COMSAT CORPORATION; AT&T CORPORATION, Petitioners,
v.
FEDERAL COMMUNICATIONS COMMISSION; UNITED STATES OF AMERICA, Rеspondents.
AT&T CORPORATION, Petitioner,
v.
FEDERAL COMMUNICATIONS COMMISSION; UNITED STATES OF AMERICA, Respondents.
No. 00-60044
UNITED STATES COURT OF APPEALS, FIFTH CIRCUIT
May 3, 2001
[Copyrighted Material Omitted]
Petition for Review of a Final Order of the Federal Communications Commission
Before DAVIS, EMILIO M. GARZA, Circuit Judges, and POGUE* , District Judge.
EMILIO M. GARZA, Circuit Judge:
Comsat and AT&T, along with intervenors MCI WorldCom, Inc., Sprint Corporation, and Telecommunications Resellers Association, petition for review of Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Sixteenth Order on Reconsideration, FCC 99-290, 15 FCC Rcd. 1679 (released Oct. 8, 1999) ("Remand Order"). Finding that Comsat lacks standing, we dismiss Comsat's petition for lack of jurisdiction. With respect to the petition of AT&T and the intervenors, we reverse and remand.
* Pursuant to the Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified as amended in scattered sections of title 47, United States Code) ("the Act"), the Federal Communications Commission ("the Commission") issued its 1997 Universal Service Order. See Federal-State Joint Board on Universal Service, 12 FCC Rcd. 8776 (1997). Numerous parties challenged that order, and we affirmed it in part and reversed it in part in our decision in Texas Office of Public Utility Counsel v. FCC,
In TOPUC, we addressed two portions of the 1997 Universal Service Order pertinent to the petitiоns now before us. First, Comsat, also a party in TOPUC, attacked the inclusion of international services revenue in determining a carrier's universal service fund contribution. Comsat contended that for carriers like itself, who generate minimal interstate services revenues, the FCC's rule required it to pay a universal service contribution that exceeded its interstate services revenues. Comsat maintained that this outcome violated § 254(d)'s requirement that all universal service support be equitаble and nondiscriminatory. We agreed and found that the Commission's interpretation of § 254(d), in which it found it could impose such costs on carriers, was "arbitrary and capricious and manifestly contrary to the statute." Id. at 434-35.
Second, GTE asserted that requiring incumbent local exchange carriers ("ILECs")1 to recover their universal service costs through access charges to interexchange carriers ("IXCs")2 contravened the Act's mandate that all support for universal service be expliсit. See TOPUC,
In response to TOPUC, the Commission issued the Remand Order. The agency adopted a bright-line percentage rule for when a carrier's international revenues would be included in the base from which the agency calculates the carrier's universal service contribution. Under the new rule, if a carrier derives less than 8 percent of its revenue from interstate services, its international revenues will not be used in calculating the contribution. For those carriers receiving 8 percent or more of their revenues from interstate services, the FCC will include their international revenue in the base for determining their contributions. The Commission also revised its rule regarding ILEC access charges by permitting, rather than requiring, ILECs to recover their universal service costs through access charges to interstate carriers.3
Comsat and AT&T each filed for review of the Remand Order in the District of Columbia Circuit Court of Appeals. Their cases were consolidated and they made a motion to transfer the case to our Circuit, which was granted. MCI WorldCom Inc., Sprint Corp., and Telecommunications Resellers Association intervened.4 Comsat challenges the Commission's 8 percent rule. AT&T challenges the Commission's decision to permit ILECs to recover universal service fund contributions through access charges to interstate carriers.
II
As a preliminary matter, we must address the Commission's assertion that Comsat lacks standing to bring this challenge to the universal service fund 8 percent contribution rule. If Comsat lacks standing, we lack jurisdiction to consider its challenge. See Steel Co. v. Citizens for a Better Env't,
The "irreducible constitutional minimum of standing" requires three things. See Lujan v. Defenders of Wildlife,
Comsat currently makes no payment to the universal service fund, nor are its revenues sufficient to trigger the 8 percent rule. Thus, Comsat's injury is not that it now makes a universal service payment nor that it is subject to the 8 percent rule. Instead, Comsat posits that it suffers from two interrelated injuries. First, it contends that it faces the threat of a massive universal service payment should its interstate revenues reach the 8 percent threshold. Second, the cost of that contribution would be so great as to render entry into the interstate services market unprofitable, and, therefore, the threat of this payment operates as a barriеr to Comsat's entry into that market. In support of its argument, Comsat maintains that the threat of payment it faces is analogous to the injury suffered by the New York City Health and Hospitals Corp. ("NYCHHC") in Clinton v. New York,
In Clinton, the Supreme Court concluded that the NYCHHC had standing to challenge the constitutionality of the Line Item Veto Act, 2 U.S.C. §§ 691-692. NYCHHC challenged the President's cancellation of a provision that would have relieved NYCHHC of its contingent liability to the United States, which remained contingent because of a pending petition for a waiver of the liability. See Clinton,
A threatened injury satisfies the injury in fact requirement so long as that threat is real, rather than speculative. See Whitmore v. Arkansas,
As for Comsat's second assertion that this threatened payment bars Comsat from entering the interstate services market, we need not determine whether this injury would constitute an injury in fact. Comsat's inability to enter the interstate market undermines its ability to meet the requirement thаt the challenged action be fairly traceable to the alleged injury. Comsat's inability to enter the interstate services market results from other regulations, rather than the 8 percent rule; therefore, Comsat does not have standing on this basis. See Warth v. Seldin,
III
Before proceeding to the merits of AT&T's petition, we must address the Commission's contention that 47 U.S.C. § 405 bars consideration of AT&T's petition. Under § 405, a party must afford the Commission an opportunity to pass on the arguments the party presents for judicial review. See 47 U.S.C. § 405.6 The Commission contends that because AT& T failed to present its assertion (i.e., the agency must eliminate ILEC cost recovеry through IXC access charges) to the Commission prior to filing the instant petition for review, we are barred from hearing AT&T's petition for review. We disagree. In the Remand Order, at ¶ 32, the Commission stated: "We believe that the Fifth Circuit intended to hold only that section 254(e) barred the FCC from requiring incumbent LECs to recover universal service contributions through access charges." See also id. at ¶ 33 ("To comply with the Fifth Circuit's order we will expand incumbent LEC's options for recovering their universal service contributions."). In doing so, the Commission discarded the notion that our TOPUC holding required the elimination of this implicit subsidy. Where the Commission has considered an argument, § 405 does not preclude review of a petitioner's claim. See Time Warner Entertainment, Co., L.P. v. FCC,
In reviewing the Commission's actions on the merits of AT&T's claims, we apply the two-step inquiry set forth in Chevron U.S.A. Inc. v. Natural Res. Def. Council,
Section 254(e) provides that universal service support "should be explicit." In TOPUC, we concluded that "the plain language of § 254(e) does not permit the FCC to maintain any implicit subsidies."
Relying on our decisions in TOPUC and Alenco, AT&T contends that the Commission cannot permit ILECs to recover their universal service costs via access charges to interstate carriers because § 254(e) requires thе elimination of all implicit subsidies. In response, the Commission maintains that our holding in TOPUC was much narrower, precluding the FCC only from requiring ILECs to recover costs through access charges. See Remand Order, at ¶ 32. Moreover, the Commission asserts that this rule harmonizes TOPUC with the Eighth Circuit's decision in Southwestern Bell Tel. Co. v. FCC,
The Commission contends that our holding in TOPUC merely proscribed requiring ILECS to recover universal service costs through access charges to IXCs. In support of this contention, the agency points to: (1) thе scope of GTE's argument in TOPUC; and (2) that we declined to grant standing to MCI as an intervenor. The Commission is correct that GTE attacked the FCC rule requiring it to recoup universal service costs from access charges to IXCs on the ground that the absence of choice in its cost recovery methods would put it at a competitive disadvantage with potential new competitors. See TOPUC,
Second, the Commission contends that in declining to consider MCI's argument in TOPUC, we limited our holding to invalidating the requirement of access chаrges to IXCs. Specifically, the Commission maintains that our description of MCI's assertions as seeking "the elimination of implicit subsidies" cabins our holding. The FCC tries to glean too much from our decision declining to grant MCI intervenor-standing. MCI, rather than filing a petition for review, sought to intervene in order to challenge the FCC's plan to reduce access charges by the amount received as explicit universal service subsidies. MCI asserted that the access charges should be reduced "to the forward-looking cost level used by the agency to calculate support for high-costs areas" because the failure to do so violated the FCC's "statutory mandate to eliminate implicit subsidies when it implements the new universal service plan." TOPUC,
The Commission next maintains that it needed to permit ILECs to recoup their universal service cost via access charges in order to comply with our holding in TOPUC and the Eighth Circuit's decision in Southwestern Bell. We disagree. Our sister circuit concluded that the recovery of contribution costs from IXCs did not constitute an implicit subsidy, but was "a real cost of doing business." Southwestern Bell,
In short, we find that our holding in TOPUC makes it clear that the "FCC cannot maintain any implicit subsidies" whether on a permissive or mandatory basis. We hold that the FCC's Remand Order permitting the ILECs to recoup universal services costs through access charges is contrary to the рlain language of § 254(e).
IV
For the foregoing reasons, we DISMISS Comsat's petition for want of jurisdiction. We GRANT AT&T's petition for review and we REVERSE and REMAND to the Commission for proceedings not inconsistent with this opinion.
NOTES:
Notes
Judge, United States Court of International Trade, sitting by designation.
A local exchange carrier provides local telephone service within a particular geographical calling area. ILECs were those local exchange carriers historically granted exclusive franсhises to provide local service. See Assoc. of Communications Enters. v. FCC,
IXCs, long distance carriers, "must obtain access to local telephone customers in order to sell their services. An IXC connects to its long-distance customers by using either special access or switched access facilities." Southwestern Bell Tel. Co. v. FCC,
In a subsequent order, the Commission narrowed its permissive rule to apply it only to non-price cap ILECs and competitive LECs. See In re Access Charge Reform, Price Cap Performance Review for Local Exchange Carriers, Low Volume Long Distance Users, and Federal-State Joint Board on Universal Service, Sixth Report and Order in CC Docket No. 96-26 and 94-1, Report and Order in CC Docket No. 99-249, and Eleventh Report and Order in CC Docket 96-45, FCC 00-193, 15 FCC Rcd. 12962, app. B at 56, § 69.158 (2000) (requiring price cap ILECs to recover universal service costs through end user charges, leaving non price cap ILECs and competitive LECs to recover their costs through access charges to IXCs).
Hereinafter AT&T, MCI WorldCom, Inc., Sprint Corporation, and the Telecommunications Resellers Association are collectively referred to as AT&T.
Comsat argued for the first time at oral argument that its merger with Lockheed Martin bore on its standing argument. Arguments presented for the first time at oral argument are waived. See Whitehead v. Food Max of Miss., Inc.,
47 U.S.C. § 405 provides in relevant part that:
The filing of a petition for reconsideration [by the Commission] shall not be a condition precedent to judicial review of any such order, decision, report, or action, except where the party seeking review (1) was not a party to the proceedings resulting in such order, decision, report, or action or (2) relies on questions of factor law upon which the Commission, or designate authority within the Commission has been afforded no opportunity to pass.
The Commission аlso contends that the rule permitting access charges is transitional and, therefore, Chevron step-two applies, thereby granting it the discretion to continue the implicit subsidy during the transition to the explicit subsidy system. The Commission, however, failed to brief this issue, raising it for the first time at oral argument. Thus, the Commission has waived this argument. See Zuccarello v. Exxon Corp.,
Pogue, Judge, concurring:
I agree with the majority that the decisions in Texas Office of Pub. Util. Counsel v. FCC,
Section 254(e) provides that "support should be explicit and sufficient to achieve the purposes of this section." 47 U.S.C. § 254(e) (1986) (emphasis added). It is simply not clear to me that this language amounts to a "plain, direct statutory command." TOPUC,
Assuming that the language of § 254(e) is ambiguous, then Chevron step two should apply. In TOPUC, the FCC advanced an argument that аccess charges could be maintained because they are explicit to the carrier, even though implicit to the consumer. See TOPUC,
Although I respect the controlling effect of TOPUC and Alenco on the disposition of this case, it is my opinion that the TOPUC court failed to afford the FCC's interpretation of the statute the deference required under the Chevron doctrine. For these reasons, I concur.
