Federal Communications Commission v. Florida Power Corporation Group Cable, Inc v. Florida Power Corporation

• Citation: 107 S.Ct. 1107,480 U.S. 245,94 L.Ed.2d 282
• Decision Date: 25 February 1987
• Docket Number: Nos. 85-1658,85-1660,s. 85-1658
• Parties: FEDERAL COMMUNICATIONS COMMISSION, et al., Appellants, v. FLORIDA POWER CORPORATION et al. GROUP W CABLE, INC., et al., Appellants, v. FLORIDA POWER CORPORATION et al
• Court: United States Supreme Court

480 U.S. 245

107 S.Ct. 1107

94 L.Ed.2d 282

FEDERAL COMMUNICATIONS COMMISSION, et al., Appellants,

v FLORIDA POWER CORPORATION et al.

GROUP W CABLE, INC., et al., Appellants,

v. FLORIDA POWER CORPORATION et al.

Nos. 85-1658, 85-1660.

Argued Dec. 3, 1986.

Decided Feb. 25, 1987.

Syllabus

The Pole Attachments Act (Act) empowers the Federal Communications Commission (FCC), in the absence of parallel state regulation, to determine "just and reasonable" rates that utility companies may charge cable television systems for using utility poles as the physical medium for stringing television cable (47 U.S.C. § 224(b)(1)). The Act, in effect, also provides a range of reasonableness within which the FCC may set rates when it indicates that a minimum reasonable rate is equivalent to the marginal cost of providing pole attachments, while the maximum reasonable rate is determined by computing the fully allocated cost of the construction and operation of each pole to which cable is attached (47 U.S.C. § 224(d)(1)). Upon the complaints of three cable operators alleging that the yearly per-pole attachment rentals charged them by appellee Florida Power Corporation—$7.15, $6.24, and $5.50, respectively—were unreasonable, the FCC's Common Carrier Bureau issued orders reforming each of the pole attachment agreements to provide for yearly rents of $1.79 per pole. These orders were upheld by the FCC, which rejected appellee's constitutional arguments under the Takings and Due Process Clauses. However, on review, the Court of Appeals held that the Act violated the Fifth Amendment. The court first concluded that the Act authorized a permanent physical occupation of property constituting a per se taking for which compensation must be paid under Loretto v. Tele-prompter Manhattan CATV Corp., 458 U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982). The court then struck down the Act under the Fifth Amendment on the ground that its authorization to the FCC to make initial rate determinations under prescribed standards usurped an exclusively judicial function.

Held:

1. The Act does not authorize a taking of property within the meaning of the Fifth Amendment. Pp. 250-254.

(a) The Court of Appeals erred in applying Loretto § narrow per se rule, since the element of required acquiescence is at the heart of the concept of occupation under Loretto, whereas nothing in the Act, as in- terpreted by the FCC, requires utility companies to give cable companies space on utility poles or prohibits utility companies from refusing to enter into attachment agreements. Since the Act clearly contemplates voluntary commercial leases rather than forced governmental licensing, it merely regulates the economic relations of utility company landlords and cable company tenants, which regulation is not a per se taking under Loretto. Pp. 250-253.

(b) The FCC order did not effect a taking under traditional Fifth Amendment standards, which permit governmental regulation of rates chargeable on the use of private property devoted to public purposes so long as the rates set are not confiscatory. Here, the rate imposed was calculated according to the Act's maximum rate formula, which is not confiscatory since it provides for the recovery of fully allocated costs, including the actual cost of capital. Pp. 253-254

2. Because the Act does not authorize a taking under the Fifth Amendment, it is unnecessary to review the Court of Appeals' holding that the Act is unconstitutional. P. 254.

772 F.2d 1537, reversed.

MARSHALL, J., delivered the opinion for a unanimous Court. POWELL, J., filed a concurring opinion, in which O'CONNOR, J., joined, post, p. ----.

Lawrence G. Wallace, Washington, D.C., for appellants in No. 85-1658.

Jay E. Ricks, Washington, D.C., for appellants in No. 85-1660.

Allan J. Topol, Washington, D.C., for appellees in both cases.

Justice MARSHALL delivered the opinion of the Court.

These cases present consolidated appeals from a single decision of the United States Court of Appeals for the Eleventh Circuit holding that 47 U.S.C. § 224 (the Pole Attachments Act) effects an unconstitutional taking of property without just compensation.

I

The Pole Attachments Act, 92 Stat. 35, as amended, 47 U.S.C. § 224, was enacted by Congress as a solution to a perceived danger of anticompetitive practices by utilities in connection with cable television service. Cable television operators, in order to deliver television signals to their subscribers, must have a physical carrier for the cable; in most instances underground installation of the necessary cables is impossible or impracticable. Utility company poles provide, under such circumstances, virtually the only practical physical medium for the installation of television cables. Over the past 30 years, utility companies throughout the country have entered into arrangements for the leasing of space on poles to operators of cable television systems. These contracts have generally provided for the payment by the cable companies of a yearly rent for space on each pole to which cables were attached, the fixed costs of making modifications to the poles and of physical installation of cables being borne by the cable operators. In many States the rates charged by the utility companies for these attachments have not been subject to regulation.

In response to arguments by cable operators that utility companies were exploiting their monopoly position by engaging in widespread overcharging, Congress in the Pole Attachments Act authorized the Federal Communications Commission to fill the gap left by state systems of public utilities regulation.¹ See S.Rep. No. 95-580, pp. 12-14 (1977), U.S. Code Cong. & Admin.News 1978, p. 109. The Act provides that any cable company operating in a State which does not regulate the rates, terms, and conditions of pole attachments may seek relief from alleged overcharging before the Commission, which is empowered to "regulate the rates, terms, and conditions for pole attachments to provide that such rates, terms, and conditions are just and reasonable. . . ." 47 U.S.C. § 224(b)(1). The Act establishes a standard for the Commission's determination of rates, providing that "a rate is just and reasonable if it assures a utility the recovery of not less than the additional costs of providing pole attachments, nor more than an amount determined by multiplying the percentage of the total usable 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." § 224(d)(1).

In 1963, appellee Florida Power Corporation (Florida Power) entered into a pole attachment agreement with appellant Cox Cablevision Corporation (Cox). Florida Power subsequently, in 1977 and 1980, contracted for similar purposes with Teleprompter Corporation and Teleprompter Southeast, Inc. (Teleprompter), and Acton CATV, Inc. (Acton), respectively.² In November 1980, Teleprompter filed a complaint with the FCC, alleging that its 1980 per pole rent of $6.24 was unreasonable under the Act. In February 1981, Acton filed a complaint concerning the rate under its agreement, which was $7.15 per pole. In July 1981, the Commis- sion's Common Carrier Bureau issued a memorandum opinion and order finding in favor of Teleprompter and Acton, reforming the agreements to provide in both cases for yearly rents of $1.79 per pole, and ordering refunds of excess rents paid after the filing of the complaints.³ Florida Power filed an application for review by the FCC; during the pendency of this application Cox filed a complaint seeking revision of the rent charge under its 1963 agreement, which was at that time set at $5.50 per pole. The Common Carrier Bureau ordered reformation of Cox's agreement to provide for rent of $1.79 per pole. In September 1984 the FCC, in a single order, approved the orders of the Common Carrier Bureau in all three cases. The Commission rejected constitutional arguments raised by Florida Power under the Takings and Due Process Clauses, and upheld the rate calculations made by the Bureau.

Florida Power then sought review of the FCC's decision in the United States Court of Appeals for the Eleventh Circuit.⁴ Neither Florida Power nor any of the intervenors argued before the Eleventh Circuit that the Pole Attachments Act was unconstitutional.⁵ The Court of Appeals nonetheless held in a per curiam opinion that the Pole Attachments Act violated the Fifth Amendment. 772 F.2d 1537 (1985). The court first concluded that the Act effected a taking of property because it authorized a permanent physical occupation of property under our decision in Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982). 772 F.2d, at 1544. The court then struck down the Act under the Fifth Amendment because it authorizes the FCC to make the initial determination of the amount of compensation to be paid under legislatively prescribed standards. "By prescribing a 'binding rule' in regard to the ascertainment of just compensation," the court stated, "Congress has usurped what has long been held an exclusive judicial function." Id., at 1546.

The FCC and intervenor cable operators noticed separate appeals from this decision. We noted probable jurisdiction and consolidated the cases for argument and decision, 476 U.S. 1156, 106 S.Ct. 2273, 90 L.Ed.2d 716 (1986). We now reverse.

II

The Court of Appeals found at the outset that the Pole Attachments Act authorizes a permanent physical occupation of property, which, under the rule we adopted in Loretto, is per se a taking for which compensation must be paid. 772 F.2d, at 1543-1544. We disagree with this premise, for we find that Loretto has no application to the facts of this litigation.

In Loretto we reviewed a New York statute which prohibited any owner of rental property from "in...