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Gulf Power Company v. FCC & USA, No. 11-1215 (D.C. Cir.)

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Released: February 21, 2012
USCA Case #11-1215 Document #1359348 Filed: 02/21/2012 Page 1 of 8

United States Court of Appeals


Argued January 19, 2012
Decided February 21, 2012
No. 11-1215




On Petition for Review of an Order of
the Federal Communications Commission

Eric B. Langley argued the cause for petitioner. With him
on the briefs were J. Russ Campbell, Jason B. Tompkins, and
Ralph A. Peterson
. Allen M. Estes entered an appearance.
Richard K. Welch, Deputy Associate General Counsel,
Federal Communications Commission, argued the cause for
respondents. With him on the brief were Robert B. Nicholson
and Robert J. Wiggers, Attorneys, U.S. Department of
Justice, Austin C. Schlick, General Counsel, Federal

USCA Case #11-1215 Document #1359348 Filed: 02/21/2012 Page 2 of 8

Communications Commission, Peter Karanjia, Deputy
General Counsel, and Laurel R. Bergold, Attorney.
John D. Seiver, Ronald G. London, and Christopher A.
Fedeli were on the brief for intervenors Florida Cable
Telecommunications Association, Inc., et al., in support of
Before: TATEL and GRIFFITH, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge

WILLIAMS, Senior Circuit Judge: In 1978 Congress
passed the Pole Attachments Act, which set a ceiling and a
floor on the price that cable television operators and
telecommunications carriers (here called cable operators for
simplicity’s sake) must pay to attach their lines to a power
company’s utility poles. See 47 U.S.C. § 224(d). The act
directs the Federal Communications Commission to “regulate
the rates, terms, and conditions for pole attachments to
provide that such rates, terms, and conditions are just and
reasonable,” id. § 224(b)(1), and then sets the bounds for what
is “just and reasonable”:
[A] rate is just and reasonable if it assures a utility the
recovery of not less than the additional costs of providing
pole attachments, nor more than an amount 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, duct, conduit, or
Id. § 224(d). Congress thus specified a minimum charge
(characterized by the Supreme Court as the “marginal cost of

USCA Case #11-1215 Document #1359348 Filed: 02/21/2012 Page 3 of 8

[the] attachments,” FCC v. Florida Power Corp., 480 U.S.
245, 253 (1987)) and a maximum (“the fully allocated cost of
the construction and operation of the pole to which [the] cable
is attached,” id.). The FCC promulgated regulations that
clarified how to calculate the upper limit of Congress’s
formula and appeared to make the maximum rate the ceiling
for what the utility may charge (as the word maximum
implies). See 47 C.F.R. § 1.1409(e); but cf. id. § 1.1409(b).
While specifying rate limits, the 1978 act left utilities free
to refuse attachment. In 1996 Congress added a requirement
that utilities allow attachment except in cases of “insufficient
capacity” or for “reasons of safety, reliability and generally
applicable engineering purposes.” 47 U.S.C. § 224(f).
Soon after the 1996 amendments, petitioner Gulf Power
and other utility companies increased their pole attachment
rates to levels above the statutory maximum. Several cable
operators filed a complaint against Gulf with the FCC, which
ruled that Gulf’s increased rates violated the act and the
FCC’s implementing regulations.
Gulf now seeks review of that order, arguing that the act
fails to provide for just compensation under the Fifth
Amendment, and that the FCC’s decision is arbitrary and
capricious, or is otherwise not supported by substantial
evidence. We find the doctrine of collateral estoppel (or
“issue preclusion”) a fatal bar to Gulf’s assertion of the
constitutional issue, and its remaining arguments unavailing.
We thus deny the petition.
* * *

Gulf primarily contends that the act and the FCC’s
implementing regulations fail to provide just compensation for
power companies forced to allow attachments at the

USCA Case #11-1215 Document #1359348 Filed: 02/21/2012 Page 4 of 8

prescribed rates. The FCC responds that the Eleventh
Circuit’s rejection of that claim in Alabama Power Co. v.
, 311 F.3d 1357 (2002), bars Gulf’s pursuit of it here.
Gulf and Alabama Power are both wholly owned subsidiaries
of a third company, Southern Company. For reasons
elaborated below, we agree with the Commission.
Alabama Power the court faced a challenge by Gulf’s
sister company to the precise scheme at issue here. Alabama
Power, like Gulf, argued that “the statute and regulations fail
to provide just compensation.” Id. at 1367. The Eleventh
Circuit held that, outside of certain limited circumstances, the
act’s rates amounted to just compensation. Id. at 1370-71.
Although acknowledging that mandatory attachments could
impose an opportunity cost on a utility (namely, loss of the
advantage of either using attachment space itself or renting it
to another), the court held that the takings clause did not
require compensation for that cost in the absence of actual
crowding. Thus, it concluded, the act and regulations failed to
specify just compensation only when a power company could
show that “(1) the pole [in question] 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.” Id. at 1370.
Because the act itself allows the utility to refuse access
altogether in cases of “insufficient capacity,” 42 U.S.C.
§ 224(f)(2), we take it that the Alabama Power formula will
only become relevant in cases where the current set of
attachments have filled the pole to capacity and the utility is
then presented with either of the two opportunities discussed
in part (2) of the formula, namely renting the occupied space
to another at a higher rate or using that space itself for a
higher-valued use. Refinements of this sort, however, are
unnecessary to resolve this case.

USCA Case #11-1215 Document #1359348 Filed: 02/21/2012 Page 5 of 8

The doctrine of issue preclusion generally bars
“successive litigation of an issue of fact or law actually
litigated and resolved in a valid court determination essential
to the prior judgment.” New Hampshire v. Maine, 532 U.S.
742, 748-49 (2001); see also Taylor v. Sturgell, 553 U.S. 880,
892 (2008). Gulf argues that neither the issue nor the parties
are identical to those in Alabama Power.
As to parties, it is true that Gulf was not a party to that
decision (though the FCC obviously was). But there are a
number of exceptions to the requirement of identical parties
(six, according to the Supreme Court’s count in Taylor, 553
U.S. at 893), of which the most pertinent is the case where the
party sought to be barred exercised such control over the prior
litigation that he can be said to have “‘had his day in court’
even though he was not a formal party,” id. at 895 (quoting 1

We find such control here. Gulf and Alabama Power
were under the common control and complete ownership of
their parent entity, Southern Company. See Southern Co.,
Form 10-K, Annual Report for the Fiscal Year Ending Dec.
31, 2010, at I-1 (Feb. 25, 2011) (“10-K”). Both companies
were thus servants to the same master. There seems at most
only a trivial difference between a case where the party sought
to be barred is a parent of a corporate party in the first
litigation, and one where the two parties are fellow wholly-
owned subsidiaries. Compare Fitzgibbon v. Martin County
Coal Corp
., No. 05-36, 2007 WL 1231509, at *9 (E.D. Ky.
Apr. 25, 2007) (rejecting such an equation without
While that relationship alone may not always show
sufficient control, it plainly does so in this context. Gulf filed
its own petition for review in Alabama Power as an
intervenor, it was a signatory on both Alabama Power’s

USCA Case #11-1215 Document #1359348 Filed: 02/21/2012 Page 6 of 8

opening and reply briefs in the case, and its counsel presented
oral argument in the Eleventh Circuit on behalf of both
companies. See Respondents’ Br. 40. Although the Eleventh
Circuit’s decision dismissed Gulf’s petition for lack of
standing before reaching the merits, Alabama Power Co., 311
F.3d at 1366-67, Gulf does not dispute that it had a full and
fair opportunity to present its arguments in Alabama Power.
Moreover, Gulf and Alabama Power are hardly subsidiaries
representing distant wings of a far-flung conglomerate. They
both provide power and power transportation in a specific
region of the country, and do so in close coordination. See
10-K at I-2 (describing Southern and its affiliates as
constituting the “Southern Company System” whose power
sources are “interconnected with the [other affiliates’]
transmission facilities” and which “operate[] as a single
integrated electric system”). Taking all of these factors into
consideration, we think that Gulf has had an ample day in
Gulf claims, however, that the central issue in Alabama
Power—whether the statutory scheme provides just
compensation—is quite different from the one it tries to raise
here—“Is [the Alabama Power] ‘test’ . . . inconsistent with
settled, Fifth Amendment takings jurisprudence[?]”

Petitioner’s Reply Br. 9. Put another way, Gulf argues that
the issue in the Alabama Power was the constitutionality of
the scheme, whereas the issue before us now is whether
Alabama Power decided that issue correctly. But if an issue
can be turned into a new issue merely by asking whether it
had been rightly decided, collateral estoppel would never
Recognizing that we might find it bound by Alabama
Power, Gulf contends that the FCC applied that decision’s
exception to the rate scheme too narrowly. As we saw earlier,
Alabama Power required a utility, trying to show that the act’s

USCA Case #11-1215 Document #1359348 Filed: 02/21/2012 Page 7 of 8

rate scheme failed to provide just compensation, first to prove
that its poles were “at full capacity.” 311 F.3d at 1370. Gulf
tried to show full capacity by evidence that some poles could
receive attachments only if some work were performed on the
existing attachments. The FCC rejected the evidence on the
ground that it would show full capacity only under an
assumption “that a pole is at full capacity whenever any
make-ready work [e.g., rearrangement of existing
attachments] would be required to accommodate a new
attachment.” In the Matter of Fla. Cable Telecomms. Ass’n
Inc. et al. v. Gulf Power Co.
, 26 FCC Rcd. 6452, 6462 ¶ 25
(2011) (“Order”). The FCC, instead, reasoned: “When a new
attacher could be accommodated by rearranging existing
attachments or with conventional attachment techniques to the
same extent that the utility uses them, . . . the pole is not at full
capacity.” Id. ¶ 24 Gulf defends its assumption, arguing that
otherwise the pole rate scheme forces it to expand the normal
capacity of a pole in a way that is inconsistent with Alabama
and with an earlier Eleventh Circuit decision, Southern
Co. v. FCC
, 293 F.3d 1338, 1346 (2002). See Petitioner’s Br.
We find the FCC’s interpretation in accord with both the
Eleventh Circuit decisions and with common sense. In
Alabama Power, the Eleventh Circuit explicitly noted that the
pole rate scheme already provided for the reimbursement of
the make-ready costs of any new attachments, see 311 F.3d at
1368-69. As there is no reason to assume the court suddenly
forgot that fact when it was crafting its exceptions to the rate
scheme, it must have understood that the statutory formula
was adequate in at least some cases involving make-ready
Nor is Southern Company to the contrary. The court
there held that in a situation where “it is agreed that capacity
on a given pole . . . is insufficient
,” the FCC may not order

USCA Case #11-1215 Document #1359348 Filed: 02/21/2012 Page 8 of 8

make-ready work. 293 F.3d at 1346 (emphasis added); see
also id. at 1347, 1352. That condition (insufficient capacity)
is, after all, precisely the one under which 47 U.S.C.
§ 224(f)(2) absolves the utility of any duty to provide access.
But the necessity of make-ready work before attaching a new
cable does not, by itself, entail “expanding” a pole’s capacity
or indicate that capacity was insufficient. Anyone who has
had to rearrange plates in a dishwasher to fit in one more item,
or to reconfigure plugs on a power strip to attach one more
electronic device, knows that such “make-ready” work does
not expand the device’s capacity (in the normal sense of those
words), but merely makes possible a more efficient use of
existing capacity. The FCC’s interpretation of “full capacity”
is thus fully consistent with the Eleventh Circuit’s definition,
and is not arbitrary and capricious.
With this interpretation in mind we hold that Gulf failed
to meet its burden to show that its poles are at full capacity, as
required by Alabama Power. Because proving full capacity is
a prerequisite to qualifying for the Alabama Power exception,
we need not reach Gulf’s arguments concerning the legal
standards and record evidence involved in the second of the
exception’s preconditions—whether Gulf could show that
there were other buyers waiting in the wings or other higher-
valued uses for the utility pole space.
* * *
The petition for review is


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