Appendix — FCC v. Midwest Video Corp.

re Supreme Court, U. $ “Y

FILED

77-1575

No.

—_—_—_—_—_—— . _——_—_——_——— , CLERK

MAY 4 1978

. ee

Iu the Supreme Court of the United States

OCTOBER TERM, 1977

FEDERAL COMMUNICATIONS COMMISSION,

PETITIONER

Vv.

MIDWEST VIDEO CORPORATION, ET AL.

PETITIONFER’S APPENDIX

DANIEL M. ARMSTRONG,

Associate General Counsel,

JULIAN R. RUSH, JR.,

Counsel,

Federal Communications Commission

Washington, D.C. 20554.

INDEX TO APPENDICES

Appendix A: Opinion of the United States Court of

Appeals for the Eighth Circuit —

Appendix B: Report and Order of the Federal Commu-

I i eueeeebneneamesciieiiin

Appendix C: Memorandum Opinion and Order of the

Federal Commuvications Commission .........................

Appendix D: Order of the United States Court of Ap-

peals for the Eighth Circuit granting Motion for Stay

Or a edoiseniaiienbadalin

Appendix E: Communications Act of 1934, as amended,

47 U.S.C.:

RG Saar ee Re

SEED sentinnmneeseemniencnnennasiijiniaronmnmnnnsnammmnnptaesataetnae

RUPEE echirsvundnnierctaeteneneeanniiiittiiannemmnniinciienmseats

Appendix F: Rules and Regulations of the Federal Com-

munications Commission, 47 C.F.R..:

Se ED GUE UNNE cecennepnispiccvesisinsniinssnccnesiigipiinenczainitaneniaian

Page

207

209

209

210

210

210

211

212

1

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

No. 76-1496

MIDWEST VIDEO CORPORATION, PETITIONER,

Vv.

FEDERAL COMMUNICATIONS COMMISSION

and UNITED STATES OF AMERICA, RESPONDENTS.

AMERICAN BROADCASTING COMPANIES, INC., et al.,

INTERVENORS.

No. 76-1839

AMERICAN CIVIL LIBERTIES UNION, PETITIONER,

v.

FEDERAL COMMUNICATIONS COMMISSION

and UNITED STATES OF AMERICA, RESPONDENTS.

AMERICAN BROADCASTING COMPANIES, INC., et al.,

INTERVENORS.

On Petition for Review of an Order

of the Federal Communications Commission

Submitted: September 12, 1977

Filed: February 21, 1978

Before STEPHENSON, Circuit Judge, WEBSTER,

Circuit Judge, and MARKEY, Chief Judge.*

MARKEY, Chief Judge.

Petitioners, Midwest Video Corporation (Midwest)

and the American Civil Liberties Union (ACLU),

seek review of the Federal Communications Com-

mission’s (Commission’s) Report and Order in

Docket No. 20508, 59 F.C.C.2d 294 (released May

13, 1976), reconsideration denied, 62 F.C.C.2d 399

(released December 21, 1976) (1976 Report)* im-

posing mandatory access and channel capacity re-

quirements upon certain cable television systems.”

* The Honorable Howard T. Markey, Chief Judge, United

States Court of Customs and Patent Appeals, sitting by

designation.

1The 1976 Report modifies and replaces earlier regulations

on mandatory access and channel capacity, Cable Television

Report and Order, 36 F.C.C.2d 148, affirmed on reconsidera-

tion, 36 F.C.C.2d 326 (1972) (Cable Report). Our holding,

that the access rules of the 1976 Report exceed the jurisdic-

tion of the Commission, carries with it the substantially

identical, though more onerous, rules of the Cable Report.

2 Community-wide, coaxial cable television systems were

earlier called “Community Antenna Television” or “CATV”

Midwest challenges the regulations as (1) inade-

quately supported by the record, (2) beyond the

jurisdiction of the Commission, (3) viviative of the

free speech clause of the First Amendment, and

(4) violative of the due process clause of the Fifth

Amendment.

ACLU does not challenge the Commission’s juzis-

diction to issue the 1976 Report regulations, but ob-

jects to the softening modifications made to the 1972

Cable Report access rules,’ alleging that the modi-

fications (a) lack rational basis in their failure to

consider interests of access program producers, (b)

violate the Commission’s mandate to regulate cable

television as a common carrier, and (c) do not fully

achieve general First Amendment goals.‘

We grant the petition for review and set aside the

order because it exceeds the jurisdiction of the Com-

mission.

Background

As the cable television industry sought to develop

over the past twenty-five years, the Commission’s

systems. The Commission now uses the more inclusive “cable

television,” Cable Report, as do we. See 47 C.F.R. § 76.5(a)

(1976).

* See note 1 supra.

* Briefs Amicus Curiae or as Intervenors were filed by Na-

tional Cable Television Association, Inc.; Teleprompter Cor-

poration; National Black Media Coalition, Citizens For Cable

Awareness in Pennsylvania, and Philadelphia Community

Cable Coalition, jointly; and Coldwater Cablevision Incor-

porated and Michigan CA-TV Company, jointly.

4

effort to regulate it has led to numerous Commission

proceedings, voluminous litigation, and substantial

literature.’

A cable system is composed of an antenna, to pick

up local and distant broadcast signals, and cables

for transmitting those signals to the home television

sets of the system’s paying subscribers. Some sys-

tems have employed the services of microwave com-

panies for long distances between their antennae.

The cable system may also transmit its own pro-

grams, i.e., “cablecast,” through its cables to its sub-

scribers. For technical reasons, most cable systems

began with 12 channels.*

’Of the extensive commentary, these are representative:

Barrow, Program Regulation in Cable TV: Fostering Debate

in a Cohesive Audience, 61 Va. L. Rev. 515 (1975); Bretz,

Public Access Cable TV: Audiences, J. of Com., Summer 1975

at 15; Doty, Public Access Cable TV: Who Cares, J. of Com.,

Summer 1975 at 23; Price, Requiem for the Wired Nation:

Cable Rulemaking at the FCC, 61 Va. L. Rev. 541 (1975);

Lapierre, Cable Television and the Promise of Programming

Diversity, 42 Fordham L. Rev. 25 (1973); S. Rivkin, Cable

Television: A Guide to Federal Regulations (1973); Barrow,

The New CATV Rules: Proceed on Delayed Yellow, 25 Vand.

L. Rev. 681 (1972); Park, Cable Television, UHF Broadcast-

ing, and FCC Regulatory Policy, 15 J. Law & Econ. 207

(1972); Posner, The Appropriate Scope of Regulation in the

Cable Television Industry, 3 Bell J. Econ. & Mtg. Sci. 98

(1972); R. Smith, The Wired Nation: Cable TV: The Elec-

tronic Communications Highway (1972); Sloan Commission

on Cable Communications, On the Cable: The Television of

Abundance (1971); Note, The Wire Mire: The FCC and

CATV, 79 Harv. L. Rev. 366 (1965).

*The 12 channels are in the “low band” and “high band”

portions of the MHz spectrum. The 20 channel capacity re-

quirement in the 1976 Report necessitates use of the “mid-

5

Having decided to preserve the “national television

service” as it existed in 1952, Sixth Report and

Order on Rules Governing Television Broadcast Sta-

tions, 17 Fed. Reg. 3905 (1952), the Commission

initially ignored cable television, considering it no

threat to broadcasting or to its regulatory domain.

On receipt of broadcaster complaints in 1958, the

Commission ruled that cable systems were not com-

mon carriers and refused to regulate them. Frontier

Broadcasting Co., 24 F.C.C. 251, 253-54 (1968),

aff'd, Report and Order on Inquiry Into the Impact

of Community Antenna Systems, Television Trans-

lators, Television “Satellite” Stations, and Television

“Repeaters” on the Orderly Development of Televi-

sion Broadcasting, 2€ F.C.C. 408, 441 (1959). The

Commission’s position that cable systems were not

engaged in common carrier operations was upheld

in WSTV, Inc., 23 Rad. Reg. (P-H) $184 (1962)

and in Philadelphia Television Broadcasting Co. v.

FCC, 359 F.2d 282, 284, (D.C. Cir. 1966). In all

this, the Commission decided that it had no jurisdic-

tion over cable television as common carriers under

Title II of the Communications Act of 1934, as

amended, 47 U.S.C. §§ 151 et seg. (1970) (Act),

band,” and a concomitant expense of construction and re-

building.

Technophiles say that present technology enables installa-

tion of as many as 80 channels, and that the advent of laser-

ray carriage of television signals, with virtually unlimited

channels, may replace cable. See Field, Laser Video Is Intrigu-

ae Is It Useful? N.Y. Times, Sept. 18, 1972, at 37,

col. 3.

6

or as broadcasters under Title III of the Act, and

that it had no plenary power to regulate an industry

just because that industry may have an impact on

broadcasting, over which it did have jurisdiction.’

Becoming persuaded, and announcing with admir-

able candor, that cable systems might represent a

competitive threat to its regulatees in television

broadcasting, the Commission decided to assert

jurisdiction.* The Commission’s approach to Con-

gress for appropriate statutory authority was frus-

trated. To date, the Congress has refrained from

exercising its legislative authority to provide that

* The Commission candidly and repeatedly admitted an in-

ability to determine the fact of adverse impact, Report and

Order on Inquiry, supra, 26 F.C.C. at 421-22, 424, 436; First

Report and Order on Grant of Authorizations in the Business

of Radio Service for Microwave Stations to Relay Television

Signals to Community Antenna Systems, 38 F.C.C. 683, 710-11

(1965), and Second Report and Order on Grant * * * Antenna

Systems, 2 F.C.C.2d 725, 773, 781 (1966). Yet the Commission

refused a request for an experiment to test impact, Suburban

Cable TV Co., 9 F.C.C.2d 1013 (1967).

® Whether agencies become captives of their regulatees, and

whether the “barter process” before agencies must be accepted

in place of “ideal” rulemaking, see Jaffe, The Illusion of the

Ideal Administration, 86 Harv. L. Rev. 1183 (1973), and

whether, to use an imperfect analogy, the motion picture in-

dustry could have advanced as rapidly against vaudeville

under a Federal Entertainment Commission, or the airlines as

rapidly under a Federal Transportation Commission regulat-

ing railroads and airlines, the wisdom and implications to

social progress of a regulatory system that enlists the power

of government to preserve established industry against new

technological competition, as distinguished from reliance on

consumer preference at a perceived risk of market chaos, is a

matter for the Congress, not the courts.

7

the Commission shall or shall not regulate cable

systems, and, if they shall, in what manner and to

what purpose and extent. The subject of cable reg-

ulations has thus been left substantially entirely to

the Commission and the Courts.’

Proceeding on its own, the Commission has at-

tempted not just to keep pace, but to anticipate the

course of communications advances, facing the vir-

tually impossible task of outrunning our modern

technological juggernaut. Beginning with indirect

regulation through its jurisdiction over microwave

companies used by some cable systems, and exhibit-

ing an apparent hostility toward letting cable grow

as its own ingenuity and consumer acceptance may

have dictated, the Commission imposed an extended

“freeze” on cable’s growth, see Wentronics, Inc. v.

FCC, 331 F.2d 782 (D.C. Cir. 1964).

The Commission has since attempted to frame a

place for cable television while preserving broadcast

television intact. The effort has resulted in the estab-

lishment of a Cable Television Bureau under the

* A bill giving the Commission full licensing authority over

cable television failed on the Senate floor. S. 2653 S. Rep.

No. 923, 86th Cong., Ist Sess. (1959). The Commission’s own

legislation was introduced in 1961. S. 1044 and H.R. 6840,

87th Cong. 1st Sess. (1961). Congress took no legislative

action. The matter was again considered in 1965 and 1966.

Hearings on H.R. 7715 Before the Subcomm. on Communica-

tions and Power of the House Committee on Interstate and

Foreign Commerce, 89th Cong., 1st Sess. (1965); Hearings on

H.R. 12914, H.R. 13286, and H.R. 14201 Before the House

Committee on Interstate and Foreign Commerce, 89th Cong.,

2d Sess. (1966).

8

Commission, and 60 pages of cable regulations at

47 C.F.R. $§ 76.1-78.115 (1976).” As a substitute

for the license it is statutorily empowered to grant

or refuse to broadcasters, the Commission issues a

“Certificate of Compliance,” for cable operators. 47

C.F.R. § 76.11. It sets for state and local franchis-

ing authorities the conditions they may impose on

cable enterprises seeking a franchise to string cable

underground or on poles. 47 C.F.R. § 76.31. It re-

quires cable operators to submit forms and reports.

47 C.F.R. $§ 76.401-411.

Much of the Commission’s cable-regulating has

involved the planting of new and dramatic seeds of

regulation, based on soaring, euphoric predictions

(some from cable owners) of great things to come

from cable television, seeds which had to be plowed

under, when germination failed in the bright sun-

light of commercial, economic, and_ technological

reality.”

2” Cable owners may welcome the Commission, as regulator-

protector-servant. Dealing en masse with the Commission,

which dictates to local franchising authorities, 47 C.F.R.

§ 76.258, may be easier than facing those authorities one-on-

one; the Chief of the Cable Television Bureau desired to regu-

late pay movies in hotel rooms as competitors to cable televi-

sion. 12 Weekly TV Digest, Oct. 16, 1972 at 2. Cable and

broadcast industries may one day require “protection” against

the threat that direct satellite-to-home television will replace

both.

™ For more detailed discussion of: (1) the potential techno-

logical capacities of cable telecommunications; (2) the Com-

mission’s initial declination of jurisdiction; (3) its later, grow-

ing effort to regulate; (4) its changes in justification, from

9

The Commission’s jurisdiction over cable retrans-

mission of distant (Los Angeles) broadcast television

signals into a local (San Diego) broadcast station’s

“contour” was upheld as “reasonably ancillary” to

its regulatory responsibilities for broadcast television

in United States v. Southwestern Cable Co., 392 U.S.

157 (1968). In the following year, the Commission

adopted a “mandatory origination” rule, requiring

cable systems with over 3499 subscribers to originate

some programs of their own. First Report and

Order in Docket No. 18397, 20 F.C.C. 201, 202-04

(1969). This court set that rule aside as beyond the

Commission’s jurisdiction. Midwest Video Corp. v.

United States, 441 F.2d 1322 (8th Cir. 1971). Ina

split decision, the Supreme Court reversed, sustain-

ing the mandatory origination rule as also “reason-

for broadcast television. United States v. Midwest

Video Corp., 406 U.S. 649 (1972).*

Having carried the fight to victory in the Supreme

Court, the Commission never enforced its mandatory

protection of local VHF broadcasting stations, to fostering of

UHF growth, to a fight against “unfair competition;” (5) the

utopian forecasts of cable’s potential, and ensuing disappoint-

ments; and (6) the oft-repeated pattern of regulations with-

drawn, waivered, and abandoned, see the literature listed in

note 5, supra, particularly Lapierre, Cable Television and the

Promise of Programming Diversity, 42 Fordham L. Rev. 25

(1973), and Price, Requiem For the Wired Nation: Cable

Rulemaking at FCC, 61 Va. L. Rev. 541 (1975).

% Four Justices joined a plurality opinion; four dissented.

The Chief Justice concurred in the result.

10

origination rule.“ Instead, it conducted new proceed-

ings, leading to the 1972 Cable Report, imposing

“mandatory access” rules, under which cable systems

in the largest 100 markets, were required, inter alia,

to build a 20-channel capacity, to reserve three “ac-

cess” channels for free use by public, educational,

and governmental bodies, and to reserve a fourth

channel for leased access. 36 F.C.C.2d at 240-41. All

access was to be on a first come, nondiscriminatory

basis, with no control by cable operators over pro-

gram content. A compliance deadline of March 31,

1977 was set.“

In 1974, the Commission formally rescinded the

mandatory origination rule, 39 Fed. Reg. 43302, and

simultaneously issued rules on equipment availability,

Report and Order in Docket No. 19988, 49 F.C.C.2d

18 In Midwest Video, supra, 441 F.2d at 1328, this court said

it was “highly speculative whether there is sufficient expertise

or information available to support a finding that the origina-

tion rule will further the public interest.” In reversing, the

plurality considered that holding “patently incorrect” 406

U.S. at 671.

* Midwest was not operating in one of the top 100 markets

and its standing to challenge these rules would have been

doubtful. See Midwest Video Corp. v. United States, supra,

441 F.2d at 1328. ACLU complained of the Commission’s

failure (1) to impose common carrier obligations, and (2) to

limit cable owners to one channel. The Ninth Circuit denied

ACLU’s petition for review. American Civil Liberties Union

v. FCC, 523 F.2d 1344 (9th Cir. 1975). The Commission em-

phasizes here a phrase of the opinion in that case as indicating

judicial approval of its access rules, but there was no chal-

lenge to its jurisdiction to issue its access rules before that

court.

11

1090 (1974), requiring cable systems with over 3499

subscribers to purchase, and make available to the

public, equipment for producing local programs and

cable time for their presentation. Midwest petitioned

this court for review but withdrew its petition as

moot in view of the challenge here to the 1976 Re-

port, which merged the equipment availability and

mandatory access rules. Midwest Video Corp. v.

FCC, No. 75-1671, dismissed on petitioner’s motion

(8th Cir. April 12, 1976).

In March, 1974, the Commission appointed task

forces to investigate the effect of the 1972 Cable

Report rules. In responding to the task forces’ re-

port, the Commission invited comment on postpone-

ment of the March 31, 1977 deadline, Notice of Pro-

posed Rulemaking in Docket No. 20363, FCC 75-211,

51 F.C.C.2d 519 (Released Feb. 26, 1975), and

acknowledged concerns of various parties that: (1)

industry revenues were insufficient to create new

plants, distribution networks, amplifiers, converters,

and modulators; (2) more time was needed to build

revenue; (3) the poor economy and large debt of

most cable systems meant they were unable to borrow

for non-revenue producing activities; and (4) the

Commission was unreasonable in expecting financial

interests to provide capital while it required fran-

chise authorities to enforce access and equipment

rules, a process entailing the cable system’s very

authority to operate. The Commission received esti-

mates that the cost of rebuilding to meet the 1972

rules was between $133 million and $430 million.

12

In its Notice of Proposed Rulemaking in Docket

No. 20508, 53 F.C.C.2d 782, 784 (Released June 27,

1975), the Commission added to deadline postpone-

ment consideration of alternative methods by which

“we might reaffirm our commitment to access cable-

casting while recognizing the economic realities of

today’s marketplace.” It noted the substantial cost

of technological changes required by its 1972 access

rules and great variances in the burden on different

cable systems.

In its Notice in Docket No. 20508, supra, the Com-

mission rejected all suggestions that it require con-

struction of channel capacity and provision of ac-

cess only upon indication of community demand for

such services. The suggesters felt that in many

communities the channels and equipment would go

unused, yet the cost would be borne by cable con-

sumers (“subscribers”) totally uninterested in view-

ing access programs. The Commission said,

“TW]hile we may consider this approach at some

point in the future, we do not believe for the fol-

lowing reasons that the general adoption of an ap-

proach strictly tied to demand would at this time

be wise.” The Commission listed ten “reasons”:

(1) cable television is new and evolving; (2) avail-

ability * of cable channels for dissemination of in-

1° How adoption of a demand-governed approach after con-

struction could save the construction costs was not explained.

1° Of course access channels were not actually “available” on

most systems, hence the Commission’s felt need to order their

construction.

13

formation is even newer; (3) demand for access

services is a function of community awareness of

their existence; (4) awareness and full utilization

of cable’s potential requires time; (5) some older

systems have provided minimal access on a voluntary

basis or no access; (6) in those communities aware-

ness has not had opportunity or time to develop;

(7) if its requirements resulted in blank channels,

it believed that would shorten the time to realize

the full potential for access services, because blank

channels are visible and continuing inducements to

be filled; (8) it considered that true for the channel

user and the system operator; (9) if it required

the system operator to provide access channels, he

could be expected to encourage their use; (10) if it

now altered its rules to reflect existing demand for

access services, it would raise a barrier to growth

of that demand and a disincentive to new services

“we expect of cable.” 53 F.C.C.2d at 787, 788.

Though the Commission said “There is mounting

evidence that access cablecasting in an increasing

number of communities is beginning to fill that

need,” Commissioner Robinson stated, “If the com-

mission has such evidence they have kept it re-

markably well hidden from me.” 53 F.C.C.2d at 801.

Commissioner Quello suggested deference to local

franchise authorities, who might require one access

channel “upon demand and need therefore,” and

called on the Commission to obtain “practical, sta-

tistical data on current uses of cable facilities” and

to project the future based “on statistical data rather

14

than ‘blue sky’ expectations as in the past,” saying,

“In short, I think the Commission has burdened

the cable industry unnecessarily with requirements

and restrictions which cannot be statistically or

practically supported.” 53 F.C.C.2d at 799.

On May 13, 1976, having invited and received com-

ments, the Commission released its Report and Order

in Docket 20508, the 1976 Report here under review.

The 1976 Report rescinded earlier requirements

based on assu:nptions admittedly proven false, and

made three major changes in the 1972 mandatory ”

17 We deal here only with mandatory access. Nothing in

present law or in this opinion precludes a cable system opera-

tor from voluntarily providing public access.

Moreover, the present case involves only the jurisdiction of

the Commission to issue its Federal access and equipment

rules. The only direct effect of our opinion on the election of

local franchising authorities, to require or waive access re-

quirements in the light of community need and interests, is to

free those authorities from the Commission’s restrictions,

found in 59 F.C.C.2d at 324-25. 47 C.F.R. § 76.258.

The Commission mis-relies on the presumed right of fran-

chising authorities to condition local franchises on provision

of access channels as justification for its doing so. The Com-

mission’s jurisdiction must come from Congress, not from

local authorities.

ACLU implies the demise of all public access if mandatory

access rules are not upheld. Nothing of record so indicates.

Conjecture could equally invisage voluntary continuation and

expansion of existing access programs. In all events, the Com-

mission’s jurisdiction is not expandable through application

of unauthorized regulations, nor can application convert unau-

thorized regulations into authorized regulations, over the short

term and prior to direct court challenge.

Though ACLU argues that mandatory access must be con-

tinued to protect the “investment” of present access users, no

ae

15

access rules. First, it applied them to all cable sys-

tems with over 3499 subscribers, eliminating the

top 100 markets criteria. 59 F.C.C.2d at 303-06;

47 C.F.R § 76.252-56 (1976). Second, it extended

the March 31, 1977, deadline for compliance with

the 20-channel construction requirement to June 21,

1986, for most, but not all, existing systems. 59

F.C.C.2d at 321-24; 47 C.F.R. § 76.252(b) (1976).*

Third, it required fovr access channels only of sys-

tems having sufficient capacity and demand for full

time access, requiring other systems to conglomerate

access on one or more channels. 59 F.C.C.2d at 314-

16; 47 C.F.R. § 76.254 (1976).

Thus an evolutionary process has led to the Com-

mission action under review, the 1976 Report, which

provides:

(1) that operators of cable systems having

3500 or more subscribers designate at

least four channels for access users, one

channel each for public access, education

access, local government access, and

leased access. 47 C.F.R. § 76.254(a).

one can be said to have reasonably relied on, or established an

equity in continuation of, Commission cable regulations which

have been consistently and continually revised, unenforced,

withdrawn, waivered, and abandoned. Nor may vested inter-

ests be normally acquired in continuation of regulations ex-

ceeding ab initio the jurisdiction of the issuing agency.

*® The March 31, 1977 deadline was previously cancelled in

Report and Order in Docket No. 20363, 54 F.C.C.2d 207

(1975). Petition for review is pending in National Black

Media Coalition v. FCC, D.C. Cir. Appeal No. 75-1792, a case

held in abeyance pending outcome of these consolidated cases.

16

(2) that, until demand exists for full time use

of all four access channels, access pro-

gramming may be combined on one or

more channels. 47 C.F.R. § 76.254(b).

(3) that at least one full channel for shared

access be provided, but if a system had

insufficient activated channel capacity on

June 21, 1976, it could provide whatever

portions of channels are available for such

purposes. 47 C.F.R. § 76.254(c).

(4) that at least one public access channel be

forever supplied without charge. 47

C.F.R. § 76.256(c) (2).

(5) that a reasonable charge for production

costs may be charged for live studio pro-

grams longer than five minutes. 47

C.F.R. § 76.256(c) (3).

(6) that operators establish rules providing

for access on a first-come, nondiscrimina-

tory basis and prohibiting the transmis-

sion of lottery information, obscene or in-

decent matter, and commercial and politi-

cal advertising. 47 C.F.R. § 76.256(d) (1)

(on public channel). 47 C.F.R. § 76.256

(d)(2) (on educational channels).

In its Clarification of Section 76.256 of the Commission’s

Rules and Regulations, 59 F.C.C.2d 984, 986 (1976), the Com-

mission amended these regulations to provide that cable oper-

ators enforce the rules which they are required to establish

against obscenity and indecency.

In American Civil Liberties Union v. FCC, No. 76-1695

(D.C. Cir.), ACLU has chailenged the rules found at 47 C.F.R.

§ 76.256(d) (1)-(3) as unconstitutionally imposing a prior

censorship obligation on cable operators. Upon an order of

~ en

Ao eS me eo ~

- en ee eee a

17

(7) that cable operators exercise ao other con-

trol over content of access programs. 47

C.F.R. § 76.256(b).

(8) that educational and local government ac-

cess be offered without charge for the first

five years. 47 C.F.R. § 76.256(c) (1).

(9) that operators establish rules for leased

access channels on a first-come, nondis-

criminatory basis, requiring sponsorship

identification and an appropriate rate

schedule, with no control over program

content except to prohibit lottery infor-

mation and obscene or indecent material.

47 C.F.R. § 76.256(d) (3).

(10) that each cable supply equipment and fa-

cilities for local production and presenta-

tion of access and lease programs. 47

C.F.R. § 76.256(a).”

the court in that pending case, issued August 26, 1977, 47

C.F.R. § 76.256(d) (1)-(3) has been stayed to the extent that

it prohib . the presentation of obscene or indecent matter

pending the conclusion of proceedings upon remand to the

Commission. However, the Commission may decide not to

repeal this provision. Thus, to prevent multiple remands, we

view this provision as before us as part of the 1976 Report az

clarified. 59 F.C.C.2d 984.

*° The Commission interpreted this rule as requiring equip-

ment availability beyond normal business hours, Reconsidera-

tion of Report and Order in Docket No. 20508, 62 F.C.C.2d

399, 406 (1976), and as not permitting a charge for use of

automated services to play tapes and films, id. at 407, even

if the playing runs longer than five minutes.

The Commission requires cable operators to permit the in-

stallation of converters by third parties who wish to use the

operators’ facilities and who will pass the cost of converters

18

(11) that equipment in new cable systems have

a capacity of two-way, nonvoice communi-

cation and a minimum of 20 channels.

47 C.F.R. § 76.252 (a).”

to subscribers desiring to view the program of the third party.

It also insists that cable operators with limited capacity defer

their own programming in favor of access users. “We shall

scrutinize the actions of operators who, while providing their

own programming, assert that their activated capability is

insufficient to permit the leasing of a channel to potential

competitors.” 1976 Report at 316. The Commission believes

that time and weather channels, though of “substantial benefit

to subscribers,” should also give way to access programs. /d.

at 316 n.19. If only one channel is available for use by access

seekers, the cable operator will be in “bad faith” if he uses

that channel for pay programming. /d. at 317.

% Jurisdiction to require minimum channel capacity and

two-way capacity has not been argued separately from the

mandatory access requirement. Channel capacity is apparently

necessary to provide access channels. The Commission has

linked two-way capacity with the 20-channel requirement in

the same regulation, apparently because the cost is lower if

such capacity be added when the 20 channels are built. The

relationship of mandatory access to a two-way capacity re-

quirement is not as clear as that of the 20-channel require-

ment, but to the extent that two-way capacity relates to the

“access concept” or that two-way capacity cannot be separated

from the 20-channel requirement, it must fall with the 20-

channel and other regulations of the 1976 Report. If cable

systems offer two-way communications services, those services

may be subject to regulation in accord with their nature,

which is distinct from that of program distribution services

affected by access requirements.

In adopting its two-way capacity requirement, the Commis-

sion recognized that it could not preempt state or local regu-

lation of intra-state, two-way, non-video communications, cit-

ing Nat'l Ass’n of Reg. Util. Comm’rs v. FCC, 533 F.2d 601

(D.C. Cir. 1976). The Commission interpreted that decision

narrowly, stating that it did not foreclose authority to order

EEE EN + ne

Ce ee

19

(12) that cable systems in operation within a

major television market before March 31,

1972, and other systems in operation be-

fore March 31, 1977, shall have ten years

from the effective date (June 21, 1976) of

the 1976 Report to comply. 47 C.F.R.

§ 76.252 (b).

Issue

The dispositive issue is whether the regulations

promulgated in the 1976 Report exceed the Commis-

sion’s jurisdiction.”

two-way capacity, and that some functions of that capacity

— to broadcast program distribution. 59 F.C.C.2d at 310-

In broadcast television, British viewers may acquire the

“teletext” device, enabling them to call up on their sets data

blocks (100 magazine pages) in which the desired information

can be found, or the “viewdata” system, employing telephone

lines, for calling up on their sets the specific information de-

sired. British Hook Up TV To Printed Magazine, Washington

Post, Dec. 25, 1977, at D4. Whether the Commission has con-

sidered any requirement for “two way capacity” on broadcast

television is not of record.

Two-way capacity service may well acquire consumer in-

terest and demand. See, e.g., Columbus Folk Can Talk Back

When TVs Become Annoying, The Cincinnati Enquirer, Dec.

1, 1977, at A-6.

*2 Because we hold the regulations under review to have

gone too far, it is unnecessary to discuss at length all other

contentions raised by Midwest, amici curiae, and intervenors,

or to treat ACLU’s contention that the regulations did not go

far enough.

20

OPINION

I Jurisdiction

The mandatory access, channel capacity, and

equipment regulations of the 1976 Report exceed the

Commission’s jurisdiction because: (1) the statute

provides no jurisdiction; (2) the regulations are not

“reasonably ancillary” to the Commission’s responsi-

bilities for regulation of broadcast television; (3)

objectives do not confer jurisdiction; (4) the Com-

mission’s ends do not justify its means; (5) the

means are forbidden within the Cemmission’s statu-

tory jurisdiction.

(1) The Statute and the Commission’s Jurisdic-

tion Over Cable Television

The Commission’s charter, its basic grant of power

to regulate, is the Communications Act of 1934, as

amended, 47 U.S.C. § 151 et seg. (1970) (Act), in

which Congress delegated regulatory authority over

(1) common carriers of communications by wire or

radio, Title II, 47 U.S.C. §§ 201-21 (1970), and (2)

broadcasters using channels of radio transmission,

Title III, 47 U.S.C. §§ 301-29 (1970). Because

§3(b) includes “transmission by radio of * * * pic-

tures * * *,” 47 U.S.C. §153(b) (1970), the Act

encompasses broadcast television. Cable systems,

first developed in the 1950’s, are neither common

carriers nor broadcasters.** Hence the Act contains

In its 1976 Report and elsewhere, the Commission has

recognized that cable systems are neither common carriers nor

Se et ae a

Pei aa

»)

21

no specific grant of authority over cable systems, and

there can have been no Congressional intent regard-

ing them.

Whether the Commission and the courts should

relieve Congress of the need to revise statutes in the

light of new technology, General Telephone Co. of

Cal. v. FCC, 413 F.2d 390 (D.C. Cir. 1969), cert.

denied, 396 U.S. 888 (1969),** neither the nonexist-

ence of cable technology in 1934, nor Congressional

abstention over the past quarter century, need be

broadcasters, but has justified its rules by labelling cable sys-

tems as a “hybrid” of both, without explanation of how a

system, when it does not offer a service of transmitting the

communications of others, incorporates any aspect of “com-

mon” carriage, or how a system that employs no frequency

of the broadcast spectrum to cablecast, and that sends its

transmissions only to its own specific subscribers and not into

the airwaves, incorporates any aspect of “broadcasting.” The

operative fact would appear to be that cable systems, because

they retransmit broadcast programs, and because their sub-

scribes may also receive over-the-air broadcast programs, may

affect the broadcast television industry. Whether that effect

be viewed as a competitive threat to broadcasters, as detri-

mental to conventional television service to the public, or as

impeding the legitimate statutory goals of the Act, the Com-

mission has deemed it necessary, in the absence of Congres-

sional guidance, to devote a major effort over recent years to

attempted regulation of cable television.

** Concerning the new satellite communication technology,

Congress appears to have had little difficulty in adopting ap-

propriate legislation, i.e., the Communications Satellite Act

of 1962, 47 U.S.C. §§ 701-44 (1970). Further, when Congress

has wished to include cable systems in a provision of the Act,

it has done so. 47 U.S.C. § 314 (1970), as amended by Act of

Oct. 15, 1974, Pub. L. No. 93-443, Titles I, IV, §§ 205(b),

403, 88 Stat. 1278, 1291.

22

considered the sole reason for the present absence of

specific, plenary statutory power to regulate the in-

dustry called “Cable Television.” Neither the basic

rationale for regulation of common carriers (to in-

sure fair and equal access to the carrier’s service)

nor that for regulation of broadcast transmissions

(to preclude bedlam on broadcast frequencies), is

applicable to cable systems per se.

Congressional! silence does not, however, end the

inquiry in every case. Though a statutory void

cannot itself create jurisdiction in an agency, and

though neither agencies nor courts receive the legis-

lative powers not exercised by the Congress, the rapid

growth of communications technology requires a

unified system of regulation, and sufficient flexibility

and breadth of mandate to permit an agency, con-

fronted with new technology not covered by statute

but having serious impact on technology that is, to

adopt such regulations as will enable the agency to

protect the public interest.”

25 As authority for its 1976 Report, the Commission lists

Sections 2, 3, 4 (i) and (j), 301, 303, 307, 308, 309, 315, and

817 of the Act. 1976 Report, 59 F.C.C.2d at 327. Section 2

states those to whom the statute applies. Section 3 is “defini-

tions.” Section 4(i) gives authority for all acts necessary to

the Commission’s function. Section 4(j) specifies proceedings.

Sections 361, 307, 308, and 309 cover ..censing of broadcast-

ers. Section 303 covers powers and duties of the Commission.

Section 317 covers announcements by broadcasters. Section

315 covers equal time for political candidates. The sole refer-

ence to cable systems appears in Section 315. The 1976 Re-

port has no relation to equal time for political candidates on

23

In GTE Service Corp. v. FCC, 474 F.2d 724 (2d

Cir. 1973), the court held that statutory silence did

not preclude regulation of the interaction of data

processors and common carriers, while denying Com-

mission. authority to regulate data processors them-

selves. And there lies the rub. Regulation to protect

the public’s vested interest in an established service,

against injury from interaction of new technology,

is one thing. It is quite another when an agency

steps beyond its authority. The former may well be

in the public interest. The latter never is.*

Respecting the Commission’s jurisdiction over

cable systems, the Supreme Court has supplied a

measure. Under that guidance, the statute is to be

given a broad, not restrictive, interpretation. Fur-

cable television, which is covered in a separate reguiation, 47

C.F.R. § 76.205.

Realism impels recognition that delegation is a necessary

part of the modern legislative function. There being no dele-

gation of power over cable systems, we do not here determine

a normal “breadth of delegation” question. In a sense, the

Commission’s rationale, and the Court’s “reasonably ancil-

lary” standard, may be analogized to the “necessary and

proper” clause, Const. art. I, § 8, cl. 18, applicable to the Con-

gress. If so, the power to issue the present construction and

access rules, as discussed infra, is not necessary and proper

to “carry into execution” the Commission’s delegated powers

over broadcast television.

2° That the compliance deadline for some cable systems was

rolled forward to 1986, and that the Commission stands ready

to “waive” its requirements for those systems able to sustain

the burden of proving undue hardship on them individually,

cannot justify an agency action exceeding its jurisdiction ab

initio.

24 25

ther, wr cali Peg rs super-Commissioners, — ability of Los Angeles programs in San Diego would

inexpert view of the wisdom of the regulations under Ccnemeent, Gon eultann af Gin, lose enneniional tele:

review is not to be substituted for the experience and ! vision station, risking loss of advertising revenues

expertise of the Commission. To shy, however, on and curtailment or termination of the local station’s

those grounds from determination of the legal ques- ; : _

* tls ype service to the public. Petitioner argued that the

tion touching the Commission’s jurisdiction, would Commission had no jurisdiction whatever over cable

be a denial of effective judicial review of regulatory fon , ,

' elie ; be | systems. Citing broad purposes in $1 of Title I,

actions “not in accordance with law,” 5 U.S.C. § 706 : .

(2)(A) (1970), and an exercise in judicial abdi | 47 U.S.C. §151, the Court described the Commis-

tion. Th setae ail . i oy —= omar | sion’s authority over cable television as restricted to

— . ere a Sere ee that “reasonably ancillary to the effective perform-

for jurisdiction, we determine the jurisdictional issue

. e a > 4 , *. af *s*,* f

in accord with the “reasonably ancillary” standard ance of the Commission’s various responsibilities for

the regulation of television broadcasting.” 392 U.S.

expressed in Southwestern, supra, and Midwest

Video, supra. at 178.

| The rule at issue in Midwest Video, requiring cable

(2) The “Reasonably Ancillary’ Standard | systems to originate programs, was also held “rea-

Because the Supreme Court sustained its authority a ay © Oe Ces ape

o> cumin tim sited: ti then nak tk | ties for broadcast television. Noting that Ҥ 2(a)

ade Vv re io Comaiinden cnn Cant. bas nnd | does not in and of itself prescribe any objectives for

, Pree Peas: | which the Commission’s regulatory power over CATV

rane bc scapregpr ting: Ren: dhe mec feable television] might properly be exercised,” 406

, Gy | U.S. at 661, the plurality found such objectives in

rere a SPIE GUNN Beg | the broad policy statements of §§ 1 and 303(g) * of

The jurisdiction found in Southwestern was suffi- , | be permitted until the Commission had had a chance to fully

cient to encompass prohibition of importation by | consider the matter. 392 U.S. at 160.

cable systems of distant broadcast signals into the 28 Section 303(g) of the Act provides:

top 100 markets without a Commission finding of 303. Powers and duties of Commission.—

consistency with the public interest. 392 U.S. at ee ee

166-67.*" The Commission’s concern was that avail- (g) Study new uses for radio, provide for experimental

uses of frequencies, and generally encourage the larger

2* The actual Commission order before the Court was in the | ae. tone tuesee Cees in the public interest

nature of a “stay,” under which no further importation would :

[Footnote continued on page 26]

26

the Act. The four dissenting justices said the upshot

of the plurality’s holding was “to make the Commis-

sion’s authority over activities ‘ancillary’ to its re-

sponsibilities greater than its authority over any

broadcast licensee.” 406 U.S. at 681. The Chief

Justice, concurring in the result, concluded that until

Congress acts, the Commission should be allowed

wide latitude, but also stated:

Candor requires acknowledgement, for me at

least, that the Commission’s position strains the

outer limits of even the open-ended and perva-

sive jurisdiction that has evolved by decisions

of the Commission and the courts. [406 U.S. at

676. |

In our view, the present mandatory access, chan-

nel construction, and equipment availability rules

burst through the outer limits of the Commission’s

delegated jurisdiction.” The 1976 Report nowhere

states, and the Commission nowhere argues, that

these rules were created and applied to cable sys-

28 [Continued]

The plurality opinion did not mention the distinction be-

tween “radio,” which transmits in the electronic broadcast

frequency spectrum, and cable systems, which do not.

2° We are not alone in the view that the Commission’s juris-

diction found in Midwest Video must represent the “outer

limits.” The D.C. Circuit, speaking of Midwest Video and

Southwestern, has said, “That these cases establish an outer

boundary to the Commission’s authority we have no doubt

***” Home Box Office, Inc. v. FCC, No. 75-1280 et al., slip

opinion at 34, (D.C. Cir. Mar. 25, 1977), cert. denied, No. 76-

1724 et al. (Oct. 3, 1977).

27

tems to protect a broadcast station’s “contour” as in

Southwestern; or to require, as in Midwest, the origi-

nation of programs, like broadcasters do; or to gov-

ern an activity involving the airwaves; or to protect

the growth of broadcast television; or to protect the

public interest in continued broadcast television

services;* or to protect broadcasting against “un-

fair competition” from cable, or to allow the Com-

mission “to perform with appropriate effectiveness” ”

its responsibilities for broadcast television.

The standard established by the Court is “reason-

ably ancillary,” not merely “ancillary.” The standard

is already broad, and the term “reasonably,” re-

quiring some nexus with the Commission’s statutory

responsibility, must not be read out of it. Nor can

there be deleted what the Court said cable actions

must be “reasonably ancillary” to, 2.e., “the effective

performance of the Commission’s various responsi-

* The 1976 Report, 59 F.C.C.2d at 326, itself divorces the

present access rules from cable regulations based on the public

interest in commercial television:

In the former case [channel capacity and access rules]

we seek to promote the expansion of communications

services as well as the expansion of the public’s access

thereto, while in the latter [limitations on broadest pro-

grams retransmittable to cable consumers] we seek to

insure that the interest of the public in maintaining a

healthy commercial television structure will not be un-

dermined. Although there is some relationship between

the two considerations, each must be considered on its

merits.

= Midwes? Video, supra, 406 U.S. at 661.

EE eT

28

bilities for the regulation of television broadcasting.”

392 U.S. at 178 (emphasis added).

The Commission has not shown the slightest nexus

between its 1976 Report access rules and its responsi-

bilities for broadcast television.

Because the free public access concept, on newly

constructed, separately designated channels, has

nothing to do with retransmission of broadcast sig-

nals on existing channels, the relationship or inter-

action between cable and broadcast systems present

in Southwestern and in Midwest Video is totally ab-

sent here. The present rules are not designed to

govern some deleterious interrelationship of cable

systems to broadcasting, or to require that cable

systems do what broadcasters do, but relate to cable

systems alone, and are designed to force them into

activities not engaged in or sought; activities having

no bearing, adverse or otherwise, on the health and

welfare of broadcasting.”

Though neither Southwestern nor Midwest Video

supports jurisdiction here, it is a “reasonably ancil-

lary” standard we apply, and it is the 1976 Report

rules we review. Each regulation of cable television

must individually stand or fall, not on legal precedent

32 At the time of Midwest Video, cable operators made “no

contribution” for the broadcast signals they retransmitted,

and the Chief Justice referred to cable systems’ “on stream”-

with-broadcasting activities as incurring some burden.

Though broadcasters might have been earning more from ad-

vertisers through cable’s increase in their audience, cable

operators are now required to pay a royalty on retransmission.

See 17 U.S.C. § 111 (1976).

29

concerning other regulations, but on whether or not

the regulation under the review meets the standard

established by the Court.” The Commission reliance

on Southwestern and Midwest Video ignores the in-

dications in those cases that it has no sweeping

jurisdiction over cable television, that whatever juris-

diction it may have is contingent upon its delegated

powers, and that each attempt to regulate cable sys-

tems must be individually justified. Nat'l Ass’n of

Reg. Util. Comm’rs v. FCC, 533 F.2d 601, 612 (D.C.

Cir. 1976).

Thus the Commission argues that the Court’s ap-

proval of the mandatory origination rule in Midwest

Video constituted effective approval of the present

construction and access rules. The contention is dis-

ingenuous. The Court was aware that one way of

satisfying the origination requirement was to cable-

cast programs “produced by others.” ** But that

88 The Commission appears to have no need for the Court’s

“reasonably ancillary” standard. In the 1976 Report, 59 F.C.C.

2d at 299, the Commission reaffirmed its view that cable tele-

vision “is a hybrid that requires identification and regulation

as a separate force in communications.” The difficulty with

that self-serving view is manifold: it lacks statutory basis;

it is open ended, authorizing almost any regulation; and its

“separate force” concept ignores the “reasonably ancillary”

standard. A private industry does not “require” federal regu-

lation just because a federal agency says it does.

*%In discussing the definition of cablecasting the plurality

stated:

“Cablecasting” was defined as “programing distributed

on a CATV system which has been originated by the

CATV operator or by another entity, exclusive of broad-

oe

30

form of “access” was not the mandatory access

required by the present rules. Nor did that form

of “access” involve the extensive and expensive con-

struction, and equipment purchase and installation,

required by the present rules. Further, the plurality

opinion specifically stated that no regulation, pro-

posed or adopted, other than the program origination

requirement, was before the Court, and that no

views were intimated on the validity of any other

regulations. 406 U.S. at 652 n.4.

The Commission’s argument equating its origina-

tion rule and the present access rules disregards

fundamental differences between them. Under the

former, had it been enforced, cable operators would

have had discretion and ee

content, could have sought financial support, and

would have been forced to act like broadcasters.

Under the latter, cable operators can have no discre-

cast signals carried on the system.” * * * As this defini-

tion makes clear, cablecasting may include not only pro-

grams produced by the CATV operator, but “films and

tapes produced by others, and CATV network program-

ing.” * * * Although the definition now refers to pro-

graming “subject to the exclusive control of the cable

operator,” this is apparently not meant to effect a change

in substance or to preclude the operator from cablecasting

programs produced by others [406 U.S. at 653 n.6.]

The plurality opinion also indicates an awareness that, prior

to its Midwest Video decision, mandatory public access re-

quirements had been introduced in the 1972 Cable Report, but

the only regulations before the Court in Midwest Video were

those promulgated in the First Report and Order, 20 F.C.C.2d

201 (1969). See 406 U.S. at 654 n.8.

31

tion or responsibility for program content, may make

essentially no charge, and are forced to act like com-

mon-carriers.”

Nothing, therefore, in the plurality’s approval of

the erstwhile origination rule as “reasonably ancil-

lary” in Midwest Video may serve to bring the en-

tirely distinct mandatory access rules within that

standard.

To be “reasonably ancillary,” the Commission’s

rules must be reasonably ancillary to something.

As discussed below, the Commission has-no jurisdic-

tion within its statutory grant, under the broadest

view of that grant, to force the present free public

access rules upon broadcasters, or to make broad-

casters into common carriers. Because, as we shall

see, the 1976 Report regulations are an attempt to

do just that to cable systems, they can fare no better.

The Commission having no power to impose these

access rules on either broadcast or cable systems, the

1976 Report regulations cannot be “‘reasonably ancil-

lary to the effective performance of the Commission’s

various responsibilities for the regulation of televi-

sion broadcasting.”

ss A further difference is that under the origination rule

programs would have at least been produced, though program

quality and viewer interest were not assured. The present

rules merely insure that cable owners will spend money to

construct studios and channels and install equipment, passing

some or all of the cost to their consumer-subscribers.

82

(3) Objectives

(a) Statutory v. Commission Objectives

The Commission’s fundamental argument, in sup-

port of jurisdiction to issue its 1976 Report regula-

tions, is based on “‘objectives.”** That view permeates

the 1976 Report and the Commission’s brief here,

the latter stating the issues as (1) whether the rules

are a “reasonable exercise of agency authority to

promote statutory objectives,” in the face of argu-

ments “rejected” in Midwest Video, and (2) whether

the constitutional arguments, “also similar to those

rejected in Midwest Video,” are without merit. Even

if a statutory statement of objectives constituted a

grant of power, the objectives on which the Commis-

sion relies are not those stated in the statute.”

The statutory objectives stated in §1 of the Act

(not cited as authority in the 1976 Report) are “to

make available, so far as possible, to all the people

of the United States a rapid, efficient, nation-wide

and world-wide wire and radio communication serv-

%* The Commission’s argument built on Midwest Video con-

centrates on what is claimed to be the Court’s “approval” of

the Commission’s “objectives” in that case.

** The entire tone of the Commission’s Notice of Proposed

Rulemaking in Docket No. 20508, 53 F.C.C.2d 782, and its

1976 Report, indicates a devotion to the goal, per se, of public

access to cable television. “Accordingly, we specifically reaf-

firm the commitment which we made to the public, educational,

governmental and leased access concepts contained in the

Report and Order [Cable Report],” 53 F.C.C.2d at 790, and

“reaffirm our commitment to access * * * [and] to pursue our

access goals * * *,” 53 F.C.C.2d at 795 (emphasis added).

33

ice * * *.” The Commission does not argue that this,

or any one of the statutory sections cited as authority

in the 1976 Report, see note 25 supra, contains ob-

jectives achieved or approached by the present regu-

lations. And well it doesn’t. For the Act, however

broadly read, contains no objectives so broad as to

encompass whatever is necessary to get everybody on

television. If that major foray be a legitimate goal,

it must be established not by the Commission or the

courts, but by Congress.

The “objectives,” cited and relied on by. the Com-

mission in its brief here, are of its own design:

“increasing the number of outlets for community

self-expression and augmenting the public’s choice

of programs and types of services.”

The Commission draft of objectives in its brief

is not the statement submitted to the Supreme Court

in Midwest Video, where the full statement read, “to

further long established regulatory goals in the field

of television broadcasting by increasing the number

of outlets of community self-expression and augment-

ing the publice’s choice of programs and types of

services.” 406 U.S. at 667-68 (emphasis adde .

The Commission’s brief thus tailors a set of objec-

tives to fit the rules it desires here to sustain. To

condone that practice would be to turn judicial re-

view of the regulatory process on its head.”

%* The Commission says its objectives were “recognized” in

Midwest Video. The plurality there did say that the Commis-

sion had reasonably determined that the origination rule would

further achievement of the objectives cited to the Court, 406

34

If any specific “long established goals in the field

of television broadcasting” are here involved, we are

not told what they are. In the statement used to

persuade the plurality in Midwest Video, “increasing

outlets” and “augmenting choices” follow “by,” and

are thus set forth as actions leading to the broad-

casting goals. We are cited to no instance in which

“increasing outlets” and “augmenting choices” have

themselves been approved as cable jurisdiction-

spawning goals.” If “increasing outlets” and “aug-

menting choices” are goals, they cannot be divorced

from the context of broadcasting. That, context de-

U.S. at 667-68, but the relationship of even those objectives

to mandatory access rules was not before or discussed by the

Court. It was also indicated generally in Midwest Video that

the Commission was not limited to preventing cable’s adverse

impact on broadcasting, but could regulate cable systems to-

ward achievement of statutory objectives, and that the Com-

mission’s objectives were within its “mandate for the regu-

lation of television broadcasting.” 406 U.S. at 668 (emphasis

added). Though the Court in Midwest Video stated that § 2

of the Act, 47 U.S.C. § 152, contained no objectives “for which

the Commission’s regulatory power over CATV might prop-

erly be exercised,” 406 U.S. at 661, the Commission cited § 2

as among the statutory sections authorizing the present ac-

cess rules.

%® As discussed at p. 45 infra, whatever the “long-established

goals” are, their achievement cannot lawfully be attempted

“in the field of television broadcasting” by means of the access

rules here at issue. That fact weighs heavily against the claim

of jurisdiction to issue these rules as “reasonably ancillary”

to the Commission’s “responsibilities for broadcast television.”

Moreover the notion that a federal agency may lawfully com-

pel a private industry, in any field, to build facilities, to dedi-

cate them to free public use, and to police that use against

obscenity, appears at best unique.

35

fines and limits the means by which those goals may

be sought. Moreover, if the objectives cited in Mid-

west Video and those cited here had been stated

identically, that circumstance would not sustain the

present rules. The only possible objectives—rules

relationship in Midwest Video applied to origination.

Because the rules are fundamentally different, re-

lationship to an origination rule provides no support

for rules enabling anyone and everyone to ‘get on”

cable television.”

Doubtless “increasing outlets” and “augmenting

choices” are laudable, praiseworthy, and desirable

actions. Communication is the life blood of a free

society, and “freedom of communication” is virtually

synonymous with “freedom of speech” and “ficcdom

of the press.” It can be assumed that no agency will

act toward objectives perceived as evil, but the world

has come to regret many actions taken in the name

of attractive euphemisms and appeals to goals be-

loved by many.

“(T]he widest possible dissemination of informa-

tion from diverse and antagonistic sources is essen-

tial to the welfare of the public.” Associated Press

v. United States, 326 U.S. 1, 20 (1945). See Red

Lion Broadcasting Co. v. FCC, 395 U.S. 367 (1969).

Though those cases did not deal with access-by-all,

the quoted principle is unchallengeable. To enliven

and enrich the public dialogue is a commendable

# “Tn the future everybody will be world famous for fifteen

minutes.” Andy Warhol, Boston Book and Art, 3d ed., p. 12

(1970).

36

intent. We are here concerned, however, not with the

Commission’s psyche, but with its action. The ques-

tion before us is not the sincerity of the Commission

or the glorious nature of its objectives. The sole

question is whether compelling cable systems to build

and dedicate facilities to essentially free public use

was within the Commission’s jurisdiction.

The Commission calls “increasing outlets’’ and

“augmenting choices” its “regulatory policy,” point-

ing not to the Act but to the only former action ap-

pearing to support that policy, z.e., Midwest Video,

which dealt with entirely different regulations.

Whether we find the “policy” attractive is irrelevant.

A court may favor an agency-esponsed policy, while

condemning the agency’s exercise of unauthorized

power in a specific action taken in pursuit of that

policy. The nobility of a goal or policy cannot justify

usurpation, by the Commission or by us, of a power

to pursue it in whatever manner we think might

“work.”

The fundamental principle that governmental

agencies are limited to the exercise of power dele-

gated by the Congress would be nullified if an agency

(like Disraeli, who is said to have preferred the

power to write the public’s slogans over the power

to write its laws) were at liberty to expand its juris-

diction, as far and wide as it wished, by the facile,

case-by-case step of re-writing the objectives found

in the delegating statute. If “jurisdiction” be syn-

onymous with agency-drafted, ad hoc “objectives,”

37

Congress and the courts become essentially super-

fluous.**

In its 1976 Report and before us, however, the

Commission overrides all concerns, practical, statu-

tory, legal, and constitutional, upon a single analy-

sis, i.¢., it is enough that its objectives be good and

that its action be reasonably related to them. But

the list of good “objectives” conceivable by the nu-

merous regulatory agencies of the federal govern-

ment, and perhaps achieveable if they had carte

blanche, is endless. And every act of every agency

would be justified, jurisdictionally sound, and ju-

dicially approved, if values sought were the sole

criterion.”

“ Congress would still be needed to create and fund agen-

cies, and courts might still be needed to rubber-stamp every

action likely to achieve the broad “objectives” improvised by

the agency.

“ The illogic of considering agency objectives as sole jus-

tification for agency action is illustrated here. The goal of

“increasing the number of outlets for local self-expression”

can be facilitated by requiring not just cable systems, but

theatres, newspapers, broadcast stations, museums, concert

halls, universities, and all who have acquired an audience, to

grant free public access to their facilities and to a possible

“shot” at their audiences.

ACLU points to Nat’l Citizens Comm. for Broadcasting v.

FCC, No. 75-1064 (D.C. Cir. March 1, 1977) in support of a

presumption in favor of diversity of expression. In that case,

however, the court dealt only with broadcasters, holding that

the Commission could not refuse to order divestiture of cross-

owned radio and television stations, because divestiture in-

creases the likelihood that the public will hear broadcasters

with diverse views, and because lack of access by a broad-

caster to the airwaves impinged on First Amendment policies.

38

The Commission has on other occasions faced the

delicate task of softening our troubled edges, when

there occurs a restriction of someone’s right to speak.

Government may have to act to prevent single owner-

ship of all television, radio, and newspaper voices in

a community. The Commission’s mandatory access,

channel capacity, and equipment rules are quite

another matter. Here the Commission engages in no

protection of the right to speak. On the contrary, it

has embarked, with positive commands, on a crusade

to create a public right to use cable facilities.

True, the Commission acted here with a view to-

ward expanding what it considers the goals of the

First Amendment.” Every regulatory agency should

have all constitutional “goals” and restrictions on

government in mind in carrying out its duties (the

more so where, as here, the agency is operating out-

There is no conflict with that case in our holding that the

Commission lacks jurisdiction to impose access by the public

to private cable facilities. That increased opportunities for

diverse expression remain high among our society’s desiderata

does not confer jurisdiction to do what the Commission did

here.

**Dean Griswold’s “decisional leapfrogging,” though ap-

plied to the Constitution and the courts, may be applied to

agencies, which may also decide that, “Well, it really is a good

idea.” (Here the obviously good idea of increasing opportuni-

ties to exercise freedom of speech) See Griswold, The Judicial

Process, 28 Rec. of N.Y.C.B.A. 14, 25 (1973). The present

rules are not designed to meet a constitutionally forbidden

“abridging” of the right to speak. Nor do they involve the

“balanced presentation of ideas” concept of the Fairness Doc-

trine. They merely attempt to create a public right to speak

on cable television.

39

side its stautory jurisdiction) but we deal here with

the Federal Communications Commission not the Fed-

eral First Amendment Commission. We are aware of

nothing in the Act and have been cited to no other

proper source, which places with the Commission an

affirmative duty or power to advance First Amend-

ment goals by its own tour de force, through get-

ting everyone on cable television or otherwise. Rhet-

orice in praise of objectives cannot confer jurisdiction.

If the Commission desires to operate in an area

beyond its statutory borderline of jurisdiction, and

to direct an industry, at that industry’s expense, to

provide and police new opportunities to speak, prior

Concressional direction appears a minimum require-

ment.** Composing its own statement of “objectives”

will not alone provide the required jurisdictional

power.“

(b) Objectives and Retransmission

The Commission’s brief justifies its zeal for free

publie access to cable television, as it has most of its

** We do not here consider, of course, whether the Congress

could constitutionally so direct.

** The Commission’s submission of an objectives statement

in support of origination, and its submission of part of that

statement here in support of free public access, is a further

illustration of the unreliability of broad, malleable, agency-

created, all purpose “objectives” as the sole basis for testing

jurisdiction. There is no question that public access necessar-

ily increases outlets and augments choices. The present agency

rationale for requiring cable systems to build additional chan-

nels, for example, would support the jurisdiction to order a

cable system built where none existed, for that would “in-

crease outlets” and “augment choices.”

40

cable regulations, on cabie’s reception and retrans-

mission of broadcast signals, i.e., its “free ride” on

broadcast television, for which cable should “pay” by

meeting Commission “objectives.” In its Cable Re-

port, 36 F.C.C.2d at 190, and in its present brief,

the Commission states:

Broadcast signals are being used as a basic

component in the establishment of cable systems,

and it is therefore appropriate that the funda-

mental goals of a national communications struc-

ture be furthered by cable * * *.'*!

To the extent that cable systems must now pay

royalties for broadcast programs retransmitted, note

32 supra, the Commission’s “free ride” rationale

may crumble. Beyond that question, however, the

Commission does not “own” broadcast programs, and

may not lawfully condition their retransmission on

compliance with any and every rule it may devise.

In Fortnightly Corp. v. United Artists Television,

Inc., 392 U.S. 390 (1968), a copyright case con-

cerned with whether cable systems “performed” re-

transmitted broadcast programs, the Court discussed

eable’s retransmission activity:

Essentially, a CATV [cable television] system

no more than enhances the viewer’s capacity to

“©The Commission went on to state that cable could not

have the economic benefits of signal carriage without having

public responsibilities as well. Cable Report, 36 F.C.C.2d at

354. The National Black Media Coalition, et al., also empha-

sizes cable’s “free” acquisition of broadcast signals which no

longer obtains. See note 32, supra.

41

receive the broadcaster’s signals; it provides a

well-located antenna with an efficient connection

to the viewer’s television set. * * *.

The function of CATV systems has little in

common with the function of broadcasters. CATV

systems do not in fact broadcast or rebroadcast.

Broadcasters select the programs to be viewed;

CATV systems simply carry, without editing,

whatever programs they receive. Broadcasters

procure programs and propagate them to the

public; CATV systems receive programs that

have been released to the public and carry them

by private channels to additional viewers. [392

U.S. at 399-400 (footnotes omitted). ]!*"!

In Office of Communication of United Church of

Christ v. FCC, 359 F.2d 994 (D.C. Cir. 1966), then

Judge, now Chief Justice Burger said, “{N either

is [a broadcaster] a purely private enterprise like

a newspaper or an automobile agency. * * * A broad-

caster seeks and is granted the free and exclusive

use of a limited and valuable part of the public do-

main; when he accepts that franchise it is burdened

by enforceable public obligations.” 359 F.2d at 1003.

A cable system is on this record a private enterprise.

No statute requires or authorizes federal franchising

of cable systems. In retransmitting broadcast pro-

grams, cable systems use no “limited and valuable

part,” or any other part, of the federal public do-

main. The Commission nowhere tells us, nor is it

**In Fortnightly, the Court held that cable systems did not

“perform” programs retransmitted and did not, therefore,

have to pay royalties. 392 U.S. at 400-01.

42

readily apparent, why the mere retransmission of

broadcast signals makes it “appropriate” that cable

be shackled to every Commission notion of what is

good for the public—or why the mere transmission

of broadcast signals makes it “appropriate” that

cable be chained (by requiring it and it alone to

build, dedicate, and police new and separate facilities

for public use) to the Commission’s vision of the

future.

The Commission does not say that the absence of

20 cable channels, and free public access thereto, has

in any manner impeded “the fundamental goals of

a national communications structure.” What the

Commission does say is that the cable industry must

be regulated to give public access because cable is

there, and has a “potential” to build a many-chan-

neled capacity. A fortiori, says the Commission,

cable systems must build and dedicate that capacity,

to achieve the Commission’s “objectives.” But noth-

ing whatever in the Act, or anywhere else, gives the

Commission the unlimited right to say to any private

industry, “We believe we have seen the future, and

you must construct it.” Because an industry can

do something cannot be the sole basis for a federal

agency’s peace-time jurisdiction to make it do it.

(ce) Objectives v. Unsupported Visions

The regulatory philosophy repeatedly expressed in

the 1976 Report is that the imponderable whims of

cable consumers cannot be relied upon, but that fa-

43

cilities, if built and offered free, will encourage their

own use: “

Should compliance with our requirements result

in the maintenance of blank or partially blank

channels, it is our belief that the time required

to realize the full potential for access services

will be shortened, for these channels are them-

selves a visible and continuing inducement to be

filled. [Notice of Proposed Rulemaking, supra,

53 F.C.C.2d at 787-88.]

Building for the future, says the Commission, will

enable it to take advantage of cable’s “capability,”

relying thus on a type of trickle-out theory to facili-

tate its social-engineering effort. The rules under re-

view are thus self-fulfilling: they first compel the cre-

ation of excess capacity, and then impose a public

access obligation on the ground that the capacity

exists.“* The Commission must have broad discretion

** The 1976 Report resulted from the realization that many

equipment and construction requirements of the 1972 Cable

Report had proven excessively burdensome, counterproduc-

tive, and unrealistic. A major value in a competitive, con-

sumer-choice system lies in the limitation of losses to those

entrepreneurs who, like the purveyor of the Edsel, guess

wrong about consumer preferences. A major detriment re-

sides in regulatory action requiring massive construction by

an entire industry to meet an agency-envisaged future, and

with no evidence of consumer demand. If the guess is wrong,

everybody loses.

** Some, but only some, cable systems have already built 20

or more channels, some in response to the Cable Report. That

circumstance does not create a jurisdiction in the Commission

to compel public access to the facilities of any cable system.

44

“to respond to changes which necessarily emanate

from a dynamic industry,” General Telephone Co. of

Cal. v. FCC, supra, 413 F.2d at 405, but the present

access rules are not a response to change; they are

the creation of change, in the “belief” that what the

Commission describes as a “societal good,” 1976 Re-

port, 59 F.C.C.2d at 296, will result.

Visions of theoreticians are in proper context of

great value. To achieve, man must visualize. And

regulatory agencies must take into account both the

future and the future effects of their regulations, as

best those effects may be estimated on a proper rec-

ord. But visions of the future, with their low batting

average for accuracy, serve poorly as the sole basis

for regulations having the force of law; ” and prophe-

cies of even the wisest regulator are no substitute for

u lawful grant of jurisdiction.

Regulations like those before us, profoundly alter-

ing the obligations of a private business, requiring

a fundamental change in its nature, and imposing

costs on its consumer-subscribers, should be based on

more than an uncertain trumpet of expectation alone.

In enforcing regulations designed by the regulator to

make futuristic visions come true, courts must pro-

ceed with a care proportional to the risk of delivering

%® As discussed infra, the Commmission rescinded its manda-

tory origination rule because, inter alia, there was no demand

for such programs. In its 1976 Report, the Commission re-

fused to consider whether any viewer demand existed for

access programs, though the “access concept” and its Cable

Report had been extant for years. See p. 12 supra.

45

thereby into the regulator's hands an awesome power.

For that way may lie not just a totally regulated fu-

ture, unpalatable as that may be to a free people, but

a government-designed, government-molded, govern-

ment-packaged future.

The public interest rubric encourages judicial def-

erence to an agency’s expertise, not to its prescience.

Findings may be presumptively correct. Not so futur-

istic guesses.

Most importantly, jurisdiction is not acquired

through visions of Valhalla. An agency can neither

create nor lawfully expand its jurisdiction by merely

deciding what it thinks the future should be like,

finding a private industry that can be restructured to

make that future at least possible, and then forcing

that restructuring, in the mere hope that if it’s there

it will be used.

The Commission asserts that it has a mandate to

meet the always-with-us “need for additional means

of community expression,” Notice, supra, 53 F.C.C.

2d at 790. We need not determine whether the Com-

mission has such mandate. It is enough to hold that,

if it does, it cannot pursue it by forcing broadcasters,

cable systems, ham radio operators, pay-TV systems,

subscription-TV systems, closed-circuit-to theatres

systems, data processors, or any other communica-

tions industry, to construct facilities and donate them

to anyone who walks in.

In short, the Commission has not been charged,

even impliedly, with a responsibility of “increasing

outlets for local expression and augmenting program

choices,” by mandating massive rebuilding and by

attempting to deliver the audience of A over to B, at

A’s expense, just and solely because B wants to get an

audience,” and in total disregard of what the paying

audience wants. Whether lodgement of that responsi-

bility in the Commission be good or bad is not for us

to say. It has not occurred.

(d) Objectives and the Public Interest

Jurisdiction having been found wanting, we dis-

cuss the public interest parameters in response to the

Commission’s insistence that its public interest ob-

jectives authorize its access rules. We do not decide

a public interest question, other than to hold that the

public interest is not served by agency actions beyond

their jurisdiction. See National Broadcasting Co. v.

United States, 319 U.S. 190, 224 (1943).

The Commission founded its access rules on its be-

lief that the “public interest can be significantly ad-

vanced by opening of cable channels for use by the

public and other specified users who would otherwise

not likely have access to television audiences,” 1976

Report, 59 F.C.C.2d at 296, and refused to be de-

terred by evidence indicating little likelihood of any-

one ever watching access programs. The cable con-

sumer was thus made hostage to the Commission’s

"A responsibility clearly distinguishable from that of

guarding a local broadcaster’s audience against cable invasion

from afar, as in Southwestern, supra.

em Soeses ee ee en 2 * =

47

faith that the equipment he was forced to buy would

be used.”

The Commission referred to a “need” for access

services, but refused to undertake a search for evi-

dence of that need, recommended by two Commission-

ers. Notice, supra, 53 F.C.C.2d at 799-801. Absent

evidence that the public is or may be interested in

listening, the mere belief that the public interest lies

in forcing cable operators to build and deliver to each

citizen an electronic soapbox would appear entirely

conclusory. As did the public interest in mandating

origination, p. 73 infra, it may also prove illusory.”

In insisting that channels be built, so their blank-

ness will be “an inducement to be filled,” the Commis-

sion made no reference to the consumer, but stated,

“This consideration is true both for the potential

channel user as well as the cable operator * * *.” 53

F.C.C.2d at 788. But, as with the tango, communica-

tion takes two. Speaker minus listener equals zero.

* The Act, § 1, includes as a statutory objective, the pro-

vision of an “efficient” communication service. The Commis-

sion does not explain, in its 1976 Report or in its brief here,

how the construction of channels and installation of equipment

that may never be used, so far as this record and the Commis-

sion’s experience with mandatory origination would indicate,

contributes to efficiency of cable systems or serves the public

interest in achievement of this statutory objective.

** Intervenors National Black Media Coalition et al. suggest,

in their brief at 46, a rule that cable owners be required to

promote access, by seeking access users and advertising access

programs to their subscribers, because it is otherwise “im-

possible to build an audience for access programs.” (emphasis---~

added).

48

The 1976 Report is concerned with access by the pub-

lic, not with access to the public.

Absent evidence that there is, or is likely to be, a

substantial national demand by “users who would

otherwise not likely have access to television audi-

ences,” and whether there is, or is likely to be, any

demand at all for viewing by consumers, who would

have to pay for access equipment (even if no access

programs are produced; or no viewers ever watch),

the Commission’s argument that its objectives require

a public interest conclusion that cable systems must

be rebuilt, and mandatory access provided, is serious-

ly undermined.”

It would appear that satisfaction of the Commis-

sion’s desire to advance First Amendment interests

in increased communication via its access concept can

actually be assured only (1) by an Orwellian require-

ment that users must produce and cable consumers

must watch access programs,” or (2) by a cable sys-

* Evidence of strong viewer demand would not alone confer

upon the Commission a jurisdiction sufficient te authorize its

1976 Report mandatory access rules; nor, if jurisdiction were

present, would such evidence warrant anything less than the

most careful evaluation of First Amendment values involved

in the “access concept.” Evidence of user demand, i.e., of de-

mand for the free use of another’s property, while perhaps

less difficult to find or generate, would appear to provide even

less warrant for either a finding of jurisdiction or dismissal

of the First Amendment concerns expressed at p. 58 infra.

** Illustrating the problems and dangers inherent in some

regulatory attempts to achieve positive goals, as distinguished

from prevention of improper, injurious, or criminal conduct.

[Footnote continued on page 49]

as 2.2

49

tem’s provision of access programs in response to its

subscribers’ desire to view them. If, in broadcasting

where viewing is free, “the interest of the viewer is

paramount,” Columtja Broadcasting System, Ine. v.

Democratic National Committee, 412 U.S. 94 (1972)

(CBS); Red Lion Broadcasting, supra, it would ap-

pear more so in cable systems, where subscribers must

pay.

A public interest question may be stated as: Who

decides whether cable consumers shall pay millions

for equipment to enable access programs? The Com-

mission, or the consumer? Nothing of record reflects

a public interest in denying consumers that choice, or

in forcing consumers to buy what they may refuse

to purchase voluntarily. Certainly a merely conjec-

tural connection between mandatory access and like-

lihood of its increasing true local communication, even

if jurisdictionally permissible, would caution us, were

we deciding where the public interest lay, against

> [Continued]

One intervenors’ brief views public access as an opportunity

for a minority spokesman to address members of his minority

grouping. Contra, are those who find that use undesirable, as

a potential splintering of society. Lapierre, supra note 5, at

120 n.536.

Competitive forces in radio broadcasting, with limited fre-

quencies but without mandatory access rules, have not encour-

aged sameness, but have produced “specialty” stations: ail

news, black, classical, country, rock and underground. See

Note, Filthy Words, The FCC, and the First Amendment:

Regulating Broadcast Obscenity, 61 Va. L. Rev. 579, 617

(1975).

50

concluding that the public interest would be harmed

if the choice remained with the consumer.”

Given the general desirability of the Commission’s

objectives, we find no basis, in the record made, for

concluding that those objectives render the access

rules before us “reasonably ancillary” to the Commis-

sion’s responsibilities for regulation of broadcast tele-

vision, or that those objectives confer upon the Com-

mission a jurisdiction broad enough to encompass the

present access rules.

(4) Ends v. Means

To countenance regulation without at least implied

authorization of the peorie’s representatives, because

the purpose be benign, is to adopt the view that “the

end justifies the means” and stop there. But in gov-

ernment as in life, a good end does not justify any

°° Cable subscribers represent only a small portion of the

television viewers of America, and the 1976 Report exempts

from its impact the cable systems serving some of them. The

relationship of the public interest in “increasing community

outlets” and “augmenting program choices and services” to

free public access on cable facilities would be more apparent

if the Commission “objectives” were also sought among the

vast majority of television viewers to whom programs are

supplied within the Commission’s broadcasting jurisdiction,

and if the 1976 Report regulations had not required that cable

systems hold open a channel for access, even if no one desires

access, and precluded the cable owner from using that channel

to increase program diversity with his own or pay-cable pro-

gramming. 1976 Report, 59 F.C.C.2d at 316-17. The net re-

sult of most attempts to regulate cable systems appears to

have been to restrict, not augment, the number and type of

programs available to cable consumers.

aS = eek. et et! +

51

and every means. As above indicated, origination and

madatory access are very different means indeed, and,

as discussed below, the Commission is statutorily pro-

hibited from enforcing its present mandatory access

rules within its statutory jurisdiction over broadcast-

ers.

_ It is not jur'sdictionally so that means are imma-

terial, so long as broadly encompassing “objectives”

can be restated from the purpose statement in § 1, or

from the powers and duties statement in § 303(g), of

the Act. Referring to Southwestern and Midwest

Video, the D.C. Circuit has stated:

That these cases establish an outer boundary

to the Commission’s authority we have no doubt

. and if judicial review is to be effective in

keeping the Commission within that boundary,

we think the Commission must either demon-

strate specific support for its actions in the lan-

guage of the Communications Act or at least be

able to ground them in a well-understood and

consistently held policy developed in the Commis-

sion’s regulation of broadcast television. [Home

Box Office, Inc. v. FCC, supra note 29, at 34.]

A “well-understood and consistently held policy de-

veloped in the Commission’s regulation of broadcast

television” includes regulatory means as well as regu-

latory goals. In Home Box Office, after noting that

the Commission was without authority to control the

program content of broadcast television in the man-

ner sought under the anti-siphoning rules there at is-

sue, the court said:

52

Moreover, given the similarities between cable-

casting operations and broadcasting, we seriously

doubt that the Communications Act could be

construed to give the Commission “regulatory

tools” over cable-casting that it did not have

over broadcasting. * * * Thus, even if the siphon-

ing rules might in some sense increase the pub-

lie good, this consideration alone cannot justify

the Commission’s regulations. [Home Box Of-

fice, Inc. v. FCC, supra note 29, at 41-42.]'°"

In Home Box Office, the Commission was employ-

ing means not available in broadcast regulation to

control cablecasting activities already underway. Its

present effort to employ means not available in broad-

cast regulation is even further beyond its jurisdic-

tion, for here the Commission is attempting to compel

the initiation of particular (access) cablecascing ac-

tivities. It is at best anomalous to assert that broad-

casting objectives are furthered by use of regulatory

tools not lawfully useable to regulate broadcasting.”

°* Home Box Office may be interpreted as denying the Com-

mission “regulatory tools” over cable it does not have over

broadcasting, as equating government power over cable sys-

tems with that over newspapers in the context of intrusion

into First Amendment rights, or as confining the Commission

to regulation of cable activities having a nexus with cable’s

carriage of broadcast signals. Each interpretation would

apply here, and each necessitates the setting aside of the 1976

Report access rules.

** In a post-hearing submission, the Commission cites Nat'l

Citizens Comm. for Broadcasting v. FCC, No. 74-1700 et al.

(D.C. Cir. Nov. 11, 1977) and the indication therein that the

Commission should consider whether broadcasters could sat-

isfy their fairness doctrine obligations by voluntarily provid-

|

|

|

53

As we have said, regulatory action cannot be “reason-

ably ancillary” to nothing.

We need not determine what distinctions the Com-

mission may draw between broadcasting and cable

systems. It is sufficient to hold that, in making any

such distinction, the Commission may not exceed its

jurisdiction. However attractively the Commission’s

objectives are interpreted, reinterpreted, or re-pack-

aged, regulatory actions forbidden as means to ach-

ieve them within its statutory jurisdiction cannot be

considered “reasonably ancillary” to that jurisdic-

tion.”

ing public access. We are at a loss to understand what bearing

the cited case has on the present proceeding, which does not

involve the fairness doctrine, but which does involve com-

pelled access and an effort to impose common carrier type

obligations, or to understand how, if at all, the case can be

thought to have overturned the Commission’s policy respecting

forced access to broadcast facilities reflected in Columbia

Broadcasting System, Ine. v. Democratic Nat’l Comm., 412

U.S. 94 (1973) or to have repealed the statutory prohibition

against treating broadcasters as common carriers, p. 53 infra.

* To the extent, if any, that “increasing the number of out-

lets for community self-expression and augmenting the pub-

lic’s choice of programs and types of services” are legitimate

goals achieveable in broadcasting, they would appear auto-

matically achievable with respect to those broadcast programs

retransmitted by cable. The retransmitted broadcast pro-

grams have already had the benefit of Commission regulation.

Where cable provides the only television service, and monopo-

lization is a legitimate concern, 2 reyuirement that public in-

formation programs of broadcast television be retransmitted

would appear to be an application of the same regulatory tool

used to achieve the same public interest goals achieved within

the Commission’s jurisdiction over broadcasters.

54

(5) The Means Are Forbidden Within

The Commission’s Statutory Jurisdiction

(a) Forced Access

Counsel for the Commission admitted at oral argu-

ment that the mandatory access rules here at issue

could not be enforced upon broadcasters. Though

counsel said the reason lay in scarcity of broadcast

frequencies, it appears to have escaped Commission

attention that it is the scarcity of broadcast signals

that excuses its limited regulatory intrusion on First

Amendment and other rights of broadcasters. The

Commission’s notion that the absence of scarcity in

the potential number of cables removes the limits on

its authority has things backward. The absence of

scarcity removes the excuse for intrusion.

The reasons why access-to-cable cannot be justified

as related to the broadcast milieu are fundamental

and pervasive. First, as indicated throughout this

opinion, many impedimenta to enforcement of manda-

tory access have nothing to do with scarcity of broad-

cast frequencies. Second, the Commission’s breadth

of regulatory power over “semi-public” broadcasters,

though limited, is expressly statutory and greater, not

less, than any ancillary power it may have over pri-

vate media, like cable systems. See National Broad-

casting Co. v. United States, supra, at 216-219

(1943). Third, the Commission’s confirmed policy is

that no private individual or group has a right to use

broadcast frequencies, and it has recognized that ac-

tion contrary to that policy is beyond its jurisdiction.

55

If there be a relation between public access and the

Commission’s “long established regulatory goals in

the field of television broadcasting,” it escapes detec-

tion in the Commission’s actions within its jurisdic-

tion. The Commission firmly rejected an opportunity

to move even partially toward those goals, as it here

interprets them, when it was requested to force paid

and limited, not free and fullblown, access on broad-

casters. Its resistance was sustained by the Supreme

Court, which established that no person has a consti-

tutional right of access to broadcast television. CBS,

supra.”

* The Commission correctly says that CBS held that it need

not force access on broadcasters, not that it could not do so,

and that the Court referred to Commission plans to apply

access to cable systems. As indicated in CBS, 412 U.S. at 113,

the Commission and the Congress have consistently recognized

the serious statutory and constitutional prohibitions against

enforcement of public access upon broadcast facilities. The

Court in CBS did make a passing reference to proposed access

rules for cable systems, but only in the course of discussing

the possibility of some form of “limited” access to broadcast-

ing at some future date, id. at 131, and no Commission rule,

access or other, was before the Court. Nor were these access

rules before the court in Home Box Office, supra note 29. The

Commission inappropriately argues that footnote 82 in the

latter opinion shows that the D.C. Circuit “would approve an

access obligation.” In all events the non-dicta statements of

the Court in CBS, and those in Home Box Office, are far more

persuasive than passing remarks and footnotes relating to

matters not before the courts. Concentrating on the latter,

the Comriission disregards language indicating the impro-

priety of ‘ts access rules, e.g., the non-public interest in access

as favoring the wealthy, 412 U.S. at 123; the difficulty of ap-

plying the Fairness Doctrine and how its suspension would

56

Indeed, if there be a “public interest’ in achieve-

ment of the Commission’s “long established goals’’

through access, the Commission has not attempted to

serve that public interest by requiring broadcasters,

who reach the vast majority of television viewers and

are clearly within its jurisdiction, to give (or even

sell), even limited time to the public on a first come,

nondiscriminatory basis; nor does the Commission

deny broadcasters the right to control the material

going out over their facilities.

This court will not interpret the Commission’s

“long established goals” one way when the Commis-

sion is operating near the ancillary fringes of its

statutory jurisdiction, and another way when it is

operating clearly within its statutory jurisdiction;

nor can we believe that the Commission’s “long estab-

lished goals,”’ interpreted by the Commission as auth-

izing public access, are legitimate when applied to

cable‘systems and illegitimate when applied to broad-

casters.

Still, at the very time the Commission was telling

us that only practicality impeded its full authority

to force the present free public access ru’es upon

broadcasters, it refused even to inquire into the need

for broadcasters to give even a little time (petition-

ers sought 90 seconds out of every 7,200 seconds) to

Public Service Announcements (PSAs), and to adopt

rules enabling citizen groups, minority spokesmen,

lose more than gained, id. at 124; and Congress’ conclusion

that “the public interest in being informed requires periodic

accountability * * *,” id. at 125.

57

and in general the same access-seekers involved here,

to have their announcements aired. Petition to Insti-

tute a Notice of Inquiry and Proposed Rule Making

on the Airing of Public Service Announcements by

Broadcast Licensees, FCC 77-685 (Released Oct. 13,

1977). The petitioners’ “objectives” were paraphrases

of those relied on here by the Commission, i.e., an in-

crease in “diversification” of “programming,” com-

munity service, meeting local needs, favoring “those

citizen groups whose voices typically have not been

heard on the broadcast media,” and providing “need-

ed assistance to citizen groups in communicating their

programs to the public.” Petitioners also asked that

broadcasters make facilities and technical assistance

available.

Broadcasters argued, in Petition, supra, that the

‘“nroposed rules would be an impermissable intrusion

into [their] programming prerogatives,” that “re-

quiring a broadcaster to air a particular type of pro-

gram matter constitutes censorship,” that providing

technical assistance would be a “heavy burden” on

small staffs, and that giving “special access to certain

groups” was contrary to “the Commission’s policy

that no private individual or group has a right to

the use of broadcast facilities.” In its decision deny-

ing an inquiry, the Commission stated:

After considering these arguments we believe

that even if the First Amendment and Section

326 of the Communications Act are not an abso-

lute barrier, adoption of the instant proposal

would be an inappropriate intrusion into the sen-

58

sitive area of programming. For this reason and

because of the licensee’s knowledge of his com-

munity, he is accorded broad discretion in pro-

gramming matters, including the scheduling and

selection of PSAs.

* > * *

* * * As to providing a preference for citizen

group announcements, we note that no private

individual or group has a right of special access

to the airwaves. [Petition, supra, at 4, 6] '*'

Again, in a recent proceeding, Changes in the En-

tertainment Formats of Broadcast Stations, Notice

of Inquiry, 57 F.C.C.2d 580 (1976), Memorandum

Opinion and Order, 60 F.C.C.2d 858 (1976), the

Commission concluded that it lacked authority to reg-

ulate broadcast program formats, because that action

is analogous to imposing common carrier responsibili-

ties on broadcasters and is thus prohibited by Section

3 of the Act, 60 F.C.C.2d at 859; and because “[i]t

is impossible to determine whether consumers would

be better off [with a particular format] without ref-

erence to the actual preferences of real people.” /d.

at 864. The Commission’s 1976 Report attempts to

impose a “public forum” format on cable systems,

* At this point, the Commission added a footnote: “See

Columbia Broadcasting System, Inc. Vv. Democratic National

Committee, 412 U.S. 94 (1973), in which the Commission’s

long-standing policy against such special access was upheld.”

The Commission did not, as it does here, refer to the Court’s

passing remark about the possibility of developing a “limited”

form of access, though the remark related, as did CBS and the

Petition, to a demand for limited access to broadcasting.

LL TE Re th

59

and, as discussed below, it does impose common car-

rier responsibilities, and it totally ignores the prefer-

ences of cable consumers, who are “real people.”

Thus the Commission exceeded its own recognized

jurisdictional limitations in the field of television

broadcasting, when it attempted to impose its 1976

Report mandatory access, channel construction and

equipment rules on cable systems.” The Commission

does not in truth rely here on any “reasonably ancil-

lary” jurisdiction. The jurisdictional genesis for the

present access rules is not even allegedly lurking in

the lacuna of the Act.” It arises not from a power

over broadcasting but from a Commission act of cre-

ation. Creation, however, is a function of the Al-

mighty, and in the creation of jurisdictional authori-

ty, the almighty is Congress, not the Commission.

(b) Common Carrier

Section 3(h) of the Act, 47 U.S.C. § 153(h), pro-

vides that “a person engaged in radio broadcasting

shall not * * * be deemed a common carrier.” In

*? The present rules are an effort by the Commission to exer-

cise the “authority over activities ‘ancillary’ to its responsi-

bilities greater than its authority over any broadcast licensee”

referred to in the Midwest Video dissent. 406 U.S. at 681.

**The Commission’s power to license broadcasters exists

only “insofar as there is demand for same * * *,” 47 U.S.C.

§ 307(b) (1970), and the issuances of licenses is the means

“to provide a fair, efficient, and equitable distribution of radio

service * * *,” 47 U.S.C. §307(b) (1970). Nothing in the

Act authorizes the Commission to create licensees, or to force

anyone to become public access broadcasters, whether to “in-

crease outlets” or for any other reason.

National Association of Regulatory Utility Commis-

sioners v. FCC, 525 F.2d 630, 641 (D.C. Cir. 1976)

cert. denied, 425 U.S. 992 (1976), and in National

Association of Regulatory Utility Commissioners v.

FCC, 533 F.2d 601, 608-09, (D.C. Cir. 1976), the

court defined the two prerequisites of communications

common carriage: (1) provision of service to users

indiscriminately; and (2) transmission of intelligence

of the user’s own design and choosing. The 1976 Re-

port mandatory access rules require: (1) provision

of cable service to users indiscriminately; and (2)

transmission of intelligence of the user’s own design

and choosing. Thus the 1976 Report imposes common

carrier responsibilities on cable systems, and the at-

tempt to bludgeon cable systems into becoming com-

mon carriers is an exercise specifically forbidden the

Commission within its delegated powers. It is no

more jurisdictionally sound than the same action

would be if exerted against broadcasters.”

The 1976 Report creates a dilemma and impales

itself on the horns. The regulations require that a

cable system cablecast access users’ programs. If the

Commission’s equation of “cablecast’” to “broadcast”

be made, the cable system, as broadcaster, cannot

** The Commission is statutorily prohibited from censorship.

47 U.S.C. $326 (1970). The present access rules not only

impose common carrier obligations, it imposes prior censor-

ship duties, see p. 66 infra, on cable operators. There being

no public access to broadcasting, such prior censorship duties

have never been imposed on broadcasters, which the Commis-

sion is empowered to regulate directly.

le ab et

61

have the Commission’s common carrier type access

rules enforced upon it without violation of the Act.”

There can be no question that the 1976 Report

mandatory access rules are an attempt to convert

cable systems into common carriers with respect to

their bandwidths not used to retransmit broadcast

signals. In the parent Cable Report, the Commission

emphasized that it contemplated “a multipurpose

cable operation combining carriage of broadcast sig-

nals with program origination and common carrier

service. 36 F.C.C.2d at 197. (emphasis added) It

repeated that contemplation in its Reconsideration,

36 F.C.C.2d at 352.”

“If “cablecaster” and “cablecasting” be read as “broad-

caster” and “broadcasting,” the access rules actually require

that a cable operator become a common-carrier type broad-

caster, or a broadcasting-type common carrier. In rejecting

petitioner’s First Amendment arguments, the 1976 Report, 59

F.C.C.2d at 299, defends the access rules as permissible,

“C(w]hen broadcasting, or related activity by cable television

systems is involved * * *.” The Commission did not explain

why, if “broadcasting * * * is involved,” it did not apply its

broadcast rules. Moreover, because cablecasts are sent only

through the cable system’s cables, and only to the system’s

paying subscribers, the equation of cablecasting to “broad-

casting,” i.e., to sending a communication out over radio fre-

quencies for free pick-up by anyone with a receiver, appears

at best tenuous.

* That Congress has recognized the giving of the micro-

phone to everyone, even if they pay for it, is making the micro-

phone owner a common carrier, is reflected in the quotations

from legislative history quoted in CBS, supra, at 105-110.

ACLU argues that cable systems have in recent times

adopted practices which it says are common carrier in nature,

citing Nat'l Ass’n of Reg. Util. Comm’rs v. FCC, 533 F.2d 601

To keep its “Certificate of Compliance,” a cable

system must comply with the Commission’s manda-

tory access regulations (or seek a waiver, which has

no jurisdictional effect). In Frost & Frost Trucking

Co. v. Railroad Commission, 271 U.S. 583, 592, 599

(1926), the Court found it an unwarranted intrusion

into the conduct of a private enterprise for the govern-

ment to mandate that trucking companies offer their

services as common carriers or not at all, rejecting

the argument that the state could so condition the use

of highways. We find it an unwarranted intrusion

into the conduct of a cable enterprise for the Commis-

sion to mandate that cable companies offer services as

common carriers or not at all, and we reject the argu-

ment that it may so condition broadcast program re-

transmission, which has not even the nexus to cable-

casting that highways may have to trucking. Tele-

prompter Corp. v. Columbia Broadcasting System,

Ine., TOSI, 405 (1974).

Prior to promulgation of mandatory access rules,

cable operators had full discretion to decide what

originated programming to distribute over their fa-

(1976), which dealt with point-to-point, two-way, nonvideo

communications, not free public access to cable systems facili-

ties. To the extent that cable systems elect to engage in or

interact with common carrier activities, those activities or

interactions may be subject to regulation; the problem comes

when the Commission attempts to force common carrier ac-

tivities. ACLU’s insistence that the access rules of the 1972

Cable Report be resurrected, by essentially full common car-

rier regulation under Title II, with freedom to set lease rates

that will attract capital, illustrates the identity of access rules

and coercion of cable systems into common carrier activities.

cilities. That would have remained true if the Com-

mission had enforced its origination rule, under which

cable operators need not have transmitted communi-

cations of all comers. Access rules, removing discre-

tion from cable operators and forcing them to act as

common carriers, do not prevent a business entity

from acting in a manner injurious to the public inter-

est. The present rules merely accomplish the coercion

into common carrier operations of a business neither

acting as, nor holding itself out as, a common carrier.

The Commission chooses not to meet disectly Mid-

west’s argument that it lacks jurisdiction to force

common carrier responsibilities upon cable systems.

It merely relies on the broad allegation that its access

rules “are reasonably related to achieving objec-

tives.” That reliance must fail, for imposftion of

common carrier responsibilities to achieve broadcast

goals impermissibly intermixes the two fields which

Congress expressly kept asunder, by its enactment of

§ 3(h) of the Act, and its separate treatment of com-

mon carriers (Title I1) and broadcasters (Title III)

in the Act.

** “So long as the rules adopted are reasonably related to

achieving objectives for which the Commission has been as-

signed jurisdiction we do not think they can be held beyond

our authority merely by denominating them as somehow ‘com-

mon carrier’ in nature. The proper question * * * is * * *

whether the rules adopted promote statutory objectives” 1976

Report, 59 F.C.C.2d at 299. The {gemmission does not tell us

how or why its access rules are not far more than merely

denominated as “somehow” common carrier in nature, or why

they are not in fact common-carrier-type rules.

64

Though the Commission tells us that Midwest

Video legitimized its present common carrier type ac-

cess regulations, the Commission told the Supreme

Court that the origination rule there involved was

an attempt to require cable systems “to meet some of

the same basic standards of responsibility to the pub-

lic that are imposed on broadcasters.” Brief for ap-

pellants United States and FCC at 15 n.12, Midwest

Video, supra.” Because the Commission’s 1976 Re-

port regulations are an attempt to require cable sys-

tems to meet “standards of responsibility to the pub-

lie’ that cannot lawfully be “imposed on broadcast-

ers;” they are necessarily divorced from, rather than

reasonably ancillary to, the Commission’s regulation

of broadcasting.

II Constitutional Considerations

The 1976 Report access regulations having exceed-

ed the Commission’s jurisdiction, it is unnecessary to

rest our decision on constitutional grounds and we de-

cline to do so. Benanti v. United States, 355 U.S. 96,

99 (1957); Neese v. Southern Railway, 350 U.S. 77,

78 (1955); Peters v. Hobby, 349 U.S. 331, 338

(1954). Moreover, communications technology is dy-

namic, capable tomorrow of making today obsolete.

Referring to First Amendment rights of broadcasters

and the public, in CBS, supra, the Court said, “At

** There was no common carrier question raised in Midwest

Video. The origination rule had at least the merit of com-

pelling cable operators to do no more than what broadcasters

must do, i.e., originate programs.

Mates os

65

the very least, courts should not freeze this neces-

sarily dynamic process into a constitutional holding.”

412 U.S. at 132.

Though we find it unnecessary to resolve the seri-

ous constitutional issues raised, we do hold that

where, as here, potential incursions into sensitive con-

stitutional rights are involved, careful scrutiny is

required in delineating the scope of authority that

Congress intended the agency to exercise.

Even the broadest opinion, that of the plurality

in Midwest Video Corp., recognizes that the Com-

mission can act only for ends for which it could

also regulate broadcast television. Indeed, even

this standard will be too commodious in certain

cases, since * * * the scope of the Commission’s

constitutionally permitted authority over broad-

cast television in areas impinging on the First

Amendment is broader than its authority over

cable television. [Home Box Office, Inc. vy. FCC,

note 29 supra, at 33-34.]

Moreover, the First Amendment overtones, and

other constitutional considerations present in the 1974

Report, are such as to reinforce our conclusion on the

jurisdictional issue.”

** That the origination rule in Midwest Video was free of

the potential First Amendment problems created by manda-

tory access rules serves to further strengthen our conclusion

that the “reasonably ancillary” standard, though it legitimized

origination, cannot encompass mandatory access.

If jurisdiction existed, necessitating resolution of the con-

stitutional issues, we would not interpret the Commission’s

66

(a) The First Amendment

This is the first case raising the First Amendment

implications of a Commission effort to enforce un-

limited public access requirements. The Commission

has shown a proper care and concern for the First

Amendment rights of broadcasters, and for the Act’s

($ 326) prohibition of censorship, as illustrated by

its resistance to demands for lirnited access to broad-

east television. CBS, supra; Petition, FCC 77-685,

supra. That care and concern is remarkably absent

from the 1976 Report, compelling unlimited access to

cable television.

Nor does the Commission make any effort before

us to indicate that, in its 1976 Report, it engaged in

the required, though difficult, “balancing” task in

which it has traditionally engaged with respect to

First Amendment values in exercising its jurisdic-

tional responsibilites for broadcast television. Con-

centrating on creating a public right to exercise free-

dom of speech on cable television, the Commission

gave no thought, on this record, to freedom of the

press.

The Commission points to no First Amendment

right which it believes overrides the First Amend-

ment rights it has recognized in broadcasters but re-

fused to recognize in cable operators. Instead, the

Commission’s brief dismisses Midwest’s concern for

statutory grant as permitting violation of constitutional

rights. Greene Vv. McElroy, 360 U.S. 474, 506-508 (1959);

Kent Vv. Dulles, 357 U.S. 116, 125-130 (1957).

67

its First Amendment rights in four paragraphs, say-

ing only that cable systems retransmit broadcast sig-

nals, that Midwest Video authorizes rules designed

to achieve the Commission’s program diversity ‘‘ob-

jectives,” and that First Amendment goals are pro-

moted by access rules, citing Red Lion Broadcasting

Co., supra, and language therein concerning an “un-

inhibited marketplace of ideas” and “monopolization

of that market.”

Assessment of the proper balance of First Amend-

ment rights must be based on a record, not merely on

argument regarding precedent or on resort to an “ob

jectives” rubric. Government control of business op-

erations must be most closely scrutinized when it af-

fects communication of information and ideas, and

prior restraints in those circumstances are presump-

tively invalid. See Bantam Books, Inc. vy. Sullivan,

372 U.S. 58, 70 (1963). “The line between informing

and entertaining is too elusive for the protection

* * *” of First Amendment rights to turn on that

distinction. Winters v. New York, 333 U.S. 507,

510 (1948).

In wresting from cable operators the control of

privately owned facilities for transmission of pro-

grams not acquired from public airwaves, the Com-

mission makes no effort to show that action to have

been necessary to protect a “clear public interest,

threatened not doubtfully or remotely, but by clear

and present danger,” or to show “the gravest abuses,

endangering paramount interests [which would] give

occasion for permissible limitation.” Thomas v. Col-

68

lins, 323 U.S. 516, 530 (1945). As the Court de-

scribed the majority error below in CBS, supra at

126, the Commission appears to have “minimized the

difficult problems” created by its access rules, and

thus “failed to come to grips” with the important

First Amendment considerations present—‘“the risk

of an enlargement of government control over the

content of [cablecast] discussion of public issues.”

In its desire to accommodate “users who would

otherwise not likely have access to television audi-

ences,” 1976 Report, 59 F.C.C.2d at 296, the Com-

mission made no delineation of whether cable sys-

tems, absent imposition of its access rules, are public

forums. If they are not, it would appear that the

present access rules cannot withstand constitutional

muster. Every individual’s right to speak, precious

and paramount as it is, does not include every indi-

vidual’s right to be given the possibility of an audi-

ence by government fiat, or to speak in a non-public

forum, like a newspaper, a magazine, or on the Sen-

ate floor. See American Communications Associa-

tion v. Douds, 339 U.S. 382, 394 (1950); Avins v.

Rutgers, State University of New Jersey, 385 F.2d

151, 153 (3rd Cir. 1967), cert. denied, 390 U.S. 920

(1968). The First Amendment rights of cable opev-

ators rise from the Constitution; the public’s “right”

to “get on television” stems from the Commission de-

sire to create that “right.”

It is not enough, therefore, to merely cite the re-

transmission of broadcast signals by cable systems.

As above indicated, no nexus exists between the func-

69

tion of retransmitting broadcast signals and the dis-

tinct function of cablecasting. Teleprompter Corp. v.

Columbia Broadcasting System, Inc., supra. Cable-

casting is communicating, requiring thorough and

penetrating consideration of the communicator’s First

Amendment rights.” Cablecasting, however, involves

no transmitting over the airwaves or the use of sig-

nals acquired from the airwaves.”

If there be any arguable relationship between

cablecasting and retransmission, it would appear far

too tenuous and uncertain to warrant a eavalier over-

riding of First Amendment rights present in cable-

casting.

Concurring in Home Box Office, supra note 29,

Judge Weigel expressed well the concern noted here,

in stating:

[T]he Commission lacks the power to control the

content of programs originating in the studios

of cablecasters. Such programs involve neither

retransmission of signals received over the air

from conventional television broadcasting nor

transmission over television broadcasting fre-

quencies. They are offered to users of television

*° Communication via cable has been held to constitute pro-

tected speech, Weaver v. Jordan, 64 Cal.2d 235, 411 P.2d 289,

cert. denied, 385 U.S. 844 (1966); as have movies, Joseph

Burstyn, Inc. Vv. Wilson, 343 U.S. 495 (1952).

"The Commission’s authority to regulate with respect to

the technicalities invoived in cable systems’ use of microwaves

was recognized by this court in Black Hills Video Corp. v.

FCC, 399 F.2d 65 (8th Cir. 1968).

70

sets on terms the users are free to accept or

reject.

* * * In relation to cablecasting, the power is

so fraught with the potential for impingement

upon First Amendment rights that it should not

be sanctioned by implication.

Under its 1976 Report access rules, the Commis-

sion is present in each cable operator’s studio, hold-

ing open the door to all who wish to enter and use

it, (turning its back, however, as we shall see, when

the pornographer enters). Under some circumstances,

the Commission’s access rules effectively silence the

cable operator, denying him all use of his own facili-

ties, for any exercise of his First Amendment rights.

1976 Report, 59 F.C.C.2d at 316-17. The Fairness

Doctrine applicable to cablecasting, 47 C.F.R.

§ 76.209, would involve the Commission when circum-

stances give rise to its application, but application of

that doctrine to access programs has not on this rec-

ord been considered by the Commission.” The con-

stitutional considerations generated by its access rules

require the Commission to evaluate carefully the ex-

tent to which it may reside in the studios of cable-

casters as one of the issues too sensitive to permit

superficial dismissal on the mere ground that cable

72 One commentator believes that access rules were the Com-

mission’s way out of “the fairness cave.” Price, supra note 5,

at 551-52 n.61. See note 62 supra, regarding the dilemma

noted by the Court in CBS, respecting the application or

waiver of the Fairness Doctrine when public access is man-

dated.

71

Operators, in a separate activity, retransmit broad-

cast signals.

Though neither Southwestern nor Midwest Video

dealt with First Amendment concerns, the Commis-

sion says it “contemplated” third party access as

among its “objectives” in issuing the origination rule

approved in Midwest Video. If that be so, what may

have rested on the backroads of the Commission’s

mind is irrelevant. Our interest is in what the Com-

mission did; and what it did in Midwest Video is

entirely distinct from what it did here.

Moreover, our concern at this point is with a fun-

damental First Amendment difference, which the

Commission appears to ignore. Under origination the

cable operator may permit access of third parties of

his selection, and retain ultimate editorial discretion

and responsibility regarding what programming ma-

terial goes out over his lines. Under the present ac-

cess rules he may choose neither user nor material.

The irrelevance of “objectives,” as a sole basis for

jurisdiction, is even more apparent when objectives

are cited as sole justification ior access rules, regard-

less of their effect on First Amendment rights. Red

Lion, supra, involved application of the Fairness Doc-

trine to broadcast television. Its language cannot vali-

date the present access rules or justify a disregard of

the constitutional concerns they entail. Citation of

Midwest Video and Red Lion cannot serve as a basis

for failure to make the First Amendment evaluations

required here.

72

The Commission does not favor us with any views

as to: (1) why cable systems are not entitled to the

same First Amendment rights as other private media,

such as newspapers and movie theatres; (2) how

compelled access to cable facilities is distinguishable,

in a First Amendment context, from compelled ac-

cess to broadcast facilities; or (3) how its rule, 47

C.F.R. § 76.256(d) (1)-(3), requiring cable operators

to exercise prior restraint of obscenity,” and the ex-

posure of cable owners to law suits resulting from its

access rules, can be justified. Though we refrain

from resting our decision on the Constitution, we note

the emphasis in the Commission’s brief on the notion

that access is old and established ground; but when

serious First Amendment questions are raised, deja

vu will not do.

In Miami Herald Publishing Co. v. Tornillo, 418

U.S. 241 (1974), the Court held unconstitutional a

state effort to compel access to the pages of a news-

paper, even for the limited purpose of attack-response.

In Home Box Office, supra note 29, at 72, the court

said:

[S]earcity which is the result solely of economic

conditions is apparently insufficient to justify

even limited government intrusion into the First

"> The Commission’s request for remand in American Civil

Liberties Union v. FCC, Case No. 76-1695 (D.C. Cir.), indi-

cating the possibility of repeal of prior censorship responsi-

bilities, has no effect here. The Commission may elect not to

repeal the rule, and repeal would not resolve other problems

involved in the access rules generally. See note 19 supra.

73

Amendment rights of the conventional press, see

Miami Herald Publishing Co. v. Tornillo, 418

U.S. 241, 247-256 (1974), and there is nothing

in the record before us to suggest a constitu-

tional distinction between cable television and

newspapers on this point. [footnote omitted]

The present access rules strip from cable operators,

on four of their channels, all rights of material selec-

tion, editorial judgment, and discretion enjoyed by

other private communications media, and even by the

“semi-public” broadcast media. Cable operators must

allow use of their facilities, for transmission toward

their paying subscribers, of any program material,

no matter the quality, interest, relevance, taste, con-

text; beauty, or scurrilousness (short of obscenity,

when prior restraint is physically possible, infra).

They must lease a channel to any person, regardless

of business reputation, competence, or financial stand-

ing. They must permit third-party installation of

equipment on the sets of their subscribers who want

to watch the third party’s program.”

Though the Commission’s logic would apply, and

its “objectives” would be as well achieved, and though

newspapers “retransmit” hundreds of government

press releases, we assume that no government agency

™ The Commission places the burden on the cable operator

to prove that inferior equipment will harm his system’s serv-

ice before it will permit him to refuse installation, and re-

quires that he permit a test installation over a reasonable time

to determine whether harm will result, though it recognized

that “posting bond may be appropriate” during the test period.

Memorandum Opinion and Order, 62 F.C.C.2d 399, 404 (1976).

74

has the fatal-to-freedom power to force a newspaper

to add 20 pages to its publication, or to dedicate

three pages to free, first-come-first-served access by

the public, educators, and government, or to lease

a fourth page on the same basis, or to “advance the

public interest by opening of [letters-to-editor col-

umns| for use by public and other specified users

who would otherwise not likely have access to [news-

paper] audiences.”

Despite the Court’s guidance in Miami Herald,

supra, the Commission has attempted here to require

cable operators, who have invested substantially to

create a private electronic “publication’—a means

of dissiminating information—, to open their “pub-

lications” to all for use as they wish. That govern-

mental interference with the editorial process raises

a serious First Amendment issue. Though we are

not deciding that issue here, we have seen and heard

nothing in this case to indicate a constitutional dis-

tinction between cable systems and newspapers in the

context of the government’s power to compel public

access.

If the Commission has any authority to intrude

upon the First Amendment rights of cable operators,

that authority, as above indicated, is less, not greater

than its authority to intrude upon the First Amend-

ment rigiits of broadcasters. Were it necessary to

decide the issue, the present record would render the

intrusion represented by the present rules constitu-

tionally impermissable.

75

The 1976 Report spawns a further, and serious,

constitutional difficulty of another sort. The Com-

mission’s access rules require cable operators to

create and operate a public forum, with no control

of its content, but with an obligation of suppressing

speech the government could suppress because of

obscenity or indecency. 47 C.F.R. § 76.256(d) (1)-

(3).” In so mandating, the Commission appears to

have created a corps of involuntary government sur-

rogates, but without providing the procedural safe-

guards respecting “prior restraint” required of the

government.” In Southeastern Promotions, Ltd. v.

Conrad, 420 U.S. 546, 560 (1975), the Court de-

scribed those safeguards as: (1) the censor must

initiate judicial proceedings and prove the material

unprotected; (2) restraint prior to judicial review

can be only for a brief period, to preserve the status

quo; and (3) prompt judicial determination must be

assured.

‘Vhen cable operators asked how they could censor

obscenity in the open access system required by the

7’ Midwest’s standing to raise the constitutional rights of

cable users has not been challenged. See Note, Standing to

Arrest Constitutional Jus Tertii, 88 Harv. L. Rev. 423 (1974);

NAACP v. Alabama ex rel. Patterson, 357 U.S. 449 (1958);

Barrows V. Jackson, 346 U.S. 249 (1953).

In CBS, supra, at 115 et seq., the Court said broadcasters

are not engaged in government action just because they are

permitted to use the airwaves. Here the government requires

cable operators to censor. The Court said the First Amend-

ment does not reach acts of private parties in every instance

in which the Commission or Congress merely permitted or

failed to prohibit the speech-denying act complained of. 412

U.S. at 119. Here the Commission has ordered such acts.

76

1976 Report, the Commission issued a Clarification,

supra note 19, which stated that cable operators must

“enforce” the rule, and must proscribe all obscene

and indecent matter, and, “Indeed, he is responsible

to the Commission for doing so.” 59 F.C.C.2d at 984.

The Commission said cable operators should exercise

a prior restraint when possible, and, when that is

not possible,” cable operators should exclude the of-

fender from access in the future. Thus the Com-

mission made the cable operator both judge and jury,

and subjected the cable user’s First Amendment

rights to decision by an unqualified private citizen,

whose personal interest in satisfying the Commission

enlists him on the “safe” side—the side of suppres-

_ sion.

Nor does the Clarification appear to have dealt

with the chilling effect which fear of future disbar-

ment woula have upon access users, (though it re-

ferred to such an effect on access services if cable

operators had to pre-screen numerous programs).

Neither did it discuss the effect on subscriber allegi-

ance to a cable system which must permit live access

programmers at least one bite at the obscenity apple.

The Clarification “suggested” that “distasteful”

programs be cablecast at hours that would “mini-

mize exposure to children,” but specifically refused

** Whether the Commission considered a requirement that

all access programs be in the form of videotape, whether the

cost of videotape to access users would have limited the Com-

mission’s desire to get absolutely everybody on cable televi-

sion, or whether the commission considered assigning the cost

of access videotapes to the cable consumers, is unknown.

77

to either require or prohibit such scheduling. 59

F.C.C.2d at 985. How any “scheduling” could be

done, of programs unknown to and under no control

of the operator, was not discussed. Nothing was

said in the Clarification respecting the prior-restraint

safeguards specified in Southeastern Promotions,

Ltd. supra, or in Freedman v. Maryland, 380 US. 51

(1965).

(b) Due Process

Midwest argues persuasively that the 1976 Report

mandatory construction and access rules constitute a

taking of private property without just compensa-

tion and deny cable owners an opportunity to earn

a fair rate of return, in violation of the due process

clause of the Fifth Amendment.

The Commission makes no effort to show that its

access rules do not violate the due process provisions

of the Constitution. It merely dismisses petitioner’s

arguments on its “objectives” and on the ground

that the same arguments were rejected by this court

in Black Hills Video Corp. v. FCC, supra note 71,

and by the Supreme Court in Midwest Video.

Though we find it unnecessary to resolve the issue,

we have rejected the objectives argument above, and

we suggest the inappropriateness of the Commission’s

legal precedent argument. That a violation of due

process rights under the Constitution may not have

been earlier found by a court, in reviewing regula-

tions concerning cable’s use of a microwave com-

pany’s services and non-duplication rules, as in Black

Hills, or concerning an origination rule, as in Mid-

78

west Video, cannot for a moment mean that due

process concerns raised by the 1976 Report manda-

tory construction and access rules may on that

ground be dismissed. As in the matter of jurisdic-

tion, each regulation must on its own pass, or fail

to pass, constitutional muster.

In promulgating regulations requiring expendi-

tures of many millions of dollars for construction and

public dedication of additional channels and equip-

ment, the Commission was not at liberty to disregard

due process rights of cable operators, or of cable con-

sumers to whom most if not all costs will be passed.

Whether those rights be labeled “economic” or other-

wise, they are not in our view obsolete.” The human

right to own property is a most fundamental right,

the alleged deprivation of which cannot be ignored

because thet right was found uninfringed, or over-

taken by the public interest, in cases dealing with

earlier and different regulations. If consumers’

money is to be taken, in response to a /ederal regu-

latory agency’s view of the public interest, it must

be upon a record far less speculative than that at

hand, and on a far stronger basis than court deci-

sions relating to other regulations.

The present access rules, scraped free of argu-

mentative barnacles, require the construction of fa-

™ The brief of ACLU refers to Midwest’s arguments as

“obsolete notions of economic due process.” Those relying on

regulatory power and exuberance, to deliver over the facilities

of another at no cost, may rue the day. The regulatory mind

is normally unbiased; the regulatory rain falls on all.

79

cilities and their dedication to the public. Presum-

ably, a requirement that facilities be built and dedi-

cated without compensation to the federal govern-

raent (for public use) would be a deprivation for-

oidden by the Fifth Amendment. A “taking” does

not require that the government take title. United

States v. Kansas City Life Insurance Co., 339 U.S.

799 (1950); United States v. Causby, 328 U.S. 256

(1946). That the forced dedication be direct to the

people, rather than indirect through theii govern-

ment, would appear to be of no constitutional mo-

ment.

We express concern, also, over the Commission’s

approach to a further problem engendered by its

1976 Report regulations. When the cable operator,

in policing his access channels, is considering whether

an access user is being or has been “obscene” or “‘in-

decent,” ” or whether access should be denied for

any reason, there are ghosts in the wings. On one

side lurks a fear of violating the Commission’s rules,

and potential loss of his “Certificate of Compliance.”

On the other stands the potential for violation of the

access user’s rights. The exposure of cable operators

to law suits, by access users claiming prior restraint

of their First Amendment rights, or interference

with their new-found “right” to be on cable television

whenever, and as often as they like, by the state for

*® Considering the difficulties experienced by the courts in

defining the obscene, the cable operator, were he to engage a

battery of lawyers, could hardly be envied this part of the

tasks imposed by the regulations under review.

80

his having transmitted obscene material, by out-

raged subscribers (whether outraged by obscenity or

outraged by having to pay for it) or by persons

denied access for any reason, is among the problems

which do not appear to have been fully considered

by the Commission in its removal of the cable opera-

tor’s control over his system’s programs. The Com-

mission did speak of the censorship and law suit

problem in its Cable Report, 36 F.C.C.2d at 196:

We have adopted the no-censorship requirement

in order to promote free discourse; this is, we

believe, valid regulation having “the force of

law.” While the matter is of course one for

resolution by the courts, State law imposing

liability on a system that has no control over

these channels may unconstitutionally frustrate

Federal purposes. In any event, if a problem

should develop in this respect, it is readily rem-

edied by Congress and, in this connection, we

would welcome clarifying legislation.'*'

And again on reconsideration :

Various parties have questioned our judgment

that there seems litle likelihood of civil or crimi-

nal liability against cable operators from the

*° The Commission also indicated in its Clarification that it

planned to seek legislation making obscenity and indecency

on cable channels a federal crime. 59 F.C.C.2d at 985-86. Why,

if cable casting be broadcasting, such legislation is needed in

view of 18 U.S.C. § 1464 (1970) was not discussed. The Com-

mission’s monumental lack of success in obtaining legislation

giving it general regulatory power over cable systems bodes

ill for the notion that the problem is “readily remedied by

Congress.”

81

use of access channels. The parties contend, un-

derstandably, that our feeling in this matter,

however persuasive, is hardly a guarantee. They

note, further, that although the cable operator

will have no control over program content on

access channels, he is charged with proscribing

the presentation of obscene material. It is sug-

gested that to this extent, at least, the operator

will, in effect, be required to exercise control.

To clarify this area, we are requested to seek

legislation to grant immunity to a system over-

ating under our access rule. We, of course, ap-

preciate petitioner’s concern over the liability is-

sue. We still believe, however, that existing case

law solves most problems in this area [footnote

omitted ]. [Reconsideration of the Cable Televi-

sion Report and Order, 36 F.C.C.2d 326, 357

(1972).]

The subjection of cable operators to potential lia-

bility because of the acts of third parties over which

they have no control, and the burden and expense

of cable operators in trying to convince state courts

that the Commission’s regulations supersede state

law, was not addressed in the 1976 Report.

The Commission, in its requirement that cable

operators exercise prior restraint of obscenity in ac-

cess cablecasting, attempts to transfer to cable oper-

ators the very censorship power statutorily forbidden

to. the Commission in § 326 of the Act.’ The Com-

** For a review of the difficulties experienced by the Com-

mission in dealing with obscenity and profanity in broadcast-

ing, and the limited use of the criminal prohibition of 18

U.S.C. § 1464 (1970), see Note, Filthy Words, supra note 55.

mission’s “belief’’ that cable operators would be free

of legal liability because they were only following

orders seems ill-founded when the orders are to do

what it cannot do.

The aplomb with which the Commission is willing

to forcefully expose cable operators to criminal and

civil suits, with all of the uncertainties and serious

liberty and financial risks involved in defending

them, particularly in these years of America’s liti-

gious binge, raises serious questions, about the ra-

tionality of the access rules, about the lack of evi-

dence showing a publie interest so strong as to war-

rant them, and about the due process interests ef-

fected; all of which would require the closest judicial

scrutiny if the access rules of the Commission were

to be otherwise held within its jurisdiction.

Ill The Record

Because the mandatory access and channel capac-

ity rules of the 1976 Report exceed the jurisdiction

of the Commission, we refer to the record only be-

cause our reference may be of use in further pro-

ceedings.

Concerning abandonment of its cable origination

rule, the Commission stated:

Quality, effective, local programming demands

creativity and interest. These factors cannot be

mandated by law or contract. The net effect of

attempting to require origination has been ex-

penditure of large amounts of money for pro-

gramming that was, in many instances, neither

ee

83

wanted by subscribers nor beneficial to the sys-

tem’s total operation. In those cases in which

the operator showed an interest or the cable

community showed a desire for local program-

ming, an outlet for local expression began to

develop regardless of specific legal requirements.

During the suspension of the mandatory rule,

cable operators have used business judgment and

discretion in their origination decisions. For ex-

ample, some operators have felt compelled to

originate programming to attract and retain

subscribers. These decisions have been made in

light of local circumstances. This, we think, is

as it should be. [Report and Order in Docket

No. 19988, 49 F.C.C.2d 1090, 1105-06 (1974).]

The Commission does not tell us how, if at all, its

mandatory access rules would result in “{q]uality,

effective, local programming” with the required

“creativity and interest” by legal mandate; or why

their “net effect” would not be an even greater “ex-

penditure * * * for programming * * * neither

wanted by subscribers nor beneficial to the system’s

total operation ;” or why “an outlet for local expres-

sion” would not begin to develop under voluntary

access “regardless of specific legal requirements”

when a “cable community showed a desire” for ac-

cess programs; or why, if such desire occurred, op-

erators would not feel “compelled” to supply access

programs to “attract and retain subscribers ;” or why

decisions on origination programming “in light of

local circumstances” is “as it should be,” while de-

cisions on access programming in that “light” should

84

be denied by force of law to operators, subscribers,

and local franchise authorities. In sum, the Commis-

sion, in mandating channel construction and public

access, appears to have gone directly contrary to its

origination experience.”

The Commission makes no response, on the merits,

to Midwest’s argument that the access rules are

arbitrary, capricious, and irrational, but remains

content to argue that the record information behind

its Cable Report, by which it first adopted access

rules, is not before us.

We do not here find it necessary to review the

present record in the detail required when a decision

turns on the nature of the rulemaking process, Camp

y. Pitts, 411 U.S. 188 (1973); Citizens to Preserve

Overton Park, Ine. v. Volpe, 401 U.S. 402 (1971).

However, the Cable Report itself, the 1976 Report,

and its record information, are more than sufficient

to illustrate the Commission-recognized speculative

nature of the agency’s mandatory access action, and

*? The Commission’s assertion that there is no real difference

between origination and access rules is not accompanied by

an indication that its hopes for access will prove any less for-

lorn, or its crystal ball any less clouded. The Commission

mentioned access rules in the course of abandoning origina-

tion, but its assertion here, that access was merely substituted

as es burdensome requirement, suffers from comparison

with-its actual reason for abandoning origination, as formally

expressed in its Report and Order in Docket 19988, supra. The

Commission does not explain how massive rebuilding and pub-

lie access are “less burdensome” on cable operators than no

— rebuilding and control of his facilities for his own origination.

85

to raise a serious question of whether it would be

sustained on the administrative record.

Moreover, the right of Midwest, to whom access

rules were first made applicable by the 1976 Report,

to judicial review of its challenge to the rationality

of access rules per se is even more certain than that

of petitioner in Functional Music, Inc. v. FCC, 274

F.2d 543 (D.C. Cir. 1953), where the underlying

rules had long been applicable to petitioner.

The Commission’s arbitrary approach to imposi-

tion of its ‘access concepts” appears reflected in the

1976 Report. Disregarding the results of its flawed

faith in origination, the Commission compelled con-

struction of facilities on the obvious fact that failure

to construct them would impede their use and on

the mere theory and assumption that if they are

built they will someday be used.“ Throughout the

1976 Report, the Commission describes most of its

rules as involving “difficult” problems. In withdraw-

ing and modifying its Cable Report rules, the Com-

mission itself characterized some of those earlier

rules as: imposing ‘“‘a very significant burden * * *

for which there is no reasonable forseeable need,”

59 F.C.C.2d at 306; requiring a two-way capacity for

which “developments * * * have been far slower than

** It would appear that the logic of this approach would

have justified a government requirement for building 12,000

foot runways at every major airport in 1930, or rocket launch-

ing pads in 1947, when some were predicting and urging a

flight to the moon. The Commission has forbidden the laying

of a seventh transatlantic cable on the ground that it may not

be used. Report, Order and Third Statement of Policy and

Guidelines in Docket No. 18875, FCC 77-862 (Dec. 23, 1977).

86

was anticipated * * *,” id. at 309; imposing a “bur-

den [converter installation] we have required system

operators to meet [we think] is unreasonable * * *,”

and imposing a cost on “the subscriber who must ulti-

mately pay * * * whether or not he wishes to view

the programming being provided * * *,” and that

may have impeded construction of cable systems in

new communities. Jd. at 313.“

In 1974, the Commission stated that it was “too

early to discern any trends regarding our leased

access channel rules,” and that “access is still in its

infancy and it has a long-hard-struggle ahead before

it becomes an accepted part of the communication

process in this country. We knew this would be the

case when we instituted the rules * * *.” Clarifica-

tion of the Cable Television Rules, 46 F.C.C.2d 175,

185 (1974). Two years later, the 1976 Report con-

tains no discussion of any evidence or investigation

of trends favoring leased or other access channel

rules.

The Commission implicitly and explicitly recog-

nized that there was insufficient evidence of demand

for access programs, present or future, by users or

viewers. Recognition of that iack of evidence, and

the speculative roots of the present access rules,

* If jurisdiction existed, it would be necessary to consider a

further issue. When the Comrrission first adopted its access

rules, Cable Report, it compensated the affected cable systems,

for the burdens imposed, with additional distant signal car-

riage. With no explanation, the Commission imposed access

rules in the 1976 Report for the first time on other cable sys-

tems with no compensation for the burdens thereby imposed.

[Footnote continued on page 87]

EE a

87

appear implicitly in the Commission’s reliance on the

need to build facilities so they can create their own

use, and in its specific refusal to rely on the market-

place. Explicitly, the 1976 Report contains: “While

the overall impact that use of these [access] channels

can have may have been exaggerated in the past,

nevertheless we believe they can, if properly used,

result in the opening of new outlets for local expres-

sion * * *,” 59 F.C.C.2d at 296; “there may be need

[outside major television markets] for access serv-

ices * * *.” Jd. at 300. “In addition, the audiences

viewing access programming on such [small systems

inside major markets] may reasonably be expected

to be so small that a federally imposed requirement

would appear inappropriate.” Jd. at 303. “Based upon

the comments filed in this proceeding as well as those

filed in Docket 20363 and our experience generally,

while it would appear that the use of access chan-

nel is growing, in the vast majority of communities

presently providing multiple channels for access use,

these channels are at best sporadically programmed.”

Id. at 314 (emphasis added). On reconsideration,

speaking of possible denial of access services by cable

operators, the Commission said, “Our present experi-

** [Continued]

Concerning the compulsion of massive expenditures for

cable structures that may never be used, and the cost of which

is not recoverable, the 1976 Report appears to dismiss objec-

tion with a touch of the sang froid: “when it appears, based

on our experience in administering our rules, that they are

unnecessarily burdensome * * *, we change them.” 59 F.C.C.

2d at 326.

88

ence has been, however, that even larger systems

typically have difficulty finding access channel users

so this problem with smaller systems is not likely to

arise with any frequency.” 62 F.C.C.2d at 403 (em-

phasis added) .”

The Commission’s apparent inability, or unwilling-

ness, to assemble a rational factual basis for its be-

lief that its “access concept” will “work” is the more

surprising in view of its relatively long experience

with the subject.” Seven years before the 1976 Re-

port, the Commission referred to a possible future

requirement for leased access, and adopted the “basic

** The Commission devoted a paragraph, 1976 Report, § 9,

59 F.C.C.2d at 296, to recognition that “public benefits must

be carefully weighed against the costs * * *,” but the “weigh-

ing” related only to the more burdensome construction rules

of its Cable Report, not to its access concept. The Commis-

sion stated that its 1976 rulemaking related only to alterna-

tive methods “by which it might reaffirm its commitment to

access programs * * *,” id. at 295; that its 1972 commitment

“should not be abandoned,” id. at 296; and that it had a “basic

determination to retain channel capacity and access rules,”

id. at 297. In its Memorandum Opinion and Order, 62 F.C.C.2d

399, reconsidering its 1976 Report, the Commission stated,

“There should be no mistake regarding the Commission’s con-

tinuing commitment to the provision of access servic2s and

channels. However, as we stated in the Report and Order, this

is a very difficult area. Our general reevaluation of the 1972

rules was not intended to reverse our position * * *.” 7d.

at 401.

* So far as appears in the record, the Commission did not

consider the possibility of Commission-designed questionnaires

sent by cable operators to their subscribers and returned by

the subscribers to the Commission, to determine viewer

interest.

ee

89

goal” of maximum program choice through public ac-.

cess to cable facilities. CATV, First Report and Order,

29 [sic] F.C.C.2d 201, 205-06 (1969). Its coercive

reach for that goal occurred in 1972, four years before

the 1976 Report, when it issued the channel construc-

tion and access rules of the Cable Report. In the

Cable Report, the Commission stated that its judg-

ments on how access would evolve were “intuitive”

and that “necessary insights” would be needed. 36

F.C.C.2d at 194, 197, 352. In 1974, two years before

the 1976 Report, the Commission repeated its dedica-

tion to use of the public power in pursuit of its pre-

dilection for access. Clarification of the Cable Tele-

vision Rules, 46 F.C.C.2d 176, 179-80 (1974). In

1976, still devoid of evidence that any meaningful

present or future public demand for access could be

expected, the Commission introduced its present ac-

tion by saying, “We wish to emphasize at the outset

that we do not intend in this proceeding to abandon

our goals for access cablecasting; * * *.” Notice of

Proposed Rule Making, 53 F.C.C.2d 782, 784 (1976).

In its 1976 Report, as above indicated, the Com-

mission adhered to its faith in access as a naked

“concept,” refusing to seek evidence that the public

interest would not be harmed by mandating consumer

expenditure of millions for equipment never used.”

** The record of the 1976 Report is replete with comments

that, though there was “awareness” of access programs, few

people with something to say were interested in producing

them; that almost no one wants to watch in many segments of

our vast country; that when access had been tendered it had

90

The Commission’s refusal ‘to leave the provision of

channel capacity and access services entirely to the

marketplace * * *,” 59 F.C.C.2d at 321, appears con-

trary to the law limiting the Commission within its

statutory jurisdiction, where access to broadcast fa-

cilities is governed not by regulation but by market

forces. FCC v. Sanders Brothers Radio Station, 309

U.S. 407, 475 (1940).

It is not readily apparent that the present rules

were based on a clear administrative record that

shows existence of a problem justifying intrusion on

First Amendment rights, or that relates a “solution”

to the agency’s statutory mandate as required by

not been used and had been rejected by subscribers; that offers

of access had been declined by schools which owned television

equipment for its use; that a survey of 149 cable systems

showed their access channels, offered under the Cable Report

rules, went unused an average of 92% of the time; that another

survey of 10,000 subscribers showed 97% disinterested in

viewing access programs if they cost $1.75-$2.00 per month;

that access programs had been voluntarily provided when

subscriber interest warranted them. There was no evidence

that ordinary market demand could never result in access

programs, or that a solemn silence would descend in the

absence of mandatory access rules. There was no evidence that

programs of so little interest or value that no one and no

group is willing to purchase time to present them would garner

viewers.

Lack of evidentiary support in the record is asserted by

both petitioners. ACLU points out that the Commission has

not named the access-supporting groups it says it solicited for

comment, or disclosed the criteria used in selecting them, and

argues that the economic data reflected a much smaller burden

than that used to justify the modification made to the con-

struction requirements of the Cable Report.

Ae

+ Wow ae. ae

91

United States v. O’Brien, 391 U.S. 367 (1968). Fur-

ther, the mandatory access rules explicitly and can-

didly appear to curtail expression indirectly by favor-

ing access seekers over cable system owner®*tontfary

to the injunction of Madison Joint School District

No. 8 v. Wisconsin Employment Relations Commis-

sion, 429 U.S. 167 (1976).

There may rarely be time for complete answers

and insights, but the Commission appears to have

here failed to defensibly articulate a rationality for

its access rules. If jurisdiction were present, and it

were therefore necessary to give the present record

the “hard look” referred to by Judge Leventhal in

Greater Boston Television Corp. v. FCC, 444 F.2d

841, 851 (D.C. Cir. 1970), cert. denied, 403 U.S. 923

(1971), it is at best doubtful that a court could avoid

finding it reflective of agency action arbitrary and

capricious.

Conclusion

The 1976 Report mandatory channel capacity,

equipment, and access rules exceeded the jurisdiction

of the Commission. Accordingly, they are set aside.

Webster, Circuit Judge, concurring.

I concur in the Court’s decision to set aside the

Commission’s regulations because they are outside

the statutory jurisdiction conferred on the FCC in

the area of cable television. (See Part I of the opin-

ion.) While I am in general agreement with the ex-

tensive and well-reasoned analysis of the constitu-

92

tional.questions contained in Chief Judge Markey’s

opinion (see Parts II and III), I refrain from join-

ing it because disposition of the case on the jurisdic-

tional basis makes it unnecessary to reach those

questions.’

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS,

EIGHTH CIRCUIT.

‘Chief Judge Markey makes it abundantly clear that Parts

II and III are not necessary to the result. See Slip Op. at 57,

63, 65, and 68.

93

APPENDIX B

F.C.C. 76-313

[59 F.C.C.2d 294]

BEFORE THE

FEDERAL COMMUNICATIONS COMMISSION

WASHINGTON, D.C. 20554

Docket No. 20508

In the Matter of

AMENDMENT OF PART 76 OF THE COMMISSION’S

RULES AND REGULATIONS CONCERNING THE

CABLE TELEVISION CHANNEL CAPACITY AND

ACCESS CHANNEL REQUIREMENTS OF SECTION 76.251

REPORT AND ORDER

(Proceeding Terminated )

(Adopted: April 1, 1976; Released:

May 13, 1976)

BY THE COMMISSION: COMMISSIONER HooKS CON-

CURRING IN PART AND DISSENTING IN PART AND

ISSUING A STATEMENT; COMMISSIONERS WASHBURN

AND ROBINSON CONCURRING AND ISSUING STATE-

MENTS.

1. Effective March 31, 1972, the Commission

adopted the Cable Television Report and Order, FCC

72-108, 36 FCC 2d 143 (1972), which, inter alia,

included various channel capacity and access chan-

nel requirements for systems located in the major

94

television markets.’ In general, systems commencing

service after March 31 1972, (hereinafter referred

to as new systems) were expected to fully comply

with these requirements on commencing service, while

systems already in operation as of that date (old sys-

tems) were given five years, that is until March 31,

1977, to reconstruct their plant and distribution net-

works, purchase new equipment, provide minimum

studio facilities for the public access channel, and

come into full compliance with these requirements.

1 These requirements have been contained in Section 76.251

of the Rules, the pertinent provisions of which may be sum-

marized as follows:

Channel Capacity Requirements

1. 20-channel capacity available for immediate or poten-

tial use (76.251 (a) (1));

2. For each broadcast channel used, an equivalent

amount of bandwidth available for non-broadcast pur-

poses (76.251 (a) (2));

8. Technical capacity for non-voice return communica-

tion (76.251(a) (3));

Access Channel Requirements

4. A single channel each for public, educational, local

government and leased channel use (76.251 (a) (4)-(a)

(7));

5. Equipment and facilities necessary for the production

of programming on the public access channel (76.251

(a) (4));

6. The provision of additional access channels based

upon the utilization of those in existence (76.251 (a) (8) );

7. The provision of public, educational and governmental!

access services under certain circumstances at no charge

(76.251 (a) (10) (i)-(ii) ).

a

a oe

[295] 2. In Public Notices respectively dated May

15 and 17, 1974, the Commission announced the crea-

tion of Re-Regulation and 1977 Task Forces. In an ef-

fort to continually review its regulatory program the

Commission charged these Task Forces with conduct-

ing an examination of all of its rules and regulations

respecting cable television. The common goal of the two

Task Forces was to study the problems posed by the

cable television rules and regulations for the Com-

mission, local franchising authorities and the cable

television industry, and to make appropriate rec-

ommendations with respect to how these rules might

be refined to more fully serve the public interest. The

1977 Task Force was specifically established to study

the problems posed by the March 31, 1977 deadline

for achieving compliance with the cable television

rules.

3. Responding to the recommendations of the 1977

Task Force the Commission adopted the Notice of

Proposed Rulemaking in Docket 20363, FCC 75-211,

51 FCC 2d 519 (1975), which requested comment

upon the necessity of postponing or cancelling the

March 31, 1977 reconstruction deadline in view of

economic considerations. In that Notice the Commis-

sion confined its inquiry to the amount of capital re-

quired to comply with its reconstruction require-

ments, the availability of such capital in the market-

place and the overall ability of the industry to achieve

compliance by March, 1977. The Commission indi-

cated that an additional Notice would be issued in-

96

quiring into alternative methods by which it might

reaffirm its commitment to access cablecasting for

old systems while recognizing the economic realities

posed by system reconstruction. It also stated that

in the additional rulemaking Notice it would address

certain other matters respecting its channel capacity

and access channel requirements for both new and old

systems.

4. On June 3, 1975, the Commission adopted the

Notice of Proposed Rulemaking in Docket 20508,

FCC 75-644, 53 FCC 2d 782 (1975), which consti-

tued that additional Notice. On July 9, 1975, the

Commission adopted its Report and Order in Docket

20363, FCC 75-821, 54 FCC 2d 207 (1975), which

cancelled the March 31, 1977 reconstruction date and

suspended any requirement that older systems recon-

struct to comply with the channel capacity and access

channel requirements pending the outcome of its June

3, 1975 Notice.

5. In its June 3, 1975 Notice, the Commission re-

quested comment on a variety of matters which re-

lated to its channel capacity and access channel re-

quirements. In addition to soliciting views on various

alternatives to the March 31, 1977 uniform recon-

struction deadline, the Commission determined to re-

examine the criterion (location within the 35-mile

zone of a major television market) presently utilized

to trigger its channel capacity and access require-

ments for both new and old systems. Also included

in that Notice was a reexamination of the “two-way,”

i a ai a ae TN ree ee ee a el

97

“one-for-one” and “converter” requirements for both

new and old systems.*

[296] 6. Inan effort to obtain the views of as many

interested parties as possible, the Commission gave

broad notice of the matters contained in Docket

20508 ad individually solicited the opinions of over

100 public interest, access, educational and citizens

groups. The Commission has received a significant

number of responses from various parties, including

cable television interests; broadcast interests; public

interest and access organizations; individual mem-

bers of the public; state and municipal cable regu-

lators; educational authorities; and electronic equip-

ment suppliers, submitting diverse observations, opin-

ions and proposals. Comments of all parties were

carefully studied and considered. While some parties’

comments touched upon matters of more direct rele-

vance to the Commission’s Notice in Dock

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