# Kcst-Tv, Inc. v. Federal Communications Commission and United States of America > Court of Appeals for the D.C. Circuit · January 25, 1983 · 699 F.2d 1185 URL: https://www.frixlaw.com/law-library/cases/9470269 ## Case - **Full name:** KCST-TV, INC., Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents - **Court:** Court of Appeals for the D.C. Circuit - **Decided:** January 25, 1983 - **Citations:** 699 F.2d 1185; 226 U.S. App. D.C. 33; 53 Rad. Reg. 2d (P & F) 139; 1983 U.S. App. LEXIS 31107 - **Precedential status:** Published - **Opinion:** Dissent by Scalia - **Judges:** Tamm, Wilkey, Scalia - **Cited by:** 21 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9470269 ## Opinion text SCALIA, Circuit Judge, dissenting: I cannot call the Commission’s action in this case arbitrary, capricious or abusive of discretion, and must therefore dissent. I set forth my views at some length because I believe that our readiness to entertain challenges of this sort, and to require the type of “fine-tuning” the majority demands, is one of the factors contributing to regulatory delay and to the increasing caseload of the courts. *1196 Even if the majority opinion were correct in its assumption that “the logic of applying section 76.92(g)” hinges upon whether “the distant station is ... in fact significantly viewed,” Maj. Op. at 1192, the Commission’s action would be well within the bounds of the reasonable. Some general rules, to avoid being arbitrary, must reach nothing that could be omitted without affecting their purposes. The analogy to laws regulating free speech comes readily to mind: they cannot be “overinclusive.” Other general rules, however, are permitted to embrace a good deal of irrelevancy. Traffic ordinances require the motorist to observe a red light even at 1:00 a.m. on a deserted rural intersection. How approximate a rule may be without being arbitrary depends upon two factors: (1) the importance of the prohibition that the rule imposes (or the benefit it confers) to public and private interests; and (2) the difficulty of making the rule less approximate and more precise. Still accepting the majority’s premise that the ultimate objective of section 76.-92(g) is to permit duplication of signals that are currently “significantly viewed,” the Commission’s rule assumes, in effect, that stations significantly viewed in 1970 (the year of the surveys on which the Commission’s 1972 Cable Television Report and Order was based) are still significantly viewed. For all we know on the basis of the evidence before us that may be, overall, a pretty good approximation. But in any event the two factors I have described above would require, in the present circumstances, only a relatively rough one. As to (1) the importance of the rule to public and private interests: The public interest served by insulating television stations from cable-carried competition is prevention of deterioration in local broadcast service caused by financial distress or failure of licensees. 1 That public interest cannot ultimately suffer from the approximative nature of the present rule, since if a station owner does not automatically qualify for needed protection under it, he can qualify independently after making a showing of economic distress. The rule is, in other words, only a “first cut” at the problem of identifying the necessary degree of protection from competition; it can afford to be a rough one, because a more refined cut follows. 2 The private interest involved is, of course, the broadcaster’s loss of the profits that would accrue from the restriction of competition. Were there a legal entitlement to these profits, the rule affecting them would have to be quite precise. That is not the case, however, since the Communications *1197 Act does not confer immunity from competition. FCC v. Sanders Brothers Radio Station, 309 U.S. 470 , 60 S.Ct. 693 , 84 L.Ed. 869 (1940). The rule would even have to be moderately precise if its effect were to deprive petitioner of benefits to which it was not entitled, but which the public interest demanded. That also is not the issue here, since, as just discussed, the case-by-case inquiry available upon a showing of economic distress assures consideration of public interest needs. The essence of petitioner’s complaint is simply that the Commission’s “first cut” automatically gives unneeded profits (unneeded as far as the public interest is concerned) to some other stations but not to KCST. That is not, I think, a complaint that calls forth a heavy burden of justification. An agency is not permitted to scatter the incidental benefits of its regulatory scheme haphazardly, but neither must it adjust an allegedly “inequitable” distribution that is produced by a measure reasonably designed to achieve efficiency and dispatch in the pursuit of its principal public goal. If the network nonduplication rule is, for the public interest purposes it is meant to achieve, a reasonable one, 3 the “inequity” between KCST and those stations that obtain the windfall of unneeded profits is no different from the inequity between KCST and those citizens who have not received the windfall of a television broadcasting license. As for (2) the relative ease of adopting a more precise approximation: The use of current surveys would obviously involve substantial administrative inconvenience to both the Commission and cable systems, producing a recurrent phasing in and phasing out of various stations as viewing patterns and other factors change back and forth. The majority’s last footnote suggests that this inconvenience could be avoided by requiring lower viewing percentages for the retention of “significantly viewed” status than for its acquisition in the first place. That amounts to acknowledging that a healthy degree of imprecision in this matter is not only inevitable but positively desirable. The degree produced by the majority’s approach is undoubtedly somewhat lesser (since it permits case-by-case evaluation) than continual reliance upon the 1970 surveys. But that indeterminately greater precision comes at some expense, and I cannot say that the Commission’s method is arbitrary or indeed even less desirable. I suppose that after a very large number of years it will be true that the 1970 surveys are inordinately unindicative of current viewing patterns, even for purposes of a “first cut” at the problem the Commission wishes to address. But I have no basis for saying that on the present record. I suspect, moreover, that the Commission is not only a much better judge of that than we but also has adequate incentive to remedy the difficulty — namely, the incentive of having to process the increased number of applications for case-by-case exemption that the disparity will produce. The foregoing discussion has assumed the validity of the majority’s assumption: that the ultimate purpose of the rule was to reach a rough approximation of current viewing patterns. In fact, however, I think that is not so. In my view the purpose of the rule was, is, and may properly be, to. establish quite simply a “once-in, always-in” regime. That is to say, once a cable system has been given the right and the obligation to carry a particular signal as a local signal, it retains that right and obligation permanently. Actual viewing patterns are thereafter irrelevant to the Commission’s policies, except that they may be one of many factors considered in ruling upon a request for network nonduplication protection by a station that can demonstrate economic *1198 harm resulting in potential loss of broadcast service. I am led to this conclusion first, by the clear language of the rule itself. It used the term “significantly viewed station,” but that was a term of art which meant a station that: (1) if included within the surveys used for purposes of the Commission’s 1972 Cable Television Report and Order, was listed in Appendix A to that Report and Order under the county in which the cable system’s community is located; or (2) if not included within those surveys, can be shown to meet the same viewing share and net weekly circulation tests in the county as were required for inclusion in Appendix A; or (3) whether or not included within the surveys (which were county-wide) can be shown to meet those tests within the cable system’s particular community. 4 It could not be clearer that the Commission was adopting neither a test that requires current achievement of particular viewing or circulation percentages, nor even a test that is designed to indicate current achievement of particular viewing or circulation percentages. The latter is evident from the fact that, while some provision is made for subsequent inclusion as a “significantly viewed” station on the basis of actual, current viewing patterns, see 47 C.F.R. § 76 .-54(b), (d), no provision is made for subsequent deletion on that basis. Moreover, even the provisions for subsequent inclusion are not designed to take account of changes in viewing patterns over time, but rather to accommodate stations (presumably new stations) not covered by the 1970 survey, 47 C.F.R. § 76.54 (d), or to permit demonstration, through community-specific surveys, that the viewing patterns shown by the county-wide surveys were not representative of the viewing patterns within the cable system’s particular service area, 47 C.F.R. § 76.54 (b). 5 Apart from these narrow exceptions, the rule represents not only a “once-in, always-in” but even a “once-out, always-out” approach. All that is simply not compatible with the notion that a rough approximation of current viewing was the object. There are extremely good reasons why the Commission adopted a “once-in, always-in” approach. To begin with, it avoids the disruption of the public’s viewing patterns. It is true (as the majority states) that since the 1980 elimination of limitations on distant signals, a station’s loss of “significantly viewed” status will not require a cable system to drop that station or another distant signal. But it is also true, since the mandatory carriage and network nonduplication rules operate in tandem, 6 that loss of the status will permit a cable system to drop a station that cable viewers in the area have received regularly and that at least a sub *1199 stantial number of such viewers regard as “local.” 7 Another compelling reason for the “once-in, always-in” approach is the distortion of the over-the-air viewing percentages caused by cable carriage once it is permitted. Assume, for example, a county in which a distant signal met the “significantly viewed” percentages in the 1970 survey because of large off-the-air viewership in the county’s northeast quadrant. Assume, further, that a cable system has since “wired” 80% of the homes in that northeast quadrant, so that four out of five viewers who previously watched the station “off the air” no longer do so. The station would then no longer meet the “significantly viewed” standard, even though it is no less “local” than it ever was. There is, in other words, no way to reconstruct off-the-air viewing patterns once cable has been carrying the signal. It seems very likely that those viewers most loyal to a relatively weak not-so-distant distant signal would have been first in line to “get wired.” To be sure, the Commission’s approach permits significant viewing to be considered as one of the relevant factors where financial distress has been shown, but in that context it can be discounted for the sort of distortion just described and in any event need not determine the outcome. 8 But making such an inherently unreliable factor the very touchstone of entitlement to relief is quite another matter. 9 The Commission’s statements and practice are entirely consistent with the alternative view of the network non-duplication exception I have suggested. The Commission stated in its 1972 Cable Television Report and Order that the list of “significantly viewed” stations would not be subject to deletion on the basis of “some special showing or later survey.” 36 F.C.C.2d at 175 n. 45. It has never permitted such deletion. And in granting or even considering exemption from the “significantly viewed” exception to the network nonduplication prohibition it has — as it originally said it would 10 —insisted upon a showing of economic injury that would be detrimental to broadcast service. 11 As it correctly said in the Memorandum Opinion and Order here under challenge, “[i]t can no longer be open to question that economic impact is a prime constituent element of our waiver analysis.” Joint App. at 58. *1200 On either ground, therefore, the Commission’s rule and the practice under it seem to me sustainable: Either as a means of identifying those stations that are currently significantly viewed — an identification that is, for plausible reasons, rough and ready, but need only be rough and ready since the only cognizable interest it affects, the public interest, is fully protected by a follow-on inquiry that is case-by-case and more precise. Or (what I think is actually the case) as a means of taking into account a factor which, in the nature of things, can only be taken into account once (as it was in 1972) and thereafter becomes submerged in the waves of advancing technology. The majority cites WAIT Radio v. FCC, 135 U.S.App.D.C. 317, 321 , 418 F.2d 1153 , 1157 (1969), for the proposition that the agency “must take a ‘hard look’ at meritorious applications for waiver.” Maj. Op. at 1191. Unless one reads the word “meritorious” in such fashion as to drain the statement of all meaning (so that for some rules there can be no meritorious applications); or unless one assumes (with equally emasculating consequences) that it is permissible to take only a “soft look” at whether the application is meritorious; as a generally applicable proposition that statement seems to me neither self-evident, nor logically supportable, nor sustained by the holdings, or even the internal practices, of the courts. It would mean, in effect, that there could be no rules but only case-by-case adjudication. What is true, and what in my view WAIT represents, is the proposition that a rule which otherwise might be impermissibly broad can be saved by the “safety valve” of waiver or exemption procedures. 12 That does not preclude the possibility that an agency may craft a rule which — either because it is quite precise or because the subject is not one as to which precision is required (see the discussion at the outset of this opinion) — does not need for its validity the availability of exemption. Moreover, I know of nothing which prevents an agency from making one of its rules inflexible, leaving the courts (if they consider it invalid in that form) only the power to strike it down and require a more precise rule, but not the power to mandate the agency’s administrative choice between a regime governed entirely by rule and one in which adjudicatory waiver determinations must be made. Cf. FPC v. Texaco, Inc., 377 U.S. 33 , 84 S.Ct. 1105 , 12 L.Ed.2d 112 (1964); NLRB v. Bell Aerospace Co., 416 U.S. 267, 290-95 , 94 S.Ct. 1757, 1769-72 , 40 L.Ed.2d 134 (1974). But the incursion into agency management effected by the majority opinion goes further than merely telling the FCC it cannot have an inflexible rule. It tells the agency it cannot have a flexible rule which contains only a single exemption process. The “safety valve” referred to in WAIT does exist. The agency has assumed, in the words of WAIT, 418 F.2d at 1157 , 135 U.S. App.D.C. at 321, the “obligation to seek out the ‘public interest’ in particular, individualized cases.” As noted earlier, the only public interest at issue is avoiding the deterioration of broadcast service caused by financial distress; and waiver of the present rule is always available where such distress can be shown. What the majority opinion demands is a second “safety valve,” seeking to assure not the public interest but a more *1201 equitable distribution among private parties of the profits which the nonduplication rules provide. Finally, I believe the decision today to be inconsistent with earlier opinions of this court approving the Commission’s refusal to afford any applicant a dispensation from its cable television rules without a prior showing of economic harm that imperils broadcast service. KIRO, Inc. v. FCC, 203 U.S. App.D.C. 318, 631 F.2d 900 (1980); Pikes Peak Broadcasting Co. v. FCC, 137 U.S. App.D.C. 234, 242-43, 422 F.2d 671 , 679-80, cert. denied, 395 U.S. 979 , 89 S.Ct. 2134 , 23 L.Ed.2d 767 (1969). The majority opinion distinguishes these cases by asserting that “[a]n allegation that a distant station is not significantly viewed ... is fundamentally different from an allegation that the rules place a station at a competitive disadvantage . ... ” Maj. Op. at 1192. I do not see why. What is crucial in determining whether a waiver must be granted is not violation of the abstract “logic” of the rule at issue (assuming, what is not true, that the logic would be violated here) but rather frustration of the public policy which the rule is meant to pursue. It seems to me that assertion and proof of competitive harm comes much closer to establishing frustration of the policy at issue here (financial viability of broadcast stations) than does the assertion that a competing distant signal is not “significantly viewed.” Indeed, the latter is merely a step towards proving the former. The Commission has established a scheme which, if it falls short of possible further refinement (which I doubt), does not clearly do so, and does not do so in a degree that can be regarded as arbitrary. Indeed, I think the approach which the Court now imposes upon the Commission is a better candidate for that designation, since it would give automatic legal effect to off-the-air viewing surveys in communities where — since the cable genie is already out of the bottle and cannot be pushed back in — such surveys are meaningless. For these reasons, I respectfully dissent. . As the Commission stated in its 1980 Report and Order terminating its three-year inquiry into the distant signal carriage rules: Because-competition is the general requirement, the Commission is not to be concerned with the effects of competition on station revenues or profits. It must be concerned, however, if there is evidence that competition is so destructive or debilitating that it results in a loss of broadcast service to the public. Report and Order in Dockets 20988 and 21284, 79 F.C.C.2d 663 , 666 (1980). . The majority opinion asserts that “[a] waiver, of course, may be in the public interest notwithstanding a lack of economic impact on the station.” Maj. Op. at 1192 n. 12. That proposition is unquestionably true. In a particular case, any circumstances could be brought forward to show that the public interest would be furthered by a waiver. It might be established here, for example, that the required deletion of the distant signal would cause the cable system to fill the vacated time with news and public affairs programming that the Commission deems to be in the public interest. But such extraneous consequences are not, I presume, the stuff of which the majority’s mandatory waiver policy is constructed. At least where, as here, the requested waiver seeks not the elimination of a governmental prohibition, but the extension of one, surely the regulatory objective relied upon to justify the extension must be the particular regulatory objective which the rule itself pursues. Otherwise, it is indeed an open-ended and limitless regime of policymaking by adjudicatory waiver that the majority envisions. Therefore, when what is at issue is a rule designed to assure minimum financial viability of broadcast stations, the only circumstances that could conceivably be thought to require case-by-case extension of the rule’s prohibition against competition would be those in which an effect upon such viability can be established. The Commission’s “second cut” is entirely adequate to assure consideration of such circumstances. . It is not a reasonable one, of course, if the Commission’s “first cut” confers automatic protection upon too many stations that do not need it in order to remain financially viable. Cable systems could presumably challenge the scheme on that basis. But I doubt that KCST has standing to attack such a defect by demanding that it, too, be included among the unnecessary beneficiaries of the agency’s runaway generosity — at least if it makes no showing that one of its competitors is advantaged by the excess. . The definition of “significantly viewed” to which the nonduplication rule refers reads as follows in relevant part: (a) Signals that are significantly viewed ... are those that are listed in Appendix A of the memorandum opinion and order on reconsideration of the [1972] Cable Television Report and Order .... (b) Significant viewing in a cable television community for signals not shown as significantly viewed under paragraphs (a) or (d) of this section may be demonstrated by an independent professional audience survey .... (d) Signals of television broadcast stations not encompassed by the surveys ... used in establishing [the 1972 designations] may be demonstrated as significantly viewed on a county-wide basis by independent professional audience surveys .... 47 C.F.R. § 76.54 (1981). . The majority opinion states that these limited _ exceptions which permit stations to show that they are significantly viewed appear “to be no less of a burden on the FCC than permitting stations to prove that distant stations are not significantly viewed.” Maj. Op. at 1194-1195. That is questionable, since the first of the exceptions applies only to stations not surveyed in 1970, and the second requires the applicant to commission a special community-specific survey not routinely conducted by the rating services. See 40 Fed.Reg. 11000 (1975); 40 Fed.Reg. 48928 (1975). But even if they are as burdensome, the burden is undertaken for an entirely different purpose. . Compare 47 C.F.R. §§ 76.57 (a)(4), 76.59(a)(6) and 76.61(a)(5) with 47 C.F.R. § 76.92 (g). . This result could be avoided of course, by severing the mandatory carriage and network nonduplication provisions, so that the former would continue to be governed by a “once-in, always-in” rule while the latter would be subject to the continuous assessment of actual viewing decreed by the majority opinion. That, however, would produce the strange (one might almost say capricious) result that the Commission would require cable systems to carry stations and then in turn require them to delete those stations’ most widely viewed programming. . The Commission also relies upon whatever a current off-the-air survey shows (even in a “wired” community) for making the initial determination that a new station is significantly viewed, or that significant viewing exists at the community level (rather than the county-wide level covered by the 1970 surveys). See 47 C.F.R. § 76.54 (b), (d). Necessarily so, since no earlier survey depicting the relevant off-the-air market in a more pristine state exists. Replacing nothing with something is different from, what the majority suggests here, replacing better with worse. . This particular justification for the “once-in, always-in” approach was not argued by the Commission. Even if we felt constrained to disregard this obvious practical factor as a basis for sustaining the Commission’s approach, we can hardly ignore it in reaching our own conclusion that an “actual viewing” approach is required. . The Commission stated when it denied reconsideration of the network nonduplication rule that “[i]f parts of these signals are to be deleted from cable carriage, that action should be taken ... only upon a showing of some need for regulatory intervention in order to preserve local television broadcast service.” Reconsideration of Network Programming Exclusivity Protection — CATV, 68 F.C.C.2d 1461 , 1468 (1978). . The OkeAirCo case cited in the majority opinion, 44 R.R.2d 166 (1978), did not involve an exemption from the “significantly viewed” exception to the network nonduplication prohibition, 47 C.F.R. § 76.92 (g), but rather an exemption from the prohibition itself, 47 C.F.R. § 76.92 (a). Moreover, as to that, the Commission had never adopted a “once-in, always-in” approach. . This is the limitation which the WAIT opinion meant to suggest when it said that “[t]he agency’s discretion to proceed in difficult areas through general rules is intimately linked to the existence of a safety valve procedure for consideration of an application for exemption based on special circumstances.” 135 U.S. App.D.C. at 321, 418 F.2d at 1157 (emphasis added). It is worth noting that the Supreme Court cases cited by WAIT to establish even this limited proposition did not involve situations in which a rule was asserted to be merely imprecise in its application. Rather, they all involved the quite different assertion that the matters determined by the rule were required by statute to be determined on a case-by-case basis, in individual licensing proceedings. FPC v. Texaco, Inc., 377 U.S. 33 , 84 S.Ct. 1105 , 12 L.Ed.2d 112 (1964); United States v. Storer Broadcasting Co., 351 U.S. 192 , 76 S.Ct. 763 , 100 L.Ed. 1081 (1956); National Broadcasting Co. v. United States, 319 U.S. 190 , 63 S.Ct. 997 , 87 L.Ed. 1344 (1943). The Supreme Court held that the availability of a waiver or exemption procedure satisfied the statutory requirement for individualized consideration. It is on this airy foundation that the Castle of Waiver-Under-All-Rules has been raised. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9470269. Public record. Not legal advice.