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Industry Downplays Risks

FCC Looking to Back EPA in Lead Cable Contamination Controversy

The FCC contacted the White House’s Council on Environmental Quality and the EPA about their plans about health and environmental risks from lead-sheathed cables used by AT&T and Verizon, which report earnings this week. USTelecom said Friday the telecom industry is working to better understand the extent of the problem (see 2307210056). The cables received lawmaker, industry and public attention after The Wall Street Journal reported this month about telcos, including AT&T and Verizon, having left lead cables underground, underwater and on poles nationwide.

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We want to figure out how we can assist [those agencies] going ahead,” Chairwoman Jessica Rosenworcel told reporters last week. The FCC is also examining the Communications Act, “trying to understand if issues like this have ever arisen before,” she said. Environmental law experts said EPA would most likely lead efforts to investigate and address lead contamination. The EPA didn't comment.

The Environmental Defense Fund, Below the Blue and Clean Water Action sent a letter to EPA Administrator Michael Regan July 17 asking the agency to “investigate the uncontrolled release of lead by more than 2,000 lead-sheathed telecom cables into water or surface soil across the nation.” More than 300 of the cables “are posing a threat to community drinking water sources,” the groups said.

EPA has clear authority on this one,” though maybe not exclusive authority, said Tom Neltner, EDF senior director-safer chemicals. EPA has the expertise to assess risk and authority to address problems, though with tens of thousands of miles of cables potentially involved "it may not have the best mechanism," Neltner said. The Comprehensive Environmental Response, Compensation and Liability Act -- the Superfund law -- is site specific, and speaks in terms of landfills and spills rather than wide-ranging problems, he said. The Safe Drinking Water Act also could be a legal route, he said.

The cables, if unused and abandoned, are technically waste, which would put them under the Resource Conservation and Recovery Act (RCRA), which would put them under EPA purview, said environmental and administrative law expert Dave Owen, a professor at the University of California College of the Law, San Francisco. RCRA's implementation authority is also partially delegated to states, so state environmental agencies also would have some authority, he said. There could be fines for past noncompliance under RCRA, but EPA wasn't working on the problem and warning telcos in the past so it would be surprising if it sought fines, Owen said. The agency more likely would work with industry on a plan to address environmental problems, he said. With so many states having implementation authority, it seems likely some state attorneys general or state environmental agencies "are going to take a very close look at this even if EPA does not," Owen said.

Michael Barsa, co-director of the environmental law concentration, Northwestern Pritzker School of Law, emailed that EPA would have jurisdiction and likely would investigate under the Superfund law, as it has numerous times in the past under it to remediate lead-contaminated sites, with telcos footing the cleanup costs, unless there's something in the way they were regulated that would shield them from Superfund liability.

The cables, if dug up and disposed of, would likely be under RCRA, with state environmental agencies overseeing that work, said Bill Andreen, University of Alabama emeritus law professor specializing in environmental and administrative law. He said Clean Water Act applicability to the cables would be "a little bit of a stretch" since that law usually regulates discharge like sewage, but injunctions could be pursued under the Clean Water Act.

It's too soon to say what role the FCC might play, as more facts need to be gathered, Commissioner Brendan Carr told reporters last week.

"Everyone should take a pause to learn the facts before jumping to any conclusions, assessing blame, or exorbitant cost estimates," said former Commissioner Mike O'Rielly. "We only know that some current wireline providers have a very small portion of their current network with legacy lead cables," he said: "Despite the concerns involving lead, there appears no proof today of any causation with health effects from these cables. It is way too early and inappropriate to lay blame on telecom companies with suppositions and accusations based on just what we know today. I suspect the FCC will provide a consultative role to other federal agencies, including EPA, to determine a complete picture, which could take considerable time. Indiscriminately yanking out old lead wires, especially in many instances they were previously abandoned with no current owner, could be dangerous and counterproductive."

We know what the largest sources of lead are in the environment, including historic leaded gasoline and lead paint, and lead water pipes,” said a statement from Stan Meiburg, a former senior EPA official. “It’s important to not make assumptions about individual cases of lead exposure, but rely on the findings of scientists and doctors in individual cases,” he said.

States are also starting to investigate. New York Gov. Kathy Hochul (D) directed the state departments of Public Service, Health and Environmental Conservation Thursday “to immediately investigate a recent report of old lead-covered cables left by telecommunication companies and the potential public health risks associated with exposure to those cables.”

"We are using all of the tools at our disposal to ensure communities are out of harm's way," Hochul said: "Lead-covered cables pose a serious threat to communities across New York, and I am directing State agencies to immediately launch a full investigation. We will hold the telecommunication companies responsible and take swift action to remediate any problems."

I don’t think potential environmental impact of lead is an FCC issue or that they could be construed as an expert agency on this topic,” said Recon Analytics’ Roger Entner. “It would be great if the FCC would focus more on its core mission, like the spectrum pipeline,” he said.

The primary goal should be to identify the extent of any health risk and identify means of alleviating it,” said Joe Kane, Information Technology and Innovation Foundation director-broadband and spectrum policy. “That's not directly an FCC matter, and it would be a mistake to slow down a public-health response in order to claim FCC jurisdiction,” he said.

Industry Claims Risks Are Small

The telecom industry is committed to addressing lead-sheathed cables in networks that may be a threat to the public (see 2307210004), USTelecom CEO Jonathan Spalter said Friday on CNBC, but he said there's no evidence the cables are a health risk. Carriers faced a selloff of their stock in the wake of The Wall Street Journal report, but major carriers have since started to provide a glimpse of the size of the problem, which analysts say could take decades to address. Many of the copper wires now at issue were laid from the 1880s through the 1950s when replacement started, Spalter said.

There has been speculation these last few days, and that’s one of the reasons why we’ve been putting out facts -- very clear facts,” Spalter said. “The fundamental fact is that only a small portion of America’s telecom infrastructure is actually lead-sheathed, and generally these cables are placed in parts of the country which minimize the opportunity for access from the public,” he said. “We’re going to address these on a case-by-case basis,” he said.

USTelecom members are doing site testing in locations that may be at risk and providing exposure testing for employees who request it, Spalter said. “We’re working closely, and constructively I would add, with regulators and policymakers,” he said. USTelecom also recently posted a website on the issue, “Telecom Cable Facts," addressing questions raised by the WSJ and others.

Verizon said Friday only a small percentage of its cables contain lead. “We are taking these concerns regarding lead-sheathed cables very seriously,” a spokesperson emailed: “Lead-sheathed infrastructure has not been deployed in decades by Verizon or its predecessor companies. For about the past 20 years, we've been modernizing our network and deployed fiber optic cables in thousands of cities and towns.”

AT&T said in a recent filing in the U.S. District Court for the Eastern District of California that “lead-clad cables represent less than 10%” of the company’s “copper footprint of roughly two million sheath miles of cable, the overwhelming majority of which remains in active service.” More than two-thirds of its lead-clad cabling is “either buried or in conduit, followed by aerial cable, and with a very small portion running underwater,” AT&T said. Telephone and Data Systems (TDS) said last week it “conducted an assessment of its communications network across the country and located approximately 10 miles of lead-covered cables.”

Early cost projections that it's hearing for removing lead-sheathed cables from telecom networks are “way off base, in our view,” Raymond James analysts told investors last week. “After speaking with our contacts, we believe the cost basis to be orders of magnitude less than some that were being used,” the analysts said: “Our industry contacts indicate to us their current best estimate is that lead sheathed lines make up about 1% of the route miles in the network. Different carriers may be slightly higher, but we believe it's a small percentage regardless, and they have been actively removing these for decades.”

A lead-driven sell-off in telecom shares was not on our bingo card,” MoffettNathanson’s Craig Moffett said in an investor note: “Lead risk is clearly not a good thing, but we don’t know how bad it will ultimately be. It would be disingenuous to try putting firm numbers around it.” Many unknowns remain, Moffett said: “Some of these cables have been removed, some have been abandoned in place, and some are still in use. We’d be shocked if the carriers even had accurate, comprehensive records regarding the presence or location of all lead cables in their networks.”

AT&T and Verizon stock prices hit near historic lows after news broke of the lead cable issue. Citi downgraded AT&T, Frontier Communications and TDS last week to neutral/high risk and lowered the per-share price targets to $16, $17 and $8, respectively. "Copper network deployed with possible lead sheathing could be a significant percentage of the legacy network deployed nationally with varying exposures for each firm," said Citi’s Michael Rollins. Resolving the issue could take "years,” he said.

JPMorgan analysts downgraded AT&T to neutral. “Potential copper lead sheathing liability is unquantifiable at this time, but will be a substantial long-term overhang on AT&T and the industry,” they said.