Amicus Curiae Brief — FCC v. Florida Power Corp.

.

a.

85-1658 .

_ Supreme Court, U.S. |

FILED i

in To | may 9 wee |

Supreme Court of the United | tuobess F. seaniot “4

OCTOBER TERM, 1985 &

FEDERAL COMMUNICATIONS COMMISSION

and

UNETED STATES OF AMERICA,

Appellants,

FLORIDA POWER CORPORATION, ef al.

Appellees.

On Appeal from the

United States Court of Appeals

for the Eleventh Circuit

BRIEF OF NEW YORK STATE

CABLE TELEVISION ASSOCIATION, ET AL.

AS AMICI CURIAE

JOSHUA NOAH KOENIG, Counse! of Record

Suite 40]

150 State Street

Albany, New York 12207

(S18) 463-6676

Attorney for

New York State Cable Television Association

Alaska Cable Television Association

Connecticut Cable Television Association

Florida Cable Television Association, Inc

Hawan Cable Television Association

Indiana Cable Television Association

Kansas CATV Association

Louisiana Cable Television Association

Maryland-Delaware Cable TV Association, Inc

Oregon Cable Communications Association

Washington Cable Communications Association

West Virginia Cable Television Association

Wisconsin Cable Communications Association

Wyoming Cable Television Association

® Ce,

i

QUESTIONS PRESENTED

1. May Congress empower a federal administrative agency

to determine, pursuant to reasonable statutory guidelines and

subject to judicial review, the compensation to be paid to a

regulated utility company for the use of surplus space on its

utility poles by cable television service companies?

2. Does the Pole Attachment Act of 1978, 47 U.S.C. 224,

violate the Fifth Amendment to the Constitution by effecting a

taking of property without providing for a constitutionally

adequate determination of just compensation to paid for such

taking?

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED .nccoccccicsscssscrussuiensannaal i

TABLE OF AUTIOOR ETE nccceccccccsesosccessnssnnsensanen iil

INTEREST OF THE AMICI CURIAE 1.0000. .occcccccceceeees l

STATEMENT OF THE CASE. ........cccccccccccossssecsscccseesseoess 5

SUMMARY OF ARGUMENT 0.000000. ooccccccccccceceeeceeeeeeees 5

ARCSUDEEN TT occcccecossecesecesessscnnsenssnssnsannniinnaiininnen 8

THE QUESTIONS PRESENTED ARE

SUBB TAN TIAL, «..cccpcccsscccscssscnsinenianee 8

The Eleventh Circuits decision is inconsistent

with established law on the application of the

Takings Clause and the setting of just com-

PORSRTIOR....u...cccccececonsesessnceseninenniinaia goocenensiine 8

Loretto v. Teleprompter is inapplicable............... 8

II. Congress may empower an administrative

agency to determine just compensation for a

Fifth Amendment taking, pursuant to reason-

able standards, and subject to judicial review...... 13

Ill. Congress may regulate the activities of com-

mercial enterprises without effecting a taking

requiring the payment of just compensation

under the Fifth Amendment ..................ccccseeeceeeees 15

COIN UBIO ....c0csccccesesesseessonssonsnnssnsunnneniuninnnnnnnnnnnnnn 19

iil

TABLE OF AUTHORITIES

Page

CASES:

Alabama Power Co. v. FCC, 773 F.2d 362 (D.C. Cir.

i... caccsssrenscccccoes 15,17

Andrus v. Allard, 444 U.S. 51 (1979) ....cccccccccccceeeceeeees 10

Bauman v. Ross, 167 U.S. 548 (1897) .........00ccccccccceeee 13,14,15

Block v. Hirsh, 256 U.S. 135 (1921) ......cccccccccceeeeeeeeeeees 10

Bowles v. Willingham, 321 U.S. 503 (1944) 0.0.0.0... 10

In re City of New York (Fifth Avenue Coach Lines),

Sn 13

Florida Power Corp. v. FCC, 772 F.2d 1537 (11th

I __.._. censnnennososocooees passim

FPC v. Hope Natural Gas Co., 320 U.S. 591 (1944) ... 16,17

Hilton Washington Corp. v. District of Columbia, 777

i. ssssssmsnsosoosccece 16

Keystone Assoc. v. Moerdler, \9 N.Y.2d 78 (1966) ..... 13

Kimball Laundry Co. v. United States, 338 U.S. |

i. acencmsusssccecoccces 17

Loretto v. Teleprompter-Manhattan CATV Corp., 458

U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982)... passim

Loretto v. Teleprompter Manhattan CATV Corp., 53

N.Y.2d 124, 423 N.E.2d 320 (1981 ).......000 ee. 4

Loretto v. Teleprompter Manhattan CATV Corp., 58

N.Y.2d 143, 446 N.E.2d 428 (1983) ......0.... ee. 12,13,14

Louisville & Nashville R.R. Co. v. Mottley, 219 U.S. :

467, 31 S.Ct. 265, 55 L.Ed. 297 (1911)... 17

McGovern v. New York, 229 U.S. 363 ......cccccccccccccceeeeees 18

Miller v. United States, 620 F.2d 812 (1980) .............. 14

Monongahela Power Co. v. FCC, 655 F.2d 1254

I ._. s secnsecenecoccccnes 15,17

Monongahela Navigation Co. v. United States, 148

ee. _ ccccnscnnconcosoocs 13,14

Munn vy. Illinois, 94 U.S. 113 (1877) ....ccccccccccceccceeeeeeees 14,15,16

Penn Central Transportation Co. v. New York City,

a... ccensssnnsoconccee 10,16

Permian Basin Area Rate Cases, 390 U.S. 747

EE SESE 16

Regional Rail Reorganization Cases, 419 U.S. 102

EE 14

iV

Ruckelshaus v. Monsanto Co., 467 U.S. 986, 104 S.Ct.

SIREN SRE Seanaene oie nes PL aA a. MASSE Ou

Texas Power & Light Co. v. FCC, No. 84-4818 (Sth

Es SEUMIIETE © ha, GIUPUIEE cicssticsecctacesscnsdsancusddeadadnbenanbeiedaaneds

United States v. Cent. Eureka Mining Co.. 357 US.

a a, TUTE diinniseicepsceehstinsensseniiinssuninstandtanldeladieiiidupieassiaaeieaets

United States v. Cors, 337 U.S. 325 (1949) woe

CONSTITUTIONAL PROVISIONS AND STATUTES:

areas ns I ee

Pole Attachment Act, Pub.L. No. 95-234, § 6, 92

Stat. (codified as amended at 47 U.S.C. § 224

III GUIEPE UO cicsitcictesiinscieietenincnsenscaietatiesdmsteanstien

yg) Eg | __—_) EI ROSNIOET RP ner r

Se Ts Oe icciiitainlaleeincriitianieatleiectiattantaiasiilea eins

New York State Const. Art. I § 7 (McKinney’s Cons.

Laws of N.Y., Book 2, NY Const. 1982) ....00....c..

New York Executive Law § 828 (McKinney 1982)...

LEGISLATIVE MATERIALS:

Senate Report No. 95-580, 95th Cong., Ist Sess.

(Nov. 2, 1977), 92 Seat. Vol. 2 108 .......0000...0...

OTHER MATERIALS:

Jurisdictional Statement, of Group W Cable, Inc.,

National Cabie Television Association, Inc., and

Cox Cablevision Corporation, appellants in this

IS Cee He HOI Siticntsncnsttinenseiianditinetiteenss

R. Epstein, Takings: Private Property and the Power

of Eminent Domain, Harvard University Press,

Sy: SHRI: SPIED ctrseiciiisessdccciectnnitsbiiedastadsanienibistiies

Page

15

15

10

18

passim

passim

15

15

14

8,12

6,7,10,

1]

4,5

IN THE

Supreme Court of the United States

OcTOBER TERM, 1985

No. 85-1657

FEDERAL COMMUNICATIONS COMMISSION

and

UNITED STATES OF AMERICA,

Appellants,

¥.

FLORIDA POWER CORPORATION, ef al.,

Appellees.

On Appeal from the

United States Court of Appeals

for the Eleventh Circuit

BRIEF OF NEW YORK STATE

CABLE TELEVISION ASSOCIATION, ET AL.

AS AMICI CURIAE

INTEREST OF THE AMICI CURIAE

The amici curiae are a group_of trade associations repre-

senting cable television operators in their respective states.

They include the following parties: the New York Cable

Television Association, the Alaska Cable Television Associ-

ation, the Connecticut Cable Television Association, the Florida

Cable Television Association, Inc., the Hawaii Cable Television

Association, the Indiana Cable Television Association, the

Kansas CATV Association, the Louisiana Cable Television

Association, the Maryland-Delaware Cable TV Association,

2

Inc. (representing cable television operators in those two

states), the Oregon Cable Communications Association, the

Washington Cable Communications Association, the West Vir-

ginia Cable Television Association, the Wisconsin Cable Com-

munications Association, and the Wyoming Cable Television

Association. Some of these associations are incorporated and

some are unincorporated membership associations.

This appeal arises from a decision of the United States

Court of Appeals for the Eleventh Circuit ( Florida Power Corp.

v. FCC, 772 F.2d 1537 (October 8, 1985)), invalidating the

federal Pole Attachment Act, which empowered the Federal

Communications Commission to the regulate the rates, terms

and conditions of the attachment of cable television service

wires and facilities to the poles of utility companies. '

Some of these amici curiae associations represent cable

television operators in states which have not exercised state-

level jurisdiction over the pole attachment rates charged by

utilities (such as Florida, Indiana, Kansas, Louisiana, West

Virginia, Wisconsin, and Wyoming ), and therefore these cable

operators are directly reliant upon the Federal Communications

Commission (“FCC” or “Commission” ) under the federal Pole

Attachment Act for protection from unreasonable pole attach-

ment charges. Others of these associations represent cable

television operators in states which have exercised such state

junsdiction (such as New York, Delaware, Alaska, Con-

necticut, Hawaii, Maryland, Oregon, and Washington), and

where the cable operators must rely upon state administrative

agencies for such protection; but even in these circumstances the

subject cable television companies and their associations have a

vital interest in the instant case because the respective state

administrative agencies have directly followed or adopted the

FCC’s pole attachment rate standards, or have been very

substantially and clearly influenced by said standards, and

because a confirmation of the lower court’s ruling would

' Pub. L. No. 95-234, § 6, 92 Stat. 33, 35-36 ( codified as amended at 47

U.S.C. §224 (West Supp. 1985)). The Commission was authorized to

regulate pole attachment arrangments under the Act only where these services

are not similarly regulated by any state authority. 47 U.S.C. § 224(c).

undoubtedly put in jeopardy the jurisdictional authority of state

as well as federal pole attachment regulations.

Notwithstanding their differences, each of the associations

comprising this group of amici curiae performs an active and

important function in pursuing the interests of cable television

operators in its state, and particularly with respect to the subject

before the Court, the establishment of utility pole attachment

charges. Each represents almost every cable television com-

pany and operating cable TV system in its state, and does so in

a wide variety of formal and informal contexts. Cumulatively,

they represent about one thousand cable television systems with

about ten million cable television subscribers.

Each of these associations, on behalf of itself and the cable

television companies, systems and subscribers it represents, has

a vital interest in the outcome of this appeal. Should the

decision of the court below be upheld, the rates charged by

utility pole owners for attachment of cable television facilities

will rise dramatically and unconscionably. In some states this

will result directly from the removal of the FCC as an available

forum for resolving any disputes arising with the utility pole

owners in the exercise of their monopoly over pole attachments,

and from the absence of any alternative forum at a state level.

Even in those states which exercised authority in this area,

attachment rates are likely to go up sharply because of their

historic reliance on the FCC standards as guidelines, and

because a confirmation of the Eleventh Circuit’s ruling would

unavoidably put into jeopardy the authority of state adminis-

trators to continue to do what the Congress may not authorize

the FCC to do. Such substantial increases in pole attachment

rates could prove extremely (perhaps critically) damaging to

the continued provision of cable television services.

Because of the significantly lower number of cable TV

subscribers per mile of cable wire, as compared to the number

of utility customers on average, and because of the relatively

small contribution of pole attachment charges to the total

revenues of utilities, a given dollar increase in the charge for

attachment per pole results in a very substantially higher impact

on the costs to cable subscribers than to the potential cost

4

savings to utility rate payers. Moreover, pole attachment

charges represent a relatively high proportion of cable teie-

vision Operating costs.2 Thus, attachment fee increases may

cripple the profitability of cable services, directly resulting in

substantial service rate increases to subscribers and in limita-

tions on the improvement of service offerings and the expansion

of service territories. Fears of the malicious motives of

telephone utilities, which have consistently approached cable

television as a rival and competitive industry, helped convince

the FCC and Congress that some reasonable restriction on

attachment charges was necessary. Without some such protec-

tion the very continuation of many cable television systems may

be threatened.

The holding of the court below threatens more than the

reasonableness of utility pole attachment arrangements. By

finding that the Pole Attachment Act constituted a taking

requiring just compensation under the Fifth Amendment,3 and

that Congress may not empower an administrative agency such

as the FCC to determine such just compensation under a

reasonable standard, even with court review available,‘ the

Eleventh Circuit put in danger a wide variety of existing

administrative procedures and regulatory programs at the state

and federal level. Included among these is the ability of states

to provide reasonable mechanisms for assuring that cable

television services can be made available to the tenants of

premises owned by others, which was the very subject of this

Court’s decision in Loretto v. Teleprompter, relied upon by the

court below. The amici curiae associations have a strong

interest in the impact which the instant appeal may have on

these other areas of regulatory authority, and particularly with

the regulation of service to tenants addressed in Loretto. If this

Court’s ruling in Loretto can now be found to forbid any state

2 See the Jurisdictional Statement of Group W Cable, Inc., National

Cable Television Association, Inc., and Cox Cablevision Corporation, appel-

lants in this appeal, at 4.

3772 F.2d 1537, at 1544.

4Id. at 1546.

5 Loretto v. Teleprompter-Manhattan CATV Corp., 458 U.S. 419, 102

S.Ct. 3164, 73 L.Ed.2d 868 ( 1982).

6772 F.2d at 1544.

5

or federally legislated regulatory programs in this area, signifi-

cant harm will be done io operations of cable TV companies

and the hopes of tenant residents to obtain communications

services on reasonable terms.

The amici curiae contend that the dire results described

above are not required by the Constitution or the rulings of this

Court, and that the decision below is in error. These amici will

be vitally affected by the outcome of this case. They urge this

Court to review and reverse the decision of the Eijeventh

Circuit.”

STATEMENT OF THE CASE

In the interests of judicial economy, amici adopt the

statement of the case provided in the jurisdictional statement of

appellants Group W Cable, Inc., National Cable Television

Association, Inc. and Cox Cablevision Corporation.

SUMMARY OF ARGUMENT

In finding that the Pole Attachment Act is in violation of

the Fifth Amendment, the Eleventh Circuit has held what is not

a taking to be a taking, and in doing so has undone both the

supposed taking and any available control on the reason-

ableness of utility pole attachment charges. The court below

found, wrongly and without any record or support, that in effect

a new right of attachment had been granted by Congress and

the FCC to cable television operators.2 However, even though

the court expressed no objection to this supposed exercise of

Congressional police power, and even though the petitioner

Florida Power did not argue the invalidity of such a taking, the

court did not proceed to review the adequacy of the com-

pensation which might be appropriate for such a taking under

the Fifth Amendment ( which was all that had been requested

by petitioner), nor did it even stop at ruling that an alternative

? The amici curiae submit this Brief by consent of the parties to this

appeal. Their statements of consent have been filed with the Clerk of the

Court.

8772 F.2d at 1543.

6

method for setting such compensation was required. Such a

ruling is in no way required by the Constitution or the decisions

of this Court and would in itself have constituted error. Rather,

the court below simply struck down the subject statute entirely,

thereby invalidating the very grant of right which it supposed

had been created by Congress, along with any compensation

questions which might have arisen from such a taking.9

If left unreversed, the decision below would completely

obstruck the public interest goals of Congress in adopting the

Act (to ensure some mechanism for reviewing the reason-

ableness of the rates charged for pole attachment), goals to

which that court had no discernible objection. The result of

that decision, unsupported in factual assumptions or legal

principle, is that pole attachment charges will be left entirely

unreviewable, even by the courts. If any taking had occurred, it

would have arisen, supposedly, from the statute which the court

below has now struck down. Thus, such a ghostly taking has

been laid to rest and no coins need even be placed on the grave.

The lower court’s determination was fundamentally flawed

by its misunderstanding of what, if anything, had been “taken”.

In fact, Congress did not create some new right of pole

attachment, a right to make, uninvited, a permanent physical

occupation of the private property of the utility, or for a cable

TV operator to unilaterally appropriate pole space or to convert

some such property to its own ownership. '° To the contrary, no

Sid. at 1546.

'0“Moreover, the Commission's jurisdictional reach extends only to

those entities which participate in the provision of communications space on

utility poles. Thus, an electric power company which owns or controls a uulity

pole would be subject to FCC jurisdiction only if two preconditions are met:

(1) the power company shares its pole with a telephone company, or other

communications entity; and, (2) a cable television system shares the commu-

nications space on the pole with the telephone uulity or other communications

entity, Of occupies the communications space alone. An electric power

company owning or controlling a pole on which no communications space has

been designated would not be subject to FCC jurisdiction. S. 1547, as

reported, does not vest within a CATV system operator a night to access to a

utility pole, nor does the bill, as reported, require a power company to

dedicate a portion of its pole plant to communications use.”

Senate Report 95-580 at 15-16 { Nov. 2, 1977) to accompany S. 1547 which

became Pub.L. 95-234, 92 Stat. Vol. 2 108, 123-124.

7

taking was ever involved, at least not in the context of the Fifth

Amendment. Rather, if anything was taken from the utilities, it

was only their ability to charge an unreasonable, monopolistic

price. Not one foot, nor even one inch, of any pole was

removed from the ownership, usage or enjoyment of the utility

company. If hypothetically, Congress had made such a taking,

so that it could thereafter allow cable operators to rent such

space directly from the government, then a Fifth Amendment

question would likely arise. But, this did not happen. Neither

Congress nor the FCC has mandated that any utility go into, or

stay in, the business of sharing its surplus pole space. Nor has

the Act even attempted to restrict the price charged for such

arrangements to a level which could be argued to be in any

sense confiscatory. The Act allows the pole owners to continue

to reap the value of such pole space by charging reasonable

rental rates.’' In reality, this law creates nothing more than

another form of rent control regulation.

If the Act effected a taking, then the court below should

have considered whether that type of taking was inherently

improper. But even that court did not find such a taking to be

improper. In the Loretto decision, relied upon by the court

below, this Court found that a taking had been effected, but it

did not hold that the taking was in any way improper.'? The

11 The Act authorizes the FCC to regulate the rates, terms and conditions

for pole attachments to provide that they are “just and reasonable”, 47 U.S.C.

§ 224(b), (and only if no appropriate state-level regulatory mechanism exists,

Id. § 224(c)). It states that, “a rate is just and reasonable if it assures a utility

the recovery of not less than the additional cost of providing pole attach-

ments, nor more than an amount determined by multiplying the percentage of

the total usage space, or the percentage of the total duct or conduit capacity,

which is occupied by the pole attachment by the sum of the operating

expenses and actual capital costs of the utility attributable to the entire pole,

duct, conduit, or right-of-way.” Id. § 224(d)(1). Or, in effect, a rate that is

at least equal to the “additional” or “avoidable” costs of the utility and no

greater than the “fully allocated costs”. Senate Report 95-580 at 19 ( Nov. 2,

1977), 92 Stat. Vol. 2 108, 127.

12“The Court of Appeals determined that § 828 serves the legitimate

public purpose of ‘rapid development of and maximum penetration by means

of communication which has important educational and community aspects,’

$3 N.Y.2d, at 143-144, 423 N.E.2d at 329, and thus is within the State's police

power. We have no reason to question that determination.” Loretto v.

Teleprompter-Manhattan CATV Corp., 458 U.S. 419, 425 (1982).

8

Court found only that just compensation must be paid for that

taking, but it did not invalidate the state statute at issue. If, as

appellants argue in the instant appeal, the taking effected by the

Pole Attachment Act is merely a taking of the utility company’s

ability to charge unreasonable and monopolistic prices, then the

propriety and validity of the Act is all the more evident.

If this form of regulation requires the setting of just

compensation in a Fifth Amendment context, then the court

below should have considered the proper amount of com-

pensation which would have satisfied the Constitutional rights

of the pole owners, as well as the proper forum for setting that

amount. The precedents make clear thai the Constitution is

satisfied if a fair and reasonable price is allowed. This is

precisely what Congress has directed. If this Court confirms

that Congress and its properly authorized administrative

agencies may not establish such reasonable rates by regulatory

action, even subject to judicial review, then the courts them-

selves might have to act as case-by-case ratemakers in all

instances of utility rate regulation or rent control programs.

Such a conclusion is unreasonable on its face and inconsistent

with a long line of clear precedent.

ARGUMENT

THE QUESTIONS PRESENTED ARE SUBSTANTIAL

The Eleventh Circuit’s decision is

inconsistent with established law on the

application of the Takings Clause and the

setting of just compensation

I. Loretto v. Teleprompter Is Inapplicable.

The Eleventh Circuit’s reliance on this Court’s decision in

Loretto v. Teleprompter is entirely misplaced. In Loretto a state

statute had expressly prohibited landlords of tenanted proper-

ties from refusing to permit the installation of cable television

service to their tenants.'3 There was no question that the

'IN.Y. Exec. Law § 828 (McKinney 1982).

9

intrusion would be an unwilling one from the point of view of

many landlords. The need for such a requirement had been

clear to the State Legislature, which recognized that many

landlords would see no reason to permit cable television

installation upon any terms (and some landlords would have

reason to forbid such services in order to further their own

competitive services ).'4 This Court found that such a statute

effected a taking in the Fifth Amendment context, because it

resulted in an unconsented permanent physical occupation of

the landlord’s property. '5

By comparison, the federal Pole Attachment Act merely

attempts to regulate the existing and future pole attachment

rental prices charged by utility companies which are willingly in

the business of sharing their surplus pole space.'® This is no

more than a classic form of proper business regulation; it is

made even less controversial because the regulated businesses

are already public utilities ( with controlled or controllable rates

of return), because the “properties” at issue are already

dedicated to the protected utility rate bases, and because the

underlying property value being regulated (the scarce pole

space ) was created by the government as a beneficial monopoly

and therefore always was subject to regulation to prevent abuse

of the monopoly. '7

14 These legislative considerations were noted by the New York Court of

Appeals in its original decision upholding the validity of the statute in

question. Loretto v. Teleprompter Manhattan CATV Corp., 53 N.Y.2d 124,

140-141, 423 N.E.2d 320, 327-328 (1981).

18 458 U.S. 419, 438 (1982).

16 See footnote 10, supra.

17 Professor Epstein discusses the special situation faced by privileged

utilities in his recent study of the Takings Clause. Although he is generally

critical of the failure of modern decisions to provide just compensation, he

supports the theory of regulation of utilities. He notes for example,

“Direct rate regulation is therefore understood as the tail end of a

system that confers upon the regulated industry the private power

of eminent domain. In one sense it closely resembles the

situation already considered with workers’ compensation, where

the size of the quid pro quo is left to legislative discretion, with

little or no constitutional scrutiny by the courts.” Epstein,

Takings: Private Property and the Power of Eminent Domain, 275

(1985).

10

In adopting the Pole Attachment Act Congress expressed

no concern that a right of attachment was even needed.'8 In

clear distinction to the statute considered in Loretto, Congress

intended here only to regulate, not to appropriate.

In writing for the majority in Loretto, Justice Marshall took

care to distinguish that government regulation on the use of

Property is not necessarily a taking requiring just compensation

in the Fifth Amendment context. Citing Penn Central Trans-

portation Co. v. New York City, 438 U.S. 104 (1978), he wrote,

“the Court has often upheld substantial regulation of an

owner’s use of his own property where deemed necessary to

promote the public interest.” 458 U.S. 419, at 426. In Loretto

this Court made clear that its holding was based on the

circumstance of an unwilling permanent physical occupation. It

expressly noted other instances in which even severe forms of

government regulation, amounting to a complete prohibition of

the affected commercial activity, were held not to be takings. '9

The Loretto decision made particular reference to prece-

dents upholding regulation of the landlord-tenant relationship,

“without paying compensation for all economic injuries that

such regulation entails” 20, citing among others decisions up-

holding rent control statutes ( Bowles y. Willingham, 321 U.S.

503 (1944), and Block v. Hirsh, 256 U.S. 135 (1921)). These

were distinguished from the Loretto facts because, “in none of

these cases ... did the government authorize the permanent

occupation of the landlord’s property by a third party.” 21 In its

summary the Court noted that its decision was “very narrow”,

‘8“It has been made clear in testimony by CATV industry representa-

tives to this committee that access to utility poles does not in itself constitute a

problem, among other reasons because CATV offers an income-producing use

of an otherwise unproductive and often surplus portion of plant.” Senate

Report 95-580 at 16 ( Nov. 2, 1977), 92 Stat. Vol. 2 109, at 124.

‘9 Citing at 458 U.S. 431, U.S. v. Cent. Eureka Mining Co., 357 U.S. 155

(1958), in which certain gold mines were ordered to cease Operations

altogether, without compensation for lost revenues; and at note 10 at 433. and

at 436, Andrus v. Allard, 444 U.S. 51 (1979), in which a complete ban on the

commerce in eagle feathers was held not to be a taking.

20 458 U.S. 419, at 440.

21 Id.

and reiterated that it did not, “question the equally substantial

authority upholding a State’s broad power to impose appropri-

ate restrictions upon an owner's use of his property.” (emphasis

in original) 22

In the instant case, the court below relied upon the Loretto

decision because it found that the subject statute, the Pole

Attachment Act, forced utility pole owners to allow cable

television attachments.23 This was simple error. Based on that

false presumption, the court examined whether the supposed

intrusion involved a “permanent physical occupation”, with

particular concern regarding whether the occupation was “per-

manent”. the court found that it was “permanent” in the

context of the Loretto standard.24 However, this issue of

permanency has relevance only if the occupancy was forced and

uninvited: a consentual attachment (even at rates which are

regulated with ut consent) is almost by definition non-

permanent.?25

In fact, when understood to be merely another form of rent

control legislation, the validity of the Pole Attachment Act is

confirmed by the decision of this Court in Loretto. The court

below rests its conclusion that the instant pole attachments are

22 Id. at 441.

23772 F.2d 1537, at 1543.

241d. at 1544.

25 Congress appears to have considered that the Act would permit FCC

restriction of a utility’s termination of attachment nghts only in the most

extreme and abusive circumstances.

“While S. 1547, as reported, does not legislate a guarantee of

access by CATV systems to utility poles, the committee recog-

nizes that it is conceivable that a nontelephone utility which

currently provides CATV pole attachment space might dis-

continue such provision simply in order to avoid FCC regulation.

The committee believes that under S. 1547, as reported, the

Commission could determine that such conduct would constitute

an unjust or unreasonable practice and take appropnate action

upon a finding that CATV pole attachment rights were dis-

continued solely to avoid jurisdiction.”

Senate Report 95-580 at 16 ( Nov. 2, 1977), 92 Stat. Vol. 2 109,

at 124.

12

unconsented upon too fine a distinction; it sees a lack of consent

merely in the fact that the price of attachment was not

agreeable to the utility.26 This is hardly the type of uncon-

sented physical intrusion addressed in the “very narrow”

decision in Loretto.

It is also very important to consider what the Loretto

decision did not hold. This Court did not find that the State

statute at issue in Loretto was in any way an improper exercise

of the State’s police power.27 It did not strike down the Statute

and invalidate the taking. It did not find that the amount of

compensation sought by the appellant there (the current mar-

Ket, monopolistic, “hold-out”, value of the landlord’s agree-

ment to permit entry) was the proper standard for satisfying

just compensation under the Fifth Amendment.2® And it did

not hold that the State’s mechanism for setting just com-

pensation was inadequate or that such just compensation could

only be set by the direct and first instance adjudication of the

courts.29 Clearly, the Eleventh Circuit’s reliance on Loretto was

inappropnate in this instance.

26“Assuming for the moment that Florida Power’s actions can be

construed as an invitation to access its poles, it is nonetheless clear that that

invitation was made subject to and based upon certain conditions, namely the

agreed upon annual per pole rate. ... While they may have been invited at

the outset, they certainly weren't invited at the rate imposed by the FCC. In

our opinion, the cable companies’ occupation of Florida Power's poles ar the

rates specified by the FCC is anything but invited.” (Emphasis added) 772

F.2d 1537, at 1543.

27 See footnote |2, supra.

28 This Court took care to note that its ruling, “does not presuppose that

the fee which many landlords had obtained from Teleprompter pnor to the

law's enactment is a proper measure of the value of the property taken. The

issue of the amount of compensation that is due, on which we express no

opinion, is a matter for the state courts to consider on remand.” 458 U.S. 419,

441.

2° Under the New York statute in question in Loretto the amount of

compensation is set in the first instance by a state regulatory agency, the

Commission on Cable Television, pursuant to standards it adopts by regu-

lation. N.Y. Exec. L. § 828(1)(b) (McKinney 1982). On remand, the New

York Court of Appeals reviewed the statute and found that it comported with

Fifth Amendment requirements and that the setting of just compensation by

the administrative agency in the first instance. subject to the judicial review

(footnote continues )

13

Il. Congress may empower an administrative agency to deter-

mine just compensation for a Fifth Amendment taking,

pursuant to reasonable standards, and subject to judicial

review.

Even if, hypothetically, Congress had made a taking of

utility pole space, and thus created a right of just compensation

for the utility pole owners under the Fifth Amendment, nothing

in the Constitution or the decisions of this Court would forbid

Congress from establishing a mechanisin for the determination

of such just compensation in the first instance by an adminis-

trative agency, such as the FCC. Congress may also provide

reasonable standards to be followed by such an agency in

making its determinations of just compensation. The validity of

such an arrangement is perfected by the availability of judicial

review.

The determination of the Eleventh Circuit in the decision

below that the setting of just compensation may only be done

directly by the courts in the first instance 9° is in error and

should be reversed.

The Eleventh Circuit’s reliance on Monongahela Naviga-

tion Co. v. U.S., 148 U.S. 312 (1893), is both outdated and

misplaced. That case addressed the adequacy of compensation

in a Fifth Amendment context. This Court has made clear that

it is inappropriate to cite that case for the conclusion that the

courts are the exclusive app’ priate forums for the determina-

(footnote continued )

already guaranteed under New York law, was appropnate and Con-

stitutional. $8 N.Y.2d 143, 446 N.E.2d 428, 459 N.Y.S.2d 743 (1983). It

discussed at length and expressly rejected the appellant's arguments that just

compensation must be set in the first instance by the courts. “Neither the

federal nor the state constitution proscnbes determinauon of compensation

for a taking by a commission rather than a court.” Ciung Bauman v. Ross, |67

U.S. $48, $93 (1897), and distinguishing and explaining Master of Keystone

Assoc. v. Moerdler, 19 N.Y.2d 78, 89 (1966) and Matter of City of New York

(Fifth Avenue Coach Lines), \8 N.Y.2d 212, 218 | 1966), which confirmed

only “that the Legislature may not itself fix compensation, not that it may not

authonze the first instance determination of compensation by commissioners

or a commission, subject to later judicial review ~ 58 N.Y 2d 143, at 152

30 772 F.2d 1537, at 1546.

14

tion of just compensation. Regional Rail Reorganization Act

Cases, 419 U.S. 102, 151 n.39 ( 1974).31 The New York Court

of Appeals in its decision on remand of Loretto addressed this

specific issue in the context of that case, after acknowledging

this Court’s express ruling that the statute considered in that

case effected a taking requiring just compensation,32 and

pointed out that the principle that such compensation could be

set by a legislatively created commission was so well established

that a provision of the New York Constitution which enun-

ciated that point had been repealed in 1964 as “obsolete and

superfluous”’.33

What Monongahela Navigation did establish was the

simple principle that a legislative body may not effectively

remove from the courts the ultimate residual authority to review

any determination of just compensation for a Fifth Amendment

taking to ensure that such compensation is adequate to satisfy

Constitutional compliance.>4

The establishment of reasonable Congressional standards

to be used by an administrative agency in its determinations of

just compensation does not alter the principle stated above.

The judicial test still remains one of whether such standards

allow the setting of just compensation as ultimately reviewed by

the courts.35

31 See also, Munn v. Illinois. 94 US. 113 (1877): Bawman v Ross, 167

U.S. 548, $93 (1897); and other cases cited by the appellants in this case.

32 See note 29, supra.

3358 N.Y.2d 143, 152. referring to subdivision (b) of section 7 of article

| of the New York Constitution ( McKinney's Cons Laws of NY. Book 2. NY

Const, Art I, § 7, Histoncal Note )

34“ Monongahela did no more than restate the general principle that the

courts, not the legislature, are ultimately entrusted with assunng compliance

with consututional commands.” Regional Rail Reorganization Act Cases, 419

U.S. at 151 1.39

38 Although the recent Court of Claims decision relied upon by the court

delow, Miller v. United States, 620 F.2d 812 ( 1980). notes iN Passing that a

just compensation determination, “is basicaliy a question of fact” and as such

exclusively a judicial function (citing Monongahela Nav. Co. v. United

States), it immediately thereafter holds that. “the rate of interest set by a

statute” [which was at issue therein] “can be applied to a claim for just

compensation if such rate is reasonable and judicially acceptable.” 620 F.2d

a

at 85

15

Even if no direct judicial appeal is provided (unlike here

where the determinations of the FCC under the Pole Attach-

ment Act are expressly appealable to the federal Courts of

Appeals 36) the availability of a claim under the Tucker Act 37

ensures that property owners will have some form of judicial

review available to protect their rights to just compensation

under the Fifth Amendment when a taking has been made by

action of the federal government.38 Where an appeal to judicial

review is available, as here, no inherent violation of the Fifth

Amendment is evident merely from a Congressionally created

administrative mechanism for setting just compensation in the

first instance.?9

In the case of a Pole Attachment Act considered here, the

availability of judicial review has been demonstrated by the

very proceeding brought by the petitioner Florida Power in the

Eleventh Circuit, and by similar prior appeals appropriately

reviewed by the federal Courts of Appeals.4°

III. Congress may regulate the activities of commercial

enterprises without effecting a taking requiring the pay-

ment of just compensation under the Fifth Amendment.

The principle that legislative regulation of commerical

activities or of the use of private property, in the proper exercise

of the government’s police power, is not a taking requiring the

payment, of just compensation under the Fifth Amendment is.

well established. In Munn v. Illinois, 94 U.S. 113 (1877), the

Court confirmed the long-established principle that private

property, otherwise protected from government control or

removal, may become subject to regulation when the owner

36 47 U.S.C. § 402(a).

37 28 U.S.C. § 1491 (1982).

38 Ruckelshaus v. Monsanto Co., 467 U.S. 986, 104 S. Ct. 2862 (1984).

39 Bauman v. Ross, supra.

40 Monongahela Power Co. v. FCC, 655 F.2d 1254 (D.C. Cir. 1981),

upholding the FCC’s regulatory standards for pole attachments; Alabama

Power Co. v. FCC, 773 F.2d 362 (D.C. Cir. 1985), ordering certain

modifications of the FCC’s compensation calculations under the statutory

standard: and Texas Power & Light Co. v. FCC, No. 84-4818 (Sth Cir. March

17, 1986), in accord with Alabama Power.

16

willingly puts it to use in a manner subject to a public interest.4'

The owner’s common law rights in his property can not prohibit

a proper exercise of legislative power, and there (as here) this

allowed for the regulation of rates for property usage by others,

to allow the owner a reasonable rate but not one determined

by the purely monopolistic market value controlled by the

owner.42 Since the decision in Munn this Court has repeatedly

held various forms of regulation to be proper exercises of the

police power and not violative of the Takings Clause.43 The

established test for review of the regulation of rates of a utility

service is whether the limit on investment return is so severe as

to be genuinely confiscatory.44

The Pole Attachment Act is simply another of the rate

regulation programs which should be reviewed by this stan-

dard. The control imposed does not constitute an uninvited

taking of property of the type addressed in Loretto, but only a

restraint on the price charged for an otherwise invited relation-

ship. As recently as last year the Court of Appeals for the

District of Columbia considered the Loretto standard in detail

before holding that a regulation of privately operated taxi

stands in the city of Washington was not a taking because of the

voluntary participation of local hotels in making such taxi

stands available on their private property. Hilton Washington

Corp. v. District of Columbia, 777 F.2d 47 (1985).

“'“Property does become clothed with a public interest when used in a

manner to make it of public consequence, and affect the community at large.

When, therefore, one devotes his Property to a use in which the public has an

interest, he, in effect, grants to the public an interest in that use, and must

submit to be controlled by the public, for the common good, to the extent of

the interest he has thus created. He may withdraw his grant by discontinuing

the use; but, so long as he maintains the use, he must submit to the control.”

94 US. at 126.

42 Id. at 134.

*3In the Loretto decision, relied upon the court below, this line of

decision was described extensively. 458 U.S. 419, 426-441. See generally,

Penn Central Transportation Co. v. New York City, 438 U.S. 104, 98 S.Ct.

2646, 57 L-Ed.2d 631 (1978).

44 FPC v. Hope Natural Gas Co., 320 US. $9} (1944): Permian Basin

Area Rate Cases, 390 U.S. 747 ( 1968)

ee

17

The Eleventh Circuit decision in the instant case seemed to

show an unexpected concern with the preexisting contract rights

of the utility pole owners. But it is well established that a

preexisting contractual right may be limited or modified (or

even eliminated) by proper exercise of the regulatory function

of Congress. Louisville & Nashville R.R. Co. v. Mottley, 219

U.S. 467, 31 S.Ct. 265, 55 L.Ed. 297 (1911).45

Ultimately, what is at issue in this case is not the appli-

cation of the Fifth Amendment, but the question of the proper

amount of the compensation which the affected utilities may

charge for their cooperative sharing of pole space. For if the

amount permitted is a fair and reasonable one then questions

about the application of the Fifth Amendment are effectively

moot.46 The proper determination of the value of the utility’s

rentable pole space is not based on the monopolistic “hold-up”

price which might be obtained by the utility, but a reasonable

return on the investment of the utility in the regulated prop-

erty.47 The proper measure of value is the owner’s loss, if any,

not the taker’s gain.48 In the instant case there is no loss because

the Act has guaranteed a non-confiscatory recovery (‘“‘not less

than the additional cost of providing pole attachments” 49) and

the FCC’s standards have ensured that the maximum fair

return on investment (fully allocated costs recovery, as per-

mitted by the Act) is recovered.5° To determine the value of the

pole usage on the basis of the market_price, as the Eleventh

Circuit seemed inclined to do (with reference to the pre-Act

contract prices extracted by Florida Power through its

monopolistic dominance ) would be to validate for the first time

45“ the contract in question would have been illegal if made after the

passage of the commerce act, it cannot now de enforced against the railroad

company, even though valid when made.” 219 U.S. at 485.

The Louisville & Nashville decision is cited by the D.C. Circuit in its ruling

confirming the FCC’s pole attachment regulations. Monongahela Power Co.,

655 F.2d 1254, 1256 (D.C. Cir. 1981) (per cumam).

46 Alabama Power Co. v. FCC, 773 F.2d 362, 367 n8 (D.C. Cir. 1985).

47 FPC v. Hope Natural Gas Co., 320 U.S. 591 (1944).

48 Kimball Laundry Co. v. U.S., 338 U.S. 1, 5 (1949).

49 47 U.S.C. § 224 (d).

50 Alabama Power Co., supra., at 367 n8.

18

the “hold-up” price as a fair basis of rate regulation or just

compensation. This artificial or inflated value based on the

public need has been universally rejected as a measure of

compensation.5!

Because the Congress and the FCC have adequately

provided for the ability of Florida Power to obtain a reasonable

return on its shared pole space, no taking has occurrred and no

danger arises that just compensation will not be paid even if a

taking has occurred.

51 U.S. v. Cors, 337 U.S. 325, 333-334 (1949); McGovern v. New York,

229 U.S. 363. .

ee

ly

CONCLUSION

For the reasons expressed above, this Court should note

probable jurisdiction and reverse the judgment below.

Respectfully submitted,

By

Joshua Noah Koenig

Suite 401

150 State Street

Albany, New York 12207

(518) 463-6676

Counsel for Amici Curiae Cable

Television Associations

May 9, 1986