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D.C. Circuit Upholds FCC’s Interpretation of Pole Attachment Statute

On February 26, 2013, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) upheld an April 2011 Federal Communications Commission (“FCC”) order that revised the FCC’s previous interpretation of Section 224 of the Communications Act of 1934, which regulates pole attachment rates.  In doing so, the D.C. Circuit upheld the FCC’s interpretations that: (1) certain local telephone companies, defined as incumbent local exchange carriers (“ILECs”) are “providers of telecommunication services”, and therefore eligible for the FCC to regulate their pole attachment rates under Section 224; (2) the FCC may create rate parity between telecommunication providers and cable companies by limiting the pole attachment rate utilities can charge telecommunication providers in a manner comparable to the lower pole attachment rates charged to cable providers; and (3) the refund period for overcharges can be based on the applicable statute of limitations, rather than the date that an overcharge complaint is filed.

The FCC’s April 2011 order involves both the 1978 Pole Attachment Act and 1996 Telecommunications Act.  Notably, the 1978 Pole Attachment Act implemented Section 224 of the Communications Act of 1934, establishing upper and lower limits for pole attachment rates that cable companies must pay, and granted the FCC the authority to regulate just and reasonable rates, terms, and conditions.  The 1996 Telecommunications Act revised and expanded the 1978 Pole Attachment Act to (1) include providers of telecommunication services as potential beneficiaries within the pole attachment definition; (2) exclude ILECs from the definition of “telecommunications carrier”; and (3) require the FCC to promulgate regulations “governing the rates for pole attachments used by the telecommunication carriers to provide telecommunication services.”

After the FCC issued its April 2011 order, petitioners – consisting of several power companies – challenged all of the FCC’s revised interpretations.  In its opinion, the D.C. Circuit rejected all of the petitioners’ challenges.  First, the D.C. Circuit held that in regard to inclusion of ILECs into the pole attachment rate regulation by the FCC, the FCC can regulate the pole attachment rates of ILECs because ILECs can be defined as a “provider of telecommunication service” under section 224, even if it’s not defined as a “telecommunication provider”.  Second, the D.C. Circuit held that FCC’s decision regarding the telecommunications rate warranted deference from the D.C. Circuit because the FCC’s methodology – which would revise the telecommunications pole attachment rate under Section 224(e) to be roughly equivalent to the cable rate under Section 224(d) – was consistent with the unspecified cost terms in Section 224(e).  Finally, the D.C. Circuit stated that the FCC has broad discretion in altering the refund period for overcharges, and “it is hard to see any legal objection to the [FCC’s] selection of any reasonable period for accrual of compensation for overcharges or other violations of the statute or rules.”

A copy of the opinion is available here.