The opinion of the court was delivered by: SUSAN ILLSTON, District Judge
ORDER RE: PLAINTIFFS' MOTIONS FOR SUMMARY JUDGMENT
On March 17, 2005, the Court heard arguments on the motions for
summary judgment filed by each plaintiff in these two related
cases. Having carefully considered the arguments of counsel and
the papers submitted, the Court hereby VACATES the CPUC's January
30, 2003 Decision; and REMANDS the matter to the CPUC in order
for it to adopt regulations in compliance with FCC regulations.
The parties' motions for summary judgment are accordingly GRANTED
in part and DENIED in part.
BACKGROUND This action arises out of the alleged violation by the
California Public Utilities Commission ("CPUC" or "Commission")
of the Federal Telecommunications Act of 1996 ("1996 Act" or
"Act"), the Federal Communications Commission ("FCC") rules
implementing the 1996 Act, and the Takings and Due Process
Clauses of the United States Constitution and the California
Constitution. On January 30, 2003, the CPUC issued Decision No.
03-01-077 ("Decision") requiring Pacific Bell Telephone Company
("SBC California") to: (i) provide competing local exchange
telecommunications carriers ("CLECs") with access to the
high frequency portion of the electronic spectrum of a copper loop
("HFPL") in SBC California's network as an unbundled*fn1
network element*fn2 ("UNE");*fn3 (ii) charge a monthly
recurring price of zero ($0.00) for the HFPL; and (iii) refund to
CLECs that have purchased the HFPL all of their previous payments
for the HFPL, which were made under the interim monthly price of
approximately $5.00 per HFPL. Id. at ¶ 1.
The CPUC implemented these requirements even though the FCC
decision initially determining that the HFPL was a UNE was
vacated by the D.C. Circuit in United States Telecom Association
v. Federal Communications Commission, 290 F.3d 415 (D.C. Cir.
2002) ("USTA I") as inconsistent with the 1996 Act. At the time
the CPUC issued the Decision, the FCC had not yet issued a new
decision or rules addressing the issue.
In response to the D.C. Circuit's ruling in USTA I, the FCC
released its order containing the new rules, i.e., the
"TriennialReview Order" or "TRO," on August 21, 2003. See In
the Matter of Review of the Section 251 Unbundling Obligations of
Incumbent Local Exchange Carriers, 2003 WL 22175730 (Aug.21,
2003). The TRO did not require unbundling of HFPL on a nationwide
basis. TRO at ¶ 255. The FCC reversed itself based on its findings that CLECs could engage in line splitting,
in which one CLEC provides voice service on the low frequency
portion of the loop and the other provides DSL on the high
frequency portion. Id. at ¶ 259. The FCC also considered
competition from cable companies, which provide nearly 60 percent
of all high speed lines. Id. at ¶ 262. Based in part on these
findings, the FCC determined that the "costs of unbundling the
HFPL outweigh the benefits." Id. at ¶ 263.
The D.C. Circuit upheld this portion of the TRO in United
States Telecom Association v. Federal Communications Commission,
359 F.3d 554 (D.C. Cir. 2004) ("USTA II"). State regulatory
commissions also were parties to the action and had argued that
the TRO "improperly preempts state unbundling regulations that
exist independent of the Commission's federal unbundling
regulations enacted pursuant to [47 U.S.C.] § 251." USTA II,
359 F.3d at 594. However, the D.C. Circuit found that the states'
claim was not ripe:"The general prediction voiced in ¶ 195 [that
a state's decision to unbundle a network element would likely
conflict with the federal regime] does not constitute final agency
action, as the Commission has not taken any view on any attempted
state unbundling order." Id. To this date, the FCC has still
not taken any view on the CPUC's decision to unbundle HFPL.
On May 5, 2004, this Court denied intervenor-defendant Covad
Communication Company's ("Covad") motion to dismiss and granted
defendant CPUC's motion to hold the proceedings in abeyance until
the Supreme Court decided whether it would grant certiorari to
review the D.C. Circuit's decision in USTA II. On July 29,
2004, Verizon California, Inc. ("Verizon") also filed a complaint
in this Court against the CPUC, seeking declaratory and
injunctive relief because the CPUC Decision is inconsistent with
the FCC's TRO and substantially prevents the FCC's implementation
of the provisions of the 1996 Telecommunications Act. This Court
issued an order relating the Verizon case (C 04-3092 SI) to the
Pacific Bell/SBC California case (C 03-1850 SI) already before
On October 12, 2004, the Supreme Court denied certiorari in
USTA II. As a result, on January 14, 2005 plaintiffs in each
action filed motions for summary judgment, renewing their
argument that the CPUC's requirement to unbundle HFPL is
preempted by the FCC's holding in the TRO. Both motions are
before the Court today.
Summary judgment is proper "if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is
no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law." Fed.R. Civ.
The TRO reflected the FCC's attempt to comply with the 1996
Act, after the D.C. Circuit found in USTA I that the FCC had
failed to consider the requirements of
47 U.S.C. § 251(d)(2)*fn4 when ordering ILECs to unbundle the high
frequency of the loop and offer it to competitors. The FCC was
directed by the D.C. Circuit to consider the costs associated
with unbundling and balance those costs ...