United States Cellular Corp. v. Federal Communications Commission

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 15, 2001 Decided June 29, 2001

No. 00-1072

United States Cellular Corporation,
Petitioner

v.

Federal Communications Commission and
United States of America,
Respondents

Association of Public-Safety Communications
Officials-International, Inc., et al.,
Intervenors

Consolidated with
00-1536, 00-1538, 01-1047

On Petitions for Review of Orders of the
Federal Communications Commission

Thomas P. Van Wazer argued the cause for petitioners.
With him on the briefs were James P. Young, Donald J.

Evans and Sylvia Lesse. Stephen G. Kraskin entered an
appearance.

Roberta L. Cook, Counsel, Federal Communications Com-
mission, argued the cause for respondents. With her on the
brief were Christopher J. Wright, General Counsel, John E.
Ingle, Deputy Associate General Counsel, Catherine G. O'Sul-
livan and Andrea Limmer, Attorneys, U.S. Department of
Justice. Daniel M. Armstrong, Associate General Counsel,
Federal Communications Commission, entered an appear-
ance.

Robert M. Gurss and Tamara Y. Brown were on the brief
for intervenor Association of Public-Safety Communications
Officials-International, Inc.

Before: Henderson, Tatel and Garland, Circuit Judges.

Opinion for the Court filed by Circuit Judge Tatel.

Tatel, Circuit Judge: In an effort to speed implementation
of enhanced 911 services for wireless phones, the Federal
Communications Commission removed a provision condition-
ing wireless carriers' obligation to purchase and install the
necessary technology on guaranteed state or local govern-
ment funding. The carriers challenge this decision, arguing
that, among other things, it contravenes the cost causation
principle adopted by this court in Competitive Telecommuni-
cations Association v. FCC, 87 F.3d 522, 529 (D.C. Cir. 1996)
("Comptel"), is arbitrary and capricious, 5 U.S.C. s 706(2)(A),
violates the Regulatory Flexibility Act, 5 U.S.C. ss 601-612,
and amounts to an unconstitutional taking. Finding petition-
ers' arguments either without merit or not properly before us,
we deny the petition for review in its entirety.

I

Over the last thirty years, 911 service has "spread across
the nation and become synonymous with emergency assis-
tance." In re Revision of the Comm'n's Rules to Ensure
Compatibility with Enhanced 911 Emergency Calling Sys.,

11 FCC Rcd 18676 p 3 (1996) ("First Report & Order"). At
its most basic, 911 service involves routing calls to state or
local governmental entities responsible for coordinating emer-
gency response, known as Public Safety Answering Points
("PSAPs"), which dispatch emergency assistance to callers.
Most PSAPs now provide E911--enhanced 911--services for
calls placed from traditional landline phones, using Automatic
Numbering Identification ("ANI") to determine a caller's
phone number and Automatic Location Identification ("ALI")
to pinpoint a caller's location. For landline calls, ALI infor-
mation is typically determined by looking up the caller's
phone number in an address/telephone number database.

Although wireless callers place a large number of 911 calls,
implementing E911 services for wireless phones has proven
more difficult. In June 1994, a group of public safety organi-
zations (including the Association of Public-Safety Communi-
cations Officials ("APCO"), intervenor here) issued an Emer-
gency Access Position Paper highlighting the need to make
E911 services available to wireless callers to "facilitate rapid
and effective contact with emergency services, when and
where needed." Shortly thereafter, the Commission issued a
notice of rulemaking to "ensure that, over time, [wireless
callers would] have the same level of access to 911 emergency
services as [landline] callers," and proposed requiring wire-
less carriers to make both ANI and ALI information available
to PSAPs. In re Revision of the Comm'n's Rules to Ensure
Compatibility With Enhanced 911 Emergency Calling Sys., 9
FCC Rcd 6170 pp 37, 50-52 (1994).

After the comment period ended, APCO and two other
public safety bodies, together with the Cellular Telecommuni-
cations Industry Association ("CTIA"), a trade association of
wireless industry participants, filed with the Commission a
Consensus Agreement addressing wireless E911 implementa-
tion. Among other things, the Agreement proposed a cost
recovery mechanism to fund carrier and PSAP investment in
E911 technology, asking the Commission to condition the
obligation to make these investments on a guarantee of state
or local government funding. The Commission also sought
public comment on this Consensus Agreement.

 After receiving comments on its proposal and the Consen-
sus Agreement, the Commission adopted its First Report &
Order, which established a two-phase plan for wireless E911
implementation. Phase I, to have been completed in eighteen
months, required wireless carriers to enable PSAPs to deter-
mine a caller's ANI and the location of the base station or cell
site receiving the 911 call. First Report & Order, 11 FCC
Rcd 18676 at p 10. Wireless carriers had five years to
complete Phase II, which required them to enable PSAPs to
identify a caller's ALI within a specified range. Id. Wireless
carriers can implement Phase II in at least two ways. One is
network-based, determining a caller's location by triangulat-
ing signals from several different cell sites or base stations.
In re Revision of the Comm'n's Rules to Ensure Compatibili-
ty with Enhanced 911 Emergency Calling Sys., 14 FCC Rcd
17388 p 23 (1999) ("Third Report & Order"). The other is
handset-based; it incorporates locating functionality (such as
Global Positioning System technology) into the telephone
itself. Id. at p 18.

Under the Commission's Order, carriers' Phase I and
Phase II obligations would not be triggered until two condi-
tions were met: (1) the carrier had to receive a request for
these services from a PSAP capable of receiving and utilizing
the data; and, responding to the Consensus Agreement's cost
recovery provision, (2) "a mechanism for the recovery of costs
relating to the provision of such services" had to be in place.
First Report & Order, 11 FCC Rcd 18676 at p 11. The
Commission prescribed no particular cost recovery mecha-
nism, however, because "[n]o party dispute[d] the fundamen-
tal notion that carriers must be able to recover their costs of
providing E911 services" and because "an inflexible Federal
prescription would deny carriers and government officials the
freedom to develop innovative cost recovery solutions." Id. at
WW 89-90.

The Commission also responded to comments by rural
wireless carriers that "providing ALI in rural areas may not
be technologically and economically feasible," id. at p 84, and
that carrier cost recovery mechanisms might not fully reim-
burse these higher implementation costs. According to the

rural carriers, a network-based method of providing ALI
would be difficult because, given the configuration of many
rural providers' towers as a "string of pearls" along a high-
way, triangulation would require a large number of additional
towers and equipment. Petitioners' Opening Br. at 17; cf.
Third Report & Order, 14 FCC Rcd 17388 at p 23. They also
claimed they had no alternative, because the handset-based
solution was not yet technologically available. The Commis-
sion concluded that these problems "need not delay adoption
of the general rule" because "[i]n cases where the cost
recovery mechanism for E911 service uniquely disadvantages
a particular carrier, we will ... consider waiver requests."
First Report & Order, 11 FCC Rcd 18676 at p 84.

Reconsidering the First Report & Order, the Commission
reaffirmed its decision not to prescribe a particular cost
recovery mechanism. In re Revision of the Comm'n's Rules
to Ensure Compatibility with Enhanced 911 Emergency Call-
ing Sys., 12 FCC Rcd 22665 WW 143-146 (1997). CTIA filed
for a second reconsideration, asking the Commission to clarify
that state and local governments could not satisfy the carrier
cost recovery requirement by asking carriers to recover their
own costs directly through charges to wireless customers, and
to mandate that the cost recovery mechanisms states and
localities adopt be "competitively neutral." In response, and
after receiving a Joint Status Report filed by the Consensus
Agreement parties (joined by the Wireless Consumers Alli-
ance, Inc.) revealing that Phase I implementation was pro-
ceeding more slowly than planned, the Commission issued a
Public Notice seeking information on whether the carrier cost
recovery requirement was responsible for the delay, and if so,
how to address this problem. Public Notice, Comm'n Seeks
to Facilitate Wireless E911 Implementation and Requests a
Report, 14 FCC Rcd 11138, 11138 (1999). Petitioners United
States Cellular Association ("US Cellular") and the Rural
Cellular Association ("RCA") submitted comments.

In the resulting Second Reconsideration Order, the Com-
mission found that the "prerequisite that there be a carrier
cost recovery mechanism has not expedited the delivery of
E911 service and, if anything, has become and will continue to

be an impediment of E911 service." In re Revision of the
Comm'n's Rules to Ensure Compatibility with Enhanced 911
Emergency Calling Sys., 14 FCC Rcd 20850 p 42 (1999)
("Second Recons. Order"). Although twenty-seven states had
enacted some sort of Phase I cost recovery legislation, id. at
p 34, these services were "scarce, and, in most parts of the
country, nonexistent," id. at p 33. Twenty-three states had
no Phase I cost recovery mechanism in place, and even in the
states that had enacted legislation, the Commission found
that disputes about the adequacy and administration of cost
recovery interfered with Phase I implementation. Id. at p 36.
The Commission further agreed with APCO that, because few
state and local governments had enacted Phase II legislation,
and because the costs of doing so would likely exceed Phase I
costs, carrier cost recovery threatened to become an even
greater obstacle to Phase II implementation. Id. at p 42.

To alleviate these delays, the Commission dropped the
carrier cost recovery requirement, noting that "[wireless]
carriers are not subject to rate regulation, and may adjust
their rates to reflect the cost of providing E911 services
without [Commission] intervention." Id. at p 49. According
to the Commission, passing costs on to consumers is "the
normal way that costs of doing business, including the costs of
complying with government-imposed requirements, are recov-
ered in an industry free of rate regulation." Id. at p 61.

Addressing comments that eliminating the carrier cost
recovery requirement would unfairly discriminate against ru-
ral carriers, the Commission concluded that the record con-
tained insufficient evidence to support the claim that rural
carriers' implementation costs are higher, and that, even if
they are, "it is not clear that such costs should be pooled for
recovery in this competitive, deregulated industry." Id. at
p 57.

Petitioners RCA and Corr Wireless Communications
("Corr") sought further reconsideration of the Second Recon-
sideration Order, contending that the Commission had im-
properly disregarded rural carriers' concerns about cost re-

covery. Corr, a rural carrier, submitted detailed information
on its Phase II implementation costs. The reconsideration
petitions also argued that the Commission's action violates
universal service requirements under 47 U.S.C. s 254 and
amounts to an unconstitutional taking in violation of the Fifth
Amendment. Although petitioners had not made these
claims in the proceedings leading to the Second Reconsidera-
tion Order (in fact, Corr had not even participated in those
proceedings), Corr argued that its failure was excusable
because the Commission had not given adequate notice of the
possibility that it would abandon the carrier cost recovery
requirement. Disagreeing, and finding that commenters had
presented no "new or persuasive evidence" to justify reopen-
ing the proceedings, the Commission denied reconsideration.
In re Revision of the Comm'n's Rules to Ensure Compatibili-
ty with Enhanced 911 Emergency Calling Sys., 15 FCC Rcd
22810 p 8 (2000) ("Fifth Memorandum & Order").

RCA and Corr have now filed a petition for review of the
Commission's decision to deny reconsideration of the Second
Reconsideration Order. All three petitioners also challenge
the Second Reconsideration Order itself, arguing that the
Commission's decision to eliminate the carrier cost recovery
requirement violates this circuit's cost causation principle.
See Comptel, 87 F.3d at 529. They also argue that the
Commission acted arbitrarily and capriciously in violation of
the Administrative Procedure Act and violated both the Reg-
ulatory Flexibility Act and the takings clause of the Fifth
Amendment.

II

We begin with petitioners' contention that eliminating the
carrier cost recovery requirement runs afoul of this circuit's
cost causation principle. In Comptel, we held that when the
Commission sets rates, it "must ... specifically justify any
rate differential that does not reflect cost." 87 F.3d at 529.
In that case, the Commission had established a rate structure
that essentially required large long distance carriers to subsi-
dize smaller ones. Concluding that "the attempt to recover

costs from [long distance carriers] that did not cause those
costs to be incurred would impart the wrong incentives," id.
at 530-31, we vacated the Commission's order. Comptel
based its cost causation principle on both APA section
706(A)(2), which makes unlawful arbitrary and capricious
agency actions, 5 U.S.C. s 706(2)(A), and then-existing ver-
sions of Communications Act sections 201 and 202, which
presently provide that "charges ... for and in connection
with [a] communication service, shall be just and reasonable,"
47 U.S.C. s 201(b), and that "[i]t shall be unlawful for any
common carrier to make any unjust or unreasonable discrimi-
nation in charges ... for or in connection with [a] communi-
cation service," id. s 202(a). See Comptel, 89 F.3d at 529.
Petitioners here argue that neither they nor their customers
caused the E911 costs, and therefore that Comptel prohibits
the Commission from requiring them to pay for the cost of
implementation.

The Commission argues that petitioners may not rely on
the cost causation principle because they failed to raise
Communications Act sections 201 and 202 in the proceedings
before the agency. See 47 U.S.C. s 405(a)(2); Bartholdi
Cable Co. v. FCC, 114 F.3d 274, 279 (D.C. Cir. 1997) (inter-
preting section 405(a)(2) as requiring that the Commission
"be afforded an 'opportunity to pass' on an issue as a condi-
tion of judicial review."). Alternatively, the Commission ar-
gues, even if the cost causation principle were properly
raised, it applies only when the Commission is setting rates.
Petitioners concede their failure to cite Communications Act
sections 201 and 202 in the proceedings before the Commis-
sion, but claim that they have not waived reliance on these
sections because the "issue [was] necessarily implicated by
the argument made to the Commission." Time Warner
Entm't Co. v. FCC, 144 F.3d 75, 80 (D.C. Cir. 1998). Addi-
tionally, they argue that because the cost causation principle
also rests on the APA's prohibition against arbitrary and
capricious agency action, it applies whether or not the Com-
mission is setting rates. We need not resolve these disputes,
however, because even if the cost causation principle applies

outside rate-regulated industries and is properly before us,
petitioners' argument fails.

Petitioners claim that the "cost causer" for wireless E911 is
"clearly" the PSAP: "E911 capabilities are not necessary to
provide wireless service. Rather, carriers are forced to in-
stall these E911 capabilities at the instigation of and for the
use of the PSAPs in their provision of emergency services."
Petitioners' Opening Br. at 28. Compelling carriers rather
than PSAPs to bear financial responsibility for wireless E911
implementation by passing some or all of the costs on to their
customers, petitioners claim, violates the cost causation prin-
ciple. We disagree.

For one thing, PSAPs are not the cost causers for wireless
E911 implementation. As the Commission points out:

Wireless E911 services are provided for the benefit of all
subscribers, to enable them to call and receive prompt
attention from public safety agencies.... It is entirely
rational for subscribers to wireless services to pay
through their charges for the costs the Commission has
required the carriers to incur to upgrade their systems to
include E911 services. Subscribers, after all, are the
ultimate beneficiaries when E911 calls go through and
public safety agencies respond.

Respondent's Br. at 34-35.

Petitioners' argument to the contrary rests on a profound
misunderstanding of PSAPs and their public safety function.
Petitioners seem to think that PSAPs are private busi-
nesses--like commercial ambulance makers, to use petition-
ers' own example--providing for-profit services to the public.
If this were true, petitioners might have a point. But PSAPs
are governmental entities playing a critical role in the provi-
sion of public safety services: in larger urban areas, they are
stand-alone government-funded organizations; in smaller ru-
ral areas, they may be local law enforcement offices. PSAPs
themselves derive no benefit from wireless E911 services;
rather, they provide safety services to benefit the public.
Under the Commission's Order, it is the beneficiaries of these

services who ultimately pay most if not all of the cost of
wireless E911 implementation.

Petitioners argue that wireless customers have not directly
requested carriers to provide them with E911 services. This
is certainly true, but the Commission, as their governmental
representative, has made this request on their behalf. Thus,
in a sense, the Commission itself is the cost causer--it is the
Commission's Order that requires wireless carriers to provide
E911 services in the public interest. Whether the Commis-
sion or the wireless customer is the cost causer, we need not
decide. What's important is that on no plausible theory are
PSAPs the cost causers: their only role is providing 911
service. True, a PSAP request is a precondition of a wireless
carrier's obligation to implement E911 technology, First Re-
port & Order, 11 FCC Rcd 18676 at p 11, but the obligation
itself results from the Commission's Order, and the beneficia-
ry of that obligation is the public.

The public nature of wireless E911 services distinguishes
this case from Comptel. There, the Commission had required
some private businesses (large long-distance carriers) to sub-
sidize others (smaller long-distance carriers). This produced
competitive distortion in the private market, insulating some
inefficient smaller firms from the pressures of the market-
place. Comptel, 87 F.3d at 530. In this case, by contrast,
eliminating the carrier cost recovery requirement produces
no such inefficiencies; it merely imposes the cost of E911
service on its beneficiaries.

Disagreeing, petitioners claim that eliminating the carrier
cost recovery requirement will lead to "inefficient economic
behavior, because [the government is] not required to inter-
nalize the costs of building [E911 capabilities]." Petitioners'
Opening Br. at 29. Petitioners apparently think that, if
governmental entities are not obliged to cover the costs of the
public benefits they impart, they may order safety services
that wireless customers do not really want, or at least do not
want at the price they must pay. This potential "inefficien-
cy," petitioners claim, violates the cost causation principle.

 This argument is breathtaking. If petitioners were correct,
the Federal Aviation Administration could not require airlines
to install safety equipment without reimbursing them for
their costs, the Environmental Protection Agency would have
to pay factories for the cost of required pollution-reducing
technology, and the Department of Transportation would
have to pay automobile manufacturers to install safety belts
and air bags. Each of these agencies has "caused" the cost of
its regulatory safety requirements in the same way the
Commission has caused the cost of wireless E911 implemen-
tation. Yet it is ludicrous to suggest that government cannot
pass these costs along to regulated entities.

Attempting to distinguish these sorts of safety regulations
from the Commission's action in this case, petitioners' counsel
observed at oral argument that the Commission has chosen to
implement its wireless E911 mandate not directly, but
through PSAPs. But the manner in which the Commission
chooses to implement its regulations is irrelevant. The fact
remains that the Commission has imposed upon wireless
carriers an obligation to implement a service in the public
interest. Whether it does this directly or with the coopera-
tion of other governmental safety organizations, it has no
obligation to compensate carriers for their costs.

If, as petitioners fear, the government improperly assesses
the public interest--for instance, if consumers would rather
pay less for wireless phones without E911 or cars without
safety belts--the remedy is political, not judicial. Granting
petitioners the relief they seek, moreover, would not neces-
sarily have any impact at all on this so-called inefficiency. If
the carrier cost recovery requirement were still in place, a
state or local government could decide to place a tariff on
wireless service exactly equal to the amount carriers would
have to raise rates to cover the costs of implementation. At
oral argument, petitioners' counsel conceded that such a tariff
would not violate the cost causation principle (if the Commis-
sion could in some way be held responsible for it), because
government would bear the costs of wireless E911 implemen-
tation. Yet any "inefficiency" caused by requiring carriers to

pass implementation costs along to their customers would
result equally from such a state or local tariff.

Petitioners claim that eliminating the carrier cost recovery
requirement produces another competitive distortion: "be-
cause rural carriers' costs of implementing E911 capabilities
are higher per customer than those of predominantly urban
carriers, the [Commission's] rule introduces artificial, [Com-
mission]-created competitive inequalities between rural and
urban carriers." Petitioners' Opening Br. at 30. We are
skeptical, however, that this claim has anything at all to do
with Comptel's cost causation principle. Petitioners do not
argue (nor could they) that the Commission has required
rural carriers to subsidize costs caused by urban ones. In-
stead, petitioners seem to be arguing that, like the rate
structure invalidated in Comptel, the Commission's elimina-
tion of the carrier cost recovery requirement is arbitrary and
capricious because it distorts the competitive marketplace.
But the Commission found insufficient evidence to conclude
that rural carriers' implementation costs are higher. Second
Recons. Order, 14 FCC Rcd 20850 at p 57. Even assuming
that they are, however, it is because (as petitioners recognize)
rural carriers do business in areas with lower population
density. And again, because a cost recovery requirement
could result in tariffs equal in amount to carriers' increased
rates, granting petitioners the relief they seek would not
necessarily alleviate any inequality.

Petitioners presumably hope that a government cost recov-
ery mechanism would pool wireless E911 costs, distributing
them equally among rural and urban carriers. But such
pooling, the Commission found, may itself distort the competi-
tive marketplace: to preserve competition, carriers ought to
be responsible for the potentially greater costs of doing
business in rural areas. Id. Petitioners' solution may thus
create exactly the distortion they seek to avoid.

III

This brings us to petitioners' other APA challenges. They
first argue that the Commission failed to consider alternative

causes of the delay in wireless E911 implementation. In
particular, petitioners point to three alternatives suggested
by commenters: lack of liability protection for wireless carri-
ers and PSAPs; Local Exchange Carriers' failure to fulfil
their obligations; and disputes between carriers and PSAPs
over which technology to use in implementing wireless E911.
The Commission responds that it found the carrier cost
recovery requirement to be a significant cause of delay,
Second Recons. Order, 14 FCC Rcd 20850 at p 38, and that
even if other causes exist, it need not address all wireless
E911 implementation problems at the same time. We agree.
As we said in National Association of Broadcasters v. FCC,
agencies need not address all problems "in one fell swoop."
740 F.2d 1190, 1207 (D.C. Cir. 1984) (citing Williamson v. Lee
Optical Co., 348 U.S. 483, 489 (1955) ("[R]eform may take
place one step at a time, addressing itself to the phase of the
problem which seems most acute to the [regulatory] mind.")).
In any event, and contrary to petitioners' claim, the Commis-
sion did address these alternative explanations, finding that
problems caused by lack of liability protection were mooted
by legislation granting such protection, Second Recons. Or-
der, 14 FCC Rcd 20850 at p 9; that the Telecommunications
Act of 1998 and existing regulations already require Local
Exchange Carriers to fulfill their obligations, id. at p 8; and
that the Commission is available to mediate technology dis-
putes between PSAPs and carriers, id. at p 7.

Petitioners next argue that the Commission failed to con-
sider alternative solutions to the problems posed by the
carrier cost recovery requirement, including drafting more
specific instructions and guidelines on the most disputed cost
recovery issues and permitting carriers to file federal tariffs
to recover their costs. As the Commission points out in its
brief, however, it gave reasons for rejecting both alternatives.
Respondent's Br. at 25-27 (citing Second Recons. Order, 14
FCC Rcd 20850 at WW 49-52). In reply, petitioners, apparent-
ly missing this section of the Commission's brief, not only
reassert that the Commission "simply ignored these propos-
als," Petitioners' Reply Br. at 14, but also make no effort to
argue what they must: that the Commission's reasons for

rejecting these alternatives were inadequate or unsupported
by record evidence. See Comm. for Cmty. Access v. FCC, 737
F.2d 74, 83 (D.C. Cir. 1984).

Petitioners argue that the Commission's decision to elimi-
nate the carrier cost recovery requirement finds no support
in the record because "none of the parties ... (with the
exception of APCO ... ) recommended the elimination of
carrier cost recovery." Petitioners' Opening Br. at 37. But
the Commission has no obligation to take the approach advo-
cated by the largest number of commenters, Natural Res.
Def. Council v. EPA, 822 F.2d 104, 122 n.17 (D.C. Cir. 1987);
indeed, the Commission may adopt a course endorsed by no
commenter. The Commission's only responsibilities are to
respond to comments, 5 U.S.C. s 553, and to choose a reason-
able approach backed up by record evidence, Comm. for
Cmty. Access, 737 F.2d at 83.

Next, petitioners argue that, in eliminating the cost recov-
ery requirement, the Commission "dramatically" departed
from precedent without explanation. Petitioners' Opening
Br. at 38. In particular, they argue, the Commission gave no
reason for abandoning its goal of achieving parity in wireless
and landline services, so these services can "truly be viewed
as substitute[s] by American consumers." In re Revision of
the Comm'n's Rules to Ensure Compatibility with Enhanced
911 Emergency Calling Sys., 14 FCC Rcd 10954 p 4 ("Second
Report & Order"). Because landline carriers typically recov-
er E911 costs by obtaining state authorization to add a
surcharge to customers' bills, petitioners claim that to achieve
parity between landline and wireless phone service, wireless
E911 should be funded through a similar state tariff. But the
Commission's apparent focus in achieving wireless and land-
line parity is not on making funding methods identical, but on
equalizing services available to consumers: one of the Com-
mission's parity goals is to ensure that consumers have access
to E911 services whether they use landline or wireless
phones. Second Report & Order, 14 FCC 10954 at p 4 ("We
expect to continue to explore ways to improve wireless 911
service because the improvement of wireless 911 is an essen-
tial element in applying wireless communications to improv-

ing public safety and hastening the day when wireless and
[landline] can truly be viewed as substitute services by Amer-
ican consumers."). Because the Commission found that carri-
er cost recovery was impeding wireless E911, its action
furthers, not frustrates, the goal of wireless/landline parity.
And as the Commission points out, the difference in funding
mechanisms reflects an important difference in the way each
service is regulated: landline carriers are rate-regulated;
wireless carriers are not. Because landline carriers are
unable to pass E911 implementation costs along to customers,
as wireless carriers can, the Commission had more than
sufficient reason to choose a different E911 implementation
scheme for wireless carriers.

Finally, petitioners argue that the Commission's analysis of
the impact of its Order on rural carriers was arbitrary and
capricious. In response to comments that eliminating the
carrier cost recovery requirement would unduly burden rural
carriers, the Commission found insufficient record evidence to
support commenters' claims that the costs of wireless E911
implementation in rural areas would, in fact, be higher.
Second Recons. Order, 14 FCC Rcd 20850 at p 57. "While
some costs will likely be higher in such areas," the Commis-
sion stated, "other costs may actually be lower, such as
construction costs or other infrastructure needs." Id. In its
brief in this court, the Commission notes that neither RCA
nor US Cellular submitted any specific financial data to
support their claims of higher costs. Without specific evi-
dence, the Commission was entitled to conclude that petition-
ers failed to demonstrate that rural carriers would dispropor-
tionately suffer from eliminating the carrier cost recovery
requirement.

According to petitioners, Corr, a rural carrier, did supply
specific financial data. But Corr submitted this evidence for
the first time in its petition for reconsideration of the Second
Reconsideration Order. Refusing to reopen the proceeding,
Fifth Memorandum & Order, 155 FCC Rcd 22810 at p 30, the
Commission found that Corr had adequate notice of the
possibility that the Commission would drop the carrier cost
recovery requirement, and that Corr had not submitted "new

or persuasive evidence that [the Commission's] conclusions
were in error," id. at p 8. "Where ... the Commission
refuses to reopen a proceeding, what is reviewable is merely
the lawfulness of the refusal," ICC v. Bhd. of Locomotive
Eng'rs, 482 U.S. 270, 278 (1986) (emphasis omitted)--in this
case, the Commission's determination that adequate notice
had been given and its finding that Corr's data did not qualify
as new evidence requiring reconsideration, see Bowman
Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S.
281, 295 (1974) (listing cases discussing agency error in failing
to reopen proceedings to consider new evidence). Because
petitioners offer no challenge to this part of the Commission's
decision, we lack jurisdiction to consider the implications of
Corr's cost data on the Second Reconsideration Order, as
well as other challenges to that order contained in the reject-
ed reconsideration petitions. Bhd. of Locomotive Eng'rs, 482
U.S. at 282.

IV

The Regulatory Flexibility Act obliges federal agencies to
assess the impact of their regulations on small businesses.
See 5 U.S.C. ss 601-612. Petitioners claim that the Commis-
sion failed to fulfill the RFA's requirement to file a final
regulatory flexibility analysis ("FRFA") containing

a description of the steps the agency has taken to
minimize the significant economic impact on small enti-
ties consistent with the stated objectives of applicable
statutes, including a statement of the factual, policy, and
legal reasons for selecting the alternative adopted in the
final rule and why each one of the other significant
alternatives to the rule considered by the agency which
affect the impact on small entities was rejected.

5 U.S.C. s 604(a)(5). Purely procedural, however, RFA sec-
tion 604 requires nothing more than that the agency file a
FRFA demonstrating a "reasonable, good-faith effort to carry
out [RFA's] mandate." Alenco Communications, Inc. v.
FCC, 201 F.3d 608, 625 (5th Cir. 2000). Petitioners dispute
neither that the Commission included a FRFA in its Second

Reconsideration Order, 14 FCC Rcd 20850, 20901 app. C, nor
that this statement addresses all subjects required by the
RFA. Instead, petitioners argue that the Commission's anal-
ysis of the impact its action would have on small carriers and
its dismissal of alternatives was arbitrary. But as we have
already seen, the Commission's analysis of the impact on
small rural carriers, supra at 15-16, and its reasons for
dismissing alternatives to eliminating the carrier cost recov-
ery requirement, supra at 13-14, were entirely reasonable.

Petitioners also argue that the Commission failed to issue
an initial regulatory flexibility analysis as required by RFA
section 603. 5 U.S.C. s 603. Not only did petitioners fail to
raise this argument until their reply brief, see Corson &
Gruman Co. v. NLRB, 899 F.2d 47, 50 n.4 (D.C. Cir. 1990)
("We require petitioners and appellants to raise all of their
arguments in the opening brief to prevent 'sandbagging' of
appellees and respondents and to provide opposing counsel
the chance to respond."), but the RFA expressly prohibits
courts from considering claims of non-compliance with section
603, Allied Local & Reg'l Mfrs. Caucus v. EPA, 215 F.3d 61,
79 (D.C. Cir. 2000).

V

Because petitioners' remaining claims--that the Commis-
sion's action violates the universal service requirements of the
Communications Act, 47 U.S.C. s 254, and the takings clause
of the Fifth Amendment, U.S. Const. amend. V--were raised
only in petitions for reconsideration of the Second Reconsid-
eration Order, thus suffering the same defects as Corr's
submission of cost data, see supra at 15-16, we lack jurisdic-
tion to consider them. We therefore deny the petition for
review in its entirety.

So ordered.