Opinion ID: 442118
Heading Depth: 3
Heading Rank: 1

Heading: The Meaning of Order.

Text: 25 The Louisiana Commission presents what can be taken to be two distinct arguments for its position that the meaning of the word order in the statute does not encompass the FCC January 6 Preemption Order. First, the Louisiana Commission contends that the Preemption Order was issued merely to clarify the law and not to compel state regulatory commissions to take any action. Specifically, the Louisiana Commission asserts that the order merely is an interpretation of the preemptive effect of Sec. 220(b), which provides that the FCC shall, as soon as practicable, make depreciation prescriptions. According to the Louisiana Commission, the Preemption Order is not binding and thus is unenforceable under Sec. 401(b). 26 In determining the effect of an administrative action, we must, of course, look beyond its label to its substance. See Avoyelles Sportsmen's League, Inc. v. Marsh, 715 F.2d 897, 908-09 (5th Cir.1983); Brown Express, Inc. v. United States, 607 F.2d 695, 700 (5th Cir.1979). If an administrative agency intends a declaration to be no more than an expression of its construction of a statute or rule, the declaration is interpretive in nature and does not have the full force of law. If, on the other hand, an agency acts in accordance with its legislatively delegated rulemaking authority, the declaration is legislative in nature and binding on all applicable persons. Chamber of Commerce of the United States v. OSHA, 636 F.2d 464, 468 (D.C.Cir.1980); Brown Express, Inc., supra, at 700; Joseph v. United States Civil Service Comm'n, 554 F.2d 1140, 1154 n. 26 (D.C.Cir.1977). In addition, administrative agencies may make rules of general application in individual adjudicative proceedings. See Shell Oil v. FERC, 707 F.2d 230, 235 (5th Cir.1983). 27 The district court held that the language of the Preemption Order is plainly directed to all state regulatory bodies and plainly declares that their depreciation procedures must comply with FCC procedures. 570 F.Supp. at 236. We agree. The FCC adopted the Preemption Order in a rulemaking proceeding only after receiving a significant number of comments and reply comments. 13 Although the FCC stated in the course of the Preemption Order that Sec. 220(b) of the Communications Act automatically preempted state depreciation policies, the FCC also explicitly relied on its own legislatively delegated power to preempt. 92 F.C.C.2d at 875-80. Indeed, the FCC in the Preemption Order did far more than merely interpret the Act and relevant legislative history. The FCC analyzed the policies underlying its depreciation methodologies and concluded in no uncertain terms that this Commission's depreciation policies and rates, including the expensing of inside wiring, preempt inconsistent state depreciation policies and rates. 14 Reading the Preemption Order as a whole, we have no doubt that in issuing the order the FCC intended not merely to advise the public on its interpretation of the preemptive effect of Sec. 220(b), but to preempt as a matter of substantive law inconsistent state practices. 15 28 Second, the Louisiana Commission contends in effect that the FCC Preemption Order, regardless of its binding effect, is not enforceable under Sec. 401(b) because that provision only applies to those orders that are the product of an adjudicative proceeding. By making this argument, the Louisiana Commission is in effect inviting us to travel down the same path recently traversed by the First Circuit in New England Tel. & Tel. Co., supra. After carefully reviewing the arguments both in favor and against adopting such a narrow interpretation of Sec. 401(b), however, we find that we must decline this invitation and instead join the Eighth Circuit in upholding the authority of the district court under Sec. 401(b) to enforce the FCC Preemption Order. See Southwestern Bell Tel. Co., supra. 29 The First Circuit in New England Tel. & Tel. Co., supra, based its interpretation of order in Sec. 401(b) on several policy considerations. 16 The court expressed concern, first, that, if Sec. 401(b) were construed to allow enforcement of general FCC rules and regulations by private parties, the FCC's primary control over the enforcement of the Communications Act would be seriously undermined. Such a construction, second, would place the interpretation of the rules and regulations in the hands of the some 700 federal district judges, thus threatening the sound development of a coherent nationwide policy. Third, a broad construction of Sec. 401(b) would often result in fractionated review of intrastate rates by encouraging private parties to challenge in federal court discrete aspects of the state ratemaking procedure. Fourth, the court noted that allowing private parties to utilize Sec. 401(b) solely to enforce specific adjudicatory orders would make more intelligible the inability of district courts in Sec. 401(b) proceedings to consider the substantive validity of the underlying order. 30 While we acknowledge the importance of these policy considerations, we are not persuaded by them to adopt a restrictive construction of the statute. First, the First Circuit was not able to cite, and our own research fails to uncover, a single precedent in support of its interpretation. 17 At least two Supreme Court decisions, however, can be read as providing support for interpreting the term order in Sec. 401(b) to include administrative rules. In Ambassador, Inc. v. United States, 325 U.S. 317, 65 S.Ct. 1151, 89 L.Ed. 1637 (1945), the Supreme Court considered the validity of a preliminary injunction issued against hotels in violation of a tariff regulation imposed by the telephone company. The tariff regulation had been filed in compliance with an FCC rulemaking order and had not been specifically upheld by the FCC as reasonable. The Supreme Court, in sustaining the injunction, upheld the district court's determination that the defendant hotels were in violation of the regulation and found that the suit to enjoin the violation was authorized under Sec. 401. Although the Court failed to specify the subsection of Sec. 401 to which it was referring, it is clear that the suit had to have been brought under Sec. 401(b) since Sec. 401(a) only authorizes a district court to enjoin violations of the Act itself. 18 If Sec. 401(b) is available to enforce tariff regulations filed pursuant to agency rulemaking, the section should surely be available also to enforce rules and regulations of the agency itself. 31 Furthermore, in Columbia Broadcasting System, Inc. v. United States (CBS), 316 U.S. 407, 62 S.Ct. 1194, 86 L.Ed. 1563 (1942), the Supreme Court held that FCC regulations were orders within the meaning of Sec. 402(a). 19 In asking us to construe order more narrowly in the context of Sec. 401(b) than did the Supreme Court in interpreting the neighboring Sec. 402(a), the Louisiana Commission faces the natural presumption that identical words used in different parts of the same act are intended to have the same meaning. Atlantic Cleaners & Dyers, Inc. v. United States, 286 U.S. 427, 433, 52 S.Ct. 607, 609, 76 L.Ed. 1204 (1932). See also Hotel Equities Corp. v. CIR, 546 F.2d 725, 728 (7th Cir.1976); Curry v. Block, 541 F.Supp. 506, 518 (S.D.Ga.1982), aff'd, 738 F.2d 1556 (11th Cir.1984). This presumption, of course, is not rigid and readily yields whenever there is such variation in the connection in which the words are used as reasonably to warrant the conclusion that they were employed in different parts of the act with different intent. 286 U.S. at 433, 52 S.Ct. at 609. 32 CBS dealt with FCC regulations that precluded a broadcast station from obtaining a license if the station had entered into certain types of contracts with a broadcast network. CBS brought the action under Sec. 402(a) in order to secure judicial review of the regulation. In finding that the regulation was an order within the meaning of Sec. 402(a), the Supreme Court pointed out that, inasmuch as the regulations governed and had an immediate impact upon the contractual relations between the stations and the networks, the implementation of the regulation was not dependent on administrative action. The Court held that, therefore, in order to avoid the harm that would otherwise result from the execution of an illegal regulation, judicial review under Sec. 402(a) was appropriate. According to the Court, [w]hen, as here, such regulations are promulgated by order of the Commission and the expected conformity to them causes injury cognizable by a court of equity, they are appropriately the subject of attack under the provisions of Sec. 402(a). Id. 316 U.S. at 418-19, 62 S.Ct. at 1201. 33 The First Circuit, in considering CBS, found that the Court's reasoning did not apply to a Sec. 401(b) proceeding because the same considerations of fairness supporting a broad interpretation of order were not present in that context. We disagree. Substantial unfairness can result from either compliance with an improper regulation or noncompliance with a proper one. Especially in the context of a pervasively regulated industry, beneficiaries of a self-executing regulation should not be denied the intended effect of the regulation without recourse merely because the FCC has yet to institute enforcement proceedings. In the instant case, the FCC Preemption Order was issued in response to a perceived failure of the regulatory system to furnish the telephone industry with sufficient cash flow. If each telephone company must wait to receive this benefit until the FCC is able to institute individual enforcement proceedings, telephone companies may well suffer for a significant period of time the harm the Preemption Order was designed to prevent. 34 Second, we adopt a broad construction of Sec. 401(b) because we are not convinced that the policies put forward by the First Circuit are threatened seriously enough to outweigh the vital policies furthered by private enforcement of FCC rulemaking orders. The FCC has broad discretion to act through either case-by-case adjudication or the rulemaking process. SEC v. Chenery Corp., 332 U.S. 194, 202, 67 S.Ct. 1575, 1580, 91 L.Ed. 1995 (1947); Avoyelles Sportsmen's League, Inc., supra, at 909. Thus, if the FCC deems that enforcement of a certain policy is desirable on an individual basis, it certainly has the discretion to proceed other than by adopting a self-executing rule. To a large extent, therefore, the FCC itself can avoid private incursions upon its enforcement responsibilities. Moreover, through the use of agency intervention and amicus curiae briefs, as well as through the application of the doctrine of primary jurisdiction, the courts and the FCC should be able to prevent both significant inconsistent applications of FCC rules and serious judicial encroachment upon FCC responsibilities. See, e.g., American Trucking Ass'n v. ICC, 682 F.2d 487, 491 (5th Cir.1982) (primary jurisdiction allows court faced with an issue requiring the special expertise of an agency to suspend proceedings pending referral of the issue to the agency for official position). 35 Most importantly, however, we simply do not see how the FCC's responsibility in developing and enforcing a coherent communications policy would be significantly undermined by giving the FCC discretion to adopt self-executing rules and then to rely in part on private enforcement. We firmly believe, in fact, that under appropriate circumstances such an approach would promote significant federal interests in conserving limited agency resources and in accelerating the implementation of FCC rules and regulations. We can also envision situations in which only a private party would have a sufficient interest in the obedience of an FCC rule to institute an enforcement proceeding. Cf. FCC v. Sanders Brothers Radio Station, 309 U.S. 470, 477, 60 S.Ct. 693, 698, 84 L.Ed. 869 (1940) (person with a financial stake in the granting of a license may be the only one with sufficient interest to seek judicial review). 36 In short, we find that both precedent and sound policy support a broad interpretation of Sec. 401(b) to allow private enforcement of FCC rules and regulations. 20 Therefore, we hold that the FCC Preemption Order is an order within the meaning of Sec. 401(b). 21 37