Opinion ID: 3032515
Heading Depth: 4
Heading Rank: 2

Heading: The Challenged Action Is Final

Text: 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 VERIZON v. PEEVEY 7847 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 . 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. 7848 VERIZON v. PEEVEY 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, VERIZON v. PEEVEY 7849 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. 7850 VERIZON v. PEEVEY 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.