United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 30, 1998 Decided June 18, 1999
No. 97-1662
Beehive Telephone Company, Inc. and
Beehive Telephone Nevada, Inc.,
Petitioners
v.
Federal Communications Commission and
United States of America,
Respondents
Southwestern Bell Telephone Company, et al.,
Intervenors
On Petition for Review of an Order of the
Federal Communications Commission
George L. Lyon, Jr. argued the cause for petitioners. On
the briefs was Russell D. Lukas.
K. Michele Walters, Counsel, Federal Communications
Commission, argued the cause for respondents. On the brief
were Joel I. Klein, Assistant Attorney General, U.S. Depart-
ment of Justice, Robert B. Nicholson and Robert J. Wiggers,
Attorneys, Christopher J. Wright, General Counsel, Federal
Communications Commission, John E. Ingle, Deputy Associ-
ate General Counsel, and Laurel R. Bergold, Counsel.
John M. Goodman, William B. Barfield, M. Robert Suther-
land, James D. Ellis, Patricia Diaz Dennis, Robert M.
Lynch and Robert B. McKenna were on the brief for Bell
Company intervenors. David F. Brown and Michael E.
Glover entered appearances.
Before: Edwards, Chief Judge, Ginsburg, and Rogers,
Circuit Judges.
Opinion for the Court filed by Circuit Judge Ginsburg.
Ginsburg, Circuit Judge: The Federal Communications
Commission, holding that access to the central database of
routing information for toll-free telephone numbers is a com-
mon carrier telecommunications service, required the Bell
Operating Companies (BOCs) to file a tariff of rates for that
service. See In the Matter of Provision of Access for 800
Service (CompTel Declaratory Ruling), 8 F.C.C.R. 1423,
p p 25-29 (1993). When the BOCs filed the tariff as directed,
the Beehive Telephone Companies (collectively Beehive) filed
a formal complaint against them, claiming that the Commis-
sion lacks authority to require that the service be tariffed.
The Commission denied the complaint, and Beehive petitions
for review, arguing, in addition to the question of the Com-
mission's authority, that the Commission violated its rules
regarding ex parte contacts in complaint proceedings, and
that the Commission has failed to implement a provision of
the Telecommunications Act of 1996 that requires it to trans-
fer operation of the toll-free database to an "impartial" entity,
47 U.S.C. s 251(e)(1).
We deny the petition for review. Beehive does not have
standing under Article III of the Constitution to bring the
first two claims; as to the third, it has not exhausted its
administrative remedies.
I. Background
Toll-free telephone service (commonly called 800 service)
involves a subscriber agreeing to pay an interexchange carri-
er (IXC) for all calls made to it using a predesignated 800
number. Toll-free service thus enables a business to provide
its customers, potential customers, employees, and others
with a free and convenient means of contacting it.
Since 1993 a nationwide computer-based Service Manage-
ment System has been used to route each 800 call to the
appropriate IXC, which then forwards the call to the sub-
scriber. The SMS also makes 800 numbers portable; that is,
a subscriber may change carriers without having to change its
800 number. Otherwise, once a business had created sub-
stantial goodwill in a toll-free number through its advertising
and use, or had obtained a number with substantial market-
ing value because of its mnemonic appeal (such as 1-800-
FLOWERS), the cost of switching to another IXC would be
the loss of that number, which would inhibit competition
among IXCs.
The SMS database contains information associated with
each 800 number, including the identity of the carrier selected
by the subscriber. See 47 C.F.R. s 52.101(d). That informa-
tion is downloaded to 12 regional databases, called Service
Control Points. When a caller places an 800 call, a switch
belonging to the caller's local exchange carrier (LEC) queries
the regional SCP for routing information. The SCP then
instructs the switch to route the call to the subscriber's
chosen IXC, which delivers the call to the subscriber.
Database Service Management, Inc. (DSMI) manages the
SMS, see 47 C.F.R. s 52.103(f)(1), but does not itself collect
or update the data the SMS uses to route calls. Instead, so-
called Responsible Organizations input and update the infor-
mation contained in the SMS database. See CompTel Declar-
atory Ruling, 8 F.C.C.R. 1423, p 19. Any entity that meets
certain financial, technical, and service-related eligibility cri-
teria--whether an IXC, an LEC, a subscriber, or another
type of entity--may serve as a Responsible Organization.
See id. at pp 41-47. Because DSMI is a monopolist, and
because access to the SMS database is necessary to the
provision of toll-free service, the Commission requires DSMI
to provide Responsible Organizations with such access under
a tariff; the agency's purpose is to ensure "that SMS access
is provided at reasonable rates and on nondiscriminatory
terms." Id. at p 29.
In 1993 the Commission required the BOCs, which at that
time jointly owned DSMI, to file an SMS access tariff. See
id. at p 31. The Commission then suspended that tariff for
one day and instituted an investigation into its lawfulness.
See In the Matter of the Bell Operating Companies' Tariff for
the 800 Serv. Mgmt. Sys., 8 F.C.C.R. 3242 (Com. Car. Bur.
1993). Eventually the Commission concluded that the rates
the BOCs proposed to charge in the SMS access tariff were
reasonable. See In the Matter of 800 Data Base Access
Tariffs and the 800 Serv. Mgmt. Sys. Tariff, 11 F.C.C.R.
15,227, p 251 (1996) (SMS Tariff).
Beehive is an LEC operating in rural Nevada and Utah. It
is also a Responsible Organization. During the pendency of
the above-mentioned investigation, Beehive filed a complaint
against the BOCs alleging that the SMS access tariff is
invalid because the Commission lacks jurisdiction under the
Communications Act of 1934 to regulate SMS access as a
common carrier service. See 47 U.S.C. s 153(10) (defining
"common carrier"); id. s 153(52) defining "wire communica-
tion"); id. ss 201-203 (setting forth duties of common carri-
ers). In the alternative Beehive claimed that the tariffed
rates are unjust and unreasonable. See id. s 201(b). In a
subsequent pleading Beehive also alleged that the Commis-
sion violated its own rules governing whether and to what
extent third parties are allowed to have ex parte contacts with
the Commission concerning a complaint proceeding. See 47
C.F.R. ss 1.1200-1.1216 (1993).
In 1995 the Commission denied Beehive's complaint with-
out ruling upon the issue of ex parte contacts. Beehive
petitioned this court for review but before briefing was
completed the Commission moved for a remand, which we
granted, so it could pass upon the ex parte issue. In 1997 the
Commission rejected Beehive's ex parte contacts claim and
re-adopted and reaffirmed the 1995 opinion and order that we
had vacated at its request. See Beehive Tel., Inc. v. Bell
Operating Cos., 12 F.C.C.R. 17,930, 17,950 (1997). Beehive
again petitions for review.
II. Analysis
Beehive argues first that the Commission lacks authority
under the Communications Act to regulate SMS access as a
common carrier service and therefore to require tariffed
rates. Second, Beehive claims the Commission violated its ex
parte rules governing complaint proceedings. Finally, Bee-
hive asserts that the agency has failed in a timely fashion to
require that the toll-free database be transferred to "one or
more impartial entities," as required by 47 U.S.C. s 251(e)(1).
The Commission responds that Beehive lacks standing to
raise the first two claims, and that Beehive cannot obtain
review of the s 251(e)(1) claim because it did not first present
it to the Commission. We agree with the Commission in both
respects.
A. Statutory Authority and Violation of the Ex Parte Rules
The "irreducible constitutional minimum" for standing to
sue the Commission is that the petitioner (1) have suffered an
injury in fact that was (2) caused by the Commission and (3)
would likely be redressed by a favorable decision of the court.
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992).
Beehive asserts two injuries: the payments it has made and
will continue to make under the allegedly unlawful SMS tariff,
and its loss of business when DSMI, because Beehive ceased
paying certain of the charges, withdrew all but 185 of the
10,000 toll-free numbers that Beehive had reserved. As to
causation, Beehive claims that although its injuries were the
direct result of actions taken by DSMI, they were proximate-
ly caused by the Commission's requirement that SMS access
be tariffed. See Telephone & Data Sys. v. FCC, 19 F.3d 42,
47 (D.C. Cir. 1994) ("injurious private conduct is fairly tracea-
ble to the administrative action contested in the suit if that
action authorized the conduct or established its legality").
Beehive does not explain how the Commission's alleged viola-
tion of its ex parte rules contributed to either of the injuries it
asserts. In the event, however, we need not decide whether
Beehive adequately alleges injury in fact and causation be-
cause Beehive has not shown how any order we might issue
could redress its asserted injuries.
Beehive argues that prospective detariffing of SMS access
would redress its continuing injury from payment of unlawful-
ly tariffed rates. The Commission responds that such a
remedy would actually exacerbate Beehive's injury: If there
were no tariff, then Beehive would have to negotiate with a
monopolist and almost certainly would have to pay more than
the tariffed rates for SMS access. That seems right to us.
See Stephen G. Breyer & Richard B. Stewart, Administrative
Law and Regulatory Policy 223 (2d ed. 1985) ("[W]hen
monopoly is the problem, the purpose of government rate-
making is of course to impose maximum prices to protect the
public from monopolistic exploitation"). But cf. George J.
Stigler & Claire Friedland, What Can Regulators Regulate?
The Case of Electricity, 5 J.L. & Econ. 1 (1962) (casting doubt
on assumption that regulation appreciably lowers electricity
rates). Indeed, the BOCs resisted having to file a tariff for
SMS access--undoubtedly because they believed they could
charge a higher rate as an unregulated than as a regulated
monopoly. See CompTel Declaratory Ruling, 8 F.C.C.R.
1423, p 23. In its brief Beehive made no attempt to rebut the
Commission's argument. At oral argument counsel for Bee-
hive asserted that it could negotiate a better rate from the
BOCs without a tariff, but was at a loss to explain how or why
that might be so. Nor can we imagine how Beehive would be
better off without the tariff, especially considering that the
Commission found it to be just and reasonable. See SMS
Tariff, 11 F.C.C.R. 15,227, p 251.
Beehive also argued before the Commission that it could be
made whole by an award of damages in the amount it had
paid for SMS access, plus interest, and the return of the toll-
free numbers it had lost for nonpayment of the charges levied
under the tariff. The BOCs contend that they may not be
held liable for charges incurred under a tariff that the
Commission required them to file, and that Beehive therefore
may not obtain the retrospective relief it sought before the
Commission. Accordingly, the BOCs reason, even if we were
to find that the Commission lacks authority to require that
SMS access be offered under a tariff, then the only available
remedy would be prospective detariffing.
Beehive does not respond to this argument, and its cryptic
request that we order the Commission to "reconsider Bee-
hive's claims for relief" does not suffice to join the issue.
Moreover, when asked at oral argument whether prospective
detariffing is the only relief now at stake in this proceeding,
counsel referred solely to Beehive's claim under s 251(e)
(which we discuss below) and failed to assert that Beehive
continues to seek either damages or the return of its num-
bers. We conclude that Beehive has (not unreasonably)
abandoned its claim for retrospective relief.
Beehive apparently seeks no remedy that could redress its
claimed injuries. Accordingly, we hold that Beehive lacks
standing to complain that the Commission violated its statuto-
ry authority and its ex parte rules.
B. Section 251(e)
Beehive also claims the Commission has been derelict in its
duty to implement a provision of the Telecommunications Act
of 1996 that requires it to "designate one or more impartial
entities to administer telecommunications numbering." 47
U.S.C. s 251(e)(1); see also id. s 251(d)(1) ("Within six
months after February 8, 1996, the Commission shall com-
plete all actions necessary to establish regulations to imple-
ment the requirements of this section"). The Commission
counters that the s 251(e) claim is not properly before the
court because Beehive did not present it to the Commission in
this proceeding and thereby failed to exhaust its administra-
tive remedies. See 47 U.S.C. s 405(a) (barring judicial re-
view of issues upon which FCC "has been afforded no oppor-
tunity to pass").
Beehive responds first that in its 1994 complaint initiating
this proceeding it requested that the Commission transfer
management of the SMS system to a neutral third party, as
s 251(e) presumably now requires. Although Beehive did
indeed request that relief, it did so, as the Commission points
out, under a different legal theory, which was rejected and
which Beehive does not raise in its current petition for
review. See Beehive Tel., 12 F.C.C.R. 17,950, p 33 (rejecting
claim that BOCs were required under 47 U.S.C. s 214(a) to
obtain certificate of public convenience before constructing
SMS). Consequently, Beehive's 1994 complaint did not place
the s 251(e) claim before the Commission; indeed, that sec-
tion did not then exist.
Beehive next points to other proceedings before the Com-
mission in which it has raised s 251(e), arguing that it has
therefore afforded the Commission an opportunity to pass
upon the issue. In the principal case upon which it relies,
however, DIRECTV, Inc. v. FCC, 110 F.3d 816, 825 (D.C. Cir.
1997), we excused the petitioner's failure to raise an issue
before the Commission because the agency had considered it
sua sponte in that same proceeding; clearly that case does
not assist Beehive. Just as the Commission need not "sift
pleadings and documents to identify arguments that are not
stated with clarity by a petitioner," Bartholdi Cable Co. v.
FCC, 114 F.3d 274, 279 (D.C. Cir. 1997), we see no reason the
Commission should be required to sift through pleadings in
other proceedings in search of issues that a petitioner raised
elsewhere and might have raised here had it thought to do so;
indeed, such a duty would be inconsistent with our adversarial
system, in which the petitioner "has the burden of clarifying
its position before the agency." Id. at 280.
Beehive next claims it would have been futile to ask the
Commission to consider its claim under s 251(e) after we
remanded this matter because the Commission in its 1995
order had declined to reopen the record in order to address
certain issues regarding divestiture of the BOCs' interest in
DSMI. We fail utterly to see how the Commission's refusal
to entertain the divestiture issue in 1995 shows that it would
have been futile for Beehive to raise it subsequently under a
provision enacted in 1996.
Beehive also contends that it would have been futile to
present the Commission with the s 251(e) claim upon remand
because the agency need not "consider any claim not included
specifically in Beehive's original complaint." But that can
hardly be true of a claim that arises after the complaint has
been filed; indeed, the Commission sought a remand to
consider Beehive's claim regarding ex parte contacts, which
arose subsequent to the filing of its complaint. Similarly, the
s 251(e) claim arose only upon enactment of that section,
which was after Beehive filed its complaint (and before our
remand), yet Beehive never presented it to the Commission,
whether by seeking leave to amend its complaint or other-
wise. We therefore hold that Beehive's s 251(e) claim is
precluded because Beehive failed to exhaust its administrative
remedies.
III. Conclusion
In summary, we hold that Beehive lacks Article III stand-
ing to raise two of its claims and that our review of its third
claim is precluded because Beehive failed to exhaust its
administrative remedies. Accordingly, the petition for review
is
Dismissed in part and denied in part.