Petitioners Brief — FCC v. Midwest Video Corp.

Supreme Court brief1979

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Text

Nos. 77-1575, 77-1648 and 77-166

MICHAEL REDAK IRC

Iu the Supreme Court of the Yuited rates —

OCTOBER TERM, 1978

FEDERAL COMMUNICATIONS COMMISSION, ET AL.,

PETITIONERS

Vv.

MIDWEST VIDEO CORPORATION, ET AL.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE EIGHTH CIRCUIT

BRIEF FOR THE UNITED STATES

AND THE FEDERAL COMMUNICATIONS COMMISSION

WADE H. McCREE, JR.

Solicitor General

LAWRENCE G. WALLACE

Deputy Solicitor General

RICHARD A. ALLEN

Davip J. SAYLOR Assistant to the Solicitor General

Deputy General Counsel Department of Justice

DANIEL M. ARMSTRONG Washington, D.C. 20530

Associate General Counsel

KEITH H. FAGAN

Counsel

JULIAN R. Rush, JR.

Counsel

Federal Communications Commission

Washington, D.C. 20554

Bupreme Court, U,

FILED

NOV 99 J978

EET EL Re

RS eA Lec ee

1, Channel Capacity Rules

ie GN el

3. Equipment Availability Rule _.....

C. The Court of Appeals’ Decision

Summary of Argument _....

Argument:

I. The Commission has statutory authority

to adopt access, equipment availability

and channel capacity rules for cable

television systems which carry broad-

CEI I telisitintthnineniiisiiiee fad

A. Section 2(a) of the Communications

Act establishes the Commission’s

jurisdiction over cable television

B. The rules under review are reason-

ably ancillary to the Commission’s

responsibilities for the regulation of

broadcast television

Index—Continued Page

II. The access, channel capacity and equip-

III.

ment availability rules do not violate

the rights of cable operators under the

OP en 34

A. The channel capacity rules do not

violate the First Amendment even

under the court of appeals’ analysis.. 35

B. The access rules do not contravene

the First Amendment ...................... 36 Ci

1. The access rules impose a lim-

ited and content-neutral form

of carriage obligation in fur-

therance of First Amendment

EE ee ee oI ee 37

2. The access rules are consistent

with the First Amendment in

view of the particular charac-

teristics of cable television ........ 43

The rules under review do not consti-

tute a taking of property without com-

pensation in violation of the Fifth

| TTS a Re cena eae TOT 49

a ea ec NS Re 52

CITATIONS

Cases:

American Civil Liberties Union v. FCC,

ee SD verneiicieninsinitaunticiiniaaipbiniiatitimas 7, 27-28

Associated Press v. United States, 326

SIs. I ecsinesdeniicanasiiientaienpninsaibidnenniiesiditiiadiasaibnlidia 18, 41

Cases—Continued Page

Bates v. State Bar of Arizona, 433 U.S.

I Aeshacesluieildiaiatiahietaiteensiniitentaltieograbetetaaeeitnasinti 46

Black Hills Video Corp. v. FCC, 399 F.2d

ST icetedtannitl shaiihatcacasbeinniseiiiesaiuicbssciaiendautiian 48, 49

Champlin Refining Co. v. Corporation

Commission, 286 U.S. 210 ........... 39

Citizens To Preserve Overton Park, Inc.

v. Volpe, 401 U.S. 402 ......................... 31

Columbia Broadcasting System, Inc. v.

Democratic National Committee, 412

ER ere aE a 10, 29, 42, 43

Conley Electronics Corp. v. FCC, 394

F.2d 620, cert. denied, 393 U.S. 858...... 49

FCC v. National Citizens Committee for

Broadcasting, No. 76-1471 (June 12,

ST Saas 30, 31, 32, 40, 41, 46

FCC v. Pacifica Foundation, No. 77-528

gh PRR ee ee 44, 45, 47

FCC v. Pottsville Broadcasting Co., 309

RE ener 33

Ferguson v. Skrupa, 372 U.S. 726 ............ 50

First National Bank of Boston v. Bellotti,

ee 46

Goldblatt v. Hempstead, 369 U.S. 590 ...... 50

Great Falls Community TV Cable Co. v.

a EE ERS a ec 49

Lorain Journal v. United States, 342 U.S.

ERE CSE Rn Le WR 44

Miami Herald Publishing Co. v. Tornillo,

Se 15, 17, 18, 34, 40, 42,

43, 44, 46, 48

New York Times Co. v. Sullivan, 376 U.S.

PTE seinesieliiraiileidaibdNitanatiiinian jit tenants inansinara 41

Cases—Continued Page

Penn Central Transportation Co. v. New

York City, No. 77-444 (June 26, 1978)... 19, 50,

Pennsylvania Coal Co. v. Mahon, 260 U.S.

ee 50

Pittsburgh Press Co. v. Pittsburgh Com-

mission on Human Relations, 413 U.S.

|, En NN 44

Red Lion Broadcasting Co. v. FCC, 395

USE, Ge cuca 10, 18, 29, 41, 48, 46, 47. 48

Titusville Cable TV, Inc. v. United States,

Pf fi | seer 49

United States v. Causby, 328 U.S. 256 -..... 51

United States v. Midwest Video Corp.,

BOG UB. OOD cccccnictsnniiaeee passim

United States v. Southwestern Cable Co.,

RS |) | en passim

Virginia Pharmacy Board yv. Virginia

Consumer Council, 425 U.S. 748 -........ 46

Administrative decisions:

Cable Television Report and Order

(Docket 18397 et al.), 36 F.C.C. 2d

1438 (1972 Order) .......2.c..-ec---s 4, 7, 9, 10, 26, 28

First Report and Order in Docket 14895

et al., 38 F.C.C. 683 (1965 Order) ...... 45

First Report and Order in Docket 18397,

20 F.C.C. 2d 201 (1969 Order) -........... 6

Notice of Proposed Rulemaking and Notice

of Inquiry in Docket 18397, 15 F.C.C.

| : Sen EON aT Manse Se 5-6

Report and Order in Docket 19988, 49

F.C.C. 2d 1090 (1974 Order) ................ 7-8, 27

Cases—Continued Page

Report and Order in Docket 20363, 54

F.C.C. 2d 207 (1975 Order) .................. 8

Report and Order in Docket 20508, 59

F.C.C, 2d 294 (1976 Order) ............ 3, 8, 11, 12,

17, 26, 37, 38, 39

Second Report and Order in Docket 14895

et al., 2 F.C.C. 2d 725 (1966 Order)...... 5

Constitution, statutes and regulations:

United States Constitution:

ae passim

Fifth Amendment .................... 2, 4, 14, 19, 49

Communications Act of 1934, 47 U.S.C.

(and Supp. V) 151 et seq.:

Section 1, 47 U.S.C. 151 200... 1-2, 26, 33

Section 2(a), 47 U.S.C. 152(a)_....... passim

Section 3(h), 47 U.S.C. 153(h) ....... 1-2, 14

Section 303(c), 47 U.S.C. 303(¢) _.... 29, 36

Section 303 (e), 47 U.S.C. 303(e) —.... 29, 36

Section 303(g), 47 U.S.C. 303(g)...... 1-2, 26

Section 303(r), 47 U.S.C. 303 (r)...... 1-2

Section 307(b), 47 U.S.C. 307(b)...... 1-2, 26

Section 312(a) (7), 47 U.S.C. (Supp.

I iatniceiaditnctensmngnece 29

Section 315, 47 U.S.C. 315 0000... 33

Section 315(c), 47 U.S.C. (Sapp. V)

I ee 33

Federal Election Campaign Act of 1971,

Pub. L. No. 92-225, 86 Stat. 3, 7 ........... 33

Pub. L. No. 95-234, 92 Stat. 33, amend-

| ee 34

Constitution, statutes and

regulations—Continued Page

A ss niinnscctrennsimenmsinaieneiananiane 34

ED ccitecttsecminnctegmmmnniniinns 45

een 3

I itiineccnnitieneinniniincsiinmamniiagans 12

er Nitcitanriceniaescctneaiinniinnanaiin 3, 10

Fe sierrittnrienssntittenstcinsieniggutinniininas 3, 11

CK es 12, 38, 39

I iit inrniincinrernmusiiniananiiai 3

Be ey ID ceitrenscenrescesntiegandnenametiaitin 13

Gy cls FIN CD ccceccccccccsencnscnccnsoneses 13

££ 5 —-_- Ree 3

Be IED ‘sicititiierecicccnnnniieiencmnntanies 3

Miscellaneous:

Barnett, State, Federal, and Local Regu-

lation of Cable Television, 47 Notre

Dame L. Rev. 685 (1972) ........0000000000.... 45

F.C.C. News Release, “Television Broad-

cast Programming Data, 1976,’ Mimeo

#86035, June 30, 1976 -...............00.. 32

Television Digest, Vol. 18, No. 13, March

Eee 9S: Lee eI 4

TV Factbook, No. 47, Services Vol. (1978

| ESD cs OR em 3, 4

In the Supreme Court of the United States

OCTOBER TERM, 1978

Nos. 77-1575, 77-1648 and 77-1662

FEDERAL COMMUNICATIONS COMMISSION, ET AL.,

PETITIONERS

MIDWEST VIDEO CORPORATION, ET AL.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE EIGHTH CIRCUIT

BRIEF FOR THE UNITED STATES

AND THE FEDERAL COMMUNICATIONS COMMISSION

OPINIONS BELOW

The opinion of the court of appeals (App. 1-92)* is

reported at 571 F.2d 1025. The orders of the Federal

Communications Commission (App. 93-181, 182-206)

are reported at 59 F.C.C. 2d 294 and 62 F.C.C. 2d 399.

1“App.” citations refer to the appendix to the Federal Com-

munications Commission’s petition for a writ of certiorari

(No. 77-1575). After the petitions were granted, the parties

agreed not to file a joint appendix.

(1)

JURISDICTION

The court of appeals entered judgment on Febru-

ary 21, 1978. A stay of mandate was granted by

order dated April 4, 1978 (App. 207-208). The Com-

mission filed its petition for certiorari on May 4, 1978,

within the allotted time, and invoked this Court’s

jurisdiction pursuant to 28 U.S.C. 1254(1). On May

19 and May 22, 1978, respectively, the American

Civil Liberties Union and the National Black Media

Coalition, et al., also filed petitions for certiorari, and

on July 25, 1978, the United States filed a brief in

support of the Commission’s petition. This Court

granted all the petitions on October 2, 1978, and con-

solidated the three cases.

QUESTIONS PRESENTED

1. Whether the Federal Communications Commis-

sion has statutory authority to require certain cable

television systems: (1) to have the capacity by 1986

to provide at least 20 channels of service; (2) to pro-

vide access to third parties if demand exists and

there is sufficient activated channel capacity and (3)

to make available certain equipment and facilities to

those third parties for access purposes. _

2. Whether the foregoing rules are consistent with

the First and Fifth Amendments.

STATUTES AND REGULATIONS INVOLVED

Sections 1, 2(a), 3(h), 303(g), 303(r) and 307

(b) of the Communications Act of 1934, 47 U.S.C.

151, 152(a), 153(h), 303(g), 303(r) “and 307(b)

are set forth at App. 209-211. Sections 76.13, 76.252,

76.254, 76.256, 76.258, and 76.305 of the Rules and

Regulations of the Federal Communications Commis-

sion, 47 C.F.R. 76.13, 76.252, 76.254, 76.256, 76.258,

and 76.305, are set forth at App. 168-176, 202-203.

STATEMENT

In May 1976 the Federal Communications Cvu.amis-

sion issued a Report and Order in Docket 20508 (App.

93-181) (the “1976 Order”) promulgating access,

equipment availability, and channel capacity rules for

cable television systems. The rules, which amended

similar rules promulgated in 1972, require cable sys-

tems which have 3,500 or more subscribers (about

23% of all systems) ,° and which carry broadcast sig-

nals: (1) to have the capacity by 1986 to provide at

least 20 channels for cable services; (2) to make

available certain channels for third party access

(to the extent that demand exists and that those

channels are not needed by the operator for his own

established broadcast retransmission or pay cable

services; and (3) to make certain equipment and

facilities available for access purposes.

On review, the United States Court of Appeals for

the Eighth Circuit set aside the 1976 Order on the

ground that the rules were beyond the Commission’s

jurisdiction (App. 1-92). The court also expressed the

* Of the 3911 systems in operation on September 1, 1977,

913 had more than 3,500 subscribers. TV Factbook, No. 47,

Services Vol. at 73a (1978 ed.).

view that the rules violated the First and Fifth

Amendments and were inadequately supported by the

record.

On October 2, 1978, this Court granted petitions

for a writ of certiorari filed by the Commission and

two other parties, and supported by the United States.

A. Background of the 1976 Order.

In the 1960’s, the Commission became concerned

that the unregulated growth of cable television couid

have substantial adverse impacts on broadcast tele-

vision, to the detriment of the public interest.* First

° “Cable television” is sometimes also referred to as “com-

munity antenna television” (“CATV”). CATV refers to sys-

tems that receive, amplify and retransmit television broadcast

signals to the system’s subscribers by wire or microwave.

“Cable television” is a broader term that includes the broad-

cast retransmission function of CATV systems as well as the

transmission of non-broadcast signals, and was adopted by

the Commission in place of Cable Television Report and Order

(Docket 18397 et al.). 96 F.C.C. 2d 143, 144 n.9 (1972).

Since the Commission’s regulation of cable television began

in 1965, the industry has grown tremendously. Currently,

there are more than 4,000 cable systems serving 12.9 million

subscribers, or the equivalent of 17.6% of the nation’s televi-

sion homes. Television Digest, Vol. 18, No. 18, March 27, 1978

(totals as of January 1, 1978). Technological advances have

continued to increase the “multichannel capacity” which en-

ables cable systems to add to the number of outlets of com-

munication and to increase the diversity of program and

service choices. By September 1, 1977, 465 systems possessed

18 to 20 channel capacity; 501 systems had more than 20

channel capacity. TV Factbook, No. 47, Services Vol. at 73a-

76a (1978 ed.). Today, systems of up to 80 channels are at

least technically feasible, and the advent of laser technology

may soon make channel capacity virtually limitless.

Report and Order in Docket 14895 et al., 38 F.C.

683, 713-714 (1965) (the “1965 Order”); Second

Report and Order in Docket 14895 et al., 2 F.C.C. 2d

725, 728 (1966) (the “1966 Order’). It therefore

asserted jurisdiction over cable television and adopted

rules restricting the signals that could be carried on

cable systems.‘ When these “signal carriage” rules

were challenged, this Court held that the Commis-

sion’s statutory jurisdiction to regulate cable is based

on Section 2(a) of the Communications Act of 1934,

47 U.S.C. 1£2(a), and extends at least to regulation

that is “reasonably ancillary” to its regulation of the

broadcast industry. United States v. Southwestern

Cable Co., 8392 U.S. 157, 178 (1968).° r

Shortly after Southwestern Cable, the Commission

concluded that it was in the public interest and with-

in its statutory authority not only to regulate cable

television so as to prevent adverse effects on broad-

casting, but also “to requir[e] CATV affirmatively to

further statutory policies.” Notice of Proposed Rule-

* The Commission at first sought to regulate cable indirectly

by placing restrictions on the activities of common carrier

microwave facilities that served CATV systems. Later it be-

gan to regulate some systems directly, but only those that

were served by microwave. By 1966, however, the Commis-

sion had concluded that it had statutory authority to regulate

ode ay systems directly. 1966 Order, supra, 2 F.C.C. 2d at

* The Court in Southwestern Cable did not rule upon the

validity of the signal carriage rules, but, as noted in United

States v. Midwest Video Corp., 406 U.S. 649, 659 n.17 (1972),

those rules were subsequently and correctly upheld by the

courts of appeals. ;

making and Notice of Inquiry in Docket 18397, 15

F.C.C. 2d 417, 422 (1968) ; see also First Report and

Order in Docket 18397, 20 F.C.C. 2d 201 (1969) (the

“1969 Order’). In particular, the Commission “rec-

ognize[d] the great potential of the cable technology

te further the achievement of long-established regula-

tory goals in the field of television broadcasting by

increasing the number of outlets for community self-

expression and augmenting the public’s choice of pro-

grams and types of services.” 1969 Order, supra, 20

F.C.C. 2d at 202. The Commission therefore adopted

a rule requiring all cable systems which had 3,500 or

more subscribers, and which carried broadcast signals,

to operate to a significant extent as outlets for local

programs by requiring them to originate (or “cable-

cast”)* some programs and to have available facili-

ties for local production and presentation of pro-

grams.

This Court upheld the “mandatory origination”

rule in United States v. Midwest Video Corp., 406

U.S. 649 (1972) (“Midwest Video I’). The Court

expressly affirmed the Commission’s determination

that the concept of “reasonably ancillary” jurisdic-

tion is not limited to the establishment of rules de-

signed to protect broadcasting stations, but “ ‘extends

also to requiring CATV affirmatively to further stat-

utory policies’ ” (406 U.S. at 664) (plurality opinion),

¢“Cablecasting” was defined as “programming distributed

on a CATV system which has been originated by the CATV

operator or by another entity * * *” as distinguished from the

broadcast signals retransmitted over the system. 1969 Order,

supra, 20 F.C.C. 2d at 223.

and, in particular, extends to rules designed, as the

Commission had stated, to “ ‘further the achievement

of long-established regulatory goals in the field of

television broadcasting by increasing the number of

outlets for community self-expression and augmenting

the public’s choice of programs and types of services

** *” (id. at 667-668).

By the time of this Court’s decision in Midwest

Video I, the Commission, in a further effort to pro-

mote the statutory objectives of increasing outlets

and augmenting choices, had adopted access and chan-

nel capacity rules. Thus, in 1972, the Commission

promulgated rules requiring all cable operators in the

top 100 television markets to build their systems with

at least 20-channel capacity and to designate four of

these channels for public, governmental, educational

and leased access respectively. All cable systems com-

mencing operations in the major markets after March

31, 1972, were to comply immediately, while those

which had begun operating prior to that date were

generally permitted until March 31, 1977, to comply.

Cable Television Report and Order (Docket 18397

et al.), 36 F.C.C. 2d 148, 189-198 (1972) (the “1972

Order”) (reproduced at App. 212-217). That rule, the

predecessor of the rules now under review, was up-

held in American Civil Liberties Union v. FCC, 523

F.2d 1344 (9th Cir. 1975).

In 1974, the Commission repealed its origination

rule, concluding that, for the cable medium, access is

a more appropriate, less burdensome and equally ef-

fective means of promoting statutory objectives. Re-

port and Order in Docket 19988, 49 F.C.C. 2d 1090,

1099-1100, 1104-1106 (1974) (the “1974 Order’).

However, the Commission retained its equipment

availability rule so that facilities would be available

to third parties for the production of access program-

ming. See 1974 Order, supra, 49 F.C.C. 2d at 1106-

1108.

B. The 1976 Order

As the Commission gained further experience with

its access and channel capacity rules, it concluded

that economic considerations—particularly those pre-

sented by the 1977 compliance deadline—warranted

reconsideration of the rules. It therefore instituted

two further rulemaking proceedings. The first, Doc-

ket 20363, resulted in an order cancelling the March

1977 deadline. Report and Order in Docket 20368,

54 F.C.C.2d 207 (1975) (the “1975 Order’). The

second, Docket 20508, led to an order in which the

Commission reaffirmed its access and channel ca-

pacity policies, but applied the rules to all systems

with 3,500 or more subscribers, whether or not they

were located within the major markets, and also re-

laxed its rules substantially. 1976 Order, 59 F.C.C.2d

294 (App. 93-181). It is the 1976 Order which is

the subject of this litigation.’

Numerous comments were filed in the proceeding,

and in its order the Commission responded at the

* The Commission’s 1975 Order has also been challenged in

National Black Media Coalition v. FCC, No. 75-1792 (D.C.

Cir.), a case held in abeyance pending the outcome of this

proceeding.

ET Oe ee

’

outset to contentions that the basic concept of the ac-

cess rules was outside its jurisdiction and was in any

event unconstitutional. It concluded that the rules

are within its statutory jurisdiction because they are

designed to serve the very same objectives as the

origination rules held to be within the Commission’s

jurisdiction in Midwest Video I—i.e., “ ‘increasing

the number of outlets for ccmmunity self-expression

and augmenting the public’s choice of programs and

types of services.’ ”” Midwest Video I, supra, 406 U.S.

at 668. App. 103.

The Commission also rejected arguments that ac-

cess requirements constitute impermissible -ommon

carrier regulation, stating that cable systems are

“neither broadcasters nor common carriers within the

meaning of the Communications Act.” Rather, cable

is a “hybrid” requiring “identification and regula-

tion as a separate force in communications.” App.

104, quoting the 1972 Order, supra, 36 F.C.C.2d at

211. Therefore, the Commission said, “[s]o 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 ‘common carrier’ in nature. The

proper question, we believe, is not whether [the

rules] fall in one category or another of regulation

* * * but whether [they] promote statutory objec-

tives. We think they do.” App. 104.

The Commission also concluded that its rules are

consistent with the First Amendment. It stated that

in cablecasting as in broadcasting, “First Amend-

ment values are furthered by ‘an uninhibited market-

place of ideas’ in lieu of ‘monopolization of that

market’ by the government or a private broadcaster

or cable owner.” App. 105, quoting Red Lion Broad-

casting Co. v. FC€ 395 U.S. 367, 390 (1969).*

The rules promulgated by the 1976 Order operate

generally as follows:

1. Channel Capacity Rules. The channel capacity

rules require cable systems with 3,500 or more sub-

scribers ® to have the technical capacity to provide a

minimum of 20 channels “available for immediate or

potential use for the totality of cable services to be

offered.” 47 C.F.R. 76.252; App. 168. The rules

permit most existing systems until 1986 to comply

with this requirement in order to permit most ad-

ditional capacity to be installed in the course of

normal construction and repiacement. App. 146-161,

168-169. The rules do not require cable operators to

install converters enabling the reception of 20 chan-

nels by subscribers. Without such equipment, most

subscribers now can receive only 12 channels on their

®* The Commission also observed that although the cable

access rules were not before it, this Court in Columbia Broad-

casting System, Inc. v. Democratic National Committee, 412

U.S. 94 (1973), discussed the possibility of a “limited right

of access that is both practicable and desirable” and referred

specifically to the cable access rules. App. 105 n.4; see 412

U.S. at 131.

® The 3,500-subscriber standard amended the “ p 100 mar-

ket” standard employed in the 1972 Order. “yp 105-106,

111-120.

television sets. App. 132-138." The rules also require

cable systems to develop a capacity for two-way non-

voice communications. App. 124-130.

2. Access Rules. The access rules provide that,

as June 21, 1976, a cable system must allow

four groups (the public, educational authorities, local

governments and paying lessors) to use available

channels of the system that the cable operator is not

using for broadcast retransmission or pay program-

ming services (47 C.F.R. 76.254; App. 139-143, 169-

171). The rules do not require the system to dis-

place those services in favor of providing access.”

1° A converter is a relatively expensive (i.e., $25-40 per

unit) piece of equipment which, when installed on a cable

subscriber’s television set, allows him to receive more than

12 channels of cable programming—something which is other-

wise impossible in most cases. See App. 132 n.11. Although

the cable operator is not required to install converters, if

a third party wishes to bear the expense of installing them

in order to make a channel or channels available for access,

then the cable operator must permit the installation. App.

136-139.

™ Thus the rules provide that the system shall provide

access “to the extent of its available activated channel capabil-

ity”. 47 C.F.R. 76.254; App. 169. In the 1976 Order the

Commission explained that “available activated channel

capability” is determined by starting with “the number

of usable channels actually provided to each subscriber’s

home,” and subtracting “channels already programmed by

the system operator for which a separate charge is made”

and “channels used to provide traditional cable television

service, i.e., channels providing television broadcast signals

***” App. 141-142. The Commission further stated (App.

The rules also provide that the system operator may

combine all access services on one composite channel

if the demand for such services can be satisfied in

this manner. App. 140-141, 170. Systems in opera-

tion on June 21, 1976, that did not at that time have

even one full channel available for access are per-

mitted to provide access on “whatever portions of

channels are available for such purposes.”” 47 C.F.R.

76.254(c); App. 171. Existing systems that did have

an unoccupied channel on June 21, 1976, and systems

commencing operation after that date are required

to “maintain at least one full channel for shared

access programing” (ibid.).”

143 n.19): “It is not our intention that established cablecast

services provided by system operators be automatically dis-

placed.”

12 Those portions would include “blackout time”, which oc-

curs as a result of the Commission’s network non-duplication

rule, whereby a broadcast station is entitled to demand that

its network programming not be carried on a cable channel

in the same service area. See 47 C.F.R. 76.92. See also App.

140 & nn. 17, 18.

13 A number of questions concerning the administration of

the access rules and the resolution of potential conflicts

among competing channel uses are not clearly resolved by

the 1976 Order. The 1976 Order acknowledged that fact

(App. 148):

[T]he administration of the composite access channel

approach will undoubtly present many difficulties. We

shall, after some experience with these new rules has

been gathered, issue a primer on various matters respect-

ing our access channel obligations by which we hope to

further clarify our position on these matters. We shall

also administer our approach in a flexible manner and

3. Equipment Availability Rule. The equipment

availability rule provides that each system of 3,500

or more subscribers “shall have available equipment

for local production and presentation of cablecast

programs other than automated services and [shall]

permit its use for the production and presentation

of public access programs.” 47 C.F.R. 76.256(a);

App. 172. The rule also provides that, for programs

exceeding five minutes in length, the system operator

can impose reasonable charges for “equipment, per-

sonnel, and production of public access program-

ming.” 47 C.F.R. 76.256(c) (3); App. 173.

C. The Court of Appeals Decision

On review, the court of appeals set aside the chan-

nel capacity, access and equipment availability rules

as being beyond the Commission’s statutory juris-

diction (App. 1-92). The court asserted a number

shall not hesitate to revisit this entire area should our

experienc dictate that our public interest goals are not

being me.v.

And in its order on reconsideration (App. 182-206) the Com-

mission again emphasized the point (id. at 198) :

We have not included, beyond the specifications contained

in Section 76.256 of the Rules, every detail of what these

rules should contain, leaving cable operators some leeway

to experiment with the details of the rules and to accom-

modate them, in a reasonable fashion, to loca! conditions.

Questions as to the reasonableness of particular sets of

rules should be referred to the Commission for resolution.

Every effort will be made to resolve these questions on

an informal basis, but more formal proceedings will be

commenced if necessary.

of reasons in support of that conclusion. First, it

stated that the Communications Act provides no

“express basis for jurisdiction” over cable televi-

sion (App. 24). It reasoned that the rules were

not “reasonably ancillary” to the Commission’s

broadcast jurisdiction under the principles of South-

western Cable and Midwest Video I, because the

purpose of the access rule was neither to protect

broadeasters nor “to require that cable systems do

what broadcasters do * * *” (App. 28). In addition,

the court concluded that the objectives of the rules, to

increase outlets and programming choices, were

essentially irrelevant to the jurisdictional issue (App.

32-50), and that the Commission’s “ends” do not

justify its “means.” App. 50-53. Finally, it con-

cluded that the access rules contravened express

jurisdictional limitations, because, in the court’s view,

the Commission could not impose access rules on

broadcasters (App. 54-59) and because broadcasters

cannot be regulated as common carriers under Sec-

tion 3(h) of the Act, 47 U.S.C. 153(h) (App. 59,

64).

Having held the rules to have been beyond the Com-

mission’s jurisdiction, the court of appeals expressed

at some length its view that the rules in any event

would violate the First and Fifth Amendments ( App.

% The court also stated that the Commission could not base

its rules upon “futuristic visions” (App. 44), but must ac-

tually find evidence of “substantial national demand” for

access services (App. 48). But even this would not confer

jurisdiction (id. at n.54). Finally, the court expressed doubt

that the rules were in the public interest (App. 49-50).

ere — ene — -

64-82), although the court expressly declined to rest

its decision on constitutional grounds (id. at 64).

The court concluded that the rules would deprive

cable operators of control of communications trans-

mitted on their facilities in violation of the First

Amendment principles set forth in Miami Herald

Publishing Co. v. Tornillo, 418 U.S. 241 (1974)

(App. 71-74)." The court also “suggested” (id. at

77, 78-79) that the rules would constitute a taking

of property for public use without compensation in

violation of the Fifth Amendment.”

SUMMARY OF ARGUMENT

The Commission has statutory authority to pro-

mulgate the channel capacity, access and equipment

availability rules under Section 2(a) of the Com-

munications Act and principles established in Sowth-

western Cable and Midwest Video I. Southwestern

Cable held that the Commission’s jurisdiction to regu-

* The court also concluded that the rules would impose

upon cable operators impermissible censorship obligations

with respect to indecent or obscene materials (id. at 75-77).

The Commission did not seek review of that conclusion since

the Commission has instituted a review of those provisions

dealing with obscene and indecent materials (77-1575 Pet. 15-

16 n.15).

% The court, also without deciding, raised a number of

questions about the adequacy of the Commission’s rationale

and the record support for its rules, and stated (App. 91)

that “it is at best doubtful that a court could avoid find-

ing [the record] reflective of agency action arbitrary and

capricious.”

late cable television is based on Section 2(a) and

includes at least the authority to prescribe rules that

are “reasonably ancillary” to the Commission’s regu-

lation of television broadcasting. Midwest Video I

upheld the Commission’s rules requiring cable sys-

tems to originate programs, and explained that the

reasonably ancillary standard is not limited to the

promulgation of rules designed to protect or directly

affect television broadcasting; it also extends to rules,

like the origination rule, designed to require cable

systems themselves affirmatively to promote such

statutory policies as increased outlets for community

expression and programming choices for the public.

The rules under review are reasonably ancillary

to the Commission’s regulation of broadcasting in the

very same sense as the origination rule upheld in

Midwest Video I. Like the origination rule, they are

designed to promote the statutory objectives of in-

creased community outlets and programming choices;

indeed they were adopted in large part as a less

burdensome substitute for the now-repealed origi-

nation rule. They would also appear to fall more

clearly within the jurisdiction recognized by all of

the members of the Court in Midwest Video I, be-

cause the principal objection of the dissenters in that

case to the origination rule was that it required cable

systems, which are for the most part simply carriers

of the signals of others, affirmatively to engage in an

enterprise they had not chosen to undertake. The

rules under review here, in contrast, impose a limited

form of carriage obligation that is similar to cable

television’s principal function.

The rules under review do not contravene the First

Amendment rights of cable operators.

1. Although the court below did not separately

analyze the different types of rules promulgated by

the 1976 Order, the channel capacity rules, requiring

certain cable systems by 1986 to have the potential

of transmitting 20 channels, do not deprive the cable

operators of control over what is transmitted on his

facilities. Those rules present no substantial con-

stitutional question even under the court of appeals’

analysis.

2. With respect to the access rules, the court of

appeals erred in concluding that they violate the

First Amendment by simple analogy to the question

whether similar rules would be invalid as applied to

newspapers, and by relying on Miami Herald Pub-

lishing Co. v. Tornillo, supra. A more particularized

consideration of the characteristics of the rules and

of the cable television industry supports their con-

stitutionality.

First, the access rules impose a very limited obli-

gation on cable operators that does not substantially

impair their ability to use their facilities for their

principal and traditional functions of broadcast re-

transmission and pay programming. Rather they im-

pose a limited carriage-type obligation to provide ac-

cess on channels that the operator is not using for

those services. Unlike the right of reply statute held

invalid in Miami Herald, the obligation is content-

neutral; it is not triggered by anything communicated

over the system’s facilities and therefore does not

have the capacity to chill the operator’s exercise of its

own First Amendment rights.

Second, the access rules are designed to enhance

what this Court has frequently held to be significant

First Amendment interests, namely the “widest possi-

ble dissemination of information from diverse and

antagonistic sources” (Associated Press v. United

States, 326 U.S. 1, 20 (1945)) and “an uninhibited

marketplace of ideas” (Red Lion Broadcasting Co.

v. FCC, 395 U.S. 367, 390 (1969) ).

Third, although it may be that such a limited com-

mon carriage obligation could not constitutionally be

imposed on newspapers or other print media, there

are significant differences between cable television

and the print media and also significant similarities

between cable television and communications com-

mon carriers and broadcasters upon whom similar

obligations may be imposed. The particular char-

acteristics of cable television make analogies to the

print media inappropriate and support the consti-

tutionality of the access rules.

Finally, the validity of the access rules is strongly

supported by Midwest Video I, which noted with ap-

proval that the courts of appeals had upheld the

Commission’s earlier signal carriage rules, which,

inter alia, also imposed a limited carriage obligation

on cable systems; i.e., the obligation to carry the sig-

nals of local broadcast licensees. For First Amend-

ment purposes, the access rules here are not materially

different from those signal carriage rules.

III

The court of appeals erred in suggesting that the

rules under review constituted a taking of property

in violation of the Fifth Amendment. Under princi-

ples recently reaffirmed in Penn Central Transporta-

tion Co. v. New York City, No. 77-444 (June 26,

1978), the relatively limited obligations imposed by

these rules fall far short of a taking.

ARGUMENT

THE COMMISSION HAS STATUTORY AUTHORITY

TO ADOPT ACCESS, EQUIPMENT AVAILABILITY

AND CHANNEL CAPACITY RULES FOR CABLE

TELEVISION SYSTEMS WHICH CARRY BROAD- —

CAST SIGNALS

The holding of the court of appeals that the Com-

mission lacks statutory jurisdiction to promulgate

the rules under review is contrary to this Court’s

decisions in South western Cable and Midwest Video I.

Those decisions established that the Commission’s

basic grant of jurisdiction over cable television is

Section 2(a) of the Communications Act; that its

authority to prescribe rules for cable television in-

cludes rules that are “ ‘reasonably ancillary to the

effective performance of the Commission’s various

responsibilities for the regulation of television broad-

casting’ ” (392 U.S. at 178; 406 U.S. at 670); and

that such “reasonably ancillary” rules include not

only rules designed to protect or affect the business

of broadcast licensees but also those designed to re-

quire cable systems themselves affirmatively to pro-

mote such statutory policies as increased community

outlets and programming choices. Those principles

fully support the Commission’s jurisdiction in this

case.

A. Section 2(a) of the Communications Act Establishes

the Commission’s Jurisdiction Over Cable Television

Section 2(a) of the Communications Act, 47 U.S.C.

152(a), provides in pertinent part:

The provisions of this chapter shall apply to

all interstate and foreign communication by

wire or radio and all interstate and foreign

transmission of energy by radio, which origi-

nates and/or is received within the United

States, and to all persons engaged within the

United States in such communication or such

transmission of energy by radio * * *.

In Southwestern Cable this Court held that Section

2(a) constitutes the Comission’s basic grant of juris-

diction over cable television, which is undisputably

“interstate * * * communication by wire or radio

* * *” 292 U.S. at 168-169. See also Midwest

Video I, supra, 406 U.S. at 662 and n.21. In so hold-

ing, the Court expressly rejected the contention, which

the court below accepted (App. 22-24), that neither

* With respect to the Commission’s reliance on Section

2(a), the court of appeals stated only “Section 2 states those

to whom the statute applies” (App. 22 n.25).

I“

Section 2(a) nor any other section of the Act ex-

pressly conferred jurisdiction over cable television.

The cable operators in Southwestern Cable had con-

tended that because they were neither common car-

riers, subject to regulation under Title II of the Act,

nor broadcasters, subject to Title III, their activities

“elude[d] altogether the Act’s grasp.” 392 U.S. at

172. The Court, however, held to the contrary (id.

at 172-173; footnotes omitted) :

We cannot construe the Act so restrictively.

Nothing in the language of § 152(a), in the sur-

rounding language, or in the Act’s history or

purposes limits the Commission’s authority to

those activities and forms of communication

that are specifically described by the Act’s other

provisions. The section itself states merely that

the “provisions of [the Act] shall apply to all

interstate and foreign communication by wire or

radio * * *.” Similarly, the legislative history

indicates that the Commission was given “regu-

latory power over all forms of electrical com-

munication * * *.” S. Rep. No. 781, 73d Cong.,

2d Sess., 1. Certainly Congress could not in

1934 have forseen the development of community

antenna television systems, but it seems to us

that it was precisely because Congress wished “to

maintain, through appropriate administrative

control, a grip on the dynamic aspects of radio

transmission,” F'.C.C. v. Pottsville Broadcasting

Co., [309 U.S. 134, 138 (1940)], that it con-

ferred upon the Commission a “unified jurisdic-

tion” and “broad authority.” Thus, “[u]nder-

lying the whole [Communications Act] is recog-

nition of the rapidly fluctuating factors char-

acteristic of the evolution of broadcasting and

of the corresponding requirement that the ad-

ministrative process possess sufficient flexibility

to adjust itself to these factors.” F'.C.C. v. Potts-

ville Broadcasting Co., supra, at 138. Congress

in 1934 acted in a field that was demoustrably

“both new and dynamic,” and it therefore gave

the Commission “a comprehensive mandate,” with

‘not niggardly but expansive powers.” National

Broadcasting Co. v. United States, 319 U.S. 190,

219 [1943]. We have found no reason to believe

that § 152 does not, as its terms suggest, confer

regulatory authority over “all interstate * * *

communication by wire or radio.”

See also Midwest Video I, supra, 406 U.S. at 660-

661.

In both Southwestern Cable and Midwest Video I,

however, the Court found it unnecessary to delineate

the outer limits of the Commission’s “comprehensive

mandate” to regulate interstate communications by

wire or radio, including those by cable systems, be-

cause it concluded that the Commission’s jurisdiction

at least included prescribing rules for cable television

that are “ ‘reasonably ancillary to the effective per-

formance of the Commission’s various responsibilities

for the regulation of television broadcasting’ ” (392

U.S. at 178; 406 U.S. at 670).* In the present case

1% In Southwestern Cable and Midwest Video I, the Court

made clear that it was not holding that the Commission’s

jurisdiction was limited to prescribing rules reasonably ancil-

lary to its responsibilities over television broadcasting; it

it is similarly unnecessary to decide the outer limits

of the Commission’s jurisdiction over cable because

here, too, the rules are reasonably ancillary to the

Commission’s responsibilities over television broad-

casting, as that concept was explained and applied in

Southwestern Cable, and, particularly, in Midwest

Video I. Indeed, they are ancillary in the very same

sense as the rules upheld in Midwest Video I.

simply did not decide that issue. See Southwestern Cable,

supra, 392 U.S. at 178: “We express no views as to the Com-

mission’s authority, if any, to regulate CATV under any other

circumstances or for any other purposes.” See also Midwest

Video I, supra, 406 U.S. at 662.

The Court’s articulation of a reasonably ancillary standard

appears to have been in response to possible concerns that

the Commission’s authority to prescribe rules for cable sys-

tems would not be confined by any statutory standards if it

were based solely on the broad jurisdictional grant of Section

2(a), because the substantive provisions of the Act (Titles II

and III) related specifically to common carriers and broad-

casters respectively, and cable systems could not be precisely

described as either. As the Court stated in Midwest Video I,

supra, 406 U.S. at 661, “§ 2(a) does not in and of itself pre-

scribe any objectives for which the Commission’s regulatory

power over CATV might properly be exercised.” There is no

basis for such concerns if cable rules can be measured by, and

viewed as reasonably ancillary to, the statutory standards

and policies governing television broadcasting, to which cable

television is closely related. Although those statutory stand-

ards antedated both television broadcasting and cablecasting,

they embody policies that are pertinent to both.

i i aa a ac le

B. The Rules Under Review Are Reasonably Ancillary

to the Commission’s Responsibilities For the Regu-

lation of Broadcast Television

In Southwestern Cable, the Court upheld the Com-

mission’s authority to prescribe rules for cable that

are reasonably ancillary to the Commission’s juris-

diction over television broadcasting in the context of

rules designed to protect broadcasters by restricting

the broadcast signals that cable systems retransmit

to their subscribers.” In Midwest Video I, the Court

applied the same principles to uphold rules requiring

certain cable systems to perform more than their

traditional function of receiving and retransmitting

the signals of broadcasters—requiring them, inter

alia, to originate programming produced by them-

selves or others. Although the origination requirement

was not designed to protect television broadcasters,

or even to affect them directly, the plurality opinion

of the Court affirmed the Commission’s view that its

“reasonably ancillary” jurisdiction over cable tele-

vision “is not limited to controlling the competitive

impact CATV may have on broadcast services. * * *

[W]e must agree with the Commission that its ‘con-

cern with CATV carriage of broadcast signals is not

1* Those rules required cable systems to carry local broad-

cast signals, prohibited duplication of local broadcast pro-

gramming, and prohibited importation of distant signals into

certain markets. The Court did not pass on the validity of

those rules, but as was noted in Midwest Video I, supra, 406

U.S. at 659, n.17, “[t]heir validity was, however, subse-

quently and correctly upheld by courts of appeals as within

the guidelines of [Southwestern Cable]. See, e.g., Black Hills

Video Corp. v. FCC, 399 F.2d 65 (CA 8 1968).”

just a matter of avoidance of adverse effects, but ex-

tends also to requiring CATV affirmatively to further

statutory policies’ [15 F.C.C. 2d 417, 422 (1968) ].”

406 U.S. at 664. ‘That opinion further stated (406

U.S. at 667-668) :

[T]he critical question in this case is whether

the Commission has reasonably determined that

its origination rule will “further the achievement

of long-established regulatory goals in the field

of television broadcasting by increasing the num-

ber of outlets for community self-expression and

augmenting the public’s choice of programs and

types of services * * *.” [Quoting from 20 F.C.C.

2d 201, 202 (1969).] We find that it has.

The Court also rejected contentions that the Com-

mission could not require cable systems to provide

services that they had not willingly undertaken to

perform. The plurality opinion stated (496 U.S. at

670):

The Commission is not attempting to compel

wire service where there has been no commit-

ment to undertake it. CATV operators to whom

the cablecasting rule applies have voluntarily

engaged themselves in providing that service,

and the Commission seeks only to ensure that

it satisfactorily meets community needs within

the context of their undertaking.

It is also significant here that Midwest Video I

further noted that the courts of appeals had correctly

applied the reasonably ancillary standard established

in Southwestern Cable to uphold thé Commission’s

earlier “signal carriage rules,” which, inter alia, re-

quire cable systems to carry the signals of local

broadcasters located within the system’s service area

upon the broadcasters’ request. 406 U.S. at 659

n.17.”

The principles stated in Midwest Video I control

the jurisdictional issue in this case. The channel

capacity, access, and equipment availability rules are

designed to serve the very same objectives of increas-

ing community outlets of expression and increasing

programming choices as the origination rules upheld

in Midwest Video I, and the Commission’s judgment

that they will promote those objectives is a reasonable

one.” Indeed, as the 1972 Order and 1976 Order re-

fiect, the rules at issue here were designed in large

part as a substitute for the origination rule (which

was repealed in 1974) that would be less burden-

2 The Chief Justice concurred in the result in Midwest

Video I. While he expressed the view that the Commission’s

imposition of an origination requirement “strain[ed] the

outer limits” of its jurisdiction, the Chief Justice also ac-

knowledged that “Congress has created its instrumentality to

regulate broadcasting [and] has given it pervasive powers.”

406 U.S. at 676. In addition, the Chief Justice “agree[d]

with the plurality’s rejection of any meaningful analogy be-

tween requiring CATV operators to develop programing

and the concept of commandeering someone to engage in

broadcasting. * * * [W]hen [cable operators] interrupt the

[broadcast] signal and put it to their own use for profit, they

take on burdens, one of which is regulation by the Commis-

sion.” Ibid.

20a As Midwest Video I noted (406 U.S. at 669-670), those

policies and objectives are set forth in a number of provisions

of the Communications Act, including Sections 1, 303(g) and

307 (b), 47 U.S.C. 151, 303(g) and 307(b).

aaa re

some on cable operators than the origination rules

and yet would serve largely the same objective (App.

103-104; 1974 Order, supra, 49 F.C.C. 2d at 1099-

1100) .*

Moreover, to the extent that they differ, the rules

here fall more clearly within the jurisdiction recog-

nized by all Members of the Court in Midwest Video

I. The principal objection of the four dissenting

Justices in that case was to the fact that the origina-

tion rule imposed on cable operators functions and

responsibilities that were different from those they

had chosen to undertake. 406 U.S. at 677-681. The

dissenting opinion emphasized that “CATV is simply

a carrier having no more control over the message

content that does a telephone company” (id. at 680),

and concluded that requiring such carriers to engage

in program origination was so extreme a step that it

should be left to Congress. The rules here, in con-

trast, impose carriage requirements that are far closer

to cable television’s traditional retransmission func-

tions than is program origination. See also American

Civil Liberties Union v. FCC, 523 F.2d 1344, 1351

= Furthermore, it is significant that Midwest Vid-v I upheld

not only the rule requiring cable systems to originate pro-

gramming but also the related rule requiring them to make

available facilities for local production and presentation of

programs. 406 U.S. at 653-654. Although the court below did

not separately analyze the different rules here under review

for either jurisdictional or constitutional purposes (see also

discussion, page 35, infya), the equipment availability rules

not only serve the same objectives as the rules upheld in

Midwest Video I, but also constitute the same means employed

for that purpose as that utilized in the rules upheld in that

(9th Cir. 1975), upholding the access rules promul-

gated by the 1972 Order.

The grounds asserted by the court below for reach-

ing a contrary result conflict squarely with Midwest

Video I. The court below held that the Commission’s

objectives were essentially irrelevant to the juris-

dictional issue, but Midwest Video I established quite

the contrary.“ The court relied on the fact that the

rules do not protect broadcasters, and have no

“nexus” with the services provided by broadcasters

(App. 28); but the origination rules were not de-

signed to protect broadcasters, and had no closer

“nexus” to services provided by broadcasters than

the rules at issue here.”

22 The court below purported to distinguish Midwest Video

I’s elucidation of the Commission’s jurisdiction in terms of

statutory objectives by stating that that discussion only “ap-

plied to origination,” and not to access rules (App. 35). But

this Court’s discussion of the general principles governing

the Commission’s jurisdiction was plainly not limited to the

particular rules at issue in Midwest Video I.

*? Rather, both sets of rules were designed to require cable

systems themselves “ ‘affirmatively to further statutory poli-

cies’”” (406 U.S. at 664). Moreover, the explanation in Mid-

west Video I of the nexus between the origination rules and

television broadcasting applies with equal force to the rules

presently under review. It was there stated (406 U.S. at

670 n.29) :

Respondent asserts that “it is difficult to see how a

mandatory [origination] requirement * * * can be said to

aid the Commission in preserving the availability of

broadcast stations to the several states and communities.”

* * * Respondent ignores that the provision of additional

programming outlets by CATV necessarily affects the

fairness, efficiency, and equity of the distribution of tele-

vision services. We have no basis, it may be added, for

Noting, moreover, that the Commission has not im-

posed similar access rules on broadcasters, the court

of appeals asserted that the Commission could not do

so. Whether or not that assertion is correct,** Mid-

west Video I and Southwestern Cable indicated that

it is beside the point. The relevant inquiry for pur-

poses of the Commission’s jurisdiction to promulgate

overturning the Commission’s judgment that the effect in

this regard will be favorable.

** Clearly the Commission may impose—and has imposed—

on broadcasters rules analogous to the channel capacity and

equipment availability rules in this case. Certainly, for exam-

ple, the Commission can prescribe the transmitting power of

broadcast licensees and the equipment that licensees must

maintain. See 47 U.S.C. 308(c) and (e).

Whether the Commis:‘on could impose an access obligation

on broadcasters analogous to the access rules at issue here

is an open question. (And in view of the very different physi-

cal capabilities of broadcasters and cable systems, see note

26, infra, it would be difficult to compare the reasonableness

of access obligations imposed on the respective systems.) In

Columbia Broadcasting System, Inc. v. Democratic National

Committee, 412 U.S. 94 (1973), the Court rejected the con-

tention that the First Amendment required the Commission

to require broadcasters to accept paid political announce-

ments; but it also stated (412 U.S. at 131) that “[c]onceiv-

ably at some future date Congress or the Commission—or

the broadcasters—may devise some kind of limited right of

access that is both practicable and desirable.” As an example,

the Court specifically noted the Commission’s proposed access

rules for cable television, which are under review in this case.

Ibid. Furthermore, in several respects, the Commission and

Congress have imposed certain access obligations on broad-

casters; examples are the personal attack rule upheld in Red

Lion Broadcasting Co. v. FCC, supra, and 47 U.S.C. (Supp.

V) St2{a)(7), requiring broadcasters to provide time for

candidates for federal office.

rules governing cable television is not whether the

Commission has, or even could have, promulgated

the identical rules for television broadcasting ;”

rather, as Midwest Video I stated, the relevant in-

quiry is whether the rules “further statutory policies”

of increasing community outlets and program choices

(406 U.S. at 667-668). And while cable rules (like

any other) that are within the Commission’s power

to adopt may be set aside by a court if they are

“not rational and based on consideration of the rele-

vant factors” (FCC v. National Citizens Committee

for Broadcasting, No. 76-1471 (June 12, 1978),

slip op. 26), the reasonableness of the means chosen

to further those statutory policies clearly depends on

the particular characteristics of the communications

medium to which they are applied.”

25 For example, the Commission has not imposed on televi-

sion broadcasters the signal carriage rules considered in

Southwestern Cable, for the obvious reason that broadcasting

does not perform any function to which they could reasonably

be applied. There is no reason to assume that Congress in-

tended the Commission to exercise its powers over the differ-

ent forms of communications media in identical ways.

°° The principal difference between television broadcasters

and cable systems that is pertinent to the rules involved here

concern the physical constraints on the respective systems. The

broadcezster’s basic constraint, of course, is that he has only

one channel on which he can broadcast no more than twenty-

four hours in a day. Any access obligation imposed on a broad-

caster that would meaningfully increase outlets for community

expression and programming alternatives would be likely to

displace a significant portion of his own programming time. A

cable operator is not similarly constrained. Technology makes

it reasonably feasible for each system to have twenty simul-

taneously transmitting channels, and possibly many more.

Finally, the court below expressed the view that

the rules were unwise, not in the public interest, and

not supported by record evidence showing a demand

for access services.” But the wisdom of particular

rules and whether they will serve the public interest

are matters for the Commission to decide; a review-

ing court is limited to determining whether they are

within its statutory jurisdiction to adopt and whether

they are arbitrary or capricious. See FCC v. National

Citizens Committee for Broadcasting, supra, slip op.

28. See also Midwest Video I, supra, 406 U.S. at

674: “It was, of course, beyond the competence of the

Court of Appeals itself to assess the relative risks

and benefits of cablecasting.”* While there was, in

our view, substantial evidentiary support in the

rulemaking proceeding for the rules the Commission

adopted,” the court’s error was the fundamental one

** Thus the court, incorrectly, described the rules here as a

“major foray” designed to “get everybody on television”

(App. 33), and stated that they were based on “futuristic

visions” (App. 44), that they were not supported by evidence

of “substantial national demand” for access (App. 48), and

that they would “mandat[e] massive rebuilding * * * in total

disregard of what the paying audience wants” (App. 46). See

generally App. 42-53.

8 See also, e.g., Citizens To Preserve Overton Park, Inc. v.

Volpe, 401 U.S. 402, 413-416 (1971).

*° The court’s conclusion that the record failed to indicate

significant demand for access channels is simply incorrect.

For example, the city and county schools in San Diego, Cali-

fornia, commented in the rulemaking that they had committed

and were using a considerable budget for educational access

via cable systems to the public schools. App. 151-152. And the

of applying a substantial evidence test to the notice

and comment rulemaking employed by the Commis-

sion here. In FCC v. National Citizens Committee for

Broadcasting, supra, among other cases, this Court

has made clear that in rulemaking of this kind (slip

op. 36):

complete factual support in the record for the

Commission’s judgment or prediction is not

possible or required: “a forecast of the direction

in which future public interest lies necessarily in-

volves deductions based on the expert knowledge

of the agency,” Federal Power Commission v.

Transcontinental Gas Pipe Line Corp., 365 U.S.

1, 30 (1961) °° °.

See also Midwest Video I, supra, 406 U.S. at 673-

675 & n.31.

Finally, the court of appeals’ jurisdictional holding

is not only inconsistent, as we have shown, with

Southwestern Cable and Midwest Video I. It is also

National Cable Television Association, although contending

that access rules serve little purpose, gave the results of a

survey of major market cable systems. Of 145 systeme re-

ported, 36 systems indicated regular daily or weekly use of

educational, municipal and public access channels on the

average of 18 hours weekly per system and 14 hours weekly

per channel. NCTA Comments, filed in Docket 20508, October

8, 1975, at 26-29. This compares favorably to the average of

17 hours per week devoted to news and public affairs by

commercial television stations. See F.C.C. News Release,

“Television Broadcast Programming Data, 1976”, Mimeo

#86035, June 30, 1976.

contrary to the basic scheme and policies of the

Communications Act. We see no sound reason for con-

cluding that Congress, in its “comprehensive man-

date” to the Commission in Sections 1 and 2(a) of

the Act, intended to withhold from the Commission the

very power, under all circumstances, to promulgate

rules of this kind in furtherance of the well estab-

lished statutory policies of promoting television serv-

ices, outlets for community expression, and program

choices for the public. To the contrary, the potential

and growth of the cable television industry (see

note 3, supra)” underscore Congress’ “recognition

[in the Communications Act] of the rapidly fluctuat-

ing factors characteristic of the evolution of broad-

casting and of the corresponding requirement that the

administrative process possess sufficient flexibility to

adjust itself to these factors.” FCC v. Pottsville

Broadcasting Co., 309 U.S. 134, 188 (1940).

* As was said of cable television in Midwest Video I, supra,

406 U.S. at 651, “[t]he potential of the new industry to

augment communication services now available is * * *

phenomenai.”

** Indeed, since Midwest Video I, Congress has acted in sev-

eral ways to confirm this Court’s conclusion that the Commis-

sion’s regulation of cable television is congressionally au-

thorized. In the Federal Election Campaign Act of 1971, Pub.

L. No. 92-225, 86 Stat. 3, 7, enacted in 1972, Congress amended

Section 315 of the Communications Act, 47 U.S.C. 315, which

imposes equal time and fairness obligations on broadcasting

stations, to provide in Section 315{c) that:

THE ACCESS, CHANNEL CAPACITY AND EQUIP-

MENT AVAILABILITY RULES DO NOT VIOLATE

THE RIGHTS OF CABLE OPERATORS UNDER THE

FIRST AMENDMENT :

The court of appeals, although purporting not to

rest its decision on constitutional grounds, expressed

at some length its view that the rules under review

violate the First Amendment rights of cable opera-

tors because they deprive the operators of control

of what is communicated on their facilities. The

court relied particularly on Miami Herald Publishing

Co. v. Tornillo, supra, which held that government

(1) the term “broadcasting station” includes a com-

munity antenna television system; and

(2) the terms “licensee” and “station licensee” when used

with respect to a community antenna television sys-

tem mean the operator of such system. .

Similarly, the statutory prohibition on cigarette advertising

is applicable not only to broadcasters, but to “any medium of

electronic communication subject to the jurisdiction of the

Federal Communications Commission.” 15 U.S.C. 1335. Most

recently, in Pub. L. No. 95-234, 92 Stat. 33, Congress amended

47 U.S.C. 503(b) to provide for forfeiture penalties for

persons who willfully fail to comply with the terms and

conditions of any “license, permit, certificate, or other in-

strument or authorization issued by the Commission”; the

amendment expressly applies the penalty provisions to com-

mon carriers, broadcast licensees and “cable television op-

erator[s].” These actions confirm Congress’ understanding

that the Commission is to regulate cable television systems,

and certainly do not reflect any congressional objection to the

principle of imposing access, equipment availability and chan-

nel capacity requirements on such systems.

cannot, under the First Amendment, compel a news-

paper to publish the reply of a person whom the

newspaper had attacked, even if the newspaper has

monopcly economic power. Because the opinion below

makes clear the court of appeals’ view that the rules,

even if within the Commission’s statutory jurisdic-

tion, are unconstitutional, this Court, if it agrees

with our contention in point I that the rules are

within the Commission’s jurisdiction, should decide

the constitutional questions.

A. The Channel Capacity Rules Do Not Violate The First

Amendment Even Under the Court of Appeals’

Analysis

The court of appeals’ constitutional discussion did

not distinguish between the channel capacity rules,

the access rules or the equipment availability rules; |

it broadly condemned them all. But the different

rules involve significantly different considerations for

purpose of constitutional analysis, and we submit,

as a preliminary matter, that there is no basis, even

under the court of appeals’ analysis, for invalidating

the channel capacity rules under the First Amend-

ment.

While the channel capacity rules were adopted in

part to provide the capacity to meet access obliga-

tions, they also serve significant independent interests

in the efficient and orderly development of what this

Court in Southwestern Cable and Midwest Video I

(and even the court below, see App. 64-65) recog-

nized to be a “dynamic industry”. Such rules are

analogous to requirements that broadcast licensees

have certain minimum power capacity (see, e.g., 47

U.S.C. 303(¢c) and (e)) or that those granted build-

ing permits provide certain minimum parking or other

facilities even though present demand does not require

the full use of such capacities. Such rules do not im-

pose the burden that the court below found constitu-

tionally offensive—i.e., divesting the operator of con-

trol of what is communicated over his facilities—and

there is no basis for concluding that they offend the

First Amendment.”

B. The Access Rules Do Not Contravene The First

Amendment

The court of appeals erred in concluding that the

access rules violate the First Amendment, on the

basis of a simple analogy to the question whether

similar rules would be invalid as applied to news-

papers. Determining whether the rules are consistent

with the First Amendment requires a more particu-

larized consideration of, first, the characteristics of

the rules and the interests they affect, and, second,

the characteristics of the industry or entities to which

the rules apply. We submit that those considerations

support the constitutionality of the access rules under

review.

* The equipment availability rules, although in themselves

the same kind of physical capacity requirements as the chan-

nel capacity rules, are more closely tied to the access rules,

since they require the availability of equipment for access

purposes. We will assume that the equipment availability

rules are part of the access rules for purposes of constitu-

tional analysis, and will not separately discuss them.

1. The Access Rules Impose a Limited and Content-

Neutral Form of Carriage Obligation In Further-

ance of First Amendment Values

The court of appeals failed to recognize the

limited nature of the access rules. Contrary to its

opinion, the access rules do not compel “unlimited

access to cable television” (App. 66) and do not,

under any circumstances “effectively silence the cable

operator, denying him all use of his own facilities,

for any exercise of his First Amendment rights”

(App. 70; original emphasis). Rather, as noted in

the Statement (page 11, supra), the rules only re-

quire cable systems with 3,500 or more subscribers to

provide certain channels for access by the public,

educational groups, local governments, and lessors

to the extent that the system has “activated chan-

nel capacity” available for such access; and the

1976 Order has defined “available activated chan-

nel capacity” as channels that the system is not

using for its own broadcast retransmission or pay

cable services. In addition, the rules permit the cable

operator to combine different access uses on the same

channel if demand permits even if other channels

are available and activated (7.e., unused by the opera-

tor). In sum, the rules do not impair the cable

operator’s ability to provide its principal and tradi-

tional services."

** We can envision only two potential conflicts of any conse-

quence between the cable operator’s needs and the demands of

The rules do require that cable operators permit

access users, on a first-come non-discriminatory basis,

access users that the rules might require to be resolved in

favor of access users.

As the Commission explained in the 1976 Order, “available

activated channel capacity” excludes channels used for broad-

cast retransmission or pay programming, but includes chan-

nels used by the operator for “origination services”—which

the rules permit but no longer require the operator to provide.

Consider, for example, a cable system that does not provide

converters to its subscribers (who can therefore receive only

12 cable channels on their sets) and that uses 11 channels for

broadcast retransmission and pay programming. If there is

access demand for the twelfth channel, and if the operator

has been using or desires to use that channel for its own

origination (or “cablecasting”) services, the rules and the

1976 Order indicate that access users be given priority for the

twelfth channel and that the operator, to provide an additional

origination channel to his subscribers, would have to install

converters to activate a thirteenth channel, rather than rele-

gate the access users to that course. On the other hand, the

1976 Order indicates that the Commission has not finally de-

cided how that kind of conflict should be resolved in particular

cases, since it stated (App. 143 n.19): “It is not our intention

that established cablecast services provided by system oper-

ators be automatically displaced. While we generally believe

that automated services such as time and weather channels

should give way to access uses, if other irreconcilable conflicts

between channel uses develop, we are prepared to consider

each such situation individually on its merits.”

The rules also provide that, with the exception of systems in

operation on June 21, 1976, with insufficient activated chan-

nel capability, “[eJach * * * system [with 3500 or more sub-

scribers] shall, in any case, maintain at least one full channel

for shared access programming.” 47 C.F.R. 76.254(c) ; App.

171. Consider a system without converters that commenced

operations after June 21, 1976, and in time became capable of

delivering 12 channels of broadcast retransmission to its

subscribers. The 1976 Order again suggests that in such a

to use channels that the operator is not using for

broadcast retransmission or pay cable services. To

that extent they can be viewed as a limited form of

common carriage-type obligation.“ See App. 104. But

while that obligation admittedly may require a cable

operator to transmit communications on iis facilities

that it might prefer not to, it is quite different from

the obligation imposed by the right of reply statute

case the system would have to reserve the twelfth channel

exclusively for shared access rather than use it for broadcast

retransmission (App. 144-145, 195). However, Section 76.254

reserved must be one of those 12 channels that is actually

available to subscribers without converters, rather than one

of the 20 channels that are capable of being provided with

converters.

The 1976 Order did not specifically address the foregoing

questions or other potential conflicts; rather it reserved such

questions for further consideration (App. 148, 198). Until

the Commission considers and resolves such particular con-

flicts in the context of specific cases, there is no need to specu-

late whether any particular resolution might present constitu-

tional questions. But even if this Court were to conclude that

certain of these provisions require a particular resolution of a

hypothetical conflict that would infringe the cable operator’s

First Amendment rights, that conclusion would not affect the

validity of the basic provisions of the rules, which present no

such conflict and which, as noted, do not impair the cable

operators’ abilities to provide their traditional and principal

services. Cf. Champlin Refining Co. v. Corporation Commis-

sion, 286 U.S. 210, 234 (1982).

“ The obligation is limited because it preserves the opera-

tor’s basic freedom to engage in the business of transmitting

signals of his choice and does not subject him to common

carriage reguiations under Title If of the Act, which would

include tariff filing, vate regulation, and full dedication of

facilities to common carriage.

that this Court invalidated in Miami Herald Publish-

ing Co. v. Tornillo, supra.

Miami Herald involved a statute designed to foster

a “responsible press” (418 U.S. at 256) by requiring

newspapers to publish replies to their editorial at-

tacks. This Court concluded that the statute would

not only force newspapers to publish something they

disagreed with but also would discourage newspapers

from taking controversial stands on public issues

with the result that “political and electoral coverage

would be blunted or reduced.” 418 U.S. at 257. In

contrast, the access obligations at issue here are en-

tirely unrelated to the content of what the cable

operator otherwise transmits. The regulations in

this case, as in FCC v. National Citizens Committee

for Broadcasting, supra, are “not content-related”’

(slip op. .24).

Finally, it is significant that the access rules do

not present a question of subordinating First Amend-

ment interests to other, unrelated, governmental in-

terests. Rather, to the extent they can be regarded

as affecting the First Amendment interests of cable

operators, they present a question of competing First

Amendment interests. That is so because the rules

are designed to enhance what this Court has recog-

nized many times to be important First Amendment

interests, by providing significant additional outlets

for expression of diverse views by individuals and

groups within communities served by cable television.

In Assoviated Press v. United States, 326 U.S. 1,

20 (1945), in upholding the application of the anti-

trust laws to the news media, this Court stated:

[The First} Amendment rests on the assumption

that the widest possible dissemination of infor-

mation from diverse and antagonistic sources is

essential to the welfare of the public, that a free

press is a condition of a free society. * * * Free-

dom to publish means freedom for all and not

for some.

Similarly, in New York Times Co. vy. Sullivan, 376

U.S. 254, 270 (1964), the Court reaffirmed our

“profound national commitment to the principle that

debate on public issues should be uninhibited, robust,

and wide-open.”

In Red Lion Broadcasting Co. v. FCC, 395 U.S.

367, 390 (1969), the Court upheld the Commission’s

personal attack rule and fairness doctrine as applied

to broadcasters, stating: “It is the purpose of the

First Amendment to preserve an uninhibited market-

place of ideas in which truth will ultimately prevail,

rather than to countenance monopolization of that

market, whether it be by the Government itself or a

private licensee.” And in the context of those rules

the Court stated, “[i]t is the right of the viewers

and listeners, not the right of bvoadcasters, which is

paramount” (ibid.). See also FCC v. National Citi-

zens Committee for Broadcasting, supra, upholding

rules prospectively banning co-located newspaper-

broadcaster combinations: “[T]he purpose and effect

[of the rules] is to promote free speech, not to re-

strict it” (slip op. 24).

Finally, in Columbia Broadcasting System, Inc. v.

Democratic National Committee, 412 U.S. 94 (1973),

although rejecting claims that the First Amendment

compelled the Commission to permit access to broad-

cast facilities for paid advertisements concerning

controversial public issues, the Court acknowledged

the First Amendment values in diversity of expres-

sion and increased programming (id. at 101-102,

110-114, 122}, and stated (id. at 131):

Conceivably at some future date Congress or

the Commission—or the broadcasters—may de-

vise some kind of limited right of access that is

both practicable and desirable. Indeed, the Com-

mission noted in these proceedings that the ad-

vent of cable television will afford increased

opportunities for the discussion of public issues.

In its proposed rules on cable television the Com-

mission has provided that cable systems in major

television markets

“shall maintain at least one specially desig-

nated, noncommercial public access channel

available on a first-come, nondiscriminatory

basis. The system shall maintain and have

available for public use at least the minimal

equipment and facilities necessary for the

production of programming for such a chan-

nel.” 37 Fed. Reg. 3289, § 76.251(a)(4).

We recognize that the Court in Columbia Broad-

casting System did not rule on the validity of the

access rules that it mentioned. We also recognize

that the Court in Miami Herald was presented with

a claim that the Florida right of reply statute was

designed to enhance First Amendment interests in

diversity of expression and held that those interests

could not justify the restriction there at issue on the

First Amendment rights of affected newspapers. But

the Court in both cases acknowledged the competing

First Amendment interests involved, ana both cases

support, rather than undermine, our contention that

the important First Amendment interests that the

access rules are designed to promote constitute a

significant factor in determining their constitutional-

ity. We submit that a proper consideration of those

interests, of the relatively limited burdens imposed on

cable operators, and of the particular and distinguish-

ing features of cable television (discussed in the fol-

lowing section) shows that the access rules are “both

practicable and desirable” (Columbia Broadcasting

System, supra, 412 U.S. at 131) and consistent with

the First Amendment.

2. The Access Rules are Consistent With the First

Amendment In View of the Particular Character-

istics of Cable Television

We have argued in the preceding section that the

court of appeals erred in analogizing the access rules

to the statute invalidated in Miami Herald. We also

contend, in this section, that the court erred in

equating cable television with newspapers, and also

erred in concluding that the rules are invalid because

cable television is not subject to the physical limita-

tions of the broadcast spectrum. While the cable

television industry has similarities to a number of

other industries—broadcasters, common carriers,

public utilities, and newspapers—it also has features

that distinguish it from each of those others. And the

constitutionality of rules applied to that industry

depends, inter alia, on an analysis of those similari-

ties and differences. As this Court stated in FCC v.

Pacifica Foundation, No. 77-528 (July 3, 1978), slip

op. 19: “We have long recognized that each medium

of expression presents special First Amendment prob-

lems.”

We may assume arguendo that even the limited

form of common carriage-type obligations imposed by

the access rules could not be imposed on newspapers.”

But it has never been doubted that the government

can impose common carriage obligations on telephone

and telegraph carriers and can require them to carry

messages that they might prefer not to. And this

Court in Red Lion Broadcasting, supra, upheld the

constitutionality of a limited access obligation im-

posed on broadcasters (i.e., access to reply to personal

attacks) that a state could not, under Miami Herald,

impose on newspapers. For purposes of constitutional

analysis, there are important similarities between

cable television and broadcasters and communications

*° On the other hand, it could reasonably be argued that a

state could, for example, require a newspaper to offer its

classified advertising services to the public on a nondiscrimi-

natory basis. Cf. Pittsburgh Press Co. v. Pittsburgh Commis-

sion on Human Relations, 413 U.S. 376 (1973). Moreover,

this Court has expressly held that a newspaper “may not

accept or deny advertisements” in furtherance of an attempt

to monopolize or restrain trade in violation of the antitrust

laws. Lorain Journal v. United States, 342 U.S. 143, 156

(1951).

common carriers, as well as important differences

detween cable television and newspapers or other

print media.

First, as we have noted, the four dissenting

Justices in Midwest Video I stressed that “CATV is

simply a carrier having no more control over the

message content than does a telephone company” (406

U.S. at 680). While some cablecasters today origi-

nate or select some of their programming, the re-

transmission of broadcast signals or the transmission

of programs designed for broadcast elsewhere is stil]

the pervasive characteristic of the industry. Indeed,

the access rules apply only to cable systems that

retransmit broadcast signals (see 47 C.F.R. 76.5(a) ).

Second, these broadcast-related activities support

an expensive system of distribution having the char-

acteristics of a natural monopoly. In significant re-

spects a cable system is similar to a public utility;

its operations require the placement of wires over or

under the publie streets involving substantial capital

investment similar to that of other natural monopo-

lies.” In contrast to the possibilities that exist in the

* Accordingly, most localities require a cable system to ob-

tain a local government franchise before it can commence

operations—an obligation that it is doubtful that a state could

impose on a newspaper or magazine. See Pacifica Foundation,

supra, slip op. 19-20. See generally Barnett, State, Federal,

and Local Regulation of Cable Television, 47 Notre Dame L.

Rev. 685 (1972). Indeed, the proposition endorsed by the

court below that cable systems are not distinguishable from

newspapers for First Amendment purposes would raise seri-

ous doubts as to the constitutionality of such local franchis-

ing regulations.

print media for such devices as direct mailings or

dissemination of pamphlets or handbills, there is no

practical way to engage in limited or ad hoe cable-

casting without access to the system.”

Third, cable television has close and obvious simi-

larities to television broadcasting, on which its busi-

ness for the most part depends. It is true that cable

television is not subject to the physical spectrum

limitations on which this Court relied in Red Lion

Broadcasting Co. v. FCC, supra, in upholding the ap-

plication of the Commission’s fairness doctrine and

personal attack rules to broadcast licensees. See also

FCC v. National Citizens Committee for Broadcasting,

supra, slip op. 22. However, this Court recently ob-

’* The proposition that the differences between cable televi-

sion and newspapers are of constitutional significance is im-

plicit in Southwestern Cable and Midwest Video I, both of

which upheld the Commission’s authority to prescribe rules

for cable television that government could not, under Miami

Herald, prescribe for newspapers. See also discussion, pages

48-49, infra. Indeed, the Court’s opinion and a concurring

opinion in Miami Herald strongly suggest the Court’s recog-

nition of the special and distinguishing features of the print

media. The Court’s opinion focuses almost exclusively on

newspapers and the print media, and Mr. Justice White, con-

curring, stated that “the First Amendment erects a virtually

insurmountable barrier between government and the print

media * * *” (418 U.S. at 259; emphasis added). This Court

has also recognized in several other cases that the electronic

media present “special” problems which may warrant a dif-

ferent regulatory approach. See, e.g., Virginia Pharmacy

Board vy. Virginia Consumer Council, 425 U.S. 748, 773

(1976); Bates v. State Bar of Arizona, 433 U.S. 350, 384

(1977) ; First National Bank of Boston vy. Bellotii, 485 U.S.

765, 791 n.30 (1978).

served in FCC v. Pacifica Foundation, supra, slip op.

20, that “[t]he reasons for * * * [First Amendment]

distinctions [between the broadcast and print media]

are complex,” rather than related solely to the physical

limitations of the broadcast spectrum. From the

standpoint of viewers and listeners, the similarities

between cablecasting and broadcasting as media of

expression all but eclipse the differences. And, for

First Amendment purposes, “[i]t is the right of the

viewers and listeners, not the right of the broad-

casters [or cablecasters], which is paramount.” Red

Lion, supra, 395 U.S. at 390.

Furthermore, the physical constraints facing would-

be cablecasters are in significant respects similar to

the physical limitations of the broadcast spectrum.

In Red Lion, the Court upheld the Commission’s per-

sonal attack rules and fairness doctrine on the ground

(395 U.S. at 388):

Where there are substantially more individuals

who want to broadcast than there are frequen-

cies to allocate, it is idle to posit an unabridge-

able First Amendment right to broadcast com-

parable to the right of every individual to speak,

write, or publish.

The same considerations support the access rules at

issue here. While a given cable system is not subject

to the limitations of the radio spectrum, there are

significant physical limitations, noted above (page 45,

supra), that prevent most individuals who may wish

to cablecast from constructing and operating their

own cable television systems. Those constraints are not

merely the kind of economic constraints considered in

Miami Herald, and indeed they are significantly

greater than the constraints facing would-be broad-

casters. The difficulties confronting would-be cable-

casters are comparable to the difficulties that would

face would-be telephone users who, in the absence of

access to the facilities of a telephone company, would

each have to construct his own telephone system to

communicate by telephone. As in Red Lion, where

one or two companies have acquired the privilege of

constructing a large cable network in a community,

“it is idle to posit an unabridgeable First Amend-

ment right [to operate such a system] comparable

to the right of every individual to speak, write, or

publish” (395 U.S. at 388).

Finally, our submission that the access rules are

consistent with the First Amendment derives sig-

nificant support from Southwestern Cable and Mid-

west Video I. Southwestern Cable involved the Com-

mission’s signal carriage rules, which, inter alia,

also imposed upon cable operators a limited form

of carriage obligation—namely, the obligation to

retransmit, upon request, the broadcast signals of

broadcast licensees serving the same community as

the cable system. Although this Court did not spe-

cifically address the First Amendment issues, it

expressly noted in.Midwest Video I that the courts

of appeals had correctly upheld the signal carriage

rules, citing Black Hills Video Corp. v. FCC, 399

F.2d 65 (8th Cir. 1968) (406 U.S. at 659 n.17);

and Black Hills Video Corp. expressly rejected First

Amendment challenges to those rules. 399 F.2d at

69.° For First Amendment purposes, we see no

material distinction between the limited carriage ob-

ligation involved in Southwestern Cable and Black

Hills and the access rules involved here.

THE RULES UNDER REVIEW DO NOT CONSTITUTE

A TAKING OF PROPERTY WITHOUT COMPENSA-

TION IN VIOLATION OF THE FIFTH AMENDMENT

The court of appeals also erred in suggesting that

the channel capacity, access, and equipment avail-

ability rules constituted a taking of property without

just compensation in violation of the Fifth Amend-

ment (App. 77-79).*

**In Black Hills, the mandatory carriage rule, along with

the Commission’s distant signal and non-duplication rules for

cable television, were specifically upheld against a First

Amendment attack. The distant signal and/or non-duplication

rules were also found constitutionally valid in Conley Elec-

tronics Corp. Vv. FCC, 394 F.2d 620, 624 (10th Cir.), cert.

denied, 393 U.S. 858 (1968); Titusville Cable TV, Ince. v.

United States, 404 F.2d 1187, 1189-1190 (3d Cir. 1968) ; and

Great Falls Community TV Cable Co. v. FCC, 416 F. 2d 238,

240-242 (Sth Cir. 1969).

°° In addition, the court expressed the view that the rules

“violate the due process provisions of the Constitution” (App.

77). The reasons for that conclusion are not clear, since

there was no claim that any party’s procedural rights were

violated during the Commission’s proceedings. The court

appears to have relied on notions of substantive due process

and its own manifest dislike of the rules, saying (App. 78

n.78): “Those relying on regulatory power and exuberance,

While it may be difficult in some cases to draw the

line between permissible regulation and an unconsti-

tutional taking, and the question is one of degree (see

Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415-

416 (1922)),” the rules at issue here do not present

even a colorable taking claim. In Penn Central Trans-

portation Co. v. New York City, No. 77-444 (June

26, 1978), this Court listed two factors that have

particular significance in determining whether there

has been a taking: first, “[t]he economic impact of

the regulation on the claimant and, particularly, the

extent to which the regulation has interfered with

distinct investiment backed expectations” ; and, second,

to deliver over the facilities of another at no cost, may rue

the day. The regulatory mind is normally unbiased ; the regu-

latory rain falls on all.” But the court’s personal views on

the merits of economic regulation is not a ground for finding

a due process violation. As this Court stated in Ferguson Vv.

Skrupa, 372 U.S. 726, 731-732 (1963) (citations omitted) :

We refuse to sit as a “superlegisiature to weigh the

wisdom of legislation,” and we emphatically refuse to go

back to the time when courts used the Due Process Clause

“to strike down state laws, regulatory of business and in-

dustrial conditions, because they may be unwise, im-

provident, or out of harmony with a particular school

of thought.”

“ There Mr. Justice Holmes stated for the Court: “The

general rule at least is, that while property may be regulated

to a certain extent, if regulation goes too far it will be recog-

nized as a taking. * * * [T]his is a question of degree—and

therefore cannot be disposed of by general propositions.” See

also Goldblatt v. Hempstead, 369 U.S. 590, 594 (1962)

(“There is no set formula to determine where regulation

ends and taking begins”’).

“the character of the governmental action * * * [e.g.,

whether it] can be characterized as a physical in-

vasion by Government” (slip op. 18). Here, the

relatively limited obligations imposed by these rules

do not significantly impair the operator’s abilities to

provide his own services or recover his investment.

Moreover, this is not a situation where there has

been a physical invasion by government. Compare,

e.g., United States v. Causby, 328 U.S. 256 (1946).

Rather, it is a case where the “interference,” such as

it is, “arises from [a] public program adjusting the

benefits and burdens of economic life to promote the

common good.” Penn Central, supra, slip op. 18.

Accordingly, the rules involved here fall far short of

a taking.”

“ Indeed, the due process and taking arguments accepted

by the court of appeals are substantially the same arguments

made by the cable operators in opposing the significantly

more burdensome mandatory origination rule upheld by this

Court in Midwest Video I. See Brief of Midwest Video Corp.

in No. 71-506 at 32-38; Midwest Video I, supra, 406 U.S. at

658 n.15, 662-664. As previously noted (pages 7-8, supra), the

Commission repealed the origination rule in favor of access

obligations partly because it found the latter to be less burden-

some to cable operators.

CONCLUSION

The judgment of the court of appeals should be

reversed and the order of the Commission affirmed.

Respectfully submitted.

WADE H. McCree, Jr.

Solicitor General

LAWRENCE G. WALLACE

Deputy Solicitor General

RICHARD A. ALLEN

Assistant to the Solicitor General

Davip J. SAYLOR

Deputy General Counsel

DANIEL M. ARMSTRONG

Associate General Counsel

KEITH H. FAGAN

Counsel

JULIAN R. RUSH, JR.

Counsel

Federal Communications Commission

NOVEMBER 1978

W os. S. coveenwent printine orrice, 1978

278069 201

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