Alliance for Community Media v. F.C.C., No. 07-3391.

• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)
• Writing for the Court: R. Guy Cole, Jr.
• Citation: 529 F.3d 763
• Parties: ALLIANCE FOR COMMUNITY MEDIA, et al., Petitioners, State of Hawaii; City and County of San Francisco; National Cable & Telecommunications Association, Inc.; City of New York; City of Milwaukee, Wisconsin; City of White Plains, New York; City of Wilmington, Delaware, Intervenors, v. FEDERAL COMMUNICATIONS COMMISSION; United States of America, Respondents, Ad Hoc Telecom Manufacturer Coalition; Qwest Communications International, Inc.; USTelecom; Verizon; AT & T, Intervenors.
• Decision Date: 27 June 2008
• Docket Number: No. 07-3570.,No. 07-3391.,No. 07-3674.,No. 07-3675.,No. 07-3673.,No. 07-3573.,No. 07-3824.,No. 07-3572.,No. 07-3571.,No. 07-3677.,No. 07-3569.,No. 07-3574.,No. 07-3676.

529 F.3d 763 ALLIANCE FOR COMMUNITY MEDIA, et al., Petitioners,
State of Hawaii; City and County of San Francisco; National Cable & Telecommunications Association, Inc.; City of New York; City of Milwaukee, Wisconsin; City of White Plains, New York; City of Wilmington, Delaware, Intervenors,
v.
FEDERAL COMMUNICATIONS COMMISSION; United States of America, Respondents,
Ad Hoc Telecom Manufacturer Coalition; Qwest Communications International, Inc.; USTelecom; Verizon; AT & T, Intervenors. No. 07-3391. No. 07-3569. No. 07-3570. No. 07-3571. No. 07-3572. No. 07-3573. No. 07-3574. No. 07-3673. No. 07-3674. No. 07-3675. No. 07-3676. No. 07-3677. No. 07-3824. United States Court of Appeals, Sixth Circuit. Argued: February 6, 2008. Decided and Filed: June 27, 2008.

[529 F.3d 766]

ARGUED: Alan G. Fishel, Arent Fox, LLP, Washington, D.C., Joseph L. Van Eaton, Miller & Van Eaton, Washington, D.C., Howard J. Symons, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, Washington, D.C., for Petitioners. James M. Carr, Federal Communications Commission, Washington, D.C., for Respondents. Joseph L. Van Eaton, Miller & Van Eaton, Washington, D.C., Michael K. Kellogg, Kellogg, Huber, Hansen, Todd, Evans & Figel, Washington, D.C., for Intervenors. ON BRIEF: Alan G. Fishel, Jeffrey E. Rummel, Arent Fox, LLP, Washington, D.C., Christopher J. White, Department of Public Advocate, Newark, New Jersey, Michael S. Schooler, National Cable & Telecommunications Association, Washington, D.C., Matthew C. Ames, Joseph L. Van Eaton, Miller & Van Eaton, Washington, D.C., Kenneth S. Fellman, Kissinger & Fellman, Denver, Colorado, for Petitioners. James M. Carr, Laurence N. Bourne, Federal Communications Commission, Washington, D.C., Steven J. Mintz, Robert B. Nicholson, United States Department of Justice, Washington, D.C., for Respondents. William K. Sanders, City Attorney's Office, San Francisco, California, Michael S. Schooler, National Cable & Telecommunications Association, Washington, D.C., Tillman Lay, Spiegel & McDiarmid, Washington, D.C., Joseph L. Van Eaton, Miller & Van Eaton, Washington, D.C., Rodney L. Joyce, Joyce & Associates, Chevy Chase, Maryland, Michael K. Kellogg, Colin S. Stretch, Kellogg, Huber, Hansen, Todd, Evans & Figel, Washington, D.C., for Intervenors. James N. Horwood, Spiegel & McDiarmid, Washington, D.C., Lani L. Williams, Local Government Lawyer's Round Table, Oconomowoc, Wisconsin, for Amici Curiae.

Before: SUHRHEINRICH, COLE, and GIBBONS, Circuit Judges.

OPINION

R. GUY COLE, JR., Circuit Judge.

Following a notice-and-comment rulemaking procedure, the Federal Communications Commission ("FCC," "Commission," or "the agency") released an order ("the Order") adopting rules interpreting and implementing section 621(a)(1) of the Communications Act of 1934 ("the Act"), 47 U.S.C. § 541(a)(1), which prohibits local franchising authorities from "unreasonably refus[ing] to award" competitive cable franchises. The FCC released the Order on March 5, 2007 on the basis of record evidence that the operation of the local franchising process was unreasonably impeding competitive entry into the cable television market. A summary of the Order was subsequently published in the Federal Register on March 21, 2007.

Petitioners and intervenors, consisting primarily of various local franchising authorities ("LFAs"), their representative organizations, and the incumbent cable industry's trade association, request us to reverse the FCC's decision and declare the Order void in its entirety, asserting that the FCC lacks the requisite authority to promulgate the Order and, in the alternative, that the FCC's interpretation is not entitled to deference and is arbitrary and capricious. For the following reasons, we find that the FCC acted well within its statutorily delineated authority in enacting the Order and that there exists sufficient record evidence to indicate that the FCC

529 F.3d 767

did not engage in arbitrary-and-capricious rulemaking activity. Accordingly, we DENY the petitions for review.

I. BACKGROUND

A. Factual Background

Given the complexity of the regulatory regime at issue, we begin by tracing the historical evolution of cable regulation and the role of the FCC therein. The public at large first obtained access to cable television in the 1950s. See generally City of Dallas, Tex. v. FCC, 165 F.3d 341, 345-46 (5th Cir.1999). During this first decade in which cable television was publicly available, the FCC abstained from regulating in this arena because it believed it lacked the authority to do so under existing statutory provisions. Id. at 345. By the mid-1960s, however, cable television had proliferated to such a degree that the FCC determined that it must regulate cable franchises in order to carry out its statutory duty to oversee all forms of broadcasting on behalf of the public interest. Id. The Supreme Court subsequently affirmed the FCC's regulatory authority over cable television, holding that the agency was authorized to issue rules that were "reasonably ancillary to the effective performance of the Commission's various responsibilities for the regulation of television broadcasting." United States v. Southwestern Cable Co., 392 U.S. 157, 178, 88 S.Ct. 1994, 20 L.Ed.2d 1001 (1968).

Regulation of cable services did not fall entirely on the shoulders of the FCC, however. Municipalities, or LFAs, also exerted an interest in regulating the cable medium. See generally American Civil Liberties Union v. FCC, 823 F.2d 1554, 1558 (D.C.Cir.1987). Specifically, they retained discretion to decide whether to grant cable franchises to applicants in their communities. Id. at 1558. As part of this negotiation process, cable operators frequently agreed to perform various activities on behalf of the public interest in exchange for a franchise. Id.

Given the overlapping jurisdiction of the FCC and the municipalities, in 1972 the agency issued a report to delineate the contours of its jurisdiction vis-a-vis the LFAs. Cable Television Report and Order, 36 F.C.C.2d 143, on reconsideration, 36 F.C.C.2d 326 (1972), aff'd sub. nom. American Civil Liberties Union v. FCC, 523 F.2d 1344 (9th Cir.1975). In this report, the agency carved out a system of "deliberately structured dualism." Id. Within this binary regulatory regime, "state or local government issued franchises while the FCC exercised exclusive authority over all operational aspects of cable communication, including technical standards and signal carriage." National Cable Television Ass'n v. FCC, 33 F.3d 66, 68-69 (D.C.Cir.1994) (internal quotations omitted).

This was the state of the cable communications market until 1984. At this time, approximately twenty years following the FCC's foray into the cable television market, Congress conveyed its input for the first time through passage of a legislative amendment to the Communications Act¹, entitled the Cable Communications Policy Act of 1984, Pub.L. No. 98-549, 98 Stat. 2779. The 1984 Act was a response to the "illdefined [sic] . . . state of regulatory uncertainty" resulting from the overlapping authority of the FCC and municipalities. American Civil Liberties Union, 823 F.2d at 1559. Accordingly, the legislation enlarged the Communications Act by inserting

529 F.3d 768

Title VI provisions governing the operation of cable providers and franchises. The purpose of these provisions was to "establish[] a national policy that clarifie[d] the current system of local, state and federal regulation of cable television" and to "continue[ ] reliance on the local franchising process as the primary means of cable television regulation, while defining and limiting the authority that a franchising authority may exercise through the franchise process." H.R.Rep. No. 98-934U.S.Code Cong.& Admin.News 1984 at pp. 4655, 4661. Thus, the regulatory guidelines incorporated into Title VI aimed to "both . . . reliev[e] the cable industry from unnecessary, burdensome regulation and . . . ensur[e] that cable systems remain responsive to the needs of the public." American Civil Liberties Union, 823 F.2d at 1559. In so doing, the amendments "balance[d] two conflicting goals: preserv[ing] the critical role of municipal governments in the franchise process . . . while affirming the FCC's exclusive jurisdiction over cable service, and overall facilities which relate to such service." City of New York v. FCC, 814 F.2d 720, 723 (D.C.Cir.1987) (internal quotations and citations omitted).

As a result of the amendment, when an entity now chooses to enter the market and offer services as a "cable operator,"² it must comply with the dictates of Title VI. Section 621 of Title VI—the provision at issue in the instant case—enumerates various requirements cable operators must follow to acquire cable franchises. Specifically, subsection (b)(1) of Section 621, 47 U.S.C. § 541(b)(1), situates the securing of cable franchises as a mandatory precondition for providing cable services,³ and subsection (a)(1), 47 U.S.C. § 541(a)(1), authorizes LFAs to award these franchises.⁴ By delegating this task to LFAs, the 1984 Act effectively "preserve[d] the role of municipalities in cable regulation." City of Dallas, Tex., 165 F.3d at 345.

Subsequently, in 1992, Congress once again weighed in on the regulation of cable television and clarified the role of LFAs through enactment of the Cable Television Consumer Protection and Competition Act, Pub.L. No. 102-385, 106 Stat. 1460. Specifically, Congress revised section 621(a)(1) to codify restraints on the licensing activities of an LFA such that it may grant "1 or more franchises within its jurisdiction; except that a franchising authority may not grant an exclusive franchise and may not unreasonably refuse to award an additional competitive franchise." (emphasis added). Through this amendment, Congress further endowed potential entrants with a judicial remedy by entitling them to commence an action in a federal or state...