PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

GTE SOUTH, INCORPORATED,
Plaintiff-Appellant,

and

UNITED STATES OF AMERICA,
Intervenor-Plaintiff,

v.

THEODORE V. MORRISON, JR.;
HULLIHEN W. MOORE; I. CLINTON
MILLER, in their official capacities
as Commissioners of the Virginia
State Corporation Commission; COX
                                                     No. 98-1887
FIBERNET COMMERCIAL SERVICES,
INCORPORATED; AT&T
COMMUNICATIONS OF VIRGINIA,
INCORPORATED; MCI
TELECOMMUNICATIONS CORPORATION;
MCIMETRO ACCESS TRANSMISSION
SERVICES OF VIRGINIA, INCORPORATED,
Defendants-Appellees,

and

ATTORNEY GENERAL OF THE
COMMONWEALTH OF VIRGINIA,
Intervenor-Defendant.

Appeal from the United States District Court
for the Eastern District of Virginia, at Richmond.
James R. Spencer, District Judge.
(CA-97-493)

Argued: June 8, 1999

Decided: December 15, 1999
Before MICHAEL, Circuit Judge; Malcolm J. HOWARD, United
States District Judge for the Eastern District of North Carolina,
sitting by designation; and Jerome B. FRIEDMAN, United States
District Judge for the Eastern District of Virginia, sitting by
designation.

_________________________________________________________________

Affirmed by published opinion. Judge Michael wrote the opinion, in
which Judge Howard and Judge Friedman joined.

_________________________________________________________________

COUNSEL

ARGUED: Steven Gill Bradbury, KIRKLAND & ELLIS, Washing-
ton, D.C., for Appellant. Donald Beaton Verrilli, Jr., JENNER &
BLOCK, Washington, D.C.; Robert A. Dybing, SHUFORD, RUBIN
& GIBNEY, Richmond, Virginia, for Appellees. ON BRIEF: Paul T.
Cappuccio, Brett M. Kavanaugh, Patrick F. Philbin, Theodore W. Ull-
yot, KIRKLAND & ELLIS, Washington, D.C.; William P. Barr,
Ward W. Wueste, Jr., M. Edward Whelan, III, GTE SERVICE COR-
PORATION, Washington, D.C.; Richard D. Gary, Edward J. Fuhr,
Paul E. Mirengoff, Robert R. Merhige, IV, Richard B. Harper, HUN-
TON & WILLIAMS, Richmond, Virginia, for Appellant. Maureen F.
Del Duca, Jodie L. Kelley, JENNER & BLOCK, Washington, D.C.;
Thomas F. O'Neil, III, William Single, IV, Matthew B. Pachman,
MCI WORLDCOM, INC., Washington, D.C.; John A. Gibney, Jr.,
SHUFORD, RUBIN & GIBNEY, Richmond, Virginia; James C.
Dimitri, William H. Chambliss, STATE CORPORATION COMMIS-
SION, Richmond, Virginia; Michael W. Smith, E. Ford Stephens,
CHRISTIAN & BARTON, L.L.P., Richmond, Virginia; John J.
Langhauser, Wilma R. McCarey, AT&T COMMUNICATIONS OF
VIRGINIA, INC., Oakton, Virginia; James C. Roberts, George A.
Somerville, Dabney J. Carr, IV, MAYS & VALENTINE, L.L.P.,
Richmond, Virginia; David Carpenter, David Lawson, SIDLEY &
AUSTIN, Washington, D.C., for Appellees. Stephen W. Preston, Act-
ing Assistant Attorney General, Helen F. Fahey, United States Attor-
ney, Mark B. Stern, Susan L. Pacholski, Appellate Staff, Civil
Division, UNITED STATES DEPARTMENT OF JUSTICE, Wash-

                   2
ington, D.C.; Christopher J. Wright, General Counsel, John E. Ingle,
Deputy Associate General Counsel, Stewart A. Block, Brian M. Hoff-
stadt, FEDERAL COMMUNICATIONS COMMISSION, Washing-
ton, D.C., for Amicus Curiae.

_________________________________________________________________

OPINION

MICHAEL, Circuit Judge:

The Telecommunications Act of 1996, Pub. L. 104-104, 110 Stat.
56, codified at 47 U.S.C. § 251 et seq. (sometimes, the Act), requires
local telephone companies, heretofore monopolies, to make their
facilities and services available to would-be competitors at negotiated
prices or, if negotiations fail, at prices to be set in arbitration proceed-
ings before state utility commissions. The Act gives federal district
courts jurisdiction to review state commission determinations. Here,
the Virginia State Corporation Commission (the SCC) determined
prices in arbitration proceedings brought by new entrants into Virgin-
ia's local telephone markets, Cox Fibernet Commercial Services, Inc.
(Cox), MCI Telecommunications Corporation and MCImetro Access
Transmission Services of Virginia, Inc. (collectively, MCI), and
AT&T Communications of Virginia, Inc. (AT&T), against the incum-
bent company, GTE South Incorporated (GTE). After the SCC arbi-
tration GTE sued Cox, AT&T, MCI, and the SCC commissioners in
district court alleging that the SCC's pricing decisions failed to meet
the requirements of the Act. The district court granted summary judg-
ment for the defendants (the new entrants and the commissioners),
thus upholding the SCC's arbitration decisions. GTE appeals, and we
affirm.

I.

The breakup of AT&T in the early 1980s brought competition to
the long distance telephone market. The local market, however, has
been a different story. Until the passage of the 1996 Act, state utility
commissions continued to regulate local telephone service as a natural
monopoly. Commissions typically granted a single company, called
a local exchange carrier (LEC), an exclusive franchise to provide tele-

                     3
phone service in a designated area. Under this protection the LEC
built a local network -- made up of elements such as loops (wires),
switches, and transmission facilities -- that connects telephones in the
local calling area to each other and to long distance carriers.

The 1996 Act brought sweeping changes. It ended the monopolies
that incumbent LECs held over local telephone service by preempting
state laws that had protected the LECs from competition. See 47
U.S.C. § 253. Congress recognized, however, that removing the legal
barriers to entry would not be enough, given current technology, to
make local telephone markets competitive. In other words, it is eco-
nomically impractical to duplicate the incumbent LEC's local net-
work infrastructure. To get around this problem, the Act allows
potential competitors, called competing local exchange carriers
(CLECs), to enter the local telephone market by using the incumbent
LEC's network or services in three ways. First, a CLEC may build its
own network and "interconnect" with the network of an incumbent.
See id. § 251(c)(2). Second, a CLEC may lease elements (loops,
switches, etc.) of an incumbent LEC's network "on an unbundled
basis." See id. § 251(c)(3). Third, a CLEC may buy an incumbent
LEC's retail services "at wholesale rates" and then resell those ser-
vices to customers under its (the CLEC's) brand. See id. § 251(c)(4).

The Act details procedures for allowing a CLEC access to the
incumbent LEC's facilities and services. The CLEC first makes a
request to the incumbent for interconnection or for access to its net-
work or services. Thereafter, both parties must negotiate in good faith
in an effort to reach agreement on terms and conditions (including
price) of access. See id. §§ 251(c)(1), 252(a)(1). If negotiations fail --
it is hard to see how they would not -- either party may petition the
state utility commission to arbitrate open issues.See id. § 252(b).1 The
terms imposed by the state commission in arbitration must "meet the
requirements of section 251 . . . including the regulations prescribed
by the [FCC] pursuant to section 251." Id. § 252(c)(1). The Act
includes general standards for a state commission to use in arbitrating
open price (or rate) issues. See id. §§ 251(c), 252(d). Finally, the Act
authorizes any party aggrieved by the arbitration decision of a state
_________________________________________________________________
1 If the state commission elects not to assume its role as arbitrator, the
Act shifts this responsibility to the FCC. See 47 U.S.C. § 252(e)(5).

                    4
commission to bring an action in federal district court to determine
whether the arbitration decision "meets the requirements of" §§ 251
and 252. See id. § 252(e)(6).

We digress for a moment to discuss the issuance and status of the
FCC rules. The Act directed the FCC to "establish regulations to
implement the requirements" of § 251, that is, the requirements to
advance local competition. Id. § 251(d)(1). On August 8, 1996, the
FCC issued an order and rules implementing the local competition
provisions of the Act. See In the Matter of Implementation of the
Local Competition Provisions in the Telecommunications Act of
1996, First Report and Order, 11 F.C.C.R. 15499 (1996) (First Report
and Order). Included were rules to be used by state commissions in
determining the price new entrants would be charged for interconnec-
tion, access to unbundled network elements, and retail services
bought for resale.

A number of interested parties, mainly incumbent LECs and state
utility commissions, filed petitions for review in several circuits chal-
lenging the FCC's rules, especially those relating to pricing. The peti-
tions were consolidated and assigned to the Eighth Circuit by the
panel on multidistrict litigation. See 28 U.S.C. § 2112(a). On Septem-
ber 27, 1996, three days before the FCC's rules were scheduled to go
into effect, the Eighth Circuit entered a temporary stay of the rules,
see Iowa Utils. Bd. v. FCC, 96 F.3d 1116, 1118 (8th Cir. 1996), and
later entered a stay of the pricing rules pending final decision, see
Iowa Utils. Bd. v. FCC, 109 F.3d 418, 427 (8th Cir. 1996). Ulti-
mately, in July 1997 the Eighth Circuit vacated the pricing rules,
holding that the FCC lacked jurisdiction to promulgate them. See
Iowa Utils. Bd. v. FCC, 120 F.3d 753, 800 (8th Cir. 1997), aff'd in
part, rev'd in part sub nom. AT&T Corp. v. Iowa Utils. Bd., 525 U.S.
366, 119 S. Ct. 721 (1999). The Eighth Circuit said that §§ 252(c)(2)
and (d) of the Act give state utility commissions exclusive authority
to make pricing decisions under §§ 251 and 252, thereby depriving
the FCC of any rulemaking power in that area. See Iowa Utils. Bd.,
120 F.3d at 793-800. The Supreme Court disagreed. On January 25,
1999, the Court held that the FCC had jurisdiction to issue rules
implementing the pricing provisions of the Act. See AT&T Corp. v.
Iowa Utils. Bd., 525 U.S. at ___, 119 S. Ct. at 733 ("[T]he Commis-
sion has jurisdiction to design a pricing methodology"). In other

                     5
words, the FCC is empowered to issue "rules to guide the state-
commission judgments." Id. Although the Court validated FCC rule-
making, the case was remanded for the Eighth Circuit to consider sub-
stantive challenges to the rules. See id. at ___, 119 S. Ct. at 738.
Nevertheless, the pricing rules took effect when the Supreme Court
reversed the Eighth Circuit's judgment of vacatur.

We now turn to this case. After the passage of the 1996 Act, sev-
eral CLECs, including Cox, MCI, and AT&T, sought to enter the
local telephone market in Virginia. Accordingly, the CLECs made
separate requests to GTE for interconnection to GTE's network,
access to GTE's network elements, and wholesale rates for GTE's
retail services. After negotiations failed, each of the CLECs filed a
§ 252(b)(1) petition with the SCC asking it to arbitrate the unresolved
issues in the negotiations with GTE. On October 16, 1996, the SCC
consolidated the arbitration cases. By the time the SCC heard the mat-
ter, the Eighth Circuit had issued its stay of the FCC's pricing rules.
Thus, the SCC relied mainly on the Act in making pricing determina-
tions in the arbitration.

The standards from the Act that guided the SCC on the open pric-
ing issues are as follows. Prices (or rates) for interconnection and
unbundled network elements must be "just, reasonable, and nondis-
criminatory." 47 U.S.C. §§ 251(c)(2)(D), 251(c)(3). Specifically,
these prices must be "based on the cost (determined without reference
to a rate-of-return or other rate-based proceeding) of providing the
interconnection or network element," and they"may include a reason-
able profit." Id. § 252(d)(1). The wholesale rates that an incumbent
LEC may charge a CLEC for retail services must be determined "on
the basis of retail rates charged to subscribers for the telecommunica-
tions service requested, excluding the portion thereof attributable to
any marketing, billing, collection, and other costs that will be avoided
by the local exchange carrier." Id. § 252(d)(3).

In the SCC proceeding the parties disagreed fundamentally about
the methodology that should be used in making price determinations
under the Act. For network element pricing, the CLECs proposed the
Hatfield model, a forward-looking methodology for determining
costs. It is a Total Element Long Run Incremental Cost (TELRIC)
model. The Hatfield model starts from scratch and simulates a new

                    6
telephone network for the relevant local service area. The model cal-
culates (on a forward-looking basis) the direct and indirect costs of
building and operating the elements of this simulated network, basi-
cally using the most economical and efficient configuration and tech-
nology available today.

For network element pricing, GTE proposed a much different
model, the Market Determined-Efficient Component Pricing Rule (M-
ECPR). M-ECPR is at bottom a methodology that allows recovery of
historical costs. Although the M-ECPR model calls for estimating the
costs of providing each network element on a forward-looking basis,
the calculation does not end there. It adds components that allow the
incumbent LEC to recover all of the actual costs it has incurred in
constructing its network, including its historical costs reflected on its
books.

At the SCC arbitration the parties also proposed different methods
for determining wholesale prices for services to be resold. The dispute
centered on how to calculate the costs that "will be avoided," 47
U.S.C. § 252(d)(3), by an incumbent LEC when it provides retail ser-
vices to a CLEC. The CLECs argued that the wholesale prices should
be determined by assuming (for purposes of the calculation) that the
incumbent LEC would leave the retail market altogether; thus, all
marketing, billing, collection, and like costs would be deducted from
the incumbent's retail price. GTE pointed out that it will not be leav-
ing the retail market (its customer base will just be smaller), and it
argued for the subtraction of only those costs that will be reduced by
its loss of retail sales.

On December 11, 1996, the SCC issued an order that in large mea-
sure adopted the CLECs' proposals for pricing standards. The SCC
generally approved the use of the Hatfield model for network element
pricing in the interim before permanent ratemaking, but it adopted
two modifications suggested by the SCC staff. First, the input "fill
factor" (the percentage of distribution plant that is actually in use) was
decreased in response to concerns expressed by GTE. Second, the
input for cost of capital was increased to 10.55 percent. On wholesale
pricing, the SCC interpreted costs that "will be avoided" to mean
"those costs that would be reasonably avoidable by a local exchange
company furnishing only wholesale service." These arbitration deci-

                     7
sions were incorporated into "interconnection agreements" between
GTE and the individual CLECs. The interconnection agreements were
approved by the SCC in May 1997.

On June 30, 1997, GTE filed a complaint in federal court in the
Eastern District of Virginia against the three CLECs (Cox, AT&T,
and MCI) and the SCC commissioners, alleging (among other things)
that the SCC violated the Act (1) by employing a forward-looking
cost methodology to determine prices for network elements, (2) by
adopting a pricing methodology that denied GTE its historic costs,
and (3) by calculating wholesale prices on the assumption that GTE
will get out of retailing entirely. Both sides cross-moved for summary
judgment, and the district court granted summary judgment to the
CLECs and the SCC commissioners, holding that the SCC's pricing
methodologies met the requirements of the Act. See GTE South, Inc.
v. Morrison, 6 F. Supp. 2d 517 (E.D. Va. 1998). GTE appealed.

After the Supreme Court in Iowa Utilities Board confirmed FCC
rulemaking power with respect to the Act's pricing provisions, we
allowed the parties to re-brief this case. GTE, the appellant, raises the
following arguments in its revised brief: first, the FCC's rules cannot
be applied retroactively; second, if the rules apply, we cannot apply
them in the first instance and a remand to the SCC would be neces-
sary; third, we should exercise jurisdiction to invalidate the rules as
contrary to the Act, but if we decide that we lack jurisdiction to
review the rules, we should stay this appeal until the Eighth Circuit
decides the substantive challenges to the rules; fourth, if we reach the
merits and apply the rules, we should reverse the district court
because the SCC's pricing decisions do not comply with the rules. We
turn to these arguments.

II.

GTE contends that we may not use the FCC's pricing rules to eval-
uate the SCC's arbitration determinations because any application of
the rules to this case would give them an impermissible retroactive
effect. As we have mentioned, the Eighth Circuit stayed the pricing
rules on September 27, 1996, shortly before they were slated to take
effect on September 30, 1996. The CLECs in this case began arbitra-
tion proceedings before the SCC in October 1996; in those proceed-

                     8
ings, which concluded in May 1997 (while the stay was still in effect),
the SCC relied mainly on the Act, and not the FCC rules. The Eighth
Circuit's stay expired on July 18, 1997, when that court vacated the
pricing rules. See Iowa Utils. Bd., 120 F.3d at 820 ("Upon the filing
of this opinion and order, the provisions of our stay order are deemed
expired."). However, on January 25, 1999, the Supreme Court in Iowa
Utilities Board reversed the Eighth Circuit's judgment vacating these
rules, allowing them to take effect.2

While GTE concedes that Supreme Court decisions are usually
retroactive and apply to cases pending on direct review, it urges us to
except Iowa Utilities Board from the general rule. An exception is
warranted, GTE argues, because in Iowa Utilities Board the Court
breathed life into "substantive rules delineating new legal obligations
that were stayed before they ever went into effect .. . (and were then
vacated)." Appellant's Br. at 22. Any present application of the pric-
ing rules to the SCC's arbitration decisions would therefore be imper-
missibly retroactive, according to GTE.

Generally, "judicial construction of a statute is an authoritative
statement of what the statute meant before as well as after the deci-
sion of the case giving rise to that construction." Rivers v. Roadway
Express, Inc., 511 U.S. 298, 312-13 (1994). See also Harper v. Vir-
ginia Dep't of Taxation, 509 U.S. 86, 97 (1993) (holding that
Supreme Court's interpretation of a law is controlling and "must be
given full retroactive effect in all cases still open on direct review and
as to all events, regardless of whether such events predate or postdate
[the Court's] announcement of the rule"). Thus, the Supreme Court's
determination that the FCC has jurisdiction to issue pricing rules
would appear to compel the conclusion that the FCC always had such
jurisdiction and that the rules apply as of the effective date originally
scheduled. See, e.g., United States v. Gonzalez-Sandoval, 894 F.2d
1043, 1052-53 (9th Cir. 1990)(where underlying offense was commit-
ted during five months between Ninth Circuit's invalidation of Sen-
tencing Reform Act and Supreme Court's decision overruling Ninth
Circuit, criminal sentence had to conform to Sentencing Guidelines
_________________________________________________________________
2 In light of the history and substance of the orders and opinions of the
Eighth Circuit and the Supreme Court, we reject GTE's alternative argu-
ment that the pricing rules are not yet in effect.

                    9
despite law of circuit at time crime was committed). GTE argues that
this straightforward analysis is insufficient here only because the
Eighth Circuit stayed the effective date of the pricing rules while it
was deciding to vacate them. Because the stay was a valid, if errone-
ous, order, the FCC rules did not go into effect until the Supreme
Court reversed the Eighth Circuit. GTE's retroactivity argument thus
hinges on the point that the stay prevented the rules from taking effect
both before and during the SCC arbitration.

GTE's emphasis on effective dates, however, overlooks the central
concern of retroactivity analysis. A regulation"does not operate
`retrospectively' merely because it is applied in a case arising from
conduct antedating the [regulation's] enactment." Landgraf v. USI
Film Prods., 511 U.S. 244, 269 (1994). Rather, a"court must ask
whether the new provision attaches new legal consequences to events
completed before its enactment." Id. at 269-70. The law with true
retroactive effect is one that "takes away or impairs vested rights
acquired under existing laws, or creates a new obligation, imposes a
new duty, or attaches a new disability" to past transactions. Society
for Propagation of the Gospel v. Wheeler, 22 F. Cas. 756, 767 (No.
13,156)(CC NH 1814)(Story, J.). See also Landgraf, 511 U.S. at 269
n.23 (citing similar formulations).

When we consider GTE's argument in light of these principles, it
becomes clear that application of the FCC's pricing rules in this
appeal would have no genuine retroactive effect. First, GTE cannot
identify any vested right that it acquired during the Eighth Circuit's
stay. For example, that court's stay and invalidation of the FCC's
rules on jurisdictional grounds did not give GTE a vested right to his-
torical costs under its interpretation of the Act, an interpretation that
was vigorously contested by the CLECs and the SCC staff. Nor could
GTE reasonably rely on an interpretation of the Act that the FCC, as
we shall see, had already rejected in its (stayed) rules. Second, the
SCC made price determinations that will govern future business rela-
tions among GTE and its competitors in the local telephone market.
Thus, applying the FCC rules in these proceedings will not impose
new obligations or duties with respect to past transactions. See
Landgraf, 511 U.S. at 273 ("When the intervening statute authorizes
or affects the propriety of prospective relief, application of the new
provision is not retroactive.").

                     10
Finally, and perhaps most importantly, the core principle disfavor-
ing retroactive application of laws -- that "settled expectations should
not be lightly disrupted," Landgraf, 511 U.S. at 265 -- is inapplicable
here. GTE had ample notice of the First Report and Order (containing
the rules) because it was published prior to the SCC arbitration, and
GTE surely knew that the FCC's authority to issue pricing rules might
ultimately be upheld by the Supreme Court. See id. at 270 (observing
that "familiar considerations of fair notice, reasonable reliance, and
settled expectations" should guide retroactivity analysis); cf.
Gonzalez-Sandoval, 894 F.2d at 1053 (criminal defendant was on
notice that Supreme Court might vacate Ninth Circuit decision invali-
dating Sentencing Guidelines).

In sum, there are no retroactivity principles that prevent us from
applying the FCC's pricing rules in this appeal.

III.

GTE next invokes the Chenery doctrine to argue that we "cannot
affirm the SCC's decisions on the theory that they comply with the
FCC's rules for the simple reason that the SCC did not apply those
rules." Appellant's Br. at 47. If the rules are to be applied, GTE
argues, we must remand for the SCC to apply them in the first
instance. We disagree.

In SEC v. Chenery Corp., 318 U.S. 80 (1943), the SEC issued an
enforcement order that was based solely upon an inapplicable princi-
ple of equity. The question before the Supreme Court was whether the
order could be upheld on an alternative ground not relied upon by the
agency, that is, the facts would have allowed the SEC to rely on its
discretionary authority and "special administrative competence" to
issue the order. The Court refused to affirm the order, holding that "an
administrative order cannot be upheld unless the grounds upon which
the agency acted in exercising its powers were those upon which its
action can be sustained." Id. at 95. The Chenery Court qualified this
broad statement by explaining that "a judicial judgment cannot be
made to do service for an administrative judgment" when "an [admin-
istrative] order is valid only as a determination of policy or judgment
which the agency alone is authorized to make and which it has not
made." Id. at 88 (emphasis added). Thus, when an agency bases its

                    11
order on an unsupportable rationale, we cannot uphold the order on
an alternative ground that would require us to exercise any discretion-
ary judgment entrusted to the agency. See ICC v. Brotherhood of
Locomotive Eng'rs, 482 U.S. 270, 283 (1987). We may, however,
affirm an order on an alternative ground that is"within the power of
[an] appellate court to formulate." Chenery, 318 U.S. at 88. Specifi-
cally, if the administrative order reaches the correct result and can be
sustained as a matter of law, we may affirm on the legal ground even
though the agency relied on a different rationale. See Koyo Seiko Co.
v. United States, 95 F.3d 1094, 1101 (Fed. Cir. 1996).

These principles arising from Chenery must be applied in light of
the reviewing authority Congress assigned to federal courts under the
Telecommunications Act of 1996. We determine whether a state util-
ity commission's arbitration decision "meets the requirements" of
§§ 251 and 252 of the Act. See 47 U.S.C. § 252(e)(6). Congress did
not intend for the statutory language to be the only guide because it
authorized the FCC to issue rules "to implement the requirements" of
§ 251, the section relating to duties and terms of interconnection,
unbundled access, wholesaling, etc. See id.§ 251(d)(1). In the normal
course, state commissions will be applying the FCC rules in the first
instance. The SCC did not do that here because of the Eighth Circuit's
stay, and we must therefore decide whether we may rely on the rules
in this unusual circumstance. In addition to implicating Chenery, this
question also involves the standard of review we follow. As we indi-
cate in part V, infra, we review the SCC's interpretation of the Act
de novo, and we do not accord any deference to the SCC's interpreta-
tion of the Act. Nor would we accord any deference to the SCC's
interpretation of the FCC's rules, if the SCC had applied them.
Because the SCC's interpretation of the rules could not circumscribe
our power of review, we may rely on the rules to the extent they assist
us in making the legal determination whether the SCC's decision
meets the requirements of the Act.

IV.

GTE presses further to avoid application of the FCC's pricing rules
by arguing that their methodology is contrary to the Act. Subsumed
within this challenge to the rules is GTE's argument that the FCC's
construction of the Act would effect an unconstitutional taking. In the

                    12
event that we lack jurisdiction in this case to declare the rules invalid,
GTE argues that we should stay this appeal until the Eighth Circuit
issues its decision on their validity. Although we conclude that we
lack jurisdiction to review the rules, we decline to issue a stay for rea-
sons we discuss below.

This case was commenced in district court under§ 252(e)(6) of the
Telecommunications Act and is before us on appeal from the judg-
ment of the district court. Under the Hobbs Act courts of appeals have
"exclusive jurisdiction . . . to determine the validity of . . . all final
orders" (including those relating to rulemaking) of the FCC. 28
U.S.C. § 2342(1). See also 47 U.S.C.§ 402(a). That jurisdiction is
invoked by filing a petition for direct review of an agency order in a
court of appeals within sixty days of its issuance. See 28 U.S.C.
§§ 2342, 2344. GTE attempts to avoid the Hobbs Act's exclusive
review mechanism by invoking § 252(e)(6). Because that section
gives district courts (and us on appeal) the authority to determine
whether a state arbitration decision meets the requirements of the Act,
GTE argues that we must necessarily have the authority to determine
the validity of FCC rules if we apply them in evaluating an SCC deci-
sion. Thus, GTE argues that § 252(e)(6) implicitly grants to district
courts (and to us on appeal) the jurisdiction that the Hobbs Act explic-
itly reserves to courts of appeals on petitions for review. We disagree.
"Generally, when jurisdiction to review administrative determinations
is vested in the courts of appeals these specific, exclusive jurisdiction
provisions preempt district court jurisdiction over related issues under
other statutes." Palumbo v. Waste Tech. Indus., 989 F.2d 156, 160-61
(4th Cir. 1993)(quoting Connors v. Amax Coal Co. , 858 F.2d 1226,
1231 (7th Cir. 1988)). And a party cannot use an appeal from a dis-
trict court to circumvent the Hobbs Act's requirement that a challenge
to an FCC order is subject only to direct review in a court of appeals.
See, e.g., Missouri v. United States, 109 F.3d 440, 442 (8th Cir. 1997)
(applying judicial review provisions of Clean Air Act). There is a
good reason for this. The FCC is not a party to a§ 252(e)(6) action,
and surely Congress would not give a court the power to determine
the validity of an agency's rules when the agency itself is not a party.
See City of Peoria v. General Elec. Cablevision Corp., 690 F.2d 116,
119 (7th Cir. 1982)("[T]he proper party defendant in the judicial
review proceeding is the FCC, not a private company which . . . may
be indifferent to the validity of the rule."). Thus, the district court

                     13
could not hear a challenge to the rules, see US West Communications
v. MFS Intelenet, Inc., No. 98-35146, 1999 WL 799082, at *8 (9th
Cir. Oct. 8, 1999), and neither can we in this appeal, id., 1999 WL
799082, at *5.3

We are also precluded from reviewing the validity of the FCC's
pricing rules under the statute governing consolidation of agency
review proceedings, 28 U.S.C. § 2112(a). Various parties filed peti-
tions for review of the FCC's First Report and Order (issuing the pric-
ing rules) in several courts of appeals. Pursuant to§ 2112(a) the
multidistrict litigation panel consolidated the petitions and assigned
the matter by lottery to the Eighth Circuit. See 28 U.S.C.
§ 2112(a)(3). That circuit is now the sole forum for addressing chal-
lenges to the validity of the FCC's rules. See id. § 2112(a)(5). This
consolidation procedure for review of agency orders is in place "to
avoid confusion and duplication by the courts" and "to prevent
unseemly conflicts that could result should sister circuits take the ini-
tiative and issue conflicting decisions." Westinghouse Elec. Corp. v.
NRC, 598 F.2d 759, 766-67 (3d Cir. 1979)(internal quotation marks
omitted). GTE is one of the parties attacking the substance of the
rules in the Eighth Circuit proceeding. It cannot take a second bite at
the apple and also challenge the rules in this circuit.

Because we will not be addressing whether the FCC's pricing rules
are contrary to the Act, we proceed to GTE's suggestion that we hold
this appeal in abeyance until the Eighth Circuit has resolved that
question. We realize that should we apply the rules and decide this
_________________________________________________________________
3 GTE also relies on cases creating a limited exception to the Hobbs
Act's filing deadline: when a party did not seek direct review to chal-
lenge an agency's rule within sixty days of its issuance, and the agency
later applies the rule in an enforcement action against the party, the court
of appeals reviewing the enforcement order also has jurisdiction to hear
the party's substantive challenge to the rule. See, e.g., Commonwealth
Edison Co. v. NRC, 830 F.2d 610, 614 (7th Cir. 1987). This judicially
created exception simply waives the Hobbs Act's sixty-day filing dead-
line in a narrow circumstance. The exception is of no help to GTE
because it does not alter the exclusive jurisdiction of the courts of
appeals, which may be invoked only by the filing of a petition for
review. See, e.g., JEM Broad. Co. v. FCC , 22 F.3d 320, 324-25 (D.C.
Cir. 1994); Texas v. United States, 749 F.2d 1144, 1146 (5th Cir. 1985).

                     14
case now, the Eighth Circuit may later invalidate some or all of the
rules. We therefore consider whether making a decision today will
work any fundamental unfairness on GTE.

We turn first to the interconnection agreements between GTE and
the CLECs, which specifically provide for modification should the
governing law or regulations change.4 As counsel for one of the
CLECs conceded at oral argument, if the invalidation of a rule
requires a change in prior rates, the parties will"settle up," a regular
occurrence in public utility ratemaking. Thus, if the Eighth Circuit
invalidates any rule on which we rely, GTE can recover any resulting
shortfall in prices through the process of settling up. Moreover, our
refusal to stay this appeal will have no immediate effect on GTE's
obligations. Since the SCC approval of the interconnection agree-
ments, GTE has been required to lease its network elements and make
services available at the prices set by the SCC arbitration. Even if we
stayed this appeal, GTE would continue to make its network and ser-
vices available at those prices. Moreover, the prices under review here
are interim, not permanent prices, and the interconnection agreements
themselves expire on May 1, 2000. In these circumstances, issuing a
stay now would serve little purpose.

In addition, Congress intended that competition under the Tele-
communications Act take root "as quickly as possible." H.R. Rep. No.
104-204 at 89 (1995). Withholding our decision until the Eighth Cir-
cuit and (perhaps) the Supreme Court review the validity of the
FCC's rules could result in a considerable delay. Issuing this opinion
without delay is consistent with Congress's express policy to bring
about competition quickly in the local telephone markets.
_________________________________________________________________
4 For example, section AJ of the GTE-Cox agreement reads as follows:

          The terms and conditions of this Agreement shall be subject to
          any and all applicable laws, rules, regulations or guidelines that
          subsequently may be prescribed by any federal, state or local
          governmental authority. To the extent required by any such sub-
          sequently prescribed law, rule, regulation or guideline, the par-
          ties agree to modify, in writing, the affected term(s) and
          condition(s) of this Agreement to bring them into compliance
          with such law, rule, regulation or guideline.

                    15
Finally, we reject GTE's suggestion that our inability to review the
rules before we apply them violates due process. First, GTE has not
been denied judicial review on the validity of the rules, it has only
been denied review in this forum. Clearly, Congress"may prescribe
the procedures and conditions under which, and the courts in which,
judicial review of administrative orders may be had." City of Tacoma
v. Taxpayers of Tacoma, 357 U.S. 320, 336 (1958). Second, GTE is
now obtaining judicial review of the rules in the Eighth Circuit, the
forum selected according to Congress's prescription in 28 U.S.C.
§ 2112(a). Third, when Congress has provided an exclusive mecha-
nism for review of an agency rule, due process is not violated by
enforcing that rule in another forum that cannot consider its validity.
See Yakus v. United States, 321 U.S. 414, 432-34 (1944). Contrary to
GTE's assertions, that review need not take place before the rule is
enforced. "Where only property rights are involved, mere postpone-
ment of the judicial enquiry is not a denial of due process, if the
opportunity given for the ultimate judicial determination of the liabil-
ity is adequate." Bowles v. Willingham, 321 U.S. 503, 520
(1944)(quoting Phillips v. Commissioner, 283 U.S. 589, 596-97
(1931)). See also Yakus, 321 U.S. at 436; cf. Mathews v. Eldridge,
424 U.S. 319, 339-49 (1976)(upholding termination of Social Secur-
ity benefits prior to evidentiary hearing). Here, if we apply the rules
and the Eighth Circuit invalidates them, GTE can recover any under-
payment by settling up. If it cannot settle up through negotiations, it
can arbitrate before the SCC. If it is dissatisfied with the arbitration
result, it can sue in district court under § 252(e)(6) of the Act. In sum,
because GTE can obtain any relief to which it is entitled through the
combination of its properly filed petition for review in the Eighth Cir-
cuit and its remedies under the interconnection agreements and the
Act, our application of the FCC's pricing rules without considering
their validity would not violate due process. We will therefore apply
the rules.

V.

A.

We are almost ready to discuss the merits, but we must first con-
sider the applicable standards of review. We review de novo the dis-
trict court's grant of summary judgment. See United States v. Leak,

                     16
123 F.3d 787, 791 (4th Cir. 1997). As for the SCC's determinations,
§ 252(e)(6) of the Act provides for "judicial review of the [state]
Commission's actions," but it does not prescribe any standard for that
review. Moreover, because the SCC is not an "agency" as defined by
the Administrative Procedure Act, the standards provided by that act
are not directly applicable. See 5 U.S.C.§ 701(b)(1)(defining agency
as an "authority of the Government of the United States"). Absent a
statutory command, general standards for judicial review of agency
action apply. A "state agency's interpretation of federal statutes is not
entitled to the deference afforded a federal agency's interpretation of
its own statutes under Chevron." Orthopaedic Hosp. v. Belshe, 103
F.3d 1491, 1495-96 (9th Cir. 1997)(citation omitted). See also MCI
v. Bell Atlantic, 36 F. Supp. 2d 419, 422-23 (D.D.C. 1999); AT&T
Communications of South Central States, Inc. v. BellSouth Telecom-
munications, Inc., 20 F. Supp. 2d 1097, 1100-01 (E.D. Ky. 1998); US
West Communications, Inc. v. MFS Intelenet, No. C97-222WD, 1998
WL 350588, at *2 (W.D. Wa. Jan. 7, 1998). Thus, we review de novo
the SCC's interpretations of the Telecommunications Act. See James
Madison Ltd. v. Ludwig, 82 F.3d 1085, 1096 (D.C. Cir. 1996).

Turning to the standard for our review of SCC factfinding, we note
first that the Act does not require us to sit as a super public utilities
commission. "The appraisal of cost figures is itself a task for [agency
expertise], since these costs involve many estimates and assumptions
and, unlike a problem in calculus, cannot be proved right or wrong.
They are, indeed, only guides to judgment. Their weight and signifi-
cance require expert appraisal." New York v. United States, 331 U.S.
284, 328 (1947). Consequently, we review the factfindings of the
SCC under the substantial evidence standard. This standard, as we
have noted in similar contexts, "is consistent with our precedent con-
cerning federal judicial review of state-agency decisions." AT&T
Wireless PCS, Inc. v. Winston-Salem Zoning Bd. of Adjustment, 172
F.3d 307, 314 (4th Cir. 1999). See also Clark v. Alexander, 85 F.3d
146, 151-152 (4th Cir. 1996)(reviewing factfinding of Virginia local
housing authority for substantial evidence). The substantial evidence
standard is, by the way, the same standard we would apply in cases
where arbitration under the Act is conducted by the FCC, rather than
a state utilities commission. See 47 U.S.C.§ 252(e)(5)(requiring FCC
to arbitrate if state commission fails to do so); 5 U.S.C.
§ 706(2)(E)(requiring that agency action be supported by substantial

                     17
evidence when "reviewed on the record of an agency hearing pro-
vided by statute").5

In applying the substantial evidence standard, a"court is not free
to substitute its judgment for the agency's . . .; it must uphold a deci-
sion that has `substantial support in the record as a whole' even if it
might have decided differently as an original matter." AT&T Wireless
PCS, Inc. v. City Council of City of Virginia Beach , 155 F.3d 423,
430 (4th Cir. 1998), quoting NLRB v. Grand Canyon Mining Co., 116
F.3d 1039, 1044 (4th Cir. 1997).

With these standards in mind, we turn, at last, to the merits.

B.

On the merits, GTE first argues that the SCC's methodology for
setting prices for unbundled network elements violates the FCC's
rules. The SCC invited GTE and the CLECs to submit models to gen-
erate prices for access to these elements, and both sides complied.
The CLECs offered the Hatfield model, and GTE offered a model
employing the M-ECPR methodology. The SCC staff proposed a
third model based on Hatfield, with some modifications. The SCC
ultimately adopted the staff's modified Hatfield model as "the only
reasonable option" given the "limited record" in the arbitration pro-
ceeding. GTE claims that this model does not comply with the meth-
odology required by the FCC's rules.

The Act requires that state commissions determine"just and rea-
_________________________________________________________________
5 We are aware that in reviewing state commission arbitration decisions
under the Act, some other courts, including the district court in this case,
have used the "arbitrary and capricious" standard of review. See, e.g., US
West Communications v. MFS Intelenet, Inc., No. 98-35146, 1999 WL
799082, at *1 (9th Cir. Oct. 8, 1999); GTE South, Inc. v. Morrison, 6 F.
Supp. 2d 517, 523 (E.D. Va. 1998). With respect to review of factfind-
ings, there is no meaningful difference between this standard and the
substantial evidence standard we apply. See James City County v. EPA,
12 F.3d 1330, 1338 n.4 (4th Cir. 1993); Association of Data Processing
Serv. Orgs. v. Board of Governors, 745 F.2d 677, 683-84 (D.C. Cir.
1987) (Scalia, J.).

                     18
sonable" prices for access to unbundled network elements. 47 U.S.C.
§ 252(d)(1). Those prices are to be "based on the cost (determined
without reference to a rate-of-return or other rate-based proceeding)
of providing the . . . network element." Id. § 252(d)(1)(A). The FCC's
First Report and Order provides the methodology that state commis-
sions are to use under the Act in arbitrating disputes over prices for
unbundled network elements. See First Report and Order at ¶ 618
("[T]he rules we adopt today set forth the methodological principles
for states to use in setting prices."). The Supreme Court has confirmed
the FCC's authority to issue rules "to design a pricing methodology"
under the Act. Iowa Utils. Bd., 525 U.S. at ___, 119 S. Ct. at 733.

Under the FCC rules a state commission must set the price for an
unbundled network element based on the element's forward-looking
Total Element Long Run Incremental Cost (TELRIC). See First
Report and Order at ¶ 672. A "forward-looking" approach looks to the
costs a new entrant (CLEC) would incur in constructing a functionally
comparable network today. "Long run" is a period "so long that all of
the firm's present contracts will have run out, its present plant and
equipment will have been worn out or rendered obsolete and will
therefore need replacement, etc." Id. at¶ 677 n. 1682. "Incremental
costs" are "the additional costs . . . that a firm will incur as a result
of expanding the output of a good or service by producing an addi-
tional quantity of the good or service." Id . at ¶ 675. Applying these
definitions, the FCC concluded that an unbundled network element's
TELRIC "should be based on costs that assume that wire centers will
be placed at the incumbent LEC's current wire center locations, but
that the reconstructed local network will employ the most efficient
technology for reasonably foreseeable capacity requirements." Id. at
¶ 685. See also id. at ¶ 690 ("Costs must be based on the incumbent
LEC's existing wire center locations and most efficient technology
available."); 47 C.F.R. § 51.505(b)(1) (1999) (requiring costs to be
based on "the most efficient telecommunications technology currently
available and the lowest cost network configuration, given the exist-
ing location of the incumbent LEC's wire centers.").

GTE points to no specific aspect of the SCC's modified Hatfield
model that violates these rules. That model estimates the cost of pro-
viding unbundled network elements based on the hypothetical con-
struction and operation of the most efficient local network

                    19
conceivable, with one limitation. Specifically, it takes only the loca-
tion of an incumbent's switches or wire centers as a given (the
"scorched node" approach) and otherwise assumes a network com-
prised of the most efficient wiring configuration and most efficient
technology available. This approach is expressly endorsed in the
FCC's pricing rules. See First Report and Order at ¶ 685. In fact, the
FCC in choosing a methodology that calculates costs on a forward-
looking basis, cited the very version of Hatfield that the CLECs
placed before the SCC in the arbitration. See id. at ¶ 834 ("We believe
that the generic forward-looking costing models, in principle, appear
best to comport with the preferred economic cost approach discussed
previously. Several such models were placed in the[FCC rulemaking]
record, including Hatfield 2 [and] Hatfield 2.2."). It is clear, then, that
the modified Hatfield methodology used by the SCC complied with
the FCC's requirements that the costs of unbundled network elements
be calculated on a forward-looking, long run basis, using the most
efficient telecommunications technology currently available.

According to GTE, it is not enough that Hatfield's methodology
complies with the FCC's rules. GTE goes on to attack the accuracy
of the Hatfield model. Complaints about accuracy are, of course,
assertions of factual error, which we review under the substantial evi-
dence standard. GTE argues that the FCC, in an order issued after this
appeal was filed, "rejected even a significantly updated and improved
version of Hatfield for use in determining the costs of universal ser-
vice." Appellant's Br. at 60. GTE refers to the FCC's discussion in
In the Matter of Federal-State Joint Board on Universal Service, Fifth
Report and Order, 13 F.C.C.R. 21323 (1998) (Fifth Report and
Order). Based on that order's identification of flaws in the updated
version of Hatfield, GTE contends that "the SCC's use of an earlier
and even more flawed version of Hatfield must be reversed." Appel-
lant's Br. at 61.

The Fifth Report and Order, unlike the adversarial arbitration pro-
ceedings challenged here, was the result of a notice-and-comment
rulemaking in which the FCC considered the merits of several
forward-looking cost models: an updated version of Hatfield (called
HAI), the Benchmark Cost Proxy Model (BCPM), and the Hybrid
Cost Proxy Model (HCPM). Recognizing that each had advantages
and disadvantages, the FCC ultimately endorsed a synthesized model

                     20
that incorporated elements of HAI, BCPM, and HCPM. See Fifth
Report and Order at ¶ 92. GTE is correct in asserting that the FCC has
identified specific defects in the Hatfield model that cause it to under-
estimate costs. See, e.g., First Report and Order at ¶ 794 ("We do not
believe, however, that these model outputs by themselves necessarily
represent accurate estimates of the absolute magnitude of loop costs.
. . . [F]urther analysis is necessary in order to evaluate fully the proce-
dures and input assumptions that the models use in order to derive
cost estimates."); Fifth Report and Order at¶ 58 ("The HAI model
also sacrifices accuracy by assuming that customers are dispersed uni-
formly within its distribution areas."). However, GTE failed to pro-
vide evidence to the SCC that would have permitted the commission
to assess more accurately the cost of providing network elements.
Rather, GTE presented a model that the SCC staff concluded was a
"black box," in that its operations and assumptions could not be
tested. The SCC staff complained that GTE failed to suggest alternate
input data or assumption changes for the Hatfield model, that its doc-
umentation was incomplete, that its model included data not specific
to Virginia, and that it relied on assumptions and inputs that could not
be verified or supported. Both the SCC and its staff noted that the
Hatfield model, unlike GTE's model, had been subject to scrutiny by
the FCC, as well as by parties to numerous arbitration proceedings
around the country. Consequently, the generally understood Hatfield
model was less likely than the untested GTE model to have funda-
mental problems that had not been discovered.

The SCC concluded that the criticisms of the different cost models
offered by GTE and the CLECs had merit. Consequently, the SCC
refused to accept either model presented by the parties. See Order
Resolving Rates for Unbundled Network Elements and Interconnec-
tion, Wholesale Discount for Services Available for Resale, and Other
Matters, PUC 960117, PUC 960118, PUC 960124, PUC 960131
(Dec. 11, 1996) ("We find that the evidence presented by the parties
was not adequate to allow us to choose either the GTE or the
AT&T/MCI Hatfield model results for determining costs to be used
for setting permanent rates."). Instead, the SCC adopted the Hatfield
model, as modified by the staff to address GTE's concerns about fill
factors and the cost of capital. In doing that, the SCC repeated its con-
cerns about the models put forward by the parties, but observed that
it was required by the Act to resolve the arbitrated issues within nine

                     21
months of the CLECs' request for interconnection. See 47 U.S.C.
§ 252(b)(4)(C). Given the limited record, limited time, demonstrated
flaws in each side's model, and the absence of any opportunity to ade-
quately test GTE's model, the SCC set interim rates based on the
modified Hatfield model, the "only reasonable option."

GTE concludes its briefing with the suggestion that any failure on
its part to provide the SCC with a verifiable pricing proposal or data
that supported it is "irrelevant" because the SCC "was still obligated
to set rates that met the Act's commands." Appellant's Reply Br. at
29. The Act does not command the SCC to independently acquire evi-
dence that GTE did not provide, and we will affirm the SCC determi-
nations so long as they find support in the record as a whole. See 47
U.S.C. § 252(b)(4)(B) ("If any party refuses or fails unreasonably to
respond on a timely basis to any reasonable request from the State
commission, then the State commission may proceed on the basis of
the best information available to it from whatever source derived.").

In the face of conflicting evidence and a statutory deadline for
decision, the SCC relied on the best information available to set prices
for network elements: the Hatfield model as adjusted to incorporate
specific objections based on verifiable evidence. We conclude that the
SCC's decision to set interim prices based on that information and the
commission's resulting decisions on prices all have substantial sup-
port in the record as a whole. We therefore affirm the district court's
judgment upholding the SCC's network element pricing determina-
tions.

C.

GTE also challenges the SCC's methodology for determining the
wholesale prices for GTE's retail products. The SCC assumed, for
purposes of determining wholesale prices, that GTE would exit the
retail market altogether and thus incur no costs for marketing, billing,
collection, and other such items. Under the Act wholesale prices are
determined on the basis of the incumbent LEC's "retail rates charged
to subscribers for the telecommunications service requested, exclud-
ing the portion thereof attributable to any marketing, billing, collec-
tion, and other costs that will be avoided by the local exchange
carrier." 47 U.S.C. § 252(d)(3). According to GTE, the SCC's

                    22
assumption that GTE will exit the retail market entirely is contrary to
fact, resulting in a discount that is not limited to the costs that "will
be avoided" by GTE when it begins wholesaling. In other words, GTE
says that when it wholesales only some of its retail services, the costs
it will avoid will be smaller on a per unit basis than the costs it would
avoid if it abandoned retailing entirely.

In its First Report and Order the FCC issued the following guide
to state commissions for setting wholesale prices:

          "the portion [of the retail rate] . . . attributable to costs that
          will be avoided" includes all of the costs that the LEC incurs
          in maintaining a retail, as opposed to wholesale, business.
          In other words, the avoided costs are those that an incum-
          bent LEC would no longer incur if it were to cease retail
          operations and instead provide all of its services through
          resellers. Thus, we reject the arguments of incumbent LECs
          and others who maintain that the LEC must actually experi-
          ence a reduction in its operating expenses for a cost to be
          considered "avoided" for purposes of section 252(d)(3).

First Report and Order at ¶ 911 (emphasis added). The SCC's
assumption in setting wholesale prices -- that GTE would exit the
retail market altogether -- is completely consistent with the FCC's
rule. We therefore affirm the district court judgment upholding the
wholesale prices set by the SCC. Of course, if the Eighth Circuit
strikes down the FCC's wholesale pricing rule, GTE will have the
opportunity to modify its interconnection agreements and seek recov-
ery of any underpayment in the process of settling up. See part IV,
supra.

VI.

The district court's judgment upholding the SCC's pricing method-
ology and determinations is affirmed.

AFFIRMED

                     23
