Cases by Issue - Radio and Television Regulation

Community Television Of So. Cal. v. Gottfried - Oral Argument

Wed, 18 Feb 2009 07:11:15 +0000

Case:

Community Television Of So. Cal. v. Gottfried

Media File:

81-298_19821012-argument.mp3

Related Transcript:

81-298_19821012-argument_transcript.xml

Transcript:

ORAL ARGUMENT OF EDGAR F. CZARRA, JR., ESQ., ON BEHALF OF THE PETITIONER IN 81-298

Chief Justice Burger: We will hear arguments next in Community Television against Gottfried.

Mr. Czarra, I think you may begin whenever you are ready.

Mr. Czarra: Mr. Chief Justice, and may it please the Court, this statutory construction case involves television programs for the deaf.

Some background will establish the context for the specific facts and the narrow legal issue that is before the Court.

Without visual aids, most deaf persons cannot understand the sound part of television.

Government agencies and broadcasters have been working for more than a decade on ways to provide the deaf with suitable access to the sound part of television.

Until early 1980, there were essentially two kinds of special visual aids that could help the deaf.

One was sign language interpretation.

The other was so-called open captions.

While helpful to the deaf, both are visible on all television sets.

Because they are distracting and block part of the visual picture, both impact adversely on television service for the non-deaf majority.

Competing technologies to produce captions visible only to the deaf reached the developmental stage in the early 1970's, and have been evolving.

This is so-called closed captioning.

One system reached the marketplace in 1980.

The other is not as far along, but it may offer more benefits in the long run.

Basically, both involve transmission of specially encoded signals that will produce captions only on television sets that have special decoding mechanisms.

Producing captions that fit the visual action is a sophisticated process involving skilled personnel and special equipment.

It is far more complex than flashing a tornado warning across the bottom of the screen.

Some programs are not suited to captions at all, and caption is expensive, about $2,500 an hour, and public television's historic budget crunch has grown much worse lately.

Despite these difficult problems, great strides have been made.

Due to a combination of available approaches, deaf viewers throughout the country today have access to the sound part of many hours of television each week on both commercial and public stations.

Now, this case comes to the Court on a record that covers KCET's 1974 to 1977 license term.

This was long before closed captioning was in being.

Nevertheless, KCET had presented nearly 1,000 programs with special visual aids during that license term.

The Respondents requested the FCC to deny KCET's license renewal.

They claimed that KCET's programs for the deaf were not enough, and had not been presented in peak viewing hours.

Respondents focused on the comparatively new Section 504 of the Rehabilitation Act of 1973, that prohibits discrimination against handicapped persons by recipients of federal financial assistance.

Respondents requested the FCC to use its license renewal processes to force KCET to provide more of the special services they believe that Section 504 required.

Three points made by the FCC in denying Respondents' complaint merit emphasis here.

First, the FCC found that KCET had offered special broadcasts for the deaf, and had not abused its discretion in scheduling them.

The only specific claims of KCET shortcomings were thus found baseless.

Second, the FCC reviewed the many steps it had taken under the general public interest standard of the Communications Act concerning television for the deaf, and some of these predated enactment of Section 504.

Third, the FCC concluded that it lacked Section 504 enforcement duties, because it did not dispense public funds.

The FCC deferred to the funding agencies to decide complaints of Section 504 violations, but the FCC made very clear that any finding of a Section 504 violation by KCET would be given weight.

Meanwhile, the Respondents went elsewhere.

They filed a complaint against KCET at what is now the Department of Education, one of the funding agencies.

They also brought a class action against KCET in District Court.

Both complaints charged Section 504 discrimination, and both were eventually resolved in KCET's favor.

The Respondents then appealed the FCC's denial of their complaint.

A panel of the D.C. Circuit, speaking through Judge Wright, with Judge McGowan dissenting, reversed the FCC.

Its decision ignored the extensive record evidence of KCET's service to the deaf, as well as the FCC's conclusions about it.

We ask this Court to reverse the D.C. Circuit.

The sole basis for the D.C. Circuit's decision was its belief that Section 504 expressed such a strong national policy in favor of the deaf that the FCC had to read the public interest standard in the Communications Act as if it incorporated the policy of Section 504.

The FCC thus was ordered independently to decide KCET's Section 504 compliance as part of the license renewal proceedings at the FCC.

The narrow issue this Court agreed to review is whether that novel incorporation theory is a legally correct interpretation of the intent of Congress.

We say it is not.

The mandatory incorporation theory is at war with this Court's holding that the FCC has very broad discretion to decide the scope of the public interest standard.

We have found no holding by this Court suggesting that the FCC must automatically read into the public interest standard policies expressed by the Congress in other statutes.

The FCC is not required to incorporate the policy of another law unless the Congress directs it.

Of course, the FCC may and often does consider the policies of other statutes when it determines the scope of the public interest standard in the Communications Act, but that is an initial judgment that the Congress entrusted to the FCC.

The FCC exhibited leadership concerning television for the deaf.

The Court of Appeals acted as if the FCC had done nothing.

Mr. Alito: Mr. Czarra, do you have any idea whether the FCC at the license renewal stage would take into consideration the fact, if there were a fact, that a licensee had been found to be guilty of an unfair labor practice?

Mr. Czarra: Yes, it would.

The FCC takes into account findings by other agencies or courts of violations of law by its licensees.

Mr. Alito: What would it do if it found that a licensee had committed an unfair labor practice?

Mr. Czarra: It would depend on the circumstances.

I don't recall immediately a case about an unfair labor practice, but they would look to see to what extent that judicial or other agency finding indicated a character trait on the part of the licensee that suggested it undeserving to be licensed.

Mr. Alito: What if an intervenor in a license renewal proceeding, if that is what you call them, someone objecting to the license renewal, said, I think this station has been guilty of an unfair labor practice.

It is true, the NLRB has never passed on it.

Would the FCC undertake to determine that for itself?

Mr. Czarra: Well, I think the FCC initially would look at the nature of the allegations, how well they were supported by specific facts, affidavits, and so on, but I suspect that the most that the FCC would do in that situation is simply wait to see what one of the enforcement agencies would do.

Mr. Alito: Do you think if... assume the unfair labor practice had been adjudicated by the NLRB, or that it hadn't, but the intervenor called the FCC's attention to an adjudicated unfair labor and an alleged unadjudicated one.

Could the FCC say, sorry, that is irrelevant?

Mr. Czarra: I don't think that they would say that it was irrelevant.

Mr. Alito: I didn't ask that.

Could they say it legally?

Must they... must they take into account this failure of a licensee to live up to the requirements of another law?

Must they take that into account?

Mr. Czarra: No, I think it depends on the nature of the law.

Mr. Alito: What about this case, then?

Didn't the FCC say that the licensee's conduct under Section 504 is irrelevant?

Mr. Czarra: No, they did not.

They said that they were going to wait until--

Mr. Alito: Irrelevant to the license renewal proceedings.

Mr. Czarra: --No, they said it was relevant, and that they would take into account any adjudication by a responsible agency that there had been discrimination or violation of Section 504.

Mr. Alito: But until some other agency acted on it, it was irrelevant?

Mr. Czarra: Well, I am stumbling over the word "irrelevant".

Mr. Alito: Well, anyway, they would not take evidence as to what the station's conduct was with respect to 504--

Mr. Czarra: Well, they had--

Mr. Alito: --as long as there had been no adjudication by some other agency.

Mr. Czarra: --But they had evidence before it of what the station was doing in terms of service to the deaf, and it decided that apart from a specific finding by a funding agency that there was some problem under 504, that the Commission under its view of the public interest standard found no shortcoming.

It noted specifically in its opinion that the station had been providing programs for the deaf.

It noted specifically that there was a controversy over the scheduling of those programs, but consistent with its historic views on scheduling questions, said, no problem, as far as the public interest standard is concerned.

For eight or nine years before the Commission acted on the Respondent's complaints here, and beginning well before enactment of Section 504, the FCC had been focusing on the question of television for the deaf.

It did not advocate its responsibilities in proceeding as it did, for it balanced the conflicting interests of the deaf and the hearing audiences.

It studied the evolving technology.

Mr. Alito: Mr. Czarra, did the FCC take any new action after the adoption of Section 504, or was its policy already fixed?

Did it reconsider it and determine that what it had already done met the requirements of 504 to the extent that it was relevant?

Mr. Czarra: As far as the published opinions go, Justice O'Connor, there is no indication that they specifically took into account a statute called Section 504.

Mr. Alito: It never mentioned it by number or name?

Mr. Czarra: Not as far as I recall, but after its enactment it did on several occasions before it resolved this case deal with the subject of television service for the deaf.

It was authorizing experiments on this new captioning technology.

After those had progressed, it actually authorized regular operations with the new technology, and it was continuing to observe the problem, study the question, and it continued, though, to pronounce its decision that it did not feel that under all of the circumstances things were far enough along to warrant a mandatory obligation by television stations to do any particular thing for the deaf, though it encouraged them to do what they could.

Mr. Alito: If we were to determine that the Act, Section 504, is relevant to the purposes and things which the FCC has to decide in some way, I take it it is your position that the FCC has taken action and has applied the principles embodied in 504.

Mr. Czarra: Precisely.

I think that the FCC was out in front of the Congress and in front of the national policy in terms of television for the deaf, for it started to deal with this question in 1970, three years before there was such a thing as the Rehabilitation Act.

Mr. Alito: Did the holding of the Court of Appeals impose any special burdens on the agency other than to require it to make tracks, so to speak, indicating its consideration of the section?

Mr. Czarra: Well, I think the Court of Appeals' opinion is somewhat ambiguous.

On the one hand, there is language that says, now, we are leaving this up to you, FCC.

You fill in the interstices of this requirement.

But by the same token, there was language in the opinion that says, we expect you to do something about this now.

We expect stations to do this, and in the light of the record where KCET had shown that it had done extensive things, one can only wonder if the Court of Appeals wasn't saying that we are requiring you, FCC, to order these stations to take some kinds of affirmative action that they have not taken up until now.

Mr. Alito: What if evidence is offered that out of the 300 employees, there are only 3 percent that include minorities, Hispanics, orientals, Negroes, et cetera?

Is that relevant to the issue before the Commission on the renewal of the license?

Mr. Czarra: Yes, it would be.

The FCC looks into all sorts of things, but employment of women and minorities is one of the things they look at.

Mr. Alito: Why wouldn't the Commission then have a hearing on the allegations that a station hadn't lived up to its obligations under 504?

Mr. Czarra: Well, the FCC had said in 1970 and again in 1976 that we are not going to impose any specific obligations because this whole question of television service for the deaf is wrapped up in technology and economics and other practical problems.

Therefore, we are not going to mandate some specific actions.

So that pleadings saying that a station had only done X amount of programming for the deaf would not run afoul of any stated policy, any standard, any guideline that the FCC had laid down.

Mr. Alito: But allegedly had run afoul of 504.

Mr. Czarra: Well, that is correct, but--

Mr. Alito: Just like the Commission listens to allegations that the station hasn't lived up to some of its obligations under some other statutes.

Mr. Czarra: --Well, the Commission evaluates the factual allegations and the record of the station, and it decides whether in its view of the public interest, whether it takes into account fully the provision of some other statute or only partially.

Mr. Alito: Well, did the Commission in this case, or did it not, rule that the Section 504 provided no basis for the non-renewal of the license?

Mr. Czarra: It did not so state that.

It said that it was not the enforcement agency for 504, and that until an enforcement agency had ruled KCET to have discriminated, there was nothing for it to evaluate, bearing in mind again that it was satisfied that the station had done for the deaf all the things that the FCC had been saying that the deaf were entitled to have.

I will reserve the rest of my time for rebuttal.

Chief Justice Burger: Mr. Alito?

ORAL ARGUMENT OF SAMUEL A. ALITO, JR., ESQ., ON BEHALF OF PETITIONER IN NO. 81-799

Mr. Alito: Mr. Chief Justice, and may it please the Court, the narrow issue presented by this case is which agency or agencies have the responsibility for construing and enforcing Section 504 of the Rehabilitation Act.

Must the FCC do so in licensing proceedings, as the Court of Appeals held, or is the responsibility for interpreting and enforcing Section 504 exclusively that of the funding agencies, as we believe Congress determined?

Mr. Alito: You think it must be one or the other?

Mr. Alito: No, it could be both, Your Honor.

Our position is that Congress intended for Section 504 to be enforced by the funding agencies exclusively, and not by agencies like the FCC, that do not provide--

Mr. Alito: So it couldn't be both under the statute?

Mr. Alito: --That's correct.

We believe that Congress's intent was that it be enforced--

Mr. Alito: So the FCC would have no authority by rule to say that because of 504 the stations must do so and so?

Mr. Alito: --I believe the FCC certainly has the authority under its own public interest standard to impose captioning requirements, and it has said so.

Mr. Alito: Yes, but when it says particularly because of 504, the requirements of 504, we are incorporating into our public interest standard, it would have authority to do that?

Mr. Alito: I believe that the enactment of 504 or any other statute is something that the Commission could take into consideration in making its public interest determination, but I don't believe the Commission can take upon itself the responsibility for enforcing statutes if that responsibility was committed to other agencies by Congress, and I think--

Mr. Alito: Then you don't agree with your colleague, who suggested that the employment policies of the licensee are relevant factors in the license renewal.

Mr. Alito: --Oh, I agree that that is a relevant factor, Your Honor.

The Commission--

Mr. Alito: How does it affect the listeners?

Mr. Alito: --Pardon me?

Mr. Alito: How does the employment practice of technicians, stenographers, salesmen, et cetera, have any bearing on what goes out over the air?

Mr. Alito: The Commission has taken the position that a station that refuses to employ persons regardless of race, sex, national origin, or religion, cannot provide service to all members of the community, as is required by the Communications Act.

It is--

Mr. Alito: Well, then I am confused by your other response that these... I thought you were indicating that the enforcement of these other statutory duties entrusted to other agencies was left to them, and not to be taken on by the FCC.

Mr. Alito: --I think it's necessary to draw a sharp distinction between the enforcement of other statutes or the policies they express merely because those policies happen to be expressed in the statute and a factor that the Commission determines to be relevant under the public interest standard.

Mr. Alito: What could be a greater enforcement mechanism than the threat of losing a television license?

Mr. Alito: It certainly is severe.

Mr. Alito: That is far more serious than an order of the National Labor Relations Board or the EEOC, is it not?

Mr. Alito: It certainly is a severe sanction.

The question is whether it is the sanction Congress intended in this instance, and our position is, Congress intended for Section 504 to be enforced by the funding agencies.

The very structure of Section 504 points clearly in that direction.

504 is not applicable to all private entities or all that could be reached under the commerce clause.

It applies only to recipients of federal financial assistance.

Congress merely attached certain conditions to the receipt of federal aid, and if one of those conditions is violated, then the most obvious and basic remedies are to cut off the funding or to enjoin the recipient from continued violation of the terms of the grant.

Now, the FCC and other licensing agencies, unlike the funding agencies and unlike the courts, lack the power to do either of those things.

So, as I said, the structure of Section 504 makes it ill suited for enforcement by agencies like the Federal Communications Commission.

Beyond that, we believe that the legislative history of Section 504 clearly illustrates that Congress intended for that provision to be enforced by the funding agencies.

There is nothing in Section 504 itself and nothing in the legislative history of that provision to indicate that Congress contemplated enforcement by agencies like the FCC.

And in our view, that is highly significant, for when Congress establishes a comprehensive administrative procedure for the enforcement of the statute, and commits that responsibility to a particular agency or agencies, and it says nothing about enforcement by other agencies, then we believe it may be fairly inferred that Congress intended... did not intend for those agencies to have the enforcement responsibility.

Mr. Alito: Do you make the same argument on equal employment opportunity, for example, that the FCC should not concern itself whatever with that in license renewals?

Mr. Alito: Not at all, Your Honor.

The FCC has determined that employment discrimination is very relevant to the license... licensing decision, and thus--

Mr. Alito: Don't you think the FCC has determined that service to the hearing impaired is relevant to its license renewal application?

Mr. Alito: --It certainly has, and it has said so.

Mr. Alito: Was that an erroneous decision?

Mr. Alito: Absolutely not.

Employment discrimination is different from captioning, for a number of reasons.

First of all, probably the most important reason is that captioning, unlike refraining from discriminating on the basis of race or any other invidious classification, captioning is a problem of considerable technical complexity.

The technology is in flux.

There are competing technologies at this time, and it is the Commission's judgment in the exercise of its discretion in bringing its expertise to bear on this problem that at the present time under its public interest standard technological progress may best be stimulated by refraining from imposing compulsory constraints, but the Commission has made it clear that it will continue to monitor developments in this area, and will not hesitate to impose mandatory requirements if sufficient progress is not demonstrated by the broadcasters, if the remaining technical and financial questions are not resolved, and perhaps after Section 504's meaning is clarified by the funding agencies.

Let me address a bit more directly this question of employment discrimination, because it is central to Respondent's argument and also to the reasoning of the Court of Appeals.

I think it is important to recognize that the Commission's treatment of employment discrimination and its treatment of the problem of captioning and making television understandable for the deaf is parallel in many respects.

The Commission does not enforce Title VII of the Civil Rights Act of 1964, which deals with employment discrimination.

The Commission does not enforce Section 504 of the Rehabilitation Act.

The Commission has stated that under its public interest standard, it will take into account employment discrimination by licensees.

Similarly, under its public interest standard, the Commission has long sought technically and financially feasible means of making television accessible to hearing impaired viewers, but it has reached the judgment that imposing mandatory captioning requirements at the present time under the public interest standard is not wise.

The second point to remember is that the FCC voluntarily and in the exercise of its discretion decided to take on the responsibility for looking at employment discrimination by licensees.

It was not compelled to do that by any court.

And therefore, what the Commission has done voluntarily in that area is hardly precedent for what the Court of Appeals did in this case.

And the third point which I--

Mr. Alito: Your thought there is that the Commission may take into consideration some policies from other statutes as a part of the public interest standard on its own initiative, although had it declined to do so, the Court of Appeals couldn't compel it to do so.

Mr. Alito: --The Commission's decision to consider or not to consider a factor would be tested against an abuse of discretion standard.

Mr. Alito: Well, do you think that in the particular case that we are talking about, it is the Commission's position that it couldn't have been required to consider employment discrimination if it had chosen not to, if that had been appealed to the Court of Appeals the way the 504 situation was here?

Mr. Alito: The Commission might well have been held by a court to have abused its discretion if it had decided that no evidence of employment discrimination, no matter how invidious, was relevant to the public interest standard, and the same sort of test is the proper one here.

Did the Commission abuse its broad discretion when it decided to treat the question of captioning as it did?

The Commission has thoroughly considered this problem, and has developed a comprehensive approach to the problem, and its approach has three basic parts.

It requires the transmission of emergency announcements in visual form.

It has decided that at the present time under the public interest standard other mandatory requirements should not be imposed.

It has stated that it will not adjudicate violations of Section 504 itself, but will take into account as evidence of a licensee's character any violations found by one of the appropriate funding agencies.

The test that the Court of Appeals ought to have applied is, was this approach an abuse of discretion, and if the court had applied that test, we feel confident it would have been required to sustain the Commission's approach.

Mr. Alito: Your argument, counsel, seems to go beyond that of the station itself.

The station says the FCC recognized the relevance of the policies behind 504, and it has made an appropriate response at the present time, and you are saying that there was no obligation at all on the part of FCC to even recognize those policies.

That seems to me perhaps not necessary to go that far in this case.

Would you agree with that?

Mr. Alito: Your Honor, I hope that that is not the argument that I have left the impression I am advancing.

My argument is that the Commission was not required to define and enforce Section 504.

The Commission may have been required under the public interest standard to consider the problem of service to the deaf.

The Commission has considered that problem beginning before the enactment of the Rehabilitation Act, and it has not abused its discretion in the manner in which it considered the problem.

Mr. Alito: Well, it did here just reject the submission without hearing.

Mr. Alito: It rejected the submission here without a hearing.

Mr. Alito: And it wasn't going to take any evidence about the station's performance with respect... under 504.

Mr. Alito: That's correct, Your Honor.

It said that it would take into account any violations subsequently found by the appropriate funding agencies.

Mr. Alito: But apparently it did think that the station wasn't out of line in terms of what the Commission's own judgment had been in the past about what stations ought to do.

Mr. Alito: The Commission has taken the position that mandatory requirements should not be imposed, largely for the technical reasons that I have touched on, and therefore there was no reason to conduct a hearing to determine whether the number of captioned hours broadcast by KCET was sufficient to meet any standard previously imposed.

Mr. Alito: So the Commission's policy was, the station should not be made to do anything with respect to 504.

Mr. Alito: That is correct, Your Honor, in a sense.

Chief Justice Burger: We will resume there at 1:00 o'clock, counsel.

You may continue, Mr. Alito.

ORAL ARGUMENT OF SAMUEL A. ALITO, JR., ESQ., ON BEHALF OF PETITIONER IN NO. 81-799 -- RESUMED

Mr. Alito: Mr. Chief Justice, and may it please the Court, in FCC versus National Citizens Commission for Broadcasting, this Court stated,

"While the Commission does not have the power to enforce the antitrust laws as such, it is permitted to take antitrust policies into account in making licensing decisions pursuant to the public interest standard. "

Paraphrasing that statement and applying it to this case, while the Commission does not have the power to enforce Section 504 as such, it is permitted to take the problem of adapting television to the deaf into account in making licensing decisions pursuant--

Mr. Alito: Must it?

Must it?

Mr. Alito: --That would be tested against the public interest, against an abuse of discretion standard.

Mr. Alito: Well, how about the case you just cited?

Did it have to take antitrust considerations into account?

Mr. Alito: The Court didn't find that it had to.

Mr. Alito: What is your submission on that?

Must it, or not?

Mr. Alito: It varies, I think, Your Honor, depending from case to case.

I don't believe it's possible to make a blanket statement.

Mr. Alito: What about... Let's just take the antitrust case then, if you want to do it case by case.

Must it take antitrust considerations into account?

Mr. Alito: In certain contexts, I think it may be required to do so, but not--

Mr. Alito: Sometimes it must?

In the context of the antitrust laws?

Mr. Alito: --In certain--

Mr. Alito: Sometimes it must?

Mr. Alito: --In certain contexts, anticompetitive behavior by a licensee might be relevant to the licensing decision.

Mr. Alito: So it must in certain cases.

Mr. Alito: Under an abuse of discretion standard, it might be found to be required to do so.

Mr. Alito: So in our case, it must take into consideration in the proper case, as you say, the conduct of the licensee in the light of 504.

Mr. Alito: I don't mean... by proper case, I don't mean the case of one licensee as opposed to another licensee.

I mean with respect to a particular problem and a particular policy.

Here, the point is that the Commission has adopted a considered policy with respect to this problem of technological flux and technological complexity.

Mr. Alito: Mr. Alito, may I ask you a question about the particular problem that this case raises?

As I understand it, this is a license renewal proceeding, and Mrs. Gottfried objected to the renewal of the license, and filed an objection to the renewal which was later supported by some kind of an affidavit.

Is that right?

And what I want to know is, where is the affidavit in the papers?

What is it that she has filed on which she did not get a hearing?

I can't find it in the papers.

Mr. Alito: Her claim was, she had two basic claims.

Mr. Alito: My specific question first is, where can I find it in the papers?

Do you know?

Her claim, or her submission.

Her submission that--

Mr. Alito: It is in the record of the case.

It is not in the joint appendix.

Mr. Alito: --It is not in the appendix at all?

Mr. Alito: No, it's not.

Mr. Alito: Oh.

Then, what was her claim?

Mr. Alito: I believe she had two principal claims.

The first was a general allegation that the programming of this licensee and the other Los Angeles television stations involved was insufficient with respect to the deaf.

The second was that the--

Mr. Alito: Insufficient according to what standard?

Mr. Alito: --Under the... Under Section 504 of the Rehabilitation Act.

Her second claim was that KCET had abused its discretion by its decision concerning the scheduling of the ABC captioned news, and as to that question, the Commission inquired into the matter and found that KCET had not abused its programming discretion.

Mr. Alito: So she did get a hearing on the second charge she made?

Mr. Alito: She certainly got an inquiry by the Commission into that charge.

She did not get an inquiry into the general allegation of insufficient programming for the deaf, because the Commission does not have at this time mandatory requirements concerning captioning.

What is basically wrong with the Court of Appeals decision in this case is that it requires the Commission to pave the way in construing what Section 504 requires.

It requires something more than simply a recitation of the language of Section 504, because 504's requirements in the area of captioning are as yet not fully defined.

For example, it may be argued under this Court's decision in Southeastern Community College versus Davis that Section 504 requires no captioning because Section 504 does not demand expensive affirmative efforts to overcome handicaps, the disabilities imposed by handicap.

On the other hand, it may be argued again based on Davis that captioning is required because there are instances in which the refusal to accommodate the needs of the handicapped through captioning or some other available technology might amount to discrimination.

Until such basic questions concerning Section 504's applicability to the problem of captioning are resolved, and in our view they should be resolved by the funding agencies, it will be impossible for the Commission to determine in a licensing proceeding whether a licensee had complied with Section 504--

Mr. Alito: May I ask another question?

Because I have a lot of difficulty with abstract problems, as this seems to be.

Did she in her paper allege specific facts that she said constituted a violation of a statute?

Mr. Alito: --She alleged facts which she claimed constituted a violation.

Mr. Alito: Essentially, what facts did she allege?

Basically, what did she say?

Mr. Alito: The specific allegation concerned when KCET began to broadcast the ABC captioned news, and the hour at which it was programmed.

The general allegations concerned the number of programs broadcast during the license term that were accessible to hearing impaired viewers.

Mr. Alito: And so, could it be said that by denying a hearing, that the FCC said... ruled, in effect, that those allegations, even if true, do not constitute a violation of that statute, or is it better to say they don't care whether it constitutes a violation of the statute?

Which is their view?

Mr. Alito: Your Honor, I don't believe it's either.

They did not find that those did not constitute a violation of 504.

They certainly did not say that whether or not KCET had violated 504 was irrelevant.

It was relevant to the character, to KCET's character and therefore its fitness for a license, but the Commission stated that it would wait until a violation of that statute was found by one of the funding agencies.

Mr. Alito: That's like saying they don't care unless some other agency finds there to be a violation.

Mr. Alito: I wouldn't say they don't care, Your Honor.

It is simply a recognition that one administrative agency, even though required to implement the public interest, cannot be expected to do the work of all the other administrative agencies.

Mr. Alito: So it is a... I asked you earlier in this argument, didn't they say, it is irrelevant until and unless some other agency decides there has been a violation?

Because they had no hearing.

Mr. Alito: It is true in that sense.

Whether or not they complied with 504.

But not the general question of adapting television to the deaf.

Mr. Alito: Yes, because they felt that they were at least in line with Commission policy.

Mr. Alito: They felt they were in line with the Commission policy of not imposing mandatory requirements at this time.

Mr. Alito: Insofar as 504 is concerned, isn't it a fairly orthodox application of primary jurisdiction on behalf of one agency for another?

Mr. Alito: I believe it is, Your Honor.

It is what the Commission does in cases of allegations of individual employment discrimination and other cases concerning the violation of statutes committed by Congress to other agencies.

Thank you.

Mr. Alito: Frequently in our opinions and questions we refer to the alleged expertise, the accumulated experience of these regulatory agencies.

Isn't that a factor to be taken into account, whether, as Justice Rehnquist suggested, this is a primary responsibility of the FCC, to delve into a subject where another agency has total control?

Mr. Alito: I believe the FCC's expertise is very relevant in this sense.

The Commission has brought its expertise to bear upon the problem of captioning, and has developed an approach, and if the Court of Appeals had applied the correct test, it would have sustained the FCC's exercise of its expert judgment in this case.

The decision of the Court of Appeals can hardly be sustained in the name of the Commission's expertise, when that is precisely what it upset.

There is something a little bit strange, I admit, on its face, about the FCC, the expert in the area of broadcasting, deferring to a funding agency, but this is where Congress allocated that responsibility, and what Section 504 is about, at least in part, is how an agency's funds are spent, and the FCC is not... does not claim particular expertise as to how the funds of the Department of Education or another funding agency should be spent.

Thank you.

Chief Justice Burger: Mr. Firestone.

ORAL ARGUMENT OF CHARLES M. FIRESTONE, ESQ., ON BEHALF OF THE RESPONDENTS IN BOTH CASES

Mr. Firestone: Mr. Chief Justice, and may it please the Court, I represent Sue Gottfried and the Greater Los Angeles Council on Deafness, who in turn represent the estimated five and a half to eighteen million severely hearing impaired people who have been subject to a history of discrimination generally and largely excluded from participation in and denied the benefits of our nation's pervasive and influential television system.

We are supported in this case, of course, by deaf groups around the country who really seek to be included in the television system, where--

Mr. Alito: The word... when you use the word "discrimination", what do you mean?

Mr. Firestone: --Certainly that is a term of art with respect to--

Mr. Alito: Well, I am just wondering... it must be in your mind, so how is it defined in your mind?

Mr. Firestone: --I think in the case of 504, I think discrimination means failure to... indifference, exclusion, and failure to remove barriers that are at least reasonably accommodable.

Mr. Alito: You don't suggest it means purposeful discrimination because somebody can't hear?

Mr. Firestone: Well, I think that is part of the definition of discrimination as well, and certainly that--

Mr. Alito: Somebody is discriminating against them because they can't hear?

Mr. Firestone: --No.

Mr. Alito: Is that what you are saying?

Mr. Firestone: It is hard to believe that that would be the case.

Mr. Alito: That isn't what you really mean, is it?

Mr. Firestone: No, although that--

Mr. Alito: You mean they are discriminating in the sense they don't have the same opportunity.

Mr. Firestone: --Yes, they are denied equal access, more or less, and denied--

Mr. Alito: They are not provided equal access.

Mr. Firestone: --Not provided by reasonable accommodations.

Now, it is possible that, as the Commission has held, that the policy of exclusion can be inferred from... excuse me, a policy of discrimination can be inferred from a policy of exclusion of minorities, or a policy of indifference.

The Commission has held that in a couple of cases, so that it is very possible that as a legal matter there would be discrimination, although somebody does not have the animus, which is hard to believe, that somebody would actually discriminate against the disabled.

Mr. Alito: Well, if this Court or any court, for example, which is open to the public does not provide amplifying equipment so that people who are hard of hearing either can't follow the proceedings or have great difficulty, is that a discrimination?

Mr. Firestone: Well, certainly you are not under any obligation, legal obligation, as is in this case, but I think that... and I would also preface by saying that the Court has been accommodating to--

Mr. Alito: Must it?

Must it?

That is the question.

Mr. Firestone: --Not under the law.

Not under the law.

I don't think the Court would be covered by--

Mr. Alito: Then--

Mr. Firestone: --You mean, if the Court--

Mr. Alito: --Do I understand your answer that it is not discriminatory not to provide caption, immediate translation of everything that is going on here for the benefit of the audience?

Mr. Firestone: --Actually, I am... I don't know if the Court is considered... you mean, under Section 504, or just generally discrimination?

Mr. Alito: No, generally.

The term discrimination isn't limited to this statute.

It is a broad term.

Mr. Firestone: I think what is required is reasonable accommodation under the standard of Davis and other cases that have looked at what is discrimination against the disabled.

Reasonable accommodation might mean allowing signing, as the Court has done.

It may mean... or the case of a lawyer who wants to argue, to allow for simultaneous captioning.

I think the Court's record in this area is exemplary, but not to allow... not to have amplification equipment that may or may not help other people I don't think is required.

Mr. Alito: Well, are we subject to 504?

Mr. Firestone: I don't think so.

Mr. Alito: Why aren't we?

Mr. Firestone: I don't think you are defined as a federal agency, are you?

0 [Generallaughter.]

Officially.

Mr. Alito: Well, we are funded.

I suppose we are funded.

Mr. Firestone: Federally funded, but I don't think--

Mr. Alito: No one can cancel our license.

We are not funded by grants under the program, are we?

Mr. Firestone: --Right.

0 [Generallaughter.]

Mr. Alito: And our license can't be cancelled by anyone.

Mr. Firestone: Right.

We are accountable to you, not the other way around, as the licensees are accountable to the FCC and to the public.

Mr. Alito: My hypothetical questions were put to you in your use of the word "discrimination".

Mr. Firestone: Yes.

Mr. Alito: Which is not limited to 504 or any other statute.

It is a very broad term.

Mr. Firestone: Right, and I think that I was somewhat careful not to only use the word "discrimination", but also use the other words of the statute, which say not to exclude from the benefits or deny participation.

In other words, the statute, I think, still given the Davis case, which says that it really is talking about intentional discrimination, but it also goes on to say that discrimination, there is a fine line between discrimination and failure to afford affirmative action, illegal discrimination versus affirmative action.

I think that 504 was definitely intended to allow for access by the disabled to America's institutions.

It was really a step forward.

Is was the Magna Carta of civil rights for the disabled, and in this case, I think that Congress also intended that this Magna Carta be taken into account not simply by an occasional funding agency or at the whim of the funding agency, but by all the government.

The issue in this case is whether or not one government... the one government institution which is charged with the overall regulation of television may ignore or find irrelevant Congressional policy designed to aid the handicapped when it considers a license renewal application of an applicant who is subject to this requirement, and it is clear in this case that KCET is subject to the--

Mr. Alito: Suppose the Commission said, well, we are going to adopt a rule that we think 504 is a relevant matter for the public interest, and here is our rule, here is what stations must do.

Mr. Firestone: --Yes.

Mr. Alito: And then a station comes up for license renewal, and the Commission rules that the station is in perfect conformity with its rule, and denies a hearing on allegations that the station has not lived up to 504.

Mr. Firestone: Well, in that case, then the rule was adopted pursuant to 504.

Presumably that could be reviewed as to whether or not it is arbitrary or capricious.

Mr. Alito: The action or the rule?

Mr. Firestone: It has a rule.

I'm sorry.

Mr. Alito: Yes, well, the rule could be subject to--

Mr. Firestone: Yes, or presumably at the license renewal time, and that--

Mr. Alito: --You think the rule could be attacked at license renewal time?

Mr. Firestone: --I think that if the rule were an illegal rule, were found to be contrary to the law, I think that it could be attacked.

It would be certainly an unusual situation.

I can't think offhand of one--

Mr. Alito: Well, the Commission... I gather the Commission's argument is that it has done internally all that it thinks necessary under 504.

Mr. Firestone: --Well, the Commission--

Mr. Alito: And that it doesn't need to listen to anything else.

Mr. Firestone: --No, the Commission has one grave omission, and that omission is 504.

When it adopted these policies, when it looked, you know, at this application, it did not take into account the fact that Congress intended that those who are disabled have access to the communications system.

We are talking here about the communications handicapped, the people who really don't have the opportunity to partake in this system, and here is an opportunity not only to include them, but certainly to look at how the recipients of federal financial assistance, those who are under a specific law, to apply this standard of inclusion, of non-discrimination, however we want to describe the dictates of 504.

It had an opportunity to bring them into the communications system, and instead what it did was say, we will not look at this.

This is irrelevant.

This is... A licensee can do nothing and still comply.

In fact, it could discriminate, presumably.

Let's say that a licensee intentionally... I can't understand why, but let's say that a licensee would intentionally refuse to carry, let's say, close captioned.

In fact, there is a licensee that when they get the closed captions, they remove the closed captions, as I understand it, before they send it out.

Now, I am not saying this is a public broadcasting station, but let's say that the licensee actually takes that affirmative step.

The Commission would say, this is irrelevant.

It doesn't matter what you do or what you don't do, in terms of providing some service for the hearing impaired.

Mr. Alito: Let me ask you, suppose the funding agency had considered a complaint that this particular funded station hadn't lived up to its obligations under 504, and had decided that... had rejected the complaint, and said the station was living up to its obligations under 504, doing all that was reasonably necessary, and then the station came up for license renewal.

Could you relitigate that whole question or not?

Mr. Firestone: I think so, certainly, because--

Mr. Alito: You have to say that, I gather, don't you?

Mr. Firestone: --Well, I wouldn't have to say that, because in this case there was no reasonable expectation that another agency would act.

In other words, I don't have to say it in this case.

Mr. Alito: Why?

Why?

Mr. Firestone: Because the Commission was told, and it admitted that HEW, who they were deferring to, had no intention to act until Congress passed a law to decide which agency was the appropriate agency.

There was no reasonable expectation that there would be action in this case, and--

Mr. Alito: Well, if Congress hasn't yet passed a law deciding which agency should be responsible, isn't that an indication of some go slow attitude on Congress's part--

Mr. Firestone: --No.

Mr. Alito: --until that law is passed?

Mr. Firestone: No.

Your Honor, quite the contrary.

Certainly in 1974 the only statutory history we have on Section 503, which... actually it was a year later when they amended the law, the Congress made very clear in the Senate report that they expected action by the end of 1974.

They--

Mr. Alito: By whom?

Mr. Firestone: --Well, they were mainly looking for guidelines from the HEW, but they also specified that there was no specific enforcement mechanism in the statute.

The Commission is arguing that there was... I think what they have to be arguing is that the legislative history intended that they not consider, because at the time of the passage of Section 504, the FCC did consider allegations of discrimination, allegations of employment discrimination as well as programming discrimination, whether or not there is an EEOC in existence, and Congress just intended to adopt a civil rights law for the disabled as it has for the minorities and women, and for them to say that the FCC is intended not to enforce this, or... excuse me.

We are not even talking about enforcement here.

What we are talking about is consideration.

All the court held in this case was not that the FCC has to be the primary enforcer or actually enforce the law.

They are saying, take this into consideration when you look at the public interest merits of a license.

Mr. Alito: But the Court of Appeals did hold that the agency was not entitled as a matter of its discretion to defer to the other agency which had primary responsibility for enforcing 504.

Isn't that correct?

Mr. Firestone: Well--

Mr. Alito: Is it correct, or not?

Mr. Firestone: --In this case, and they did say the special circumstances of this case, they said that deference... that they couldn't defer.

In fact, I would point out--

Mr. Alito: Was your answer yes or no?

Mr. Firestone: --Yes.

But I... the special circumstances of this case are not only what the Court has pointed out, but in this case the Commission did not condition the license, so in other words, let's say that a further decision had been made by the Department of Education now that did relate to the license period, and by the way, they are not even considering factors that relate to the license period, which is the period in question under FCC law.

Mr. Alito: Mr. Firestone, that makes me... I hate to interrupt you, and maybe I shouldn't, but I really want to be sure I understand the relief that you think your client is entitled to.

You were objecting to the renewal of the license, which I take it means that had you won, the license renewal would have been denied.

Mr. Firestone: Your Honor, in this case, had we won, it would simply be considered as a... we would go through a hearing.

Mr. Alito: Is that the relief that you requested, a denial of the license?

Mr. Firestone: That's the extreme relief that is possible.

In fact--

Mr. Alito: Well, is that what you requested?

Mr. Firestone: --I think that as a matter of law we put in, you petition to deny.

That's the standard procedure.

Mr. Alito: Well, if that isn't what you really wanted, what did you want?

Mr. Firestone: We want access of programming for the deaf.

We want recognition.

Mr. Alito: Do you want something specific with respect to this particular station, or do you want a general rule to apply to all stations?

Mr. Firestone: Your Honor, we would like to see... I'm stepping back from this case for a second.

We would like to see a rule of broad applicability.

Mr. Alito: Well, we have to decide a lawsuit, you know.

Mr. Firestone: The Commission can choose whether it proceeds by rulemaking or adjudication.

Mr. Alito: Well, Judge McGowan said they ought to proceed by rulemaking, and therefore you should lose in this proceeding.

Mr. Firestone: Well, it would have been tremendous if the Commission had proceeded by rulemaking, but they specifically declined to adopt a rule.

Now, when we come before them in an adjudication, they say, there is no rule, therefore we won't consider it.

I mean, it's a Catch 22 that the deaf are faced with.

Mr. Alito: But what is it... I still don't... I have... it is a very strange case for me, because the pleadings are not before us, and that is what we are arguing about, the sufficiency of your pleadings.

I don't know exactly what you want.

I know you would like the Commission to do something.

Mr. Firestone: Yes.

Mr. Alito: But is an objection to a license renewal an appropriate way to get the Commission to adopt a rule?

Isn't that what you really want, is a rule?

Mr. Firestone: Well, the Commission... what we want is a guideline.

Now, it can come... if the Commission--

Mr. Alito: Well, should they deny this applicant's license in order to give you a guideline?

Mr. Firestone: --No, I think the court recognized that the licensee would not lose its license, that in fact there are plenty of other sanctions that are available to the Commission in this area.

They can apply prospective reporting requirements.

They can give a conditional license.

They can admonish a licensee.

They can even inquire.

They did none of these.

Mr. Alito: Did they treat this licensee any differently than any other licensee, according to your allegations?

Do you allege this station operates differently than any other public station does?

Mr. Firestone: Well, we certainly allege that their refusal to carry the ABC captioned news, for example, or their refusal to put on the captioned version of... was indicative of an attitude of indifference, at the least.

Mr. Alito: But is it unique to this station?

Mr. Firestone: Well, there were 118 stations around the country that were carrying the ABC captioned news when the Los Angeles station, where there may be the second most number of people who are deaf in the country, was not carrying this.

I mean, there was a certain indifference going on here.

And it led to the situation where the deaf were picketing the station, and finally they put it on at 11:30 at night and repeated it at 6:30 the next morning, and... sometimes.

Sometimes they didn't put it on at 11:30.

And that was considered under--

Mr. Alito: Mr. Firestone, I take it your position is, and arguably it is correct, that the Commission ruled that considerations of 504 are irrelevant to the license renewal proceeding.

Is that right?

Mr. Firestone: --No, we--

Mr. Alito: I mean, the Commission.

The Commission's action was--

Mr. Firestone: --Yes, the Commission's... that's right.

Mr. Alito: --that it is irrelevant, it is just beside the point, in which event they would say also if you asked them to make a rule that that is irrelevant, too, because it just... until somebody else does something, it is none of our business.

Mr. Firestone: It seems to me that that is their attitude.

There was a request for action.

They constantly say, we will not adopt a rule, and then the only way to come before them... this is the appropriate... at this point, this is the appropriate means of trying to seek a guideline as to what--

Mr. Alito: If they won't make a rule, you want it by adjudication at an appropriate time.

Mr. Firestone: --That's right.

And also there are other advantages of adjudication.

Looking at a case specifically, just as Your Honor would prefer to have the specifics of a case before you than the abstract, is very helpful to an agency, and of course we are dealing here with the agency with the expertise over broadcasting.

I would point out, for example, in the Commission's brief they issue certain... they mention certain requirements that would be necessary for a 504 application to television.

Two of those, at Page 32, are, it must not place unreasonable restrictions upon the journalistic and artistic freedom of television broadcasters and producers.

It must not impose such high costs on public television stations that they are driven out of business or forced to curtail other important services.

Now, how does the agency that is charged with the responsibility of licensing these television stations, and remember that our system is that we deny the right to broadcast to everyone but the few licensees who get these licenses, and once they have those licenses, they are public trustees accountable now every five years to the government, and to the people, and how they are going to avoid looking at this question when these requirements are only within their expertise... I mean, they are suggesting that you go to the Department of HEW, which is now the Department of Education.

The licensee in this case was funded by the Department of Education for certain programming, by the Department of Commerce.

They get equipment.

Mr. Alito: Do you think the Commission in any manner short of rulemaking has ever communicated to any station what its preferments are with respect to the handicapped?

Are you a communications lawyer?

Mr. Firestone: Yes.

Mr. Alito: Well, are you aware that the Commission has ever taken any position with respect to communicating with the people who can't hear very well?

Mr. Firestone: The only thing that they did was, in 1970... I will go through it.

In 1970, they said it would be very good to have television accessible to the deaf.

We are suggesting certain items, but we will adopt no rule, and by the way, this was on a request for ruling.

Mr. Alito: They suggested it, didn't they?

Mr. Firestone: They suggested some things.

Mr. Alito: And people knowledgeable in the business knew what the suggestions are.

Mr. Firestone: If they read the deaf captioning decision at 26 FCC 2nd 916 or whatever.

Mr. Alito: Well, lawyers for stations usually do, don't they?

Mr. Firestone: I would hope so.

Mr. Alito: Yes.

Well, was this station in compliance with the suggestions of the Commission, or not?

Mr. Firestone: Well, the Commission has never... won't look at that question.

Mr. Alito: I am asking you, not the Commission.

Mr. Firestone: I think that they aren't in compliance with the suggestions.

The suggestions were such things as getting together with other licensees and--

Mr. Alito: So this station has followed the lead of the Commission, is doing everything the Commission thought needed to be done.

Mr. Firestone: --No, it said that they had not.

They had not--

Mr. Alito: This station has not done everything the Commission thought should be done?

Mr. Firestone: --They have not done everything that the Commission suggested in the 1970 statement.

Mr. Alito: Oh, they haven't?

Mr. Firestone: They have not.

No.

They... Not only that, the Commission has not looked at it.

They refuse to look at that question.

They said, we adopted no rule, then they... but they did say, this is up to each individual licensee to show... to determine how to serve their local communities.

We have come in and said that they are not serving their local community.

It could be a case now where the Commission's position is that somebody has affirmatively refused to carry captioned programming, to send out the encoded signal, taken an affirmative step.

Mr. Alito: I understood that the Commission had stated that it did encourage experimentation with technology by stations about this problem, and that it actually issued a warning that it would consider imposition of mandatory requirements if it determined in the future that the voluntary efforts were not satisfactory.

Is that right?

Mr. Firestone: They did when they adopted the Line 21 captioning, said that... at that time, they said it is still up to each individual licensee.

It is each individual licensee's responsibility to serve the local community, the local deaf community.

They indicated that that would be something--

Mr. Alito: Well, is what the Court of Appeals did here really to quarrel with the FCC's determination of public interest?

Mr. Firestone: --No, Your Honor.

Mr. Alito: What is in the public interest?

Mr. Firestone: The Court of Appeals was extremely careful and extremely narrow in this decision to say in the special circumstances of this case the FCC must... cannot ignore the dictates of 504.

When they look at these questions, they just should consider the fact that Congress intended that the deaf have some access, that they not be ignored, and that certainly was the thrust of the Court of Appeals' decision.

Mr. Alito: Has the FCC also required that all emergency messages be visually transmitted?

Mr. Firestone: Yes.

But of course--

Mr. Alito: And it said that if the agency charged with primary enforcement of 504 determines there is a violation, it will take that into account?

Mr. Firestone: --Well, I don't think they could have taken it into account in this decision without actually proceeding with revocation action, because they did not condition the outcome of this proceeding on the outcome of any other proceedings in the government.

Mr. Alito: Mr. Firestone--

--What--

--Go ahead.

My only question was, I thought we might clarify, if you would give me your idea of what the FCC has to do to comply with the opinion of the court below.

Mr. Firestone: Your Honor, I think that they have to inquire into the good faith of the licensee as to how they were--

Mr. Alito: How would they do that?

Mr. Firestone: --I think that the... I suppose that if... first of all--

Mr. Alito: Can we get beyond supposing?

Mr. Firestone: --Well, there are... the Commission has a variety of options that the court left open to them.

The court very much recognized this Court's requirement that the court allow... defer to the Commissions' discretion, so they left open the procedures to the Commission.

Now, one possibility would be that the Commission would designate for hearing, in which case I would expect that the licensee would come forward with a motion for summary judgment, bringing forth affidavits of various Commission... I mean, various station officials to discuss what they had done and--

Mr. Alito: All you want is a hearing?

Mr. Firestone: --That's right.

That is all--

Mr. Alito: That is all you want?

So far.

0 [Generallaughter.]

Mr. Firestone: --Well, the Commission must be reasonable.

Let's take the situation of--

Mr. Alito: What do you want beyond a hearing?

Mr. Firestone: --Beyond the hearing, we would like guidelines.

I think that what the Commission would have to do--

Mr. Alito: You would get the guidelines on a hearing involving one station?

Mr. Firestone: --Well, the Commission has done this on numerous occasions.

Mr. Alito: You want rulemaking or not?

Mr. Firestone: The Commission could defer... This is another possibility.

The Commission could institute a rulemaking.

Mr. Alito: Well, what do you want?

Mr. Firestone: I would like to see a rulemaking, but--

Mr. Alito: You've got a ruling.

You want an adjudication first as to whether this license can be renewed.

That is what you asked for.

Mr. Firestone, do you think--

--Where did you ask for a license to be renewed?

Mr. Firestone: --Pardon?

Mr. Alito: Where did you ask for relief?

Mr. Firestone: In the petition before the Commission.

Mr. Alito: None of that is here.

Mr. Firestone: It is not, Your Honor.

Mr. Alito: It is in the record.

Mr. Firestone: It is in the joint appendix of the D.C. Circuit.

We were asked to keep down the record.

Mr. Alito: Isn't it in the record that has been lodged here, somewhere?

Mr. Firestone: Yes.

Mr. Alito: It is not in the printed--

Mr. Firestone: It is not in the joint appendix.

Mr. Alito: --It is in the record lodged here, isn't it?

Mr. Firestone: It's in the record.

The record would include, I assume, the joint appendix of the D.C. Circuit, and we were asked to keep the record down.

The Commission did not... well, I don't want to go into the Joint appendix problems, but I apologize for not having--

Mr. Alito: Mr. Firestone, do you think it is crystal clear that this television station and the programming it presents is

"a program or activity receiving federal financial assistance. "

under the terms of 504--

Mr. Firestone: --Yes, Your Honor.

Mr. Alito: --and that it would have no defense to an action, say, if the appropriate agency brought it in court?

Mr. Firestone: Yes, Your Honor, and in fact this has been held by everyone who has looked at.

Mr. Alito: What do you mean, held by everyone?

Mr. Firestone: Well, the District Court--

Mr. Alito: Are some of them judges?

Mr. Firestone: --Yes, the District Court in Los Angeles held that they were subject to 504.

The Department of Health, Education, and Welfare held that they were subject to 504.

And I would like to point out that this licensee is... receives assistance not only from the Department of Education, the Department of Commerce, the National Endowment for the Arts, the National Endowment for the Humanities, the U.S. Information Administration, but also the Corporation for Public Broadcasting and the Public Broadcasting Service, and particularly the Corporation for Public Broadcasting is... they float through federal funds to the licensee, but they do not... they are not a federal agency.

They don't have the enforcement power.

Mr. Alito: Didn't the station make some defense in the Court of Appeals that it was not subject to this provision, that it had a statutory exemption from program control or something to that effect?

Mr. Firestone: Well, the Court of Appeals disposed of it in a footnote.

Yes.

Mr. Alito: Well, if we get back to your contention that all these things ought to be originally thrashed out before the FCC, does that really make much sense, if it is deciding a fairly complicated question of... wouldn't you want the agency charged with the statutory mandate whose administrative interpretation would be entitled to considerable weight to make those kind of determinations in the first place?

Mr. Firestone: Well, I don't see how the fact that the licensee got $5 million in federal money in 1977, and how they have gotten something like 30 percent of their money from federal subsidies can be a difficult question as to whether or not they are subject to 504.

Mr. Alito: Could you have just gone into a district court somewhere and sought to enjoin or to get an injunction against the station for violations of 504?

Mr. Firestone: Yes, there was an action.

There was such an action.

Mr. Alito: Well, there was such an action.

Did you win?

Mr. Firestone: No, the... well--

Mr. Alito: What was the result of the action?

Mr. Firestone: --The result was that the court found that they couldn't... that there was no standard by any of these funding agencies.

Mr. Alito: Didn't they say you should go to the funding agency, or not?

Mr. Firestone: It was the... actually, the licensee in that decision, and that is, I think, at Page 149 of the joint appendix that you have, argued that there was primary jurisdiction in the FCC.

That is where they told... that is what they were telling the court.

Mr. Alito: Did you lose, or what happened?

Mr. Firestone: It is on appeal in the Ninth Circuit.

Mr. Alito: Well, you lost in the district court on the grounds that that was the wrong place to go?

Mr. Firestone: No, no.

The district court found that the... they dismissed the licensee because there was no standards for the licensee to comply with, and they then issued an order for the--

Mr. Alito: No standards issued by the funding agency.

Mr. Firestone: --By the funding agencies, and they included the Federal Communications Commission.

Mr. Alito: Now, this Court has said countless times, and other courts have, that these regulatory agencies have broad, very broad discretion as to what they will weigh and take into account.

Now, if an agency has exercised that discretion and come up with what someone regards as a wrong decision, isn't the review of that decision limited to an abuse of discretion, not a matter of a Court of Appeals deciding that it should have been done some other way?

Mr. Firestone: Yes, Your Honor, and that's exactly what happened in this case.

Mr. Alito: And you suggest there is an abuse of discretion here on the part of the agency?

Mr. Firestone: Yes.

Yes, there was an abuse of discretion by failing to consider a relevant factor, making the consideration of a law that is clearly relevant to communications, to the Communications Act... we are talking about inclusion of a segment... a minority segment of the audience, something that really goes to the underlying purposes of the Communications Act.

In fact, if you--

Mr. Alito: An abuse of discretion on the Commission's part because it decided to defer to an agency which has a life or death control over a public television station, life or death control by virtue of the grants.

Mr. Firestone: --Well, the agencies that they deferred to do not have life and death control.

The life or death control is the Commission's, and in fact--

Mr. Alito: Don't you think the grants have a lot to do... perhaps life and death isn't quite it, but they can shut off the supply of blood, can't they?

Mr. Firestone: --They can, and that would be an extreme remedy which we frankly would not like to see, but the... because we would like to see public... we don't want to hurt public broadcasting.

We are trying to get more service, not less.

In other words, the remedy... we were faced there with a remedy that is an unsatisfactory remedy to everyone.

Mr. Alito: But the grant agency doesn't always just inflict a death blow right away.

They inform the grantee or the prospective grantee that if they don't do certain things, then their grant will be cut off.

Mr. Firestone: Okay.

Mr. Alito: Isn't that the real control over this problem?

Mr. Firestone: No, Your Honor, it isn't, quite honestly.

Mr. Alito: Well, 504, though, isn't a commerce power regulation.

It's spending power, isn't it?

Mr. Firestone: Yes, but it is still aimed at--

Mr. Alito: And it only affects people who get federal money.

Mr. Firestone: --That's right, which is this licensee.

Mr. Alito: It is not a general regulation that people who communicate over the airways that are granted, that are licensed through a public authority are subject to this regulation.

It is just people who get money.

Mr. Firestone: That's right.

Mr. Alito: What kind of an agency, or what kind of a licensee do we have here?

Do we have one who got money?

Mr. Firestone: Yes.

Mr. Alito: Well, then--

Mr. Firestone: A licensee who received money from the federal government.

Mr. Alito: --Yes.

Mr. Firestone: However, some of the--

Mr. Alito: And if they don't play ball according to the views of that agency, they aren't going to get any more money.

Isn't that the prospect?

Mr. Firestone: --Perhaps that would be the extreme repercussion.

Mr. Alito: Isn't that the statutory scheme?

Mr. Firestone: Your Honor, and I would really like to go to the statutory scheme, which contemplates not only that these factors would be enforced at the individual funding agencies, and by the way, they get most of their funds from the Corporation for Public Broadcasting, which cannot in fact enforce this statute.

They also get a lot of their equipment from the Department of Commerce through facilities grants, and how do you enforce that after you have given them the facilities?

I mean, there are some real problems with the enforcement aspect here.

But in the end, it is really the FCC that must look at the overall operation of the station.

The fact that this licensee is subject to this law is simply... I mean, is very importantly a factor to be taken into account when they look at whether or not a licensee is law abiding, and look at the character of the licensee, look at the operation of the station, look at the intent of Congress.

Congress, at the time that they passed the Rehabilitation Act, the FCC was considering allegations of discrimination.

They were considering equal employment allegations.

They were considering programming allegations.

Even though these could have been affected by going to an agency.

Let me give an example.

Let's say that in Jackson, Mississippi, there is a licensee who always excluded blacks from the screen, and they got money from the federal government through... let's say they are a public licensee and they got their equipment, say, from the government.

Mr. Alito: Wasn't that issue settled in United Church of Christ against WLBT?

Mr. Firestone: That's right, and the Commission had an obligation to--

Mr. Alito: That was a clear case of discrimination on the basis of race, was it not?

Mr. Firestone: --But the Commission is saying that if there is another agency... that's exactly what this case is about.

If there is another agency who can enforce this law, because the law would be Title VI, that would be a violation of Title VI, if there is another agency that can enforce that, we won't look at it.

In that case, the Commission... the analogy would be here, we are not going to look at it until another agency decides whether or not there is a violation.

Mr. Alito: But in the United Church of Christ case, it was 50 or 60 percent of the audience that was being discriminated against.

What percentage of the audience total is involved here?

Mr. Firestone: Your Honor, the percentage is in single figures, I think.

The hearing impaired may be 5 percent.

The severely hearing impaired may be 5 percent.

Somewhere between... around 5 to 7 percent or so.

But that I don't think is the proper criterion in this case to consider.

The fact is that Congress intended to protect this class of people.

It intended that licensees who receive federal money open up, lower their barriers to the provision of the programming for these people, and the FCC would be the... really the appropriate place to exert their expertise.

I mean, this... we are talking about an educational, informational, vital part of this country which is, for better or worse, television, and it is considered maybe the second most influential institution in the United States, and we are now in 1982, and there are... the Commission has still not looked at this question as to whether or not a licensee is complying or even serving the purposes of the Communications Act... I mean, of the Rehabilitation Act.

I think that Congress intended in the legislative history of Section 504 that this would be a broad policy, and I would like to bring the Court to the cases where the Court has said that the FCC cannot ignore a relevant statute.

Let me give you an example of one that the Commission cites in its EEO rules, where the National Labor Relations Board wanted to reinstate some employees on a ship who had struck and in fact the court found that this was a violation of the mutiny, that the actual strike happened to be a violation of the mutiny laws, and they said, you cannot apply the National Labor Relations Act without considering other relevant statutes to this matter.

There is no question that Congress intended this law to be a broad policy to include the deaf, include the disabled, and what the Commission is saying, and I think quite clearly, today, is, this is not something that we must take into account when we have... make our independent public interest standard, and there are plenty of cases, including the United Church of Christ case, which say that the Commission must look at the facts of that case.

Remeber, in that case they tried to defer the question of the discrimination.

It is a very similar situation.

Let's say that the Commission in that case said, well, this is something for another agency to decide, we won't decide it, and they waited and waited, and another agency didn't come forward.

Or the NPC case, which proposes or suggests... this is the U.S. Supreme Court case... that because the licensee might be in violation of the antitrust laws, which of course the Justice Department primarily enforces, does not mean that the Commission must not take the policies of the antitrust laws into account in the Communications Act.

They have tried to distinguish the antitrust laws by saying, well, this is so clearly related to the Communications Act.

There is no question that the provision of service to minority groups is vitally important to the--

Mr. Alito: In that case, the Commission should take into consideration the antitrust laws on its own motion?

It wasn't forced to by a Court of Appeals.

Mr. Firestone: --They weren't, but there are other cases where Courts of Appeals have required, and the Supreme Court, required that they take into account the... such as the Southern Steamship case that I was referring to a minute ago.

Mr. Alito: That was the National Labor Relations Board, wasn't it?

Mr. Firestone: Yes, but the principle is the same.

The principle is that where there is a... and the NAACP case is another example.

Now, there, the NAACP adopted a rule, but the point is that where there is a clearly relevant statute, that what is happening here is that Congress... that the FCC is ignoring Congressional policy.

Mr. Alito: So you say that the FCC must take into account any clearly defined federal policy expressed in a statute?

Every one.

And that the FCC is not free to say in administering the public interest standard that we are going to exclude from our considerations of the public interest standard Statute A, B, and C, but include them in D, E, and F.

You say that is just wrong?

Mr. Firestone: It is wrong if the statute that they are excluding relates to the underlying values of the Communications Act.

Mr. Alito: Well, may they exclude any statute that has some relevance to the--

Mr. Firestone: May they exclude any statute that has relevance?

Mr. Alito: --from consideration of the public interest?

They say, we are in charge of administering the public interest standard, here is a statute we think is too tangential to be considered.

Mr. Firestone: They... I would first preface this by saying that that is... this case... that is broader than what this case holds, and it is broader than the NAACP versus Federal Power Commission.

Mr. Alito: Yes, but surely the Court of Appeals imposed ingredients of the public interest that the Communcations Commission rejected.

They are saying, you must consider part of the public interest, A, B, and C, even though you don't want to.

Mr. Firestone: Because the Commission abused its discretion by failing to consider this relevant factor which they agree is relevant.

The Commission itself said, well, we will take this into account at a later time, perhaps, although they didn't condition... they didn't do the formal action that they needed to do in order to take that into account, but where there is a relevant statute, certainly they must consider... this is... says the same where the court says, okay, when we look over... the reviewing standard is arbitrary, capricious, abuse of standard, or abiding by law, and part of that discussion and search, scrutiny by the court is whether or not they considered all relevant factors.

Mr. Alito: Well, suppose the Commission had undertaken a rulemaking proceeding about this subject, and the submissions were so confusing and the technology in such a state of flux that they declined to issue any rule, that it just wasn't timely to issue a rule right now, and then the next day this submission is made, that the license should be denied because of failure to live up to 504.

Can't the Commission say, awfully sorry, but it just isn't... now is just not the time to do that?

Mr. Firestone: Well, I think what they would have to do is at least look at the allegations.

Mr. Alito: Well, they did look at the allegations, and they said, we don't want to have another hearing, we just decided that it isn't time to have a decision.

Mr. Firestone: No, what they did was, they looked at those allegations in consideration of another factor.

In other words, they looked at-it without taking into account what the Congressional policy was with respect to the deaf.

They said, okay, we are not going to look at the programming scheduling, but they didn't look at the programming scheduling and the decision of the licensee not to carry this programming, for example, with the idea in mind of Congress intending that the deaf... that the recipients of federal financial assistance make reasonable accommodations to serve the disabled.

That was plain and simple what happened here, was ignoring of federal policy and a clearly relevant statute to the public interest standard, and the Commission's failure to judge management of discrimination.

Chief Justice Burger: Your time has expired now, counsel.

Mr. Firestone: Thank you, Your Honor.

Chief Justice Burger: Mr. Czarra.

ORAL ARGUMENT OF EDGAR F. CZARRA, JR., ESQ., ON BEHALF OF PETITIONER IN NO. 81-298 -- REBUTTAL

Mr. Czarra: Justice Stevens, the Respondents here asked the FCC to deny KCET's license because it was not broadcasting with open captions all of its programs.

That was their complaint.

That was the relief that they sought.

Now, as far as what--

Mr. Alito: Does the record tell us whether any station uses captioning in all its programs?

Mr. Czarra: --The record, I think, does not show that, Your Honor, but the point is, Justice White, that KCET did everything that the FCC had said in its policy statements it was going to require.

Mr. Alito: Your colleague denied that.

Mr. Czarra: He is incorrect.

Mr. Alito: Is that in the record?

Mr. Czarra: It is in the record.

Mr. Alito: That it complied with everything the FCC had suggested stations ought to do?

Mr. Czarra: The only thing the FCC said it was going to require stations to do--

Mr. Alito: Well, suggest, suggest.

Mr. Czarra: --Well, all right.

First we will take require.

Was emergency messages.

There is not an allegation anywhere that KCET failed to do that.

Mr. Alito: How about suggest?

Mr. Czarra: The suggestions were that the faces of newscasters be present on the screen, that scores of games be given visually.

KCET didn't broadcast any games.

Mr. Alito: You mean, not even scores?

Mr. Czarra: I think not.

They are supposed to be educational.

0 [Generallaughter.]

Mr. Alito: They would violate their license if they broadcast one, I suppose.

Mr. Czarra: No, the question, I guess, is, would they violate their license if they didn't broadcast one.

Mr. Alito: If they didn't, okay.

Mr. Czarra: After a day and a half of trial in federal district court in California, the judge dismissed the complaint against KCET, the complaint of discrimination, on the ground that there had been no proof of discrimination.

We didn't even have to put on our defense.

And... Thank you.

Mr. Alito: Well, you can certainly finish your--

Chief Justice Burger: Finish your sentence.

Mr. Alito: --Finish your answer to my question.

Mr. Czarra: Well, I was going to another point.

I had finished that one.

Mr. Alito: Well, not quite.

0 [Generallaughter.]

Mr. Czarra: Wonderful.

Mr. Alito: Did the court find, or has anybody found, or is it just your assertion, that the station had lived up to every suggestion that the FCC had made about taking care of the handicapped?

Mr. Czarra: The only express suggestions were the ones that I enumerated, emergency bulletins, focusing on the face of people so that lipreading would be permissible, and giving scores in writing.

Chief Justice Burger: Thank you, gentlemen.

The case is submitted.

Attribution:

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Featured:

CBS, Inc. v. FCC - Oral Argument

Wed, 18 Feb 2009 06:13:06 +0000

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CBS, Inc. v. FCC

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1980_80_207_argument.xml

Transcript:

ORAL ARGUMENT OF FLOYD ABRAMS, ESQ., ON BEHALF OF THE PETITIONERS

Chief Justice Burger: We'll hear arguments first this morning in CBS v. The Federal Communications Commission and the related cases.

Mr. Abrams, you may proceed whenever you are ready.

Mr. Abrams: Mr. Chief Justice and may it please the Court:

This consolidated case comes to this Court on writs of certiorari to the U.S. Court of Appeals for the District of Columbia.

It involves a decision of that court affirming two 4 to 3 rulings of the Federal Communications Commission that ABC, CBS and NBC violated Section 312(a)(7) of the Federal Communications Act by declining to sell one half hour of prime time on their networks to the Carter-Mondale Committee during a specified four-day period, during the first week in December of 1979... a time 11 months before the national election, 8 months before the Democratic National Convention, almost three months before the first primary, and over a month and a half before the first official contest of any sort in which there was voter participation... the Iowa caucus.

I wish to emphasize that this was not an application for time in Iowa, with respect to the Iowa caucus... which was, as I've said, about a month and a half away; this was for time from the national networks to be broadcast on those national networks around the nation.

And it is the failure of the networks to sell the precise time sought at the time it was sought that the Commission has found in the statute's language, unreasonable; even though CBS, for example, immediately offered to sell two five-minute periods of time during the time-periods that it was sought, and ABC offered to sell time in the first week of January of 1980.

The facts of the case are easily stated and, I think, not disputed.

In October 1979, letters were written on behalf of the Carter-Mondale campaign to each of the three networks, seeking to purchase a half hour of time during specified time-periods in the first week of December.

It was said in these letters that the needs of the Carter-Mondale campaign were such that the time was required to kick off the campaign.

Each of the networks declined to sell precisely the time that was requested, on the evenings that they were sought.

Each made a submission, first to the Carter-Mondale campaign by way of response, and then to the Commission.

When a complaint was filed there, setting forth their reasons, as I said... CBS made an immediate offer to sell two five-minute periods of time; ABC advised that it would sell time in early 1980 and prior to the time the Commission ruled, offered to sell time in the first week of January, 1980.

NBC initially declined to sell the half-hour at the time that it was sought, and when a half hour was sought in early January, NBC offered to sell it at that time.

The length of time before the election and the amount of potential requests for equal opportunities under Section 315 of the Federal Communications Act, and other requests for time were cited separately by each of the networks in their responses.

ABC and NBC pointed, for example, to the fact that they had not sold national network time in the 1976 election until March and April of that election year.

CBS pointed to the fact that it had already received requests from the Connally campaign on September 14th and the Reagan campaign on September 21.

Unidentified Justice: The statute involved here was not in effect in 1976, was it?

Mr. Abrams: It was in effect in 1976, it never resulted in any litigation.

Unidentified Justice: But it was in effect at the time that the--

Mr. Abrams: Yes.

It was passed in 1972.

Unidentified Justice: --Passed in--

Mr. Abrams: Seventy-two, the Federal Election Campaign Act.

On its face, this statute, which is Section 312(a)(7) is one of 7 subsections of Section 312(a) of the Federal Communications Act, setting forth acts that can lead to license revocation.

The list is simple, of course I won't read it, but it includes such things as the making of false statements on the application for a license, the violation of cease and desist orders of the Commission, the willful or repeated failures to operate substantially as set forth in the license and the like.

None of these imposed any new, substantive obligations.

All of them imposed the risk of sanctions upon the networks or of the stations involved, broadcast stations, it was said if there was violation.

Our section, the one at issue today as adopted in the Federal Election Campaign Act prohibits the following: willful or repeated failure to allow reasonable access to or to permit purchase of reasonable amounts of time of time for the use of a broadcast station by a legally qualified candidate for federal elective office on behalf of his candidacy.

If the Court please, it is now the position of the Commission that the plain meaning of those words leads inexorably to the conclusion that ABC, say, which offered to sell time in January 1980 rather than December 1979, is in plain violation of the statute.

We maintain that that is not so--

Justice Rehnquist: --Mr. Abrams, do you deny that the Commission could take that into consideration at the time the station's license comes up for renewal?

Mr. Abrams: --We think that it was proper to take into account a charge by a complainant at the time the charge is made, Justice Rehnquist, the violation of Section 312(a)(7).

Justice Rehnquist: The same way any of the other conditions for license renewal could be considered?

Mr. Abrams: It's an appropriate thing to be considered then; the fashion in which the Commission has handled it is the fashion akin to the way its handled fairness doctrine complaints, which is to say, on a case by case approach, which we think is an entirely proper way to approach it, we do not object to the fact that when a complaint is made with respect to Section 312(a)(7), the Commission makes a ruling then as to whether the complaint is justified or not.

But I agree that if someone believes at license renewal time that there is a violation of any portion of Section 312(a), that's an appropriate thing to be considered by the Commission.

Justice Rehnquist: Well what did the Court of Appeals grant the Commission here?

Or affirm the Commission's doing here that was different from that?

Mr. Abrams: Our objection to what the Court of Appeals affirmed had nothing to do with the propriety of a complaint being filed.

Our objection is that we believe the Court of Appeals and the Commission applied the wrong standard in making its decision as to whether the networks acted reasonably.

So we don't come to you to say that a candidate may not file a complaint in front of the Commission alleging violation of what he says are the terms of the Federal Communications Act.

He may, and indeed that was true long before Section 312(a)(7) was in the books; that was true under the public interest standard as well, because if one thing I think is common ground between us here, it is that at least since this Court's decision in WDAY and really long before, it has been clear that broadcasters have been obliged under the public interest standard to sell some time to candidates and that it would be a violation of their public interest requirements if they refused to do so.

Now there was a different standard applied under the public interest standard and that's one of the reasons that I'm here today.

But there was never any question but that a candidate could file a complaint in front of the Commission and indeed candidates did file complaints in front of the Commission long before Section 312(a)(7) existed and that the Commission would rule on the propriety of the conduct of the station involved.

Justice White: Mr. Abrams, how is the... I take it that it is possible for a network to violate 312(a)(7) by certain kinds of conduct even within your construction of it?

Mr. Abrams: Yes, Mr. Justice--

Justice White: How would the Commission go about remedying that, you say there would be a complaint and then adjudication?

Mr. Abrams: --A complaint would be filed, there would be an adjudication--

Justice White: And what would the Commission do then?

Mr. Abrams: --As a practical matter, the Commission would have to do no more than it did here, to make a ruling that the network had acted, or that the language of the statute--

Justice White: Issue a declaratory judgment?

Mr. Abrams: --It is, as it were, a declaration--

Justice White: It has no authority to issue a cease and desist order or to order you to do anything, does it?

Mr. Abrams: --It has the power, under 312(a)(7) only to revoke.

It--

Justice White: I wonder, is that what a complaint says when it is filed with the Commission, the network has violated 312(a)(7) and therefore you should revoke its license?

Is that what it says?

Mr. Abrams: --No sir.

What the Carter-Mondale campaign said was that you should tell the network to sell the time on one of the evenings that we are requesting it and that is, in effect, precisely what the Commission did.

Now if that had not been stayed by the Court of Appeals as it was and by the judicial process as it was, and if the networks had violated that direction at the very least they would have acted at considerable peril, surely with respect to license renewal time, having violated a direct command of the commission with respect to what their obligation was.

And that's the same way the Fairness Doctrine worked... the Fairness Doctrine--

Justice White: Do you think... I take it that right on its face, that the Commission did violate... if the network did violate the 312(a)(7) and it was sustained in Court, and as final judgment the Commissioner actually could revoke the license without waiting for license renewal time.

Mr. Abrams: --If there were a willful or repeated failure within the meaning of the statute--

Justice White: Right, right.

Mr. Abrams: --we would, I take it, be arguing it was of course not willful nor repeated nor existing--

Justice White: I understand, I understand that.

Mr. Abrams: --But what the statutory language provides is that if that occurs that this is an allowable sanction.

And I don't quarrel with the fact that--

Justice White: So really all the Commission does is issue a declaratory judgment--

Mr. Abrams: --Yes, and the network... the station understands--

Justice White: --And then the network has to decide what it's supposedly going to do about it.

Mr. Abrams: --Well it doesn't have an awful lot of choice, Mr. Justice.

Justice White: Oh exactly.

Chief Justice Burger: Mr. Abrams, is it conceivable that over a period there would be a number of complaints, two, three or four, by the candidates or committees, on which the Commission would give no relief but then at the renewal stage, under United Church of Christ, among other things, examine whether there was a pattern of favoring one kind of a candidate, or one candidate or one party and take that into account in the renewal proceedings?

Mr. Abrams: It's appropriate at the renewal proceedings for the Commission to take into account the conduct of the broadcaster, including to be sure--

Chief Justice Burger: For the entire three-year period?

Mr. Abrams: --compliance... yes sir,... it's compliance with its public interest obligation.

And one of the reasons I can say, easily, why the networks and the stations much prefer, under the Fairness Doctrine and under this system, the idea of case by case adjudication is that it is to say the least, an uncomfortable sense to be met for the first time at license renewal time with a series of charges to the effect that there's a violation of the public interest standard or some other obligations.

But I can't tell you, if somebody comes in and makes a sufficient showing of failure to abide by the public interest obligations of the station, that that's an improper thing for the Commission to consider; it is indeed a proper thing for the Commission to consider.

But so far as possible, it's best to do this on a case by case basis.

For one thing, it allows case by case curing of the problems if indeed stations are found to have violated any obligations.

In a Fairness context, for example, it allows the station to do something about that which it has been accused of not serving the public about.

Unidentified Justice: But I gather, Mr. Abrams, you do agree that if there's a violation of 312(a)(7) that the Commission finds and the only sanctions it may impose are immediate revocation or wait until license renewal time.

Are there any other sanctions the Commission can... impose?

Mr. Abrams: I don't know of any other sanctions which the Commission can impose, I think it fair to say as a practical matter, as I suggested to Mr. Justice White, that the conclusion by the Commission of a violation of Section 312(a)(7) which is affirmed by the Courts or not appealed to the Courts, would have more than a little effect on the conduct of the station involved.

Justice White: Well if the Commission, at the end of its declaratory judgment it says we find that you have violated the section but we don't propose now to revoke your license, we'll just take it into account at some time... I take it there's never been any question that you can get review in the Court of Appeals of that declaratory judgment?

Mr. Abrams: There's never been any question about it, no sir.

Justice Rehnquist: And the Commission doesn't claim any authority to go further and... or... require you at a particular point to sell time?

Or does it?

Mr. Abrams: I think you'd do best to ask that question to my friend on my right.

The Commission to my knowledge has not taken that position... what it did do in this case, for example, Mr. Justice Rehnquist, was to direct the networks to inform the Commission how it intended to comply with Section 312(a)(7) given the conclusion of the Commission that there has been a failure to comply by not selling the time on the nights which it was--

Justice Brennan: But I take it that would depend on whether Carter-Mondale still wanted the time at the time you were now required to give it to them.

Mr. Abrams: --It would depend, in this case, indeed it did depend, Mr. Justice Brennan, because they withdrew their request in light of the Iranian crisis, made a new request for time which was granted by in fact, all of the networks.

Justice White: But the case is still a live case because, I take it, you think the Commission has... it maintains its view and that you will be in trouble with them again?

Mr. Abrams: It is live in that sense, it is live in the Southern Pacific sense, it is live in... for another reason, and that is that the Commission takes the position in this very case with respect to these very networks that there is

"continuing legal and practical effect of their ruling, without regard to the fact that they have not imposed any sanctions-- "

Justice White: Well, as long as they are still ahead at license renewal time the rule is there, isn't it?

Mr. Abrams: --Yes, well it is always there and of course, as I said first, it is a recurrent controversy and indeed it is a peculiarly recurring controversy in the context of election campaigns.

And as the Court suggested just last week in the Wisconsin Primary case, that's even a more special situation, in which parties have to have some way to get to Court to have a resolution either prior to election or after election, to find out what the rules of the game are.

Justice Stewart: The statute, of course, talks about individual stations--

Mr. Abrams: Yes.

Justice Stewart: --and the parties in this case are networks, not individual stations.

Now I... I think the networks do own a limited number of individual stations--

Mr. Abrams: Mr. Justice Stewart, we argued that below, we took the position below that Section 312(a)(7) does not apply to the networks because it says what it says.

Justice Stewart: --Yes, right.

Mr. Abrams: And indeed, because in the ordinary case it wouldn't make sense for it to apply to the networks.

Our example earlier is a useful one.

The Commission held and the Court of Appeals affirmed the proposition that it did apply to networks.

We have not pressed that point here, but--

Unidentified Justice: You haven't... that isn't one of your points raised?

Mr. Abrams: --No sir, it is not.

Unidentified Justice: But still with all this discussion with my brothers about the sanctions to be imposed, the statute is very clear, it has no reference whatsoever to networks, except insofar as they may be the owners of individual stations, and I know they are, a limited number.

Mr. Abrams: That is correct, and that was the view that we took, as I've indicated... we did not press that point in this Court.

Unidentified Justice: The networks' license could never be revoked.

Mr. Abrams: The networks don't have licenses.

Unidentified Justice: Yes.

Mr. Abrams: Yes.

And that's... that was one of the things again, that we urged below, and I begin to be sorry we didn't raise here perhaps.

Justice Stevens: Do the networks have an obligation to obey the Fairness Doctrine?

Mr. Abrams: The networks have been held by Commission practice... yes sir, to be obliged to obey the Fairness Doctrine.

And I believe the networks--

Justice Stevens: Do you question that?

Mr. Abrams: --No sir.

Justice Stevens: Well, individual stations do, and most, many individual stations are affiliated with one network or another.

Mr. Abrams: Yes.

Justice Stevens: Are the statutory provisions related to the Fairness Doctrine that apply to the networks as opposed to licensees?

Mr. Abrams: There are no distinct statutory provisions.

The only Fairness Doctrine requirement is in Section 315, it is not couched in the same language as this, but the Fairness Doctrine has been... has arisen in a variety of cases and controversies before the Commission.

Some bought by the networks after they had lost in the Commission itself, and we have not taken the position and do not take the position that it cannot apply to the networks in that sense.

Chief Justice Burger: What happens, Mr. Abrams, as a practical matter, between the network and the affiliated stations?

If the networks said, yes, we'll give you the hour but the particular station said, no, we won't carry it; are they free to do that?

Mr. Abrams: Yes sir.

Networks have no power to require affiliated stations to carry it and can do nothing and would do nothing to require the affiliates to carry--

Chief Justice Burger: If half of the affiliates declined to carry it, I suppose that would have something to do with the cost of the time, wouldn't it?

Mr. Abrams: --No, the cost of the time would be arranged beforehand... would have to do of course with the effect of the broadcast... but the time of this sort would be paid... the amount would be paid to the network itself, because the time would be purchased from the network itself.

But there's absolutely nothing the network can do, to require, for example, that these advertisements... if they were... if the networks have to carry them, be shown in Iowa.

And one of the things that we said from the start to the Commission was... and to the Carter campaign... was, that if what you're thinking about is the Iowa Caucus, which is what's coming up close, why don't you go to the Iowa stations and seek to buy time.

And it has always been our view that a very different kind of reasonableness standards would govern a request brought 47 days before the Iowa Caucus in Iowa, than would occur eight months before the Democratic National Convention when a nationwide broadcast is sought.

I would like to turn briefly to the nature of the statute as we see it.

And to start out, by saying this, I think it is common ground here that unless the statute significantly changed the public interest standard as it previously existed, we would not be here today and the broadcasters would have prevailed at the Commission level.

I think my friends on my right would agree to that, it is based on the case law, a correct proposition.

And so it seems to me that the first issue for consideration by the Court is whether Section 312(a)(7) in fact changed the pre-existing case law, and to the extent that it is asserted by the Commission.

We urge upon you, among other things, the fact that this issue has to a considerable degree at least, been before this Court before.

In 1973, in the CBS v. DNC case, this Court had occasion to analyze the nature of broadcast regulation and to go through, at considerable length, the fact that Congress had, in the Court's terms, time and again rejected systems of mandatory access.

The Court in the course of demonstrating that Congress had rejected such systems time and again, cited to this statute and referred to it as a codification of prior practice.

The Court had the benefit at that time of a brief amicus curiae filed by the United States and the FCC, urging precisely that position upon it.

We believe what the Court said then, and I want to emphasize that it is not just the footnote which refers to Section 312(a)(7)... that we rely upon here, but the text and the theme of the Court's opinion there that we rely upon.

The Court had before it then the brief of the FCC, it had before it the statute and the statute was then brand new.

We believe what the Court said in '73 in DNC, about this issue was correct notwithstanding that has now been characterized by the Commission as a decision which did not have the benefit of an interpretation by the agency with the obligation of enforcing it, even though there was a brief by that very agency before it, and notwithstanding the fact that Judge Bazelon for the Court of Appeals said that the Court had strayed far from what was before it and had treated the issue in a cursory fashion.

I do not believe that is a fair statement and I urge upon the Court the conclusions reached on it before.

We believe the intent of Section 312(a)(7) is clear and that it may be found in the single piece of legislative history that one and all agree is the most important piece and that is the report of the Senate Commerce Committee which put this into the bill for the first time.

And they could not have made clearer that what Congress was concerned about was that in the context of the passage of the Federal Election Campaign Act of 1971, which limited campaign expenditures by all forms of media, which was enacting a lowest unit charge provision, that Congress wanted to make sure that there would be no diminution in the language of the Senate report in the amount of coverage by broadcasters.

The broadcasters would not then say we don't have to carry political advertisements.

That was the purpose of the bill, was to codify the pre-existing obligation of that sort and it was to codify it and do more, it was to add a sanction in Section 312(a)(7), and that is precisely what it did.

What the Commission's decision does is, we believe, entirely inconsistent, not only with the notion of codification, but with the theory of broadcast regulation and of political neutrality of the Commission, as we have known it in this country.

At the heart of the Commission's decision is the notion that this is a kind of candidates' entitlement bill, that this is legislation which leads, as a first question to what does the candidate want and how can we give it to him.

What the Commission has done is to say that one issue which previously had always been decided as part of the reasonableness standard applied in the context of public interest cases, that is the question of when to start selling time is not a factor at all; that that is a legal objective fact and that the Commission will tell us hereafter when a campaign is "in full swing".

They have thus taken out of the equation which used to govern the whole notion of reasonableness any ability of the broadcasters to factor in when, except to say, we will tell you when the campaign is in full swing and once it is in full swing then your legal obligations attach and then we will apply a kind of equation of which the single most important element is the candidate's needs.

It is the position of the Commission that we, networks, and then they, the Commission, no less, are to get involved in the question of what the candidate wants, and to some extent at least, why he wants it.

Now the Commission has tried, in the latter stages of this case, to retreat from that and to say that you can take the candidates' needs as expressed by them.

But the problem is that the opinion of the Commission and the opinion of Judge Bazelon below make very clear that what we are then allowed to say, what we are almost obliged to say as networks, is something like this: a candidate says he wants two hours to do a program on foreign policy, to express his views.

We are then to look and see if he can do that, a foreign policy speech, in something less than two hours and we are supposed to get back to the candidate, make a judgment, get back to the Commission, have a federal agency no less, rule on the question of our reasonableness in telling that candidate that two hours is longer than he needs to make a speech.

I wish to refer the Court to one of the cases cited in our brief, the Ed Clark case, a recent opinion after the promulgation of the Carter-Mondale case, where NBC... from my personal knowledge... was put in the position where a third-party candidate for the Libertarian party was saying I want 25-minute segments and NBC, trying to comply with this new ruling which we come to you today to seek to get reversed, was put in the position of saying we think 5 five-minute segments, plus a series of shorter segments, 30-second segments, et cetera, can accomplish your stated ends of greater voter identification and raising money.

We never should have been in that position; the Commission surely should never have been put in the position of judging the reasonableness, and in that case, it said NBC was reasonable in saying that back to Ed Clark.

That imports the Commission into the political process in a way it has never been before and we think that it raises the most significant constitutional questions as well.

If I may, I would like to reserve what little time I have left for rebuttal, Mr. Chief Justice.

Chief Justice Burger: Very well.

Mr. Shapiro.

ORAL ARGUMENT OF STEPHEN M. SHAPIRO, ESQ., ON BEHALF OF THE RESPONDENTS

Mr. Shapiro: Thank you, Mr. Chief Justice, and may it please the Court:

The government's submission in this case has two principal parts.

First, we contend that Section 312(a)(7) imposed a new obligation on broadcasters to afford reasonable access to individual candidates for federal elective office.

Second, we contend that the Commission properly found that Petitioners failed to afford reasonable access on the facts of this particular case.

I'd like to take up each of these points in turn.

Justice Rehnquist: Mr. Shapiro, may I ask you first, why did the Commission go after the networks rather than stations, since networks aren't licensed?

Mr. Shapiro: The networks are the sole owners and operators of five licensed television stations in the biggest television markets in the country.

They are broadcast stations, the Commission has always viewed them as such prior to the enactment of this statute, and it continues to view them as broadcast stations that do own licensed television stations.

So--

Justice Rehnquist: It would be only the licenses of those particular stations that would be subject to revocation?

Mr. Shapiro: --Only the licenses of those stations could be revoked; the Commission has not yet determined whether cease and desist orders, in addition to revocation, could supplement its remedies in this area.

That's a possibility as well.

Justice White: Nor has it been determined whether if it did use cease and desist orders, whether the statute would authorize it.

Mr. Shapiro: That's correct.

The Commission hasn't passed on the available arsenal of remedies, because it has not yet had occasion to impose sanctions on any station in the last eight years.

The question of remedy hasn't arisen yet.

Chief Justice Burger: At some time, Mr. Shapiro, as you develop this discussion of the new obligation, as you call it, would you suggest hypothetically what would be the situation if some of the committees... and we read in the paper that there are activities already developing right in Washington for 1984... if some of these committees made requests now for 15 minutes or 30 minutes, for May or July of this year, or a year from now... in other words, at what point is the Commission authorized to say when the campaign begins?

Mr. Shapiro: At these early stages, I'm quite sure that the Commission would conclude that the Presidential campaign for 1984 is not yet in full swing.

It looks to a complex of factors; the nearness of the primaries and the conventions and caucuses in the several states, the number of candidates who have announced their intention to seek the presidency, the existence of nationwide campaign activities and campaign organizations... it looks to a whole series of such factors.

Unidentified Justice: By the statute there has to be a legally qualified candidate, whatever that means.

Mr. Shapiro: That's correct.

Unidentified Justice: There is none now, for 1984.

Mr. Shapiro: That's quite true.

To be legally qualified, the candidate has to have, to be on the ballot in ten different states for the forthcoming primaries and to have announced his intention to seek the presidency, so at this early stage you wouldn't even have a legally qualified candidate.

Chief Justice Burger: That's why I emphasized hypothetically.

When does this begin after he is a qualified candidate, after someone is a qualified candidate, and what is the specific source of authority in the statute for the Commission to fix that date?

Mr. Shapiro: The source of authority in the Commission's view, is in the statutory requirement that reasonable access be afforded.

And the Commission interprets the term "reasonable access" to have a time component as well as an amount component.

And it of course has explicit statutory authority to prescribe conditions that give effect to other provisions in the statute.

We quoted that provision in our brief.

It does have authority to interpret provisions such as the reasonable access provision.

Justice White: Do you think the statute would authorize the Commission to, at some point in the process, just to announce that the campaign has now begun, without purporting to sit in review of a network's judgment as to when the campaign has begun?

Mr. Shapiro: We believe that it would have that authority, but it hasn't purported to proceed on that basis.

It waits for complaints to be filed and then determines if the campaign is in full swing, if it's found to be in full swing it then considers whether or not the denial of air time has been reasonable.

Unidentified Justice: Of course this statute applies not only to Presidential elections, but to any federal elective office, doesn't it?

Mr. Shapiro: That's quite true.

Unidentified Justice: Congressional races and Senatorial races?

Mr. Shapiro: That's right.

Yes, Your Honor.

Unidentified Justice: Any problems arisen under it in connection with such races yet?

Mr. Shapiro: The statute has worked remarkably well, even with respect to these races for a seat in Congress.

Principally because the parties negotiate, resolve these questions on their own; there have only been 37 rulings under the statute in the last eight years.

And considering the fact that there have been 2500 races for federal elective office in that period and there are almost 10,000 broadcasters are subject to this provision... that's a remarkably small number of interventions in the particular cases.

Chief Justice Burger: Aren't the economic factors a natural damper on these early requests?

Mr. Shapiro: That's quite true, Your Honor.

The cost of this segment of time was $186,000 on CBS.

There's a natural pressure not to make early requests or to make unduly large requests for time.

Quite expensive.

Justice Stevens: Mr. Shapiro, how many of these 37 rulings were before this ruling and how many after it?

Mr. Shapiro: In our brief in opposition we note that eight of them have come afterwards and all of those were in favor of the broadcaster, save one, the rest of them preceded the Carter-Mondale ruling here.

Justice Rehnquist: At the time of the Carter-Mondale ruling, was that the ticket on the ballot in ten states?

Mr. Shapiro: Yes.

They made that demonstration before the Commission, that they had substantial bona fide campaign activities in ten or more states; that's an alternative in addition to being on the ballot.

And I believe that's the route they use to show bona fide candidacy, was existence of substantial campaigning in ten different states.

Justice Rehnquist: That's their definition of a legally qualified candidate?

Mr. Shapiro: That's one component.

There are three requirements that are set forth in the Commission's regulations.

And one of them is, a specified amount of activity in ten different states, or placement on the primary ballot in ten different states.

Chief Justice Burger: Is there anything to prevent a network from selling time next week to a 1984 candidate?

Mr. Shapiro: If it chooses to do so, it's perfectly free to negotiate and that's the--

Chief Justice Burger: If he has $186,000 for a half hour?

Mr. Shapiro: --That's right.

Parties are always free to strike whatever bargain they wish to, and that's the Commission's expectation in this area; that its guidelines and rules will facilitate private negotiations and minimize the need for the government to get into the process.

Justice White: Well, I take it you're going to tell us how (a)(7) changes the law?

Mr. Shapiro: Yes, Your Honor.

The networks, of course, argue that this Section imposed no new duty, that it simply codified the previously existing public interest standard.

Justice White: And do you agree that if it hadn't imposed a new duty, the Commission's order in this case would have been infirm?

Mr. Shapiro: Well that's quite true.

Under the old public interest policy, no individual candidate had a right of affirmative access.

He could not obtain any relief from the Commission no matter how many times he was denied access.

It guaranteed no reasonable access or indeed, any access, to the individual candidate.

It required only some political programming during the three-year term of the license.

The broadcaster was at liberty to pick and choose among the campaigns and decide which were the most important and which it would sell time to, and which it would not sell time to.

For example, the broadcaster could determine that the campaign for governor in a particular year was more important than the campaign for a seat in the House of Representatives, and withhold time from all of the candidates in the Congressional race.

One need only compare this amorphous obligation with the very specific obligation imposed by the new statute to see that Congress was embarking on a new course.

Under this statute, 312(a)(7), Congress has empowered the Commission to impose sanctions based on a broadcaster's repeated or willful failure to sell reasonable amounts of air time to an individual federal candidate.

The words chosen by Congress focus in squarely on the individual: a legally qualified candidate must be afforded the specific use of a broadcast station to advocate his candidacy.

Under the statute, the broadcaster exposes himself to the ultimate sanction of license revocation if he unreasonably withholds air time on two or more occasions, or if he does this willfully on even one occasion.

In short, as the Commission and the Court of Appeals both agreed, this statute extends its protection to the individual federal candidate, a kind of protection that was wholly unknown under the predecessor public interest standard.

In this connection the Court may reasonably ask why, if Congress really meant to codify the public interest standard why didn't it refer to the elements of the public interest standard?

Why didn't it say that the broadcasters should review state and federal campaigns, should pick out the most important ones, should give air time to some of them and withhold air time from the others.

These elements of the public interest policy are simply not the elements prescribed by Congress in 312(a)(7).

And the legislative history of this provision far from contradicting its plain meaning, strongly supports the literal interpretation that the Commission has given.

Section 312(a)(7) was a central part of Title I of the Federal Election Campaign Act.

Title I, according to the Senate Commerce Committee, had two and only two purposes: it's first purpose was to give candidates, and I quote,

"greater access to the media, so that they may better explain their stand on the issues and thereby more fully and completely inform the voters. "

It's second purpose was to halt the spiraling cost of campaigning.

Now Section 312(a)(7) doesn't have any direct relationship to the goal of containing campaign costs, but it does have a direct bearing on the goal of better informing the electorate, by focusing in on the individual candidate it goes beyond the old public interest standard and affords "greater access to the media".

Congress' intent is also reflected in its contemporaneous amendment of another closely related statutory provision.

Before 1972, Section 315 of the Act contained a proviso which states flatly that there was no duty to give an individual candidate affirmative access.

The proviso read as follows:

"no obligation is imposed in any licensee to allow the use of its station by any such candidate. "

But when Congress enacted Section 312(a)(7) it recognized that this unqualified statement was no longer correct; it was necessary for Congress to make what it called conforming amendment, to bring Section 315 into harmony with the newly enacted 312(a)(7).

As amended, Section 315 now provides no obligation is imposed under this subsection on any licensee to allow the use of its station by any such candidate.

Unidentified Justice: And did that come out of the Conference Committee?

Mr. Shapiro: That came out of the Conference Committee, that's correct, Your Honor.

And it was necessary for Congress to qualify its statement that there was no duty to give affirmative access to individual candidates and to make it quite clear that that statement applied only under Section 315, precisely because the newly enacted Section 312(a)(7) does obligate broadcasters to afford affirmative access to individual candidates.

Unidentified Justice: Well even if you are right in everything you've said so far, the duty is only to allow reasonable access or to permit purchase of reasonable amounts of time, and somebody has to decide what that means.

Mr. Shapiro: That's correct, and Congress delegated the enforcement role to the Commission.

And it gave the Commission power to secure compliance by the broadcasters.

It never would have done this if it believed that the networks and the broadcasters would have unlimited discretion to withhold air time--

Unidentified Justice: Well, but do they have discretion to decide what's reasonable?

That's the... not unlimited discretion.

Mr. Shapiro: --They... if their discretion exceeds the bounds of reasoning--

Unidentified Justice: I mean, the word "reasonable" must mean something, doesn't it?

It doesn't mean absolute, it means something less than that.

Mr. Shapiro: --It does indeed... and the final arbiter in a case of disagreement is the Commission, because--

Unidentified Justice: Well that's the... wasn't that one of the issues and an important issue in this case.

Mr. Shapiro: --I don't see how the language could be interpreted to say that the final arbiter of reasonableness is the regulated broadcaster, because the Commission has the power to revoke its license if it behaves in an unreasonable way.

Chief Justice Burger: But the initial decision is the network, is that right?

Mr. Shapiro: That's correct, that's correct.

Chief Justice Burger: Then what is the... is there any indication of what is the scope of review of the Commission?

Is it like the clearly erroneous Rule 52 or anything like that?

Mr. Shapiro: It's quite similar, Your Honor, to the kind of review that a Court of Appeals would extend to an administrative decision, to see if the relevant factors had been considered and whether there has been an abuse of discretions--

Chief Justice Burger: Then it comes to the Commission with a presumption of regularity and correctness, does it not?

Mr. Shapiro: --The Commission is disposed to agree with the broadcaster in a close case; it's made that quite clear, that it will defer to discretion unless there is a clear abuse.

Justice White: Surely there's a... I know court, not agencies, get away with all sorts of things.

There's a range of conduct that would be within their power?

Mr. Shapiro: That's true.

Justice White: And it wouldn't be just one thing, it could be... I suppose, a network might reasonably decide that within... on any day within three or four months that a campaign had begun.

Mr. Shapiro: In this case the--

Justice White: And any one of them would be reasonable.

Mr. Shapiro: --In this case--

Justice White: Even if the Commission thought that it would have preferred the decision to be somewhere else.

Mr. Shapiro: --That's true.

If the Commission regarded the factual issues in a particular case as close, it would defer to the broadcaster.

But in this case the finding of violation rested on what the Commission regarded as a legal error, that is, that these networks applied blanket rules in dealing with the candidate.

That is, they would not receive the individual request and analyze it in its own particularized context.

Chief Justice Burger: Do you think that the networks would be entitled to take into account in the total equation, what Congress and the Federal election law and other ways has shown a concern about the mounting costs of campaigns and the length of campaigns, does that fit into the equation along with a judgment as to whether the public... there's enough public interest, say?

Mr. Shapiro: In our view, Congress did not intend that the networks deny or cut back requests for air time from candidates on the view that this was too costly or that it was contributing to mounting campaign costs.

And one reason--

Chief Justice Burger: Congress doesn't deal with these problems in logic-tight compartments, does it?

That over in the elections law they are saying we are trying to shorten campaigns and cut the costs down, but even in this other area then totally ignore that.

Mr. Shapiro: --One reason for not allowing the networks to engage in that kind of inquiry is that there is no basis for asserting that granting air time to candidates is going to increase costs.

This is the most cost effective means of communication.

If the Court were to compare the $186,000 price tag on this half hour to the cost of stuffing envelopes--

Chief Justice Burger: Then you're quarreling with the Court's opinion in CBS v. Democratic National Committee.

That was only 45 seconds... spots, that were involved in that case.

Mr. Shapiro: --We quite agree with the decision there.

In that case, the vice in the access scheme was that it had no Congressional sanction, whereas in this case Congress has prescribed a specific access scheme for a narrowly defined class of candidates, federal candidates for office.

In the DNC case of course, the Court of Appeals had constructed an access scheme virtually out of whole cloth, there was no basis in statute or in prior Commission precedent.

And in fact, the statute contained a provision... Section 3(h) that militated against the access scheme that the Court evolved on an ad hoc basis.

Justice White: Well Mr. Shapiro, you think the Commission in this case, in deciding there had been a violation, asked the question was it reasonable for the networks to decide that the campaign hadn't begun?

Mr. Shapiro: The Commission takes the position that in that area it will make its own judgment about whether the campaign is--

Justice White: So you... I thought just a while ago you talked... I thought you agreed a moment ago that the Commission should... it should determine whether the networks judgment about when the campaign had begun was reasonable.

Mr. Shapiro: --That is an area where the Commission has said there is lesser discretion in deciding when the campaign begins, it said it will listen to the positions of the networks... and the candidates, and make its own judgment.

Justice White: Well yes, but... doesn't it nevertheless have to conclude that the network made an unreasonable decision?

Mr. Shapiro: Yes, and it did just that, in light of an abundance of evidence showing that the campaign was in full swing in November--

Justice White: Well, but it does that in a sense that we're describing... we're just going to decide for ourselves when it begins, as a matter of objective fact, and if the network chose a different date it was just wrong.

Mr. Shapiro: --If the evidence is against the network, that's correct.

And here it was clearly against the networks because the campaign activities were in full swing by anybody's definition except these networks.

If the Court looks at--

Justice White: Was that bottom line, was it bottom line then, or was it that the networks had acted unreasonably?

Mr. Shapiro: --Acted unreasonably in concluding that the campaign wasn't in full swing.

Justice Rehnquist: Mr. Shapiro, was the so-called conforming amendment to Section 315 contained in the same statute at large as the 312(a)(7)?

Mr. Shapiro: Yes, Your Honor it was.

And it was a sentence or two removed from 312(a)(7).

The Commission might have interpreted the statute to require the offer of fixed quantities of time under a particular time schedule to try to mitigate some of the complexities that we're talking about, under highly specific rules.

And it sought the views of the networks on this kind of a proposal in 1978.

The networks vehemently opposed this kind of an approach, urging the Commission to continue to proceed on a case-by-case basis analyzing the reasonableness of their conduct on an ad hoc basis, or a case-by-case basis.

In its comments to the Commission at that time, NBC stressed the importance of individual treatment.

It stated in its brief, a copy of which I have lodged with the Court yesterday, and I quote,

"different candidates have different campaign strategies. "

"One will concentrate on 30-minute programs of prime time, another may want 10-second spots during fringe programming. "

"A third will seek exposure around news and public affairs programming. "

"We believe it would be most difficult for the Commission to promulgate any rule that could take all of these diverse strategies and campaign needs into account. "

The Commission essentially agreed with that assessment.

It concluded that it would be best to adopt general guidelines under Congress' rule of reason, to facilitate individual negotiations.

And to minimize the need for governmental intervention.

One of the guidelines of course, is that broadcasters need not extend any access even if the federal candidate is legally qualified, unless the campaign is fully underway as evidenced by objective facts that we've been discussing.

The second guideline is that once the campaign begins, broadcasters may not enforce across the board or blanket policies in rejecting requests for time.

They must be willing to negotiate and attempt to accommodate--

Justice Stevens: If you could just stop there for a moment, Mr. Shapiro.

Why is a blanket rule... say we don't want anything for two weeks or three weeks, necessarily arbitrary?

It seems to me there is a certain element of reasonableness in saying even though the campaign has begun, we think in terms of interest and orderly programming, and not getting too many obligations too soon, we'd rather wait till... for 30 days.

Why is it necessarily unreasonable--

Mr. Shapiro: --I can't state it any better than NBC did in the passage that I just quoted.

The different campaign strategies that the candidates pursue are vitally important to communicating their own message, and to adopt a simple rule that only five-minute spots will be allowed or you won't allow access in the month of December, that can interfere fundamentally with the strategy of a particular candidate.

Justice Stevens: --Well it may not give the man the strategy he wants but does it necessarily violate either the requirement of reasonable amounts of time or reasonable access?

Mr. Shapiro: Well--

Justice Stevens: Those are the two requirements that the networks must meet.

Mr. Shapiro: --It's the Commission's duty to interpret the reasonable access standard and in its view--

Justice Stevens: Well, you would agree it doesn't necessarily violate the reasonable amount of time requirement?

Mr. Shapiro: --No.

It's the reasonable access requirement--

Justice Stevens: Reasonable access.

And the reasonable access must always reflect what the candidate wants?

Mr. Shapiro: --Balanced against the legitimate concerns of the broadcasters.

The Commission has concluded that there really are two interests here that have to be weighed; reasonableness looks both ways, to the candidate and to the broadcaster--

Justice Stevens: Well as I understand your point earlier, it didn't look both ways, it said there's kind of a flat ban against flat bans.

Mr. Shapiro: --It said that it is improper not to weigh the needs of the particular candidate and the particular case, but you also must weigh the legitimate concerns of the broadcaster in the same balancing process; that is, multiplicity of candidates or program disruption.

And this is the kind of accommodation of both of the interests that the Commission believes best strikes the balance of reasonableness under the statute.

Unidentified Justice: But after weighing those, it did come up with at least one per se rule, and that is that any broadcaster's blanket refusal to sell any time to any qualified candidate, even after the campaign had begun during a certain period was, per se, unreasonable.

Mr. Shapiro: That's correct.

It's necessary to weigh--

Unidentified Justice: A broadcaster might say this is the Christmas season and we have our own programming and we don't want to accept anything until after the first of the year.

Mr. Shapiro: --That's correct.

It's necessary to weigh the individual request.

Unidentified Justice: But there is no, ever, after the weighing process was over they came up with this per se rule, didn't they?

The Commission did.

Mr. Shapiro: Well no, the per se rule means that you have to engage in an individual ad hoc weigh in--

Unidentified Justice: Right.

And therefore that no blanket ban is constantly reasonable?

Mr. Shapiro: --Is permissible... that's... that is correct.

And the networks expend a great deal of time attacking this guidelines but I would submit that they have not demonstrated that this approach is patently irrational or that it conflicts with any provision of the Communications Act.

Justice White: Well that's turning the thing upside down, isn't it?

It's a reasonable... the networks have to give reasonable access and they, in the first instance decide what's reasonable?

Mr. Shapiro: And the Commission reviews that to that to see if it really is within the bounds of discretion and one of the standards that it has prescribed to make the process conform in its view with the statutory requirement is that no blanket rules may be prescribed.

And the question for a reviewing court is whether it's patently irrational, arbitrary or capricious for the Commission to adopt this approach, and we submit that it isn't.

Justice White: So that, I take it then, you seriously contend that Congress intended that the Commission play a very central role, as a broker, in political campaigns in deciding access to television?

Mr. Shapiro: That's precisely the role Congress has given the Commission, to sit as umpire in cases of disagreement over reasonable access issues--

Justice White: And in deciding what the needs of candidates are and--

Mr. Shapiro: --Not deciding what their needs are.

Justice White: --Well, you just said they had to... they must take account of what the candidate's style is, of what their approach is and what their needs are.

Mr. Shapiro: The Commission's only review--

Justice White: That the Commission, if it disagrees--

Mr. Shapiro: --with respect to that issue--

Justice White: --with the... I take it, from what you say, that if the Commission disagrees with the networks' judgment about what the needs of the candidate are, they haven't given him reasonable access?

Mr. Shapiro: --No sir.

It's only role in reviewing is to determine if the... if the networks have considered the request on an individual basis, and if so, if they have weighed it against the factors that the Commission has specified as counterveiling factors... if the networks have done that, they are home free.

There's no violation.

Justice Rehnquist: Mr. Shapiro, in the Court of Appeals opinion 4(a) of the Appendix, the Court of Appeals says that... describing the Commission proceeding, it ordered the networks to comply with the requirements of the Act.

Now what would have been the sanction had the networks not have complied with the orders of--

Mr. Shapiro: The sanction that's expressly prescribed is revocation of broadcast license, and each of these networks is a licensee of five VHF television stations.

The Commission staff believes that in addition to revocation there is a cease and desist remedy, cease and desist order that's available, but that hasn't been litigated.

Justice Rehnquist: --Well, could it, right then, revoke the license?

Mr. Shapiro: The statute requires either repeated or willful misconduct.

Now, if there had been no petition for appellate review and the Commission had entered the order that it did and the networks continued to withhold access, at that point, arguably you would have willful misconduct.

But it requires either willfulness or repetitive misconduct.

Justice White: Well doesn't a complaint have to allege a willful violation, even to energize the Commission?

I mean, the statute says repeated or willful... no question here, there wasn't any question about repeated refusal, was there?

Mr. Shapiro: No.

But it's essential that the Commission adjudicate a specific complaint such as this to see if in the future there is in fact a pattern of repetition.

That's why the Commission takes the first case.

Justice White: You mean the Commission will take a case if a claimant says this hasn't been repeated yet, this is the initial instance and as far as I know, it isn't willful, they are in perfectly good faith, they just haven't interpreted... you mean the Commission would get underway right then?

Mr. Shapiro: It would determine if there was--

Justice White: Not even a claim of willfulness?

Mr. Shapiro: --That's correct.

It would determine if there was an unreasonable withholding, and then if there was a second such adjudication, that would lead to the imposition of sanctions under the statute.

But it doesn't determine the first--

Justice White: Can you adjudicate the very first... suppose there's no claim of willfulness, and the Commission isn't looking for willfulness, the Commission will take on the very first refusal because it may be... it will be repeated?

Mr. Shapiro: --Precisely.

And the broadcasters have urged the Commission to do just that.

Unidentified Justice: Well from what I've read and heard here today, I understand that the broadcasters welcome this position.

Mr. Shapiro: They welcome this because it prevents a pattern of misconduct from turning into something that later would result in revocation.

And that's precisely why they urged us to follow this approach.

Chief Justice Burger: Would you--

Mr. Shapiro: And the Court of Appeals have approved that approach.

Chief Justice Burger: --Would you agree that the decision on the part of the network could be erroneous, but... in a particular case, but still within the bounds of reasonableness?

Or are they mutually exclusive?

Mr. Shapiro: Well in... the Commission has divided up the issues, on the question of whether the campaign has started it makes its own independent determination.

But on the question whether the broadcaster has balanced the individual interest against the broadcaster's own counterveiling interests, in this area, they will not intrude unless the decision is clearly erroneous, whether it's an abuse of discretion--

Chief Justice Burger: Where do you get the "clearly erroneous" in the statute?

Clearly, now you're equating it something to Rule 52(a).

Where do you get the clearly, the adjective?

Mr. Shapiro: --This is the Commission's interpretation of the reasonable access requirement and it was intended to confer greater discretion on broadcasters than would otherwise exist if the Commission determined that de novo.

I see that my time has expired, and I thank the Court.

Chief Justice Burger: Very well.

Do you have anything further, Mr. Abrams?

Mr. Abrams: Just one moment, Your Honor.

I'd just like to point out to the Court if I may that the plain meaning of this statute has never been as plain to the Commission as it is today.

They have issued reports in 1972, 1974, a primer in 1978, none of which talked about this being a candidate's needs statute.

This matter of the Commission determining when as an objective matter the campaign began did not come to the Commission's mind until its second opinion in this case.

In it's very first opinion they purported to say that the networks had acted unreasonably in deciding when the campaign began.

It was not until page 124(a) of the appendix to the petition where the Commission, in its second opinion on rehearing, says in so many words that its determination was based on its own independent evaluation of the status of the campaign.

Mr. Shapiro refers to Title I and its purposes and I can do no more than to refer the Court to the briefs on that.

Title I of the statute said, in so many words, how media access was to be expanded, it did not include and the Commission's opinion says this, Section 312(a)(7) as one means by which that expansion would occur.

And finally, a word on blanket rule.

I don't even understand why it is a blanket rule for ABC to say in December we think it's appropriate for us to start selling time in January.

It is only by the Commission's process of detaching the issue of when from factors that the networks may consider and be judged on, in some reasonable way, and by getting that out of the equation entirely, that it makes it a blanket policy.

That it's only that that makes it "unreasonable" because that's not a subject in which the networks have anything to say at all anymore.

ORAL REBUTTAL ARGUMENT OF FLOYD ABRAMS, ESQ., ON BEHALF OF THE PETITIONERS

Justice White: Do you agree, Mr. Abrams, that they... that this process of undertaking these cases where there is no claim of repeated violations, no claim of a willful violation; only a claim of an unreasonable one and go at it the very first time around?

Mr. Abrams: Well, there's a claim, Mr. Justice White, and there was a claim here of willful misconduct--

Justice White: Yes, but there was never a claim--

Mr. Abrams: --the Commission--

Justice White: --Oh was there a claim of willful misconduct?

Mr. Abrams: --The Carter-Mondale campaign said that was so--

Justice White: So you think--

Mr. Abrams: --and we think--

Justice White: --they ought to actually claim a... a willful misconduct?

Mr. Abrams: --A claim was made, I don't think the Commission had any option but to rule on it at the time and in the way that they did.

Justice White: But I gathered Mr. Shapiro indicated that they would undertake these adjudications even if there's no claim of... either of repeated or willful misconduct?

Mr. Abrams: My impression, Mr. Justice White, and I must say it is that, is that parties have come to characterize their claims in this area within the statutory language and so they say, at least when they file complaints, that it is willful or--

Justice White: Willful in the sense... surely they know what they are doing?

Not unconscious.

Mr. Abrams: --In terms of the broadcasters, I mean the worst thing of all would be to be confronted with a situation where the only punishment is capital punishment, license revocation, and the first time it comes up is at the moment that your license is up for consideration.

Chief Justice Burger: Presumably if they moved to revoke the license, there would be a hearing process, I take it?

Mr. Abrams: I certainly trust so, Mr. Chief Justice.

Justice Stevens: Mr. Abrams, before you sit down, I'd like to ask you just one question if I may.

Your position is that the amendment made no change in the statute, merely codified it, the pre-existing law.

And Mr. Shapiro suggests that under pre-existing law, under the public interest standard you could have excluded entirely coverage for certain minor campaigns, for example, but that now you could not do that because of the legally qualified candidate language.

How do you respond to that argument?

Mr. Abrams: We don't believe that we could have refrained, under the public interest standard as it exists, from making any use time available, say, in this Presidential campaign or in this Presidential primary--

Justice Stevens: No, he's talking about other campaigns.

Mr. Abrams: --Oh, in other federal races like that?

It... this would be a different situation perhaps, if there was a lower federal category than races for Congress, but that is not the case.

And it has always been our understanding that the public interest standard would not have permitted a flat policy on behalf of a broadcaster of declining to sell time totally to federal candidates.

And so to that extent as well, we think it is a codification.

Thank you, Mr. Chief Justice.

Chief Justice Burger: Thank you, gentlemen.

The case is submitted.

Attribution:

The OYEZ Project

Featured:

FCC v. WNCN Listeners Guild - Oral Argument

Fri, 09 Jan 2009 14:46:08 +0000

Case:

FCC v. WNCN Listeners Guild

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79-824_19801103-argument.mp3

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transcript.xml

Transcript:

ORAL ARGUMENT OF DAVID J. SAYLOR, ESQ., ON BEHALF OF THE PETITIONERS FEDERAL COMMUNICATIONS COMMISSION, ET AL.

Chief Justice Burger: We'll hear arguments first this morning in Federal Communications Commission v. WNCN Listeners and the related and consolidated cases.

Mr. Saylor, I think you may proceed whenever you are ready.

Mr. Saylor: Thank you, Mr. Chief Justice, and may it please the Court:

This is an important case for the nation's nearly 9,000 radio stations and their millions of avid listeners.

The decision here will determine whether regulators in Washington over their own strong objections must intrude into the workings of the radio entertainment marketplace in countless communities across the country.

Unidentified Justice: You seem to emphasize radio.

Do you think it has no bearing on broadcasting generally?

Mr. Saylor: I think the case does have bearing on television as well, but the Commission's policy statement is restricted to radio.

Therefore, I believe the issue before the Court today strictly relates to radio.

The issue before this Court is this: must the Federal Communications Commission in ruling on radio license renewals and transfers decide whether to permit a radio station to change from one type of entertainment programming to another.

Or, stated a different way, did the FCC correctly determine in the proceedings below that the Communications Act of 1934, read in light of the First Amendment, grants the Commission the discretion to decline to review changes in so-called unique entertainment formats?

The Court of Appeals for the District of Columbia Circuit sitting en banc ruled against the Commission.

The Court declared that the Commission must hold a hearing to determine whether a format change is consistent with the public interest.

Unidentified Justice: Mr. Saylor, what was not entirely clear to me in reading the briefs is, are we talking about changes that have been made or prospective changes, or both?

Mr. Saylor: Mr. Justice Stewart, this case involves proposed changes as well as changes that may have taken place midterm in a three-year license period.

Unidentified Justice: Both?

Mr. Saylor: Yes.

However, according to a footnote in the Court of Appeals decision, a challenge to the midterm change in format would not come until the time for renewal.

Unidentified Justice: Renewal or transfer.

Mr. Saylor: Yes.

Unidentified Justice: Would the standard be any different if we were talking about the initial issuance of a license, if such licenses were available?

All the statute says as I read it is the public interest.

Mr. Saylor: That's correct.

It's the same standard, public interest, convenience, and necessity.

The Commission's view in this situation, both renewals and transfers, is that it would not be in the public interest to engage in regulation of unique formats.

There's a somewhat different question posed when it's an initial licensing.

The Commission has considered so-called specialized program issues in comparative cases which would come up often at initial licensing time.

But in none of those cases has the Commission ever considered the entertainment programming as such in deciding whether or not the application should be granted.

So that while the Commission did not address itself in this policy statement to the question you raise, Mr. Justice Rehnquist, I believe the Commission's policy in the past has been not to consider entertainment programming in making decisions regarding initial licensing.

Unidentified Justice: I'm not sure how you relate that to the issues.

Let me put another question to you.

Suppose on renewal of a license at the expiration of three years the representatives of the listening audience came in and demonstrated that this station had changed its format and was showing nothing except football games, basketball games, hockey games, prizefights, and athletic events; nothing else.

Would that be relevant to the issue of renewal of the license?

Mr. Saylor: The Commission would not, in my view, consider the entertainment programming as such.

The Commission would, however, be concerned if the licensee or the applicant indicated no interest in programming news and public affairs, so-called non-entertainment programming.

The Commission has--

Unidentified Justice: So the format if... I'm not sure exactly what that term embraces in this case, but the content of programming is a very relevant factor in the renewal of a license, is it not?

Mr. Saylor: --The Commission has considered the quantity of non-entertainment programming proposed by an applicant, but it has never delved into the quality of the programming and has not made value judgments regarding whether one type of entertainment programming is more in the public interest than another.

Unidentified Justice: So the standard is the same for both the issuance of the original license and for the renewal, is it not?

Mr. Saylor: Yes, it is.

Unidentified Justice: And does the Commission treat them differently in the sense of evaluating entertainment versus news and that sort of thing?

Mr. Saylor: No.

In neither instance does the Commission consider the entertainment programming as such.

The non-entertainment programming such as news and public affairs programming is considered but in a very general sense.

The Commission simply wants to assure itself that the applicant will not neglect that type of programming.

The Commission inquires as to what percentage of the broadcast week, or the broadcast day, will be devoted to news and other informational programming.

Unidentified Justice: It's basically a quantitative consideration?

Mr. Saylor: It is a quantitative consideration--

Unidentified Justice: Plus, I suppose, objectivity and fairness and so on?

Mr. Saylor: --Yes, Mr. Justice Stewart.

And the reason for that is that the news and other informational programming makes up a small, relatively small portion of the broadcast day, whereas the entertainment programming traditionally consumes the balance of the broadcast day and it is there that the Commission has felt that the Congress wanted broadcasters to compete.

And basically that's where they compete, with their entertainment program.

Were the Commission to regulate entertainment programming it would reduce the licensee discretion in that very large portion of the broadcast day and raise in the Commission's view serious First Amendment considerations.

Unidentified Justice: Mr. Saylor, what about the percentage of time for commercials?

Is there any regulation of that?

Mr. Saylor: The Commission has a guideline in the form of a delegation of authority to the Staff of the Broadcast Bureau.

If the applicant proposes a percentage of broadcast hour above a certain number for commercial programming, the Commission would consider that and if there is not an adequate explanation from the licensee, the Commission might well put that matter into hearing to determine whether or not the licensee is proposing an excessive amount of commercial programming.

Unidentified Justice: What is the justification for that other than its possible impact on the entertainment part of the programming.

Mr. Saylor: Well, I guess historically the Congress has expressed some interest in the amount of commercials on broadcast programming and the Commission has felt that perhaps some supervision is appropriate in order to insure that licensees don't vastly exceed what would be in the public interest.

However, the Commission is presently reconsidering that.

It has reached the tentative conclusion that the marketplace is sufficiently competitive so that broadcasters are most unlikely to engage in excessive commercialization.

But I can't say at this point, of course, that the Commission has gotten rid of those regulations entirely, but they are processing guidelines and they are quantitative rather than qualitative and they relate to a smaller portion of the broadcast day than entertainment programming.

Unidentified Justice: Well, this distinction between quantity and quality becomes a little blurred, does it not, if quantitatively all or most of the program is devoted to one kind of activity, namely, the athletics that I suggested in the hypothetical?

Does that not come into the area of quality of service, by the failure to have any news broadcasts, by the failure to have any educational broadcasts, any music?

Mr. Saylor: The failure to have any news or public affairs programming of any sort would be a matter of interest and concern to the Commission, but the fact that it was sports as opposed to something else that was occupying most of the broadcast day, that would not be a matter which the Commission would feel it's competent to evaluate.

The Commission does not believe that it has the capacity to determine whether sports programming is more in the interest of the public than a particular type of musical programming.

And most of these cases, of course, have come up in the context of one type of musical programming versus another.

And especially in that instance the Commission doubts that it has the capacity, the wherewithal to ascertain what the public really wants, the intensity of preference on the part of the public, and whether one group which prefers one type of format outnumbers another group, and whether or not the group which outnumbers would in fact listen to the programming.

Unidentified Justice: I have to ask the question I wanted to ask, and I don't mind asking after what you just said.

In order to decide this case, I don't have to find out the difference between rock, hard rock, and jazz, do I?

Mr. Saylor: Mr. Justice Marshall, you do not need to decide the difference between them but I do think that you have to wrestle with the same problem the Commission has in determining how the Commission in a given case would be able to distinguish between different kinds of music in order to judge whether or not a type of music is being abandoned and there are no reasonable or adequate substitutes elsewhere in the marketplace.

That is a very difficult, subjective, almost an esthetic value judgment which in most cases, administrative law judges, commissioners, and Justices of this Court simply can't have the knowledge to draw the distinctions, and even if, as happened before the administrative law judge in the WEFM case, even if an expert is brought in, a musicologist, the other side can just as easily bring in a musicologist on the other side.

Unidentified Justice: Is there any real question under the Court of Appeals opinion as to whether the Commission would know whether a change is planned or had taken place?

Mr. Saylor: Mr. Justice White, there certainly are some instances where the Commission would not have any difficulty determining that a change had taken place.

Certainly the difference between classical music and country and western is clear.

Unidentified Justice: Well, the limits of the Court of Appeals' opinion as I understand it is that if a change is contemplated the Commission should take into consideration whether or not there's some... whether it's economically sound and whether there's a public market for it or a public demand for it.

And if it is, the Commission ought to really think about whether they ought to permit the change.

Is that the rule?

Mr. Saylor: That's part of the test the Court of Appeals--

Unidentified Justice: Part of it, but what do you think the Court of Appeals held?

Mr. Saylor: --The Court of Appeals held that the Commission must hold a hearing if the format--

Unidentified Justice: But the Court of Appeals said almost never would a hearing be necessary.

Mr. Saylor: --Well, they felt that there were not that many protests and that there really wouldn't be a need for a hearing in very many instances.

But--

Unidentified Justice: Well, then, is it right to say the Court of Appeals said there must be a hearing every time?

Mr. Saylor: --No, they did not.

They said that there must be a hearing if four threshold requirements are met.

First, the format must be arguably unique; secondly, there must be significant public grumbling by those loyal to that particular format; third, the format must be one which could be... the adherents of that format must be sufficiently numerous so that one could say there are enough frequencies available in the community so that in a technological sense their preference could be satisfied.

And fourth, the point that you were raising a moment ago, there must either be substantial material question about the financial viability of the format or as to whether or not that format could arguably become financially viable.

Unidentified Justice: Now, is it the Commission's submission that considering those threshold matters that you just listed is beyond the Commission's competence or that's just a wrong construction of the statute?

And I suppose you would suggest that raises a First Amendment question.

Mr. Saylor: The Commission's basic position is that there's nothing in the statute which requires this type of inquiry.

The second point of my argument today is that the Commission's judgment as to what is or is not in the public interest was a reasonable judgment.

And third, the Court of Appeals' approach to this matter raises serious First Amendment reservations.

Unidentified Justice: Does this represent a change of mind by the Commission, or has it always had this position?

Mr. Saylor: The Commission has always had this position.

There was a period subsequent to the Voice of Atlanta case announced by the Court of Appeals in 1970 where the Commission was trying to determine how it could satisfy the--

Unidentified Justice: But prior to 1970 the Commission's position was always what you say it should be today?

Mr. Saylor: --Yes.

Unidentified Justice: Or it is today?

Mr. Saylor: Yes: that it's a matter for the licensee to decide what type of entertainment programming is most in the public interest.

Unidentified Justice: Subject always to the risk that he may be confronted with some complaints at the time of renewal of the license on program content.

Mr. Saylor: He might be subject to those complaints but--

Unidentified Justice: Haven't some licenses been lost on that grounds?

Mr. Saylor: --Not on entertainment programming.

Unidentified Justice: Not on entertainment, but on content of the total broadcast, the use of the total broadcast time?

Mr. Saylor: Yes.

there have been licenses taken away for violations of the Fairness Doctrine, which is in a sense a content-related concept.

I believe licenses... a few, at least, have been taken away, or applications denied, for a failure to indicate any desire to program news and public affairs; information, not entertainment.

Unidentified Justice: What if the change that happens to be at issue in a renewal proceeding is an abandonment of any news content in the broadcast day?

Suppose in the midterm a licensee abandons any kind of diversity in its program and goes to, say, all sports, as the Chief Justice suggests, and no news, no educational matters, and things like that.

Then, would you say that's to be left to the marketplace completely?

Mr. Saylor: The Commission's position is that the licensee does have discretion to change midterm from what the licensee proposed at the outset of the license term.

However, if there is evidence that the licensee never intended to fulfill that proposal--

Unidentified Justice: That isn't my question.

I mean they... the licensee did intend to fulfill it at the outset and then changed it, but in the midterm it decides to change to all sports or in a transfer proceeding the transferee proposes to go to all sports, whereas his predecessor had a little variety in his program.

Now, is that a... would that be outside the reach of the Commission?

Mr. Saylor: --I think not.

I think the Commission would take a look at that to determine why the licensee thought that it would be in the public interest to program--

Unidentified Justice: Well, would the Commission have the power to, under the statute to deny the transfer on that basis?

Mr. Saylor: --I think the Commission would have the authority under the statute to deny the transfer or to deny renewal, but the inquiry--

Unidentified Justice: Well, is that different than the issue that's involved here?

Mr. Saylor: --I think it is.

Unidentified Justice: Why is that?

Mr. Saylor: The inquiry in that case would, if I understand the hypothetical correctly, the inquiry would be into the quantity of news and other non-entertainment programming.

The licensee would have changed to zero percent programming.

Unidentified Justice: Well, public interest, convenience, and necessity is virtually unbridled discretion unless it's somehow filled in by the FCC, and how has the FCC filled it in in this respect?

Mr. Saylor: Mr. Justice Rehnquist, I would agree with your characterization of the public interest standard.

The Commission years ago indicated that diversity was an important aspect of the public interest.

But in this context the Commission concluded that there are two types of diversity of ideas.

There is diversity between broad format categories and in addition there is diversity within a format category.

There are perhaps over a hundred different types of middle-of-the-road programming.

Middle-of-the-road is a classification.

There are, as I think was implicit in Justice Marshall's question, many different types of rock music.

The Commission felt that there are two different types of diversity and the Commission is not in a position to choose between one and the other.

Listeners do indeed identify substantial differences within a given format category.

In addition there are other public interest considerations, other considerations which fall into this rubric of the public interest.

One is the idea that the licensee should have wide discretion.

This Court has indicated as much, its approval of that concept, in several decisions recently, including the Midwest Video II case, and the case of CBS v. Democratic National Committee.

In addition, the concept of how to balance and accommodate these different interests is one which this Court has said is appropriately a matter for Commission discretion.

Here the Commission concluded that it simply lacked the capacity to decide what is most in the public interest in the case of two different competing types of entertainment programming.

Unidentified Justice: Well, is it the Commission's position that if there's a proposal to switch from one kind of diversity to another, that's the business of the broadcaster?

Mr. Saylor: Yes.

Unidentified Justice: But if a broadcaster wants to shift from a program that's got some diversity in it to a thoroughly unique program, all one-sided or all one content, that he is in trouble?

Mr. Saylor: Only insofar as under the current guidelines the licensee would be neglecting news and informational programming entirely.

Unidentified Justice: Well, he may not get renewal then, or the transfer may not go through; right?

Mr. Saylor: Perhaps, but it depends upon the licensee's explanation.

If the Commission concludes that the licensee has done it in good faith and believes that it is in the public interest, then the Commission would not prevent renewal.

Unidentified Justice: So your suggestion is that these are exactly the kinds of judgments of the public interest that the Commission ought to make rather than a court?

Mr. Saylor: Absolutely.

Furthermore, there is nothing... as I said earlier, that's... on the face of the statute or in its legislative history or anything that's implicit in the statute that would indicate the approach taken by the Court of Appeals is mandatory.

Unidentified Justice: But if you suggest that all of those things that we've just been talking about, are they equally suspect under the First Amendment?

I guess you can't say that.

Mr. Saylor: I think that, if... by different things you mean the amount of entertainment programming or the quality of the entertainment programming?

Unidentified Justice: The shift from... is it equally suspect under the First Amendment to object to shifting to uniqueness as it is to shift from one diversity to another?

Mr. Saylor: I don't think there's--

Unidentified Justice: I don't understand your First Amendment argument then.

Mr. Saylor: --The First Amendment argument really relates to... it is not that the First Amendment... except in the area of chilling experimentation the Commission did not conclude that there would be a First Amendment bar.

They did believe that the impact upon experimentation, on licensees who would want to try unique format, would be adverse, counterproductive even to the objective of the Court of Appeals.

So in that area the Commission viewed the situation as creating an impermissible chilling effect.

But otherwise, I think the Commission's concern was with the values of the First Amendment.

The greater the degree of Commission intrusion, the greater the portion of the broadcast day which is affected, the greater the amount to which the Commission is entangled in making value judgments about programming, the more the First Amendment is implicated.

It is a balancing of different values, and certainly in this case involving entertainment programming the Commission felt that the balance tipped very much in favor of leaving the judgment to licensee discretion.

Unidentified Justice: Mr. Saylor, when a license is initially granted, particularly where you have competition between two applicants, is entertainment program format relevant in the Commission's view?

Mr. Saylor: The Commission has never indicated that entertainment programming would be decisionally significant in a comparative case.

Unidentified Justice: Does it inquire into the entertainment program format of a prospective applicant?

Mr. Saylor: No.

Unidentified Justice: It doesn't even ask for it?

Mr. Saylor: Well, it does ask what programming--

Unidentified Justice: What does it usually ask?

Mr. Saylor: --what programming is proposed, but it's a very general question, and one, I believe, if the Commission is affirmed in this case, it would probably eliminate that question from its--

Unidentified Justice: But it has been asking that question up to now.

And I'm just... why would that even be relevant under your theory?

Mr. Saylor: --Why would?

Unidentified Justice: Why has it done it... it's done this for years, hasn't it?

Mr. Saylor: The Commission has gathered the information for years, I would say more for statistical purposes than anything else, but the publicly available sources are sufficient to provide that information so I think the Commission might well reconsider even asking for that information.

Unidentified Justice: And you would say it would never be significant in choosing between rival applicants?

Mr. Saylor: Entertainment programming has never been and would not be in the future.

I would like to reserve five minutes of my time, if I may, with the permission of the Court.

Thank you.

Chief Justice Burger: Mr. Dyk.

ORAL ARGUMENT OF TIMOTHY B. DYK, ESQ., ON BEHALF OF THE PETITIONERS AMERICAN BROADCASTING COS., INC., ET AL., & NATL. ASSN. OF BROADCASTERS ET AL.

Mr. Dyk: Thank you, Mr. Chief Justice, and may it please the Court:

What we have in this case, of course, is a policy judgment by the Commission not to engage in a particular kind of regulation of broadcast programming.

And that fact alone distinguishes this case from many of the other situations about which the Court was asking.

Because in those situations the Commission has determined to engage in program regulation in its view of the public interest.

The Congress in 1927 and again in 1934 charged the Commission with the task of determining what is in the public interest in broadcasting.

And when the Commission gets into the programming area that of course requires the drawing of very delicate and difficult lines.

This is not the first case involving such questions to come before this Court and I'm sure it will not be the last.

But where the Commission as here has reached a policy judgment that regulation would not serve the public interest the Court of Appeals should not substitute its judgment for the Commission and impose a regulatory regime which the Commission is very much opposed to.

Unidentified Justice: Going back, Mr. Dyk, to this question in the application, either an initial application or a transfer with a new transferee, is the question in your view directed... questions about program content... and they do; the Commission does ask about that... is that directed at determining whether there is the appropriate diversity or is it directed at the quantitative aspects of a particular program?

Mr. Dyk: The Commission asks a number of questions on the form about programming, including the quantity of news, public affairs, informational programming.

It asks questions about so-called ascertainment of community needs, an obligation which the Commission has imposed to require the broadcaster to go out in the community and interview the general public and community leaders to determine the problems, needs, and interests of the community.

The broadcaster is required to make lists of these problems and to propose programming responsive to them.

There are other questions on the form also relating to the amount of commercials.

In addition to all of that--

Unidentified Justice: Is this the form for an original license?

Mr. Dyk: --It would both be on the form for an original license and for a renewal of license though the amount of details required is somewhat different.

But on both of those the broadcaster has been asked in the past a question about format.

And at one time there was a question there that asked how this contributed to diversity?

That second question has been eliminated from the form because the Commission thought that it was inappropriate to get into those areas.

But despite the existence of these questions on the form, the Commission has never gotten into the question of whether a particular format should be abandoned or whether a broadcaster should be required to continue with a particular format, because of the Commission's view that that intrudes very much in the area of program content.

As to why the question is on the form, I think one needs perhaps to understand a little bit of the history of it.

When the Commission first got into business of applying the public interest standard, there were many fewer broadcast stations than there are today.

There are about 8,500 of them now, of which I think about 1,000 are public stations.

There were only a few hundred at the time, originally.

And the Commission's view in the early days was that... and this was the view of broadcasters also, that there should be a general approach to programming, and they had various categories and broadcasters were thought to pretty much have the same programming approach, and that conformed to what broadcasters wanted to do at that time.

Part of the implication at that time was that a specialized format such as we have now in great abundance because of the large number of stations, the development of FM and so on, that that might raise special public interest questions, so the question on the form really arose because the Commission was concerned that at some point that the move to these specialized formats and away from a more general programming approach might itself be something with which the Commission should concern itself I think the Commission, based on the present experience and the great diversity that exists, has recognized that most stations now, perhaps 90 percent of them, have these specialized formats, and it really has determined that it should not regulate.

Unidentified Justice: Inform me what you mean by specialized format.

You say, 90 percent of the radio stations have a specialized format?

Mr. Dyk: Yes.

For example, WMAL I think, in this city, might be viewed by some people as having a more general programming approach, news, music, talk, and so on.

But most of the stations have a specialized format, whether it be classical or rock or middle-of-the-road, beautiful music, all news; there's an immense variety of them, depending on how you categorize them.

There could be said to be hundreds and hundreds of different formats.

And it's not just the music that's played, but also how you treat the news, where you place it, the style, the pace of the station.

And these are things that appeal very differently to different members of the audience, so that someone might see a great difference between one station which classifies itself as a rock station and another station which also may classify itself as a rock station, but the sound of those stations, their quality and their approach, may be very, very different and mean very, very different things to the listener.

Unidentified Justice: Mr. Dyk, when the Commission has reached its determination along these lines, that it would not be in the public interest to regulate as it has, what is the standard of review which the Court of Appeals applies to review that decision?

Mr. Dyk: The Commission decision not to regulate?

I would suppose under the statute it's an arbitrary and capricious standard.

But here we're dealing with a situation where there's no specific statutory language requiring this regulation, where there's no legislative history suggesting that the Commission should do it.

And indeed, there is very specific legislative history, we think, suggesting that this kind of a qualitative approach to programming, whether it be in the entertainment area or the news area or any other area, is something that the Commission is not supposed to do.

It's not supposed to set--

Unidentified Justice: Well, that's the contrary to law standard.

Mr. Dyk: --Pardon me?

Yes.

Unidentified Justice: You're suggesting it's the contrary to law standard?

Mr. Dyk: Yes.

I think that's what the Court of Appeals viewed it as, and they suggested that what the Commission was doing was contrary to law.

I think we find it somewhat difficult to find in the statute any legal requirement that the Commission engage in this very kind of intrusive regulation where the First Amendment and the statute and the history of the statute and the policy of the statute reflected in this Court's decisions in CBS and Midwest Video all counsel against a very intrusive kind of Commission regulation that would be involved here.

Unidentified Justice: The law being public interest, convenience and necessity?

Mr. Dyk: That is apparently what the Court viewed as governing here, and--

Unidentified Justice: Is there any other statute for it to fall back on?

Mr. Dyk: --I think not.

No, I think that is the only provision that they could rely on, and it is the only provision that they relied on here.

I think there was some reference to some other general portion of the statute in one of the other earlier decisions, just about the larger use of radio or something like that, but that's equally general and this Court in NCCB suggested that that is not a ground for the Court of Appeals telling the Commission what to do.

Unidentified Justice: Mr. Dyk, as I understand your position, the statute does not require the Commission to take the view that the Court of Appeals took: they must follow these factors.

Do you think the statute would have permitted the Commission to adopt the same rule that the Court of Appeals has in effect forced them to adopt?

Mr. Dyk: That, of course, is not a question that's here.

But I think the answer is clearly, no, that the Commission could not have adopted that kind of intrusive regulation.

Unidentified Justice: Even if it thought this was the appropriate way to achieve diversity?

Mr. Dyk: Yes, I think that is true.

Because when the Commission gets down into this question of prohibiting the broadcaster from presenting a particular kind of program, as this Court recognized in Red Lion, as this Court recognized in Pacifica while sustaining the particular Commission ruling there, there are very substantial First Amendment and statutory questions.

And for the Commission to get into this area of regulation would require it to make the most elusive and subjective kinds of judgments.

Unidentified Justice: Do you say that for a constitutional reason or a statutory reason or both?

Mr. Dyk: Both.

The statutory reason relating to this history of Commission regulation; the 1927 Act where Congress adopted very few provisions in the Act requiring specific regulation of programming; Section 315, of course; Section 1464, which was involved in Pacifica.

And at the same time it rejected many, many other proposals to require more intrusive regulation of programming, including the priorities provision which I had mentioned a moment ago, a provision to require equal time for the discussion of public issues, provisions to prohibit various kinds of discrimination against programming.

And the Congress rejected all of these, and instead adopted Section 326 and in 1934 adopted Section 3(h) which this Court has discussed in its various decisions.

And in order to avoid these constitutional questions one looks back at the statute and finds that the Congress was deeply concerned about Commission intrusion into program content--

Unidentified Justice: Mr. Dyk, if I understand your argument then, it is not that the Commission has made the policy judgment; rather that Congress has made this policy judgment.

Mr. Dyk: --My argument, Mr. Justice Stevens, is, both.

That the Commission in this case has made the policy judgment not to intrude, and that that alone is sufficient to sustain the Commission--

Unidentified Justice: But you do also contend that Congress made precisely the same policy judgment?

Mr. Dyk: --That is correct, Your Honor.

And--

Unidentified Justice: You mentioned that 90 percent of all the stations have a particular format?

Mr. Dyk: --Specialized format.

Unidentified Justice: Specialized format.

Suppose the Commission was confronted with a situation in a community that's served by five radio stations, we will assume.

Four of them are already specialized on rock music, whatever that definition embraces, and the fifth one comes in and says, they can do a better job of rock music than the others.

Would the Commission say, no, we've got enough rock stations, we want a broader base, more diversity in your entertainment?

Mr. Dyk: No, it would not and it could not, and the reason that it would not, or one of the reasons that it would not is because the hypothetical, Mr. Chief Justice, which you are assuming is not the way the market works.

It's a very dynamic market, a very competitive market, it's a terribly fragmented market, as compared to television.

In the larger cities we have dozens and dozens of stations.

They are always looking for a new programming approach.

They are always trying to innovate.

They are always trying to get a larger share of the audience.

And you find that format shifts occur constantly.

And one of the things that the Commission strongly suggested here is that if you have this kind of intrusive regulation, that broadcasters would be very reluctant to adopt these innovative formats, for example, the all news format, which came into being in the late 1960s.

Many people and Commissioner Robinson suggested this before.

Many people believed that that innovation would never have occurred if the Court of Appeals regulatory regime had been in effect, because a broadcaster is extremely reluctant to get himself into a situation where he adopts an innovative format, finds that it does not work, and then is barred from changing that without having to go through a lengthy and expensive hearing, all the while, perhaps, losing very, very substantial amounts of money.

The WEFM station involved in one of these earlier cases lost about $2 million under the format that was involved in that case, and of course a hearing was held to be required because the Court said, well, maybe you didn't lose the $2 million because of the format, maybe you lost it because of mismanagement or something like that.

So, the hearing that would be required in many, many of these cases is a very substantial deterrent to a broadcaster who is thinking of changing the format.

Unidentified Justice: Then, are you saying that in this hypothetical, four stations, all rock music, and another one that is a so-called good music station with a variety of classical music, is going to shift to the rock pattern and a half a dozen community organizations come in, the symphony or the opera society, choral groups, religious groups, and say, this community is saturated with rock music, there should be one station which will have a broad base, religious music, opera, classical music, semi-classical, popular, the Commission wouldn't hear that, I take it?

Mr. Dyk: It would not hear that and it would not need to because if such a demand existed it would be met by broadcasters in the market.

We find in a number of these--

Unidentified Justice: Well, where do you... from what do you draw that statement?

Mr. Dyk: --Well, for example, there was a recent change in New York.

I think that it was, the call letters were WRVR, which was a jazz station, which changed its jazz format to country music, and almost immediately a couple of other stations in the market expanded their jazz programming.

They came in to fill that gap.

There's a substantial amount of evidence in the record that that sort of thing happens.

If someone abandons a format and there is a great need for that kind of programming, a great demand for it, someone will come in and do it.

But the problem is that in some of these situations where... for example, in the Atlanta case, the Voice of the Arts in Atlanta, a case which was decided by the Court of Appeals, they relied on this survey that purportedly showed that 16 percent of the people in that market really preferred classical music.

Well, there were lots of defects to that survey.

But the major defect is that there wasn't anything like 16 percent of the people listening to that station.

It was less than one percent.

If 16 percent of the people in that market had wanted classical music, there wouldn't have been one classical music station; there probably would have been three of them, because that's an enormous market share.

The only way that listener preferences can really be determined here is by allowing the marketplace to work, allowing broadcasters to innovate and change, based on their hunches, based on their own surveys to try to meet the demands of the audience.

Unidentified Justice: Are you saying that Congress in the '27 and '34 acts has in effect mandated that the marketplace and nothing else is to govern?

Mr. Dyk: Well, I think, Mr. Chief Justice, that that would be going a little far.

I think that Congress obviously contemplated that in some areas the Commission would have to intervene.

Since 1959, I assume, or when Congress adopted the Fairness Doctrine as part of the statute, that that is one of those areas, and one of the parts of the Fairness Doctrine, the so-called first part of the Fairness Doctrine, is that broadcasters have to present controversial issue programming.

So, in your example of the station which did nothing but program all sports, as Mr. Saylor said, that probably would raise an issue of compliance with the Fairness Doctrine, because the broadcaster wouldn't be serving the public by total absence of information programs.

Unidentified Justice: But that's because of a specific statutory provision.

Mr. Dyk: Yes, a specific statutory provision, which obviously we do not have here.

And I think that the Commission because of the dynamism of the radio market and because of the large number of stations, because of the very kinds of subjective judgments that they would have to make here, was correct in concluding that it could determine not to impose this particular kind of intrusive regulation.

The kinds of distinctions that would have been required, or would be required by the Court of Appeals' regime, are terribly subjective between fine arts stations and classical stations, between contemporary music and progressive rock, and even in one case which isn't recorded in F. 2d... it's the WONO case, the allegation was that the selections that the broadcaster was choosing were incongruous and unadventurous.

And the court said, well, you've got to have a hearing to see whether under those circumstances there's a unique format that's been abandoned and that the Commission should raise a public interest question.

So it's those kinds of very intrusive judgments that would have to be made here.

Now, in addition, of course, to the specific priorities provision that was deleted from the statute, the Congress, as this Court has recognized in CBS and Midwest Video, decided to set up a system of public trusteeship leaving to the broadcaster, by and large, the specific programming judgments.

And just as this Court in the CBS case said that to require a general system of access, as the court, the same court has required there, would be to abandon this editorial role for very speculative gains, so it would seem here, that the same kind of speculative gains is all that one could hope from the regulatory regime which the Court of Appeals would impose, and as the Commission found, the gains would not only be speculative, but there would be this very, very adverse effect on innovation, experimentation, and the operation of the marketplace.

Mr. Chief Justice, unless there are questions, I'd like to reserve the remainder of my time for rebuttal.

Chief Justice Burger: Very well, Mr. Dyk.

Ms. Glen.

ORAL ARGUMENT OF MS. KRISTIN BOOTH GLEN, ESQ., ON BEHALF OF RESPONDENTS, THE WNCN LISTENERS GUILD, ET AL.

Mr. Glen: Thank you, Mr. Chief Justice; may it please the Court.

My name is Kristin Booth Glen.

I represent the WNCN Listeners Guild, which was one of the petitioners in the three cases below.

I'll be speaking for all the respondents today, except that Ms. Wilhemina Cooke, my co-counsel, will be speaking for the last ten minutes on the specific issue of foreign language formats, which is perhaps the starkest example of what we have in front of us today.

I'd like to speak generally about the issues that I think the Court has been exploring with Mr. Dyk and Mr. Saylor, but suggest that if there is time I hope to save a few moments at the end to raise with you an independent ground upon which the Commission's policy statement here can be set aside.

And that is, it's blatant and flagrant violation of Section 553 of the Administrative Procedure Act, which we have argued at some length, so poisoned this record that the policy statement simply may not stand, even under your rulings in Vermont Yankee.

Unidentified Justice: Which section is that, counsel?

Mr. Glen: Excuse me, Your Honor?

Section 553, the notice and comment requirement.

I could speak to that now if you wish but I think perhaps--

Unidentified Justice: No.

Anytime.

Mr. Glen: --I hear from the questions that the Court has been asking a great deal of concern with what I think has troubled us from the beginning of this case.

The Commission itself in over ten years of listening to the D.C. Circuit, counsel for the Commission and for the private parties today, have repeatedly mischaracterized what the D.C. Circuit has been doing as some intrusion into policy, as some rewriting of the public interest standard, as some requirement that the Commission or the Government range freely among broadcasters, telling them what to play, telling them what not to play.

And nothing, in fact, as I think the very restrained opinion of the D.C. Circuit below says, is farther from the truth.

This is really quite a simple case.

This is not a case in which there is disagreement on what the public interest requires in terms of diversity.

This is not a case in which the D.C. Circuit is substituting its policy judgment.

This is a case actually unlike most of the communications cases that you hear.

This is simply about procedure, about the requirement that a regulatory agency follow the procedure that the statute which Congress has passed requires it to do.

And--

Unidentified Justice: Well, the regulatory agency and the Court of Appeals don't have quite the same view of the statute, do they?

Mr. Glen: --Well, they certainly don't, Your Honor, but certainly it is a premise of the separation of powers in this country, that a court's construction of the statute is ultimately binding.

Now, obviously you have it within your power to construe this statute differently than the Court of Appeals did, but the Court's construction of the statute itself, which is not a policy issue here, is binding on the agency.

And it is in fact this construction which is quite clear and which I think quite clearly comes from the statute that the Commission has for reason of its own... and I'll speak to that, I think... repeatedly refused to follow this statute.

Now--

Unidentified Justice: That is, as construed by the D.C. Court of Appeals?

Mr. Glen: --Your Honor, not just as construed by the D.C. Circuit.

I think that--

Unidentified Justice: No, as construed by you as well?

Mr. Glen: --Not even by me, Your Honor.

I think actually as construed by this Court as early back as the case of Ashbacker Radio.

If you look at the statutory scheme, particularly Sections 309 and 310, you notice that, what again I think you meant at the argument here, what Congress did was set up a comprehensive licensing scheme to deal with the electromagnetic spectrum.

And what it also did was say that we will choose among various applicants if there are choices; if there are none, we will look at the applicant who comes in to decide who will best serve the public interest convenience and necessity.

And we will do that in three-year blocks.

We will give licenses for three years.

There is no property right in those licenses.

The statute says, in three separate sections, that there is no right beyond the three-year period.

And, in fact, the whole congressional scheme is that in this renewal decision which the Commission must make, the channels which are allocated are always free to be reallocated if someone else can better serve the public.

And as Justice Burger... then Judge Burger, said in the D. C. Circuit, "Licensees run on their record".

That's what they do.

The way we choose licensees is by their service.

In the end that's it, and service is programming.

So this is clearly within the statute, and has always been involved in the Commission's determinations.

And I will in a moment, if you will bear with me, go down a whole series of areas in which the Commission looks into this kind of programming in terms of judging service, both for initial applicants, for renewal applicants, for competing applicants, for waivers of allocation policy, and so forth.

But the statute itself, I think, really requires some care.

Section 309(a) states... and it is the mandatory quality of the statute, I think, that the D. C. Circuit is dealing with, again and again, and which takes us away from the Commission's decision that it is its policy not to make judgments... 309(a) says that in each application the Commission

"shall determine whether the public interest, convenience, and necessity would be served by granting."

Section 309(d)(1) provides... and this is different from many regulatory statutes, but it is special here because of the special nature of the electromagnetic spectrum, that any party in interest may file with the Commission if it believes that the public interest will not be served.

And in the seminal case of the United Church of Christ that Justice Burger decided in 1966, the public was given standing to raise precisely those issues, because it is the public, that decision said, who is best in a position to talk about the service that the licensee has rendered or will render.

They know it the most, they care the most, and therefore they are appropriate parties.

Finally... and I might add, that the transfer situation is governed by 310 but the standards are exactly the same and the language, the Commission "must" or "shall", is equally there.

Finally, Section 309(d)(2) provides that if a substantial and material question of fact is presented or if the Commission for any reason is unable to find that the grant of the application... and again this would be either the initial application, the renewal, or the transfer... would be consistent with Subsection (a): it shall provide as proceeded; if not it must hold a hearing.

In other words, we have a statutory scheme which says, every time an application is made, whether it is an application to be the first broadcaster on a frequency; to renew your license; an application by a competing applicant who comes in at a renewal period and says, I can do it better; or when an existing licensee wishes to transfer his license; the Commission must make the public interest determination.

Now, there has never been any question until this proceeding... and in fact I believe that there is not even any question in this proceeding... that that public interest determination includes diversity.

The diversity standard of the public interest standard is not free-wheeling; it comes from the Act.

The Act begins, that

"the purpose of this Act is to provide service to all the people of the United States."

Unidentified Justice: Now, what kind of diversity?

Wouldn't it depend upon what's already in the market?

Let's say you have an area, a metropolitan area, in which there are 12 radio stations, and eight of them already broadcast various kinds of rock and roll, and/or country and western music, various kinds of it?

In that market, if an applicant for a license said he wanted a... he proposed to broadcast as the entertainment portion of his programming rock and roll or country and western, it would be quite a different situation from a market, wouldn't it, where the ten stations already broadcasted various sorts of classical or semi-classical or conventional popular music?

Mr. Glen: Well, of course, Your, Honor.

And in fact the Commission--

Unidentified Justice: Or does in your submission each applicant for a license or for a transfer or for a renewal have to himself provide diversity, regardless of what's already in the market?

Mr. Glen: --No.

Your Honor, I think, actually, I'd like to clear up something that was said before.

With regard, for example, to initial applicants, the form--

Unidentified Justice: This case does not involve the initial--

Mr. Glen: --It doesn't, Your Honor, except that--

Unidentified Justice: --applicant... it promotes the same statutory language.

Mr. Glen: --Right.

Except that in every situation other than the situation raised in this policy statement, that is to say, when citizens come in and say, this proposed abandonment or this actual abandonment of a unique format has decreased diversity.

In every other situation where diversity is at issue, the Commission looks from, starting from the application for an initial license where contrary to counsel's position, on the radio license form 301, and it's in Footnote 7 of our brief, the citation, the question is asked, what programming do you propose and how does it contribute to overall diversity?

They don't ask that on television licenses, and I think that that's a clear choice, understanding that there's a conscious choice, to look for diversity within a service area when making choices among either new applicants or competing applicants.

Now, when an applicant for a station or a competing applicant comes in and says, I propose a new format, a specialized format, a unique format, whether that is classical music in a market with ten rock stations or whether it is Spanish language in a mixed market or whatever, the Commission's own statement, its own policy statement, reaffirmed as recently as September of this year, says that that applicant gets a comparative plus, a merit, in the determination as to whether he or she will best serve the public interest and get the license.

Unidentified Justice: And is this true only if there is not already a Spanish language station?

Or if it--

Mr. Glen: Well, what the most recent case says, it's the case called Cameron, which again is cited in our brief, it says that the comparative merit will be given only to a licensee who proposes a unique format, and that is a unique format, obviously, in the service area.

So if there are already four Spanish language stations, he gets nothing.

Unidentified Justice: --Then it's not unique.

Mr. Glen: But if it is the first classical music station, he does.

Unidentified Justice: What if there was a unique format proposed in Montana, a Spanish-language speaking station and there are 20 witnesses before the Commission, and all of them say they don't understand the language and they wouldn't tune in to a Spanish language speaking station, and there is no proponent of the thing testifying.

Does the Commission nonetheless grant a frequency to the Spanish language speaking station?

Mr. Glen: Well, Your Honor, the question of uniqueness or of contribution to diversity is never necessarily controlling.

It is simply a public interest aspect which the Commission takes into account.

It may be counterbalanced by some other aspect, there may be another format that many people wish to hear, there may be other reasons, there may be minority ownership... and that's something that the Commission is interested in... it need not be dispositive, and clearly if there is no need for it in the service area, the plus which it may get may not be enough to outweigh the programming proposals of the other applicant or prospective licensee.

Unidentified Justice: In other words, a Bulgarian language station would be unique but it might not be in the public interest and--

Mr. Glen: It's also pretty unlikely that anybody would propose it in Montana... Exactly.

But it is an aspect of the public interest, and it is an aspect which the Commission looks at all the time.

Right here in Washington, even as we speak, the Commission has said, in a competing application for WOOK-FM, because of the loss of a Spanish language format and that whole complicated situation, leaving 300,000 people in the standard metropolitan statistical area without Spanish language programming, that one of the competing applicants, a Hispanic, has proposed a Spanish language programming format in its application.

In the event a threshold showing is made to the administrative law judge that Hispanic's proposed format is specialized and unique, an inquiry into the need for that format may be considered under the standard comparative issue.

So in fact there you have the Commission itself saying, when a broadcaster comes in and says, I propose to increase diversity and to serve a portion of the community that has not been served, they'll look at it.

Unidentified Justice: --Well, if the Commission is saying this, why did the Court of Appeals overrule?

Mr. Glen: Because they say it in every situation except the single situation which is before you here and which was before the Commission in the policy statement.

And that is, where the question is not an increase in diversity because a broadcaster is proposing a unique format or increasing diversity by some specialized program, but where listeners, where the very public who were let into these proceedings in 1966 by the UCC case says, this proposed abandonment of a unique format will decrease diversity.

And the Court of Appeals has said, it must be treated the same way.

Certainly the policy considerations, the difficulties that the Commission and the private parties speak of in terms of making these determinations are exactly the same.

And yet the Commission has said, in this instance where it's the public who raises it, where we're talking about the decrease, we will not look.

And it is that "we will not look" that the Commission has said finally and clearly in its policy statement, although it had previously had at least a generalized statement that it would take hard looks in hard cases and if a unique format was really abandoned it would take a hard look.

In this policy statement, no date at the end of the statement, it said, we have decided that we will not look.

In other words, we will not make the public interest determination that the statute mandates.

Unidentified Justice: Was that the Commission's position before 1970?

Mr. Glen: Well, the Commission always took a position that licensee discretion in general and that the marketplace did best in terms of allocating its own formats.

Unidentified Justice: When did this hard look notion come up?

After 1970?

After the Court of Appeals decision?

Mr. Glen: No, Your Honor.

Earlier... well, the decision that was reviewed in WEFM, which was the first en banc format case in the D. C. Circuit, in fact had appended to it a policy statement that Commissioner Burch... that Commissioner Burch wrote and that other commissioners joined in, in which he said... and this is what's very interesting, because there is no disagreement here between the Court of Appeals and this policy statement, that, in general we think that the marketplace works very well.

In general we think that the marketplace maximizes diversity.

We think that these choices should be made by licensees, and that's the best thing.

But where... and it's quoted in our brief... that where a unique format is going to be abandoned, where there will truly be a loss of diversity, we will take a hard look and consider that.

Now, that I consider to be consistent with the statutory standard.

Unidentified Justice: Was that a Commission position or just several commissioners?

Mr. Glen: Well, it was a majority.

I think it was six out of seven of the commissioners who issued that statement and they did so particularly because, although there was a specific adjudicatory situation, they said, we want you to know what we're talking about.

And what we're talking about is in general letting the marketplace do it, but a hard look, the safety valve, the kind of things discussed in--

Unidentified Justice: You say that was attached to their position they took in the Court of Appeals in 1970?

Mr. Glen: --In WEFM itself; exactly.

Unidentified Justice: What was the difference between them and the Court of Appeals, then, at that time?

Mr. Glen: Well, the difference in that case, that was an adjudication, and they did not look, and they said, we don't find that there is an issue of fact.

And in fact, two out of three judges of the original panel of the Court of Appeals that heard it said, right, there's no question of fact.

And it was the en banc--

Unidentified Justice: So, you think... do you think this new policy statement is wholly inconsistent with the policy statement that six of the seven commissioners stated in 1970?

Mr. Glen: --It is, Your Honor, and I think they specifically say in the Appendix at 134a, it's Footnote 8, to their decision, to the policy statement that is in review here.

And it reads as follows:

"The Commission has indicated that it would take an extra hard look at the reasonableness of any proposal that would deprive a community of its only source of a particular type of programming."

And then it cites the Zenith Radio Corp., which was in fact the WEFM case at the Commission.

Unidentified Justice: Well, then, that would seem to apply whether the public raised a fuss or not?

Mr. Glen: Well, it only comes up, really, if the public raises a fuss, although I think that the obligation to look is always on the Commission.

But I think that the case below here says that you have to have public grumbling.

But the Commission continues here, having just stated that it will give a hard look where a unique service is going to be taken away,

"Having given the entire matter further study, however, we have concluded that such a position is neither administratively tenable nor necessarily in the public interest."

"Rather, as discussed herein, we believe that the market is the allocation mechanism of preference for entertainment formats and that Commission supervision in this area will not be conducive either to producing diversity or satisfied listeners."

In other words, we will not look.

And it is the "we will not look" which is the abdication of the statutory responsibility.

Unidentified Justice: Couldn't it be that we did look and don't agree with you?

Mr. Glen: No, Your Honor, this is a policy statement.

And in fact, the very interesting thing about this--

Unidentified Justice: It says that, we listened to you and we decided the other way.

Isn't that what it says?

Mr. Glen: --Your Honor, the Commission itself throughout both the notice of inquiry--

Unidentified Justice: I'm only talking about what you just read.

Mr. Glen: --Well, perhaps I can relate it back.

In all of these documents, the Commission itself says--

Unidentified Justice: They did give you a hearing, didn't they?

And they didn't stop you from putting on anything you wanted to put on?

Mr. Glen: --No, Your Honor, but what they have said is, they will never give us a hearing again.

We can walk in and say, there are 300,000 Hispanics in this city, there are 40 radio stations.

The Hispanic station is now changing to a format which is duplicated by several other stations.

This is a terrible loss, both to diversity and to the service of a minority community which is part of the undivided ownership and the Commission--

Unidentified Justice: Wouldn't it also be a loss of finance to the station?

Mr. Glen: --Your Honor, we can say this format is making money, this format is necessary, this format will create a terrible loss, and the Commission has said in the policy statement which you are reviewing here and which the D. C. Circuit has struck down, we will not look.

The Commission has said, throughout this proceeding, we recognize that there are marketplace failures.

Unidentified Justice: So your only complaint is they said they wouldn't look?

Mr. Glen: Well, but Your Honor, in saying they will not look they are saying that they will not make the statutory public interest determination that 309 and 310 require them to make.

Unidentified Justice: Well, that's their own... if they hadn't made that statement you wouldn't be here?

Mr. Glen: In this policy review?

No, if they said, we will look, we will follow the statute, we will follow the law as the D. C. Circuit has explicated it, we will do in a situation where listeners raise this question.

Unidentified Justice: Now, will you answer my question?

My question is, if all they said was, if they had not said, we wouldn't look, would you be here?

Mr. Glen: In this policy statement?

No, Your Honor, I would not be here.

Unidentified Justice: Thank you.

Mr. Glen: I would not be here.

It's somewhat peculiar that these cases didn't come up in adjudicatory situations.

There were four of them, as you know, and the Commission had actually prepared a petition for certiorari in WEFM, and for reasons best known to itself, decided not to appeal that specific factual case to this Court.

So all we have is the policy statement here.

But it is, I think, that the policy statement places in very stark terms the Commission's statement that it will not follow the statute, that it is abdicating its statutory responsibility--

Unidentified Justice: No, no, now, the Commission did not say it will not follow the statute.

The Commission said, we are following the statute.

Mr. Glen: --Well, Your Honor, the Commission has said, we will not make this public interest determination.

Unidentified Justice: Exactly.

Mr. Glen: And I think that this is--

Unidentified Justice: And we are following the statute, and this is the only way to follow the statute.

That's what the Commission said.

It never said, we will not follow the statute.

Don't tell us that.

Mr. Glen: --I'm not even sure that the Commission said that.

The Commission said, if our--

Unidentified Justice: Did it say we are going to violate the statute, as you've just argued to us?

Mr. Glen: --No, but it said, in our judgment it's best to let the marketplace make the determination across the board.

Unidentified Justice: And that that's what the statute requires.

Mr. Glen: But, it's pretty clear, I think, from the decisions of this Court as far back as Ashbacker Radio, that when the statute requires a procedure, when the statute requires a hearing between competing applicants, as was the case in Ashbacker, or as here where material and substantial questions going to the public interest are raised, that the fact that the Commission, even given its expertise and whatever, thinks than another procedure might be better, is simply not permissible.

That is in a sense what happened in UCC.

The Commission said, we don't have to let these people in, we don't have to give them standing, and we're not going to hold a hearing.

Justice Burger said, this is a procedural case.

In Ashbacker the Commission said, we think it would be better to just grant this application and put the competing application to the side and hold a hearing later, because it would be in the public interest to get somebody on the air.

And this Court said, no.

The statute says, there is a right to a hearing.

And the fact that you think that there's a better procedure is not within your power.

If you think there's a better procedure, go to Congress.

And in fact, the Commission has gone to Congress every year, and they're there again this year as are many other members of the private broadcast industry saying, don't make us do this, don't make us regulate.

But we have a statutory scheme right now, and the statutory scheme says that they do have to regulate, that there do have to be choices made about who will use this scarce resource.

And, for better or worse, that choice is on the Commission and at least the Commission is in some senses democratically responsible.

For them to say, the marketplace will make the choice, we won't look, is to put the power to decide what shall be heard and who will be served not in people who are responsible to the President and the Congress but to people with marketplace forces.

And that is precisely the scheme that the Congress eschewed by developing a licensing system in the first place.

Unidentified Justice: But you could say alternatively that the Commission has decided that the public interest, convenience, and necessity are best served by the marketplace allocation force.

Mr. Glen: Your Honor, the Commission must make in cases in this Court, from as far back as Pottsville, through NBC and RKO, to discussion in the National Citizens Communications for Broadcasting case, about the broad rule that the D. C. Circuit would have imposed in terms of cross-ownership.

Talk about the Commission's, the requirement that the Commission make an individualized determination, and to say, we're not going to make determinations, we're not going to look, we're just going to let the marketplace do it, is to say we will not make that individualized determination.

And I think that that's really related to the right that the statute creates for a hearing.

Unidentified Justice: If that's the way they construed the statute, admittedly it's contrary to the Court of Appeals construction.

But it would not require a hearing, an individualized hearing in every case.

They say, we're going to let the marketplace do it.

Mr. Glen: But if the marketplace were to be allowed to make these decisions, then you wouldn't have comparative renewal hearings, you wouldn't have initial renewal hearings, you wouldn't have the Commission making choices in every other situation about who will best serve the public.

And that's the question that's being asked here, where someone says, I'm going to abandon the only Spanish language format, or I'm going to abandon the only classical format, or the only black format, is that person best serving the public interest?

And the Commission cannot avoid that determination under this statutory scheme.

In NCCB you said the reason that it's okay to not have an across-the-board rule about divestiture and concentration is because the rights of both competing applicants and petitioners to deny, under 309, are protected because the Commission will make an individualized determination in each case where those issues are raised, whether the concentration issue so substantially affects the public interest that the license should be denied or that it should be given to someone else.

Unidentified Justice: Some of this discussion has left me a little bit confused, but maybe you can clear it up.

You'll recall the hypothetical I gave to your friends on the other side of the table about the community with five radio stations, four of them already in rock, and the fifth one is going to move... and this is either on a renewal or at any time... going to move into all rock, because rock is doing so well.

Now, what's your position on the scope of the Commission's authority to weigh the diversity of programming over the whole community and over all of the stations?

Mr. Glen: Well, Your Honor, it's not my opinion of the Commission's ability to weigh this.

The Commission itself speaks to this all the time.

And in initial application, if there's an open frequency and this is the only applicant, although he was asked the question, how are you going to contribute to diversity, presumably he will not be denied the license because he is not contributing diversity, because there's no one else.

If, however, it's a renewal situation and someone else comes in and says, here's this fellow who's playing rock; I propose to program to the black community... which is 40 percent of this community and which is otherwise unserved.

The Commission itself has said, in cases cited in our brief in Cameron and as I say, as recently as the WOOK case here in Washington, that that applicant will be given a preference, that that is... on that issue.

And that that is something that the Commission will look at and looks at all the time.

It does look at contributions to diversity when broadcasters raise them.

It simply doesn't look at decreases in diversity when citizens raise them.

And in a sense that is symptomatic of the Commission's continued hostility to the United Church of Christ decision, which did allow the public in and which did allow the public to raise these issues.

Nobody but the public knows better.

Unidentified Justice: Well, but that wasn't a decision of this Court.

Mr. Glen: No, it wasn't, Your Honor, but it certainly has received such a citation across the board in cases of this Court and commentators and whatever that I think that there's not a lot of question.

I don't even think that the Commission would deny that it's good law.

It's not, of course, but it's a very important and very substantial explication of what the Act is about, why Congress has chosen this licensing scheme, the kinds of choices that are made, so that this very special resource, the electromagnetic spectrum, which the public owns, and which the Government controls, shall be used to serve all the people.

Unidentified Justice: That holding didn't go to what you have just suggested.

That holding went only to to the parties that the Commission must hear, not how the Commission should decide the issue.

Mr. Glen: Of course, Your Honor, and I certainly don't want to overly butter you up, but it was an opinion in which you really spoke in historic and in policy terms about the statute, about the need for service--

Unidentified Justice: The judges who decided it thought it was a pretty narrow issue, in terms of intervention, not substantive.

Mr. Glen: --It's not substantive, but what it says is that the public, or responsible members of the public, are frequently the best judges of the service that is being given to them, and the Act provides that they are entitled to service.

That's the scheme we have.

And as the opinion said, they care the most and they know the most, and they may be in the best position to vindicate the public interest, and that's why they should be there in these format cases.

And I think it's also important to say--

Unidentified Justice: Couldn't the Commission's policy follow directly from that statement?

Insofar as the public lets its wishes be known, it does so by tuning in to various stations, and the ownership or management of a station would know that, and with the profit motive motivating it, it would give the public what it wanted.

Mr. Glen: --Your Honor, I think that's a very important question and it really goes to one of the confusions that permeate this case, which is the confusion that the Commission engages in over the difference between audience satisfaction or consumer satisfaction and the public interest.

It is very clear that the marketplace in radio is not between the listener and the broadcaster.

Listeners are the bait by which broadcasters obtain advertising--

Unidentified Justice: Well, of course, broadcasters are only interested in that segment of the public which are potential radio listeners.

Mr. Glen: --Well, they're also interested in that segment of--

Unidentified Justice: Some people just never listen to the radio and broadcasters presumably would have no interest in their tastes, even if their tastes represented 15 percent of the community.

Mr. Glen: --Well, but Justice Stewart, it's not just their tastes or whether they listen, it's whether they have dollars to spend on products that advertisers wish to advertise, which is why you see perpetually that large portions of the population or large minorities, the poor, racial minorities, children, the elderly--

Unidentified Justice: Listeners to country and western?

Mr. Glen: --are not served.

Listeners to country and western are at least perceived by advertisers as having good demographics, as having high disposable income, and therefore you may see four country and western stations or five rock stations, because those consumers are favored consumers, and nothing that broadcasts to the elderly, little that broadcasts to children, little that broadcasts to racial minorities who are not perceived as being markets for the advertisers.

So, in fact, the scheme of the Act... and we're not certainly not asking and there's nothing in this decision that says the Commission should go out and say, aha, here's an unserved minority, let's allocate a station.

I mean, that's what in a sense the legislative history that's talked about throughout all the briefs talks about.

And that's not at issue here; we're not talking about allocations.

What we are talking about, though, is that where there is diversity, where there isn't a minority taste or a minority ethnic or a minority age group, a group of listeners who after all own the air waves just as much as the people who buy pimple cream, that when that minority--

Unidentified Justice: They might be the same people.

Mr. Glen: --Hopefully not.

--when that minority is being served and a broadcaster says, I don't want to do that anymore, I'd rather play rock and make more money, that that is a legitimate question, that that decrease in diversity, that decrease in service to that minority audience is a part of the public interest that the Commission should look at in deciding whether to renew the license or grant the transfer, or whatever.

It doesn't have to decide it in favor of keeping format; it doesn't require that... the D. C. Circuit in the opinion below is extraordinarily careful to say how very limited its holding is, that the Commission has no power to tell people they must retain formats or what they must play.

It simply must look at the effect on diversity of the loss of the unique format, what that's raised by a substantial group of the public.

Unidentified Justice: But if the issue is raised, you have to assume there will be some cases in which they would tell the licensee, you must continue the same format.

Mr. Glen: Well, Your Honor, they don't tell the licensee he must continue.

Every licensee runs on his record.

Every licensee who has no property right beyond the three years knows... it doesn't happen frequently... but knows that if somebody comes along and says, I'll do better, that the Commission has the absolute power, although it chooses not to exercise it very frequently, to replace him with someone who will serve better.

Unidentified Justice: Well, is it not part of your position that in a given transfer application that would involve a dramatic change of format, that there would be some case in which the public could come in and convince the Commission that they should not allow the change to take place because they want to retain the old format, it's in the public interest to retain the old format?

Mr. Glen: Your Honor, that's absolutely right and it doesn't compel anyone to do anything.

The prospective licensee clearly has no right to--

Unidentified Justice: Well, it compels them not to do something they want to do.

Mr. Glen: --Well, no, the prospective licensee clearly is out of it.

He has no right to the license at all.

So that the fact that he is being told, we don't need more rock, certainly doesn't violate his rights in any way.

And the present licensee is simply being told, if you don't want to program this, you can go away.

If somebody else wants to program this format, we're going to give them a preference because this is a minority portion of the community that deserves service under the universal service standard of the Act, and that the public interest would best be served.

No one is compelled to continue; there is not a common carrier obligation.

But the other side of common carrier, and I think it's important to look at this, is that licensees don't get financial and economic protection from the Commission either.

That's what the Sanders Brothers case says.

In Sanders Brothers there was a licensee in the community.

The Commission said, we're going to put in another station, because that will increase diversity in this community.

And the first licensee came in and said, wait a minute, you're going to cut into our profits, there aren't going to be enough advertisers, we don't want this guy in here.

Don't let him in.

And this Court held, that's not what it's about.

The Commission's interest, the Commission's vindication of the public's interest in diversity far overrides the broadcaster's interest in profits.

He's given the license, he's allowed to exploit it; if he makes money, fine; if he doesn't make money, fine.

That's not the Commission's concern unless it involves ultimately a decrease or a diminution of the public service.

He's not a common carrier, he's not entitled to protection.

Unidentified Justice: When you get down to the question of diversity, it sounds quite easy and manageable when you start talking, or when you first think of it, but when you start thinking of examples of it, there is going to be kind of hanging over the head of any programmer who... as Justice Stevens suggests... who wants to abandon a unique format, the threat that his license would be not renewed at the end of the three-year period.

Now, to what extent does the Commission have to weigh diversity?

Mr. Glen: Well, Your Honor, that obviously... let me answer that in two ways.

One is to just restate, in case this is troubling you at all, that it's perfectly clear that this Court has held numerous times that the First Amendment is not violated by not renewing a licensee because someone else will better serve the public.

The question of how diversity is implicated or weighed is a fact question in every case.

It's precisely the kind of fact question that the Commission decides all the time.

And in fact it's very illustrative that in the ten years that the Commission has lived under First Voice of Atlanta and then WEFM and now this case, that it has found in various instances that diversity is not terribly affected.

There was a case recently; this is a station in Cincinnati, where the Commission said there are three other stations in the market that play roughly the same thing, therefore diversity won't really be affected, therefore there doesn't have to be a hearing, therefore it doesn't impact on the public interest in such a way that you lose your license.

Unidentified Justice: The only reason you have a hearing is because there's an issue of fact that could result in some different outcome.

I mean, just to say that all you have to do is have a hearing isn't dispositive of the case, because if you're having a hearing it must be about some meaningful contested issue of fact that will result in a different outcome depending on how it's decided.

Mr. Glen: That's true, Your Honor, but there might also be situations... and sadly enough, since I represent a lot of classical music lovers... there are situations where very unique formats are abandoned, and there is not the sufficient public grumbling which the D. C. Circuit has said must occur, and nothing happens at all.

And that licensee gets a free ride.

But he's not entitled to economic protection.

Nobody by virtue of having a license is entitled to be protected against the vicissitudes of a system premised on a choice among licensees for who will best serve the public.

Unidentified Justice: Well, then, if the public is the ultimate arbiter, as in your view, why should public grumbling from more than one citizen be required, in order to hold a hearing on diversity?

Mr. Glen: Well, Your Honor, because the whole point is, is the public interest in diversity being affected?

If a number of people come forward and say, this is terrible, that we're losing this Spanish format, or terrible that we're not going to have classical music anymore; there are 400,000 of us, we've listened to it and we love it.

Then that goes to the impact on diversity which is part of the public interest standard, which the Commission has to decide.

It may decide, for example, that the first black station or the first Haitian station in New York will be offered instead, and that that offsets the loss in diversity.

It's clearly a fact determination but it's not a fact determination any different from the determination that the Commission makes in a comparative situation where a broadcaster says, give me the license because I'm going to do something you need, because I'm going to contribute to diversity.

And, in fact, across the board the Commission looks at this kind of programming.

As recently as in one of the RKO license renewals that have been going on, RKO was allowed to show meritorious service because it broadcast... this was the station in Los Angeles... because it broadcast concerts of the Los Angeles Philharmonic.

The Commission looks at this all the time when broadcasters raise it.

There is no question that it is part of the public interest.

Unidentified Justice: Ms. Glen, do you agree with opposing counsel that the Commission's statement of policy and the Court of Appeals decision in this case relate both to program changes that have been made and those that are proposed to be made?

Mr. Glen: Yes, Your Honor.

Clearly, the Court of Appeals has spoken and again, very carefully, grounded their decision in the language of the statute.

I must be frank with you and tell you that when we started litigating these cases we had hoped that we could challenge format changes whenever they occurred because we felt their impact on the public interest and diversity was so great.

The Court of Appeals has very carefully grounded this in the statutory requirement that on its decision on these applications the Commission must make a determination.

Unidentified Justice: On renewals or on transfers.

Mr. Glen: So that it is only renewals and transfers that are involved here.

Unidentified Justice: Well, but that wasn't really my question.

Yes, I understand that you're in agreement that it only applies to renewals and transfers.

Mr. Glen: I'm sorry, perhaps I misunderstood your question.

Unidentified Justice: But does it apply to program changes that have been made as well as those that are proposed to be made to both?

Mr. Glen: Oh, of course, Your Honor.

For example, the RVR situation was already mentioned.

There was a 24-hour jazz station in New York, WRVR.

Its license comes up for renewal in the spring of '81.

Unidentified Justice: And it has changed?

Mr. Glen: It has changed to a country and western format which duplicates--

Unidentified Justice: During the three-year--

Mr. Glen: --A month ago.

Unidentified Justice: --Yes.

It already had its license.

Mr. Glen: And under the D. C. Circuit's decision... and I believe, under the statute, and hopefully under your opinion here, when that license comes up for renewal, if in fact the 50,000 people who have already petitioned are joined by 200,000 more and there is a substantial showing that there is a need and a unique service here and a community that's served, and financial viability for the format, then it will be raised.

It will not do much for the jazz listeners who want to hear it now, but it is there to be raised in the public interest determination.

And I think that's... it's also illustrative of how limited this decision is, but still how--

Unidentified Justice: It will be equally true in a renewal or transfer proceeding in the Commission under the Court of Appeals decision and the Commission's statement of policy that if the proposed transferee or if the applicant for renewal said, if this transfer is affected or if the renewal of my license is effected, I'm going to change my programming format.

Mr. Glen: --If he said that?

Unidentified Justice: Yes.

This would also be applicable.

Mr. Glen: Of course it would.

Of course it would.

Unidentified Justice: Both the changes that have been made--

Mr. Glen: Right.

Unidentified Justice: --and those proposed to be made.

Mr. Glen: Exactly.

And obviously, the licensees, I think as a practical matter, at this point, if it's not a transfer situation, have figured out that it's better to do it mid-license term because maybe by the time the license comes up the public grumbling will disperse or people will be happier, whatever.

But nevertheless the question of the decrease in that service area and to that minority community is still there.

The public grumbling may dissipate.

Again, Justice Rehnquist, your licensee may get away with it.

That's the chance he takes.

Unidentified Justice: How large a segment of the public does it have to be?

Mr. Glen: Well--

Unidentified Justice: Supposing, instead of your 300,000 Hispanics, it's 200 Hispanics?

Mr. Glen: --Your Honor, that's really... that goes to the problem with the inquiry here.

This Commission was told by the D. C. Circuit in saying, this is your statutory obligation, why don't you go make standards?

Why don't you go devise procedures that will help you to deal with this?

We don't want to wipe you out although I must say there have been ten format cases in ten years, so it's not a huge problem for the Commission.

But nevertheless, you can devise standards which will weed out these people, and in the very proceeding under review here many people came in, answered rhetorical questions that were asked by the Commission about how much grumbling is necessary, what should the burden of proof be, what, how do we decide, you know, if there's substitutability?

And listeners' groups, including the group that I represent here today submitted extensive comments to try to help the Commission develop standards for dealing with this.

The Commission obviously has a great deal of discretion as to how to make these choices and weed people out, just as it weeds people out in Fairness Doctrine complaints.

All that is being said is that it must ultimately make the determination although it can weed them out.

What the Commission should be doing is devising these standards, not saying, we won't follow the statute, we won't follow the D. C. Circuit.

And I think that it can be quite narrow, that the Circuit has said it will--

Unidentified Justice: Well, but you say, "we won't follow the statute".

What statute?

The public interest?

Mr. Glen: --The statute that says, before a transfer or a renewal can be granted the Commission must make a determination that the public interest will be served, and if there are material questions of fact it shall hold a hearing.

That's what the statute--

Unidentified Justice: But the Commission has said that that isn't the way to read the statute.

Mr. Glen: --Well, but they said that in Ashbacker too and this Court said, you may think that there's a better way but that's what the statute said and you have to hold the hearing because the statute provides that you have to hold the hearing.

Unidentified Justice: Right, and this Court presumably will have to say this one way or the other here.

Mr. Glen: I would certainly hope that it would follow Ashbacker.

But I think that the ability to develop standards is really something that is not so difficult for the Commission, and the ability to make these fact determinations is not so terrible, and that the areas in which they do this are really quite bewildering.

They look at programs all the time, they look at the kinds of programming in renewal and in comparative hearings; they look at the promise of specialized format in comparative hearings; they have themselves engaged in such activities as developing anti-siphoning rules for pay cable saying, we're not going to let cable play certain kinds of programming which we think the audience for free broadcasting should get: feature films, sports, series programs.

In other words, they look, they make judgments all the time about programming and about service.

And they do it whenever the licensees and whenever broadcasters ask them to do it, and what they are saying here is, we will not do it when the public asks.

And if this Act is really about securing service to all the people of the United States, if those very special considerations that are set forth in Red Lion... and there's just no way, you know, that anybody arguing this case can say it better than what Red Lion said about that if this resource is to be used, that if it is the rights of the public that are paramount, then the Commission simply cannot take the position that what it will do for the broadcasters it will not do for the public, that it will not serve minority communities, that it will let the marketplace and marketplace forces dictate these choices to the detriment of racial, ethnic, undemographically favored consumers.

It must make this decision.

If it doesn't want to make the decision it can go to Congress and ask Congress to ask to change the statute, but until it does the statute makes it very clear.

And perhaps in conclusion, I am reminded of a ditty, as it were, but it seems appropriate to me, from the first act of Ruddigore, in which Richard Dauntless... and I would like to think of the Commission as dauntless in this even though they have been somewhat misguided... states,

"For duty, duty must be done; the rule applies to everyone."

"And painful though that duty be, to shirk the task were fiddle-dee-dee."

Congress has put the task of making these public interest determinations in the hands of the Commission, not in the hands of the marketplace.

The Commission may not like it but it is guided by a standard which it applies across the board in every other situation.

Its job is to decide who will best serve the public who owns the airwaves, and the decision of the D. C. Circuit below does no more than say that it must make that determination in a principled way, a way which will be reviewed deferentially by the Court, but that it must make the determination.

That's what the case below says, and we would urge your affirmance on that basis.

Chief Justice Burger: Ms. Cooke.

ORAL ARGUMENT OF MS. WILHELMINA REUBEN COOKE, ESQ., ON BEHALF OF RESPONDENTS, UNITED CHURCH OF CHRIST ET AL.

Mr. Cooke: Mr. Chief Justice, and may it please the Court:

I am Wilhelmina Reuben Cooke and I appear on behalf of the Office of Communication of the United Church of Christ, and major Spanish-Mexican-American civil rights organizations which include the Mexican-American Legal Defense and Educational Fund, and the Bicultural-Bilingual Coalition on Mass Media.

These respondents share a common belief that the implications of the order under review here today encompass not only a question of whether we, the public, will have access to diverse musical and entertainment experiences but involve central premises of our broadcast system.

First, that in a democratic society all substantial segments of the public should have some means of self-expression and access to information necessary to exercise their rights as citizens.

And secondly, that at least primary first broadcast service should be provided to all the people of the United States.

Because these issues are presented most vividly in the context of foreign language programming and other specialized ethnic formats, we'd like to make three points to the Count today in the time allotted to us.

First of all, that these formats are a critical aspect of this case.

They demonstrate, first, that one cannot draw a strict dichotomy between entertainment and so-called non-entertainment informational features of radio service.

Secondly, they also demonstrate that the FCC's administrative nightmare argument as a justification for its absolute refusal to look at any format change is suspect.

And finally, it also demonstrates the importance of the public rights and concerns which the Commission has decided must be met by economic forces or be totally ignored.

In the context of the third point we'd like to discuss the Commission's 11th hour suggestion that these formats were not covered by the opinion under review.

With respect to the totality of program service on radio, we think that the industry's and the FCC's attempt to minimize the importance of the issue of format diversity by characterizing it as simply entertainment not only ignores this Court's decision in Red Lion but also ignores the particularly critical role of foreign language and special ethnic formats in fostering and preserving cultural heritage as well as promoting assimilation in our country.

Unidentified Justice: Ms. Cooke, let me ask you this.

Suppose someone opens a theater in a particular community, large community of New York or San Antonio where most of the people are Spanish-speaking; at least, that's their primary language; a theater, or a movie theater, or a bookstore.

And the odds are they're not going to do very well if they don't put on Spanish language movies or sell Spanish language books.

Is that reasonable?

Mr. Cooke: That may be true.

Unidentified Justice: Now, well, isn't that likely to be true as a matter of economics?

If you aren't selling what the purchasers want in that neighborhood, they're not likely to give you much business.

Now, how far do you carry that when you move out of the private theater, which can put on whatever kind of movies it wants, in any language it wants, Bulgarian, or Yugoslav, whether they have customers or not, to a radio station, and how do you make the distinction?

How much response must the Commission require?

Mr. Cooke: We start from the premise in the particular hypothetical that you've posited, that the aura of First Amendment rights in the broadcasting spectrum is somewhat different, that this Court has always differentiated between the kinds of protections involved in other First Amendment areas, print and so forth, and broadcast.

And that, in broadcast, because of the scarcity arguments and also because of the public ownership, and because of the licensing scheme which declares that in order... because all cannot speak, then some mechanism must be available so that many thoughts can be heard, that the order is different.

But even in the context of format the Commission has always said that it is not the tastes of individual persons that is to be acknowledged necessarily, but that substantial segments of a population must be addressed.

Where in broadcast a radio situation will come in and the segment of the community that is unserved is 20 or 30 percent, or whatever particular standard the Commission devises, then that is a substantial segment, and as part of the public owners of the air waves, it is a consideration in terms of diversity.

And so that the order and the concerns are different in the theater and the private enterprise system, and that when we are dealing with a licensing system in which there is not ownership and property rights.

I think the other question that makes the broadcast situation vastly different is that in non-entertainment situations the Commission has neglected to emphasize that the non-entertainment informational programming is selective and focuses on a particular group, so that one does not have Spanish informational services in the context of a black radio format, and the two welded together.

This is important because in the specialized format situation of foreign language programming, the loss of the format may equal the loss of effective broadcast services.

How can a licensee address community needs or problems or services if a large segment of the community cannot effectively communicate in that language.

Secondly, we just raise very briefly... Ms. Glen has referred to the FCC's administrative nightmare argument, but it becomes even more suspect when it is applied to respondent's concerns.

Clearly there is no difficulty in distinguishing a Spanish language station from other stations, or determining whether or not that format is unique, or whether or not there is in fact a substantial population that will be unserved, not simply underserved by the loss of that format.

Unidentified Justice: Do you suggest that the community, a Spanish-speaking community, has a constitutional right to have broadcasts in Spanish?

Mr. Cooke: I would not say that it is a constitutional right except in the sense that we need not look that far; we can look at the Act itself, which provides in terms of allocations that the duty of the Commission is to establish primary service to all people of the United States.

I think there does become a question in terms of service when people cannot understand that, and so that is one of the factors that the Commission has to raise in terms of making decisions about allocations.

And in fact, this Court, in Allentown, the FCC v. Allentown, took on the same kind of considerations.

It did so in the context of geographic communities rather than ethnic communities, and what we're suggesting to the Court is that same kind of reasoning which is premised in the statutory system, and the allocations policy should also be one of the factors that the Commission consider under the public interest standard.

One example we might use is that the Commission uses it, and as Ms. Glen has pointed out to the Court, when the public comes in the values may shift.

For example, there is present in the record before the Court a situation in Alice, Texas, in which a licensee came in to the Commission at a comparative stage and said, I will do Spanish programming to a community that is comprised of 65 percent Mexican Americans and are clearly bilingual.

On the basis of that it was preferred and it got the station and three months later terminated that format and went to Top 40.

Under the Commission's policy statement which suggests that the Commission make an inquiry into diversity and concern at initial licensing, this particular format change, although it might have been perfectly viable financially, is precluded from inquiry and precluded from challenge under this particular statement.

Finally, what we would like to emphasize is that the Commission--

Unidentified Justice: Then you are saying there is some obligation on the part of the broadcaster to put the broadcasts in the language of a substantial number of listeners?

Mr. Cooke: --The Commission itself has suggested this.

One of them--

Unidentified Justice: But not as a constitutional matter, you say?

Mr. Cooke: --But as a question of the statutory obligation, yes.

I think there are constitutional implications of a decision that says that the reality of First Amendment rights is such that we have large segments of our community whose First Amendment rights can only be addressed in the context of their particular language.

I think that there are implications there.

But the Commission can look at the statute.

Unidentified Justice: This particular distinction says, we're doing very well without any Spanish language broadcasts and if someone else can have Spanish language broadcasts, this is the United States and the language of this country is American.

And we aren't going to broadcast anything in Spanish, even if we lose some business, as long as we're doing pretty well without it.

Mr. Cooke: I would suggest we're only talking about something that has existed, not an affirmative obligation of a licensee to come in and have to meet needs.

The Commission has suggested in some ways that... and, in fact, this is one of the tenets of allocation and regulation, that when a licensee comes in, the licensee makes certain promises on the basis of which the Commission can find a grant of that particular license is in the public interest.

And then that licensee runs on the record.

Here we would have a situation in which a licensee came in and made the initial determination that there were certain needs, exercised their particular editorial discretion, and then the Commission must state, to make certain changes, you have to have them grounded in public interest considerations, if unmet needs of substantial segments of the population will not be served.

Chief Justice Burger: Very well.

Mr. Saylor?

ORAL ARGUMENT OF DAVID J. SAYLOR, ESQ., ON BEHALF OF THE PETITIONERS FEDERAL COMMUNICATIONS COMMISSION, ET AL. -- REBUTTAL

Mr. Saylor: I have several brief points to make in rebuttal.

First of all, I believe Ms. Glen characterized this case as one involving procedures.

That's directly contrary to the way we view this case.

This is a case of substance.

The Commission engaged in substantive rulemaking or policy making in an attempt to determine what the public interest standard in the statute requires; a question of substance.

Unidentified Justice: Mr. Saylor, right on that point, do you share the view of Mr. Dyk that the policy judgment was made by Congress rather than by the Commission, and that the Commission was required to take this position by the statute?

Mr. Saylor: The Commission's view as expressed in its policy statement is that the statute does not require regulation, but the position we've taken in our brief, and the position the Commission took in its policy statement, was that while there are statements of the Congress regarding the issue in the course of hearings, there then is no need to reach a determination as to whether or not the statute would bar the Commission from engaging in the type of regulation the Court of Appeals imposed.

In other words--

Unidentified Justice: So you take no position on whether the Court of Appeals position would be consistent with the statute?

Mr. Saylor: --We think it's a difficult statutory question but we don't think this Court is required to decide that issue, if you are inclined to rule our way.

This is a case of discretion and the Commission has interpreted the public interest standard in a way consistent with the statute.

Unidentified Justice: May I ask one other question?

In a free market you can rely on Adam Smith's principles to achieve your diversity; the entertainment market generally.

And if a person wants to make a foolish investment he is free to do so and no harm's done.

But suppose you have a case with a limited number of radio stations that some very wealthy eccentric person decided to buy a station and broadcast nothing except some program nobody was really interested in, maybe Russian folk music or something, that nobody wanted to hear, and you could demonstrate that the audience was practically zero.

Would the Commission have the authority to take the license, to decline to renew the license at the end of the three-year period under the policy statement?

Mr. Saylor: Well, I don't think the policy statement is addressed to that type of a question.

There is a very difficult--

Unidentified Justice: No, but it does take the position you won't look at program content at all--

--The policy statement, and this Court's decisions, only go to a change in programming, don't they?

Mr. Saylor: --Yes.

I can't conceive of the marketplace ever working in that way so that someone wanted to waste his money.

But if it should happen, I think perhaps the correct answer is, is the Commission would allow the licensee to retain that license.

Unidentified Justice: People do publish books that don't make them any money, just because they want to vindicate their egos, and have some special interest in it.

That could happen in the radio field.

Mr. Saylor: I can conceive of people having that inclination but it's an expensive proposition and I think most unlikely.

If there is a frequency being wasted in that way, I am sure someone will come in and offer to pay a very substantial amount of money to obtain that license, and I doubt that that--

Unidentified Justice: Even in that case, you'd let the free market make its decision?

Mr. Saylor: --I would.

I believe the Commission would allow the marketplace to function.

As I said earlier, this is a case involving the meaning of the public interest standard.

This is much like the newspaper-broadcast cross-ownership case where the Commission was attempting to determine what the public interest requires.

There there was a conflict, or arguable conflict, between diversification in ownership which is calculated to lead to diversity of ideas on the one hand, versus the concept of best practicable service and the concept of local ownership, and how desirable local ownership was.

The Commission concluded that despite these cross-ownership situations most of them should be grandfathered, because to push the goal of diversity too far would undercut some of the other statutory objectives inherent in the public interest standard.

We view this case in much the same way.

However, here there is an additional twist, and that is, even pursuing diversity, the Commission reached the view that there are two types of diversity competing here: diversity between format types and diversity within format types.

The Commission simply does not have the capacity and thinks it would be inappropriate to attempt to choose between one type of diversity and another.

We think, on the other hand, that the Court of Appeals did make that choice and in doing so acted in contravention of a standard that this Court long ago announced in the case of NBC v. United States, but it is not for the Court of Appeals to say whether the public interest will be furthered or retarded; that's the Commission's job.

I have one other quick point to make that, with respect to Spanish language programming, the Commission's view is that the entertainment elements of that programming are subject to this policy statement but that the informational programming and the licensee's, or the applicant's responsibility to ascertain the problems, needs, and interests of the community and to respond to that with informational programming is something different, which the Commission didn't face in this policy statement and the Court need not decide.

Unidentified Justice: Mr. Saylor, with reference to the Zenith Radio Corporation matter before the FCC referred to on the petition for cert, Appendix 134a, in which the Commission recites that in the Zenith Radio Case it had taken a hard look position?

Mr. Saylor: Yes.

That, now, was--

Unidentified Justice: That was in 1973, I take it?

Mr. Saylor: --Yes.

Unidentified Justice: And it was after the Voice of Atlanta case.

Mr. Saylor: It was after that case.

Unidentified Justice: Was that hard look position adopted under the pressure of the Voice of Atlanta, or had it always been the Commission's view?

Mr. Saylor: It was adopted under the pressure from the Court of Appeals in the Atlanta case and the Progressive Rock case, and another case which has been cited in the--

Unidentified Justice: And in the Voice of Atlanta case the Commission appeared before the Court of Appeals asserting that it should let the market--

Mr. Saylor: --Absolutely.

And that has been the Commission's position throughout, but the Court and the Commission... the Commission was attempting to in some way comply with the Court's mandate.

Unidentified Justice: --So the six-commissioner statement in the--

Mr. Saylor: It's an aberration.

Unidentified Justice: --I'm not sure it was an aberration.

It was no more of an aberration than the hard look Zenith Radio position.

It was just that it was at a... well, that six-commissioner--

Mr. Saylor: That is the same--

Unidentified Justice: --statement was in 197--

Mr. Saylor: --That was in the Zenith case.

Unidentified Justice: --Exactly.

Mr. Saylor: That was the concurring statement, concurred in by six commissioners in WEFM.

Unidentified Justice: So, you say it was under pressure of the Court of Appeals position?

Mr. Saylor: Well, one has to view it in that context.

Unidentified Justice: That isn't what the commissioners said, is it?

Mr. Saylor: Not precisely.

But I think the Court of Appeals in this case concluded that the Commission had never changed its mind on the basic proposition that it's a matter of licensee discretion.

Unidentified Justice: In any event, your submission is that prior to the Voice of Atlanta case the Commission's position was exactly what it is now?

Mr. Saylor: Yes.

Thank you.

Chief Justice Burger: Mr. Dyk?

Mr. Dyk: Yes, thank you, Mr. Chief Justice.

Just very briefly, in response to Mr. Justice White, the Court of Appeals in the course of this decade of decisions was extraordinarily critical of the Commission for continually resisting its policy.

The Court of Appeals--

ORAL ARGUMENT OF TIMOTHY B. DYK, ESQ., ON BEHALF OF THE PETITIONERS AMERICAN BROADCASTING COS., INC., ET AL., & NATL. ASSN. OF BROADCASTERS ET AL. -- REBUTTAL

Unidentified Justice: Well, like it is in this case?

Mr. Dyk: --Yes.

And the Court of Appeals did not suggest in any of these opinions that the Commission had departed from an earlier policy.

What the Court of Appeals was suggesting is that the Commission consistently declined to adopt the policy--

Unidentified Justice: Had been consistently wrong?

Mr. Dyk: --and been consistently wrong.

And that's the issue in this case.

Unidentified Justice: Well, why didn't the FCC petition for certiorari for some of those earlier decisions?

Mr. Dyk: Well, I couldn't answer that, but I think the WEFM case, for example, did not raise the statutory issues which we've been urging, or the constitutional issues, as Judge Bazelon, I think, had noted in his separate opinion in WEFM.

So I think it is quite likely that one of the reasons that the Commission went back and considered these issues in this policy proceeding which is under review was because some of the issues hadn't been decided by the Commission and hadn't been presented to the Court of Appeals in that earlier case.

If there's nothing else, thank you.

Chief Justice Burger: Thank you, counsel.

The case is submitted.

Attribution:

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FCC v. National Citizens Committee for Broadcasting - Oral Argument

Sun, 08 Aug 2010 19:14:36 +0000

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FCC v. National Citizens Committee for Broadcasting

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76-1471_19780116-argument.mp3

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76-1471_19780116-argument.xml

Transcript:

Argument of Erwin N. Griswold

Chief Justice Warren E. Burger: We will hear arguments next in Federal Communications Commission, 1471 and the related and consolidated cases.

Mr. Griswold, I think you may proceed whenever you are ready.

Mr. Erwin N. Griswold: Mr. Chief Justice and may it please the Court.

These cases are here on petition for certiorari to review a decision of the United States Court of Appeals for the District of Columbia Circuit.

There are many parties and several issues.

All arise out of the ownership of a newspaper and of a broadcast facility, television or radio, in the same community by the same interest.

In the terms of the trade, this is known as cross-ownership.

The issues here result from an order of the Federal Communications Commission made in 1975 after five years of hearings.

This was a rule making proceeding and the result is known as the Commission’s Second Report and Order.

It occupies most of the first volume of the appendix from pages 134 to 338.

The ruling announced by the Commission was that it would not hear after grant a new broadcast license or transfer of license where there was cross-ownership.

This is known as the prospective rule, but the Commission also determined that it would not apply this rule retroactively.

That is, that it would not refuse to renew existing licenses solely on the ground of cross-ownership.

This is known as the grandfather provision of the rule.

There was however an exemption to the grandfather rule.

In sixteen small market situations, where there was no other newspaper and no other comparable broadcast facility, the Commission did apply its new rule to existing licensees.

It said that they must divest either the newspaper or the broadcast facility by 1980.

Numerous appeals were taken to the Court of Appeals for the District Columbia.

The Federal Communications Commission naturally defended its order, but the Department of Justice attacked it, the government speaking with many voices, particularly with respect to the grandfather provision.

The Court of Appeals last March affirmed the prospective order, but it found that the grandfather provision was invalid because it said it was not rational.

It held that because of a compelling presumption and that is the court’s words, in favor of diversity, “Divestiture is required accept in those cases where the evidence clearly demonstrates that cross-ownership is in the public interest.

Under the judgment of the court, those portions of the orders that have retroactive effect and those portions dealing with existing combinations are vacated and the record is remanded to the Commission for adoption rules not in consistent with the opinion of the Court of Appeals.”

In this Court, there are widely divergent interests.

I represent the private parties; newspapers and broadcast stations and the American News Paper Publishers Associations and the National Association of Broadcasters.

Some of my clients are concerned with the perspective rule and others are primarily concerned with the grandfather question.

I am also appearing for the small market situations and also for some newspaper radio combinations which seem to be at some risk of being lost in the shuffle.

I now turn to the validity of the prospective rule.

There is a serious constitutional question here.

The petitioners, newspapers and broadcast stations are subjected to blanket exclusion from Commission licensing merely because they engage in publishing.

The government may not condition the grant of a privilege on the forfeiture of a constitutional right, as in effect this Court held in the Simmons case some ten years ago in a different context.

Chief Justice Warren E. Burger: Mr. Griswold, suppose a television station had broadcast which were clearly, for the purposes of my question, clearly an after task, the hurdles of the obscenity decisions of this Court, that is we would not sustain a criminal conviction for what they had shown on the television, would that be a ground considered denial renewal of the license of the end of the three year validity?

Mr. Erwin N. Griswold: That would certainly be a ground to be taken into account along with all the other factors in determining whether the license should be renewed.

Chief Justice Warren E. Burger: Well, how would you square that with the, I am sure you have a distinction between what (Voice Overlap)

Mr. Erwin N. Griswold: Because we are not dealing here with something which says, this is merely a ground to be taken into account with all the other factors.

We are dealing here with a blanket rule which says that if you are in common ownership with a newspaper, you cannot receive a license.

Now, whether you get a renewal or not is the question of the grandfather rule which is the next part of my argument.

Chief Justice Warren E. Burger: Let me change my hypothetical then the only adverse evidence against the broadcaster is found in the series of broadcast of the kind I included in my original hypothetical question and the Commission said any licensee which resists in that kind of broadcasting will not be renewed.

That is --

Mr. Erwin N. Griswold: Well, that would be precise of this case, that would be announcing a rule that indicates of cross-ownership, there cannot be a renewal and that I suggest is contrary to a constitutional provision.

Justice Potter Stewart: Say one newspaper in a two-newspaper town was to merge with the other and let us suppose that the existing status that allows that in some circumstances had not been passed, that is does antitrust laws, do they valuably apply?

Mr. Erwin N. Griswold: The antitrust laws is clearly applied to newspapers and to television and then in any event where there is a violation of the antitrust laws as there was in the Lorain Journal case, which came from this Court, the Department of Justice can proceed under the --

Justice Potter Stewart: Well, one newspaper says along, the only reason I cannot acquire the other newspapers because I am a newspaper, some other company could acquire it?

Mr. Erwin N. Griswold: It would not be as the Lorain Journal Case shows.

It is not just that it is another newspaper.

It is the actual anticompetitive effect --

Justice Potter Stewart: In the news business?

Mr. Erwin N. Griswold: -- in the news business.

In the Lorain Journal Case for example --

Justice Potter Stewart: And the government is entitled to insist that there be dispersion in the publishing business, is that it?

Mr. Erwin N. Griswold: Mr. Justice, it is a different, it seems to me between the antitrust laws and the influence or weight to be given to anticompetitive effect.

Justice Potter Stewart: Well I know, but anticompetitive does not conceal the fact that we are talking about competition in the news business?

Mr. Erwin N. Griswold: And I am perfectly willing to concede that the anticompetitive effect can be taken into account along with all other factors in determining whether a license should be granted or should be renewed.

Justice Potter Stewart: The government under the antitrust laws could validly prevent there being only one paper in the town where there have been two before?

Mr. Erwin N. Griswold: I am not sure of that Mr. Justice.

Justice Potter Stewart: Well, I suppose that otherwise -- based on antitrust considerations, you will conclude that antitrust laws would be violated, if these --

Mr. Erwin N. Griswold: No, I do not Mr. Justice.

There are many cities in this country which have only one newspaper.

Justice Potter Stewart: I understand.

Mr. Erwin N. Griswold: And I know nothing to indicate that that violates the antitrust law.

Justice Potter Stewart: I just posed to you though the situation where under ordinary antitrust principles, merger between two papers would violate the antitrust laws and under commonly understood antitrust principles.

You would say that if that were true, you could prevent the merger of the two for papers without violating the First Amendment?

Mr. Erwin N. Griswold: Yes Mr. Justice.

Even though it does violate the anti trust laws and I know of nothing in these cases which indicates that any of these interests has violated the antitrust law.

Justice Potter Stewart: I know, but then in that case the government is saying there must be two newspaper voices in the city --

Mr. Erwin N. Griswold: And applying the same law to newspapers that applies to every other kind of business in the country whereas this rule applies only to newspapers and applies a rule which is much more stringent.

Justice Potter Stewart: You would not say then that the antitrust laws could validly prevent all of the press, all of the newspapers and all of the televisions stations in the city merging?

Mr. Erwin N. Griswold: Well, I assume that that would violate antitrust law.

Justice Potter Stewart: Even though you have televisions stations as well as newspapers?

Mr. Erwin N. Griswold: I thought you said all the newspapers and all the televisions merging.

Justice Potter Stewart: I did.

Mr. Erwin N. Griswold: Well, that under many circumstances would violate the antitrust laws and I am not contending that newspapers are not subject to the antitrust laws.

I am contending that they cannot validly be made subject to a blanket rule, based simply on the fact that there is cross-ownership.

Justice John Paul Stevens: Mr. Griswold, let me asked the other side of the same coin.

Do you know how many communities in this country have more than two newspapers?

Mr. Erwin N. Griswold: No, Mr. Justice, I do not, not great many.

Justice John Paul Stevens: Not a great many and hence we do deal with a product of scarcity, even on the newspapers side?

Mr. Erwin N. Griswold: Even on the newspapers side.

Washington at the moment has two newspapers.

In Buckley against Valeo, this Court said that the concept that government may restrict the speech of some elements of our society in order to enhance the relative voice of others is wholly foreign to the First Amendment.

This is a sort of Never-Never-Land as Justice Stewart pointed out in the Democratic National Committee case.

Here, the First Amendment designed to protect press freedom is used to restrict the press and this is done to enhance the First Amendment value of diversity on broadcasting.

Justice William H. Rehnquist: Would you think that Commission saw its source of authority to require diversity in the First Amendment?

Mr. Erwin N. Griswold: I am not sure that the Commission did it only there, the Court of Appeals certainly did. The Court of Appeals said that a presumption was compel in order to carry out First Amendment values.

Justice William H. Rehnquist: Is that about the same thing in Buckley against Valeo?

Mr. Erwin N. Griswold: Yes.

Justice John Paul Stevens: Is that not the same thing in Democratic National Committee?

Mr. Erwin N. Griswold: In the Democratic National Committee case.

Justice John Paul Stevens: Same court?

Mr. Erwin N. Griswold: There is nothing in the amendment about diversity, just freedom and there is a further paradox. The regulations here were intended to affect more than broadcast media and they can have no effect on diversity and broadcasting.

Looking only at broadcasting, there would be no more diversity after these amendments rules are in affect than it was before.

There will be just as many voices.

Chief Justice Warren E. Burger: Well, has diversity not been a factor in the decisions of the Commission for three years?

Mr. Erwin N. Griswold: Yes Mr. Chief Justice and I am quite clear that diversity can continue to be a factor, but not the controlling factor.

Not the one which makes a controlling presumption in the face of which everything else must view.

The First Amendment --

Chief Justice Warren E. Burger: When you have a half a dozen considerations, how do you really determine which is the one that both counters back?

Mr. Erwin N. Griswold: Well, Mr. Chief Justice the closest analogy I have been able to think of, I suppose based on my past experience is the problem with the Buckley case.

What do you do when you have more applicants than you can handle.

You take into account a great many factors and you come up with your conclusion and that it seems to me is what is involved here.

Diversity is an appropriate factor, but it is not appropriate to make it the exclusive factor which the Court of appeals did below.

The First Amendment is a shield not a sword to promote diversity, but the Court need not resolve this constitutional question.

Just as in Helvring against Griffiths, it held that in the absence of a clear statement by Congress, it need not decide whether stock dividends are constitutionally subject to income tax and I may add that Congress has never made that decision when constituting stock dividends or not subject to income tax.

By any analysis, the prospective rule is clearly a legislative action which can only be supported by an adequate delegation from Congress.

It is my contention that Congress has never made any such delegation.

In addition to the constitutional though, we have the fact that the ban on cross-ownership is a fundamental exercise of governmental power affecting important aspects of our free society and involving a substantial change in the practice over the past half century.

There is room to argue I think that such a fundamental change, going beyond radio and television, and reaching into the printed press, is one which should be made or authorized by representatives of the people in Congress and that authority to make such a change should not be inferred or surmised.

Now in our briefs, we have discussed the nature of the authorization.

All that has ever been given with the Commission was given to it in 1934 when it was given power over communication by wire or radio, not power over newspapers and it was also given authority to grant licenses if public convenience interest or necessity will be served thereby.

Language obviously taken over from the traditional public utility statute without any thought of newspapers.

Moreover, we have some legislative history which is pretty good, detailed in the newspaper, in particular in 1952, the Senate passed the statute affecting the powers of the Communications Commission.

The House amended that statute with an explicit provision saying you do not have any power over newspapers.

The exact language is quoted in the brief.

It went to conference and the conference took out the house amendment.

But the Conference Committee issued a report in which it stated that this was taken out because it was unnecessary that the Commission did not have any power over newspapers.

Justice William H. Rehnquist: How much of a weight can we attribute to what the 1952 Congress thought as to what the 1934 Congress amended?

Mr. Erwin N. Griswold: I would suggest Mr. Justice that that is not what we are dealing with here.

We are dealing with what the 1952 Congress did.

The 1952 Congress, many times committee reports have been used to establish the intention or meaning of an Act of Congress and in the hierarchy of committee reports, conference committees are the very highest and here we have a Conference Committee report, clearly dealing with this question after which both houses passed the statute and the President signed it and I would suggest that is I agree, it is not language and the statute, but it is the closest to it that you will ever find and it is not simply a case of subsequent members saying, well, we did mean so and so back there in 1934.

Now, I must turn to the grandfather question.

The action of the Commission making its new rule in applicable to existing licensees except in certain small market situations.

The court below has held that the Commission could not in the court’s words rationally reach the conclusion in favor of grandfathering and it is held, apparently based on First Amendment values that there is a “presumption in favor of divestiture” which must be given “controlling weight.

”So that “divestiture” is required except in those cases where the evidence clearly discloses that cross-ownership is in the public interest and the court expressly recognized that its pronouncement was a “court approved policy” and it remanded the case to the Commission for adoption of a rule not in consistent with its opinion.

In doing this, the court violated proper standards of judicial review because it is not its function to tell the Commission what rule to make.

For example, if the Commission knew that it could not use the grandfathering technique in this area, it might decide that no rule at all is preferable.

That is the matter with the Commission not the court, but the court below has decided that divestiture is required except on an affirmative showing of public interest.

In essence, this is the question which was decided by this Court six years ago in the Democratic National Committee case.

There the court below held that the Commission must make a new rule requiring licensees to accept editorial advertising on the same general ground.

This Court held that there was no such constitutional requirement and that Court should not freeze the Commission’s necessarily dynamic process into a constitutional holding, but this is precisely what the court below has done here.

It has required that a specific rule be adopted because in the Court’s view and words, the First Amendment’s search for truth will be facilitated by governmental policy that facilitates diversity.

There is no basis I think upon which this conclusion can be supported.

I am supported with respect to the grandfather argument by counsel for the Federal Communications Commission and I think that I will leave most of the rest of the argument to Mr. Armstrong, but this Court has held in the Idaho Power Case that the selection of appropriate policies in carrying out statute is an administrative, not a judicial decision and in Board of Trade against the United States, a good many years ago the Court said, we certainly have neither technical competence nor legal authority to pronounce upon the wisdom of the course taken by the Commission.

Now, there are two remaining issues to which I can give on a brief consideration.

In its final order, the Commission listed sixteen situations to which it did not apply the grandfather rule.

These are seven cases where there was co-ownership of the only newspaper and the only television station in the community, even if there were radio stations in the community.

There were also nine situations were there was a single newspaper and a single radio station or a combination of AM/FM radio stations.

These situations have been called egregious cases, but I think that is too pejorative.

They may more accurately be called small market cases.

The Court of Appeals set aside this portion of the Commission’s decision and in this respect the court’s decision should be sustained.

The Court of Appeals was correct in holding that “the record contain no evidence that justified the desperate treatment of the sixteen affected combinations” and the Commission itself said that the rules are not in the least premise on the existence of improprieties in the operation of the media holdings.

Justice William H. Rehnquist: Counsel, if we are talking about rules, why is there need to be any reference to a record?

The Commission can make a rule without having any record before it, can they not?

Mr. Erwin N. Griswold: That certainly is a nice question.

I would suggest that a rule which is applicable to only sixteen instances out of hundreds is not really a rule, but necessarily involves what amounts to an adjudication with respect to those sixteen instances.

For example, in some of these cases there is a cable television.

In one of the cases, where there is a newspaper and a television station, there are seven radio stations in addition to separately owned in the community and all of those things it seems to me should be taken into account.

This question of the small market cases is dealt with more fully in the red covered brief.

Finally, I would say that this dog has a very small tail.

There are a few situation of cross-ownership of a newspaper and radio station where there are other broadcasters, television or radio in the same community.

These were not covered by the Commission’s order because of the grandfather’s clause.

However, should the Court uphold the Court of Appeals and saying that the grandfather’s clause is invalid then they would be swept in, but the position is made in the blue and the green brief, that radio is different from television, that there should be separate consideration to the question whether the rule should apply to radio, and where there is only a radio or television and there are other voices in the community and my position is that care should be taken to see that these newspaper radio combinations are not just caught up in the draft and carried away.

Our basic contention is that the Commission had no authority to make any rules in this area either for constitutional or statutory reasons, but that if did have that such authority, it did have power to make the grandfather provision.

Chief Justice Warren E. Burger: Mr. Armstrong.

Argument of Daniel M. Armstrong

Mr. Daniel M. Armstrong: Mr. Chief Justice and may it please the Court.

The Commission’s fundamental position in these consolidated cases is first, that our prospective rule is a rational exercise of a rule making authority grounded in the public interest standard of the 1934 statute.

Secondly, that our refusal to apply the new policy against additional co-located newspaper broadcast combinations to existing combinations, except in certain of the small market cases is rational and was adequately explained in the Second Report and Order.

On the first contention at the outset, I believe a question came up as the whether the Commission felt that the First Amendment was the source of the prospective rule.

I will concede that I think the court may find some language in the Commission's Second Report and Order in which the Commission said that what we are doing here is consistent with the objective of the First Amendment to encourage a number of speakers, but I would not stand on the First Amendment constitutionally, compelling the Commission to have adopted the prospective rule.

Instead --

Justice Byron R. White: How often as it?

Mr. Daniel M. Armstrong: Or even --well, I think Mr. Justice White that it is authorized by this Public Interest Standard and the Communications Act.

Justice Byron R. White: Which is one?

Interstate Commerce?

It is interstate Commerce basis?

Mr. Daniel M. Armstrong: It is the standard that among under considerations that the Commission can take into account in allocating spectrum resources is a policy of diversity and that is one component of the public interest.

Justice William H. Rehnquist: Based on Congress’ authority over interstate commerce?

Mr. Daniel M. Armstrong: Yes sir, yes sir.

Justice William H. Rehnquist: Not the First Amendment?

Mr. Daniel M. Armstrong: Yes sir and not the First Amendment, I understand your question.

In applying that diversity component of the public interest standard, the courts, both the Court of Appeals and this Court’s dictum in the 1959 RCA Case have long recognized and being visible conceded this that one of the relevant factors the Commission can take into account in citing how to allocate spectrum resources is whether the applicant before it has ownership interest, not only in other broadcast stations, but also in newspapers.

So, and I believe Mr. Chief Justice that you may have alluded to this, as we view this case, the real question in this case raised by the prospective rule is not a First Amendment question.

It is whether the Commission has rationally in applying the public interest standard of the Act reached the position where it is ready to announce that this one relevant factor is now going to be determined.

I might say it is not determinative in an exceptional case which might warrant a waiver of the rule, but for purposes of argument since that is admittedly an exceptional case we will precede on the assumption that we said it is going to be determined.

And the Commission will respectfully submit that that is not a case of first impression before this Court because prior to the adoption of the multiple ownership rules that was before the Court in the Storer Broadcasting case in 1956, if an applicant owned seven AM radio stations for example and was applying to the Commission for an eighth AM radio station, presumably it would have been recognized that in applying the diversity policy in passing on that application, the Commission could certainly take into account the fact that the applicant already owned seven AM stations.

But the argument prior to this Court’s decision in Storer which the Court of Appeals in the Storer case had accepted was that the Commission could not make that one fact determinative and would instead be able to deny that application only after a full hearing in which the applicant could submit all of the so-called other relevant factors, the applicant wished to consider.

Chief Justice Warren E. Burger: How much weight could the Commission give if an applicant had only four television stations, but their market area came in to play?

Mr. Daniel M. Armstrong: Well, I think, I believe I understand Mr. Chief Justice that your question is suppose the Commission was to change the present rule which says there is a limit of five VHF stations to try to change it to four.

If the Commission were to do that, I think we would argue that --

Chief Justice Warren E. Burger: What I had in mind was four stations in New York City, Newark, Trenton and Philadelphia or something like that?

Mr. Daniel M. Armstrong: I think the closer the location, the easier a job the Commission would have in convincing a court that its public interest judgment was rational.

Yes sir, I would not want to say that we could not argue for a different limit even if they were not close together, but that is clearly relevant and that is my point in this case.

That just as it was a rational public interest judgment in Storer to finally reach a judgment that seven AM stations is subject to a waiver.

And this Court said the Commission once it reached that judgment could announce its judgment in the form of the rule and the Court reversed the Court of Appeals in Storer.

We are saying to you that a point has now come and the Commission has rationally explained why it feels it is now in a position to make the fact that an applicant for a new license or a transfer, fact that that applicant is in newspaper owner, we are now ready in the application of our licensing experience to say that is going to be --

Justice Byron R. White: The case is not over if we agree with you on that, is it?

Mr. Daniel M. Armstrong: No sir, I am saying that we have to still defend our grandfather rule with that.

Justice Byron R. White: Well no, I mean --

Mr. Daniel M. Armstrong: Oh! The statutory authority point?

Justice Byron R. White: We cannot agree with you, you cannot win this case without our deciding the constitutional issue, can we?

Mr. Daniel M. Armstrong: Well, I would say --

Justice Byron R. White: Your position maybe a very rational application in public interest standard and it is still barred by the First Amendment?

Mr. Daniel M. Armstrong: Well, we read Mr. Justice White the NBC case to give us --

Justice Byron R. White: You are going to argue the constitution as it is?

Mr. Daniel M. Armstrong: Yes sir.

Justice Byron R. White: All right.

Thank you.

Mr. Daniel M. Armstrong: But if we are acting within our statutory authority and in a moment, I would like to discuss being visible to reference to the 52 legislation, but if it is within our general rule making authority under the 34 Act and if the public interest judgment is rationally explained and if that leads us to a decision to deny an applicant license, it is our position that that applicant has not had his First Amendment rights violated anymore than the applicant for the eighth AM radio station would not have his constitution rights violated, if in applying that rule that was upheld in Storer we turned his application down.

Now, as to the point of the statutory authority in the reference to the --

Justice Byron R. White: You mean, we can just cite that case as the authority for the constitutional question presented here?

Mr. Daniel M. Armstrong: We read that case as saying that in applying the public interest standard if the Commission rationally concludes that an applicant is not going to receive a license, that the applicant cannot complaint because of the fact that as a result not getting a license his First --

Justice Byron R. White: So your answer is yes, that is it?

Mr. Daniel M. Armstrong: Yes sir, where relying on NBC for that point as dispositive.

On the statutory --

Justice Potter Stewart: (Voice Overlap)arguments, at least part of it was different and that is that this imposes an administrative inhibition on the newspapers, is it not?

Mr. Daniel M. Armstrong: Mr. Justice Stewart we view this --

Justice Potter Stewart: However which, first of all the Commission does not have statutory jurisdiction and secondly it introduces a new First Amendment argument?

Mr. Daniel M. Armstrong: We do not ground this case in any way upon any assertive statutory jurisdiction over newspapers.

Justice Potter Stewart: But that is an impact of the what the Commission did?

Mr. Daniel M. Armstrong: The ultimate bottom line in the case as we see it is whether those spectrum resources have to be given to an applicant and we would say that this Court in the dictum in the 1959 case and the Court of Appeals in the McClatchy and Clarksburg Cases has recognized that a newspaper, the status of an applicant as the owner of the newspaper is relevant for the Commission to consider in deciding whether to give that applicant a broadcast station.

So we do not, as I was trying to say, if we are beginning to think that there is new First Amendment issue because of the newspaper status of the applicant injected into this case, it is really just a question of whether the Commission has now reached the point in the application of its licensing experience.

Well, to put the point differently, suppose the situation had not adopted this rule and we had gone through the formalities of the process that lingers, when it is urged that we should go through, case by case by the next 30 years and it just so happened that when this Court reviewed what had happened after the next 30 years, you would find that in every single case the Commission had said in applying our accumulating insight and experience we reached a judgment that the relevant factor of the applicants newspaper ownership is now going to be determinative.

Application denied, really that that would be no different situation than the situation we have now.

The only difference is the Commission has simply announced that it grants, that its attitude is such that there would be a denial.

Justice Thurgood Marshall: But you did say a lot of newspapers?

Mr. Daniel M. Armstrong: Well, Mr. Justice Marshall.

Justice Thurgood Marshall: I mean for example, the owner can own General Motors, a line of steamship line, Amtrak, four bars and grills, Chase National Bank, that is okay?

Mr. Daniel M. Armstrong: Mr. Justice Marshall.

Justice Thurgood Marshall: But newspaper, no.

Mr. Daniel M. Armstrong: Excuse me sir, you are quite correct in your statement of what happens.

Our answer would be that the Commission is even handedly and rationally applying a relevant public interest policy of diversity and I would have to concede you that by its very nature that is the policy which will have more bite as far as a newspaper or another broadcast station is concerned that it would as far as the owner of Amtrak.

Yes sir, that is right.

Justice Thurgood Marshall: How long do you on the --

Mr. Daniel M. Armstrong: There is no question about that, that by its very nature, the policy is going to hurt a newspaper applicant’s chances more than it will hurt the owner of the Amtrak's chances if he wants to go a license.

Justice Thurgood Marshall: But then it is just not neutral at all, but you are not neutral, are you?

Mr. Daniel M. Armstrong: I think that the policy of, if it could be characterized is that, it nevertheless is not a ground for striking down what we done because the diversity policy would seem to me by the intend of your question would fall and that has been recognized.

Justice Thurgood Marshall: I still do not see where you get the jurisdiction over the newspaper owner?

Mr. Daniel M. Armstrong: We do not have jurisdiction of the newspaper at all.

We have jurisdiction over the newspaper owner, only when the newspaper owner comes to the Commission and asks for a licensed which is what we do have jurisdiction over, the allocation of a radio license.

Justice Thurgood Marshall: But I mean, do they do have to set out all these other things?

Mr. Daniel M. Armstrong: Excuse me sir?

Justice Thurgood Marshall: The proposed owner, does he have to set out everything else he owns?

Mr. Daniel M. Armstrong: I do not want to get drawn into a detailed discussion of the Commission’s ownership purporting requirements, but I think we do require -.

Moving increasingly to acquire increasing annual reports about other ownership interest they may have and certainly we could tell from an applicant being before us I think whether or not the applicant was a newspaper owner or the owner of Amtrak.

Justice Thurgood Marshall: Well, this is aimed at newspaper?

Mr. Daniel M. Armstrong: No sir, it is.

Justice Thurgood Marshall: I do not care, you get the right one.

Mr. Daniel M. Armstrong: Well, the actual wording of this regulation, yes sir, it is, on its face it is.

Justice Thurgood Marshall: And does that not violate the specific provision of that Committee report?

Mr. Daniel M. Armstrong: That was the point I was coming to.

Justice Thurgood Marshall: Oh! Good.

Chief Justice Warren E. Burger: Now, before you get to that, we have said, I think on the number of occasions here and other courts have said it that the First Amendment does not confine to newspapers or publishers, it belongs to everyone.

But suppose you had a broadcast license available and the one of the bidders was Amtrak and the other one was responsible, reputable newspaper.

Would not the inquiry give great weight to the newspaper’s experience in journalism as distinguished from Amtrak’s lack of joint experience in that field?

Mr. Daniel M. Armstrong: As I understand it, you are saying that would, in that case does newspaper ownership would actually work in his favor?

Chief Justice Warren E. Burger: Because it shows their experience?

Mr. Daniel M. Armstrong: Yes sir.

On the other hand I would have to concede that consistent with the longstanding Commission policy as reflected for example in McClatchy under the diversity policy, it would cut the other way and how the mix would come out on an the individual case.

Chief Justice Warren E. Burger: There is only one newspaper, the newspaper that had no others stations and no other --?

Mr. Daniel M. Armstrong: Under those circumstances it is quite conceivable that the weight in favor of the experience factor that you mentioned would outweigh whatever the merit the applicant would suffer under the diversity criteria.

On the statutory authority point we have two arguments.

The first one was suggested by Mr. Justice Rehnquist and that is we think for the reasons that I have gone through that the 34 statute, the public interest rule making standard authority given to the Commission in Section 303 as interpreted by this Court in Storer is sufficient to answer the case and that the Court should not give much if any weight to subsequent legislative history that was relied on by the Mr. Griswold, but if the Court is disposed to take into account subsequent legislative history, we call the Court’s attention to the 74 statute.

In 1952 as it was recognized in the argument, neither the House, actually well the House of Representative had, but in the final analysis it was just a conference committee report and there was no legislation on that.

But in 1974, the Congress was fully aware of the Commission’s outstanding rule-making proceeding which is now before this Court.

They followed it closely and there was interchange between the Commission and the Congress concerning the evolution of that percept and each House went on record with a legislative bill in 1974 which we would respectfully submit, simply is inconsistent with the notion that Congress in 1952 had denied our authority in this area.

The House of Representatives said whatever it is you are going to do in your outstanding proceeding on the basis of newspaper broadcast cross ownership, do it in a rule making percept and also finish that rule making proceeding by a date certain.

The Senate took out the first provision, but also passed a provision saying in this outstanding proceeding you have got proposing a rule to ban future newspaper broadcast cross ownership, finish it by a certain date and although the two houses, the different versions were not reconciled and no legislation ever emerged, we do think that the 1974 history would remove any possible conclusion that in 1952 our general rule making authority had been cut down.

To turn to our case before this Court as a petitioner, it is our argument that the distinction between the prospective and retroactive rules is rational one and was adequately explained in our opinion.

In the case of the prospective rule, the Commission admittedly operating on the presumption that it was more realistic to expect true diversity if you did not have common ownership decided to give that consideration determinative weight, even though we recognized and the court below recognized this, that there was no guarantee that the more diverse new points would result if we did have separate ownership.

But the Commission said under these circumstances, a prospective rule where you are not talking about other countervailing considerations, we think the one reason that we had once had for allowing that is no longer determinative.

In other words, we can have a pool of other people coming forward.

We no longer have to rely upon a newspaper owner to get service started and so under those circumstances, even though the gain in diversity may be slight, it may be only hoped for in great many cases, nevertheless where there is no real cost on the other side of the balance wheel, we are going to get it determinative weight.

Justice Thurgood Marshall: Well, what happens if a newspaper in Baltimore wants to buy a radio, television stations in Washington?

Mr. Daniel M. Armstrong: It would depend on the contour of the radio station in Washington whether or not it would place a certain contour over the city of Baltimore.

I do not think it is by any means compelled from this rule that it could not be done.

In fact, as to make this one very clear, this is not a total ban against new newspaper owners coming into broadcasting.

Just to take an easier case if it i.c. Richmond, Virginia then for sure the Baltimore newspaper would be able to be eligible to apply for a radio station in Richmond.

Justice Potter Stewart: Involves a --

Justice Thurgood Marshall: That is why I did not pick Richmond.[Laughter]

Mr. Daniel M. Armstrong: You picked the case that would require some detailed application of the standards of the rule and I would not know right off hand how it might come out.

Justice Potter Stewart: It has to do with the City Signal or something?

Mr. Daniel M. Armstrong: Yes sir, yes sir.

A specified signal over the community of Baltimore.

Yes sir.

The other considerations that were present in the case of a retroactive rule which did not in our judgment outweigh the presumed gain and diversity that would have resulted from applying the rule across the board were first, a broader divestiture rule of the sort that was advocated by the respondents, National Citizens Committee for Broadcasting would have swept out proven licensees with long records of meritorious service.

The Commission pointed out and I think it was paragraph 109 of the Second Report and Order that these licensees, many of them had been there from the time the station was first established and there was a study in the record that it has not been disputed by Mr. Robins saying that the particular newspaper licensees had shown by their action a much greater long-term commitment to broadcasting than had been true with others.

So, the Commission was confronted with the fact that it was going to have to get rid of a class of licensees who included licensees with outstanding record.

Justice John Paul Stevens: Mr. Armstrong, how many of the members of the class that are preserved by the grandfather clause with that definition?

Mr. Daniel M. Armstrong: Well, Mr. Justice Stevens, every member of that class, it can be said of that member that its record has been before the Commission at every three years at renewal time has been passed upon by the Commission and has been found to be in the public interest and the Commission characterized, generally speaking, the record of the class as a group as meritorious and --

Justice John Paul Stevens: And your argument is not that it includes some specially well qualified stations, but then everyone in the class has proven his entitlement to a continued license.

Mr. Daniel M. Armstrong: Well, it is true.

Justice Potter Stewart: That is true about every licensee in this country, is it not?

Mr. Daniel M. Armstrong: Yes, sir.

Justice Potter Stewart: With one or two exceptions, every licensee has had his license three years or more.

Mr. Daniel M. Armstrong: Yes, sir and in the case of these, though it has been passed upon by the Commission at three year intervals and it is found they had been serving public interest --

Justice Potter Stewart: And it is true about every licensee in the country with one or two notable exceptions?

Mr. Daniel M. Armstrong: Well, I think in the case of these licensees, generally speaking Mr. Justice Stewart, they have been in there longer.

As I said earlier a lot of them have been in there since the beginning so there has been much longer continuity of service in their case than as the case with a lot of other licensees.

Although it is true that the great value which the Commission places on continuity of service has clearly been evidenced by the manner in which the Commission has disposed the renewal applications.

And nothing I might say in our effort to preserve our grandfather rule in this case is intended to immunize any licensee from continuing to have to pass the Commission’s scrutiny every three years and to be judge on their performance.

Justice Thurgood Marshall: Was diversity involved in each one of these renewals?

Mr. Daniel M. Armstrong: I am not sure.

Justice Thurgood Marshall: I think we have, most of us have familiarity with renewals and applications and sometimes you know renewals are almost perfunctory?

Mr. Daniel M. Armstrong: I am not sure.

Justice Thurgood Marshall: Are they not?

Mr. Daniel M. Armstrong: Well, Mr. Marshall --

Justice Thurgood Marshall: I am not speaking about FCC but in others did it not --

Mr. Daniel M. Armstrong: That may be true in other agencies.

Justice Thurgood Marshall: But it could not be in the --

Mr. Daniel M. Armstrong: The Commission is obligated by [Laughter].

Justice Thurgood Marshall: And include the diversities?

Mr. Daniel M. Armstrong: Well, I would not want to concede that we have not followed their statutory mandate to make a public interest finding.

Justice Thurgood Marshall: I mean, I have difficulty with -- suppose it happens that in this town there is one radio station, one television station, and one newspaper and the town decides why should it not and this has been renewed for the last ten times.

It ought to -- there is a grandfather clause?

Mr. Daniel M. Armstrong: It means that if will not -- well, there are certain small market cases which Washington would not include.

So, if it is a larger market, it means that that applicant will not be required to divest because of the cross-ownership factor. It does not mean that applicant three years from now will get a renewal.

That applicant will get a renewal only if the Commission upon judging the applicant’s record of performance --

Justice Thurgood Marshall: That is with or without this rule?

Mr. Daniel M. Armstrong: Yes, sir.

All that these rule does --

Justice Thurgood Marshall: The rule does tend to later though, does it not?

Mr. Daniel M. Armstrong: All that this rule does is tend to give the applicant a chance to have his future fate as a broadcaster if he wants to continue, determined on the basis of his record of performance and not on the basis of the fact that he is a cross-owner, that is all it does.

And in addition to our justification which we think was rationally explained and our right to say that continuity outweighs the presumed gain and diversity, we also relay on the doctrine that this result of grandfather is so clearly rational in terms of our legal system’s bias against retroactive applications and new policies that it really did not require a great deal of explanation.

It is consistent with what the Commission’s licensing policy has been over the years.

It is consistent with what we have done in past instances when we have adapted rules that are designed to further diversity by limiting multiple ownership with almost without exception.

Chief Justice Warren E. Burger: Is it inconceivable that after five years experience or any number of years you want to pick, the Commission might come to substantially the same conclusion that the Court of Appeals came to now in a rule making proceeding?

Mr. Daniel M. Armstrong: It is conceivable Mr. Chief Justice.

Chief Justice Warren E. Burger: On basis of experience?

Mr. Daniel M. Armstrong: The Commission on the basis of experience, five years from now might reach a judgment that it should order more extensive divestiture and give more weight to diversity than it felt it was able to do on the basis of the record in this proceeding because this record did not establish a strong showing and Commission relied on that heavily and clearly intervening experience might change the nature of the record.

That was a very important part of the Commission’s balancing process.

Justice Byron R. White: Mr. Armstrong, could I ask you what is your view of the relative position, of the relative function of the Department of Justice and the bureaucracies in this case that you think your relative position is governed by Section 2348 of the Title XXVIII?

Mr. Daniel M. Armstrong: Yes Sir, I believe that is the position we are relying upon in order for our authority to file --

Justice Byron R. White: I know, I am sure that it looks like you certainly have the authority, what about the Department of Justice?

Mr. Daniel M. Armstrong: Well, it is our view that like the National Citizens Community for Broadcasting, they were a party with a very strong policy preference as to how the Commission should have weighed the competing considerations which were before in the case --

Justice Byron R. White: So you would say that under 2348, the Attorney General for example, could have instituted the entire review proceeding before the Court of Appeals just disagreeing with it?

Mr. Daniel M. Armstrong: Initially, I might say in this case that the Department of Justice did file United States versus FCC, they later withdrew it.

I believe the Court of Appeals denied a motion by the National Association of Broadcasters to strike them as the petitioner.

On that basis --

Justice Byron R. White: So, they do not question at all of the authority of the -- I am sure you disagree with them on the result, but you do not question at all their authority to take the position contrary with respect to divestiture?

Mr. Daniel M. Armstrong: We do not question their authority to tell us that they wish to be given more weight to the given presumed gained (Voice Overlap)

Justice Byron R. White: Or to appear in this Court --

Mr. Daniel M. Armstrong: Or to appear in this Court.

Justice William H. Rehnquist: What if the Federal Communications Commission had turned down the United States' motion to intervene, do you think they would still have any standing to challenge anything in the Court of Appeals other than the Commission’s denial of motion to intervene?

Mr. Daniel M. Armstrong: Your Honor's question is a good question and I must say that have not focus on that question.

From my point of view from time to time I have considered whether it was appropriate for them to be opposing the Commission on a broad scale in the Courts and I would like to reserve my opportunity of some future occasion to make that argument, but I must say that I cannot be very enlightening to Your Honor on that point.

Justice William H. Rehnquist: In your position I take in response to Mr. Justice White is that, since the Commission allowed them to intervene just like they allowed a number of private groups to intervene, they have at least the standing --

Mr. Daniel M. Armstrong: Yes sir, at least we will go for as far to say under the circumstances where they were a party with the strong policy pitch before the Commission, either a statutory respondent or as a petitioner, they probably should be allowed to make that argument.

Justice Thurgood Marshall: Mr. Armstrong, but regardless of all that we recognize their right to intervene in this Court at anytime, do you not?

Mr. Daniel M. Armstrong: I would guess sir, yes sir.

Chief Justice Warren E. Burger: You do more than recognize that you insist on it do you not, Mr. Armstrong, you would assert it affirmatively?

Mr. Daniel M. Armstrong: Certainly and many instances we would have to rely upon --

Unknown Speaker: Why, why, why, would the Department of Justice have the right to intervene between two private parties?(Voice Overlap)

Why do you not concede that, since this is between two private parties, why is there a right on the part of the Department of Justice to intervene?

Mr. Daniel M. Armstrong: Well, I did not understand.

I misunderstood Mr. Justice Marshall’s question to be in that context.

I was thinking about it more in terms of a case where a Governmental Agency was involved and there is some authority, it might not be correct, but we have been led to believe that in some of our cases, for example, Section 402 (b) of our Act as opposed to section 402 (a) which is governed by the Judicial Review Act and that is the case we here now, but if it is a licensing case, we have been led to believe.

That if we do not get proper treatment in our view from the Court of Appeals, we have to have a Solicitor General signing our petition to cert.(Voice overlap)

That is what I have in mind.

Justice Thurgood Marshall: That was what I meant.

Mr. Daniel M. Armstrong: Yes Sir.

Justice Byron R. White: Where do you find that?

It is not say the Attorney General is responsible for it and has controlling interest of the government in all court proceedings in this chapter then it goes on to say the agency has the right to represented by --?

Mr. Daniel M. Armstrong: Well, Mr. Justice White, as I understand it that is --

Justice Byron R. White: Do you think that includes the power to make the decision(Inaudible)?

Mr. Daniel M. Armstrong: Well, in 402 (a) case under our statute, that is specifically governed by Title XXVIII and the Section you have read, clearly gives us the right come here as we done in this case without the department.

We have another statute --

Justice Byron R. White: Even to bring the petition of cert?

Mr. Daniel M. Armstrong: Yes sir.

Justice Byron R. White: Which you did, you filed it?

Mr. Daniel M. Armstrong: Yes Sir, but there is another case in our statute 47 U. S. C. Section 402 (b) which does not appear to be governed by Title XXVIII in just a classic licensing case as opposed to rule making and there we have been given an opinion by the department that they must file.

Justice William H. Rehnquist: Well, just a minute counsel.

It is one thing, is it not, to say that you may come here only with permission of the Solicitor General and it is quite another thing to say that the Solicitor General may come here regardless of any statutory of authorization just because he feels like coming?

Mr. Daniel M. Armstrong: Well, I would qualify the answer that I gave to Mr. Justice Marshall to say that we are thinking of the case that I just described to you where they would be coming here advocating the position that we had advocated in the Court of Appeals.

Justice Thurgood Marshall: And could come as Amicus Curie without the consent of anybody?

Mr. Daniel M. Armstrong: I believe that the federal rules do make allowance for that, yes sir.

Chief Justice Warren E. Burger: Wallace.

Argument of Lawrence G. Wallace

Mr. Wallace: Mr. Chief Justice and may it please the Court.

I am here representing the United States which is the statutory party in these proceedings [Laughter] and probably would have the right to intervene because of the Constitutionality of an Act of Congress as applied has been challenged.

However, there is no need to exercise such a right in this case.

Under Section --

Justice William H. Rehnquist: Well, Mr. Wallace, are you not ordinarily expected to uphold the Act of Congress that is challenged under that Section?

Mr. Wallace: We are not attacking the Constitutionality of any Act of Congress in our submission to this Court.

Justice William H. Rehnquist: But I thought you said that that is one of the authorities by which you were here?

Mr. Wallace: We could.

Well we did not have to seek to intervene for that purpose.

Justice Potter Stewart: And therefore we do not (Voice Overlap)

Mr. Wallace: That is correct.

Under Section 307 of the Communications Act, the Federal Communications Commission is to grant applications for broadcast licenses if the public convenience interest or necessity will be served thereby, and for more than 30 years, in both rule making and licensing proceedings, the Commission has recognized that this standard requires it to take into account in issuing licenses, the interest of the public in diversity of ownership of the media of communications and among the factors that is historically considered for this purpose in comparative proceedings over the years has been an applicant's ownership of the daily newspaper in the locality to be served by the broadcasting license.

In this respect, the Commission is charged not to be neutral, but to make an inquiry as to what will serve the public interest under the Statutory Standard, and one of the components of the public interest is diversity of ownership of the media of communications and divergent voices to be heard.

The present rule, before this Court, is an effort to deal with newspaper broadcast co-ownership question in a more systematic way.

It is not a rule that disqualifies newspaper owners from being licensees of broadcast stations.

The rule applies only to co-ownership of a newspaper and a broadcast facility in the same community.

Newspaper owners are not disqualified under this rule from ownership of broadcast stations from licensing broadcast stations, no one owns the particular airways, but from being licensees of broadcast stations in other communities and that is an important distinction to keep in mind here.

It is illustrated very well by the recent exchange between the Detroit News and the Washington Post of television stations in those two cities, which will result in dissolution of two of the two co-ownership situations that were before the Commission when it was considering this rule, by means of the swapping that the Commission anticipated could occur without in any way making newspaper owners as such ineligible to be licensees of broadcasting stations.

But, by applying the public interest standard in a licensing of broadcasting stations, so as to increase or at least to protect against diminishing, the diversity of voices to be heard in that community based on a finding of the Commission or based on its experience and much evidence was before it, that the public looks primarily to these two sources, to its daily newspapers and its local broadcasting stations and particularly its local television stations for its news and for its information on public affairs.

And this is accentuated with respect to local news affairs of the handling of this matter by the adoption of a rule rather than case by case as it has been handled over the years, is entirely appropriate to facilitate business planning and to enable the Commission to bring about required changes as a result of reconsiderations of its earlier policies in which it has granted some so-ownerships of co-located stations, cross-ownerships by means of what has been referred to in these proceedings as divestiture rather than what is being referred to as forfeiture of licenses.

And it is important that any retrospective application that the Commission was considering here was not to being achieved by means of simply forfeiting the value of the license and the goodwill at the time a renewal would come up two or three years hence, by holding a comparative proceeding and simply awarding the license to other applicants, so that the licensee would be able to realize only the physical value of its assets as a result.

The Commission was concerned with protecting licensees against this result by providing a means whereby they would have a reasonable period to swap stations or otherwise to realize the market value of their licenses all with the view toward what the Commission has over the years, we think legitimately recognized to be a component of the public interest standard that it should provide incentives for superior public service, incentives to get people to devote their financial resources and their professional endeavors to providing a superior service without the risk of having to start from scratch when they have provided such as service every three years, in a comparative proceedings against others.

If the public is to be well served in this interest, the Commission undertook to protect this interest by proceeding in a rule.

Making proceeding rather than merely applying from case to case, the new insights and the further insights that is developed into the problem of concentration of ownership of the media and the problems that it has presented that have come to its attention over the years.

It further sought to protect these interests by specifying that it would certify transfers that resulted from the divestiture provisions that it would adopt, and it did adopt some as the Court has been informed for favorable tax treatment under Section 1071 of the Internal Revenue Code, in order to further protect those interests because the transfers were being ordered in the public interest and a waiver provision was also adopted under which claims of particular hardship could be heard with a view toward possibly extending the time in individual cases and the like.

So the rule that has been adopted in so far as it applies prospectively, it seems to us to be valid and reasonable way to apply the public interest standard that the Commission long has been applying under the Act based on the commerce power of Congress and the divestitures that were ordered under that rule we also think were valid regardless of how one views the refusal to order the further divestitures.

In that respect, we disagree with the Court of Appeals.

We think that Commission did have authority based on the considerations that were before it to recognize that especially severe problems existed in communities in which there were for example only one daily newspaper and one television station where there would be a mutual inhibition on cross criticism between the two major media in the community which in itself would leave the community without any independent voice to criticize the impact that those media have on the community and the effect on its affairs.

We think that this is an egregious consideration that the Commission did properly recognize.

We disagree on the Court of Appeals that there was no rational basis for singling out those particular examples.

We do not believe, however, that the grandfathering that the Commission has adopted with respect to the other existing cross-ownerships was rationally justified by the considerations that the Commission itself chose to rely on.

On the Commission’s own terms we do not think the lines that it has drawn, the basic differentiation is introduced between the existing cross-ownerships and the future license questions, including transfers has been rationally justified.

Before I turn to the reasons why the Commission’s justification do not stand up, it is important I think to recognize that very important interests are at stake here in what the Commission has decided because not only the public interest that this Court has recognized in the Associated Press case and the other cases dealing with the First Amendment aspects of regulation in the area of news media, the public interest in the widest possible dissemination of information from diverse and antagonistic sources as it was put there.

But there were a number of examples before the Commission of disadvantages flowing from cross-ownership or safeguards from having an independent voice to which the Commission was surely entitled to give weight without going into great detail about them.

Examples were cited to the Commission, the joint operating agreement being --

Justice William H. Rehnquist: Mr. Wallace, may I interrupt you for a moment.

You are now arguing against the Commission’s grandfathering provision?

Mr. Wallace: Yes.

Justice William H. Rehnquist: And you are saying that there were examples before to which it was entitled to give weight?

Mr. Wallace: That is correct.

Justice William H. Rehnquist: And that does not make sense to me.

It seems to me that you must make a stronger case than that?

Mr. Wallace: Well, I am about to, but I am using this introduction to the deficiencies because I think it is important to recognize what was at stake before the Commission.

Justice William H. Rehnquist: But if it was entitled to give weight then it is not entitled to give weight.

Mr. Wallace: It obviously some weight to these or it would not have adopted the prospective rule in order the divestitures that it did.

One of the constraints upon the administrative agency is consistency in its treatment of various parties subject to its jurisdiction Mr. Justice and that is one of the problems which were presented here I want to highlight that in just a moment.

Chief Justice Warren E. Burger: The consistency concept does not prevent a regulatory agency from having a change of mind or heart over a period of time, does it?

Mr. Wallace: Not at all, but it does have to base the way it applies that change on rational grounds that do not treat individuals arbitrarily based on factors that are unrelated rationally to the basis at which the agency has changed its position.

I want to just mention one or two examples that were before the Commission and to which it obviously gave some weight in adopting the prospective rule and of the divestiture requirement that it did.

One was an example of joint operating agreements that had been a subject of negotiation between the daily newspapers in a city and which were being opposed by labor unions and others in the community and where allegations were made that the television station owned by one of those newspapers presented no news concerning those agreements and their negotiations until they were consummated and that to have done so would have been against the economic interest of the newspaper that owns the television station.

Another example was editorial support in the local newspapers for a particular location for a museum to be built in the city which a location was close to where the newspapers were being published where there is considerable sentiment for the museum to be located elsewhere which is brought out only and independently operated television station in that community and was not allegedly covered in the particular papers involved there.

These are examples and the idea is not whether the particular examples were accurate but here were the kinds of dangers that the Commission had before it and obviously had in mind in its concern about cross-ownerships here.

The other factor to keep in mind is that the prospective rule that the Commission did adopt does have effect on existing combinations.

This is not a bright line between a prospective rule and a retrospective rule.

It has an effect on existing combinations by a process of gradual attrition of existing cross-ownerships at the time they are transferred for value and for example when the Washington Star in this city was sold within recent years, the transfer policy was applied to it and the co-owned television station could not be transferred to the same owner.

The result was a dissolution of that ownership where the competitive daily newspaper, The Washington Post was allowed to continue to have its locally owned co-located commonly owned television station.

This introduces a disparity between newspapers in the same community which is a serious matter.

I do not say that it is not a constitutional disparity, that it is not something that Congress could have adopted, but it is a disparity in treatment in a constitutionally sensitive area which impels us to take a careful look at the reasons given by the Commission --

Justice Potter Stewart: That disparity would be wholly correctable within a maximum of three years if the Commission thought that, that disparity was a controlling reason for not granting the renewal of the application?

Mr. Wallace: It could be, but the Commission is under considerable inhibition at renewal time to engage in what it considers to be a forfeiture of the applicant’s license when the applicant is providing great service.

Justice Potter Stewart: Yes I know, but you are arguing now that the Commission was compelled not to have a Grandfather Clause?

Mr. Wallace: Well, I am arguing that the Commission, there are particularly strong reasons to see whether the Commission’s Grandfather Clause was rationally based, whether the grounds that it gave for adopting the Grandfather Clause stand up, on the Commission's own premises.

That is all I am arguing, not that the Commission was compelled to have a Grandfather Clause.

Justice Potter Stewart: If it had this perspective rule it was compelled to have a Grandfather Clause, that was I thought what your argument was?

Mr. Wallace: Well we have said that --

Justice Potter Stewart: Am I mistaken?

Mr. Wallace: I believe you are Mr. Justice.

We have taken the position in our brief that the Court of Appeals went too far.

Justice Potter Stewart: Oh in requiring a rule.

Mr. Wallace: In requiring a rule and that the Commission if it can rationally justify a grandfathering, it is entitled to adopt a Grandfathering Provision.

We are saying a remand is needed here because the explanations which the Commission offered do not rationally justify the grandfathering that it adopted.

Justice John Paul Stevens: Mr. Wallace, what about the local ownership point which is the first one they make?

Why is that irrational?

Is it that it is so improbable that will have an impact on local ownership or in the alternative are you arguing that it is irrational to have local ownership be a factor to consider, which are you arguing?

Mr. Wallace: Well, we are arguing several points in response to that.

One is that the Commission has not repudiated its longstanding policy of not giving very heavy weight to local ownership as such.

Justice John Paul Stevens: Because it never said that it was totally zero factor?

Mr. Wallace: It has never said that it was totally zero.

Number two is that one quarter of the co-ownerships that it is grandfathering are not locally owned.

It does not really support the grandfathering of those particular ones.

A third point is that they were --

Justice John Paul Stevens: It was considered rational as to the three quarters?

Mr. Wallace: A third point is that there was nothing before the Commission to -- it just shows that they were not really relying on that.

A third point is --

Justice John Paul Stevens: Listen and please answer my question if you would.

They did said it as a reason, they said they were relying on it, we have to assume that they wrote that opinion in good faith and you say it does apply the three quarters of the existing licensees.

Is it irrational as applied to those three quarters?

Mr. Wallace: Yes, because there was nothing before the Commission to show that local ownership would be diminished.

Justice John Paul Stevens: But was it irrational consideration that concluded that it might be and that is all I held and you gave an example earlier in your argument of the Washington-Detroit swap where it took place.

So how can you say that it is irrational to assume that it might take place?

Mr. Wallace: The Commission has approved many transfers over the years which resulted in diminution of local ownership as I expect they will approve the Washington-Detroit transfer and there was no evidence before the Commission that local ownership that they were not eligible local owners to come forward to be transferees of these licenses if the Commission were to require that they be transferred to locally owned interest, if the Commission wanted to give particular weight to that factor.

The Commission certainly did not give any weight to a requirement that local owners be found in the instances in which it was requiring divestiture.

Justice William H. Rehnquist: You do not need any sort of evidence in a rule making procedure, do you?

Mr. Wallace: No, but you need a rational ground for belief that, what you are worried about will be diminished by the particular course of action.

Justice William H. Rehnquist: But is not the Commission presume to have some confidence and expertise which can supply that rational ground just patently fallacious?

Mr. Wallace: It does have some expertise in this area, but there is nothing on the face of either Commission practice, what the Commission purported to rely on or what was before it to indicate that local ownership would be preserved by the Grandfathering or was of sufficient concern that the Commission that they were taking any step to assure transfers to local owners where they were requiring divestiture.

In other words, as we said in our brief, that particular element was a make way.

I think Mr. Firestone will deal with the other grounds relied upon by the Commission and why we do not think that they rationally justify the order that it adopted.

And I do believe that Court should keep in mind that in 1943 at the time the Commission adopted the rule against co-located AM stations it did not Grandfather, it did not introduce the disparities that it is introducing here in the example that I gave between two different newspapers in the same community.

Chief Justice Warren E. Burger: Mr. Firestone somewhere in the course of your discussion, if you find it convenient and if you think it is relevant, would you relate what the Commission has done here to its situation that has been mentioned requiring a divestiture by the star of its broadcast relations and permitting even though it is true that any other licensee is up for renewal, but one was mandatory and one is a still open?

Argument of Charles M. Firestone

Mr. Charles M. Firestone: Yes Mr. Chief Justice.

Mr. Chief Justice and may it please the Court.

I am Charles Firestone from the National Citizens Communication Broadcasting, which of course does seek affirmance of the court's decision.

I have three points I want to make and during the course of that time, I do hope to address that point.

First, I would like to follow through on the Deputy Solicitor General’s arguments about why it was arbitrary and capricious in the to answer Mr. Justice Rehnquist’s question about the need for record.

The point is here I think that the Congress has ordered the agencies under the Administrator Procedure Act not to be arbitrary and capricious and that is really the basis of this court reversal that simply that the Commission was arbitrary and capricious in the way that they treated the various issues before them.

Justice William H. Rehnquist: That is quite different than saying it is not supported by substantial record concerns, substantial evidence.

A renewal survive the arbitrary and capricious test without it and all that the evidence includes for the Commission, is it not?

Mr. Charles M. Firestone: Well, we believe that if there is absolutely no record support and no basis for coming to suppositions that it could rise to the level of arbitrary.

Justice Thurgood Marshall: Is it not difficult to find arbitrary and capricious over five year period of time?

Mr. Charles M. Firestone: Your Honor, the place where it was arbitrary and capricious was the Commission’s failure to order divestiture and the failure to apply its prospective rule.

They applied, they set a standard here --

Justice Thurgood Marshall: And that was five years, they worked on?

Mr. Charles M. Firestone: There were the five-year standard.

Justice Thurgood Marshall: Should I going to say that it is arbitrary and capricious?

Mr. Charles M. Firestone: That the five-year standard --

Justice Thurgood Marshall: That would be arbitrary, but it shows, it is hard to see it is capricious.[Laughter]

Mr. Charles M. Firestone: The five-year standard is now what we say is arbitrary and capricious.

What happened here is that the Commission used totally unsupported conjectures.

They applied standards which are inconsistent with past Commission practices and which are inconsistent with the Communications Act.

A second point, I hope to make in my argument is that the issue of discretion that the court remanded the case to the Commission contemplating that the Commission would have discretion when the case was remanded.

Of course, the agency has great discretion in this area and in fact the court restored discretion to the Commission in the important area of renewals.

The Commission took away its own discretion by its ad hoc standard in considering structural allegations of concentration of control.

Thus the Commission said, concentration controls of primary licensing factor and --

Justice Potter Stewart: The court did seem at least in its words to require that the Commission issued a rule in this area?

Mr. Charles M. Firestone: Well, to the extent of that orders of rule, I think we would concede that the Commission does have authority.

Chief Justice Warren E. Burger: To have no rule at all?

Mr. Charles M. Firestone: To have no rule at all.

Chief Justice Warren E. Burger: But is there a difference when they go part way down the road and not all the way?

Mr. Charles M. Firestone: Yes you Honor, there is a difference there.

Chief Justice Warren E. Burger: That the Court of the Appeals was pointing to?

Mr. Charles M. Firestone: They pointed it to it, but I suppose that if the Commission acted rationally and the Court of Appeals pointed out many areas, this decision was riddled over there at the agency level.

The Court of Appeals pointed out many of the areas and I would not presume to be able to figure how the Commission is going to treat it.

They do have wide discretion, but it seems to me conceivable, that as long as there are not arbitrary on remand, they may adapt no rule.

Now that might mean no perspective rules, well I am not sure.

But if they do adapt the prospective rule, as they did here, and in their discretion found that nothing can be more important than insuring that there is a free flow of information, the Public has the right to know it, it derives from, but not just the First Amendment, it also derives from Section 303 (g) of the Communications Act which is on page A 29 of the joint appendix where it says, Congress mandated the Commission to promote the effective, the larger, and more effective use of radio in the NBC.

The Court in NBC said that this included a concern about the monopolization of media, but the Commission did come out with a standard.

They said that, it is unrealistic to expect a true diversity from newspaper broadcast station combinations, and therefore, in looking only to the broadcasting stations, and they not trying to regulate newspapers, they treat newspapers as they treat television stations to the extent you cannot own two television stations in the same market and they look to the equality more or less in terms of where people get most their news and information.

But when it came time to apply this to renewal, even though there is a three-year limit on renewals set by Congress and even though the Communications Act mandates larger and more effective use of radio, the Commission moved to immunize existing licensees from structural challenge on from the basis of the concentration of the control.

And on these three points, the Commission used to override the strong factor of the diversity, the Commission itself has said that diversity is the primary licensing factor and yet they look to this three overriding factors to this diversity criterion.

And the first, Mr. Justice Stevens, with regard to the local ownership, the first thing that Commission did was ban local ownership in the prospective rule.

If a local newspaper wants to acquire a local television station, they cannot do it, the factor diversity overrode.

Secondly as --

Justice John Paul Stevens: I did not bar local ownership.

I disbarred local ownership by a district (Inaudible)?

Mr. Charles M. Firestone: Right, but certainly here, what it showed is that they preferred the criterion of the diversity over local ownership for the perspective rule, but turned it around and used this criterion to override diversity for existing licensees when 25% of them were not even local owners.

Secondly, the Commission only looks to local ownership, traditionally and on the 1965 Policy Statement on renewals.

They only look at to the extent that there is integration of ownership and the management.

And here the broadcaster’s claim that the newspaper owners were not integrated in the management of the stations and Commission relied on that.

They said, where they not separately run they would require far many more --

Justice William H. Rehnquist: But does not the Commission's reliance here supersedes whatever they said in 1965?

Mr. Charles M. Firestone: Except that they have not -- they have not rushed.

Perhaps, they could supersede it, but they did not do it here.

They did not really explain what they are doing here.

Justice William H. Rehnquist: Well, if every agency when it changes it might have to get out all of its other inconsistent statements that were made over last 40 years, we would never adjourn for the summer?[Laughter]

Mr. Charles M. Firestone: That is true, but there are internal inconsistencies here, and also they did not really treat this issue of integration.

What they are talking about, they are saying local owners, they do not really go into this, but when you look other Commission Law over the years, they did not intend to overrule this issue of integration, they just did not deal with it.

And its just goes to the arbitrariness of the Commission’s decision here.

Justice John Paul Stevens: Mr. Firestone, I know the newspapers argued that they were not involved in the management of the station as much, did the Commission so find?

Mr. Charles M. Firestone: The Commission stated that where it is not that case, where they are not separate ownership, they would require far many more divestitures.

They did not actually make the finding that, and they did not look into it any more.

They basically relied on these representations.

Justice John Paul Stevens: Are you saying that it would be irrational to attach any weight at all with the acquirement of local ownership, unless the local owner was actively involved in management?

Mr. Charles M. Firestone: Under existing Commission Law, unless the Commission changes it.

Justice John Paul Stevens: Let us follow Mr. Justice Rehnquist’s suggestion.

Maybe all of the past the Commission law has been irrational, the question is whether this particular ruling was rational, is it not?

And would it be irrational for the Commission to attach some weight to factor local ownership even though the local owner were not actively involved in management?

Is that not the question?

Mr. Charles M. Firestone: I do not think it is the question, but if it were --

Justice John Paul Stevens: Well, we must mean different things by irrationality, that is there are different kinds of irrationality?

Mr. Charles M. Firestone: No, I think that the question here is, has the Commission been internally inconsistent?

Have they been inconsistent with prior policies without explaining their part?

Justice John Paul Stevens: In other words, whenever you find inconsistency, do you necessarily find irrationality, is that your view?

Mr. Charles M. Firestone: I think that it raises the question of irrationality.[Laughter]

I think inconsistency, raises the question of irrationality, but here, if they had some reason for the inconsistency it would be one thing, but they did not explain any reasons for that and they just mentioned it.

In fact, in this case they actually purported to be following past policy.

They alluded to the 1965 Policy Statement and I do not think it was their intention to go to retreat from that integration of ownership and the management factor.

Second, the issue of the local economic dislocations was another example.

First of all whether it was --

Justice John Paul Stevens: I just ask one other question, Mr. Firestone.

On remand I take it, it would not be open to Commission to rewrite in its opinion entirely and say well we would review the entire matter from a new angle, we overrule a lot of prior decisions, we now conclude upon fresh review that the Grandfather Clause is proper and the prospective rule is proper both.

Could they write a better opinion and still sustain the rule under the Court of Appeals mandate?

Mr. Charles M. Firestone: Under the Court of the Appeals mandate, the quick answer to your questions is, I do think the Commission could rewrite the opinion.

Justice John Paul Stevens: And reach the same result?

Mr. Charles M. Firestone: And reach the same result.

It is very hard to determine, I cannot really determine that.

Justice John Paul Stevens: So, if you assume they could have written a better opinion and reached the same result you must be assuming that it was not totally irrational?

Mr. Charles M. Firestone: Right, but well, I think generally --

Justice John Paul Stevens: Is it the remand, is not generally the remand, it is not the remand to say go ahead and restate your reasons, your reasons do not adequately support the conclusion.

If I understand that, the remand is to carry out the direction of the Court of Appeals as to what the rule should be?

Mr. Charles M. Firestone: Well, we do not read that decision.

We read the decision for instance in footnote 53, to contemplate that there might be a totally different rule, a totally different even prospective rule in terms of a 30% criterion as was suggested by some people including some parties here.

But getting on to the local economic dislocations criterion, the Commissions says, we are afraid, in fact they do not make it clear again, we are not sure what they said, except that the counsels explain that they say that they are concerned about reinvestment of having enough money to increase interest rates, or concerned that interest rates will increase, if there is a widespread divestiture.

And they were concerned if there would be enough money to invest in the program, and yet the Commission specifically has refused to look at this question in licensing cases, and in the Alianza case which we cite is an example where the Court of the Appeals has affirmed the Commission’s refusal to look into this criterion in the public interest.

Now, they are using that criterion to override their strong interest and diversity of communication sources.

Similarly with continuity of ownership and there of course the licensee just minimally served the public interest over the years.

Mr. Armstrong says, the longevity of their service is the factor that really matters, but if their service has not been good, it may be that the new licensee will do a much better job.

In the WDHDH case, the one time, when a newspaper television broadcaster cross-owner was replaced with a new applicant, that new applicant, or that new licensee has performed excellently, superior service throughout, and it is recognized throughout the country, to that effect.

Now, of course broadcasters do they take their license subject to renewal at the time and subject to the rules in effect at the time of renewal.

No license can last no longer than three years, they ran on their record, and you can have the record go on for say that because they did a great job 20 years ago, but have not done a good job the last three years, that does not mean anything, and has not, in the past Commission’s Decisions.

But the key fact here is the Commission did not really come to a systematic evaluation of the record, they did not really look at their own past precedent.

They did not look at and there are internal inconsistencies in the order.

Now, with the respect to the issue of discretion, in answer to Mr. Chief Justice’s question with respect to the Washington Star, of course the Commission’s Rule applies to transfers.

The Washington Star was in bad shape according to their allegations and they needed an influx of money and they -- not into a transfer of control.

The licensee basically would have continued with Washington Star and WMAL, the radio and television stations, yet the Commission's rule prospectively said that this is a sale and the public interest is not served by the acquisition of a TV and a newspaper or broadcast TV.

Chief Justice Warren E. Burger: But if basic principle is true, why does it not apply to the existing situation and many others?

Mr. Charles M. Firestone: That is exactly our contention that it should and in fact, what they have done is apply the public interest standard to transfers which they refuse to apply to renewals, and yet it is the same a public interest standard.

Now, maybe, there are factors that can override this diversity criterion, with respect to renewal applicants.

The Commission did not really and rationally dealt with that, and they threw out some reasons, but really the Commission had a goal here, and they stated the goal as diversifying the media of promoting diversification, and yet what it has done is has turned around and protected existing licensees against challenge and against the applications of this public interest standard at renewal time.

And I like to give an example, and what I consider a better example in terms of this issue and that is in Lancaster, Pennsylvania, there was in 1975, a newspaper monopoly owned by one family, the only newspaper in town, the only VHF station in town, two or five radio stations, a cable television system of which it was co-owned, they own 60% or 40% owner, owned two of the remaining three radio stations in town.

It was grandfathered because there was an incoming signal from a station assigned to Lebanon and Lancaster, it is hyphenated market and this was a UHF signal.

Now, in a consideration on that renewal of that Lancaster Station, the Commission would not allow a showing that the incoming signal was not a significant signal that 15,000 people could not really obtain that signal.

It will not allow a showing as to inapplicability of any of these criteria, such as local ownership, such as continuity or local economic dislocations.

They would not even allow a showing as to the Sherman Act violation, the allegation of Sherman Act violation which the Commission said was standard.

They would not allow a showing because they said they are not equipped to administer the antitrust laws.

There was a catch 22 there and finally, under the reconsideration order, under the Commissions Standards, if that UHF Signal went dark tomorrow, of course the situations has since changed, but, if that signal went dark, the Commission said in reconsideration, that it would not require to divestiture even in that event, even though it met this standard of egregiousness that they have required divestiture for the 16 because they said they are concerned about uncertainty, they did not want the licensees to feel uncertain.

Your Honor, if I can just sum up.

I think that the basis here is the First Amendment interest and the diversity of information sources, as Judge Learned Hand said, to some it may be folly, but we have stake upon it our all.

Thank You.

Chief Justice Warren E. Burger: Mr. Griswold, you had some observations right down, so that your argument about the unconstitutionality of saying a newspaper cannot have the same rights as anyone else, how would you apply that preposition to what I have just been discussing with Mr. Firestone on the Star?

The Federal Communications Commission, it appears said to the Star, the new owners of the Star you cannot have this televisions station.

Under your theory, as you outlined at the outset, that would be unconstitutional, would it not?

Rebuttal of Erwin N. Griswold

Mr. Erwin N. Griswold: If done by a blanket rule which prevents the consideration of all of the facts circumstances, with respect to that particular case.

Chief Justice Warren E. Burger: It was a blanket rules?

Mr. Erwin N. Griswold: In this case it is a blanket rule.

Chief Justice Warren E. Burger: In the Star Case?

Mr. Erwin N. Griswold: I am sorry, I am afraid I do not understand the case.

Chief Justice Warren E. Burger: Well, when the Star, when a new owner bought the Star, he had the diversity of television license element there?

Mr. Erwin N. Griswold: When, when I am sorry (Voice Overlap)

Chief Justice Warren E. Burger: When the new owner bought the Star --

Mr. Erwin N. Griswold: Oh! The Washington Star?

Chief Justice Warren E. Burger: WMAL, to get --

Mr. Erwin N. Griswold: I think that of course, as far as I know is the only case, or at least the only prominent case which actually exists under this rule and I think it shows among the other things that this rule does not promote diversity.

What has happened by taking the ownership by a newspaper into account in a particular case with respect to the Boston Herald has been to destroy the Boston Herald and what may happen with respect to the rule is applied to the Washing Star may be to destroy the Washing Star and my contention is that, the Commission not only has no authority under its existing statute to make a rule applicable only to newspapers, but that it may well be unconstitutional in doing so, in particular, in dealing with the final case to which Mr. Firestone referred, I would like to suggest that there is nothing about that in the record of this case and if the Commission was in error in that case it should come up in that case on that record.

Justice Byron R. White: Are you suggesting that, constitutionally, the prospective rule might survive, but the divestiture rule might not?

Mr. Erwin N. Griswold: No, Mr. Justice, I think that constitutionally the prospective rule should not --

Justice Byron R. White: Oh I understand, I understand but you concede that the one surviving and not the other?

Mr. Erwin N. Griswold: Oh! I can concede it, yes but my position is, that the prospective rule is not constitutional.

There is no previous case, which applies any statute or any rule of the Commission to newspapers, to all newspapers and only the newspapers.

A reference has been made to the NBC Case and that involves question of affiliation of a station with a network, completely broadcast.

The Star Case involved multiple ownership of broadcast stations, only broadcast.

Justice Byron R. White: Well, why should the owner of broadcast station be forbidden from acquiring another just because he is a broadcaster?

Mr. Erwin N. Griswold: Mr. Justice, I think that was probably settled as long ago as the Federal Radio Commission Case in 1930.

Justice Byron R. White: Maybe?[Laughter]

It maybe settled but was it right?

Was it settled right?

Mr. Erwin N. Griswold: The Pottsville Case is 1940, yes, I think so.

Justice Byron R. White: And why, can I ask you why?

Mr. Erwin N. Griswold: And the Red Lion Case in which I appeared seven or eight years ago, for better or for worse, the Court has taken the role, I am inclined to think for the better though it is an awful course question, but there is something about broadcasting involving the limitation of the spectrum, which makes it appropriate for the Government to introduce a regulation.

There is no such rule with respect to the press, and that is the position we take here.

Unknown Speaker: Retrospect to my inquiry long ago about the scarcity of newspaper --?

Mr. Erwin N. Griswold: Yes, there is a greater scarcity of newspapers now, and there may be more.

The next step here, will be barring all newspapers everywhere, they talk about swapping, but if you can do this, you can make a rule which says, that no newspaper can own a television station.

We think that this was in effect covered by the Gross Jean Case --

Justice John Paul Stevens: Mr. Griswold, supposing we had a situation in which Congress repealed the Sherman Act, then passed the new statute and said that it should be unlawful for newspapers to enter into agreements and restrain the trade, would that be constitutional?

Mr. Erwin N. Griswold: Yes, Mr. Justice.

Justice John Paul Stevens: That would be all directed in newspapers and no one else?

Mr. Erwin N. Griswold: I am quite sure it would, and that it is seems to me is exactly what the Court decided on the Gross Jean Case where it held that the tax applicable only to newspapers was invalid and as this Court has said with respect to that in the Oklahoma Press Case, the singling out of the press for different treatment from that accorded other businesses in general is invalid.

Justice John Paul Stevens: What do you mean?

You mean the statute would be unconstitutional?

Mr. Erwin N. Griswold: The statute would be unconstitutional, that was I thought I said.

Justice John Paul Stevens: No, you said it would be, in other words, you say if there were a statute to repeal the Sherman Act, we pass a new statute and say that monopoly and restraints to trade in the newspaper business are here by forbidden, you say that is unconstitutional?

Mr. Erwin N. Griswold: Mr. Justice, I think that any legislation by Congress which is applicable only to newspapers would almost inevitably be a violation of the First Amendment, unless, maybe it gives them something.

Chief Justice Warren E. Burger: Yes, I was just going to say that.[Laughter]

I was just going to call your attention to the Newspaper Preservation Act.

Unknown Speaker: You are a good lawyer, Griswold.

Chief Justice Warren E. Burger: Which permitted, which permitted[Laughter]

Mr. Erwin N. Griswold: Well, I have always been troubled by the Newspaper Preservation Act and that of course is a step in the direction of easing the antitrust laws giving them something and as long as the antitrust laws are applicable to newspapers and the Labor Relation Laws, have also been held to be applicable in newspapers, I would suppose that Congress can minimize the situations in which those statutes apply.

Chief Justice Warren E. Burger: Very well.

Thank you Gentlemen.

The case is submitted.

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