United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 18, 2004 Decided March 11, 2005
No. 03-1405
CENTRAL TEXAS TELEPHONE COOPERATIVE, INC., ET AL.,
PETITIONERS
v.
FEDERAL COMMUNICATIONS COMMISSION AND
UNITED STATES OF AMERICA,
RESPONDENTS
SPRINT CORPORATION,
INTERVENOR
On Petition for Review of an Order of the
Federal Communications Commission
Gregory W. Whiteaker argued the cause for petitioners.
With him on the briefs were Michael R. Bennet and Rebecca L.
Murphy.
Richard K. Welch, Counsel, Federal Communications
Commission, argued the cause for respondents. With him on the
brief were Catherine G. O'Sullivan and Andrea Limmer,
Attorneys, U.S. Department of Justice, John A. Rogovin,
General Counsel, Daniel M. Armstrong, Associate General
Counsel, and Lisa E. Boehley, Counsel. Nancy C. Garrison,
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Attorney, U.S. Department of Justice, and Joel Marcus,
Counsel, Federal Communications Commission, entered
appearances.
Luisa L. Lancetti and Charles W. McKee were on the brief
for intervenor Sprint Corporation in support of respondents.
Before: SENTELLE, RANDOLPH, and GARLAN D , Circuit
Judges.
Opinion for the Court filed by Circuit Judge RANDOLPH.
RANDOLPH, Circuit Judge: Petitioners are rural telephone
carriers. Pursuant to 28 U.S.C. § 2342(1) and 47 U.S.C.
§ 402(a), they seek review of an October 7, 2003, Memorandum
Opinion and Order of the Federal Communications Commission
dealing with telephone number portability between wireless
carriers. Telephone Number Portability -- Carrier Requests for
Clarification of Wireless-Wireless Porting Issues, CC Docket
No. 95-116, 18 F.C.C.R. 20,971 (2003) (“October Order”). The
issues are whether the Commission adopted the October Order
in violation of the procedural requirements of the Administrative
Procedure Act and the Regulatory Flexibility Act, and whether
the Order is arbitrary and capricious.
I.
Under § 251(b)(2) of the Telecommunications Act of 1996,
all local exchange carriers (LECs) must “provide, to the extent
technically feasible, number portability in accordance with
requirements prescribed by the Commission.” 47 U.S.C.
§ 251(b)(2). The 1996 Act also imposes a “duty” on LECs “to
establish reciprocal compensation arrangements for the transport
and termination of telecommunications.” 47 U.S.C. § 251(b)(5).
The Act defines “number portability” as
3
the ability of users of telecommunications services to retain,
at the same location, existing telecommunications numbers
without impairment of quality, reliability, or convenience
when switching from one telecommunications carrier to
another.
47 U.S.C. § 153(30). Congress viewed number portability as a
means of encouraging competition: a customer is less likely to
switch carriers if he cannot retain his telephone number.
Cellular Telecomms. & Internet Ass’n v. FCC, 330 F.3d 502,
513 (D.C. Cir. 2003) (“CTIA”).
In July 1996, the Commission issued rules and deployment
schedules to implement number portability. See Telephone
Number Portability, 11 F.C.C.R. 8352 (1996) (“First Portability
Order”), on recons., 12 F.C.C.R. 7236 (1997), further recons.,
13 F.C.C.R. 21,204 (1998). Adopting the statutory definition of
“number portability” in a regulation, 47 C.F.R. § 52.21(l), the
Commission required LECs to begin implementing number
portability to other LECs, and “to all telecommunications
carriers, including commercial mobile radio services (CMRS)
providers.” First Portability Order, 11 F.C.C.R. at 8355 ¶ 3
(emphasis added). Although § 251(b)(2) imposed number
portability only on LECs, the Commission relied on other
statutory provisions to require CMRS -- wireless -- carriers to
port numbers among themselves and to and from LECs. 11
F.C.C.R. at 8431-32 ¶ 153; see CTIA, 330 F.3d at 508.
At the same time, the Commission refused to impose
location portability on either LECs or wireless carriers. The
Commission defined location portability as “the ability of users
of telecommunications services to retain existing
telecommunications numbers without impairment of quality,
reliability, or convenience when moving from one physical
location to another.” 47 C.F.R. § 52.21(j). For LECs, what the
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Commission meant by “physical location” was not certain.
Among the possibilities were “the customer’s physical location,
the end of the wire’s physical location, or the rate center’s
physical location.” In the Matter of Starnet, Inc., 355 F.3d 634,
638 (7th Cir. 2004). Every 10-digit number is assigned to a rate
center, which is a specific geographic location the LEC
designates with the approval of a state regulatory commission.
For wireline customers, service is fixed at the rate center; the
LEC uses the rate center to determine whether a call is a local
call or a toll call. The service areas of wireless carriers tend to
be larger; because wireless service is mobile, wireless customers
can travel out of a rate center and make calls without incurring
toll charges. For wireless carriers, the Commission said it would
impose “service provider portability.” Its regulation defining
service provider portability used the same language as the
regulatory (and statutory) definition of number portability --
namely, “the ability of users of telecommunications services to
retain, at the same location, existing telecommunications
numbers without impairment of quality, reliability, or
convenience when switching from one telecommunications
carrier to another.” 47 C.F.R. § 52.21(q). The Commission
indicated what it meant by “moving from one physical location
to another” when it wrote: “Today, telephone subscribers must
change their telephone numbers when they move outside the
area served by their current central office.” First Portability
Order, 11 F.C.C.R. at 8443 ¶ 174. (A “central office” is a
“switching unit, in a telephone system which provides service to
the general public, having the necessary equipment and
operations arrangements for terminating and interconnecting
subscriber lines,” 47 C.F.R. Pt. 36 Appendix – Glossary.)
To address technical issues regarding number portability,
the Commission turned to the North American Numbering
Council (NANC), a federal advisory committee consisting of
representatives of the telecommunications industry. In May
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1997, the NANC submitted its recommendations regarding
wireline-to-wireline porting. Largely adopting the NANC’s
recommendations in a Second Portability Order, 12 F.C.C.R.
12,281 (1997), the Commission also decided that if a state
regulatory authority imposed a separate location portability
requirement on LECs, this would have to be limited to carriers
with a local presence in the same rate center in order to ensure
proper rating and routing of calls. The NANC did not address
geographic limitations with respect to the obligation of wireless
carriers to furnish service provider portability. The Commission
therefore requested the NANC to make recommendations
regarding wireless carriers, “such as how to account for
differences between service area boundaries for wireline versus
wireless services and how to implement number portability in a
roaming environment.” Id. at 12,334 ¶ 91. In 1998, The NANC
later reported that it had been unable to reach a consensus about
intermodal porting, that is, porting between wireless carriers and
LECs.
After granting extensions for deploying wireless-to-wireless
porting and intermodal porting, the Commission set November
24, 2003, as the date by which LECs had to port to wireless
carriers and wireless carriers had to port numbers among
themselves in the nation’s 100 largest population centers. In
other areas, wireless porting had to occur 6 months later. As the
deadlines approached, the Cellular Telecommunications &
Internet Association (CTIA) filed petitions with the Commission
seeking declaratory rulings holding, among other things, that
LECs had a duty to port numbers to those wireless carriers
whose service areas overlapped the wireline rate center
associated with the number, and that wireless carriers had a duty
to port numbers to other wireless carriers if their service areas
overlapped.
CTIA filed its petitions pursuant to 47 C.F.R. § 1.2, which
6
states that the “Commission may, in accordance with section
5[(e)] of the Administrative Procedure Act, on motion or on its
own motion issue a declaratory ruling terminating a controversy
or removing uncertainty.” CTIA alleged that certain LECs and
rural wireless carriers were narrowly construing their obligation
to port numbers to CMRS carriers, claiming that they did not
have to port numbers to CMRS carriers that had neither a
presence in the rate center from which the ported number
originated nor a direct interconnection with the customer’s
original carrier. The Commission published notices in the
Federal Register seeking comments on the issues CTIA raised.
68 Fed. Reg. 7323 (Feb. 13, 2003); 68 Fed. Reg. 34,547 (June
10, 2003).
Among the 100 comments filed with the Commission were
those of the Rural Telecommunications Group (RTG), of which
at least some petitioners are members. As relevant to this case,
the RTG asserted “that in order for one wireless carrier to
request number portability from another, the requesting carrier
must have a local point of presence, local numbering resources,
and local interconnection with the porting out carrier in the rate
center with which the ported number is associated.” October
Order, 18 F.C.C.R. at 20,977 ¶ 19. If these requirements were
not imposed, according to the RTG, number portability “will
lead to massive customer confusion and discrimination against
small and rural carriers.” Id.
The Commission issued two opinions and orders in
response to CTIA’s petitions. The first, handed down on
October 7, 2003, the October Order, dealt only with wireless-to-
wireless porting. The second, issued on November 10, 2003,
dealt with wireline-to-wireless porting. Only the October Order
is before us in this case.
The October Order rejected the RTG’s claims. The
7
Commission decided that nothing in its rules restricted wireless-
to-wireless number portability in the manner the RTG proposed
and that imposing those restrictions would undermine the
competitive benefits of number portability. To limit
“wireless-wireless porting based on wireline rate centers would
be to limit the ability of some consumers to port their telephone
numbers from one wireless carrier to another. We see no reason
to impose such restrictions on the competitive alternatives
available to wireless consumers.” October Order, 18 F.C.C.R.
at 20,978 ¶ 22. The Commission recognized the “rating” issues
rural wireless carriers had raised and their concern that “in
porting numbers to wireless carriers that do not have a point of
presence in the local area, a donating rural wireless carrier
delivering a call to a ported number would be forced to deliver
the call outside of its local service area and thereby incur
transport charges that were not factored into its rate design.” Id.
at ¶ 23. The Commission refused to address these issues in its
October Order because its wireless porting rules did not depend
on “how calls to the number will be rated and routed after the
port occurs” and because it would consider the issues in separate
proceedings. Id. The end of the opinion, in a section entitled
“Procedural Matters and Ordering Clauses,” stated: “The
Commission is not required by the Regulatory Flexibility Act,
5 U.S.C. § 604 to prepare a Regulatory Flexibility Analysis of
the possible economic impact of this order on small entities.” Id.
at 20,894 ¶ 42.
One month later, in another “Memorandum Opinion and
Order” which we shall call the Intermodal Order, the
Commission dealt with porting between wireline and wireless
carriers. Memorandum Opinion and Order and Further Notice
of Proposed Rulemaking, 18 F.C.C.R. 23,697 (Nov. 10, 2003).
Although the Commission had already limited wireline-wireline
porting “to carriers with facilities or numbering resources in the
same rate center,” Intermodal Order, 18 F.C.C.R. at 23,700 ¶ 7
8
(footnote omitted), it refused to do so for intermodal porting,
despite claims that the absence of restrictions would amount to
location portability. In the context of intermodal porting, the
Commission concluded “that porting from a wireline to a
wireless carrier that does not have a point of interconnection or
numbering resources in the same rate center as the ported
number does not, in and of itself, constitute location portability,
because the rating of calls to the ported number stays the same.”
Id. at 23,708 ¶ 28. In the intermodal setting, porting is required
if the wireless carrier’s coverage area encompasses the rate
center to which the ported number is assigned. Id. at 23,707
¶ 25. The Intermodal Order refused to require interconnection
agreements for intermodal porting because this would delay
intermodal porting and thus undermine its benefits to
consumers. Id. at 23,712 ¶ 36. In view of claims that wireless
carriers would be getting an unfair competitive advantage over
wireline carriers as a result of the Intermodal Order, the
Commission issued a notice of proposed rulemaking seeking
comment on, among other things, “how to facilitate wireless-to-
wireline porting where there is a mismatch between the rate
center associated with the wireless number and the rate center in
which the wireline carrier seeks to serve the customer.” Id. at
23,714 ¶ 42.
II.
Petitioners’ arguments are that the October Order
constituted a legislative rule promulgated in violation of the
Administrative Procedure Act and the Regulatory Flexibility
Act, and that even if the Order constituted an interpretive rule
exempt from notice and comment rulemaking, the Order should
be set aside as arbitrary and capricious. We believe we may
consider the merits of these arguments despite the Commission’s
claims that petitioners lack standing and that their petition for
judicial review was untimely.
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As to standing, the Commission argues that the October
Order did not injure petitioners because their objections are
directed to the Commission’s pre-existing interconnection rules
rather than to the wireless-to-wireless porting requirements. We
think there is nothing to this. For one thing, two of the four
petitioners are both wireline and wireless carriers (the other two
are LECs only). As wireless carriers, the Order directly affects
their porting obligations to other wireless carriers and does so,
according their lights, despite the Commission’s violations of
the procedural and substantive requirements of the APA. That
in itself is sufficient to confer standing on them. See Lujan v.
Defenders of Wildlife, 504 U.S. 555, 561-62, 572 n.7 (1992).
For another thing, even in their capacity as LECs, the order
damages -- again by petitioners’ lights -- their financial interests,
because they will be unable to recover the additional costs
entailed in wireless-to-wireless porting of numbers tied to their
rate centers.
We also reject the Commission’s argument that petitioners
are really mounting an untimely challenge to the porting
requirements of the First Portability Order because the
Commission’s October Order merely reiterated those
requirements. The argument goes to the merits. Petitioners
claim that the October Order amended the earlier order in
violation of the rulemaking procedures of the APA. The petition
for judicial review is therefore timely.
III.
The controversy is a common one for this court: petitioners
view the October Order as embodying a “substantive rule”; the
Commission defends on the ground that the Order is an
“interpretative rule.” By a “substantive rule” -- or as we call it,
a “legislative rule,” a term not used in the APA -- petitioners
10
mean a rule that may be promulgated only after compliance with
the rulemaking requirements of § 553 of the APA. 5 U.S.C.
§ 553. By “interpretative rule,” a term the APA does use, the
Commission means a rule that § 553(b)(3)(A) exempts from
those requirements. 5 U.S.C. § 553(b)(3)(A).
It is fair to ask why both sides assume that we are even
dealing with the making of a rule, whether of the legislative or
interpretive variety. Agencies often have a choice of proceeding
by adjudication rather than rulemaking. The National Labor
Relations Board, for one, has traditionally preferred to proceed
this way and the Supreme Court has upheld its preference for
adjudication. See NLRB v. Bell Aerospace Co., 416 U.S. 267,
290-95 (1974); see also SEC v. Chenery Corp., 332 U.S. 194
(1947). Orders handed down in adjudications may establish
broad legal principles. In this case, the Commission issued its
October Order in response to CTIA’s “Petition for Declaratory
Ruling.” The petition sought an adjudication. CTIA expressly
invoked Commission Rule 1.2, 47 C.F.R § 1.2, a provision
giving the Commission the authority to issue declaratory orders.
Section 1.2 refers to § 554(e) of the APA, which states: “The
agency, with like effect as in the case of other orders, and in its
sound discretion, may issue a declaratory order to terminate a
controversy or remove an uncertainty.” 5 U.S.C. § 554(e).
Section 554(e) is a subsection of the provision governing formal
adjudication. While the proceedings in this matter did not
constitute formal adjudication, there is some authority to the
effect that the declaratory ruling provision in § 554(e) may be
used in informal adjudication. See Jeffrey S. Lubbers & Blake
D. Morant, A Reexamination of Federal Agency Use of
Declaratory Orders, 56 ADMIN . L. REV. 1097, 1112-14 (2004),
citing cases; but see ATTORNEY GENER A L’ S MANUAL ON THE
ADMINISTRATIVE PROCEDURE ACT 59 (1947). The fact that the
Commission operated under Rule 1.2, rather than directly under
§ 554(e), may also make a difference. Here, the resulting
11
Commission ruling is itself styled “Memorandum Opinion and
Order.” Opinions are the end products of adjudications.
Although the Commission used the Federal Register to notify
interested parties of CTIA’s petition, and to solicit comments on
the issues the petition raised, the Federal Register announcement
did not suggest that the proceeding would be anything other than
an adjudication. See 68 Fed. Reg. 34,547 (June 10, 2003). See
New York State Comm’n on Cable Television v. FCC, 749 F.2d
804, 815 (D.C. Cir. 1984).
We have included the foregoing discussion despite the
Commission’s failure to defend the October Order on the
ground that it resulted from an adjudication. We think it
important to make clear that we are simply assuming that the
October Order, issued in a proceeding commenced under
Commission Rule 1.2, constituted some sort of rule -- legislative
or interpretive -- rather than the outcome of an informal
adjudication. Compare Sprint Corp. v. FCC, 315 F.3d 369, 372
(D.C. Cir. 2003). Given the broad definition of “rule” in APA
§ 551(4) -- “an agency statement of general or particular
applicability and future effect designed to implement, interpret,
or prescribe law or policy” -- the October Order may
comfortably be considered a “rule,” as may many other agency
actions. See Ronald M. Levin, The Case for (Finally) Fixing the
APA’s Definition of “Rule,” 56 ADMIN . L. REV. 1077 (2004).
And it may be so considered despite the Commission’s calling
what it did here an “Order.” Although the APA defines “order”
as a final disposition other than in a rulemaking, 5 U.S.C.
§ 551(6), the Commission uses the designation “order” even
when it issues legislative rules after overt § 553 rulemaking.
See, e.g., First Portability Order, supra.
As to petitioners’ complaint that the Commission’s
procedure, or lack thereof, violated the APA, the reasons given
in the companion case dealing with the November Intermodal
12
Order, United States Telecom Ass’n, et al. v. FCC, Nos. 03-1414
& 03-1443 (“USTA”), are enough to show that the notice and
comment requirements of APA § 553 were sufficiently satisfied,
even if the October Order were a legislative rule. But that
cannot end the procedural question for the same reason it could
not bring the question to an end in USTA. The Commission
failed to issue an impact statement under § 604 of the
Regulatory Flexibility Act, 5 U.S.C. § 604, and petitioners --
who describe themselves as small entities, see 5 U.S.C. § 611 --
claim that they were entitled to one. Because § 604 requires
such a statement for rules that must be promulgated in
accordance with § 553 of the APA, but not for interpretive rules
(or adjudicative decisions), we must determine within which
category the October Order falls. We must do so even though
petitioners’ representative never raised the Regulatory
Flexibility Act in the proceedings leading to the October Order.
The RTG preserved the question, just barely, by stating in one
sentence of its comments on CTIA’s petition that before the
Commission could side with CTIA, it would have to conduct a
rulemaking.
We may approach the question this way. If a “second rule
repudiates or is irreconcilable with [a prior legislative rule], the
second rule must be an amendment of the first; and, of course,
an amendment to a legislative rule must itself be legislative.”
Am. Mining Cong. v. Mine Safety & Health Admin., 995 F.2d
1106, 1109 (D.C. Cir. 1993), quoting Nat’l Family Planning &
Reprod. Health Ass’n v. Sullivan, 979 F.2d 227, 235 (D.C. Cir.
1992) (inner quotations omitted). Petitioners say the October
Order is such an amendment because it required location
portability for wireless-to-wireless porting despite the First
Portability Order’s rejection of location portability. For
location portability in the context of wireless-to-wireless
porting, they assert that “the relevant location is not the physical
location of the customer but the location of the serving switch or
13
the POI [point of interconnection].” Brief of Petitioners at 20.
Everyone, including petitioners, recognizes that today a
typical wireless customer can make calls from locations
throughout the country without switching his telephone number
-- something a wireline customer obviously cannot do without
location portability. Id. at 21 n.53. To illustrate, suppose a
wireless customer living in Arizona moves to Texas, keeping his
cell phone number. After living in Texas for several years he
decides to change carriers and requests the old carrier to port his
cell phone number to the new carrier. As the Commission
discusses in its brief, the First Portability Order would require
the old carrier to port the number. (The assumption is that the
service areas of the old and new wireless carriers overlap.)
Number portability and service provider portability mean,
according to the rules promulgated in the First Portability
Order, the ability of customers to retain their telephone numbers
when switching carriers while the customers stay in the same
location. 47 C.F.R. § 52.21(l) & (q). That fits the hypothetical
precisely. Location portability, on the other hand, does not
depend on a customer’s changing from one carrier to another.
The customer may want to stay with the same carrier when he
moves out of the area of its coverage. In that situation, as the
First Portability Order recognizes, the customer would not be
able to keep his number unless his carrier took steps to port the
number, something the Commission refused to require. See 47
C.F.R. § 52.21(j).
What we have just written summarizes the reasons
underlying the Commission’s conclusion, in its October Order,
that in wireless-to-wireless porting, the relevant location is not --
as petitioners argue -- the location of the serving switch or point
of interconnection. October Order, 18 F.C.C.R. at 20,972 ¶ 2.
Location portability means, as the Commission explained in the
First Portability Order, that customers could keep their
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telephone numbers after moving out of the area their current
central office served. First Portability Order, 11 F.C.C.R. at
8443 ¶ 174. But in the wireless context, customers who move,
temporarily or permanently, may retain their numbers. They
may do so not because there is location portability, but because,
despite their moves, they are still within an area their current
wireless carrier serves.
While the October Order therefore did not repudiate the
First Portability Order by requiring location portability in
wireless-to-wireless porting, that does not necessarily render it
an interpretive rule. See Am. Mining Cong., 995 F.2d at 1112.
To fall within that category, the rule must be interpreting
something. It must “derive a proposition from an existing
document whose meaning compels or logically justifies the
proposition. The substance of the derived proposition must flow
fairly from the substance of the existing document.” Robert A.
Anthony, “Interpretive” Rules, “Legislative” Rules, and
“Spurious” Rules: Lifting the Smog, 8 ADMIN . L. REV. 1, 6 n.21
(1994). If, despite an agency’s claim, a rule cannot fairly be
viewed as interpreting -- even incorrectly -- a statute or a
regulation, the rule is not an interpretive rule exempt from
notice-and-comment rulemaking. E.g., Syncor Int’l Corp. v.
Shalala, 127 F.3d 90, 95 (D.C. Cir. 1997); Hoctor v. U.S. Dep’t
of Agric., 82 F.3d 165 (7th Cir. 1996); see HENRY J. FRIENDLY,
BENCHMARKS 144-45 (1967). This is not to say that only
interpretive rules interpret. The APA’s definition of “rule”
contemplates that all types of rules, legislative and interpretive
alike, may interpret “law.” The EPA regulations at issue in
Chevron U.S.A., Inc. v. Natural Resources Defense Council,
Inc., 467 U.S. 837 (1984), for instance, interpreted the term
“stationary source” in the Clean Air Act (and did a good deal
more). Nor may one say that there is a clear “line between
interpretation and policymaking.” John F. Manning,
Nonlegislative Rules, 72 GEO . WASH . L. REV. 893, 924 (2004).
15
Chevron recognized that an agency’s choice among plausible
meanings of a statute may be influenced by considerations of
policy. The Supreme Court has said much the same regarding
an agency’s interpretation of its regulations. See Thomas
Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994).
We believe the October Order is fairly characterized as an
interpretive rule and that it “sensibly conforms to the purpose
and wording” of the First Portability Order. Northern Ind. Pub.
Serv. Co. v. Porter County Chapter of the Izaak Walton League
of Am., Inc., 423 U.S. 12, 15 (1975). In arguing about why the
October Order did, or did not, amount to an interpretive rule,
neither the Commission nor petitioners focus entirely on the
language of actual regulations issued in the First Portability
Order. Much of their attention is on the First Portability
Order’s statement explaining, in several hundred paragraphs, the
action the Commission was taking. The Commission’s
statement was meant to comply with APA § 553(c)’s
requirement that when an agency promulgates rules, it must
include “a concise general statement of their basis and purpose.”
The drafters of the APA recognized the function and importance
of such statements: “the courts and the public may use such
statements in the interpretation of the agency’s rules.”
ATTORNEY GENERA L ’ S MANUAL ON THE ADMINISTRATIVE
PROCEDURE ACT 32 (1947).
The issue CTIA had posed in its petition for a declaratory
ruling, and the issue discussed in the comments of the RTG ,was
whether the First Portability Order embodied the conditions on
wireless-to-wireless portability some rural carriers insisted upon.
The Commission said it did not. Rather than pointing to specific
language in the First Portability Order that supposedly imposed
those restrictions, petitioners draw an analogy -- wrongly, the
Commission thought -- to wireline-to-wireline porting. In that
context, the Commission’s Second Portability Order required
16
that the porting-in carrier have a presence in the same rate center
as the porting-out carrier. From this, petitioners conclude that
“it would be only logical” that the Commission had also
intended to so restrict wireless-to-wireless porting. Brief of
Petitioners at 26.
The Commission failed to see the logic. It reviewed its
First Portability Order and the rules promulgated in that
proceeding: “Nothing in the rules provides that wireless carriers
must port numbers only in cases where the requesting [wireless]
carrier has numbering resources and/or a direct interconnection
in the rate center associated with the number to be ported and
wireless carriers may not demand that [other wireless] carriers
meet these conditions before porting.” October Order, 18
F.C.C.R. at 20,977 ¶ 21. This is true, but not all that persuasive.
The regulations themselves contained little detail and basically
repeated the language of the Act. But the Commission’s
October Order did not stop with a negative. It went on to
explain why petitioners’ “logical” inference was mistaken. In
giving its explanation, the Commission properly considered a
purpose of its First Portability Order -- to promote competition
among wireless carriers. The Supreme Court has observed that
an agency construing its regulations “is in a better position . . .
to reconstruct” their “purpose,” in part because of the agency’s
“historical familiarity” with the reasons underlying the
regulatory language. Martin v. Occupational Safety & Health
Review Comm’n, 499 U.S. 144, 152-53 (1991). Restricting
wireless-to-wireless porting in the manner petitioners proposed
would, the Commission determined, greatly undermine the
competitive benefits of wireless number portability because the
restrictions would prevent many wireless customers from having
their numbers ported to other wireless carriers whose service
areas overlapped. October Order, 18 F.C.C.R. at 20,978 ¶ 22.
And it would have this deleterious effect even though “wireless
service is spectrum-based and mobile in nature” and even
17
though, as a result, “wireless carriers do not utilize or depend on
the wireline rate center structure to provide service . . . .” Id.
Petitioners’ arguments in favor of treating the October
Order as a legislative rule rest on the premise that the
Commission expanded or altered the porting obligations of
wireless carriers. For the reasons just given we think the
Commission was on solid ground in deciding that those
obligations flowed from the First Portability Order and that it
was petitioners who wanted to impose new restrictions by
engrafting the wireline regime on wireless-to-wireless porting.
In any event, to the extent petitioners are contending that
interpretive rules cannot be conduct-altering, the law is to the
contrary. We have held, for instance, that an agency may use an
interpretive rule to transform “a vague statutory duty or right
into a sharply delineated duty or right.” Health Ins. Ass'n of Am.
v. Shalala, 23 F.3d 412, 423 (D.C. Cir. 1994). We have held
that an interpretive rule does not have to parrot statutory or
regulatory language but may have “the effect of creating new
duties.” Fertilizer Inst. v. United States EPA, 935 F.2d 1303,
1308 (D.C. Cir. 1991). American Mining Congress, 995 F.2d at
1107-08, found a rule to be interpretive even though it altered
primary conduct. So did Fertilizer Institute, 935 F.2d at 1308-9;
Air Transp. Ass'n of Am. v. FAA, 291 F.3d 49, 52-55 (D.C. Cir.
2002); and, among others, Caraballo v. Reich, 11 F.3d 186, 195
(D.C. Cir. 1993).
Nearly all of petitioners’ arguments revolve around what
they perceive as the adverse financial impact on rural LECs
stemming from the Commission’s refusal to limit wireless-to-
wireless porting in the manner they proposed. There was a time
when this court used a “substantial effects” or “substantial
impact” test to help draw a line between legislative rules and
general statements of policy, which are also exempt from notice-
and-comment rulemaking under APA § 553(b)(3)(A). See, e.g.,
18
Pickus v. Bd. of Parole, 507 F.2d 1107, 1112 (D.C. Cir. 1974).
But we rejected such a test for determining whether an agency
pronouncement was a legislative rule or an interpretive rule.
Because both types of rules may “vitally affect private
interests,” the “substantial impact test has no utility in
distinguishing between the two.” Cabais v. Egger, 690 F.2d
234, 237-38 (D.C. Cir. 1983). Or, as we stated in American
Hospital Ass’n v. Bowen, 834 F.2d 1037, 1046 (D.C. Cir. 1987),
“the mere fact that [an interpretive] rule may have a substantial
impact ‘does not transform it into a legislative rule,’” quoting
American Postal Workers Union v. United States Postal Service,
707 F.2d 548, 560 (D.C. Cir. 1983).
We therefore hold that the October Order constituted an
interpretive rule under § 553(b)(3)(A) of APA. It follows that
the Commission was not required to issue an impact statement
under § 604 of the Regulatory Flexibility Act, which applies
only to legislative rules.
IV.
Even if the October Order is an interpretive rule, petitioners
say it must be set aside as “arbitrary”and “capricious.” 5 U.S.C.
§ 706(2)(A). One of their arguments deals with the
Commission’s determination that “no carrier may unilaterally
refuse to port with another carrier because that carrier will not
enter into an interconnection agreement.” October Order, 18
F.C.C.R. at 20,977-78 ¶ 21; see also id. at 20,978 ¶ 24. In the
absence of an interconnection agreement, the Commission found
that its First Portability Order required carriers to “port
numbers upon request, with no conditions.” Id. at ¶ 24.
Petitioners maintain that the “structure of the Act clearly
requires that number portability be imposed and accomplished
within the context of carrier interconnection agreements,” Brief
of Petitioners at 41, and that the October Order “prohibits”
19
LECs from requiring the porting-in carrier to “negotiate the
terms of interconnection.” Id. at 43.
The argument is unconvincing. The October Order dealt
only with wireless-to-wireless porting; the porting obligations of
LECs were the subject of the Intermodal Order issued one
month later. Also, the October Order did not prohibit any LEC
from negotiating an interconnection agreement with any other
carrier. The Commission simply decided that the absence of an
interconnection agreement did not, under the First Portability
Order, excuse one wireless carrier from porting a number to
another wireless carrier. Furthermore, the procedures set forth
in § 252 of the Act, which govern the negotiation and arbitration
of interconnection agreements, apply by their terms exclusively
to incumbent LECs. 47 U.S.C. § 252.
The source of the Commission’s authority here and in the
portion of the First Portability Order dealing with wireless
porting, was not that section but others. Petitioners correctly
point out that § 251(c)(2)(b) of the Act requires incumbent LECs
to permit interconnection “within” their network. But it is not
correct that the October Order “effectively negates” this
provision. Brief of Petitioners at 44. Under the Act, wireless
carriers can choose to interconnect indirectly -- that is, outside
of their respective networks. First Portability Reconsideration
Order, 12 F.C.C.R. at 7305 ¶ 121 (citing 47 U.S.C. § 251(a)(1)).
Petitioners also claim that the October Order is arbitrary
because the Commission failed to consider the impact of the
Order on petitioners with respect to rating and routing. The
Commission recognized these concerns but found them to be
“outside the scope of this order.” October Order, 18 F.C.C.R. at
20,978 ¶ 23. The “rating and routing issues raised by the rural
wireless carriers have been raised in the context of non-ported
numbers and are before the Commission in other proceedings.”
20
Id.
The Commission has discretion “to defer consideration of
particular issues to future proceedings when it thinks that doing
so would be conducive to the efficient dispatch of business and
the ends of justice.” United States Telecom Ass’n v. FCC, 359
F.3d 554, 588 (D.C. Cir. 2004). There is good reason to believe,
as the Commission did, that further factual development was
needed to assess petitioners’ claims. For one thing, it is not
apparent that this proceeding -- dealing as it did with wireless-
to-wireless porting -- was the appropriate forum in which to
address their concerns. Petitioners’ complaint is about their
obligation to pay additional transport costs associated with the
delivery of calls outside the local exchange. That problem, if it
is one, does not depend on whether the call is to a number that
has or has not been ported between wireless carriers. Applicants
for a stay of the Intermodal Order had claimed, as petitioners
claim here, “that there is no established method for routing and
billing calls ported outside of the local exchange.” Telephone
Number Portability -- United States Telecom Ass’n and
CenturyTel of Colorado, Inc., Joint Petition for Stay Pending
Judicial Review, 18 F.C.C.R. 24,664, 24,666 ¶ 9 (Nov. 20,
2003). The Commission’s response, given before the November
24, 2003, deadline, underscores why it acted responsibly in
postponing consideration of these issues: “today, in the absence
of wireline-to-wireless [number portability], calls are routed
outside of local exchanges and routed and billed correctly. We
thus find that, without more explanation, the scope of the alleged
problem and its potential effect on consumers is unclear.” Id.
* * *
We have considered and rejected petitioners’ other
arguments. For the reasons stated above we hold that the
October Order was an interpretive rule, that petitioners were
21
therefore entitled to no further process under the APA or the
Regulatory Flexibility Act, and that the October Order was not
arbitrary or capricious. The petition for judicial review is
therefore denied.
So ordered.