BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION In Re Application of U S WEST, Inc. And QWEST COMMUNICATIONS INTERNATIONAL, INC. For An Order Disclaiming Jurisdiction, or in the Alternative, Approving the U S WEST, INC.--QWEST COMMUNICATIONS INTERNATIONAL, INC. Merger ))))))))) ) DOCKET NO. UT-991358 SEVENTH SUPPLEMENTAL ORDER GRANTING MOTION TO ISSUE BENCH REQUESTS and REVISING PROCEDURAL SCHEDULE 1 PROCEEDINGS: On August 31, 1999, U S WEST, Inc. and Qwest Communications International, Inc. jointly filed an application requesting that the Commission issue an order disclaiming jurisdiction over their proposed merger transaction, or in the alternative, approving the merger. The Commission, on due and proper notice, conducted evidentiary hearing proceedings on March 14-17, 22, 2000, and on April 10, 12, and 20, 2000, before Chairwoman Marilyn Showalter, Commissioner Richard Hemstad, Commissioner William R. Gillis, and Administrative Law Judge Dennis J. Moss. The Commission established a briefing schedule that required Initial Briefs be filed by April 28, 2000, and Reply Briefs by May 12, 2000. Subsequently, the Commission continued the date for Initial Briefs until May 3, 2000, to permit time for orderly consideration of Staff's post-hearing motions that are the subject of this Order. 2 PARTIES: Lisa A. Anderl, Senior Attorney, U S WEST, Inc. (Seattle), and James M. Van Nostrand, Stoel Rives, LLP, Seattle, Washington, represent U S WEST, Inc. Ronald Wiltsie, Mace Rosenstein, and Gina Spade, Hogan & Hartson L.L.P., Washington, D.C., represent Qwest Communications International, Inc. Gregory J. Kopta and Dan Waggoner, Davis Wright Tremaine, Seattle, represent AT&T Communications of the Pacific Northwest, Inc. Gregory J. Kopta, Davis Wright Tremaine, Seattle, also represents Advanced Telecom Group, Inc., Nextlink Washington, Inc., and Northpoint Communications, Inc. Andrew O. Isar, Director- State Affairs, Telecommunications Resellers Association, represents that organization. Arthur A. Butler, Ater Wynne LLP, Seattle, represents Rhythms Links, Inc. and SBC National, Inc. Richard A. Finnigan, Attorney, Olympia, represents the Washington Independent Telephone Association (WITA). Mark P. Trinchero, Davis Wright Tremaine, Portland, Oregon, represents McLeodUSA Telecommunications Services, Inc. Brooks E. Harlow, Miller, Nash, Wiener, Hager & Carlson LLP, Seattle, represents Covad Communications Company, Northwest Payphone Association, and Metronet Services Corporation. Clay Deanhardt, Attorney, Santa Clara, California, also represents Covad Communications Company. Robert Nichols, Nichols and Associates, Boulder, Colorado, represents Level 3 Communications, Inc. Arthur A. Butler, Ater Wynne LLP, Seattle, represents. Simon ffitch, Assistant Attorney General, Seattle, represents the Public Counsel Section, Office of Attorney General. Sally G. Johnston, Assistant Attorney General, Olympia, represents the Commission's regulatory staff (Staff). 3 MOTION FOR ISSUANCE OF BENCH REQUESTS; REQUEST FOR CONTINUANCE; REVISED PROCEDURAL SCHEDULE: On April 26, 2000, Commission Staff filed a Request for Continuance of Briefing Schedule combined with its Motion for Issuance of Bench Requests. The Request and Motion were based on asserted "new developments in the case that warrant an extension of the current briefing schedule." In particular, Staff stated that U S WEST and Qwest have entered into settlement agreements with various CLEC's, including some of the CLEC intervenors in this proceeding, and is in the process of negotiating settlement agreements with other CLEC intervenors, yet only one such agreement, with Rhythms Links Inc., has been filed in this docket. Staff stated its position that "it is imperative that the agreements become a part of the record in this case." 4 Various Parties responded to Staff's Request and Motion, generally opposing the Motion for Issuance of Bench Requests, and either not opposing or supporting a short continuance of the briefing schedule. Staff filed a brief reply pertinent to one aspect of the U S WEST and Qwest Answer. 5 On April 28, 2000, the Commission granted a short continuance of the briefing schedule until May 3, 2000, for Initial Briefs, and took Staff's Motion under advisement. On May 1 and 2, 2000, Staff informed the Bench by telephone that certain of the settlement agreements had been, or shortly would be, submitted to Staff. Staff related that some of the settlement agreements would be submitted pursuant to the Protective Order in this proceeding, classified either as "confidential" or "Highly Confidential." 6 Also on May 2, 2000, Staff filed a Renewed Request for Continuance of Briefing Schedule and Renewed Motion for Issuance of Bench Requests. Staff states that it has received two settlement agreements: one between U S WEST and Qwest and Covad, and one between U S WEST and Qwest and AT&T. Staff attached the Covad agreement which was submitted to Staff as a "public, non-confidential document, " according to Staff's Renewed Motion. Staff later informed the Bench that U S WEST takes the position that this agreement should be treated as confidential, but Staff was not aware of that at the time it submitted the agreement as an attachment to its Renewed Motion. Staff relates that the AT&T agreement was submitted with the Highly Confidential designation. Staff also says that McCleodUSA has agreed to provide a copy of its settlement agreement with U S WEST and Qwest, but also under the Highly Confidential designation. 7 Finally, Staff's Renewed Motion contemplates that additional settlement agreements may be reached between U S WEST and Qwest, and NEXTLINK; and between U S WEST and Qwest, and ATG. Level 3 Communications, LLC also is negotiating with U S WEST and Qwest, according to Level 3's response to Staff's original Request and Motion. Thus, it appears that except for SBC National, Inc., all CLEC intervenors have finalized, or are moving toward finalization of individual settlement agreements. 8 Based on its review of the agreements it has seen so far, two of which have been provided to the Bench, Staff urges that they be made part of the record. With respect to the allegedly highly confidential AT&T agreement, which has not been provided to the Bench, Staff states that based on its analysis "it is essential that the Commission have access to the agreement as [the Commission] weighs the issues presented by the merger application." Finally, Staff moves the Commission to require production of any agreement U S WEST and Qwest achieve with either NEXTLINK or ATG in exchange for those companies= withdrawal of opposition to the merger. Staff wants all of these agreements, and presumably any agreement reached with Level 3, or SBC National, made part of the record. Staff previously requested, in addition, that a certain Interim Line Sharing Agreement between U S WEST and various CLEC's, some of whom are intervenors here, be made an exhibit. 9 Staff asks for a further continuance of the briefing schedule to afford Staff adequate time to review, analyze, and brief the agreements. Staff argues that a continuance is necessary and in the public interest. 10 COMMISSION DISCUSSION AND DECISION: Each of the agreements discussed above that have been consummated to date includes a term that requires the CLEC intervenor to seek to withdraw from this proceeding and support, or at least not oppose any longer, the Commission's approval of U S WEST and Qwest's merger application. To that extent, at least, each of these settlements relates to, and impacts on, the ongoing proceedings that now are at the briefing stage. In reviewing the two agreements that have been provided - one filed in this docket by Rhythms Links in support of its filing to withdraw, and one (the Covad agreement) submitted by Staff in support of its Renewed MotionB it appears that some of the issues resolved by these Parties' individual agreements are issues under consideration in this proceeding. The Commission notes, too, that the Rhythms Links' agreement includes both a provision that will be null and void if the merger does not close, and expressly states the settling parties agreement that "this Stipulation represents a just, equitable and reasonable resolution of issues in [Docket No. UT-991358, the merger proceeding]." 11 Because the executed agreements between U S WEST and Qwest, and various intervenors, relate to pending issues in this proceeding to a greater or lesser degree, as discussed above, it is important that the Parties have an opportunity to argue on brief how the agreements may bear on the public interest determination that the Commission must make in this case. That, of course, requires production of the agreements for the record. Moreover, to the extent any additional agreements are consummated in the near future, these also should be submitted for the record and considered. Staff's Motion for Issuance of Bench Requests accordingly should be, and is, granted to the extent reflected in Bench Request No. 2, which is attached as an appendix to this Order. Parties should note that U S WEST and Qwest's responses to Bench Request No. 2 will be made exhibits to the hearing record absent written objection filed simultaneously with the response. Answers to any objection must be filed as required by the terms of Bench Request No. 2. 12 It follows from the decision to grant Staff's Motion that there must be some adjustment to the briefing schedule to permit adequate time for the agreements to be furnished and for briefing with respect to them. Although Staff's Renewed Request includes no specific suggestion, the Bench learned by telephone communication with Staff counsel that Staff would find a continuance until May 12, 2000, for the filing of Initial Briefs to be adequate. That continuance will be granted and the date for Reply Briefs will be continued until May 19, 2000. This postpones the existing date for Reply Briefs by only one week and thus should satisfy concerns expressed by some Parties that there not be any significant delay to the post-hearing process in this docket. ORDER 13 IT IS ORDERED That U S WEST and Qwest respond to Bench Request No. 2 as provided by its terms. 14 IT IS ORDERED FURTHER That the procedural schedule in this proceeding is amended to require that Initial Briefs be filed by May 12, 2000, and Reply Briefs be filed by May 19, 2000. DATED at Olympia, Washington, and effective this 2nd day of May, 1999. WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION DENNIS J. MOSS, Administrative Law Judge