Electronic Industries Ass'n, Consumer Electronics Group v. F. C. C., 75-1120

Citation180 U.S.App.D.C. 250,554 F.2d 1109
Decision Date16 December 1976
Docket NumberNo. 75-1120,75-1120
Parties, 2 Media L. Rep. 1159 ELECTRONIC INDUSTRIES ASSOCIATION, CONSUMER ELECTRONICS GROUP, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents. *
CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)

J. Edward Day, Washington, D. C., with whom William F. Taylor, Washington, D. C., was on the brief for petitioner in No. 75-1120.

Horace P. Moulton, New York City, with whom Stephen N. Shulman, Stephen G. Wood, Washington, D. C., Eric L. Hirschhorn, F. Mark Garlinghouse and Alfred A. Green, New York City, were on the brief for petitioners American Tel. and Tel. Co., and others, in No. 75-1143 also argued for all other petitioners.

Jack David Smith, Counsel, F. C. C., Washington, D. C., with whom Ashton R. Hardy, Gen. Counsel, Daniel M. Armstrong, Acting Associate Gen. Counsel, C. Grey Pash, Jr., Robert C. Ware, Counsel, F. C. C. , Barry Grossman, and Laurence K. Gustafson, Attys., Dept. of Justice, Washington, D. C., were on the brief for respondents.

Allen R. Frischkorn, Jr., Ruth L. Prokop and Timothy N. Seward, Washington, D. C., were on the brief for petitioners in No. 75-1148.

Warren E. Baker, Westwood, Kan., John M. Lothschuetz, Mansfield, Ohio, and Carolyn C. Hill, Washington, D. C., were on the brief for petitioner in No. 75-1227.

Abe Fortas and Kenneth E. Hardman, Washington, D. C., were on the brief for petitioner in No. 75-1266.

Jack Werner, Washington, D. C., was on the brief for petitioner in Nos. 75-1394 and 75-1395. Laurence Singer, Washington, D. C., also entered an appearance for petitioner in Nos. 75-1394 and 75-1395.

Philip M. Walker and Donald E. Ward, Washington, D. C., were on the brief for petitioner in No. 75-1401. Arthur G. House, Chevy Chase, Md., also entered an appearance for petitioner in No. 75-1401.

Herbert E. Forrest, Washington, D. C., Thormund A. Miller, San Francisco, Cal., and James M. Tobin, Washington, D. C., were on the brief for petitioner in No. 75-1404.

Michael H. Bader, Kenneth A. Cox, William J. Byrnes and Raymond C. Fay, Washington, D. C., were on the brief for petitioners in No. 75-1422.

Robert E. McKee and Howard A. White, New York City, were on the brief for petitioner in No. 75-1453.

William K. Coulter and Cynthia R. Clarke, Washington, D. C., were on the brief for petitioner in No. 75-1459.

Denis J. Brion, Washington, D.C., Carl J. Cangelosi, New York City, Eileen Lerman, Washington, D.C., and Donald J. Elardo, New York City, were on the brief for petitioner in No. 75-1513.

John B. Gantt, Washington, D. C., was on the brief for petitioner in No. 75-1558.

James T. Roche, John M. Scorce, Vienna, Va., and Kevin H. Cassidy, Washington, D. C., were on the brief for intervenor in No. 75-1143.

Robert E. Conn, New York City, entered an appearance for intervenor in Nos. 75-1453 and 75-1513.

Before MacKINNON and ROBB, Circuit Judges, and BRODERICK, ** United States District Judge for the Eastern District of Pennsylvania.

Opinion for the court filed by MacKINNON, Circuit Judge.

MacKINNON, Circuit Judge:

Petitioners-appellant 1 (hereinafter, "petitioners") in these 14 consolidated cases are common carriers or equipment manufacturers regulated by the Federal Communications Commission (FCC) who seek review of the orders establishing the Commission's 1975 fee schedule 2 insofar as that schedule relates to them. They therefore challenge the validity of the following specific fees: (1) common carrier application, filing, and grant fees; (2) common carrier tariff filing fees; and (3) equipment type approval, type acceptance and certification fees. 3 In accordance with the disposition made in a companion case decided this same date, National Cable Television Assn. v. FCC (National Cable), 4 we remand this case to the FCC for reconsideration and clarification of the 1975 fee schedule in accordance with the principles set forth in this and the companion cases also decided this date. 5

I.

The fees at issue in this case appear to have been fixed in essentially the same way as were the other fees in the 1975 FCC fee schedule. This process, described in greater detail in National Cable, was designed to recover the costs associated with the processing of applications and tariff filings, and involved three steps: (1) calculation of "total projected costs" of the particular bureau 6 by adding a pro-rata share of certain indirect costs 7 to "all costs" which could be directly attributed to that bureau; (2) multiplication of this "total projected costs" figure by a percentage representing the portion of the bureau's activity that was devoted to application processing or tariff filing; (3) addition of a portion of the cost of the Antenna Survey Program conducted by the Field Operations Bureau, where applicable, to arrive at a "fee recoverable cost." 8 Fees were then set by proportionately scaling down previous rates until a projected total revenue equal to the fee recoverable cost was reached. 9

We have criticized this method of setting fees in National Cable, and there determined that the cable television annual authorization fee did not comply with the requirements set out by the Congress in the independent Offices Appropriation Act of 1952 (IOAA) 10 and by the Supreme Court in National Cable Television Assn. v. United States (NCTA), 415 U.S. 336, 94 S.Ct. 1146, 39 L.Ed.2d 370 (1974), and FPC v. New England Power Co., 415 U.S. 345, 94 S.Ct. 1151, 39 L.Ed.2d 383 (1974). We adopt those criticisms here and reach a similar conclusion. Despite the wide variety in the composition of the fees for the Cable TV Bureau and the bureaus involved here, and the very substantial difference in duties, the controlling principles are the same. Since the Commission followed the same principles in setting all the fees, the bureau fees here in question should similarly be corrected. The belated revision of the figures for projected and recoverable costs in the Common Carrier Bureau, see note 8 supra, also compels remand. We therefore return this case along with its companions to the Commission for reconsideration and clarification of the 1975 fees.

Petitioners have raised many significant arguments concerning the validity of the particular fees at issue here. It is our conclusion that compliance with the requirements set out in the other cases decided today, see note 5 supra, will also settle many if not all of the disputes which have given rise to this lawsuit. Certain of the contentions of the petitioners in this case bear discussion, however. In the following sections, we discuss several unique questions which bear upon the application of the principles of National Cable by the agency on remand.

II.

The contention most strongly urged by petitioners is that the Commission has no authority to assess any fee for tariff filings and equipment approvals and certifications, even assuming that such fees would be constructed so as to comply with the requirements set out in the companion cases. Petitioners' argument is that the public interest in these activities is so strong that it is unfair to assess any of their cost against any private party. In support of this view, they cite language in NCTA which they allege indicates that the inclusion of charges for services rendered to the public in a fee assessed against a private party will transform that fee into a tax, which the agency has no authority to levy. 415 U.S. at 341-42, 94 S.Ct. 1146.

Examination of the two Supreme Court decisions, supra, on this subject fails to reveal support for this broad proposition. What the Court does hold is that " 'value to the recipient' is . . . the measure of the authorized fee," 415 U.S. at 342-43, 94 S.Ct. at 1150, and that to the extent that the Commission expended moneys for the "public policy or interest . . . and other pertinent facts," 415 U.S. at 343, 94 S.Ct. at 1150, such expenses could not be recovered from those regulated by the agency. The Court quoted a statement from the legislative history which indicated that the cost of granting a "franchise," and the cost of services which result in "protection" of franchise holders (presumably apart from protecting the public), were examples of benefits to recipients which were of value to them and for which they could be required to pay. In connection therewith, the statement observed that the recipient "should pay some of the cost of the hearings." 415 U.S. at 342-43, 94 S.Ct. at 1150. See note 17 infra. This indicates the Court recognized that the problem involved separating out the costs of issuing the franchise and of protecting it from operational interference, and of collecting for such expenses as distinguished from "costs (of services which) inured to the benefit of the public."

Therefore it is clear that under NCTA expenditures made to benefit the public are required to be excluded from a proper fee. 415 U.S. at 341-43, 94 S.Ct. 1146. But the Court has not held that no fee can be assessed in situations which partially benefit the public. To the contrary, it explicitly recognized that "some of the costs (of the FCC regulation of the cable television industry) inured to the benefit of the public, unless the entire regulatory scheme is a failure, which we refuse to assume," 415 U.S. at 343, 94 S.Ct. at 1150, but held that a fee related to costs could still be assessed against the private recipient so long as it was measured by a "value to the recipient" standard and the cost of providing public benefits was excluded. 415 U.S. at 342-44, 94 S.Ct. 1146.

Application of that principle to these cases presents difficult practical questions on matters about which the record contains insufficient data. Because of that void, a detailed analysis by this court of the problems involved is impossible. We can, however, provide some general guidelines for the Commission which we see as being presented by the...

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