TALK AMERICA, INC. v. MICHIGAN BELL TELEPHONE CO., DBA AT&T MICHIGAN
No. 10-313
Supreme Court of the United States
Argued March 30, 2011-Decided June 9, 2011
564 U.S. 50
*Tоgether with No. 10-329, Isiogu et al. v. Michigan Bell Telephone Co., dba AT&T Michigan, also on certiorari to the same court.
Eric D. Miller argued the cause for the United States as amicus curiae in support of petitioners. With him on the brief were Acting Solicitor General Katyal, Deputy Solicitor General Stewart, Austin C. Schlick, Richard K. Welch, and Maureen K. Flood.
Scott H. Angstreich argued the cаuse for respondent in both cases. With him on the brief were Brendan J. Crimmins, Scott K. Attaway, Gary L. Phillips, Christopher M. Heimann, John T. Lenahan, Mark R. Ortlieb, and Cynthia F. Malone.†
†Briefs of amici curiae urging reversal in both cases were filed for the California Public Utilities Commission by Frank R. Lindh, Helen M. Mickiewicz, and Laura E. Gasser; for COMPTEL by Mary C. Albert; and for Sprint Nextel Corp. by Kannon K. Shanmugam and George W. Hicks, Jr.
Briefs of amici curiae urging affirmance in both cases were filed for Administrative Law Professors by C. Frederick Beckner III; for CenturyLink, Inc., et al. by John M. Devaney, Robert B. McKenna, and John E. Benedict; for United States Telecom Association et al. by Megan L. Brown, Bennett L. Ross, and Jonathan B. Banks; and for Verizon by Heather M. Zachary and Michael E. Glover.
JUSTICE THOMAS delivered
In these cases, we consider whether an incumbent provider of local telephone service must make certain transmission facilities available to competitors at cost-based rates. The Federal Communications Commission (FCC or Commission) as amicus curiae1 contends that its regulations require the incumbent provider to do so if the facilities are to be used for interconnection: to link the incumbent provider‘s telephone network with the competitor‘s nеtwork for the mutual exchange of traffic.
I
The Telecommunications Act of 1996 (1996 Act), 110 Stat. 56, imposed a number of duties on incumbent providers of local telephone service in order to facilitate market entry by competitors. AT&T Corp. v. Iowa Utilities Bd., 525 U. S. 366, 371 (1999). The incumbent local exchange carriers (LECs) owned the local exchange networks: the physical equipment necessary
The 1996 Act addressed that barrier to market entry by requiring incumbent LECs to share their networks with competitive LECs in several ways, two of which are relevant here. First,
These cases concern incumbent LECs’ obligation to share existing “entrance facilities” with competitive LECs. Entrance facilities are the transmission facilities (typically wires or cables) that connect competitive LECs’ networks with incumbent LECs’ networks. The FCC recently adopted a regulation specifying that entrance facilities are not among the network elements that
The specific issue here is whether respondent, Michigan Bell Telephone Company, d/b/a AT&T Michigan (AT&T), must lease existing entrance facilities to competitive LECs at cost-based rates. The FCC interprets its regulations to require AT&T to do so for the purpose of interconnection. We begin by reviewing the Commission‘s recent actions regarding entrance facilities and then explain the particular dispute that is before us today.
A
In 2003, the FCC decided, contrary to its previous orders, that incumbent LECs were not obligated to provide cost-based unbundled access to entrance facilities under
The FCC emphasized, however, the limits of this ruling. Entrance facilities аre used for two purposes: interconnection and backhauling.2 It expressly “d[id] not alter” an incumbent LEC‘s obligation under
On direct review, the D. C. Circuit questioned the Commission‘s determination that entrance facilities are not network elements under
In 2005, the Commission responded. See Triennial Review Remand Order ¶¶ 136-141. The Commission retreated from its view that entrance facilities are not network elements but adhered to its previous position that cost-based unbundled access to them need not be provided under
B
In the wake of the Triennial Review Remand Order, AT&T notified competitive LECs that it would no longer provide entrance facilities at cost-based rates for either backhauling or interconnection, but would instead charge higher rates. Competitive LECs complained to the Michigan Public Service Commission (PSC) that AT&T was unlawfully abrogating their right to cost-based interconnection under
AT&T challenged the Michigan PSC‘s ruling in the District Court, which, relying on the Triennial Review Remand Order, ruled in AT&T‘s favor. The Michigan PSC and several competitive LECs, including petitioner Talk America, Inc., appealed.
The Court of Appeals for the Sixth Circuit affirmed over a dissent. Michigan Bell Telephone Co. v. Covad Communications Co., 597 F. 3d 370 (2010). At the court‘s invitation, the FCC filed a brief as amicus curiae, arguing that the
II
Petitioners contend that AT&T must leasе its existing entrance facilities for interconnection at cost-based rates. We agree.
A
No statute or regulation squarely addresses whether an incumbent LEC must provide access to entrance facilities at cost-based rates as part of its interconnection duty under
“The duty to provide, for the facilities and equipment of any requesting telecommunications carrier, interconnection with the local exchange carrier‘s network—
“(A) for the transmission and routing of telephone exchange service and exchange access;
“(B) at any technically feasible point within the carrier‘s network;
“(C) that is at least equal in quality to that provided by the local exchange carrier to itself or to any subsidiary, affiliate, or any other party to which the carrier provides interconnection; and
“(D) on rates, terms, and conditions that are just, reasonable, and nondiscriminatory, in accordance with the terms and conditions of the agreement and the requirements of this section and section 252 of this title.”
Nothing in that language expressly addresses entrance facilities. Nor does any regulation do so. See Brief for United States as Amicus Curiae 22, n. 6.
AT&T contends that the statute makes clear that an incumbent LEC need not provide access to any facilities—much less entrance facilities—to provide interconnection. The company points out that
We do not find the statute so clear. Although
B
In the absence of any unambiguous statute or regulation, we turn to the
The Commission contends that its regulations require AT&T to provide access at cost-based rates to its existing entrance facilities for the purpose of interconnection. The Commission‘s interpretation proceeds in three steps. First, an incumbent LEC must lease “technically feasible” facilities for interconnection. Second, entrance facilities are among the facilities that an incumbent must make available for interconnection, if technically feasible. Third, it is technically feasible to provide access to the particular entrance facilities at issue in these cases.
1
The Commission first contends that an incumbent LEC must lease, at cost-based rates, any requested facilities for obtaining interconnection with the incumbent LEC‘s network, unless it is technically infeasible to do so. Section 251(c)(2) mandates that an incumbent LEC provide interconnection, at cost-based rates, “at any technically feasible point within the carrier‘s network.” The FCC has long сonstrued
The requirement in
As additional support for its assertion that incumbent LECs are obligated to lease facilities, the FCC highlights the examples in
2
Next, the Commission contends that existing entrance facilities are among the facilities that an incumbent LEC must lease for interconnection. According to
3
Finally, the FCC contends that providing access to the entrance facilities here for interconnection purposes is technically feasible. Under the Commission‘s regulations, an incumbent LEC bears the burden of showing that a requested method or point of interconnection is technically infeasible. See
C
The FCC‘s interpretation is not “plainly erroneous or inconsistent with the regulation[s].” Auer, supra, at 461 (internal quotation marks omitted). First, we disagree with AT&T‘s argument that entrance facilities are not a part of incumbent LECs’ networks. Indeed, the Commission‘s view on this question is more than reasonable; it is certainly not plainly erroneous. The Triennial Review Remand Order responded to the D. C. Circuit‘s decision questioning the Commission‘s earlier finding that entrance facilities are not network elements. It revised the definition of dedicated transport—a type of network element—to include entrance facilities. Triennial Review Remand Order ¶¶ 136-137; see
Second, we are not persuaded by AT&T‘s argument that the Commission‘s views conflict with the definition of interconnection in
The better reading of the regulation is that it merely reflects that the “transport and termination of traffic” is subject to different regulatory treatment than interconnection. Compensation for transport and terminаtion—that is, for delivering local telephone calls placed by another carrier‘s customer—is governed by separate statutory provisions and regulations. See
In sum, the Commission‘s interpretation of its regulations is neither plainly erroneous nor inconsistent with the regulatory text. Contrary to AT&T‘s assertion, there is no danger that deferring to the Commission would effectively “permit the agency, under the guise of interpreting a regulation, to create de facto a new regulation.”5 Christensen v. Harris County, 529 U. S. 576, 588 (2000).
D
Nor is there any other “reason to suspect that the interpretation does not reflect the agency‘s fair and considеred judgment on the matter in question.” Auer, 519 U. S., at 462. We are not faced with a post-hoc rationalization by Commission counsel of agency action that is under judicial review. See ibid.; see also Burlington Truck Lines, Inc. v. United States, 371 U. S. 156, 168-169 (1962) (“The courts may not accept appellate counsel‘s post hoc rationalizations for agency action; [SEC v.] Chenery [Corp., 332 U. S. 194 (1947)], requires that an agency‘s discretionary order be upheld, if at all, on the same basis articulated in the order by the agency itself“). And although the FCC concedes that it is advancing a novel interpretation of its longstanding interconnection regulations, novelty alone is not a reason tо refuse deference. The Commission explains that the issue in these cases did not arise until recently—when it initially
AT&T suggests that the Commission is attempting to require under
1
To begin with, AT&T‘s accusation does not square with the regulatory history. The Commission was not compelled to eliminate the obligation to lease unbundled entrance facilities at cost-based rates. It is true that, prior to the Triennial Review orders, the Commission twice unsuccessfully attempted to impose sweeping unbundling requirements on incumbent LECs. See Local Competition Order ¶ 278; In re Implementation of Local Competition Provisions of the Telecommunications Act of 1996, 15 FCC Rcd. 3696, 3771-3904, ¶¶ 162-464 (1999); see also
The Commission‘s initial decision to eliminate the obligation to unbundle entrance facilities, however, was not a result of the narrower view of impairment mandated by this Court and the D. C. Circuit. Instead, the Commission determined that entrance facilities need not be provided on an unbundled basis under
Moreover, since its initial deсision to eliminate the unbundling obligation for entrance facilities, the Commission has been committed to that position. When the D. C. Circuit questioned the Commission‘s finding that entrance facilities are not network elements, the Commission responded by observing that the court “did not reject our conclusion that incumbent LECs need not unbundle entrance facilities, only the analysis through which we reached that conclusion.” Triennial Review Remand Order ¶ 137. The Commission then found another way to support that same conclusion.
2
More importantly, AT&T‘s characterization of what the Commission has done, and is doing, is inaccurate. The Triennial Review orders eliminated incumbent LECs’ obligation under
We are not concerned that the Triennial Review Remand Order did not expressly distinguish between backhauling and interconnection, though AT&T makes much of that fact. AT&T argues that the Commission‘s holding in the Triennial Review Remand Order is broader than that in the Triennial Review Order. In AT&T‘s view, the Commission concluded in the Triennial Review Remand Order that competitors are not impaired if they lack cost-based access to entrance facilities for backhauling or interconnection.
There are two flaws with AT&T‘s reasoning. First, as we have discussed, the Triennial Review Remand Order reinstated the ultimate conclusion of the Triennial Review Order and changed only “the analysis through which [it] reached that conclusion.” Triennial Review Remand Order ¶ 137. Second, unlike
The FCC as amicus curiae has advanced a reasonable interpretation of its regulations, and we defer to its views. The judgment of the United States Court of Appeals fоr the Sixth Circuit is reversed.
It is so ordered.
JUSTICE KAGAN took no part in the consideration or decision of these cases.
JUSTICE SCALIA, concurring.
I join the opinion of the Court. I would reach the same result even without benefit of the rule that we will defer to an agency‘s interpretation of its own regulations, a rule in recent years attributed to our opinion in Auer v. Robbins, 519 U. S. 452, 461 (1997), though it first appeared in our jurisprudence more than half a century earlier, see Bowles v. Seminole Rock & Sand Co., 325 U. S. 410 (1945). In
It is comforting to know that I would reach the Court‘s result even without Auer. For while I have in the past uncritically accepted that rule, I have become increasingly doubtful of its validity. On the surface, it seems to be a natural corollary—indeed, an a fortiori application—of the rule that we will defer to an agency‘s interpretation of the statute it is charged with implementing, sеe Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984). But it is not. When Congress enacts an imprecise statute that it commits to the implementation of an executive agency, it has no control over that implementation (except, of course, through further, more precise, legislation). The legislative and executive functions are not combined. But when an agency promulgates an imprecise rule, it leaves to itself the implementation of that rule, and thus the initial determination of the rule‘s meaning. And though the adoption of a rule is an exercise of the executive rather than the legislative power, a properly adopted rule has fully the effect of law. It seems contrary to fundamental principles of separation of powers to permit the person who promulgates a law to interpret it as well. “When the legislative and executive powers are united in the same person, or in the same body of magistrates, there can be no liberty; because apprehensions may arise, lest the same monarch or senate should enact tyrannical laws, to execute them in a tyrannical manner.” Montesquieu, Spirit of thе Laws bk. XI, ch. 6, pp. 151-152 (O. Piest ed., T. Nugent transl. 1949).
Deferring to an agency‘s interpretation of a statute does not encourage Congress, out of a desire to expand its power, to enact vague statutes; the vagueness effectively cedes power to the Executive. By contrast, deferring to an agency‘s interpretation of its own rule encourages the agency to enact vague rules which give it the power, in future adjudications, to do what it pleases. This frustrates the notice and predictability purposes of rulemaking, and promotes arbitrary government. The seeming inappropriateness of Auer deference is especially evident in cases such as these, involving an agency that has repeatedly been rebuked in its attempts to expand the statute beyond its text, and has repeatedly sought new means to the same ends.
There are undoubted advantages to Auer deference. It makes the job of a reviewing court much easier, and since it usually produces affirmance of the agency‘s view without conflict in the Circuits, it imparts (once the agency has spoken to clarify the regulation) certainty and predictability to the administrative process. The defects of Auer deference, and the alternatives to it, are fully explored in Manning, Constitutional Structure and Judicial Deference to Agency Interpretations of Agency Rules, 96 Colum. L. Rev. 612 (1996). We have not been asked to reconsider Auer in the present cases. When we are, I will be receptive to doing so.