MCI v. US West

• Decision Date: 02 March 2000
• Docket Number: 98-35820 and 98-35822,Nos. 98-35819,s. 98-35819
• Citation: 204 F.3d 1262
• Parties: (9th Cir. 2000) MCI TELECOMMUNICATIONS CORPORATION, a Delaware corporation; MCI METRO ACCESS TRANSMISSION SERVICES, INC.,Plaintiffs-Appellants, v. U.S. WEST COMMUNICATIONS, a Colorado corporation; THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION(WUTC); ANNE LEVINSON, Chair; RICHARD HEMSTAD; WILLIAM P. GILLIS, in their official capacities as Commissioners of WUTC, Defendants-Appellees. MCI TELECOMMUNICATIONS CORPORATION, a Delaware corporation; MCI METRO ACCESS TRANSMISSION SERVICES, INC., Plaintiffs, v. U.S. WEST COMMUNICATIONS, a Colorado corporation;Defendant-Appellant, THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION (WUTC); ANNE LEVINSON, Chair;RICHARD HEMSTAD; WILLIAM P. GILLIS, in their official capacities as Commissioners of WUTC,Defendants-Appellees. MCI TELECOMMUNICATIONS CORPORATION, a Delaware corporation; MCI METRO ACCESS TRANSMISSION SERVICES, INC.,Plaintiffs-Appellees, v. U.S. WEST COMMUNICATIONS, a Colorado corporation; ANNE LEVINSON, Chair; RICHARD HEMSTAD; WILLLIAM P. GILLIS, in their official capacities as Commissioners of WUTC, OPINION Defendants, and THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION(WUTC), Defendant-Appellant
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1262

204 F.3d 1262 (9th Cir. 2000)

MCI TELECOMMUNICATIONS CORPORATION, a Delaware corporation; MCI METRO ACCESS TRANSMISSION SERVICES, INC.,Plaintiffs-Appellants, v. U.S. WEST COMMUNICATIONS, a Colorado corporation; THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION(WUTC); ANNE LEVINSON, Chair; RICHARD HEMSTAD; WILLIAM P. GILLIS, in their official capacities as Commissioners of WUTC, Defendants-Appellees.

MCI TELECOMMUNICATIONS CORPORATION, a Delaware corporation; MCI METRO ACCESS TRANSMISSION SERVICES, INC., Plaintiffs, v. U.S. WEST COMMUNICATIONS, a Colorado corporation;Defendant-Appellant, THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION (WUTC); ANNE LEVINSON, Chair;RICHARD HEMSTAD; WILLIAM P. GILLIS, in their official capacities as Commissioners of WUTC,Defendants-Appellees.

MCI TELECOMMUNICATIONS CORPORATION, a Delaware corporation; MCI METRO ACCESS TRANSMISSION SERVICES, INC.,Plaintiffs-Appellees, v. U.S. WEST COMMUNICATIONS, a Colorado corporation; ANNE LEVINSON, Chair;

RICHARD HEMSTAD; WILLLIAM P. GILLIS, in their official capacities as Commissioners of WUTC, OPINION Defendants and THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION(WUTC), Defendant-Appellant.

Nos. 98-35819, 98-35820 and 98-35822

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted October 7, 1999

Filed March 2, 2000

[Copyrighted Material Omitted]

COUNSEL: William Single, IV, MCI Telecommunications Corporation, Washington, D.C.; D. Scott Barash, Jenner & Block, Washington, D.C., for the plaintiffs-appellants-cross-appellees.

Sherilyn Peterson and Kirstin S. Dodge, Perkins Coie, Bellevue, Washington; Shannon E. Smith, Assistant Attorney General, Olympia, Washington, for the defendants-appelleescross-appellants.

Gary Feinerman, Mayer, Brown & Platt, Chicago, Illinois and Susan L. Pacholski, United States Department of Justice, Washington, D.C., for the amici curiae.

Appeals from the United States District Court for the Western District of Washington; Barbara J. Rothstein, Chief District Judge, Presiding. D.C. No. CV-97-01508-BJR, D.C. No. CV-97-01508-BJR, D.C. No. CV-97-01508-BJR

Before: Alfred T. Goodwin, Mary M. Schroeder, and Susan P. Graber, Circuit Judges.

SCHROEDER, Circuit Judge:

INTRODUCTION AND STATUTORY BACKGROUND

This is an appeal by U S West Communications, Inc. ("U S West") and a cross-appeal by MCI Telecommunications Corporation ("MCI") from a district court judgment entered after review of a Washington Utilities and Transportation Commission ("WUTC") decision. The WUTC decision approved an agreement between U S West and MCImetro Access Transmission Services, Inc. ("MCImetro"), an MCI affiliate, under the Telecommunications Act of 1996 ("the Act"), codified in part at 47 U.S.C. SS 251-61. The agreement sets forth the terms under which MCImetro may interconnect with U S West, the former state regulated monopolist, in order to operate as a competing local telecommunications provider in the Seattle/Bellevue area.

The Act calls upon federal courts to hear challenges to interconnection agreements developed and approved through state administrative proceedings. Review in federal court is limited to the determination of whether the agreement "meets the requirements of" the Act. 47 U.S.C. S 252(e)(6). In this case, we are asked to decide whether a number of provisions in the agreement between U S West and MCImetro violate the Act.

This court has recently had occasion to decide several cases under the Telecommunications Act, and we then described the overall operation of the Act at greater length. See Pacific Bell v. Cook Telecom, Inc., 1999 WL 1249707 (9th Cir. Dec. 27, 1999); U S West Communications v. MFS Intelenet, Inc., 193 F.3d 1112 (9th Cir. 1999). One of the Act's principal ingredients is a regulatory framework for promoting competition in local telephone service. The Act prohibits state sanctioned monopolies, which previously governed the field. It contains various provisions aimed at facilitating entry by potential competitors. Ironically for a statute intended to promote competition, the Act creates two levels of regulatory control. The Federal Communications Commission is charged with the responsibility of promulgating regulations necessary to implement the Act itself, but the Act reserves to states the ability to impose additional requirements so long as the requirements are consistent with the Act and "further competition." See 47 U.S.C. S 251(d).

The Act labels all former local-phone service monopolists Incumbent Local Exchange Carriers ("ILECs"). In this case the ILEC is U S West. The new competitors are called Competing Local Exchange Carriers ("CLECs"). The CLEC in this case is MCImetro.

Section 251 of the Act imposes several direct requirements on an ILEC faced with potential competitive entry by a CLEC. It is of particular relevance to this appeal that ILECs must make key "network elements" available to CLECs on an "unbundled" basis at rates that are reasonable and nondiscriminatory. See 47 U.S.C. S 251(c)(3). The Act defines a "network element" as follows: "a facility or equipment used in the provision of a telecommunications service. Such term also includes features, functions, and capabilities that are provided by means of such facility or equipment, including subscriber numbers, databases, signaling systems, and information sufficient for billing and collection or used in the transmission, routing, or other provision of a telecommunications service." 47 U.S.C. S 153(29).

The FCC by regulation lists certain network elements that must be made available by the ILECs. See 47 C.F.R. S 51.319. In deciding which network elements are subject to unbundled access, Congress has instructed the FCC to consider "whether (A) access to such network elements as are proprietary in nature is necessary; and (B) the failure to provide access to such network elements would impair the ability of the telecommunications carrier seeking access to provide the services that it seeks to offer." 47 U.S.C.S 251(d)(2).

The Act does not, however, attempt to provide all the terms upon which ILECs must transact with CLECs. Rather, section 252 of the Act permits carriers to contract independently for interconnection and the provision of goods and services. The reward for reaching an independent agreement is exemption from the substantive requirements of subsections 251(b) and 251(c). See 47 U.S.C. S 252(a)(1). If the carriers do not reach an independent agreement within a specified period, the parties may petition the state agency responsible for regulating local telecommunications to arbitrate the open issues. If arbitration comes into play, then the resulting agreement must comply with section 251 of the Act and any FCC regulations promulgated under that section. See 47 U.S.C. S 252(c)(1). All interconnection agreements, whether reached independently or through arbitration, must be approved by the state agency (in this case, the WUTC). See 47 U.S.C. S 252(e)(1). The state agency may refuse to approve an independently negotiated agreement only if (1) the agreement or a provision thereof discriminates against a carrier not a party to the agreement, or (2) the agency finds that implementing the agreement or a provision thereof would be inconsistent with the public interest, convenience, and necessity. See 47 U.S.C. S 252(e)(2)(A). The state agency may refuse to approve an arbitrated agreement only if the agreement or a provision thereof fails to meet the requirements of section 251 of the Act or the FCC regulations promulgated under the Act. See 47 U.S.C. S 252(e)(2)(B).

Finally, the Act permits any party "aggrieved " by a determination made by a state agency under section 252 to "bring an action in an appropriate Federal district court to determine whether the agreement . . . meets the requirements of section 251 of this title and this section." 47 U.S.C.S 252(e)(6). This language makes clear that review in federal court is restricted to the determination of whether the terms of the agreement violate any of the Act's requirements. This limited task is not always an easy one, however. "It would be a gross understatement to say that the Telecommunications Act of 1996 is not a model of clarity. It is in many important respects a model of ambiguity or indeed even self-contradiction." AT&T v. Iowa Utils. Bd., 119 S. Ct. 721, 738 (1999).

We have jurisdiction of appeals from final judgments in these actions under 28 U.S.C. S 1291. Our review is de novo. See MFS Intelenet, 193 F.3d at 1117. To the extent that the statute requires factual findings to support the state agency's determination, those findings are reviewed for substantial evidence. GTE South, Inc. v. Morrison, 199 F.3d 733, 745-46 (4th Cir. Dec. 15, 1999)

HISTORY OF THIS AGREEMENT AND THE EIGHTH CIRCUIT LITIGATION

The FCC promulgated its initial regulations under the Act in 1996. Under the Hobbs Act, the Federal Courts of Appeals have exclusive jurisdiction over challenges to FCC regulations. See 28 U.S.C. S 2342; 47 U.S.C.S 402(a). Several parties filed petitions for review of the FCC regulations in several different circuits. When agency regulations are challenged in more than one court of appeals, 28 U.S.C.S 2112 requires that the panel on multidistrict litigation consolidate the petitions and assign them to a single circuit. The panel assigned the challenges to the FCC regulations to the Eighth Circuit, which thereby became, and remains, "the sole forum for addressing . . . the validity of the FCC's rules." GTE South, 199 F.3d at 743 Therefore, the subsequent history of the Eighth Circuit litigation, Iowa Utilities Board v. FCC, has punctuated the history of this agreement and litigation.

On March 26, 1996, MCImetro requested interconnection negotiations with U S West. On August 30, when the parties could not come to agreement on a number of issues, MCImetro petitioned for arbitration before a WUTC...