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American Broadcasting Companies Inc. v. United States

decided as amended (2nd).: May 27, 1982.

AMERICAN BROADCASTING COMPANIES, INC., CBS, INC., NATIONAL BROADCASTING COMPANY, INC., PETITIONERS,
v.
FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS, AMERICAN TELEPHONE & TELEGRAPH COMPANY, INTERVENOR



Petition for review of an order of the Federal Communications Commission, American Telephone and Telegraph Co., 86 F.C.C.2d 956 (1981), granting American Telephone & Telegraph Company's special permission request to allow tariff revisions to take effect early and declining to reject or to suspend and investigate AT&T's tariff filing.

Meskill and Kearse, Circuit Judges, and Metzner, District Judge.*fn*

Author: Meskill

MESKILL, Circuit Judge:

Petitioners American Broadcasting Companies, Inc., CBS Inc. and National Broadcasting Company, Inc. ("Networks") seek review of an order of the Federal Communications Commission ("FCC"), American Telephone and Telegraph Co., 86 F.C.C.2d 956 (1981) (hereinafter " Special Permission Order "), granting American Telephone & Telegraph Company's ("AT&T") special permission request to allow tariff revisions to take effect early and declining to reject or to suspend and investigate AT&T's tariff filing. The Networks contend that the FCC violated the Administrative Procedures Act ("APA") in granting AT&T's special permission request and violated sections 201(b) and 204(a) of the Communications Act,*fn1 47 U.S.C. §§ 201(b), 204(a), in refusing to undertake pre-effectiveness review of the proposed tariffs. We lack jurisdiction to review the FCC's decision to forego pre-effectiveness review. ABC, Inc. v. FCC, 662 F.2d 155 (2d Cir. 1981) (hereinafter " ABC I "). Further, we find no violation of the APA in the FCC's grant of AT&T's special permission request. Accordingly, we dismiss the petition in part and deny it in part.

BACKGROUND

AT&T, a telecommunications common carrier that offers private line services, Message Telecommunications Services (MTS) and Wide Area Telecommunications Services (WATS), is subject to FCC regulation under the Communications Act, 47 U.S.C. §§ 201 et seq. The actual setting of carrier rates has often involved a two-step process: first, the FCC approves the carrier's overall rate of return; and second, the carrier files a tariff revision designed to produce the approved rate of return. See generally ABC I, 662 F.2d at 156.

On April 6, 1981, after almost two years of hearings, the FCC approved an increase in AT&T's overall rate of return to 12.75 percent. American Telephone and Telegraph Co., 86 F.C.C.2d 221 (1981) (hereinafter " Rate of Return Decision "), appeal filed, United States v. FCC, 227 U.S. App. D.C. 413, 707 F.2d 610 (1981).*fn2 The FCC announced the new rate of return in a news release on April 6, 1981 and issued the text of the Rate of Return Decision to the public on May 7. The Rate of Return Decision appeared in the Federal Register on June 11. 46 Fed. Reg. 30,818 (1981). In discussing the rate of return increase the FCC noted:

The recent record in this Docket has demonstrated the volatile economic and financial conditions which have occurred during the course of this proceeding. . . . After considering the substantial increases which have occurred in A.T.&T.'s costs of common stock equity and embedded debt, and the volatility of current economic and financial conditions, we believe that it is imperative that A.T.&T. be permitted to realize the new rate of return as soon as possible. Accordingly, as in our prior decision in Docket No. 20376, 57 F.C.C.2d at 973, we shall permit A.T.&T. to effect tariff revisions which are designed to produce revenues necessary to earn the new rate of return on not less than thirty days notice from the filing of its tariffs.

Rate of Return Decision, 86 F.C.C.2d at 250 (emphasis in original).

On April 10, 1981, AT&T filed tariff revisions designed to produce the 12.75 percent rate of return. AT&T Transmittal Nos. 13703-13708. AT&T proposed, inter alia, a sixteen percent increase for its private line services,*fn3 submitted twenty-six volumes of supporting data pursuant to 47 C.F.R. § 61.38 and, in compliance with 47 C.F.R. § 61.58, notified customers of the proposed rate changes. AT&T concurrently requested special permission to make the rates effective five days after the effective date of the Rate of Return Decision instead of on ninety days notice as provided by 47 U.S.C. § 203(b) (1).*fn4

On April 23, the Acting Chief of the FCC's Common Carrier Bureau granted AT&T's special permission request for private line and WATS services, allowing the rate increases to take effect on thirty days notice, or five days after release of the text of the Rate of Return Decision, whichever occurred later. The rationale for granting the request was the inadequacy of AT&T's earnings level and its urgent need for rate relief. J. App. at 113-14.

In response, the Networks filed an "Emergency Application for Review." On May 5, the FCC upheld the Bureau Chief's decision. American Telephone and Telegraph Co., FCC 81-214 (adopted May 5, 1981). J. App. at 234-40. The FCC noted that members of the public who objected to the tariffs could seek post-effectiveness review under 47 U.S.C. §§ 206-209. Id. at 4; J. App. at 237. The FCC also observed that while "the statutory scheme affords those who object to a tariff as unlawful ample remedies to seek refunds or damages, . . . the carrier can never recoup revenues lost because of delays attributable to the agency or protesting parties." Id. at 1; J. App. at 234.

On May 13, a day before the tariffs were due to take effect, the Bureau Chief, noting the need to clarify some aspects of the AT&T's filing, deferred the effective date of the tariffs until July 9, pending receipt of the appropriate cost information from AT&T. He indicated, however, that upon receipt of the data and completion of the staff's analysis, the Bureau would "consider allowing advancement of the effective date [of the tariff filings]." Id. at 273. Following its filing of tariff revisions and submission of data, AT&T renewed its request for special permission to advance the effective date of the tariffs.

On June 25, the FCC adopted and released the order under review. American Telephone and Telegraph Co., 86 F.C.C.2d 956 (1981). Reiterating its opinion that "'it is imperative that AT&T be permitted to realize the new rate of return as soon as possible,'" id. at 961, the FCC decided that the most appropriate procedure was to suspend the tariff revisions for one day, institute an investigation into the "discrete problems" it perceived in the filing and impose "an accounting order on all rate increases to facilitate possible refunds," id. at 965. The FCC maintained that this procedure would protect ratepayers if the rate increases were later determined to be excessive and would, at the same time, enable AT&T to realize revenues at the level ...


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