Federal Communications Commission v. Beach Communications, Inc

• Citation: 124 L.Ed.2d 211,508 U.S. 307,113 S.Ct. 2096
• Decision Date: 01 June 1993
• Docket Number: No. 92-603,92-603
• Parties: FEDERAL COMMUNICATIONS COMMISSION and United States, Petitioners, v. BEACH COMMUNICATIONS, INC., et al
• Court: United States Supreme Court

508 U.S. 307

113 S.Ct. 2096

124 L.Ed.2d 211

FEDERAL COMMUNICATIONS COMMISSION and United States, Petitioners,

v BEACH COMMUNICATIONS, INC., et al.

No. 92-603.

Argued March 29, 1993.

Decided June 1, 1993.

Syllabus ^*

The Cable Communications Policy Act of 1984 (Act) provides that cable television systems be franchised by local governmental authorities, but exempts, inter alia, facilities serving "only subscribers in 1 or more multiple unit dwellings under common ownership, control, or management, unless such . . . facilities us[e] any public right-of-way," § 602(7)(B). After petitioner Federal Communications Commission (FCC) ruled that a satellite master antenna television (SMATV) system—which typically receives a satellite signal through a rooftop dish and then retransmits the signal by wire to units within a building or a building complex—is subject to the franchise requirement if its transmission lines interconnect separately owned and managed buildings or if its lines use or cross any public right-of-way, respondents, SMATV operators, petitioned the Court of Appeals for review. Among other things, the court found that § 602(7) violated the equal protection guarantee of the Fifth Amendment's Due Process Clause because there is no rational basis for distinguishing between those facilities exempted by the statute and SMATV systems linking separately owned and managed buildings.

Held: Section 602(7)(B)'s common-ownership distinction is constitutional. Pp. ____.

(a) In areas of social and economic policy, a statutory classification that neither proceeds along suspect lines nor infringes fundamental constitutional rights must be upheld against equal protection challenge if any reasonably conceivable state of facts could provide a rational basis for the classification. See, e.g., Sullivan v. Stroop, 496 U.S. 478, 485, 110 S.Ct. 2499, 2504, 110 L.Ed.2d 438. On rational-basis review, a statutory classification such as the one at issue comes before the Court bearing a strong presumption of validity, and those attacking its rationality have the burden to negate every conceivable basis that might support it. Since a legislature need not articulate its reasons for enacting a statute, it is entirely irrelevant for constitutional purposes whether the legislature was actually motivated by the conceived reason for the challenged distinction. Legislative choice is not subject to courtroom fact-finding and may be based on rational speculation unsupported by evidence or empirical data. Adherence to these restraints on judicial review preserves to the legislative branch its rightful independence and its ability to function. The restraints have added force where a legislature must engage in a process of line drawing, as Congress did here in choosing which facilities to franchise. This necessity renders the precise coordinates of the resulting legislative judgment virtually unreviewable, since the legislature must be allowed leeway to approach a perceived problem incrementally. Pp. ____.

(b) There are at least two possible bases for the common-ownership distinction; either one suffices. First, Congress borrowed § 602(7)(B) from the FCC's pre-Act regulations, and, thus, it is plausible that Congress also adopted the FCC's rationale, which was that common ownership was indicative of systems for which the costs of regulation would outweigh the benefits to consumers. A legislator might rationally assume that such systems would typically be limited in size or would share some other attribute affecting their impact on cable viewers' welfare such that regulators could safely ignore them. Subscribers who can negotiate with one voice through a common owner or manager may have greater bargaining power relative to the cable operator and therefore less need for regulatory protection. A second conceivable basis for the statutory distinction is concern over the potential for effective monopoly power. The first SMATV operator to gain a foothold by installing a dish on one building in a block of separately owned buildings would have a significant cost advantage in competing for the remaining subscribers, because it could connect additional buildings for the cost of a length of cable while its competitors would have to recover the cost of their own satellite facilities. Thus, the first operator could charge rates well above its cost and still undercut the competition. These rationales provide plausible bases for the common-ownership distinction that do not depend upon the use of public rights-of-way. Pp. ____.

296 U.S.App.D.C. 141, 965 F.2d 1103 (CADC 1992), reversed and remanded.

THOMAS, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and WHITE, BLACKMUN, O'CONNOR, SCALIA, KENNEDY, and SOUTER, JJ., joined. STEVENS, J., filed an opinion concurring in the judgment.

John F. Manning, Washington, DC, for petitioners.

Deborah C. Costlow, Washington, DC, for respondents.

Justice THOMAS delivered the opinion of the Court.

In providing for the regulation of cable television facilities, Congress has drawn a distinction between facilities that serve separately owned and managed buildings and those that serve one or more buildings under common ownership or management. Cable facilities in the latter category are exempt from regulation as long as they provide services without using public rights-of-way. The question before us is whether there is any conceivable rational basis justifying this distinction for purposes of the Due Process Clause of the Fifth Amendment.

I

The Cable Communications Policy Act of 1984 (Cable Act), 98 Stat. 2779, amended the Communications Act of 1934, 47 U.S.C. § 151 et seq., to establish a national framework for regulating cable television. One objective of the Cable Act was to set out "franchise procedures and standards which encourage the growth and development of cable systems and which assure that cable systems are responsive to the needs and interests of the local community." § 601(2), 47 U.S.C. § 521(2). To that end, Congress provided for the franchising of cable systems by local governmental authorities, § 621(a), 47 U.S.C. § 541(a), and prohibited any person from operating a cable system without a franchise, subject to certain exceptions, § 621(b), 47 U.S.C. § 541(b). Section 602(7) of the Communications Act, as amended, 47 U.S.C.A. § 522(7) (Supp.1993), determines the reach of the franchise requirement by defining the operative term "cable system." ¹ A cable system means any facility designed to provide video programming to multiple subscribers through "closed transmission paths," but does not include, inter alia,

"a facility that serves only subscribers in 1 or more multiple unit dwellings under common ownership, control, or management, unless such facility or facilities us[e] any public right-of-way." § 602(7)(B), 47 U.S.C.A. § 522(7)(B) (Supp.1993).

In part, this provision tracks a regulatory "private cable" exemption previously promulgated by the Federal Communications Commission (FCC or Commission) pursuant to pre-existing authority under the Communications Act. See 47 CFR § 76.5(a) (1984) (exempting from the definition of "cable television system" "any such facility that serves or will serve only subscribers in one or more multiple unit dwellings under common ownership, control, or management"). The earlier regulatory exemption derived in turn from the Commission's first set of cable rules, published in 1965. See Rules re Microwave-Served CATV, 38 F.C.C. 683, 741 (1965) (exempting from the definition of "community antenna television system" "any such facility which serves only the residents of one or more apartment dwellings under common ownership, control, or management, and commercial establishments located on the premises of such an apartment house"). The Cable Act narrowed the terms of the regulatory exemption by further excluding from the exemption any closed transmission facilities that use public rights-of-way.

This case arises out of an FCC proceeding clarifying the agency's interpretation of the term "cable system" as it is used in the Cable Act. See In re Definition of a Cable Television System, 5 F.C.C.Rcd. 7638 (1990). In this proceeding, the Commission addressed the application of the exemption codified in § 602(7)(B) to satellite master antenna television (SMATV) facilities. Unlike a traditional cable television system, which delivers video programming to a large community of subscribers through coaxial cables laid under city streets or along utility lines, an SMATV system typically receives a signal from a satellite through a small satellite dish located on a rooftop and then retransmits the signal by wire to units within a building or complex of buildings. See 5 F.C.C.Rcd., at 7639. The Commission ruled that an SMATV system that serves multiple buildings via a network of interconnected physical transmission lines is a cable system, unless it falls within the § 602(7)(B) exemption. See id., at 7639-7640. Consistent with the plain terms of the statutory exemption, the Commission concluded that such an SMATV system is subject to the franchise requirement if its transmission lines interconnect separately owned and managed buildings or if its lines use or cross any public right-of-way. See id., at 7641-7642.²

Respondents Beach Communications, Inc., Maxtel Limited Partnership, Pacific Cablevision, and Western Cable Communications, Inc.—SMATV operators that would be subject to franchising under the Cable Act as construed by the Commission petitioned the Court of Appeals for review. The Court of Appeals rejected respondents' statutory challenge to the Commission's interpretation, but a majority of the court found merit in the claim that § 602(7) violates the implied equal protection guarantee of the Due Process Clause. 294 U.S.App.D.C. 377, 959 F.2d 975 (1992). In the absence of what it termed "the predominant rationale for local franchising" (use of public...