Supreme Court Rules Against AT&T in Talk America Case

In his concurrence, Scalia said he would have ruled against AT&T without the amicus brief, but that he has growing concerns about case law giving deference to government agencies’ self-interpretations of their own rules. FCC Chairman Julius Genachowski is “gratified” by the court’s decision and “that the court recognizes the important role the agency plays as an expert in this area,” he told reporters. He said he hadn’t read Scalia’s concurrence and so couldn’t comment on the justice’s concerns.

AT&T is “disappointed” with Thursday’s ruling, and doesn’t know how much money the decision will cost in reduced interconnection fees, the company said in a written statement. “The decision focused on a narrow FCC rule, and the Court emphasized that it is limited to existing facilities used by competitive local exchange carriers for interconnection purposes.” CompTel, which filed an amicus brief against AT&T in the case, said Thomas’ decision was “a great victory for CLECs.” AT&T “has litigated this entrance facilities issue in numerous jurisdictions,” the group said. “In affirming the statutory right of competitive carriers to obtain cost-based interconnection, this decision will provide much needed certainty for the future."

AT&T won at the appellate level, successfully overturning a Michigan Public Service Commission decision requiring it to continue to offer backhauling and interconnection to CLECs at cost. AT&T had relied on the FCC’s 2005 triennial review remand order, which found that entrance facilities were different from network elements but that ILECs don’t have to provide cost-based unbundled access to them. On appeal, the FCC filed an amicus brief saying the remand order “did not change incumbent LECs’ interconnection obligations, including the obligation to lease entrance facilities for interconnection.” The appellate court disregarded the FCC’s amicus argument. Thomas said that under the court’s previous decision in Auer v. Robbins, the commission’s amicus brief was owed deference.

"No statute or regulation squarely addresses whether an incumbent LEC must provide access to entrance facilities at cost-based rates as part of its interconnection duty under Section 251(c)(2),” Thomas wrote. After quoting from the section, he wrote: “Nothing in that language expressly addresses entrance facilities. Nor does any regulation do so."

AT&T had argued that ILECs don’t have to provide access to “any” facility to meet its interconnection duties, arguing that Section 251(c)(2) doesn’t mention ILEC facilities, but only requires ILECs provide interconnection “for the facilities and equipment.” Of AT&T’s position, “in contrast,” Thomas wrote, Section 251(c)(3) “requires that incumbent LECs provide unbundled ‘access to [their] network elements.'"

"We do not find the statute so clear,” Thomas wrote. “Although Section 251(c)(2) does not expressly require that incumbent LECs lease facilities to provide interconnection, it also does not expressly excuse them from doing so.” Given that ambiguity, the FCC’s amicus is decisive, Thomas said. “The Commission contends that its regulations require AT&T to provide access at cost-based rates to its existing entrance facilities for the purpose of interconnection,” he wrote. The commission’s standards here have three prongs, Thomas wrote: First, ILECs have to lease “technically feasible” interconnections. Second, “entrance facilities are among the facilities that an incumbent must make available for interconnection, if technically feasible.” Third, the entrance facilities in this case were technically feasible, Thomas wrote.

"In sum, the Commission’s interpretation of its regulations is neither plainly erroneous nor inconsistent with the regulatory text,” Thomas wrote. “Contrary to AT&T’s assertion … [w]e are not faced with a post-hoc rationalization by Commission counsel of agency action that is under judicial review.” And “more importantly,” Thomas added, “AT&T’s characterization of what the Commission has done and is doing is inaccurate. The Triennial Review orders eliminated incumbent LECs’ obligation under Section 251(c)(3) to provide unbundled access to entrance facilities. But the FCC emphasized in both orders that it ‘[did] not alter’ the obligation on incumbent LECs under Section 251(c)(2) to provide facilities for interconnection purposes."

"There are two flaws with AT&T’s reasoning,” Thomas wrote. “First … the Triennial Review Remand Order reinstated the ultimate conclusion of the Triennial Review Order and changed only ’the analysis through which [it] reached that conclusion.’ … Second, unlike Section 251(c)(3)’s unbundling obligation,” the triennial review order “does not require the Commission to consider impairment,” Thomas wrote.

Concurring, Scalia said he had no need to rely on Auer, “because I believe the FCC’s interpretation is the fairest reading of the orders in question. Most cogently,” he wrote, “the Triennial Review Remand Order serves no purpose unless one accepts (as AT&T does not) the distinction between backhauling and interconnection that is referred to in footnotes” of the order. That’s probably for the best, Scalia said, because he’s beginning to have doubts about the deference standards laid out in Auer. “On the surface, it seems to be a natural corollary -- indeed an a fortiori application -- of the rule that we will defer to an agency’s interpretation of the statute it is charged with implementing” under the classic Chevron case, Scalia said. “But it is not. When Congress enacts an imprecise statute that it commits to the implementation of an executive agency, it has no control over the implementation of an executive agency, it has no control over that implementation (except, of course, through further, more precise legislation). The legislative and executive functions are not combined. But when an agency promulgates an imprecise rule, it leaves to itself the implementation of that rule, and thus the initial determination of the rule’s meaning.”

This, Scalia said, “seems contrary to fundamental principles of separation of powers to permit the person who promulgates a law to interpret it as well.” When Congress passes a vaguely-worded law, it does not expand its own power, but rather, “the vagueness effectively cedes power to the Executive,” the jurist wrote. “By contrast, deferring to an agency’s interpretation of its own rule encourages the agency to enact vague rules which give it the power, in future adjudications, to do what it pleases.” This, in turn, “frustrates the notice and predictability purposes of rulemaking, and promotes arbitrary government,” he said. “The seeming inappropriateness of Auer deference is especially evident in cases such as these, involving an agency that has repeatedly been rebuked in its attempts to expand the statute beyond its text, and has repeatedly sought new means to the same ends.”