United States Court of Appeals

For the Eighth Circuit

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No. 16-1683

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Ameren Corporation; American Electric Power Service Corporation; Centerpoint

Energy Houston Electric, LLC; Virginia Electric and Power Company

lllllllllllllllllllllPetitioners

v.

Federal Communications Commission; United States of America

lllllllllllllllllllllRespondents

COMPTEL, doing business as INCOMPAS; Level 3 Communications; National

Cable & Telecommunications Association; United States Telecom Association

lllllllllllllllllllllIntervenors

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Texas Industrial Energy Consumers; Texas Office of Public Utility Counsel

lllllllllllllllllllllAmici on Behalf of Petitioner

____________

Petition for Review of an Order of the

 Federal Communications Commission

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 Submitted: January 11, 2017

 Filed: July 31, 2017

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Before WOLLMAN, MURPHY, and COLLOTON, Circuit Judges.

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WOLLMAN, Circuit Judge.

Ameren Corporation; American Electric Power Service Corporation;

CenterPoint Energy Houston Electric, LLC; and Virginia Electric and Power

Company (collectively, Petitioners) petition for review of a November 2015 order of

the Federal Communications Commission (FCC) governing the rates that utility

companies may charge telecommunications providersfor attaching their networks to

utility-owned poles. The FCC, the United States, and intervenors COMPTEL d/b/a

INCOMPAS; National Cable & Telecommunications Association; Level 3

Communications, LLC; and United States Telecom Association oppose the petition. 

We deny the petition.

I. Background

Under the Pole Attachments Act, 47 U.S.C. § 224, the FCC has the authority

to ensure that rates for attachments to utility poles by providers of cable television

services (cable providers) and providers of telecommunications services

(telecommunications providers) are “just and reasonable.” Id. § 224(b)(1). 

Section 224 initially applied only to cable providers. The statute sets forth a lower

bound and an upper bound for “just and reasonable” rates. The lower bound is a rate

that “assures a utility the recovery of not less than the additional costs of providing

pole attachments,” and the upper bound is a rate that is “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.” Id. § 224(d)(1). The FCC set the rate for this upper bound (the

Cable Rate) by multiplying three values: the space factor (the space occupied by an

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attachment divided by the total usable space on the pole), the net cost of a bare pole,

and a carrying charge rate. 47 C.F.R. § 1.1409(e)(1). 

Congress amended § 224 in 1996, expanding it to cover pole attachments by

telecommunications providers. Section § 224(e) sets forth methods for apportioning

the cost of a pole among telecommunications providers:

(2) 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 ofsuch costs among all attaching entities.

(3) A utility shall apportion the cost of providing usable space among all

entities according to the percentage of usable space required for each

entity.

Id. § 224(e). This revision thus established a separate formula for determining the

rate for pole attachments by telecommunications providers (the Telecom Rate).

Until 2011, the FCC determined “cost” for the Telecom Rate the same way as

for the Cable Rate (net cost of a bare pole multiplied by a carrying charge rate), and

implemented § 224(e)(2) by calculating the space factor differently, apportioning

two-thirds of the costs of the unusable space among attaching telecommunications

providers. Thus, the Telecom Rate wastypically higher than the Cable Rate, because

the values for the net cost of a bare pole and the carrying charge rate were the same

for both the Cable Rate and the Telecom Rate, while the value for the space factor

was typically higher in the Telecom Rate because it included two-thirds of the

unusable space on the pole.

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In response to concerns that the risk of having to pay the Telecom Rate may

have deterred cable providers from expanding their services, the FCC adopted an

order in April 2011 designed to equalize the Cable and Telecom Rates. In the Matter

of Implementation of Section 224 of the Act, Report and Order and Order on

Reconsideration, 26 FCC Rcd. 5240 (2011) (the April 2011 Order). This Order

reinterpreted the term “cost” in § 224(e)(2) by defining the “cost” for an urban-area

pole as 66 percent of the pole’s fully allocated costs (the net cost of a bare pole

multiplied by the carrying charge rate), and for a non-urban-area pole as 44 percent

of the pole’s fully allocated costs. Id. at 5304, ¶ 149. Under the FCC’s rebuttable

presumptions of 5 attachersto an urban-area pole and 3 attachersto a non-urban-area

pole, In the Matter of Implementation of Section 224 of the Act, Order and Further

Notice of Proposed Rulemaking, 25 FCC Rcd. 11864, 11913, ¶ 119 n.324 (2010), the

new Telecom Rate under the April 2011 Order approximated the Cable Rate.

The United States Court of Appeals for the District ofColumbia Circuit upheld

the April 2011 Order against claims that it was inconsistent with § 224. Am. Elec.

Power Serv. Corp. v. FCC, 708 F.3d 183 (D.C. Cir.), cert. denied, 134 S. Ct. 118

(2013). The electric utilities’ petition for review argued that “cost” in § 224(e) must

mean the fully allocated costs of a pole, not the April 2011 Order’s definition of

“cost” as either 66 or 44 percent of the pole’s fully allocated costs. Id. at 189. The

D.C. Circuit noted that § 224(e) “isin important respects lessspecific than § 224(d),”

because “while § 224(e) prescribes the apportionment criteria rather specifically, it

nowhere defines the term ‘cost.’” Id. at 188-89. Evaluating the April 2011 Order

under the standard set forth in Chevron, USA, Inc. v. Natural Resources Defense

Council, Inc., 467 U.S. 837 (1984), the court held that the term “cost” as used in

§ 224(e) is ambiguous and that the FCC’s interpretation of the statute wasreasonable

in light of its policy interest in eliminating market distortion caused by the difference

between the Cable Rate and the Telecom Rate. Am. Elec. Power, 708 F.3d at 186,

189-90.

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In November 2015, the FCC again altered the TelecomRate, adopting the order

at issue in this case. In the Matter of Implementation of Section 224 of the Act, Order

on Reconsideration, 30 FCC Rcd. 13731 (2015) (the November 2015 Order). The

FCC found that the April 2011 Order had failed to equalize the Telecom Rate and the

Cable Rate, because utilities frequently rebutted the presumptions of 5 attachers in

an urban area and 3 attachersin a non-urban area, which resulted in a higher Telecom

Rate. Id. at 13738, ¶ 18. The FCC was also concerned that its recent order

classifying retail broadband internet service as a telecommunications service, In the

Matter of Protecting and Promoting the Open Internet, Report and Order on Remand,

Declaratory Ruling, and Order, 30 FCC Rcd. 5601, 5734, ¶ 308 (2015), in

conjunction with the continued disparity between the Cable Rate and the Telecom

Rate, would lead to rate increases for cable providers offering broadband service. 

November 2015 Order at 13741, ¶ 21. Further, the FCC was concerned that, because

some states that had elected to regulate pole attachments under 47 U.S.C. § 224(c)

used the Cable Rate, a higher Telecom Rate would deter telecommunications

investment in states where the FCC’s Telecom Rate applied. Id. at 13741-42, ¶ 22. 

The November 2015 Order addressed these concerns by eliminating the distinction

between poles in urban and non-urban areas, instead basing “cost” on the average

number of attachers to a pole within an area: “cost” in areas with an average of 5

attachers is defined as 66 percent of fully allocated costs, 56 percent for 4 attachers,

44 percent for 3 attachers, and 31 percent for 2 attachers. Id. at 13756. In service

areas where the average number of attachers is not a whole number, the percentage

is interpolated from the percentages assigned to the nearest whole numbers. Id.

II. Discussion

We review the FCC’s interpretation of § 224(e) under the two-step framework

set forth in Chevron. We first determine “whether Congress has directly spoken to

the precise question at issue,” and if it has, we “must give effect to the unambiguously

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expressed intent of Congress.” Chevron, 467 U.S. at 842-43. “[I]f the statute issilent

or ambiguous with respect to the specific issue, the question for the court is whether

the agency’s answer is based on a permissible construction of the statute.” Id. at 843. 

The agency’s view “governs if it is a reasonable interpretation of the statute—not

necessarily the only possible interpretation, nor even the interpretation deemed most

reasonable by the courts.” Entergy Corp. v. Riverkeeper, Inc., 556 U.S. 208, 218

(2009). Even when an agency policy represents a change from past policy, the

agency generally need not demonstrate that “the reasons for the new policy are better

than the reasons for the old one; it suffices that the new policy is permissible under

the statute, that there are good reasons for it, and that the agency believes it to be

better.” FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009).

We conclude that the term “cost” in § 224 is ambiguous. “The fact is that

without any better indication of meaning than the unadorned term, the word ‘cost’ in

[a different statute], as in accounting generally, is ‘a chameleon,’ a ‘virtually

meaningless term.’” See Verizon Commc’ns, Inc. v. FCC, 535 U.S. 467, 500 (2002)

(citations omitted). Indeed, § 224(d) uses the term “cost” in different ways. It sets

forth as a lower bound “the additional costs of providing pole attachments.” It sets

forth as an upper bound a rate equal to the percentage of the pole’s usable space

occupied by the attachment multiplied by the “operating expenses and actual capital

costs of the utility attributable to the entire pole.” In § 224(e), by contrast, Congress

did not specify what type of “cost” it meant, providing instead that, among

telecommunications providers, the “cost” of providing usable space on a pole shall

be apportioned according to the percentage of usable space required for each attacher,

and the “cost” of providing unusable space on a pole shall be apportioned to each

attacher such that its share equals two-thirds of the costs it would be allocated under

an equal apportionment of such costs. Thus, while the Cable Rate under § 224(d)

must fall within a range defined by two different, specified types of “cost,” § 224(e)

does not specify what type of “cost” must be used to determine the Telecom Rate.

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Petitioners argue that the November 2015 Order defies Congress’s intent to

establish two different ratesin § 224(d)(1) and § 224(e). We disagree that the statute

evinces such an intent. Section 224(d) requires that pole attachment rates for cable

providers fall within a certain range. Section 224(e) requires that pole attachment

rates for telecommunications providers be calculated according to a certain formula. 

Because the term “cost” in § 224(e) is ambiguous, the same “cost” definition need not

be used to determine the upper bound for cable rates under § 224(d) and the rate for

telecommunications providers under § 224(e). Accordingly, the statute permits, but

does not require, the Cable Rate and the Telecom Rate to diverge.

Likewise, we reject Petitioners’ argument that the FCC’s interpretation of the

statute renders § 224(e) superfluous. See Corley v. United States, 556 U.S. 303, 314

(2009) (“[A] statute should be construed so that effect is given to all its provisions,

so that no part will be inoperative or superfluous, void or insignificant . . . .” (quoting

Hibbs v. Winn, 542 U.S. 88, 101 (2004))). As set forth above, the statute allows the

Cable Rate and the Telecom Rate to diverge, but does not require them to do so. 

Whether or not the rates diverge, the Cable Rate must fall within the range set forth

in § 224(d) and the Telecom Rate must be calculated according to the formula set

forth in § 224(e). Thus, the formula for calculating the Telecom Rate under § 224(e)

is not superfluous.

1

In light of this conclusion, we need not address the FCC’s argument that the

1

alternative, cost-causation formula for determining the Telecom Rate under

47 C.F.R. § 1.1409(e)(2)(ii) prevents § 224(e) from becoming superfluous under the

November 2015 Order.

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We conclude that the November 2015 Order constitutes a reasonable

interpretation of the ambiguity in § 224(e). The FCC sought to eliminate the

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disparity between the Cable and Telecom Rates in order to avoid subjecting cable

providers offering broadband service to the higher Telecom Rate, and to avoid rate

disparity between states whose pole attachment rates are regulated by the FCC and

those states that had elected to regulate pole attachment rates using the Cable Rate

even for telecommunications providers. Finding that the April 2011 Order’s

presumptions of five attachers in urban areas and three attachers in non-urban areas

were inadequate to achieve these goals, the FCC adopted the multiple cost allocators

set forth in the November 2015 Order. This approach represents a “reasonable

policy” choice, and thus we defer to the FCC’s interpretation. See Verizon, 535 U.S.

at 523.3

We find the D.C. Circuit’s decision in American Electric Power to be

persuasive. Petitioners attempt to distinguish this case from American Electric

Power, noting that, under the April 2011 Order upheld in that case, the Telecom Rate

did not vary based on the number of attachers(instead varying based on urban or nonTo the extent that Petitioners argue that the November 2015 Order resulted

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from arbitrary and capricious decision making in violation of the Administrative

Procedure Act, 5 U.S.C. § 706, their argument fails for the same reasons that explain

why the November 2015 Order is reasonable. See Shays v. Fed. Election Comm’n,

414 F.3d 76, 96 (D.C. Cir. 2005) (“[O]ur inquiry at the second step of Chevron . . .

overlaps with the arbitrary and capricious standard . . . .” (quoting Chamber of

Commerce of the U.S. v. Fed. Election Comm’n, 76 F.3d 1234, 1235 (D.C. Cir.

1996))).

Petitioners contend that “[t]here issimply no evidence in the record sufficient

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to support a determination” that equating the Telecom Rate and the Cable Rate will

encourage the expansion of broadband services. Pet’rs’ Br. 39. This claim is timebarred under 28 U.S.C. § 2344 in light of Petitioners’ failure to challenge that

determination within sixty days of the entry of the April 2011 order.

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urban location); that the April 2011 Order adopted only two definitions of the term

“cost,” as opposed to the potentially infinite definitionsin the November 2015 Order;

and, “perhaps most importantly,” that under the April 2011 Order it was at least

possible for the Cable and Telecom Ratesto diverge. Petr’s’ Br. 21-22. We conclude

that those distinctions are of no significance. The D.C. Circuit concluded that the

term “cost” was ambiguous and that the FCC’s choice to define “cost” so as to

equalize the Cable and Telecom Rates was reasonable. Am. Elec. Power, 708 F.3d

at 188-90. That reasoning applies with equal force here. 

The petition for review is denied.

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