held that Bell and

the Associated Bell System Companies had engaged

in unlawful conduct in refusing or delaying to pro-

vide the physical interconnection of their facilities

necessary for the specialized carriers to provide their

authorised services, and directed AT&T and the Bell

Companies to furnish to specialized carriers the inter-

connection facilities essential to the rendition of all

of their authorized services.“ Included among these

authorized services were Foreign Exchange (FX)

service’ and Common Control Switching Arrange-

* MCT Telecommunications, Inc,, Initia) Decision, 18 F.C. C. 2d 979,

1007 (1967), Decision, 18 F. C. C. 2d 953, 965 (1969), reconsideration

denied, 21 F.C. C. 2d 190 (1970), modifications granted, 27 F.C. C. 2d

380 (1971),

Note 2 supra, 29 F. C. C. 2d at 940.

N * Washington Utilities & Transportation Commission v. FCC, 513

F.2d 1142 (9th Cir, 1975), cert. denied, National Assn. of Regula-

tory Utility Commissioners v. FCC, 423 U.S, 836 (1975),

ue System Tariff Offerings, 40 P. C. C. 2d 413, 435-36, 438

" Foreign exchange (FX) is a private line service that is partially

‘‘switehed’’, permitting a telephone subscriber in one exchange to

maintain a local telephone in another exchange area as if his tele-

phone were actually located in that other exchange area, 46 F. C. C.

2d at 418 fn. 5; National Association of Regulatory Utility Com-

missioners (NARUC) petition, at 4-5, fn. 4.

4

ments (COSA), This decision was affirmed by the

Third Circuit.“

In 1971 the FCC also issued a declaratory ruling

{hat the Communications Act of 1934, as amended,”

preempts state regulation of the terms and conditions

of the interconnection of facilities (in that case tele-

phone terminal equipment) used for both interstate

and intrastate communications services, when the

atate or local regulation conflicts with Federal regu-

lation of those facilities." That decision was affirmed

by the Fourth Circuit,” and in collateral cases by the

First Circuit“ and the Supreme Court of Nebraska.“

In 1975 and 1976 the FCC exercised its primary

authority over facilities used in both interstate and

intrastate communications to establish a terminal

equipment registration program, precluding incon-

— — —

"A CCSA is a private line system for linking the various offices

of a large company through large switches on a local telephone

company's premises instead of through a switchboard on the eus-

tomers premises, 46 F. C. C. 2d at 418 fn. 5; NARUC petition at 5

fn, 5.

* Bell Telephone Co, of Pennsylvania v. FCC, 503 F.2d 1250 (3rd

Cir, 1974), cert, denied, AT&T v. FCC, 422 U.S, 1026 (1975),

rehearing denied, 423 U.S, 886 (1976).

"47 U.S.C, 151 et seq,

'' Tolerant Leasing Corp., 45 F.C. C. 2d 204 (1974),

'* North Carolina Utilities Commission v. FCC (North Carolina

/), 5387 F.2d 787 (4th Cir, 1976), cert, denied, 429 U.S, 1027 (1976).

% Puerto Rico Telephone Co. v. FOC, 653 ¥.2d 694 (Ast Cir,

1977).

* Sherdon v. Dann, 193 Neb, 768, 229 N. W. 2d 531 (1976).

5

sistent state and local regulation.“ These decisions

were also affirmed by by the Fourth Circuit.“

B. Facts of the Case

The present case involves facilities located in Cali-

fornia which are used by a customer of Southern Pa-

cific Communications Company (SPCC) for its na-

tional FX-CCSA communications network.“ SPCC

provides an interstate coast-to-coast specialized com-

munications service, including FX and CCSA service,

under authorizations and radio licenses issued by the

FCC pursuant to its Specialized Common Carrier de-

cision.” SPCC also holds a California intrastate certi-

fieate of convenience and necessity issued by a peti-

tioner herein, the Publie Utilities Commission of the

State of California (CPUC), under an interim opin-

ion which precludes SPCC from“ any connection of

private line eirenits to the exchange network“, inelud—

ing any connection similar to foreign exchange ser-

vice.“ i”

'* Proposals for New or Revised Classes of Interstate and Foreign

Message Toll Telephone Service MTS) and Wide Area Telephone

Service (WATS), First Report and Order, 56 F. C. C. 2d 593 (1975),

Second Report and Order, 58 F.C. C. 2d 736 (1976),

" North Carolina Utilities Commission v. FCC (North Carolina

11), 652 Fed 1086 (4th Cir, 1977), cert. denied, No, 76-1675,

46 „W. 3191 (Oct, 3, 1977),

The Commission's decision under review is applicable to inter-

connections in both California and Oklahoma, 56 F.C. C. 2d at 14-25

(Pet. App. 16-44) passim, However, since petitioners have addressed

themsclves only to the facilities in California, SPCC’s brief in oppo-

sition will be directed only to those facilities.

Note 2 supra.

„ Pacific Telephone and Telegraph Co, v. Southern Pacific Com-

munications Co., Decision No, 84167 (Cal, PUC Mar, 4, 1975) (Pet.

App, 45-124, at 114),

6

Acting solely in reliance upon its authorizations

and licenses issued under the statutory jurisdiction

and orders of the FCO, and not in any part in reli-

ance upon its intrastate certificate issued by CPUO,

SPCC in March, 1975, ordered interconnection facili-

ties from the Paeifie Telephone and Telegraph Com-

piny (PT&T) to connect the SPCC private line cir-

enit between San Diego and Los Angeles to a COSA

switching machine at Los Angeles, so as to provide

access by a COSA network of American Airlines

which stretches across the United States, Until the

interconnection, the nationwide private line network

of American Airlines stopped at Los Angeles, and

could not reach San Diego. With the interconnection,

a call could originate anywhere in the United States,

including locations in California, on the COSA net-

work of American Airlines; be carried over interma-

chine trunk lines to the Los Angeles COSA switcher;

and be carried over SPCC lines from Los Angeles to

SCC terminal in San Diego and over a leased

PT&T local distribution facility to a customer’s prem-

ises in San Diego, It was estimated that 82% of the

calls on the American Airlines network terminating

at San Diego would in fact be originated from points

outside of the State of California.

Although advised by SPCC that it was relying

solely on its FCO authorizations, and by the FCO's

Common Carrier Bureau that in the Bureau’s view

the interconnection sought by SPCC was interstate in

character subject to FCC jurisdiction, PT&T filed a

complaint with the CPUC alleging SPCC’s action in

seeking interconnection was i, direct and flagrant

7

violation” of the CUC“ prohibition on intrastate

FX service by SPCC.”

. The FCC Proceeding

800 thereupon filed a petition on June 16, 1975,

with the FCC for declaratory rulings to reaffirm the

primacy of the FCO's jurisdiction over the facilities,

and for enforcement of the earlier cease and desist

orders requiring AT&T and the Associated Bell Sys-

tem Companies to furnish FX and COSA intercon-

nection on reasonable terms and conditions. Comments

in opposition were filed jointly by AT&T, PT&T, and

Southwestern Bell Telephone Company, and by

NARUC, CPUC, and the United States Independent

Telephone Association (USITA).

On October 9, 1975, the FCC issued a memorandum

opinion and order affirming its jurisdiction over the

facilities, The FCC ruled it would be inappropriate

to await the outcome of state proceedings or to con-

vene a Federal-State Joint Board, since SPCC’s pe-

tition presented the legal question of jurisdiction

whether the facilities were interstate, which did not

require state interpretations. 56 F. C. C. 2d at 18, Pet.

App. at 25-26. The FCC described and analyzed the

California facilities as “part of dedicated interstate

private line networks“, 56 F. C. C. 2d at 19, Pet. App.

at 27, and as “an integral part of a dedicated inter-

state communications network.“ 56 F.C. C. 2d at 21,

Pet. App. at 32. The FCC refused to limit the use of

the facilities to interstate communications. It found

that leaving intrastate transmissions to a separate FX

The complaint is attached to the FCC's ruling, 6 F.C. C. ad at

22-23, Pet.App. at 35-39,

8

line subject to state restrictions would require the cus-

tomer to maintain two redundant facilities or to in-

vest in expensive additional equipment simply because

of jurisdictional conflicts, This was ‘‘clearly not in the

publie interest“ and contrary to the mandate of See-

tion | of the Communications Act“ to make available

a rapid, efficient, unified national communications ser-

viee, 56 F. C. C d at 19, Pet. App. at 28. It was found to

be technically and practically difficult“ to ‘‘split’’ the

facilities between interstate and intrastate transmis-

sion funetions. 56 F. C. C. 2d at 19, Pet. App. at 29. The

VCC ruled that the facilities were interstate, even

thorugh capable of intrastate service as well, and thus

under Federal jurisdiction, 56 F.C.C.2d at 21, Pet.

App. at 32. While the FOC therefore required the As-

soviated Bell System Companies to interconnect its

local facilities to the SPCC private lines as an intra-

state segment of the interstate service, it made clear

that it did not intend to assume jurisdiction over local

exchange telephone service, 56 F. C. C. 2d at 21, Pet.

App. at 33,

D. Decision of the Court of Appeals

On petitions for review, the District of Columbia

Cirenit (Chief Judge Bazelon and Circuit Judge

‘'amm for the majority) held that the FCC did not

exceed its authority in asserting jurisdiction over the

facilities, located entirely within a state but used for

both interstate and intrastate communications; that

the FCC reasonably concluded it was technically diffi-

cult and impractical to separate the facilities between

their interstate and intrastate functions; that the

—

478.0, 151.

— —— — —

9

FCC’s position that the physical location of the facili-

ties was not determinative was logical and supported

by substantial authority ; and, quoting from the Fourth

Circuit,” that the FCC’s declaration of authority over

the interconnection of the facilities with the national

network was ‘‘a proper and reasonable assertion of

jurisdiction conferred by the Act.’’ Pet.App. at 1-6.

Circuit Judge Robinson, dissenting, argued that the

record before the FCC was inadequate to support the

FCC’s ruling that it was technically and practically

difficult’’ to separate interstate FX and intrastate FX.

Pet.App. at 7-15.

ARGUMENT

1. The decision of the District of Columbia Circuit

is consistent with applicable decisions of this Court

and reflects the direct application of settled law gov-

erning federal-state relationships under circumstances

where federal and state regulations are inconsistent.

One hundred and fifty years after Gibbons v. Og-

den,” it is not necessary that this Court now examine

again the doctrine that Federal law is paramount over

inconsistent state regulation affecting interstate com-

merce. Where Federal and State regulations impose

conflicting duties on a carrier, “one must yield, and

that one is the state law.“ It is an “elementary and

long settled doctrine’ that “there can be no divided

authority over interstate commerce and that the regu-

* Note 12 supra, 537 F.2d at 794.

9 Wheaton (22 U.S.) 1 (1824).

Gulf, Colorado d S. F. Ry. Co. v. Hefley, 158 U.S. 98, 103

(1895).

10

lations of Congress on that subject are supreme.“

Where interstate and intrastate services are inextri-

cably intertwined, so that the efficient performance

of either is dependent upon the efficient performance

of the system as a whole, state regulation of intrastate

service is subordinate to the performance by the car-

rier of its Federal duty to render efficiently services

in interstate commerce.”

Under the commerce clause, the FCC has been

given expansive powers by the Congress. The FCC

serves as “the single Government agency” with (uni-

fied jurisdiction” and broad regulatory authority over

all forms of electrical communication.” It “is con-

firmed by the language of the statute and by judicial

decisions” that the Communications Act contemplates

the regulation of interstate communications “from its

inception to its completion’’ at the ultimate destina-

tion.”

Petitioners are wholly incorrect in suggesting that

the FCC did not give proper recognition to the intra-

state use of the facilities, or proper deference to the

role of the states in the Federal system. The FCC ex-

plicitly acknowledged that the facilities were used for

both interstate and intrastate communications, and

2 Chicago, RI. & P. Ry. Co. v. Hardwick Farmers Elevator Co.,

226 U.S. 426, 435 (1913).

** Colorado v. United States, 271 U.S. 153, 164-66 (1926).

27 United States v. Southwestern Cable Co., 392 U.S. 157, 168

(1968).

* United States v. AT&T, 57 F.Supp. 451, 454 (S. D. N. V.

1944), affirmed, Hotel Astor, Inc. v. United States, 325 U.S. 837

(1945).

11

that while the facilities were designed to interconnect

by switches with the interstate CCSA network, ‘‘the

lines may be utilized alternatively to access a foreign

telephone exchange located within the same state as

the customer’s terminal facilities.“ 56 F.C.C.2d at 19,

Pet.App. at 27. The FCC specifically recognized that

Section 2(b) of the Communications Act“ denies it

jurisdiction over intrastate communications, and ex-

pressly disclaimed any intent to assume jurisdiction

over local exchange service, 56 F.C.C.2d at 21, Pet.

App. at 33. What the FCC could not tolerate, how-

ever, were restrictions on authorized FX service which

would frustrate the Congressional intent expressed in

the Communications Act to make available an effi-

cient, unified, nationwide communication service. 56

. C. C. 2d at 19, 20, Pet. App. at 28, 29.

2. The FCC’s decision affirmed on review by the

District of Columbia Circuit is not in conflict with the

statutory scheme or legislative history of the Com-

munications Act.

Before the passage of the Communications Act of

1934, Federal regulation of communications facilities

was not centered in one government body, although

they were “inextricably intertwined in communica-

tion”, and the responsibility for regulation was scat-

tered without any governmental agency authorized to

deal with communications problems as such.” The pur-

pose of the Act was to create a communication com-

mission with regulatory power over all forms of elec-

trical communication, whether by telephone, telegraph,

47 U.S.C, 152(b).

„Study of Communications By an Interdepartmental Commit-

tee, 73rd Cong., 2d Sess. 6-7 (1934).

12

cable, or radio. * * * There is a vital need for one

commission with unified jurisdiction over all of these

methods of communication.“ The First Vice Presi-

dent and Chairman of the Executive Committee of

NARUC testified before House and Senate com-

mittees: “

We endorse the principle of this bill, because it

specifically reserves to the State Governments

their rightful powers over matters of purely State

concern, such as so-called exchange or local

rates of telephone companies. [Emphasis added]

The arguments of petitioners that Sections 2(b)

and 221(b) of the Communications Act“ preclude the

FCC’s exercise of any jurisdiction over intrastate

facilities, whether or not a segment of interstate com-

munication, were carefully considered by the Fourth

Cireuit in North Carolina I* and North Carolina II”

and in both cases rejected by a majority of the Court.

In North Carolina I (by Senior Circuit Judges Has-

tie and Tuttle, sitting by designation, Circuit Judge

Widener dissenting), it was noted that the FCC for

some 30 years, without Congressional interference,

had viewed and treated Section 2(b) of the Act as im-

posing no bar to its exercise of jurisdiction over fa-

cilities used in connection with both intrastate and

„» Sen. Rept. No. 781, 73d Cong. 2d Sess. 1 (1934).

„„ Ilearings on H.R. 8301 Before the House Committee on Inter-

state and Foreign Commerce, 73rd Cong., 2d Sess. 132 (1934) ;

Hearings on S. 2910 Before the Senate Committee on Interstate

Commerce, 73rd Cong., 2d Sess, 156 (1934).

347 U.S.C. 152(b), 221(b).

Note 12 supra.

Note 16 supra.

13

interstate telephone communications.” In North Caro-

lina II (by Senior Circuit Judges Tuttle and Rives,

sitting by designation, Circuit Judge Widener dis-

senting), the Court of Appeals held that just as the

FCC has full statutory authority to regulate inter-

state-intrastate equipment to ensure the safety of the

national network, there can be no statutory basis for

the argument that FCC regulations serving other im-

portant interests of national communications policy

are subject to state utility commissions.” Both de-

cisions recognize that Section 221(b) is no bar, since

its purpose is only to enable state commissions to

regulate local exchange service in metropolitan areas

extending across state boundaries.”

This Court has denied petitions for write of cer-

tiorari in both North Carolina cases.” No reason is

presented to suggest a change of circumstances which

would make the grant of the writ more appropriate

at this time.

| 3. The decision of the District of Columbia Circuit

is consistent with, and a direct lineal descendant of,

the decisions of other Courts of Appeals.

The decision below implements the principles es-

tablished in the decision of the Ninth Circuit affirm-

ing the authorization of specialized carriers and re-

quiring established carriers to interconnect their fa-

Note 12 supra, 537 F. ad at 794-95.

Note 16 supra, 552 F.2d at 1046-47.

Note 12 supra, 537 F.2d at 795 and fn. 11; Note 16 supra, 552

F. ad at 1045.

* Notes 12 and 16 supra.

14

cilities; “” the decision of the Third Circuit affirming

the FCC’s requirement that the established carriers

must provide interconnection of FX and CCSA fa-

cilities; “' and two decisions of the Fourth Circuit,”

as well as a collateral decision of the First Circuit,”

affirming FCC jurisdiction over facilities used in both

interstate and intrastate communications. Certiorari

having been sought and denied in the Ninth, Third,

and two Fourth Cireuit decisions, and not sought in

the First Cireuit case, there clearly is no basis for a

grant of the writ in this case.

4. This case presents no important question of fed-

eral law, but rather a question of fact correctly re-

solved by the FCC.

The thrust of the petitions for a writ of certiorari is

directed to a factual issue, whether the record was ade-

quate for the FCC to have found that it was technically

difficult to ‘‘split’’ the facilities so that one set of facili-

ties would be used for interstate FX lines, and another

set of facilities subject to state restrictions for intra-

state use. Petitioners’ objections were fully presented

to and considered by the FCC. Bringing to bear on

this question the deposit of its experience, the disci-+

plined feel of the expert“,“ the FCC concluded that

requiring the customer to maintain two redundant

facilities or to invest in expensive additional equip-

ment simply because of jurisdictional conflicts was

clearly not in the public interest and would violate its

% Note 5 supra.

Note 9 supra

Notes 12, 16 supra.

Note 13 supra.

** See FCC v. RCA Communications, Inc., 346 U.S. 86, 91 (1953).

15

statutory mandate to make available a unified, nation-

wide communication service. 56 F.C.C.2d at 19-20,

Pet.App. at 28-30. The majority of the District of

Columbia Circuit panel held that the FCC had ‘‘rea-

sonably concluded”’ that it was impractical to separate

interstate FX from intrastate FX service in this case.

Pet. App. at 6.“

It requires no evidentiary hearing for the FCC to

recognize that if interstate facilities were required to be

separated, a customer seeking to obtain both services

would be required to maintain two separate redundant

facilities (one for interstate FX service, and one for

intrastate FX service), and to incur the expense for

additional equipment to restrict calls. When the same

issue was raised in North Carolina I with respect to

terminal equipment rather than the end segments of

circuits, Senior Circuit Judge Hastie observed :“

Usually it is not feasible, as a matter of economics

and practicality of operation, to limit the use of

such equipment to either interstate or intrastate

transmissions.

* AT&T v. FCC, 551 F.2d 1287 (D.C. Cir. 1977), cited by CPUC

(Pet. at 19-20) is inapposite. The issue in that case was a factual

dispute whether a manual mobile telephone system adversely affected

dial mobile service, where there was a conflict in the information

furnished by the parties, not the practicability of separating inter-

state and intrastate service by the same facilities. Significantly,

Chief Judge Bazelon supported the Court’s opinion in both cases,

obviously pereeiving no inconsistency, and Circuit Judge Robinson,

dissenting in this case, did not invoke the mobile telephone case in

which he had also participated.

Note 12 supra, 537 F. 2d at 791.

16

In this regard, CPUC, a petitioner here, has itself

earlier said, in granting SPCC its limited intrastate

certificate of convenience and necessity :“

No telephone corporation would ever build tan-

dem interstate-intrastate systems. The waste in-

volved would be monumental.

Not only is the FOC’s conclusion patently reason-

able and correct, but in any event, this is not the type

of issue which could profitably engage the attention of

this Court,

5. Petitioners err in suggesting that there are any

special or important reasons for review.

No important principles of law that have not long

been settled are involved. Several Cireuit Courts have

considered the same questions and reached the same

results, without certiorari being granted. The amounts

and business involved represent only an insignificant

fraction of the revenues and business of PT&T, the

complaining carrier. The Fourth Circuit said in North

Carolina II“ that

petitioners cannot create an economic impact with

the volume of their jeremiad. Their claims of eco-

nomic impact are refrains of asse that the

FCC has consistently found te be unsubstantiated

by evidence, conclusory, and based on unrealistic

assumptions about market behavior. [Citations. ]

In any event, if there is any adverse impact upon the

local user, the matter is readily remedied by an

adjustment in ‘jurisdictional separations’’ of inter-

Note 19 supra, Pet. App. at 68.

Note 16 supra, 552 F.2d at 1055-56.

17

state and intrastate revenues, and is under continuing

review by the FCC.”

The decision of the District of Columbia Circuit

serves a larger purpose in the public interest, in per-

mitting both established and new communications car-

riers to engage in fuller and freer competition in pro-

viding specialized services, and in furthering the man-

date of Section 1 of the Communications Act to pro-

vide a rapid, efficient, nationwide communications

service with adequate facilities at reasonable charges.”

A grant of the petitions for a writ of certiorari has

not been justified.

Seo Specialized Common Carrier Inquiry, note 2 supra, on

reconsideration, 31 F.C. C. 2d at 1108; Economic Implications and

Interrelationships Arising From Policies and Practices Relating to

Customer Interconnection, Jurisdictional Separations and Rate

Structures, 46 F. C. C. 2d 214 (1974), 50 F.C. C. 2d 674 (1974), 61

F. C. C. 2d 766 (1976).

% U.S.C, 151.

18

CONCLUSION

For the foregoing reasons, the petitions for a writ

of certiorari should be denied.

Respectfully submitted,

TuormMuND A, MILLER

Ricuarp S. Korr

James M. Tostn

One Market Plaza

San Francisco, Cal. 94105

Hersert E. Forrest

1250 Connecticut Ave., N.W.

Washington, D.C, 20036

Attorneys for Respondent

Southern Pacific

Communications Company

Srepror & JOHNSON

1250 Connecticut Avenue, N. W.

Washington, D.. 20036

Of Counsel