# Unit ed State s Co urt of Appeals

F O R T H E D I S T R

I C T O F C O L U M B I A

C I R C U I T

Arg ued September

5, 2014 Dec ided Octobe r 31, 2014

No. 13-1220

V E R I Z O N A N D AT& T, I

N C ., P E TI TI O N E R S

v. F E D E R A L C O M M

U N I C A TI O N S C O M M I S S I O N A N D U N I TE D S TA TE S O F A M E R I C A , R E S P O N D E

N TS

On Petition for Review of a n Orde r of the Fe dera l Comm unications Commis sion

Helgi C. W

alker arg ued the cause for petitioners. Wit h her

on the briefs wer e Gary L. Phillips
, Benne tt L

. R o ss , Brett A. Shumate
, Michae l E. Glover
, and Christ opher M. Miller

. Christ opher M. He imann enter ed an a ppear ance

.

Richard K. W

elch
, Deputy Associate Gene ral Counsel, Fe dera l Communi cations Commi ssion, arg ued the cause for respond ents

. Wit h him on the brief wer e W illiam J. Baer
, Assistant Attorney Gene ral, U.S. Depa rtment of J ustice, Robert B. Nicholson and Nickolai G. Levin
, Attorney s, Jonathan B. Sallet
, Gene ral Counsel, Fe de r al Communi cations Commi ssion, Jacob M. L ew i s , Associate Gene ral Counsel, and Laurel R. Bergold , Counsel

.2

Be fo re : T A TE L and B R O W N , Circuit Judges
, and S I L B E R M A N , Senior Circuit Judge

. Opin i o n fo r the Court filed by Senior Circuit Judge S I L B E R M A N

.

S I L B E R M A N , Senior Circuit Judge : Petitioners Ver izon and AT& T appea l the FCC’s denial of their petition to forbe ar from apply ing the requirement that incumbent price cap car riers maintain a Unifor m Sy stem of Acc ounts. The Commi ssion insists that the statutory prec onditions for section 10 forbe ara nce

are not met, nor was its ref usal ar b i t ra ry and capr icious. We
ag ree that the FCC’s interpre tation and application of section 10

are permissible and de ny

the petition for re view.

I.

Congr ess has require d the FCC to establish rul es presc ribing a Uniform Sy stem of Acc ounts for use by telephone companies since 1935. Earlier rules wer e desig ned to f acilitate
rate deter minations in the traditional monopoly model: expenses

wer e ag g reg ated and classified not by the particula r activities or service s, but ra t her acc ording to the org anization that incurre d
t h e m

. P E T E R W

. H U B E R E T A L

. , F E D E R A L T E L E C O M M

U N I C A TI O N S L A

W § 2.2.2.9. (2d ed. 2014). The FCC collecte d company -wide financ ial and opera ting data in a world wher e a monopoliz ed industry provided only two basic service s

– local and long distance. The Commi ssion ad o p t ed a new

acc ounting sy stem in 1986 – Part 32 – t o respond to the intr o d u ct i o n of competiti on and new service s. The FCC made clea r t hat P art 32 obliga tions wer e im posed only on incumbent l o ca l exchang e car

riers (those that opera ted exclusively withi n their local service are a prior to the 1996 Act). Petitioners AT& T and Ver izon are incumbent L ECs subject to price cap reg ulation.3

(Price cap reg ulation g overns a broade r class of car riers than just incumbent L ECs even though Part 32 applies only to incumbent L ECs). The FCC classifies incumbent L ECs a s “dominant” on the basis of m ar k et power (enc ompassing marke t share and control of network fac iliti es), wh ich in most marke ts in the nineties, “amounted to a distinctio n betwee n AT& T and

ever y one else.” MCI Telecomm s. Corp. v. Am. Tel. & Tel. Co
., 512 U.S. 218, 221 (1994).

This “ new” Uniform Sy stem of Acc ounts was desig ned to complement the then-e x istin g rate structure g overning incumbent L ECs, rate of return reg ulation. L ECs repor ted their
costs to establish a rate base and the Commi ssion set price s that allowed L ECs to ear

n a formulated rate of return. This way if

a L EC spent money on, for example, a new op er at i ng plant, it had a rig ht to char g e enoug h to rec over those expenditures. Part 32 was integ ral to this reg ime beca use it allowed the FCC to deter mine the costs of specific service s; the acc ounting rules are specific ally tailored t o the telecommunica tions industry and require ca rrier s to maintain 170 cost and reve nue acc ounts setting forth disag g reg ate and g eog raphic ally -spec ific data. The Commi ssion relied upon the de tailed cost data ref lected in Par

t 32 acc ounts to set rate s on the basis o f cost estimates (der ived from past c osts).

Although Part 32 incorpora ted cer tain elements of GAAP, the t wo accounting sy stems are considera b l y d i ffe rent in terms of both content and purpose. Part 32 is tailored for disclosure to reg ulators, wher eas GAAP is g ear ed towards disclosure to investors. GAAP provides for much more flex ibilit y than P art 32 bec au s e i t is a set of acc ounting principles, conce pts, and standards (as oppo sed to detailed cost acc ounting rules) pursuant to which a company can de termine its own sy stem of ac counts, which will nece ssarily

vary from ca rrier to car rier.4

The data underly

ing Part 32 was als o u s ed by incumbent L ECs to comply with rules requiring that they divide their costs and reve nues in a specifie d manner

. For example, Part 64’s cost assig nment rules require that car riers direc tly assig n or allocate the ir in v e s tm e n ts, expenses, and reve nues betwee n reg ulated and

non-re g ulated activities. P ar t 3 6 then require s car riers to separ ate reg

ulated investment, expenses, and reve nues betwee n the interstate and intrastate jurisdictions. I ncumbent L ECs also submitt ed raw Part 32 data in the form of Automated Reporting Manag ement I nformation Sy stem (MI S) Reports that they wer e require d to file annua lly

. 1

I n the ear ly 1 9 9 0s, the Commi ssion abandone d rate of
return reg ulation, rec og nizi ng that a too-hig h rate of return could prompt perve rse incentives an d induce ineffic iencies. The Commi ssion adopted price cap reg ulation in its place

. Under the

new reg ime, the Commi ssion sets a maxi mum price and the firm selec ts rates a t or below the cap. Nat’l Rural Telecom A ss’n v. F.C.C. , 988 F.2d 174, 178 ( D.C. Cir. 1993).

The rate -setting fra mework require s car riers to file tariff

s that establish the rate s, terms, and conditions of interstate service s. I nterstate acc ess rate s are the most commonly -filed tariff , and the FCC is c harg ed with e nsuring these rate s are just and rea sonable. The tariff filing s cheme is “the hear t of the 2

common-ca

rrier section o f the Communi cations Act” and is
sy mbiotic wit h price cap reg ulation: in switching to price cap, the FCC modified the tariff revie w proce ss to set a ceiling on the

The par ti es re fe r to this w it

h a pec ulia

r ac ro ny m , ARMI S, wh ic h 1

so unds li ke a Def

ens e Depa

rt m ent sy st em

. We w il l use the sho rt er

w el l- known acrony

m MI S – Ma

nag em ent I nfo rm at io n Sy st em s

– unders ta nding tha t the y ar e a uto m at ed.

I nter st at e a cc es s r at es ar e f or se rv ic es that

pro vi de L ECs w it

h ac ce ss 2
to lo ca l n et work s at the or ig inat ing or te rm inat ing ends of a lo ngdist anc e c al l.5

inters t at e acc ess rate s L ECs can char g e. MCI Telecomm s. Corp. , 512 U.S. at 229.

I nterstate acc ess rate s are set for differ ent g roups of service
cate g ories known as baskets. When a L EC files interstate acc ess rate s that are at or b el o w a basket’s price cap and within specifie d pricing bands for service cate g ories in that basket, the FCC presumes such rate s ar e rea sonable and revie ws the tariff pursuant to “strea

mlined” proce dures. LEC Price Cap Order
, 5 FCC Rcd 6786, 67 88 ¶ 11 (1990). Such rate s g ener ally will become ef

fec tive without suspension and investiga tion under section 204. B ut rates f

iled above the cap or price band have a strong likelihood of suspension, and they will be subjected to a

more sear ching revie w. Once the tariff is suspended and set for investiga tion, the FCC dispenses with the presum p t i on of

rea sonablene ss and the burden is imposed on the car rier to show its rate s are just and rea sonable. I n ad d ition, the FCC may challeng e and investiga te a car rier’ s rat es at any time upon its

own initiative or rec eipt o f a co m p l aint
, and if it finds that a tariff is unlawful, the FCC m ay p re scribe a new rate

. Finally
, any party may submit a section 208 complaint challeng ing even presumptively

rea sonable pric e ca

p rate s.

The shift from rate -of- return t o price cap reg ulation undoubtedly obviated some of the need to maintain detailed cost

acc ounts beca

use the Commi ssion no longe r sets rate s based primarily on costs. The extent to which Part 32 rema ins rele vant is the essential issue bef

ore us.

To further the dere g ulatory aims underly ing t h e 1996 overha ul of the Communi cations Act, Congr ess provided the FCC with the unusual authority to forbe ar from enfor cing provisions of the Act as well as i t s o wn reg ulations. See 47 U.S.C. § 160. Section 10(a) provides that the Commi ssion shall forbe ar from apply

ing any provision o r ru l e “to a telecommunica tions car

rier or telecommunica

tions service
, or6

class [t here of]” if the Commi ssion finds that: (1) enfor ceme nt is
not nece ssary to ensure that char g es and prac tic es are just,

rea sonable and non-discr i minatory
, (2) enfor ceme nt “is not

nece ssary for the protec tion of consumers,” and (3) forbe ara nce “is consistent with the public in t erest.” Then, fleshing out the

conce pt of “public interest,” the Act state s in se ction 10(b) that in evalua ting the public interest “the Commi ssion shall consider whether forbe ara

nce from enfor cing the provision or reg ulation will promote competitive marke t conditions” – and if the Commi ssion deter

mines that such forbeara nce will promote competition amon g providers of telecommunica tions service s that deter mination shall be a basis for a Commi ssion finding that forbe ara nce is in the public intere st.

Section 10(c) provides that any car rier may submit a petition for forbe ara

nce. Such a reque st “shall be deeme d
g rante d ” u nless the Commi ssion denies the petition for failure
to meet section 10(a) ’s three conditions within one y ear (subject
to a ninety -day extension) of rec eivin g t h e reque st. The three conditions of § 10 (a ) ar e conjunctive and the Commi ssion can “prope rly deny a petition for forbe ara nce if it finds that any one of the three prong s is unsatisfied.” See Cellular Telec omms. & Internet Ass’n v. F.C.C.
, 330 F.3d 502, 509 (D.C. Cir. 2003). I t should be appar ent, howeve r, that there is a g rea t deal of overla p in the three fac tors. Fa ctor number one seems to focus on other

cu s t o m ers and fac tor two on the broad consumer population. But it is hard to i m agine any action that would enhanc e competition satisfy ing the public interest that actua lly would not also satisfy the first two fac tors. On the other hand, it might be that a proposed forbe ara

nce that would not injure competition
among providers could still somehow be prejudicial to

consumers.

Petitioners Ver izon and AT& T have long arg ued that
, in light of the exis ting price cap reg ime, the Commi ssion’s

acc ounti n g rules are unnece ssary and have used the vehicle of7

section 10 to chip awa

y at specific acc ounting rules. I n a trilogy of 2008 order s, the FCC g rante d incumbent L ECs’ petitions for forbe ara nce from cost assig nment rules and cer tain MI S Reports. The Commi ssi o n’s first Orde r g ranting AT& T forbe ara nce from cost as s ignme nt rules (and associate d MI S
repor ting require me n ts) was conditioned on, inter alia
, requiring AT& T to reta in and provide Part 32 data upon request, implement a method of prese rv i ng the integ rity
, for both costs and reve nues, o f i ts acc ounting sy stem, and submit a detailed compliance plan. I n t he second Orde r, the Commi ssion provided forbe ara

nce fr o m M I S s er vice quality and infrastruc ture filing require ments to AT& T, Ver izon and Qwest, and ex tended the same conditional forbe ara nce from cost assig nment rules (pre viously g rante d to AT& T) to V erizon and Qw es t. Finally
, in the third Orde r, the Commi ssion g ran t ed forbe ara nce t o Qwest, AT& T and Ver izon from filing cer tain financ ial-themed MI S Reports on the condition that the car riers continue to file cer

tain pole attachme nt data pub l icly with the Commi ssion. I n sum, the C ommissi on’s gra nts of forbear ance

wer e conditioned upon the continued application of Part 32 to Ver izon, AT& T, and Qwest in all three Orde rs, and its decisions
to dispense with filing require ments did not aff ect the obliga tion to maintain the underlying Par t 32 data.

This bring s us t o the instant petition. USTelec om soug ht relief from a my

riad of sta tutory and rule provisions, including application of the entire Part 32 to all incumbent price cap

ca rr iers. USTelec om also made two separ ate reque sts fo r

3 partial forbe ara

nce for a ll price cap car

riers from (1) specific Part 32 rules containing proper ty rec ord require men t s and (2)
cost assig nment rules (which had alre ady b een g rante d to AT& T
, Ver izon, and Qwest). USTelec om and petitioners

USTel ec om is peti ti one rs ’ tr ade as so ci at io n and re pre se nts incum bent 3 L ECs. Ve ri zo n Br. at

9.8

arg ued Pa rt 32 no longe r serve s any curr ent fede ral need when
app lied to incumbent, price cap L ECs. And, they claimed, the burden an d ex pense associate d with keeping two sets of
reg ulatory and financ ial acc ounting books actua lly distorts an incre asing ly competit i v e marke tplace for telecommunica tion service s; the costs of Part 32 compliance are imposed solely on incumbent L ECs. I n the wee ks prec eding the alre ady -extended deadline when the petition woul d be deeme d g rante d, USTelec om filed a number of ex parte submissi ons, two of which set forth proposed terms for what they called “ voluntary

comm i tments” or “conditions for” forbe ara nce. Although the 4
p a r t i e s u s e t h e t e r m s “ p a r t i a l ” a n d “ c o n d i t i o n a l ” intercha ng eably
, these are two distinct ty pes o f forbeara

nce; partial forbe ara

nce is a reque st for the FCC to fo rb ea r from apply ing a subset of a g roup of reg ulations, wher eas conditional forbe ara nce is a reque st for acr oss-the-boa rd forbe ara

nce subject
to enumera ted conditions.

The Commi ssion g rante d partial, conditional, or complete forbe ara nce from 126 of 141 challeng ed rules. The FCC did not, howeve r, g rant the g lobal reque st to forbe ar from apply ing Part 32 to incumb en t p rice cap car riers beca

use it found that USTelec om had failed to car ry its burden of proof on eac h of the thr ee p ro n g s of section 10. USTelecom Order
, 28 FCC Rcd 7627, 7630 ¶ 2 (2013). Ver izon and AT& T petition for revie w of the USTelecom Order.

The April 18 ex parte le tt er of fe re d that incum

bent pric e ca

p c ar ri er s 4

w oul d (1) conti nue fi li ng pol e at ta chm ent info rm at io n and dev el op

m et hods to re plic at e necessa ry pol e at

ta chm ent data fo r fi li ng purpos es , (2) co m

m it to tr ac k tr ans ac ti ons subject to se ct io n 272(e)( 3), and the Ma

y 3 ex p a rt e le tter added that the ca rr ie rs w oul d (3) li m it incr ea se s to th e cos t input to the FCC pol e at ta chm ent ra te fo rm

ulae fo r thre e y ea

rs , and (4 ) reta in the abil it y to pro vi de fi nanci al data depic ti ng e xist ing Par

t 32 ac co unt st

ruc ture s f or fiv e y ea rs

.9

II.

Petitioners insist that the switch to price cap reg ulation has rende red Part 32 useless, and section 10 there fore require s the FCC to fore bear from apply ing it to incumbent price cap

car riers. Even if section 10 does not require complete forbe ara nce a ccor ding to pe titioners, the FCC’s dec ision not t o g rant partial forbe ara

nce is arbitra

ry and capr icious. Petitioners further arg ue the Commi ssion did not explain its selec tive enfor ceme n t o f Part 32 acc ounting rules (which only apply to incumbent p ri ce cap car riers) and ignor ed the costs of comply ing w ith Part 32.

The Commi ssion of course arg ues that it rea sonably denied USTelec om’s petition. The FCC maintains that it is not require d, under its own rules, to a ddress petitioners’ ex parte conditional

or partial forbe ara

nce reque sts that wer e not contained in the

o rig inal forbe ara

nce petition as to the g ener al require ment o f Part 32 cost data. And the Commi ssion asser ts a curr ent, fede ral

n eed to reg ulate (1) pole attachme nt rate s which are based o n costs, as well as (2) incumbent p ri ce cap car riers’ interstate

acc ess rate s, which the FC C h as a statutory duty to ensure are just, rea sonable, and nondiscriminatory

. We are told that Part 32 is neede d to comply with s ec t i o n 254(k)’ s prohibition on

cross subsidiz ation and section 273(e) (3)’ s require ment that price cap L ECs proper l y re co rd their imputation costs. The Commi ssion explains that GAAP does not provide the requisite
cost data beca

use it is mere ly a non-industry specific set of principles that does not meet the Commi ssion’s need for detailed

co st information that is uniform acr oss car riers. The FC C contends, moreove r, that p eti tioners did not show that their (unsubstantiated) costs of compliance outweig hed the benef its provided by Part 32’s rete ntion. Finally
, the Commi ssion maintains that Part 32 is nece ssary only for incumbent L ECs so10

they do not use their control over wholesale network fac iliti es to impede compe tition or charg e unre asonable rate s. 5

A.

At oral arg ument, petitioners asser ted t h at when the Commi ssion deter

mines whether to g rant forbe ara nce under section 10 it is en gage d, under the APA, in an adjudication rathe r than a rul emaking

. We take it the petitioners, by so arg uing, wer e attempting to avoid our case s holding that revie w of an ag ency ’s denial of a rulemaking “is evalua ted with a defe renc e so broa d as to make the proce ss akin to nonrevie wability .” Cellnet Commc’n, Inc. v. F.C.C.
, 965 F.2d 1106, 1111 (D.C. Cir. 1992). Although parties h av e taken differ ent positions befor e the Commi ssion as to the proper desig nation of section 10 proce dures, the FCC, while s u ggest ing they appea r like rulemaking
, has avoided conclusively deciding the issue. Procedural Forbearance Order
, 2 4 FCC Rcd 9543, 9554 ¶ 2 (2009).
Early on, in p as s i n g, we descr ibed a pre- section 10 forbe ara nce petition as a reque st for a ru l emaking

. Am. T el. & T el

. v. F.C.C.
, 978 F.2d 727, 730-31 (D.C. Cir. 1992). Our char acte rization was adopted and expanded to an entire cate g ory of FCC forbe ar an ce order s by the Supreme Court. MCI Telecomm s

. C orp. , 512 U.S. at 220-21 (desc ribing the FCC’s

ea rl ier forbe ara

nce order s as “a series of rules”)

. Actually
, i t should be obvious that a section 1 0 fo rbea ranc e petition is a reque st f or a rulemaking , since it seeks a modification of a rule

Alt hough p et it io ner s cl ai m it is unfai r to im pos e Par t 32 data 5

re quire m ents onl y on incum bent ca rr ie rs , sug ge st ing that new entr ants

suc h as w ir el es s ca

rr ie rs hav e al te re d the m ar ke tplac e (pa

ra doxic al ly tho se new entr ants ar e prim ar il y peti ti one rs ’ ow n af fi li at es ), they do
not squar el y ch alle nge the Com m is si on’s prio r dete rm inat io n that incum bents hav e m ar

ke t pow er

. Of co urse , t

hat w oul d be pos si ble i n the upco m ing rule m ak ing

.11

which has only future eff ect. Bowen v. George town Univ. Hosp.
, 488 U.S. 204, 216 (1988) (Scalia, J

. concur ring ). Neve rtheless, since Congr ess has provided specific criter ia that
must g overn the Commi ssion’s consideration of a section 10 petition the FCC’s discreti o n is somewhat more limit ed than would be true in the more ty pical rule making reque st.

More contentious is the question as to which party has the burden of proof. Ver izon and AT& T claim that since the statute

rea ds the FCC “shall” g rant forbe arance if the conditions are met, the burden is on the Commi ssion. Fa ced with the same 6 issue, the Tenth Circui t concluded that since the statute was silent on the question, un d er Chevron
, the Commi ssion’s in t erpr etation – that the burden is on the petitioner – should
preva il. Qwest Corp. v. F.C.C
., 689 F.3d 1214, 1226 (10th Cir. 2012). We ag ree

. 7

B.

Petitioners substantive challeng e, essent ia ll y , is that Part 32

acc ounting rules, which are costly to maintain, ar e n o l ong er “nec essar y ” within the meaning of section 10(a) (1) and (2) and

The FCC insi st s that the le ga l quest io n of burd en of pro of is not 6
pro per ly bef

or e us bec aus e no par

ty ra is ed the ar gum ent at the ag enc y le ve l. See 47 U.S.C. § 405(a) (e xhaust io n re quire m ent)

. H owever, peti ti one rs ar e not re quire d to ra ise “futil e” ar gum ents bef or e the
age ncy , and the FCC has dec is iv el y al lo ca te d the burden of pro of to the par ty se ek ing for bea

ra nce in it s Forbear

ance Proc edure

s Orde r and appli ed that rule i n the USTele com Or der

. See Omni

point Corp. v. F.C.C. , 78 F.3d 620, 635 (D.C. Cir . 199 6).

Sec ti on 7(c ) of the APA plac es the burden of pro of on the pro pone nt 7 of a rule or or der
, but that se ct io n go ve rns fo rm al rule m ak in g (o r adjudica ti on)

. 5 U.S.C. § 556(d). We do not nor m al ly think of burden of pro of as ap p ly in g to an info rm al rule m ak ing
, y et the lo gi c of

se ct io n 7(c ) see ms to apply equal ly to this unique ty pe of info rm al rule m ak ing

.12

are there fore no longe r in the public interest (3). We ha ve held that the Commi ssion’s definition of nece ssary – that there is a strong connec tion betwee n the rule in question and the ag ency ’s purpose – is one to which we defe r. Cellular T elec omms. , 330 F.3d at 512. But the C ommissi on itself has st ated that it must have a “cur

rent need” to maintain a statutory require ment or a challeng ed reg ulation. AT& T Cost Assignment Forbearance Order
, 23 FCC Rcd 730 2
, 7 3 1 3-14 ¶ 20 (2008). Petitioners insist that there i s n o longe r such a curr ent need beca use the Commi ssion’s intr oduction of price cap acc ess rate s repla ced the old cost of servic e methodolog y

.

Putti ng asi d e for a moment the question of whether the price cap reg imen has g ener ally made unnece ssary Part 32 data, petitioners conce de that the rate s for pole attachme nts (any attachme nt by a cable television sy stem or telecommunica tions service provider to a pole, duct, conduit or rig ht-of-w ay owned

or controlled by a utilit y or L EC which is require d to g rant such

acc ess) are still based on co s t s ; there is no price cap for pole
att achme nt rate s. I nitial rate s are established throug h p ri v at e 8
neg otiations betwee n a pole a ttacher and the carr ier. Although neither the statute nor the FCC’s i mplementing rules ex plicitly require submissi on of Part 32 data, neg otiating parties re l y on cost data contained in Part 32 to set rate s, and in the event there is a dis pute, t o form the b as is of allega tions in a complaint. I t follows, in adjudicating disputed pole attachme nt rate s, the FCC relies on Part 32 cost data to deter mine whe t h er the rate is

rea sonable – if th e rate ref lects actua l costs, and if not, to set a lawful rate

. There are curr ently eig ht section 224 complaints pending befor e the FCC. Apar t from the adjudicator

y proce ss, 9

See 47 U.S .C. § 2 24(a) (4), ( d)(1) , (f) (1); 47 C. F.R. § 1.14 04. 8

Pet it io ner s le gi ti m at el y poi nted out in their b rief ing that ther e w as 9 onl y one pendin g se ct io n 224 co m plai nt bec aus e, prio r to or al

ar gum ent, the Com

m is si on had not update d it s w ebs it e. Enforc eme nt Bure au - Mark

et Dis putes R esoluti on Div is ion Pending Formal13

the Commi ssion uses (and has rec ently used) data derive d from Part 32 to modify the formula that parties use to calc ul at e p ole attachme nt rate s. See US T el ec om Order
, 28 FCC Rcd at 7659 ¶ 64.

Petitioners insist that Part 32 is unnece ssary because the FCC has other informational source s available that allow it to comply with its statutory duties t o ensure that pole attachme nt rate s are just and rea sonable – primar ily GAAP. 1 0

But petitioners conce de that cert ain expense cate g ories under Part 32 do not have a “pre cise corollar y under GAAP” and there are “sig nificant” differ ence s in the two trea tm en t s of

cer tain pole attachme nt expenses. The FCC assert s that as a result of t his disjunction, GAAP acc ounting would actua lly incre ase the ra

te price cap c arr iers cha

rg e for pole attachme nts. US T elecom Order
, 28 FCC Rcd at 7659-60 ¶ 65. Altho u gh petitioners claim that pole attachme nt rate s b as ed on GAAPderive d data could decline u n d e r a p p r o p r iate circ umstances, they do not dispute that they also could incre ase. Nor does the sparse

rec ord befor e us contain evidenc e as to how (or in what direc tion) transitioning to GAAP would result in rate distortions. I n any event, petitioners admit, rely ing on GAAP would require

car riers to develop new methods to replica te the pole attachme nt cost data. So, we think petitioners’ arg ument that the FCC must

re l y on its price cap reg imen for the setting of pole attachme nt rate s is rather w eak a

nd easily reje cted.

Perhaps rec og nizi ng the wea kness of their claim reg arding

Complaints

, http:/

/w w w

. FC C

. G O V

/e ncy cl op e di a

/ e b- pe nd i ng

- f

o r m a l

- an d- pol e- ac ti on- co m

plai nts ( la st

upd at ed Sep. 15, 20 14).

Pet it io ner s do not full y dev el op how the pol e at ta chm ent co st data it 1 0
pro vi des to the Com

m is si on (a s a co nditio n of the FC C ’ s ea rl ie r fo rbe ar anc e f

ro m fil ing MI S Repo rt

43- 01) va

ri es fro m Par t 32 data

.14

pole attachme nt rate s, petitioners submitt ed an ex p arte letter
sug g esting
, inter alia
, a partial forbe ara nce – Part 32 data would be require d only for pole attachme nt rate s. T h e Commi ssion, howeve r, declined to co nsider a proposal submitt ed so late beca use it had ins u fficie nt time to evalua te it. We have previously said that the FCC is not oblige d to consider late-f iled proposals. Feature Gr o up IP W est, LLC v. F.C.C.
, 424 Fe d. App’x. 7, 10 (D.C. Cir. 2011)

. And althoug h the Commi ssion 1 1 has, on occa sion, sua sponte order ed partial forbe ara nce, AT& T Cost Assignment Forbearance Order
, 23 FCC Rcd at 7318 ¶ 28; USTelecom Or d

er , 28 FCC Rcd at 7360 ¶ 2, there is surely no obliga tion for the Commissi on to do so.

C.

We turn to the more important question of whether Part 32

acc ount i n g d ata is still neede d to ensure that acce ss rate s of incumbent L ECs are “just and reasonable ” withi n t h e meaning of sec t i o n 1 0(a) (1). The Commi ssion claims it needs that data both to evalua te exis ting price cap acc ess ra t es , to deter mine whether they are adequate, but also to deal with complaints that

a particular rate is discriminatory even if under the price cap rate . Petitioners asser

t that the C ommissi on itself has said that it did not anticipate altering those rate s, AT& T Cost Assignment Forbearance Order
, 23 FCC Rcd at 7313 ¶ 19, and that actua lly there have been no complaints and subsequent reque sts for Part 32 data since the p ri ce cap reg imen was instit uted. As the Commi ssion noted howe v er, there was in fac t one rec ent complaint which was not adjudicate d only beca use the tariff was withdrawn.

Par ti es m ay ci te unpu blis hed opi nio ns “as pre ce dent.” See D.C. C I R 1 1 R. 32.1 (b)( 1); but se e D.C. C I R

. R. 36(e) (2) (“ [P ]a nel’s dec is io n to is sue an unpu b li she d dispo si ti on m ea ns that the panel se es no pre ce denti al va lue in that dispo si ti on.” ). We ci te Featur e Group fo r it s pe rs uas iv e a

uthor it y , and ado pt it s dic ta

as a ho lding

.15

Stil l, petitioners arg ue that if the C o m m i ssion wer e to forbe ar – excuse petitioners from maintaining Part 32 data – and a complaint was filed a carrie r could either submit GAAP d ata to substantiate the rea sonablene ss of the rate s o r could even

rec rea te Part 32 data. We think the Commi ssion’s response is

rea sonable. As we noted ear lier, GAAP is desig ned for investors
not reg ulators and to rec rea te Part 32 data t o m eet a complaint would take too lon g. Although the Commi ssion admits that it has not soug ht P ar t 32 data from an incumbent car rier for the
purposes of investiga ting a tariff since the price cap reg imen was i nstitut ed, it points out that the very exis tence of the data constitutes a deter

rent to the institution of discr iminatory rate s.

To be sure the curr ent need for Part 32 data – outside pole attachme nt rate s – appea

rs marg inal. I f th e Commi ssion wer e insisti ng that the incumbent car riers maintain Part 32 data

mere ly as a competitive handica p, that would surely b e illegitimate. But we have n o rea son to doubt the FCC’s g ood faith. There fore
, the Commi ssion is entitled to defe renc e as to its
purpose.

We have consistently defe rre d to the Commi ssion’s forbe ara nce decisions, Cellular T el ecom ms. , 330 F.3d at 510 (“[ A] measure may be ‘nec essar y ’ even though acc eptable alterna tives have not been ex hausted.” ); Earthlink, Inc. v. F.C.C.
, 462 F.3d 1, 8 (D.C. Cir. 2006) (F CC’s forbe ara nce analy sis may vary under the circ umstances an d can be made “with an ey e to the future” ); In re Co r e C o mmc’ ns, Inc.
, 455 F.3d 267, 282 (D.C. Cir. 20 0 6 ) (“[A]ge ncy ’s predic tive judgme nts ab o u t are as that are within the ag ency ’s field of discretion and expertise are enti t l ed to particula rly defe rential revie w.”) ; Feature Grp. IP W est , 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 W orldCom, Inc. v. F.C.C.
, 209 F.3d 760 (D.C. Cir. 2 0 0 0), except in case s wher e the Commi ssion devi ated without16

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 C o r

p

. v. F.C.C.
, 236 F.3d 729 (D.C. Cir. 2001), or did not discuss section 10' s criter ia at all, Verizon Tel. Cos. v. F.C.C.
, 374 F.3d 1229 (D.C. Cir. 2004)

. Since we think that the FCC rea sonably conclude d that it continued to need Part 32 data to ensure that acc ess rate s wer e not discriminatory – we defe r once more – there fore
, it is unnece ssary for us to consider fac tors two and thre e of subse ction 10(a)

.

* * *

We are also told that the Commi ssion plans to consider the continuing need for P art 32 data in a pe n d ing rulemaking

. We have held that t he Commi ssion cannot defe nd ag ainst the forbe ara nce p eti tion by pointing to an upcoming rulemaking (such a scena

rio is not implicated here ). AT& T Corp.
, 236 F.3d
at 738. On t he other hand, that does not mean that consi d er ati ons that wer e rele vant to the forbe ara nce petition would not have continuing rele vance in the ordinary rulemaking

. I t may well be that petitioners’ contention that Part 32 data is no longe r justified by the expense will prove mo re co m pelling. 1 2

The pe tition for reviewis denied. So ordered.

Cos t data pre se nted by peti ti one rs w as sp arse

. See Pet it ion of 1 2 USTele com for Forb ea ra n ce , WC Doc ke t No. 12- 61 at 40 (Fe b. 16, 2012 ) (USTe le co m es ti m at ing “mi ll io ns of d olla rs ” spe nt on

m ai ntai ning tw o se par at e se ts of boo ks ); Ex Parte Let te r fr om USTele com to FCC
, WC Doc ke t N o. 1 2

- 61 at 13 (Apr. 18, 2013 ) (AT& T not ing that it is “difficu lt to quantif y al l the co st s of

co m plia nce ” a nd est im at ing $18 to $24 m il li on in annual co st s) ; Or al Arg

. (26:15- 2 7:00) (AT& T spe nds al m os t $24 m il li on a y ea r si m ply
to m odi fy ac co unting pro gr am s to m at ch up w it h Par t 32). The re co rd la ck s any info rm at ion ab out peti ti one r Veri zo n’s co st of co m plia nce

.