(Cite as: 119 S.Ct. 721)
142 L.Ed.2d 835, 67 USLW 4104, 1999-1 Trade Cases P 72,405, 99 Cal. Daily Op. Serv. 633,
1999 Daily Journal D.A.R. 773, 14 Communications Reg. (P&F) 1120, 12 Fla. L. Weekly Fed.
AT & T CORPORATION, et al., petitioners,
IOWA UTILITIES BOARD, et al.
AT & T Corporation, et al., petitioners,
California, et al.
MCI Telecommunications Corporation, petitioner,
Iowa Utilities Board, et al.
MCI Telecommunications Corporation, petitioner,
California, et al.
Association For Local Telecommunications Services, et al., petitioners,
Iowa Utilities Board, et al.
Federal Communications Commission and United States, petitioners,
724 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW TODAy
Iowa Utilities Board, et al.
Federal Communications Commission and United States, petitioners,
California, et al.
Ameritech Corporation, et al., petitioners,
Federal Communications Commission, et al.
GTE Midwest, Incorporated, petitioner,
Federal Communications Commission, et al.
US West, Inc., petitioner,
Federal Communications Commission, et al.
Southern New England Telephone Company, et al., petitioners,
Federal Communications Commission, et al.
Nos. 97-826, 97-829, 97-830, 97-831, 97-1075, 97-1087, 97-1099, and 97-1141
Supreme Court of the United States
Argued Oct. 13, 1998.
Justice SCALIA delivered the opinion of the Court.
In this case, we address whether the Federal Communications Commission has authority to implement certain pricing and
nonpricing provisions of the Telecommunications Act of 1996, as well as whether the Commission's rules governing
unbundled access and "pick and choose" negotiation are consistent with the statute.
Until the 1990s, local phone service was thought to be a natural monopoly. States typically granted an exclusive franchise
in each local service area to a local exchange carrier (LEC), which owned, among other things, the local loops (wires
connecting telephones to switches), the switches (equipment directing calls to their destinations), and the transport trunks
(wires carrying calls between switches) that constitute a local exchange network. Technological advances, however, have
made competition among multiple providers of local service seem possible, and Congress recently ended the longstanding
regime of state-sanctioned monopolies.
The Telecommunications Act of 1996, Pub.L. 104-104, 110 Stat. 56, (1996 Act or Act) fundamentally restructures local
telephone markets. States may no longer enforce laws that impede competition, and incumbent LECs are subject to a host
of duties intended to facilitate market entry. Foremost among these duties is the LEC's obligation under 47 U.S.C. § 251(c)
(1994 ed., Supp. II) to share its network with competitors. Under this provision, a requesting carrier can obtain access to an
incumbent's network in three ways: It can purchase local telephone services at wholesale rates for resale to end users; it
can lease elements of the incumbent's network "on an unbundled basis"; and it can interconnect its own facilities with the
incumbent's network. [FN1] When *727 an entrant seeks access through any of these routes, the incumbent can negotiate
an agreement without regard to the duties it would otherwise have under § 251(b) [FN2] or (c). See § 252(a)(1). But if
private negotiation fails, either party can petition the state commission that regulates local phone service to arbitrate open
issues, which arbitration is subject to § 251 and the FCC regulations promulgated thereunder.
FN1. 47 U.S.C. § 251(c) (1994 ed., Supp. II) provides as follows:
"Additional Obligations of Incumbent Local Exchange Carriers.
"In addition to the duties contained in subsection (b) of this section, each incumbent local exchange carrier has the following
"(1) Duty to Negotiate
"The duty to negotiate in good faith in accordance with section 252 of this title the particular terms and conditions of
agreements to fulfill the duties described in paragraphs (1) through (5) of subsection (b) of this section, and this subsection.
The requesting telecommunications carrier also has the duty to negotiate in good faith the terms and conditions of such
"(2) Interconnection "The duty to provide, for the facilities and equipment of any requesting telecommunications carrier,
interconnection with the local exchange carrier's network--
CHAPTER 36: ADMINISTRATIVE LAW 725
"(A) for the transmission and routing of telephone exchange service and exchange access;
"(B) at any technically feasible point within the carrier's network;
"(C) that is at least equal in quality to that provided by the local exchange carrier to itself or to any subsidiary, affiliate, or
any other party to which the carrier provides interconnection; and
"(D) on rates, terms, and conditions that are just, reasonable, and nondiscriminatory, in accordance with the terms and
conditions of the agreement and the requirements of this section and section 252 of this title.
"(3) Unbundled Access
"The duty to provide, to any requesting telecommunications carrier for the provision of a telecommunications service,
nondiscriminatory access to network elements on an unbundled basis at any technically feasible point on rates, terms, and
conditions that are just, reasonable, and nondiscriminatory in accordance with the terms and conditions of the agreement
and the requirements of this section and section 252 of this title. An incumbent local exchange carrier shall provide such
unbundled network elements in a manner that allows requesting carriers to combine such elements in order to provide such
"(A) to offer for resale at wholesale rates any telecommunications service that the carrier provides at retail to subscribers
who are not telecommunications carriers; and
"(B) not to prohibit, and not to impose unreasonable or discriminatory conditions or limitations on, the resale of such
telecommunications service, except that a State commission may, consistent with regulations prescribed by the Commission
under this section, prohibit a reseller that obtains at wholesale rates a telecommunications service that is available at retail
only to a category of subscribers from offering such service to a different category of subscribers.
"(5) Notice of Changes
"The duty to provide reasonable public notice of changes in the information necessary for the transmission and routing of
services using that local exchange carrier's facilities or networks, as well as of any other changes that would affect the
interoperability of those facilities and networks.
"The duty to provide, on rates, terms, and conditions that are just, reasonable, and nondiscriminatory, for physical
collocation of equipment necessary for interconnection or access to unbundled network elements at the premises of the local
exchange carrier, except that the carrier may provide for virtual collocation if the local exchange carrier demonstrates to the
State commission that physical collocation is not practical for technical reasons or because of space limitations."
FN2. Section 251(b) imposes the following duties on incumbents:
"The duty not to prohibit, and not to impose unreasonable or discriminatory conditions or limitations on, the resale of its
"(2) Number Portability
"The duty to provide, to the extent technically feasible, number portability in accordance with requirements prescribed by
"(3) Dialing Parity
"The duty to provide dialing parity to competing providers of telephone exchange service and telephone toll service, and the
duty to permit all such providers to have nondiscriminatory access to telephone numbers, operator services, directory
assistance, and directory listing, with no unreasonable dialing delays. "(4) Access to Rights-of-Way
"The duty to afford access to the poles, ducts, conduits, and rights-of-way of such carrier to competing providers of
telecommunications services on rates, terms, and conditions that are consistent with section 224 of this title.
"(5) Reciprocal Compensation
"The duty to establish reciprocal compensation arrangements for the transport and termination of telecommunications."
Six months after the 1996 Act was passed, the FCC issued its First Report and Order implementing the local-competition
provisions. In re Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, 11 FCC Rcd
15499 (1996) (First Report & Order). The numerous challenges to this rulemaking, filed across the country by incumbent
LECs and state utility commissions, were consolidated *728 in the United States Court of Appeals for the Eighth Circuit.
The basic attack was jurisdictional. The LECs and state commissions insisted that primary authority to implement the
local-competition provisions belonged to the States rather than to the FCC. They thus argued that many of the local-
competition rules were invalid, most notably the one requiring that prices for interconnection and unbundled access be
based on "Total Element Long Run Incremental Cost" (TELRIC)--a forward-looking rather than historic measure. [FN3] See
47 CFR §§ 51.503, 51.505 (1997). The Court of Appeals agreed, and vacated the pricing rules, and several other aspects of
the Order, as reaching beyond the Commission's jurisdiction. Iowa Utilities Board v. FCC, 120 F.3d 753, 800, 804, 805-806
(1997). It held that the general rulemaking authority conferred upon the Commission by the Communications Act of 1934
extended only to interstate matters, and that the Commission therefore needed specific congressional authorization before
726 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW TODAy
implementing provisions of the 1996 Act addressing intrastate telecommunications. Id., at 795. It found no such
authorization for the Commission's rules regarding pricing, dialing parity, [FN4] exemptions for rural LECs, the proper
procedure for resolving local-competition disputes, and state review of pre-1996 interconnection agreements. Id., at 795-796,
802-806. Indeed, with respect to some of these matters, the Eighth Circuit said that the 1996 Act had affirmatively given
exclusive authority to the state commissions. Id., at 795, 802, 805.
FN3. TELRIC pricing is based upon the cost of operating a hypothetical network built with the most efficient technology
available. Incumbents argued below that this method was unreasonable because it stranded their historic costs and
underestimated the actual costs of providing interconnection and unbundled access. The Eighth Circuit did not reach this
issue, and the merits of TELRIC are not before us.
FN4. Dialing parity, which seeks to ensure that a new entrant's customers can make calls without having to dial an access
code, was addressed in the Commission's Second Report and Order. See In re Implementation of the Local Competition
Provisions of the Telecommunications Act of 1996, 11 FCC Rcd 19392 (1996). In a separate opinion that is also before us
today, the Eighth Circuit vacated this rule insofar as it went beyond the FCC's jurisdiction over interstate calls. People of
California v. FCC, 124 F.3d 934, 943 (1997).
The Court of Appeals found support for its holdings in 47 U.S.C. § 152(b) (§ 2(b) of the Communications Act of 1934), which,
it said, creates a presumption in favor of preserving state authority over intrastate communications. 120 F.3d, at 796. It
found nothing in the 1996 Act clear enough to overcome this presumption, which it described as a fence that is "hog tight,
horse high, and bull strong, preventing the FCC from intruding on the states' intrastate turf." Id., at 800.
Incumbent LECs also made several challenges, only some of which are relevant here, to the rules implementing the 1996
Act's requirement of unbundled access. See 47 U.S.C. § 251(c)(3) (1994 ed., Supp. II). Rule 319, the primary unbundling
rule, sets forth a minimum number of network elements that incumbents must make available to requesting carriers. See
47 CFR § 51.319 (1997). The LECs complained that, in compiling this list, the FCC had virtually ignored the 1996 Act's
requirement that it consider whether access to proprietary elements was "necessary" and whether lack of access to
nonproprietary elements would "impair" an entrant's ability to provide local service. See § 251(d)(2). In addition, the LECs
thought that the list included items (like directory assistance and caller I.D.) that did not meet the statutory definition of
"network element." See § 153(29). The Eighth Circuit rebuffed both arguments, holding that the Commission's
interpretations of the "necessary and impair" standard and the definition of "network element" were reasonable and hence
lawful under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694
(1984). See 120 F.3d, at 809-810.
When it promulgated its unbundling rules, the Commission explicitly declined to impose a requirement of facility
ownership on carriers who sought to lease network elements. First Report & Order ¶ ¶ 328-340. Because the list of
elements that Rule 319 made available *729 was so extensive, the effect of this omission was to allow competitors to provide
local phone service relying solely on the elements in an incumbent's network. The LECs argued that this "all elements" rule
undermined the 1996 Act's goal of encouraging entrants to develop their own facilities. The Court of Appeals, however,
deferred to the FCC's approach. Nothing in the 1996 Act itself imposed a requirement of facility ownership, and the court
was of the view that the language of § 251(c)(3) indicated that "a requesting carrier may achieve the capability to provide
telecommunications service completely through access to the unbundled elements of an incumbent LEC's network." 120
F.3d, at 814.
Given the sweep of the "all elements" rule, however, the Eighth Circuit thought that the FCC went too far in its Rule
315(b), which forbids incumbents to separate network elements before leasing them to competitors. 47 CFR § 51.315(b)
(1997). Taken together, the two rules allowed requesting carriers to lease the incumbent's entire, preassembled network.
The Court of Appeals believed that this would render the resale provision of the statute a dead letter, because by leasing the
entire network rather than purchasing and reselling service offerings, entrants could obtain the same product--finished
service--at a cost-based, rather than wholesale, rate. 120 F.3d, at 813. Apparently reasoning that the word "unbundled" in §
251(c)(3) meant "physically separated," the court vacated Rule 315(b) for requiring access to the incumbent LEC's network
elements "on a bundled rather than an unbundled basis." Ibid.
Finally, incumbent LECs objected to the Commission's "pick and choose" rule, which governs the terms of agreements
between LECs and competing carriers. Under this rule, a carrier may demand that the LEC make available to it "any
individual interconnection, service, or network element arrangement" on the same terms and conditions the LEC has given
anyone else in an agreement approved under § 252--without its having to accept the other provisions of the agreement. 47
CFR § 51.809 (1997); First Report & Order ¶ ¶ 1309- 1310. The Court of Appeals vacated the rule, reasoning that it would
deter the "voluntarily negotiated agreements" that the 1996 Act favored, by making incumbent LECs reluctant to grant
quids for quos, so to speak, for fear that they would have to grant others the same quids without receiving quos. 120 F.3d,
The Commission, MCI, and AT & T petitioned for review of the Eighth Circuit's holdings regarding jurisdiction, Rule
315(b), and the "pick and choose" rule; the incumbent LECs cross-petitioned for review of the Eighth Circuit's treatment of
the other unbundling issues. We granted all the petitions. 521 U.S. ----, 118 S.Ct. 879, 139 L.Ed.2d 867 (1998).
CHAPTER 36: ADMINISTRATIVE LAW 727
Section 201(b), a 1938 amendment to the Communications Act of 1934, provides that "[t]he Commission may prescribe such
rules and regulations as may be necessary in the public interest to carry out the provisions of this Act." 52 Stat. 588, 47
U.S.C. § 201(b). Since Congress expressly directed that the 1996 Act, along with its local-competition provisions, be inserted
into the Communications Act of 1934, 1996 Act, § 1(b), 110 Stat. 56, the Commission's rulemaking authority would seem to
extend to implementation of the local- competition provisions. [FN5]
FN5. Justice BREYER says, post, at 749, that "Congress enacted [the] language [of § 201(b) ] in 1938," and that whether it
confers "general authority to make rules implementing the more specific terms of a later enacted statute depends upon what
that later enacted statute contemplates." That is assuredly true. But we think that what the later statute contemplates is
best determined, not by speculating about what the 1996 Act (and presumably every other amendment to the
Communications Act since 1938) "foresees," ibid., but by the clear fact that the 1996 Act was adopted, not as a freestanding
enactment, but as an amendment to, and hence part of, an Act which said that "[t]he Commission may prescribe such rules
and regulations as may be necessary in the public interest to carry out the provisions of this Act." Justice BREYER cannot
plausibly assert that the 1996 Congress was unaware of the general grant of rulemaking authority contained within the
Communications Act, since § 251(i) specifically provides that "[n]othing in this section shall be construed to limit or
otherwise affect the Commission's authority under section 201."
*730  Respondents argue, however, that § 201(b) rulemaking authority is limited to those provisions dealing with purely
interstate and foreign matters, because the first sentence of § 201(a) makes it "the duty of every common carrier engaged in
interstate or foreign communication by wire or radio to furnish such communication service upon reasonable request
therefor ... ." It is impossible to understand how this use of the qualifier "interstate or foreign" in § 201(a), which limits the
class of common carriers with the duty of providing communication service, reaches forward into the last sentence of §
201(b) to limit the class of provisions that the Commission has authority to implement. We think that the grant in § 201(b)
means what it says: The FCC has rulemaking authority to carry out the "provisions of this Act," which include §§ 251 and
252, added by the Telecommunications Act of 1996. [FN6]
FN6. Justice BREYER appeals to our cases which say that there is a " 'presumption against the pre-emption of state police
power regulations,' " post, at 749, quoting from Cipollone v. Liggett Group, Inc., 505 U.S. 504, 518, 112 S.Ct. 2608, 120
L.Ed.2d 407 (1992), and that there must be " 'clear and manifest' showing of congressional intent to supplant traditional
state police powers," post, at 750, quoting from Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 91 L.Ed.
1447 (1947). But the question in this case is not whether the Federal Government has taken the regulation of local
telecommunications competition away from the States. With regard to the matters addressed by the 1996 Act, it
unquestionably has. The question is whether the state commissions' participation in the administration of the new federal
regime is to be guided by federal-agency regulations. If there is any "presumption" applicable to this question, it should
arise from the fact that a federal program administered by 50 independent state agencies is surpassing strange.
The appeals by both Justice THOMAS and Justice BREYER to what might loosely be called "States' rights" are most
peculiar, since there is no doubt, even under their view, that if the federal courts believe a state commission is not
regulating in accordance with federal policy they may bring it to heel. This is, at bottom, a debate not about whether the
States will be allowed to do their own thing, but about whether it will be the FCC or the federal courts that draw the lines to
which they must hew. To be sure, the FCC's lines can be even more restrictive than those drawn by the courts-- but it is
hard to spark a passionate "States' rights" debate over that detail.
Our view is unaffected by 47 U.S.C. § 152(b) (§ 2(b) of the 1934 enactment), which reads:
"Except as provided in sections 223 through 227 ..., inclusive, and section 332 ..., and subject to the provisions of section 301
of this title ..., nothing in this chapter shall be construed to apply or to give the Commission jurisdiction with respect to ...
charges, classifications, practices, services, facilities, or regulations for or in connection with intrastate communication
service ... ."
The local-competition provisions are not identified in § 152(b)'s "except" clause. Seizing on this omission, respondents argue
that the 1996 Act does nothing to displace the presumption that the States retain their traditional authority over local
Respondents' argument on this point is (necessarily) an extremely subtle one. They do not contend that the "nothing ...
shall be construed" provision prevents all "appl[ication]" of the Communications Act, as amended in 1996, to intrastate
service, or even precludes all "Commission jurisdiction with respect to" such service. Such an interpretation would utterly
nullify the 1996 amendments, which clearly "apply" to intrastate service, and clearly confer "Commission jurisdiction" over
some matters. Respondents argue, therefore, that the effect of the "nothing ... shall be construed" provision is to require an
explicit "appl[ication]" to intrastate service, and in addition an explicit conferral of "Commission jurisdiction" over intrastate
service, before Commission jurisdiction can be found to exist. Such explicit "appl[ication]," they acknowledge, was effected
by the 1996 amendments, but "Commission jurisdiction" was explicitly conferred only as to a few matters.
The fallacy in this reasoning is that it ignores the fact that § 201(b) explicitly gives the FCC jurisdiction to make rules
governing matters to which the 1996 Act applies. Respondents argue that avoiding this pari passu expansion of Commission
728 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW TODAy
jurisdiction with expansion of the substantive scope of the Act *731 was the reason the "nothing shall be construed"
provision was framed in the alternative: "nothing in this Act shall be construed to apply or to give the Commission
jurisdiction " (emphasis added) with respect to the forbidden subjects. The italicized portion would have no operative effect,
they assert, if every "application" of the Act automatically entailed Commission jurisdiction. The argument is an
imaginative one, but ultimately fails. For even though "Commission jurisdiction" always follows where the Act "applies,"
Commission jurisdiction (so-called "ancillary" jurisdiction) could exist even where the Act does not "apply." The term "apply"
limits the substantive reach of the statute (and the concomitant scope of primary FCC jurisdiction), and the phrase "or give
the Commission jurisdiction" limits, in addition, the FCC's ancillary jurisdiction.
The need for both limitations is exemplified by Louisiana Pub. Serv. Comm'n v. FCC, 476 U.S. 355, 106 S.Ct. 1890, 90
L.Ed.2d 369 (1986), where the FCC claimed authority to issue rules governing depreciation methods applied by local
telephone companies. [FN7] The Commission supported its claim with two arguments. First, that it could regulate
intrastate because Congress had intended the depreciation provisions of the Communications Act to bind state commissions-
-i.e., that the depreciation provisions "applied" to intrastate ratemaking. Id., at 376-377, 106 S.Ct. 1890. We observed that
"[w]hile it is, no doubt, possible to find some support in the broad language of the section for respondents' position, we do not
find the meaning of the section so unambiguous or straightforward as to override the command of § 152(b) ... " Id., at 377,
106 S.Ct. 1890. But the Commission also argued that, even if the statute's depreciation provisions did not apply intrastate,
regulation of state depreciation methods would enable it to effectuate the federal policy of encouraging competition in
interstate telecommunications. Id., at 369, 106 S.Ct. 1890. We rejected that argument because, even though the FCC's
broad regulatory authority normally would have been enough to justify its regulation of intrastate depreciation methods
that affected interstate commerce, see id., at 370, 106 S.Ct. 1890; cf. Houston & Shreveport R. Co. v. United States, 234
U.S. 342, 358, 34 S.Ct. 833, 58 L.Ed. 1341 (1914), § 152(b) prevented the Commission from taking intrastate action solely
because it furthered an interstate goal. 476 U.S., at 374, 106 S.Ct. 1890. [FN8]
FN7. We discuss the Louisiana case because of the light it sheds upon the meaning of § 152(b). We of course do not agree
with Justice BREYER'S contention, post, at 750, that the case "raised a question almost identical to the one before us."
That case involved the Commission's attempt to regulate services over which it had not explicitly been given rulemaking
authority; this one involves its attempt to regulate services over which it has explicitly been given rulemaking authority.
FN8. Because this reasoning clearly gives separate meanings to the provisions "apply" and "give the Commission
jurisdiction," we do not understand why Justice THOMAS asserts, post, at 744, that we have not given effect to every word
that Congress used. Nor do we agree with Justice THOMAS that our interpretation renders § 152(b) a nullity. See post, at
744. After the 1996 Act, § 152(b) may have less practical effect. But that is because Congress, by extending the
Communications Act into local competition, has removed a significant area from the States' exclusive control. Insofar as
Congress has remained silent, however, § 152(b) continues to function. The Commission could not, for example, regulate
any aspect of intrastate communication not governed by the 1996 Act on the theory that it had an ancillary effect on matters
within the Commission's primary jurisdiction. Justice THOMAS admits, as he must, that the Commission has authority to
implement at least some portions of the 1996 Act. See post, at 743. But his interpretation of § 152(b) confers such
inflexibility upon that provision that he must strain to explain where the Commission gets this authority. A number of the
provisions he relies on plainly read, not like conferrals of authority, but like references to the exercise of authority conferred
elsewhere (we think, of course, in § 201(b)). See, e.g., § 251(b)(2) (assigning State commissions "[t]he duty to provide, to the
extent technically feasible, number portability in accordance with requirements prescribed by the Commission."); §
251(d)(2) (setting forth factors for the Commission to consider "[i]n determining what network elements should be made
available for purposes of subsection (c)(3)"); § 251(g) (requiring that any pre-existing "regulation, order, or policy of the
Commission" governing exchange access and interconnection agreements remain in effect until it is "explicitly superseded
by regulations prescribed by the Commission"). Moreover, his interpretation produces a most chopped-up statute, conferring
Commission jurisdiction over such curious and isolated matters as "number portability, ... those network elements that the
carrier must make available on an unbundled basis for purposes of § 251(c), ... numbering administration, ... exchange
access and interconnection requirements in effect prior to the Act's effective date, ... and treatment of comparable carriers as
incumbents ...." post, at 743, but denying Commission jurisdiction over much more significant matters. We think it most
unlikely that Congress created such a strange hodgepodge. And, of course, Justice THOMAS'S recognition of any FCC
jurisdiction over intrastate matters subjects his analysis to the same criticism he levels against us, post, at 744: Just as it is
true that Congress did not explicitly amend § 152(b) to exempt the entire 1996 Act, neither did it explicitly amend § 152(b)
to exempt the five provisions he relies upon.
*732 The parties have devoted some effort in this case to debating whether § 251(d) serves as a jurisdictional grant to the
FCC. That section provides that "[w]ithin 6 months after [the date of enactment of the Telecommunications Act of 1996,] the
Commission shall complete all actions necessary to establish regulations to implement the requirements of this section." 47
U.S.C. § 251(d) (1994 ed., Supp. II). The FCC relies on this section as an alternative source of jurisdiction, arguing that if it
was necessary for Congress to include an express jurisdictional grant in the 1996 Act, § 251(d) does the job. Respondents
counter that this provision functions only as a time constraint on the exercise of regulatory authority that the Commission
CHAPTER 36: ADMINISTRATIVE LAW 729
has been given in the six subsections of § 251 that specifically mention the FCC. See §§ 251(b)(2), 251(c)(4)(B), 251(d)(2),
251(e), 251(g), 251(h)(2). Our understanding of the Commission's general authority under § 201(b) renders this debate
FN9. Justice THOMAS says that the grants of authority to the Commission in § 251 would have been unnecessary "[i]f
Congress believed ... that § 201(b) provided the FCC with plenary authority to promulgate regulations." Post, at 744. We
have already explained that three of the five provisions on which Justice THOMAS relies are not grants of authority at all.
See n. 9, supra. And the remaining two do not support his argument because they are not redundant of § 201(b). Section
251(e), which provides that "[t]he Commission shall create or designate one or more impartial entities to administer
telecommunications numbering," requires the Commission to exercise its rulemaking authority, as opposed to § 201(b),
which merely authorizes the Commission to promulgate rules if it so chooses. Section 251(h)(2) says that the FCC "may, by
rule, provide for the treatment of a local exchange carrier ... as an incumbent local exchange carrier for purposes of [§ 251]"
if the carrier satisfies certain requirements. This provision gives the Commission authority beyond that conferred by §
201(b); without it, the FCC certainly could not have saddled a nonincumbent carrier with the burdens of incumbent status.
The jurisdictional objections we have addressed thus far pertain to an asserted lack of what might be called underlying FCC
jurisdiction. The remaining jurisdictional argument is that certain individual provisions in the 1996 Act negate particular
aspects of the Commission's implementing authority. With regard to pricing, the incumbent LECs and state commissions
point to § 252(c), which provides:
"(c) Standards for Arbitration
"In resolving by arbitration under subsection (b) any open issues and imposing conditions upon the parties to the agreement,
a state commission shall--
"(1) ensure that such resolution and conditions meet the requirements of section 251, including the regulations prescribed by
the Commission pursuant to section 251;
"(2) establish any rates for interconnection, services, or network elements according to subsection (d); and
"(3) provide a schedule for implementation of the terms and conditions by the parties to the agreement."
Respondents contend that the Commission's TELRIC rule is invalid because § 252(c)(2) entrusts the task of establishing
rates to the state commissions. We think this attributes to that task a greater degree of autonomy than the phrase
"establish any rates" necessarily implies. The FCC's prescription, through rulemaking, of a requisite pricing methodology
no more prevents the States from establishing rates than do the statutory "Pricing standards" set forth in § 252(d). It is the
States that will apply those standards and implement that methodology, determining the concrete result in particular
circumstances. That is enough to constitute the establishment of rates.
 Respondents emphasize the fact that § 252(c)(1), which requires state commissions to assure compliance with the *733
provisions of § 251, adds "including the regulations prescribed by the Commission pursuant to section 251," whereas §
252(c)(2), which requires state commissions to assure compliance with the pricing standards in subsection (d), says nothing
about Commission regulations applicable to subsection (d). There is undeniably a lack of parallelism here, but it seems to
us adequately explained by the fact that § 251 specifically requires the Commission to promulgate regulations implementing
that provision, whereas subsection (d) of § 252 does not. It seems to us not peculiar that the mandated regulations should
be specifically referenced, whereas regulations permitted pursuant to the Commission's § 201(b) authority are not. In any
event, the mere lack of parallelism is surely not enough to displace that explicit authority. We hold, therefore, that the
Commission has jurisdiction to design a pricing methodology.
 For similar reasons, we reverse the Court of Appeals' determinations that the Commission had no jurisdiction to
promulgate rules regarding state review of pre-existing interconnection agreements between incumbent LECs and other
carriers, regarding rural exemptions, and regarding dialing parity. See 47 CFR §§ 51.303, 51.405, and 51.205-51.215 (1997).
None of the statutory provisions that these rules interpret displaces the Commission's general rulemaking authority. While
it is true that the 1996 Act entrusts state commissions with the job of approving interconnection agreements, 47 U.S.C. §
252(e) (1994 ed., Supp. II), and granting exemptions to rural LECs, § 251(f), these assignments, like the rate-establishing
assignment just discussed, do not logically preclude the Commission's issuance of rules to guide the state-commission
judgments. And since the provision addressing dialing parity, § 251(b)(3), does not even mention the States, it is even
clearer that the Commission's § 201(b) authority is not superseded. [FN10]
FN10. Justice THOMAS notes that it is well settled that state officers may interpret and apply federal law, see, e.g., United
States v. Jones, 109 U.S. 513, 3 S.Ct. 346, 27 L.Ed. 1015 (1883), which leads him to conclude that there is no constitutional
impediment to the interpretation that would give the States general authority, uncontrolled by the FCC's general
rulemaking authority, over the matters specified in the particular sections we have just discussed. Post, at 745-746. But
constitutional impediments aside, we are aware of no similar instances in which federal policymaking has been turned over
to state administrative agencies. The arguments we have been addressing in the last three paragraphs of our text assume a
scheme in which Congress has broadly extended its law into the field of intrastate telecommunications, but in a few
specified areas (ratemaking, interconnection agreements, etc.) has left the policy implications of that extension to be
determined by state commissions, which--within the broad range of lawful policymaking left open to administrative
730 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW TODAy
agencies--are beyond federal control. Such a scheme is decidedly novel, and the attendant legal questions, such as whether
federal courts must defer to state agency interpretations of federal law, are novel as well.
 Finally (as to jurisdiction), respondents challenge the claim in the Commission's First Report and Order that § 208, a
provision giving the Commission general authority to hear complaints arising under the Communications Act of 1934, also
gives it authority to review agreements approved by state commissions under the local-competition provisions. First Report
& Order ¶ ¶ 121-128. The Eighth Circuit held that the Commission's "perception of its authority ... is untenable ... in light
of the language and structure of the Act and ... operation of section [152(b) ]." 120 F.3d, at 803. The Court of Appeals erred
in reaching this claim because it is not ripe. When, as is the case with this Commission statement, there is no immediate
effect on the plaintiff's primary conduct, federal courts normally do not entertain pre-enforcement challenges to agency rules
and policy statements. Toilet Goods Assn., Inc. v. Gardner, 387 U.S. 158, 87 S.Ct. 1520, 18 L.Ed.2d 697 (1967); see also
Lujan v. National Wildlife Federation, 497 U.S. 871, 891, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990).
 We turn next to the unbundling rules, and come first to the incumbent LECs' complaint *734 that the FCC included
within the features and services that must be provided to competitors under Rule 319 items that do not (as they must) meet
the statutory definition of "network element"--namely, operator services and directory assistance, operational support
systems (OSS), and vertical switching functions such as caller I.D., call forwarding, and call waiting. See 47 CFR §§
51.319(f)-(g) (1997); First Report & Order ¶ 413. The statute defines "network element" as
"a facility or equipment used in the provision of a telecommunications service. Such term also includes features, functions,
and capabilities that are provided by means of such facility or equipment, including subscriber numbers, databases,
signaling systems, and information sufficient for billing and collection or used in the transmission, routing, or other
provision of a telecommunications service." 47 U.S.C. § 153(29) (1994 ed., Supp II).
Given the breadth of this definition, it is impossible to credit the incumbents' argument that a "network element" must be
part of the physical facilities and equipment used to provide local phone service. Operator services and directory assistance,
whether they involve live operators or automation, are "features, functions, and capabilities ... provided by means of" the
network equipment. OSS, the incumbent's background software system, contains essential network information as well as
programs to manage billing, repair ordering, and other functions. Section 153(29)'s reference to "databases ... and
information sufficient for billing and collection or used in the transmission, routing, or other provision of a
telecommunications service" provides ample basis for treating this system as a "network element." And vertical switching
features, such as caller I. D., are "functions ... provided by means of" the switch, and thus fall squarely within the statutory
definition. We agree with the Eighth Circuit that the Commission's application of the "network element" definition is
eminently reasonable. See Chevron v. NRDC, 467 U.S., at 866, 104 S.Ct. 2778.
 We are of the view, however, that the FCC did not adequately consider the "necessary and impair" standards when it
gave blanket access to these network elements, and others, in Rule 319. That rule requires an incumbent to provide
requesting carriers with access to a minimum of seven network elements: the local loop, the network interface device,
switching capability, interoffice transmission facilities, signaling networks and call-related databases, operations support
systems functions, and operator services and directory assistance. 47 CFR § 51.319 (1997). If a requesting carrier wants
access to additional elements, it may petition the state commission, which can make other elements available on a case-by-
case basis. § 51.317.
 Section 251(d)(2) of the Act provides:
"In determining what network elements should be made available for purposes of subsection (c)(3) of this section, the
Commission shall consider, at a minimum, whether--
"(A) access to such network elements as are proprietary in nature is necessary; and
"(B) the failure to provide access to such network elements would impair the ability of the telecommunications carrier
seeking access to provide the services that it seeks to offer."
The incumbents argue that § 251(d)(2) codifies something akin to the "essential facilities" doctrine of antitrust theory, see
generally 3A P. Areeda & H. Hovenkamp, Antitrust Law ¶ ¶ 771-773 (1996), opening up only those "bottleneck" elements
unavailable elsewhere in the marketplace. We need not decide whether, as a matter of law, the 1996 Act requires the FCC
to apply that standard; it may be that some other standard would provide an equivalent or better criterion for the limitation
upon network-element availability that the statute has in mind. But we do agree with the incumbents that the Act requires
the FCC to apply some limiting standard, rationally related to the goals of the Act, *735 which it has simply failed to do. In
the general statement of its methodology set forth in the First Report and Order, the Commission announced that it would
regard the "necessary" standard as having been met regardless of whether "requesting carriers can obtain the requested
proprietary element from a source other than the incumbent," since "[r]equiring new entrants to duplicate unnecessarily
even a part of the incumbent's network could generate delay and higher costs for new entrants, and thereby impede entry by
competing local providers and delay competition, contrary to the goals of the 1996 Act." First Report & Order ¶ 283. And it
CHAPTER 36: ADMINISTRATIVE LAW 731
announced that it would regard the "impairment" standard as having been met if "the failure of an incumbent to provide
access to a network element would decrease the quality, or increase the financial or administrative cost of the service a
requesting carrier seeks to offer, compared with providing that service over other unbundled elements in the incumbent
LEC's network," id., ¶ 285 (emphasis added)--which means that comparison with self-provision, or with purchasing from
another provider, is excluded. Since any entrant will request the most efficient network element that the incumbent has to
offer, it is hard to imagine when the incumbent's failure to give access to the element would not constitute an "impairment"
under this standard. The Commission asserts that it deliberately limited its inquiry to the incumbent's own network
because no rational entrant would seek access to network elements from an incumbent if it could get better service or prices
elsewhere. That may be. But that judgment allows entrants, rather than the Commission, to determine whether access to
proprietary elements is necessary, and whether the failure to obtain access to nonproprietary elements would impair the
ability to provide services. The Commission cannot, consistent with the statute, blind itself to the availability of elements
outside the incumbent's network. That failing alone would require the Commission's rule to be set aside. In addition,
however, the Commission's assumption that any increase in cost (or decrease in quality) imposed by denial of a network
element renders access to that element "necessary," and causes the failure to provide that element to "impair" the entrant's
ability to furnish its desired services is simply not in accord with the ordinary and fair meaning of those terms. An entrant
whose anticipated annual profits from the proposed service are reduced from 100% of investment to 99% of investment has
perhaps been "impaired" in its ability to amass earnings, but has not ipso facto been "impair[ed] ... in its ability to provide
the services it seeks to offer"; and it cannot realistically be said that the network element enabling it to raise its profits to
100% is "necessary." [FN11] In a world of perfect competition, in which all carriers are providing their service at marginal
cost, the Commission's total equating of increased cost (or decreased quality) with "necessity" and "impairment" might be
reasonable; but it has not established the existence of such an ideal world. We cannot avoid the conclusion that, if Congress
had wanted to give blanket access to incumbents' networks on a basis as unrestricted as the scheme the Commission has
come up with, it would not have included § 251(d)(2) in the statute at all. It would simply have said (as the Commission in
effect has) that whatever requested element can be provided must be provided.
FN11. Justice SOUTER points out that one can say his ability to replace a light bulb is "impaired" by the absence of a
ladder, and that a ladder is "necessary" to replace the bulb, even though one "could stand instead on a chair, a milk can, or
eight volumes of Gibbon." True enough (and nicely put), but the proper analogy here, it seems to us, is not the absence of a
ladder, but the presence of a ladder tall enough to enable one to do the job, but not without stretching one's arm to its full
extension. A ladder one-half inch taller is not, "within an ordinary and fair meaning of the word," post, at 739, "necessary,"
nor does its absence "impair" one's ability to do the job. We similarly disagree with Justice SOUTER that a business can be
impaired in its ability to provide services--even impaired in that ability "in an ordinary, weak sense of impairment," ibid., at
740--when the business receives a handsome profit but is denied an even handsomer one.
*736  When the full record of these proceedings is examined, it appears that that is precisely what the Commission
thought Congress had said. The FCC was content with its expansive methodology because of its misunderstanding of §
251(c)(3), which directs an incumbent to allow a requesting carrier access to its network elements "at any technically
feasible point." The Commission interpreted this to "impos[e] on an incumbent LEC the duty to provide all network
elements for which it is technically feasible to provide access," and went on to "conclude that we have authority to establish
regulations that are coextensive" with this duty, First Report & Order ¶ 278 (emphasis added). See also id., ¶ 286 ("[w]e
conclude that the statute does not require us to interpret the 'impairment' standard in a way that would significantly
diminish the obligation imposed by section 251(c)(3)"). As the Eighth Circuit held, that was undoubtedly wrong: Section
251(c)(3) indicates "where unbundled access must occur, not which [network] elements must be unbundled." 120 F.3d, at
810. The Commission does not seek review of the Eighth Circuit's holding on this point, and we bring it into our discussion
only because the Commission's application of § 251(d)(2) was colored by this error. The Commission began with the premise
that an incumbent was obliged to turn over as much of its network as was "technically feasible," and viewed (d)(2) as merely
permitting it to soften that obligation by regulatory grace:
"To give effect to both sections 251(c)(3) and 251(d)(2), we conclude that the proprietary and impairment standards in
section 251(d)(2) grant us the authority to refrain from requiring incumbent LECs to provide all network elements for which
it is technically feasible to provide access on an unbundled basis." First Report & Order ¶ 279.
The Commission's premise was wrong. Section 251(d)(2) does not authorize the Commission to create isolated exemptions
from some underlying duty to make all network elements available. It requires the Commission to determine on a rational
basis which network elements must be made available, taking into account the objectives of the Act and giving some
substance to the "necessary" and "impair" requirements. The latter is not achieved by disregarding entirely the availability
of elements outside the network, and by regarding any "increased cost or decreased service quality" as establishing a
"necessity" and an "impair[ment]" of the ability to "provide ... services."
The Commission generally applied the above described methodology as it considered the various network elements
seriatim. See id., ¶ ¶ 388-393, 419-420, 447, 481-482, 490-491, 497-499, 521-522, 539-540. Though some of these sections
contain statements suggesting that the Commission's action might be supported by a higher standard, see, e.g., ¶ ¶ 521-522,
732 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW TODAy
no other standard is consistently applied and we must assume that the Commission's expansive methodology governed
throughout. Because the Commission has not interpreted the terms of the statute in a reasonable fashion, we must vacate
47 CFR § 51.319 (1997).
 The incumbent LECs also renew their challenge to the "all elements" rule, which allows competitors to provide local
phone service relying solely on the elements in an incumbent's network. See First Report & Order ¶ ¶ 328-340. This issue
may be largely academic in light of our disposition of Rule 319. If the FCC on remand makes fewer network elements
unconditionally available through the unbundling requirement, an entrant will no longer be able to lease every component
of the network. But whether a requesting carrier can access the incumbent's network in whole or in part, we think that the
Commission reasonably omitted a facilities-ownership requirement. The 1996 Act imposes no such limitation; if anything,
it suggests the opposite, by requiring in § 251(c)(3) that incumbents provide access to "any" requesting carrier. We agree
with the Court of Appeals that the Commission's refusal to impose a facilities-ownership requirement was proper.
Rule 315(b) forbids an incumbent to separate already-combined network elements before *737 leasing them to a competitor.
As they did in the Court of Appeals, the incumbents object to the effect of this rule when it is combined with others before us
today. TELRIC allows an entrant to lease network elements based on forward-looking costs, Rule 319 subjects virtually all
network elements to the unbundling requirement, and the all-elements rule allows requesting carriers to rely only on the
incumbent's network in providing service. When Rule 315(b) is added to these, a competitor can lease a complete,
preassembled network at (allegedly very low) cost-based rates.
The incumbents argue that this result is totally inconsistent with the 1996 Act. They say that it not only eviscerates the
distinction between resale and unbundled access, but that it also amounts to Government-sanctioned regulatory arbitrage.
Currently, state laws require local phone rates to include a "universal service" subsidy. Business customers, for whom the
cost of service is relatively low, are charged significantly above cost to subsidize service to rural and residential customers,
for whom the cost of service is relatively high. Because this universal-service subsidy is built into retail rates, it is passed
on to carriers who enter the market through the resale provision. Carriers who purchase network elements at cost, however,
avoid the subsidy altogether and can lure business customers away from incumbents by offering rates closer to cost. This, of
course, would leave the incumbents holding the bag for universal service.
As was the case for the all-elements rule, our remand of Rule 319 may render the incumbents' concern on this score
academic. Moreover, § 254 requires that universal-service subsidies be phased out, so whatever possibility of arbitrage
remains will be only temporary. In any event, we cannot say that Rule 315(b) unreasonably interprets the statute.
 Section 251(c)(3) establishes:
"The duty to provide, to any requesting telecommunications carrier for the provision of a telecommunications service,
nondiscriminatory access to network elements on an unbundled basis at any technically feasible point on rates, terms, and
conditions that are just, reasonable, and nondiscriminatory in accordance with the terms and conditions of the agreement
and the requirements of this section and section 252 .... An incumbent local exchange carrier shall provide such unbundled
network elements in a manner that allows requesting carriers to combine such elements in order to provide such
Because this provision requires elements to be provided in a manner that "allows requesting carriers to combine" them,
incumbents say that it contemplates the leasing of network elements in discrete pieces. It was entirely reasonable for the
Commission to find that the text does not command this conclusion. It forbids incumbents to sabotage network elements
that are provided in discrete pieces, and thus assuredly contemplates that elements may be requested and provided in this
form (which the Commission's rules do not prohibit). But it does not say, or even remotely imply, that elements must be
provided only in this fashion and never in combined form. Nor are we persuaded by the incumbents' insistence that the
phrase "on an unbundled basis" in § 251(c)(3) means "physically separated." The dictionary definition of "unbundled" (and
the only definition given, we might add) matches the FCC's interpretation of the word: "to give separate prices for
equipment and supporting services." Webster's Ninth New Collegiate Dictionary 1283 (1985).
 The reality is that § 251(c)(3) is ambiguous on whether leased network elements may or must be separated, and the
rule the Commission has prescribed is entirely rational, finding its basis in § 251(c)(3)'s nondiscrimination requirement. As
the Commission explains, it is aimed at preventing incumbent LECs from "disconnect[ing] previously connected elements,
over the objection of the requesting carrier, not for any productive reason, but just to impose wasteful reconnection costs on
new entrants." Reply Brief for Federal Petitioners 23. It is true that Rule 315(b) could allow entrants access to an entire
preassembled network. In the absence of Rule 315(b), however, incumbents could *738 impose wasteful costs on even those
carriers who requested less than the whole network. It is well within the bounds of the reasonable for the Commission to
opt in favor of ensuring against an anticompetitive practice.
The FCC's "pick and choose" rule provides, in relevant part:
CHAPTER 36: ADMINISTRATIVE LAW 733
"An incumbent LEC shall make available without unreasonable delay to any requesting telecommunications carrier any
individual interconnection, service, or network element arrangement contained in any agreement to which it is a party that
is approved by a state commission pursuant to section 252 of the Act, upon the same rates, terms, and conditions as those
provided in the agreement." 47 CFR § 51.809 (1997).
Respondents argue that this rule threatens the give-and-take of negotiations, because every concession as to an
"interconnection, service, or network element arrangement" made (in exchange for some other benefit) by an incumbent LEC
will automatically become available to every potential entrant into the market. A carrier who wants one term from an
existing agreement, they say, should be required to accept all the terms in the agreement.
 Although the latter proposition seems eminently fair, it is hard to declare the FCC's rule unlawful when it tracks the
pertinent statutory language almost exactly. Section 252(i) provides:
"A local exchange carrier shall make available any interconnection, service, or network element provided under an
agreement approved under this section to which it is a party to any other requesting telecommunications carrier upon the
same terms and conditions as those provided in the agreement."
The FCC's interpretation is not only reasonable, it is the most readily apparent. Moreover, in some respects the rule is
more generous to incumbent LECs than § 252(i) itself. It exempts incumbents who can prove to the state commission that
providing a particular interconnection service or network element to a requesting carrier is either (1) more costly than
providing it to the original carrier, or (2) technically infeasible. 47 CFR § 51.809(b) (1997). And it limits the amount of time
during which negotiated agreements are open to requests under this section. § 51.809(c). The Commission has said that an
incumbent LEC can require a requesting carrier to accept all terms that it can prove are "legitimately related" to the desired
term. First Report & Order ¶ 1315. Section 252(i) certainly demands no more than that. And whether the Commission's
approach will significantly impede negotiations (by making it impossible for favorable interconnection- service or network-
element terms to be traded off against unrelated provisions) is a matter eminently within the expertise of the Commission
and eminently beyond our ken. We reverse the Eighth Circuit and reinstate the rule.
It would be gross understatement to say that the Telecommunications Act of 1996 is not a model of clarity. It is in many
important respects a model of ambiguity or indeed even self-contradiction. That is most unfortunate for a piece of
legislation that profoundly affects a crucial segment of the economy worth tens of billions of dollars. The 1996 Act can be
read to grant (borrowing a phrase from incumbent GTE) "most promiscuous rights" to the FCC vis- & agrave;-vis the state
commissions and to competing carriers vis- & agrave;-vis the incumbents--and the Commission has chosen in some
instances to read it that way. But Congress is well aware that the ambiguities it chooses to produce in a statute will be
resolved by the implementing agency, see Chevron v. NRDC, 467 U.S., at 842-843, 104 S.Ct. 2778. We can only enforce the
clear limits that the 1996 Act contains, which in the present case invalidate only Rule 319.
For the reasons stated, the July 18, 1997 judgment of the Court of Appeals, 120 F.3d 753, is reversed in part and affirmed
in part; the August 22, 1997 judgment of the Court of Appeals, 124 F.3d 934, is reversed in part; and the cases are
remanded for proceedings consistent with this opinion.
*739 It is so ordered.
(Cite as: 276 F.3d 583)
349 U.S.App.D.C. 240, 2002-1 Trade Cases P 73,536, Comm. Fut. L. Rep. P 28,696
United States Court of Appeals,
District of Columbia Circuit.
FEDERAL TRADE COMMISSION, Appellee,
KEN ROBERTS COMPANY, et al., Appellants.
Argued Oct. 4, 2001.
Decided Dec. 28, 2001.
Rehearing and Rehearing En Banc Denied March 1, 2002.
734 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW TODAy
HARRY T. EDWARDS, Circuit Judge:
The appellants - Ken Roberts Company ("KRC"), Ken Roberts Institute, Inc. ("KRI"), United States Chart Company
("Chart"), and Ted Warren Corporation ("Warren") (collectively "Ken Roberts") - sell instructional materials that purport to
teach would-be investors how to make money investing in the commodities and *584 securities markets. In an effort to
determine whether Ken Roberts had engaged in deceptive advertising or selling of goods or services in violation of sections 5
and 12 of the Federal Trade Commission Act, 15 U.S.C. §§ 45, 52, the Federal Trade Commission ("FTC") issued civil
investigative demands ("CIDs") requiring Ken Roberts to produce documents and to respond to interrogatories relating to
the companies' business practices. The appellants answered some of the interrogatories, but declined to respond to most of
what had been requested. Ken Roberts then filed a Petition to Quash with the FTC. The appellants claimed that, because
the regulation of their advertising practices was subject to the exclusive jurisdiction of the Commodities Futures Trading
Commission ("CFTC") or the Securities and Exchange Commission ("SEC"), the FTC lacked authority to investigate. The
FTC denied the petition and then filed its own petition in District Court seeking an order to enforce the CIDs. On May 26,
2000, the District Court granted the FTC's petition and ordered Ken Roberts to comply with the CIDs. The appellants now
seek review of that judgment.
Ken Roberts contends that, pursuant to the express terms of the Commodity Exchange Act ("CEA"), the CFTC has exclusive
jurisdiction to regulate the disputed business practices of Ken Roberts Company and United States Chart Company. Ken
Roberts claims further that, because Ken Roberts Institute and Ted Warren Corporation are subject to pervasive regulation
by the SEC under the Investment Advisors Act ("IAA"), the FTC's authority to investigate these companies has been
impliedly preempted. Therefore, according to Ken Roberts, because the FTC is without authority to regulate the cited
advertising and promotional practices of Ken Roberts, the CIDs cannot be sustained. We disagree.
With rare exceptions (none of which applies here), a subpoena enforcement action is not the proper forum in which to
litigate disagreements over an agency's authority to pursue an investigation. Unless it is patently clear that an agency
lacks the jurisdiction that it seeks to assert, an investigative subpoena will be enforced. Whatever the ultimate merit of
Ken Roberts' preemption arguments - and we believe they have little - appellants cannot overcome the long-standing
doctrine that precludes courts from entertaining challenges to the jurisdiction of administrative agencies during subpoena
enforcement proceedings. Because under no reasonable reading of the CEA or the IAA does either of those statutes
manifestly strip the FTC of its broad power over deceptive advertising, we affirm the District Court's decision that
appellants must comply with the FTC's compulsory process.
KRC and Chart market courses in commodities trading and are therefore subject to the jurisdiction of the CFTC. KRI and
Warren offer instruction in securities trading, which places them within the regulatory ambit of the SEC. These companies
rely heavily on Internet advertising: their websites feature grandiose claims about potential earnings by investors and
testimonials from persons who have allegedly benefitted from Ken Roberts' instructional materials.
Since 1994, the CFTC has carefully monitored the activities of KRC to determine whether the company had violated various
sections of the CEA, particularly the statute's antifraud provisions, 7 U.S.C. § 6o (1999). In at least four separate
investigations, the Commission sought to determine whether KRC's advertising claims, both in print and, more recently, on-
line, can be substantiated. To this end, *585 the CFTC repeatedly used its subpoena power to compel KRC to turn over
business records and detailed documentation supporting the promotional claims that it has made. The company always has
responded to CFTC subpoenas, and never has been sanctioned or forced to admit any wrongdoing. While one investigation
did lead to a consent decree, pursuant to which KRC and Chart registered with the CFTC as commodity trading advisers
("CTAs"), see 7 U.S.C. § 1a(5), the Commission has never taken enforcement action against KRC.
In 1999, the FTC, in conjunction with the CFTC and the SEC, announced a coordinated investigation of deceptive day
trading promotions. In early September 1999, the FTC formally authorized the use of compulsory process to determine
whether various on-line merchants were engaged in deceptive marketing practices. With an investigative agenda aimed at
high-risk/high-yield investment activity and suspicious Internet advertising, the Commission soon focused on Ken Roberts.
On September 30, 1999, the FTC issued CIDs requesting a wide variety of information through written interrogatories and
documents relating to Ken Roberts' business practices. The CIDs were designed to reveal whether the companies had
mislead the public in promoting their instructional courses. To this end, the Commission demanded a full accounting of the
companies' sales volume, as well as evidence underlying the claims made in their testimonials and other advertising
Appellants resisted complying fully with the CIDs, believing them to be duplicative of the subpoenas that had already been
issued by the CFTC and beyond the FTC's power to issue. Thus, Ken Roberts responded only to some of the interrogatories
and produced none of the requested documents. They then filed an administrative petition with the FTC to quash the
CIDs. In that proceeding, Ken Roberts argued, as they do here, that the CEA and the IAA deprive the Commission of its
jurisdiction to regulate - and therefore to investigate - deceptive advertising practices of, respectively, CTAs and investment
advisers. The FTC rejected this petition, holding that the subpoenas were issued as part of a lawful investigation, one fully
authorized by the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 41 et seq. (1997), and not foreclosed by any rival
CHAPTER 36: ADMINISTRATIVE LAW 735
regulatory statute. See In re Petition of The Ken Roberts Co. et al. to Quash Civil Investigative Demands, File No. 9923259
(Feb. 25, 2000), reprinted in Joint Appendix ("J.A.") 72. When Ken Roberts persisted in refusing to comply with the CIDs,
the FTC petitioned the District Court to compel enforcement pursuant to 15 U.S.C. § 57b-1(e). In a brief order, the District
Court granted the agency's petition to enforce. See FTC v. Ken Roberts Co., Order, Misc. No. 00-204 (May 26, 2000),
reprinted in J.A. 248. Ken Roberts now appeals.
Appellants ask this court to hold that the jurisdiction-conferring provisions of the CEA and the IAA preempt - the former
expressly, the latter implicitly - the jurisdiction that the FTC would otherwise possess over appellants' allegedly deceptive
marketing of their investor-training courses. Though the nature of our analysis obliges us to investigate these questions, we
need not answer them definitively, for we have concluded that Ken Roberts' challenge is premature.
A. Jurisdictional Challenges to Agency Subpoenas
 The threshold issue in this case is whether the appellants may raise their challenge to the Commission's jurisdiction
now, or instead whether they are obliged *586 to await an actual enforcement action. In upholding the judgment of the
District Court, we are governed by the long-standing doctrine that administrative agencies must be given wide latitude in
asserting their power to investigate by subpoena. As the Second Circuit has noted:
[A]t the subpoena enforcement stage, courts need not determine whether the subpoenaed party is within the agency's
jurisdiction or covered by the statute it administers; rather the coverage determination should wait until an enforcement
action is brought against the subpoenaed party.
United States v. Construction Prods. Research, Inc., 73 F.3d 464, 470 (2d Cir.1996).
The Supreme Court first articulated this doctrine in Endicott Johnson Corp. v. Perkins, 317 U.S. 501, 63 S.Ct. 339, 87 L.Ed.
424 (1943). Endicott established that, as a general proposition, agencies should remain free to determine, in the first
instance, the scope of their own jurisdiction when issuing investigative subpoenas. The Court therefore held that the
Secretary of Labor was entitled to enforce a subpoena for payroll records issued in an effort to determine whether Endicott
Johnson had run afoul of the Walsh-Healey Public Contracts Act. The District Court had scheduled a trial to determine
whether Endicott was covered by the Act, but the Supreme Court rejected this approach. Rather, the Court held that,
because "[t]he evidence sought by the subpoena was not plainly incompetent or irrelevant to any lawful purpose of the
Secretary in the discharge of her duties under the Act ... it was the duty of the District Court to order its production for the
Secretary's consideration." Id. at 509, 63 S.Ct. at 343 (emphasis added).
Following Endicott, courts of appeals have consistently deferred to agency determinations of their own investigative
authority, and have generally refused to entertain challenges to agency authority in proceedings to enforce compulsory
process. See, e.g., United States v. Sturm, Ruger & Co., 84 F.3d 1, 5 (1st Cir.1996) ("We have repeatedly admonished that
questions concerning the scope of an agency's substantive authority to regulate are not to be resolved in subpoena
enforcement proceedings."); Construction Prods. Research, 73 F.3d at 468-73 (enforcing subpoena issued by Nuclear
Regulatory Commission over objection that the subject matter of the agency's investigation was reserved by law for the
Department of Labor); EEOC v. Peat, Marwick, Mitchell & Co., 775 F.2d 928, 930 (8th Cir.1985) ("The initial determination
of the coverage question is left to the administrative agency seeking enforcement of the subpoena."); Donovan v. Shaw, 668
F.2d 985, 989 (8th Cir.1982) ("It is well-settled that a subpoena enforcement proceeding is not the proper forum in which to
litigate the question of coverage under a particular federal statute."); FTC v. Ernstthal, 607 F.2d 488, 490 (D.C.Cir.1979)
(acknowledging a concession that "an individual may not normally resist an administrative subpoena on the ground that the
agency lacks regulatory jurisdiction if the subpoena is issued at the investigational stage of the proceeding").
Subpoena enforcement power is not limitless, however. In United States v. Morton Salt Co., 338 U.S. 632, 652, 70 S.Ct.
357, 369, 94 L.Ed. 401 (1950), the Court emphasized that a subpoena is proper only where "the inquiry is within the
authority of the agency, the demand is not too indefinite and the information sought is reasonably relevant." Accordingly,
"there is no doubt that a court asked to enforce a subpoena will refuse to do so if the subpoena exceeds an express statutory
limitation on the agency's investigative powers." Gen. Fin. Corp. v. FTC, 700 F.2d 366, 369 (7th Cir.1983). Thus, a court
must "assure itself that the subject matter of the investigation *587 is within the statutory jurisdiction of the subpoena-
issuing agency." FEC v. Machinists Non-Partisan Political League, 655 F.2d 380, 386 (D.C.Cir.1981); see also FTC v.
Texaco, Inc., 555 F.2d 862, 879 (D.C.Cir.1977) (en banc) (administrative subpoenas should be enforced unless the
information sought is irrelevant to "a lawful purpose of the agency"). These cases amply demonstrate that while the courts'
role in subpoena enforcement may be a "strictly limited" one, it is neither minor nor ministerial. See FTC v. Anderson, 631
F.2d 741, 744 (D.C.Cir.1979).
In adhering to the foregoing principles, we have held that enforcement of an agency's investigatory subpoena will be denied
only when there is "a patent lack of jurisdiction" in an agency to regulate or to investigate. See CAB v. Deutsche Lufthansa
Aktiengesellschaft, 591 F.2d 951, 952 (D.C.Cir.1979); see also Gov't of Territory of Guam v. Sea-Land Serv., Inc., 958 F.2d
1150, 1155 (D.C.Cir.1992); Ernstthal, 607 F.2d at 492 (declining to relax "the well-established barrier against ruling on the
agency's regulatory jurisdiction in subpoena enforcement proceeding ... where the absence of jurisdiction is not patent, and
736 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW TODAy
there are no allegations of agency bad faith"). As the following discussion will demonstrate, there is no "patent lack of
jurisdiction" in this case.
B. Preemption of the FTC's Power to Regulate Deceptive Advertising
 On its own terms, the FTC Act gives the FTC ample authority to investigate and, if deceptive practices are uncovered, to
regulate appellants' advertising practices. See 15 U.S.C. §§ 45(a) (allowing the Commission to prevent unfair competition
and deceptive acts or practices in or affecting commerce); 52-54 (allowing the Commission to regulate and enjoin false
advertising); 57b-1(c) (allowing the Commission to issue CIDs to investigate possible § 45 violations). Therefore, the FTC
is entitled to have its subpoenas enforced unless some other source of law patently undermines these broad powers.
Appellants contend that two federal statutes have this effect. KRC and Chart, who sell courses in commodities investing,
argue that the 1974 amendments to the Commodity Exchange Act expressly preempted the FTC's jurisdiction over their
activities as registered CTAs. KRI and Warren, who sell courses in securities investing, argue that the Investment
Advisers Act impliedly preempts the Commission's regulatory power over their advertisements. We consider these
contentions in turn, and conclude that neither has merit.
1. Appellants' Claim of Express Preemption Pursuant to the Commodity Exchange Act
Though Congress has long sought to regulate the futures market, the Commodity Futures Trading Commission is not very
old. The first federal statute dealing with commodities trading, the 1921 Future Trading Act, was declared
unconstitutional by the Supreme Court, see Hill v. Wallace, 259 U.S. 44, 42 S.Ct. 453, 66 L.Ed. 822 (1922), and quickly
replaced by the Grain Futures Act, which the Court upheld, see Bd. of Trade of City of Chicago v. Olsen, 262 U.S. 1, 43 S.Ct.
470, 67 L.Ed. 839 (1923). In 1936, this latter enactment was amended and renamed the Commodity Exchange Act. That
initial version of the CEA delegated certain regulatory responsibilities to a commission composed of the Attorney General,
along with the Secretaries of Agriculture and Commerce. See Merrill Lynch, Pierce, Fenner & Smith v. Curran, 456 U.S.
353, 360-63, 102 S.Ct. 1825, 1830-32, 72 L.Ed.2d 182 (1982); S.REP. NO. 93-1131, at 13-14 (1974), reprinted in 1974
U.S.C.C.A.N. 5843, 5855.
*588 It was not until 1974, however, that the CFTC as it exists today was born. After considerable deliberation, Congress
enacted the Commodity Future Trading Commission Act ("CFTCA"), an extensive overhaul of the CEA that both expanded
the statute's coverage and dramatically altered its enforcement scheme. Curran, 456 U.S. at 365-66, 102 S.Ct. at 1832-33.
Most importantly, the CFTCA for the first time brought all commodities under federal regulation; the earlier statutes had
covered only enumerated agricultural goods that in no way represented the vast array of products that were actually being
traded on futures markets. See H.R.REP. NO. 93-963, at 38 (1974). The Commission spawned by the 1974 statute was an
independent regulatory agency invested with broad powers to regulate futures trading and commodities exchanges. See
S.Rep. No. 93-1131, at 2-3, 1974 U.S.C.C.A.N. at 5844-45; CFTC v. Schor, 478 U.S. 833, 836, 106 S.Ct. 3245, 3249, 92
L.Ed.2d 675 (1986) (describing the "sweeping authority" entrusted to the CFTC). Congress authorized the CFTC to bring
an action for injunctive relief in federal district court against anyone violating the CEA or the regulations promulgated
thereunder. See Commodity Future Trading Commission Act of 1974, Pub.L. No. 93-463, § 211, 88 Stat. 1402 (1974)
(codified as amended at 7 U.S.C. § 13a-1).
Moreover, and most important to the present case, the new agency was invested with exclusive jurisdiction over certain
aspects of the futures trading market. See id., § 201, 88 Stat. 1389 (codified as amended at 7 U.S.C. § 2(a)(1)(A) (2001)).
The aim of this provision, according to one of its chief sponsors, was to "avoid unnecessary, overlapping and duplicative
regulation," especially as between the Securities and Exchange Commission and the new CFTC. 120 Cong. Rec. H34,736
(Oct. 9, 1974) (remarks of House Agriculture Committee Chairman Poage); Philip F. Johnson, The Commodity Futures
Trading Commission Act: Preemption as Public Policy, 29 VAND. L. REV. 12-13; 16-17 (1976).
In determining what Congress intended when it passed § 2(a)(1)(A), we must focus on the precise text of the enacted
legislation. See Carter v. United States, 530 U.S. 255, 271, 120 S.Ct. 2159, 2170, 147 L.Ed.2d 203 (2000) ("In analyzing a
statute, we begin by examining the text, not by psychoanalyzing those who enacted it.") (internal citations omitted). Section
2(a)(1)(A) reads as follows:
The Commission shall have exclusive jurisdiction ... with respect to accounts, agreements (including any transaction which
is of the character of, or is commonly known to the trade as, an "option", "privilege", "indemnity", "bid", "offer", "put", "call",
"advance guaranty", or "decline guaranty"), and transactions involving contracts of sale of a commodity for future delivery,
traded or executed on a contract market designated or derivatives transaction execution facility registered pursuant to
section 7 or 7a of this title or any other board of trade, exchange, or market, and transactions subject to regulation by the
Commission pursuant to section 23 of this title. Except as hereinabove provided, nothing contained in this section shall (I)
supersede or limit the jurisdiction at any time conferred on the Securities and Exchange Commission or other regulatory
authorities under the laws of the United States or of any State, or (II) restrict the Securities and Exchange Commission and
such other authorities from carrying out their duties and responsibilities in accordance with such laws. Nothing in this
section shall supersede or limit the jurisdiction conferred on courts of the United States or any State.
*589 7 U.S.C. § 2(a)(1)(A) (emphasis added). Appellants (KRC and Chart) contend that this provision precludes the FTC
from regulating their activities as registered CTAs, because the statute gives the CFTC "exclusive jurisdiction" over
CHAPTER 36: ADMINISTRATIVE LAW 737
"accounts, agreements ... and transactions involving contracts of sale of a commodity for future delivery." In other words,
Ken Roberts claims that the advertising and promotion of educational materials that purport to teach investors how to get
rich trading futures are "transactions involving contracts of sale of a commodity for future delivery." Thus, appellants
would have us construe this phrase to confer exclusive jurisdiction on the CFTC over the marketing practices of firms that
sell not commodities themselves, but rather instruction in commodities trading. We find this interpretation of the
Commission's exclusive jurisdiction to be far-fetched, to say the least.
On its face, § 2(a)(1)(A) confers exclusive jurisdiction to the CFTC over a limited, discrete set of items related to the making
of futures contracts. Specifically, these are (1) "accounts ... involving contracts of sale of a commodity for future delivery," (2)
"agreements" involving the same, (3) "transactions" involving the same, and (4) "transactions subject to regulation by the
Commission pursuant to section 23 of this title" (dealing with so- called "margin" or "leverage" contracts). It is certainly not
obvious that the advertising at issue in this case fits in any of these categories. "Transactions," broadly construed, is perhaps
appellants' best bet. Yet, it strains common parlance to construe "transactions involving contracts of sale of a commodity"
to include the marketing practices of a firm that does not buy and sell futures, but rather merely instructs others how to do
so. As it is generally understood, the word "transactions" conveys a reciprocity, a mutual exchange, which seems absent
from the allegedly deceptive advertising materials that the FTC seeks to investigate in this case. See WEBSTER'S THIRD
NEW INTERNATIONAL DICTIONARY 2425-26 (defining "transaction" as, inter alia, "a business deal" and "a
communicative action or activity involving two or more parties or two things reciprocally affecting or influencing each
Appellants seek to overcome this impression by pointing to a separate provision in the statute that uses "transactions" in a
different, and more expansive, way. As part of the 1974 overhaul of the CEA, Congress made a set of legislative findings in
which it announced that the activities of CTAs, including "their advice, counsel, publications, writings, analyses, and reports
[,] customarily relate to and their operations are directed toward and cause the purchase of commodities for future
delivery...." 7 U.S.C. § 6l. This finding then goes on to say that "the foregoing transactions occur in such volume as to affect
substantially transactions on contract markets." Id. (emphases added). Ken Roberts contends that because Congress used
the term "transactions" to mean advice, counsel, publications, etc., in § 6l, we must read that term the same way in the
exclusive jurisdiction provision in § 2(a)(1)(A). "The rule of in pari materia - like any canon of statutory construction - is a
reflection of practical experience in the interpretation of statutes: a legislative body generally uses a particular word with a
consistent meaning in a given context." Erlenbaugh v. United States, 409 U.S. 239, 243, 93 S.Ct. 477, 480, 34 L.Ed.2d 446
(1972). In this case, however, appellants' attempted reliance on the in pari materia canon of construction is entirely
unconvincing, because it proves far too much.
Appellants ignore the fact that § 6l uses the word "transactions" twice in the same *590 sentence to mean two different
things. The second appearance of the word - "transactions on contract markets" - cannot reasonably embrace the broad set
of activities contemplated by the first. Instead, the second reference to "transactions" in § 6l is best understood to refer to
the actual trading of futures contracts. As such, the in pari materia rule is of little help to appellants, for it provides no
guidance as to which construction of "transactions" the court should import from § 6l into § 2(a)(1)(A).
 By contrast, when "transactions" is examined in the context of § 2(a)(1)(A), it seems most naturally read as
encompassing, like its neighbors, a set of arrangements directly related to the actual sale of commodities futures. In
statutory interpretation, after all, words are generally known by the company they keep. Gustafson v. Alloyd Co., 513 U.S.
561, 575, 115 S.Ct. 1061, 1069, 131 L.Ed.2d 1 (1995) (describing and applying the noscitur a sociis canon). And here,
because "accounts" and "agreements" seem so plainly to denote categories of financial arrangements through which the
trading of commodities occurs or is facilitated, it makes sense to construe "transactions" in the same way.
These terms were added to the bill that became the CFTCA in order to extend the Commission's exclusive jurisdiction over
so-called "discretionary accounts," commodity options, and other trading agreements described in the statute. See Johnson,
at 14 & n.44; H.R. Conf. Rep. No. 93-1383 (1974), reprinted in 1974 U.S.C.C.A.N 5894, 5897 ("[T]he Commission's
[exclusive] jurisdiction ... includes the regulation of commodity accounts, commodity trading agreements, and commodity
options."). Noscitur a sociis instructs us to construe "transactions" in a similar light, as denoting a set of actions closely
linked to the actual trading of commodities. Under this reading, all of the categories delineated in § 2(a)(1)(A) describe
business deals that involve the buying and selling of futures, which comports with Congress' goal of conferring the CFTC
with sole regulatory authority over "futures contract markets or other exchanges," H.R. Conf. Rep. No. 93-1383, 1974
U.S.C.C.A.N. at 5897 (emphasis added), or "over options trading in commodities (but not in securities)," S.Rep. No. 93-1131,
at 31, 1974 U.S.C.C.A.N. at 5870 (emphasis added).
A second problem with the broad definition of "transactions" proposed by the appellants is that it produces potentially
absurd results. See Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 575, 102 S.Ct. 3245, 3252, 73 L.Ed.2d 973 (1982)
("[I]nterpretations of a statute which would produce absurd results are to be avoided if alternative interpretations consistent
with the legislative purpose are available."). The first use of that word in § 6l sweeps more broadly than just the "advice,"
"counsel," and "publications" of CTAs; indeed, it includes their very "operations" as well. And an interpretation of §
2(a)(1)(A) under which the CFTC was given exclusive authority over all CTA "operations involving contracts of sale of a
738 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW TODAy
commodity," especially when coupled with the expansive reading of "involving" urged by appellants, would seem to preclude
virtually any other government regulation affecting the futures trading industry. It could suggest, for example, that
government agencies regulating employment relations or safety and health would be powerless to take action against CTAs.
We do not believe that this is what Congress intended when it enacted § 2(a)(1)(A).
As noted above, the statute's legislative history repeatedly emphasizes that the CFTC's jurisdiction was "to be exclusive
*591 with regard to the trading of futures on organized contract markets." S.Rep. No. 93-1131, at 23, 1974 U.S.C.C.A.N. at
5863 (emphasis added). Indeed, as the Seventh Circuit has recognized, the goal of the CFTCA was to bring the futures
markets "under a uniform set of regulations" and that "[o]nly in the context of market regulation does the need for uniform
legal rules apply." Am. Agric. Movement, Inc. v. Bd. of Trade of City of Chicago, 977 F.2d 1147, 1155-57 (7th Cir.1992)
(relying on this legislative purpose to hold that state common law actions against commodities brokers are preempted only
when they would "directly affect trading on or the operation of a futures market"). It is true that the CFTC was created to
regulate all commodities and commodities trading, see Point Landing, Inc. v. Omni Capital Int'l Ltd., 795 F.2d 415, 420-21
(5th Cir.1986); it does not follow from this, however, that Congress intended to preempt the activities of all other federal
agencies in their regulatory realms. "Preemption of the regulation of the market does not also mean preemption of all law
that might involve participants in the market." Poplar Grove Planting and Refining Co. v. Bache Halsey Stuart Inc., 465
F.Supp. 585, 592 (D.La.1979). Appellants' position makes no sense insofar as it suggests that the scope of the CFTC's
exclusive jurisdiction is broader than the scope of the agency's authority to regulate under the CEA.
We will give appellants the benefit of the doubt and assume that what they really mean to argue is that the limits of the
exclusive jurisdiction provision in § 2(a)(1)(A) is coterminous with the limits of the CFTC's regulatory authority under the
CEA. In other words, Ken Roberts appears to assume that, at a minimum, whatever the Commission may regulate, it
regulates exclusively. This is a specious contention. Both the text and purpose of the statute contemplate a regime in which
other agencies may share power with the CFTC over activities that lie outside the scope of § 2(a)(1)(A), but that still involve
the activities of commodities advisers or that implicate other provisions of the CEA. Indeed, the inclusion of the so-called
"regulatory savings clauses," § 2(a)(1)(A)(I)-(II), makes clear that other agencies, such as the FTC, retain their jurisdiction
over all matters beyond the confines of "accounts, agreements, and transactions involving contracts of sale of a commodity
for future delivery." Cf. Chicago Mercantile Exch. v. SEC, 883 F.2d 537, 550 (7th Cir.1989) (noting that § 2 "carries no
implicit preemptive force").
The imperfect overlap between § 2(a)(1)(A) and the rest of the CEA is neatly demonstrated by the statute's antifraud
provision, on which the CFTC's own power to investigate appellants, which it has done since 1994, presumably rests. 7
U.S.C. § 6o makes it unlawful, inter alia, for a CTA "to engage in any transaction, practice, or course of business which
operates as a fraud or deceit upon any client or participant or prospective client or participant." Thus, while the CFTC has
the clear statutory authority to regulate a CTA's deceitful "practices" - and "practices," far more so than "transactions,"
comfortably describes the advertising at issue in this case - there is no reason to think that this authority is exclusive. A
"practice" or "course of business" is quite plainly not a "transaction" - either in life or in this statutory provision. (Nor for
that matter is it an "account" or "agreement.") As such, a comparison of the texts of § 6o and § 2(a)(1)(A) appears to indicate
that the CFTC's authority over CTAs is broader than the substantive scope of its exclusive jurisdiction to regulate futures
and futures markets.
In sum, then, both context (textual and historical) and common sense support a reading of the exclusive jurisdiction
provision *592 in which the phrase "accounts, agreements, and transactions involving contracts of sale of a commodity" does
not cover the marketing of investor-education courses that leads only tangentially to the actual purchase of futures. While
the FTC's investigation may implicate the CEA, we believe that it falls outside of the range of subjects described by §
2(a)(1)(A). At the very least, the foregoing discussion illustrates that there is no "patent lack of jurisdiction" in the FTC to
investigate or regulate in this case. Appellants' preemption arguments are simply not compelling enough to overcome this
court's long- standing chariness about entertaining jurisdictional challenges to administrative subpoenas. Accordingly, we
hold that the District Court's properly allowed the FTC to proceed with its investigation of KRC and Chart.
2. Implied Preemption Under the Investment Advisers Act
KRI and Warren, whose businesses involve securities rather than commodities, assert that the comprehensive scope of the
Investment Advisers Act of 1940, 15 U.S.C. § 80b-1 et seq. (1997), preempts the FTC's jurisdiction to regulate the fraudulent
practices of "investment advisers" such as themselves. Even if there were something to this claim, which we doubt, it does
not come close to establishing that the FTC is manifestly without jurisdiction in regard to the subject matter of its
In contrast to the CEA, the IAA contains no express exclusive jurisdiction provision. As such, the only vehicle by which the
FTC's otherwise-plenary power to investigate and uproot unfair or deceptive trade practices could be disturbed is through
the doctrine of implied repeal. We have recognized that, where intended by Congress, " 'a precisely drawn, detailed statute
pre-empts more general remedies.' " Galliano v. U.S. Postal Serv., 836 F.2d 1362, 1367 (D.C.Cir.1988) (quoting Brown v.
Gen. Servs. Admin., 425 U.S. 820, 834, 96 S.Ct. 1961, 1968, 48 L.Ed.2d 402 (1976)). This can occur either where the two
enactments are in "irreconcilable conflict" or where the latter was clearly meant to serve as a substitute for the former.
CHAPTER 36: ADMINISTRATIVE LAW 739
Posadas v. Nat'l City Bank, 296 U.S. 497, 503, 56 S.Ct. 349, 352, 80 L.Ed. 351 (1936); cf. Demby v. Schweiker, 671 F.2d 507,
513 (D.C.Cir.1981) (Wright, J., concurring) (describing the two kinds of implied repeals). Appellants contend that the
antifraud provision of the IAA, which prohibit investment advisers from engaging "in any transaction, practice, or course of
business which operates as a fraud or deceit upon any client or prospective client," 15 U.S.C. § 80b- 6(2), stands as just such
a specific remedy that displaces the more general coverage of the FTC Act.
To prevail at this stage of the litigation, KRI and Warren must establish not merely that the IAA, properly construed,
deprives the FTC of jurisdiction, but that it does so patently. However, the entire structure of the implied preemption
inquiry militates against such a finding in this case. Both the Supreme Court and this court have observed that implied
repeals of one statute (or a provision in one statute) by another are "not favored." Radzanower v. Touche Ross & Co., 426
U.S. 148, 154, 96 S.Ct. 1989, 1993, 48 L.Ed.2d 540 (1976) (quoting United States v. United Cont'l Tuna Corp., 425 U.S. 164,
168, 96 S.Ct. 1319, 1323, 47 L.Ed.2d 653 (1976)); Galliano, 836 F.2d at 1369 ("strongly disfavored"). They are recognized
only where the intention of the legislature is "clear and manifest." Posadas, 296 U.S. at 503, 56 S.Ct. at 351; Morton v.
Mancari, 417 U.S. 535, 549-50, 94 S.Ct. 2474, 2482-83, 41 L.Ed.2d 290 (1974) (some "affirmative showing" of intent to repeal
*593 Because we live in "an age of overlapping and concurring regulatory jurisdiction," Thompson Med. Co. v. FTC, 791
F.2d 189, 192 (D.C.Cir.1986), a court must proceed with the utmost caution before concluding that one agency may not
regulate merely because another may. E.g., Galliano, 836 F.2d at 1369-70 (relying on the First Amendment and the canon
of constitutional doubt in holding that the Federal Election Campaign Act partially preempted the postal fraud prescriptions
of 39 U.S.C. § 3005); see also Pennsylvania v. ICC, 561 F.2d 278, 292 (D.C.Cir.1977) ("It is well established that when two
regulatory systems are applicable to a certain subject matter, they are to be reconciled and, to the extent possible, both
given effect."). In this case, while it may be true that the IAA and the FTC Act employ different verbal formulae to describe
their antifraud standards, it hardly follows that they therefore impose conflicting or incompatible obligations. See
Radzanower, 426 U.S. at 155, 96 S.Ct. at 1992-93 (repeals only implied to the extent necessary to make the later enacted
law work). Undoubtedly, entities in appellants' position can - and of course should - refrain from engaging in both "unfair
and deceptive acts or practices" and "any transaction, practice, or course of business which operates as a fraud or deceit
upon a client or prospective client." The proscriptions of the IAA are not diminished or confused merely because investment
advisers must also avoid that which the FTC Act proscribes. And, because these statutes are "capable of co-existence," it
becomes the duty of this court "to regard each as effective" - at least absent clear congressional intent to the contrary.
Mancari, 417 U.S. at 551, 94 S.Ct. at 2483.
Appellants can point to nothing in the background or history of the IAA that demonstrates (or even hints at) a congressional
intent to preempt the antifraud jurisdiction of the FTC over those covered by the new statute. Nor does the subsequent
case law interpreting these statutes contain such declarations. The closest case is perhaps Spinner Corp. v. Princeville
Develop. Corp., 849 F.2d 388, 392 n. 4 (9th Cir.1988), which notes that the "FTC has never undertaken to adjudicate
deceptive conduct in the sale and purchase of securities, presumably because such transactions fall under the
comprehensive regulatory umbrella of the Securities and Exchange Commission." Based on this observation, the court held
that Hawaii's "baby FTC Act," which was patterned after the federal statute, did not regulate the purchase and sale of
securities, despite language that would seem to include such activity. See id. Even if we agreed with the Ninth Circuit's
dubious reasoning - which implies that because a power has not been exercised, the power does not exist - we simply do not
think that such indicia of intent are enough to allow us to quash the FTC's subpoenas.
In sum, then, whatever the ultimate force of arguments about the structure of the IAA or the FTC's historical practice
regarding securities transactions, neither of these are sufficiently forceful to deprive the Commission of its general
prerogative to determine, at least in the first instance, the scope of its own investigatory authority.
For the reasons given above, we hold that the FTC is entitled to enforce its CIDs against all four appellants in this case.
Neither the Commodity Exchange Act nor the Investment Advisers Act evince an unambiguous intent to deprive the FTC of
its otherwise applicable authority to investigate possibly deceptive advertising and marketing practices merely because
those practices relate to either the commodities or the securities business. *594 Accordingly, the decision of the District
Court is affirmed.
740 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW TODAy
(Cite as: 105 F.3d 248)
65 USLW 2497, 44 ERC 1029, 27 Envtl. L. Rep. 20,501, 1997 Fed.App. 22P
The SIERRA CLUB, et al., Plaintiffs-Appellants,
Jack Ward THOMAS, et al., Defendants-Appellees,
Ohio Forestry Association, Inc., Intervening Defendant-Appellee.
United States Court of Appeals,
Argued Oct. 12, 1995.
Decided Jan. 21, 1997.
Rehearing and Suggestion for Rehearing En Banc Denied April 7, 1997.
BOYCE F. MARTIN, JR., Chief Judge.
The Sierra Club and Citizens Council on Conservation and Environmental Control appeal the district court's order granting
summary judgment to Jack Ward Thomas, Chief of the United States Forest Service, and officials of the United States
Forest Service, pursuant to the district court's review of the Land Resource Management Plan for the Wayne National
Forest. For the reasons described below, we reverse and remand this matter to the district court for further proceedings
consistent with this opinion.
In 1988, the regional forester for the Eastern Division of the United States Forest Service issued a decision, pursuant to the
National Forest Management Act, adopting a ten-year plan for Ohio's Wayne National Forest. The plan designated 126,107
acres of the Wayne from which timber could be removed or cut. During the ten-year life of the plan, 7.5 million board feet of
timber could be cut per year. The plan designated that eighty percent of all timbering techniques would be "even-aged"
management, a harvest technique aimed at creating a regeneration of trees which are essentially the same age. In almost
all cases, the even-aged management contemplated clearcutting of the timber. Clearcutting involves the removal of all trees
within areas ranging in size from fifteen to thirty acres, and is thus a very sensitive public issue.
The Sierra Club appealed the regional forester's decision to the chief of the Forest Service pursuant to the applicable
regulations. In 1990, the chief of the Forest Service denied the Sierra Club's appeal and affirmed the plan. Pursuant to
final agency action, the Sierra Club filed this action in the district court. Appealing the district court's order granting
summary judgment to the Forest Service, the Sierra Club argues that the Forest Service made arbitrary assumptions in the
Wayne planning process that biased the plan toward timbering.
The National Forest Management Act was enacted as a direct result of congressional concern for Forest Service clearcutting
practices and the dominant role timber production has historically played in Forest Service policies. Congress was
concerned that, if left to its own essentially unbridled devices, the Forest Service would manage the national forests as mere
monocultural "tree farms." Procedurally, the Act requires the Forest Service to develop Land and Resource Management
*250 Plans for the national forests. This formal planning process was designed to curtail agency discretion and to ensure
forest preservation and productivity. Substantively, the Act imposes extensive limitations on timber harvesting by
restricting the use of clearcutting to situations in which clearcutting is the optimum method for harvesting.
First, we address the threshold issue of justiciability. The Forest Service claims that the Sierra Club lacks standing. To
establish constitutional standing, a plaintiff first must first suffer an injury-in-fact that is (1) concrete and particularized,
and (2) actual or imminent, not conjectural or hypothetical. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct.
2130, 2136, 119 L.Ed.2d 351 (1992). Second, the injury must be fairly traceable to the defendant's conduct. Id. at 560-61,
112 S.Ct. at 2136. Third, the injury must be redressable by the court. Id. at 561, 112 S.Ct. at 2136. In cases involving Land
Resource Management Plans, the most controverted standing issue is whether the injury is imminent.
 A plaintiff who seeks review of a Land Resource Management Plan must show that it will suffer personal harm as a
result of the plan. We have long recognized that injury is not confined to economic injury; aesthetic and environmental
injuries can be embraced by this definition of personal harm. Sierra Club v. Morton, 405 U.S. 727, 734, 92 S.Ct. 1361, 1366,
31 L.Ed.2d 636 (1972). Land Resource Management Plans represent significant and concrete decisions that play a critical
role in future Forest Service actions. "To the extent that the plan pre-determines the future, it represents a concrete injury
that plaintiffs must, at some point, have standing to challenge." Idaho Conservation League v. Mumma, 956 F.2d 1508,
1516 (9th Cir.1992). If the Sierra Club was allowed to challenge the Forest Service plan only at the site-specific stage, then
the meaningful citizen participation contemplated by the National Forest Management Act "would forever escape review."
 The district court concluded that the Sierra Club's challenge presented a ripe controversy. Closely related to the issue of
standing, the ripeness doctrine exists to keep the judiciary from "entangling [itself] in abstract disagreements over
administrative policies" by preventing premature adjudication. Sierra Club v. Marita, 46 F.3d 606, 614 (7th
CHAPTER 36: ADMINISTRATIVE LAW 741
Cir.1995)(quoting Abbott Lab. v. Gardner, 387 U.S. 136, 148-49, 87 S.Ct. 1507, 1515, 18 L.Ed.2d 681 (1967)). The Forest
Service maintains that disputes over forest planning are not ripe for review until a site-specific action occurs. We agree with
the district court. Plaintiffs need not wait to challenge a specific project when their grievance is with an overall plan.
 Because we find that the Sierra Club's case is justiciable, we turn now to the merits. We give no particular deference to
the district court and directly review the administrative record as if we were the first reviewing court. Schuck v. Frank, 27
F.3d 194, 197 (6th Cir.1994). While it is generally accepted that federal agencies are entitled to a presumption of good faith
and regularity in arriving at their decisions, that presumption is not irrebuttable. We would be abdicating our
Constitutional role were we simply to "rubber stamp" this complex agency decision rather than ensuring that such decision
is in accord with clear congressional mandates. It is our role to see that important legislative purposes are not lost or
misdirected in the vast hallways of the federal bureaucracy. Specifically, we must decide whether the Forest Service took a
hard look at the relevant factors and reached a decision that was neither arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with the law.
 The Sierra Club contends that the even-aged logging agenda is illegal in that the Forest Service has not complied with
the constraints on its choice of even-aged management techniques contained in the National Forest Management Act. In
reviewing this record, we have carefully examined the conclusions drawn by the Forest Service to test for internal
consistency and reasonableness. Although the Forest Service has the benefit of the presumption of good faith and regularity
in agency action, we have attempted to ascertain whether the plan has been improperly skewed. We conclude that the *251
planning process was improperly predisposed toward clearcutting. The resulting plan is arbitrary and capricious because it
is based upon this artificial narrowing of options.
Although it would be impractical to set forth the details of the administrative record here, one example of bias is
particularly illustrative. The Forest Service argues that its even-aged management plan is based on evidence that timbering
will provide new opportunities for recreation that will, in turn, preserve and enhance the diversity of plant and animal
communities in the Wayne National Forest. Most recreation does not require timber harvesting, however. Further, as the
Forest Service's own records reflect, the Wayne is surrounded by and intermingled with privately-held land which already
contains an abundance of diverse plant and animal life. Timbering simply does not promote the kind of recreational
activities that are in demand in the Wayne; in fact, recreation like fishing and hiking is harmed by clearcutting. The
planners also failed to recognize that cutting is unlikely to stimulate new and valuable forms of recreation because much of
the Wayne has already been cut or developed. In that particular environment, clearcutting loses its value.
The National Forest Management Act mandates that the Service ensure that even-aged management practices be used in
the national forests only when "consistent with the protection of soil, watershed, fish, wildlife, recreation, and aesthetic
resources, and the regeneration of the timber resource." 16 U.S.C. § 1604(g)(3)(F)(v). The National Forest Management Act
thus contemplates that even-aged management techniques will be used only in exceptional circumstances. Yet, the
defendants would utilize even-aged management logging as if it were the statutory rule, rather than the exception. By
arbitrarily undervaluing the recreational value of wilderness, the Forest Service created a very distorted picture of the
Wayne National Forest. Based on false premises such as these, the Forest Service improperly concluded that clearcutting
It is not surprising that the Forest Service came to this conclusion. Created, in part, to ensure a reliable timber supply, the
Forest Service has a history of preferring timber production to other uses. Rather than being a neutral process which
determines how the national forests can best meet the needs of the American people, forest planning, as practiced by the
Forest Service, is a political process replete with opportunities for the intrusion of bias and abuse. Because national forests
are located near rural communities, foresters make management decisions to support perceived needs in the communities.
By sharing timber proceeds with those communities, the Forest Service strengthens the link between timber sales and the
livelihoods of local constituencies. See, Office of Technology Assessment, Forest Service Planning: Accommodating Uses,
Producing Outputs, and Sustaining Ecosystems 46 (1992). The resulting dependency of these communities on timber
production causes over-harvesting and destructive harvesting methods. The relationship of the Forest Service to the timber
industry also constrains the Forest Service's planning freedom. Rural constituencies reliant on timber sale revenues may
provoke politicians to place pressure on the Forest Service to sustain that revenue. Consequently, the Forest Service
becomes trapped: cutting off timber sales would cause loss of employment and revenue in local communities but continued
timber sales risk over-harvesting and below-cost sales.
The Forest Service budgeting process, which allows the Forest Service to keep a percentage of the funds it realizes from
timber sales, provides an incentive for the Forest Service to sell timber below cost or at a loss. See, Randal O'Toole,
Reforming the Forest Service 122 (1988). Also, to maximize its budget, the Forest Service uses expensive timber
management and reforestation techniques, such as clearcutting. Id. Again, conflicting interests lead to perverse results:
clearcutting provides the Forest Service with a higher congressional subsidy because the Forest Service can request
preparation and administrative costs. Consequently, decisions may be made, not because they are in the best interest of the
American people but because they benefit the Forest Service's fiscal interest.
742 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW TODAy
*252 Each of these biases undermines even the facial neutrality of the National Forest Management Act. Even when there
may be more valuable uses for the land, the above biases and constraints cause the Forest Service to manage primarily to
maximize timber outputs.
The public nature of the planning process and the public's right to appeal timber sales were intended by Congress to be a
check on the Forest Service's power and discretion. Judicial review of planning decisions is intended to be a further check.
Accordingly, in light of our examination of the structure, legislative history, and purpose of the National Forest
Management Act we find the Forest Service has failed to comply with the protective spirit of the National Forest
Management Act. We further find that this non-compliance is an arbitrary act in excess of the statutory limitations
provided in § 1604(g)(3)(F)(v). The Forest Service's planning process, therefore, was not in accordance with the law.
Accordingly, we REVERSE the district court's order for summary judgment and REMAND this case to the district court for
further proceedings consistent with this opinion.