[Brief for Amici Curiae the United States ]{.smallcaps}[and the Federal
Communications Commission]{.smallcaps}

[In the United States Court of Appeals ]{.smallcaps}[for the Fourth
Circuit]{.smallcaps}

[No]{.smallcaps}. 07-1401

[MCImetro Access Transmission Services of]{.smallcaps}

[Virginia]{.smallcaps}, [Inc]{.smallcaps}.,
[d]{.smallcaps}/[b]{.smallcaps}/[a Verizon Access
Transmission]{.smallcaps}

[Services of Virginia]{.smallcaps},

Plaintiff-Appellant,

v\. [Mark C]{.smallcaps}. [Christie]{.smallcaps}, [et al]{.smallcaps}.,

Defendants-Appellees.

[On Appeal from the United States District Court ]{.smallcaps}[for the
Eastern District of Virginia]{.smallcaps}

[Matthew B]{.smallcaps}. [Berry ]{.smallcaps}[General
Counsel]{.smallcaps}

[Joseph R]{.smallcaps}. [Palmore ]{.smallcaps}[Deputy General
Counsel]{.smallcaps}

[Richard K]{.smallcaps}. [Welch]{.smallcaps}

[Acting Deputy Associate General]{.smallcaps}

[Counsel]{.smallcaps}

[Christopher L]{.smallcaps}. [Killion]{.smallcaps}

[Deputy Associate General Counsel]{.smallcaps}

[Nicholas A]{.smallcaps}. [Degani ]{.smallcaps}[Counsel]{.smallcaps}

[Federal Communications Commission]{.smallcaps}

[Washington]{.smallcaps}, [D]{.smallcaps}.[C]{.smallcaps}. 20554 (202)
418-1740

[Thomas O]{.smallcaps}. [Barnett ]{.smallcaps}[Assistant Attorney
General]{.smallcaps}

[James J]{.smallcaps}. [O]{.smallcaps}'[Connell]{.smallcaps},
[Jr]{.smallcaps}.

[Deputy Assistant Attorney General]{.smallcaps}

[Catherine G]{.smallcaps}. [O]{.smallcaps}'[Sullivan ]{.smallcaps}[Nancy
C]{.smallcaps}. [Garrison ]{.smallcaps}[Attorneys]{.smallcaps}

[United States Department of Justice]{.smallcaps}

[Washington]{.smallcaps}, [D]{.smallcaps}.[C]{.smallcaps}. 20530 (202)
514-1531

**[TABLE OF CONTENTS]{.underline}**

**[Page]{.underline}**

STATEMENT OF INTEREST AND QUESTION PRESENTED 1

STATEMENT OF FACTS 2

ARGUMENT 6

CONCLUSION 15

i

**[TABLE OF AUTHORITIES]{.underline}**

**[Page]{.underline}**

**[Cases]{.underline}**

*California v. FCC*, 567 F.2d 84 (D.C. Cir. 1977) 13

*Crockett Tel. Co. v. FCC*, 963 F.2d 1564 (D.C. Cir. 1992) 12

*Freeman v. Burlington Broadcasters, Inc.*, 204 F.3d 311 (2d Cir. 2000)
14

*Freightliner Corp. v. Myrick*, 514 U.S. 280 (1995) 7

*Global Crossing Telecomms., Inc. v. Metrophones Telecomms., Inc.*, 127

S. Ct. 1513 (2007) 12

*Hillsborough County, Fla. v. Automated Med. Labs., Inc.*, 471 U.S. 707

\(1985\) 7, 8

*MCIMetro Access Transmission Servs., Inc. v. BellSouth Telecomms.,
Inc*.,

352 F.3d 872 (4th Cir. 2003) 14

*NARUC v. FCC*, 746 F.2d 1492 (D.C. Cir. 1984) 13

*Qwest Corp. v. Scott*, 380 F.3d 367 (8th Cir. 2004) 13

*Sperry v. Florida*, 373 U.S. 379 (1963) 14

*U.S. v. SBC Commc'ns, Inc.*, 489 F. Supp. 2d 1 (D.C. Cir. 2007) 4

*United States v. Locke*, 529 U.S. 89 (2000) 10

*Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP*, 540
U.S.

398 (2004) 9

*Verizon Commc'ns, Inc. v. FCC*, 535 U.S. 467 (2002) 14

**[Federal Administrative Decisions]{.underline}**

*Application of GTE Corp., Transferor, and Bell Atlantic Corp.,*

*Transferee*, 14 FCC Rcd 14032 (2000) 10

*Applications of Ameritech Corp., Transferor, and SBC Communications*

*Inc., Transferee*, 14 FCC Rcd 14712 (1999) 10

*AT&T and the Associated Bell System Cos. Interconnection With*

*Specialized Carriers*, 56 FCC.2d 14 (1975) 13

*AT&T Inc. and BellSouth Corp. Application*, 22 FCC Rcd 5662 (2007) 10

ii

**[Page]{.underline}**

*Local Competition Order*, 11 FCC Rcd 15499 (1997) 14

*Mobile Telecommunications Technologies Corp.*, 6 FCC Rcd 1938 (1991) 12

*MTS and WATS Market Structure Amendment of Part 36 of the*

*Commission's Rules and Establishment of a Joint Board*, 4 FCC

Rcd 5660 (1989) 3, 13

*Verizon Communications Inc. and MCI, Inc. Applications for Approval of*

*Transfer of Control*, 20 FCC Rcd 18433 (2005) 4, 5, 8, 9

*Vonage Holdings Corp.*, 19 FCC Rcd 22404 (2004) 12

**[State Administrative Decisions]{.underline}**

*Joint Petition of Verizon Communications and MCI, Inc. for approval
of*\
*agreement and plan of merger*, Order Granting Approval, Case No.\
PUC-2005-00051 (Va. St. Corp. Comm'n Oct. 6, 2005) 3, 10

*Petition of MCIMetro Access Transmission Services of Virginia, Inc.,*\
*d/b/a Verizon Access Transmission Services of Virginia for*\
*removal of certain provisions of the October 6, 2005, Order in*\
*Case No. PUC-2005-00051*, Order Denying Petition, Case No.\
PUC-2006-00057 (Va. St. Corp. Comm'n July 10, 2006) 5

**[Statutes and Regulations]{.underline}**

15 U.S.C. § 16(b)--(h) 4

47 C.F.R. § 36.154(a) 3, 13

47 U.S.C. § 151 2, 12

47 U.S.C. § 201(b) 2, 12

47 U.S.C. § 202(a) 2

47 U.S.C. § 203(a) 12

47 U.S.C. § 214 4

47 U.S.C. § 214(a) 2

47 U.S.C. § 252 14

47 U.S.C. § 310(d) 4

iii

**[Page]{.underline}**

**[Other Sources of Law]{.underline}**

Federal Rule of Civil Procedure 12(b)(6) 6

U.S. Const. art. VI, cl. 2 7

iv

[In the United States Court of Appeals ]{.smallcaps}[for the Fourth
Circuit]{.smallcaps}

[No]{.smallcaps}. 07-1401

[MCImetro Access Transmission Services of]{.smallcaps}

[Virginia]{.smallcaps}, [Inc]{.smallcaps}.,
[d]{.smallcaps}/[b]{.smallcaps}/[a Verizon Access
Transmission]{.smallcaps}

[Services of Virginia]{.smallcaps},

Plaintiff-Appellant,

v\.

[Mark C]{.smallcaps}. [Christie]{.smallcaps}, [et al]{.smallcaps}.,

Defendants-Appellees.

[On Appeal from the United States District Court ]{.smallcaps}[for the
Eastern District of Virginia]{.smallcaps}

[Brief for Amici Curiae the United States ]{.smallcaps}[and the Federal
Communications Commission]{.smallcaps}

**[STATEMENT OF INTEREST AND QUESTION PRESENTED]{.underline}**

The United States and the Federal Communications Commission file this
amicus curiae brief in response to the Court's request for the
government's view on whether federal law preempts a merger condition
imposed by the State Corporation Commission of Virginia ("Virginia
Commission") on the offering of interstate special access or private
line services by Appellant MCIMetro Access

Transmission Services of Virginia, Inc., d/b/a Verizon Access
Transmission Services of Virginia ("Verizon Access").^1^

The Federal Communications Commission ("FCC") is the federal regulatory
agency charged by Congress with the responsibility to "regulat\[e\]
interstate" common carrier communications services, 47 U.S.C. § 151, and
to ensure that the rates, terms, and conditions of such services are
just and reasonable and free of any undue discrimination or preference,
*id. *§§ 201(b), 202(a). In addition, the FCC must ensure that any
transaction involving the transfer of lines used in interstate
communications from one carrier to another complies with "public
convenience and necessity." *See id. *§ 214(a). The United States
Department of Justice ("DOJ") also reviews proposed acquisitions or
mergers for potential violations of the federal antitrust laws.

**[STATEMENT OF FACTS]{.underline}**

Special access services, which are sometimes called "private line"
services, provide dedicated bandwidth for a customer's usage. Because
special access lines usually carry both interstate and intrastate
traffic, the FCC has drawn a bright-line rule for jurisdictional
purposes: Special access lines carrying both intrastate and interstate
traffic are classified as interstate for rate regulation and other
purposes

^1^ Order, No. 07-1401 (Jan. 2, 2008); *see also *Order, No. 07-1401
(Jan. 22, 2008) (granting extension of time to file until February 19,
2008).

2

"if the interstate traffic on the line involved constitutes more than
ten percent of the total traffic on the line." 47 C.F.R. § 36.154(a).
Interstate traffic that "amounts to ten percent or less of the total
traffic on a special access line" is deemed de minimis, and that line is
classified as intrastate for jurisdictional purposes. *MTS and WATS
Market Structure Amendment of Part 36 of the Commission's Rules and
Establishment of a Joint Board*, 4 FCC Rcd 5660, 5660, para. 2 (1989)
("*Special Access 10% Order*").

The Virginia Commission approved the merger of Verizon Communications,
Inc. and MCI, Inc. on October 6, 2005, with several conditions. As
relevant here, the Virginia Commission required that MCI (now Verizon
Access), as a condition of merging, "continue to offer to wholesale
customers in Virginia its available intrastate *and interstate *special
access, private line or its equivalent, and high capacity loop and
transport facilities, without undue discrimination, \[on\] pre-merger
terms and conditions and at prices that do not exceed pre-merger rates."
*Joint Petition of Verizon Communications and MCI, Inc. for approval of
agreement and plan of merger*, Order Granting Approval, Case No.
PUC-2005-00051, at 28 (Va. St. Corp. Comm'n Oct. 6, 2005) (JA 52)
(emphasis added) ("*Virginia Approval Order*"). The condition applies to
both existing and future customers of MCI and will remain in effect
until the Virginia Commission

3

determines that competition from other carriers will ensure "adequate
service to the public at just and reasonable rates." *Id. *at 28--29 (JA
52--53).

The United States Department of Justice investigated the merger for
possible violations of the federal antitrust laws. It filed a complaint
and proposed consent decree in the United States District Court for the
District of Columbia on October 27, 2005. *See *Complaint ¶¶ 26 (JA 16).
The court approved the consent decree under the Antitrust Procedures and
Penalties Act, 15 U.S.C. § 16(b)--(h), and entered it on March 29, 2007.
*See U.S. v. SBC Commc'ns, Inc.*, 489 F. Supp. 2d 1 (D.C. Cir. 2007)
(entry of Verizon-MCI consent decree is in the public interest). The
antitrust consent decree, which required specified divestitures covering
fiber optic lines (including certain lines in Virginia), did not impose
any conditions or restrictions on the pricing of telecommunications
services.

On November 17, 2005, the FCC issued its decision under sections 214 and

310(d) of the Communications Act of 1934, as amended, 47 U.S.C. §§ 214,
310(d),

permitting the transfer of lines associated with the merger. *See
Verizon*

*Communications Inc. and MCI, Inc. Applications for Approval of Transfer
of*

*Control*, 20 FCC Rcd 18433 (2005) ("*FCC Order*") (JA 60--100). The FCC

adopted as binding legal commitments several conditions that Verizon and
MCI

offered voluntarily, including the commitment that "\[f\]or a period of
thirty months

following the Merger Closing Date, Verizon/MCI shall not increase the
rates paid

4

by MCI's existing customers (as of the Merger Closing Date) of the DS1
and DS3 wholesale metro private line services that MCI provides in
Verizon's incumbent local telephone company service areas above their
level as of the Merger Closing Date." *FCC Order*, 20 FCC Rcd at 18560
(JA 91). The FCC also stated that its conditions were not intended "to
restrict, supersede, or otherwise alter state or local jurisdiction
under the Communications Act of 1934, as amended, or over the matters
addressed in these Conditions, or to limit state authority to adopt
rules, regulations, performance monitoring programs, or other policies
that are not inconsistent with these Conditions." *Id. *at 18559 (JA
90).

After Verizon and MCI consummated the merger, Verizon Access petitioned
the Virginia Commission to remove its merger condition insofar as it
pertained to interstate special access services. The Virginia Commission
denied the request "without prejudice." *Petition of MCIMetro Access
Transmission Services of Virginia, Inc., d/b/a Verizon Access
Transmission Services of Virginia for removal of certain provisions of
the October 6, 2005, Order in Case No. PUC-2005-00051*, Order Denying
Petition, Case No. PUC-2006-00057, at 10 (Va. St. Corp. Comm'n July 10,
2006) (JA 110).

In November 2006, Verizon Access filed a complaint in the United States

District Court for the Eastern District of Virginia challenging the
Virginia

Commission's authority to impose a merger condition related to
interstate special

5

access services. *See *Complaint ¶ 6 (JA 10). On March 27, 2007, the
district court dismissed the complaint under Rule 12(b)(6) of the
Federal Rules of Civil Procedure for failure to state a claim upon which
relief can be granted. The court found that "there is no \[federal\]
preemption of special access lines in particular or the field of
telecommunications in general," D. Ct. Op. at 8 (JA 127), and rejected
the argument that the state-imposed condition "conflicts with the policy
judgments made by the FCC and DOJ in their respective approvals of the
merger," *id. *at 10 (JA 129). Verizon Access appealed.

**[ARGUMENT]{.underline}**

Verizon Access has contended that the *FCC Order *and the antitrust
consent

decree preempt the Virginia Commission's merger condition. Verizon
Access also

argues more generally that the condition is preempted by the federal

Communications Act. The Virginia Commission disagrees and contends that
the

*FCC Order *ratified its merger condition. The government wishes to make
three

primary points. First, the Virginia Commission's merger condition does
not

conflict with and is not preempted by the *FCC Order *or the antitrust
consent

decree. Second, the *FCC Order *did not authorize, endorse, or ratify
the Virginia

Commission's condition. Third, separate from the *FCC Order*, the

Communications Act of 1934, as amended, generally grants the FCC
exclusive

authority to regulate the rates, terms, and conditions under which
interstate

6

communications services are sold. The Virginia Commission therefore
lacks authority to regulate interstate special access services through a
merger condition. In the government's view, the merger condition at
issue in this case is therefore preempted.

1\. Under the Supremacy Clause, U.S. Const. art. VI, cl. 2, federal law
preempts any conflicting state laws or regulatory actions that would
prohibit a private party from complying with federal law or that
"stand\[\] as an obstacle to the accomplishment and execution" of
federal objectives. *Freightliner Corp. v. Myrick*, 514 U.S. 280, 287
(1995) (internal quotation marks omitted); *Hillsborough County, Fla. v.
Automated Med. Labs., Inc.*, 471 U.S. 707, 713 (1985) (noting that
"state laws can be pre-empted by federal regulations"). Verizon Access
has argued that the *FCC Order *or the antitrust consent decree preempts
the challenged merger condition. *See *Complaint ¶¶ 41--42 (JA 22--23).
Contrary to Verizon's contention, however, the condition adopted by the
Virginia Commission does not conflict with and is not preempted by the
*FCC Order *or the antitrust consent decree.

Verizon Access cannot claim that it would be impossible to comply with
both the state condition and the *FCC Order*: If Verizon Access offers
its wholesale, special access services at pre-merger rates and on
pre-merger terms and conditions to all comers (the state condition, JA
52), it would necessarily "not

7

increase the rates" paid by MCI's existing special access customer base
(the federal condition, JA 91).

Verizon Access's argument that the state-merger condition contravenes
the FCC's objectives also fails in light of the savings clause of
Appendix G. There, the FCC made explicit its intention that the
conditions in its *Order *not "restrict, supersede, or otherwise alter
state or local jurisdiction under the Communications Act of 1934, as
amended, or over the matters addressed in these Conditions, or . . .
limit state authority to adopt rules, regulations, performance
monitoring programs, or other policies that are not inconsistent with
these Conditions." *FCC Order*, 20 FCC Rcd at 18559 (JA 90). In other
words, the savings clause clarifies that the FCC's special access
condition (like the others in the *FCC Order*) was intended to be a
minimum safeguard of competition. It was not the product of a fine-tuned
balancing of the benefits and burdens of regulation that would foreclose
state action on the same subject. *Cf. Hillsborough County*, 471 U.S. at
721 (finding no preemption when agency regulations set "minimum safety
standards" rather than "a particular balance between safety and
quantity"). Because the Virginia Commission's condition is "not
inconsistent" with the private line condition in the *FCC Order*, the
*FCC Order *does not preempt it.

There is likewise no basis for the claim that the Virginia Commission's

condition conflicts with the antitrust consent decree. Complaint ¶¶
41--43 (JA 22--

8

23). The decree does not regulate the prices, terms, and conditions of
any

telecommunications services, and the *Virginia Approval Order *has no
effect on the

divestitures required by the decree, which have already been
consummated.

2\. The Virginia Commission and the district court go too far, however,
in

asserting that the savings clause in Appendix G granted general
authority to the

States to impose regulations on interstate special access services. *See
*D. Ct. Op. at

11 (JA 130) (asserting that the FCC intended the States to have
authority "over

matters which are not reserved to the \[S\]tates by the Act, but which
do appear in

the Conditions"); Va. Comm'n Br. at 20 (claiming that the savings clause

"envisions (in the FCC's view) a dual federal-state regulatory regime
over the

matters addressed in the FCC conditions"). The text of the savings
clause makes

clear that the federal conditions do not "*alter *state or local
jurisdiction . . . or . . .

limit state authority." *FCC Order*, 20 FCC Rcd at 18559 (JA 90)
(emphasis

added). In other words, the FCC left undisturbed whatever authority
state

commissions had before the *FCC Order*. There is simply no textual
support for the

notion that this savings clause confers additional authority on the
States or ratifies

merger conditions that States did not have jurisdiction to impose
otherwise. *See*

*Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP*, 540
U.S. 398, 407

\(2004\) (holding that a savings clause stating that the
Telecommunications Act of

1996 does not "modify, impair, or supersede" the antitrust laws "does
not create

9

new claims that go beyond existing antitrust standards"); *see also
United States v. Locke*, 529 U.S. 89, 106 (2000) (refusing to read a
savings clause to "upset the careful regulatory scheme established by
federal law").

The FCC repeatedly has used savings clauses such as this to make clear
that its orders do not disturb existing state authority,^2^ and no court
or state commission has previously construed these savings clauses to
impart new authority to the States. Contrary to the Virginia
Commission's claim that Appendix G's savings clause has "no other
plausible meaning" than to grant the State authority it otherwise does
not possess, Va. Comm'n Br. at 20, the clause's most plausible meaning
is that it leaves state authority unchanged.^3^

The district court's reliance on the FCC's "continuing silence" is
similarly misplaced. D. Ct. Op. at 12 (JA 131). The court found it
significant that a representative of XO Communications discussed the
Virginia Commission's

^2^ *See, e.g.*, *AT&T Inc. and BellSouth Corp. Application*, 22 FCC Rcd
5662, 5807\
(2007); *Application of GTE Corp., Transferor, and Bell Atlantic Corp.,
Transferee*,\
14 FCC Rcd 14032, 14262 (2000); *Applications of Ameritech Corp.,
Transferor,*\
*and SBC Communications Inc., Transferee*, 14 FCC Rcd 14712, 14968
(1999)\
(subsequent history omitted).

^3^ In any event, the Virginia Commission could not have relied on
Appendix G to\
the *FCC Order *because the State adopted its merger condition 25 days
before the\
FCC issued its decision. Rather, the Virginia Commision asserted that it
"is

not . . . prohibited from conditioning Transfers Act approval on matters
related to federal authority," citing cases in which it had conditioned
approval on the merging parties' receiving federal approvals. *Virginia
Approval Order *at 29 (JA 53).

10

merger condition with legal advisers to two FCC Commissioners shortly
before the FCC voted to approve the transfers. *See id. *(citing Letter
from Thomas Cohen, Kelley Drye & Warren LLP, to Marlene H. Dortch,
Secretary, Federal Communications Commission, WC Docket Nos. 05-65,
05-75 (filed Oct. 7, 2005) (JA 118--19)). From that isolated
communication, the District Court surmised --- and the Virginia
Commission contends in this Court, *see *Va. Comm'n Br. at 25, 28 ---
that "if the FCC had any concerns about the substance of the \[Virginia
Commission's\] condition, it would have made them known," D. Ct. Op. at
12 (JA 131). That view misapprehends the law as well as the reality of
agency decision-making. As a practical matter, the FCC cannot
necessarily respond to every piece of information put into the
administrative record, and there is no legal or logical basis for
treating its failure to do so as an implicit statement of its views on
the merits. Furthermore, the district court's assumption that the FCC
had "actual knowledge" of the state-imposed condition is irrelevant:
whether particular state-imposed conditions might be preempted by
federal law was not an issue in the federal proceeding, which focused on
the transfer of control and on the federally-imposed conditions that
served the public interest. The fact that the FCC did not go out of its
way to mention an issue not before it is unsurprising and establishes
nothing as to its opinion on the matter. Similarly, no conclusions
should be drawn

from the FCC's "continuing silence in the wake of this litigation." D.
Ct. Op. at 12

11

(JA 131). Like other federal agencies, the FCC has limited resources to
expend on litigation and cannot be said to approve of a particular
judicial result merely because it chooses to focus those resources on
cases in which it is a party.

3\. Because the *FCC Order *neither limited nor expanded state
jurisdiction, the general rule that the FCC has exclusive jurisdiction
over interstate communications services applies. *See, e.g.*, 47 U.S.C.
§ 151 (creating the FCC "\[f\]or the purpose of regulating interstate
and foreign commerce in communication by wire and radio"); *id. *§
201(b) (requiring all charges for interstate and foreign common carrier
communications services to be "just and reasonable"); *id. *§ 203(a)
(requiring carriers to file tariffs specifying those charges with the
FCC); *Vonage Holdings Corp.*, 19 FCC Rcd 22404, 22412, para. 16 (2004)
(stating that the FCC has "exclusive jurisdiction over 'all interstate
and foreign communication'"); *Mobile Telecommunications Technologies
Corp.*, 6 FCC Rcd 1938, 1941 n.6 (1991) ("Under the Communications Act,
\[S\]tates may not engage in tariff regulation of interstate services.
The Act grants this Commission exclusive authority to regulate the
charges and services of interstate common carriers.").^4^

^4^ *See also, e.g.*, *Global Crossing Telecomms., Inc. v. Metrophones
Telecomms., Inc.*, 127 S. Ct. 1513, 1516--17 (2007) (noting that Title
II of the Communications Act of 1934 sets up a "traditional regulatory
system" in which the FCC "would determine a rate's reasonableness");
*Crockett Tel. Co. v. FCC*, 963 F.2d 1564, 1566 (D.C. Cir. 1992) ("The
FCC has exclusive jurisdiction to regulate interstate common carrier
services including the setting of rates."); *NARUC v. FCC*, 746

12

And although special access lines often carry both interstate and
intrastate traffic, the FCC has classified as jurisdictionally
interstate all special access lines whose traffic is more than ten
percent interstate. *See *47 C.F.R. § 36.154(a); *Special Access 10%
Order*, 4 FCC Rcd at 5660, para. 2.^5^

The enactment of the Telecommunications Act of 1996 did not change the
statutory allocation of jurisdiction in any way relevant to this case.
The district court's suggestion that the 1996 Act and the Commission's
*Local Competition Order *opened up the entire field of
telecommunications to joint federal and state regulation, *see *D. Ct.
Op. at 8 (JA 127), is incorrect. Although the 1996 Act altered the
traditional dual regulatory system and "expand\[ed\] the applicability
of . . . state rules to historically interstate issues," *Local
Competition Order*, 11

F.2d 1492, 1498 (D.C. Cir. 1984) ("Interstate communications are totally
entrusted to the FCC . . . ."); *AT&T and the Associated Bell System
Cos. Interconnection With Specialized Carriers*, 56 FCC.2d 14, 20, para.
21 (1975) ("\[T\]he States do not have jurisdiction over interstate
communications . . . ."), *aff'd*, *California v. FCC*, 567 F.2d 84
(D.C. Cir. 1977) (per curiam).

^5^ The district court's reliance on *Qwest Corp. v. Scott*, 380 F.3d
367 (8th Cir. 2004), to resolve this issue is misplaced. In *Scott*, the
Eighth Circuit confronted the narrow issue of whether the FCC's holding
in the *Special Access 10% Order *prohibited a State from requesting
performance reports for traffic over special access lines. It did not,
however, address the issue here: the general scope of state authority
under the Communications Act to regulate the rates, terms, and
conditions of interstate special access services. *See *380 F.3d at 374
("\[W\]hen the *10% Order *is read as a whole, the Commission's
expressed intent to preempt state regulation does not extend to
performance measurements and standards."). Neither the FCC nor the
United States was a party to that litigation.

13

FCC Rcd 15499, 15544, para. 83 (1997), it did so only to a limited
extent. States in carefully defined circumstances now have limited
authority over certain interstate matters involving interconnection
agreements arising "pursuant to section 252." *Id. *at 15544, para. 84;
*see *47 U.S.C. § 252; *see generally Verizon Commc'ns, Inc. v. FCC*,
535 U.S. 467, 491--93 (2002) (outlining the interplay of sections 251
and 252); *MCIMetro Access Transmission Servs., Inc. v. BellSouth
Telecomms., Inc*., 352 F.3d 872, 874--76 (4th Cir. 2003) (same). Here,
however, the Virginia Commission neither acted pursuant to such
procedures nor claims any authority under section 252. Thus, that
provision is of no moment here.

The Virginia Commission therefore had no jurisdiction to regulate
Verizon Access's interstate special access services. That it attempted
to do so as part of a merger approval does not change the analysis. A
state regulator cannot leverage its authority in one field to regulate
another field entrusted to federal oversight alone. *See, e.g.*, *Sperry
v. Florida*, 373 U.S. 379, 385 (1963) ("A State may not enforce
licensing requirements which, though valid in the absence of federal
regulation, give the State's licensing board a virtual power of review
over \[activities sanctioned by federal authorities\]." (footnote and
internal quotation marks omitted)); *Freeman v. Burlington Broadcasters,
Inc.*, 204 F.3d 311, 323--25 (2d Cir. 2000). Because the Virginia
Commission's condition undeniably seeks to

14

regulate Verizon Access's offering of interstate special access
services, federal law preempts it.

**[CONCLUSION]{.underline}**

Federal law preempts the Virginia Commission's condition insofar as that
condition applies to the rates, terms, and conditions on which Verizon
Access offers interstate special access services.^6^

Matthew B. Berry General Counsel

Joseph R. Palmore Deputy General Counsel

Richard K. Welch

Acting Deputy Associate General Counsel

Christopher L. Killion

Deputy Associate General Counsel

Nicholas A. Degani Counsel

Federal Communications Commission 445 12th St. SW Washington, D.C. 20554
(202) 418-1740

February 19, 2008

Respectfully submitted,

Thomas O. Barnett Assistant Attorney General

James J. O'Connell, Jr.

Deputy Assistant Attorney General

Catherine G. O'Sullivan

Nancy C. Garrison Attorneys

U.S. Department of Justice Antitrust Division, Rm. 3224 950 Pennsylvania
Ave. NW Washington, D.C. 20530 (202) 514-1531

^6^ The United States and the FCC take no position on any issue before
this Court that is not addressed in this brief.

15