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Ameren Corporation v. Federal Communications Commission

United States Court of Appeals, Eighth Circuit

July 31, 2017

Ameren Corporation; American Electric Power Service Corporation; Centerpoint Energy Houston Electric, LLC; Virginia Electric and Power Company Petitioners
v.
Federal Communications Commission; United States of America Respondents COMPTEL, doing business as INCOMPAS; Level 3 Communications; National Cable & Telecommunications Association; United States Telecom Association Intervenors Texas Industrial Energy Consumers; Texas Office of Public Utility Counsel Amid on Behalf of Petitioner

          Submitted: January 11, 2017

         Petition for Review of an Order of the Federal Communications Commission

          Before WOLLMAN, MURPHY, and COLLOTON, Circuit Judges.

          WOLLMAN, Circuit Judge.

         Ameren Corporation; American Electric Power Service Corporation; CenterPoint Energy Houston Electric, LLC; and Virginia Electric and Power Company (collectively, Petitioners) petition for review of a November 2015 order of the Federal Communications Commission (FCC) governing the rates that utility companies may charge telecommunications providers for attaching their networks to utility-owned poles. The FCC, the United States, and intervenors COMPTEL d/b/a INCOMPAS; National Cable & Telecommunications Association; Level 3 Communications, LLC; and United States Telecom Association oppose the petition. We deny the petition.

         I. Background

         Under the Pole Attachments Act, 47 U.S.C. § 224, the FCC has the authority to ensure that rates for attachments to utility poles by providers of cable television services (cable providers) and providers of telecommunications services (telecommunications providers) are "just and reasonable." Id. § 224(b)(1). Section 224 initially applied only to cable providers. The statute sets forth a lower bound and an upper bound for "just and reasonable" rates. The lower bound is a rate that "assures a utility the recovery of not less than the additional costs of providing pole attachments, " and the upper bound is a rate that is "determined by multiplying the percentage of the total usable space . . . which is occupied by the pole attachment by the sum of the operating expenses and actual capital costs of the utility attributable to the entire pole." Id. § 224(d)(1). The FCC set the rate for this upper bound (the Cable Rate) by multiplying three values: the space factor (the space occupied by an attachment divided by the total usable space on the pole), the net cost of a bare pole, and a carrying charge rate. 47 C.F.R. § 1.1409(e)(1).

         Congress amended § 224 in 1996, expanding it to cover pole attachments by telecommunications providers. Section § 224(e) sets forth methods for apportioning the cost of a pole among telecommunications providers:

(2)A utility shall apportion the cost of providing space on a pole, duct, conduit, or right-of-way other than the usable space among entities so that such apportionment equals two-thirds of the costs of providing space other than the usable space that would be allocated to such entity under an equal apportionment of such costs among all attaching entities.
(3)A utility shall apportion the cost of providing usable space among all entities according to the percentage of usable space required for each entity.

Id. § 224(e). This revision thus established a separate formula for determining the rate for pole attachments by telecommunications providers (the Telecom Rate).

         Until 2011, the FCC determined "cost" for the Telecom Rate the same way as for the Cable Rate (net cost of a bare pole multiplied by a carrying charge rate), and implemented § 224(e)(2) by calculating the space factor differently, apportioning two-thirds of the costs of the unusable space among attaching telecommunications providers. Thus, the Telecom Rate was typically higher than the Cable Rate, because the values for the net cost of a bare pole and the carrying charge rate were the same for both the Cable Rate and the Telecom Rate, while the value for the space factor was typically higher in the Telecom Rate because it included two-thirds of the unusable space on the pole.

          In response to concerns that the risk of having to pay the Telecom Rate may have deterred cable providers from expanding their services, the FCC adopted an order in April 2011 designed to equalize the Cable and Telecom Rates. In the Matter of Implementation of Section 224 of the Act, Report and Order and Order on Reconsideration, 26 FCC Rcd. 5240 (2011) (the April 2011 Order). This Order reinterpreted the term "cost" in § 224(e)(2) by defining the "cost" for an urban-area pole as 66 percent of the pole's fully allocated costs (the net cost of a bare pole multiplied by the carrying charge rate), and for a non-urban-area pole as 44 percent of the pole's fully allocated costs. Id. at 5304, ¶ 149. Under the FCC's rebuttable presumptions of 5 attachers to an urban-area pole and 3 attachers to a non-urban-area pole, In the Matter of Implementation of Section 224 of the Act, Order and Further Notice of Proposed Rulemaking, 25 FCC Rcd. 11864, 11913, ¶ 119 n.324 (2010), the new Telecom Rate under the April 2011 Order approximated the Cable Rate.

         The United States Court of Appeals for the District of Columbia Circuit upheld the April 2011 Order against claims that it was inconsistent with § 224. Am. Elec. Power Serv. Corp. v. FCC, 708 F.3d 183 (D.C. Cir.), cert. denied, 134 S.Ct. 118 (2013). The electric utilities' petition for review argued that "cost" in § 224(e) must mean the fully allocated costs of a pole, not the April 2011 Order's definition of "cost" as either 66 or 44 percent of the pole's fully allocated costs. Id. at 189. The D.C. Circuit noted that § 224(e) "is in important respects less specific than § 224(d), " because "while § 224(e) prescribes the apportionment criteria rather specifically, it nowhere defines the term 'cost.'" Id. at 188-89. Evaluating the April 2011 Order under the standard set forth in Chevron, USA, Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), the court held that the term "cost" as used in ยง 224(e) is ambiguous and that the FCC's ...


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