Amicus Curiae Brief — Public Service Commission of Maryland v. Chesapeake and Potomac Telephone Company of Maryland

@

OCTOBER TERM, 1985

‘3

Supreme Court, U.S,

FILED

oct © 198s

pens Ze 7 No, 84-1362

TOL i

In the Supreme Court of the Untied States—

PUBLIC SERVICE COMMISSION OF MARYLAND, PETITIONER

Vv.

CHESAPEAKE AND POTOMAC TELEPHONE

COMPANY OF MARYLAND

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT

BRIEF FOR THE FEDERAL COMMUNICATIONS

COMMISSION AS AMICUS CURIAE

SUPPORTING RESPONDENT

CHARLES FRIED

Acting Solicitor General

LAWRENCE G. WALLACE

Deputy Solicitor General €

CHRISTOPHER J. WRIGHT

Assistant to the Solicitor General

- Department of Justice |

Washington, D.C. 20530

(202) 638-2217

: BEST AVAILABLE COPY

QUESTIONS PRESENTED

1. Whether a state regulatory commission or its in-

dividual members are “persons” under 47 U.S.C. 401(b),

which provides for enforcement of orders of the Federal

Communcations Commission against “any person.”

2. Whether an order issued by the Federal Communi-

cations Commission declaring that state regulatory com-

missions may not require telephone companies to use

depreciation methods other than those prescribed by the

FCC is an “order” under 47 U.S.C. 401(b), which pro-

vides for enforcement of “any order of the Commission,

other than for the payment of money.”

(I)

~

TABLE OF CONTENTS

Page

Interest of the Federal Communications Commission...... 1

EG i A ce 1

Introduction and summary of argument _........................ 7

I. State utility commissions and their individual

members are “persons” subject to enforcement

proceedings under Section 401(b) of the Com-

EET SD a oR 9

A. The definition of “person” clearly includes

individual commissioners and does not ex-

clude state commissions .................000..... eee 10

B. The legislative structure and context support

the conclusion that state commissions and

their members are “persons” under Section

LSS TE 14

II. The FCC’s Preemption Order is enforceable un-

Er 18

A. The plain meaning and legislative context of

Section 401(b, show that rulemaking orders

are enforceable under that Section ................ 19

B. Effective implementation of the Act is en-

hanced by enforceability of rulemaking or-

ders under Section 401 (b).......-..--0002-.- 24

RE ESS 28

TABLE OF AUTHORITIES

Cases:

Ambassador, Inc. v. United States, 325 U.S. 317.... 19

Amendment of Part 31, Property Depreciation, In

re, 83 F.C.C.2d 967, reconsideration denied, 87

ES RE 3

Amendment of Part 31, Uniform System of Ac-

counts, In re:

es usepnencnnepece 3

a nsenananesitansapenes 4

a csesennesoenenegnoved passim

IV

Cases—Continued : Page

American Telephone & Telegraph Co. v. United

Bae: TP Ty Ta caress ctttintenntitesttninnineceininninenien 3, 20-21

American Tobacco Co. Vv. Patterson, 456 U.S. 63.... 10

Atascadero State Hospital v. Scanlon, No. 84-351

Camm GR, TID eecacintettisienisteepenicinicnnestiniiasnntensansnincenaece 11

Atlantic Cleaners & Dyers, Inc. v. United States,

fc jx on 21

Bob Jones University v. United States, 461 U.S.

TITIES | icciencneinimicnndsiestatiéshecneniniasiaitntiiinenciantiatdiabiminahiitiainiaaitaatins 21

Brookhaven Cable TV, Inc. v. Kelly, 428 F. Supp.

1216, aff’d, 573 F.2d 765, cert. denied, 441 U.S.

Sh PE ne ESC: Ce ASE el ne 20

Columbia Broadcasting System, Inc. v. United

Botan, GOB TAG. GG iscerceciicvtncinivecenssnnniinciiinn 15, 20, 21, 22

Computer & Communications Industry Association

v. FCC, 693 F.2d 198, cert. denied, 461 U.S. 938.. 16

Comtronics, Inc. v. Puerto Rico Telephone Co., 409

F. Supp. 800, aff’d, 553 F.2d 701 ....................-.... 20

FCC v. Sanders Brothers Radio Station, 309 U.S.

GO. ccsecniesoncinsnenitenehieatepndidaiednschendieiads Miaaiamaaasinaitimeniteagen 25

Farmers’ Loan & Trust Co. V Northern Pac. Ry,.,

§ -&RREEREL ones SOR ERLE VR 22

Georgia V. Evans, 316 U.S. 159 ....................------------ 13

Illinois Bell Telephone Co. v. Illinois Commerce

Commission, 740 F.2d 566 .........................--..-------- 6

Illinois Cent. R.R. v. Public Utilities Commission,

OR Te GE aincdicessecconcctiadstessinneiibiictinsininenidiebansiicnaiaain 22, 23

Kentucky v. Graham, No. 84-849 (June 28, 1985) .. 10

Kosak v. United States, No. 82-618 (Mar. 21,

RE ELS aS Eee 10

Kroeger v. Stahl, 148 F. Supp. 403, aff’d, 248 F.2d

| ee ee ee ee Se ee Seen enya eS e m 20

MCI Communications Corp. V. AT&T, 496 F.2d

| ee CR ae OEE eee: Sew 26

McFaddin Express, Inc. v. Adley Corp., 346 F.2d

424, cert. denied, 382 U.S. 1026 ............................ 22

Mountain States Telephone & Telegraph Co. V.

Montana Department of Public Service Regula-

0 2) A OE eee 6, 10

National Association of Regulatory Utility Com-

missioners V. FCC, 583 F.2d 601.......................---- 16

Vv

Cases—Continued : Page

National Broadcasting Co. v. United States, 319

RO EEA a See cent Seni ae 7-8

New England Telephone & Telegraph Co. v. Pub-

lic Service Board, 576 F. Supp. 490, vacated as

moot, No. 84-7051 (2d Cir. Dec. 5, 1984) .......... 6, 10

New England Telephone & Telegraph Co. v. Public

Utilities Commission, 579 F. Supp. 1356... 18

New England Telephone & Teleyraph Co. v. Public

Utilities Commission, 570 F. Supp. 1558, rev'd,

742 F.2d 1, petition for cert. pending, No. 84-

REST Se oC SC ee RN ‘.6, 10, 12, 18, 19

F.2d 1036, cert. denied, 484 U.S. 874... 15-16

North Carolina Utilities Commission v. FCC, 537

F.2d 787, cert. denied, 429 U.S. 1027... 15, 21

Northwestern Bell Telephone Co. v. Iowa State

Commerce Commission, No. 83-688-A (S.D. Iowa

SSS RISESS A ara 6

Ohio v. Helvering, 292 U.S. 360... 13

Pacific Fruit Express Co. v. Akron, C. & Y.R.R.,

524 F.2d 1025, cert. denied, 424 U.S.911 23

Pacific Northwest Bell Telephone Co. v. Washing-

ton Utilities & Transportation Commission, 565

F. Supp. 17, appeal pending, No. 83-3746 (9th

8 EER RSE gS ES ee 6,19

Pfizer, Inc. v. India, 484 U.S. 308... 11,12

Phelps Dodge Corp. v. NLRB, 313 U.S. 177... 11, 24

Prescription of Revised Percentages of Deprecia-

tion, In re, 92 F.C.C.2d 693... 2, 4, 5, 22

Quern Vv. Jordan, 440 U.S. 382... ss 11

Richards v. United States, 369 U.S.1..... ss 10

Scheuer v. Rhodes, 416 U.S. 232... oS ae 10

SEC v. Chenery Corp., 3832 U.S.194.... ss 26

South Central Bell Telephone Co. v. Louisiana Pub-

lic Service Commission, 570 F. Supp. 227, aff'd,

744 F.2d 1107, appeal pending, No. 84-870... 6, 10, 17,

18, 19, 20, 21, 23, 26

Southwestern Bell Telephone Co. v. Arkansas Pub-

lic Service Commission, 738 F.2d 901, reversing,

584 F. Supp. 1087, petition for cert. pending,

ELSI NER ED m 6,17

VI

Cases—Continued : Page

Southwestern Bell Telephone Co. v. State Corpora-

tion Commission, No. 83-4090, appeal pending,

I Ee 6

Transamerica Mortgage Advisors, Inc. Vv. Lewis,

I a ebiuiisiainegnenns 17

United States v. City of Jackson, 318 F.2d 1............ 23

United States v. Mississippi, 380 U.S. 128 ................ 11

Virginia State Corporation Commission v. FCC,

b. ¢ =e 5

Wisconsin Bell, Inc. v. Public Service Commission,

No. 84-C-4 (E.D. Wisc. Nov. 138, 1984), appeal

pending, No. 84-3110 (7th Cir.) ~.................---.-.- 6

Young, Ex parte, 209 U.S. 128.............----.---.----00---0+- 10, 11

Constitution, statutes, regulation and rule:

ie rer 11

Administrative Procedure Act, 5 U.S.C. 551 et seq.:

ee 23

0 22

IT ss rnieateremeciinaneimainntinnamanenmuates 24

Communications Act of 1934, 47 U.S.C. 151 et seq.:

3 ee 8

Pog kt MY Sone 12, 23

| 8, 9-10, 11, 12

I recede cetcesinrntenensenierennsinnnsinntebiinies 12

' f |. | Sees ern 8, 25

4 cn 13

csc scheipesmninstenbeensesisneibsibneaitinn 3

IE EE 8, 4, 16

47 U.S.C. 220(j) ante me 16

I iirtnceicecensccentessncnnnterrenticteninennatanine 13

I occ dita pcccercciqainiiccinintinaptnnedosnenstin 3

0 slbncbibiaeindieesatibatas 14

47 U.S.C. 308a(e)....................... a cctledilindinttatmsshidint 12

6 ee 8, 9, 15, 19

Br I oosoicccccvccevessncevenrsncetioninseseconibenioel 8, 20, 24

rg NEES passim

a. snssnicschannsintnnesienwennnicinasdisiny 7, 9, 20, 21

AT U.S.C. 402 (8)......-..-2220-----2-0---crenesecenersoreseeessees 5, 16, 22

VII

States, regulation and rule—Continued : Page

i A ile 5, 14, 16

A eM” 8, 25, 26

TE A 8, 24

EE 5, 15, 22

ee el 19

ae 8, 24

i 3

AN ee 17, 27

15

a A 8

A ee a ee 8

i eee 8, 24

Interstate Commerce Act, 49 U.S.C. (1976 ed.)

SEGA es 14, 22, 23

Johnson Act, 28 U.S.C. 1342... 17

SE a 5

TE RN ee 5

EE ETA Ce 5

Tee Diaiiicened, 22

I i 5

Miscellaneous:

H.R. Rep. 1850, 73d Cong., 2d Sess. (1934)... 7

RE

\ ayes

a Py

a ee a

oo

‘ae

aiianond

eA

?.

In the Supreme Court of the United States

OCTOBER TERM, 1985

No. 84-1362

PUBLIC SERVICE COMMISSION OF MARYLAND, PETITIONER

v.

CHESAPEAKE AND POTOMAC TELEPHONE

COMPANY OF MARYLAND

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT

BRIEF FOR THE FEDERAL COMMUNICATIONS

COMMISSION AS AMICUS CURIAE

SUPPORTING RESPONDENT

INTEREST OF THE FEDERAL

COMMUNICATIONS COMMISSION

Orders of the Federal Communications Commission are

subject to enforcement in federal district courts pursuant

to 47 U.S.C. 401(b). Petitioner seeks (1) to limit the

“persons” against whom enforcement may be had to ex-

clude state regulatory commissions and their members

and (2) to limit the “orders” that may be enforced to

exclude rulemaking orders. In the FCC’s view, accept-

ance of either of petitioner’s contentions would interfere

with effective enforcement of its actions.

STATEMENT

The FCC regularly prescribes depreciation rates spe-

cifically for respondent, the Chesapeake and Potomac

Telephone Company of Maryland (C&P). In 1983, the

(1)

2

FCC deciared, in its “Preemption Order’ (In re Amend-

ment of Part 31, Uniform System of Accounts, 92 F.C.C.

2d 864; J.A. 17-49), that state regulatory commissions

could not order telephone companies to use depreciation

methods contrary to those prescribed by the FCC. At the

same time, the FCC ruled, in a proceeding involving de-

preciation rates for C&P, that FCC depreciation orders

are binding at both federal and state levels. In re Pre-

scription of Revised Percentages of Depreciation, 92

F.C.C.2d 693, 700 (1982). Petitioner, the Public Serv-

ice Commission of Maryland, nevertheless refused to per-

mit C&P to follow the depreciation rates prescribed by

the FCC in state ratemaking proceedings. C&P then

filed an enforcement action in the United States District

Court for the District of Maryland, pursuant to 47

U.S.C. 401(b), asking that Court to compel the Mary-

land commission to permit C&P to use the depreciation

methods and rates prescribed by the FCC.’ The district

court issued a preliminary injunction requiring the

Maryland commission to follow the FCC’s orders (Pet.

App. lla-23a). The Fourth Circuit affirmed (Pet. App.

ta-]0a).

1. Most telephone companies are subject to regula-

tion by both state and federal authorities. State com-

missions regulate intrastate services, while the FCC over-

1 Section 401 (b) provides:

If any person fails or neglects to obey any order of the Com-

mission other than for the payment of money, while the same

is in effect, the Commission or any party injured thereby, or

the United States, by its Attorney General, may apply to the

appropriate district court of the United States for the enforce-

ment of such order. If, after hearing, that court determines

that the order was regularly made and duly served, and that

the person is in disobedience of the same, the court shall en-

force obedience to such order by a writ of injunction or other

proper process, mandatory or otherwise, to restrain such per-

son or the officers, agents, or representatives of such person,

from further disobedience of such order, or to enjoin upon it

or them obedience to the same.

3 °

sees interstate services. The commissions, both state and

federal, base their rate regulation in part on the costs

of facilities used to provide service within their respec-

tive jurisdictions.2 Telephone companies are therefore

subject to accounting rules and depreciation requirements

that are essential to the performance of the regulatory

agencies’ ratemaking functions. Those rules, in turn, af-

fect the telephone companies’ ability to modernize their

facilities.

The Communications Act of 1934 gives the FCC au-

thority to establish a uniform system of accounts for

common carriers and to prescribe rules to govern the

depreciation of common carrier facilities. 47 U.S.C. 220;

see American Telephone & Telegraph Co. v. United States,

299 U.S. 232 (1936). Section 220(b) states that car-

riers “shall not” use any depreciation procedures other

than those prescribed by the FCC. In 1980 and 1981,

the FCC adopted two substantive orders changing its

regulations that govern the depreciation of certain tele-

phone company plant.’ It concluded that the prior prac-

? The costs of facilities, most of which are used interchangeably

for intrastate and interstate calls, are divided among the juris-

dictions in accordance with procedures established by the FCC in

cooperation with the state commissions. 47 U.S.C. 221(c), 410(c).

%In the first of the orders, the Commission accepted the use of

“equal life group” and “remaining life” depreciation methods as

a means of conforming the regulatory treatment of plant deprecia-

tion more closely to the actual decline in value and eventual

retirement of that plant. Jn re Amendment of Part 31, Property

Depreciation, 83 F.C.C.2d 267 (1980), reconsideration denied, 87

F.C.C.2d 916 (1981). In the second order, the FCC decided that

it no longer would treat expenditures for “inside wiring” of resi-

dences and businesses as a capital investment subject to inclusion

in the rate base and to depreciation. Instead, it would treat those

costs as current expenses that the carrier would recover as part

of its revenue requirement in the year in which they were incurred.

In re Amendment of Part 31, Uniform System of Accounts, 85

F.C.C.2d 818 (1981).

4

tices had_led to out-of-phase capital recovery and mis-

allocation of costs, which conflicted with the FCC’s policy

of encouraging competition, and that they otherwise were

inconsistent with the public interest.

At the request of state commissions and telephone com-

panies, the FCC then considered whether its deprecia-

tion decisions preempted inconsistent depreciation prac-

tices in state ratemaking proceedings. After first decid-

ing that state commissions were not preempted (Jn re

Amendment of Part 31, Uniform System of Accourts,

89 F.C.C.2d 1094 (1982)), the FCC unanimously deter-

mined on reconsideration that state commissions must

conform to the FCC’s recent depreciation decisions if the

purposes of those decisions were not to be frustrated

(J.A. 17-49). The FCC also determined in its Preemp-

tion Order that Section 220(b) as a matter of law ousted

the states from any role in setting depreciation rates for

telephone equipment that is used in part for interstate

services unless the FCC expressly has authorized such a

role (J.A. 40). The FCC concluded that “inconsistent

state prescribed depreciation rates are preempted by the

Communications Act and are accordingly void” (J.A.

39). The FCC gave general notice of its Preemption

Order to carriers and to the public by publication in the

Federal Register (J.A. 41). It gave particular notice

to each of the state commissions by serving copies of the

order on them (ibid.).

The FCC prescribed new depreciation rates specifically

for C&P in December 1982 after a proceeding in which

the Maryland commission was an active participant. Jn

re Prescription of Revised Percentages of Depreciation,

92 F.C.C.2d at 697, 698-699. The Commission made this

prescription only after (1) reviewing the carrier’s fil-

ings; (2) making its own independent analysis and rec-

ommendations; and (3) receiving and considering com-

ment from representatives of C&P and the Maryland

commission. Jd. at 696. In its order, which was adopted

the same day as the Preemption Order, the FCC reiter-

5

ated its ruling that federal depreciation orders “are bind-

ing at both the federal and state levels” (id. at 700).

2. A decision of the FCC, such as the Preemption

Order or an order prescribing depreciation rates for

C&P, is subject to agency reconsideration and to judicial

review, at the instance of any person aggrieved by the

decision, in the federal courts of appeals. 47 U.S.C. 405,

402 (a) ; 28 U.S.C. 2342(1). The court of appeals for the

circuit in which petition for review is filed has “exclusive

jurisdiction to make and enter * * * a judgment deter-

mining the validity of * * * the order of tie agency.”

28 U.S.C. 2349(a). The court of appeals may stay or

enjoin the operation of the FCC’s order pending judicial

review, on a proper showing. 28 U.S.C. 2349(b): Fed.

. App. P. 18. Under the Communications Act, FCC

erders remain in force until the FCC or “a court of

competent jurisdiction” issues a superseding order. 47

U.S.C. 408.

The Maryland commission did not seek review of the

FCC order prescribing depreciation rates for C&P. The

Virginia State Corporation Commission filed a petition

for review of the Preemption Order in the Fourth Cir-

cuit. The Maryland commission did not intervene or par-

ticipate in that review proceeding, although more than

twenty other state commissions did. No party sought a

stay of the FCC’s order in that court. The Fourth Cir-

cuit affirmed the Preemption Order in June 1984. Vir-

ginia State Corporation Commission v. FCC, 737 F.2d

388. This Court has agreed to review the Fourth Cir-

cuit’s affirmance of the Preemption Order and will hear

oral argument in that case in tandem with this case.

See Louisiana Public Service Commission v. FCC, No.

84-871.

8. This case arose in February 1983 when the Mary-

land commission refused to permit C&P to use the de-

preciation rates prescribed by the FCC in calculating

6

intrastate rates. C&P had argued on the basis of the

Preemption Order that it was required to use the de-

preciation rates set by the FCC. The Maryland com-

mission concluded that the FCC lacked authority to pre-

empt and it refused to permit C&P to calculate its rates

in accordance with the FCC’s depreciation prescription

(J.A. 62-70).

C&P filed a complaint in the United States District

Court for the District of Maryland, pursuant to Section

401(b), seeking an injunction directing the Maryland

commission to permit the company to use the rates pre-

scribed by the FCC. As several other courts had done

in similar cases,* the district court issued the injunc-

tion, requiring the Maryland commission “to abide by

the FCC’s [Preemption] Order regarding depreciation

rates” (Pet. App. 12a).

The Fourth Circuit unanimously affirmed (Pet. App.

la-10a), specifically rejecting the two arguments that

4E.g., Wisconsin Bell, Inc. v. Public Service Commission, No.

84-C-4 (E.D. Wis. Nov. 13, 1984), appeal pending, No. 84-3110

(7th Cir.); Northwestern Bell Telephone Co. v. Iowa State Com-

merce Commission, No. 83-688-A (S.D. Iowa Sept. 27, 1984) ;

Mountain States Telephone & Telegraph Co. v. Department of

Public Service Regulation, 588 F. Supp. 5 (D. Mont. 1983); New

England Telephone & Telegraph Co. v. Public Utilities Commission,

570 F. Supp. 1558 (D. Me. 1983), rev’d, 742 F.2d 1 (1st Cir.

1984), petition for cert. pending, No. 84-900; South Central Bell

Telephone Co. v. Louisiana Public Service Commission, 570 F. Supp.

227 (M.D. La. 1988), aff’d, 744 F.2d 1107 (5th Cir. 1984), appeal

pending, No. 84-870; Southwestern Bell Telephone Co. v. State

Corporation Commission, No. 838-4090 (D. Kan. Apr. 8, 1983),

appeal pending, No. 84-2295 (10th Cir.); Pacific Northwest Bell

Telephone Co. v. Washington Utilities & Transportation Commis-

sion, 565 F. Supp. 17 (W.D. Wash. 1983), appeal pending, No. 83-

3746 (9th Cir.). See also Southwestern Bell Telephone Co. Vv.

Arkansas Public Service Commission, 738 F.2d 901 (8th Cir.),

rev’g, 584 F. Supp. 1087 (D. Ark. 1984), petition for cert. pending,

No. 84-488. Contra New England Telephone & Telegraph Co. Vv.

Public Service Board, 576 F. Supp. 4% (D. Vt. 1983), vacated as

moot, No. 84-7051 (2d Cir. Dec. 5, 1984). Cf. Illinois Bell Telephone

Co. v. Illinois Commerce Commission, 740 F.2d 566 (7th Cir. 1984).

7

the Maryland commission presses in this Court. The

court of appeals first rejected the Maryland commission’s

argument that the defendants named by C&P are not

persons within the meaning of Section 401(b). The

court stated that the argument “is without merit be-

cause C&P’s suit for preliminary injunction named not

only [the Maryland commission] but also the officials

comprising [the Maryland commission] as defendants.

Thus, even if [the Maryland commission] is not a ‘per-

son’ within the meaning of Section 401(b), [the Mary-

land commission]’s officials are expressly covered by that

section” (Pet. App. 4a). The court also stated that “[the

Maryland commission] must be considered a ‘person’

within the meaning of Section 401(b)” because a “con-

trary interpretation would undermine the Federal Com-

munications Act by rendering [the Maryland commis-

sion] and other communications ‘entities’ immune from

enforcement actions by the FCC under Section 401(b)”

(ibid.).

The court also rejected the Maryland commission’s ar-

gument that the Preemption Order is not an “order”

within the meaning of Section 401(b). The court noted

that the Preemption Order had been reviewed by the

Fourth Circuit at the request of state commissions pur-

suant to 47 U.S.C. 402, which “only provides for review

of FCC ‘orders’” (Pet. App. 5a). If the Preemption

Order is an order for purposes of review under Section

402, then, the court reasoned, it is necessarily an order

for purposes of enforcement under Section 401.

INTRODUCTION AND SUMMARY OF ARGUMENT

Congress created the FCC for the purpose of centraliz-

ing, in one agency, the task of overseeing the communica-

tions industry in the United States and developing com-

munications policies for wire and radio on an integrated

basis. H.R. Rep. 1850, 73d Cong., 2d Sess. 3 (1984).

It gave the Commission “a comprehensive mandate” (Na-

8

tional Broadcasting Co. v. United States, 319 U.S. 190,

219 (1943)), directing the agency to use its authority

to make available a “rapid, efficient, Nation-wide, and

world-wide wire and radio communication service.” 47

U.S.C. 151.

Section 401 of the Communications Act is the prin-

cipal section governing enforcement of the Act and of

FCC orders entered in the exercise of authority granted

by the Act.° Section 401(a) provides that the federal

government may seek to enjoin violations of the Act it-

self “by any person” in the federal district courts. Sec-

tion 401(b) provides that the federal government “or

any party injured thereby” may seek enforcement of

FCC orders in the federal district courts “if any person

fails or neglects to obey any order of the Commission

other than for the payment of money.” Thus, Section

401(b) applies broadly to any person and to any order

other than for the payment of money.

Petitioner argues that the enforcement provisions of

the Act do not apply to it because neither it nor its in-

dividual members are “persons” under Section 401. The

Act, however, expressly defines “person” to include “in-

dividuals” (47 U.S.C. 153(i)), so the individual mem-

bers of the Maryland commission are clearly “persons.”

Moreover, while Section 153(i) does not mention state

commissions in its list of what the term “person” in-

cludes, it does not exclude them either. State commis-

sions are considered “persons” under other sections of

5 Separate judicial enforcement mechanisms exist (1) for the

resolution of certain complaints for damages against common car-

riers (as an alternative to agency resolution of those complaints),

47 U.S.C. 207; (2) for the consideration of mandamus petitions to

compel common carriers to provide service on nondiscriminatory

terms, where violation of the Act is alleged, 47 U.S.C. 406; (3)

for the enforcement of FCC orders requiring the payment of money,

47 U.S.C. 407, 504(a); and (4) for the enforcement of FCC sub-

poenas, 47 U.S.C. 409(g). In addition, criminal penalties are avail-

able for some violations of the Act or FCC regulations. 47 U.S.C.

501, 502.

9

the Act. It is sensible to consider them persons under

Section 401 as well since, otherwise, state commissions

may frustrate national communications policy.

Petitioner also argues that, because the Preemption

Order is the product of a rulemaking proceeding, it is

not an “order” under Section 401(b). Petitioner argues

that only adjudicatory orders can be enforced under Sec-

tion 401(b). Petitioner concedes that orders resulting

from rulemaking proceedings are “orders” under Sec-

tion 402, which governs judicial review. The natural and

sensible reading of the statute, we submit, requires the

word “order” to be given the same meaning in Section

401(b) as in its neighboring provision. Private enforce-

ment of rulemaking orders helps to effectuate the pur-

poses of the Act, without interfering with the FCC’s role

in formulating national communications policy. The FCC

performs its responsibilities under the Act through a

combination of general, self-executing orders, such as the

Preemption Order, and more detailed orders, such as the

order prescribing depreciation rates to be followed by

C&P. The FCC is thereby enabled to implement the stat-

utory policies with greater efficiency. It is, accordingly,

essential to the statutory scheme for the Act’s enforce-

ment provisions to apply to both categories of orders.

I. STATE UTILITY COMMISSIONS AND THEIR

INDIVIDUAL MEMBERS ARE “PERSONS” SUB-

JECT TO ENFORCEMENT PROCEEDINGS UNDER

SECTION 401(b) OF THE COMMUNICATIONS ACT

In plain terms, Section 401 provides jurisdiction in

the federal district courts sufficient generally to prevent

“any person” from thwarting the goals of the Communi-

cations Act either by direct violation of its terms or by

disobeying an FCC order. “Person” is defined elsewhere

in the Act to “include[] an individual, partnership, as-

sociation, joint-stock company, trust, or corporation.” 47

10

U.S.C. 153(i). Petitioner argues that neither the in-

dividual commissioners nor the state commissions are

“persons” under Section 401 (b).*

A. The Definition Of “Person” Clearly Includes Indi-

vidual Commissioners And Does Not Exclude State

Commissions

1. As the court of appeals concluded, the individual

commissioners named as defendants in this case are “per-

sons” under Section 401(b) of the Act. “Individuals”

are specifically listed among the persons enumerated in

Section 153(i). Therefore, if we assume that “ ‘the legis-

lative purpose is expressed by the ordinary meaning of

the words used’” (Kosak v. United States, No. 82-618

(Mar. 21, 1984), slip op. 5, quoting American Tobacco

Co. Vv. Patterson, 456 U.S. 63, 68 (1982), and Richards

v. United States, 369 U.S. 1, 9 (1962)), the individual

members of the Maryland commission are “persons.” In-

dividual state officials acting in their official capacities

have traditionally been subject to injunctive actions to

enforce federal rights, even where actions against the

states themselves would be unavailable. See, e.g., Ken-

tucky v. Graham, No. 84-849 (June 28, 1985), slip op.

9-10 & n.18; Schewer v. Rhodes, 416 U.S. 2382, 237

(1974); Ex parte Young, 209 U.S. 123 (1908). The

plain meaning of Sections 153(i) and 401(b) accordingly

refutes petitioner’s contention that its members are not

“persons,” and petitioner can point to nothing in the

Act’s legislative history to show that Congress did not

intend the words of the statute to have their ordinary

meaning.

* This argument has been rejected by the Fourth Circuit (Pet.

App. 4a), the Fifth Circuit (744 F.2d at 1115-1116), and four

district courts (Maryland, Pet. App. 16a-17a; Montana, 588 F. Supp.

at 7; Maine, 570 F. Supp. at 1567; and Louisiana, 570 F. Supp. at

236). The Vermont district court accepted the argument (576

F. Supp. at 493-496) .

11

2. State commissions should also be considered persons

under the Act.? The Act’s definition of “person” does

not exclude state commissions: the illustrative list of

persons in Section 153(i) is inclusive rather than ex-

clusive. See Pfizer, Inc. v. India, 434 U.S. 308, 312 n.9

(1978); Phelps Dodge Corp. v. NLRB, 313 U.S. 177,

189 (1941). Nonetheless, petitioner argues (Br. 14)

that the fact that neither Section 401(b) nor Section

153(i) specifically includes state commissions is evi-

dence of a congressional intention to exclude them. Quite

the opposite conclusion is warranted. When Congress

wanted to make particular exceptions in the Communica-

tions Act, it did so explicitly. For example, it spe-

cifically withdrew orders for the payment of money from

the scope of Section 401(b). Similarly, Congress ex-

plicitly exempted governmental entities from certain li-

™This case does not raise the kinds of Eleventh Amendment

policy concerns that this Court addressed in Atascadero State

Hospital v. Scanlon, No. 84-351 (June 28, 1985). There, the

Court reiterated the principle that exceptions to the general im-

munity of states from damage suits by private parties in federal

court, established by the Eleventh Amendment, will be found only

where Congress has specifically stated its intention to authorize

such suits. First, enforcement suits under Section 401(b) are not

suits for damages—indeed, Section 401(b) specifically excludes

suits for enforcement of orders requiring the payment of money—

but for injunctive relief. Under Ez varte Young, supra, state

officials are regularly sued for injunctive relief. See Quern Vv.

Jordan, 440 U.S. 332, 337 (1979) (Eleventh Amendment concerns

are not implicated in cases seeking injunctive relief). Second, al-

though the enforcement suit in this case was brought by a private

party, Section 401(b) does not distinguish between private parties

and the federal government in authorizing enforcement suits and

conferring district court jurisdiction. The Eleventh Amendment

does not bar suits by the federal governm “xt against a state. United

States v. Mississippi, 380 U.S. 128, 140-141 (1965). If the term

“person” is not to mean two different things in Section 401(b),

depending on who the plaintiff is, using Eleventh Amendment policy

considerations to construe “person” to exclude state commissions

would deprive the FCC of the only procedure it has under the Act

for judicial enforcement of the great majority of its orders against

state agencies.

12

censing provisions. See 47 U.S.C. 302a(c) (“([t]he pro-

visions of this section shall not be applicable * * * to

devices or home electronic equipment and systems for

use by the Government of the United States or any

agency thereof”). An inference that Congress intended

to exclude state agencies from the Act’s comprehensive

equitable enforcement provisions cannot justifiably be

based on the absence of specific mention of such agencies

where the “naturally broad and inclusive” meaning of

the word “person” suggests their inclusion. See Pfizer,

Inc., 484 US. at 312.

Petitioner’s argument (Br. 11-12) that state commis-

sions should be excluded from the definition of “person”

in Section 153(i) because a separate subsection, 47

U.S.C. 153(t), defines “[s]tate commission,” is uncon-

vincing. As one district court concluded, this argument

“overstates the rigor of the definitional structure of the

Act” (New England Telephone & Telegraph Co., 570 F.

Supp. at 1567).* Section 153, 47 U.S.C. (& Supp. I) 153,

provides that its definitions apply “unless the context

otherwise requires.” Moreover, Section 153(i) is one of

only five terms in Section 153 whose definition states what

the term “includes” rather than what it “means.”

“Clearly, where the context of the use of the word ‘per-

son’ requires that a state commission be considered a

person, the section contemplates that that term has suffi-

cient scope to embrace a state commission” (570 F. Supp.

at 1568).

Petitioner also argues (Br. 13-14) that state commis-

sions are “substantially different” from the types of en-

tities listed in Section 153(i) and thus implicitly are ex-

cluded from the concept of “persons” under the defini-

®In reversing that decision, the First Circuit did not directly

address the “person” issue. New England Telephone & Telegraph

v. Public Utilities Commission, supra (Pet. App. 24a). It did,

however, assume that state commissions are persons under Section

401 in suggesting that telephone companies could enforce FCC

adjudicatory orders against state commissions under Section 401 (b)

(Pet. App. 38a).

a ne

13

tion. This Court has held that state agencies may be

“persons” in instances in which the statutory definition

of that term does not explicitly include public entities,

and, indeed, where the examples given are substantially

different in many respects from state agencies. See, ¢.g.,

Ohio v. Helvering, 292 U.S. 360, 370 (1934) (state liquor

authority is a person under Internal Revenue Code,

which defined that term to mean and include “a part-

nership, association, company or corporation, as well as

a natural person”). Under Georgia v. Evans, 316 U.S.

159, 161 (1942), whether the term “person” includes en-

tities such as state commissions depends on its “legis-

lative environment,” which includes the structure of the

Act, its legislative history, and practice and judicial rul-

ings under the Act.®

®The Maryland commission also points out (Br. 14-15) that

47 U.S.C. 208 authorizes “[a]ny person, any body politic, or mu-

nicipal organization, or State commission” to complain to the FCC

about any action by a common carrier in violation of the Act. The

Maryland commission contends that this language in Section 208

shows that Congress did not consider a state commission to be a

person under the Act. Section 208 is better understood as an in-

stance in which Congress wanted to be absolutely clear that govern-

mental entities who might want to act on behalf of their citizens

could file complaints with the FCC against carriers. Without such

specificity, carriers might have argued that those bodies lacked

standing to file complaints because they would not likely be injured

in their own right by carrier actions. Stated differently, the

redundancy in Section 208 was necessary to resolve possible doubts

about the standing of state commissions to file complaints with the

FCC. It is noteworthy that 47 U.S.C. 221(a) directs the FCC to

provide notification “to the State commission * * * and to such

other persons as it may deem advisable” when telephone companies

apply for permission to consolidate. This language suggests that

Congress thought of state commissions as “persons.” In the final

analysis, neither Section 208 nor Section 221(a), which point in

different directions, is dispositive of the proper construction of

Section 401 (b).

14

B. The Legislative Structure And Context Support

The Conclusion That State Commissions And Their

Members Are “Persons” Under Section 401(b)

It is clear, and long established as a matter of prac-

tice, that the term “person” in many sections of the

Communications Act includes states and their agencies.

For example, in Section 301, Congress directed the FCC

to provide for the use of radio channels by “persons.”

47 U.S.C. 301. Many states and state agencies have li-

censes, and they would not likely contend that they are

not “persons” eligible to obtain radio licenses. Nor are

the states likely to contend that they are not “persons”

for the purposes of Section 405 of the Act, which per-

mits “any party * * * or any other person” to seek

reconsideration of an FCC order. In fact, the California

state commission filed such a petition in response to the

FCC’s substantive depreciation orders that are the origin

of this case. See California PUC Petition for Reconsider-

ation, Docket No. 79-105 (filed Apr. 29, 1981).

There are several reasons why state commissions should

be considered “persons” under Section 401(b) as well.

The legislative history shows that Congress modeled Sec-

tion 401(b) on Section 16(12) of the Interstate Com-

merce Act, 49 U.S.C. (1976 ed.) 16(12) (repealed 1978).

S. Rep. 781, 73d Cong., 2d Sess. 9 (1934); H.R. Rep.

1850, 73d Cong., 2d Sess. 7 (1934). There was, how-

ever, one highly significant change. Section 16(12) pro-

vided for relief “[i]f any carrier fails or neglects to

obey any order of the Commission other than for the

payment of money.” Congress copied this phrase ver-

batim, except that it substituted “person” for “carrier.”

The committee reports do not explain the reason for

10 Moreover, state commissions may seek review of orders such

as the Preemption Order in the courts of appeals. As we argue,

pages 20-21, infra, it logically follows that they ought to be sub-

ject to enforcement as well.

15

this change. But, in a scheme where the FCC, state

commissions, and private carriers are principal actors,

and the FCC has primary responsibility, it is reasonable

to assume that Congress contemplated that its use of the

broad term “person” (in preference to the model stat-

ute’s term “carrier’”’) would reach the state commissions.

Surely, if Congress had intended otherwise, some ex-

planation would have been needed to show that the

broad term “persons” did not include state commissions

or their members. Yet nothing in the legislative history

indicates that Congress meant to exclude state commis-

sions.

Section 401 creates general jurisdiction in the federal

courts to enforce the Communications Act and the FCC’s

orders." If neither state commissions nor their indi-

vidual members are persons under Section 401, then the

FCC, as well as private parties, would lack explicit au-

thority to enforce the Communications Act and FCC or-

ders against state commissions in federal courts. The

efficacy of this provision would be undermined if state

commissions were not subject to enforcement of orders

requiring their compliance since state commis‘ions can

undermine the goals of the Communications Act by re-

fusing to comply with such orders. Indeed, in recent

years, a number of state commissions have resisted the

competitive policies adopted by the FCC. In all but one

instance in which the FCC has found its policies pre-

emptive of inconsistent state regulation, reviewing courts

have upheld the FCC’s actions. See, e.g., North Carolina

Utilities Commission v. FCC, 537 F.2d 787 (4th Cir.),

cert. denied, 429 U.S. 1027 (1976); North Carolina Util-

11 FCC orders do not require enforcement action to become bind-

ing, but take effect by operation of law and are binding “unti! the

Commission or a court of competent jurisdiction issues a super-

seding order.” 47 U.S.C. 408. See also 47 U.S.C. 416(c) ; Columbia

Broadcasting System, Inc. Vv. United States, 316 U.S. 407, 420

(1942).

16

ities Commission v. FCC, 552 F.2d 1036 (4th Cir.),

cert. denied, 434 U.S. 874 (1977); Computer & Com-

munications Industry Association v. FCC, 693 F.2d 198

(D.C. Cir. 1982), cert. denied, 461 U.S. 938 (1983).”

The FCC and interested private parties must be able to

enforce such orders under Section 401(b) if they are

to be effective against reluctant state agencies.

The case for enforcing FCC orders against state com-

missions is particularly compelling when the order at

issue deals with depreciation practices. The Communica-

tions Act requires the FCC to prescribe depreciation

rates and practices only after notifying state commis-

sions and receiving and considering the views and recom-

mendations of those commissions. 47 U.S.C. 220(b) and

(j). State commissions may seek clarification or recon-

sideration of depreciation orders and obtain judicial re-

view if they believe themselves to be aggrieved. 47

U.S.C. 405, 402(a). The role of the state commissions

in the process of prescribing depreciation rates is so sig-

nificant and detailed as to foreclose any legitimate claim

that Congress, after setting up the process, intended to

immunize state commissions from enforcement of the

resulting depreciation orders.

While it is reasonable to assume that most state agen-

cies will comply voluntarily with lawful orders of the

FCC, the experience of the FCC with its depreciation

Preemption Order reveals that judicial enforcement is

necessary in some cases. Even though the FCC’s Pre-

emption Order was under review in a court of appeals

with authority to stay or enjoin its effectiveness, the

#2 The single exception was the FCC’s attempt to preempt state

regulation of the use of local leased access channels on cable tele-

vision systems. National Association of Regulatory Utility Commis-

sioners V. FCC, 533 F.2d 601 (D.C. Cir. 1976). The court of appeals

reversed the FCC’s decision in that case because it exceeded the

FCC’s limited authority to regulate cable television in ways that

are “ ‘reasonably ancillary’ ” to the regulation of broadcast television

(id. at 621-623 (Lumbard, J., concurring) ).

17

Maryland commission and several other state agencies

deliberately refused to comply without seeking interim

judicial relief pending review. This practice constituted

an evasion of the jurisdiction of the court of appeals

and a considered defiance of the FCC’s order—conduct

that Section 401(b) was clearly designed to remedy. See

Southwestern Bell Telephone Co. v. Arkansas Public

Service Commission, 738 F.2d at 906, 908-909.*

Nor would a holding that state commissions are “per-

sons” within the meaning of Section 401(b) authorize

federal courts to interfere improperly in intrastate rate-

making." In virtually every one of the enforcement cases

prompted by the Preemption Order, the action of the dis-

trict court was confined simply to ordering the state

commission to permit the telephone company to use the

13 It is no answer to assert (Br. 14 n.8) that enforcement against

states is unnecessary under Section 401(b) because state courts

will set aside state commission decisions that are contrary to fed-

eral law. The Communications Act’s remedies are “in addition to”

other remedies. 47 U.S.C. 414. Moreover, reliance on state court

actions would seriously hinder the FCC in enforcement of its

orders, since the FCC would have to confront varying state law

requirements in order to obtain enforcement, rather than complying

only with the clear and straightforward requirements of Section

401(b). Furthermore, reliance on enforcement in state courts would

surely lead to the sort of inconsistent application decried by amici

state commissions in arguing (Br. 8-10) that only the FCC should

be permitted to enforce rulemaking orders. And, finally, there is no

warrant for barring enforcement in federal courts “without some

indication that Congress in fact wished to remit the litigation of a

federal right to the state courts.” Transamerica Mortgage Advisors,

Inc. V. Lewis, 444 U.S. 11, 19 n.8 (1979).

14 The Maryland commission contends (Br. 20) that the Johnson

Act, 28 U.S.C. 1342, evidences a federal policy against permitting

federal courts to issue injunctions in state ratemaking proceedings.

The Johnson Act does not foreclose federal court jurisdiction in

this case, however, because jurisdiction is not based on diversity

or on a claim that the state’s rate order was unconstitutional, but

on a federal statute expressly authorizing the district court to act.

See South Central Bell Telephone Co., 744 F.2d at 1123 n.28.

18

depreciation rates and methods prescribed by the FCC.

In the one instance where the court was required w go

further, its action was designed merely to protect the

integrity of its original injunction.”®

Finally, as we have shown (page 10, supra), there is

no basis for doubt that the individual members of state

commissions are “persons” within the meaning of Section

401(b). No reason is apparent to explain why, in that

circumstance, Congress would not have intended equitable

relief under that Section to be available also against the

commissions themselves.

Il. THE FCC’S PREEMPTION ORDER 1S ENFORCE-

ABLE UNDER SECTION 401(b)

Section 401(b) authorizes judicial enforcement of “any

order of the Commission, other than for the payment of

money.” The statutory language does not except rule-

making orders; nor does it restrict enforcement to ad-

judicatory orders. Petitioner, adopting the reasoning of

the First Circuit in New England Telephone & Telegraph

Co. v. Public Utilities Commission, supra (Pet. App. 24a),

16 See South Central Bell Telephone Co. In that case, the district

court issued a preliminary injunction ordering the Louisiana com-

mission to permit South Central Bell to use the depreciation rates

prescribed by the FCC. The Louisiana commission responded by

reducing the telephone company’s rate of return, without further

proceedings, so as to minimize the effect of the preliminary injunc-

tion. The district court concluded that the Louisiana commission

deliberately had not complied with its order. The court, stressing

that the commission had received no evidence before adjusting the

rate of return, modified its injunction by ordering the commission

to permit South Central Bell to increase its revenues in order to

recover the entire amount the commission had determined was re-

quired on account of application of the depreciation practices pre-

scribed by the FCC. The Fifth Circuit affirmed. South Central

Bell Telephone Co. v. Louisiana Public Service Commission, 744

F.2d at 1113-1114, 1121-1122. Compare New England Telephone &

Telegraph Co. v. Public Utilities Commission, 579 F. Supp. 1356,

1361-1362 (D. Me. 1984) (reasonable adjustment of rate of return

in light of new depreciation procedures is permissible).

19

argues nonetheless that Section 401(b) does not author-

ize district courts to enforce FCC rulemaking orders.*®

A. The Plain Meaning And Legislative Context Of

Section 401(b) Show That Rulemaking Orders Are

Enforceable Under That Section

Section 401(b) applies to “any order of the Com-

mission other than for the payment of money.” It refers

to any order, making no distinction between adjudicatory

orders and rulemaking orders. If Congress had intended

to restrict Section 401(b) to the enforcement of adjudi-

catory orders, it could have written the statute more nar-

rowly. Indeed, the fact that Congress expressly excluded

orders for the payment of money from the otherwise

comprehensive language of the enforcement statute

strongly suggests that Congress intended the statute to

apply to all other classes of FCC orders."

This Court has assumed that Section 401 is available

for the enforcement of regulations implemented under

the Communications Act as a result of agency rulemak-

ing. In Ambassador, Inc. v. United States, 325 U.S. 317,

325 & n.7. (1945), the Court affirmed a district court

decision enjoining hotels from violating tariff regulations

imposed by a telephone company, where the telephone

company was complying with an FCC rulemaking order

in imposing the regulations. Although the Court did not

address the issue, it implicitly assumed that rulemaking

orders could be enforced under Section 401(b).%* See also

16 The reading of Section 401(b) urged by the petitioner has

been rejected by the Fourth Circuit (Pet. App. 4a-5a), the Fifth

Circuit (744 F.2d at 1115-1119), and the three district courts that

have addressed the issue (Louisiana, 570 F. Supp. at 236; Maine,

570 F. Supp. at 1571-1577; and Washington, 565 F. Supp. at 21).

The First Circuit reversed the Maine district court’s decision.

17 Moreover, Congress limited some provisions of the Act ex-

pressly to adjudication. See, e.g., 47 U.S.C. 409.

18 The Ambassador opinion cites Section 401 as the source of

judicial authority to restrain a violation of the tariff regulation.

825 U.S. at 325 & n.7. The suit must have been grounded on

20

Brookhaven Cable TV, Inc. v. Kelly, 428 F. Supp. 1216

(N.D.N.Y. 1977), aff'd, 573 F.2d 765 (2d Cir. 1978),

cert. denied, 441 U.S. 904 (1979) (enforcing an FCC

declaratory ruling that was entered in clarification of

an order adopting rules for cable television) .’®

Both Section 401(b) and Section 402, the provision gov-

erning judicial review of FCC orders, use the phrase “any

order of the Commission” to describe their applicability.

It is well established, and the petitioner apparently con-

cedes (Br. 29-30), that this phrase as used in Section 402

includes rulemaking “orders.” See Columbia Broadcast-

ing System, Inc. v. United States, 316 U.S. 407, 417

(1942) .” Thus, petitioner’s argument runs counter to the

subsection 401(b), because violation by a telephone company’s cus-

tomer of a prescribed tariff regulation is not necessarily a viola-

tion of any provision of the Act itself, and subsection 401(a) is

available only to enforce provisions of the Act. See South Central

Bell Telephone Co., 744 F.2d at 1117 n.18.

19 Petitioner errs in relying on Comtronics, Inc. v. Puerto Rico

Telephone Co., 409 F. Supp. 800 (D.P.R. 1975), aff’d on other

grounds, 558 F.2d 701 (1st Cir. 1977), and Kroeger v. Stahl, 148

F. Supp. 403 (D.N.J.), aff'd, 248 F.2d 121 (3d Cir. 1957), in

arguing that “courts have historically declined to enforce FCC

rules and regulations on behalf of private litigants” (Br. 32-33).

No specific rulemaking order of the FCC appeared to be at issue

in Comtronics. Rather, the plaintiff vaguely alleged that the de-

fendant had violated FCC “holdings, rulings and policies” (409

F. Supp. at 804) by failing to connect its telephone lines to equip-

ment sold by plaintiff. The court said nothing remotely suggesting

that a rulemaking order is not enforceable under Section 401(b).

In Kroeger, the plaintiff obtained a license from the FCC to conduct

radio tests and then argued that the license was an FCC order

that implicitly barred local authorities from denying his application

for a variance to buile. a 75-foot radio mast on residential property.

The court rejected tnat frivolous claim. By contrast, the Preemption

Order here at issue specifically held that state commissioners were

bound to comply with the FCC’s depreciation rules.

2° FCC rulemaking orders prescribing accounting methods and

depreciation rates and practices have long been deemed reviewable.

See, e.g., American Telephone & Telegraph Co. v. United States, 299

21

“natural presumption that identical words used in differ-

ent parts of the same act are intended to have the same

meaning.” Atlantic Cleaners & Dyers, Inc. v. United

States, 286 U.S. 427, 483 (1932). See, e.g., Bob Jones

University v. United States, 461 U.S. 574, 586-588

(1983).

There are no differences between Sections 402 and

401(b) that justify different treatment of these identical

phrases. A principal reason for this Court’s finding in

Columbia Broadcasting System, Inc. that rulemaking

orders are reviewable was that such orders are self-

executing and require immediate compliance. 316 U.S.

at 417-423. The same reasoning supports the conclusion

that rulemaking orders should be enforceable. As the

Fifth Circuit pointed out, “[s]ubstantial unfairness can

result from either compliance with an improper regula-

tion or noncompliance with a proper one.” 744 F.2d at

1118. Indeed, acceptance of petitioner’s argument would

create the anomalous situation in which a state commis-

sion (or any othe’ party) could seek review of an FCC

order adopting rules, lose its case on the merits, and still

avoid enforcement pursuant to Section 401(b) until and

unless the FCC went through further administrative pro-

cedures to generate a specific adjudicatory order that

could be enforced.”*

U.S. 282 (19386). Similarly, FCC orders declaring the preemptive

effect of the Commission’s substantive rules and policies have been

reviewed without suggestion that the court of appeals lacked juris-

diction. See, e.g., North Carolina Utilities Commission v. FCC,

537 F.2d 787 (4th Cir. 1976).

21 Moreover, this case cannot accurately be regarded as one seek-

ing enforcement of an abstract rule. Although the Preemption

Order was adopted in a rulemaking docket, that order disposed of

particular requests for declaratory relief as to the meaning and

applicability of the FCC’s substantive rules, both in general and

in the particular context of a dispute between the Ohio commission

and a telephone company. The Administrative Procedure Act

(APA) authorizes the FCC to issue declaratory rulings to terminate

controversy or remove uncertainty, and provides that such orders

22

Petitioner’s argument is also contrary to the FCC’s

consistent interpretation of Section 408 of the Act, which

provides that “all orders of the Commission, other than

orders for the payment of money,” become effective thirty

days after the date “public notice of the order is given.”

The FCC has regarded this statute as governing the ef-

fectiveness of rulemaking orders. See 47 C.F.R. 1.427.

Petitioner would have this Court conclude that although

FCC rulemaking orders are effective under Section 408

and reviewable under Section 402(a), they are nonethe-

less unenforceable under Section 401(b), even though

these provisions use identical language. The anomaly of

this contention is apparent: an unenforceable order is

ineffective against anyone who chooses to disregard it.”

have “like effect as in the case of other orders.” 5 U.S.C. 554(e).

In addition, the FCC in a 1982 depreciation proceeding involving

several individual carriers, specifically prescribed depreciation rates

and practices for C&P in Maryland and specifically declared the

preemptive effect of those prescriptions. In re Prescription of Re-

vised Percentages of Depreciation, 92 F.C.C.2d at 700. Whatever

merit a narrow interpretation of “order” might have in the (per-

haps unrealistic) context of an attempt to enforce an abstract rule,

it would elevate form over the substance of the FCC’s actions here

to hold those actions unenforceable. The particular method by

which the FCC has adopted its order—rulemaking or adjudication—

is not conclusive; “it is the substance of what the Commission has

purported to do and has done which is decisive.” Columbia Broad-

casting System, Inc. v. United States, 316 U.S. at 416.

22 The cases petitioner cites (Br. 33-34) that were decided under

Section 16(12) of the Interstate Commerce Act do not support its

argument that rulemaking orders are not “orders” under Section

401(b). In McFaddin Express, Inc. v. Adley Corp., 346 F.2d 424,

426 (2d Cir. 1965), cert. denied, 382 U.S. 1026 (1966), the plain-

tiff contended that the defendant had violated a management con-

tract that had been authorized by the ICC. In Farmers’ Loan &

Trust Co. v. Northern Pac. Ry., 83 F. 249 (D. Wash. 1897), the

order at issue was directed at two specific railroads. Neither case

involved any rulemaking order or other order comparable to the

Preemption Order. This Court’s statement in Illinois Cent. R.R.

v. Public Utilities Commission, 245 U.S. 493, 502 (1918), that

“{i]Jn common acceptation a suit to enforce an order of the [ICC]

is one which seeks to compel the carrier to whom the order is

23

Finally, there is no merit to petitioner’s attempt to use

the Administrative Procedure Act’s definition of the word

“order” to interpret Section 401(b). Neither the Com-

munications Act nor the APA suggests that the APA

definitions are relevant in interpreting the Communica-

tions Act. There is no reason to engraft the APA’s defi-

nition of “order” onto Section 401(b) in the absence of

statutory language requiring it or at least some reference

in the legislative history indicating that this was Con-

gress’s intention. This is especially so since the distinc-

tion between rulemaking and adjudication in the APA’s

definition of “order” is designed to indicate what agency

procedures apply to a given administrative undertaking,

not whether agency actions are enforceable. Petitioner

directed to yield obedience to its command” is also irrelevant. As

we have noted (page 14, supra), Section 16(12) applied to disobedi-

ence by “carriers” rather than by “persons.” The Court made the

statement petitioner quotes, not in order to address any question

relevant to a distinction between rulemaking and adjudicatory

orders, but because, in Jllinois Cent. R.R., the suit was brought

“by the carriers, not against them” (245 U.S. at 503).

Moreover, as the Fifth Circuit noted in South Central Bell (744

F.2d at 1118 n.20), the cases construing Section 16(12) support its

conclusion that Congress did not intend to exclude rulemaking

orders from enforcement under Section 401(b). In Pacific Fruit

Depress Co. v. Akron, C. & Y. R.R., 524 F.2d 1025 (9th Cir. 1975),

cert. denied, 424 U.S. 911 (1976), an order directed generally at all

rail carriers using protective services was at issue. The court con-

cluded that “the District Court, pursuant to the broad power to

compel obedience under § 16(12) * * *, had the power to mandate

compliance with that order” (524 F.2d at 1031). Similarly, United

States v. City of Jackson, 318 F.2d 1 (5th Cir. 1963), involved a

general order forbidding carriers to use segregated facilities. The

court found that order enforceable under Section 16(12) (318

F.2d at 9).

23 The APA’s definition section states that its definitions are

“(flor the purpose of this subchapter.” 5 U.S.C. 551. The Com-

munications Act has its own definition provisions, although they do

not define “order.” 47 U.S.C. (& Supp. I) 153.

2 It is noteworthy that where the APA deals with matters other

than agency procedures, such as the provisions for judicial review,

24

has shown no basis for applying a distinction regarding

procedural matters in one statute to the enforcement pro-

visions of another statute.

B. Effective Implementation Of The Act Is Enhanced

By Enforceability Of Rulemaking Orders Under

Section 401(b)

Petitioner primarily relies on policy arguments*® in

contending (Br. 34) that only the FCC, and not private

parties, should be permitted to enforce rulemaking or-

ders.** However, policy considerations under the statute

actually support the opposite conclusion.

It is true that the FCC is primarily responsible for

enforcement of the Act and for developing a coherent

it does not use the term “order.” In defining those actions that are

reviewable in court, the APA uses the term “agency action” and

does not distinguish between adjudicatory and rulemaking actions.

5 U.S.C. 701-705.

25 Of course, this Court has no policy-making role that would per-

mit it to ignore the plain language of the statute. Phelps Dodge

Corp. Vv. NLRB, 313 U.S. 177, 194 (1941).

26 If rulemaking orders are not enforceable under Section 401(b),

then it is not clear that they are judicially enforceable at all. No

other provision of the Act explicitly applies to the enforcement of

FCC orders, other than the narrow provisions for enforcement of

orders for the payment of money and subpoenas. 47 U.S.C. 407,

504(a), 409(¢). The Maryland Commission and amici assume that

rulemaking orders are enforceable under Section 401(a), which

applies to “violation of any of the provisions of this chapter by any

person,” because “rulemaking orders are the functional equivalent

of the provisions of the Act itself” (Amici Br. 6; see Br. 32 (“en-

forcement of FCC ‘rules and regulations’ in effect constitutes en-

forcement of the Act itself”)). But it is not at all clear that all

violations of rulemaking orders are also violations “of the provi-

sions of this chapter”—indeed it is much more natural to describe

such a violation as a violation of an “order of the Commission other

than for the payment of money” as specified in Section 401(b). If

rulemaking orders are not enforceable at all, then there is a large

gap in the enforcement provisions of the Act, which petitioner

does not defend as a policy matter,

25

communications policy.*7 However, permitting the courts

to enforce FCC rulemaking orders in actions brought by

private parties pursuant to the specific procedures in Sec-

tion 401(b) does not conflict with the FCC’s responsibili-

ties. Rather, the very justification for private enforce-

ment statutes such as Section 401(b) is that the agency

may not have the resources to police every violation of its

orders and that private parties aggrieved by such viola-

tions can help to do so. Cf. FCC v. Sanders Brothers

Radio Station, 309 U.S. 470, 477 (1940) (one with a

financial stake in a matter before the agency may be the

only one with sufficient interest to prosecute it to com-

pletion) .

The narrow function of the district court in Section

401(b) enforcement actions ensures that the court need

not encroach on the agency’s responsibilities. Under Sec-

tion 401(b), the only questions for the enforcing court

are whether the FCC’s order was properly entered and

duly served or published, whether the defendant has vio-

lated it, and whether the complainant has been injured

by the violation. These questions normally will be readily

answered without substantial judicial inquiry into regula-

tory matters. If questions regarding communications pol-

icy arise, the enforcing court can and should either refer

such questions to the FCC under the doctrine of primary

27 The Maryland commission’s assertion that “only the FCC can

enforce the Act” (Br. 32) overlooks several statutes authorizing

private actions to vindicate rights under the Act and regulations

adopted in implementation of the Act. For example, Section 207

authorizes complaints either to the FCC or to a district court

alleging damages as a result of violations by carriers and em-

powers the court to award damages and attorneys’ fees. Section

406 authorizes private suits in district courts to obtain service on

a nondiscriminatory basis from carriers subject to the Act. Thus,

while it is true that the FCC has principal responsibility for

enforcing the Act, it is incorrect to base a narrow interpretation

of Section 401(b) on the premise that only the FCC can enforce

the Act and its regulations.

26

jurisdiction or solicit the FCC’s views as an intervenor

or as amicus curiae.** In this way, the FCC’s role as

primary interpreter of the Communications Act is pre-

‘served, and the district court may fulfill the particular

responsibilities Congress conferred on it in Section

401(b).

Agencies such as the FCC have broad discretion to use

either rulemaking or case-by-case adjudication (or some

combination of the two) to carry out their statutory re-

sponsibilities. See SEC v. Chenery Corp., 332 U.S. 194,

203 (1947). That discretion would be unduly restricted,

to the detriment of efficient administration of the Act,

if the Commission could not adopt self-executing rules to

implement the statute and rely in part on private en-

forcement actions for their effectuation.

Under the First Circuit’s view of Section 401(b) (Pet.

App. 39a), the FCC could conduct separate adjudicatory

proceedings as each state refused to permit its local tele-

phone companies to use the depreciation rates and meth-

ods prescribed by the FCC, issue specific orders to each

state commission, and thereafter obtain enforcement in

the courts. There is no reason to require such redundant

procedures, as this case demonstrates. The FCC has

issued detailed and particularized orders requiring cer-

tain depreciation rates for C&P, and it has declared the

preemptive effect of its depreciation orders. The Mary-

land commission did not seek judicial review of the perti-

nent orders, but simply went its own way in disregard

28In most of the enforcement cases that have arisen under the

Preemption Order, the FCC has been invited to participate as

amicus curiae and has done so. E.g., South Central Bell Telephone

Co., 744 F.2d at 1118. Under some circumstances, a failure by the

district court to obtain the views of the FCC may be reversible

error. See MCI Communications Corp. v. AT & T, 496 F.2d 214 (3d

Cir. 1974) (district court injunction under Section 406 vacated be-

cause the matter should have been referred to FCC under doctrine

of primary jurisdiction to develop important policy views).

27

of them. A further order or action by the FCC to vest

the district court with enforcement authority could be

no more specific than the orders already issued and

would only produce delay.

Finally, there is no merit to the First Circuit’s some-

what inconsistent concern (Pet. App. 34a-35a) that per-

mitting private enforcement of FCC rulemaking orders

such as the ones involved here will produce piecemeal re-

view of state ratemaking proceedings.” Enforcement

actions under Section 401(b), whether brought by pri-

vate persons or by the FCC itself, do not require or au-

thorize the federal district courts to engage in “review”

of state rate proceedings. Under the statute, the role of

the district courts is confined to enforcement of an FCC

order.

2° The fact that a telephone company such as C&P might chal-

lenge a state commission’s ratemaking order in state courts does not

detract from its right to seek relief in the federal district court

insofar as the state ratemaking order involves violation of an FCC

order. The Communications Act does not abridge or alter remedies

already existing at common law or by statute, but its provisions

“are in addition to such remedies.” 47 U.S.C. 414.

28

CONCLUSION

The judgment of the court of appeals should be affirmed.

Respectfully submitted.

CHARLES FRIED

Acting Solicitor General

LAWRENCE G. WALLACE

Deputy Solicitor General

CHRISTOPHER J. WRIGHT

Assistant to the Solicitor General

JACK D. SMITH

General Counsel

DANIEL M. ARMSTRONG

Associate General Counsel

JOHN E. INGLE

Deputy Associate General Counsel

JANE E. MAGO

Counsel

Federal Communications Commission

OCTOBER 1985

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