United States v. Storer Broadcasting Company/Opinion of the Court

by Stanley Forman Reed

United States Supreme Court

351 U.S. 192

United States  v.  Storer Broadcasting Company

 Argued: Feb. 28, 29, 1956. --- Decided: May 21, 1956

The Federal Communications Commission issued, on August 19, 1948, a notice of proposed rulemaking under the authority of 47 U.S.C. §§ 303(r), 311, 313 and 314, 47 U.S.C.A. §§ 303(r), 311, 313, 314 (Communications Act of 1934, as amended, 47 U.S.C. § 301 et seq., 47 U.S.C.A. § 301 et seq.). It was proposed, so far as is pertinent to this case, to amend Rules 3.35, 3.240 and 3.636 relating to Multiple Ownership of standard, FM and television broadcast stations. Those rules provide that licenses for broadcasting stations will not be granted if the applicant, directly or indirectly, has an interest in other stations beyond a limited number. The purpose of the limitations is to avoid overconcentration of broadcasting facilities.

As required by 5 U.S.C. § 1003(b), 5 U.S.C.A. § 1003(b), the notice permitted 'interested' parties to file statements or briefs. Such parties might also intervene in appeals. 47 U.S.C. § 402(d) and (e), 47 U.S.C.A. § 402(d, e). Respondent, licensee of a number of radio and television stations, filed a statement objecting to the proposed changes, as did other interested broadcasters. Respondent based its objections largely on the fact that the proposed rules did not allow one person to hold as many FM and television stations as standard stations. Storer argued that such limitations might cause irreparable financial damage to owners of standard stations if an obsolescent standard station could not be augmented by FM and television facilities.

In November 1953 the Commission entered an order amending the Rules in question without significant changes from the proposed forms. ^[1] A review was sought in due course by respondent in the Court of Appeals for the District of Columbia Circuit under 5 U.S.C. § 1034, 5 U.S.C.A. § 1034, ^[2] 47 U.S.C. § 402(a), 47 U.S.C.A. § 402(a), ^[3] and 5 U.S.C. § 1009(a), (c), 5 U.S.C.A. § 1009(a, c). ^[4] Respondent alleged it owned or controlled, within the meaning of the Multiple Ownership Rules, seven standard radio, five FM radio and five television broadcast stations. It asserted that the Rules complained of were in conflict with the statutory mandates that applicants should be granted licenses if the public interest would be served and that applicants must have a hearing before denial of an application. 47 U.S.C. § 309(a) and (b), 47 U.S.C.A. § 309(a, b). ^[5] Respondent also claimed:

'The Rules, in considering the ownership of one (1%) per cent or more of the voting stock of a broadcast licensee corporation as equivalent to ownership, operation or control of the station, are unreasonable and bear no rational relationship to the national Anti-Trust policy.'

This latter claim was important to respondent because allegedly 20% of its voting stock was in scattered ownership and was traded in by licensed dealers. This stock was thus beyond its control.

Respondent asserted it was a 'party aggrieved' and a 'person suffering legal wrong' or adversely affected under the several statutes that authorize review of FCC action. See notes 2, 3 and 4, supra. It stated its injuries from the Rules thus:

'Storer is adversely affected and aggrieved by the Order of the Commission adopted on November 25, 1953, amending the Multiple Ownership Rules, in that:

'(a) Storer is denied the right of a full and fair hearing to determine whether its ownership of an interest in more than seven (7) standard radio and five (5) television broadcast stations, in light of and upon a showing of all material circumstances, will thereby serve the public interest, convenience and necessity.

'(b) The acquisition of Storer's voting stock by the public under circumstances beyond the control of Storer, may and could be violative of the Multiple Ownership rules, as amended, and result in a forfeiture of licenses now held by Storer, with resultant loss and injury to Storer and to all other Storer stockholders.'

On the day the amendments to the Rules were adopted, a pending application of Storer for an additional television station at Miami was dismissed on the basis of the Rules.

While the question of respondent's right to appeal has not been raised by either party or by the Court of Appeals, our jurisdiction is now mooted. It may be considered. Federal Communications Commission v. National Broadcasting Co., 319 U.S. 239, 246, 63 S.Ct. 1035, 1038, 87 L.Ed. 1374. Jurisdiction depends upon standing to seek review and upon ripeness. If respondent could not rightfully seek review from the order adopting the challenged regulations, it must await action to its disadvantage under them, and neither the Court of Appeals nor this Court has jurisdiction of the controversy. Under the above-cited Code sections, review of Commission action is granted any party aggrieved or suffering legal wrong by that action. ^[6]

We think respondent had standing to sue at the time it exercised its privilege. The process of rulemaking was complete. It was final agency action, 5 U.S.C. § 1001(c) and (g), 5 U.S.C.A. § 1001(c, g), by which Storer claimed to be 'aggrieved.' When the authority to appeal was substantially the same, we held that an appellant who complained of the grant of a license to a competitor because it would reduce its own income had standing to appeal against a contention, admittedly sound, that such economic injury to appellant was not a proper issue before the Commission. We said:

'Congress had some purpose in enacting section 402(b)(2). It may have been of opinion that one likely to be financially injured by the issue of a license would by the only person having a sufficient interest to bring to the attention of the appellate court errors of law in the action of the Commission in granting the license. It is within the power of Congress to confer such standing to prosecute an appeal.' Federal Communications Comm'n v. Sanders Bros. Radio Station, 309 U.S. 470, 477, 60 S.Ct. 693, 698, 84 L.Ed. 869.

We added that such an appellant could raise any relevant question of law in respect to the order.

Again in Columbia Broadcasting System v. United States, 316 U.S. 407, 62 S.Ct. 1194, 86 L.Ed. 1563, this Court considered the problem of standing to review Commission action under the then existing § 402(a), 48 Stat. 1093, and the Urgent Deficiencies Act, 38 Stat. 219. CBS there sought review of the adoption of Chain Broadcasting Regulations by the Commission. Against the contention that the adoption of regulations did not command CBS to do or refrain from doing anything, dissent 316 U.S. at 429, 62 S.Ct. 1206, this Court held that the order promulgating regulations was reviewable because it presently affected existing contractual relationships. It said:

'The regulations are not any the less reviewable because their promulgation did not operate of their own force to deny or cancel a license. It is enough that failure to comply with them penalizes licensees, and appellant, with whom they contract. If an administrative order has that effect it is reviewable and it does not cease to be so merely because it is not certain whether the Commission will institute proceedings to enforce the penalty incurred under its regulations for non-compliance.' Id., 316 U.S. at pages 417 418, 62 S.Ct. at page 1200.

The Court said that the regulations 'presently determine rights.' Id., 316 U.S. at page 421, 62 S.Ct. at page 1202.

'Appellant's standing to maintain the present suit in equity is unaffected by the fact that the regulations are not directed to appellant and do not in terms compel action by it or impose penalties upon it because of its action or failure to act. It is enough that, by setting the controlling standards for the Commission's action, the regulations purport to operate to alter and affect adversely appellant's contractual rights and business relations with station owners whose applications for licenses the regulations will cause to be rejected and whose licenses the regulations may cause to be revoked.' Id., 316 U.S. at page 422, 62 S.Ct. at page 1202.

See Federal Communications Commission v. American Broadcasting Co., 347 U.S. 284, 289, 74 S.Ct. 593, 597, 98 L.Ed. 699, and EL Dorado Oil Works v. United States, 328 U.S. 12, 18-19, 66 S.Ct. 843, 846, 90 L.Ed. 1053.

The regulations here under consideration presently aggrieve the respondent. The Commission exercised a power of rulemaking which controls broadcasters. The Rules now operate to control the business affairs of Storer. Unless it obtains a modification of this declared administrative policy, Storer cannot enlarge the number of its standard of FM stations. It seems, too, that the note to Rule 3.636 (n. 1, supra) endangers Storer's stations as alleged in its petition for review. See this opinion, supra, 76 S.Ct. at page 767 at (b). Commission hearings are affected now by the Rules. Storer cannot cogently plan its present or future operations. ^[7] It cannot plan to enlarge the number of its standard or FM stations, and at any moment the purchase of Storer's voting stock by some member of the public could endanger its existing structure. These are grievances presently restricting Storer's operations. In the light of the legislation allowing review of the Commission's actions, we hold that Storer has standing to bring this action.

In its petition for review Storer prayed the court to vacate the provisions of the Multiple Ownership Rules insofar as they denied to an applicant already controlling the allowable number of stations a 'full and fair hearing' to determine whether additional licenses to the applicant would be in the public interest. ^[8] The Court of Appeals struck out, as contrary to § 309(a) and (b) of the Communications Act (n. 5, supra), the words italicized in Rule 3.636 (n. 1, supra) and the similar words in Rules 3.35 and 3.240. The case was remanded to the Commission with directions to eliminate these words. 95 U.S.App.D.C. 97, 220 F.2d 204. We granted certiorari 350 U.S. 816, 76 S.Ct. 52.

The Commission asserts that its power to make regulations gives it the authority to limit concentration of stations under a single control. ^[9] It argues that rules may go beyond the technical aspects of radio, that rules may validly give concreteness to a standard of public interest, and that the right to a hearing does not exist where an applicant admittedly does not meet those standards as there would be no facts to ascertain. The Commission shows that its regulations permit applicants to seek amendments and waivers of or exceptions to its Rules. ^[10] It adds:

'This does not mean, of course, that the mere filing of an application for a waiver * * * would necessarily require the holding of a hearing, for if that were the case a rule would no longer be a rule. It means only that it might be an abuse of discretion to fail to hear a request for a waiver which showed, on its face, the existence of circumstances making application of the rule inappropriate.'

Respondent defends the position of the Court of Appeals. It urges that an application cannot be rejected under 47 U.S.C. § 309, 47 U.S.C.A. § 309, without a 'full hearing' to applicant. We agree that a 'full hearing' under § 309 means that every party shall have the right to present his case or defense by oral or documentary evidence, to submit rebuttal evidence, and to conduct such cross-examination as may be required for a full and true disclosure of the facts. Cf. 5 U.S.C. § 1006(c), 5 U.S.C.A. § 1006(c). Such a hearing is essential for wise and just application of the authority of administrative boards and agencies.

We do not read the hearing requirement, however, as withdrawing from the power of the Commission the rulemaking authority necessary for the orderly conduct of its business. As conceded by Storer, 'Section 309(b) does not require the Commission to hold a hearing before denying a license to operate a station in ways contrary to those that the Congress has determined are in the public interest.' ^[11] The challenged Rules contain limitations against licensing not specifically authorized by statute. But that is not the limit of the Commission's rulemaking authority. 47 U.S.C. § 154(i) and § 303(r), 47 U.S.C.A. §§ 154(i), 303(r), grant general rulemaking power not inconsistent with the Act or law.

This Commission, like other agencies, deals with the public interest. Scripps-Howard Radio v. Federal Communications Commission, 316 U.S. 4, 14, 62 S.Ct. 875, 882, 86 L.Ed. 1229. Its authority covers new and rapidly developing fields. Congress sought to create regulation for public protection with careful provision to assure fair opportunity for open competition in the use of broadcasting facilities. Accordingly, we cannot interpret § 309(b) as barring rules that declare a present intent to limit the number of stations consistent with a permissible 'concentration of control.' It is but a rule that announces the Commission's attitude on public protection against such concentration. ^[12] The Communications Act must be read as a whole and with appreciation of the responsibilities of the body charged with its fair and efficient operation. The growing complexity of our economy induced the Congress to place regulation of businesses like communication in specialized agencies with broad powers. Courts are slow to interfere with their conclusions when reconcilable with statutory directions. ^[13] We think the Multiple Ownership Rules, as adopted, are reconcilable with the Communications Act as a whole. An applicant files his application with knowledge of the Commission's attitude toward concentration of control.

In National Broadcasting Co. v. United States, 319 U.S. 190, 63 S.Ct. 997, 87 L.Ed. 1344, similar rules prohibiting certain methods of chain broadcasting were upheld despite a claim that the Rules caused licenses to be denied without 'examination of written applications presented * * * as required by §§ 308 and 309.' Id., 319 U.S. at page 230, 63 S.Ct. at page 1016. ^[14] The National Broadcasting case validated numerous regulations couched in the prohibitory language of the present regulations. The one in the margin will serve as an example. ^[15]

In the National Broadcasting case we called attention to the necessity for flexiblity in the Rules there involved. 'Commission provided that 'networks will be given full opportunity, on proper application for new facilities or renewal of existing licenses, to call to our attention any reasons why the principle should be modified or held inapplicable." Id., 319 U.S. at apge 207, 63 S.Ct. at page 1005. We said:

'The Commission therefore did not bind itself inflexibly to the licensing policies expressed in the Regulations. In each case that comes before it the Commission must still exercise an ultimate judgment whether the grant of a license would serve the 'public interest, convenience, or necessity.' If time and changing circumstances reveal that the 'public interest' is not served by application of the Regulations, it must be assumed that the Commission will act in accordance with its statutory obligations.' Id., 319 U.S. at page 225, 63 S.Ct. at page 1013.

That flexibility is here under the present § 309(a) and (b) and the FCC's regulations. See n. 10, supra. We read the Act and Regulations as providing a 'full hearing' for applicants who have reached the existing limit of stations, upon their presentation of applications conforming to Rules 1.361(c) and 1.702, that set out adequate reasons why the Rules should be waived or amended. The Act, considered as a whole, requires no more. We agree with the contention of the Commission that a full hearing, such as is required by § 309(b), note 5, supra, would not be necessary on all such applications. As the Commission has promulgated its Rules after extensive administrative hearings, it is necessary for the accompanying papers to set forth reasons, sufficient if true, to justify a change or waiver of the Rules. We do not think Congress intended the Commission to waste time on applications that do not state a valid basis for a hearing. If any applicant is aggrieved by a refusal, the way for review is open.

We reverse the judgment of the Court of Appeals and remand the case to that court so that it may consider respondent's other objections to the Multiple Ownership Rules.

Reversed and remanded.

Notes

1. Section 3.636 will illustrate the problem:
2. 'Any party aggrieved by a final order reviewable under this chapter may, within sixty days after entry of such order, file in the court of appeals, wherein the venue as prescribed by section 1033 of this title lies, a petition to review such order. * * *'
3. '(a) Any proceeding to enjoin, set aside, annul, or suspend any order of the Commission under this chapter (except those appealable under subsection (b) of this section) shall be brought as provided by and in the manner prescribed in chapter 19A of Title 5.'
4. 'Except so far as (1) statutes preclude judicial review or (2) agency action is by law committed to agency discretion-
5. 47 U.S.C. § 309, 47 U.S.C.A. § 309:
6. Legal wrong, as a ground for standing to appeal, was introduced by the Administrative Procedure Act, § 10(a). 60 Stat. 243. In explanation the reports of the Senate, No. 752, 79th Cong., 1st Sess. 26, and the House, No. 1980, 79th Cong., 2d Sess. 42, define 'legal wrong': 'The phrase 'legal wrong' means such a wrong as is specified in section 10(e). It means that something more than mere adverse personal effect must be shown in order to prevail-that is, that the adverse effect must be an illegal effect.'
7. Cf. Frozen Food Express v. United States, 351 U.S. 40, 43 44, 76 S.Ct. 569, 571.
8. Storer also attacked the 1% ownership provision that appears as a note to Rule 3.636, n. 1, supra. This was not passed upon by the Court of Appeals. 95 U.S.App.D.C. 97, 220 F.2d 204. Its judgment leaves that portion of the Rule unaffected. As there was no cross petition for certiorari, we leave open the question of its validity.
9. 'The Commission may perform any and all acts, make such rules and regulations, and issue such orders, not inconsistent with this chapter, as may be necessary in the execution of its function.' 47 U.S.C. § 154(i), 47 U.S.C.A. § 154(i).
10. 47 CFR, Rev.1953, § 1.361(c):
11. See 47 U.S.C. §§ 310 and 311, 47 U.S.C.A. §§ 310, 311. Cf. Ashbacker Radio Corp. v. Federal Communications Commission, 326 U.S. 327, 333, n. 9, 66 S.Ct. 148, 151, 90 L.Ed. 108; and 47 CFR, Rev. 1953 § 1.724; Felman v. United States, 339 U.S. 973, 70 S.Ct. 1030, 94 L.Ed. 1379; Federal Communications Comm'n v. American Broadcasting Co., 347 U.S. 284, 74 S.Ct. 593, 98 L.Ed. 699.
12. See National Broadcasting Co. v. United States, 319 U.S. 190, 196, 63 S.Ct. 997, 1000. We said last Term that determination of improper concentration of control was for appraisal by the Commission after hearing. Federal Communications Commission v. Allentown Broadcasting Co., 349 U.S. 358, 363-364, 75 S.Ct. 855, 858, 859, 99 L.Ed. 1147.
13. See Unemployment Compensation Commission of Territory of Alaska v. Aragan, 329 U.S. 143, 153, 67 S.Ct. 245, 250, 91 L.Ed. 136; O'Leary v. Brown-Pacific-Maxon, 340 U.S. 504, 508, 71 S.Ct. 470, 472.
14. Point III of the National Broadcasting Company brief argued the matter under this heading, 'The Commission Cannot Escape Its Duty to Evaluate and Decide Each License Application on Its Own Facts.' At that time § 309(a) had the hearing provision. It read:
15. "No license shall be granted to a standard broadcast station having any contract, arrangement, or understanding, express or implied, with a network organization under which the station is prevented or hindered from, or penalized for, broadcasting the programs of any other network organization." Id., 319 U.S. at page 200, 63 S.Ct. at page 1002; 47 CFR, 1941 Supp., § 3.101.