Local Exchange Bypass Procedures Act of 1986

Local Exchange Bypass Procedures Act of 1986 - Amends the Communications Act of 1934 to direct the Federal Communications Commission to suspend the operation of, and conduct a hearing on the lawfulness of, any tariff filed by a dominant interexchange carrier to provide a service to bypass the switched facilities of an exchange carrier. Prohibits such a tariff from taking effect unless and until the Commission finds it to be just and reasonable. Provides that a tariff shall not be found to be just and reasonable if it will have the effect of: (1) diverting a substantial portion of an exchange carrier's originating or terminating traffic; (2) impeding competition in long distance services; or (3) substantially raising telephone exchange service rates.

Requires the Commission to: (1) conduct an inquiry into the plans of any dominant interexchange carrier to provide services using its own switched facilities but not the facilities of an exchange carrier; and (2) examine the impact of such plans on the continued availability of exchange service at reasonable rates, the viability of exchange carriers, and competition in the provision of long distance service.

Directs the Commission to: (1) establish and implement a monitoring system to detect and quantify bypass activities; and (2) include a summary of the data collected by such system in its annual report to the Congress.