In re Verizon New England, Inc.

• Decision Date: 22 February 2002
• Docket Number: No. 00-118.,00-118.
• Citation: 795 A.2d 1196
• Parties: In re PETITION OF VERIZON NEW ENGLAND INC. d/b/a Verizon Vermont
• Court: Vermont Supreme Court

795 A.2d 1196

In re PETITION OF VERIZON NEW ENGLAND INC. d/b/a Verizon Vermont

No. 00-118.

Supreme Court of Vermont.

February 22, 2002.

Michael H. Dworkin, Chair.

Barbara G. Ripley of Wilson & White, P.C., Montpelier, Sean A. Lev of Kellogg, Huber, Hansen, Todd & Evans, P.L.L.C., Washington, D.C., and Victor D. Del Vecchio and Gregory M. Kennan, Boston, Massachusetts, for Appellant.

Charles F. Storrow of Kimbell & Storrow, Montpelier, and Kenneth W. Salinger of Palmer & Dodge LLP, Boston, Massachusetts, for Appellee AT & T Communications of New England, Inc.

Leslie A. Cadwell and John J. Cotter, Special Counsel, Montpelier, for Appellee Department of Public Service.

Present: AMESTOY, C.J., DOOLEY, MORSE, JOHNSON and SKOGLUND, JJ.

JOHNSON, J.

Bell Atlantic-Vermont appeals an order of the Public Service Board requiring the telecommunications company to make certain facilities or services available to competitive local exchange carriers. Bell Atlantic-Vermont argues that the Public Service Board's order is inconsistent with federal law, and is not supported by independent state authority. We hold that there is ample state authority to support the order of the Public Service Board, and that the order does not contradict federal law.¹ Accordingly, we affirm.

This case arises from the merger of New England Telephone & Telegraph Company with Bell Atlantic, which was approved by the Public Service Board (PSB) in February 1997. As part of the agreement, the PSB ordered the merged company, known as Bell Atlantic-Vermont (BAVT), to comply with the federal "competitive checklist" that is laid out in 47 U.S.C. § 271(c)(2)(B), part of the Telecommunications Act of 1996 (the Act). The checklist contains fourteen elements that were designed to regulate the entry of a Bell operating company into interLATA services (service between the local exchange and an outside exchange). This case, however, does not implicate the checklist, or the Act, directly. Rather, the PSB appropriated the checklist's requirements as a framework for constraining any anti-competitive effects of the merger of Bell Atlantic and New England Telephone & Telegraph. Thus, the PSB required BAVT's compliance with the federal competitive checklist as an exercise of the PSB's authority under state law to oversee the merger, not to implement the checklist or the Act themselves.

The PSB ordered BAVT to comply with the competitive checklist by September 1997. In June 1998, the PSB held a hearing to assess the extent to which BAVT had complied with the competitive checklist and enacted any necessary changes to its network.² After receiving recommendations from two hearing officers in June 1999, the PSB issued its final order in January 2000.

In that decision, the PSB determined that BAVT had not satisfied two elements of the competitive checklist, and ordered compliance with them. One element of the checklist requires BAVT to provide "[n]on-discriminatory access to network elements in accordance with the requirements of sections 251(c)(3) and 252(d)(1) of [47 U.S.C.]." 47 U.S.C. § 271(c)(B)(ii). Another item on the checklist obligates BAVT to ensure that "[t]elecommunications services are available for resale in accordance with the requirements of sections 251(c)(4) and 252(d)(3) of this title." 47 U.S.C. § 271(c)(B)(xiv). The PSB held that BAVT had not complied with the nondiscriminatory access requirement of the competitive checklist because the company did not offer combinations of unbundled network elements (UNEs) that are ordinarily combined to provide service to a customer, but that are not currently physically combined, to competitors in the local exchange market. The PSB also found that BAVT had not complied with the element of the competitive checklist to resell telecommunications services because BAVT had not offered voice mail for resale to competitors. According to the PSB, its authority to order BAVT to provide combinations of UNEs is based both in the federal law referenced by the competitive checklist, as well as independent state law. In contrast, the PSB rested its decision to order BAVT to offer voice mail for resale solely on its authority under state law.

BAVT appeals from the decision, arguing that state law does not authorize the PSB to require the company to combine UNEs that are ordinarily combined at the request of a competitor. BAVT further contends that the federal law referenced in the competitive checklist does not require BAVT to provide a competitor with combinations of UNEs that are ordinarily combined, and thus any state law that mandates as much is preempted by federal law. Similarly, BAVT argues that it should not be required to resell voice mail as a telecommunications service to competitors because the PSB's jurisdictional grant over "telecommunications" does not include voice mail. BAVT claims that the federal definition of "telecommunications," which does not include voice mail, preempts the state definition, even if it includes voice mail, because the two definitions are inconsistent.

We affirm both determinations by the PSB on the ground that irrespective of federal law, state law authorizes the board to issue the challenged orders. We reject the claims of federal preemption because we do not find any aspect of relevant federal law inconsistent with the PSB's decision.

I. Regulatory Background

The competitive checklist, and the federal law referenced within, are part of the Telecommunications Act of 1996, Pub.L. No. 104-104 (codified throughout 47 U.S.C. §§ 151-609). The Act fundamentally amends the Communications Act of 1934, 48 Stat. 1064, the principal legislation that regulates telecommunications and established the FCC. According to the preamble, the 1996 Act's purpose is "to promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies." Pub.L. No. 104-104 (1996). As such, the Act aims to restructure local telephone markets by imposing duties on incumbent local exchange carriers to open their networks to competition and by preventing states from enforcing laws that impede entry into local exchange markets.

The use of a federal statute by a state board is consistent with the federal government's approach to telecommunications regulation, in which states are considered partners in regulation. In both the 1934 Act and the 1996 Act, Congress has taken pains to preserve the overlapping jurisdiction of the states and the federal government over the telecommunications industry. Specifically, the language of the 1996 Act compels the conclusion that Congress did not intend to occupy the field of telecommunications regulation, and that it took explicit steps to maintain the authority of state regulatory bodies to enforce and work within the Act. For example, 47 U.S.C. § 251(d)(3) states:

In prescribing and enforcing regulations to implement the requirements of this section, the Commission shall not preclude the enforcement of any regulation, order, or policy of a State commission that—

(A) establishes access and interconnection obligations of local exchange carriers;

(B) is consistent with the requirements of this section; and

(C) does not substantially prevent implementation of the requirements of this section and the purposes of this part.

(Emphasis added). Similarly § 252(e)(3) states "[n]otwithstanding paragraph (2), but subject to section 253 of this title, nothing in this section shall prohibit a State commission from establishing or enforcing other requirements of State law in its review of an agreement . . . ." (Emphasis added). Also § 261(c) states:

Nothing in this part precludes a State from imposing requirements on a telecommunications carrier for intrastate services that are necessary to further competition in the provision of telephone exchange service or exchange access, as long as the State's requirements are not inconsistent with this part or the Commission's regulations to implement this part.

(Emphasis added). These various statutes preserving state authority are tied to specific aspects of the Act's requirements. Together, however, these statutes indicate that despite the detailed requirements the Act imposed on telecommunications operations, the regulatory scheme remains a partnership between federal and state authorities, in which states are granted broad power to regulate telecommunications as long as the states do not act inconsistently with federal law. Accord Puerto Rico Tel. Co. v. Telecommunications Regulatory Bd. of P.R., 189 F.3d 1, 14 (1st Cir.1999) ("The Act exemplifies a cooperative federalism system, in which state commissions can exercise their expertise about the needs of the local market and local consumers, but are guided by the provisions of the Act and by the concomitant FCC regulations ....").

In Vermont, the Legislature has assumed those broad powers to regulate telecommunications by granting the PSB general authority over the industry. Three statutes define the board's jurisdiction in this area. Title 30 V.S.A. § 203(5) gives the PSB jurisdiction over a "company offering telecommunications service to the public on a common carrier basis." The extent of this jurisdiction is further explained by 30 V.S.A. § 209(a)(3), which grants the board jurisdiction over the "manner of operating and conducting any business subject to supervision under this chapter, so as to be reasonable and expedient, and to promote the safety, convenience and accommodation of the public." Finally, 30 V.S.A. § 2701 states that the board may require connections between "two or more telephone companies ... whose lines can be made to form a continuous line of communication, by the construction and maintenance of suitable connections, for the transfer of messages or conversations, and that public convenience and necessity will be subserved...