********************************************************    
                         NOTICE
********************************************************

This document was converted from
WordPerfect to ASCII Text format.

Content from the original version of the document such as
headers, footers, footnotes, endnotes, graphics, and page numbers
will not show up in this text version.

All text attributes such as bold, italic, underlining, etc. from the
original document will not show up in this text version.

Features of the original document layout such as
columns, tables, line and letter spacing, pagination, and margins
will not be preserved in the text version.

If you need the complete document, download the
WordPerfect version or Adobe Acrobat version, if available.

*****************************************************************

                            Before the
                Federal Communications Commission
                      Washington, D.C. 20554
                                   

In the Matter of                )
                               )
Application for Review and Petition for)
Reconsideration or Clarification of )
Declaratory Ruling Regarding U S West )      NSD-L-97-6
Petitions to Consolidate LATAs in )
Minnesota and Arizona           )

                   MEMORANDUM OPINION AND ORDER

Adopted:  August 13, 1999                         Released:  September 1, 1999

By the Commission:

                         I.  INTRODUCTION

     1.  On April 21, 1997, the Common Carrier Bureau (Bureau) released the LATA Modification
Order, in which the Bureau ruled that the Federal Communications Commission (FCC or
Commission) has exclusive authority, pursuant to section 3(25)(b) of the Communications Act, to
modify Local Access Transport Area (LATA) boundaries, and did not delegate that power to any
other entity.  On May 20, 1997, U S WEST Communications, Inc. (U S WEST) filed a petition for
reconsideration or clarification with the Bureau of the LATA Modification Order.  The U S WEST
petition has been referred to us by the Bureau.  On May 21, 1997, the Arizona Corporation
Commission (ACC) filed an application for review or stay of the LATA Modification Order.

     2.   On May 14, 1999, AT&T Corp. (AT&T) filed a motion for a standstill order
prohibiting U S WEST from (a) providing or offering to provide to customers in Arizona any
interLATA service not described in  271(b)(2) or (b)(3), as defined with reference to the LATA
boundaries that were established by the Modification of Final Judgment (MFJ), unless and until the
requisite authority therefor has been expressly granted by the Commission; and (b) taking any actions
to procure or request an order from the ACC purporting to remove or revise LATA boundaries in
Arizona in a manner prohibited by the Telecommunications Act of 1996 and the prior order in this
proceeding.

     3.   Because the LATA Modification Order is sufficiently clear that no clarification is
necessary, we deny U S WEST's petition.  Further, because the Communications Act grants the
Commission exclusive jurisdiction to approve changes to any LATA boundaries, section 2(b) of the
Act is not implicated.  We thus affirm the Bureau's conclusion and deny the ACC's application. 
Although we will not be addressing the AT&T motion for a standstill order today, our conclusions
herein also reject arguments made by U S WEST in its opposition to the AT&T motion that the ACC
has any authority to establish or modify intrastate LATA boundaries and should resolve any questions
that U S WEST may have concerning whether it can provide service across currently recognized
LATA boundaries without first seeking a LATA boundary modification from this Commission.
 
                         II.  BACKGROUND

     4.  The Bureau released the LATA Modification Order in response to a petition for
declaratory ruling filed by the Competition Policy Institute (CPI) and the Minnesota Department of
Public Service (MDPS) on March 4, 1997.  The CPI/MDPS petition requested that the Bureau issue
a declaratory ruling that the Commission in the Local Competition Second Report and Order did not
delegate to the states authority to approve the establishment or modification of LATA boundaries,
and that this authority remains with the Commission.  CPI and MDPS requested that the Bureau rule
on this issue because U S WEST had filed petitions with the ACC and the Minnesota Public Utilities
Commission (MPUC), asking that those commissions make the LATAs in their states coextensive
with state boundaries.

     5.  In responding to the CPI/MDPS petition, U S WEST argued, inter alia, that the
determination of an intrastate LATA boundary is the type of wholly intrastate matter over which
section 2(b) of the Communications Act precludes Commission jurisdiction.  The ACC agreed with
U S WEST that under section 2(b) of the Act, the modification of intrastate LATA boundaries is a
matter reserved to state jurisdiction, and argued that as a result the ACC is the appropriate
governmental entity to make a decision regarding all intrastate telecommunications matters in
Arizona, including the LATA modification petition filed by U S WEST.

     6.  The Bureau, in the LATA Modification Order, first rejected the argument made by U S
WEST and the ACC that section 2(b) limits Commission jurisdiction over LATA boundaries.  The
Bureau explained that LATAs are a purely federal creation and never have been administered by the
states.  Rather, the U.S. District Court for the District of Columbia (U.S. District Court) divided all
territory in the continental United States served by the BOCs into LATAs as part of its approval of
the AT&T Consent Decree, which resolved a lawsuit brought under federal antitrust law.  Under
the AT&T Consent Decree, BOCs were permitted to provide local and toll service within each LATA
(i.e., intraLATA service), but were prohibited from providing service across LATA boundaries (i.e.,
interLATA service).  All interLATA traffic was to be carried by interexchange carriers.  The U.S.
District Court acted as the sole forum for matters concerning LATA boundaries, and held that the
decree preempted all inconsistent state law. 

     7.  The Bureau concluded that Congress, in the Telecommunications Act of 1996 (1996
Act), shifted authority over LATA boundaries from the U.S. District Court to the Commission.  The
Bureau pointed out that section 601(a) of the 1996 Act makes "[a]ny conduct or activity" formerly
subject to the AT&T Consent Decree subject to the Act.  Section 251(g), in turn, explicitly
delegates to the Commission sole authority to administer the "equal access and nondiscriminatory
interconnection restrictions and obligations" that applied under the AT&T Consent Decree, of which
exclusive authority over LATA boundary establishment or modification is an essential component. 
The Bureau noted that section 3(25) of the Act defines a LATA as a "contiguous geographic area
. . . established or modified by a Bell operating company . . . and approved by the [Federal
Communications] Commission."  Accordingly, the Bureau concluded that the 1996 Act explicitly
conferred exclusive jurisdiction over LATA boundaries on the Commission, that no construction of
the statute was necessary, and that as a result, section 2(b) does not limit the Commission's authority
to modify LATA boundaries.

     8.  The Bureau further explained that the Commission had not delegated authority over the
administration of LATA boundaries to state commissions.  The Bureau stated that in the Local
Competition Second Report and Order the Commission had adopted rules to implement section
251(b)(3) of the Act that allowed states to implement dialing parity on the basis of either state or
LATA boundaries, but in that Order had not delegated authority to modify LATA boundaries to the
states.  According to the Bureau, the Commission anticipated that the significance of LATA
boundaries would decrease once the BOCs complied with the section 271 checklist, had begun to
offer in-region interLATA service, and eventually, no longer needed to comply with the requirement
that they provide interLATA service through a separate affiliate.  The Bureau noted that the Local
Competition Second Report and Order thus permitted states to take the ongoing significance of
LATA boundaries into consideration, and have the flexibility to require that toll dialing parity be
implemented on the basis of state boundaries rather than on a LATA-by-LATA basis where the state
determines that to do so would be pro-competitive and otherwise in the public interest.  The Bureau
then held that, by allowing the states such flexibility, the Commission in no way delegated any
authority over the modification of LATA boundaries to the states.

     9.  The Bureau concluded that the Act prohibited the Commission from delegating its
authority over LATA boundaries to the states until a BOC had satisfied the requirements of section
271.  The Bureau initially noted that section 271 prohibits a BOC from providing interLATA
services until it has met a fourteen-point checklist to open its intraLATA markets to competition and
the Commission approves the BOC's application to provide interLATA service.  Further, section
272(a) prohibits a BOC from providing in-region interLATA service directly.  Rather, a BOC, once
it obtains section 272 approval, must provide such services through a separate affiliate meeting the
requirements of section 272(b).  Under section 272(f)(1), the provisions of section 272 (other than
those in subsection (e)) sunset with respect to a particular BOC three years after the BOC receives
section 271 authority, unless the Commission extends the 3-year period by rule or order.  Finally,
the Bureau noted that section 10(d) of the Act explicitly prohibits the Commission from taking any
action that would constitute a forbearance of its authority to ensure that section 271's requirements
are fully implemented.  The Bureau reasoned that, by allowing states to modify LATA boundaries
in the manner proposed by U S WEST, the Commission would be allowing the states to transform
what had been an interLATA call into an intraLATA call, thus allowing a BOC to provide interLATA
service without satisfying the section 271 checklist.  Such a result, the Bureau concluded, would be
the very type of forbearance prohibited by section 10(d).

     10.  In sum, the Bureau found that (1) Congress vested exclusive authority in this Commission
to define LATA boundaries; (2) the Commission in its Local Competition Second Report and Order
did not delegate this authority to the states; and (3) such authority, if delegated to the states, would
impermissibly circumvent section 271.

            III.  ACC'S APPLICATION FOR REVIEW OR STAY

          A.  Background

     11.  The ACC contends that we should review the Bureau's order because it addresses a
question of law not previously resolved by the Commission, thus meeting one of the criteria that our
rules of practice specify must be met to warrant Commission review of any action taken pursuant to
delegated authority.  According to the ACC, the CPI/MDPS petition and the subsequent Bureau
order present "the novel question of interpretation of section 271(d) of the 1996 Act in conjunction
with section[s] 2(b) and 10(d) of the Act."  The ACC asserts that section 271(d) "delegates the
authority to permit BOCs to provide interLATA services to the FCC," and "[p]ursuant to section
10(d) of the Act, the FCC may not forbear from applying the requirements of section 271 of the 1996
Act until it determines that those requirements have been fully implemented," but that section 2(b)
"specifically reserves jurisdiction over regulation of intrastate telecommunication services to the
state."  In other words, the ACC's argument is based on the contention, rejected by the Bureau, that
because 2(b) of the Act precludes Commission jurisdiction over purely intrastate communications,
it "preserves" to Arizona the authority to define intrastate LATA boundaries.

     12.  Alternatively, the ACC requests that we stay the Bureau's Order on the ground that the
issue of whether states have the right to modify LATA boundaries should not be decided until after
a BOC has met the requirements of the section 271 competitive checklist.  ACC states that it has
opened dockets to monitor U S WEST's compliance with section 271 and to receive public comment
on U S WEST's request to modify LATA boundaries within Arizona.

     13.  AT&T, CPI, MDPS, TCG, and TRA concur with the Bureau's conclusion that the
Commission possesses exclusive authority over LATA boundaries, and that the Commission did not
delegate that authority to the states.

          B.  Discussion

     14.  For the reasons stated below, we affirm the Bureau's conclusion in the LATA
Modification Order that Commission jurisdiction over LATA boundaries is the result of explicit
grants of authority by Congress in the 1996 Act, and thus is not subject to section 2(b) of the Act. 
We also find that the Commission's exclusive jurisdiction over the administration of LATA boundaries
is the most reasonable conclusion that can be drawn from the structured statutory scheme that
Congress created in the 1996 Act.

     15.  First, the 1996 Act and the Supreme Court's conclusion in Louisiana Public Service
Commission v. F.C.C. do not support the ACC's argument that section 2(b) "preserves" to the ACC
the authority to define intrastate LATA boundaries once the ACC determines that U S WEST has
complied with the section 271 competitive checklist. The ACC misstates the issue when it argues that
the Bureau's Order presents a novel question concerning the interpretation of section 2(b) in
conjunction with sections 271(d) and 10(d).  In Louisiana Public Service Commission v. F.C.C., the
Supreme Court ruled that to overcome the intrastate proscription of section 2(b), Congress must
either modify section 2(b) or grant the Commission additional intrastate authority.  As the Bureau
correctly concluded in the LATA Modification Order, Congress did grant authority over LATA
boundaries, whether interstate or intrastate, to the Commission.  Although the ACC, like all state
commissions, plays a significant role in evaluating a BOC's compliance with the 271 checklist, the
ACC argument that this role extends to the modification of LATA boundaries is incorrect.  Congress
vested exclusive jurisdiction over LATA boundaries in the Commission.

     16.  As the Bureau correctly found, LATAs were part of a consent decree, the MFJ, approved
by a federal court in the context of a federal antitrust suit.  Under the MFJ, the states had no
jurisdiction over the creation or administration of LATA boundaries.  The Bureau also correctly
concluded that Congress, in the 1996 Act, explicitly granted authority to the Commission to approve
the establishment or modification of LATA boundaries, both intrastate and interstate.  In section 601,
Congress directed that "any conduct or activity" previously subject to the AT&T Consent Decree was
now subject to the "restrictions and obligations" of the Act, as amended.  In section 3(25)(b),
Congress explicitly included LATAs as one such "conduct or activity" subject to the "restrictions and
obligations of the Act" by defining a LATA as a geographic area "approved by the Commission." 
The Act's explicit grant of jurisdiction to the Commission to approve any change to a LATA
boundary could not be more clear.

     17.  Further, the Bureau correctly concluded that exclusive Commission authority to
approve any changes to LATA boundaries is consistent with the 1996 Act overall.  In section 251(g),
Congress delegated to the Commission sole authority to administer the "equal access and
nondiscriminatory interconnection restrictions and obligations" that applied under the AT&T Consent
Decree.  Further, in section 271, Congress granted exclusive authority to the Commission to
approve interLATA service by BOCs.  Pursuant to section 10(d) of the Act, the Commission must
exercise this authority by determining that the requirements of section 271 are fully implemented
before the Commission may forbear from applying any of the requirements of section 271. 
Notwithstanding U S WEST's arguments, it would be inconsistent with Congress's grant of sole
authority to the Commission to administer the equal access regime and section 271 to interpret the
1996 Act as allowing any other entity the authority to redefine or eliminate LATA boundaries.
Congress has thus clearly granted the Commission additional authority to approve modifications of
LATA boundaries, whether interstate or intrastate, thus belying any argument that section 2(b) grants
any authority over LATA boundaries to the states.

     18.  U S WEST's recent argument that Commission jurisdiction over LATA boundaries
in section 3(25) is not exclusive and that nothing precludes state commissions from altering in-state
LATA boundaries does not alter our conclusion.  As we discuss above, historically, LATAs are a
purely federal construct, over which the states had no authority.  Following the enactment of the 1996
Act, jurisdiction over LATAs was transferred to the Commission in section 3(25), which establishes
a statutory formula by which LATA boundaries are to be defined.  The section states that a LATA
is (A) that which was established before the enactment of the 1996 Act, or (B) that which is
established or modified by a BOC after the enactment of the 1996 Act and approved by the
Commission.  Thus LATAs are what the MFJ court said they were or what the Commission
approves.  The Act does not provide for any state jurisdiction over LATAs whatsoever.  U S WEST
argues, however, that section 3(25) somehow allocates some jurisdiction over LATA boundaries to
the states because the section is silent regarding state commission authority to modify LATA
boundaries.  According to U S WEST, because section 3(25) does not explicitly prohibit a state from
modifying an intrastate LATA boundary, the Act implicitly allows a state to do so.  As we discuss
in the previous paragraph, the argument that jurisdiction over LATA boundary administration is
"shared" by the states is inconsistent with section 3(25) and the exclusive authority that Congress
intended that the Commission exercise over the section 271 process.  Further, as the Supreme Court
recently held in AT&T Corp. v. Iowa Utilities Bd., the 1996 Act's silence regarding state jurisdiction,
rather than implicitly allocating jurisdiction to the states, assures that Commission jurisdiction is not
superseded, and that FCC jurisdiction "always follows where the Act applies."  Thus, as the
Bureau correctly concluded, and as we affirm today, in the 1996 Act, Congress transferred sole
authority over LATA boundaries to the Commission.

     19.  We also affirm the Bureau's conclusion that the Commission, in the Local Competition
Second Report and Order, did not delegate its exclusive authority over LATA boundaries to the
states.  As the Bureau correctly observed, the Commission has never explicitly delegated its authority
over LATA boundaries.  There is no mention anywhere in the Local Competition Second Report and
Order of any delegation of Commission authority over LATA boundaries to the states.  Further, the
Bureau correctly concluded that section 10(d) of the Act precludes the possibility that there was an
implicit delegation of Commission authority.  We note initially that we do not agree with the Bureau's
conclusion in dicta that delegation of the FCC's exclusive authority over LATA boundaries would
automatically violate section 10(d).  The section 10(d) mandate that the Commission determine that
the requirements of section 271 be fully implemented is not so rigid that any delegation by the
Commission of its exclusive authority over LATA boundaries would be a per se violation of section
10(d).  Nonetheless, the Bureau is correct that the Commission would not have implicitly delegated
its authority because the Commission would have had to take steps to ensure that such a delegation
would not violate section 10(d).  In order to make this determination, the Commission would have
solicited comment on the issue, or at a minimum, discussed the issue in detail in the Local
Competition Second Report and Order.  No such solicitation or discussion took place.  Thus, the
Bureau correctly concluded that the Commission, in the Local Competition Second Report and
Order, neither explicitly nor implicitly, delegated its authority over LATA boundaries to the states.
 
     20.  The Bureau thus correctly rejected the argument presented by ACC and U S WEST that
Commission jurisdiction over LATA boundaries is limited by section 2(b), and that the Commission
delegated its authority over LATA boundaries to the states.  As the Bureau found, Congress vested
exclusive authority to define LATA boundaries with the FCC, and the Commission in the Local
Competition Second Report and Order did not delegate this authority to the states.  The ACC
Application is thus denied because it fails to meet the requirements for review of an order issued
under delegated authority.

                  IV.  U S WEST'S PETITION FOR 
                 RECONSIDERATION OR CLARIFICATION

          A.  Background

     21.  In paragraph 23 of the LATA Modification Order, the Bureau concluded that the
Commission, by allowing state commissions to implement dialing parity on the basis of state
boundaries, had delegated no authority over LATA boundaries to the states.  Instead, the Bureau
reasoned, the Commission was anticipating that the significance of LATA boundaries would decrease
once the BOCs complied with the Section 271 checklist, began to offer in-region interLATA service,
and eventually no longer needed to comply with the Section 272 requirement that they provide
interLATA service through a separate affiliate.  The Bureau then stated

          At that time, as the Commission explained in paragraph 37 of the Second Report and Order,
     the states would have the flexibility to implement in-region dialing parity on the basis of state
     or LATA boundaries after taking into account the current relevance of LATA boundaries.

     22.  In its petition, U S WEST asks whether the Bureau, by stating in paragraph 23 of the
LATA Modification Order, that states would have the flexibility to implement toll dialing parity on
the basis of state boundaries "at that time," was referring to the expiration of the three-year period
during which section 272 of the Act requires BOCs to provide interLATA services through a separate
affiliate, and had concluded that the Commission had tolled a state's ability to implement dialing parity
on the basis of state boundaries until then.  U S WEST argues that tolling a state's authority to
implement intrastate dialing parity until after those three years would impair that state's ability to
implement policies that affect intrastate services and are procompetitive and in the public interest. 
CPI, MDPS, AT&T, MCI, TCG, and TRA filed comments in response to the U S WEST petition.

     23.  Even though intraLATA toll dialing parity has been implemented nationwide, the U
S WEST Petition does not present a moot issue.  States that currently administer intraLATA toll
dialing parity on a LATA-by-LATA basis may wish to move to a statewide toll dialing parity
structure in the future.  In a state that has implemented toll dialing parity on a LATA-by-LATA basis,
customers are able to choose the carrier they wish to carry toll calls within each LATA in the state
in the same way they now choose an interLATA carrier.  If a state were to implement toll dialing
parity on the basis of state boundaries, the state would discard the intraLATA/interLATA dichotomy
in favor of an intrastate/interstate dichotomy, and customers would make one choice for a toll
provider (both intraLATA and interLATA) within the state. 

     24.  The significance of U S WEST's concern is that if a state implements toll dialing parity
on a statewide basis, a BOC may only offer full toll service within that state after it has been granted
authority under section 271 to provide interLATA service, a service that section 272 of the Act
requires the BOC to supply through a separate affiliate for three years.  If the Commission has tolled
a state's authority to implement statewide dialing parity until the end of that three-year period, the
BOC could not offer statewide toll services during that time.  Thus, if a state were to implement toll
dialing parity on the basis of LATA boundaries, BOC customers would choose from among at least
two providers of intraLATA "1+" toll service.  Because the state had implemented toll dialing parity
on a LATA-by-LATA basis, none of these toll calls would cross LATA boundaries.  As a result,
either the BOC or the BOC's interLATA affiliate (if the BOC had been granted interLATA authority
pursuant to section 271) could be one of the providers from which the customer could choose.  If,
on the other hand, a state were to implement toll dialing parity on the basis of state borders (an event
that has yet to occur), then customers could choose to have all their "1+" intrastate toll traffic
automatically routed to the carrier of the customer's choice.  If the BOC had not been granted section
271 authority, it could not be one of those choices because it could not supply intrastate toll traffic
that would cross LATA boundaries.  If the BOC had been granted authority under section 271 to
offer interLATA service, however, the BOC's interLATA affiliate could carry intrastate interLATA
toll traffic and thus be a presubscription choice during the three-year section 272 period.
 
          B.  Discussion

     25.  For the reasons stated below, we deny the U S WEST petition.  As CPI and MDPS
correctly observe, a state may implement toll dialing parity based on either LATA boundaries or
state boundaries, whichever it determines to be both procompetitive and in the public interest.  There
is no language in either the Local Competition Second Report and Order or the LATA Modification
Order that tolls a state's authority to implement dialing parity on the basis of state borders until the
sunset of the separate affiliate requirement of section 272 of the Act.

     26.  U S WEST's concern that the Commission tolled state authority to implement dialing
parity on the basis of state boundaries is based on a misinterpretation of the discussion in paragraph
23 of the LATA Modification Order.  The phrase, "at that time," in the LATA Modification Order
does not limit a state's ability to implement dialing parity.  It merely refers to the time when a state
would most likely take advantage of the flexibility that it has to implement toll dialing parity on the
basis of state boundaries.  Further, the Local Competition Second Report and Order does not require
a state to delay implementation of statewide toll dialing parity until the end of the three-year separate
affiliate period, but rather assumes that a state may implement statewide toll dialing parity during the
section 272 period.  The Commission included the section 272 separate affiliate requirement as one
of the factors that "states should be able to take . . . into account, where applicable, and have the
flexibility to require that toll dialing parity implementation be based on state boundaries . . . ." 
States can only "take into account" the relevance of the section 272 separate affiliate requirements
for the period during which the requirements apply to a particular BOC.  Thus, it is implicit in the
Local Competition Second Report and Order that states may implement toll dialing parity based on
state boundaries while the section 272 separate affiliate requirements apply to a particular BOC.

     27.  We also agree with CPI and MDPS that we should dispel any potential ambiguities
regarding Commission authority by reaffirming our exclusive authority to modify LATA boundaries,
our jurisdiction over the section 271 application process, and by affirming that BOCs must abide by
the section 272 separate affiliate requirement no matter which way a state may implement toll dialing
parity.

     28.  As the Bureau observed in the LATA Modification Order, the Commission, in the
Local Competition Second Report and Order allowed the states to implement toll dialing parity on
the basis of state boundaries, but explicitly recognized the continuing significance of current LATA
boundaries should states decide to implement dialing parity on the basis of state borders.  Paragraph
five of the Local Competition Second Report and Order states in relevant part:

          [t]he toll dialing parity requirement we adopt is defined by LATA boundaries given that the
     Bell Operating Companies' (BOCs') operations are likely to be shaped by LATA boundary
     restrictions for a period of unforeseeable duration.  Given that implementation of the 1996
     Act over time may diminish the significance of LATA boundaries, however, we permit states
     to redefine the toll dialing parity requirement based on state, rather than LATA, boundaries
     where a state deems such a requirement to be pro-competitive and otherwise in the public
     interest.

     29.  Thus, although a state is free to implement dialing parity based on state borders, until
a LATA modification is approved by the Commission pursuant to section 3(25) of the Act, LATA
boundaries would continue to remain in place.  As we discuss above, this would affect the manner
in which a BOC would be able to provide toll dialing parity.  Whether, and under what circumstances,
either of the scenarios discussed in paragraph 23 would be "procompetitive and in the public interest"
is for each state, in the first instance, to decide.  As the Commission stated in the Local Competition
Second Report and Order, because of variations that exist among LATA boundaries and toll traffic
within, and among, the various states, each state should have the opportunity to determine whether
customers should be able to presubscribe to carriers for intrastate toll service and for interstate toll
service in lieu of the intraLATA and interLATA toll presubscription dichotomy.

     30.  Further, as the Bureau correctly held in the LATA Modification Order, states'
discretion to implement toll dialing parity on the basis of state boundaries is not a grant of authority
to the states to authorize a BOC to provide intrastate interLATA service.  Section 271 of the Act
grants that authority solely to the Commission.  Finally, notwithstanding the manner in which a state
chooses to implement toll dialing parity, each BOC is required to comply with the separate affiliate
requirements of section 272 before the BOC may be granted in-region interLATA authority under
section 271.

     31.  Because the Local Competition Second Report and Order and the LATA Modification
Order do not prohibit state commissions from exercising their authority to implement toll dialing
parity on the basis of state boundaries until after sunset of the three-year section 272 separate
subsidiary requirement, we reject the AT&T, MCI, TCG, and TRA arguments to the contrary.

                          V.  CONCLUSION

     32.  The Commission possesses exclusive authority to approve all LATA boundary
modifications, whether interstate or intrastate, and the Commission has not, explicitly or implicitly,
delegated that authority to the states.  Neither the LATA Modification Order nor any aspect of the
Local Competition Second Report and Order limits the time during which a state may implement toll
dialing parity on the basis of state or LATA boundaries.  During the three-year section 272 separate
affiliate period, states may implement toll dialing parity based on state boundaries.  Absent a LATA
boundary modification approved by this Commission, however, LATA boundaries will remain in
effect in any state that so implements dialing parity.  Finally, a BOC must comply with the separate
affiliate provisions of section 272 no matter how a state implements toll dialing parity.  We therefore
deny ACC's application for review or stay and deny U S WEST's petition for reconsideration or
clarification.

                      VI.  ORDERING CLAUSES

     33.  Accordingly, IT IS ORDERED, pursuant to sections 1.115(g) and 1.106(j) of the
Commission's rules, 47 C.F.R.  1.115(g), 1.106(j), respectively, that the Application for Review
filed by Arizona Corporation Commission IS DENIED and the Petition for Reconsideration or
Clarification filed by U S WEST IS DENIED.



                         FEDERAL COMMUNICATIONS COMMISSION



                         
                         Magalie Roman Salas
                         Secretary                            APPENDIX A

Parties Filing Comments on ACC's Application for Review

AT&T Corporation (AT&T)
The Competition Policy Institute and Minnesota Department of Public Service (CPI and MDPS)
The Telecommunications Resellers Association (TRA)
Teleport Communications Group Inc. (TCG)



Parties Filing Comments on U S WEST's Petition for Reconsideration or Clarification

AT&T Corporation (AT&T)
The Competition Policy Institute and Minnesota Department of Public Service (CPI and MDPS)
MCI Telecommunications Corporation (MCI)
The Telecommunications Resellers Association (TRA)
Teleport Communications Group Inc. (TCG)