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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 23, 2004 Decided April 16, 2004
No. 03-1017
AT&T CORPORATION,
PETITIONER
v.
FEDERAL COMMUNICATIONS COMMISSION AND
UNITED STATES OF AMERICA,
RESPONDENTS
WORLDCOM INC., ET AL.,
INTERVENORS
On Petition for Review of an Order of the
Federal Communications Commission
Paul J. Zidlicky argued the cause for petitioner. With him
on the briefs were David L. Lawson, Jonathan F. Cohn,
David W. Carpenter, John E. Benedict, H. Richard Juhnke,
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
William Single IV, Jeffrey A. Rackow, Donald B. Verilli, Jr.,
Mark D. Schneider and Michael DeSanctis. Mark C. Rosen-
blum and Jodie L. Kelley entered appearances.
Joel Marcus, Counsel, Federal Communications Commis-
sion, argued the cause for respondents. With him on the
brief were Robert H. Pate, III, Assistant Attorney General,
U.S. Department of Justice, Robert B. Nicholson and Robert
J. Wiggers, Attorneys, John A. Rogovin, General Counsel,
Federal Communications Commission, and Daniel M. Arm-
strong, Associate General Counsel. John E. Ingle, Deputy
Associate General Counsel, entered an appearance.
Robert F. Aldrich argued the cause for intervenors Ameri-
can Public Communications Council, Inc., et al. With him on
the brief were Albert H. Kramer, Michael K. Kellogg, Aaron
M. Panner, James G. Harralson, Michael E. Glover, Edward
Shakin, Gary L. Phillips and James D. Ellis. John M.
Goodman entered an appearance.
Before: RANDOLPH, ROGERS, and TATEL, Circuit Judges.
Opinion for the Court filed by Circuit Judge RANDOLPH.
RANDOLPH, Circuit Judge: For nearly a decade the Federal
Communications Commission has attempted to restructure
payphone compensation in compliance with the Telecommuni-
cations Act of 1996, Pub. L. No. 104-104, 110 Stat. 56. The
1996 Act required the Commission to ‘‘establish a per call
compensation plan to ensure that all payphone service provid-
ers are fairly compensated for each and every completed
intrastate and interstate call using their payphone[.]’’ 47
U.S.C. § 276(b)(1)(A). On three prior occasions we have
ruled on various aspects of the Commission’s payphone com-
pensation plan. Illinois Pub. Telecommunications Ass’n v.
FCC, 117 F.3d 555 (D.C. Cir. 1997), supplemented at 123 F.3d
693 (D.C. Cir. 1997); MCI Telecommunications Corp. v. FCC,
143 F.3d 606 (D.C. Cir. 1998); Am. Pub. Communications
Council v. FCC, 215 F.3d 51 (D.C. Cir. 2000) (‘‘APCC’’).
Petitioner AT&T and intervenors MCI and Sprint (‘‘AT&T’’),
all long-distance carriers, now challenge the Commission’s
latest revision of the compensation amount.
3
At the heart of these proceedings is the compensation of
coinless calls – those calls in which the caller, instead of
depositing money in the payphone, dials an access number or
a toll free number. In 1996 the Commission designed a
system in which the long-distance carrier handling the coin-
less call reimburses the payphone service provider on a flat-
rate, per phone basis.1 Implementation of the Pay Telephone
Reclassification and Compensation Provisions of the Tele-
communications Act of 1996, Report and Order, 11 F.C.C.R.
20,541 (Sept. 20, 1996) (‘‘First Order’’). Calculating a per
phone compensation figure requires multiplying two numbers:
a set price per call and an average volume of calls per phone.
Id. ¶ ¶ 119-25. The Commission expected that reimburse-
ment would switch to a per call basis once tracking technolo-
gy was in place. Id. ¶ 99. Call tracking would eliminate the
need for an average call volume estimate. The First Order
determined the price of a call to be 35 cents and the average
number of calls from a payphone to be 131 per month,
equaling $45.85 per phone. Id. ¶ ¶ 119-25. The Commission
intended this rate to apply from November 7, 1996, to Octo-
ber 6, 1997, when it expected the tracking technology to have
been fully implemented. Id. ¶ 126. This interval has become
known as the Interim Period. The Commission also set the
35 cent per call rate as the default rate for the first year of
per-call compensation after October 6, 1997. Id. ¶ 72.
In response to the petitions of various parties challenging
the First Order, we vacated and remanded the 35 cent per
call compensation rate for coinless calls. Illinois, 117 F.3d at
564-65, clarified at 123 F.3d at 694. No party challenged the
131 call volume estimate. On remand, the Commission, using
a different methodology, adjusted the per call compensation
rate to 28.4 cents per call. Implementation of the Pay
Telephone Reclassification and Compensation Provisions of
the Telecommunications Act of 1996, Second Report and
Order, 13 F.C.C.R. 1778 ¶ 1 (Oct. 9, 1997) (‘‘Second Order’’).
The Commission established this rate for two years beyond
1 Much of the background on the Commission’s efforts at
payphone compensation is set forth in APCC, 215 F.3d at 52-55.
4
October 7, 1997. Because call tracking had not yet been fully
implemented, the new rate served both as a default rate for
tracked calls and as a basis for per-phone compensation. The
Commission also tentatively applied this rate to the Interim
Period, although it deferred full reconsideration of the Inter-
im Period rate as ordered in Illinois until a later time. Id.
¶ 4. Finding this rate deficient as well, we remanded but did
not vacate the 28.4 cent rate, giving the Commission six
months to adopt a different figure. MCI, 143 F.3d at 609.
On remand the Commission again established a new rate, this
time 24 cents per call, which it applied retroactively to both
the Interim Period and the interval between October 7, 1997,
and April 20, 1999, the effective date of the newly-issued rate.
In re Implementation of the Pay Telephone Reclassification
and Compensation Provisions of the Telecommunications
Act of 1996, Third Report and Order, and Order on Reconsid-
eration of the Second Report and Order, 14 F.C.C.R. 2545
(Feb. 4, 1999) (‘‘Third Order’’). This latter interval is consid-
ered the Intermediate Period. The Commission also stated
that the 24 cent price would serve as the default rate for
coinless calls through January 31, 2002.2 Id. ¶ 18. We
affirmed the Commission’s per call compensation rate.
APCC, 215 F.3d 51.
In 2002 the Commission, still addressing the Illinois re-
mand, further revised the per call estimate to 22.9 cents per
call for the Interim and Intermediate Periods. Implementa-
tion of the Pay Telephone Reclassification and Compensa-
tion Provisions of the Telecommunications Act of 1996,
Fourth Order on Reconsideration and Order on Remand, 17
F.C.C.R. 2020 ¶ 7 (Jan. 31, 2002) (‘‘Fourth Order’’). Due to
the availability of new call volume data, the Commission, inter
alia, adjusted the average call volume figure from 131 to 148
for both periods. Id. ¶ ¶ 11, 36. As it did in the previous
orders, the Commission also applied the revised figures pro-
spectively – this time from April 21, 1999 forward, an interval
2 The original text incorrectly stated ‘‘January 31, 2001’’ instead
of ‘‘January 31, 2002.’’ See Erratum, 14 F.C.C.R. 2545 (Mar. 12,
1999).
5
the parties call the Post-Intermediate Period. Id. App. A.
No party asked the Commission to reconsider the 22.9 cents
per call figure. MCI petitioned for reconsideration on the
ground that the data and methodology the Commission used
to reach the 148 call estimate were faulty and that the
Commission should have applied a decline factor for 1998 and
beyond to take into account decreasing payphone call volume.
AT&T filed comments on MCI’s petition. The Commission,
in refusing to reopen this aspect of the Fourth Order, defend-
ed the quality of the data it used to reach the 148 figure and
its decision not to adopt a decline factor in light of insufficient
evidence demonstrating a decrease in per payphone call vol-
ume. Implementation of the Pay Telephone Reclassification
and Compensation Provisions of the Telecommunications
Act of 1996, Fifth Order on Reconsideration and Order on
Remand, 17 F.C.C.R. 21,274 ¶ ¶ 16-22 (Oct. 23, 2002) (‘‘Fifth
Order’’).
AT&T then filed this action seeking judicial review of the
Fifth Order in which the Commission denied MCI’s petition
for reconsideration.
The general rule is that an agency’s denial of a petition for
reconsideration is not subject to judicial review. ICC v. Bhd.
of Locomotive Engineers, 482 U.S. 270, 278-79 (1987); South-
western Bell Tel. Co. v. FCC, 180 F.3d 307, 310 (D.C. Cir.
1999); Beehive Tel. Co. v. FCC, 180 F.3d 314, 317-18 (D.C.
Cir. 1999); Microwave Communications, Inc. v. FCC, 515
F.2d 385, 387 n.7 (D.C. Cir. 1974). AT&T admits that it
sought review only of the Commission’s Fifth Order denying
reconsideration. But the general rule does not apply here, so
AT&T argues, because the Commission had no discretion to
deny reconsideration – reconsideration was mandatory under
§ 276(b)(1) of the 1996 Act. This section states that the
Commission, ‘‘within 9 months after February 8, 1996, TTT
shall take all actions necessary (including any reconsidera-
tion) to prescribe regulations TTT to ensure that all payphone
service providers are fairly compensatedTTTT’’ 47 U.S.C.
§ 276(b)(1). The use of the word ‘‘shall,’’ according to AT&T,
removes the Commission’s discretion to deny a reconsidera-
tion petition, at least when the Commission believes granting
6
the petition is ‘‘necessary’’ to ensure fair payphone compensa-
tion.
AT&T’s interpretation of § 276(b)(1) is impossible. On the
face of it, the provision simply established a temporal man-
date – 9 months. Section 276(b)(1) says nothing about the
decision whether to grant a petition for reconsideration. It
speaks only to how long the Commission may take for its
initial actions and for proceedings, if any, after it has granted
a petition for reconsideration. The evident purpose of Con-
gress was to speed things up. Yet AT&T’s version of
§ 276(b)(1) would only slow things down. We therefore
cannot read § 276(b)(1) as departing – solely for the purpose
of restructuring the payphone market – from the long-
standing rule that the Commission may in its discretion deny
a petition for reconsideration.
The Fifth Order, as a denial of reconsideration, is thus not
subject to judicial review unless it falls within some exception
to the general rule. The Supreme Court described such an
exception in Locomotive Engineers: when the request for
agency reconsideration rested on ‘‘new evidence or changed
circumstances that rendered the agency’s original order inap-
propriate.’’ 482 U.S. at 278 (internal quotations omitted).
The Court was there interpreting the Interstate Commerce
Act, which contained three grounds for rehearing: ‘‘material
error, new evidence, or substantially changed circumstances.’’
482 U.S. at 277 (citing 49 U.S.C. § 10327(g) (current version
at 49 U.S.C. § 722(c))). Here, the rehearing statute – 47
U.S.C. § 405(a) – does not use those words. It specifies no
grounds for rehearing, leaving the matter to ‘‘such general
rules as the Commission may establish.’’3 The Commission’s
rules provide that a petition for rehearing relying on facts not
presented in the original proceeding ‘‘may’’ be granted if the
facts ‘‘relate to events’’ occurring after ‘‘the last opportunity
3 Section 405(a) provides that if the Commission grants recon-
sideration, it is limited to taking ‘‘newly discovered evidence, evi-
dence which has become available only since the original taking of
evidence, or evidence which the Commission TTT believes should
have been taken in the original proceeding.’’
7
to present such matters,’’ or if the petition ‘‘relies on facts
unknown to petitioner TTT which could not, through the
exercise of ordinary diligence, have been learned prior to such
opportunity.’’ 47 C.F.R. § 1.106(c) & (b)(2). In Southwest-
ern Bell, 180 F.3d at 311, and Beehive, 180 F.3d at 318, we
assumed that the Commission’s rehearing rules were compa-
rable to those recited in the Court’s Locomotive Engineers
opinion. See also Transportation Intelligence, Inc. v. FCC,
336 F.3d 1058, 1062 (D.C. Cir. 2003); Schoenbohm v. FCC,
204 F.3d 243, 245 (D.C. Cir. 2000). We will do the same in
considering AT&T’s argument that the Commission should
have reconsidered its Fourth Order in light of new evidence
showing a decline in call volume in the Post-Intermediate
Period. (AT&T concedes that its claims pertaining to the
Interim and Intermediate Periods, and its other claims appli-
cable to the Post-Intermediate Period, were not based on new
evidence.)
The supposed new evidence consisted of the following. In
May 2002, after the Fourth Order issued, MCI filed a reply to
comments on its petition for reconsideration of the Fourth
Order. MCI’s reply cited its internal data for completed
payphone calls in the first quarters of 1998, 1999, 2000 and
2001, which it said showed that calls per payphone have been
declining over time. For the same purpose, MCI also cited
data from Southwestern Bell (‘‘SBC’’), a regional Bell operat-
ing company (‘‘RBOC’’), dealing with the routing of payphone
calls to long-distance carriers or other carriers for the fourth
quarters of 1997, 1998, 2000 and the third quarter of 2001.
SBC had filed this data in March 2002 in compliance with the
Commission’s request of December 20, 2001. The Commis-
sion sought the information from SBC and other RBOCs so
that it could, as it did in the Fifth Order, determine the
allocation of per-payphone payments among long-distance
carriers. See Fifth Order, 17 F.C.C.R. 21,274 ¶ 49.
According to AT&T, not only the SBC data MCI cited in its
reconsideration reply but also all the data submitted by the
other RBOCs in March 2002 constitute new evidence warrant-
ing an exception to the rule that reconsideration denials are
8
not reviewable.4 This misapprehends the law. The petition
for reconsideration must present the allegedly new evidence
to the agency; even if the party does so and even if the
evidence is in fact newly discovered, a court will reverse an
agency’s denial of reconsideration only ‘‘in the most extraordi-
nary circumstances,’’ Bowman Transp., Inc. v. Arkansas-Best
Freight Sys., Inc., 419 U.S. 281, 296 (1974), and only if the
agency has engaged in the ‘‘clearest abuse of discretion.’’
Locomotive Engineers, 482 U.S. at 278, quoting United States
v. Pierce Auto Freight Lines, Inc., 327 U.S. 515, 534-35
(1946); but cf. Jost v. Surface Transp. Bd., 194 F. 3d 79, 85
(D.C. Cir. 1999). When a party has not presented the
evidence to the agency in its reconsideration petition, the
evidence is not ‘‘new’’: if ‘‘no new data TTT has been put
forward as the basis for reopening,’’ the agency’s denial of
rehearing is not reviewable. Locomotive Engineers, 482 U.S.
at 279. The Commission’s rules make this plain. The only
new facts that can serve as a basis for granting reconsidera-
tion are those the ‘‘petition relies on.’’ 47 C.F.R.
§ 1.106(b)(2)(i) & (ii).
Here neither MCI’s petition for reconsideration, nor any-
one else’s, relied on March 2002 data supplied by any of the
RBOCs other than SBC. It follows that the only question is
whether the SBC data constituted new evidence, that is, facts
relating to events occurring after the Fourth Order or facts
unknown to AT&T which could not have been known by the
exercise of ordinary diligence. Id.; see Southwestern Bell,
180 F.3d at 312.
We believe the data MCI cited to the Commission falls into
neither category. The SBC data covered a period dating
back more than four years before the Fourth Order issued at
the end of January 2002. AT&T has not shown that this data
was nonexistent prior to the Fourth Order. Still less has
AT&T offered any cogent reason why it, or some other party,
could not have requested the Commission to seek the data
from SBC, as the Commission did on its own in December
4 AT&T does not claim that MCI’s own data qualified as new
evidence.
9
2001. It is not enough to point out that ‘‘March comes after
January.’’ Pet. Reply Br. at 7. In order to constitute new
facts under the Commission’s rules the petitioner must have
exercised ordinary diligence to learn of them. So too under
Locomotive Engineers: the failure to have the evidence
placed before the agency in the original proceeding must be
of ‘‘no fault’’ of the petitioner. 482 U.S. at 279; compare FED.
R. CIV. P. 60(b) (motion for reconsideration allowed on ground
of ‘‘newly discovered evidence which by due diligence could
not have been discovered TTT’’).
The alleged decline in call volume was not news. AT&T
claims the decline began in 1998, years before the Fourth
Order. In its petition for reconsideration, MCI relied on
figures published in a newspaper article in November 2001.
MCI attached other newspaper articles from February 2001
and May 2001 discussing the decline. The SBC data there-
fore did not relate to events occurring after the Fourth Order
and it did not relate to ‘‘facts unknown to’’ AT&T. 47 C.F.R.
§ 1.106(b)(2)(i) & (ii).
AT&T rests its ‘‘newly discovered evidence’’ claim on the
alternative ground that a ‘‘public notice seeking comments in
advance of the Fourth Order sought information solely with
respect to the Interim Period [November 7, 1996, to October
6, 1997]’’ rather than the Post-Intermediate Period beginning
in April 1999. Pet. Reply Br. at 7. Although this sounds like
an inadequate-notice-and-opportunity-to-comment claim un-
der the Administrative Procedure Act, 5 U.S.C. § 553(b); see
Sprint Corp. v. FCC, 315 F.3d 369 (D.C. Cir. 2003), AT&T has
never explicitly made that argument despite opportunities to
do so.
As to the notice itself, it dealt with the RBOCs’ challenge to
payphone compensation issues relating to the Interim Period.
RBOC/GTE Payphone Coalition Files Proposal for Setting
Payphone Compensation for Interim Period in Pay Tele-
phone Reclassification and Compensation Proceeding, Public
Notice, 15 F.C.C.R. 18,122 (Sept. 26, 2000). The notice did
not say that the Fourth Order proceedings would be restrict-
ed to deciding only those issues. And it certainly was not.
10
The Fourth Order was both a reconsideration of the Third
Order and a continuation of the proceedings on remand from
this court. As it did in prior orders, the Commission applied
the new calculations beyond the time period applicable to the
remand. See Fourth Order, 7 F.C.C.R. 2020 ¶ 4 (describing
Second and Third Orders). That the Commission in the
Fourth Order adjusted the call volume both for the Interim
Period and the period thereafter should have come as no
surprise. Compare Third Order, 14 F.C.C.R. 2545 ¶ ¶ 230-31
(setting 24 cent rate both retroactively for Interim/Intermedi-
ate Periods and prospectively until January 31, 2002).
The parties to the proceedings leading to the Fourth Order
must have realized that call volume after April 1999 would be
relevant. The subject was on the table from the time of the
initial Notice of Proposed Rulemaking requesting comment
on payphone compensation. Notice of Proposed Rulemaking,
11 F.C.C.R. 6716, 61 Fed. Reg. 31,481 (June 6, 1996).
Charged with establishing a system of fair compensation, 47
U.S.C. § 276(b)(1)(A), the Commission went to work devising
the appropriate calculations. Specifically, the Commission
sought comment ‘‘on how compensation levels should be
permitted to change in the future TTT Commenters should
submit a summary of any data that support their arguments.’’
Notice of Proposed Rulemaking, 11 F.C.C.R. 6716 ¶ 38. In
the First Order the Commission set the call volume rate at
131 calls per month. First Order, 11 F.C.C.R. 20,541 ¶ 125.
From then on the parties had a duty to inform the Commis-
sion of any change in conditions they thought warranted a
rate adjustment. In connection with the Third Order, the
Commission solicited and used call volume data to set the per
call compensation rate until January 31, 2002, well beyond the
end of the Interim and Intermediate Periods. Third Order,
14 F.C.C.R. 2545 ¶ ¶ 18, 230, Erratum. The Commission
correctly stated at oral argument that call volume and cost
per call are inextricably linked. The 24 cent per call rate in
the Third Order resulted from the Commission’s dividing per-
payphone common costs ($101.29) by the total number of calls
11
at a marginal payphone location (439).5 Id. ¶ 191. The
Commission thus needed call volume data to set this rate.
And if, as AT&T claims, the volume began declining around
1998, AT&T had good reason to believe – had notice – that
this decline in volume was relevant to the proceedings on the
Fourth Order. The price set in the Third Order would
otherwise continue to apply not only to the Interim and
Intermediate Periods, but also to the Post-Intermediate Peri-
od. The Commission foresaw that market conditions might
require further adjustments: ‘‘Barring an unforeseen change
in the market or in the relevant technology, we will look with
disfavor upon any petition requesting that we modify, before
January 31, [2002], either the compensation amount or com-
pensation mechanism.’’ Id. ¶ 18 (emphasis added). Yet no
party ‘‘questioned [the $0.24] determination.’’ Fourth Order,
17 F.C.C.R. 2020 ¶ 7.
When we ask, as the Commission’s rules require and as
Locomotive Engineers instructs us to, whether AT&T could
have urged the Commission to consider declining call volume
before it issued the Fourth Order, the answer is yes. The
SBC data MCI brought to the Commission’s attention in
asking for reconsideration was therefore not new evidence
within the Commission’s rules or Locomotive Engineers and
it was hardly earth-shattering in any event. Rather than
suggesting a steady decline in call volume during the Post-
Intermediate Period, SBC’s data showed that there were
more calls per payphone in the third quarter of 2001 than in
the fourth quarter of 2000. The SBC data also was inconclu-
sive regarding whether call volume per payphone had de-
clined since April 1999 (the beginning of the Post-
Intermediate Period).6
5 The RBOCs provided total call volume data and then subdi-
vided that figure into dial-around calls (which are at issue here),
local coin calls and ‘‘other’’ calls. Id. ¶ 151.
6 An overall decline in call volume does not necessarily trans-
late into a decline in call volume per payphone. It may have been,
as the RBOCs argued in opposing reconsideration, that payphone
12
We therefore hold that the Commission’s denial of recon-
sideration in the Fifth Order is not reviewable. This does not
leave AT&T completely without recourse. The Commission
has initiated a new rulemaking proceeding on payphone com-
pensation, at the request of the American Public Communica-
tions Council. See Request to Update Default Compensation
Rate for Dial-Around Calls from Payphones, 18 F.C.C.R.
22,811 (Oct. 31, 2003). The new Notice of Proposed Rulemak-
ing recognizes that ‘‘industry conditions have changed signifi-
cantly’’ and that ‘‘[p]ayphone usage and deployment are de-
creasing as the use of wireless services increases.’’ Id. ¶ 18.
The petition for review is denied.
providers removed payphones as use dropped off, leaving only
payphones that were generating the highest volumes.