Court Opinion

ID: 7016638
Source: CourtListenerOpinion
Date Created: 2022-07-24 04:23:07.64144+00
Date Added: 2024-06-11T16:10:24.667197
License: Public Domain

BARKETT, Circuit Judge:
In this appeal we were originally asked to review two orders of the Georgia Public Service Commission (the “GPSC”), which interpreted the contract between Bell-South Telecommunications, Inc. (“Bell-South”) and MCImetro Access Transmission Services, Inc. (“MCImetro”), and the contract between BellSouth and World-Com Technologies, Inc. (“WorldCom”). Both contracts were interconnection agreements mandated by the Federal Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (1996) (“FTCA”). The GPSC was asked to interpret the meanings of provisions in each contract which established reciprocal compensation rates for local telephone traffic.1 BellSouth claimed that calls made to internet service providers (“ISPs”) could not be considered “local traffic” subject to reciprocal com*1273pensation under the contracts. MCImetro and WorldCom both claimed that such calls were “local” and therefore subject to reciprocal compensation. They demanded payment under their respective contracts and sought relief before the GPSC. The GPSC determined that calls to ISPs were “local traffic” under the contracts and thus reciprocal compensation must be paid by BellSouth. BellSouth then commenced an action in the district court, asserting that the GPSC decision was contrary to federal law and claiming that the district court had jurisdiction under 47 U.S.C. § 252(e)(6) and 28 U.S.C. § 1331. The district court affirmed the GPSC’s order and BellSouth appealed. A split panel of this court did not reach the merits of the appeal, reversing the district court’s order on the grounds that there was no statutory authority for the GPSC to interpret and enforce these interconnection agreements in the first instance.
A majority of the judges in active service granted the petition for rehearing en banc filed by MCImetro Access Transmission Services and WorldCom Technologies and vacated the panel opinion in this case. We now address, en banc, the appropriateness of the GPSC’s order and the extent of federal jurisdiction over challenges to that order.
Discussion
To address the natural monopoly in place in the telecommunications industry and promote competition in local telephone service, Congress passed the FTCA in 1996. Pub. L. No. 104-104, 110 Stat. 56. Its regulatory scheme was designed to counteract the deterrence of competition inherent in the high, fixed initial cost of telephone service and the need for all customers to interconnect with one another. Thus, in order to open intrastate telephone markets to competition, it required incumbent Local Exchange Carriers (“ILECs”), such as BellSouth, to share access to loops and exchanges with competing LECs (“CLECs”), like MCImetro and WorldCom. 47 U.S.C. § 251(a)(1).2 The FTCA further required ILECs and CLECs that are sharing resources to “establish reciprocal compensation arrangements for the transport and termination of telecommunications.” 47 U.S.C. § 251(b)(5).3 These agreements were to be submitted for approval or rejection to the state public service commission and, in making this determination, the commissions were to consider several specific factors. 47 U.S.C. § 252(e) provides:
(e) Approval by State commission.
(1) Approval required.
Any interconnection agreement adopted by negotiation or arbitration shall be submitted for approval to the State commission. A State commission to which an agreement is submitted shall approve or reject the agreement, with written findings as to any deficiencies.
(2) Grounds for rejection.
The State commission may only reject— (A) an agreement (or any portion thereof) adopted by negotiation under subsection (a) of this section if it finds that—
(i) the agreement (or portion thereof) discriminates against a telecommunications carrier not a party to the agreement; or
(ii) the implementation of such agreement or portion is not consistent with *1274the public interest, convenience, and necessity; or
(B) an agreement (or any portion thereof) adopted by arbitration under subsection (b) if it finds that the agreement does not meet the requirements of section 251 [47 U.S.C. § 251], including the regulations prescribed by the Commission pursuant to section 251 [47 U.S.C. § 251], or the standards set forth in subsection (d) of this section.
(3) Preservation of authority.
Notwithstanding paragraph (2), but subject to section 253 [47 USC § 253], nothing in this section shall prohibit a State commission from establishing or enforcing other requirements of State law in its review of an agreement, including requiring compliance with intrastate telecommunications service quality standards or requirements.
(4) Schedule for decision.
If the State commission does not act to approve or reject the agreement within 90 days after submission by the parties of an agreement adopted by negotiation under [47 U.S.C. § 252(a)], or within 30 days after submission by the parties of an agreement adopted by arbitration under [47 U.S.C. § 252(b) ], the agreement shall be deemed approved. No State court shall have jurisdiction to review the action of a State commission in approving or rejecting an agreement under this section.
(5) Commission to act if State will not act.
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 Commission 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.
(6)Review of State commission actions. In a case in which a State fails to act as described in paragraph (5), the proceeding by the Commission under such paragraph and any judicial review of the Commission’s actions shall be the exclusive remedies for a State commission’s failure to act. In any case in which a State commission makes a determination under this section, 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 this section.
While § 252 expressly gives state commissions authority to approve or reject interconnection agreements, the statute does not specifically say that this empowerment includes the interpretation and enforcement of interconnection agreements after their initial approval. We agree with all the parties before us, however, that a common sense reading of the statute leads to the conclusion that the authority to approve or reject agreements carries with it the authority to interpret agreements that have already been approved. We find further support for this conclusion in the recent decision of the Supreme Court in Verizon Md., Inc. v. PSC, 535 U.S. 635, 122 S.Ct. 1753, 152 L.Ed.2d 871 (2002), in the decisions of all other circuit courts to have considered the question, and in the determination of the Federal Communications Commission, (“ FCC”), which is entitled to deference in the interpretation of the pertinent statute. See In re Starpower, 15 F.C.C.R. 11277, ¶ 6, at 1129-80, 2000 WL 767701 (2000).
The Verizon case involved a public service commission order like the one before *1275us that had resolved the question of whether calls made to an ISP could be considered “local calls” subject to reciprocal compensation pursuant to the interconnection agreement of the parties. While the procedural posture of Verizon differs from that of the case at bar, the Verizon case arose from a set of facts identical to those here: In Verizon, WorldCom and Verizon had negotiated an interconnection agreement that had been approved by the Maryland Public Service Commission (the “MPSC”). Several months after the interconnection agreement had been approved, Verizon refused to pay WorldCom for calls made to ISPs. WorldCom filed a complaint with the MPSC. The MPSC determined that, as a matter of state contract law, ISP calls were compensable local traffic under the interconnection agreement between Verizon and WorldCom. Verizon sued the MPSC in federal district court, asserting jurisdiction under 47 U.S.C. § 252(e)(6) and 28 U.S.C. § 1331. Verizon claimed that the MPSC order violated the FTCA and a ruling of the FCC. The district court dismissed the action without reaching the merits, holding that neither the FTCA nor 28 USC § 1331 gave it jurisdiction over Verizon’s claims against private defendants. The Fourth Circuit affirmed. The Supreme Court granted certiorari, addressing the question of “whether federal district courts have jurisdiction over a telecommunication carrier’s claim that the order of a state utility commission requiring reciprocal compensation for telephone calls to [ISPs] violates federal law.” Verizon, 122 S.Ct. at 1754. The Court reversed the Fourth Circuit and held that the federal district court had jurisdiction under 28 U.S.C. § 1331 to review the state utility commission’s interpretation of the interconnection agreement at issue. Id. at 1761. Because it found jurisdiction under 28 U.S.C. § 1331, the Court did not decide whether there was also jurisdiction under § 252(e)(6). The determination that the district court did have jurisdiction to review the MPSC’s order interpreting the interconnection agreement assumed that the state utility commission had the authority to interpret the interconnection agreements in the first instance. The Court noted that the “parties dispute whether it is in fact federal or state law that confers this authority, but no party contends that the Commission lacked jurisdiction to interpret and enforce the agreement.” Id. at 1758 n. 2.
Other circuits have expressly recognized state commissions’ authority to interpret the interconnection agreements at issue. In Bell Atl. Md., Inc. v. MCI WorldCom, 240 F.3d 279, 304 (4th Cir.2001), the court noted that: “The critical question is not whether State commissions have authority to interpret and enforce interconnection agreements — we believe they do — but whether these decisions are to be reviewed by State courts or federal courts.” As noted, the Fourth Circuit’s determination that federal courts did not have authority to hear challenges to the decision of the MPSC was vacated by the Supreme Court in Verizon, 122 S.Ct. at 1761. The Fifth Circuit, in Southwestern Bell Tel. Co. v. PUC, 208 F.3d 475, 479-80 (5th Cir.2000), noted that “the Act’s grant to the state commissions of plenary authority to approve or disapprove these interconnection agreements necessarily carries with it the authority to interpret and enforce the provisions of agreements that state commissions have approved.” In Southwestern Bell Tel. Co. v. Brooks Fiber Communs. of Okla., Inc., 235 F.3d 493, 497 (10th Cir.2000), the court deferred to the FCC’s conclusion that state commissions have the authority to interpret and enforce interconnection agreements. In Puerto Rico Tel. Co. v. Telecommunications Regulatory Bd., 189 F.3d 1, 10-13 (1st Cir.1999), the court held that there was no jurisdiction over a dispute between an ILEC and *1276a CLEC regarding whether long-distance charges applied to certain cellular calls,4 but did not question the state commission’s authority to resolve the dispute.5 In Illinois Bell Tel. Co. v. Worldcom Techs., Inc., 179 F.3d 566, 573 (7th Cir.1999), the court stated that, in deciding a dispute between a CLEC and an ILEC over whether ISP calls were local traffic, the state commission “was doing what it is charged with doing in the Act and in the FCC ruling. It was determining what the parties intended under the agreements.” Finally, in Iowa Util. Bd. v. F.C.C., 120 F.3d 753, 804 (8th Cir.1997), the court commented that “state commissions retain the primary authority to enforce the substantive terms of the agreements made pursuant to sections 251 and 252.” Iowa Utilities was reversed in part on other grounds by AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 385, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999), which held that, under the FTCA, the FCC has authority to “design a pricing methodology” and to promulgate rules regarding various other matters.
No court has held or suggested that a state commission does not have the authority to interpret and enforce interconnection agreements after they have been approved. Moreover, the entity charged with the implementation of the FTCA, the FCC, has clearly stated that state commissions have the authority to interpret interconnection agreements. In re Starpower, 15 F.C.C.R. 11277. In Starpower, the FCC held that a determination of whether ISP traffic was subject to reciprocal compensation under an interconnection agreement was a determination that a state commission was required to make under § 252(e)(5). Id. In that case, Starpower Communications had asked the FCC to preempt the jurisdiction of the Virginia State Corporation Commission (“Virginia Commission”) to resolve disputes over interconnection agreements between Star-power and Bell Atlantic Virginia and GTE South. Id. As in this case, the dispute in Starpower was over whether calls to ISPs were local calls. Id. Starpower filed petitions with the Virginia Commission against Bell Atlantic and GTE, seeking compensation under the interconnection agreements for calls made to ISPs. Id. The Virginia Commission declined jurisdiction in both of Starpower’s actions. Id. Starpower then petitioned the FCC to hear its complaint. Id. Because the Virginia State Corporation Commission had failed to make a determination concerning the dispute over ISP traffic, the FCC assumed jurisdiction of the dispute.6 Id. at 11278. In determining whether to take jurisdiction, the FCC stated that it “must first determine whether a dispute arising from interconnection agreements and seeking interpretation and enforcement of those agreements is within the states’ ‘responsibility’ under section 252.” Id. at 11279. The FCC decided that interpretation and enforcement of interconnection agreements were responsibilities of the states under section 252, citing Southwestern Bell, 208 F.3d 475 and Illinois Bell, 179 F.3d 566 for support. Id.7
*1277Under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), agency determinations are entitled to due deference if (1) the statute is silent or ambiguous with respect to the issue at hand and (2) “the agency’s answer is based on a permissible construction of the statute.” Id. at 843, 104 S.Ct. 2778. “A court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency.” Id. at 844, 104 S.Ct. 2778. Although the FCC’s ruling in Star-power relied on federal court decisions that were based on a vacated FCC ruling, the FCC also pointed out, approvingly, that the courts had based their decisions on a recognition that “due to its role in the approval process, a state commission is well-suited to address disputes arising from interconnection agreements.” Starpower, 15 FCC Red. at 11280. This observation of the state commissions’ suitability for the interpretation of interconnection agreements is not unreasonable, nor is it contrary to the language of the statute.8
Moreover, the language of § 252 persuades us that in granting to the public service commissions the power to approve or reject interconnection agreements, Congress intended to include the power to interpret and enforce in the first instance and to subject their determination to challenges in the federal courts. Section 252(e)(6) gives federal courts jurisdiction to review “determinations” made by state commissions. 47 U.S.C. § 252(e)(6). In contrast, § 252(e)(4) abrogates state court jurisdiction “to review the action of a State commission in approving or rejecting an agreement under this section.” 47 U.S.C. § 252(e)(4). The use of the word “determination” in § 252(e)(6) rather than a specific reference to the approval or rejection of agreements leads us to believe that Congress did not intend to limit state commissions’ authority to the mere approval and rejection of agreements. See Russello v. United States, 464 U.S. 16, 23, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983) (“[Where] Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.”) (quoting United States v. Wong Kim Bo, 472 F.2d 720, 722 (5th Cir.1972)). It is reasonable to read the grant of authority in 252(e) as encompassing the interpretation of agreements, not just their approval or rejection.
Given the extensive federal regulation of interconnection agreements and the role state commissions play in their formation, it would be illogical to say that the GPSC's interest in an interconnection agreement is extinguished as soon as the agreement is approved, and that the agreement should thereafter be treated as any other contract.9 At least one circuit has described state commissions as “deputized federal regulator[s]” authorized to exercise regula*1278tory power and ensure compliance with federal law as set out in the FTCA. MCI Telcoms. Corp. v. Illinois Bell Tel. Co., 222 F.3d 323, 344 (7th Cir.2000). Interconnection agreements are tools through which the FTCA enforced. Thus, it is consistent with the FTCA to have state commissions interpret contracts and subject their interpretations to federal review in the district courts.
Additionally, the Supreme Court has specifically held in Verizon that federal courts have jurisdiction under 28 U.S.C. § 1331 to hear challenges to the orders of state public service commissions interpreting interconnection agreements exactly like the one before us. 122 S.Ct. at 1761. Section 1331 provides that “the district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. There is no question that the controversy before us arises under the FTCA and that all of the public service commission’s decisions are permeated by federal questions. For example, § 252(e)(2)(A)(ii) requires public service commissions to interpret negotiated agreements prior to approval to ensure that they are “consistent with the public interest, convenience, and necessity.” 47 U.S.C. § 252(e)(2)(A)(ii). After an agreement is approved, each party to the agreement is required to “make available any interconnection, service, or network element provided under [the agreement] to any other requesting telecommunications carrier upon the same terms and conditions as those provided in the agreement.” 47 U.S.C. § 252(i).
The resolution of each issue need not depend completely upon an interpretation of federal law. For purposes of 28 U.S.C. § 1331 jurisdiction, all that is required is that there be an arguable claim arising under federal law. As the Supreme Court said in Verizon:
“It is firmly established in our cases that the absence of a valid (as opposed to arguable) cause of action does not implicate subject-matter jurisdiction, i.e., the court’s statutory or constitutional power to adjudicate the case.” ... As we have said, “the district court has jurisdiction if ‘the right of the petitioners to recover under their complaint will be sustained if the Constitution and laws of the United States are given one construction and will be defeated if they are given another,’unless the claim ‘clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or where such claim is wholly insubstantial and frivolous.’ ” ... Here, resolution of Verizon’s claim turns on whether the Act, or an FCC ruling issued thereunder, precludes the Commission from ordering payment of reciprocal compensation, and there is no suggestion that Verizon’s claim is “ ‘immaterial’ ” or “ ‘wholly insubstantial and frivolous.’ ”
122 S.Ct. at 1758-59.
In this case, as in Verizon, the complaint alleges that the GPSC’s determination is inconsistent with the FTCA and its implementing regulations and also argues that the GPSC erred in its interpretation of the contracts. This involves the same federal question presented in Verizon. Federal courts must resolve the question of whether a public service commission’s order violates federal law and any other federal question as well as any related issue of state law under its pendent state jurisdiction. Thus, pursuant to Verizon, the Georgia Public Service Commission had the authority to interpret and enforce the interconnection agreements that it had approved in the first instance and the federal district court had jurisdiction over this case pursuant to 28 U.S.C. § 1331. Moreover, through the FTCA, Congress conferred upon the public service commissions the power to interpret and enforce the *1279interconnection agreements mandated by the FTCA and federal district courts have jurisdiction over challenges to these interpretations and enforcement orders.
CONCLUSION
For the foregoing reasons, we conclude that the Georgia Public Service Commission has the authority under federal law to interpret and enforce the interconnection agreements at issue between the parties and that its determination is subject to review in the federal courts. We refer all other issues to a panel of this Court and instruct the Clerk of the Court to assign this case to the next available oral argument panel to resolve the merits of this case.

. The term "reciprocal compensation rates” simply means that Carrier A would pay Carrier B for any calls made by a Carrier A customer that terminated in Carrier B's network, and vice-versa.

. "Each telecommunications carrier has the duty to interconnect directly or indirectly with the facilities and equipment of other telecommunications carriers.” 47 U.S.C. 251(a)(1).

. "Each local exchange carrier has ... [t]he duty to establish reciprocal compensation arrangements for the transport and termination of telecommunications.” 47 U.S.C. 251(b)(5).

. The plaintiffs in Puerto Rico did not allege a violation of federal law, and the parties did not assert 28 U.S.C. § 1331 as a basis for jurisdiction.

. The court expressly mentioned ''post-approval/rejection determinations” and proceeded to discuss the district court's jurisdiction to review these, not the state commission’s authority to make them. Id.

."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 ... 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.” 47 U.S.C § 252(e).

.The cited decisions relied on an FCC ruling *1277that was subsequently vacated.

. An agency's interpretation of a statute is unreasonable and thus does not merit deference if it is "arbitrary, capricious, or clearly contrary to law." Alabama Power Co. v. FERC, 22 F.3d 270, 272 (11th Cir.1994) (citing Chevron, 467 U.S. at 844, 104 S.Ct. 2778).

. A state commission's authority to approve or reject an interconnection agreement would itself be undermined if it lacked authority to determine in the first instance the meaning of an agreement that it has approved. A court might ascribe to the agreement a meaning that differs from what the state commission believed it was approving-indeed, the agreement as interpreted by the court may be one the state commission would never have approved in the first place. To deprive the state commission of authorily to interpret the agreement that it has approved would thus subvert the role that Congress prescribed for state commissions.