Opinion ID: 359862
Heading Depth: 3
Heading Rank: 2

Heading: The Ex Parte Contacts in this Case

Text: 45 As noted earlier, 52 as of August 26, 1976 the Commission had received comments from USL and the Euro-Pacific parties as to the proposed agreements. There was nothing secret about these comments: they were provided in each instance to the opposing parties, and were available to other members of the public. At its regular meeting on August 26th the Commission decided that ICT Should not be permitted to enter the conference at that time, but that instead the issue should be set down for further investigation and hearing. The Commission then directed that an order to this effect be issued. 53 The order was not issued, however, for reasons which are unexplained. And at its September 29th meeting the Commission squarely reversed its position on admission of ICT, which is the critical antitrust question raised by 9902-3. On that day, without notice to USL or to the public, the Commission reconsidered its earlier decision and determined that ICT could immediately become a party to the Euro-Pacific agreement without any further hearing or investigation. An order to that effect was signed on the same day. 54 46 The Ex parte communications at issue here took place between August 26th and September 28th; indeed, they appear to be the only comments received by the Commission and its staff during this critical period. We do not know exactly how many contacts there were, or exactly what was said, or what the Commission staff conveyed to the Commission as to the substance of the communications in which it engaged. Our only indication as to the nature of these contacts is found in an excerpt from a September 28th staff memorandum to the Commission, included in the joint appendix in this action, which served at least in part as the basis of the Commission's September 29th decision to permit ICT to join the conference. The memorandum was to provide additional information to the Commission in the event it wishes to reconsider its decision not to approve the addition of ICT to Euro-Pacific. JA 72. The joint appendix in this case at page 72 describes notices received from the German and French governments through their Washington embassies that they strongly support ICT's participation in the joint service and urge the Commission to approve its admission. It also details the position of the Euro-Pacific parties that it is imperative to have the financial support of ICT in order to finalize any plans for future buildings and to produce and maintain the frequency and quality of service that will be necessary for them to survive in this trade. Id. Finally, it relates that the Euro-Pacific parties, 47 through their attorney, have urged the staff to convey to the Commission their concept of ICT as the direct substitute for HAL in this trade and in the joint service. Therefore, since the Commission determined that there was economic and commercial justification for HAL's participation in the joint service, they view this as a precedent for ICT's participation in the joint service as well. They feel that the Commission, like USL, may have misconceived ICT as a totally New service and a New participant in the trade and its inclusion in the joint service as creating a New and far reaching 'consortium' with a New partner. ((emphasis) added) However, they see it differently. They do not consider ICT to be a new service or new participant in the trade but rather a return to the trade of an old and long standing service and participant, HAL, with the only change being in the name and the owners. Instead of creating a new . . . 'consortium' with a new partner, the parties conceive of ICT's joining the joint service as an act of rejoining and of recreating a relationship which previously existed and which the Commission sanctioned. 48 JA 72-73. 49 Even this brief outline of the Ex parte communications in this case makes clear that secret Ex parte contacts were employed both to introduce new arguments and positions and to respond to and rebut the arguments which protestant USL made in its public filings. Although the notices from the French and German governments were in no way classified, it appears that they were never mentioned or made available to the parties or to the public; USL, in particular, was completely unaware of the active support of Agreement 9902-3 by foreign governments. Similarly, the argument that addition of ICT was financially imperative to Euro-Pacific's continued survival appears nowhere in Euro-Pacific comments; it emerged for the first time in these Ex parte communications. Finally, the argument that ICT should be permitted to join the service as the successor to HAL albeit with a different name and different owners was clearly intended to respond to the argument publicly made by USL that addition of a third party which is itself a potential competitor and which is controlled by a dominant carrier raises serious antitrust questions requiring a hearing for their resolution. Euro-Pacific had noted in its filed response to USL's comments that HAL, the former third party in the Euro-Pacific service, had been reorganized under new control as ICT. 55 But the Euro-Pacific parties did not make in their public response the more specific and legalistic argument that the Commission's prior approval of HAL's participation in the joint service served as a precedent justifying, on economic and commercial grounds, ICT's proposed participation. 50 USL was unaware of all these contacts. Nor is it reasonable to assume that any other member of the public knew or could have known of their existence, let alone their substance. Indeed, it was not until preparation of the joint appendix to this review action that USL first learned of the existence of Ex parte contacts prior to the Commission's decision. 51 It is, of course, impossible to determine the precise influence of these Ex parte contacts on the Commission's final decision. The fact that the Commission reversed its judgment on the participation of ICT in the conference after being informed of the substance of these contacts, however, raises the spectre of a substantial influence on the approval decision; indeed, it provides at least one explanation of what the Commission was referring to when it cited reliable data reposing in the Commission's files as support for its decision. 56 But whether or not this refers to the Ex parte communications at issue, the fact remains that these communications are inconsistent with both the hearing provided by statute and the requirements of judicial review under the Administrative Procedure Act. 52