Aventure Communication Technology, LLC v. Iowa Utilities Board et al

Filing 61

MEMORANDUM OPINION AND ORDER denying 12 Motion for Preliminary Injunction, granting 20 Motion to Intervene by Verizon; granting 24 Motion to Intervene by Qwest, granting 33 Motion to Intervene by AT and T; and granting 35 Motion to Intervene by Sprint. Signed by Judge Mark W Bennett on 08/17/2010. (Emailed to attorney Carpenter) (src)

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF IOWA WESTERN DIVISION AVENTURE COMMUNICATION TECHNOLOGY, L.L.C., an Iowa corporation, Plaintiff, vs. IOWA UTILITIES BOARD, Utilities Division, Department of Commerce; ROBERT B. BERNTSEN, KRISTA K. TANNER, and DARRELL HANSON, in their Official Capacities as Members of the Iowa Utilities Board and not as Individuals, Defendants, and VERIZON COMMUNICATIONS, INC., MCIMETRO ACCESS TRANSMISSION SERVICES, L.L.C., d/b/a Verizon Access Transmission Services, MCI COMMUNICATIONS SERVICES, INC., d/b/a Verizon Business Services; QWEST COMMUNICATIONS COMPANY, L.L.C., f/k/a Qwest Communications Corporation; AT&T COMMUNICATIONS OF THE MIDWEST, INC.; TCG OMAHA; and SPRINT COMMUNICATIONS COMPANY, L.P., Intervenors/defendants. ____________________ No. C 10-4074-MWB MEMORANDUM OPINION AND ORDER REGARDING AVENTURE'S MOTION FOR PRELIMINARY INJUNCTION AND INTEREXCHANGE CARRIERS' MOTIONS TO INTERVENE

TABLE OF CONTENTS I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 A. Factual Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1. The entities involved and their dispute . . . . . . . . . . . . . . . . . 4 2. The IUB's rule-making . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3. Aventure's tariff revisions . . . . . . . . . . . . . . . . . . . . . . . . 13 B. Procedural Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 II. LEGAL ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. Intervention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Qwest's "Jurisdictional" Challenges . . . . . . . . . . . . . . . . . . . . . . . C. Standards For Preliminary Injunctive Relief . . . . . . . . . . . . . . . . . . D. Application Of The Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Likelihood of success . . . . . . . . . . . . . . . . . . . . . . . . . . . a. Applicable standards . . . . . . . . . . . . . . . . . . . . . . . b. Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i. Vagueness . . . . . . . . . . . . . . . . . . . . . . . . . ii. Barriers to competition . . . . . . . . . . . . . . . . . iii. Interference with interstate commerce . . . . . . . iv. Violation of Iowa law and the filed rate doctrine . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Threat of irreparable harm . . . . . . . . . . . . . . . . . . . . . . . a. Applicable standards . . . . . . . . . . . . . . . . . . . . . . . b. Arguments of the parties . . . . . . . . . . . . . . . . . . . . c. Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Balance of harms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . a. Applicable standards . . . . . . . . . . . . . . . . . . . . . . . b. Arguments of the parties . . . . . . . . . . . . . . . . . . . . c. Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. The public interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 20 24 27 28 29 29 32 32 37 41 43 47 47 48 49 50 50 52 52 53

III. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

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and enhanced telephone services to business and residential customers in Iowa, seeks a preliminary injunction enjoining action to enforce an order of the Iowa Utilities Board (IUB) concerning "high volume access service" (HVAS). HVAS includes conference bridges, chat lines, help desks, and other services based upon a high volume of incoming and outgoing calls. The IUB, its members, and four prospective intervenors-- interexchange carriers (IXCs) that terminate long-distance calls to telephone numbers assigned to the CLEC--oppose such a preliminary injunction. I. INTRODUCTION A. Factual Background The court is mindful of the general rule that "the findings of fact and conclusions of law made by a court granting a preliminary injunction are not binding at trial on the merits." University of Texas v. Camenisch, 451 U.S. 390, 395, 101 S. Ct. 1830, 68 L. Ed. 2d 175 (1981); accord United States Sec. and Exchange Comm'n v. Zahareas, 272 F.3d 1102, 1105 (8th Cir. 2001) ("[W]e have long held that `findings of fact and conclusions of law made by a court granting a preliminary injunction are not binding.'") (quoting Patterson v. Masem, 774 F.2d 251, 254 (8th Cir. 1985)); National Credit Union Admin. Bd. v. Johnson, 133 F.3d 1097, 1103 n. 5 (8th Cir. 1998) (quoting this principle from Camenisch); Henderson v. Bodine Aluminum, Inc., 70 F.3d 958, 962 (8th Cir. 1995) (citing this statement from Camenisch as the "general rule" for findings of fact and 3

A

competitive local exchange carrier (CLEC), which provides interstate and intrastate exchange access telephone service, as well as local, long distance,

conclusions of law in preliminary injunction rulings). Thus, all findings of fact in this ruling are provisional. 1. The entities involved and their dispute Plaintiff Aventure Communication Technology, L.L.C. (Aventure), alleges that it is a so-called competitive local exchange carrier or CLEC, that is, a telecommunications carrier that operates a local telephone network and provides switched exchange access to that network by long distance companies, so-called interexchange carriers or IXCs, including Qwest Communications Company, L.L.C. (Qwest), Verizon Communications, Inc. (Verizon), AT&T Corporation (AT&T), and Sprint Communications Company, L.P. (Sprint). Access to Aventure's local telephone network allows the IXCs to complete long distance calls placed by the IXCs' long distance customers to numbers that have been assigned to Aventure's local customers. Aventure's business customers include companies that provide conference calling services to the public. Callers reach the conference calling "bridges" by dialing a long distance telephone number, just as they would to call any other residential or business telephone number in Iowa. IXCs must compensate Aventure for calls from IXCs completed to numbers assigned to Aventure's customers by paying a "terminating access charge." Aventure's compensation rates--its tariffs--are regulated, in part, by the Federal Communications Commission (FCC), which has jurisdiction over long distance calls that cross state boundaries (interstate or international traffic), and, in part, by the Iowa Utilities Board (IUB), which has jurisdiction over calls that originate and terminate within the state of Iowa (intrastate traffic). Approximately 98% of Aventure's long distance traffic is interstate, while the rest is intrastate. This dispute is one of a series of disputes between Iowa LECs, like Aventure, and IXCs, such as Qwest, Verizon, AT&T, and Sprint, about whether the IXCs must pay access charges to the Iowa LECs for traffic terminated to conference call providers and 4

other high volume access services. Aventure contends that the IXCs have refused to pay the tariffed rates for calls terminated to Aventure's conference call providers. The IXCs assert that Aventure is engaged in "traffic pumping" or "access stimulation," involving actively pursuing then billing a high volume of calls to free calling service companies that do not qualify for switched access service at rates determined on historically low volume and relatively high costs per call. Of particular interest here is a state-based case before the IUB initiated by Qwest in February 2007, identified by Aventure as the IUB Proceedings, but more precisely identified as Qwest Communications Corp. v. Superior Tel. Coop., IUB Docket No. FCU07-2. In the IUB Proceedings, Qwest alleged that it did not owe eight LECs, including Aventure, the terminating access charges for which Qwest had been billed and that, to the extent that Qwest had paid any of those charges, it was entitled to a refund. Eventually, in a Final Order in the IUB Proceedings dated September 21, 2009, the IUB found that the conference-calling service providers did not subscribe to services provided by the LECs pursuant to their tariffs--i.e., they were not "end users" under those tariffs--so that Qwest did not owe access charges to the LECs for traffic delivered to the conference call service providers. The Final Order also announced that the IUB would initiate formal rule-making proceedings to consider the policy issues raised in its Final Order. 2. The IUB's rule-making Indeed, on September 18, 2009, the IUB issued an order establishing Docket No. RMU-2009-0009 and commencing a rule-making proceeding (the IUB Rule-Making Proceedings). See In re High Volume Access Services, RMU-2009-0009, Order Initiating Rule Making (IUB Sept. 18, 2009) ("HVAS NPRM"), attached to Aventure's Motion For Preliminary Injunction as Exhibit 2. In that notice, the IUB proposed to amend its rules "to address High Volume Access Service (HVAS) and the effect HVAS can have on a 5

local exchange carrier's (LEC's) revenues from intrastate switched access services." HVAS NPRM at 1. The IUB released its Order Adopting Rules (HVAS Order) in the IUB Rule-Making Proceedings on June 7, 2010. See Complaint, Exhibit 1. In the HVAS Order, the IUB explained that the rules amendments were, in particular, "focused on situations in which an [sic] LEC's rates for intrastate access services are based, indirectly, on relatively low traffic volumes, but the LEC then experiences a relatively large and rapid increase in those volumes, resulting in a substantial increase in revenues without a matching increase in the total cost of providing access service." HVAS Order at 1. The HVAS Order recognized, This can happen, for example, as a result of adding an [sic] HVAS customer that offers conference bridges, chat lines, help desks, or other services that are based upon high volumes of incoming or outgoing interexchange calls. The result is an increase in the LEC's access service minutes, which leads in turn to a matching increase in the amount the LEC bills to interexchange carriers (IXCs) for switched access services. When this situation is actively pursued by the LEC, it is sometimes referred to as "access stimulation." HVAS Order at 1-2. The court finds the "Background" to the amendment of the rules in the HVAS Order to be particularly instructive. Therefore, the court quotes that "Background" here, in its entirety: The Federal Communications Commission (FCC) has described access stimulation and the economic incentives for it under the federal system of rate regulation as follows: Oversimplifying somewhat, to establish their rates, rate-of-return carriers calculate a revenue requirement, which is intended to recover expenses plus a reasonable rate of return. Once the revenue requirement is determined, carriers propose prices for all interstate 6

services, which, when multiplied by historical or projected demand, are targeted to equal the revenue requirement. If, after rates are set, actual demand and expenses differ from the estimated demand and expenses, the realized rate-of-return may be greater or less than the targeted rate of return. The limited information we have suggests that, in certain instances, some LECs are experiencing dramatic increases in demand for switched access services. If the average cost per minute falls as demand grows, the realized rates of return are likely to exceed the authorized rate of return and thus the tariffed rates become unjust and unreasonable at some point. It is well established that there is a large fixed cost to purchasing a local switch and that the marginal or incremental cost of increasing the capacity of a local switch is low (some contend that it is zero ) and certainly less than the average cost per minute of the local switch. Thus, if the average revenue per minute remains constant as demand grows, but the average cost per minute falls (which occurs if the marginal cost per minute is less than the average cost per minute) then profits (or return) will rise. This principle is equally applicable to all LECs. Moreover, the cost of local switching increases incrementally, while the price for local switching is established based on average costs, which are significantly higher. As a result, most of the switch costs are recovered by the demand used to establish the local switching rate. Carriers offering tandem switching services would experience a similar effect for their tandem switching costs. Accordingly, when local switching demand increases significantly, a carrier's increased revenues generally will exceed any cost increases. As a result, a carriers' rate of return at some point is likely to exceed the maximum allowed rate of return, making the rates unjust and unreasonable.

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A similar effect to that associated with local switching would also occur in the transport segment of the exchange access network. As demand increases, the number of circuits needed for transmission will increase. Again, the incremental cost is lower than the average cost (although the disparity is likely not as great as in the local switching case), which would lead to the rates for transport becoming unreasonable at some point as demand increases. In the Matter of Establishing Just and Reasonable Rates for Local Exchange Carriers, WC Docket No. 07-135, "Notice of Proposed Rulemaking" at ¶¶ 14-15 (FCC October 2, 2007) (hereinafter the FCC Notice). The system in Iowa is slightly different because the Board does not have rate regulation jurisdiction over a LEC's intrastate access charges to the same extent as the FCC has over interstate access charges. Iowa Code § 476.11 gives the Board jurisdiction over the terms and procedures under which toll (or interexchange) communications are interchanged, but only after a written complaint is filed by one of the telephone companies involved. This complaint-based jurisdiction means the Board is unable to order individual LECs to file new tariffs for switched access service rates on its own initiative, as the FCC has proposed to do in the FCC Notice. Thus, while the Board is aware of the FCC Notice and has given it consideration when preparing this order, the Board is not proposing to adopt the same type of rules that the FCC has described. Even in a reduced-regulation environment, the cost of filing an individual intrastate access service tariff for each LEC can be substantial. Filing costs are particularly important when those costs are being spread over a fairly small customer base, resulting in a relatively large cost per customer. In order to reduce that burden, the Board has adopted rules that allow associations of local exchange utilities to file intrastate access service tariffs. Non-rate-regulated local exchange utilities may then concur in the association tariff. See 199 IAC 8

22.14(2)(b)(1). Most small LECs have opted into the association tariff filed with the Board by ITA. The access rates contained in ITA's intrastate tariff have generally mirrored interstate rates filed by the National Exchange Carrier Association (NECA) with the FCC. However, when NECA began the process of reducing some of its interstate rates, ITA elected not to adopt the reduced rates in its intrastate tariff. In July of 2007, several IXCs filed objections to rate changes proposed by ITA for its intrastate access tariff. After holding formal contested case proceedings on the proposed changes, the Board ordered certain of the rates in ITA's intrastate tariff to be set at the same level as NECA's current rates for those elements. Those rates in ITA's intrastate tariff continue to be based on the NECA rates, which are supported by interstate costs. This has been a cost-effective method of setting intrastate rates in the ITA tariff, but it did not allow for the possible effect of HVAS. All elements of association tariffs are subject to Board review and approval, pursuant to 199 IAC 22.14(2)(b)(2). These rules give the Board jurisdiction to address the HVAS situation as it arises under an association tariff. Because HVAS situations tend to be fact-sensitive and individualized, the Board has concluded that HVAS calls should not be billed for access services pursuant to an association tariff. Under the adopted rules, any LEC providing HVAS must file an individual tariff for that service (although it may continue to concur in an association tariff for all other access services). To the extent an individual LEC opts to file an individual tariff for intrastate access services, either HVAS only or for all such services, the Board's rate jurisdiction is limited to the circumstances specified in § 476.11. Even for those situations, however, the Board proposed to adopt rules setting out the standards by which it will rule on the reasonableness of an individual LEC tariff if a complaint is filed pursuant to § 476.11. To that end, the adopted rules specify certain procedures that will be required in order to 9

ensure reasonable HVAS access rates, such as prohibiting the application of association access rates to HVAS traffic, a requirement to engage in good faith negotiations for intrastate access rates, and final Board approval of HVAS tariff provisions. The adopted rules define an [sic] HVAS situation in terms of a rapid increase in access volumes (access growth of more than 100 percent in six months). For established LECs, this should be an effective test. The Board realizes that a new entrant's intrastate access billings are likely to exceed the HVAS threshold proposed in these rules even if the company is not engaged in true HVAS activities, simply because the company's normal intrastate access volumes are likely to be increasing rapidly (when measured on a percentage growth basis). It has generally been the Board's policy to issue a certificate of public convenience and necessity to a new entrant in the telecommunications industry in Iowa within six months of the date the new carrier plans to commence service to enable the company to apply for, and activate, new telephone numbers within the time permitted by the North American Numbering Plan. Under these adopted rules, a new entrant should provide notice to all affected carriers, pursuant to 199 IAC 22.14(2)"e," within the six-month period before it begins providing local exchange service. Under the same rule, any negotiations between the new entrant and interexchange utilities should conclude within 60 days. Therefore, a new entrant should be able to have an approved and effective access tariff on file with the Board by the time it begins providing service in Iowa. HVAS Order at 3-8 (footnote omitted). In the HVAS Order, the IUB adopted the following definition for High-Volume Access Service: "High-volume access service (HVAS)" is any service that results in an increase in total billings for intrastate exchange access for a local exchange utility in excess of 100 10

percent in less than six months. By way of illustration and not limitation, HVAS typically results in significant increases in interexchange call volumes and can include chat lines, conference bridges, call center operations, help desk provisioning, or similar operations. These services may be advertised to consumers as being free or for the cost of a long distance call. The call service operators often provide marketing activities for HVAS in exchange for direct payments, revenue sharing, concessions, or commissions from local service providers. HVAS Order, Utilities Division [199] at 3 (amending 199 IAC 22.1(3)). The HVAS Order also adopted an amendment to 199 IAC 22.14(2)"d"(8) "prohibiting the application of association access service rates to HVAS traffic." Id. The HVAS Order then adopted an entirely new paragraph 22.14(2)"e," with revisions from the proposed rule indicated by strikeouts and underlining: e. A local exchange utility that is adding a new HVAS customer or otherwise reasonably anticipates an [sic] HVAS situation shall notify interexchange utilities provide notice of the situation, the telephone numbers that will be assigned to the HVAS customer (if applicable), and the expected date service to the HVAS customer will be initiated, if applicable. Notice should be sent to each interexchange utility that paid for intrastate access services from the local exchange carrier in the preceding 12 months; to any carrier with whom the local exchange carrier exchanged traffic in the preceding 12 months; and all other local exchange carriers authorized to provide service in the subject exchange; by a method calculated to provide adequate notice. Any interexchange utility may request negotiations concerning the access rates applicable to calls to or from the HVAS customer. Any interexchange utility that believes a situation has occurred or is occurring that does not specifically meet the HVAS threshold requirements defined in subrule 22.1(3), but which raises the same general concerns and issues as an [sic] 11

HVAS situation may file a complaint with the board pursuant to these rules. A local exchange utility that experiences an increase in intrastate access billings that qualifies as an [sic] HVAS situation, but did not add a new HVAS customer or otherwise anticipate the situation, shall notify interexchange utilities of the HVAS situation at the earliest reasonable opportunity, as described in the preceding paragraph. Any interexchange utility may request negotiations concerning whether the local exchange utility's access rates, as a whole or for HVAS only, should be changed to reflect the increased access traffic. When a utility requests negotiations concerning intrastate access services, the parties shall negotiate in good faith to achieve reasonable terms and procedures for the exchange of traffic. No access charges shall apply to the HVAS traffic until an access tariff for HVAS is accepted for filing by the board and has become effective. At any time that any party believes negotiations will not be successful, any party may file a written complaint with the board pursuant to Iowa Code section 476.11. In any such proceeding, the board will consider setting the rate for access services for HVAS traffic based upon the incremental cost of providing HVAS, although any other relevant evidence may also be considered. The incremental cost will not include marketing or other payments made to HVAS customers. The resulting rates for access services may include a range of rates based upon the volume of access traffic or other relevant factors. Any interexchange carrier that believes a situation has occurred or is occurring that does not specifically meet the HVAS threshold requirements defined in subrule 22.1(3), but which raises the same general concerns and issues as an [sic] HVAS situation, may file a complaint with the board. HVAS Order, Utilities Division [199], at 3-5. Finally, the HVAS Order amended the introductory paragraph of subrule 22.20(5), with amendments underlined, as follows: 12

22.20(5) Certificate revocation. Any five subscribers or potential subscribers, an interexchange utility, or consumer advocate upon filing a sworn statement showing a generalized pattern of inadequate telephone service or facilities may petition the board to begin formal certificate revocation proceedings against a local exchange utility. For the purposes of this rule, inadequate telephone service or facilities may include the failure to bill high-volume intrastate access (HVAS) charges in a manner consistent with the requirements of 199 IAC 22.14. While similar in nature to a complaint filed under rule 199-6.2(476), a petition under this rule shall be addressed by the board under the following procedure and not the procedure found in 199--Chapter 6. HVAS Order, Utilities Division [199], at 5. Aventure contends that, if the IUB revokes a certificate of public convenience and necessity in Iowa, it will have the effect of prohibiting the LEC from, inter alia, receiving telephone numbers from the North American Numbering Plan Administrator (NANPA) and the Number Pooling Administrator. Aventure asserts, further, that without the ability to receive telephone numbers, the LEC will be effectively prohibited from providing both intrastate communication service (subject to the Board's jurisdiction) and interstate communication service (subject to the exclusive jurisdiction of the FCC). The amendments to the rules set forth in the HVAS Order became effective on August 4, 2010. HVAS Order at 3. 3. Aventure's tariff revisions On October 12, 2009, shortly after the IUB Rule-Making Proceedings began, Aventure filed proposed changes to its local exchange tariff with the IUB. Among other things, the proposed changes would have allowed Aventure to provide local exchange service in Sioux City, Iowa, which is an exchange served by Qwest Corporation. Aventure's goal in doing so was to provide services to five commercial customers, 13

requesting 555 lines in the Sioux City exchange, waiting to subscribe to Aventure's service. On November 23, 2009, however, the IUB docketed Aventure's tariff for further investigation, because "Aventure has not provided any assurances in its proposed tariff amendments, or any other filings with the Board, indicating that it intends to provide local exchange service to end user customers in a manner that is consistent with the Board's ruling in [the IUB Proceedings]." Aventure's Motion For Preliminary Injunction, Exhibit 1 (Affidavit of James McKenna), Attachment B, at 3. On December 1, 2009, Aventure filed a Motion To Approve The Tariff Revision, see Aventure's Motion For Preliminary Injunction, Exhibit 1 (Affidavit of James McKenna), Attachment D, purportedly answering the IUB's questions and urging that it be granted authority quickly, so that it could begin serving customers. However, the IUB did not respond until January 13, 2010, and when it did, it required Aventure to make additional filings and certifications before the IUB would approve Aventure's Sioux City expansion tariff. See Aventure's Motion For Preliminary Injunction, Exhibit 1 (Affidavit of James McKenna), Attachment E ("If Aventure is able to offer a satisfactory response to each of these issues [raised by its proposed tariff filing], the Board may be in a position to make the necessary findings and approve Aventure's proposed tariff revision," and enumerating the issues, one of which was a statement that Aventure will comply with the requirements of the IUB Rule-Making Proceedings). In response, on January 27, 2010, Aventure withdrew its request for approval of its tariff revisions, because the delay in the IUB approval process had caused Aventure's potential customers in the Sioux City area to find another provider. Even so, Aventure agreed to comply with the conditions set forth in the IUB's January 13, 2010, order in the IUB Proceedings.

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On July 8, 2010, Aventure filed a superseding access tariff and revisions to its local exchange tariff. Several parties, including Qwest and Sprint, filed resistances to the approval of the switched access tariff and asked the IUB to reject or suspend it, in part, because, they contend, Aventure had not complied with the new rules adopted by the IUB in the HVAS Order, but which had not yet become effective. No parties objected to the proposed revisions to Aventure's local exchange tariff. The IUB had not taken action on Aventure's new access tariff at the time that Aventure filed its Motion For Preliminary Injunction in this court. However, on August 10, 2010, the IUB suspended Aventure's proposed tariff changes, inter alia, on the ground that it appeared to conflict with the Final Order in the IUB Proceedings. Aventure's Motion For Temporary Restraining Order (docket no. 41), Exhibit A. B. Procedural Background On August 2, 2010, Aventure filed its Complaint For Declaratory, Injunctive, And Other Relief (docket no. 2), challenging the HVAS Order. Aventure named as defendants the IUB and its individual members, in their official capacities. Although only the individual board members, and not the IUB itself, have thus far entered appearances, the court will refer to the defendants collectively as the IUB. In its Complaint, Aventure asserts the following claims: Count I alleges that the HVAS Order violates the Supremacy Clause of Article VI of the United States Constitution, in that the IUB has created state law that has the effect of prohibiting interstate telecommunications services, creating an actual conflict between federal and state law that would stand as an obstacle to the accomplishment and execution of the full objectives of Congress, as set forth in the Telecommunications Act of 1996, 47 U.S.C. § 253; Count II alleges that the HVAS Order violates the Commerce Clause of Article I, § 8, cl. 3, of the 15

United States Constitution, in that the HVAS Order imposes upon interstate commerce burdens that vastly exceed the putative intrastate benefits; Count III alleges that the HVAS Order violates the Due Process Clause of the Fourteenth Amendment to the United States Constitution, in that it is vague, ambiguous, and arbitrary; Count IV alleges that the HVAS Order violates the Due Process Clause of Article I, § 9, of the Iowa Constitution, for essentially the same reasons that it violates federal due process; Count V alleges that, applying the standards for judicial review of agency action pursuant to IOWA CODE § 17A.19, the HVAS Order is unreasonable, arbitrary, capricious, and an abuse of discretion; Count VI alleges that the HVAS Order would violate the "filed rate doctrine" and IOWA CODE §§ 476.3 and 476.4; Count VII alleges that the HVAS Order violates IOWA CODE § 476.29(9), because that statutory provision permits revocation of a certificate to provide local telecommunications service only for failure to furnish reasonably adequate telephone service and facilities, but not for failure to treat HVAS charges in a manner consistent with the HVAS Order; Count VIII is a claim for declaratory judgment pursuant to 28 U.S.C. § 2201; and Count IX is a request for preliminary and permanent injunctive
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Specifically, Aventure seeks declarations that (i) the HVAS Order is unlawful and unenforceable because it conflicts with federal law and impermissibly presents obstacles to competition in interstate telecommunications; (ii) the HVAS Order is unlawful and unenforceable because it impermissibly burdens interstate commerce; (iii) the HVAS Order is unlawful and unenforceable because it is unconstitutionally vague and ambiguous in violation of the due process clause of the United States Constitution and the Constitution of Iowa; (iv) the HVAS Order is unreasonable, arbitrary, and capricious, or an abuse of the IUB's discretion, in violation of Iowa law; (v) that the IUB cannot issue a rule that conflicts with a carrier's statutory obligation to pay tariffed access charges pursuant to state law and the filed-rate doctrine; and/or (vi) that the IUB cannot revoke a certificate of public convenience and necessity for failure to bill access services in the manner set forth in the proposed rules. 16

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relief enjoining the IUB from enforcing the new provisions of 199 IAC 22.1(3) and 199 IAC 22.14 promulgated by the IUB in the HVAS Order. This matter comes before the court pursuant to Aventure's August 3, 2010, Motion For Preliminary Injunction (docket no. 12); Verizon's August 6, 2010, Motion To Intervene Pursuant to FRCP 24 (docket no. 20); Qwest's August 9, 2010, Emergency Motion To Intervene Of Right (docket no. 24); AT&T's August 10, 2010, Motion To Intervene Pursuant To FRCP 24 (docket no. 33), and Sprint's August 10, 2010, Motion To Intervene Pursuant To FRCP 24 (docket no. 35). By Orders (docket nos. 19, 22, 27, 36), the court ordered expedited responses to these motions due by 5:00 p.m. (CDT) on Thursday, August 12, 2010, and set telephonic oral arguments on the motions for 8:00 a.m. (CDT) on Monday, August 16, 2010. The court also authorized Verizon, Qwest, AT&T, and Sprint to file responses to Aventure's Motion For Preliminary Injunction and to participate in the oral arguments on the Motion For Preliminary Injunction, but stated that the court's consideration of their arguments concerning the Motion For Preliminary Injunction would be subject to the court's ruling on their Motions To Intervene.
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The movant is Verizon Communications, Inc., including the wholly owned subsidiaries MCImetro Access Transmission Services, L.L.C., d/b/a Verizon Access Transmission Services, and MCI Communications Services, Inc., d/b/a Verizon Business Services, but it identifies itself individually and collectively simply as "Verizon." The movant is Qwest Communications Company, L.L.C. (Qwest), f/k/a Qwest Communications Corporation, but it identifies itself simply as "Qwest." The movants are AT&T Communications of the Midwest, Inc., and TCG Omaha, but they identify themselves collectively as "AT&T." The movant is Sprint Communications Company, L.P., but it identifies itself simply as "Sprint." 17
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On August 10, 2010, Aventure filed Responses (docket nos. 29 & 30) to Qwest's and Verizon's Motions To Intervene stating that it had no resistance to those motions. On August 11, 2010, Aventure filed Responses (docket nos. 38 & 39) to Sprint's and AT&T's Motions To Intervene stating that it had no resistance to those motions, either. The IUB did not file any response to the Motions To Intervene by the deadline set by the court, but did state in subsequent oral arguments on the pending motions that it did not resist any of the Motions To Intervene. The IUB and each of the prospective intervenors also filed resistances to Aventure's Motion For Preliminary Injunction by the deadline on August 12, 2010. See Verizon's Resistance (docket no. 45); Sprint's Resistance (docket no. 47); IUB's Resistance (docket no. 48); Qwest's Resistance (docket no. 55); and AT&T's Resistance (docket no. 56).
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No party requested an evidentiary hearing on Aventure's Motion For Preliminary Injunction by the August 11, 2010, deadline set in the court's August 6, 2010, Order (docket no. 19). Therefore, the Motion For Preliminary Injunction was submitted on written submissions and oral arguments. On August 12, 2010, Aventure filed a Motion For Temporary Restraining Order (docket no. 41), in which it asserted that action of the IUB on August 10, 2010, required immediate injunctive relief. In an Order Regarding Aventure's Motion For Temporary Restraining Order (docket no. 43), filed August 12, 2010, the court found nothing in the IUB's August 10, 2010, action that posed such an immediate threat to the continuation of Aventure's business that the court needed to hear or rule on Aventure's Motion For Temporary Restraining Order before the oral arguments already set on Aventure's Motion Qwest's and AT&T's Resistances were not filed until August 13, 2010, after the court granted leave to file overlength briefs. Their motions to file overlength briefs, with the pertinent briefs attached, were filed on August 12, 2010. See docket nos. 49 & 53. 18
6

For Preliminary Injunction.

Therefore, the court denied Aventure's Motion For

Temporary Restraining Order without prejudice to reassertion at the telephonic oral arguments on Aventure's Motion For Preliminary Injunction. At those oral arguments, in light of the court's representation that this ruling on Aventure's Motion For Preliminary Injunction would be filed by the end of the business day on August 18, 2010, Aventure did not reurge its request for a temporary restraining order. The court heard telephonic oral arguments on the pending motions as scheduled on August 16, 2010. At the oral arguments, Aventure was represented by George David Carter, Jr., who argued the motions, and Jonathan Edward Canis of Arent Fox, L.L.P., in Washington, D.C., and by local counsel Paul D. Lundberg of the Lundberg Law Firm in Sioux City, Iowa. The individual members of the IUB were represented by counsel David Jay Lynch, who argued the motions, and Jennifer Smithson in Des Moines, Iowa. Proposed intervenor Sprint was represented by Bret Alan Dublinske of Dickinson, Mackaman, Tyler & Hagen, P.C., in Des Moines, Iowa. Mr. Dublinske also appeared as local counsel for proposed intervenor Verizon, but Verizon was also represented by Scott Angstreich, who argued the motions on Verizon's behalf, and Gregory Rapawy of Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C., in Washington, D.C. Proposed intervenor Qwest was represented by Charles W. Steese of Steese, Evans & Frankel, P.C., in Denver, Colorado, who argued the motion, and in-house counsel George Thompson. Proposed intervenor AT&T was represented by David Carpenter of Sidley Austin, L.L.P., in Chicago, Illinois, who argued the motion, and by Richard W. Lozier, Jr., of Belin McCormick, P.C., in Des Moines, Iowa, and Letty S.D. Friesen of AT&T in Denver, Colorado.
7 7

Again, the IUB itself has not yet appeared in these proceedings. 19

The pending motions are all now fully submitted. II. LEGAL ANALYSIS Before considering Aventure's Motion For Preliminary Injunction, the court must determine which of the prospective intervenors, if any, should be allowed to resist that Motion along with the IUB. The court will then turn to consideration of the arguments by the appropriate parties for and against the entry of a preliminary injunction. A. Intervention Verizon, Qwest, AT&T, and Sprint have all moved to intervene as of right pursuant to Rule 24(a)(2) of the Federal Rules of Civil Procedure. Verizon, AT&T, and Sprint have also moved, in the alternative, for permissive intervention pursuant to Rule 24(b)(1)(B). All seek to intervene to defend the HVAS Order, although only Verizon and Sprint expressly request to be aligned as defendants. All of the intervening IXCs assert that they have an interest relating to the property or transaction that is the subject of this action and that they are so situated that disposing of the action may, as a practical matter, impair or impede their ability to protect their interests, because all participated in the underlying administrative rule-making proceedings and all are businesses affected by the resulting regulations. They also argue that their interests are distinct from, and not adequately represented by, the IUB, essentially because they are businesses affected by the challenged regulations, as opposed to the entity that promulgated the regulations, so that they each have unique operational, competitive, and financial interests. Aventure does not oppose the intervention of Verizon, Qwest, AT&T, or Sprint. At the August 16, 2010, oral arguments, the IUB also represented that it had no objection to the Motions To Intervene. 20

Rule 24(a)(2) of the Federal Rules of Civil Procedure provides for intervention as of right under the following circumstances: On timely motion, the court must permit anyone to intervene who: *** (2) claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest, unless existing parties adequately represent that interest. FED. R. CIV. P. 24(a)92). To put it another way, Under Rule 24(a)(2), a party is entitled to intervene as a matter of right upon filing a timely motion if: (1) she has a cognizable interest in the subject matter of the litigation, (2) the interest may be impaired as a result of the litigation, and (3) the interest is not adequately protected by the existing parties to the litigation. Chiglo v. City of Preston, 104 F.3d 185, 187 (8th Cir. 1997). Medical Liability Mut. Ins. Co. v Alan Curtis, L.L.C., 485 F.3d 1006, 1008 (8th Cir. 2007) (footnote omitted). The Eighth Circuit Court of Appeals has recognized that, for purposes of Rule 24(a)(2), the prospective intervenor's interest must be "significantly protectable," which the court has interpreted to mean "legally protectable," and that general economic interests, even significant ones, are not protectable and cannot serve as the basis for intervention. See United States v. Metropolitan St. Louis Sewer Dist., 569 F.3d 829, 83839 (8th Cir. 2009); Medical Liability Mut. Ins. Co., 485 F.3d at 1008 (also stating that an interest cognizable under Rule 24(a)(2) must be "direct, substantial, and legally protectable," and that an economic interest in the outcome of the litigation is not sufficient to warrant intervention as of right). Here, the prospective intervenors all assert their 21

economic interest in the outcome of Aventure's challenge to the regulations as supporting their intervention as of right. intervention as of right. Id. Nevertheless, various courts have held that a party to an underlying administrative rule-making proceeding may properly intervene as of right in a subsequent judicial challenge to the resulting regulation. See, e.g., In re Sierra Club, 945 F.2d 776, 779 (4th Cir. 1991) (the Sierra Club could intervene as of right pursuant to Rule 24(a)(2) in an action by hazardous waste handlers challenging the constitutionality of a state's regulation of hazardous waste disposal, where it was a party to the administrative permitting proceedings involved); Coalition of Arizona/New Mexico Counties for Stable Economic Growth v. Department of the Interior, 100 F.3d 837, 842 (10th Cir. 1996) (the interest of a wildlife photographer, who had worked successfully to get the Mexican spotted owl on the endangered species list, had sufficient interest to intervene as of right under Rule 24(a)(2) in a subsequent action challenging that agency determination, citing, inter alia, Sierra Club); Washington State Bldg. & Constr. Trades Council, 684 F.2d 627, 630 (9th Cir. 1982) (holding that "the public interest group that sponsored the [statute as a ballot] initiative . . . was entitled to intervention as a matter of right under Rule 24(a)" in an action challenging the constitutionality of the statute). Therefore, the court agrees with the intervening IXCs (and Aventure) that the intervening IXCs have sufficient interest in these proceedings to intervene as of right, where they were parties to the underlying administrative proceedings in which the challenged regulations were promulgated. The court also finds that the intervening IXCs' interests may be impaired as a result of this litigation and that their interests are not adequately protected by the existing proponent of the challenged regulations, defendant IUB. See Medical Liability Mut. Ins. Co., 485 F.3d at 1008 (second and third requirements for intervention as of right pursuant 22 This interest, by itself, is not sufficient to warrant

to Rule 24(a)(2)). Plainly, whatever interests the IXCs have in continuation of the IUB's new regulations, those interests may be impaired, if this litigation results in a preliminary or permanent injunction on implementation of those new regulations. Moreover, as the Eighth Circuit Court of Appeals has explained, We determine if representation is adequate "by comparing the interests of the proposed intervenor with the interests of the current parties to the action." Sierra Club v. Robertson, 960 F.2d 83, 86 (8th Cir. 1992). A party generally need only make a minimal showing "that representation `may be' inadequate" to be entitled to intervene on that basis, Kansas Pub. Employees Ret. Sys. v. Reimer & Koger Assocs., 60 F.3d 1304, 1308 (8th Cir. 1995) (citing Trbovich v. United Mine Workers, 404 U.S. 528, 538 n. 10, 92 S. Ct. 630, 30 L. Ed. 2d 686 (1972)), but the burden is greater if the named party is a government entity that represents interests common to the public. Curry v. Regents of Univ. of Minn., 167 F.3d 420, 423 (8th Cir. 1999) (describing the doctrine of parens patriae). We presume that the government entity adequately represents the public, and we require the party seeking to intervene to make a strong showing of inadequate representation; for example, it may show that its interests are distinct and cannot be subsumed within the public interest represented by the government entity. Id.; see also Mille Lacs Band of Chippewa Indians v. Minnesota, 989 F.2d 994, 1000 (8th Cir. 1993). The party may meet that burden by showing that its interests at risk in the litigation are not shared by the general citizenry. See Mille Lacs Band, 989 F.2d at 1001 (noting that a specific property interest in the outcome of the litigation goes beyond the general public interest in the preservation of natural resources); Ubbelohde, 330 F.3d at 1025 (noting that when the government is forced to weigh competing interests, such as weighing upstream and downstream interests in the management of a river system, it may favor one over another and therefore be unable to adequately represent the conflicting interests). It is not sufficient that the party seeking 23

intervention merely disagrees with the litigation strategy or objectives of the party representing its interests. Chiglo, 104 F.3d at 188. Little Rock Sch. Dist. v. North Little Rock Sch. Dist., 378 F.3d 774, 780 (8th Cir. 2004). Here, even assuming that the IUB is a government agency that adequately represents the public's interest, the intervening IXCs have shown that they have peculiar interests that are distinct from the public interest in available, efficient, economical telecommunications services that the IUB can be expected to protect. operational, competitive, and financial interests. Therefore, the IXCs' unresisted motions to intervene as of right will be granted; the court need not consider Verizon's, AT&T's, and Sprint's alternative arguments for permissive intervention. As a result of their intervention as of right, the court will give full consideration to the IXCs' arguments, as well as the IUB's, in resistance to Aventure's Motion For Preliminary Injunction. B. Qwest's "Jurisdictional" Challenges It is an intervenor, Qwest, rather than the IUB, that raises "jurisdictional" challenges to Aventure's Motion For Preliminary Injunction and, presumably, Aventure's Complaint. In essence, Qwest's "jurisdictional" challenges are as follows: The HVAS Order is subject to judicial review in Iowa state courts, so this court should abstain from hearing Count I; all of Aventure's claims, to the extent that they are based on Aventure's allegations regarding related, pending IUB proceedings, require the court to abstain under the Younger Doctrine; and, as to Counts II through IX, Aventure has not exhausted its administrative remedies pursuant to the prudential doctrine. Because Aventure did not The IXCs' interests are unique

24

address any such "jurisdictional" issues in its Motion For Preliminary Injunction, the court treated Qwest as the movant for purposes of raising these "jurisdictional" issues. Qwest's "jurisdictional" challenges need not detain the court long, however, because the court finds that they are red herrings. First, it is well-settled that federal courts have jurisdiction over suits to enjoin state officials from interfering with federal rights. See, e.g., Independent Living Ctr. of S. Cal., Inc. v. Shewry, 543 F.3d 1050, 1056 (9th Cir. 2008) ("It is beyond dispute that federal courts have jurisdiction over suits to enjoin state officials from interfering with federal rights."); Planned Parenthood of Houston and Southeast Tex. v. Sanchez, 403 F.3d 324, 334 (5th Cir. 2005) ("While there may be some lack of harmony in the case law, the rule that there is an implied right of action to enjoin state or local regulation that is preempted by a federal statutory or constitutional provision--and that such an action falls within the federal question jurisdiction--is well-established."); Qwest Corp. v. City of Santa Fe, New Mex., 380 F.3d 1258, 1264 (10th Cir. 2004) ("[T]his court has concluded that federal district courts have jurisdiction over actions seeking to enjoin the enforcement of a state regulation," citing ANR Pipeline Co. v. Corporation Comm'n of Okla., 860 F.2d 1571, 1576 (10th Cir. 1988), in turn relying on Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96 n.14 (1983)); Local Union No. 12004 v. Massachusetts, 377 F.3d 64, 75 & n. 8 (1st Cir. 2004) ("`[T]he rule that there is an implied right of action to enjoin state or local regulation that is preempted by a federal statutory or constitutional provision--and that such an action falls within the federal question jurisdiction--is well-established.'" (quoting Richard H. Fallon et al., Hart & Wechsler's The Federal Courts & The Federal System 903 (5th ed.2003)); Ammex, Inc. v. Cox, 351 F.3d 697, 702-03 (6th Cir. 2003) ("The Supreme Court's decision in Shaw v. Delta Air Lines, Inc. makes clear that a federal court has subject

25

matter jurisdiction when a person seeks to enjoin state officials from enforcing a state regulation against the person on the ground that the regulation violates federal rights."). Second, Qwest's "jurisdictional" challenges are based on mischaracterizations of Aventure's Complaint and Motion For Preliminary Injunction. Aventure is not seeking judicial review of the IUB's rule-making proceedings, and certainly is not seeking judicial review of related pending administrative proceedings in this action, which it identifies primarily for the purpose of showing that the IUB's application of the HVAS Order is causing Aventure irreparable harm. Rather, Aventure is asserting that enforcement of the HVAS Order would violate federal rights, falling squarely within this federal court's jurisdiction. Third, Qwest has cited no authority that a complainant in a federal action for injunctive relief from a state regulation must first "exhaust" state administrative remedies--either as a prudential or a jurisdictional matter--by bringing all of its federal law challenges to the regulation before the administrative agency in the proceedings that produced the challenged regulation. Fourth, the rule-making proceedings that produced the HVAS Order have terminated. Thus, the circumstances presented here fail the first prong of the Younger abstention doctrine. See Plouffe v. Ligon, 606 F.3d 890, 892 (8th Cir. 2010) ("The Younger abstention doctrine, as it has evolved, provides that federal courts should abstain from exercising jurisdiction when (1) there is an ongoing state proceeding, (2) which implicates important state interests, and (3) there is an adequate opportunity to raise any relevant federal questions in the state proceeding," citing Middlesex County Ethics Comm'n v. Garden State Bar Ass'n, 457 U.S. 423, 432 (1982)). In other words, there is no state judicial or administrative proceeding to be disrupted by Aventure's action to enjoin implementation of the HVAS Order. Aaron v. Target Corp., 357 F.3d 768, 774 (8th Cir. 26

2004) (the "first Middlesex inquiry" considers "whether there is an ongoing state judicial proceeding that would be disrupted by the federal action"). The court rejects Qwest's "jurisdictional" challenges to Aventure's action and, therefore, turns to consideration of the merits of Aventure's Motion For Preliminary Injunction. C. Standards For Preliminary Injunctive Relief As this court has explained in past cases, it is well-settled in this circuit that applications for preliminary injunctions are generally measured against the factors set forth in the seminal decision in Dataphase Systems, Inc. v. C L Systems, Inc., 640 F.2d 109, 113 (8th Cir. 1981) (en banc). See Wachovia Sec., L.L.C. v. Stanton, 571 F. Supp. 2d 1014, 1031 (N.D. Iowa 2008); Interbake Foods, L.L.C. v. Tomasiello, 461 F. Supp. 2d 943, 954-55 (N.D. Iowa 2006); McLeodUSA Telecommc'ns Servs., Inc. v. Qwest Corp., 361 F. Supp. 2d 912, 918 (N.D. Iowa 2005); Doctor John's, Inc. v. City of Sioux City, Iowa, 305 F. Supp. 2d 1022, 1033-34 (N.D. Iowa 2004); Branstad v. Glickman, 118 F. Supp. 2d 925, 937 (N.D. Iowa 2000); Uncle B's Bakery, Inc. v. O'Rourke, 920 F. Supp. 1405, 1411 (N.D. Iowa 1996); accord Straights and Gays for Equality v. Osseo Area Sch. Dist., 471 F.3d 908, 911 (8th Cir. 2006) (same factors); Lankford v. Sherman, 451 F.3d 496, 503 (8th Cir. 2006) (same factors). The so-called "Dataphase factors" that courts must weigh to decide whether or not to grant a preliminary injunction are the following: (1) the movant's probability or likelihood of success on the merits, (2) the threat of irreparable harm or injury to the movant absent the injunction, (3) the balance between the harm to the movant and the harm that the injunction's issuance would inflict on other interested parties, and (4) the public interest. Dataphase, 640 F.2d at 114; accord Stanton, 571 F. Supp. 2d at 1032; Interbake Foods, L.L.C., 461 F. Supp. 2d at 955; 27

Doctor John's, Inc., 305 F. Supp. 2d at 1033; Branstad I, 118 F. Supp. 2d at 937 (quoting similar factors from Entergy, Ark., Inc. v. Nebraska, 210 F.3d 887, 898 (8th Cir. 2000)); FED. R. CIV. P. 65(b)(1). The burden is on the movant to establish that injunctive relief is appropriate. Lankford, 451 F.3d at 503; Baker Elec. Co-op., Inc. v. Chaske, 28 F.3d 1466, 1472 (8th Cir. 1994); Modern Computer Sys., Inc., v. Modern Banking Sys., Inc., 871 F.2d 734, 737 (8th Cir. 1989) (en banc). "`No single [Dataphase] factor in itself is dispositive; in each case all of the factors must be considered to determine whether on balance they weigh towards granting the injunction.'" Baker Elec. Co-op., 28 F.3d at 1472 (quoting Calvin Klein Cosmetics Corp. v. Lenox Labs., Inc., 815 F.2d 500, 503 (8th Cir. 1987) (citing Dataphase)); accord Lankford, 451 F.3d at 503 ("No single factor is dispositive, as the district court must balance all factors to determine whether the injunction should issue.") (citing Baker Elec. Co-op.); Bandag, Inc. v. Jack's Tire & Oil, Inc., 190 F.3d 924, 926 (8th Cir. 1999) ("These factors are not a rigid formula."). "`A district court has broad discretion when ruling on requests for preliminary injunctions, and [the appellate court] will reverse only for clearly erroneous factual determinations, an error of law, or an abuse of that discretion.'" Entergy, Ark., Inc., 210 F.3d at 898 (quoting United Indus. Corp, 140 F.3d at 1179); accord Lankford, 451 F.3d at 503. The court abuses its discretion "where the district court rests its conclusion on clearly erroneous factual findings or erroneous legal conclusions." Lankford, 451 F.3d at 503-04. D. Application Of The Standards As a matter of completeness, the court will consider, at least briefly, each of the four "Dataphase factors." See Lankford, 451 F.3d at 503 ("No single factor is

28

dispositive, as the district court must balance all factors to determine whether the injunction should issue.") (citing Baker Elec. Co-op., 28 F.3d at 1472). 1. Likelihood of success a. Applicable standards

The first "Dataphase factor" that courts must consider when ruling on an application for a preliminary injunction is the likelihood or probability of success on the merits. Dataphase, 640 F.2d at 114. There are two prongs to the "likelihood of success" factor. First, likelihood of success on the merits requires that the movant find support for its position in governing law. See, e.g., Baker Elec. Co-op., 28 F.3d at 1473-74 (Indian tribe's sovereignty to regulate electrical services); ILQ Inv., Inc. v. City of Rochester, 25 F.3d 1413, 1416 (8th Cir. 1994) (first amendment and prior restraint of expression); City of Timber Lake v. Cheyenne River Sioux Tribe, 10 F.3d 554, 556-58 (8th Cir. 1993) (Indian tribe's regulatory authority and authority of states to regulate activities on tribal lands); Aziz v. Moore, 8 F.3d 13, 15 (8th Cir. 1993) (denial of injunctive relief was proper because federal courts "must abstain from imposing injunctions on prison officials [in an action under 42 U.S.C. § 1983 action] `in the absence of a concrete showing of a valid claim and constitutionally mandated directives for relief,'" quoting Rogers v. Scurr, 676 F.2d 1211, 1214 (8th Cir. 1982)). Second, this factor requires some assessment of how likely the movant is to succeed. When determining likelihood of success, the court does not decide whether the movant for a preliminary injunction will ultimately win. Heather K. v. City of Mallard, 887 F. Supp. 1249, 1258 (citing Glenwood Bridge, Inc. v. City of Minneapolis, 940 F.2d 367, 371 (8th Cir. 1991)). Rather, "at the early stage of a preliminary injunction motion, the speculative nature of this particular [`likelihood of success'] inquiry militates against 29

any wooden or mathematical application of the test. Instead, a court should flexibly weigh the case's particular circumstances to determine whether the balance of equities so favors the movant that justice requires the court to intervene to preserve the status quo until the merits are determined." United Indus. Corp. v. Clorox Co., 140 F.3d 1175, 1179 (8th Cir. 1998) (internal citations and quotation marks omitted). More specifically, the Eighth Circuit Court of Appeals has explained, "Dataphase rejected the notion that the party seeking relief must show `a greater than fifty per cent likelihood that he will prevail on the merits,' holding instead that `where the balance of other factors tips decidedly toward plaintiff a preliminary injunction may issue if movant has raised questions so serious and difficult as to call for more deliberate investigation.'" Planned Parenthood Minnesota, North Dakota, South Dakota v. Rounds, 530 F.3d 724, 731 (8th Cir. 2008) (citing Dataphase, 640 F.2d at 113). In other words, courts should assess whether the plaintiff has a "fair chance of prevailing." Id. at 732. Aventure acknowledges that, in Planned Parenthood Minnesota, North Dakota, South Dakota, 530 F.3d at 731-32, the Eighth Circuit Court of Appeals adopted a heightened standard for success, a "likely to prevail on the merits" standard, where the movant seeks a preliminary injunction against the implementation of a state statute. Aventure argues, however, that this standard is not applicable to a preliminary injunction against implementation of a state regulation, because the IUB's promulgation of the challenged regulations did not involve both the legislative and executive branches in the formulation of policy in the name of the public interest, but formulation solely by the executive branch, citing Able v. United States, 44 F.3d 128, 131-32 (2d Cir. 1995) (per curiam), on which the court in Planned Parenthood relied. Qwest and the IUB, in particular, take issue with this contention. They argue that the Planned Parenthood "substantial likelihood" test, rather than the "fair chance" standard, applies in this case, 30

because the requested injunctive relief would stay governmental action pursuant to a statute or a regulatory scheme that is the result of the full play of the democratic process. In Planned Parenthood, the Eighth Circuit Court of Appeals expressly reaffirmed "that a party seeking a preliminary injunction of the implementation of a state statute must demonstrate more than just a `fair chance' that it will succeed on the merits. We characterize this more rigorous standard . . . as requiring a showing that the movant `is likely to prevail on the merits.'" Planned Parenthood, 530 F.3d at 731-32 (quoting Doran v. Salem Inn, Inc., 422 U.S. 922, 931 (1975), and citing Able, 44 F.3d at 131). The court also noted that, "[w]here preliminary injunctions are sought to enjoin city ordinances or administrative actions by federal, state or local government agencies, we note that the Second Circuit has examined the circumstances surrounding such government actions to determine to what extent the challenged action represents `the full play of the democratic process' and, thus, deserves the deference of the traditional test," meaning a "substantial likelihood of success," rather than the "fair chance" standard adopted in Dataphase. Id. at 733 n.6 (citing Able, 44 F.3d at 131-32). Here, contrary to Aventure's contentions, the court concludes that the rule-making procedures of the IUB did not involve mere policy-making action of the executive branch, but public debate to determine the public interest. Id.; Able, 44 F.3d at 131-33. This is so, because the IUB promulgated the HVAS Order only after opening the proposed regulations for public comment and attempting to address concerns in those public comments. Thus, the applicable standard for "likelihood of success" here is whether Aventure has "a substantial likelihood of success" on its claims. Yet, even if the court considers only whether Aventure has a "fair chance" of prevailing on the merits of its claims, the less rigorous standard for which Aventure argues, Aventure's Motion For Preliminary Injunction fails. 31

b.

Analysis

Aventure argues that it has a "fair chance" of prevailing on the merits of its claims that the HVAS Order is unreasonably vague, conflicts with federal law by imposing unlawful barriers to competition, unlawfully interferes with interstate commerce, and violates the filed rate doctrine and Iowa law. The court will consider each of these contentions in turn. i. Vagueness. Aventure argues that the HVAS Order is unconstitutionally vague, because it does not permit the ordinary person to understand what conduct is prohibited and it encourages arbitrary and discriminatory enforcement. Specifically, Aventure argues that the definition of "HVAS" in terms of an increase in total billings is inherently vague and confusing, because it is not clear whether the increase in question is measured against a LEC's total billings or against a LEC's billings for a single IXC. Aventure also argues that the definition of "HVAS" is so vague that it could apply to a carrier that does not provide service to any conference operator. Aventure also argues that "HVAS customer," "HVAS traffic," and "HVAS situation" are not defined in the regulations. Aventure also argues that the ability of IXCs to raise complaints if they simply believe that a situation with the same general concerns exists means that a LEC that tries to comply with the specific provisions of the HVAS Order and does not experience an increase in traffic may nevertheless be found to have violated the regulations. Aventure also argues that the revised regulations make failure to bill high-volume intrastate access charges in accordance with the new regulations synonymous with providing "inadequate telephone service or facilities" and allow an IXC, not just a customer, to initiate proceedings for revocation of a LEC's certificate of authority, but does so without adopting any standard at all. Thus, Aventure contends that the new regulatory scheme is based on generalities with no safe harbor for attempts at technical compliance. 32

The IUB and the intervening IXCs counter that there is nothing "vague" about the regulations, but they point out that the "vagueness" test for a civil regulation is less strict than the "vagueness" test for a criminal statute or regulation. They contend that the HVAS Order establishes a clear definition of "HVAS" and establishes a clear process for setting HVAS rates and services. More specifically, they contend that the language of the HVAS definition plainly resolves Aventure's supposed confusion about the benchmark for the increase in "total billings." Similarly, they contend that, plainly, the right of an IXC to bring a complaint, if it merely suspects a LEC is engaging in HVAS behavior, must be based on a significant increase in billings, even if the 100 percent threshold is not met, not on no increase, as Aventure fears. Moreover, Verizon points out that none of the public comments about these provisions suggested that they were "vague." A regulation is not unconstitutionally vague, if "an ordinary person would know what the regulation requires." Trans States Airlines, Inc. v. F.A.A., 439 F.3d 863, 865 (8th Cir. 2006) (citing Thomas v. Hinson, 74 F.3d 888, 889 (8th Cir. 1996), which states the test as whether the regulation "fails to give a person of ordinary intelligence a reasonable opportunity to know what is prohibited"). Put the other way around, "[t]o overcome a vagueness challenge, statutes [and regulations] must `give the person of ordinary intelligence a reasonable opportunity to know what is prohibited, so that he may act accordingly,' and `must provide explicit standards for those who apply them.'" Leib v. Hillsborough County Pub. Transp. Comm'n, 558 F.3d 1301, 1310 (11th Cir. 2009) (applying this standard to a challenge to a transportation commission's regulation concerning "limousine" service permits, quoting Grayned v. City of Rockford, 408 U.S. 104, 108 (1972)); G.K. Ltd. v. City of Lake Oswego, 436 F.3d 1064, 1084 (9th Cir. 2006) (noting, in a case involving regulation of signs, "A government regulation may be unconstitutionally vague for two reasons. First, the regulation may fail to give persons of 33

ordinary intelligence adequate notice of what conduct is proscribed; second, it may permit or authorize `arbitrary and discriminatory enforcement.'" (quoting Hill v. Colorado, 530 U.S. 703, 732 (2000)). The degree of vagueness that the Constitution will tolerate depends upon the nature of the regulation; thus, there is greater tolerance in the civil context than the criminal context, such that a civil regulation is unconstitutiona