**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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**REPORT**

**Adopted: December 31, 2002 Released: March 14, 2003**

By the Commission: Chairman Powell and Commissioner Abernathy issuing a
joint statement;

Commissioners Copps and Adelstein issuing a joint statement;
Commissioner Martin

approving in part, dissenting in part, and issuing a statement.

# Introduction 

1.  Section 11 of the Communications Act of 1934, as amended
    (Communications Act), requires the Commission: (1) to review
    biennially its regulations that apply to the operations or
    activities of telecommunications service providers; and (2) to
    determine whether those regulations are "no longer necessary in the
    public interest as the result of meaningful economic competition
    between providers of such service."[^1] Following such review, the
    Commission is required to modify or repeal any such regulations that
    are no longer necessary in the public interest.[^2]

2.  Consistent with our Section 11 regulatory review obligations, we
    issue this Report and concurrently release the 2002 Biennial
    Regulatory Review Staff Reports (Staff Reports). The Staff Reports
    review the rules issued under the Communications Act that apply to
    the operations or activities of any provider of telecommunications
    services to determine whether any such regulations are "no longer
    necessary in the public interest as the result of meaningful
    economic competition between providers of such service."[^3] As
    appropriate, based on these Staff Reports, we will issue notices of
    proposed rule making to repeal or modify regulations that are no
    longer in the public interest.

3.  The process of reviewing our rules subject to Section 11 is, in
    essence, ever-continuing. As the Staff Reports indicate, the number
    of rules subject to this review is substantial. Thus, to faithfully
    fulfill our obligation under the statute, our staff engages in an
    ongoing review, independently considering whether the relevant
    regulations are no longer necessary in the public interest as the
    result of meaningful economic competition.[^4] To supplement this
    effort, the Commission issued Public Notices in September 2002
    seeking suggestions from the public as to which rules should be
    modified or repealed as part of the 2002 Biennial Review.[^5]
    Comments were due on October 18, 2002 with reply comments due on
    November 4, 2002. We received 84 comments and 26 reply comments. In
    response to these comments, this Report addresses several
    overarching legal issues regarding the biennial review process.
    Concurrently, the Staff Reports analyzing the rules subject to the
    biennial review requirement reflect the input from the comments
    regarding particular rules.

# Legal issues

4.  Commenters have raised a number of broad legal concerns about our
    review under Section 11. As discussed below, some of these matters
    have been addressed in previous biennial review proceedings and we
    will not dwell on them. We will, however, take this opportunity to
    consider the congressional purpose behind Section 11; what it means
    for a rule to be "necessary in the public interest;" and to what
    extent the development of "meaningful economic competition" should
    define the scope of the biennial review.

5.  Initially, we note that Congress added Section 11 to the
    Communications Act as part of the reforms in the Telecommunications
    Act of 1996 (1996 Act).[^6] As the courts have recognized on many
    occasions, the overarching goal of the reforms in the 1996 Act was
    to promote competition in the communications industry.[^7] Thus, it
    is not surprising that Congress also included provisions to ensure
    that the agency would monitor the effect of that competition as it
    rolled out and make appropriate adjustments to its rules to modify
    or eliminate those rules that were "no longer necessary in the
    public interest as the result of meaningful economic competition."
    It is against this backdrop that we consider the scope of our
    Section 11 review, the standard of review applicable to our
    consideration, and the timing of rule changes relevant to these
    proceedings.

## Scope of Section 11 Review

6.  Several commenters raised questions regarding the scope of our
    Section 11 review.[^8] To determine the proper scope of review, we
    begin with the language of the statute. Section 11 imposes two
    distinct obligations regarding periodic review of our rules. First,
    Sections 11(a)(1) and (a)(2) provide:

> \(a\) [Biennial Review of Regulations.]{.smallcaps}In every
> even-numbered year (beginning with 1998), the Commission
>
> \(1\) shall review all regulations issued under this Act in effect at
> the time of the review that apply to the operations or activities of
> any provider of telecommunications service;
>
> \(2\) shall determine whether any such regulation is no longer
> necessary in the public interest as the result of meaningful economic
> competition between providers of such service.

Section 11(b) provides:

> [(]{.smallcaps}b[) Effect of Determination]{.smallcaps}.The
> Commission shall repeal or modify any regulation it determines to be
> no longer necessary in the public interest.

7.  We believe that this language is clear regarding the scope of our
    review. Quite simply, under the plain terms of Section 11(a)(1), two
    questions must be answered in the affirmative for a rule to come
    within the scope of the review. First, does the rule "apply to the
    operations or activities of any provider of telecommunications
    service"? Second, was the rule promulgated under the Communications
    Act? If a rule fails either criterion, it falls outside the scope of
    Section 11.[^9] Otherwise, the rule is subject to the statutory
    review.

8.  We recognize that there may be some confusion regarding our prior
    biennial review orders and the scope of review under Section 11. In
    previous biennial reviews, the Commission affirmatively and
    explicitly extended its review beyond the strict requirements of
    Section 11. For example, in the 2000 Biennial Review, "each Bureau
    and Office . . . endeavor\[ed\] to review all of \[the
    Commission's\] rulesnot merely the rules that \[were\] specifically
    implicated by sections 11 and 202(h) and consider whether a repeal
    or modification of any rule might be appropriate."[^10] The *2002
    Biennial Review Public Notices* also signaled the expectation that
    the 2002 Biennial Review would similarly go beyond the statutory
    requirements.[^11] We have reconsidered this approach.

9.  We do not disagree with the underlying goal of continually
    reassessing and updating all our rules. The Commission has broad
    discretion to review the continued need for any rule in the absence
    of a congressional mandate such as Section 11. We can, should, and
    will exercise that power. Section 11, however, imposes particular
    requirements on the review of rules within its scope. For this
    reason, we believe it better to focus the present biennial review
    reports only on those rules that the statute specifically addresses.
    This will reduce confusion and allow us to better fulfill our
    statutory obligation. Other regulatory changes proposed by
    commenters in this proceeding will be considered outside the
    biennial review reporting context.

10. In their comments, Covad and Time Warner Telecom contend that many
    of the issues raised by commenters are already pending in other
    dockets and thus are inappropriate for inclusion in the biennial
    review.[^12] While we recognize the practical nature of this
    suggestion, we conclude as a legal matter that the statute does not
    contemplate any such exemption. As noted above, if a rule applies to
    the operations or activities of telecommunications service providers
    and was promulgated under the Communications Act, it is within the
    scope of our Section 11 review. This is true regardless of whether
    it is also the subject of a pending rulemaking proceeding. Even in
    that case, the Commission would still need to make the statutorily
    required *determination* about the continued need for the particular
    rule. This does not mean, however, that the Commission must commence
    multiple proceedings. As a practical matter, where the Commission
    concludes that a rule in its current form is no longer necessary in
    the public interest, the pending rulemaking, depending on its scope,
    could serve as the appropriate vehicle to consider modification or
    repeal of that rule under Section 11(b).[^13]

11. Other commenters have urged the Commission to consider generally and
    specifically whether any rules or regulations should be added or
    expanded to best address the needs of state and federal regulators,
    investors, and customers.[^14] As noted above, however, in order to
    reduce confusion and improve administrative efficiency, we wish to
    confine this biennial Section 11 effort to the areas defined by the
    statute. Adding rules, as opposed to modifying or eliminating
    existing rules, is clearly beyond the immediate task. To the extent
    that commenters seek to add rules and/or seek review of rules that
    are beyond the scope of Section 11, we will consider those requests
    in appropriate context, such as petitions for rulemaking. We note
    that while proposing new rules is outside the scope of the biennial
    review, the Commission may, pursuant to its general rulemaking
    authority, decide to combine a biennial review rulemaking with
    related rulemaking proposals. In addition, as the Commission
    concluded in the 2000 Biennial Review, when it reviews its rules and
    considers competitive developments, it may consider whether new or
    different regulations are more appropriate.[^15]

## Standard of Review

12. We now turn to address several issues regarding the appropriate
    standard of review under Section 11. Specifically, commenters in
    this proceeding proffer differing interpretations of the statutory
    language that requires the Commission to determine whether its rules
    are "no longer necessary in the public interest as the result of
    meaningful economic competition."[^16] The Commission has not
    previously addressed the proper interpretation of this statutory
    language; we take this opportunity to do so.

13. As explained below, we find, contrary to the suggestions of some of
    the commenters, no evidence that Congress intended to impose a new
    or higher standard for what is "necessary in the public interest"
    for purposes of Section 11 review. We look to how this term has been
    used in other portions of the Act and how we have applied it. We
    conclude that Congress did not intend that we apply a different
    standard from that required for the Commission to adopt a rule in
    the first instance. To conclude otherwise, we would have to assume
    that without directly saying it, Congress intended to give special
    meaning to the common phrase "necessary in the public interest." We
    cannot make that analytical leap. We further conclude that Section
    11(a)(2) creates a causal connection between the existence of
    "meaningful economic competition between providers of
    \[telecommunications\] service" and the finding that a regulation is
    "no longer necessary in the public interest."

### Necessary in the public interest

14. Several parties suggest that Section 11 obligates the Commission to
    eliminate immediately any rule that it cannot determine is
    "essential" or "indispensable" to promoting the public
    interest.[^17] Initially, to the extent that these parties seek to
    rely on the D.C. Circuit's decision in *Fox Television Stations v.
    FCC*,[^18] interpreting Section 202(h) of the 1996 Act, we note that
    reliance is misplaced. On rehearing, the Court deleted language in
    its initial decision,[^19] which had indicated that the Commission
    applied "too low a standard" in con­duct­ing its biennial review of
    media ownership regulations.[^20] Thus, the Court did not foreclose
    or circumscribe our consideration of this issue.[^21]

15. Given that the meaning of "necessary in the public interest" has not
    previously been addressed by the Commission and was left open by
    *Fox*, we approach this issue as one of statutory construction and
    thus begin with the language of Section 11.[^22] In interpreting the
    phrase "necessary in the public interest," we recognize that the
    word "necessary" has an everyday meaning that implies indispensable,
    but as a common statutory term, it has been interpreted differently
    depending on the statutory context. For example, the term has been
    read in some contexts in a more restrictive sense to mean
    "indispensable" or "essential."[^23] The United States Supreme Court
    has also interpreted the terms "necessary" or "required" to mean
    "useful," "convenient," or "appropriate"[^24] Thus, we cannot
    conclude as some commenters would have us do, that there is a simple
    "plain meaning" for this statutory phrase.[^25] It would be
    inappropriate for us to consider whether the term "necessary" should
    be read in a more or less restrictive sense in the abstract. Rather,
    consistent with judicial precedent, the term is best construed in
    its statutory context.[^26]

16. Here, the legislative history of the 1996 Act and Section 11 provide
    persuasive statutory context. The legislative history of Section 11
    indicates that Congress sought to create an ongoing mechanism to
    ensure that the Commission's regulatory framework would keep pace
    with the competitive changes in the marketplace. The preamble to the
    1996 Act explicitly provides for a national policy framework that is
    designed to accelerate rapidly private sector deployment of advanced
    telecommunications and information technologies to all Americans.
    The 1996 Act provides for the use of procompetitive and deregulatory
    policies, in addition to universal service mechanisms, to create
    this national policy framework.[^27]

17. In addition, the Conference Report adopting Section 11 states, in
    pertinent part:

    New subsection (a) of section 11 requires the Commission, beginning
    in 1998 and in every even numbered year thereafter, to review all of
    its regulations that apply to the operations and activities of
    providers of telecommunications services and *determine whether any
    of these regulations are no longer in the public interest because
    competition between providers renders the regulation no longer
    meaningful*. New subsection (b) of section 11 requires the
    Commission to eliminate the regulations that it determines are no
    longer in the public interest.[^28]

    In explaining the statutory scheme, the conferees do not utilize
    language that suggests absolute necessity or indispensability. In
    fact, the Conference Report urges the Commission to focus on whether
    "regulations are *no longer in the public interest* because
    competition between providers renders the regulation *no longer
    meaningful*" and to repeal or modify rules that are "no longer in
    the public interest."[^29] The use of the phrases "no longer in the
    public interest" and "no longer meaningful" in the legislative
    history reasonably suggests that the same public interest standard
    applies both under Section 11 and when the Commission initially
    adopts a rule.[^30]

18. Moreover, construing "necessary in the public interest" in Section
    11 to mean more than the same term when used in Section 201(b) of
    the Communications Act which grants the Commission general
    rulemaking authority, for example,[^31] would unreasonably hold the
    Commission to a different and higher standard in deciding whether to
    retain an existing rule in a biennial review proceeding than in
    deciding whether to adopt a rule in the first place.[^32] Were the
    Commission to adopt this interpretation of Section 11, it could
    lawfully adopt a rule determined to further the public interest by,
    for example, fostering diver­sity or competi­tion, but it would have
    to repeal the rule two years later in the biennial review process
    unless it could satisfy the higher standard of showing that the rule
    was "necessary," in the sense of vital or indispen­sable, to
    fos­tering diversity or competition. It could thereafter, presumably,
    adopt the rule once again if it deter­mined that doing so would serve
    the public interestbut only for two more years until the next
    biennial review. There is no suggestion in the text or legislative
    history of Section 11 that Congress intended this disjunction
    between the standard for adopting rules and the standard for
    retaining rules in the biennial review context. [^33]

19. CTIA argues that given the deregulatory goals of the 1996 Act, the
    Supreme Court and D.C. Circuit opinions in *Iowa Utilities Board*
    and *GTE Service Corp. v. FCC* establish that courts now interpret
    the term "necessary" as "essential."[^34] We disagree. These cases
    simply demonstrate that terms such as "necessary" and "required"
    must be read in their statutory context. Both of these decisions
    stressed that the Commission's interpretation of the terms at issue
    was unreasonable in the context of the particular statutory
    provision. In *Iowa Utilities Board*, [^35] the Supreme Court held
    that the Commission\'s interpretation of the term \"necessary\" as
    used in Section 251 of the 1996 Act was overbroad.[^36] Section
    251(d)(2) directs the Commission to consider whether access to
    "proprietary" network elements is "necessary." The Court rejected
    the Commission's interpretation of "necessary" in this context
    because the Commission failed to consider whether a proprietary
    network element was available from sources other than the incumbent,
    and in doing so departed from the ordinary meaning of
    "necessary."[^37] The Court held that the Commission ignored the
    ordinary meaning of "impair" in determining that any increase in
    cost or decrease in quality caused by the incumbent's denial of a
    network element was sufficient to constitute impairment.[^38] In
    construing 47 U.S.C. § 251(c)(6) in *GTE Service Corp. v. FCC*,[^39]
    the Court found the Commission's interpretation of the statute
    there, which included the term necessary "overly broad and
    disconnected from the statutory purpose enunciated in §
    251(c)(6)."[^40] The Court found particularly relevant that a
    "broader construction of 'necessary' under § 251(c)(6) might result
    in an *unnecessary* taking of private property."[^41] Plainly, these
    contexts are very different from the more generic use of the term in
    Section 11.

20. In addition, the D.C. Circuit's most recent opinion reviewing
    Commission decisions under the "necessary in the public interest"
    standard provides further support for our reading of Section 11. In
    *Sinclair Broadcast Group v. FCC,* the D.C. Circuit resolved a
    challenge to the Commission's local television ownership rule.[^42]
    Although *Sinclair* did not expressly address the meaning of the
    phrase "necessary in the public interest," it applied that standard
    and ultimately upheld the bulk of the Commission's local television
    ownership rule.[^43] The Court noted that the "Commission adequately
    explained how the local ownership rule furthers diversity at the
    local level and is necessary in the 'public interest' under § 202(h)
    of the 1996 Act."[^44] In doing so, the Court did not articulate a
    new or higher public interest yardstick. Even as to the voice count
    portions of the local ownership rule, which *Sinclair* remanded to
    the Commission, the Court highlighted the "deficiency of the
    Commission's explanation" and the "explanation it failed to give for
    defining 'voices' differently in the cross-ownership and local
    ownership rules."[^45] It was the lack of reasonable explanation,
    rather than a higher public interest standard, that proved fatal.

21. The commenters' arguments that the deregulatory purpose of the 1996
    Act dictates a more stringent reading of Section 11 are also
    misplaced. As noted above, we agree that the 1996 Act favors
    competition and evidences a faith that when competition takes hold,
    many regulations can be eliminated, but this does not translate into
    a direction to deregulate for deregulation sake. To be clear, we
    acknowledge Section 11 creates a presumption in favor of repealing
    or modifying covered rules, where the statutory criteria are met.
    Thus, we must reevaluate rules in light of current competitive
    market conditions to see that the conclusion we reached in adopting
    the rulethat it was needed to further the public interestremains
    valid. What we reject is the notion that to retain a rule, we must
    conclude that it is "essential" or "indispensable." We believe that
    such a standard would likely create confusion and disruption and is
    not what Congress intended.

22. We therefore disagree with commenters who argue that the standard in
    Section 11 is more stringent than the "plain public interest"
    standard found in other parts of the Communications Act.[^46] We
    find no evidence of a heightened standard in either the purposes of
    the 1996 Act, the language or legislative history of Section 11, or
    case law. To the contrary, all suggest that Congress intended a
    regularized review using the established public interest standard to
    see if covered rules remained necessary as competition
    developed.[^47]

### Meaningful Economic Competition

23. In interpreting the relationship between the phrases "meaningful
    economic competition" and "necessary in the public interest," we
    again begin with the language of the statute. Section 11(a)(2)
    requires the Commission to determine whether any regulation is "no
    longer necessary in the public interest *as the result of*
    meaningful economic competition between providers" of
    telecommunications service.[^48] As such, the language of Section
    11(a)(2) creates a causal connection between the existence of
    "meaningful economic competition between providers" and the finding
    that a regulation is "no longer necessary in the public interest."

24. As discussed above, the purpose of the 1996 Act as well as the
    legislative history of Section 11 confirms that competition is the
    touchstone of the Section 11 inquiry. The conferees, in explaining
    Section 11(a)(2), direct the Commission to determine whether its
    regulations are "no longer in the public interest *because*
    competition between providers renders the regulation no longer
    meaningful."[^49] Section 11 contemplates a thorough review and
    assessment of the state of competition among providers of
    telecommunications service and a determination of how the regulatory
    framework should be adjusted to account for those changes.[^50] We
    note, however, that the mere presence of meaningful economic
    competition will not always lead us to conclude that repeal or
    modification of a rule is in the public interest.[^51] Rather, our
    task is to determine whether the competitive environment has changed
    such that the rule is no longer meaningful, *i.e.,* is not needed to
    further the public interest.

25. We are unpersuaded that interpreting Section 11 as we do would be
    inconsistent with the specific purpose of that provision and the
    deregulatory thrust of the 1996 Act.[^52] Verizon and Sprint argue
    that Congress could not have intended the Commission to conduct an
    unlimited review of all its regulations, but then limited the
    Commission to determining that a rule is unnecessary only due to the
    existence of meaningful competition.[^53] Verizon reasons that the
    language, "as the result of meaningful economic competition," is
    explanatory, not a prerequisite for review or elimination of
    unnecessary regulations.[^54] USTA and NTCA agree and urge the
    Commission not to limit its review under Section 11 to whether
    meaningful economic competition alone justifies change, but to
    repeal or modify regulations when it would serve the public interest
    and lessen regulatory burdens.[^55] By contrast, the Wyoming PSC
    urges the Commission to refocus its examination of its regulations
    based on the language of Section 11, rather than on a broader
    reading of the public interest standard.[^56] AT&T and Covad also
    maintain that only to the extent the Commission determines that
    meaningful competition has rendered particular regulations "no
    longer necessary in the public interest," may it repeal or modify
    those regulations pursuant to Section 11.[^57]

26. The LECs who comment in this proceeding seem to fear that without a
    broad mandate beyond competition considerations, the Commission will
    have no meaningful obligation under Section 11. We disagree. Section
    11 reflects the legislative judgment that the development of
    meaningful economic competition in the telecommunications
    marketplace should yield a different regulatory framework from that
    designed for a non-competitive market characterized by few service
    providers or a monopoly. In other words, Section 11 obligates the
    Commission to reassess constantly the state of competition and
    directs the Commission to act when it determines that competition,
    and not regulation, can meet some or all of the objectives of a
    particular rule. As such, we believe that Congress intended the
    Commission to focus its Section 11 inquiry on whether meaningful
    competition exists. This qualitative assessment of competition would
    then undergird our determinations about the continued need for
    particular rules.

27. We, of course, acknowledge the Commission's broad authority, apart
    from Section 11, to consider proposed modifications to or
    elimination of its rules under the public interest standard.[^58] In
    addition, Section 10 of the Communications Act allows the Commission
    to consider a broad range of public interest factors and to forbear
    from applying any regulation to telecommunications carriers when,
    along with two other factors, forbearance is "consistent with the
    public interest."[^59] The competition analysis we conduct under
    Section 11 is a distinct arrow in the Commission's regulatory quiver
    and we decline the invitation to conflate these approaches into the
    Section 11 process.

### Biennial Review Presumptions

28. Verizon has also argued that Section 11 places the burden on the
    Commission to support, with substantial record evidence, any
    conclusion that its rules remain necessary in the public
    interest.[^60] If the Commission is unable to meet this burden,
    Verizon argues that a regulation must be repealed immediately.[^61]
    We see no such requirement in the statute. It is clear that Section
    11 places an affirmative obligation on the Commission to examine
    critically rules subject to Section 11 review and to analyze the
    state of competition in the relevant market in order to determine
    whether competition has rendered those rules no longer necessary in
    the public interest.[^62] We also acknowledge that Section 11
    creates a presumption in favor of repealing or modifying covered
    rules, where the statutory criteria are met, but we do not read the
    statute to create a special burden of proof apart from our standard
    obligation to provide a reasoned basis for our decisions.[^63]

29. Nothing in the language of the statute suggests that in the absence
    of Commission action, the presumption in favor of repeal or
    modification operates independently and leads to automatic repeal of
    any rule. In fact, the language of Section 11(a) does not create an
    alternative to the Commission conducting a review and making a
    determination of whether any regulation is no longer necessary in
    the public interest as the result of meaningful competition. Section
    11(a) clearly states that the Commission "shall review all
    regulations issued under this Act . . . that apply to the operations
    or activities of any provider of telecommunications service." To
    read an automatic repeal into Section 11(a), captioned "Biennial
    Review of Regulations," would relieve the Commission of its
    fundamental responsibility under the section---namely conducting a
    comprehensive biennial review. Indeed, an automatic repeal approach
    ignores the congressional directive to the Commission in Section
    11(a) to conduct a review as a prerequisite for elimination and
    modification of a rule. Accordingly, a biennial review is not an
    administrative luxury.

30. Moreover, the language of Section 11(b) provides not one, but two
    responses to a review and determination that regulations are no
    longer necessary in the public interest as the result of meaningful
    competition. Under Section 11(b), the Commission is not limited to
    eliminating a rule, automatically or otherwise; modification of the
    rule is a deregulatory tool as well.

31. Congress could have limited the Commission to only eliminating rules
    determined to be no longer necessary in the public interest. The
    legislative history of Section 11 makes it clear, however, that
    Congress explicitly declined to do so. The Senate Report preceding
    the Conference Report describes a bill which would have restricted
    the Commission to only eliminating (rather than eliminating *or*
    modifying) rules:

> This provision adds a new section 259 entitled "Regulatory Reform" to
> the 1934 Act. New subsection 259(a) requires the FCC, with respect to
> its regulations under the 1934 Act . . . to review in odd-numbered
> years beginning with 1997 all regulations issued under the 1934 Act .
> . . applicable to telecommunications services. It directs further that
> \[the FCC\] shall determine whether competition has made those
> regulations unnecessary to protect the public interest. Subsection
> 259(b) requires the FCC to *repeal* any regulations under the 1934 Act
> that are found to be no longer in the public interest . . . .[^64]

While the Senate bill contained the above section, the House version did
not. According to the House Conference Report, the conferees created and
agreed on the language in Section 11, which provides for both
modification and elimination, rather than the elimination-only language
of the Senate bill.[^65] Both the text of the statute and the history of
Section 11 demonstrate that Congress provided for modification as well
elimination as means to address regulations that are no longer in the
public interest. Therefore, we find no basis for adopting an automatic
repeal approach in lieu of the option to modify or eliminate a rule as
appropriate.

32. Finally, we note that in the analogous context of Section 202(h),
    the D.C. Circuit has declined to treat a biennial review as
    requiring immediate repeal. In reviewing our treatment of the
    national television ownership cap in *Fox*, although the Court
    concluded that the Commission had failed to adequately explain its
    reasons for retaining the rule, the appropriate remedy was to remand
    rather than vacate.[^66] The Court apparently saw no statutory
    requirement to immediately eliminate the rule. Similarly, we see
    none here.

## Timing of Section 11 Review

33. A few commenters urge an interpretation of Section 11 under which
    the Commission would review all regulations and repeal or modify
    those no longer indispensable to the public interest by December
    31^st^ of each even-numbered year.[^67] The Commission addressed
    this issue fully in the 2000 Biennial Review and we decline to
    reconsider our approach.[^68] First, the language of Section 11 does
    not require such a compressed schedule. Sections 11(a)(1) and
    11(a)(2) require the Commission to review certain of its rules in
    every even-numbered year and determine whether those rules are no
    longer necessary in the public interest as a result of meaningful
    economic competition. Subsequent to making those determinations, the
    Commission is directed to "repeal or modify any regulation it
    determines to be no longer necessary in the public interest."[^69]
    Congress thus distinguished between *making determinations* (that
    certain rules are no longer in the public interest), which must
    occur within a specified time period, *i.e.*, every even-numbered
    year, and *taking action* (to repeal or modify rules that are no
    longer in the public interest) which is not required to be completed
    within that specific time period.[^70] Second, we believe that
    completing rule revisions within the even-numbered year would make
    it difficult to develop a sufficient record with respect to all the
    rules within the scope of Section 11. Accordingly, we decline to
    adopt a compressed schedule that Congress did not mandate.[^71]

# administrative matters

34. *Applications for Review.* The Staff Reports that are being released
    concurrently with this order recommend which rules are no longer
    necessary in the public interest and should be modified or repealed.
    Persons disagreeing with any of these recommendations may file an
    application for review under Section 1.115 of the Commission's
    rules.[^72] Otherwise, based on these Staff Reports, we will issue
    notices of proposed rulemaking, over the next year, to repeal or
    modify regulations as appropriate.

# conclusion

35. We commend the Bureaus and Offices for working together to prepare
    the many recommendations that comprise the Staff Reports. Their
    enterprise, imagination, and coordinated effort made this review and
    these reports possible. A constant in each biennial review are the
    bedrock principles of promoting the public interest and alleviating
    regulatory burdens. We expect these principles will be reflected in
    forthcoming notices of proposed rule making.

> FEDERAL COMMUNICATIONS COMMISSION
>
> Marlene H. Dortch
>
> Secretary

JOINT STATEMENT OF

CHAIRMAN MICHAEL K. POWELL

AND

COMMISSIONER KATHLEEN Q. ABERNATHY

> *Re: The 2002 Biennial Regulatory Review, GC Docket No. 02-390*

We write separately to comment on the Commission's interpretation of the
biennial review standard in section 11 ― in particular, our construction
of the phrase "no longer necessary in the public interest." We are
committed to achieving the procompetitive and deregulatory goals of the
Act and have consistently supported policies to achieve those goals. And
while we believe that the biennial review process is a demanding one, we
do not believe that Congress intended to invent a wholly new ― and
inevitably inconsistent ― standard for regulatory action. In our view,
the interpretation of the phrase "no longer necessary in the public
interest" in the foregoing Report is most faithful to the language of
the statute and the intent of Congress. We recognize that, as the item
makes clear and as the dissent emphasizes at length, some courts have
concluded that the word "necessary" as used in other provisions of the
statute means essential or indispensable. But numerous other court
decisions ― including both recent decisions and others tracing back to
*McCulloch v. Maryland*,[^73] one of the seminal decisions in the
Supreme Court's constitutional jurisprudence ― have construed
"necessary" to mean convenient or useful.[^74] In light of this conflict
in the law, we conclude that we must interpret the term "necessary"
based on the particular context in which it is used.

Here, we are guided principally by the fact that interpreting
"necessary" as used in section 11 to mean indispensable would mean that
the Commission would be authorized to adopt a rule that advances the
public interest, but would be forced to repeal the rule two years later
absent proof of its indispensability, only to remain free to reimpose
the rule immediately thereafter based on a lesser showing of importance.
It is black letter law that we should not construe a statute to lead to
such an absurd result.[^75]

The full text of the statute further supports this view. The statute
requires the Commission to "determine whether any \[covered\] regulation
is no longer necessary in the public interest as the result of
meaningful economic competition." It is clear that Congress envisioned
the emergence of competitive markets that would render many of our
regulations "no longer necessary." The biennial review provision was
designed to take account of these changing circumstances by peeling away
regulations that were "no longer necessary in the public interest." This
characterization as "*no longer* necessary" clearly implies that such
regulations were once "necessary in the public interest." This is
consistent with our view that the public interest standard of section 11
is the same standard the Commission uses in promulgating its rules in
the first instance. The rules were once "necessary in the public
interest" but changes in the competitive landscape have rendered them
"no longer necessary in the public interest." The dissent, however,
cannot explain how its higher standard of review ― indispensable,
essential, or absolutely required ― can be squared with the "no longer"
characterization. That is, the Commission has never promulgated rules
pursuant to such an indispensability standard. For the dissent's
argument to stand, therefore, Congress had to have created a sweeping
statutory assumption in section 11 that every regulation was at one time
deemed indispensable to the public interest. There is nothing in the
text or legislative history to suggest such an assumption. If Congress
intended to create an entirely new standard here, it would not have
included the "no longer" language or implicitly assumed that our
existing rules satisfied such a standard. The dissent offers no
convincing explanation for this anomaly.[^76]

Section 202(h) of the 1996 Act, which contains a parallel biennial
review provision, also supports this view. That section appears to
equate the phrase "necessary in the public interest" with "in the public
interest," given that it instructs the Commission to determine which
covered rules are "necessary in the public interest" and then to repeal
or modify those that are simply "no longer in the public interest."
While the appropriate standard of review under section 202(h) will be
addressed fully in a separate proceeding, in the present context of
interpreting section 11, we see no basis for concluding that Congress
intended its omission of the word "necessary" in the final clause of
section 202(h) to establish a different substantive standard than the
one in section 11. To the contrary, all indications are that sections 11
and 202(h) were intended to establish identical review procedures for
our telecommunications and media rules. The legislative history, while
not dispositive, further indicates that Congress did not intend to
create such a process.[^77]

Finally, we disagree with the dissent's assertion that our
interpretation of section 11 renders the presence or absence of
competition irrelevant and the section 11 process meaningless. The
dissent argues that failing to repeal a regulation that may no longer be
necessary in the public interest for reasons unrelated to competition
"renders the statute absurd." Dissent at 2. This logic reads section 11
in isolation and assumes incorrectly that section 11 is the only means
by which the Commission can modify or eliminate a regulation that is no
longer necessary in the public interest. If the Biennial Review process
identifies rules that have become obsolete based on factors other than
competition, it cannot be in the public interest to maintain such rules.
The broad and clear deregulatory goals of the Act and our general public
interest obligations require that we modify or eliminate such rules even
when they fall outside the precise scope of the biennial review. The
relevant distinction is that if such elimination or modification is
warranted based on factors *other than meaningful economic competition*,
it is not *required* as part of the section 11 biennial review
process.[^78]

Regardless of one's view of the correct interpretation of the
*substantive* standard in section 11, there should be no doubt that the
requirement to determine whether competition has rendered certain rules
obsolete establishes a very meaningful *process*. The Commission must
assess the state of competition in the relevant market for a given rule
and then determine whether the rule in its current form is no longer
necessary in the public interest as a result of meaningful economic
competition. Before Congress enacted section 11, the FCC was under no
requirement to ascertain regularly the continued relevance of its rules
or to justify their retention in the face of meaningful competition.
Now, the Commission conducts a thorough analysis of all covered rules
every two years, and where we find that a particular regulation no
longer serves the public interest as a result of competition, we are
required to repeal or modify it. Section 11 thus provides an important
tool in carrying out Congress's general preference for reducing
regulation where competition has emerged, and that fact should not be
obscured by the narrow debate over whether the Commission must repeal a
rule that continues to serve the public interest solely because the rule
cannot be proven to be indispensable. Ultimately, we hope that the
Commission moves beyond this academic debate and translates words into
deeds by actually reducing regulation where competition exists.

**JOINT STATEMENT OF**

**COMMISSIONER MICHAEL J. COPPS**

**AND**

**COMMISSIONER JONATHAN S. ADELSTEIN,**

**APPROVING**

*Re: The 2002 Biennial Regulatory Review*

We approve the Order because it recognizes that Section 11 requires a
two-step process. First, as the statute states, the Commission must
determine if there is meaningful competition in the relevant market. The
Order correctly notes, however, that "the mere presence of meaningful
competition will not always lead us to conclude that repeal or
modification of a rule is in the public interest. Rather, our task is to
determine whether the competitive environment has changed such that the
rule is no longer meaningful, *i.e.*, is not needed to further the
public interest." In addition, the Order concludes that the public
interest standard must be interpreted to mean the traditional Commission
public interest standard, and does not require a heightened
justification.

Furthermore, we view the attached Bureau reports as recommendations from
that Bureau as to whether we should retain, modify, or repeal specific
rules. Our approval of this item does not suggest a certain position as
to the recommendations of the staffs of the respective Bureaus. We
reserve our right to address these issues as they are presented to us in
the proceedings that will manifest themselves as a result of this
Biennial Review proceeding.

**SEPARATE STATEMENT OF**

**COMMISSIONER KEVIN J . MARTIN**

*Re: The 2002 Biennial Regulatory Review*, Report

I respectfully dissent in part from this item because I believe the
majority has misinterpreted section 11's standard of review. Section 11
was added to the Communications Act by the Telecommunications Act of
1996 ("1996 Act") as part of the 1996 Act's effort "to promote
competition and reduce regulation."[^79] Entitled "regulatory reform,"
section 11 was meant to reduce regulation and to constrain the
Commission's authority. The provision requires the Commission to review
its regulations for providers of telecommunications service every two
years and to "determine whether any such regulation is no longer
necessary in the public interest as the result of meaningful economic
competition between providers of such service."[^80] Section 11 then
mandates that "The Commission shall repeal or modify any regulation it
determines to be no longer necessary in the public interest."[^81]

As I have explained repeatedly in previous decisions before the
Commission, I believe the majority has failed to adhere to this
language.[^82] I also disagree with the majority's reading of the
legislative history and the case law. However, what troubles me the most
about the majority's decision is its view of the role of competition in
the 1996 Act's statutory scheme.

A fundamental premise of the 1996 Act and section 11 is that where
competition is present, competition -- and not regulation -- will best
maximize consumer welfare. Congress thus made the presence or absence of
meaningful competition a crucial factor in determining the nature and
extent of regulation: competition first, then deregulation. Where there
is competition to protect consumers, deregulation is appropriate and
regulations should be retained only if they are necessary -- *i.e.*,
still *needed* to protect consumers. Where there is not competition,
regulations may be appropriate to protect consumers. The majority's
reading of section 11 is most problematic in ignoring this principle.

In this item, the majority concludes that the term "necessary" should be
read to mean "useful," "convenient," or "appropriate" and asserts that
the phrase "*necessary* in the public interest" means nothing more than
"in the public interest."[^83] As the majority reads section 11 then,
the Commission is required to conduct a thorough analysis of all covered
rules, conducting a market analysis to determine the state of
competition relevant to each rule and then make an affirmative finding
on whether each rule is "in the public interest." The problem with this
reading is that, even without section 11, the Commission already has a
statutory obligation to maintain only those rules that are in the public
interest. Why would the Commission be required to conduct a market
analysis if, regardless of the result of the analysis, the Commission
has an obligation to eliminate rules no longer in the public interest?
Either the presence of competition is irrelevant and section 11's
standard is essentially meaningless, or section 11 allows the Commission
to maintain regulations acknowledged to be no longer in the public
interest if their lack of support was not due to the presence of
competition. Either answer renders the statute "absurd\[\]."[^84]

Nevertheless, the majority attempts both of them. On the one hand, the
majority insists that the presence of competition matters under its
interpretation, because, it argues, in conducting section 11's "thorough
analysis of all covered rules," the Commission need repeal or modify
only those rules that are no longer in the public interest as a result
of the presence of competition.[^85] Thus, it would seem to be entirely
proper for the Commission, in a section 11 proceeding, to acknowledge
that numerous regulations are no longer in the public interest but
maintain them because their lack of support was caused by something
other than the presence of competition, such as, for example,
technological obsolescence. But on the other hand, the majority insists
that the Commission must repeal or modify any rule found to be not in
the public interest during a section 11 review, even if the reason for
the rule's flaw is not the presence of competition: "If the Biennial
Review process identifies rules that have become obsolete based on
factors other than competition . . . the broad and clear deregulatory
goals of the Act and our general public interest obligations require
that we modify or eliminate such rules."[^86] If this is true, however,
it is unclear why the presence or absence of competition has any
relevance. The majority offers no explanation.

There is little reason, moreover, for the majority to read the statute
in this manner. Both the Supreme Court and the D.C. Circuit have held
that the term "necessary" in the 1996 Act should be read in accordance
with its ordinary meaning and does not mean merely "useful,"
"convenient," or "appropriate." The majority does not point to a single
case construing the 1996 Act or, indeed, any statute intended to limit
regulatory authority that supports its interpretation. Moreover, the
majority not only interprets "necessary" in a manner that conflicts with
the term's plain meaning; it goes on to read the word entirely out of
the statute. In the majority's view, when "necessary" means "useful,"
"convenient," or "appropriate," the phrase "necessary in the public
interest" means *exactly the same thing* as "in the public interest."

The majority's only real argument is that reading section 11's standard
to require anything more than a showing that a regulation is in the
public interest would require a greater showing when deciding whether to
retain a rule than in deciding whether to adopt the rule in the first
place. There are good reasons, however, to have a more permissive
standard for deciding whether to adopt a rule. For example, unlike a
decision whether to retain a rule, which is made after the rule has been
in operation at least two years, a decision whether to adopt a rule is
necessarily a predictive judgment that cannot be based on actual
evidence of the rule's impact. The statute's text specifically
recognizes this distinction. The decision whether to adopt a rule is
governed by section 201(b) of the Communications Act, which, unlike
section 11, requires only a determination that a rule is likely to -- or
"may" -- be necessary in the public interest: "The Commission may
prescribe such rules and regulations as *may* be necessary in the public
interest to carry out the provisions of this chapter."[^87] The majority
offers no basis whatsoever for equating the determination that a rule
"*may* be necessary in the public interest" with the determination that
a rule is "necessary in the public interest," which the majority has
already argued means exactly the same thing as "in the public interest."
The only way to make sense of the majority's argument is once again to
read words completely out of the statute.

In my view, Congress intended section 11 to be a significant and
coherent deregulatory provision that turns on the presence of
competition to protect consumers. Competition is the best method of
providing consumers choice, innovation, and affordability. Where
meaningful competition is not present, Congress understood the
importance of regulation, and the Commission has some latitude to adopt
and maintain regulations. But where meaningful competition is present,
regulation may be unnecessary or even harmful. Where there is such
competition, section 11 requires repeal or modification of regulations
that are no longer "*necessary* in the public interest" -- a burden
that, as the provision's terms make plain, is more substantial than the
"in-the-public-interest" standard. This interpretation is faithful to
the statute's language and best effectuates Congress's intent.

**I. The Majority's Interpretation Conflicts With The Statute's Text**

My reading of section 11 begins, as it must, with the statute's
language. The Communications Act contains no statutory definition of the
term "necessary," and, thus, the term should be construed "in accordance
with its ordinary or natural meaning." *FDIC v. Meyer*, 510 U.S. 471,
476 (1994). The term "necessary" is ordinarily defined as "absolutely
required," "indispensable," or "essential." *Merriam Webster's
Collegiate Dictionary* 774 (10th ed. 2000). Indeed, the majority
acknowledges that "the word 'necessary' has an everyday meaning that
implies indispensable." Report ¶ 15.

Both the Supreme Court and the D.C. Circuit have held, in interpreting
other sections of the 1996 Act, that the term "necessary" must be read
in accordance with its ordinary meaning and thus cannot mean merely
"useful," "convenient," or "appropriate." In *AT&T vs. Iowa Utilities
Board*, for example, the Supreme Court addressed section 251(d)(2) of
the Act, which requires the Commission to consider whether access to a
proprietary network element is "necessary" before ordering incumbent
local exchange carriers ("LECs") to provide the element to competitors.
*See AT&T Corp. v. Iowa Utils. Bd.*, 525 U.S. 366 (1999). The Commission
had found that access to an element is necessary if its denial would
cause a competitor any increase in cost or decrease in quality. The
Court rejected this interpretation: "the Commission's assumption that
any increase in cost (or decrease in quality) imposed by denial of a
network element renders access to that element 'necessary' . . . is
simply not in accord with the ordinary and fair meaning of \[the
statute's\] terms." *Id.* at 389-90.

The D.C. Circuit came to a similar conclusion in interpreting section
251(c)(6), which requires incumbent LECs to provide for physical
collocation of equipment "necessary" for interconnection or access to
unbundled network elements. *See GTE Serv. Corp. v. FCC*, 205 F.3d 416
(2000). The Commission had interpreted this language to require
collocation of any equipment "used or useful" for either interconnection
or access to unbundled network elements. Rejecting the Commission's
interpretation, the D.C. Circuit held that the statute must be
interpreted in accordance with its plain meaning: "As is clear from the
Court's judgment in *Iowa Utilities Board*, a statutory reference to
'necessary' must be construed in a fashion that is consistent with the
ordinary and fair meaning of the word, *i.e.*, so as to limit
'necessary' to that which is required to achieve a desired goal." *Id.*
at 423. The Court concluded that the word "necessary" is "fairly
straightforward. Something is necessary if it is required or
indispensable to achieve a certain result." *Id.* at 422.

To challenge this precedent, the majority makes much of *Sinclair
Broadcasting Group, Inc. v. FCC*, 284 F.3d 148 (D.C. Cir. 2002), a case
addressing the Commission's local television ownership rule, which
limits ownership of multiple television stations in the same market. The
D.C. Circuit in that case applied the "necessary in the public interest"
standard of section 202(h) of the 1996 Act. Similar to section 11,
section 202(h) requires the Commission to review its broadcast ownership
rules biennially to "determine whether any of such rules are necessary
in the public interest as the result of competition." 1996 Act § 202(h).
The majority argues that *Sinclair* supports its interpretation of
"necessary in the public interest" because the Court "ultimately upheld
the bulk of the Commission's local ownership rule" and rejected other
aspects of the rule for "lack of a reasonable explanation, rather than a
higher public interest standard." Report ¶ 20.

But this argument makes no sense. To begin with, the meaning of the
"necessary in the public interest" standard was not even at issue in
*Sinclair*. Indeed, the majority concedes that the case "did not
expressly address the meaning of the phrase." Report ¶ 20. That alone
makes reliance on the case misplaced, as it is a long standing principle
that judicial decisions do not serve as precedent for points that were
not raised and analyzed. *See*, *e.g.*, *United States v.
Verdugo-Urquidez*, 494 U.S. 259, 272 (1990).[^88] Even leaving aside
that problem, however, the majority's argument does not hold together.
The mere fact that *Sinclair* upheld parts of the local television
ownership rule under the "necessary in the public interest" standard
could have no bearing whatsoever on the interpretive question at issue
here unless those parts were merely "useful" or "appropriate" in the
public interest but could not meet a higher standard -- a point that is
not readily apparent and that the majority in no way asserts. The
majority's refusal even to make such an assertion, which is an essential
premise of its argument, is a telling acknowledgment of the argument's
weakness. Additionally, the fact that the court rejected other aspects
of the local television ownership rule for lack of a reasonable
explanation tells us nothing about whether there were additional flaws
in the Commission's reasoning, as courts almost never address every
ground upon which their decisions might rest. *See*, *e.g.*, *COMSAT
Corp. v. FCC*, 283 F.3d 344, 349 (D.C. Cir. 2002).

Moreover, if we are going to look to the reasoning of cases that lack
precedential value, the case most on point is *Fox Television Stations,
Inc. v. FCC*, 280 F.3d 1027 (D.C. Cir.), *reh'g granted in part*, 293
F.3d 537 (D.C. Cir. 2002). In that case, the D.C. Circuit vacated the
Commission's Cable/Broadcasting Cross Ownership rule ("CBCO"), which
restricted the ability of television licensees to hold cable franchises.
The Court applied the "necessary in the public interest" standard of
section 202(h) and, in its initial opinion, rejected the precise
argument the majority makes here. Specifically, the Court found that
that "the Commission applied too lenient a standard when it concluded
only that the CBCO Rule 'continues to serve the public interest,' and
not that it was 'necessary' in the public interest." *Fox*, 280 F.3d at
1050. According to the Court, "*The statute is clear that a regulation
should be retained only insofar as it is necessary in, not merely
consonant with, the public interest.*" *Id.* (emphasis added). On the
Commission's petition for rehearing, the Court removed this reasoning
from its opinion, because the issue had not been briefed by the parties
and was unnecessary to the Court's decision. *See Fox*, 293 F.3d at
540-41. But the Court left open the proper interpretation of "necessary
in the public interest," and its initial reasoning remains persuasive.
At the very least, this explicit discussion of the issue by the D.C.
Circuit is far more compelling than anything the majority gleans from
*Sinclair*.[^89]

**II. Legislative History Does Not Support The Majority's
Interpretation**

Despite the case law interpreting "necessary" in the 1996 Act and the
majority's acknowledgment that "the word 'necessary' has an everyday
meaning that implies indispensable," the majority concludes that the
term should instead be read to mean "useful," "convenient," or
"appropriate." *See* Report ¶ 15. The majority rests this conclusion in
large part on a brief paragraph in the 1996 Act Conference Report, which
appears to equate the phrase "necessary in the public interest" with the
phrase "in the public interest." *See* *id.* ¶ 17. Apparently, under the
majority's theory, if "necessary" means nothing more than "useful,"
"convenient," or "appropriate," the term has no meaning at all when
attached to the phase "in the public interest." Indeed, there does seem
to be no meaningful difference between saying something is "in the
public interest" and saying that the same thing is "useful in the public
interest" or "appropriate in the public interest." But whatever the
merits of using legislative history to read the word "necessary" out of
the statute, as the majority does -- a problem I address in a moment --
the majority's analysis does not take into account all of the relevant
legislative history. In fact, there is ample evidence in the legislative
history that "necessary" in section 11 was meant to have independent
force and meaning. For example, the Senate Report on the bill that
became the 1996 Act attaches independent meaning to the term
"necessary," stating that the statute would require the Commission to
"determine whether competition has made those regulations *unnecessary*
to protect the public interest." S. Rep. No. 23, 104th Cong., 1st Sess.
(Mar. 30, 1995) (emphasis added). Similarly, the bill's sponsor stated
that the statute's biennial review provision would "ensure\[\] that
regulations applicable to the telecommunications industry remain current
and *necessary* in light of changes in the industry." 141 Cong. Rec.
S7881-02, at S7887 (daily ed. Jun. 7, 1995) (statement of Sen. Pressler)
(emphasis added) ("*Pressler Statement*").

In any case, regardless how one interprets the 1996 Act's legislative
history, it is hornbook law that "Legislative history is irrelevant to
the interpretation of an unambiguous statute." *Davis v. Michigan Dept.
of Treasury*, 489 U.S. 803, 808 n.3 (1989).[^90] As both the Supreme
Court and D.C. Circuit have found, the meaning of "necessary" in the
1996 Act is clear. Accordingly, "we do not resort to legislative
history." *Ratzlaf v. United States*, 510 U.S. 135, 147-48 (1994).
Moreover, the majority does not seek to use legislative history merely
to add an interpretive gloss to section 11. Instead, the majority wishes
to read the word "necessary" completely out of the statute. The
majority's argument thus runs up against another basic principle: "It is
a time-honored tenet that \[a\]ll words and provisions of statutes are
intended to have meaning and are to be given effect, and no construction
should be adopted which would render statutory words or phrases
meaningless, redundant, or superfluous." *Lopez-Soto v. Hawayek*, 175
F.3d 170, 173 (1st Cir. 1999) (citation and quotation marks
omitted).[^91] Accordingly, the majority's interpretation is simply
untenable.

**III. The Statute's Context (As Well As Its Text) Undermines The
Majority's Interpretation**

Finally, the majority argues that "context" supports its interpretation.
The majority points to section 201(b) of the Communications Act, which
grants the Commission authority "to prescribe such rules and regulations
as may be necessary in the public interest to carry out the provisions
of this chapter." 47 U.S.C. § 201(b). The majority argues that this
provision has not been interpreted to require anything more than a
showing that a regulation is in the public interest. *See* Report ¶ 18 &
n.33. According to the majority, reading section 11 to require a greater
showing when deciding whether to retain a rule would "unreasonably hold
the Commission to a different and higher standard in deciding whether to
retain an existing rule in a biennial review proceeding than in deciding
whether to adopt a rule in the first place." *Id.* ¶ 18. Such a result,
the majority argues, would render section 11 an "absurdity." *Id.* ¶ 18
n.35.

This argument suffers from multiple flaws. To begin with, there is
nothing "absurd" in having a more permissive standard for deciding
whether to adopt a rule in the first instance than for deciding whether
to retain a rule where competition has developed. A decision whether to
adopt a rule is necessarily a predictive judgment that cannot be based
on actual evidence of the rule's impact. It would make little sense, in
that context, to hold the Commission to a more significant burden to
justify the rule. Rather, what reasonably can be expected of the
Commission before a rule is adopted is a determination whether the rule
is likely to be necessary in the public interest. Indeed, as discussed
below, the text of section 201(b) acknowledges that fact, granting the
Commission authority to adopt rules that "*may* be necessary in the
public interest." 47 U.S.C. § 201(b) (emphasis added).

Once a rule has been in place at least two years, however, we can assess
the rule in light of actual experience. We will then have evidence of
the rule's impact and are capable of meeting a greater burden to justify
the rule. Under section 11, moreover, this greater burden is triggered
only where competition has developed, which, as I discuss below,
recognizes the importance Congress placed on the need for regulatory
restraint in the presence of competition. The majority's suggestion that
the Commission might continually readopt rules under section 201(b) that
were required to be repealed pursuant to section 11 (*see* Report ¶ 18)
is a straw man: Where competition has developed, the Commission's
judgment about whether to adopt a rule will necessarily be informed by
section 11's -- and, for that matter, the entire 1996 Act's --
admonition to exercise regulatory restraint in the presence of
competition.

Unlike the majority's interpretation, moreover, my view that the
standards of section 11 and section 201(b) differ is supported by the
text of the provisions. In contrast to section 11, section 201(b) is
phrased in lenient, permissive terms: "The Commission may prescribe such
rules and regulations as *may* be necessary in the public interest to
carry out the provisions of this chapter." 47 U.S.C. § 201(b) (emphasis
added). Section 201(b) thus makes clear that a decision whether to adopt
a rule is held to a different standard than the decision whether to
retain a rule. Unlike a decision to retain a rule, the decision to adopt
a rule is, as discussed above, necessarily predictive and cannot be
based on actual evidence of the rule's operation. Under section 201(b),
such a decision can be justified if it is likely to -- or "*may*" -- be
necessary in the public interest. This stands in marked contrast to
section 11's mandate to retain a rule only if it is necessary in the
public interest, without any qualifications.

The majority offers no basis whatsoever for equating these
determinations. The majority simply reads the determination that a rule
"*may* be necessary in the public interest" to be identical to the
determination that a rule is "necessary in the public interest," which
the majority has already argued means exactly the same thing as "in the
public interest." Again, the only way to make sense of the majority's
argument is to read words completely out of the statute. As the majority
itself argues, it is better to presume that "Congress meant what it
said." Report ¶ 17 n.32.[^92]

The contexts in which section 11 and section 201(b) were enacted were
also quite different. Section 201(b) was enacted in 1938, a time when
there was no competition in telecommunications. The entire purpose of
this provision, as well as the 1934 Communications Act, was to *grant*
the Commission regulatory authority. Section 11 and the 1996 Act, in
contrast, were part of a fundamental "paradigm shift" to *limit*
regulatory authority. *Pressler Statement*, 141 Cong. Rec. S7881-02 at
S7888. While previous legislative efforts assumed "the concept of
regulated monopoly as a given" -- "that monopoly, like the poor, would
always be with us" -- the 1996 Act is based on the recognition that
competition -- not regulation -- will maximize consumer welfare. *Id.*
The 1996 Act was intended "*to promote competition and reduce
regulation*." Preamble to the Telecommunications Act of 1996, Pub. Law.
No. 104-104, § 202, 110 Stat. 56 (1996) (emphasis added). It "was an
unusually important legislative enactment. . . . *\[I\]ts primary
purpose was to reduce regulation* . . . ." *Reno v. ACLU*, 521 U.S. 844,
857 (1997) (emphasis added) (quotation marks omitted). Section 11 was
intended to be a significant part of the 1996 Act's deregulatory
program. Entitled "regulatory reform," the provision was meant to reduce
regulation and to constrain the Commission's authority. Congress wanted
to ensure that, "\[e\]very 2 years . . . all the rules and regulations
will be on the table." *Pressler Statement*, 141 Cong. Rec. S7881-02 at
S7888.

The biggest problem with the majority's argument, however, is it that it
would, to use the majority's terms, "render section 11 an absurdity."
Report ¶ 18 n.35. That is because -- irrespective of section 11 -- the
Commission already has an obligation to maintain only those rules that
are in the public interest. *See* *Washington Ass'n for Television and
Children v. FCC*, 665 F.2d 1264, 1268 (D.C. Cir. 1981) (The Commission's
"statutory mandate. . . \[prohibits\] employ\[ing\] a policy that, by
its own determination, did not serve the public interest.").[^93] On the
majority's interpretation, section 11 would merely restate this
obligation -- and, even then -- only in limited circumstances. As the
majority rightly emphasizes, section 11 requires a finding of meaningful
competition before its obligation to repeal or modify a rule comes into
play. There must be a "causal connection" between the existence of
competition and a finding that a regulation is longer "necessary in the
public interest." Report ¶ 23. Thus, under the majority's theory, the
Commission properly could, in a section 11 proceeding, acknowledge that
numerous regulations are no longer in the public interest but maintain
them because their lack of support was not due to the presence of
competition. *See id.* ¶¶ 23-27.

The majority insists that it does not read the statute in this manner.
At least according to the Chairman and Commissioner Abernathy, "If the
Biennial Review process identifies rules that have become obsolete based
on factors other than competition . . . the broad and clear deregulatory
goals of the Act and our general public interest obligations require
that we modify or eliminate such rules." Separate Statement of Chairman
Powell and Commissioner Abernathy. The problem with this assertion,
however, is that it renders the presence or absence of competition
completely irrelevant. Whether or not there is meaningful competition, a
rule that is no longer in the public interest must be repealed or
modified. The only thing that turns on a finding of competition is
apparently the legal citation attached to a rule's repeal or
modification. If that is the case, why would Congress require a finding
of meaningful competition at all? This reading of section 11 is, in the
majority's words, "dysfunctional\[\]" at best. *Id.* ¶ 15 n.22.

In my view, a critical aspect of section 11 and the 1996 Act's
deregulatory scheme -- and one lost in the majority's interpretation --
is the notion that, where competition is present, competition -- and not
regulation -- is the best method of delivering choice, innovation, and
affordability to our nation. Congress thus made the presence or absence
of meaningful competition a crucial factor in determining the nature and
extent of regulation. Where there is such competition, Congress intended
there to be deregulation. For example, in section 271, Congress
conditioned Bell Operating Company entry into the long-distance market
on the extent of competition in local markets. *See* 47 U.S.C. § 271.
And, in section 10, Congress directed the Commission to examine
"competitive market conditions" in deciding whether to grant a petition
for forbearance. 47 U.S.C. § 160(b). Similarly, section 11 requires a
finding of meaningful competition before its obligation to repeal or
modify a rule comes into play.

Unlike the majority's interpretation, my reading of section 11 gives
meaning to Congress's admonition that the Commission condition
deregulation on the presence of competition. Where meaningful
competition is not present, Congress understood the importance of
regulation, and the Commission has some latitude to maintain
regulations. But where meaningful competition is present, Congress
believed that competition will maximize consumer welfare and that
regulation may be unnecessary and potentially harmful. As the majority
acknowledges, where competition is present, "Section 11 creates a
presumption in favor of repealing or modifying covered rules." Report
¶ 28. In such circumstances, the burden shifts to the Commission to
justify why continued regulation is "necessary in the public interest."
In making that judgment, the Commission should not be able simply to
rest on the ground that the regulation at issue served some public
interest purpose and that no one has proved that is no longer the case.
The issue is whether the regulation is superior to competition and still
needed to serve that purpose. We should have to undertake a substantive
and factual examination of the regulation and its effects to determine
if its purpose can only be achieved through regulation instead of market
forces. The ultimate question must be whether, in light of competition,
the rule is "necessary." In my view, this approach is most faithful to
the language of the statute and the intent of Congress.

\* \* \*

Accordingly, for the reasons stated above, I respectfully dissent from
this item's discussion of section 11's standard as well as from its
application of that standard.

[^1]: 47 U.S.C. § 161(a).

[^2]: 47 U.S.C. § 161(b).

[^3]: 47 U.S.C. § 161(a).

[^4]: All decisions not expressly required to be made at the Commission
    level may be made by staff under 47 U.S.C. § 155(c)(1), subject to
    the filing of applications for Commission review. *See* 47 U.S.C.
    § 155(c)(4) and 47 C.F.R. § 1.115.

[^5]: *See The Commission Seeks Public Comment in the 2002 Biennial
    Review of Telecommunications Regulations Within the Purview of the
    Consumer & Governmental Affairs Bureau*, Public Notice, CG Docket
    No. 02-311 (rel. Sept. 26, 2002); *International Bureau Seeks
    Comment in 2002 Biennial Review of Telecommunications Regulations*,
    Public Notice, IB Docket No. 02-309 (rel. Sept. 26, 2002); *The
    Commission Seeks Public Comment in the 2002 Biennial Review of
    Telecommunications Regulations Within the Purview of the Office of
    Engineering and Technology*, Public Notice, ET Docket No. 02-312
    (rel. Sept. 26, 2002); *The Commission Seeks Public Comment in the
    2002 Biennial Review of Telecommunications Regulations Within the
    Purview of the Wireless Telecommunications Bureau*, Public Notice,
    WT Docket No. 02-310 (rel. Sept. 26, 2002); and *The Commission
    Seeks Public Comment in 2002 Biennial Review of Telecommunications
    Regulations Within the Purview of the Wireline Competition Bureau*,
    Public Notice, WC Docket No. 02-313 (rel. Sept. 26, 2002)
    (collectively "*2002 Biennial Review Public Notices*"). We
    incorporate the comments filed in response to those notices in this
    docket.

[^6]: Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56
    (1996).

[^7]: *See, e.g., AT&T Corp. v. Iowa Utilities Bd.*, 525 U.S. 366, 371
    (1999) (*Iowa Utilities Board*) (the 1996 Act "fundamentally
    restructures local telephone markets" to facilitate market entry);
    *Reno v. American Civil Liberties Union*, 521 U.S. 844, 857-58
    (1997) ("The Telecommunications Act was an unusually important
    legislative enactment . . . designed to promote competition"). *See
    also* *United States Telecom Association v. FCC*, 290 F.3d 415, 417
    (D.C. Cir. 2002); *New York & Public Service Comm'n of New York v.
    FCC*, 267 F.3d 91, 96 (2nd Cir. 2001).

[^8]: *See, e.g.,* Biennial Review 2002 Comments of Verizon, WC Docket
    No. 02-313 (Verizon Comments), at 7 (review required of all
    regulations issued under the Act); Biennial Review 2002 Reply
    Comments of Verizon, WC Docket No. 02-313 (Verizon Reply Comments),
    at 3 (new rules should be considered in other dockets); 2002
    Biennial Review Comments of the Wyoming Public Service Commission,
    WC Docket 02-313 (Wyoming PSC Comments), at 2 (proper focus of
    inquiry is on competition); Reply Comments of BellSouth, WC Docket
    No. 02-313 (BellSouth Reply Comments), at 2 (Section 11 review
    includes rules in pending proceedings).

[^9]: We therefore disagree with Verizon that Section 11 mandates
    Commission review of every rule or regulation issued under the
    Communications Act, without limitation. *See* Verizon Reply Comments
    at 1.

[^10]: *In the Matter of the 2000 Biennial Regulatory Review*, CC Docket
    No. 00-175, Report, 16 FCC Rcd 1207, 1209 ¶ 9 (2001) (*2000 Biennial
    Review*).

[^11]: *See 2002 Biennial Review Public Notices*, *supra* note 5
    (encouraging parties to comment on or recommend changes to rules
    that might enable the Commission to operate more efficiently and
    effectively, and noting that the Commission expects to continue to
    go beyond the statutory requirements).

[^12]: Reply Comments of Covad Communications, WC Docket No. 02-313
    (Covad Reply Comments), at 2 (arguing that it would be a mistake for
    the Commission to address issues pending in other dockets separately
    and redundantly in the biennial review); Reply Comments of Time
    Warner Telecom, WC Docket No. 02-313, at 1 (claiming that there is
    no need to address the regulations applicable to broadband service
    provided by ILECs and prohibitions under Section 272 in the biennial
    review proceeding, as they are being addressed comprehensively in
    separate Commission proceedings); *see also* AT&T Reply Comments at
    1.

[^13]: Where appropriate, Further Notices could be issued to expand the
    scope of such pending rulemakings.

[^14]: For example, the Wyoming PSC argues that if the Commission
    continues to conduct a broad inquiry, beyond the statutory
    requirements in Section 11, it should invite comment on whether any
    rules should be added or expanded to best address regulators' needs.
    Wyoming PSC Comments at 2. *See also* Reply Comments of the
    Washington Utilities and Transportation Commission, WC Docket No.
    02-313, at 2. Other commenters oppose these suggestions to add new
    regulations within the biennial review context, as antithetical to
    the purpose of Section 11. *See, e.g.,* Sprint Reply Comments, WC
    Docket No. 02-313 at 1; Reply Comments of the Competitive Universal
    Service Coalition, WC Docket No. 02-313, at 2; Reply Comments of the
    United States Telecom Association, WC Docket No. 02-313, WT Docket
    No. 02-310 (USTA Reply Comments), at 2.

[^15]: *2000 Biennial Review*, 16 FCC Rcd at 1213 ¶ 19.

[^16]: *See* 47 U.S.C. § 161(a)(2).

[^17]: *See* Verizon Comments at 3, CTIA Comments at 3; BellSouth Reply
    Comments~~,~~ at 1; Sprint Reply Comments, WT Docket No. 02-310, at
    2; *but see* AT&T Reply Comments at 6-7. AT&T vehemently disagrees
    with this reading of Section 11. AT&T contends that Section 11 only
    requires the Commission to review its rules to determine whether
    they remain "consistent with" or "useful in" the public interest.
    *Id.* To the extent Verizon argues that Section 11 contemplates
    automatic repeal, we address that interpretation in Part II.C
    *infra*.

[^18]: 280 F.3d 1027 (D.C. Cir. 2002); *reh'g granted in part*, 293 F.3d
    537 (D.C. Cir. 2002) (*Fox*).

[^19]: 280 F.3d at 1050 (holding that under the correct standard set
    forth in Section 202(h), "a regulation should be retained only
    insofar as it is necessary in, not merely consonant with, the public
    interest").

[^20]: 293 F.3d at 540 (agreeing with the Commission that a discussion
    of the meaning of "necessary in the public interest\" was not
    essential to its decision to remand the national television station
    ownership rule and to vacate the cable and broadcast cross-ownership
    rule). We note that the language of Section 202(h) is not identical
    to Section 11. Section 202(h) states:

    > The Commission shall review its rules adopted pursuant to this
    > section and all of its own­ership rules biennially as part of its
    > regulatory reform review under section 11 of the Com­munications
    > Act of 1934 and shall determine whether any of such rules are
    > necessary in the public interest as the result of competition. The
    > Com­mis­sion shall repeal or modify any regulation it deter­mines to
    > be no longer in the public interest.

    We recognize that Section 202(h), unlike Section 11, uses the term
    "necessary" only in its "review" requirement and not in its "repeal
    or modify" requirement. We do not think that difference is
    significant given what we believe "necessary in the public interest"
    means. However, the question of the appropriate standard under
    Section 202(h) of the Act is squarely presented in the Commission's
    biennial review of its ownership rules. *See In the Matter of 2002
    Biennial Regulatory ReviewReview of the Commission's Broadcast
    Ownership Rules and Other Rules Adopted Pursuant to Section 202 of
    the Telecommunications Act of 1996*, MB Docket No. 02-277, Notice of
    Proposed Rulemaking, 17 FCC Rcd 18503, 18510-11 ¶¶ 16-18 (2002)
    (seeking comment on the statutory language of Section 202(h) of the
    1996 Act and the D.C. Circuit's interpretations of that language in
    *Fox* and *Sinclair Broadcast Group v. FCC*). We therefore will
    address the standard of review contemplated by Section 202(h) in
    that context.

[^21]: 293 F.3d at 540 ("\[W\]e accept the Commission's alternative
    invitation to . . . leave this question open."). The dissent
    suggests that the reasoning of the *Fox* panel in its original
    decision, which was excised by the Court on rehearing, is ultimately
    persuasive. Dissent, at 4-5 (arguing that in its original decision,
    the *Fox* panel held that the Commission applied \"too lenient a
    standard\" in conducting its biennial review of media ownership
    regulations and that \"a regulation should be retained only insofar
    as it is necessary in, not merely consonant with, the public
    interest.\"). As we argued in our petition for rehearing, this
    holding is not compelled by the statute or its legislative history.
    Moreover, it would require the Commission to conclude that Congress
    intended either to modify fundamentally the statutory public
    interest standard (without any legislative history to that effect)
    or to create a dysfunctional scheme in which the agency could adopt
    rules upon finding them to serve the public interest, but could
    retain them for only two years unless they can be shown to meet a
    higher standard of being \"essential or indispensable.\" *See*
    Petition for Rehearing or Rehearing *En Banc*, at 5, 10; *see*
    *also* discussion *infra* at ¶ 18.

[^22]: *See CBS, Inc. v. FCC*, 453 U.S. 367, 377 (1981), *quoting Reiter
    v. Sonotone Corp.*, 442 U.S. 330, 337 (1979) ("starting point in
    every case involving statutory construction is the 'language
    employed by Congress'"); *see also Northwest Airlines, Inc. v. FAA*,
    14 F.3d 64, 69 (D.C. Cir. 1994) (same).

[^23]: *See, e.g., Kirschbaum v. Walling*, 316 U.S. 517, 525-26 (1942)
    (in determining the scope of the Fair Labor Standards Act, term
    "necessary" would encompass employees whose duties were
    "indispensable" and "essential").

[^24]: *See National Railroad Passenger Corp. v. Boston & Maine Corp.*,
    503 U.S. 407, 418-19 (1992) (Interstate Commerce Commission
    reason­ably inter­preted the term "required" in the con­demnation
    provisions of a statute as meaning "use­ful or appropriate" rather
    than "indispen­sable" where the former interpre­tation was consistent
    with the statute as a whole); *Morgan v. Commonwealth of Virginia*,
    328 U.S. 373, 377-78 (1946) (state legislation "invalid if it unduly
    burdens commerce in matters where uniformity is necessary in the
    constitutional sense of useful in accomplishing a permitted
    purpose"); *Armour & Co. v. Wantouk*, 323 U.S. 126, 129-30 (1944)
    (term "necessary" in the Fair Labor Standards Act, in context, means
    reasonably necessary to production, and not "indispensable,"
    "essential," or "vital"); *McCulloch v. Maryland*, 17 U.S. (4
    Wheat.) 316, 413 (1819) (term "necessary" in the "necessary and
    proper" clause of the U.S. Constitution means "convenient, or
    useful," and does not limit congressional power to the "most direct
    and simple" means available; noting that "to employ the means
    necessary to an end, is generally understood as employing any means
    calculated to produce the end, and not as being confined to those
    single means, without which the end would be entire unattainable.").
    *See also* *Indep. Ins. Agents of Am., Inc. v. Hawke*, 211 F.3d 638
    (D.C. Cir. 2000) (term "necessary" in the National Bank Act means
    "convenient" or "useful"); [Black's Law Dictionary]{.smallcaps} 1029
    (6^th^ ed. 1990) (The word necessary "must be considered in the
    connection in which it is used, as it is a word susceptible of
    various meanings. It may import absolute physical necessity or
    inevitability, or it may import that which is only convenient,
    useful, appropriate, suitable, proper, or conducive to the end
    sought.").

[^25]: *See, e.g.,* Verizon Comments at 3--4; Sprint Reply Comments, WT
    Docket No. 02-310, at 2. We note further that other provisions of
    the Communications Act contain similar language using the terms
    "necessary," "required," and "necessity." But those provisions have
    been construed to require the Commission to demonstrate that the
    rules it adopts advance legitimate regulatory objectivesnot that
    they are "necessary" in the sense of indispensable. *E.g.,* 47
    U.S.C. § 154(i) (FCC "may . . . make such rules and regulations, . .
    . not inconsistent with this Act, as may be necessary in the
    execution of its functions."); 47 U.S.C. § 303(f), 303(r) (the
    Commission "as public convenience, interest, or necessity requires,"
    shall adopt rules "necessary to prevent interference between
    stations and to carry out the provisions of this Act"). *See, e.g.,
    FCC v. Nat'l Citizens Comm. for Broad.*, 436 U.S. 775, 793 (1978)
    (FCC authority under Sections 154(i) and 303(r) to adopt regulations
    "necessary in the execution of its functions" and "necessary to
    carry out the provisions of this Act" only requires that Commission
    regulations be based on consideration of permissible factors and be
    otherwise reasonable).

[^26]: *See, e.g., Conroy v. Aniskoff*, 507 U.S. 511, 515 (1993)
    (statute must be read as a whole, since the meaning of statutory
    language, plain or not, depends on context).

[^27]: Preamble to Telecommunications Act of 1996, Pub. L. No. 104-104,
    110 Stat. 56 (1996) ("An Act to promote competition and reduce
    regulation in order to secure lower prices and higher quality
    services for American telecommunications consumers and encourage the
    rapid deployment of new telecommunications technologies."). For
    example, Section 271 of the 1996 Actwhich requires incumbent LECs
    to comply with a competitive checklist before entering the long
    distance market in their regionssignals Congress's intent for
    deregulation to follow meaningful competition. *See* 47 U.S.C.
    § 271(c)-(d). Similarly, the legislative history of Section 653
    notes "the development of competition and the operation of market
    forces mean that government oversight and regulation can and should
    be reduced." H. R. Conf. Rep. No. 104-458, at 178 (1996).

[^28]: H. R. Conf. Rep. No. 104-458, at 185 (1996) (emphasis added).

[^29]: *Id.*

[^30]: While the dissent argues that a higher standard of
    review―indispensable, essential, or absolutely required―is most
    consistent with the statute's language, this interpretation is
    inconsistent with Congress's inclusion of the words "no longer" in
    the text of Section 11 and in the legislative history. The mandate
    of Section 11, that the Commission determine whether a covered
    regulation is "*no longer* necessary in the public interest,"
    presupposes that each such regulation was once "necessary in the
    public interest." Contrary to the dissent's interpretation, our
    grant of rulemaking authority under the Communications Act does not
    require the Commission to promulgate rules pursuant to an
    indispensability standard and we have not done so. *See supra* note
    25 (discussing the Commission's rulemaking authority under Sections
    201(b), 303(f), 303(r) and 154(i) of the Communications Act and
    noting that under these grants of rulemaking authority the
    Commission need not establish that its rules are indispensable). As
    such, we see no evidence that Congress intended to create a higher
    standard of review. Rather, we believe that Congress meant what it
    said, that those regulations rendered *no longer* necessary as the
    result of competition should be modified or eliminated.

[^31]: 47 U.S.C. § 201(b). Section 201(b) is a 1938 amendment to the
    Communications Act of 1934 which establishes the Commission's basic
    rulemaking authority over services and charges of communications
    com­mon carriers, and provides that the agency "may prescribe such
    rules and regulations as may be *neces­sary in the public interest*
    to carry out the provisions of this chapter." Our interpretation of
    the Section 11 standard is consistent with Supreme Court precedent
    interpreting Section 201(b). In *Iowa Utilities Board*, the Supreme
    Court read the language of Section 201(b) as a "general grant of
    rulemaking authority," that extended to the implementation of the
    local competition provisions of the 1996 Act. 525 U.S. at 378
    (noting that it is implausible to assert that the 1996 Congress was
    unaware of the general grant of rulemaking authority contained
    within the Communications Act); *New York v. FCC*, 267 F.3d at
    100-01. In construing Section 11, *Iowa Utilities Board* is notable
    not only for what it says, but also what it omits. The question at
    issue was the scope of the Commission's rulemaking authority*i.e.,*
    whether primary authority to implement the local competition
    provisions of the 1996 Act belonged to the States rather than to the
    Commission. *Iowa Utilities Bd.*, 525 U.S. at 374. In rejecting this
    argument, the Supreme Court characterizes the language of Section
    201(b), which includes the phrase "necessary in the public
    interest," not as a limitation on the FCC's authority, but a
    confirmation of it. *Id.* at 378 ("We think that the grant in
    § 201(b) means what it says: The FCC has rulemaking authority to
    carry out the 'provisions of this Act'").

[^32]: The dissent focuses on the word "may" in Section 201(b) to argue
    that the standard for adopting a rule is more lenient than the
    standard for retaining it under Section 11.  Dissent, at 2, 6. This
    approach is analytically flawed. First, it ignores the fact that the
    Commission in either role and under either provision is making
    predictive judgments as to the \"necess\[ity\]\" for a particular
    rule. Thus, in adopting a rule under Section 201(b) the Commission
    is making a predictive judgment that the rule is necessary \"to
    carry out the provisions of the Act.\" In the biennial review
    context, the Commission makes the same kind of predictive judgment:
    whether, in the light of the current competitive environment, the
    rule continues to be necessary to achieve the stated aims.   In
    neither case is the Commission held to certain proof: It would be
    impossible in all but the most obvious cases to find and assert with
    absolute certainty that a rule is no longer necessary to achieve its
    ends. 

    Second, the dissent\'s focus on the word "may" in Section
    201(b) still does not explain the crucial language in Section 11
    that requires the Commission to determine whether a rule "is *no
    longer* necessary in the public interest."   Dissent, at 6 n.14.
    While in the Section 11 context, the Commission has had some
    experience with the rule and may have a more enlightened basis for
    evaluating it, the judgment essentially remains a predictive
    one---whether, in the light of new competition, the rule \"no
    longer\" is necessary in the public interest.  If Congress had
    intended the Commission to apply a different standard in evaluating
    rules under Section 11 than in adopting them, presumably it would
    have used two clearly distinct standards as opposed to the same
    standard with different verbs---or at least provided legislative
    history making clear that the identical words in Sections 201(b) and
    11 mean different things. There is simply nothing in the legislative
    history to suggest a meaningful distinction between Section 201(b)'s
    use of the language "may be necessary" and Section 11\'s use of the
    language "is no longer necessary" because the fundamental standard,
    "necessary in the public interest" remains the same. The dissent's
    inference to the contrary cannot bear its analytical weight.

[^33]: Indeed such a construction would effectively render Section 11 an
    absurdity, a result contrary to established principles of statutory
    construction. *See, e.g., Green v. Bock Laundry Mach. Co.,* 490 U.S.
    504 (1989). Other provisions of the Communications Act also employ
    the phrase "necessary in the public interest." *See* 47 U.S.C.
    § 159(b)(1)(A) (regulatory fees based on "factors that the
    Commission determines are necessary in the public interest"); 47
    U.S.C. § 215(a) (FCC report to Congress on whether legislation
    should be enacted authorizing agency to adopt certain regulations
    governing certain transactions between common carriers "as it shall
    prescribe as necessary in the public interest"). However, the term
    "necessary in the public interest" has not been judicially
    interpreted in the context of these statutory provisions. The
    Supreme Court has recognized that Congress granted the Commission
    broad discretion in determining how to effectuate the public
    interest goals of the Act so long as its determinations were based
    on consideration of permissible factors and \[are\] otherwise
    reasonable. *See FCC v. WNCN Listeners Guild*, 450 U.S. 582, 594
    (1981).

[^34]: Petition for Rulemaking of the Cellular Telecommunications &
    Internet Association, July 25, 2002 (CTIA Rulemaking Petition) at 3;
    *see also* Sprint Reply Comments, WT Docket No. 02-310, at 2.

[^35]: 525 U.S. 366.

[^36]: 47 U.S.C. § 251; 525 U.S. at 387-89.

[^37]: The Court likewise held that the Commission improperly construed
    the "impair" standard for network elements, which considers whether
    an incumbent LEC\'s failure to provide access to a network element
    would "impair" the ability of the telecommunications carrier seeking
    access to provide the services that it seeks to offer. 525 U.S. at
    388-90.

[^38]: *Id.* at 390.

[^39]: 205 F.3d 416 (D.C. Cir. 2000).

[^40]: *Id*. at 422.

[^41]: *Id*. at 423 (emphasis in original).

[^42]: *Sinclair Broadcast Group v. FCC*, 284 F.3d 148 (D.C. Cir. 2002)
    (*Sinclair*). The local television ownership rule under review
    allowed common ownership of two television stations in the same
    local market if one of the stations was not among the four highest
    ranked stations in the market and eight independently owned,
    full-power, operational television stations would remain in that
    market after the merger.

[^43]: *See id.* at 160-61.

[^44]: *Id.* at 160.

[^45]: *Id.* at 164.

[^46]: *See, e.g.,* CTIA Rulemaking Petition at 1, 4; Further Comments
    of CTIA, WT Docket No. 02-310, at 2.

[^47]: The dissent\'s contrary reading of the standard of review under
    Section 11 is based on at least two misconceptions. Contrary to the
    dissent's characterization, there is no simplistic meaning of the
    term "necessary." This Report recognizes cases interpreting the term
    "necessary" as "useful" as well as those concluding that the term
    means "indispensable." See discussion *supra* at ¶ 15. The very
    existence and number of these cases underscores the importance of
    context in interpreting Section 11.

    The dissent also argues that our interpretation renders Section 11
    meaningless. But, we clearly do not propose, as the dissent
    suggests, "simply to rest on the ground that the regulation at issue
    served some public interest purpose and that no one has proved that
    is no longer the case." Dissent, at 8. Nor do we suggest that it is
    appropriate to forego a "substantive and factual examination of the
    regulation and its effects." *Id.* To the contrary, the process
    described in this biennial review is a fact-intensive, on-going one.
    Report, *supra* at ¶ 3; *see generally*, Staff Reports. As this
    Report explains, Section 11 requires the Commission to re-examine
    the need for each covered regulation biennially and to make an
    affirmative finding in the biennial review process that a rule is
    needed to further the public interest, something that would not
    otherwise have been required. Report, *infra* at ¶¶ 24, 26 (noting
    that the plain text and legislative history of section 11
    contemplates a thorough review and obligates the Commission to
    reassess constantly the state of competitionan obligation the
    majority\'s order and accompanying staff reports faithfully
    reflect).

[^48]: 47 U.S.C. § 161(a)(2) (emphasis added).

[^49]: H. R. Conf. Rep. No. 104-458, at 185 (1996) (emphasis added).

[^50]: *See Fox,* 280 F.3d at 1044 (faulting the Commission, in the
    Section 202(h) context, for not sufficiently analyzing the state of
    competition in the television industry).

[^51]: In a similar context, the D.C. Circuit concluded that "\[a\] rule
    may be retained if it is necessary 'in the public interest'; it need
    not be necessary specifically to safeguard competition." *See*
    *Fox,* 280 F.3d at 1052.

[^52]: *See* Verizon Reply Comments at 4-5; Sprint Reply Comments, WT
    Docket No. 02-310, at 2.

[^53]: *Id.*

[^54]: Verizon Reply Comments at 4-5.

[^55]: USTA Reply Comments at 2; Comments of the National
    Telecommunications Cooperative Association (NTCA), WC Docket No.
    02-313, at 2.

[^56]: Wyoming PSC Comments at 2.

[^57]: AT&T Reply Comments at 3; Covad Reply Comments at 2.

[^58]: *See* discussion Part II.A *supra*.

[^59]: 47 U.S.C. § 160.

[^60]: Verizon Comments at 7. Cingular also contends that the
    Commission's biennial review decisions must be based on relevant
    factors and must articulate a satisfactory explanation for the
    agency's actions. Comments of Cingular Wireless, IB Docket No.
    02-309, at 4.

[^61]: Verizon Comments at 7.

[^62]: In *Fox*, the court reviewed the Commission's determination to
    retain the national television station ownership rule and faulted
    the Commission for its failure to sufficiently assess the state of
    competition in relevant markets. *Fox*, 280 F.3d at 1043-44.

[^63]: *See id.* at 1048 (holding that Section 202(h) carries with it a
    presumption in favor of repealing or modifying the ownership rules).

[^64]: S. Rep. No. 104-23, at 49 (1995) (emphasis added).

[^65]: H. R. Conf. Rep. No. 104-458, at 185 (1996).

[^66]: *Fox*, 280 F.3d at 1049.

[^67]: *See, e.g.,* Verizon Comments at 7-8; Verizon Reply Comments at
    4; USTA Reply Comments at 2.

[^68]: *See 2000 Biennial Review,* 16 FCC Rcd at 1213 ¶ 12.

[^69]: 47 U.S.C. § 161(b).

[^70]: Congress could have created a deadline for completing the
    regulatory actions contemplated by Section 11(b), as it did in
    Section 251(d) and Section 10 of the 1996 Act. Instead, Section 11
    merely directs the Commission to commence a review within
    even-numbered years. We also note, in this regard, that the
    Commission must comply fully with the requirements of the
    Administrative Procedure Act, which would prove a very difficult
    task within the timeframe proposed by commenters. Moreover, even
    were a statutory deadline missed, where Congress does not specify
    otherwise, agencies do not lose their power to act after the
    statutory deadline. *See Brock v. Pierce County*, 476 U.S. 253, 260
    (1986); *Gottlieb v. Pena*, 41 F.3d 730, 737-738 (D.C. Cir. 1994).
    We note further that where Congress intends the failure to meet a
    deadline to have a regulatory consequence, it is quite able to
    indicate its intent. *See, e.g*., 47 U.S.C. § 160(c) (failure to act
    on forbearance petition within statutory period causes it to be
    granted by operation of law).

[^71]: We also decline to adopt two proposals proffered by USTA to
    create formal deadlines for Commission action under Section 11. USTA
    suggests that rules identified for elimination in a biennial review
    would automatically sunset within 90 days, unless a petition to
    retain the rule is filed, and that biennial review rulemaking
    proceedings be initiated and completed within 90 days of the
    Commission's determination under Section 11(a). USTA Comments at 3.
    Neither the sunset procedure nor the one-size-fits-all, 90-day
    rulemaking timeframe is required by Section 11. While the Commission
    is committed to timely biennial reviews under Section 11, from a
    practical standpoint, these approaches could inadvertently prolong
    the biennial review and would place unnecessary administrative
    burdens on Commission staff.

[^72]: 47 C.F.R. § 1.115.

[^73]: *McCulloch v. Maryland,* 17 U.S. (4 Wheat) 316, 413 (1819).

[^74]: Report at para. 15 n.25.

[^75]: *See, e.g.*, *Green v. Bock Laundry* *Mach. Co.*, 490 U.S. 504
    (1989).

[^76]: The Dissent argues that the Commission's obligation to act in the
    public interest when adopting rules is based on "predictive"
    judgments and therefore is more lenient than the indispensability
    standard the dissent proffers for judgments made during the biennial
    review. This argument is unavailing at two levels. First, the
    dissent's focus on the word "may" in section 201(b) simply fails to
    respond to our point that the use of "*no longer* necessary in the
    public interest" clearly indicates that Congress intended the same
    substantive standard to apply to rule adoptions and rule
    revocations. If Congress had wanted to establish a different
    standard for revocations, it would not have used precisely the same
    words ― "necessary in the public interest" ― that it used in section
    201(b), and it presumably would have provided some hint of such an
    intent in the legislative history. Second, the dissent's argument
    ignores the fact that the Commission must make predictive judgments
    when it adopts rules *and* when it decides whether to retain a rule
    in light of the competitive environment. In neither case is the
    Commission required to "prove" the validity of its judgments, nor
    could it be as a practical matter. Rather, the Commission's
    obligation in all contexts is to make reasonable predictive
    judgments about a rule's consistency with the public interest.

[^77]: *See, e.g.*, H.R. Conf. Rep. No. 104-458 at 185 (Jan. 31, 1996).

[^78]: Oddly, the Dissent seems to suggest that in order to be
    intellectually pure in our reading of Section 11, the majority is
    required in each biennial review to retain rules that no longer
    serve the public interest as a result of factors other than
    competition. The Dissent argues that our suggestion that these rules
    too should be eliminated or modified weakens our interpretation of
    the underlying statute. We will not be bound up in such
    impracticalities of form over substance. Although for debate
    purposes we understand the assertion, the practical imperatives of
    the Commission's work requires that whenever outmoded rules are
    discovered, they should be amended to better serve the public
    interest.

[^79]: Preamble to the Telecommunications Act of 1996, Pub. Law. No.
    104-104, § 202, 110 Stat. 56 (1996).

[^80]: 47 U.S.C. § 161(a).

[^81]: *Id.* § 161(b).

[^82]: *See* Separate Statement of Commissioner Kevin J. Martin, *Year
    2000 Biennial Regulatory Review -- Amendment of Part 22 of the
    Commission's Rules To Modify or Eliminate Outdated Rules Affecting
    the Cellular Radiotelephone Service and other Commercial Mobile
    Radio Services*, Report and Order, WT Docket No. 01-108 (adopted
    Aug. 8, 2002); Separate Statement of Commissioner Kevin J. Martin,
    *Verizon Wireless's Petition for Partial Forbearance from the
    Commercial Mobile Radio Services Number Portability Obligation*,
    Memorandum Opinion and Order, WT Docket No. 01-184, CC Docket No.
    95-116 (adopted July 16, 2002); Separate statement of Commissioner
    Kevin J. Martin, *Implementation of the Cable Television Consumer
    Protection and Competition Act of 1992; Development of Competition
    and Diversity in Video Programming Distribution: Section 628(c)(5)
    of the Communications Act; Sunset of Exclusive Contract
    Prohibition*, Report and Order, CS Docket No. 01-290 (adopted June
    13, 2002).

[^83]: *See* Report ¶¶ 15, 17-18.

[^84]: *Id.* ¶ 18 n.35.

[^85]: Separate Statement of Chairman Powell and Commissioner Abernathy;
    *see* Report ¶¶ 23-27.

[^86]: Separate Statement of Chairman Powell and Commissioner Abernathy.

[^87]: 47 U.S.C. § 201(b) (emphasis added).

[^88]: *See also*, *e.g.*, *Hagans v. Lavine*, 415 U.S. 528, 533, n.5
    (1974); *United States v. L.A. Tucker Truck Lines, Inc.*, 344 U.S.
    33, 37-38 (1952).

[^89]: Of the other cases relied upon by the majority, none of them
    address the meaning of "necessary" in the 1996 Act, one of them does
    not address the term "necessary" at all (*see National R.R.
    Passenger Corp. v. Boston & Maine Corp.*, 503 U.S. 407, 418-19
    (1992)), and most were decided prior to 1947. *See* Report ¶ 15
    n.25. Most importantly, none of the majority's cases involve a
    deregulatory provision like section 11, which, as discussed below,
    is a significant factor in interpreting the meaning of the
    provision's terms.

[^90]: A*ccord* *Circuit City Stores, Inc. v. Adams*, 532 U.S. 105, 119
    (2001); *PanAmSat Corp. v. FCC*, 198 F.3d 890, 895 (D.C. Cir. 1999).

[^91]: S*ee also Department of Revenue of Oregon v. ACF Indus., Inc*.,
    510 U.S. 332, 340 (1994) (It is an "elementary canon of construction
    that a statute should be interpreted so as not to render one part
    inoperative.") (citation and quotation marks omitted).

[^92]: The language of section 201(b) also answers the majority's
    argument based on section 11's use of the phrase "*no longer*
    necessary in the public interest": it argues that the phrase "'*no
    longer* necessary' clearly implies that such regulations were once
    'necessary in the public interest.'" Separate Statement of Chairman
    Powell and Commissioner Abernathy; *see also* Report ¶ 17 n.32.
    Under section 201(b), however, the Commission must determine that a
    rule "*may* be necessary in the public interest" in order to adopt
    it in the first instance. Section 11's mandate to repeal or modify
    rules "*no longer* necessary in the first instance" simply
    acknowledges that the rule "may" have been necessary in the public
    interest previously.

[^93]: *See also* *National Broadcasting Co. v. United States*, 319 U.S.
    190, 225 (1943) ("If time and changing circumstances reveal that the
    'public interest' is not served by application of the Regulations,
    it must be assumed that the Commission will act in accordance with
    its statutory obligations.").