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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 19, 2003 Decided April 8, 2003
No. 01-1485
AT&T CORPORATION,
PETITIONER
v.
FEDERAL COMMUNICATIONS COMMISSION AND
UNITED STATES OF AMERICA,
RESPONDENTS
On Petition for Review of Orders of the
Federal Communications Commission
Daniel Meron argued the cause for petitioner. With him
on the briefs were Joseph R. Guerra, Jonathan Cohn, Mark
C. Rosenblum, and Peter H. Jacoby.
Richard K. Welch, Associate General Counsel, Federal
Communications Commission, argued the cause for respon-
dent. With him on the brief were Jane E. Mago, General
Counsel, John E. Ingle, Deputy Associate General Counsel,
Bills of costs must be filed within 14 days after entry of judgment.
The court looks with disfavor upon motions to file bills of costs out
of time.
2
Lisa E. Boehley, Counsel, and Catherine G. O’Sullivan, Chief
Counsel, U.S. Department of Justice, and Steven J. Mintz,
Counsel.
Before: TATEL and GARLAND, Circuit Judges, and WILLIAMS,
Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge TATEL.
TATEL, Circuit Judge: The Federal Communications Com-
mission assessed $80,000 in forfeiture penalties against AT&T
for ‘‘slamming’’ two customers—that is, changing their long-
distance telephone service without their authorization. Hav-
ing paid the forfeiture, AT&T now petitions for review,
arguing that in both instances it complied with the Commis-
sion’s procedures for verification of telemarketing sales.
Concluding that we have jurisdiction over AT&T’s post-
compliance challenge to the forfeiture, we hold that the
Commission’s requirement that telecommunications carriers
guarantee that the actual line subscriber has authorized the
service change order exceeds the Commission’s statutory
authority to prescribe procedures to verify that authorization.
Accordingly, we vacate the relevant portions of the forfeiture
orders.
I.
In order to prevent telecommunications carriers from mak-
ing unauthorized changes to subscribers’ telephone service—a
practice known as ‘‘slamming’’—the Telecommunications Act
of 1996 makes it unlawful for telecommunications carriers to
‘‘submit or execute a change in a subscriber’s selection of a
provider of telephone exchange service or telephone toll
service except in accordance with such verification procedures
as the Commission shall prescribe.’’ 47 U.S.C. § 258(a). In
its rules implementing section 258—and conforming its preex-
isting anti-slamming regulations to the new statute—the
Commission established various procedures that carriers
must use to verify the subscriber’s authorization to submit
the preferred carrier change order. These procedures, which
vary depending on how the carrier chooses to market its
services, include obtaining the subscriber’s written authoriza-
3
tion, or, if the carrier has solicited the subscriber over the
telephone, using an independent third party to confirm the
subscriber’s preferred carrier change order and obtain ‘‘ap-
propriate verification data (e.g., the subscriber’s date of birth
or social security number).’’ 47 C.F.R. § 64.1150(b), (d)
(1999) (currently codified as amended at 47 C.F.R.
§ 64.1120(a)(1), (c)(1), (c)(3)). In all circumstances, however,
Commission rules require that carriers obtain both ‘‘(i) Autho-
rization from the subscriber, and (ii) Verification of that
authorization in accordance with the procedures prescribed in
this section.’’ 47 C.F.R. § 64.1120(a)(1) (formerly codified at
47 C.F.R. § 64.1100(a)(1) (1999)).
In December 2000, the Commission issued a notice of
apparent liability (NAL) to AT&T for several violations of
section 258 and the Commission’s anti-slamming regulations.
Notice of Apparent Liability for Forfeiture, 16 F.C.C.R. 438
(2000). After considering AT&T’s opposition to the NAL, the
Commission found the company liable for eleven slamming
incidents—including the two at issue in this case, in which
AT&T, in the course of making telephone solicitations,
changed the long-distance carriers of two sets of customers,
Thomas Patterson and Tracie and Greg Ortega, without their
authorization. Order of Forfeiture, 16 F.C.C.R. 8978 (2001).
In both cases, AT&T argued that because it complied with
the Commission’s prescribed procedures for conducting inde-
pendent third-party verification of carrier change orders, it
made no difference that Patterson and the Ortegas later
complained that they neither knew the individuals who agreed
to change their service nor authorized those individuals to
approve a change on their behalf. Rejecting this argument,
the Commission ruled that ‘‘[a] carrier cannot comply with
the Commission’s verification procedures if it receives confir-
mation from an individual not authorized to make the
change.’’ Id. at 8985, ¶ 18 (footnote omitted). Then, acting
pursuant to Communications Act section 503(b), which autho-
rizes forfeiture penalties against any person who ‘‘willfully or
repeatedly’’ fails to comply with the Act or Commission rules
and regulations, 47 U.S.C. § 503(b), the Commission assessed
a $40,000 forfeiture for each of these two incidents, as well as
4
for each of seven others, and $80,000 for two involving forged
letters of authorization, which the Commission regards as ‘‘a
particularly egregious form of slamming,’’ Notice of Apparent
Liability, 16 F.C.C.R. at 452, ¶ 31 (footnote omitted). The
forfeiture penalties add up to $520,000. Order of Forfeiture,
16 F.C.C.R. at 8986, ¶ 20.
AT&T promptly paid the full amount of the forfeiture
penalties, but at the same time filed a petition for limited
reconsideration, asking the Commission to rescind the portion
of the Forfeiture Order finding it liable for changing the
Ortegas’ and Patterson’s long-distance carriers without their
authorization. In its Order on Reconsideration, the Commis-
sion upheld its previous findings, noting that its anti-
slamming rules ‘‘impose a strict liability standard,’’ and that
AT&T ‘‘ultimately must determine for itself how to ensure
that no unauthorized changes occur.’’ 16 F.C.C.R. 16,596,
16,597, ¶ 5, 16,599, ¶ 9. ‘‘Should AT&T’s methods prove
unsuccessful,’’ the Commission concluded, ‘‘the company is
liable for any resulting unauthorized changes.’’ Id. at 16,599
¶ 9 (footnote omitted). AT&T filed a petition for review in
this court, contending that the Commission’s requirement of
actual customer consent exceeds the agency’s statutory au-
thority.
II.
Before considering the merits of AT&T’s challenge, we
must address the Commission’s argument that we lack juris-
diction over appeals from NAL forfeiture proceedings. The
NAL procedure is just one of two ways in which the Commis-
sion may impose forfeiture penalties, each of which comes
with a different set of jurisdictional requirements—differ-
ences that are relevant to the issue before us. See generally
Action for Children’s Television v. FCC, 59 F.3d 1249, 1253–
54 (D.C. Cir. 1995) (describing the two forfeiture procedures).
Under the first and more formal procedure, the Commis-
sion provides notice to the alleged violator and affords it an
opportunity for a hearing before an administrative law judge,
who may then choose to impose forfeiture penalties. 47
5
U.S.C. § 503(b)(3)(A). The resulting forfeiture order is then
subject to review in the court of appeals. Id. If the penalty
remains unpaid once the forfeiture determination becomes
final, the United States may bring a collection action in
district court. Id. § 503(b)(3)(B).
Under the less formal NAL procedure at issue in this case,
the Commission issues a notice of apparent liability to the
alleged violator, affording it only the opportunity to show, in
writing, why no forfeiture penalty should be imposed. Id.
§ 503(b)(4). The Commission may then issue an order direct-
ing payment of the proposed forfeiture, reducing the amount
to be paid, or canceling the forfeiture altogether. 47 C.F.R.
§ 1.80(f)(4). If the order becomes final and the forfeiture
subject refuses to pay, then Communications Act section
504(a) permits the Commission to refer the matter to the
Department of Justice for commencement of a civil action to
recover the forfeiture in a district court, where the forfeiture
subject is entitled to a trial de novo. 47 U.S.C. § 504(a).
The Commission argues that unlike the formal hearing
forfeiture process, where the Communications Act expressly
gives courts of appeals jurisdiction to review forfeiture or-
ders, the less formal NAL forfeiture proceedings are not
subject to review in courts of appeals. The plain language of
the Communications Act indicates otherwise. Section 402(a),
the Act’s general review provision, vests in courts of appeals
exclusive jurisdiction over ‘‘[a]ny proceeding to enjoin, set
aside, annul or suspend’’ or determine the validity of final
Commission orders, 47 U.S.C. § 402(a); see 28 U.S.C.
§ 2342(1)—a category that includes forfeiture orders, see
Illinois Citizens Comm. for Broad. v. FCC, 515 F.2d 397, 402
(D.C. Cir. 1974) (holding that the court of appeals has juris-
diction over a third party’s challenge to a paid forfeiture
order pursuant to section 402(a)). And although section
504(a) creates an exception to that general rule, that excep-
tion is, by its express terms, limited to government actions for
the recovery of forfeiture penalties: Section 504(a) provides
that NAL forfeitures ‘‘shall be recoverable TTT in a civil suit
in the name of the United States’’ brought in the district
court, and that ‘‘any suit for the recovery of a forfeiture
6
imposed pursuant to the provisions of this chapter shall be a
trial de novo.’’ 47 U.S.C. § 504(a) (emphasis added). Be-
cause section 504(a) says nothing about district court jurisdic-
tion where the forfeiture has already been recovered, it
appears to leave court of appeals jurisdiction intact where, as
here, the forfeiture subject has paid the assessed penalty.
Though the Commission agrees that section 504(a) deals
only with challenges to unpaid forfeiture orders, it argues
that section 504(a) nevertheless overrides section 402(a), al-
beit implicitly, for purposes of challenging paid forfeiture
orders. For that proposition, the Commission relies on
Pleasant Broadcasting Co. v. FCC, 564 F.2d 496 (D.C. Cir.
1977). Addressing the question of court of appeals jurisdic-
tion over NAL forfeiture orders, Pleasant Broadcasting
states that ‘‘section 504 of the Communications Act of 1934
vests exclusive jurisdiction in the district courts to review, in
the first instance, licensee challenges to forfeiture orders.’’
Id. at 497 (citation omitted). According to the Commission,
Pleasant Broadcasting holds that section 504(a) vests exclu-
sive jurisdiction in district courts for review of all forfeiture
orders, paid or unpaid. And because section 504(a) contains
no provision for post-compliance review, the Commission ar-
gues, Pleasant Broadcasting means that forfeiture subjects
must either bring a pre-compliance challenge in district court
or bring no challenge at all; payment effectively renders
forfeiture orders unreviewable.
Despite its broad statement of its holding, Pleasant Broad-
casting provides little support for the Commission’s theory.
To begin with, Pleasant Broadcasting deals not with the
question of post-compliance review of forfeiture orders, but
rather with a forfeiture subject’s challenge to an unpaid
forfeiture order. The court’s reasoning reflects the impor-
tance of that distinction. Limiting its holding to cases in
which section 504’s ‘‘special review mechanism’’ is both ade-
quate and available, the court distinguished Illinois Citizens,
515 F.2d 397, in which this court accepted jurisdiction over
public-interest groups’ challenge to a Commission forfeiture
for broadcasting obscene and indecent materials despite the
7
fact that the broadcaster had already paid the penalty. Un-
der those circumstances, where section 504 proceedings to
collect the forfeiture ‘‘would never have been instituted,’’
Pleasant Broadcasting says that section 504 review is ‘‘un-
available,’’ and court of appeals review pursuant to section
402(a) is therefore ‘‘appropriate.’’ Id. at 501, 502–03. Al-
though Illinois Citizens involved a third-party challenge to a
paid forfeiture order, the same logic applies when the forfei-
ture subject itself seeks to bring a post-compliance challenge:
Because payment renders section 504 review ‘‘unavailable,’’
court of appeals review pursuant to section 402(a) is ‘‘appro-
priate.’’
Pleasant Broadcasting’s holding, moreover, rests at least in
part on the court’s concern that allowing forfeiture subjects to
bring challenges to forfeiture orders in courts of appeals
would give them the proverbial ‘‘two bites at the apple’’:
They would ‘‘be able to challenge the forfeiture order in a
court of appeals on the basis of the administrative record and,
if unsuccessful, TTT litigate all issues de novo in the district
court, with a right of appeal to the court of appeals.’’ Id. at
501. Even under the Commission’s theory, that danger does
not exist here. Because section 504(a) review is, by its terms,
available only in recovery actions, AT&T will get just one
bite.
In the end, Pleasant Broadcasting tells us only that section
504(a) establishes district courts as the exclusive forum for
challenges to unpaid forfeiture orders. Like section 504(a)
itself, it has no effect on court of appeals jurisdiction to
review challenges to paid forfeiture orders.
To be sure, as the Commission points out, allowing forfei-
ture subjects to choose between challenging unpaid forfeiture
orders in district court and challenging paid forfeiture orders
in the court of appeals means that they can control the forum
of review by deciding whether or not to pay the penalty. The
obvious answer to this concern is section 504(a)’s plain lan-
guage: By limiting district court jurisdiction to unpaid forfei-
tures, it gives forfeiture subjects that very choice. Such
forum-controlling compliance choices, moreover, are common
8
in statutes providing for judicial review of regulatory deci-
sions. The Communications Act itself contains another such
provision, which allows telecommunications carriers subject to
orders that conclude complaint-initiated investigations either
to appeal the order in the court of appeals under section
402(a), 47 U.S.C. § 208(b)(3), or, assuming the order requires
the payment of money, to refuse to comply and instead wait
for the complainant to file a petition in district court, id.
§ 407.
Moreover, even where, as here, a statute fails to make the
choice explicit, but rather provides only a special procedural
mechanism for the government to collect payments owed to it,
that choice nevertheless remains; the collection mechanism
has no effect on the payer’s ability to obtain post-compliance
review pursuant to generally applicable jurisdictional princi-
ples. For example, in the customs context, where Congress
granted exclusive jurisdiction to the Court of International
Trade over suits for the recovery of certain civil penalties, 28
U.S.C. § 1582(1), penalty subjects may ‘‘obtain[ ] judicial re-
view in the Court of International Trade by refusing to pay
the penalty and waiting for the government to commence an
enforcement action.’’ Trayco, Inc. v. United States, 994 F.2d
832, 837 (Fed. Cir. 1993). But they also have ‘‘the option, and
more importantly, the right’’ to pay the penalty and later
‘‘initiate suit in the district court to challenge the penalty’’
pursuant to the Tucker Act, 28 U.S.C. § 1346(a)(2). Id.
Similarly, here, where AT&T has already paid the penalty
rather than wait for the Government to commence a recovery
action, it has the option—and the right—to initiate suit in the
court of appeals pursuant to section 402(a).
III.
This brings us to the merits of AT&T’s challenge to the
Commission’s forfeiture order. Because AT&T claims that
the anti-slamming regulations violate a statute the Commis-
sion is charged with enforcing, we proceed in accordance with
Chevron U.S.A. Inc. v. Natural Resources Defense Council,
Inc., 467 U.S. 837 (1984), asking first whether ‘‘Congress has
directly spoken to the precise question at issue,’’ since if it
9
has, ‘‘that is the end of the matter; for the court, as well as
the agency, must give effect to the unambiguously expressed
intent of Congress.’’ Id. at 842–43 (footnote omitted). If the
statute is either silent or ambiguous, we defer to the agency’s
interpretation, provided that it ‘‘is based on a permissible
construction of the statute.’’ Id. at 843. Such deference is
warranted, however, only when ‘‘Congress has left a gap for
the agency to fill pursuant to an express or implied ‘delega-
tion of authority to the agency.’ ’’ Ry. Labor Executives’
Ass’n v. Nat’l Mediation Bd., 29 F.3d 655, 671 (D.C. Cir.
1994) (en banc) (citation omitted); see also Motion Picture
Ass’n of Am. v. FCC, 309 F.3d 796, 801 (D.C. Cir. 2002)
(‘‘[T]he agency’s interpretation of the statute is not entitled to
deference absent a delegation of authority from Congress to
regulate in the areas at issue.’’) (emphasis in original).
Applying this standard, we believe that the anti-slamming
regulations exceed the authority Congress delegated to the
Commission in section 258. To begin with, the regulations
go beyond the anti-slamming statute’s express terms. Sec-
tion 258 provides only that telecommunications carriers may
not submit or execute changes in subscribers’ telephone
service ‘‘except in accordance with such verification proce-
dures as the Commission shall prescribe,’’ 47 U.S.C. § 258(a),
yet the Commission’s anti-slamming regulations require that
a carrier not only comply with the Commission’s verification
procedures, but also obtain actual ‘‘[a]uthorization from the
subscriber.’’ 47 C.F.R. § 64.1120(a)(1). The distinction is
important, for as AT&T points out, the Commission’s actual-
authorization requirement charges carriers that engage in
telemarketing with a virtually impossible task: guaranteeing
that the person who answers the telephone is in fact autho-
rized to make changes to that telephone line. While a
customer’s current local exchange carrier might be able to
verify the subscriber’s identity by consulting its own custom-
er records, the Commission itself has acknowledged that
‘‘long distance service providers often lack access to the
[local exchange carrier] account records containing the perti-
nent information’’ about the customer of record. Third Re-
port and Order and Second Order on Reconsideration, Im-
10
plementation of the Subscriber Carrier Selection Changes
Provisions of the Telecommunications Act of 1996, 15
F.C.C.R. 15996, 16020, ¶ 49 n.145 (2000). Carriers, more-
over, generally have no way of knowing whom subscribers
may have authorized to make changes on their behalf. In
other words, telecommunications carriers seeking new cus-
tomers via telemarketing have little choice but to depend on
the veracity of the person answering the phone. And as the
Commission’s forfeiture order in this case illustrates, carriers
may follow all of the prescribed verification procedures yet
still find themselves liable. The actual-authorization require-
ment amounts, as the Commission acknowledges, to a strict-
liability standard. Order on Reconsideration, 16 F.C.C.R. at
16,597, ¶ 5.
Since section 258 itself contains no actual-authorization
requirement, the question becomes whether it nevertheless
authorizes the Commission to create such a requirement. We
think it does not. If Congress had wished to require actual
customer authorization, instead of prohibiting carriers from
changing subscribers’ service ‘‘except in accordance with such
verification procedures as the Commission shall prescribe,’’ it
would have written the statute to prohibit such changes
‘‘without the authorization of the subscriber.’’ Elsewhere in
the Communications Act, Congress has expressly imposed an
actual-authorization requirement. See Barnhart v. Sigmon
Coal Co., 534 U.S. 438, 439–40 (2002) (‘‘[I]t is a general
principle of statutory construction that when one statutory
section includes particular language that is omitted in another
section of the same Act, it is presumed that Congress acted
intentionally and purposely.’’) (citing Russello v. United
States, 464 U.S. 16, 23 (1983)). Section 222, for example,
requires that telecommunications carriers obtain ‘‘approval of
the customer’’ before using, disclosing, or permitting access to
‘‘individually identifiable’’ customer proprietary network in-
formation, except as otherwise required by law. 47 U.S.C.
§ 222(c)(1). It also requires the ‘‘express prior authorization
of the customer’’ for the release of wireless location informa-
tion. Id. § 222(f). By comparison, section 258(a) neither
contains a customer-consent requirement nor suggests that
Congress delegated to the Commission the discretionary au-
11
thority to adopt such a requirement. Cf. Motion Picture
Ass’n, 309 F.3d at 801–02 (finding that a statute authorizing a
study on the use of video description does not authorize the
Commission to adopt rules mandating video description). It
only authorizes the Commission to prescribe verification pro-
cedures.
Attempting to show that it has not exceeded this mandate,
the Commission insists that the actual-authorization require-
ment is not an independent requirement, but rather an inte-
gral part of its ‘‘verification procedures.’’ According to the
Commission, its verification procedures require carriers not
only to ask the right questions of their potential customers,
but to ask the right questions of the right people—that ‘‘the
third party verifier confirm the subscribers’ authorization;
obtain identification data from the subscriber; and within the
verification context obtain clear and conspicuous confirmation
that the subscriber authorized a change,’’ where ‘‘subscriber’’
means the subscriber of record, and not merely the person
who answers the phone. Respondents’ Br. at 37–38 (empha-
sis in original). We are unconvinced. A ‘‘procedure’’ is ‘‘a
particular course of action,’’ or ‘‘a particular step adopted for
doing or accomplishing something.’’ WEBSTER’S THIRD NEW
INTERNATIONAL DICTIONARY 1807 (1993). So defined, ‘‘proce-
dures’’ include, for example, referring telemarketing sales to
independent third parties to confirm orders and to ask for
identifying information such as subscribers’ dates of birth.
See 47 C.F.R. § 64.1120(a). In contrast, the Commission’s
actual-authorization requirement prescribes no ‘‘particular
step TTT for doing or accomplishing something.’’ Rather, it
establishes a goal that the Commission itself has admitted
may be impossible to accomplish—guaranteeing that the per-
son on the phone actually has authority to make changes to
the account—leaving carriers such as AT&T in the position of
‘‘determin[ing] for [themselves] how to ensure that no unau-
thorized changes occur,’’ and holding them liable if those
methods ‘‘prove unsuccessful.’’ Order on Reconsideration, 16
F.C.C.R. at 16,599, ¶ 9.
Finally, the Commission argues that the actual-
authorization requirement better serves Congress’s purpose
of protecting consumers from slamming by strengthening and
12
expanding the Commission’s preexisting anti-slamming rules.
In this case, however, where the statute’s text is clear, we
have no need to resort to section 258’s legislative history.
Rather, we think ‘‘Congress meant what it said’’—carriers
must comply with Commission verification procedures, and
nothing more. FCC v. NextWave Personal Communications
Inc., 123 S. Ct. 832, 842 (2003).
IV.
Having considered the Commission’s remaining arguments
and finding them to be without merit, we grant the petition
for review and vacate the forfeiture penalties associated with
the Ortega and Patterson accounts.
So ordered.