**\[PUBLISH\]**

**IN THE UNITED STATES COURT OF APPEALS**

**FOR THE ELEVENTH CIRCUIT**

**\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**

**No. 00-14763**

**\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**

**FCC Docket No. PA 00-00003**

**ALABAMA POWER COMPANY,**

**Petitioner,**

**versus**

**FEDERAL COMMUNICATIONS COMMISSION,**

**UNITED STATES OF AMERICA,**

**Respondents,**

**ALABAMA CABLE TELECOMUNICATIONS**

**ASSOCIATION,**

**COMCAST CABLEVISION OF DOTHAN, INC,**

**AMERICAN ELECTRIC POWER SERVICE**

**CORPORATION,**

**Intervenors,**

**\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**

**No. 00-15068**

**\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**

**FCC Docket No. PA-00-003**

**GULF POWER COMPANY,**

**Petitioner,**

**versus**

**FEDERAL COMMUNICATIONS COMMISSION,**

**UNITED STATES OF AMERICA,**

**Respondents,**

**AMERICAN ELECTRIC POWER SERVICE CORPORATION,**

**COMMONWEALTH EDISON COMPANY,**

**DUKE ENERGY CORPORATION,**

**Intervenors.**

**\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**

**No. 01-13058**

**\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**

**FCC Docket No. 01-00181-FCC**

**ALABAMA POWER COMPANY and**

**GULF POWER COMPANY,**

**Petitioners,**

**versus**

**FEDERAL COMMUNICATIONS**

**COMMISSION and the UNITED STATES,**

**Respondents,**

**ALABAMA CABLE TELECOMMUNICATIONS ASSOCIATION,**

**COMCAST CABLEVISION OF DOTHAN, INC., et al.,**

**and**

**AMERICAN ELECTRIC POWER SERVICE CORPORATION,**

**COMMONWEALTH EDISON COMPANY, ET AL.,**

**Intervenors.**

**\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**

**Petitions for Review of Orders**

**of the Federal Communications Commission**

**\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**

**(November 14, 2002)**

**Before TJOFLAT, BARKETT and WILSON, Circuit Judges.**

TJOFLAT, Circuit Judge:

As part of the Telecommunications Act of 1996, Congress amended the Pole
Attachment Act of 1978 to give cable television companies the right to
acquire space on the utility poles of power companies at rates
established by a formula (the "Cable Rate[^1]) promulgated by the
Federal Communications Commission ("FCC" or "Commission ").
[See]{.underline} 47 U.S.C. § 224. Under the regulatory scheme, if the
parties are unable to agree on the price, the cable company can seek
relief in the FCC's Cable Bureau. In this case, the Cable Bureau, and on
review, the FCC, rejected the price demanded by Alabama Power ("APCo")
for a cable television company's mandatory right of access to its
utility poles, and it ordered the parties to negotiate a price within
the parameters of the Cable Rate. [See]{.underline} [In the Matter of
Ala. Cable Telecomm. Ass'n et al. v. Ala. Power Co.]{.underline}, 16 FCC
Rcd. 12,209 (2001). APCo, Gulf Power Company ("Gulf Power"), and several
intervenors now ask us to declare that the rate imposed by the FCC does
not provide just compensation and therefore violates the Takings Clause
of the Fifth Amendment. In essence, the petitioners are using this case
as a vehicle to mount a challenge to the rate methodology set forth in
47 U.S.C. § 224(d[^2] 2 and the FCC's implementation of the rate
methodology in 47 C.F.R. §§ 1.1401 [et seq.]{.underline} We hold that
based on the particular facts of this case, the petitioners have failed
to meet their burden of proof. We therefore deny the petitions for
review.

The factual context of this case is difficult to comprehend without an
understanding of the economic and legislative climate existing prior to
the 1996 Act, as well as the history of Fifth Amendment litigation in
the pole attachment context. Part I of this opinion provides this
necessary background. Part II takes a detour from the primary focus of
this case by addressing the standing and exhaustion issues presented.
The heart of the case is found in part III, where we find that there has
been no violation of the Takings Clause. Finally, part IV addresses
arguments concerning the administrative process, such as whether the FCC
acted in a way that is arbitrary and capricious, or whether it failed to
provide the litigants with due process.

I.

Certain firms have historically been considered to be natural
monopolies--bottleneck facilities that arise due to network effect[^3] 3
and economies of scale[^4] 4 Such firms have historically included
electric utilities, local telephone companies[^5] 5 and oil pipelines.
[See generally]{.underline} Richard D. Cudahy, [Whither Deregulation: A
Look at the Portents]{.underline}, Ann. Surv. Am. L. 155 (2001). Firms
in other markets frequently need access to these bottlenecks in order to
compete. The "essential facilities" doctrine in antitrust law has often
provided the legal remedy for such problems. [See, e.g.]{.underline},
[Otter Tail Power Co. v. United States]{.underline}, 410 U.S. 366, 93 S.
Ct. 1022, 35 L. Ed. 2d 359 (1973); [see generally]{.underline} Phillip
E. Areeda & Herbert Hovenkamp, 3A [Antitrust Law]{.underline} ¶ 772
(1996). Over the last several years, however, Congress has sought to
codify forced-access regulations rather than resorting to judge-made
principles of antitrust law. The most noteworthy effort in this vein was
the Telecommunications Act of 1996, 47 U.S.C. §§ 151 [et.
seq]{.underline}. In that monumental legislation, Congress sought to
break the hold of incumbent telephone monopolies and pave the way for
local competition. As an intermediate step toward the end-game of
facilities-based competition, Congress allowed competitive local
exchange carriers (CLECs) to gain forced access to the unbundled network
elements (UNEs) of incumbent local exchange carriers (ILEC) at regulated
rates[^6] 6 [See]{.underline} 46 U.S.C. § 251(c)(3).

In another provision of the Act, Congress turned its attention away from
the relationship between CLECs and ILECs and focused on the relationship
between cable television companies and electric power companies. Power
companies have something that cable companies need: pole networks.
Concerned about the monopoly prices power companies could extract from
the cable companies, Congress allowed cable companies to force their way
onto utility poles at regulated rates. This regime was not entirely born
in 1996, however. The only novel part of the 1996 Act was *forced*
access. Pole attachments have in fact been regulated since 1978, and our
story must therefore turn to an earlier date.

Since the dawn of the cable television industry, cable companies have
attached their cables to utility poles owned by telephone companies and,
more frequently, power companies. In the view of Congress, the costs of
erecting an entirely new set of poles would have created an
insurmountable burden on cable companies. As the owner of these
"essential" facilities, the power companies had superior bargaining
power, which spurred Congress to intervene in 1978. The Pole Attachment
of Act of 1978 gave the FCC authority to "regulate rates, terms, and
conditions for pole attachments to provide that such rates, terms, and
conditions are just and reasonable" in any state that does not already
have such regulations in place. 47 U.S.C. § 224(b)(1). The Act further
provided that the minimum reasonable rate is equal to "the additional
costs of providing pole attachments," while the maximum reasonable rate
is to be calculated "by multiplying the percentage of the total usable
space, or the percentage of the total duct or conduit capacity, 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." 47 U.S.C. § 224(d)(1)[^7]7 Based on
these guidelines, the FCC promulgated regulations that focused on the
upper end of this range. Importantly, the 1978 Act did not *force* power
companies to yield access; the regulated rates applied only if (and
when) voluntary agreements were entered into. These regulations led to a
constitutional challenge under the theory that, under [Loretto v.
Teleprompter-Manhattan CATV Corp.]{.underline}, 458 U.S. 419, 102 S. Ct.
3164, 73 L. Ed. 2d 868 (1982), they worked a *per se* physical taking
without providing just compensation . This court partially agreed and
held that the FCC's Order effected a taking of Florida Power's property.
[Florida Power Corp. v. FCC]{.underline}, 772 F.2d 1537, 1544 (11th Cir.
1985). We went on to hold, however, that the FCC, as an administrative
agency rather than an Article III court, did not have the power to
determine what is just compensation for purposes of the Fifth Amendment
Takings Clause. [Id.]{.underline} The Supreme Court reversed, holding
that [Loretto]{.underline} did not apply because the Act did not
*require* power companies to give access to cable companies.
[See]{.underline} [FCC v. Florida Power Corp]{.underline}., 480 U.S.
245, 251-53, 107 S. Ct. 1107, 1111-12, 94 L. Ed. 2d 282 (1987). The
Court asserted, "\[I\]t is the invitation, not the rent, that makes
\[[Loretto]{.underline}\] different. The line which separates these
cases from [Loretto]{.underline} is the unambiguous distinction between
a commercial lessee and an interloper with a government license."
[Id.]{.underline} at 243, 107 S. Ct. at 1112. Therefore, the *per se*
rule of physical takings did not apply, and the Court upheld the rate
regulation under the "traditional" Fifth Amendment standard that applies
to rate regulations: "So long as the rates set are not confiscatory, the
Fifth Amendment does not bar their imposition." [Id.]{.underline}
(citing [St. Joseph Stock Yards Co. v. United States]{.underline}, 298
U.S. 38, 53, 56 S. Ct. 720, 726, 80 L. Ed. 1033 (1936)). In sum, the
Supreme Court found that there was no Fifth Amendment violation, and
therefore did not address whether the initial determination of just
compensation could be made by an administrative agency subject to
judicial review. [Florida Power]{.underline}, 480 U.S. at 254, 107 S.
Ct. at 1113 n.8.

Fast forward to 1996. As part of the sweeping changes Congress brought
about through the Telecommunications Act of 1996, Congress amended the
1978 Act by giving cable companies a right of forced attachment. That
is, power companies could not decline offers to attach at regulated
rates, save for the statutory exceptions of insufficient capacity or
some safety, reliability, or other engineering problem.
[See]{.underline} 47 U.S.C. § 224(f)(2)[^8] 8 This change to a
forced-access regime was perhaps spurred by new laws, consistent with
the 1996 Act's vision of competition in all sectors of the data
distribution business, that gave large power companies freedom to enter
the telecommunications business rather than remain quarantined to the
electricity business. Pub. L. No. 104-104, § 103 (1996). Perhaps fearing
that electricity companies would now have a perverse incentive to deny
potential rivals the pole attachments they need, Congress made access
mandatory. [See]{.underline} [Southern Company v. FCC]{.underline}, 293
F.3d 1338, 1341-42 (11th Cir. 2002) ("Cable companies were fearful that
utilities' prospective entry into the telecommunications market would
endanger their pole attachments, as utilities would be unwilling to rent
space on their poles to competing entities. Congress elected to address
both of these matters in the 1996 Telecommunications Act."). In all
other respects, however, the regulatory regime remained the same.
Because of this statutory change -- ever important in light of the
Supreme Court's distinction of [Loretto]{.underline} from [Florida
Power]{.underline} -- power companies renewed their Takings Clause
challenge.

In one case, the power companies took aim at the statute itself,
alleging that it was facially unconstitutional because it took property
without just compensation. The district court held that the amendment
effected a *per se* taking, but granted summary judgment in favor of the
FCC. [See]{.underline} [Gulf Power Co. v. United States]{.underline},
998 F. Supp. 1386 (N.D. Fla. 1998). In conclusory fashion, the court
found the compensation to be "just," [id.]{.underline} at 1386, and also
held that the availability of judicial review by an Article III court
rendered the initial determination of just compensation by the agency
constitutionally permissible, notwithstanding our earlier holding in
[Florida Power]{.underline}, 772 F.2d at 1544. We affirmed for different
reasons, agreeing with the district court that the Act works a *per se*
taking under [Loretto]{.underline}, but that the Act provides an
adequate process for obtaining judicial review[^9] 9 [Gulf Power Co. v.
United States]{.underline}, 187 F.3d 1324 (11th Cir. 1999) ("[Gulf Power
I]{.underline}"). However, we rejected the facial challenge, holding
that the parties failed to show that no set of circumstances exist under
which the Act would be valid[^10] 10

In another case, the power companies filed a petition for review in this
court, seeking reversal of an FCC Order, [In re Implementation of
Section 703(e) of the Telecommunications Act of 1996]{.underline}, 13
FCC Rcd. 6777 (1999), that devised a formula for computing the
attachment rent. [See]{.underline} [Gulf Power Co. v. FCC]{.underline},
208 F.3d 1263 (11th Cir. 2000) ("[Gulf Power II]{.underline}"). We held
that (1) the FCC lacked jurisdiction to regulate pole attachments to the
extent that the attaching cable operators also offered Internet service,
(2) the 1996 Act authorized a taking as previously determined by [Gulf
Power I]{.underline}, and (3) the just compensation claim failed because
the parties did not establish that there was no set of circumstances in
which the FCC's rate regulation (like the general statutory rate scheme
challenged in [Gulf Power I]{.underline}) would be valid. The first
holding was subsequently reversed by the Supreme Court in [Nat'l Cable &
Telecomm. Ass'n v. Gulf Power Co.]{.underline}, 534 U.S. 327, 122 S. Ct.
782, 151 L. Ed. 2d 794 (2002).

Forced to bring a challenge in an as-applied context, APCo seized its
opportunity in June 2000. APCo sent several letters to cable companies
stating that it would terminate attachment agreements unless the cable
companies agreed to higher rates[^11] 11 Specifically, APCo demanded an
annual rate of \$38.81 per pole rather than the current \$7.47. Various
cable companie[^12] 12 sought relief by filing a complaint against APCo
in the FCC's Cable Bureau, which ultimately found for the cable
companies. The Bureau ordered APCo to reinstate the old \$7.47 fee until
a new agreement within the parameters of the Cable Rate could be
reached. [Ala. Cable Telecom. Ass'n v. Ala. Power Co.]{.underline}, 15
FCC Rcd. 173,461 (2000). Meanwhile, a similar proceeding was initiated
against Gulf Power by the Florida Cable Telecommunications Association
and three cable Internet service providers, although that case
languished in the Bureau and has yet to come to a resolution. Both APCo
and Gulf Power filed petitions for review of the adjudication against
APCo in this court, nos. 00-14763 and 00-15068, and they simultaneously
sought review by the full Commission.

Since the initial filing of these petitions, two important decisions
have been rendered. First is the Supreme Court's decision in [National
Cable]{.underline}. In that case, the Court reversed our first holding
in [Gulf Power II]{.underline} (regarding the FCC's jurisdiction) and
thereby answered the jurisdictional arguments raised in this case. Thus,
any contention that the FCC lacks jurisdiction to regulate the
attachment rates of cable companies that also offer Internet services
must fail. The second decision is the full Commission's Order affirming
the Cable Bureau in the APCo proceeding. [See]{.underline} [In the
Matter of Ala. Cable Telecomm. Ass'n et al. v. Ala. Power
Co.]{.underline}, 16 FCC Rcd. 12,209 (2001). That decision rendered moot
the FCC's argument that we ought not reach the merits of this case
because the parties failed to exhaust their administrative remedies[^13]
13 The Order also becomes the focus of any challenge under the
Administrative Procedure Act, 15 U.S.C. § 706[^14] 14

In short, the as-applied context of this litigation, combined with the
recent decisions of the FCC and Supreme Court, eliminate any threshold
concerns that would otherwise preclude us from reaching the merits, such
as ripeness, exhaustion (and hence the jurisdiction of this court), and
the jurisdiction of the FCC. Moreover, our decisions in [Gulf Power
I]{.underline} and [Gulf Power II]{.underline} establish that the 1996
Act effects at taking, and our decision in [Gulf Power I]{.underline}
establishes that an initial determination of just compensation by the
FCC is constitutionally permissible so long as there is judicial review
in an Article III court[^15] 15 The primary issue in this case, then, is
a narrow one: whether the rate authorized by the FCC provides APCo with
just compensation.

II\.

A.

Before we address the merits, two threshold issues warrant our
attention. First, the Communications Act of 1934 requires an application
for review to the full Commission as a prerequisite to judicial review
of decisions made under delegated authority. [See]{.underline} 47 U.S.C.
§ 155(c)(7)[^16] 16 The mere act of filing an application alone does not
satisfy the jurisdictional prerequisite. The petitioners must give the
Commission an opportunity to issue a final decision; otherwise, the
statutory prerequisite would be rendered useless. The rest of section 47
U.S.C. § 155(c)(7) confirms this common sense observation by mandating
that the time limit for filing a petition for review in the court of
appeals must be computed "from the date upon which public notice is
given of orders disposing of all applications for review filed in any
case." [Id.]{.underline} That is, the Commission must in some way act on
the application for review before a party may petition a court of
appeals for review. [See]{.underline} [Richman Bros. Records Inc. v.
FCC]{.underline}, 124 F.3d 1302 (D.C. Cir. 1997). In this case, both
Gulf Power and APCo sought to bypass the full Commission by petitioning
this court for review of the Cable Bureau's decision. Both petitions
were therefore incurably premature -- at least until the Commission
finally reviewed APCo's petition. Accordingly, both of the initial
petitions, nos. 00-14763 and 00-15068, are dismissed for failure to
exhaust.

B.

The petition for review filed by Gulf Power is also defective because
petitions for review may be filed only by parties to an agency
proceeding. The Communications Act cross-references to the Hobbes Act,
and so the latter governs the procedure for judicial review of FCC
orders. [See]{.underline} 47 U.S.C. § 402 ("Any proceeding to enjoin,
set aside, annul, or suspend any order of the commission under this
chapter . . . shall be brought as provided by and in the manner
prescribed in \[the Hobbs Act,\] chapter 158 of Title 28."). That
statute, in turn, provides that "\[a\]ny party aggrieved by the final
order may . . . file a petition to review the order in the court of
appeals where venue lies." 28 U.S.C. § 2344. A "party aggrieved" is one
who participated in the agency proceeding. [See, e.g.]{.underline},
[Erie-Niagara Rail Steering Committee v. Surface Trans.
Bd.]{.underline}, 167 F.3d 111, 111-12 (2d cir. 1999); [See
also]{.underline} [In re Chicago, Milwaukee, St. Paul & Pac. R.R.
Co.]{.underline}, 799 F.2d 317, 334 (7th Cir. 1986) ("The statute limits
review to petitions filed by parties, and that is that."). Another
statute confirms this conclusion. Under 28 U.S.C. § 2348, only parties
to the agency proceeding can intervene as of right, while intervention
by a nonparty is discretionary. This statutory condition would be
defeated if the nonparty could file its own petition for review as a
matter of right. Accordingly, Gulf Power's initial petition for review
in case, no. 00-15068, must also be dismissed for lack of standing. The
Commission's final order does not affect this conclusion[^17] 17 This
leaves us only with APCo's petition for review of the Order by the full
Commission, no. 01-13058 -- a petition joined by various intervenors but
not Gulf Power.

III\.

A.

The petitioners contend that the statute and regulations fail to provide
just compensation in this case. Their argument stems from three critical
observations. First, the Cable Rate fails to allocate to the attaching
cable companies a pro rata share of the unusable portion of the pole.
The unusable portion -- the part of the pole that is below ground or is
otherwise unavailable for attachment -- is a capital expenditure that
benefits the cable companies no less than APCo[^18] 18 The unusable
portion constitutes a vast majority of the pole and provides ground
clearance that creates the requisite elevated corridor that is necessary
for all attachments. Therefore, the petitioners argue, such expenditures
should be allocated to the attaching entities equally. Second, the
petitioners argue that the Cable Rate inappropriately uses
backwards-looking "historical" costs rather than fair market value or
replacement cost. Since pole-related expenditures are largely a function
of labor costs, the present "cost" of a network of poles is much greater
than it was when the network was first erected. Third, the Cable Rate
does not allow the recovery of various expenditures that are properly
attributable to pole attachments. Once these costs are taken into
account, together with an appropriate adjustment that allocates part of
the unusable portion of the pole to cable companies and a further
adjustment that utilizes fair market value or replacement (rather than
historical) cost[^19] 19 the "just" rate would be an annual rent of over
\$47 per pole. Because \$47 is a "conservative" estimate, and since
petitioners seek only \$38.81 per pole, it is argued that the
drastically less rate of \$7.47 fails to provide just compensation.

We review constitutional challenges to agency orders *de novo*. [Gulf
Power II]{.underline}, 208 F.3d 1263, 1271; [Rural Tel. Coalition v.
FCC]{.underline}, 838 F.2d 1307, 1313 (D.C. Cir. 1988). At first blush,
the power companies appear to have a solid argument. The FCC
inappropriately focused on ratemaking cases such as [Duquense Light Co.
v. Barach]{.underline}, 488 U.S. 299, 307, 109 S. Ct. 609, 102 L. Ed. 2d
646 (1989). Cases like [Duquense Light]{.underline} stand for the
proposition that rates can be regulated so long as they are not so
"unjust" as to be confiscatory, and within this range the regulatory
agency has broad discretion. [Id.]{.underline} at 307, 109 S. Ct. at
616. When a physical taking is at issue, however, a different analytical
hat must worn. *See* 5 [Nichols on Eminent Domain]{.underline} § 18.06
\[2\], at 18-46 ("\[T\]raditional methods of valuation used in
rate-making cases are not necessarily valid when eminent domain va lue
is at issue."); [Consolidated Gas Co. of Fla. v. City Gas Co. of
Fla.]{.underline}, 912 F.2d 1262, 1314 n.52 & 1319 (11th Cir. 1990),
[vacated]{.underline}, 499 U.S. 915 (1991) (Tjoflat, C.J., dissenting)
("Because the company acts under compulsion . . . rather than
voluntarily submitting to regulation as in the ratemaking cases, the
court should apply a more rigorous standard for just compensation than
the relatively broad 'zone of reasonableness' standard developed under
[Hope]{.underline}."). The Supreme Court made this analytical distincti
on clear in [FCC v. Florida Power Corp]{.underline}., 480 U.S. 245, 107
S. Ct. 1107, 94 L. Ed. 2d 282 (1987), when the Court reversed this court
for applying the traditional [Loretto]{.underline} analysis rather than
the "not confiscatory" standard. [Id.]{.underline} at 253, 107 S. Ct. at
1113-14. As we have stated, this case *does*, in fact, trigger the
[Loretto]{.underline} analysis because of the element of compulsion in
the 1996 Act.

In physical takings cases, the property owner generally must receive the
"full monetary equivalent of the property taken." [United States v.
Reynolds]{.underline}, 397 U.S. 14, 16, 90 S. Ct. 803, 805, 25 L. Ed. 2d
12 (1970). [See also]{.underline} [United States v. Miller]{.underline},
317 U.S. 369, 373, 63 S. Ct. 276, 279, 87 L. Ed. 336 (1943) (just
compensation requires "the full and perfect equivalent in money of the
property taken."). The Supreme Court has remained steadfast in its
resistance to a rigid rule for determining just compensation. [See,
e.g.]{.underline}, [United States v. Commodities Trading
Corp.]{.underline}, 339 U.S. 121, 123, 70 S. Ct. 547, 549, 94 L. Ed. 707
(1950). Typically, fair market value is used. [Id.]{.underline} Fair
market value is established by determining "what a willing buyer would
pay in cash to a willing seller" at the time of the taking.
[Miller]{.underline}, 317 U.S. at 374, 63 S. Ct. at 280. There is not an
active, unregulated market for the use of "elevated communications
corridors," however, and so an alternative to fair market value must be
used. [Cf.]{.underline} [General Motors v. United States]{.underline},
140 F.2d 873, 875 (7th Cir. 1994) (discussing use of replacement cost
and income capitalization approaches). The appropriate alternative,
whatever that may be, rarely countenances the use of historical cost, as
several Supreme Court cases make clear. [See]{.underline} [Commodities
Trading Corp.]{.underline}, 339 U.S. at 130, 70 S. Ct. at 553; [United
States v. Toronto, Hamilton & Buffalo Navigation Co.]{.underline}, 338
U.S. 396, 403, 70 S. Ct. 217, 221-22, 94 L. Ed. 195 (1949). Therefore,
APCo argues that any of its substitute methods -- the "sales comparison"
approach, the "replacement cost" approach, or the "income
capitalization" approach -- should be used. Any of these, it argues,
yield a much higher rate than the FCC presently allows. When a
constitutionally acceptable cost methodology is combined with a more
appropriate inclusion of costs (such as unusable pole space and various
capital expenditures), the "full monetary equivalent of the property
taken" exceeds the \$38.81 rate APCo seeks. While we might ordinarily be
sympathetic to this argument[^20] 20 APCo's case is complicated by one
known fact, one unknown fact, and one legal principle.

The known fact is that the Cable Rate requires the attaching cable
company to pay for any "make-ready" costs and all other marginal costs
(such as maintenance costs and the opportunity cost of capital devoted
to make-ready and maintenance costs), in addition to some portion of the
fully embedded cost. [See]{.underline} [In the Matter of Ala. Cable
Telecomm. Ass'n et al. v. Ala. Power Co.]{.underline}, 16 FCC Rcd.
12,209, ¶ 69 n.154 (2001). Indeed, such costs were paid in the present
case[^21] 21

The legal principle is that in takings law, just compensation is
determined by the loss to the person whose property is taken. [United
States v. Causby]{.underline}, 328 U.S. 256, 261, 66 S. Ct. 1062,
1065-66, 90 L. Ed. 1206 (1946). Put differently, "\[t\]he question is,
What has the owner lost? not, What has the taker gained?" [United States
v. Virginia Elec. & Power Co.]{.underline}, 365 U.S. 624, 635, 81 S. Ct.
784, 792, 5 L. Ed. 2d 838 (1961) (citation omitted). This takings
principle is a specific application of the general principle of the law
of remedies: an aggrieved party should be put in as good a position as
he was in before the wrong, but not better. [See generally]{.underline}
Dan B. Dobbs, [1 Law of Remedies 281]{.underline} (1993). This legal
principle, together with the fact that much more than marginal cost is
paid under the Cable Rate, leads us to ask the following question: does
marginal cost provide just compensation in this case?

This question exposes the unique nature of this case. Typically, the
subject of a government condemnation proceeding is ordinary property,
such as land. In such a case, the "value" of the thing taken is
congruent with the loss to the owner, and there is therefore little
tension between the legal propositions in [Virginia
Electric]{.underline} (loss to the owner, not gain to the taker) and
[Reynolds]{.underline} (full monetary equivalent of the property taken).
This is because most property is rivalrous -- its possession by one
party results in a gain that precisely corresponds to the loss endured
by the other party. In this case, however, the property that has been
taken -- space on a pole -- may well lack this congruence. It may be,
for practical purposes, *nonrivalrous*. This means that use by one
entity does not necessarily diminish the use and enjoyment of others. A
common example of a nonrivalrous good is national defense.

Suppose, for example, that a power company must, for its own "core"
electric distribution activities, establish a network of poles that
reaches one million feet into the sky. Further suppose that there is
only one cable company in any one market that desires to attach to the
power company's poles. Finally, suppose that the government forces the
power company to let the cable company attach to its pole network. What
level of compensation is just? So long as the marginal cost of the
attachment is paid, the power company incurs no lost opportunity or any
other burden. That is, the cable company's use does not foreclose any
other use. The pole space is, for practical purposes, nonrivalrous.

To this point APCo responds that the lost sale to the cable company --
its opportunity cost -- has also been taken. We think, however, that it
is irrelevant whether the government keeps the condemned property for
itself or appropriates it to another entity. That is, if the government
ran its own monopoly cable company, it would not make sense for the
power companies to say, "Even though we are not out any more money than
we were before the taking, we are missing out on the opportunity to sell
to the government at what we deem the 'full market price' of this pole
space." [Cf.]{.underline} [United States v. Cors]{.underline}, 337 U.S.
325, 333, 69 S. Ct. 1086, 1091, 93 L. Ed. 1392 (1949) ("The special
value to the condemner as distinguished from others who may or may not
possess the power to condemn has long been excluded as an element of
market value."). It should not make a difference if the government
chooses to allocate the condemned property to private companies.

In some cases, then, marginal cost will be sufficient to compensate the
pole owner. A similar conclusion was reached in [Metropolitan Transp.
Auth. v. ICC]{.underline} , 792 F.2d 287 (2d Cir. 1986). In that case,
Amtrak was given the power to force its way onto the tracks of other
railroad companies. The ICC had authority to decide the compensation
Amtrak would pay, with the constraint that such compensation was to be
limited to "incremental costs." The Second Circuit concluded:

\[A\]ssuming arguendo that there has been a taking, compensation is
adequate since MTA, in obtaining avoidable costs, will receive what it
would have had but for the taking. In other words, the owner, there the
lessee of the railroad facilities, will be put into the same position
monetarily as it would have occupied if the property had not been taken,
and this is precisely the guiding principle of what is just
compensation. . . . If the Fifth Amendment required such a sharing \[of
the overhead costs of ownership, then the petitioners\] would be put in
a better position by Amtrak's appearance on the scene. True, Amtrak
benefits. But if we know one immutable principle in the law of just
compensation, it is that the value to the taker is not to be considered,
only loss to the owner is to be valued[^22] 22

[Id.]{.underline} at 297.

[Metropolitan Transportation]{.underline} involved something close to a
nonrivalrous good. Allowing traffic from one railroad rarely means that
another railroad is precluded from traveling on the same line unless, of
course, the line is already crowded. The possibility of crowding is
perhaps more likely in the context of pole space, however, and if
crowded, the pole space becomes rivalrous. Indeed, Congress contemplated
a scenario in which poles would reach full capacity when it created a
statutory exception to the forced-attachment regime. 47 U.S.C. §
224(f)(2). When a pole is full and another entity wants to attach, the
government taking forecloses an opportunity to sell space to another
bidding firm -- a missed opportunity that does not exist in the
nonrivalrous scenario. By forcing the power company to rent space that
could be occupied by another firm (or put to use by the power company
itself), the analogy to land becomes more appropriate. In the "full
capacity" situation, it is the zero-sum nature of pole space, like land,
that is key. This leads us to the important unknown fact: nowhere in the
record did APCo allege that APCo's network of poles is currently
crowded. It therefore had no claim. [See]{.underline} [United States v.
John J. Felin & Co.]{.underline}, 334 U.S. 624, 641, 68 S. Ct. 1238,
1246, 92 L. Ed. 1614 (1948) (holding that the burden of proving loss, as
well as the amount of any loss, is upon the party claiming to have
experienced a taking).

In short, before a power company can seek compensation above marginal
cost, it must show with regard to each pole that (1) the pole 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. Without such proof, any
implementation of the Cable Rate (which provides for much more than
marginal cost) necessarily provides just compensation. While this
analysis may create what appears to be an anomaly -- a power company
whose poles are not "full" can charge only the regulated rate (so long
as that rate is above marginal cost), but a power company whose poles
are, in fact, full can seek just compensation -- this result is in
accordance with the economic reality that there is no "lost opportunity"
foreclosed by the government unless the two factors are present[^23]23

IV\.

A.

APCo contends that regardless of how we ultimately rule on the merits,
the FCC's decision is "arbitrary and capricious" and therefore must be
set aside under 5 U.S.C. § 706. The policy decisions of agencies must be
set aside if they are not the product of reasoned decisionmaking. Courts
are deferential to agency decisions and will not upset them merely
because they disagree with the policy choice of the agency.
[See]{.underline} [Citizens to Preserve Overton Park, Inc. v.
Volpe]{.underline}, 401 U.S. 402, 416, 91 S. Ct. 814, 823-24, 28 L. Ed.
2d 136 (1971). In short, the court "must not . . . substitute \[its\]
judgment for that of the agency . . . but rather determine whether there
was a rational connection between the facts found and the choice made."
[Burlington Truck Lines, Inc. v. United States]{.underline}, 371 U.S.
156, 168, 83 S. Ct. 239, 245-46, 9 L. Ed. 2d 207 (1962).

We are unconvinced that the FCC's decision was arbitrary and capricious.
APCo argues that the FCC's misguided references to [Duquense
Light]{.underline} and other ratemaking cases, combined with its refusal
to engage in detailed consideration of APCo's evidence on the just
compensation issue, evinces unreasoned decisionmaking. The FCC did,
however, note that reimbursement of marginal cost was tantamount to just
compensation in this case. [See]{.underline} [In the Matter of Ala.
Cable Telecomm. Ass'n et al. v. Ala. Power Co.]{.underline}, 16 FCC Rcd.
12,209 ¶ 52 (2001). Therefore, it was not obliged to engage in detailed
analysis of expert testimony concerning the value proxies proffered by
the petitioners' experts, which were irrelevant given the sufficiency of
marginal cost. To be sure, the Cable Bureau and the full Commission
might have been advised to inquire about the level of capacity presently
on APCo's poles. But we can hardly fault the Commission for ignoring an
issue that APCo never raised.

Finally, we note that APCo does not contend that the FCC decision was
arbitrary and capricious in its policy determination; its concern is
only with the FCC's constitutional analysis. Accordingly, we do not
address the policy-based defenses raised by the FCC[^24] 24

B.

APCo asserts that the Commission's pole attachment complaint proceeding
is defective because "if and when " they are ultimately successful in
their claim that they are entitled to more than the statutory rate,
"there may not be any process that will compensate APCo retroactively,"
because the FCC "apparently lacks the statutory authority to order a
cable company to retroactively pay a charge higher than the statutory
maximum." This argument posits a mere hypothetical. APCo has not
demonstrated that in this case the Commission's procedures failed to
provide it with adequate compensation, and so resolution of its claim
must await another day. Moreover, this court explained in [Gulf Power
I]{.underline} that if a court were to find an FCC order to be
insufficient, Section 224 permits the court to direct

the FCC to issue a rate order providing that a utility receive the just
compensation rate from the date it was first required to provide access
under the mandatory access provision \[and thereby\] ensure a utility
receives just compensation both prospectively and in the period prior to
the court's determination of the just compensation rate.

[Gulf Power I]{.underline}, 187 F.3d at 1335.

C.

APCo also contends that the FCC's complaint process violated its Fifth
Amendment due process rights because "pole complaints normally are to be
adjudicated on the basis of the pleadings, without the opportunity for a
hearing." Like the first procedural claim, this claim fails because it
is based on a general observation rather than a real-life injury. The
Commission's rules state that "\[t\]he Commission may decide each
complaint upon the filings and information before it . . . or may, in
its discretion, order evidentiary procedures upon any issues it finds to
have been raised by the filings." 47 C.F.R. § 1.1411. APCo must
therefore identify a material question of fact that warrants a hearing.
But its dispute is only over the *methodology* that should be used to
calculate the level of just compensation -- an legal issue that hardly
warrants an evidentiary hearing since no material facts are disputed.
[See]{.underline} [Mathews v. Eldridge]{.underline}, 424 U.S. 319, 321,
96 S. Ct. 893, 896, 47 L. Ed. 2d 18 (1976) (requiring that before a
court concludes that there has been a due process violation, there must
be a private interest affected). For example, if APCo and the cable
companies were to later disagree about whether a pole network is
operating at full capacity, the FCC may commit a due process violation
if it were to adopt the cable companies' position without an evidentiary
hearing. That day, however, has not yet arrived.

V.

It is well settled that if the government commits a taking, it is under
an obligation to put the aggrieved party in the position it was in
before the taking occurred (and no better). In unique cases such as this
one, marginal cost meets this test -- unless, of course, the aggrieved
party proves lost opportunity by showing (1) full capacity and (2) a
higher valued use. APCo never alleged these facts. Therefore, its
challenges based on the Fifth Amendment and the Administrative Procedure
Act must fail, and its petition for review is denied.

SO ORDERED.

[^1]: "1 The mathematical expression of the Commission's rules, found in
    47 C.F.R. § 1.1409(e)(1), is as follows:

    *Maximum Rate* = (*Space Occupied by Attachment* *Total Usable
    Space*) *Net Cost of Bare Pole* *Carrying Charge Rate*

[^2]: )2 The rate for cable television attachments is prescribed in 47
    U.S.C. § 224(d), which states: "\[A\] rate is just and reasonable if
    it assures a utility of recovery of not less than the additional
    costs of providing pole attachments, nor more than an amount
    determined by multiplying the percentage of 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."

[^3]: s3Network effects often enhance the monopoly position of firms
    that operate in industries where a large number of common customers
    is especially advantageous. [See]{.underline} Stuart M. Benjamin,
    Douglas G. Lichtman, and Howard A. Shelanski, [Telecommunications
    Law and Policy]{.underline} 616 (2002) ("All else equal, wouldn't
    you have a strong incentive to select the phone company that had the
    largest number of customers with whom you might want to converse?
    Once you join, can you see how this same phenomenon would increase
    the pressure on, say, your friends and family -- which in turn would
    put pressure on their friends and family -- to join the same phone
    network, thus increasing any monopoly tendency already at play in
    the market?"). The cost of competing with an incumbent firm in a
    network industry may well be insurmountable. As the Supreme Court
    recently explained: "A newcomer could not compete with the incumbent
    carrier to provide local service without coming close to replicating
    the incumbent's entire existing network, the most costly and
    difficult part of which would be laying down the 'last mile' of
    feeder wire, the local loop, to thousands (or millions) of terminal
    points in individual houses and businesses." [Verizon Communications
    Inc. v. FCC]{.underline}, \_\_ U.S. \_\_, 122 S. Ct. 1446, 1662, 152
    L. Ed. 2d 701 (2001).

[^4]: .4Economies of scale typically arise when long-run average total
    cost declines as output increases. [See]{.underline} Benjamin et
    al., [Telecommunications Law and Policy]{.underline} 376 (2001).
    This attribute is common in industries where the initial fixed cost
    is very large and variable costs are comparatively slight.
    [Id.]{.underline} The result is that "eventually there will be only
    a single company, because until a company serves the whole market it
    will have an incentive to keep expanding in order to lower its
    average costs." [Omega Satellite Products Co. v.
    Indianapolis]{.underline}, 694 F.2d 119, 126 (7th Cir. 1982)
    (Posner, J.).

[^5]: ,5A central premise of the 1996 Act is that local exchange
    carriers (LECs) may not be natural monopolies after all.
    [See]{.underline} Benjamin et al., [Telecommunications Law and
    Policy]{.underline} 715 (2001) ("\[P\]olicymakers and entrepreneurs
    were ready to question the underlying assumption that local service
    should -- or at least as a practical matter would -- be provided by
    state-sanctioned monopolists.").

[^6]: .6The rate formula promulgated by the FCC (known as "TELRIC") has
    been the source of several statutory and constitutional challenges.
    [See, e.g.]{.underline}, [Verizon Communications Inc. v.
    FCC]{.underline}, \_\_ U.S. \_\_, 122 S. Ct. 1446, 1662, 152 L. Ed.
    2d 701 (2001).

[^7]: .7This rate formula, unchanged since 1978, was restated more
    clearly by the Supreme Court: "The minimum measure is thus
    equivalent to the marginal cost of attachments, while the statutory
    maximum measure is determined by the fully allocated cost of the
    cons truction and operation of the pole to which cable is attached."
    [See]{.underline} [FCC v. Florida Power Corp.]{.underline}, 480 U.S.
    245, 253, 107 S. Ct. 1107, 1113, 94 L. Ed. 2d 282 (1987).

[^8]: .8A panel of this court recently used this statutory exception as
    the basis for vacating an FCC rule which forced power companies to
    enlarge pole capacity at the request (and expense) of attaching
    cable and telecommunications companies. [See]{.underline} [Southern
    Company v. FCC]{.underline}, 293 F.3d 1338, 1346-47 (11th Cir.
    2002). The panel could not reconcile the no-capacity excuse allowed
    under the statute with the forced build-out rules required under the
    FCC's regulations, and thus held the regulations to be *ultra
    vires*.

[^9]: .9Like the district court, we held that the availability of
    judicial review in the court of appeals made the process for
    determining "just compensation" constitutionally permissible. We
    went on to enumerate "at least five means at its disposal to gather
    the information needed to determine just compensation." [Gulf Power
    v. United States]{.underline}, 187 F.3d 1324, 1334-35 (11th Cir.
    1999). A court of appeals could: (1) rely on the evidentiary
    submissions in the record of the FCC proceeding; (2) remand the case
    and direct the FCC to supplement the record pursuant to 28 U.S.C. §
    2347(c); (3) transfer the case to a district court for full hearing
    pursuant to 28 U.S.C. § 2347(b)(3); (4) appoint a special master to
    hold hearings pursuant to Fed. R. App. P. 48; (5) or fashion any
    other "appropriate modes of procedure" to gather evidence it needs
    pursuant to the All Writs Act, 28 U.S.C. § 1651.

[^10]: .10Our holding on this point is somewhat confusing in that it
    seemingly held both that (a) the challengers failed to meet their
    burden of proof to show that in all situations the rate formula
    would inevitably be unconstitutional and (b) the takings claim was
    not ripe for review. This need not concern us here, and in any event
    there is an obvious affinity between the ripeness doctrine and the
    standard for facial challenges: both doctrines frequently require
    the challenger to bring a concrete, as-applied challenge.

[^11]: .11The pole attachment agreement between APCo and AT&T Cable
    Services was typical of the agreements worked out by cable and power
    companies. Section 31 of the agreement provided for an initial three
    year term (which had expired by the time APCo sought termination),
    followed by "continuation" unless either party provided the other
    with 90 days notice of cancellation.

[^12]: s12The initial complaint was filed by the Alabama Cable
    Telecommunications Association and Comcast Cablevision of Dothan,
    Inc.

[^13]: .13That is, the Order eliminated any exhaustion problem that
    would have precluded us from reaching the merits at all. As we shall
    explain, however, the Order did not eliminate all exhaustion
    concerns.

[^14]: .14"The reviewing court shall . . . hold unlawful and set aside
    agency action, findings, and conclusions found to be . . .
    arbitrary, capricious, an abuse of discretion, or otherwise not in
    accordance with law." 15 U.S.C. § 706(2)(A).

[^15]: .15The petitioners renew their argument that regardless of the
    availability of judicial review, an administrative agency cannot
    determine just compensation in the first instance. "The law of this
    circuit," however, "is 'emphatic' that only the Supreme Court or
    this court sitting *en banc* can judicially overrule a prior panel
    decision." [See]{.underline} [Cargill v. Turpin]{.underline}, 120
    F.3d 1366, 1386 (11th Cir. 1997).

[^16]: .16The statute states, "The filing of an application for review
    shall be a condition precedent to judicial review of any order,
    decision, report, or an action made or taken pursuant to a
    delegation under paragraph (1) of this subsection." "Paragraph (1),"
    referred to in the statutory text, empowers the Commission to
    delegate its functions to an "employee board or individual employee"
    and other entities. [See]{.underline} 47 U.S.C. § 155(c)(1). This
    provision is the statutory basis for the Cable Bureau's authority to
    issue the first order in this case.

[^17]: .17Gulf Power is interested in the outcome of this case only
    because of its potential effect as a precedent for its own pending
    case. We note that Gulf Power has not moved to intervene. We will
    therefore treat it as *amicus curiae* in the APCo petition, no.
    00-13058.

[^18]: .18The regulated rate that telecommunications companies must pay,
    by contrast, includes the unusable portion of the pole.
    [See]{.underline} 47 U.S.C. § 224(3).

[^19]: ,19In the proceeding before the Cable Bureau, expert witnesses
    were used to generate assessments of "value" based upon market
    value, income capitalization, and replacement cost methodologies.

[^20]: ,20Or maybe not. Arguably, this "as-applied" challenge flies in
    the face of our conclusion in [Gulf Power I]{.underline} and [Gulf
    Power II]{.underline} that the power companies failed to prove that
    there is no circumstance in which the rate would be constitutionally
    acceptable. That conclusion would seem to foreclose any argument
    based on the *methodology* of the formula -- the crux of
    petitioners' argument in this case. The panel, however, may well
    have had in mind the general judicial aversion to facial challenges
    to rate orders, and it perhaps did not mean to preclude future
    challenges to the rate methodology in an as-applied context.
    [See]{.underline} [Verizon Communications v. FCC]{.underline}, \_\_
    U.S. \_\_, 122 S. Ct. 1646, 1679-80, 152 L. Ed. 2d 701 (2001)
    ("\[T\]he general rule is that any question about the
    constitutionality of ratesetting is raised by rates, not methods.").

[^21]: .21APCo received more than a million dollars in make-ready
    payments from cable company attachers.

[^22]: . 22Notably, the court did not take the flawed analytical step of
    focusing on the track owner's lost opportunity to charge Amtrak
    "market" rates.

[^23]: .23Since marginal cost provides just compensation so long as
    these factors are absent, it is irrelevant that the Telecom Rate
    provided in 47 U.S.C. § 224(e) yields a higher rate for
    telecommunications attachments than the Cable Rate provides for
    cable attachments. The FCC reached a perfectly logical conclusion
    when it observed:

    Congress' decision to choose a slightly different rate methodology,
    more suited in its opinion to telecommunications service providers,
    does not call into question the constitutionality of the cable rate
    formula . . . because both formulas provide just compensation under
    the Fifth Amendment . . . . Congress used its legislative discretion
    in determining that cable and telecommunications attachers should
    pay different rates.

    [In the Matter of Ala. Cable Telecomm. Ass'n]{.underline}, 16 FCC
    Rcd. 12,209, ¶ 49.

[^24]: .24We do not reach, for example, the question as to whether a
    hypothetical determination by the FCC to set the rate at marginal
    cost would be an "arbitrary and capricious" one, even if marginal
    cost would provide just compensation for Fifth Amendment purposes.