U.S. v. SOUTHWESTERN CABLE CO.
Legal provision: Communication Act of 1934
Argument of Henry Geller
Chief Justice Earl Warren: Number 363, United States et al.Petitioner, versus Southwestern Cable Company et al. and Number 428, Mid West Television Incorporated et al. versus Southwestern Cable Company et al.
Mr. Geller, you may proceed with your argument.
Mr. Henry Geller: The interim relief order which the Commission issued preserving the status quo was appealed to the Court of Appeals for the Ninth Circuit.
And that Court held that we lacked jurisdiction over community and antenna television, relying chiefly on opinion of this Court in Regents v. Carroll and that brings me to the first legal issue in the case, our jurisdiction over the off the air CATV.
Justice Potter Stewart: Is it clear to you what the Court of Appeals on the Ninth Circuit did hold and that it did hold that?
Mr. Henry Geller: We believe, yes, they did hold that that they we're saying that we lacked jurisdiction over a non-licensee CATV and we think subsequent cases, the Valley Vision Case particularly has borne that out.
There was no question of an interim relief order in Valley Vision.
They state our order and cited only the Southwestern Case here.
Justice Potter Stewart: And all that is crystal clear from this opinion law, is it?
Mr. Henry Geller: No.
The opinion is subject to construction.
Although, we think that reading it – we read it a saying that we lacked jurisdiction over CATV when it relies upon Carroll to say that we cannot extend our orders to a non-licensee and that would not just be interim relief order because there would also be rules.
And as I say in a subsequent case where there was no question of interim relief valley vision, the Court state our order and made clear in the all argument Judge Barnes was on the panel that they felt they had got to the jurisdictional issue and had held that we lacked jurisdiction over the off the air CATV.
Justice John M. Harlan: So this is from the appellant?
Mr. Henry Geller: That is correct.
Justice John M. Harlan: That case was not brought up here?
Mr. Henry Geller: It was not brought.
In the Buckeye Case, our jurisdictional position was fully sustained.
We believe that our jurisdiction stems directly from the explicit provisions of the Act.
Section 1 of the Act calls for the establishment of -- as efficient and nationwide system of wire and radio communication as possible and says that authority is being centralized in the FCC to achieve that.
Section 2 (a) of the Act says that the provisions of this Act are applicable to all interstate communication by wire and radio and Sections 4 (i) and 303 give us broad rule making powers to carry out the provisions.
Now, CATV comes within the provisions because it is an interstate communication by wire within the definition in 3 (a) and 3 (e) and that is not really in dispute here.
It also comes within the provisions that we think in another basis that it’s a -- it comes within the definition in 3 (b) of radio communication because it is an instrumentality incidental to the transmission of energy by radio and the definition includes that too, but it does come thus within two way.
The provisions of the Act are applicable and we have made rules to carry out certain provisions and the provisions which we are carrying out, we say, are, 307 (b) which calls for this nationwide plan of local television, 303 (h) which is very important here and which says that the Commission can establish the service area stations so as to achieve that nationwide plan, and 303 (s) which is the all channel law which calls for the promotion of UHF, again, is to get this system of local television.
And what -- it is that the CATV is in effect extending the service area stations.
That is what it does and the heart of our position is that since the provisions of the Act are applicable to it, we can regulate that extension of the service area by CATV in order to prevent the frustration of this nationwide plan of local service.
Now, we argue that our action therefore comes explicitly within the terms of the Act, but it also we urge, comes within the spirit and the purpose of the Act.
As this Court said in Pottsville, the very reason for the creation of the FCC was to keep a grip on this dynamic new technology that changes so much to prevent a chaotic allocation situation from resulting and in NBC, the Court said, we have been given comprehensive powers to achieve that purpose.
Justice John M. Harlan: And how does ever been the purpose of you and the submission of that?
Mr. Henry Geller: Yes, Your Honor.
Justice John M. Harlan: And you have – to put this together exclusive for the explicit as registration on this?
Mr. Henry Geller: Yes.
There are two dissenters from our jurisdiction out of the seven Commissioners.
We have sought clarifying legislation.
We sought at the time we adopted the second report.
We believe that an important new field like this, it would be desirable to have Congress legislate it.
There has been no legislation.
However, we argue that the recent legislative history, if anything, shows acquiescence when you examine this as we have pointed out in our brief.
Now the Regents v. Carroll that was relied upon by the Court below, we are just inapplicable here.
In Regents, the Commission as a condition of renewing the license of a radio station specified that the station had to terminate a contract it had with an outside party that prevented the station we found from serving the public interest fully.
The station terminated the contract.
There was a suit in the State Court for damages for Breach of Contract and this Court held that the Commission could not adjudicate the State Court matter, the issue of impossibility of performance because of the Commission’s action, all these were matters for the State Court.
The Court -- this Court did not come remotely close to holding in that case so that that the Commission lacked the authority to carry out the allocation provisions of the Act as to an entity coming expressly within those provisions, CATV, which is extending the service area or stations in a way that can frustrate the whole allocations plan.
The main argument that respondents have made against jurisdiction is that, the Act does not have any comprehensive scheme of regulation of wire communication.
It has some provisions they say like 605 but in the main, the Act deals in Title II with common carrier regulation, and in Title III with radio regulations.
Well, we would agree that the Commission does not have plenary jurisdiction to do it, everything or anything it wants to CATV, but that does not mean we lacked jurisdiction entirely.
What we have is the jurisdiction to carry out the pertinent provisions that do fit that are pertinent to CATV and that is what we are doing here.
We would also agree that the Congress in 1934 no more thought of CATV than it thought of television.
They couldn’t foresee developments like that.
What they did was to give us a broad grand of authority under a public interest standard, to carry out the provisions of the Act is to all interstate communication by wire or radio.
Justice Abe Fortas: What jurisdiction do you exercise over the cable that – over which network programs are distributed?
Mr. Henry Geller: We regulate the networks at the present time to their affiliates.
Justice Abe Fortas: I know you do that, but that's not my question.
What jurisdiction do you exercise over the cable itself –
Mr. Henry Geller: Well, we --
Justice Abe Fortas: -- that is made for the cable and the service --
Mr. Henry Geller: We – that's common -- I beg your pardon, this common carrier jurisdiction.
We regulate the rates that are charged in networks.
Justice Abe Fortas: You regulate that under your common carrier authority?
Mr. Henry Geller: That is correct.
Justice Abe Fortas: Do you claim any authority to regulate that as insularity or jurisdiction over broadcasting?
Mr. Henry Geller: No.
We have regulated the common carrier aspects, the common carrier reserves --
Justice Abe Fortas: Has the question ever arisen?
Mr. Henry Geller: No, it hasn't Your Honor because when we want to regulate the networks, we have gone in two ways to do that.
One way, we have gone is to make regulations applicable to their affiliates saying that we will not renew the license of an affiliate which engages in any activity we consider inconsistent.
Justice Abe Fortas: Do you see a distinction between your power derivative from your broadcasting jurisdiction over CATV on the one hand and over the cable service on the other hand?
I realize that one is sort of in the retail business and the others so to speak in the wholesale business, but I'm not sure that that's a difference?
Mr. Henry Geller: Well, the cable that serves a network is a common carrier.
It will serve anybody who comes along and we have held and all the parties are in agreement on this, said the CATV is not a common carrier.
It does not take messages --
Justice Abe Fortas: I understand -- yes, that's right.
So, you can't regulate CATV under your common carrier jurisdiction?
Mr. Henry Geller: We have declined to do it.
Justice Abe Fortas: Unlike that it talked about the as – the other side of the coin.
Mr. Henry Geller: Uh mm.
Justice Abe Fortas: Is there a meaning for a distinction between the jurisdiction that you claim over CATV and the cable situation with respect to your broadcasting jurisdiction and its implication?
Mr. Henry Geller: By cable, you mean the networks, sir?
I want to make sure –
Justice Abe Fortas: Yes.
Mr. Henry Geller: -- because on the network, there is a specific provision of the law applicable which says in 303 (i) that we can make regulations applicable to radio stations engaged in chain broadcasting.
We therefore focus on that when we act in the network field.
And we have adopted regulations that go – we – that go to the affiliate and we are now proposing, Your Honor, to adopt regulations in the television area that go directly to the network television licensee.
We say, they are radio stations engaged in chain broadcasting and we -- what I'm saying to you is a 303 (i) determines what we do in this area, and we are proposing direct regulation of the television network.
Now, that is being disputed by them and eventually, that's a different issue of me come before the Courts and have to be settled.
Justice Abe Fortas: As I understand that the basis really of your claim of jurisdiction over CATV is that CATV operates as an extension of particular stations?
Mr. Henry Geller: Yes, sir.
Justice Abe Fortas: Extension of their service area and in that way and I think your allocation power?
Mr. Henry Geller: That is right, sir.
Justice Abe Fortas: And since it directly affects your allocation power in that way then we should assume -- we should determine that the statute authorizes certain – some regulation of CATV.
Is that not the basis of your argument?
Mr. Henry Geller: Yes, Your Honor.
The statute says, the provisions of this Act are applicable to all interstate communication by wire.
The provisions that we are applying are 303 (h) and 307 (b) which call for these plans and what the -- since CATV is extending the service area station, we say we can make those provisions applicable.
Now, an argument comes back that the provision for making applicable are radio provisions and we're making them applicable to a wire system and that there is a rigid dichotomy here.
And to that we cite Section 1 of the Act that says that, the authorities being centralized in 1 (h) and (c) in order to get this efficient nationwide system.
Previous to the 1934 Act, the ICC had wire and the Federal Radio Commission had radio.
And the Congress said in the reports that we've cited that, there is a need for a unified jurisdiction here for one comprehensive jurisdiction over the entire industry.
And that's why they centralized the authority in the Commission and we are exercising that centralized authority over both wire and radio in order to achieve this efficient nationwide system of local television outlets, but that is a statement -- you're correcting your statement of the basis upon which we are asserting jurisdiction.
Justice Byron R. White: Do you really don't need on that approach?
You really don't need the – need any authority over wire transmission, do you?
And you have – you'd make the same argument you have no authority of the wire?
Mr. Henry Geller: Well, if – well, what we do save point to though is we have Section 2 (a) of the Act that says, the --
Justice Byron R. White: Oh, I know you don't but you don't need two, do you?
Mr. Henry Geller: Well, it's explicit.
I think the Congress meant to say that we want you to have the unified jurisdiction over wire and radio to carry out the provisions of the Act.
Justice Byron R. White: Yes, but on the -- on the other hand, would you claim authority over this -- over CATV if it didn't – have any impact at all on your broadcasting authority?
Mr. Henry Geller: Well, we would have jurisdiction over but we would have no provisions we'd be carrying out.
There wouldn't be --
Justice Byron R. White: You just wouldn't be doing anything, would it?
Mr. Henry Geller: That's correct.
Justice Byron R. White: And so you really must reach the broadcasting power –
Mr. Henry Geller: No, the --
Justice Byron R. White: -- you are asked to find what you do and it doesn't help you a whole lot to say that wire story, isn't it?
Mr. Henry Geller: It doesn't help us because then the next question comes, what are you doing to carry it out?
What provisions are you carrying it out?
But we say here that there are --
Justice Byron R. White: There are three commissions rested this – rested flatly in its opinion on the wire authority?
Mr. Henry Geller: Oh, no, Your Honor.
We start with that but you then have to go -- we're not saying that we could regulate them just because there are wire communications.
As you say, we're regulating them because there are wire communications --
Justice Byron R. White: You don't think you have any Chenery problem here at all?
Mr. Henry Geller: No, we are regulating them because they are wire communication which is extending the service area stations and having an impact on the nationwide system with television allocation and that is the basis that we are doing it.
Now The Chenery problem that was raised, the only one I'm aware of was it we did bring up the point that we could also regulate them as radio communication as incidental to the transmission of radio communication.
We don't believe there is Chenery point there either because this is a legal matter.
Chenery applied when – as to policy.
If the agency decided to act on one policy and then in court tried to shift, in Chenery said you couldn't do that.
But we have enunciated the policy in the major market in the carriage of non-duplication.
The question is whether we have the legal power to do so and we believe we do?
On the basis that they are interstate communication by wire which is affecting, extending the service area and affecting the plan and also on the basis that they are radio communication coming in within that definition also.
And incidentally we did note in our memorandum of law, Mr. Justice White, that it could come within either one of them, either 3 (a) or 3 (b), either in the state communication by wire or the radio.
We said it was unnecessary to resolve.
Now there is one other argument made in here in jurisdiction and that is it -- we have disclaimed jurisdiction previously.
In 1959, when we considered this question, we did not -- we did not pass on the issue whether we had jurisdiction, because of the impact on broadcasting.
We found that unnecessary to do so because we found no impact.
We expressly reserved the question to the jurisdiction on that basis and we have never disclaimed jurisdiction on the basis which is now asserted here before this Court.
I would like to turn now to the second issue in the case, the validity of our interim relief order, our orders that specify that pending the outcome of the evidentiary hearing, the respondents could not expend their system to throughout Los Angels – throughout San Diego with these Los Angles signals until we --
Chief Justice Earl Warren: May I ask -- may I ask when did the CATV first out an impact to on the District Court?
Mr. Henry Geller: When we looked that it 1959, we found no impact.
We think the impact begin coming in with a vengeance in the early 1960's.
Chief Justice Earl Warren: I see.
Mr. Henry Geller: Now with this rapid spurt in growth and there was a revolutionary new change where it began going in to the -- the major markets.
Chief Justice Earl Warren: I see.
Mr. Henry Geller: And there were a lot of claims of impact before, but when held the hearings we could not prove them and therefore we took no action.
Chief Justice Earl Warren: I see.
Justice Potter Stewart: When did this shift occur, that is the commencements are going into the major market?
Mr. Henry Geller: About 1962.
That was a beginning of it, 1962 and 1963, but it -- it began accelerating very rapidly after that.
Justice Abe Fortas: Does your brief state just what you think is a nature and extent of your jurisdiction, I forgot?
Mr. Henry Geller: Our brief states fully the nature of our jurisdiction over CATV, if we go --
Justice Abe Fortas: I don't mean -- I don't mean from way you drive it, but what you think you can do with respect CATV?
Do you think you can license --
Mr. Henry Geller: No.
Justice Abe Fortas: -- CATV System?
Mr. Henry Geller: No.
We think -- say we can carry out the allocation provision to prevent them from the extending a service area in such a way is direct local service.
Justice Abe Fortas: By an order --
Mr. Henry Geller: We think --
Justice Abe Fortas: -- directed to them?
Mr. Henry Geller: I beg your pardon.
Justice Abe Fortas: I order directed to the CATV.
Mr. Henry Geller: By rule and by order.
Justice Abe Fortas: You couldn't reach that by a rule and order directed to the stations to your licensees.
Mr. Henry Geller: Yes.
We -- we do licenses in station and specify what it could conserve.
And we go --
Justice Abe Fortas: No.
But I say could you reach the CATV by in that way?
Mr. Henry Geller: No, we could not.
Justice Abe Fortas: Why not?
Mr. Henry Geller: Because the CATV picks up the signal, moves it about and the station has no -- they do not come within what is called Section 325 (a) the rebroadcast prevision.
Broadcast stations have to get permission to pick up a signal and rebroadcast it.
The CATV is not a broadcast station so it just picks the signal up and moves it around.
The station couldn't do so, it couldn't put a translator, for example.
Justice Abe Fortas: You mean CATV can – does that without a permission of the station?
Mr. Henry Geller: It does this without permission.
Justice Abe Fortas: Then how do you say -- how do you say that the CATV is an extension of the service area of the station?
Mr. Henry Geller: Because in -- in practical effect it is extending the service area.
It's taking the service area of the station, the New York stations and moving them into New York.
Now, the station has nothing to say about it, but the effect from point of view our allocation plan is the same.
The -- there are New York signals being carried, perhaps ups to 50% to 85% of all our homes in Philadelphia if it's allowed to grow and that has the same affect as if it the stations had done.
And we are looking if what the effect is saying that this is an interstate communication by wire which is -- which is extending that service area and if possibly ruining the new competition, we want in Philadelphia.
Instead of getting new stations in Philadelphia that could be the basis of the fourth network, well, we're getting in adjusting New York signals coming, they are not local.
Justice Abe Fortas: Well, suppose some a movie houses decide if this is imaginable, suppose the movie houses decide that they're going to run commercially throughout the country films, that were first reduced in sound on the facilities of television stations.
Mr. Henry Geller: There will be no problem on that.
We would not --
Justice Abe Fortas: Why not?
Mr. Henry Geller: Because the -- that happens all the time, both the movie houses and -- and the TV stations are competing for product?
Justice Abe Fortas: So what's the -- how do you distinguish of theoretically except as a matter of degree?
Mr. Henry Geller: Well, we -- what we say is what's happening here it's a CATV is taking a TV signal and actually extending the service area of that TV signal into another community and that this Commission was created to control.
We -- 3038 says if this Commission is to define the service area of station and that service areas suddenly moved from New York in the Philadelphia and we -- to the detriment of our -- of the public interest and larger more effective use of radio and we say, we can control that.
We have to be able to control it and that's the difference between them.
Justice Potter Stewart: You say there will be no problem about Mr. Justice Fortas' movie house question, no problem in what respect?
Mr. Henry Geller: We would not seek to regulated in any way --
Justice Potter Stewart: You would not have jurisdiction?
Mr. Henry Geller: We would not have jurisdiction over that.
We -- we don't have a jurisdiction over bowling alleys and movie houses anything doing what -- they are extending -- they not in the state communication by wire that is extending the service area stations.
That's all we've claim to do.
We carry out Mr. Justice Fortas other provisions to the Act that we haven't gone in here such as 315 and 317.
Justice Abe Fortas: Now, but that -- that's got two parts to it.
One is, what is -- what constitutes extending the service area of station that's not the easy one for me?
Mr. Henry Geller: But, we say as a practical matter that's what are they do.
They can take a signal from New York into Washington.
Now on the second issue in the case, our position is that the -- that respondents really are ignoring the whole basic regulatory scheme here.
That scheme is design to take hold of this situation and to have an evidentiary hearing before entrenchment, that's what 1107 does.
It's says, you can't move New York signals into Philadelphia until we determine that's in the public interest.
And that's precisely what 1109 is intended to do here also and it's particularized to application; it says, you cannot spread Los Angeles signals throughout San Diego until we will resolve that question.
Now, we could have adopted a blanket rule to that effect.
We couldn't adopted the rule that said that the CATV system which is operating in one of these top 100 market communities and which has very low penetration and bringing in a signal from another community which is not viewed to any great extent, cannot extend its -- its operations on effective date of our rule until we have resolved that public interest question.
That would have been a perfectly reasonable rule.
It would have the same public interest basis as the 1107 rule.
It should not have CATV operations going through out a community that can effect the development of UHF until we resolve the public interest question and as I said --
Justice Potter Stewart: You say you could -- you say, you could clearly have done that?
Mr. Henry Geller: We believe we clearly could have done that.
Justice Potter Stewart: Well, you could have done it if your right in your first point?
Mr. Henry Geller: Oh, yes.
I'm assuming now to --
Justice Potter Stewart: And now you could have done it.
Mr. Henry Geller: I'm assuming Your Honor that we have jurisdiction.
At this point, we are all assuming we have jurisdiction in respondents and the --
Justice Potter Stewart: I didn't realize we all were?
Mr. Henry Geller: I [Laughter] I beg your pardon.
Let me put a phrase respondent cited.
They -- there argument is, in assuming we have jurisdiction over CATV and assuming that the major marker policy is reasonable and even assuming at the end of the evidentiary hearing that we could order roll back of service, they say we cannot issue this interim relief for it.
And I'm saying assuming that we could have adopted this blanket rule, if we had adopted this blanket rule, it wouldn't stopped them right in their tracks at the date that the rule became effective.
Instead of doing that, we adopted the much more reasonable procedure of 1109 where we can give particularized consideration to the question of what is the most appropriate relief here?
In San Diego for example, the pleading showed there had to be an evidentiary hearing because all the facets to the major market question were there.
The pleadings also showed that -- there are -- that they were this eight islands service, eight discreet areas and that is not in dispute.
There was no need for an evidentiary hearing.
There was one issue in dispute and we resolved that in favor of the CATV.
So that we could look and see that the place to halt this, what -- these eight discreet areas and we can allow them to grow in these areas and at the same time prevent the all out expansion that would frustrate the very purpose of the hearing.
Justice Potter Stewart: So these areas delineated by how much?
Mr. Henry Geller: By a man.
They were affidavits attached and to both -- to the pleading of the petitioner showing where there were, these affidavits were not disputed except to one instance.
And then we -- we --
Justice Potter Stewart: Resolved in favor of CATV?
Mr. Henry Geller: -- in favor to San Diego.
Justice Potter Stewart: Then these are neighborhood areas basically?
Mr. Henry Geller: There are different parts of San Diego.
Chula Vista would be one discreet area and they could expand in there.
Paauwee would be another and they are -- they were various areas in San Diego where they could continue their growth.
Justice Potter Stewart: Within each one of these eight --
Mr. Henry Geller: Right.
Justice Potter Stewart: Good, eight areas.
Mr. Henry Geller: And what respondents argument comes down to we are argue therefore is that, he's saying we can approach this problem by a rule that would halt and preserve the status quo pending the outcome of the hearing, but that we can't do it by the more flexible approach of -- of 1109.
Now, we could have adopted that rule.
We agree we could have, but our position here is that under Chenery, the agency has the discretion to proceed by way of ad hoc particularized proceedings.
They have -- it feels that's appropriate.
That here that is obviously more appropriate.
It's fair to the CATV.
And if -- this is really one reasonable overall scheme of hearing -- evidentiary hearing before entrenchment and that this is a perfectly proper way, 1109, of carrying out that scheme and one that's available under 4 (i) in 303 (r).
Now, they argued that 4 (i) and 303 (r) just housekeeping provisions, that you can adopt rules.
Well, the 4 (j) is the provision that allow us to adopt rules.
4 (i) and 303 (r) allow the Commission to issue rules, orders, and other actions is that maybe necessary in the -- in the execution of its functions.
And this Court has in Storer and in American Trucking said that, these were -- these provisions mean just what they say.
They are broad grants of authority to take action necessary in the public interest.
Finally, I would like to say that on the 312 point.
It's argued there are actions here is inconsistent with the cease-and-desist provisions.
312 is applicable when the Commission is trying to halt some activity as a legal that it violates the Rule or the Act.
If we hold the very short evidentiary hearing then, determine whether is a fact finding one, to determine whether the activity is a legal that is we order to hold.
We didn't do that here.
We were not concerned with finding out whether any activity was illegal.
We did not order any halt to ongoing activity.
What were are concern with doing here is formulating the standard particularizing the application of the major market policy to the San Diego area.
And we urge that we can do so under Chenery by this ad hoc procedure and therefore, the existence of 312, no more bursars proceeding with this ad hoc waive and it does the main approach of 1107.
If we have jurisdiction, this Court finds to regulate CATV and the major market policy is reasonable and there is no showing that ti is not then we urge that we have the power to adopt these reasonable ad hoc procedures and to take the action that we need to under the explicit language of 4 (i) and 303 (r).
Chief Justice Earl Warren: Mr. Scheiner.
Argument of Arthur Scheiner
Mr. Arthur Scheiner: Mr. Chief Justice and may it have please the Court.
At the very outset, I would like to address myself to the first question in this case, the assumption of jurisdiction by the Commission.
This question comes up in connection with respondent CATV Systems which are off the air or none microwave fed and in that respect, certainly do not utilize the radio spectrum.
Now our attempt, our position on the lack of jurisdiction is a two-pronged basis.
The Commission asserts that its jurisdiction stems from Section 2 (a), its authority over interstate wire albeit by a non-common carrier, we submit on two basis that the Commission is in error.
First, the Commission does not have jurisdiction over interstate communication by wire by non-common carriers except to the extent that such authority is conferred under the provisions of the Act.
Secondly, we urge that the Commission is lacking in jurisdiction because there are no standards, no criteria, no definition, no congressional guidance of any nature whatsoever with a respect to the basis of jurisdiction that's asserted.
Let me address myself to each of these basis in turn.
First, it is the fact that prior to the Commission's assertion of jurisdiction over CATV, it has never asserted jurisdiction over interstate communication by wire, by non-common carries.
That statement is made in our brief.
It is not controverted in the petitioner's reply brief.
The only answer is and I believe I'm quoting “We did not probe that question.”
When I say that it has never done it, it has never done it despite the existence of thousands and thousands of miles of such interstate communication by wire non-common carriers, the typical example of the rights of Y Companies.
Now, I fully recognize rights the Y Companies words reasonable and feasible to utilize such a mode of communication.
Now, this type of wire use obviously does differ from the use involved here.
Namely that's the rights of Y Companies clearly had no so-called “impact”.
They are not involved then television broadcasting.
But I respectfully invite the Court's attention to those portions of our brief which detail at considerable length the legislative history with respect to the exclusion of the AP and UPI wire services from the purview of the Commission's jurisdiction.
We put particular stress, although, we have termed the absolute and force grant analogy to the networks.
We say it's absolutely in distinguishable in ever single respect.
The networks use interstate wire.
They use it on the transcontinental basis when respect to impact.
I think the Court may take the first jurisdictional notice.
In fact, the Commission itself has recognized to the networks the very life blood of television broadcasting and in the case of the networks, there has been an explicit disavow of direct authority over the networks.
Chief Justice Earl Warren: If the Commission has no jurisdiction here, are you entirely free from regulation?
Mr. Arthur Scheiner: No, sir.
Chief Justice Earl Warren: Well, what is the regulation you would be under if they have no jurisdiction?
Mr. Arthur Scheiner: CATV systems and I might --
Chief Justice Earl Warren: I beg pardon.
Mr. Arthur Scheiner: CATV systems, Your Honor are subject to jurisdiction of local city governments, county governments, and at least in the case of two states, Connecticut and Nevada are subject to the jurisdiction of Public Utilities Commission -- Commissions and are regulated as such.
In this may I suggest, there's not a use of patient of power by the local governmental entities but rather is pursuant to the explicit invitation and recognition of the Federal Communications Commission that the selection of the franchise holders, their mode of operation and all of the indica of their operation, are quiet properly determined at the local level and not by the Federal Communications Commission except to the limited degree to which the Commission has asserted jurisdiction.
Chief Justice Earl Warren: Well is the effect -- the effect of your CATV though is – goes beyond the state lines, doesn't it?
Mr. Arthur Scheiner: Curiously, the Commission if I may answer in this fashion, the Commission disavows --
Chief Justice Earl Warren: I beg pardon.
Mr. Arthur Scheiner: The Commission explicitly disavows jurisdiction of the CATV systems on the grounds that such systems are common carriers that is excluded precariously.
If it had asserted jurisdiction over CATV systems on that ground, we would not be subject to the provisions of Title II, Common Carrier of the Communications Act by reason of explicit exclusion under Section 2 (b) of the Act.
It is the fact that the Congress in delegating authority to the Federal Communications Commission did not delegate or legislate to the full extent of the Commerce Clause.
It provided that so-called connecting carriers, carriers operating within the state are not subject to the common carrier type regulation of Federal Communications Commission.
As it --
Chief Justice Earl Warren: Yes.
As I -- as I understood the counsel in the case of the networks, they were able to regulate the networks through regulation of the local -- of the local stations.
Now, is there any -- is there any way that there could be regulation over the end of your -- your possible interference with the allocation programs of the Commission, if they did not have jurisdiction over CATV?
Mr. Arthur Scheiner: Regulation by the Federal Communications Commission?
Chief Justice Earl Warren: Oh, well by anybody.
Mr. Arthur Scheiner: Oh, certainly.
Chief Justice Earl Warren: I'd like to who -- who can regulate that?
Mr. Arthur Scheiner: Oh, certainly.
In the case of Connecticut and Nevada they are presently regulated by two public utilities Commissions.
Chief Justice Earl Warren: I know but suppose there's – suppose in Connecticut, you set up your CATV and it interfered with the program in New York and New Jersey.
How could -- how is that regulated in anyway?
Mr. Arthur Scheiner: Well, in the case of Connecticut with which I am most familiar, that agency, the Public Utilities Commission, prescribed with great precision the programs that might be carried, the amounts that might be charged the customer, the technical quality of the service, the whole host of characteristics and indica of common carrier regulation of public utility regulation and that was fully provided for by the Connecticut state statute.
Chief Justice Earl Warren: Well is that for the protection of the areas in Connecticut or is that, that assume to be for the protection of the service area of New York and New Jersey or parts of Pennsylvania let us say?
Mr. Arthur Scheiner: It's rather difficult to characterize very briefly the thrust of the purpose of the legislation in the State to Connecticut.I do think --
Chief Justice Earl Warren: No.
Do they -- do they assume to protect the New York area for instance or are there -- is there a function to protect the people of Connecticut?
Mr. Arthur Scheiner: I think it's fair to -- fair to say that that the primary function was to protect people of the State of Connecticut.
Chief Justice Earl Warren: Well, there is secondary function if they have to protect New York?
Mr. Arthur Scheiner: I -- I do not believe so because the question in -- as I view it didn't arise.
It was the regulation of CATV systems located within the State of Connecticut.
Chief Justice Earl Warren: Well, now as a practical matter without regard to what power the Commission actually had.
Wouldn't that -- wouldn't that leave the Commission in a bad situation if it could not protect New York's interest?
Mr. Arthur Scheiner: I -- I do not view it in that fashion and second to the extent that the Commission is without power, I suggest the ready answer is, that such power maybe conferred by Congress and the Commission has sought such authority from Congress on several occasions and thus far without success, but I do think that there are number of very serious and very difficult legislative type determinations to be made.
For example, is it appropriate that this type of new activity which has been exempted from the grant of jurisdiction to the Commission? Should this type of activity be regulated by a federal agency and if so should it be regulated by the Federal Communications Commission?
We may all agree that the aviation for air transport industry is clearly the proper subject to regulation, but clearly should it be regulated by the ICC?
Now, these are profound and difficult questions to answer, but they are questions of a legislative nature.
We have made, if I may continue?
Chief Justice Earl Warren: Yes, of course.
Mr. Arthur Scheiner: We have made a second basic attack on the jurisdiction asserted by the Commission, simply there no criteria or standards of any kind.
In answer to that contention, we get two curious replies in its reply brief and I submit for the first time the Commission, I'm sorry, the government asserts the criteria and standards that you think are required are spelled out in Title III and more particularly, the broadcast provisions of Title III.
And I think I'm quoting their brief when I say, they say, “These provisions are quiet explicit and CATV systems are subject to those explicit provisions.”
The other petitioner in its original brief suggest to this Court that the Federal Communications Commission under the statutory scheme at its option could have regulated CATV systems as common carriers.
So, we now have three claimed basis of jurisdiction; interstate wire or alternatively, if you don't like that one, the Government urges radio, broadcast provisions of radio and if you don't care for that one regulate them as common carriers.
And these arguments are submitted in answer to our contention that there are no criteria whatsoever governing the purported assertion of jurisdiction, but let as examine the Government's contention.
I think, I submit, it is absolutely untenable to suggest to this Court that the broadcast provisions of Title III of the Communications Act are applicable and govern the regulation of CATV systems.
If so, in the case of broadcasting, it is the Commission which picks licensees.
For the statuary limited term of 3 years and picks them based on specified statuary criteria including character, financial qualifications, technical qualifications and the frequencies are granted free in broadcasting and broadcasting is explicitly examined from the provisions of the common carrier sections.
In broadcasting by the decisions of this Court and the other Federal Courts, a State may not censor broadcast, a state may not impose a gross receipts tax on the operation broadcast stations.
Contrast that if you will with the whole scheme of the so-called regulatory regime as applied to CATV.
As I stated earlier, these licenses are granted pursuant to Commission invitation of solicitation by a host of local authorities.
They are granted on a basis of local criteria for periods arranging up from three years to much, much greater periods.
In the case of the San Diego systems, we pay a gross receipts tax unlike broadcasting.
To suggest to this Court that the specific provisions of broadcasting in Title III apply to the regulation of CATV and this is the definition of limitation that we say does not exist in the Act.
These propositions I respectfully submit is completely untenable.
Let me give two specific examples if may, Under Section 326 of the Communications Act and this was not cited in our brief for the reason that the Government rely on the – relies on the explicit provisions of broadcasting was raise for the first time in its replied brief.
But under Section 326 it is provided, “No regulation or condition shall be promulgated or fixed by the Commission which I'll interfere with right of free speech by means radio communication.
That I submit is what the second report is all about.
Chief Justice Earl Warren: Well, may I ask this question and I will try not to disturb you anymore, but without -- without regard to whether Congress actually did leave you beyond in a regulation by the Commission, what do you have to say as to the reasonableness of the argument of counsel that -- that such power is essential to their having -- to their allocation systems that they -- that they have and not -- if unregulated it will -- will interfere with a --with their programs to a agreed that they cannot function effectively?
Mr. Arthur Scheiner: Your Honor please I do not agree with it.
Chief Justice Earl Warren: Well --
Mr. Arthur Scheiner: Basically, we must distinguish between two types of situations and in Mr. Geller's opening argument yesterday he said, “Counsel on this case do not in test the validity of Commission regulation of a microwave fed systems.
We don't contest it because it's not an issue on this case.
In this case, we are operating within the Commission's rules.
We are delivering the so-called Grade B signals and Grade B signals in my layman's terms or signals which the station is authorize to deliver.
We are not carrying New York signals to Chicago.
We are operating with in the confines of the Commission's own allocation report.
As the Court below found, we are local in ever respect and this was explicitly considered by the Commission.
We're delivering the very signals which the Commission's allocation plans, presumed station would be authorized to deliver.
That is the function of the CATV systems on this case.
I do have one further point in connection with the lack of standards argument.
And this sir relates to the -- it is a procedural point.
If in fact the broadcast previsions of Title III apply, let us assume that we were now a licensee.
If we were a licensee and the Commission wanted makes some change in the mode of our operation, the height or the power pursuant to which we were authorize to operate, it would have to do among other things at least two.
First, under the Section 316 of the Act, the Commission would have to tell us what it proposed to do us?
Second, it would have to tell us the reasons therefore.
Third, it would have to give us notice, a 30-days notice for a hearing and in that hearing the Commission would have the burden of proceeding with the evidence and the burden of proof.
Now, we have been -- now translating that 316 requirement to the facts to this case, I respectfully submit that we have been under sentence by the Commission for 19 to 20 months.
The very first time that we will be advised that what it is that the Commission proposes to do translating this to the 316 analogy, the specific broadcast provisions which counsel asserts furnish the limitation.
The first time that we will be told, of what the Commission proposes to do, is when the Commission issues its final report in the pending evidentiary proceeding which is now before the Commission itself.
Chief Justice Earl Warren: And then what review would you have?
Mr. Arthur Scheiner: Then -- then Your Honor, we would have to start over again.
We would have the opportunity for a judicial review by the – it will be the Federal, one other thing in the pending case before the Commission.
It was not the Commission that assumed the burden of proceeding with the evidence.
It was not the Commission that assumed the burden of proof but in those two respects, petitioner Mid-West and respondent CATV systems pursuant to Commission order shared various portions of these burdens.
In a sense, we've been dealing in the dark for close to two years.
The Commission has never advised us much less in writing of what the nature of the changes, restrictions, and limitations are?
And this raises what I submit is one of the very basic and in our view fatal defects in the scheme of the second report.
In the second report, what the Commission has done is write the rules of this game and they're detailed and they're specific.
And it is stipulated and found by the court below that we are in compliance, but they write one additional rule.
The risk, I don't believe this is an over statement, I don't think that Rule find its parallel anywhere in any other administrative agency.
That Rule explicitly says, “Having written the rules of the game, we can change them at anytime we please, in any manner we please, and to whomsoever we please and I would like if may, to refer the Court to the provisions of Section 1109 which are set forth in the appendix to the brief.
That Section says --
Chief Justice Earl Warren: What the page?
Mr. Arthur Scheiner: I'm sorry, Your Honor.
That's page 81 of the appendix in the buff colored volume.
It is the joint appendix in this case.
The Rule 1109 says, “Upon the petition and skipping the intervening words, upon the position in effect of any interested person, the Commission may waive any provisions of the Rules relating to the distribution of television signals by CATV systems impose additional or different requirements or issue a ruling on a complaint or disputed question.”
That is the standard on which are case has been tried.
The Commission may impose additional or different requirements.
Square that I suggest, with the mandatory requirements of Section 316 of the Communications Act and this is terribly important in our view, for the reason that throughout the entire Act, there is one grand overwhelming concern expressed by the Congress in Section 312, provision relating to the revocation of broadcast licensees or the issuance of cease-and-desist orders, 316 which I described, Section 204 relating to the imposition of requirements or changes on common carriers, the one grand premise expressed throughout the Act is a deep concern for the protection by way of procedural due process of all other persons who are licensed or do business subject to -- or by reason of Commission license, franchise or authorization.
And that grant concerned is completely ignored by the Government's view that the Commission proceeded properly in the face of Section 312, in the face of these other provisions by saying, we can do what we will, when we will, and in any matter that we chose to do it, and will tell you for the first time when we issue of final report.
Chief Justice Earl Warren: May I ask Mr. Scheiner just one more question.
If -- as I understood you in the San Diego area, you're not bringing in any additional service?
You're – you're following the rules of the regulation whatever they might be of the Commission?
Now would your argument be the same, if it were not that way and if you were bringing in some other part of the country something it would interfere with the -- with the allocation programs of the Commission?
Mr. Arthur Scheiner: Sir, the answer would not be the same and the reason is that in the alloca -- in the use of the spectrum space, the transmission of radio energy, the Commission does have quiet extensive power.
There is built in to the utilization of spectrum space of necessity a judgment as to how the spectrum space should be use.
There's a quality judgment involve and that is, is it better use for one purpose than for another purpose.
Of necessity, the agency has to make that determination.
So precisely stated, I would not make the same answer in that case.
However, the one significant point which follows from this is that, we might very well find our selves in a most anomalous position.
Two systems side by side; one system utilizing spectrum space and the other not utilizing the spectrum space.
One subject to the Commission's rather plenary authority over the utilization of radio spectrum and the other free of the same type of federal regulation.
Now, this is anomalous situation which suggest only that the necessity for regulation is an area of proper legislative concern.
Problems of this nature – problems of and the other types of problems that I address myself too, are properly to be resolved as a result of a careful and deliberate legislative concern.
For example, if Your Honor would refer to Appendix a in Southwestern's brief, where at the request of the Government, a Bill was sponsored looking towards conferring of jurisdiction over the Federal Communications Commission.
The Congress in that bill at least rather meticulously reviewed the appropriate provisions of the Communications Act.
And in Title III of that Act, as reflected in Appendix a, the -- and I'm never now referring to page 82 of respondent Southwestern's brief the blue covered brief, the Congress in the proposed bill, Section 330 (b) detailed 8 or 10 provisions of Title III which were applicable ignoring obviously a number of others.
It is this kind of determination which I submit is the appropriate decision to make by an informed legislature.
It is not in our view, the kind of determination which the agency itself may make without any guidance or limitation of any kind.
Sir, I've been advised that I've used my time, if their no further questions.
Chief Justice Earl Warren: No.
Oh, thank you.
Mr. Arthur Scheiner: Thank you, sir.
Chief Justice Earl Warren: Mr. Heald.
Argument of Robert L. Heald
Mr. Robert L. Heald: Mr. Chief Justice, may it please the Court.
The Mission Cable basically attacks the jurisdiction of a Federal Communication Commission on two grounds.
The first has been covered very extensively with Mr. Scheiner, but I would like to briefly summarize our position.
We think the failure of jurisdiction is very basic simply because Title III is a licensing statute and that all rules and regulations promulgated their under must be connected with, in harmony with, and for the further of this licensing function.
Of course, there are specific statutory exceptions that Congress has made like 303 (f).
We think this interpretation is consistent with statements of this Court.
Starting in 1940 in Pottsville, in Sanders 1943 and NBC, and of course in 1950 in the Carol case, this Court has described Title III as a licensing section.
Now, the Commission the Government has also contended that they have the right to regulate FCC -- the CATV under the definition of radio transmissions and they concede of course in Title III is as limited to radio or radio transmission.
And Mr. Geller referred to the definition contained in 2 (b) and 2 (d) of the Communications Act which provides that radio transmissions cover any service or communication that is incidental thereto.
And Mr. Scheiner has pointed out that under this interpretation they claim jurisdiction to regulate CN ---- the CATV under Title III.
We think the answer to this argument is very simple.
If they are radio transmissions, the present rules and regulations are invalid since they do not comply with the specific congressional directives contained in Title III.
For example they do not proceed in written applications, they don't give instructions permits, they don't grant licenses.
They don't determine the qualifications of the operator.
Equally important as Mr. Scheiner pointed out they don't give the CATV operator the protections provided in Title III for station licensees and again, he referred to Section 316 and 326.
And the freedom from censorship, I think could not be more clearly violated than the order in this case which prohibits Mission Cable from bringing in the signals of Los Angeles to the San Diego Area.
Justice Abe Fortas: But I didn't understand Mr. Geller's argument quite that way.
Perhaps I'm wrong, but I thought he was arguing sort of a necessary and appropriate power that is to say that implicit in the other parts of the Act in various parts of the Act, he asks this Court to find a power to the Commission to impose certain types of regulation on CATV as necessary and incidental to the explicit powers in the statute.
Mr. Robert L. Heald: Mr. Justice Fortas, we would say that that is not within the power the Commission to decide.
Justice Abe Fortas: I understand that but I -- that is his argument there's no problem --
Mr. Robert L. Heald: I didn't understand it that way.
I do understand that they -- I'm sorry.
Justice Abe Fortas: I beg your pardon, but as I understand that you're saying that the Governments' argument is that power to regulate CATV is found squarely with and not by implication.
Mr. Robert L. Heald: No, that is not sir.
I concede they asked by implication, but we suggest that if under the definition if they once argued the CATV operations do come as a regular transmissions then they are stock with everything in Title III.
They can't come up with what they describe as a limited programming.
In other words, they either have to stay in Title III or they have to get out of it.
They can't pick and choose in Title III what they want to use.
Justice Abe Fortas: But they're trying to get out on it?
Mr. Robert L. Heald: Well, they're trying to get out was first --
Justice Abe Fortas: As I understand on the ground that this is something that is necessarily incidental to the exercise of its powers explicitly vested in them?
Mr. Robert L. Heald: Mr. Justice Fortas --
Justice Abe Fortas: Is that -- am I correct in understanding that are things you should --
Mr. Robert L. Heald: I do not think that -- I didn't understand the argument that way.
They're using the term incidental as a definition term which brings him within the build he be classified as radio transmission.
They are not saying that that definition also says that they incidentally can use some powers to regulate.
That as I understand their argument, the words incidental to radio transmission means they are the same as radio transmission and therefore, they are under Title III.
The other side of the coin, may it please the Court, is if they are not radio transmissions then Title III clearly gives them no authority to regulate because by their own admission is limited to radio transmissions.
But I would like to go on to our second argument which we have expressed in our briefs and which we feel also that clearly shows that the Federal Communications Commission has no jurisdiction over CATV.
Justice Byron R. White: Would you -- excuse me a minute.
What if a licensed station owned a CATV cable installation for the purpose of extending its signals say into San Diego to Los Angeles, if you say this – this case operations is owned by the license station?
Mr. Robert L. Heald: Yes, sir.
Justice Byron R. White: Would the Commission have any authority whatsoever?
Mr. Robert L. Heald: Yes, I think they would. I think the analogy to the network would be direct then.
The Commission in NBC case have to – been to control the network affiliation --
Justice Byron R. White: Why is that?
Why could this if tell them their license station in Los Angeles which is broadcasting out to so many miles normally, why couldn't it tell that station that it could not have a cable extension into San Diego?
Mr. Robert L. Heald: I'm directing my attention to jurisdiction.
They clearly have jurisdiction over that station.
Justice Byron R. White: Well, why you would have – yeah, they have jurisdiction over the station but why would they had jurisdiction over that part of that station's operation?
Mr. Robert L. Heald: I would suggest that for the same reason I'm going to direct myself, they would not have that you would be in a proper -- improper exercise that their authority to tell that station it couldn't own a cable which was extending it to the great big come to a beyond.
Justice Byron R. White: Well, you say that – you've say that the Commission would be likewise be precluded --
Mr. Robert L. Heald: That is correct.
Justice Byron R. White: --from preventing a license station from extending its signal in the San Diego?
Mr. Robert L. Heald: That is correct.
And for the separates of which I like to direct the Court's attention to now is that they call it CATV rules by the Commission's own admission in the second report in order by a decision of the Court of Appeals in the Buckeye case are designed solely for the elimination of competition to CATV to the UHF stations primarily.
And to limit the ability of American citizens to watch signals that are freely available to them and do not cause any electrical interference to any existing station.
Now as I understood the Commission before did not claim any explicit authority Mr. Geller said, they did.
I understood they were claiming their authority under an applied interpretation of the statute.
Then, they had a little formula that it went like this.
They said take 2 (a) which is a definition the Commission has control of all interstate communications by wire and add to that the rule making provisions of 303 (f), 4 (i), and 303 (r) and apply that to the substantive provisions, 307 (b) and 303 (h) and you come up with jurisdiction.
Now, one factor in this equation that they don't particularly emphasize is that the rule making functions provide that these rules and regulations promulgated there under must be consistent with the Act.
And I also suggest to the Court that under in these implied powers the purposes of these rules and regulations must be consistent with the condition -- congressional directive for purposes of enacting the Act.
Now, this Court had occasion on numbers cases to point out, why Congress enacted the Communications Act and the Radio Act of 1927, its predecessor.
They were concern according to this Court, that the chaos that occurred in the radio that stations and people by jumping stations from frequency to frequency, from community to community were destroying all service to the American people so that in effect their was no radio service and therefore, it was necessary come up with a Licensing Act to control these people.
This Court has also stated that the second purpose was that Congress was spurred by the fear monopoly and they were concerned that some industries might gable up all the large frequencies and place them in a large metropolitan areas and this deprived other portions of the United States of the services and as many services as possible.
These two reasons clearly point out that Congress was interested in dividing up this electronic pie if you will in as many ways as possible consistent with the physical laws of electronic to make as many services as available to many people as possible.
Now under these interpretations consistent with these interpretations, this Court for instance has held that licensing per se is not a violation of freedom of speech because if we don't have licenses, we will destroy everything and therefore it's not an unreasonable interpretation.
This Court has held in the NBC case that Congress had -- the Commission has the power to regulate the network relations, the contracts with these -- which affiliated stations in order to provide better and more services and this was incidental to their licensing functions.
And in United States v. Storer this Court has held that the Commission could set up multiple ownership rules as incident to its licensing power such it would be useless to make a Commission on an application to which they have predetermined was already contrary to the public interest.
Well, the Commission is -- the Government in its brief has argued again and again until Congress has bestowed comprehensive powers upon this Commission and we agree.
But this Court had said these powers are not limitless and they must be interpreted in line with the provisions of the Act.
Now with this in mind, I would like to turn to the two specific provisions that the Commission claims gives it the power to regulate CATV and this is 303 (h) and 307 (b).
Now, 303 (h) provides as a directive to the Commission to set up areas and zones of service for stations.
I'm sure this Court is aware at the time the Communications Act was enacted, Congress was thinking primarily of the standard broadcast band, that is the band between 540 and 1600 GHz.
And they were concerned, that the interference that was being caused and Congress was fully aware that the factors that cause interference are the same factors that cause service.
Instead of broadcast station it is power and frequency which results in a usable service to a certain period of area and then far beyond that, is a creation of electrical interference that destroys other service.
And this was a directive to the Commission to set up different types of stations with different coverages and different power.
So again, they could get as many possible services to all the people of the United States within the capabilities of the physical laws of electronics.
Now, 307 (b) as the Court is aware provides that in handling applications the Commission should make a fair and efficient distribution of services and facilities throughout the communities and states insofar as there is a demand for the same.
I suggest this again with a clear indication that the Congress intent to make as many services available to all the people of the United States as would be possible within the physical laws of electronics and not allow them all to get in one place.
Now consistent with these two congressional directives, Congress has come up with this -- the Commission has come up with the series of rules and regulations to cover standard broadcasting and television.
In standard broadcasting, they have created classes of stations.
There's a local station which has power up to 1 kilowatt or a thousand watts, 250 at night.
They have created the regional stations with powers up to five kilowatts.
Clear channel stations of power of the 50 kilowatts, they have day time stations.
The Commission has recognized that in order to get this maximum service, they should limit the area service but what they are really doing, may it please the Court, is not limiting the area of service, they are limiting the interference implications which go far beyond that area service and which there is no practical way to live.
And Congress' directive to create different areas and zones was again a clear directive to make as many services available to the people of United States.
Now in television, it's still I might point out is in the sample that in United States we have a few frequencies with one's AM station.
If all frequencies have one AM station, we'd have 106 stations, but with this ability to create different classes of stations, we have today over 4,200 AM stations operating in the United States.
Now, the television and commission did the same thing, using a slightly different plan.
They set up the television allocation plan.
They provided from minimum separation distances between co-channel and adjacent channel stations and this was to prevent interference.
And then based upon this minimum separation distances, they allocated television frequencies to all the communities in the United States as many as possible while it could still avoid interference based upon these minimum separations.
And then they limited the tower height and the power which were two of the factors that cause both service and interference in television.
So that as many as possible, again, as many stations as possible could exist within this electronic spectrum.
Now, the Commission has set up classes of television service.
There are city grade, grade A and grade B.
Now I'm sure the Court is aware this grade B is nothing more than imaginary or fictional line it's drawn on the chart which is an engineer's attempt to show that at that spot, a certain grade of service, a certain strength of signal exists.
But the Commission has never contended that service stops at that Grade B contour.
Service goes far beyond that.
It may be a factor of terrain, a sensitivity of the receiver, the height of the antenna.
In San Diego, we have a force of their antennas which are listening off the air to this Los Angeles stations.
The Commission has never said that every station in the same community must have the same Grade B contours.
Within the limits of the maximum minimum power, they can have any height than any tower they want.
So in the same city, you will have stations with different Grade B contours, different service areas.
But in every case they are limited by the Commission's rules to preventing interference, to causing interference, beyond those Grade B -- beyond the interference which is well beyond the Grade B contour.
I submit that the purpose of Congress in enacting these two Sections was very clear.
It was to provide the max -- that the Commission should create the maximum number of services possible within the physical laws of electronics.
Now, Mr. Geller stated at the opening that the congressional -- Congress had given the Commission a mandate to have local service and he referred to 307 (b).
Now, if he was saying that Congress gave the Commission a mandate to provide for frequencies in every community so that they would be available if they were needed, I agree.
I submit for the FCC has gone wrong in the CAT regulations as they have attempted to go into a new field of economy – of the economics.
They have attempted to limit competition in an attempt to guarantee the viability of UHF stations whether the people want to see them or not and I submit that purpose is directly contrary to the congressional purpose in setting up Sections 307 (b) and 303 (h).
Now Justice Fortas, I think you ask Mr. Geller a question the other day as to whether or not CATV would cause -- would create competition to the network stations?
And I think Mr. Geller misunderstood your answer -- your question because the answer no because the duplication rules would prevent competition.
I assume your question was directed to point would unregulated CATV cause competition to networks and the answer in emphatically, yes.
They would be the prime source of competition and the federal government, the district -- Department of Justice in its brief in a District – United States Court of Appeals for the District of Columbia Circuit in the ITT case, specifically propose the merger on the grounds that ITT was going into the CATV business and this would be greatest possible source of competition to the networks.
Now, we have also asked this Court to reconsider and clarify its language in the Sander's case which we think is an eminently sound decision, since it holds that broadcasting is free.
It is a freely competitive business and that the Commission has no control over the business of broadcasting and that the broadcaster must stay on the fall upon the acceptability of his product.
Unfortunately, there is some other language in the case that Commission in licensing stations must consider impact of competition on the public.
And as the result of that language as the United States Court of Appeals for District Columbia Circuit on the Caroll case has come up with the Rule of the Commission must consider the protest or the petitioner of an existing station, if it objects to a new license being granted in the same community that alleges that the competition will hurt the public.
Now, there have been a lot of cases started to that rule.
There been a lot of hearings, but I know of no instance from the Federal Communications Commission has denied a license with the finding that the competition from other station will be detrimental to the public.
Now, the Commission is aware and I'm sure this Court can take judicial notice that time after time stations and communities are not financially successful and they go through one owner and two-owner, and three owners until finally somebody gets hold of that station and for some reason, either initiative hard work knowledge of local conditions he makes it successful and it starts producing a product that the people want to watch and then it starts contributing to the welfare of that community.
Now broadcasting is something unique, it is something that's based upon an initiative, all other forms of information, entertainment, education, or in competition and we submit Congress wisely left the broadcasting business to be in competition and broadcast station should rely upon their product.
And we submit that here, where non-micro way CATV does in no way causes electrical interference to existing stations, in no way prevents the development of local stations, if there is a demand from the citizens for that station, in no way prevents any person from watching, if he's desire friends to see -- when the CATV comes in upon his request, he can have a switch put in and still contain -- maintain his outside antenna.
It's strictly within his control what he wants to watch.
I submit that the purpose of the CATV Rules are diametrically opposed to the intend of Congress and that enacting both the Act in these two specific Sections which the Commission is relying upon and for that reason it's beyond the jurisdiction of the Commission.
Justice Abe Fortas: Why do you suppose -- what is your opinion as to the reason why Congress hasn't legislated on the subject?
Mr. Robert L. Heald: Mr. Justice Fortas, I am going to take to try and guess why Congress has enacted perhaps express in considering --
Justice Abe Fortas: I know but its nothing in the – there are no committee reports or anything in the sort that provide the basis for the less changing.
Mr. Robert L. Heald: As to why they have not acted?
There is nothing in the reports.
They must be --
Justice Abe Fortas: Mr. Geller urges as I understand them that this Congress' inaction should be taken as acquiescence and what the Commissions were not to in this field and that's always a permissible line of argument.
Now, I wondered if you had the state your view as to the reason.
Mr. Robert L. Heald: Now, we feel on the contrary that this is such a complicated subject and it is the extending the power of the Commission into a brand new field which Congress has never considered the administrative agency should act before, that inaction is only because of the complicated subject that is involved.
Justice Abe Fortas: But that Congress has not acted because --
Mr. Robert L. Heald: Because we have -- they have just not have time to consider.
Now some of the unanswered questions --
Justice Abe Fortas: That's -- in other words, that Congress is different about legislating in this field?
Mr. Robert L. Heald: [Attempt to Laughter] I would hope they would take the time to examine any complicated questions that arise.
And I think one for instance that is bother than is whether not CATV's can originate?
And this is a question that is now before the Commission and whether or not the Commission can prohibit that either under present rules is whether Congress --
Justice Abe Fortas: An originate program?
Mr. Robert L. Heald: That's correct.
In addition, as you know a CATV system have multiple channels.
The ones in San Diego have 12 channels and they use some of those channels or can use some of those channels to other things other than bringing in television.
And they could originate there own programs, the news program or weather program, and film so the capability of CATV, the effect on economic status, I submit such a complicated subject that the inference that Congress has not acted at this time is not that they agree that the Commission has so far but perhaps it is such a complicated subject that they want to time the act upon it first.
Justice Abe Fortas: Well, it had a little while then?
Mr. Robert L. Heald: They've had I think two years.
Well, they asked first in 196o when Congress -- when Commission didn't ask for it in a very hard way and in the second time, they ask for it and as I'm not familiar with the hearings and what extent it was argued.
But I do know there was a very strenuous minority report which we quote in our brief which specifically points out, why the Commission should not have jurisdiction.
And raises the very problems the complications will arise unless Congress fully considers them.
Now, Mr. Chief Justice you raised the question as what was the answer to the reasonableness problem that Mr. Geller raises.
Now the force of course is, we've emphasized that there is no electrical interference.
The point is that its only economic impact.
I suggest that Mr. Geller may have a very reasonable argument.
There maybe a need for economic control against to ensure the viability of VHF and UHF television.
They're may be a need to limit the right of American public to watch television channels that are freely available to them.
There may be even a need to give this power to the Federal Communications Commission and administrative agency but I suggest that is a matter for Congress and Mr. Geller's argument is directed to the wrong forum since a federal agency should not be allowed to take itself up by its foot straps and launch itself into a new field, find you the control of economics, competition without specific congressional direction.
Now with time remaining to I would like to adjust myself for the decision of the Court below in which it said this Commission didn't have the power to which you would stay ordered.
We think the decision is eminently sound and that the Court made have very fine analysis of the powers to Commission.
And they very briefly pointed out that under the rule making Sections 4 (i), 303 (f), and 303 (r) which says that, the powers must be consistent with the Act.
That if they had the tremendous power, if the Commission has the tremendous power to issue a stay without a hearing and upon disputes of fact because there is a lot of disputes of fact in this petition in which they acted.
They had asked the Congress to do a useless thing in enacting 312 (b) because they clearly have the authority to do everything that 312 (b) gave them.
They also asked the Commission -- Congress to do I useless thing when it given the parts to find its forfeitures because I submit, that would clearly be encompassed in this broad authority they now claiming.
It is also equal important that when Congress did decide to give them some additional power cease and desist, after they claim, they had no right except the power to revoke licenses, the Congress very carefully hedged that power in with limitations to protect the rights of the licensee.
What we have here is a case where the federal agency claims that under the implied power it's taking out of specifics, it has greater power than it has under the specific authority granted to it by Congress.
And Mr. Geller has pointed out in his oral argument and he is also pointed in his brief that the Commission could have proceeded by a general order in this rule making.
They could have come up with an order saying that all CATV stops here.
Now, they cite no authority for this and we don't concede they would have this authority even though, we go under the premise they have something have jurisdictional with CATV.
Specifically, they would not have the authority by a rule making to issue a general order saying that all VHF televisions have to go off the air at 8 o'clock in order to give UHF economic protection.
The Section 316 would prohibit that because of the modification and license and then entitled adjudicatory hearing.
But we really think the argument is beside the point.
The Commission elected to follow another procedure.
They didn't go by the state order.
They didn't attempt by a stay order to control the lawful operations of the CATV systems.
They elected to go on the ad hoc basis and use a stay authority and an interlocutory type of authority and we submit they clearly do not have that authority.
And the Syracuse case that he refers to which upholds the authority of agency that either go by general rule making or specific case, as I read it says, our goals on the assumption that is clear that the agency has both those powers and the case says it's in our discretion to go one way to the other.
Here the key is and we dispute that they have the authority to go on the second method and if they lacked the power to issue a temporally injunction to stop the lawful activities upon pleadings which are completely in dispute as to fact, we submit, they do not have authority to issue a temporally stay.
For that basis we feel to the decision of the lower court was eminently sound, it is correct, and should be affirm by this Court.
Chief Justice Earl Warren: Mr. Jennes.
Argument of Ernest W. Jennes
Mr. Ernest W. Jennes: Mr. Chief Justice and may it please the Court.
Let me state once more the basis of the assertion by the FCC of jurisdiction here because I fear it's been a bit confused.
The Commission's assertion here is not based upon the notion of implied power.
It is based squarely on the fact that CATV systems are engaged in inter-state communication by wire or radio.
They extend the signals of television broadcast stations and the have an impact on National Communications Policy, and there are specific provisions of the Act to implement these jurisdictional provisions.
Justice Abe Fortas: Well, --
Mr. Ernest W. Jennes: Sir?
Justice Abe Fortas: I don't quite understand that because as I understand in your saying that there is explicit authority in the Act to regulate this but there isn't?
Mr. Ernest W. Jennes: No.
I'm saying that the Act specifically applies to communication by wire, interstate communication by wire or radio.
Justice Abe Fortas: Alright, now --
Mr. Ernest W. Jennes: CATV systems clearly come within that definition.
Justice Abe Fortas: But how?
Mr. Ernest W. Jennes: And that if I may –
Justice Abe Fortas: No.
Mr. Ernest W. Jennes: -- and that if I may Section 2 (a) of the Communications Act says, the provisions of this Act shall apply to all interstate and foreign communication by wire or radio.
Now, this is not implicit.
This is an explicit --
Justice Abe Fortas: Now tell –
Mr. Ernest W. Jennes: Then we find the provisions in the Act that apply.
Justice Abe Fortas: Now, explain to me just how CATV fits with that definition?
Mr. Ernest W. Jennes: Well as to wire communication, CATV transmits the signals, pictures, and sounds by wire and cable between the points of origin and reception of such transmission.
Justice Abe Fortas: Between the points of origin?
Mr. Ernest W. Jennes: And reception of the said translation.
In other words, between --
Justice Abe Fortas: But that you mean by origin there, you must mean that CATV pick up?
Mr. Ernest W. Jennes: From the point of which the CATV system picks the signal up above the air to the point of which it carries it to the -- into the home and it does engaged in wire communication.
Justice Abe Fortas: But does that?
Justice Byron R. White: Then what made the Commission do about wire communication?
Mr. Ernest W. Jennes: Sir?
Justice Byron R. White: Then what make – what made the Commission do about wire communication?
Granted that this CATV system is a wire carrier or as transmitting by wire.
What made the commission do about it?
Mr. Ernest W. Jennes: The Commission may embrace all of the specific powers that are given to it by the statute such as Section 4 (i) which is an issue here to implement the policies which are to be found in provisions like section 307 (b), the provisions limiting the – the reach of television signals and the like.
Justice Byron R. White: So if they do anything with the wire communications that operation which is necessary to carry out its powers over radio broadcast.
Mr. Ernest W. Jennes: Well within the context of this --
Justice Byron R. White: That's what the commission is doing, isn't?
It's regulating the wire carrier to the extent necessary to make effective its powers over broadcast?
Mr. Ernest W. Jennes: That is right and similar --
Justice Byron R. White: Under Title II?
Mr. Ernest W. Jennes: -- under Title III.
Justice Byron R. White: III?
Mr. Ernest W. Jennes: That is right.
Justice Byron R. White: So it's really an adjunct to their exercising there explicit power you say as an adjunct to their or in supplemental to their Title III power?
Mr. Ernest W. Jennes: That is right.
May I suggest also --
Justice Byron R. White: So, if they could do -- I suppose you would argue that they could do that without any express authority over wire carriers.
Mr. Ernest W. Jennes: No, I'm not prepared to argue that.
Justice Byron R. White: Yes, alright.
Mr. Ernest W. Jennes: Then we're talking about inherit powers and this case is not about inherit powers, if it please the Court, it's about express powers.
May I suggest also that the policy question is not as respondents would have it one of Government protection of vested broadcast interest against competition.
This specific case deals with whether the San Diego area is to have a full measure of its own competitive service or is to be a television satellite of Los Angeles served principally or exclusively by Los Angeles stations via cable.
And more fundamental in San Diego and throughout the country, FCC regulation of CATV extension of distance signals is necessary because there's a clear and present danger that there would be and increasing concentration and centralization rather than expansion of media of communications.
Justice Abe Fortas: Well, I suppose if there's a result of some technological development, it will possible to have a 50 or 60 additional of VHF or UHF stations there.
The argument would be that the Commission can deny license and perhaps it's been indicated on the grounds that would be excessive competition?
Mr. Ernest W. Jennes: Well, I think that the Sander's case has indicated that -- that if –
Justice Abe Fortas: But that's about
Mr. Ernest W. Jennes: -- that if the extent of the competition as such as to take away services to something that Commission should take into account.
Chief Justice Earl Warren: Yes and that's essentially the argument here but as I understand it on the policy side or whatever one might want to call it?
Mr. Ernest W. Jennes: Plus the fact that under the broadcast rules of the Commission which are aimed to prevent concentration these Los Angeles television stations can't serve San Diego directly.
They can't own San Diego broadcast outlets to rebroadcast their signals.
Indeed, there's a short limit on the number of television stations that maybe commonly owned by a single entity and yet without CATV regulation, CATV by extending their signals could to for these large Los Angeles stations where they can't do for themselves.
Now, Mr. Chief Justice it has been suggested that if the Commission did not have jurisdiction here that these matters would all be taking care off by the States.
I suggest respectfully that the States are not concerned with the communications policy for the nation as a whole.
They are concerned with their own local but important networks and under the Communications Act as this Court said in Bennetti, here was provided a comprehensive scheme for the regulation of the interstate commerce and I might say also that it's quite interesting and noteworthy that when the CATV interests are appearing before State Public Utility Commissions on the matter of public utility regulation of CATV, they then content that CATV is an interstate commerce and there any State regulation of that kind is preempted by the Federal Communications Act.
Now, the system of regulation which the Commission has adopted was intended to resolve public interest considerations before entrenchment of CATV extension of distance signals.
And the Commission singled out different kinds of situations for handling in different manners.
I can't over emphasize that the concept of interim relief to maintain the situation until --