United States Court of Appeals
For the First Circuit
No. 04-1711
GLOBAL NAPS, INC.,
Plaintiff, Appellant,
v.
VERIZON NEW ENGLAND, INC.; MASSACHUSETTS
DEPARTMENT OF TELECOMMUNICATIONS AND ENERGY;
PAUL B. VASINGTON, in his capacity as Commissioner;
JAMES CONNELLY, in his capacity as Commissioner;
W. ROBERT KEATING, in his capacity as Commissioner;
DIEDRE K. MANNING, in her capacity as Commissioner; and
EUGENE J. SULLIVAN, in his capacity as Commissioner,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Rya W. Zobel, U.S. District Judge]
Before
Lynch, Lipez, and Howard, Circuit Judges.
William J. Rooney, Jr., with whom Jeffrey Melick was on brief,
for appellant.
Scott H. Angstreich, with whom Bruce P. Beausejour, Keefe B.
Clemons, Sean A. Lev, Mary Ann McGrail, and Kellogg, Huber, Hansen,
Todd, & Evans were on brief, for appellee Verizon New England, Inc.
Thomas A. Barnico, Assistant Attorney General, with whom
Thomas F. Reilly, Attorney General, was on brief, for appellee
Massachusetts Department of Telecommunications and Energy.
January 19, 2005
LYNCH, Circuit Judge. This appeal represents one part of
a larger dispute between Global NAPs, a competitive local exchange
carrier (CLEC), and Verizon New England, Inc., an incumbent local
exchange carrier (ILEC), in their attempt to reach an
interconnection agreement under the Telecommunications Act of 1996
(TCA), Pub. L. No. 104-104, 110 Stat. 56 (codified as amended in
scattered sections of 47 U.S.C.). The TCA sets up detailed
procedures for the creation of interconnection agreements in order
to serve the TCA's goal of fostering competition in local telephone
markets. Those procedures allow competing carriers to gain access
to the incumbent carrier's telecommunications network and
facilities and govern the terms and fees of that access.
Global NAPs appeals from the district court's judgment
affirming a February 19, 2003 order of the Massachusetts Department
of Telecommunications and Energy (DTE), the state commission given
the power to arbitrate disputes over interconnection agreements
under the TCA. 47 U.S.C. § 252(b). The February 19, 2003
administrative order followed an earlier December 12, 2002 DTE
order deciding the arbitration between Verizon and Global NAPs.
That arbitration had been initiated by Global NAPs after a period
of negotiation with Verizon failed to produce an agreement on all
issues.
The challenged February 19 order allowed a remedial
motion by Verizon to force Global NAPs to sign an interconnection
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agreement consistent with the terms of the DTE's earlier December
12 arbitration order. Verizon brought this motion because Global
NAPs had balked at the December 12 arbitration order, said it was
not bound by the result of the arbitration, and that it was instead
exercising what it thought was its unconditional right under
§ 252(i) of the Act to adopt the terms of an interconnection
agreement Verizon had with Sprint, which preexisted Global NAPs'
arbitration request.
The merits of the underlying December arbitration order
from the DTE are not before us. The merits issue before us is
whether in its February order the DTE acted in violation of
§ 252(i) of the TCA in precluding Global NAPs from nullifying and
avoiding the effect of the arbitration –- which binds Global NAPs
and Verizon to an agreement –- by instead opting into the terms of
an older agreement Verizon had signed with Sprint. If Global NAPs
were free to so opt in, that would moot the challenge to the
underlying December arbitration order. We find that the DTE's
February 19 order was not in violation of the TCA and affirm the
district court.
I.
Before the passage of the TCA, local telephone service
was provided mainly by state-regulated monopolies, such as Verizon.
These monopolies, the ILECs, owned all networks and facilities
(including telephone lines, poles, trunks, etc.) attendant to the
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provision of local telephone service. See AT&T Corp. v. Iowa
Utils. Bd., 525 U.S. 366, 371 (1999). A purpose of the TCA was to
end the local telephone monopolies and create a national
telecommunications policy that strongly favored competition in
local telephone markets. See P.R. Tel. Co. v. Telecomm. Regulatory
Bd. of P.R., 189 F.3d 1, 7 (1st Cir. 1999).
Section 251 of the TCA imposes obligations on both
competing carriers and incumbent carriers. Section 251(a)(1)
imposes a duty on all carriers "to interconnect directly or
indirectly with the facilities and equipment of other
telecommunications carriers." 47 U.S.C. § 251(a)(1). The TCA
imposes on an incumbent carrier more stringent duties, including
"the duty to permit other carriers to interconnect with its
facilities, to provide other carriers with access to elements of
its local network on an 'unbundled' basis, to sell to other
carriers at wholesale prices the services that it provides to its
customers, and to negotiate interconnection agreements in good
faith." P.R. Tel. Co., 189 F.3d at 8; see 47 U.S.C. § 251(c).
Section 252 provides the procedures for the creation of
interconnection agreements.1 Interconnection agreements govern the
1
In addition to pursuing an interconnection agreement, a
competitor may also seek access to the incumbent's network by
purchasing local telephone services at wholesale rates for resale
to end users or by leasing elements of the incumbent's network on
an "unbundled basis." 47 U.S.C. § 251(c); U.S. West Communication,
Inc. v. Sprint Communication Co., 275 F.3d 1241, 1244 (10th Cir.
2002).
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terms and conditions by which CLECs may gain access to the ILECs'
local telephone network and facilities, thus allowing the CLECs to
provide competing local telephone service. Incumbents and
competitors may negotiate freely an interconnection agreement, and
both parties have a duty to negotiate in good faith. 47 U.S.C.
§ 251(c)(1). If the parties reach an agreement through
negotiation, that agreement need not satisfy the substantive
requirements of §§ 251(b) and (c). Id. § 252(a)(1). If after a
period of negotiation the parties are not able to come to an
agreement on some issues, either party may petition a state
commission to decide those open issues in arbitration. Id.
§ 252(b)(1). The commission then has the authority to decide the
open issues between the parties, and to impose conditions on the
parties for the implementation of the terms of arbitration into an
agreement. Id. § 252(b)(4)(C). In deciding those issues, the
commission must "ensure that such resolution and conditions meet
the requirements of section 251 of this title, including the
regulations prescribed by the [Federal Communications Commission]
pursuant to section 251." Id. § 252(c)(1). Further, either
party's refusal to negotiate or to cooperate with the state
commission acting as arbitrator constitutes a breach of its duty to
negotiate in good faith. Id. § 252(b)(5).
In addition, the TCA requires ILECs to allow any
requesting CLEC to adopt the terms and conditions of any
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interconnection agreement it has with any other CLEC, provided that
agreement has been approved by the requisite state
telecommunications commission. Id. § 252(i).
Once a negotiated or arbitrated agreement is completed,
it must be submitted to the state commission for approval. Id.
§ 252(e)(1). The commission may reject any negotiated agreement if
it discriminates against a third party carrier or if its
implementation is "not consistent with the public interest,
convenience, and necessity." Id. § 252(e)(2)(A). The commission
may reject an arbitrated agreement if it fails to meet the
substantive requirements of § 251, including the FCC's implementing
regulations, or the pricing standards set forth in § 252(d). Id.
§ 252(e)(2)(B). That commission decision is subject to federal
judicial review:
In any case in which a State commission makes
a determination under this section, any party
aggrieved by such determination may bring an
action in an appropriate Federal district
court to determine whether the agreement or
statement meets the requirements of section
251 of this title and this section.
Id. § 252(e)(6).
Verizon and Global NAPs began the negotiation process for
a new interconnection agreement in early 2002, because their
previous agreement was approaching expiration. On July 30, 2002,
Global NAPs filed a petition with the DTE to arbitrate several
issues on which the parties could not agree. The DTE issued an
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order on December 12, 2002, resolving all open issues and ordering
the parties to incorporate the arbitrated terms into an agreement
and file that agreement with the DTE within 21 days, or by January
2, 2003. The DTE allowed the parties' joint motion for extension
of time to file the agreement until January 17, 2003.
On December 30, 2002, Global NAPs brought an action in
federal district court challenging the merits of the DTE's
arbitration determination.2 The merits of that December 12, 2002
DTE order are not before us.
On January 9, 2003, Global NAPs informed Verizon that,
rather than entering into the agreement embodying the DTE's
arbitration decision, it would seek to adopt the terms of a
preexisting December 19, 2001 agreement Verizon had with Sprint
("Sprint agreement"). Global NAPs contended that it has an
unconditional right to do so pursuant to 8 U.S.C. § 252(i). Global
NAPs said its adoption of the preexisting Sprint agreement was
consistent with the arbitration order, under which Global NAPs
retained its § 252(i) rights.
On January 16, 2003, Global NAPs informed the DTE of its
intention to opt into the Sprint agreement, in place of the
2
The most important contested issue in that arbitration
between the parties relates to the reciprocal compensation
requirements between ILECs and CLECs for toll-free calls placed by
the ILEC's customers to a CLEC's internet service provider (ISP)
customers. This issue has prompted much litigation, including
issues concerning the validity of FCC rulings on the issue. See,
e.g., WorldCom, Inc. v. FCC, 288 F.3d 429 (D.C. Cir. 2002).
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arbitrated agreement. In response, on January 17, 2003, Verizon
filed a motion with the DTE to approve the arbitration order,
seeking, in essence, to force Global NAPs to execute an agreement
consistent with the arbitration order, or alternatively, should the
DTE allow Global NAPs to opt into the Sprint agreement, to order
that the "agreement be modified to reflect the [DTE]'s legal and
policy determinations set forth in the Arbitration Order."
On February 19, 2003, the DTE granted the initial portion
of Verizon's motion and ordered the parties to sign and file an
agreement consistent with the initial arbitration order. That
February 19, 2003 order is the subject of this appeal. All parties
agree that this order left Global NAPs free to challenge the
substance of the December 12, 2002 arbitration order.
In the February 19 order, the DTE rejected Global NAPs'
claim that it retained the unconditional right to opt into the
Sprint Agreement even after the DTE issued its arbitration order.
The DTE first held that a final arbitration order pursuant to
§ 252(b) is binding on both parties,3 noting that it had always
3
The DTE also rejected Global NAPs' claim that when the
FCC stated, in the Local Competition Order ¶ 1293, that "competing
providers do not have an affirmative duty to enter into agreements
under section 252," the FCC meant that CLECs were not bound by the
results of an state arbitration under § 252(b). Local Competition
Order, 11 F.C.C.R. 15499, 16131 (1996). Rather, the DTE held that
a fuller reading of the TCA and FCC rules shows that this paragraph
stood for the narrower proposition that competing carriers, unlike
incumbents, cannot be forced to enter into an interconnection
agreement, but rather can purchase services directly through the
incumbent's tariff. The DTE held that it does not mean that CLECs
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required that arbitration be binding on both parties. It held that
its rule that arbitrations be binding on both parties was
consistent with FCC regulation. See 47 C.F.R. § 51.807(h).
Further, the DTE noted that the FCC's Local Competition Order,
which embodies the FCC's initial post-enactment interpretation of
the statute, stated that the states may consider the FCC's rules
when implementing their own standards for arbitration. See Local
Competition Order, 11 F.C.C.R. 15499, 16127 (1996).
Further, the DTE held that since the arbitration order
directed the parties to file an agreement containing the arbitrated
terms, and provided no alternatives, Global NAPs' attempt to opt
into the Sprint agreement was in violation of that earlier order.
The DTE held that "[t]he § 252(i) adoption process permits a CLEC,
during the negotiation process, to opt into another carrier's
contract, not to do so after a decision has been reached through
arbitration."
It also noted that Global NAPs' interpretation of the TCA
was contrary to public policy, as it would allow carriers to "game
the system" by always attempting to arbitrate, and if unhappy with
the results, merely to opt into an existing agreement.4 The DTE
can avoid the terms of a valid arbitration order.
4
The DTE reasoned that competing carriers would have no
incentive to negotiate and would always seek arbitration, because
the ability to opt into an existing agreement post-arbitration
would mean that such competitors could only benefit and never be
made worse off by arbitration. That would waste the DTE's limited
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ordered the parties to file an agreement consistent with the
initial arbitration order within seven days. The parties signed
and entered an agreement consistent with the court's ruling, under
Global NAPs' protest. The DTE did not, contrary to Global NAPs'
assertion, hold that a party to an arbitrated agreement can never
exercise rights under § 252(i). It also did not, contrary to
Verizon's assertion, hold that a party subject to a valid
arbitration order could never, under § 252(i), take advantage of
terms in a previously available agreement.
On March 6, 2003, Global NAPs filed a second action in
district court, this time challenging the DTE's February 19 order.
On March 11, 2003, all parties to the second litigation
(Global NAPs, Verizon, and the DTE) filed a joint motion to
consolidate Global NAPs' two actions. In that motion, the parties
proposed that the district court rule on Global NAPs' challenge of
the DTE's February 19 order –- whether Global NAPs is permitted to
opt into the Sprint Agreement –- prior to ruling on its challenge
to the DTE's underlying arbitration order –- the merits of the
arbitration agreement. The district court granted the motion and
accepted the parties' briefing schedule, under which the parties
filed cross motions for summary judgment in the first action on the
issue whether § 252(i) would permit Global NAPs to opt into the
Sprint agreement despite the existence of the DTE's arbitration
resources and be unduly burdensome to incumbents.
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order to the contrary. The district court granted Verizon's and
the DTE's motions for summary judgment, and denied Global NAPs'
motion. Global NAPs timely appealed.
II.
Appellate Jurisdiction
The parties agree the federal courts have subject matter
jurisdiction to review state agency determinations under the TCA
for compliance with federal law, pursuant to 28 U.S.C. § 1331.
Verizon Md., Inc. v. Public Serv. Comm'n of Md., 535 U.S. 635, 642
(2002). See also, 47 U.S.C. § 252(e)(6).
Verizon initially argues that this court lacks appellate
jurisdiction to hear Global NAPs' appeal due to (1) the lack of a
final judgment under 28 U.S.C. § 1291 and (2) lack of standing in
Global NAPs. The DTE does not join Verizon in arguing lack of
appellate jurisdiction or lack of standing, but briefs the case on
the merits.
Verizon argues that the district court's ruling was not
a final judgment because Global NAPs' two actions were
consolidated, thus rendering them one case, and the grant of
summary judgment disposed of only one of the two consolidated
cases. This argument is without merit. The disposition of one
case in a consolidated action is a final and appealable judgment
unless the cases were consolidated "for all purposes." See Bay
State HMO Management, Inc. v. Tingley Sys., Inc., 181 F.3d 174, 178
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n.3 (1st Cir. 1999). In moving to consolidate these cases, the
parties expressly requested that the district court review the
February 12, 2003 DTE order before proceeding with its review of
the December 12, 2002 order, and the district court agreed to do
so.5 Review of the merits of the December 12, 2002 arbitration
order was, in essence, stayed pending the court's determination of
the challenge to the second DTE order; the parties proposed
completely separate briefing schedules for the review of the two
consolidated cases. Verizon's claim that the cases were
consolidated "for all purposes" is wrong and Verizon's last minute
assertion is inconsistent with how it presented its case in the
trial court.
These circumstances bring the case squarely within the
bounds of In re Massachusetts Helicopter Airlines, Inc., 469 F.2d
439 (1st Cir. 1972). There, this court determined that the claims
in a consolidated action remained separate, and therefore a Rule
54(b) determination was not required for appellate jurisdiction to
be proper, because "[e]xcept for the consolidation of the[] cases
for the convenience of pre-trial and trial procedure, the cases
maintained their separate identities throughout the litigation.
Separate judgments were entered in each of the five cases." Id. at
441. We found this to be consistent with the theory behind
5
Further, we note that Verizon did not move to challenge
jurisdiction upon the filing of Global NAPs' appeal, waiting
instead until the filing of its brief to do so.
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consolidation, which was a procedural mechanism meant to serve the
purposes of judicial economy and convenience of the parties, as
here, but not to alter the substantial rights the parties had in
the separate actions.6 Id.
Verizon relies on a notation in the district court docket
from the clerk of court that the second complaint, i.e. the present
case, was consolidated "for all future proceedings," and that this
removes it from the Massachusetts Helicopter rule. See Bay State
HMO Management, Inc, v. Tingley Sys., Inc., 181 F.3d 174, 178 n.3.
The reality of the situation is that the consolidation was for
purposes of convenience and efficiency.
Verizon also urges us to overrule Massachusetts
Helicopter in favor of the Ninth Circuit rule in Huene v. United
States, 743 F.2d 703, 705 (9th Cir. 1984), also followed in Trinity
Broad. Corp. v. Eller, 827 F.2d 673, 675 (10th Cir. 1987) and
Spraytex, Inc. v. DJS&T & Homax Corp, 96 F.3d 1377, 1382 (Fed. Cir.
1996). The advantage, it says, of the Ninth Circuit rule is that
it provides a bright line –- no ruling in a consolidated case may
be appealed until there is an ultimate final judgment on all
matters. That is true. The disadvantage of the rule is that it
may cause injustice on particular facts, and the rule acts as a
6
Verizon's attempt to characterize the district court's
order as a grant of partial summary judgment is in error. There is
nothing in the district court's memorandum or judgment that
suggests it was a grant of partial summary judgment.
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disincentive which may prevent consolidation for purely pragmatic
reasons of convenience and efficiency.
In any event, our adherence to the Massachusetts
Helicopter rule was reaffirmed more recently in Bay State HMO
Management, 181 F.3d at 178 n.3. As a panel, we are not free to
overrule circuit precedent. The district court's grant of summary
judgment is a final order within the meaning of 28 U.S.C. § 1291.
Verizon's challenge to Global NAPs' standing to pursue an
appeal is also without merit. Verizon's claim of lack of standing
seems to be predicated on the notion that, if Global NAPs is
allowed to opt into the Sprint agreement, the DTE will construe the
Sprint agreement in a manner consistent with the terms of the
arbitration order, and thus Global NAPs will be no better off.
Global NAPs disagrees, and recites injury to itself.
Further, Verizon's position is contrary to its position below in
several respects. Among them is that Verizon requested from the
DTE that, should the DTE allow Global NAPs to adopt the Sprint
agreement, then the agreement be modified to adopt legal and policy
determinations made in the arbitration order. If the Sprint
agreement were not materially different from the challenged
agreement, such modification would not be necessary. Indeed,
Global NAPs would not be trying to join the Sprint agreement.
Further, the possibility that the DTE might construe the Sprint
agreement consistently with the December 12 arbitration order, and
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that doing so would be upheld against a likely challenge, is
insufficient to render Global NAPs without standing in this case.
We reject the lack of standing argument.
III.
Interpretation of the TCA § 252(i)
The precise legal question under review is narrow, though
one of first impression in the circuit courts of appeals: does a
competing carrier have an unconditional right, under § 252(i) of
the TCA, to avoid the terms of a final arbitration order from a
state telecommunications commission, adjudicating a dispute between
the CLEC and ILEC, by seeking to opt into the terms of a previous
interconnection agreement that the ILEC has with another CLEC?
This is an issue of federal statutory interpretation of the TCA.7
We agree with the DTE and the district court that the TCA grants no
such right.
Standard of Review
This circuit has not previously articulated precisely the
standard of judicial review of state agency determinations under
the TCA. Issues of law, as here, are subject to de novo review,
P.R. Tel. Co. v. Telecomm. Regulatory Bd. of P.R., 189 F.3d 1, 7
7
Since the FCC, and not the individual state commissions,
is the agency with the power granted by Congress to administer the
TCA, through the formulation of policy, rulemaking, and regulation,
we do not afford deference to the DTE's interpretation of the
statute under Chevron, U.S.A., Inc. v. Natural Res. Def. Council,
Inc., 467 U.S. 837, 843 (1984).
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(1st Cir. 1999), and we apply that standard to state agency
determinations under the TCA.8
In interpreting a statute, we begin with the text.
BedRoc Ltd. v. United States, 124 S. Ct. 1587, 1593 (2004).
Section 252(i) states:
A local exchange carrier shall make available
any interconnection, service, or network
element provided under an agreement approved
under this section to which it is a party to
any other requesting telecommunications
carrier upon the same terms and conditions as
those provided in the agreement.
47 U.S.C. § 252(i). In urging the court to hold that § 252(i)
gives it an unconditional right to avoid the terms of an
arbitration order and opt into a previously available agreement,
Global NAPs points out that the text of § 252(i) does not state
8
Each of the Circuits that has addressed the standard of
review under the TCA has held that where the state agency
determination rests principally on an interpretation of the TCA, de
novo review is applied. See, e.g., Ind. Bell Tel. Co. v. McCarty,
362 F.3d 378, 383 (7th Cir. 2004); MCIMetro Access Transmission
Servs. v. Bellsouth Telecomms., Inc., 352 F.3d 872, 876 (4th Cir.
2003); Coserv. Ltd. Liab. Corp. v. Southwestern Bell Tel. Co., 350
F.3d 482, 486 (5th Cir. 2003); U.S. West Communications, Inc. v.
Sprint Communications Co., 275 F.3d 1241, 1248 (10th Cir. 2002);
AT&T Communications of S. States, Inc. v. BellSouth Telecomm.,
Inc., 268 F.3d 1294, 1296 (11th Cir. 2001); AT&T Communications of
N.J. v. Verizon N.J., Inc., 270 F.3d 162, 169 (3d Cir. 2001); U.S.
West Communications., Inc. v. MFS Intelenet, Inc. 193 F.3d 1112,
1117 (9th Cir. 1999). Further, other Circuits have held that where
no error of law exists, the state agency's other determinations are
reviewed under the arbitrary and capricious standard. See, e.g.,
MCI Telecomms. Corp. v. Ohio Bell Tel. Co., 376 F.3d 539, 548 (6th
Cir. 2004); U.S. West Communications, Inc., 275 F.3d at 1248;
Southwestern Bell Tel. Co. v. Waller Creek Communications, Inc.,
221 F.3d 812, 816 (5th Cir. 2000); MFS Intelenet, 193 F.3d at 1117.
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expressly when and under what circumstances the incumbent must make
interconnection agreements available to other competitors. From
this silence, Global NAPs argues it is free to opt in at any time
it chooses. But § 252(i) does not expressly state what Global NAPs
reads it to mean either. At best, § 252(i) is ambiguous on the
subject, if that section is read alone. The absence of an express
statement in § 252(i) does not end the matter; the section must be
read in light of the structure and intent of the statute.
Global NAPs' broad reading of § 252(i) is incorrect,
because that reading brings § 252(i), under the circumstances of
this case, into direct conflict with, and in important aspects
negates, several other sections of the TCA.
Global NAPs' reading is inconsistent with the basic
arbitral power vested in the state commission. Section 252(b),
entitled "Agreements arrived at through compulsory arbitration,"
allows for either party to an interconnection agreement to petition
a state commission for arbitration of open issues, and grants
powers to the state commission to carry out the arbitration. Id.
§ 252(b).
Global NAPs' reading is also inconsistent with the power
of state commissions to make their arbitral decisions binding on
both parties. Section 252(b)(4)(C) requires the state commission
to "resolve each issue set forth in the petition and the response,
if any, by imposing appropriate conditions as required to implement
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subsection (c) of this section upon the parties to the agreement."
Id. § 252(b)(4)(C). In turn, subsection (c), among other things,
states that "a State commission shall . . . provide a schedule for
implementation of the terms and conditions by the parties to the
agreement." Id. § 252(c). By allowing the commission acting as
arbitrator to place conditions on both parties for the
implementation of interconnection agreements, it is clear that
§ 252(b)(4)(C) intends for arbitration orders to be binding on both
parties.
Global NAPs responds that arbitration orders are not
binding because generally under the TCA, the obligations on CLECs
are not equal to or reciprocal with those on ILECs and so
arbitration decisions are equally asymmetrical in their results.
Global NAPs also makes a broader argument that the FCC's
regulations, and the TCA generally, create asymmetrical rights and
obligations on competitors and incumbents, and those greatly tip
the scale in favor of competitors. It argues that under § 252
incumbents are required to enter into interconnection agreements,
but competitors are not. Thus Global NAPs argues that, to the
extent there is ambiguity as to the scope of § 252(i), it should be
construed broadly in favor of competitors and against the
incumbent, consistent with the asymmetry created by the statute and
regulations as a whole.
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This argument, however, ignores the important fact that
§ 252(b) is not one of the areas of the TCA that creates
asymmetrical obligations on the parties. Section 252(b)(1) allows
either party to the negotiation to petition for arbitration.
Section 252(b)(4) allows the state commission to impose conditions
on both parties in order to carry out the arbitration. And
§ 252(b)(5) creates a duty for both parties to cooperate with the
arbitration at the risk of breaching the duty both parties have,
under § 252(a), to negotiate in good faith. There is no basis for
Global NAPs' reading § 252(i) as somehow turning the parallel
obligations that run throughout § 252(b) into merely one-way
obligations.
Further, Global NAPs' reading is in conflict with the
statutory duties of good faith and cooperation with the commission
as arbitrator. The TCA, at § 252(b)(5), states:
The refusal of any other party to the
negotiation to participate further in the
negotiations, to cooperate with the State
commission in carrying out its function as an
arbitrator, or to continue to negotiate in
good faith in the presence, or with the
assistance, of the State commission shall be
considered a failure to negotiate in good
faith.
Id. § 252(b)(5). In attempting to void the terms of a valid
arbitration order, it is clear that Global NAPs is refusing to
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cooperate with the DTE, in violation of its duty to negotiate in
good faith.9
Global NAPs responds by asking the court to read an
implicit limitation on the good faith requirement of § 252(b)(5) –-
that CLECs are not bound by the terms of § 252(b)(5) if they
attempt to opt into a previously available contract. Global NAPs
says that this is the effect of § 252(i). But § 252(i) says
nothing of the sort. Rather, it is written in terms of an
obligation on the part of ILECs to make agreements available to
potential CLECs, not as an unconditional right on the part of CLECs
to modify their clear obligations under earlier subsections of
§ 252. We read the sections consistently, and conclude that
§ 252(i) is not an implicit limit on the binding effect of the
arbitration provisions of § 252(b)(5). In this context, there is
nothing ambiguous about the terms of § 252(b)(4)(C) and (b)(5).
Global NAPs' argument is also inconsistent with the
judicial review provisions in the TCA, for determinations made by
a state commission:
9
The record is clear that the DTE did not consider its
order to be a penalty. Rather, the DTE held that § 252(i) could
not be read to allow Global NAPs to void the terms of the binding
arbitration order by opting into an agreement available to them
throughout the entire period of negotiation and arbitration.
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In any case in which a State commission makes
a determination under this section, any party
aggrieved by such determination may bring an
action in an appropriate Federal district
court to determine whether the agreement or
statement meets the requirements of section
251 of this title and this section.
47 U.S.C. § 252(e)(6). If "any party aggrieved by a determination"
feels the arbitral determination is contrary to the TCA, its remedy
is through judicial review, not self-help.
In addition to our reading of the statutory sections,
there is another source of law to consider: FCC regulations
interpreting the statutory sections at issue, albeit on different
points. The FCC's interpretation is relevant in two senses.
First, under § 252(c)(1), the DTE itself must "ensure that such
resolution and conditions meet the requirements of section 251 of
this title, including the regulations prescribed by the Commission
pursuant to section 251." Id. § 252(c)(1). Second, to the extent
there is ambiguity in the statute, present here in § 252(i) but not
in § 252(b)(4)(C) and (b)(5), deference is due to the FCC's
reasonable interpretation. Chevron, U.S.A., Inc. v. Natural Res.
Def. Council, Inc., 467 U.S. 837, 843 (1984).10
The FCC has not interpreted the statute on the precise
question before us. That is not surprising, since the issue is one
10
The FCC is explicitly granted rulemaking authority under
the TCA, 47 U.S.C. § 201(b), and the Supreme Court has held that
this includes rulemaking power for §§ 251 and 252, without being
limited to interstate and foreign matters. AT&T Corp. v. Iowa
Utils. Bd., 525 U.S. 366, 378 (1999).
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of the power of a state commission. The TCA is an interwoven whole
and the FCC's interpretation of related strands of the weaving is
relevant, at least by analogy.
Both sides cite to the FCC's regulation interpreting
§ 252(i), found at 47 C.F.R. § 51.809, in support of their
interpretation of the statute. The regulation, 47 C.F.R.
§ 51.809(b), provides two express limitations to a CLEC's opt in
rights under § 252(i): an incumbent need not make available the
terms of an interconnection agreement to a particular competitor 1)
if it shows that the costs of providing a service will be greater
to the requesting competitor than it was to the original
negotiating party, or 2) if it shows that the provision of that
service is technically infeasible. 47 C.F.R. § 51.809(b). In
addition, there is a third limitation: 47 C.F.R. § 51.809(c)
states that incumbents must make terms of interconnection
agreements available to other competitors only "for a reasonable
time" after their approval by the state commission.
The FCC regulation 47 C.F.R. § 51.809 itself rejects
Global NAPs' premise that § 252(i) grants an unconditional right to
CLECs to adopt the terms of any interconnection agreement the ILEC
has with another CLEC. The obligation of ILECs to make those
agreements available to other CLECs is itself subject to
conditions: comparable-cost, technical-feasibility, and the
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reasonable-time restrictions are three such conditions contemplated
by the regulation.11
The reasonable-time requirement under 47 C.F.R.
§ 51.809(c) is particularly relevant. Here, after all, the DTE has
said it might have reached a different outcome if, during the
pendency of an arbitration, Global NAPs had sought to withdraw its
request for arbitration in favor of exercising whatever opt in
rights it had. The DTE held only that once it had concluded its
arbitration and issued its order, Global NAPs was not free to enter
into an opt in agreement in lieu of accepting arbitrated terms and
incorporating them into its agreement. The DTE's position is
entirely consistent with the FCC regulation's reasonable-time
requirement.
We also consider the parties' arguments based on the
FCC's Local Competition Order, which embodies the FCC's initial
interpretative rulemaking implementing the TCA after its passage in
1996, as support for its interpretation of the statute. See 11
F.C.C.R. 15499 (1996). Global NAPs attempts to argue that while
FCC arbitrations are binding on both parties, 47 C.F.R.
§ 51.807(h), the Local Competition Order demonstrates that
arbitrations before state agencies under § 252(b) are only binding
11
The reasoning provided for our reading of the statute
above, consistent with the entirety of § 252, adequately dispels
Global NAPs' argument that the limitations on § 252(i) promulgated
by the FCC in § 51.809 are the only permissible limitations that
could apply to that subsection.
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on incumbents. It makes a sort of negative pregnant argument from
the FCC's Local Competition Order ¶ 1293, which states:
Absent mutual agreement to different terms,
the decision reached through arbitration is
binding. We conclude that it would be
inconsistent with the 1996 Act to . . . permit
incumbent LECs to not be bound by an
arbitrated determination. We also believe
that, although competing carriers do not have
an affirmative duty to enter into agreements
under section 252, a requesting carrier might
face penalties if, by refusing to enter into
an arbitrated agreement, that carrier is
deemed to have failed to negotiate in good
faith.
11 F.C.C.R. at 16131. Global NAPs contends that this renders the
arbitration provision a one-way ratchet: incumbents are bound by
the arbitration decision, but competitors are not. We disagree.
The Order does not say that competitors are not required to accept
the terms of an arbitration order. Rather it says that competitors
are not required "to enter into agreements under section 252," and
this is clearly correct. The law mandates that an incumbent must
enter into an interconnection agreement under the requisite
conditions, and the competitor need not enter into an agreement
even if the incumbent so desires. It says nothing about the
obligations of a competitor that is subject to the terms of a
binding arbitration order.
Significantly, the Local Competition Order does not state
that competitors have a right to use § 251(i) to avoid their
obligations under a binding arbitration order. Properly read the
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Order refers to the admitted binding effect in FCC arbitrations,
but says nothing about state arbitrations. Further, the FCC
regulation's explicit statement of the binding effect on both
parties supports the DTE's position. See 47 C.F.R. § 51.807(h).
Global NAPs then makes another argument based on lack of
symmetry as to most favored nation clauses. Global NAPs cites to
Local Competition Order ¶ 1316, as well as the Tenth Circuit's
decision in U.S. West Communications, Inc. v. Sprint Communications
Co., 275 F.3d 1241 (10th Cir. 2002), to support its interpretation
of § 252(i). Neither is helpful to Global NAPs' position.
Paragraph 1316 of the Local Competition Order states:
We further conclude that section 252(i)
entitles all parties with interconnection
agreements to "most favored nation" status
regardless of whether they include "most
favored nation" clauses in their agreements.
Congress's command under section 252(i) . . .
means that any requesting carrier may avail
itself of more advantageous terms and
conditions subsequently negotiated by any
other carrier for the same individual
interconnection, service, or element once the
subsequent agreement is filed with, and
approved by, the state commission.
11 F.C.C.R. at 16139-40 (emphasis added). Paragraph 1316's "most
favored nation" language deals with an issue not presented here:
the ability of a party to an existing interconnection agreement to
adopt the terms of another carrier's agreement that is subsequently
approved by a state commission. The DTE's decision said nothing
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about Global NAPs' § 252(i) rights to adopt terms in subsequently
approved agreements, nor does our decision here do so.
Global NAPs' reliance on U.S. West suffers from a similar
problem. The question that court faced was whether the state
commission acting as arbitrator properly interpreted § 252(i) to
allow a competitor to amend its interconnection agreement to take
advantage of an incumbent's tariffs, as opposed merely to an
element in another competitors' approved interconnection agreement,
that are more favorable than the prices in its agreement. U.S.
West, 275 F.3d at 1249. The case did not say that a CLEC subject
to a binding arbitration order can use § 252(i) to avoid the terms
of that order and adopt completely the terms of a previously
available agreement.
Global NAPs makes a final, policy-based argument that
reading § 252(i) to prevent it from opting into the Sprint
agreement post-arbitration is both anti-competitive and
discriminatory, and thus at odds with the purpose of the TCA. If
what Global NAPs alleges were true, namely that the terms of the
underlying arbitration order are either contrary to law or unduly
burdensome on Global NAPs (or both), the statute provides Global
NAPs with a remedy –- direct review of the terms of the arbitration
order in district court. 47 U.S.C. § 252(e)(6). This is the
remedy Congress provided.
Accordingly, we affirm. Costs are awarded to Verizon.
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Global Naps, Inc. v. Verizon New England, Inc.
Court: Court of Appeals for the First Circuit
Date filed: 2005-01-19
Citations: 396 F.3d 16
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