80 U.S. 245
Nos. 85-1658, 85-1660.
Argued Dec. 3, 1986.
Decided Feb. 25, 1987.
The syllabus constitutes no part of the opinion of the Court
but has been prepared by the Reporter of Decisions for the
convenience of the reader.
See United States v. Detroit Lumber Co., 200 U.S. 321,
337, 26 S.Ct. 282, 287, 50 L.Ed. 499.
Pole Attachments Act (Act) empowers the Federal Communications
in the absence of parallel state regulation, to determine
"just and reasonable" rates that utility companies
may charge cable television systems for using utility poles
as the physical medium for stringing television cable (47
U.S.C. § 224(b)(1)).
The Act, in effect, also provides a range of reasonableness
within which the FCC may set rates when it indicates that
a minimum reasonable rate is equivalent to the marginal cost
of providing pole attachments, while the maximum reasonable
rate is determined by computing the fully allocated cost of
the construction and operation of each pole to which cable
is attached (47 U.S.C. § 224(d)(1)).
Upon the complaints of three cable operators alleging
that the yearly per-pole attachment rentals charged them by
appellee Florida Power Corporation -- $7.15, $6.24, and $5.50,
respectively -- were unreasonable, the FCC's Common Carrier
Bureau issued orders reforming each of the pole attachment
agreements to provide for yearly rents of $1.79 per pole.
These orders were upheld by the FCC, which rejected
appellee's constitutional arguments under the Takings and
Due Process Clauses. However, on review, the Court of Appeals
held that the Act violated the Fifth Amendment.
The court first concluded that the Act authorized a
permanent physical occupation of property constituting a per
se taking for which compensation must be paid under Loretto
v. Tele-prompter Manhattan CATV Corp., 458 U.S. 419, 102 S.Ct.
3164, 73 L.Ed.2d 868 (1982).
The court then struck down the Act under the Fifth
Amendment on the ground that its authorization to the FCC
to make initial rate
determinations under prescribed standards usurped an exclusively
The Act does not authorize a taking of property within the
meaning of the Fifth Amendment.
The Court of Appeals erred in applying Loretto 's narrow
per se rule, since the element of required acquiescence
is at the heart of the concept of occupation under Loretto,
whereas nothing in the Act, as interpretedby 246
the FCC, requires utility companies
to give cable companies space on utility poles or prohibits
utility companies from refusing to enter into attachment
Since the Act clearly contemplates voluntary commercial
leases rather than forced governmental licensing, it merely
regulates the economic relations of utility company landlords
and cable company tenants, which regulation is not a per
se taking under Loretto. Pp. 1111-1113.
The FCC order did not effect a taking under traditional
Fifth Amendment standards, which permit governmental regulation
of rates chargeable on the use of private property devoted
to public purposes so long as the rates set are not confiscatory.
Here, the rate imposed was calculated according to
the Act's maximum rate formula, which is not confiscatory
since it provides for the recovery of fully allocated costs,
including the actual cost of capital.
Because the Act does not authorize a taking under the Fifth
Amendment, it is unnecessary to review the Court of Appeals'
holding that the Act is unconstitutional.
F.2d 1537, reversed.
J., delivered the opinion for a unanimous Court.
POWELL, J., filed a concurring opinion, in which O'CONNOR,
J., joined, post, p. ----.
Solicitor General Wallace argued the cause for appellants
in No. 85-1658. With
him on the brief were Solicitor General Fried, Harriet S.
Shapiro, and Jack D. Smith.
Jay E. Ricks argued the cause for appellants in No.
him on the briefs were Brenda L. Fox, E. Barrett Prettyman,
Jr., and J. Christopher Redding.
J. Topols argued the cause for appellees in both cases and
filed a brief for appellee Florida Power Corp.
With him on the brief was Harry A. Evertz III.
Peyton G. Bowman III and Daniel J. Wright filed a brief
for appellees Alabama Power Co. et al. Shirley S. Fujimoto
and Ralph A. Simmons filed a brief for appellee Tampa Electric
Co. Paul Glist filed a brief for the Texas Cable TV Association,
Inc., et al. as amicus curiae urging reversal in No. 85-1658.
of amici curiae urging affirmance were filed for the Edison
Electric Institute by Robert L. Baum and Jan J. Sagett; for
the Mountain States Telephone and Telegraph Co. et al. by
L. Andrew Tollin; and for the Pacific Legal Foundation by
Ronald A. Zumbrun and John H. Findley.
of amici curiae were filed for the Association of American
Railroads by Paul A. Cunningham and Kenneth P. Kolson; and
for the Nor‑West Cable Communications et al. by Harold
R. Farrow, Sol Schildhause, and Siegfried Hesse.
Justice MARSHALL delivered the opinion
of the Court.
cases present consolidated appeals from a single decision
of the United States Court of Appeals for the Eleventh Circuit
holding that 47 U.S.C. § 224 (the Pole Attachments Act) effects
an unconstitutional taking of property without just compensation.
Pole Attachments Act, 92 Stat. 35, as amended, 47 U.S.C. §
224, was enacted by Congress as a solution to a perceived
danger of anticompetitive practices by utilities in connection
with cable television service.
Cable television operators, in order to deliver television
signals to their subscribers, must have a physical carrier
for the cable; in
most instances underground installation of the necessary cables
is impossible or impracticable.
Utility company poles provide, under such circumstances,
virtually the only practical physical medium for the installation
of television cables.
Over the past 30 years, utility companies throughout
the country have entered into arrangements for the leasing
of space on poles to operators of cable television systems.
These contracts have generally provided for the payment
by the cable companies of a yearly rent for space on each
pole to which cables were attached, the fixed costs of making
modifications to the poles and of physical installation of
cables being borne by the cable operators.
In many States the rates charged by the utility companies
for these attachments have not been subject to regulation.
response to arguments by cable operators that utility companies
were exploiting their monopoly position by engaging in widespread
overcharging, Congress in the Pole Attachments Act authorized
the Federal Communications Commission to fill the gap left
by state systems of public utilities 248
See S.Rep. No. 95-580, pp. 12-14 (1977), U.S. Code
Cong. & Admin.News 1978, p. 109. The Act provides that any
cable company operating in a State which does not regulate
the rates, terms, and conditions of pole attachments may seek
relief from alleged overcharging before the Commission, which
is empowered to "regulate the rates, terms, and conditions
for pole attachments to provide that such rates, terms, and
conditions are just and reasonable...."
47 U.S.C. § 224(b)(1).
The Act establishes a standard for the Commission's
determination of rates, providing that "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, or the percentage of the total
duct or conduit capacity, 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,
The Commission had previously investigated allegations of
overcharging by utilities, but had concluded that it had no
jurisdiction because pole attachments were not "communications
by wire or radio" under the Communications Act, 48 Stat.
1064, as amended, 47 U.S.C. § 151.
See California Water & Telephone Co., 64 F.C.C.2d
753, 758 (1977).
1963, appellee Florida Power Corporation (Florida Power) entered
into a pole attachment agreement with appellant Cox Cablevision
Corporation (Cox). Florida Power subsequently, in 1977 and
1980, contracted for similar purposes with Teleprompter Corporation
and Teleprompter Southeast, Inc. (Teleprompter), and Acton
CATV, Inc. (Acton), respectively. [FN2]
In November 1980, Teleprompter filed a complaint with
the FCC, alleging that its 1980 per pole rent of $6.24 was
unreasonable under the Act.
In February 1981, Acton filed a complaint concerning
the rate under its agreement, which was $7.15 per pole. In
July 1981, the Commission's 249 Common Carrier
Bureau issued a memorandum opinion and order finding in favor
of Teleprompter and Acton, reforming the agreements to provide
in both cases for yearly rents of $1.79 per pole, and ordering
refunds of excess rents paid after the filing of the complaints.
Power filed an application for review by the FCC;
during the pendency of this application Cox filed a
complaint seeking revision of the rent charge under its 1963
agreement, which was at that time set at $5.50 per pole.
The Common Carrier Bureau ordered reformation of Cox's
agreement to provide for rent of $1.79 per pole.
In September 1984 the FCC, in a single order, approved
the orders of the Common Carrier Bureau in all three cases.
The Commission rejected constitutional arguments raised
by Florida Power under the Takings and Due Process Clauses,
and upheld the rate calculations made by the Bureau.
Florida Power's agreements with Cox and Acton were for a minimum
term of one year, thereafter terminable by either party on
six months' notice.
The agreement with Teleprompter provided for a minimum
term of 5 1/2 years, terminable thereafter on six months'
FN3. The rate ordered
by the Commission was in both instances substantially lower
than the rate which the cable operators had asked the Commission
to adopt. The
cable operators, after review of information provided by Florida
Power, had requested the imposition of annual rents of approximately
$2.20 per pole.
Power then sought review of the FCC's decision in the United
States Court of Appeals for the Eleventh Circuit. [FN4]
Neither Florida Power nor any of the intervenors argued
before the Eleventh Circuit
that the Pole Attachments Act was unconstitutional. [FN5]
The Court of Appeals nonetheless held in a per curiam
opinion that the Pole Attachments Act violated the Fifth Amendment.
772 F.2d 1537 (1985). 250 The
court first concluded that the Act effected a taking of property
because it authorized a permanent physical occupation of property
under our decision in Loretto v. Teleprompter Manhattan CATV
Corp., 458 U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982). 772 F.2d, at 1544.
The court then struck down the Act under the Fifth
Amendment because it authorizes the FCC to make the initial
determination of the amount of compensation to be paid under
legislatively prescribed standards.
"By prescribing a 'binding rule' in regard to
the ascertainment of just compensation," the court stated,
"Congress has usurped what has long been held an exclusive
judicial function." Id., at 1546.
in No. 85‑1660, Group W Cable, Inc., National Cable
Television Association, Inc., and Cox Cablevision Corporation,
intervened before the Court of Appeals supporting the FCC. Tampa Electric Company, Alabama
Power Company, Arizona Public Service Company, and Mississippi
Power and Light Company, appellees in both cases, intervened
before the Court of Appeals in support of Florida Power.
FN5. Florida Power's
opening brief in the Court of Appeals stated that its petition
for review of the Commission's order did not "involve
a facial attack on the constitutionality of a legislative
Brief for Petitioner in No. 84-3683 (CA11), p. 35.
FCC and intervenor cable operators noticed separate appeals
from this decision.
We noted probable jurisdiction and consolidated the
cases for argument and decision, 476 U.S. 1156, 106 S.Ct.
2273, 90 L.Ed.2d 716 (1986).
We now reverse.
Court of Appeals found at the outset that the Pole Attachments
Act authorizes a permanent physical occupation of property,
which, under the rule we adopted in Loretto, is per se a taking
for which compensation must be paid.
772 F.2d, at 1543-1544.
We disagree with this premise, for we find that Loretto
has no application to the facts of this litigation.
Loretto we reviewed a New York statute which prohibited any
owner of rental property from "interfer[ing] with the
installation of cable television facilities upon his property
or premises," and provided that the landlord could charge
cable operators for access to his property only the amount
"which the [State Commission on Cable Television] shall,
by regulation, determine to be reasonable."
458 U.S., at 423, and n. 3, 102 S.Ct., at 3169, and
n. 3. The appellant in Loretto had purchased an apartment
building upon the roof of which appellee had mounted cables
and switching boxes for the provision of cable television
service to tenants.
The State Commission on Cable Television had declared
that a one-time charge of $1 might be levied by
251 landlords in return for
the statutory compulsory access to property.
Id., at 424-425, 102 S.Ct., at 3169-3170.
We found that our prior decisions interpreting the
Takings Clause, along with the purposes of the Clause itself,
compelled the conclusion that "a permanent physical occupation
authorized by government is a taking without regard to the
public interests that it may serve."
Id., at 426, 102 S.Ct., at 3171.
We reversed the holding of the New York Court of Appeals
that the challenged statute did not take property within the
meaning of the Fifth Amendment, and remanded for consideration
of the issue whether just compensation had been paid.
characterized our holding in Loretto as "very narrow."
Id., at 441, 102 S.Ct., at 3179.
The Court of Appeals in its decision in these cases
broadened that narrow holding beyond the scope to which it
For, while the statute we considered in Loretto specifically
required landlords to permit permanent occupation of their
property by cable companies, nothing in the Pole Attachments
Act as interpreted by the FCC in these cases gives cable companies
any right to occupy space on utility poles, or prohibits utility
companies from refusing to enter into attachment agreements
with cable operators. [FN6] The Act authorizes the FCC, in
the absence of parallel 252
state regulation, to review the rents
charged by public utility landlords who have voluntarily entered
into leases with cable company tenants renting space on utility
we observed in Loretto, statutes regulating the economic relations
of landlords and tenants are not per se takings.
Id., at 440, 102 S.Ct., at 3178;
see Bowles v. Willingham, 321 U.S. 503, 517‑518,
64 S.Ct. 641, 648‑649, 88 L.Ed. 892 (1944);
Block v. Hirsh, 256 U.S. 135, 157, 41 S.Ct. 458, 460,
65 L.Ed. 865 (1921);
see also Fresh Pond Shopping Center, Inc. v. Callahan,
464 U.S. 875, 104 S.Ct. 218, 78 L.Ed.2d 215 (1983) (dismissing
challenge to rent control ordinance under Loretto for want
of substantial federal question).
"So long as these regulations do not require the
landlord to suffer the physical occupation of a portion of
his building by a third party, they will be analyzed under
the multifactor inquiry generally applicable to nonpossessory
Loretto, supra, 458 U.S., at 440, 102 S.Ct., at 3178
FN6. The Court
of Appeals found, and appellees contend here, that "[t]he
hard reality of the matter is that if Florida Power desires
to exclude the cable companies, for whatever reason, they
are powerless to do so ... because in previous cases where
utilities have ordered cable companies to disconnect, the
FCC has routinely intervened by issuing temporary stays which
prevent the exclusion of the cable companies." 772 F.2d
1537, 1543 (1985).
According to the Solicitor General, the FCC "has
not yet taken a position" on whether utilities may terminate
attachment contracts for non‑retaliatory reasons.
Tr. of Oral Arg. 7. The language of the Act provides
no explicit authority to the FCC to require pole access for
cable operators, and the legislative history strongly suggests
that Congress intended no such authorization.
See, e.g., S.Rep. No. 95-580, p. 16 (1977), U.S.Code
Cong. & Admin.News 1978, p. 124 (The Act "does not
vest within a CATV system operator a right to access to a
utility pole, nor does the bill, as reported, require a power
company to dedicate a portion of its pole plant to communications
do not decide today what the application of Loretto v. Teleprompter
Manhattan CATV Corp., 458 U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d
868 (1982), would be if the FCC in a future case required
utilities, over objection, to enter into, renew, or refrain
from terminating pole attachment agreements.
This element of required
acquiescence is at the heart of the concept of occupation.
As we said in Loretto:
law has long protected an owner's expectation that he will
be relatively undisturbed at least in the possession of his
require, as well, that the owner permit another to exercise
complete dominion literally adds insult to injury.
Furthermore, such an occupation is qualitatively more
severe than a regulation of the use of property, even a regulation
that imposes affirmative duties on the owner, since the owner
may have no control over the timing, extent, or nature of
458 U.S., at 436, 102 S.Ct., at 3176 (citation omitted).
Appellees contend, in
essence, that it is a taking under Loretto for a tenant invited
to lease at a rent of $7.15 to remain at the regulated rent
of $1.79. But
it is the invitation, not the rent, that makes the difference.
The line which separates these cases from Loretto is the unambiguous
253 between a commercial
lessee and an interloper with a government license.
We conclude that the Court of Appeals erred in applying
the per se rule of Loretto to the Pole Attachments Act.
The remaining question, whether
under traditional Fifth Amendment standards the challenged
FCC order effected a taking of property, is readily answered.
It is of course settled beyond dispute that regulation
of rates chargeable from the employment of private property
devoted to public uses is constitutionally permissible.
See Munn v. Illinois, 94 U.S. [4 Otto] 113, 133-134,
24 L.Ed. 77 (1877);
Permian Basin Area Rate Cases, 390 U.S. 747, 768-769,
88 S.Ct. 1344, 1360-1361, 20 L.Ed.2d 312 (1968).
Such regulation of maximum rates or prices "may,
consistently with the Constitution, limit stringently the
return recovered on investment, for investors' interests provide
only one of the variables in the constitutional calculus of
Id., at 769, 88 S.Ct., at 1361.
So long as the rates set are not confiscatory, the
Fifth Amendment does not bar their imposition. St. Joseph
Stock Yards Co. v. United States, 298 U.S. 38, 53, 56 S.Ct.
720, 726, 80 L.Ed. 1033 (1936);
see Permian Basin, supra, 390 U.S., at 770, 88 S.Ct.,
The Pole Attachments
Act, as previously noted, provides a range of reasonableness
within which the FCC may undertake rate-setting.
The Act provides that the minimum reasonable rate is
equal to "the additional costs of providing pole attachments,"
while the maximum reasonable rate is to be calculated "by
multiplying the percentage of the total usable space, or the
percentage of the total duct or conduit capacity, 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 right-of-way."
47 U.S.C. § 224(d)(1).
The minimum measure is thus equivalent to the marginal
cost of attachments, while the statutory maximum measure is
determined by the fully allocated cost of the construction
and operation of the pole to which cable is attached.
254 The FCC has evidently
interpreted the statute to provide that when it reduces the
contract rate for pole attachments, it may only reduce to
the maximum rate allowed under the statute.
Tr. of Oral Arg. 10.
The rate imposed by the Commission in this case was
calculated according to the statutory formula for the determination
of fully allocated cost.
App. to Juris. Statement of FCC 23a.
Appellees have not contended, nor could it seriously
be argued, that a rate providing for the recovery of fully
allocated cost, including the actual cost of capital, is confiscatory.
[FN7] Accordingly, we hold that the FCC regulatory order challenged
below does not effect a taking of property under the Fifth
In view of the Commission's interpretation of the statute,
and use of the fully allocated cost measure in this case,
we have no occasion to consider the constitutionality of the
minimum rate allowable under the statute.
we hold that the Pole Attachments Act does not authorize a
taking of property within the meaning of the Fifth Amendment,
the holding of the Court of Appeals, that the Act is void
because it unconstitutionally constrains the judicial determination
of just compensation for takings, necessarily falls. [FN8]
The decision of the Court of Appeals is
Our disposition of the takings question makes it unnecessary
to review on the merits the Court of Appeals' holding that
Congress may not establish standards under which the initial
determination of compensation will be made by an administrative
authority subject to final judicial review.
POWELL, with whom Justice O'CONNOR joins, concurring.
join the Court's opinion, and write only to state generally
my understanding as to the scope of judicial review of rates
determined by an administrative agency.
I agree that the FCC regulatory order challenged in
these cases does not effect 255
an unconstitutional taking of property.
In the Court's brief discussion of "traditional
Fifth Amendment standards," it quotes a single sentence
from the Permian Basin Area Rate Cases, 390 U.S. 747, 88 S.Ct.
1344, 20 L.Ed.2d 312 (1968), to the effect that regulation
of maximum rates "may, consistently with the Constitution,
limit stringently the return recovered on investment, for
investors' interests provide only one of the variables in
the constitutional calculus of reasonableness," id.,
at 769, 88 S.Ct., at 1361.
mandated by the Constitution is considerably more complex
than this simple statement reflects.
Justice Harlan's opinion for the Court in that case
is some 74 pages long.
In addition, Justice Douglas wrote an interesting,
and relevant, dissenting opinion.
The one sentence included in today's opinion in no
way accurately portrays the full rationale of judicial review
of ratemaking by administrative tribunals.
Other portions of the Permian opinion could be quoted
to indicate that the standard gives governments far less leeway. Indeed, on the next page
in Permian the Court identifies the relevant standard
of review under the Natural Gas Act as "just and
reasonable," id., at 770, 88 S.Ct., at 1361, and the
opinion goes on to suggest that the Commission's rates must
be selected "from the broad zone of reasonableness."
second rate case in which several Justices carefully considered
the role courts should play in reviewing administrative ratemaking
orders is FPC v. Hope Natural Gas Co., 320 U.S. 591, 64 S.Ct.
281, 88 L.Ed. 333 (1944).
Justice Douglas, writing for the Court, stated that
the "just and reasonable" standard required that
"the return to the equity owner should be commensurate
with returns on investments in other enterprises having corresponding
at 603, 64 S.Ct., at 288.
I do not suggest
that this isolated sentence from Hope Natural Gas is any more
to be viewed as the appropriate standard than the sentence
from Permian Basin the Court quotes today.
My point is only that judicial review of rates challenged
as taking property without just compensation involves careful
consideration of the relevant statute, the action of the
256 regulatory commission,
and a complex of other factors.
The rates before us clearly comport with the Constitution.
In my view no purpose is served by selecting for quotation
a single sentence that, standing alone, is meaningless at