In this appeal we were originally asked to review two orders of the Georgia Public Service Commission (the "GPSC"), which interpreted the contract between BellSouth Telecommunications, Inc. ("BellSouth") and MCImetro Access Transmission Services, Inc. ("MCImetro"), and the contract between BellSouth and WorldCom Technologies, Inc. ("WorldCom"). Both contracts were interconnection agreements mandated by the Federal Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (1996) ("FTCA"). The GPSC was asked to interpret the meanings of provisions in each contract which established reciprocal compensation rates for local telephone traffic.1 BellSouth claimed that calls made to internet service providers ("ISPs") could not be considered "local traffic" subject to reciprocal compensation under the contracts. MCImetro and WorldCom both claimed that such calls were "local" and therefore subject to reciprocal compensation. They demanded payment under their respective contracts and sought relief before the GPSC. The GPSC determined that calls to ISPs were "local traffic" under the contracts and thus reciprocal compensation must be paid by BellSouth. BellSouth then commenced an action in the district court, asserting that the GPSC decision was contrary to federal law and claiming that the district court had jurisdiction under 47 U.S.C. § 252(e)(6) and 28 U.S.C. § 1331. The district court affirmed the GPSC's order and BellSouth appealed. A split panel of this court did not reach the merits of the appeal, reversing the district court's order on the grounds that there was no statutory authority for the GPSC to interpret and enforce these interconnection agreements in the first instance.

A majority of the judges in active service granted the petition for rehearing en banc filed by MCImetro Access Transmission Services and WorldCom Technologies and vacated the panel opinion in this case. We now address, en banc, the appropriateness of the GPSC's order and the extent of federal jurisdiction over challenges to that order.

To address the natural monopoly in place in the telecommunications industry and promote competition in local telephone service, Congress passed the FTCA in 1996. Pub. L. No. 104-104, 110 Stat. 56. Its regulatory scheme was designed to counteract the deterrence of competition inherent in the high, fixed initial cost of telephone service and the need for all customers to interconnect with one another. Thus, in order to open intrastate telephone markets to competition, it required incumbent Local Exchange Carriers ("ILECs"), such as BellSouth, to share access to loops and exchanges with competing LECs ("CLECs"), like MCImetro and WorldCom. 47 U.S.C. § 251(a)(1).2 The FTCA further required ILECs and CLECs that are sharing resources to "establish reciprocal compensation arrangements for the transport and termination of telecommunications." 47 U.S.C. § 251(b)(5).3 These agreements were to be submitted for approval or rejection to the state public service commission and, in making this determination, the commissions were to consider several specific factors. 47 U.S.C. § 252(e) provides:

(e) Approval by State commission.

(1) Approval required.

Any interconnection agreement adopted by negotiation or arbitration shall be submitted for approval to the State commission. A State commission to which an agreement is submitted shall approve or reject the agreement, with written findings as to any deficiencies.

(2) Grounds for rejection.

The State commission may only reject —

(A) an agreement (or any portion thereof) adopted by negotiation under subsection (a) of this section if it finds that —

(i) the agreement (or portion thereof) discriminates against a telecommunications carrier not a party to the agreement; or

(ii) the implementation of such agreement or portion is not consistent with the public interest, convenience, and necessity; or

(B) an agreement (or any portion thereof) adopted by arbitration under subsection (b) if it finds that the agreement does not meet the requirements of section 251 [47 U.S.C. § 251], including the regulations prescribed by the Commission pursuant to section 251 [47 U.S.C. § 251], or the standards set forth in subsection (d) of this section.

(3) Preservation of authority.

Notwithstanding paragraph (2), but subject to section 253 [47 USC § 253], nothing in this section shall prohibit a State commission from establishing or enforcing other requirements of State law in its review of an agreement, including requiring compliance with intrastate telecommunications service quality standards or requirements.

(4) Schedule for decision.

If the State commission does not act to approve or reject the agreement within 90 days after submission by the parties of an agreement adopted by negotiation under [47 U.S.C. § 252(a)], or within 30 days after submission by the parties of an agreement adopted by arbitration under [47 U.S.C. § 252(b)], the agreement shall be deemed approved. No State court shall have jurisdiction to review the action of a State commission in approving or rejecting an agreement under this section.

(5) Commission to act if State will not act.

If a State commission fails to act to carry out its responsibility under this section in any proceeding or other matter under this section, then the Commission shall issue an order preempting the State commission's jurisdiction of that proceeding or matter within 90 days after being notified (or taking notice) of such failure, and shall assume the responsibility of the State commission under this section with respect to the proceeding or matter and act for the State commission.

(6) Review of State commission actions.

In a case in which a State fails to act as described in paragraph (5), the proceeding by the Commission under such paragraph and any judicial review of the Commission's actions shall be the exclusive remedies for a State commission's failure to act. In any case in which a State commission makes a determination under this section, any party aggrieved by such determination may bring an action in an appropriate Federal district court to determine whether the agreement or statement meets the requirements of [47 U.S.C. § 251] and this section.

While § 252 expressly gives state commissions authority to approve or reject interconnection agreements, the statute does not specifically say that this empowerment includes the interpretation and enforcement of interconnection agreements after their initial approval. We agree with all the parties before us, however, that a common sense reading of the statute leads to the conclusion that the authority to approve or reject agreements carries with it the authority to interpret agreements that have already been approved. We find further support for this conclusion in the recent decision of the Supreme Court in Verizon Md., Inc. v. PSC, 535 U.S. 635, 122 S.Ct. 1753, 152 L.Ed.2d 871 (2002), in the decisions of all other circuit courts to have considered the question, and in the determination of the Federal Communications Commission, (" FCC"), which is entitled to deference in the interpretation of the pertinent statute. See In re Starpower, 15 F.C.C.R. 11277, ¶ 6, at 1129-80, 2000 WL 767701 (2000).

The Verizon case involved a public service commission order like the one before us that had resolved the question of whether calls made to an ISP could be considered "local calls" subject to reciprocal compensation pursuant to the interconnection agreement of the parties. While the procedural posture of Verizon differs from that of the case at bar, the Verizon case arose from a set of facts identical to those here. In Verizon, WorldCom and Verizon had negotiated an interconnection agreement that had been approved by the Maryland Public Service Commission (the "MPSC"). Several months after the interconnection agreement had been approved, Verizon refused to pay WorldCom for calls made to ISPs. WorldCom filed a complaint with the MPSC. The MPSC determined that, as a matter of state contract law, ISP calls were compensable local traffic under the interconnection agreement between Verizon and WorldCom. Verizon sued the MPSC in federal district court, asserting jurisdiction under 47 U.S.C. § 252(e)(6) and 28 U.S.C. § 1331. Verizon claimed that the MPSC order violated the FTCA and a ruling of the FCC. The district court dismissed the action without reaching the merits, holding that neither the FTCA nor 28 U.S.C. § 1331 gave it jurisdiction over Verizon's claims against private defendants. The Fourth Circuit affirmed. The Supreme Court granted certiorari, addressing the question of "whether federal district courts have jurisdiction over a telecommunication carrier's claim that the order of a state utility commission requiring reciprocal compensation for telephone calls to [ISPs] violates federal law." Verizon, 122 S.Ct. at 1754. The Court reversed the Fourth Circuit and held that the federal district court had jurisdiction under 28 U.S.C. § 1331 to review the state utility commission's interpretation of the interconnection agreement at issue. Id. at 1761. Because it found jurisdiction under 28 U.S.C. § 1331, the Court did not decide whether there was also jurisdiction under § 252(e)(6). The determination that the district court did have jurisdiction to review the MPSC's order interpreting the interconnection agreement assumed that the state utility commission had the authority to interpret the interconnection agreements in the first instance. The Court noted that the "parties dispute whether it is in fact federal or state law that confers this authority, but no party contends that the Commission lacked jurisdiction to interpret and enforce the agreement." Id. at 1758 n. 2.

Other circuits have expressly recognized state commissions' authority to interpret the interconnection agreements at issue. In Bell Atl. Md., Inc. v. MCI WorldCom, 240 F.3d 279, 304 (4th Cir.2001), the court noted that: "The critical question is not whether State commissions have authority to interpret and enforce interconnection agreements — we believe they do — but whether these decisions are to be reviewed by State courts or federal courts." As noted, the Fourth Circuit's determination that federal courts did not have authority to hear challenges to the decision of the MPSC was vacated by the Supreme Court in Verizon, 122 S.Ct. at 1761. The Fifth Circuit, in Southwestern Bell Tel. Co. v. PUC, 208 F.3d 475, 479-80 (5th Cir.2000), noted that "the Act's grant to the state commissions of plenary authority to approve or disapprove these interconnection agreements necessarily carries with it the authority to interpret and enforce the provisions of agreements that state commissions have approved." In Southwestern Bell Tel. Co. v. Brooks Fiber Communs. of Okla., Inc., 235 F.3d 493, 497 (10th Cir. 2000), the court deferred to the FCC's conclusion that state commissions have the authority to interpret and enforce interconnection agreements. In Puerto Rico Tel. Co. v. Telecommunications Regulatory Bd., 189 F.3d 1, 10-13 (1st Cir.1999), the court held that there was no jurisdiction over a dispute between an ILEC and a CLEC regarding whether long-distance charges applied to certain cellular calls,4 but did not question the state commission's authority to resolve the dispute.5 In Illinois Bell Tel. Co. v. Worldcom Techs., Inc., 179 F.3d 566, 573 (7th Cir.1999), the court stated that, in deciding a dispute between a CLEC and an ILEC over whether ISP calls were local traffic, the state commission "was doing what it is charged with doing in the Act and in the FCC ruling. It was determining what the parties intended under the agreements." Finally, in Iowa Util. Bd. v. F.C.C., 120 F.3d 753, 804 (8th Cir.1997), the court commented that "state commissions retain the primary authority to enforce the substantive terms of the agreements made pursuant to sections 251 and 252." Iowa Utilities was reversed in part on other grounds by AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 385, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999), which held that, under the FTCA, the FCC has authority to "design a pricing methodology" and to promulgate rules regarding various other matters.

No court has held or suggested that a state commission does not have the authority to interpret and enforce interconnection agreements after they have been approved. Moreover, the entity charged with the implementation of the FTCA, the FCC, has clearly stated that state commissions have the authority to interpret interconnection agreements. In re Starpower, 15 F.C.C.R. 11277. In Starpower, the FCC held that a determination of whether ISP traffic was subject to reciprocal compensation under an interconnection agreement was a determination that a state commission was required to make under § 252(e)(5). Id. In that case, Starpower Communications had asked the FCC to preempt the jurisdiction of the Virginia State Corporation Commission ("Virginia Commission") to resolve disputes over interconnection agreements between Starpower and Bell Atlantic Virginia and GTE South. Id. As in this case, the dispute in Starpower was over whether calls to ISPs were local calls. Id. Starpower filed petitions with the Virginia Commission against Bell Atlantic and GTE, seeking compensation under the interconnection agreements for calls made to ISPs. Id. The Virginia Commission declined jurisdiction in both of Starpower's actions. Id. Starpower then petitioned the FCC to hear its complaint. Id. Because the Virginia State Corporation Commission had failed to make a determination concerning the dispute over ISP traffic, the FCC assumed jurisdiction of the dispute.6 Id. at 11278. In determining whether to take jurisdiction, the FCC stated that it "must first determine whether a dispute arising from interconnection agreements and seeking interpretation and enforcement of those agreements is within the states' `responsibility' under section 252." Id. at 11279. The FCC decided that interpretation and enforcement of interconnection agreements were responsibilities of the states under section 252, citing Southwestern Bell, 208 F.3d 475 and Illinois Bell, 179 F.3d 566 for support. Id.7

Under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), agency determinations are entitled to due deference if (1) the statute is silent or ambiguous with respect to the issue at hand and (2) "the agency's answer is based on a permissible construction of the statute." Id. at 843, 104 S.Ct. 2778. "A court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency." Id. at 844, 104 S.Ct. 2778. Although the FCC's ruling in Starpower relied on federal court decisions that were based on a vacated FCC ruling, the FCC also pointed out, approvingly, that the courts had based their decisions on a recognition that "due to its role in the approval process, a state commission is well-suited to address disputes arising from interconnection agreements." Starpower, 15 FCC Rcd. at 11280. This observation of the state commissions' suitability for the interpretation of interconnection agreements is not unreasonable, nor is it contrary to the language of the statute.8

Moreover, the language of § 252 persuades us that in granting to the public service commissions the power to approve or reject interconnection agreements, Congress intended to include the power to interpret and enforce in the first instance and to subject their determination to challenges in the federal courts. Section 252(e)(6) gives federal courts jurisdiction to review "determinations" made by state commissions. 47 U.S.C. § 252(e)(6). In contrast, § 252(e)(4) abrogates state court jurisdiction "to review the action of a State commission in approving or rejecting an agreement under this section." 47 U.S.C. § 252(e)(4). The use of the word "determination" in § 252(e)(6) rather than a specific reference to the approval or rejection of agreements leads us to believe that Congress did not intend to limit state commissions' authority to the mere approval and rejection of agreements. See Russello v. United States, 464 U.S. 16, 23, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983) ("[Where] Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.") (quoting United States v. Wong Kim Bo, 472 F.2d 720, 722 (5th Cir.1972)). It is reasonable to read the grant of authority in 252(e) as encompassing the interpretation of agreements, not just their approval or rejection.

Given the extensive federal regulation of interconnection agreements and the role state commissions play in their formation, it would be illogical to say that the GPSC's interest in an interconnection agreement is extinguished as soon as the agreement is approved, and that the agreement should thereafter be treated as any other contract.9 At least one circuit has described state commissions as "deputized federal regulator[s]" authorized to exercise regulatory power and ensure compliance with federal law as set out in the FTCA. MCI Telcoms. Corp. v. Illinois Bell Tel. Co., 222 F.3d 323, 344 (7th Cir.2000). Interconnection agreements are tools through which the FTCA enforced. Thus, it is consistent with the FTCA to have state commissions interpret contracts and subject their interpretations to federal review in the district courts.

Additionally, the Supreme Court has specifically held in Verizon that federal courts have jurisdiction under 28 U.S.C. § 1331 to hear challenges to the orders of state public service commissions interpreting interconnection agreements exactly like the one before us. 122 S.Ct. at 1761. Section 1331 provides that "the district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. There is no question that the controversy before us arises under the FTCA and that all of the public service commission's decisions are permeated by federal questions. For example, § 252(e)(2)(A)(ii) requires public service commissions to interpret negotiated agreements prior to approval to ensure that they are "consistent with the public interest, convenience, and necessity." 47 U.S.C. § 252(e)(2)(A)(ii). After an agreement is approved, each party to the agreement is required to "make available any interconnection, service, or network element provided under [the agreement] to any other requesting telecommunications carrier upon the same terms and conditions as those provided in the agreement." 47 U.S.C. § 252(i).

The resolution of each issue need not depend completely upon an interpretation of federal law. For purposes of 28 U.S.C. § 1331 jurisdiction, all that is required is that there be an arguable claim arising under federal law. As the Supreme Court said in Verizon:

"It is firmly established in our cases that the absence of a valid (as opposed to arguable) cause of action does not implicate subject-matter jurisdiction, i.e., the court's statutory or constitutional power to adjudicate the case." ... As we have said, "the district court has jurisdiction if `the right of the petitioners to recover under their complaint will be sustained if the Constitution and laws of the United States are given one construction and will be defeated if they are given another,'unless the claim `clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or where such claim is wholly insubstantial and frivolous.'" ... Here, resolution of Verizon's claim turns on whether the Act, or an FCC ruling issued thereunder, precludes the Commission from ordering payment of reciprocal compensation, and there is no suggestion that Verizon's claim is "`immaterial'" or "`wholly insubstantial and frivolous.'"

122 S.Ct. at 1758-59.

In this case, as in Verizon, the complaint alleges that the GPSC's determination is inconsistent with the FTCA and its implementing regulations and also argues that the GPSC erred in its interpretation of the contracts. This involves the same federal question presented in Verizon. Federal courts must resolve the question of whether a public service commission's order violates federal law and any other federal question as well as any related issue of state law under its pendent state jurisdiction. Thus, pursuant to Verizon, the Georgia Public Service Commission had the authority to interpret and enforce the interconnection agreements that it had approved in the first instance and the federal district court had jurisdiction over this case pursuant to 28 U.S.C. § 1331. Moreover, through the FTCA, Congress conferred upon the public service commissions the power to interpret and enforce the interconnection agreements mandated by the FTCA and federal district courts have jurisdiction over challenges to these interpretations and enforcement orders.

For the foregoing reasons, we conclude that the Georgia Public Service Commission has the authority under federal law to interpret and enforce the interconnection agreements at issue between the parties and that its determination is subject to review in the federal courts. We refer all other issues to a panel of this Court and instruct the Clerk of the Court to assign this case to the next available oral argument panel to resolve the merits of this case.

I concur in the judgment of the Court and in the opinion by Judge Barkett, except that I decide nothing about jurisdiction under 47 U.S.C. § 252(e)(6).

ANDERSON, Circuit Judge, concurring, in which BLACK, Circuit Judge, joins:

I concur and join most of the opinion of Judge Barkett. The parties were asked to brief two issues for the en banc court: first, does federal law give state commissions, like the Georgia Public Service Commission ("GPSC"), the authority to resolve disputes between telecommunications carriers regarding the interpretation of the contractual terms of an interconnection agreement that has already been approved pursuant to 47 U.S.C. § 252(e); and, second, if not, does Georgia law give the GPSC this authority.

With respect to the first issue, I agree with Judge Barkett that the most plausible reading of the federal statute is that it contemplates that GPSC not only has the expressly stated authority to approve or reject the interconnection agreement at issue here, but also has the implicit authority to interpret the agreement after it has already been approved. I agree with Judge Barkett that it would make little sense to grant the obvious authority to interpret the agreement in connection with the approval thereof, but then deny the authority to later implement and enforce same and resolve disputes as to the original interpretation. In so holding, we are joining the numerous circuit courts of appeal discussed by Judge Barkett, and providing appropriate deference to the Federal Communications Commission ("FCC"). See In re Starpower Communications, 15 FCC Red. 11277, 11279, ¶ 6, 2000 WL 767701 (2000). Having thus resolved that GPSC has authority pursuant to the federal statute, I need not address the second issue briefed by the parties en banc, whether or not such authority might also have been provided by state law.

I also agree with Judge Barkett that the district court had jurisdiction pursuant to 28 U.S.C. § 1331 to entertain BellSouth's claim in the instant case.1 I agree with Judge Barkett that BellSouth's claim is precisely the same as that presented by Verizon, with respect to which the Supreme Court held that the district court had jurisdiction under 28 U.S.C. § 1331. In both cases, the dispute between the parties revolved around whether or not the incumbent local exchange carrier ("ILEC") (Verizon in the Supreme Court case and BellSouth here) was required to pay reciprocal compensation to a competitive local exchange carrier ("CLEC") with respect to calls to local access numbers of internet service providers ("ISPs"). In both cases, the interconnection agreement between the two parties was one which had been voluntarily negotiated.2 In both cases, the public service commission had originally approved the interconnection agreement at an earlier time, and the dispute arose later. In both, the dispute was presented to the state agency which rendered its determination resolving the dispute. In both cases, the decision of the public service commission was challenged in federal district court. Thus, the dispute at issue in the instant case is factually identical to that in Verizon, and the posture of the claim before the district court is the same.

BellSouth's claim in the instant case is that the GPSC order is inconsistent with the Act and its implementing regulations. BellSouth's claim is indistinguishable from that asserted by Verizon in the Supreme Court case. Verizon had taken the position that "it would no longer pay reciprocal compensation for telephone calls made by Verizon's customers to the local access numbers of internet providers (`ISPs'), claiming that ISP traffic was not `local traffic' subject to the reciprocal compensation agreement." Id. at 1757. After Maryland's Public Service Commission ruled against it, Verizon filed a complaint in the district court challenging the Public Service Commission's order, and claiming "that the determination that Verizon must pay reciprocal compensation ... for ISP traffic violated the 1996 Act, and the FCC ruling." Id. BellSouth's claim is identical. Like Verizon, BellSouth claims that the GPSC order here, construing ISP calls as "local" and requiring BellSouth to pay reciprocal compensation, violates the Act and its implementing regulations. As in Verizon, BellSouth relies upon the FCC ruling characterizing such ISP traffic as non-local. The instant case being indistinguishable from Verizon with respect to the § 1331 jurisdictional issue, I readily conclude that the district court had original jurisdiction of BellSouth's claim pursuant to § 1331.3

Although the jurisdictional issue can begin and end with Verizon, it is appropriate to note, as Judge Barkett does, that § 1331 jurisdiction requires only an arguable federal claim, that is, one which is not wholly insubstantial and frivolous. A concise summary of BellSouth's federal question argument illustrates why the Court in Verizon found that the claim was not frivolous and that there was § 1331 jurisdiction. BellSouth's several reasons for finding federal question jurisdiction follow.

First, BellSouth points out that the interconnection agreement at issue here was mandated by federal statute. 47 U.S.C. § 251(b)(5).

Second, the federal statute mandates that it be nondiscriminatory. 47 U.S.C. § 252(e)(2)(A)(i). This means that the terms of the agreement must be available to all carriers, similar to a tariff.

Third, the statute mandates that the terms of the agreement must be consistent with the public interest, convenience and necessity. 47 U.S.C. § 252(e)(2)(A)(ii). BellSouth implicitly suggests that this provision probably adopts and perhaps federalizes well-established state standards.

Fourth, in addition as a practical matter, even a voluntarily negotiated agreement, as here, is cabined by the obvious recognition that the parties to the agreement had to agree within the parameters fixed by the federal standards set out in 47 U.S.C. §§ 251 and 252. BellSouth reasons that the negotiating parties obviously know that if they do not agree, such standards will be imposed. Section 252(b). Thus, the parties know that they cannot deviate significantly from all of the federally imposed standards. Accordingly, BellSouth argues that significant nondiscriminatory and public convenience standards are absolutely mandatory, and that the rest of the federal standards, including the pricing standards of § 252(d), are as a practical matter "coerced" by the federal statute into such agreements.

Fifth, and significant in light of the particular matter at issue — whether ISP calls are "local telecommunications traffic" — BellSouth points out that the definition of "local telecommunications traffic" is set out in regulations promulgated by the FCC. 47 C.F.R. § 51.701(b). BellSouth argues that the construction of that federal definition presents a federal question.

Sixth, further with respect to the particular matter at issue, BellSouth argues that the FCC has ruled that ISP calls, such as the ones at issue here, are interstate rather than local in nature, and therefore not governed by the reciprocal compensation provision of § 251(b)(5). See Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Inter-Carrier Compensation for ISP-Bound Traffic, 14 FCC Rcd 3689, 1999 WL 98037 (1999) (applying an "end-to-end" analysis to exclude ISP calls from reach of § 251(b)(5) on theory that they are indeed not "local"), vacated and remanded by Bell Atlantic Tel. Cos. v. F.C.C., 206 F.3d 1, 5, 8 (D.C.Cir.2000), reinstated on remand by 16 FCC Rcd 9151, 2001 WL 455869 (2001) (FCC determining that it was authorized under § 251(g) to "carve out" ISP calls from § 251(b)(5)'s reciprocal compensation provision and establish a "bill and keep" system), remanded by WorldCom, Inc. v. F.C.C., 288 F.3d 429, 434 (D.C.Cir.2002) (remanding because it rejected the FCC's reliance on § 251(g), but stating that it is likely that the FCC has authority from some other source to elect the system set forth in the remand order). BellSouth notes that the GSPC in its consideration of these issues and almost every other court have always looked to the FCC rulings in ascertaining the meaning of such terms of art which obviously fall squarely within the core concerns of the agency's expertise.

Seventh, the Supreme Court in Verizon, indicated in dicta that § 252(e)(6)4 may not be a simple procedural device setting forth federal court subject-matter jurisdiction to review state commissions decisions, but rather "reads like the conferral of a private right of action." 122 S.Ct. at 1759. If a federal statute creates a private cause of action, there would clearly be a federal question.

Finally, BellSouth argues that the interconnection agreement at issue here should not be considered an ordinary commercial contract because it really constitutes a kind of federally mandated agreement,5 similar in many ways to a tariff, and points to cases holding that the interpretation of such federally mandated agreements raise issues of federal law. See Thurston Motor Lines, Inc. v. Jordan K. Rand, Ltd., 460 U.S. 533, 534, 103 S.Ct. 1343, 1343, 75 L.Ed.2d 260 (1983) (notwithstanding that the dispute involves a simple contract collection, the duty and obligation to pay grows out of and is dependent upon the federal act mandating the agreement between the parties); Louisville & N.R.R. v. Rice, 247 U.S. 201, 202-03, 38 S.Ct. 429, 429, 62 L.Ed. 1071 (1918); Western Union Int'l v. Data Dev., 41 F.3d 1494, 1496 (11th Cir.1995) (same with respect to a suit to collect payment of a tariff under the Communications Act of 1934).6

Considering BellSouth's arguments,7 as summarized above, I cannot conclude that BellSouth makes a merely frivolous claim that the issue before us presents a federal question. Indeed, as explained above, the Supreme Court in Verizon so held.

In sum, I conclude that the GPSC had authority to entertain this case, and that the district court had jurisdiction under 28 U.S.C. § 1331 to entertain the claim presented by BellSouth.8 Like Judge Barkett, I would refer other issues to a panel.

BLACK, Circuit Judge, concurring, in which ANDERSON, Circuit Judge, joins:

I concur in Judge Anderson's separate opinion. I write to expand upon the deference this Court owes the decisions of the Federal Communications Commission under Chevron, U.S.A., Inc. v. Natural Res. Def. Counsel, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984).

As Judge Barkett states, agency interpretations of the statutes they are charged with administering are entitled to deference under a two-step analysis. First, if Congress has spoken to the precise question at issue, then the unambiguously expressed intent of Congress governs. Id. at 842-43, 104 S.Ct. at 2781. Second, if the statute is silent or ambiguous, then the agency's interpretation must be given effect so long as it is based on a permissible reading of the statute. Id. at 843, 104 S.Ct. at 2782. FCC has interpreted the Telecommunications Act to authorize Public Service Commissions to adjudicate post-agreement disputes under 47 U.S.C. § 252. See In re Starpower, 15 F.C.C.R. 11277, ¶ 6, at 1129-80, 2000 WL 767701 (2000). Under Chevron, the FCC's interpretation is entitled to deference.

At Chevron step one, the precise question at issue here has no clear answer in the statutory text. We granted rehearing en banc to answer the following question:

Does federal law, specifically 47 U.S.C. §§ 251 and 252, give state commissions, like the GPSC, the authority to resolve disputes between telecommunications carriers regarding the interpretation of the contractual terms of an interconnection agreement that has already been approved pursuant to 47 U.S.C. § 252(e)?

No statutory text clearly authorizes or forecloses PSC adjudications of post-agreement disputes. The statute authorizes PSCs to "approve or reject" interconnection agreements submitted to them. 47 U.S.C. § 252(e)(1). The statute goes on, however, to refer to "determination[s] under this section." Id. § 252(e)(6). While it may be possible to cabin these "determinations" to PSC decisions approving or rejecting interconnection agreements, "determinations" can also be fairly construed to encompass determinations in post-agreement disputes. Congress could have easily avoided this interpretation by replacing the phrase "makes a determination under this section" in § 252(e)(6) with the words "approves or rejects." In this statutory context, the narrower interpretation is hardly the "unambiguously expressed intent of Congress." Chevron, 467 U.S. at 843, 104 S.Ct. at 2781. Because Congress did not express its intent so clearly, we must conclude that this statute is ambiguous.1

At Chevron step two, we must defer to the agency's interpretation if it is based upon a permissible reading of the statute. Chevron, 467 U.S. at 843, 104 S.Ct. at 2782. There should be little doubt that FCC's interpretation in Starpower is entitled to deference in this case. See S.E.C. v. Zandford, 535 U.S. 813, 122 S.Ct. 1899, 1903, 153 L.Ed.2d 1 (2002) (finding that an SEC interpretation in the context of a formal adjudication is entitled to deference). That conclusion is not disturbed by the recent Supreme Court cases articulating some limits on Chevron deference. See United States v. Mead Corp., 533 U.S. 218, 228, 121 S.Ct. 2164, 2171, 150 L.Ed.2d 292 (2001) (recognizing that "[t]he fair measure of deference to an agency administering its own statute has been understood to vary with circumstances, and courts have looked to the degree of the agency's care, its consistency, formality, and relative expertness, and to the persuasiveness of the agency's position") (citations omitted); Christensen v. Harris County, 529 U.S. 576, 587, 120 S.Ct. 1655, 1662-63, 146 L.Ed.2d 621 (2000) (declining to defer to an agency interpretation reached without formal adjudication or notice-and-comment rulemaking); see also Edelman v. Lynchburg Coll., 535 U.S. 106, 122 S.Ct. 1145, 1150, 152 L.Ed.2d 188 (2002) ("[D]eference under Chevron does not necessarily require an agency's exercise of its express notice-and-comment rulemaking power") (citation omitted).

Nor is the deference owed to FCC altered by any dissatisfaction we may have with the quality of the agency's legal reasoning in Starpower. Agencies derive their authority to interpret the statutes they administer — and thereby bind federal courts — from Congressional delegation. Chevron, 467 U.S. at 843-44, 104 S.Ct. at 2782.2 By virtue of that Congressional delegation, an administrative agency need not cite any cases in reaching its interpretation; its interpretation is authoritative because it has been posited by the agency. Of course, the agency's interpretation cannot be "procedurally defective, arbitrary or capricious in substance, or manifestly contrary to the statute," Mead Corp., 533 U.S. at 227, 121 S.Ct. at 2171, and legal errors in the agency's decision might transgress these limits. Within these boundaries, however, an agency is entitled to deference simply because it has acted.3

It follows, therefore, that deference to an agency interpretation is not automatically defeated4 by any perceived weakness in judicial opinions on which the agency relies in formulating its interpretation. In this respect, an agency interpretation differs from a judicial precedent. The authoritativeness of an opinion might be diminished if its rationale is undermined;5 a valid agency interpretation, on the other hand, is like a statute, which continues to be authoritative even if the reasons for enacting the statute pass. Like a statute, an agency interpretation is entitled to deference because it has been posited by an institution with authority — in this case, the FCC, which derives its authority from a Congressional delegation. FCC need not have cited any legal precedent in its Starpower decision; its interpretation of § 252 would have been entitled to exactly the same deference from this Court.6

I do not think FCC's Starpower decision is based on an impermissible construction of the Telecommunications Act, so we must defer to the agency's interpretation. I concur with the conclusion that the Georgia Public Services Commission has the authority to interpret and enforce the interconnection agreements at issue here.

TJOFLAT, Circuit Judge, dissenting, in which BIRCH, Circuit Judge, joins:

A. The Telecommunications Act of 1996 and reciprocal compensation

In 1996, Congress amended the Communications Act of 1934, see Telecommunications Act of 1996 ("1996 Act"), Pub. L. 104-104, 110 Stat. 56 (codified at 47 U.S.C. § 151 et seq.), in an effort to deregulate the telecommunications industry — especially the local exchanges once thought to be entrenched natural monopolies. Sections 251 and 252 form the heart of the 1996 Act. Section 251 imposes several obligations on incumbent local exchange carriers ("ILECs").1 Section 252 covers the implementation of these obligations, giving significant authority to states in a regulatory scheme that has been dubbed "cooperative federalism." See, e.g., Philip J. Weiser, Chevron, Cooperative Federalism, and Telecommunications Reform, 52 Vand. L. Rev. 1 (1999). Section 252 establishes two tracks for interconnecting ILECs and competitive local exchange carriers ("CLECs"). One is the "voluntary" track pursuant to section 252(a)2 and section 252(e).3 If the ILEC and CLEC enter into a voluntary agreement, the state public service commission ("PSC")4 is charged with the task of approving or rejecting the agreement. See 28 U.S.C. § 252(e). There are only two available grounds for rejecting the agreement. First, the PSC might believe that the agreement is discriminatory and thus unfair to a third-party CLEC. Second, the PSC might believe that the agreement is inconsistent with the public interest, convenience, and necessity. See 47 U.S.C. § 252(e)(2)(A). The PSC cannot impose specific obligations on the parties who reach a voluntary agreement. In other words, the parties are exempt from the specific obligations of section 251. See 47 U.S.C. § 252(a) ("[ILECs and CLECs may] enter into a binding agreement ... without regard to the standards set forth in subsections (b) and (c) of section 251 of this title."). Another option comes into play if the ILEC and CLEC refuse to come to an agreement: the state PSC can arbitrate the dispute and, in the process, impose section 251 obligations on the parties. See 47 U.S.C. § 252(b) ("Agreements arrived at through compulsory arbitration"). Both determinations by the PSC — the decision to approve or reject a voluntary agreement and the decision to impose various requirements through arbitration — are reviewable in federal court. See 28 U.S.C. § 251(e)(6).5

One obligation that all LECs have under section 251 is the duty to form a reciprocal compensation agreement with competing LECs. See 47 U.S.C. § 251(b)(5). When a customer of LEC A calls a customer of LEC B, LEC B is entitled to demand compensation for terminating the call of LEC A's customer. One option the LECs have is to agree to a "bill and keep" system of compensation whereby each LEC considers the total termination costs a wash, thereby eliminating the necessity of a billing arrangement and its concomitant administrative costs. See Stuart M. Benjamin, Douglas G. Lichtman, and Howard A. Shelanski, Telecommunications Law and Policy 934 (2001). Another option is for each LEC to pay the other for every call termination. In the past, ILECs and CLECs have frequently chosen the latter option in their voluntary agreements. This choice caused ILECs trouble when CLECs sought as their primary customers certain entities that were net receivers of telephone calls (and therefore rarely placed calls to the customers of ILECs). One such customer is the Internet service provider ("ISP"), whose metaphysical status has caused the FCC tremendous definitional problems.

The FCC eventually weighed in, however, in an effort to fix the perceived asymmetry.6 The FCC made the tentative conclusion that ISP-bound calls are "interstate," rather than "local," and thus not subject to reciprocal compensation charges. That is, ILECs were not required to pay CLECs for the termination of ISP-bound calls. In accordance with the statute, the FCC left open the possibility of private agreements to the contrary. A CLEC and an ILEC could, for example, pay each other for the termination of ISP-bound calls notwithstanding the FCC's conclusion that ISP-bound calls are not "local."

The ILEC in this case, BellSouth Telecommunications, Inc. ("BellSouth"), declined to pay reciprocal compensation fees to various CLECs. The Georgia Public Service Commission ("GPSC") adjudicated the dispute, holding that the parties were required to compensate each other for the termination of ISP-bound calls.7 BellSouth sought review in federal district court of the GPSC's Order, asserting federal jurisdiction under 28 U.S.C. § 1331 and 47 U.S.C. § 252(e)(6). The district court rejected BellSouth's arguments on the merits, holding that (1) the GPSC's Order did not violate federal law and (2) the GPSC's application of Georgia contract law to the voluntary agreement was not an "arbitrary and capricious" analysis.8 A panel of this court reversed, holding that the GPSC lacked authority under state and federal law to enforce and interpret interconnection agreements and that this authority must rest with state courts rather than PSCs. The panel also held that the district court lacked jurisdiction under 47 U.S.C. § 252(e)(6). See BellSouth Telecomms., Inc. v. MCImetro Access Transmission Servs., Inc., 278 F.3d 1223 (11th Cir.2002), vacated, BellSouth Telecomms., Inc. v. MCImetro Access Transmission Servs., Inc., 297 F.3d 1276 (11th Cir.2002). After the panel's decision was rendered, the Supreme Court issued its decision in Verizon Md. Inc. v. Pub. Serv. Comm'n of Md., 535 U.S. 635, 122 S.Ct. 1753, 152 L.Ed.2d 871 (2002), which touches upon many of the issues in this case.

I would hold that (1) the authority of the GPSC under Georgia law is a state law issue that this court should decline to reach, and that federal law does not preclude PSCs from adjudicating post-agreement disputes if states make the choice to allocate adjudicative power to their PSCs; (2) the district court did not have jurisdiction under 47 U.S.C. § 252(e)(6) for several reasons, not least among which is the fact that the plain language of the statute does not provide for appellate review in the district courts of PSC adjudications of post-agreement disputes; (3) the district court did not have jurisdiction under 28 U.S.C. § 1331 over any of the claims BellSouth now presses on appeal,9 primarily because the posture of the district court was that of an "appellate" court and not a court of "original" jurisdiction; (4) the district court did have supplemental jurisdiction over BellSouth's state law "federal element" claim pursuant to the Supreme Court's holding in City of Chicago v. Int'l Coll. of Surgeons, 522 U.S. 156, 118 S.Ct. 523, 139 L.Ed.2d 525 (1997), because the district court had original jurisdiction over the (now-dropped) Verizon-like claim of federal preemption;10 and (5) on the merits, there is no way the district court could have determined whether the GPSC held (a) that the parties intended to track evolving standards of federal law or (b) that the parties intended to pay each other for the termination of ISP-bound traffic notwithstanding federal law. Accordingly, I would vacate the decision of the district court and instruct it to remand the case to the GPSC so that it can more clearly articulate the basis for its conclusion, and also so that it can adjudicate the dispute in light of the FCC's recent regulations.

A. Is there section 1331 jurisdiction if one assumes, arguendo, that the proceeding before the district court was an "original" proceeding?

There are many claims in this litigation that are allegedly federal in nature. Assuming, for the moment, that the litigation before the district court in this case was an "original" proceeding, it is questionable whether all of BellSouth's complaints "arise under" federal law for purposes of 28 U.S.C. § 1331.

One contention in BellSouth's "petition for judicial review" is that the GPSC's Order violates the 1996 Act and the FCC's regulations thereunder. Although the "petition for judicial review" is unclear on this point, I think I understand BellSouth to be adopting the position more clearly articulated by the plaintiff in Verizon, where the plaintiff sought relief "on the ground that such regulation is pre-empted by a federal statute which, by virtue of the Supremacy Clause of the Constitution, must prevail." Verizon, 122 S.Ct. at 1757. An identical cause of action could have been asserted in this case under 42 U.S.C. § 1983 or under Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96, 103 S.Ct. 2890, 2899, 77 L.Ed.2d 490 n. 14 (1983) (holding that plaintiffs may assert a private right of action directly under the Supremacy Clause of the Constitution).

On appeal, BellSouth no longer disputes that the GSPC could have ordered the parties to pay each other for the termination of ISP-bound calls, and for good reason: the FCC has consistently promulgated regulations, consistent with the 1996 Act's affinity for voluntary agreements, that enable ILECs and CLECs to enter into reciprocal compensation agreements on the subject of ISP-bound traffic notwithstanding any federal regulations that might deem ISP-bound traffic "interstate" as a matter of law. In the FCC's first (and now-vacated) ISP ruling, for example, the FCC was careful to note that "parties may voluntarily include this [ISP-bound] traffic within the scope of their interconnection agreements" as those agreements are "interpreted and enforced by state commissions." Implementation of the Local Competition Provisions in the Telecomms. Act of 1996; Intercarrier Compensation for ISP-Bound Traffic, 14 F.C.C.R. 3689, ¶ 12, at 3703, 1999 WL 98037 (1999). The FCC concluded, "Nothing in this Declaratory Ruling, therefore, necessarily should be construed to question any determination a state commission has made, or may make in the future, that parties have agreed to treat ISP-bound traffic as local traffic under existing interconnection agreements." Id. ¶ 24, 3704. On remand from the D.C. Circuit, the FCC reached an identical conclusion. See Implementation of the Local Competition Provisions in the Telecomms. Act of 1996; Intercarrier Compensation for ISP-Bound Traffic, 16 F.C.C.R. 9151, ¶ 82, at 9189, 2001 WL 455869 (2001) ("The interim compensation regime we establish here... does not alter existing contractual obligations, except to the extent that parties are entitled to invoke contractual change-of-law provisions. This Order does not preempt any state commission decision regarding compensation for ISP-bound traffic for the period prior to the effective date of the interim regime we adopt here."). Since the GPSC's conclusion that BellSouth owed the CLECs reciprocal compensation fees was based upon its interpretation of the voluntary interconnection agreement, federal law certainly creates no impediment to the GPSC Order. Indeed, I might be inclined to find that BellSouth's claim does not meet the standard for well-pleaded complaints under Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct. 773, 776, 90 L.Ed. 939 (1946), and its progeny. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 89, 118 S.Ct. 1003, 1010, 140 L.Ed.2d 210 (1998) (holding that district courts do not have jurisdiction if the claim "clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or where such a claim is wholly insubstantial or frivolous"). However, the Supreme Court held that an identical claim in Verizon was not "immaterial" or "wholly insubstantial and frivolous," Verizon, 122 S.Ct. at 1758-59, and so this court is obliged to extend BellSouth the same treatment as that received by Verizon.

2. "Coerced" contracts and federal common law

Another argument is that either the rule of decision for all post-agreement disputes is some sort of federal common law of contracts, or else the disputes "arise under" federal law even if state law provides the rule of decision because the agreements are "coerced" by the federal government and they are an integral part of a federal regulatory scheme. Therefore, BellSouth argues, all interconnection disputes can wind up in federal court pursuant to 28 U.S.C. § 1331.

a. "Coerced" contracts

The fact that the interconnection agreements are "coerced" and made pursuant to a federal regulatory scheme is not enough to make run-of-the-mill contract claims — say, a dispute over performance or price — subject to section 1331 jurisdiction. If state law is the rule of decision, then ordinary contract claims would not raise a "federal issue" for district courts to resolve. Indeed, one Supreme Court case has expressly held that a federally compelled contractual provision was not to be construed in federal court under principles of federal law, but rather under state law applied in state courts. See Jackson Transit Auth. v. Local Div. 1285, Amalgamated Transit Union, 457 U.S. 15, 29, 102 S.Ct. 2202, 2210, 72 L.Ed.2d 639 (1982).

Many post-agreement interconnection disputes would raise only state law claims, and any federal ingredient would be so far removed from the issues for judicial resolution that many claims would not even come close to what Justice Frankfurter called the "litigation provoking problem" of a federal element in a state law cause of action. See Textile Workers Union of Am. v. Lincoln Mills of Ala., 353 U.S. 448, 470, 77 S.Ct. 912, 928, 1 L.Ed.2d 972 (1957) (Frankfurter, J., dissenting). The only possible theory that BellSouth might invoke is the idea of "protective jurisdiction" — the notion that "with regard to subjects concerning which Congress has legislative power under Article I, it can pass a statute granting federal jurisdiction and that the jurisdictional statute is itself a `law of the United States' within Article III, even though Congress has not enacted any substantive rule of decision and thus state law is to be applied." 13B Charles Alan Wright, Arthur R. Miller, & Edward H. Cooper, Federal Practice and Procedure § 3565 (2d ed. 1984). This theory is inapposite to this discussion, however, because we are positing that the only jurisdictional statute is 28 U.S.C. § 1331. The theory of protective jurisdiction applies only within the context of a special jurisdictional statute; no one has ever argued that section 1331 itself amounts to a grant of jurisdiction to entertain state law claims on particular matters of federal concern. Moreover, doubt on the validity of protective jurisdiction was cast by Mesa v. California, 489 U.S. 121, 109 S.Ct. 959, 103 L.Ed.2d 99 (1989). In that case, the Court held that the jurisdictional provision found in 28 U.S.C. § 1442(a)(1) required federal officers to raise a federal defense before removing to federal court. The Court refused to take the broader position that even if no federal issue is presented for judicial resolution, Congress can enact a statute granting federal courts jurisdiction in order to protect the federal interest at stake. Such an interpretation of the statute would, according to the Court, raise "serious doubt" about to the statute's constitutionality, because it would implicate the outer boundaries of Congress's ability to define the scope of federal jurisdiction. Mesa, 489 U.S. at 136, 109 S.Ct. at 968.

If interconnection agreements are to be interpreted under a federal common law of contracts, then all post-agreement disputes would raise a federal question and thereby satisfy the "arising under" requirement of 28 U.S.C. § 1331. However, there is no compelling reason why federal common law should be the rule of decision in adjudications of post-agreement disputes between CLECs and ILECs.

There is no indication in the 1996 Act that Congress intended the rule of decision to be one of federal common law. The fact that the contracts are "coerced" is inapposite; as the Court held in Jackson Transit Auth., supra, federally compelled contractual provisions are not necessarily to be construed in federal court under principles of federal common law. Jackson, 457 U.S. at 29, 102 S.Ct. at 2202. Rather, the Court held that the contract in that case had to be enforced in state courts under principles of state law. Id.

Without explicit congressional authorization for the courts to craft common-law rules for interpreting interconnection agreements, state law must be the rule of decision. Professor Chemerinsky describes the presumption against federal common law:

There long has been a strong presumption against the federal courts fashioning common law to decide cases. The Rules of Decision Act, which was part of the Judiciary Act of 1789 and which remains largely unchanged to this day, states that "the laws of the several states, except where the Constitution or treaties of the United States or Acts of Congress otherwise require or provide, shall be regarded as rules of decisions in civil actions in the courts of the United States, in cases where they apply." 28 U.S.C. § 1652. This law, by its very terms, seems to deny the existence of federal common law; the Rules of Decision Act commands that in the absence of positive federal law, federal courts must apply state law.

See Erwin Chemerinsky, Federal Jurisdiction § 6.1, at 350 (3d ed. 1999) (footnote omitted).

In a narrow category of cases, Congress has authorized federal courts to create a body of common law rules. See, e.g., Textile Workers Union of Am. v. Lincoln Mills of Ala., 353 U.S. 448, 77 S.Ct. 912, 1 L.Ed.2d 972 (1957) (labor-management contract disputes); Nat'l Soc'y of Prof. Eng'rs v. United States, 435 U.S. 679, 687-88, 98 S.Ct. 1355, 1363, 55 L.Ed.2d 637 (1978) (antitrust). Even so, the presumption and modern trend is to the contrary. The Supreme Court, for example, refused to extend its authority to craft substantive rules of antitrust law in a way that would also allow it to make post-judgment rules governing contribution among antitrust defendants. See Tex. Indus., Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 640-41, 101 S.Ct. 2061, 2067, 68 L.Ed.2d 500 (1981). Commenting on this case, Professor Chemerinsky concludes, "Texas Industries thus reaffirms the basic principle: The federal judiciary will formulate a body of common law rules only pursuant to clear congressional intent for such action." Chemerinsky, supra, § 6.3.2, at 376 (emphasis added).

There is no clear congressional intent for courts to craft common law rules in the context of disputes over interconnection agreements. Indeed, the invocation of federal common law would be in considerable tension with the reverse-preemption provision in the 1996 Act and the Act's scheme of cooperative federalism (both of which are discussed in part III.A, infra) by ceding new authority to the federal courts where none existed before, while simultaneously displacing state law.

A final position BellSouth takes is that (a) the parties intended that their mutual obligations under the interconnection agreement track evolving standards of federal law and (b) federal law provides that ISP-bound traffic is "interstate" rather than "local" and therefore LECs need not pay each other for the termination of ISP-bound calls. This is the argument that BellSouth has advanced throughout this litigation, though one is hard pressed to find it in its "petition for judicial review." After reciting at length the definitions of various terms under FCC regulations, BellSouth states in paragraph 31 that "[i]t was in the context of the foregoing provisions of law that BellSouth and MFS/WorldCom executed the Interconnection Agreement." In paragraph 53, BellSouth alleges that "the PSC's Order holding that the use of local facilities to connect to an ISP constitutes Local Traffic under the Interconnection Agreement is inconsistent with the facts and contrary to the provisions of the 1996 Act." I will stretch these sentences, respectively, to mean that (a) the parties intended to track federal law and (b) federal law means X rather than, as the GSPC held, Y. See Lykins v. Pointer, Inc., 725 F.2d 645, 646 (11th Cir.1984) (holding that a district court could exercise federal tort claim liability jurisdiction, despite the plaintiff's failure to allege statutory authority for such jurisdiction, because the requisite facts were alleged). Resolution of this claim boils down to contractual interpretation — namely, whether the parties intended to compensate each other for the termination of ISP-bound calls. It is therefore a state law claim.

This claim, then, squarely confronts this court with the "litigation provoking problem" of a federal issue embedded in a state law cause of action. In Smith v. Kansas City Title & Trust Co., 255 U.S. 180, 41 S.Ct. 243, 65 L.Ed. 577 (1921), the plaintiff sued in federal court under the theory that the defendant-corporation violated state law when it purchased various bonds. State law delineated permissible investments to those consistent with state and federal law, and the bonds, according to the plaintiff, violated the U.S. Constitution. The Court held that the district court had section 1331 jurisdiction to hear the claim. More recently, the Court stated in Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983), that when "it appears that some substantial, disputed question of federal law is a necessary element of one of the well-pleaded claims," then federal jurisdiction is appropriate. Id. at 3, 103 S.Ct. at 2847. In Moore v. Chesapeake & Ohio R.R. Co., 291 U.S. 205, 54 S.Ct. 402, 78 L.Ed. 755 (1934), the Court took the opposite turn, holding that "arising under" jurisdiction rarely exists outside of the context of federal causes of action. The Court attempted to reconcile these cases in Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986). There, the Court declined to find jurisdiction over a state tort claim that alleged a violation of an FDA regulation as an element of the cause of action. The Court cautioned that "careful judgments" must be made. Id. at 814, 106 S.Ct. at 3235. It ultimately concluded that since Congress did not create a federal cause of action for violations of the FDA regulation, its intent would be defeated if the Court allowed district courts to entertain an identical claim under state law. Id. at 812, 106 S.Ct. at 3234.

In the case at bar, it is unclear whether there would be jurisdiction under the framework established in Merrell Dow. On one hand, the federal element — a mere declaratory ruling by the FCC that ISP-bound traffic is "interstate" — is clearly not a federal cause of action. On the other hand, federal regulatory policy is definitely intertwined with the state law cause of action and Merrell Dow is therefore easily distinguishable. I need not undertake a jurisdictional analysis under Merrell Dow, because I think that the district court's posture below was that of an appellate court and therefore 28 U.S.C. § 1331 is inapplicable.11

B. Was the proceeding below an "original" proceeding?

1. Are all 47 U.S.C. § 252(e)(6) proceedings, in which LECs seek review of PSC orders in federal district court, undertaken pursuant to the original jurisdiction of district courts under 28 U.S.C. § 1331?

At first blush, it may appear strange to call the district court's posture in the 47 U.S.C. § 252(e)(6) context to be that of a court asserting "original" jurisdiction. After all, the district court is reviewing the ruling of a lower body, and the district court's role therefore seems to be "appellate" in nature. However, there is a colorable argument that all such proceedings are, in fact, "original." If this argument prevails, then the proceeding in the district court below was an "original" proceeding, and the district court might have had jurisdiction over the state law claim depending upon how an analysis of the case under Merrell Dow would be resolved.

a. "Yes": A potential argument

In Verizon, the Court asserted that section 252(e)(6) may not be a jurisdictional provision; rather, it might be a provision that confers a private right of action. See Verizon, 122 S.Ct. at 1759 ("Section 252 does not establish a distinctive review mechanism for the commission actions that it covers ... and it does not distinctively limit the substantive relief available. Indeed, it does not even mention subject-matter jurisdiction, but reads like a private action."). In the same passage, the Court went on to cite Steel Co., 523 U.S. at 90-91, 118 S.Ct. at 1010-11, for the proposition that "even a statutory provision that uses the word `jurisdiction' may not relate to `subject matter jurisdiction.'" Thus, if one takes the Court's language seriously, then there must be a separate jurisdictional basis for all § 252(e)(6) actions in the district courts, because § 252(e)(6) does not have anything to do with subject-matter jurisdiction and is merely a cause of action.

One must ask, then, what is the jurisdictional basis for district court review of accept-or-reject determinations that PSCs must make pursuant to § 252(e)(1)? Since there must be a jurisdictional basis outside of § 252(e)(6), then it is tempting to look at 28 U.S.C. § 1331. That provision states: "The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." The italicized term is striking: section 1331 is about "original" rather than "appellate" jurisdiction. Suppose, for example, that a PSC arbitrates an interconnection agreement. Suppose further that a CLEC feels that the PSC has not required the ILEC to meet all of the obligations that is required of it under 47 U.S.C. § 251, and it seeks review of the PSC's determination in federal district court. Is the proceeding before the district court an "original" proceeding? If it is not, then § 252(e)(6) is without effect; Congress drafted a private cause of action, but district courts have no jurisdiction to review PSCs because Congress did not amend 28 U.S.C. § 1331 to provide for appellate jurisdiction in the district courts.

One option is contend that jurisdiction under section 1331, in the context of an appellate proceeding to resolve a single federal claim, is not troublesome. That may be the position of Justice Souter who, in a concurring opinion joined by Justice Breyer and Justice Ginsburg, stated that the proceeding in Verizon was an "appellate" proceeding while simultaneously agreeing that jurisdiction existed pursuant to 28 U.S.C. § 1331. Verizon, 122 S.Ct. at 1763 (Souter, J., concurring) ("Verizon accordingly seeks not a simple order of relief running against the state commission, but a different adjudication of a federal question by means of appellate review in Federal District Court, whose jurisdiction to entertain the claim of error the Court today has affirmed.") (emphasis added). But that is not a satisfactory result, because section 1331 clearly says the word "original" and says nothing about "appellate" jurisdiction in the district courts.12

After Verizon, we are thus left with four possible conclusions: (1) appellate jurisdiction and 28 U.S.C. § 1331 can coincide with respect to the same claim;13 (2) 47 U.S.C. § 252(e)(6) is surplusage; (3) all proceedings before district courts under 47 U.S.C. § 252(e)(6) are "original" proceedings; or (4) the Court's private-right-of-action discussion was dicta and 47 U.S.C. § 252(e)(6) is, in fact, a jurisdictional provision — a special, closely cabined conference of appellate jurisdiction upon district courts to review PSC accept-or-reject determinations. The first two are clearly wrong, leaving only the last two options. If the third option is correct, then I would be willing to embrace the idea that the proceeding below was an "original" proceeding and I might therefore find jurisdiction under 28 U.S.C. § 1331 if this result is in accordance with Merrell Dow.

b. "No": The Better Argument

A reading of Verizon that would tag the nature of district court review of PSC orders with the "original" label poses several problems that ultimately force me to take option four rather than option three. First, anyone familiar with Anglo-American jurisprudence would believe that the district court's posture in the accept-or-reject setting is that of an appellate court. Compare Black's Law Dictionary 98 (6th ed. 1990) (defining "appellate jurisdiction" as "jurisdiction to revise or correct the proceedings in a cause already instituted and acted upon by an inferior court, or by a tribunal having the attributes of a court"), with id. at 1099 (defining "original jurisdiction" as "jurisdiction to consider the case in the first instance"). In the example of the CLEC challenge described above, the PSC considers the case "in the first instance," while the district court is being asked to "correct the proceedings in a cause already instituted and acted upon" by "a tribunal having the attributes of a court."

More importantly, 47 U.S.C. § 252(e)(5) provides that the FCC is to make the accept-or-reject determination if the PSC does not act. As Justice Souter points out in his opinion, see Verizon, 122 S.Ct. at 1763 n. 5 (Souter, J., concurring), there is no special review statute for the FCC in the 1996 Act. Rather, the FCC is reviewed pursuant to its ordinary review statute. See 28 U.S.C. § 2344. That provision states that aggrieved parties may file a petition to review the FCC's order in the court of appeals where venue lies. Clearly the action taken in the latter case is an "appeal." One does not, for example, say that a party aggrieved by an agency order files an "original" action in a court of appeals. Rather, one would say that the "original" proceeding takes place within the agency and that the proceeding before a court of appeals is an "appeal." I think it would strain logic to call a proceeding in a court of appeals challenging the FCC's accept-or-reject determination an "appeal" while simultaneously contending that an identical proceeding in a district court challenging a PSC's accept-or-reject determination is an "original action."

Two other considerations inform my conclusion that the proceedings before district courts on review of PSC orders are appellate proceedings. First, three Justices of the Supreme Court agreed with an opinion that explicitly called the district court's posture to be that of an "appellate" court.14 Second, many courts have held that district courts must give deference to certain PSC determinations,15 and deference is a hallmark of appellate review.

Since district court review of PSC accept-or-reject determinations is an "appellate" rather than "original" proceeding, this leaves me with option four: I decline to read the Court's suggestion that 47 U.S.C. § 252(e)(6) is a "private right of action" as a holding. Since this conclusion is, in fact, the best reading of the Court's language, I read the Court's discussion as dicta and distinguish the present case from Verizon.

The Verizon Court never analyzed whether the 47 U.S.C. § 252(e)(6) is a private right of action. It never invoked the factors employed in Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 2088, 45 L.Ed.2d 26 (1975), for determining whether a statute creates a private cause of action; nor did it engage in any kind of analysis whatsoever. Rather, it was merely attempting to reinforce its argument for the unexceptional proposition that 47 U.S.C. § 252(e)(6) does not cabin the original federal question jurisdiction of district courts. Indeed, the Court expressly reserved the question of whether § 252(e)(6) amounts to a jurisdictional grant, concluding that "even if § 252(e)(6) does not confer jurisdiction, it at least does not divest the district courts of their authority under 28 U.S.C. § 1331 to review the Commission's order for compliance with federal law." Verizon, 122 S.Ct. at 1758. My reading is entirely consistent with this principle: it reads § 252(e)(6) as an expansion of federal jurisdiction because cases "arising under" federal law can still be brought in federal district court as an original matter under 28 U.S.C. § 1331, and appeals from PSC accept-or-reject determinations can be brought in federal district court pursuant to § 252(e)(6).

My reading is consistent with the facts in Verizon. In that case, the plaintiff claimed that federal law precluded the Maryland PSC from ordering the payment of reciprocal compensation, notwithstanding the PSC's conclusion that, under principles of state contract law, the parties agreed to pay each other for the termination of ISP-bound calls. As the Court put it: "Verizon [sought] relief from the Commission's order on the ground that such regulation is pre-empted by a federal statute which, by virtue of the Supremacy Clause of the Constitution, must prevail." Verizon, 122 S.Ct. at 1758 (citing Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96, n. 14, 103 S.Ct. 2890, 2899, n. 14, 77 L.Ed.2d 490 (1983), which held that litigants may assert a private right of action for preemption under the Supremacy Clause). The claim in Verizon, in short, was one that was brought to the district court as an original matter. The PSC never passed on the issue; it was precisely the PSC's action that was allegedly illegal under federal law. The claim was not merely an error in legal judgment by a lower body. As will be discussed infra, the latter is what we have here — a claim of the appellate variety.

2. Was the proceeding below, in which BellSouth sought review of the PSC Order in federal district court, undertaken pursuant to the original jurisdiction of the district court under 28 U.S.C. § 1331?

The answer to this question is a resounding "no." As stated in part II.A.1, BellSouth abandoned its Verizon-like claim that the GPSC was preempted by federal law and therefore could not order the payment of reciprocal compensation fees for ISP-bound traffic. The district court had original jurisdiction over this claim, because the crux of the claim is that the PSC did something illegal. A private right of action — whether under the Constitution directly (pursuant to Shaw) or 42 U.S.C. § 1983 — provides the vehicle for such a claim. The only potential claim left is the state law claim with a federal element. See supra part II.A.3. In short, BellSouth argues that (a) the GPSC agreed that the parties intended to track federal law16 and (b) the GPSC made a legal mistake when it found that, as a matter of federal law, ISP-bound traffic is "local" rather than "interstate." This is merely a claim of legal error — a claim fit for an appeal, but not an original action. This is so even if BellSouth dresses up its claim by seeking declaratory relief.

Indeed, BellSouth itself must have believed that the proceeding below was an "appellate" proceeding. If it were an original proceeding, BellSouth would have asked the district court to ignore the PSC's Order entirely. Instead, it argued before the district court that (a) the GPSC believed that the parties intended to track federal law and (b) that this conclusion was correct, but that the GPSC got the law part wrong. It asked the court, in short, to give vitality to part of the GPSC's analysis rather than ignoring it entirely. Moreover, paragraph 57 of BellSouth's "petition for judicial review" asks the district court to "reverse" the PSC Order because it was "erroneous as a matter of law." That language is typical of appellate proceedings, not original proceedings.