Document ID: A:\NYSCCT2.TXT NEW YORK STATE COMMISSION ON CABLE TELEVISION, Petitioner, against FEDERAL COMMUNICATIONS COMMISSION and UNITED STATES OF AMERICA, Respondents, TELEPROMPTER CORPORATION and WWHT CORPORATION, Intervenors No. 296, Docket 80-4253 UNITED STATES COURT OF APPEALS, SECOND CIRCUIT 669 F.2d 58; 7 Media L. Rep. 2562 October 29, 1981, Argued January 7, 1982, Decided PRIOR HISTORY: Petition for review of orders of the Federal Communications Commission, 69 F.C.C.2d 657; 8 Petition for review denied. COUNSEL: Franklin K. Breselor, Asst. Atty. Gen. of State of New York, Albany, N.Y. (Robert Lisa B. Margolis, Counsel, F.C.C., Washington, D.C. (Stephen A. Sharp, Gen. Counsel, F. . Grossman, Atty. U.S. Dept. of Justice, Washington, D.C., of counsel), for respondents. Gardner F. Gillespie, Washington, D.C. (Hogan & Hartson, Jay E. Ricks, Paul C. Skelly, N. Frank Wiggins, Washington, D.C. (Cohn & Marks, Washington, D.C.), for intervenor WWH JUDGES: Before FEINBERG, Chief Judge, FRIENDLY, Circuit Judge, and PIERCE, Circuit Judge. * When this appeal was heard, Judge Pierce was a District Judge for the Southern Distri OPINIONBY: PIERCE OPINION: [*60] Since the inception of the American television era, various ideas, technologies, and se . This case raises the issue of whether the Federal Communications Commission ("FCC") law Background Among the several options available to some television viewers in New York State are pr A MATV system, normally installed in multi-unit dwellings such as apartment houses, con UHF signals and relays them to the viewers. Reception is normally improved because of th In a CATV or cable television system, broadcast signals are initially received at the C ed to the consumer by cable or wire. See FCC v. Midwest Video Corp., 440 U.S. 689, 697 n. ). A common carrier system in the MDS consists of a fixed station which transmits high fre to a selected lower frequency by a downconverter, passed through a decoder which activates is utilized to deliver the signal to each unit. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n1. For a fuller description of MDS, see In re Application of Midwest Corp., 53 F.C.C.2 - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Atop the Empire State Building in New York City is station WQQ-79, which operates under New York, New Jersey, and Connecticut. Among WQQ-79's customers, for which it transmits p some 233 MATV and CATV reception points serving an estimated 110,950 subscribers. Like a programming. Instead, it engages the services of middlement, such as Orth-O-Vision, Inc. to a rooftop antenna connected to the necessary downconverter and decoder. The signal is In 1972, the New York State legislature created the New York State Commission on Cable television system" n2 does not include a "master antenna television system." n3 In two ord 1977 ("Further Clarification"), the State Commission ruled that the statutory definition ly viewable off-the-air broadcast signals. Thus, a MATV system which delivered down conve ntly, such a system could not operate without first obtaining a franchise from the local m - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n2. N.Y. Executive Law @ 812(2) defines "cable television system" as: "any system which operates for hire the service of receiving and amplifying programs br ams by wire, cable, microwave or other means, whether such means are owned or leased, to p (a) any system which serves fewer than fifty subscribers; or (b) any master antenna television system; or (c) any cable television company which serves at least fifty but fewer than one thousan n3. N.Y.Executive Law @ 812(6) defines "master antenna television system" as: "any system which serves only the residents of one or more apartment dwellings under co r the air by stations which may be normally viewed or heard locally without objectionable n4. Section 819 states: "1. Notwithstanding any other law, no cable television system, whether or not it is dee franchised by each municipality in which it proposes to provide or extend service. "2. A municipality shall have the power to require a franchise of any cable television provision of any municipal charter or other law authorizing a municipality to require and "3. Nothing in this article shall be construed to prevent franchise requirements in exc - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - By its "Petition for Expedited Relief" filed on March 11, 1977, Orth-O-Vision, a market n of pay programming sold by Orth-O-Vision which was transmitted from WQQ-79 to MATV syste ision released on September 22, 1978, the FCC, treating Orth-O-Vision's petition as a peti "to the extent that their effect will be to prohibit the receipt of federally-authorized M ion for reconsideration, the FCC made clear that its prior ruling was not limited to HBO p ("Second Order"). n7 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n5. Copies of the public notice were presumably available at the FCC's general informat ng of the petition was published in the Federal Register. n6. Comments in support of the petition were filed by Teleprompter Corporation ("Telepr nd New York City. n7. Neither FCC Order purported to preempt all state regulation of MATV systems. Indee - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - In the petition for review now before us, n8 the State Commission contends that the FCC n only affected intrastate MDS transmissions, over which the FCC has no jurisdiction; and, - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n8. The State Commission's petition, over which we have jurisdiction pursuant to 28 U.S n April 15, 1981. n9. At oral argument the State Commission raised an argument that it had not mentioned by way of a declaratory ruling. The choice between rulemaking and adjudication rests wit ookhaven Cable TV, Inc. v. Kelly, 573 F.2d 765, 768 (2d Cir.), cert. denied, 441 U.S. 904, by interested parties, was not an abuse of discretion. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Discussion Under the Supremacy Clause of the Constitution, Art. VI, cl. 2, a federal law preempts S. 52, 67, 61 S. Ct. 399, 404, 85 L. Ed. 581 (1941); see Chicago & North Western Transport 2, 83 S. Ct. 1210, 1217, 10 L. Ed. 2d 248 (1963). Even in an area where Congress has not c , 435 U.S. 151, 158, 98 S. Ct. 988, 994, 55 L. Ed. 2d 179 (1978); Jones v. Rath Packing Co uage or implicitly contained in its structure and purpose." Id. at 525, 97 S. Ct. at 1309. 637, 652, 91 S. Ct. 1704, 1712, 29 L. Ed. 2d 233 (1971). In a similar vein, the Supreme Co 30 U.S. at 526, 97 S. Ct. at 1310. Pursuant to the foregoing guidelines, we will examine the effect of the State Commissio ew of the FCC's declaratory orders is prescribed by 5 U.S.C. @ 706(2)(A)-(D). n10 [*63] not in accordance with law" or action which fails to meet constitutional, jurisdictional, trary or capricious" standard of review-a "narrow" standard, id. at 416, 91 S. Ct. at 823- dcasting, 436 U.S. 775, 803, 98 S. Ct. 2096, 2116, 56 L. Ed. 2d 697 (1978); Citizens to Pr that of the agency. National Citizens Committee for Broadcasting, 436 U.S. at 803, 98 S. 1981), cert. pet. filed, 50 U.S.L.W. 3177 (Sept. 14, 1981). - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n10. Section 706(2)(E), which requires agency findings and conclusions made pursuant to ing. See note 9 supra. Also inapplicable is @ 706(2)(F) since the FCC's factual findings - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - A. Effect of State Commission's Regulation Programming transmitted via MDS is received by rooftop antenna, downconverted and decod MDS signal to each individual viewer is effected through the MATV system's wiring network iver its material from the rooftop reception antenna to home television sets. 69 F.C.C.2d by WQQ-79's signals to Orth-O-Vision's customers." Id. The FCC confirmed those findings i ed by MDS facilities and ... the use of MATV distribution circuitry is generally the most The State Commission contends that MATV systems are not integral or necessary for the d ged finding that delivery of MDS services is most economically provided by MATV circuitry. t state of affairs. In short, the FCC reasonably found that MATV distribution circuitry w After noting the integral connection between MATV systems and the receipt of programmin ming transmitted to multi-unit dwellings, and thereby curtail MDS as a competitor of conve erfere with, burden, and limit service provided by MDS. 69 F.C.C.2d at 668-69; 82 F.C.C.2 The State Commission claims that the FCC erred in finding that it sought to encourage t ng the grant of franchises to such MATV systems. We initially note that the State Commiss s admission in the Clarification, at 8-9, upon which the FCC relied, that "(w)e anticipate As to effects, the FCC found that the State Commission's policy had already had an actu pply Orth-O-Vision with pay programming for new customers. 69 F.C.C.2d at 662. In its Sec n New York City. 82 F.C.C.2d at 184. Based upon the foregoing findings, the FCC reasonabl Equally supportable and lawful is the FCC's conclusion that the State's regulation burd e number of receive points, and, therefore, a reduction in the number of receive points ca n's contention, be split into interstate and intrastate components. A reduction in the nu 9 is part of a national network of Microband owned and operated MDS stations in ten states nterstate (MDS) network," which would be linked by domestic satellite and terrestrial micr 00, 20 L. Ed. 2d 1001 (1968). Further, given this nationwide link between various MDS stat ., 38 F.C.C.2d 897, 899-900 (1973), reconsideration denied, 53 F.C.C.2d 294, 300-01 (1975) ided by MDS. B. The FCC's Regulatory Interest In 1934 Congress enacted the Communications Act (the "Act") and created the FCC for the -wide wire and radio communication service...." 47 U.S.C. @ 151. Under 47 U.S.C. @ 152(a), , 88 S. Ct. at 2002-03 (1968). Moreover, the FCC is empowered to "perform any and all acts S.C. @ 154(i). Congress gave the FCC broad authority, so as to "maintain, through appropri 1441, quoting, FCC v. Pottsville Broadcasting Co., 309 U.S. 134, 138, 60 S. Ct. 437, 439, - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n11. The statutory definitions of "communication by wire" and "communication by radio" transmission(s)." 47 U.S.C. @ 153(a)-(b). - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - As to more specific powers of the FCC, Title II of the Act, 47 U.S.C. @ 201 et seq., co authority over radio communication. Congress has instructed the FCC to "encourage the lar 10, 87 L. Ed. 1344 (1943), and to maintain federal control "over all the channels of inter restrictions and conditions, not inconsistent with law, as may be necessary to carry out Since MDS operators are communications common carriers, they must adhere to the require ntrary to the State Commission's contention, 47 U.S.C. @ 152(b) does not bar the FCC's ass mmunication service by wire or radio. As previously discussed, WQQ-79's service and MDS i - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n12. Further, the jurisdictional constraint of @ 152(b) is subject to 47 U.S.C. @ 301. ipated interconnected nationwide MDS network, intrastate MDS transmissions could reasonabl d effects outside New York State. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - C. Conflict in the Regulatory Schemes and the Need for Preemption Pursuant to the Congressional mandate expressed in the Act, the FCC is empowered to pro nd preeminent interest in the development of MDS service as a whole." 69 F.C.C.2d at 669. could provide simultaneous inexpensive transmission of many different forms of programming s the effect of reducing the number of MDS receive points in New York, n14 could frustrate ike New York's, effectively reduce the number of MDS receive points would impose an imperm development of an interstate MDS network. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n13. MDS is presently limited to two channels. The FCC, however, has proposed rules th , 1980). n14. The FCC's conclusion that the franchise requirement imposed on MATV systems would on. See FCC v. WNCN Listeners Guild, 450 U.S. 582, 595, 101 S. Ct. 1266, 1274, 67 L. Ed. ertain that the anticipated effect of the State's policy (i.e. the denial of franchises re ed, 429 U.S. 1027, 97 S. Ct. 651, 50 L. Ed. 2d 631 (1976). The FCC's finding of a chilling effect on interstate MDS service. n15. The State Commission's contention that the effect of its regulation of Orth-O-Visi - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Contrary to the State Commission's contentions, the FCC's preemption order is not inval of state and local price regulation of one type of cable television programming where the . 904, 99 S. Ct. 1991, 60 L. Ed. 2d 372 (1978), aff'g, 428 F. Supp. 1216 (N.D.N.Y.1977); s 48 L. Ed. 2d 816 (1976). Federal regulation need not be heavy-handed in order to preempt Vagueness The State Commission's final argument is that the FCC orders are void for vagueness. T for reconsideration before the FCC. In denying that petition, the FCC rejected the same v y or rule, by definition or any other device, that has the effect of limiting or adversely 7 is not impermissibly vague simply because borderline hypotheticals could be envisioned w ilroad Co. v. United States, 279 F. Supp. 316, 351 (S.D.N.Y.1967) (three judge court) (Fri 389 U.S. 486, 88 S. Ct. 602, 19 L. Ed. 2d 723 (1968). Given the fact that the FCC adequat s is without merit. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n16. The State Commission goes so far as to suggest that the FCC's orders could be read vent, the FCC has specifically disavowed such a policy. Brief for Respondents, at n.51. n17. The sole case relied upon by the State Commission, Public Media Center v. FCC, 190 r a particular decision to make possible meaningful review of that decision. See N.L.R.B. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Conclusion The State Commission's petition for review is denied.