Broadcast Flag Regulation Outside Scope of FCC Authority

In a unanimous decision on 6 May 2005, the Court of Appeals in Washington, D.C. concluded the scope of authority delegated by Congress to the Federal Communications Commission (FCC) does not include mandating "broadcast flag" regulations in digital television apparatuses. A broadcast flag is a digital code embedded in digital television equipment which prevents the redistribution of the broadcast content over the Internet. A broadcast flag prevents redistribution of content after transmission is complete. The FCC issued the regulation to deter unauthorized copying and redistribution of television content, based on an increasing transition from analog to digital television equipment.

As a condition precedent to codifying the broadcast flag requirement, the FCC held an extensive rulemaking procedure in which thousands of heated comments were submitted to the FCC on both sides of the debate. Numerous comments challenged the FCC's jurisdiction, arguing the FCC had no statutory authority to regulate broadcast content after it is received. The FCC, however, relied on its ancillary jurisdiction set forth in Title I of the Communications Act of 1934. The Act created the FCC and articulates the FCC's regulatory authority.

The Act sets forth a two-prong test, which, if satisfied, permits the FCC to exercise its authority. First, the general jurisdiction under the Act must encompass the regulated subject. Second, the regulation must be "reasonably ancillary" to the FCC's mandated responsibilities. The FCC argued television receivers, including those not engaged in the process of communication, are covered under the Act. Under the Act, communications subject to its mandates are defined as the transmission of signals through the air or wires, as well as "all instrumentalities, facilities, [and] apparatus" in connection with this transmission. The FCC considered digital television receiving equipment as within the scope of that definition.
The court rejected the FCC's argument, ruling the Act does not indicate legislative intent to delegate the regulation of communication devices not engaged in transmission. The court explained the statutory language of the Act refers to "apparatus" that are "incidental to transmission." Regulating apparatus not engaged in the process of radio or wire transmission, such as digital television receiving equipment, is out of the FCC's congressionally delegated authority.