FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

VERIZON CALIFORNIA INC., 

Plaintiff-Appellant,

v.

MICHAEL R. PEEVEY; LORETTA M.

LYNCH; CARL W. WOOD; GEOFFREY

F. BROWN; SUSAN P. KENNEDY, in

their official capacities as

Commissioners of the Public No. 04-15155

Utilities Commission of the State D.C. No.

of California, and not as  CV-03-02838-THE

individuals,

Defendants-Appellees, OPINION

AT&T COMMUNICATIONS OF

CALIFORNIA INC.; MCI WORLDCOM

COMMUNICATIONS, INC.; MCIMETRO

ACCESS TRANSMISSION SERVICES,

LLC,

Defendants-IntervenorsAppellees. 

Appeal from the United States District Court

for the Northern District of California

Thelton E. Henderson, District Judge, Presiding

Argued and Submitted

January 12, 2005—San Francisco, California

Filed July 6, 2005

Before: John T. Noonan, Carlos T. Bea, Circuit Judges, and

Robert E. Jones, District Judge.*

*The Honorable Robert E. Jones, Senior United States District Judge

for the District of Oregon, sitting by designation. 

7833
Opinion by Judge Noonan;

Concurrence by Judge Bea

7834 VERIZON v. PEEVEY
COUNSEL

Henry Weissmann, Burton A. Gross, John P. Hunt and Rosemarie T. Ring, Munger, Tolles & Olson LLP, Los Angeles,

California, for plaintiff-appellant Verizon California Inc. 

Randolph L. Wu, Mary F. McKenzie and Kimberly J. Lippi,

San Francisco, California, for defendants-appellees Michael

R. Peevey, Loretta M. Lynch, Carl W. Wood, Geoffrey F.

Brown and Susan P. Kennedy in their official capacities as

Commissioners of the Public Utilities Commission of the

State of California. 

Catherine M. Barrad and Randolph W. Deutsch, Sidley, Austin, Brown & Wood LLP, San Francisco, California, and

David J. Miller, AT&T Communications of California, Inc.,

San Francisco, California, for intervenor/defendant-appellee

AT&T Communications of California, Inc. 

Donald B. Verrilli, Jr., Michael B. DeSanctis and Daniel

Mach, Jenner & Block LLP, Washington, D.C., and Jeffrey A.

Rackow, MCI, Inc., Washington, D.C., for intervenors/

defendants-appellees MCI WorldCom Communications, Inc.

and MCIMetro Access Transmission Services LLC. 

OPINION

NOONAN, Circuit Judge: 

We must decide whether an incumbent local exchange carrier’s challenge to nominally “interim” rates for access to its

network by competitive local exchange carriers, which rates

are set by a state utilities commission pursuant to the Telecommunications Act of 1996, is ripe for judicial review, even

though such rates are subject to later adjustment by the state

utilities commission (“a true-up”). When the incumbent local

7836 VERIZON v. PEEVEY
exchange carrier has cognizable claims which cannot and will

not be compensated by the true-up, we hold such challenge is

ripe for judicial review. 

BACKGROUND

The Telecommunications Act of 1996 (“the Act”), Pub. L.

No. 104-104, 110 Stat. 56 (codified as amended in scattered

sections of 47 U.S.C.) aims in part to introduce competition

among local exchange carriers. Verizon Communs., Inc. v.

FCC, 535 U.S. 467, 476-77 (2002). A “local exchange” is “a

network connecting terminals like telephones, faxes, and

modems to other terminals within a geographical area like a

city.” 535 U.S. at 489. The Act recognizes two types of local

exchange carriers. An “incumbent local exchange carrier”

(“ILEC”) is a carrier that owns a local exchange. Id. at 490

(citing 47 U.S.C. § 251(h)). A “competitive local exchange

carrier” (“CLEC”) is a carrier new to the market, without a

local exchange of its own. See 535 U.S. at 491-92. Absent

regulation, “[a] newcomer could not compete with the incumbent carrier to provide local service without coming close to

replicating the incumbent’s entire existing network [or local

exchange] . . . .” Id. at 490. 

To foster competition, the Act requires that ILECs make

available to CLECs “access” to the ILECs’ “network elements” “on an unbundled basis.” 47 U.S.C. § 251(c)(3). A

“network element” is “a facility or equipment used in the provision of a telecommunications service” or those “features,

functions, and capabilities that are provided by means of such

facility or equipment, including subscriber numbers, databases, signaling systems, and information sufficient for billing

and collection or used in the transmission, routing, or other

provision of a telecommunications service.” 47 U.S.C.

§ 153(29). To provide “access” to a network element “on an

unbundled basis” — or, said differently, to provide access to

unbundled network elements (“UNEs”) — “is to lease the element, however described, to a requesting carrier at a stated

VERIZON v. PEEVEY 7837
price specific to that element” without requiring that other

elements also be leased (“bundled”). See Verizon Communs.,

Inc., 535 U.S. at 531. 

Pursuant to the Act, CLECs requesting access to UNEs are

first to attempt to negotiate rates for such access with the

ILEC that owns the network. 47 U.S.C. §§ 251(c)(1),

252(a)(1). If the parties successfully negotiate rates, the relevant state utilities commission is required to accept those rates

unless they discriminate against a carrier not a party to the

contract, or the rates are otherwise shown to be contrary to the

public interest. 47 U.S.C. §§ 252(e)(1), (e)(2)(A). If the parties cannot agree on rates, any party to the negotiations may

request arbitration to be conducted by the relevant state utilities commission. 47 U.S.C. § 252(b)(1). 

The Act assumes that a state utilities commission may

refuse or otherwise fail to conduct the arbitration, in which

case the Act provides that the Federal Communications Commission (“FCC”) shall act in the place and stead of the state

utilities commission. See 47 U.S.C. § 252(e)(5). However,

where, as here, the state utilities commission conducts the

arbitration, such commission is bound by the Act’s provisions

governing how the rates must be set and by the FCC’s related

regulations, 47 U.S.C. § 252(c)(1)-(2), including regulations

that require state utilities commissions to use the total element

long run incremental cost (“TELRIC”) methodology. 47

C.F.R. § 51.505; see also AT&T Corp. v. Iowa Utils. Bd., 525

U.S. 366, 385 (1999) (upholding the FCC’s jurisdiction to

design a pricing methodology to bind state utilities commissions); Verizon Communs., Inc., 535 U.S. at 497-528 (upholding the TELRIC regulations in particular). It is important to

note that, in setting forth these requirements, neither the Act

nor the FCC regulations distinguishes between “interim” rates

and “final” rates. Cf. AT&T Communs. of Ill., Inc. v. Ill. Bell

Tel. Co., 349 F.3d 402, 411 (7th Cir. 2003) (“[T]he possibility

of repair in the future is no warrant for promulgating today a

rate that deviates from the TELRIC standard. Federal law

7838 VERIZON v. PEEVEY
requires that any rate for unbundled network elements,

adopted by a state commission, comply with TELRIC when

adopted.”) (emphasis added). 

In 1997, the California Public Utilities Commission

(“CPUC”) established nominally interim rates for access by

CLECs to Verizon’s UNEs. We characterize these rates as

interim only in name because, for reasons not relevant here,

the CPUC did not undertake the task of setting permanent

rates until 2002. Even then, it did not set permanent rates, but

rather held expedited proceedings to establish revised interim

rates, which were to remain in effect until permanent rates

could be established. After receiving several interim rate proposals from Verizon and interested CLECs, the CPUC issued

the interim rate order that is at issue in this appeal. 2003 Cal.

PUC LEXIS 168 (Cal. Pub. Util. Mar. 13, 2003). In brief, the

revised interim rates were based on rates approved by the utilities commission in New Jersey, where Verizon also is the

ILEC; the rates were adjusted in an effort to reflect Verizon’s

higher costs in California relative to New Jersey. Id. at *109-

10. Verizon alleges both that the methodology used to set the

New Jersey rates does not comply with TELRIC as previously

interpreted both by the FCC and CPUC, Compl. ¶¶ 36, 39, 42,

and that “costs, network requirements, geography, demand

levels, and other unique features [relevant to the setting of

rates] may differ significantly by state . . . .” Verizon Compl.

¶¶ 35, 42-43. However, in an attempt to remedy these admitted problems, the CPUC made the interim rates subject to a

“true-up” when the permanent rates finally were adopted.

2003 Cal. PUC LEXIS at *110. A “true-up” is a determination by the CPUC which adjusts the interim rates, either up or

down, as of the earlier effective date of the interim rate order,

so that the adjusted interim rates equal the permanent rates as

set later in the permanent rate proceeding. 

The impact of the interim rate order entered March 13,

2003 was immediately to reduce the rates that Verizon could

charge CLECs for access to its UNEs relative to what it had

VERIZON v. PEEVEY 7839
been able to charge under the earlier rate order. After the

CPUC denied Verizon’s application for rehearing, Verizon

brought an action in federal district court against Michael R.

Peevey and other commissioners of the CPUC in their official

capacities, in which Verizon alleged five claims: (1) that the

interim rate order was arbitrary and capricious and not supported by substantial evidence; (2) that the interim rate order

was not in compliance with the Act nor with the regulations

implementing the TELRIC methodology; (3) that the interim

rate order was confiscatory; (4) that the interim rate order was

in violation of due process; and (5) that the interim rate order

was in violation of Verizon’s civil rights. Verizon sought to

have the interim rate order declared unlawful and vacated, to

have its enforcement enjoined, and to have the matter returned

to the CPUC for further proceedings. Verizon also sought its

costs and attorneys’ fees incurred in litigating the suit. 

AT&T Communications of California, Inc., MCI WorldCom Communications, Inc., and MCIMetro Access Transmission Services LLC intervened in the suit, after which Verizon

filed a motion for partial summary judgment as to its first,

second and fourth claims. However, concluding that Verizon’s first and second claims were not ripe for judicial

review, the district court denied Verizon’s motion for partial

summary judgment as to those two claims without reaching

their merits, and sua sponte dismissed the same two claims.

Then, after giving Verizon an opportunity to offer some material basis upon which to distinguish its remaining three

claims, the district court dismissed those claims also for lack

of ripeness. Verizon appealed the dismissal of its complaint.

We have jurisdiction pursuant to 47 U.S.C. § 252(e)(6) and 28

U.S.C. § 1291, and vacate and remand with instructions that

the district court consider on the merits whether Verizon is

entitled to the declaratory and injunctive relief. 

STANDARD OF REVIEW

We review de novo whether claims are ripe for judicial

review. Laub v. United States Dep’t of the Interior, 342 F.3d

1080, 1084 (9th Cir. 2003). 

7840 VERIZON v. PEEVEY
ANALYSIS

[1] The Telecommunications Act of 1996 provides a single

methodology for the setting of rates: TELRIC. “Federal law

requires that any rate for unbundled network elements,

adopted by a state commission, comply with TELRIC when

adopted.” AT&T Communs., 349 F.3d at 411. No provision is

made by this law for any rate to be established in a different

way. Verizon alleged that the CPUC had failed to comply.

The issue was ready for judicial decision. 

[2] This obvious result has been clouded by our decision in

US West Communs. v. MFS Intelenet, Inc., 193 F.3d 1112 (9th

Cir. 1999), understandably treated as precedent by the district

court. In US West the contention was made and accepted by

both parties that the rates were “interim only and may be

adjusted by later pricing proceedings.” Id. at 1118. But neither

the legitimacy of interim rates nor possible adjustment by

later pricing proceedings (a so-called true-up) is accepted by

Verizon. As neither interim rates nor a true-up compensating

for such costs as credit insurance are covered by TELRIC, we

see no reason to import into this case the assumptions and

admissions that were decisive in US West. 

[3] Verizon has presented a straightforward challenge to the

basis on which the CPUC set the current rates; namely the

rates set in New Jersey, with alleged inadequate adjustment

for Verizon’s costs in California. Whether this short cut complied with federal law and the constitution is ripe for adjudication. 

[4] Accordingly, the judgment of the district court is

VACATED and the case is REMANDED.

BEA, Circuit Judge, concurring: 

Although I join in the majority’s holding and its conclusion

that Verizon’s claims are ripe for judicial review, I do not find

VERIZON v. PEEVEY 7841
its distinction of US West Communications v. MFS Intelenet,

193 F.3d 1112 (9th Cir. 1999), to be compelling. I nevertheless find US West to be distinguishable on a different basis,

and take this opportunity to articulate that basis and also to

respond to the many arguments advanced by the CPUC and

intervenors in support of their view that Verizon’s claims are

not ripe for judicial review even independent of US West. 

I. US West Communications v. MFS Intelenet, Inc.

The majority distinguishes US West on the basis that “neither the legitimacy of interim rates nor possible adjustment by

later pricing proceedings (a so-called true up) is accepted by

Verizon,” slip op. at 7841, suggesting that, by contrast, US

West did not contest “the legitimacy of interim rates.” I take

this to mean that, according to the majority’s reading, US

West did not contest the legitimacy of rates that, by virtue of

being interim, need not be in compliance with the Act so long

as US West was later made whole. 

With this I do not agree. As we explained there, “US West

challenge[d] several of the pricing provisions as inconsistent

with the pricing standards fixed by the Act.” Id. at 1117-18.

We nevertheless concluded that the claims were not ripe for

judicial review primarily because US West conceded that the

true-up would make it whole and, thus, might moot the

appeal. Id. at 1118-19. This does not mean that US West did

not contest the legitimacy of such interim rates. Indeed, we

expressly said otherwise: 

US West challenges the interim rates, but says its

concerns would be resolved if TCG and MFS were

ordered to compensate U.S. West for any differences

between the interim rates and the permanent prices,

referred to as an “administrative true-up.” 

. . . . Accordingly, we avoid unnecessary adjudication by declining to review the interim prices now.

7842 VERIZON v. PEEVEY
If a true-up is ordered, this appeal might become

moot, as U.S. West has indicated it would be satisfied with such an order. 

Id. at 1118-19 (emphasis added). 

Thus, I find US West distinguishable from the case here not

because US West did or did not contest the legitimacy of

interim rates that do not comply with the Act and TELRIC

methodology, but because it conceded that a true-up would

make it whole whereas, by contrast, Verizon has made no

similar concession. To the contrary, as I address more fully in

Part II.B.1 below, Verizon has affirmatively alleged that the

true-up will not make it whole in two different respects: (1)

the loss of retail customers suffered during the period until

permanent rates are established, which loss is claimed to be

due to unlawfully low interim rates; and (2) the credit risk of

nonpayment by CLECs of the difference between the rates as

set by the interim rate order and as ultimately adjusted by the

true-up, a risk Verizon has been and is presently forced to

bear. Further, the CPUC agrees that these two elements of

loss claimed by Verizon will not be considered in the true-up.

Thus, to the extent that the district court here was obliged to

accept Verizon’s allegations of uncompensable losses as true,

an issue which I address in Part II.B.3 below, contrary to what

was conceded in US West, any future true-up here cannot

moot this appeal. 

Nor is there any merit in the argument of the CPUC and the

intervenors that our rationale in US West applies here with

even greater force than it did there because the true-up here

is more certain to occur than it was in US West. Presumably

the argument is that even in US West, we denied review where

there was a possibility that US West would suffer losses that

would not be compensated if, ultimately, the state utilities

commission decided not to order a true-up. But here, to the

extent Verizon’s allegations must be taken as true, Verizon

has suffered, is suffering and will continue to suffer losses

VERIZON v. PEEVEY 7843
uncompensable by a true-up; it is not a mere possibility. At

the procedural phase in which we find ourselves and given

Verizon’s allegations, it must be deemed a certainty. 

Finally, as alluded to above, the possibility that the appeal

would be mooted was not the sole ground on which we relied

in holding that the claims raised in US West were not ripe for

judicial review. Rather, as we stated:

Even if the appeal does not become moot, either

because the true-up is denied or because [the

CLECs] appeal[ ] the award of a true-up, this court

will benefit from the Commission’s and the district

court’s legal analysis of whether a true-up is authorized by the Act and from their assessment of

whether it should be imposed in these particular

cases. 

Id. at 1119. This rationale is inapplicable here because none

of the parties are contesting whether a true-up is authorized

nor whether it should be imposed here. It is admitted by all:

The CPUC made the interim rates subject to a true-up, 2003

Cal. PUC LEXIS 168, at *110 (Cal. Pub. Util. Mar. 13, 2003);

there will be a true-up. 

In short, absent even the remotest possibility that Verizon’s

claimed losses will be compensated through a true-up (assuming Verizon’s allegations to be true) thereby rendering this

appeal moot, and in the absence of any suggestion that the

parties intend to challenge the propriety of conducting a trueup either generally or as applied here, US West does not bind

us. See Hart v. Massanari, 266 F.3d 1155, 1170 (9th Cir.

2001) (“In determining whether it is bound by an earlier decision, a court considers . . . the ‘reason and spirit of cases’

[and] also ‘the letter of particular precedents.’ This includes

not only the rule announced, but also the facts giving rise to

the dispute . . . .”) (citation omitted). 

7844 VERIZON v. PEEVEY
II. Ripeness 

Having so distinguished US West, I would consider

whether the ripeness doctrine nevertheless bars Verizon’s

action. The ripeness doctrine at issue here was first set forth

in Abbott Laboratories v. Gardner, 387 U.S. 136, 153 (1967),

and is a prudential, rather than jurisdictional, doctrine.

National Audubon Society, Inc. v. Davis, 307 F.3d 835, 850

(9th Cir. 2002), as amended by, 312 F.3d 416 (9th Cir. 2002).

It requires that “[i]n considering whether a case [challenging

administrative action] is ripe for review, a court must evaluate

[1] the fitness of the issues for judicial decision and [2] the

hardship to the parties of withholding court consideration.”

US West, 193 F.3d at 1118 (quoting Winter v. California

Medical Review, Inc., 900 F.2d 1322, 1325 (9th Cir. 1990)

(quoting Abbott Laboratories, 387 U.S. at 149)) (internal quotation marks omitted). “A claim is fit for decision if the issues

raised are primarily legal, do not require further factual development, and the challenged action is final.” Id. (quoting Standard Alaska Production Co. v. Schaible, 874 F.2d 624, 627

(9th Cir. 1989)) (internal quotation marks omitted). “To meet

the hardship requirement, a litigant must show that withholding review would result in direct and immediate hardship and

would entail more than possible financial loss.” Id. (quoting

Winter, 900 F.2d at 1325) (internal quotation marks omitted).

A. The Fitness of the Issues for Judicial Decision

1. The Issues Raised Here Are Primarily Legal and

Do Not Require Further Factual Development

The requirements that the issues raised be primarily legal

and not require further factual development are, in fact, the

same. “[A] controversy is ‘essentially legal in nature’ . . .

when no ‘further factual amplification is necessary.’ ” City of

Auburn v. Qwest Corp., 260 F.3d 1160, 1172 (9th Cir. 2001)

(quoting Western Oil & Gas Association v. Sonoma County,

905 F.2d 1287, 1291 (9th Cir. 1990)). Verizon’s claims

VERIZON v. PEEVEY 7845
require analysis only of the administrative record so that the

court can determine whether the rates already imposed —

whether interim or final — comply with the Act and relevant

regulations, including the TELRIC methodology. See Fox

Television Stations, Inc. v. Federal Communications Commission, 280 F.3d 1027, 1039 (D.C. Cir. 2002) (holding that

“whether the Commission’s determination [regarding certain

‘ownership rules’] was arbitrary and capricious or contrary to

law” was a “purely legal” question). Thus, the claims require

no further factual development and are primarily legal.

2. The Challenged Action Is Final

Whether a challenged action is sufficiently “final” for judicial review depends on whether it is the sort of action which

federal courts have jurisdiction to review. Under the Act, “[i]n

any case in which a State commission makes a determination

under [47 U.S.C. § 252], any party aggrieved by such determination may bring an action in an appropriate Federal district court to determine whether the agreement or statement

meets the requirements of [47 U.S.C. § 251] and [47 U.S.C.

§ 252].” 47 U.S.C. § 252(e)(6) (emphases added). We previously have had occasion to define “a determination” for purposes of 47 U.S.C. § 252(e)(6) in the context of holding that

a utility need not exhaust available state remedies before

seeking judicial review in federal court of a final rate order set

by the CPUC. AT&T Communications Systems v. Pacific Bell,

203 F.3d 1183, 1184 (9th Cir. 2000). In so doing, we

expressly distinguished the judicial review provision in the

Act from that in the Administrative Procedure Act (“APA”),

noting that whereas the APA “authorizes review only of ‘final

agency action,’ 5 U.S.C. § 704, section 252 does not provide

that there must be a ‘final’ determination after exhaustion of

all available remedies.” Id. Rather, we explained, “[i]t

requires only that there be ‘a determination,’ ” and, thus, we

held that “[a] state commission’s decision can be ‘a determination’ even if it is subject to a request for rehearing so long

7846 VERIZON v. PEEVEY
as the decision is operational or binding on the parties in the

absence of a request for rehearing.” Id. (emphasis added). 

At least to the extent Verizon’s allegations of uncompensable harm are accepted as true, the interim rate order here is

both operative and binding on Verizon. The order was entered

on and effective as of March 13, 2003. 2003 Cal. PUC LEXIS

168, at *117. If Verizon refuses to comply, it faces substantial

penalties. Cal. Pub. Util. Code §§ 2107-08 (providing for a

penalty of as much as $20,000 for “each offense” and providing that “in case of a continuing violation each day’s continuance thereof shall be a separate and distinct offense”). And

although the interim rates may be subject to a true-up, the

losses that are alleged to result from the operation of the rates

today are alleged to be uncompensable by means of the trueup. 

The CPUC and the intervenors, however, attempt to distinguish AT&T Communications Systems on the grounds that the

question there was whether exhaustion of state remedies was

required and that the rates challenged there were final rather

than interim. Admittedly, we faced a different question in

AT&T Communications Systems than we face here. But, as I

began my analysis, whether a challenged action is sufficiently

“final” for judicial review depends on whether it is the sort of

action which federal courts have jurisdiction to review. The

Act authorizes judicial review for “determination[s]” by state

commissions, 47 U.S.C. § 252(e)(6), and I see no reason why

we should define the statutory term differently for purposes of

the ripeness doctrine than we did for purposes of the exhaustion doctrine.1

1

Indeed, we recently explained that the ripeness doctrine as it pertains

to “cases involving administrative agencies . . . recognize[s] that judicial

action should be restrained when other political branches have acted or

will act,” Principal Life Insurance Co. v. Robinson, 394 F.3d 665, 670

(9th Cir. 2004), and that “[p]rinciples of federalism lend this doctrine

additional force when a federal court is reviewing a state agency decision

at an interim stage in an evolving process.” US West, 193 F.3d at 1118.

Both of these rationale are not unlike those underlying the exhaustion doctrine. 

VERIZON v. PEEVEY 7847
Further, the CPUC and the intervenors’ emphasis on the

fact that the rates here are nominally interim rather than final

is misplaced for at least three reasons. First, Verizon’s argument today is not with the final rates. Even if the final rates

fully comply with the TELRIC methodology and even with

the ensuing true-up, Verizon would still mount the same challenge to the interim rates that it makes today. Thus, neither its

claims, nor the CPUC’s nor the intervenors’ defenses, would

differ if they were to litigate after the final rates are promulgated. 

Second, the assumption that interim rates are substantially

more fleeting than final rates and, thus, that there is or should

be something fundamentally different about the way in which

interim rates are or are not reviewed, is belied by the facts.

The interim rates here have already been in effect for more

than two years, and we are informed that although permanent

rates may be set this year, they could be set as late as next

year. By comparison, final rates that “are set by state commissions” are “usually” done so pursuant to “arbitrated agreements with [only] 3- or 4-year terms,” Verizon

Communications Inc. v. Federal Communications Commission, 535 U.S. 467, 505 (2002) (emphasis added), and likely

change thereafter. 

Third, the CPUC and the intervenors’ position largely boils

down to the indefensible proposition that a state commission

can insulate its “determination[s]” from judicial review by

labeling them “interim.” This would eviscerate the judicial

review provided by statute and cannot be, particularly in light

of the fact that, as the history of this case demonstrates, socalled interim rates can remain in effect for years, command

immediate compliance on pain of sanctions, and can allegedly

cause losses which are, and will be, uncompensable. 

Recognizing this potential for abuse, the CPUC concedes

that particularly arbitrary rates should be subject to judicial

review even if interim. See, e.g., CPUC Br. at 19-20; Jan. 21,

7848 VERIZON v. PEEVEY
2005 Oral Arg. at 00:37:37 - 00:38:09. Although the degree

of arbitrariness of an interim rate may render it more or less

in need of judicial review, it does not render an interim rate

more or less “a determination” and, thus, fit for judicial

review. 

The CPUC also defends its position by arguing that interim

and unreviewable rates are useful regulatory tools in that they

permit the CPUC to set rates relatively quickly, without the

considerable delay and expense of procuring and reviewing

cost studies and holding full hearings. Hence, argues the

CPUC, such rates better effect the purpose of the Act, which

is to promote competition among local exchange carriers. The

CPUC’s assumption, however, that absent its rate setting there

will be no competition, is in error. To begin, even before the

interim rate order at issue here, Verizon already was making

its network available to competitors under rates set by the

CPUC. Further, even absent such a circumstance, an ILEC

and CLECs are always free to negotiate rates.2 If they cannot

agree on rates, and the CPUC is without the resources to set

rates in a timely fashion, it can defer to the determinant power

of the FCC. See 47 U.S.C. § 252(e)(5) (“If a State commission fails to act to carry out its responsibility under this section in any proceeding or other matter under this section, then

the [FCC] shall issue an order preempting the State commission’s jurisdiction of that proceeding or matter within 90 days

after being notified (or taking notice) of such failure, and shall

assume the responsibility of the State commission under this

section with respect to the proceeding or matter and act for

the State commission.”). Finally, even if there were no such

provisions for the parties to negotiate rates or for the FCC to

set rates such that the absence of interim rates would mean the

absence of competition among local exchange carriers, the

2

Indeed, I note that Verizon alleges that it “proposed a voluntary reduction of certain of its UNE rates on an interim basis in order to meet the

Commission’s goal of expeditiously reducing rates,” but that this proposal

was rejected. Compl. ¶ 29. 

VERIZON v. PEEVEY 7849
fact remains that Congress did not provide in the Act for rates

— interim or otherwise — that are binding but that nevertheless do not comply with federal law and regulations such as

the TELRIC methodology. See AT&T Communications of Illinois, Inc. v. Illinois Bell Telephone Co., 349 F.3d 402, 411

(7th Cir. 2003) (“[T]he possibility of repair in the future is no

warrant for promulgating today a rate that deviates from the

TELRIC standard. Federal law requires that any rate for

unbundled network elements, adopted by a state commission,

comply with TELRIC when adopted.”). We are not a junior

varsity legislature; neither is the CPUC. Cf. Mistretta v.

United States, 488 U.S. 361, 427 (1989) (Scalia, J., dissenting). We both must abide by what Congress has provided and

live without that which it has withheld. 

Thus, I would conclude that the interim rate order here is

sufficiently final for judicial review. 

B. The Hardship to the Parties of Withholding

Judicial Consideration

1. Verizon’s Alleged Uncompensable Harm

In its complaint seeking declaratory and injunctive relief,

Verizon alleged that the CPUC’s interim rate order caused

immediate harm to Verizon by requiring Verizon both: (1) to

subsidize CLECs in the form of unlawfully low rates, which

resulted in Verizon’s loss of retail customers; and (2) to bear

the credit risk that the CLECs benefitting from the interim

rates will not exist at the time the true-up takes effect or will

lack the wherewithal to pay the difference between the

interim rates and the permanent rates for the period of time

the interim rates were in effect. Verizon further alleged that

the promised true-up would not compensate Verizon for either

of these harms:

ILECs would be irreparably harmed if state commissions could impose artificially low UNE rates sub7850 VERIZON v. PEEVEY
ject to the promise of a later true-up. Even assuming

that a true-up were actually to occur at some future

date, the [interim] Rate Order’s below-cost UNE

rates cause Verizon California irreparable harm

because they give CLECs an arbitrary competitive

advantage that allows them to take customers away

from Verizon California. This harm cannot be cured

by the prospect of a future true-up of the Commission’s erroneous rates. Moreover, any true-up could

be years away, thus exacerbating the harm. There is,

moreover, no guarantee that CLECs who have

received the benefit of below-cost rates will still exist

and have the resources to pay back their windfall —

let alone do so willingly without protracted litigation

— at some future point when the Commission corrects its erroneous rates.

. . . . 

. . . . As a result of the interim UNE rates set by the

Commission, Verizon California has been aggrieved

within the meaning of Section 252(e)(6) of the 1996

Act, 47 U.S.C. § 252(e)(6). California’s “interim”

UNE rates will enable Verizon California’s competitors to procure UNEs from Verizon California at

rates well below Verizon California’s costs of providing UNEs. Further, they will enable Verizon California’s competitors to win over Verizon

California’s customers, not because the competitors

are more efficient or innovative, but because they

have won a substantial regulatory windfall in the

form of below-cost UNE rates.

Compl. ¶¶ 44, 46 (emphasis added).3

3There is, in my view, no merit in the argument by the CPUC and the

intervenors that harm resulting from Verizon’s loss of customers is not

cognizable because the very purpose of the Act is to promote competition

VERIZON v. PEEVEY 7851
Nor does the CPUC contest that the future true-up will

afford Verizon no real remedy for the losses Verizon alleged.

Indeed, at oral arguments, the CPUC conceded not only that

the true-up as contemplated will not account for these losses,

but that federal law would not permit the CPUC to set future

rates so as to compensate Verizon for past harms resulting

from artificially low rates. Jan. 12, 2005 Oral Arg. at

00:33:59-00:34:58. 

The CPUC’s stated position at oral arguments is quite correct. Where any party requests compulsory arbitration by the

state utilities commission, the commission “shall . . . establish

any rates for . . . network elements according to subsection (d)

of this section.” 47 U.S.C. § 252(c)(2). Subsection (d)

requires in relevant part that “[d]eterminations by a State

commission of . . . the just and reasonable rate for network

elements . . . shall be . . . based on the cost . . . of providing

the . . . network element . . . and . . . may include a reasonable

profit.” 47 U.S.C. § 252(d) (emphasis added). The FCC, in

turn, promulgated regulations interpreting this subsection:

The 1996 Act requires the states to set prices for

interconnection and unbundled elements that are

cost-based, nondiscriminatory, and may include a

reasonable profit. To help the states accomplish this,

the Commission concludes that the state commissions should set arbitrated rates for interconnection

and access to unbundled elements pursuant [to] a

forward-looking economic cost pricing methodology. The Commission concludes that the prices that

new entrants pay for interconnection and unbundled

in the intrastate telecommunications markets. Competition does not typically demand that firms subsidize their competitors, which, according to

Verizon, is precisely what has happened here. Nor does the Act suggest

otherwise. I hasten to add, however, that I express no opinion as to

whether Verizon has proven or, on remand, will be able to prove its allegations that the interim rates here are unlawfully low. 

7852 VERIZON v. PEEVEY
elements should be based on the local telephone

companies Total Service Long Run Incremental Cost

of a particular network element, which the Commission calls “Total Element Long-Run Incremental

Cost” (TELRIC), plus a reasonable share of

forward-looking joint and common costs.

11 F.C.C.R. 15,499, at ¶ 29 (1996) (emphases added), as

amended by 11 F.C.C.R. 22,301 (1996); see also 47 C.F.R.

§ 51.505.4 There is, in short, no provision either in the Act or

in the FCC’s regulations for rates to be based so as to compensate ILECs for past damages of the sort alleged here. 

The CPUC and the intervenors argue, however, that any

such alleged harm is temporary or speculative or is otherwise

not cognizable under the ripeness doctrine either because the

interim rates do not require Verizon to alter its “conduct” or

because the harm is mere financial loss. I address each of

these arguments in turn. 

4The Supreme Court has explained the TELRIC methodology as follows: 

“The TELRIC of an element has three components, the operating

expenses, the depreciation cost, and the appropriate risk-adjusted

cost of capital.” A concrete example may help. Assume that it

would cost $1 a year to operate a most efficient loop element;

that it would take $10 for interest payments on the capital a carrier would have to invest to build the lowest cost loop centered

upon an incumbent carrier’s existing wire centers (say $100, at

10 percent per annum); and that $9 would be reasonable for

depreciation on that loop (an 11-year useful life); then the annual

TELRIC for the loop element would be $20. 

The actual TELRIC rate charged to an entrant leasing the element

would be a fraction of the TELRIC figure, based on a “reasonable

projection” of the entrant’s use of the element (whether on a flat

or per-usage basis) as divided by aggregate total use of the element by the entrant, the incumbent, and any other competitor that

leases it. 

Verizon Communications Inc., 535 U.S. at 496 & n.16 (citations omitted).

VERIZON v. PEEVEY 7853
First, the CPUC and the intervenors argue that Verizon’s

harm is only temporary or speculative because any retail customers that Verizon may lose while the interim rates are in

effect may return once the permanent rates are set, and

because the true-up will compensate Verizon for any difference in the rates it charges CLECs under the interim rate

order and what it will be able to charge CLECs under the permanent rate order. As for the loss of retail customers, even

assuming that every customer who allegedly left Verizon

under the interim rates returns under the permanent rates,5

Verizon will not be compensated for the loss of revenue from

the loss of such retail customers while the interim rates were

in effect. The true-up adjustment will be based on the cost of

the UNEs, and not on the basis of what the competitors’ retail

customers might have paid Verizon had they not changed service providers. 

As for the adjusted rates that Verizon may charge pursuant

to the true-up for the interim period, the credit risk that Verizon has been forced to bear exists independently of whether

the intervenors and other CLECs ultimately pay the true-up.

If an investor is forced to accept junk bonds, of equal amount

and maturity, in place of Treasury bonds, he may buy credit

insurance; but the insurance premium will reduce his return.

Similarly here, were Verizon to buy credit insurance on the

intervenors’ payments pursuant to the true-up, the cost of such

credit insurance is not an element of TELRIC.6 Thus, nothing

about Verizon’s alleged present uncompensable harm is con5Nor is there reason to so assume. In the parlance of economists, given

the transaction costs that customers bear when they switch service providers and given the price differentials among service providers under the

interim rates relative to those under the permanent rates, it may not be efficient for customers to return to Verizon even if was efficient for them to

leave in the first place. 

6Of course, Verizon — like the junk-bond holder — could choose to run

the risk of nonpayment, with the predictable effect on its financial statements and own creditworthiness, but that is an option some might not

think prudent in these days of vigilance over corporations. 

7854 VERIZON v. PEEVEY
tingent upon future events and, thus, as alleged, is either temporary or speculative. Cases in which this court and others

have found claims to be unripe for judicial review on the basis

of the alleged harm being temporary or speculative are therefore inapposite. 

Second, the CPUC and the intervenors argue that Verizon’s

alleged harm is not cognizable under the hardship prong of

the ripeness analysis because the interim rate order does not

require Verizon to alter its “conduct” but only its rates. Here,

the CPUC and the intervenors rely on language in cases stating that claims are ripe for review only when the challenged

agency action requires a change in “conduct.” E.g., Abbot

Laboratories, 387 U.S. at 153 (holding that “where a regulation requires an immediate and significant change in the

plaintiffs’ conduct of their affairs with serious penalties

attached to noncompliance, access to the courts . . . must be

permitted”); Association of American Medical Colleges v.

United States, 217 F.3d 770, 783 (9th Cir. 2000) (“Courts typically read the Abbott Laboratories rule to apply where regulations require changes in present conduct on threat of future

sanctions.”). I can discern no reason why setting rates should

not be considered “conduct,” nor do the cases support such a

position. Indeed, even the cases on which the CPUC and the

intervenors rely make clear that the references to changes in

“conduct” are meant to distinguish situations where the

agency action has “direct and immediate” impact on plaintiffs

from situations in which the impact may be indirect or speculative. Abbott Laboratories, 387 U.S. at 152-53; Association

of American Medical Colleges, 217 F.3d at 783-84 (distinguishing Abbott Laboratories from its companion case, Toilet

Goods Association, Inc. v. Gardner, 387 U.S. 158, 163-65

(1967), wherein the Supreme Court found the challenged

action not ripe for judicial review, on the grounds that “the

impact of the regulation was [there] not ‘felt immediately by

those subject to it in conducting their day-to-day affairs’ ”).

Here, there is no question that the interim rate order had a

direct and immediate effect upon Verizon. 

VERIZON v. PEEVEY 7855
Third, the CPUC and the intervenors correctly note that we

have often stated that mere financial loss is not a cognizable

harm for purposes of the hardship analysis under the ripeness

doctrine. E.g., Principal Life Insurance Co., 394 F.3d at 670;

US West, 193 F.3d at 1118; Village of Gambell v. Babbitt,

999 F.2d 403, 408 (9th Cir. 1993); Municipality of Anchorage

v. United States, 980 F.2d 1320, 1325-26 (9th Cir. 1992);

Dietary Supplemental Coalition, Inc. v. Sullivan, 978 F.2d

560, 562, 564 (9th Cir. 1992); Western Oil & Gas Association, 905 F.2d at 1291; Winter, 900 F.2d at 1325. However,

Verizon has alleged the loss of customers, which is not mere

financial loss. See Midcoast Interstate Transmission, Inc. v.

Federal Energy Regulatory Commission, 198 F.3d 960, 969-

70 (D.C. Cir. 2000) (holding that the petitioners for review of

agency orders were sufficiently aggrieved from the resulting

loss of customers that their claims were ripe for judicial

review). 

Further, to the extent Verizon’s alleged harm can be characterized as mere financial loss, although we have often

repeated the refrain that mere financial loss is insufficient to

establish hardship, none of the cases cited above turn on the

fact that the loss was merely financial. Indeed, I have found

only two cases in which we held that claims were unripe for

judicial review at least in part because the harm was mere

financial loss, both of which are readily distinguishable from

the case here, either because there was no suggestion that the

financial loss was uncompensable or because the challenged

action was otherwise not ripe for judicial review. State of California, Department of Education v. Bennett, 833 F.2d 827,

833-34 (9th Cir. 1987) (holding unripe for judicial review the

California Department of Education’s claim that Bennett was

without authority to charge prejudgment interest on misapplied Title I funds because “the harm that is presaged is limited to financial expense,” but there, in the event that the

California Department of Education ultimately prevailed, it

would suffer no harm because it would not be required to pay

the prejudgment interest); Hawaiian Electric Co. v. United

7856 VERIZON v. PEEVEY
States Environmental Protection Agency, 723 F.2d 1440,

1445 (9th Cir. 1984) (“HECO’s alleged financial hardship . . .

is insufficient to outweigh the inappropriateness of the issues

for judicial resolution.”). Moreover, we have held that agency

action that delayed indefinitely “recover[y] in tort” and “reimbursement for . . . compensation payments” “creat[ed] a practical hardship” sufficient to render a claim ripe for judicial

review. Chavez v. Director, Office of Workers Compensation

Programs, 961 F.2d 1409, 1415-16 (9th Cir. 1992). 

Finally, that the alleged harm here is uncompensable by

means of the true-up is significant. The refrain regarding

financial loss repeated in each of these cases was first uttered

by the Supreme Court in Abbott Laboratories. There, the

Supreme Court agreed with an argument advanced by the

government that “ ‘mere financial expense’ is not a justification for pre-enforcement judicial review,” holding that “possible financial loss is not by itself a sufficient interest to sustain

a judicial challenge to governmental action.” Abbott Laboratories, 387 U.S. at 153 (emphasis added). That mere financial

loss would not typically justify pre-enforcement judicial

review is not at all surprising because typically “adequate

compensatory or other corrective relief will be available at a

later date, in the ordinary course of litigation.” See Los Angeles Memorial Coliseum Commission v. National Football

League, 634 F.2d 1197, 1202 (9th Cir. 1980) (quoting Sampson v. Murray, 415 U.S. 61, 90 (1974)); cf. Toilet Goods

Association, 387 U.S. at 164-65 (holding that the challenge to

administrative action was not ripe for judicial review in part

because “no irremediable adverse consequences [would] flow

from requiring a later challenge to this regulation”). There is

no reason to conclude that is the case here.7

7

In so concluding, I do not assume that the statutory provisions providing for federal review of “determination[s]” by state utilities preclude

relief in the form of damages. See Verizon Maryland Inc. v. Public Service

Commission of Maryland, 535 U.S. 635, 643-44, 647-48 (2002) (holding

that the provision for federal review of “determination[s]” by state utilities

VERIZON v. PEEVEY 7857
2. Procedural Context 

The resolution of the appeal, then, must turn on whether

Verizon’s allegations were sufficient to support its claim of

hardship or, rather, whether the district court was correct to

dismiss Verizon’s claims in the absence of evidence of Verizon’s hardship. Before considering this question, however,

three preliminary points must be made regarding the procedural context in which the district court’s orders were rendered. 

First, at no point did the CPUC nor the intervenors file a

cross-motion for summary judgment nor a motion to dismiss.

in 47 U.S.C. § 252(e)(6) neither limits the general grant of jurisdiction in

28 U.S.C. § 1331 nor “places [any] restriction on the relief a court can

award”); BellSouth Telecommunications, Inc. v. Georgia Public Service

Commission, 400 F.3d 1268, 1271 (11th Cir. 2005) (affirming the district

court’s judgment against a state utilities commission for damages that

BellSouth Telecommunications suffered as a result of the commission’s

prior unlawfully established rates). Rather, I note only that the question of

whether sovereign immunity would preclude Verizon from suing the

CPUC for damages is very much unsettled. Compare MCI Telecommunication Corp. v. Bell Atlantic-Pennsylvania, 271 F.3d 491, 509-13 (3d Cir.

2001) (holding that states waive their sovereign immunity by voluntarily

participating in the scheme established by the Act), AT&T Communications v. BellSouth Telecommunications Inc., 238 F.3d 636, 643-47 (5th

Cir. 2001) (same), MCI Telecommunications Corp. v. Illinois Bell Telephone Co., 222 F.3d 323, 338-44 (7th Cir. 2000) (same), MCI Telecommunications Corp. v. Public Service Commission of Utah, 216 F.3d 929, 935-

39 (10th Cir. 2000) (same), US West Communications, Inc. v. TCG Seattle, 971 F. Supp. 1365, 1368-70 (W.D. Wash. 1997) (same), with Bell

Atlantic Maryland, Inc. v. MCI WorldCom, Inc., 240 F.3d 279, 290-94

(4th Cir. 2001) (holding that states do not waive their sovereign immunity

by participating in the scheme established by the Act), vacated on other

grounds sub nom. Verizon Maryland Inc. v. Public Service Commission of

Maryland, 535 U.S. 635 (2002), GTE North, Inc. v. Strand, 209 F.3d 909,

922 n.6 (6th Cir. 2000) (“[I]t is virtually certain that a state utility commission’s decision to accept regulatory authority under the [Act] cannot legitimately be construed as a valid waiver of sovereign immunity.”). 

7858 VERIZON v. PEEVEY
Second, in their brief in opposition to Verizon’s motion for

partial summary judgment, neither the intervenors nor apparently the CPUC presented any evidence contradicting Verizon’s claims of irreparable harm. Further, in its reply brief in

support of its motion, Verizon specifically reserved the opportunity to make a showing that Verizon had suffered and would

continue to suffer irreparable harm if the district court deemed

such a showing necessary. 

Third, once the district court denied in part Verizon’s

motion for summary judgment and dismissed Verizon’s first

two claims, Verizon had no meaningful opportunity to present

evidence to substantiate its claim of hardship. The district

court’s order dismissing Verizon’s first two claims in no way

invited Verizon to submit evidence that its remaining claims

were ripe. Rather, the district court held that “[i]t appears that

the Court’s ruling on ripeness grounds also forecloses Plaintiff’s remaining three causes of action,” but permitted Verizon

to file “a written response demonstrating why its remaining

three claims should not be dismissed following the Court’s

ripeness ruling.” Verizon California, Inc. v. Peevey, No. C03-

2838 THE, slip op. at 6-7 (N.D. Cal. Jan. 13, 2004) (emphasis

added). In other words, the district court was inviting Verizon

to demonstrate why the district court’s reasoning as to the first

two claims was not also applicable to the remaining three

claims. Further, even if Verizon did take the opportunity to

present evidence, that would not have impacted the district

court’s ruling as to the first two claims. The court never suggested that it would reconsider its dismissal of the first two

claims.

Thus, at the time the district court denied Verizon’s motion

for partial summary judgment and dismissed Verizon’s first

two claims, Verizon had repeatedly alleged irreparable harm,

and neither the CPUC nor the intervenors had filed a dispositive motion nor introduced evidence to the contrary. Further,

once the district court denied Verizon’s motion for partial

VERIZON v. PEEVEY 7859
summary judgment and dismissed Verizon’s first two claims,

Verizon had no meaningful opportunity to present evidence.

3. The District Court’s Order

In denying Verizon’s motion for partial summary judgment

and dismissing Verizon’s first two claims (and, later, the

remainder of Verizon’s complaint), the district court first held

as a matter of law that Verizon’s allegations of irreparable

harm were irrelevant. As the district court stated: “The only

discernible difference between this case and US West v. MFS

appears to be that US West admitted that its concerns would

be resolved by the pending true-up, whereas Verizon disputes

this issue. The Court is unconvinced that this difference is

material.” The district court then held in the alternative that

even if US West did not control the case, the court would still

hold that Verizon’s claims were not ripe for judicial review

because “possible financial loss is not sufficient to establish

hardship” and Verizon’s arguments regarding loss of customers “rests on pure speculation, and such speculative harm does

not constitute irreparable injury.” Id. at 4-6. 

The district court’s first holding was error, as explained in

Part I above. Indeed, I can think of no more of a material difference to ripeness analysis than that US West stipulated it

could recover its claimed damages through a true-up while

Verizon claims it cannot, and the CPUC agrees with Verizon.

The district court’s alternative holding likewise was error. As

detailed in Part II.B.1 above, Verizon has alleged that its harm

is not compensable through the true-up. This harm, as

pleaded, is direct and immediate rather than contingent on

future events and thus potentially temporary or speculative.

Further, as pleaded, it is cognizable as hardship even to the

extent resulting from the setting of rates as opposed to other

conduct, and even to the extent limited to mere financial loss.

This is sufficient to warrant judicial review, given the procedural posture of the case, as detailed in Part II.B.2 above.

“The question of ripeness, like other challenges to a court’s

7860 VERIZON v. PEEVEY
subject matter jurisdiction, is treated as a motion to dismiss

under Rule 12(b)(1),” and, thus, “[i]t is the burden of the complainant to allege facts demonstrating the appropriateness of

invoking judicial resolution of the dispute.” 15 Moore’s Federal Practice § 101.73[1] (2005) (emphasis added).8

Thus, in Gardner v. Toilet Goods Association, 387 U.S.

167, 168-70 (1967), a companion case to Abbott Laboratories, Toilet Goods Association challenged regulations promulgated by the Secretary of Health, Education and Welfare and

sued for injunctive and declaratory relief. The Secretary

moved to dismiss on ripeness grounds, the district court

denied the motion, and the Second Circuit affirmed. Id. at

170-71 & n.1. The Supreme Court likewise affirmed, id. at

170, holding in relevant part: “We cannot say on this record

that the burden of [compliance with the regulations at issue]

is other than substantial, accepting, as we must on a motion

to dismiss on the pleadings, the allegations of the complaint

and supporting affidavits as true.” Id. at 172 (emphasis

added). 

Likewise, in Midcoast Interstate Transmission, Inc., Midcoast petitioned for review of the Federal Energy Regulatory

Commission’s (“FERC”) orders granting Southern Natural

Gas Company’s (“Southern”) application to construct a natural gas pipeline and, as is relevant here, FERC’s order that

Southern could recover the cost of the new pipeline construction through “rolled-in” rather than “incremental” pricing.

Midcoast Interstate Transmission, Inc., 198 F.3d at 963-64. In

rolled-in pricing, “the cost of the new facilities are added to

the pipeline’s total rate base and reflected in rates charged to

all customers system-wide,” whereas in incremental pricing,

“an additional charge [is imposed] solely [on those] customers

who are directly served by the expansion facilities.” Id. at

8

I emphasize that in reaching these conclusions, I do not rely on any of

the evidence that Verizon submitted in connection with its appeal without

first having submitted it to the district court. 

VERIZON v. PEEVEY 7861
964. Midcoast claimed that FERC’s approval of rolled-in

rates ignored the agency’s own policy and precedent, id., and

contended that “but for that determination, it would not be

faced with the loss of the Cities’ business upon completion of

the North Alabama Pipeline.” Id. at 969. Midcoast reasoned

that had FERC required incremental pricing, Southern’s rates

for users of the North Alabama Pipeline would have been so

high relative to the rates that Midcoast proposed to charge for

a competing project that FERC would not have authorized the

construction of Southern’s North Alabama Pipeline. Id.

The D.C. Circuit — which, I note, has particular expertise

in administrative law — held: 

If [Midcoast’s] claim survives analysis, there can be

no question that Midcoast has suffered a certain,

concrete injury that satisfies both the statutory

and constitutional requirements for judicial review. 

Whether Midcoast is aggrieved is a question of fact;

and where they are in dispute, a court must assume

the correctness of the challenging party’s version of

the facts. . . . 

. . . . Midcoast has presented facts which, if correct,

fully support a finding that it has been aggrieved by

the pricing determination. . . . 

Accepting, as we must for purposes of our analysis,

the accuracy of Midcoast’s calculation of the incremental rate Southern would be required to charge,

we are satisfied that Midcoast has been aggrieved.

As a direct consequence of the agency’s action and

irrespective of the outcome of a future rate proceeding, Midcoast will have lost the Cities’ business

from the moment the North Alabama Pipeline begins

deliveries of natural gas until the time that the Cities

7862 VERIZON v. PEEVEY
are released from their obligations under the Southern contracts. . . .

It is for this reason that we also find the issue ripe

for review. . . . Because Midcoast faces an imminent

loss irrespective of the outcome of a future rate proceeding, there can be no question that the Commission’s pricing determination is ripe for review under

the classic test established in Abbott Laboratories v.

Gardner, 387 U.S. 136, 149, 87 S.Ct. 1507, 18

L.Ed.2d 681 (1967): the legality of the rolled-in pricing determination is fit for immediate judicial decision, and the hardship faced by Midcoast is

indisputable. 

Id. at 969-70 (emphases added). 

Similarly, in City of New Orleans v. Federal Energy Regulatory Commission, 67 F.3d 947, 948 (D.C. Cir. 1995), the

City of New Orleans and Entergy challenged an order by

FERC allowing Entergy to spin-off two electricity generating

plants because the order addressed the “prudence” of the spinoff only as to its current effect on rates up until such time as

the utility system would need to purchase new capacity.

FERC argued that the petitioners were not yet “aggrieved”

parties, id. at 952, but the D.C. Circuit disagreed:

The challenging parties assert that the transfer will

aggrieve them eventually in the form of unreasonable rates, and so was not prudently entered into. If

they are correct, as we must assume them to be for

purposes of determining their aggrievement, they

had a right to a review of FERC’s decision on the

prudence of the transaction in terms of its effect on

ratepayers. 

Id. (emphasis added). 

VERIZON v. PEEVEY 7863
Verizon indisputably “allege[d] facts demonstrating the

appropriateness of invoking judicial resolution of the dispute,” 15 Moore’s Federal Practice § 101.73[1] (2005), as

detailed in Part II.B.1 above. Nor, as detailed in Part II.B.2

above, did the CPUC nor the intervenors file a cross-motion

for summary judgment nor even proffer evidence in responding to Verizon’s motion for partial summary judgment that

might have obliged Verizon to substantiate its allegations. In

this procedural context and particularly given Verizon’s specific reservation of the opportunity to present evidence should

the district court desire, the district court’s sua sponte dismissal was error. Accordingly, I join with the majority in

vacating the district court’s orders denying Verizon’s motion

for partial summary judgment and dismissing Verizon’s complaint, and remanding with instructions that the district court

consider on the merits whether Verizon is entitled to the

declaratory and injunctive relief (and the costs and attorneys’

fees) that it seeks.

7864 VERIZON v. PEEVEY