Opinion ID: 501656
Heading Depth: 3
Heading Rank: 1

Heading: Is it a Taking?

Text: 52 Allocating twenty-five percent of NTS costs to interstate jurisdiction in effect transfers those costs to the rate bases of interstate carriers, forces them to recover those costs through their rates, and reduces their profitability. The Supreme Court, however, has reviewed statutorily authorized economic regulation with great deference. The Court's recent decision in FCC v. Florida Power Corp., --- U.S. ----, 107 S.Ct. 1107, 94 L.Ed.2d 282 (1987), follows that pattern. In that case, the Court held that Commission regulations limiting the rate an electric utility can charge television cable operators for the use of electricity poles constitute neither a per se taking of the utility's property, nor a taking under more traditional Fifth Amendment principles. 53 On the per se taking issue, the Court distinguished Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982), on the basis that the FCC did not require the power company to allow the cable operators to use its poles. Florida Power, 107 S.Ct. at 1112. The Court then applied the Takings Clause principle that [s]o long as the rates set are not confiscatory, the Fifth Amendment does not bar their imposition. Id. at 1113 (citing St. Joseph Stock Yards Co. v. United States, 298 U.S. 38, 53, 56 S.Ct. 720, 726-27, 80 L.Ed. 1033 (1936), and Permian Basin Area Rate Cases, 390 U.S. 747, 770, 88 S.Ct. 1344, 1361-62, 20 L.Ed.2d 312 (1968)). 54 In this case, nothing in the record suggests that the Commission's allocation of twenty-five percent of NTS costs to the interstate jurisdiction constitutes a confiscation of MCI's property. Indeed, MCI cannot operate general long distance service without using the facilities of local exchange companies. The proposition cannot seriously be entertained that requiring MCI to absorb part of the NTS costs of local exchanges amounts to a confiscation. See Jersey Cent. Power & Light Co. v. Federal Energy Regulatory Comm'n, 810 F.2d 1168, 1181 n. 3 (D.C.Cir.1987) (en banc) (absent deep financial hardship ... there is no taking). 55 More fundamentally, we find the facts in this case analogous to the situation confronting the Court in Florida Power, except that the parties here are inverted. In Florida Power, the television cable companies needed the utility's plant to reach their subscribers, and the utility challenged the FCC rate as a taking. Here, MCI needs local companies' NTS plant to reach its subscribers, but it is MCI that challenges the rate indirectly resulting from FCC jurisdictional action. 56 It is the nature of the rate action, rather than the identity of the party challenging it, that controls the decision whether the rate is a taking. Comparing the rate action in Florida Power to the probable effect of the twenty-five percent allocation on MCI's profits, we can discern no difference rising to the level of a Takings Clause objection. The Commission has attempted to balance various public and private concerns, acknowledged MCI's reliance on local company plant, and established an allocation figure which, on the average, scarcely differs from the frozen SPF. 57