Petition — American Telephone & Telegraph Co. v. MCI (Nos. 78-217, 78-216, 78-270)

la Supreme Court U.S,

FILED \

; 7 1978 1 |

nd 8 = 2 } 4 MICHAEL j p K. JR. CLERK

IN THE

Supreme Court of the United States

Ocroner Term, 1978

AMERICAN TELEPHONE AND TreLEGRAPH COMPANY,

Petitioner,

”.

MCL TrececomMuNtcations CorpoRATION, BT Al.

Responde nts,

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE DISTRICT OF COLUMBIA CiRCUIT

———

Of Counsel: Micra Boupi

Paur J. Berwan

SSS Sixteenth Street. N.W.

Washington, D.C. 20006

K. Mark Garuinguouse

Aurrep (. Parrots

19D Broadway

New York, N. Y. 10007) Bertos K. Karkin

Aurren Wincuens. Warrraker

19D Broadway

New York. New York 10007

Attorneys tor American

Telephone and

Telearaph Company

August 1978

Press of BYRON S. ADAMS PRINTING, INC., WASHINGTON, D. C.

TABLE OF CONTENTS

Page

SE 1

EE EES a 2

Cee ee vw ckbscnceoccecs 2

Teen ec owbeccetoses 3

SIS III ETT C TET Te +

A. The Statutory Plan and Background of This

EEE I +

EE 7

EE GL ee ll

I. The Lower Court Has Usurped the Commis-

sion’s Statutory Power To Order Interconnec-

tion and Ignored Congress’ Requirement of

Public Interest Findings by the FCC ........ 12

Il. The Lower Court’s Decision Directly Conflicts

With the Decision of the Third Circuit and In-

vades the Latter Court’s “Exclusive Jurisdic-

tion” Under the Hobbs Act ................ 17

EE EEO ES 22

TABLE OF AUTHORITIES

Cases AND ADMINISTRATIVE PROCEEDINGS:

Arrow Transp. Co. v. Cincinnati, N.O. € T.P. Ry., 379

CURE s a pak eeu aseciesccecscs 15

Bell System Tariff Offerings, 46 F.C.C.2d 413, aff’d

sub nom. Bell Telephone Company of Pennsyl-

vania v. FCC, 503 F.2d 1250 (3d Cir. 1974), cert.

EE, ED CEDED ccc cccccccccccesece 5,9

Bell Telephone Company of Pennsylvania v. FCC, 503

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

a a passim

in ation

ii Table of Authorities Continued

Page

Bowles v. Seminole Rock & Sand Co., 325 U.S. 410

CRON cv cnccncecessecesesscchecseccesessens> 13

City of Tacoma v. Taxpayers of Tacoma, 357 U.S. 320

(1958) ..... CkEicencbeeevesensvabesdsues 12, 19, 20

FCC v. National Citizens Committee for Broadcasting,

OB G.CE BORG (ISTE) oc ccc ccvvseccccresscccecs

FCC vy. Pottsville Broadcasting Co., 309 U.S. 134

CE cdc edcnidncdebecwkuencsceseccccosesens 12, 16

FPC v. Idaho Power Co., 344 U.S. 17 (1952) ........ 14, 15

Immigration and Naturalization Service v. Stamsic,

SOS UB. GR CIDTB) occ cccccccccsccccvcscctoccs

Interstate Broadcasting Co. v. FCC, 265 F.2d 598 (D.C.

ee Bs x vb bh.0 0008 cc ceseKegssenvedesWesene’

MCI Telecommunications Corp., 60 F.C.C.2d 25 (1976),

rev'd, MCI Telecommunications Corp. v. FCC,

561 F.2d 365 (D.C. Cir. 1977), cert. dened, 98 S.Ct.

| | rrr rrrr Tir riri re Ti 7,18

MCI Telecommunications Corp. v. FCC, 561 F.2d 365

(D.C. Cir. 1977), cert. denied, 98 S.Ct. 781

GREED nck sitwieas se dexea@ks keve peed saenges.s passim

Oklahoma-Arkansas Telephone Co. v. Southwestern

Bell Telephone Company, 45 F.2d 995 (8th Cir.

1930), cert. denied, 283 U.S. 822 (1931) ..........

Perkins v. Standard Oil Co., 399 U.S. 222 (1970) ..... 16

South Prairie Construction Co. v. Local No. 627, Int'l

Union of Operating Engineers, 425 U.S. 800

CRUE cds Chobe 6ecnencvedccnsevcccceceyedeeces 15

Specialized Common Carrier Services, 29 F.C.C.2d

870 (1971), aff'd sub nom. Washington Utils. &

Transp. Comm'n v. FCC, 513 F.2d 1142 (9th Cir.),

cert. denied, 423 U.S. 836 (1975) ...........00- 4,5

Udall v. Tallman, 380 U.S. 1 (1965) .........0e eee ees 13

United States v. Saskatchewan Minerals, 385 U.S. 94

SUE. cabins dsadesanbaseensasoeenewseue sees 15

Vermont Yankee Nuclear Power Corp. v. Natural Re-

sources Defense Council, 98 S.Ct. 1197 (1978) 11, 16,17

Washington Utils. € Transp. Comm'n v. FCC, 513 F.2d

1142 (9th Cir.), cert. denied, 423 U.S. 836 (1975). 4

Table of Authorities Continued iii

Page

STaTUTEs:

Communications Act of 1934:

Section 1, e¢ seqg., 47 U.S.C. $151 et seg. ........ 3

Section 201(a), 47 U.S.C. §201(a) ........... passim

Section 208, 47 U.S.C. $208 .........c ccc cc ccse 3

Section 204, 47 U.S.C. § 204 ...............005, 3

ection SOG, 47 UIC. SOS ..... osc ccccccccccce 3

Section 214, 47 U.S.C. § 214 ................. 3, 4, 11

Section 308, 47 U.S.C. $308 ..........ccccceese 3, 16

Section 309, 47 U.S.C. $309 ................05. 3, 16

Federal Power Act, Section 313(b), 16 U.S.C. § 8251(b) 19

Hobbs Act:

ee DU OPE, nvos.s ccc cc cWecadccceeas 3,17

ee I I a dh eod oh oles Cbs vies svenk es passim

See UE oo cdc bath b ch uc ch case vice 7,18, 19

Sh SE RE rs i Wewewe vb ebacxddw cis exodir 2

MISCELLANEOUS:

Brief of the FCC and United States, Washington Utils.

€ Transp. Comm’n v. FCC, 513 F.2d 1142 (9th

Cir.), cert. denied, 423 U.S. 836 (1975) .......... 5

Brief of the FCC and United States, Bell Telephone

Company of Pennsylvania v. FCC, 503 F.2d 1250

(3d Cir. 1974), cert. denied, 422 U.S. 1026 (1975) 5,6,9

Brief of MCI Telecommunications ry’ =, Bell Tele-

phone Company of Pennsylvania v. FCC, 503 F.2d

1250 (3d Cir. 1974), cert. denied, 422 U.S. 1026 P

RENO. CURR c bucked Gi eekuadas pies ch ace sdean

ae ee

iv Table of Authorities Continued

Page

Brief of Southern Pacific Communications on rce

Bell Telephone Company of Pennsylvania v

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

WBE (IBGE)... vcccccenss vupcbbenheaeeeeetes

FCC Rules Section 21.2, 47 C.F.R. § 21.2 ............

Hearings on H.R. 8301 Before the House Committee on

Interstate and Foreign Commerce, 73d Cong., 2d

Beas. (1904) ....ccscecessas sean

Notice of Inquiry and Proposed Rule Making, FCC 78-

144, March 3, 1978

ae? es ee ee

IN THE

Supreme Court of the United States

OcrToBER TERM, 1978

No.

AMERICAN TELEPHONE AND TELEGRAPH COMPANY,

Petitioner,

Vv.

MCI TrELECOMMUNICATIONS CORPORATION, ET AL.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE DISTRICT OF COLUMBIA CIRCUIT

Petitioner American Telephone and Telegraph

Company requests that a writ of certiorari be issued

to review the opinion and order of the United States

Court of Appeals for the District of Columbia Cir-

cuit in this case.

OPINIONS BELOW

The April 14, 1978, opinion of the Court of Ap-

peals, which is not yet officially reported, appears as

Appendix A to this petition.’ The lower court’s sub-

sequent opinion denying a motion for a stay pending

certiorari, which is not officially reported, appears as

*The appendices are separately bound in a companion volume

cited as ‘‘ Pet. App.’’

2

Appendix B. The February 28, 1978, Memorandum

Opinion and Order of the Federal Communications

Commission, which is not yet officially reported, ap-

pears as Appendix C,

JURISDICTION

The order of the Court of Appeals entered April

14, 1978, which together with its opinion constitutes

its judgment in this case, appears as Appendix D.

The Court of Appeals denied rehearing and sugges-

tion of rehearing en banc on May 8, 1978, by orders

which appear as Appendix E. The jurisdiction of

this Court is invoked under 28 U.S.C. § 1254(1).

QUESTIONS PRESENTED

Congress in Section 201(a) of the Communications

Act of 1934, 47 U.S.C. § 201(a), provided that physi-

eal connections between carriers may be ordered only

after a hearing and findings by the Federal Communi-

cations Commission that the interconnections sought

are ‘‘necessary or desirable in the public interest.’’

In this case, the District of Columbia Circuit has—

over the Commission’s objection—directed the Com-

mission to order that physical connections be estab-

lished between telephone companies and a specialized

carrier to permit the latter to offer long distance

telephone service (‘‘switched public message ser-

vice’’). The questions presented are:

1. Whether in mandating physical connections, the

Court of Appeals unlawfully exercised an administra-

tive function which Congress in Section 201(a) ex-

plicitly reserves to the Commission and which can

validly be exercised only after public interest findings

that the Commission has not made in this case.

3

2. Whether the Court of Appeals, in extending

existing interconnection obligations to switched pub-

lic message service, impermissibly contradicted a con-

trary prior decision of the Third Circuit rendered

under a statute giving the Third Circuit ‘exclusive

jurisdiction’ to review the Commission’s intercon-

nection orders. 28 U.S.C. § 2349,

STATUTES INVOLVED

Pertinent provisions of the Communications Act of

1934, as amended, 47 U.S.C. §151 et seq., and the

Hobbs Act, 28 U.S.C. § 2341 et seq., appear as Ap-

pendix F,

STATEMENT OF FACTS

A. The Statutory Plan and Background of This Case

The FCC authorizes common carriers to construct,

acquire and operate communications facilities under

Section 214 of the Act, 47 U.S.C. § 2142 A carrier

then makes its offering to the public by filing tariffs

pursuant to Sections 203-05 of the Act, 47 U.S.C.

§§ 203-05. A Section 214 authorization, however, re-

lates only to the use a carrier may make of its own

facilities and provides a carrier no right to compel

other carriers to interconnect with it. Interconnec-

tion rights can be conferred only after a separate

affirmative determination by the Commission under a

different provision of the Act.

Carrier interconnection rights and obligations are

controlled by Section 201(a), which imposes a limited

—

* If a carrier uses radio facilities, it is also required to obtain

radio facility construction permits and licenses under Title III of

the Act. Sections 308-09, 47 U.S.C. §§ 308-09.

4

qualification on a carrier’s common law right not to

provide physical connections with other carriers.’

Section 201(a) directs a carrier to establish physical

connection with another carrier only ‘‘in accordance

with the orders of the Commission’’ issued after op-

portunity for hearing.‘ Section 201(a) requires, as

a condition precedent to interconnection orders, that

the FCC affirmatively find that the proposed provi-

sion of interconnection facilities will be necessary or

desirable in the public interest. Bell Telephone Com-

pany of Pennsylvania v. FCC, 503 F.2d 1250, 1270

(3rd Cir. 1974), cert. dented, 422 U.S. 1026 (1975).°

In 1971, the FCC created a class of common car-

riers known as ‘‘specialized carriers,’’ and proposed

to grant them Section 214 and Title III authoriza-

tions to provide specialized private line telecommuni-

cations services using microwave radio.’ The FCC

3 E.g., Oklahoma-Arkansas Telephone Co. v. Southwestern Bell

Telephone Co., 45 F.2d 995, 997 (8th Cir. 1930), cert. denied, 283

U.S. 822 (1931). Section 201(a) ‘‘does not require the establish-

ment of through routes in the absence of an order by the Commis-

sion, nor does it provide for the compulsory establishment of

physical connection between carriers’’ absent such an order. Hear-

ings on H.R. 8301 Before the House Committee on Interstate and

Foreign Commerce, 73d Cong., 2d Sess. 14 (1934).

*Section 201(a) provides: ‘‘It shall be the duty of every com-

mon carrier .. . in accordance with the orders of the Commission,

in eases where the Commission, after opportunity for hearing,

finds such action necessary or desirable in the public interest, to

establish physical connections with other earriers .. . .’’ 47 U.S.C.

§ 201(a).

° A copy of the Third Circuit’s opinion appears as Appendix G.

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

aff'd sub. nom. Washington Utils. & Transp. Comm’n v. FCC, 513

F.2d 1142 (9th Cir.), cert. denied, 423 U.S. 836 (1975). A private

5

distinguished ‘‘private line” service from switched

‘‘publie message” services like ordinary long distance

telephone service. 29 F.C.C.2d at 911, 915." The de-

cision did not make any affirmative finding in favor

of switched public message competition (see p. 8,

below). Similarly, it made no determination that the

Bell System should provide interconnection facilities

to specialized carriers for use in providing this service,

an issue that was not even before the Commission.

Thereafter, MCI—one of the specialized carriers

authorized by the FCC—sought to connect its inter-

city lines with local exchange facilities of the Bell

System so that MCI could provide certain services

subsequently deemed to be private line services by

the Commission. The FCC instituted a separate inter-

connection proceeding under Section 201(a). After

extensive submissions, the FCC entered orders ex-

pressly designed to achieve its objective of private

line competition. Bell System Tariff Offerings, 46

F.C.C.2d 413, 427 (1974). The orders required the

Bell System to provide interconnection facilities to

line service—providing dedicated circuits—is one ‘‘whereby facili-

ties for communication between two or more designated points are

set aside for the exclusive use or availability for use of a particular

customer and authorized users during stated periods of time.’’ 47

C.F.R. § 21.2.

*The Department of Justice supported this distinction. Brief of

the FCC and United States, pp. 4-5, Washington Utils. & Transp.

Comm'n v. FCC, supra; brief of FCC and United States, pp. 5-6,

Bell Telephone Company of Pennsylvania v. FCC, supra. A public

message service—such as ordinary long distance telephone service

—is one ‘‘whereby facilities are offered to the public between all

points served by a carrier or by interconnected carriers on a non-

exclusive message-by-message basis, contemplating a separate con-

nection for each occasion of use.’’ 47 C.F.R. § 21.2.

6

specialized carriers for specialized and other private

line services. Id. at 438.

On review, the Third Circuit affirmed the FCC’s

interconnection orders in Bell Telephone Company

of Pennsylvania v. FCC, supra. The Bell System ar-

gued that the interconnection orders were unduly

vague and overbroad. The Third Circuit agreed that

the interconnection orders would be ‘‘overbroad’’ if

read abstractly (503 F.2d at 1273-74 (Pet. App. 42g) ) ;

but it sustained them on the ground that they only

required, and validly could only require, the Bell

System to provide specialized carriers with ‘‘those

(interconnection) elements of private line services”’

which were supplied within the Bell System. Id. (em-

phasis added). This construction of the FCC inter-

connection orders was urged in the Third Circuit by

the FCC, the Department of Justice, MCI and an-

other specialized carrier, Southern Pacific Communi-

cations Company.*

The statute governing review of such FCC orders

conferred on the Third Circuit ‘‘exclusive jurisdic-

tion’’ over the interconnection orders, as soon as the

Bell System filed its petition for review in that cir-

cuit and the record was lodged there by the Commis-

sion. 28 U.S.C. § 2349(a).° After this Court denied

certiorari in Bell of Pennsylvania, the Third Cir-

* Brief of FCC and United States, p. 49 & n.14; MCI Brief pp.

52-53; SPCC Brief p. 61, each of which is quoted at paras. 48-49

of the FCC’s February 28, 1978 Memorandum Opinion and Order.

(Pet. App. 28¢-29e).

®*That provision of the Hobbs Act provides in pertinent part:

‘*The court of appeals in which the record is filed . . . has

exclusive jurisdiction to make and enter . . . a judgment de-

termining the validity of, and enjoining, setting aside, or

suspending, in whole or in part, the order of the agency.’’

7

cuit’s decision determining the scope and validity of

the Bell System’s interconnection obligations became

‘*final’’? (28 U.S.C. §§ 2349, 2350) and not subject to

further review or collateral attack.

B. The Proceedings Below

In January 1975, MCI began to offer its so-called

Execunet service.” After lengthy proceedings, the

FCC determined that Execunet was clearly equivalent

to ordinary long distance telephone service and there-

fore a switched public message service rather than a

private line service.” Accordingly, the FCC rejected

the Execunet tariff as purporting to provide an un-

authorized service. MCI Telecommunications Corp.,

60 F.C.C.2d %5 (1976). Since it found Execunet be-

yond the scope of MCI’s lawful authority, the FCC

had no occasion to consider whether the Bell System

was or should be obligated under Section 201(a) to

© Execunet is a replica of ordinary long distance telephone serv-

ice. As with ordinary ‘ong distance service, Execunet customers,

utilizing local telephone company exchange facilities, can call from

any telephone in one city to any telephone in a distant city on a

eall-by-call basis; each call requires a new connection; each call is

charged a rate based on the distance called and the length of the

call, subject to a monthly minimum; and the calls utilize circuits

and switching facilities which are not exclusively dedicated to each

customer but are utilized by different customers in turn. MCI Tele-

communications Corp., 60 F.C.C.2d 25, 42, 59-62 (1976).

‘The operations of ordinary long distance service (Pet. App.

lh) and of Execunet (Pet. App. 2h) are illustrated in two dia-

grams, introduced by AT&T in MCI Telecommunications Corp.,

supra, which are reproduced as Appendix H.

8

provide connections to MCI to assist MCI in provid-

ing such a service.”

In July 1977, the District of Columbia Circuit re-

versed the rejection of MCI’s tariffs. MCI Telecom-

munications Corp. v. FCC, 561 F.2d 365, cert. denied,

98 S. Ct. 781 (1978) (‘‘Eaecunet’’).” The lower court

did not disturb the FCC’s finding that Execunet was

the functional equivalent of long distance telephone

service (561 F.2d at 378 (Pet. App. 25i)), but it found

that the FCC had never determined whether compe-

tition in ordinary long distance service would serve

the public interest. Jd. at 380 (Pet. App. 30i). Under

the lower court’s reading of Section 214, the FCC

had to resolve this issue before it could limit MCI to

providing private lige service."* The Hxecunet deci-

sion did not purport to decide any interconnection

issue; in fact, it distinguished Bell of Pennsylvania

as involving ‘‘a very different issue.’’ Id. at 378 n.59

(Pet. App. 251).

Following the denial of certiorari in Execunet, the

Bell System promptly asked the FCC to confirm that

existing interconnection orders affirmed in Bell of

'2The Bell System, initially unaware of the actual nature of

Execunet, furnished MCI with a limited number of interconnection

facilities which MCI then used to provide Execunet. When AT&T

discovered that MCI was actually providing ordinary long distance

telephone service, AT&T asked the Commission to investigate.

'* The Execunet opinion appears as Appendix I.

‘* The Court of Appeals held that even though an applicant has

sought only limited authority, once facilities authorizations have

been granted to a carrier, it can use them to provide any service it

chooses unless the FCC imposes explicit restrictions based on public

interest findings. 561 F.2d at 380 (Pet. App. 301).

9

Pennsylvania did not extend to Execunet." The Bell

System pointed out that the interconnection orders

were clearly limited by the Third Circuit, consistent

‘with the FCC’s own representations, to interconnec-

_ tion elements of “‘private line services’? (503 F.2d

1273-74 (Pet. App. 42g¢)); and that the Commission

had now explicitly ruled in Erecunet—a ruling not

questioned by the lower court—that Execunet was not

a private line service. 60 F.C.C.2d at 43-44. Accord-

ingly, if MCT desired interconnection facilities from

the Bell System for Execunet-type services, a prior

hearing and public interest findings were required un-

der Section 201(a) before such an obligation could be

imposed.

In a decision released on February 28, 1978

(‘*MO&O”’), the Commission granted the declaratory

order sought by the Bell System. Pet. App. le. It

confirmed that its own prior orders in Bell System

Tariff Offerings imposed interconnection obligations

only with respect to private line services. MO&O,

para. 58 (Pet. App. 34c). The Commission also ree-

ognized that it was ‘“‘bound by the Third Circuit’s

interpretation’’ of Bell of Pennsylvania that the ex-

isting interconnection orders were ‘‘limited to private

line services.’’ Id., para. 56 (Pet. App. 32c-33c).

Moreover, the FCC conceded that the Bell System

never had notice or hearing on any broader intercon-

*® After the Commission’s Fzecunet decision, the lower court

stayed further expansion of Execunet service, so that no new

interconnection facilities were sought; but when the lower court’s

stay dissolved after the denial of certiorari, AT&T anticipated

that it would receive numerous new demands for interconnection

facilities. In Bell of Pennsylvania, the United States and the FCC

advised the Third Circuit in response to the overbreadth argument

that ‘‘AT&T can seek guidance from the Commission’’ if questions

arose as to the extent of the Bell System interconnection obliga-

tions. Brief of FCC and United States, p. 49 n.14.

10

nection obligation, because—as the Execunet decision

recognized—the FCC had never purported to consider

whether competition for public switched message ser-

vices should be introduced. Id., para. 62 & n8 (Pet.

App. 37e-38c).

MCI did not seek judicial review in the Third Cir-

cuit des, ite the fact that the interconnection orders

in question had been definitively construed in Bell of

Pennsylvania. Instead, MCI filed a petition in the

District of Columbia Circuit, purportedly seeking

compliance with the Ezecunet mandate. Even though

the Erecunet decision said nothing about intercon-

nection obligations, MCI’s motion sought an order

directing the FCC to require the Bell System to pro-

vide physical connections, so that MCT could use Bell

Svstem facilities to expand Execunet while the pub-

lie interest impact of such expansion was being con-

sidered by the FCC.

On April 14, 1978, the lower court granted MCI’s

motion.” In his ‘‘mandate’’ decision—to which this

certiorari petition is directed—Chief Judge Wright

admitted that the original ‘‘Erecunet decision is not

addressed explicitly to the interconnection issue or

to AT&T’s obligation to provide interconnection ... .”’

Slip op. 11 (Pet. App. 10a-1la). Nevertheless, based

on his disapproval of the Commission’s reasoning, he

granted MCI’s motion and summarily directed the

Commission to order physical connection for switched

publie message service. See Pet. App. 15a. The lower

® See Pet. App. la (opinion), 1d (order). The lower court sub-

sequently issued a memorandum denying a stay pending certiorari

which repeated various contentions made in its opinion granting

MCI’s mandate motion. See Pet. App. 1b.

11

court reached this result even though Section 201(a)

clearly reserves to the Commission the affirmative de-

cision to order interconnection based on findings that

such interconnection is ‘‘necessary or desirable in the

publie interest.”” 47 U.S.C. § 201(a).

In sum, this case is quite different from the orig-

inal Execunet decision. There, the issue was whether

Section 214 permitted the Commission to limit a car-

rier’s use of its own facilities, absent public interest

findings to support that limitation.’’ Here, the ques-

tion is whether a federal court has power, in light of

Section 201(a) of the Act, to mandate physical con-

nections between carriers where that function is ex-

plicitly reserved to the agency and the agency has

never made the public interest findings which are a

statutory prerequisite to such interconnection orders.

ARGUMENT

Certiorari is warranted in this case for two distinct

reasons. First, by requiring the Commission to order

interconnection, the decision below usurps the exer-

cise of an administrative power explicitly reserved by

Congress to the agency under Section 201(a). The

lower court’s assumption of the role of super-com-

mission conflicts directly with this Court’s admoni-

tions in recent cases, including Vermont Yankee Nu-

clear Power Corp. v. Natural Resources Defense Coun-

el, 98 S.Ct. 1197 (1978). The lower court’s attempt

to dictate the exercise of agency authority is directly

‘*In aceordance with Ezecunet, the Commission has begun a

proceeding to determine whether the public interest warrants the

provision of switched public message services on a competitive or

non-competitive basis, Notice of Inquiry and Proposed Rule Mak-

ing, FCC 78-144, March 3, 1978.

12

contrary to a decision of this Court involving a simi-

lar instance of asserted ‘‘mandate’’ construction. FCC

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

Second, the lower court’s order requires the FCC

to violate a prior, controlling mandate of the Third

Cireuit. The Third Cireuit, having acquired ‘‘exclu-

sive jurisdiction’? to review the FCC’s interconnec-

tion orders, construed them as limited to ‘‘private

line’ service and found that they would be overbroad

and unsustainable if not so limited. The D.C. Cireuit’s

conflicting construction of the same interconnection

obligations to extend them to switched public message

service invades the Third Circuit’s ‘‘exclusive juris-

diction’? under the Hobbs Act and the finality ac-

corded by that statute to the Third Circuit’s prior

adjudication. See City of Tacoma v. Taxpayers of

Tacoma, 357 U.S. 320 (1958).

I. The Lower Court Has Usurped the Commission's Statutory

Power To Order Interconnection and Ignored Congress’

Requirement of Public Interest Findings by the FCC.

In Section 201(a), Congress confided to the Com-

mission the power to require physical connections be-

tween carriers to the extent ordered by the agency.

The carrier, prior to being ordered to interconnect,

must be afforded a hearing. 47 U.S.C. § 201(a). Any in-

terconnection order itself must be supported by find-

ings showing that the interconnection is ‘‘necessary

or desirable in the public interest.” Jd. Such public

interest findings, which only the FCC can make, are

a ‘‘eondition precedent’’ to imposition of any inter-

connection obligation. Bell Telephone Company of

Pennsylvania v. FCC, supra, 503 F.2d at 1270 (Pet.

App. 35g).

13

The Commission has never ordered interconnection

for switched public message service or made any pub-

lic interest findings to support such interconnection.

Certainly no such order was issued in the Specialized

Carrier case: the lower court’s own Execunet decision

explicitly held that the Specialized Carrier decision

had not even purported to decide whether switched

public message competition would be in the publie

interest." Absent such a threshold determination, the

Commission could not and did not consider whether

interconnections should be ordered to assist special-

ized carriers to provide switched public message ser-

vice.

Similarly, in Bell System Tariff Offerings, the

Commission’s interconnection orders were expressly

designed to assure full and fair competition in the

provision of ‘‘private line’’ service. 46 F.C.C.2d at

426. The Commission, supported by MCI, so con-

strued its interconnection order on direct review in

the Third Circuit. See p. 6, above. The Third Cir-

cuit similarly construed the order as limited to inter-

connection elements of ‘‘private line service.”? 503

F.2d at 1273-74 (Pet. App. 42g). Even without these

prior constructions, the Commission’s consistent read-

ing of its own order would, under decisions of this

Court, be entitled to controlling weight.”

"The Execunet decision specifically emphasized that the court

was not attempting to decide ‘‘whether competition like that posed

by Execunet is in the public interest,’’ and said that ‘‘ [t]hat will

be the question for the Commission to decide’’ on remand. 561 F.2d

at 380 (Pet. App. 230i).

'* Udall v. Tallman, 380 U.S. 1, 16-17 (1965) ; Immigration and

Naturalization Service v. Stanisic, 395 U.S, 62, 72 (1969) ; Bowles

v. Seminole Rock & Sand Co., 325 U.S. 410, 414 (1945).

14

The lower court’s error, however, goes far beyond

an unjustified reversal of the Commission. What the

lower court did in granting MCI’s petition was to

direct the Commission to order the interconnection

facilities sought by MCI. This affirmative require-

ment of interconnection, summarily imposed by the

court over the Commission’s objection, is a complete

reversal of proper roles and constitutes the usurpa-

tion of administrative power repeatedly condemned

by this Court. The authority to review an agency or-

der ‘‘is not power to exercise an essentially admin-

istrative function.” FPC v. Idaho Power Co., 344

U.S. 17, 21 (1952).”

As the Idaho Power decision makes clear, 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.”

344 U.S. at 20. Even if the Commission’s reasoning

in this case were inconsistent with the lower court’s

reasoning in a prior decision—which it is not *“—a

°° This judicially imposed interconnection requirement also vio-

lates the rights of the obligated carriers under Section 201(a),

since—-as the Commission itself admitted—it has never made the

publie interest findings on which a valid interconnection order for

Execeunct would have to rest. See MO&O, para. 60 (Pet. App. 36c).

“The lower court held in Ezecunet that the lack of a public

interest determination for or against Execunet-type competition

prevented the FCC from imposing a valid condition limiting MCI’s

service authority under Section 214. But the lack of such an affirm-

ative determination equally precludes imposing an interconnection

obligation on another carrier to provide Execunet interconnections.

The Commission’s position in this ease is thus completely consistent

with the reasoning of the original Execunet decision, It is the lower

court that has now disregarded its own prior reasoning and deter-

minations.

15

properly constituted reviewing court can do no more

than to reverse and remand the matter so that the

agency can reconsider the matter free of its original

error.” What the reviewing court cannot do is to tell

the Commission how ultimately it must resolve a

question of public policy, as the lower court did here,

or to require the agency, as the lower court did here,

to order a specific class of interconnections.

The lower court’s reliance upon its Zrecunet man-

date is fanciful. The interconnection issue was not

decided by the Commission in rejecting MCI’s Execu-

net tariff; it was not raised by MCI in its review pe-

tition; and it was not briefed by the parties in the

lower court in Execunet itself. The original Execunet

decision contains no mention of interconnection ex-

cept to distinguish Bell of Pennsylvania as involving

‘fa very different issue’’ (561 F.2d at 378 n.59 (Pet.

App. 25i)), and the lower court has admitted that the

‘*Hxecunet decision is not addressed explicitly to the

interconnection issue or to AT&T’s obligation to pro-

vide interconnecton ....’’ Slip op. 11 (Pet. App. 10a-

lla). Since the Ezecunet decision did not address

the interconnection issue, the mandate necessarily

The principle of Jdaho Power has been underscored by this

Court’s action in summarily reversing lower courts which have

disregarded the principle and sought to dictate the outcome of

ageney proceedings. See, e.g., South Prairie Construction Co. v.

Local No. 627, Int’l Union of Operating Engineers, 425 U.S, 800,

805-06 (1976); United States v. Saskatchewan Minerals, 385 U.S.

94 (1966); Arrow Transp. Co. v. Cincinnati, N.O. & T.P. Ry., 379

U.S. 642 (1965).

*3 Indeed, the Fxrecunet case had nothing whatever to do with

Bell System facilities or obligations. As examination of the decision

readily confirms, the decision was concerned solely with MCI’s

facilities and the existence of conditions limiting their use.

16

‘left the matter open for consideration’’ on remand

and its subsequent resolution by the agency could not

violate the mandate. Perkins v. Standard Oil Co., 399

U.S. 222, 223 (1970).

Whatever hidden meaning may be attributed to the

Execunet mandate, the decisive point is that the lower

court lacked power to dictate the exercise of an ad-

ministrative function. FCC v. Pottsville Broadcasting

Co., 309 U.S. 134 (1940). In Pottsville, as here, the

lower court purported to construe its own prior man-

date to require affirmative action by the agency in a

matter committed to the agency—there, to grant a

broadcast license to an applicant. In reversing, this

Court held that however the lower court might choose

to read its earlier mandate, the power to grant li-

censes (under Sections 308-09) was entrusted to the

Commission and not to the cireuit court. 309 U.S. at

141-46. The reasoning and holding of Pottsville ap-

ply with equal force to the FCC’s power to order

interconnection under Section 201(a).

Only recently this Court in Vermont Yankee re-

minded the lower court against procedural decisions

that ‘“‘unjustifiably intrude[ ] into the administrative

process’’ based on policy preferences of the review-

ing court.* Yet it should be equally plain that review-

ing courts must also respect agency power to decide

substantive policy questions, which lie at the very

core of agency expertise and authority. Vermont Yan-

kee itself pointed in this direction when it warned

24 Vermont Yankee Nuclear Power Corp. v. Natural Resources

Defense Council, 98 S.Ct, 1197, 1218 (1978). See also FCC v.

National Citizens Committee for Broadcasting, 98 S.Ct, 2096, 2111

n.15 (1978).

ee ee 2 ee

ee Se ee eee

woe es

17

against procedural requirements which, ‘“‘under the

guise of judicial review,” undercut the policy determi-

nations made by Congress. 98 S.Ct. at 1219.

In Section 201(a), Congress determined to entrust to

the Commission the power to decide whether and to

what extent interconnection should be ordered. When,

as here, a lower court summarily tells the Commission

that it must order interconnection for switched public

message service, the lesson of Vermont Yankee has

not been understood. This case presents the oppor-

tunity for this Court to determine and emphasize that

Vermont Yankee applies with equal force to substan-

tive issues entrusted by Congress to agency resolu-

tion.

II. The Lower Court's Decision Directly Conflicts With the Decision

of the Third Circuit and Invades the Latter Court's “Exclusive

Jurisdiction” Under the Hobbs Act.

In 1974, the Bell System petitioned the Third Cir-

cuit under the Hobbs Act, 28 U.S.C. §§ 2341-50, to re-

view the Commission’s interconnection orders. Re-

sponding to the Bell System’s charge that the inter-

connection orders were unduly vague and overbroad,

the Third Circuit found that the history and purpose

of the interconnection orders gave them ‘‘a definite

meaning’’ far short of an obligation to interconnect

for switched public message services:

‘‘As we read the [Bell System Tariff Offerings]

order, the FCC has required AT&T to provide

to the specialized carriers those (interconnection)

elements of private line service which AT&T sup-

plies to its affiliates and furnishes to customers

through its Long Lines Department.’’ 503 F.2d

at 1273-74 (Pet. App. 42g) (emphasis added).

18

This delineation of the interconnection obligation,

limiting it to ‘‘private line’’ service, was a holding

relied on by the Third Circuit to rescue the orders

from charges of vagueness and overbreadth.” The

holding was consistent with, and supported by, the

representations of the Commission, the Department

of Justice, and the specialized carriers. See MO&O

paras. 48-49. (Pet. App. 28¢c-29¢). Since the Commis-

sion has never issued any subsequent Section 201(a)

order to the Bell System, the Third Circuit’s decision

definitively establishes the scope of the Bell System’s

existing interconnection obligations.

The lower court in this case lacked the power under

the Hobbs Act to disregard the Third Circuit’s deci-

sion and extend the Bell System’s interconnection

obligations to a service found by the Commission to

be equivalent to ordinary long distance service.” Once

the original Bell System petition for review and the

record were filed in the Third Circuit, the Hobbs Act

conferred on that court ‘‘exclusive jurisdiction’’ over

the orders, and the court’s determinations were

‘final’? under the statute. 28 U.S.C. §§ 2349, 2350.

Construing a parallel statute, this Court clearly held

*5 Elsewhere in the opinion the Third Cireuit characterized the

orders as ones that require the Bell System ‘‘to furnish to MCI

.. . the interconnection facilities necessary to provide private line

services.’’ 503 F.2d at 1254 (Pet. App. 2g) (footnote omitted)

(emphasis added).

>The lower court never questioned the FCC’s holding that

Execunet is plainly a switched publie message service equivalent

to ordinary long distanee service. See slip op. 20 (Pet. App. 19a).

That FCC determination is both within the seope of the agency’s

expertise (/nterstate Broadcasting Co. v. FCC, 265 I°.2d 598 (D.C.

Cir. 1959)) and is clearly supported by cogent reasoning and

determinations, 60 F.C.C.2d at 43-44.

19

that such judicial review provisions create a ‘‘specific,

complete and exclusive mode for judicial review”

and the resulting decision precludes any ‘‘collateral

attack upon, and de novo litigation between the same

parties of issues determined by, the final judgment”

of the initial reviewing court. City of Tacoma v. Taz-

payers of Tacoma, 357 U.S. 320, 336, 341 (1958).”

The ‘‘exclusive jurisdiction’’ provision of the Hobbs

Act is designed to avoid conflicts by channeling pro-

ceedings to review individual FCC orders into a sin-

gle court of appeals with authority to issue a ‘‘final”

determination. When the lower court disregarded the

determination on interconnection obligations reached

previously by the Third Circuit, it not only conflicted

with the Third Circuit but also violated the ‘‘exclu-

sive jurisdiction’’ and finality provisions of the stat-

ute. Certiorari is warranted to assure compliance

with an important jurisdictional statute allocating

authority among reviewing courts.

Moreover, there is a direct conflict between the Third

Circuit and the District of Columbia Circuit. The Com-

mission issued interconnection orders in 1973 and, on

direct review, the Third Circuit held them to be lim-

2? The review statute involved in Tacoma is a counterpart to the

Hobbs Act. Compare Section 313(b) of the Federal Power Act, 16

U.S.C. § 8251(b) (quoted in 357 U.S. at 335), with 28 U.S.C.

§§ 2349, 2350.

*® Under the ‘‘exclusive jurisdiction’’ provision, the D.C. Cireuit

clearly could not have acted on the interconnection orders after the

record was filed in the Third Circuit and while the case was await-

ing decision. 28 U.S.C. § 2349. Clearly, the Third Circuit’s exclusive

authority is, if anything, even greater once it has reached a ‘‘final’’

decision.

20

ited to ‘‘private line’’ service and therefore valid in

the face of charges of vagueness and overbreadth. See

p. 17, above. In direct conflict, the District of Co-

lumbia Circuit his now said that Bell System intercon-

nection obligations, which arise out of the same orders

construed by the Third Circuit, extend to a service

found by the Commission to be a public switched mes-

sage service and not a private line service. Slip op. 2-3

(Pet. App. 2a). The agency and the telephone industry

eannot obey both circuit courts, and they deserve a

definitive resolution of the conflict by this Court.

The decisions create not merely a conflict but a log-

ical impossibility. The Third Circuit made clear that

it would have accepted the Bell System’s overbreadth

argument if the Commission interconnection orders

extended beyond private line service. 503 F.2d at 1273

(Pet. App. 42g). The District of Columbia Circuit has

now declared that the Bell System is required to pro-

vide interconnection for service that is not private

line. The District of Columbia Circuit’s determina-

tion would therefore render the interconnection orders

themselves invalid under the Third Circuit’s decision,

and MCI would be entitled to no interconnection

whatever. Such an anomoly virtually requires that

one tribunal consider the entire controversy at one

time, and confirms the wisdom of both the ‘‘exclusive

jurisdiction’? provision of the Hobbs Act and this

Court’s City of Tacoma decision.

The lower court’s attempts to distinguish the prior

Third Circuit decision actually underscore the exist-

ence of a direct conflict. First, the lower court asserts

that the Third Circuit was only required to determine

whether the interconnection orders reached the two

services initially involved in Bell of Pennsylvania, and

21

therefore—it claims—the question whether the orders

reached Execunet remained open. Slip op. 17-19 (Pet.

App. 15a-19a). However, in order to sustain the inter-

connection orders against charges of overbreadth the

Third Cireuit had to, and did in fact, construe those

orders as confined solely to private line service (503

F.2d at 1273-74 (Pet. App. 42g); and the Commission

has ruled definitively that Execunet is not a private

line service.

Secondly, the lower court suggests that the Com-

mission recognized more recently that interconnection

obligations are not necessarily limited to conventional

private line services, but extend to all ‘‘specialized’’

interstate services. Slip op. 21 (Pet. App. 20a). Even

if this were so, the Commission has explicitly ruled

that Execunet is the equivalent of ordinary long dis-

tance service. Whatever scope may be given to terms

like ‘‘private line’’ and ‘‘specialized’”’ service, the

Commission has consistently ruled that these con-

cepts do not embrace services, such as Execunet, that

are merely replicas of ordinary long distance service.”

The very existence of this direct conflict between

the circuits reaffirms the need for a determination

by this Court on the fundamental issue posed under

the Hobbs Act. By ignoring the exclusivity and fi-

nality provisions of that statute, the lower court has

reached a determination on the scope of FCC orders

contrary to that earlier reached by another court of

*°It is difficult to conceive of any service less ‘‘private’’ or

““specialized’’ than one that duplicates the essential capabilities of

ordinary long distance service. In any case, the FCC’s determina-

tion that Execunet is not a private or specialized service represents

a@ construction by the Commission of its own technical nomen-

celature.

22

appeals, in litigation between the same parties, con-

cerning precisely the same FCC orders. If the plan

of judicial review ordained by Congress in the Hobbs

Act is to function—and the agency and parties are

to be protected against conflicting mandates—then the

statutory question of jurisdictional priority posed by

this case must be resolved by this Court.

CONCLUSION

For the foregoing reasons, the writ of certiorari

should be granted.

Respectfully submitted,

Of Counsel: Micuae. Boupin

F. Mark GarLINGHOUSE Pauw J. Denman

apscive 888 Sixteenth Street, N.W.

Arrep C. Partoui ;

195 Broadway Washington, D.C. 20006

New York, N.Y. 10007 Burton K. Katkin

ALFRED WINCHELL WHITTAKER

195 Broadway

New York, New York 10007

Attorneys for American

Telephone and

Telegraph Company

August 1978