# Opposition Brief — SBC Communications, Inc. v. Federal Communications Commission

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1999
- **Citation:** 525 U.S. 1113

## Text

b) 7 Dee 18 1996
Nos. 98-652 and 98-65

In the Supreme Court of the Gnited States
OCTOBER TERM, 1998

SBC COMMUNICATIONS INC., ET AL., PETITIONERS
Uv.
FEDERAL COMMUNICATIONS COMMISSION, ET AL.

BELL ATLANTIC CORP., PETITIONER
v.
FEDERAL COMMUNICATIONS COMMISSION, ET AL.

ON PETITIONS FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

BRIEF FOR THE UNITED STATES AND THE
FEDERAL COMMUNICATIONS COMMISSION
IN OPPOSITION

SETH P. WAXMAN
Solicitor General
Counsel of Re cord
JOEL I. KLEIN
Assistant Attorney General
PHILIP D. BARTZ
CHRISTOPHER J. WRIGHT Acting Assistant Attorney

General Counsel Ge neral
JOHN E. INGLE MARK B. STERN
Deputy Assistant General JACOB M. LEW IS
Counsel ALISA B. KLEIN
DANIEL L. KAPLAN
DANAJ. MARTIN
Attorneys

Federal Communications
Commissicn

Wash ington, PAG. 20554

Department of Justice
Washington, DA " 20580-0001
(202) 514-2217

QUESTION PRESENTED

Whether certain provisions of the Telecommunica-
tions Act of 1996 applicable to the activities of the Bell
Operating Companies (47 U.S.C. 271-275) constitute
“bills of attainder,” violate separation of powers princi-
ples, or deny those companies the equal protection of
the laws.

(I)

WR VES ORNS eR Ba a a raies

pi Bs RE PE eee BAS CEE TRL RENNES SORE, RE TS

TABLE OF CONTENTS

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Conclusion

TABLE OF AUTHORITIES

Cases:

Alaska Airlines, Inc. v. Brock, 480 U.S. 678

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GENOA) cstiieusesnisaicindubesccbbclaituanisasohiaerduiinttmmibbingtiatsnticcossetetahec.

BellSouth Corp. v. FCC, 144 F.3d 58 (D.C. Cir.

GONE SietlicnnedibiissshcnpdiniaNaiatieiniashionasbiapebibdbutisisioninicisioniais-
Board of Governors v. Agnew, 329 U.S. 441

LBA F salstiedidebiasapusihctanacernuintninnisiitdassatibihasbadicaiunssaansois dass
Cummings v. Missouri, 71 U.S. (4 Wall.) 277

[RAPUEP sclehisecinesasinaseetciniiecadirsaheitncabbddalchienassumiiintiabicosasshass.
Datdridge v. Williams, 397 U.S. 471 fe. RST
DeVeau v. Braisted, 363 U.S. 144 2, See ER eat sentee
Erb v. Morasch, 177 U.S. 584 (1900) cecccccceccossosce.ce.--.....
FCC v. Beach Communications, Inc., 508 U.S. 307

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FCC v. National Citizens Comm. for Broadcasting,

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Flemming v. Nestor, 363 U.S. 603 (1960) c.ccccccssecsoesess-.
Fresno Rifle & Pistol Club, Inc. v. Van de Kamp,

965 F.2d 723 (Sth Cir. 1992) ......ccecscccscasccnssceesceseceeccecescees
Garland, Ex parte, 71 U.S. (4 Wall.) 333 (1866) ............
Hawker v. New York, 170 U.S. 189 EIRENE ce er ee ea rer = me et rr a a a RE I I rt rn re on Es ee

6

that granting the application would serve “the public
interest, convenience, and necessity” (47 U.S.C.
271(d)(3)).

Section 273 separately authorizes a BOC to manufac-
ture and provide telecommunications equipment once
the FCC has found that the BOC has satisfied the
conditions set forth in Section 271 for providing in-
region long-distance service. Finally, Sections 274 and
275 impose short-term restrictions on the BOCs’ elec-
tronic publishing and alarm monitoring services. Under
Section 274, a BOC or BOC affiliate may not, until Feb-
ruary 8, 2000, disseminate electronic publishing by
means of the BOC’s basic telephone service, except
through a “separated affiliate” or joint venture.
47 U.S.C. 274(a), 274(g)(2). Section 275 requires BOCs
that were not providing alarm monitoring services as of
November 30, 1995, to wait until February 8, 2001, to
begin doing so. 47 U.S.C. 275(a).

3. Petitioner SBC Communications Inc., through its
wholly-owned subsidiaries (Southwestern Bell Tele-
phone Company, Pacific Bell, and Nevada Bell), pro-
vides local telephone service to customers in Texas,
Missouri, Oklahoma, Arkansas, Kansas, Nevada, and
California. In April 1997, SBC filed an application
under Section 271 to provide in-region long-distance
telephone service in Oklahoma. The FCC denied the
application on the ground that SBC had not satisfied
Section 271’s threshold competitive requirements. In
re Application of SBC Commun. Inc., 12 F.C.C.R. 8685
(1997), aff'd, 138 F.3d 410 (D.C. Cir. 1998).

Six days after the FCC’s decision, SBC, along with
its wholly-owned BOC subsidiaries and several other
affiliates, filed this suit in the United States District
Court for the Northern District of Texas, challenging
the constitutionality of Sections 271 through 275. A

7

number of interested parties ultimately intervened. On
December 31, 1997, the district court held that the
challenged provisions were unconstitutional bills of
attainder. Pet. App. 73a. In a subsequent order, the
court stayed its decision pending appeal. Jd. at 76a-77a.
The court of appeals reversed. The court first held
that the challenged provisions of the 1996 Act are not
“bills of attainder” because they do not “punish” the
BOCs. E.g., Pet. App. 3la-35a. The court also rejected
petitioners’ claims that the challenged provisions vio-
late the separation-of-powers doctrine (id. at 35a-39a)
and equal protection principles (id. at 39a).’ Judge
Smith, dissenting, would have invalidated the chal-
lenged provisions as bills of attainder. Jd. at 41a-53a.

ARGUMENT

To date, two courts of appeals have ruled on the
BOCs’ bill-of-attainder challenge to the 1996 Act: the
Fifth Circuit below, and the District of Columbia
Circuit in BellSouth Corp. v. FCC, 144 F.3d 58 (1998).
Those two courts reached the same conclusion. In
BellSouth, the D.C. Circuit rejected many of the same
arguments that petitioners present here, upheld the
constitutionality of Section 274, and observed that the
BOCs’ constitutional claims were “somewhat under-
mined by § 274’s placement in an Act that as a whole
relieves the BOCs of several of the burdens imposed by
the MFJ, particularly by prescribing in § 271 a method
whereby the BOCs can achieve a long-sought-after
presence in the long-distance market.” Id. at 66 (em-

® The court of appeals also rejected a First Amendment chal-
lenge limited to Section 274. Pet. App. 40a (following BellSouth,
144 F.3d at 67-71). Petitioners have not sought this Court’s review
of that holding, and they have thus waived any First Amendment
challenge. Sup. Ct. R. 14(1)(a).

8

phasis in original). The BOCs recently challenged Sec-
tion 271 itself before another panel of the D.C. Circuit,
and that case is pending. See BellSouth Corp. v. FCC,
No. 98-1019 (D.C. Cir.) (argued Sept. 25, 1998). Unless
and until petitioners persuade some court of appeals to
depart from the current consensus, there is no need for
this Court to consider petitioners’ attack on integral
provisions of an intricate legislative compromise that
they themselves once supported (see Pet. App. 33a-
30a).

1. A statute is a “bill of attainder” within the mean-
ing of the constitutional prohibition only if it both
applies with specificity and imposes punishment. £.g.,
Selective Serv. Sys. v. Minnesota Pub. Interest Re-
search Group, 468 U.S. 841, 851 (1984). Those two ele-
ments are distinct: no regulation, no matter how
specific, is a bill of “attainder” unless it is actually
“punitive.” See, e.g., Plaut v. Spendthrift Farm, Inc.,
514 US. 211, 239 n.9 (1995); Nixon v. Administrator of
Gen. Servs., 483 U.S. 425, 472-473 (1977); BellSouth, 144
F.3d at 64.

This Court employs a common-sense approach in
determining what constitutes a “punitive” law for
attainder purposes, focusing on “whether the chal-
lenged statute falls within the historical meaning
of legislative punishment,” on “whether the statute,
viewed in terms of the type and severity of burdens
imposed, reasonably can be said to further nonpunitive
legislative purposes,” and on “whether the legislative
record evinces a congressional intent to punish.” See
Selective Serv. Sys., 468 U.S. at 852 (internal quotation
marks omitted). “[OJnly the clearest proof could suffice
to establish the unconstitutionality of a statute on such
a ground.” Flemming v. Nestor, 363 U.S. 603, 617
(1960); see also Selective Serv., 468 U.S. at 855-856 n.15.

The flaw in petitioners’ bill-of-attainder challenge here
is simple: nothing in the challenged provisions can
plausibly be characterized as “punishment.”

a. This Court has invalidated statutes as “bills of
attainder” only five times in this Nation’s history. In
each of those cases, the legislature had imposed puni-
tive disabilities on adherents of a despised political
movement (either the Confederacy or the Communist
Party) that was “thought to present a threat to the
national security.” United States v. Brown, 381 U.S.
437, 453 (1965); see also Cummings v. Missouri, 71 U.S.
(4 Wall.) 277 (1866); Ex parte Garland, 71 U.S. (4 Wall.)
333 (1866); Pierce v. Carskadon, 83 U.S. (16 Wall.) 234
(1872); United States v. Lovett, 328 U.S. 303 (1946). In
each of those cases, the Court invalidated the legisla-
tion upon determining that the sanctions at issue—
reflecting a “judgment censuring or condemning” indi-
viduals for their politics (Brown, 381 U.S. at 453-
454)—were not reasonably related to a legitimate non-
punitive purpose. See, e.g., id. at 454-455; Lovett, 328
US. at 314; Cummings, 71 U.S. at 319-320; Garland, 71
U.S. at 377-378; see also Hawker v. New York, 170 U.S.
189, 198 (1898) (discussing Cummings and Garland).

Nothing about the provisions at issue here resembles
the legislation struck down in those five cases. Business
regulations based on corporate economic power and
incentives, unlike sanctions based on an individual’s
political affiliation, are a legal commonplace. See, ¢.g.,
Turner Broadcasting Sys. v. FCC, 512 U.S. 622, 664
(1994). They rest not on a desire to “punish” the regu-
lated corporations, but on a recognition of the objective
dangers posed by monopoly power. See North Ameri-
can Co. v. SEC, 327 U.S. 686, 711 (1946).

Here, Congress recognized that the local exchange
remains a crucial bottleneck facility for long-distance

10

and other services; that the BOCs “provide over 80% of
local telephone service in the United States” (H.R. Rep.
No. 204, 104th Cong., Ist Sess., Pt. 1, at 49 (1995)); and
that, as under the consent decree, the distinctive geo-
graphical and demographic characteristics of the BOCs’
markets justified competitive protections for those
markets that were not needed elsewhere (see pp. 17-20,
infra). Thus, at the same time that it released the
BOCs from the prospective effect of the consent decree,
Congress enacted Sections 271 through 275, both to
give the BOCs incentives to open their monopoly mar-
kets to robust competition and, for a transitional period,
to preserve a level playing field in the long-distance and
other markets. See SBC Communications Inc. v. FCC,
138 F.3d 410, 412-413 (D.C. Cir. 1998); BellSouth, 144
F.3d at 65-66, 70; Pet. App. 7a. As a former FCC chair-
man told Congress, such restrictions were needed “not
because the BOCs are venal,” but because, in the
absence of such provisions, “they would be following
the natural instincts of rational businessmen” in using
their monopoly power to defeat competition. Telecom-
munications Policy Act (Part I): Hearings Before the
Subcomm. on Telecomm. & Fin. of the House Comm.
on Energy and Commerce, 101st Cong., 2d Sess. 426
(1990) (testimony of Richard E. Wiley); accord H.R.
Rep. No. 559, 103d Cong., 2d Sess., Pt. 1, at 50 (1994)
(“as [the consent decree court] has stated, the line-of-
business restrictions themselves are not punitive in
nature, but are prophylactic measures”) (internal
quotation marks omitted).°

6 Petitioners suggest that the market-opening provisions of
Sections 251 and 252 suffice to ensure local competition. See SBC
Pet. 6-7, 20-21 n.8. That argument is without merit. While
Sections 251 and 252 establish a general framework for opening

11

Those regulatory provisions are thus no more “puni-
tive” in character than the many other statutes that
exclude certain corporations from particular lines of
business to protect competition or promote other
economic goals. See BellSouth, 144 F.3d at 65.’ Such
line-of-business restrictions have never been thought to
implicate the Bill of Attainder Clause, and for good
reason: they do not “fall[] within the historical meaning

local markets to competition, Congress recognized that those pro-
visions would not achieve full competition overnight. See, e.g., 141
Cong. Rec. 88138 (daily ed. June 12, 1995) (remarks of Sen.
Kerrey); id. at S8161 (letter from State Attorneys General). In-
deed, the FCC's most recent industry survey shows that the in-
cumbent LECs have retained control of approximately 97.5% of all
local exchange revenues. See FCC, Telecommunications Indus.
Rev.: 1997, Tab. 4 (Oct. 1998) (lodged with this Court in No. 97-
826). Congress recognized that, by linking removal of the remain-
ing line-of-business restrictions to tka development of local com-
petition, the challenged provisions would give the BOCs an impor-
tant economic incentive to facilitate the process of opening their
traditional monopoly markets to full competition.

7 Eg., FCC v. National Citizens Comm. for Broadcasting, 436
U.S. 775 (1978) (affirming FCC regulation proscribing cross-
ownership of television station and newspaper in same market);
Banking Act of 1933, 12 U.S.C. 24 (Seventh) (prohibiting banks
from underwriting or issuing securities); Bank Holding Company
Act, 12 U.S.C. 1843(a)(2) (prohibiting bank holding companies, with
certain exceptions, from acquiring or retaining “direct or indirect
ownership or control of any voting shares of any company which is
not a bank or bank holding company”); see also Board of Governors
v. Agnew, 329 U.S. 441, 449 (1947) (upholding Section 32 of the
Banking Act of 1933, which prohibits a partner or employee of a
firm primarily engaged in securities underwriting from being a
director of a national bank); Federal Credit Union Act, 12 U.S.C.
1759 (restricting federal credit union membership to groups having
a common bond of association or occupation, or groups within a
well-defined community); Credit Union Membership Access Act,
Pub. L. No. 105-219, 112 Stat. 913.

12

of legislative punishment,” and they obviously “can be
said to further nonpunitive legislative purposes.”
Selective Serv. Sys., 468 U.S. at 852; see also Brown, 381
U.S. at 453-454 (distinguishing the Banking Act of 1933,
which rested on a “general knowledge of human psy-
chology,” from laws “censuring or condemning” indi-
viduals “thought to present a threat to the national
security”). Indeed, petitioners cite no case in which any
court has invalidated, as “punishment,” any restriction
on a corporation’s entry into any kind of market, let
alone entry by corporations as heavily regulated as
those here. That fact, together with the very abun-
dance of line-of-business restrictions throughout the
national economy, belies petitioners’ suggestion (e.g.,
SBC Pet. 15, 23-24) that there could be something in-
herently or historically “punitive” about such restric-
tions.

Despite petitioners’ efforts to equate the two (e.g.,
SBC Pet. 14-15), therefore, economic regulation of this
kind is a far cry from legislation designed to punish
flesh-and-blood members of vilified political groups by
prohibiting them from “practicing a profession” (Lovett,
328 U.S. at 315) The challenged provisions do not, of
course, prohibit anyone from practicing any profession,”

* In any event, even provisions that do prohibit individuals
from practicing a profession are permissible “‘when the nonpuni-
tive aims of an apparently prophylactic measure have seemed
sufficiently clear and convincing.” BellSouth, 144 F.3d at 65
(quoting L. Tribe, American Constitutional Law § 10-5, at 655 (2d
ed. 198%), in turn citing Hawker, 170 U.S. at 196, and DeVeau v.
Braisted, 363 U.S. 144 (1960)). “The question in each case where
unpleasant consequences are brought to bear upon an individual
for prior conduct, is whether the legislative aim was to punish that
individual for past activity, or whether the restriction of the

13

nor do they target disfavored political ideologies. In-
deed, the challenged regulations do not specifically
apply to any particular group of corporate managers or
directors. For example, if a BOC were to sell off its
network to some other company (say, GTE), that new
company, as the “successor or assign” of the BOC (47
U.S.C. 153(4) (Supp. II 1996)), would be no less subject
than the BOC itself to the in-region long-distance
restrictions of Section 271. Conversely, when a BOC
acquires an independent LEC, the 1996 Act does not
prohibit the BOC from providing full in-region long-
distance service in the newly acquired LEC’s local
service area (except in States that the BOC itself
served before 1996). See 47 U.S.C. 271(i)(1). Those
facts further confirm (if further confirmation were
necessary) that Congress treated the BOCs differently
from other companies because of the nature of the
regional markets they serve (see pp. 17-20, infra), not
because of any desire to “punish” them for misconduct.
b. Petitioners’ characterization of the challenged
provisions as “punishment” is particularly implausible
for an independent reason as well. As the D.C. Circuit
recently observed in rejecting the BOCs’ bill-of-
attainder challenge to Section 274, the 1996 Act “as a
whole relieves the BOCs of several of the burdens
imposed by the MFJ, particularly by prescribing in
§ 271 a method whereby the BOCs can achieve a long-
sought-after presence in the long-distance market.”
BellSouth, 144 F.3d at 66 (emphasis in original). Even
apart from the benefits the BOCs derive from a defined
statutory procedure for full entry into in-region long-
distance markets, see ibid., the challenfed provisions

individual comes about as a relevant incident to a regulation of a
present situation.” Flemming, 363 U.S. at 614 (citation omitted).

14

immediately entitle the BOCs to provide, for the first
time, long-distance service to customers outside their
local service regions, 47 U.S.C. 271(a) and (b)(2); to
provide “incidental” long-distance services to custom-
ers anywhere in the country, 47 U.S.C. 271(b)(3); and to
play a significantly greater role in activities related to
the manufacture of telecommunications equipment,
47 U.S.C. 273.

Indeed, the BOCs themselves have recognized that
enactment of the challenged provisions, together with
the termination of the consent decree, represents a net
benefit for them. As the court of appeals explained
(Pet. App. 33a-35a), the BOCs actively supported the
Act while it was pending in Congress—not, of course,
because they benefited from the local competition
provisions (see pp. 3-4, swpra), but because they very
much benefited from the replacement of the consent
decree with the new provisions of Sections 271 through
275. As this Court has indicated, legislation cannot be
said to “punish” its subjects unless, at a bare minimum,
it “depriv[es}” them of “rights * * * previously en-
joyed.” Cummings, 71 U.S. at 320. The most impor-
tant provision challenged here—Section 271—does not
even meet that threshold requirement. See also Bell-
South, 144 F.3d at 66 (upholding the short-term pro-
visions of Section 274 (see p. 6, supra) even though they
reimpose certain electronic publishing restrictions that
had recently been removed from the MF J).

ce. Because they cannot plausibly characterize the
challenged provisions as “punitive,” petitioners devote
much of their discussion to the previsions’ specificity, as
though specificity alone could convert a nonpunitive
statute into a bill of attainder. But that approach erro-
neously conflates two distinct issues. The need to show
specificity and the need to show punitiveness are sepa-

15

rate requirements for any bill-of-attainder challenge,
and there is “no warrant in the precedents for treating
Congress’s specification of the BOCs by name as a
material clement in the punishment analysis.” Bell-
South, 144 F.3d at 64 (emphasis added).

Indeed, much of petitioners’ argument reads as
though this Court had never decided Nixon v. Admin-
istrator of General Services, 433 U.S. 425 (1977). That
case involved the constitutionality of a statute enacted
shortly after President Nixon’s resignation, in response
to an agreement he signed regarding the disposition of
his presidential records. Jd. at 432. The statute over-
rode the agreement and established rules governing
disposition of the records. The statute applied to no
other records and repeatedly referred to the former
President by name. Id. at 433-434. The “essence” of
President Nixon’s constitutional challenge to that
statute, like the essence of petitioners’ arguments here,
was that “the Constitution is offended whenever a law
imposes undesired consequences on an individual or on
a class that is not defined at a proper level of general-
ity.” Id. at 469-470.

The Court rejected that challenge and upheld the
statute. It explained that President Nixon’s expansive
interpretation of the Bill of Attainder Clause “would
cripple the very prccess of legislating, for any individ-
ual or group that is made the subject of adverse legisla-
tion can complain that the lawmakers could and should
have defined the relevant affected class at a greater
level of generality.” 433 U.S. at 470. The Court
observed that a variety of other valid statutes “also
single out identifiable members of groups to bear
burdens or disqualifications”; for example, in the Re-
gional Rail Reorganization Act Cases, 419 U.S. 102
(1974); the Court had upheld the “transfer of rail pro-

16

perties of eight railroad companies to [a] Government-
organized corporation.” 433 U.S. at 471 n.34. In sum,
the Court concluded, just as “mere underinclusiveness
is not fatal to the validity of a law under the equal
protection component of the Fifth Amendment * * *
even if the law disadvantages an individual or identifi-
able members of a group,” neither does “the mere
specificity of alaw * * * call into play the Bill of
Attainder Clause.” Jd. at 471 n.33.

In Plaut v. Spendthrift Farm, Inc., 514 U.S. 211
(1995), the Court revisited this area and reaffirmed the
central holding of Nixon and similar cases. A valid bill-
of-attainder challenge, the Court explained, “requires
not merely ‘singling out’ but also punishment.” Id. at
239 n.9 (emphasis in original). In the absence of punish-
ment, Congress may legislate not just with great
specificity, but may in fact “legislate a legitimate class
of one.” Jbid. (internal quotation marks omitted). That
principle is fatal to petitioners’ bill-of-attainder claim
here.’

* The lower courts have also repeatedly rejected bill-of-
attainder challenges to regulatory statutes directed at named
entities. See, eg., Fresno Rifle & Pistol Club, Inc. v. Van de
Kamp, 965 F.2d 723, 728 (9th Cir. 1992) (rejecting bill-of-attainder
challenge to California statute barring specific brands of assault
weapons because “|t]he type of economic punishment about which
{the weapons’ manufacturers] complain is not of the type
‘traditionally judged to be prohibited by the Bill of Attainder
Clause’”) (quoting Nixon, 433 U.S. at 475); United Nuclear Corp.
v. Cannon, 555 F. Supp. 1220, 1226-1228 (D.R.I. 1982) (rejecting
bill-of-attainder challenge to Rhode Island statute requiring spe-
cific nuclear power company to post $10 million decontamination
bond); see also Nixon, 433 U.S. at 479-472 & nn. 33, 34; Maine
Cent. R.R. Co. v. Brotherland of Maintenance of Way Employees,
813 F.2d 484, 488-491 (1st Cir.), cert. denied, 484 U.S. 825 (1987).

17

2. Petitioners challenge, on a variety of grounds, the
substance of Congress’s distinction between the local-
exchange progeny of the Bell System (and “any succes-
sor or assign,” 47 U.S.C. 153(4)), and the so-called
“independent” local exchange carriers. As discussed,
that challenge cannot help petitioners’ bill-of-attainder
claim, because they cannot meet their independent
burden of showing that the provisions themselves are
“punitive.” See BellSouth, 144 F.3d at 67 (“the differ-
ential treatment of the BOCs and non-BOCs is neither
suggestive of punitive purpose nor particularly suspi-
cious”). Petitioners thus alternatively challenge the
distinction under equal protection and separation of
powers principles. As the court of appeals observed,
however, the challenged provisions do “not even argua-
bly” violate those principles. Pet. App. 41a.

a. It has long been settled that federal regulation of
ordinary economic activity is consistent with the equal
protection component of the Due Process Clause so long
as there is a rational basis for any challenged classifica-
tion. See, e.g., FCC v. Beach Communications, Inc.,
508 U.S. 307, 313 (1993); Dandridge v. Williams, 397
U.S. 471, 484-485 (1970). The provisions challenged
here easily meet that test. See Pet. App. 39a.

The provisions establish transitional entry proce-
dures for the companies that had previously been
barred, under the AT&T consent decree, from the long-
distance and related markets. As the House Energy
and Commerce Committee explained, the statute “natu-
rally focuses on the BOCs and their affiliates, because
they uniquely [we]re seeking release from restrictions
imposed under the MF J.” H.R. Rep. No. 559, supra, Pt.
1, at 50. Indeed, other LECs, including Cincinnati Bell,
Southern New England Telephone, and Sprint, had
already begun to provide long-distance service. See

18

USTA C.A. Br. 3-5. It was entirely rational for Con-
gress to distinguish between companies that it was
admitting into the long-distance market for the first
time and companies that had always been free to
provide long-distance service.

Congress also reasonably found that the BOCs’
monopoly power continued to pose unique concerns for
the development of competition, and that those con-
cerns justified the creation of a transitional regulatory
scheme in place of the restrictions of the now-vacated
consent decree. As the House Judiciary Committee ex-
plained, “the Bells alone exercise immense local ex-
change monopoly power concentrated throughout a
vast geographical region; the local exchange operations
of even the Bells’ closest runners-up are widely dis-
persed.” H.R. Rep. No. 559, supra, Pt. 2, at 93."° For
example, whereas “the BOCs are regions of contiguous
states which together sefve almost all of the large
population centers in the country,” H.R. Rep. No. 203,
104th Cong., Ist Sess., Pt. 1, at 32 (1995), “GTE serves
less than three percent of America’s urban markets,”
and its operations are chiefly located in “widely dis-
persed small- and medium-sized cities and suburban
and rural territory.” Jd. at 31. For that reason, wit-
nesses told Congress, special legislation was needed to
protect competition only in traditional BOC markets:
“The potential incentive and ability of a BOC, which

10 In evaluating the BOCs’ market power, Congress appropri-
ately took into account the fact that no BOC operates independ-
ently, because each is wholly owned and operated by a regional
conglomerate (of which there were seven at the time of enactment,
and of which there are now only five). See p. 2, supra. SBC’s
effort to compare the market power of a hypothetically divested
Nevada Bell with that of other local exchange carriers (Pet. 21 n.9)
is thus without merit.

PIR PON Ee LOND HAT ET ae APE

19

controls nearly one-seventh of the country, to dis-
advantage a competing interexchange competitor, is far
greater than for other companies that offer both local
and interexchange service.” The Role of the Depart-
ment of Justice: Hearing Before the House Comm. on
the Judiciary, 104th Cong., Ist Sess. 66 (1995) (testi-
mony of then-Assistant Attorney General Bingaman);"
see also BellSouth, 144 F.3d at 67 (“the differential
treatment of the BOCs and non-BOCs” in Section 274 is
“quite reasonable”).

Finally, the distinction Congress drew—between the
corporate successors to the Bell System monopoly and
the “independent” telephone companies—was of course
the same distinction drawn for many years by the dis-
trict court that had entered the AT&T and GTE con-
sent decrees. See pp. 2-3, supra (discussing basis for
decree restrictions). For example, in approving GTE’s
acquisition of Sprint over objections that GTE should
be subject to the same type of restrictions imposed on

1 See also ibid. (“Even GTE, the largest of the independent
companies, generally serves non-urban areas, and its local opera-
tions are geographically dispersed. That is why the BOCs were
subject to the line-of-business restrictions while GTE was allowed
to offer long distance services through a separate subsidiary.”). A
variety of witnesses emphasized the importance of this distinction.
See, eg., H.R. Rep. No. 850, 102d Cong., 2d Sess, at 93 (1992)
(quoting testimony of Professor Monaghan) (“As courts have
found, each of the RBOCs has market power significantly greater
than the only other comparably sized local exchange carrier, in
that GTE’s widely dispersed exchanges are primarily rural and
suburban in character and otherwise differ from the RBOCs.”)
(footnotes omitted); Competitive Status of the Bell Operating
Companies: Hearing Before the Subcomm. on Telecomm., Con-
sumer Protection, and Fin. of the House Comm. on Energy and
Commerce, 99th Cong., 2d Sess. 86 (1986) (testimony of then-
Assistant Attorney General Douglas H. Ginsburg) (similar).

20

the BOCs by the AT&T Consent Decree, the district
court explained: “Each of the regional [Bell] companies
has a very strong, dominant position in local
telecommunications in the area in which it serves;
GTE’s operations, by contrast, are widely scattered.”
United States v. GTE Corp., 603 F. Supp. 730, 737
(D.D.C. 1984). Congress’s rationale in enacting
Sections 271 through 275 was no less reasonable.”

b. Petitioners further argue (SBC Pet. 26; Bell Atl.
Pet. 17-23) that the 1996 Act violates separation-of-
powers principles because it alters the prospective

2 Petitioner Bell Atlantic contends (Pet. 24-28) that economic
legislation cannot identify regulated parties by name without
violating equal protection guarantees. That argument is irreconcil-
able with modern equal protection principles, as the court of ap-
peals recognized (Pet. App. 39a). See, e.g., New Orieams v. Dukes,

27 U.S. 297, 306 (1976) (upholding legislation making special
provision for two vendors as against other vendors and overruling
Morey v. Doud, 354 U.S. 457 (1957), “the only case in last half
century to invalidate a wholly economic regulation so on equal
protection grounds”); Maine Cent. R.R., 813 F.2d at 488-491
(refusing to apply heightened scrutiny to legislation “‘select[ing] a
single person for adverse treatment,” and holding that, under this
Court’s precedent, a “classification does not become irrational or
unconstitutional solely because it is specific”); see also Plaut, 514
U.S. at 239 & n.9 (discussed at pp. 21-22, infra); Nixon, 433 U.S. at
471 & n.33; Erb v. Morasch, 177 U.S. 584, 586-587 (1900). Bell
Atlantic’s reliance (Pet. 27) on the government’s brief in opposition
to certiorari in Atonio v. Wards Cove Packing Co., 513 U.S. 809
(1994) (denying certiorari), is similarly without merit. Aftonio
involved the validity of a provision in a civil rights statute that
provided “the plaintiffs in one pending case with significantly less
protection against discrimination * * * than the plaintiffs in any
other pending case.” 98-1767 U.S. Br. in Opp. at 8. The govern-
ment’s filing expressly distinguished the civil rights legislation at
issue there from a provision (such as the ones challenged here) that
is “solely an economic regulation.” Jbid.

21

equitable terms of the AT&T consent decree—albeit,
“as a whole,” to the benefit of the BOCs themselves
(BellSouth, 144 F.3d at 66). As an initial matter, that
argument conspicuously ignores the fact that the only
provision of the 1996 Act that directly addresses the
consent decree is Section 601(a)(1), 110 Stat. 143, which
terminates the decree’s prospective effect. Petitioners
obviously do not object to that provision. In any event,
even if we place that anomaly to one side (see pp. 23-24,
infra), petitioners’ separation-of-powers argument is
without merit.

As the court of appeals explained, “Congress may
change the law underlying ongoing equitable relief,
even if * * * the change is specifically targeted at and
limited in applicability to a particular injunction, and
even if the change results in the necessary lifting of
that injunction.” Pet. App. 36a (emphasis omitted).
That proposition is firmly rooted in this Court’s prece-
dents. In Pennsylvania v. Wheeling and Belmont
Bridge, 59 U.S. (18 How.) 421, 429, 431-482 (1855), the
Court upheld a law declaring a particular bridge to be a
lawful post road despite a judicial decree to the con-
trary. Similarly, in Robertson v. Seattle Audubon
Society, 503 U.S. 429 (1992), the Court upheld a statute
changing the law that governed two expressly named,
pending lawsuits. Finally, in Plaut, while invalidating a
statute that “retroactively command[ed] the federal
courts to reopen final judgments” (514 U.S. at 219 (em-
phasis added)), the Court took care to reaffirm the
constitutionality of provisions, like those at issue in
Wheeling Bridge and here, that merely “alter[] the
prospective effect of injunctions entered by Article III
courts” (id. at 232 (emphasis added)).

Plaut also refutes petitioners’ “not-too-well-defined
argument” (Pet. App. 38a) that the specificity of the

22

challenged provisions could somehow offend separation-
of-powers principles even if it does not violate the Bill
of Attainder Clause. The problem with the statute at
issue in Plaut, the Court held,

consists not of the Legislature’s acting in a par-
ticularized and hence (according to the concur-
rence) nonlegislative fashion; but rather of the
Legislature’s nullifying prior, authoritative judicial
action. It makes no difference whatever to that
separation-of-powers violation that it is in gross
rather than particularized * * *, or that it is not
accompanied by an ‘almost’ violation of the Bill of
Attainder Clause, or an ‘almost’ violation of any
other constitutional provision.

514 U.S. at 239. Specificity itself, the Court reaffirmed,
does not make a statute unconstitutional: “While leg-
islatures usually act through laws of general applicabil-
ity, that is by no means their only legitimate mode of
action.” Jd. at 239 n.9. Finally, Plaut forecloses the
distinction, reasserted here by Bell Atiantice (Pet. 26),
between statutes conferring benefits on designated
individuals and those imposing burdens on them. The
Court explained (514 U.S. at 239 n.9): “Even laws that
impose a duty or liability upon a single individual or
firm are not on that account invalid—or else we would
not have the extensive jurisprudence that we do con-
cerning the Bill of Attainder Clause, including cases
which say that it requires not merely ‘singling out’ but
also punishment, see, e.g., (Lovett, 328 U.S. at 315-318],
and a case which says that Congress may legislate ‘a
legitimate class of one,’ [Nixon, 433 U.S. at 472].” See
also Maine Cent. R.R. Co., 8138 F.2d at 488-491 (dis-
cussed in note 12, supra).

23

3. Bell Atlantic (Pet. 28) encourages the Court to
“take the whole case and decide, as well, the severabil-
ity of the Special Provisions.” In fact, that severability
issue need never be decided, because the provisions at
issue are constitutional. If that were not the case,
however, and if those provisions were invalidated, the
severability question would indeed become exception-
ally urgent.

Invalidation of Sections 271 through 275 would
plainly require invalidation of the cther major provision
of the 1996 Act applicable specifically to the Bell Com-
panies: Section 601(a)(1), which prospectively termi-
nates the effect of the AT&T consent decree. See 110
Stat. 143. That provision and Sections 271 through 275
were enacted together as inextricably related compo-
nents of “a hard-fought compromise on a massive issue
of public policy which, in the end, contained both good
and bad elements for the BOCs.” Pet. App. 33a; SBC
Communications, 138 F.3d at 412 (content of 1996 Act
“was the subject of great debate,” and “[t]he end prod-
uct was a compromise between the competing fac-
tions”). Petitioners cannot plausibly contend (ef. Bell.
Atl. Pet. 29) that it would effectuate congressional
intent to lop off only the portions of that “hard-fought
compromise” that the BOCs dislike. See BellSouth, 144
F.3d at 66 n.8." Indeed, if petitioners really believe that

18 In passing, Bell Atlantic cites Section 708 of the Communica-
tions Act of 1934, 47 U.S.C. 608, which provides as a general
matter that invalidation of one provision of the Act shall not affect
“the remainder of the Act.” See Bell Atl. Pet. 28. (As codified, the
word “Act” appears as “chapter”—Chapter 5 of Title 47—which
essentially encompasses the Communications Act. See 47 U.S.C.
609.) Bell Atlantic had good reason to give Section 708 only a
perfunctory “see also” citation: Unlike most other provisions of
the 1996 Act, Section 601(a)(1) of that Act is not codified with the

24

Congress wanted to “punish” them by subjecting them
to more onerous conditions than those that existed
under the consent decree, they cannot seriously argue
at the same time that Congress would have wished to
set them free from continuing judicial oversight in the
absence of statutory regulation.

Bell Atlantic suggests (Pet. 28) that if invalidation of
Sections 271 through 275 would require invalidation of
Section 601(a)(1), it would also require invalidation of
all the common carrier provisions of the 1996 Act, in-
cluding the very provisions that this Court is now
reviewing in AT&T Corp. v. lowa Utilities Board, No.
97-826, and consolidated cases. We disagree with that
proposition, but we note the following inescap-
able point. If successful, petitioners’ challenge would
threaten to unravel much of the 1996 Act, to the great
detriment of American consumers. The result of that
unraveling could be a return to a telecommunications
world dominated by judicial decrees rather than posi-
tive lawmaking by Congress and its delegates. Review

Communications Act, but is merely referred to in the codifier’s
historical notes. See 47 U.S.C. 152 note (Supp. II 1996). In any
event, even if Section 601(a)(1) of the 1996 Act were part of the
Communications Act, the obvious interrelationship between that
provision and Sections 271 through 275 would rebut any contrary
presumption of severability created by 47 U.S.C. 608. See Alaska
Airlines, Inc. v. Brock, 480 U.S. 678, 686 (1987).

14 Petitioners mistakenly invoke the interest of consumers as a
basis for granting them fuli and immediate entry into the long-dis-
tance market. SBC Pet. 30. There are two short answers to that
argument. First, Congress resoundingly rejected petitioners’ view
of the best way to promote consumer interest in the long run.
Second, invalidation of that congressional judgment would not in
any event give petitioners the windfall that they seek for them-
selves, because, as discussed, Section 601(a)(1) is inseverable from
the provisions that petitioners challenge.

Ee Pop ee

25

of the severability question would be only the first step
in a very long process of litigation.

Fortunately, however, this Court need not accept
Bell Atlantic’s invitation to grant certiorari on that
severability question, because there is no reason for the
Court to consider petitioners’ underlying claims on the
merits. As explained above, those claims are unsound.
And, so long as the courts of appeals maintain their
current consensus to that effect, further review by this
Court is not warranted.

CONCLUSION
The petitions for a writ of certiorari should be denied.
Respectfully submitted.

SETH P. WAXMAN
Solicitor General

JOEL I. KLEIN
Assistant Attorney General

PHILIP D. BARTZ
Acting Assistant Attorney

CHRISTOPHER J. WRIGHT General
General Counsel MARK B. STERN
JOHN E. INGLE JACOB M. LEWis

ALISA B. KLEIN

DANIEL L. KAPLAN

DANAJ. MARTIN
Attorneys

Deputy Assistant General
Counsel

Federal Communications
Commission

DECEMBER 1998

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386003_1047%3A05. Public record. Not legal advice.