FOR THE
Argued
No. 01-1192
Global NAPS, Inc.,
Petitioner
v.
Federal
Communications Commission and
Respondents
Verizon Telephone
Companies, et al.,
Intervenors
On Petition for
Review of Orders of the
Federal
Communications Commission
Christopher W.
Savage argued the cause and filed the briefs for petitioner.
Lisa E. Boehley,
Counsel, Federal Communications Commission, argued the cause for
respondents. With her on the brief were
John Rogovin, Deputy General Counsel, Richard K. Welch, Associate General
Counsel, John E. Ingle, Deputy Associate General Counsel, Catherine G. O'Sullivan,
and Robert J. Wiggers, Attorneys, U.S. Department of Justice. Nancy C. Garrison, Attorney, entered an
appearance.
Aaron M. Panner
argued the cause for intervenors. With
him on the brief were Mark L. Evans, Michael E. Glover, Edward H. Shakin, and
Lawrence W. Katz.
Before: Edwards, Rogers, and Tatel, Circuit Judges.
Opinion for the
Court filed by Circuit Judge Edwards.
Edwards, Circuit
Judge: The Telecommunications Act of
1996, Pub. L. No. 104-104 (Feb. 8, 1996), requires the Federal Communications
Commission ("FCC") to preempt the jurisdiction of any state
regulatory commission that "fails to act to carry out its
responsibility" to approve or reject interconnection agreements entered
into by local exchange carriers ("LECs"). 47 U.S.C. § 252(e)(5). In this case, Global NAPs, Inc.
("GNAPs"), a LEC providing local exchange services in
The disputed
GNAPs-Verizon agreement provides that the carriers shall pay "reciprocal
compensation" to one another for carrying and completing local calls made
by customers of one company to customers of the other. Many of GNAPs' customers are Internet Service
Providers ("ISPs"), who need telephone connections to provide their
own customers with dial-up Internet access.
However, the agreement does not specify whether calls made to ISPs are
"local" calls for which reciprocal compensation is due. Because this question has been the source of
much debate and confusion in the telecommunications field, and because the
financial stakes are high, GNAPs sought a declaratory ruling from DTE that
ISP-bound traffic is subject to reciprocal compensation under the terms of its
agreement with Verizon. After waiting
for the state agency to act on this request for nearly eight months, GNAPs
filed a petition with the FCC, asking the federal Commission to preempt DTE's
jurisdiction and resolve the issue itself.
Before the FCC
responded to this request, DTE issued an order dismissing GNAPs' claim as moot
in light of the state agency's decision that ISP-bound calls were not local
within the meaning of an identically worded interconnection agreement between
Verizon and MCI WorldCom. In light of
DTE's dismissal, the FCC concluded that the state commission had not
"fail[ed] to act to carry out its responsibility" under § 252 and,
therefore, that preemption was not warranted.
GNAPs now petitions for review of the FCC decision, arguing that the FCC
misunderstood its obligations under § 252(e)(5), which, the company insists,
compels the Commission to adjudicate the issue that DTE found to be moot. We reject the petition for want of merit.
We hold that the
FCC's conclusion that § 252(e)(5) does not empower it to look behind a state
agency's dismissal of a carrier's claim to evaluate the substantive validity of
that dismissal is both a reasonable interpretation of that provision and
consistent with the Commission's past practices and precedents. It is clear that DTE believed that it was
conclusively resolving the issue of whether GNAPs had a right to compensation
from Verizon for the costs associated with completing calls made to ISPs. It does not matter whether the state agency's
position is correct on the merits.
Rather, as the FCC found, what matters is that DTE did not fail to act,
so the federal Commission has no basis upon which to preempt the regulatory
authority of the state agency. GNAPs'
remedy lies not in FCC preemption, but rather in judicial review of DTE's
order, whether in federal or in state court.
I. Background
GNAPs is a
competitive LEC that provides local telephone service in several eastern
states, including
By the terms of
the agreement, this reciprocal compensation obligation applies only to the
"the transport and termination of Local Traffic," that is, to calls
both originated and terminated in
The issue
appeared settled until February 1999, when the FCC issued an order holding that
calls made to ISPs would be considered as nonlocal for purposes of the
Commission's rules regulating reciprocal compensation. See In re Implementation of the Local Competition
Provisions in the Telecommunications Act of 1996, Intercarrier Compensation for
ISP-Bound Traffic, 14 F.C.C.R. 3689 (Feb. 26, 1999) ("Reciprocal
Compensation Order"), vacated, Bell Atlantic Tel. Cos. v. FCC, 206 F.3d 1
(D.C. Cir. 2000). However, the FCC's
Reciprocal Compensation Order left open the possibility that state regulators
(such as DTE) could continue to treat ISP-bound traffic as local traffic, if
interconnection agreements between carriers so provided, whether explicitly or
implicitly. See Verizon Md. Inc. v.
Public Serv. Comm'n of
In the wake of
the Reciprocal Compensation Order, Verizon asked DTE to reverse its October
1998 Order, and hold that Verizon was no longer obligated to compensate other
carriers for ISP-bound calls. The
company then stopped making such payments to GNAPs. GNAPs responded to this development in two
ways. First, it filed a new tariff with
the FCC in which it sought to impose a $.008 per minute charge on the delivery
of all ISP-bound calls for which GNAPs did not receive compensation under an
existing interconnection agreement.
Verizon refused to pay, and challenged the validity of the tariff before
the FCC. The Commission declared the
tariff unlawful and void ab initio, a decision eventually affirmed by this
court. See Global NAPs, Inc. v. FCC, 247
F.3d 252 (D.C. Cir. 2001). Second, on
On
DTE, however, did
nothing in response to that complaint in the subsequent months. Finally, on
In addition, we hereby dismiss as moot the Motion for Complaint
of GNAPs in D.T.E. 99-39. As noted
above, in its Motion for Complaint, GNAPs sought a declaratory ruling from the
Department that, under the terms of its interconnection agreement with
[Verizon], GNAPs should be compensated for terminating ISP-bound traffic from
[Verizon] customers. The operative
provisions of GNAPs' agreement (i.e. the definition of local traffic and the
payment of reciprocal compensation) are in all material respects the same as
the provision in the MCI-WorldCom agreement, which were the subject of the
dispute in this proceeding (D.T.E. 97-116).
In that we have affirmed, above, our Order in D.T.E. 97-116-C concerning
this very subject, we find that the GNAPs Motion for Complaint is moot.
Complaint of MCI WorldCom, Inc., D.T.E. 97-116-D, at 20 (
Soon after DTE's
decision was released, the FCC's Common Carrier Bureau ("CCB") denied
GNAPs' petition for preemption. See In
re Global NAPs, Inc., 15 F.C.C.R. 4942 (CCB
In the end,
however, the Bureau held that, because GNAPs' complaint was no longer pending
before DTE, there was nothing for the FCC to preempt. DTE had resolved the matter, rejecting GNAPs'
complaint. See id. at p 7 (J.A.
282). Moreover, CCB explained that the
FCC's statutory preemption authority did not empower the federal agency to
examine the "underlying reasoning" supplied by DTE for its conclusion. The Bureau thus declined to look beyond DTE's
decision to question the substantive validity of the state agency's
judgment.
II. Discussion
The single issue
presented in this case is whether the FCC reasonably determined that DTE did
not "fail[ ] to act to carry out its responsibility" to adjudicate
the dispute between GNAPs and Verizon over whether ISP-bound calls are
"local" within the meaning of their interconnection agreement. Only where there is such a failure does § 252(e)(5)
obligate the Commission to step in.
Otherwise - such as where the state agency actually "makes a
determination" under § 252 - there is no statutory basis for FCC
preemption. Under such circumstances, an aggrieved party may bring an action
for judicial review in federal court under § 252(e)(6), or, if that provision
is inapplicable and there is no federal question at issue, in state court. Cf. Verizon Md., 122
Section
252(e)(6), entitled "Review of State commission actions," reads as
follows:
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 section 251 of this title and this section.
Both the plain language and structure of this provision suggest
that the remedies it authorizes are distinct and mutually exclusive. If a state commission fails to act,
preemption is a viable option; however,
if the state agency takes final action disposing of the pending claim, that
action can be undone only by direct judicial review in the appropriate
forum. And, in the present case, it does
not matter whether DTE's decision to dismiss GNAPs' complaint as moot was
reasonable. What matters is that the FCC
did not err in concluding that DTE's February 2000 Order did not constitute a
"failure to act." Therefore,
the FCC correctly held that DTE is not subject to preemption.
When DTE issued its February 2000 Order, the state agency believed that it was acting on, and disposing of, the issues raised in GNAPs' Motion for Complaint. For whatever reason, the state commission thought that upholding its May 1999 Order decided (or reconfirmed) that ISP-bound traffic was not local traffic under the Verizon-MCI WorldCom agreement, and that this determination effectively resolved the dispute between the parties to the Verizon-GNAPs agreement. Even if the state agency's dismissal was premised on faulty or incomprehensible legal reasoning, it nonetheless constituted final action disposing of GNAPs' complaint.
In the Orders now
on review, the FCC decided that it would not preempt an already completed state
proceeding, at least where doing so would require the Commission to examine the
underlying reasoning given by the state agency for terminating that
proceeding. See CCB Order, at p p 7-9
(J.A. 282-83);
The FCC's
interpretation thus suggests that only if the state commission either does not
respond to a request, or refuses to resolve a particular matter raised in a
request, does preemption become a viable option. Under this reading, the purpose of § 252(e)(5)
is to hold out the FCC as an alternative forum for the adjudication of certain
disputes related to interconnection agreements;
the statute does not authorize the Commission to sit as an appellate
tribunal to review the correctness of state resolution of such disputes. We believe that this understanding of the
preemption provision is neither incompatible with congressional intent nor
unreasonable. Instead, it seems quite
faithful to the key statutory language:
in this context, "fails to act" suggests incomplete action or
no action, not misguided action. See
Webster's Third New International Dictionary 814 (1993) (defining
"fail" when used with the infinitive as "to neglect to do
something; leave something undone; be found wanting in not doing
something").
Indeed, GNAPs'
objection here seems less to DTE's supposed inaction than to the quality of its
action. Petitioner thus focuses our
attention on the "carry out its responsibility" language in § 252(e)(5),
suggesting that these words require the FCC to take a more substantive look at
what a state commission has done before absolving itself of its duty to
preempt. See
In essence, the
Commission reasonably concluded that the "responsibility" invoked by
the statute is the state agency's responsibility to make a determination - that
is, to mediate, to arbitrate, to approve, and (possibly) to interpret and
enforce an interconnection agreement - rather than the responsibility to make a
determination that is satisfactory to all parties, or to the FCC itself. This construction, which focuses on whether
the state agency has acted, rather than on the quality of its action, is
consistent with the text and structure of the statute. This approach also allows parties frustrated
by the results from a state commission to know immediately whether to seek
preemption or judicial review, thereby saving the time and expense of
simultaneous litigation on multiple fronts.
Finally, GNAPs
contends that the FCC's holding in this case was inconsistent with the agency's
previous decisions under § 252(e)(5).
According to GNAPs, the Commission has "consistently held that it
is not bound by the mere fact that a state regulator has issued an order, or by
the mere words of such an order, in assessing whether the state regulator has
acted to carry out its responsibility with regard to a dispute."
The first
decision involved a request for preemption brought by MCI. In that case, the Commission rejected the
argument that preemption was inappropriate merely because a state agency had
issued a final arbitration order. See In
re Petition of MCI for Preemption Pursuant to Section 252(e)(5) of the
Telecommunications Act of 1996, 12 F.C.C.R. 15594, at p 32 (
In the instant
case, the claim over which GNAPs seeks preemption - the definition of
"Local Traffic" in its agreement with Verizon - was properly
presented to DTE and the state agency explicitly addressed that claim, finding
it to be moot. Accordingly, there is no
inconsistency between the FCC's refusal to preempt here and its refusal to do
so in MCI.
The second
decision to which GNAPs points involved a situation in which the FCC actually
did decide to preempt a state commission's jurisdiction. See In re Starpower Communications, LLC, Pet.
for Preemption of Jurisdiction of the Vir. State Corp. Comm'n Pursuant to
Section 252(e)(5) of the Telecommunications Act of 1996, 15 F.C.C.R. 11277 (
Starpower
concerned a preemption request brought by a LEC that had sought - and failed to
receive - a declaration from a state agency (the Virginia State Corporation
Commission) that ISP-bound traffic was local under an interconnection
agreement. The
The FCC went on
to note that, under Commission precedent, a state agency fulfills its
responsibilities under § 252(e)(5) "when it resolves the merits of a
section 252 proceeding or dismisses such a proceeding on jurisdictional or
procedural grounds."
In sum, MCI and
Starpower support the Commission's decision in this case. In neither of those prior cases did the FCC
so much as suggest that a state agency's dismissal of an issue on the merits
constitutes a failure to act. Quite the
opposite. And because DTE acted here, the
FCC's determination that it lacked the authority under § 252(e)
III. Conclusion
For the reasons
given above, we hold that the FCC's decision not to preempt DTE's jurisdiction
over GNAPs' complaint represented a reasonable interpretation of § 252(e)(5). We therefore deny the petition for review.
It is so ordered.