109 F.3d 418 (8th Cir. 1996), 96-3520, Iowa Utilities Bd. v. F.C.C.

Docket Nº:96-3520, 96-3603, 96-3604 and 96-3608.
Citation:109 F.3d 418
Party Name:IOWA UTILITIES BOARD, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION; United States of America, Respondents. NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION; United States of America, Respondents. The SOUTHERN NEW ENGLAND TELEPHONE COMPANY, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION
Case Date:October 15, 1996
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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Page 418

109 F.3d 418 (8th Cir. 1996)

IOWA UTILITIES BOARD, Petitioner,

v.

FEDERAL COMMUNICATIONS COMMISSION; United States of

America, Respondents.

NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS, Petitioner,

v.

FEDERAL COMMUNICATIONS COMMISSION; United States of

America, Respondents.

The SOUTHERN NEW ENGLAND TELEPHONE COMPANY, Petitioner,

v.

FEDERAL COMMUNICATIONS COMMISSION; United States of

America, Respondents.

BELL ATLANTIC CORPORATION; Bellsouth Corporation; Pacific

Telesis Group, Petitioners,

v.

FEDERAL COMMUNICATIONS COMMISSION; United States of

America, Respondents.

AMERITECH CORPORATION, Petitioner,

v.

FEDERAL COMMUNICATIONS COMMISSION; United States of

America, Respondents.

US WEST, INC., Petitioner,

v.

FEDERAL COMMUNICATIONS COMMISSION; United States of

America, Respondents.

GTE SERVICE CORPORATION; GTE Alaska, Incorporated; GTE

Arkansas, Incorporated; GTE California, Incorporated; GTE

Florida, Incorporated; GTE Midwest, Incorporated; GTE

South, Incorporated; GTE Southwest, Incorporated; GTE

North, Incorporated; GTE Northwest, Incorporated; GTE

Hawaiian Telephone Company, Incorporated; GTE West Coast,

Incorporated; Contel of California, Inc.; Contel of

Minnesota, Inc.; Contel of the South, Inc., Petitioners,

v.

FEDERAL COMMUNICATIONS COMMISSION; United States of

America, Respondents.

NEW YORK TELEPHONE COMPANY; New England Telephone and

Telegraph Company, Petitioners,

v.

FEDERAL COMMUNICATIONS COMMISSION; United States of

America, Respondents.

CINCINNATI BELL TELEPHONE COMPANY, Petitioner,

v.

FEDERAL COMMUNICATIONS COMMISSION; United States of

America, Respondents.

PEOPLE OF the STATE OF NEW YORK; The Public Service

Commission of the State of New York, Petitioners,

v.

FEDERAL COMMUNICATIONS COMMISSION; United States of

America, Respondents.

SBC COMMUNICATIONS, INC., Petitioner,

v.

FEDERAL COMMUNICATIONS COMMISSION; United States of

America, Respondents.

LOUISIANA PUBLIC SERVICE COMMISSION, Petitioner,

v.

FEDERAL COMMUNICATIONS COMMISSION; United States of

America, Respondents.

FLORIDA PUBLIC SERVICE COMMISSION, Petitioner,

v.

FEDERAL COMMUNICATIONS COMMISSION; United States of

America, Respondents.

SOUTH DAKOTA PUBLIC UTILITIES COMMISSION, Petitioner,

v.

FEDERAL COMMUNICATIONS COMMISSION; United States of

America, Respondents.

The PEOPLE OF the STATE OF CALIFORNIA; The Public Utilities

Commission of the State of California, Petitioners,

v.

FEDERAL COMMUNICATIONS COMMISSION; United States of

America, Respondents.

UNITED STATES TELEPHONE ASSOCIATION, Petitioner,

v.

FEDERAL COMMUNICATIONS COMMISSION; United States of

America, Respondents.

RURAL TELEPHONE COALITION, Petitioner,

v.

FEDERAL COMMUNICATIONS COMMISSION; United States of

America, Respondents.

COMPETITIVE TELECOMMUNICATIONS ASSOCIATION, Petitioner,

v.

FEDERAL COMMUNICATIONS COMMISSION; United States of

America, Respondents.

MISSISSIPPI PUBLIC SERVICE COMMISSION, Petitioner,

v.

FEDERAL COMMUNICATIONS COMMISSION; United States of

America, Respondents.

Nos. 96-3321, 96-3406, 96-3410, 96-3414, 96-3416, 96-3418,

96-3424, 96-3430, 96-3436, 96-3444, 96-3450,

96-3453, 96-3460, 96-3507, 96-3519,

96-3520, 96-3603, 96-3604 and 96-3608.

United States Court of Appeals, Eighth Circuit.

October 15, 1996

Submitted Oct. 3, 1996.

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Page 421

William Barr, Stamford Connecticut, argued for the local exchanges, and Diane Munns, Des Moines, Iowa, argued for the state utilities boards.

Christopher Wright, Washington, DC, argued for respondents.

David Carpenter, Chicago, Illinois, argued for intervenors.

Before BOWMAN, WOLLMAN and HANSEN, Circuit Judges.

HANSEN, Circuit Judge.

These cases have been consolidated in this circuit by the September 11, 1996 order of the Judicial Panel on Multidistrict Litigation, Docket No. RTC-31, pursuant to Rule 24 of the Rules of Procedure of the Judicial Panel on Multidistrict Litigation. See 28 U.S.C. § 2112(a)(3) (1994). Numerous petitioners have moved this court for a stay pending judicial review of the Federal Communications Commission's First Report and Order. 1 The FCC promulgated the rules and regulations in its First Report and Order pursuant to its reading of its statutory duty to implement the local competition provisions of the Telecommunications Act of 1996 (the Act). 2 This court granted a temporary stay on September 27, 1996, pending oral argument. After hearing oral argument on October 3, 1996, from representatives of the concerned parties, we have decided to stay the operation and effect of only the pricing provisions 3 and the "pick and choose" rule 4 contained in the FCC's First Report and Order pending our final determination of the issues raised by the pending petitions for review.

I.

In the Telecommunications Act of 1996, Congress enacted a plan to alter the monopolistic structure of local telephone service markets with an injection of competition. The Act effectively opens up local markets by imposing several new obligations on the existing providers of local telephone service in those markets. The Act refers to the current local providers as "incumbent local exchange carriers" (incumbent LECs). See 47 U.S.C.A. §§ 251(c), (h), 252(j) (West Supp. May 1996). Among other duties, the Act requires incumbent LECs (1) to allow other telecommunication carriers (such as cable television companies and current long-distance providers) to interconnect with the incumbent LEC's existing local network to provide competing local telephone service (interconnection); (2) to provide other telecommunication carriers access to elements of the incumbent LEC's local network on an unbundled

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basis (unbundled access); and (3) to sell to other telecommunication carriers, at wholesale rates, any telecommunications service that the incumbent LEC provides to its retail customers (resale). Id. § 251(c).

To accomplish these directives, the Act places a duty on incumbent LECs to privately negotiate, in good faith, comprehensive agreements with other telecommunication carriers seeking to enter the local market. See id. §§ 251(c)(1), 252(a). If the incumbent LEC and the carrier seeking entry are unable to reach a negotiated agreement, either party may petition the respective state utility commission to conduct a compulsory arbitration of the open and disputed issues and arrive at an arbitrated agreement. See id. § 252(b). The final agreement, whether arrived at through negotiation or arbitration, must be approved by the state commission. Id. § 252(e)(1). Certain portions of the Act also require the FCC to participate in the Act's implementation. See, e.g., id. §§ 251(b)(2), (d)(1), (e), 252(e)(5). The FCC's regulations pertaining to the Act form the heart of the controversies at bar.

On August 8, 1996, the FCC released its First Report and Order in which it published its comments and rules regarding the local competition provisions of the Act. The petitioners in this consolidated proceeding, consisting, at the moment, primarily of incumbent LECs and state utility commissions, argue that the FCC exceeded its authority in promulgating these rules. While several of the petitioners object to the FCC's regulations in their entirety, others specifically challenge the FCC's rules regarding the prices that an incumbent LEC may charge an incoming competitor for interconnection, unbundled access to network elements, and resale of its services.

Despite the different approaches, it is clear that all of the petitioners object principally to the FCC's pricing rules. One such rule is a mandate from the FCC that state...

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