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BELL ATLANTIC-PENNSYLVANIA v. PENNSYLVANIA PUB. UT. COMM.

August 3, 2000

BELL ATLANTIC-PENNSYLVANIA, INC., PLAINTIFF,
V.
THE PENNSYLVANIA PUBLIC UTILITY COMMISSION, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Marvin Katz, S. Judge.

MEMORANDUM AND ORDER

Now before the court is the motion to dismiss submitted by defendants the Pennsylvania Public Utility Commission (PUC) and Commissioners John M. Quain, Robert K. Bloom, Nora Mead Brownell, and Aaron Wilson, Jr., as well as the motion for judgment on the pleadings submitted by intervening state senators Vincent J. Fumo, Roger A. Madigan, and Mary Jo White. The motions seek dismissal of this action on the grounds of Eleventh Amendment immunity or, in the alternative, abstention in light of ongoing state court proceedings. In addition, the motions seek to dismiss as untimely the crossclaims of intervenors MCI WorldCom Network Services, Inc. and MCImetro Access Transmission Services, LLC (collectively, Worldcom), and the crossclaims of intervenors AT & T Communications of Pennsylvania, Inc., TCG Pittsburgh, and TCG Delaware Valley, Inc. (collectively, AT & T). Finally, the motions seek dismissal of counts four and five of plaintiff Bell Atlantic-Pennsylvania's (Bell) complaint, as well as part of Worldcom & AT & T's claims, for failure to state a claim upon which relief can be granted.*fn1

Additional intervenors in this action are Sprint Communications Company and the United Telephone Company of Pennsylvania (collectively, Sprint), and the United States. Sprint did not take a position on either motion. The United States intervened for the purpose of defending the constitutionality of the Telecommunications Act of 1996 (TCA).

I. Background

A. Telecommunications Act of 1996

This case involves the provisions of TCA that seek to foster competition in local telecommunications services.*fn2 See 47 U.S.C. § 251-52.

Until the 1990s, local phone service was thought to be a natural monopoly. States typically granted an exclusive franchise in each local service area to a local exchange carrier (LEC), which owned, among other things, the local loops (wires connecting telephones to switches), the switches (equipment directing calls to their destinations), and the transport trunks (wires carrying calls between switches) that constitute a local exchange network.

AT & T Corp. v. Iowa Utils., Bd., 525 U.S. 366, 371 (1999). Bell, the plaintiff, is an incumbent LEC.

The TCA attacks the regulatory protections that sheltered local telephone monopolies by preempt[ing] all state and local legal barriers to entry into the local telephone market," including the state-sanctioned exclusive franchises formerly enjoyed by incumbent LECs. Bell Atlantic-Del., Inc. v. McMahon, 80 F. Supp.2d 218, 222 (D. Del. 2000) (citing 47 U.S.C. § 253(a)). Through sections 251 and 252, TCA also attempts to alleviate economic barriers, recognizing that an incumbent LEC's network provides it with a competitive advantage because the cost of constructing a new, wholly redundant network is generally prohibitive. See, e.g., id.; MCI Telecomm. Corp. v. Illinois Bell Tel. Co., ___ F.3d ___, 2000 WL 1010863, at *2 (7th Cir. July 24, 2000). To that end, the TCA subjects incumbent LECs to "a host of duties intended to facilitate market entry" including "the LEC's obligation under 47 U.S.C. § 251(c) . . . to share its network with competitors." Iowa Utils. Bd., 525 U.S. at 371. Section 251(c) provides three ways a competitor can gain access to an incumbent LEC's network: "It can purchase local telephone services at wholesale rates for resale to end users; it can lease elements of the incumbent's network `on an unbundled basis'*fn3 and it can interconnect its own facilities with the incumbent's network."*fn4 Id. The TCA also requires an incumbent LEC to allow a competitor to collocate "equipment necessary for interconnection or access to unbundled network elements." 47 U.S.C. § 251(c)(6).

The Act requires that an incumbent LEC and any competitor negotiate an agreement in good faith. See 47 U.S.C. § 251(c)(1). During these negotiations, any party may request the state commission that regulates telephone services to mediate. See id. § 252(a)(2). In the event that the negotiations fail, the TCA provides that either party may petition the state commission to arbitrate any open issues. See id. § 252(b). An agreement encompassing the access methods detailed in section 251(c), whether arrived at privately or through compulsory arbitration, must be approved by the state commission. See id. § 252(e)(1). The TCA limits the grounds under which a commission may reject an agreement under federal law and regulations see id. § 252(e)(2), while preserving a state's authority to impose additional conditions that do not conflict with federal law. See id. § 252(e)(3) (stating that, notwithstanding section 252(e)(2) but subject to 47 U.S.C. § 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[.]"). If a state commission fails to act under section 252, the Federal Communications Commission(FCC) will preempt the state commission's jurisdiction and responsibilities over the access agreements.*fn5 See id. § 252(e)(5); see generally Illinois Bell, ___ F.3d at ___, 2000 WL 1010863, at *2-3 (detailing section 252's procedural scheme); MCI Telecomm. Corp. v. Public Serv. Comm'n, ___ F.3d ___, 2000 WL 783382, at *3 (10th Cir. June 20, 2000) (same).

"In any case in which a State commission makes a determination under . . . [section 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 sections 251 and 252. 47 U.S.C. § 252(e)(6). Moreover, "[n]o State court shall have jurisdiction to review the action of a State commission in approving or rejecting an agreement" under section 252. Id. § 252(e)(4).

B. The Parties' Challenges to the PUC's Global Order

At the heart of this action is an Opinion and Order entered by the PUC on September 30, 1999 (Global Order). In the Global Order, the PUC addressed the "several interrelated dockets implementing state and federal telecommunications policy in the Commonwealth of Pennsylvania." Global Order at 2 (Compl. Ex. 1). The PUC undertook the proceedings that culminated in its Global Order upon concluding that its previous system of separately adjudicating individual telecommunications cases did not lead to "satisfactory and prompt resolution" of the morass of issues raised by federal and state law mandates to provide consumers with competitive local telecommunications services. Id.

The PUC first attempted to settle the outstanding issues by negotiation, but this method failed. Two competing petitions were then filed before the Commission — one supported by Bell and others who are not parties to this action, and the other supported by Worldcom; AT & T; Senators Fumo, Madigan, and White; and others who are not parties to this action. The Global Order resolved the issues raised by the two petitions, as well as the pending interrelated dockets that were consolidated for that purpose.

The action before this court alleges that several aspects of the Global Order violate federal law.*fn6 Bell, Worldcom, and AT & T all contend that rates for unbundled network elements (UNE) set by the Global Order violate the TCA.*fn7 An order entered by the PUC on August 7, 1997, first set permanent rates for access to Bell's UNEs after a proceeding before the Commission commonly referred to as MFS-Phase III. "[N]umerous, subsequent agreements" incorporated the rates set by the MFS-Phase III Order. Compl. ¶ 22. The Global Order rates replace the MFS-Phase III rates.

Bell also challenges the PUC's authority under federal law to require it to provide unbundled access to switching throughout Pennsylvania and to provide unbundled access to digital subscriber line access multiplexers (DSLAMs).*fn8 Bell contends it should not be required, under federal law and regulations, to make these network elements available because failure to provide them would not impair a competitor's ability to provide services and because they are not necessary for a competitor to provide service. In addition, it contends that the PUC failed to engage in the analysis required by the TCA in determining that Bell make these elements available on an unbundled basis.

Finally, Bell challenges the discount wholesale rates for retail services set by the Global Order. While the wholesale discount rates set by a previous PUC decision are generally unaffected, the Global Order increases for one year the discount rate Bell may charge its competitors for retail services in less populated areas of the Commonwealth as part of a "Rural/Residential Promotion."

Bell brings its claims pursuant to the TCA, 42 U.S.C. § 1983, and 22 U.S.C. § 2201(a), and seeks declaratory and injunctive relief. AT & T and Worldcom bring their claims pursuant to the TCA and seek declaratory and equitable relief.

C. Other Proceedings

Two other proceedings are relevant to this action. The first is a challenge by Bell to the Global Order in state court. That action includes the federal claims asserted here, as well as state law claims regarding other aspects of the Global Order. Numerous parties, including most of the intervenors in this action, are participating in the state action. Bell contends that it raised the federal claims in the state court solely as a protective measure; in its petition for review before the Commonwealth Court, it reserved the federal claims pursuant to England v. Louisiana State Board of Medical Examiners, 375 U.S. 411 (1964).*fn9

The second proceeding was a case in the Middle District of Pennsylvania, MCI Telecommunications Corp. v. Bell Atlantic-Pennsylvania, Inc., No. 1:CV-97-1857. Worldcom brought that action, pursuant to the TCA, to challenge an interconnection agreement with Bell that had been approved by the PUC. That agreement incorporated the UNE rates set by the MFS-Phase III Order. See id., Report and Recommendation, at 3 (M.D. Pa. Aug. 10, 1998) (Worldcom's Brief in Opp. to Mot. to Dismiss, Ex. 8).*fn10 The Middle District court held that the PUC was not immune under the Eleventh Amendment see id., Order (M.D. Pa. Nov. 5, 1998) (Worldcom's Brief in Opp. to Mot. to Dismiss, Ex. 9), and, on June 30, 2000, it denied both the PUC's motion to certify its decision on immunity for interlocutory appeal,*fn11 see id., Mem. and Order (M.D. Pa. June 30, 2000) (PUC's Reply Brief, Ex. 1), and decided the action on the merits, see id., J. and Mem. (M.D. Pa. June 30, 2000) (Worldcom's Resp. in Opp. to the Mot. for J. on the Pleadings, Ex. 1). On July 20, 2000, Bell filed a motion for relief from judgment pursuant to Federal Rule of Civil Procedure 60 in light of a recently issued decision by the Eighth Circuit that vacated portions of the FCC regulations upon which the Middle District Court relied. See Bell's Mot. for ...


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