Reply Brief — Rosner v. United States

-~ Supreme Court, U. $,.-

{ EILED |. \

1 NOV 8 J977

No. 77-420 MICHAEL RODAK, JR., CLERK

IN THE

Supreme Court of the United States

OctoseR TERM, 1977

Untirep States INDEPENDENT TELEPHONE ASSOCIATION,

Petitioner,

Vv.

MCI TELECOMMUNICATIONS CORPORATION, et al.,

Respondents.

On Petition for a Writ of Certiorari to the United States

Court of Appeals for the District of Columbia Circuit

REPLY OF PETITIONER

Tuomas J. O’REILLY

1150 17th Street, N.W.

Washington, D.C. 20036

Counsel for United States

Independent Telephone

Association

Of Counsel:

CHADBOURNE, PARKE,

WurresipE & WOLFF

1150 17th Street, N.W.

Washington, D.C. 20036

November 3, 1977

Pumss or Brsonw S. Adams Paintina, Inc., Wasurnoton, D. C.

TABLE OF CONTENTS

——— ee |

Page

I. Tae Decision Betow Has Immepiate, UNLIMITED

Anp Grave Fepernat IMPACT..........-0eeee00% 2

II. Tue Decision Betow Conruicts Wits Tue Srat-

|

i uTE AnD OTHER DECISIONS ..........eeeeeeeees 3

| A. The Certificate Statute And Decisions ...... 3

| B. The Error In the Decision Below ........... 5

i ee eas eeeseseene s

TABLE OF AUTHORITIES

Cass:

AT ¢€T v. FCC, 539 F.2d 767 (D.C, Cir. 1976) ...... 5

Bell Telephone Co. of Pa. v. FCC, 503 F.2d 1250 (3d

Cir. 1974) ; cert. denied, 422 U.S. 1026, reh. denied,

EE, ov vcecccucedvcdeaevseeeaesee 5

United States Transmission Systems, Inc., 48 FCC 2d

EE eer cin on suens Gu neueneehees oe ses 5

Washington Utilities and Transportation Com. v. FCC,

asiss 1142 (9th Cir.) ; cert. denied, 423 U.S. 836 ‘

DEE GSnceseREUAdeb eds cGaNLehCeeATecedsseees

ADMINISTRATIVE AGENCY PROCEEDINGS:

Bell System Tariff Offerings, 46 FCC 2d 413 (1974) .. 5

Specialized Common Carriers, 44 FCC 2d 467 (1973);

| ED onc ccc cccaceanseecesees 5

Specialized Common Carrier Services, 24 FCC 2d 318

(1970); 29 FCC 2d 870 (1971); 31 FCC 2d 1106

—————— a

DET SbNthEORRb iets sdéudedabesebeeeebasceese 4,5

STaTuTEs :

Communications Act of 1934, Section 214; 47 U.S.C.

St Wie nde WEUSbr beened es ceebenetcceseci in passim

Rues anp RecuuaTions:

FCC Rules and Regulations, Sec. 63.01; 47 O.F.R.

DED Suehconuetnnsub<énben660s00edbeeecieesse 3

Le TT _ ee Oe

IN THE

Supreme Court of the United States

OctroBER TERM, 1977

No. 77-420

Unrrep States INDEPENDENT TELEPHONE ASSOCIATION,

Petitioner,

Vv.

MCI TELECOMMUNICATIONS CORPORATION, et al.,

Respondents.

On Petition for a Writ of Certiorari to the United States

Court of Appeals for the District of Columbia Circuit

REPLY OF PETITIONER

The United States Independent Telephone Associa-

tion (USITA), Petitioner in No. 77-420, respectfully

submits its reply to the Briefs in Opposition filed by

MCI Telecommunications Corp. (MCI) and Southern

Pacific Communications Co. (SPCC).

Both MCI and SPCC, extolling the virtues of the

decision below, seek to persuade the Court that that

decision was not only right but also that it involved

but a narrow and limited issue, with the only result of

the decision being a remand to the Federal Communi-

2

cations Commission (FCC) for further proceedings.

MCI and SPCC completely miss the central point of

this case and the basic reason why certiorari should

be granted and the case set for plenary review.

I. THE DECISION BELOW HAS IMMEDIATE, UNLIMITED AND

GRAVE FEDERAL IMPACT.

Underlying the horrendous practical consequences

of the decision below, one of which is the spectre of

years of FCC proceedings on remand,* is a Federal

question of primary importance and universal appli-

eability in the ongoing authorization of all common

carrier communications facilities by the FCC. This is

a question that FCC is powerless to address, much less

answer and resolve, in proceedings on remand.

Simply stated, the basic question here is whether

over many years the FCC has correctly read and ap-

plied its statute as authorizing it to grant certificates

of public convenience and necessity ‘‘as applied for,”’ *

with the affirmative grant defining the scope of the

authorization, or whether in addition to its affirmative

grant, the FCC must also measure each and every

application submitted to it against the total universe

of possible common carrier communication services,

and then specifically and affirmatively find that the

1 These involved and lengthy proceedings would be required only

if the novel theory of Federal statutory construction devised by

the court below is left standing. Moreover, the further proceedings

that would be required in this case exemplify the regulatory morass

into which, under the court’s theory, the Commission must plunge

in all certificate cases. If the Commission has correctly followed its

statute and its precedents, however, its task has already been

completed.

Communications Act of 1934, Section 214 (47 U.S.C. 214);

Pet. App. 6c.

3

public convenience and necessity does not require fa-

cilities and services not proposed by the applicant. It

is this second and essentially negative non-statutory

finding that is newly mandated by the decision below.

Truly, the situation in the particular MCI case at

bar is exacerbated by the repeated and emphatic rep-

resentations by the MCI applicant that it sought au-

thorization to provide only ‘‘specialized”’ private line

services and had no intention whatever of engaging in

the furnishing of plain old telephone service, with the

FCC granting MCI precisely the authority it sought.

The fundamental issue here, however, is far broader

than the case of MCI, SPCC, or of any other particu-

lar applicant, and can and should be decided by the

Court without regard to the presence or identity of

the private parties to this case. Indeed the case goes

directly and immediately to the very heart of the Com-

mission’s execution of its common carrier regulatory

duties and the nature and scope of its statutorily re-

quired public interest, convenience and necessity find-

ings and conclusions.

Il. THE DECISION BELOW CONFLICTS WITH THE STATUTE

AND OTHER DECISIONS.

A. The Certificate Statute And Decisions.

By its statute (specifically Section 214 of the Com-

munications Act),’ if the Commission finds and con-

cludes ‘‘that the present or future public convenience

and necessity require or will require’’* the construc-

tion of new facilities, it may issue its certificate au-

thorizing that construction. And as the court below

5 Tbid.

* Ibid.

4

acknowledged, ‘‘. . . it is analytically impossible to

determine the need for a new facility without consid-

ering the services to be provided over it.’’* To aid it

in making its public convenience and necessity findings

and conclusions, the Commission has promulgated rules

which require that every application for a certificate

of public convenience and necessity must contain show-

ings, inter alia, of the public need for the proposed

facilities, of economic justification for the proposed

project, of how existing communications services are

being furnished and reasons why existing facilities are

inadequate, and of proposed tariff charges and regu-

lations.’ Thus is the FCC informed of precisely what

authority is sought by an applicant.

In a broad yet detailed rulemaking proceeding,’ the

Commission evaluated, in the light of its statute and

its rules, hundreds of ‘‘specialized”’ certificate applica-

tions pending before it. The Commission concluded,

as a matter of general policy, that there was a public

need for the new specialized communications services

proposed; that new entry into the specialized private

* Slip op. at 23; Pet. App. 23a.

‘FCC Rules and Regulations, See. 63.01; 47 C.F.R. § 63.01. The

decision below would make a mockery of these FCC Rules, for if it

is permitted to stand, an applicant could propose a new communi-

eations service, obtain Commission authorization, find its market

estimates for the new service entirely too optimistic, and then pro-

ceed to try its luck with any other service, thus converting its

authorized facility to a purpose never considered by FCC and for

which initial authorization would not have been given. The possi-

bility for error, abuse, or misrepresentation under these circum-

stances is limitless.

* Specialized Common Carrier Services, FCC Docket No. 18920,

24 FCC 2d 318°(1970) ; 29 FCC 2d 870 (1971) ; 31 FCC 2d 1106

(1971).

5

line communications market would produc

public benefits, and would have little ene ce

existing carriers; and that grant of the pending spe-

cialized carrier applications would serve the public

interest, convenience and necessity."

The nature and scope of this general specialized

private line policy, pursuant to which thousands of

grants (including the MCI grants at issue below) were

in fact made by the Commission, were fully under-

stood by the Commission itself, by the new applicants

by those existing carriers who opposed the policy, by

State utility regulatory bodies, and by reviewing

courts.’ Indeed, even the MCI court, in the opinion

below, did not quarrel or take issue with the nature

and scope of the Commission’s affirmative Specialized

Carrier policy.”

B. The Error In The Decision Below.

What the MCI court did, however, was to first de-

vise its own novel theory of ‘‘implicit restrictions,” ™

a theory it gratuitously imputed to FCC. Having found

this theory inadequate the MCI court then proceeded

* Td.

* See, e.g., Specialized Common Carrier Services, supra: aff’

. “se 4 ; d,

oa Utilities and ‘Transportation Com. v. FCC. 513 Sei

a (9th Cir.) cert. denied, 423 U.S. 836 (1975); United States

—— Systems, Inc., 48 FCC 2d 859 (1974); aff'd, AT&T

v. FCC, 539 F.2d 767 (D.C. Cir. 1976); Bell System Tariff Offer-

pe 46 FCC 2d 413 (1974); aff'd, Bell Telephone Co. of Pa. v.

- ? 503 F.2d 1250 (3d Cir. 1974), cert. denied, 422 U.S. 1026

eh. denied, 423 U.S. 886 (1975); Specialized Common Carriers

44 FCC 2d 467 (1973) 50 FCC 24 416 (1974).

*° Slip op. at 26; Pet. App. 26a.

“ Slip op. at 16; Pet. App. 16a.

6

to judicially amend the Commission’s statute and its

rules to impose on the Commission a second public

interest finding requirement, 7.e., the making in all

application cases of ‘‘an affirmative determination that

the ‘public convenience and necessity may require

a restriction on a facility authorization limiting °

carrier to provision solely of those services propose

in its Section 214(a) application. * * ** 47 U.S.C.

§ 214(¢) (1970).’’*

In so holding, the court below committed a double

fault. First, the court failed to acknowledge the ade-

quacy of the basic affirmative public interest finding

required of the Commission by its Section 214(a),

absent which no carrier may construct any line for any

purpose, and the Commission’s specifie authority “to

issue such certificate as applied for.’’* Second, the

court misconstrued the statutory provision that the

Commission ‘‘may attach to the issuance of the certifi-

eate such terms and conditions as in tts judgment the

public convenience and necessity may require’ ** to

mean that the Commission must attach terms and con-

ditions to a certificate, without regard to whether in its

judgment terms and conditions are necessary, and if it

does not do so, its grants are unrestricted.”

12 Slip op. at 26; Pet. App. at 26a.

18 Section 214(c), 47 U.S.C. 214(c); Pet. App. Te; emphasis

supplied.

4 Tbid.

%® The apparent assumptions by the court below that the phrase

‘terms and conditions’’ equals ‘‘restrictions and limitations,” and

that the scope of an no naga ean be limited only by the impo-

sition of terms and conditions, are unwarranted grammatically or

legally. Surely the Commission may grant @ certificate as applied

for’’ without adding ‘‘ but not as not applied for.

7

In these faults lies the fatal flaw in the decision be-

low, a flaw which if not corrected here and now by the

Court will have immediate and devastating effect on

the processing of every wire and radio application **

now or in the future submitted to the Commission.

Were the decision below allowed to stand, each and

every application for certificate or license must then

be measured not only against the statutory standard,

t.e., whether the facilities and services proposed are

required by the public convenience and necessity, but

each and every application must also be the subject of

a second and further judicially mandated new inquiry

into whatever public interest considerations might be

involved in the provision of other communications

services for which the applicant has not saught authori-

zation or even has expressly disclaimed any intention

of offering.

Clearly, then, it matters not whether the applicant’s

name is MCI, SPCC or John Doe; and it matters not

whether the communications service is called Execu-

net, SPRINT, or by another name. The court below

has ordered an immediate and fundamental change in

the FCC’s consideration and disposition of all certifi-

cate applications. Even clearer is the fact that the fun-

damental and significant Federal question arising out

of the decision below is not a limited issue that can be

resolved by the FCC in proceedings on remand, for

the FCC can neither ignore nor modify the court’s

directive. Thus the question presents an issue un-

limited in scope that can only be resolved on plenary

review by the Court.

*°The Section 214 common carrier provisions are mirrored in

the Section 308 language in respect of radio licenses.

8

Ill. CONCLUSION.

For these reasons, together with those advanced in

its Petition, USITA respectfully prays that the writ

issue.

Respectfully submitted,

THomas J. O’REILLY

1150 17th Street, N.W.

Washington, D.C. 20036

Counsel for United States

Independent Telephone

Association

Of Counsel:

CHADBOURNE, PARKE,

WHITESIDE & WOLFF

1150 17th Street, N.W.

Washington, D.C. 20036