Court Opinion

ID: 7851020
Source: CourtListenerOpinion
Date Created: 2022-09-08 17:26:33.47408+00
Date Added: 2024-06-11T16:29:08.293517
License: Public Domain

STARR, Circuit Judge,
concurring in part and dissenting in part:
I respectfully dissent in Nos. 83-1252 and 83-1253, for two reasons. First, I disagree with the majority’s characterization of the applications filed by Puerto Rico Telephone Company (“PRTC”) and with the understanding as to the meaning of those applications which the majority credits to All America Cables and Radio, Inc. (“All America”). Second, I cannot agree that the order of the Federal Communications Commission granting the PRTC’s Mainland application was so unsupported as to be arbitrary and capricious.
I
The majority describes PRTC’s Mainland application as one for “authorization under section 214 of the Communications Act ... to displace All America as Puerto Rico’s long distance carrier.” Majority Opinion at 754. This view of the Mainland application swallows hook, line and sinker All America’s characterization of the PRTC application as a request for “All America’s decertification as a long distance carrier ----” Id. at 754. It is certainly true that All America reasonably could have construed the Mainland application, standing *153alone, to be a request to “displace” All America “as Puerto Rico’s long distance carrier.” What I am frankly unable to divine is how All America could reasonably have stuck to this view of PRTC’s application after its receipt of PRTC’s filing on May 1, 1979. There, PRTC took pains to point out that “[t]he concept of ‘involuntary decertification’ is one of [All America’s] own invention.” Joint Appendix (JA) at 357. Further, PRTC asserted that
By couching its argument in these terms, [All America] evidently seeks to distract the Commission from the clear and legitimate purposes of PRTC’s Application. Of course, PRTC’s Application says nothing about “decertification,” voluntary, involuntary, or otherwise. On the contrary, PRTC seeks an affirmative grant of authority from the Commission.
JA at 357-58 (emphasis added). PRTC then explained the “affirmative grant” it was seeking:
In focusing on what it alleges that PRTC is asking the Commission to do with [All America], [All America] ignores the Commission’s affirmative authority to grant a certificate of public convenience and necessity ... pursuant to section 214. Moreover, [All America] completely misses the point that to the extent that a grant of PRTC’s Application might require the Commission to take any action vis-a-vis [All America], that limited action would be taken pursuant to sections 201 and 202____
JA at 361-62 (emphasis added).
In my view, PRTC’s May 1, 1979 filing clearly placed All America on notice as to PRTC’s theory that the Mainland application sought certification under section 214. Anything beyond certification would, in turn, have to be dealt with under sections 201 and 202. Rather than dealing squarely with the issues thus framed, All America in reply to the PRTC filing addressed PRTC’s invocation of the Commission’s “affirmative authority” under section 214 only to the extent of deeming it “totally misleading,” JA at 426, and contrary to All America’s construction of section 214'. Id. at 463-65.
All America’s dogged insistence on reading the Mainland application as an “all or nothing” gambit by PRTC is drawn seriously into question by the fact — recognized by All America in its FCC filings1 — that the Commission had “never ordered the transfer of the major incidents of line ownership from an existing carrier-owner to a new competitor, as [the Mainland application] asks____” Mainland Order at 13, JA at 13. Given the unprecedented nature of the actions requested by PRTC under sections 201 and 202 vis-a-vis All America, it is difficult indeed to see how an enterprise as experienced as All America could fail to recognize the clearly indicated possibility that the Commission might grant only that portion of the Mainland application seeking section 214 certification.
In light of these circumstances, All America’s failure to address the competitive impact of a grant of section 214 authority to PRTC is more easily understood as a deliberate, strategic litigating decision than as the result of All America’s being blindsided by the competition issue. Given the pendency of the MTS/WATS proceeding 2 — which, while not addressing the special case of Puerto Rico, clearly signalled a new Commission interest in competitive MTS markets — All America had good reason for wanting to avoid the question whether Puerto Rico should have competitively delivered long distance service. This strategic interest, however, cannot justify the skillful “shell game” which All America appears to have played with considerable *154panache and success.3 All America should simply not now be heard to argue that “the FCC granted PRTC relief on a theory never raised in the pleadings,” All America Brief at 30, or that “the FCC impermissibly broadened the scope of [the Mainland] proceeding.” Id. at 29.
The majority moves from its ready acceptance of All America’s characterization of the Mainland application to a critical analysis of the FCC order granting it. This analysis merits our careful examination. The majority identifies two basic reasons given by the Commission “for its decision to consider and decide the issue of competition in a displacement case,” and concludes that “neither justifies the agency’s action.” Maj. Op. at 756.
The majority first rejects the Commission’s explanation that it decided to grant only the section 214 request contained in the Mainland application, and deny PRTC’s requests under sections 201 and 202. The majority states that “[t]his kind of theoretical splitting of the PRTC application not only appears to have no precedent in Commission history, but as a rationalization for the agency’s conduct it makes no practical or regulatory sense.” Maj. Op. at 756. The reasoning underlying this analysis turns on the majority’s quite reasonable view that “the issues to be decided in a competition proceeding differ widely from those which govern the resolution of a proceeding for the displacement of one monopoly carrier by another.” Id. at 756. But this analysis, with all respect, begs the question whether the Commission had an adequate record on which to grant the section 214 authorization, a question to which we will momentarily return.
Further, the majority’s characterization of the “metaphysical division of an application into two theoretical parts” relies to some considerable extent upon a selective reading of the literal language of section 214(c). The majority asserts, with emphasis in the original, that
[S]ection 214(c) itself provides no authority for the grant of the kind of “partial relief” the Commission asserts it granted here. That provision grants to the Commission the power to issue a certification “for a portion or portions of a line or extensionit makes no reference to the grant of a portion or portions of an application along the lines of the split posited by the Commission in these cases.
Maj. Op. at 756. As we noted above, this case appears to present a question of first impression with respect to the scope of the FCC’s authority under section 214. The majority’s rather cavalier treatment of the Commission’s claim of authority under this section flies in the face of the deference rightly owed by the Article III branch to an agency’s construction of its organic statute.4 Columbia Broadcasting Sys., Inc. v. *155Democratic National Committee, 412 U.S. 94, 121, 93 S.Ct. 2080, 2095, 36 L.Ed.2d 772 (1973); Red Lion Broadcasting Co., Inc. v. FCC, 395 U.S. 367, 381, 89 S.Ct. 1795, 1801, 23 L.Ed.2d 371 (1969). Under elementary principles, the question is not whether this court can devise a reading of the statute more to its liking; it almost always can. Rather, the agency’s interpretation should be upheld “unless there are compelling indications that it is wrong____” Columbia Broadcasting, supra, 412 U.S. at 121, 93 S.Ct. at 2096; Red Lion, supra, 395 U.S. at 381, 89 S.Ct. at 1802. Given the scope of section 214, it cannot be said that the majority has identified such “compelling indications.” In particular, the majority appears to have overlooked language in that section providing that the FCC may issue a certificate “for the partial exercise only of such right or privilege ____” This language seems to me to confer upon the Commission ample authority to approve the Mainland Order in the fashion it did.
The majority next attacks the second leg of support claimed by the Commission: “that the issue of competition had already been decided in MTS/WATS and was therefore properly applied in these cases.” Maj.Op. at 757. Here the majority is on sounder ground. I fully agree that the Commission acted improperly in applying the MTS/WATS5 outcome retroactively to cover the Mainland application and pleading cycle. But that does not end the matter for me. Denying the Commission recourse to MTS/WATS as justification for its order here simply should not sound the death knell for the Commission’s determination as to where the public interest lies. Indeed, the majority implicitly concedes as much by noting that the Commission based its decision “[primarily” on the MTS/WATS decision. There were in fact other considerations informing the Commission’s decision to grant PRTC’s application. Given the record before the Commission, and the clear consideration of these factors as reflected in the Mainland Order, I cannot in conscience conclude that the Commission’s action here descended to the depths of arbitrary and capricious conduct.
Quite to the contrary, the Commission thoroughly considered PRTC’s qualifications to provide off-island telephone service. It concluded that “PRTC has the operational, technical and financial capabilities to enter off-island markets without a diminution of existing service.” Mainland Order at 10, JA at 10. The Commission further determined that the fact that PRTC is a government-owned entity would not entail unfair competitive advantages. Id. at 11. The FCC, moreover, plainly considered the feasibility of new entry into the off-island telephone service market. After reviewing traffic data submitted by PRTC and other information as to traffic growth in the U.S.-Puerto Rico and U.S.-Virgin Islands markets, the Commission “conclude[d] that there is sufficient off-island traffic to support another off-island carrier.” Id. at 12.
Finally, the Commission addressed the competitive impact of PRTC’s entry. In addition to its inappropriate reliance upon MTS/WATS, the Commission determined that the introduction of new competition into the provision of off-island transmission facilities would benefit the public. This new competition was perceived as increasing the incentives for both All America and PRTC to respond more fully to the needs of telephone customers in Puerto Rico. Id. at 16. Certification of PRTC would enable it, in the Commission’s view, to seek the most efficient facility routing to the U.S. mainland through direct interconnection with AT & T, a development which would “facilitate line coordination, maintenance, and investment decision-making.” Id. The FCC concluded that this “managerial and operational flexibility will lead to lower rates and better quality services for Puerto Rico residents.” Id.
Against these findings, the majority deploys a parade of horribles, stemming from a presumed inability on the part of the Commission and the courts to hold PRTC to its duty under section 201, in the event it *156enters the off-island market, to provide access to its facilities to All America and possible future competitors. The concern as expressed by the majority is that “PRTC would choose instead to exploit its monopoly power to the detriment of All America and future entrants into the long distance market, if any.” Maj.Op. at 759. Further, the majority states that “once PRTC acquired as many circuits as it required, it might be expected to use its control over the routing of all long distance traffic to divert traffic from any other long distance carriers to its own lines.” Id. at 759.
It is clear beyond cavil that the competitive dynamic envisoned by the Commission would, take some time to achieve. It simply could not happen overnight. In the meantime, the possibility of abuse by PRTC would exist. However, if PRTC sought to exploit its short-run power in this market, All America and other potential competitors would likely waste little time and spare no resources in petitioning the Commission, pursuant to section 201, for fair access to PRTC’s facilities. Moreover, if, pursuant to the Mainland Order, PRTC sought unfair access to All America’s facilities, it could reasonably be expected that All America would see fit to stand its ground and contest the fairness vel non of the arrangement sought by PRTC under the standards of section 201.
In short, I am not troubled at this early stage of the process by the future possibility of abuse, given the existence of an express substantive provision and a specialized forum for the challenge of such abuses, if and when they arise. Indeed, we not infrequently refuse to entertain on grounds of ripeness and finality challenges to agency action which has not yet developed into the direct injury anticipated with dread by the regulated entity. See, e.g., Tennessee Gas Pipeline Co. v. FERC, 736 F.2d 747, (D.C.Cir.1984); Air New Zealand Ltd. v. CAB, 726 F.2d 832 (D.C.Cir.1984). It thus sounds a discordant jurisprudential note to overturn agency action on grounds of possible future evils as to which the agency has been duly equipped by Congress with weaponry to combat. Perhaps we again need to be reminded of the admonition, which obtains powerfully in the setting of judicial review of administrative action, that sufficient unto the day is the evil thereof.
II
It is clear that the Canada Order depends entirely upon the efficacy of the Commission’s order in the Mainland proceeding. Inasmuch as the majority has seen fit, notwithstanding the analysis set forth in Part I above, to reverse the Commission entirely in Nos. 83-1252 and 83-1253, the predicate for the Canada Order is thus thereby eliminated.
In light of the majority’s conclusion in that respect, I concur in the remand with respect to the Canada proceeding, particularly since the Commission’s order in that proceeding went further than simply granting PRTC certification under section 214(c). Rather, the Commission, in effect, directed All America to lease to PRTC twelve circuits under the terms of an existing tariff. See Canada Order at 11, 13, JA at 512, 514, and PRTC Brief, Appendix A. The consequence of the Canada Order became clear in the course of oral argument; PRTC now handles virtually all of the Puerto Rico-Canada traffic. A clean sweep by PRTC as to off-island traffic was clearly not contemplated by the FCC with respect to the Mainland market. See JA at 18. Thus, the practical effect of the Canada Order renders it considerably more vulnerable than the more limited Mainland Order.6
Ill
In sum, I find the Commission’s Mainland Order to be a fair and well-reasoned *157attempt to introduce competition into the market for long-distance service to Puerto Rico. Moreover, I am considerably less pessimistic than the majority about the efficacy of section 201 in deterring and frustrating any attempt PRTC might eventually be tempted to make to exploit its monopoly position in the market for local services. But in any event the majority’s opinion will presumably delay only for a while Puerto Rico’s introduction to competition in long-distance telephone service to the Mainland market now monopolized by All America.

. In its Petition to Deny, All America argued that PRTC’s application sought "relief which, to our knowledge, is unprecedented in the 45-year history of the Communications Act.” JA at 219.

. The initial notice of inquiry and proposed rulemaking in MTS/WATS was released in early March 1978. See MTS and WATS Market Structure, 67 F.C.C.2d 757 (1978). The Mainland application was filed on December 21, 1978, and All America's petition to deny was filed on April 2, 1979.

. Tellingly, All America has made the tactical decision not to seek FCC reconsideration of the Mainland Order. This decision, however, conflicts with 47 U.S.C. § 405 (1976), see Maj.Op. at 761 n. 37, which provides that a petition for rehearing is a prerequisite to judicial review in cases involving "questions of fact or law upon which the Commission ... has been afforded no opportunity to pass.” In this case, the FCC has had no opportunity to meet All America’s argument that competition issues were not in fact before the FCC in the Mainland proceeding. Given All America’s skillful avoidance of the competition issues in the Mainland proceeding, it is extraordinarily difficult to conclude, as the majority does with beguiling ease, that "there is not the slightest reason to believe that a petition for reconsideration would have caused a shift in the Commission's view of its powers.” Maj.Op. at 761. A full briefing of this point before the FCC could, at a bare minimum, conceivably have changed the Commission’s view of this matter. Clearly, the FCC would thereby have had the opportunity to address the precise argument advanced here by All America and embraced by the majority. In consequence, today’s ruling does not well serve the salutary interests of orderly administrative proceedings and judicial review fully informed by the exhaustion of procedures carefully framed by the Congress.

. It should be of some interest that the majority presses its view of FCC power under section 214 even further than does All America. Compare Maj.Op. at 756 ("section 214(c) itself provides no authority for the grant of the kind of 'partial relief the Commission asserts it granted here”) with All America Reply Brief at 4 ("[wjhatever the scope of the FCC’s authority to grant applications in part, it is not extensive enough to permit the FCC to dispense with due process”).

. MTS and WATS Market Structure, 81 F.C.C.2d 177 (1980).

. In their briefs and during oral argument, All America, PRTC, and the Commission devoted scant attention to the Canada Order. This sketchy treatment does not provide a suitable basis for a full consideration of this Order, and suggests again that the Canada Order is a mere sidelight to the centerpiece of this appeal — the Mainland Order.