WPC5 2BVXZ3|C (TT)y.C8*X/C\  P6QP"5^*7DSS77S^*7*.SSSSSSSSSS..^^^Jxooxf]xx7Axfxx]xo]fxxxxf7.7NS7JSJSJ7SS..S.SSSS7A.SSxSSJP!PZ*7777C7SSxJxJxJxJxJooJfJfJfJfJ7.7.7.7.xSxSxSxSxSxSxSxSxSxSxJxSxSxSxSxS]SxSxJxJoJoJfJfJfJxSxSxSxSxSCS7S777SAxSx]AN:*KS7JSSSSS.4}}S2~~S}277JJS77SS7J72N7[[^C`^SS`*7DSS77S^*7*.SSSSSSSSSS..^^^Jxooxf]xx7Axfxx]xo]fxxxxf7.7NS7JSJSJ7SS..S.SSSS7A.SSxSSJP!PZv7SJSS7]777JJ:S7A7xx*7SSSS!S7~.S^7~SC[227`K*724S}}}Jxxxxxxoffff7777xxxxxxx^xxxxxx]SJJJJJJoJJJJJ....SSSSSSS[SSSSSSSHP LaserJet 5Si/5Si MX1HPLA5SMX.WRSX\  P6G;,,,"UlP2 *4D ZS3|C#  ЊHP LaserJet 5Si/5Si MX1HPLA5SMX.WRSX\  P6G;,,,"UlP2 R1v!pTimes New Roman (TT)Times New Roman (Bold) (TT)Times New Roman (Italic) (TT)"5^*7DSS77S^*7*.SSSSSSSSSS..^^^Jxooxf]xx7Axfxx]xo]fxxxxf7.7NS7JSJSJ7SS..S.SSSS7A.SSxSSJP!PZ*7777C7SSxJxJxJxJxJooJfJfJfJfJ7.7.7.7.xSxSxSxSxSxSxSxSxSxSxJxSxSxSxSxS]SxSxJxJoJoJfJfJfJxSxSxSxSxSCS7S777SAxSx]AN:*KS7JSSSSS.4}}S2~~S}277JJS77SS7J72N7[[^C`^SS`*7DSS77S^*7*.SSSSSSSSSS..^^^Jxooxf]xx7Axfxx]xo]fxxxxf7.7NS7JSJSJ7SS..S.SSSS7A.SSxSSJP!PZv7SJSS7]777JJ:S7A7xx*7SSSS!S7~.S^7~SC[227`K*724S}}}Jxxxxxxoffff7777xxxxxxx^xxxxxx]SJJJJJJoJJJJJ....SSSSSSS[SSSSSSSa8DocumentgDocument Style StyleXX` `  ` a4DocumentgDocument Style Style . 2* k9 k  v a6DocumentgDocument Style Style GX  a5DocumentgDocument Style Style }X(# a2DocumentgDocument Style Style<o   ?  A.  a7DocumentgDocument Style StyleyXX` ` (#` 2 t\  j  BibliogrphyBibliography:X (# a1Right ParRight-Aligned Paragraph Numbers:`S@ I.  X(# a2Right ParRight-Aligned Paragraph Numbers C @` A. ` ` (#` a3DocumentgDocument Style Style B b  ?  1.  2   Ga3Right ParRight-Aligned Paragraph Numbers L! ` ` @P 1. ` `  (# a4Right ParRight-Aligned Paragraph Numbers Uj` `  @ a. ` (# a5Right ParRight-Aligned Paragraph Numbers _o` `  @h(1)  hh#(#h a6Right ParRight-Aligned Paragraph Numbersh` `  hh#@$(a) hh#((# 2ya7Right ParRight-Aligned Paragraph NumberspfJ` `  hh#(@*i) (h-(# a8Right ParRight-Aligned Paragraph NumbersyW"3!` `  hh#(-@p/a) -pp2(#p Tech InitInitialize Technical Style. k I. A. 1. a.(1)(a) i) a) 1 .1 .1 .1 .1 .1 .1 .1 Technicala1DocumentgDocument Style Style\s0  zN8F I. ׃  22ga5TechnicalTechnical Document Style)WD (1) . a6TechnicalTechnical Document Style)D (a) . a2TechnicalTechnical Document Style<6  ?  A.   a3TechnicalTechnical Document Style9Wg  2  1.   2@.a4TechnicalTechnical Document Style8bv{ 2  a.   a1TechnicalTechnical Document StyleF!<  ?  I.   a7TechnicalTechnical Document Style(@D i) . a8TechnicalTechnical Document Style(D a) . 2 3eDoc InitInitialize Document Stylez   0*0*0*  I. A. 1. a.(1)(a) i) a) I. 1. A. a.(1)(a) i) a)DocumentgPleadingHeader for Numbered Pleading PaperE!n    X X` hp x (#%'0*,.8135@8:d<d<BBYYdBBddBYBdYzzzzBBBBqodYYYYYYYYYYY8888dddddddnddddddd"5^2BoddȦ8BBdr2B28ddddddddddBBrrrdzNdzoȐB8BtdBdoYoYBdo8Bo8odooYNBodddYO,Oh2BBBBPBdodddddȐYYYYYN8N8N8N8oddddooooddoddddzodddYYYYYdddooPoNoNBNoddȐoNNF2ldBddddddd<d<BBoodBBddBoBddzzzzzzzzzzBBBBozdddddddYYYYY8888dddddddndddddYd"5^*7FSS$77Sp*7*.SSSSSSSSSS77pppSffoxffxx7Jo]oxfxfS]xff]]A.AFS7SSJSJ.SS..J.xSSSSAA.SJoJJAC.CZ*7777C7SSfSfSfSfSfSooJfJfJfJfJ7.7.7.7.oSxSxSxSxSxSxSxSxS]JfSxSxSxS]JxSfSfSfSfSoJoJfJfJfJxSxSxSxSxSCS7S777SJxSoSAN:*WSASSSSSS.4}}S2~~S}277]]S77SS7]72N7[[pC`pSS`*7FSS$77Sp*7*.SSSSSSSSSS77pppSffoxffxx7Jo]oxfxfS]xff]]A.AFS7SSJSJ.SS..J.xSSSSAA.SJoJJAC.CZv7S]SS7S777]]:S7A7o]*ASSSS.S7~.Sp7~SC[227`W*724S}}}Sffffffoffff7777xoxxxxxpxxxxx]fSSSSSSSoJJJJJ....SSSSSSS[SSSSSJS25 X4#Xj\  P6G;XP# X4{  Federal Communications Commission`(#dDA 97767 ă   yxdddy + Before the { Federal Communications Commission  X'MWashington, D.C. 20554 ă In the Matter of) ) Petition for Declaratory Ruling)  X_4Regarding US West Petitions to)ppNSDL976 Consolidate LATAs in Minnesota) and Arizona)  X ' ORDER c  X ' Adopted: April 21, 1997 , hh]ppReleased: April 21, 1997 By the Chief, Common Carrier Bureau:  Xy4KZ I. INTRODUCTION ă  XK4 ( 51.` ` On March 4, 1997, the Competition Policy Institute ("CPI") and the Minnesota  !yDepartment of Public Service ("MDPS," collectively "Petitioners") filed a petition ("Petition")  !Nrequesting the Federal Communications Commission ("FCC" or "Commission") to issue a  X4 !Declaratory Ruling pursuant to Section 1.2 of its rules=I2 yO'ԍ 47 C.F.R.  1.2.= to clarify that the Second Report and  X4 !OrderXI2 {O' !k ԍ Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, Second Report  {O'and Order, CC Docket No. 9698, FCC 96333 (rel. August 8, 1996) (Second Report and Order). did not delegate to the states the Commission's authority to approve the establishment of  X4 !or modification to Local Access Transport Area ("LATA")I2 {OA' ! ԍ LATAs define the geographic area within which a BOC may provide service. See infra  17 and 47 U.S.C. 153(25). boundaries and that this authority  !remains with the Commission. Petitioners request this clarification because US West has filed  !petitions with two state commissions requesting that those commissions modify the LATA  X4 !<boundaries in each of their states to make those boundaries coextensive with state boundaries.I2 yOV!' !7 ԍ The Common Carrier Bureau ("Bureau") released a Public Notice on March 6, 1997 requesting comments on the Petition. A list of the parties that filed Comments and Reply Comments is attached as an Appendix to this Order. For the reasons discussed herein, the Petition is granted. "if 0*''ZZ"Ԍ X4g\ II. BACKGROUND ă  X4 ( 2.` ` Section 251(b)(3)B~ yOK'ԍ 47 U.S.C  251(b)(3).B of the Communications Act of 1934 ("the Act"), as amended by the Telecommunications Act of 1996 ("1996 Act"),sX~ yOԍ Telecommunications Act of 1996, Pub. L. No. 104104, 110 Stat. 56 (1996).s requires all telecommunications carriers  x"to provide dialing parity to competing providers of telephone exchange service and telephone toll  X2 x service.C~ yO& ԍ 47 U.S.C.  251(b)(3).C The Commission concluded that section 251(b)(3) requires that customers be entitled  xto choose different carriers to carry both their intraLATA and interLATA toll calls on a 1+  X_2 x dialing basis.R_x~ {O ԍ Second Report and Order at  4.R In reaching this conclusion, the Commission was building upon the experiences  XH2 xand accomplishments of state commissions that had implemented toll dialing parity.3 H ~ {Oԍ Id.3 The  x Commission recognized that "toll dialing parity typically has been based on LATA boundaries  X 2 xl [i.e. presubscription on a LATAwide basis for each LATA] in multiLATA states where it has  X 2 xbeen implemented."?  ~ {ORԍ Id. at  37.? The Commission acknowledged that "the Bell Operating Companies'  xr(BOCs') operations are likely to be shaped by LATA boundary restrictions for a period of  X 2 x unforeseeable duration,"> . ~ {Oԍ Id. at  5.> and that some BOCs may find it technically infeasible, or otherwise  xM!undesirable, to implement toll dialing parity across an entire state without considering the effect  X 2 xof the state's LATA boundaries on the BOC's implementation of toll dialing parity.j  ~ {O x ԍ Id. at  37. As an example of why a BOC might not want to implement dialing parity on the basis of state boundaries, the Commission stated:   !XH[W]here BOCs receive authority to provide inregion, interLATA services, they are required to provide such  {O<   services through a separate affiliate for at least three years pursuant to section 272 of the 1996 Act. See   '47 U.S.C.  272(a)(2), (f)(1). Accordingly, it appears that the LATA distinction will remain relevant    insofar as it will continue to define the geographic areas in which a BOC must provide toll services through an affiliate and those in which it may provide toll services directly.(#  {O&"Id. at  37, n.81.j The  x'Commission, however, also observed that "implementation of the 1996 Act over time may"^ 0*%%ZZ"  X2 x!diminish the significance of LATA boundaries,"> ~ {Oyԍ Id. at  5.> and therefore did not impose a requirement that  X2 x!toll dialing parity be implemented solely on a LATA by LATA basis.FZ~ {Oԍ Id. at  5, 37.F Instead, the Commission  x: concluded that states should be able to take into account such factors as the effect of LATA  x boundary restrictions on BOC implementation of toll dialing parity, and thus have the flexibility  x4!to require that toll dialing parity be implemented on the basis of state boundaries rather than on  x4!a LATA by LATA basis where the state determines that to do so would be procompetitive and  Xv2otherwise in the public interest.dv~ {O ԍ Id. at  37; see also 47 C.F.R. 51.209.d  XH2 ` EH3.` ` `On November 22, 1996, US West filed a petition before the Minnesota PUC  xM!("MPUC") requesting that the MPUC redefine the boundaries of the five LATAs within the state  xso that Minnesota would become a one LATA state. On January 17, 1997, US West filed a  xG"petition with the Arizona Corporation Commission ("ACC") requesting that the ACC redefine the  X 2 x!boundaries of the two LATAs within the state so that Arizona would become a one LATA state.a ~~ yOԍ We refer to the two petitions as the "State Petitions."a  x!In supporting those requests before the state commissions, US West stated that in the 1996 Act  x_Congress vested authority in the Commission to change LATA boundaries, and that the  X 2Commission delegated this authority to the states in the Second Report and Order.~ ~ {Ofԍ See, e.g., US West Minnesota State Petition (Appendix A to the Petition) at 6.~  X{2 III. PLEADINGS ă  XM2 `  H4.` ` `The Petition. Petitioners request a declaratory ruling that the Commission did not  xdelegate to the states the Commission's authority to establish or modify LATA boundaries.  xPetitioners first argue that the 1996 Act gives authority over LATA boundaries solely to the  X2 xrCommission. Petitioners state that Section 601(a) of the 1996 Act>~ yOYԍ 1996 Act 601(a).> makes any conduct or  X2 x!activity formerly subject to the AT&T Consent Decree subject to the Act.80 ~ yO ԍ Petition at 3.8 Petitioners contend  xf!that, because LATA boundaries were established as part of the rulings administering the decree,  X2 x"Section 601(a) transfers authority over LATA boundaries to the Commission.3 ~ {O4$ԍ Id.3 Petitioners further"R 0*%%ZZ2"  X2 xcontend "X   "X that Section 3(25) of the ActA~ yOyԍ 47 U.S.C.  153(25).A explicitly  X2 xl authorizes the Commission to approve LATA boundaries.8X~ yOԍ Petition at 3.8 The petitioners conclude that the  x 1996 Act requires that LATA boundaries either be those established under the AT&T Consent  X2 xDecree or those established or modified by the BOC and approved by the Commission.3~ {OTԍ Id.3  xrPetitioners assert that, although the 1996 Act grants the Commission authority over LATA  x!boundaries, it does not authorize the Commission to delegate its authority over the establishment  Xv2or modification of LATA boundaries to the states.;vz~ {O ԍ Id. at 67.;  XH2 ` H5.` ` `Petitioners argue further that the Commission did not delegate its authority over  x! LATA boundaries to the states. According to Petitioners, there is no statement, either in the  X 2 x!NPRM ~ {O x!ԍ Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Notice of  {OProposed Rulemaking, CC Docket No. 9698, FCC 96182 (rel. April 19, 1996) (NPRM).  or in the Second Report and Order, of any intent to delegate Commission authority over  x!the definition of LATA boundaries. Petitioners state that US West has misconstrued Commission  x statements solely intended to give states the choice of implementing the 1+ toll dialing parity  xrrequirement on a statewide basis or on a LATAwide basis, but with all LATA restrictions  X 2remaining unchanged.: h ~ yOԍ Petition at 45.:  X2 ` H6.` ` `Moreover, according to Petitioners, allowing a state to redefine intrastate LATA  xf!boundaries would effectively allow the states to determine the conditions under which the BOCs  x would be allowed to provide intrastate, interLATA service, an outcome inconsistent with the  x requirements of Section 271, which requires the Commission to approve any BOC applications  X62to provide interLATA service.36 ~ {Oԍ Id.3  X2 ` H7.` ` `Petitioners express concern that a state PUC could grant US West the relief it  X2 xS requested.4 ~ {O,#ԍ Id. 4 They further note that legislation has recently been introduced in Minnesota that"0*%%ZZ%"  X2 x!directs the MPUC to modify LATA boundaries to convert Minnesota into a singleLATA state.=~ {Oyԍ Id. at 1011.= Petitioners request that the Commission act promptly to resolve this matter to avoid  x"the preemption petitions that parties would file with the Commission if a state granted the request  X2of US West (or any other BOC) to combine LATAs within a state.:Z~ {Oԍ Id. at 11.:  X2 ` H8.` ` `Comments in Support of the Petition. AT&T Corporation ("AT&T"), the  xCompetitive Telecommunications Association ("CompTel"), MCI Telecommunications  xxCorporation ("MCI"), the Telecommunications Resellers Association ("TRA"), Teleport  x Communications Group, Inc. ("TCG"), and WorldCom, Inc. ("WorldCom") have filed comments  x in support of the Petition. Commenters supporting the Petition agree that the Commission did  X 2 x not delegate authority over LATA boundaries to the states. ~ {O x!ԍ See, e.g., AT&T Comments at 2, 45; CompTel Comments at 5; MCI Comments at 5; TRA Comments at 2, 3, 6; TCG Comments at 56. Moreover, all commenters agree  xwith Petitioners that the 1996 Act gave the Commission exclusive authority over the  X 2 x!administration of LATA boundaries, F~ {Oԍ See, e.g., CompTel Comments at 4; TRA Comments at 8; TCG Comments at 3; WorldCom Comments at 3. and that the Commission cannot delegate this authority to  X 2 xthe states.! ~ {O^ԍ See, e.g., AT&T Comments at 3; TRA comments at 7; WorldCom Comments at 3; TCG Comments at 3. Commenters concur that, if exercised, the authority that US West claims was  X 2 xl delegated would impermissibly circumvent Section 271 of the Act." j ~ {O xԍ See, e.g., AT&T Comments at 6; TCG Comments at 7; MCI Comments at 34; TRA Comments at 45; WorldCom Comments at 12. In addition, AT&T states  x4!that the 1996 Act prohibits the Commission from forbearing to enforce any of the requirements  xxof Section 271 until the Commission determines that those requirements "have been fully  Xy2implemented."?#y ~ yOԍ AT&T Comments at 89.?  XK2 ` H9.` ` `Comments Opposing the Petition. US West contends that when the Commission  x authorized states "to redefine the toll dialing parity requirement based on state, rather than on  xM!LATA, boundaries where a state deems such a requirement to be procompetitive and otherwise  X2 xf!in the public interest" in the Second Report and Order, the Commission acknowledged that state  X2 xcommissions have authority to redefine LATA boundaries.@$T ~ yO#ԍ US West Comments at 2.@ US West states that, as a"$0*%%ZZ%"  X2 x consequence, it filed the State Petitions.%$~ {Oy x!ԍ Id. US West further states that both Arizona and Minnesota had issued orders requiring intraLATA dialing  xrparity prior to December 19, 1995, and that as a result, competitors are now able to offer 1+ intraLATA  x#presubscription, consumer and interexchange carriers have reaped economic benefits and US West has suffered as  {Omuch as a 30% market loss in the intraLATA toll market in those states. Id. at 23. US West argues that denying the  xS Petitioners' request for clarification and permitting Minnesota and Arizona to grant the State  xrPetitions will allow US West to compete fully in those states' intraLATA markets. US West  X2 xasserts that, rather than harming consumers and competition, the additional choice (i.e., U.S.  xf!West) that would be available to consumers in the intrastate long distance market will benefit the  X2public.;&~ {O ԍ Id. at 34.;  Xa2 ` H 10.` ` `In support of its contention that the Commission delegated LATA modification  x_authority to the states, US West first argues that under the AT&T Consent Decree, state  X32 x! commissions retained limited jurisdiction over local and intraLATA calls.'3F~ {O* x ԍ Id. at 4. According to US West, although the U.S. District Court for the District of Columbia (the "U.S.  x!District Court") adopted LATAs to set "boundaries beyond which the a Bell Operating Company may not carry  x"telephone calls," the U.S. District Court could neither require nor forbid competition within the LATAs. Thus, US  x#West argues, the States of Minnesota and Arizona were within their authority when they concluded that intraLATA  x!competition was in each state's best interest, and thus authorized 1+ toll dialing for all certificated intraLATA  {Ocarriers. Id. at 56. Second, US West  X 2 x!asserts that the FCC, as part of its implementation of the Act's dialing parity requirement in the  X 2 xSecond Report and Order, recognized that state commissions play an important role in  x!implementing the procompetitive objectives of the 1996 Act, and, for this reason, permitted the  x state commissions to modify LATA boundaries to allow incumbent LECs (ILECs) like US West  X 2to compete fully in the intrastate toll market.;( ~ {O5ԍ Id. at 78.;  X2 ` H 11.` ` `Third, US West states that the Commission did not link the introduction of  X}2 x!statewide dialing parity to the requirements of Section 271,:)}T ~ {Oԍ Id. at 10.: and that Section 271 does not bar  Xf2 x!the modification of LATA boundaries.:*f~ {O ԍ Id. at 13.: US West argues that the determination of an intrastate  XO2 xLATA boundary is the type of wholly intrastate matter over which Section 2(b) of the Act@+Ox~ yOx#ԍ 47 U.S.C.  152(b).@"O+0*%%ZZ$"  X2 x4!precludes Commission jurisdiction.A,~ yOyԍ US West Comments at 11.A US  x4!West contends that under the Act's definition, the Commission should be limited to approval of  x!interstate LATA modifications; but, even if the definition could be expanded to include intrastate  x!boundaries, the states are not precluded from playing a role where intrastate LATA boundaries  x4!are concerned, and the Commission is not prohibited from permitting the states to exercise that  X2role.=-X~ {Oԍ Id. at 1112.=  X_2 ` qH 12.` ` `The Arizona Corporation Commission states that it is considering the US West  XH2 xS application to expand LATA boundaries.D.H~ yO ԍ ACC Comments at pages 34.D The ACC further contends that it is committed to  xpursuing an orderly transition to competition, and that it is in the best position to make any  x!determinations that affect intrastate matters over which it retains jurisdiction pursuant to Section  X 2 x 2(b) of the Act.9/ z~ {O.ԍ Id. at 5.9 As a consequence, the ACC asserts that it is the appropriate governmental  xM!entity to make a decision regarding intrastate telecommunications matters, including the petition  X 2filed by US West.<0 ~ {Oԍ Id. at 3, 5.<  X 2 ` H 13.` ` `In addition, the ACC states that while it recognizes that changing intraLATA  x boundaries may have an interstate effect and that the Commission may have a role in a process  x that alters those borders, the Commission should not decide at this time whether Arizona may  Xb2 xalter intrastate LATA boundaries.31b~ {Oԍ Id.3 Instead, the ACC states that it will open a docket to  x determine whether US West has met the requirements of the Section 271 checklist before it will  x!reach a decision as to whether the expansion of LATA boundaries is procompetitive and in the  X2 x!public interest.320 ~ {Oԍ Id.3 The ACC argues that such a process is consistent with the dual jurisdiction that  X2remains intact in Section 2(b) of the Act.33 ~ {Oy!ԍ Id.3 "T 30*%%ZZ>"Ԍ X2 ` H 14.` ` `Replies. Petitioners, AT&T, MCI, TCG, US West and the Antitrust Division of the  X2 x Department of Justice ("DOJ")4~ yOb xM!ԍ On April 3, 1997, the DOJ filed Reply Comments in the form of a letter to the Chairman of the FCC, along  x with a Motion for Leave to File LateFiled Reply Comments. DOJ Motion for Leave to File Late-Filed Reply  xComments at 1. On April 11, 1997, US West filed a Response to the DOJ's Reply Comments ("US West  x Response"), along with a Motion for Leave to File Out Of Time Comments in Response to the DOJ. US West  xy"Motion for Leave to File Out Of Time at 1. In the interest of having as complete a record as possible, we grant the Motions of the DOJ and US West. have filed reply comments. Most commenters argue that the  X2 xSecond Report and Order does not support US West's argument,5@~ {O ԍ See, e.g., Petitioners Reply at 2, 45; DOJ Reply at 2; AT&T Reply at 2; MCI Reply at 35, that the 1996 Act gives  X2 xM!unambiguous authority over LATA boundaries to the Commission,6~ {O@ ԍ See, e.g., Petitioners Reply at 56; DOJ Reply at 12; MCI Reply at 4; TCG Reply at 8, and that US West's request  x!is inconsistent with the requirements that Congress established in Section 271 of the Act to allow  X2 x BOCs to enter the interLATA market.7d ~ {Oԍ See, e.g., Petitioners Reply at 67; DOJ Reply at 2; MCI Reply at 1; TCG Reply at 36. In its Reply, US West asserts that granting the State  x!Petitions will correct the customer confusion and competitive imbalance that have resulted from  Xa2 xl the introduction of 1+ intraLATA presubscription in the intrastate toll market.?8a ~ yOԍ US West Reply at 24.? US West also  XJ2 x observes Section 271(e)(2)(B)F9J ~ yOԍ 47 U.S.C.  271(e)(2)(B).F allows states that had initiated 1+ toll dialing parity prior to  X32December 19, 1996 to keep such regulations in place.?:3~ yOԍ US West Reply at 67.?  X 2 ` H15.` ` `US West reiterates its contention that in the Second Report and Order the  xCommission gave the states the choice to "redefine the [LATA] boundaries so that  x!presubscription for toll services would occur in an intrastate/interstate basis, consistent with the  X 2 x!historical jurisdiction reserved to the states over intrastate telecommunications services.";; ~ {Oԍ Id. at 78.; US  x!West asserts that, contrary to arguments raised by AT&T, TCG and WorldCom, the Commission  xf!may delegate authority over LATA boundaries subject to conditions that it chooses to attach to  X}2 xthe delegation.9<}8~ {Of"ԍ Id. at 9.9 The US West Response states that the local conditions upon which Judge  xGreene relied have changed during the last 14 years, and, as a result, the original LATA"f<0*%%ZZu"  X2 x boundaries may no longer reflect the telecommunications needs of certain states.@=~ yOyԍ US West Response at 2.@ US West  x!argues that state commissions have greater knowledge of local conditions than a federal agency,  x! and that changes in LATA boundaries would affect matters (such as intraLATA service) over  xM!which US West believes the Act gives states primary responsibility. According to US West, the  x Commission, rather than blocking the states from examining this issue, should permit the states  x to consider whether conditions justify LATA modification and, if so, what type of modification  Xv2may be appropriate.>vX~ yO  x!ԍ US West Response at 2. US West also argues that granting the State Petitions will not diminish US West's incentive to comply with the 271 checklist. US West Response at 34.  XH2v IV. DISCUSSION ă  X 2  # A.XHCongress Vested Exclusive Authority to Define LATA Boundaries Within the FCC's  X 2Jurisdiction (#  X 2 ` dH16.` ` `US West's and ACC's argument that Commission jurisdiction over LATAv  X 2 x!boundaries is limited by Section 2(b) of the Act? ~ yOԍ 47 U.S.C. 152(b). Section 2(b) states in pertinent part that   S XH[N]othing in this Act shall be construed to apply or to give the Commission jurisdiction with respect to (1)    charges, classifications, practices, services, facilities, or regulations for or in connection with intrastate communication . . . (#Ɨ is incorrect. In Louisiana Public Service Com'n  X 2 x!v. F.C.C.,F@ ` ~ yOԍ 476 U.S. 355, 36869 (1986).F the Supreme Court determined that, in order to overcome Section 2(b)'s limits on the  x."Commission's jurisdiction with respect to intrastate communications service, Congress must either  x modify Section 2(b) or grant the Commission additional authority. As explained below, in the  x!AT&T Consent Decree, the U.S. District Court created LATAs pursuant to federal antitrust law,  x'then acted as the sole forum for matters concerning LATA boundaries. The Commission's  xYsubsequent authority to administer LATA boundary modification results from supervening  x legislation that explicitly and exclusively transfers this authority to the Commission, and, by its terms, is not subject to Section 2(b) of the 1934 Communications Act.  X2 ` H17.` ` `On August 24, 1982, the U.S. District Court entered the AT&T Consent Decree,  X2 xwhich required AT&T to divest its ownership of the BOCs.A ~ {Of# x ԍ United States v. American Telephone and Telegraph Co., 552 F. Supp. 131 (D.D.C. 1982), aff'd sub nom.  {O0$Maryland v. United States, 460 U.S. 1001 (1983). The Court held that the decree" L A0*%%ZZ"  X2 xM!preempted all inconsistent state lawCB~ {Oy x4!ԍ Id at 153159. The U.S. District Court also stated that nothing in the Communication Act of 1934 limited  xf!the Court's jurisdiction. The U.S. District Court held that there was nothing in the Communications Act that  x`"immunized the states from preemption by other federal statutes such as the Sherman Act, and that the decree  x%concerned the national matter of the telecommunications network, a matter beyond the "local services . . . that in their  x`"nature and effect are separable from and do not substantially affect the conduct or development of interstate  {Occommunications." Id., citing North Carolina Utilities Commission v. FCC, 537 F.2d 787, 793 (4th Cir. 1976).C and conditioned its approval of the  X2 xrdecree on, inter alia, modification of the decree "to confirm the Court's authority to initiate  X2 x!enforcement proceedings sua sponte.";CD~ {O ԍ Id. at 217.; The U.S. District Court subsequently divided all territory  X2 x in the continental United States served by the BOCs into LATAs.D~ {OF  x ԍ See United States v. Western Electric, 569 F. Supp. 990, 993994 (D.D.C. 1983) (hereinafter Western  {M Electric). Under the decree, BOCs  x! were permitted to provide telephone service within a LATA, intraLATA service, but were not  X2 x!permitted to carry traffic that crossed LATA boundaries, interLATA service.;E0 ~ {Orԍ Id. at 994.; InterLATA traffic  Xz2 x was to be carried by interexchange carriers.4Fz ~ {Oԍ Id. 4 The U.S. District Court was the sole forum for  Xc2matters concerning LATA boundaries.<GcT ~ {Ohԍ Id. at 1000.<  X52 ` H18.` ` `In its administration of LATA boundaries, the U.S. District Court received  xnumerous requests for waivers of the AT&T Consent Decree to permit exceptions to LATA  xrestrictions to preserve local calling. In its rulings on these requests, the U.S. District Court  x recognized state expertise over local issues, but never ceded jurisdiction over the modification  X 2 x of LATA boundaries to the states, even where those boundaries were wholly intrastate.H ~ {Op x ԍ United States v. Western Electric Company, Inc., No. 820192, slip op. at 2 (D.D.C. May 18, 1993) ("May  {O:18 1993 Order"). For  x: example, the U.S. District Court granted such waivers only when the competitive effects were  xxminimal and a sufficient community of interest across LATA boundaries had been clearly  X2 x shown.I^B~ {O! x4!ԍ See United States v. Western Electric Company, Inc., No. 820192, slip op. at 3 n.8 (D.D.C. July 19, 1984)  {OQ" x"("July 1984 Order"); United States v. Western Electric Company, Inc., No. 820192 slip op. at 2, 3 n.3 (D.D.C. Jan.  {O#31, 1985) ("Jan. 1985 Order"); May 18 1993 Order at 2. The Court granted waivers to permit BOCs to offer flatrate, nonoptional expanded" hI0*%%ZZO"  X2 x! local calling area (ELCS) plansJ~ {Oyԍ See, e.g.,, Western Electric, 569 F. Supp. at 1002 n.54; July 1984 Order; Jan. 1985 Order. to permit traditional local telephone service between nearby exchanges, but refused to  X2 xG"grant waivers for measuredrate ELCS planscK(Z~ {O x!ԍ See, e.g.,, Western Electric, 569 F. Supp. at 1002 n.54 (optional ELCS plans denied); May 18, 1993 Order  {O x"(optional ELCS plan denied); United States v. Western Electric Company, Inc., No. 820192 (D.D.C. Dec. 3, 1993)  {Oq x"("Dec. 3, 1993 Order") (measuredrate ELCS plan denied); United States v. Western Electric Company, Inc., No.  {O;820192 (D.D.C. Dec. 17, 1993) ("Dec. 17, 1993 Order") (measuredrate, optional ELCS plan denied).c calling for subscribers to pay measuredrates based  X2 xf!on such factors as duration, distance, and time of day.MLJ~ {O ԍ See Dec. 3, 1993 Order.M The Court found that granting the latter  x type of waiver could have an anticompetitive effect because the services that would have been  xoffered under such plans were similar to the toll service normally provided by interexchange  Xv2 x!carriers.Mv~ {Oԍ See Western Electric, 569 F. Supp. at 1001, 1002 n.54.; Dec. 17, 1993 Order at 34; Dec. 3, 1993 Order.ĩ Further, the Court expressed concern that allowing exceptions for measuredrate plans  xf!could lead to a "piecemeal dismantling" of the prohibition on the BOCs' provision of interLATA  XH2 xrservice.RNHn ~ {Ogԍ See May 18, 1993 Order at 4.R Thus, the U.S. District Court retained sole authority over any change to all LATA boundaries until the enactment of the 1996 Act.  X 2 ` H19.` ` `The 1996 Act shifts the Court's exclusive authority over LATA boundaries to the  x!Commission. Section 601 of the Act transfers authority over any "conduct or activity" previously  xFsubject to the AT&T Consent Decree to the requirements and obligations of the Act, as  X 2 xamended.O ~ yOo x4!ԍ In Section 601(a), the Act makes any conduct or activity formerly subject to the AT&T Consent Decree subject to the Act. 1996 Act 601(a). Section 251(g) then explicitly delegates to the Commission sole authority to  x!administer the "equal access and nondiscriminatory interconnection restrictions and obligations"  X2 xthat applied under the AT&T Consent Decree.@PX ~ yOԍ 47 U.S.C.  251(g).@ Exclusive authority over LATA boundary  x!establishment or modification is an essential component of the Commission's authority to enforce  x the equal access and interconnection restrictions established under the AT&T Consent Decree.  x Congress underscored the Commission's sole authority over LATA boundaries in new Section  x!3(25) of the Act by defining a LATA to mean a "contiguous geographic area . . . established or  X2 xmodified by a Bell operating company after such date of enactment [February 8, 1996] and  X2 x!approved by the Commission."RQ~ yO$ԍ 47 U.S.C.  153(25) (emphasis added).R The Act thus gives the Commission sole authority to approve" xQ0*%%ZZ+"  x!any BOC action to establish or to modify LATA boundaries as they existed on February 8, 1996.  xThe Commission's jurisdiction over the administration of LATA boundary establishment and  x modification comes directly from the 1996 Act which gives the Commission explicit, exclusive  x: authority. No construction of the statute is necessary and Section 2(b) thus imposes no limit  x upon the Commission's authority to approve the establishment of, or modification to, LATA boundaries.  X_2  A# B.XHThe Commission Has Not Delegated its Authority to Redefine LATA Boundaries to  XH2the States (#  X 2 ` H20.` ` `US West relies on the language of paragraph 5 of the Second Report and Order  x!to support its argument that the Commission delegated to the states its authority to establish or  x! modify LATA boundaries. That paragraph, however, explicitly recognizes the significance of  X 2 x!current LATA boundaries to states' decisions to implement dialing parity on a state border basis. Paragraph five states in relevant part:  XH[t]he toll dialing parity requirement we adopt is defined by LATA boundaries  given that the Bell Operating Companies' (BOCs') operations are likely to be  qshaped by LATA boundary restrictions for a period of unforeseeable duration.  XO2 Given that implementation of the 1996 Act over time may diminish the  X:2 significance of LATA boundaries, however, we permit states to redefine the toll  X%2 dialing parity requirement based on state, rather than LATA, boundaries where a  9state deems such a requirement to be procompetitive and otherwise in the public  X2interest.OR~ {Orԍ Id. at  5 (emphasis added).O   X2 ` kH21.` ` `US West incorrectly concludes that this language means that "the Commission has  x: specifically delegated its power to modify LATA boundaries to the states, who may redefine  X2 x LATAs to be coextensive with state borders."mSZ~ yOԍ US West Minnesota State Petition (Appendix A to the Petition) at 6.m The paragraph says nothing about changing  X2 xLATA boundaries, but rather allows the states to implement dialing parity across LATAs or  x!across the whole state. In contrast to US West's assertion, paragraph 5 discusses the diminution  xof the significance of LATAs over time rather than the delegation or redefinition of LATA boundaries.  X2 ` ~H22.` ` `US West also contends that paragraph 37 contains language delegating to the states  x!the authority to modify LATA boundaries. In paragraph 37, however, the Commission qualified  x its "expectation that implementation of the 1996 Act eventually will diminish the significance of  x LATA boundaries" with the statement that "BOCs remain subject to certain LATA boundary" S0*%%ZZ#"  x restrictions for at least the nearterm and that some BOCs may find it technically infeasible, or  x"otherwise undesirable, to implement toll dialing parity based on state boundaries." Moreover, the  xM!Commission observed that BOCs will be subject to the requirements of Section 272 that a BOC  x offer inregion interLATA service only through a separate affiliate for at least three years after  x!that BOC receives permission to offer such service. The Commission explained that the separate  xaffiliate requirement would cause the LATA distinction to remain relevant because LATA  xboundaries will continue to define the geographic areas in which a BOC that provides toll  x@services must do so through an affiliate (interLATA) and those in which it may provide toll  XH2 x!services directly (intraLATA).TH~ {O ԍ Second Report and Order at  37, n. 81, citing 47 U.S.C.  272(a)(2), (f)(1). The Commission concluded that states should "be able to take  X12 xl the relevance of those factors,"?U1Z~ {O< ԍ Id. at  37.? (i.e., the impact of LATA restrictions on the state's resident  X 2 x BOC), into account, and "have the flexibility to require that toll dialing parity implementation  X 2 x be based on state boundaries where they determine that implementing toll dialing parity on the  X 2 xbasis of state boundaries would be procompetitive and otherwise in the public interest."EV ~ {Oԍ Id. (emphasis added).E  X 2 x! Consequently, the Second Report and Order did not explicitly delegate authority over LATA boundary modification to the states.  X2 ` }H23.` ` `The plain language of the Second Report and Order repudiates US West's  x argument that the Commission implicitly delegated LATA modification authority to the states.  x! As indicated in the previous paragraphs, the only implication consistent with the Act and the  XU2 F"f!Second Report and Order is that the Commission was anticipating that the significance of LATA  F"S boundaries would decrease once the BOCs complied with the Section 271 checklist, began to  F" offer inregion interLATA service, and eventually no longer needed to comply with the Section  F" 272 requirement that they provide interLATA service through a separate affiliate. At that time,  X2 F"M!as the Commission explained in paragraph 37 of the Second Report and Order, the states would  F"have the flexibility to implement inregion dialing parity on the basis of state or LATA  X2 F" boundaries after taking into account the current relevance of LATA boundaries.7W~~ {Oԍ See id.7 Thus, a plain  X2 F"reading of the language in the Second Report and Order shows that the Commission neither  F" explicitly nor implicitly delegated to the states authority to modify LATA boundaries, and that  F"!the Commission fully expected that all LATA restrictions will continue to remain in place for the  F" foreseeable future unless the Commission explicitly approved a BOC petition to modify those boundaries. "G W0*%%ZZ"Ԍ X2 LQ24.` ` mFinally, whenever the Commission has delegated authority to the states, it has done  X2 F"so explicitly. For example, in paragraphs 272 and 315 of the Second Report and Order, the  F"!Commission explicitly delegated limited authority over certain numbering administration functions  X2 F"! such as area code relief.]X~ {O6ԍ Second Report and Order at  272, 315.] As discussed above, it is clear that the Commission made no such  X2delegation concerning LATA boundaries in the Second Report and Order.  Xz2  @ C.XQThe LATA Modification Authority US West Claims Was Delegated Would  Xc2Impermissibly Circumvent Section 271 of the Communications Act (#  X52  LQ25.` ` mSection 271 of the Act creates a structured statutory scheme for the entry of the  F"S BOCs into the interLATA market and sets strict requirements that must be met before a BOC  X 2 F"!may enter into that market.UY Z~ {Oԍ See 47 U.S.C.  271, et seq.U Central to these Section 271 requirements is that the Commission  F"!ԩ not the states approve BOC entry into the interLATA market after the Commission consults  X 2 F"f!with state commissions and the Department of Justice._Z ~ {Ovԍ See e.g., 47 U.S.C.  271(b)(1), 271(d)._ Further, the Commission must apply all  F"rSection 271 requirements because Section 10(d) of the Act prohibits the Commission from  F"'forbearing to apply "the requirements of . . . Section 271 . . . until it determines that those  X2 F"rrequirements have been fully implemented."@[~~ yOԍ 47 U.S.C.  160(d).@ The Section 10(d) requirement means that the  F"4!Commission must ensure that all the requirements of Section 271 are implemented before a BOC  F"may offer interLATA service. Thus, Section 10(d) limits the manner in which the Commission  F"!may exercise its sole and exclusive authority to approve the establishment of or modification to LATA boundaries.  X 2 LQ26.` ` mUS West argues that the Commission delegated to the states the authority to  F"4!collapse their intrastate LATA boundaries to make each state a one LATA state. Should a state  F" exercise such authority, it would be permitting the BOCs to supply service between areas from  F"4!which they had been barred by the AT&T Consent Decree, but without requiring the Commission  X2 F"4!to approve the BOCs' 271 application to supply such service.V\~ {Om ԍ Western Electric, 569 F. Supp. at 994.V Had US West made this request  F"-directly to the Commission, the restrictions of Section 10(d) would have prohibited the  F"YCommission from granting the request until such time as US West had entirely satisfied the  F" requirements of Section 271. Commission delegation of its authority over LATA boundaries  F" faces the same restriction. The Act expressly prohibits the Commission from abstaining in any  F"Yway from applying the requirements of Section 271 until those requirements have been fully";\0*%%ZZ"  X2 F" implemented. Because the FCC has not yet concluded that any BOC has met the requirements  F"rof Section 271, the Commission could not have lawfully delegated its exclusive authority to approve modifications to LATA boundaries to the states.  X2 LQ27.` ` mEven if Section 10(d) did not bar the Commission from allowing the states to  F"! collapse LATA boundaries, intrastate LATA boundaries continue to serve a procompetitive  F"!purpose. The U.S. District Court established LATAs to "mark the boundary beyond which a Bell  X_2 F" Operating Company may not carry telephone calls."7]_~ {Oԍ See id.7 The U.S. District Court held that the size  F"of the LATAs as determined by the boundary drawing process (most of which involved the  F"S establishment of intrastate LATA boundaries), could favor the BOCs or competitive carriers,  X 2 F"depending on the size of the LATA.3^ Z~ {O% ԍ Id.3 As indicated in paragraph 18, supra, the U.S. District  F"!Court strictly limited its grant of LATA boundary waivers to those that permitted traditional local  F"service between nearby exchanges, and never condoned waiver requests that could permit a  X 2 F"r"piecemeal dismantling" of the prohibition on the BOCs' provision of interLATA service.R_ ~ {Otԍ See May 18, 1993 Order at 4.R  F"Rather, the U.S. District Court allowed the BOCs to engage in what would normally be  F"interLATA service "only in carefully limited areas and for carefully limited purposes, that is,  X2 F"when this serves the public convenience and does not harm competition."`~~ {Oԍ See United States v. Western Electric, 578 F. Supp. 662, 664 (D.D.C. 1983). The U.S. District  F"Court continued to limit its grant of LATA boundary waivers to local service type calls  Xd2throughout its administration of the AT&T Consent Decree. Tad~ {O%ԍ See, e.g., May 18, 1993 Order.T  X62 LQ28.` ` mNothing has changed since the passage of the 1996 Act to justify the "piecemeal  X2 F"dismantling" of the LATAs prohibited by Judge Greene. As indicated supra, in the Second  X 2 F"!Report and Order, the Commission contemplated that intrastate LATA restrictions would remain  X2 F"@in place for "a period of unforeseeable duration."Rb~ {OHԍ Second Report and Order at  5.R Further, even according to the figures  F"M!employed by US West, intrastate interLATA revenues represented 30 percent of all 1995 access  X2 F"revenues.c4 ~ {O"ԍ US West Response at 34, citing FCC Common Carrier Bureau, Trends in Telephone Service, 57 (Mar. 1997). This figure does not support US West's position, but rather indicates that the  F"Fintrastate interLATA market is an essential component of the structured federal scheme  F"contemplated in Section 271 of the Act because the possibility of BOC participation in this" c0*%%ZZ "  F"! market should act as a powerful incentive for BOCs to open up the local market. It would be  F" contrary to congressional intent, and would vitiate much of the incentive offered under Section  X2 F"!271 of the Act for the Commission to condone an interpretation of the Second Report and Order that would allow states to eliminate the intrastate interLATA market.  X2 D.XQConclusion (#  Xa2 LQ29.` ` mIn conclusion, we find that the Commission did not and could not delegate its  F"authority over the definition of LATA boundaries to the states. Accordingly, the Petition is granted.  X 26 V. ORDERING CLAUSES ă  X 2 LQ30.` ` mAccordingly, IT IS ORDERED, pursuant to Sections 0.291 and 1.2 of the  F" Commission's rules, 47 C.F.R.  0.291 and 1.2, that the Petition for Declaratory Ruling filed by  F" the Competition Policy Institute and the Minnesota Department of Public Service to clarify that  F"!the Second Report and Order did not delegate to the states the Commission's authority over the  F"definition of LATA boundaries and that this authority remains with the Commission, IS GRANTED.  X62 LQ31.` ` mIT IS FURTHER ORDERED, pursuant to Section 408 of the Communications Act  F"4!of 1934, as amended, 47 U.S.C.  408, that this Order SHALL BE EFFECTIVE IMMEDIATELY UPON RELEASE. Q` ` m hhFEDERAL COMMUNICATIONS COMMISSION Q` ` m hhRegina M. Keeney Q` ` m hhChief, Common Carrier Bureau"gc0*%%ZZ"  X2 APPENDIX  X2  X2Parties Filing Comments The Arizona Corporation Commission AT&T Corporation The Competitive Telecommunications Association MCI Telecommunications Corporation The Telecommunications Resellers Association Teleport Communications Group Inc. U S West Communications, Inc. WorldCom, Inc  X 2Parties Filing Reply Comments AT&T Corporation The Competition Policy Institute/Minnesota Department of Public Service (Joint Reply) The United States Department of Justice (Antitrust Division) MCI Telecommunications Corporation Teleport Communications Group Inc. U S West Communications, Inc. (also filed Response to DOJ Reply)