Chesapeake & Potomac Telephone Co. v. Maryland/Delaware Cable Television Ass'n

COLE, Judge. The question before us in this appeal is whether the Public Service Commission of Maryland (PSC) has jurisdiction to regulate “pole attachment” agreements between utility companies and cable television companies. We set forth the following facts to place the issue in proper focus. Cable television companies provide programming to their subscribers by running coaxial cables, either underground or above ground on poles, from their transmission centers to the television sets of their customers.

Because of practical, economic, and aesthetic reasons, nearly all cable television lines are attached to existing utility poles pursuant to leases negotiated between cable television companies and utility companies. These leases are generally referred to as “pole attachment” agreements. In 1978, Congress determined that regulation of pole attachment agreements was necessary to ensure that cable television companies would be permitted to attach their lines to utility poles owned (and virtually monopolized) by utility companies. However, Congress observed that only a small number of states were monitoring these agreements.

S. Rep. No. 580, 95th Cong., 2d Sess. 13-14, reprinted in ments of 1978 (Act), Pub. L. No. 95-234, 92 Stat. 36, (codigress further determined that state and local regulatory bodies, because of their familiarity with local conditions, could regulate pole attachment agreements more effectively than a federal regulatory body. Id. at 16-17 , reprinted in U.S. Code Cong. & Admin.

News at 124-25. Therefore, in an effort to assure regulation of all pole attachment agreements, Congress enacted the Communications Act Amendments of 1978 (Act), Pub.L. No. 95-234, 92 Stat. 36, (codified at 47 U.S.C. § 224 ), which provides for federal regula ⁵⁵⁷ tion of pole attachment agreements in the absence of state regulation. In other words, the Act vests the Federal Communications Commission (FCC) with plenary power to regulate the “rates, terms, and conditions of pole attachment” agreements. 47 U.S.C. § 224 (b). The Act also provides the following mechanism for states to use to exercise jurisdiction over these agreements: (1) Nothing in this section shall be construed to apply to, or to give the [FCC] jurisdiction with respect to rates, terms, and conditions for pole attachments in any case where such matters are regulated by a State.

(2) Each State which regulates the rates, terms, and conditions for pole attachments shall certify to the [FCC] that— (A) it regulates such rates, terms, and conditions; and (B) in so regulating such rates, terms, and conditions, the State has the authority to consider and does consider the interests of the subscribers of cable television services, as well as the interests of the consumers of the utility services. 47 U.S.C. § 224 (c) (1982). In June 1985, the PSC attempted to wrest jurisdiction over pole attachment agreements away from the FCC. The PSC promulgated regulations to govern the rates, terms, and conditions of pole attachment agreements between utility companies and cable television companies. See COMAR 20.51.01 and .02. 1 The PSC then issued Order No. 67049, ⁵⁵⁸ which certified to the FCC that the PSC regulated the rates, terms, and conditions of pole attachment agreements in Maryland and that it had authority to consider, and would consider, the interests of cable television subscribers.

The Maryland/Delaware Cable Television Association, Inc. (Association), a trade association for the cable television industry in Maryland and Delaware, challenged the validity of the PSC’s regulations. The Association* 2 brought a declaratory judgment action in the Circuit Court for Baltimore County under Maryland Code (1957, 1980 Repl. Vol., 1986 Cum.Supp.), Art. 78, § 89 against the PSC and a number of utility companies. 3 The complaint alleged ⁵⁵⁹ that the promulgation of the regulations was beyond the PSC’s statutory powers and thus did not satisfy the FCC’s requirements for preempting federal jurisdiction. In its answer, the PSC asserted that the Public Service Commission Law (PSC Law), Maryland Code (1957, 1980 Repl.

Vol., 1986 Cum.Supp.), Art. 78, gave the PSC authority to regulate pole attachment agreements. There was no genuine dispute as to any material fact and all parties therefore moved for summary judgment in their favor. The circuit court granted summary judgment for the Association. The court found the PSC’s regulations invalid on two independent grounds.

First, the court concluded that the PSC did not have the statutory power to regulate the rates, terms, and conditions of pole attachment agreements. Second, the court found that the PSC did not have the statutory power to consider, and in fact may not have considered, the interests of cable television subscribers as required by the Act. The PSC appealed the circuit court’s decision to the Court of Special Appeals, but we granted certiorari before consideration of the case by the intermediate appellate court. On appeal, the PSC argues that §§ 56 and 68(a) of the PSC Law grant the PSC authority to regulate the rates, terms, and conditions of pole attachment agreements.

The PSC also cites several sections of the PSC Law to support its position that the PSC has the power to consider the interests of cable television subscribers. The Association argues that the sections cited by the PSC are insufficient to grant the PSC the requisite power needed to regulate pole attachment agreements. We agree with the Association and hold that the PSC does not have the statutory authority to regulate pole attachment agreements. We explain. ⁵⁶⁰ The PSC is a legislatively created body and, thus, its powers are limited to those expressly or impliedly granted by statute.

Albert v. Public Serv. Comm’n, 209 Md. 27, 34 , 120 A.2d 346, 349 (1956); accord Holy Cross Hosp. v. Health Serv. Cost Review Comm’n, 283 Md. 677, 683 , 393 A.2d 181, 184 (1978). The parties agree that the PSC Law does not grant the PSC power to directly regulate cable television companies or the express power to regulate a utility company’s pole attachment agreements.

Nevertheless, the PSC argues that §§ 56 and 68(a) give it the power to regulate the rates, terms, and conditions of pole attachment agreements. We begin our discussion by examining § 56, which provides in pertinent part: The [PSC] shall supervise and regulate all public service companies subject to its jurisdiction to assure their operation in the interest of the public and to promote adequate, economical, and efficient delivery of utility services in the State without unjust discrimination, giving consideration to the public safety, the economy of the State, the conservation of natural resources, and the preservation of environmental quality____ The PSC argues that utility poles are integral to the operation of a utility company’s business and that the attachment of cable television lines to utility poles may interfere with the reliability of utility service, public safety, and aesthetics. The PSC suggests that the presence of cable television lines and equipment on poles may interfere with the ability of utility company employees to repair and maintain utility wires on the same poles and that abuses of cable operators could potentially disrupt utility service. In addition, the PSC argues that without its regulation of pole attachment agreements, “the attachments might develop into a haphazard mesh on the skyline.” The PSC therefore concludes that its regulations are valid under § 56. 4 ⁵⁶¹ We agree with the PSC that utility poles are essential to the delivery of telephone and electric service and that the PSC is empowered to regulate the use of such poles to ensure reliable service and to protect the public safety.

Nevertheless, we fail to understand how the regulation of the rates of pole attachment agreements is necessary to ensure safe and reliable utility service to the public. Furthermore, we fail to perceive any relation between the price a cable television company pays to attach its cable to a utility pole and the “efficient delivery of utility services,” “public safety,” and “the preservation of environmental quality.” We therefore conclude that § 56 does not give the PSC authority to promulgate COMAR 20.51.01 and .02, which regulate the rates set in pole attachment agreements. 5 The PSC also argues that it has power to regulate the rates set in pole attachment agreements under § 68(a) of the PSC Law. That section grants the PSC “the power to determine just and reasonable rates of public service companies.” Section 2(q) defines “rates” as “tolls, fares, tariffs, fees, prices and any other charges for public utility services ... and any schedule, regulation, classification or practice of any public service company affecting the amount of such charges.” (Emphasis added). The PSC argues that because utility poles are essential to providing utility service and are a part of the utility company’s plant, the rental of pole space for cable television wires is a “public utility ⁵⁶² service.” The PSC therefore contends that it can regulate the rates charged for that service under § 68(a).

We disagree with the PSC’s overly broad interpretation of the term “public utility service.” The PSC was created in 1910 to supervise the essential public services provided by utility companies. 1910 Laws of Maryland, ch. 180. As we stated in Public Serv. Comm’n v. Philadelphia Balto. & Wash. R.R., 155 Md. 104, 115 , 141 A. 509, 514 (1928): The welfare, safety, and convenience of the public depended so closely upon the fair and efficient administration of corporations engaged in furnishing transportation, light, power, water, sewage, and other sanitary facilities to the public, that it became necessary to devise some agency by which they could be supervised and controlled in the exercise of their corporate functions and in the use of the privileges granted to them by the State, so as to insure the highest quality service commensurate with the compensation charged, and to secure a relation between service and rates fair alike to the corporation and the public.

(Emphasis added). Although the PSC Law was revised and recodified by the 1955 Laws of Maryland, ch. 441, the purposes and duties of the PSC were not changed. Baltimore Tank Lines v. Public Serv. Comm’n., 215 Md. 125, 127-28 , 137 A.2d 187, 189 (1957).

Therefore, the PSC continues to be responsible for ensuring that the “users of [a] utility [are] insured of safe and adequate service at a reasonable price.” Miles v. Public Serv. Comm’n, 151 Md. 337, 344 , 135 A. 579, 582 (1926). We find that “public utility services” are limited to those services that a utility company provides under “the privileges granted to [it] by the State.” With regard to the utility companies involved in the instant case, the electric companies have franchises to produce and deliver electricity, while the telephone company has a franchise to provide telephonic service. Those are the “public utility services” ⁵⁶³ that the PSC must regulate to protect the public.

Providing excess pole space for cable television line attachment is not a “public utility service.” Instead, it is a “service” unrelated to a utility company’s primary function. At oral argument, the PSC conceded that if an electric company owned an office building, part of which it used and part of which it leased to a private business, the rental of that office space would not be a “public utility service,” and the PSC would have no power to regulate the lease. We find the rental of unused pole space by an electric company to a cable