AT&T Communications v. BellSouth Telecommunications

• Decision Date: 16 January 2001
• Docket Number: No. 99-30421,99-30421
• Citation: 238 F.3d 636,2001 WL 38281
• Parties: (5th Cir. 2001) AT&T COMMUNICATIONS, Plaintiff - Appellant v. BELLSOUTH TELECOMMUNICATIONS INC; LOUISIANA PUBLIC SERVICE COMMISSION; DON OWEN; IRMA MUSE DIXON; DALE SITTIG; JAMES M FIELD; JACK A BLOSSMAN; COMMISSIONER OF LOUISIANA PUBLIC SERVICE COMMISSION, in their official capacities, Defendants - Appellees. AT&T COMMUNICATIONS OF THE SOUTH CENTRAL STATES, INC, also known as AT&T, Plaintiff - Appellant, v. BELLSOUTH TELECOMMUNICATIONS INC; LOUISIANA PUBLIC SERVICE COMMISSION; DON OWEN, The Commissioners of the Louisiana Public Service Commissioners in their Official Capacity; IRMA MUSE DIXON, The Commissioners of the Louisiana Public Service Commissioners in their Official Capacity; DALE SITTIG, The Commissioners of the Louisiana Public Service Commissioners in their Official Capacity; JAMES M. FIELD, The Commissioners of the Louisiana Public Service Commissioners in their Official Capacity; JACK A. BLOSSMAN JR, The Commissioners of the Louisiana Public Service Commissioners in their Official Capacity, Defendants - Appellees. AMERICAN COMMUNICATION SERVICES OF LOUISIANA, INC; AMERICAN COMMUNICATION SERVICES OF BATON ROUGE, INC; AMERICAN COMMUNICATION SERVICES OF SHREVEPORT, INC, Plaintiffs - Appellants, v. BELLSOUTH TELECOMMUNICATIONS INC; THE LOUISIANA PUBLIC SERVICE COMMISSION; DON OWEN; IRMA MUSE DIXON; DALE SITTIG; JAMES M. FIELD; JACK A. BLOSSMAN also known as Jay Blossom; COMMISSIONERS OF THE LOUISIANA PUBLIC SERVICE COMMISSION, in their official capacities, Defendants - Appellees
• Court: U.S. Court of Appeals — Fifth Circuit

Page 636

238 F.3d 636 (5th Cir. 2001)

AT&T COMMUNICATIONS, Plaintiff - Appellant v. BELLSOUTH TELECOMMUNICATIONS INC; LOUISIANA PUBLIC SERVICE COMMISSION; DON OWEN; IRMA MUSE DIXON; DALE SITTIG; JAMES M FIELD; JACK A BLOSSMAN; COMMISSIONER OF LOUISIANA PUBLIC SERVICE COMMISSION, in their official capacities, Defendants - Appellees.

AT&T COMMUNICATIONS OF THE SOUTH CENTRAL STATES, INC, also known as AT&T, Plaintiff - Appellant, v. BELLSOUTH TELECOMMUNICATIONS INC; LOUISIANA PUBLIC SERVICE COMMISSION; DON OWEN, The Commissioners of the Louisiana Public Service Commissioners in their Official Capacity; IRMA MUSE DIXON, The Commissioners of the Louisiana Public Service Commissioners in their Official Capacity; DALE SITTIG, The Commissioners of the Louisiana Public Service Commissioners in their Official Capacity; JAMES M. FIELD, The Commissioners of the Louisiana Public Service Commissioners in their Official Capacity; JACK A. BLOSSMAN JR, The Commissioners of the Louisiana Public Service Commissioners in their Official Capacity, Defendants - Appellees.

AMERICAN COMMUNICATION SERVICES OF LOUISIANA, INC; AMERICAN COMMUNICATION SERVICES OF BATON ROUGE, INC; AMERICAN COMMUNICATION SERVICES OF SHREVEPORT, INC, Plaintiffs - Appellants, v. BELLSOUTH TELECOMMUNICATIONS INC; THE LOUISIANA PUBLIC SERVICE COMMISSION; DON OWEN; IRMA MUSE DIXON; DALE SITTIG; JAMES M. FIELD; JACK

A. BLOSSMAN also known as Jay Blossom; COMMISSIONERS OF THE LOUISIANA PUBLIC SERVICE COMMISSION, in their official capacities, Defendants - Appellees.

No. 99-30421

UNITED STATES COURT OF APPEALS, Fifth Circuit

January 16, 2001

Appeals from the United States District Court For the Middle District of Louisiana.

Before POLITZ, SMITH, and DENNIS, Circuit Judges.

DENNIS, Circuit Judge:

The issues in this case are (1) whether a telecommunications carrier is barred by the Eleventh Amendment from bringing suit in federal district court against a state public service commission under Section 252 (e)(6) of the Telecommunications Act of 1996, 47 U.S.C. § 151, et seq. (1996 Act or Act), for judicial review of whether the commission's arbitration determination with respect to an interconnection agreement meets the requirements of § 151 of the Act and applicable FCC regulations; and (2) whether the carrier may bring an action under the Ex parte Young doctrine in federal court against the individual members of a state public service commission in their official capacities for prospective relief from their arbitration determination contrary to the requirements of § 251 of the Act and its implementing regulations.¹ The district court held that the plaintiff telecommunications carriers were barred by Eleventh Amendment immunity from bringing such actions and dismissed their suits. We reverse and remand the case for further proceedings in accordance with the 1996 Act and the Ex parte Young doctrine.

In the 1996 Act Congress pre-empted the states in the regulation of local telecommunications competition with regard to all matters addressed by the Act. The Act offers state public service commissions the option, however, of approving or rejecting, pursuant to §§ 251 and 252 of the Act, any interconnection agreement between carriers adopted by negotiation or arbitration. If the state public service commission declines such offer in any proceeding under the Act, the FCC is required to assume the responsibility of acting upon that matter. In a case in which the state public service commission accepts the responsibility offered and makes a determination under the Act, any party aggrieved by such determination may bring an action in an appropriate federal district court to determine whether the agreement meets the requirements of §§ 251 and 252. The 1996 Act provides that no state court shall have jurisdiction to review the action of a state commission in approving or rejecting an agreement under the Act.

When the Louisiana Public Service Commission (LPSC) accepted Congress's offer to function as an arbitrator under the Act in determining and approving the interconnection agreement in the present case, the regulation of local telecommunications competition and related interconnection agreements was no longer a permissible or lawful activity within the states' own powers. When Congress bestows a gift or gratuity upon a state of a benefit which cannot be obtained by the state's own power, Congress may attach to the gratuity the condition of a voluntary waiver by the state of its Eleventh Amendment immunity. Consequently, the LPSC voluntarily waived its state immunity when it accepted the Congressional offer of a gratuity that was clearly conditioned upon the LPSC's amenability to federal suits by private parties under the Act and arbitrated the interconnection dispute in the present case.²

The LPSC commissioners allegedly determined and approved an interconnection agreement that violates the requirements of the 1996 Act, and the aggrieved carriers bound by the determination seek prospective injunctive relief against the commissioners in their official capacities to terminate further operation of the agreement against them; therefore, the doctrine of Ex parte Young permits the suit to proceed against the commissioners.

I. The Telecommunications Act of 1996

A. Background; Preemption of State Regulatory Jurisdiction

In AT&T Corp. v. Iowa Utilities Board, 525 U.S. 366, 371-373 (1999), the Supreme Court succinctly described the context and content of the 1996 Act:

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 1996 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. When 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) 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.

(footnotes omitted).

The FCC issued its First Report and Order implementing local competition provisions under the 1996 Act six months after its passage. In Re Implementation of the Local Competiton Provisions in the Telecommunications Act of 1996, 11 FCC Rcd 15499 (1996) (First Report & Order). Numerous challenges to the FCC's rulemaking by incumbent LECs and state utility commissions were consolidated in the Eighth Circuit. The Court of Appeals vacated the FCC's pricing rules and several other aspects of the First Report and Order, as reaching beyond the Commission's jurisdiction. Iowa Utilities Board v. FCC, 120 F.3d 753, 800, 804, 805-806 (8th Cir. 1997). It held that the general rulemaking authority conferred upon the FCC by the Communications Act of 1934 extended only to interstate matters, and that the FCC therefore lacked the specific congressional authorization it needed for implementing provisions of the 1996 Act addressing intrastate communications. Id. at 795.

The Supreme Court in Iowa Utilities reversed on the main point, holding that the FCC has general jurisdiction to implement the 1996 Act's local-competition provisions. The Court concluded that since Congress expressly directed that the 1996 Act be inserted into the Communications Act of 1934, and since the 1934 Act already provides that the FCC "may prescribe such rules and regulations as may be necessary in the public interest to carry out the provisions of this Act," 47 U.S.C. § 201(b), the FCC's rulemaking authority extends to implementation of §§ 251 and 252. "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." Id. at 378. Furthermore, the Court held that section 152(b) of the Communications Act of 1934, which provides that "nothing in this chapter shall be construed to apply or to give the [FCC] jurisdiction with respect to . . . intrastate communications service . . ." does not change this conclusion because the 1996 Act clearly applies to intrastate matters. Id. at 379-380.

Significantly for purposes of deciding the Eleventh Amendment issues in the present case, the Court in Iowa Utilities, in answer to arguments of the dissenters relying on the presumption against preemption of state regulatory power, responded that the 1996 Act clearly manifested Congress's intent to supplant traditional state police power regulation of local telecommunications competition:

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 matters addressed by the 1996...