II. CONSTITUTIONALITY OF SECTION 271

On New Year's Eve 1997, a Federal district court invalidated section 271, as well as the provisions in the 1996 Act that govern BOC entry into manufacturing, alarm services, and electronic publishing.⁽¹⁷⁾ While the court intimated that the challenged provisions could be considered appropriate economic regulation, it judged them to be an unconstitutional bill of attainder.⁽¹⁸⁾ A statute constitutes a bill of attainder when it "(1) identifies a specific individual or group (2) inflicts punishment on that individual or group (3) without benefit of a judicial trial."⁽¹⁹⁾ As demonstrated below, section 271 easily passes muster under each of these tests.

The first criterion is somewhat misstated, because the case law indicates that a statute must do more than specify an individual or group for punishment. The statutes which the Supreme Court has found to be bills of attainder were enactments that penalized individuals to one degree or another for some immutable past behavior or affiliation.⁽²⁰⁾ The individuals' place within the attainted class was thus irreversible or inescapable. In order for a statute to be considered a bill of attainder, therefore, the penalized class must be both "specified" and "fixed."⁽²¹⁾

Section 271 establishes no such closed class. To the contrary, the BOCs can escape the restriction by complying with the competitive checklist and, thereby, open their market to competition. "'[F]ar from attaching to . . . past and ineradicable actions,' ineligibility [for interLATA entry] 'is made to turn upon continuously contemporaneous fact [in this case, the lack of an open local exchange marketplace]' which [a BOC desiring interLATA entry] can correct."⁽²²⁾ Because section 271 does not single out a fixed group, it does not constitute a bill of attainder.

As for the second criterion, section 271 cannot be said to "punish" the BOCs. Indeed, the alleged penalty it imposes is not even permanent. Again, a BOC can secure interLATA entry by complying with the market-opening provisions of the 1996 Act. "A statute that leaves open perpetually the possibility of [escaping the pertinent restriction] does not fall within the historical meaning of forbidden legislative punishment."⁽²³⁾ The court discounted the temporary nature of the interLATA restriction, concluding, without discussion or substantiation, that the principal statutory precondition for interLATA entry (i.e., checklist compliance) is "onerous," "tainted with indefiniteness and replete with arbitrary standards," and "may never be met by the BOCs."⁽²⁴⁾ But ipse dixit cannot provide the "unmistakable evidence of punitive intent" required before a statute may be invalidated as a bill of attainder.⁽²⁵⁾

The court's characterization of the competitive checklist, moreover, would doubtless surprise those Members of Congress who questioned the adequacy of the checklist as an entry condition because it could be complied with easily without producing meaningful local competition.⁽²⁶⁾ Further, the sponsor of the Senate telecommunications reform bill, Senator Pressler, indicated that the checklist was a less rigorous standard than the one that governed BOC interLATA entry prior to passage of the 1996 Act.⁽²⁷⁾ In short, the court's unsubstantiated assertions about the severity of the checklist requirements are contrary to Congress' understanding of those requirements.

The evidence demonstrates that Congress intended section 271 not to penalize the BOCs, but "to further nonpunitive legislative purposes."⁽²⁸⁾ The fundamental goal of the 1996 Act was to promote competition in all telecommunications markets, notably local exchange service markets.⁽²⁹⁾ Congress therefore imposed on the LECs that dominate local markets certain obligations designed to facilitate competitive entry.⁽³⁰⁾ There is no question that Congress had the authority to establish the goal of greater competition and to prescribe mechanisms to achieve it.

The legislature realized, however, that the path to expanded local competition would be smoother if the LECs could be induced to cooperate with the 1996 Act's market-opening provisions.⁽³¹⁾ Section 271 was intended to create such incentives on the part of the BOCs, the principal providers of local service in the metropolitan areas where most Americans live and work.⁽³²⁾ Far from removing a carrot from the BOCs, as SBC claimed,⁽³³⁾ section 271 was a carrot that Congress held out to encourage the BOCs to collaborate in the effort to promote local competition.⁽³⁴⁾ Properly viewed, section 271 is not a punitive law, but rather "a prophylactic measure -- an incentive to comply with valid laws [to promote competition], enforced by withholding the enjoyment of various benefits (and even rights) until such compliance is evidenced."⁽³⁵⁾

The court nonetheless determined that Congress meant for section 271 to "serve as punishment for the BOCs' presumed anticompetitive conduct."⁽³⁶⁾ But there is not a shred of evidence for that conclusion in the statute or the legislative history. To the contrary, the record is replete with congressional statements favoring expeditious BOC entry into the interLATA market.⁽³⁷⁾ Had Congress actually meant to enact a punitive statute, section 271 would have looked quite different from the provision that came before the court. For example, Congress would not have allowed the BOCs to provide, upon enactment of the 1996 Act, interLATA services outside of their monopoly service areas, a right they did not generally possess previously.⁽³⁸⁾ Congress would not have permitted the BOCs to offer, upon enactment, certain "incidental" interLATA services within their service areas, including wireless long distance services.⁽³⁹⁾ It would not have established a standard for judging BOC requests to offer in-region interLATA services that was, in the minds of many Congressmen, more favorable to the BOCs than the test in effect before passage of the 1996 Act.⁽⁴⁰⁾

Thus, section 271 displays none of the features that the Supreme Court has stated are necessary characteristics of a punitive statute.⁽⁴¹⁾ It does not fall within the historical meaning of legislative punishment, because its restriction is escapable. There is no evidence that Congress enacted the provision to punish the BOCs. In the absence of such evidence, section 271 should be taken for what it appears to be -- a mechanism for allowing the BOCs into the interLATA market in a way that promotes both long distance and local competition. It is not a bill of attainder.

Finally, section 271 cannot be seen as a punishment imposed without a judicial trial. The 1996 Act, after all, did not impose the interLATA restriction on the BOCs. It first appeared in the 1982 AT&T Consent Decree, which was entered in settlement of a 1974 Federal antitrust suit against the Bell System. That settlement was precipitated by the trial court's denial of AT&T's motion to dismiss the case. The court concluded, after months of trial, that the "evidence adduced by the government demonstrate[s] that the Bell System has violated the antitrust laws in a number of ways over a lengthy period of time."⁽⁴²⁾

The SBC court's response was that the consent decree and its restrictions were "born out of alleged antitrust violations by AT&T," not the BOCs.⁽⁴³⁾ But the AT&T court also concluded, in its order approving the proposed AT&T Consent Decree, that "[t]he key to the Bell System's power to impede competition has been its control of local telephone service."⁽⁴⁴⁾ It recognized, moreover, that after the divestiture contemplated by the AT&T Consent Decree, the Bell System's local service monopolies would pass from AT&T to the newly-created BOCs. The court therefore concluded that unfettered BOC entry into related markets such as long distance "carrie[d] with it a substantial risk that the [BOCs] will use the same anticompetitive techniques used by AT&T in order to thwart the growth of their own competitors."⁽⁴⁵⁾ Accordingly, the court ratified provisions in the AT&T Consent Decree that barred each BOC from providing interLATA services until it could show that "there is no substantial possibility that it could use its monopoly power to impede competition in the market it seeks to enter."⁽⁴⁶⁾

Contrary to the SBC court's assessment, the interLATA restriction is not some vestige of a parent's sins two decades old.⁽⁴⁷⁾ Nor was it imposed "for what offenses Congress believes the BOCs may (without any evidence) commit in the future."⁽⁴⁸⁾ Rather, the restriction exists because a judicial tribunal concluded that it was necessary to prevent the recurrence of anticompetitive conduct documented in a lengthy antitrust trial. As the AT&T court put it, "[t]o permit the [BOCs] to compete in [the interLATA] market would be to undermine the purpose of the proposed decree -- to create a truly competitive environment in the telecommunications industry."⁽⁴⁹⁾

When Congress was debating telecommunications reform legislation, it recognized that the BOCs' local exchange monopolies had not eroded much in the years after their separation from AT&T.⁽⁵⁰⁾ Congress also reasonably relied upon the court's previous findings that, left unchecked, the BOCs' could leverage their local market power in ways that could forestall competition in interLATA and other markets. At the same time, however, the legislature was disturbed by the fact that, with the AT&T Consent Decree in place, the AT&T court and the DOJ were controlling national telecommunications policy in several important areas.⁽⁵¹⁾ Congress also was frustrated with certain aspects of DOJ's administration of the decree.⁽⁵²⁾

In the end, Congress chose not to terminate the AT&T Consent Decree.⁽⁵³⁾ It also retained the decree's interLATA restriction (albeit with some modifications), incorporating it into section 271.⁽⁵⁴⁾ To address the concerns described above, however, Congress transferred prospective administration and enforcement of the decree from the court to the Commission.⁽⁵⁵⁾ Further, Congress modified the legal standard governing BOC applications to remove the interLATA restriction from the "no substantial possibility" formulation in the AT&T Consent Decree to the standard that now appears in section 271.

Thus, the SBC court oversimplified the matter when it suggested that the 1996 Act replaced the AT&T Consent Decree.⁽⁵⁶⁾ As noted, the Act primarily altered the way in which the BOCs could seek and justify removal of decree's continuing restrictions, and changed the forum in which those requests would be heard. Congress did not alter the decree's core interLATA restriction -- its ban on BOC provision of long distance services originating within their local service areas. In so doing, the legislature did not have to make any findings about the need for that restraint. That determination had been made years earlier by a court after a judicial trial.

Section 271 is not an unconstitutional bill of attainder. The SBC court's conclusion to the contrary rests on its misapplication of the relevant law, its lack of deference for an act of Congress, and its misunderstanding of the underlying facts. The court's opinion also results, however, from an overly broad reading of the Bill of Attainder Clause. The clause seems intended to protect individuals and groups from being singled out for punishment because of their beliefs or political affiliations.⁽⁵⁷⁾ Extending it to the realm of economic regulation -- an application that likely was never intended by the Framers of the Constitution -- would "cripple the ability of legislatures to respond to some perceived social or economic problem by imposing restrictions or limitations on individuals, corporations, or industries which are deemed responsible for the problem."⁽⁵⁸⁾ Section 271 provides no cause for such a dramatic step.

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17. SBC Communications, Inc. v. FCC, Civ. No. 7:97-CV-163-X, 1997 U.S. Dist. LEXIS 20725 (N.D. Tex. Dec. 31, 1997), motions for stay pending.

18. Id. at *12. The court concluded that the Bill of Attainder Clause, U.S. Const., Art. I, § 9, cl. 3, applies to corporations as well as to individuals. SBC Communications, 1997 U.S. Dist. LEXIS 20725, at *13 n.5. The Supreme Court has not squarely addressed the issue, but it has noted that "courts have consistently regarded the Bill of Attainder Clause . . . only as protection[] for individual persons and private groups, those who are particularly vulnerable to nonjudicial determinations of guilt." South Carolina v. Katzenbach, 383 U.S. 301, 324 (1966).

19. SBC Communications, 1997 U.S. Dist. LEXIS 20725, at *16 (citing Selective Serv. Sys. v. Minnesota Public Interest Research Group, 468 U.S. 841, 846-847 (1984)).

20. See, e.g., United States v. Brown, 381 U.S. 437 (1965) (voiding statute that barred anyone who had been a Communist Party member in the preceding 5 years from serving on the board of any labor union); United States v. Lovett, 328 U.S. 303 (1946) (law prohibited payment of salaries for three named Federal government employees in retribution for past "subversive" conduct); Ex parte Garland, 71 U.S. (4 Wall.) 333 (1866) (former Confederate sympathizers could not practice law in Federal courts unless they signed an oath denying any past allegiance to the Confederate cause); Cummings v. Missouri, 71 U.S. (4 Wall.) 277 (1866) (preachers subject to the same restraint).

21. See Laurence B. Tribe, American Constitutional Law § 10-5, at 655 (2d ed. 1988) (Tribe) ("[T]he most basic test" of a bill of attainder is that the statute must "single out or 'specify' a fixed class of persons for disadvantageous treatment.").

22. Minnesota PIRG, 468 U.S. at 851 (quoting Communist Party of United States v. Subversive Activities Control Bd., 367 U.S. 1, 87 (1961)).

23. Id. 468 U.S. at 853. The court attempted to distinguish Minnesota PIRG on the grounds that the statute challenged there involved "the mere denial of a noncontractual governmental benefit," whereas section 271 denies the BOCs their right to participate in a particular employment or business (i.e., interLATA services). SBC Communications, 1997 U.S. Dist. LEXIS 20725, at *25. One noted constitutional scholar has opined, however, that the quoted language "may have been a makeweight in the [Minnesota PIRG] Court's bill of attainder analysis," given the Court's prior finding that the contested statute did not specify a fixed class. Tribe, supra note 21, § 10-5, at 653 n.11.

24. SBC Communications, 1997 U.S. Dist. LEXIS 20725, at *25-*26.

25. See Minnesota PIRG, 468 U.S. at 856 n.15 (quoting Flemming v. Nestor, 363 U.S. 603, 619 (1960)). See also Fletcher v. Peck, 10 U.S. (6 Cranch) 87, 128 (1810) ("[I]t is not on slight implication and vague conjecture, that the legislature is to be pronounced to have transcended its powers, and its acts to be considered void.").

The court's haste to condemn section 271 and to impugn the motives of the Congress that enacted it cannot be squared with the court's duty "not to destroy [an act of Congress] if [it] can, but to construe it, if consistent with the will of Congress, so as to comport with constitutional limitations." Civil Service Commission v. Letter Carriers, 413 U.S. 548, 571 (1973). See also Ashwander v. Tennessee Valley Auth., 297 U.S. 288, 348 (1936) (Brandeis, J., concurring) (noting that when an act of Congress is drawn into question, "it is a cardinal principle that this Court will first ascertain whether a construction of the statute is fairly possible by which the question may be avoided" (quoting Crowell v. Benson, 285 U.S. 22, 62 (1932))).

26. See, e.g., 141 Cong. Rec. S8444 (daily ed. June 15, 1995) (statement of Sen. Kerrey) ("A corporation can easily satisfy the checklist without giving the consumer competitive choice."). See generally notes 273-277 infra and accompanying text.

27. 141 Cong. Rec. S8195 (daily ed. June 12, 1995) (checklist was a compromise between the entry standard in the AT&T Consent Decree (see below) and the date certain standard favored by some Senators). See also 142 Cong. Rec. S713 (daily ed. Feb. 1, 1996) (statement of Sen. Breaux) (suggesting that some BOCs may be able to satisfy the statutory standard for interLATA entry (presumably including checklist compliance) shortly after enactment); 141 Cong. Rec. at S7888 (June 6, 1995) (statement of Sen. Pressler) ("[a]t least one of the [BOCs]--NYNEX--can probably fulfill all the checklist's requirements very soon").

28. Nixon v. Administrator of General Services, 433 U.S. 425, 475-476 (1977).

29. See notes 264-265 infra and accompanying text.

30. See 47 U.S.C. § 251(c).

31. See note 5 supra and accompanying text.

32. See note 6 supra.

33. SBC Communications, 1997 U.S. Dist. LEXIS 20725, at *6.

34. See note 6 supra.

35. Tribe, supra note 21, §10-4, at 648 (suggesting that Cummings and Garland would have been decided differently if the challenged statutes had had the goal of inducing Confederates to lay down their arms and to rejoin the union).

36. SBC Communications, 1997 U.S. Dist. LEXIS 20725, at *27.

37. See, e.g., 142 Cong. Rec. S713 (daily ed. Feb. 1, 1996) (statement of Sen. Breaux) ("[L]egislation contemplates that the FCC should act favorably and expeditiously on [BOC] petitions to compete in the long distance business."); id. at S711 (daily ed. Feb. 1, 1996) (statement of Sen. Thurmond) (BOCs "certainly should be allowed to enter long distance markets under appropriate circumstances, for it is generally desirable to have as many competitors as possible in each market"); 141 Cong. Rec. H8465 (daily ed. Aug. 4, 1995) (statement of Rep. Goodlatte) (citing "the AT&T consent decree that prevents the [BOCs] from competing in the long distance market" as one of the "artificial government-imposed restraints [that] inhibit the development of real competition"); id. at H8463 (daily ed. Aug. 4, 1995) (statement of Rep. Berman) ("I do not think we should put artificial restrictions on the ability of the [BOCs] to go into long distance.").

38. See 47 U.S.C. § 271(b)(2).

39. See id. § 271(b)(3), (g).

40. The court also seemed to condemn section 271 because it subjects the BOCs to restrictions that are not borne by other LECs. See, e.g., SBC Communications, 1997 U.S. Dist. LEXIS 20725, at *20 (statute "fail[s] to set forth a generally applicable rule requiring all local exchange carriers to comply with" the interLATA restriction), *21 ("all other telecommunications carriers, including all other non specified similarly situated local exchange carriers, may offer any of the [interLATA] services forbidden to the BOCs"). The Supreme Court has made clear, however, that differential treatment, without more, is not sufficient to transform a legal restriction into a bill of attainder:

However expansive the prohibition against bills of attainder, it surely was not intended to serve as a variant of the equal protection doctrine, invalidating every Act of Congress or the States that legislatively burdens some persons or groups but not all plausible individuals. In short, while the Bill of Attainder Clause serves as an important "bulwark against tyranny," it does not do so by limiting Congress to the choice of legislating for the universe, or legislating only benefits, or not legislating at all.

Nixon, 433 U.S. at 471 (citations omitted).

41. In deciding whether a statute inflicts forbidden punishment, we have recognized three necessary inquiries: (1) whether the challenged statute falls within the historical meaning of legislative punishment; (2) whether the statute, "viewed in terms of the type and severity of burdens imposed, reasonably can be said to further nonpunitive legislative purposes"; and (3) whether the legislative record "evinces a congressional intent to punish."

Minnesota PIRG, 468 U.S. at 852 (quoting Nixon, 433 U.S. at 475-478).

42. United States v. AT&T, 524 F. Supp. 1331, 1381 (D.D.C. 1981).

43. SBC Communications, 1997 U.S. Dist. LEXIS at 20725, at *29.

44. United States v. AT&T, 552 F. Supp. 131, 223 (D.D.C. 1982), aff'd sub nom. Maryland v. United States, 460 U.S. 1001 (1983).

45. Id. at 224.

46. Id. at 225 (modifying the parties' proposed decree by adding a new Section VIII(C)). The court did not impose line-of business restrictions on the BOCs lightly. Realizing that such restraints are themselves anticompetitive, the court scrutinized each one carefully before approving it:

The Court will not impose restrictions simply for the sake of theoretical consistency. Restrictions must be based on an assessment of the realistic circumstances of the relevant markets, including the [BOCs'] ability to engage in anticompetitive behavior, their potential contribution to the market as an added competitor to AT&T, as well as upon the effects of the restrictions on the rates for local telephone service.

Id. at 224.

47. SBC Communications, 1997 U.S. Dist. LEXIS 20725, at *20, *29.

48. Id. at *20.

49. United States v. AT&T, 552 F. Supp. at 188.

50. See, e.g., H.R. Rep. No. 104-204, 104th Cong., 1st Sess. 49 (1995), reprinted in 1996 U.S.C.C.A.N. 10, 12 (1995) (House Report) ("BOCs provide over 80% of local telephone service in the United States. . . . While some competition has developed in the local business service and exchange access markets, local residential service remains a monopoly service."); 141 Cong. Rec. H8289 (daily ed. Aug. 2, 1995) (statement of Rep. Conyers) ("[T]ruth is, . . . very little has changed since 1984. The [BOCs] still have a firm monopoly over the local exchange market."); id. at S8361 (daily ed. June 14, 1995) (statement of Sen. Warner) (noting that heart of the Bell System's ability to engage in discriminatory conduct "was the control which the local [BOC] had -- and still has -- over the local telephone exchange"); id. at S8141 (daily ed. June 12, 1995) (statement of Sen. Leahy) (AT&T Consent Decree "left the [BOCs] with local exchange monopolies, which persist today."); id. at S7892 (daily ed. June 7, 1995) (statement of Sen. Pressler) (BOCs "are protected with monopoly status in the local residential phone service markets.").

51. See, e.g., 142 Cong. Rec. S688 (daily ed. Feb. 1, 1996) (statement of Sen. Hollings) (AT&T court "has been doing yeoman's work in attempting to ensure that monopolies do not abuse their market power. But it is time for Congress to reassert its responsibilities in this area"); 141 Cong. Rec. H8274-8275 (daily ed. Aug. 2, 1995) (statement of Rep. Dingell) ("One judge, a couple of law clerks, a gaggle of Justice Department lawyers,

. . . have been making the entirety of telecommunications policy for the United States since the breakup [of AT&T]."); id. at S7887 (daily ed. June 7, 1995) (statement of Sen. Pressler) ("[L]egislation reasserts congressional authority over [BOC] provision of long distance and restores the FCC authority to set communications policy over those issues.").

52. 141 Cong. Rec. H8463 (daily ed. Aug. 4, 1995) (statement of Rep. Dingell) ("Justice Department is in good part responsible for the unfair situation which this country confronts in telecommunications."); id. at S8147 (daily ed. June 12, 1995) (statement of Sen. Pressler) (complaining of lengthy delays in DOJ's processing of BOC petitions to waive specific decree restrictions).

53. Congress recognized that terminating the decree would unlawfully deprive the AT&T court of its jurisdiction over decree violations occurring prior to passage of the 1996 Act. See Conference Report, supra note 2, at 198, 1996 U.S.C.C.A.N. at 212 (Congress cannot retroactively overturn a judicial consent decree).

54. 47 U.S.C. § 271(a).

55. See id. § 271(d).

56. SBC Communications, 1997 U.S. Dist. LEXIS 20725, at *5.

57. See Minnesota PIRG, 468 U.S. at 860 (Powell, J. concurring) ("[N]o minority or disfavored group is singled out by Congress [in the challenged statute] for disparate treatment."); Brown, 381 U.S. at 453 (stating that statute in question "inflicts its deprivation upon the members of a political group thought to present a threat to national security. . . . such groups were the targets of English and early American bills of attainder."); Long Island Lighting Co. v. Cuomo, 666 F. Supp. 370, 403 (N.D.N.Y. 1977) ("Bills of attainder historically have been passed in times of war or rebellion, or when some menace to domestic tranquility was perceived.").

The clause's narrow cast perhaps explains why it has seldom been used to void a Federal statute. See Federal Defendants' Memorandum in Support of Motion for Stay Pending Appeal at 4, SBC Communications v. FCC, Civil No. 7-97-CV-163-X (N.D. Tex. filed Jan. 6, 1998) ("Supreme Court has only invalidated a law on bill of attainder grounds twice in this century, and, on both occasions, the law at issue was enacted in response to the perceived threat of the Communist Party").

58. Long Island Lighting Co., 666 F. Supp. at 403.