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

Decision Date15 October 1996
Docket Number96-3430,96-3414,96-3444,96-3604 and 96-3608,Nos. 96-3321,96-3406,96-3424,96-3436,96-3453,96-3507,96-3410,96-3519,96-3520,96-3450,96-3418,96-3460,96-3416,96-3603,s. 96-3321
Citation109 F.3d 418
CourtU.S. Court of Appeals — Eighth Circuit
Parties1996-2 Trade Cases P 71,598, 172 P.U.R.4th 645 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 COMMISSI

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 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 commissions employ the "total element long-run incremental cost" (TELRIC) method to calculate the costs that an incumbent LEC incurs in making its facilities available to competitors. See First Report and Order, Appendix B-Final Rules §§ 51.503, 51.505. After applying the TELRIC method and arriving at a cost figure, the state commissions, acting as arbitrators, must then determine the price that an incumbent LEC may charge its competitors, based on the TELRIC driven cost figure. See id.

Many of the incumbent LECs object to the TELRIC method for two reasons. First, it does not consider their "historical" or "embedded" costs (costs that an incumbent incurred in the past) in calculating the cost figure to be used to determine the rates. See id. § 51.505(d)(1). Second, it requires that an incumbent LEC's cost be measured as if the incumbent were using the most efficient telecommunications technology currently available, regardless of the technology presently employed by the incumbent and to be used by the competitor. See id. § 51.505(b)(1). The incumbent LECs argue that the TELRIC method underestimates their costs and results in prices that are too low. The incumbent LECs maintain that these low prices would effectively require them to subsidize their competitors and thereby threaten the viability of the LECs' own businesses.

For similar reasons, the petitioners also object to the FCC's proxy rates, which are to be used by the state commissions if they elect not to employ the TELRIC method to set prices. See id. §§ 51.503(b)(2), 51.513, 51.705(a)(2), 51.707. The incumbent LECs argue that these proxy rates do not accurately reflect their costs and are artificially low. In addition to the rules regarding TELRIC and the proxy rates, the petitioners object to several other FCC regulations that pertain to the pricing of intrastate telephone service. 5

Some of the petitioners also seek to stay the FCC's so-called "pick and choose" rule, id. § 51.809, with which the FCC purports to implement § 252(i) of the Act. Section 252(i) requires an LEC to make available any interconnection, service, or network element contained in an approved agreement to which it is a party to any other telecommunications carrier upon the same "terms and conditions" as those provided in the agreement. Here again, price becomes a key issue. When the FCC promulgated its rule, it expanded the statutory language of § 252(i) to...

To continue reading

Request your trial
261 cases
  • Let Them Play MN v. Walz
    • United States
    • U.S. District Court — District of Minnesota
    • February 8, 2021
    ...... "great[,] and of such imminence that there is a clear and present need for equitable relief," Iowa Utils. Bd. v. FCC , 109 F.3d 418, 425 (8th Cir. 1996). A plaintiff must show more than a future ......
  • Dist. of Columbia v. U.S. Dep't of Agric., Civil Action No. 20-119 (BAH)
    • United States
    • U.S. District Court — District of Columbia
    • March 13, 2020
    ......FCC , 740 F.3d 623, 639 (D.C. Cir. 2014) (stating the general rule of statutory interpretation that ... later be recovered for reasons such as sovereign immunity constitutes irreparable injury."); Iowa Utilities Bd. v. FCC , 109 F.3d 418, 426 (8th Cir. 1996) ("The threat of unrecoverable economic ......
  • N.Y. State Telecomms. Ass'n, Inc. v. James
    • United States
    • U.S. District Court — Eastern District of New York
    • June 11, 2021
    ......2013) ; Chamber of Commerce v. Edmondson , 594 F.3d 742, 770–71 (10th Cir. 2010) ; and Iowa Utils. Bd. v. FCC , 109 F.3d 418, 426 (8th Cir. 1996) ). Beginning June 15, 2021, Plaintiffs will ......
  • Florida v. Becerra
    • United States
    • U.S. District Court — Middle District of Florida
    • June 18, 2021
    ...759 F.3d 588, 599 (6th Cir. 2014); Chamber of Commerce v. Edmondson, 594 F.3d 742, 770-71 (10th Cir. 2010); Iowa Utilities Bd. v. FCC, 109 F.3d 418, 426 (8th Cir. 1996); United States v. State of N.Y., 708 F.2d 92, 93 (2d Cir. 1983); Georgia v. Pruitt, 326 F. Supp. 3d 1356, 1367 (S.D. Ga. 2......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT