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Gulf Power Company v. Federal Communications Commission and United States of America

February 21, 2012


On Petition for Review of an Order of the Federal Communications Commission

The opinion of the court was delivered by: Senior Circuit Judge Williams.

Argued January 19, 2012

Before: TATEL and GRIFFITH, Circuit Judges, and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge WILLIAMS.

WILLIAMS, Senior Circuit Judge: In 1978 Congress passed the Pole Attachments Act, which set a ceiling and a floor on the price that cable television operators and telecommunications carriers (here called cable operators for simplicity's sake) must pay to attach their lines to a power company's utility poles. See 47 U.S.C. § 224(d). The act directs the Federal Communications Commission to "regulate the rates, terms, and conditions for pole attachments to provide that such rates, terms, and conditions are just and reasonable," id. § 224(b)(1), and then sets the bounds for what is "just and reasonable":

[A] rate is just and reasonable if it assures a utility the recovery of not less than the additional costs of providing pole attachments, nor more than an amount determined by multiplying the percentage of the total usable space . . . which is occupied by the pole attachment by the sum of the operating expenses and actual capital costs of the utility attributable to the entire pole, duct, conduit, or right-of-way.

Id. § 224(d). Congress thus specified a minimum charge (characterized by the Supreme Court as the "marginal cost of [the] attachments," FCC v. Florida Power Corp., 480 U.S. 245, 253 (1987)) and a maximum ("the fully allocated cost of the construction and operation of the pole to which [the] cable is attached," id.). The FCC promulgated regulations that clarified how to calculate the upper limit of Congress's formula and appeared to make the maximum rate the ceiling for what the utility may charge (as the word maximum implies). See 47 C.F.R. § 1.1409(e); but cf. id. § 1.1409(b).

While specifying rate limits, the 1978 act left utilities free to refuse attachment. In 1996 Congress added a requirement that utilities allow attachment except in cases of "insufficient capacity" or for "reasons of safety, reliability and generally applicable engineering purposes." 47 U.S.C. § 224(f).

Soon after the 1996 amendments, petitioner Gulf Power and other utility companies increased their pole attachment rates to levels above the statutory maximum. Several cable operators filed a complaint against Gulf with the FCC, which ruled that Gulf's increased rates violated the act and the FCC's implementing regulations.

Gulf now seeks review of that order, arguing that the act fails to provide for just compensation under the Fifth Amendment, and that the FCC's decision is arbitrary and capricious, or is otherwise not supported by substantial evidence. We find the doctrine of collateral estoppel (or "issue preclusion") a fatal bar to Gulf's assertion of the constitutional issue, and its remaining arguments unavailing. We thus deny the petition.

Gulf primarily contends that the act and the FCC's implementing regulations fail to provide just compensation for power companies forced to allow attachments at the prescribed rates. The FCC responds that the Eleventh Circuit's rejection of that claim in Alabama Power Co. v. FCC, 311 F.3d 1357 (2002), bars Gulf's pursuit of it here. Gulf and Alabama Power are both wholly owned subsidiaries of a third company, Southern Company. For reasons elaborated below, we agree with the Commission.

In Alabama Power the court faced a challenge by Gulf's sister company to the precise scheme at issue here. Alabama Power, like Gulf, argued that "the statute and regulations fail to provide just compensation." Id. at 1367. The Eleventh Circuit held that, outside of certain limited circumstances, the act's rates amounted to just compensation. Id. at 1370-71. Although acknowledging that mandatory attachments could impose an opportunity cost on a utility (namely, loss of the advantage of either using attachment space itself or renting it to another), the court held that the takings clause did not require compensation for that cost in the absence of actual crowding. Thus, it concluded, the act and regulations failed to specify just compensation only when a power company could show that "(1) the pole [in question] is at full capacity and (2) either (a) another buyer of the space is waiting in the wings or (b) the power company is able to put the space to a higher-valued use with its own operations." Id. at 1370.

Because the act itself allows the utility to refuse access altogether in cases of "insufficient capacity," 42 U.S.C. § 224(f)(2), we take it that the Alabama Power formula will only become relevant in cases where the current set of attachments have filled the pole to capacity and the utility is then presented with either of the two opportunities discussed in part (2) of the formula, namely renting the occupied space to another at a higher rate or using that space itself for a higher-valued use. Refinements of this sort, however, are unnecessary to resolve this case.

The doctrine of issue preclusion generally bars "successive litigation of an issue of fact or law actually litigated and resolved in a valid court determination essential to the prior judgment." New Hampshire v. Maine, 532 U.S. 742, 748-49 (2001); see also Taylor v. Sturgell, 553 U.S. 880, 892 (2008). Gulf argues ...

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