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Federal Communications Commission
Washington, D.C. 20554
Florida Cable )
Association, Inc.; Comcast )
Cablevision of )
Panama City, Inc.; Mediacom )
Southeast, L.L.C.; and Cox )
Communications Gulf Coast, )
L.L.C., ) EB Docket No. 04-381
Gulf Power Company,
HEARING DESIGNATION ORDER
Adopted: September 24, 2004 Released: September 27,
By the Chief, Enforcement Bureau:
1. Pursuant to the Commission's rules,1 we initiate a
hearing in connection with a Petition for Reconsideration and
Request for Evidentiary Hearing filed in the above-captioned
complaint proceeding.2 As explained more fully in this Hearing
Designation Order (``HDO''), the hearing will determine whether
the respondent, Gulf Power Company (``Gulf Power''), is entitled
to receive compensation above marginal cost for any attachments
to its poles belonging to the complainants, Florida Cable
Telecommunications Association, Inc.; Comcast Cablevision of
Panama City, Inc.; Mediacom Southeast, L.L.C.; and Cox
Communications Gulf Coast, L.L.C. (collectively, ``Cable
2. On July 10, 2000, the Cable Operators filed a
complaint3 against Gulf Power alleging that Gulf Power violated
section 224 of the Act4 and the Commission's pole attachment
rules5 by unilaterally terminating its existing pole attachment
agreements with the Cable Operators, forcing the Cable Operators
to execute new pole attachment agreements that contained much
higher pole attachment rates, and refusing to renegotiate new
rates in good faith in accordance with the Cable Formula.6 Gulf
Power subsequently filed a response arguing that the Commission
lacked jurisdiction over the Complaint, that a pole attachment
rate derived through use of the Commission's Cable Formula would
not provide just compensation, as required by the Fifth Amendment
to the United States Constitution (``just compensation''), and
that an alternative cost methodology should be employed in order
to arrive at an appropriate pole attachment rate.7
3. On May 13, 2003, the Enforcement Bureau granted the
Complaint.8 Specifically, the Gulf Power Order determined that
the Commission had jurisdiction to decide the issues raised in
the Complaint, that the Complaint was ripe for resolution, and
that the Cable Formula provides Gulf Power with just
compensation.9 In reaching the third conclusion, the Gulf Power
Order relied on the Commission's previous holding that the Cable
Formula, along with the payment of make-ready expenses, provides
remuneration that exceeds just compensation.10 The Gulf Power
Order further quoted the Eleventh Circuit's recent explanation in
the Alabama Power Decision that a utility pole owner is
constitutionally entitled only to marginal costs unless certain
conditions are present:
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.11
The Gulf Power Order concluded that Gulf Power had ``submitted no
evidence in th[e] proceeding that would satisfy the test
articulated by the Eleventh Circuit.''12 Accordingly, because
Gulf Power had not used the Cable Formula to determine an
appropriate pole attachment rate, and had not provided evidence
to satisfy the Eleventh Circuit's standard for justifying
compensation above marginal cost for any particular pole, the
Gulf Power Order granted the Complaint and directed the parties
to negotiate new pole attachment rates pursuant to the Cable
4. Gulf Power subsequently filed its Petition. The
Petition observes that the Alabama Power Decision was released
after the last submission expressly mentioned in the Commission's
complaint rules (i.e., the Cable Operators' Reply) had been filed
in this proceeding.14 Moreover, the Petition contends that the
Alabama Power Decision articulated a new standard for determining
whether pole attachment rates amount to just compensation.15 The
Petition asserts, therefore, that the Bureau improperly applied
the Alabama Power Decision's standard to the facts in the Gulf
Power Order, because the Bureau did so without notifying the
parties or giving them an opportunity to submit new evidence
bearing on the standard.16 The Petition consequently requests
that the Bureau ``set this proceeding for a full evidentiary
hearing to allow [Gulf Power] an opportunity to present evidence
to meet the new standard.''17 The Cable Operators opposed the
Petition, arguing that Gulf Power fails to meet the Commission's
requirements for bringing a petition for reconsideration or to
establish that the Gulf Power Order applied a ``novel'' legal
standard, and that the Petition is internally inconsistent and
unpersuasive.18 Gulf Power subsequently filed a reply.19
5. On December 19, 2003, Bureau staff deferred ruling on
the merits of the Petition pending Gulf Power's filing and
service of a submission specifying the kinds of evidence it
wished to submit for further consideration in response to the
Alabama Power Decision's standard and explaining the significance
of that evidence.20 After carefully reviewing the parties'
submissions, we conclude that Gulf Power should be afforded the
opportunity to present the evidence delineated in its Description
of Evidence during a hearing before an Administrative Law Judge
III. PROCEDURAL DESIGNATIONS
III.A. Procedural and Evidentiary Rules
6. This proceeding shall be governed by sections 1.201
through 1.364 of the Commission's rules of practice for hearing
proceedings, to the extent practicable for the adjudication of
this issue.22 The ALJ may, in his discretion, require the
parties to submit all or any portion of their case in writing if
he determines that such written submissions would contribute
significantly to the disposition of the proceeding.23
7. Discovery shall be conducted in accordance with
sections 1.311-1.325 of the Commission's rules.24
III.C. Burdens of Proceeding and Proof
8. Because Gulf Power is the moving party with respect to
the Petition,25 it bears the burden of proceeding with the
introduction of evidence and the burden of proving it is entitled
to compensation above marginal cost with respect to specific
III.D. Bureau Participation
9. The Enforcement Bureau shall be a party to the
proceeding and will determine its level of participation, as
appropriate. Pursuant to section 1.47(c) of the Commission's
rules,27 the Bureau shall be served with documents in the same
manner as other parties.
IV. ORDERING CLAUSES
10. ACCORDINGLY, IT IS ORDERED, pursuant to sections 1,
4(i), 4(j), 224, and 405 of the Communications Act of 1934, as
amended, 47 U.S.C. §§ 151, 154(i), 154(j), 224, 405, and sections
0.111, 0.311, 1.106, and 1.1411 of the Commission's rules, 47
C.F.R. §§ 0.111, 0.311, 1.106, 1.1411, that Gulf Power's Petition
IS GRANTED to the extent indicated in this HDO;
11. IT IS FURTHER ORDERED, that the above-captioned
proceeding IS DESIGNATED FOR A HEARING before an ALJ, at a time
and place to be specified in a subsequent Order, upon the
Whether Gulf Power is entitled to receive compensation
above marginal costs for any attachments to its poles
belonging to the Cable Operators, and, if so, the
amount of any such compensation.
12. IT IS FURTHER ORDERED, that to avail themselves of the
opportunity to be heard and the right to present evidence, the
designated parties, pursuant to section 1.221(c) of the
Commission's rules,28 SHALL FILE in triplicate, within twenty
(20) days of the mailing of this Order by the Secretary, a
WRITTEN NOTICE OF APPEARANCE, stating an intention to appear on
the date fixed for the hearing and present evidence on the issue
specified in this Order.
13. IT IS FURTHER ORDERED, that this hearing will be
governed by the rules of practice and procedure pertaining to the
Commission's Hearing Proceedings, 47 C.F.R. §§ 1.201-1.364,
subject to the ALJ's discretion to regulate the hearing.
14. IT IS FURTHER ORDERED, that all Discovery shall be
conducted in accordance with 47 C.F.R. §§ 1.311-1.325, subject to
the ALJ's discretion.
15. IT IS FURTHER ORDERED, that Gulf Power shall have both
the burden of proceeding with the introduction of evidence and
the burden of proof on all issues.
16. IT IS FURTHER ORDERED, that the Enforcement Bureau
shall be a party to the proceeding.
17. IT IS FURTHER ORDERED, that the Secretary of the
Commission shall cause to have this Order published in the
FEDERAL COMMUNICATIONS COMMISSION
David H. Solomon
Chief, Enforcement Bureau
1 See 47 C.F.R. §§ 1.1411 (in pole attachment complaint
proceedings, the Commission ``may, in its discretion, order
evidentiary procedures upon any issues it finds to have been
raised by the filings''); 0.111(a)(12) (the Enforcement Bureau
may resolve complaints regarding pole attachments filed under
47 U.S.C. § 224); 0.111(a)(17) (the Enforcement Bureau may issue
orders taking appropriate action in response to complaints,
including hearing designation orders).
2 Gulf Power Company's Petition for Reconsideration and Request
for Evidentiary Hearing, File No. PA 00-004 (filed June 23, 2003)
3 Complaint, File No. PA 00-004 (filed July 10, 2000)
(``Complaint'') at 7, ¶¶ 22-23. The Cable Operators originally
filed the complaint with the Commission's former Cable Services
Bureau. Effective March 25, 2002, the Commission transferred
responsibility for resolving pole attachment complaints from the
former Cable Services Bureau to the Enforcement Bureau. See
Establishment of the Media Bureau, the Wireline Competition
Bureau and the Consumer and Governmental Affairs Bureau,
Reorganization of the International Bureau and Other
Organizational Changes, Order, 17 FCC Rcd 4672 (2002).
4 47 U.S.C. § 224.
5 47 C.F.R. §§ 1.1401-1.1418.
6 The ``Cable Formula'' is the methodology that the Commission
developed to calculate the maximum allowable pole attachment rate
that a specific utility may charge a cable operator providing
cable services. See Amendment of Rules and Policies Governing
Pole Attachments, Report and Order, 15 FCC Rcd 6453, 6457, ¶ 5
(2000), review denied sub nom., Southern Co. Serv., Inc. v. FCC,
313 F.3d 574 (D.C. Cir. 2002); Amendment of Commission's Rules
and Policies Governing Pole Attachments, Consolidated Partial
Order on Reconsideration, 16 FCC Rcd 12103, 12110, ¶ 10 (2001).
See also Adoption of Rules for the Regulation of Cable Television
Pole Attachments, First Report and Order, 68 FCC2d 1585 (1978);
Second Report and Order, 72 FCC2d 59 (1979); Third Report and
Order, 77 FCC2d 187 (1980), review denied sub nom., Monongahela
Power Co. v. FCC, 655 F.2d 1254 (D.C. Cir. 1985) (per curiam);
Amendment of Rules and Policies Governing the Attachment of Cable
Television Hardware to Utility Poles, Report and Order, 2 FCC Rcd
4387, 4397-98, ¶¶ 78-80 (1987), Memorandum Opinion and Order on
Reconsideration, 4 FCC Rcd 468 (1989).
7 Gulf Power Company's Response to Complaint, File No. PA 00-004
(filed Aug. 9, 2000) (``Response'') at 9-13, 38-52.
8 See Florida Cable Telecommunications Association, Inc.; Comcast
Cablevision of Panama City, Inc.; Mediacom Southeast, L.L.C.; and
Cox Communications Gulf Coast, L.L.C. v. Gulf Power Company,
Memorandum Opinion and Order, 18 FCC Rcd 9599 (Enf. Bur. 2003)
(``Gulf Power Order'').
9 Gulf Power Order, 18 FCC Rcd at 9602-03, ¶¶ 6-8; 9603-05, ¶¶ 9-
10; 9607, ¶ 15.
10 Gulf Power Order, 18 FCC Rcd at 9609, ¶ 15 (citing Alabama
Cable Telecommunications Ass'n v. Alabama Power Co., Order, 16
FCC Rcd 12209, 12223-36, ¶¶ 32-61 (2001) (``Alabama Power FCC
Order'')). The Alabama Power FCC Order arose from a similar
complaint that a cable association filed with the Commission
against Alabama Power Company (``Alabama Power''). (Like Gulf
Power, Alabama Power is a wholly-owned subsidiary of The Southern
Company.) The complaint alleged that Alabama Power unlawfully
had terminated existing pole attachment agreements and attempted
to impose new agreements containing higher rates. Alabama Power
responded that the Cable Formula did not provide it with just
compensation. The former Cable Services Bureau rejected Alabama
Power's assertions and ordered the parties to re-negotiate in
good faith, using the Cable Formula as a guide to establishing a
reasonable rate. Alabama Cable Telecommunications Association v.
Alabama Power Company, Order, 15 FCC Rcd 17346 (Cable Serv. Bur.
2000). The Commission subsequently upheld the bureau's
determinations in response to Alabama Power's Application for
Review. See Alabama Power FCC Order, 16 FCC Rcd at 12209.
Alabama Power then appealed to the Eleventh Circuit, which upheld
the Commission's conclusions. Alabama Power Co. v. FCC, 311 F.3d
1357 (11th Cir. 2002) (``Alabama Power Decision''). The United
States Supreme Court denied certiorari on October 6, 2003.
Alabama Power Co. v. FCC, 124 S. Ct. 50 (2003).
11 Gulf Power Order, 18 FCC Rcd at 9607, ¶ 15 (citing Alabama
Power Decision, 311 F.3d at 1370-71).
12 Gulf Power Order, 18 FCC Rcd at 9607, ¶ 15. Cf. Alabama Power
Decision, 311 F.3d at 1372 (Alabama Power ``never alleged . . .
facts'' showing ``(1) full capacity and (2) a higher valued
13 Gulf Power Order, 18 FCC Rcd at 9608, ¶ 17.
14 Petition at i, 2-3, 5.
15 Petition at i, 1-2, 4-7; Gulf Power Company's Reply to
Complainants' Opposition to Petition for Reconsideration, File
No. PA 00-004 (filed Aug. 13, 2003) (``Reply to Opposition to
Petition'') at ii, 1-4.
16 Petition at i, 5-7, 10-12. See Reply to Opposition to
Petition at ii, 1-3, 6-7.
17 Petition at 10. See also Petition at i, 10-12. The Petition
also asserts that the Alabama Power Decision's standard
improperly departs from Commission policies and practices
regarding pole attachment cost recovery, and that the Alabama
Power Decision's standard has no basis in just compensation
jurisprudence. Petition at i, 7-10. See Reply to Opposition to
Petition at ii, 2. Gulf Power subsequently acknowledged,
however, that ``[o]nce the rule in [the Alabama Power Decision]
becomes final, either through denial of certiorari review or an
ultimate ruling on the merits by the Supreme Court, it will be
binding upon the FCC - it will set the standard.'' Reply to
Opposition to Petition at 5-6. As noted above, after Gulf Power
filed the Petition, the United States Supreme Court denied
certiorari in Alabama Power, and the Eleventh Circuit's decision
became final. See note 10, supra.
18 Opposition to Gulf Power Company's Petition for
Reconsideration and Request for Evidentiary Hearing, File No. PA
00-004 (filed July 25, 2003) (``Opposition to Petition'').
19 Reply to Opposition to Petition.
20 Letter to J. Russell Campbell, Ralph A. Peterson, and John
Seiver from Lisa B. Griffin, Deputy Chief, Market Disputes
Resolution Division, Enforcement Bureau, Federal Communications
Commission, File No. PA 00-004 (Dec. 19, 2003) (``December 19
Letter Ruling''). See 47 C.F.R. § 1.106(k)(2). Gulf Power
thereafter submitted its proffer of evidence (Description of
Evidence Gulf Power Seeks to Present in Satisfaction of the
Eleventh Circuit's Test, File No. PA 00-004 (filed Jan. 8, 2004)
(``Description of Evidence'')), to which the Cable Operators
filed a response. Response to Description of Evidence Gulf
Power Seeks to Present in Satisfaction of the Eleventh Circuit's
Test, File No. PA 00-004 (filed Feb. 6, 2004) (``Cable Operators'
Response to Description of Evidence'').
21 We disagree with the Cable Operators that the Petition is
inappropriate because the Alabama Power Decision purportedly did
not establish a new legal standard. Opposition to Petition at 9-
13. Consequently, we believe that consideration of the facts
Gulf Power intends to proffer in an effort to satisfy the Alabama
Power Decision's standard is ``required in the public interest.''
47 C.F.R. § 1.106(c)(2). We also find that the Petition is not
inconsistent with Gulf Power's legal arguments in its appeal of
the Alabama Power Decision. See Opposition to Petition at 13-14.
We express no opinion about the ultimate merits of the Petition -
i.e., whether Gulf Power is entitled to receive compensation
above marginal cost - leaving that determination to an ALJ. See
Opposition to Petition at 14-16; Reply to Opposition to Petition
at 6-7; Description of Evidence; Cable Operators Response to
Description of Evidence.
22 47 C.F.R. §§ 1.201-1.364.
23 See 47 U.S.C. §§ 154(i), 154(j). Cf. High Tech Furnace Sys.,
Inc. v. FCC, 224 F.3d 781, 789 (D.C. Cir. 2000) (written body of
evidence in 47 U.S.C. § 208 complaint proceeding ``created the
record necessary to make the just and reasonableness
determination contemplated by 47 U.S.C. § 201(b)'').
24 47 C.F.R. §§ 1.311-1.325.
25 See Petition at ii, 2, 10-12; Gulf Power's Reply at ii, 4-8.
26 See 47 C.F.R. § 1.255(a) (at hearings on a petition, the
petitioner shall open and close); Alabama Power Decision, 311
F.3d at 1370 (``the burden of proving loss, as well as the amount
of any loss, is upon the party claiming to have experienced a
taking'') (quoting United States v. John J. Felin & Co., 334 U.S.
624, 641 (1948)).
27 47 C.F.R. § 1.47(c).
28 47 C.F.R. § 1.221(c).