United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 22, 2005 Decided May 6, 2005
No. 04-1037
AMERICAN LIBRARY ASSOCIATION, ET AL.,
PETITIONERS
v.
FEDERAL COMMUNICATIONS COMMISSION AND
UNITED STATES OF AMERICA,
RESPONDENTS
MOTION PICTURE ASSOCIATION OF AMERICA, INC., ET AL.
INTERVENORS
On Petition for Review of an Order of the
Federal Communications Commission
Pantelis Michalopoulos argued the cause for petitioners.
With him on the briefs were Cynthia L. Quarterman, Rhonda M.
Bolton, Lincoln L. Davies, and Gigi B. Sohn.
Jacob M. Lewis, Attorney, Federal Communications
Commission, argued the cause for respondents. With him on the
brief were R. Hewitt Pate, Assistant Attorney General,
Catherine G. O’Sullivan and James J. Fredricks, Attorneys,
John A. Rogovin, General Counsel, Federal Communications
Commission, Austin C. Schlick, Deputy General Counsel, Daniel
M. Armstrong, Associate General Counsel, and C. Grey Pash,
Jr., Counsel.
2
Christopher Wolf, Bruce E. Boyden, Mace J. Rosenstein,
and Catherine E. Stetson were on the brief for intervenor Motion
Picture Association of America, Inc.
Before: EDWARDS, SENTELLE, and ROGERS, Circuit
Judges.
Opinion for the Court filed by Circuit Judge EDWARDS.
EDWARDS, Circuit Judge: It is axiomatic that
administrative agencies may issue regulations only pursuant to
authority delegated to them by Congress. The principal question
presented by this case is whether Congress delegated authority
to the Federal Communications Commission (“Commission” or
“FCC”) in the Communications Act of 1934, 47 U.S.C. § 151 et
seq. (2000) (“Communications Act” or “Act”), to regulate
apparatus that can receive television broadcasts when those
apparatus are not engaged in the process of receiving a broadcast
transmission. In the seven decades of its existence, the FCC has
never before asserted such sweeping authority. Indeed, in the
past, the FCC has informed Congress that it lacked any such
authority. In our view, nothing has changed to give the FCC the
authority that it now claims.
This case arises out of events related to the nation’s
transition from analog to digital television service (“DTV”).
Since the 1940s, broadcast television stations have transmitted
their programs over the air using an analog standard. DTV is a
technological breakthrough that permits broadcasters to transmit
more information over a channel of electromagnetic spectrum
than is possible through analog broadcasting. Consumer Elecs.
Ass’n v. FCC, 347 F.3d 291, 293 (D.C. Cir. 2003). Congress
has set December 31, 2006, as the target date for the
replacement of analog television service with DTV. See 47
U.S.C. § 309(j)(14).
In August 2002, in conjunction with its consideration of the
technological challenges related to the transition from analog
3
service to DTV, the Commission issued a notice of proposed
rulemaking to inquire, inter alia, whether rules were needed to
prevent the unauthorized copying and redistribution of digital
television programming. See Digital Broadcast Copy
Protection, 17 F.C.C.R. 16,027, 16,028 (2002) (“NPRM”).
Thousands of comments were filed in response to the agency’s
NPRM. Owners of digital content and television broadcasters
urged the Commission to require DTV reception equipment to
be manufactured with the capability to prevent unauthorized
redistributions of digital content. Numerous other commenters
voiced strong objections to any such regulations, contending
that the FCC had no authority to control how broadcast content
is used after it has been received. In November 2003, the
Commission adopted “broadcast flag” regulations, requiring that
digital television receivers and other devices capable of
receiving digital television broadcast signals, manufactured on
or after July 1, 2005, include technology allowing them to
recognize the broadcast flag. See Digital Broadcast Content
Protection, 18 F.C.C.R. 23,550 (2003) (codified at 47 C.F.R.
pts. 73, 76). The broadcast flag is a digital code embedded in a
DTV broadcasting stream, which prevents digital television
reception equipment from redistributing broadcast content. The
broadcast flag affects receiver devices only after a broadcast
transmission is complete. The American Library Association,
et al. (“American Library” or “petitioners”), nine organizations
representing a large number of libraries and consumers, filed the
present petition for review challenging these rules.
In adopting the broadcast flag rules, the FCC cited no
specific statutory provision giving the agency authority to
regulate consumers’ use of television receiver apparatus after the
completion of a broadcast transmission. Rather, the
Commission relied exclusively on its ancillary jurisdiction under
Title I of the Communications Act of 1934.
4
The Commission recognized that it may exercise ancillary
jurisdiction only when two conditions are satisfied: (1) the
Commission’s general jurisdictional grant under Title I covers
the regulated subject and (2) the regulations are reasonably
ancillary to the Commission’s effective performance of its
statutorily mandated responsibilities. See 18 F.C.C.R. at 23,563.
The Commission’s general jurisdictional grant under Title I
plainly encompasses the regulation of apparatus that can receive
television broadcast content, but only while those apparatus are
engaged in the process of receiving a television broadcast. Title
I does not authorize the Commission to regulate receiver
apparatus after a transmission is complete. As a result, the
FCC’s purported exercise of ancillary authority founders on the
first condition. There is no statutory foundation for the
broadcast flag rules, and consequently the rules are ancillary to
nothing. Therefore, we hold that the Commission acted outside
the scope of its delegated authority when it adopted the disputed
broadcast flag regulations.
The result that we reach in this case finds support in the All
Channel Receiver Act of 1962 and the Communications
Amendments Act of 1982. These two statutory enactments
confirm that Congress never conferred authority on the FCC to
regulate consumers’ use of television receiver apparatus after
the completion of broadcast transmissions.
As petitioners point out, “the Broadcast Flag rules do not
regulate interstate ‘radio communications’ as defined by Title I,
because the Flag is not needed to make a DTV transmission,
does not change whether DTV signals can be received, and has
no effect until after the DTV transmission is complete.”
Petitioners’ Br. at 23. We agree. Because the Commission
overstepped the limits of its delegated authority, we grant the
petition for review.
5
I. BACKGROUND
The Communications Act of 1934 was “implemented for
the purpose of consolidating federal authority over
communications in a single agency to assure ‘an adequate
communication system for this country.’” Motion Picture Ass’n
of Am., Inc. v. FCC, 309 F.3d 796, 804 (D.C. Cir. 2002)
(quoting S. REP . NO. 73-781, at 3 (1934)). Title I of the Act
creates the Commission “[f]or the purpose of regulating
interstate and foreign commerce in communication by wire and
radio so as to make available, so far as possible, to all the people
of the United States . . . a rapid, efficient, Nation-wide, and
world-wide wire and radio communication service with
adequate facilities at reasonable charges.” 47 U.S.C. § 151.
Title I further provides that the Commission “shall execute and
enforce the provisions” of the Act, id., and states that the Act’s
provisions “shall apply to all interstate and foreign
communication by wire or radio,” id. § 152(a).
The FCC may act either pursuant to express statutory
authority to promulgate regulations addressing a variety of
designated issues involving communications, see, e.g., 47
U.S.C. § 303(f) (granting the Commission authority to prevent
interference among radio and television broadcast stations), or
pursuant to ancillary jurisdiction, see, e.g., 47 U.S.C. § 154(i)
(“[t]he Commission may perform any and all acts, make such
rules and regulations, and issue such orders, not inconsistent
with this chapter, as may be necessary in the execution of its
functions”).
Although somewhat amorphous, ancillary jurisdiction is
nonetheless constrained. In order for the Commission to
regulate under its ancillary jurisdiction, two conditions must be
met. First, the subject of the regulation must be covered by the
Commission’s general grant of jurisdiction under Title I of the
Communications Act, which, as noted above, encompasses “‘all
interstate and foreign communication by wire or radio.’” United
6
States v. Southwestern Cable Co., 392 U.S. 157, 167 (1968)
(quoting 47 U.S.C. § 152(a)). Second, the subject of the
regulation must be “reasonably ancillary to the effective
performance of the Commission’s various responsibilities.” Id.
at 178. Digital television is a technological breakthrough that
allows broadcasters to transmit either an extremely high quality
video programming signal (known as high definition television)
or multiple streams of video, voice, and data simultaneously
within the same frequency band traditionally used for a single
analog television broadcast. See Advanced Television Systems
and Their Impact Upon the Existing Television Broadcast
Service, 11 F.C.C.R. 17,771, 17,774 (1996). In 1997, the FCC
set a target of 2006 for the cessation of analog service. See
Advanced Television Systems and Their Impact Upon the
Existing Television Broadcast Service, 12 F.C.C.R. 12,809,
12,850 (1997). Congress subsequently provided that television
broadcast licenses authorizing analog service should not be
renewed to authorize such service beyond December 31, 2006.
See 47 U.S.C. § 309(j)(14).
In August 2002, the FCC issued a notice of proposed
rulemaking regarding digital broadcast copy protection. See
Digital Broadcast Copy Protection, 17 F.C.C.R. 16,027 (2002)
(“NPRM”). The Commission sought comments on, among
other things, whether to adopt broadcast flag technology to
prevent the unauthorized copying and redistribution of digital
media. See id. at 16,028-29. The broadcast flag, or
Redistribution Control Descriptor, is a digital code embedded in
a digital broadcasting stream, which prevents digital television
reception equipment from redistributing digital broadcast
content. See id. at 16,027. The effectiveness of the broadcast
flag regime is dependent on programming being flagged and on
devices capable of receiving broadcast DTV signals
(collectively “demodulator products”) being able to recognize
and give effect to the flag. Under the rule, new demodulator
products (e.g., televisions, computers, etc.) must include flag-
7
recognition technology. This technology, in combination with
broadcasters’ use of the flag, would prevent redistribution of
broadcast programming. The broadcast flag does not have any
impact on a DTV broadcast transmission. The flag’s only effect
is to limit the capacity of receiver apparatus to redistribute
broadcast content after a broadcast transmission is complete.
The NPRM also sought comments on whether the
Commission had the authority to mandate recognition of the
broadcast flag in consumer electronics devices. Id. at 16,029-
30. The Commission requested commenters to address whether
“this [is] an area in which the Commission could exercise its
ancillary jurisdiction under Title I of the Act.” Id. The FCC
also asked “commenters to identify any statutory provisions that
might provide the Commission with more explicit authority to
adopt digital broadcast copy protection rules,” such as 47 U.S.C.
§ 336(b)(4) and (b)(5), id., which authorize the Commission to
regulate the issuance of licenses for digital television services,
see 47 U.S.C. § 336(a)-(b).
Unsurprisingly, there was an enormous response to the
NPRM. The Commission received comments from, among
others, owners, producers, and distributors of broadcast
television content; consumer electronics manufacturers;
consumer interest groups; library associations; and individual
consumers. Content owners and television broadcasters argued
that, if DTV broadcast content was not protected from the threat
of widespread unauthorized redistribution via networks such as
the Internet, high value content would migrate from broadcast
television to pay television services, which offer a more secure
distribution channel. See Digital Broadcast Content Protection,
18 F.C.C.R. 23,550, 23,553 (2003) (“Flag Order”); Joint Reply
Comments of the Motion Picture Association of America, Inc.,
et al., 2/20/03, reprinted in Joint Appendix (“J.A.”) 1080, 1088.
But there was also overwhelming opposition to the proposed
broadcast flag rules. As Commissioner Adelstein noted:
8
“Thousands of people contacted us and urged us not to [adopt
the broadcast flag regime]. Many consumers are concerned
about the effect on their use and enjoyment of television, as well
as their personal privacy.” See Flag Order, 18 F.C.C.R. at
23,620 (statement of Commissioner Adelstein, approving in
part, dissenting in part). Opponents of regulation argued that the
threat from content redistribution was overstated in light of
technological limitations to widespread Internet retransmission.
See id. at 23,553. In addition, critics of the proposed rules
expressed concerns about implementation costs and suggested
that the broadcast flag both was an inadequate tool to protect
content and would stifle innovation. Id. at 23,557.
On the question of the Commission’s authority to
promulgate broadcast flag regulations, proponents pointed to 47
U.S.C. § 336. See Flag Order, 18 F.C.C.R. at 23,562. Enacted
as part of the Telecommunications Act of 1996, Pub. L. No.
104-104, § 201, 110 Stat. 56, 107, 47 U.S.C. § 336 sets forth
certain criteria pursuant to which the Commission may issue
new licenses for advanced television services. Proponents also
argued that, even if the Commission lacked express statutory
authority under § 336, the FCC was authorized to adopt
broadcast flag rules pursuant to its ancillary jurisdiction. See
Joint Comments of the Motion Picture Association of America,
Inc., et al., 12/6/02, J.A. 760, 798-807.
Opponents contended that the Commission lacked
jurisdiction to implement broadcast flag rules. They pointed out
that the plain text of § 336 authorized the FCC to regulate only
DTV broadcast licensees and the quality of the signal
transmitted by such licensees. See, e.g., Reply Comments of
Phillips Electronics North America Corp., 2/18/03, J.A. 1012,
1027-28. Critics also maintained that the Commission could not
rely on its ancillary jurisdiction to adopt a broadcast flag regime.
As one commenter noted:
9
[The] unbounded view of FCC jurisdiction [advanced by
flag proponents] proves too much. Were it true, the FCC
would have plenary authority to regulate consumer
electronics and computer devices, and there would have
been no need for Congress to delegate authority to the FCC
to implement its policy objectives [in various laws
authorizing the FCC to regulate specific aspects of
consumer electronics].
Id., J.A. 1028-29.
In November 2003, the FCC adopted regulations requiring
demodulator products manufactured on or after July 1, 2005 to
recognize and give effect to the broadcast flag. See Flag Order,
18 F.C.C.R. at 23,570, 23,576, 23,590-91. The Commission
explained:
In this Report and Order, we conclude that the potential
threat of mass indiscriminate redistribution will deter
content owners from making high value digital content
available through broadcasting outlets absent some content
protection mechanism. Although the threat of widespread
indiscriminate retransmission of high value digital
broadcast content is not imminent, it is forthcoming and
preemptive action is needed to forestall any potential harm
to the viability of over-the-air television. Of the
mechanisms available to us at this time, we believe that [a
broadcast flag] regime will provide content owners with
reasonable assurance that DTV broadcast content will not
be indiscriminately redistributed while protecting
consumers’ use and enjoyment of broadcast video
programming.
Id. at 23,552. The Commission also adopted an interim policy
for approving the technologies that could be employed by
demodulator products to comply with the requirements of the
10
Flag Order and issued a further notice of proposed rulemaking
to address this and other issues. See id. at 23,574-79.
In explaining the source of its authority to promulgate the
broadcast flag rules, the Commission did not invoke 47 U.S.C.
§ 336. Rather, the Commission purported to rely solely on its
ancillary jurisdiction under Title I of the Communications Act
of 1934. See id. at 23,563. The Commission found that (1)
television receivers are covered by Title I’s general
jurisdictional grant even when those receivers are not engaged
in the process of communication by wire or radio and (2) flag-
based regulations are reasonably ancillary to the Commission’s
regulatory authority to foster a diverse range of broadcast
television programs and promote the transition from analog
service to DTV. See id. at 23,563-66. The Commission
acknowledged that “this may be the first time the Commission
exercises its ancillary jurisdiction over equipment manufacturers
in this manner.” Id. at 23,566. The Commission nonetheless
concluded that “[t]he fact that the circumstances may not have
warranted an exercise of such jurisdiction at earlier stages does
not undermine our authority to exercise ancillary jurisdiction at
this point in time.” Id.
Commissioner Abernathy issued a separate statement, in
which she expressed her support for the Flag Order, but noted:
I have previously expressed concerns about whether we
have jurisdiction to adopt a broadcast flag solution, or
whether this is an issue best left for Congress. As a general
rule, the Commission should be wary of adopting
significant new regulations where Congress has not spoken.
On balance, though, I believe that given the broad
congressional direction to promote the transition to digital
broadcasting, a critical part of that obligation involves
protection of content that is transmitted via free over-the-
air-broadcasting. I am hopeful that any court review of this
decision can occur before the effective date of our rules.
11
Id. at 23,614 (separate statement of Commissioner Abernathy).
Commissioners Copps and Adelstein dissented in part from the
issuance of the Flag Order. Commissioner Copps dissented
“because the [regulations did] not preclude the use of the flag
for news or for content that is already in the public domain” and
“because the criteria adopt[ed] for accepting digital content
protection technologies fail to address . . . the impact . . . on
personal privacy.” Id. at 23,616-17 (Statement of Commissioner
Copps). Commissioner Adelstein dissented because the
regulations did “not rule out the use of the flag for content that
is in the public domain.” Id. at 23,620 (Statement of
Commissioner Adelstein).
The instant petition for review, filed by nine organizations
representing numerous libraries and consumers, challenges the
FCC’s Flag Order on three grounds: (1) the Commission lacks
statutory authority to mandate that demodulator products
recognize and give effect to the broadcast flag; (2) the broadcast
flag regime impermissibly conflicts with copyright law; and (3)
the Commission’s decision is arbitrary and capricious for want
of reasoned decisionmaking. The Motion Picture Association of
America (“MPAA”) intervened in support of the Commission.
In its brief to the court, MPAA also contested petitioners’
Article III standing. After hearing oral argument, the court
requested additional submissions from the parties on the
question of standing. See Am. Library Ass’n v. FCC, 401 F.3d
489 (D.C. Cir. 2005) (“Am. Library I”).
As explained below, we are now satisfied that at least one
member of one of the petitioner groups has standing to pursue
this challenge to the FCC’s broadcast flag rules. The court
therefore has jurisdiction to consider the petition for review. On
the merits, we hold that the FCC lacked statutory authority to
impose the broadcast flag regime. Therefore, we grant the
petition for review without reaching petitioners’ other
challenges to the Flag Order.
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II. ANALYSIS
A. Standing
Before addressing the merits of petitioners’ claims, we must
first determine whether they have demonstrated that they have
Article III standing, a prerequisite to federal court jurisdiction.
Am. Library I, 401 F.3d at 492. Associations such as petitioners
have representational standing under Article III if (1) at least one
of their members has standing, (2) the interests the association
seeks to protect are germane to its purpose, and (3) neither the
claim asserted nor the relief requested requires the participation
of an individual member in the lawsuit. Id. As we noted in
American Library I, we have no reason to doubt that petitioners
satisfy the latter two requirements, and neither the FCC nor
intervenor MPAA has suggested otherwise. Therefore, the focus
of our inquiry here is whether at least one member of a
petitioner group has standing to sue in its own right. Id.
In order to meet this first prong of the associational standing
test, at least one member of a petitioning group must satisfy “the
three elements that form the ‘irreducible constitutional minimum
of standing.’” Id. (quoting Lujan v. Defenders of Wildlife, 504
U.S. 555, 560 (1992)). These elements are: (1) injury in fact,
(2) causation, and (3) redressability. See id. at 492-93 (citing
Defenders of Wildlife, 504 U.S. at 560-61). The “only thing at
issue in this case is the injury-in-fact prong of Article III
standing, for causation and redressability are obvious if
petitioners can demonstrate injury.” Id. at 493. Furthermore, as
we have already made clear,
[w]ith regard to the injury-in-fact prong of the standing test,
petitioners need not prove the merits of their case in order
to demonstrate that they have Article III standing. Rather,
in order to establish injury in fact, petitioners must show
that there is a substantial probability that the FCC’s order
13
will harm the concrete and particularized interests of at
least one of their members.
Id. (citations omitted).
In response to our decision in American Library I,
petitioners submitted a brief, accompanied by 13 affidavits from
individual members and individuals representing their member
organizations, to demonstrate their standing. These materials
included an affidavit executed by Peggy Hoon, the Scholarly
Communication Librarian at the North Carolina State University
(“NCSU”) Libraries in Raleigh, North Carolina, a member of
petitioner Association of Research Libraries. Affidavit of Peggy
Hoon, 3/29/05, ¶ 1. Ms. Hoon’s affidavit asserts that the NCSU
Libraries assist faculty members who would like to make
broadcast materials available to students in distance learning
courses via the Internet. The affidavit states that the NCSU
Libraries currently assist a professor in the Foreign Languages
and Literatures Department make short broadcast clips of the
Univision network’s program, El Show de Christina, available
over the Internet on a password-protected basis for use in a
distance-education Spanish language course. The affidavit
alleges that Internet redistribution is essential to making such
clips available. See id. ¶¶ 5-10. The FCC does not dispute that
the NCSU Libraries’ activities are lawful. And as petitioners
point out, if the regulations implemented by the Flag Order take
effect, there is a substantial probability that the NCSU Libraries
would be prevented from assisting faculty to make broadcast
clips available to students in their distance-learning courses via
the Internet.
At oral argument, counsel for the FCC stated explicitly that
the Commission is not challenging petitioners’ standing in this
case. Recording of Oral Argument at 29:01-:18. In its
supplemental brief, the Commission again does not raise a
challenge to petitioners’ standing. Instead, the Commission
merely responds on the merits, taking issue with certain
14
statements in petitioners’ supplemental brief and affidavits about
the breadth of the broadcast flag regime. See FCC Supp. Br. at
3.
Intervenor MPAA, which does challenge petitioners’
standing, argues that any injury suffered by the Libraries
following the FCC’s implementation of the broadcast flag
regulations will be “due solely to the independent . . . decisions
of third parties not before this Court.” MPAA Supp. Br. at 6.
In other words, MPAA assumes that, because hardware
manufacturers eventually might be able to gain approval for
apparatus that allow for greater distribution of broadcast content
in a manner that is consistent with the Flag Order, it will be the
unavailability of this new technology and not the agency’s
enforcement of the broadcast flag rule that causes injury to
petitioners. Thus, under MPAA’s view, redress for petitioners
must come from the hardware manufacturers, not the FCC. This
is a specious argument.
There is clearly a substantial probability that, if enforced,
the Flag Order will immediately harm the concrete and
particularized interests of the NCSU Libraries. Absent the Flag
Order, the Libraries will continue to assist NCSU faculty
members make broadcast clips available to students in distance-
education courses via the Internet, but there is a substantial
probability that the Libraries will be unable to do this if the Flag
Order takes effect. It is also beyond dispute that, if this court
vacates the Flag Order, the Libraries will be able to continue to
assist faculty members lawfully redistribute broadcast clips to
their students.
In short, it is clear that, on this record, the NCSU Libraries
have satisfied the requisite elements of Article III standing:
injury in fact, causation, and redressability. Therefore, the
Association of Research Libraries also has standing. See Am.
Library I, 401 F.3d at 492. Because only one member of a
petitioning organization must have standing in order for the
15
court to have jurisdiction over a petition for review, see Nuclear
Energy Inst., Inc. v. EPA, 373 F.3d 1251, 1266 (D.C. Cir. 2004),
it is unnecessary for us to consider any of the other grounds
offered by petitioners to demonstrate their standing. We
therefore move to the question of whether the Commission acted
in excess of its statutory authority in promulgating the Flag
Order.
B. The Limits of the FCC’s Delegated Authority Under the
Communications Act
In defending the Flag Order and the broadcast flag
regulations contained therein, the Commission contends that it
reasonably interpreted the Communications Act as granting
it jurisdiction to establish technical requirements for
television receiving equipment in order to fulfill its
responsibility of implementing the transition to digital
television. Sections 1 and 2(a) of the Act, 47 U.S.C. 151,
152(a), confer on the agency regulatory jurisdiction over all
interstate radio and wire communication. Under the
definitional provisions of section 3, 47 U.S.C. 153, those
communications include not only the transmission of
signals through the air or wires, but also “all
instrumentalities, facilities, [and] apparatus” associated
with the overall circuit of messages sent and received –
such as digital television receiving equipment.
....
. . . [T]he Commission has the authority to promulgate
regulations to effectuate the goals and provisions of the Act
even in the absence of an explicit grant of regulatory
authority, if the regulations are reasonably ancillary to the
Commission’s specific statutory powers and
responsibilities.
FCC Br. at 17, 23-24.
16
Petitioners counter that
[t]he FCC has asserted jurisdiction it does not have. . . .
The FCC claims no specific statutory authority allowing it
to meddle so radically in the nation’s processes of
technological innovation, but instead cites to its latent
“ancillary” jurisdiction, which the FCC astonishingly
contends is boundless unless Congress specifically acts to
limit it.
. . . [I]n no circumstance can the FCC regulate an
activity that is not an interstate “communication” by radio
or wire, and the Broadcast Flag rules regulate neither. The
Broadcast Flag does not dictate how DTV transmissions are
made, but simply controls how the transmitted content can
be treated after it is received. . . . [T]he Communications
Act is clear that, unless specified elsewhere, it gives the
FCC authority over receipt “services,” not the receipt
“apparatuses” the agency now attempts to regulate.
Petitioners’ Br. at 19-20.
As noted above, the principal issue in this case is whether
the Commission acted outside the scope of its delegated
authority when it adopted the disputed broadcast flag
regulations. The FCC, like other federal agencies, “literally has
no power to act . . . unless and until Congress confers power
upon it.” La. Pub. Serv. Comm’n v. FCC, 476 U.S. 355, 374
(1986). The Commission “has no constitutional or common law
existence or authority, but only those authorities conferred upon
it by Congress.” Michigan v. EPA, 268 F.3d 1075, 1081 (D.C.
Cir. 2001). Hence, the FCC’s power to promulgate legislative
regulations is limited to the scope of the authority Congress has
delegated to it. Id. (citing Bowen v. Georgetown Univ. Hosp.,
488 U.S. 204, 208 (1988)).
17
1. The Applicable Standard of Review
In assessing whether the Commission’s Flag Order exceeds
the agency’s delegated authority, we apply the familiar
standards of review enunciated by the Supreme Court in
Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc.,
467 U.S. 837 (1984), and United States v. Mead Corp., 533 U.S.
218, 226-27 (2001). In reviewing agency action under Chevron,
“if the intent of Congress is clear,” the court “must give effect
to [that] unambiguously expressed intent.” Chevron, 467 U.S.
at 842-43 (“Chevron Step One”). If “Congress has not directly
addressed the precise question at issue,” and the agency has
acted pursuant to an express or implied delegation of authority,
the agency’s statutory interpretation is entitled to deference, as
long as it is reasonable. Id. at 843-44 (“Chevron Step Two”).
The FCC argues here that the court should defer to the agency’s
interpretation of its ancillary jurisdiction under Chevron,
because, in its view, the regulations promulgated in the Flag
Order reflect a reasonable application of the agency’s ancillary
authority under the Communications Act. The agency’s self-
serving invocation of Chevron leaves out a crucial threshold
consideration, i.e., whether the agency acted pursuant to
delegated authority.
As the court explained in Motion Picture Ass’n of America,
Inc. v. FCC, 309 F.3d 796, 801 (D.C. Cir. 2002) (“MPAA”), an
“agency’s interpretation of [a] statute is not entitled to deference
absent a delegation of authority from Congress to regulate in the
areas at issue.” The court observed that the Supreme Court’s
decision in Mead “reinforces” the command in Chevron that
“deference to an agency’s interpretation of a statute is due only
when the agency acts pursuant to ‘delegated authority.’” Id.
(quoting Mead, 533 U.S. at 226). See also Cal. Indep. Sys.
Operator Corp. v. FERC, 372 F.3d 395, 399 (D.C. Cir. 2004);
Bluewater Network v. EPA, 370 F.3d 1, 11 (D.C. Cir. 2004);
AT&T Corp. v. FCC, 323 F.3d 1081, 1086 (D.C. Cir. 2003); Ry.
18
Labor Executives’ Ass’n v. Nat’l Mediation Bd., 29 F.3d 655,
670-71 (D.C. Cir. 1994) (en banc).
In Aid Ass’n for Lutherans v. United States Postal Serv.,
321 F.3d 1166 (D.C. Cir. 2003), the court explained:
“Chevron is principally concerned with whether an agency
has authority to act under a statute.” Arent v. Shalala, 70
F.3d 610, 615 (D.C. Cir. 1995). Chevron analysis “is
focused on discerning the boundaries of Congress’
delegation of authority to the agency; and as long as the
agency stays within that delegation, it is free to make policy
choices in interpreting the statute, and such interpretations
are entitled to deference.” Id.; see also Mead, 533 U.S. at
226-27 (holding that Chevron deference is due only when
the agency acts pursuant to “delegated authority”).
....
An agency construction of a statute cannot survive judicial
review if a contested regulation reflects an action that
exceeds the agency’s authority. It does not matter whether
the unlawful action arises because the disputed regulation
defies the plain language of a statute or because the
agency’s construction is utterly unreasonable and thus
impermissible.
Id. at 1174.
Petitioners’ principal claim here is that the challenged
broadcast flag regulations emanated from an ultra vires action
by the FCC. We agree. This being the case, the regulations
cannot survive judicial review under Chevron/Mead. Our
judgment is the same whether we analyze the FCC’s action
under the first or second step of Chevron. “In either situation,
the agency’s interpretation of the statute is not entitled to
deference absent a delegation of authority from Congress to
regulate in the areas at issue.” MPAA, 309 F.3d at 801 (citing
19
Ry. Labor Executives, 29 F.3d at 671). In this case, as explained
below, the FCC’s interpretation of its ancillary jurisdiction
reaches well beyond the agency’s delegated authority under the
Communications Act. We therefore hold that the broadcast flag
regulations exceed the agency’s delegated authority under the
statute.
2. Ancillary Jurisdiction Under the Communications Act
of 1934
As explained above, the only basis advanced by the
Commission as a source for its authority to adopt the broadcast
flag regime was its ancillary jurisdiction under Title I of the
Communications Act of 1934. See Flag Order, 18 F.C.C.R. at
23,563-64. As the Commission recognized, its ancillary
jurisdiction is limited to circumstances where: (1) the
Commission’s general jurisdictional grant under Title I covers
the subject of the regulations and (2) the regulations are
reasonably ancillary to the Commission’s effective performance
of its statutorily mandated responsibilities. See id. at 23,563
(citing Southwestern Cable, 392 U.S. at 177-78).
The insurmountable hurdle facing the FCC in this case is
that the agency’s general jurisdictional grant does not
encompass the regulation of consumer electronics products that
can be used for receipt of wire or radio communication when
those devices are not engaged in the process of radio or wire
transmission. Because the Flag Order does not require
demodulator products to give effect to the broadcast flag until
after the DTV broadcast has been completed, the regulations
adopted in the Flag Order do not fall within the scope of the
Commission’s general jurisdictional grant. Therefore, the
Commission cannot satisfy the first precondition to its assertion
of ancillary jurisdiction.
The Supreme Court has delineated the parameters of the
Commission’s ancillary jurisdiction in three cases: United
20
States v. Southwestern Cable Co., 392 U.S. 157 (1968), United
States v. Midwest Video Corp., 406 U.S. 649 (1972) (“Midwest
Video I”), and FCC v. Midwest Video Corp., 440 U.S. 689
(1979) (“Midwest Video II”). In Southwestern Cable and
Midwest Video I, the Court upheld the Commission’s regulation
of cable television systems as a valid exercise of its ancillary
jurisdiction, but also made clear that the Commission’s ancillary
authority has limits. In Midwest Video II, the Court found that
the Commission had overstepped those limits. Because
Southwestern Cable, Midwest Video I, and Midwest Video II are
central to our analysis of whether the Commission lawfully
exercised its ancillary jurisdiction in this case, we discuss these
cases in some detail.
In Southwestern Cable, the Supreme Court recognized that
the Communications Act confers a sphere of ancillary
jurisdiction on the FCC. See 392 U.S. at 177-78. The principal
question presented was whether the FCC had the authority to
regulate cable television systems (“CATV”), absent any express
congressional grant of authority to the FCC to regulate in this
area. See id. at 164-67. The Court’s conclusion that the FCC
did have such authority rested on two factors. First, it was
beyond doubt that CATV systems involved interstate
“‘communication by wire or radio,’” id. at 168 (quoting 47
U.S.C. § 152(a)), and, thus, were covered by Title I’s general
jurisdictional grant. Second, the Court concluded that at least
some level of CATV regulation was “reasonably ancillary to the
effective performance of the Commission’s various
responsibilities [delegated to it by Congress] for the regulation
of television broadcasting.” Id. at 178. Because these two
conditions were satisfied, the Court held that, to the degree it
was in fact reasonably ancillary to the Commission’s
responsibilities over broadcast, the FCC had the power to
regulate cable television as “‘public convenience, interest or
necessity requires,’” so long as the regulations were “‘not
inconsistent with law.’” Id. (quoting 47 U.S.C. § 303(r)).
21
Four years later, the Court applied the two-part test
enunciated in Southwestern Cable to review a rule adopted by
the FCC providing that no CATV system with 3,500 or more
subscribers could carry the signal of any television broadcast
station unless the system distributed programming that had
originated from a source other than the broadcast signals and the
system had facilities for local program production. See Midwest
Video I, 406 U.S. at 653-54 & n.6. The regulation was designed
to increase the number of outlets for community self-expression
and the programming choices available to the public. See id. at
654.
A closely divided Court held that the Commission’s rule
was a valid exercise of its ancillary jurisdiction. In an opinion
by Justice Brennan, a plurality of the Court began its analysis by
recognizing the two requirements for the Commission’s exercise
of ancillary jurisdiction: (1) that the regulation must cover
interstate or foreign communication by wire or radio and (2) that
the regulation must be reasonably ancillary to the Commission’s
effective performance of its statutorily mandated
responsibilities. See id. at 662-63. The parties before the Court
in Midwest Video I did not dispute that the first precondition was
met. See id. at 662. Furthermore, the plurality concluded that
the regulation was reasonably ancillary to the Commission’s
responsibilities for the regulation of broadcast television,
because the Commission reasonably concluded that the rule
would “‘further the achievement of long-established regulatory
goals in the field of television broadcasting by increasing the
number of outlets for community self-expression and
augmenting the public’s choice of programs and types of
services.’” Id. at 667-68 (quoting Commission report
accompanying the disputed regulation).
Chief Justice Burger provided the fifth vote to sustain the
regulation at issue in Midwest Video I, but he concurred only in
the judgment. Chief Justice Burger agreed that, in light of the
22
“pervasive powers” conferred upon the Commission and its
“generations of experience,” the Court should sustain the
Commission’s authority to impose the regulation at issue. Id. at
676 (Burger, C.J., concurring in the result). Nonetheless, he
noted: “Candor requires acknowledgment, for me at least, that
the Commission’s position strains the outer limits of even the
open-ended and pervasive jurisdiction that has evolved by
decisions of the Commission and the courts.” Id.
Seven years later, in Midwest Video II, the Court considered
whether another FCC effort to regulate cable television was a
permissible exercise of the Commission’s ancillary jurisdiction.
This time the Court decided that the Commission had gone too
far. The rules at issue required that cable television systems
carrying broadcast signals and having at least 3,500 subscribers
develop at least a 20-channel capacity, make certain channels
available for third-party access, and furnish equipment for
access purposes. 440 U.S. at 691. The Court held that the rules
exceeded the Commission’s authority. Id. at 708-09.
Specifically, because the Communications Act explicitly
directed the Commission not to treat broadcasters as common
carriers, the Court concluded that it was not reasonably ancillary
to the Commission’s effective performance of its responsibilities
relating to broadcast television for the Commission to impose
common-carrier obligations on cable television systems. See id.
at 702-05, 708-09. While the Court recognized that the statutory
bar on treating broadcasters as common carriers did not apply
explicitly to cable systems, the Court explained that, “without
reference to the provisions of the Act directly governing
broadcasting, the Commission’s jurisdiction under [Title I]
would be unbounded.” Id. at 706. The Court refused to
countenance such a boundless view of the Commission’s
jurisdiction, noting that, “[t]hough afforded wide latitude in its
supervision over communication by wire, the Commission was
not delegated unrestrained authority.” Id. As the Commission
correctly explained in the Flag Order, Midwest Video II stands
23
for the proposition that “if the basis for jurisdiction over cable
is that the authority is ancillary to the regulation of broadcasting,
the cable regulation cannot be antithetical to a basic regulatory
parameter established for broadcast.” Flag Order, 18 F.C.C.R.
at 23,563 n.70.
The Court’s decisions in Southwestern Cable, Midwest
Video I, and Midwest Video II were principally focused on the
second prong of the ancillary jurisdiction test. This is
unsurprising, because the subject matter of the regulations at
issue in those cases – cable television – constituted interstate
communication by wire or radio, and thus fell within the scope
of the Commission’s general jurisdictional grant under Title I of
the Communications Act. However, these cases leave no doubt
that the Commission may not invoke its ancillary jurisdiction
under Title I to regulate matters outside of the compass of
communication by wire or radio. As we have explained:
While the Supreme Court has described the jurisdictional
powers of the FCC as . . . expansive, there are limits to
those powers. No case has ever permitted, and the
Commission has never, to our knowledge, asserted
jurisdiction over an entity not engaged in “communication
by wire or radio.”
Accuracy in Media, Inc. v. FCC, 521 F.2d 288, 293 (D.C. Cir.
1975) (additional internal quotation marks omitted) (citing Nat’l
Broad. Co. v. United States, 319 U.S. 190, 219 (1943)); see also
id. at 294 (“Jurisdiction over CATV [in Southwestern Cable]
was expressly predicated upon a finding that the transmission of
video and aural signals via the cable was ‘interstate . . .
communication by wire or radio.’” (quoting Southwestern
Cable, 392 U.S. at 168)); Midwest Video I, 406 U.S. at 662
(making clear that the Commission’s jurisdiction is limited to
activities involving communication by wire or radio). This
principle is crucial, because the issue here is precisely whether
24
the Flag Order asserts jurisdiction over matters that are beyond
the compass of wire or radio communication.
Southwestern Cable, Midwest Video I, and Midwest Video
II are also relevant to the present controversy for a second
reason. In each of these decisions, the Court followed a very
cautious approach in deciding whether the Commission had
validly invoked its ancillary jurisdiction, even when the
regulations under review clearly addressed “communication by
wire or radio.” As the Seventh Circuit has noted: “The Court
[in Southwestern Cable] appeared to be treading lightly even
where the activity at issue” involved cable television, which
“easily falls within” Title I’s general jurisdictional grant. Ill.
Citizens Comm. for Broad. v. FCC, 467 F.2d 1397, 1400 (7th
Cir. 1972). The Seventh Circuit’s characterization is equally apt
with respect to the Court’s opinions in Midwest Video I and
Midwest Video II.
We think that the Supreme Court’s cautionary approach in
applying the second prong of the ancillary jurisdiction test
suggests that we should be at least as cautious in this case.
Great caution is warranted here, because the disputed broadcast
flag regulations rest on no apparent statutory foundation and,
thus, appear to be ancillary to nothing. Just as the Supreme
Court refused to countenance an interpretation of the second
prong of the ancillary jurisdiction test that would confer
“unbounded” jurisdiction on the Commission, Midwest Video II,
440 U.S. at 706, we will not construe the first prong in a manner
that imposes no meaningful limits on the scope of the FCC’s
general jurisdictional grant.
In light of the parameters of the Commission’s ancillary
jurisdiction established by Southwestern Cable, Midwest Video
I, and Midwest Video II, this case turns on one simple fact: the
Flag Order does not require demodulator products to give effect
to the broadcast flag until after the DTV broadcast is complete.
The Flag Order does not regulate the actual transmission of the
25
DTV broadcast. In other words, the Flag Order imposes
regulations on devices that receive communications after those
communications have occurred; it does not regulate the
communications themselves. Because the demodulator products
are not engaged in “communication by wire or radio” when they
are subject to regulation under the Flag Order, the Commission
plainly exceeded the scope of its general jurisdictional grant
under Title I in this case.
In seeking to justify its assertion of jurisdiction in the Flag
Order, the Commission relies on the fact that the
Communications Act defines “radio communication” and “wire
communication” to include not only the “transmission of . . .
writing, signs, signals, pictures, and sounds” by aid of wire or
radio, but also “all instrumentalities, facilities, apparatus, and
services (among other things, the receipt, forwarding, and
delivery of communications) incidental to such transmission.”
47 U.S.C. § 153(33) (defining “radio communication”); id. §
153(52) (defining “wire communication”). The Flag Order
asserts: “Based on this language, [the Commission finds] that
television receivers are covered by the statutory definitions and
therefore come within the scope of the Commission’s general
authority outlined in [Title I] of the Communications Act.” 18
F.C.C.R. at 23,563-64. The Commission thus apparently
believed that, given the definitions of “wire communication”
and “radio communication” in Title I, it could assert jurisdiction
over television receivers even when those receivers were not
engaged in broadcast transmission simply because they are
apparatus used for the receipt of communications. See also FCC
Br. at 26. We reject this position, for it rests on a completely
implausible construction of the Communications Act.
The statute does not give the FCC authority to regulate any
“apparatus” that is associated with television broadcasts.
Rather, the statutory language cited by the FCC refers only to
“apparatus” that are “incidental to . . . transmission.” In other
26
words, the language of § 153(33) and (52) plainly does not
indicate that Congress intended for the Commission to have
general jurisdiction over devices that can be used for receipt of
wire or radio communication when those devices are not
engaged in the process of radio or wire transmission.
The language relied upon by the Commission in the
statutory definitions of “wire communication” and “radio
communication” was part of the original Communications Act
of 1934. See Pub. L. No. 73-416, § 3(a)-(b), 48 Stat. 1064,
1065; see also Southwestern Cable, 392 U.S. at 168 (quoting
this language). The Commission acknowledges that, in the more
than 70 years that the Act has been in existence, it has never
previously sought to exercise ancillary jurisdiction over
reception equipment after the transmission of communication is
complete. See Recording of Oral Argument at 34:45-35:23.
This is not surprising, since the Commission’s current
interpretation of the statute’s definitional language would render
step one of the Supreme Court’s two-part test for determining
whether a subject is within the Commission’s ancillary
jurisdiction essentially meaningless.
We can find nothing in the statute, its legislative history, the
applicable case law, or agency practice indicating that Congress
meant to provide the sweeping authority the FCC now claims
over receiver apparatus. And the agency’s strained and
implausible interpretations of the definitional provisions of the
Communications Act of 1934 do not lend credence to its
position. As the Supreme Court has reminded us, Congress
“does not . . . hide elephants in mouseholes.” Whitman v. Am.
Trucking Ass’n, 531 U.S. 457, 468 (2001). In sum, we hold that,
at most, the Commission only has general authority under Title
I to regulate apparatus used for the receipt of radio or wire
communication while those apparatus are engaged in
communication.
27
Our holding is consistent with the Seventh Circuit’s well-
reasoned decision in Illinois Citizens, which concluded that the
FCC may not lawfully exercise jurisdiction over activities that
do not constitute communication by wire or radio. See 467 F.2d
at 1399-1400. In that case, the Illinois Citizens Committee for
Broadcasting filed a complaint with the FCC, alleging that the
proposed construction of the Sears Tower in Chicago “would
throw ‘multiple ghost images’ on television receivers in many
areas of the Greater Chicago Metropolitan Area.” Id. at 1398.
The petitioners called upon the FCC to take steps to prevent this
interference, including, if necessary, ordering Sears, Roebuck &
Co. to cease construction of the tower until the company had
taken measures to ensure that television viewers would continue
to receive an adequate signal. The Commission denied the
requested relief on the ground that it lacked jurisdiction over the
construction of the Sears Tower, and the Illinois Citizens
Committee sought review by the Seventh Circuit. See id. at
1398-99.
The Illinois Citizens Committee argued that, in light of
Southwestern Cable, the FCC had the power to regulate “all
activities which ‘substantially affect communications.’” Id. at
1399. The Seventh Circuit flatly rejected this argument as
unsupported by the Communications Act or judicial decisions
interpreting the Act:
While we appreciate the need for a flexible approach to
FCC jurisdiction, we believe the scope advanced by
petitioners is far too broad. The “affecting
communications” concept would result in expanding the
FCC’s already substantial responsibilities to include a wide
range of activities, whether or not actually involving the
transmission of radio or television signals much less being
remotely electronic in nature. Nothing before us supports
this extension.
Id. at 1400 (footnote omitted).
28
In Motion Picture Ass’n, this court concluded that the
Commission lacked authority under Title I of the
Communications Act to promulgate regulations that
significantly implicated program content. Focusing specifically
on 47 U.S.C. § 151, which is part of Title I and which the FCC
conceded was the only possible source of authority that could
justify its adoption of the video description rules at issue in the
case, we explained:
Under [§ 151], Congress delegated authority to the FCC to
expand radio and wire transmissions, so that they would be
available to all U.S. citizens. Section [151] does not
address the content of the programs with respect to which
accessibility is to be ensured. In other words, the FCC’s
authority under [§ 151] is broad, but not without limits.
309 F.3d at 804 (full citations omitted) (citing Midwest Video I,
406 U.S. at 667-68, and Southwestern Cable, 392 U.S. at 172).
Just as no provision in Title I addresses program content, no
provision in Title I addresses requirements for demodulator
products not engaged in communication by wire or radio.
In sum, because the rules promulgated by the Flag Order
regulate demodulator products after the transmission of a DTV
broadcast is complete, these regulations exceed the scope of
authority Congress delegated to the FCC. And because the
Commission can only issue regulations on subjects over which
it has been delegated authority by Congress, the rules adopted
by the Flag Order are invalid at the threshold jurisdictional
inquiry. As was true in Aid Ass’n for Lutherans, “our judgment
in this case is the same whether we analyze the agency’s
statutory interpretation under Chevron Step One or Step Two.
‘In either situation, the agency’s interpretation of the statute is
not entitled to deference absent a delegation of authority from
Congress to regulate in the areas at issue.’” 321 F.3d at 1175
(quoting MPAA, 309 F.3d at 801). “An agency construction of
a statute cannot survive judicial review if a contested regulation
29
reflects an action that exceeds the agency’s authority.” Id. at
1174. It does not matter whether the unlawful action arises
because the regulations at issue are “contrary to clear
congressional intent” as ascertained through use of the
“traditional tools of statutory construction,” Chevron, 467 U.S.
at 843 n.9, or “utterly unreasonable and thus impermissible.”
Aid Ass’n for Lutherans, 321 F.3d at 1174. The FCC has no
congressionally delegated authority to regulate receiver
apparatus after a transmission is complete. We therefore hold
that the broadcast flag regulations exceed the agency’s delegated
authority under the statute.
3. Subsequent Congressional Legislation
We think that, for the reasons discussed above, the FCC
never has possessed ancillary jurisdiction under the
Communications Act of 1934 to regulate consumer electronic
devices that can be used for receipt of wire or radio
communication when those devices are not engaged in the
process of radio or wire transmission. Indeed, in the more than
70 years of the Act’s existence, the Commission has neither
claimed such authority nor purported to exercise its ancillary
jurisdiction in such a far-reaching way. See Flag Order, 18
F.C.C.R. at 23,566 (“We recognize that the Commission’s
assertion of jurisdiction over manufacturers of equipment in the
past has typically been tied to specific statutory provisions and
that this is the first time the Commission has exercised ancillary
jurisdiction over consumer equipment manufacturers in this
manner.”).
The Commission weakly attempts to dismiss this history by
suggesting that “Congressional admonitions and past
Commission assurances of a narrow exercise of authority over
manufacturers (such as those reflected in the [All Channel
Receiver Act] and its legislative history) are properly limited to
the context of those explicit authorizations. The regulations here
do not fall within the subject matter of those explicit
30
authorizations.” Id. (footnote omitted). This cryptic statement
surely cannot justify the FCC’s overreaching for regulatory
authority that Congress has never granted. As we held in Aid
Ass’n for Lutherans:
In this case, the [agency]’s position seems to be that the
disputed regulations are permissible because the statute
does not expressly foreclose the construction advanced by
the agency. We reject this position as entirely untenable
under well-established case law. See Ry. Labor Executives’
Ass’n v. Nat’l Mediation Bd., 29 F.3d 655, 671 (D.C. Cir.
1994) (en banc) (“Were courts to presume a delegation of
power absent an express withholding of such power,
agencies would enjoy virtually limitless hegemony, a result
plainly out of keeping with Chevron and quite likely with
the Constitution as well.”) (emphasis in original); see also
Halverson v. Slater, 129 F.3d 180, 187 (D.C. Cir. 1997)
(quoting Ry. Labor Executives, 29 F.3d at 671); Oil, Chem.
& Atomic Workers Int’l Union v. NLRB, 46 F.3d 82, 90
(D.C. Cir. 1995) (same); Ethyl Corp. v. EPA, 51 F.3d 1053,
1060 (D.C. Cir. 1995) (“We refuse . . . to presume a
delegation of power merely because Congress has not
expressly withheld such power.”); Natural Res. Def.
Council v. Reilly, 983 F.2d 259, 266 (D.C. Cir. 1993) (“‘[I]t
is only legislative intent to delegate such authority that
entitles an agency to advance its own statutory construction
for review under the deferential second prong of
Chevron.’”) (alteration in original) (quoting Kansas City v.
Dep’t of Hous. & Urban Dev., 923 F.2d 188, 191-92 (D.C.
Cir. 1991)).
321 F.3d at 1174-75.
It is enough here for us to find that the Communications Act
of 1934 does not indicate a legislative intent to delegate
authority to the Commission to regulate consumer electronic
devices that can be used for receipt of wire or radio
31
communication when those devices are not engaged in the
process of radio or wire transmission. That is the end of the
matter. It turns out, however, that subsequent legislation
enacted by Congress confirms the limited scope of the agency’s
ancillary jurisdiction and makes it clear that the broadcast flag
regulations exceed the agency’s delegated authority under the
statute.
The first such congressional enactment of note is the All
Channel Receiver Act (“ACRA”), Pub. L. No. 87-529, 76 Stat.
150 (codified at 47 U.S.C. §§ 303(s), 330(a)). Enacted in 1962,
the ACRA granted the Commission authority to require that
televisions sold in interstate commerce are “capable of
adequately receiving all frequencies allocated by the
Commission to television broadcasting.” 47 U.S.C. § 303(s).
See Elec. Indus. Ass’n Consumer Elecs. Groups v. FCC, 636
F.2d 689 (D.C. Cir. 1980) (“EIA”) (offering an extensive review
of the legislative history of the ACRA). The original version of
the All Channel Receiver Act “would have given the
Commission the authority to set ‘minimum performance
standards’ for all television receivers shipped in interstate
commerce.” Id. at 694 (quoting S. REP . NO. 87-1526, at 7
(1962)). However, in response to criticism about giving the
FCC such broad authority over television receiver design, the
“minimum performance standards” language was deleted before
the bill passed the House. The version that passed the House
would have instead given the Commission the authority to
require that television sets “be capable of receiving all
frequencies allocated by the Commission to television
broadcasting.” Id. (quoting H.R. REP . NO. 87-1559, at 1 (1962)).
FCC Chairman Newton Minnow then wrote the chair of the
Senate Subcommittee on Communications expressing his
concern that under the House version, “‘we may be powerless to
prevent the shipment . . . of all-channel sets having only the
barest capability for receiving UHF signals, and which therefore
would not permit satisfactory and usable reception of such
32
signals in a great many instances.’” Id. at 695 (alteration in
original) (quoting the letter). The Senate amended the bill, and
the version that was ultimately enacted allowed the FCC to
require television receivers sold in interstate commerce to be
“capable of adequately receiving all frequencies allocated by the
Commission to television broadcasting.” 47 U.S.C. § 303(s)
(emphasis added).
It is clear, however, that, in enacting the ACRA, Congress
did not “give the Commission unbridled authority” to regulate
receiving apparatus. EIA, 636 F.2d at 696. This was confirmed
when the Commission attempted to set a standard requiring
television manufacturers to take steps to improve the quality of
UHF reception beyond what could be attained with then-existing
technology. On review, this court ruled that the Commission
overstepped its delegated authority and vacated the
Commission’s action. See id. at 698. The court held that, while
the ACRA granted the Commission “limited . . . authority to
ensur[e] that all sets ‘be capable of adequately receiving’ all
television frequencies,” Congress had intentionally restricted
this jurisdictional grant to preclude wide-ranging FCC “receiver
design regulation.” Id. at 695, 696.
The All Channel Receiver Act’s limited and explicit grant
of authority to the Commission over receiver equipment clearly
indicates that neither Congress nor the Commission assumed
that the agency could find this authority in its ancillary
jurisdiction. It also confirms the Commission’s absence of
authority to regulate receiver apparatus as proposed by the
broadcast flag regulations in the Flag Order. If the Commission
had no ancillary jurisdiction to regulate the quality of UHF
reception, it cannot be doubted that the agency has no ancillary
authority to regulate consumer electronic devices that can be
used for receipt of wire or radio communication when those
devices are not engaged in the process of radio or wire
transmission.
33
A second congressional enactment that confirms the limited
scope of the agency’s ancillary jurisdiction is the
Communications Amendments Act of 1982, Pub. L. No. 97-259,
§ 108, 96 Stat. 1087, 1091-92. As part of the Communications
Amendments Act of 1982, Congress authorized the Commission
to impose performance standards on household consumer
electronics to ensure that they can withstand radio interference.
See 47 U.S.C. § 302a(a). The legislative history of 47 U.S.C. §
302a demonstrates that this enactment was intended by Congress
to give the Commission authority it did not previously possess
over receiver equipment. Specifically, the Conference Report
stated that, because industry attempts to solve the interference
problem voluntarily had not always been successful, “the
Conferees believe that Commission authority to impose
appropriate regulations on home electronic equipment and
systems is now necessary to insure that consumers’ home
electronic equipment and systems will not be subject to
malfunction due to [radio frequency interference].” H.R. C ONF.
REP . NO. 97-765, at 32 (1982) (emphasis added).
The Commission argues that the legislative history of §
302a indicates that the legislation’s purpose was to preclude
state and local regulation of radio interference. However, it is
not until several paragraphs after the portion of the Conference
Report quoted above that the Report noted that the legislation
was “further intended to clarify the reservation of exclusive
jurisdiction to the Federal Communications Commission over
matters involving [radio frequency interference].” Id. at 33
(emphasis added). Congress’s principal purpose in enacting 47
U.S.C. § 302a was clearly to expand the Commission’s authority
beyond the scope of its then-existing jurisdiction, which is
inconsistent with the FCC’s current view that it always has had
sweeping jurisdiction over receiver apparatus under Title I of the
Communications Act.
34
III. CONCLUSION
The FCC argues that the Commission has “discretion” to
exercise “broad authority” over equipment used in connection
with radio and wire transmissions, “when the need arises, even
if it has not previously regulated in a particular area.” FCC Br.
at 17. This is an extraordinary proposition. “The
[Commission’s] position in this case amounts to the bare
suggestion that it possesses plenary authority to act within a
given area simply because Congress has endowed it with some
authority to act in that area. We categorically reject that
suggestion. Agencies owe their capacity to act to the delegation
of authority” from Congress. See Ry. Labor Executives’ Ass’n,
29 F.3d at 670. The FCC, like other federal agencies, “literally
has no power to act . . . unless and until Congress confers power
upon it.” La. Pub. Serv. Comm’n v. FCC, 476 U.S. 355, 374
(1986). In this case, all relevant materials concerning the FCC’s
jurisdiction – including the words of the Communications Act
of 1934, its legislative history, subsequent legislation, relevant
case law, and Commission practice – confirm that the FCC has
no authority to regulate consumer electronic devices that can be
used for receipt of wire or radio communication when those
devices are not engaged in the process of radio or wire
transmission.
Because the Commission exceeded the scope of its
delegated authority, we grant the petition for review, and reverse
and vacate the Flag Order insofar as it requires demodulator
products manufactured on or after July 1, 2005 to recognize and
give effect to the broadcast flag.
So ordered.