American Broadcasting Companies, Inc. v. Federal Communications Commission

662 F.2d 155
Court of Appeals for the Second Circuit·Decided October 19, 1981·No. Nos. 1588 to 1590, Dockets 81-4080, 81-4082, and 81-4084·Published·Cited by 1 cases

Opinion

MARKEY, Chief Judge:

Background

AT&T is a telecommunications common carrier, offering private line services, Message Telecommunications Services (MTS), and Wide Area Telecommunications Services (WATS).

Concerned that AT&T’s monopoly services (MTS and WATS) might be providing a cross-subsidy for its private line offerings, the FCC instituted an investigation in 1965 into the lawfulness of all AT&T rates and services. A primary goal of that investigation was development of a costing methodology which would permit AT&T to compete effectively but prevent it from engaging in cross-subsidization.

In 1976, in Docket 18128, the FCC established general principles to govern the development and evaluation of rates for AT&T’s various services. One such principle required that AT&T set rates for individual services that would produce for each an authorized system-wide rate of return.

Finding the Docket 18128 principles inadequate, on January 6,1981 the FCC adopted an Interim Cost Allocation Manual (ICAM) listing detailed procedures which AT&T was to follow in allocating its costs among four broad service categories — private line services, MTS, WATS, and Exchange Access Facilities. The FCC ordered that each category earn the authorized interstate rate of return.

On February 13, 1981, AT&T filed tariff revisions proposing an across-the-board rate increase of 16.4% covering each of its various private line services.1 AT&T provided cost data showing that the increase would result in the private line category earning in the aggregate the then authorized interstate rate of 10.5%, but submitted no information relating to the individual earnings level of each of the private line services.

Petitioners and other private line users requested the FCC to reject or suspend the tariff revisions, urging that because AT&T failed to provide cost justification for each of the various private line service rates affected by the increase, the tariff filing was defective and in violation of § 201(b) of the Communications Act (Act) (47 U.S.C. [157]*157§ 201(b))2 and FCC Rule 61.38 (47 C.F.R. § 61.38).3 Petitioners did not file a complaint under § 208 of the Act.4

The FCC declined to reject, or suspend and investigate, the tariff filing, but acknowledged that AT&T remained obligated to fully justify its tariff rates in individual tariff proceedings. Petitioners then brought this appeal, asserting that the FCC had unlawfully abdicated its statutory obligation under § 201(b) to ensure just and reasonable rates.

Issue

Whether this court has jurisdiction to review the FCC’s refusal to reject, or suspend and investigate, tariff filings.

OPINION

A statute, 28 U.S.C. § 2342, limits the jurisdiction of the courts of appeals to review of final decisions of the FCC. In denying petitions to reject, or suspend and investigate, AT&T’s tariff filings, the FCC did not rule here on the lawfulness of those tariffs, that is, on whether the tariffs comply with § 201(b). The FCC exercised its discretionary authority under § 204 of the Communications Act to allow tariffs to go into effect without suspension and investigation.5 That exercise constitutes a preliminary decision within the Commission’s exclusive discretion. It does not result in a final order reviewable in this court.

In Arrow Transportation Co. v. Southern Railway Co., 372 U.S. 658, 83 S.Ct. 984, 10 L.Ed.2d 52 (1963) (Arrow), the Court held Interstate Commerce Commission exercises of its suspension powers nonreviewable. The Court pointed out that judicial review at that stage would undermine the agency’s primary jurisdiction by bringing the courts into adjudication of the lawfulness of rates in advance of administrative consideration.

In Southern Railway Co. v. Seaboard Allied Milling Corp., 442 U.S. 444, 99 S.Ct. 2388, 60 L.Ed.2d 1017 (1979) (Southern Railway), the Court held that an agency’s decision not to investigate was similarly immune from judicial review. Construing § 15(8)(a) of the Interstate Commerce Act,6 a provision comparable to § 204, the Court said that provision cannot “be read to toler[158]*158ate judicial review of the Commission’s decision not to investigate the lawfulness of a proposed rate schedule.” Id. at 454, 99 S.Ct. at 2394. The Court explained that though the statute which is “written in the language of permission and discretion”, id. at 455, 99 S.Ct. at 2394, leaves to the ICC’s unreviewable discretion the authority to investigate, the ICC’s exercise of its rate-investigation authority is not “entirely unre-viewable. ... For any [interested party] may require the Commission to investigate the lawfulness of any rate at any time — and may secure judicial review of any decision not to do so — by filing a .. . complaint [under the complaint provisions of the Act].” Id. at 454, 99 S.Ct. at 2394.

The nonreviewability doctrine of Arrow and Southern Railway has been held to preclude judicial review of the Federal Energy Regulatory Commission refusal to reject a tariff filing:

The decision whether to reject or to accept a rate filing is based on precisely the same information, and primarily the same considerations, that govern decisions to suspend or not to suspend, to investigate or not to investigate. The decision to accept a rate filing is a necessary adjunct to the unreviewable decision to suspend and investigate. It would make little sense to declare orders concerning suspension and investigation unreviewable if the courts may review the related order to accept a rate filing.

Papago Tribal Utility Authority v. FERC, 628 F.2d 235, 243 (D.C.Cir.1980).

When asked to review an FCC order denying petitions to reject and petitions to suspend, the court said in Aeronautical Radio, Inc. v. FCC, 642 F.2d 1221, 1234 (D.C. Cir.1980):

The decision of the FCC to accept the AT&T tariff filing satisfies the ... criteria of unreviewability. The acceptance is non-final because it is the initiation of an administrative proceeding.. The Commission merely accepted the tariff and did not rule on the lawfulness of the rates to be paid.... The act of acceptance creates no irreparable harm because investigatory hearings are available for examination of the filing on the merits. 47 U.S.C. §§ 206-209... .

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American Broadcasting Companies, Inc. v. Federal Communications Commission, 662 F.2d 155 (2d Cir. 1981).

662 F.2d 155 (American Broadcasting Companies, Inc. v. Federal Communications Commission) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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