Lead Opinion
We must decide whether an incumbent local exchange carrier’s challenge to nominally “interim” rates for access to its network by competitive local exchange carriers, which rates are set by a state utilities commission pursuant to the Telecommunications Act of 1996, is ripe for judicial review, even though such rates are subject to later adjustment by the state utilities commission (“a true-up”). When the incumbent local exchange carrier has cognizable claims which cannot and will not be compensated by the true-up, we hold such challenge is ripe for judicial review.
BACKGROUND
The Telecommunications Act of 1996 (“the Act”), Pub.L. No. 104-104, 110 Stat. 56 (codified as amended in scattered sections of 47 U.S.C.) aims in part to introduce competition among local exchange carriers. Verizon Communs., Inc. v. FCC,
To foster competition, the Act requires that ILECs make available to CLECs “access” to the ILECs’ “network elements” “on an unbundled basis.” 47 U.S.C. § 251(c)(3). A “network element” is “a facility or equipment used in the provision of a telecommunications service” - or those “features, functions, and capabilities that are provided by means of such facility or equipment, including subscriber numbers, databases, signaling systems, and information sufficient for billing and collection or used in the transmission, routing, or other provision of а telecommunications service.” 47 U.S.C. § 153(29). To provide “access” to a network element “on an unbundled basis” — or, said differently, to provide access to unbundled network elements (“UNEs”)' — '“is to lease the element, however described, to a requesting carrier at a stated price specific to that element” without requiring that other elements also be leased (“bundled”). See Verizon Communs., Inc.,
Pursuant to the Act, CLECs requesting access to UNEs are first to attempt to negotiate rates for such access with the ILEC that owns the network. 47 U.S.C. §§ 251(c)(1), 252(a)(1). If the parties successfully negotiate rates, the relevant state utilities commission is required to accept those rates unless they discriminate against a carrier not a party to the contract, or the rates are otherwise shown to be contrary to the public interest. 47 U.S.C. §§ 252(e)(1), (e)(2)(A). If the parties cannot agree on rates, any party to the negotiations may request arbitration to be conducted by the relevant state utilities commission. 47 U.S.C. § 252(b)(1).
The Act аssumes that a state utilities commission may refuse or otherwise fail to conduct the arbitration, in which case the Act provides that the Federal Communications Commission (“FCC”) shall act in the place and stead of the state utilities commission. See 4H U.S.C. § 252(e)(5). However, where, as here, the state utilities commission conducts the arbitration, such commission is bound by the Act’s provisions governing how the rates must be set and by the FCC’s related regulations, 47 U.S.C. § 252(c)(1)-(2), including regulations that require state utilities commissions to use the total element long run incremental cost (“TELRIC”) methodology. 47 C.F.R. § 51.505; see also AT & T Corp. v. Iowa Utils. Bd.,
In 1997, the California Public Utilities Commission (“CPUC”) established nominally interim rates for access by CLECs to Verizon’s UNEs. We characterize these rates as interim only in name because, for reasons not relevant here, the CPUC did not undertake the task of setting permanent rates until 2002. Even then, it did not set permanent rates, but rather held expedited proceedings to establish revised interim rates, which were to remain in effect until permanent rates could be es
The impact of the interim rate order entered March 13, 2003 was immediately to reduce the rates that Verizon could charge CLECs for access to its UNEs relative to what it had been able to charge under the earlier rate order. After the CPUC denied Verizon’s application for rehearing, Verizon brought an aсtion in federal district court against Michael R. Pee-vey and other commissioners of the-CPUC in their official capacities, in which Verizon alleged five claims: (1) that the interim rate order was arbitrary and capricious and not supported by substantial evidence; (2) that the interim rate order was not in compliance with the Act nor with the regulations implementing the TELRIC methodology; (3) that the interim rate order was confiscatory; (4) that the interim rate order was in violation of due process; and (5) that the interim rate order was in violation of Verizon’s civil rights. Verizon sought to have the interim rate order declared unlawful and vacated, to have its enforcement enjoined, and to have the matter returned to the CPUC for further proceedings. Verizon also sought its costs and attorneys’ fees incurred in litigating the suit.
AT & T Communications of California, Inc., MCI WorldCom Communications, Inc., and MCIMetro Access Transmission Services LLC intervened in the suit, after which Verizon filed a motion for partial summary judgment as to its first, second and fourth claims. However, concluding that Verizon’s first and second claims were not ripe for judicial review, the district court denied Verizon’s motion for partial summary judgment as to those two claims without reaching their merits, and sua sponte dismissed the same two claims. Then, after giving Verizon an opportunity to offer some material basis upon which to distinguish its remaining three claims, the district court dismissed those claims also for lack of ripeness. Verizon appealed the dismissal of its complaint. We have jurisdiction pursuant to 47 U.S.C. § 252(e)(6) and 28 U.S.C. § 1291, and vacate and remand with instructions that the district court consider on the merits whether Verizon is entitled to the declaratory and in-junctive relief.
STANDARD OF REVIEW
We review de novo whether claims are ripe for judicial review. Laub v. United States Dep’t of the Interior,
The Telecommunications Act of 1996 provides a single methodology for the setting of rates: TELRIC. “Federal law requires that any rate for unbundled network elements, adopted by a state commission, comply with TELRIC when adopted.” AT & T Communs.,
This obvious result has been clouded by our decision in US West Communs. v. MFS Intelenet, Inc.,
Verizon has presented a straightforward challenge to the basis on which the CPUC set the current rates; namely the rates set in New Jersey, with alleged inadequate adjustment for Verizon’s costs in California. Whether this short cut complied with federal law and the constitution is ripe for adjudication.
Accordingly, the judgment of the district court is VACATED and the case is REMANDED.
Concurrence Opinion
concurring:
Although I join in the majority’s holding and its conclusion that Verizon’s claims are ripe for judicial review, I do not find its distinction of US West Communications v. MFS Intelenet,
I. US West Communications v. MFS Intelenet, Inc.
The majority distinguishes US West on the basis that “neither the legitimacy of interim rates nor possible adjustment by later pricing proceedings (a so-called true up) is accepted by Verizon,” slip op. at 1073, suggesting that, by contrast, U.S. West did not contest “the legitimacy of interim rates.” I take this to mean that, according to the majority’s reading, U.S. West did not contest the legitimacy of rates that, by virtue of being interim, need not be in compliance with the Act so long as U.S. West was later made whole.
With this I do not agree. As we explained there, “US West challenge[d] sеveral of the pricing provisions as inconsistent with the pricing standards fixed by the Act.” Id. at 1117-18. We nevertheless concluded that the claims were not ripe for judicial review primarily because U.S. West conceded that the true-up would make it whole and, thus, might moot the appeal. Id. at 1118-19. This does not mean that U.S. West did not contest the legitimacy of such interim rates. Indeed, we expressly said otherwise:
US West challenges the interim rates, but says its concerns would be resolved if TCG and MFS were ordered to compensate U.S. West for any differences between the interim rates and the permanent prices, referred to as an “administrative true-up.”
.... Accordingly, we avoid unnecessary adjudication by declining to review the interim prices now. If a true-up is ordered, this appeal might become moot, as U.S. West has indicated it would be satisfied with such an order.
Id. at 1118-19 (emphasis added).
Thus, I find US West distinguishable from the case here not because U.S. West did or did not contest the legitimacy of interim rates that do not comply with the Act and TELRIC methodology, but because it conceded that a true-up would make it whole whereas, by contrast, Verizon has made no similar concession. To the contrary, as I address more fully in Part II.B.l below, Verizon has affirmatively alleged that the true-up will not make it whole in two different respects: (1) the loss of retail customers suffered during the period until permanent rates are established, which loss is claimed to be due to unlawfully low interim rates; and (2) the credit risk of nonpayment by CLECs of the difference between the rates as set by the interim rate order and as ultimately adjusted by the true-up, a risk Verizon has been and is presently forced to bear. Further, the CPUC agrees that these two elements of loss claimed by Verizon will not be considered in the true-up. Thus, to the extent that the district court here was obliged to accept Verizon’s allegations of uncompensable losses as true, an issue which I address in Part II.B.3 below, contrary to what was conceded in US West, any future true-up here cannot moot this appeal.
Nor is there any merit in the argument of the CPUC and the intervenors that our rationale in US West applies here with even greater force than it did there because the true-up here is more certain to occur than it was in US West. Presumably the argument is that even in US West, we denied review where there was a possibility that U.S. West would suffer losses that would not be compensated if, ultimately, the state utilities commission decided not to order a true-up. But here, to the extent Verizon’s allegations must be taken as true, Verizon has suffered, is suffering and will continue to suffer losses uncompensa-ble by a true-up; it is not a mere possibility. At the procedural phase in which we find ourselves and given Verizon’s allegations, it must be deemed a certainty.
Finally, as alluded to above, the possibility that the appeal would be mooted was not the sole ground on which we relied in holding that the claims raised in US West were not ripe for judicial review. Rather, as we stated:
Even if the appeal does not become moot, either because the true-up is denied or because [the CLECs] appeal[] the award of a true-up, this court will benefit from the Commission’s and the district court’s legal analysis of whether a true-up is authorized by the Act and from their аssessment of whether it should be imposed in these particular cases.
Id. at 1119. This rationale is inapplicable here because none of the parties are contesting whether a true-up is authorized nor whether it should be imposed here. It is admitted by all: The CPUC made the interim rates subject to a true-up,
In short, absent even the remotest possibility that Verizon’s claimed losses will be compensated through a true-up (assuming Verizon’s allegations to be true) thereby rendering this appeal moot, and in the absence of any suggestion that the parties intend to challenge the propriety of conducting a true-up either generally or as applied here, US West does not bind us.
II. Ripeness
Having so distinguished US West, I would consider whether the ripeness doctrine nevertheless bars Verizon’s action. The ripeness doctrine at issue here was first set forth in Abbott Laboratories v. Gardner,
A. The Fitness of the Issues for Judicial Decision
1. The Issues Raised Here Are Primarily Legal and Do Not Require Further Factual Development
The requirements that the issues raised be primarily legal and not require further factual development are, in fact, the same. “[A] сontroversy is ‘essentially legal in nature’ ... when no ‘further factual amplification is necessary.’ ” City of Auburn v. Qwest Corp.,
2. The Challenged Action Is Final
Whether a challenged action is sufficiently “final” for judicial review depends on whether it is the sort of action which federal courts have jurisdiction to review. Under the Act, “[i]n any case in which a State commission makes a determination under [47 U.S.C. § 252], any party aggrieved by such determination may bring an action in an appropriate Federal district court to determine whether the agreement or statement meеts the requirements of [47 U.S.C. § 251] and [47 U.S.C. § 252].” 47 U.S.C. § 252(e)(6) (emphases added). We previously have had
At least to the extent Verizon’s allegations of uncompensable harm are acceptеd as true, the interim rate order here is both operative and binding on Verizon. The order was entered on and effective as of March 13, 2003.
The CPUC and the intervenors, however, attempt to distinguish AT & T Communications Systems on the grounds that the question there was whether exhaustion of state remedies was required and that the rates challenged there were final rather than interim. Admittedly, we faced a different question in AT & T Communications Systems than we face here. But, as I began my analysis, whether a challenged action is sufficiently “final” fоr judicial review depends on whether it is the sort of action which federal courts have jurisdiction to review. The Act authorizes judicial review for “determination[s]” by state commissions, 47 U.S.C. § 252(e)(6), and I see no reason why we should define the statutory term differently for purposes of the ripeness doctrine than we did for purposes of the exhaustion doctrine.
Further, the CPUC and the intervenors’ emphasis on the fact that the rates here are nominally interim rather than final is misplaced for at least three reasons. First, Verizon’s argument today is not with the final rates. Even if the final rates fully comply with the TELRIC methodology and' even with the ensuing true-up, Verizon would still mount the same challenge to the interim rates that it makes today. Thus, neither its claims, nor the CPUC’s nor the intervenors’ defenses, would differ if they were to litigate after the final rates are promulgated.
Second, the assumption that interim rates are substantially more fleeting than final rates and, thus, that there is or
Third, the OPUC and the intervenors’ position largely boils down to the indefensible proposition that a state commission can insulate its “determination^” from judicial review by labeling them “interim.” This would eviscerate the judicial review provided by statute and cannot be, particularly in light of the fact that, as the history of this case demonstrates, so-called interim rates can remain in effect for years, command immediate compliance on pain of sanctions, and can allegedly cause losses which are, and will be, uncompensable.
Recognizing this potential for abuse, the CPUC concedes that particularly arbitrary rates should be subject to judicial review even if interim. See, e.g., CPUC Br. at 19-20; Jan. 21, 2005 Oral Arg. at 00:37:37-00:38:09. Although the degree of arbitrariness of an interim rate may render it more or less in need of judicial review, it does not render an interim rate more or less “a determination” and, thus, fit for judicial review.
The CPUC also defends its position by arguing that interim and unreviewable rates are useful regulatory tools in that they permit the CPUC to set rates relatively quickly, without the considerable delay and expense of procuring and reviewing cost studies and holding full hearings. Hence, argues the CPUC, such rates better effect the purpose of the Act, which is to promote competition among local exchange carriers. The CPUC’s assumption, however, that absent its rate setting there will be no- competition, is in error. To begin, even before the interim rate order at issue here, Verizon already was making its network available to competitors under rаtes set by the CPUC. Further, even absent-such a circumstance, an ILEC and CLECs are always free to negotiate rates.
Thus, I would conclude that the interim rate order here is sufficiently final for judicial review.
B. The Hardship to the Parties of Withholding Judicial Consideration
1. Verizon’s Alleged Uncompensable Harm
In its complaint seeking declaratory and injunctive relief, Verizon alleged that the CPUC’s interim rate order caused immediate harm to Verizon by requiring Verizon both: (1) to subsidize CLECs in the form of unlawfully low rates, which resulted in Verizon’s loss of retail customers; and (2) tо bear the credit risk that the CLECs benefitting from the interim rates will not exist at the time the true-up takes effect or will lack the wherewithal to pay the difference between the interim rates and the permanent rates for the period of time the interim rates were in effect. Verizon further alleged that the promised true-up would not compensate Verizon for either of these harms:
ILECs would be irreparably harmed if state commissions could impose artificially low UNE rates subject to the promise of a later true-up. Even assuming that a true-up were actually to occur at some future date, the [interim] Rate Order’s below-cost UNE rates cause Verizon California irreparable harm because they give CLECs an arbitrary competitive advantage that allows them to take customers away from Verizon California. This harm cannot be cured by the prospect of a future true-up of the Commission’s erroneous rates. Moreover, any true-up could be years awаy, thus exacerbating the harm. There is, moreover, no guarantee that CLECs who have received the benefit of below-cost rates will still exist and have the resources to pay back their windfall — let alone do so willingly without protracted litigation — at some future point when the Commission corrects its erroneous rates.
.... As a result of the interim UNE rates set by the Commission, Verizon California has been aggrieved within the meaning of Section 252(e)(6) of the 1996 Act, 47 U.S.C. § 252(e)(6). California’s “interim” UNE rates will enable Verizon California’s competitors to procure UNEs from Verizon California at rates well below Verizon California’s costs of providing UNEs. Further, they will enable Verizon California’s competitors to win over Verizon California’s customers, not because the competitors are more efficient or innovative, but because they have won a substantial regulatory windfall in the form of below-cost UNE rates.
Compl. ¶¶ 44, 46 (emphasis added).
Nor does the CPUC contest that the future true-up will afford Verizon no real
The CPUC’s stated position at oral arguments is quite correct. Where any party requests compulsory arbitration by the state utilities commission, the commission “shall ... establish any rates for ... network elements according to subsection (d) of this section.” 47 U.S.C. § 252(c)(2). Subsection (d) requires in,relevant part that “[d]eterminations by a State commission of ... the just and reasonable rate for network elements ... shall be ... based on the cost ... of providing the ... network element ... and ... may include a reasonable profit.” 47 U.S.C. § 252(d) (emphasis added). The FCC, in turn, promulgated regulations interpreting this subsection:
The 1996 Act requires the states to set prices for interconnection and unbundled elements that are cost-based, nondiscriminatory, and may include a reasonable profit. To help thе states accomplish this, the Commission con-eludes that - the state commissions should set arbitrated rates for interconnection and access to unbundled elements pursuant [to] a forward-looking economic cost pricing methodology. The Commission concludes that the prices that new entrants pay for interconnection and unbundled elements should be based on the local telephone companies Total Service Long Run Incremental Cost of a particular network element, which the Commission calls “Total Element Long-Run Incremental Cost” (TELRIC), plus a reasonable share of forward-looking joint and common costs.
11 F.C.C.R. 15,499, at ¶ 29 (1996) (emphases added), as amended by 11 F.C.C.R. 22,301 (1996); see also 47 C.F.R. § 51.505.
The CPUC and the intervenors argue, however, that any such alleged harm is temporary or speculative or is otherwise not cognizable under the ripeness doсtrine either because the interim rates do not require Verizon to alter its “conduct” or because the harm is mere financial loss. I address each of these arguments in turn.
As for the adjusted rates that Verizon may charge pursuant to the true-up for the interim period, the credit risk that Verizon has been forced to bear exists independently of whether the intervenors and other CLECs ultimately pay the true-up. If an investor is forced to accept junk bonds, of equal amount and maturity, in place of Treasury bonds, he may buy credit insurance; but the insurance premium will reduce his return. Similarly here, were Verizon to buy credit insurance on the intervenors’ payments pursuant to the true-up, the cost of such credit insurance is not an element of TELRIC.
Second, the CPUC and the intervenors argue that Verizon’s alleged harm is not cognizable under the hardship prong of the ripeness analysis because the interim rate order does not require Verizon to alter its “conduct” but only its rates. Here, the CPUC and the intervenors rely on language in cases stating that claims are ripe for review only when the challenged agency action requires a change in “conduct.” E.g., Abbott Laboratories,
Third, the CPUC and the intervenors correctly note that we have often stated that mere financial loss is not a cognizable harm for purposes of the hardship analysis under the ripeness doctrine. E.g., Principal Life Insurance Co.,
Further, to the extent Verizon’s alleged harm’ can be characterized as mere financial loss, although we have often repeated the refrain that mere financial loss is insufficient to establish hardship, none of the eases cited above turn on the fact that the loss was merely financial. Indeed, I have found only two cases in which we held that claims were unripe for judicial review at least in part because the harm was mere financial loss, both of which are readily distinguishable from the case here, either because there was no suggestion that the financial loss was uncompensable or because the challenged action was otherwise not ripe for judicial review. State of California, Department of Education v. Bennett,
Finally, that the alleged harm here is uncompensable by means of the true-up is significant. The refrain regarding financial loss repeated in each of these cases was first uttered by the Supreme Court in Abbott Laboratories. There, the Supreme Court agreed with an argument advanced by the gоvernment that “ ‘mere financial expense’ is not a justification for pre-en-
2. Procedural Context
The resolution of the appeal, then, must turn on whether Verizon’s allegations were sufficient to support its claim of hardship or, rather, whether thе district court was correct to dismiss Verizon’s claims in the absence of evidence of Verizon’s hardship. Before considering this question, however, three preliminary points must be made regarding the procedural context in which the district court’s orders were rendered.
First, at no point did the CPUC nor the intervenors file a cross-motion for summary judgment nor a motion to dismiss.
Second, in their brief in opposition to Verizon’s motion for partial summary judgment, neither the intervenors nor apparently the CPUC presented any evidence contradicting Verizon’s claims of irreparable harm. Further, in its reply brief in support of its motion, Verizon specifically reserved the opportunity to make a showing that Verizon had suffered and would continue to suffer irreparable harm
Third, once the district court denied in part Verizon’s motion -for summary judgment and dismissed Verizon’s first two claims, Verizon had no meaningful opportunity to present evidence to substantiate its claim of hardship. The district court’s order dismissing Verizon’s first two claims in no way invited Verizоn to submit evidence that its remaining claims were ripe. Rather, the district court held that “[i]t appears that the Court’s ruling on ripeness grounds also forecloses Plaintiffs remaining three causes of action,” but permitted Verizon to file “a written response demonstrating why its remaining three claims should not be dismissed following the Court’s ripeness ruling.” Verizon California, Inc. v. Peevey, No. C03-2838 THE, slip op. at 6-7 (N.D.Cal. Jan. 13, 2004) (emphasis added). In other words, the district court was inviting Verizon to demonstrate why the district court’s reasoning as to the first two claims was not also applicable to the remaining three claims. Further, even if Verizon did take the opportunity to present evidence, that would not have impacted the district court’s ruling as to the first two claims. The court never suggested that it would reconsider its dismissal of the first two claims.
Thus, at the time the district court denied Verizon’s motion for partial summary judgment and dismissed Verizon’s first two claims, Verizon had repeatedly alleged irreparable harm, and neither the CPUC nor the intervenors had filed a dispositive motion nor introduced evidence to the contrary. Further, once the district court denied Verizon’s motion for partial summary judgment and dismissed Verizon’s first two claims, Verizon had no meaningful opportunity to present evidence.
3. The District Court’s Order
In denying Verizon’s motion for partial summary judgment and dismissing Verizon’s first two claims (and, later, the remainder of Verizon’s complaint), the district court first held as a matter of law that Verizon’s allegations of irreparable harm were irrelevant. As . the district court stated: “The only discernible difference between this case and US West v. MFS appears to be that U.S. West admitted that its concerns would be resolved by the pending true-up, whereas Verizon disputes this issue. The Court is unconvinced that this difference is material.” The district court then held in the alternative that even if US West did not control the case, the court would still hold that Verizon’s claims were not ripe for judicial review because “possible financial loss is not sufficient to establish hardship” and Verizon’s arguments regarding loss of customers “rests on purе speculation, and such speculative harm does not constitute irreparable injury.” Id. at 4-6.
The district court’s first holding was error, as explained in Part I above. Indeed, I can think of no more of a material difference to ripeness analysis than that U.S. West stipulated it could recover its claimed damages through a true-up while Verizon claims it cannot, and the CPUC agrees with Verizon. The district court’s alternative holding likewise was error. As detailed in Part II.B.1 above, Verizon has alleged that its harm is not compensable through the true-up. This harm, as pleaded, is direct and immediate rather than contingent on future events and thus potentially temporary or speculative. Further, as pleaded, it is cognizable as hardship even to the extent resulting from the setting of rates as opposed to other conduct, and even to the extent limited to mere financial loss. This is sufficient to warrant judicial review, given the proce
Thus, in Gardner v. Toilet Goods Association,
Likewise, in Midcoast Interstate Transmission, Inc., Midcoast petitioned for review of the Federal Energy Regulatory Commission’s (“FERC”) orders granting Southern Natural Gas Company’s (“Southern”) application to construct a nаtural gas pipeline and, as is relevant here, FERC’s order that Southern could recover the cost of the new pipeline construction through “rolled-in” rather than “incremental” pricing. Midcoast Interstate Transmission, Inc.,
The D.C. Circuit — which, I note, has particular expertise in administrative law — held:
If [Midcoast’s] claim survives analysis, there can be no question that Midcoast has suffered a certain, concrete injury that satisfies both the statutory and constitutional requirements for judicial review.
Whether Mideoast is aggrieved is a question of fact; and where they are in dispute, a court must assume the correctness of the challenging party’s version of the facts. ...
.... Midcoast has presented facts which, if correct, fully support a finding that it has been aggrieved by the pricing determination....
Accepting, as we must for purposes of our analysis, the accuracy of Midcoast’s calculation of the incremental rateSouthern would be required to charge, we are satisfied that Midcoast has been aggrieved. As a direct consequence of the agency’s action and irrespective of the outcome of a future rate proceeding, Midcoаst will have lost the Cities’ business from the moment the North Alabama Pipeline begins deliveries of natural gas until the time that the Cities are released from their obligations under the Southern contracts....
It is for this reason that we also find, the issue ripe for review.... Because Mid-coast faces an imminent loss irrespective of the outcome of a future rate proceeding, there can be no question that the Commission’s pricing determination is ripe for review under the classic test established in Abbott Laboratories v. Gardner,387 U.S. 136 , 149,87 S.Ct. 1507 ,18 L.Ed.2d 681 (1967): the legality of the rolled-in pricing determination is fit for immediate judicial decision, and the hardship faced by Midcoast is indisputable.
Id. at 969-70 (emphases added).
Similarly, in City of New Orleans v. Federal Energy Regulatory Commission,
The challenging parties assert that the transfer will aggrieve them eventually in the form of unreasonable rates, and so was not prudently entered into. If they are correct, as we must assume them to be for purposes of determining their ag-grievement, they had a right to a review of FERC’s decision on the prudence of the transaction in terms of its effect on ratepayers.
Id. (emphasis added).
Verizon indisputably “allege[d] facts demonstrating the appropriateness of invoking judicial resolution of the dispute,” 15 Moore’s Federal Practice § 101.73[1] (2005), as detailed in Part II.B.l above. Nor, as detailed in Part II.B.2 above, did the CPUC nor the intervenors file a cross-motion for summary judgment nor even proffer evidence in responding to Verizon’s motion for partial summary judgment that might have obliged Verizon to substantiate its allegations. In this procedural context and particularly given Verizon’s specific reservation of the opportunity to present evidence should the district court desire, the district .court’s sua sponte dismissal was error. Accordingly, I join with the majority in vacating the district court’s orders denying Verizon’s motion for partial summary judgment and dismissing Verizon’s complaint, and remanding with instructions that the district court consider on the merits whether Verizon is entitled to the declaratory and injunctive relief (and the costs and attorneys’ fees) that it seeks.
Notes
. Indeed, we recently explained that the ripeness doctrine as it pertains to "cases involving administrative agencies ... recognize[s] that judicial action should be restrained when other political branches have acted or will act,” Principal Life Insurance Co. v. Robinson,
. Indeed, I note that Verizon alleges that it “proposed a voluntary reduction of certain of its UNE rates on an interim basis in order to meet the Commission’s goal of expеditiously reducing rates,” but that this proposal was rejected. Compl. ¶ 29.
. There is, in my view, no merit in the argument by the CPUC and the intervenors that harm resulting from Verizon’s loss of customers is not cognizable because the very purpose of the Act is to promote competition in the intrastate telecommunications markets. Competition does not typically demand that firms subsidize their competitors, which, according to Verizon, is precisely what has happened here. Nor does the Act suggest other
. The Supreme Court has explained the TEL-RIC methodology as follows:
“The TELRIC of an element has three components, the operating expenses, the depreciation cost, and the appropriate risk-adjusted cost of capital.” A concrete example may help. Assume that it would cost $1 a year to operate a most efficient loop element; that it would take $10 for interest payments on the capital a carrier would have to invest to build the lowest cost loop centered upon an incumbent carrier's existing wire centers (say $100, at 10 percent per annum); arid that $9 would be reasonable for depreciation on that loop (an 11-year useful life); then the annual TELRIC for the loop element would be $20.
The actual TELRIC rate charged to an entrant leasing the element would be a fraction of the TELRIC figure, based on a "reasonable projection” of the entrant’s use of the element (whether on a flat or per-usage basis) as divided by aggregate total use of the element by the entrant, the incumbent, and any other competitor that leases it.
Verizon Communications Inc.,
. Nor is there reason to so assume. In the parlance of economists, given the transaction costs that customers bear when they switch service providers and given the price differentials among service providers under the interim rates relative to those under the permanent rates, it may not be efficient for customers to return to Verizon even if was efficient for them to leave in the first place.
. Of course, Verizon — like the junk-bond holder — could choose to run the risk of nonpayment, with the predictable effect on its financial statements and own creditworthiness, but that is an option some might not think prudent in these days of vigilance over corporations.
. In so concluding, I do not assume that the statutory provisions providing for federal review of "determination[s]” by state utilities preclude relief in the form of damages. See Verizon Maryland Inc. v. Public Service Commission of Maryland,
. I emphasize that in reaching these conclusions, I do not rely on any of the evidence that Verizon submitted in connection with its appeal without first having submitted it to the district court.