# Amicus Curiae Brief — MCI Telecommunications Corp. v. American Telephone & Telegraph Co.

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385013_0450%3A14

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1994
- **Citation:** 512 U.S. 218

## Text

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.E D

IN THE

Nos. 93-356, 93-521 JAN 13 1994

Supreme Court of the United States

OCTOBER TERM, 1993

MCI TELECOMMUNICATIONS, INC.,

7 Petitioner,

AMERICAN TELEPHONE & TELEGRAPH CoMPANY, et al.,
Respondents.

UNITED STATES OF AMERICA and
FEDERAL COMMUNICATIONS COMMISSION,

7 Petitioners,

AMERICAN TELEPHONE & TELEGRAPH COMPANY, et al.,
Respondents.

On Writs of Certiorari to the
United States Court of Appeals
for the District of Columbia Circuit

BRIEF OF AMICI CURIAE WILTEL, INC,
ET AL., IN SUPPORT OF PETITIONERS

PETER A. ROHRBACH

DAVID G. LEITCH *

KARIS A. HASTINGS

HOGAN & HARTSON

555 Thirteenth Street, N.W.
Washington, D.C. 20004
(202) 637-5822

* Counsel of Record Counsel for Amici Curiae

WILSON - Eras Printine Co.. Inc. - 789-0096 - WASHINGTON. D.C. 20001

BEST AVAILABLE COPY

TABLE OF CONTENTS

Page
TABLE OF AUTHORITIES ...............2-:cc0-cceesco-ssseessceeseeees ii
STATEMENT OF INTEREST OF AMICI CURIAE.. 1
STATEMENT OF THE CASE ...............-..:-ccesssescssssseesnee 2
SUMMARY OF ARGUMENT ooo cocccceccceeeeneee 4
I cae 7

I. THE FCC’S PERMISSIVE DETARIFFING
POLICY IS WELL WITHIN THE AUTHOR-
ITY DELEGATED TO THE COMMISSION
8 a 7

A. Congress Has Directly Spoken to the Ques-
. tion at Issue by Providing the Commission
with Authority to Modify Any Requirement
of Section 203, Including the Tariffing Re-
i icicilhakihsssi thesis dnagdinenniivanbidimatietipiniasanss 10

B. At a Minimum, the FCC’s Construction of
the Statute it Administers is Reasonable and
Entitled to Deference from the Courts _......... 18

II. THE FCC’S DECISION DID NOT IMPLI-
CATE THE FILED RATE DOCTRINE,
WHICH DOES NOT SPEAK TO THE QUES-
TION OF WHEN RATES MUST BE FILED... 28

TEND scctincncenceniancitrstainccntilacsulrsucialainienidistasiomaniadininainnintany 30

Se et I i i i et 8

ii

TABLE OF AUTHORITIES

Cases: Page

American Telephone & Telegraph Co. v. FCC, 978
F.2d 727 (D.C. Cir. 1992), cert. denied, 113
S. Ct. 3020 (1993)... cs ee
Ardestani v. INS, 112 S. Ct. 515 (1991) . snubiaiaieae 12
Chemical Manufacturers Ass’n v. Natural Re-
sources Defense Council, Inc., 470 U.S. 116
PETITE .cxcsncscactsneienesesiemsesahosesoucdiacesacdiumssmeianaannaanaaaaaannnnnn 12, 18
Chevron U.S.A. Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837 (1984) _... _5, 7, 8, 10, 18-19

Crandon v. United States, 494 U.S. 152 (1990)... 19
Estate of Cowart v. Nicklos Drilling Co., 112 S. Ct.
CD CIID. cncrnctiicisciedeiccncstslinasaemaaen 10, 12, 18
FCC v. Pottsville Broadcasting Co., 309 U.S. 134
CIID... . ic scisiematulathenmedeongiietaniaanaae 9
Good Samaritan Hosp. v. Shalala, 113 8. Ct. 2151
(| ERE Se 19
INS v. Cardoza-Fonseca, 480 U.S. 421 (1987)... 10
K Mart Corp. v. Cartier, Inc., 486 U.S. 281
CID one <sscscsoncsvemnccssdatadoseiaesncucsmmammassaaaaeaan 10

Leatherman v. Tarrant County Narcotics Intelli-
gence and Coordination Unit, 113 S. Ct. 1160

PEIIIID .:cac:consisnnnneismnstenctisneisiiscaapunseiansmennnsnianannaannnann 13
Lechmere, Inc. v. NLRB, 112 S. Ct. 841 (1992)... 15
Maislin Industries, U.S., Inc. v. Primary Steel,

we ££: @ fF, eee 28-29
MCI Telecommunications Corp. v. FCC, 765 F.2d

i i te SS 0|6=— 7, 15-17
National Railroad Passenger Corp. v. Boston &

Maine Corp., 112 S. Ct. 1894 (1992) _............. 12, 14-15

National Railroad Passenger Corp. v. National
Ass’n of Railroad Passengers, 414 U.S. 453

CRIED. ...ncciscncnermnsasnecsecissnsstdembemsenacacassicacaamnaenennnn 13
Negonsott v. Samuels, 113 S. Ct. 1119 (1993) _....... 10
NLRB v. United Food & Commercial Workers

etem, G56 UE. BEB CRD censceckscsnsstitteibebinnans 18
Pauley v. Bethenergy Mines, Inc., 111 8S. Ct. 2524

| | aa 8,18
Permian Basin Area Rate Cases, 390 U.S. 747

CED ccccnncuveicnssnestnitslinsupiansanesiameiaiienne 28
Perrin v. United States, 444 U.S. 37 (1979)........ 12

iii
TABLE OF AUTHORITIES—Continued
Page

Russello v. United States, 464 U.S. 16 (1983) ........ 12

Sullivan v. Everhart, 494 U.S. 83 (1990) —... 10

United States v. James, 478 U.S. 597 (1986)... 12

United States v. Shimer, 367 U.S. 374 (1961)... 18

United States v. United States Gypsum Co., 438
EE 21

Young v. Community Nutrition Institute, 476 U.S.
I ceeucouens 11

Administrative Rulings:

Competition in the Interstate Interexchange Mar-
ketplace, Report and Order, 6 FCC Red 5880
EEE 25

Expanded Interconnection w vith Local Telephone
Company Facilities:

Notice of Proposed Rulemaking and Notice

of Inquiry, 6 FCC Red 3259 (1991) a 25
Report and Order and Notice of Proposed

Rulemaking, 7 FCC Red 7369 (1992)... 26
Second Notice of Proposed Rulemaking, 7

FCC Red 7740 (1992) .......................000000000.... 26
Second Report and Order and Third Notice

of Proposed Rulemaking, 8 FCC Red 7374

ees 26

Policy & Rules Concerning Competitive Commen
Carrier Services and Facilities Authorizations
Therefor (“Competitive Carrier Rulemaking”):

Fifth Report and Order, 98 F.C.C.2d 1191
EEE SEES A 3, 20
First Report and Order, 85 F.C.C.2d 1
LEE SS 3
Fourth Report and Order, 95 F.C.C.24 554
EES OLE Se —e TRY
Further Notice of Proposed Rulemaking, 84
hk Ey) eee .. 21,24
Notice of Inquiry and Proposed Rulemaking,
77 F.C.C.2d 308 (1979) ...............000....... 3, 19, 20, 21
Second Report and Order, 91 F.C.C.2d 59
LE A 3, 20, 21

iv

TABLE OF AUTHORITIES—Continued
Page

Sixth Report and Order, 99 F.C.C.2d 1020,
vacated, MCI Telecommunications Corp. v.
FCC, 765 F.2d 1186 (D.C. Cir. 1985) —_....... 15,17
Tariff Filing Requirements for Interstate Common
Carriers, Notice of Proposed Rulemaking, 7
FCC Red 804 (1992) ......... Sern roe hm ek re 23
Tariff Filing Requirements for Nondominant
Common Carriers:
Memorandum Opinion and Order, 8 FCC Red

CREEK =
Notice of Proposed Rulemaking, 8 FCC Red
EE SSS Ea 23, 26
Statutes:
47 U.S.C. § 151...... snshisndiiataineaiiedaladiaditsll andi 5, 6, 19-22
gj aera eee 3, 24
Oe A aceite etaeeladaiaimalaiiae 3, 24
5 ERE een serene ec passim
er I sisccisinitictenisinstinemereniainsinnentiniial 11, 13, 14, 16
ge passim
47 U.S.C. § S08 (Ee) ...............0.000....... shinee 13-14
| eee 14-15
Legislative Materials:

FCC and NTIA Authorizations: Hearings Before
the Subcom. on Telecommunications and Fi-
nance of the House Comm. on Energy and Com-

merce, 101st Cong., Ist Sess. (1989) 0.000000... 14

H.R. Rep. No. 213, 101st Cong., Ist Sess. (1989) .... 14

S. Rep. No. 439, 101st Cong., 2d Sess. (1990)... 14
Other Authorities:

Black’s Law Dictionary (5th ed. 1979) ....000.......... 11

FCC Industry Analysis Division, Long Distance
Market Shares, Third Quarter, 1993 (December

ee Le ate ee Oe 22
Thomas W. Merrill, Judicial Deference to Execu-
tive Precedent, 101 Yale L.J. 969 (1992) ........... 9,10

Antonin Scalia, Judicial Deference to Administra-
tive Interpretations of Law, 1989 Duke L. J.
511 (1989) . 8-9

v

TABLE OF AUTHORITIES—Continued

Jahan Sharifi, Precedents Construing Statutes
Administered by Federal Agencies After the
Chevron Decision: What Gives?, 60 U. Chi. L.
As I

Laurence H. Silberman, Chevron—The Intersec-
tion of Law and Policy, 58 Geo. Wash. L. Rev.
ERNE errr Ah SOc Pe

Cass R. Sunstein, Law and Administration After
Chevron, 90 Colum. L. Rev. 2071 (1990) ....._.

Telecommunications Reports (Sept. 13, 1993)...

Webster's Ninth New Collegiate Dictionary
(1989)

ieee tet hd i Ld LEE ELLE EEE

Page

IN THE
Suprenw Court of the United States
OCTOBER TERM, 1993

No. 93-356
MCI TELECOMMUNICATIONS, INC.,
. Petitioner,

AMERICAN TELEPHONE & TELEGRAPH COMPANY, ef al.,
Respondents.

No. 93-521

UNITED STATES OF AMERICA and
FEDERAL COMMUNICATIONS COMMISSION,
7 Petitioners,
AMERICAN TELEPHONE & TELEGRAPH COMPANY, et al.,
Respondents.

On Writs of Certiorari to the
United States Court of Appeals
for the District of Columbia Circuit

BRIEF OF AMICI CURIAE WILTEL, INC.,
ET AL., IN SUPPORT OF PETITIONERS

STATEMENT OF INTEREST OF AMICI CURIAE

Amici WilTel, Inc., LDDS Communications, Inc. d/b/a
LDDS Metromedia Communications, Cable & Wireless,
Inc.. Chadwick Telecommunications Corp., American
Network Exchange, Inc., KLP, Inc. db a Call America,
U.S. Long Distance, Inc., Consolidated Network, Inc.,
Capital Network System, Inc., Impact Telecommunica-
tions Corp., LCI International, Inc., One-2-One Commu-
nications, Inc., and Telephone Electronics Corp. are long

2

distance telephone companies of varying size. All of these
companies are considered non-dominant interexchange
carriers by the Federal Communications Commission, and
accordingly were not required to file and maintain tariffs
with the Commission prior to the decision below. Amicus
America’s Carriers Telecommunications Association is a
trade association representing non-dominant long distance
carriers. Amicus MFS Communications Company is a
competitive local exchange carrier in the emerging market
for alternatives to the local telephone company monopo-
lies, and also was not required to file tariffs prior to the
decision below.

Under the court of appeals decision, amici would be
required to file tariffs with the Federal Communications
Commission. This requirement would not only result in
added financial burdens on amici, but would also be detri-
mental to the viability and further development of tele-
communications competition. Amici therefore have a
direct stake in the outcome of this case, which is of far-
reaching significance to the entire telecommunications in-
dustry. This brief is filed with the consent of the parties.
Copies of the consent letters have been filed with the

Clerk.
STATEMENT OF THE CASE

This case arises from a decision of the Court of Ap-
peals for the District of Columbia Circuit invalidating the
longstanding permissive detariffing policy of the Federal
Communications Commission (“FCC” or “Commission” ).
The court of appeals found that this policy, which the
FCC has characterized as “one of the cornerstones” of its
regulation of developing telecommunications competition
(Pet. App. 65a),’ violated Section 203 of the Communi-

! Citations to “Pet. App.” are to the Appendix to the Petition for
Writ of Certiorari in No. 93-356. Unless otherwise indicated,
citations to FCC orders and notices are citations to such items in
CC Docket No. 79-252, Policy & Rules Concerning Rates for Com-
petitive Common Carrier Services and Facilities Authorizations
Therefor (“Competitive Carrier Rulemaking”).

3

cations Act of 1934, as amended (“the Communications
Act” or “the Act”), 47 U.S.C. § 203.

More specifically, this case has developed out of the
FCC’s Competitive Carrier Rulemaking, a multi-staged
proceeding between 1979 and 1985 that established regu-
latory policies to govern new competitors entering here-
tofore monopoly telecommunications markets. Over 13
years ago the FCC concluded that the rates of such “non-
dominant” carriers are presumptively lawful because they
“simply cannot rationally price their services in ways
which, or impose terms and conditions which, would con-
travene” applicable sections of the Communications Act.
See First Report and Order, 85 F.C.C.2d 1, 31 (1980).*
No party sought review of that decision, or the reduced
tariff regulation that the FCC adopted to implement it.
Two years later the FCC reaffirmed its conclusion regard-
ing the presumptive lawfulness of non-dominant carrier
rates based on its expert review of subsequent events in
the market. The Commission then found that tariff regu-
lation of such carriers was unnecessary and granted per-
missive detariffing to resale carriers. See Second Report
and Order, 91 F.C.C.2d at 64-71. The next year the FCC
extended permissive detarifling to other non-dominant car-

=~

*In its 1979 Notice of Inquiry and Proposed Rulemaking, the
Commission announced its “tentative belief that competitive car-
rier rates are highly unlikely to contravene the Act.” 77 F.C.C.2d
308, 310. The Commission reasoned that under widely accepted
economic theory “the rates of non-dominant carriers are unlikely
to be either predatory or supra-competitive and thus are unlikely
to contravene” the proscription of 47 U.S.C. § 201(b) on unjust
and unreasonable rates. /d. at 334. Likewise, “these same factors
preclude these [non-dominant] carriers from unjustly discriminat-
ing in favor of some customers at the expense of their other cus-
tomers,” id. at 337, in violation of the Act’s prohibition on “unjust
or unreasonable discrimination in rates.” 47 U.S.C. § 202(a).
The Commission has repeatedly endorsed these conclusions, See,
e.g., First Report and Order, 85 F.C.C.2d at 5, 20; Second Report
and Order, 91 F.C.C.2d 59, 69 (1982); Fourth Report and Order,
95 F.C.C.2d 554, 577-578 (1983); Fifth Report and Order, 98
F.C.C.2d 1191, 1199-1202, 1207-08 (1984).

4

riers. See Fourth Report and Order, 95 F.C.C.2d at
578." No party sought review of any of these Commis-
sion decisions.

Thus, for well over a decade it has been a black letter
principle that non-dominant carrier rates, terms and other
service conditions are presumptively lawful. This princi-
ple is not before the Court today; indeed, it has never
been challenged.

The only issue here is whether the FCC’s authority to
modify any requirement of Section 203 of the Act is suffi-
cient to allow the Commission to excuse hundreds of non-
dominant carriers from filing tariffs that the Commission
has already held are presumptively lawful. The D.C. Cir-
cuit answered that question in the negative, and the ques-
tion is now before this Court on review.

SUMMARY OF ARGUMENT

This case goes directly to the heart of the FCC’s ability
to regulate developing telecommunications competition at
a time of great ferment in the industry. The court of
appeals has stripped the FCC of a crucial tool—clearly
entrusted to the Commission by the Communications Act
—by which it fosters competition.

The court of appeals read the plain meaning of Section
203(b)(2) too narrowly when it found that the express
grant of authority to “modify any requirement” of Section
203 did not give the FCC the flexibility to adopt permis-
Sive detariffing. This plain meaning is supported both by
the specific language of Section 203, the language and
Structure of other parts of the Act, and subsequent con-
gressional action. Because the Commission’s understand-
ing of the statute it administers is demonstrably correct,
“that is the end of the matter; for the court. as well as
the agency, must give effect to the unambiguously ex-

* At that time the FCC noted that over the preceding three years
it had received only five petitions challenging tariff filings of “spe-
cialized” (i.e., new) common carriers such as MCI, and that none
of the petitions had merit. See 95 F.C.C.2d at 578 n.79.

5

pressed intent of Congress.” Chevron U.S.A. Inc. Vv.
Natural Resources Defense Council, Inc., 467 U.S. 837,
842-843 (1984).

Should the Court find Section 203 ambiguous or un-
clear on the question presented, it is plain at a minimum
that the Commission's construction of this provision is a
permissible one. The D.C. Circuit below failed to defer to
the FCC’s reasonable interpretation of its governing stat-
ute as required by Chevron. Had it done so, it would
have found that the language of the Communications Act
amply supports the FCC’s decision to excuse non-
dominant carriers from filing tariffs.

Permissive detariffing is supported, not only by Section
203, but by the FCC’s expert and reasonable understand-
ing of the broader purposes of the Act—and the complex
industry conditions in which it applies. Section 1 of the
Act gives the FCC a broad mandate “to make available,
so far as possible, to all the people of the United States

a rapid, efficient, Nation-wide and world-wide wire and

radio communications service with adequate facilities at
reasonable charges.” 47 U.S.C. § 151.

The FCC determined nearly two decades ago that com-
petition can help meet these objectives. The amici here
owe their existence to that decision. But the challenge of
a transition from monopoly to competitive markets can-
not be overstated. Even today AT&T's long distance mar-
ket share is over 60°, three times greater than that of
even its largest rival. Equally important, competition with
local telephone companies is only now beginning. The
FCC had just taken its first major steps to encourage such
competition when the D.C. Circuit invalidated the permis-
sive detariffing policy.

The court of appeals struck down one of the most im-
portant tools used by the FCC to manage competitive
market development. The flexibility provided by Section
203 of the Act allows the FCC to avoid harmful and
unnecessary tariff regulation of developing competitors—

6

regulation that the Commission has found could prevent
competition from taking root in the face of the market
power of preexisting monopolies. The Commission then
has used this same flexibility gradually to reduce regula-
tion of the dominant monopoly as market competition
grows.

Significantly, the Commission long ago found that the
rates charged by non-dominant competitors are presump-
tively lawful under the Act because those carriers lack
market power. Indeed, the Commission made tariff filing
permissive only after it reaffirmed, based on further ex-
perience, that non-dominant carrier rates should continue
to be considered presumptively lawful. No party has
ever challenged this substantive conclusion.

The only issue here, then, is whether Section 203 should
be given a constricted reading so as to require the filing
of rates that the Commission has already found presump-
tively lawful, even though such a requirement would have
harmful effects on users of telecommunications services
and on the overall policy goals expressed in Section 1 of
the Act. In these circumstances the Court should respect
the language of Section 203, and restore to the Commis-
sion its full statutory authority to regulate competitive
market development.

7
ARGUMENT

I. THE FCC’S PERMISSIVE DETARIFFING POLICY
IS WELL WITHIN THE AUTHORITY DELEGATED
‘a TO THE COMMISSION IN SECTION 203

In ho'ding that the Commission’s authority to “modify
any requirement” of Section 203 does not permit it to
modify the tariff filing requirement, the court below re-
jected the agency’s interpretation of the statute it admin-
isters. Remarkably, it did so without analyzing the
agency’s construction under the principles announced by
this Court in Chevron U.S.A. Inc. vy. Natural Resources
Defense Council, Inc., 467 U.S. 837 (1984), the seminal
decision establishing the guidelines for analysis “[w]hen a
court reviews an agency's construction of the statute which
it administers * * *.” Jd. at 842.4. Under that familiar
analysis, “[f]irst, always, is the question whether Congress
has directly spoken to the precise question at issue. If
the intent of Congress is clear, that is the end of the
matter; for the court, as well as the agency, must give
effect to the unambiguously expressed intent of Congress.”
Id. at 842-843. If, however, “the court determines Con-
gress has not directly addressed the precise question at
issue, the court does not simply impose its own construc-
tion on the statute * * *. Rather, if the statute is silent
or ambiguous with respect to the specific issue, the ques-
tion for the court is whether the agency’s answer is based
on a permissible construction of the statute.” Jd. at 843.

*The D.C. Circuit’s unpublished per curiam opinion below did
not cite Chevron and relied exclusively on its opinion in American
Telephone & Telegraph Co. v. FCC, 978 F.2d 727 (D.C. Cir. 1992),
cert. denied, 113 8S. Ct. 3020 (1993). That opinion, in turn, men-
tions Chevron only to say that the court’s 1985 decision in MCI
Telecommunications Corp. V. FCC, 765 F.2d 1186 (D.C. Cir. 1985)—
which the D.C. Circuit found (incorrectly, we think) to be the
ultimate source for the decision below—did not cite Chevron. Thus,
although all of the tariffing decisions of the D.C. Circuit postdate
this Court’s decision in Cherro», that court has never analyzed
Section 203 under Chevron principles,

8

The D.C. Circuit’s failure to apply the teaching of
Chevron was fundamental error. One of the primary
effects of the approach mandated by this Court in Chev-
ron is to ensure the appropriate distribution of authority
in our federal system. As the Court observed in Chevron
itself:

While agencies are not directly accountable to the
people, the Chief Executive is, and it is entirely
appropriate for this political branch of the Govern-
ment to make such policy choices—resolving the
competing interests which Congress—itself either in-
advertently did not resolve, or intentionally left to
be resolved by the agency charged with the admin-
istration of the statute in light of everyday realities.
[467 U.S. at 865-866. ]

See also Pauley vy. Bethenergy Mines, Inc. 111 S. Ct.
2524, 2534 (1991) (judicial deference mandated by
Chevron “reflects a sensitivity to the proper roles of the
judicial and political branches”).° Chevron’s allocation
of the appropriate roles between the judiciary and the
executive is not, however, merely a matter of political
theory, for it also reflects the relative competence and
expertise of the two branches. For this reason, the Court
has found particular significance in the complexity of the
statute at issue, and the expertise of the agency in ad-
ministering it. See, e.g., id. (in the context of a “com-
plex and highly technical regulatory program” requiring
the application of “significant expertise” and “the exer-
cise of judgment grounded in policy concerns, * * *
courts appropriately defer to the agency entrusted by Con-
gress to make such policy determinations” ).°

* See also Laurence H. Silberman, Chevron—The Intersection of
Law and Policy, 58 Geo. Wash. L. Rev. 821, 822 (1990) (Chevron
“is simply a sound recognition that a political branch, the execu-
tive, has a greater claim to make policy choices than the judiciary”).

® Justice Scalia has explained that “one of [Chevron’s) major
advantages from the standpoint of governmental theory * * * is
to permit needed flexibility, and appropriate political participation,
in the administrative process.” Antonin Scalia, Judicial Deference

a

9

Long before the decision in Chevron, this Court recog-
nized the need for particular deference to the Commis-
sion’s judgments under the Communications Act. The
Act, the Court observed, is a “supple instrument for the
exercise of discretion by an expert body which Congress
has charged to carry out its legislative policy.” FCC v.
Pottsville Broadcasting Co., 309 U.S. 134, 138 (1940).
By its decision below, therefore, the D.C. Circuit imposed
its understanding of the statute not only in the face of
the contrary requirements of Chevron, but also against
the longstanding recognition of the Commission’s author-
ity to exercise the discretion granted by the “supple instru-
ment” handed to it by Congress sixty years ago to develop
regulatory policies that promote the national interest in
efficient, reasonably priced telecommunications.

Vindication of these longstanding principles is par-
ticularly important now, when the FCC is in the midst of
supervising the complex transition from monopoly to com-
petitive telecommunications markets. The FCC’s exercise
of its flexibility thus far has been a success. as demon-
Strated by the existence of the amici here and the im-
portant role they play in bringing innovative services to
the public.

The court below disregarded the authority given the
FCC by the plain meaning of the statute to excuse non-
dominant carriers from filing tariffs. Moreover, the court
did not acknowledge, let alone apply, its obligation to

to Administrative Interpretations of Law, 1989 Duke L. J. 511,
517 (1989). See also Thomas W. Merrill, Judicial Deference to
Executive Precedent, 101 Yale L. J. 969, 1002 (1992) (“the practice
of deferring to executive interpretations of statutes performs many
valuable functions: it allows policy to be made by actors who are
politically accountable; it draws upon the specialized knowledge of
the administrators; it injects an element of flexibility into statu-
tory interpretation; and it helps assure nationally uniform con-

structions”); Cass R. Sunstein, Law and Administration After
Chevron, 90 Colum. L. Rev. 2071, 2084 (1990) (“when agency
competence is relevant, deference is particularly appropriate”).

10
defer to the FCC’s reasonable interpretation of the Act.
As a result, the court’s decision must be reversed.

A. Congress Has Directly Spoken to the Question at
Issue by Providing the Commission with Authority
to Modify Any Requirement of Section 203, Includ-
ing the Tariffing Requirement

Amici fully concur in the submission of the Solicitor
General that “the FCC’s policy is not merely a reasonable
interpretation of the statute, it is the correct one.” 93-521
Pet. at 14. As this Court’s post-Chevron decisions have
explained, the inquiry under step one of the analysis is
an effort to “ascertain[] the plain meaning of the stat-
ute, * * * look[ing] to the particular statutory language
at issue, as well as the language and design of the statute
as a whole.” K Mart Corp. v. Cartier, Inc., 486 U-S.
281, 291 (1988).* These traditional tools of statutory
construction establish that the FCC correctly determined
that its permissive detariffing decisions were authorized
by the Communications Act.

a. As the Court has repeatedly noted, all Statutory
construction must begir with the text of the statute itself.
See, e.g., Negonsott v. Samuels, 113 §. Ct. 1119, 1122-23
(1993); Estate of Cowart v. Nicklos Drilling Co., 112
S. Ct. 2589, 2594 (1992). The “particular statutory
language at issue” in this case, K Mart Corp., 486 U.S.
at 291, is quite broad. Section 203(b)(2) gives the
Commission power “in its discretion and for good cause
shown,” to “modify any requirement made by or under
the authority of this section either in particular instances
or by general order applicable to special circumstances or

7 See Sullivan v. Everhart, 494 U.S. 83, 89 (1990); INS vy.
Cardoza-Fonseca, 480 U.S. 421, 449 (1987) (using “ordinary canons
of statutory construction” to ascertain meaning of the statute) ;
Chevron, 467 U.S. at 843 n.9 (inquiry into meaning of statute is
to be conducted “employing traditional tools of statutory construc-
tion”). See also Merrill, 101 Yale L. J. at 990-992 (describing
evolution of Chevron step one analysis).

et

ll

conditions except that the Commission may not require
the notice period specified in paragraph (1) to be more
than one hundred and twenty days.” 47 U.S.C. § 203(b)
(2) (emphasis added). The “requirements” of Section
203, of course, include the tariff filing requirement of Sec-
tion 203(a).* The D.C. Circuit, however, found that the
Commission, in excusing some carriers from the tariffing
requirement while continuing to apply it to dominant
carriers, did not “modify” that requirement. This decision
was plainly in error.

The D.C. Circuit's decision rested on the definition of
“modify” found in Black's Law Dictionary (Sth ed. 1979).
Pet. App. 53a. That dictionary defines “modify” as “[t]o
alter; to change in incidental or subordinate features: en-
large; extend; amend; limit: reduce.” Black's at 905. In
determining that the authority to “modify” permitted only

“circumscribed alterations,” Pet. App. 53a (emphasis

added), the court below apparently emphasized the por-
tion of the definition concerning changes in “incidental
or subordinate features.” Even this source, however, does
not so limit the meaning of the word. Thus, for example,
Black's also defines “modify” as “amend.” “limit.” or
“reduce.” None of these definitions is qualified with any

*The D.C, Circuit apparently believed that its decisions were
supported by the observation that Congress, in using the word
“shall” in section 208(a), employed the language of command.
See Pet. App. 52a. We have no quarrel with this observation. Byt
see Young V. Community Nutrition Institute, 476 U.S. 974 (1986)
(“shall” may in some circumstances be permissive). But use of
the term “shall” merely establishes that Congress in fact imposed
a “requirement”—which it then expressly gave the C: mmission the
authority to “modify.” See Webster's Ninth New Coll gqiate Die-
tionary 1002 (1989) (definition of “require” includes “to impose
a compulsion or command on”).

Indeed, the only “requirement” of Section 208 that is not ex-
pressly conditioned on the Commission's discretion to adopt regu-

lations (¢.¢., “as the Commission may by regulation require’)
is the basic tariffing requirement of Section 203 (a). Thus, unless
it applies to that requirement, the Commission’s modification

authority under Section 203(b) (2) would be wholly superfluous.

12

reference to “incidental or subordinate features.” Nor
does the ordinary, plain meaning of the term “modify”
include any such limitation.” Webster's Ninth New Col-
legiate Dictionary, for example, defines “modify” as
either “to make minor changes in” or “to make basic
or fundamental changes in order to give a new orientation
to or to serve a new end.” Jd. at 763. And this Court
has observed elsewhere that “the word ‘modify’ * * * jn
its broadest sense * * * encompass[es] any change or al-
teration * * *.” Chemical Manufacturers Ass'n v. Nat-
ural Resources Defense Council, Inc., 470 US. 116, 125
(1985) (emphasis added )."”

It is also evident from the “precise language at issue”
that Congress, rather than limiting the Commission’s
authority to modifications a court might find “incidental”
or “subordinate,” intended the broader definition of “mod-
ify” to apply here. Congress directly and expressly gave
the Commission the authority to modify “any” require-
ment of Section 203. There is no basis in this language,
or in the accepted meaning of the word “modify,” to hold
that only “circumscribed alterations” are permissible.

Under the precise language of the Statute, then, it is
plain that the permissive detariffing policy does not exceed
Statutory authority. By permitting non-dominant carriers

* Congress is presumed to intend the ordinary meaning of the
words it uses. Russello v. United States, 464 U.S. 16, 21 (1983);
Perrin V. United States, 444 U.S. 37, 42 (1979).

This Court has suggested that “(t}he existence of alternative
dictionary definitions * * *, each making some sense under the
Statute, itself indicates that the statute is open to interpretation.”
National Railroad Passenger Corp. V. Boston & Maine Corp., 112 S.
Ct. 1394, 1402 (1992). The mere existence of alternative dictionary
definitions does not compel analysis under Chevron’s second step
in this context. As we explain, other features of the Communica-
tions Act demonstrate that only one of the alternative dictionary
definitions—the broad one—makes “some sense under the statric ”
This Court has found a statute to be unambiguous even where
alternative dictionary definitions exist. See, e.9., Estate of Cowart
Vv. Nieklos Drilling Co., 112 8. Ct. 2589 (1992); Ardestani v. INS.
112 S. Ct. 515 (1991); United States v. James, 478 U.S. 597
(1986). See also Sunstein, 90 Colum. L. Rev. at 2091 & n.97.

i

a

13

to forego filing tariffs, the Commission simply relied on
its authority to “modify”—to change, alter, or amend—
“any” requirement of Section 203, including the tariff
filing requirement of Section 203(a).

2. In addition to the precise language at issue, the
language and structure of the Act as a whole confirm the
Commission’s understanding of the statute. We believe—
as the Commission did—that the statute contains three
specific indications of congressional intent. each confirm-
ing the authority of the Commission to adopt permissive
detariffing.

First, Section 203(b)(2) contains one—and only one
—express limitation of the authority to “modify any re-
quirement”: “the Commission may not require the notice
period specified in paragraph (1) to be more than
one hundred and twenty days.” The existence of an ex-
press limitation on the authority to modify strongly con-
firms that the Congress meant what it said when it
otherwise gave the Commission authority to “modify
any requirement” of Section 203. See Leatherman Vv.
Tarrant County Narcotics Intelligence and Coordination
Unit, 113 S. Ct. 1160, 1163 (1993); National Railroad
Passenger Corp. v. National Ass'n of Railroad Passengers,
414 U.S. 453, 458 (1974). In its Brief in Opposition,
AT&T offered no contrary explantion for this express
qualification on the FCC’s modification authority.

Second, the section of the Act immediately following
the express grant of authority to modify clearly contem-
plates that some carriers will be excused from the tariff
filing requirement. Section 203(c), which was ignored by
the court below, provides that “[njo carrier, unless other-
wise provided by or under the authority of this chapter,
shall engage or participate in [interstate and foreign wire
or radio| communication unless schedules have been filed
and published in accordance with the provisions of this
subchapter and with the regulations made thereunder”
(emphasis added). The plain meaning of this provision

14

is that it may be “provided”—here. by the Commission—
“under the authority of this chapter” that some carriers
may engage in such communications without filing and
publishing schedules of charges."

Third, Congress recently adopted another provision of
the Act, 47 U.S.C. § 226(h)(1)(A), confirming that it
Shares the FCC's interpretation of Section 203. That
provision, adopted as part of the Telephone Operator
Consumer Services Improvement Act of 1990, imposed on
non-dominant carriers offering operator services the duty
to file informational tariffs. Because the information re-
quired by such tariffs would be largely contained in any
tariffs filed under Section 203(a), this additional require-
ment of the 1990 statute would have been redundant if
these non-dominant carriers were required to file tariffs
under the Act. But Congress plainly did not intend to
adopt a redundant regulatory requirement. Rather, fully
aware of the Commission's permissive detariffing policy,"
Congress determined that a limited form of tariffing should
be reimposed on providers of certain services. Whether
considered as congressional acquiescence,” or simply as

'" AT&T has complained that this argument ignores the second
clause of Section 203(c), which, it says (without bothering to
quote the clause), “prohibits charging rates other than those filed
in tariffs.” Opp. at 16. But the second clause of Section 203(c)
prohibits a carrier from charging a different rate for eommunica-
tions “between the points named in any such schedule than the
charges specified in the schedule then in effect” (emphasis added).
This restatement of the filed rate doctrine, discussed infra at 28 to
29, applies by its own terms only to those circumstances where a
schedule has been filed and is in effect. Rather than “prohibiting
rates other than those filed in tariffs,” the statute clearly prohibits
only rates other than those specified in any tariff that is actually
filed (either by Commission mandate or voluntarily ).

'2 See FCC and NTIA Authorizations: Hearings Before the
Subcommittee on Telecommunications and Finance of the House
Committee on Energy and Commerce, 101st Cong., Ist Sess. 30
(1989); S. Rep. No. 439, 101st Cong., 2d Sess. 3-4 & n.10 (1990) ;
H.R. Rep. No. 213, 101st Cong., Ist Sess. 3, 5-6 (1989).

'* See National Railroad Passenger Corp. v. Boston & Maine
Corp., 112 8. Ct. at 1402 (finding agency's interpretation permissi-

a

15

additional statutory evidence of the scope of Section
203(b)(2), the requirement of Section 226(h)(1)(A)
confirms the Commission’s interpretation of the statute it
administers.

3. In reaching its contrary conclusion, the D.C. Cir-
cuit below relied for its Statutory construction exclusively
on its earlier decision in AT&T v. FCC, supra, which in
turn relied on its 1985 decision in MCI v. FCC, supra.
See Pet. App. 2a, 52a-53a. Although the AT&T court

court, however, did not recognize that the MCI deci-
sion was reached without the benefit of the subsequent
congressional action discussed above, which demonstrated
Congress's agreement with the FCC’s interpretation of
Section 203 as allowing “permissive detariffing.” More
importantly, the AT&T court overstated the relevance of
the MCI decision here: the reasoning of that decision
plainly does not compel affirmance of the D.C. Circuit's
erroneous decisions on permissive detariffing."*

The MCI case arose out of the Commission’s Sixth
Report and Order, 99 F.C.C.2d 1020 (1985), in which

ble where “statutory addition enacted by the Congress,” which did
not modify the specific language at issue, “confirms the [agency’s |
view” and contrary interpretation “would make the amendment
superfluous” ).

'' AT&T has suggested that the decision below was based on the
doctrine that “judicial construction of a statute binds subsequent
courts and eliminates ‘any issue of deference to the [agency ].’”
Opp. at 19 (quoting Lechmere, Inc. vy. NLRB, 112 S Ct. 841, 847
(1992)). But even if the D.C. Circuit’s decision was mandated by
its earlier AT&T decision, that decision certainly was not man-
dated by the MC/ decision, which expressly reserved the question
at issue here. None of these decisions, of course, binds this Court.
See generally Jahan Sharifi, Precedents Construing Statutes Ad-
ministered hy Federal Agencies After the Chevron Decision:
What Gives?, 60 U. Chi. L. Rev. 223 (1993).

-—

16

it prohibited carriers from filing tariffs. The issue, there-
fore, was “whether the Commission has statutory authority
to prohibit common carriers from filing tariffs * yf *.
Opp. App. 3a (reproducing MCI decision) (emphasis in
Original). The court held that the Commission, by pro-
hibiting the filing of the tariffs, had not adopted the “cir-
cumscribed alterations” permitted by Section 203(b) (2)
but rather had adopted a “wholesale abandonment or
elimination of a requirement.’ Jd. at lla (emphasis
added). The court viewed the mandatory detariffing pol-
icy before it as “fundamentally” different from the per-
missive detarifling policy at issue here. Jd. at 8a
(emphasis added). It specifically noted that “we do not
reach the question whether the FCC’s earlier permissive
orders are invalid.” Jd. at 20a.

The D.C. Circuit's subsequent AT&T decision relied
on the MC/ opinion—which, as noted, expressly reserved
the issue presented in AT&T and here—with little analy-
sis. Rather, the court simply repeated the language of
MCI and concluded: “Whether detarifling is made man-
datory, as in the Sixth Report, or simply permissive, as in
the Fourth Report, carriers are, in either event, relieved
of the obligations to file tariffs under section 203(a).
That step exceeds the limited authority granted the Com-
mission in section 203(b) to ‘modify’ requirements of the
Act.” Pet. App. 53a. This ipse dixit, however, provides
no support for the Court's extension of the MCI holding
on mandatory detarifling to the “fundamentally” different
permissive detarifling policy at issue here.

The MCI decision stands only for the proposition that
the authority provided in Section 203(b)(2) does not
permit the “wholesale abandonment or climination” of
Section 203(a) such that carriers are prohibited from
filing tariffs. The court thereby protected the opportunity
to file tariffs that also is present in Section 203. Some
carriers had noted affirmative reasons why they might
wish to retain tariffs, including simplification of contract-
ing with customers and coordination with corresponding

17

tariffs for intrastate services. See Sixth Report and Order,
99 F.C.C.2d at 1024-25 & n.13. They argued that Sec-
tion 203 allowed them to maintain interstate tariffs on
file with the FCC, even if the FCC itself had no material
interest in the tariffs for its own purposes, and was willing
to make such filings voluntary.

But unlike the mandatory detariffing at issue in MCI,
permissive detariffing does not constitute “wholesale aban-
donment or elimination” of the requirements of Section
203. Rather, the Commission, “in its discretion and for
good cause shown,” Section 203(b)(2). modified the
requirement by making the mandatory element of that
section applicable only for tariffs that are not presump-
tively lawful—i.e., tariffs of carriers with market power.
The FCC also retained regulation of other carriers
through its complaint process and investigative powers.

It is one thing to hold that the Commission may not
modify a statutory command by turning it into a prohibi-
tion—the action the D.C. Circuit condemned in MCI—
thereby affecting carriers’ opportunity to file tariffs if they
wish. But it is quite something else to say that the Com-
mission may not modify the command by excusing some
carriers from compliance where the Commission itself has
no further need for the relevant tariff filings to meet its
statutory duties. In the language of the D.C. Circuit. the
former is more plainly a “wholesale elimination or aban-
donment,” while the latter bears the characteristics of an
alteration that is “circumscribed,” i.¢., limited in its appli-
cation. Thus, even if the MCI case accurately describes
the boundaries of the statutory authority (an issue this
Court need not reach), that case does not compel the
decision reached by the D.C. Circuit in the “fundamen-
tally” different context presented here.

18

B. At a Minimum, the FCC’s Construction of the Stat-
ute it Administers is Reasonable and Entitled to
Deference from the Courts

Although this case may be resolved on the basis of the
plain evidence of the statute’s meaning, the foregoing
demonstrates, at a minimum, that the agency's construc-
tion of the statute is a permissible one entitled to defer-
ence under Chevron. As the Chevron Court explained, an
agency’s interpretation of an ambiguous statute is entitled
to deference so long as it “ ‘represents a reasonable ac-
commodation of conflicting policies that were committed
to the agency’s care by the statute.” 467 U.S. at oo
(quoting United States Vv. Shimer, 367 US. 374, 38:
(1961)). Once a court determines that the issue is not
definitively resolved by the statute, “it is incumbent upon
[the party challenging the agencys— interpretation] to
establish that the agency’s construction Is inconsistent
with the structure and purpose of the statute and therefore
impermissible.” Silberman, 58 Geo. Wash. L. Rev. at
827. AT&T cannot carry that burden here.

When analyzing an agency construction of a statute
under step two of the Chevron test, this Court has de-
ferred to any reasonable or rational agency construction.
As the Court observed just last Term:

[W]Jhere the agency’s interpretation of a statute is
at least as plausible as competing ones, there is little,
if any, reason not to defer to its construction. We
should be especially reluctant to reject the agency's

15 See, e.g., Estate of Cowart, 112 8. Ct. at 2594 (deference is
owed to a “reasonable” statutory interpretation from an adminis-
tering agency); Pauley v. Bethenergy Mines, Inc., 111 8. Ct. at
2535 (agency position “entitled to deference” so long as it is reason-
able): NLRB v. United Food & Commercial Workers Union, 484
U.S. 112, 123 (1987) (question is whether agency’s construction is
“rational and consistent with the statute”) ; Chemical Manu facturers
Ass’n v. Natural Resources Defense Council, Inc., 470 U.S. at 125
(agency’s construction sustained if it is a “sufficiently rational

one’).

19

current view, which, as we see it, so closely fits “the
design of the statute as a whole and * * * its object
and policy.” [Good Samaritan Hosp. v. Shalala, 113
S. Ct. 2151, 2161 (1993) (quoting Crandon v.
United States, 494 U.S. 152, 158 (1990) ).]

We have already demonstrated that the agency’s construc-
tion fits closely with the language and design of the stat-
ute. We explain below that this construction—which even
the D.C. Circuit called “not insubstantial,” Pet. App. 52a
—also is a reasonable implementation of the object and
policy that guide the statute.

1. Section 1 of the Communications Act, 47 U.S.C.
§ 151, imposes on the FCC the mandate “to make avail-
able, so far as possible, to all the people of the United
States a rapid, efficient, Nation-wide, and world-wide wire
and radio communication service with adequate ‘ucilities
at reasonable charges.” This directive was given “at a
time when there was little or no competition in tele-
communications.” Notice of Inquiry and Proposed Rule-
making, 77 F.C.C.2d at 359. However, as new technologi-
cal and legal developments permitted the introduction of
competition into certain market segments, the FCC recog-
nized its obligation under Section 1 to foster such com-
petition to improve telecommunications efficiency and
choice for consumers, as well as to reduce prices. As
discussed above, in the Competitive Carrier Rulemaking
the FCC adopted regulatory policies applicable to new
entrants, including a finding that the rates and service
terms of competitors are presumptively lawful. Again,
this conclusion has never been challenged, and will remain

a governing principle however the Court decides this case.
See supra at 3-4.

It follows that when the FCC construed Section 203, it
reasonably concluded that the modification authority pro-
vided there was broad enough to permit it to excuse non-
dominant carriers from filing tariffs that the Commission
did not require in order to meet its statutory obligations.
Permissive detariffing was a small and logical step.

20

The Court should recognize that even though the FCC
has created a presumption that non-dominant carrier rates
are lawful (and excused tariff filing on that basis as un-
necessary), the Commission at all times has retained full
authority to examine such rates upon customer complaint
or its own motion. See, e.g., Second Report and Order,
91 F.C.C.2d at 70; Fourth Report and Order, 95
F.C.C.2d at 556. Non-dominant carriers must stand ready
to file relevant rate information upon request, and have
that information evaluated under the statutory standards.
Thus, in no respect did the Commission abandon its
fundamental responsibility to protect consumers from un-
lawful rates when it exercised its modification discretion
under Section 203(b)(2).

The FCC’s construction of Section 203 is even more
clearly reasonable given the affirmative harm the Commis-
sion found that mandatory tariff filing would do to its
general obligations under Section 1. As early as 1979,
in the first notice in the Competitive Carrier Rulemak-
ing, the FCC expressed concern that “some of the poten-
tial public benefits which we had hoped would flow
from freer entry have been frustrated, in part, by con-
tinued adherence to rules and procedures governing tar-
iff filings * * * designed primarily for carriers with
dominant market positions and monopoly services.” No-
tice of Inquiry and Proposed Rulemaking, 77 F.C.C.2d
at 330. See also id. at 309. For example, the FCC
found that tariff requirements imposed significant im-
pediments to market entry, for the direct costs of pre-
paring, filing, and maintaining a current tariff are substan-
tial. 7d. at 359.

These costs take on heightened significance in the con-
text of firms with little or no market power trying to
break in against a longstanding industry giant. From the
time of its initial notice in 1979, the Commission has re-
woe found that tariff filings in the context of an
otherwise competitive market would likely have anticom-
petitive effects. As the FCC explained, carriers attempt-
ing to compete “must cither offer services unavailable

21

from the established carriers or, more likely, offer services
with rates, conditions and practices more favorable than
those offered by the established carriers.” Jd. at 324
The FCC saw that dominant monopoly carriers could
use the tariff process to squelch such competitive market
developments. Id. The Commission further found that
continued regulation of non-dominant firms would “dis-
courage the introduction of new, competitive services,”
act as a barrier to market entry by new firms and
inhibit innovative pricing mechanisms. /d.

_ The FCC has endorsed these conclusions repeatedly in
its decade of experience with the deregulation of non-
dominant interexchange carriers.° For example, the FCC
emphasized in the rulemaking directly at issue here its
finding that “mandatory tariff regulation of non-dominant
Carriers was in fact at odds with the fundamental statutory
purpose set forth in Section 1 of the Act because it in-
hibits price competition, service innovation, entry into
the market, and the ability of firms to respond quickly to
market trends.” Pet. App. 27a." /

16 See, e.g., Fourth Report and Order, 95 F.C.C.2d at 555 n.l
( tariff filing requirements “impede entry, impair competitive pric-
ing, and facilitate collusive conduct’’) (citing United States v
United States Gypsum Co., 438 U.S. 422, 457 (1978) (“the exchan
of price information among competitors carries with it the added
potential for the development of concerted price-fixing arrange-
ments”) ) ; Second Report and Order, 91 F.C.C.2d at 71 (tariff
“requirements stifle price competition and service and marketing
innovation”) ; Further Notice of Proposed Rulemaking, 84 F.C.C.2d

at 454 (“Tariff posting * * * provides an excellent mechanism for
inducing noncompetitive pricing”).

. '? The FCC has endorsed the fundamental conclusions supportin
its regulatory decisions even after the D.C. Circuit issued the
decision below. In response to the AT&T decision the Commissio
reaffirm[ed]" its “policy findings, adopted nearly a decade ago si
Competitive Carrier, and conclude[d] that * * * traditional ta if
regulation of nondominant carriers is not only unnecessary os
awure just and reasonable rates, but is actually counterproductive
” Tariff Piling Requirements for Nondominant Carriers
Memorandum Opinion and Order, 8 FCC Red. 6752, 6752 ( 1993)
(footnote omitted) (“Rate Range Order” ), appeal pending sub nom

22

2. The Commision’s judgment that the permissive
detariffing modification serves the goals of the Communi-
cations Act has been confirmed by its actual effect on the
marketplace for long distance services. As the Commis-
sion noted below, “permissive detariffing has proven to
be a success over the years, as evidenced by the robust
competition in the interexchange [long distance] market
and the increased choices for consumers with respect to
carriers and prices.” Id. at 29a. Such choices advance
Section 1’s mandate of “adequate facilities at reasonable
charges.”

Amici are a product of the Commission’s actions. Con-
sumer options have increased dramatically under permis-
sive detariffing: “In 1982, approximately a dozen long
distance carriers operated within the United States. By
March 1992, there were an estimated 482 such carriers
purchasing switched access from local exchange carriers.”
Id. at 30a. AT&T’s share of the market, while still large
enough to secure its place as the dominant carrier, “de-
clined from over 80% to just more than 60%, while its
rates for directly dialed interstate [service] have also
fallen substantially.” Jd.”

Given the costs and negative effects resulting from
tariff filings by non-dominant carriers, the FCC’s decision
to free those carriers from the obligation to make such
filings plainly was a substantial factor in this market
maturation. Indeed, the Competitive Telecommunications
Association told the FCC that many of the companies

Southwestern Pell Corporation v. FCC, Nos. 93-1562 et al. (D.C.
Cir. filed Aug. 30, 1993). Nevertheless, the FCC was constrained
to impose some type of tariff regulation on nondominant carriers
because the court below had held that filed tariffs are required by
the Act.

18 The FCC has reported that “[b]y mid 1993, about 72% of the
nation’s [telephone] lines were presubscribed to AT&T, 15% to
MCI and 6% to Sprint,” with “[o]ver four hundred smaller car-
riers” accounting for the remainder of the interstate long distance
industry. FCC Industry Analysis Division, Long Distance Market
Shares, Third Quarte”, 1993 at 3 (December 1993).

23

operating in the market “would not be in existence today
were it not for the Commission’s policy of encouraging
competition in the telecommunications marketplace
through the lifting of unnecessary and burdensome regu-
lations.” Reply Comments of the Competitive Telecom-
munications Association at 11."

_ Perhaps the most compelling confirmation that permis-
sive detariffing fosters the Act’s general purpose is the
unanimity of the users of long distance telecommunica-
tions services in support of the policy. For example, the
Ad Hoc Telecommunications Users Committee (the on-
going representative of major corporate telecommunica-
tions departments on regulatory issues), called the Com-
mission’s policy “a major regulatory success story” as a
result of which “[c]ompetition has burgeoned in the long-
distance marketplace.” Comments at 3. Likewise, the
International Communications Association, which de-
scribes itself as “the largest association of telecommunica-
tions users in the world,” observed that the permissive
detarifling policy permits non-dominant common carriers
“to make rapid, efficient responses to changes in demand
and cost * * * and price competitively,” all without any
detriment to users. Comments at 5.

In short, the FCC’s detariffing policy has served the
goals of the Communications Act well, just as the Com-
mission hoped when it announced that policy over a
decade ago. Adopted at a time of almost no competition

' Citations to comments are to those comments received by the
FCC in response to Tariff Filing Requirements for Interstate
Common Carriers, Notice of Proposed Rulemaking, 7 FCC Red 804
(1992), the proceeding that led to the decision at issue here.

See also Comments of OCOM Corporation at 8 (“Many of the
smaller carriers today would not be here now or be able to continue
offering competitive services under a more burdensome regulatory
structure.” Permissive detariffing is “critical to the survival of a
substantial number of nondominant interexchange carriers”) :
Reply Comments of the United States Commerce Department's
National Telecommunications and Information Administration at 5.

24

in the market for long distance services, the policy has
enabled hundreds of new firms to enter and begin to com-
pete effectively by offering innovative service and rate
plans. Prices for long distance service have decreased
dramatically. There is no evidence of widespread viola-
tions of the substantive pricing prohibitions in Sections
201(b) and 202(a) of the Act. Nothing has led any
party to ask the FCC to reconsider its finding that non-
dominant carrier rates are presumptively lawful.

These substantial marketplace benefits, however, could
easily be lost, and further development of competition
stunted, if the decision below stands. A mandatory tariff
requirement on non-dominant carriers necessarily curbs
those carriers’ ability to offer innovative price and service
plans to meet customer needs as they arise. See Further
Notice of Proposed Rulemaking, 84 F.C.C.2d at 454.
This is true even though the FCC has attempted to min-
imize the tariff burden on non-dominant carriers as it
responds to the court of appeals decision here. The Com-
mission has permitted non-dominant carriers to file so-
called rate range tariffs setting forth minimum and max-
imum rates and offering prices within the bands. See
Rate Range Order, supra. Even these tariffs impose un-
necessary burdens on carriers, and in any event AT&T
and certain local telephone companies have challenged the
Commission’s Rate Range Order based on the same court
of appeals decision at issue here. See Telecommunications
Reports, Sept. 13, 1993, at 22. In a long distance market
where one firm still controls more than 60 percent of the
business, any reduction in the pressure of competi-
tion is likely to be damaging to that market’s further
development.”

20 It should be emphasized that as the long distance marketplace
has become more competitive, the FCC also has substantially re-
laxed its regulation of AT&T to permit AT&T to respond to that
competition. Today virtually all AT&T tariffs also are considered
presumptively lawful. AT&T has broad freedom to negotiate prices

25

3. The statutory purposes served by the permissive
detariffing modification are not limited to the long dis-
tance arena. The FCC has concluded that this policy is
equally required for the development of other markets
where telecommunications competition is far less.advanced. _

Local telephone service is a prime example. This multi-
billion dollar market is now the domain of the Bell Oper-
ating Companies and other local exchange telephone com-
panies (“LECs”). But like the long distance market in
the early 1980s, the local telephone market is the focus
of increasing competition.”

The Association for Local Telecommunications Services
(“ALTS”) explained in comments before the FCC that
its member non-dominant competitive access provides
(“CAPs”) “attempt to compete directly with dominant
local exchange carriers” by “deploy[ing] innovative tech-
nologies—including fiber optic and microwave networks”
—in metropolitan areas across the country. ALTS Com-

with customers on a competitive basis, and then file simple tariffs
reflecting the rates and other major elements of the resulting con-
tracts. See Competition in the Interstate Intererchange Market-
place, Report and Order, 6 FCC Red 5880, 5882, 5894, 5897 (1991).
Given AT&T’s continued domination of the long distance market, the
FCC has not been willing to excuse AT&T altogether from filing
tariffs—the FCC still sees the need to oversee AT&T’s conduct to
that extent. However, AT&T has recently filed a request for the
FCC to extend permissive detariffing to it as well; that request is
now under consideration by the Commission. Motion for Reclassi-
fication of AT&T as a Nondominant Carrier, filed by AT&T in the
Competitive Carrier Rulemaking (Sept. 22, 1993).

*1 As the Commission has explained: “For many years, local
exchange carriers (LECs) faced little or no competition in pro-
viding the local access facilities and services used in the provision
of interstate communications. Recent changes, however, have facili-
tated the development of competition in the provision of these
facilities and services.” Expanded Interconnection with Local Tele-
phone Company Facilities (“Expanded Interconnection”), Notice
of Proposed Rulemaking and Notice of Inquiry, 6 FCC Red 3259,
8259 (1991).

26

ments at 1-2. Thus, for example, amicus Metropolitan
Fiber Systems “operates state-of-the-art digital fiber optic
telecommunications networks in the business districts” of
cities throughout the United States. Comments of Metro-
politan Fiber Systems at 2. See also Comments of Local
Area Telecommunications, Inc. at 1 (company Provides
“a broad range of * * * competitive access services, pri-
marily via microwave facilities”). Nevertheless, the CAP
share of the total market for local telephone exchange
services remains less than one percent. ALTS Comments
at 5-6.

The Commission has recently adopted new local ex-
change policies to begin what it calls “the process of
opening the remaining preserves of monopoly telecom-
munications service to competition.” See, e.g., Expanded
Interconnection, Report and Order and Notice of Pro-
posed Rulemaking, 7 FCC Red 7369, 7372 (1992). In
that context, the Commission noted the success of its de-
regulatory approach toward long distance services. /d. at
7378. The FCC similarly believed that greater competi-
tion in the local telephone market should increase
“incentives for efficiency and encourage deployment of
advanced technologies facilitating new and innovative
services.” Expanded Interconnection, Second Report and
Order and Third Notice of Proposed Rulemaking, 8 FCC
Red 7374, 7383-84 (1993). The Commission has taken
several actions to foster competition in the local telephone
market, and further proposals are pending.”

The FCC’s steps to promote new local service competi-

tion have taken place against a background of permissive
detariffing for non-dominant CAPs,” supported by the

22 See, e.g., Expanded Interconnection, Second Notice of Proposed
Rulemaking, 7 FCC Red 7740, 7747-49 (1992).

23 See, e.g., Tariff Filing Requirements for Nondominant Common
Carriers, Notice of Proposed Rulemaking, 8 FCC Red 1395, 1397
(1993) (“Since their inception, CAPs have not been burdened by
interstate tariff filing requirements”).

27

same FCC statutory construction and policy conclusions
arrived at in the Competitive Carrier Rulemaking de-
scribed earlier. Under the decisions below, however, the
Commission has been required to reimpose tariff regula-
tion on the CAPs along with all other non-dominant
carriers.“ Such regulation substantially and unnecessarily
interferes with the still-emerging competition in the local
market, no less than it would have interfered with new
long distance competition a decade ago. CAPs face sub-
stantial hurdles to market entry, including the need for
massive capital investment and vigorous price competi-
tion from the reigning monopolists. As ALTS explained
below, “[i]mposition of a mandatory tariffing obligation
would impose a substantial economic burden on such
carriers. The costs associated with the preparation and
maintenance of federal tariffs—legal and consulting fees,
the diversion of personnel, the filing fees—constitute an
expense the CAPs can ill afford.” ALTS Comments at
6-7. More important, mandatory tariffing can provide an
opportunity for the dominant LECs to bring price and
service rigidity to the marketplace, thereby discouraging
innovations CAPs might offer in service or price and
stifling the newborn competitors.

Local telephone competition holds the promise to rev-
olutionize the nation’s telecommunications infrastructure.
The FCC envisions a future in which multiple carriers—
local and long distance, mobile and wireline—intercon-
nect with one another and compete to offer business and
residential users advanced quality services at lower prices.
To reach that goal—the goal mandated by Section 1 of
the Communications Act—the FCC will need all the
flexibility provided by the Act. In these circumstances,
the FCC’s construction of Section 203 is entirely reason-
able and demands deference from the judicial branch.

**See Tariff Filing Requirements for Nondominant Common
Carriers, Memorandum Opinion and Order, 8 FCC Red 6752, 6754
(1993).

28

II. THE FCC’S DECISION DID NOT IMPLICATE THE
FILED RATE DOCTRINE, WHICH DOES NOT
SPEAK TO THE QUESTION OF WHEN RATES
MUST BE FILED

This is not a filed rate doctrine case. Indeed, under
the FCC’s decision hundreds of non-dominant carriers
filed no tariffs, and hence had no “filed rate”. Amici make
this observation only because AT&T has placed tremen-
dous weight on the filed rate doctrine here, and particu-
larly on the Court's application of that doctrine in the
context of a different regulatory statute,\in Maislin Indus-
tries, U.S., Inc. Vv. Primary Steel, Inc., 497 US. 116
(1990). In its opposition to the petitions for certiorari,
for example, AT&T repeatedly asserted that the D.C.
Circuit’s decision below was ‘required * * * by a long
line of this Court’s decisions culminating in Maislin.”
Opp. at 1. See also id. at 5 (the decision in Maislin “elim-
nated any possibility that the FCC, might have the author-
ity that MCI claimed”); 7, 9-14, 19-20. But the decision

2% The D.C. Circuit in AT&T, by contrast, observed in a footnote
only that its decision was “somewhat buttressed” by Maislin and
cited the “shared lineage” of the Communications Act and the
Interstate Commerce Act. Pet. App. 53a-54a n.12. This genealogical
approach to statutory interpretation, however, cannot substitute
for a precise examination of the language at issue, which both the
D.C. Circuit beiow and AT&T in this Court have declined to offer.
As the petitioners demonstrated in their replies to the opposition
to the petitions, the language of the Communications Act is dif-
ferent in vital respects from that of its ancestor the Interstate
Commerce Act. Amici agree with petitioners that Maislin, which
discusses the filed rate doctrine in the context of the Interstate
Commerce Act, does not control how the doctrine would be applied
under the Communications Act, and in any event that decision is
irrelevant here. To the extent that reasoning by analogy to other
regulatory contexts is appropriate, a more apt analogy is to this
Court’s decision in Permain Basin Area Rate Cases, 390 U.S. 747
(1968), in which the Court endorsed the Federal Power Commis-
sion’s regulatory decisions that “began a new era in the regulation
of natural gas producers.” /d. at 755.

Pe

ge et tT et Sey ee AERP Dee

Se

29

below was in no way compelled (as AT&T contends) by
the filed rate doctrine.

Properly understood, AT&T’s extreme reliance on
Maislin is a red herring. The filed rate doctrine involves
the relative enforceability of inconsistent contract and
tariff terms; it provides that in such a case a bona fide
tariff provision governs. The specific question in Maislin
was “the validity of [an ICC] policy * * * that relieves
a shipper of the obligation of paying the filed rate when
the shipper and carrier have privately negotiated a lower
rate.” 497 U.S. at 119 (emphasis added). The resolu-
tion of that question, the Court found, rested on a straight-
forward application of the filed rate doctrine: the filed
tariff rate applied.

This case, by contrast, involves the entirely different
question of whether a tariff rate is required in the first
place. The filed rate doctrine has nothing to say about
this question. None of the filed rate doctrine cases AT&T
cites involves an interpretation of the scope of the tariff
filing requirement. The question at issue in this case is
not answered by citation of the doctrine; it is instead
answered by the specific language of the Communications
Act. See Maislin, 497 U.S. at 136 (Scalia, J., concurring)
(“prior ‘filed-rate’ decisions * * * were based not on the
‘regulatory scheme as a whole,’ * * * but rather on the
text of the statute”). Based on its reasonable interpreta-
tion of Section 203, the FCC properly relieved non-
dominant carriers of the obligation to file tariffs at all.

30
CONCLUSION

For the foregoing reasons, and those in the briefs of
petitioners, this Court should reverse the decision below.

Respectfully submitted,

PETER A. ROHRBACH

DAVID G, LEITCH *

KARIS A, HASTINGS

HOGAN & HARTSON

555 Thirteenth Street, N.W.
Washington, D.C. 20004
(202) 637-5822

* Counsel of Record Counsel for Amici Curiae

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385013_0450%3A14. Public record. Not legal advice.