Commissioner Quello's Statement

June 12, 1997

Re: Proposed Notice of Inquiry
Broadcast Advertisement of Distilled Spirits

I cannot support the issuance of a Notice of Proposed Rule Making on Broadcast Advertisement of Distilled Spirits because I believe that the Federal Communications Commission lacks jurisdiction to consider the subject matter. I believe that a significant measure of our duty as Commissioners to seek and serve the public interest in our decisions is to refrain from regulating wherever possible and certainly where we are not authorized to act.

I am not an attorney so I do not intend for the following to be a treatise on the legal concept of "jurisdiction." Nevertheless, after twenty-three years of service on the Federal Communications Commission, including almost one year as Chairman, I have heard countless arguments on legal concepts and am required to make judgments based on them in fulfillment of my oath of office. Accordingly, I will offer my views as a Commissioner entrusted to vote on such matters.

It is precisely because I want to see the issue of liquor ads on TV responsibly and effectively handled that I do not support engaging the FCC's investigative, rule making, or hearing processes in what I fear would ultimately be a futile, and possibly counterproductive, effort to devise an FCC mandated regulatory "solution." As I stated when this issue first arose: "In my view, the issue is not whether something must be done, but rather who can most capably do it."

This issue is undeniably important. What is equally clear to me is that this Federal Communications Commission is an unauthorized forum. We lack jurisdiction and no amount of hectoring from the Chairman's supposed "bully pulpit" can change that. The good news is that the matter is being handled competently by the FTC, an agency that has the requisite jurisdiction and expertise. The only down side is that the FCC will not get to claim credit for resolving the issue. When balanced against an unauthorized and unwise foray into jurisdictional power grabbing, that is a result that I can support.

Jurisdiction is a fundamental precept to regulatory action. Jurisdiction must be conferred by legislative enactment. It must not be "bootstrapped" from an overly expansive reading of general regulatory oversight authority. It is not the importance to society of a particular subject matter that, ipso facto, gives a particular agency jurisdiction to investigate. Accordingly, jurisdiction cannot be obtained by one of the regulators -- who should retain impartiality -- conducting a public relations campaign.

Jurisdiction over the subject matter at hand is the condition precedent to lawful action. A body acting in a regulatory capacity either has it or does not. Unlike judicial tribunals that are elucidating constitutional issues, regulatory bodies should tread very carefully when entering the arena of "penumbras and emanations." I am hesitant to infer jurisdiction from general pronouncements. I prefer to read the enabling statute and give the words their plain meaning. Put simply, jurisdiction is given in the statute or it is not. We either have it and can exercise it at our discretion or we do not and must not.

Regulatory bodies are the creation of the body politic. They are endowed with carefully circumscribed authority to perform certain roles that individuals in society deem more efficiently accomplished by their representative acting in their behalf rather than individually for themselves. Regulatory bodies are the result of statutory enactments. Agencies derive their very existence and their authority from the enabling statute. Before this or any other commission or agency may act, it must have authority to proceed. It is because I am convinced that this Federal Communications Commission does not have such fundamental authority to exercise power to investigate the advertising of distilled spirits on television that I have taken the extraordinary action of voting against inquiring into the issue and, furthermore, have taken the equally extraordinary step of issuing the instant Statement to put forth my reasons.

I am fully aware that the Federal Communications Commission has "[F]ull authority and power at any time to institute an inquiry, on its own motion, [but only] in any case and as to any matter or thing concerning which complaint is authorized to be made, to or before the Commission by any provision of this Act . . . ." (1) As I have explained previously in a letter to Ranking Member John Dingell in response to his inquiry regarding the FCC's jurisdiction to inquire into the advertising of distilled spirits:

[T]he Commission does not possess sufficient express authority under its statutory mandate to pursue the complex facts or balance the competing interests necessary to resolve this issue. The First Amendment's protection of commercial speech and the specific provisions in the Communications Act proscribing censorship are well known. Crucially, the FCC has never before taken action concerning TV advertising without a specific mandate from Congress. In sum, absent a more specific mandate from Congress, this controversy appears to be outside the FCC's jurisdiction and expertise.(2)

In the absence of explicit statutory authority, agencies are not free to impose limits on advertising by cobbling together general assertions of "public interest" based on particular health effect characteristics of the product. A federal court recently held that government assertions as to the "unique" nature of a product and the alleged mandate to protect children do not confer statutory authority to regulate advertising where none exists.(3) Similarly, the courts have limited this Commission's ability to unilaterally assert jurisdiction over programming matters in the absence of an express statutory grant.(4) This restriction on the FCC's authority to interfere with programming content decisions applies both affirmatively and negatively; that is, we are limited in what we may approve and what we may preclude. In ruling on the 1992 Cable Act, the U.S. Supreme Court stated that,

The FCC's oversight responsibilities do not grant it the power to ordain any particular type of programming that must be offered by broadcast stations. The Commission may not impose upon them its private notions of what the public ought to hear.

Over zealous exercise of expansive and ill-defined regulatory powers would quickly descend into the realm of the ludicrous. For example, the public has recently become concerned about the safety of air bags in the proximity of children. Well, automobiles are advertised on television, are they not? Are we, the Federal Communications Commission, to therefore, open an inquiry into the matter? Can we thereby distinguish between one or another automaker as to which entity falls within such asserted yet nebulous regulatory ambit?

I view this example as de minimus extrapolation of the arguments of those who urge jurisdiction upon us in the matter of the effect on children of the advertisement of distilled spirits on television. The jurisdictional nexus proffered by those who would have the Federal Communications Commission act on the issue of the permissibility of advertising of a legal product -- as are distilled spirits -- in the absence of an explicit legislative mandate is tenuous at best and trivializes the issue.

This example is not intended to make light of the seriousness of underage drinking. The tragic consequences of such illegal behavior are well known. I believe that the concerns expressed in the letters to this Commission asking that we pursue this matter are deeply-held, well-founded, and well-articulated. Unfortunately for those who would urge us to act precipitously and outside the scope of our authority, they are equally mis-directed.

This is not to say that those who are concerned about the subject of the effect of television advertising of distilled spirits on children are without remedy or recourse. Far from it. The FCC has an existing inter-agency agreement with the Federal Trade Commission under which our sister agency has the responsibility of investigating advertising practices and making recommendations to us for appropriate action within our jurisdiction, if warranted, upon evaluation of their findings.(5) The FTC is already conducting an inquiry comprising two investigations into the advertising of alcohol based products. It would be wasteful for this Commission to expend limited resources on duplicative efforts.

The Federal Communications Commission has a very full agenda. We have only just completed the initial steps in implementing the most sweeping overhaul of regulatory authority, embodied in the Telecommunications Reform Act of 1996, that I have encountered in my lifetime first as

a broadcast executive and now as a Commissioner. We are not an agency in need of additional work or one looking for something to do to justify our existence.

Moreover, the issue is already being addressed in a forum of competent jurisdiction. I have no doubt that the FTC will resolve the matter consistent with the public interest. Nevertheless, if others perceive a gap in governmental responsiveness, Congress, as the duly elected representatives of the people, can exercise its legislative prerogative to inquire into the matter on its own as a prelude to legislation or to grant this or some other commission explicit jurisdiction to regulate on this subject. Until such time, I will continue to vigorously oppose efforts to engulf the Federal Communications Commission in a matter beyond its historical expertise and jurisdictional competence.

The authority of Congress to conduct wide ranging investigations into issues of national concern such as the health effects of the advertising of a particular product and to fashion an appropriate legislative response is plenary and beyond peradventure. By contrast, this Commission has long recognized that we lack expertise to adjudge the health effects of broadcast advertising. Over two decades ago we stated that:

If in the future we are confronted with a case similar to that presented by the cigarette controversy, it may be appropriate to refer the matter to Congress for resolution. For Congress is in a far better position than this Commission to develop expert information on whether particular broadcast advertising is dangerous to health or otherwise detrimental to the public interest. Furthermore, it is questionable whether this Commission has a mandate so broad as to permit it "to scan the airwaves for offensive material with no more discriminating a lens than the 'public interest' or even the 'public health'."(6)

I find it significant that many Congressional leaders agree with my interpretation of our jurisdictional boundaries. Moreover, the Committee Chairman cancelled the proposed hearings on liquor advertising when the major networks agreed that they would continue to abide by the voluntary ban and not carry such advertisements. In cancelling the proposed hearing, Senator Conrad Burns, the Chairman of our oversight subcommittee cautioned Chairman Hundt in the strongest possible terms against, "[Y]our repeated attempt to assert jurisdiction over the advertisement of various legal products . . . ."(7) Senator Burns concluded that, "[A]ny further investigation of this matter by the FCC would be inappropriate and would be a waste of the FCC's resources." Additionally, there is no doubt that Senator John Ashcroft, Chairman of the Senate Committee on Consumer Affairs, Foreign Commerce and Tourism, agrees that the FTC rather than the FCC has jurisdiction over liquor advertising. Senator Ashcroft concluded in a letter to the Chairman of the Federal Trade Commission, Robert Pitofsky, that, "[T]he FTC appropriately regulates the advertising of alcoholic beverages on television."(8) The Federal Communications Commission also responded to a detailed set of questions from John Dingell, the Ranking Member on the House Committee on Commerce, the clear import of which was to inform the FCC that we did not have jurisdiction to investigate the advertisement of a legal product.(9) Congressman Dingell noted that in creating the FCC:

Congress also carefully limited the Commission's authority. For example, Congress has never given the Commission the ability to censor specific programming or advertising; to prohibit or limit broadcasters' ability to air commercial advertising; or to prohibit or limit particular advertising of products or services legally sold in interstate commerce. It is unclear that Congress could give the Commission the ability to do any of these things in a manner consistent with the First Amendment. Even in those limited instances where the content of broadcast advertising, or the specific products or services that may be advertised, is regulated or prohibited -- including obscene or indecent advertising, prohibitions on gambling advertising and public broadcasting underwriting, and cigarette advertising -- it was Congress that required the Commission to act. Id.

I concur in the judgment of key Congressional leadership that the matter is being responsibly addressed in another government agency with clear jurisdiction and that the major networks are acting in a responsible manner in maintaining their voluntary commitments. I will not countenance intrusive regulatory micromanagement by this Commission masquerading in the form of government directed "voluntary" commitments.

I am particularly suspect of regulations, characterized as "voluntary" or not, that could easily run afoul of the First Amendment. It seems to me that those who want us to "investigate" this issue are in actuality seeking mandatory content regulations. The Supreme Court of the United States recently held that liquor advertisements are "protected speech" within the contours of the First Amendment.(10) In 44 Liquormart Inc. v. Rhode Island, the Supreme Court unanimously affirmed

the alcohol industry's commercial free speech rights in granting price advertising for alcohol products the same First Amendment protection given other legal products and services. On the other hand, the First Amendment does not convey unlimited rights to any speaker, commercial or otherwise.

I continue to hew to my judgment that, "The issues raised by hard liquor advertising constitute a very difficult legal and factual no-man's-land."(11) I am deeply concerned about striking a proper balance between free speech and the protection of our children, but I firmly believe that the Federal Communications Commission does not have the jurisdiction to strike that particular public interest balance. I am unaware of any legal authority for the FCC to undertake the exercise of rendering expert judgment or evaluating claims concerning the alleged harmfulness of liquor advertisements. The FCC has no established expertise in this area, and this is neither the time, nor the forum, nor the controversy for this Commission to try and learn about such matters, particularly given the other immense challenges confronting this agency.

I am all too aware of the high level of Commission resources that may be drawn into a debate over appropriate social policy with respect to "protecting" children. In view of the Commission's recent experience in this regard, I do not support committing any Commission resources to attempting to render expert judgments or evaluating claims concerning the harmfulness of liquor advertising or to even "merely gathering information" that would lead to the expectation that this Commission would do so.

The Court of Appeals for the District of Columbia recently warned this very Commission that, "[I]t goes without saying that the bald assertion of power by [an] agency cannot legitimize it."(12) The Court "categorically" rejected the suggestion that, "Unable to link its assertion of authority to any statutory provision, the [FCC'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".(13)

I intend to heed this clear and emphatic warning from our reviewing court. Our regulatory authority, indeed duty, to ground our decisions regarding broadcast licensees firmly in the public interest does not confer upon us the power to range afar and conduct "fishing expeditions" to gather information outside that narrow and explicit grant of power. This issue of the potential effect on consumption of alcohol by minors as a result of advertising on the broadcast medium is far too important to subject the parties to a duplicative and unproductive "dog and pony show" that is merely window dressing and distracts from the efforts of an on-going investigation being conducted by an authorized entity.

As part of the Chairman's public relations campaign to hype this issue he has asked rhetorically how those who oppose his power grabbing machinations would respond to those who have petitioned this Commission to address the issue of broadcast advertising of distilled spirits. My answer is plain and direct. I congratulate the President, Members of Congress, and concerned citizens for articulating the importance of the issue and direct their attention to the Federal Trade Commission for resolution of the on-going investigations. In that forum they will have ample opportunity to shape public policy in an authorized venue.

I have said it before but it bears repeating, I thought the era of "big government" was over. Why then does the Chairman demagogue this issue by seeking duplicative government efforts, particularly in an unauthorized body? I will not be bullied into opening an FCC investigation on this subject -- an action which I firmly believe would violate administrative and Constitutional principles -- by the efforts of some to paint me as anti-child, or insulting to other officers of the government, or somehow a bad Catholic. Ad hominem attacks do not jurisdiction make.

Accordingly, I support the decision to pull the draft NOI on Broadcast Advertisement of Distilled Spirits from the agenda for the upcoming open meeting of the Federal Communications Commission. I eagerly await the results of the Federal Trade Commission investigations on this topic and will be guided by their expert analysis and recommendations.

1. 47 U.S.C. 403, Communications Act of 1934, as amended, (emphasis added).

2. Letter from J.H. Quello to Hon. J.D. Dingell (Jan. 31, 1997).

3. Coyne Beahm, Inc. v. FDA, 958 F.Supp. 1060, 1083-1086 (M.D.N.C. 1997).

4. See, e.g., FCC v. Midwest Video Corp., 440 U.S. 689 (1979).

5. Copy of Inter-Agency Agreement between the FCC and FTC attached.

6. The Handling of Public Issues Under the Fairness Doctrine and the Public Interest Standards of the Communications Act, 48 FCC.2d 1, 25 n.22 (1974), aff'd, National Citizens Committee for Broadcasting v. FCC, 567 F.2d 1095 (D.C. Cir. 1977)(quoting Banzhaf v. FCC, 405 F.2d 1082, 1099) (1968), cert. den., 396 U.S. 842 (1969).

7. Letter from Hon. Conrad Burns to Reed Hundt (April 14, 1997)(copy attached).

8. Letter from Hon. John Ashcroft to Mr. Robert Pitofsky (March 21, 1997)(copy attached).

9. Letter from Hon. John D. Dingell to Reed Hundt (January 2, 1997)(copy attached).

10. 44 Liquormart Inc. v. Rhode Island, 116 U.S. 1495 (1996).

11. Press Statement of Commissioner James H. Quello (Nov. 18, 1996).

12. COMSAT Corp. v. FCC, No. 96-1325 (May 30, 1997) citing with approval, Railway Labor Executive Ass'n v. National Mediation Bd., 29 F.3d 655, 669 (D.C. Cir. 1994)(en banc).

13. Id. (quoting Railway Labor Exec. Ass'n v. Nat'l Mediation Bd., id. at 670)(emphasis in original).

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