[PUBLISH]{.underline}

**UNITED STATES COURT OF APPEALS**

**TENTH CIRCUIT**

+-----------------------------------+-----------------------------------+
| RT COMMUNICATIONS, INC.; UNION    | Nos. 98-9541                      |
| TELEPHONE COMPANY,                |                                   |
|                                   | > 98-9542                         |
| Petitioners,                      |                                   |
|                                   |                                   |
| vs.                               |                                   |
|                                   |                                   |
| FEDERAL COMMUNICATIONS            |                                   |
| COMMISSION; UNITED STATES OF      |                                   |
| AMERICA,                          |                                   |
|                                   |                                   |
| Respondents.                      |                                   |
|                                   |                                   |
| \_\_\_\_\_\_\_\_\_\               |                                   |
| _\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ |                                   |
|                                   |                                   |
| SILVER STAR TELEPHONE CO.,        |                                   |
|                                   |                                   |
| INC.,                             |                                   |
|                                   |                                   |
| Intervenor.                       |                                   |
+-----------------------------------+-----------------------------------+

**ON PETITIONS FOR REVIEW FROM ORDERS OF**

**THE FEDERAL COMMUNICATIONS COMMISSION**

**(CCB Pol. 97-1; FCC 97-336 & FCC 98-205)**

Bruce S. Asay, Associated Legal Group, LLC, Cheyenne Wyoming, for
Petitioners RT Communications, Inc. and Union Telephone Co. (Gay V.
Woodhouse, Attorney General, Michael L. Hubbard, Kristin H. Lee, Stephen
G. Oxley, Office of the Attorney General, Cheyenne, Wyoming, for
Petitioner Wyoming Public Service Commission, with him on the brief).

James M. Carr, Counsel, (and Christopher J. Wright, General Counsel, and
John E. Ingle, Deputy Associate General Counsel, Federal Communications
Commission, Washington, D.C., and Joel I. Klein, Assistant Attorney
General, Catherine G. O\'Sullivan and Nancy C. Garrison, Attorneys,
United States Department of Justice, Washington, D.C., with him on the
brief), for Respondents.

John D. Seiver and John C. Dodge of Cole, Raywid & Braverman, LLP,
Washington, D.C., for Intervenor.

Before **KELLY**, **HOLLOWAY**, and **BRISCOE**, Circuit Judges.

**KELLY**, Circuit Judge.

This case involves an appeal from orders of the Federal Communications
Commission (FCC) preempting a section of Wyoming telecommunications law.
We have jurisdiction under 47 U.S.C. § 402(a) and 28 U.S.C. § 2342(1)
and uphold the FCC orders.

[Background]{.underline}

In 1993, the Wyoming Public Service Commission (PSC) conducted an
extensive review of the state\'s telecommunications infrastructure. It
concluded that modern basic telecommunications service was not being
adequately provided in many rural areas of the state and ordered
extensive improvements. U.S. West, the primary telecommunications
provider in Wyoming, decided to sell off certain local exchanges to
independent providers rather than incur the expense of upgrading the
existing infrastructure. It entered into an agreement to sell the Afton,
Wyoming Exchange to Union Telephone Company (Union) and the Wyoming PSC
subsequently granted Union a certificate of public convenience and
necessity (CPCN) to serve the Afton Exchange.[^1]

Based partly on the findings of the PSC, the state enacted the Wyoming
Telecommunications Act of 1995, designed to provide a smooth transition
from monopolistic industry to a competitive market. In order to induce
the development of telecommunications infrastructure in rural areas, the
Act provided small incumbent telephone companies with a ten year period
of protection from competition until each had \"substantially
recover\[ed\] its investment for upgraded services\" in that particular
area. Wyo. Stat. Ann. § 37-15-201(c), (d). A competing company could
only receive a concurrent CPCN in one of these exchanges if they were
able to provide adequate service and the incumbent LEC: (1) consented;
(2) was unwilling or unable to provide adequate service; (3) failed to
protest the concurrent application; (4) had applied for or was providing
concurrent service in another exchange; or (5) was providing cable radio
or video services. Wyo. Stat. Ann. § 37-15-201(c).

In February 1996, Silver Star Telephone Company applied for a concurrent
CPCN to provide competing local phone service in the Afton Exchange.
Union protested this application. In a December 1996 decision, the
Wyoming PSC determined that Union was the incumbent LEC of the Afton
Exchange (even though the sale from U.S. West had not been completed)
and denied Silver Star\'s application pursuant to Wyo. Stat. §
37-15-201(c).

Silver Star petitioned the Federal Communications Commission (FCC) to
preempt the PSC\'s decision and the Wyoming statute as conflicting with
the Telecommunications Act of 1996, specifically 47 U.S.C. § 253. In a
September 24, 1997 order (hereinafter \"Order\"), the FCC granted the
petition, finding that the Wyoming statute was not \"competitively
neutral\" as required by § 253(b). [See]{.underline} Addendum to Pet.
Br.; 12 F.C.C.R. 15639.

A month later, the PSC filed a petition asking the FCC to reconsider its
preemption of the statute. Before the FCC could rule on this petition,
however, the proposed sale of the Afton Exchange from U.S. West to Union
fell through. The Wyoming PSC determined that U.S. West did not qualify
for the protection of § 37-15-201(c) and granted Silver Star a
concurrent CPCN. Since Silver Star\'s requests had been met, the PSC
argued that the issue was moot and the FCC should withdraw its order and
refuse to further address the claim. The FCC disagreed and upheld the
preemption of the Wyoming statute in an August 24, 1998 order
(hereinafter \"Reconsideration Order\"). [See]{.underline} Addendum to
Pet. Br.; 13 F.C.C.R. 16356. This appeal followed.

[Discussion]{.underline}

A. [Mootness]{.underline}

Petitioners argue that the FCC petition became moot when the Wyoming PSC
granted Silver Star a concurrent CPCN and, therefore, the FCC should
have dismissed the issue. However, this argument confuses the
jurisdictional requirements of the FCC with those of an Article III
court. \"\[A\]n administrative agency is not bound by the constitutional
requirement of a \'case or controversy\' that limits the authority of
article III courts to rule on moot issues.\" [Climax Molybdenum Co. v.
Secretary of Labor]{.underline}, 703 F.2d 447, 451 (10th Cir. 1983).
[See also]{.underline} [Metropolitan Council of NAACP Branches v.
FCC]{.underline}, 46 F.3d 1154, 1161 (D.C. Cir. 1995) (noting that
\'case or controversy\' rules of Article III do not apply to
administrative agencies). Rather, an agency has \"substantial
discretion\" to decide whether to hear issues which might be precluded
by mootness. [See]{.underline} [Climax]{.underline}, 703 F.2d at 451. In
exercising this discretion, the agency should be guided by two factors:
(1) whether resolution of the issue is the proper role of the agency as
an adjudicatory body; and (2) whether concerns for judicial economy
weigh in favor of present resolution. [Id]{.underline}.

In this case, the FCC clearly meets both factors. First, 47 U.S.C. §
253(d) specifically designates preemption as a proper action of the FCC
when dealing with state statutes which conflict with § 253(a) or (b).
Secondly, the FCC noted that the Wyoming PSC\'s decision to grant Silver
Star a concurrent CPCN was based upon changed factual circumstances and
not upon a finding that the Wyoming statute was invalid. The FCC
determined that its first order was necessary because otherwise \"the
Wyoming Commission would continue to follow \[§ 37-15-201(c)\] and deny
any future concurrent CPCN application to which an eligible incumbent
LEC duly objected.\" Reconsideration Order at 13. The FCC\'s decision to
preempt the Wyoming statute was an act of the proper government agency
based upon principles of judicial economy. We cannot say that this
decision was an abuse of discretion.

B. [Competitively Neutral]{.underline}

47 U.S.C. § 253(a) provides: \"No State or local statute or regulation .
. . may prohibit or have the effect of prohibiting the ability of any
entity to provide any interstate or intrastate telecommunications
service.\" The Wyoming statute clearly has the effect of prohibiting
telecommunications companies from obtaining a concurrent CPCN to provide
intrastate phone service. However, petitioners argue that the Wyoming
statute is saved by § 253(b).

Nothing in this section shall affect the ability to impose, on a
competitively neutral basis and consistent with section 254 of this
section, requirements necessary to preserve and advance universal
service, protect the public safety and welfare, ensure the continued
quality of telecommunications services, and safeguard the rights of
consumers.

47 U.S.C. § 253(b). The FCC found that the Wyoming statute could not be
saved under this provision because it was not competitively neutral.
Petitioners disagree and argue that the Wyoming statute is competitively
neutral because it treats all [new]{.underline} telecommunication
entrants the same.

In reviewing a final FCC order interpreting the Telecommunications Act,
we utilize the two-step approach announced in [Chevron USA Inc. v.
Natural Resources Defense Council]{.underline}, 467 U.S. 837 (1984).
[See]{.underline} [U.S. West v. FCC]{.underline}, 182 F.3d 1224, 1231
(10th Cir. 1999). If the statute speaks clearly to the precise question
at issue, we must give effect to the express intent of Congress.
[See]{.underline} [Chevron]{.underline}, 467 U.S. at 842-43. When the
statute is silent or ambiguous, however, deference is due to the
agency\'s interpretation, so long as it is reasonable and not otherwise
arbitrary, capricious or contrary to the statute. [See]{.underline}
[id]{.underline}. at 843-44. Since the FCC\'s order in this case
involved the interpretation of the ambiguous phrase \"competitively
neutral,\" we review with deference.[^2]

In its Reconsideration Order, the FCC noted that the \"Wyoming legal
requirements are not \'competitively neutral\' within the meaning of §
253(b), because they award certain incumbent LECs the ultimate
competitive advantage ­ preservation of monopoly status ­ and
simultaneously saddle potential new entrants with the ultimate
competitive disadvantage ­ an insurmountable barrier to entry.\"
Reconsideration Order at 3. The FCC specifically rejected the claim that
a statute was neutral if it treated all [new]{.underline} carriers the
same. \"Neither the language of section 253(b) nor its legislative
history suggests that the requirement of competitive neutrality applies
only to one portion of a local exchange market ­ new entrants ­ and not to
the market as a whole, including the incumbent LEC.\" [Id]{.underline}.
at 6.

Petitioners argue that the Wyoming statute is not an \"insurmountable\"
or \"absolute\" barrier to competition, and therefore, it
[must]{.underline} be competitively neutral. The problem with this
argument is that it simply does not speak to the question of competitive
neutrality. First, the FCC\'s view that this is an absolute bar to
prospective LECs is correct. \"\[A\] potential new entrant cannot do
anything to avoid or hurdle the rural incumbent protection provision\'s
bar. The incumbent LEC, instead, has essentially unfettered discretion
to determine whether the rural incumbent protection provision will
operate to preclude competitive entry in its territory.\" FCC
Reconsideration Order at 5.

Second, even assuming Petitioners\' argument to be true, the extent to
which the statute is a \"complete\" bar is irrelevant. § 253(a) forbids
any statute which prohibits or has \"the effect of prohibiting\" entry.
Nowhere does the statute require that a bar to entry be insurmountable
before the FCC must preempt it.

Support for the FCC\'s definition of \"competitively neutral\" can be
drawn from recent cases discussing the term as used in other sections of
the Telecommunications Act. In [U.S. West v. MFS Intelenet,
Inc.]{.underline}, 193 F.3d 1112 (9th Cir. 1999), the Ninth Circuit
noted that \"\[t\]he FCC has ruled that a mechanism assigning costs
based on each exchange carrier\'s active local numbers is
\'competitively neutral\' \[under § 251(e)(2)\] but a mechanism
requiring new entrants to bear all the costs of number portability is
not.\" [Id]{.underline}. at 1120. The court then prohibited a collateral
attack on this order since plaintiffs had not sought a determination of
validity directly with the court of appeals.

In [Cablevision of Boston, Inc. v. Public Improvement
Comm\'n]{.underline}, 184 F.3d 88 (1st Cir. 1999), a carrier challenged
city policy regarding the use of underground cable and circuit conduits.
In examining the \"competitively neutral\" requirements of § 253(c), the
court held:

that the term \"competitively neutral in § 253(c) imposes ­ at most ­ a
negative restriction on local authorities\' choices regarding the
management of their rights of way. This means that the statute would not
require local authorities to purposefully seek out opportunities to
level the telecommunications playing field. If, however, a local
authority decides to regulate for its own reasons . . ., § 253(c) would
require that it do so in a way that avoids creating unnecessary
competitive inequities among telecommunications providers.

[Id]{.underline}. at 105. The court assumed that the city\'s oral policy
which resulted in \"equivalent notice obligations for [all]{.underline}
market participants\" satisfied the competitively neutral requirement.
[Id]{.underline}. at 103 (emphasis added).

Petitioners spend the majority of their briefs arguing that the Wyoming
statute should not be preempted because it accords with the universal
service policy of the federal Telecommunications Act. However, it is a
well established rule of statutory construction that general policy does
not trump specific legislative provisions. While we empathize with
Wyoming\'s desire to achieve statewide modern telecommunications
service, § 253 governs this case and requires preemption.

Petitioners further argue (1) that preemption is only possible when
Congress has passed legislation occupying an entire field of regulation;
(2) the FCC failed to give proper notice of the proceedings; and (3) the
FCC exceeded its authority by preempting more than was \"necessary\" to
enforce § 253. These arguments are meritless.

First, \"\[p\]re-emption occurs when Congress, in enacting a federal
statute, expresses a clear intent to pre-empt state law . . . .\"
[Louisiana Pub. Serv. Comm. v. FCC]{.underline}, 476 U.S. 355, 368
(1986). § 253 is a clear example of this. [See]{.underline} 47 U.S.C. §
253(d) (\"the Commission *shall* *preempt* the enforcement of such
statute) (emphasis added). Second, the FCC gave proper notice of its
contemplated action in two Public Notices, which specifically stated
that the FCC was contemplating preempting both the Wyoming PSC\'s Denial
Order and \"certain provisions of the Wyoming Telecommunications Act of
1995 (*i.e.*, Wyo. Stat. Ann. §§ 37-15-201(c)-(f)).\" R. at tab. 17, 37.
Third, the FCC order was \"necessary\" within the meaning of § 253(d) to
afford new LECs a competitive opportunity in the telecommunications
market. Petitioners have not asserted, nor are we aware of, any
alternative besides complete preemption which would have guaranteed
across the board competitive neutrality.

The FCC\'s Orders preempting the Wyoming statute were based on a
reasonable interpretation of § 253(b) and are not otherwise
unconstitutional.

AFFIRMED.

[^1]: Wyoming law requires that providers of local phone service ­ also
    known as \"local exchange carriers\" (LECs) ­ obtain a CPCN from the
    Wyoming PSC for each exchange before providing service in that area.
    Wyo. Stat. Ann. § 37-15-201(a). A LEC may not provide service in
    areas for which it is not authorized in its CPCN.

[^2]: The phrase \"competitively neutral\" is used in only three
    sections of the United States Code, and all three of those
    references were added by the Telecommunications Act of 1996.
    [See]{.underline} 47 U.S.C. §§ 251, 253, 254. Nowhere is the phrase
    defined.