FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
GLOBAL NAPS CALIFORNIA, INC., No. 09-55600
Petitioner-Appellant,
D.C. No.
v.
2:07-cv-04801-
PUBLIC UTILITIES COMMISSION OF MMM-SS
THE STATE OF CALIFORNIA,
OPINION
Respondent-Appellee.
Appeal from the United States District Court
for the Central District of California
Margaret M. Morrow, District Judge, Presiding
Argued and Submitted
May 3, 2010—Pasadena, California
Filed October 28, 2010
Before: Diarmuid F. O’Scannlain and Richard C. Tallman,
Circuit Judges, and Joan Humphrey Lefkow,
District Judge.*
Opinion by Judge O’Scannlain
*The Honorable Joan Humphrey Lefkow, United States District Judge
for the Northern District of Illinois, sitting by designation.
17903
17906 GLOBAL NAPS CALIFORNIA v. PUC
COUNSEL
Joel Davidow, Kile Goekijan Reed and McManus, PLLC,
Washington, D.C., argued the cause for the petitioner-
appellant, and filed the brief. Richard W. Davis, Davis
DeYoung LLP, Los Angeles, California, and Laurie
DeYoung, Davis DeYoung LLP, Los Angeles, California,
were also on the briefs.
Christopher P. Witteman, California Public Utilities Commis-
sion, San Francisco, California, argued the cause for the
respondent-appellee and filed the brief. Frank R. Lindh, Cali-
fornia Public Utilities Commission, San Francisco, California,
GLOBAL NAPS CALIFORNIA v. PUC 17907
and Helen M. Mickiewicz, California Public Utilities Com-
mission, San Francisco, California, were also on the brief.
Christian F. Binnig, Mayer Brown LLP, Chicago, Illinois,
filed a brief on behalf of amicus curiae The Southern New
England Telephone Co., Illinois Bell Telephone Co., Ohio
Bell Telephone Co., Pacific Bell Telephone Co., and Bell-
South Telecommunications, Inc. Hans J. Germann, Mayer
Brown LLP, Chicago, Illinois, and Stephen S. Sanders, Mayer
Brown LLP, Chicago, Illinois, were also on the brief.
Michael E. Glover, Verizon, Arlington, Virginia, filed a brief
on behalf of amicus curiae Verizon. Karen Zacharia, Verizon,
Arlington, Virginia, Katharine R. Saunders, Verizon, Arling-
ton, Virginia, and Scott H. Angstreich, Kellogg, Huber, Han-
sen, Todd, Evans & Figel, PLLC, Washington, DC, were also
on the brief.
OPINION
O’SCANNLAIN, Circuit Judge:
We must decide, among other issues, whether the Califor-
nia Public Utilities Commission acted arbitrarily and capri-
ciously when it interpreted an interconnection agreement
between two competitive local telephone exchange carriers as
establishing the rate at which each must compensate the other
for handling Voice-over-Internet-Protocol calls.
I
A
“Prior to 1996, local telephone service generally was pro-
vided by a local monopolist who offered services at prices
regulated and imposed by a variety of governmental agen-
17908 GLOBAL NAPS CALIFORNIA v. PUC
cies.” Pac. Bell Tel. Co. v. Cal. Pub. Utils. Comm’n, 2010
WL 3421187, at *2 (9th Cir. Sept. 1, 2010). Under this sys-
tem, a single local exchange carrier (“LEC”) provided all tele-
phone service in a geographically confined area known as a
Local Access and Transport Area (“LATA”). The passage of
the Telecommunications Act of 1996 (“Act”), Pub. L. No.
104-104, 110 Stat. 56 (codified in part at 47 U.S.C.
§§ 251-261), ended this system of regulated monopolies. In
its place, the Act established a competitive regime under
which formerly monopolistic local-service providers, or
incumbent local exchange carriers (“ILECs”), and new local-
service providers, or competitive local exchange carriers
(“CLECs”), compete to provide telephone service in the same
LATA.
Because each of the LECs operating within a LATA owns
and operates an independent network of telephone lines, the
customers of each LEC may call the customers of other LECs
only if these networks are interconnected. For this reason, the
Act requires LECs to interconnect their networks of telephone
lines with the networks of other LECs. See 47 U.S.C.
§ 251(a)(1). “Interconnection allows customers of one LEC to
call the customers of another, with the calling party’s LEC
(the ‘originating’ carrier) transporting the call to the connec-
tion point, where the called party’s LEC (the ‘terminating’
carrier) takes over and transports the call to its end point.”
Verizon Cal. v. Peevey, 462 F.3d 1142, 1146 (9th Cir. 2006).
Interconnection gives rise to a potential problem, however.
If one LEC’s customer calls a second LEC’s customer, the
second customer’s LEC will not be compensated for its role
in completing the call because it does not bill the caller. This
is so because people do not customarily pay for receiving
phone calls, only for placing them. See generally Peter W.
Huber et al., Federal Telecommunications Law § 2.1.1, at
79-85 (2d ed. 1999) (describing the manner in which
telephone-service providers are compensated for their ser-
vices). To ensure that each LEC is compensated for its role in
GLOBAL NAPS CALIFORNIA v. PUC 17909
such calls, the Act requires LECs to negotiate interconnection
agreements that “establish reciprocal compensation arrange-
ments for the transport and termination of telecommunica-
tions.” 47 U.S.C. § 251(b)(5). To satisfy this obligation, LECs
typically execute contracts referred to as “interconnection
agreements” that establish the rate at which the originating
carrier compensates the terminating carrier for completing a
call. See Global NAPs, Inc. v. Verizon New Eng., Inc., 505
F.3d 43, 45 (1st Cir. 2007). For such calls, the originating car-
rier compensates the terminating carrier at the rate set forth in
the carriers’ interconnection agreement, rather than under the
access charge regime applicable to long-distance calls. Id.
Although federal law requires LECs to execute intercon-
nection agreements, the contracts themselves are creatures of
state law. Ill. Bell Tel. Co. v. Global NAPs Ill., Inc., 551 F.3d
587, 591 (7th Cir. 2008); Verizon Cal., Inc. v. Peevey, 462
F.3d 1142, 1152 (9th Cir. 2007). Such contracts are executed
under, and interpreted according to, state law. Ill. Bell Tel.
Co., 551 F.3d at 591. Thus, when a disagreement over the
terms of such an agreement arises, “the suit is not based on
federal law in any realistic sense, but on a . . . term in a con-
tract.” Id.
Federal law permits a LEC that believes another LEC has
violated the terms of an interconnection agreement to seek
redress before a state public utilities commission. See Peevey,
462 F.3d at 1151-52; see also BellSouth Telecomm., Inc. v.
MCImetro Access Transmission Servs., 317 F.3d 1270, 1274
(11th Cir. 2003) (en banc). If a party to such a proceeding
believes that the state public utility commission’s decision is
incorrect, that party may seek review of the decision in fed-
eral court. Verizon Md. Inc. v. Pub. Serv. Comm’n of Md., 535
U.S. 635, 642 (2002).
Because federal law requires LECs to enter into intercon-
nection agreements with other LECs operating within the
same LATA, such agreements typically concern calls that
17910 GLOBAL NAPS CALIFORNIA v. PUC
originate and terminate within the LATA. See In re Imple-
mentation of the Local Competition Provisions in the Tele-
comms. Act of 1996, ¶ 1034, 11 FCC Rcd. 15499, 16013
(1996). Thus, “interLATA” calls—or those that involve the
transport of a call originating in one LATA and terminating
in another—generally fall outside the reciprocal-
compensation regime described above. See SBC Commc’ns
Inc. v. FCC, 138 F.3d 410, 412 n.1 (D.C. Cir. 1998). Calls
within a single LATA, or intraLATA calls, are often purely
local, although sometimes calls between distant geographic
points within a single LATA are nevertheless long-distance
calls. The latter type of such calls are known as “intraLATA
toll calls.” See Huber et al., supra, § 9.7, at 580. Interconnec-
tion agreements often set forth the rate of compensation appli-
cable both to intraLATA calls and to intraLATA toll calls.
B
This appeal arises out of a dispute between two LECs that
operate in California: Global NAPs California, Inc. (“Global”)1
and Cox California Telcom, LLC (“Cox”).
To comply with their section 251(a)(1) obligation to inter-
connect their networks, Global and Cox executed a negotiated
interconnection agreement on October 29, 2003. This
agreement, the Network Interconnection Agreement
(“Agreement”), established “the terms, conditions and pricing
under which [Global] and Cox . . . [would] offer and provide
to each other Interconnection within the state of California.”
The Agreement provides that when either carrier terminates
an “intraLATA toll call” that originated on the other carrier’s
network, the terminating carrier shall charge the originating
carrier a prescribed fee based on the length of the call. The
Agreement defines intraLATA toll traffic as “those
1
Global also operates as a long-distance provider. Its activities in the
long-distance telephone market are irrelevant to this case.
GLOBAL NAPS CALIFORNIA v. PUC 17911
intraLATA calls that are not defined as Local Traffic in [the
Agreement].” Local traffic is defined as “traffic other than
ISP-bound Traffic that is originated by a Customer of one
Party on that Party’s network and terminates to a Customer of
the other Party on that other Party’s network, within a given
local calling area, or expanded area service area.” The Agree-
ment further provides that “[t]he designation of traffic as
Local Traffic . . . or IntraLATA Toll for purposes of compen-
sation shall be based on the horizontal and vertical coordi-
nates associated with the originating and terminating NPA-
NXXs2 of the call.”
In June 2004, Cox terminated intraLATA toll traffic origi-
nating on Global’s network and began billing Global pursuant
to the Agreement. Global refused to pay. In response to Cox’s
invoice, Global denied the existence of the Agreement and
argued that the traffic it delivered to Cox was not subject to
any non-contractual compensation obligations. Specifically,
Global asserted that the disputed traffic originated with its cli-
ents that provide Voice-over-Internet-Protocol (“VoIP”) ser-
vices to consumers, and the traffic was therefore not subject
to compensation obligations under the Agreement. The Eighth
Circuit has helpfully described such technology in the follow-
ing way:
VoIP is an internet application utilizing “packet-
switching” to transmit a voice communication over
a broadband internet connection. In that respect, it is
different from the “circuit-switching” application
used to route traditional landline telephone calls. In
circuit-switched communications, an electrical cir-
2
“Telephone numbers generally consist of ten digits in the form of
NPA-NXX-XXXX. The first three digits indicate the Numbering Plan
Area (or NPA), commonly known as the area code, and the next three dig-
its refer to the exchange code. Under standard industry practice, area
codes and exchange codes generally correspond to a particular geographic
area served by a LEC.” Peevey, 462 F.3d at 1147-48.
17912 GLOBAL NAPS CALIFORNIA v. PUC
cuit must be kept clear of other signals for the dura-
tion of a telephone call. Packet-switched
communications travel in small digital packets along
with many other packets, allowing for more efficient
utilization of circuits.
Minn. Pub. Util. Comm’n v. FCC, 483 F.3d 570, 574 (8th Cir.
2007).
Global does not provide VoIP services directly to end
users. Instead, it contracts with VoIP providers to transfer
their broadband-Internet-based calls to traditional telephone
lines. When a customer of one of Global’s clients makes a
VoIP phone call, the VoIP provider transfers that call to
Global. Global then transfers the call to the appropriate carrier
—in this case, Cox—which in turn connects the call to the
intended recipient.
C
On April 27, 2008, Cox filed a complaint with the Califor-
nia Public Utilities Commission (“CPUC”). The complaint
alleged that Cox had been terminating intraLATA toll calls
for Global since June 2004, and that Global had failed to pay
Cox for terminating those calls in accordance with the Agree-
ment. Cox asked that the CPUC order Global “to pay all
amounts due to Cox under the [Agreement] for the termina-
tion of intraLATA toll calls, including past due amounts and
interest” and “to make all future payments due to Cox under
the [Agreement].”
In its answer, Global admitted that it had executed the
Agreement with Cox, but denied that it had breached it. In
response to Cox’s claim that Global had failed to compensate
Cox for terminating intraLATA toll calls, Global acknowl-
edged that “the sole area of dispute presented in the complaint
relates to compensation for the termination by Cox of
intraLATA toll calls within the state of California.” It denied
GLOBAL NAPS CALIFORNIA v. PUC 17913
that the relevant traffic was subject to the Agreement’s
intraLATA-toll-call provision, however, claiming that the
traffic “arises from an enhanced service provider” and is
therefore “subject to an exemption” from “access charges”
created by federal regulations.
After Global answered the complaint, Cox filed a motion
for summary judgment, which the CPUC granted. Turning
first to the text of the Agreement, the CPUC concluded that
the disputed traffic fell within the Agreement’s intraLATA-
toll-traffic provision because Global had admitted that the
traffic at issue was intraLATA toll traffic. Turning to Global’s
legal claims, the CPUC rejected its claim that federal law
exempts VoIP traffic from contractual compensation obliga-
tions.
After Global refused to pay Cox in accordance with the
CPUC’s order, the CPUC issued a second order suspending
Global’s authorization to operate as a telecommunications
provider in California until Global compensated Cox as
required by the CPUC’s order.
D
Global filed a petition for review in the U.S. District Court
for the Central District of California. Global sought review of
both the CPUC’s order requiring it to pay Cox in accordance
with the Agreement and the CPUC’s order suspending Glob-
al’s right to operate as a telecommunications provider in Califor-
nia.3 Global’s petition identifies the CPUC—not Cox—as the
respondent.
After denying Global’s motion for a preliminary injunction,
the district court granted the CPUC’s motion for judgment on
3
Under 28 U.S.C. § 1331, a district court has jurisdiction to review a
decision by the CPUC to ensure compliance with federal law. See Verizon
Md. Inc., 535 U.S. at 642.
17914 GLOBAL NAPS CALIFORNIA v. PUC
the administrative record. Conducting a de novo review, the
district court agreed with the CPUC’s conclusion that federal
law permitted the CPUC to enforce the Agreement with
respect to Global’s VoIP traffic. Turning to the CPUC’s inter-
pretation of the Agreement, the district court upheld the
CPUC’s conclusion that the Agreement required Global to
compensate Cox for terminating Global’s VoIP-originated
traffic. Global timely appealed from the district court’s judg-
ment.
II
Global contends that the CPUC’s interpretation of the
Agreement, and the procedures it used to arrive at that inter-
pretation, violated applicable California law, and thus the dis-
trict court erred in concluding otherwise.4 We are deferential
to the CPUC’s interpretation of state law, and a petition for
review may be granted only if its application of state law was
arbitrary and capricious. Peevey, 462 F.3d at 1150. “A state
commission’s decision is arbitrary and capricious if the deci-
sion was not supported by substantial evidence or the com-
mission made a clear error of judgment.” Id. (internal
quotation marks and citation omitted).
A
Global argues that the CPUC acted arbitrarily and capri-
ciously by concluding that the Agreement’s definition of
intraLATA toll traffic includes the VoIP traffic Global for-
warded to Cox. The Agreement defines intraLATA toll traffic
as “those intraLATA calls that are not defined as Local Traf-
fic in [the Agreement].” The Agreement further provides that
“[t]he designation of traffic as Local Traffic . . . or IntraLATA
4
We review the district court’s decision to grant summary judgment de
novo. Peevey, 462 F.3d at 1150. In reviewing the CPUC’s determinations,
we apply the same standards the district court should apply. U.S. W.
Commc’ns v. MFS Intelenet, Inc., 193 F.3d 1112, 1117 (9th Cir. 1999).
GLOBAL NAPS CALIFORNIA v. PUC 17915
Toll for purposes of compensation shall be based on the hori-
zontal and vertical coordinates associated with the originating
and terminating NPA-NXXs of the call.” Because VoIP calls
are carried over the Internet, rather than traditional phone
lines, Global argues that classifying a VoIP call as “local” or
“intraLATA toll” based on the location associated with the
NPA-NXX of the phone number that initiated the call is inap-
propriate.
[1] We reject Global’s argument. The CPUC’s character-
ization of Global’s VoIP traffic as intraLATA toll traffic
came from Global itself. In response to the complaint Cox
filed with the CPUC, Global “admit[ted] that the sole area of
dispute presented in the complaint relates to compensation for
the termination by Cox of intraLATA toll calls within the
state of California.” Based on this concession, the CPUC con-
cluded that there was no dispute that “[a]ll the calls for which
Cox has billed Global . . . are intra-LATA toll calls.”
[2] Moreover, Global’s claim that it is technologically
infeasible to classify its VoIP traffic based on the coordinates
associated with the NPA-NXX of the phone number initiating
the phone call is not supported by the record. Before the
CPUC, Cox offered evidence showing that the NPA-NXX
associated with the origination point of each of the disputed
calls was “located within the LATA, but outside the local
calling area, of the Cox end-user customer receiving the call.”
Given that the Agreement defines intraLATA toll traffic as
traffic that travels within a single LATA, but crosses the
boundary of a local calling area, this traffic falls within the
Agreement’s definition of intraLATA toll traffic. Global has
offered no evidence that Cox has attempted to bill it for traffic
whose NPA-NXX does not meet the definition of intraLATA
toll traffic set forth in the Agreement. Thus, the district court
properly ruled that the CPUC did not act arbitrarily and capri-
ciously in concluding that Global’s VoIP traffic is subject to
17916 GLOBAL NAPS CALIFORNIA v. PUC
the termination charges the Agreement establishes for
intraLATA toll traffic.5
B
Global next contends that a fact hearing was necessary to
determine whether its VoIP traffic fell within the Agreement’s
intraLATA-toll-call provision because the nature of the traffic
Global delivered to Cox was in dispute. We disagree.
[3] The CPUC is empowered by the California Constitu-
tion to establish rules of procedure governing hearings before
it. Cal. Const. art. XII, § 2. It has not established a definitive
standard for evaluating whether summary judgment is appro-
priate, but it generally follows the requirements set forth in
California Code of Civil Procedure § 437(c). See Westcom
Long Distance, Inc. v. Pac. Bell, 54 C.P.U.C. 2d 244, 249
(Cal. Pub. Util. Comm’n 1994). Section 437(c) states that
summary judgment is appropriate where no triable issues of
material fact are present.
[4] Here, the CPUC determined that summary judgment
was appropriate because the nature of the disputed traffic was
immaterial to the question of contract interpretation before it.
As discussed above, Global conceded that the disputed traffic
was intraLATA toll traffic for billing purposes. In addition,
5
Global also claims that the CPUC’s interpretation of the Agreement
was arbitrary and capricious because the CPUC failed to hold a fact hear-
ing and consider extrinsic evidence as to the Agreement’s meaning. Glob-
al’s concession that all relevant calls were intraLATA toll calls rendered
it unnecessary for the CPUC to consider extrinsic evidence of the parties’
intent. Whatever the scope of the Agreement’s intraLATA-toll-call provi-
sion, it certainly sets forth the rate of compensation applicable to admit-
tedly intraLATA toll traffic. Cf. Ohio Bell Tel. Co. v. Global NAPs Ohio,
Inc., 2010 WL 987053, at *4 (S.D. Ohio Mar. 15, 2010) (denying sum-
mary judgment because an issue of fact existed regarding the nature of dis-
puted traffic where the parties’ interconnection agreement expressly
exempted VoIP traffic from the intercarrier-compensation rates applicable
to intraLATA toll traffic).
GLOBAL NAPS CALIFORNIA v. PUC 17917
Global offered no evidence to demonstrate that Cox was using
improper NPA-NXX information as a basis for its charges.
Thus, the CPUC’s determination that a fact hearing would not
assist it in resolving the matter of contract interpretation
before it was not arbitrary and capricious.
C
Global claims that the CPUC acted arbitrarily and capri-
ciously by requiring Global to compensate Cox for terminat-
ing its VoIP traffic while not requiring a similarly situated
LEC to compensate carriers terminating its VoIP traffic. As
evidence to support this claim, Global cites a draft arbitration
award issued by a CPUC arbitrator in Petition of Level 3
Communications, App. 04-06-004 (Cal. Pub. Utility Comm’n
June 1, 2004).
Contrary to Global’s assertions, however, the Level 3 deci-
sion is in no way at odds with the CPUC’s decision in this
case. In Level 3, the administrative law judge concluded that
VoIP traffic is subject to reciprocal-compensation obligations
arising under federal law, and ordered the parties to negotiate
an agreement establishing the rate for such charges. Id. at *12,
*80. This is consistent with the CPUC’s determination that
Global should compensate Cox under the terms of the Agree-
ment. Thus, Global’s claim that the CPUC has issued incon-
sistent decisions is without merit.
III
Global next argues that the CPUC’s conclusion that the
Agreement obligates Global to pay Cox compensation for ter-
minating VoIP traffic is contrary to federal law. We review
the CPUC’s interpretation of federal law de novo. Pac. Bell
v. Pac. W. Telecomm, Inc., 325 F.3d 1114, 1123 n.8 (9th Cir.
2003).
17918 GLOBAL NAPS CALIFORNIA v. PUC
A
[5] Global contends that the CPUC’s interpretation of the
Agreement violates FCC regulations that, in Global’s view,
exempt VoIP traffic from federal access charges. First, Global
argues that under an FCC order, VoIP traffic is not subject to
traditional long distance access charges, citing In re Petition
for Declaratory Ruling that AT&T’s Phone-to-Phone IP Tele-
phony Services are Exempt from Access Charges (“IP-in-the-
Middle Order”), 19 FCC Rcd. 7457 (2004). Second, should
we conclude that the FCC has not specifically exempted VoIP
traffic from federal access charges, Global urges us to con-
clude that its traffic is nevertheless exempt under a different
exemption applicable to “enhanced-service-providers.” Under
this exemption, telecommunications providers offering ser-
vices that use “computer processing applications that act on
the format, content, code, protocol or similar aspects of the
subscriber’s transmitted information; provide the subscriber
additional, different, or restructured information; or involve
subscriber interaction with stored information,” 47 C.F.R.
§ 64.702(a), are not subject to federal access charges, see In
re IP-Enabled Servs., 19 FCC Rcd. 4863, 4880 (2004).
[6] Global’s claim fails, however, because the CPUC did
not require Global to pay any compensation under the federal
access-charges regime. Access charges are a federally pre-
scribed rate of compensation that long-distance carriers must
pay LECs that terminate interLATA calls. See Global NAPs
v. Verizon New Eng., 603 F.3d 71, 77 (1st Cir. 2010)
(“GNAPs V“). The CPUC did not require Global to compen-
sate Cox under the federal access-charges regime. Instead, the
CPUC required Global to compensate Cox “as provided in the
Interconnection Agreement between the parties.”
[7] Global argues, however, that the CPUC’s decision had
the effect of imposing access charges on Global’s VoIP traffic
because the rate of reciprocal compensation applicable to
intraLATA toll traffic under the terms of the Agreement is the
GLOBAL NAPS CALIFORNIA v. PUC 17919
same as the rate applicable to interLATA traffic under the
federal access-charge regime. Therefore, in Global’s view, the
CPUC’s decision is the functional equivalent of imposing
access charges on the traffic Global sends to Cox. This argu-
ment fails, however, because Global’s duty to compensate
Cox stems from its contractual obligations. That the Agree-
ment established a rate of compensation similar to the rate
established by relevant federal regulations does not change
the legal basis for Global’s obligations.
[8] The very authorities Global cites to support its conten-
tion that VoIP traffic is exempt from federal access charges
confirm that such traffic is subject to reciprocal-compensation
obligations under section 251(b)(5). For example, in Petition
of MCImetro Access Transmission Services, 05-MA-138,
2006 WL 2434198 (Pub. Serv. Comm’n. of Wis. May 16,
2006) (arbitration award), the Public Services Commission of
Wisconsin held that a LEC could not charge a VoIP provider
access charges for terminating VoIP traffic. Id. at 32. The
Commission went on to hold, however, that such traffic was
subject to section 251’s reciprocal-compensation require-
ments, and ordered the parties to negotiate an agreement
establishing such compensation. Id. at 36. Similarly, in South-
western Bell Telephone, L.P. v. Missouri Public Service Com-
mission, 461 F. Supp. 2d 1055 (E.D. Mo. 2006), the district
court concluded that although access charges are inapplicable
to intraLATA VoIP calls, VoIP carriers are still obligated to
pay compensation under section 251 interconnection agree-
ments. Id. at 1083. Thus, we reject Global’s claim that federal
law prohibits the CPUC from enforcing the terms of the
Agreement with respect to VoIP traffic.6
6
To the extent that Global continues to suggest that its VoIP traffic is
entitled to an exemption from its section 251(b)(5) reciprocal-
compensation obligation under the FCC’s pronouncement in In re Imple-
mentation of the Local Competition Provisions in the Telecommunications
Act of 1996 (“ISP-Remand Order”), 16 FCC Rcd. 9151 (2001), its argu-
ment also fails. The ISP-Remand Order addresses the reciprocal-
17920 GLOBAL NAPS CALIFORNIA v. PUC
B
Global next contends that the CPUC’s order interpreting
the Agreement constitutes an improper exercise of its regula-
tory authority. According to Global, because the CPUC inter-
preted a “boilerplate” provision of the Agreement as imposing
compensation requirements on VoIP traffic, it effectively
“regulated” all VoIP providers that are bound by interconnec-
tion agreements containing similar boilerplate clauses.
According to Global, interpreting language used in many
interconnection agreements is prohibited under our decision
in Pacific Bell v. Pac West Telecomm, Inc., 325 F.3d 1114,
1128-29 (9th Cir. 2003). We disagree.
[9] The CPUC possesses the authority to resolve disputes
between LECs. See id. In the course of resolving such dis-
putes, the CPUC may interpret the terms of an interconnection
agreement. See Ill. Bell Tel. Co., 551 F.3d at 594-95. Resolv-
ing the dispute between Cox and Global necessarily required
the CPUC to interpret the terms of the Agreement, and there-
fore the CPUC acted properly by doing so.
[10] Our decision in Pacific Bell confirms, rather than con-
tradicts, this conclusion. There, we held that the CPUC could
not use its rulemaking authority to issue an order purporting
to interpret the meaning of terms in interconnection agree-
ments. Pac. Bell, 325 F.3d at 1128. This is so because inter-
preting an interconnection agreement requires the CPUC to
consider the terms of the particular agreement it is interpret-
ing. Thus, “[t]o suggest that the CPUC could interpret an
compensation rate applicable when traffic delivered to an Internet service
provider (“ISP”) crosses networks owned by more than one LEC. Id. at
9187-88. Global does not contend that any of the disputed traffic was sent
to an ISP, however. Likewise, the record does not indicate that any of the
disputed traffic was delivered to an ISP. Thus, none of the traffic at issue
in this case is the type of traffic subject to the ISP-Remand Order, and we
need not discuss the terms of the ISP-Remand Order in further detail.
GLOBAL NAPS CALIFORNIA v. PUC 17921
agreement without reference to the agreement at issue is
inconsistent with the CPUC’s weighty responsibilities of con-
tract interpretation under § 252.” Id. at 1128. Pacific Bell
therefore holds that a state public utility commission may not
use its rulemaking authority to engage in activities that are
judicial in nature.
[11] But the CPUC’s conduct in this case is entirely con-
sistent with this limitation. The CPUC did not issue a single
order purporting to interpret many agreements; instead, it
examined the terms of the Agreement at issue, and reached a
conclusion about those terms’ meaning. It makes no differ-
ence that many interconnection agreements contain language
similar to that used in the Agreement. Accordingly, we reject
Global’s claim to the contrary.
IV
For the foregoing reasons, the judgment of the district court
is
AFFIRMED.