FCC Says It Properly ‘Exercised’ Its Authority in Duke/AT&T Pole Attachment Dispute

The FCC “reasonably exercised” its statutory authority when it decided the pole attachment rate Duke Energy charged AT&T was unjust and unreasonable, said the commission’s responding brief Thursday (docket 22-2220) in the 4th U.S. Circuit Court of Appeals to the Duke and AT&T consolidated petitions for review. The FCC also properly decided AT&T should pay Duke a pole attachment rate that’s lower than the rate in their joint use agreement but higher than the rate paid by other companies that attach their lines to Duke’s poles, it said.

The FCC also properly ordered Duke to refund AT&T the difference between the rate in the joint use agreement and the “just and reasonable rate” it should pay Duke, as determined by the commission, for the period covered by the three-year statute of limitations, said the commission’s brief. Duke and AT&T both walked away from agency’s decisions in protest, later filing separate petitions for review that ultimately were consolidated before the 4th Circuit (see 2302130027).

Duke asserts the FCC lacks jurisdiction over the rates utilities charge ILECs, but that argument is barred by “principles of issue preclusion,” said the commission. Duke’s corporate parent raised the same argument more than a decade ago before the U.S. Court of Appeals for the D.C. Circuit, “which squarely rejected it,” it said.

Duke’s jurisdictional objection “also fails on the merits,” said the FCC. As the D.C. Circuit explained, the commission “reasonably interpreted” Section 224 of the Communications Act “as authorizing it to regulate the pole attachment rates that ILECs pay utilities,” it said. The 9th Circuit agreed, and there’s “no basis for revisiting those decisions here,” it said.

The agency “properly applied its regulations and precedent” in deciding the rates Duke charged AT&T were unjust and unreasonable, said the FCC. It also “properly required” Duke, not AT&T, to assume the cost of the 40-inch safety space on Duke’s poles, it said. The FCC for decades “assigned the safety space to the electric utility, rather than entities with attachments on its poles” because it’s the utility “that needs that space to protect its electric lines, and the utility is the only entity that can make productive use of it,” it said.

The commission also “reasonably determined” AT&T should pay a higher rate than other attachers, though not as high as that specified in its joint use agreement with Duke, said the FCC. That’s because it enjoys “material” advantages that aren’t available to other attachers on Duke’s poles, it said. Though AT&T “interprets the evidence differently,” the FCC’s decision was based on “substantial evidence, including the terms in AT&T’s joint use agreement,” it said.

Consistent with agency regulations and precedent, the FCC “only compared contract terms, not other attachers’ statutory and regulatory rights,” said the commission. The agency “also reasonably permitted Duke to use different inputs in the different formulas used to calculate the different rates paid by AT&T and other attachers on Duke’s poles,” it said.