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 BellSouth Telecommunications, Inc. ("BellSouth") and MCImetro Access Transmission Services, Inc. ("MCImetro"), and the contract between BellSouth and WorldCom 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.
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.
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).
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
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
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 Starpower 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.
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.
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:
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
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.
EDMONDSON, Chief Judge, concurring in part:
I concur in the judgment of the Court and in the opinion by Judge Barkett, except that I decide nothing about jurisdiction under 47 U.S.C. § 252(e)(6).
ANDERSON, Circuit Judge, concurring, in which BLACK, Circuit Judge, joins:
I concur and join most of the opinion of Judge Barkett. The parties were asked to brief two issues for the en banc court: first, does federal law give state commissions, like the Georgia Public Service Commission ("GPSC"), the authority to resolve disputes between telecommunications carriers regarding the interpretation of the contractual terms of an interconnection agreement that has already been approved pursuant to 47 U.S.C. § 252(e); and, second, if not, does Georgia law give the GPSC this authority.
With respect to the first issue, I agree with Judge Barkett that the most plausible reading of the federal statute is that it contemplates that GPSC not only has the expressly stated authority to approve or reject the interconnection agreement at issue here, but also has the implicit authority to interpret the agreement after it has already been approved. I agree with Judge Barkett that it would make little sense to grant the obvious authority to interpret the agreement in connection with the approval thereof, but then deny the authority to later implement and enforce same and resolve disputes as to the original interpretation. In so holding, we are joining the numerous circuit courts of appeal discussed by Judge Barkett, and providing appropriate deference to the Federal Communications Commission ("FCC"). See In re Starpower Communications, 15 FCC Red. 11277, 11279, ¶ 6, 2000 WL 767701 (2000). Having thus resolved that GPSC has authority pursuant to the federal statute, I need not address the second issue briefed by the parties en banc, whether or not such authority might also have been provided by state law.
I also agree with Judge Barkett that the district court had jurisdiction pursuant to 28 U.S.C. § 1331 to entertain BellSouth's claim in the instant case.
BellSouth's claim in the instant case is that the GPSC order is inconsistent with the Act and its implementing regulations. BellSouth's claim is indistinguishable from that asserted by Verizon in the Supreme Court case. Verizon had taken the position that "it would no longer pay reciprocal compensation for telephone calls made by Verizon's customers to the local access numbers of internet providers (`ISPs'), claiming that ISP traffic was not `local traffic' subject to the reciprocal compensation agreement." Id. at 1757. After Maryland's Public Service Commission ruled against it, Verizon filed a complaint in the district court challenging the Public Service Commission's order, and claiming "that the determination that Verizon must pay reciprocal compensation ... for ISP traffic violated the 1996 Act, and the FCC ruling." Id. BellSouth's claim is identical. Like Verizon, BellSouth claims that the GPSC order here, construing ISP calls as "local" and requiring BellSouth to pay reciprocal compensation, violates the Act and its implementing regulations. As in Verizon, BellSouth relies upon the FCC ruling characterizing such ISP traffic as non-local. The instant case being indistinguishable from Verizon with respect to the § 1331 jurisdictional issue, I readily conclude that the district court had original jurisdiction of BellSouth's claim pursuant to § 1331.
First, BellSouth points out that the interconnection agreement at issue here was mandated by federal statute. 47 U.S.C. § 251(b)(5).
Second, the federal statute mandates that it be nondiscriminatory. 47 U.S.C. § 252(e)(2)(A)(i). This means that the terms of the agreement must be available to all carriers, similar to a tariff.
Third, the statute mandates that the terms of the agreement must be consistent with the public interest, convenience and necessity. 47 U.S.C. § 252(e)(2)(A)(ii). BellSouth implicitly suggests that this provision probably adopts and perhaps federalizes well-established state standards.
Fourth, in addition as a practical matter, even a voluntarily negotiated agreement, as here, is cabined by the obvious recognition that the parties to the agreement had to agree within the parameters fixed by the federal standards set out in 47 U.S.C. §§ 251 and 252. BellSouth reasons that the negotiating parties obviously know that if they do not agree, such standards will be imposed. Section 252(b). Thus, the parties know that they cannot deviate significantly from all of the federally imposed standards. Accordingly, BellSouth argues that significant nondiscriminatory and public convenience standards are absolutely mandatory, and that the rest of the federal standards, including the pricing standards of § 252(d), are as a practical matter "coerced" by the federal statute into such agreements.
Fifth, and significant in light of the particular matter at issue — whether ISP calls are "local telecommunications traffic" — BellSouth points out that the definition of "local telecommunications traffic" is set out in regulations promulgated by the FCC. 47 C.F.R. § 51.701(b). BellSouth argues that the construction of that federal definition presents a federal question.
Sixth, further with respect to the particular matter at issue, BellSouth argues that the FCC has ruled that ISP calls, such as the ones at issue here, are interstate rather than local in nature, and therefore not governed by the reciprocal compensation provision of § 251(b)(5). See Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Inter-Carrier Compensation for ISP-Bound
Seventh, the Supreme Court in Verizon, indicated in dicta that § 252(e)(6)
Finally, BellSouth argues that the interconnection agreement at issue here should not be considered an ordinary commercial contract because it really constitutes a kind of federally mandated agreement,
Considering BellSouth's arguments,
In sum, I conclude that the GPSC had authority to entertain this case, and that the district court had jurisdiction under 28 U.S.C. § 1331 to entertain the claim presented by BellSouth.
BLACK, Circuit Judge, concurring, in which ANDERSON, Circuit Judge, joins:
I concur in Judge Anderson's separate opinion. I write to expand upon the deference this Court owes the decisions of the Federal Communications Commission under Chevron, U.S.A., Inc. v. Natural Res. Def. Counsel, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984).
As Judge Barkett states, agency interpretations of the statutes they are charged with administering are entitled to deference under a two-step analysis. First, if Congress has spoken to the precise question at issue, then the unambiguously expressed intent of Congress governs. Id. at 842-43, 104 S.Ct. at 2781. Second, if the statute is silent or ambiguous, then the agency's interpretation must be given effect so long as it is based on a permissible reading of the statute. Id. at 843, 104 S.Ct. at 2782. FCC has interpreted the Telecommunications Act to authorize Public Service Commissions to adjudicate post-agreement disputes under 47 U.S.C. § 252. See In re Starpower, 15 F.C.C.R. 11277, ¶ 6, at 1129-80, 2000 WL 767701 (2000). Under Chevron, the FCC's interpretation is entitled to deference.
At Chevron step one, the precise question at issue here has no clear answer in the statutory text. We granted rehearing en banc to answer the following question:
No statutory text clearly authorizes or forecloses PSC adjudications of post-agreement disputes. The statute authorizes PSCs to "approve or reject" interconnection agreements submitted to them. 47 U.S.C. § 252(e)(1). The statute goes on, however, to refer to "determination[s] under this section." Id. § 252(e)(6). While it may be possible to cabin these "determinations" to PSC decisions approving or rejecting interconnection agreements, "determinations" can also be fairly construed to encompass determinations in post-agreement disputes. Congress could have easily avoided this interpretation by replacing the phrase "makes a determination under this section" in § 252(e)(6) with the words "approves or rejects." In this statutory context, the narrower interpretation is hardly the "unambiguously expressed intent of Congress." Chevron, 467 U.S. at 843, 104 S.Ct. at 2781. Because Congress did not express its intent so clearly, we must conclude that this statute is ambiguous.
Nor is the deference owed to FCC altered by any dissatisfaction we may have with the quality of the agency's legal reasoning in Starpower. Agencies derive their authority to interpret the statutes they administer — and thereby bind federal courts — from Congressional delegation. Chevron, 467 U.S. at 843-44, 104 S.Ct. at 2782.
It follows, therefore, that deference to an agency interpretation is not automatically
I do not think FCC's Starpower decision is based on an impermissible construction of the Telecommunications Act, so we must defer to the agency's interpretation. I concur with the conclusion that the Georgia Public Services Commission has the authority to interpret and enforce the interconnection agreements at issue here.
TJOFLAT, Circuit Judge, dissenting, in which BIRCH, Circuit Judge, joins:
A. The Telecommunications Act of 1996 and reciprocal compensation
In 1996, Congress amended the Communications Act of 1934, see Telecommunications Act of 1996 ("1996 Act"), Pub. L. 104-104, 110 Stat. 56 (codified at 47 U.S.C. § 151 et seq.), in an effort to deregulate the telecommunications industry — especially the local exchanges once thought to be entrenched natural monopolies. Sections 251 and 252 form the heart of the 1996 Act. Section 251 imposes several obligations on incumbent local exchange carriers ("ILECs").
One obligation that all LECs have under section 251 is the duty to form a reciprocal compensation agreement with competing LECs. See 47 U.S.C. § 251(b)(5). When a customer of LEC A calls a customer of LEC B, LEC B is entitled to demand compensation for terminating the call of LEC A's customer. One option the LECs have is to agree to a "bill and keep" system of compensation whereby each LEC considers the total termination costs a wash, thereby eliminating the necessity of a billing arrangement and its concomitant
The FCC eventually weighed in, however, in an effort to fix the perceived asymmetry.
B. This dispute
The ILEC in this case, BellSouth Telecommunications, Inc. ("BellSouth"), declined to pay reciprocal compensation fees to various CLECs. The Georgia Public Service Commission ("GPSC") adjudicated the dispute, holding that the parties were required to compensate each other for the termination of ISP-bound calls.
I would hold that (1) the authority of the GPSC under Georgia law is a state law issue that this court should decline to reach, and that federal law does not preclude PSCs from adjudicating post-agreement disputes if states make the choice to allocate adjudicative power to their PSCs; (2) the district court did not have jurisdiction under 47 U.S.C. § 252(e)(6) for several reasons, not least among which is the fact that the plain language of the statute does not provide for appellate review in the district courts of PSC adjudications of post-agreement disputes; (3) the district court did not have jurisdiction under 28 U.S.C. § 1331 over any of the claims BellSouth now presses on appeal,
II. Section 1331 Jurisdiction
A. Is there section 1331 jurisdiction if one assumes, arguendo, that the proceeding before the district court was an "original" proceeding?
There are many claims in this litigation that are allegedly federal in nature. Assuming, for the moment, that the litigation before the district court in this case was an "original" proceeding, it is questionable whether all of BellSouth's complaints
1. Federal preemption
One contention in BellSouth's "petition for judicial review" is that the GPSC's Order violates the 1996 Act and the FCC's regulations thereunder. Although the "petition for judicial review" is unclear on this point, I think I understand BellSouth to be adopting the position more clearly articulated by the plaintiff in Verizon, where the plaintiff sought relief "on the ground that such regulation is pre-empted by a federal statute which, by virtue of the Supremacy Clause of the Constitution, must prevail." Verizon, 122 S.Ct. at 1757. An identical cause of action could have been asserted in this case under 42 U.S.C. § 1983 or under Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96, 103 S.Ct. 2890, 2899, 77 L.Ed.2d 490 n. 14 (1983) (holding that plaintiffs may assert a private right of action directly under the Supremacy Clause of the Constitution).
On appeal, BellSouth no longer disputes that the GSPC could have ordered the parties to pay each other for the termination of ISP-bound calls, and for good reason: the FCC has consistently promulgated regulations, consistent with the 1996 Act's affinity for voluntary agreements, that enable ILECs and CLECs to enter into reciprocal compensation agreements on the subject of ISP-bound traffic notwithstanding any federal regulations that might deem ISP-bound traffic "interstate" as a matter of law. In the FCC's first (and now-vacated) ISP ruling, for example, the FCC was careful to note that "parties may voluntarily include this [ISP-bound] traffic within the scope of their interconnection agreements" as those agreements are "interpreted and enforced by state commissions." Implementation of the Local Competition Provisions in the Telecomms. Act of 1996; Intercarrier Compensation for ISP-Bound Traffic, 14 F.C.C.R. 3689, ¶ 12, at 3703, 1999 WL 98037 (1999). The FCC concluded, "Nothing in this Declaratory Ruling, therefore, necessarily should be construed to question any determination a state commission has made, or may make in the future, that parties have agreed to treat ISP-bound traffic as local traffic under existing interconnection agreements." Id. ¶ 24, 3704. On remand from the D.C. Circuit, the FCC reached an identical conclusion. See Implementation of the Local Competition Provisions in the Telecomms. Act of 1996; Intercarrier Compensation for ISP-Bound Traffic, 16 F.C.C.R. 9151, ¶ 82, at 9189, 2001 WL 455869 (2001) ("The interim compensation regime we establish here ... does not alter existing contractual obligations, except to the extent that parties are entitled to invoke contractual change-of-law provisions. This Order does not preempt any state commission decision regarding compensation for ISP-bound traffic for the period prior to the effective date of the interim regime we adopt here."). Since the GPSC's conclusion that BellSouth owed the CLECs reciprocal compensation fees was based upon its interpretation of the voluntary interconnection agreement, federal law certainly creates no impediment to the GPSC Order. Indeed, I might be inclined to find that BellSouth's claim does not meet the standard for well-pleaded complaints under Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct. 773, 776, 90 L.Ed. 939 (1946), and its progeny. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 89, 118 S.Ct. 1003, 1010, 140 L.Ed.2d 210 (1998) (holding that district courts do not have jurisdiction if the claim "clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or where such a claim is wholly insubstantial or frivolous"). However, the Supreme Court held that an identical claim in Verizon was not "immaterial" or "wholly insubstantial and frivolous," Verizon, 122 S.Ct. at 1758-59, and so this court is
2. "Coerced" contracts and federal common law
Another argument is that either the rule of decision for all post-agreement disputes is some sort of federal common law of contracts, or else the disputes "arise under" federal law even if state law provides the rule of decision because the agreements are "coerced" by the federal government and they are an integral part of a federal regulatory scheme. Therefore, BellSouth argues, all interconnection disputes can wind up in federal court pursuant to 28 U.S.C. § 1331.
a. "Coerced" contracts
The fact that the interconnection agreements are "coerced" and made pursuant to a federal regulatory scheme is not enough to make run-of-the-mill contract claims — say, a dispute over performance or price — subject to section 1331 jurisdiction. If state law is the rule of decision, then ordinary contract claims would not raise a "federal issue" for district courts to resolve. Indeed, one Supreme Court case has expressly held that a federally compelled contractual provision was not to be construed in federal court under principles of federal law, but rather under state law applied in state courts. See Jackson Transit Auth. v. Local Div. 1285, Amalgamated Transit Union, 457 U.S. 15, 29, 102 S.Ct. 2202, 2210, 72 L.Ed.2d 639 (1982).
Many post-agreement interconnection disputes would raise only state law claims, and any federal ingredient would be so far removed from the issues for judicial resolution that many claims would not even come close to what Justice Frankfurter called the "litigation provoking problem" of a federal element in a state law cause of action. See Textile Workers Union of Am. v. Lincoln Mills of Ala., 353 U.S. 448, 470, 77 S.Ct. 912, 928, 1 L.Ed.2d 972 (1957) (Frankfurter, J., dissenting). The only possible theory that BellSouth might invoke is the idea of "protective jurisdiction" — the notion that "with regard to subjects concerning which Congress has legislative power under Article I, it can pass a statute granting federal jurisdiction and that the jurisdictional statute is itself a `law of the United States' within Article III, even though Congress has not enacted any substantive rule of decision and thus state law is to be applied." 13B Charles Alan Wright, Arthur R. Miller, & Edward H. Cooper, Federal Practice and Procedure § 3565 (2d ed. 1984). This theory is inapposite to this discussion, however, because we are positing that the only jurisdictional statute is 28 U.S.C. § 1331. The theory of protective jurisdiction applies only within the context of a special jurisdictional statute; no one has ever argued that section 1331 itself amounts to a grant of jurisdiction to entertain state law claims on particular matters of federal concern. Moreover, doubt on the validity of protective jurisdiction was cast by Mesa v. California, 489 U.S. 121, 109 S.Ct. 959, 103 L.Ed.2d 99 (1989). In that case, the Court held that the jurisdictional provision found in 28 U.S.C. § 1442(a)(1) required federal officers to raise a federal defense before removing to federal court. The Court refused to take the broader position that even if no federal issue is presented for judicial resolution, Congress can enact a statute granting federal courts jurisdiction in order to protect the federal interest at stake. Such an interpretation of the statute would, according to the Court, raise "serious doubt" about to the statute's constitutionality, because it would implicate the outer boundaries of Congress's ability to define the scope of federal jurisdiction. Mesa, 489 U.S. at 136, 109 S.Ct. at 968.
b. Federal common law
If interconnection agreements are to be interpreted under a federal common law of contracts, then all post-agreement disputes would raise a federal question and thereby satisfy the "arising under" requirement of 28 U.S.C. § 1331. However, there is no compelling reason why federal common law should be the rule of decision in adjudications of post-agreement disputes between CLECs and ILECs.
There is no indication in the 1996 Act that Congress intended the rule of decision to be one of federal common law. The fact that the contracts are "coerced" is inapposite; as the Court held in Jackson Transit Auth., supra, federally compelled contractual provisions are not necessarily to be construed in federal court under principles of federal common law. Jackson, 457 U.S. at 29, 102 S.Ct. at 2202. Rather, the Court held that the contract in that case had to be enforced in state courts under principles of state law. Id.
Without explicit congressional authorization for the courts to craft common-law rules for interpreting interconnection agreements, state law must be the rule of decision. Professor Chemerinsky describes the presumption against federal common law:
See Erwin Chemerinsky, Federal Jurisdiction § 6.1, at 350 (3d ed. 1999) (footnote omitted).
In a narrow category of cases, Congress has authorized federal courts to create a body of common law rules. See, e.g., Textile Workers Union of Am. v. Lincoln Mills of Ala., 353 U.S. 448, 77 S.Ct. 912, 1 L.Ed.2d 972 (1957) (labor-management contract disputes); Nat'l Soc'y of Prof. Eng'rs v. United States, 435 U.S. 679, 687-88, 98 S.Ct. 1355, 1363, 55 L.Ed.2d 637 (1978) (antitrust). Even so, the presumption and modern trend is to the contrary. The Supreme Court, for example, refused to extend its authority to craft substantive rules of antitrust law in a way that would also allow it to make post-judgment rules governing contribution among antitrust defendants. See Tex. Indus., Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 640-41, 101 S.Ct. 2061, 2067, 68 L.Ed.2d 500 (1981). Commenting on this case, Professor Chemerinsky concludes, "Texas Industries thus reaffirms the basic principle: The federal judiciary will formulate a body of common law rules only pursuant to clear congressional intent for such action." Chemerinsky, supra, § 6.3.2, at 376 (emphasis added).
There is no clear congressional intent for courts to craft common law rules in the context of disputes over interconnection agreements. Indeed, the invocation of federal common law would be in considerable tension with the reverse-preemption provision in the 1996 Act and the Act's scheme of cooperative federalism (both of which are discussed in part III.A, infra) by ceding new authority to the federal courts where none existed before, while simultaneously displacing state law.
3. Federal element in a state law cause of action: Merrell Dow
A final position BellSouth takes is that (a) the parties intended that their mutual obligations under the interconnection agreement track evolving standards of federal law and (b) federal law provides that ISP-bound traffic is "interstate" rather than "local" and therefore LECs need not pay each other for the termination of ISP-bound calls. This is the argument that BellSouth has advanced throughout this litigation, though one is hard pressed to find it in its "petition for judicial review." After reciting at length the definitions of various terms under FCC regulations, BellSouth states in paragraph 31 that "[i]t was in the context of the foregoing provisions of law that BellSouth and MFS/WorldCom executed the Interconnection Agreement." In paragraph 53, BellSouth alleges that "the PSC's Order holding that the use of local facilities to connect to an ISP constitutes Local Traffic under the Interconnection Agreement is inconsistent with the facts and contrary to the provisions of the 1996 Act." I will stretch these sentences, respectively, to mean that (a) the parties intended to track federal law and (b) federal law means X rather than, as the GSPC held, Y. See Lykins v. Pointer, Inc., 725 F.2d 645, 646 (11th Cir.1984) (holding that a district court could exercise federal tort claim liability jurisdiction, despite the plaintiff's failure to allege statutory authority for such jurisdiction, because the requisite facts were alleged). Resolution of this claim boils down to contractual interpretation — namely, whether the parties intended to compensate each other for the termination of ISP-bound calls. It is therefore a state law claim.
This claim, then, squarely confronts this court with the "litigation provoking problem" of a federal issue embedded in a state law cause of action. In Smith v. Kansas City Title & Trust Co., 255 U.S. 180, 41 S.Ct. 243, 65 L.Ed. 577 (1921), the plaintiff sued in federal court under the theory that the defendant-corporation violated state law when it purchased various bonds. State law delineated permissible investments to those consistent with state and federal law, and the bonds, according to the plaintiff, violated the U.S. Constitution. The Court held that the district court had section 1331 jurisdiction to hear the claim. More recently, the Court stated in Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983), that when "it appears that some substantial, disputed question of federal law is a necessary element of one of the well-pleaded claims," then federal jurisdiction is appropriate. Id. at 3, 103 S.Ct. at 2847. In Moore v. Chesapeake & Ohio R.R. Co., 291 U.S. 205, 54 S.Ct. 402, 78 L.Ed. 755 (1934), the Court took the opposite turn, holding that "arising under" jurisdiction rarely exists outside of the context of federal causes of action. The Court attempted to reconcile these cases in Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986). There, the Court declined to find jurisdiction over a state tort claim that alleged a violation of an FDA regulation as an element of the cause of action. The Court cautioned that "careful judgments" must be made. Id. at 814, 106 S.Ct. at 3235. It ultimately concluded that since Congress did not create a federal cause of action for violations of the FDA regulation, its intent would be defeated if the Court allowed district courts to entertain an identical claim under state law. Id. at 812, 106 S.Ct. at 3234.
In the case at bar, it is unclear whether there would be jurisdiction under the framework established in Merrell Dow. On one hand, the federal element — a mere declaratory ruling by the FCC that ISP-bound traffic is "interstate" — is clearly not a federal cause of action. On the other
B. Was the proceeding below an "original" proceeding?
1. Are all 47 U.S.C. § 252(e)(6) proceedings, in which LECs seek review of PSC orders in federal district court, undertaken pursuant to the original jurisdiction of district courts under 28 U.S.C. § 1331?
At first blush, it may appear strange to call the district court's posture in the 47 U.S.C. § 252(e)(6) context to be that of a court asserting "original" jurisdiction. After all, the district court is reviewing the ruling of a lower body, and the district court's role therefore seems to be "appellate" in nature. However, there is a colorable argument that all such proceedings are, in fact, "original." If this argument prevails, then the proceeding in the district court below was an "original" proceeding, and the district court might have had jurisdiction over the state law claim depending upon how an analysis of the case under Merrell Dow would be resolved.
a. "Yes": A potential argument
In Verizon, the Court asserted that section 252(e)(6) may not be a jurisdictional provision; rather, it might be a provision that confers a private right of action. See Verizon, 122 S.Ct. at 1759 ("Section 252 does not establish a distinctive review mechanism for the commission actions that it covers ... and it does not distinctively limit the substantive relief available. Indeed, it does not even mention subject-matter jurisdiction, but reads like a private action."). In the same passage, the Court went on to cite Steel Co., 523 U.S. at 90-91, 118 S.Ct. at 1010-11, for the proposition that "even a statutory provision that uses the word `jurisdiction' may not relate to `subject matter jurisdiction.'" Thus, if one takes the Court's language seriously, then there must be a separate jurisdictional basis for all § 252(e)(6) actions in the district courts, because § 252(e)(6) does not have anything to do with subject-matter jurisdiction and is merely a cause of action.
One must ask, then, what is the jurisdictional basis for district court review of accept-or-reject determinations that PSCs must make pursuant to § 252(e)(1)? Since there must be a jurisdictional basis outside of § 252(e)(6), then it is tempting to look at 28 U.S.C. § 1331. That provision states: "The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." The italicized term is striking: section 1331 is about "original" rather than "appellate" jurisdiction. Suppose, for example, that a PSC arbitrates an interconnection agreement. Suppose further that a CLEC feels that the PSC has not required the ILEC to meet all of the obligations that is required of it under 47 U.S.C. § 251, and it seeks review of the PSC's determination in federal district court. Is the proceeding before the district court an "original" proceeding? If it is not, then § 252(e)(6) is without effect; Congress drafted a private cause of action, but district courts have no jurisdiction to review PSCs because Congress did not amend 28 U.S.C. § 1331 to provide for appellate jurisdiction in the district courts.
One option is contend that jurisdiction under section 1331, in the context of an
After Verizon, we are thus left with four possible conclusions: (1) appellate jurisdiction and 28 U.S.C. § 1331 can coincide with respect to the same claim;
b. "No": The Better Argument
A reading of Verizon that would tag the nature of district court review of PSC orders with the "original" label poses several problems that ultimately force me to take option four rather than option three. First, anyone familiar with Anglo-American jurisprudence would believe that the district court's posture in the accept-or-reject setting is that of an appellate court. Compare Black's Law Dictionary 98 (6th ed. 1990) (defining "appellate jurisdiction" as "jurisdiction to revise or correct the proceedings in a cause already instituted and acted upon by an inferior court, or by a tribunal having the attributes of a court"), with id. at 1099 (defining "original jurisdiction" as "jurisdiction to consider the case in the first instance"). In the example of the CLEC challenge described above, the PSC considers the case "in the first instance," while the district court is being asked to "correct the proceedings in
More importantly, 47 U.S.C. § 252(e)(5) provides that the FCC is to make the accept-or-reject determination if the PSC does not act. As Justice Souter points out in his opinion, see Verizon, 122 S.Ct. at 1763 n. 5 (Souter, J., concurring), there is no special review statute for the FCC in the 1996 Act. Rather, the FCC is reviewed pursuant to its ordinary review statute. See 28 U.S.C. § 2344. That provision states that aggrieved parties may file a petition to review the FCC's order in the court of appeals where venue lies. Clearly the action taken in the latter case is an "appeal." One does not, for example, say that a party aggrieved by an agency order files an "original" action in a court of appeals. Rather, one would say that the "original" proceeding takes place within the agency and that the proceeding before a court of appeals is an "appeal." I think it would strain logic to call a proceeding in a court of appeals challenging the FCC's accept-or-reject determination an "appeal" while simultaneously contending that an identical proceeding in a district court challenging a PSC's accept-or-reject determination is an "original action."
Two other considerations inform my conclusion that the proceedings before district courts on review of PSC orders are appellate proceedings. First, three Justices of the Supreme Court agreed with an opinion that explicitly called the district court's posture to be that of an "appellate" court.
Since district court review of PSC accept-or-reject determinations is an "appellate" rather than "original" proceeding, this leaves me with option four: I decline to read the Court's suggestion that 47 U.S.C. § 252(e)(6) is a "private right of action" as a holding. Since this conclusion is, in fact, the best reading of the Court's language, I read the Court's discussion as dicta and distinguish the present case from Verizon.
The Verizon Court never analyzed whether the 47 U.S.C. § 252(e)(6) is a private right of action. It never invoked the factors employed in Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 2088, 45 L.Ed.2d 26 (1975), for determining whether a statute creates a private cause of action; nor did it engage in any kind of analysis whatsoever. Rather, it was merely attempting to reinforce its argument for the unexceptional proposition that 47 U.S.C. § 252(e)(6) does not cabin the original federal question jurisdiction of district courts. Indeed, the Court expressly reserved the question of whether § 252(e)(6) amounts to a jurisdictional grant, concluding that "even if § 252(e)(6) does not confer jurisdiction, it at least does not divest the district courts of their authority under 28 U.S.C. § 1331 to review the Commission's order for compliance with federal law." Verizon, 122 S.Ct. at 1758. My reading is entirely consistent with this principle: it reads § 252(e)(6) as an expansion of federal jurisdiction because cases "arising under"
My reading is consistent with the facts in Verizon. In that case, the plaintiff claimed that federal law precluded the Maryland PSC from ordering the payment of reciprocal compensation, notwithstanding the PSC's conclusion that, under principles of state contract law, the parties agreed to pay each other for the termination of ISP-bound calls. As the Court put it: "Verizon [sought] relief from the Commission's order on the ground that such regulation is pre-empted by a federal statute which, by virtue of the Supremacy Clause of the Constitution, must prevail." Verizon, 122 S.Ct. at 1758 (citing Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96, n. 14, 103 S.Ct. 2890, 2899, n. 14, 77 L.Ed.2d 490 (1983), which held that litigants may assert a private right of action for preemption under the Supremacy Clause). The claim in Verizon, in short, was one that was brought to the district court as an original matter. The PSC never passed on the issue; it was precisely the PSC's action that was allegedly illegal under federal law. The claim was not merely an error in legal judgment by a lower body. As will be discussed infra, the latter is what we have here — a claim of the appellate variety.
2. Was the proceeding below, in which BellSouth sought review of the PSC Order in federal district court, undertaken pursuant to the original jurisdiction of the district court under 28 U.S.C. § 1331?
The answer to this question is a resounding "no." As stated in part II.A.1, BellSouth abandoned its Verizon-like claim that the GPSC was preempted by federal law and therefore could not order the payment of reciprocal compensation fees for ISP-bound traffic. The district court had original jurisdiction over this claim, because the crux of the claim is that the PSC did something illegal. A private right of action — whether under the Constitution directly (pursuant to Shaw) or 42 U.S.C. § 1983 — provides the vehicle for such a claim. The only potential claim left is the state law claim with a federal element. See supra part II.A.3. In short, BellSouth argues that (a) the GPSC agreed that the parties intended to track federal law
Indeed, BellSouth itself must have believed that the proceeding below was an "appellate" proceeding. If it were an original proceeding, BellSouth would have asked the district court to ignore the PSC's Order entirely. Instead, it argued before the district court that (a) the GPSC believed that the parties intended to track federal law and (b) that this conclusion was correct, but that the GPSC got the law part wrong. It asked the court, in short, to give vitality to part of the GPSC's analysis rather than ignoring it entirely. Moreover, paragraph 57 of BellSouth's "petition for judicial review" asks the district court to "reverse" the PSC Order because it was "erroneous as a matter of law." That language is typical of appellate proceedings, not original proceedings.
III. Section 252(e)(6) Jurisdiction
A. The source of PSC authority to interpret and enforce interconnection agreements is not section 252(e)(1), but residual authority reserved to states under the 1996 Act
Proponents of federal jurisdiction are eager to find that the source of PSC authority to interpret and enforce voluntary agreements resides in section 252(e)(1) rather than residual authority under the 1996 Act,
I am convinced that PSC authority does not reside in section 252(e)(1). My primary reason is that the plain language of the 1996 Act says nothing of the sort. I have looked long and hard at the provision, and I find only this language: "A State commission to which an agreement is submitted shall approve or reject the agreement, with written findings as to any deficiencies." 47 U.S.C. § 252(e)(1) (emphasis added). BellSouth asks this court to insert by judicial fiat the following additional language: "State commissions shall also enforce and interpret interconnection agreements if any post-agreement dispute arises." It is up to Congress, not judges, to make this proposed statutory amendment, and I decline to read into the statute language that does not exist. To the majority, it would not make sense to grant PSCs authority to ensure that interconnection agreements comply with the requirements of the 1996 Act on the front end without also instructing PSCs to engage in post-agreement adjudication on the back end. I will show in due time why Congress's choice made perfect sense. For now, it is enough to say that the authority is not found within the text of 47 U.S.C. § 252(e)(1). "[O]ur problem is to construe what Congress has written. After all, Congress expresses its purpose by words. It is for us to ascertain — neither to add nor to subtract, neither to delete nor to distort." 62 Cases, More or Less, Each Containing Six Jars of Jam v. U.S., 340 U.S. 593, 596, 71 S.Ct. 515, 518, 95 L.Ed. 566 (1951).
Aside from the obvious separation-of-powers concern, there are two additional problems with judicially manipulating section 252(e)(1) so as to insert language about post-agreement adjudication. First, since this interpretation would give federal courts jurisdiction to review all interconnection disputes under section 252(e)(6), such as price and performance disputes, all of the problems discussed in part III.B, infra, apply. Second, this reading would foreclose states from allocating adjudicative authority to enforce and interpret interconnection agreements to state trial courts rather than state PSCs, and Congress
It is not section 252(e)(1), but rather residual authority left to states under the 1996 Act that gives states (and potentially PSCs, if the state so chooses) authority to interpret and enforce interconnection agreements.
Suppose that prior to 1996, a Bell Operating Company in State X desired to let a CLEC interconnect with its system (for a fee, of course). The state, invoking its exclusive authority over the intrastate arena, would (a) decide whether to permit the new entry; (b) possibly require (i) certain contractual provisions and/or (ii) state approval of the final ILEC/CLEC agreement; and (c) adjudicate any post-agreement dispute. Moreover, the state would have authority to designate the entity charged with each particular task. The chosen entity might well be a court, regulatory agency, or even the legislature itself. The 1996 Act altered the scope of state authority, but this alteration was only partial. For example, states no longer have the choice to deny new entry altogether, and so state authority to undertake task (a) has been completely abrogated. See 47 U.S.C. § 253 ("Removal of barriers to entry").
B. Why there is no jurisdiction under section 252(e)(6)
1. Plain language
Having determined that the GPSC's authority to enforce and interpret interconnection agreements does not arise from section 252(e)(1), I know that federal jurisdiction does not exist under section
2. Cooperative federalism and the presumption against federal jurisdiction
Clearly, state commission decisions that are not expressly designated for review in federal court are left for review by state courts, as provided by the existing law of the state that created the state commission. The reverse-preemption provision of the 1996 Act stands for the proposition that state jurisdiction should be retained (to the exclusion of federal jurisdiction) unless there is a clear statement to the contrary. Another clear statement rule is at play in this case: because federal courts are courts of limited jurisdiction, when their jurisdiction is created by statute, the statute is strictly construed. See Turner v. Bank of N. Am., 4 U.S. (4 Dall.) 8, 11, 1 L.Ed. 718 (1799) (stating that because federal courts are of limited jurisdiction, "the fair presumption is ... that a cause is without its jurisdiction, until the contrary appears."); see also Jackson Transit Auth. v. Local Div. 1285, Amalgamated Transit Union, 457 U.S. 15, 30, 102 S.Ct. 2202, 2211, 72 L.Ed.2d 639 (1982) (Powell, J., concurring) ("Because a federal court should exercise extreme caution before assuming jurisdiction not clearly conferred by Congress, we should not condone the implication of federal jurisdiction over contract claims in the absence of an unambiguous expression of congressional intent."). The state-authority presumption of the federal scheme, combined with this venerable principle of federal jurisdiction, demands a clear statement that state review is abolished in lieu of federal review. Both polices stand for one overarching principle: Federal jurisdiction is not to be presumed or implied. I cannot find a clear statement; indeed, the plain language forces me to reach the opposite conclusion.
3. Special problems of deference; protective jurisdiction reconsidered
If the proponents of section 252(e)(6) jurisdiction are correct, what rule of decision must state PSCs utilize in adjudicating generic contract disputes, such as whether the parties have performed under the terms of an interconnection agreement? And what level of deference, if any, must federal courts give to the PSC's conclusion? Under my interpretation of the 1996 Act, the answer is easy: state entities (whether a PSC or trial court) review contracts under state law, and appeals are taken as provided by state rules of appellate review. Under the opposing view, these questions become intractable problems which lead to absurd results, lending further credence to the proposition that federal jurisdiction was never intended by Congress.
Perhaps anticipating these devastating arguments, BellSouth concedes that the rule of decision might well be state law.
I also note that if the statutory scheme were interpreted so as to prescribe federal review of state entities on questions of state law, the scheme would push the boundaries of Congress's authority under Article III to define the scope of federal jurisdiction.
4. Other circuits
Against this array of arguments consisting of (1) venerable principles of federal jurisdiction (i.e., the presumption against federal jurisdiction and the presumption against federal common law); (2) the reverse-preemption provision and the 1996 Act's scheme of cooperative federalism; (3) the constitutional avoidance canon; and (4) a host of intractable problems that federal jurisdiction would yield, one would think that proponents of jurisdiction would be able to point to an ultra-clear statement that Congress intended federal jurisdiction to exist over all run-of-the-mill disputes regarding compliance with existing interconnection agreements. As part III.B.1 demonstrates, however, the plain language of the 1996 Act leads to the opposite conclusion, further buttressing the argument against jurisdiction under section 252(e)(6). Instead, proponents of federal jurisdiction (both litigants and courts) point to amorphous concepts of "inherent" jurisdiction
The Fifth Circuit held that "federal court jurisdiction extends to review of state commission rulings on complaints pertaining to interconnection agreements and that such jurisdiction is not restricted to mere approval or rejection of such agreements." Southwestern Bell Tel. Co. v. Public Util. Comm'n, 208 F.3d 475, 481 (5th Cir.2000). In reaching this conclusion, the court recognized that § 252(e)(6) could be read literally to limit federal review of State commissions to decisions "approving or disapproving, or arbitrating, an interconnection agreement." Id. at 479. But the court rejected that reading because it concluded, "We do not think such a narrow construction was intended." Id. The court then reasoned that assignment to 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 [such] agreements." Id.
Bell Atl. Md., Inc., 240 F.3d at 305-06 (alterations in original). Resort to the ipse dixit simply will not do.
5. Chevron Deference
Sensing that conclusory assertions about "inherent" jurisdiction will not carry the day, proponents of federal jurisdiction mount one last ditch effort by invoking Chevron deference. See Chevron, U.S.A., Inc. v. Natural Res. Def. Counsel, 467 U.S. 837, 104 S.Ct. 2778, 80 L.Ed.2d 694 (1984). In that case, the Court held that agency determinations are entitled to deference if (1) the statute is silent or ambiguous and (2) the agency's answer is based on a reasonable construction of the statute. See id. at 843-45, 104 S.Ct. at 2781-83. It is argued that we should give deference to the FCC's conclusion in Starpower, 15 F.C.C.R. 11277, ¶ 6, at 11279-80 (2000), that PSC authority to adjudicate post-agreement disputes comes from 47 U.S.C. § 252(e)(1).
I do not think Chevron deference is appropriate in this case. First, section 252(e)(1) lists only two possible PSC "determinations" (i.e., to approve or reject an agreement); section 252(e)(6) cabins federal jurisdiction to section 252(e)(1) determinations by its very terms. The statute is clear as a bell, and no deference is owed when the statute is unambiguous. Second, the clear statement rules and absurdities discussed above reinforce my conclusion that Congress did not intend section
6. Summary of section 252(e)(6) argument
The jurisdictional question before this court — whether U.S. district courts have jurisdiction to review all PSC orders interpreting and enforcing voluntary interconnection agreements under 47 U.S.C. § 252(e)(6) — could be decided in one of several ways. First, we might conclude, as the panel did, that the silence of 47 U.S.C. § 252(e)(1) on the subject of PSC adjudication of post-agreement disputes is tantamount to a congressional conclusion that PSCs are precluded from adjudicating interconnection disputes. Second, we might conclude that 47 U.S.C. § 252(e)(1) grants PSCs "inherent" authority to interpret and enforce interconnection agreements,
The Fourth Circuit recognized that interconnection disputes "may amount to tens of thousands of cases." See Bell Atl. Md., Inc. v. MCI WorldCom, Inc., 240 F.3d 279, 305 (4th Cir.2001); see also Kathleen Wallman, A Birthday Party: The Terrible or Terrific Two's? 1996 Federal Telecommunications Act, 51 Fed. Comm. L.J. 229, 240 (1998) (finding that roughly 2,400 interconnection agreements had been reached by 1998). One would think that if Congress had wanted this mountain of interconnection disputes to wind up in federal court, it would have clearly said so. This potentially enormous increase in the federal docket, in conjunction with the plain language of the statute, the constitutional avoidance canon, two clear statement rules, and a host of anomalies that would ensue,
IV. Section 1367 Jurisdiction
The supplemental jurisdiction statute provides that "in any civil action of which
V. Unclear GPSC Order
After examining the GPSC's Order in this case, I am unable to conclude, as did the district court, that the GPSC in fact determined that the parties agreed to pay reciprocal compensation fees for ISP-bound traffic even though they were not required to do so under federal law. Much like BellSouth's cryptic "petition for judicial review," I am unable to make sense of the GPSC's Order. On one hand, it claims that the parties "agreed" to deem ISP-bound traffic "local," in addition to pointing to factors such as usage of trade and course of dealing. The latter are state law interpretative tools used to shed light on the parties' intent at the time of contracting. See Restatement (Second) of Contracts §§ 219-22 (1981); U.C.C. § 1-205 (1977). Therefore, BellSouth's position that the GPSC's holding was driven solely by the fact that it determined, as a matter of law, that such traffic is "local" is incorrect. On the other hand, there is no question that the GPSC's erroneous assessment of federal law was a significant factor in its conclusion, occupying most of the pages in the GPSC Order. The fact issue in this case — whether the parties' objective intent called for the payment of reciprocal compensation fees for ISP-bound traffic — was never clearly answered by the GPSC. Did the parties intend to track federal law? Or did they intend to pay each other for the termination of ISP-bound calls notwithstanding federal law? These are fact questions that must be clearly answered in the first instance by the GPSC or a court exercising original
The crux of BellSouth's position is that the GPSC made an error of law in its analysis of BellSouth's "federal element" state law claim, and that the district court should have corrected the alleged error. BellSouth cites only two possible grounds for jurisdiction in this case — section 1331 and section 252(e)(6). Each of these positions suffers from a fatal flaw. The district court lacked section 1331 jurisdiction because the proceeding before the court on the "federal element" claim was an "appellate" rather than an "original" proceeding. Section 252(e)(6) is equally unavailing because that statute cabins district court appellate jurisdiction to accept-or-reject determinations that PSCs make pursuant to 47 U.S.C. § 252(e)(1).
The district court did, however, have supplemental jurisdiction over BellSouth's "federal element" claim. This is because BellSouth initially brought another claim in addition to its claim for administrative review — namely, that the GPSC was federally preempted from ordering the payment of reciprocal compensation fees for ISP-bound calls. Thus, although the district court did not have jurisdiction under section 1331 to hear BellSouth's claim for administrative review, it had supplemental jurisdiction over that claim (notwithstanding its appellate nature) because the court had original jurisdiction over the preemption claim.
Even though the district court had supplemental jurisdiction over the "federal element" claim, it is unclear what, precisely, the GPSC held with regard to that claim. I would therefore vacate the decision by the district court and remand the case to the district court with instructions to remand to the GPSC.
Id. at 1758. The Court first states Verizon's claim as being that the order "violated the Act and the FCC ruling," and with respect to that claim the Court stated: "We have no doubt that federal courts have jurisdiction under § 1331 to entertain such a suit." Then the Court apparently restates the same claim in terms of preemption. Respectfully, I do not believe that the Fourth Circuit on remand from the Supreme Court opinion in Verizon would feel free to parse the holding of the Supreme Court as suggested by Judge Tjoflat. Like Verizon, BellSouth in the instant case claims that the Public Service Commission order violates the Act and its implementing regulations and rulings, the same claim asserted by Verizon in the Supreme Court.
Judge Tjoflat also expresses concern that all state public service commission decisions affecting interconnection agreements will be deemed federal questions and will flood the federal courts. I would not address such other claims; I would address only the claim asserted by BellSouth here, which I submit is the same claim presented by Verizon to the Supreme Court. Incidentally, I note that BellSouth never asserts in its briefs on appeal a state law contract claim. Indeed, BellSouth notes that the district court in an "alternative holding" did address a state contract law issue, but BellSouth argues only that such issue is irrelevant because the contract is governed by federal law and the FCC rulings. Thus, the potential claim — a pure state law claim — that concerns Judge Tjoflat has not been argued and is not before us.
Benjamin et al., supra, at 610-11.