Petition — United States Independent Telephone Ass'n v. MCI Telecommunications Corp.

ne

7~ Supreme Court, U. &

FILED

78-216 | AUG V% 1978

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IN THE L_MICHAEL RODAK, JR., CLERK

Supreme Court of the United States

Ocroser TERM, 1978

No. 78-

UnItep States INDEPENDENT TELEPHONE ASSOCIATION,

Petitioner,

Vv .

MCI TEeLECOMMUNICATIONS Corporation, et al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COLUMBIA CIRCUIT

Tuomas J. O'REILLY

1150 17th Street, N.W.

Washington, D.C. 20036

Counsel for United States

Independent Telephone

Association

Of Counsel:

CHADBOURNE, PARKE,

Wuiresive & WOLFF

1150 17th Street, N.W.

Washington, D.C. 20036

August 7, 1978

Press or Bron S. ApAMs Parintina, Inc., Wasuinoton, D. C.

TABLE OF CONTENTS

Page

ES ae 2

Nei cecctcecbec 2

RU PPUIPTID kc cnc cccnccccccccccccccceccs 3

ee cdceweweceones 3

SSTATMMENT OF THE CaS ..... ccc ccc ccc ccccccccccces 3

Reasons FOR GRANTING THE WRIT .................6. 9

I. Tse Court Betow Has Far OVERSTEPPED THE

Bounps or Jupician Review ................-. 10

II. Conriictrine Decisions Are Not Reconcien By

ne ahcwaconcesied 13

ee cece ncseacbepwecees 17

TABLE OF AUTHORITIES

CasEs:

Atchison, Topeka & S.F. R.R. Co. v. Denver N.O.R.R.

SN no. co ccwcccbecccececes 7

Burlington Truck Lines v. U.S., 371 U.S. 156 (1972) .. 11

F.C.C. v. Pottsville Broadcasting Co., 309 U.S. 134

ee reins 6anbesésebecceces 10, 11, 13

F.C.C. v. RCA Communications, Inc., 346 U.S. 86

EEE TE See 17

F.C.C. v. Schreiber, 381 U.S. 279 (1965) ............ 11

FPC v. Idaho Power Co., 344 U.S. 17 (1952) ........ 11

FPC v. Transcontinental Gas Pipe Line Corp., 423 U.S.

EES RE ll

Louisville € Nashville R.R. Co. v. West Coast Co., 198

Tee ec dweccenecess ces 7

li Table of Authorities Continued

Page

MCI Communications Corp. v. A.T.@T., 496 F.2d 214

OR | Re ey ree 14, 15, 18

SEC v. Chenery, 332 U.S. 194 (1947) ...........008. ll

Vermont Yankee Nuclear Power Corp. v. NRDC, 46 _

L.W. 4301; U.S. —— (April 3, 1978) .... passim

Washington Utilities & Transportation Com. v. F.C.C.,

513 F.2d 1142 (9th Cir. 1975); cert. den. 423 U.S.

EE 8s 45 Was ches papar ds bbdebeeundanens 3,4

ADMINISTRATIVE AGENCY PROCEEDINGS:

Beil System Tariff Offerings, 46 FCC 2d 413 (1974);

aff'd. sub nom. Bell Telephone Company of Penn-

sylvania y. I'.C.C., 403 F.2d 1250 (3d Cir. 1974),

cert. den., 422 U.S. 1026 (1975) ..........000. 6, 15, 18

Specialized Common Carriers, 29 FCC 2d 870 (1971),

recon, den. 31 FCC 2d 1106 (1971) .............. 3,4

STaTUTEs:

Communications Act of 1934

Or SE, ck cc ceeec dv acceusewe 3, 10

ns ce dei cvcdeneacean 16

etiote Sie, GF WAC, 6 GIG oo obi viv vc cvncvcics 4, 15, 16

.

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IN THE

Supreme Court of the United States

OcToBER TERM, 1978

No. 78-

UntTep States INDEPENDENT TELEPHONE ASSOCIATION,

Petitioner,

vV.

MCI TELECOMMUNICATIONS CoRPORATION, e¢ al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COLUMBIA CIRCUIT

Petitioner United States Independent Telephone

Association (USITA)' respectfully prays that a writ

of certiorari be issued to review the opinions and or-

ders of the United States Court of Appeals for the

District of Columbia Circuit in this case.

‘ USITA’s interest in this case is that of the approximately 1,600

‘‘Independent’’ (non-Bell) telephone companies of these United

States, which serve about 30 million telephones in over half of the

served geographical area of the nation; and which, together with

Boll System companies, have constructed and operate the integrated

nationwide telephone network.

2

OPINIONS BELOW

The opinions of the Court of Appeals in this case,

all captioned MCI Telecommunicattons Corp. v. F.C.C.,

are:

1. July 28, 1977, reported at 561 F.2d 365 (here-

in “‘Execunet I”) ; cert. den., 46 U.S.L.W. 3446,

— U.S. —— (Jan. 16, 1978); ©

2. April 14, 1978, not yet officially reported (here-

in ‘“‘Ezxecunet II’’);

3. May 8, 1978, not yet officially reported (here-

in “‘Execunet III’’),

These three opinions appear as Appendix I, Appendix

D, and Appendix E, respectively, in the separately

bound appendix to the petition in this case filed this

date by American Telephone and Telegraph Company.’

JURISDICTION

The judgment of the Court of Appeals was entered

on April 14, 1978, and petitions for rehearing and sug-

gestions for rehearing en banc were denied on May 8,

1978. Timely motions for stay pending certiorari were

denied by the Court of Appeals on May 11, 1978;* and

applications for stay were denied by the Court on May

22, 1978.

The jurisdiction of the Court is invoked under 28

U.S.C. § 1254(1).

*To avoid burdening the court with unnecessarily duplicative

material, USITA will adopt the A. T. & T. Appendix and refer to

it herein as ‘‘ Pet. App.”’

*The lower court did grant stay pending filing and disposition

of application for stay to the Circuit Justice.

j

4

3

QUESTION PRESENTED

Whether the court below has once more overstepped

the bounds of judicial review and ‘‘unjustifiedly [and

erroneously] intruded into the administrative proc-

ess’’* by judicially ordering (1) continued and ex-

panded competition in the provision of long-distance

telephone service and (2) the use of existing tele-

phone company local exchange facilities in furtherance

of that competition, all in the absence of the Con-

gressionally mandated public interest findings by the

Federal Communications Commission.

STATUTES INVOLVED

Pertinent provisions of the Communications Act

of 1934, as amended * appear as Pet. App. F.

STATEMENT OF THE CASE

In 1971, acting on representations by applicants for

authority to offer ‘‘specialized’’ interstate communi-

cations services that the services proposed were not

available from existing telephone companies, the F.C.C.

established a general policy permitting essentially

open entry into “‘the business . . . of providing spe-

cialized private or leased line communication services

through a microwave transmission facility as distin-

guished from public exchange and long distance toll

telephone service.’’* This distinction and the scope of

*Vermont Yankee Nuclear Power Corp. v. NRDC, 46 U.S.L.W.

4301, 4310, —— U.S. —— (Apri! 3, 1978).

°47 U.S.C. 151, et seq.

®* Washington Utilities & Transportation Com. v. F.C.C., 513 F.2d

1142, 1155 (9th Cir. 1975) ; cert. den., 423 U.S. 836 (1975), affirm-

ing Specialized Common Carriers, 29 FCC 2d 870 (1971), recon.

den, 31 FCC 2d 1106 (1971).

4

authorizations granted by F.C.C. pursuant to Spe-

cialized Carriers were well understood by all concerned,

including petitioner below, the original specialized

carrier, Microwave Communications, Inc. (MCI). In

its ‘‘Motion to Strike,’’ filed May 15, 1974 in Wash-

ington Utilities, supra, MCI argued:

‘*‘Specialized carriers are not authorized to fur-

nish the equivalent [of] ordinary long distance

telephone service, and to the best of our knowl-

edge this is the first time anyone has ever alleged

that they are.’’

Four months later, in September 1974, MCI filed with

the Commission a tariff offering metered use service, a

service subsequently advertised and promoted by MCI

as ‘‘Execunet”. The Execunet tariff was twice re-

jected by the Commission as an unauthorized dupli-

cation of ordinary long distance telephone service.’

In Ezecunet I, supra, the court below in essence

found that although the Commission considered only

the services proposed in the application before it, and

may have thought it was granting MCI only the au-

thority it sought, t.e., to provide only private line ser-

vices,” the statute under which the Commission has

been operating for over 40 years permits limitations

on grants only under the ‘‘terms and conditions” clause

of Section 214(c), and only on an adequately sup-

ported affirmative finding that the public interest re-

<

™MCI Telecommunications Corp., 60 FCC 2d 25 (1976) and

Appendix B (letter order, 1975).

*In the court’s words, ‘‘We can assume, without deciding, that

a service like Execunet was not within the contemplation of the

Commission when it made the Specialized Carrier decision’’ Execu-

net I, 561 F.2d at 378, Pet. App. 25i.

¢

*

4

=

3

4

5

quires limitations.’ Finding further that the Commis-

sion’s Specialized Carrier decision “‘ecannot reasonably

be read to have made an affirmative determination that

the public convenience and necessity required ‘private

line’ restrictions, ”’ the Court below held that MCI’s

authorizations were unrestricted."* Next addressing the

question of the provision by MCI of ‘‘Execunet?? ser-

vice, the court’s words were:

“é

.

. we have not had to consider, and hav

considered, whether competition like that st

Execunet is in the public interest. That will be the

question for the Commission to decide should it

elect to continue these proceedings,’’ ™

Execunet I thus “‘reversed and remanded,’’ with ex-

pressions of concern and words of caution to the Com-

mission that in the court’s view FCC had not so far

determined that A T & T should be granted a de jure

monopoly in the long distance telephone field, and

ponccae pcre draw no public interest inferences

rom the fact that another ier’ i

would compete in that field."* i Hace o

* Execunet I, 561 F.2d at 377, Pet. A i i

tT! ; ‘ . App. 23i. Section 214 f

the Communications Act (47 U.S.C. 214(.) ), whieh the pening Ai

construed, provides in pertinent part that:

‘“‘The Commission shall have power to issue i

[of public convenience and necessity] as applied pag my “=

— to issue it, or to issue it for a portion or portions of a

ine . . . described in the application, or for the partial exer-

cise only of such right or privilege, and may attach to the

issuance of the certificate such terms and conditions as in its

judgment the public convenience and necessity may require.’’

'° Execunet I, 561 F.2d at 379, Pet. App. 28i.

" Execunet I, 561 F.2d at 380, Pet. App. 30i.

'2 Tid.

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6

Motions for stay of mandate pursuant to Rule 41(b),

Federal Rules of Appellate Procedure, were granted

and petitions for certiorari, duly filed by USITA,

AT&T, and FCC, were opposed by MCI and Southern

Pacific Communications Company”™ on the ground,

inter alia, that review by the Court would be prema-

ture, since Execunet I ‘‘made no ruling on the lawful-

ness of Execunet ... or between authorized and non-

authorized services. All these matters are left for the

Commission to decide.” * The Court denied certiorari

on January 16, 1978 (Mr. Justice Stewart and Mr.

Justice Powell were recorded as voting for grant).

On February 28, 1978 the Commission, responding

to an AT&T ‘‘Petition for Declaratory Order,” held

that its earlier interconnection order,” under which

Bell System companies were required to interconnect

their local exchange facilities with the intercity facili-

ties of the specialized carriers, covered only private

line services, not long distance telephone service.” In

reaching its conclusion, the Commission recognized, as

indeed did the Court of Appeals in Execunet I, the

‘‘very different issue’ (from facility authorizations)

involved in a Communications Act Section 201(a) in-

terconnection proceeding,” where interconnection of

18 The Solicitor General urged granting of the writ, but reserved

his position on the merits.

1* Nos. 77-420 et al., SPCC Brief in Opposition, pp. 10-11.

‘S Bell System Tariff Offerings, 46 FCC 2d 413 (1974); aff’d.

sub nom. Bell Telephone Company of Pennsylvania v. F.C.C., 403

F.2d 1250 (3d Cir. 1974), cert. den., 422 U.S. 1026 (1975); see

also MCI vy, A.T.&T., 496 F.2d 214 (3d Cir. 1974).

*® Memorandum Opinion and Order, FCC 78-142, Pet. App. C.

17 Execunet I, 561 F.2d at 378, n.59, Pet. App, 24i-25i.

Se nn

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aR ages Vie BE ae SE eB.

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carrier facilities can only be ordered by the Commission

after opportunity for hearing and on an affirmative

finding that interconnection is necessary or desirable

in the public interest.” Acknowledging, as the Court of

Appeals in Execunet I also pointed out, that there had

been no hearings on the issue of competition in the

long distance telephone field, and finding that there

had been neither notice nor opportunity for hearing on

the long distance telephone service interconnection

issue, the Commission concluded that it was bound by

the Third Circuit’s affirmance of the Commission’s

interconnection order, specifically that court’s ruling

that the order was not overbroad when construed—as

the court did—to cover only private line services.”

MCI ’s reaction to this FCC ruling took the form of

a motion to the Execunet I court ‘‘for an order direct-

ing compliance with mandate.’”’ The motion was

granted by the court below on April 14, 1978 (“‘Execu-

net II my with the order being accompanied by a 22-

page opinion by Chief Judge Wright, in which is re-

cited “the long series of proceedings and litigation in

which MCI has attempted to secure and preserve its

as At common law there is no duty on the pa i

physically connect its facilities with ‘eae 2 pial Pane Ma

Atchison, Topeka & S.F. R.R. Co. v. Denver N.O. R.R. Co 110

U.S. 667 (1884); Louisville & Nashviile R.R. Co. v. West Coast

Co., 198 U.S. 483 (1904). The interconnection obligation is thus

purely a matter of statute, and arises only on Commission order.

**Memorandum Opinion and Order, FCC 78-142, February 28

1978, Pet. App. C. Instructive in this context is the Third Cireuit 's

earlier decision in MCI vy. AT&T, supra, n.15, in which the court

vacated a district court ordered interconnection because of un-

certainty as to what private line services had been authorized by

FCC and to accord to the agency the right to first determine the

—. a permissible competition between specialized and existing

8

authority to offer Execunet service,’’ the ‘‘almost con-

tinuous resistance from AT&T,”’ and the ‘‘thought that

this process finally culminated in our Exzecunet deci-

sion upholding MCI’s authority to offer Execunet

pending further rulemaking by the Commission.”’ *

Finding that the Commission’s order “‘. . . twists the

issues we contemplated in this case beyond recognition;

it deliberately frustrates the purpose of the litigation,

the hasis on which it was presented by the parties, and

the intended effect of our decree,’’* the court below

found that although Ezecunet I ‘‘.. . is not addressed

explicitly to the interconnection issue or to A. T .& T.’s

obligation to provide interconnection,’’” ‘‘the fact of

the matter is that our Ezecunet decision did clearly

contemplate—by virtue of A. T. & T.’s representations

and actions—that A. T. & T. was required to provide

interconnection for Execunet service.’’™

Petitions for rehearing and suggestions for rehear-

ing en banc were denied by the court below on May 8,

1978. USITA’s motion for stay pending certiorari was

denied on May 11, 1978, with a ten page per curiam

(‘‘Execunet III’’) restating the court’s view of MCI’s

authority to provide long distance telephone service as

unlimited and unrestricted, its view of telephone com-

panies interconnection obligations necessarily similarly

unbounded, and its determination that MCI’s right to

enter and to expand its participation in the long dis-

tance telephone service market must be allowed to

20 Execunet II, slip op., p. 3; Pet. App. 2a-3a.

*1 Exrecunet II, slip op., p. 16, Pet. App. 15a.

22 Td. at 11, Pet. App. 10a-1la.

23 Td, at 10, Pet. App. 9a.

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continue ‘‘. . . until and unless it was fo

. . und

public interest demanded otherwise.”’ * that the

REASONS FOR GRANTING THE WRIT

The Commission’s response to the E.

date was the institution on February 28, 1978 of s mee

ceeding to determine the precise question posed by

the court below in its Execunet I opinion, i.e., “‘whether

competition like that posed by Execunet is in the publie

interest.” ss It is clear, and the court below agrees, that

the Commission has not yet affirmatively made that

public interest determination.

In Execunet II and Ezxecunet III, howey

court below (1) has itself authorized that tet ag

and (2) has itself ordered existing telephone compa-

nies to interconnect their local exchange facilities in

furtherance of that competition. In so doing, the lower

court has now so far overstepped the permissible

bounds of judicial review as t

motte 0 warrant summary

Indeed, in its trio of Execunet decisions the court

below has reriously misread the statutes involved, has

usurped the Commission’s authority to determine the

public interest in both grants of authority and inter-

connection matters, and has precluded responsible ex-

ercise of that authority by the agency, all in direct con-

flict with the Commission’s statute, the applicable and

** Execunet II, slip op., at 15, Pet. App. 14a.

*““In the Matter of MTS and WATS Market Structure’, CC

Docket No, 78-72, Notice of I . :

ruary 23, 1978, ¢ of Inquiry (FCC 78-144), adopted Feb-

** Execunet I, 561 F.2d at 380, Pet. App. 30i.

10

controlling decisions of the Court and the interconnec-

tion decisions of the Third Circuit.

I. The Const Below Has Far Overstepped The Bounds Of Judicial

Review.

That the court below may not have had available to

it on April 14, 1978 (the date of Erecunet II) the

Court’s April 3, 1978 opinion in Vermon* Yankee Nu-

clear Power Corp. v. NRDC (46 U.S.L.W. 4301) does

not excuse or justify its flagrant violation of the stand-

ard for judicial review of agency action.

Here, as in Vermont Yankee, the agency involved

has been given broad regulatory authority, in this case

over the development of ‘‘. . . a rapid, efficient, Na-

tion-wide and world-wide wire and radio communica-

tion service with adequate facilities at reasonable

charges.’’" Here, as in Vermont Yankee, construction

permits and licenses (or certificates of convenience and

necessity) must be obtained; and grant by the agency

must be based on adequate findings that the public

interest, convenience and necessity require or will be

served by grant of the authority requested.” And here,

as in Vermont Yankee, the decisions below emanate

from the Court of Appeals for the District of Colum-

bia Circuit and thus ‘‘will serve as precedent for many

more proceedings for judicial review of agency actions

than would the decision of another Court of Appeals.’’”

Even without Vermont Yankee, however, the stand-

ard for judicial review has been well established by the

Court in a long line of decisions, including F'.C.C. v.

** Communications Act of 1934, See. 1 (47 U.S.C. 151).

*8 Thid., Sees, 214, 308-309,

** Vermont Yankee, supra, at 4305, n.14.

eee as ae

11

Pottsville Broadcasting Co., 309 U.S. 134, 143 (1940) ;

SEC v. Chenery, 332 U.S. 194, 196 (1947): F.C.C. v.

Schreiber, 381 U.S. 279, 290 (1965) ; Burlington Truck

Lines v U.S., 371 U.S. 156, 169 (1972); and FPC v

Transcontinental Gas Pipe Line Corp., 423 U.S. 326

( 1976). It has been and remains absolutely clear that

Judicial review of agency action must be based on the

agency’s action and its rationale. Moreover, as the

Court held in FPC v. Idaho Power Co., 344 U.S. 17, 20

(1952), the ‘‘function of the reviewing court ends when

an error of law is laid bare. At that point the matter

goes once more to the Commission for reconsideration.”

Further, As Mr. Justice Rehnquist, reviewing T'rans-

oe supra, for the Court in Vermont Yankee

said:

‘In that case, in determining the proper scope of

judicial review of agency action under the Natural

Gas Act, we held that while a court may have oec-

casion to remand an agency decision because of

the adequacy of the record, the agency should nor-

mally be allowed to ‘exercise its administrative

discretion in deciding how, in light of internal

organization considerations, it may best proceed

to develop the needed evidence and how its prior

decision should be modified in light of such evi-

dence as develops.’ ”’ ®

Measured by these standards, the decisions below are

clearly beyond the pale. For in these decisions the

Execunet court first found error in the Commission’s

failure to affirmatively find a public interest require-

menit to limit its authorizations to MCI—a finding ob-

viously impossible in view of the total absence of a

record relating to services which MOI had not pro-

*° Vermont Yankee, supra, at 4307.

12

posed. Had the court below stopped at that point, its

decision could have arguably been said to have com-

plied with the judicial review standard, even if its

construction of the Commission’s statute were errone-

ous.

But the court below did not stop with laying bare

what it viewed as the Commission’s error of law.

Rather, it gratuitously counselled the Commission in

Execunet I that it must develop a new record, a record

on which a finding could be made that grant of author-

ity for services for which authority was not sought

could be found to be not in the publie interest. Addi-

tionally, the court advised the FCC that no public in-

terest inferences should be drawn from the fact that a

proposed service would compete in the long distance

telephone field; and that the Commission ‘‘must be

ever mindful that just as it is not free to create compe-

tition for competition’s sake,” it is not free to propa-

gate monopoly for monopoly’s sake;’’ and that the test

is the public interest, ‘‘not the private financial inter-

ests of those who until now have enjoyed the fruits of

de facto monopoly.’’™

In Erecunet II, the court below went still farther

afield. It decided there that not only had the Commis-

sion erred, but that its failure (in the court’s view)

to adequately and properly limit MCI to the provision

of private line services in fact not only authorized

MCI to operate its facilities to provide long distance

telephone service (Section 214) but also obligated the

existing telephone companies to interconnect their local

facilities in order to help MCI compete in that market

(Section 201(a)). Moreover, said the court below, the

** Execunet I, 561 F.2d at 380, Pet. App. 30i (footnote omitted).

13

Commission is powerless to stop or contain competition

or interconnection in the long distance telephone mar-

ket until and unless it finds, after completion of the

proceeding instituted in compliance with the Execunet

I mandate, that competition adversely affects the pub-

lie interest.”

Each of these steps beyond the finding of Commis-

sion error is, we respectfully submit, an excess of judi-

cial activism warranting summary reversal. Vermont

Yankee, supra, while specifically and recently directed

to the District of Columbia Circuit is not new law.

Pottsville Broadcasting, supra, quite clearly drew the

distinction between a mandate from court to court and

court to an administrative agency, (309 U.S. at 141-

144) and found that the Court of Appeals, when it had

‘laid bare [the] error [of the agency], exhausted the

only power which the Congress gave it’? (309 U.S. at

145). In authorizing competition and requiring inter-

connections, the court below has ignored the teaching

of Pottsville. Both functions are quite clearly vested

in the agency, not the court; and as the court’s man-

damus to FCC was set aside in Pottsville, so too must

the Hwxecunet court’s usurpation of agency functions

be reversed here.

II. Conflicting Decisions Are Not Reconciled By Nullifying One.

The efforts of the Execunet court notwithstanding,

there remains an unreconcilable conflict between the

Third and District of Columbia Circuits. The treat-

ment accorded the Third Circuit’s in-depth exploration

and resolution of the interconnection issue by the covrt

= Execunet II, slip op., at 15, Pet. App. 14a. MCI has estimated

the time required to complete this proceeding to be ‘‘several years’’

(MCI Opposition to Motions for Stay, April 20, 1978).

14

below can only be described as at best, cavalier, and at

worst, rendering wholly without meaning the entire

Third Cireuit proceeding.

In Execunet I, the court distinguished Bell of Penn-

sylvania, supra, on the ground that it ‘involved a very

different issue, namely whether the Commission had

affirmatively determined that it would be 1n the public

interest to require A. T. & T. to interconnect with MCI

for the purpose of allowing MCI to offer FX and CCSA

service. See 47 U.S.C. §201(a) (1970).’’* In Ezecu-

net II the lower court ‘‘changed positions as nimbly

as if dancing a quadrille,’’** and now finds in the

Third Cireuit’s broad construction of Specialized Car-

riers, supra, ‘*. .. strong support—not conflicting au-

thority—for the similarly broad construction we ac-

corded in Exrecunet to Specialized Carrier [sic]....”™

What the Execunet court consistently refuses to

acknowledge in either its effort to distinguish or its

claim of support is the fact that central to the Third

Circuit’s interconnection ruling is the basic question

of what competitive services MCI had been authorized

by FCC to provide. If MCT is indeed the holder of un-

limited authorizations and correspondingly unlimited

rights to interconnection, as Execunet II holds, the

Third Circuit’s deliberations on the scope of MCI’s au-

thorizations were purely academic. The Third Circuit’s

opinion in MCI Communications Corp. v. AT&T, 496

F.2d 214 (3d Cir. 1974) is peculiarly pertinent and in-

83 Execunet /, 561 F.2d at 378, n.59; Pet. App. 24i-25i.

%* Vermont Yankee, supra, at 4306, quoting Orloff v. Willoughby,

345 U.S. 83, 87 (1953).

S Execunet I1, slip op. at 18-19, Pet. App. 17a.

15

structive here. In that case a preliminary injunction

requiring specified interconnections had been issued by

the District Court. In vacating the injunction, Cireuit

Judge Van Dusen, for the court, wrote:

‘Deferral to the FCC under the doctrine of pri-

mary jurisdiction is particularly appropriate in

this case not simply because of the fact of uncer-

tainty concerning the issue of what private line

services have been authorized, but also because

of the nature of the issue. For a court to resolve

this issue results in a judicial determination of the

scope of permissible competition between the spe-

ctalized carriers, such as MCI, and the existing

carriers, such as AT&T. Such a determination, in-

volving, as it must, the comparative evaluation of

complex, technical, economic and policy factors, as

well as consideration of the public interest, should

be made, in the first instance by the administrative

agency which has been entrusted with the primary

responsibility for making such a determination

and which has the expertise necessary for the de-

velopment of sound regulatory policy.’’ 496 F.2d

at 222 (footnote omitted, emphasis supplied).

The result of this decision was Bell System Tariff Of-

ferings, supra, which was then affirmed in Bell of

Pennsylvania, supra.

In the ease at bar, FCC did indeed make its deter-

mination in the first instarice—that it had affirmatively

authorized MCI to offer private line service and only

private line services. But in Execunet I and Ezecunet

II the court below made new law—an affirmative FCC

authorization pursuant to Section 214(a)“ of the

*® Section 214(a) (47 U.S.C. 214(a)) provides in part that:

‘No carrier shall undertake the construction of a new line or

of an extension of any line, or shall acquire or operate any

16

Communications Act cannot be limited to the author-

ity applied for unless FCC conditions its grant pur-

sant to a separate and additional public interest

finding under Section 214(c), and telephone compa-

nies interconnection obligation are measured by that

same unlimited standard, not by Section 201(a).”

The culmination of the Commission’s ‘deliberations

on how to conduct its affairs under this novel and

judicially preseribed procedure, following a three

month’s freeze on all applications, is a remarkable

new routine in which the affirmative finding of public

convenience and necessity in each processed applica-

tion is conditioned on the outcome of the proceeding

instituted by the Commission, in response to Ezxecunet

I, to determine whether the public convenience and

necessity require competition in the provision of long

distance telephone service.”

line, or extension thereof, or shall engage in transmission over

or by means of such additional or extended line, unless there

shall first have been obtained from the Commission a certifi-

eate that the present or future public convenience and neces-

sity require or will require the construction, or operation, or

construction and operation of such additional or extended

7 Of particular concern to the Independents in this context is

the apparent elimination of the requirements of Section 201(a)

from the statute, and the denial to the Independents of the right

to hearing before the Commission on interconnection matters spe-

cifieally acknowledged by the Third Cireuit. See Bell of Pennsyl-

vania, supra, at 1273, n.3la.

°8 How a finding today that the public convenience and necessity

require the construction or operation of a new line can be condi-

tioned on the outeome of a proceeding to determine whether the

publie convenience and necessity require that construction and

operation, puzzling at best, is but one result of judicial intrusion

into the administrative process. For the Court’s convenient refer-

ence, a copy of a typical FCC authorization under the new proce-

dure is attached as Exhibit A.

17

Unlike the Third Circuit, the Ezecunet court, re-

grettably, did not allow the FCC to conduct the pro-

ceeding ordered * by Execunet J and determine in the

first instance ‘‘.. . the scope of permissible competition

between the specialized carriers, such as MCI, and the

existing carriers, such as AT&T.’’ Rather, by the

judicial fiat of Execunet IT long distance telephone

competition is authorized, and interconnection is re-

quired, even in the judicially acknowledged absence

of any administrative public interest findings as to

either authorization or interconnection, and must be

permitted to continue and expand ‘‘until and unless

it was found that the public interest demanded other-

wise.’’ 40

Thus the conflict between the Third Circuit’s limited

to private line decision and the District of Columbia

Circuit’s unlimited view remains, and indeed is sharp-

ened by Ezxecunet II. The conflict can only be resolved

by the Court.

CONCLUSION

Thus has the court below overstepped the bounds

of judicial review and usurped the functions of the

F.C.C. Thus has the court below reversed the holding

in F.C.C. v. RCA Communications, Inc., 346 U.S. 86,

93 (1953) that ‘‘The Act by its terms prohibits com-

petition by those whose entry does not satisfy the

‘public interest’ standard.’’ (Emphasis supplied). And

thus has the court below reduced the thorough and

a Execunet I may be read as leaving the institution of a pro-

ceeding to the Commission’s discretion. Given the Commission’s

statutory public interest duty, however, it had no choice but to

proceed.

© Erecunet 11, slip op. at 15, Pet. App. 14a.

18

careful deliberations of the Third Circuit to a mean-

ingless semantic exercise, for the entire interconnec-

tion proceeding in that court,” in which the lawfulness

of the FCC order requiring interconnection for MCI’s

‘‘presently or hereafter authorized’’ services hinged

on its scope, becomes wholly academic if indeed the

Execunet court is correct in finding MCI’s authoriza-

tions unlimited and telephone company interconnec-

tion obligations equally unbounded.

For these reasons, the writ should issue to the Court

of Appeals for the District of Columbia Circuit, and

this case should be set for plenary review.

Respectfully submitted,

Tuomas J. O’REILLY

1150 17th Street, N.W.

Washington, D.C. 20036

Counsel for United States

Independent, Telephone

Association

Of Counsel:

CHADBOURNE, PARKE,

WuiresinE & WOLFF

1150 17th Street, N.W.

Washington, D.C. 20036

August 7, 1978

** MCI v. AT&T, supra; Bell Telephone Company of Pennsyl-

vania V. F.C.C., 503 F.2d 1250 (3d Cir, 1974).

EXHIBIT A

la

Before the

Federal Communications Commission

Washington, D.C. 20554

File No. I-T-C-2621

In the Matter of

Western Union Internationat, Ino.

Application for authority to acquire and operate facilities

between New York and Washington, D.C.

ORDER AND AUTHORIZATION

Adopted: July 28, 1978

Released: August 1, 1978

1, Opon consideration of the above-captioned applica-

tion, filed on Oct. 10, 1975 by Western Union International,

Inc. (WUI), we find that a grant of said application will

serve the public interest, convenience and necessity ;

2. Accordingly, Ir Is Orpgrep, pursuant to Section 0.291

of the Commission’s Rules on Delegations of Authority.

That application File No. I-T-C-2621 Is Heresy Granrep,

explicitly subject to the following: The authorization of

the facilities and services herein shall be subject to pos-

sible revocation or modification as a result of any findings,

rules, requirements or other actions which may result from

or be promulgated by, the proceedings in Common Carrier

Docket No. 78-72, ‘‘In the Matter of MTS and WATS

Market Structure,’? FCC 78-144 (March 3, 1978) or Com-

mon Carrier Docket No. 78-96, ‘‘Regulatory Policies Con-

cerning the Provision of Domestic Public Message Serv-

ices By Entities Other Than the Western Union Telegraph

Co. and Proposed Amendment to Parts 62 and 64 of the

Commission’s Rules,” FCC 78-184 (March 28, 1978). The

grantee is afforded 30 days from the release of this order

to decline this authorization as conditioned. Failure to

2a

respond within this period will constitute formal accept-

ance of the authorization as conditioned;* and

(A) WUI is authorized to:

(1) lease from AT&T and operate 11 voice cir-

cuits between its operating offices in New York

and Washington, D.C.;

(2) use said facilities to provide those services

WUI was authorized to provide by the Commis-

sion’s Order and Authorization adopted April 8,

1964, File No. T-C-1749 et al, as modified by the

Commission’s Memorandum Opinion, Order and

Authorization adopted Dec. 21, 1967, File No. T-C-

2135 et al, between the United States and over-

* Heretofore, when evaluating whether the public convenience

and necessity required the construction and operation of proposed

new channels of communications, the Commission believed it suffi-

cient to consider the application ‘‘as applied for,’’ i.e. limited to

those specific classes of service offerings mentioned in the applica-

tion or specifically authorized by prior Commission action, How-

ever, the Court has recently held that a carrier may introduce new

service offerings using existing facilities merely through the filing

of appropriate tariffs, unless such use of the facilities has been

explicitly restricted based on an adequate public interest determi-

nation at the time of authorization. MCI Telecommunications

Corporation v, FCC, 561 F.2d 365 (D.C. Cir. 1977). Pursuant to

this legal interpretation, it appears that carriers may now enter

and compete in various communications markets, including public

message service markets as well as competitive markets from which

they were previously precluded, employing both their existing

facilities and any additional facilities the Commission may author-

ize without the requisite limitations based on appropriate public

interest fiindings. In order to determine whether the public inter-

est. requires any regulatory controls or restrictions on the future

market structure for public message telephone and telegraph serv-

ices, and if so, the nature of any such restrictions, the Commission

has instituted CC Docket Nos, 78-72 and 78-96. Pending the

results of those proceedings, we believe the public interest requires

that we condition all further facility authorizations on their

outcome.

3a

seas points WUI is authorized to serve and

beyond;

(3) subdivide the voice circuits authorized herein

in accordance with the Commission’s Memoran-

dum Opinion, Report and Order adopted Feb. 13,

1974, Docket No. 18348;

(B) The Commission’s temporary authorizations,

granted Sept. 19, and Oct. 20, 1975 and expiring Dee.

31, 1978, authorizing the facilities requested in the

instant applications, are hereby TeRMINaTep.

FeperaL CoMMUNICATIONS CoMMISSION

/8/ Joet S. Wrynik

for Charles R. Cowan

Chief, Facilities & Services Division