Title: In the Matter of Alleged Noncompliance by RCN of NY

State: new-jersey

Issuer: New Jersey Supreme Court

Document:

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized). In 2003, the BPU sent an order to RCN stating that RCN s SMATV system is a cable system under the Cable Act and directed RCN to comply with the New Jersey Cable Television Act by filing for a certificate of approval and for Jersey City s consent. RCN conceded that its cables run underneath public roads but claimed that those cables do not use a public right-of-way within the meaning of the Cable Act. The BPU then issued an order in which it stated that RCN s running of its cables under a public road is a sufficient use of the public right-of way to qualify RCN as a cable system under the Cable Act. On appeal, the Appellate Division reversed the BPU and, in a reported opinion, held that RCN s SMATV system is not a cable system under the Cable Act. The BPU appealed and this Court granted certification. HELD: RCN s Newport facility constitutes a cable system under section 522(7) (B) of the Federal Cable Act and is subject to BPU regulation . To understand and interpret use, the statutory term in question, we first set forth a discussion of the cable industry s regulatory history and the policies underlying the Cable Act. We need to determine whether RCN s wires use any public right of way within the meaning of section 522(7) (B). Because we find the statue is ambiguous, we then examine agency interpretation of the provision. Finally, we consider whether we are required to defer to that interpretation. (pp. 5-6) 2. The Federal Communications Commission (FCC) laid the foundation for the current dual, state-federal regulatory scheme when it preempted state regulation of operational aspects of cable systems but preserved local control of the non-operational aspects of the industry. The FCC established exceptions that exempt certain cable providers from regulation. Relevant to this appeal is the FCC s 1983 declaratory judgment exempting from state and local regulation those SMATV systems that receive wireless signals into antennas stationed on private property. One year later, Congress passed the Cable Act, which adopted the dual, federal-state regulatory system first established by the FCC. Congress chose to preserve such state regulatory power because, like the FCC, it recognized that localities should be able to exert some control over cable because it crosses public rights of way. (pp. 6-8) 3. Whether a cable provider falls within the ambit of the Cable Act and is thus subject to state regulation hinges on whether its facility qualifies as a cable system. The statute defines a cable system but such term does not include a facility that serves subscribers without using any public right-of-way. (pp. 8-9) The term using, as employed in section 522 (7) (B) of the Cable Act is ambiguous. The Act does not define that term, nor does legislative history shed light on its proper interpretation. (p. 11) 5 A 1984 United States Supreme Court decision (Chevron) instructs us that if a statute is silent or ambiguous with respect to a specific issue, reviewing courts should look to the interpretation of the agency administering that statute. Because the ambiguous statutory language and legislative history do not resolve what constitutes use of a public right-of-way, we therefore consider whether the FCC has provided its own interpretation of that section. We will not afford to the BPU the deference that Chevron provides to federal agencies interpreting federal law. If state courts applied deference to a local authority s interpretation of the Cable Act, it would subvert Congress goal of achieving a national policy concerning cable communications. (pp. 12-13) 6. The FCC determined that closed transmission paths such as wires use a public right-of-way under the meaning of the Act when those paths cross the right of way. The FCC stated that when it had used the word crossing in its notice of proposed rule-making , it had not meant to imply anything different from the statutory term using, and that if the SMATV facility does cross a public right-of-way, it will be considered a cable system for purposes of the Cable Act and FCC rules. The FCC justified its decision to equate use with cross in explaining that states and localities should be able to regulate cable facilities with closed transmission paths that cross public rights-of-way because of the physical imposition and substantial construction upon those rights-of-way by the closed transmission paths. (pp. 13-18) 7. Under Chevron, this Court only must determine that the FCC s interpretation is not arbitrary, capricious, or manifestly contrary to the statute. We hold that the interpretation meets Chevron s deferential standard. The FCC s interpretation rationally relates to the intrusion of wires and cables on public rights-of-way while promoting growth and increased competition in the field of satellite transmission. Because many of the local regulatory powers triggered by such a crossing under the FCC s interpretation relate directly to the ability and right of municipalities to manage and seek compensation for that physical intrusion, the FCC s interpretation is rational. (pp. 19-20) 8. The interpretation is reasonable not only because it enables municipalities to manage and seek compensation for the physical intrusion of wires on their public roads, but also because it promotes the growth of wireless technology. The FCC has long exempted wireless video providers from regulation to entice investment in the field of satellite transmission. Freedom from obtaining a franchise, annual fees, compliance with local customer service laws, and all the other responsibilities concomitant with regulation is a rational means of motivating companies to pursue research, development, and investment in the wireless field. (pp. 20-21) 9. The FCC s use -equals- cross interpretation has the distinct advantage of providing a clear rule of law. If Congress had intended to carve out an exception for minimal use, it could have done so expressly. Section 522(7) (B) does not evidence such an intent. (pp. 21-22) 10. Applying the FCC s interpretation to the facts of this appeal, and because RCN admits that its wires cross River Drive South and Newport Parkway, we conclude that RCN s facility constitutes a cable system within the meaning of section 522(7) (B) and is subject to BPU regulation. We add only that we find no reason to grandfather RCN. When RCN assumed operation of the SMATV facility, it was or should have been aware that the facility s wires run underneath roads that had been dedicated to the public in prior years. (p. 22) The judgment of the Appellate Division is REVERSED and the matter is REMANDED to the BPU for proceedings consistent with this opinion. CHIEF JUSTICE PORITZ and J USTICES LONG, LaVECCHIA, ALBIN, WALLACE and RIVERA-S OTO join in JUSTICE ZAZZALI s opinion. SUPREME COURT OF NEW JERSEY A- 138 September Term 2004 IN THE MATTER OF ALLEGED NON-COMPLIANCE BY RCN OF NY, a Wholly-Owned Subsidiary of RCN Corporation, with the Requirements of N.J.S.A. 48:5A-15, 16, 17, and 22 Requiring Municipal Consent from the City of Jersey City and a Certificate of Approval from the Board for Newport Community in Jersey City, New Jersey Argued November 30, 2005 March 1, 2006 On certification to the Superior Court, Appellate Division, whose opinion is reported at 375 N.J. Super. 12 (2005). Kenneth J. Sheehan, Deputy Attorney General, argued the cause for appellant, New Jersey Board of Public Utilities (Peter C. Harvey, Attorney General of New Jersey, attorney; Andrea M. Silkowitz, Assistant Attorney General, of counsel). Robert G. Goode argued the cause for respondent, RCN Telecom Services, Inc., incorrectly plead as RCN of NY (Arturi, D'Argenio & Guaglardi, attorneys). JUSTICE ZAZZALI delivered the opinion of the Court. RCN of New York (RCN) operates a satellite master antenna system (SMATV) in the Newport Building Complex in Jersey City, providing cable programming to Newport s residents. The SMATV facility functions by receiving a microwave signal at a centrally located antenna in Newport and re-transmitting that signal to Newport s buildings through wires that run underneath public roads. The Board of Public Utilities (BPU), the body that regulates utilities in the State of New Jersey, claims that the Cable Communications Policy Act of 1984, 47 U.S.C. 521 to 573 (Federal Cable Act), authorizes the BPU to regulate RCN. The BPU argues that RCN is subject to regulation because RCN s SMATV facility is using any public right-of-way under 522(7)(B) of the Federal Cable Act and therefore qualifies as a cable system. Pursuant to the private cable exemption in 522(7)(B), cable facilities that do not use public rights-of-way are exempt from the dual, federal-state regulatory scheme created by the Federal Cable Act, which vests both the Federal Communications Commission (FCC) and state-run local authorities such as the BPU with powers to enforce its provisions. RCN agrees that its wires cross underneath Newport s public rights-of-way but disputes the BPU s determination that it uses those roads within the meaning of the Federal Cable Act. This matter thus requires the Court to interpret the meaning of the phrase using any public right-of-way. 522(7)(B). The agency charged with the statute s administration, the FCC, has determined that when closed transmission paths such as wires or cables cross public rights-of-way, they use those rights-of-way. Because that interpretation is reasonable, we are bound under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984), to defer to the FCC and hold that RCN is subject to BPU regulation. [ 36 F.C.C.2d 143, 207 (1972) (emphasis added).] Despite growing federal and state regulatory involvement in the cable industry, the FCC established exceptions that exempt certain cable providers from regulation. Relevant to this appeal is the FCC s 1983 declaratory judgment exempting from state and local regulation those SMATV systems that receive wireless signals into antennas stationed on private property. In re Earth Satellite Communc ns, Inc., 95 F.C.C.2d 1223, 1229-35 (1983). The FCC took that step to promote growth and increased competition in the field of satellite technology, which it labeled a concern of increasing significance to the public at large. Id. at 1230. It reasoned that limiting regulation of satellite systems would best foster their growth, because do[ing] away with redundant government regulation . . . lowers the economic and procedural barriers inhibiting unrestricted competitive entry into the satellite field. Id. at 1231 (citation omitted). One year later, Congress passed the Federal Cable Act, Pub. L. No. 98-549, 98 Stat. 2779 (codified as amended at 47 U.S.C. 521 to 573), which adopted the dual, federal-state regulatory system first established by the FCC. Under that Act, all cable system operators must obtain a franchise from their local authority before providing service, 541(b)(1), and local authorities may exercise various regulatory powers over franchisees largely relating to the non-operational aspects of cable service. Congress chose to preserve such state regulatory power because, like the FCC, it recognized that localities should be able to exert some control over cable because it crosses public rights of way. 129 Cong. Rec. 15,590 (1983) (statement of Sen. Hollings). Pursuant to that grant of authority by Congress, New Jersey enacted the New Jersey Cable Television Act, N.J.S.A. 48:5A-1 to -63, vesting the BPU with the power to regulate cable television companies. Whether a cable provider falls within the ambit of the Federal Cable Act and is thus subject to state regulation hinges on whether its facility qualifies as a cable system. The statute defines a cable system as a facility, consisting of a set of closed transmission paths and associated signal generation, reception, and control equipment that is designed to provide cable service which includes video programming and which is provided to multiple subscribers within a community, but such term does not include . . . a facility that serves subscribers without using any public right-of-way. [ 522(7)(B) (emphasis added).] Thus, facilities that do not use a public right-of-way are exempt from state regulation. As noted, prior to the Federal Cable Act, the FCC had exempted SMATV systems on private property from regulation. After the passage of the Federal Cable Act, the FCC reaffirmed that position in In re Definition of a Cable Television System, in which it ruled that satellite signals are not closed transmission paths and do not use public rights-of-way within the meaning of 522(7)(B). 5 F.C.C.R. 7638, 7639 (1990). Accordingly, when a SMATV system s rooftop satellite dish receives a signal, it can retransmit that signal by wires to residential units within the same building or to buildings in the same complex without ever using any public right-of-way, 522(7)(B), provided that the complex has only private streets. [Mason City, supra, 634 N.W.2d at 672-73.] Not all courts that have addressed this issue share our view that the FCC has interpreted the meaning of use in 522(7)(B). In Guidry, supra, the Eighth Circuit Court of Appeals found that the Commission s Report and Order [in Definition of a Cable Television System] did not address whether crossing a public right-of-way by buried cable is use for purposes of 522(7)(b). 117 F.3d at 386. Nonetheless, the court concluded that the FCC s statement that [r]adio waves may cross a public right-of-way but do not use it, ibid. (citing Definition of a Cable Television System, supra, 5 F.C.C.R. at 7642), represents an express recognition by the FCC that crossing is distinct from using, ibid. We respectfully disagree with the Eighth Circuit and read the phrase highlighted by the court, that radio waves may cross a right-of-way without using it, as applying only to wireless transmissions. In our view, that phrase is inapplicable to SMATV systems such as RCN s facility, which connects separate buildings through cables buried beneath public rights-of-way. Similarly, in this appeal our Appellate Division labeled the FCC s statement in Definition of a Cable Television System that use is equivalent to cross as dicta, stating that the F.C.C. was not attempting to answer the question which confronts this court, nor did it give reasons to support its assertion that crossing a public right-of-way constitutes a use of that right-of-way. Alleged Non-Compliance by RCN of NY, supra, 375 N.J. Super. at 22. The panel did not elaborate on its rationale for finding the FCC s interpretation to be dicta. It presumably did so because of the FCC s statement that in its notice of proposed rulemaking, the FCC sought comment on whether facilities serving multiple dwellings that do not use public rights-of-way might in some instances be cable systems within the Act s definition. We further sought comment on the broader implications of treating facilities connected only by radio (or infrared) transmissions and making use of no other interconnecting wires or cables as cable systems. [Definition a Cable Television Sys., supra, 5 F.C.C.R. at 7638.] Although that statement standing alone might suggest that the ruling extends only to the regulatory status of purely wireless SMATV systems, thus excluding RCN, further consideration of the notice reveals that such is not the case. That notice also states that comments are sought specifically with respect to the question of what constitutes a [sic] crossing a public right-of-way, including but not limited to the use of infrared technology. In re Definition of a Cable Television Sys., 4 F.C.C.R. 2088, 2088 (1989) (notice of proposed rulemaking). Further, we find that the FCC did indeed justify its decision to equate use with cross. The FCC explained that states and localities should be able to regulate cable facilities with closed transmission paths that cross public rights-of-way because of the physical imposition and substantial construction upon those rights-of-way by the closed transmission paths. See generally Definition of a Cable Television Sys., supra, 5 F.C.C.R. 7638. Finally, FCC v. Beach Communications, Inc. suggests that if the United States Supreme Court were to confront the question we now face, it too would find that the FCC has interpreted use to mean cross. 508 U.S. 307, 311, 113 S. Ct. 2096, 2100, 124 L. Ed. 2d 211, 220 (1993). In that case, the Supreme Court stated: Consistent with the plain terms of the statutory exemption, the Commission concluded that such an SMATV system is subject to the franchise requirement if its transmission lines . . . use or cross any public right-of-way. Ibid. (citing Definition of a Cable Television Sys., supra, 5 F.C.C.R. at 7641-42) (holding that Federal Cable Act s previous requirement, that only cable facilities servicing buildings under common ownership are exempt from regulation, withstands rational basis review) (emphasis added). See footnote 1 Because we find that the FCC has interpreted the term using in 522(7)(B), we defer to that interpretation unless it is arbitrary or capricious, an issue we now explore. CHIEF JUSTICE PORITZ and JUSTICES LONG, LaVECCHIA, ALBIN, WALLACE and RIVERA-SOTO join in JUSTICE ZAZZALI s opinion. SUPREME COURT OF NEW JERSEY NO. A-138-04 SEPTEMBER TERM 2004 ON CERTIFICATION TO Appellate Division, Superior Court IN THE MATTTER OF ALLEGED NON-COMPLIANCE BY RCN OF NY, A Wholly owned Subsidiary of RCN Corporation, with the Requirements of N.J.S.A. 48:5A-15, 16,17, and 22 Requiring Municipal Consent from the City of Jersey City and a Certificate of Approval from the Board for Newport Community in Jersey City, New Jersey DECIDED March 1, 2006 Chief Justice Poritz PRESIDING OPINION BY Justice Zazzalli CONCURRING/DISSENTING OPINIONS BY DISSENTING OPINION BY