United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 4, 2002 Decided December 20, 2002
No. 01-1326
Southern Company Services, Inc.,
Petitioner
v.
Federal Communications Commission and
United States of America,
Respondents
United Telecom Council, et al.,
Intervenors
Consolidated with
01-1328, 01-1372, 01-1377, 01-1378, 01-1380
On Petitions for Review of Orders of the
Federal Communications Commission
-----------
J. Russell Campbell argued the cause for petitioners. With
him on the briefs were Andrew W. Tunnell, Eric B. Langley,
Jennifer M. Buettner, Charles A. Zdebski, Shirley S. Fujimo-
to, Christine M. Gill, Thomas P. Steindler, Erika E. Olsen,
Jill M. Lyon, Brett W. Kilbourne, and Laurence Brown.
John D. Sharer entered an appearance.
Gregory M. Christopher, Counsel, Federal Communications
Commission, argued the cause for respondents. With him on
the brief were Jane E. Mago, General Counsel, John E.
Ingle, Deputy Associate General Counsel, Robert B. Nichol-
son and Robert J. Wiggers, Attorneys, United States Depart-
ment of Justice. John J. Powers III entered an appearance.
Daniel L. Brenner, Neal M. Goldberg, David L. Nicoll,
Thomas F. O'Neil III, William Single IV, Paul Glist, John
D. Seiver, Geoffrey C. Cook, Brian M. Josef, and Anthony C.
Epstein were on the brief for intervenors National Cable &
Telecommunications Association, et al.
Before: Edwards, Rogers, and Garland, Circuit Judges.
Opinion for the Court filed by Circuit Judge Edwards.
Edwards, Circuit Judge: In this case, Southern Company
Services along with a dozen owners of utility poles and
conduits (collectively, "utilities" or "petitioners") petition this
court for review of three Federal Communications Commis-
sion ("FCC" or "Commission") Orders implementing amend-
ments to the Pole Attachments Act (the "Act"), 47 U.S.C.
s 224 (2000). Under the Act, the owners of poles and
conduits have an obligation to lease space to companies that
wish to "attach" cables or wires. The statute gives the FCC
authority to "regulate the rates, terms, and conditions" in the
market for attachment space and to "adopt procedures neces-
sary and appropriate to hear and resolve complaints" regard-
ing these matters. Id. s 224(b)(1). In the disputed Orders,
the Commission announced regulations and procedures de-
signed to assure that telecommunications providers can ob-
tain the attachment space at just and reasonable rates.
In July 1997, the FCC adopted a Notice of Proposed Rule
Making ("NPRM") relating to the implementation of s 703(e)
of the Telecommunications Act of 1996 to amend the Commis-
sion's rules and policies governing pole attachments. In the
Matter of Implementation of Section 703(e) of the Telecom-
munications Act of 1996, Amendment of the Commission's
Rules and Policies Governing Pole Attachments, Notice of
Proposed Rule Making, 12 F.C.C.R. 11,725 (Aug. 12, 1997),
reprinted in Joint Appendix ("J.A.") 297-326. In February
1998, after notice and comment, the Commission announced
rules governing reasonable rates for telecommunications at-
tachments and guidelines for nondiscriminatory access to
poles and conduits. Implementation of Section 703(e) of the
Telecommunications Act of 1996, Amendment of the Com-
mission's Rules and Policies Governing Pole Attachments,
Report and Order, 13 F.C.C.R. 6,777 (Feb. 6, 1998), ("Tele-
com Order"), reprinted in J.A. 213-96. In March 1997, the
FCC adopted a NPRM relating to the maximum just and
reasonable rates utilities may charge for attachments made to
a pole, duct, conduit or right-of-way. 12 F.C.C.R. 7,449 (Mar.
14, 1997). In April 2000, following notice and comment, the
Commission revised the methodology and application of the
rate formula. Amendment of Rules and Policies Governing
Pole Attachments, Report and Order, 15 F.C.C.R. 6,453 (Apr.
3, 2000) ("Fee Order"), reprinted in J.A. 79-158. Finally, in
May 2001, the FCC clarified and revised its two previous
orders, answering petitions from interested parties in a con-
solidated proceeding. In the Matter of Amendment of the
Commission's Rules and Policies Governing Pole Attach-
ments; In the Matter of Implementation of Section 703(e) of
the Telecommunications Act of 1996, Consolidated Partial
Order on Reconsideration, 16 F.C.C.R. 12,103 (May 25, 2001)
("Reconsideration Order"), reprinted in J.A. 1-78.
The utilities contend that the new rules exceed the FCC's
enforcement authority and interfere with their rights to rea-
sonably deny pole, duct, conduit, and right-of-way space.
Petitioners also claim that the rules betray the requirements
of reasoned decision-making under the Administrative Proce-
dure Act ("APA").
On the record presented, we find that the FCC Orders are
premised on reasonable interpretations of the Act and that
the disputed rules do not interfere with petitioners' rights to
negotiate contracts or to deny space for legitimate reasons.
Certain of the disputed rules are unripe for review, so we
offer no judgment on them. We otherwise hold that, in
promulgating the disputed Orders, the FCC took into account
the relevant factors, provided reasoned explanations for its
decisions, and grounded its justifications in record evidence.
Accordingly, we reject petitioners' claim that the rules are
"arbitrary, capricious or contrary to law," and hereby deny
the petitions for review.
I. Background
In 1978, Congress enacted the Pole Attachments Act to
curb anti-competitive tendencies that limited the growth of
the communications market. Pub. L. No. 95-234, 47 U.S.C.
s 224 (1978); see also Nat'l Cable & Telecomm. Ass'n, Inc. v.
Gulf Power Co., 534 U.S. 327, 330 (2002); FCC v. Fla. Power
Corp., 480 U.S. 245, 247-48 (1987). The then-nascent cable
industry relied heavily upon the space on utility poles to
secure the wires that delivered the signals to consumers.
Since building new poles was prohibitively expensive, cable
operators instead leased existing space from utilities (usually
electricity and telephone service companies). Fla. Power
Corp., 480 U.S. at 247 ("Utility company poles provide, under
such circumstances, virtually the only practical physical medi-
um for the installation of television cables."). However,
utilities often exploited their market position to charge exces-
sively high attachment rates. To restrain this practice, Con-
gress sought to "establish a mechanism whereby unfair pole
attachment practices may come under review and sanction,
and to minimize the effect of unjust or unreasonable pole
attachment practices on the wider development of cable tele-
vision service to the public." S. Rep. No. 95-580 (1977)
("Senate Report"), reprinted in 1978 U.S.C.C.A.N. 109.
The original provisions in the Act gave the FCC authority
to "regulate the rates, terms, and conditions" for attachment
contracts and the authority to assure that such rates are "just
and reasonable." 47 U.S.C. s 224(a) (1978). The Act defined
a "pole attachment" as "any attachment made by a cable
television system to a pole, duct, conduit or right of way
controlled by a utility." Id. s 224(a)(4). Under the Act, the
Commission could set rates ranging from no less than "the
additional cost of providing the pole attachments" to no more
than the share of the total operating expenses in proportion
to the percentage of space on the pole occupied by the cable
carrier. Id. s 224(d)(1); see also Fla. Power Corp., 480 U.S.
at 248. The FCC's jurisdiction to enforce the statute applied
in all places where state agencies had not previously adopted
regulations. See Senate Report, 1978 U.S.C.C.A.N. at 110.
Responding to the development of telecommunications
technologies during the intervening years, Congress substan-
tially amended 47 U.S.C. s 224 in the 1996 Telecommunica-
tions Act, Pub. L. No. 104-104, 110 Stat. 56 (1997). The
major changes in the Act reflect the view that telecommunica-
tions companies offering new services to the public should
enjoy protections similar to those that the 1978 Act made
available to the cable industry. See H.R. Conf. Rep. No.
104-458 (1996), reprinted in 1996 U.S.C.C.A.N. 125. Con-
gress determined that expanding the Act's scope in this
manner would ultimately improve telecommunications service
options for consumers.
Three specific changes in the Act are relevant to the
present case. First, the amended statute broadens the defi-
nition of "pole attachment" to include connections made by
cable operators or any other "provider of telecommunications
service" to poles, ducts, conduits, or rights-of-way owned or
controlled by a utility. 47 U.S.C. s 224(a)(4). The Act also
calls on the FCC to develop a separate attachment rate
scheme for telecommunications providers. Id. s 224(e). Fi-
nally, the Act requires owners to provide "non-discriminatory
access" to attachers seeking space on poles, ducts, conduits,
and rights-of-way. Id. s 224(f)(1). An owner may deny
space "where there is insufficient capacity and for reasons of
safety, reliability and generally applicable engineering pur-
poses." Id. s 224(f)(2).
The contested issues in this case fall into four general
categories. First, the Commission updated its formula for
allocating the cost of "other than usable" (or "unusable")
space. The Act directs that "[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." Id. s 224(e)(2). Thus, the
maximum rate for any single attacher decreases as the total
number of attaching entities grows. In the Reconsideration
Order, the FCC announced that it would calculate the costs
for unusable space based on the following definition:
The term "attaching entities" includes, without limi-
tation and consistent with the Pole Attachment Act,
any telecommunications carrier, incumbent or other
local exchange carrier, cable operator, government
agency, and any electric or other utility, whether or
not the utility provides telecommunications service
to the public, as well as any other entity with a
physical attachment to the pole.
Reconsideration Order at 12,133-34 p 59, J.A. 29 (footnote
omitted). This position reversed the Commission's position in
the Telecom Order that both municipal agencies and utilities
with wires on the pole were subject to the "attaching entities"
classification only if they provided telecommunications ser-
vices. Id. at 12,1332 p57, J.A. 28; see also Telecom Order at
6,800-04 pp 48-54, J.A. 237-40. To aid in rate calculations, the
Commission announced that poles located in areas with more
than 50,000 people have a presumed average of five attachers,
while poles located in areas with fewer than 50,000 people
have a presumed average of three attachers. Reconsidera-
tion Order at 12,139-40 p 71, J.A. 35-36.
Second, pursuant to s 224(e)(1), the FCC adopted a com-
plaint resolution process for situations "when the parties fail
to resolve a dispute over [rate] charges." Under the applica-
ble rules, an attacher may "sign" a contract with a utility and
later file a complaint with the FCC to contest an element of
that agreement deemed to be unfair. Id.; Telecom Order at
6,780-90 pp 16-21, J.A. 223-26; Reconsideration Order at 12,-
112 p 12, J.A. 8. This is the so-called "sign and sue" rule.
Third, the Commission adopted regulations for overlashing,
a technique whereby a telecommunications provider attaches
a wire to its own (or, for third-party overlashing, to other
attachers') existing wires. The FCC rule provides that a
third-party overlasher "shares space with the host attach-
ment" and, therefore, does not qualify as an "attaching enti-
ty" for purposes of the attachment rate formula. Reconsider-
ation Order at 12,145 p 83, J.A. 41. This rule changed the
position taken by the FCC in the Telecom Order. See
Telecom Order at 6,809-10 pp 68-69, J.A. 245-46. The Com-
mission also clarified that an overlashing party does not need
to obtain advance consent from a utility if that party has a
primary wire attachment already in place. Reconsideration
Order at 12,144-45 p 82, J.A. 40-41. The FCC recognized,
however, that "a utility is entitled to notice of the overlash-
ing," and that the utility may recover any costs incurred for
strengthening the pole to support the weight of additional
wires. Id.
Fourth, the FCC adopted rules concerning the rate formula
for attachment space in conduits - the hollow underground
structures that carry cables and telecommunications wires.
In both the Fee Order and the Reconsideration Order, the
Commission determined that conduits contain no unusable
space. Id. at 12,149 p 93, J.A. 45; Fee Order at 6,496-97
pp 89-90, J.A. 123. The Commission found that any conduit
area that could be utilized for a specific purpose was "usable"
and therefore was subject to the rate formula:
[A]n electric utility is allowed to reserve capacity for
future business purposes under a bona fide business
plan, but must allow that capacity to be used for
attachments until an actual business need arises.
For whatever reason capacity may be reserved or
designated for special uses, by or on behalf of the
utility, and regardless of who may benefit directly or
indirectly from those uses, the capacity is available
for use and therefore remains part of the total
capacity of the conduit for rate determination pur-
poses.
Reconsideration Order at 12,150 p 94, J.A. 46 (footnotes
omitted). The FCC also adopted an administrative presump-
tion that each conduit attachment occupies only half the space
within each duct (i.e., a subsection of the conduit). Id. at
12,150 p 95, J.A. 46; Telecom Order at 6,829 p 115, J.A. 265-
66. Just as it found that its presumptions for the number of
entities on a pole were rebuttable, the agency noted that any
utility could offer data showing that specific attachments
actually used a greater share of duct space. Id.
II. Analysis
Petitioners assert that the disputed rules and procedures
should be vacated, because they violate the Act and betray
the precepts of reasoned decision-making under s 706(2)(A)
of the APA, 5 U.S.C. s 706(2)(A).
In deciding whether to defer to the FCC's construction of
the Pole Attachments Act, we adhere to the tests enunciated
by the Supreme Court in Chevron U.S.A. Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837 (1984), and
United States v. Mead Corp., 533 U.S. 218 (2001). In Chev-
ron, the Court held that, "[i]f the intent of Congress is clear,
that is the end of the matter; for the court, as well as the
agency, must give effect to the unambiguously expressed
intent of Congress." 467 U.S. at 842-43. This is so-called
"Chevron Step One" review. If Congress "has not directly
addressed the precise question" at issue, and the agency has
acted pursuant to an express or implicit delegation of authori-
ty, the agency's interpretation of the statute is entitled to
deference so long as it is "reasonable" and not otherwise
"arbitrary, capricious, or manifestly contrary to the statute."
Id. at 843-44. This is so-called "Chevron Step Two" review.
Mead reinforces Chevron's command that Chevron deference
to an agency's interpretation of a statute is due only when "it
appears that Congress delegated authority to the agency
generally to make rules carrying the force of law, and that
the agency interpretation claiming deference was promulgat-
ed in the exercise of that authority." Mead, 533 U.S. at 226-
27.
In this case, there is no doubt that the FCC promulgated
the new rules pursuant to congressionally delegated authority
and that the disputed Orders purport to have the force of law.
Petitioners contend, however, that certain provisions in the
new rules exceed the Commission's authority under the Act.
We reject this contention. The intent of Congress is not
unambiguously expressed in the provisions of the Act at issue
in this case. Nonetheless, the FCC's constructions of the Act
are entirely reasonable and thus deserving of deference under
Chevron Step Two.
Petitioners also contend that, whether or not the new rules
reflect permissible interpretations of the statute, they should
be vacated as "arbitrary and capricious" under the APA. In
Motor Vehicle Mfrs. Assoc. v. State Farm Mut. Auto. Ins.
Co., 463 U.S. 29 (1983), the Supreme Court explained the
APA's "arbitrary and capricious" test, as follows:
The scope of review under the "arbitrary and capri-
cious" standard is narrow and a court is not to
substitute its judgment for that of the agency. Nev-
ertheless, the agency must examine the relevant
data and articulate a satisfactory explanation for its
action including a "rational connection between the
facts found and the choice made." In reviewing that
explanation, we must "consider whether the decision
was based on a consideration of the relevant factors
and whether there has been a clear error of judg-
ment." Normally, an agency rule would be arbi-
trary and capricious if the agency has relied on
factors which Congress has not intended it to consid-
er, entirely failed to consider an important aspect of
the problem, offered an explanation for its decision
that runs counter to the evidence before the agency,
or is so implausible that it could not be ascribed to a
difference in view or the product of agency exper-
tise. The reviewing court should not attempt itself
to make up for such deficiencies: "We may not
supply a reasoned basis for the agency's action that
the agency itself has not given." We will, however,
"uphold a decision of less than ideal clarity if the
agency's path may reasonably be discerned."
Id. at 43 (citations omitted). As the Court makes clear, the
scope of judicial review under this standard is narrow. Pur-
suant to this standard, we can find no basis for overturning
the agency rules at issue in this case.
A. The Pole Space Rules
The Act sets forth fairly general rules regarding allocations
of the cost of usable and unusable space for attachments. See
47 U.S.C. s 224(d), (e). As noted above, the rate for any
single "attaching entity" varies inversely with the total num-
ber of attachers. Reconsideration Order at 12,131-32 p 55,
J.A. 27-28. In applying the statute, the Commission's rules
prescribe that any party with a physical attachment is an
"attaching entity." Reconsideration Order at 12,133-34 p 59,
J.A. 29. This means that even municipalities and utility
owners themselves may be deemed "attaching entities." Pe-
titioners challenge this rule, claiming that the statute only
allows telecommunications and cable companies to be counted
as attaching entities.
Petitioners' view of the statute is wrong. The specific
provision at issue, 47 U.S.C. s 224(e)(2), merely says that the
FCC must equally apportion costs "among all attaching enti-
ties." Petitioners argue, however, that the statutory defini-
tions of "pole attachment," s 224(a)(4), and "telecommunica-
tions carrier," s 224(a)(5), which do not include utilities and
municipalities, show that Congress meant to exclude utilities
and municipalities from the category of attaching entities.
This argument fails, because the cited provisions do not
establish what parties qualify as "attaching entities" for pur-
poses of apportioning costs under s 224(e)(2). In fact, to the
extent the Act mentions "entities" at all, the term bears
different meanings depending upon the context. Compare id.
s 224(h) (describing obligations of an "owner" and "any enti-
ty" when either modifies a pole attachment), with id. s 224(i)
(prohibiting charges to a party for attachment changes by
"any other entity" including owners). The most that can be
said is that s 224(e)(2) is unclear on whether utilities or
municipalities count as "attaching entities" for purpose of
apportioning costs.
The FCC's decision to count utilities among "attaching
entities" is an eminently reasonable interpretation of the
statute. The FCC reasoned that its broader definition better
reflects the operative language in the Act. Congress chose
not to use a more specific term like "telecommunications
carrier" or "provider of telecommunications services," which
would have evidenced an intent to distribute the unusable
space costs more narrowly. Reconsideration Order at 12,133-
34 p 59, J.A. 29-30. The broader definition is also justified
because it limits the financial burden on telecommunications
providers and therefore encourages growth and competition
in the industry. Finally, the FCC noted that, absent the rule,
a telecommunications provider might bear the entire cost of
unusable space where it is the sole paying attacher. Id. at
12,134 p 60, J.A. 30. In sum, the agency's interpretation of
s 224(e)(2) is clearly a permissible interpretation of the stat-
ute to which we must defer.
Petitioners complain that the FCC acted unreasonably
when it "reversed course" in its Reconsideration Order, re-
moving all of the limitations that it had previously embraced
for counting attaching entities in the Telecom Order. Com-
pare Reconsideration Order at J.A. 28-30 with Telecom Order
at J.A. 236-40. But this reversal does not render the new
rule infirm. Rather, the issue is whether the agency fur-
nished a reasoned explanation for its changed position.
PSWF Corp. v. FCC, 108 F.3d 354, 357 (D.C. Cir. 1997);
Greater Boston Corp. v. FCC, 444 F.2d 841, 852 (D.C. Cir.
1970). There is no doubt in this case that the FCC's changed
position was fully justified and reasonable. The same reasons
that justify the agency's permissible interpretation of the
statute justify its decision to change from a narrow to a
broader definition of attaching entities. Reconsideration Or-
der at 12,133-34 pp 58-61, J.A. 29-30. As noted above, the
FCC reasonably concluded that the broader definition better
served the goals of the Act.
Petitioners further claim that the FCC violated the Act and
acted unreasonably in adopting presumptions for the number
of attaching entities. The Reconsideration Order states:
In order to expedite the process of developing
average numbers of attaching entities, and allow
utilities to avert the expense of developing location
specific averages, we provide two rebuttable pre-
sumptive averages for use in our Telecom Formula.
This gives both small and large utilities the option of
not conducting a potentially costly and burdensome
exercise necessary to develop averages based on
their company specific records. The adoption of
presumptive averages should reduce cost and effort
by all parties....
In the Telecom Order, we did not establish pre-
sumptions, but said we believed the most efficient
and expeditious manner to calculate a presumptive
number of attaching entities would be for each utili-
ty to develop its own presumptive average number
of attaching entities. We now reconsider that deci-
sion and set rebuttable presumptive average num-
bers of attaching entities for our two categories,
urbanized and non-urbanized. We are now persuad-
ed that utilities and attaching entities would benefit
from our providing presumptive averages for their
use. Our establishment of presumptive averages
will expedite the process and allow utilities to avert
the expense of developing location specific averages.
As with all our presumptions, either party may rebut
this presumption with a statistically valid survey or
actual data.
Id. at 12,139 pp 69-70, J.A. 35 (footnotes omitted).
The FCC's decision to use rebuttable presumptions is
neither inherently unlawful nor facially unreasonable. We
reject petitioners' suggestions to the contrary. However,
because the FCC has yet to apply the presumptions, we have
no basis upon which to judge the reasonableness of the new
rules as applied. The presumptions are merely presumptions
that are subject to rebuttal in any case. And, under the
applicable rule, utilities are free to substitute their own
surveys to establish more precise data on the numbers of
attaching entities. Absent a live controversy regarding a
particular application of the presumptions, petitioners' chal-
lenges to the presumptions as applied are unfit for review.
Because the "institutional interests" of the agency and the
court favor postponing review, and because petitioners have
pointed to no "hardship" that will result from delaying review,
we dismiss the as-applied challenges to the presumptions for
want of ripeness. See City of Houston v. Dep't of Housing
and Urban Dev., 24 F.3d 1421, 1430-32 (D.C. Cir. 1994).
B. The Overlashing Rules
Petitioners contest the FCC's rules on overlashing on
several grounds. First, they claim that the rules force utili-
ties to violate the Act's nondiscrimination provision, because
they establish different norms for an overlashing entity and
other attaching entities. Second, they contend that without a
rule that overlashers give prior notice to utilities, owners
cannot exercise their right to deny access for the reasons
listed in the statute. Finally, they suggest that the FCC
procedurally erred by ignoring their comments in drafting
these rules. We find no merit in these claims.
Because overlashing by definition involves a physical con-
nection to other wires and not to the pole itself, the Commis-
sion concluded that a utility is not entitled to charge overlash-
ing parties for pole space. Reconsideration Order at 12,142
p 76, J.A. 38. This is a permissible construction of the
statute, one that comports with the FCC's permissible con-
struction of "attaching entities."
The overlashing rules allow utilities to charge overlashers
"make ready" costs if the overlashing wires require enhancing
the strength of the pole. Id. at 12,142 p 77, J.A. 38-39. And
a utility can also deny access to overlashers for reasons of
insufficient capacity, safety or reliability as described in the
Act. See 47 U.S.C. s 224(f)(2); Reconsideration Order, at
12,141 p 74, J.A. 37. Overlashers are not required to give
prior notice to utilities before overlashing. However, the
FCC rules do not preclude owners from negotiating with pole
users to require notice before overlashing. Id. at 12,144 p 82,
J.A. 41 ("We clarify that it would be reasonable for a pole
attachment agreement to require notice of third party over-
lashing."). Whether, and to what extent, such a contract
provision might be enforceable is a question not presently
before us. Therefore, we have no occasion to decide that
issue.
In short, the overlashing rules show due consideration for
the utilities' statutory rights and financial concerns. The
record shows that these matters played a role in the FCC's
decision, but petitioner's concerns were balanced with the
efficiency gains that overlashing brings to the industry. See
id. at 12,140-41 p 73, J.A. 36-37.
C. "Sign and Sue" Rule
Petitioners also contend that the FCC's rule allowing enti-
ties to "sign and sue" violates the Act's plain meaning and is
arbitrary and capricious. According to petitioners, attaching
parties should be required to take exception to the terms and
conditions of an agreement when the attachment agreement
is negotiated or be estopped from filing a complaint about
those terms after the agreement is executed. Petitioners
argue that, under the Commission's rule, attachers can keep
the benefit of their bargains as they see fit and simultaneous-
ly seek to avoid disfavored provisions. "The Commission's
decision to play both negotiator and arbitrator, thus displac-
ing any true market negotiations, is unlawful," say petition-
ers. Petitioners' Br. at 37. We disagree.
The Commission has a duty to "adopt procedures necessary
and appropriate to hear and resolve complaints concerning
such rates, terms, and conditions." 47 U.S.C. s 224(b)(1);
see also id. s 224(e)(1) (directing FCC to establish regula-
tions to govern when "parties fail to resolve a dispute over
such charges"). Complying with these statutory mandates
gives the FCC jurisdiction to resolve contract disputes be-
tween the parties, save possibly where state regulations
occupy the field. Id. s 224(c)(1).
Petitioners' argument implicitly suggests that, under the
disputed rule, the FCC seeks to retain unfettered authority to
abrogate the lawful terms of private settlements merely at
the behest of attachers. We see nothing in the rules to
support this view. The agency's brief to this court aptly
disposes of this issue:
The utilities do not describe or explain under what
circumstances the Commission's condoning of "sign
and sue" undermines reliance on private negotiation
or when exactly it is unfair to the utilities, but we
observe that "sign and sue" is likely to arise only in
a situation in which the attacher has agreed, for one
reason or another, to pay a rate above the statutory
maximum or otherwise relinquish a valuable right to
which it is entitled under the Pole Attachments Act
and the Commission's rules. If the rates and condi-
tions to which the attacher later objects are within
the statutory framework, then the utility has nothing
to fear from the attacher's complaint. The attacher
would not be entitled to relief.
For example, one scenario in which "sign and sue"
is likely to arise is when the attacher acquiesces in a
utility's "take it or leave it" demand that it pay more
than the statutory maximum or relinquish some
other valuable right - without any quid pro quo
other than the ability to attach its wires on unrea-
sonable or discriminatory terms. Of course the Pole
Attachments Act was designed to prevent such an
exercise of monopoly power that would nullify the
statutory rights of cable systems or telecommunica-
tions carriers to obtain both immediate access and
timely regulatory relief to the extent access is unrea-
sonable or discriminatory. The utility is statutorily
required to grant prompt, nondiscriminatory access
and may not erect unreasonable barriers or engage
in unreasonable delaying tactics. So in this scenar-
io, where the utility gives nothing of value in ex-
change for the attacher's coerced "agreement" to
accept unreasonable or discriminatory access, the
utility has no right to complain if the attacher "signs
and sues" to challenge this abuse of the utility's
monopoly control over the essential transport facili-
ties.
It is conceivable that in some circumstances, the
utility may give a valuable concession in exchange
for the provision the attacher subsequently chal-
lenges as unreasonable. As a hypothetical example,
the utility might agree to absorb some of the make-
ready or attachment costs that are normally paid by
the attachers in exchange for a higher rate. In that
situation, the Commission could evaluate the reason-
ableness of the rate provisions as a package, and
these provisions would rise or fall together without
undermining the statutory policy in favor of volun-
tary dispute resolution.
Respondent's Br. at 42-43.
On the record at hand, we conclude that the rule is a
reasonable exercise of the agency's duty under the statute to
guarantee fair competition in the attachment market. The
agency's limited authority to review negotiated settlements is
consistent with the statute and it does not interfere with any
of the rights afforded petitioners under the Act.
D. Conduit Space Rules
Finally, petitioners contend that the FCC's decisions on
conduit space and fees are unlawful and unreasonable. Ac-
cording to petitioners, the Reconsideration Order fails to
recognize that portions of conduits are unusable for purposes
of computing the appropriate attachment formula. Petition-
ers also contend that, without explanation or support in the
record, the FCC reversed the Telecom Order decision that
conduit space reserved for maintenance and emergency use is
reserved for the benefit of all conduit occupants; that such
reservation renders that duct unusable; and that the costs of
the space should be allocated to those who benefit from it.
Petitioners argue further that the FCC engaged in arbitrary
and capricious decision-making when it derived a rebuttable
presumption that an attacher occupies only one-half of a duct
or conduit. We find no merit in these contentions.
The Commission did not shift its position without explana-
tion or good reason, as petitioners contend, when it adopted
the unusable space rule. Rather, the Commissioner's Recon-
sideration Order is cogent on this issue:
In the Fee Order, we reviewed the Fee Order
Notice filings as well as the Telecom Order petition
filings and concluded that other than collapsed ducts
which are not counted in determining total capacity,
there is no unusable capacity in a conduit. This was
a departure from our conclusion in the Telecom
Order and we now affirm our conclusion in the Fee
Order. The total capacity of a duct or conduit is the
entire volume of available capacity in the conduit
system. All costs associated with the construction of
the conduit system are considered in determining
the cost of this total capacity.
...
We will not allow capacity designated for mainte-
nance, future business plans, or municipal set-asides
to be subtracted from the total duct or conduit
capacity for rate determination purposes. The rec-
ord supports our analysis that capacity in a duct or
conduit that is usable for any of these purposes is
part of the "total duct or conduit capacity." For
example, a utility may set-aside capacity for mainte-
nance or emergencies so that unoccupied capacity is
available into which a temporary cable may be
placed and spliced into a damaged cable. Capacity
so designated is usable in the event it is needed, and
available for use by the utility at any time for any
purpose, and is therefore part of the total available
conduit capacity. Such reservation of capacity is not
necessarily identified by a specific duct or location,
can be treated, used, withdrawn or discarded at the
sole discretion of the utility, and must be considered
part of the total capacity of the conduit.
Reconsideration Order, 12,147, 12,149 pp 88, 93, J.A. 43, 47.
The FCC's rule adopting a presumption for duct space is
not facially invalid. The rule merely establishes a rebuttable
presumption. See id. at 12,150-51 p 95, J.A. 46; see also id.
at 12,152 p 98, J.A. 48 ("When the actual percentage of
capacity is known, it can and should be used instead of the
one half presumption."). The possibility that a utility can
present information showing that an attached wire or cable
occupies more than half of the duct space makes it clear that
the rule is not facially unreasonable.
We will not otherwise address the merits of this rule,
however, because petitioners' challenge to the rule as applied
is unripe. See City of Houston, 24 F.3d at 1430-32. The
same considerations that prompted our dismissal of petition-
ers' as-applied challenge to the rule regarding presumptions
for the number of attaching entities apply here as well.
III. Conclusion
For the reasons stated above, the petitions for review of
the FCC Orders are hereby denied.