Brookhaven Cable TV, Inc. v. Kelly
| Decision Date | 29 March 1978 |
| Docket Number | D,Nos. 458,482,s. 458 |
| Citation | 573 F.2d 765 |
| Parties | 3 Media L. Rep. 2226 BROOKHAVEN CABLE TV, INC., Capital Cablevision, Inc., Samson Cablevision Corp., Teleprompter Electronics Corporation, Warner Cable of Olean, Inc., National Cable Television Association, Inc., New York State Cable Television Association and Home Box Office, Inc., Plaintiffs-Appellees, United States of America and Federal Communications Commission, Plaintiffs- Intervenors-Appellees, v. Robert F. KELLY, Chairman, Jerry A. Danzig, Vice Chairman, Michael H. Pendergast, Eli Wagner and Edward J. Wegman, Commissioners of the New York State Commission on Cable Television, Defendants-Appellants, National Association of Regulatory Utility Commissioners, Defendant- Intervenor-Appellant. ockets 77-6156, 77-6157. |
| Court | U.S. Court of Appeals — Second Circuit |
Stuart Robinowitz, New York City (Paul, Weiss, Rifkind, Wharton & Garrison, Robert S. Smith, Susan P. Carr and Jack A. Horn, New York City, on the brief), for plaintiffs-appellees.
Eloise E. Davies, Atty., Appellate Section, Civ. Div., Dept. of Justice, Washington, D. C. (Barbara Allen Babcock, Asst. Atty. Gen., Washington, D. C., Paul V. French, U. S. Atty., Albany, N. Y. and Leonard Schaitman, Atty., Dept. of Justice, Washington, D. C., Daniel M. Armstrong, Associate Gen. Counsel, Gregory Christopher and Lauren Belvin, Counsels, F. C. C., Washington, D. C., on the brief), for intervenors-plaintiffs-appellees.
Charles A. Bradley, New York City , for defendants-appellants.
William R. Nusbaum, Deputy Asst. Gen. Counsel, Washington, D. C. (Paul Rodgers, Gen. Counsel, and Charles A. Schneider, Asst. Gen. Counsel, Washington, D. C., on the brief), for intervenor-defendant-appellant.
Before LUMBARD and OAKES, Circuit Judges, and WYZANSKI, District Judge. *
This appeal raises two questions: whether the Federal Communications Commission has the authority to preempt state and local price regulation of one aspect of cable television specialized programming for which a per-program or per-channel charge is made and if so, whether the FCC has adequately and effectively exercised that authority. The Northern District of New York, Port, J., finding that the FCC both possessed and had asserted the requisite authority, granted summary judgment to the plaintiffs herein, declaring that the action of the New York State Commission on Cable Television ("Commission") seeking to impose price regulation on specialized pay cable was invalid, and enjoining defendants from attempting such regulation in the future. We affirm.
Plaintiffs are five cable television operators, two trade associations and Home Box Office, a supplier of special pay cable programming. In addition, Judge Port permitted the FCC and the United States to intervene as parties plaintiff. The Commission and its members were joined as defendants by intervenor National Association of Regulatory Utility Commissioners ("NARUC").
This action was commenced in response to New York's scheme for regulating cable TV, N.Y.Exec.Law §§ 811-831 (McKinney's 1972-1977 Supp.) (article 28). The relevant portions of article 28 are set forth in the margin. 1 The provisions in dispute here concern the setting of rates by the state and local franchising authorities.
The sections concerning rates generated considerable confusion when promulgated in 1972, particularly with regard to special programming on cable systems. Accordingly, on March 1, 1976, the Commission issued a "Clarification of Commission Policy," 2 which indicated (1) that no exemption or exclusion from franchising and rate approval requirements was intended for "pay," "auxiliary" or "subscription" cable services the specialized programming at issue here; (2) that companies already providing pay cable services would not be required to amend their franchises immediately, but would have to give notice within two months to the appropriate authorities of their current rates, or face "appropriate sanctions"; and (3) that "active enforcement" of these policies would be undertaken.
Plaintiffs sought a declaration that the policies expressed in the Clarification violated the supremacy clause of the United States Constitution because of alleged FCC preemption as well as the first, fifth and fourteenth amendments. The district court granted summary judgment on the supremacy clause claim, and this appeal followed.
We hold that the FCC has the authority to preempt state and local price regulation of special pay cable programming; that it has exercised this authority; and that the means it has chosen to preempt state regulation are adequate and effective.
In United States v. Southwestern Cable Co., 392 U.S. 157, 178, 88 S.Ct. 1994, 2004, 20 L.Ed.2d 1001 (1968), the Supreme Court upheld the FCC's jurisdiction to regulate cable TV to the extent that such regulation is "reasonably ancillary to the effective performance of the Commission's various responsibilities for the regulation of television broadcasting."
The Court elaborated on and expanded this standard in United States v. Midwest Video Corp., 406 U.S. 649, 667-68, 92 S.Ct. 1860, 1870, 32 L.Ed.2d 390 (1972), in which it approved the FCC's mandatory cable origination rules as "reasonably ancillary" to "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 type of service." It follows that the FCC may regulate cable TV if its regulation will further a goal which it is entitled to pursue in the broadcast area.
A decision to delay all price regulation of special pay cable meets that test; a policy of permitting development free of price restraints at every level is reasonably ancillary to the objective of increasing program diversity, and far less intrusive than the mandatory origination rules approved in Midwest Video, supra. Cf. National Association of Theater Owners v. FCC, 136 U.S.App.D.C. 352, 362, 420 F.2d 194, 203 (1969), cert. denied, 397 U.S. 922, 90 S.Ct. 914, 25 L.Ed.2d 102 (1970) ().
Cases relied on by NARUC and the Commission are readily distinguished. In NARUC v. FCC, 174 U.S.App.D.C. 374, 533 F.2d 601 (1976), the court ruled that there was no nexus shown between FCC preemption of regulation of two-way non-video leased access cable channels (used for such purposes as burglar alarms) and the goal of increasing program diversity. Here a connection has been shown.
Home Box Office, Inc. v. FCC, 567 F.2d 9 (D.C.Cir. March 25, 1977), cert. denied, 434 U.S. 829, 98 S.Ct. 111, 54 L.Ed.2d 89 (1977) (Dkt. Nos. 76-1841 and -1842), overturned FCC anti-siphoning rules because of failure to demonstrate a genuine problem of siphoning broadcast programming. The FCC's regulatory goal in HBO was not program diversity, as here, but decreased competition.
Finally, Midwest Video Corp. v. FCC, 571 F.2d 1025, No. 76-1496 (8th Cir. Feb. 27, 1978), held that the FCC's imposition of minimum public access and channel capacity standards on cable systems was improper. The court ruled that this was an attempt to do in the cable field something the FCC was specifically prohibited from doing in the broadcast area imposing the burdens of common carriers. The far less intrusive 'regulation' proposed in the instant case is one which plainly eludes any attempt to analogize the regulation itself rather than the underlying policy to the broadcast area.
That the FCC has, in fact, sought to preempt state and local price regulation of special pay cable programming is evident from a survey of FCC pronouncements in the area since 1974:
In Section 76.31(a)(4) (of 47 C.F.R.) we require that...
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...precedent. The second case the FCC relies upon, Brookhaven Cable TV, Inc. v. Kelly, 428 F.Supp. 1216 (N.D.N.Y.1977), aff'd, 573 F.2d 765 (2d Cir.1978), cert. denied, 441 U.S. 904, 99 S.Ct. 1991, 60 L.Ed.2d 372 (1979) involved, not rulemaking, but a declaratory order as to which the defendan......
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New York State Com'n on Cable Television v. F.C.C.
...television programming where the FCC's policy was to delay all price regulation so as to allow free-market pricing. Brookhaven Cable TV, Inc. v. Kelly, 573 F.2d 765 (2d Cir.), cert. denied, 441 U.S. 904, 99 S.Ct. 1991, 60 L.Ed.2d 372 (1978), aff'g, 428 F.Supp. 1216 (N.D.N.Y.1977); see Natio......
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New York State Com'n on Cable Television v. F.C.C.
...stations voluntary). The Commission has preempted regulation of pay television programming services and rates, Brookhaven Cable TV, Inc. v. Kelly, 573 F.2d 765 (2d Cir.1978), cert. denied, 411 U.S. 904, 99 S.Ct. 1991, 60 L.Ed.2d 372 (1979), and the carriage of television broadcast signals. ......
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