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Statement of Commissioner Harold Furchtgott-Roth, Dissenting in Part

In the Matter of Implementation of Section 207 of the Telecommunications Act of 1996, Restrictions on Over-the-Air Reception Devices: Television Broadcast Service and Multichannel Multipoint Distribution Service, CS Docket No. 96-83.

I fully concur in the Commission's excellent decision not to extend our section 207 rules to cover common and restricted access property.(1) For the well-articulated reasons that such property should not be governed by these rules, however, neither should rental property. I therefore respectfully dissent from that part of today's Report & Order ("R&O") which subjects leased property to regulation under section 207.

In deciding that application of our over-the-air reception device ("OTARD") regulations to common and restricted access property would raise grave questions under the Takings Clause, the R&O reasons that, as in Loretto v. Teleprompter Manhattan CATV Corp, 458 U.S. 419 (1982), "the physical occupation here would involve the direct attachment of video reception devices to" the property. Supra at para. 40. Such an attachment, the R&O continues, would constitute a "permanent physical occupation" and consequently a per se taking. Id. But the very same "direct attachment of video reception devices" to property would occur in the rental property context. Thus, the attachment of reception devices to rental property is as much a "permanent physical occupation" within the meaning of the Takings Clause as the attachment of such devices to common and restricted access property.

Nevertheless, the R&O concludes that extension of the OTARD rules to rental property would occasion no per se taking. For this conclusion, the R&O relies on the proposition that when "the private property owner voluntarily agrees to the possession of its property by another, the government can regulate the terms and conditions of that possession without effecting a per se taking." Supra at para. 18 (citing FCC v. Florida Power, 480 U.S. 245 (1987)).(2)

I must doubt the applicability of Florida Power, however, and for this fundamental reason: the particular occupation to which the landlord has "voluntarily agree[d]" is necessarily defined by the terms of the lease. That legal document is the primary determinant of the property rights that have, or have not been, transferred from owner to tenant, and there are myriad allocations of property rights to which landlords and tenants might agree.(3) Where a landlord has expressly included lease provisions prohibiting the attachment of certain equipment to rental property, it cannot be said that he has consented to such an occupation of his property.

In other words, if the landlord has not agreed to a certain occupation or use of his property, there can be no theory of consent with respect to the prohibited occupation or use that would prevent application of the Takings Clause. Cf. Declaration of Charles M. Haar in Support of Reply Comments of National Apartment Association et al., at 24-25 ("The notion of implied consent to use the property . . . is not applicable here where the owners are careful to delineate the boundaries of the demised property to exclude areas such as the roof and exterior walls."). Admittedly, a tenant who occupies property subject to certain contractual limitations is not a complete stranger to the property, but as far as contractually restricted uses of that property are concerned, the law does indeed deem him "an interloper." Florida Power, 480 U.S. at 252.

Indeed, the R & O repeatedly recognizes this very point -- namely, that the government can regulate property use only within the boundaries of the property rights that have actually been conferred upon the tenant -- in the discussion of common and restricted access property. For instance, in rejecting the argument that the Commission could strike down lease provisions limiting tenant usage of, or access to, common and other property, the R & O correctly explains that "[s]o long as a tenant owns the reception device placed in a common or restricted access area, and the terms of the tenant's lease . . . or other agreement do not give the tenant the right to exclusively possess any portion of this property, the landlord's . . . property would be subjected to an uninvited permanent physical occupation." Supra at para. 43 (emphasis added). If placement of a reception device on property such as a balcony or exterior wall adjoining a tenant's apartment is barred by the rental contract, however, then the landlord would be equally subject to an "uninvited" invasion of his property -- the forced introduction of the prohibited attachment -- if the tenant nevertheless affixed a device on that property. Just as "the landlord does not invite the tenant to take possession of common and restricted access property," supra at para. 39, so too the landlord has not invited the tenant to use the property for the attachment of reception devices.(4)

Similarly, in declining to rely on Florida Power in the context of restricted and common property, the R & O notes that "the agreed-upon scope of the physical possession is set forth in the lease or other controlling document." Supra at para. 45.(5) As discussed above, the same is true in the rental property situation. Location of a reception device on an exterior wall when such action is barred by the lease is no more "agreed-upon" than placement of a reception device on a rooftop when that particular action is prohibited by the lease. In both cases, what matters is the "agreed-upon scope" of the tenant's legal rights with respect to the property in question.(6)

Given the primacy of the lease agreement in defining the respective property rights of landlords and tenants in leased property, the standard adopted in this Order -- namely, that tenants can attach devices to property "within their leasehold," supra at para. 7 -- is entirely circular. The property rights that are "within a leasehold" can only be ascertained by reference to the lease, but this item prohibits any lease restrictions that impair attachments, and so it is impossible to limit our regulation in this area to property rights actually possessed by the leaseholder. Accordingly, it is hard to see, as a matter of black letter contract law, what it means for attachment to be authorized "within a leasehold" and yet undertaken "without the landlord's permission." Supra at 9.

I question the force of Florida Power in the context of this R&O for another reason: that case was about what the Supreme Court called "economic regulation" of commercial agreements. As the Court explained, "statutes regulating the economic relations of landlords and tenants are not per se takings" under Loretto. 480 U.S. at 252 (emphasis added). While it is certainly true that simple price regulation would fall within this standard -- and those were the facts in Florida Power -- this item, by contrast, does not involve the regulation of the economic status of landlords with respect tenants. Rather, it involves the regulation of their respective property rights; it transfers from the landlord to the tenant a previously unpossessed and intentionally retained aspect of the right to use the property. And it does so without providing for any compensation to the landlord, much less "just" compensation.(7)

If the foregoing does not create a Takings Clause problem, then at least the circularity of the amendment adopted today indicates that, as a structural matter, section 207 was probably never intended to apply to viewers who had no ownership interest in the relevant property. When section 207 is limited to governmental and homeowners' association limits on reception devices, as opposed to lease restrictions, this problem of circularity disappears.

Finally, I note that in erecting its distinction between the legal significance of attaching devices to rental property and to common/restricted access property, the R & O appears to assume that just because a landlord has agreed to the exclusive possession of certain property by a tenant, he has thereby transferred to the tenant an absolute right to use that property. This is in error.

A landlord is not obliged to turn over to a tenant the entire "use" strand in his bundle of property rights. If he chooses, and the tenant agrees, he can confer a limited right to use upon the tenant.(8) In fact, use restrictions on property that tenants have the exclusive right to occupy and possess are commonplace. For example, I may possess the exclusive right to occupy the patio adjacent to my apartment, and I may also have an exclusive right generally to use it. But the landlord can, by power of private contract, restrict my use of the balcony: that is, notwithstanding my exclusive right to occupy and generally use the balcony, I may not be legally entitled to, say, hang laundry on its rails or store my bicycle there. The landlord has chosen not to bargain away those aspects of his right to use the property and thus retains them.

I do not think that section 207 authorizes us to deprive landlords of their right to retain aspects of the right to use their property. Conversely, I do not think that section 207 authorizes us to bestow new property rights upon tenants -- here, the right to use property for certain purposes -- at the expense of landlords. Although the item reasons that the statute does not "direct the Commission to impose affirmative duties on" non-viewers "to grant access to restricted areas to permit the installation of" reception devices, supra at para. 7, that is exactly what the rules governing rental property do. They require landlords to transfer certain usage rights to tenants in order to allow them to attach devices; that is surely an affirmative act and, now, a federal obligation.

To be sure, the language of section 207 is exceedingly broad, obliging us to adopt regulations "to prohibit restrictions that impair a viewer's ability to receive video programming services through devices designed for over-the-air reception" of services. But we should always read these kinds of statutes against the backdrop of the Takings Clause, as Bell Atlantic Co. v. FCC teaches. See 24 F.3d 1441 (D.C. Cir. 1994). Because of the Takings issues that are at least arguably raised here, I would stop short of extending these rules to viewers who lack an ownership interest in the property to which they wish to affix reception devices. There is no question but that the Commission met its obligation under section 207 in the first R & O by outlawing governmental and homeowners' association rules that impair viewers' abilities to employ reception devices. There is no statutory need to go further and create constitutional problems by extending the rules to property in which viewers lack any ownership interest.

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To sum up, it is not clear to me that there is a significant difference, for purposes of Takings Clause analysis, between lease provisions that prohibit the installation of reception devices in common/restricted access areas and lease provisions that do so in other rental property areas. Under Florida Power, the constitutionality of the OTARD rules in either context turns on the question of consent and, thus, on the terms of the particular agreement between the landlord and the tenant. It seems to me that if one of these situations presents Takings problems, as this item concludes, then so does the other. Moreover, the circularity of the standard adopted today suggests that section 207 was never meant to apply outside the context of property in which the viewer has an ownership interest. For these reasons, and because the decision to extend OTARD rules to leased property is a generally unnecessary incursion on private property rights, I respectfully dissent.

1. I also join in the conclusions reached with respect to the Equal Protection Clause and First Amendment. See supra at paras. 49-59.

2. Although the Commission attempts to frame this rule in terms of "possession," Florida Power clearly speaks in terms of the "occupation" of the relevant property. See 480 U.S. at 252; see also Yee v. Escondido, 503 U.S. 519, 527 (1992). Thus, the Commission's emphasis on possession does not exist in the relevant case law. It is the occupation, i.e., the "required acquiescence," Florida Power, 480 U.S. at 252, that counts under the Takings Clause. It is that act that could theoretically slice through an owner's bundle of property rights -- rights that include the ability not just to possess, but also to use and dispose of property. See Loretto, 458 U.S. at 435.

3. For this reason, I think the R&O goes too far when it states that "[t]ypically, for apartments, [leased property under the exclusive possession of the viewer] will include balconies, balcony railings and terraces" and that for "rented single family homes or manufactured homes which sit on rented property, it will typically include patios, yards or gardens within the leasehold." Supra at para. 29. We cannot prescribe general federalized lease terms (although I fear that may be the logical implication of this decision), and the very nature of contracts is that their terms can be customized to suit the particular circumstances in which the parties find themselves.

4. Accordingly, to say that the attachment of devices to rental property is like the attachment of "rabbit ears" to a television set, see supra at para. 20, does not advance the ball in this game: the critical question is whether the person who owns the equipment is the same person who owns the property to which it is permanently affixed, which the R&O makes clear in its section on restricted access property. See supra at para. 43 (noting "critical" issue that "ownership of the property (i.e., the hypothetically required cable equipment) must rest with the landlord"). And, if the rabbit ears are the property of some third party and their placement is mandated by the government, that would raise the issue of a per se Taking.

5. As noted supra note 2, it is the permanent, physical occupation of the owner's property (which could be a number of different kinds of invasions), not just the extent of the possession of the property (which is only one of several kinds of property rights that might be adversely affected by an occupation of the property), that triggers the Takings Clause.

6. Although the majority counters that "[f]or takings purposes, the lease is [only] relevant in defining the physical area of consensual occupation (e.g., the apartment but not the roof or exterior walls)," supra at para. 23, no support for that assertion is provided.

7. What I question here, primarily, is the logic of the distinction that the majority has drawn in concluding that the application of OTARD rules presents a per se taking in one area where a tenant lacks the necessary property rights but not in the other. Even if there is no per se Taking in these situations, however, the extension of section 207 to rental property certainly creates a potential regulatory taking. See Declaration of Charles M. Haar in Support of Reply Comments of National Apartment Association et al., at 6-9 (arguing that, under the factors set forth in Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978), subjecting rental property to OTARD regulation would occasion a regulatory taking).

8. Even the language of the R & O belies this fundamental premise. See, e.g., para. 19 (noting that "to a large extent [but not entirely, if contractual usage limitations exist!], the property owner relinquishes its right to control the use of its property when it leases the property") (emphasis added); id. note 50 (noting "that (absent a valid restriction) a tenant may put the leased premises to whatever lawful purpose it so desires") (emphasis added) (citation omitted).