# Petition for Writ of Certiorari — National Ass'n of Regulatory Utility Commissioners v. Federal Communications Commission > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385608_1167%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1975 - **Citation:** 423 U.S. 836 ## Text (i) TABLE OF CONTENTS ot PPP ETETITITICE TEETER TLE io i) reer errr rere eee ee eer er ee ree QUESTIONS PRESENTED ..... 2... ccccccccceecs STATUTORY PROVISIONS INVOLVED............ STATEMENT OF THE CASE ..............2000055 REASONS FOR GRANTING THE WRIT ............ II. Il. The FCC’s “Free Entry”’ Policy for Specialized Com- mon Carriers Conflicts with this Court’s Deter- mination in FPC v. Texaco, Inc., 417 U.S. 380 (1974), that a Regulatory Agency May not Defer to the Market Place as the Measure of a Statutorily Mandated Decisional Standard................ The Extent to which a Reviewing Court Should Con- sider Subsequent Inconsistent Agency Action is an Important Question of Administrative Law which is Likely to be Recurring, and which Requires Guid- og ee eee Sanction by the Court of Appeals of the FCC’s Failure to Comply with NEPA so far Departs from an Acceptable Course of Judicial Review that this Court Should Exercise its Supervisory Powers ..... CRAIG i oc SRG kde ews gene eee nadestsewens 19 20 ERIN LIT RLS EI YR NE gS DOP TR (ii) TABLE OF AUTHORITIES Page Cases: Allocation of Microwave Frequencies Above 890 Mc,27 F.C.C. 359 (1959), affirmed and modified on recon- sideraiion, Allocation of Frequencies in Bands Above 890 Me, 29 F.C.C. 825 (1960)... 0... eee eee eee 7 Burlington Truck Lines v. United States, 371 U.S. 156 Cee Ce ee Ce TELE TOURETTE EEE 16, 20 CAB v. Delta Air Lines, 367 U.S. 316 (1961). ........... 16 Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402 | SRP PEO er ere et eee ee eee ee a 20 CPI Microwave, Inc., 37 F.C.C. 2d 1120 (1972) ERS On ere ee 19 Data Transmission Company, 34 F.C.C. 2d 306 (1972) .... 19 FCC v. RCA Communications, Inc., 346 U.S. 86 ASSES SS ees ay er are ea 1S FPC v. Texaco, Inc., 471 U.S. 380 (1974) .......... 14, 15, 16, 17,19 In the Matter of Economic Implications and Interrela- tionships Arising From Policies and Practices Relating to Customer Interconnection, Jurisdictional Separations and Rate-Structures, Notice of Inquiry, 46 F.C.C. 2d 214 (1974) ......... 12, 22 Memorandum Opinion and Order, 49 F.C.C. 2d ROS Ea arn tee 21 First Supplemental Notice, 50 F.C.C. 2d 574 (1974) . . 12 the Matter of Establishment of Policies and Procedures for Consideration of Applications to Provide Specialized Common Carrier Services in the Domestic Public Point- to-Point Microwave Radio Service and Proposed Amend- ments to Parts 21, 43, and 61 of the Commission's Rules, (iii) Notice of Inquiry to Formulate Policy, Notice of Pro- posed Rule Making, and Order, 24 F.C.C. 2d 318 i. Peer Pee TY COTTE LTE TORE TL TE CTE TET First Report and Order, 29 F.C.C. 2d 870(1971) .... Memorandum Opinion and Order, 31 F.C.C. 2d 1106 In the Matter of Implementation of the National Envi- ronmental Policy Act of 1969, Notice of Proposed Rule Making, 36 F.C.C. 2d 108 i PPP ST TT eer rr rrrre Tere re cree Report and Order, 49 F.C.C. 2d 1313 (1974). ....... Order, SO F.C.C. 2d 814 (1975) .. 6... ee eee eee MCI Carriers, 27 F.C.C. 2d 380(1971) «2... eee eee ees 32 F.C.Gedd SOCIGTA) . ww ccc eee eccce pf eal le | oy ee 37 F.C.C. 2d 1120(1972) (notations)....... Microwave Communications, Inc., 18 F.C.C. 2d 953 (1969), reconsideration denied, 21 F.C.C. 2d 190(1970)....... Nebraska Consolidated Communications Corporation, 35 F.C.C. 2d 991 (1972) (notation). ... 2... eee ee eee New York v. United States, 342 U.S. 882 (1951) (Douglas, J., dissenting). ... 0... ccc cece ee eee e teen eens NLRB v. Metropolitan L. Ins. Co., 380 U.S. 438 POPPE TEPUCTT ETE CET ELT CERES E EE SEC v. Chenery Corp.. 332 U.S. 194(1947). 2... 6.6 ee eee Smith v. Illinois Bell Telephone Co., 282 U.S. 133 SOULS GAR AWARRAL RD RANAR NAS 6 Oba Skane Ree ws Southern Pacific Communications Company, 37 F.C.C. 2d ES Gc beks Ache eke sk eesnSevecnsena vas 10, 11 passim 21 25 12,25 13 ; 19 : 19 19 19 : 7,10, 21 19 o LV OONE NE Rg LOE ELON TE IL, EPS LPO SATEEN! SIE RLE ENT ER MSO ET INI EL Bt A 1 Rg rere | scm ID saith (iv) Page United States Transmission Systems, 48 F.C.C. 2d 859 Ae eee ee ee ey ee ee 19 Western Tele-Communications, Inc., 35 F.C.C. 2d 991 inch weed nauk Some heed nes eane 19 Statutes: Administrative Procedure Act, 5 U.S.C. § 706(1970) ..... 20 Communications Act, 47 U.S.C. § 151, et seg. (1970) ..... passim 47 U.S.C. § 201, et seg. (1970) (Title I) ............. 5 pg Rie bo 6S PEP eee EEE LTT eee 12 AF ee RAN ha cA Sin aban ecsaciawececses 6 47 U.S.C. § 301, et seg. (1970) (Title III)............. 5 SF MAE a Gh a dha as ce becascccasbenss 12 47 U.S.C. § 310(1970, Supp. IID)... 2... eee ee ee eee 19 47 U.S.C. § 410(c) (1970, Supp. TID)... 2... eee ee eee 3 National Environmental Policy Act, 42 U.S.C. § 4321, et AS Orr rr ree eee eee TEST Te eS passim pe Re ene er ee 2 CLR ok 0 i re 3 oe re eee rea 3 LR ee Go err rere rer rere 3 Miscellaneous: Hearings before the Subcommittee on Communications of the Committee on Commerce, United States Senate. on Overview of the Federal Communications Commission, 92d Cong., 2d Sess., Serial No. 92-54(1972).......... 7 IN THE Supreme Court of the Mnited States OCTOBER TERM, 1974 NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION, et ai., Respondents. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT Petitioner, the National Association of Regulatory Utility Commissioners, respectfully prays that a writ of certiorari issue to review the judgment and opinion of the United States Court of Appeals for the Ninth Circuit entered in this proceeding on January 20, 1975. OPINIONS BELOW The opinion of the Court of Appeals, which has not yet been generally reported,’ appears at Appendix A to this petition.’ The First Report and Order of the Federal Com- ' However, excerpts of the opinion appear at 43 U.S.L.W. 2341 (February 18, 1975). ? The appendices are separately bound in a companion volume. hereinafter cited as ‘‘Pet. App.” con UP OLIN 2 munications Commission (FCC), which is reported at 29 F.C.C. 2d 870 (1971), appears at Appendix C, and its Memorandum Opinion and Order denying recon- sideration, reported at 31 F.C.C. 2d 1106 (1971), appears at Appendix D. JURISDICTION The judgment of the Court of Appeals for the Ninth Cir- cuit was entered on January 20, 1975. A timely petition for rehearing was denied on March 12, 1975, by an order which appears at Appendix B, and this petition for certiorari is filed within 90 days of that date. The jurisdiction of this Court is invoked under 28 U.S.C. § 1254(1) (1970). QUESTIONS PRESENTED 1. Whether the FCC exceeded its authority under the Communications Act by promulgating, on the basis of a rulemaking proceeding, a ‘‘free entry” policy for new ap- plicants seeking to provide specialized common carrier ser- vices to the public. 2. Whe*'«t an FCC decision may be sustained as rational, when the FCC has subsequently instituted an in- vestigation of basic issues which were raised in the subject decision but were rejected by the FCC as being without merit. 3. Whether a Court of Appeals may permit the FCC to ignore the National Environmental Policy Act (NEPA), on grounds of timeliness of raising the issue that arguably may have been initially justified, when the Court’s decision on review is not issued until two years after oral argument on the appeal, and at that time the FCC still had made no move to comply with the law.’ ‘In the event certiorari is granted, petitioner may also present the related issue for a ruling, namely, whether the FCC's failure to comply with NEPA should have been excused by the Court of Appeals had there been no extended delay in rendering its decision. PERS A SNR 3 STATUTORY PROVISIONS INVOLVED 1. Communications Act of 1934, as amended, 47 U.S.C. § 151 et seq. (1970). 2. National Environmental Policy Act of 1969, 42 U.S.C. § 4321 et seg. (1970). 3. Administrative Procedure Act, 5 U.S.C. § 551 e2 seq. (1970). Relevant sections of the statutes are set out in Ap- © pendices E through G, respectively. STATEMENT OF THE CASE In this case the NARUC challenges a major policy decision of the Federal Communications Commission es- tablishing a general rule favoring the unlimited or ‘‘free” entry of new entities seeking to provide domestic private line communications common carrier services to the public. EEE LL LES LN IVE RDA IS OTP LT Background. For many years, common carrier telecom- munications services have been provided to the American people through chosen instruments regulated by Federal and State regulatory agencies. The Congress created the FCC in 1934 to regulate interstate carrier telecom- munications services, and its counterparts at the State level — members of the NARUC‘ — were established by their respective legislatures to regulate intrastate carrier services. * The NARUC is “the national organization of State commissions” charged with the economic and safety regulation of utilities and carriers, as referred to by Congress in 49 U.S.C. §§ 302(bX2), 30XM and ~ 1673(aX1) (1970) and 47 U.S.C. § 41Qe) (1970, Supp. IID). A substantial portion of the opinion of the Court of Appeals is devoted to establishing the proposition that NARUC and its members have standing to mount the instant challenge to the FCC’s decision. (Pet. App. 2a-18a). This portion of the Court’s opinion is clearly correct, and review is not sought of that issue herein. ; eee PRETEEN POISE BRITS OEE EEO Se ee Ecos aR EED THROUGH 4 Insofar as pertinent here, there are three basic types of interstate carrier telecommunications services: Message Toll Telephone Service (MTS), Wide Area Telephone Ser- vice (WATS) and Private Line Service (PLS). MTS is or- dinary long distance telephone service, wherein a sub- scriber may be connected on demand with any other telephone anywhere in the nation. The charges for such ser- vice are fixed on a per message basis and reflect both the distance and the length of time of the call. In turn, rates are determined by averaging costs, so that they are the same for equidistant pairs of points, regardless of the actual costs of providing the service along a given route. WATS enables a subscriber to be connected on demand with any other telephone in a specified geographical area (such as a State or one or more area codes), for essentially a fixed charge per month. PLS (also known popularly as ‘‘tie- lines’’ and ‘‘leased"’ or ‘‘dedicated™ lines) provides a sub- scriber with an open circuit between two or more specific telephones or switchboards for essentially a fixed charge per month. As can be seen, WATS and PLS are designed to meet the needs of large telecommunications users, and may be viewed as ‘‘volume discount” alternatives to MTS. Stated another way, the ordinary consumer is confined, as a prac- tical matter, to MTS to meet his telecommunications needs, because he does not generate the volume required to make WATS and PLS discounts meaningful. * Each of these services is also offered on an intrastate basis, subject to NARUC members’ jurisdiction, with essentially similar rate and ser- vice characteristics. In addition, however, NARUC members regulate local exchange telephone service, which has no counterpart at the in- terstate level. LPM IED ATOLL TIA ALE Dns ERAN LS CLES OSL EEE OA PIED BN ORIOL IE oN REMY sree | REA EDAD LES ASR LAM DINING iE VE Ee NT ET A ORI Se OL RRO I aN 5 By the same token, the intercity telephone industry plant used to provide MTS, WATS and PLS is substantially fungible.® The dominant entity providing domestic intercity telecommunications services is, of course, American Telephone & Telegraph Company (AT&T). Through its Long Lines Department and the facilities of its operating =~ telephone company subsidiaries (popularly referred to collectively as the ‘‘Bell System”’), it may be fairly said that AT&T provides and operates the overwhelming majority of all MTS, WATS and PLS facilities available in America. Independent, non-Bell telephone companies provide such services within their respective service areas; however, in almost ali cases the services are provided jointly with the Bell System, with Bell providing the intercity transmission facilities and acting as the primary manager. a ad Je REST CaS RLS gy MONTINI GMT ACR ae ry In addition, Western Union Telegraph Company provides PLS for non-voice (i.e., record or data) ap- plications, as an incident to its public telegraph service. For purposes of the decision below, the FCC characterized Western Union's operations as ‘“‘modest"’ compared with those of AT&T. (Pet. App. 119a). After World War II, technological advances made it possible to employ microwave radio frequencies in long haul communications transmission. This development called into play the FCC's function as manager of the frequency spectrum under Title III of the Communications Act, 47 U.S.C. § 301 et seg. (1970), in addition to its traditional common carrier regulatory function under Title Il of the Act, 47 U.S.C. § 201 et seg. (1970). * The major difference among the three services in this regard is that PLS circuits essentially bypass the switching apparatus of the telephone company that is used to complete circuits on demand for individuai calls in MTS and WATS. 254 Sore crus aR RES ANTI! VOR LONE RIN LORE PR Te IRS Speman . ee | FEED THROUGH 16 Other cases have also affirmed the proposition that an ad- ministrative agency has discretion in making statutorily- mandated determinations. However, there are clearly also countervailing propositions which have been recognized by this Court. As Mr. Justice Douglas cogently observed: Expert discretion is the lifeblood of the ad- ministrative process, but ‘‘unless we make the requirements for administrative action strict and demanding, expertise, the strength of modern government, can become a monster which rules with no practical limits on its discretion.’’'’ Similarly, Chief Justice Warren has pointed out that an administrative agency ‘ . is entirely a creature of Congress and the determinative question is not what the [agency] thinks it should do but what Congress has said it can do."’?° Recently, in FPC v. Texaco, Inc., 417 U.S. 380, 41 L.Ed. 2d 141, 94 S.Ct. 2315 (1974), this Court set aside an FPC or- der exempting small producers of natural gas from direct rate regulation. Although the specific ruling was that the order was too ambiguous to be sustained, the Court went on to Say: For the purposes of the proceedings that may occur on remand, we should also stress that in our view the prevailing price in the market place can- not be the final measure of ‘just and reasonable” '® Burlington Truck Lines v. United States, 371 U.S. 156, 167, 9 L.Ed. 2d 207, 215, 83 S.Ct. 239 (1962), quoting New York v. United Stuies, 342 U.S. 882, 884, 96 L.Ed. 662, 663, 72 S.Ct. 152 (1951) (Dissenting opinion). Emphasis in original. ?? CAB v. Delta Air Lines, 367 U.S. 316, 322, 6 L.Ed. 2d 869, 874, 81 S.Ct. 1611 (1961). la | a ) at on 7 ~~ - Fea Nh A MII aaah! ee WY CES ANN AN REL RTE LPP ANNI SEES AO AMT a IRE LE END ROA 17 rates mandated by the Act. It is abundantly clear from the history of the Act and from the events that prompted its adoption that Congress con- sidered that the natural gas industry was heavily concentrated and the monopolistic forces were distorting the market price for natural gas. Hence, the necessity for regulation... .?! The Court further stated: In concluding that the Commission lacks the authority to place exclusive reliance on market prices, we bow to our perception of legislative in- tent. It may be, some economists have per- suasively argued, that the assumptions of the 1930’s about the competitive structure of the natural gas industry, if true then, are no longer true today. It may also be that control of prices in this industry, in a time of shortage, if such there be, is counterproductive to the interests of the consumer in increasing the production of natural gas. [1 is nut the Court's role, however, to overturn congressional assumptions embedded into the Jramework of regulation established by the Act. This is a proper task for the legislature where the public interest may be considered from the multi- faceted points of view of the representational process.? As did the FPC in Texaco, the FCC held a rulemaking to implement its policy. As did the FPC in Texaco, the FCC here produced an elaborate rationale to support its policy decision. But the bottom line in both cases is that the FCC and FPC determined that the “congressional assumptions *" 417 U.S. at 397-398, 41 L.Ed. 2d at 156. Emphasis added. Foot- note omitted. 2 417 U.S. at 400, 41 L.Ed. 2d at 157-158. Emphasis added. Foot- note omitted. oid choc oeemamaminers _EED THROUGH PALER A FOIL LEE 2 2S OF BECO PPC 18 embedded into the framework of regulation established by the Act’’ were no longer appropriate, if they ever were. Accordingly, the FCC, as did the FPC, determined that the market place should be the measure of additional entry into communications common carriage, rather than the regulated entry mandated by Congress. The latter proposition can be demonstrated briefly. After making generalized findings relating to need for new entry on a nationwide basis, and collateral matters, the FCC con- cluded: aa . .. [I]f an applicant is found qualified, obtains the necessary financial backing, and makes a business judgment to risk that investment in com- petition with such of the pending applicants as may be authorized, we are not inclined to place further obstacles in its path. Moreover, since new entry by more than one private line applicant ap- pears reasonably feasible in a potential market of this nature, we deem the marketplace to be a more reliable and effective instrument than the comparative hearing process for determining how many and which new entrants may succeed. (Pet. App. 159a-160a. Emphasis added). These, then, are the standards by which the FCC authorized and will continue to authorize new specialized common carriers under the “‘public interest’’ standard of the Act: (1) whether the applicant is ‘‘qualified,’””* (2) whether the applicant makes the “‘business judgment”’ to 23 The NARUC is aware of no FCC requirements for entities to be ‘qualified,’ other than that they must make a minimal showing of capability to provide the proposed service (which must be done in any event by an unregulated businessman in order to get financial backing), and that they not contravene the provisions of the Act relating to alien (continued) 8 Role Ea aE See, tinct USL ONAN FONE BAe Ee SG LL GE LAN: I By ON TL OR GRE A FE tae ALE ES ANE, FOE AE EO SG MONA ONC TR poe Cn, Tae 5 19 enter the business, and (3) whether the applicant can get financial backing. Clearly, such standards in practice are © nothing more than required of any businessman entering a completely unregulated activity. As such, they constitute deferral to the market place in conflict with this Court’s 5 ruling in FPC v. Texaco, Inc., supra. f ee et ‘ Il. THE EXTENT TO WHICH A REVIEWING COURT SHOULD CONSIDER SUBSEQUENT : INCONSISTENT AGENCY ACTION IS AN IM- ; PORTANT QUESTION OF ADMINISTRATIVE LAW WHICH IS LIKELY TO BE RECURRING, AND WHICH REQUIRES GUIDANCE BY THIS COURT. > A second reason for granting the writ here requested is that this case calls into question the scope of factors which a reviewing court should properly consider in assessing the rationality, and therefore the lawfulness, of an agency decision. More specifically, this case raises the issue of whether a reviewing court must blind itself to subsequent agency action that is fundamentally inconsistent with its posture before the court in the decision under review. In discharging their function as the primary reviewers of agen- cy action, Courts of Appeals are likely to face this question (continued) control and similar matters. 47 U.S.C. § 310 (1970, Supp. III). Although the Court of Appeals laid some stress on the fact that this decision did not act on the merits of individual applications (Pet. App. 29a), in practice the applications have been granted subsequent to this decision as essentially a ministerial function. See, e.g.. MCI Carriers, 27 F.C.C. 2d 380 (1971); 32 F.C.C. 2d 36 (1971); 35 F.C.C. 2d 98 (1972); 37 F.C.C. 2d 1120 (1972) (four notations); Nebraska Consolidated Com munications Corporation, 35 F.C.C. 2d 991 (1972) (notation); Southern Pacific Communications Company, 37 F.C.C. 2d 245 (1972); Western Tele-Communications, Inc., 35 F.C.C. 2d 991 (1972) (notation); CP/ Microwave, Inc., 37 F.C.C. 2d 1120 (1972) (notation); Data Trans- mission Company, 34 F.C.C. 2d 306 (1972); United States Trans- mission Systems, 48 F.C.C. 2d 859 (1974). > Soiees tee ue RE IO A ee EN aE CO | _EED THROUGH Voy 20 on a recurring basis, and should have the benefit of this Court’s guidance in their deliberations. From time to time this Court has expanded upon the criteria by which the adequacy of an administrative decision is to be judged under the Administrative Procedure Act, 5 U.S.C. § 706 (1970). See, e.g., SEC v. Chenery Corp., 332 U.S. 194, 196, 91 L.Ed. 1995, 1999, 67 S.Ct. 1575 (1947) (court must judge the propriety of the agency’s action solely on the grounds invoked by the agen- cy; and if those grounds are inadequate or improper, the court is powerless to affirm the administrative action by substituting what it considers to be a more proper basis); Burlington Truck Lines v. United States, 371 U.S. 156, 168, 9 L.Ed. 2d 207, 216, 83 S.Ct. 239 (1962) (courts may not ac- cept appellate counsel’s post hoc rationalizations for agency action); NLRB v. Metropolitan L. Ins. Co., 380 U.S. 438, 443, 13 L.Ed. 2d 951, 955, 85 S.Ct. 1061 (1965) (when agency exercises discretion it must disclose the basis of its order and give clear indication that it has exercised the discretion with which Congress has empowered it); Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 28 L.Ed. 2d 136, 153, 91 S.Ct. 814 (1971) (court must consider whether the agency decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment). Administrative agencies necessarily write their opinions (particularly major ones such as here presented) with at least one eye cocked to the Courts of Appeals. Accordingly, the process of ferreting out discrepancies between what is stated in an opinion, and what the underlying realities are continually becomes more subtle. Under these cir- cumstances, it is appropriate that the criteria employed by the Courts of Appeals to test agency decisions should likewise continually be refined. This case presents such a refinement. One of the prin- cipal assignments of error urged by the NARUC upon the ABET RRR CSSA RTO IER OTS NIL SER Om porysi1wo irra pDvyv a BLE 21 Court of Appeals is that the FCC failed to adequately in- vestigate or consider the impact of its decision on the telephone service rates paid by the vast majority of the telephone using public who have no use for the services of the specialized common carriers. (Pet. App. 27a).?* Although the Court recognized, as NARUC contended, that the FCC has a legal duty to consider such economic impact (Pet. App. 13a), the Court summarily rejected the NARUC’s claim that the duty had been insufficiently met by holding that the FCC’s treatment of this issue “‘is adequate.” (Pet. App. 27a). In turn, the bottom line of the portions of the record cited by the Court is the FCC’s categorical assertion that **.. there is no valid basis for NARUC’s assumption that such [specialized common carrier] entry will prejudice the users of local telephone services.”’ (31 F.C.C. 2d at 1107- 1108, Pet. App. 192a). ** In brief, the impact is two-fold; First, obtaining additional separations modifications becomes infeasible, as a practical matter. because of pressures on AT&T's interstate profits resulting from the PLS competition. (As an example, the NARUC filed a petition with the FCC for additional modifications on December 19, 1973. On December 17, 1974, the FCC announced that action on the petition would be in- definitely deferred. Memorandum Opinion and Order, /n the Matter of the Economic Implications and Interrelationships Arising From Policies and Practices Relating toe Customer Interconnection, Jurisdic- tional Separations and Rate-Structures, 49 F.C.C. 2d 1238, 1241. As noted above (pp. 6 - 7), the changes since 1952 alone reduce the telephone bills of intrastate ratepayers approximately $1 billion an- nually. Thus, the benefits of long haul cost-saving technological in- novations would no longer continue to be shared with the local telephone users. Second, competitive revenue diversion from AT&T, coupled with rate reductions in PLS, brought about by competitive pressures, likely would require rate increases by AT&T in areas and services where no competition exists. See the dissenting opinion of Chairman Rose! Hyde in Microwave Communications, Inc., 18 F.C.C. 2d 953, 971-973, quoted above, pp. 8 - 10. Thus, there can be an economic impact on AT&T's customers without necessarily an economic impact on A T& 7 LAPSE REIS SITS LS ORF -(D THROUGH 22 However, in making its ruling the Court neither acknowledged nor discussed the fact that on April 10, 1974, nine months before the Court's ruling, the FCC had instituted an investigation in its Docket No. 20003 of the very contentions which it previously categorically rejected, and upon which the Court relied in affirming the FCC.” Moreover, the Court summarily denied the NARUC’s Petition for Rehearing (Pet. App. 47a), which strongly em- phasized the fundamental inconsistency between the FCC’s posture before the Court on review of this case, and its having instituted an expensive and burdensome in- vestigation of issues it categorically rejected as having ‘‘no valid basis.’’”° The NARUC recognizes that there must be some prac- tical end to litigation and the issues that may be raised on review of an agency decision. But where, as here, the agency acts so diametrically at odds with its posture before the court while the decision is stil] under review, the reviewing court should be flexible enough to account for that develop- ment and act accordingly. *® Notice of Inquiry, /n the Matter of the Economic Implications and Interrelationships Arising From Policies and Practices Relating to Customer Interconnection, Jurisdictional Separations and Rate- Structures, 46 F.C.C. 2d 214 (1974). The Court was advised by the NARUC of the pendency of the proceeding and its significance as early as May, 1974. See above, p. 12, n. 14. *° For a fully documented showing of the FCC's inconsistency, see Part III of the NARUC’s Petition for Rehearing. (Pet. App. 220a-224a). The NARUC would especially point out, however, that in instituting the economic impact investigation, the FCC specifically referred to the NARUC’s claims of economic impact in this case. Notice of Inquiry, /n the Matter of the Economic Implications and Interrelationships Arising From Policies and Practices Relating to Customer In- terconnection, Jurisdictional Separations and Rate-Structures, 46 F.C.C. 2d 214, 215, quoted at Pet. App. 221a. Se “ DIG LEE SOLIS AEs RINT. TPES was Bice i he cl Le ila ad — BLE 23 III. SANCTION BY THE COURT OF APPEALS OF THE FCC’S FAILURE TO COMPLY WITH NEPA SO FAR DEPARTS FROM AN ACCEPTABLE COURSE OF JUDICIAL REVIEW THAT THIS COURT SHOULD EXERCISE ITS SUPERVISORY POWERS. Finally, sanction by the Court of Appeals of the FCC’s complete failure in this case — over more than a two-year period — to attempt any compliance whatsoever with the requirements of the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. § 4321, et seq. (1970), so far de- parts from an acceptable course of judicial review that this Court’s exercise of its supervisory powers is warranted. The proceedings before the FCC were tried on the basis of traditional issues of economic regulation, and it was not until review had been sought in the Court of Appeals that the NARUC understood NEPA’s relevance in this case and raised that issue to the Court.”’ In its decision, the Court properly recognized that consideration of the NEPA claims would be within its discretion, even though not presented to the FCC in the first instance, and that NEPA’s “‘lofty pur- poses’’ must be weighed heavily in the balance in exercising that discretion. (Pet. App. 40a). Nevertheless, the Court declined review. (Pet. App. 40a-42a). >”? Specifically, the NARUC alleged adverse environmental impact resulting from the FCC’s decision in the following respects: (1) the marring of the aesthetic environment because of the proliferation of multiple low-capacity transmission systems across the country, with microwave towers constructed every 20-40 miles, rather than a limited number of high capacity systems; and (2) the establishment of an overabundance of less expensive (relative to rural areas) com- munications facilities in highly populated urban corridors, tending to further concentrate businesses and population in these areas. The NARUC also raised as a matter of concern the possible increase in elec- tromagnetic pollution that could result from a proliferation of systems. compared to a limited number of high capacity systems. 4 eee | TELM I SOON PESOS BE AEP RRR 24 It may be, had the Court’s decision issued without ex- tended delay, that the discretion so exercised might have been sustainable.”* In this case, however, oral argument on the appeal was not held until six months after the last round of briefs were filed, and the decision did not issue un- til two years thereafter. During the two and one-half years that the FCC was on notice that it had failed to comply with NEPA in this case, it made absolutely no move to rectify that failure. Even assuming the FCC’s original omission was inadvertent, its continuing failure to comply with the law cannot be excused. In its ruling below, the Court noted and relied upon the fact that: Before any construction [of microwave towers by specialized common carriers] is authorized, separate hearings must be held on each ap- plication. NEPA will be applicable to those proceedings. The FCC must consider ‘“‘the en- vironmental impact of the proposed action’’ as a whole, and in full context. It cannot treat each ap- plication separately from the others and ignore the total program of which it is a part. (Pet. App. 41a. Footnote omitted). However, in its Petition for Rehearing, the NARUC ad- vised the Court: (1) that the FCC had not held hearings on the individual applications, (2) that the FCC had already granted substantially all of the pending applications for specialized common carrier construction permits, and (3) that in granting these applications, the FCC gave no con- sideration whatever to environmental impact, let alone the comprehensive analysis that the Court recognized is legally required. (Pet. App. 225a). Accordingly, the NARUC ad- vised the Court that if it did not review the NEPA issues, ** The NARUC specifically reserves this issue in the event certiorari is granted. 25 the FCC would be permitted to “entirely escape compliance with NEPA in one of the few general proceedings it has con- ducted which is likely to have a significant impact on the quality of the human environment.” (Pet. App. 218a). Inexplicably, the Court of Appeals refused to take any further action to uphold NEPA’s “‘lofty purposes.” In light of the FCC’s new rules for implementing NEPA,” there can be little doubt that the environmental impact should have been considered by the FCC. By the express terms of those rules, environmental issues are to be con- sidered, and an environmental impact statement issued, in rulemaking proceedings; and the construction of microwave towers such as here authorized are specifically designated as “‘major’’ Federal actions within the meaning of NEPA." (Pet. App. 226a-227a). i The effect of the Court’s action, therefore, is to permit a flagrant non-compliance with the law to go unredressed — a result which clearly warrants exercise by this Court of its supervisory powers. ** Report and Order, Jn the Matter of Implementation of the National Environmental Policy Act of 1969. 49 F.C.C. 2d 1313 (1974). The rules became effective with January 20, 1975 — five fui! years after NEPA became effective. The proposed rules were released on August }, 1972, 36 F.C.C. 2d 108, but the final rules were not released unti: December 16, 1974. Coincidentally or otherwise, the final rules were not promulgated until substantially all of the pending applications for specialized common carrier construction permits had been granted. %° Id., Rule 1.1303. ** Id., Rule 1.130XaX2). Soa NS ROBIE 5 SSI RY SEES RIA AIRY EE EAE EET ER AS PES =-D THROUGH amet MOA ate RR Aan NID eh TATE PS RE Re RO 26 CONCLUSION For these reasons, a writ of certiorari should issue to review the judgment and opinion of the United States Court of Appeals for the Ninth Circuit. Respectfully submitted, PAUL RODGERS General Counsel KENNETH E. HARDMAN Deputy Assistant General Counsel National Association of Regulatory Utility Commissioners 1102 ICC Building Post Office Box 684 Washington, D.C. 20044 Counsel for Petitioner June 9, 1975 Sie , ete ip SAS OCTOBER TERM, 1974 No. 74-] 550 NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS, Petitioner, FEDERAL COMMUNICATIONS COMMISSION, et al., APPENDIX PAUL RODGERS General Counsel KENNETH E. HARDMAN Deputy Assistant General Counsel National Association of Regulatory Utility Commissioners 1102 ICC Building Post Office Box 684 Washington, D.C. 20044 Counsel for Petitioner June 9, 1975 THE CASILLAS PRESS, INC.—1717 K Street. N. W.—Washington, 0. C.—223-1220 Cie TABLE OF CONTENTS APPENDIX A, Opinion of the Court of Appeals.......... APPENDIX B, Order of the Court of Appeals SR CUNUUED 5b vc Vesdecdacvadtiesnadecsde APPENDIX C, Report and Order of the Federal Communications Commission ...............e00008 APPENDIX D, Memorandum Opinion and Order of the Federal Communications Commission Denying INNS 6 hehe cGch ads KOR ED hoe db doth heccic APPENDIX E, Communications Act of 1934, Ss hate eae ys wu clade hh Coa KGa lesen APPENDIX F, National Environmental Policy NT Wes CA MRR AGA ee eka k 6 hows o6 $008 seine APPENDIX H, Petition for Rehearing Before the SUE GN ous pba OG eek aukde exe bow BRA e a Ke an Cat ADE CH Cah Vie MIME lth hy Bg PRGR LEE LL RIAS POLES ann tie DIE OLE 9 8 IEICE ADE CL EAE ME RE ONE RAD OE la APPENDIX A UNITED STATES COURT OF APPEALS FOR THE NINTH CIREUIT WASHINGTON UtIvitirs & TRANSPORTATION : CoMMISSION, Petitioner, Vs. FEDERAL COMMUNICATIONS COMMISSION and Unrrep States oF AMERICA, Respondents, Data TRANSMISSION Co.; NaTIONAL RETAIL MER- CHANTS AssociaTION; THE Business EqQuip- MENT MANUFACTURERS AssocIATION; MCI CarRIERS; NEBRASKA CONSOLIDATED COMMUNI- CATIONS; INTERDATA COMMUNICATIONS; SoUTH- ERN Paciric Communications Company; WESTERN TELE-COMMUNICATIONS, Intervenors. NaTIONAL AssociaT.ON oF REGULATORY UTILITY COMMISSIONERS, Petitioners, Vs. FEDERAL COMMUNICATIONS CoMMISSION and Unitep StaTEs oF AMERICA, Respondents. } | January 20, 1975] No. 71-2919 No. 72-1198 OPINION On Petition for Review of an Order of the Federal Communications Commission Before: BROWNING WRIGHT, and WALLACE, Circuit Judges. BROWNING, Circuit Judge: The Federal Communications Commission authorized Microwave Communications, Ine, to constreet a specialized communications YR SAR OT OE Sa Ot A RE ORS St SOREN RRR ori roy aa ae ae Fa NEC ag oe es 2a 2 Washington Utilitics & Transportation Commission, et al. vs. common carrier route between St. Louis and Chicago. Microwave Communications, Ine., 18 F.C.C.2d 953 (1969). As a result, a large number of applications were filed by others interested in providing specialized communications services in competition with the established carriers.! The applications raised common ques- tions. The Commission instituted a proceeding to formulate policy and establish rules with respect to these issues. See Notice of Inquiry to Formulate Policy, Notice of Proposed Rulemaking, and Order, 24 F.C.C.2d 318 (1970). These petitions seck review of the final order issued as a result of that procecding. First Report and Order, 29 F.C.C.2d 870 (1971).? The Commission’s order reflects two basic determinations. The Commission decided that “a general policy in favor of the entry of new carriers in the specialized communications ficld would serve the public interest, convenience, and necessity.” 29 F.C.C.2d at 920. It also decided that “it is not necessary or desirable in the public interest to hold comparative hearings for the purpose - of restricting new entry in any particular area to only one pri- ' vate line applicant.” 29 F.C.C.2d at 926. Petitioners attack both determinations on substantive and pro- . eedural grounds resting upon the Federal Communications Act, > 47 US.C. §§ 214, 309. They also argue that the Commission failed to consider the environmental impact of the policy adopted by the order as required by the National Environmental Policy | Act, 42 U.S.C. §§ 4231 et seq. j ee ee Kespondents respond on the merits, and, in addition, challenge petitioners’ standing to seek review of the Commission’s order. We hold that petitioners have standing. We affirm the order. I. We have been admonished that “[g]eneralizations about stand- ing to sue are largely worthless as such” (Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 1As of March 15, 1971, 33 applicants had submitted 46 separate pro- posals for the operation of 1877 microwave stations. First Report & Order, 29 F.C.C.2d 870, 871 n.1 (1971). 2The Commission’s Memorandum Opinion and Order denying petitions for reconsideration is reported at 31 F.C.C.2d 1106 (1971). rie De EN eats TY nana behod oe ee Mee DIE TE. 4 x el SALI DIE LTRT. SURE RIS POE SUF — een: SL NTRESO 3a Federal Communications Commission, et al. 3 151 (1970)), and that the solution to standing “problems is in uny event more or less determined by the specific circumstances of individual situations.” Mnited States ex rel. Chapman v. Fed- eral Power Commission, 345 U.S. 153, 156 (1953). From an exam- ination of the nature of. this proceeding, the character and in- terest of the parties, and the substance of the issues, we conclude that each petitioner is a “proper party to request an adjudication of [the] particular issue|s|” it seeks to raise, F'last v. Cohen, 392 U.S. 83, 100 (1968). See also United States v, Richardson, bias RO: Aidicede eas (1974) (slip at 8); Sierra Club v. Mor- ton, 405 U.S. 727, 732 (1972). Petitioners seek review of final administrative action. The availability of judicial review of administrative decisions is gen- erally thought to serve important public purposes.? This prem- ise underlies the rule that “only upon a showing of ‘clear and convincing evidence’ of a contrary legislative intent should the courts restrict access to judicial review”’ (Abbott Laboratories v. Gardner, 387 US. 136, 141 (1967), and has-+led to a progres- ~ sive expansion of the categories of persons who are granted stand- ing to obtain such review. See, e.9., Arnold Tour, Inc. v. Camp, 400 U.S. 45 (1970); Barlow v. Collins, 397 U.S. 159 (1970) ; Association of Data Processing Service Organizations, Inc. v. Camp, supra. Congress has expressly authorized review of final orders of the FCC.* Thus, “Congress has weighed the need for and value 3See, e.g., Tucker, The Metamorphosis of the Standing to Sue Doctrine, 17 N.Y.L. Forum 911, 935-40 (1972). 4“The court of appeals has exclusive jurisdiction to enjoin, set aside, suspend (in whole or in part), or to determine the validity of — (1) all final orders of the Federal Communications Commission made reviewable by section 402(a) or title 47.” 28 U.S.C. § 2342(1). “Any proceeding to enjoin, set aside, annul, or suspend any order of the Commission under this chapter (except those appealable under subsection (b) of this section) shall be brought as provided by and in the manner prescribed in chapter 19A of Title 5.” 47 U.S.C. § 402(a). “A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof.” 5 U.S.C. § 702. “Any party aggrieved by [a final order reviewable under 47 U.S.C. § 402(a)] may, within 60 days after its entry, file a petition to review the order in the cowt of appeals where venue lies.” 28 U.S.C. § 2344. BLEED THROUGH _ Rey Iaae CaN eRE, . BASS BEEN BEIT Ce MBP A OSS A GPR NOMEN SOLERO LE WE eNO: IY ATI BR GED RON Sa LEIS IN ACER RA ST LITA “ * aig BRE. ot we LRN LEE LER EE Gt OP Lae 4a 4 Washington Utilitics & Transportation Commission, ct al. vs. of judicial review of a given category of administrative decisions, and has decided it is warranted. Congress having explicitly made that decision, the Court has before it only the implementing, see- ondary decision as to whether there is reason not to allow the particular plaintiff in question to be one of those who may in- voke the review—and the. standing rules tend to become more liberal.” Seott, Standing in the Supreme Court—A Functional Analysis, 86 Harv. L. Rev. 645, 656 (1973). A. The Washington Utilities and Transportation Commission (WUTC) is an agency of the State of Washington, charged by law with responsibilities related to issucs it secks to raise. There is substantial authority that such an agency, raising such issues, is a proper plaintiff to obtain review of an administrative order. WUTC’s petition for review alleges that WUTC and the gen- : eral public of Washington “are aggrieved” by the FCC order because “[e]ffectuation of the Order would serve to increase the burden to intrastate telephone users by reason of the diversion of interstate usage of telephone network facilities to the detri- - ment of telephone users whose rates are regulated by state authorities.” The factual and legal premises for WUTC's assertion of stand- ing are largely conceded. The telephone systein is a single, inte- grated network. The same services and equipment provide both interstate and intrastate services. The rates fixed for these services must be sufficient to allow the utility to recover its ex- penses and receive a reasonable return on its investment. Since the rates of interstate services are fixed by the federal agency and rates for intrastate services by state agencies, common plant and service costs must be allocated between them. Smith v. Illinois Bell Telephone Co., 282 U.S. 133, 146-49 (1930); The Min nesota Rate Cases, 230 U.S. 352, 435 (1913). The allocation reflects the relative use of the common facilities in providing one service or the other. A reduction in interstate service rela- tive to intrastate service would decrease the allocation of the costs of common plant and services to the base for interstate rates, and increase the allocation of these costs to the base for % { } 3 ESS LOBED LOLLY SN SAIC $NA SS AER OE SPLEGECTA Se PE OLDEN LIAL ETD ES eg I ee! ate PAIR LM “te ee RIN y eee AE esta armen aid = a Sa Federal Communications Commission, et al. 5 intrastate rates, thus requiring state regulatory agencies to in- crease rates for intrastate service.5 WUTC contends that by authorizing new earriers to furnish specialized interstate commmuniecation serviecs without determin- ing that present cerricrs are unable to meet the need for this service, and without individualized determination of economic exclusivity, the Conmissiou’s order will result in 2 increase in the number of carriers competing to provide this interstate: servier and will decrease the usage existing carriers will make : of common telephone facilitics for the purpose of providing inter state service. This in turn will require allocation to intrastate 7 service of a larger share of the costs of serviee and equipment used in providing both intrastate and interstate services, and will compel WUTC to raise rates for intrastate service, contrary to the interesis of Washington telephone users. ¢ WUTC is invested by statute with broad 1 sponsibilities to pro- tecu the interests of the people of the State of Washingtoii in matters related to the cost and quality of telephone service. WUTC is required to “[rjegulate in the public interest... the rates, services, fevilities, and practices of all persons [ineluding telephone companies} engaging within this stete in the business of supplying any utility service .. . to the public for compensa- tion... .” RCW. 80,01.040(3). The interest of the public to be protected under the statute is that of the customers of the reg- ulated utility. Cole v. Washington Utilities & Trensportation Commission, 79 Wash.2d 302, 305, 488° P2d 71, 73-74 (1971). WUTC is empowered to fix rates for intrastate telephone service that are “just and wasonsble™ in ordor to protect consumers from charges that sre “unjust, unreasonable, wnjustly diserimina- tory or unduly preferential,” as well as to protect the utilities from charges that are “insufficient to yield reasonsble com pensa- tion for the service rendered.” R.C.W. 80.36.140. SLR LEST ORY Ce UN eR RO SOLIDE FE" se re Aor often gs The Supreme Court of Washington has specifically recognized that WUTC has an obligation to protect the interests of tele- 5As stated in a recent Senate Report discussing telephone rates, “The determination of the rate base at the Federal level, then. has a strong relation to the rates which are charged at the local levei.” S, Rep. No. 362, 92d Cong., Ist Sess. (1971), 2 U.S. Code Cong. & Admin. News 1511, 1513. DONE aE hatte ED AS Sieg NOBLE NT AN lin US DR RIE ey OE AR 8 RS ST ANOS Gd Sa PTS 6a 6 Washington Utilitics € Transportation Commission, et al. vs. phone users in separations matters—analogous to those under- lying WUTC's petition for review in this case—that come within its intrastate regulatory jurisdiction. In State ex rel. Pacific Northwest Bell Telephone Co. v. Washington Utilitics & Trans- portation Commission, 66 Wash.2d 411, 403 P.2d 73 (1965), WUTC, under authority granted by R.C.W. 80.36.160, issued an order relating to the division of revenues derived from the inter- change of interstate long distance telephone messages between Pacific Northwest Bell and two independent telephone companies. The determination of the appropriate division of revenues in turn required WUTC to devise a plan for the separation or allocation of costs among the various local and toll telephone services per- formed by the independent companies. In its opinion affirming the order, the court stated: The present proceeding is preliminary to the Commission’s principal function, which is to establish rates for telephone service which are found to be fair, just, and reasonable to the user, and sufficient to provide reasonable compensation to the utility for the service rendered. See RCW 80.36.080 and 140. ” The Commission, in its order, pointed out that the divi- ; sion of revenues is inextricably related to the rate-making ' process. Thus the real parties in interest in this case are all the users of telephone service in the state of Washington who will have to pay the rates ultimately established for such service. 66 Wash.2d at 427, 403 P.2d at 84. In addition to these regulatory functions, two other Washing- ton statutes impose upon WUTC an advocacy role in support of the intcrests—stated in the broadest terms—of telephone users of the state. WUTC is authorized to participate in administrative and judicial proceedings of the kind involved here, “in which there is at issue the authority, rates or practices for . . . utility services affecting the interests of the state of Washington, its businesses and general public... .” R.C.W. 80.01.075.6 WUTC’s 6The statute reads: The commission shall have the authority as petitioner, intervenor or otherwise to initiate and/or participate in proceedings before federal administrative agencies in which there is at issue the authority, | eae ESS SLIDE Be NS RS TEMES © SNe RANE SD a SRA SRAT PRGA LEON PPA A ORIN LAE EI a heme a am NSP Se a AM Se EAS panini esse 7a Federal Communications Commission, et al. 7 authority under this statute does not appear to be limited to proceedings relating to intrastate services; it exists whenever the authority, rate, or practice affects the interests of the state, its businesses, or its people. A second Washington statute gives ; WUTC power to investigate interstate rates and charges for tel- ephone services, and provides, “[w]here any acts in relation thereto take place within this state which, in the opinion of the commission, are excessive or discriminatory, or are levied or laid in violation of the federal communications act... ,” WUTC can petition the FCC for relief. R.C.W. 80.36.250. For thirty years or more WUTC and other state utilities commissions have acted on the premise that their duty to pro- i tect the interest of the people of their respective states is not . discharged simply by accepting the existing allocation of joint 3 costs to intrastate use as a base for determining reasonable intra- State rates. They have actively sought to reduce the allocation of joint costs to the intrastate rate base to the extent consistent with law. Congress and the FCC have Jong recognized that the state utilities commissions are the appropriate parties to represent their respective states in this effort.7 ENR ARMOR RA OK rates or practices for transportation or utility services affecting the interests of the state of Washington, its businesses and general public, and to do all things necessary in its opinion to present to such federal administrative agencies all facts bearing upon such issues, and to similarly initiate and/or participate in any judicial proceedings relating thereto. *In 1941 the FCC and the National Association of Regulatory Utility Commissioners (NARUC) initiated a cooperative study of procedures for the allocation of joint costs. American Tel. & Tel. Co. and the Associated Bell System Companies, 3 F.C.C.2d 307, 309 (1960). In 1947 the FCC published the NARUC-FCC Separations Manual based on this study. Id. at 310. The FCC observed in its 1969 report: “Separations procedures that have been developed through the cooperative efforts of the Com- mission, the State regulatory agencies through the NARUC, and the telephone industry have long been used by telephone regulatory agencies for ratemaking purposes.” 35th Annual Report of the FCC 60 (1969). In 1969 the FCC ordered a $237 million reduction in interstate rates; at the same time rate increases of $500 million were pending before state regulatory agencies. 117 Cong. Rec. 28906-07 (1971). The reduction in interstate rates was based on the development of new technology, such as microwave transmission and coaxial cables, capable of application pni- ry & an | : Cai Latin Ania ta ( Ah Shieh ane tet a vhbctnlibes.: 8a 8 Wuashinglou Ulilitics & Transportation Commission, et al. vs. The test currently applied to determine if a private person has standing to seck judicial review of ageney action is set forth in Association of Data Proccssing Scrvice Organizations, Inc. v. Camp, supra, 397 U.S. at 152-53:, The complainant must allege “that the challenged action has eaused him injury in fact, eeonomic or otherwise,” and the interest which the complain- ant secks to protect must be “arguably within the zone of inter- ests to be protected or regulated by the statute of constitutional guarantee in question.” Both parts of the Duta Processing test are satisfied in this case.8 The purposes of the first Data Processing requirement—‘injury in fact’”—are satisfied here because the alleged interference with WUTC’s ability to discharge its obligation to protect the inter- ests of Washington telephone users gives spccificity and con- erctencss to the controversy and assures its presentation with adversarial vigor. The fact that WUTC’s alleged injury is not economic in nature and cannot be quantified docs not prevent it from satisfying the requirement of “injury in fact.” Data Processing, supra, 397 U.S. marily in interstate communication. Id. at 28907 (remarks of Rep. Rvoney). The FCC and NARUC cooperated, through a joint board administratively established by the FCC at NARUC’s request, in recom- mending proposed rule changes for jurisdictional separations which, when adupted, resulted in u shift of $126 million in revenue requirements from inisustaic to interstate operations. 1L.R. Rep. No. 429, 92a Cong., lst Sess. 3 (1971). Congress was fully advised of these developments. The FCC and NARUC then agreed upon legislation for the establishment of a permanent Federal-State Joint Board to deal with separation problems S. Rep. No. 92-362, 2 U.S. Code Cong. & Admin. News, 92d Cong., 1st Sess. 1511, 1513-14 (1971). In enacting the proposed statute Congress recognized, with approval, that the result of allowing representatives of the state commissions to participate would be an increase in the alloca- tion of joint plant and operation costs to interstate use. 117 Cong. Ree. 28906-07. 8The Supreme Court has applied this two-part test in cases where there was no specific statutory provision for judicial review, and complainants relied on the general review provisions of the Administrative Procedure Act. Since in this instance the statute specifically provides for review, a less strict test for standing may be justified. See Scott, Standing in the Supreme Court—A Functional Analysis, 86 Harv. L. Rev. 645, 667-68 (1973). SPLATT PEPE Hee PRE AREER A ASE 9a Federal Communications Coainission, et al. 9 at 154; Sterra Club v. Morton, supra, 405 U.S. at 734: United States v. SCRAP, 412 U.S. 669, 686 (1973). WUTC’s allegation that the FCC order will affect the dischare. by WUTC of its duty to protect the interest of Wasi:ington telephone users arises too plausibly from the known facts of the industry to be dis- missed as “an ingenious academic exercise in the conceivable.” United States v. SCRAP, supra, 412 U.S. at 688." And it is no bar to WUTC’s standing that the line of causation between the FCC order and interference with WUTC's performance of. its duties may be attenuated. Jd. at 688-90. The obligation interfered with is imposed directly and specif- ically upon WUTC by statute. Thus, WUTC sceks to discharge a legal duty—it does not act from a generalized “motivation,” Schlesinger v. Reservists Committee to Stop the War, —. US. setae y woe (1974) (slip at 17), or because of 2 “mere ‘intercst in a problem,’” Sierra Club v. Morton, supra, 405 US. ot 739; and its concern is not of a kind shared by citizens g: nerally. Schles- tnger v. Rescrvists Committee to Stop the War, supra, ...... US. | Ra (slip at 12); United States v. Richardson, supra, ....... U.S. at ow... (slip at 10-12). As Judee Leventhal said in a singular context, “We showld not be nigvardly in guaging the interest of a state administrative officer in the validity of what his federal counterpart has done in an area of overlapping fact and intertwined law.” Nuesse v. Camp, 385 F.2d 694, 700 (D.C. Cir. 1967). In Coleman v. Miller, 307 U.S. 433 (1939). the Supreme Court strongly suggested, in a somewhat different contest, that for purposes of standing, impairment of an administrative ageuer’s interest in the effective discharge of the obligations imposed upon the ageney by law, is the equivalent of the “personal stake,” “injury in fact,” or “concrete injury” that would suppert standing ®The FCC found there is “no reason to anticipate that new entry in the specialized field would result in any substantial diversion of A.T. & T.’'s revenues or would have any significant adverse impact on telephone users” (29 F.C.C.2d at 912), but this finding cannot be conclusive on the issue of stancing—one of the issnes WUTC seeks to raise on review is that this finding ix uot sustained by the reeord. See United States yv. SCRAP, 412 U.S. 669, 688-90 (1973); Association of Data Processing: Serv. Organizations, Ine. v. Camp, 397 U.S. 150, 153, 158 (1970). . . cone PERE SEP a ae fea? . we STS gute ® LiL MEME RA RE gin ope wae 47 eee One eee 9 Aa etd ROAR Sas bite Sa Disha ells ON a STI ahs oie ak eae Seed. Masti ay 10a 10 Washington Utilitics & Transportation Commission, et al. vs. of a private plaintiff. The immediate question in Coleman v. Miller was whether state senators opposing ratification of the Child Labor Amendment had standing to seck review by the Supreme Court of a state court decision sustaining the right of the lieutenant governor to cast a decisive vote in favor of rati- fication. The Supreme Court held that the scnators’ interest in maintaining the effectiveness of their votes was sufficient to support standing. The Court noted, “[{T]jhere has been recogni- tion of the legitimate interest of public officials and administra- tive commissions, federal and state, to resist the endeavor to prevent the enforcement of statutes in relation to which they have official duties.” 307 U.S. at 441-42. Reviewing certain of its past decisions, the Court concluded (id. at 445): This class of cases in which we have exercised our appel- late jurisdiction on the application of state officers may be said to recognize that they have an adequate interest in the controversy by reason of their duty to enforce the state statutes the validity of which has been drawn in ques- tion. In none of these cases could it be said that the state officers invoking our jurisdiction were sustaining any “pri- vate damage.” United States ex rel. Chapman v. Federal Power Commission, supra, 345 U.S. at 153, also holds, though without discussion, that an adverse effect on the performance of official duties consti- tutes the kind of injury necessary to support standing to sue. The Scerctary of the Interior was permitted to challenge an FPC order granting a license to a private company to build a generating plant on a site that the Secretary argued had been withdrawn from the licensing jurisdiction of the FPC and re- served for public construction. The Court sect out the bases relied upon by the Secretary for standing as follows (345 US. at 155-56) : The Secretary of the Intcrior points to his statutory duty to act as sole marketing agent of power developed at public hydroelectric projects and not required for the operation of the project; §5 of the Flood Control Act of 1944 directs him to transmit and dispose of such power in a manner calculated to “encourage the most widespread use thereof at the lowest possible rates to consumers consistent with Pa ERNE I EAE LN ral OO MET FN ST be OES ee RED ELTA LIOR SO . canine a FAS eS BEA OPE Sete ae pa oN lla Federal Communications Commission, et al. 11 sound business principles.” 58 Stat. 890, 16 U.S.C. § §25s. This provision, it is said, announess a congressional poliey for the guidanee of the Secretary that would be disturbed by the respondent company’s plan; thus . speeific interest ; of the Seeretary, in addition to his more general duties re- lating to the conservation and utilization of the Nation’s : water resources, is said to be adversely affected by the i Commission's order. : Because of “[dJifferenees of view” among the Jus‘ies, 345 US. at 156, the grounds for the holding that the Seeretary had stand- ' ing to seek review of the FPC order were not discussed. How- f ever, since the Secretary alleged no private injurv of any kind, : his standing necessarily rested upon the adverse effect of the FTC order on performance of his official dutics to encourage widespread use of electricity at the lowest possible rates, and, more generally, to manage the nation’s water resources. a STG rege R The Supreme Court held in Juferstatc Commerce Commission v. Oregon-Washington Railroad & Navigation Co., 288 US. 14, 24-25 (1933), that state agencies had standing to challenge a district court order reversing an ICC order requiring construc- tion of several railroad routes, beeause the agencies “officially represent{ed] the interest of their states in obtaining adequate transportation service.” In a different context, the Court held in Securities & Exchange Commission ». Unitcd States Realty & Improvement Co., 310 US. 434 (1940), that the SEC should be permitted to intervene in a Chapter XI proceeding that the Commission alleged should have been brought under Chapicr X, which provides for participation by the Commission. The Court said, “we think it is plain that the Commission has a sufficient interest in the maintenance of its statutory authority and the performance of its publie dutics to entitle it through intervention to prevent reorganizations which should rightly be subjected to its scrutiny, from procesding without it.” 310 U.S. at 460. In this cireuit the principle that a public agener hes standing to seck judicial revicow of governmental action thet af-cts the performances of its duties has been expliceithy recognized by a three-judge court in a case involving WULC's pred cessor agene., ——— a ete ee tee! ERP eas ait eM KS UIE Lats ¢ 5 y 23a Federal Communications Commission, et al. 33 merce in communication by wire and radio so us to make avail- : able, so far as possible, to all the people of the United States a 4 rapid, efficient, Nation-wide, and world-wide wire and radio com- munications service with adequate facilities at reasonable charges ..” (47 U.S.C. § 151), and “generally encourage the larger and more effective use of radio in the public interest” (47 U.S.C. : §303(g)). See 49 F.C.C.2d at 901. : This statutory language does not suggest that the Commission is to give controlling weight to the mere fect that existing com- mon carriers have the ability to perform the service an applicant : wishes to furnish. Nor, for that matter, does it suggest that the Commission is to accord controlling weight to asserted benefits : of competition, or to any other particular factor. The Commis- i sion’s authority is stated broadly to avoid the need for repeated e congressional review and revision of the Commission’s authority e to meet the needs of a dynamic, rapidly changing industry. Va- k tional Association of Theatre Owners v. Federal Communications & Commission, 420 F.2d 194, 199 (D.C. Cir. 1969). Regulatory practices and policies that will serve the “publie interest” today ; may be quite different from those that were adequate to thet : purpose in 1910, 1927, or 1934, or that may further the public interest in the future.23 The power of the Commission, in determining the “public in- terest,” to accord competitive considerations the weight the Com- mission gave to them in this case is fully supported by the Su- preme Court's opinion in Federal Communications Commission v. RCA Communications Inc., 346 US. 86 (1953).24 The Court held that the Commission could noi treat the encouragement of *3Cases cited by the Commission (29 F.C.C.2d at 901) sustain its interpretation of §§4(i) and (j) and 303(r) of the Communications Act, 47 U.S.C. §§ 154(i) and (j), 303(r), as conferring “ ‘not niggardly but expansive powers’ and wide discretion to adopt flexible procedures, rules and orders to meet ever-changing communications needs. .. . 2 National Broadcasting Co. v. United States, 319 U.S. 190; FCC v. Pottsville Broad- casting Co., 309 U.S. 134, 137-138; United States v. Southwestern Cable Co., 392 U.S. 157, 172-173; United States v. Storer Broadcasting Co., 351 U.S. 192, 202-203.” “'General Tel. Co. v. United States, 449 F.2d 846, 857-58 (5th Cir. 1971). Seo also Gulf States Util. Co. v. MPC, 411 U.S. 747, 759 (1973): City of Huntington Library v. FPC, F224 ......... ..... (D.C. Cir. 1974). bli sed aiaaiss ea ee ee es eR NE GPL ADE IIE SCRE I ELLE SAGE AIL RIR ET Pog BEI PEG G8 TREES ERS MAREE SING Ae AE ATE NRE ORIG Bede PKE EA eID 24a 24 Washington Utilitics & Transportation Commission, et al. v's. competition as such as “the single or controlling reliance for safe- guarding the public interest,” (id. at 93), and therefore could not authorize entry of a competing carrier on the naked assump- tion that as a matter of national policy, competition was to be fostered if “reasonably feasible” (id. at 95). Because the Com- mission had authorized a new radio telegraph service on just that premise, the case was remanded for reconsideration. The Court made it clear, however, that “competition is a relevant factor in weighing the public interest,” and if the Commission had “clearly indicated that it relied on its own evaluation of the needs of the industry rather than on what it deemed a national policy, its order would have a different foundation.” Id. at 94. The Court spelled out the basis upon which the Commission could authorize new entry because of competitive considerations (id. at 96-97): We think it not inadmissible for the Commission, when it makes manifest that in so doing it is conscientiously cxercis- ing the discretion given it by Congress, to reach a conclu- sion whereby authorizations would be granted wherever competition is reasonbly feasible. This is so precisely because the exercise of its functions gives it accumulating insight not vouchsafed to courts dealing ecpisodically with the practical problems involved in such determination. Here, however, the conclusion was not based on the Commission’s own judgment but rather on the unjustified assumption that it was Con- gress’ judgment that such authorizations are desirable. . . . In reaching a conclusion that duplicating authorizations are in the public interest wherever competition is reasonably feasible, the Commission is not required to make specific findings of tangible bencfit. It is not required to grant authorizations only if there is a demonstration of facts indi- cating immediate benefit to the public. To restrict the Commission action to cases in which tangible evidence appro- priate for judicial determination is available would disre- gard a major reason for the creation of administrative agen- cies, better equipped as they are for weighing intangibles “by specialization, by insight gained through experience, and by more flexible procedure.” Far East Conf. v. United States, 342 U.S. 570, 575. In the nature of things, the possible abn i WER LER 2 EPO PERSE EL INL LIE AS LADIES LIP LIED LEE II SOCIAL EERE PA BEE, ISS REINA Sa ol asi = ee onan 0 epee Wis Be ieee fy ats AD Lah ia 25a Federal Communications Comm ission, et al. 5 benefits of competition do not lend themselves to detailed forecast, ef. Lubor Board v. Seren- Up Co., 344 US. 344, 348, but the Commission must at least warrant, as it were, that competition would serve some bencficial purpose such as maintaining good service and improving it. Although we think RCAC’s contention that an applicant must demonstrate tangible benefits is asking too much, it is not too much to ask that there be ground for reasonable expectation that com- petition may have some beneficial effect. Merely to assume that competition is bound to be of advantage, in an industry so regulated and so largely closed as is this one, is not enough. TE PAS ees — Pas We have quoted the Court at length because it is evident from the Commission’s opinion in the present case that the Conimission was fully conscious of the guidelines announced in RCA Com- munications, and sought conscientiously to follow them. Our exr- lier summary of the Commission's opinion demonstrates that the Commission succeeded. Ser note 21 supra. The Commission's policy determination that the publie interest would be served by entry of new carriers in the specialized communications field is based upon its own judgment that such authorizations are de- : sirable, a judgment reached in a conscientious exercise of. tie f discretion vesied in the Commission by Congress. As to the bene- fits of competition, the Commission said, “It is our judgmen:, based on our cumulative knowledge of the industry and the entire ? record in this proceeding—ineluding our stafi’s analysis. that i there is a sufficient ground for a reasonable cxpeciation that new entry here will have some beneficial effects. We so warrant.” 29 ; F.C.C.2d at 910. Against there benefits, the Commission carefully weighed possible adverse effects of competition upon existing car- riers and their serviecs (29 F.C.C.2d at 910-14) before finally ; concluding that ua general policy of new entry would serve the é public interest, convenience, and necessity. ; 7 RRR ROE GMS cre Woes as a Re The Supreme Court’s disposition of ROA Communications is flatly inconsistent with NARUC's contention that new entry is impermissible if it will result in duplication of facilities of ex- isting carriers capable of furnishing the serviec. The Supreme Court noted that the Commission hed soul that more facilities Arata % | . lettin ON eT 26a 26 Washington Utilitics & T'ransportation Commission, et al. vs. were then authorized than were necessary to handle the present and expected volume of traffie under sound operating conditions. 346 U.S. at 88.25 Nonetheless, the Court remanded with the ex- press understanding that the Commission might permit entry of new carriers if it found the public interest would be served. The disposition on remand is significant. As the Commission notes (29 F.C.C.2d at 902 n.19): On remand in that case the Commission concluded on the basis of its experience that competition resulting from a grant of the application was reasonably feasible and would serve the public interest. It stated: “What we require is that, in order to be successful an applicant must demonstrate that, as has been done here, through the operation of such a cireuit, some public need would be served or some advan- tage would accrue to the public, or at least that there is a reasonable expectation that such competition may have some beneficial effect.” Mackey Radio and Tclegraph Company, Inc., 19 FCC 1321, 1350 (1955), aff'd. RCA Communica- ‘ions, Inc. v. FCC, 238 F.2d 24, 27-28 (1956), cert. den. 352 U.S. 1004 (1957). As the Commission puts it, RCA Communications stands for the proposition that “while wasteful duplication is generally to be avoided, duplication is not wasteful where a certificating ageney appropriately concludes that competition is reasonably feasible and may be expected to have some beneficial effect.” 29 F.C.C.2d at 902 n.20. Assuming that the use of rulemaking procedures in this case was appropriate, we are not persuaded by NARUC’s attacks upon the sufficiency of the record in support of the rule adopted. We are satisfied that “there is sufficient relationship between the Commission’s conclusion and the factual bases in the record upon which it relied to substantively support this exercise of its 25This finding prompted Justice Douglas to dissent from the Court’s ultimate disposition of the case, arguing that remand would be fruitless because the Commission, exercising its independent judgment, could not possibly find that the entry of new carriers would serve the public interest. 346 U.S. at 99. a EA OL! CUTAN HF Re WE, Reciete — a * = 1¢ er, mh ns a o PPE TRIES IIS AIS SEPP SEDI ONS nee roe Series, 27a Federcl Communications Com mission, et al. ne authority.” United States v. Allegheny-Ludlum Steel Co., 406 U.S. 742, 755-56 (1972) .26 Not surprisingly, both NARUC and WUTC place some em- phasis upon the contention that the Commission did not give suf- ficient consideration to the risk that new specialized carriers would divert interstate business from the established carriers, leading to higher rates for local users. It is argued that the Commission did not sufficiently investigate the nature and size of the market or the potential economic impact of new entrants. The Commission specifically addressed itself to these contentions. 29 F.C.C.2d at 910-14, 917-20; 31 F.C.C.2d at 1107-08. Its re- sponse is adequate. There is truth in NARUC’s charge that the Commission’s de- cision rests in good part upon “suppositious eventualities.” Plan- ning necessarily rests upon the acceptance of uncertain forecasts of future events. No other course is possible if the Commission is to formulate regulatory practices and policies that will enable the industry to satisfy future public needs.27 B. We tum now to WUTC’s argument that it was improper for the Commission to employ policy- and rulemaking procedures to determine whether competition would further the publie inter- “6The Court explained this standard of review as follows: We do not weigh the evidence introduced before the Commission ; we do not inquire into the wisdom of the regulations that the Com- mission promulgates, and we inquire into the soundness of the reasoning by which the Commission reaches its eonelusions only to ascertain that the latter are rationally supported. 406 U.S. at 742. Prior to this decision, there was disagreement among lower courts as to the standard of review of agency rules such as those involved in Allegheny-Ludlum Stcel Corp. and in this ease. Compare Califernia Citizens Band Ass'n v. United States, 375 F.2d 43, 53-54 (9th Cir. 1967) and Superior Oil Co. v. FPC, 322 F.2d 601, 619 (9th Cir. 1963) with City of Chicago v. FPC, 458 F.2d 731, 741-45 (D.C. Cir. 1972). “7FCC v. RCA Communications, Inc., 346 U.S. 86, 96-97 (1953) ; United Stat:s v. Detroit & Cleveland Navy. Co., 326 U.S. 236, 241 (1945) ; GTFE. Sery. Corp. v. FCC, 474 F.2d 724, 731 (2d Cir. 1973) ; see American Airlines, lic. y. CAL, 359 F.2d 624, 633 (D.C. Cir. 1966). Seine PEER AEA Ari OE hs NEL ve CAGED ELISE SLL LO TELE Ds tit HOY Ses Ce SLR belts a Ss PERRIS am RT es RoR aay PE IGE BEY INN LIN DELIA SP ALOD Pi TG LINC AVE BLE EH FRED 28a 28 Washington Utilitics & Transportation Commission, et al. vs. est rather than determining this issue in adjudicative hearings on individual applications. At the outset, it is clear that if it was permissible for the Commission to adopt a general and nationwide policy that the public interest would be served by permitting the entry of new carriers in the specialized communications field, it was appropri- ate for the Commission to do so in a rulemaking proceeding. The policy proposed and adopted by the Commission falls pre- cisely within the Administrative Procedure Act’s definition of a “rule.’28 The problem confronting the Commission met uniformly accepted standards for utilization of rulemaking procedures: It affected large numbers of individual situations, it involved deter- mination of a general policy applicable equally to all in the af- fected class, case-by-case adjudication would require repetitious determination of precisely the same issue, it concerned future events, and it required a broad judgment, legislative in nature, rather than resolution of a particular dispute of fact.2® The crucial question is whether the Commission acted within its statutory authority in adopting a general policy favoring entry of new carriers rather than considering the costs and benefits of the specific proposal in each application. We hold that the Commission did act within its authority. oa pect sac USER Not dal RAR ae id nea 28A “rule” is defined as “[t]he whole or a part of an agency statement of general or particular applicability and future effect designed to imple- mc¢nt, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency.” 5 U.S.C. § 551(4). 29“]t must be emphasized that here the Commission is moving into a new area of policy affecting large numbers of telephone carriers. The advantages of rule-making over adjudicatory proceedings in such cireum- stances are well understood.” GTE Serv. Corp. v. FCC, 474 F.2d 724, 732 (2d Cir. 1973). “Adjudicatory hearings serve an important function when the agency bases its decision on the peculiar situation of individual parties who know more about this than anyone else. But when, as here, a new policy is based upon the general characteristics of an industry, rational decision is not furthered by requiring the agency to lose itself in an excursion into detail that too often obscures fundamental issues rather than clarifies them.” WBEN, Ine. v. United States, 396 F.2d 601, 618 (2d Cir. 1968). “The adversary nature of [a trial-type] proceeding is particularly suited to the determination of ‘adjudicative’ facts, but not to the development of ‘legislative’ facts—that is, to dctermine specific events in the past which are contested rather than general information NI PPL AL ILL OD STILL SLR IIIA IH GR BOE OIE Rp at ae mn 2 / - een puasenemenemees 29a Federal Coramunications Commission, et al. 29 WUTC contends that 47 U.S.C. §§ 214 and 309, particularly the latter, bar formulation of a policy determination in rulemaking proceedings that the public interest would be served by the entry of new carricrs. As WUTU points out, section 309(a ) provides that “the Commission shall determine, in the case of each ap- plication filed with it . . . whether the public interest, convenience, and necessity will be served by the granting of such appliea- tion”; and sections 309(d)(2) and 309(e) mandate an adjudica- tory hearing, conducted in accordance with 5 U.S.C. § 556(d), if “a substantial and material issue of fact is presented.” a The Commission points out that it did act upon the merits of individual applications: “{T]his proceeding does not undertake to decide all of the issues pertinent to pending apvlications, and does not go to the qualifications of the applicants or the suf- ficieney of particular proposals. Such questions will be resolved by appropriate procedures when the applications are processed {under § 309].” Sce 29 F.C.C.2d at 896. WUTC responds that by adopting a policy in favor of competitive entry the Commis- sion decided the substance of the issue of public interest, con- venience, and necessity as to each of the pending applications. leaving open only whether the particular applicant is qualified and the proposed services is technically and economically sownd. WUTC asserts that the adequacy of existing service, the nes for the new service, and the desirability of competitive entry must also be determined in adjudicatory procecdings upon each application pursuant to section 309. The same argument has been advaneed repeatedly both under the statutory provisious involved here and anulogous statutes, and has been repeatedly rejected. Sections 4(i), 4(j) and 303(1r) of the Act, 47 U.S.C. §§ 1544) & (j), 303(r), describe the Commission’s broad power to issue fining Procedural Requirements for Agency Rulemaking, 87 Harv. L. Rev. 782, 784 (1974). Sce also United States v. Florida East Coast Ry., 410 U.S. 224, 245-46 (1973) ; FPC v. Texaco, Inc., 377 U.S. 33, 44 (1964) ; SEC v. Chenery Corp., 332 U.S. 194, 202-03 (1947); City of Chicago v. FPC, 458 F.2d 731, 739 (D.C. Cir. 1971); General Tel. Co. v. United States, 449 F.2d $46, 863 n.15 (Sth Cir. 1971); Airline Pilots Ass'n v. Quesada, 276 F.2d 892, 895-96 (2d Cir. 1960). Bis St BRR OSI OIL IL PE. EON GE AY Rao nd tt ea Ly ADEN! Rael ccd NY BEY ee 30a 30 Washington Uttlitics & Transportation Commission, ct al. vs. rules and regulations.2® Section 309 defines the Commission’s au- thority in granting or denying an individual application. WUTC’s “contentions sharply pose the issue whether provisions for general rule making by administrative agencies are to be applied in their apparent breadth or are limited by other statutory provisions seemingly framed to deal with the different problem of individual applications. In resolving the conflict it is well to remember that Congress could hardly have intended to deprive administrative agencies of the ability to administer.” WBEN, Inc. v. United Statcs, 396 F.2d 601, 607 (2d Cir. 1968). As the concluding admonition forctells, WBEN, Inc. resolved the coniliet in favor of the Commission’s broad rulemaking power. Acting under section 303(r) of the Act, the Commission in that ease hed promulgated a new rule limiting the predawn broadecast- ing rights of a class of broadcasters. The latter contended that a separate evidentiary hearing as to each licensee was required by section 316(a) of the Act which permits modification of a station license or permit only if the Commission determines “such action will promote the public interest, convenience, and neces- sity,” and requires that the holder be given an opportunity to show cause “by public hearing” why the modification should not issue. The court held (396 F.2d at 618): But no case cited to us has held that §316 thus disables the agency in the exercise of its rulemaking powers. Rather, in the only decision in point, the Ninth Circuit upheld the Commission’s modification of existing license rights by rule, dcelaring that § 316’s “primary function is to protect the in- dividual licensee from a modification order of the Commission and is concerned with the conduct and other facts peculiar 3047 U.S.C. § 154(i) provides: The Commission may perform any and all-acts, make such rules and regulations, and issue such orders, not inconsistent with this chapter, as may be necessary in the execution of its functions. 47 U.S.C. § 154(j) provides in part: The Commission may conduct its proceedings in such manner as will best conduce to the proper dispatch of business and to the ends of justice. ... 47 U.S.C. § 303(r) authorizes the Commission to: Make . . . such rules and regulations and prescribe such restrictions, not inconsistent with law, as may be necessary to carry out the pro- visions of this chapter .... * ¥ 4 a % iy 3 5 3la Federal Communications ¢ ‘ommuission, et al. 31 to an individual licensee.” California Citizens Band Associa- tion v. United States, 375 F.2d 43 (1967), cert. denied, 389 U.S. 844, 88 S.Ct. 96, 19 L.Ed.2d 112 (1967). The decision draws the proper line, Another of the Commission’s rules involved in WBEN, Inc. provided that an authorization io offer pre-sunrise broadcast service was to issue to eligible stations merely upon a showing as to technical matters. It was contended that this rule was pre- cluded by the provisions of section 309(d) (the section relied upon by WUTC in this case) allowing any party in interest the right to file a petition to deny such an application, and requiring an evidentiary hearing to resolve aii “substantial and material questions of fact.” 396 F.2d at 621. The court held that the analysis of section 316 in relation to section 303(r) applied to section 309 as well. The court said (396 F.2d at 622): » + ~ §309(d) was an attempt to provide a workable metho: whereby persons affected by an individual application for a license or its modification were to have notice and a reason- able period for registering their objections without, how- ever, requiring the FCC to hold a hearing in every case where a petition to deny was filed. Nothing in the text or in the historv indieates that the statute was addressed to the entirely difcrent situation where, after proceeding under § 4 of the APA, the Comniission utilizes the rule-making power granted by £303(1r) to alter the permissible times of opere- tion by existing licensees, particularly sinee, as indicated above, coniminuce with §309(d) after suea 2 rule-making proceeding would generally be an exercise in futility. The Supreme Court arrived at the same conclusion With ro- spect to the relationship between the Commission’s rulemaking power under section 303(1) of the Act and its duty to adjudicate under section 309 in United States v. Storer Broadcasting Coy.- pany 351 U.S. 192 (1956). Following a rulemaking proceeding under the authority of seetion 303(r), the Commission issued rules providing that in passing upon applications for tel vision broadeasting liconses it would emsider it to be contrary to public interost, convonicues, or necessity for any party to have an in- teresi in inore than five television stations. Storcr Proad ests ‘of Py RPT I OMT IS eae or ha el SEILER POMS IE IE We STE AICS, a Veédal seis ae Gee CP ee tok arti ik aR TRESS fete ga ote oetanat eee ee ne eet 32a 32) Washington Utilitics & Transportation Commission, ct al. vs. Company had five such stations. On the day the rules were adopted, a pending application by Storer for an additional sta- tion was dismissed on the basis of the rule. Storer argued that by the express terms of section 309 its application could not be rejected without a “full hearing.” The Supreme Court held, however, that the Act must be read as a whole, that section 309 did not withdraw the Commission’s rulemaking power under sec- tion 303(r), that in the exercise of that power the Commission could announce in advance its attitude regarding concentration of control as it related to the public interest, and that unless an application set forth reasons sufficient to justify a change or waiver of the rule, section 309 did not require a hearing. 351 U.S. at 202-05. Federal Power Commission v. Texaco, Inc., 377 US. 33 (1964), applied the same analysis to comparable provisions of the Natural Gas Act. Following rulemaking proceedings the Commis- sion issued regulations providing that a producer's application for a certificate of public interest, convenience, and necessity under section 7 of the Act would be rejected if any contract submitted in support of the application contained certain forbidden provi- sions. An application submitted by Texaco, Inc. was rejected under the rule without a hearing despite the provision of section 7 that the Commission “shall set” such applications “for hear- ing.” The Court of Appeals set aside the Commission’s order, holding that the regulation was a valid statement of Commission policy, but that it could not “be used to deprive an applicant of the statutory hearing granted those who seek certificates of public convenience and necessity. 377 U.S. at 37. The Supreme Court reversed, holding, on the authority of Storer, “that the statutory requirement for a hearing under §7 does not preclude the Commission from particularizing statutory standards through the rule-making process and barring at the threshold those who neither measure up to them nor show reasons why in the public interest the rule should be waived.” Jd. at 39. The same principle was applied under similar statutory provi- sions in American Airlines, Inc. v. Civil Aeronautics Board, 359 F.2d 624, 628, 631 (D.C. Cir. 1966), and Airline Pilots Assocta- tion v. Quesada, 276 F.2d 892 (2d Cir. 1960). In American Airlines, Inc. the Civil Aeronautics Board issued a policy statement after rulemaking proceedings that only all- . spec an me Rid, Pol Ae 33a Federal Commun ic@t ions Comics ‘on, et al. 35 cargo earricrs could sell spac’ for freight on a reserved basis at wholesale rates. The Board ®pproved pending tariffs of all- cargo carricrs providing for st¢) serviee and sumvearily rejected the similar tariffs filed by eo™bination carricrs. The latter ob- jected on the ground that the Borrd’s action effecied a modifiea- tion of their certificates of public convenience and necessity which could be accomplished only After a fui! adjudieatory hearing under section 401(g) of the Pederc! Aviation Act, 49 U.S.C. §1371(g). The court reject-d the argument on the basis of the Storey vale “that notwithstanding the statutory hearing require- ment the Commission retaincd the power to promulgate rules of general application consistent With the Act, and to deny an adju- dicatory hearing to applicants Whose applications on their face showed violations of the rule.” 359 F.2d at 628. The court, in rejecting the suggestion that Storer applied only to regulations affecting future applications fol uew certilicetes, and not to regu- lations affecting rights under existing certificates, stated (359 F.2d at 629): [T]he Storer doctrine is not to be revised or reshaped by reference to fortuitous citcumstances. It rests on a funda- mental awareness that rule making is a vital part of the administrative process, particularly adapted to and needful for sound evolution of policy in guiding the future devclop- ment of industries subject to intensive administrative reovla- tion in the public interest, and that such rule making is not to be shackled, in the absence of clear and specifie Con- gressional requirement, by importation of formalities de- veloped for the adjudieatery process and basically unsuited for policy rule making. Airline Pilots Association sustained a regulation issued by the Federal Aviation Agency after rulemaking pro.cedings thet no person over 60 could serve as a commercial aireraft pilot. Plain- tiffs argued that the regulation was invalid because it was issued without an adjudicatory hearing reynired by section 696 oF the Federal Aviation Act of 1958, 49 U.S.C. § 1429. before an a'r man’s license may be amended, modified, suspended, cr revoked. The court rejected the arguincnt, holding that section 1429 iip- plicd “only when an order of the Administrator is directed to an individual airman and is concerned with eonduet or other facts peculiar to the airman,” and was “not intended to apply EPL YT NR IRR SOR ey Cp ROR TLD SPHERE WS bhi ah SA eR UME ars he cil ein ahd) taapanaeas 34a 34. Washington Utilitics & Transportation Commission, et al. vs. when a general directive of the Administrator is promulgated {under § 601 of the Act, 49 U.S.C. § 1421] though the regulation may in fact modify airmen’s Certificates.” 276 F.2d at 897. WUTC distinguishes Storer on several grounds. It notes that the regulation involved in Storer set up standards that barred issuance of a certificate of public interest, convenience, and necessity to applicants who did not meet them, while in this case the standard permitted entry. The relevance of this difference is not apparent. The rules involved in WBEN, Inc. and American Airlines favored some grants and barred others, In either case the Commission uses rulemaking procedures to arrive at a general determination as to a matter relevant to the public interest, convenience, and necessity. To repeat, “the Storer doc- trine is not to be revised or reshaped by reference to fortuitous circumstances.” American Airlines, Inc. v. Civil Aeronautics Board, supra, 359 F.2d at 629. WUTC seems to argue that Storer should not be applied because the issue resolved by rulemaking in this case is somehow more central to the discharge of the Commission’s ultimate statutory responsibility to determine the public interest, convenience, and necessity. The rule involved in Storer, as in each of the other eases discussed, effectively determined that a class of applications would be approved or rejected, and thus effectively determined the public interest, convenience, and necessity as related to the disposition of each such application. These cases reject WUTC’s assumption that adjudicatory proccedings are preferred if not mandated for the determination of issues central to the public interest. When, as here, the issue is resolved by adoption of a general policy for uniform application in the regulation of a nationwide industry, rulemaking is an entirely appropriate means for “a particularization of the Commission’s conception of the — ‘publie interest’ sought to be safeguarded by Congress in enacting the Communications Act of 1934.” National Broadcasting Co. v. United States, 319 U.S. 190, 218 (1943). WUTC contends that the Commission bound “itself inflexibly to the licensing policies expressed” in its order, contrary to the requirement of National Broadcasting Co. v. United States, supra, 319 U.S. at 225; see Federal Power Commission v. Texaco, Inc., supra, 377 U.S. at 40-41; United States v. Storer Broadcasting Company, supra, 351 U.S. at 204-05. Though the Commission RR RIAD A ENG AMER EDT CONTR RR Na DO + ASO TETAS LOR EAS TE GH OTR Bt A ee 35a Federal Communications Commiss‘on, et al. 35 said it would pass separately upon the merits of each pending application, presumably the rule would govern individual cases. That is its function. Cf. Port Angeles Telecable, Inc. v. Federal Communications Commission, 416 F.2d 243, 246 n.6 (9th Cir. 1969). Nonetheless, the Commission’s regulations specifically pro- vide for waiver of “rules, regulations or other requirements” upon an appropriate showing. 47 C.F.R. § 1.566 (1973); United States v. Storer Broadcasting Company, supra, 357 U.S. at 201, 205; see also 47 C.F.R. §1.3 (1973); WBEN, Inc. v. United States, supra, 396 F.2d at 618. In addition, the Commission specifically noted (29 F.C.C.2d at 900 n.17): “As in the case of any policy or rule of general applicability, a waiver, excep- tion or evidentiary hearing may be granted upon an adequate showing of exceptional circumstances making it inappropriate to apply the policy or rule in a particular situation.” Further, the Commission said it would “examine future applications in light of the circumstances then shown,” and expressed its willing- ness to alter its policy “if it no longer comports with the publie interest, convenience, and necessity” (29 F.C.C.2d at 927), an assurance the Commission has recently reaffirmed. See In re Commission Policics Governing the Licensing and Regulation of Specialized Common Carriers, 44 F.C.C.2d 467, 471 n2 (1973). III Both NARUC and WUTC challenge the Commission’s con- clusion that “it is not necessary or desirable in the publie interest to hold comparative hearings for the purpose of restricting new entry in any particular area to only one private line applicant.” 29 F.C.C.2d at 926. Again, the petitioners’ arguments rest on somewhat different grounds. NARUC's argument is not directed to comparative hearings as such; rather, under this heading, NARUC presents a general objection to the Commission's use of rulemaking procedures. Its argument is simply that section 309(e) requires an adjudi- catory hearing when “a substantial and material question of fact is presented”; and that oth the record in this proceeding and the several opinions filed in Mierowave Communications Ine.. 18 F.C.C.2d 953 (1969), demonstrate that many such questions were presented here. including the nature and extent of the market, the ability of existing carriers to supply it, whether the applicants proposed a different service than is now available, the RIT RY PAE RDNA LEI SOY CR RF POT OL ee Rae a» 36a 36 Washinglon Uttlitics € Transportation Commission, et al. vs. cost of the proposed service, the extent of duplication of facili- tics involved, the potential for “eream skimming,” and the effect upon existing carriers of this and other potential conscquences of competition. The answer to this argument, as we have said, is that rulemaking pursuant to section 303(r) is an alternative to adjudicatory proccedings under section 309 in a proper case, and that this is such a case. Rulemaking is hardly limited, as NARUC implies, to that certainly rare and probably entirely hypothetical situation in which the facts relevant to determina- tion of a question of general policy are beyond dispute.*! WUTC’s argument is that the Commission must inquire whether the service proposed by any of the applicants would preclude the service proposed by any other; and, if it would, that the Commission must hold a comparative hearing to deter- mine which applicant should be authorized to render the service. WUTC relies primarily upon what are commonly referred to as the Ashbacker doctrine and the Carroll doctrine, originating in Ashbacker Radio Corporation v. Federal Communications Com- mission, 326 U.S. 327 (1945), and Carroll Broadcasting Co. v. Federal Communications Commission, 258 F.2d 440 (D.C. Cir. 1958). Ashbacker involved two applications for broadcasting authority that were actually exclusive in the sense that the broadcast signals would interfere with each other. Only one of the two applications could be granted. The Commission granted one and 31In United States v. Florida East Coast Ry., 410 U.S. 224 (1973), it was argued that because §1(14)(a) of the Interstate Commerce Act re- quired tle Commission to give consideration to certain factors specified in the statute when it fixed the compensation to be paid by one railroad for the use of freight cars of another, the Commission was required to make its determination “on the record after opportunity for agency hear- ing” pursuant to 5 U.S.C. §553(¢), rather than by informal rulemaking procedures. The Court rejected the argument, stating (410 U.S. at 235): We know of no reason to think that an administrative agency in reaching a decision cannot accord consideration to factors such as those set forth in the 1966 amendment by means other than a trial- type hearing or the presentation of oral argument by the affected parties. Congress by that amendment specified necessary components of the ultimate decision, but it did not specify the method by which the Commission should acquire information about those components. 37a Federal Coimaunications Cominivsion, et al, 37 set the other for hearing. The Court held that as a practical matter this required the second applicant to justify displace- ment of an established licensec, and made the second applicant’s right under section 309(a) to a hearing before denial an “empty thing.” The Court held, “where two bona fide applieations are mutually exclusive the grant of one without a hearing to both deprives the loser of the opportunity which Congress chose to give him.” 326 U.S. at 333. Mutual exclusivity in the Ashbacker sense is not involved in this case. Carroll held that, in some circumstances, before an application for a license can be granted a section 309 hearing is required “to determine whether the economic effect of a second license in this area would be to damage or destroy service to an extent inconsistent with the public interest,” 258 F.2d at 443. As the Carroll court plainly stated, the doctrine of that case is simply a particularization of the public interest standard: “The basic charter of the Commission is. of course, to act in the publie interest. It grants or denies licenses as the public interest, con- venience and necessity dictate. Whatever factual elements make up that criterion in any given problem—and the problem mar differ factually from ease to case—must be considered.” Jd. Carroll recognized that sometimes competition may serve the public interest; sometimes it may not. If in a proceeding under section 309 the Commission is presented with a substantial show- ing that it will not, appropriate findings should be made. Id. at 444. The showing required is described in WLVA, Inc. v. Federal Communications Commission, 459 F.2d 1286, 1297 (D.C. Cir. 1972): “[A] petitioner secking a héaring on the Carrol issue must plead specifie factual data sufficient to make out a prima facie case that the economic consequences of a grant of the challenged application will lead to an overall derogation of service to the public.”32 32The Court continued: Specifically, the petitioner must raise substantial and material ques- tions of fact as to whether: (1) the revenue potential of the market is such that a grant will cause the petitioner to suffer a significant Joss of income; (2) the effect of this loss will be to compel the neti- tioney to eliminate some or all of its publie service programmiie: and (3) this loss of presramming will not be oftset by the increased how-networlk: provramming proposed to be offered by the applicant. é PP EIEN ROGET es | 38a 38 Washington Utililics & Transportation Commission, et al. vs. But once again, the Commission may de*ermine general ques- tions relating to the public interest, convenience, and necessity in rulemaking proceedings; and, specifically, may determine that competition in the furnishing of a class of regulated service will lead not to poorer but to better service to the public, and will otherwise be in the publie interest. We have sustained the Com- mission’s determination to this effect with respect to the special- ized communications field as a whole, supporting a general policy favoring entry of new carriers nationwide. The Commission’s determination with regard to comparative hearings is simply a reaffirmation of that general policy, as applied to the specific applications then pending. The reasons given by the Commission in support of its con- clusion that it would be contrary to the public interest and inconsistent with its policy determination in favor of new entry to limit entry among pending applications by holding compara- tive hearings on issues of economic exclusivity, are summarized in the margin.** They reflect a careful consideration of the rele- 33As the Commission had concluded, the public interest would be served by offering users flexibility and a wide range of choice. The applicants were secking to develop a relatively new and potentially very large market with heterogeneous submarkets. The proposals reflected differing routes and services. The various systems might develop along different lines. The number of potentially successful operations might well depend on the ingenuity, enterprise, and initiative of the participants in developing new services and equipment. Only four of the 33 applicants claimed economic exclusivity, and they failed to make a substantial prima facie showing that the potential specialized market along any route was so limited as to support only a single entrant. The remaining applicants are willing to proceed in the face of competition. The Commission has found a general public need and demand for the proposed services in all areas. The record as a whole indicates that entry by more than one private line carrier should generally be reasonably feasible, in view of the large and hetero- gencous potential market. The investment and revenne requirements are such that a comparatively small share of the potential market may result in a financially successful operation for any one applicant and that a number of smal] carriers may co-exist in any particular region. If somo fail, the adverse consequences would not be significant. Merger is more likely than bankruptcy or removal of facilities from the field. Even if a carrier is lost, demand for this type of communication could be met by another entrant or by an established carrier, and the frequencies would revert to the Commission fur reassignment to others. There would be i 4 a a SEE CRM ALI Pahl SP aA a re 39a Federal Communications Conuniss‘on, et al. 39 ’ vant factors, and a reasoned exercise of the Commission’s discretion.#4 IV NARUC attacks the order on the additional ground that the Commission failed to consider the environmental impact of the policy adopted by the order, as required by section 102 of the National Environmental Policy Act (NEPA), 42 U.S.C. § 4332. Neither NARUC nor any other party raised the NEPA claim before the Commission. The Commission argues that this court is barred from considering the claim by 47 U.S.C. § 405,35 which “precludes judicial review of questions of law or fact that the ‘ Commission has not had an opportunity to pass upon.” Neckritz v. Federal Communications Commission, 446 F.2d 501, 503 (9th Cir. 1971) ; sce Great Falls Community TV Cable Co. v. Federal Communications Commission, 416 F.2d 238 (9th Cir. 1969). NEPA does not permit the Commission to confine itself to consideration of environmental issues raised by the parties. Calvert Cliffs’ Coordinating Committee v. Atomic Energy Com- minimal inconvenience to the public. If it should turn out that the market is spread so thin among the new entrants as to adversely affect their service to the public in an area, the Commission ean take remedial action by rulemaking or comparative hearing at license renewal time. The Com- mission does not know whether all of the pending applications will be found qualified and, if so, will elect to proceed. Since new entry of more than one private applicant appears reasonably feasible in the potential market, the market place is a more reliable and effective instrument than the comparative hearing process for determining how many and which new entrants may succeed. In summary, it is desirable to avoid delay in the institution of services needed by the publie now, the publie will be benefited by the availability of diverse options, and there will be no public detriment if some of the pending applicants fail. %4The Commission responded briefly but adequately to WUTC’s vigor- ously pressed arzumeit that special consideration was required of ap- plications to provide service in the Pacifie Coast area. 29 F.C.C.2d at 899, 926-27. 3547 U.S.C. § 405 provides that “[t]he filing of a petition for rehearing shall net be a condition precedent to judicial review of any .. . order, decision, report, or action [by the Commission], exeept where the party seeking such review ... (2) relies on questions of fact or law upon which the Commission .. . has been siforded no opportunity to pass.” re e ba ad | SF D8 Set EN BB eT GEOR BNP =— bier Sete ton er RTRs. 40a 40 Washington Utlitics & Transportation Commission, et al. vs, mission, 449 F.2d 1109, 1118-19 (D.C. Cir. 1971). The Com- mission is required “to consider environmental values ‘at every distinctive and comprehensive stage of the [agency's] process.’ The primary and nondelegable responsibility for fulfilling that function lies with the Commission.” Greene County Planning Board v. Federal Power Commission, 455 F.2d 412, 420 (2d Cir. 1972), quoting Calvert Cliffs’ Coordinating Committee v. Atomic Energy Commission, supra, 449 F.2d at 1119. The imme- diate question, however, is not whether the FCC failed to dis- charge its obligations under NEPA, but whether its alleged failure may be considered on review of the Commission’s order. That question is still governed by section 405(a), for “NEPA was not intended to repeal by implication any other statute.” United States v. SCRAP, supra, 412 U.S. at 694. But “the doctrine expressed in section 405 is not inflexible; it leaves room for the operation of sound judicial discretion to determine whether and to what extent judicial review of ques- tions not raised before the agency should be denied.” Great Falls Community TV Cable Co. v. Federal Communications Com- mission, supra, 416 F.2d at 239. A proper accommodation with NEPA requires that the appellate court in exercising its dis- cretion under section 405 weigh the “lofty purposes” of NEPA (United States v. SCRAP, supra, 412 U.S. at 693) heavily in the balance.*¢ Giving full weight to NEPA’s vital purposes, we conclude that in the particular circumstances of this case the balance should be struck against possible review and reversal of this 36The discretion excreised by vie court under 47 U.S.C. § 405 is the same as that exercised in applying the general nonstatutory requirement of exhaustion of administrative remedies; for the doctrine “is substantially the same whether or not it happens to be embodied in such a statutory provision.” K. Davis, Administrative Law Treatise § 20.06, at 92 (1958). See also MeKart v. United States, 395 U.S. 185, 193 (1969). The factors to be considered are spelled ont in MeGee v. United States, 402 U.S. 479 (1971), and MeciXart v. United States, 395 U.S. 185 (1969). See also Crayeroft v. Ferrall, 408 F.2d 587 (9th Cir. 1969). City of New York v. United States, 337 F. Supp. 150 (E.D.N.Y. 1972) (three iudge court), dees not l:old that the general doctrine requiring exhaustion of administrative remedies is inapplicable to NEPA issues. In that case the NEPA issues were presented to the agency during the alministrative process, % é : 4la Iederal Communications Commission, ct al. 41 Commission cider on the ground NARUC seeks to raise for the first time in this court. In reaching this conclusion, we do not mean to imply that an environmental impact statement would have been required had the issue been raised before the Commission. Any damage that might be done to NEPA interests by failure to review the NEPA questions now is probleniatieal and, in any event, slight. The FCC's order simply adopts policy. Before any construction is authorized, separate hearings must be held on each application. NEPA will be applicable to those proceedings. The FCC must consider “the environmental impact of the pro- posed action” as a whole, und in full context. It cannot treat cach application separately from the others and ignore the total program of whieh it is a part."7 There is no apparent obstacle to NARUC presenting its position on the environmental issue to the Commission in a procecding on one or more of the individua! applications; and, if the Commission fails to apply the proper standard, NARUC may obtain judicial review. It is also of some relevance to the balancing of interests that NARUC’s claims of erivironmental impact do not appear to be particularly substantial. If the order had not been entered, the specialized communications services would have been furnish: d by the present common carriers, using facilities built for thet purpose. These carvicrs insist that they alone could and would have supplied all future necds for these services. The efvcct o the order will be to introduce competition in the fueaish: x of the services. The immediate effect of the order is upon who will furnish the servies, not whether it will be furnished, or how much; competition may or inay not increase the total volume S*See Natural Kesourees Dejeise Council v. Grant, 241 F. Supp. 356, 367 (E.D.N.C. 1972). The Guidelines of the Council on Environmental Quality provide: The statutory clause “major Federal actions Signilicant!y effecting the quality of the hiaman environment” is to be construed by agencies with a view to the crerall, enmulative impact of the acticu proposed (and of further actions contemplated). Such actions may be localized in their impact, but is there js potential that the environment may be siguiticautly aiveted, the statemout is to be prepared, Proposed actions, the civiroamental impoet of witiels is apt to be highly eou- troversial, should be covered in all cases. 36 Fed. Reg. *724 (1971) (emphasis supplied). Ne tee Se CD a 8. aN IR ti tt 42a 42 Washington Utilitics & Transportation Commission, ct al. vs. of service performed, At issue is the incremental adverse effect that might result from the substitution of competition for monopoly, and only the portion of this increment, if any, that cannot be adequately considered in indivdualized hearings. Balanced against these problematical and attenuated adverse consequences of denying review, the disadvantages of allowing NARUC and others similarly situated to bypass the administra- tive proceeding are substantial. We are denied the benefit of the Commission’s views on even the threshold question of whether and to what extent NEPA applies in the peculiar substantive and procedural posture of this matter. If the NEPA issue had been timely raised, it might have been fully explored by the Commission, and could now be finally resolved, on an adequate record, without further delay. Such a resolution cannot now be achieved without great delay, waste, and expense. The order under consideration is a first step in a continuing, interrelated, administrative process. It is important that challenges to such a process be raised and resolved in its earlier stages so that subse- quent steps may be undertaken with a full appreciation of the risks. Cf. United States v. Tucker Truck Lines, 344 U.S. 33, 37 (1952). Finally, we cannot ignore the potential for abuse if those who object to an agency’s action, and would prefer to delay it if it cannot be wholly barred, are permitted to reserve an issue that might induce a remand if all else fails. The order of the Commission is affirmed. WALLACE, Circuit Judge, Concurring: I concur in the result reached by the majority. However, I disagree that standing for Washington Utilities & Transporta- tion Commission (WUTC) should be based on the alternative ground of parens patrice. Not only is the parens patriae reason- ing unnecessary to decide this case but application of the doc- trine appears to be barred by Massachusetts v. Mellon, 262 U.S. 447 (1923). There Massachusetts, acting as parens patriae, sued to prevent enforcement of the Maternity Act of 1921, alleging that it was an unconstitutional usurpation of state power. The Court stated: “n — eNO OP ARI er ad ee oa Fe ee 5 ee a eee 43a Federal Communications Commission, et al. 43 We need not go so far as to say that a State may never intervene by suit to protect its citizens against any form of enforcement of unconstitutional acts of Congress; but we are clear that the right to do so does not arise here. . . [T]he citizens of Massachusetts are also citizens of the United States. It cannot be conceded that a State, as parens patriae, may institute judicial proceedings to protect citizens ; of the United States from the operation of the statutes ; thereof. While the State, under some circumstances, may sue in that capacity for the protection of its citizens (Mis- sourt v. Illinois, 180 U.S. 208, 241), it is no part of its duty or power to enfcree their rights in respect of their rela- tions with the Federal Government. In that field it is the United States, and not the State, which represents them as parens patriae, when such representation becomes appropri- ate; and to the former, and not to the latter, they must look for such protective measures as flow from that status. Id. at 485-86, The Supreme Court has relied upon Massachusetts v. Mellon to eeny Florida standing to act as parens patriae in an action to en- join collection of federal inheritance taxes in Florida. Florida v. Mellon, 273 U.S. 12, 18 (1927). The Court has also denied standing to the Governor of Louisiana to bring an original action on behalf of the state to enjoin the enforcement of a regulation under the Emergency Price Control Act of 1942 fixing maximum prices for strawberries. Jones ex rel. Louisiana v. Bowles, 322 U.S. 707 (1944) (Per Curiam). See H. Hart and H. Weehsler, The Federal Courts and The Federal System 276 (2d ed. 1973). The holding of Massachusetts v. Mellon has not been, as the ma- jority contends, ‘‘eroded by time.’’ This phrase is from the dissent- ing opinion of Justice Douglas in Massachusetts v. Laird, 400 U.S. 886, 889 (1970), a case in which Massachusetts sought to adjudi- eate the constitutionality of the participation of the United States in the Vietnam war. The majority, however, denied the state leave to file a complaint either because it lacked standing or because it did not present a justiciable controversy. See id. at 887 (Douglas, J., dissenting). Furthermore, the Solicitor General had argued that Massachusetts v. Mellon barred the suit. See id. Thus, if any- J 2 % a 2 ? z Sb santas bes SiGe. 44a 44 Washington Utilities & Transportation Commission, ct al. vs. thing, this case implies that the doctrine of Massachusetts v. Mellon is alive and well. Morcover, I believe the majority is wrong in asserting in foot- note 16 that South Carc.ina v. Katzcenbach, 383 U.S. 301 (1966), ‘‘allowed a state to challenge as parens patriae an allegedly un- constitutional congressional statute.’’ Quite the contrary, the Court held that Massachusetts v. Mellon barred a parens patriae suit by South Carolina. Id. at 324. Standing was granted to the state, not as parens patriae but in its own right, because the Voting Rights Act of 1965 arguably invaded powers reserved to the states. See id. at 323-27. Finally, our decision in Public Utilities Comm’n of California v. United States, 356 F.2d 236 (9th Cir.), cert. denied, 385 U.S. 816 (1966), cites Massachusetts v. Mellon with approval in a situation identical to that presented by this case. There the California count- erpart to WUTC challenged an ICC public notice that invited tele- phone companies to propose tariffs reducing interstate rates. We reasoned that public utility regulation has historically been a legis- lative function and that rate fixing by a regulatory commission is an essentially legislative act. Id. at 241. In a footnote we then dis- cussed the parens patriae issue: This raises the question of whether petitioner has standing to maintain this suit in its capacity as a representative of the people of the State of California. It has long been recognized that a state, as parens patriae, cannot institute judicial pro- ceedings to protect citizens of the United States from the oper- ation of federal statutes because it is the United States, not the state, to whom citizens of the United States must look as parens patriae for protection of whatever rights they might have under federal legislation. Commonwealth of Massachu- setts v. Mellon, 262 U.S. 447, 43 S.Ct. 597, 61 L.Ed. 1078 (1923). Id. at 241 n.1 (dictum). I must also specifically dissociate myself from footnote 17 of the majority opinion, which states that National Association of Regulatory Utility Commissioners (NARUC) has standing in its . own right. As with the parens patriae discussion, this ground for A NS ne he: MB Rpts Adee 45a Federal Communications Commission, et al. 45 standing is not needed te decide this case. True, the majority has admitted it to be dicta and placed it in a footnote. Nevertheless, the argument should not go unchallenged. The majority asserts that NARUC has standing because ‘‘Con- gress has accorded NARUC official status as the representative of state regulatory agencies in dealing with the basic problem under- lying these petitions for review.’’ I believe this to be incorrect. Congress has created a Federal-State Joint Board to consider the problems of allocating common carrier property and expenses be- tween interstate and intrastate operations (which is one basis for determining telephone rates). 47 U.S.C. § 410(c). Each time the Federal Communications Commission has a proceeding which con- cerns the separation problem, it creates a Joint Board to act as a hearing examiner. The poard then forwards its recommended de- cision to the full FCC. The board is composed of three FCC mem- bers and four state commissioners ‘‘nominated by the national organization of State commissions,’’ which is NARUC. The state members may participate in the subsequent FCC deliberations, but they do not have a vote. Id. Thus it is inaccurate to say that NARUC has “‘official status as the representative of state regulatory agencies,’’ at least with respect to the functions of the Joint Board. First. NARUC only nominates the state members—the commission still has the respon- sibility to select them. The FCC’s dominant role in the selection process is illustrated by the parallel provisions of subsection (a) giving the commission discretion to reject any nominee. 47 U.S.C. § 410(a). Second, only the state agency members actually appointed to the Joint Board serve as representatives of state commissions. They, not NARUC, sit on the board as hearing examiners; they, not NARUC, participate in the subsequent FCC deliberations. NARUC’s role is, therefore, rather limited. The organization itself cannot be injured by the FCC’s action in the present matter: Its right to nominate will remain unimpaired. Certainly NARUC has an interest in the matter but only as an interest group like the Sierra Club. It may indeed have standing to challenge [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385608_1167%3A1. Public record. Not legal advice.