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Parties Involved:
AT&T Corporation
Petitioner
Federal Communications Commission
Respondent
United States of America
Respondent

Document Text:

Notice: This opinion is subject to formal revision before publication in the

Federal Reporter or U.S.App.D.C. Reports. Users are requested to notify

the Clerk of any formal errors in order that corrections may be made

before the bound volumes go to press.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 19, 2003 Decided April 8, 2003

No. 01-1485

AT&T CORPORATION,

PETITIONER

v.

FEDERAL COMMUNICATIONS COMMISSION AND

UNITED STATES OF AMERICA,

RESPONDENTS

On Petition for Review of Orders of the

Federal Communications Commission

Daniel Meron argued the cause for petitioner. With him

on the briefs were Joseph R. Guerra, Jonathan Cohn, Mark

C. Rosenblum, and Peter H. Jacoby.

Richard K. Welch, Associate General Counsel, Federal

Communications Commission, argued the cause for respondent. With him on the brief were Jane E. Mago, General

Counsel, John E. Ingle, Deputy Associate General Counsel,

 Bills of costs must be filed within 14 days after entry of judgment.

The court looks with disfavor upon motions to file bills of costs out

of time.

USCA Case #01-1485 Document #742699 Filed: 04/08/2003 Page 1 of 12
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Lisa E. Boehley, Counsel, and Catherine G. O’Sullivan, Chief

Counsel, U.S. Department of Justice, and Steven J. Mintz,

Counsel.

Before: TATEL and GARLAND, Circuit Judges, and WILLIAMS,

Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge TATEL.

TATEL, Circuit Judge: The Federal Communications Commission assessed $80,000 in forfeiture penalties against AT&T

for ‘‘slamming’’ two customers—that is, changing their longdistance telephone service without their authorization. Having paid the forfeiture, AT&T now petitions for review,

arguing that in both instances it complied with the Commission’s procedures for verification of telemarketing sales.

Concluding that we have jurisdiction over AT&T’s postcompliance challenge to the forfeiture, we hold that the

Commission’s requirement that telecommunications carriers

guarantee that the actual line subscriber has authorized the

service change order exceeds the Commission’s statutory

authority to prescribe procedures to verify that authorization.

Accordingly, we vacate the relevant portions of the forfeiture

orders.

I.

In order to prevent telecommunications carriers from making unauthorized changes to subscribers’ telephone service—a

practice known as ‘‘slamming’’—the Telecommunications Act

of 1996 makes it unlawful for telecommunications carriers to

‘‘submit or execute a change in a subscriber’s selection of a

provider of telephone exchange service or telephone toll

service except in accordance with such verification procedures

as the Commission shall prescribe.’’ 47 U.S.C. § 258(a). In

its rules implementing section 258—and conforming its preexisting anti-slamming regulations to the new statute—the

Commission established various procedures that carriers

must use to verify the subscriber’s authorization to submit

the preferred carrier change order. These procedures, which

vary depending on how the carrier chooses to market its

services, include obtaining the subscriber’s written authorizaUSCA Case #01-1485 Document #742699 Filed: 04/08/2003 Page 2 of 12
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tion, or, if the carrier has solicited the subscriber over the

telephone, using an independent third party to confirm the

subscriber’s preferred carrier change order and obtain ‘‘appropriate verification data (e.g., the subscriber’s date of birth

or social security number).’’ 47 C.F.R. § 64.1150(b), (d)

(1999) (currently codified as amended at 47 C.F.R.

§ 64.1120(a)(1), (c)(1), (c)(3)). In all circumstances, however,

Commission rules require that carriers obtain both ‘‘(i) Authorization from the subscriber, and (ii) Verification of that

authorization in accordance with the procedures prescribed in

this section.’’ 47 C.F.R. § 64.1120(a)(1) (formerly codified at

47 C.F.R. § 64.1100(a)(1) (1999)).

In December 2000, the Commission issued a notice of

apparent liability (NAL) to AT&T for several violations of

section 258 and the Commission’s anti-slamming regulations.

Notice of Apparent Liability for Forfeiture, 16 F.C.C.R. 438

(2000). After considering AT&T’s opposition to the NAL, the

Commission found the company liable for eleven slamming

incidents—including the two at issue in this case, in which

AT&T, in the course of making telephone solicitations,

changed the long-distance carriers of two sets of customers,

Thomas Patterson and Tracie and Greg Ortega, without their

authorization. Order of Forfeiture, 16 F.C.C.R. 8978 (2001).

In both cases, AT&T argued that because it complied with

the Commission’s prescribed procedures for conducting independent third-party verification of carrier change orders, it

made no difference that Patterson and the Ortegas later

complained that they neither knew the individuals who agreed

to change their service nor authorized those individuals to

approve a change on their behalf. Rejecting this argument,

the Commission ruled that ‘‘[a] carrier cannot comply with

the Commission’s verification procedures if it receives confirmation from an individual not authorized to make the

change.’’ Id. at 8985, ¶ 18 (footnote omitted). Then, acting

pursuant to Communications Act section 503(b), which authorizes forfeiture penalties against any person who ‘‘willfully or

repeatedly’’ fails to comply with the Act or Commission rules

and regulations, 47 U.S.C. § 503(b), the Commission assessed

a $40,000 forfeiture for each of these two incidents, as well as

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for each of seven others, and $80,000 for two involving forged

letters of authorization, which the Commission regards as ‘‘a

particularly egregious form of slamming,’’ Notice of Apparent

Liability, 16 F.C.C.R. at 452, ¶ 31 (footnote omitted). The

forfeiture penalties add up to $520,000. Order of Forfeiture,

16 F.C.C.R. at 8986, ¶ 20.

AT&T promptly paid the full amount of the forfeiture

penalties, but at the same time filed a petition for limited

reconsideration, asking the Commission to rescind the portion

of the Forfeiture Order finding it liable for changing the

Ortegas’ and Patterson’s long-distance carriers without their

authorization. In its Order on Reconsideration, the Commission upheld its previous findings, noting that its antislamming rules ‘‘impose a strict liability standard,’’ and that

AT&T ‘‘ultimately must determine for itself how to ensure

that no unauthorized changes occur.’’ 16 F.C.C.R. 16,596,

16,597, ¶ 5, 16,599, ¶ 9. ‘‘Should AT&T’s methods prove

unsuccessful,’’ the Commission concluded, ‘‘the company is

liable for any resulting unauthorized changes.’’ Id. at 16,599

¶ 9 (footnote omitted). AT&T filed a petition for review in

this court, contending that the Commission’s requirement of

actual customer consent exceeds the agency’s statutory authority.

II.

Before considering the merits of AT&T’s challenge, we

must address the Commission’s argument that we lack jurisdiction over appeals from NAL forfeiture proceedings. The

NAL procedure is just one of two ways in which the Commission may impose forfeiture penalties, each of which comes

with a different set of jurisdictional requirements—differences that are relevant to the issue before us. See generally

Action for Children’s Television v. FCC, 59 F.3d 1249, 1253–

54 (D.C. Cir. 1995) (describing the two forfeiture procedures).

Under the first and more formal procedure, the Commission provides notice to the alleged violator and affords it an

opportunity for a hearing before an administrative law judge,

who may then choose to impose forfeiture penalties. 47

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U.S.C. § 503(b)(3)(A). The resulting forfeiture order is then

subject to review in the court of appeals. Id. If the penalty

remains unpaid once the forfeiture determination becomes

final, the United States may bring a collection action in

district court. Id. § 503(b)(3)(B).

Under the less formal NAL procedure at issue in this case,

the Commission issues a notice of apparent liability to the

alleged violator, affording it only the opportunity to show, in

writing, why no forfeiture penalty should be imposed. Id.

§ 503(b)(4). The Commission may then issue an order directing payment of the proposed forfeiture, reducing the amount

to be paid, or canceling the forfeiture altogether. 47 C.F.R.

§ 1.80(f)(4). If the order becomes final and the forfeiture

subject refuses to pay, then Communications Act section

504(a) permits the Commission to refer the matter to the

Department of Justice for commencement of a civil action to

recover the forfeiture in a district court, where the forfeiture

subject is entitled to a trial de novo. 47 U.S.C. § 504(a).

The Commission argues that unlike the formal hearing

forfeiture process, where the Communications Act expressly

gives courts of appeals jurisdiction to review forfeiture orders, the less formal NAL forfeiture proceedings are not

subject to review in courts of appeals. The plain language of

the Communications Act indicates otherwise. Section 402(a),

the Act’s general review provision, vests in courts of appeals

exclusive jurisdiction over ‘‘[a]ny proceeding to enjoin, set

aside, annul or suspend’’ or determine the validity of final

Commission orders, 47 U.S.C. § 402(a); see 28 U.S.C.

§ 2342(1)—a category that includes forfeiture orders, see

Illinois Citizens Comm. for Broad. v. FCC, 515 F.2d 397, 402

(D.C. Cir. 1974) (holding that the court of appeals has jurisdiction over a third party’s challenge to a paid forfeiture

order pursuant to section 402(a)). And although section

504(a) creates an exception to that general rule, that exception is, by its express terms, limited to government actions for

the recovery of forfeiture penalties: Section 504(a) provides

that NAL forfeitures ‘‘shall be recoverable TTT in a civil suit

in the name of the United States’’ brought in the district

court, and that ‘‘any suit for the recovery of a forfeiture

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imposed pursuant to the provisions of this chapter shall be a

trial de novo.’’ 47 U.S.C. § 504(a) (emphasis added). Because section 504(a) says nothing about district court jurisdiction where the forfeiture has already been recovered, it

appears to leave court of appeals jurisdiction intact where, as

here, the forfeiture subject has paid the assessed penalty.

Though the Commission agrees that section 504(a) deals

only with challenges to unpaid forfeiture orders, it argues

that section 504(a) nevertheless overrides section 402(a), albeit implicitly, for purposes of challenging paid forfeiture

orders. For that proposition, the Commission relies on

Pleasant Broadcasting Co. v. FCC, 564 F.2d 496 (D.C. Cir.

1977). Addressing the question of court of appeals jurisdiction over NAL forfeiture orders, Pleasant Broadcasting

states that ‘‘section 504 of the Communications Act of 1934

vests exclusive jurisdiction in the district courts to review, in

the first instance, licensee challenges to forfeiture orders.’’

Id. at 497 (citation omitted). According to the Commission,

Pleasant Broadcasting holds that section 504(a) vests exclusive jurisdiction in district courts for review of all forfeiture

orders, paid or unpaid. And because section 504(a) contains

no provision for post-compliance review, the Commission argues, Pleasant Broadcasting means that forfeiture subjects

must either bring a pre-compliance challenge in district court

or bring no challenge at all; payment effectively renders

forfeiture orders unreviewable.

Despite its broad statement of its holding, Pleasant Broadcasting provides little support for the Commission’s theory.

To begin with, Pleasant Broadcasting deals not with the

question of post-compliance review of forfeiture orders, but

rather with a forfeiture subject’s challenge to an unpaid

forfeiture order. The court’s reasoning reflects the importance of that distinction. Limiting its holding to cases in

which section 504’s ‘‘special review mechanism’’ is both adequate and available, the court distinguished Illinois Citizens,

515 F.2d 397, in which this court accepted jurisdiction over

public-interest groups’ challenge to a Commission forfeiture

for broadcasting obscene and indecent materials despite the

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fact that the broadcaster had already paid the penalty. Under those circumstances, where section 504 proceedings to

collect the forfeiture ‘‘would never have been instituted,’’

Pleasant Broadcasting says that section 504 review is ‘‘unavailable,’’ and court of appeals review pursuant to section

402(a) is therefore ‘‘appropriate.’’ Id. at 501, 502–03. Although Illinois Citizens involved a third-party challenge to a

paid forfeiture order, the same logic applies when the forfeiture subject itself seeks to bring a post-compliance challenge:

Because payment renders section 504 review ‘‘unavailable,’’

court of appeals review pursuant to section 402(a) is ‘‘appropriate.’’

Pleasant Broadcasting’s holding, moreover, rests at least in

part on the court’s concern that allowing forfeiture subjects to

bring challenges to forfeiture orders in courts of appeals

would give them the proverbial ‘‘two bites at the apple’’:

They would ‘‘be able to challenge the forfeiture order in a

court of appeals on the basis of the administrative record and,

if unsuccessful, TTT litigate all issues de novo in the district

court, with a right of appeal to the court of appeals.’’ Id. at

501. Even under the Commission’s theory, that danger does

not exist here. Because section 504(a) review is, by its terms,

available only in recovery actions, AT&T will get just one

bite.

In the end, Pleasant Broadcasting tells us only that section

504(a) establishes district courts as the exclusive forum for

challenges to unpaid forfeiture orders. Like section 504(a)

itself, it has no effect on court of appeals jurisdiction to

review challenges to paid forfeiture orders.

To be sure, as the Commission points out, allowing forfeiture subjects to choose between challenging unpaid forfeiture

orders in district court and challenging paid forfeiture orders

in the court of appeals means that they can control the forum

of review by deciding whether or not to pay the penalty. The

obvious answer to this concern is section 504(a)’s plain language: By limiting district court jurisdiction to unpaid forfeitures, it gives forfeiture subjects that very choice. Such

forum-controlling compliance choices, moreover, are common

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in statutes providing for judicial review of regulatory decisions. The Communications Act itself contains another such

provision, which allows telecommunications carriers subject to

orders that conclude complaint-initiated investigations either

to appeal the order in the court of appeals under section

402(a), 47 U.S.C. § 208(b)(3), or, assuming the order requires

the payment of money, to refuse to comply and instead wait

for the complainant to file a petition in district court, id.

§ 407.

Moreover, even where, as here, a statute fails to make the

choice explicit, but rather provides only a special procedural

mechanism for the government to collect payments owed to it,

that choice nevertheless remains; the collection mechanism

has no effect on the payer’s ability to obtain post-compliance

review pursuant to generally applicable jurisdictional principles. For example, in the customs context, where Congress

granted exclusive jurisdiction to the Court of International

Trade over suits for the recovery of certain civil penalties, 28

U.S.C. § 1582(1), penalty subjects may ‘‘obtain[ ] judicial review in the Court of International Trade by refusing to pay

the penalty and waiting for the government to commence an

enforcement action.’’ Trayco, Inc. v. United States, 994 F.2d

832, 837 (Fed. Cir. 1993). But they also have ‘‘the option, and

more importantly, the right’’ to pay the penalty and later

‘‘initiate suit in the district court to challenge the penalty’’

pursuant to the Tucker Act, 28 U.S.C. § 1346(a)(2). Id.

Similarly, here, where AT&T has already paid the penalty

rather than wait for the Government to commence a recovery

action, it has the option—and the right—to initiate suit in the

court of appeals pursuant to section 402(a).

III.

This brings us to the merits of AT&T’s challenge to the

Commission’s forfeiture order. Because AT&T claims that

the anti-slamming regulations violate a statute the Commission is charged with enforcing, we proceed in accordance with

Chevron U.S.A. Inc. v. Natural Resources Defense Council,

Inc., 467 U.S. 837 (1984), asking first whether ‘‘Congress has

directly spoken to the precise question at issue,’’ since if it

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has, ‘‘that is the end of the matter; for the court, as well as

the agency, must give effect to the unambiguously expressed

intent of Congress.’’ Id. at 842–43 (footnote omitted). If the

statute is either silent or ambiguous, we defer to the agency’s

interpretation, provided that it ‘‘is based on a permissible

construction of the statute.’’ Id. at 843. Such deference is

warranted, however, only when ‘‘Congress has left a gap for

the agency to fill pursuant to an express or implied ‘delegation of authority to the agency.’ ’’ Ry. Labor Executives’

Ass’n v. Nat’l Mediation Bd., 29 F.3d 655, 671 (D.C. Cir.

1994) (en banc) (citation omitted); see also Motion Picture

Ass’n of Am. v. FCC, 309 F.3d 796, 801 (D.C. Cir. 2002)

(‘‘[T]he agency’s interpretation of the statute is not entitled to

deference absent a delegation of authority from Congress to

regulate in the areas at issue.’’) (emphasis in original).

Applying this standard, we believe that the anti-slamming

regulations exceed the authority Congress delegated to the

Commission in section 258. To begin with, the regulations

go beyond the anti-slamming statute’s express terms. Section 258 provides only that telecommunications carriers may

not submit or execute changes in subscribers’ telephone

service ‘‘except in accordance with such verification procedures as the Commission shall prescribe,’’ 47 U.S.C. § 258(a),

yet the Commission’s anti-slamming regulations require that

a carrier not only comply with the Commission’s verification

procedures, but also obtain actual ‘‘[a]uthorization from the

subscriber.’’ 47 C.F.R. § 64.1120(a)(1). The distinction is

important, for as AT&T points out, the Commission’s actualauthorization requirement charges carriers that engage in

telemarketing with a virtually impossible task: guaranteeing

that the person who answers the telephone is in fact authorized to make changes to that telephone line. While a

customer’s current local exchange carrier might be able to

verify the subscriber’s identity by consulting its own customer records, the Commission itself has acknowledged that

‘‘long distance service providers often lack access to the

[local exchange carrier] account records containing the pertinent information’’ about the customer of record. Third Report and Order and Second Order on Reconsideration, ImUSCA Case #01-1485 Document #742699 Filed: 04/08/2003 Page 9 of 12
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plementation of the Subscriber Carrier Selection Changes

Provisions of the Telecommunications Act of 1996, 15

F.C.C.R. 15996, 16020, ¶ 49 n.145 (2000). Carriers, moreover, generally have no way of knowing whom subscribers

may have authorized to make changes on their behalf. In

other words, telecommunications carriers seeking new customers via telemarketing have little choice but to depend on

the veracity of the person answering the phone. And as the

Commission’s forfeiture order in this case illustrates, carriers

may follow all of the prescribed verification procedures yet

still find themselves liable. The actual-authorization requirement amounts, as the Commission acknowledges, to a strictliability standard. Order on Reconsideration, 16 F.C.C.R. at

16,597, ¶ 5.

Since section 258 itself contains no actual-authorization

requirement, the question becomes whether it nevertheless

authorizes the Commission to create such a requirement. We

think it does not. If Congress had wished to require actual

customer authorization, instead of prohibiting carriers from

changing subscribers’ service ‘‘except in accordance with such

verification procedures as the Commission shall prescribe,’’ it

would have written the statute to prohibit such changes

‘‘without the authorization of the subscriber.’’ Elsewhere in

the Communications Act, Congress has expressly imposed an

actual-authorization requirement. See Barnhart v. Sigmon

Coal Co., 534 U.S. 438, 439–40 (2002) (‘‘[I]t is a general

principle of statutory construction that when one statutory

section includes particular language that is omitted in another

section of the same Act, it is presumed that Congress acted

intentionally and purposely.’’) (citing Russello v. United

States, 464 U.S. 16, 23 (1983)). Section 222, for example,

requires that telecommunications carriers obtain ‘‘approval of

the customer’’ before using, disclosing, or permitting access to

‘‘individually identifiable’’ customer proprietary network information, except as otherwise required by law. 47 U.S.C.

§ 222(c)(1). It also requires the ‘‘express prior authorization

of the customer’’ for the release of wireless location information. Id. § 222(f). By comparison, section 258(a) neither

contains a customer-consent requirement nor suggests that

Congress delegated to the Commission the discretionary auUSCA Case #01-1485 Document #742699 Filed: 04/08/2003 Page 10 of 12
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thority to adopt such a requirement. Cf. Motion Picture

Ass’n, 309 F.3d at 801–02 (finding that a statute authorizing a

study on the use of video description does not authorize the

Commission to adopt rules mandating video description). It

only authorizes the Commission to prescribe verification procedures.

Attempting to show that it has not exceeded this mandate,

the Commission insists that the actual-authorization requirement is not an independent requirement, but rather an integral part of its ‘‘verification procedures.’’ According to the

Commission, its verification procedures require carriers not

only to ask the right questions of their potential customers,

but to ask the right questions of the right people—that ‘‘the

third party verifier confirm the subscribers’ authorization;

obtain identification data from the subscriber; and within the

verification context obtain clear and conspicuous confirmation

that the subscriber authorized a change,’’ where ‘‘subscriber’’

means the subscriber of record, and not merely the person

who answers the phone. Respondents’ Br. at 37–38 (emphasis in original). We are unconvinced. A ‘‘procedure’’ is ‘‘a

particular course of action,’’ or ‘‘a particular step adopted for

doing or accomplishing something.’’ WEBSTER’S THIRD NEW

INTERNATIONAL DICTIONARY 1807 (1993). So defined, ‘‘procedures’’ include, for example, referring telemarketing sales to

independent third parties to confirm orders and to ask for

identifying information such as subscribers’ dates of birth.

See 47 C.F.R. § 64.1120(a). In contrast, the Commission’s

actual-authorization requirement prescribes no ‘‘particular

step TTT for doing or accomplishing something.’’ Rather, it

establishes a goal that the Commission itself has admitted

may be impossible to accomplish—guaranteeing that the person on the phone actually has authority to make changes to

the account—leaving carriers such as AT&T in the position of

‘‘determin[ing] for [themselves] how to ensure that no unauthorized changes occur,’’ and holding them liable if those

methods ‘‘prove unsuccessful.’’ Order on Reconsideration, 16

F.C.C.R. at 16,599, ¶ 9.

Finally, the Commission argues that the actualauthorization requirement better serves Congress’s purpose

of protecting consumers from slamming by strengthening and

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expanding the Commission’s preexisting anti-slamming rules.

In this case, however, where the statute’s text is clear, we

have no need to resort to section 258’s legislative history.

Rather, we think ‘‘Congress meant what it said’’—carriers

must comply with Commission verification procedures, and

nothing more. FCC v. NextWave Personal Communications

Inc., 123 S. Ct. 832, 842 (2003).

IV.

Having considered the Commission’s remaining arguments

and finding them to be without merit, we grant the petition

for review and vacate the forfeiture penalties associated with

the Ortega and Patterson accounts.

So ordered.

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