ON PETITION FOR REVIEW FROM THE FEDERAL COMMUNICATIONS COMMISSION.
Seitz, Chief Judge, and Aldisert and Garth, Circuit Judges. Garth, Circuit Judge, dissenting.
This petition for review of an order of the Federal Communications Commission presents issues concerning the scope and applicability of exchange of facilities contracts in force between Western Union (WU) and American Telephone and Telegraph (AT&T). The Commission concluded that the contracts did not cover AT&T facilities to be used by WU to provide foreign exchange (FX) and common control switching arrangement (CCSA) services,*fn1 and that in accepting its satellite authorization WU had waived any contract rights it might have had in connection with facilities for its domestic satellite service. WU, therefore, would be obliged to lease facilities for these services at the higher rates set forth in AT&T tariffs filed with the Commission, not at the lower contract rates. We hold that the Commission acted within its statutory authority and that its conclusions were not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.*fn2 Accordingly, we deny WU's petition for review.
A detailed history of the disputes underlying this litigation is set forth in Bell Telephone Co. v. FCC, 503 F.2d 1250 (3d Cir. 1974), cert. denied, 422 U.S. 1026, 95 S. Ct. 2620, 45 L. Ed. 2d 684 (1975), and will not be repeated here. That decision constitutes the legal predicate for the litigation at bar. There we affirmed a decision and order of the FCC which in pertinent part (a) required AT&T to furnish to all specialized common carriers - among them WU - interconnection facilities to provide authorized communications services including FX and CCSA services, and (b) rejected AT&T tariffs insofar as they covered interconnection facilities and services already covered by Bell-Western Union exchange of facilities contracts. Bell Telephone Co. v. FCC established that the Communications Act does not authorize the modification or abrogation of contracts by subsequently filed tariffs. But the order of the Commission there affirmed also said that, with respect to facilities not covered by exchange of facilities contracts, AT&T was to charge pursuant to tariffs. 503 F.2d at 1282-84.
Following the decision in Bell Telephone Co. v. FCC, AT&T refused WU's requests to lease facilities for FX, CCSA, and domestic satellite services at contract rates although AT&T leased identical facilities at those rates when the facilities were used for other services. WU sought relief in administrative proceedings before the Commission. On October 16, 1974, the Commission decided that WU had waived any contract rights it might have had in connection with facilities for its domestic satellite service when it accepted its satellite authorization, but emphasized that AT&T was required to interconnect with WU to permit WU to provide FX and CCSA services. The Commission did not, at that time, decide whether the required FX and CCSA interconnections were to be pursuant to tariff or contract, but asked the parties to brief the question. 49 F.C.C.2d 321 (1974). On June 24, 1975, the Commission released its Memorandum Opinion and Order rejecting WU's contention that the exchange of facilities contracts covered FX and CCSA services and denying reconsideration of its prior decision that domestic satellite contract rights, if any, had been waived. 53 F.C.C.2d 1045 (1975).
In concluding that FX and CCSA services were not covered by the exchange of facilities contracts, the Commission relied upon the language of the contracts. Conceding that facilities available under the contract are technically capable of furnishing FX and CCSA services, the Commission asked instead "whether the contracts allow the use of these facilities for FX and CCSA services." 53 F.C.C.2d at 1050. This question it resolved by reference to contract sections 3(b)*fn3 and 3(d),*fn4 finding the controlling language in section 3(d): "Connection of Western Union private line services with Telephone Company services shall be allowed only under the tariffs of the Telephone Company . . . ." The contracts distinguish between services and facilities.*fn5 Section 3(d) applies expressly to services. In the Commission's view, however, section 3(d) served a definitional purpose, referencing the contracts themselves to services allowed at the date of contracting and, thereby, limiting contract facilities to use for such services:
The purpose of this provision is to define those situations in which Western Union services utilizing facilities obtained under the contracts, may be connected to Bell services. Since this provision references the applicable telephone company tariffs, the question before us is whether the cross reference to the applicable tariffs is to be made as of the time of contracting (e.g., January 1, 1970) or as of the date the interconnection of services is to be made. The law is well settled that all parts or sections of a contract must be given effect, force and meaning, if possible, and if it can fairly and reasonably be done; and that a construction rendering a provision or term meaningless or superfluous should be avoided. If there were no Section 3(d) in the contract, then the terms and conditions governing the connection of Bell Services with the services of other common carriers would be found in the then effective applicable Bell System customer tariffs. If the cross reference to the applicable telephone company tariffs is meant to be to the then effective tariff provisions, then Section 3(d) would be superfluous. Therefore, in order to give meaning to Section 3(d), we conclude that the cross reference to applicable telephone company tariffs is to be made as of the time of contracting (e.g., January 1, 1970). Since the telephone company tariffs, at that time, did not allow Western Union to interconnect its private line services with Bell's services for the purpose of providing its own FX and CCSA services, we conclude that Western Union may not obtain under the contracts, facilities which would be used in the provision of FX and CCSA services. Western Union may, of course, obtain such facilities pursuant to Bell tariffs on file with this Commission, in the same manner and at the same rates as other common carriers offering FX and CCSA type services.
53 F.C.C.2d at 1051 (footnotes omitted).
The FCC authorized WU's domestic satellite application on January 18, 1973, subject to the condition that WU's "facilities shall be operated in accordance with all Commission policies adopted in Docket No. 16495 [which established basic domestic satellite policy objectives] and all rules and policies subsequently made applicable to domestic satellite communications . . . ." 38 F.C.C.2d 1197, 1199 (1973). Some eight months later, in the context of AT&T's domestic satellite application, the Commission decided that tariffs, not private contracts, were the means most conducive to achieving its basic policy objectives of reasonable and non-discriminatory satellite licensee access to AT&T facilities.*fn6 The effect of the quoted conditional language, the Commission here concluded, was to waive any contract rights WU might have had in connection with its satellite operations, and to subject those operations to the subsequently articulated tariff policy. "We conclude that Western Union willingly and knowingly accepted a condition in its domestic satellite authorization, as implemented by the unchallenged AT&T decision, which constituted a voluntary waiver of its contract rights, if any existed." 53 F.C.C.2d at 1054.
WU petitions for review under § 402(a) of the Communications Act, as amended, 47 U.S.C. § 402(a), and 28 U.S.C. § 2342(1).
We turn now to review of the Commission's conclusions: first, concerning FX and CCSA services, and, second, concerning domestic satellite service.
Preliminarily, we must address a question raised concerning the proper scope of our review of the FCC's conclusions concerning FX and CCSA services. Both parties, correctly, agree that the pertinent statute is § 706 of the Administrative Procedure Act, note 2 supra, which provides that a reviewing court shall set aside agency conclusions found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. WU argues, however, that the Commission here was not applying the Communications Act which is the agency's expert province, but was applying general common law precepts of contract construction in which the agency has no particular expertise. Accordingly, the argument continues, the Commission here is entitled to no greater deference from this court than would be due a district court in a breach of contract action. We cannot agree.
WU makes no attempt to harmonize its argument for a more stringent standard of review with the apparently clear language of the Administrative Procedure Act. We find no ambiguity in the statutory standard. Nor do we perceive any intimation that an agency's resort to general legal precepts in determining a matter within the ambit of its expertise suffices to divest that determination of judicial deference otherwise due. Certainly, this controversy falls within the ambit of the FCC's expertise. These agreements involve complex, sophisticated, and rapidly-evolving communications technology. Quite properly, WU took the matter to the FCC for resolution, not to a district court.*fn7 Moreover, the agreements implicate questions of national regulatory policy. They concern the applicability of Commission-approved tariffs intended to provide access to all common carriers on reasonable and non-discriminatory terms. Under these circumstances, the fact that these are private agreements cannot alter the statutory deference due the Commission. See North Atlantic Westbound Freight Ass'n v. FMC, 130 U.S. App. D.C. 122, 397 F.2d 683, 685 (1968); Manufacturers Light & Heat Co. v. FPC, 374 F.2d 88, 89 (3d Cir. 1967). We will upset the Commission's conclusion concerning FX and CCSA only if it is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. Meadville Master Antenna, Inc. v. FCC, 535 F.2d 214 (3d Cir. 1976).
WU objects to the FCC's conclusion concerning FX and CCSA in three respects. First, WU focuses on the Commission's determination that the contracts cover the technical facilities that would provide FX and CCSA services. This determination, WU contends, should have been dispositive of the litigation. WU here contends, in effect, for a plenary obligation on the part of AT&T to provide contract facilities for any services that WU might be authorized to, and choose to, provide during the term of the contracts. But the Commission aptly answered this contention: "the question to be resolved is not whether the facilities available under the contracts are capable of furnishing FX and CCSA services, but rather whether the contracts allow the use of these facilities for FX and CCSA services." 53 F.C.C.2d at 1050.
Second, WU takes issue with the Commission's reliance on section 3(d) as defining the services for which contract facilities are available by reference to services being provided by WU at the time of contracting in 1970. WU argues that the purpose of section 3(d) is not to define services for which contract facilities are available, but is "to acknowledge that such service connection configurations are consistent with these facilities contracts." (Petitioner's Brief at 22.) According to WU, section 3(d) contemplates an arrangement where WU would lease facilities at contract rates and services at tariff rates.*fn8 AT&T's response is multi-faceted. Distilled to its essence, however, it is that WU's interpretation results in an "open-ended" obligation to provide facilities at contract rates, and that other contract provisions evidence no intention on the part of AT&T to assume such an obligation. Most particularly, AT&T points to section 3(b), note 3 supra, with its enumeration of five specific instances in which circuits leased to WU under contract may be connected with other circuits, and its requirement of AT&T approval for other connections. AT&T also points to section 2(d)*fn9 of Contract No. 2, and section 2(g)*fn10 of Contract No. 1 (identically reproduced in section 2(f) of Contract No. 2), as evidence that the parties did not contemplate the obligation that WU seeks to impose. AT&T, of course, vigorously supports the FCC's reference to 1970 as the time for judging the scope of the parties' obligations, asserting that "it is clear that section 3, read as a whole, plainly mandates" such a reference. (Intervenors' Brief at 31.)
Unfortunately, what is clear and plain to the advocates is not always clear and plain to the court. This aspect of the argument is slippery. But we need not decide what result we would reach if faced with the necessity of construing de novo these Delphic contractual provisions. What is clear only is that it is not clear what these provisions, especially section 3(d), mean. Certainly, it was not arbitrary or capricious to conclude, as the Commission did, that the contracts embodied some limitation on AT&T's obligation to provide facilities technically covered by the specifications of the contracts. Neither, we believe, was it arbitrary or capricious for the Commission to interpret section 3(d) as imposing that limitation by referencing the contracts to the time of contracting. Accordingly, we reject WU's argument concerning the interpretation of section 3(d).
Finally, WU contends that the Commission's decision was tainted by the application of erroneous standards of law, to-wit, by consideration of parol evidence as to the contracting parties' intentions, and by adoption of a policy of strict construction of the exchange of facilities contracts. WU's parol evidence contention is based on the Commission's consideration of an affidavit concerning AT&T's intentions during the negotiations and in the execution of the contracts.*fn11 For this contention to have logical validity, WU would have to establish at a minimum: (a) as a matter of administrative law, that the Commission was bound to apply the parol evidence rule, and (b) as a matter of contract law,*fn12 that the rule was applicable. WU has not established either of these propositions. We have strong doubts on both scores, but we have no occasion to go further than the basic precept of administrative law set forth in § 556(d) of the Administrative Procedure Act: "Any oral or documentary evidence may be received, but the agency as a matter of policy shall provide for the exclusion of irrelevant, immaterial, or unduly repetitious evidence." 5 U.S.C. § 556(d).*fn13 The paramount issue being the real intention of the parties, Ludwig Honold Manufacturing Co. v. Fletcher, 405 F.2d 1123, 1131 (3d Cir. 1969), and the Commission having obviously concluded that an affidavit speaking to that issue was not "irrelevant, immaterial, or unduly repetitious", we are not in a position to gainsay that conclusion.*fn14 The Commission considered a similar affidavit supplied by WU, note 11 supra, so clearly the practice here was even-handed. And, in any event, the agency's opinion makes clear that the affidavits were not dispositive in effect; they merely "buttressed" its conclusions concerning FX and CCSA. Ibid. We reject the parol evidence argument.
at a minimum: (a) as a matter of administrative law, that the Commission was bound to apply the parol evidence rule, and (b) as a matter of contract law,*fn12 that the rule was applicable. WU has not established either of these propositions. We have strong doubts on both scores, but we have no occasion to go further than the basic precept of administrative law set forth in § 556(d) of the Administrative Procedure Act: "Any oral or documentary evidence may be received, but the agency as a matter of policy shall provide for the exclusion of irrelevant, immaterial, or unduly repetitious evidence." 5 U.S.C. § 556(d).*fn13 The paramount issue being the real intention of the parties, Ludwig Honold Manufacturing Co. v. Fletcher, 405 F.2d 1123, 1131 (3d Cir. 1969), and the Commission having obviously concluded that an affidavit speaking to that issue was not "irrelevant, immaterial, or unduly repetitious", we are not in a position to gainsay that conclusion.*fn14 The Commission considered a similar affidavit supplied by WU, note 11 supra, so clearly the practice here was even-handed. And, in any event, the agency's opinion makes clear that the affidavits were not dispositive in effect; they merely "buttressed" its conclusions concerning FX and CCSA. Ibid. We reject the parol evidence argument.
WU gets no further with its attack on the FCC's announced policy of strict construction of the exchange of facilities contracts.*fn15 WU interprets this as a policy to construe the contracts "not in accord with their literal meaning, but as narrowly as possible" and asserts that such a policy "necessarily would stem from authority granted the agency in the Communications Act to abrogate, set aside or modify the contracts, and it is settled that no such authority exists, except possibly under formal hearing procedures, not followed here." (Petitioner's Brief at 31-32.) This argument misconceives the agency's action: the Commission here did not abrogate, set aside or modify the contracts, it construed them. Of course, opinions may differ as to the proper limits and results of construction. But where, as here, the meaning of contractual provisions is contested and unclear, we have no hesitancy in characterizing the process as construction. Moreover, while we would see no impropriety in alertness to policy implications of contract construction, we find no evidence in the decision under review of the application of any particular philosophy of construction, strict or otherwise. We find simply an effort to determine the intentions of the parties embodied in a group of difficult contractual provisions. Again, we can discern no basis to disturb the FCC's conclusions.
We have considered WU's arguments, and we have reviewed the FCC's conclusion that FX and CCSA services are not covered by the exchange of facilities contracts. We do not find that conclusion to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.
Turning to the domestic satellite aspect of the petition for review, we again address the threshold question of the proper scope of our review. In this phase of the case, WU makes two substantive arguments: first, that the WU satellite authorization was not, in fact, conditioned on a waiver of contract rights; and second, that any such condition imposed constituted an unlawful expansion of the Commission's regulatory powers. With regard to WU's first argument, our review must be based on determining whether the FCC's action was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. The reasons set forth previously for applying that standard apply here a fortiori. Primarily, this argument turns on an interpretation of the FCC's own prior action in imposing the contested waiver, and upon a factual determination whether WU knowingly and voluntarily accepted its authorization subject to the condition. We will accord the full deference of the statutory standard to the Commission's conclusions on these points. With regard to WU's second argument, our review is of a different character. A claim that agency action is "in excess of statutory jurisdiction, authority, or limitations, or short of statutory right, " 5 U.S.C. § 706(2)(C), necessarily entails a firsthand judicial comparison of the claimed excessive action with the pertinent statutory authority. See, e. g., FPC v. Moss, 424 U.S. 494, 96 S. Ct. 1003, 47 L. Ed. 2d 186, 44 U.S.L.W. 4278 (1976).
In marked contrast to the parties' contractual language previously discussed, the Commission's language in its January, 1973, satellite authorization to WU was quite explicit: "these [satellite] facilities shall be operated in accordance with all Commission policies adopted in Docket No. 16495 and all rules and policies subsequently made applicable to domestic satellite communications." 38 F.C.C.2d at 1199. Having argued that the FX and CCSA contract terms were clear and unambiguous, WU here contends that the Commission's language was not sufficiently clear to give fair notice of a waiver. WU asserts that in January, 1973, it had no reason to suspect that it was waiving contract rights. "No policy was then in effect or subsequently adopted in the orders cited by the FCC compelling Western Union to waive its contract rights in order to receive the requested domestic satellite authority." (Petitioner's Brief at 37.) But the FCC had said in June, 1972, that its objective was "that all carriers providing retail interstate satellite services . . . have access at nondiscriminatory terms and conditions to local loop and interchange facilities." 35 F.C.C.2d at 856 (1972). WU is not unsophisticated; at the least this language adumbrated the possibility that tariffs might be applied. And surely a policy was "subsequently adopted" - in connection with AT&T's satellite application, 42 F.C.C.2d at 656-60 - which required that tariffs, not private contracts, govern domestic satellite facilities. The Commission said:
53 F.C.C.2d at 1053-54 (1975).
We do not believe that this conclusion was arbitrary, capricious, an abuse of discretion, or otherwise ...