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
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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 (Annina Mitchell, Assistant

Attorney General, with her on the briefs), Salt Lake City, Utah, appearing for

Defendants-Appellants.

Mark B. Stern, Attorney (William B. Schultz, Acting Assistant Attorney General,

David J. Schwendiman, United States Attorney, Susan L. Pacholski, Attorney,

Christopher J. Wright, General Counsel, John E. Ingle, Deputy Associate General

Counsel, and Susan L. Launer, Deputy Associate General Counsel, with him on

the brief), Appellate Staff Civil Division, Department of Justice, Washington,

DC, appearing for the Defendant-Intervenor-Appellee.

Paul M. Smith, Jenner & Block, Washington, DC (Thomas F. O'Neil, III and

William Single, IV, MCI Worldcom, Inc., Washington, DC, J. Alex Ward, Jenner

& Block, Washington, DC, counsel for MCI Telecommunications Corp. and

MCImetro Access Transmission Services, Inc.; Phillip L. Douglass, US West Law

Department, Denver, Colorado, and Kara Sacilotto, Perkins, 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, counsel for AT&T

Communications of the Mountain States, Inc., with him on the brief), appearing

for Appellees.

Before TACHA, BALDOCK, and BRORBY, Circuit Judges.

TACHA, Circuit Judge.

Defendants-appellants the Utah Public Service Commission (UPSC) and the

individual commissioners appeal the district court’s denial of their motion to

dismiss on Eleventh Amendment immunity grounds. Defendants also contest the
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district court’s conclusion that it has jurisdiction to consider US West’s takings

claim. We exercise jurisdiction over this interlocutory appeal pursuant to 28

U.S.C. § 1291 and the collateral order doctrine, see 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 of 1996, Pub. L. No.

104-104, 110 Stat. 56 (codified in scattered sections 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 amended in scattered sections of 47

U.S.C.A. (West 1991 & Supp. 2000)) (“1934 Act”). Congress adopted the 1934

Act “to protect American consumers against AT&T which, through an aggressive

policy of consolidation, had gained a virtual monopoly over all segments of the

telecommunications industry. Telephone service as a whole was viewed as a

natural monopoly which needed to be regulated for the benefit of all users.” 

Michael Kerf & Damien Geradin, Controlling Market Power in

Telecommunications: Antitrust vs. Sector-Specific Regulation: An Assessment of

the United States, New Zealand and Australian Experiences, 14 Berkeley Tech.

L.J. 919, 936 (1999). Thus, pursuant to the 1934 Act, Congress created the
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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 foreign commerce in communication

by wire and radio”). 

The 1934 Act left regulation of intrastate telephone 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, classifications, practices, services,

facilities, or regulations for or in connection with intrastate communication

service by wire or radio of any carrier”). In regulating local phone service,

[s]tates typically granted an exclusive franchise in each

local service area to a local exchange carrier (LEC), which

owned, among other things, the local loops (wires connecting

telephones to switches), the switches (equipment directing

calls to their destinations), and the transport trunks (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 Bell 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 service was a natural monopoly.” 

Id. Eventually, potential competitors and the Department of Justice sued AT&T
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to dismantle its virtual monopoly. Pursuant to a 1982 consent decree, AT&T

agreed to divest the local BOCs and reorganize them into subsidiaries of seven

independent local exchange carriers, known as regional BOCs. See United States

v. Western Elec. Co., 569 F. Supp. 1057, 1061-62 & 1062 n.5 (D.D.C. 1983),

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 & Geradin, 14 Berkeley Tech. L.J. at

938. 

 While the 1982 consent decree fostered competition in the long-distance

market, technological advances occurred that made “competition among multiple

providers of local service seem possible.” AT&T Corp., 952 U.S. at 371. Thus,

by 1994, “[m]any states had already commenced their own efforts to deregulate

the telecommunications industry” by permitting local competition. Deonne L.

Bruning, The Telecommunications Act of 1996: The Challenge of Competition,

30 Creighton L. Rev. 1255, 1258 (1997). In 1996, Congress passed the

Telecommunications Act to further encourage local competition. See Jim Chen,

The Magnificent Seven: American Telephony’s Deregulatory Shootout, 50

Hastings L.J. 1503, 1514 (1999) (“The Act sought to unleash three of the most

deeply entrenched monopolists in the American economy–local exchange carriers,

interexchange carriers, and cable system operators–on each other’s markets in the
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hope that competition among the large would dissolve 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 “establish[ed] baseline rules

for every company that want[s] to provide telecommunications 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 competitors.” 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 and receive calls.” Bruning,

30 Creighton L. Rev. at 1259. Section 251 thus requires incumbents to negotiate

interconnection agreements with entrants in good faith. See 47 U.S.C.A. §

251(c)(1). 

2. Section 252

Under § 252, an incumbent and a new carrier may privately agree on the
1A state commission “fails to act” if it “fails to respond, within a

reasonable time, to a request for mediation . . . or . . . 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 state commission does not fail to

act “if an agreement is deemed approved under section 252(e)(4).” Id. §

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terms of an interconnection agreement. See id. § 252(a)(1). If private negotiation

fails, then either party can petition the state commission 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 submitted to the state

commission. Id. § 252(e)(1). The state commission then must approve or reject

the agreement. Id.

A state commission may reject a negotiated agreement only if it

discriminates against non-party carriers or is inconsistent 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 prescribed 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 deemed approved. Id. § 252(e)(4). 

However, if a state commission “fails to act to carry out its responsibility under [§

252],” then the FCC will preempt the state commission’s jurisdiction over that

proceeding and assume the state commission’s responsibility. Id. § 252(e)(5).1 If
51.801(c). Thus, if a state commission does not approve or reject an agreement

and it is deemed approved, the FCC cannot preempt the state commission’s

jurisdiction and review the agreement.

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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 251 [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 jurisdiction, 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 will participate in the

federal regulatory scheme. If a state elects to regulate interconnection agreements

through its state commission, then the state is subject to suit in federal court.

II. Facts

On July 26, 1996, AT&T Communications of the Mountain States, Inc.

(“AT&T”), filed a petition with the UPSC for arbitration with US West

Telecommunications, Inc. (“US West”) pursuant to § 252(b) of the Act. On

September 3, 1996, MCI Metro Access Transmission Services, Inc. and MCI

Telecommunications Corp. (collectively MCI) filed a similar petition for

arbitration with US West. After consolidating the AT&T and MCI petitions, the
2Based on a stipulation reached with MCI, defendants did not move to have

themselves dismissed from MCI’s suit. 

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UPSC issued an arbitration order resolving a number of open issues. The order

directed the parties to file fully executed interconnection agreements with the

UPSC that were consistent with the UPSC’s resolution of the parties’ disputes. 

The UPSC then reviewed and approved the submitted interconnection 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 court. US West challenged some

provisions in its interconnection agreements with MCI 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 commissioners and the UPSC. After the

district court consolidated the suits, the individual commissioners and the UPSC

moved to have themselves dismissed from US West’s suit pursuant to Fed. R. Civ.

P. 12(b).2 Defendants claimed that they were immune from suit under the

Eleventh Amendment and that the district court did not have jurisdiction over US

West’s takings claim. The district court denied the 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 state’s claim of Eleventh
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Amendment immunity from suit in federal court.” Innes 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 provides: “The Judicial

power of the United States shall not be construed to 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 Foreign State.” The Supreme

Court has construed the Eleventh Amendment to mean that “an unconsenting State

is immune from suits brought in federal courts by her 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 by consenting to suit in federal

court. College Sav. Bank v. Florida Prepaid Postsecondary 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).
3The district court’s opinion mentions abrogation in passing, and on appeal

defendants’ briefly argue that Congress could not have constitutionally abrogated

state sovereign immunity through passage of the Act. Congress may abrogate the

states’ sovereign immunity in the exercise of its Section 5 power to enforce the

Fourteenth Amendment. College Sav. Bank, 119 S. Ct. at 2224. After Seminole

Tribe, however, “Congress may not abrogate state sovereign 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). There is no

question that Congress adopted both the 1934 Act and 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’ sovereign immunity under the 1996 Act. 

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IV. Analysis

Defendants contend that none of the limits on sovereign 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 opted to participate in the

statutory scheme set forth in the Act. The district court also found that the

individual commissioners were subject to suit under Ex parte Young. We agree

with both findings.3

A. Waiver

1. Means of Waiver

Generally, a state may waive its Eleventh Amendment immunity in one of

two ways. First, a state waives its immunity if it voluntarily 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] jurisdiction.” Id. (internal quotation marks
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and citation omitted).

A state can make a “clear declaration” of its consent to be sued in federal

court by expressly waiving its immunity through a state statute or constitutional

provision. See Innes, 184 F.3d at 1278. A state can also declare its intent to

submit to suit by impliedly or constructively waiving its immunity if the

declaration is clear and altogether voluntary. See generally College Sav. Bank,

119 S. Ct. 2219 (overruling the constructive waiver doctrine 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 certain circumstances); see also

Innes, 184 F.3d at 1280 (stating that nothing in College Savings Bank forecloses

us from examining the underlying facts of a case to determine whether a state has

unequivocally expressed its intent to waive its immunity). 

Here, US West sued the UPSC and the individual commissioners. 

Accordingly, Utah did not invoke the jurisdiction of a federal court and thereby

waive its immunity. Furthermore, Utah did not expressly consent to suit through

a state statute or constitutional provision governing 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 statute.”). Thus, the question is
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whether, under College Savings Bank, Utah constructively waived its immunity

from suit when it arbitrated an interconnection dispute between US West, AT&T

and MCI pursuant to § 252 of the Act.

2. College Savings Bank

Because College Savings Bank overruled Parden’s constructive waiver

doctrine, we begin with a brief discussion of Parden. In Parden, the employees of

a railroad owned and operated by the State of Alabama 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 state’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 act, 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 Prepaid”), an arm of the State

of Florida. 119 S. Ct. at 2223. Florida Prepaid administers a program designed

to ensure that individuals have sufficient funds to finance a college education. Id.

The bank claimed that Florida Prepaid misrepresented its product in its marketing

brochures and annual reports in violation of the Lanham Act. Id. As amended by
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the Trademark Remedy Clarification Act (TRCA), the Lanham Act provides that

states are not immune from suit in federal court for violations of the Act. Id.

Florida Prepaid claimed, however, that it was immune from suit because the

TRCA was enacted pursuant to Congress’s Article I power and Congress may not

abrogate state sovereign immunity when it legislates 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 administration of its program

after the TRCA made it clear that such activity would subject Florida Prepaid to

suit. Id. The Court overruled Parden and 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 sovereign immunity be unequivocal.” 

Id. at 2228 (citing Great Northern Life Ins. Co. v. Read, 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 certain 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 suits brought by individuals.” Id.

However, this “is very far from concluding that the State made an ‘altogether

voluntary’ decision to waive its immunity.” Id.
4Defendants contend that College Savings Bank precludes Congress from

using its commerce power to obtain a constructive or implied waiver from a state. 

They therefore argue that because Congress adopted the 1996 Act pursuant to its

commerce power, § 252 cannot permissibly require states to constructively or

impliedly waive their sovereign immunity. We disagree. The key to constructive

or implied waiver under College Savings Bank is 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.

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Furthermore, if the Court recognized “a congressional power to exact

constructive waivers of sovereign immunity through the exercise of Article I

powers,” it would thereby “permit Congress to circumvent the antiabrogation

holding of Seminole Tribe.” Id. at 2229 (emphasis added). “Forced waiver 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 immunity to be valid under

College Savings Bank, it must be altogether voluntary and not forced from a state

by Congress. A constructive waiver is voluntary only where Congress threatens a

state with the denial of a “gift or gratuity” if the 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 the waiver is no longer freely

given. See id. In addition, it may be that the difference between a gift and a

sanction disappears when the gift Congress threatens to withhold is large enough. 

See id. 
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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 Parden and the case at bar. In Petty,

the Court held that a bistate commission created pursuant to an interstate compact

“had consented to suit by reason of a suability provision 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 exercise of its

spending power, condition its grant of funds to the States upon their taking

certain actions that Congress could not require them to take, and that acceptance

of the funds entails an agreement to the actions.” Id. (citing Dole).

The College Savings Bank court 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 the consent of Congress. Id. 

The granting of consent therefore is a gratuity. Id. Similarly, “Congress has no

obligation to disburse funds to the States; such funds are gifts.” Id. 

In contrast, in both Parden and the case before the Court, Congress did not

threaten the denial of a gift or gratuity if the states refused to waive their

sovereign immunity. See id. Instead, in both Parden and College Savings Bank,

Congress threatened a sanction: “exclusion of the State from otherwise
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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 vehicle. The voluntariness of a

waiver is destroyed “when what is attached to the refusal to waive is the

exclusion of the State from otherwise lawful activity.” Id.; see also Innes, 184

F.3d at 1284 (holding that a state university “knowingly and voluntarily” waived

the state’s immunity “by agreeing, as a prerequisite to its participation in the

Perkins Loan program, to undertake certain enumerated actions in federal

bankruptcy court in the event of a claim for discharge 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 has clearly expressed its intention

that if a state elects to approve or reject an interconnection 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 under [§ 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 have
5Utah’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 act on 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 immunity, it must determine if the

waiver is valid by examining whether the defendant had the authority to waive the

state’s immunity).

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jurisdiction to review the action of a State commission 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 waiver is insufficient, standing

alone, to render a state’s waiver altogether voluntary. Id.

Instead, Utah has voluntarily waived its immunity only if Congress, through

the 1996 Act, threatened it with the denial of a gratuity, rather than the imposition

of a sanction. Prior to 1996, the states were permitted to regulate local phone

service. Indeed, the 1934 Act specifically left regulation of intrastate telephone

services to the states. However, the 1996 Act preempted 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 addressed by the 1996 Act,”

Congress “unquestionably” has “taken the regulation of local telecommunications

competition away from the States”). Although it did not do so, Congress could

have preempted all state regulation of local phone service. See FERC v.
6Defendants contend that Congress has imposed a sanction on them because

if they refuse to consent to suit, Utah will be excluded completely from the

regulation of interconnection agreements. They suggest 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 such a substantial amount of

regulatory authority. Seizing on language in College Savings Bank, they argue

that the inducement offered by Congress is “so coercive 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 without merit. 

The size of the “gift” was not at issue in College Savings Bank because

“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 theory was 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 has 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 example, to ensure that barriers

to competition will fall, § 253 prohibits all state statutes and regulations that

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Mississippi, 456 U.S. 742, 764 (1982) (“[T]he commerce power permits Congress

to pre-empt the States entirely in the regulation of 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 essentially transformed

the regulation of local phone service from an otherwise permissible state activity

into a federal gratuity. As in Petty and 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 phone service on its consent to suit

in federal court, Congress threatened the state with the denial of a gratuity rather

than exclusion from an otherwise lawful activity.6

 We therefore hold that Utah
impede “the ability of any entity to provide any interstate or intrastate

telecommunications service.” 47 U.S.C.A. § 253(a). Thus, § 253(a) effectively

“strikes down all franchised monopolies that were given by the states to local

exchange companies.” Kerf & Geradin, 14 Berkeley Tech. L.J. at 940. However,

§ 253(b), captioned “State regulatory authority,” contains 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, and safeguard the rights of

consumers.” Thus, state commissions may continue to regulate

telecommunications in the public interest, as long as such regulations are

competitively neutral.

7The district courts are divided over whether, under College Savings Bank,

a state waives its sovereign immunity when it accepts Congress’s invitation to

participate in the review of interconnection agreements 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 waiver). 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 addressing the applicability of

Alden v. Maine, 527 U.S. 706 (1999), College Sav. Bank v. Florida Prepaid

Postsecondary Educ. Expense Bd., 527 U.S. 666 (1999), and Florida Prepaid

Postsecondary Educ. Expense Bd. v. College Sav. Bank, 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 “it is 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 Bank and Florida Prepaid). 

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voluntarily waived its sovereign immunity when the UPSC, through its

commissioners, arbitrated the interconnection dispute in this case.7

 Defendants

are subject to suit in federal court, and this case may proceed.

C. Ex Parte Young
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Even if the Eleventh Amendment barred US West’s suit against the UPSC,

US West still could proceed with its suit against the individual commissioners. In

a suit similar to the one at bar, the Sixth Circuit found 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 that 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 Amendment. 

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 [against 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 Young

to § 252 cases. Recently, the Supreme Court once again

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 declaratory 

relief).
8Defendants contend that Seminole Tribe and Coeur d’Alene Tribe

narrowed the Ex parte Young doctrine so as to make it inapplicable to this case. 

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 Ex parte Young case, “[w]e

must examine whether the relief Plaintiff[] seek[s] against the state officials

implicates special sovereignty interests, and whether that requested relief is the

functional equivalent to a form of legal relief against the state that would

otherwise be barred by the Eleventh Amendment.” Id. (internal quotation marks

and citations omitted). In this case, US West requests declaratory and injunctive

relief to remedy actions by the commissioners which it claims are violations of

federal law. Such relief would not affect any special sovereignty interests or

otherwise cause offense to Utah’s sovereign authority. Defendants’ argument

therefore is without merit.

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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 suit 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 a taking of its property for

public use without just compensation in violation of 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. Civ. 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 in federal court until it attempts

to obtain compensation through state procedures or pleads that it would be futile
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to do so. They claim that because US West has not yet gone through state

channels, the takings claim is not ripe and the district 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 did not discuss ripeness in its

memorandum order denying defendants’ motion to dismiss. The lower court

merely found that US West brought its claim under the 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 proper jurisdiction to hear them.” 

Mem. Order at 7. Whether the claim is ripe for judicial review is another

question, one that the district court apparently did not address. 

We see no reason to “depart from the general rule that ‘a federal appellate

court does not consider an issue not passed upon below.’” Walker v. Mather (In

re Walker), 959 F.2d 894, 896 (10th Cir. 1992) (quoting Singleton v. Wulff, 428

U.S. 106, 120 (1976)). We therefore decline to consider the merits of defendants’

ripeness argument. The ripeness issue will be before the district court on remand.

AFFIRMED AND REMANDED.