Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-12-01124/USCOURTS-caDC-12-01124-0/pdf.json

Parties Involved:
Cisco WebEx LLC
Intervenor for Petitioner
Federal Communications Commission
Respondent
The Conference Group, LLC
Petitioner
United States of America
Respondent
Verizon
Intervenor for Respondent
Verizon Wireless
Intervenor for Respondent

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 15, 2013 Decided July 2, 2013

No. 12-1124

THE CONFERENCE GROUP, LLC,

PETITIONER

v.

FEDERAL COMMUNICATIONS COMMISSION

 AND UNITED STATES OF AMERICA,

RESPONDENTS

CISCO WEBEX LLC,

INTERVENOR FOR PETITIONER 

VERIZON AND VERIZON WIRELESS,

INTERVENORS FOR RESPONDENTS

On Petition for Review of An Order of 

the Federal Communications Commission

Ross A. Buntrock argued the cause for petitioner. With him

on the briefs was Michael B. Hazzard.

Christopher J. Wright argued the cause for intervenor Cisco

WebEx LLC. With him on the briefs was Brita D. Strandberg.

Joel Marcus, Counsel, Federal Communications

Commission, argued the cause for respondent. On the brief were

USCA Case #12-1124 Document #1444648 Filed: 07/02/2013 Page 1 of 17
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Robert B. Nicholson and Nickolai G. Levin, U.S. Department of

Justice, Attorneys, and Sean A. Lev, General Counsel, Federal

Communications Commission, Peter Karanjia, Deputy General

Counsel, Richard K. Welch, Deputy Associate General Counsel,

and Laurel R. Bergold, Attorney.

Helgi C. Walker argued the cause for intervenors Verizon,

et al. With her on the brief were Elbert Lin, Michael E. Glover,

and Christopher M. Miller.

Before: GARLAND, Chief Judge, ROGERS, Circuit Judge,

and SILBERMAN, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge ROGERS.

ROGERS, Circuit Judge: In 2008 the Federal

Communications Commission decided that the audio bridging

services provided by InterCall, Inc. are properly classified as

“telecommunications” under the Communications Act of 1934,

as amended, and thereby obligate it and “similarly situated”

providers to contribute directly to the Universal Service Fund

(“USF”), 47 U.S.C. § 254(d). The Conference Group, joined by

intervenor Cisco WebEx, contends that the Commission 

converted an unlawful decision by the administrator of the USF

as to InterCall, Inc.’s contribution obligation into an industrywide legislative rule without adequate notice or comment, in

violation of section 553 of the Administrative Procedure Act

(“APA”), and that the Commission’s action was arbitrary and

capricious because it ignored uncontroverted facts and legal

precedent. 

The Conference Group has standing to challenge the

Commission’s decision as procedurally unlawful rulemaking,

but we conclude that there is no merit to that challenge. The

Commission’s decision involved a statutory interpretation that

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could be rendered in the form of an adjudication, not only in a

rulemaking. Because the decision was an adjudication and the 

The Conference Group was not a party, it lacks standing to

challenge the merits of that adjudication. Although the

Commission stated its decision would apply to “similarly

situated” providers, that is true of all precedents. And this court

has held that the mere fact that an adjudication creates a

precedent that could harm a non-party does not create the injuryin-fact required for Article III standing. If the Commission

applies its rule of decision for InterCall, Inc. to The Conference

Group, The Conference Group can present its substantive

arguments in its own adjudication. Intervenor Cisco WebEx’s

lack of standing is a fortiori because it claims it is not similarly

situated to InterCall, Inc. and thus can claim no injury as a

consequence of the Commission’s decision. Accordingly, we

deny The Conference Group’s petition in part and dismiss it in

part for lack of jurisdiction.

I.

The Communications Act of 1934, as amended by the

Telecommunications Act of 1996, 47 U.S.C. § 151 et seq. (“the

Act”), defines two categories of regulated entities relevant here:

telecommunications carriers and information-service providers. 

See generally Nat’l Cable & Telecomm. Ass’n v. Brand X

Internet Serv., 545 U.S. 967, 975 (2005) (“Brand X”). The Act

regulates the former as common carriers, and providers of

telecommunications services are required to contribute to the

USF. 47 U.S.C. § 254(d). It also authorizes the Commission to

impose additional regulatory obligations on non-common

carriers under its Title I ancillary jurisdiction to regulate

interstate and foreign communications. See Brand X, 545 U.S.

at 975 (citing 47 U.S.C. §§ 151–161). The Act defines

“telecommunications” as “the transmission, between or among

points specified by the user, of information of the user’s

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choosing, without change in the form or content of the

information as sent and received.” 47 U.S.C. § 153(50). Thus,

“telecommunications service” is “the offering of

telecommunications for a fee directly to the public, or to such

classes of users as to be effectively available directly to the

public, regardless of the facilities used.” Id. § 153(53). In

contrast, “information service” is “the offering of a capability

for generating, . . . or making available information via

telecommunications, and includes electronic publishing, but

does not include any use of any such capability for the

management, control, or operation of a telecommunications

system or the management of a telecommunications service.” 

Id. § 153(24).

Section 254, on universal service, provides, in relevant part: 

Every telecommunications carrier that provides

interstate telecommunications services shall contribute,

on an equitable and nondiscriminatory basis, to the

specific, predictable, and sufficient mechanisms

established by the Commission to preserve and

advance universal service. . . . Any other provider of

interstate telecommunications may be required to

contribute to the preservation and advancement of

universal service if the public interest so requires. 

Id. § 254(d) (emphases added). By regulation, the Commission

announced that, in addition to “telecommunications services”

providers such as common carriers, “[c]ertain other providers of

interstate telecommunications . . . also must contribute to the

universal service support mechanisms.” 47 C.F.R. § 54.706(a). 

Specifically: 

Interstate telecommunications include, but are not

limited to: (1) Cellular telephone and paging services;

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(2) Mobile radio services; (3) Operator services; (4)

Personal communications services (PCS); (5) Access

to interexchange service; (6) Special access service; (7)

WATS; (8) Toll-free service; (9) 900 service; (10)

Message telephone service (MTS); (11) Private line

service; (12) Telex; (13) Telegraph; (14) Video

services; (15) Satellite service; (16) Resale of interstate

services; (17) Payphone services; and (18)

Interconnected VoIP services[;] (19) Prepaid calling

card providers. 

Id. (emphasis added). Required USF contributions are based on

a provider’s projected net end-user telecommunications

revenues, id. § 54.706(b), and filed in accordance with the

Telecommunications Reporting Worksheet (FCC Form 499), id.

§ 54.711(a), (c). Since 2002 the instructions accompanying the

FCC Form 499 for annual filings have provided that “toll

teleconferencing” is subject to direct USF contributions. See

FCC Form 499-A Telecommunications Reporting Worksheet at

20 (Feb. 2002). 

The Commission has delegated administration of the USF

to the Universal Service Administrative Company (“USAC”),

see In re Changes to the Board of Directors of the National

Exchange Carrier Association, Inc. and Federal-State Joint

Board on Universal Service, 12 FCC Rcd. 18400, 18407 ¶ 11

(1997) (“Second Order on Reconsideration”). It has no policy

or interpretive role, see 47 C.F.R. § 54.702(c), and must seek

guidance from the Commission where the Act or the

Commission’s rules are unclear or do not address a particular

situation, id. Upon appeal of the USAC’s contribution

decisions, the Commission conducts de novo review of “novel

questions of fact, law, or policy.” Id. § 54.723(b). 

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In 2007, the USAC initiated an audit of InterCall, Inc. for

the purpose of determining whether it owed USF contributions. 

As self-described, InterCall, Inc. offers an audio bridging

service that “allows multiple end users to communicate and

collaborate with each other using telephone lines” by “link[ing]

multiple communications together and feed[ing] to each station

a composite audio input minus the user’s own audio.” See In the

Matter of Request for Review by InterCall, Inc. of Decision of

the Universal Service Administrator at 4, CC Docket No. 96-45

(Feb. 1, 2008) (“Request for Review”). “The audio bridge also

performs conference validation functions, collects billing and

participant information . . . and enables numerous conference

control features, including recording, delayed playback, mute

and unmute of callers and operator assistance.” Id. InterCall,

Inc. provides a “stand-alone” audio bridge service and

“purchases toll-free, international and/or local number-based

services from one or more telecommunications vendors” in

order to obtain the telecommunications input required to operate

its service. Id. at 5.

The USAC found that the audio bridging services provided

by InterCall, Inc. are toll teleconferencing services subject to

direct USF contribution obligations. See Letter from USAC to

Steven A. Augustino, Esq. (Jan. 15, 2008) (“USAC Decision”). 

InterCall, Inc. sought review by the Commission and a stay,

arguing that the USAC acted beyond its authority, and that

InterCall, Inc.’s audio bridging service is an information service

that is not obligated to make USF payments. See Request for

Review at 1, 6-10. It argued that the Commission had to

proceed by rulemaking to modify audio bridging providers’ USF

contribution requirements, id. at 23-25, and, alternatively, that

even if audio bridging services were telecommunications,

InterCall, Inc. and other stand-alone audio bridging service

providers are not subject to common carrier regulations and thus

not subject to § 254(d)’s mandatory contribution obligations, see

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id. at 12-17. The Commission issued a public notice on

February 14, 2008, seeking comment on InterCall, Inc.’s request

for review of the USAC Decision and a stay. Comments by

interested parties were due, and comments were received, by

February 25, 2008 as were reply comments due, and in fact

received, by March 3, 2008.

The Commission denied in part and granted in part

InterCall, Inc.’s request for review. In re Request for Review by

InterCall, Inc. of Decision of Universal Service Administrator,

23 FCC Rcd. 10731 (2008) (“InterCall Order”). The

Commission found that “the audio-bridging services InterCall

provides are equivalent to teleconferencing services and are

‘telecommunications’ under the Telecommunications Act of

1996 (1996 Act) and the Universal Service First Report and

Order.” InterCall Order, 23 FCC Rcd. at 10731 ¶ 1 (citing

Federal-State Joint Board on Universal Service, 12 FCC Rcd.

8776 (1997) (“Universal Service First Report and Order”), aff’d

in part, rev’d in part, remanded in part sub nom, Texas Office

of Public Utility Counsel v. FCC, 183 F.3d 393 (5th Cir. 1999),

cert. denied, 530 U.S. 1210 (2000), cert. dismissed, 531 U.S.

975 (2000)). It explained that such audio bridging services are

properly classified as “telecommunications” because “the

purpose and function of the bridge is simply to facilitate the

routing of ordinary telephone calls.” Id. at 10735 ¶ 11. As it

had “previously determined in performing a similar analysis,”

the Commission observed that “this results in no more than the

creation of the transmission channel chosen by the customer.” 

Id. (citing In re North American Telecommunications

Association Petition for Declaratory Ruling Under § 64.702 of

the Commission’s Rules Regarding the Integration of Centrex,

Enhanced Services, and Customer Premises Equipment, ENF

84-2, Mem. Op. & Order, 101 FCC 2d 349, 363 ¶ 31 (1985)

(“No. Am. Telecomm. Petition”)). 

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The Commission further found that the add-on “features

offered in conjunction with InterCall’s service are not

‘integrated,’” id., and thus “do not change a service from

telecommunications to an information service,” id. at 10735

¶ 12. Such “features perform validation functions, collect

billing and participant information, and enable the participants

to record, delete playback, mute and unmute, and access

operator assistance,” id. (citing In re Regulation of Prepaid

Calling Card Services, 21 FCC Rcd. 7290, 7295-96 ¶¶ 14-15

(2006) (“Prepaid Calling Card Order”)), and “do not alter the

fundamental character of InterCall’s telecommunications

offering so that the entire offering becomes an information

service,” id. at 10735 ¶ 13. Rather, “[c]onsistent with the

decision in the Prepaid Calling Card Order, these separate

capabilities are part of a package in which the customer can still

conduct its conference call with or without accessing these

features.” Id. They “therefore, are not sufficiently integrated

into the offering to convert the offering into an information

service.” Id. Because “[p]roviders of [telecommunications]

services must contribute directly to the USF based on revenues

from these services,” the Commission denied InterCall, Inc.’s

request to reverse the USAC Decision in that regard. Id. at

10731 ¶ 1. 

The Commission granted InterCall, Inc.’s request for 

review insofar as the USAC had required contributions based on

past revenues, and instead chose to apply its decision on a

prospective basis, partly in view of the lack of clarity regarding

the direct contribution obligations of stand-alone audio bridging

service providers. Id. at 10738 ¶ 24. The Commission directed

the USAC “to implement the findings in this order with respect

to all audio bridging service providers,” id. at 10739 ¶ 25, “and

reiterate[d] that all similarly situated providers, i.e., stand-alone

teleconferencing providers as well as integrated teleconferencing

providers, are, at a minimum, providers of telecommunications

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for the purposes of contributing to the [USF] . . . .” Id. at 10739

¶ 26. InterCall, Inc. was ordered to “contribute directly to the

USF beginning as of the calendar quarter immediately following

the next scheduled FCC Form 499-Q[uarterly] filing after the

release date of this order.” Id. at 10731 ¶ 1. The Commission

“further direct[ed] USAC to ensure that all similarly situated

audio bridging service providers contribute directly to the USF

beginning as of this same time frame.” Id. 

Other audio bridging service providers, but not InterCall,

Inc., petitioned for reconsideration and clarification. After

providing public notice and receiving comments, the

Commission denied the petitions. In re Universal Service

Contribution Methodology, 27 FCC Rcd. 898 (2012)

(“Reconsideration Order”). The Conference Group, joined by

intervenor Cisco WebEx, petitions for review of the InterCall

Order, invoking the court’s jurisdiction under 47 U.S.C. 

§ 402(a).

II.

As a threshold matter, the court must address whether

petitioner The Conference Group and intervenor Cisco WebEx

have standing to challenge the InterCall Order, as it implicates

our jurisdiction. See Am. Library Ass’n v. FCC, 401 F.3d 489,

492 (D.C. Cir. 2005); Fund for Animals, Inc. v. Norton, 322 F.3d

728, 733 (D.C. Cir. 2003) (citing Sierra Club v. EPA, 292 F.3d

895, 898 (D.C. Cir. 2002)); see also Steel Co. v. Citizens for a

Better Environment, 523 U.S. 83, 93 (1998). Neither was the

specific company whose audio bridging service was addressed

in the InterCall Order, and The Conference Group and Cisco

WebEx each has the burden of establishing its standing. See

Am. Library Ass’n, 401 F.3d at 492–93 (citing Sierra Club, 292

F.3d at 899–901). Of the three elements of standing under

Article III of the U.S. Constitution — injury-in-fact, causation,

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and redressability — the Supreme Court has instructed that the

first requires a showing of “an invasion of a legally protected

interest which is (a) concrete and particularized, and (b) actual

or imminent, not conjectural or hypothetical.” Lujan v.

Defenders of Wildlife, 504 U.S. 555, 560 (1992) (internal

citations and quotations omitted). If The Conference Group or

Cisco WebEx has shown the requisite injury, that it has shown

the other two elements is not in doubt here. 

We hold that The Conference Group has standing to

challenge the Commission’s decision as procedurally unlawful

rulemaking, but lacks standing to challenge the merits of the

decision adopted in the InterCall Order if it was an adjudication. 

In contending that the Commission engaged in unlawful

rulemaking, The Conference Group states that it “is ‘similarly

situated’ to InterCall, Inc., . . . the immediate subject of both the

USAC determination and the [InterCall] [O]rder at issue in this

case,” Pet’r. Br. at 4, as it too “provides audio, web, and video

conferencing services which allow multiple parties to

communicate with each other through an audio bridging

device,” id. at iv. It claims that it has suffered a concrete injury

because the InterCall Order “erroneously requires The

Conference Group now to make direct payments to the USF as

a provider of ‘telecommunications service’ based upon its

conference bridging service revenues, an obligation that has

significantly increased the cost of The Conference Group’s

overhead.” Id. at 14–15. For purposes of standing, the court

must assume The Conference Group would prevail on the merits

of its claim that the InterCall Order “improperly imposed new

legislative rules on the entire conference bridging industry

without providing the notice and comment safeguards required

by Section 553 of the APA,” id. at 25. See City of Waukesha v.

EPA, 320 F.3d 228, 235 (D.C. Cir. 2003) (citing Warth v. Seldin,

422 U.S. 490, 502 (1975)). So understood, The Conference

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Group has identified a cognizable harm to it as a result of the

InterCall Order in the form of additional financial costs and

regulation. See Sea-Land Serv., Inc. v. Dep’t of Transp., 137

F.3d 640, 648 (D.C. Cir. 1998). This injury-in-fact, its causation

and redressability show that The Conference Group has Article

III standing to challenge the InterCall Order as unlawful

rulemaking. The Conference Group has also established that it

has prudential standing, for “‘the interest it seeks to protect is

arguably within the zone of interests to be protected or regulated

by the statute . . . in question’ or by any provision ‘integral[ly]

relat[ed]’ to it.” Grocery Mfrs. Ass’n v. EPA, 693 F.3d 169, 179

(D.C. Cir. 2012) (quoting Nat’l Petrochem. Refiners Ass’n v.

EPA, 287 F.3d 1130, 1147 (D.C. Cir. 2002) (quoting Ass’n of

Data Processing Serv. Orgs. v. Camp, 397 U.S. 150, 153

(1970))); see Kowalski v. Tesmer, 543 U.S. 125, 129–130

(2004) (citing Warth v. Seldin, 422 U.S. 490, 499 (1975));

Clarke v. Sec. Indus. Ass’n, 479 U.S. 388, 399 (1987).

The Conference Group lacks Article III standing, however,

to challenge the merits of the InterCall Order if it was an

adjudication. The court has rejected the view that “the mere

potential precedential effect of an agency action affords a

bystander to that action a basis for complaint.” Shipbuilders

Council of Am. v. United States, 868 F.2d 452, 457 (D.C. Cir.

1989); see Am. Family Life Assurance Co. v. FCC, 129 F.3d

625, 629 (D.C. Cir. 1997) (quoting Radiofone, Inc. v. FCC, 759

F.2d 936, 939 (D.C. Cir. 1985) (Scalia, J., sep. op.)); Sea-Land

Serv., 137 F.3d at 648; Gulf Oil Corp. v. Brock, 778 F.2d 834,

838 (D.C. Cir. 1985). Because The Conference Group’s claimed

injury was due merely to the unfavorable precedent created by

the InterCall Order, its “plea is essentially, a request for judicial

advice — a declaration that a line of agency rulings should

henceforth have no precedential effect.” Shipbuilders Council

of Am., 868 F.2d at 456.

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Although “merely foreseeable future litigation resulting

from a statutory interpretation that an agency has adopted in an

adjudication is ‘alone,’— i.e., without more — too speculative

to satisfy Article III's injury-in-fact requirement,” Teva

Pharmaceuticals USA, Inc. v. Sebelius, 595 F.3d 1303, 1313

(D.C. Cir. 2010) (citing Sea-Land, 137 F.3d at 648), there are

circumstances where the court has “allowed a party to challenge

in advance an agency policy adopted via adjudication when the

prospect of impending harm was effectively certain,” id. at

1314. For instance, Teva had sought a declaratory judgment in

the district court for a mandatory injunction that the Food and

Drug Administration (“FDA”) grant its generic drug application

so as to give Teva a statutory six-month period of market

exclusivity. Absent that grant Teva faced immediate

competition from other generic drug manufacturers with no

possibility of an adequate remedy on appeal. The court held that

Teva had standing to challenge FDA’s statutory interpretation

because “[a]ny imminent deprivation of Teva’s allegedly

deserved exclusivity would be directly attributable to the FDA’s

statutory interpretation,” and a declaratory judgment would

redress its injury. Id. at 1312. 

Notably, in Teva, the FDA’s policy had been announced in

previous adjudications but Teva was not appealing the

adjudication of another party, as The Conference Group seeks

to do here. Rather, Teva brought its own action in the district

court. Moreover, in Teva the plaintiff could “point[] to a

particular imminent application of the disputed agency policy .

. . , the firmness of which is not in dispute, on a fast-arriving

date certain.” Id. at 1313. Here, The Conference Group does

not identify any imminent Commission enforcement action

against it. Finally, if the Commission decides to apply the rule

of decision in the InterCall Order to The Conference Group,

The Conference Group has the option to raise its substantive

arguments in its own adjudication. In Teva, by contrast, the

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imminent threat was not the FDA’s decision but third-party

competition whose effects on the market a reviewing court

would be unable to unscramble, and it seems unlikely that Teva

could have obtained a stay to stop this presumably lawful thirdparty conduct that the FDA declined to block. The situation

here is quite different, for The Conference Group can raise its

substantive argument before being forced to contribute to the

USF. 

Cisco WebEx’s lack of standing to challenge both the

method of adopting and the merits of the InterCall Order is a

fortiori. Cisco WebEx states that “[t]he [InterCall] Orders

addressed a service . . . that differs significantly from WebEx’s

service, as InterCall’s service provides only audio bridging and

does not include any of the other advanced capabilities

[provided by Cisco WebEx].” Cisco WebEx Intervenor Br. at

3; see Cisco WebEx Rule 28(j) letter at 2 (Apr. 11, 2013). If it

is not “similarly situated” to InterCall, Inc., then it can claim no

injury from those orders. Cisco WebEx’s brief is silent on the

question of whether it has standing, but see Sierra Club, 292

F.3d at 900, and states, as relevant, only that it “is concerned

that the [InterCall] Orders may have adopted a classification

standard that, if given precedential value, would lead to

improper future classification decisions,” id. at 3. Before the

Commission its parent corporation similarly stated regarding the

InterCall Order: “[W]e think it is clear that the Commission did

not sub silentio narrow or modify its long-standing tests for

whether a service is functionally integrated and ‘alters the

fundamental character of [a] telecommunications offering,’” and

suggested only that “the Commission would do well to reemphasize that it was merely applying existing law, not

rewriting it.” Comments of Cisco Systems, Inc. at 4 (Sept 18,

2008) (quoting InterCall Order, 23 FCC Rcd. at 10735 ¶ 13). 

These comments underscore the speculative nature of Cisco

WebEx’s “concern[].” As this court stated in Capital Legal

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Foundation v. Commodity Credit Card Corporation, 711 F.2d

253, 258 (D.C. Cir. 1983), a “sincere, vigorous interest in the

action challenged, or in the provisions of law allegedly violated,

will not do to establish standing” because to satisfy Article III

standing there must be an injury-in-fact. Cisco WebEx has

shown no “concrete and particularized” or “no[n] conjectural”

injury, Lujan, 504 U.S. at 560, stemming from the InterCall

Order.

Because neither petitioner The Conference Group, nor

Cisco WebEx as intervenor in support of petitioner, has standing

to challenge the merits raised in another party’s case, it follows

that defendant intervenor Verizon and Verizon Wireless, which

seeks to appear only to defend the merits of the Commission’s

decision in the InterCall Order, cannot have standing either. 

III.

The Conference Group contends that the Commission

converted an unlawful decision by the USAC as to one audio

bridging provider’s contribution obligation into an industry-wide

legislative rule imposing new substantive duties on all audio

bridging service providers without adequate notice and

comment, in violation of APA section 553. For the following

reasons, we hold that the statutory interpretation by the

Commission in the InterCall Order was neither a legislative nor

an interpretative rule. Rather it was simply an interpretation

given in the course of an informal adjudication. Cf. Sugar Cane

Growers Coop. of Fla. v. Veneman, 289 F.3d 89, 95–96 (D.C.

Cir. 2002); Harborlite Corp.v. ICC, 613 F.2d 1088, 1093 n.11

(D.C. Cir. 1979). 

In interpreting and administering its statutory obligations

under the Act, the Commission has very broad discretion to

decide whether to proceed by adjudication or rulemaking. See

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Qwest Services Corp. v. FCC, 509 F.3d 531, 536 (D.C. Cir.

2007); Time Warner Entm’t Co. v. FCC, 240 F.3d 1126, 1141

(D.C. Cir. 2001); see also 47 U.S.C. § 154(j). The InterCall

Order has none of the hallmarks of legislative rulemaking that

this court has identified, such as amending a prior legislative

rule or explicitly invoking the Commission’s general legislative

authority. See Am. Mining Congress v. MSHA, 995 F.2d 1106,

1112 (D.C. Cir. 1993); Fertilizer Institute v. EPA, 935 F.2d

1303, 1308 (D.C. Cir. 1991). In concluding that InterCall, Inc.

was required to make direct payments to the USF, the

Commission relied primarily on the statutory definitions of

“telecommunications” and “information service” as interpreted

in its Universal Service Orders and implementing regulations. 

See InterCall Order, 23 FCC Rcd. at 10731-32 ¶¶ 2-3 (citing

Universal Service Orders First Report and Order, 12 FCC Rcd.

at 9183-84 ¶ 795, 9207 ¶¶ 846-47; Second Order on

Reconsideration, 12 FCC Rcd. at 18499-513, Appendix A). (In

the former, the Commission extended the USF contribution

obligation to private providers of interstate telecommunications,

see Universal Service First Report and Order, 12 FCC Rcd. at 

9183-84 ¶ 795; the latter set forth how the amount of the

contribution is calculated and filed, see Second Order on

Reconsideration, 12 FCC Rcd. at 18499-513, Appendix A.) The

Commission also relied on its relevant classification precedent,

including that addressing when add-on features change

“transmission service” into an “information service.” See

InterCall Order, 23 FCC Rcd. at 10735 ¶ 13 (citing Prepaid

Calling Card Order, 21 FCC Rcd. at 7295-96 ¶¶ 14-15);

Reconsideration Order, 27 FCC Rcd. 898, 903-04 ¶¶ 12-13

(same). 

The Commission thus proceeded as it had in the order under

review in AT&T v. FCC, 454 F.3d 329, 333 (D.C. Cir. 2006),

where the court viewed the Commission’s order classifying

AT&T’s prepaid calling cards for the first time to be an

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adjudication. There, the court concluded that, as here, “[t]he

Commission’s rulings reflect a highly fact-specific, case-by-case

style of adjudication.” Here too, the Commission’s

classification order “is simply the latest application of this

approach,” id.

 

The only remaining question is whether the Commission’s

inclusion of the “similarly situated” phrase in the InterCall

Order, 23 FCC Rcd. at 10731 ¶ 1, transmutes that adjudication

into a rulemaking. It does not. Without the phrase, the

precedential effect of the order would be the same. “[T]he nature

of adjudication is that similarly situated non-parties may be

affected by the policy or precedent applied, or even merely

announced in dicta.” Goodman v. FCC, 182 F.3d 987, 994 (D.C.

Cir. 1999); see also NLRB v. Bell Aerospace Co., 416 U.S. 267,

292 (1974); NLRB v. Wyman-Gordon Co., 394 U.S. 759, 765–66

(1969) (plurality opinion); id. at 772 (concurring opinion). 

Similarly, the statements in paragraphs 25 and 26 of the

InterCall Order, on which counsel for The Conference Group

focused during oral argument, elaborate upon the Commission’s

statutory interpretation of when a stand-alone service like

InterCall, Inc.’s is subject to direct USF contributions, but

represent no more than an interpretative precedent for the

Commission to apply. The fact that an order rendered in an

adjudication “may affect agency policy and have general

prospective application,” New York State Comm’n on Cable

Television v. FCC, 749 F.2d 804, 814 (1984) (quoting Chisholm

v. FCC, 538 F.2d 349, 365 (D.C. Cir. 1976)), does not make it

rulemaking subject to APA section 553 notice and comment. 

The Commission, accordingly, could properly proceed by

adjudication in addressing for the first time the proper

classification of audio bridging service provided by InterCall,

Inc., cf. Bell Aerospace, 416 U.S. at 292–93, and was not

required to provide more notice than it did. The APA’s notice

and comment requirements do not apply (unless required by

USCA Case #12-1124 Document #1444648 Filed: 07/02/2013 Page 16 of 17
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statute) to “interpretative rules” or “general statements of

policy.” 5 U.S.C. § 553(b)(3)(A).

Accordingly, because the Commission rendered its

classification interpretation by adjudication rather than

legislative rulemaking, and because The Conference Group was

not a party to that adjudication and fails to show it has standing

to object to the merits of the adjudication, we dismiss in part and

deny in part The Conference Group’s petition for review.

USCA Case #12-1124 Document #1444648 Filed: 07/02/2013 Page 17 of 17