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Time Warner Cable Texas LLC v. CPS Energy and Southwestern Bell Telephone Co.

Supreme Court of Texas

May 17, 2019

Time Warner Cable Texas LLC and Public Utility Commission of Texas, Petitioners,
v.
CPS Energy and Southwestern Bell Telephone Company d/b/a AT&T Texas, Respondents

          Argued January 24, 2019

          On Petition for Review from the Court of Appeals for the Third District of Texas

          Chief Justice Hecht delivered the opinion of the Court. Justice Busby did not participate in the decision.

          OPINION

          Nathan L. Hecht, Chief Justice.

         Under the Public Utility Regulatory Act ("PURA"), "a municipality or municipally owned utility may not discriminate in favor of or against a certificated telecommunications provider regarding . . . utility pole attachment . . . rates or terms".[1] In this case, the Public Utilities Commission ("PUC") concluded that a utility that invoices different providers a uniform rate nevertheless violates this provision if it "fail[s] to take timely action to ensure that all pole attachers actually [pay] the uniform rate it invoice[s]."[2] We agree, and accordingly reverse the judgment of the court of appeals in part and remand the case to the trial court.[3]

         CPS Energy, a utility owned by the City of San Antonio, supplies electricity to customers over lines attached to poles that it owns on its rights-of-way in the San Antonio area. Telecommunication providers lease space on the poles to attach their wires and cables. Providers Time Warner Cable ("Time Warner") and Southwestern Bell Telephone Company d/b/a AT&T Texas ("AT&T") constructed their networks in San Antonio using CPS Energy's poles under different agreements. Time Warner's 1984 agreement provided for an initial annual pole attachment rate of $3.75 per pole, with an escalator clause allowing annual rate increases. Time Warner also agreed to pay a permit application fee each time it attached to one of CPS Energy's poles. AT&T's 1987 agreement set a fixed annual pole attachment rate of $3.75 per pole with no escalator clause. AT&T was not required to pay permit application fees.

         By January 2007, Time Warner's pole attachment rate had escalated from $3.75 to $15.63. CPS Energy billed AT&T the higher rate, but AT&T continued to pay the lower amount, and CPS Energy did nothing to collect its invoices until January 2009. PURA Section 54.204(c) has, since September 1, 2006, required utilities like CPS Energy to "charge" all telecommunications providers "a single, uniform pole attachment . . . rate", [4] and Section 54.204(b) prohibits CPS Energy from "discriminat[ing]" between providers "regarding . . . utility pole attachment . . . rates or terms".[5] In December 2008, Time Warner sued CPS Energy for violating these provisions by not requiring AT&T to pay the higher rate and began paying CPS Energy the lower amount. A month later, CPS Energy petitioned the PUC to enforce Section 54.204 against AT&T and Time Warner- specifically, to order them to pay outstanding pole attachment fees from 2008 forward. On CPS Energy's motion, the trial court abated Time Warner's lawsuit pending completion of the administrative proceedings.

         In its final order, the PUC concluded that by failing to take "meaningful", "serious", and "timely action to ensure that all pole attachers actually paid the uniform rate it invoiced", CPS Energy violated both Section 54.204(c)'s uniform-charge requirement and Section 54.204(b)'s prohibition of discrimination.[6] The PUC ordered CPS Energy to comply with Section 54.204 going forward.[7] The district court affirmed these conclusions.[8]

         The court of appeals reversed, reasoning as follows. Section 54.204(c) requires only that a utility charge uniform rates, not that it also collect them.[9] Although neither word is defined in PURA, the ordinary, dictionary definitions show that the two terms are different, and PURA itself distinguishes them.[10] For example, PURA defines rate to include "a compensation, tariff, charge, fare, toll, rental, or classification that is directly or indirectly demanded, observed, charged, or collected".[11] The purpose of the uniform-rate requirement is to help ensure that a utility does not discriminate in allowing telecommunications providers to attach cables to its poles.[12] If a telecommunications provider does not pay the rate the utility uniformly charges, any discriminatory effect is the telecommunication provider's fault, not the utility's.[13] A utility that "enter[s] into side agreements with certain attaching entities for a different rate or who ma[kes] no effort to collect from an attaching entity who was not paying the charged rate" might violate Section 54.204(c), but there is no evidence of collusive or fraudulent conduct by CPS Energy here.[14] For the same reasons that CPS Energy's ineffective collection efforts did not violate Section 54.204(c), CPS Energy also did not violate Section 54.204(b).[15] Thus, the court concluded, the PUC exceeded its authority in requiring CPS Energy to use meaningful and serious efforts to collect its rates.[16] We granted the PUC's and Time Warner's petitions for review.[17]

         Utility poles support overhead public utilities, and wire-based telecommunications providers like Time Warner pay rental fees to attach equipment to these poles. In effect, pole access determines whether telecommunications providers can enter a community. Telecommunications providers have no cost-effective alternative but to pay pole owners' stated rental fees to construct a network of wires and cables that will be insulated from people and vehicles. This disparity in bargaining power has resulted in a host of abuses, including telecommunications providers charging discriminatory and exorbitant rents to attach equipment to poles.[18]

         In 1978, Congress responded with the Pole Attachment Act, which requires the Federal Communications Commission, in the absence of state regulation, to "regulate the rates, terms, and conditions for pole attachments" and ensure that they are "just and reasonable".[19] The federal act set the stage for a wave of state regulation. Recognizing that "public utilities are by definition monopolies in the areas they serve", Texas first passed the Public Utility Regulatory Act in 1975 to "protect the public interest in [utilities'] rates and services".[20] The Legislature has amended PURA several times since. A nondiscrimination provision was added in 1995[21] and moved to Section 54.204 during the 1997 recodification of PURA in the Utilities Code.[22] The 2005 amendments added the uniform-charge requirement in Section 54.204(c).[23]

         Petitioners argue that despite differences in the meanings of charge and collect, charging rates necessarily entails making reasonable efforts to collect them, especially in Section 54.204, which prohibits discrimination in effect as well as by intent. We need not address this argument. PURA treats the two terms separately in defining rate, as the court of appeals noted.[24] But PURA's definition of rate includes both charge and collect.[25] Substituting the definition of rate for that word in Section 54.204(b)'s prohibition of "discriminat[ion] . . . regarding . . . rates"[26] yields a prohibition applicable to "compensation . . . charged[] or collected".[27] CPS Energy failed to make any serious or meaningful effort to collect from AT&T before it initiated the enforcement proceeding, and it collected far more from Time Warner than from AT&T. CPS Energy discriminated in collecting rates from these telecommunications providers and, because its actions fall within Section 54.204(b)'s prohibition, we need not address what conduct is included in charging rates.

         Read as a whole, PURA prohibits discrimination. There is no dispute that while CPS Energy charged Time Warner and AT&T the same rates, it collected far more from Time Warner. The PUC's finding that CPS Energy failed to make any serious or meaningful effort to collect from AT&T before it initiated the enforcement proceeding is supported by substantial evidence, and the effect on Time Warner was clearly discriminatory. Thus, the PUC could reasonably have concluded, as it did, that CPS Energy violated the plain terms of Section 54.204(b), and we need not consider whether the same conduct also violated Section 54.204(c).[28]

         Accordingly, we reverse the court of appeals' judgment in part and ...


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