Iowa Utilities Bd. v. F.C.C.

• Decision Date: 22 January 1998
• Docket Number: 3453,3410,3608,3519,3416,3424,3708,3507,3460,3906,Nos. 96-3321,3436,3414,3418,3430,3696,3756,3901,3406,3709,3450,3444,3982,3520,3603,s. 96-3321
• Citation: 135 F.3d 535
• Parties: 10 Communications Reg. (P&F) 695, 11 Communications Reg. (P&F) 695 IOWA UTILITIES BOARD, Petitioner, Bell Atlantic Corporation, et al., Intervenors on Appeal, v. FEDERAL COMMUNICATIONS COMMISSION; United States of America, Respondents.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 535

135 F.3d 535

10 Communications Reg. (P&F) 695,

11 Communications Reg. (P&F) 695

IOWA UTILITIES BOARD, Petitioner Bell Atlantic Corporation, et al., Intervenors on Appeal, v. FEDERAL COMMUNICATIONS COMMISSION; United States of America, Respondents.

Nos. 96-3321, 3406, 3410, 3414, 3416, 3418, 3424, 3430,

3436, 3444, 3450, 3453, 3460, 3507, 3519, 3520,

3603, 3608, 3696, 3708, 3709, 3756,

3901, 3906, 3982.

United States Court of Appeals Eighth Circuit.

Jan. 22, 1998.

Diane Munns, Des Moines, IA, argued, for Iowa Utility Board, Mark L. Evans, Washington, DC, argued, for Ameritech, Bell Atlantic Telephone Companies, BellSouth Corp., SBC Communications, Inc., US West, Inc. and United States Telephone Assoc., M. Edward Whelan, Washington, DC, argued, for GTE.

Christopher J. Wright, Washington, DC, argued, for FCC, David W. Carpenter, Chicago, IL, argued, for Intervenors on Appeal.

Before BOWMAN, WOLLMAN, and HANSEN, Circuit Judges.

HANSEN, Circuit Judge.

I.

Several petitioners have filed motions requesting this court to issue and enforce our mandate in the case of Iowa Utils. Bd. v. FCC, 120 F.3d 753 (8th Cir.1997). ¹ On October 14, 1997, after granting motions for panel rehearing, we amended our July 18, 1997, decision and issued the mandate. See id. at 813 (replacing Section II(G)(1)(f)); id. at 818 n. 38 (clarifying scope of vacatur); id. at 819 n. 39 (clarifying scope of vacatur). We expressly reserved jurisdiction over the petitioners' motions to enforce the mandate. Today, following oral argument on the motions, we address that issue.

One of the core holdings of our July 18, 1997, decision was that the Federal Communications Commission (FCC) has no jurisdiction to issue pricing regulations for interconnection, unbundled access, resale, and transport and termination of local telecommunication services under section 252(d) of the Telecommunications Act of 1996. ² We held that the Act vests exclusive authority to establish the pricing requirements of this section in the state commissions, and we vacated the FCC's pricing regulations in which the FCC purported to arrogate that power to itself. Today we hold that the FCC violated this central tenet of our decision when it issued its Ameritech Michigan Order of August 19, 1997. ³ Because that portion of the Ameritech Order which offends our decision is, in our view, an advisory opinion of the FCC, we need not review the FCC's denial of Ameritech's application or even determine whether we have jurisdiction to do so. Rather, Petitioners request and we grant prospective relief in the form of a writ of mandamus. Specifically, we direct the clerk of this court to issue a writ of mandamus ordering the FCC to abide by our mandate and to refrain from subsequent attempts to apply either directly or indirectly its vacated pricing policies regarding the pricing of interconnection, unbundled access, resale, and transport and termination of local telecommunications traffic. For reasons which we explain, it has no authority to do so under section 271(d)(3)(A) or section 271(d)(3)(C) of the Act.

II.

A. The Mandate

In our July 18 decision, we held in the clearest possible terms that the state commissions have exclusive jurisdiction to regulate the prices that incumbent local exchange carriers (LECs) may charge their competitors for access to the incumbent LECs' local telephone network facilities. After a detailed analysis of sections 251 and 252 of the Act, we concluded that "the Act plainly grants the state commissions, not the FCC, the authority to determine the rates involved in the implementation of the local competition provisions of the Act." Iowa Utils. Bd., 120 F.3d at 796. Elsewhere we wrote that

the terms of the Act clearly indicate that Congress did not intend for the FCC to issue any pricing rules, let alone preempt state pricing rules regarding the local competition provisions of the Act. Because the Act clearly grants the states the authority to set the rates for interconnection, unbundled access, resale, and transport and termination of traffic, the FCC has no valid pricing authority over these areas of new localized competition for the states to negate.... [S]ubsections 252(c)(2) and 252(d) clearly assign jurisdiction over the rates for the local competition provisions of the Act to the state commissions[.]

Id. at 798-799 (internal citations omitted). In short, our decision made very clear that "Congress did not envision the FCC's participation in determining the prices that the incumbent LECs will be able to charge for opening their networks to new entrants." Id. at 795. We held that in promulgating regulations purporting to govern the types of pricing systems state commissions were to adopt, the FCC had exceeded its statutory authority and violated the plain meaning of the 1996 Federal Communications Act. Accordingly, we vacated the national pricing rules that the FCC had promulgated.

B. The FCC's Ameritech Order

We filed our Iowa Utils. Bd. decision on July 18, 1997. On August 19--scarcely one month later--the FCC made clear its intention to disregard those portions of our decision with which it disagreed. It did so in the memorandum opinion and order which it issued denying Ameritech Michigan's application to provide in-region interLATA services in Michigan. In that opinion, the FCC reasserted its authority to do precisely what we held in Iowa Utils. Bd. it had no power to do. It asserted that it had the authority to interpret section 252(d) of the Act, and it adopted a policy which will coerce state commissions to adopt its vacated TELRIC-based pricing rules for implementation of the local competition provisions of the Act in spite of our order.

The Ameritech Order denied Ameritech's application for authorization under section 271 of the Communications Act of 1934, as amended, to provide in-region, interLATA services in the State of Michigan. It denied the application because it found that Ameritech had failed to satisfy section 271's competitive checklist's requirements of access to its operations support systems, interconnection, and access to its 911 and E911 services. Finding these three failures to be dispositive, the FCC determined that it need not and would not address whether Ameritech had satisfied the other requirements of the competitive checklist. See Ameritech Order pp 5-6, 280-81. Specifically, it "[did] not reach the question of whether Ameritech's pricing of checklist items complies with the requirements of section 271[.]" Id. p 281. Thus, paragraphs 280-297, wherein the FCC reasserts its authority to establish the prices for the local competition provisions, do not address the merits of Ameritech's application, but instead constitute an advisory opinion. The FCC explained its issuance of such an opinion by stating that it sought to provide guidance as to what showing would be required in future applications to demonstrate full compliance with the checklist. Id. pp 6, 281.

It is not for us to address the propriety of the FCC's issuance of an important policy statement in an advisory opinion separate from the merits determination of a section 271 order. Rather, our inquiry is limited to the question of whether the issuance of this particular advisory opinion and its content constitute a violation of our mandate. It clearly does. The FCC admits in paragraph 283 that "the Eighth Circuit has held that the Commission lacks jurisdiction to issue national rules establishing a methodology by which the states determine the rate for interconnection, unbundled network elements, resale, and transport and termination in state-arbitrated interconnection agreements pursuant to section 252." Inexplicably, it then proceeds to establish just such a methodology, stating that the cost-based standard of § 252(d) is contained in a federal statute and is "therefore[ ] presumed to have a uniform meaning nationwide." Id. p 286. This attempt to reassert the vacated pricing rules by imposing them as conditions for entry by the Bell Operating Companies into the in-region, interLATA telecommunications business does by indirection what we told the FCC in Iowa Utils. Bd. it could not do. The FCC cannot do in an advisory opinion in a ruling on a section 271 application that which we have expressly forbidden it from doing in its rule-making procedure. A more clear violation of our mandate could hardly be imagined.

C. Section 252

Section 271(d)(3) requires the FCC to determine whether an applicant has implemented the competitive checklist of Section 271(c)(2)(B). Items (i), (ii), (xiii), and (xiv) of that checklist in turn require a Bell Operating Company (BOC) to provide interconnection, access to unbundled network elements, transport and termination, and resale prices that are "in accordance with" subsections (c) and (d) of section 252. ⁴ In other words, items (i), (ii), (xiii), and (xiv) of the competitive checklist do nothing more than incorporate by reference the specific requirements of sections 251 and 252. As discussed above, our July 18 decision clearly held that only the state commissions have the statutory authority to set prices under sections 251(c) and 252(d).

The FCC does not contest the fact that section 271(c)(2)(B) merely requires compliance with sections 251(c) and 252(d) of the Act, and it concedes that it "lack[s] authority to prescribe a national pricing methodology to implement the requirements of section 252(d)." See id. p 284. Nonetheless, it engages in a lengthy discussion of its interpretation of section 252(d), see id. pp 282-294, and ends this discussion by concluding that subsections (i), (ii), and (xiii) of section 271(c)(2)(B) all require that the rates charged by the applicant BOC must be based on TELRIC principles. Id. pp 292-93. It clearly announces that it will not grant a section 271 application unless the rates are based on TELRIC principles. Id. In so doing, the FCC reinstates the substance of the pricing...