4th Circuit Should Deny Duke, AT&T Petitions for Review, Says FCC's Final Brief

Duke Energy’s argument the FCC lacks jurisdiction over the pole attachment rates utilities charge incumbent local exchange carriers like AT&T “is barred by principles of issue preclusion,” said the commission’s final redacted public reply brief, dated Thursday and docketed Friday (docket 22-2220) in the 4th U.S. Circuit Court of Appeals, in opposition to the Duke and AT&T petitions for review of the agency’s 2018 order (see 2212290050).

In the order, the FCC determined AT&T should pay a pole attachment rate that’s lower than that of its joint use agreement with Duke but higher than the rate paid by other companies that attach their lines to Duke’s poles. It also ordered Duke to refund AT&T the difference between the rate in the joint use agreement and what the commission found to be the “just and reasonable rate” for the period covered by a three-year statute of limitations.

Duke’s corporate parent, more than a decade ago, raised the same jurisdictional argument before the U.S. Court of Appeals for the D.C. Circuit, “which squarely rejected it,” said the FCC’s brief. “Duke’s jurisdictional objection also fails on the merits,” it said. As the D.C. Circuit explained, the FCC “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 later agreed, it said: “There is no basis for revisiting those decisions here.”

The FCC “reasonably exercised its statutory authority in this case,” said the agency’s brief. The commission “properly applied its regulations and precedent” in deciding the rates Duke charged AT&T were “unjust and unreasonable,” it said. The order didn’t harm any “reliance interest” of Duke’s, it said. During the period covered by its complaint, “Duke had notice that it might have to issue a refund if an ILEC, like AT&T, established that Duke’s pole attachment rates were unjust and unreasonable,” it said.

The commission also “reasonably determined” that AT&T should pay a higher rate than other attachers, though not as high as specified in the joint use agreement, “because it enjoys material advantages that are not available to other attachers on Duke’s poles,” said the agency’s brief. 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. The commission 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.

The FCC in the 2018 order “carefully balanced” the interests of the parties to ensure AT&T “pays a just and reasonable rate that compensates Duke for the pole attachment terms it provides AT&T while at the same time treating all attachers on Duke’s poles fairly,” said the agency’s brief. The commission’s determinations are “faithful” to the Communications Act, it said. The decisions also adhere to the agency’s precedent and regulations, and they’re supported by substantial evidence, and are reasonable, it said. The 4th Circuit should deny both petitions for review, it said.