Court Opinion

ID: 8904749
Source: CourtListenerOpinion
Date Created: 2022-11-27 01:44:31.435208+00
Date Added: 2024-06-11T17:08:05.150367
License: Public Domain

FRIENDLY, Circuit Judge,
dissenting:
The question here is a narrow one. Since the decision under review the FCC has engaged in further rulemaking under 5 U.S.C. § 553 and has dealt with the problem in a manner noted below. In the Matter of Amendment of Subparts B and C of Part 76 of the Commission's Rules Pertaining to Applications for Certificates of Compliance and Federai-State/Local Regulatory Relationships, Docket 21002, 41 Pike & Fischer RR2d 885 (1977). The controversy is confined to the period between March 31, 1972 and November 7,1977, the effective date of the amendments.
While I would be the last to suggest that an administrative agency must always follow the strict letter of its own regulation, we have not quite reached the Humpty Dumpty era where a word “means just what I choose it to mean, neither more nor less.” There can be no fair doubt of the meaning of the grandfather clause, 47 C.F.R. § 76.31(b), quoted in footnote 2 to Judge Oakes’ opinion, as a matter of ordinary English speech. The clause “grandfathered” existing systems, not simply existing rates.1 Still I would not insist on the letter if some city sought to avail itself of the grandfather clause in a manner clearly contrary to its spirit, e. g., by doubling or tripling the franchise fee — assuming that this would not bring an end to the franchise or to the grandfather protection as the majority believe it well might. See 46 F.C. *101C.2d 175, 197 (1974). The instant problem is not of that sort at all. It has arisen from what the majority concedes to have been a development about which the Commission simply had not thought, to wit, the advent of state in addition to local regulation of certain cable television franchises and the concomitant desire of the legislators that the cost of the state regulation should be borne by the cable television industry, which can pass such costs on to its customers, rather than by all the citizenry of New York, most of whom have neither interest in nor ability to afford this service. These modest regulatory charges, limited by New York to the minimum necessary to cover the costs of regulation, and in no case to exceed 2% of gross annual receipts, were not the sort of exaction against which the Commission properly wished to guard. Rather they are precisely of the sort for which the grandfathering provisions were designed to provide “flexibility,” see note 1 supra. As the majority says, “[t]he broad purpose of the franchise fee limitation was to check rising fees that were wholly unreasonable because they bore no relation to the costs of regulation.” Since the New York State Commission’s are precisely related to such costs, I see no sufficient reason for not holding the Commission to what it clearly said, rather than forcing the New York Commission into time-consuming and expensive litigation with municipalities on the issue of who has the prior claim to the permitted fees, an issue which if determined adversely to the Commission will leave the burden of regulatory costs on New York taxpayers generally rather than on the cable television companies and their customers.2 The Commission noted in its recent rulemaking that “the growth of pay cable during the past few years has been robust,” para. 70 & n. 22, with the number of subscribers increasing a hundredfold in the period between March 1973 and June 1976; the intervenors will not perish if they are required to pay for the important functions with which the New York Commission has been charged, see N.Y. Executive Law, §§ 815, 822, 824, 825, 826, as the FCC grandfather regulation so plainly directed. Cf. Amendment of Subparts B and C, supra, 41 Pike & Fischer RR2d at 917 (J. R. Fogarty, Comm’r, concurring in part, dissenting in part).
The argument in favor of reading the regulation to mean what it says is strengthened by the ease with which the Commission could have changed it. See Note, Violations by Agencies of Their Own Regulations, 87 Harv.L.Rev. 629, 648-49 (1974). In contrast to a statute, where time pressures and other factors bearing upon legislators may render amendment a tedious process, the Commission, if dissatisfied with its grandfather clause, could readily have initiated a rulemaking proceeding under 5 U.S.C. § 553. When it ultimately did this, on a broader scale, it learned something about the grandfather provision — just what notice and comment rulemaking is supposed to accomplish. Although adhering to the general framework of the previous fee regulation, the FCC made two changes which may greatly assist the New York Commission in its efforts to make this industry pay for regulatory costs. The FCC was convinced, para. 69, “that franchising authorities do in fact have a regulatory involvement with pay cable and similar auxiliary services that justifies expanding the franchise fee base to include gross revenues derived from all cable services,” rather than the payments from subscribers alone to which its previous regulation was limited. Also, in contrast to the discouraging statement about its waiver policy contained in its earlier report, 46 F.C.C.2d at 207, which is quoted in fn. 9 to the majority opinion, the FCC now announced, para. 59, “we are confident that our waiver processes can deal adequately with unusual cases.” Hence, if the New York Commission now needs relief under the new rules — -something that may not be needed in the future since, as we were told at argument, with *102start-up costs now having been covered and with cable revenues greatly increased, there was a likelihood of decrease in the expense of regulation as a percentage of revenues— there is a fair prospect New York can get this. For the past, matters should be left as the grandfather clause said they were to be.
I would grant the petition to review.

. If there were any doubt, this would be removed by 187 of the Cable Television Report and Order, 36 F.C.C.2d 143, 210 (1972):
The grandfathering provisions of our rules with respect to franchise standards seek to achieve a large measure of flexibility. An existing cable system will be required to certify within five years of the effective date of these rules or on renewal of its franchise, whichever comes first, that its franchise meets the requirements of the rules. This deferral should relieve both cable systems and local authorities of whatever minor dislocations our rules might otherwise cause.

. This burden will fall on the taxpayers at precisely the time the FCC has shifted most of the responsibility for regulating cable television back to state and local governments. See Amendment of Subparts B and C, supra, 41 Pike & Fischer RR2d at 897, 899, 900.