So Co Svc Inc v. FCC, et al, No. 01-1326 (D.C. Cir. 2002)

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. Fujimo-

to, 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. Nichol-

son and Robert J. Wiggers, Attorneys, United States Depart-

ment 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 Commis-

sion ("FCC" or "Commission") Orders implementing amend-

ments to the Pole Attachments Act (the "Act"), 47 U.S.C.

s 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 neces-

sary and appropriate to hear and resolve complaints" regard-

ing these matters. Id. s 224(b)(1). In the disputed Orders,

the Commission announced regulations and procedures de-

signed to assure that telecommunications providers can ob-

tain 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 s 703(e)

of the Telecommunications Act of 1996 to amend the Commis-

sion's rules and policies governing pole attachments. In the

Matter of Implementation of Section 703(e) of the Telecom-

munications 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 at-

tachments and guidelines for nondiscriminatory access to

poles and conduits. Implementation of Section 703(e) of the

Telecommunications Act of 1996, Amendment of the Com-

mission's Rules and Policies Governing Pole Attachments,

Report and Order, 13 F.C.C.R. 6,777 (Feb. 6, 1998), ("Tele-

com 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 con-

solidated proceeding. In the Matter of Amendment of the

Commission's Rules and Policies Governing Pole Attach-

ments; 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 rea-

sonably 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 Proce-

dure 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.

s 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 medi-

um for the installation of television cables."). However,

utilities often exploited their market position to charge exces-

sively high attachment rates. To restrain this practice, Con-

gress 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 tele-

vision 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. s 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. s 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. s 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 substan-

tially amended 47 U.S.C. s 224 in the 1996 Telecommunica-

tions Act, Pub. L. No. 104-104, 110 Stat. 56 (1997). The

major changes in the Act reflect the view that telecommunica-

tions 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. Con-

gress 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 defi-

nition 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. s 224(a)(4). The Act also

calls on the FCC to develop a separate attachment rate

scheme for telecommunications providers. Id. s 224(e). Fi-

nally, the Act requires owners to provide "non-discriminatory

access" to attachers seeking space on poles, ducts, conduits,

and rights-of-way. Id. s 224(f)(1). An owner may deny

space "where there is insufficient capacity and for reasons of

safety, reliability and generally applicable engineering pur-

poses." Id. s 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. s 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 limi-

tation 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 ser-

vices. 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. Reconsidera-

tion Order at 12,139-40 p 71, J.A. 35-36.

Second, pursuant to s 224(e)(1), the FCC adopted a com-

plaint resolution process for situations "when the parties fail

to resolve a dispute over [rate] charges." Under the applica-

ble 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 attach-

ment" and, therefore, does not qualify as an "attaching enti-

ty" for purposes of the attachment rate formula. Reconsider-

ation 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 Com-

mission 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 overlash-

ing," 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 pur-

poses.



Reconsideration Order at 12,150 p 94, J.A. 46 (footnotes

omitted). The FCC also adopted an administrative presump-

tion 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 s 706(2)(A)

of the APA, 5 U.S.C. s 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 Chev-

ron, 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 authori-

ty, 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 promulgat-

ed 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 capri-

cious" standard is narrow and a court is not to

substitute its judgment for that of the agency. Nev-

ertheless, 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 judg-

ment." Normally, an agency rule would be arbi-

trary and capricious if the agency has relied on

factors which Congress has not intended it to consid-

er, 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 exper-



 tise. 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. Pur-

suant 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. s 224(d), (e). As noted above, the rate for any

single "attaching entity" varies inversely with the total num-

ber 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." Pe-

titioners 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. s 224(e)(2), merely says that the

FCC must equally apportion costs "among all attaching enti-

ties." Petitioners argue, however, that the statutory defini-

tions of "pole attachment," s 224(a)(4), and "telecommunica-

tions carrier," s 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 pur-

poses of apportioning costs under s 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.

s 224(h) (describing obligations of an "owner" and "any enti-

ty" when either modifies a pole attachment), with id. s 224(i)

(prohibiting charges to a party for attachment changes by

"any other entity" including owners). The most that can be

said is that s 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

s 224(e)(2) is clearly a permissible interpretation of the stat-

ute to which we must defer.

Petitioners complain that the FCC acted unreasonably

when it "reversed course" in its Reconsideration Order, re-

moving all of the limitations that it had previously embraced

for counting attaching entities in the Telecom Order. Com-

pare 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 fur-

nished 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 Or-

der 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 pre-

sumptive 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 utili-

ty to develop its own presumptive average number

of attaching entities. We now reconsider that deci-

sion and set rebuttable presumptive average num-

bers of attaching entities for our two categories,

urbanized and non-urbanized. We are now persuad-

ed 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' chal-

lenges 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 utili-

ties 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 con-

nection to other wires and not to the pole itself, the Commis-

sion concluded that a utility is not entitled to charge overlash-

ing 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 con-

struction 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. s 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 enti-

ties 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 simultaneous-

ly seek to avoid disfavored provisions. "The Commission's

decision to play both negotiator and arbitrator, thus displac-

ing any true market negotiations, is unlawful," say petition-

ers. 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. s 224(b)(1);

see also id. s 224(e)(1) (directing FCC to establish regula-

tions 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 be-

tween the parties, save possibly where state regulations

occupy the field. Id. s 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 condi-

tions 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 unrea-

sonable 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 telecommunica-

tions carriers to obtain both immediate access and

timely regulatory relief to the extent access is unrea-

sonable 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 scenar-

io, where the utility gives nothing of value in ex-

change 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 facili-

ties.



It is conceivable that in some circumstances, the

utility may give a valuable concession in exchange

for the provision the attacher subsequently chal-

lenges 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 reason-

ableness of the rate provisions as a package, and

these provisions would rise or fall together without

undermining the statutory policy in favor of volun-

tary 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. Ac-

cording to petitioners, the Reconsideration Order fails to

recognize that portions of conduits are unusable for purposes

of computing the appropriate attachment formula. Petition-

ers 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 explana-

tion or good reason, as petitioners contend, when it adopted

the unusable space rule. Rather, the Commissioner's Recon-

sideration 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 mainte-

nance, future business plans, or municipal set-asides

to be subtracted from the total duct or conduit

capacity for rate determination purposes. The rec-

ord 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 mainte-

nance 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 petition-

ers' 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.