Yakima Valley Cablevision, Inc. v. F.C.C.
| Decision Date | 08 July 1986 |
| Docket Number | Nos. 85-1464,85-1665,s. 85-1464 |
| Citation | 794 F.2d 737 |
| Parties | YAKIMA VALLEY CABLEVISION, INC., Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and the United States of America, Respondents, Board of Supervisors of Fairfax County, Virginia, United Cable Television Corporation, City of Fairfax, Virginia, Continental Cablevision of Michigan, Inc., National Cable Television Association, Inc., City of Southfield, Michigan, City of Sunnyside, Washington, et al., Intervenors. CONNECTICUT CABLE TELEVISION ASSOCIATION, INC., Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and the United States of America, Respondents, National Cable Television Association, Inc., Media General Cable of Fairfax, Inc., State of Connecticut, et al., Board of Supervisors of Fairfax County, Virginia, Intervenors. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Petitions for Review of Orders of the Federal Communications commission.
Stuart F. Feldstein, with whom Charles S. Walsh, Arthur H. Harding and Howard S. Shapiro, Washington, D.C., were on brief, for petitioner, Yakima Valley Cablevision, Inc., in No. 85-1464.
Brent N. Rushforth, with whom John I. Davis and Richard D. Marks, Washington, D.C., were on brief, for petitioner, Connecticut Cable Television Ass'n, Inc., in No. 85-1665. Arnold P. Lutzker, Washington, D.C., also entered an appearance, for petitioner in No. 85-1665.
Gregory M. Christopher, Counsel, F.C.C., with whom Jack D. Smith, Gen. Counsel, Daniel M. Armstrong, Associate Gen. Counsel, F.C.C., Robert B. Nicholson and Marion L. Jetton, Attys., Dept. of Justice, Washington, D.C., were on brief, for respondents in Nos. 85-1464 and 85-1665. Margaret G. Halpern and John J. Powers, III, Attys., Dept. of Justice, Washington, D.C., also entered appearances, for respondents in Nos. 85-1464 and 85-1665.
Craig J. Gehring with whom John L. Longstreth was on the brief, Washington, D.C., for intervenors, City of Southfield, Mich., et al., in No. 85-1464.
Donald J. Mulvihill, Hugh P. Morrison, Jr., Rand McQuinn, Kathy M. Silberthau, Washington, D.C., David M. Davenport, David Stitt and Michael H. Long, Fairfax, Va., were on brief, for intervenors, Board of Supervisors of Fairfax County, Va., et al., in Nos. 85-1464 and 85-1665.
Richard K. Greenberg, Hartford, Conn., was on brief, for intervenor, State of Conn., in No. 85-1665.
Brenda L. Fox, Carol A. Melton, Gardner F. Gillespie, Wesley R. Heppler, James F. Ireland, III, Ian D. Volner and Mark L. Pelesh, Washington, D.C., were on joint brief, for intervenors, National Cable Television Ass'n, Inc., et al., in Nos. 85-1464 and 85-1665.
Robert H. Ruxin, Seattle, Wash., entered an appearance, for intervenor, City of Sunnyside, Wash., et al., in No. 85-1464.
Before EDWARDS and BORK, Circuit Judges, and KOZINSKI, * Circuit Judge, United States Court of Appeals for the Ninth Circuit.
Opinion for the Court filed by Circuit Judge HARRY T. EDWARDS.
Petitioners Yakima Valley Cablevision, Inc. ("Yakima") and the Connecticut Cable Television Association, Inc. ("CCTA") challenge orders of the Federal Communications Commission ("FCC" or "the Commission") dismissing requests for declaratory rulings regarding the legality of certain state and local taxes imposed on earnings by cable companies. In each instance, the petitioner seeks a declaration by the FCC that the challenged taxes were excessive "franchise fees" under a now-rescinded FCC regulation 1 and under section 622 of the Cable Communications Policy Act of 1984 ("the Cable Act"). 2 In dismissing the requests for declaratory relief, the FCC declined to address the merits of the underlying franchise-fee disputes. Rather, the FCC ruled that petitioners' claims with respect to taxes assessed before the enactment of the Cable Act were somehow moot. This ruling had the effect of applying retroactively its new policy of refusing to resolve franchise-fee disputes. The Commission also ruled that all current claims concerning the legality of taxes under the franchise-fee provisions of the Cable Act should be resolved by the courts, not the agency.
The petitioners have challenged the legality of the FCC's decision to decline review of franchise-fee disputes arising under the Cable Act. However, we have no occasion here to reach this issue. The initial petitions for declaratory rulings involved solely the status of certain state and local taxes under the FCC franchise-fee regulation; the Cable Act issues were not raised until later in the proceeding. Furthermore, the Commission's policy of deferring franchise-fee issues to courts was enunciated in a separate rulemaking proceeding that is not the subject of this appeal. Indeed, the FCC has recently issued a second rulemaking order that more fully explains the agency's enforcement policy with respect to the franchise-fee provisions of the Cable Act. A challenge to this new policy is now pending before the court in a separate appeal brought by the ACLU; 3 therefore, it would be wholly inappropriate for us to preempt consideration of this issue by the panel assigned to hear the ACLU case. Instead, we will permit the petitioners to intervene in that case for the purpose of challenging the Commission's policy of forbearance.
We further hold, however, that the FCC has unreasonably failed to explain its decision not to address--under its now-rescinded franchise-fee regulation--disputes over franchise fees imposed before the enactment of the Cable Act. The petitioners in this case filed valid petitions requesting relief under a lawful FCC regulation pursuant to procedures established by the Commission. Beginning in 1972, the Commission routinely and consistently had settled franchise disputes under its franchise-fee regulation. Yet, in the instant case, although millions of dollars of past tax liability are at stake, and despite the fact that the FCC regulation unquestionably governs the legality of the taxes imposed before the enactment of the Cable Act, the FCC inexplicably has refused to resolve the franchise-fee disputes and has offered no explanation for its decision to apply retroactively its policy of forbearance. Under Motor Vehicle Manufacturers Association of United States, Inc. v. State Farm Mutual Automobile Insurance Co., 4 we have no choice but to remand this issue to the FCC.
In 1972, before enactment of the Cable Act, the FCC adopted cable television regulations pursuant to its authority under the Communications Act of 1934. 5 Recognizing that the imposition of unduly high franchise fees on cable companies by states and municipalities could hamper the FCC policy of encouraging the growth of cable systems, the Commission promulgated a regulation limiting the imposition of such fees. The regulation provided:
Franchise fees shall be no more than 3 percent of the franchisee's gross revenues per year from all cable services in the community (including all forms of consideration, such as initial lump sum payments). If the franchise fee is in the range of 3 to 5 percent of such revenues, the fee shall be approved by the Commission if reasonable upon showings: (a) by the franchisee, that it will not interfere with the effectuation of federal regulatory goals in the field of cable television, and (b) by the franchising authority, that it is appropriate in light of the planned local regulatory program. With respect to a system community unit that was franchised or in operation prior to March 31, 1972, the provisions of this paragraph shall not be effective unit [sic] the end of the system's current franchise period, or until 15 years from the date of initial grant of the franchise, whichever occurs first. 6
Between 1972 and 1984, the Commission resolved numerous franchise-fee disputes under the regulation; 7 these disputes arose in three different contexts. First, by Commission regulation, cable companies were required to apply for a certificate of compliance, and franchise fees were required to be reported in the application. 8 In reviewing these applications, the FCC would treat the franchise fee as "null and void" to the extent that it violated the relevant Commission regulation. 9 Thus, the Commission examined the legality of franchise fees imposed on every cable company requesting a certificate of compliance.
Second, under the FCC regulation, either a cable company or a franchising authority could apply for a "waiver" of the franchise-fee limits. Most commonly, a franchising authority would request a waiver in order to impose a five percent fee rather than a three percent fee. 10
Finally, if--as in the instant case--a cable company believed that the franchising authority had increased a franchise fee beyond permissible levels after the company already had obtained a certificate of compliance, the company could seek relief in the form of a declaratory ruling from the FCC. 11 This procedure was the only mechanism to challenge an increase in a franchise fee imposed after a cable company had obtained a certificate of compliance.
So far as we can tell, until the instant case, the FCC had not once declined to resolve any legitimate franchise-fee dispute brought before the Commission pursuant to any of the foregoing procedures. 12
In 1984, Congress enacted the Cable Act, with the goal of "establish[ing] a national policy that clarifies the current system of local, state and Federal regulation of cable television." 13 Section 622 of the Cable Act imposes a five percent statutory limit on franchise fees paid by a cable company:
(b) For any twelve-month period, the franchise fees paid by a cable operator with respect to any cable system shall not exceed 5 percent of such cable operator's gross revenues derived in such period from the operation of the cable system. For purposes of this section, the 12-month period shall be the 12-month period applicable under the franchise for...
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