Ameren Corporation; American Electric Power Service Corporation; Centerpoint Energy Houston Electric, LLC; Virginia Electric and Power Company Petitioners
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
for Review of an Order of the Federal Communications
WOLLMAN, MURPHY, and COLLOTON, Circuit Judges.
WOLLMAN, Circuit Judge.
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.
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).
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
(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
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.
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
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 § 224(e)
is ambiguous and that the FCC's ...