Document ID: A:\BEACH.TXT FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES, PETITIONERS v. BEACH COMMUNICATIONS, INC., ET AL. No. 92-603 SUPREME COURT OF THE UNITED STATES 113 S. Ct. 2096; 1993 U.S. LEXIS 3744; 124 L. Ed. 2d 211; 61 U.S.L.W. 4526; 73 Rad. Reg. 2d (P & F) 1 March 29, 1993, Argued June 1, 1993, Decided PRIOR HISTORY: [*1] ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR DI DISPOSITION: 296 U.S. App. D. C. 141, 965 F. 2d 1103, reversed and remanded. SYLLABUS: The Cable Communications Policy Act of 1984 (Act) provides that cable television systems b ship, control, or management, unless such . . . facilities use any public right-of-way," @ tellite signal through a rooftop dish and then retransmits the signal by wire to units wit or if its lines use or cross any public right-of-way, respondents, SMATV operators, petit Clause because there is no rational basis for distinguishing between those facilities exe Held: Section 602(7)(B)'s common-ownership distinction is constitutional. Pp. 5-13. (a) In areas of social and economic policy, a statutory classification that neither procee could provide a rational basis for the classification. See, e.g., Sullivan v. Stroop, 496 ose attacking its rationality have the burden [*3] to negate every conceivable basis th gislature was actually motivated by the conceived reason for the challenged distinction. L traints on judicial review preserves to the legislative branch its rightful independence a lities to franchise. This necessity renders the precise coordinates of the resulting legis (b) There are at least two possible bases for the common-ownership distinction; either one as [*4] that common ownership was indicative of systems for which the costs of regulati ibute affecting their impact on cable viewers' welfare such that regulators could safely i fore less need for regulatory protection. A second conceivable basis for the statutory dis eparately owned buildings would have a significant cost advantage in competing for the rem satellite facilities. Thus, the first operator could charge rates well above its cost and ts-of-way. Pp. 9-13. 296 U.S. App. D. C. 141, 965 F. 2d 1103, reversed and remanded. JUDGES: THOMAS, J., delivered the opinion of the Court, in which REHNQUIST, C. J., and WHI OPINIONBY: THOMAS OPINION: [**218] JUSTICE THOMAS delivered the opinion of the Court. In providing for the regulation of cable television facilities, Congress has drawn a di facilities in the latter category are exempt from regulation as long as they provide serv es of the Due Process Clause of the Fifth Amendment. I The Cable Communications Policy Act of 1984 (Cable Act), 98 Stat. 2779, amended the Com t out "franchise procedures and standards which encourage the growth and development of ca s provided for the franchising of cable systems by local governmental authorities, @ 621(a), 47 U.S.C. @ 541(a), and prohibited any person from ope C. A. @ 522(7) (Supp. 1993), determines the reach of the franchise requirement by defining aths," but does not include, inter alia, - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n1 The Cable Television Consumer Protection and Competition Act of 1992, Pub. L. 102-38 tion of rates charged by cable systems. See @ 3, 106 Stat. 1464. The 1992 Act renumbered t - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [*7] "a facility that serves only subscribers in 1 or more multiple unit dwellings under com In part, this provision tracks a regulatory "private cable" exemption previously promulgat ng from the definition of "cable television system" "any such facility that serves or will m the Commission's first set of cable rules, published in 1965. See Rules re Microwave-Ser ne or more apartment dwellings under common ownership, control, or management, and commerc om 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 the Commission addressed the application of the exemption codified in @ 602(7)(B) to satel through coaxial cables laid under city streets or along utility lines, an SMATV system ty complex of buildings. See 5 F. C. C. Rcd., at 7639. The Commission ruled that an SMATV sys ption. See id., at 7639-7640. Consistent with the plain terms of the statutory exemption, ngs or if its lines use or cross any public right-of-way. See id., at 7641-7642. n2 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n2 In its initial interpretation of the Cable Act, the Commission had ruled that the di ment" of the buildings served. In re Amendments of Parts 1, 63, & 76, 104 F. C. C. 2d 386, s at issue here. See In re Definition of a Cable Television System, 5 F. C. C. Rcd. 7638, - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [*10] Respondents Beach Communications, Inc., Maxtel Limited Partnership, Pacific Cablevision Court of Appeals for review. The Court of Appeals rejected respondents' statutory challen Process Clause. 294 U.S. App. D. C. 377, 959 F. 2d 975 (1992). In the absence of what it t ny conceivable basis, for distinguishing between those facilities exempted by the statute provide "additional 'legislative facts'" to justify the distinction. Ibid. n3 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n3 Respondents also claimed that the Cable Act's franchise requirement violates the Fir activities. The Court of Appeals held the First Amendment claim unripe, 294 U.S. App. D. C d, at 986. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [*11] A report subsequently filed by the Commission failed to satisfy the Court of Appeals. T other than those offered by a concurring member [**221] of the court. App. to Pet. for aditional cable systems than are facilities serving commonly owned buildings, in terms of and concurring in judgment). In a second opinion, the majority found this rationale to be protection component of the Fifth Amendment, insofar as it imposes a discriminatory franch tuated SMATV operators. Id., at , 965 F. 2d, at 1106. n5 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n4 Chief Judge Mikva dissented for the reasons given in his earlier concurrence. U.S. n5 The Court of Appeals had also questioned whether there existed a rational basis for as radio or microwave transmission. See 294 U.S. App. D. C., at 382, 389, 959 F. 2d, at 98 ted here. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [*13] Because the Court of Appeals held an Act of Congress unconstitutional, we granted certi II Whether embodied in the Fourteenth Amendment or inferred from the Fifth, equal protecti t neither proceeds along suspect lines nor infringes fundamental constitutional rights mus Sullivan v. Stroop, 496 U.S. 478, 485 (1990); Bowen v. Gilliard, 483 U.S. 587, 600-603 (19 asons" for Congress' action, "our inquiry is at an end." United States Railroad Retirement pathy, even improvident decisions will eventually be rectified by the democratic process a ootnote omitted). n6 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n6 As they did in the Court of Appeals, respondents seek heightened scrutiny, claiming ondents). We will confine ourselves, however, to the question presented, which is limited eals did not reach respondents' heightened-scrutiny challenge because it found merit in th 4-15, respondents point to the burdens imposed on franchised cable systems under the newly dents' arguments for heightened scrutiny are best left open for consideration by the Court Respondents also raise a threshold issue. They argue that no case or controversy exists that local franchising must depend on use of public rights-of-way) when it took no action essional adoption of statutory interpretations, however, has no place in constitutional re - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [*15] [**222] On rational-basis review, a classification in a statute such as the Cable Act ve classification have the burden "to negative every conceivable basis which might support Moreover, because we never require a legislature to articulate its reasons for enacting a States Railroad Retirement Bd. v. Fritz, supra, at 179. See Flemming v. Nestor, 363 U.S. o significance in rational-basis analysis. See Nordlinger v. Hahn, 505 U.S. , (1992) (slip op., at 13) (equal protection "does not demand for purposes other words, a legislative choice is not subject to courtroom fact-finding and may be base 6, 464 (1981). "'Only by faithful adherence to this guiding principle of judicial review o hael v. Southern Coal & Coke Co., 301 U.S. 495, 510 (1937)). [**223] These restraints on judicial review have added force "where the legislature m t to a regulatory requirement -- much like classifying governmental beneficiaries -- "inev might have been drawn differently at some points is a matter for legislative, rather than ion of "cable system" those facilities that serve commonly owned or managed buildings with mic or social legislation. In establishing the franchise requirement, Congress had to draw nreviewable, since the legislature must be allowed leeway to approach a perceived problem "The problem of legislative classification is a perennial one, admitting of no doctrinaire take one step at a time, addressing itself to the phase of the problem which seems most a ion Clause goes no further than the invidious discrimination." Id., at 489 (citations omit - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n7 See also Dandridge v. Williams, 397 U.S. 471, 485 (1970) (classification does not vi ed); Metropolis Theatre Co. v. Chicago, 228 U.S. 61, 69-70 (1913) ("The problems of govern , 207 U.S. 338, 354 (1907) ("logical appropriateness of the inclusion or exclusion of obje - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [*19] Applying these principles, we conclude that the common-ownership distinction is constit hough the existence of a prior administrative scheme is certainly not necessary to the rat of those systems for which the costs of regulation would outweigh the benefits to consumer CFR @ 76.5(a) (1984). In explaining both exemptions, the Commission stated: "Not all [systems] can be subject to effective regulation with the resources available nor which best conserves regulatory energies and allows the most cost effective use of availa e very small are inefficient to regulate and can safely be ignored in terms of their poten tations." In re Definition of a Cable Television System, 67 F. C. C. 2d 716, 726 (1978). This regulatory-efficiency model, originally suggested by Chief Judge Mikva in his concurr d buildings without crossing public rights-of-way would typically be limited in size or wo Respondents argue that Congress did not intend common ownership to be a surrogate for s e posited reason for the challenged distinction actually motivated Congress is "constituti tes that both common ownership and number of subscribers were considered indicia of "very separate satellite dish on each building served. Brief for Respondents 42. The additional Furthermore, small size is only one plausible ownership-related factor contributing to ould conceivably have greater bargaining power vis--vis the cable operator (even if the nu ubstantial leverage, because he could withhold permission to operate the SMATV system on h subscribers in commonly owned complexes. Respondents acknowledge such possibilities, see - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n8 According to respondents, the FCC's pre-Cable Act common-ownership exemption provide (MATV) facilities -- ordinary rooftop antenna facilities that receive conventional broadca rgue that this prior exemption merely reflected the FCC's judgment that common antennas, u g, because Congress is not bound by the administrative derivation of the "private cable" e arth Satellite Communications, Inc., 95 F. C. C. 2d 1223, 1224, n. 3 (1983), aff'd sub nom apply equally to SMATV and MATV facilities. See 5 F. C. C. Rcd., at 7639-7641. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [*23] There is a second conceivable basis for the statutory distinction. Suppose competing SM out crossing a public right-of-way. If all the buildings belong to one owner or are common e first SMATV operator who gains a foothold by signing a contract and installing a satelli ect additional buildings for the cost of a few feet of cable, whereas any competitor would This potential for effective monopoly power might theoretically justify regulating the lat III The Court of Appeals quite evidently believed [*24] that the crossing or use of a pu , at 1105; 294 U.S. App. D. C., at 389, 959 F. 2d, at 987. As we have indicated, however, ptions underlying these rationales may be erroneous, but the very fact that they are "argu The judgment of the Court of Appeals is reversed, and the case is remanded for further So ordered. CONCURBY: STEVENS CONCUR: [**226] JUSTICE STEVENS, concurring in the judgment. Freedom is a blessing. Regulation is sometimes necessary, but it is always burdensome. ption in favor of freedom. If the owner of a large building decides to improve it by installing his own electric g can surely allow the owner to use the electricity that it generates for whichever applianc ight arise. For he would be seeking access to an already regulated market. A television antenna, like a windmill, is a somewhat unsightly species of improvement. e open market without also regulating the way in which the owner of the antenna, or the wi t for an exception from burdensome [*26] regulation and franchising requirements even wh dings. The master antenna serving multiple units in an apartment building is less unsightly th e costs of franchising and economic regulation. Even though regulation might have been jus 998 (1977) -- a justification for nonregulation would nevertheless remain: Whenever possib That brings us to the "private cable" exemption as applied to Satellite Master Antenna rovement on [*27] his own property as he sees fit unless there is a sufficient public i ls to subscribers on other people's property. In that situation, the property owner, or th crossing of that line need not trigger regulatory [**227] intervention, and the absen the former and abstaining in the case of the latter. Such a policy is adequately justifie Thus, while I am not fully persuaded that the "private cable" exemption is justified by In my judgment, it is reasonable to presume n3 that Congress was motivated [*28] by an govern impartially. See Hampton v. Mow Sun Wong, 426 U.S. 88, 100 (1976). Accordingly, I c - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n1 Approximately 25% of all multiple dwellings units are in complexes large enough to s prior to enactment to the Cable Communications Policy Act of 1984 (Cable Act), 98 Stat. 27 tter when it passed the Cable Act, leaving out the exemption based on system size. Respond n2 The Court's theory assumes a great deal about the nature of what is essentially a hy o extract monopoly rents from landlords. [*29] n3 The Court states that a legislative classification must be upheld "if there is any r 'our inquiry is at an end,'" ante, at 6. In my view, this formulation sweeps too broadly, ceivable set of facts" test is tantamount to no review at all. I continue to believe that when Congress imposes a burden on one group, but leaves unaf for the unequal treatment." United States Railroad Retirement Bd. v. Fritz, 449 U.S. 166, classification is rationally related to "a legitimate purpose that we may reasonably presu - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [*30]