## Facts

- Qwest Corporation, a Bell operating company and incumbent local exchange carrier in Minnesota, provided wholesale network elements to competitive local exchange carriers.
- Under 47 U.S.C. § 271, Qwest was obligated to provide certain “checklist” network elements (“§ 271 elements”) to competitors as a condition of offering long-distance service.
- After administrative proceedings, Minnesota Public Utilities Commission (MPUC) concluded it could regulate intrastate rates for § 271 elements and that Qwest’s existing rates were unjust and unreasonable.
- The MPUC issued an order (Apr. 23, 2010) requiring Qwest to submit for commission review and approval a list of prices for wholesale elements it was obligated to provide under § 271 (or provided voluntarily), excluding elements subject to 47 U.S.C. § 251.
- Qwest filed suit in federal district court seeking declaratory and injunctive relief, alleging the MPUC order was preempted by the Telecommunications Act of 1996 and FCC policy; the district court upheld the order.

## Issues

1. Whether federal telecommunications law and FCC implementation preempt a state commission order requiring review and approval of a Bell operating company’s intrastate prices for wholesale elements provided under 47 U.S.C. § 271 (and certain voluntarily provided elements), rather than under 47 U.S.C. § 251.
2. Whether a state’s rate-approval regime for § 271 elements conflicts with Congress’s allocation of authority to the FCC under § 271 and the Act’s distinct treatment of § 251 versus § 271 obligations.

## Decision

- The Eighth Circuit reversed the district court.
- The court held federal law preempted the MPUC’s order in its entirety.
- The court remanded with instructions to enter judgment for Qwest and to enjoin enforcement of the MPUC’s Apr. 23, 2010 order.

## Legal Principles

- The Telecommunications Act of 1996 establishes distinct regulatory schemes under § 251 and § 271, with an expressly defined state role for § 251 interconnection and pricing, but primary federal oversight for § 271 compliance.
- Under § 271, the FCC has principal authority to ensure that prices for checklist elements are “just, reasonable, and not unreasonably discriminatory,” and state commissions may not impose independent rate-setting or rate-approval requirements for § 271 elements.
- State action is preempted when it conflicts with federal law by obstructing Congress’s objectives and the FCC’s chosen enforcement framework for § 271 obligations.
- A state commission requirement that a carrier submit § 271 element prices for state “review and approval” constitutes prohibited rate regulation when federal law reserves that function to federal oversight.

## Conclusion

The Eighth Circuit held that Minnesota could not require Qwest to submit § 271 (and certain voluntary) wholesale element prices for state commission approval because that rate regulation conflicts with the federal scheme assigning § 271 compliance oversight to the FCC; the state order was therefore preempted and enjoined.


Qwest Corp. v. Minn. Pub. Utils. Comm'n, 684 F.3d 721 (8th Cir. 2012)