August 11, 1999

**SEPARATE STATEMENT OF COMMISSIONER MICHAEL K. POWELL, DISSENTING**

*In the Matter of Petition of Ameritech Corporation for Forbearance from
Enforcement of Section 275(a) if the Communications Act, as Amended, CC
Docket No. 98-65, Memorandum Opinion and Order.*

There are quite a few problems with this Order, both in terms of what it
says and what it does not say. For starters, the Order misinterprets and
misapplies section 10\'s public interest prong by shifting an
unsubstantiated burden to the petitioner and applying the wrong
standard. Specifically, the item says that in order to meet this
forbearance criterion (section 10(a)(3)), a petitioner must explain how
the benefits of a statutory provision can be attained in the event of
forbearance.[^1] As I have asserted in prior statements, the language of
section 10 places on the FCC a greater burden to demonstrate that all
three prongs of the forbearance test are or are not satisfied, whether
it be a rule or a statutory provision.[^2] *The majority apparently now
believes that it can summarily dismiss forbearance petitions, with mere
passing reference to only one of the congressionally mandated prongs of
analysis. It makes no effort to explain the benefits of section 275(a).
Instead, the majority ignores the public interest benefits of
forbearance asserted by Ameritech, fails to balance them against the
purpose of section 275(a) [and]{.underline} invents a new public
interest principle.*[^3]

*This new principle, suggested by the alarm industry, would recognize
that we are dealing with an act of Congress passed a relatively short
time ago (1996) which sunsets a little more than*

*a year from now. It would require that Ameritech show that there are
"new or unanticipated circumstance\[s\] that might have persuaded
Congress to adopt an earlier sunset."*[^4] *Yet, nothing in the text or
legislative history of section 10 requires or suggests "changed
circumstances" as a prerequisite to forbearance of a statutory
provision. Nor has the Commission ever employed this standard for
denying forbearance and the item cites none. So, where does this new
standard come from?*

#### ***Apparent Constitutional Concerns Are Not A Basis For Failing To Follow Congressional Direction.*** 

*AICC argues that failure to read in a requirement that circumstances
must be shown to have changed before forbearing from a statutory
provision would constitute an unconstitutional delegation of authority
to the FCC. Perhaps out of this concern -- and I can only surmise since
it is not addressed -- the Order summarily dismisses the petition to
forbear from a statutory provision, stating flatly that nothing has
changed since its adoption. I, too, find something disquieting about
Congress delegating broad authority to an independent agency to sweep
away a legislative act, particularly where little has changed since the
time the legislative act was consummated. But, my discomfort is no
greater than that I feel with respect to the extraordinarily broad
authority we regularly invoke to promulgate rules or expand regulatory
coverage beyond the express terms of statutes. Moreover, regardless of
our constitutional concerns with the statute, we are duty bound to
comply with clear congressional directives.* [^5]

*Based on my brief review of precedent in this area, I believe that it
is quite questionable that a court would find section 10 to be an
unconstitutional delegation of authority, or otherwise contravene the
separation of powers, under the long line of applicable judicial
precedent. In order to avoid a delegation infirmity, Congress need only
set out an "intelligible principle to which the person or body
authorized \[to act\] is directed to conform. . ."*[^6] *With respect to
section 10, Congress has provided a three-prong analysis to guide our
forbearance decisions. And with respect to the final \"public interest\"
finding, Congress has offered specific guidance as to the things that
\"shall\" be taken into consideration. Specifically, Congress commands
the Commission to consider whether forbearance from enforcing the
provision or regulation will promote competitive market conditions,
including the extent to which such forbearance will enhance competition
among providers of telecommunications services. 47 U.S.C. § 160(b). If
the Commission determines that forbearance will promote competition
among providers of telecommunications services, that determination may
be the basis for a Commission finding that forbearance is in the public
interest.*

*In my attempt here to defend section 10 from this constitutional attack
by AICC, which the majority does not do, I cannot resist making the
observation that if section 10 is constitutionally suspect on this
basis, many of the other standards presently applied to justify our
[regulatory]{.underline} actions are as well. For example, the "public
interest, convenience and necessity" standard is unbounded yet has been
upheld against constitutional attack. See*, *e.g.*, *FCC v. Pottsville
Broadcasting Co.*, 309 U.S. 134, 138 (1940); *National Broadcasting Co.
v. United States,* 319 U.S. 190 (1943). The Commission has also reached
for \"ancillary jurisdiction\" or other broad \"necessary and proper\"
delegations as a basis for regulating the cable industry and, more
recently, asserted such plenary power in an unconstrained manner to
extend coverage of section 255 to non-telecommunications services and
the 1996 Act to private building owners and managers. I personally have
never fully agreed with the courts\' apparent sanctioning of such broad
grants, but such decisions are the law. *See, e.g*., *Texas Office of
Public Utility Counsel v. FCC*, 1999 WL 556461 (5^th^ Cir. 1999)
(holding that section 4(i) of the Act permits support of non-
telecommunications carriers providing internet access and internal
connections to schools and libraries as "necessary to fulfill \[the
Act\'s\] primary directives.")

I am disturbed to note, however, that broad grants of authority to
impose new regulations often proceed with little hesitation, but in the
application of a broad grant to deregulate like section 10, we suddenly
(apparently) give in to a concern about unconstitutional delegations of
authority. Moreover, I disagree that the Commission can ignore a
congressional directive because a party has argued that such directive
might be unconstitutional. Nor do I believe it is free to import
additional criterion, which are not necessary to cure any potential
constitutional infirmity. But, ironically, this Order short shrifts the
congressionally crafted \"intelligible principles\" in section 10. That
is, arguably the allegiant application of the three-prong test set out
in section 10 is essential in order not to usurp unconstrained
legislative power which might give rise to separation of power concerns.

Yet, here (as we have done before over my objections), the item
summarily dismisses a properly presented and well-supported forbearance
petition, resting exclusively on only one of the three guiding
principles set out by Congress -- as applied the apparently broad,
catch-all public interest prong. More disturbingly, as noted above, the
application of that prong in this case fails to take into account the
specific direction to consider the promotion of competition when
evaluating this basis of decision. Rather, the item perpetuates an
open-ended notion of \"public interest,\" to import (at the eleventh
hour) new and novel additional requirements.

**\"Changed Circumstances.\"**

There is no attempt to even find "changed circumstances" or apply this
new test in this Order. Even if "changed circumstances" were relevant,
can we not point to the circumstances facing Ameritech and SBC in their
merger (in which the alarm industry is requesting that we require
divestiture of all of Ameritech\'s alarm monitoring assets because SBC
is not grandfathered)? Can we not rely on the implementation on our
non-structural safeguards or the other safeguards that apply to other
LECs in section 275? Can not we point to the fact that the Commission\'s
own interpretation of section 275, after a loss in the D.C. Circuit, has
changed, essentially putting a halt to any expansion by Ameritech\'s
alarm monitoring affiliate? No, the burden is shifted to Ameritech.

**Sections 10 and 275(a) Can Coexist.**

By its terms, section 10 unequivocally can be applied to section 275.
Forbearance must be applied to both Commission regulations and to
provisions of the Communications Act, including those added by the 1996
Act. Indeed, the statute itself in section 10(d) lists the provisions
for which forbearance is not available (excluding section 275): \"the
Commission may not forbear from applying the requirements of section
251(c) or 271 . . . until it determines that those requirements have
been fully implemented.\" 47 U.S.C. § 160(d). The Commission has already
forborne from section 272 of the 1996 Act in connection with RBOC
provision of

E-911[^7] *and reverse directory services.*[^8] *Even where the
Commission refused to forbear from section 254(g), it never mentioned
that forbearance would be impossible in view of the simultaneous
enactment of that provision and section 10.*

*I would agree that many of the points that argue for forbearance (some
of which I set forth below) were probably the case at the time section
275 was adopted. True enough, but one answer is simply because at the
same time 275 was adopted, so was section 10 and we are duty-bound to
apply it, without regard to alleged constitutional concerns. A second
answer, however, is that Congress set out a comprehensive scheme in the
1996 Act which required many complex judgments that it did not believe
it could responsibly make without thorough analysis. Also, there are a
lot of deals and compromises that get into large pieces of legislation
like this. Consequently, Congress concurrently established certain bars
or limitations as starting points and delegated to the Commission the
job of carefully evaluating such provisions to see if less regulatory
devices existed to render unnecessary blanket bans against certain
activity. Indeed, the advantage of forbearance is that it requires
case-by-case evaluation, where a flat rule has dangers of being
over-inclusive. Congress may have wished to establish a default
presumption that barred entry, which could be rebutted through
forbearance in a certain case.*

*It is also important to observe that Congress understood that it could
not possibly sort through the panoply of FCC regulations and antitrust
doctrine that might assuage some of its concerns with respect to
competition. Instead, it may have chosen to direct the FCC to make such
an assessment and if convinced, following its \"intelligible
principle,\" that if the provision was unnecessary, it could forbear.
Therefore, in concluding that there must be a peaceful coexistence of
sections 10 and 275(a), the original intent of section 275 must be
fairly assessed.*

***Understanding Section 275(A) And Applying Section 10 To It.***

*The text of section 275(a) does not help explain why the RBOCs are
banned from the alarm monitoring business for five years. The conference
report and most floor statements, while attempting to explain the scope
of the grandfathering provision that applies to Ameritech, does not
discuss [why]{.underline} the growth of Ameritech\'s alarm business is
restricted in certain ways. See* S. Conf. Rep. 230, 104th Cong., 2nd
Sess. 348-50 (1996); *see also* *Alarm Industry Communications Comm. v.
FCC*, 131 F.3d 1066, 1071 (D.C. Cir. 1997). However, when you go back a
little further to try to figure out how Congress was going to handle
things that grew out of the line of business restrictions originally
imposed by the MFJ, you discover two principal concerns: (1) concern
that the incumbent could leverage its control over the \"local
bottleneck\" telephone infrastructure to gain a competitive advantage in
providing alarm monitoring services; and (2) concern by the \"small
business dominated alarm industry\" that big companies like the RBOCs
will harm competition and upset the \"level playing field.\" *See* H.R.
Rep. No. 204(i), 104th Cong., 1st Sess. 237-38 (1995); *see also* 141
Cong. Rec. S8355-56 (June 14, 1995) (statement by Senator Harkin).

Then, when one faithfully applies the prongs of section 10, it is
difficult to conclude that section 275(a)(1) is necessary to ensure just
and reasonable, nondiscriminatory rates, or (2) is necessary to protect
consumers from harm, or (3) that it is inconsistent with the public
interest to forebear, unless we want to, with full disclosure, continue
the \"public interest,\" as Senator Harkin saw it, in protecting this
competitive \"small business\" industry. We must also ask ourselves
whether there are other alternatives that could shape the implementation
of section 275(a) in a way that best matches competitive and regulatory
realities of the day. For example, we should have explored relief for
Ameritech that is prospective only so that any alleged section 275
violations could be adjudicated and proper sanctions could be imposed
for such violations (if found). Also, we should have explored
out-of-region relief, which would address the Congress\' and the alarm
industry\'s concerns about bottleneck facilities. This approach would
also show that section 10 does in fact contain limiting principles and
can be applied in a way to avoid alleged unconstitutional delegation
problems.

If we had conducted a proper section 10 analysis, I think it might have
proved sufficiently persuasive to grant, at least in part, the petition.
Perhaps the majority would not have so found. But they must, I believe,
reach that conclusion only after a full and faithful application of the
standards set forth by Congress, which they have failed to do here.
Moreover, I am disheartened by the degree to which we express reluctance
to employ broad grants for deregulatory purposes, but express little
concern when such grants are invoked for adoption or extension of new
rules. For these reasons, I respectfully dissent.

[^1]: *See* *Policy and Rules Concerning the Interstate Interexchange
    Marketplace*, CC Docket No. 96‑61, Memorandum Opinion and Order, 14
    FCC Rcd 391 (1998). The item fails to note that, even if this is the
    burden placed on proponents of forbearance, this principle was
    established in a Commission Order released more than seven months
    after Ameritech filed its petition. Ameritech would not have had a
    clue that this is what its petition needed to show. The item also
    fails to note that the Order is subject to judicial appeal and
    petitions for reconsideration.

[^2]: *See Memorandum Opinion and Order and Notice of Proposed
    Rulemaking*, Personal Communications Industry Association\'s
    Broadband Personal Communications Services Alliance\'s Petition For
    Forbearance For Broadband Personal Communications Services, 13 FCC
    Rcd 16857 (1998) (Statement of Commissioner Powell, dissenting in
    part).

[^3]:
    ###  *Nor does the item really address what the intended benefits of the alarm monitoring prohibition were. I will address this below. I note further that the item makes no attempt whatsoever to carry out the mandate of section 10(b) considering whether forbearance will promote competitive market conditions, including the extent to which forbearance will enhance competition among providers of telecommunications services.* 

    ### 

[^4]: *See* Order at ¶ 9; *see also* Comments of the Alarm Industry
    Communications Committee (AICC) at 5-8. A concern about the short
    time left in the life of this statutory provision also would have
    led me to question why we would grant such relief if it was coming
    relatively soon through operation of the sunset. However, I must
    point out that when Ameritech filed its petition, May 13, 1998, it
    was less than half-way through the life of section 275(a). A year
    plus 90 days later we are telling Ameritech to wait it out until
    February 2001. This remaining time period in a highly competitive
    industry like alarm monitoring is an eternity to companies seeking
    to grow their business and provide their public shareholders
    sustained value in a volatile market.

[^5]: *See cf.* Department of Justice Appropriation Authorization Act,
    Fiscal Year 1980, Pub. L. No. 96-132, §21(a) 93 Stat. 1049
    (requiring Attorney General to report to each House of Congress a
    determination that the Department of Justice "will refrain from
    defending any provision of law enacted by Congress . . . because of
    the position of the Department that such provision is not
    constitutional"). Congress appears to have been clear that it
    generally expects the constitutionality of its laws to be defended,
    such that it may require notification from agencies if they do not
    intend to meet this expectation.

[^6]: *J.W.Hampton, Jr., & Co. v. United States, 276 U.S. 394,* 409
    (1928). But for a recent case in the D.C. Circuit released after
    AICC filed its comments (*see American Trucking Ass\'n, Inc. v.
    EPA*, 175 F.3d 1027 (D.C. Cir. 1999)), the courts have generally
    avoided striking down acts of Congress or their implementation by
    administrative agencies under the non-delegation doctrine. *See*
    Mistretta v. United States, 488 U.S. 361, 372 (1989) (there is \"a
    practical understanding that in our increasingly complex society,
    replete with ever changing and more technical problems, Congress
    simply cannot do its job absent an ability to delegate power under
    broad general directives.\"); *see also id.* at 416 (Scalia, J.
    dissenting and noting that the Supreme Court has \"almost never felt
    qualified to second-guess Congress regarding the permissible degree
    of policy judgment that can be left to those executing or applying
    the law.\") In fact, the Court has held in only two cases that a
    statue amounted to an unconstitutional delegation of legislative
    authority, and this was over fifty years ago. *See Panama Refining
    Co. v. Ryan*, 293 U.S. 388 (1935) (holding that a provision of the
    National Industrial Recovery Act was an unconstitutional delegation
    because it allowed the President to exercise unfettered discretion
    to determine policy as to the transportation of excess oil; the
    statute failed to articulate a proper standard to govern the
    President\'s actions).

    In the other case from 1935, which AICC cites, *A.L.A. Schechter
    Poultry Corp. v. United States*, 295 U.S. 495 (1935), the Court held
    that another provision of the National Industrial Recovery Act was
    unconstitutional because it once again provided the President with
    the ability to legislate without proper congressional guidance or an
    \"intelligible principle.\" In *Schechter*, the President approved
    codes of fair competition that were developed by the industry.
    Congress had no part in the development of these codes, which had
    the force of law. The Court faulted this code-making process for
    creating a private delegation where an industry was, in essence,
    making law. I read *Schechter* as generally standing for the
    proposition that Congress may not delegate unfettered lawmaking
    authority to private parties, which section 10 of the Communications
    Act surely does not do.

    AICC also cites *Loving v. United States*, 517 U.S. 748 (1996),
    which repeats the general rule that Congress must also \"lay down by
    legislative act an intelligible principle to which the person or
    body authorized to \[act\] is directed to conform.\" *Id*. at 771
    (quoting *J.W. Hampton*, 276 U.S. at 409). The Court in *Loving*
    said that \"the intelligible-principle rule seeks to enforce the
    understanding that Congress may not delegate the power to make laws
    and so may delegate no more than the authority to make policies and
    rules that implement its statutes. *Id*. (citation omitted); s*ee
    also* AICC comments at n.4. However, in that case cited by AICC, the
    Court upheld the alleged delegation under the intelligible-principle
    rule, noting further that, since 1935, it has upheld, without
    exception, delegations under standards phrased in \"sweeping
    terms.\" *Id*. (citing *National Broadcasting Co. v. United States*,
    319 U.S. 190 (1943) (upholding delegation to the Federal
    Communications Commission to regulate radio broadcasting according
    to \"public interest, convenience, or necessity\")).

[^7]: *See* *Bell Operating Companies Petitions for Forbearance from the
    Application of Section 272 of the Communications Act of 1934, As
    Amended, to Certain Activities*, CC Docket No. 96-149, Memorandum
    Opinion and Order, 13 FCC Rcd 2627 (1998). In the Order, the Common
    Carrier Bureau granted the petitions of BellSouth and other Bell
    Operating Companies, pursuant to section 10 of the Communications
    Act, for forbearance from the application of the separate affiliate
    requirements of section 272 to their E911 services and to
    BellSouth\'s reverse search directory assistance services.

[^8]: *See Nevada Bell, Pacific Bell and Southwestern Bell Telephone
    Company Petition for Forbearance from the Application of Section 272
    of the Communications Act of 1934, As Amended, to Reverse Search
    Services,* CC Docket No. 98-193, Memorandum Opinion and Order, 1999
    WL 198878 (Apr. 9, 1999). In the Order, the Common Carrier Bureau
    granted the petitions of Nevada Bell, Pacific Bell, and Southwestern
    Bell Telephone Companies for forbearance from the application of
    section 272 of the Communications Act of 1934, as amended, to their
    electronic reverse directory services.