## F I L E D United States Court of Appeals Tenth Circuit 

### JUN 20 2000 

### PATRICK FISHER Clerk PUBLISH
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

MCI TELECOMMUNICATIONS CORPORATION, a Delaware corporation,

Plaintiff - Appellee, US WEST COMMUNICATIONS, INC., a Colorado corporation,

Plaintiff-Counter-Defendant - Appellee,

v. PUBLIC SERVICE COMMISSION OF UTAH; STEPHEN F. MECHAM; CONSTANCE B. WHITE; CLARK D. JONES, Commissioners of the Public Service Commission of Utah,

Defendants - Appellants, and
AT&T COMMUNICATIONS OF THE MOUNTAIN STATES, INC., a New York corporation, Defendant, UNITED STATES OF AMERICA,

Defendant-Intervenor - Appellee. No. 99-4203-2-

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF UTAH (D. Ct. No. 98-CV-490)
Sandy J. Mooy, Utah Public Service Commission (Anni na Mitchell, Assistant Attorney General, with her on the briefs), Salt Lak e City, Utah, appearing for Defendants-Appellants. Mark B. Stern, Attorney (William B. Schultz, Acting Assistant Attorney General, David J. Schwendiman, United States Attorney, SusanL. Pacholski, Attorney, Christopher J. Wright, General Counsel, John E. Ing le, Deputy Associate General Counsel, and Susan L. Launer, Deputy Associate Gene ral Counsel, with him on the brief), Appellate Staff Civil Division, Departm ent of Justice, Washington, DC, appearing for the Defendant-Intervenor-Appellee

. Paul M. Smith, Jenner & Block, Washington, DC (Thom as F. O'Neil, III and William Single, IV, MCI Worldcom, Inc., Washington, DC, J. Alex Ward, Jenner & Block, Washington, DC, counsel for MCI Telecommun ications Corp. and MCImetro Access Transmission Services, Inc.; Philli p L. Douglass, US West Law Department, Denver, Colorado, and Kara Sacilotto, P erkins, Coie LLP, Washington, DC, counsel for US West Communications, Inc.; Daniel Waggoner, Davis, Wright, Tremaine, LLP, Seattle, Washington, Thomas Pelto and Rebecca DeCook, AT&T Communications, Denver, Colorado, coun sel for AT&T Communications of the Mountain States, Inc., with h im on the brief), appearing for Appellees.

Before TACHA , BALDOCK , and BRORBY , Circuit Judges.

TACHA , Circuit Judge.

Defendants-appellants the Utah Public Service Commi ssion (UPSC) and the individual commissioners appeal the district court’ s denial of their motion to dismiss on Eleventh Amendment immunity grounds. De fendants also contest the-3-

district court’s conclusion that it has jurisdictio n to consider US West’s takings claim. We exercise jurisdiction over this interloc utory appeal pursuant to 28 U.S.C. § 1291 and the collateral order doctrine, se e Puerto Rico Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc. , 506 U.S. 139, 147 (1993), and affirm. We do not reach the merits of defendants’ argument on the takings claim.

I. Telecommunications Act of 1996

A. History This case arises under the Telecommunications Act o f 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified in scattered sectio ns of 47 U.S.C.A. (West Supp. 2000)) (“1996 Act” or “Act”). The 1996 Act amended the Communications Act of 1934, ch. 652, 48 Stat. 1064 (codified as amende d in scattered sections of 47 U.S.C.A. (West 1991 & Supp. 2000)) (“1934 Act”). Co ngress adopted the 1934 Act “to protect American consumers against AT&T whi ch, through an aggressive policy of consolidation, had gained a virtual monop oly over all segments of the telecommunications industry. Telephone service as a whole was viewed as a natural monopoly which needed to be regulated for t he benefit of all users.” Michael Kerf & Damien Geradin, Controlling Market P ower in Telecommunications: Antitrust vs. Sector-Specific R egulation: An Assessment of the United States, New Zealand and Australian Exper iences , 14 Berkeley Tech. L.J. 919, 936 (1999). Thus, pursuant to the 1934 A ct, Congress created the-4-

Federal Communications Commission (FCC), and gave that agency jurisdiction to regulate interstate telephone services. See Communications Act of 1934 , ch. 652, § 1, 48 Stat. 1064 (codified as amended at 47 U.S.C .A. § 151) (creating the FCC and giving it authority over “interstate and foreig n commerce in communication by wire and radio”). The 1934 Act left regulation of intrastate telephon e services to the states.
See id. § 2(b) (codified as amended at 47 U.S.C.A. § 152) (denying the FCC jurisdiction “with respect to (1) charges, classifi cations, practices, services, facilities, or regulations for or in connection wit h intrastate communication service by wire or radio of any carrier”). In regu lating local phone service,

[s]tates typically granted an exclusive franchise i n each local service area to a local exchange carrier (LEC ), which owned, among other things, the local loops (wires c onnecting telephones to switches), the switches (equipment di recting calls to their destinations), and the transport tru nks (wires carrying calls between switches) that constitute a local exchange network. AT&T Corp. v. Iowa Utils. Bd. , 525 U.S. 366, 371 (1999). Most of the LECs were part of AT&T’s Bell System and were known as B ell Operating Companies (“BOCs”). Kerf & Geradin, 14 Berkeley Tech. L.J. at 937. “As the telephone industry developed in the 1950s and 1960s, many began to challenge the basic premise that telephone servi ce was a natural monopoly.” Id. Eventually, potential competitors and the Departm ent of Justice sued AT&T-5-

to dismantle its virtual monopoly. Pursuant to a 1 982 consent decree, AT&T agreed to divest the local BOCs and reorganize them into subsidiaries of seven independent local exchange carriers, known as regio nal BOCs. See United States v. Western Elec. Co. , 569 F. Supp. 1057, 1061-62 & 1062 n.5 (D.D.C. 198 3), aff’d sub nom. California v. United States , 464 U.S. 1013 (1983). In exchange, AT&T was permitted, among other things, to compete with virtually no restrictions in long-distance services. Kerf & Ger adin, 14 Berkeley Tech. L.J. at
938. While the 1982 consent decree fostered competitio n in the long-distance market, technological advances occurred that made “ competition among multiple providers of local service seem possible.” AT&T Co rp. , 952 U.S. at 371. Thus, by 1994, “[m]any states had already commenced theirown efforts to deregulate the telecommunications industry” by permitting loca l competition. Deonne L. Bruning, The Telecommunications Act of 1996: The Ch allenge of Competition , 30 Creighton L. Rev. 1255, 1258 (1997). In 1996, C ongress passed the Telecommunications Act to further encourage local c ompetition. See Jim Chen, The Magnificent Seven: American Telephony’s Deregul atory Shootout , 50 Hastings L.J. 1503, 1514 (1999) (“The Act sought to unleash three of the most deeply entrenched monopolists in the American econo my–local exchange carriers, interexchange carriers, and cable system operators– on each other’s markets in the-6-

hope that competition among the large would dissolv e these industrial giants.”) In so doing, Congress “fundamentally restructure[d] local telephone markets” and “ended the longstanding regime of state-sanctioned monopolies.” AT&T Corp. , 952 U.S. at 371. B. 47 U.S.C.A. §§ 251-252
1. Section 251 To accomplish the goals of the Act, Congress “estab lish[ed] baseline rules for every company that want[s] to provide telecommu nications service.” Bruning, 30 Creighton L. Rev. at 1258. Specifically, 47 U.S .C.A. § 251 imposes various duties on incumbent LECs to facilitate market entry . Because incumbents own the current network, “[f]oremost among these duties is the [incumbent] LEC’s obligation . . . to share its network with competit ors.” AT&T Corp. , 952 U.S. at 371; see 47 U.S.C.A. § 251(c). Congress deemed network sharing, or interconnection, necessary “so that all customers, even those served by a competitor, can seamlessly and transparently make a nd receive calls.” Bruning, 30 Creighton L. Rev. at 1259. Section 251 thus req uires incumbents to negotiate interconnection agreements with entrants in good fa ith. See 47 U.S.C.A. § 251(c)(1).
2. Section 252 Under § 252, an incumbent and a new carrier may pri vately agree on the1 A state commission “fails to act” if it “fails to r espond, within a

reasonable time, to a request for mediation . . . o r . . . a request for arbitration . . . or fails to complete an arbitration within the time limits established in section 252(b)(4)(C).” 47 C.F.R. § 51.801(b) (1999). A st ate commission does not fail to act “if an agreement is deemed approved under secti on 252(e)(4).” Id. § -7- terms of an interconnection agreement. See id. § 252(a)(1). If private negotiation fails, then either party can petition the state com mission that regulates local phone service to arbitrate any open issues. Id. § 252(b)(1). Whether an agreement is adopted by negotiation or arbitration, it must be s ubmitted to the state commission. Id. § 252(e)(1). The state commission then must appro ve or reject the agreement. Id. A state commission may reject a negotiated agreemen t only if it discriminates against non-party carriers or is inco nsistent with the public interest, convenience, and necessity. Id. § 252(e)(2)(A). On the other hand, a state commission may reject an arbitrated agreement only if the agreement does not comply with § 251, including the regulations prescr ibed by the FCC pursuant to § 251, or the pricing standards set forth in § 252(d) . Id. § 252(e)(2)(B). If a state commission does not approve or reject an agreement within specified time periods, then the agreement is deeme d approved. Id. § 252(e)(4). However, if a state commission “fails to act to car ry out its responsibility under [§ 252],” then the FCC will preempt the state commissi on’s jurisdiction over that proceeding and assume the state commission’s respon sibility. Id. § 252(e)(5). 1 If51.801(c). Thus, if a state commission does not ap prove or reject an agreement

and it is deemed approved, the FCC cannot preempt t he state commission’s jurisdiction and review the agreement. -8- a state commission does act, any party “aggrieved” by its determination “may bring an action in an appropriate Federal district court to determine whether the agreement . . . meets the requirements of section 2 51 [and section 252].” Id. § 252(e)(6). State courts do not “have jurisdiction to review the action of a State commission in approving or rejecting an agreement.” Id. § 252(e)(4). If a state commission fails to act and the FCC asserts jurisdi ction, then “the proceeding by the [FCC] . . . and any judicial review of the [FCC ’s] actions shall be the exclusive remedies.” Id. § 252(e)(6). Thus, § 252 allows a state to choose whether it wil l participate in the federal regulatory scheme. If a state elects to re gulate interconnection agreements through its state commission, then the state is sub ject to suit in federal court.
II. Facts On July 26, 1996, AT&T Communications of the Mounta in States, Inc. (“AT&T”), filed a petition with the UPSC for arbitr ation with US West Telecommunications, Inc. (“US West”) pursuant to § 252(b) of the Act. On September 3, 1996, MCI Metro Access Transmission Se rvices, Inc. and MCI Telecommunications Corp. (collectively MCI) filed asimilar petition for arbitration with US West. After consolidating the AT&T and MCI petitions, the2 Based on a stipulation reached with MCI, defendants did not move to have

themselves dismissed from MCI’s suit. -9- UPSC issued an arbitration order resolving a numberof open issues. The order directed the parties to file fully executed interco nnection agreements with the UPSC that were consistent with the UPSC’s resolutio n of the parties’ disputes. The UPSC then reviewed and approved the submitted i nterconnection agreements pursuant to 47 U.S.C.A. § 252(e). US West subsequently filed suit against AT&T, MCI, the individual commissioners, and the UPSC in federal district cou rt. US West challenged some provisions in its interconnection agreements with M CI and AT&T, raised a takings claim and sought declaratory and injunctive relief. On the same day, MCI filed suit against US West, the individual commissi oners and the UPSC. After the district court consolidated the suits, the individu al commissioners and the UPSC moved to have themselves dismissed from US West’s s uit pursuant to Fed. R. Civ. P. 12(b). 2 Defendants claimed that they were immune from sui t under the Eleventh Amendment and that the district court did not have jurisdiction over US West’s takings claim. The district court denied th e motion, concluding that it had jurisdiction over defendants and the takings claim.

III. Eleventh Amendment Immunity “We review de novo a district court’s denial of a s tate’s claim of Eleventh-10-

Amendment immunity from suit in federal court.” In nes v. Kansas State Univ. , 184 F.3d 1275, 1277 (10th Cir. 1999), cert. denied , __ U.S. __, 120 S. Ct. 1530 (2000). The Eleventh Amendment to the U.S. Constitution pro vides: “The Judicial power of the United States shall not be construed t o extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Fo reign State.” The Supreme Court has construed the Eleventh Amendment to mean that “an unconsenting State is immune from suits brought in federal courts by h er own citizens as well as by citizens of another State.” Edelman v. Jordan , 415 U.S. 651, 662-63 (1974). However, state sovereign immunity is not absolute. First, a state may not assert an Eleventh Amendment defense where Congress has properly abrogated its immunity. See Seminole Tribe of Fla. v. Florida , 517 U.S. 44, 55 (1996). Second, a state may waive its sovereign immunity byconsenting to suit in federal court. College Sav. Bank v. Florida Prepaid Postse condary Educ. Expense Bd. , 527 U.S. 666, 119 S. Ct. 2219, 2223 (1999). Third, a private party may sue a state officer for prospective injunctive or declaratory relief from an ongoing violation of the Constitution or federal laws. See Ex parte Young , 209 U.S. 123, 159-60 (1908); see also Alden v. Maine , 527 U.S. 706, 119 S. Ct. 2240, 2267 (1999) (affirming the continuing vitality of Ex parte Young ).3 The district court’s opinion mentions abrogation inpassing, and on appeal

defendants’ briefly argue that Congress could not h ave constitutionally abrogated state sovereign immunity through passage of the Act . Congress may abrogate the states’ sovereign immunity in the exercise of its S ection 5 power to enforce the Fourteenth Amendment. College Sav. Bank , 119 S. Ct. at 2224. After Seminole Tribe , however, “Congress may not abrogate state soverei gn immunity pursuant to its Article I powers.” Florida Prepaid Postsecondary Educ. Expense Bd. v. College Sav. Bank , 527 U.S. 627, 119 S. Ct. 2199, 2205 (1999). Ther e is no question that Congress adopted both the 1934 Act an d the 1996 Act pursuant to its Article I commerce power. Thus, we agree with defendants that Congress could not and did not abrogate the states’ sovereig n immunity under the 1996 Act. -11- IV. Analysis Defendants contend that none of the limits on sover eign immunity apply to them, and that therefore they are immune from suit. The district court found that the UPSC waived its sovereign immunity when it opte d to participate in the statutory scheme set forth in the Act. The distric t court also found that the individual commissioners were subject to suit underEx parte Young . We agree with both findings. 3
A. Waiver
1. Means of Waiver Generally, a state may waive its Eleventh Amendmentimmunity in one of two ways. First, a state waives its immunity if itvoluntarily invokes the jurisdiction of a federal court. See College Sav. Bank , 119 S. Ct. at 2226. Second, a state waives its immunity if it “makes a clear declaration that it intends to submit itself to [a federal court’s] jurisdictio n.” Id. (internal quotation marks-12-

and citation omitted). A state can make a “clear declaration” of its conse nt to be sued in federal court by expressly waiving its immunity through a s tate statute or constitutional provision. See Innes , 184 F.3d at 1278. A state can also declare its i ntent to submit to suit by impliedly or constructively waivi ng its immunity if the declaration is clear and altogether voluntary. See generallyCollege Sav. Bank , 119 S. Ct. 2219 (overruling the constructive waiverdoctrine of Parden v. Terminal Ry. of Ala. , 377 U.S. 184 (1964), but recognizing that a state may still constructively or impliedly waive its immunity in c ertain circumstances); see also
Innes , 184 F.3d at 1280 (stating that nothing in College Savings Bankforecloses us from examining the underlying facts of a case to determine whether a state has unequivocally expressed its intent to waive its imm unity). Here, US West sued the UPSC and the individual comm issioners. Accordingly, Utah did not invoke the jurisdiction o f a federal court and thereby waive its immunity. Furthermore, Utah did not expr essly consent to suit through a state statute or constitutional provision governi ng this case. See Utah Code Ann. § 63-30-16(1) (Supp. 1999) (providing that Utah state district courts have exclusive original jurisdiction over suits brought against the state); Sutton v. Utah State Sch. for the Deaf & Blind , 173 F.3d 1226, 1233 (10th Cir. 1999) (“Utah has not waived its Eleventh Amendment immunity by statu te.”). Thus, the question is-13-

whether, under College Savings Bank , Utah constructively waived its immunity from suit when it arbitrated an interconnection dis pute between US West, AT&T and MCI pursuant to § 252 of the Act. 2. College Savings Bank Because College Savings Bankoverruled Parden ’s constructive waiver doctrine, we begin with a brief discussion of Parde n . In Parden , the employees of a railroad owned and operated by the State of Alaba ma sued the railroad under the Federal Employer’s Liability Act (FELA). 377 U.S. at 184-85. Alabama asserted a sovereign immunity defense. Id. The Supreme Court held that Alabama had waived its immunity because FELA conditioned a stat e’s right to operate a railroad in interstate commerce upon amenability to suit in federal court. Id. at 192. Since Alabama chose to operate a railroad in interstate commerce, it impliedly accepted the conditions imposed by the ac t, including the condition that it consent to suit. Id. In College Savings Bank , a New Jersey bank sued the Florida Prepaid Postsecondary Education Expense Board (“Florida Pre paid”), an arm of the State of Florida. 119 S. Ct. at 2223. Florida Prepaid a dministers a program designed to ensure that individuals have sufficient funds to finance a college education. Id. The bank claimed that Florida Prepaid misrepresente d its product in its marketing brochures and annual reports in violation of the La nham Act. Id. As amended by-14-

the Trademark Remedy Clarification Act (TRCA), the Lanham Act provides that states are not immune from suit in federal court fo r violations of the Act. Id. Florida Prepaid claimed, however, that it was immun e from suit because the TRCA was enacted pursuant to Congress’s Article I p ower and Congress may not abrogate state sovereign immunity when it legislate s under Article I. Id. at 2224. The bank contended that, under Parden , Florida Prepaid had waived its immunity when it engaged in the interstate marketing and adm inistration of its program after the TRCA made it clear that such activity wou ld subject Florida Prepaid to suit. Id. The Court overruled Pardenand concluded that Florida Prepaid had not waived its immunity. See id. at 2226-28. The Court reasoned that it could not “square Parden with [its] cases requiring that a State’s express waiver of sovereig n immunity be unequivocal.” Id. at 2228 (citing Great Northern Life Ins. Co. v. Re ad , 322 U.S. 47 (1944)). “The whole point of requiring a ‘clear declaration’ by the State of its waiver is to be certain that the State in fact consents to suit. ” Id. Where Congress clearly expresses its intention that if a state takes certa in action it will waive its immunity, “the most that can be said with certainty is that the State has been put on notice that Congress intends to subject it to su its brought by individuals.” Id. However, this “is very far from concluding that the State made an ‘altogether voluntary’ decision to waive its immunity.” Id.4 Defendants contend that College Savings Bankprecludes Congress from

using its commerce power to obtain a constructive o r implied waiver from a state. They therefore argue that because Congress adopted the 1996 Act pursuant to its commerce power, § 252 cannot permissibly require st ates to constructively or impliedly waive their sovereign immunity. We disag ree. The key to constructive or implied waiver under College Savings Bankis the voluntariness of the state waiver, not the particular power pursuant to which Congress enacted the statute. Under College Savings Bank , Congress may not exact or force a waiver from a state pursuant to any of its Article I powers. -15- Furthermore, if the Court recognized “a congression al power to exact constructive waivers of sovereign immunity through the exercise of Article I powers,” it would thereby “permit Congress to circu mvent the antiabrogation holding of Seminole Tribe .” Id. at 2229 (emphasis added). “Forcedwaiver and abrogation are not even different sides of the same coin – they are the same side of the same coin.” Id. (emphasis added). 4 Thus, for a constructive waiver of sovereign immuni ty to be valid under College Savings Bank , it must be altogether voluntary and not forced fr om a state by Congress. A constructive waiver is voluntary on ly where Congress threatens a state with the denial of a “gift or gratuity” if th e state refuses to consent to suit in federal court. See id. at 2231. Where Congress threatens a state with a “sanction” if it refuses to consent to suit, then t he waiver is no longer freely given. See id. In addition, it may be that the difference betwee n a gift and a sanction disappears when the gift Congress threaten s to withhold is large enough.
See id.-16-

To illustrate its holding in College Savings Bank , the Court distinguished the legitimate conditions Congress placed on states in Petty v. TennesseeMissouri Bridge Comm’n , 359 U.S. 275 (1959), and South Dakota v. Dole , 483 U.S. 203 (1987), from the forced waivers in Pardenand the case at bar. In Petty , the Court held that a bistate commission created pu rsuant to an interstate compact “had consented to suit by reason of a suability pro vision attached to the congressional approval of the compact.” College Sav. Bank , 119 S. Ct. at 2231 (citing Petty ). In Dole , the Court held “that Congress may, in the exercis e of its spending power, condition its grant of funds to the States upon their taking certain actions that Congress could not require the m to take, and that acceptance of the funds entails an agreement to the actions.” Id. (citing Dole ). The College Savings Bankcourt explained that the bistate commission’s waiver was valid because, under the Compact Clause of the U.S. Constitution, states may not form an interstate compact without t he consent of Congress. Id. The granting of consent therefore is a gratuity. I d. Similarly, “Congress has no obligation to disburse funds to the States; such fu nds are gifts.” Id. In contrast, in both Pardenand the case before the Court, Congress did not threaten the denial of a gift or gratuity if the st ates refused to waive their sovereign immunity. See id. Instead, in both Pardenand College Savings Bank , Congress threatened a sanction: “exclusion of the S tate from otherwise-17-

permissible activity.” Id. Specifically, the federal statute in Parden required Alabama to waive its immunity or give up its ability to own and operate a railroad in interstate commerce. In College Savings Bank , the TRCA required Florida to waive its immunity or give up its ability to engage in the business of advertising and selling a for-profit educational investment veh icle. The voluntariness of a waiver is destroyed “when what is attached to the r efusal to waive is the exclusion of the State from otherwise lawful activi ty.” Id. ; see also Innes , 184 F.3d at 1284 (holding that a state university “know ingly and voluntarily” waived the state’s immunity “by agreeing, as a prerequisit e to its participation in the Perkins Loan program, to undertake certain enumerat ed actions in federal bankruptcy court in the event of a claim for discha rge filed by the studentborrower”). 3. Application of College Savings Bank 47 U.S.C.A. § 252 invites states to participate in the federal government’s regulation of local telephone service. Congress ha s clearly expressed its intention that if a state elects to approve or reject an inte rconnection agreement, then it waives its sovereign immunity. See 47 U.S.C.A. § 252(e)(6) (“In any case in which a State commission makes a determination unde r [§ 252], any party aggrieved by such determination may bring an action in an appropriate Federal district court . . . .”); see also id. § 252(e)(4) (“No State court shall have5 Utah’s Governmental Immunity Act provides that “state” “means the state

of Utah, and includes any . . . commission.” Utah Code Ann. § 60-30-2(9) (Supp. 1999). The UPSC therefore has the authority to acton behalf of Utah and can waive Utah’s sovereign immunity. See Innes , 184 F.3d at 1284 (stating that even where a court finds a waiver of state sovereign imm unity, it must determine if the waiver is valid by examining whether the defendant had the authority to waive the state’s immunity). -18- jurisdiction to review the action of a State commis sion in approving or rejecting an agreement under this section.”). 5 Thus, § 252 puts Utah on notice that Congress intends to subject it to suits brought by individuals if it acts under §
252. See College Sav. Bank , 119 S. Ct. at 2228. College Savings Bank , however, makes it clear that Congress’s intent to effect a w aiver is insufficient, standing alone, to render a state’s waiver altogether volunt ary. Id. Instead, Utah has voluntarily waived its immunity o nly if Congress, through the 1996 Act, threatened it with the denial of a gr atuity, rather than the imposition of a sanction. Prior to 1996, the states were perm itted to regulate local phone service. Indeed, the 1934 Act specifically left re gulation of intrastate telephone services to the states. However, the 1996 Act pree mpted state regulatory authority over some aspects of local phone service. See AT&T Corp. , 525 U.S. at 730 n.6 (stating that “[w]ith regard to matters add ressed by the 1996 Act,” Congress “unquestionably” has “taken the regulationof local telecommunications competition away from the States”). Although it di d not do so, Congress could have preempted all state regulation of local phone service. See FERC v.6 Defendants contend that Congress has imposed a sanc tion on them because

if they refuse to consent to suit, Utah will be exc luded completely from the regulation of interconnection agreements. They sug gest that in this case, the difference between the denial of a gratuity and the imposition of a sanction has disappeared since Congress threatens to withhold su ch a substantial amount of regulatory authority. Seizing on language in Colle ge Savings Bank , they argue that the inducement offered by Congress is “so coer cive as to pass the point at which pressure turns into compulsion.” 119 S. Ct. at 2231 (internal quotation marks and citations omitted). This argument is wit hout merit. The size of the “gift” was not at issue in College Savings Bankbecause “the point of coercion [was] automatically passed” when Congress conditioned participation in an otherwise lawful activity on a state’s consent to suit. Id. Thus, the Court’s discussion of the coercion theorywas merely dicta. See Kansas v. United States , __ F.3d __, 2000 WL 710489, at *6 (10th Cir. June 1, 2000) (“[T]he coercion theory is unclear, suspect, and ha s little precedent to support its application.”). Moreover, § 252 removes only a slice of regulatory authority from a state if it declines to waive its sovereign immunity. For e xample, to ensure that barriers to competition will fall, § 253 prohibits all state statutes and regulations that -19- Mississippi , 456 U.S. 742, 764 (1982) (“[T]he commerce power p ermits Congress to pre-empt the States entirely in the regulation o f private utilities.”); Hodel v. Virginia Surface Mining & Reclamation Ass’n , 452 U.S. 264, 290-91 (1981). Thus, with the passage of the 1996 Act, Congress es sentially transformed the regulation of local phone service from an otherwise permissible state activity into a federal gratuity. As in Pettyand Dole , Congress was under no obligation to allow states to participate in the Act’s regulatory scheme. Accordingly, by conditioning a state’s ability to regulate local ph one service on its consent to suit in federal court, Congress threatened the state wit h the denial of a gratuity rather than exclusion from an otherwise lawful activity. 6 We therefore hold that Utahimpede “the ability of any entity to provide any in terstate or intrastate

telecommunications service.” 47 U.S.C.A. § 253(a). Thus, § 253(a) effectively “strikes down all franchised monopolies that were g iven by the states to local exchange companies.” Kerf & Geradin, 14 Berkeley T ech. L.J. at 940. However, § 253(b), captioned “State regulatory authority,” c ontains a broad exception which provides that nothing in § 253 “shall affect the ability of a State to impose, on a competitively neutral basis . . . requirements necessary to preserve and advance universal service, protect the public safety and welfare, ensure the continued quality of telecommunications services, a nd safeguard the rights of consumers.” Thus, state commissions may continue t o regulate telecommunications in the public interest, as long as such regulations are competitively neutral.

7 The district courts are divided over whether, underCollege Savings Bank , a state waives its sovereign immunity when it accep ts Congress’s invitation to participate in the review of interconnection agreem ents under § 252. See, e.g. , Bell Atlantic-Del., Inc. v. McMahon , 80 F. Supp.2d 218, 231-33 (D. Del. 2000) (finding a waiver); Wisconsin Bell, Inc. v. Public Serv. Comm’n of Wis. , 57 F. Supp.2d 710, 714-16 (W.D. Wis. 1999) (finding no wa iver). We are unaware of any circuit court that has decided this issue. See MCI Telecomms. Corp. v. Illinois Commerce Comm’n , 183 F.3d 558, 564-67 (7th Cir. 1999) (finding a constructive waiver), vacated and reh’g granted , 183 F.3d 567 (7th Cir. 1999) (ordering the parties to file supplemental briefs a ddressing the applicability of Alden v. Maine , 527 U.S. 706 (1999), College Sav. Bank v. FloridaPrepaid Postsecondary Educ. Expense Bd. , 527 U.S. 666 (1999), and Florida Prepaid Postsecondary Educ. Expense Bd. v. College Sav. Ban k , 527 U.S. 627 (1999)); see also GTE North, Inc. v. Strand , 209 F.3d 909, 2000 WL 424028, at *12 n.6 (6th Cir. Apr. 20, 2000) (stating in dicta that “itis virtually certain that a state utility commission’s decision to accept regulatory authority under the [1996 Act] cannot legitimately be construed as a valid waiver of sovereign immunity” after College Savings Bankand Florida Prepaid ). -20- voluntarily waived its sovereign immunity when the UPSC, through its commissioners, arbitrated the interconnection dispute in this case. 7Defendants are subject to suit in federal court, and this case may proceed. C. Ex Parte Young-21-

Even if the Eleventh Amendment barred US West’s sui t against the UPSC, US West still could proceed with its suit against t he individual commissioners. In a suit similar to the one at bar, the Sixth Circuitfound that the matter before it was “a straightforward Ex parte Young case.” Michigan Bell Tel. Co. v. Climax Tel. Co. , 202 F.3d 862, 867 (6th Cir. 2000). We conclude t hat the instant suit is also a straightforward Ex parte Young case and adopt the Sixth Circuit’s rationale and holding: The Ex parte Young doctrine operates as an

exception to the general rule of sovereign immunity that states may only be sued with their consent. Under Ex parte Young , suits against state officials seeking equitable relief for ongoing violations of federal law are not barred by the Eleventh Amendmen t. Ex parte Young , 209 U.S. at 159-60. The [UPSC] not only approved the interconnection agreement[s], it is responsible for ongoing enforcement of the agreement[s]. [US West] alleges that the agreement[s] violate[] federal law, and is seeking equitable relief [again st the commissioners]. . . . Under Ex parte Young , [US West] is entitled to proceed. Seminole Tribe of Florida v. Florida , 517 U.S. 44 (1996) and Idaho v. Coeur d’Alene Tribe , 521 U.S. 261 (1997), do not affect the application of Ex parte Y oung to § 252 cases. Recently, the Supreme Court once a gain affirmed the vitality of Ex parte Young , even while strongly reaffirming states’ rights against suit. See Alden v. Maine , 119 S. Ct. 2240, 2266-68 (1999) ([stating that] sovereign immunity does not bar certain actions against state officers for injunctive or de claratory relief).8 Defendants contend that Seminole Tribe and Coeur d’Alene Tribe

narrowed the Ex parte Young doctrine so as to make it inapplicable to this cas e. We have recognized that “Coeur d’Alene Tribe imposes an important additional requirement” upon the application of Ex parte Young . J.B. ex rel. Hart v. Valdez , 186 F.3d 1280, 1286 (10th Cir. 1999). Now, in an E x parte Young case, “[w]e must examine whether the relief Plaintiff[] seek[s] against the state officials implicates special sovereignty interests, and wheth er that requested relief is the functional equivalent to a form of legal relief aga inst the state that would otherwise be barred by the Eleventh Amendment.” Id

. (internal quotation marks and citations omitted). In this case, US West requ ests declaratory and injunctive relief to remedy actions by the commissioners which it claims are violations of federal law. Such relief would not affect any spec ial sovereignty interests or otherwise cause offense to Utah’s sovereign authori ty. Defendants’ argument therefore is without merit. -22- Id. at 867-68 (parallel citations omitted). 8 Thus, we hold that under Ex parte Young , the Eleventh Amendment does not bar US West’s sui t against the individual commissioners. V. US West’s Takings Claim In its first amended complaint, US West claimed that the contractual provisions imposed upon it by the UPSC constitute ataking of its property for public use without just compensation in violation o f the Fifth and Fourteenth Amendments. US West sought relief under 42 U.S.C. § 1983. Defendants moved to dismiss US West’s takings claim under Fed. R. Ci v. P. 12(b), and the district court determined that it had jurisdiction over the claim. On appeal, defendants argue that US West cannot raise its takings claim i n federal court until it attempts to obtain compensation through state procedures or pleads that it would be futile-23-

to do so. They claim that because US West has not yet gone through state channels, the takings claim is not ripe and the dis trict court therefore does not have jurisdiction over it. We find no indication in the record that defendants made this argument to the district court. Moreover, the district court d id not discuss ripeness in its memorandum order denying defendants’ motion to dism iss. The lower court merely found that US West brought its claim under t he Fourteenth Amendment and 42 U.S.C. § 1983. The district court concluded that “[t]hese are appropriate channels for such claims and this Court has the pro per jurisdiction to hear them.” Mem. Order at 7. Whether the claim is ripe for jud icial review is another question, one that the district court apparently di d not address. We see no reason to “depart from the general rule t hat ‘a federal appellate court does not consider an issue not passed upon be low.’” Walker v. Mather (In re Walker) , 959 F.2d 894, 896 (10th Cir. 1992) (quoting Singl eton v. Wulff , 428 U.S. 106, 120 (1976)). We therefore decline to con sider the merits of defendants’ ripeness argument. The ripeness issue will be befo re the district court on remand.
AFFIRMED AND REMANDED.