United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 4, 2002 Decided December 20, 2002

No. 01-1326

Southern Company Services, Inc.,

Petitioner

v\.

Federal Communications Commission and

United States of America,

Respondents

United Telecom Council, et al.,

Intervenors

Consolidated with

01-1328, 01-1372, 01-1377, 01-1378, 01-1380

On Petitions for Review of Orders of the

Federal Communications Commission

\-\-\-\-\-\-\-\-\-\--

J. Russell Campbell argued the cause for petitioners. With him on the
briefs were Andrew W. Tunnell, Eric B. Langley, Jennifer M. Buettner,
Charles A. Zdebski, Shirley S. Fujimoto, Christine M. Gill, Thomas P.
Steindler, Erika E. Olsen, Jill M. Lyon, Brett W. Kilbourne, and
Laurence Brown. John D. Sharer entered an appearance.

Gregory M. Christopher, Counsel, Federal Communications Commission,
argued the cause for respondents. With him on the brief were Jane E.
Mago, General Counsel, John E. Ingle, Deputy Associate General Counsel,
Robert B. Nicholson and Robert J. Wiggers, Attorneys, United States
Department of Justice. John J. Powers III entered an appearance.

Daniel L. Brenner, Neal M. Goldberg, David L. Nicoll, Thomas F. O\'Neil
III, William Single IV, Paul Glist, John D. Seiver, Geoffrey C. Cook,
Brian M. Josef, and Anthony C. Epstein were on the brief for intervenors
National Cable & Telecommunications Association, et al.

Before: Edwards, Rogers, and Garland, Circuit Judges.

Opinion for the Court filed by Circuit Judge Edwards.

Edwards, Circuit Judge: In this case, Southern Company Services along
with a dozen owners of utility poles and conduits (collectively,
\"utilities\" or \"petitioners\") petition this court for review of
three Federal Communications Commission (\"FCC\" or \"Commission\")
Orders implementing amendments to the Pole Attachments Act (the
\"Act\"), 47 U.S.C. § 224 (2000). Under the Act, the owners of poles and
conduits have an obligation to lease space to companies that wish to
\"attach\" cables or wires. The statute gives the FCC authority to
\"regulate the rates, terms, and conditions\" in the market for
attachment space and to \"adopt procedures necessary and appropriate to
hear and resolve complaints\" regarding these matters. Id. § 224(b)(1).
In the disputed Orders, the Commission announced regulations and
procedures designed to assure that telecommunications providers can
obtain the attachment space at just and reasonable rates.

In July 1997, the FCC adopted a Notice of Proposed Rule Making
(\"NPRM\") relating to the implementation of § 703(e) of the
Telecommunications Act of 1996 to amend the Commission\'s rules and
policies governing pole attachments. In the Matter of Implementation of
Section 703(e) of the Telecommunications Act of 1996, Amendment of the
Commission\'s Rules and Policies Governing Pole Attachments, Notice of
Proposed Rule Making, 12 F.C.C.R. 11,725 (Aug. 12, 1997), reprinted in
Joint Appendix (\"J.A.\") 297-326. In February 1998, after notice and
comment, the Commission announced rules governing reasonable rates for
telecommunications attachments and guidelines for nondiscriminatory
access to poles and conduits. Implementation of Section 703(e) of the
Telecommunications Act of 1996, Amendment of the Commission\'s Rules and
Policies Governing Pole Attachments, Report and Order, 13 F.C.C.R. 6,777
(Feb. 6, 1998), (\"Telecom Order\"), reprinted in J.A. 213-96. In March
1997, the FCC adopted a NPRM relating to the maximum just and reasonable
rates utilities may charge for attachments made to a pole, duct, conduit
or right-of-way. 12 F.C.C.R. 7,449 (Mar. 14, 1997). In April 2000,
following notice and comment, the Commission revised the methodology and
application of the rate formula. Amendment of Rules and Policies
Governing Pole Attachments, Report and Order, 15 F.C.C.R. 6,453 (Apr. 3,
2000) (\"Fee Order\"), reprinted in J.A. 79-158. Finally, in May 2001,
the FCC clarified and revised its two previous orders, answering
petitions from interested parties in a consolidated proceeding. In the
Matter of Amendment of the Commission\'s Rules and Policies Governing
Pole Attachments; In the Matter of Implementation of Section 703(e) of
the Telecommunications Act of 1996, Consolidated Partial Order on
Reconsideration, 16 F.C.C.R. 12,103 (May 25, 2001) (\"Reconsideration
Order\"), reprinted in J.A. 1-78.

The utilities contend that the new rules exceed the FCC\'s enforcement
authority and interfere with their rights to reasonably deny pole, duct,
conduit, and right-of-way space. Petitioners also claim that the rules
betray the requirements of reasoned decision-making under the
Administrative Procedure Act (\"APA\").

On the record presented, we find that the FCC Orders are premised on
reasonable interpretations of the Act and that the disputed rules do not
interfere with petitioners\' rights to negotiate contracts or to deny
space for legitimate reasons. Certain of the disputed rules are unripe
for review, so we offer no judgment on them. We otherwise hold that, in
promulgating the disputed Orders, the FCC took into account the relevant
factors, provided reasoned explanations for its decisions, and grounded
its justifications in record evidence. Accordingly, we reject
petitioners\' claim that the rules are \"arbitrary, capricious or
contrary to law,\" and hereby deny the petitions for review.

I. Background

In 1978, Congress enacted the Pole Attachments Act to curb
anti-competitive tendencies that limited the growth of the
communications market. Pub. L. No. 95-234, 47 U.S.C. § 224 (1978); see
also Nat\'l Cable & Telecomm. Ass\'n, Inc. v. Gulf Power Co., 534 U.S.
327, 330 (2002); FCC v. Fla. Power Corp., 480 U.S. 245, 247-48 (1987).
The then-nascent cable industry relied heavily upon the space on utility
poles to secure the wires that delivered the signals to consumers. Since
building new poles was prohibitively expensive, cable operators instead
leased existing space from utilities (usually electricity and telephone
service companies). Fla. Power Corp., 480 U.S. at 247 (\"Utility company
poles provide, under such circumstances, virtually the only practical
physical medium for the installation of television cables.\"). However,
utilities often exploited their market position to charge excessively
high attachment rates. To restrain this practice, Congress sought to
\"establish a mechanism whereby unfair pole attachment practices may
come under review and sanction, and to minimize the effect of unjust or
unreasonable pole attachment practices on the wider development of cable
television service to the public.\" S. Rep. No. 95-580 (1977) (\"Senate
Report\"), reprinted in 1978 U.S.C.C.A.N. 109.

The original provisions in the Act gave the FCC authority to \"regulate
the rates, terms, and conditions\" for attachment contracts and the
authority to assure that such rates are \"just and reasonable.\" 47
U.S.C. § 224(a) (1978). The Act defined a \"pole attachment\" as \"any
attachment made by a cable television system to a pole, duct, conduit or
right of way controlled by a utility.\" Id. § 224(a)(4). Under the Act,
the Commission could set rates ranging from no less than \"the
additional cost of providing the pole attachments\" to no more than the
share of the total operating expenses in proportion to the percentage of
space on the pole occupied by the cable carrier. Id. § 224(d)(1); see
also Fla. Power Corp., 480 U.S. at 248. The FCC\'s jurisdiction to
enforce the statute applied in all places where state agencies had not
previously adopted regulations. See Senate Report, 1978 U.S.C.C.A.N. at
110.

Responding to the development of telecommunications technologies during
the intervening years, Congress substantially amended 47 U.S.C. § 224 in
the 1996 Telecommunications Act, Pub. L. No. 104-104, 110 Stat. 56
(1997). The major changes in the Act reflect the view that
telecommunications companies offering new services to the public should
enjoy protections similar to those that the 1978 Act made available to
the cable industry. See H.R. Conf. Rep. No. 104-458 (1996), reprinted in
1996 U.S.C.C.A.N. 125. Congress determined that expanding the Act\'s
scope in this manner would ultimately improve telecommunications service
options for consumers.

Three specific changes in the Act are relevant to the present case.
First, the amended statute broadens the definition of \"pole
attachment\" to include connections made by cable operators or any other
\"provider of telecommunications service\" to poles, ducts, conduits, or
rights-of-way owned or controlled by a utility. 47 U.S.C. § 224(a)(4).
The Act also calls on the FCC to develop a separate attachment rate
scheme for telecommunications providers. Id. § 224(e). Finally, the Act
requires owners to provide \"non-discriminatory access\" to attachers
seeking space on poles, ducts, conduits, and rights-of-way. Id. §
224(f)(1). An owner may deny space \"where there is insufficient
capacity and for reasons of safety, reliability and generally applicable
engineering purposes.\" Id. § 224(f)(2).

The contested issues in this case fall into four general categories.
First, the Commission updated its formula for allocating the cost of
\"other than usable\" (or \"unusable\") space. The Act directs that
\"\[a\] utility shall apportion the cost of providing space on a pole,
duct, conduit, or right-of-way other than the usable space among
entities so that such apportionment equals two-thirds of the costs of
providing space other than the usable space that would be allocated to
such entity under an equal apportionment of such costs among all
attaching entities.\" Id. § 224(e)(2). Thus, the maximum rate for any
single attacher decreases as the total number of attaching entities
grows. In the Reconsideration Order, the FCC announced that it would
calculate the costs for unusable space based on the following
definition:

The term \"attaching entities\" includes, without limiation and
consistent with the Pole Attachment Act, any telecommunications carrier,
incumbent or other local exchange carrier, cable operator, government
agency, and any electric or other utility, whether or not the utility
provides telecommunications service to the public, as well as any other
entity with a physical attachment to the pole.

Reconsideration Order at 12,133-34 p 59, J.A. 29 (footnote omitted).
This position reversed the Commission\'s position in the Telecom Order
that both municipal agencies and utilities with wires on the pole were
subject to the \"attaching entities\" classification only if they
provided telecommunications services. Id. at 12,1332 p57, J.A. 28; see
also Telecom Order at 6,800-04 pp 48-54, J.A. 237-40. To aid in rate
calculations, the Commission announced that poles located in areas with
more than 50,000 people have a presumed average of five attachers, while
poles located in areas with fewer than 50,000 people have a presumed
average of three attachers. Reconsideration Order at 12,139-40 p 71,
J.A. 35-36.

Second, pursuant to § 224(e)(1), the FCC adopted a complaint resolution
process for situations \"when the parties fail to resolve a dispute over
\[rate\] charges.\" Under the applicable rules, an attacher may \"sign\"
a contract with a utility and later file a complaint with the FCC to
contest an element of that agreement deemed to be unfair. Id.; Telecom
Order at 6,780-90 pp 16-21, J.A. 223-26; Reconsideration Order at
12,-112 p 12, J.A. 8. This is the so-called \"sign and sue\" rule.

Third, the Commission adopted regulations for overlashing, a technique
whereby a telecommunications provider attaches a wire to its own (or,
for third-party overlashing, to other attachers\') existing wires. The
FCC rule provides that a third-party overlasher \"shares space with the
host attachment\" and, therefore, does not qualify as an \"attaching
entity\" for purposes of the attachment rate formula. Reconsideration
Order at 12,145 p 83, J.A. 41. This rule changed the position taken by
the FCC in the Telecom Order. See Telecom Order at 6,809-10 pp 68-69,
J.A. 245-46. The Commission also clarified that an overlashing party
does not need to obtain advance consent from a utility if that party has
a primary wire attachment already in place. Reconsideration Order at
12,144-45 p 82, J.A. 40-41. The FCC recognized, however, that \"a
utility is entitled to notice of the overlashing,\" and that the utility
may recover any costs incurred for strengthening the pole to support the
weight of additional wires. Id.

Fourth, the FCC adopted rules concerning the rate formula for attachment
space in conduits - the hollow underground structures that carry cables
and telecommunications wires. In both the Fee Order and the
Reconsideration Order, the Commission determined that conduits contain
no unusable space. Id. at 12,149 p 93, J.A. 45; Fee Order at 6,496-97 pp
89-90, J.A. 123. The Commission found that any conduit area that could
be utilized for a specific purpose was \"usable\" and therefore was
subject to the rate formula:

\[A\]n electric utility is allowed to reserve capacity for future
business purposes under a bona fide business plan, but must allow that
capacity to be used for attachments until an actual business need
arises. For whatever reason capacity may be reserved or designated for
special uses, by or on behalf of the utility, and regardless of who may
benefit directly or indirectly from those uses, the capacity is
available for use and therefore remains part of the total capacity of
the conduit for rate determination purposes.

Reconsideration Order at 12,150 p 94, J.A. 46 (footnotes omitted). The
FCC also adopted an administrative presumption that each conduit
attachment occupies only half the space within each duct (i.e., a
subsection of the conduit). Id. at 12,150 p 95, J.A. 46; Telecom Order
at 6,829 p 115, J.A. 265-66. Just as it found that its presumptions for
the number of entities on a pole were rebuttable, the agency noted that
any utility could offer data showing that specific attachments actually
used a greater share of duct space. Id.

II\. Analysis

Petitioners assert that the disputed rules and procedures should be
vacated, because they violate the Act and betray the precepts of
reasoned decision-making under § 706(2)(A) of the APA, 5 U.S.C. §
706(2)(A).

In deciding whether to defer to the FCC\'s construction of the Pole
Attachments Act, we adhere to the tests enunciated by the Supreme Court
in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467
U.S. 837 (1984), and United States v. Mead Corp., 533 U.S. 218 (2001).
In Chevron, the Court held that, \"\[i\]f the intent of Congress is
clear, that is the end of the matter; for the court, as well as the
agency, must give effect to the unambiguously expressed intent of
Congress.\" 467 U.S. at 842-43. This is so-called \"Chevron Step One\"
review. If Congress \"has not directly addressed the precise question\"
at issue, and the agency has acted pursuant to an express or implicit
delegation of authority, the agency\'s interpretation of the statute is
entitled to deference so long as it is \"reasonable\" and not otherwise
\"arbitrary, capricious, or manifestly contrary to the statute.\" Id. at
843-44. This is so-called \"Chevron Step Two\" review. Mead reinforces
Chevron\'s command that Chevron deference to an agency\'s interpretation
of a statute is due only when \"it appears that Congress delegated
authority to the agency generally to make rules carrying the force of
law, and that the agency interpretation claiming deference was
promulgated in the exercise of that authority.\" Mead, 533 U.S. at
226-27.

In this case, there is no doubt that the FCC promulgated the new rules
pursuant to congressionally delegated authority and that the disputed
Orders purport to have the force of law. Petitioners contend, however,
that certain provisions in the new rules exceed the Commission\'s
authority under the Act. We reject this contention. The intent of
Congress is not unambiguously expressed in the provisions of the Act at
issue in this case. Nonetheless, the FCC\'s constructions of the Act are
entirely reasonable and thus deserving of deference under Chevron Step
Two.

Petitioners also contend that, whether or not the new rules reflect
permissible interpretations of the statute, they should be vacated as
\"arbitrary and capricious\" under the APA. In Motor Vehicle Mfrs.
Assoc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983), the
Supreme Court explained the APA\'s \"arbitrary and capricious\" test, as
follows:

The scope of review under the \"arbitrary and capricious\" standard is
narrow and a court is not to substitute its judgment for that of the
agency. Nevertheless, the agency must examine the relevant data and
articulate a satisfactory explanation for its action including a
\"rational connection between the facts found and the choice made.\" In
reviewing that explanation, we must \"consider whether the decision was
based on a consideration of the relevant factors and whether there has
been a clear error of judgment.\" Normally, an agency rule would be
arbitrary and capricious if the agency has relied on factors which
Congress has not intended it to consider, entirely failed to consider an
important aspect of the problem, offered an explanation for its decision
that runs counter to the evidence before the agency, or is so
implausible that it could not be ascribed to a difference in view or the
product of agency expertise. The reviewing court should not attempt
itself to make up for such deficiencies: \"We may not supply a reasoned
basis for the agency\'s action that the agency itself has not given.\"
We will, however, \"uphold a decision of less than ideal clarity if the
agency\'s path may reasonably be discerned.\"

Id. at 43 (citations omitted). As the Court makes clear, the scope of
judicial review under this standard is narrow. Pursuant to this
standard, we can find no basis for overturning the agency rules at issue
in this case.

A. The Pole Space Rules

The Act sets forth fairly general rules regarding allocations of the
cost of usable and unusable space for attachments. See 47 U.S.C. §
224(d), (e). As noted above, the rate for any single \"attaching
entity\" varies inversely with the total number of attachers.
Reconsideration Order at 12,131-32 p 55, J.A. 27-28. In applying the
statute, the Commission\'s rules prescribe that any party with a
physical attachment is an \"attaching entity.\" Reconsideration Order at
12,133-34 p 59, J.A. 29. This means that even municipalities and utility
owners themselves may be deemed \"attaching entities.\" Petitioners
challenge this rule, claiming that the statute only allows
telecommunications and cable companies to be counted as attaching
entities.

Petitioners\' view of the statute is wrong. The specific provision at
issue, 47 U.S.C. § 224(e)(2), merely says that the FCC must equally
apportion costs \"among all attaching entities.\" Petitioners argue,
however, that the statutory definitions of \"pole attachment,\" §
224(a)(4), and \"telecommunications carrier,\" § 224(a)(5), which do not
include utilities and municipalities, show that Congress meant to
exclude utilities and municipalities from the category of attaching
entities. This argument fails, because the cited provisions do not
establish what parties qualify as \"attaching entities\" for purposes of
apportioning costs under § 224(e)(2). In fact, to the extent the Act
mentions \"entities\" at all, the term bears different meanings
depending upon the context. Compare id. § 224(h) (describing obligations
of an \"owner\" and \"any entity\" when either modifies a pole
attachment), with id. § 224(i) (prohibiting charges to a party for
attachment changes by \"any other entity\" including owners). The most
that can be said is that § 224(e)(2) is unclear on whether utilities or
municipalities count as \"attaching entities\" for purpose of
apportioning costs.

The FCC\'s decision to count utilities among \"attaching entities\" is
an eminently reasonable interpretation of the statute. The FCC reasoned
that its broader definition better reflects the operative language in
the Act. Congress chose not to use a more specific term like
\"telecommunications carrier\" or \"provider of telecommunications
services,\" which would have evidenced an intent to distribute the
unusable space costs more narrowly. Reconsideration Order at 12,133-34 p
59, J.A. 29-30. The broader definition is also justified because it
limits the financial burden on telecommunications providers and
therefore encourages growth and competition in the industry. Finally,
the FCC noted that, absent the rule, a telecommunications provider might
bear the entire cost of unusable space where it is the sole paying
attacher. Id. at 12,134 p 60, J.A. 30. In sum, the agency\'s
interpretation of § 224(e)(2) is clearly a permissible interpretation of
the statute to which we must defer.

Petitioners complain that the FCC acted unreasonably when it \"reversed
course\" in its Reconsideration Order, removing all of the limitations
that it had previously embraced for counting attaching entities in the
Telecom Order. Compare Reconsideration Order at J.A. 28-30 with Telecom
Order at J.A. 236-40. But this reversal does not render the new rule
infirm. Rather, the issue is whether the agency furnished a reasoned
explanation for its changed position. PSWF Corp. v. FCC, 108 F.3d 354,
357 (D.C. Cir. 1997); Greater Boston Corp. v. FCC, 444 F.2d 841, 852
(D.C. Cir. 1970). There is no doubt in this case that the FCC\'s changed
position was fully justified and reasonable. The same reasons that
justify the agency\'s permissible interpretation of the statute justify
its decision to change from a narrow to a broader definition of
attaching entities. Reconsideration Order at 12,133-34 pp 58-61, J.A.
29-30. As noted above, the FCC reasonably concluded that the broader
definition better served the goals of the Act.

Petitioners further claim that the FCC violated the Act and acted
unreasonably in adopting presumptions for the number of attaching
entities. The Reconsideration Order states:

In order to expedite the process of developing average numbers of
attaching entities, and allow utilities to avert the expense of
developing location specific averages, we provide two rebuttable
presumptive averages for use in our Telecom Formula. This gives both
small and large utilities the option of not conducting a potentially
costly and burdensome exercise necessary to develop averages based on
their company specific records. The adoption of presumptive averages
should reduce cost and effort by all parties\....

In the Telecom Order, we did not establish pre-sumptions, but said we
believed the most efficient and expeditious manner to calculate a
presumptive number of attaching entities would be for each utility to
develop its own presumptive average number of attaching entities. We now
reconsider that decision and set rebuttable presumptive average numbers
of attaching entities for our two categories, urbanized and
non-urbanized. We are now persuaded that utilities and attaching
entities would benefit from our providing presumptive averages for their
use. Our establishment of presumptive averages will expedite the process
and allow utilities to avert the expense of developing location specific
averages. As with all our presumptions, either party may rebut this
presumption with a statistically valid survey or actual data.

Id. at 12,139 pp 69-70, J.A. 35 (footnotes omitted).

The FCC\'s decision to use rebuttable presumptions is neither inherently
unlawful nor facially unreasonable. We reject petitioners\' suggestions
to the contrary. However, because the FCC has yet to apply the
presumptions, we have no basis upon which to judge the reasonableness of
the new rules as applied. The presumptions are merely presumptions that
are subject to rebuttal in any case. And, under the applicable rule,
utilities are free to substitute their own surveys to establish more
precise data on the numbers of attaching entities. Absent a live
controversy regarding a particular application of the presumptions,
petitioners\' challenges to the presumptions as applied are unfit for
review. Because the \"institutional interests\" of the agency and the
court favor postponing review, and because petitioners have pointed to
no \"hardship\" that will result from delaying review, we dismiss the
as-applied challenges to the presumptions for want of ripeness. See City
of Houston v. Dep\'t of Housing and Urban Dev., 24 F.3d 1421, 1430-32
(D.C. Cir. 1994).

B. The Overlashing Rules

Petitioners contest the FCC\'s rules on overlashing on several grounds.
First, they claim that the rules force utilities to violate the Act\'s
nondiscrimination provision, because they establish different norms for
an overlashing entity and other attaching entities. Second, they contend
that without a rule that overlashers give prior notice to utilities,
owners cannot exercise their right to deny access for the reasons listed
in the statute. Finally, they suggest that the FCC procedurally erred by
ignoring their comments in drafting these rules. We find no merit in
these claims.

Because overlashing by definition involves a physical connection to
other wires and not to the pole itself, the Commission concluded that a
utility is not entitled to charge overlashing parties for pole space.
Reconsideration Order at 12,142 p 76, J.A. 38. This is a permissible
construction of the statute, one that comports with the FCC\'s
permissible construction of \"attaching entities.\"

The overlashing rules allow utilities to charge overlashers \"make
ready\" costs if the overlashing wires require enhancing the strength of
the pole. Id. at 12,142 p 77, J.A. 38-39. And a utility can also deny
access to overlashers for reasons of insufficient capacity, safety or
reliability as described in the Act. See 47 U.S.C. § 224(f)(2);
Reconsideration Order, at 12,141 p 74, J.A. 37. Overlashers are not
required to give prior notice to utilities before overlashing. However,
the FCC rules do not preclude owners from negotiating with pole users to
require notice before overlashing. Id. at 12,144 p 82, J.A. 41 (\"We
clarify that it would be reasonable for a pole attachment agreement to
require notice of third party over-lashing.\"). Whether, and to what
extent, such a contract provision might be enforceable is a question not
presently before us. Therefore, we have no occasion to decide that
issue.

In short, the overlashing rules show due consideration for the
utilities\' statutory rights and financial concerns. The record shows
that these matters played a role in the FCC\'s decision, but
petitioner\'s concerns were balanced with the efficiency gains that
overlashing brings to the industry. See id. at 12,140-41 p 73, J.A.
36-37.

C. \"Sign and Sue\" Rule

Petitioners also contend that the FCC\'s rule allowing entities to
\"sign and sue\" violates the Act\'s plain meaning and is arbitrary and
capricious. According to petitioners, attaching parties should be
required to take exception to the terms and conditions of an agreement
when the attachment agreement is negotiated or be estopped from filing a
complaint about those terms after the agreement is executed. Petitioners
argue that, under the Commission\'s rule, attachers can keep the benefit
of their bargains as they see fit and simultaneously seek to avoid
disfavored provisions. \"The Commission\'s decision to play both
negotiator and arbitrator, thus displacing any true market negotiations,
is unlawful,\" say petitioners. Petitioners\' Br. at 37. We disagree.

The Commission has a duty to \"adopt procedures necessary and
appropriate to hear and resolve complaints concerning such rates, terms,
and conditions.\" 47 U.S.C. § 224(b)(1); see also id. § 224(e)(1)
(directing FCC to establish regulations to govern when \"parties fail to
resolve a dispute over such charges\"). Complying with these statutory
mandates gives the FCC jurisdiction to resolve contract disputes between
the parties, save possibly where state regulations occupy the field. Id.
§ 224(c)(1).

Petitioners\' argument implicitly suggests that, under the disputed
rule, the FCC seeks to retain unfettered authority to abrogate the
lawful terms of private settlements merely at the behest of attachers.
We see nothing in the rules to support this view. The agency\'s brief to
this court aptly disposes of this issue:

The utilities do not describe or explain under what circumstances the
Commission\'s condoning of \"sign and sue\" undermines reliance on
private negotiation or when exactly it is unfair to the utilities, but
we observe that \"sign and sue\" is likely to arise only in a situation
in which the attacher has agreed, for one reason or another, to pay a
rate above the statutory maximum or otherwise relinquish a valuable
right to which it is entitled under the Pole Attachments Act and the
Commission\'s rules. If the rates and conditions to which the attacher
later objects are within the statutory framework, then the utility has
nothing to fear from the attacher\'s complaint. The attacher would not
be entitled to relief.

For example, one scenario in which \"sign and sue\" is likely to arise
is when the attacher acquiesces in a utility\'s \"take it or leave it\"
demand that it pay more than the statutory maximum or relinquish some
other valuable right - without any quid pro quo other than the ability
to attach its wires on unreasonable or discriminatory terms. Of course
the Pole Attachments Act was designed to prevent such an exercise of
monopoly power that would nullify the statutory rights of cable systems
or telecommunications carriers to obtain both immediate access and
timely regulatory relief to the extent access is unreasonable or
discriminatory. The utility is statutorily required to grant prompt,
nondiscriminatory access and may not erect unreasonable barriers or
engage in unreasonable delaying tactics. So in this scenario, where the
utility gives nothing of value in exchange for the attacher\'s coerced
\"agreement\" to accept unreasonable or discriminatory access, the
utility has no right to complain if the attacher \"signs and sues\" to
challenge this abuse of the utility\'s monopoly control over the
essential transport facilities.

It is conceivable that in some circumstances, the utility may give a
valuable concession in exchange for the provision the attacher
subsequently challenges as unreasonable. As a hypothetical example, the
utility might agree to absorb some of the make-ready or attachment costs
that are normally paid by the attachers in exchange for a higher rate.
In that situation, the Commission could evaluate the reasonableness of
the rate provisions as a package, and these provisions would rise or
fall together without undermining the statutory policy in favor of
voluntary dispute resolution.

Respondent\'s Br. at 42-43.

On the record at hand, we conclude that the rule is a reasonable
exercise of the agency\'s duty under the statute to guarantee fair
competition in the attachment market. The agency\'s limited authority to
review negotiated settlements is consistent with the statute and it does
not interfere with any of the rights afforded petitioners under the Act.

D. Conduit Space Rules

Finally, petitioners contend that the FCC\'s decisions on conduit space
and fees are unlawful and unreasonable. According to petitioners, the
Reconsideration Order fails to recognize that portions of conduits are
unusable for purposes of computing the appropriate attachment formula.
Petitioners also contend that, without explanation or support in the
record, the FCC reversed the Telecom Order decision that conduit space
reserved for maintenance and emergency use is reserved for the benefit
of all conduit occupants; that such reservation renders that duct
unusable; and that the costs of the space should be allocated to those
who benefit from it. Petitioners argue further that the FCC engaged in
arbitrary and capricious decision-making when it derived a rebuttable
presumption that an attacher occupies only one-half of a duct or
conduit. We find no merit in these contentions.

The Commission did not shift its position without explanation or good
reason, as petitioners contend, when it adopted the unusable space rule.
Rather, the Commissioner\'s Reconsideration Order is cogent on this
issue:

In the Fee Order, we reviewed the Fee Order Notice filings as well as
the Telecom Order petition filings and concluded that other than
collapsed ducts which are not counted in determining total capacity,
there is no unusable capacity in a conduit. This was a departure from
our conclusion in the Telecom Order and we now affirm our conclusion in
the Fee Order. The total capacity of a duct or conduit is the entire
volume of available capacity in the conduit system. All costs associated
with the construction of the conduit system are considered in
determining the cost of this total capacity.

\...

We will not allow capacity designated for maintenance, future business
plans, or municipal set-asides to be subtracted from the total duct or
conduit capacity for rate determination purposes. The record supports
our analysis that capacity in a duct or conduit that is usable for any
of these purposes is part of the \"total duct or conduit capacity.\" For
example, a utility may set-aside capacity for maintenance or emergencies
so that unoccupied capacity is available into which a temporary cable
may be placed and spliced into a damaged cable. Capacity so designated
is usable in the event it is needed, and available for use by the
utility at any time for any purpose, and is therefore part of the total
available conduit capacity. Such reservation of capacity is not
necessarily identified by a specific duct or location, can be treated,
used, withdrawn or discarded at the sole discretion of the utility, and
must be considered part of the total capacity of the conduit.

Reconsideration Order, 12,147, 12,149 pp 88, 93, J.A. 43, 47.

The FCC\'s rule adopting a presumption for duct space is not facially
invalid. The rule merely establishes a rebuttable presumption. See id.
at 12,150-51 p 95, J.A. 46; see also id. at 12,152 p 98, J.A. 48 (\"When
the actual percentage of capacity is known, it can and should be used
instead of the one half presumption.\"). The possibility that a utility
can present information showing that an attached wire or cable occupies
more than half of the duct space makes it clear that the rule is not
facially unreasonable.

We will not otherwise address the merits of this rule, however, because
petitioners\' challenge to the rule as applied is unripe. See City of
Houston, 24 F.3d at 1430-32. The same considerations that prompted our
dismissal of petitioners\' as-applied challenge to the rule regarding
presumptions for the number of attaching entities apply here as well.

III\. Conclusion

For the reasons stated above, the petitions for review of the FCC Orders
are hereby denied.