Am. Elec. Power Serv. Corp. v. Fed. Commc'ns Comm'n

• Decision Date: 26 February 2013
• Docket Number: No. 11–1146.,11–1146.
• Citation: 708 F.3d 183
• Parties: AMERICAN ELECTRIC POWER SERVICE CORPORATION, et al., Petitioners v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents. Consumers Energy Company, et al., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

708 F.3d 183

AMERICAN ELECTRIC POWER SERVICE CORPORATION, et al., Petitioners

v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents.Consumers Energy Company, et al., Intervenors.

No. 11–1146.

United States Court of Appeals, District of Columbia Circuit.

Argued Jan. 23, 2013.

Decided Feb. 26, 2013.

On Petition for Review of an Order of the Federal Communications Commission.

Eric B. Langley argued the cause for petitioners. With him on the briefs were J. Russ Campbell, Jason B. Tompkins, and Sean B. Cunningham.

John B. Richards and Thomas B. Magee were on the brief for intervenors Consumers Energy Company, et al. in support of petitioners.

Edward H. Comer, Aryeh B. Fishman, Shirley S. Fujimoto, Jeffrey L. Sheldon, and Kevin M. Cookler were on the brief for amicus curiae Edison Electric Institute in support of petitioners.

C. Grey Pash Jr., Counsel, Federal Communications Commission, argued the cause for respondents. On the brief were Robert B. Nicholson and Kristen C. Limarzi, Attorneys, U.S. Department of Justice, and Austin C. Schlick, General Counsel, Federal Communications Commission, Peter Karanjia, Deputy General Counsel, and Richard K. Welch, Deputy Associate General Counsel. Laurel R. Bergold, Attorney, Federal Communications Commission, entered an appearance.

Helgi C. Walker argued the cause for intervenors United States Telecom Association, et al. With her on the brief were Bennett L. Ross, Brendan T. Carr, John E. Benedict, William A. Brown, Gary L. Phillips, Michael E. Glover, Edward Shakin, and Katharine R. Saunders.

Jonathan E. Nuechterlein argued the cause for intervenors Comcast Corporation, et al. With him on the brief were Kelly P. Dunbar, Rick Chessen, Neal M. Goldberg, Lynn R. Charytan, T. Scott Thompson, Michael T.N. Fitch, Craig Gilmore, Alan G. Fishel, Jeffrey E. Rummel, Adam D. Bowser, David P. Murray, Thomas Jones, Gardner Gillespie, Wesley R. Heppler, Paul Glist, Daniel L. Brenner, Michael F. Altschul, Brian M. Josef, Jonathan D. Hacker, Loren L. AliKhan, and John D. Seiver. Christopher A. Fedeli, Paul A. Werner III, Christopher M. Heimann, and Heather M. Zachary entered appearances.

Before: TATEL, Circuit Judge, and WILLIAMS and SENTELLE, Senior Circuit Judges.

WILLIAMS, Senior Circuit Judge:

Section 224 of the Communications Act of 1934, 47 U.S.C. § 224, provides a variety of advantages to certain types of firms seeking to attach their wires, cable, or other network equipment to utility poles. The Federal Communications Commission, which is charged with applying § 224, in 2011 made three revisions to its interpretation of the statute. In the Matter of Implementation of Section 224 of the Act, Report and Order and Order on Reconsideration, 26 FCC Rcd. 5240 (April 7, 2011) (“Order”). The Order (1) for the first time allows incumbent local exchange carriers (“ILECs”) (which are principally the descendants of the “Baby Bells” that emerged from AT & T's 1984 break-up, see 47 U.S.C. § 251(h)) to share the benefits of some of § 224' s provisions; (2) reformulates the ceiling on the rate that pole-owning utilities can charge “telecommunications carriers” seeking to make pole attachments; and (3) moves back the date as of which compensatory damages start to accrue in favor of parties filing successful complaints against utilities. The reader should note that because § 224(a)(5) excludes ILECs from the definition of “telecommunications carriers,” the newly reformulated rates do not directly affect the rates chargeable to ILECs.

Petitioners, the American Electricity Power Services Corporation and other power companies, challenge all three changes. We reject petitioners' arguments and deny the petition.

* * *

Before the advent of cable television, utilities—including power companies and ILECs—owned and operated extensive networks of poles that carried their wires, cables, and other network equipment. These utilities often shared poles, operating them under joint ownership agreements that split the costs. Cable companies sought access to the poles for their own network equipment; the utilities, in turn, sought “to charge monopoly rents” for that access. Nat'l Cable & Telecomms. Ass'n v. Gulf Power Co., 534 U.S. 327, 330, 122 S.Ct. 782, 151 L.Ed.2d 794 (2002) (“NCTA ”).

In 1978 Congress responded by passing the Pole Attachment Act (“the 1978 Act”), adding it as § 224 of the Communications Act. (Because we address many provisions of § 224, we attach its current version below in its entirety.) The 1978 Act provided that “the Commission shall regulate the rates, terms, and conditions for pole attachments to provide that such rates, terms, and conditions are just and reasonable.” 47 U.S.C. § 224(b)(1). It also adopted upper and lower bounds for “just and reasonable” rates: the upper bound is “the fully allocated cost of the construction and operation of the pole to which [the] cable is attached,” FCC v. Florida Power Corp., 480 U.S. 245, 253, 107 S.Ct. 1107, 94 L.Ed.2d 282 (1987), the lower bound the “marginal cost of [the] attachments,” id. See 47 U.S.C. § 224(d)(1). Under this authority, the Commission adopted a rate formula that has become known as the “cable rate.” See 47 C.F.R. § 1.1409(e)(1).

The Telecommunications Act of 1996 (“the 1996 Act”) adjusted and expanded the provisions of the 1978 Act. Three sets of changes in the 1996 Act are especially relevant to this petition. First, the 1996 Act amended § 224 to define a “pole attachment” as “any attachment by a cable television system or provider of telecommunications service to a pole, duct, conduit, or right-of-way owned or controlled by a utility.” 47 U.S.C. § 224(a)(4)(emphasis added). The 1978 Act had identified only cable television systems as § 224's potential beneficiaries.

Second, besides clarifying the definition of “utility” to include local exchange carriers (i.e., ILECs and competitive LECs), the 1996 Act provided a special definition of “telecommunications carrier,” excluding ILECs from that category for purposes of § 224. 47 U.S.C. § 224(a)(5). Its language is the gravamen of petitioners' claim that ILECs are not in any respect among § 224's beneficiaries.

Third, Congress added § 224(e) to authorize the FCC to develop regulations governing the charges for “pole attachments used by telecommunications carriers to provide telecommunications services.” In 1998 the Commission issued such regulations, thereby establishing what has been known as the “telecom rate.” See Implementation of Section 703(e) of the Telecommunications Act of 1996, 13 FCC Rcd 6777, 6822–23, ¶¶ 99–102 (1998) (“1998 Order”). The 1996 Act left intact the Commission's broad rate-setting authority under § 224(b)(1).

In 2011 the Commission issued the Order, adopting the three new interpretations identified at the outset. We review the Commission's interpretation of § 224 for reasonableness under the familiar standard of Chevron, USA, Inc. v. NRDC, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), “which ... means (within its domain) that a ‘reasonable agency interpretation prevails.’ ” Northern Natural Gas Co. v. FERC, 700 F.3d 11, 14 (D.C.Cir.2012) (quoting Entergy Corp. v. Riverkeeper, Inc., 556 U.S. 208, 218, 129 S.Ct. 1498, 173 L.Ed.2d 369 (2009)). Because the Order is a change in the Commission's position, the requirement of reasoned decisionmaking demands that it “display awareness that it is changing position.” FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515, 129 S.Ct. 1800, 173 L.Ed.2d 738 (2009). “But it need not demonstrate to a court's satisfaction that the reasons for the new policy are better than the reasons for the old one; it suffices that the new policy is permissible under the statute, that there are good reasons for it, and that the agency believes it to be better.” Id.

* * *

ILECs' Pole Attachment Rights.Section 224(a)(4), as amended by the 1996 Act, defines a pole attachment as any attachment either by the operators of cable television systems covered by the 1978 Act or by any “provider of telecommunications services.” The Commission relies on § 224(a)(4) to support its decision to allow ILECs access to benefits from § 224. Petitioners challenge that conclusion, claiming that via § 224(a)(5) Congress intended to rigorously exclude ILECs from any of those benefits.

We reiterate, to make clear just what the Commission has and has not done, that it has not purported to bring ILECs under the new telecom rate adopted under § 224(e)(1). The Order simply classifies ILECs as among the potential beneficiaries of § 224(b)(1), which authorizes the Commission to regulate the rates, terms and conditions of “pole attachments” and assure that they are “just and reasonable.” For now, noting the existence of possible distinctions between ILECs and other pole attachers, the Commission says that it will handle any complaints by ILECs “on a case-by-case basis.” Order ¶ 214 & n. 647.

To support their challenge, petitioners point to the two statutory provisions that define “telecommunications carrier.” First, § 153(51), part of the Act's general list of definitions for Chapter 5, provides (with an irrelevant exception) that “[t]he term ‘telecommunications carrier’ means any provider of telecommunications services.” Second, § 224(a)(5) specifies that “[f]or purposes of this section, the term ‘telecommunications carrier’ (as defined in section 153 of this title) does not include any incumbent local exchange carrier as defined in section 251(h) of this title,” i.e., does not include any ILEC. Thus, because § 224(a)(5) excludes ILECs from the category “telecommunications carrier,” and § 153 partially defines “telecommunications carrier” as “any provider of telecommunications services,” petitioners argue that for purposes of § 224 there is a simple equation: telecommunications carriers equals providers of telecommunications services (and thus, by definition, the reverse). Accordingly, in their view, § 224(a)(5)'s...