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   Dissenting Statement of Commissioner Harold Furchtgott-Roth

In the Matter of C-TEC Corporation, Final Resolution of Cable Programming Service Rate
Complaints 

     For the reasons that follow, I must respectfully dissent from this Order adopting a
"resolution" of cable programming service tier ("CPST") rate complaints against C-TEC
Corporation.

     First, I do not believe that the Commission possesses statutory authority to resolve CPST
rate complaints by way of this sort of negotiated global settlement. It is true, as the Commission
has observed in similar items, that section 4(i) of the Communications Act states that the
Commission may "issue such orders, not inconsistent with this Act, as may be necessary in the
execution of its functions," and that section 4(j) authorizes the Commission to "conduct its
proceedings in such a manner as will best conduce to the proper dispatch of business and to the
ends of justice." 47 U.S.C. sections 154(i)-(j).

     But the Communications Act includes another provision -- one that, unlike sections 4(i)
and (j), speaks directly to the proper processing of CPST complaints. Unfortunately, the
Commission fails to follow the dictates of this provision, which mandates that "the Commission
shall, by regulation, establish . . . fair and expeditious procedures for the . . . resolution of
complaints from any franchising authority . . . alleging that a rate for cable programming" is
unreasonable. 47 U.S.C. section 623(c)(1)(B)(emphasis added). The simple fact, however, is that
there are no Commission regulations that even arguably provide procedures for a negotiated
settlement such as this; the requirements of this section therefore have not been met. 

     Conversely, the regulations that the Commission has adopted to govern procedures for
rate complaints, which, like the statute itself, generally contemplate individualized adjudication of
complaints, see, e.g., id. section 623(c)(1)(A); 47 CFR section 76.957, have clearly not been
observed here. The Commission's noncompliance with these regulations raises its own separate
set of potential legal problems. See generally Service v. Dulles, 354 U.S.363, 388 (1957)
(administrative agencies must follow their own regulations). 

     In sum, given the existence of section 623, I simply do not understand how the use of this
mechanism could comport with the Communications Act. Absent conformity with duly
promulgated regulations providing for the use of this procedure, this resolution violates section
623.  

     The existence of section 623 also renders inapposite the caselaw often cited by the
Commission in support of its position that these global settlements are proper. To be sure, courts
have held that agencies generally possess broad discretion to choose between administrative
processes.  But none of those cases involve, as here, an agency's failure to conform with
statutorily-prescribed limitations on that discretion. Cf. Heckler v. Chaney, 470 U.S. 821, 833
(1985) (presumption against unreviewability of agency non-enforcement decisions rebutted where
"the substantive statute has provided guidelines for the agency to follow"). Indeed, the decisions
typically cited by the Commission are expressly premised on the lack of any statutory language
precluding the agency's choice of processes.  See, e.g., In re Permian Rate Basin Area Rate
Cases, 390 U.S. 747, 797 (1968) (stating, in affirming the Federal Power Commission's two-price
rate structure for regulation of gas prices, that "[w]e find no objection under the Natural Gas Act
to this dual arrangement" and that "[n]othing in the purposes or history of the Act forbids the
Commission to require different prices for different sales").

     I understand the argument from utility for this sort of creative processing mechanism. If
the Commission believes that rate "resolutions" are procedurally necessary, however, section 623
requires that we establish them by regulation, with notice and comment. Pragmatic considerations
are undeniably important, but they cannot overcome the clear letter of the law.  Our paramount
duty is to implement the law as written by Congress and enacted by the President -- not based on
our own conceptions of the most efficient and effective way to proceed.  See Chevron  v. Natural
Resources Defense Council, 467 U.S. 837, 842-43 (1985) (where statutory language is clear,
"that is the end of the matter," for the agency "must give effect to the unambiguously expressed
intent of Congress").

     Second, I do not believe that this Order satisfies the Commission's obligation under the
Administrative Procedure Act to engage in reasoned decisionmaking. Cf. Koch Gateway Pipeline
Co. v. FERC, 136 F.3d 810, 814 (D.C. Cir. 1998)("reasoned decisionmaking" requires "a process
demonstrating the connection between the facts found and the choice made"). In this Order, there
is no explanation as to how the Commission arrived at the refund amounts that it today mandates. 
There is no suggestion that any of the mandatory factors set out in the statute, see 47 USC
section 623(c)(2)(A)-(F), or the objective criteria in our regulations, see 47 CFR section 76.922,
for measuring the reasonableness of rates were either considered or applied.  Why do New York
subscribers receive a refund of $3.30, whereas New Jersey subscribers receive $5.00?  Why do
subscribers within a State, but in different franchise areas, receive an identical refund?  Nothing in
the Order accounts for the choice of the relevant dollar figures.  

     Rather, the Order simply asserts that certain rates were in excess of maximum permitted
rates but that the overcharges were offset by other, lower rates.  This is not an explanation, just a
conclusory statement.  The Order provides no explanation of the findings upon which the
conclusion is supposedly based:why the maximum permitted rates were reasonable under the
Commission's rules; the amount of the overcharges; the duration of the   overcharges; the
amount of the basic service tier undercharges; the duration of the undercharges; or the final
difference between the over and undercharges.  The Order also states that offsets were computed
on a system basis.  But there is no discussion of what the offsets for each system are and why,
notwithstanding the asserted system-by-system computation, the refunds are uniform throughout
States.  In short, this Order does not provide a sufficiently reasoned or detailed explanation of the
rate methodology employed by the Commission.

     This lack of explanation as to methodology, as well as the uniformity of the refunds across
franchise areas, causes me to suspect that the number at which the Commission and the cable
operator have arrived has little do with actual rate analysis but more to do with simple horse-
trading. And due to this lack of explanation of the methodology or factors employed to calculate
the refund, there is no way for the local franchise authority or the subscriber who specifically
requested an explanation of the basis for the refunds to know whether they have been given a fair
deal or even what the terms of that deal are, much less for a court to review the rationality of the
refund determination.

     Third, I am deeply concerned that the actual complainants were not party to the
negotiations that produced this "resolution." As I have made clear in other contexts, I believe that
it is most unseemly, if not illegal, when regulated entities and regulators go behind closed doors to
hammer out settlements. See, e.g., Third Order on Reconsideration, Revision of Universal
Service Collection Amounts for 1998, FCC No. 97-411 (Dec. 16, 1997). I realize that the
complainants were given the chance to comment on the final agreement reached by the
Commission and the cable company, but this participation came at the eleventh hour, after the
essential terms of the resolution were already finalized as between the company and the
Commission.  And the responses to the complainants' comments are, as described above, not
particularly satisifying. 

     It is true that the local franchising authorities and other complainants were not deprived of
any participation they would have been afforded in a traditional cable rate adjudication.  But that
is not the point: under a traditional proceeding, municipalities may not have been able to
participate beyond the point of submitting their complaint, but neither would the cable operator
have been able to participate beyond the point of submitting their response. The problem is not
that the complainants did not get additional participation per se but that the cable operator was
afforded greater participation rights than they were. Whether or not this amounts to a violation of
our ex parte rules, a process in which the heart of the negotiations are conducted without the
participation of the complainants themselves is just not a fair process. 
     
     Finally, in the context of these rate resolutions, the Commission has often purported to
bind even those complaining parties who vigorously object to the terms of the resolution.  It is a
fundamental, however, that settlements require the consent, whether on an opt-in or opt-out basis,
of all the parties in interest.  If, in response to this order, franchising authorities or other
complainants object to its terms and conditions, I have difficulty seeing how, as a matter of black
letter settlement law, they could be bound by this "resolution."  

     I appreciate that these "resolutions" are efficient in that they dispose of large numbers of
complaints in one fell swoop. The Commission saves itself a lot of time-consuming work, and the
cable operator saves itself a lot of regulatory headaches and uncertainty. But it is the
municipalities and the ratepayers they represent, who were not a party to the negotiations that
produced this resolution, that seem to be getting the short end of this regulatory stick. However
convenient global rate resolutions might be for the Commission and for cable companies, they do
not appear to be within the bounds of governing law. The policies of "finality" and "stability"
cannot overcome the provisions of the Communications Act, black-letter contract law, or the
"reasoned decisionmaking" requirement of the Administrative Procedure Act.  I therefore cannot
sanction the use of this procedure or the resultant Order.

                         *    *    *
     
     In closing, I observe that the administrative burdens that drove the Commission to employ
this creative but unlawful method of resolving consumer complaints are the sorry and inevitable
by-product of rate regulation itself. The better method for avoiding the administrative disaster that
would be occasioned by individualized adjudication of these backlogged complaints is simply to
abolish rate regulation. That is, in part, precisely what Congress wisely recognized when it
mandated that CPST regulation cease after March 31, 1999. Fortunately, that time has now come.