U.S. West Communications, Inc. v. Jennings, CV 97-26-PHX-RGS-OMP.
| Decision Date | 04 May 1999 |
| Docket Number | No. CV97-629-PHX-RGS-OMP.,No. CV97-2025-PHX-RGS-OM.,No. CV97-394-PHX-RGS-OMP.,No. CV 97-26-PHX-RGS-OMP.,No. CV97-342-PHX-RGS-OMP.,No. CV97-2324-PHX-RGS-OM.,No. CV97-1927-PHX-RGS-OM.,No. CV97-626-PHX-RGS-OMP.,No. CV97-1856-PHX-RGS-OM.,No. CV97-1723-PHX-RGS-OM.,CV 97-26-PHX-RGS-OMP.,CV97-394-PHX-RGS-OMP.,CV97-1723-PHX-RGS-OM.,CV97-1856-PHX-RGS-OM.,CV97-1927-PHX-RGS-OM.,CV97-2025-PHX-RGS-OM.,CV97-2324-PHX-RGS-OM.,CV97-342-PHX-RGS-OMP.,CV97-626-PHX-RGS-OMP.,CV97-629-PHX-RGS-OMP. |
| Citation | 46 F.Supp.2d 1004 |
| Parties | U.S. WEST COMMUNICATIONS, INC., a Colorado corporation, et al., Plaintiffs, v. Renz D. JENNINGS, as a member of the Arizona Corporation Commission, et al., Defendants. |
| Court | U.S. District Court — District of Arizona |
Christopher C. Kempley, Maureen A. Scott, Janice M. Alward, Janet F. Wagner, for Arizona Corporation Commission, Phoenix, AZ.
Timothy Berg, C. Owen Paepke, Theresa Dwyer, Fennemore Craig, Phoenix, AZ, L. Norton Cutler, Jr., Thomas M. Dethlefs, Wendy M. Moser, Blair A. Rosenthal, U.S. West Law Department, Denver, CO, for U.S. West Communications, Inc.
Steven J. Duffy, Ridge & Isaacson, Phoenix, AZ, David P. Murray, Kevin M. Miller, A. Renee Callahan, Willkie Farr & Gallagher, Washington, DC, for Sprint Communications Co. Thomas H. Campbell, W. Todd Coleman, Lewis & Roca, Phoenix, AZ, Darryl M. Bradford, Terri L. Mascherin, Andrew M. Spangler, Jr., David C. Layden, Jenner & Block, Chicago, IL, Thomas F. O'Neill III, Mark B. Ehrlich, [in-house counsel], Washington, DC, for MCI Telecommunications Corp.
Andrew D. Hurwitz, Joan S. Burke, Osborn Maledon, Phoenix, AZ, Michael D. Warden, Stephen F. Smith, Jacqueline G. Cooper, James C. Stansel, Carl D. Wasserman, Sidley & Austin, Washington, DC, Maria Arias Chapleau, Rebecca DeCook, AT & T Law Department, Denver, CO, for AT & T Communications of the Mountain States, Inc. and AT & T Wireless.
Lex J. Smith, Michael J. Patten, Brown & Bain, Phoenix, AZ, Edward A. Yorgitis, Jr., Douglas P. Lobel, Joseph A. Boyle, Kelley Drye & Warren, Washington, DC, for e-spire Communications, Inc. (formerly American Communications Services, Inc.)
Patricia Lee Refo, Jeffrey B. Guldner, Snell & Wilmer, Phoenix, AZ, for Brooks Fiber Communications of Tuscson, Inc.
Douglas G. Bonner, C. Joel Van Over, Morton J. Posner, Ky E. Kirby, Tamar E. Finn, Swidler & Berlin, Washington, DC, for WorldCom Technologies, Inc. and GST Tucson Lightwave, Inc.
Arthur G. Garcia, Theodore C. Hirt, Philip D. Bartz, Jose deJesus Rivera, Dennis G. Linder, Brian G. Kennedy, David T. Zaring, Civil Division, U.S. Dep't of Justice, Washington, DC, for Federal Communications Commission.
These ten consolidated cases arise under the Telecommunications Act of 1996 ("the Act"), Pub.L. No. 104-104, 110 Stat. 56, 47 U.S.C. § 153, et seq. US West Communications, Inc. ("US West"), the incumbent local exchange carrier ("ILEC") in Arizona, is a party in each case. The Arizona Corporation Commission ("the ACC"), which regulates public utilities in Arizona, is a defendant in each case, as are the members of the ACC in their official capacities ("the Commissioners").
Various prospective competitive local exchange carriers ("CLECs") are parties to one or more cases. They include AT & T Communications of the Mountain States, Inc. ("AT & T"), AT & T Wireless Services, Inc. ("AT & T Wireless"), TCG Phoenix ("TCG") (whose interest in this litigation was assumed by AT & T following the latter's acquisition of TCG), GST Tucson Lightwave, Inc., GST Net(AZ), Inc., and GST Telecom, Inc. (collectively "GST"), MCI Telecommunications Corp. and MCIMetro Access Transmission Services, Inc. (collectively "MCI"), Sprint Communications Company, L.P. ("Sprint"), Brooks Fiber Communications of Tucson, Inc. ("Brooks Fiber"), e-spire Communications, Inc. ("E-spire") (formerly known as American Communications Services, Inc. ("ACSI")), and WorldCom Technologies, Inc. ("WorldCom") (which has assumed the interest in this litigation formerly held by MFS Communications Company, Inc. ("MFS")). In addition, the Federal Communications Commission ("FCC") has participated as amicus curiae.
"[A]ny party aggrieved" by a decision of a state public utilities commission concerning an interconnection agreement "may bring an action in an appropriate Federal district court to determine whether the Agreement ... meets the requirements of the Act." 47 U.S.C. § 252(e)(6).
The scope of review is confined to the administrative record. With regard to the standard of review, this court does not sit as a surrogate public utilities commission to second-guess the decisions made by the state agency to which Congress has committed primary responsibility for implementing the Act in Arizona. Rather, this court's principal task is to determine whether the ACC properly interpreted the Act and any implementing regulations, which is a question of federal law that is reviewed de novo. In all other respects, review will be under the arbitrary and capricious standard.
After oral argument in these cases, the Supreme Court decided AT & T Corp. v. Iowa Util. Bd., ___ U.S. ___, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999). The Supreme Court's interpretation of the Act, and of the implementing regulations, must be applied to all pending cases. See Rivers v. Roadway Express, Inc., 511 U.S. 298, 312-13, 114 S.Ct. 1510, 128 L.Ed.2d 274 (1994). "A judicial construction of a statute is an authoritative statement of what the statute meant before as well as after the decision of the case giving rise to that construction." Id.
However, in addition to interpreting the Act, the Supreme Court reinstated some FCC regulations that the Eighth Circuit had first stayed and later vacated. Some parties have urged this court to apply those reinstated FCC regulations when reviewing the ACC decisions and interconnection Agreements at issue here. The court declines to do so. Those regulations were not in effect when these Agreements were negotiated by the parties and approved by the ACC. Consequently, the ACC could not have erred by failing to apply those regulations. MCI Telecom., Corp. v. GTE Northwest, Inc., 41 F.Supp.2d 1157, 1161-65 (D.Or.1999); US West Communications, Inc. v. AT & T Communications of the Pac. Northwest, 46 F.Supp.2d 1068, 1069-75 (D.Or.1999).
Whether a party may petition the ACC to modify an Agreement on the ground that there has been a subsequent change of law, or whether the ACC should grant such a request, are questions that should be addressed first by the ACC rather than by this court.
By a 2-1 vote,1 the ACC authorized U.S. West to charge $21.98 per month for an unbundled 2-wire loop. AT & T, E-spire, GST, and WorldCom challenge that decision as arbitrary, capricious, and contrary to law. They contend that the ACC should have adopted the loop price of $16.28 per month recommended by a three member arbitration panel.
The hearing transcripts reflect that the Commissioners approached their task seriously and made a good faith effort to resolve conflicting evidence and reach a decision that complied with the law while protecting the public interest.
The ACC's task was complicated by the total element long run incremental cost ("TELRIC") pricing methodology that the FCC has pressured state public utilities commissions to adopt. TELRIC employs a "scorched node analysis" which assumes that the existing U.S. West network is replaced by a mythical efficient telephone network that retains only the locations of the existing U.S. West wire centers. As one state public utility commission observed, "TELRIC methodology assumes an optimal network that will never exist and which will produce services the current network cannot provide...." Re U.S. West Communications, Inc., Docket No. RPU-96-9, 1998 WL 265370 at *5 (Iowa Util.Bd. April 23, 1998).
Because TELRIC focuses on a mythical network instead of U.S. West's existing network, each party was free to offer its own vision of this mythical network, limited only by the party's audacity and its ability to procure an expert witness willing to endorse that party's vision. Judging from the transcript of the ACC hearings, a majority of the Commissioners became increasingly frustrated with this pricing methodology and skeptical about the validity of the self-serving forecasts and models offered by the parties and their hired experts. Nevertheless, the ACC was compelled to make a decision, which it did. Under the circumstances, those challenging the ACC's decision have a difficult task to convince a reviewing court that the ACC was arbitrary and capricious in selecting one vision of this mythical network over a competing vision or in rejecting both visions and making its own reasoned forecast.
The existing U.S. West network in Arizona contains approximately 43,504 miles of cable. Some of that mileage overlaps because U.S. West periodically "reinforced" the system to increase capacity. The parties agree that a mythical efficient network would contain fewer miles of cable, since adequate capacity would be installed from the outset. The Hatfield Model version 2.2.2, sponsored by MCI and AT & T, estimated that an efficient network would require 12,296 miles of cable. The arbitrators recommended adoption of that figure, but the Commissioners concluded it was unreasonably low. During the ACC hearing, AT & T conceded that version 2.2.2 of the Hatfield Model was flawed and often underestimated cable mileage. A newer version of the Hatfield Model (version 3.1) produced an estimate of 26,092 miles of cable, very close to the 26,489 mile estimate generated by U.S. West's RLCAP model. A majority of the Commissioners then voted to adopt the 26,092 figure.
This decision was not arbitrary and capricious. The ACC was not required to adopt AT & T's mileage estimate, which everyone agreed was seriously flawed. The ACC also did not err by allegedly relying upon extra-record evidence. Although the arbitrators did not have the benefit of Version 3.1 of the...
To continue reading
Request your trial
-
Mci Telecomm. Corp. v. Bellsouth Telecomm., Inc.
...T Communications of Virginia, Inc. v. Bell Atlantic-Virginia, Inc., 197 F.3d 663, 672 (4th Cir.1999); U.S. West Communications, Inc. v. Jennings, 46 F.Supp.2d 1004, 1018-19 (D.Ariz.1999); MCI Telecommunications Corp. v. BellSouth Telecommunications, Inc., 40 F.Supp.2d 416, 425 (E.D.Ky.1999)......
-
Bell Atlantic-Delaware, Inc. v. McMahon
...46 F.Supp.2d 1004 (D.Ariz.1999); MCI Telecomms. Corp. v. GTE Northwest, Inc., 41 F.Supp.2d 1157 (D.Or.1999). Unlike the state commissions in Jennings and GTE Northwest, Inc., however, the Delaware Commission (with the parties' consent) voluntarily adopted the FCC's TELRIC pricing methodolog......
-
Flandreau Santee Sioux Tribe v. Gerlach
... ... West Des Moines Community School Dist. ( Plough ), ... B & B Hardware, Inc v. Hargis Industries, Inc. , U.S. , 135 S.Ct ... 4 Id. See Sprint Communications, Inc. v. Jacobs , U.S. , 134 S.Ct. 584, 588, ... ...
-
U.S. West Communications v. Hix
...district court has held that an interconnection agreement must contain a "most favored nation" provision. U S West Commun., Inc. v. Jennings, 46 F.Supp.2d 1004, 1027 (D.Ariz.1999). 5. This Court must follow the Supreme Court's decision and apply the FCC regulations reinstated by that Court.......