                                                                    FILED
                                                        United States Court of Appeals
                         UNITED STATES COURT OF APPEALS         Tenth Circuit

                                       TENTH CIRCUIT                         October 26, 2011

                                                                           Elisabeth A. Shumaker
                                                                               Clerk of Court
 CCCOK, INC.,

           Plaintiff - Appellant,

 v.                                                           No. 11-6016
                                                      (D.C. No. 5:07-CV-00629-M)
 SOUTHWESTERN BELL TELEPHONE                                 (W.D. Okla.)
 L.P., d/b/a AT&T of Oklahoma, f/k/a
 SWBT; THE CORPORATION
 COMMISSION OF OKLAHOMA; JEFF
 CLOUD, in his official capacity as
 Chairman of The Corporation
 Commission of Oklahoma; DENISE A.
 BODE, in her official capacity as Former
 Commissioner of The Corporation
 Commission of Oklahoma; BOB
 ANTHONY, in his official capacity as
 Commissioner of the Corporation
 Commission of Oklahoma,

           Defendants - Appellees.


                                    ORDER AND JUDGMENT*


Before LUCERO and MATHESON, Circuit Judges, and FREUDENTHAL,† District
Judge.



       * This order and judgment is not binding precedent, except under the doctrines of
law of the case, res judicata, and collateral estoppel. It may be cited, however, for its
persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
       †
        The Honorable Nancy D. Freudenthal, United States District Judge, United
States District Court for the District of Wyoming, sitting by designation.
       In 2005, Appellant CCCOK, Inc. (“CCCOK”) filed a complaint at the Oklahoma

Corporation Commission (“OCC”) against Southwestern Bell Telephone, L.P.

(“SWBT”).1 CCCOK sought an order directing SWBT to pay it over two-million dollars

in compensation for SWBT’s alleged breach of a contract between CCCOK and SWBT

(the “Parties”).

       The OCC rejected CCCOK’s claim, concluding that CCCOK was not entitled to

compensation under the “clear and unambiguous” language of the Parties’ contract.

CCCOK, Inc. v. Sw. Bell Tel., L.P., OCC Order No. 538697, at 5 (May 2, 2007) (“OCC

Order”). The OCC also noted in dicta that “the interpretation of the [contract] urged by

[CCCOK] [was] unreasonable and contrary to the public interest, and [that it] would lead

to unintended and absurd consequences.” Id.

       The United States District Court for the Western District of Oklahoma affirmed

the OCC’s ruling. CCCOK appealed. On appeal, CCCOK contends that the OCC’s

ruling was arbitrary and capricious because it: (1) disregarded the terms of the Parties’

contract; (2) contradicted record evidence; and (3) violated CCCOK’s rights under state

and federal law.

       The district court had jurisdiction to consider CCCOK’s claim pursuant to 47

U.S.C. § 252(e)(6). See Sw. Bell Tel. Co. v. Brooks Fiber Commc’ns. of Okla., Inc., 235

F.3d 493, 497 (10th Cir. 2000). Exercising jurisdiction under 28 U.S.C. § 1291, we hold




       1
      Sometime after CCCOK filed its OCC Complaint, SWBT was acquired by
AT&T of Oklahoma. For clarity, we refer to the Appellees as SWBT.
                                             2
that the OCC’s ruling was not arbitrary and capricious and we affirm the district court’s

decision.

                                    I. BACKGROUND

   A. Factual and Legal Background

       This appeal concerns the OCC’s rejection of a claim of breach of contract filed by

CCCOK against SWBT. The Parties’ adopted their contract, and the OCC approved it,

pursuant to the Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56,

codified at 47 U.S.C. § 151 et seq. (the “Telecommunications Act” or the “Act”). We

begin by providing a brief overview of the Telecommunications Act.

       1. The Telecommunications Act

       Congress passed the Telecommunications Act “to encourage competition in the

telephone services industry.” Brooks, 235 F.3d at 495. The Act requires local exchange

carriers2—i.e., telephone companies—competing within the same geographic area to

“interconnect” their telephone networks “to ensure that callers who subscribe to one local

telephone service can receive calls from, and place calls to, those who subscribe to a

different local telephone service.” Id.

       The Act also requires local exchange carriers to “establish reciprocal

compensation arrangements for the transport and termination of telecommunications.”

47 U.S.C. § 251(b)(5). Such arrangements provide that when a customer of Carrier A

makes a local call to a customer of Carrier B, the carrier for the calling party (Carrier A)


       2
        “The term ‘local exchange carrier’ means any person that is engaged in the
provision of telephone exchange service or exchange access.” 47 U.S.C. § 153(32).
                                              3
is required to compensate the carrier for the called party (Carrier B) for transporting and

terminating—i.e., delivering— the call to its destination. See 47 C.F.R. § 51.701(e).

       The exact terms and conditions under which local exchange carriers interconnect

and provide reciprocal compensation are contained in contracts referred to as

“interconnection agreements.” See Brooks, 235 F.3d at 495. The Act requires that all

interconnection agreements be approved by a state commission, which must ensure that a

proposed agreement complies with the Telecommunication Act’s provisions. See 47

U.S.C. § 252(e)(1), (2)(b).

       In many instances, the terms of an interconnection agreement are created through

mutual negotiation. However, section 252(i) of the Telecommunications Act requires

local exchange carriers to “make available any interconnection, service, or network

element provided [in any interconnection agreement] to which it is a party to any other

requesting telecommunications carrier upon the same terms and conditions as those

provided in the agreement.” 47 U.S.C. § 252(i). Thus, new local exchange carriers may

choose to adopt the terms of an existing interconnection agreement and to have that

agreement approved by the relevant state commission instead of negotiating new terms

with an existing local exchange carrier. See id.

       2. The Parties

       SWBT is a local exchange carrier that provides traditional landline telephone

service throughout the state of Oklahoma. Sometime before 1998, Ted L. Snider—the

owner and creator of CCCOK—learned of an interconnection agreement between SWBT

and another local exchange company that featured “an unusually high reciprocal

                                             4
compensation rate . . . for exchange of Local Traffic.” Aplt. Opening Br., at 4 n.2.

       As CCCOK acknowledges in its brief, Mr. Snider designed a plan to “exploit the

. . . opportunity presented by the unusually high reciprocal compensation rate.” Id. To

accomplish his objective, Mr. Snider began operating two entities in the state of

Oklahoma: (1) Zipramp, Inc., an internet service provider; and (2) CCCOK, a local

exchange company that provided “managed modem services” to ZipRamp. ZipRamp

was CCCOK’s only end user. In other words, ZipRamp was the only customer that

subscribed to CCCOK’s managed modem service.

       In 1998, CCCOK adopted the terms of the existing interconnection agreement

between SWBT and the other local exchange carrier that featured the “unusually high

reciprocal compensation rate.” Id. In 1999, the OCC approved the interconnection

agreement between CCCOK and SWBT (the “ICA”).

       3. The ICA

       Section III of the ICA contains a reciprocal compensation agreement, which, in

pertinent part, states:

                      For purposes of compensation under this Agreement,
               the telecommunications traffic traded between the Parties
               shall be classified as either Local traffic, Through-put traffic,
               IntraLata Interexchange traffic, or InterLATA Interexchange.
               ...

                       Calls originated by one Party’s end users and
               terminated to the other Party’s end users shall be classified as
               local traffic under this Agreement if the call originates and
               terminates in the same SWBT exchange area. . . . Calls not
               classified as local under this Agreement shall be treated as
               interexchange for intercompany compensation purposes.


                                              5
ROA, at 469.

      4. ZipRamp and the MegaPort Service

      In early 2001, ZipRamp began offering an internet service called “MegaPort” in

Oklahoma. During the six months that it was in operation, ZipRamp provided the

MegaPort service to approximately 129 customers. The vast majority of its customers

were churches, schools, and nonprofit organizations to whom ZipRamp offered the

MegaPort service free of charge. All of ZipRamp’s customers were SWBT end users. In

other words, all of ZipRamp’s customers subscribed to SWBT’s telephone services.

      The Megaport service allowed customers to access the internet using SWBT’s

local telephone facilities and equipment provided by ZipRamp. ZipRamp provided each

customer two high capacity telephone lines referred to as “SuperTrunks.” Each

SuperTrunk contained 48 voice-graded telephone lines and created a direct T-1

connection from the SWBT switch to the ZipRamp customers’ premises.

      ZipRamp also provided each of its customers a Lucent router—a modem and

routing device. ZipRamp programmed the Lucent routers to auto-dial, connect, and

maintain between 20 and 32 concurrent telephone calls at a time. The auto-dialed

telephone calls were placed 24 hours a day, seven days a week, even if the ZipRamp

customers were not using their computers or their computers were turned off.

      All of the auto-dialed telephone calls placed by the Lucent routers were directed to

CCCOK’s managed modem service and were terminated to ZipRamp—CCCOK’s only

end user. ZipRamp configured the Lucent routers so that its customers could not dial

telephone numbers of their choosing or use the SuperTrunk lines to make voice calls.

                                            6
ZipRamp also disabled a feature on the Lucent routers referred to as “dynamic bandwidth

allocation.” This feature was designed to decrease or increase the number of connections

initiated by a router based on a user’s internet activity. By disabling dynamic bandwidth

allocation—and thereby preventing the Lucent routers from increasing or decreasing

connections as a user’s internet activity required—ZipRamp ensured that the routers

would generate maximum call traffic at all times.

       Using this equipment, ZipRamp connected its customers’ computers to the internet

as follows:

              a. The Lucent routers at the ZipRamp customers’ premises placed
                 numerous concurrent auto-dialed telephone calls 24 hours a day, seven
                 days a week;

              b. the auto-dialed calls traveled from the ZipRamp customer/SWBT end
                 users’ premises via SWBT telephone lines to the SWBT switch;3

              c. the SWBT switch sent an electronic message to CCCOK requesting a
                 telephone connection to CCCOK’s switch;

              d. CCCOK terminated—i.e., delivered—the auto-dialed calls to ZipRamp;
                 and

              e. ZipRamp used several modems to connect the calls to the internet.

       5. The ZipRamp Service Contract and Letters of Agency

       All of the customers that signed up for the MegaPort service signed a service

contract with ZipRamp (the “Service Contract”). In relevant part, the Service Contract

provides:


       3
       The term “switch” refers to equipment that directs a call to its destination. See
Qwest Corp. v. Pub. Utils. Comm’n. of Colo., 479 F.3d 1184, 1193 (10th Cir. 2007).

                                            7
              1. Introduction: During the term (as defined below) of this
                 Agreement, ZIPRAMP will provide Customer with
                 MegaPort Service. Megaport Service is Broadband
                 Internet Access Service that includes an allocation of ____
                 IP Addresses for the customer’s sole and exclusive use,
                 utilizing the equipment and facilities described . . . below.
                 ...

              2. Equipment and Facilities:       In order to facilitate
                 MegaPort Service, ZIPRAMP will install a Lucent Max
                 4000 Router, or a comparable piece of equipment, on the
                 customer premises, to which the customer’s existing
                 computer network will be connected. ZIPRAMP will, as
                 agent for the customer . . . order and install two (2)
                 SuperTrunks from Southwestern Bell Telephone.

ROA, at 541-42.

      Each ZipRamp customer also signed a Letter of Agency that was

attached to the Service Contract. The Letters of Agency state:

              I hereby authorize ZipRamp, Inc. (ZipRamp), to act as my
              agent in provisioning and order two (2) SuperTrunks from
              Southwestern Bell Telephone as described in Southwestern
              Bell Telephone’s Integrated Services Tariff, Part 4, Subpart
              4.7. In addition, I further authorize ZipRamp to block
              optional services not limited to the following: Third Party
              Billing and Collect Calling, Long Distance and International
              Long Distance, All 900 Services, Three Way Calling, Call
              Return, Call Blocker, Auto Redial, Calling Card Services,
              PIC and LPIC. I also agree that I will not contract with
              Southwestern Bell Telephone to add any additional
              equipment or services to the circuits that are the subject of
              this agreement. I further authorize ZipRamp to handle the
              necessary arrangements, including billing and responding to
              any inquiries by Southwestern Bell Telephone.

ROA at 548.

      The Service Contract and Letters of Agency did not inform the ZipRamp

customers that numerous concurrent auto-dialed telephone calls would be placed by the

                                             8
Lucent routers to ZipRamp 24 hours a day, seven days a week.

      6. The Dispute

      From January 2001 to June 2001, the Lucent routers installed by ZipRamp

initiated a large number of telephone calls (the “MegaPort Traffic”) on SWBT’s

telephone network that passed through CCCOK’s managed modem service and

terminated to ZipRamp—CCCOK’s only end user. The MegaPort Traffic produced

nearly two-hundred-million minutes of use that were recorded by CCCOK and SWBT.

      In February 2001, CCCOK began sending SWBT monthly invoices requesting

reciprocal compensation for the MegaPort Traffic. Added together, the invoices from

February, March, April, May, and June requested more than two-million-dollars in

reciprocal compensation.

      In February 2001, SWBT paid the amount requested in CCCOK’s invoice in full.

In the subsequent months, however, the amounts of reciprocal compensation requested by

CCCOK increased significantly. SWBT discovered that the MegaPort Traffic was

generated by the auto-dialed calls placed by the Lucent routers that ZipRamp

programmed and installed at the ZipRamp customers’/SWBT end users’ premises.

SWBT formally disputed the charges contained in the invoices and refused to pay

CCCOK. As a result of its inability to collect the revenues it expected, CCCOK ceased

doing business in Oklahoma in June 2001.

   B. Procedural History

      1. The OCC Challenge

      On January 3, 2005, CCCOK filed a complaint against SWBT at the Oklahoma

                                           9
Corporation Commission. CCCOK sought an order finding that SWBT had breached its

obligations under the ICA and directing SWBT to pay it for all of the MegaPort Traffic as

originally invoiced.

       After holding a hearing, the OCC issued a written order rejecting CCCOK’s claim.

See OCC Order, at 6. The OCC found the terms of the ICA “clear and unambiguous.”

Id. at 5. Based on its interpretation of those terms, the OCC concluded “that the ICA

requires payment of reciprocal compensation” only for traffic that qualifies as

telecommunications traffic. Id. at 4. The OCC stated that “[t]o qualify for reciprocal

compensation under the ICA, [telecommunications] traffic must be originated by [an

SWBT] end user, must consist of information of the user’s choosing, and must be

terminated at the direction of the [SWBT] end user[] at the destination[] of the end user’s

choice.” Id. at 6. After conducting a thorough review of the record, the OCC concluded

that the MegaPort Traffic did not satisfy any of these requirements.

       The OCC noted that it could “find no evidence in the record . . . establish[ing] that

any [SWBT] end user actually made use of [the] MegaPort service, or originated any

call[s] on [CCCOK’s] network.” Id. at 3. It further noted that “[t]he undisputed evidence

show[ed] that the [MegaPort] [T]raffic was generated by equipment owned by

[ZipRamp], installed at the [SWBT] end user’s premises and programed to operate as an

auto-dialer.” Id. Additionally, it stated that there was no evidence in the record

demonstrating that the SWBT end users had authorized ZipRamp to place the auto-dialed

calls on their behalf. See id. at 3-4. Based on these findings, the OCC concluded that the

MegaPort Traffic “was not originated by [an SWBT] end user.” Id. at 3.

                                             10
       The OCC also found that the SWBT “end users had no control over the

termination of the traffic generated by [ZipRamp’s] equipment” and that the “end users

could not use [the] MegaPort service to dial numbers of their choosing or to reach other

points on the Public Switched Telephone Network.” Id. at 4. It therefore concluded that

the MegaPort Traffic was “neither terminated at the direction of [an SWBT] end user[]

nor at destinations of the end user’s choice.” Id. Finally, the OCC found that there was

“[n]o evidence . . . in the record that any ‘information of the user’s choosing’ was

transmitted on [ZipRamp’s] network.” Id.

       Because it concluded that the MegaPort Traffic did not satisfy any of these

requirements, the OCC stated: “Having completed a thorough review of the record, [we]

find[] that [the] MegaPort [T]raffic does not qualify for reciprocal compensation under

the clear and unambiguous provisions of the ICA.” Id. at 5.

       After ruling that the MegaPort Traffic did “not qualify for reciprocal

compensation under the clear and unambiguous provisions of the ICA,” the OCC stated

in dicta:

              On the other hand, the interpretation of the ICA urged by
              [CCCOK] is unreasonable and contrary to the public interest,
              and would lead to unintended and absurd consequences. . . .
              The Commission cannot reasonably interpret the ICA to
              require compensation where—as here—the only economic
              purpose for the underlying service is the generation of
              reciprocal compensation. Neither can the Commission
              interpret the ICA to require compensation for a business
              practice by which the legitimate and trusting nature of
              schools, churches, and not-for-profit organizations were
              exploited . . . . Such an interpretation would be contrary to
              the public interest.


                                             11
Id. at 5 (quotations omitted).

       2. The District Court Challenge

       CCCOK challenged the OCC’s decision in the United States District Court for the

Western District of Oklahoma. See CCCOK, Inc. v. Sw. Bell Tel., L.P., No. 5:07-cv-

00629-M, 2010 U.S. Dist. LEXIS 135155 (W.D. Okla. Dec. 21, 2010). CCCOK argued

that the OCC’s decision was arbitrary and capricious for three reasons. First, it

contended that the “OCC ignored substantial and undisputed record evidence proving that

the disputed traffic was compensable under the . . . ICA.” Id. at *6. Second, it claimed

that the OCC “failed to acknowledge, much less follow, the unambiguous terms of the

. . . ICA.” Id. Finally, it asserted that the OCC’s ruling “ignored the decision of the 10th

Circuit Court of Appeals in Southwestern Bell Telephone Co. v. Brooks Fiber

Communications of Oklahoma, Inc., 235 F.3d 493 (10th Cir. 2000).” 4 Id. at *11. The

district court rejected these arguments and affirmed the OCC’s ruling, concluding that

“the actions of the OCC [were] properly supported by the evidence presented.” Id. at *9.

CCCOK then filed the instant appeal.

                                      II. DISCUSSION

       On appeal, CCCOK contends that the OCC’s ruling was arbitrary and capricious

for three reasons. First, it argues that the OCC’s decision contradicts the terms of the

ICA. Second, it argues that the OCC’s ruling ignores and contradicts substantial and

undisputed record evidence. Finally, it asserts that the OCC’s statements concerning the


       4
           CCCOK has not reasserted this argument on appeal.

                                             12
interpretation of the ICA advanced by CCCOK violated its rights under state and federal

law.5

        We review the OCC’s application of state law principles to interpret and apply the

Parties’ ICA under an arbitrary and capricious standard of review. See Brooks, 235 F.3d

at 498. Agency action is arbitrary and capricious if the agency “has relied on factors

which Congress has not intended it to consider, entirely failed to consider an important

aspect of the problem, offered an explanation for its decision that runs counter to the

evidence before the agency,” or if the agency action “is so implausible that it could not be

ascribed to a difference in view or the product of agency expertise.” Copar Pumice Co.

v. Tidwell, 603 F.3d 780, 793 (10th Cir. 2010) (quoting Motor Vehicle Mfrs. Ass’n of the

U.S. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)). An agency’s

interpretation of a contract is arbitrary and capricious if the interpretation is unreasonable.

See Weight Loss Healthcare Ctrs. of Am., Inc. v. OPM, 2011 U.S. App. LEXIS 17529, ---

F.3d --- (10th Cir. 2011); Brooks, 235 F.3d at 499 (“We believe the OCC reasonably

interpreted the Agreement . . . we [therefore] find that the OCC’s interpretation . . . was

neither arbitrary nor capricious.”). In reviewing agency actions under the “arbitrary or

capricious standard,” the court’s duty “is to ascertain whether the agency examined the

relevant data and articulated a rational connection between the facts found and the

        5
         In its reply brief, CCCOK also argues that the OCC’s decision was arbitrary and
capricious because it relied on factors that Congress did not intend it to consider. We
have consistently stated that we will not consider arguments raised for the first time in a
reply brief. See, e.g., United States v. Harrell, 642 F.3d 907, 918 (10th Cir. 2011)
(“[A]rguments raised for the first time in a reply brief are generally deemed waived.”).
We therefore decline to address CCCOK’s argument that the OCC relied on factors that
Congress did not intend it to consider.
                                              13
decision made.” McKeen v. U.S. Forest Serv., 615 F.3d 1244, 1253 (10th Cir. 2010)

(quotations omitted).

         A. The OCC’s Interpretation of the ICA

         We first consider whether the OCC’s interpretation of the ICA was arbitrary and

capricious. “The Agreement itself and state law principles govern[ed] the [OCC’s] . . .

interpretation of the [ICA].” Brooks, 235 F.3d at 499. Under the arbitrary and capricious

standard of review, we will affirm the OCC’s interpretation as long as it is reasonable.

Id.

         Under Oklahoma law, “[a] contract must be . . . interpreted as to give effect to the

mutual intention of the parties, as it existed at the time of contracting, so far as the same

is ascertainable and lawful.” Okla. Stat. tit. 15, § 152. “When a contract is reduced to

writing, the intention of the parties is to be ascertained from the writing alone, if

possible.” Id. § 155. “The whole of a contract is to be taken together, so as to give effect

to every part, if reasonably practicable, each clause helping to interpret the others.” Id.

§ 157.

         In relevant part, Section III of the ICA states:

                For purposes of compensation under this Agreement, the
                telecommunications traffic traded between the Parties shall be
                classified as either Local traffic, Through-put traffic,
                IntraLata Interexchange traffic, or InterLATA Interexchange.
                ...

                        Calls originated by one Party’s end users and
                terminated to the other Party’s end users shall be classified as
                local traffic under this Agreement if the call originates and
                terminates in the same SWBT exchange area. . . . Calls not
                classified as local under this Agreement shall be treated as

                                                14
              interexchange for intercompany compensation purposes.

ROA, at 469 (emphases added).

       The OCC found this language to be “clear and unambiguous.” Based on the text

of Section III, the OCC concluded “that the ICA requires payment of reciprocal

compensation” only for telecommunications traffic. See OCC Order, at 4 (“The

Commission . . . finds that the ICA requires payment of reciprocal compensation on

traffic described in terms of ‘telecommunications.’”).

       CCCOK argues that the OCC’s conclusion that the ICA requires reciprocal

compensation only for telecommunications traffic contradicts the terms of the ICA.

CCCOK contends that all “calls,” even those that do not qualify as telecommunications

traffic, are compensable under the ICA. To reach this conclusion, CCCOK relies on the

last sentence of Section III, which states that “[c]alls not classified as local under this

Agreement shall be treated as interexchange for intercompany compensation purposes.”

(emphasis added). Based on this provision, CCCOK claims that all “calls” are

compensable under the ICA. It asserts: “Even if . . . the disputed calls were not . . .

‘telecommunications,’ the record is undisputed that they are calls . . . they were

[therefore] compensable . . . as interexchange [traffic].”6 Aplt. Opening Br., at 17.


       6
         We note that CCCOK’s argument that even “calls” that do not qualify as
“telecommunications” are compensable under the ICA appears to contradict other
portions of its opening and reply briefs. For instance, on pages two and three of its reply
brief, CCCOK states: “According to the plain and unambiguous language of the parties’
[ICA], ‘calls’ refer to compensable ‘telecommunications traffic traded between the
Parties.’” Similarly, on page 12 of its opening brief, CCCOK states that the Parties
“expressly agreed that all ‘telecommunications traffic between the parties’ would be
compensated pursuant to Article III of the [ICA].”
                                              15
       The OCC did not read the ICA this way. Our task is not to decide whether

CCCOK or the OCC has the best or most plausible interpretation of the ICA. Instead, our

job is to decide whether the OCC’s interpretation of the ICA was reasonable, and we

conclude that it was.

       We recognize that the final sentence of Section III uses the term “calls” instead of

the term “telecommunications traffic.” But we believe it was reasonable for the OCC to

interpret the ICA as requiring reciprocal compensation only for “calls” that qualify as

telecommunications traffic.

       The first sentence of Section III lists four categories of “telecommunications

traffic” that qualify for compensation under the ICA: (1) Local Traffic, (2) Through-put

traffic, (3) IntraLata Interexchange traffic, and (4) InterLATA Interexchange. The final

sentence of Section III states that “Calls not classified as local under this Agreement shall

be treated as interexchange for intercompany compensation purposes.” When read in

conjunction, it is reasonable to understand the term “interexchange” in the final sentence

of Section III as referring to the “Interexchange” categories in the first sentence. It is also

reasonable to conclude that the term “interexchange” in the final sentence included the

categories of telecommunications traffic listed in the first sentence of Section III. Based

on its reading of the ICA, the OCC concluded that the ICA required reciprocal

compensation only for telecommunications traffic; calls that do not qualify as

telecommunications traffic were not compensable.

       We believe the OCC’s interpretation of the ICA was reasonable. We therefore

hold that the OCC’s interpretation was neither arbitrary nor capricious.

                                              16
       B. The OCC’s Review of the Evidence and Enforcement of the ICA’s Terms

       We next consider whether the OCC’s ruling ignores or contradicts record

evidence. The OCC determined that to qualify for reciprocal compensation under the

“clear and unambiguous” terms of the ICA, telecommunications traffic must: (1) be

originated by an SWBT end user, (2) consist of information of an SWBT end user’s

choosing, and (3) be terminated at the direction of the end user at the destination of the

end user’s choosing. After reviewing the record evidence, the OCC concluded that the

MegaPort traffic did not satisfy these requirements.

       Other than its argument that all “calls” qualify for reciprocal compensation under

the ICA—which we rejected above—CCCOK does not challenge the three-part test

articulated by the OCC. For instance, CCCOK expressly acknowledges that to qualify

for compensation under the ICA a “call[] must originate by a party’s end user and

terminate to the other party’s end user.” Aplt. Opening Br., at 28.

       CCCOK argues, however, that “[c]ontrary to the OCC’s findings, the MegaPort

Traffic meets each of the[] requirements” in this three-part test. Id. at 14. Specifically, it

contends that the record clearly establishes that: (1) the SWBT end users initiated the

MegaPort Traffic, (2) the MegaPort Traffic was terminated at the direction of SWBT end

users at the destinations of the end users’ choosing, and (3) the MegaPort Traffic

consisted of information of the SWBT end users’ choosing.

       For the reasons explained below, we conclude that the OCC’s ruling that the

SWBT end users did not originate the MegaPort Traffic was not arbitrary and capricious.

Because we affirm the OCC’s ruling that the MegaPort Traffic did not satisfy the first

                                              17
element of the three-part test for determining whether telecommunications traffic

qualifies for reciprocal compensation under the ICA, we need not and do not address the

OCC’s rulings that the MegaPort Traffic also failed to satisfy the second and third

elements.

       1. The OCC’s Conclusion That The SWBT End Users Did Not Originate The
          MegaPort Traffic Was Not Arbitrary or Capricious

       The OCC determined that to qualify for reciprocal compensation under the ICA,

telecommunications traffic must be originated by an SWBT end user. CCCOK does not

dispute this determination. See Aplt. Opening Br., at 28.

       The OCC concluded that the MegaPort Traffic did not satisfy this requirement. It

reached this conclusion based on several factual findings. First, it found that there was

“no evidence in the record to establish that any [SWBT] end user actually made use of

the MegaPort service or originated any call on [SWBT’s] network.” OCC Order, at 3.

Second, it found that there was no evidence that “any of the [auto-dialed] calls were

related to any actual usage from [SWBT] end users.” Id. Third, it found that “[t]he

undisputed evidence show[ed] that the [MegaPort] [T]raffic was generated by equipment

owned by [ZipRamp], installed at the [SWBT] end user’s premises and programmed to

operate as an auto-dialer.” Id. at 4. Finally, it found that there was no “language in any

of the documents that [the SWBT] end users signed that authorize[d] [CCCOK] or its

affiliate ZipRamp to make calls on behalf of any of those end users.” Id. Based on these

findings, the OCC stated that the “MegaPort [T]raffic was not originated by [an SWBT]

end user.” Id. at 3.


                                            18
       CCCOK argues that the OCC’s ruling that the SWBT end users did not originate

the MegaPort Traffic ignores and contradicts undisputed record evidence. CCCOK does

not dispute that the MegaPort Traffic was generated by the auto-dialed calls placed by the

Lucent routers. But it contends that the terms of the ZipRamp Service Contract and

Letters of Agency “clearly disclose that the SWBT [end users] agreed to allow ZipRamp

to provide him or her with [the] MegaPort Service using the Lucent [routers] and

SWBT’s SuperTrunk service.” Aplt. Opening Br., at 22. It claims that “the SWBT [end

users] essentially authorized ZipRamp to use the Lucent [routers] and SuperTrunk service

on his or her behalf” and that the SWBT end users thereby “authorized the origination of

the MegaPort traffic.” Id. at 22, 24.

       As noted above, in relevant part, the ZipRamp Service Contract states:

              1. Introduction: During the term (as defined below) of this
                 Agreement, ZIPRAMP will provide Customer with
                 MegaPort Service. Megaport Service is Broadband
                 Internet Access Service that includes an allocation of ____
                 IP Addresses for the customer’s sole and exclusive use,
                 utilizing the equipment and facilities described . . . below.
                 ...

              2. Equipment and Facilities:          In order to facilitate
                 MegaPort Service, ZIPRAMP will install a Lucent Max
                 4000 Router, or a comparable piece of equipment, on the
                 customer premises, to which the customer’s existing
                 computer network will be connected. ZIPRAMP will, as
                 agent for the customer as authorized by the attached Letter
                 of Agency, order and install two (2) SuperTrunks from
                 Southwestern Bell Telephone.

ROA, at 541-42.

The Letters of Agency referenced in the ZipRamp Service Contract state:


                                            19
              I hereby authorize ZipRamp, Inc. (ZipRamp), to act as my
              agent in provisioning and order two (2) SuperTrunks from
              Southwestern Bell Telephone as described in Southwestern
              Bell Telephone’s Integrated Services Tariff, Part 4, Subpart
              4.7. In addition, I further authorize ZipRamp to block
              optional services not limited to the following: Third Party
              Billing and Collect Calling, Long Distance and International
              Long Distance, All 900 Services, Three Way Calling, Call
              Return, Call Blocker, Auto Redial, Calling Card Services,
              PIC and LPIC. I also agree that I will not contract with
              Southwestern Bell Telephone to add any additional
              equipment or services to the circuits that are the subject of
              this agreement. I further authorize ZipRamp to handle the
              necessary arrangements, including billing and responding to
              any inquiries by Southwestern Bell Telephone.

ROA at 548.

       We see nothing in the Service Contract or Letters of Agency that contradicts the

OCC’s finding that the SWBT end users/ZipRamp customers did not authorize ZipRamp

to place the auto-dialed calls on their behalf. Nothing in the text of the Service Contract

or Letters of Agency informed the ZipRamp customers that numerous concurrent auto-

dialed telephone calls would be placed by the Lucent routers to ZipRamp 24 hours a day,

seven days a week regardless of the customers’ internet usage. Furthermore, there is no

evidence in the record indicating that the ZipRamp customers knew or understood that

ZipRamp had disabled the Lucent routers’ dynamic bandwidth allocation feature to

ensure that the routers would generate as many calls as possible even if the customers’

computers were turned off. Additionally, there is no evidence in the record

demonstrating that the ZipRamp customers ever used the MegaPort service or that they

were aware of the auto-dialed telephone calls.



                                             20
       Based on the limited record evidence and the terms of the Service Contract and

Letters of Agency, we conclude that the OCC’s ruling that the SWBT end users did not

originate the MegaPort Traffic did not “run[] counter to the evidence before [it]” and was

not “so implausible that it could not be ascribed to a difference in view or the product of

agency expertise.” Tidwell, 603 F.3d at 793 (quotations omitted). We therefore hold that

the OCC’s ruling was not arbitrary or capricious.

       Because we conclude that the MegaPort Traffic did not satisfy the first element of

the three-part test for determining whether telecommunications traffic qualifies for

reciprocal compensation under the ICA, we need not address the OCC’s rulings that the

MegaPort Traffic also failed to satisfy the second and third elements of that test.

       C. The OCC’s Statements Regarding CCCOK’s Interpretation of the ICA

       Finally, we consider whether the OCC’s statements regarding CCCOK’s proposed

interpretation of the ICA violated CCCOK’s rights under state or federal law. We hold

that they did not.

       In its written order, the OCC noted that it found the pertinent sections of the ICA

to be “clear and unambiguous.” OCC Order, at 5. It then stated that it had conducted a

thorough “review of the record” and concluded that the “MegaPort [T]raffic [did] not

qualify for reciprocal compensation under the clear and unambiguous provisions of the

ICA.” Id. After stating this conclusion, the OCC stated in dicta:

              On the other hand, the interpretation of the ICA urged by
              [CCCOK] is unreasonable and contrary to the public interest,
              and would lead to unintended and absurd consequences. . . .
              The Commission cannot reasonably interpret the ICA to
              require compensation where—as here—the only economic

                                             21
                 purpose for the underlying service is the generation of
                 reciprocal compensation. Neither can the Commission
                 interpret the ICA to require compensation for a business
                 practice by which the legitimate and trusting nature of
                 schools, churches, and not-for-profit organizations were
                 exploited. Such an interpretation would be contrary to the
                 public interest.

Id. at 5 (emphasis added and quotations omitted).

       CCCOK contends that the OCC’s statement violated its rights under state and

federal law. CCCOK argues that “[t]he OCC may not void [an] [ICA] without

demonstrating that it violates a specific and clearly enunciated public policy.” Aplt.

Opening Br., at 29-30. It claims that “[t]he OCC failed to identify such a public policy”

and that its “‘public interest’ findings are [therefore] contrary to CCCOK’s rights under

federal and state law.” Id. at 29-30.

       CCCOK’s argument lacks merit. CCCOK contends that the OCC violated its

rights under state and federal law by “voiding” the ICA “without demonstrating that it

violate[d] a specific and clearly enunciated public policy.” Id. But the OCC did not

“void” the ICA, it enforced it. Indeed, throughout its Order, the OCC noted several times

that it “base[d] its [ruling] on the clear and unambiguous language of the ICA.” OCC

Order, at 4-5.

       Even if state or federal law prohibited the OCC from “voiding” an ICA without

demonstrating that it violated a specific and clearly enunciated public policy, the OCC

could not have violated such a law because it did not “void” the ICA. We therefore reject

CCCOK’s argument that the OCC’s statements concerning CCCOK’s interpretation of

the ICA violated its rights under state or federal law.

                                             22
                                    III. CONCLUSION

      For the reasons discussed above, we hold that the OCC’s interpretation of the ICA

was reasonable and was not arbitrary or capricious. We further hold that the OCC’s

ruling that the MegaPort Traffic does not qualify for reciprocal compensation under the

ICA because it was not originated by an SWBT end user does not contradict record

evidence and was not arbitrary or capricious. Finally, we hold that the OCC’s statements

regarding CCCOK’s proposed interpretation of the ICA did not violate CCCOK’s rights

under state or federal law. Based on these conclusions, we AFFIRM the district court’s

decision that the OCC’s ruling was not arbitrary or capricious.

                                         ENTERED FOR THE COURT



                                         Scott M. Matheson, Jr.
                                         Circuit Judge




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