ORDER NO. 98-132

ENTERED APR 7, 1998

This is an electronic copy.

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

AR 340

DISPOSITION: RULES ADOPTED AS MODIFIED

At its public meeting of November 4, 1997, the Commission adopted a report by the Administrative Hearings Division (AHD) recommending that the Commission open a formal rulemaking docket to promulgate rules for arbitrations and mediations under the 1996 federal Telecommunications Act (the Act). The report noted that the Commission has been conducting arbitration proceedings under the 1996 Act in accordance with the procedural guidelines adopted in UM 807. These guidelines have worked well but need more detail and some modification, AHD contended.

For the most part, AHD’s proposed rules follow the policy set out in UM 807. They maintain the focus on flexibility and efficiency by limiting party status to the petitioning company and the responding LEC, by maintaining stringent controls over discovery, and by retaining a general streamlining of procedures. Most of the proposed modifications involve the addition of detail to the broad outlines set out in UM 807. For example, the rules add definitions of a few terms and detail to a number of requirements such as time frames and filing obligations. The proposed rules also explicitly incorporate the standards set out in the Act for acceptance and rejection of agreements. Moreover, the proposed rules set out procedures for the filing and review of Statements of Generally Available Terms under §252(f) of the Act.

Additionally, the proposed rules remove the requirement that the arbitrator notify parties and give them an opportunity to participate when the arbitrator confers with Staff. Because of the tight time lines and busy schedules of all participants, the current notification process under UM 807 has prevented the arbitrator from conferring with Staff when preparing the award. AHD argued that the proposed change would eliminate that barrier.

The notice of proposed rulemaking was published in the Secretary of State’s Bulletin on December 1, 1997. The proposed rules were circulated to persons interested in such matters.

A comment hearing was held on the proposed rules on January 7, 1998, before Lowell W. Bergen, Administrative Law Judge (ALJ). Appearances were entered by Timothy J. O’Connell on behalf of GTE Northwest Incorporated (GTE); Penny Bewick on behalf of Electric Lightwave, Inc. (ELI); Lawrence Reichman on behalf of U S WEST Communications, Inc. (USWC); and Lisa Rackner on behalf of MCI. USWC also filed written comments that reflect its comments at hearing.

Positions of the Participants

USWC comments that the proposed rules deviate in one respect from the UM 807 policy statement. That policy statement specified that if an arbitrator wanted to consult with Staff, the arbitrator must give the parties to the arbitration notice and an opportunity to be present during the discussions. The proposed rules delete this provision, and USWC would like it reinstated. USWC also proposes applying the same procedures to the situation in which the Commission wishes to consult with Staff when it considers approving or rejecting an arbitrated agreement. That is, USWC would like the rules to require that parties receive notice of the Commission’s intention to consult with Staff and have an opportunity to be present or an opportunity to review and respond to Staff’s written comments.

GTE shares USWC’s concerns about notice of the arbitrator’s consultation with Staff. GTE also pointed out that there was no rush to promulgate the rules. Therefore, GTE suggested waiting until the federal courts issue decisions reviewing arbitrations and arbitrated agreements. Waiting would allow the Commission to ascertain the acceptability of the procedures under consideration in the proposed rules.

GTE expressed substantive concern with proposed rule subsection 860-016-0030(3). That subsection in the draft rules provides, in relevant part:

Respondent may file a response within 25 days of the request for arbitration. In the response, the respondent shall address each issue listed in the request, describe the respondent’s position on those issues, and identify and present any additional issues for which the respondent seeks resolution. Building upon the contract language proposed by the applicant, and using the form of agreement selected by the applicant, the respondent shall provide a "mark-up" document containing the language upon which the parties agree and, where they disagree, both the applicant’s language (bolded) and the respondent’s proposed language (underscored).

GTE takes issue with the sentence that begins "Building upon…" First, GTE contends that the sentence does not comply with the Act. It broadens the issues in the arbitration beyond those identified in the petition. GTE believes that conflicts with the Act, §252(b)(4)(A), which reads:

The State commission shall limit its consideration of any petition and any response thereto to the issues set forth in the petition and the response, if any.

Furthermore, §252(b)(4)(C) requires the Commission to resolve "each issue set forth in the petition." The proposed procedure broadens the issues beyond those identified in the petition by putting at issue the marked-up contract language.

GTE also points out that the sentence in question determines a fundamental issue in the arbitrations, that is, the issue as to whose contract should be used. GTE believes that disputes about contract language or whose agreement to accept as the working document are issues for the arbitrator to decide. The proposed rules are supposed to be procedural rules, and GTE does not believe that the rules should predetermine the outcome of substantive disputes.

MCI supports the rules as drafted, with the same reservation that USWC and GTE expressed about omitting the notice and opportunity to be heard provision from the Commission’s policy statement. MCI recognizes the legitimate reasons for doing away with notice and an opportunity to participate on consultations with Staff. The arbitrations implicate a very tight time line, and the addition of another procedural step takes time from the Commission’s processing of the arbitrations. MCI proposes giving parties 24 hours’ notice and the opportunity to be present via a telephone conference to discuss or be heard on any particular issue. MCI believes that most parties would simply want to listen to the conference, not to participate, since parties have ways to be heard all through the process. At the discretion of the arbitrator, parties could comment on the conference in a manner determined in each case.

Commission Discussion

Arbitrator’s consultation with Staff: The Commission believes the participants’ concerns about arbitrator/Staff consultation are appropriate. At the same time, the arbitrations must be processed expeditiously. The participants’ suggestions about telephone conferences and possible written comments by the parties in response to Staff comments are well taken. Such a procedure would allow the parties to be informed about inputs into the Commission’s decision and would also allow the arbitrator flexibility with respect to receiving comments on the consultation. This procedure both safeguards the procedural rights of participants and allows dockets to proceed quickly. Accordingly, OAR 860-016-0030(6) has been redrafted. Language in italics has been added to the draft rule, which now reads as follows:

(6) Only the two negotiating parties will have full party status. The arbitrator may confer with Staff for assistance throughout the arbitration process. If Staff assistance is desired, the arbitrator will notify (by telephone or other means) the parties at least 24 hours before the consultation with Staff. The parties may attend or listen to the consultation and may respond in a manner allowed by the arbitrator.

On the other hand, the Commission elects not to allow parties to be present at Commissioner consultations with Staff. Parties will have had ample opportunity for input into the arbitrator’s decision and for comment on that decision to the Commission in the approval or rejection phase of the decision making process. The Commission does not believe that due process requires further opportunity for the parties to comment on the arbitrator’s decision. Furthermore, standards for Commission approval or rejection of the arbitrator’s decision are so narrow (compliance with §251 of the Act and with the pricing standards of §252(d)) as to make consultation unlikely except on very technical grounds.

"Building upon the contract language proposed by applicant": GTE’s concern about this language has merit. The Commission agrees that the language in question predetermines what should properly be an issue for the arbitrator, namely whose contract to accept. The language in question has been eliminated in order to leave the arbitrator discretion as to what should constitute the base contract and how to handle the other party’s emendations to the contract. OAR 860-016-0030(3) now reads as follows:

(3) Respondent may file a response within 25 days of the request for arbitration. In the response, the respondent shall address each issue listed in the request, describe the respondent’s position on those issues, and identify and present any additional issues for which the respondent seeks resolution.

GTE’s proposed delay in promulgating the rules: The Commission sees no point in waiting for federal court review of the arbitration decisions. The Commission believes that its procedural rules are reasonable and reflect the letter and spirit of the Act, and will withstand review. Therefore, the Commission has decided to promulgate them now.

DISPOSITION

At its April 7, 1998, public meeting, the Commission adopted the proposed rules as modified, set forth in Appendix A, attached to this order and incorporated herein by reference.

ORDER

IT IS ORDERED that Oregon Administrative Rules, Chapter 860, Division 016, as set forth in Appendix A, attached to this order, are adopted. The rules shall be effective upon filing with the Secretary of State.

Made, entered, and effective .

A party may request rehearing or reconsideration of this order pursuant to ORS 756.561. A party may appeal this order to a court pursuant to applicable law.

DIVISION 016

MEDIATION AND ARBITRATION UNDER THE 1996 TELECOMMUNICATIONS ACT

860-016-0000

Definitions

As used in Division 016 of the rules:

(1) "The Act" means the federal Communications Act of 1934, as amended by the Telecommunications Act of 1996.

(2) "Arbitration" means the submission of a dispute for resolution by a neutral third party appointed by the Commission.

(3) "Commission" means the Oregon Public Utility Commission.

(4) "Mediation" means a process in which a neutral third party assists negotiating parties to reach their own solution.

(5) "Petitioner" means a person who has filed a petition for arbitration under the Act.

(6) "Respondent" means the party to a negotiation, which did not make the request for arbitration.

Stat. Auth.: ORS 756.060

Stat. Implemented: 47 USC 252

Hist.: New

860-016-0010

Commission Policy

The policy of the Public Utility Commission of Oregon relating to mediation and arbitration under the Act is to facilitate the execution of interconnection agreements among telecommunications carriers. The Commission encourages and will assist parties to reach agreement on access to the telecommunications network, as well as the routing of and payment for interconnected calls. When the parties do not reach agreement among themselves, the Commission will arbitrate disputes so that interconnection agreements will be fair and will comply with the provisions of the Act.

Stat. Auth.: ORS 756.060

Stat. Implemented: 47 USC 252

Hist.: New

860-016-0020

Negotiation and Mediation of Interconnection Agreements

(1) The negotiating parties may ask a mediator outside the Commission to help them reach agreement. If they request the Commission to mediate, the Commission will use an Administrative Law Judge (ALJ) or a member of the utility Staff to mediate.

(2) Only the negotiating parties and the mediator will participate in mediation sessions.

(3) After the parties reach agreement, they shall file the negotiated interconnection agreement with the Commission. Unless the agreement merely adopts an agreement previously approved by the Commission, the Commission will serve notice of the negotiated agreement on those who have indicated a desire to receive notice of mediated and arbitrated agreements. The public may then file comments within 21 days of service of the notice, unless the Commission establishes a different time limit in an individual case. If the agreement merely adopts an agreement previously approved by the Commission, the Commission will process the agreement on an expedited basis, without serving notice of it.

(4) The Commission will accept or reject the agreement within 90 days. The grounds for rejection are that the agreement:

(a) Discriminates against a carrier not a party to the agreement; or

(b) Is not consistent with the public interest, convenience, and necessity. Applicable Commission policies will be a factor in public interest, convenience, and necessity.

Stat. Auth.: ORS 756.060

Stat. Implemented: 47 USC 252

Hist.: New

860-016-0030

Arbitration of Disputes

(1) Negotiating parties may engage the services of an outside arbitrator rather than file a petition with the Commission. If the negotiating parties petition the Commission to arbitrate their dispute, the Commission will use an ALJ as arbitrator unless workload constraints necessitate the use of an outside arbitrator.

(2) A petition for arbitration must contain:

(a) A statement of all unresolved issues;

(b) A description of each party's position on the unresolved issues;

(c) A proposed agreement addressing all issues, including those on which the parties have reached agreement and those that are in dispute. Wherever possible, the petitioner should rely on the fundamental organization of clauses and subjects contained in an agreement previously approved by the Commission;

(d) Documentation showing that the request complies with the time requirements of the Act.

(3) Respondent may file a response within 25 days of the request for arbitration. In the response, the respondent shall address each issue listed in the request, describe the respondent's position on those issues, and identify and present any additional issues for which the respondent seeks resolution.

(4) The arbitration will be conducted in a manner similar to a contested case proceeding, and the arbitrator will have the same authority to conduct the arbitration process as an ALJ has in conducting hearings under the Commission's rules. However, the arbitration process will be streamlined to meet the Act’s timelines. An early conference will be held to discuss processing of the case, and to receive the proposal put forth by each party. The arbitrator will establish the schedule, and decide whether an oral hearing would be helpful. After the oral hearing or other procedures (for example, rounds of comments),

each party will submit its "final offer" proposed agreement. The arbitrator will choose between the two final offers. However, if neither offer is consistent with the Act and Commission policies, the arbitrator will make an award that meets those requirements.

(5) Formal discovery procedures will be allowed only to the extent deemed necessary by the arbitrator. Parties will be required to cooperate in good faith in voluntary, prompt, and informal exchanges of information relevant to the matter. Unresolved discovery disputes will be resolved by the arbitrator upon request of a party. The arbitrator will order a party to provide information if he/she determines the requesting party has a reasonable need for the requested information and that the request is not overly burdensome.

(6) Only the two negotiating parties will have full party status. The arbitrator may confer with Staff for assistance throughout the arbitration process. If Staff assistance is desired, the arbitrator will notify (by telephone or other means) the parties at least 24 hours before the consultation with Staff. The parties may attend or listen to the consultation and may respond in a manner allowed by the arbitrator.

(7) To keep the process moving forward, appeals to the Commission will not be allowed during the arbitration process. An arbitrator may certify a question to the Commission if deemed necessary.

(8) To accommodate the need for flexibility, the arbitrator may use procedures that vary from those set out here if he/she deems it helpful in a particular arbitration, as long as the procedures are fair, treat the parties equitably, and substantially comply with the procedures listed here.

Each arbitration award must:

(a) Ensure that the requirements of sections 251 and 252 of the Act and any valid applicable Federal Communications Commission regulations under those sections are met;

(b) Establish interconnection and network element prices consistent with the Act;

(c) Establish a schedule for implementation of the agreement; and

(d) Be consistent with Commission policies.

(10) After an arbitration award is submitted to the Commission, notice will be served on those who have indicated a desire to receive notice of mediated and arbitrated agreements. Any person may then file comments within 10 days of service of the award.

(11) The Commission will accept, modify, or reject an arbitration award within 30 days.

(12) Within 14 days after the Commission issues its arbitration decision, petitioner shall prepare an interconnection agreement complying with the terms of the arbitration decision and serve it on respondent. Respondent shall either sign and file the agreement, or file objections to it, within 10 days of service of it. If objections are filed, they shall state how the agreement fails to comply with the arbitration decision, and offer substitute language complying with the decision. The Commission will approve or reject a filed interconnection agreement within 30 days of its filing, or the agreement will be deemed approved.

Stat. Auth.: ORS 756.060

Stat. Implemented: 47 USC 252

Hist.: New

860-016-0040

Statement of Generally Available Terms

(1) A Bell Operating Company may file a statement of generally available terms that comply with Sections 251 and 252 of the Act. Any person may file comments concerning the statement of generally available terms within 30 days of the filing of the statement. The comments shall be limited to the standards for review established in this rule.

(2) The Commission will review the statement of generally available terms within 60 days of its submission, and either reject it or permit it to go into effect. The period for review may be extended if the submitting carrier agrees to a time extension. The Commission may continue to review the statement after it has gone into effect.

Stat. Auth.: ORS 756.060

Stat. Implemented: 47 USC 252

Hist.: New