Nos. 98-652 and 98-653
In the Supreme Court of the United States
OCTOBER TERM, 1998
SBC COMMUNICATIONS INC., ET AL., PETITIONERS
v.
FEDERAL COMMUNICATIONS COMMISSION, ET AL.
BELL ATLANTIC CORP., PETITIONER
v.
FEDERAL COMMUNICATIONS COMMISSION, ET AL.
ON PETITIONS FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
BRIEF FOR THE UNITED STATES AND THE FEDERAL COMMUNICATIONS COMMISSION
IN OPPOSITION
CHRISTOPHER J. WRIGHT
General Counsel
JOHN E. INGLE
Deputy Assistant General Counsel
Federal Communications
Commission
Washington, D.C. 20554
SETH P. WAXMAN
Solicitor General
Counsel of Record
JOEL I. KLEIN
Assistant Attorney General
PHILIP D. BARTZ
Acting Assistant Attorney General
MARK B. STERN
JACOB M. LEWIS
ALISA B. KLEIN
DANIEL L. KAPLAN
DANA J. MARTIN
Attorneys
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217
QUESTION PRESENTED
Whether certain provisions of the Telecommunications Act of 1996 applicable
to the activities of the Bell Operating Companies (47 U.S.C. 271-275) constitute
"bills of attainder," violate separation of powers principles,
or deny those companies the equal protection of the laws.
In the Supreme Court of the United States
OCTOBER TERM, 1998
No. 98-652
SBC COMMUNICATIONS INC., ET AL., PETITIONERS
v.
FEDERAL COMMUNICATIONS COMMISSION, ET AL.
No. 98-653
BELL ATLANTIC CORP., PETITIONER
v.
FEDERAL COMMUNICATIONS COMMISSION, ET AL.
ON PETITIONS FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
BRIEF FOR THE UNITED STATES AND THE FEDERAL COMMUNICATIONS COMMISSION
IN OPPOSITION
OPINIONS BELOW
The opinion of the court of appeals (Pet. App. 1a-53a1) is reported at 154
F.3d 226. The opinion of the district court (Pet. App. 54a-73a) is reported
at 981 F. Supp. 996.
JURISDICTION
The judgment of the court of appeals was entered on September 4, 1998. The
petition for a writ of certiorari in No. 98-652 was filed on October 19,
1998, and the petition for a writ of certiorari in No. 98-653 was filed
on October 20, 1998. The jurisdiction of this Court is invoked under 28
U.S.C. 1254(1).
STATEMENT
1. For many years, most telephone service in the United States-both local
and long-distance-was provided by AT&T and its corporate affiliates,
collectively known as the Bell System. In 1974, the United States sued AT&T
under the Sherman Act, alleging, among other things, that the Bell System
had improperly used its monopoly power in local markets to impede competition
in the long-distance market. See United States v. AT&T Co., 524 F. Supp.
1336 (D.D.C. 1981). In 1982, to settle that lawsuit, AT&T entered into
a consent decree-which became known as the Modification of Final Judgment,
or MFJ-that required it to divest its local exchange operations. The newly
independent Bell Operating Companies (BOCs) continued to provide monopoly
local exchange service in their respective regions, while AT&T continued
to provide nationwide long-distance service. The BOCs were initially grouped
into seven corporate entities known as "Regional Bell Operating Companies."
See United States v. AT&T Co., 552 F. Supp. 131 (D.D.C. 1982), aff'd
sub nom. Maryland v. United States, 460 U.S. 1001 (1983). After recent mergers,
that number now stands at five: Bell Atlantic, BellSouth, SBC Communications,
Ameritech, and U S WEST.
The consent decree, overseen for many years by the federal district court
in Washington, D.C., prohibited the BOCs from providing long-distance telephone
service, manufacturing telecommunications equipment, and providing information
services. In approving the restriction on long-distance service,2 the district
court explained that a BOC, if permitted to enter the long-distance market,
could use its monopoly control over local bottleneck facilities (through
which all calls must pass) to impede long-distance competition in two principal
ways: The BOC could subject competitors to discriminatory terms of access
to the local network, and it could cross-subsidize its own long-distance
operations with its monopoly local revenues. AT&T Co., 552 F. Supp.
at 187-188, 223. The court cited related concerns in approving the restrictions
on information services and equipment manufacturing. See id. at 189-191.
2. The Telecommunications Act of 1996 (1996 Act), Pub. L. No. 104-104, 110
Stat. 56, comprehensively overhauled the regulation of all telephone markets.
In the "local competition" provisions of the Act, 47 U.S.C. 251
et seq., Congress sought to open local markets to full competition for the
first time by requiring all incumbent local exchange carriers (LECs), including
the BOCs, to make their networks and services available to new entrants
in three distinct but complementary ways. See 47 U.S.C. 251(c)(2)-(4). First,
Section 251(c)(2) requires the incumbents to "interconnect" their
networks with those of other carriers, and to do so "on rates, terms,
and conditions that are just, reasonable, and nondiscriminatory." Second,
Section 251(c)(3) entitles potential competitors to lease elements of an
incumbent's network, again at "just, reasonable, and nondiscriminatory"
rates, terms, and conditions. Finally, Section 251(c)(4) gives potential
competitors a right to buy an incumbent LEC's retail services "at wholesale
rates" and then to resell them to end users. Several important issues
concerning those local competition provisions are now pending before this
Court in AT&T Corp. v. Iowa Utilities Board, No. 97-826 (argued Oct.
13, 1998), and consolidated cases.
Congress also enacted a set of provisions-applicable to the BOCs and "any
successor or assign" (47 U.S.C. 153(4)(B) (Supp. II 1996))-that "as
a whole relieves the BOCs of several of the burdens imposed by the MFJ,
particularly by prescribing * * * a method whereby the BOCs can achieve
a long-sought-after presence in the long-distance market." BellSouth
Corp. v. FCC, 144 F.3d 58, 66 (D.C. Cir. 1998) (emphasis in original). The
most basic of those provisions is Section 601(a) of the 1996 Act, 110 Stat.
143, which terminates the prospective effect of the AT&T consent decree.
In place of the decree, Congress created a transitional regulatory framework
governing the BOCs' entry into certain new markets, both to ensure orderly
progress towards full and fair competition in telecommunications and to
give the BOCs a strong incentive to facilitate the realization of that goal.
Section 271 addresses BOC entry into the long-distance market. That provision
automatically entitles all BOCs to provide, for the first time, "out-of-region"
long-distance services: i.e., long-distance services originating outside
the States in which a BOC was authorized to provide local telephone service
on the date of the statute's enactment. 47 U.S.C. 271(b)(2), (i).3 Section
271 also introduces a procedure under which the BOCs may apply to the FCC
for authorization to provide, also for the first time, full long-distance
telephone service to customers within their "in-region" States.
After "consult[ing]" with the relevant state public utility commission,
and after both "consulting" with the Department of Justice and
giving "substantial weight" to its views, the FCC is to grant
a BOC's in-region long-distance application if it finds the following (47
U.S.C. 271(d)): (1) that the BOC has satisfied certain statutory requirements
designed to open its local exchange market to competition (47 U.S.C. 271(c));
(2) that, for an interim period, the BOC will conduct its long-distance
operations in accordance with the structural separation requirements of
47 U.S.C. 272;4 and (3) that granting the application would serve "the
public interest, convenience, and necessity" (47 U.S.C. 271(d)(3)).
Section 273 separately authorizes a BOC to manufacture and provide telecommunications
equipment once the FCC has found that the BOC has satisfied the conditions
set forth in Section 271 for providing in-region long-distance service.
Finally, Sections 274 and 275 impose short-term restrictions on the BOCs'
electronic publishing and alarm monitoring services. Under Section 274,
a BOC or BOC affiliate may not, until February 8, 2000, disseminate electronic
publishing by means of the BOC's basic telephone service, except through
a "separated affiliate" or joint venture. 47 U.S.C. 274(a), 274(g)(2).
Section 275 requires BOCs that were not providing alarm monitoring services
as of November 30, 1995, to wait until February 8, 2001, to begin doing
so. 47 U.S.C. 275(a).
3. Petitioner SBC Communications Inc., through its wholly-owned subsidiaries
(Southwestern Bell Telephone Company, Pacific Bell, and Nevada Bell), provides
local telephone service to customers in Texas, Missouri, Oklahoma, Arkansas,
Kansas, Nevada, and California. In April 1997, SBC filed an application
under Section 271 to provide in-region long-distance telephone service in
Oklahoma. The FCC denied the application on the ground that SBC had not
satisfied Section 271's threshold competitive requirements. In re Application
of SBC Commun. Inc., 12 F.C.C.R. 8685 (1997), aff'd, 138 F.3d 410 (D.C.
Cir. 1998).
Six days after the FCC's decision, SBC, along with its wholly-owned BOC
subsidiaries and several other affiliates, filed this suit in the United
States District Court for the Northern District of Texas, challenging the
constitutionality of Sections 271 through 275. A number of interested parties
ultimately intervened. On December 31, 1997, the district court held that
the challenged provisions were unconstitutional bills of attainder. Pet.
App. 73a. In a subsequent order, the court stayed its decision pending appeal.
Id. at 76a-77a.
The court of appeals reversed. The court first held that the challenged
provisions of the 1996 Act are not "bills of attainder" because
they do not "punish" the BOCs. E.g., Pet. App. 31a-35a. The court
also rejected petitioners' claims that the challenged provisions violate
the separation-of-powers doctrine (id. at 35a-39a) and equal protection
principles (id. at 39a).5 Judge Smith, dissenting, would have invalidated
the challenged provisions as bills of attainder. Id. at 41a-53a.
ARGUMENT
To date, two courts of appeals have ruled on the BOCs' bill-of-attainder
challenge to the 1996 Act: the Fifth Circuit below, and the District of
Columbia Circuit in BellSouth Corp. v. FCC, 144 F.3d 58 (1998). Those two
courts reached the same conclusion. In BellSouth, the D.C. Circuit rejected
many of the same arguments that petitioners present here, upheld the constitutionality
of Section 274, and observed that the BOCs' constitutional claims were "somewhat
undermined by § 274's placement in an Act that as a whole relieves
the BOCs of several of the burdens imposed by the MFJ, particularly by prescribing
in § 271 a method whereby the BOCs can achieve a long-sought-after
presence in the long-distance market." Id. at 66 (emphasis in original).
The BOCs recently challenged Section 271 itself before another panel of
the D.C. Circuit, and that case is pending. See BellSouth Corp. v. FCC,
No. 98-1019 (D.C. Cir.) (argued Sept. 25, 1998). Unless and until petitioners
persuade some court of appeals to depart from the current consensus, there
is no need for this Court to consider petitioners' attack on integral provisions
of an intricate legislative compromise that they themselves once supported
(see Pet. App. 33a-35a).
1. A statute is a "bill of attainder" within the meaning of the
constitutional prohibition only if it both applies with specificity and
imposes punishment. E.g., Selective Serv. Sys. v. Minnesota Pub. Interest
Research Group, 468 U.S. 841, 851 (1984). Those two elements are distinct:
no regulation, no matter how specific, is a bill of "attainder"
unless it is actually "punitive." See, e.g., Plaut v. Spendthrift
Farm, Inc., 514 U.S. 211, 239 n.9 (1995); Nixon v. Administrator of Gen.
Servs., 433 U.S. 425, 472-473 (1977); BellSouth, 144 F.3d at 64.
This Court employs a common-sense approach in determining what constitutes
a "punitive" law for attainder purposes, focusing on "whether
the challenged statute falls within the historical meaning of legislative
punishment," on "whether the statute, viewed in terms of the type
and severity of burdens imposed, reasonably can be said to further nonpunitive
legislative purposes," and on "whether the legislative record
evinces a congressional intent to punish." See Selective Serv. Sys.,
468 U.S. at 852 (internal quotation marks omitted). "[O]nly the clearest
proof could suffice to establish the unconstitutionality of a statute on
such a ground." Flemming v. Nestor, 363 U.S. 603, 617 (1960); see also
Selective Serv., 468 U.S. at 855-856 n.15. The flaw in petitioners' bill-of-attainder
challenge here is simple: nothing in the challenged provisions can plausibly
be characterized as "punishment."
a. This Court has invalidated statutes as "bills of attainder"
only five times in this Nation's history. In each of those cases, the legislature
had imposed punitive disabilities on adherents of a despised political movement
(either the Confederacy or the Communist Party) that was "thought to
present a threat to the national security." United States v. Brown,
381 U.S. 437, 453 (1965); see also Cummings v. Missouri, 71 U.S. (4 Wall.)
277 (1866); Ex parte Garland, 71 U.S. (4 Wall.) 333 (1866); Pierce v. Carskadon,
83 U.S. (16 Wall.) 234 (1872); United States v. Lovett, 328 U.S. 303 (1946).
In each of those cases, the Court invalidated the legislation upon determining
that the sanctions at issue- reflecting a "judgment censuring or condemning"
individuals for their politics (Brown, 381 U.S. at 453-454)-were not reasonably
related to a legitimate nonpunitive purpose. See, e.g., id. at 454-455;
Lovett, 328 U.S. at 314; Cummings, 71 U.S. at 319-320; Garland, 71 U.S.
at 377-378; see also Hawker v. New York, 170 U.S. 189, 198 (1898) (discussing
Cummings and Garland).
Nothing about the provisions at issue here resembles the legislation struck
down in those five cases. Business regulations based on corporate economic
power and incentives, unlike sanctions based on an individual's political
affiliation, are a legal commonplace. See, e.g., Turner Broadcasting Sys.
v. FCC, 512 U.S. 622, 664 (1994). They rest not on a desire to "punish"
the regulated corporations, but on a recognition of the objective dangers
posed by monopoly power. See North American Co. v. SEC, 327 U.S. 686, 711
(1946).
Here, Congress recognized that the local exchange remains a crucial bottleneck
facility for long-distance and other services; that the BOCs "provide
over 80% of local telephone service in the United States" (H.R. Rep.
No. 204, 104th Cong., 1st Sess., Pt. 1, at 49 (1995)); and that, as under
the consent decree, the distinctive geographical and demographic characteristics
of the BOCs' markets justified competitive protections for those markets
that were not needed elsewhere (see pp. 17-20, infra). Thus, at the same
time that it released the BOCs from the prospective effect of the consent
decree, Congress enacted Sections 271 through 275, both to give the BOCs
incentives to open their monopoly markets to robust competition and, for
a transitional period, to preserve a level playing field in the long-distance
and other markets. See SBC Communications Inc. v. FCC, 138 F.3d 410, 412-413
(D.C. Cir. 1998); BellSouth, 144 F.3d at 65-66, 70; Pet. App. 7a. As a former
FCC chairman told Congress, such restrictions were needed "not because
the BOCs are venal," but because, in the absence of such provisions,
"they would be following the natural instincts of rational businessmen"
in using their monopoly power to defeat competition. Telecommunications
Policy Act (Part I): Hearings Before the Subcomm. on Telecomm. & Fin.
of the House Comm. on Energy and Commerce, 101st Cong., 2d Sess. 426 (1990)
(testimony of Richard E. Wiley); accord H.R. Rep. No. 559, 103d Cong., 2d
Sess., Pt. 1, at 50 (1994) ("as [the consent decree court] has stated,
the line-of-business restrictions themselves are not punitive in nature,
but are prophylactic measures") (internal quotation marks omitted).6
Those regulatory provisions are thus no more "punitive" in character
than the many other statutes that exclude certain corporations from particular
lines of business to protect competition or promote other economic goals.
See BellSouth, 144 F.3d at 65.7 Such line-of-business restrictions have
never been thought to implicate the Bill of Attainder Clause, and for good
reason: they do not "fall[] within the historical meaning of legislative
punishment," and they obviously "can be said to further nonpunitive
legislative purposes." Selective Serv. Sys., 468 U.S. at 852; see also
Brown, 381 U.S. at 453-454 (distinguishing the Banking Act of 1933, which
rested on a "general knowledge of human psychology," from laws
"censuring or condemning" individuals "thought to present
a threat to the national security"). Indeed, petitioners cite no case
in which any court has invalidated, as "punishment," any restriction
on a corporation's entry into any kind of market, let alone entry by corporations
as heavily regulated as those here. That fact, together with the very abundance
of line-of-business restrictions throughout the national economy, belies
petitioners' suggestion (e.g., SBC Pet. 15, 23-24) that there could be something
inherently or historically "punitive" about such restrictions.
Despite petitioners' efforts to equate the two (e.g., SBC Pet. 14-15), therefore,
economic regulation of this kind is a far cry from legislation designed
to punish flesh-and-blood members of vilified political groups by prohibiting
them from "practicing a profession" (Lovett, 328 U.S. at 315)
The challenged provisions do not, of course, prohibit anyone from practicing
any profession,8 nor do they target disfavored political ideologies. Indeed,
the challenged regulations do not specifically apply to any particular group
of corporate managers or directors. For example, if a BOC were to sell off
its network to some other company (say, GTE), that new company, as the "successor
or assign" of the BOC (47 U.S.C. 153(4) (Supp. II 1996)), would be
no less subject than the BOC itself to the in-region long-distance restrictions
of Section 271. Conversely, when a BOC acquires an independent LEC, the
1996 Act does not prohibit the BOC from providing full in-region long-distance
service in the newly acquired LEC's local service area (except in States
that the BOC itself served before 1996). See 47 U.S.C. 271(i)(1). Those
facts further confirm (if further confirmation were necessary) that Congress
treated the BOCs differently from other companies because of the nature
of the regional markets they serve (see pp. 17-20, infra), not because of
any desire to "punish" them for misconduct.
b. Petitioners' characterization of the challenged provisions as "punishment"
is particularly implausible for an independent reason as well. As the D.C.
Circuit recently observed in rejecting the BOCs' bill-of-attainder challenge
to Section 274, the 1996 Act "as a whole relieves the BOCs of several
of the burdens imposed by the MFJ, particularly by prescribing in §
271 a method whereby the BOCs can achieve a long-sought-after presence in
the long-distance market." BellSouth, 144 F.3d at 66 (emphasis in original).
Even apart from the benefits the BOCs derive from a defined statutory procedure
for full entry into in-region long-distance markets, see ibid., the challenged
provisions immediately entitle the BOCs to provide, for the first time,
long-distance service to customers outside their local service regions,
47 U.S.C. 271(a) and (b)(2); to provide "incidental" long-distance
services to customers anywhere in the country, 47 U.S.C. 271(b)(3); and
to play a significantly greater role in activities related to the manufacture
of telecommunications equipment, 47 U.S.C. 273.
Indeed, the BOCs themselves have recognized that enactment of the challenged
provisions, together with the termination of the consent decree, represents
a net benefit for them. As the court of appeals explained (Pet. App. 33a-35a),
the BOCs actively supported the Act while it was pending in Congress-not,
of course, because they benefited from the local competition provisions
(see pp. 3-4, supra), but because they very much benefited from the replacement
of the consent decree with the new provisions of Sections 271 through 275.
As this Court has indicated, legislation cannot be said to "punish"
its subjects unless, at a bare minimum, it "depriv[es]" them of
"rights * * * previously enjoyed." Cummings, 71 U.S. at 320. The
most important provision challenged here-Section 271-does not even meet
that threshold requirement. See also BellSouth, 144 F.3d at 66 (upholding
the short-term provisions of Section 274 (see p. 6, supra) even though they
reimpose certain electronic publishing restrictions that had recently been
removed from the MFJ).
c. Because they cannot plausibly characterize the challenged provisions
as "punitive," petitioners devote much of their discussion to
the provisions' specificity, as though specificity alone could convert a
nonpunitive statute into a bill of attainder. But that approach erroneously
conflates two distinct issues. The need to show specificity and the need
to show punitiveness are separate requirements for any bill-of-attainder
challenge, and there is "no warrant in the precedents for treating
Congress's specification of the BOCs by name as a material element in the
punishment analysis." BellSouth, 144 F.3d at 64 (emphasis added).
Indeed, much of petitioners' argument reads as though this Court had never
decided Nixon v. Administrator of General Services, 433 U.S. 425 (1977).
That case involved the constitutionality of a statute enacted shortly after
President Nixon's resignation, in response to an agreement he signed regarding
the disposition of his presidential records. Id. at 432. The statute overrode
the agreement and established rules governing disposition of the records.
The statute applied to no other records and repeatedly referred to the former
President by name. Id. at 433-434. The "essence" of President
Nixon's constitutional challenge to that statute, like the essence of petitioners'
arguments here, was that "the Constitution is offended whenever a law
imposes undesired consequences on an individual or on a class that is not
defined at a proper level of generality." Id. at 469-470.
The Court rejected that challenge and upheld the statute. It explained that
President Nixon's expansive interpretation of the Bill of Attainder Clause
"would cripple the very process of legislating, for any individual
or group that is made the subject of adverse legislation can complain that
the lawmakers could and should have defined the relevant affected class
at a greater level of generality." 433 U.S. at 470. The Court observed
that a variety of other valid statutes "also single out identifiable
members of groups to bear burdens or disqualifications"; for example,
in the Regional Rail Reorganization Act Cases, 419 U.S. 102 (1974), the
Court had upheld the "transfer of rail properties of eight railroad
companies to [a] Government-organized corporation." 433 U.S. at 471
n.34. In sum, the Court concluded, just as "mere underinclusiveness
is not fatal to the validity of a law under the equal protection component
of the Fifth Amendment * * * even if the law disadvantages an individual
or identifiable members of a group," neither does "the mere specificity
of a law * * * call into play the Bill of Attainder Clause." Id. at
471 n.33.
In Plaut v. Spendthrift Farm, Inc., 514 U.S. 211 (1995), the Court revisited
this area and reaffirmed the central holding of Nixon and similar cases.
A valid bill-of-attainder challenge, the Court explained, "requires
not merely 'singling out' but also punishment." Id. at 239 n.9 (emphasis
in original). In the absence of punishment, Congress may legislate not just
with great specificity, but may in fact "legislate a legitimate class
of one." Ibid. (internal quotation marks omitted). That principle is
fatal to petitioners' bill-of-attainder claim here.9
2. Petitioners challenge, on a variety of grounds, the substance of Congress's
distinction between the local-exchange progeny of the Bell System (and "any
successor or assign," 47 U.S.C. 153(4)), and the so-called "independent"
local exchange carriers. As discussed, that challenge cannot help petitioners'
bill-of-attainder claim, because they cannot meet their independent burden
of showing that the provisions themselves are "punitive." See
BellSouth, 144 F.3d at 67 ("the differential treatment of the BOCs
and non-BOCs is neither suggestive of punitive purpose nor particularly
suspicious"). Petitioners thus alternatively challenge the distinction
under equal protection and separation of powers principles. As the court
of appeals observed, however, the challenged provisions do "not even
arguably" violate those principles. Pet. App. 41a.
a. It has long been settled that federal regulation of ordinary economic
activity is consistent with the equal protection component of the Due Process
Clause so long as there is a rational basis for any challenged classification.
See, e.g., FCC v. Beach Communications, Inc., 508 U.S. 307, 313 (1993);
Dandridge v. Williams, 397 U.S. 471, 484-485 (1970). The provisions challenged
here easily meet that test. See Pet. App. 39a.
The provisions establish transitional entry procedures for the companies
that had previously been barred, under the AT&T consent decree, from
the long-distance and related markets. As the House Energy and Commerce
Committee explained, the statute "naturally focuses on the BOCs and
their affiliates, because they uniquely [we]re seeking release from restrictions
imposed under the MFJ." H.R. Rep. No. 559, supra, Pt. 1, at 50. Indeed,
other LECs, including Cincinnati Bell, Southern New England Telephone, and
Sprint, had already begun to provide long-distance service. See USTA C.A.
Br. 3-5. It was entirely rational for Congress to distinguish between companies
that it was admitting into the long-distance market for the first time and
companies that had always been free to provide long-distance service.
Congress also reasonably found that the BOCs' monopoly power continued to
pose unique concerns for the development of competition, and that those
concerns justified the creation of a transitional regulatory scheme in place
of the restrictions of the now-vacated consent decree. As the House Judiciary
Committee explained, "the Bells alone exercise immense local exchange
monopoly power concentrated throughout a vast geographical region; the local
exchange operations of even the Bells' closest runners-up are widely dispersed."
H.R. Rep. No. 559, supra, Pt. 2, at 93.10 For example, whereas "the
BOCs are regions of contiguous states which together serve almost all of
the large population centers in the country," H.R. Rep. No. 203, 104th
Cong., 1st Sess., Pt. 1, at 32 (1995), "GTE serves less than three
percent of America's urban markets," and its operations are chiefly
located in "widely dispersed small- and medium-sized cities and suburban
and rural territory." Id. at 31. For that reason, witnesses told Congress,
special legislation was needed to protect competition only in traditional
BOC markets: "The potential incentive and ability of a BOC, which controls
nearly one-seventh of the country, to disadvantage a competing interexchange
competitor, is far greater than for other companies that offer both local
and interexchange service." The Role of the Department of Justice:
Hearing Before the House Comm. on the Judiciary, 104th Cong., 1st Sess.
66 (1995) (testimony of then-Assistant Attorney General Bingaman);11 see
also BellSouth, 144 F.3d at 67 ("the differential treatment of the
BOCs and non-BOCs" in Section 274 is "quite reasonable").
Finally, the distinction Congress drew-between the corporate successors
to the Bell System monopoly and the "independent" telephone companies-was
of course the same distinction drawn for many years by the district court
that had entered the AT&T and GTE consent decrees. See pp. 2-3, supra
(discussing basis for decree restrictions). For example, in approving GTE's
acquisition of Sprint over objections that GTE should be subject to the
same type of restrictions imposed on the BOCs by the AT&T Consent Decree,
the district court explained: "Each of the regional [Bell] companies
has a very strong, dominant position in local telecommunications in the
area in which it serves; GTE's operations, by contrast, are widely scattered."
United States v. GTE Corp., 603 F. Supp. 730, 737 (D.D.C. 1984). Congress's
rationale in enacting Sections 271 through 275 was no less reasonable.12
b. Petitioners further argue (SBC Pet. 26; Bell Atl. Pet. 17-23) that the
1996 Act violates separation-of-powers principles because it alters the
prospective equitable terms of the AT&T consent decree-albeit, "as
a whole," to the benefit of the BOCs themselves (BellSouth, 144 F.3d
at 66). As an initial matter, that argument conspicuously ignores the fact
that the only provision of the 1996 Act that directly addresses the consent
decree is Section 601(a)(1), 110 Stat. 143, which terminates the decree's
prospective effect. Petitioners obviously do not object to that provision.
In any event, even if we place that anomaly to one side (see pp. 23-24,
infra), petitioners' separation-of-powers argument is without merit.
As the court of appeals explained, "Congress may change the law underlying
ongoing equitable relief, even if * * * the change is specifically targeted
at and limited in applicability to a particular injunction, and even if
the change results in the necessary lifting of that injunction." Pet.
App. 36a (emphasis omitted). That proposition is firmly rooted in this Court's
precedents. In Pennsylvania v. Wheeling and Belmont Bridge, 59 U.S. (18
How.) 421, 429, 431-432 (1855), the Court upheld a law declaring a particular
bridge to be a lawful post road despite a judicial decree to the contrary.
Similarly, in Robertson v. Seattle Audubon Society, 503 U.S. 429 (1992),
the Court upheld a statute changing the law that governed two expressly
named, pending lawsuits. Finally, in Plaut, while invalidating a statute
that "retroactively command[ed] the federal courts to reopen final
judgments" (514 U.S. at 219 (emphasis added)), the Court took care
to reaffirm the constitutionality of provisions, like those at issue in
Wheeling Bridge and here, that merely "alter[] the prospective effect
of injunctions entered by Article III courts" (id. at 232 (emphasis
added)).
Plaut also refutes petitioners' "not-too-well-defined argument"
(Pet. App. 38a) that the specificity of the challenged provisions could
somehow offend separation-of-powers principles even if it does not violate
the Bill of Attainder Clause. The problem with the statute at issue in Plaut,
the Court held,
consists not of the Legislature's acting in a particularized and hence (according
to the concurrence) nonlegislative fashion; but rather of the Legislature's
nullifying prior, authoritative judicial action. It makes no difference
whatever to that separation-of-powers violation that it is in gross rather
than particularized * * *, or that it is not accompanied by an 'almost'
violation of the Bill of Attainder Clause, or an 'almost' violation of any
other constitutional provision.
514 U.S. at 239. Specificity itself, the Court reaffirmed, does not make
a statute unconstitutional: "While legislatures usually act through
laws of general applicability, that is by no means their only legitimate
mode of action." Id. at 239 n.9. Finally, Plaut forecloses the distinction,
reasserted here by Bell Atlantic (Pet. 26), between statutes conferring
benefits on designated individuals and those imposing burdens on them. The
Court explained (514 U.S. at 239 n.9): "Even laws that impose a duty
or liability upon a single individual or firm are not on that account invalid-or
else we would not have the extensive jurisprudence that we do concerning
the Bill of Attainder Clause, including cases which say that it requires
not merely 'singling out' but also punishment, see, e.g., [Lovett, 328 U.S.
at 315-318], and a case which says that Congress may legislate 'a legitimate
class of one,' [Nixon, 433 U.S. at 472]." See also Maine Cent. R.R.
Co., 813 F.2d at 488-491 (discussed in note 12, supra).
3. Bell Atlantic (Pet. 28) encourages the Court to "take the whole
case and decide, as well, the severability of the Special Provisions."
In fact, that severability issue need never be decided, because the provisions
at issue are constitutional. If that were not the case, however, and if
those provisions were invalidated, the severability question would indeed
become exceptionally urgent.
Invalidation of Sections 271 through 275 would plainly require invalidation
of the other major provision of the 1996 Act applicable specifically to
the Bell Companies: Section 601(a)(1), which prospectively terminates the
effect of the AT&T consent decree. See 110 Stat. 143. That provision
and Sections 271 through 275 were enacted together as inextricably related
components of "a hard-fought compromise on a massive issue of public
policy which, in the end, contained both good and bad elements for the BOCs."
Pet. App. 33a; SBC Communications, 138 F.3d at 412 (content of 1996 Act
"was the subject of great debate," and "[t]he end product
was a compromise between the competing factions"). Petitioners cannot
plausibly contend (cf. Bell. Atl. Pet. 29) that it would effectuate congressional
intent to lop off only the portions of that "hard-fought compromise"
that the BOCs dislike. See BellSouth, 144 F.3d at 66 n.8.13 Indeed, if petitioners
really believe that Congress wanted to "punish" them by subjecting
them to more onerous conditions than those that existed under the consent
decree, they cannot seriously argue at the same time that Congress would
have wished to set them free from continuing judicial oversight in the absence
of statutory regulation.
Bell Atlantic suggests (Pet. 28) that if invalidation of Sections 271 through
275 would require invalidation of Section 601(a)(1), it would also require
invalidation of all the common carrier provisions of the 1996 Act, including
the very provisions that this Court is now reviewing in AT&T Corp. v.
Iowa Utilities Board, No. 97-826, and consolidated cases. We disagree with
that proposition, but we note the following inescap- able point. If successful,
petitioners' challenge would threaten to unravel much of the 1996 Act, to
the great detriment of American consumers.14 The result of that unraveling
could be a return to a telecommunications world dominated by judicial decrees
rather than positive lawmaking by Congress and its delegates. Review of
the severability question would be only the first step in a very long process
of litigation.
Fortunately, however, this Court need not accept Bell Atlantic's invitation
to grant certiorari on that severability question, because there is no reason
for the Court to consider petitioners' underlying claims on the merits.
As explained above, those claims are unsound. And, so long as the courts
of appeals maintain their current consensus to that effect, further review
by this Court is not warranted.
CONCLUSION
The petitions for a writ of certiorari should be denied.
Respectfully submitted.
CHRISTOPHER J. WRIGHT
General Counsel
JOHN E. INGLE
Deputy Assistant General Counsel
Federal Communications
Commission
SETH P. WAXMAN
Solicitor General
JOEL I. KLEIN
Assistant Attorney General
PHILIP D. BARTZ
Acting Assistant Attorney General
MARK B. STERN
JACOB M. LEWIS
ALISA B. KLEIN
DANIEL L. KAPLAN
DANA J. MARTIN
Attorneys
DECEMBER 1998
1 "SBC Pet." refers to the petition for a writ of certiorari in
No. 98-652; "Bell Atl. Pet." refers to the petition in No. 98-653.
"Pet. App." refers to the appendix to the petition in No. 98-652.
(The appendices to the petitions are identical.)
2 The district court divided the Bell Companies' collective geographical
regions into approximately 160 exchange areas, known as "local access
and transport areas" or "LATAs." See United States v. Western
Elec. Co., 569 F. Supp. 990 (D.D.C. 1983). The relevant restriction in the
consent decree permitted the BOCs to provide telephone service "only
between points within a single LATA, providing what is, basically, the traditional
local telephone service." United States v. Western Elec. Co., 969 F.2d
1231, 1233 (D.C. Cir. 1992), cert. denied, 507 U.S. 951 (1993). For ease
of exposition, we refer to inter-LATA calls in the vernacular: as "long-distance
calls." Such calls should not be confused with the somewhat larger
category of "toll calls," which includes some intra-LATA calls
that the decree permitted the Bell Companies to carry.
3 Section 271 also provides that the BOCs may immediately provide, to customers
located anywhere in the country, "incidental" long-distance services,
47 U.S.C. 271(b)(3), including audio and video programming and commercial
mobile services, "gateway information services" linking local
customers to information service clearinghouses, and centralized signaling
services. See 47 U.S.C. 271(g).
4 The interim provisions of Section 272 require the BOCs to set up separate
affiliates if they wish to engage in manufacturing, origination of most
non-incidental in-region long-distance services, or long-distance information
services other than electronic publishing or alarm monitoring. 47 U.S.C.
272(a) and (b); see also 47 U.S.C. 272(f) (sunset).
5 The court of appeals also rejected a First Amendment challenge limited
to Section 274. Pet. App. 40a (following BellSouth, 144 F.3d at 67-71).
Petitioners have not sought this Court's review of that holding, and they
have thus waived any First Amendment challenge. Sup. Ct. R. 14(1)(a).
6 Petitioners suggest that the market-opening provisions of Sections 251
and 252 suffice to ensure local competition. See SBC Pet. 6-7, 20-21 n.8.
That argument is without merit. While Sections 251 and 252 establish a general
framework for opening local markets to competition, Congress recognized
that those provisions would not achieve full competition overnight. See,
e.g., 141 Cong. Rec. S8138 (daily ed. June 12, 1995) (remarks of Sen. Kerrey);
id. at S8161 (letter from State Attorneys General). Indeed, the FCC's most
recent industry survey shows that the incumbent LECs have retained control
of approximately 97.5% of all local exchange revenues. See FCC, Telecommunications
Indus. Rev.: 1997, Tab. 4 (Oct. 1998) (lodged with this Court in No. 97-826).
Congress recognized that, by linking removal of the remaining line-of-business
restrictions to the development of local competition, the challenged provisions
would give the BOCs an important economic incentive to facilitate the process
of opening their traditional monopoly markets to full competition.
7 E.g., FCC v. National Citizens Comm. for Broadcasting, 436 U.S. 775 (1978)
(affirming FCC regulation proscribing cross-ownership of television station
and newspaper in same market); Banking Act of 1933, 12 U.S.C. 24 (Seventh)
(prohibiting banks from underwriting or issuing securities); Bank Holding
Company Act, 12 U.S.C. 1843(a)(2) (prohibiting bank holding companies, with
certain exceptions, from acquiring or retaining "direct or indirect
ownership or control of any voting shares of any company which is not a
bank or bank holding company"); see also Board of Governors v. Agnew,
329 U.S. 441, 449 (1947) (upholding Section 32 of the Banking Act of 1933,
which prohibits a partner or employee of a firm primarily engaged in securities
underwriting from being a director of a national bank); Federal Credit Union
Act, 12 U.S.C. 1759 (restricting federal credit union membership to groups
having a common bond of association or occupation, or groups within a well-defined
community); Credit Union Membership Access Act, Pub. L. No. 105-219, 112
Stat. 913.
8 In any event, even provisions that do prohibit individuals from practicing
a profession are permissible "'when the nonpunitive aims of an apparently
prophylactic measure have seemed sufficiently clear and convincing.'"
BellSouth, 144 F.3d at 65 (quoting L. Tribe, American Constitutional Law
§ 10-5, at 655 (2d ed. 1988), in turn citing Hawker, 170 U.S. at 196,
and DeVeau v. Braisted, 363 U.S. 144 (1960)). "The question in each
case where unpleasant consequences are brought to bear upon an individual
for prior conduct, is whether the legislative aim was to punish that individual
for past activity, or whether the restriction of the individual comes about
as a relevant incident to a regulation of a present situation." Flemming,
363 U.S. at 614 (citation omitted).
9 The lower courts have also repeatedly rejected bill-of-attainder challenges
to regulatory statutes directed at named entities. See, e.g., Fresno Rifle
& Pistol Club, Inc. v. Van de Kamp, 965 F.2d 723, 728 (9th Cir. 1992)
(rejecting bill-of-attainder challenge to California statute barring specific
brands of assault weapons because "[t]he type of economic punishment
about which [the weapons' manufacturers] complain is not of the type 'traditionally
judged to be prohibited by the Bill of Attainder Clause'") (quoting
Nixon, 433 U.S. at 475); United Nuclear Corp. v. Cannon, 553 F. Supp. 1220,
1226-1228 (D.R.I. 1982) (rejecting bill-of-attainder challenge to Rhode
Island statute requiring specific nuclear power company to post $10 million
decontamination bond); see also Nixon, 433 U.S. at 470-472 & nn. 33,
34; Maine Cent. R.R. Co. v. Brotherland of Maintenance of Way Employees,
813 F.2d 484, 488-491 (1st Cir.), cert. denied, 484 U.S. 825 (1987).
10 In evaluating the BOCs' market power, Congress appropriately took into
account the fact that no BOC operates independently, because each is wholly
owned and operated by a regional conglomerate (of which there were seven
at the time of enactment, and of which there are now only five). See p.
2, supra. SBC's effort to compare the market power of a hypothetically divested
Nevada Bell with that of other local exchange carriers (Pet. 21 n.9) is
thus without merit.
11 See also ibid. ("Even GTE, the largest of the independent companies,
generally serves non-urban areas, and its local operations are geographically
dispersed. That is why the BOCs were subject to the line-of-business restrictions
while GTE was allowed to offer long distance services through a separate
subsidiary."). A variety of witnesses emphasized the importance of
this distinction. See, e.g., H.R. Rep. No. 850, 102d Cong., 2d Sess, at
93 (1992) (quoting testimony of Professor Monaghan) ("As courts have
found, each of the RBOCs has market power significantly greater than the
only other comparably sized local exchange carrier, in that GTE's widely
dispersed exchanges are primarily rural and suburban in character and otherwise
differ from the RBOCs.") (footnotes omitted); Competitive Status of
the Bell Operating Companies: Hearing Before the Subcomm. on Telecomm.,
Consumer Protection, and Fin. of the House Comm. on Energy and Commerce,
99th Cong., 2d Sess. 86 (1986) (testimony of then-Assistant Attorney General
Douglas H. Ginsburg) (similar).
12 Petitioner Bell Atlantic contends (Pet. 24-28) that economic legislation
cannot identify regulated parties by name without violating equal protection
guarantees. That argument is irreconcilable with modern equal protection
principles, as the court of appeals recognized (Pet. App. 39a). See, e.g.,
New Orleans v. Dukes, 427 U.S. 297, 306 (1976) (upholding legislation making
special provision for two vendors as against other vendors and overruling
Morey v. Doud, 354 U.S. 457 (1957), "the only case in the last half
century to invalidate a wholly economic regulation solely on equal protection
grounds"); Maine Cent. R.R., 813 F.2d at 488-491 (refusing to apply
heightened scrutiny to legislation "'select[ing] a single person for
adverse treatment,'" and holding that, under this Court's precedent,
a "classification does not become irrational or unconstitutional solely
because it is specific"); see also Plaut, 514 U.S. at 239 & n.9
(discussed at pp. 21-22, infra); Nixon, 433 U.S. at 471 & n.33; Erb
v. Morasch, 177 U.S. 584, 586-587 (1900). Bell Atlantic's reliance (Pet.
27) on the government's brief in opposition to certiorari in Atonio v. Wards
Cove Packing Co., 513 U.S. 809 (1994) (denying certiorari), is similarly
without merit. Atonio involved the validity of a provision in a civil rights
statute that provided "the plaintiffs in one pending case with significantly
less protection against discrimination * * * than the plaintiffs in any
other pending case." 98-1767 U.S. Br. in Opp. at 8. The government's
filing expressly distinguished the civil rights legislation at issue there
from a provision (such as the ones challenged here) that is "solely
an economic regulation." Ibid.
13 In passing, Bell Atlantic cites Section 708 of the Communications Act
of 1934, 47 U.S.C. 608, which provides as a general matter that invalidation
of one provision of the Act shall not affect "the remainder of the
Act." See Bell Atl. Pet. 28. (As codified, the word "Act"
appears as "chapter"-Chapter 5 of Title 47-which essentially encompasses
the Communications Act. See 47 U.S.C. 609.) Bell Atlantic had good reason
to give Section 708 only a perfunctory "see also" citation: Unlike
most other provisions of the 1996 Act, Section 601(a)(1) of that Act is
not codified with the Communications Act, but is merely referred to in the
codifier's historical notes. See 47 U.S.C. 152 note (Supp. II 1996). In
any event, even if Section 601(a)(1) of the 1996 Act were part of the Communications
Act, the obvious interrelationship between that provision and Sections 271
through 275 would rebut any contrary presumption of severability created
by 47 U.S.C. 608. See Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 686
(1987).
14 Petitioners mistakenly invoke the interest of consumers as a basis for
granting them full and immediate entry into the long-distance market. SBC
Pet. 30. There are two short answers to that argument. First, Congress resoundingly
rejected petitioners' view of the best way to promote consumer interest
in the long run. Second, invalidation of that congressional judgment would
not in any event give petitioners the windfall that they seek for themselves,
because, as discussed, Section 601(a)(1) is inseverable from the provisions
that petitioners challenge.