Utex Communications Corp v. Public Utility Cmsn of Texas, et al

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Utex Communications Corp v. Public Utility Cmsn of Texas, et al

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Case: 09-50313

Document: 00511191669

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Date Filed: 08/02/2010

IN THE UNITED STATES COURT OF APPEALS United States Court of Appeals FOR THE FIFTH CIRCUIT Fifth Circuit FILED
August 2, 2010 N o . 09-50313 Lyle W. Cayce Clerk

U T E X COMMUNICATIONS CORPORATION, Plaintiff-Appellant, v. P U B L I C UTILITY COMMISSION OF TEXAS; PAUL HUDSON, IN HIS O F F I C I A L CAPACITY AS CHAIRMAN OF THE PUBLIC UTILITY C O M M IS S I O N OF TEXAS; JULIE CARUTHERS PARSLEY, IN HER O F F I C I A L CAPACITY AS COMMISSIONER OF THE PUBLIC UTILITY C O M M IS S I O N OF TEXAS; BARRY SMITHERMAN, IN HIS OFFICIAL C A P A C I T Y AS COMMISSION OF THE PUBLIC UTILITY COMMISSION O F TEXAS; AND SOUTHWESTERN BELL TELEPHONE, L.P., D/B/A A T & T TEXAS F/K/A SBC TEXAS, D e fe n d a n t s -A p p e lle e s .

A p p e a l from the United States District Court for the Western District of Texas A -0 6 -C A -5 6 7 -L Y

B e fo r e DAVIS, WIENER and SOUTHWICK, Circuit Judges. W . EUGENE DAVIS, Circuit Judge.* P la in t iff UTEX Communications Corporation ("UTEX") appeals the ju d g m e n t of the district court which affirmed the order of the Public Utility

Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.

*

Dockets.Justia.com

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No. 09-50313 C o m m is s io n of Texas ("PUCT") declining to consider proposed amendments to t h e contract controlling the relationship between UTEX and defendant S o u th w e s t e r n Bell Telephone Company, d/b/a AT&T Texas, because the r e q u e s te d amendments were beyond the scope of its proceedings. P U C T 's order was not arbitrary or capricious, we AFFIRM. I. This case arises under the Telecommunications Act of 1996 (the "Act") w h ic h amended the Communications Act of 1934 to deregulate telephone s e r v ic e s that had previously been provided by a single company within each local area. The Act required incumbent local exchange carriers ("ILECs" or Because

" I n c u m b e n t s " ), like AT&T Texas, which had previously held a monopoly, to enter in to interconnection agreements ("ICAs" or "Agreements") with competitive local e x c h a n g e carriers ("CLECs" or "Local Carriers") like plaintiff UTEX. Each ICA s e t s the terms and conditions on which an Incumbent will provide a Local C a r r ie r with interconnection to the Incumbent's network and use of individual e le m e n t s of the incumbent's network on an unbundled basis. The individual e le m e n t s are called unbundled network elements ("UNEs" or "Elements"). The A c t gives the FCC the discretion to determine which Elements will be u n b u n d le d . L o c a l Carriers can enter into Agreements with Incumbents in two ways. F ir s t , a Local Carrier and an Incumbent can attempt to negotiate an Agreement, fo llo w e d by arbitration of any open issues before the state utility commission. The final Agreement is subject to the approval by the state utility commission a n d review by the federal district court. Alternatively, under 47 U.S.C. § 252(i), a Local Carrier may adopt an existing Agreement between an Incumbent and a n o t h e r Local Carrier which has previously been approved by the state utility c o m m is s io n . UTEX chose the second option by adopting an Agreement that

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No. 09-50313 A T & T Texas had negotiated with another Local Carrier owned by the principals o f UTEX in 2000 (the "UTEX/AT&T Texas 2000 ICA"). In 2000, when the UTEX / AT&T Texas 2000 ICA was approved, the FCC's L o c a l Competition Order was in effect, identifying certain Elements that I n c u m b e n t s were required to make available to Local Carriers. The validity of t h e FCC's rules in the Local Competition Order was litigated over several years t h e r e a ft e r and resulted in several modifications, including the 2003 Triennial R e v ie w Order ("TRO") and the 2005 Triennial Review Remand Order ("TRRO"). The TRO and TRRO changed the Elements that the Incumbents were required t o unbundle and provide to Local Carriers. Most ICAs, including the UTEX/AT&T Texas 2000 ICA, include a "change o f law" provision that allows for the Agreement to be amended to reflect changes in the law which affect the terms of the Agreement as negotiated and approved. In 2004, AT&T Texas petitioned PUCT to conform Agreements with twentye ig h t Local Carriers, including UTEX, to the current law pursuant to the change o f law provisions in the Agreements. The petition came before PUCT in Docket 3 0 4 5 9 . The stated purpose of the filing was to change the terms of all nons t a n d a r d form Agreements, like UTEX's, to conform to the FCC's orders in TRO a n d TRRO. UTEX argued that the scope of Docket 30459 should include

n e g o t ia t io n of pricing and other terms to be added to its Agreement to allow it t o access the Elements available after the change in law. AT&T Texas argued a n d PUCT agreed that Docket 30459 was limited in scope to conform Elements in the parties' Agreements to the new FCC rules and did not include items u n a ffe c te d by TRO and TRRO. UTEX appealed to the district court. The district court determined that the "missing provisions UTEX r e q u e s te d to have added were available at the time the 2000 Agreement was n e g o t ia t e d and finalized" and that there has been "no change in the FCC rules t h a t would allow UTEX to seek a modification of the 2000 Agreement through 3

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No. 09-50313 t h e change-of-law provision" in its Agreement to obtain the terms suggested by UTEX. Accordingly, the district court concluded that PUCT "did not act

a r b it r a r ily or capriciously when it determined that UTEX's request to add m is s in g provisions was outside the scope of the proceedings initiated by AT&T u n d e r the change-of-law provision of the 2000 ICA." UTEX appeals the district c o u r t's order. Since July 31, 2002, another Docket affecting these parties has been p e n d in g at PUCT. Docket 26381 concerns an arbitration of a new Agreement b e in g negotiated between UTEX and AT&T Texas to replace the existing U T E X /A T & T Texas 2000 ICA, which is the Agreement being amended in the c h a n g e of law proceeding in Docket 30459. After UTEX informed PUCT

a r b it r a t o r s in docket 26381 that all the issues involved Voice Over Internet P r o t o c o ls (VoIP), PUCT abated the arbitration based on its understanding that t h e FCC needed to first establish standards for this feature. UTEX filed a p e t i t i o n with the FCC asking the FCC to preempt PUCT's jurisdiction over D o c k e t 26381 and negotiate the agreement itself. The FCC denied UTEX's p e t it io n , stating that PUCT should arbitrate based on existing law regarding V o I P . PUCT has initiated rulemaking to establish Texas's VoIP standards. PUCT has stated that once that rulemaking is complete, it will complete the a r b it r a t io n of a replacement Agreement between UTEX and AT&T Texas in D o c k e t 26381. After oral argument was heard in this case, this court was informed that U T E X filed for Chapter 11 bankruptcy relief in the Western District of Texas, t r ig g e r in g the automatic stay of this case under 11 U.S.C. §362. The court was in fo r m e d by letter dated May 14, 2010, that the stay was lifted by order of the B a n k r u p t c y Court dated April 23, 2010. Accordingly, we proceed with this a p p e a l.

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No. 09-50313 II. This court considers de novo the legal issue of whether the agency's actions a r e in compliance with the Act and reviews all other decisions under an a r b it r a r y and capricious standard. Sw. Bell Tel. Co. v. PUCT, 208 F.3d 475, 482 (5 t h Cir. 2000). III. At issue in this case is the scope of Docket 30459. PUCT has broad d is c r e t io n to control what matters it will consider in a particular docket. Reliant E n e r g y , Inc. v. PUC, 153 S.W.3d 174, 194 (Tex. App. Austin 2004)(PUCT has a u t h o r it y to consolidate issues from different dockets in a single generic p r o c e e d in g ); El Paso v. Public Util. Comm'n, 839 S.W.2d 895, 926 (Tex. App. A u s t in 1992), rev'd in part on other grounds, 883 S.W.2d 179 (Tex. 1994)(PUCT h a s power to sever issues as "[a]ny other result would defeat the legislative in te n t in delegating duties to the Commission for more efficient

a d m in is t r a t io n " ). UTEX wants access to two specific Elements, DS3 Loops and DSL-capable L o o p s . These Elements are on the current FCC list of Elements that Incumbents m u s t make available. They were also available under FCC rules in place at the t im e the UTEX/AT&T Texas 2000 ICA was adopted. However, according to U T E X , AT&T Texas will not allow UTEX to access them because AT&T Texas c la im s that their current Agreement (UTEX/AT&T Texas 2000 ICA) does not h a v e specific prices, terms for ordering, or provisioning or certain cross-connects t h a t are necessary to make the loops function. U T E X argues that the scope of Docket 30459 should include the n e g o t ia t io n of terms to allow it to access DS3 Loops and DSL-capable loops that a r e on the current list of available Elements. It bolsters its argument with the fa c t that Docket 26381, the attempt to negotiate a new Agreement with AT&T T e x a s , has been abated by the arbitrators, leaving it with no way to resolve this 5

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No. 09-50313 is s u e . AT&T Texas argued and PUCT agreed that Docket 30459 was limited in s c o p e to conform Elements in the parties' Agreement to the new FCC rules. The d is t r ic t court agreed. We also agree. UTEX contends that AT&T Texas refuses to make DS3 and DSL loops a v a ila b le because of deficiencies in the UTEX/AT&T Texas 2000 ICA. It is clear t o us, however, that any deficiencies in the Agreement in this respect were not c r e a t e d by the change in law resulting from TRO and TRRO. UTEX states in its b r ie f that "AT&T refuses to provide two specific UNEs (DS3 Loops and DSLc a p a b le Loops) to UTEX under the current agreement because AT&T insists the c u r r e n t terms do not have specific prices, terms for ordering, or provisioning or c e r t a in `cross-connects' that are necessary to make the loops function. UTEX has b e e n trying to secure these `missing' terms . . . for over seven years." Accordingly, the problems with the missing terms and the Agreement between U T E X and AT&T Texas predate both the TRO and TRRO, as well as AT&T T e x a s 's filing of this change of law proceeding. PUCT's ruling states that "UTEX admits that the TRO and TRRO do not e x p r e s s ly require changes to existing manual or mechanized pre-ordering and o r d e r in g processes, but explains that its concern is that there are no existing p r o c e s s e s for certain UNEs (or connections to or between them) that are s p e c ific a lly retained in those orders." PUCT correctly recognized that the TRO a n d TRRO did not affect or create this deficiency in UTEX's Agreement with A T & T Texas. The Elements UTEX wants access to were available both at the t im e the Agreement was adopted and after the issuance of the TRO and TRRO. The lack of "specific prices, terms for ordering, or provisioning or certain `crossc o n n e c t s ' that are necessary to make the loops function" in the Agreement was n o t a problem created by those orders. In other words, UTEX's prospects of o b ta in in g functioning DS3 and DSL loops was no better or worse after TRO and TRRO. Because PUCT considered docket 30459 solely dedicated to 6

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No. 09-50313 i m p le m e n t in g amendments to the contracts required by the change in law fo llo w in g the issuance of TRO and TRRO, it concluded that UTEX's request was b e y o n d the scope of the proceeding. PUCT's decision to limit the scope of 30459 was particularly appropriate b e c a u s e that proceeding involved not only AT&T Texas and UTEX, but also tw en ty -se v en other CLEC's who had the same or similar Agreements with AT&T T e x a s . PUCT was entitled to conclude that introduction of individual contract is s u e s into this proceeding would be unwieldy. In addition, despite UTEX's arguments to the contrary, nothing in the Act, F C C rules or TRO or TRRO in particular, requires PUCT to consider its a n c illa r y contract dispute issues in this change of law proceeding or requires P U C T or the district court to review the full Agreement, as amended, for c o m p lia n c e with the Act. In sum, we agree with PUCT that "[t]hese questions regarding Element a v a ila b ilit y have no relationship to the TRO and TRRO and were not impacted b y those FCC decisions. In fact, they appear to be issues predating those Orders a lt o g e t h e r ." In other words, the terms UTEX is seeking to add to its Agreement w it h AT&T Texas are issues independent of the issues created by the changes in the law caused by TRO and TRRO and instead involve a separate contract d is p u t e with AT&T Texas. PUCT's decision that those claims should be brought in a separate proceeding or addressed in the new agreement under Docket 26381 w a s not arbitrary or capricious. UTEX also takes the position that PUCT erred by sending UTEX to Docket 2 6 3 8 1 to resolve issues related to the full implementation of TRO and TRRO into it s Agreement with AT&T Texas and by then abating that proceeding, leaving it unable to function. The district court dismissed UTEX's claims related to D o c k e t 26381 and UTEX admits that it did not appeal that dismissal.

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No. 09-50313 A c c o r d in g ly , this court has no jurisdictional basis to review the abatement of the p r o c e e d in g in Docket 26381. IV. F o r the reasons set forth above, we affirm the judgment of the district c o u r t. While UTEX's access to the Elements under its Agreement with AT&T T e x a s continues to be subject to its contract dispute, those issues did not arise a s a result of changes implemented by TRO or TRRO. Accordingly, this change o f law proceeding does not encompass that dispute and PUCT's decision to limit t h e scope of Docket 30456 accordingly was not arbitrary or capricious. A F F IR M E D .

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