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DC Circuit Hears Utilities’ Pole Attachment Appeal

Dave Thomas

Gardner Gillespie

Paul Werner

23 January 2013
The United States Court of Appeals for the District of Columbia Circuit earlier today heard oral argument in American Electric Power Service Corp. v. Federal Communications Commission – the electric utilities’ petition for review of core aspects of the FCC’s 2011 overhaul and modernization of its pole-attachment regulations. The argument focused on two principal issues: (1) whether local exchange carriers are entitled to just and reasonable pole attachment rates; and (2) the FCC’s efforts to align the historically higher “telecommunications rate” with the lower “cable rate.”
DC Circuit Hears Utilities’ Pole Attachment Appeal

While it is not possible to predict an outcome based simply on questions and comments made by the judges at oral argument, it did appear that the panel was inclined to uphold the FCC’s decision.DC Circuit Hears Utilities Pole Attachment Appeal

The utilities argued that the Commission violated settled rules of statutory interpretation and upended the agency’s own precedent in granting ILECs rights to just and reasonable pole attachment rates and in redefining the “telecom” rate formula to more closely approximate the formula used to calculate pole attachment rates for cable service. The court seemed skeptical of the utilities’ arguments on both points.

First, on the applicability of Section 224’s rate protections to ILECs, the panel appeared unconvinced by the utilities’ argument that the terms “telecommunications carrier” and “provider of telecommunications service” are equivalent and used synonymously by Congress in Section 224. Chief Judge Sentelle observed that, under standard rules of statutory construction, different statutory terms typically are to be assigned different meanings, while other members of the panel appeared convinced that the statute is at best ambiguous. Judge Tatel observed that the fact that the panel and counsel for the utilities had debated the term’s meaning for nearly ten minutes (and could continue on for longer) alone signaled that the term was open to interpretation. Based on the court’s questioning of the utilities’ lawyer, and the Commission’s, it appears likely that the court will find the statute open to the Commission’s chosen interpretation.

The utilities also argued that the FCC’s interpretation was unreasonable (even if statutorily permissible), because the record did not support the agency’s conclusion that an imbalance of bargaining power existed between utilities and ILEC’s as a result of an imbalance in pole ownership. The panel appeared unconvinced that the Commission’s policy choice lacked record support, with ILECs’ counsel citing to several specific instances in the record (including a submission of the utilities themselves) where such showings were made.

With respect to the FCC’s recalibration of the telecom formula to approximate the lower cable rate formula, the court questioned why the FCC was less than direct in doing so. The court seemed to be leaning toward a conclusion that the statutory term “costs” as used in Section 224(e) is ambiguous (as other courts have concluded). At one point, Chief Judge Sentelle pointedly asked the utilities’ counsel to explain the unambiguous definition of the term. He was visibly unsatisfied when counsel attempted to answer the question by pointing to the wide and variable range of costs articulated in Section 224(d). Judge Williams also pointed to Section 224(b) as establishing a broad mandate for the Commission to ensure just and reasonable pole attachment rates.

While the utilities also challenged the Commission’s revisions to its rule governing refunds for unjust and unreasonable rates, neither the parties nor the court addressed this argument today.

Dave Thomas

Gardner Gillespie

Paul Werner

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