CENTRAL TEXAS TELEPHONE COOPERATIVE, INC., ET AL., PETITIONERS v. FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS SPRINT CORPORATION, INTERVENOR
No. 03-1405
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 18, 2004 Decided March 11, 2005
On Petition for Review of an Order of the Federal Communications Commission
Gregory W. Whiteaker argued the cause for petitioners. With him on the briefs were Michael R. Bennet and Rebecca L. Murphy.
Richard K. Welch, Counsel, Federal Communications Commission, argued the cause for respondents. With him on the brief were Catherine G. OʼSullivan and Andrea Limmer, Attorneys, U.S. Department of Justice, John A. Rogovin, General
Luisa L. Lancetti and Charles W. McKee were on the brief for intervenor Sprint Corporation in support of respondents.
Before: SENTELLE, RANDOLPH, and GARLAND, Circuit Judges.
Opinion for the Court filed by Circuit Judge RANDOLPH.
RANDOLPH, Circuit Judge: Petitioners are rural telephone carriers. Pursuant to
I.
Under
In July 1996, the Commission issued rules and deployment schedules to implement number portability. See Telephone Number Portability, 11 F.C.C.R. 8352 (1996) (“First Portability Order“), on recons., 12 F.C.C.R. 7236 (1997), further recons., 13 F.C.C.R. 21,204 (1998). Adopting the statutory definition of “number portability” in a regulation,
At the same time, the Commission refused to impose location portability on either LECs or wireless carriers. The Commission defined location portability as
To address technical issues regarding number portability, the Commission turned to the North American Numbering Council (NANC), a federal advisory committee consisting of representatives of the telecommunications industry. In May 1997, the NANC submitted its recommendations regarding wireline-to-wireline porting. Largely adopting the NANC‘s recommendations in a Second Portability Order, 12 F.C.C.R. 12,281 (1997), the Commission also decided that if a state regulatory authority imposed a separate location portability requirement on LECs, this would have to be limited to carriers with a local presence in the same rate center in order to ensure proper rating and routing of calls. The NANC did not address geographic limitations with respect to the obligation of wireless carriers to furnish service provider portability. The Commission therefore requested the NANC to make recommendations regarding wireless carriers, “such as how to account for differences between service area boundaries for wireline versus wireless services and how to implement number portability in a roaming environment.” Id. at 12,334 ¶ 91. In 1998, The NANC later reportеd that it had been unable to reach a consensus about intermodal porting, that is, porting between wireless carriers and LECS.
After granting extensions for deploying wireless-to-wireless porting and intermodal porting, the Commission set November 24, 2003, as the date by which LECs had to port to wireless carriers and wireless carriers had to port numbers among themselves in the nation‘s 100 largest population centers. In other areas, wireless porting had to occur 6 months later. As
CTIA filed its petitions pursuant to
Among the 100 comments filed with the Commission were those of the Rural Telecommunications Group (RTG), of which at least some petitioners are members. As relevant to this case, the RTG asserted “that in order for one wireless carrier to request number portability from another, the requesting carrier must have a local point of presence, local numbering resources, and local interconnection with the porting out carrier in the rate center with which the ported numbеr is associated.” October Order, 18 F.C.C.R. at 20,977 ¶ 19. If these requirements were not imposed, according to the RTG, number portability “will lead to massive customer confusion and discrimination against small and rural carriers.” Id.
The Commission issued two opinions and orders in response to CTIA‘s petitions. The first, handed down on October 7, 2003, the October Order, dealt only with wireless-to-wireless porting. The second, issued on November 10, 2003, dealt with wireline-to-wireless porting. Only the October Order is before us in this case.
The October Order rejected the RTG‘s claims. The Commission decided that nothing in its rules restricted wireless-to-wireless number portability in the manner the RTG proposed and that imposing those restrictions would undеrmine the competitive benefits of number portability. To limit “wireless-wireless porting based on wireline rate centers would be to limit the ability of some consumers to port their telephone numbers from one wireless carrier to another. We see no reason to impose such restrictions on the competitive alternatives available to wireless consumers.” October Order, 18 F.C.C.R. at 20,978 ¶ 22. The Commission recognized the “rating” issues rural wireless carriers had raised and their concern that “in porting numbers to wireless carriers that do not have a point of presence in the local area, a donating rural wireless carrier delivering a call to a ported number would be forced to deliver the call outside of its local service area and thereby incur transport charges that were not factored into its rate design.” Id. at ¶ 23. The Commission refused to address these issues in its October Order because its wireless porting rules did not depend on “how calls to the number will be rated and routed after the port occurs” and because it would consider the issues in separate proceedings. Id. The end of the opinion, in a section entitled “Procedural Matters and Ordering Clauses,” stated: “The Commission is not required
One month later, in another “Memorandum Opinion and Order” which we shall call the Intermodal Order, the Commission dealt with porting between wireline and wireless carriers. Memorandum Opinion and Order and Further Notice of Proposed Rulemaking, 18 F.C.C.R. 23,697 (Nov. 10, 2003). Although the Commission had already limited wireline-wireline porting “to carriers with facilities or numbering resources in the same rate center,” Intermodal Order, 18 F.C.C.R. at 23,700 ¶ 7 (footnote omitted), it refused to do so for intermodal porting, despite claims that the absence of restrictions would amount to location portability. In the context of intermodal porting, the Commission concluded “that porting from a wireline to a wirelеss carrier that does not have a point of interconnection or numbering resources in the same rate center as the ported number does not, in and of itself, constitute location portability, because the rating of calls to the ported number stays the same.” Id. at 23,708 ¶ 28. In the intermodal setting, porting is required if the wireless carrier‘s coverage area encompasses the rate center to which the ported number is assigned. Id. at 23,707 ¶ 25. The Intermodal Order refused to require interconnection agreements for intermodal porting because this would delay intermodal porting and thus undermine its benefits to consumers. Id. at 23,712 ¶ 36. In view of claims that wireless carriers would be getting an unfair competitive advantage over wireline carriers as a result of the Intermodal Order, the Commission issued a notice of proposed rulemaking seeking comment on, among other things, “how to facilitate wireless-to-wireline porting where there is a mismatch between the rate center associated with the wireless number and the rate center in which the wireline carrier seeks to serve the customer.” Id. at 23,714 ¶ 42.
II.
Petitioners’ arguments are that the October Order constituted a legislative rule promulgated in violation of the Administrative Procedure Act and the Regulatory Flexibility Act, and that even if the Order constituted an interpretive rule exеmpt from notice and comment rulemaking, the Order should be set aside as arbitrary and capricious. We believe we may consider the merits of these arguments despite the Commission‘s claims that petitioners lack standing and that their petition for judicial review was untimely.
As to standing, the Commission argues that the October Order did not injure petitioners because their objections are directed to the Commission‘s pre-existing interconnection rules rather than to the wireless-to-wireless porting requirements. We think there is nothing to this. For one thing, two of the four petitioners are both wireline and wireless carriers (the other two are LECs only). As wireless carriers, the Order directly аffects their porting obligations to other wireless carriers and does so, according their lights, despite the Commission‘s violations of the procedural and substantive requirements of the APA. That in itself is sufficient to confer standing on them. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561-62, 572 n.7 (1992). For another thing, even in their capacity as LECs, the order damages -- again by petitioners’ lights -- their financial interests, because they will be unable to recover the additional costs entailed in wireless-to-wireless porting of numbers tied to their rate centers.
III.
The controversy is a common one for this court: petitioners view the October Order as embodying a “substantive rule“; the Commission defends on the ground that the Order is an “interpretative rule.” By a “substantive rule” -- or as we call it, a “legislative rule,” a term not used in the APA -- petitioners mean a rule that may be promulgated only after compliance with the rulemaking requirements of
It is fair to ask why both sides assume that we are even dealing with the making of a rule, whether of the legislative or interpretive variety. Agencies often have a choice of proceeding by adjudication rather than rulemaking. The National Labor Relations Board, for one, has traditionally preferred to proceed this way and the Supreme Court has upheld its preference for adjudication. See NLRB v. Bell Aerospace Co., 416 U.S. 267, 290-95 (1974); see also SEC v. Chenery Corp., 332 U.S. 194 (1947). Orders handed down in adjudications may establish broad legal principles. In this case, the Commission issued its October Order in response to CTIA‘s “Petition for Declaratory Ruling.” The petition sought an adjudication. CTIA еxpressly invoked Commission Rule 1.2,
We have included the foregoing discussion despite the Commission‘s failure to defend the October Order on the ground that it resulted from an adjudication. We
As to petitioners’ complaint that the Commission‘s procedure, or lack thereof, violated the APA, the reasons given in the companion case dealing with the November Intermodal Order, United States Telecom Assʼn, et al. v. FCC, Nos. 03-1414 & 03-1443 (“USTA“), are enough to show that the notice and comment requirements of
We may approach the question this way. If a “second rule repudiates or is irreconcilable with [a prior legislative rule], the second rule must be an amendment of the first; and, of course, an amendment to a legislative rule must itself be legislative.” Am. Mining Cong. v. Mine Safety & Health Admin., 995 F.2d 1106, 1109 (D.C. Cir. 1993), quoting Nat‘l Family Planning & Reprod. Health Assʼn v. Sullivan, 979 F.2d 227, 235 (D.C. Cir. 1992) (inner quotations omitted). Petitioners say the October Order is such an amendment because it required location portability for wireless-to-wireless porting despite the First Portability Order‘s rejection of location portability. For location portability in the context of wireless-to-wireless porting, they assert that “the relevant location is not the physical location of the customer but the location of the serving switch or the POI [point of interconnection].” Brief of Petitioners at 20.
Everyone, including petitioners, recognizes that today a typical wireless customer can make calls frоm locations throughout the country without switching his telephone number -- something a wireline customer obviously cannot do without location portability. Id. at 21 n.53. To illustrate, suppose a wireless customer living in Arizona moves to Texas, keeping his cell phone number. After living in
What we hаve just written summarizes the reasons underlying the Commission‘s conclusion, in its October Order, that in wireless-to-wireless porting, the relevant location is not -- as petitioners argue -- the location of the serving switch or point of interconnection. October Order, 18 F.C.C.R. at 20,972 ¶ 2. Location portability means, as the Commission explained in the First Portability Order, that customers could keep their telephone numbers after moving out of the area their current central office served. First Portability Order, 11 F.C.C.R. at 8443 ¶ 174. But in the wireless context, customers who move, temporarily or permanently, may retain their numbers. They may do so not because there is location portability, but because, dеspite their moves, they are still within an area their current wireless carrier serves.
While the October Order therefore did not repudiate the First Portability Order by requiring location portability in wireless-to-wireless porting, that does not necessarily render it an interpretive rule. See Am. Mining Cong., 995 F.2d at 1112. To fall within that category, the rule must be interpreting something. It must “derive a proposition from an existing document whose meaning compels or logically justifies the proposition. The substance of the derived proposition must flow fairly from the substance of the existing document.” Robert A. Anthony, “Interpretive” Rules, “Legislative” Rules, and “Spurious” Rules: Lifting the Smog, 8 ADMIN. L. REV. 1, 6 n.21 (1994). If, despite an agency‘s claim, a rule сannot fairly be viewed as interpreting -- even incorrectly -- a statute or a regulation, the rule is not an interpretive rule exempt from notice-and-comment rulemaking. E.g., Syncor Intʼl Corp. v. Shalala, 127 F.3d 90, 95 (D.C. Cir. 1997); Hoctor v. U.S. Depʼt of Agric., 82 F.3d 165 (7th Cir. 1996); see HENRY J. FRIENDLY, BENCHMARKS 144-45 (1967). This is not to say that only interpretive rules interpret. The APA‘s definition of “rule” contemplates that all types of rules, legislative and interpretive alike, may interpret “law.” The EPA regulations at issue in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), for instance, interpreted the term “stationary source” in the Clean Air Act (and did a good deal more). Nor may one say that there is a clear “line between interpretation and policymaking.” John F. Manning, Nonlegislative Rules, 72 GEO. WASH. L. REV. 893, 924 (2004). Chevron recognized that an agency‘s choice among plausible meanings of a statute may be influenced by considerations of policy. The Supreme
We believe the October Order is fairly characterized as an interpretive rule and that it “sensibly conforms to the purpose and wording” of the First Portability Order. Northern Ind. Pub. Serv. Co. v. Porter County Chapter of the Izaak Walton League of Am., Inc., 423 U.S. 12, 15 (1975). In arguing about why the October Order did, or did not, amount to an interpretive rule, neither the Commission nor petitioners focus entirely on the language of actual regulations issued in the First Portability Order. Much of their attention is оn the First Portability Order‘s statement explaining, in several hundred paragraphs, the action the Commission was taking. The Commission‘s statement was meant to comply with
The issue CTIA had posed in its petition for a declaratory ruling, and the issue discussed in the comments of the RTG, was whether the First Portability Order embodied the conditions on wireless-to-wireless portability some rural carriers insisted upon. The Commission said it did not. Rather than pointing to specific language in the First Portability Order that supposedly imposed those restrictions, petitioners draw an analogy -- wrongly, the Commission thought -- to wireline-to-wireline porting. In that context, the Commission‘s Second Portability Order required that the porting-in carrier have a presence in the same rate center as the porting-out carrier. From this, petitioners conclude that “it would be only logical” that the Commission had also intended to so restrict wireless-to-wireless porting. Brief of Petitioners at 26.
The Commission failed to see the logic. It reviewed its First Portability Order and the rules promulgated in that proceeding: “Nothing in the rules provides that wireless carriers must port numbers only in cases where the requesting [wireless] carrier has numbering resources and/or a direct interconnection in the rate center associated with the number to be ported and wireless carriers may not demand that [other wireless] carriers meet these conditions before porting.” October Order, 18 F.C.C.R. at 20,977 ¶ 21. This is true, but not all that persuasive. The regulations themselves contained little detail and basically repeated the language of the Act. But the Commission‘s October Order did not stop with a negative. It went on to explain why petitioners’ “logical” inference was mistaken. In giving its explanatiоn, the Commission properly considered a purpose of its First Portability Order -- to promote competition among wireless carriers. The Supreme Court has observed that an agency construing its regulations “is in a better position to reconstruct” their “purpose,” in part because of the agency‘s “historical familiarity with the reasons underlying the regulatory language.” Martin v. Occupational Safety & Health Review Commʼn, 499 U.S. 144, 152-53 (1991). Restricting wireless-to-wireless porting in the manner petitioners proposed would, the Commission determined, greatly undermine the competitive benefits of wireless number portability because the
Petitioners’ arguments in favor of treating the October Order as a legislative rule rest on the premise that the Commission expanded or altered the porting obligations of wireless carriers. For the reasons just given we think the Commission was on solid ground in deciding that those obligations flowed from the First Portability Order and that it was petitioners who wanted to imрose new restrictions by engrafting the wireline regime on wireless-to-wireless porting. In any event, to the extent petitioners are contending that interpretive rules cannot be conduct-altering, the law is to the contrary. We have held, for instance, that an agency may use an interpretive rule to transform “a vague statutory duty or right into a sharply delineated duty or right.” Health Ins. Assʼn of Am. v. Shalala, 23 F.3d 412, 423 (D.C. Cir. 1994). We have held that an interpretive rule does not have to parrot statutory or regulatory language but may have “the effect of creating new duties.” Fertilizer Inst. v. United States EPA, 935 F.2d 1303, 1308 (D.C. Cir. 1991). American Mining Congress, 995 F.2d at 1107-08, found a rule to be interpretive even though it altered primary conduct. So did Fertilizer Institute, 935 F.2d at 1308-9; Air Transp. Assʼn of Am. v. FAA, 291 F.3d 49, 52-55 (D.C. Cir. 2002); and, among others, Caraballo v. Reich, 11 F.3d 186, 195 (D.C. Cir. 1993).
Nearly all of petitioners’ arguments revolve around what thеy perceive as the adverse financial impact on rural LECS stemming from the Commission‘s refusal to limit wireless-to-wireless porting in the manner they proposed. There was a time when this court used a “substantial effects” or “substantial impact” test to help draw a line between legislative rules and general statements of policy, which are also exempt from notice-and-comment rulemaking under
We therefore hold that the October Order constituted an interpretive rule under
IV.
Even if the October Order is an interpretive rule, petitioners say it must be set aside as “arbitrary” and “capricious.”
The argument is unconvincing. The October Order dealt only with wireless-to-wireless porting; the porting obligations of LECs were the subject of the Intermodal Ordеr issued one month later. Also, the October Order did not prohibit any LEC from negotiating an interconnection agreement with any other carrier. The Commission simply decided that the absence of an interconnection agreement did not, under the First Portability Order, excuse one wireless carrier from porting a number to another wireless carrier. Furthermore, the procedures set forth in
The source of the Commission‘s authority here and in the portion of the First Portability Order dealing with wireless porting, was not that section but others. Petitioners correctly point out that
Petitioners also claim that the October Order is arbitrary because the Commission failed to consider the impact of the Order on petitioners with respect to rating and routing. The Commission recognized these concerns but found them to be “outside the scope of this order.” October Order, 18 F.C.C.R. at 20,978 ¶ 23. The “rating and routing issues raised by the rural wireless carriers have been raised in the context of non-ported numbers and are before the Commission in other proceedings.” Id.
The Commission has discretion “to defer consideration of particular issues to future proceedings when it thinks that doing so would be conducive to the efficient dispatch of business and the ends of justice.” United States Telecom Assʼn v. FCC, 359 F.3d 554, 588 (D.C. Cir. 2004). There is good reason to believe, as the Commission did, that further factual development was needed to assess petitioners’ claims. For one thing, it is not apparent that this proceeding -- dealing as it did with wireless-to-wireless porting -- was the appropriate forum in which to address their concеrns. Petitioners’ complaint is about their obligation to pay additional transport costs associated with the delivery of calls outside the local exchange. That problem, if it is one, does not depend on whether the call is to a number that has or has not been ported between wireless carriers. Applicants for a stay of the Intermodal Order had claimed, as petitioners claim here, “that there is no established method for routing and billing calls ported outside of the local exchange.” Telephone Number Portability -- United States Telecom Ass‘n and CenturyTel of Colorado, Inc., Joint Petition for Stay Pending Judicial
* * *
We have considered and rejected petitioners’ other arguments. For the reasons stated above we hold that the October Order was an interpretive rule, that petitioners were therefore entitled to no further process under the APA or the Regulatory Flexibility Act, and that the October Order was not arbitrary or capricious. The petition for judicial review is therefore denied.
So ordered.