National Cable Television Association, Inc v. United States 8212 948

• Citation: 39 L.Ed.2d 370,94 S.Ct. 1146,415 U.S. 336
• Decision Date: 04 March 1974
• Docket Number: No. 72,72
• Parties: NATIONAL CABLE TELEVISION ASSOCIATION, INC., Petitioner, v. UNITED STATES and Federal Communications Commission. —948
• Court: United States Supreme Court

415 U.S. 336

94 S.Ct. 1146

39 L.Ed.2d 370

NATIONAL CABLE TELEVISION ASSOCIATION, INC., Petitioner,

v UNITED STATES and Federal Communications Commission.

No. 72—948.

Argued Dec. 3, 1973.

Decided March 4, 1974.

Syllabus

The Independent Offices Appropriation Act, 1952 (hereafter the Act), authorizes each federal agency to prescribe by regulation such fee for the agency's services as is determined to be fair and equitable, taking into consideration the direct and indirect 'cost to the Government, value to the recipient, public policy or interet served, and other pertinent facts . . ..' Pursuant to the Act, the Federal Communications Commission (FCC), in revising fees imposed upon community antenna television (CATV) systems, first estimated its direct and indirect costs for CATV regulations, and then, while retaining filing fees, added an annual fee for each CATV system at the rate of 30¢ per subscriber, concluding that this fee would approximate the 'value to the recipient' used in the Act. The Court of Appeals, on a review obtained by petitioner, a CATV trade association, approved the FCC's action. Held:

1. The Act authorizes the imposition of a 'fee,' which connotes a 'benefit' of 'value to the recipient.' The latter phrase is the proper measure of the authorized charge, not the 'public policy or interest served' phraseology which, if read literally, would enable the agency to make assessments or tax levies whereby CATV's and other broadcasters would be paying not only for the benefits they received but, contrary to the Act's objectives, would also be paying for the protective services the FCC renders to the public. Pp. 340—343.

2. The FCC should reappraise the annual fee imposed upon the CATV's. It is not enough to figure the total cost (direct and indirect) to the FCC for operating a CATV supervision unit and then to contrive a formula reimbursing the FCC for that amount, since some of such costs certainly inured to the public's benefit and should not have been included in the fee imposed upon the CATV's. Pp. 343—344.

464 F.2d 1313, reversed and remanded.

Stuart F. Feldstein, Washington, D.C., for petitioner.

Edward R. Korman, New York City, for respondents.

Jr. Justice DOUGLAS delivered the opinion of the Court.

The Independent Offices Appropriation Act, 1952, Tit. 5, 65 Stat. 290, 31 U.S.C. § 483a, provides in relevant part: 'It is the sense of the Congress that any work, service . . . benefit, . . . license, . . . or similar thing of value or utility performed, furnished, provided, granted . . . by any Federal agency . . . to or for any person (including . . . corporations . . .) . . . shall be self-sustaining to the full extent possible, and the head of each Federal agency is authorized by regulation . . . to prescribe therefor . . . such fee, charge, or price, if any, as he shall determine . . . to be fair and equitable taking into consideration direct and indirect cost to the Government, value to the recipient, public policy or interest served, and other pertinent facts . . ..'¹ Petitioner is a trade association rep- resenting community antenna television (CATV) systems which transmit TV programs by cable. The Federal Communications Commission is authorized to regulate these CATV outlets, as the Court held in United States v. Southwestern Cable Co., 392 U.S. 157, 88 S.Ct. 1994, 20 L.Ed.2d 1001. The power to regulate, though not in the form of granting licenses extends to the promulgation of regulations requiring the compulsory origination of programs by CATV. United States v. Midwest Video Corp., 406 U.S. 649, 92 S.Ct. 1860, 32 L.Ed.2d 390. These CATV's, however, are not under the exclusive oversight of the Commission. Local governments and even some States provide permits or franchises to CATV's, including rights of way for the cables used. Some communities in return for their permits require the CATV to pay an annual percentage fee as a gross receipts tax.²

The Commission in 1964 established only nominal filing fees that produced revenues which approximated 25% of the Commission's annual appropriation. See 21 F.C.C.2d 502, 503. See also Aeronautical Radio, Inc. v. United States, 7 Cir., 335 F.2d 304. The Bureau of the Budget urged higher fee schedules; and so did the committees of the Congress. See H.R.Rep.No.91—316, pp. 7—8, and H.R.Conf.Rep.No.91—649, p. 6, where it was stated:

'The committee of conference is agreed that the fee structure for the Commission should be adjusted to fully support all its activities so the taxpayers will not be required to bear any part of the load in view of the profits regulated by this agency.'

The Commission, after notice and hearing, revised existing fees for licensees and for the first time imposed fees upon CATV's. It first estimated its direct and indirect costs for CATV regulation which were $1,145,400 or 4.6% of its total budget request for that year. Filing fees were retained; and there was added an annual fee for each cable television system at the rate of 30 cents for each subscriber. The Commission, finding that subscription rates clustered at about $5 a month, concluded that the 30-cent fee would typically amount to only about one-half of 1% of a CATV system's gross revenues from subscription. The fees would produce, it said, $1,145,000 annually, and it concluded that the 30-cent fee would approximate the 'value to the recipient' used in the Act, 23 F.C.C.2d 880; 28 F.C.C.2d 139.

Petitioner obtained review of the decision in the Court of Appeals, which approved the Commission's action, 464 F.2d 1313. The case is here on a petition for certiorari which we granted, 411 U.S. 981, 93 S.Ct. 2267, 36 L.Ed.2d 957, because of an apparent conflict between the decision in this case and the decision in New England Power Co. v. FPC, 151 U.S.App.D.C. 371, 467 F.2d 425, of the Court of Appeals for the District of Columbia Circuit.

Taxation is a legislative function, and Congress, which is the sole organ for levying taxes,³ may act arbitrarily and disregard benefits bestowed by the Government on a taxpayer and go solely on ability to pay, based on property or income. A fee, however, is incident to a voluntary act, e.g., a request that a public agency permit an applicant to practice law or medicine or construct a house or run a broadcast station. The public agency performing those services normally may exact a fee for a grant which, presumably, bestows a benefit on the applicant, not shared by other members of society. It would be such a sharp break with our traditions to conclude that Congress had bestowed on a federal agency the taxing power that we read 31 U.S.C. § 483a narrowly as authorizing not a 'tax' but a 'fee.' A 'fee' connotes a 'benefit' and the Act by its use of the standard 'value to the recipient' carries that connotation. The addition of 'public policy or interest served, and other pertinent facts,' if read literally, carries an agency far from its customary orbit and puts it in search of revenue in the manner of an Appropriations Committee of the House.

The lawmaker may, in light of the 'public policy or interest served,' make the assessment heavy if the lawmaker wants to discourage the activity;⁴ or it may make the levy slight if a bounty is to be bestowed; or the lawmaker may make a substantial levy to keep entrepreneurs from exploiting a semipublic cause for their own personal aggrandizement. Such assessments are in the nature of 'taxes' which under our constitutional regime are traditionally levied by Congress.

There is no doubt that the main function of the Commission is to safeguard the public interest in the broadcasting activities of members of the industry. If assessments are made by the Commission against members of the industry which are sufficient to recoup costs to the Commission for its oversight, the CATV's and other broadcasters would be paying not only for benefits they received but for the protective services rendered the public by the Commission. The fixing of such as- sessments, it is argued, is the levying of taxes. The Court, speaking through Mr. Chief Justice Hughes said in Schechter Corp. v. United States, 295 U.S. 495, 529, 55 S.Ct. 837, 843, 79 L.Ed. 1570:

'The Constitution provides that 'All legislative powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.' Art. I, § 1. And the Congress is authorized 'To make all laws which shall be necessary and proper for carrying into execution' its general powers. Art. I, § 8, par. 18. The Congress...