Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-13-01220/USCOURTS-caDC-13-01220-0/pdf.json

Parties Involved:
AT&T, Inc.
Petitioner
Federal Communications Commission
Respondent
United States of America
Respondent
Verizon
Petitioner

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 5, 2014 Decided October 31, 2014

No. 13-1220

VERIZON AND AT&T, INC.,

PETITIONERS

v.

FEDERAL COMMUNICATIONS COMMISSION AND

UNITED STATES OF AMERICA,

RESPONDENTS

On Petition for Review of an Order of 

the Federal Communications Commission

Helgi C. Walker argued the cause for petitioners. With her

on the briefs were Gary L. Phillips, Bennett L. Ross, Brett A.

Shumate, Michael E. Glover, and Christopher M. Miller. 

Christopher M. Heimann entered an appearance. 

Richard K. Welch, Deputy Associate General Counsel,

Federal Communications Commission, argued the cause for

respondents. With him on the brief were William J. Baer,

Assistant Attorney General, U.S. Department of Justice, Robert

B. Nicholson and Nickolai G. Levin, Attorneys, Jonathan B.

Sallet, General Counsel, Federal Communications Commission,

Jacob M. Lewis, Associate General Counsel, and Laurel R.

Bergold, Counsel. 

USCA Case #13-1220 Document #1519978 Filed: 10/31/2014 Page 1 of 16
2

Before: TATEL and BROWN, Circuit Judges, and

SILBERMAN, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

SILBERMAN.

SILBERMAN, Senior Circuit Judge: Petitioners Verizon and

AT&T appeal the FCC’s denial of their petition to forbear from

applying the requirement that incumbent price cap carriers

maintain a Uniform System of Accounts. The Commission

insiststhat the statutory preconditions for section 10 forbearance

are not met, nor was its refusal arbitrary and capricious. We

agree that the FCC’s interpretation and application of section 10

are permissible and deny the petition for review.

I. 

Congress has required the FCC to establish rules

prescribing a Uniform System of Accounts for use by telephone

companies since 1935. Earlier rules were designed to facilitate

rate determinations in the traditional monopolymodel: expenses

were aggregated and classified not by the particular activities or

services, but rather according to the organization that incurred

them. PETER W. HUBER ET AL., FEDERAL

TELECOMMUNICATIONSLAW § 2.2.2.9. (2d ed. 2014). The FCC

collected company-wide financial and operating data in a world

where a monopolized industry provided only two basic services

– local and long distance. The Commission adopted a new

accounting system in 1986 – Part 32 – to respond to the

introduction of competition and new services. The FCC made

clear that Part 32 obligations were imposed only on incumbent

local exchange carriers (those that operated exclusively within

their local service area prior to the 1996 Act). Petitioners AT&T

and Verizon are incumbent LECs subject to price cap regulation. 

USCA Case #13-1220 Document #1519978 Filed: 10/31/2014 Page 2 of 16
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(Price cap regulation governs a broader class of carriers than just

incumbent LECs even though Part 32 applies only to incumbent

LECs). The FCC classifies incumbent LECs as “dominant” on

the basis of market power (encompassing market share and

control of network facilities), which in most markets in the

nineties, “amounted to a distinction between AT&T and

everyone else.” MCI Telecomms. Corp. v. Am. Tel. & Tel. Co.,

512 U.S. 218, 221 (1994).

This “new” Uniform System of Accounts was designed to

complement the then-existing rate structure governing

incumbent LECs, rate of return regulation. LECs reported their

costs to establish a rate base and the Commission set prices that

allowed LECs to earn a formulated rate of return. This way if

a LEC spent money on, for example, a new operating plant, it

had a right to charge enough to recover those expenditures. Part

32 was integral to this regime because it allowed the FCC to

determine the costs of specific services; the accounting rules are

specifically tailored to the telecommunications industry and

require carriers to maintain 170 cost and revenue accounts

setting forth disaggregate and geographically-specific data. The

Commission relied upon the detailed cost data reflected in Part

32 accounts to set rates on the basis of cost estimates (derived

from past costs).

Although Part 32 incorporated certain elements of GAAP,

the two accounting systems are considerably different in terms

of both content and purpose. Part 32 is tailored for disclosure to

regulators, whereas GAAP is geared towards disclosure to

investors. GAAP provides for much more flexibility than Part

32 because it is a set of accounting principles, concepts, and

standards (as opposed to detailed cost accounting rules) pursuant

to which a company can determine its own system of accounts,

which will necessarily vary from carrier to carrier. 

USCA Case #13-1220 Document #1519978 Filed: 10/31/2014 Page 3 of 16
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The data underlying Part 32 was also used by incumbent

LECs to comply with rules requiring that they divide their costs

and revenues in a specified manner. For example, Part 64’s cost

assignment rules require that carriers directly assign or allocate

theirinvestments, expenses, and revenues between regulated and

non-regulated activities. Part 36 then requires carriers to

separate regulated investment, expenses, and revenues between

the interstate and intrastate jurisdictions. Incumbent LECs also

submitted raw Part 32 data in the form of Automated Reporting

Management Information System (MIS) Reports that they were

required to file annually.

1

In the early 1990s, the Commission abandoned rate of

return regulation, recognizing that a too-high rate of return could

prompt perverse incentives and induce inefficiencies. The

Commission adopted price cap regulation in its place. Underthe

new regime, the Commission sets a maximum price and the firm

selects rates at or below the cap. Nat’l Rural Telecom Ass’n v.

F.C.C., 988 F.2d 174, 178 (D.C. Cir. 1993).

The rate-setting framework requires carriers to file tariffs

that establish the rates, terms, and conditions of interstate

services. Interstate access rates are the most commonly-filed

tariff, and the FCC is charged with ensuring these rates are just

and reasonable. The tariff filing scheme is “the heart of the 2

common-carrier section of the Communications Act” and is

symbiotic with price cap regulation: in switching to price cap,

the FCC modified the tariff review process to set a ceiling on the

The parties refer to this with a peculiar acronym, ARMIS, which

1

sounds like a Defense Department system. We will use the shorter

well-known acronym MIS – Management Information Systems –

understanding that they are automated.

Interstate access rates are for services that provide LECs with access 2

to local networks at the originating or terminating ends of a longdistance call. 

USCA Case #13-1220 Document #1519978 Filed: 10/31/2014 Page 4 of 16
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interstate access rates LECs can charge. MCI Telecomms.

Corp., 512 U.S. at 229. 

Interstate access rates are set for different groups of service

categories known as baskets. When a LEC files interstate access

rates that are at or below a basket’s price cap and within

specified pricing bands for service categories in that basket, the

FCC presumes such rates are reasonable and reviews the tariff

pursuant to “streamlined” procedures. LEC Price Cap Order, 5

FCC Rcd 6786, 6788 ¶ 11 (1990). Such rates generally will

become effective without suspension and investigation under

section 204. But rates filed above the cap or price band have a

strong likelihood of suspension, and they will be subjected to a

more searching review. Once the tariff is suspended and set for

investigation, the FCC dispenses with the presumption of

reasonableness and the burden is imposed on the carrier to show

its rates are just and reasonable. In addition, the FCC may

challenge and investigate a carrier’s rates at any time upon its

own initiative or receipt of a complaint, and if it finds that a

tariff is unlawful, the FCC may prescribe a new rate. Finally,

any party may submit a section 208 complaint challenging even

presumptively reasonable price cap rates. 

The shift from rate-of-return to price cap regulation

undoubtedly obviated some of the need to maintain detailed cost

accounts because the Commission no longer sets rates based

primarily on costs. The extent to which Part 32 remains relevant

is the essential issue before us.

To further the deregulatory aims underlying the 1996

overhaul of the Communications Act, Congress provided the

FCC with the unusual authority to forbear from enforcing

provisions of the Act as well as its own regulations. See 47

U.S.C. § 160. Section 10(a) provides that the Commission shall

forbear from applying any provision or rule “to a

telecommunications carrier or telecommunications service, or

USCA Case #13-1220 Document #1519978 Filed: 10/31/2014 Page 5 of 16
6

class [thereof]” if the Commission finds that: (1) enforcement is

not necessary to ensure that charges and practices are just,

reasonable and non-discriminatory, (2) enforcement “is not

necessary for the protection of consumers,” and (3) forbearance

“is consistent with the public interest.” Then, fleshing out the

concept of “public interest,” the Act states in section 10(b) that

in evaluating the public interest “the Commission shall consider

whether forbearance from enforcing the provision or regulation

will promote competitive market conditions” – and if the

Commission determines that such forbearance will promote

competition among providers of telecommunications services

that determination shall be a basis for a Commission finding that

forbearance is in the public interest. 

Section 10(c) provides that any carrier may submit a

petition for forbearance. Such a request “shall be deemed

granted” unless the Commission denies the petition for failure

to meet section 10(a)’s three conditions within one year (subject

to a ninety-day extension) of receiving the request. The three

conditions of § 10(a) are conjunctive and the Commission can

“properly deny a petition for forbearance if it finds that any one

of the three prongs is unsatisfied.” See Cellular Telecomms. &

Internet Ass’n v. F.C.C., 330 F.3d 502, 509 (D.C. Cir. 2003). It

should be apparent, however, that there is a great deal of overlap

in the three factors. Factor number one seems to focus on other

customers and factor two on the broad consumer population.

But it is hard to imagine any action that would enhance

competition satisfying the public interest that actuallywould not

also satisfy the first two factors. On the other hand, it might be

that a proposed forbearance that would not injure competition

among providers could still somehow be prejudicial to

consumers. 

Petitioners Verizon and AT&T have long argued that, in

light of the existing price cap regime, the Commission’s

accounting rules are unnecessary and have used the vehicle of

USCA Case #13-1220 Document #1519978 Filed: 10/31/2014 Page 6 of 16
7

section 10 to chip away at specific accounting rules. In a trilogy

of 2008 orders, the FCC granted incumbent LECs’ petitions for

forbearance from cost assignment rules and certain MIS

Reports. The Commission’s first Order granting AT&T

forbearance from cost assignment rules (and associated MIS

reporting requirements) was conditioned on, inter alia, requiring

AT&T to retain and provide Part 32 data upon request,

implement a method of preserving the integrity, for both costs

and revenues, of its accounting system, and submit a detailed

compliance plan. In the second Order, the Commission

provided forbearance from MIS service quality and

infrastructure filing requirements to AT&T, Verizon and Qwest,

and extended the same conditional forbearance from cost

assignment rules (previously granted to AT&T) to Verizon and

Qwest. Finally, in the third Order, the Commission granted

forbearance to Qwest, AT&T and Verizon from filing certain

financial-themed MIS Reports on the condition that the carriers

continue to file certain pole attachment data publicly with the

Commission. In sum, the Commission’s grants of forbearance

were conditioned upon the continued application of Part 32 to

Verizon, AT&T, and Qwest in all three Orders, and its decisions

to dispense with filing requirements did not affect the obligation

to maintain the underlying Part 32 data.

This brings us to the instant petition. USTelecom sought

relief from a myriad of statutory and rule provisions, including

application of the entire Part 32 to all incumbent price cap

carriers. USTelecom also made two separate requests for

3

partial forbearance for all price cap carriers from (1) specific

Part 32 rules containing property record requirements and (2)

cost assignment rules (which had already been granted to

AT&T, Verizon, and Qwest). USTelecom and petitioners

USTelecomis petitioners’ trade association and represents incumbent 3

LECs. Verizon Br. at 9. 

USCA Case #13-1220 Document #1519978 Filed: 10/31/2014 Page 7 of 16
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argued Part 32 no longer serves any current federal need when

applied to incumbent, price cap LECs. And, they claimed, the

burden and expense associated with keeping two sets of

regulatory and financial accounting books actually distorts an

increasingly competitive marketplace for telecommunication

services; the costs of Part 32 compliance are imposed solely on

incumbent LECs. In the weeks preceding the already-extended

deadline when the petition would be deemed granted,

USTelecom filed a number of ex parte submissions, two of

which set forth proposed terms for what they called “voluntary

commitments” or “conditions for” forbearance. Although the 4

parties use the terms “partial” and “conditional”

interchangeably, these are two distinct types of forbearance;

partial forbearance is a request for the FCC to forbear from

applying a subset of a group of regulations, whereas conditional

forbearance is a request for across-the-board forbearance subject

to enumerated conditions. 

The Commission granted partial, conditional, or complete

forbearance from 126 of 141 challenged rules. The FCC did not,

however, grant the global request to forbear from applying Part

32 to incumbent price cap carriers because it found that

USTelecom had failed to carry its burden of proof on each of the

three prongs of section 10. USTelecom Order, 28 FCC Rcd

7627, 7630 ¶ 2 (2013). Verizon and AT&T petition for review

of the USTelecom Order.

The April 18 ex parte letter offered that incumbent price cap carriers

4

would (1) continue filing pole attachment information and develop

methods to replicate necessary pole attachment data for filing

purposes, (2) commit to track transactionssubject to section 272(e)(3),

and the May 3 ex parte letter added that the carriers would (3) limit

increases to the cost input to the FCC pole attachment rate formulae

for three years, and (4) retain the ability to provide financial data

depicting existing Part 32 account structures for five years. 

USCA Case #13-1220 Document #1519978 Filed: 10/31/2014 Page 8 of 16
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II.

Petitioners insist that the switch to price cap regulation has

rendered Part 32 useless, and section 10 therefore requires the

FCC to forebear from applying it to incumbent price cap

carriers. Even if section 10 does not require complete

forbearance according to petitioners, the FCC’s decision not to

grant partial forbearance is arbitrary and capricious. Petitioners

further argue the Commission did not explain its selective

enforcement of Part 32 accounting rules (which only apply to

incumbent price cap carriers) and ignored the costs of

complying with Part 32. 

The Commission of course argues that it reasonably denied

USTelecom’s petition. The FCC maintains that it is not required,

under its own rules, to address petitioners’ ex parte conditional

or partial forbearance requests that were not contained in the

original forbearance petition as to the general requirement of

Part 32 cost data. And the Commission asserts a current, federal

need to regulate (1) pole attachment rates which are based on

costs, as well as (2) incumbent price cap carriers’ interstate

access rates, which the FCC has a statutory duty to ensure are

just, reasonable, and nondiscriminatory. We are told that Part

32 is needed to comply with section 254(k)’s prohibition on

cross subsidization and section 273(e)(3)’s requirement that

price cap LECs properly record their imputation costs. The

Commission explains that GAAP does not provide the requisite

cost data because it is merely a non-industry specific set of

principles that does not meet the Commission’s need for detailed

cost information that is uniform across carriers. The FCC

contends, moreover, that petitioners did not show that their

(unsubstantiated) costs of compliance outweighed the benefits

provided by Part 32’s retention. Finally, the Commission

maintains that Part 32 is necessary only for incumbent LECs so

USCA Case #13-1220 Document #1519978 Filed: 10/31/2014 Page 9 of 16
10

they do not use their control over wholesale network facilities to

impede competition or charge unreasonable rates. 

5

A.

At oral argument, petitioners asserted that when the

Commission determines whether to grant forbearance under

section 10 it is engaged, under the APA, in an adjudication

rather than a rulemaking. We take it the petitioners, by so

arguing, were attempting to avoid our cases holding that review

of an agency’s denial of a rulemaking “is evaluated with a

deference so broad as to make the process akin to nonreviewability.” Cellnet Commc’n, Inc. v. F.C.C., 965 F.2d 1106,

1111 (D.C. Cir. 1992). Although parties have taken different

positions before the Commission as to the proper designation of

section 10 procedures, the FCC, while suggesting they appear

like rulemaking, has avoided conclusively deciding the issue. 

Procedural Forbearance Order, 24 FCC Rcd 9543, 9554 ¶ 2

(2009). 

Early on, in passing, we described a pre-section 10

forbearance petition as a request for a rulemaking. Am. Tel. &

Tel. v. F.C.C., 978 F.2d 727, 730-31 (D.C. Cir. 1992). Our

characterization was adopted and expanded to an entire category

of FCC forbearance orders by the Supreme Court. MCI

Telecomms.Corp., 512 U.S. at 220-21 (describing the FCC’s

earlier forbearance orders as “a series of rules”). Actually, it

should be obvious that a section 10 forbearance petition is a

request for a rulemaking, since it seeks a modification of a rule

Although petitioners claim it is unfair to impose Part 32 data 5

requirements only on incumbent carriers, suggesting that new entrants

such as wireless carriers have altered the marketplace (paradoxically

those new entrants are primarily petitioners’ own affiliates), they do

not squarely challenge the Commission’s prior determination that

incumbents have market power. Of course, that would be possible in

the upcoming rulemaking. 

USCA Case #13-1220 Document #1519978 Filed: 10/31/2014 Page 10 of 16
11

which has only future effect. Bowen v. Georgetown Univ.

Hosp., 488 U.S. 204, 216 (1988) (Scalia, J. concurring). 

Nevertheless, since Congress has provided specific criteria that

must govern the Commission’s consideration of a section 10

petition the FCC’s discretion is somewhat more limited than

would be true in the more typical rulemaking request. 

More contentious is the question as to which party has the

burden of proof. Verizon and AT&T claim that since the statute

reads the FCC “shall” grant forbearance if the conditions are

met, the burden is on the Commission. Faced with the same 6

issue, the Tenth Circuit concluded that since the statute was

silent on the question, under Chevron, the Commission’s

interpretation – that the burden is on the petitioner – should

prevail. Qwest Corp. v. F.C.C., 689 F.3d 1214, 1226 (10th Cir.

2012). We agree.

7

B.

Petitioners substantive challenge, essentially, is that Part 32

accounting rules, which are costly to maintain, are no longer

“necessary” within the meaning of section 10(a)(1) and (2) and

The FCC insists that the legal question of burden of proof is not 6

properly before us because no party raised the argument at the agency

level. See 47 U.S.C. § 405(a) (exhaustion requirement). However,

petitioners are not required to raise “futile” arguments before the

agency, and the FCC has decisively allocated the burden of proof to

the party seeking forbearance in its Forbearance Procedures Order

and applied that rule in the USTelecom Order. See Omnipoint Corp.

v. F.C.C., 78 F.3d 620, 635 (D.C. Cir. 1996).

Section 7(c) of the APA places the burden of proof on the proponent 7

of a rule or order, but that section governs formal rulemaking (or

adjudication). 5 U.S.C. § 556(d). We do not normally think of burden

of proof as applying to an informal rulemaking, yet the logic of

section 7(c) seems to apply equally to this unique type of informal

rulemaking. 

USCA Case #13-1220 Document #1519978 Filed: 10/31/2014 Page 11 of 16
12

are therefore no longer in the public interest (3). We have held

that the Commission’s definition of necessary – that there is a

strong connection between the rule in question and the agency’s

purpose – is one to which we defer. Cellular Telecomms., 330

F.3d at 512. But the Commission itself has stated that it must

have a “current need” to maintain a statutory requirement or a

challenged regulation. AT&T Cost Assignment Forbearance

Order, 23 FCC Rcd 7302, 7313-14 ¶ 20 (2008). Petitioners

insist that there is no longer such a current need because the

Commission’s introduction of price cap access rates replaced the

old cost of service methodology. 

Putting aside for a moment the question of whether the

price cap regimen has generally made unnecessary Part 32 data,

petitioners concede that the rates for pole attachments (any

attachment by a cable television system or telecommunications

service provider to a pole, duct, conduit or right-of-way owned

or controlled by a utility or LEC which is required to grant such

access) are still based on costs; there is no price cap for pole

attachment rates. Initial rates are established through private

8

negotiations between a pole attacher and the carrier. Although

neither the statute nor the FCC’s implementing rules explicitly

require submission of Part 32 data, negotiating parties rely on

cost data contained in Part 32 to set rates, and in the event there

is a dispute, to form the basis of allegations in a complaint. It

follows, in adjudicating disputed pole attachment rates, the FCC

relies on Part 32 cost data to determine whether the rate is

reasonable – if the rate reflects actual costs, and if not, to set a

lawful rate. There are currently eight section 224 complaints

pending before the FCC. Apart from the adjudicatory process, 9

See 47 U.S.C. § 224(a)(4), (d)(1), (f)(1); 47 C.F.R. § 1.1404. 8

Petitioners legitimately pointed out in their briefing that there was 9

only one pending section 224 complaint because, prior to oral

argument, the Commission had not updated its website. Enforcement

Bureau - Market Disputes Resolution Division Pending Formal 

USCA Case #13-1220 Document #1519978 Filed: 10/31/2014 Page 12 of 16
13

the Commission uses (and has recently used) data derived from

Part 32 to modify the formula that parties use to calculate pole

attachment rates. See USTelecom Order, 28 FCC Rcd at 7659

¶ 64. 

Petitioners insist that Part 32 is unnecessary because the

FCC has other informational sources available that allow it to

comply with its statutory duties to ensure that pole attachment

rates are just and reasonable – primarily GAAP.10

But petitioners concede that certain expense categories

under Part 32 do not have a “precise corollary under GAAP” and

there are “significant” differences in the two treatments of

certain pole attachment expenses. The FCC asserts that as a

result of this disjunction, GAAP accounting would actually

increase the rate price cap carriers charge for pole attachments. 

USTelecom Order, 28 FCC Rcd at 7659-60 ¶ 65. Although

petitioners claim that pole attachment rates based on GAAPderived data could decline under appropriate circumstances, they

do not dispute that they also could increase. Nor does the sparse

record before us contain evidence as to how (or in what

direction) transitioning toGAAP would result in rate distortions. 

In any event, petitioners admit, relying on GAAP would require

carriers to develop new methods to replicate the pole attachment

cost data. So, we think petitioners’ argument that the FCC must

rely on its price cap regimen for the setting of pole attachment

rates is rather weak and easily rejected. 

Perhaps recognizing the weakness of their claim regarding

Complaints, http://www.FCC.GOV/encyclopedia/eb-pending-formal-an

d-pole-action-complaints (last updated Sep. 15, 2014). 

Petitioners do not fully develop how the pole attachment cost data it 10

provides to the Commission (as a condition of the FCC’s earlier

forbearance from filing MIS Report 43-01) varies from Part 32 data.

USCA Case #13-1220 Document #1519978 Filed: 10/31/2014 Page 13 of 16
14

pole attachment rates, petitioners submitted an ex parte letter

suggesting, inter alia, a partial forbearance – Part 32 data would

be required only for pole attachment rates. The Commission,

however, declined to consider a proposal submitted so late

because it had insufficient time to evaluate it. We have

previously said that the FCC is not obliged to consider late-filed

proposals. Feature Group IP West, LLC v. F.C.C., 424 Fed.

App’x. 7, 10 (D.C. Cir. 2011). And although the Commission 11

has, on occasion, sua sponte ordered partial forbearance, AT&T

Cost Assignment Forbearance Order, 23 FCC Rcd at 7318 ¶ 28;

USTelecom Order, 28 FCC Rcd at 7360 ¶ 2, there is surely no

obligation for the Commission to do so. 

C.

We turn to the more important question of whether Part 32

accounting data is still needed to ensure that access rates of

incumbent LECs are “just and reasonable” within the meaning

of section 10(a)(1). The Commission claims it needs that data

both to evaluate existing price cap access rates, to determine

whether they are adequate, but also to deal with complaints that

a particular rate is discriminatory even if under the price cap

rate. Petitioners assert that the Commission itself has said that

it did not anticipate altering those rates, AT&T Cost Assignment

Forbearance Order, 23 FCC Rcd at 7313 ¶ 19, and that actually

there have been no complaints and subsequent requests for Part

32 data since the price cap regimen was instituted. As the

Commission noted however, there was in fact one recent

complaint which was not adjudicated only because the tariff was

withdrawn. 

Parties may cite unpublished opinions “as precedent.” See D.C.CIR

11

R. 32.1(b)(1); but see D.C. CIR. R. 36(e)(2) (“[P]anel’s decision to

issue an unpublished disposition means that the panel sees no

precedential value in that disposition.”). We cite Feature Group for

its persuasive authority, and adopt its dicta as a holding. 

USCA Case #13-1220 Document #1519978 Filed: 10/31/2014 Page 14 of 16
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Still, petitioners argue that if the Commission were to

forbear – excuse petitioners from maintaining Part 32 data – and

a complaint was filed a carrier could either submit GAAP data

to substantiate the reasonableness of the rates or could even

recreate Part 32 data. We think the Commission’s response is

reasonable. As we noted earlier, GAAP is designed for investors

not regulators and to recreate Part 32 data to meet a complaint

would take too long. Although the Commission admits that it

has not sought Part 32 data from an incumbent carrier for the

purposes of investigating a tariffsince the price cap regimen was

instituted, it points out that the very existence of the data

constitutes a deterrent to the institution of discriminatory rates. 

To be sure the current need for Part 32 data – outside pole

attachment rates – appears marginal. If the Commission were

insisting that the incumbent carriers maintain Part 32 data

merely as a competitive handicap, that would surely be

illegitimate. But we have no reason to doubt the FCC’s good

faith. Therefore, the Commission is entitled to deference as to its

purpose. 

We have consistently deferred to the Commission’s

forbearance decisions, Cellular Telecomms., 330 F.3d at 510

(“[A] measure may be ‘necessary’ even though acceptable

alternatives have not been exhausted.”); Earthlink, Inc. v.

F.C.C., 462 F.3d 1, 8 (D.C. Cir. 2006) (FCC’s forbearance

analysis may vary under the circumstances and can be made

“with an eye to the future”); In re Core Commc’ns, Inc., 455

F.3d 267, 282 (D.C. Cir. 2006) (“[A]gency’s predictive

judgments about areas that are within the agency’s field of

discretion and expertise are entitled to particularly deferential

review.”); Feature Grp. IP West, 424 F. App’x 7; M2Z

Networks, Inc. v. F.C.C., 558 F.3d 554 (D.C. Cir. 2009); Qwest

Corp. v. F.C.C., 482 F.3d 471 (D.C. Cir. 2007); MCI

WorldCom, Inc. v. F.C.C., 209 F.3d 760 (D.C. Cir. 2000),

except in cases where the Commission deviated without

USCA Case #13-1220 Document #1519978 Filed: 10/31/2014 Page 15 of 16
16

explanation from its past decisions, Verizon Tel. Cos. v. F.C.C.,

570 F.3d 294 (D.C. Cir. 2009); AT&T Inc. v. F.C.C., 452 F.3d

830 (2006); AT&T Corp. v. F.C.C., 236 F.3d 729 (D.C. Cir.

2001), or did not discuss section 10's criteria at all, Verizon Tel.

Cos. v. F.C.C., 374 F.3d 1229 (D.C. Cir. 2004). Since we think

that the FCC reasonably concluded that it continued to need Part

32 data to ensure that access rates were not discriminatory – we

defer once more – therefore, it is unnecessary for us to consider

factors two and three of subsection 10(a).

* * *

We are also told that the Commission plans to consider the

continuing need for Part 32 data in a pending rulemaking. We

have held that the Commission cannot defend against the

forbearance petition by pointing to an upcoming rulemaking

(such a scenario is not implicated here). AT&T Corp., 236 F.3d

at 738. On the other hand, that does not mean that

considerations that were relevant to the forbearance petition

would not have continuing relevance in the ordinaryrulemaking. 

It may well be that petitioners’ contention that Part 32 data is no

longer justified by the expense will prove more compelling.12

The petition for review is denied.

So ordered.

Cost data presented by petitioners was sparse. See Petition of 12

USTelecom for Forbearance, WC Docket No. 12-61 at 40 (Feb. 16,

2012) (USTelecom estimating “millions of dollars” spent on

maintaining two separate sets of books); Ex Parte Letter from

USTelecom to FCC, WC Docket No. 12-61 at 13 (Apr. 18, 2013)

(AT&T noting that it is “difficult to quantify all the costs of

compliance” and estimating $18 to $24 million in annual costs); Oral

Arg. (26:15-27:00) (AT&T spends almost $24 million a year simply

to modify accounting programs to match up with Part 32). The record

lacks any information about petitioner Verizon’s cost of compliance. 

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