Court Opinion

ID: 7855483
Source: CourtListenerOpinion
Date Created: 2022-09-08 17:43:20.386974+00
Date Added: 2024-06-11T16:29:43.817507
License: Public Domain

STARR, Circuit Judge,
concurring:
I concur in the court’s judgment and in much of its opinion. In my view, Congress well knew what it was doing in comprehensively and carefully crafting the Communications Act. That regime, I believe, does not allow the remedy that the agency has suddenly discovered a half-century after the Act’s passage. Although a panel of this court has recently (during the period when the present case was sub judice) held to the contrary, that case is still pending before the court. Under these circumstances, it seems to me appropriate to set forth the reasons for my conclusion that the FCC’s innovations of late are without statutory foundation.
I
The terms and structure of the Communications Act bear decisively upon the FCC’s latter-day inspiration as to reach of its regulatory powers. Briefly stated, sections 201 to 205 of the Act deal with rates. Under section 203, the all-important requirement of filing a schedule of charges is laid out: “Every common carrier, except connecting carriers, shall ... file with the Commission ... schedules showing all charges.” (emphasis added) This is an absolute condition precedent to doing business. Unless schedules have been filed, section 203(c) tells us, “no carrier ... shall engage or participate in such communication____” In addition, section 203(c) mandates that carriers scrupulously abide by the schedules as filed.
With this foundation, the statute goes on to provide the Commission with two instruments of control over the content of the schedules. Section 204(a) permits the Commission to suspend the operation of a newly filed charge while it investigates the rate’s lawfulness and, after a full hearing, to make whatever order as “would be proper.” Under section 205(a), the Commission is “authorized and empowered to determine and prescribe what will be the just and reasonable charge ... to be thereafter observed” if the “Commission shall be of [the] opinion that any charge ... is or will be in violation of any of the provisions of [the Act]____” This combination of powers represents an architecturally harmonious regulatory scheme: the Commission enjoys corrective power at both stages of the process. Under section 204, it may reject rates before a proposed schedule goes into effect; under section 205, it may prescribe new rates to override a schedule currently in effect.
Once the Commission has allowed the schedule to become effective, the statute sets forth specific methods of enforcement. If the carrier fails to abide by a filed tariff (in violation of section 203(c)), then the faithless carrier is subject to penalties (in the form of fines) under section 203(e). If a carrier knowingly fails or neglects to follow a prescription (in violation of section 205(a)), it is subject to penalties (also in the form of fines) under section 205(b). Each statutory section containing a specific mandate thus contains a corresponding penalty for violation {see also section 202(a), prohibiting discrimination in charges, and section 202(c), subjecting the carrier to penalties for violation of 202(a)). If, say, a section 205(a) prescription is violated, the Commission may invoke the remedial mechanism crafted specifically to deal with such violations (found in section 205(b)).
In crafting this elaborate scheme, Congress did not leave an injured customer without a remedy; to the contrary, the statute expressly provides for consumer remedies. In section 206, the carrier is put on notice that if it violates the Act, it will be liable to persons injured by its actions. *46Sections 207-209 then set forth in detail the procedures through which an aggrieved customer can obtain relief. The statute is clear, however, that the customer must initiate these proceedings, save for one limited situation. Under section 204(a), if the Commission has suspended rates, but has been unable to complete its investigation and hearing within five months, the new or revised charge goes into effect. In that event, the Commission is authorized to require the carrier to account for all amounts received, and upon completion of the hearing, the agency may require the carrier to refund, with interest, the portion of amounts paid that was not justified.
An examination of the statute as a whole makes crystal clear that the schedule filed by a carrier serves as the foundation by which Congress’ regulatory scheme achieves stability, predictability, and protection of the public interest. Once the schedule is filed and allowed to go into effect, carriers (and consumers) are entitled to rely on it, except for the one special situation addressed (and procedurally safeguarded) in section 204. This is not anything novel. In the analogous rate regulatory scheme administered by the ICC, the Supreme Court has repeatedly “stressed the importance of common carriers' being able to rely on effective tariffs on file with the Commission.” ICC v. American Trucking Associations, Inc., 467 U.S. 354, 364 n. 7, 104 S.Ct. 2458, 2464 n. 7, 81 L.Ed.2d 282 (1984) (referring to Berwind-White Coal Mining Co. v. Chicago and Erie Railroad Co., 235 U.S. 371, 35 S.Ct. 131, 59 L.Ed. 275 (1914) and Davis v. Portland Seed Co., 264 U.S. 403, 44 S.Ct. 380, 68 L.Ed. 762 (1924)). And there should be no doubt about the relevance of the Supreme Court’s teaching under the “prototypical ratemaking statute, the Interstate Commerce Act”; it is well settled that “the principles of judicial review of agency refund decisions in ratemaking cases are of general applicability.” Las Cruces TV Cable v. FCC, 645 F.2d 1041, 1047 (D.C.Cir.1981). To observe but one example of this pervasiveness, recognition of the role of fidelity to filed schedules in ensuring stability and fairness undergirds the “filed rate doctrine” articulated in the area of energy regulation. Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 571, 576-79, 101 S.Ct. 2925, 2929-31, 69 L.Ed.2d 856 (1981). Under this doctrine, which “has its origins in ... cases interpreting the Interstate Commerce Act” and “has been extended across the spectrum of regulated utilities,” id. at 577, 101 S.Ct. at 2930, the Commission “may not impose a retroactive rate regulation and, in particular, may not order reparations,” id. at 578 n. 8, 101 S.Ct. at 2930 n. 8 (emphasis in original).
II
In view of this carefully crafted scheme, it is apparent that the refund rule that the Commission advances here does clear violence to the values of stability and predictability that Congress so carefully enshrined in the Communications Act. In the Commission’s Orwellian world, carriers are no longer able to rely on filed rates; instead, they go about their business in constant jeopardy of being forced to refund enormous sums of money, even though they complied scrupulously with their filed rates. The Commission, inspired by its own victory in Nader, has turned the regulatory world upside down.
The Act, which is purely prospective in design, manifestly does not contemplate this unsettling state of affairs. As I have detailed above, Congress constructed the Act so that the Commission’s remedial power is limited to prospective relief: when the Commission determines that existing rates are excessive, it cannot order a refund of past payments under the revoked rate. Rather, the FCC can only correct the problem through a prospective prescription under section 205. The courts have consistently adhered to this basic rule of ratemaking. See, e.g., Arizona Grocery Co. v. Atchison, Topeka and Santa Fe Railway Co., 284 U.S. 370, 390, 52 S.Ct. 183, 186, 76 L.Ed. 348 (1932) (“Where the Commission has ... declared what is the maximum reasonable rate to be charged by a carrier, it may not at a later time ... subject a carrier which conformed thereto to the payment of reparation measured by what the *47Commission now holds it should have decided in the earlier proceeding to be a reasonable rate.”); Sea Robin Pipeline Co. v. FERC, 795 F.2d 182, 189 n. 7 (D.C.Cir.1986) (the Commission “may not order a retroactive refund based on a post hoc determination of the illegality of a filed rate’s prescription.”).
The question is therefore whether Nader somehow indirectly demolished this longstanding example of harmonious statutory architecture. The answer, demanded by law and basic notions of democratic theory, is obviously no. Although Nader added a new wrinkle to the rate regulatory system by allowing the Commission to prescribe the rate of return (a mere component of a rate), I am at a loss to understand why Nader brings with it an enforcement mechanism that contravenes the terms, structure, and goals of the Act itself. To be sure, the Commission’s Nader-blessed rate-of-retum prescription would have more teeth with the “refund rule” in effect. But, that approach carries us too far. In the post-Nader world heralded by the Commission, the FCC’s determination of what constitutes a just and reasonable rate would carry more force if the Commission could order a refund of (previously approved) rates collected in excess of the just and reasonable amount. That, however, is exactly what the statute (and the Arizona Grocery/Sea Robin line of cases) incontrovertibly prohibits.
That is not to say that the Commission is without recourse in that situation. Quite to the contrary, the FCC is at liberty to use its Congressionally conferred section 205 power to prescribe just and reasonable charges for the future. The result should be the same when the Commission is exercising the ancillary power approved in Nader: once it determines that a tariff is properly targeted to the prescribed rate of return and allows it to become effective, the Commission should repair to prospective revisions.
Indeed, since the Commission’s duty is to ensure that rates are just and reasonable (not to ensure that a certain rate of return is met), see 47 U.S.C. § 201(b), it is passing strange to allow the Commission to order refunds (and thereby undercut the Congressionally ordained values of stability and predictability) where a rate-of-return prescription is exceeded, but not where a just and reasonable charge is exceeded. Likewise, because the statute contains specific penalty provisions, it is unlikely that the Commission would have authority to require a refund when a filed tariff or a rate prescription is violated.
Ill
In sum, the terms and structure of this 53-year old statute prohibit the Commission’s exercise of this newly discovered clawback authority. This conclusion is buttressed by the fact that one year before the passage of the Communications Act, Congress repealed section 15(a) of the Interstate Commerce Act, which contained a “recapture” provision strikingly similar to the agency-created one at issue in this case. From 1920 to 1933, the Interstate Commerce Act contained a provision that mandated the Commission to establish rates so that the “carriers as a whole” would earn a fair return. The provision also provided that, since “it is impossible ... to establish uniform rates ... which will adequately sustain all the carriers ... without enabling some of such carriers to receive a net railway operating income substantially and unreasonably in excess of a fair return,” carriers who received an excessive return (which was deemed income in excess of 6% of the value of the railway property) would have to place half of the excess in a carrier-maintained reserve and half in a “general railroad contingent fund.” Transportation Act of 1920, 41 Stat. 456, 488-91.
In 1933, Congress repealed the provision. It replaced the ill-fated scheme with a “rule of ratemaking,” that is to say certain factors the Commission was to consider when setting rates. The Conference Report explains that the “experience of the last twelve years” showed (1) the impossibility of maintaining the level of rates required to produce the percentage rate fixed by the statute, and (2) the destabilizing (and debilitating) effects of changing the *48rate level to meét the inevitable fluctuations in revenue. H.R.Conf.Rep. No. 213, 73rd Cong., 1st Sess. 29 (1933). The chairman of the ICC’s legislative committee is quoted in the Report as stating: “[T]here is something incongruous in a system of regulation which finds it necessary to permit carriers to earn more than they ought to earn, and meets the difficulty by taking money away after it is received.” Id. at 30.
It is evident that Congress agreed with the sober assessment of the chairman. And in the wake of that bitter lesson learned the hard way, it strains credulity to maintain, as the FCC does, that Congress meant in 1934 to weave silently into the Communications Act the same sort of refund authority that it found unworkable in the statutory paradigm, the Interstate Commerce Act.
Finally, it should not be assumed that my analysis defangs Nader, leaving it a toothless victory for the Commission. In Nader itself, it bears remembering, the “refund rule” was not even at issue. The Commission was fighting, instead, for other benefits that would flow from regulatory prescribing of rates of return. And those benefits were beguiling indeed — they included limiting carriers’ discretion to initiate rate revisions, see Nader, 520 F.2d at 201, and giving the agency the ability summarily to reject any tariff revision designed to achieve more than the prescribed rate of return, see id. at 202. Now the Commission wants more. We should say no. This goes too far. We should limit the Commission to its not insubstantial fruits harvested in Nader, and avoid wreaking havoc in the communications industry and the previously architecturally sound and sensible law of ratemaking. In this age of deference to the largely unaccountable organs of government, we must not permit those quasiautonomous creatures of the political branches to tear asunder that which the representatives of the people have seen fit to ordain and maintain for a quarter of the Nation’s history. To do so is a misguided affront to basic principles of republicanism.