FCC Lacks ‘Statutory Jurisdiction’ Over Pole Attachment Dispute, Says Duke’s Reply

The arguments that the FCC and AT&T raise in Duke Energy’s petition for review of the FCC’s November order denying the company reconsideration in a pole attachment rate dispute with AT&T (see 2211290053) “reinforce” that the FCC shouldn’t “assert jurisdiction" over the rates AT&T pays Duke where it lacks jurisdiction over the rates Duke pays AT&T, said Duke’s reply brief Monday (docket 22-2220) at the 4th U.S. Circuit Court of Appeals.

Duke alleges the FCC created an entirely new standard and retroactively applied it to the joint use agreement in place between Duke and AT&T to award AT&T a refund for the period governed by its 2011 pole attachment order (see 2304110001). Duke contends the FCC erred in saying AT&T is entitled to a refund for the portion of its claim governed by the 2011 order.

Duke argues it’s not "rational" to assume Congress intended for the FCC to have jurisdiction over the rates paid by ILECs to joint use agreements but not over the rates paid by electric utilities, said the reply brief. The FCC wrongly contends Duke waived that argument, it said. The record shows Duke raised the “incomplete” nature of the FCC’s jurisdiction, “and its impact on the jurisdictional issue in this case, in several ways,” it said.

The FCC “was clearly aware of the regulatory gap created by its incomplete jurisdiction,” said the reply brief. The FCC ordered the parties to amend their joint use agreement to include a rate no higher than the “old telecom rate” for AT&T’s use of Duke’s poles, it said. But for Duke’s use of AT&T’s poles, the FCC “merely (and vaguely) directed the parties” to negotiate a rate that reflects proportional reciprocal rates for Duke’s attachments to AT&T’s poles, it said: “Because the FCC exhibited its awareness of the incomplete nature of its jurisdiction, Duke cannot have waived that argument.”

The FCC’s "acknowledgment" it lacks jurisdiction over the rates Duke pays AT&T “crystalizes the FCC’s lack of statutory authority over this dispute,” said the reply brief. In its response brief, the agency “never asserts that it has jurisdiction over the rates Duke pays AT&T,” it said. “This should end the inquiry,” it said.

That the FCC lacks jurisdiction over the rates Duke pays AT&T, “combined with the fact that there is no express statement in the Pole Attachments Act that Congress intended to create a regulatory gap, can lead to only one rational conclusion,” said the reply brief: “Congress never intended for the FCC to regulate joint use relationships between ILECs and electric utilities where net joint use rental is exchanged.”

The agency’s “post-hoc attempt” to fill the regulatory gap is “unavailing,” said the reply brief. In an attempt to address that gap, “the FCC argues that it can regulate the rates Duke pays AT&T indirectly,” it said. The FCC cites its previous statement it would be skeptical of a complaint by an ILEC seeking a proportionally lower rate to attach to an electric utility’s poles than the rate the ILEC is charging the electric utility to attach to its poles, the brief said. But the agency’s order in this case “makes clear that the foregoing statement is toothless,” it said.

The FCC also wrongly argues it didn’t create a regulatory gap, said the reply brief. It argues the Enforcement Bureau ordered the parties to negotiate a new rate for Duke’s attachments to AT&T’s poles, it said. The commission also argues the FCC previously said a just and reasonable rate for an electric utility’s attachments to an ILEC’s pole would be the same proportionate rate charged the electric utility, in light of the ILEC’s relative usage of the pole, the brief said.

But the FCC "entirely failed" to consider “the disparity between Duke’s pole costs and AT&T’s pole costs,” said the reply brief. “The FCC, in its response brief, now appears to agree that such disproportionate costs are relevant to the rates Duke pays AT&T, and thus to the overall resolution of the dispute,” it said: “This admission by the FCC is significant because it highlights the arbitrary and capricious nature of the FCC’s assertion of jurisdiction over the rate AT&T pays Duke.”