United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 4, 2021 Decided July 9, 2021

No. 19-1233

GREAT LAKES COMMUNICATION CORP., ET AL.,

PETITIONERS

v.

FEDERAL COMMUNICATIONS COMMISSION AND UNITED 

STATES OF AMERICA,

RESPONDENTS

AT&T CORP., ET AL.,

INTERVENORS

Consolidated with 19-1244

On Petitions for Review of an Order

of the Federal Communications Commission

Lauren J. Coppola argued the cause for petitioners. With 

her on the joint briefs were G. David Carter, Dwayne D. Sam, 

Anthony T. Caso, John C. Eastman, Henry Goldberg, and W. 

Kenneth Ferree. Robert Callahan entered an appearance.
2

James M. Carr, Counsel, Federal Communications 

Commission, argued the cause for respondents. With him on 

the brief were Michael F. Murray, Deputy Assistant Attorney 

General, U.S. Department of Justice, Robert B. Nicholson and 

Andrew N. Delaney, Attorneys, Thomas M. Johnson, Jr., 

General Counsel, Federal Communications Commission, 

Ashley S. Boizelle, Deputy General Counsel, and Richard K. 

Welch, Deputy Associate General Counsel. Jacob M. Lewis, 

Associate General Counsel, and Matthew J. Dunne, Counsel, 

Federal Communications Commission, entered an appearance.

Timothy J. Simeone, Deepika H. Ravi, Michael J. 

Hunseder, James P. Young, Christopher M. Heimann, and 

David L. Lawson were on the joint brief of intervenors AT&T 

Corp., et al. in support of respondents. C. Frederick Beckner 

III, Jonathan E. Nuechterlein, and Christopher J. Wright

entered appearances. 

Before: WILKINS and RAO, Circuit Judges, and 

SILBERMAN, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge 

SILBERMAN.

SILBERMAN, Senior Circuit Judge: Petitioners challenge 

an FCC rule that discourages competitive carriers from 

stimulating access fees that long-distance carriers must pay 

when routing calls to a local carrier. We deny the petitions

because the Commission has ample statutory authority and its 

rule is reasonable. 

I

As we previously described, so-called “competitive 

carriers” compete with legacy “incumbent carriers,” who are 
3

descendants of AT&T’s broken-up monopoly. See generally

Comptel v. FCC, 978 F.3d 1325 (D.C. Cir. 2020). Typically, 

the latter own the local phone network, while the former lease 

or purchase at wholesale the use of the incumbent’s network to 

deliver services.

The smaller of the incumbent carriers—operating largely 

in rural areas—are known as rate-of-return carriers because 

their prices are set by a regulatory formula based on their costs 

plus a profit percentage. Competitive carriers benchmark their 

rates to an incumbent operating in the same area, whose rates 

have already been approved. See Connect America Fund, 

Notice of Proposed Rulemaking, 26 FCC Rcd. 4569 ¶ 36 

(2011). Since competitive carriers use the networks of others, 

they have greater geographic flexibility. And this flexibility 

allows them to act quickly to exploit profitable market 

opportunities and engage in regulatory arbitrage.

In a previous case, we described the competitive carriers’ 

targeting of a market niche servicing large business and 

government entities. Comptel, 978 F.3d at 1331. In this case,

the FCC focuses on the competitive carriers’ pursuit of another 

market segment—toll conference centers. They host telephone 

conferences where multiple people call in to a meeting.

Servicing toll conference centers has been a particularly 

lucrative business for competitive carriers. Under existing (and 

congressionally-sanctioned) regulations, long-distance carriers 

must pay an “access fee” to local carriers that deliver calls to 

their recipients. The access fee covers the responsibility of

tandem switching and transportation to the local carrier’s end 

office. The more people who call into the conference center,

the more profit the carrier generates, because fees exceed the 

marginal cost to the carrier. This provides a competitive carrier 

an incentive to operate in areas where the incumbents have high 
4

per-minute interstate access rates, and then to inflate the 

amount of traffic on its system.

Calls to rural areas are more expensive (and profitable) for 

technological and regulatory reasons. So competitive carriers 

will often route calls through rural areas and encourage toll 

conference centers to operate there. Indeed, some carriers 

operating in rural areas have had explicit agreements with call 

centers to share revenue from access charges—thereby 

stimulating conference callers to offer artificially low rates 

(even totally free calls). 

As a result of these incentives, some sparsely populated 

rural areas receive a disproportionate and overwhelming 

number of calls. The Commission credited AT&T’s 

observation, for instance, that twice as many calling minutes 

were routed in a month to Redfield, South Dakota (population 

2,300) and one end office as were routed to Verizon’s facilities 

in New York City (population 8,500,000) and 90 end offices. 

Similarly, Sprint explained that Iowa, with 1% of the U.S. 

population, accounts for 48% of Sprint’s access fee payments.

In addition to higher fees, the Commission notes that access

stimulation may result in overloaded networks, call blocking,

and dropped calls. Updating the Intercarrier Compensation 

Regime to Eliminate Access Arbitrage, 34 FCC Rcd. 9035 ¶¶

15, 95, 111 (2019) (“Order”).

The long-distance carriers complained to the FCC. Under 

existing rules they could not charge their customers separately 

for such calls; long-distance rates for customers are calculated 

as flat rates without regard to the length of call or geographic

distance. See 47 U.S.C. § 254(g); Connect America Fund, 

Report and Order, 26 FCC Rcd. 17663 ¶ 663 (“2011 Order”).

The interexchange carriers claimed, therefore, that the costs 
5

generated by the few who were making these calls to 

conference centers were borne by all customers.

In a 2011 rule, the FCC agreed with the long-distance 

carriers’ complaints. 2011 Order ¶ 675. The FCC designated 

carriers who exploited this regulatory loophole as “access 

stimulators.” That designation included both competitive 

carriers and rate-of-return carriers who (1) had a revenue 

sharing agreement with a third-party based on access charges 

and (2) had three times as many long-distance calls coming in 

(“terminating”) as going out (“originating”).

1 If designated an 

access stimulator, regulators would reduce the access fees that 

a carrier was permitted to charge. 2011 Order ¶¶ 684–86, 688–

90.2

But the 2011 rule was not completely successful. Some 

competitive carriers continued to stimulate access fees 

notwithstanding the sanction. Others successfully

circumvented the ban on direct revenue sharing with the 

conference call centers by using third parties. See Order ¶ 44;

AT&T Corp. v. FCC, 970 F.3d 344, 351–53 (D.C. Cir. 2020).

So, in 2018, the Commission revisited the problem. It 

issued a Notice of Proposed Rulemaking that, importantly, 

inquired “whether, and if so how, to revise the current 

definition of access stimulation to more accurately and

1 Even if a carrier didn’t meet the 3:1 ratio, it could still be 

an access stimulator if it had doubled either its interstate originating 

or terminating switched access minutes in a month, year over year.

2 Certain carriers challenged the 2011 rule in the Tenth 

Circuit, which sided with the Commission. See generally In re FCC 

11-161, 753 F.3d 1015 (10th Cir. 2014).
6

effectively target harmful access stimulation practices.”3 The 

prospective sanction for a carrier determined to be an access 

stimulator was a complete ban on charging access fees.

The FCC released a draft order in which it stated that it 

would add an alternative definition of access stimulation that 

would not include the troubling revenue sharing agreement as 

an essential element. Instead, competitive—as well as rate-ofreturn—carriers that terminated six times the number of longdistance calls they originate would be access stimulators, even 

if there was no revenue sharing agreement.

After the close of the comment period, AT&T and NTCA 

(a trade association including rate-of-return carriers) met with 

the FCC and claimed that rate-of-return carriers did not engage 

in harmful access stimulation practices, but some would 

nevertheless hit the 6:1 ratio. They proposed a higher ratio—

10:1—for rate-of-return carriers. That same day, the FCC 

released a notice of its final agenda, thereby, under the 

Commission’s rules, preventing further responses. 

The Commission adopted rules largely following those 

proposed in the draft order but incorporating the differentiated 

definitions proposed by AT&T and NTCA. In addition to the 

old definition of access stimulation, the Commission added a 

new factor. If a competitive carrier exceeded a 6:1 ratio of 

terminating to long-distance calls in any month, it would be 

labelled an access stimulator regardless of whether it had any 

revenue sharing agreements. Order ¶¶ 43–67. But rate-ofreturn carriers without a revenue sharing agreement could 

3 Notice of Proposed Rulemaking, 33 FCC Rcd. 5466, 5475

¶ 26 (2018) (“NPRM”).
7

avoid access-stimulator status if their ratio did not exceed 10:1 

for three consecutive months.4

The Commission explained its separate test for rate-ofreturn carriers by emphasizing their structural and economic 

differences from competitive carriers. Id. ¶¶ 47–55. As we 

previously described, the Commission noted that many rate-ofreturn carriers are small and rural. They have fixed offices and 

infrastructure serving defined communities. By contrast, many 

competitive carriers serve only high-volume commercial 

customers and can flexibly target those customers. Id. ¶ 49. 

And the Commission found that rate-of-return carriers may be 

more susceptible to seasonal fluctuations given the economics 

of rural communities. These considerations, coupled with the 

lack of evidence that rate-of-return carriers were engaging in 

harmful access-stimulation practices, led the Commission to 

adopt the separate definitions of access stimulation.

The Order prohibited an access stimulator from collecting

access charges from long-distance carriers. Moreover, it also 

imposed responsibility on access stimulators for paying any 

access charges imposed by intermediate carriers (carriers 

between the long-distance carrier and the access-stimulating 

network). Order ¶¶ 17–42. The agency explained this rule 

would “properly align financial incentives by making the 

access-stimulating [carrier] responsible for paying for the part 

of the call path that it dictates.” Order ¶ 17.

4 Rate-of-return carriers also had to be of sufficient size to 

trigger the 10:1 ratio definition—at least 500,000 minutes of 

interstate terminating traffic in an end office, averaged over three 

calendar months. Order ¶ 43.
8

II

Petitioners (several competitive carriers and companies 

that offer conference calls) challenge the rule on three grounds. 

First, they contend that it exceeds the Commission’s statutory 

authority. Second—and this is the main substantive 

argument—the rule is arbitrary and capricious (unreasonable) 

for several reasons. Third, there is a separate violation of the 

APA; the rule is not a logical outgrowth of the Notice of 

Proposed Rulemaking. We take these arguments in turn.

A

The government relies primarily on 47 U.S.C. § 201(b) for 

its authority to promulgate the Order. That section provides:

All charges, practices, classifications, and regulations 

for and in connection with [common carrier]

communication service, shall be just and 

reasonable, . . . The Commission may prescribe such 

rules and regulations as may be necessary in the 

public interest to carry out the provisions of this 

chapter.

(emphasis added). On its face, Section 201(b) gives the 

Commission broad authority to define and prohibit practices or 

charges that it determines unreasonable. Fees intentionally 

accrued by artificially stimulating and inefficiently routing 

calls would appear to fall within that wide authority. To be sure, 

under the APA, the Commission’s decisions as to what is 

unreasonable must themselves be reasonable. But if the 

Commission can legitimately conclude that local carriers’ 

behavior as an access stimulator is unfair to the long-distance

carriers and their customers—which we discuss in part B—

then the local carriers who engage in access stimulation can 
9

reasonably be described as engaging in unreasonable practices

under Section 201(b).

Petitioners respond by claiming that the statutory text in 

Section 201(b) is not as broad as it seems because other 

provisions cabin the Commission’s authority. It is claimed that 

Section 251(b)(5), which obliges carriers to establish 

reciprocal arrangements to transport and terminate calls, and 

Section 252(d)(2), which links reciprocity with just and 

reasonable agreements, are inconsistent with the remedy the 

Order applies to an access stimulator.

47 U.S.C. § 251(b): Each local exchange carrier has 

the following duties: . . . (5) The duty to establish 

reciprocal compensation arrangements for the 

transport and termination of telecommunications.

47 U.S.C. § 252(d)(2): (A) For the purposes of 

compliance by an incumbent local exchange 

carrier with section 251(b)(5) of this title, a State 

commission shall not consider the terms and 

conditions for reciprocal compensation to be just and 

reasonable unless—(i) such terms and conditions 

provide for the mutual and reciprocal recovery by 

each carrier of costs associated with the transport and 

termination on each carrier’s network facilities . . . . 

(B) This paragraph shall not be construed—(i) to 

preclude arrangements that afford the mutual recovery 

of costs through the offsetting of reciprocal 

obligations, including arrangements that waive 

mutual recovery (such as bill-and-keep 

arrangements).

(emphases added).
10

Petitioners contend that the reciprocity and mutuality 

requirements of 251(b)(5) and 252(d)(2) should inform the

reading of 201(b)’s “just and reasonable” term. But, as the 

Commission points out, neither 251(b)(5) or 252(d)(2) applies 

directly to the FCC. They are directed to carriers and State 

Commissions respectively, and the Commission’s role is 

limited to supplying background default rules for States to 

apply. See Order ¶ 99 (citing 2011 Order ¶¶ 760–81); see also

47 U.S.C. § 201(b) (granting rulemaking authority).

There is no dispute between the parties that the linguistic 

meaning of “just and reasonable,” standing alone, would give 

the Commission broad authority. See Nat’l Ass’n of Regul. Util. 

Comm’rs v. ICC, 41 F.3d 721, 726–27 (D.C. Cir. 1994). But,

arguably, the Chevron framework is still in play to determine 

whether Sections 251 and 252 affect the meaning of “just and 

reasonable” in this context. The government invoked Chevron, 

and we think its interpretation is eminently permissible. See

467 U.S. 837 (1984).

Even assuming the sections did limit the Commission’s 

authority under 201(b), Petitioners’ argument has no merit. 

They argue the sanction imposed on access stimulators is itself 

non-reciprocal and non-mutual because they can no longer 

recover access charges for calls they terminate—a 

circumstance which doesn’t apply to calls the access stimulator 

originates. This seems to us to be a rather labored and 

unpersuasive argument. Under Petitioners’ logic, if a local 

carrier’s ratio of incoming calls to outgoing were 100:1, the 

Commission would be powerless to prevent the access 

stimulator from recovering access fees despite being grossly 

disproportionate to its costs. And after all, the whole purpose 

of the FCC’s rule is to achieve a measure of reciprocity 
11

between the originating and terminating calls, and thereby 

reciprocity with the interexchange carriers.

5

In sum, we think Petitioners’ statutory arguments are 

unpersuasive.

B

Petitioners attack the premise of the FCC’s rule. It is 

allegedly unreasonable for the FCC to conclude that consumers 

were disadvantaged by the stimulation of access charges.6

Seventy-five million people use toll conferencing annually. 

And the revenue long-distance carriers receive from these 

subscribers—some $20.7 billion—dwarfs the $60–80 million 

in additional charges caused by access stimulators. 

The flaw in the argument is that, as the Commission 

explained, it is impossible for the long-distance carriers to 

charge those users the marginal cost for these services. Section 

254(g) of the Communications Act prevents them from 

charging customers directly for these costs. Since the costs are 

thus spread to all consumers, access stimulation raises the cost 

of calls for everyone. See Order ¶ 20 n.55 (citing 2011 Order

¶ 663).

5 This whole question of access stimulation will probably 

become moot as the Commission fully transitions to what is called a 

bill-and-keep regime, whereby access fees will be largely or entirely 

eliminated and each carrier will bill its customers for its cost of 

originating and terminating calls. See Order ¶ 11; 47 U.S.C. § 251(g) 

(providing the Commission authority to establish transitory rules). 

6 See 5 U.S.C. § 706(2)(A); FCC v. Prometheus Radio 

Project, 141 S. Ct. 1150, 1158 (2021) (requiring agency action be 

“reasonable and reasonably explained”).
12

Still, Petitioners challenge the notion that even though the

costs for long-distance carriers had been reduced by the 2011 

rule—and reduced further by the 2019 rule—these cost savings 

would flow to consumers. They have, according to Petitioners, 

fattened the purses of the long-distance carriers’ stockholders, 

not callers. To support this theory, Petitioners sought discovery 

into whether the 2011 rule had actually benefitted consumers. 

They contend that the Commission’s refusal to pursue evidence 

to establish their premise was erroneous and, substantively, the 

premise itself was unreasonable.

We disagree. The Commission was well within its broad 

discretion to “decide when enough data is enough.” United 

States v. FCC, 652 F.2d 72, 90–91 (D.C. Cir. 1980) (en banc).

And it could reasonably rely on common sense and predictive 

judgments within its expertise “even if not explicitly backed by 

information in the record.” Phoenix Herpetological Soc’y, Inc. 

v. U.S. Fish & Wildlife Serv., 998 F.3d 999, 1006 (D.C. Cir. 

2021); see also FCC v. Fox Television Stations, Inc., 556 U.S. 

502, 521 (2009).

In any event, the requested evidentiary exploration would 

have been a snare and a delusion. It is well established the 

interexchange market is quite competitive, as the Commission

explains. Order ¶ 32. In a competitive market, a reduction in 

producer costs can reasonably be expected to translate into 

lower consumer prices. Moreover, as the Commission further 

explained, even if some portion of the cost savings improved 

the returns of shareholders, that would benefit the public in the 

long run by encouraging further investment in long-distance 

networks.

Petitioners further contend that even large and expensive 

charges should be tolerated provided that the long-distance 

carriers are able to make a profit. This argument is based on a 
13

rather disappointing understanding of economics. The relevant 

point is that artificial network stimulation harms consumers by 

distorting the market.

* * *

Next we deal with Petitioners’ claim that it was unfair, and 

thus unreasonable, to treat the rate-of-return carriers more 

leniently than the competitive carriers. It will be recalled that 

the rate-of-return carriers are not deemed access stimulators 

unless they have incoming calls which exceed a ratio of 10:1 

vis-à-vis outgoing calls, but competitive carriers are subject to 

a 6:1 ratio.

7

The Commission “bears the burden ‘to provide some 

reasonable justification for any adverse treatment relative to 

similarly situated competitors.’” Baltimore Gas & Elec. Co. v. 

FERC, 954 F.3d 279, 283–84 (D.C. Cir. 2020) (quoting ANR 

Storage Co. v. FERC, 904 F.3d 1020, 1025 (D.C. Cir. 2018)). 

We think the Commission satisfied this burden and reasonably 

distinguished the two kinds of carriers. The rate-of-return 

carriers lack the same ability to pursue conference call centers 

as customers and game the access charge regime. They have a 

relatively defined geographic footprint that prevents the 

aggressive selling practices and rate arbitrage that competitive 

carriers can employ.

7 Petitioners also claim the 6:1 ratio is arbitrary. In a sense 

that is true, just as would be true of a 60 miles-per-hour speed limit. 

But it is within the zone of reasonableness given the Commission’s 

goal to set a ratio that would encompass carriers engaged in access 

stimulating practices without relying on a revenue sharing 

agreement. See Vonage Holdings Corp. v. FCC, 489 F.3d 1232, 

1242–43 (D.C. Cir. 2007).
14

To be sure, some competitive carriers have gravitated to 

state-of-the-art network facilities, affixing them more firmly to 

a geographic area and allowing them to pursue both business 

and residential customers. But as a class, it is still true that most 

competitive carriers are much more flexible than rate-of-return 

carriers. Therefore, the FCC’s differential treatment of the two 

types of carriers was reasonable.

Indeed, the Commission saw no evidence that rate-ofreturn carriers had sought to stimulate their access charges or 

engage in rate arbitrage. Yet the increasing use of the internet

and cell phones to initiate long-distance calls could cause rateof-return carriers’ ratio of incoming-to-outgoing calls to rise

above 6:1. So the 10:1 limitation imposed on them by the 

Commission’s Order was a reasonable prophylactic limitation. 

* * *

Petitioners argue that the Commission’s subsequent 

enforcement of the rule and grant of waivers demonstrates the 

Order’s arbitrariness, and, specifically, evidence the 

Commission’s targeting of certain competitive carriers. The 

FCC responds that such arguments are improperly before this 

Court. We side with the Commission. 

Ordinarily we review only the order or rule before us, not 

subsequent events. Comptel, 978 F.3d at 1334. However, 

Petitioners call our attention to an exception, Amoco Oil Co. v. 

EPA, 501 F.2d 722 (D.C. Cir. 1974). The peculiar 

circumstances of that case led us to consider post-rulemaking 

events for the limited purpose of assessing “the truth or falsity 

of agency predictions.” Id. at 729 n.10. We considered postrulemaking congressional testimony that bore directly on the 

plausibility of agency predictions that were essential to the 

rule—and predictions the agency reaffirmed subsequent to the 

rule. Id. at 729 n.10, 731. 
15

As we later emphasized, “[t]he exception made in Amoco 

Oil was quite narrow.” Defs. of Wildlife v. Gutierrez, 532 F.3d 

913, 920 (D.C. Cir. 2008). It does not apply here, and we 

certainly do not wish to extend it. If Petitioners want to 

challenge the Commission’s enforcement practices it will have 

to do so in a separate proceeding.8

C

There remains Petitioners’ argument that the final rules’

differential treatment of rate-of-return carriers and competitive 

carriers—even if reasonable—was not foreshadowed by the 

NPRM; it was not a “logical outgrowth” of the Notice. See U.S.

Telecom Ass’n v. FCC, 825 F.3d 674, 700 (D.C. Cir. 2016) (A 

notice “satisfies the logical outgrowth test if it expressly ask[s] 

for comments on a particular issue or otherwise ma[kes] clear 

that the agency [is] contemplating a particular change.” 

(internal quotation omitted)); 5 U.S.C. § 553(b)(3) (“The notice 

shall include . . . (3) either the terms or substance of the 

proposed rule or a description of the subjects and issues 

involved.”).

This is a troubling argument, perhaps because the

Commission accepted the last-minute proposal from AT&T 

and NTCA—too late for adverse comment. Even though we 

have concluded that the FCC’s adoption of the proposal was 

8 Petitioners also raise a rather weak argument that the Order 

creates a Network Edge inconsistently with past policy. See Fox 

Television Stations, 556 U.S. at 515. A Network Edge is the 

boundary in a bill-and-keep system where the financial responsibility 

shifts between carriers. Petitioners’ argument is not worth discussing 

because, as reasonably construed by the Commission, the Order does 

not set a Network Edge, as it does not yet institute a bill-and-keep 

regime. See Order ¶ 101.
16

reasonable, can it fairly be said that the differential treatment 

was a logical outgrowth of the notice?

The FCC’s position is clearly yes because the NPRM

explicitly asked whether the Commission should “modify the 

ratios or triggers”—plural—in the definition of access 

stimulation (recall it is 3:1 under the 2011 rule). NPRM ¶ 26.

That statement warned commenters that the prior 3:1 ratio 

could be modified. Granted, it did not explicitly suggest 

differential treatment. But since the Commission concluded 

that rate-of-return carriers were not at all access stimulators—

a conclusion that Petitioners do not challenge—it would have 

been foreseeable that rate-of-return carriers would have been 

excluded altogether from any modification of the 2011 rule.

Because even such an extreme differential treatment was 

foreseeable, the Order’s more limited differential ratios were a 

logical outgrowth of the notice.9

* * *

In sum, Petitioners have not shown that the Commission 

failed to provide adequate notice or otherwise acted 

unreasonably in its promulgation of the Order. Thus, we deny 

the petitions for review.10

So ordered.

9 Petitioners also claim that the remedy to be imposed on 

access stimulators in the final rule differs from the remedy suggested 

in the NPRM. We think that is obviously of no significance. See 

NPRM ¶¶ 8–9; 13–23; Order ¶¶ 40–41.

10 Petitioners have made a number of other and subsidiary 

arguments which we have considered and reject without written 

opinion.