Fones4all Corp. v. FCC

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
FONES4ALL CORPORATION, 
Petitioner,
VERIZON; AT&T, No. 06-75388
Intervenors,
v.  FCC No.
WC05-261
FEDERAL COMMUNICATIONS OPINION
COMMISSION; UNITED STATES OF
AMERICA,
Respondents.

On Petition for Review of an Order of the
Federal Communications Commission
Argued and Submitted
September 12, 2008—Pasadena, California
Filed December 16, 2008
Before: Mary M. Schroeder and Johnnie B. Rawlinson,
Circuit Judges, and Brian E. Sandoval,* District Judge.
Opinion by Judge Schroeder
*The Honorable Brian E. Sandoval, United States District Judge for the
District of Nevada, sitting by designation.
16483
16486 FONES4ALL CORP. v. FCC
COUNSEL
Michael B. Hazzard, Washington, DC, for petitioner
Fones4All Corporation.
Scott H. Angstreich, Washington, DC, for the intervenors.
James M. Carr, Washington, DC, for respondents Federal
Communications Commission, et al.
FONES4ALL CORP. v. FCC 16487
OPINION
SCHROEDER, Circuit Judge:
This is a petition for review of a decision of the Federal
Communications Commission (“FCC”) denying Fones4All’s
petition for forbearance from the application of an FCC regu-
lation. That regulation removed any requirement that incum-
bent local exchange carriers (“ILECs”) provide unbundled
services to competitive local exchange carriers (“CLECs”),
like the petitioner, Fones4All. The principal issue for us to
resolve relates, not to the merits of the regulation, but to
Fones4All’s contention that the order denying its petition was
untimely, and that the petition therefore must be “deemed
granted” within the provisions of the Telecommunications
Act of 1996. See 47 U.S.C. § 160(c).
The timeliness issue involves the practice of the FCC of
announcing a decision on the last possible day and then
“backdating” the later explanation for that decision to the date
on which it was announced. We join the D.C. Circuit in hold-
ing that a challenge to the practice is not properly before us
because it was never raised before the FCC and, therefore,
administrative remedies were not exhausted. See 47 U.S.C.
§ 405; In re Core Commc’ns, 455 F.3d 267 (D.C. Cir. 2006);
Qwest Corp. v. FCC, 482 F.3d 471 (D.C. Cir. 2007).
On the merits, this petition must be viewed in light of a
decade-long FCC process aimed at ensuring competition in
the telecommunications market between those carriers in exis-
tence at the time of the passage of the Telecommunications
Act of 1996, the ILECs, and the newcomers entering the mar-
ket after that enactment, the CLECs. See 47 U.S.C. § 251(h);
47 C.F.R. § 61.26(a)(1). That process culminated in the Trien-
nial Review Remand Order of 2005 (“TRRO”), in which,
after full notice and comment, the FCC required CLECs to
end their dependence on unbundled services provided by the
older, better established ILECs. Prior to the TRRO, Fones4All
16488 FONES4ALL CORP. v. FCC
had contracts to receive services from ILECs, the intervenors
Verizon and AT&T. In seeking to get out from under the reg-
ulation implementing the 2005 TRRO, petitioner is essentially
trying to fight one more round in a bout that was lost in 2006,
when the D.C. Circuit upheld the TRRO. Covad Commc’ns
Co. v. FCC, 450 F.3d 528 (D.C. Cir. 2006).
I. Statutory and Regulatory Background
The Telecommunications Act of 1996 sought, among other
things, to promote competition and mitigate ILECs’ natural
advantages over new market entrants. Covad, 450 F.3d at 531;
Sprint Telephony PCS, L.P. v. County of San Diego, 543 F.3d
571, 575 (9th Cir. 2008) (en banc). To help achieve that goal,
the Act gave the FCC the power to require ILECs to give
CLECs access to network elements on an unbundled basis. 47
U.S.C. § 251(c)(3). CLECs would also receive this access at
a low cost, the so-called TELRIC pricing, which stands for
Total Element Long-Run Incremental Cost. Verizon
Commc’ns Inc. v. FCC, 535 U.S. 467, 523 (2002); 47 C.F.R.
§ 51.505(b) (defining TELRIC pricing). Before the FCC
could require unbundling, however, the Act directed the FCC
to consider whether failure to provide unbundled access
would impair CLECs from entering the market. 47 U.S.C.
§ 251(d)(2). Obviously, CLECs desired widespread unbun-
dled access, and the lower costs associated with it, while
ILECs did not want to provide it. Covad, 450 F.3d at 532-33.
This opposition led to what the D.C. Circuit characterized as
a decade-long “tug-of-war between CLECs advocating more
unbundling and ILECs advocating less.” Id.Three times the FCC tried, unsuccessfully, to implement
the unbundling provisions of the Telecommunications Act. Its
fourth attempt, in 2006, was finally upheld in Covad. Id. at
531 (“[T]he Commission’s fourth try is a charm.”). In its first
try, the FCC issued a set of local competition rules in August
of 1996. Implementation of the Local Competition Provisions
in the Telecomms. Act of 1996, First Report and Order (“Local
FONES4ALL CORP. v. FCC 16489
Competition Order”), 11 F.C.C.R. 15499 (1996). The rules
then adopted unbundled access only “if the quality of the ser-
vice the entrant can offer, absent access to the requested ele-
ment, declines and/or the cost of providing the service rises.”
Id. at 15643. The Supreme Court vacated these unbundling
rules, holding that the Commission had failed properly to con-
duct the impairment analysis. AT&T Corp. v. Iowa Utils. Bd.,
525 U.S. 366, 389-92 (1999). The FCC’s second attempt to
provide unbundled access met with no more success. Imple-
mentation of the Local Competition Provisions of the Tele-
comms. Act of 1996, 15 F.C.C.R. 3696 (1999). The D.C.
Circuit vacated those rules in May of 2002. U.S. Telecomm.
Ass’n v. FCC, 290 F.3d 415 (D.C. Cir. 2002) (“USTA I”). The
court instructed the FCC to make more nuanced unbundling
determinations. Id. at 422, 426. Following the USTA I
remand, the FCC attempted to make these nuanced determina-
tions. In the Matter of Review of the Section 251 Unbundling
Obligations of Incumbent Local Exchange Carriers, Report
and Order and Order on Remand and Further Notice of Pro-
posed Rulemaking, (“Triennial Review Order”), 18 F.C.C.R.
16978, 17035 (2003). The FCC eliminated unbundling
requirements for CLECs that served enterprise customers,
such as larger businesses, but kept other unbundling require-
ments in place. The former determination was upheld, U.S.
Telecomm. Ass’n v. FCC, 359 F.3d 554, 586-87 (D.C. Cir.
2004) (“USTA II”), but the latter was not, id. at 564-71.
On August 20, 2004, the FCC released an Interim Order
that required ILECs to continue to adhere to any commit-
ments they had made to provide unbundled access to CLECs.
Order and Notice of Proposed Rulemaking, (“Interim Order
and Triennial Review Remand NPRM”), 19 F.C.C.R. 16783,
16783-84 (2004). With respect to that NPRM, the FCC sought
“comment on how to respond to the D.C. Circuit’s USTA II
decision in establishing sustainable new unbundling rules.”
Id. at 16788. The comment period was held open for twenty-
one days. Id. at 16783. Reply comments could be filed up to
thirty-six days after publication in the Federal Register. Id.
16490 FONES4ALL CORP. v. FCC
The FCC received and considered comments, and the process
culminated in the TRRO. In the Matter of Unbundled Access
to Network Elements, Order on Remand (“Triennial Review
Remand Order”), 20 F.C.C.R. 2533 (2005). Fones4All had
full opportunity to comment, but this record does not reflect
whether it did.
The Commission then determined that CLECs would gen-
erally not be impaired if they lost unbundled access to mass
market switching. Unbundled Access to Network Elements;
Review of the Section 251 Unbundling Obligations of Incum-
bent Local Exchange Carriers, 70 F.R. 8940, 8942 (2005).
Thus most CLECs had become competitively viable and no
longer needed unbundled access. The goal of viable market
competition between CLECs and ILECs had been achieved;
it was no longer necessary for ILECs to provide unbundled
access to CLECs because, generally, CLECs could provide
their own. Accordingly, the FCC amended regulation
§ 51.319(d) to terminate mandatory unbundling of mass mar-
ket switching.
In Covad Communications Co. v. FCC, the D.C. Circuit
reviewed the TRRO and upheld the FCC’s actions, including
the FCC’s adoption of regulation § 51.319(d). 450 F.3d 528.
It is that regulation that Fones4All now challenges in this pro-
ceeding, because it wants to continue enjoying low-cost
access provided by the ILECs.
Regulation § 51.319(d) provides as follows:
(i) An incumbent LEC [ILEC] is not required to pro-
vide access to local circuit switching on an unbun-
dled basis to requesting telecommunications carriers
for the purpose of serving end-user customers using
DS0 [mass market] capacity loops.
(ii) Each requesting telecommunications carrier
shall migrate its embedded base of end-user custom-
FONES4ALL CORP. v. FCC 16491
ers off of the unbundled local circuit switching ele-
ment to an alternative arrangement within 12 months
of the effective date of the Triennial Review Remand
Order.
47 C.F.R. § 51.319(d)(2)(i)-(ii). This regulation enables
ILECs to disavow any contractual obligations for unbundled
access to mass market switching. The regulation flows
directly from the TRRO’s findings that CLECs are no longer
impaired from entry into the market.
II. Procedural Background of this Case
At issue here is the FCC’s denial of Fones4All’s petition
for forbearance from the application of regulation
§ 51.319(d). The Telecommunications Act allows entities
aggrieved by particular regulations to file petitions for for-
bearance. This course of action is governed by Section 10 of
the Act. See 47 U.S.C. § 160. Petitions for forbearance ask the
FCC, as the name suggests, to forbear from applying a certain
regulation to the entity. The FCC is required to grant a peti-
tion for forbearance if the FCC determines that all three of the
following requirements are met:
(1) enforcement of such regulation or provision is
not necessary to ensure that the charges, practices,
classifications, or regulations by, for, or in connec-
tion with that telecommunications carrier or telecom-
munications service are just and reasonable and are
not unjustly or unreasonably discriminatory; [and]
(2) enforcement of such regulation or provision is
not necessary for the protection of consumers; and
(3) forbearance from applying such provision or
regulation is consistent with the public interest.
47 U.S.C. § 160(a).
16492 FONES4ALL CORP. v. FCC
Section 10 sets out strict time limits within which the FCC
must act on a petition for forbearance. If the FCC does not
timely deny the petition, it is “deemed granted” as a matter of
law. 47 U.S.C. § 160(c). The base time period in which to
deny a petition is one year from its filing date, id., but the
Commission may extend the initial one-year period by an
additional 90 days. If it does so, the FCC has one-year-plus-
90-days in which to deny the petition before it is “deemed
granted.” Id. The statute specifically provides as follows:
Any telecommunications carrier, or class of telecom-
munications carriers, may submit a petition to the
Commission requesting that the Commission exer-
cise the authority granted under this section with
respect to that carrier or those carriers, or any service
offered by that carrier or carriers. Any such petition
shall be deemed granted if the Commission does not
deny the petition for failure to meet the requirements
for forbearance under subsection (a) of this section
within one year after the Commission receives it,
unless the one-year period is extended by the Com-
mission. The Commission may extend the initial
one-year period by an additional 90 days if the Com-
mission finds than an extension is necessary to meet
the requirements of subsection (a) of this section.
The Commission may grant or deny a petition in
whole or in part and shall explain its decision in
writing.
47 U.S.C. § 160(c).
Fones4All filed its petition for forbearance on July 1, 2005,
seeking relief from regulation § 51.319(d). On June 8, 2006,
within the initial one-year period allotted by Section 10, the
FCC’s Chief of the Wireline Competition Bureau (“WCB”)
granted the one-time 90-day extension, making the new dead-
line for action September 28, 2006. After the WCB granted
the extension, Fones4All filed an Application for Review of
FONES4ALL CORP. v. FCC 16493
the extension, asking the FCC to determine whether the WCB
had the authority to extend time and whether the extension
was truly necessary. At that time, the FCC took no action on
Fones4All’s Application for Review. Then, on September 28,
2006, the FCC issued a press release indicating that the com-
missioners had voted to deny Fones4All’s petition for forbear-
ance. The next day, September 29, 2006, one day after the
maximum one-year-plus-90-day deadline for agency action
had passed, the FCC released its “Memorandum Opinion and
Order” denying the petition for forbearance. The FCC release
said that the Memorandum Opinion and Order had been
adopted on September 28, 2006.
In its Memorandum Opinion and Order denying
Fones4All’s petition, the FCC ruled that the Chief of the
WCB acted properly, pursuant to delegated authority, to
extend the one-year deadline to one-year-plus-90-days, and
that the FCC, by voting on September 28, 2006, had denied
the petition before it could be “deemed granted” as a matter
of law under 47 U.S.C. § 160(c). The FCC also determined
that Fones4All’s petition was “procedurally defective,” in that
it did not seek relief that could be granted, because forbear-
ance from Regulation § 51.319(d) would not affirmatively
require ILECs to provide Fones4All with unbundled access to
mass market switching, which was the relief that Fones4All
sought in its petition for forbearance. Instead, the FCC rea-
soned, if it were to grant the petition for forbearance, there
would be a “vacuum,” meaning that Regulation § 51.319(d)
would not require Fones4All to move its customers off the
ILECs’ unbundled switching, but there would still be no legal
requirement that ILECs provide Fones4All’s customers with
access to that unbundled switching. The FCC also denied the
petition because it found that Fones4All had not met any of
the three Section 10 statutory requirements for forbearance,
including a showing that forbearance was necessary to protect
competition or consumers and that forbearance was consistent
with the public interest.
16494 FONES4ALL CORP. v. FCC
Fones4All filed a timely petition for review with this Court.
Most of Fones4All’s arguments here relate to whether its peti-
tion for forbearance should have been “deemed granted” as a
matter of law: Petitioner contends the FCC’s use of the “back-
dating” procedure was improper, and that the FCC thus did
not act within the statutory time limits set out by Congress in
the Act. 47 U.S.C. § 160(c).
Fones4All also maintains that, if we do not agree that its
petition should have been “deemed granted” by virtue of the
claimed procedural irregularities of the denial, then on the
merits, the FCC’s Memorandum Opinion and Order is an
unreasonable application of the statutory requirements of Sec-
tion 10 and that the FCC should have granted Fones4All’s
petition for forbearance. 47 U.S.C. § 160(a).
III. Analysis
A. Backdating
[1] Under applicable regulations, the FCC may “designate
an effective date that is either earlier or later in time than the
date of public notice of such action.” 47 C.F.R § 1.103(a).
This procedure of releasing documents with two dates — a
release date and an adoption date — can be traced to the time
of enactment of the Telecommunications Act of 1996 itself.
47 C.F.R. § 1.103 (1996). The FCC has also backdated deci-
sions on petitions for forbearance for quite some time. See,
e.g., In the Matter of Petition for Forbearance of the Indep.
Tel. & Telecomms. Alliance, 14 F.C.C.R. 10840 (1999)
(released on June 30, 1999, but adopted on May 18, 1999).
Indeed, the FCC maintains that FCC orders have, for more
than 30 years, routinely reflected two dates in their captions:
the adoption date, when the Commission voted, and the
release date, when the Commission released its written order.
The problem that Fones4All brings to us, however, is that
the release date of the written order was outside the allowable
FONES4ALL CORP. v. FCC 16495
time limits for an FCC decision, and thus Fones4All contends
its forbearance petition must be “deemed granted” under Sec-
tion 10(c). 47 U.S.C. § 160(c). Fones4All did not make this
argument to the FCC, and the Commission therefore did not
have an opportunity to pass on it in this case.
[2] It is undisputed that, assuming the one-year deadline
was properly extended, the Commission’s vote, as announced
in the press release, was timely, but the subsequent order
explaining the decision was backdated to comply with the
deadline. The situation is one of first impression in this cir-
cuit, but the D.C. Circuit has at least twice encountered a sim-
ilar set of facts involving backdating. See Core, 455 F.3d at
274-75; Qwest, 482 F.3d at 473.
In Core, the FCC issued a press release indicating the Com-
mission’s vote took place on October 8, 2004, but the final
order did not come until ten days later, October 18, 2004,
which was approximately one week after the deadline for
action had passed. Core, 455 F.3d at 274-75. The FCC back-
dated the order to October 8, 2004, the date of the vote and
press release. Id. In Qwest, the FCC issued the press release
on September 16, 2005, the last day before the petition would
be “deemed granted” as a matter of law, but the FCC did not
release the written order until December 2, 2005, approxi-
mately seventy-seven days later. Qwest, 482 F.3d at 473. The
FCC backdated that order too. Id.[3] In its review of the orders, the D.C. Circuit did not
reach the merits of the backdating issue in either case. Instead,
the court held that it lacked jurisdiction to decide whether the
petition had been “deemed granted” because the petitioners
had not given the Commission an opportunity to pass on the
issue. Core, 455 F.3d at 276; Qwest, 482 F.3d at 474. In each
case, the D.C. Circuit relied on Section 405 of the Act, which
provides that “[t]he filing of a petition for reconsideration
shall not be a condition precedent to judicial review of any
such order [of the FCC] . . . except where the party seeking
16496 FONES4ALL CORP. v. FCC
such review . . . relies on questions of fact or law upon which
the Commission . . . has been afforded no opportunity to
pass.” 47 U.S.C. § 405.
In this case, as it did before the D.C. Circuit, the FCC takes
the position that Fones4All cannot challenge the backdating
practice, and hence take advantage of the “deemed granted”
provision, without first presenting the argument to the Com-
mission. This is in accord with standard administrative law
principles that the Supreme Court has recognized. Exhaustion
“serves the twin purposes of protecting administrative agency
authority and promoting judicial efficiency.” McCarthy v.
Madigan, 503 U.S. 140, 145 (1992). The D.C. Circuit has rec-
ognized that the statute in this case, Section 405, requires
exhaustion to “afford the Commission the initial opportunity
to correct errors in its decision or the proceeding leading to
decision.” Qwest, 482 F.3d at 475 (citations omitted). Allow-
ing the FCC to pass on the backdating issue serves the inter-
ests of the courts as well. It helps “produce a useful record for
subsequent judicial consideration.” Woodford v. Ngo, 548
U.S. 81, 89 (2006) (citation omitted). Requiring exhaustion
generally makes good sense, because the reviewing court
needs a full and adequate understanding of the reasons for an
agency’s decision and for its rejection of arguments that may
be made by those aggrieved by the agency decision.
[4] Fones4All, however, contends that exhaustion would
have been futile. It is true that “futility” is a well-established
principle in administrative common law absent Congressional
directive. Courts have not insisted upon exhaustion where it
would clearly be of no avail. “Exhaustion of administrative
remedies is not required where administrative remedies are
inadequate or not efficacious, [or] where pursuit of adminis-
trative remedies would be a futile gesture . . . .” SE Alaska
Conservation Council, Inc. v. Watson, 697 F.2d 1305, 1309
(9th Cir. 1983); see also Singh v. Ashcroft, 362 F.3d 1164,
1169 (9th Cir. 2004).
FONES4ALL CORP. v. FCC 16497
[5] In this case, the requirement of exhaustion is statutory.
Fones4All, therefore, must urge this court to recognize futility
as an exception to Section 405’s exhaustion requirement.
Congress, however, has explicitly mandated that the FCC
have the “opportunity to pass” on the merits of any challenges
to its orders before review may be sought in the Courts of
Appeals. In such circumstances, we have held that the futility
doctrine is not applicable. “Where a statute specifically
requires exhaustion, the requirement is not excused based
merely [on] a judicial conclusion of futility.” Sun v. Ashcroft,
370 F.3d 932, 941 (9th Cir. 2004) (internal quotation marks
and citations omitted); see also Booth v. Churner, 532 U.S.
731, 741 n.6 (2001) (Courts of Appeals should “not read futil-
ity or other exceptions into statutory exhaustion where Con-
gress has provided otherwise.”) (citations omitted). Because
the Telecommunications Act does require exhaustion, we can-
not rely on a judicially created futility exception to evade the
statutory exhaustion requirement.
There is, moreover, no support either in this circuit or in the
D.C. Circuit for relieving Fones4All from the exhaustion
requirement with respect to its challenge to backdating. In
Qwest, the petitioner argued that sending the case back to the
FCC on exhaustion grounds was futile because the agency’s
position on backdating was clear, and that the FCC has had,
in some sense, an “opportunity to pass” on the backdating
issue since it began its backdating process. Qwest, 482 F.3d
at 476-77. The D.C. Circuit, nevertheless, declined to find
exhaustion futile with respect to the single case before it,
explaining that “one swallow doesn’t make a summer.” Id. at
477.
Fones4All next argues that, if the Telecommunications Act
and administrative law principles required it to present the
backdating issue to the Commission first, then it did ade-
quately do so. In its June 28, 2006 Application for Review of
the WCB’s extension order, Fones4All asked the FCC to
“issue an order . . . resolving the Fones4All Petition within the
16498 FONES4ALL CORP. v. FCC
one-year statutory deadline, as required by Section 10.” Also,
in an ex parte letter to the FCC, dated after the one-year dead-
line had passed, counsel for Fones4All entreated that the FCC
“should issue some sort of papers describing what it thinks it
has done, is doing, or is not doing.” Fones4All claims that
these documents sufficiently raised the backdating issue to
give the FCC an opportunity to pass on it, even though
Fones4All did not name or describe the backdating practice.
[6] Fones4All is correct insofar as it points out that Section
405 does not require it to afford the agency an opportunity to
pass on the issue “in any particular manner” to satisfy the sec-
tion’s exhaustion requirement. Coal. for Noncommercial
Media v. FCC, 249 F.3d 1005, 1008 (D.C. Cir. 2001). The
issue must, however, be “meaningfully raised.” Id.; see also
Wash. Ass’n for Television and Children v. FCC, 712 F.2d
677, 681 (D.C. Cir. 1983) (requiring a “fair opportunity” to
pass on the issue). Here, Fones4All not only failed to name
or describe the backdating process, but it did not specifically
object to the FCC’s practice of issuing a press release fol-
lowed by a written order. Nor did Fones4All ever meaning-
fully assert that it considered the press release ineffective as
a denial of its petition. We, therefore, conclude that Fones4All
never “meaningfully rais[ed]” backdating issues before the
FCC. There has been a failure to exhaust administrative reme-
dies.
B. WCB’s Authority to Extend Time
Fones4All next challenges the timeliness of the FCC’s
denial of its petition for forbearance on the ground that the
WCB lacked authority to authorize an extension pursuant to
Section 10(c). According to Fones4All, that authority is con-
ferred upon the “Commission,” not the WCB. 47 U.S.C.
§ 160(c) (“The Commission may extend the initial one-year
period by an additional 90 days if the Commission finds that
an extension is necessary to meet the requirement of subsec-
tion (a) of this section.”). Here Fones4All did exhaust reme-
FONES4ALL CORP. v. FCC 16499
dies. It objected to the extension by filing an Application for
Review on June 28, 2006. Although the FCC made no imme-
diate response, in its September 29, 2006 Memorandum Opin-
ion and Order explaining its earlier vote to deny, the FCC
concluded that the WCB had the authority to invoke the lim-
ited statutory extension provision. We agree.
[7] Under the Act, the FCC may delegate its functions to
its subdivisions. See 47 U.S.C. § 155(c)(1) (allowing the FCC,
“by published rule or by order, [to] delegate any of its func-
tions”). By regulation, the FCC has delegated many of its
functions to the Chief of the WCB. See 47 C.F.R. § 0.91. In
particular, Section 0.91(m) authorizes the WCB to “[c]arry
out the functions of the Commission under the Communica-
tions Act of 1934, as amended, except as reserved to the
Commission . . . .” Id. Pursuant to the regulations, however,
the WCB may not decide issues of first impression, described
as “any applications or requests which present novel questions
of fact, law or policy which cannot be resolved under out-
standing precedents and guidelines.” 47 C.F.R. § 0.291. There
is no specific provision reserving the right to grant extensions
of time to the commissioners; extensions of time are not gen-
erally regarded as presenting novel issues of law or policy.
[8] While the petition for forbearance itself may have
raised novel issues, the Commission, and not the WCB,
decided the merits of the petition. The nature of the underly-
ing petition did not transform a procedural order extending
time into a matter presenting novel issues.
[9] Moreover, we are interpreting the FCC’s regulations,
and courts should give “substantial deference to an agency’s
interpretation of its own regulations.” Thomas Jefferson Univ.
v. Shalala, 512 U.S. 504, 512 (1994) (citations omitted). Here,
in the Final Memorandum Opinion and Order released on
September 29, 2006, the FCC has interpreted its own regula-
tions as allowing the Chief of the WCB to issue an order
extending time. Because this conclusion is not “plainly erro-
16500 FONES4ALL CORP. v. FCC
neous or inconsistent with the regulation,” this Court should
defer, even assuming there were some ambiguity in the under-
lying regulation. Id. (citation omitted).
C. Necessity
Fones4All’s final challenge to timeliness is its contention
that the extension failed to satisfy the statutory mandate
requiring some necessity to justify a 90-day extension beyond
the one-year limit. Section 10 allows for an extension “if the
Commission finds that an extension is necessary to meet the
requirements of subsection (a) of this section.” 47 U.S.C.
§ 160(c).
Fones4All’s most significant argument in this regard is that
the frequency of the FCC’s extensions of the time limits sug-
gests that the standard for “necessity” has been reduced to one
of administrative expediency. On this record, we can express
no opinion concerning the overall practices of the FCC with
respect to applying the necessity standard, but we do agree
with the FCC there was no violation of the standard in this
case. Fones4All’s petition was not a typical run-of-the-mill
petition for forbearance that seeks relief from a new regula-
tion imposed by the Commission. Here, ironically, the peti-
tion sought to reimpose the requirement to provide unbundled
access that Regulation § 51.319(d) had abrogated.
Fones4All’s petition was sufficiently out of the ordinary to
justify the extension of the deadline in these proceedings.
[10] We cannot, therefore, fault the extension on procedural
grounds. We turn to the merits of the petition for forbearance.
D. Denial of the Forbearance Petition
[11] On the merits, Fones4All is essentially seeking to be
relieved from the effects of Regulation § 51.319(d) that ended
access to unbundled services. Regulation § 51.319(d) pro-
vides as follows:
FONES4ALL CORP. v. FCC 16501
(i) An incumbent LEC [ILEC] is not required to pro-
vide access to local circuit switching on an unbun-
dled basis to requesting telecommunications carriers
for the purpose of serving end-user customers using
DS0 [mass market] capacity loops.
(ii) Each requesting telecommunications carrier
shall migrate its embedded base of end-user custom-
ers off of the unbundled local circuit switching ele-
ment to an alternative arrangement within 12 months
of the effective date of the Triennial Review Remand
Order.
47 C.F.R. § 51.319(d)(2)(i)-(ii). A grant of the petition would
effectively eliminate the requirement that Fones4All transfer
its customers off of ILECs’ unbundled mass market switch-
ing. Fones4All thus seeks to regain the benefits it had under
contracts with the intervenor ILECs for access to unbundled
switching. The contracts were entered into in a period when
ILECs were required to offer unbundled services to the
CLECs in order to foster competition.
[12] The difficulty with Fones4All’s position now is that
forbearance from this regulation would not reinstate the
requirement that the ILECs offer unbundled services to the
CLECs. Even if Fones4All were not required to migrate its
customers off ILEC switching, the ILECs would not be
required to provide the switching. It is for that reason that the
FCC denied the petition for forbearance, and it is for that rea-
son we must uphold the denial. The decision was not “arbi-
trary, capricious, an abuse of discretion, or otherwise not in
accordance with law.” 5 U.S.C. § 706(2)(A). As the FCC said,
“forbearance from Rule 51.319(d) would not give the Peti-
tioner the relief it seeks.” The Memorandum Opinion and
Order explained that “forbearing from Section 51.319(d) of
the Commission’s rules results in a void rather than an unbun-
dled local circuit switching requirement.”
16502 FONES4ALL CORP. v. FCC
The end of the old era of unbundled local switching access
for the CLECs came with the Triennial Review Remand
Order of 2005, the TRRO. That order was subject to full
notice and comment, held open for thirty-six days. The FCC
received and reviewed comments, and the FCC was con-
vinced that CLECs generally no longer needed unbundled
access in order to compete in the telecommunications market.
The D.C. Circuit upheld the TRRO in Covad. “[T]he Com-
mission reasonably concluded that CLECs are not ‘impaired’
without unbundled access to MMLS [mass market local
switching].” Covad, 450 F.3d at 547.
Fones4All quibbles with the elucidation by the FCC of its
reasons for denying the petition for forbearance, contending
that the FCC failed to explain adequately why Fones4All had
failed to meet the requirements of Section 10(a). In this back-
handed way, Fones4All tries to contend that the FCC must
forbear from applying the order. The Commission, however,
did explain its decision with reference to the factors that are
statutorily required to be considered. Our review is limited to
assuring that that was done. “Our task is to ensure that the
agency considered the relevant factors and articulated a ratio-
nal connection between the facts found and the choices
made.” NW Ecosystem Alliance v. U.S. Fish and Wildlife
Serv., 475 F.3d 1136, 1140 (9th Cir. 2007) (quotation marks
and citations omitted). In particular, the FCC concluded that
“[e]nforcement of this regulation [51.319(d)] is therefore nec-
essary to foster competition and protect consumers.” This
Court “is not empowered to substitute its judgment for that of
the agency.” Citizens to Preserve Overton Park, Inc. v. Volpe,
401 U.S. 402, 416 (1971), abrogated on other grounds by
Califano v. Sanders, 430 U.S. 99 (1977). In sum, Fones4All’s
petition for forbearance was not necessary to protect the inter-
ests of competition or to protect customers, but only to protect
the interests of Fones4All itself.
IV. Mootness
[13] There is one final issue to be addressed briefly.
Fones4All, having been dependent on the unbundled access to
FONES4ALL CORP. v. FCC 16503
the ILECs’ switching, has lost its customers to other, more
stable ILECs and CLECs, in all likelihood as a result of Regu-
lation § 51.319(d). Fones4All is presently in bankruptcy. The
FCC suggests that the proceedings before us may now be
moot. The issue is whether we could grant any effective relief.
See, e.g., In re Coordinated Pretrial Proceedings in Petro-
leum Prods. Antitrust, 109 F.3d 602, 612 (9th Cir. 1997)
(“Generally, an appeal will be dismissed as moot when events
occur which prevent the appellate court from granting any
effective relief even if the dispute is decided in favor of the
appellant.”) (citation omitted). As the intervenor-ILECs and
the FCC point out, the existence and outcome of this litigation
could have some impact on the value of the assets of
Fones4All in bankruptcy. At least to that extent, and certainly
on the administrative record before us, this litigation cannot
be said to be moot.
Petition DENIED.