MCI Telecommunications Corp. v. American Telephone & Telegraph Co.

512 U.S. 218, 114 S. Ct. 2223, 129 L. Ed. 2d 182, 1994 U.S. LEXIS 4639
Supreme Court of the United States·Decided June 17, 1994·No. 93-356·Published·Cited by 571 cases

Opinions

[220]*220Justice Scalia

delivered the opinion of the Court.

Section 203(a) of Title 47 of the United States Code requires communications common carriers to file tariffs with the Federal Communications Commission, and § 203(b) authorizes the Commission to “modify” any requirement of §203. These cases present the question whether the Commission’s decision to make tariff filing optional for all nondominant long-distance carriers is a valid exercise of its modification authority.

I

Like most cases involving the role of the American Telephone and Telegraph Company (AT&T) in our national telecommunication system, these have a long history. An understanding of the cases requires a brief review of the Commission’s efforts to regulate and then deregulate the telecommunications industry. When Congress created the Commission in 1934, AT&T, through its vertically integrated Bell system, held a virtual monopoly over the Nation’s telephone service. The Communications Act of 1934, 48 Stat. 1064, as amended, authorized the Commission to regulate the rates charged for communication services to ensure that they were reasonable and nondiscriminatory. The requirements of §203 that common carriers file their rates with the Commission and charge only the filed rate were the centerpiece of the Act’s regulatory scheme.

In the 1970’s, technological advances reduced the entry costs for competitors of AT&T in the market for long-distance telephone service. The Commission, recognizing the feasibility of greater competition, passed regulations to facilitate competitive entry. By 1979, competition in the provision of long-distance service was well established, and some urged that the continuation of extensive tariff filing requirements served only to impose unnecessary costs on new entrants and to facilitate collusive pricing. The Commission held hearings on the matter, see Competitive Carrier Notice of Inquiry and Proposed Rulemaking, 77 [221]*221F. C. C. 2d 308 (1979), following which it issued a series of rules that have produced this litigation.

The First Report and Order, 85 F. C. C. 2d 1,20-24 (1980), distinguished between dominant carriers (those with market power) and nondominant carriers — in the long-distance market, this amounted to a distinction between AT&T and everyone else — and relaxed some of the filing procedures for non-dominant carriers, id., at 30-49. In the Second Report and Order, 91 F. C. C. 2d 59 (1982), the Commission entirely eliminated the filing requirement for resellers of terrestrial common carrier services. This policy of optional filing, or permissive detariffing, was extended to all other resellers, and to specialized common carriers, including petitioner MCI Telecommunications Corp., by the Fourth Report and Order, 95 F. C. C. 2d 554 (1983),1 and to virtually all remaining categories of nondominant carriers by the Fifth Report and Order, 98 F. C. C. 2d 1191 (1984). Then, in 1985, the Commission shifted to a mandatory detariffing policy, which prohibited nondominant carriers from filing tariffs. See Sixth Report and Order, 99 F. C. C. 2d 1020. The United States Court of Appeals for the District of Columbia Circuit, however, struck down the Sixth Report’s mandatory detariffing policy in a challenge brought — somewhat ironically as it now appears — by MCI. See MCI Telecommunications Corp. v. F. C. C., 765 F. 2d 1186 (1985) (Ginsburg, J.). The Court of Appeals reasoned that § 203(a)’s command that “[e]very common carrier . . . shall. . . file” tariffs was mandatory. And although § 203(b) authorizes the Commission to “modify any requirement” in the section, the Court of Appeals concluded that that phrase “suggested] circumscribed alterations — not, as the FCC now would have it, wholesale abandonment or elimination of a requirement.” Id., at 1192.

[222]*222In the wake of the invalidation of mandatory detariffing by the Court of Appeals, MCI continued its practice of not filing tariffs for certain services, pursuant to the permissive detariffing policy of the Fourth Report and Order. On August 7, 1989, AT&T filed a complaint, pursuant to the third-party complaint provision of the Communications Act, 47 U. S. C. § 208(a), which alleged that MCI’s collection of unified rates violated §§ 203(a) and (c). MCI responded that the Fourth Report was a substantive rule, and so MCI had no legal obligation to file rates. AT&T rejoined that the Fourth Report and Order was simply a statement of the Commission’s nonenforcement policy, which did not immunize MCI from private enforcement actions; and that if the Fourth Report and Order established a substantive rule, it was in excess of statutory authority. The Commission did not take final action on AT&T’s complaint until almost ZVz years after its filing. See AT&T Communications v. MCI Telecommunications Corp., 7 FCC Rcd 807 (1992). It characterized the Fourth Report and Order as a substantive rule and dismissed AT&T’s complaint on the ground that MCI was in compliance with that rule. It refused to address, however, AT&T’s contention that the rule was ultra vires, announcing instead a proposed rulemaking to consider that question. See Tariff Filing Requirements for Interstate Common Carriers, Notice of Proposed Rulemaking, 7 FCC Red 804 (1992).

AT&T petitioned for review, arguing, inter alia, that the Commission lacked authority to defer to a later rulemaking consideration of an issue which was dispositive of an adjudicatory complaint. The United States Court of Appeals for the District of Columbia Circuit granted the petition for review. See American Telephone & Telegraph Co. v. F. C. C., 978 F. 2d 727 (1992) (Silberman, J.). The Court of Appeals characterized the Commission’s failure to address its authority to promulgate the permissive detariffing policy as “a sort of administrative law shell game,” id., at 731-732. Address[223]*223ing that question itself, the Court of Appeals concluded that the permissive detariffing policy of the Fourth Report and Order was rendered indefensible by the 1985 MCI decision: “Whether detariffing is made mandatory, as in the Sixth Report, or simply permissive, as in the Fourth Report, carriers are, in either event, relieved of the obligation to file tariffs under section 203(a). That step exceeds the limited authority granted the Commission in section 203(b) to ‘modify’ requirements of the Act.” Id., at 736. The Court of Appeals then remanded the case so that the Commission could award appropriate relief. See id., at 736-737. We denied certiorari. MCI Telecommunications Corp. v. American Telephone & Telegraph Co., 509 U. S. 913 (1993).

Moving now with admirable dispatch, less than two weeks after the decision by the Court of Appeals concerning the adjudicatory proceeding, the Commission released a Report and Order from the rulemaking proceeding commenced in response to AT&T’s complaint. See In re Tariff Filing Requirements for Interstate Common Carriers, 7 FCC Rcd 8072 (1992), stayed pending further notice, 7 FCC Red 7989 (1992). That is the Report and Order at issue in this case.

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MCI Telecommunications Corp. v. American Telephone & Telegraph Co., 512 U.S. 218, 114 S. Ct. 2223, 129 L. Ed. 2d 182, 1994 U.S. LEXIS 4639 (1994).

512 U.S. 218 (MCI Telecommunications Corp. v. American Telephone & Telegraph Co.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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