United States Court of Appeals
Fifth Circuit
F I L E D
November 21, 2003
IN THE UNITED STATES COURT OF APPEALS
Charles R. Fulbruge III
FOR THE FIFTH CIRCUIT Clerk
_____________________
No. 02-51065
_____________________
COSERV LIMITED LIABILITY CORPORATION;
MULTITECHNOLOGY SERVICES LP,
Plaintiffs-Appellants,
versus
SOUTHWESTERN BELL TELEPHONE COMPANY;
PUBLIC UTILITY COMMISSION OF TEXAS;
REBECCA KLEIN; PAUL HUDSON; JULIE PARSLEY,
Defendants-Appellees.
__________________________________________________________________
Appeal from the United States District Court
for the Western District of Texas
_________________________________________________________________
Before JOLLY, HIGGINBOTHAM, and STEWART, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
In this case of first impression in this Circuit we interpret
the compulsory arbitration provision of the Telecommunications Act
of 1996 (“Telecom Act” or “Act”) set forth at 47 U.S.C. §
252(b)(1). We hold that only issues voluntarily negotiated by the
parties pursuant to § 252(a) are subject to the compulsory
arbitration provision. In so holding, we affirm on alternative
grounds the district court’s grant of summary judgment.
I
Southwestern Bell Telephone Company (“SWBT”) and Coserv
Limited Liability Corporation (“Coserv”) are local exchange
carriers subject to the Telecom Act. SWBT is an incumbent local
exchange carrier (ILEC) that provides telecommunications services
and operates telecommunications equipment throughout Texas. Coserv
is a competitive local exchange carrier (CLEC) that provides
telecommunications services and operates telecommunications
facilities located at approximately fifty-eight apartment complexes
in Texas. At each of the apartment complexes, Coserv’s facilities
include telecommunications equipment in a central telephone
equipment room as well as equipment and wires running to multiple
buildings and individual apartments. In order to allow tenants to
select telephone service from other telecommunications providers,
Coserv allows other providers to bring a network connection to a
single point in the central telephone equipment room. Coserv
typically charges these other providers a one-time connection fee
and a monthly service fee for the connection and use of its
facilities. Coserv terms this practice “compensated access”.
The obligations of SWBT, Coserv, and all other local exchange
carriers, both incumbents as well as competitors, are listed in
Section 251(b) of the Act. These obligations relate to: resale of
telecommunications services; number portability; dialing parity;
2
access to right-of-ways; and reciprocal compensation.1 In
addition, § 251(c) places six specific duties on ILECs, which
relate to: the duty to negotiate; interconnection; unbundled
access; resale; notice of changes; and collocation.2 An ILEC’s §
251(c)(1) duty to negotiate is limited in scope to “the particular
terms and conditions of agreements to fulfill the duties described
in [§ 251(b) and (c)].”3
In § 252, the Act specifies the procedures for an ILEC to
fulfill its duty to negotiate. Upon receiving a request for an
agreement pursuant to the duties listed in § 251, an agreement can
be reached through voluntary negotiations or through compulsory
arbitration.4 Under the provision for voluntary negotiations, the
parties are free to reach any agreement, without regard to the
duties set forth in § 251.5 However, any voluntary agreement must
1
47 U.S.C. § 251(b).
2
47 U.S.C. § 251(c).
3
47 U.S.C. § 251(c)(1). The section reads in its entirety:
The duty to negotiate in good faith in
accordance with section 252 of this title the
particular terms and conditions of agreements
to fulfill the duties described in paragraphs
(1) through (5) of subsection (b) of this
section and this subsection. The requesting
telecommunications carrier also has the duty
to negotiate in good faith the terms and
conditions of such agreements.
4
47 U.S.C. § 252(a) & (b).
5
47 U.S.C. § 252(a)(1), “Voluntary negotiations,” reads in
part:
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be submitted to the state commission for approval.6 The compulsory
arbitration clause provides that:
During the period from the 135th to the
160th day (inclusive) after the date on which
an incumbent local exchange carrier receives a
request for negotiation under this section,
the carrier or any other party to the
negotiation may petition a State commission to
arbitrate any open issues.7
The meaning of the phrase, “any open issues” is the subject of this
appeal.
Once a petition for arbitration has been accepted by the state
commission, the state commission “shall resolve each issue set
forth in the petition ... by imposing appropriate conditions as
required to implement subsection (c) of this section.”8 In
resolving any open issues, the state commission shall ensure that
the requirements of § 251 are met.9
II
Upon receiving a request for
interconnection, services, or network elements
pursuant to section 251 of this title, an
incumbent local exchange carrier may negotiate
and enter into a binding agreement with the
requesting telecommunications carrier or
carriers without regard to the standards set
forth in subsections (b) and (c) of section
251 of this title.
6
47 U.S.C. § 252(a)(1).
7
47 U.S.C. § 252(b) (emphasis added).
8
47 U.S.C. § 252(b)(4)(C).
9
47 U.S.C. § 252(c)(1).
4
Coserv requested an interconnection agreement governing SWBT’s
duties under § 251. The parties proceeded with voluntary
negotiations pursuant to § 252. Coserv sought to add to the
negotiations its proposed rates, terms, and conditions for
compensated access. SWBT refused to negotiate issues relating to
compensated access. Voluntary negotiations over SWBT’s § 251
duties continued but did not result in an interconnection
agreement.
Coserv filed a petition for arbitration with the Public
Utility Commission (“PUC”), pursuant to § 252. Coserv identified
several issues that it claimed remained open between the parties,
including issues relating to compensated access. SWBT argued that
the PUC lacked jurisdiction to arbitrate issues relating to
compensated access and the PUC ultimately agreed. The PUC read §
252’s “any open issues” clause narrowly, concluding that:
§ 251(c) limits the scope of interconnection
agreements arbitrated pursuant to FTA § 252 to
those duties described in “paragraphs (1)
through (5) of subsection (b) and this
subsection.” ... By the clear terms of §
251(c), the parties’ good faith duties to
negotiate in accordance with § 252 are
restricted to those duties described in (1)-
(5) of (b), which apply to all LECs, and (c),
which applies to ILECs exclusively.
The PUC entered an arbitration award setting forth an
interconnection agreement governing SWBT’s duties to Coserv under
§ 251 and refusing to consider the compensated access issues based
on lack of jurisdiction. Coserv brought an action in federal
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district court challenging the PUC’s jurisdictional finding. The
district court agreed with the PUC and granted summary judgment
accordingly. Coserv appeals the judgment of the district court.
III
We review the grant of summary judgment de novo, applying the
same standard as the district court.10 A district court reviews
the compliance of an interconnection agreement with federal law and
related matters of statutory interpretation de novo.11
We begin, as we always do in matters of statutory
interpretation, with the plain language and structure of the
statute.12 Section 251 provides that an ILEC has:
[t]he duty to negotiate in good faith in
accordance with section 252 of this title the
particular terms and conditions of agreements
to fulfill the duties described in paragraphs
(1) through (5) of subsection (b) of this
section and this subsection.13
Section 252 provides in relevant part:
(a) Agreements arrived at through negotiation
(1) Voluntary negotiations
Upon receiving a request for
interconnection, services or network
elements pursuant to section 251 of
10
Wyatt v. Hunt Plywood Co., 297 F.3d 405, 408 (5th Cir.2002).
11
Southwestern Bell Telephone Co. v. Public Utility Commission
of Texas, 208 F.3d 475, 482 (5th Cir. 2000); U.S. West
Communications v. MFS Intelenet, 193 F.3d 1112, 1117 (9th Cir.
1999).
12
See Society of Lloyd’s v. Turner, 303 F.3d 325, 330 (5th Cir.
2002).
13
47 U.S.C. § 251(c)(1).
6
this title, an incumbent local
exchange carrier may negotiate and
enter into a binding agreement with
the requesting telecommunications
carrier or carriers without regard
to the standards set forth in
subsections (b) and (c) of section
251 of this title....
(b) Agreements arrived at through compulsory
arbitration
(1) Arbitration
During the period from the
135th to the 160th day (inclusive)
after the date on which an incumbent
local exchange carrier receives a
request for negotiation under this
section, the carrier or any other
party to the negotiation may
petition a State commission to
arbitrate any open issues.14
Thus, compulsory arbitration under § 252 begins with a request
by a CLEC to negotiate with an ILEC regarding its obligations under
§ 251. An ILEC is required by the Act to negotiate about those
duties listed in § 251(b) and (c). During negotiations, however,
the parties are free to make any agreement they want without regard
to the requirements of § 251(b) and (c). To that extent, the
parties are free to include interconnection issues that are not
listed in § 251(b) and (c) in their negotiations. If the voluntary
negotiations result in only a partial agreement, or in no agreement
at all, either party can petition for compulsory arbitration of any
open issue.
14
47 U.S.C. §§ 252(a)(1); (b)(1) (emphasis added).
7
There is nothing in § 252(b)(1) limiting open issues only to
those listed in § 251(b) and (c). By including an open-ended
voluntary negotiations provision in § 252(a)(1), Congress clearly
contemplated that the sophisticated telecommunications carriers
subject to the Act might choose to include other issues in their
voluntary negotiations, and to link issues of reciprocal
interconnection together under the § 252 framework. In combining
these voluntary negotiations with a compulsory arbitration
provision in § 252(b)(1), Congress knew that these non-§ 251 issues
might be subject to compulsory arbitration if negotiations fail.
That is, Congress contemplated that voluntary negotiations might
include issues other than those listed in § 251(b) and (c) and
still provided that any issue left open after unsuccessful
negotiation would be subject to arbitration by the PUC.
We hold, therefore, that where the parties have voluntarily
included in negotiations issues other than those duties required of
an ILEC by § 251(b) and (c), those issues are subject to compulsory
arbitration under § 252(b)(1). The jurisdiction of the PUC as
arbitrator is not limited by the terms of § 251(b) and (c);
instead, it is limited by the actions of the parties in conducting
voluntary negotiations. It may arbitrate only issues that were the
subject of the voluntary negotiations. The party petitioning for
arbitration may not use the compulsory arbitration provision to
obtain arbitration of issues that were not the subject of
negotiations. This interpretation comports with the views of the
8
other courts that have reviewed this provision in similar
contexts.15 It also comports with the structure of the Act and our
recognition of the flexibility accorded state PUCs by the Act.16
In reaching this conclusion, we do not eliminate the limits §
251 places on an ILEC’s duty to negotiate nor do we create any new
obligations under the Telecom Act. An ILEC is clearly free to
refuse to negotiate any issues other than those it has a duty to
negotiate under the Act when a CLEC requests negotiation pursuant
to §§ 251 and 252. Indeed, in this case SWBT refused to negotiate
the compensated access issues -- such that these issues potentially
become subject to the appropriate state remedies.
While the PUC erred in its interpretation of the compulsory
arbitration provision, its ultimate refusal to arbitrate the
compensated access issue was correct, because compensated access
was not a mutually agreed upon subject of voluntary negotiation
between SWBT and Coserv. As we find this a sufficient basis for
the PUC’s denial of jurisdiction, we do not reach the alternative
15
See US West Communications, Inc. v. Minnesota Public
Utilities Commission, 55 F. Supp. 2d 968 (D. Minn. 1999) (holding
that “open issues” are limited to those that were the subject of
voluntary negotiations). See also MCI Telecommunications Corp. v.
BellSouth Telecommunications, Inc., 298 F.3d 1269 (11th Cir. 2002)
(rejecting a district court’s conclusion that the compulsory
arbitration provision was so broad as to include any issue raised
by the petitioning party).
16
See Southwestern Bell Telephone Co. v. Waller Creek
Communications, 221 F.3d 812, 816 (5th Cir. 2000) (courts review a
state PUC’s Telecom Act interpretations de novo, but resolution of
all other issues under the arbitrary and capricious standard); 47
U.S.C. §§ 251(d)(3), 251(e)(3), and 261(c).
9
grounds offered by the PUC or other issues raised by the parties in
this case.
For the foregoing reasons, the judgment of the district court
is
AFFIRMED.
10