Opinion ID: 380921
Heading Depth: 2
Heading Rank: 2

Heading: The Nature of the FCC's 1976 Decision

Text: 62 We are initially confronted by a patent enigma in the FCC's 1976 decision between its repeated assertions that AT&T's 1973 to 1976 WATS tariff revisions are unlawful 66 as well as NULL AND VOID, 67 and its concurrent decision to continue those revisions in effect for a period of over three years thus far, pending a still elusive final determination of what rates are proper. The statute reads with superficial clarity: to be lawful, charges must be just and reasonable while, conversely, unjust and unreasonable charges are unlawful. 68 The statutory scheme further provides that if the FCC finds a carrier's tariffs to be unjust and unreasonable, it is authorized and empowered to determine and prescribe just and reasonable rates itself. 69 Of course, it goes without saying that the FCC cannot prescribe unjust or unreasonable rates. As we pointed out in Nader v. FCC, 70 one of (t)he essential elements of a valid prescription order (is) . . . a finding that the action taken is just and reasonable. 71 63 What we have here, despite the FCC's rhetoric, is a situation where it could not, according to its own judgment, decide whether the proposed tariffs were just and reasonable or unjust and unreasonable. Moreover, the FCC frankly conceded that since it did not have the data at hand to decide what the just and reasonable rates should be, it could not prescribe an appropriate WATS tariff for AT&T. Nonetheless, MCI argues that the action of the FCC in allowing AT&T's WATS tariff revisions to go into and continue in effect amounts to a prescription without the requisite finding that those revisions are just and reasonable. 72 This must be so because, MCI says, the FCC's 1976 decision in so many words finds the proposed rates unlawful, even though the FCC also concluded that the record is . . . insufficient to permit us to justify any rate structure or rate prescription, even for an interim period. 73 64 It is indeed true that it is the actual impact of the FCC's actions, rather than the language it uses, which determines whether or not the FCC has prescribed tariffs or other conditions under the statute. In Nader v. FCC, 74 for example, the FCC's setting of a specific rate of return was held to be an implicit prescription of permissible charges, because setting an allowable rate of return effectively, even if not literally, mandates what charges can be assessed. 75 And the Second Circuit's 1973 opinion in American Telephone & Telegraph Co. v. FCC 76 held that an FCC requirement for special permission to change a filed rate had the same effect as a rate prescription under the statute. 77 But we are unable to find a prescription here. 65 The basic thrust of the FCC's 1976 decision was that the record is insufficient to support AT&T's 1973 to 1976 WATS tariff revisions. 78 An indication of the FCC's principal concern comes from its explanation of the need for more data on the differences, if any, in Outward and Inward WATS costs based on the distances involved: 79 66 . . . By requiring such data, we are not implying that it may not be appropriate to vary Outward and Inward WATS charges over distance. Our finding merely reflects the necessity for having sufficient evidence provided so we can give reasoned consideration to the lawfulness of WATS charges. 67 We conclude that a filed tariff, like those here, not found by the FCC to be either just and reasonable or unjust and unreasonable on the basis of the carrier's supporting evidence at the point of filing can avoid the stigma of unlawfulness, at least for a reasonable time. There must be enough movement in the statutory joints to allow for such an exigency, given the enormous complexity of ratemaking for an enterprise of AT&T's dimensions. Conversely, had we read the FCC's 1976 decision as actually finding AT&T's 1973 to 1976 WATS tariff revisions unjust and unreasonable on their merits, we conclude that the prohibition of unjust and unreasonable tariffs in § 201(b) of the statute would prevent the FCC from continuing those revisions in effect. The only exception to that we can see is that perhaps the FCC could continue the unlawful tariffs for a short period to allow the carrier to quickly develop an interim alternative; that would enable the FCC to prevent the complete cessation of vital communication services admittedly a valid goal because of the carrier's failure to then have an effective tariff on file, as § 203(c) of the statute requires. 68 In United States v. Students Challenging Regulatory Agency Procedures (SCRAP), 80 the Supreme Court interpreted provisions of the Interstate Commerce Act similar to those in § 204(a) 81 and found that the Interstate Commerce Commission's (ICC's) limited suspension power analogous to the FCC's authority here represents a careful accommodation of the various interests involved. 82 The Court thus held that the judiciary cannot enjoin the effectiveness of railroad-initiated transportation surcharges for alleged violations of the National Environmental Policy Act (NEPA) after the ICC had already acted and refused to suspend the surcharges. The Court remarked on the statutory suspension provisions at issue there: 83 69 . . . The suspension period was limited as to time to prevent excessive harm to the carriers, for the revenues lost during that period could not be recouped from the shippers. On the other hand, Congress was aware that if the Commission did not act within the suspension period, then the new rates would automatically go into effect and the shippers would have to pay increased rates that might eventually be found unlawful. To mitigate this loss, Congress authorized the Commission to require the carriers to keep detailed accounts and eventually to repay the increased rates if found unlawful. To allow judicial suspension for non-compliance with NEPA would disturb this balance of interests. 70 The Court's holding thus amplified its 1963 decision in Arrow Transportation Co. v. Southern Railway Co. 84 that a district court could not delay the effectiveness of new rail carrier rates once the maximum statutory suspension period expired, because that would upset the compromise between the interests of the carriers and those of the public which Congress meant to strike by limiting the ICC's suspension power. 85 71 More recently in its 1973 American Telephone & Telegraph Co. v. FCC 86 opinion the Second Circuit discussed SCRAP and Arrow Transportation as they apply to what is now § 204(a) of the Communications Act and concluded: 87 72 Thus, in both SCRAP and Arrow, while the issue was the judiciary's role in the rate making process, the Court recognized the careful accommodation of interests upon which the regulatory scheme was based, including the limitation as to time imposed upon the suspension power granted to the ICC. 73 In light of the Supreme Court's interpretation of analogous provisions of the Interstate Commerce Act, it is abundantly clear to us that the statutory scheme of the Communications Act reflects the realization of Congress that when a carrier is prevented from placing in effect new rate increases it may suffer irreparable loss which in turn may impede the provision of adequate service during a period of rising costs. 74 At issue in SCRAP, Arrow Transportation and in the Second Circuit's 1973 AT&T case were rate increases. AT&T's WATS tariff revisions challenged here resulted in rate increases for some customers, but they also included rate decreases for others, 88 and it is those decreases MCI challenges as anticompetitive. In its opinion, the Second Circuit alluded to rate reductions and § 204(a), and remarked: Similarly, the loss sustained when an agency delays a rate reduction can be equally as damaging, for during the delay customers may turn elsewhere and be permanently lost to the carrier. 89 75 The mandate in § 204(a) that carrier-initiated tariff revisions shall go into effect at the latest after a five-month suspension, if the FCC has not found them unjust and unreasonable, and the accommodation of competing interests § 204(a) attempts to make, do not, however, still our deeper problems with the length of time these temporary or interim WATS tariff revisions have been allowed to remain in effect. We agree with Commissioner Washburn's observation in his reluctant concurrence with the FCC's 1976 decision to continue the revisions' effectiveness that, unless an end comes soon to this proceeding, it will be apparent to all that the FCC has essentially lost control over the rates (AT&T) . . . charges customers. 90 76