Amicus Brief — Federal Communications Commission v. National Citizens Committee for Broadcasting

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Supreme Ccurt, U. S,

RILED

NOV 17 1977

Nos. 76-1471, 76-1521. 76-1595,

76-1604, 76-1624, 76-1685 MICHAEL RODAK, JR. CLERK

IN THE

Supreme Court of the United States

Ocroper Term, 1977

FEDERAL COMMUNICATIONS CoMMIASION, et al.,

Petitioners,

Vv.

National Crrizens COMMITTEE FOR BROADCASTING,

et al., Respondents.

On Writ of Certicrari to the United States Court of

Appeals for the District of Columbia Circuit

BRIEF OF AMICI CURIAE

FILED ON BEHALF OF DISPATCH PRINTING

COMPANY AND THE JOURNAL COMPANY

TABLE OF CONTENTS

Page

Inrernest oF Amici CURIAE ..........0eeeceeeeceeeees 1

I es icc p acess ode weece 4

i ete beebeses 6

I. Congress Has Made It Clear That It Has Dele-

II.

gated No Power To The Commission To Make

A General Rule Denying Broadcast Licenses To

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Determinations Of ‘‘Public Convenience, Inter-

est, And Necessity’? Have Been Delegated By

Congress To The Commission And Not To The

Courts, And The Court Below, By Itself Making

Such A Determination, Exceeded The Proper

Scope Of Judicial Review .................406-

A. The Intent, As Well As The Effect Of The

Decision Of The Court Below, Was To Usurp

The Commission’s Responsibility To Deter-

mine The Public Interest ..................

B. The Usurpation By The Court Below Of The

Commission’s Responsibility Was Improper

1. The Court Below Improperly Undertook

To Weigh The Evidence ................

2. A Court May Not Conclude That An Agen-

cy Decision Is Invalid Merely Because It

ould Weigh The Factors Involved In

That Decision Differently Than The

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3. The Court Below Exceeded The Proper

Scope Of Judicial Review By Command-

ing The Commission To Adopt A Specific

Rule Selected By It ..................4.

C. The Court Below Tres On The Prin-

ciple Of Separation Of Powers ............

ii Table of Contents Continued

Page

III. The Court Of Appeals Erred In Concluding That

The Commission’s Determination That Its New

Rule Should “ot Generally Be Applied Retro-

actively Was Irrational ................+0e00.

A. Rationality Does Not Require Retroactivity .

B. Retroactivity Has Not Been Required For

The Validity Of Rulemaking, Legislation Or

Sumiginl AGMGD 1. vccccesccvvesessaseeunas

1. Prospective-only Commission Rules .....

2. Prospective-only By Other Agencies ....

3. Prospective-only Legislation ...........

. Prospective-only Holdings By This Court

AnG@ Gibor Gases .. i .cccbsavsdcsaunaees

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TABLE OF AUTHORITIES

Cases:

Action for Children’s Television v. FCC, Case No. 74-

2006 (D.C. Cir., July 1, 1977) .........cccccecces

Adams vy. Illinois, 405 U.S. 278 (1972) ...............

er Holly Hill Fruit Products, Inc., 322 U.S. 607

Allen v. State Bd. of Elections, 393 U.S. 544 (1969) ....

Almeida-Sanchez v. United States, 413 U.S. 266 (1973

American Airlines, Inc. v. CAB, 192 F.2d 417 (D.C.

Ohm, BBD o0.0.0 + ae adios oo v:0 0.6.0:hesc ene

American Telephone & Telegraph Co. v. United States,

300 UB. THAMEOOD os; « ccnns icdintnnasaeeeee

Associated Industries of New York State, Inc. v. Dept.

of Labor, 487 F.2d 342 (2d Civ. 1973) ............

Associated Press y. United States, 326 U.S. 1 (1945) ..

Balts v. Balts, 273 Minn, 419, 142 N.W. 2d 66 11968) 7

Board of Trade v. United States, 314 U.S. 584 (1942) ..

Bowen v. United States, 422 U.S. 916 (1975) .........

Bowman Transportation, Inc. v. Arkansas-Best Freight

System, Inc., 419 U.S. 281 (1974) ..........0055.

Brandywine-Main Line Radio, Inc. v. FOC, 473 F.2d 16,

(D.C. Cir. 1972), cert. denied, 412 U.8. 922 (1973) .

Table of Authorities Continued iii

Page

Buckeye Cablevision, Inc. v. FCC, 387 F.2d 220 (D.C.

DCI dint vines cub bce cecsevecaceeesccecees

Burns v. Owens, 459 S.W. 2d 303 (Mo. 1970) .......... 38

Calder v. Bull, 3 Dall. 386 (1798) ..........0-eeeeeees 35

Chevron Oil Co. v. Huson, 404 U.S. 97 (1971) ... .40, 42, 43

Chicot County Drainage District v. Baxter State Bank,

BED TBs BIE CRD ccc ccc sccsscnccccccccccees 40

Chimel v. California, 395 U.S. 752 (1969) ............ 41

Cipriano v. City of Houma, 395 U.S. 701 (1969) ...... 39, 43

Citizens Communications Center v. FCC, 447 F.2d 1201

ES 2h Se adda eedhoacdeccedeseteces 23

Citizens to Preserve Overton Park, Inc. v. Volpe, 401

TD nn Lacidad cn bannedad) ood Reese « 18, 21

City of Phoenia v. Kolodziejski, 399 U.S. 204 (1970) .. 40

Claridge Apartments Co. v. Comm’r, 323 U.S. 141

I ids ane dkinevivnd Kodbecedtocece 35

Coleman v. Alabama, 399 U.S. 1 (1970) ......... eeese 42

Columbia Broadcasting System, Inc. v. Democratic Na-

tional Committee, 412 U.S. 94 (1972) ........ 14, 23, 26

Columbus Broadcasting Coalition v. FCC, 505 F.2d 320

SM, BED 5 o-n.0bncbchbpe% cs ccgscdectscess 38

—— Lo Open Media v. FCC, 533 F.2d 1 (D.C.

a a eer

Connecticut Committee Against Pay TV v. FCC, 301

F.2d 835 (D.C. Cir. 1962) ..........cesseccccess 20

Cornell v. United States, 427 F.2d 680 (2d Cir. 1970) .. 30

Daniel v. Louisiana, 420 U.S. 31 (1975) .............. 42

Dawson v. Olsen, 94 Idaho 636, 496 P.2d 97 (1972) .... 38

Desist v. United States, 394 U.S. 244 (1969) .......... 41

England v. Louisiana State Bd. of Medical Examiners,

ED 5 oo bianii de) ap biddaseesccs 40

Escobedo vy. Illinois, 378 U.S. 478 (1964) ............. 41

Ethyl ta v. EI 4, 541 F.2d 1 (D.C. Cir.), cert. denied,

hia oD, Lind chcaheendb.cbevese 21

FCC v. Pottsville Broadcasting Co., 309 U.S. 134

ER ila eal wks chy db ntle 4 ape 0% 12, 27, 28, 31

FCC v. RCA Communications, Inc., 346 U.S. 86

CES tieRiadee dh Uh ilk. gogehsineces scons 24, 26, 31

a in Brothers Radio Station, 309 U.S. 470 i

FCC v. Schreiber, 381 U.S. 279 (1965) ............... 30

PCC v. WOKO, Inc., 329 U.S. 223 (1946) ............ 26

iv Table of Authorities Continued

Page

Federal Radio Commission v. General Electric Co., 281

CEE, Ge GREED occ cccccoccsvccdsscaseounenese 29, 30

Fidelity Television, Inc. v. FCC, 515 F.2d 684 (D.C.

Cir.), cert. dented, 423 U.S. 926 (1975) .......... 23

Fountain v. Fountain, 214 Va. 347, 200 S.E.2d 513

(1973), cert. denied, 416 U.S. 939, rehearing denied,

rm) +” > Geet As oceep geoer

FPC vy. Idaho Power Co., 344 U.S. 17 (1952) . .27, 28, 29, 31

General Telephone ren & the Southwest v. United

(5t

States, 449 F.2d PAD 6059605600660 33

Gilbert v. California, 388 U.S. 263 (1967) ............ 41

Goller v. White, 20 ‘Vis.2d 402, 122 N.W.2d 193 (1963) 39

Gosa v. Mayden, 413 U.S. 665 (1973) ................ 42

Great Northern Railway Co. v. Sunburst Oil & Refining

Car, Be WEED COED 6c cnccugiseccosvacdesées 38

Greater Boston Television Corp. v. FCC, 444 F.2d 841

(D.C. Cir. 1970), cert. denied sub nom. WHDH, Inc.

ew, -Z 1° Sh fOU S er e e eory 23

Griffin v. California, 380 U.S. 609 (1965) ............. 41

Grosso v. United States, 390 U.S. 62 (1968) .......... 42

Halliday v. United States, 394 U.S. 831 (1969) ........ 41

Hanover Shoe, Inc. v. United Shoe Machinery Corp.,

REE He ee 40

Hassett v. Welch, 303 U.S. 303 (1938) ......... et eal 35

James v. United States, 366 U.S. 213 (1961) .......... 41

Jefferson Standard Broadcasting Co. v. FCC, 297 F.

Bey A UC eee 37

Jenkins v. Delaware, 395 U.S. 213 (1969) ............ 41

Johnson v. New Jersey, 384 U.S. 719 (1966) .......... 41

Katz v. United States, 389 U.S. 347 (1967) ........... 41

Kojis v. Doctors Hospital, 12 Wis.2d 367, 107 N.W. 2d

131, modified on rehearing, 107 N.W. 2d 193 (1963) 39

Langdell v. Dodge, 100 N.H. 118, 122 A.2d 529 (1956) .. =

Lemon v. Kurtzman, 411 U.S. 192 (1973) ............

Linkletter v. Walker, 381 U.S. 618 (1965) ........... 41, 43

Maceren v. District Director, Immigration and Naturali-

zation Service, 509 F.2d 934 (9th Cir. 1974) ...... 37

Mackey v. United States, 401 U.S. 667 (1971) ........ 41

Marchetti v. United States, 390 U.S. 39 (1968) ....... 42

Mapp v. Ohio, 367 U.S. 643 (1961) ...............05. 41

Marks v. United States, 430 U.S. 188 (1977) .......... 42

McClatchy Broadcasting Co. v. FCC, 239 F.2d 15 (D.C.

Cir. 1956), cert. denied, 353 U.S. 918 (1957) ...... 24

Table of Authorities Continued v

Page

Miami Herald Publishing Co. v. Tornillo, 418 U.S. 241

EE nc iubens neebtededwace FbesWecocscodess

Michigan v. Payne, 412 U.S. 47 (1973) ........-+-+4-- 42

Michigan v. Tucker, 417 U.S. 433 (1974) .........45+: 41

Miller v. California, 413 U.S. 15 (1973) ..........+++- 42

Miranda v. Arizona, 384 U.S. 436 (1966) ............. 41

Molitor v. Kaneland Communitu Unit Dist., No. 302, 18

Til.2d 11. 163 N.E. 2d 89 (1959) ..............5-- 38

Mt. Mansfield Television, Inc. v. FCC, 442 F.2d 470 (2d

Pk. DD ckes siadidinmes setsabtla sebkueetets 19, 20

National Ass’n of Independent Television Producers

avd Distributors v. FCC, 516 F.2d 526 (2d Cir.

EN ) Shiv dns ve Seed an cbc deWesee- baden esa uhs 26, 31

National Ass’n of Motor Bus Owners v. FCC, 460 F.2d

3 POS yore ete ee 31

National Broadcastina Co. v. FCC, 516 F.2d 1101 (D.C.

Cir. 1975). cert. denied sub nom. Accuracy in Media,

Inc. v. National Broadcasting Co., 424 U.S. 910

SEER, tiie kktcdn cab codddeebouctoud bhonecieanend 28

National Broadcasting Co., Inc. v. United States, 319

Was Se CHD (Ep ccne cacdedocnsus 18. 21. 22, 25. 30, 36

Niagara Mohawk Power Corp. v. FPC, 379 F.2d 153

[ih TD éncchsncsvcatan caves cheescenese 33

NLRB vy. Bell Aerospace Co., 416 U.S. 267 (1974) ..... 38

NLRB v. E€B Brewing Co., 276 F.2d 594 (6th Cir.

DE = ditcny Ut tnde va teotn vet bpe ede bonketapen<s 37

NLRB v. Food Store Employees Union, 417 U.S. 1

SED. nam Gadane Kuve cbieee Cad bbints Onees ba bXbss 28

NLRB v. Majestic Weaving Co., 355 F.2d 854 (2d Cir.

I bs Gdisk C445 s Sas natalie dd CTGa cdacones <3 37, 38

NLRB v. Wyman-Gordon Co., 394 U.S. 759 (1969) .... 38

North Carolina v. Pearce, 395 U.S. 711 (1969) ........ 42

O’Callahan v. Parker, 395 U.S. 258 (1969) ............ 42

Parker v. Port Huron Hospital, 361 Mich. 1, 105 N.W.

OE F CRE 5 ebuteis odes’ tinthdoamekioettanen 39

Public Interest Research Group v. FCC, 522 F.2d 1060

(1st Cir. 1975), cert. denied, 424 U.S. 965 (1976) . .25, 26

— ma of America v. United States, 341 U.S. 412

vi Table of Authorities Continued

Page

Retail, Wholesale and Dep’t Store Union v. NLRB, 466

F.2d 380 (D.C. Cir. 1972) ..........ceeeeeeeees 33, 37

Schwartz v. U.S. Rubber Corp., 112 N.J. Super. 595, 272

re ') OF) oS eee 39

Scripps-Howard Radio, Inc. v. FCC, 316 U.S. 4 (1942) . 32

SEC vy. Chenery Corp., 332 U.S. 194 (1946) ... .25, 32, 33, 3

Simpson v. Union Oil Co., 377 U.S. 13 (1964) .........

South Prairie Construction Co. v. Local 627, Operating

Engineers, 427 U.S. 800 (1976) .......----e eee:

Stovall v. Denno, 388 U.S. 293 (1967) ........6-000 00s 41

Taylor v. Louisiana, 419 U.S. 522 (1975) .........+.5. 42

Tehan v. United States ex rel. Shott, 382 U.S. 406

CED *6c inde cv0dn tncegesesesswdesahedussoeres 41

The Permian Basin Area Rate Cases, 390 U.S. 747

rors: reer ie Tier 25

United States v. Allegheny-Ludlum Steel Corp., 406

Wey Wee COD 0c c'bvn cabsdetcnsensenedas cogets 19

United States v. Estate of Donnelly, 397 U.S. 286 (1970) 40

United States v. Maher, 307 U.S. 148 (1939) ........ 34, 35

United States v. McDaniel, 7 Peters 1 (1833) ......... 33

United States v. Morgan, 313 U.S. 409 (1941) ......... 32

United States v. Peltier, 422 U.S. 531 (1975) .......... 42

United States v. Saskatchewan Minerals, 385 U.S. 94

SED iccocaccccomeuvanechudennd 6 tbbeckiaedes 31

United States v. Storer Broadcasting Co., 351 U.S. 192

GRD boc cdcnupscnassasbedshcnceasecenesdbese 37

United States v. Wade, 388 U.S. 218 (1967) .......... 41

Vermont Yankee Nuclear Power Corp. v. Natural

Resources Defense Council, Inc., No. 76-419, to be

argued November 28, 1977, reviewing Natural Re-

sources Defense Council, Inc. v. Nuclear Regula-

tory Commission, 547 F.2d 633 (D.C. Cir. 1976) ... 26

Vickers v. Vickers, 109 N.H. 169, 242 A.2d 57 (1968)... 39

Williams v. United States, 401 U.S. 646 (1971) ....... 41

ConsTITuTION, STATUTES AND REGULATIONS :

WE, Goeth: BOG, BE GE. Bs dp dncwcctede ddswiessvues 35

WR, Qe BE o's 6.6 66s hte es NV i td ec cdesdy 7, 15, 25

OR i te isisic inns stnivnticcndinin ee

CE, GER, BANE, FEES ccccevrescecsescdasbvansave 40

BS ee ERD vn tdsnncasvnvnncscsactendtiten 21

Table of Authorities Continued Vii

Page

EP SES asddkocodsbédecunsétececueseence 27

Pe ME dbbdodsb nb <éscsebedevccnscene

29 U.S.C. $261 ......... patdvnv>ehedsstimehoerneews

42 U.S.C. § 1973, et seq. (1964 ed., Supp. I) .......... 40

GF iva Ede ces cvbesecbivedderctcugendi 12

EE Sin. fd Kudu Rocb sé cnacéccshucee cadauwe 12

er ion, peaks ave eis yeas ioenn ewes 12

Oe EE venccccbesvavdccdteoebeteceesunnt 12

SF Wh 6c okt canede coyiged chvareuneve soa 12

PD San dain b bbb sd ndteveesee cigbases’ 24

eon 8 od cna od eon eats babounnns 12

er Ah nk cs pens ree Sane 'nhhoehen 0% 12

Re BP hdd ob wo cc bab dks coteseededexduiive 3

Ge GE bce kkk apne dules so kcesVnnestee’s oe 3

Be EN RE 35.06 cas scks pase ect ¥eedecseveecects 3

PPE Ca be cover cache boseennsdnbecees 41

MISCELLANEOUS:

Beytagh, ‘‘Ten Years of Non-Retroactivity: A Critique

and a Proposal,’’ 61 Va. L. Rev. 1577 (1975) ..... 39

Cable Television Report and Order, 36 F.C.C. 2d 143

GUE. binds widbdad cavanind ditedakwenews os btké 36

CATV-TV Cross-Ownership Rules, 55 F.C.C. 2d 540

(1975), reconsideration denied, 58 F.C.C. 2d 596

(1976), appeal pending, No. 75-1933, et al., (D.C.

aa aaa motions for partial stay granted, June

Comment Note, ‘‘ Prospective or Retroactive tion

of Overruling ion,’’ 10 A.L.R. 3d (1966) 39

Conference Report No. 2426, 82d Cong., 2d Sess. (1952) 11

98 Cong. Rec. 7417-7420 (1952) ..........0..seeeeeee. 11

viii Table of Authorities Continued

Page

98 Cong. Rec. H9048-9049 (daily ed. July 2, 1952) .... 11

Distribution of Television Broadcast Signals by CATV

Systems, 2 F.C.C. 2d 725 (1966) ............06.

Hearings on Application for Second VHF Station, 3

P&F Radio Reg. 2d 909 (1964) ....... rehiventwres

H.R. Rep. No. 1750, 82d Cong., 2d Sess. (1952) ....... 10

Interim Policy on Television Multiple Ownership, 5

P&F Radio Reg. 2d 271 (1965) ...........-0e00e

Memorandum Opinion and Order, 53 F.C.C. 2d 859

SEED casoessncnoerensencstesdetesseaune 13, passim

Multiple Ownership Rules, Docket No. 20548, 63 F.C.C.

Be GD CIIGED ce vcdcveveccecsiusiccsteatenees 24, 36

Multiple Ownership of Standard, FM, and Television

Broadcast Stations, 22 F.C.C. 2d 306 (1970) ....36, 38

Multiple Ownership of Standard, FM, and Television

Broadcast Stations, 45 F.C.C. 1476 (1964) ........ 36

Multiple Ownership of Television Broadcast Stations,

12 P&F Radio Reg. 2d 1501 (1968) ..............

Proposed Amendments to the Communications Act of

1934: Hearings on 8.814 Before the Senate Comm.

<a Commerce, 78th Cong., Ist Sess. .

DOUG wah con cdcundendoved cat wheudadwanceniecen

Proposed Amendments to the Communications Act of

1934: Hearings on §.1333 Before the Senate Comm.

on Interstate Commerce, h Cong., 1st Sess.

GORGE) eer édnncecccccccebasnidechseouiebbeun 8

Proposed Amendments to the Communications Act of

1934: Hearings on 8.1973 Before the Subcomm. on

S.1973 of the Senate Comm. on Interstate and For-

eign Commerce, 81st Cong., Ist Sess. (1949) ..... 8,9

Revision of FM Broadcast Rules, 40 F.C.C. 660 (1962) 36

Schaefer, ‘‘The Control of ‘Sunbursts’: Techniques of

mah Overruling,’’ 42 N.Y.U. L. Rev. 632 ™

Second Report and Order in Docket 18110, 50 F.C.C. 2d

SOUP GUO ob cen decccveccneeVbcsneeeweds 13, passim

Table of Authorities Continued ix

Page

S. Rep. No. 741, 81st Cong., Ist Sess. (1949) ..... 8, 9,10, 11

Story, Constitution, § 1398 (1898) ...............005- 34

Supreme Court Rule 42(1) .............c cece ee eeeee 4

Testimony of Chairman Richard E. Wiley before the

— Subcommittee on Communications, May 10,

BET 34640 cbacadaktie cep 0chdes sbaweenes ees. cb5 0

Telephone Terminal Equipment Rules, 59 F.C.C. 2d

PEE uc os aks bare on ce hs ec ce mhevesbudehers 36

‘‘The Supreme Court, 1968 Term,’’ 83 Harv. L. Rev.

RE Sccdcadeccseberibesecbiscaanceade esas 38

Wall Street Journal, October 13, 1977, p.1........... 16

Wright, Skelly, ‘‘The Courts and the Rule Making

rocess: The Limits of Judicial Review,’’ 59 Corn.

¢ “% 9, BP atime Ens 30

IN THE

Supreme Court of the United States

OctroserR TERM, 1977

Nos. 76-1471, 76-1521, 76-1595,

76-1604, 76-1624, 76-1685

FEDERAL COMMUNICATIONS COMMISSION, ef al.,

Petitioners,

Vv.

NATIONAL CITIZENS COMMITTEE FOR BROADCASTING,

et al., Respondents.

On Writ of Certiorari to the United States Court of

Appeals for the District of Columbia Circuit

BRIEF OF AMICI CURIAE

FILED ON BEHALF OF DISPATCH PRINTING

COMPANY AND THE JOURNAL COMPANY

INTEREST OF AMICI CURIAE

The Dispatch Printing Company (‘‘Dispatch’’) pub-

lishes The Columbus Dispatch, an independent daily

evening newspaper, and The Columbus Sunday Dis-

patch, a Sunday newspaper, in Columbus, Ohio.’ Dis-

patch owns all the stock of WBNS-TV Inc., licensee

of WBNS-TV, Channel 10, in Columbus.’ Dispatch

*The Dispatch competes with a daily morning newspaper, The

Columbus Citizen-Journal, published by the E. W. Scripps Com-

pany.

* Dispatch also owns WTHR(TV) in Indianapolis, Indiana.

shareholders also own RadiOhio, Inc., licensee of radio

stations WBNS(AM) and WBNS-FM, Columbus.

Dispatch began broadcasting AM radio in 1934, and

built the Columbus FM station in 1939,° and TV sta-

tion in 1957.

The Journal Company (‘‘Journal’’) is the pub-

lisher of The Milwaukee Journal, an independent daily

evening and Sunday newspaper, and The Milwaukee

Sentinel, an independent daily morning newspaper,

in Milwaukee, Wisconsin. Journal owns all the stock

of WTMJ, Inc.. licensee of WTMJ-TV, Channel 4, in

Milwaukee, and of WTMJ(AM) and WKTI(FM) in

Milwaukee.* Journal built its stations and put them

on the air, AM in 1927, TV in 1947 and FM in 1940.

The Journal Company is owned by its employees.’

This system of employee ownership is unique and

guarantees that the company will be owned by people

who live in and are involved in the local community.

’ WBNS-FM’s call letters when it first went on the air were

W8xXVY.

*WTMJ, Inc. also owns Teltron, Inc. which operates cable tele-

vision systems in Wausau, Wisconsin Rapids, and Stevens Point,

Wisconsin.

* Starting in 1937, shares of The Journal Company stock were

placed in trust. Employees can buy a ‘‘unit of beneficial interest,’’

which confers all the rights of common voting stock ownership,

except that the units must be resold to other active employees when

an owner ceases to be an employee. Units are allocated on the basis

of each employee’s responsibility, leadership, contributions to the

success of the company and length of service. Employees of WTMJ,

Inc. as well as employees of The Journal

Company participate in

this employee ownership arrangement. Currently, 1316 employees

are unit holders of over 88% of the total stock of The Journal

Company.

After a seven year rulemaking proceeding, the Fed-

eral Communications Commission (hereinafter ‘‘the

Commission’’) adopted rules forbidding the prospec-

tive formation of combinations of a newspaper and a

broadcast station (radio or television) located in the

same community,° but limiting retroactive application

of the rule to existing combinations located in com-

munities served by only one daily newspaper and one

broadcast station. In the case of one newspaper-one

broadcast station communities, the Commission order

required one of these interests to be divested within

five years.

The court of appeals upheld the prospective portion

of the rules (FCC App. A, p. 33),’ but held invalid

the Commission’s determination not to apply the cross-

ownership rule retroactively. (FCC App. A, p. 60.)°

The Commission rule invalidated by the court of

appeals would have permitted Dispatch and Journal

to retain their co-located newspaper and broadcast

stations so long as the stations continue to serve the

public interest. The decision of the court of appeals, if

upheld, would affect Dispatch and Journal substan-

tially and adversely, by forcing each of them to divest

*That is, ownership of a newspaper located within the City

Grade signal, i.c., primary service area, of a commonly owned

broadcast station. See 47 C.F.R. §§ 73.685, 73.315, 73.188. For ease

of reference, such co-location is referred to herein as ‘‘in the same

community.’’

either its newspaper or its broadcast stations, located

respectively in Columbus and Milwaukee, unless each

could make a showing of special circumstances. (FCC

App. A, p. 60.)

Dispatch and Journal have obtained written consent

of all the parties below to the filing of this brief as

amtict curiae pursuant to Rule 42(1) of the Rules of

this Court, and have filed these consents simultaneously

with this brief.

SUMMARY OF ARGUMENT

The Commission, after a lengthy rulemaking pro-

ceeding, adopted a rule in regard to the cross-owner-

ship of newspapers and broadcast stations, which pro-

hibited future combinations of commonly owned

broadcast facilities in the same community, permitted

the continued existence of such combinations in com-

munities with more than one media outlet, and required

divestiture in communities where there was only one

media voice. The court below upheld the Commission’s

prospective ban, but invalidated the ‘‘grandfathering’’

and ordered the Commission to adopt a specific rule in

regard to existing cross-ownerships which gives diver-

sity of ownership ‘‘controlling weight.”’

Congress has indicated that it did not delegate to

the Commission the power to make a general rule

which denies broadcast licenses to newspaper owners.

The question was fully considered in 1952, and Con-

gress concluded that the Commission had no such

power. Thus, the Commission could not promulgate

any blanket rule in regard to the grant or denial of

broadcast licenses to newspaper owners, including the

prospective rule upheld by the court below.

By replacing the rule in regard to cross-ownership

selected by the Commission with a rule more to its

liking, the court below improperly usurped a basic

policy judgment allocated by Congress to the Com-

mission. It improperly immersed itself in weighing the

evidence to restrike the balance between permitting

and prohibiting cross-ownership. But a mewiewing

court may not invalidate an agency deeision merely be-

cause it would weigh the factors involved in that de-

cision in a manner different from the balamcing en-

gaged in by the agency. Nor may a reviewing court

command the Commission to adopt a speeifie rule se-

lected by it. Thus, the court below both exeeeded the

proper scope for judicial review and trespassed beyond

the boundaries established by the separation of powers.

The court of appeals also determined that the Com-

mission’s decision limiting the impact of its cross-

ownership ban to future acquisitions or constructions

of broadcast facilities was irrational. (FCC App. E,

p. 165.) This determination flies in the face of the his-

tory of administrative, legislative and judicial action,

and of common sense. It can be read as little more than

a statement that the court may enforce its own policy

in regard to cross-ownership, and not that of the Com-

* Amici endorse the positions taken by other parties: (1) that

questions summarized briefly above, namely:

1. Did the court below and the Commission

wrongfully conclude that the Commission had

the authority to promulgate a general rule pro-

hibiting the grant of licenses for broadcast fa-

cilities to newspaper owners?

2. Does the decision of the court of ap im-

properly usurp the function allocated by Con-

gress to the Federal Communications Commis-

sion, in view of the fact that Con assigned

to the Commission, and noi to the courts, the

responsibility to determine the ‘‘public inte»-

est, convenience and necessity’’ in regulating

broadcast licensing ?

3. Was the Commission acting reasonably within

its delegated powers when it changed its rules

and practices only with respect to prospective

cross-ownership of newspapers and broadcast

facilities ? *°

ARGUMENT

in that circumstance. This question raises problems of

delegation of powers. It also raises problems under

the First Amendment, and these are important in two

aspects, first, as to the constitutional power of Con-

gress, and second, as to the effect which such consti-

tutional questions should have on the construction of

the power which Congress has actually delegated to

the Commission.

These questivns are discussed in full in briefs filed

by the parties in this ease, particularly in the briefs

filed by the American Newspaper Publishers Associa

tion and the National Association of Broadeasters.

Although this »rief is primarily devoted to the ques-

tion of the “‘grandfather clause’’ in the Commiission’s

ordér, the interest of the amici curiae will be pro-

tected if it is deeided that the Commission did not

have power delegated to it to make a rule placing

a special restriction om the ownership of broadcast

stations by newspapers. Accordingly, the amici curtae

fully swpport the briefs filed yy the parties which

contend that the Commission has no such power. If this

contention is upheld, then the “‘grandfather’’ question

is no lon~er relevant.

There is one aspect of the question of the Commis-

sion’s basic power to which it is appropriate to call

special attention. The fact is that Congress has con-

sidered this question, and has made it as clear as it is

possible to do wi t an actual statutory provision

ion has not been given power to dis-

criminate against newspapers in the licensing of broad-

This specific question, which Congress had been con-

sidering for about a decade," was presented to and

acted upon by Congress im 1952. Previously, in 1949, a

bill, S. 1973, designed to amend several sections of the

Communications Act of 1934 was pending before a Sen-

ate subcommittee. One of the proposals under consid-

eration was an amendment introduced by Senator

Ernest McFarland which was intended to deny the

Commission the power to restrict ownership of broad-

cast facilities by newspapers.’ The Acting Chairman

of the Commission, Rosel Hyde, testified before the sub-

committee of the Senate Committee on Interstate and

Foreign Commerce that the Commission did not have

power to make a blanket rule preventing all persons

engaged in a particular business, such as publishing

newspapers, from obtaining a license, even if such ac-

tion was believed to be in the public interest. Proposed

" Proposed Amendments to the Communications Act of 1934:

Hearings on 8S, 814 Before the Senate Comm. on Interstate Com-

merce, 78th Cong., Ist Sess. 80-85 (1943) ; Proposed Amendments to

the Communications Act of 1934: Hearings on S. 1333 Before the

Senate Comm. on Interstate Commerce, 80th Cong., Ist Sess. (1947).

‘* The amendment provided :

‘‘No sanction shall be imposed or substantive rule or order

be issued except within jurisdiction delegated to the Commis-

sion and as authorized by law. bl pm a

or promulgate no rule or regulation o or

the Aan agp result of which is to effeet a discrimination

between persons based upon race, reli or political affilia-

tion, or kind of lawful occupation or business association.”’

8. Rep. No. 741, 8Ist Cong., Ist Sess. 3 (1949). In regard to this

amendment, the Acting Chairman of the Commission, Rosel Hyde,

submitted written testimony stating: ‘‘The principal intent of the

section is, of course, to outlaw the possibilit.’ of any rule excluding

newspaper owners from owning radio stations.’’ Proposed Amend-

ments to the Communications Act of 1934: Hearings on S. 1973

Before the Subcomm. on 8. 1973 of the Senate Comm. on Interstate

and Foreign Commerce, 81st Cong., 1st Seas. 20-21 (1949).

cate 34:

Amendments to the Communications Act of 19

Hearings on S. 1973 Before the Subcomm. on S. 1973

of the Senate Comm. on Interstate and Foreign Com-

merce, 8ist Cong., Ist Sess. 42-44, 103-105 (1949).

After Chairman Hyde’s testimony, the subcom-

mittee eliminated the proposed amendment from the

bill. When the full committee reported the bill to the

Senate floor, it commented on the reasons for omitting

the amendment:

‘‘This language was first pro nearly 6 years

ago during hearings on a Communications Act

amendments bill, solely because the Federal Com-

munications Commission at that time had under

consideration a rule which would prohibit news-

from becoming holders of radio licenses.

While the Commission may have been motivated,

i t least, by the best intentions in seeking

to ntti omptie control of organs of pub-

lic expression in a community, its ea gnc viral

tion was of questionable constitutional ve ty,

particularly in the absence of au a

in the basic act to adopt such a rule. However, the

net effect of the Commission’s proposed antinews-

paper rule was to deny consideration of —

tions from newspapers, all such applications hs a

ing been placed in a pending file. fter —,

for some 2 years, the Commission dropped .

plans for such a rule and began processmg 0”

newspaper applications in the same manner

other applications.

S. Rep. No. 741, 8ist Cong., Ist Sess. 2 (1949).

After summarizing the Commission’s testimony, the

committee concluded:

should peng 4 understood that in elim-

ini whe asatias committee has done so

the procedure which was outlined in the section,

has testified that it intends to follow that proce-

dure, and that it is of the opinion that it has no

legal or constitutional authority to follow any

other procedure.

S. Rep. No. 741, 81st Cong., Ist Sess. 3 (1949).

In 1951, a bill, S. 658, which was almost identical

to the final version of 8. 1973 was adopted by the

Senate and went to the House. The House adopted an

amendment which provided that:

*“*The Commission shall not make any rule or reg-

ulation, of substance or procedure, the purpose

or result of which is to effect a discrimination be-

tween persons based upon interest in, association

with, or ownership of any medium primarily en-

gaged in the gathering and dissemination of in-

ormation and no application for a construction

rmit or station license, or for the renewal, modi-

eation or transfer of such a permit or license,

shall be denied by the Commission solely because

of any such interest, association, or ownership.”’

H.R. Rep. No. 1750, 82d Cong., 2d Sess. 9 (1952).

When the bill went to conference, the Conference

Committee eliminated the House amendment. But the

Conference Committee Report made it clear that the

provision was omitted because the Conference Com-

mittee found it unnecessary. It stated:

“It is the view of the conference committee that

under the present law the Commission is not au-

thorized to make or promulgate any rule or regu-

lation the effect of which would be to discriminate

against any person because such person has an

interest in, or association with, a newspaper... .

Also the Commission could not arbitrarily

any application solely because of any such inter-

est or association.”’

Conference Report No. 2426, 82d Cong., 2d Sess. 19

(1952). The discrimination to which the amendment

responded, and which the Conference Report stated the

Commission was not authorized to make, was against

the denial of broadcast licenses by the Commission be-

cause the prospective licensee was commonly owned

with newspapers or news disseminating agencies. 98

Cong. Ree. 7417-7420 (1952); 98 Cong. Rec. H9048-

9049 (daily ed. July 2, 1952).

Thus, Congress, by formal, published action, ap-

proved by both Houses of Congress, made it clear that

it did not regard the Commission as having any power

delegated to it to discriminate against newspapers

in the ownership of broadcast facilities. The views of

Congress may or may not have changed in the mean-

time. When Congress has denied that it has made a

delegation of power, however, such a delegation can

hardly be inferred from subsequent inaction. In view

of the delicacy of the area, and the nationwide impact

of any change, this clear delineation of the Commis-

sion’s powers should remain binding on it until Con-

gress determines to extend the powers which it said it

did not delegate when it last formally gave considera-

tion to this question.

tl.

DETERMINATIONS OF “PUBLIC CONVENIENCE, INTEREST.

AND NECESSITY” HAVE BEEN DELEGATED BY CONGRESS TO

THE COMMISSION AND NOT TO THE COURTS. AND THE

COURT BELOW, BY ITSELF MAKING SUCH A DETERMINA-

TION, EXCEEDED THE PROPER SCOPE OF JUDICIAL REVIEW.

The Communications Act of 1934 provides not only

that the Commission shall make regulations to carry

out the provisions of the Act, 47 U.S.C. § 303(f),” but

also that:

“The Commission, if publie convenience, interest,

or necessity will be served thereby, .. . shall grant

to any applicant therefor a station license pro-

vided for by this Chapter.’ 47 U.S.C. § 307(a)."

Congress thus delegated to the Commission the au-

thority both to determine what radio or television

license applicants shall be granted licenses and to

make regulations to implement such determinations in

the ‘‘publie convenience, interest, and necessity.”’ *

A. The Intent, As Well As The Effect Of The Decision Of The

Court Below, Was To Usurp The Commission’s Responsibility

To Determine The Public Interest.

Pursuant to this licensing and rulemaking author-

ity, the Commission determined that the public inter-

est would be promoted by (1) prohibiting future com- ©

“Section 303, 48 Stat. 1082, as amended, 47 U.S.C. § 303(f)

provides, in pertinent part, that ‘‘the Commission from time to

time, as public convenience, interest, or necessity requires shall—

[m]ake such regulations not inconsistent with law as it may deem

necessary ... to carry out the provisions of this Act .. .”’ See

also 47 U.S.C. § 303(r).

* See also 47 U.S.C. §§ 301, 303(r), 309(a) and § 310(b).

** This Court has long recognized the Commission’s delegated

responsibility for licensing decisions. It has stated in regard to

licensing that :

** *public convenience, interest, or necessity’ was the touch-

stone for the exercise of the Commission’s authority. While

this criterion is as concrete as the complicated factors for

juugment in such a field of delegated authority permit, it

serves as & supple instrument for the exercise of discretion

by the expert body which Congress has charged to carry out

its legislative policy.’’ FCC v. Pottsville Broadcasting Co.,

309 U.S. 134, 138 (1940).

binations of daily newspaper and broadcasting sta-

tions in the same community; (2) breaking up within

five years existing combinations of daily newspaper

and broadcasting stations in communities where there

was no other media voice; and (3) permitting contin-

ued operation, or ‘‘grandfathering,’’ of existing com-

binations in communities with other media outlets.

(FCC App. B, pp. 90-91.)

The court of appeals disagreed with the Commis-

sion’s decision in regard to existing cross-ownerships.

It disregarded the results of an extensive, seven year

long rulemaking proceeding conducted by the Com-

mission, in which, if the Commission had power, it was

engaging in what is clearly delegated legislative ac-

tion.’ Should the decision of the court below be per-

mitted to stand, it would transform patterns of owner-

ship of newspaper and television and radio stations,”

developed as a result of actions of and policies estab-

lished by the Federal Communications Commission,”

‘6 Second Report and Order in Docket 18110, 50 F.C.C.2d 1046

(1975) ; Memorandum Opinion and Order, 53 F.C.C.2d 859 (1975).

(FCC App. B and C, pp. 61-158.)

‘" See text, supra, pp. 11-12, and n. 13 and n. 14, at p 12, supra.

** Respondents acknowledge the ‘‘considerable impact’’ of the

decision below. Opposition to Petitions for a Wri of Certiorari,

at 7.

1* See Testimony of Chairman Richard E. Wiley ‘fore the Sen-

ate Subcommittee on Communications, May 10, 197”:

which have served the public well for more than 50

years. The decision below would do this without any

action by Congress and against the considered judg-

ment of the agency established by Congress to formu-

late policy in this area. The court of appeals did not

decide that the Commission cannot make a particular

rule (as was unsuccessfully contended in Red Lion

Broadcasting Co. v. FCC, 395 U.S. 367 (1969), for ex-

ample). Rather, the court below has commanded that

the Commission make the particular rule selected by

the court. That is essentially legislative action. No

case is known of such judicially mandated legislative

action. Surely, a court could not properly command

Congress to pass such a statute, and, under proper

concepts of separation of powers, it should have no

power to command affirmative legislative action by

Congress’ delegatee. Indeed, this Court refused to

order the adoption of a legislative rule in Columbia

Broadcasting System, Inc. v. Democratic National

Committee, 412 U.S. 94 (1972), reflecting the long-

standing principle that it is the administrative agency,

to which Congress has d..vgated legislative authority,

and not the courts, which is to make legislative rules.

In the opinion of the court below, ‘‘the Commission

could not have rationally concluded that the compet-

»° In that case, the Commission refused to adopt a rule requiring

broadcasters to accept editorial advertisements. The court of ap-

peals disagreed. It ‘‘remanded the case to the Commission to de-

velop procedures and guidelines for administering a First Amend-

ment right of access.’’ Columbia Broadcasting System, Inc. v.

Democratic National Committee, supra, 412 U.S, at 97. Even though

the court of appeals remanded the case to the Commission to de-

velop principles in accord with its decision, whereas here the court

of appeals directed the principles to be adoptea, this Court refused

to order the Commission to adopt what was essentially a legisla-

tive rule developed by the court of appeals. Jd.

ing policies it offered justified grandfathering absent

a show of harm.’’ (FCC App. A, p. 56.) It therefore

ordered that ‘‘divestiture is required except in those

eases where the evidence clearly discloses that cross-

ownership is in the public interest.’’ (FCC App. A,

p. 60.) It did not, therefore, simply remand to the

Commission for further rulemaking consistent with its

opinion, but rather ‘‘required’’ that a specific rule be

adopted because, in the court’s view, it is the only

rational rule. (FCC App. A, pp. 56, 60, and FCC

App. E, p. 165.)

There can be no doubt that the court of appeals did

not intend simply to remand for a consistent result,

but rather its purpose was to compel adoption of the

rule favored by it. In granting a stay of its mandate, it

said (FCC App. E, p. 167):

‘Since the only consistent and court-approved

policy in this field was that which we approved

in pe ‘Baw Ten the Commission’s prospective rules

[prohibition of cross-ownership], and because no

valid reasons had been given by the Commission

for departing from this policy of giving diversity

of media ownership controlling weight, we ordered

the Commission to take further steps to ensure

that everyone [all existing as well as prospective

cross-owners] would be consistently treated under

the standard already adopted for new license ap-

plicants (subject, of course, to an appropriate

waiver procedure, which we also ordered the Com-

mission to adopt. ...).’’

The Commission and the court of appeals did not

disagree on several of the factors which comprise the

public interest. There was no disagreement, for exam-

ple, that the First Amendment objectives of preserv-

ing ‘‘an uninhibited marketplace of ideas in which

truth will ultimately prevail... ,’’ Red Lion Broad-

casting Co. v. FCC, 395 U.S. 367, 390 (1969), and that

nurturing ‘‘the widest possible dissemination of infor-

mation from diverse and antagonistic sources... ,”’

Associated Press v. United States, 326 U.S. 1, 20

(1945), are appropriate factors in determining the

public interest.” But the court of appeals clearly dis-

2! Both the Commission and the court of appeals took as a com-

mon point of origin that any analysis of the First Amendment

questions raised by this case starts with the presumption that the

inherent scarcity of the broadcast spectrum necessitates, and, in-

deed, justifies some sort of government regulation. See, e.g., Red

Lion Broadcasting Co. v. FCC, supra. It may be, however, that

this part of the doctrine of broadcast regulation needs review and

rethinking.

The broadcast spectrum may be no longer such a scarce resource.

As The Wall Street Journal recently described, October 13, 1977,

p. 1, there has been a tripling of the number of applications for

ultra high-frequency or UHF channels over two years ago. It also

reported that there are 400 unused UHF channels available for

commercial broadcasting, as well as approximately 80 very high-

frequency or VHF channels. There have been large advances in

satellite, cable, microwave and other technologies in recent years.

These developments may mean that searcity is no longer an adequate

foundation on which to erect a complex structure of First Amend-

ment and regulatory values. As Judge Bazelon has pointed out,

there are more broadcast stations than daily newspapers, and

neither the radio nor the television spectrum is completely filled.

For this, and other reasons, Judge Bazelon concluded that the

time to re-examine the scarcity doctrine may be here. Brandywine-

Main Line Radio, Inc. v. FCC, 473 F.2d 16, 64-79 (D.C, Cir. 1972)

(Bazelon, J., dissenting), cert. denied, 412 U.S. 922 (1973). Cf.

Judge Bazelon’s view of searcity in the decision below. (FCC App.

A, pp. 22-23, n. 31.)

Even if it is assumed, arguendo, that the broadcast spectrum is

a scarce resource, this notion does not justify or compel divestiture

of existing facilities. Nor do the implications of the scarcity argu-

ment cut with equal force in radio and television, in markets with

three stations and markets with thirty, in markets with their own

local weekly newspapers or own magazines and those which have

none. These substantive considerations were ignored by the court

agreed with the Commission about (1) who is to make

the decision that these objectives will be promoted, and

(2) what factors should enter that decision, and their

appropriate weights.

B. The Usurpation By The Court Below Of The Commission's

Responsibility Was Improper.

The court of appeals would eliminate the Commis-

sion’s authority to weigh competing public interest

licensing considerations where cross-ownership of daily

newspaper and broadcast facilities is involved. In all

cases where cross-ownership exists, the court commands

the Commission to refuse to grant a license in the ab-

sence of a showing that the cross-ownership is in the

public interest sufficient to rebut the ‘‘presumption”’

‘“‘compelled”’ against it. (FCC App. A, p. 60.) Thus di-

vestiture becomes the rule, not the exception. The Com-

mission, on the other hand, sought to promote the ob-

jective of a free, competitive, marketplace of ideas dis-

seminated from diverse sources by grandfathering,

which permits gradual evolution by marketplace

below, which recited the word ‘‘scarcity’’ as a kind of unques-

tioned and unquestionable truth.

‘*Scarcity’’ is only another word for ‘‘value.’’ How to maxi-

mize or distribute the value of the broadcast spectrum is an area

entrusted by Congress to the Commission as part of its mandate

to administer this resource in the public interest. The public in-

terest demands diversity of voices, i.¢., ‘‘outlets of self-expression,’’

not diversity of ownership. In some cases, ‘‘voice diversity’’ and

‘‘ownership diversity’’ may go hand in hand; in others, they may

not. In order to sift out such complicated choices, Congress man-

dated that the public interest in the effective use of the broadcast

spectrum be determined through rules devised on the basis of ex-

perience and expert judgment, rather than through rigid judicial

assertions of logic.

transfers rather than revolution by forced sale of

properties in 50 television markets and 160 newspaper-

radio combinations. Thus, under the Commission’s view,

divestiture was to be the exception not the rule.

By thus reformulating the rule in regard to cross-

ownership, the court substituted its judgment for that

of the Commission as to what cross-ownership rule

would best promote the public interest. This decision

usurps the Commission’s congressionally mandated re-

sponsibility by transferring a basic policy judgment

from the Commission to the court.” It thus violates

the separation of powers. This Court has stated that:

‘‘This mandate to the FCC to assure that broadcasters

operate in the public interest is a broad one, a power

‘not niggardly but expansive’.’’ Red Lion Broadcast-

ing Co. v. FCC, supra, 395 U.S. at 380, quoting Na-

tional Broadcasting Co, v. United States, 319 U.S. 190,

219 (1943).

It is a ‘‘venerable principle that the construction

of a statute by those charged with its execution should

be followed unless there are compelling indications that

it is wrong... .’’ Red Lion Broadcasting Co. v.

FCC, supra, 395 U.S. at 381. A reviewing court ‘‘is

not empowered to substitute its judgment for that of

the agency.’’ Citizens to Preserve Overton Park, Inc.

v. Volpe, 401 U.S. 402, 416 (1971). Yet the court of

appeals did not follow the Commission’s construction

of Section 303 of the Communications Act, the public

2? The court of appeals conceded that it was dealing with a policy

matter. It stated: ‘‘We summarize the record only to the extent

necessary to show that in determining its divestiture policy, the

Commission necessarily had to rely on policy, not factual considera-

tions.’’ (FCC App. A, pp. 37-38 ; emphasis added. )

interest mandate. Rather, it exceeded the proper scope

for judicial review by substituting its judgment for

that of the Commission.

1. The Court Below Improperly Undertook To

Weigh The Evidence.

The court of appeals based its conclusion that di-

vestiture of all cross-owned facilities is required on

its own weighing of the record evidence. (FCC App.

A, pp. 49, 52-58.) But this Court has expressly stated

that in judicial review (speaking of the Interstate

Commerce Commission) :

‘*We do not weigh the evidence introduced before

the Commission; we do not inquire into the wis-

dom of the regulations that the Commission pro-

mulgates, and we inquire into the soundness of the

reasoning by which the Commission reaches its

conclusions only to ascertain that the latter are

rationally supported.”’

United States v. Allegheny-Ludlum Steel Corp., 406

U.S. 742, 749 (1972).”

The Court of Appeals for the Second Circuit, in a

case involving the Federal Communications Commis-

sion, reached a similar result. It stated that it is not a

reviewing court’s ‘‘function to weigh the evidence in

support of these various points of view. [A court]

should not, and indeed cannot, substitute [its] judg-

ment for that of the Commission.’’ Mt. Mansfield Tele-

vision, Inc. v. FCC, 442 F.2d 470, 482 (2d Cir. 1970).

** Of course, as discussed below, an inquiry into the rationality

of the conclusions reached by an administrative agency cannot be

used by a reviewing court to mask its disagreement with the wisdom

of the agency's policies.

That court also concluded that it was the Commission’s

proper function to make estimates and foreeasts based

on the record evidence.” The ‘‘fact that there is vig-

orous disagreement as to the effect of the rule does not

prevent the Commission from acting or require this

court to reassess the probabilities.’’ Jbid, at 483-484.

By reweighing and rebalancing the evidence in order

to reach its own conclusion in regard to divestiture,

the court below exceeded the proper scope of judicial

review.

2. A Court May Not Conclude That An Agency De-

cision Is Invalid Merely Because It Would Weigh

The Factors Involved In That Decision Differ-

ently Than The Agency.

An administrative decision may not be set aside by

a reviewing court unless ‘‘arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance with

24 In American Airlines, Inc. vy. CAB, 192 F.2d 417, 420 (D.C.

Cir, 1951), the court of appeals stated, in regard to certificates of

public convenience and necessity to be issued by the Civil Aero-

nauties Board, that

‘the regulatory function . . . is a forward-looking funetion,

as any examination of regulatory measures easily demon-

strates... . When a regulatory action contemplates a pro-

d development, new, not existing, a type of judgment is

required which is wholly absent from the mere evaluation 0”

past facts to ascertain a present or past fact. It is in the exer-

cise of that sort of judgment that the much discussed expertise

of administrative agencies finds its greatest value. Here is the

field of uncertainties, imponderables and estimates. This is

where the rule that a conclusion within the realm of rational

deduction or inference stands despite differences of opinion,

has its greatest applicability.’’

See also Connecticut Committee Against Pay TV v. FCC, 301 F.2d

835, 837 (D.C. Cir. 1962).

law.’’ 5 U.S.C. § 706(2)(A).” To reach this question,

a reviewing court may consider only whether the ad-

ministrative decision ‘‘was based on a consideration

of the relevant factors and whether there has been a

clear error of judgment.’’ Citizens to Preserve Overton

Park, Inc. v. Volpe, supra, 401 U.S. at 416; * Bowman

Transportation, Inc. v. Arkansas-Best Freight System,

Inc., 419 U.S. 281, 285 (1974).

“ There can be no doubt that the Commission engaged

in extensive ‘‘consideration’’ of the various factors

relevant to the public interest which were raised in

the course of the rulemaking. The Commission’s order

was based on many thousands of pages of written evi-

dence, including the submission of one or more sets of

comments and studies by over 200 parties, and two

and one half days of argument by some 45 scheduled

parties. The Commission orders occupy 118 pages.”

The court of appeals, however, concluded not that

*° While there is some question as to whether this standard or

the so-called ‘‘substantial evidence’’ standard for judicial review,

5 U.S.C. § 706(2)(E), applies, the issues raised by the court of

appeals decision would be the same in either case in light of the

extensive record developed in this proceeding. Indeed, some courts

have concluded that the differences between sections 2(A) and 2(E)

are more apparent than real. See, ¢.g., Associated Industries of

New York State, Inc. v. Dept. of Labor, 487 F.2d 342, 349-350

(2d Cir. 1973) (Friendly, J.).

** At least one panel of the Court of Appeals for the District

of Columbia Cireuit has recognized that the reference to ‘‘error

of judgmen ’’ does not replace or change the traditional arbitrary

and capricious standard of review. Ethyl Corp. v. EPA, 541 F.2d

1, 34-35, n. 74 (D.C. Cir.), cert. denied, 426 U.S. 941 (1976).

* This Court found the extent of the record developed by the

Commission in regard to Chain Broadcasting Regulations signifi-

ry par hy Broadcasting Co. v. United States, supra, 319

there had been insufficient ‘‘consideration,’’ but that

the Commission in weighing the relevant factors,

had failed to reach the ‘‘proper’’ balance of them, a

balance in which divestiture was required.

The Commission’s decision resulted from considera-

tion of many significant factors in addition to promo-

tion of diversity of information sources, including: (1)

potential dislocation of existing service (FCC App. B,

p. 93); (2) the benefits of existing local ownership and

involvement in broadcast operations (FCC App. B, p.

93) ; (3) the superior past performance of many cross-

owners (FCC App. B, p. 93, n.26); (4) the existence

of competing media voices in affected communities

(FCC App. B, p. 96); and (5) the potential for de-

terioration in local programming service and quality

which might result from purchasers of divested sta-

tions bearing burdensome capital costs (FCC App. B,

p. 93). The Commission found no harm to the public

interest resulted from the existing cross-ownerships

which it concluded should be grandfathered. (FCC

App. B, pp. 90, 95, 104.) In such a circumstance, basic

equitable considerations weigh heavily against divesti-

ture.”

The Commission properly paid particular attention

to the local and service aspects of broadcasting in as-

sessing the relative weight to be given these factors.

This Court has endorsed this emphasis on localism and

on service in stating that: ‘‘An important element of

public interest and convenience affecting the issue of a

license is the ability of the licensee to render the best

practicable service to the community reached by his

broadeasts.’’ FCC v. Sanders Brothers Radio Station,

2* Cf. National Broadcasting Co. v. United States, supra, 319 U.S.

at 207.

309 U.S. 470, 475 (1940). The court of appeals had pre-

viously endorsed the Commission’s view that superior

past performance by a licensee is an important public

interest consideration. It has stated: ‘‘The court rec-

ognizes that the public itself will suffer if incumbent

licensees cannot reasonably expect renewal when they

have rendered superior service.’’ Citizens Communica-

tions Center v. FCC, 447 F.2d 1201, 1213, n. 35 (D.C.

Cir. 1971). It has also stated that ‘‘The proper weight

to be given past performance is, of course, a matter for

the Commission’s judgment.’ Fidelity Television, Inc.

v. FCC, 515 F.2d 684, 709 (D.C. Cir.), cert. denied, 423

U.S. 926 (1975). But the court of appeals has now

written the local service and past performance concepts

out of the statute in cases involving cross-ownership.

Nowhere has this Court stated that diversity of in-

formation sources, either on a local or a national level,

is the overriding or determinative element of the public

interest.” In fact, until now, the court of appeals itself

has never raised diversity to such a preeminent posi-

tion. Indeed, it has done the opposite. It has said that

‘‘avoiding concentration of control in communication

is such an important objective that the Commission

must be accorded discretion in choice of measures for

its fulfillment.’’ Greater Boston Television Corp. v.

FCC, 444 F.2d 841, 860 (D.C. Cir. 1970), cert. denied

2° The court below rested its opinion on the central importance

to the First Amendment of diversity. But the First Amendment

does not require content diversity, let alone ownership diversity,

nor does it require any particular form of governmental regula-

tion to be adopted to promote diversity. See Miami Herald Publish-

ing Co. v. Tornillo, 418 U.S. 241 (1974) ; Columbia Broadcasting

System, Inc. v. Democratic National Committee, 412 U.S. 94

(1972).

sub nom. WHDH, Inc. v. FCC, 403 U.S. 923 (1971).

In regard to competing license applications, the court

of appeals has held that the Commission was entitled

to consider diversification of control ‘‘in connection

with all other relevant factors and to attach such sig-

nificance to it as its judgment dictates.’’ McClatchy

Broadcasting Co. v. FCC, 239 F.2d 15, 18 (D.C. Cir.

1956), cert. denied, 353 U.S. 918 (1957).

In this case, the court of appeals has decided that

the Commission should no longer be accorded discretion

in choosing measures to fulfill the objectives of diver-

sity.” Neither the protections afforded by the Fairness

Doctrine,” nor the Commission’s ability to review

license performance in triennial license renewal pro-

ceedings, 47 U.S.C. § 307(d), nor the Commission’s

authority to issue further rules to prevent abuses,” are

considered appropriate measures. The Commission’s

judgment as to the ‘‘significance’’ to be accorded diver-

sification of control and its expert ability to consider

it as one of a number of public interest factors is

trampled by the determination of the court below that

its policy of ‘‘giving diversity of media ownership con-

“” Only in waiver situations (FCC App. A, p. 60) would the

court of appeals accord the Commission any discretion at all. But

this Court has said that the public interest standard ‘‘no doubt

leaves wide discretion and calls for imaginative interpretation.’’

FCC v. RCA Communications, Inc., 346 U.S. 86, 90 (1953).

*' See Red Lion Broadcasting Co. v. FCC, 395 U.S. 367 (1969).

** For example, the Commission has recently issued a Report and

Order in regard to rules to prohibit certain other forms of concen-

tration of control, e.g., ownership of three broadcast stations where

any two are within 100 miles of the third, or where the primary

service contour of related stations overlaps. Multiple Ownership

Rules, Docket No. 20548, 63 F.C.C.2d 824 (1977).

trolling weight’? must be followed. (FCC App. E, p.

167.)

The elevation of ownership diversity as the sine qua

non of ‘‘relevant factors’’ represents a policy judgment

by the court of appeals that displaces the Commission’s

judgment with its own. Yet, competing policy judg-

ments are the very ‘‘area where administrative judg-

ments are entitled to the greatest amount of weight by

appellate courts.’’ SEC v. Chenery Corp., 332 U.S. 194,

209 (1946). The Commission considered and weighed

the factors relevant to this policy determination. It

struck a balance between no rule at all, and a rule—

now ordained by the court of appeals—ordering total

divestiture. ‘‘The court’s responsibility is not to sup-

plant the Commission’s balance of these interests with

one more nearly to its liking, but instead to assure itself

that the Commission has given reasoned consideration

to each of the pertinent factors.’’ The Permian Basin

Area Rate Cases, 390 U.S. 747, 792 (1968).”

The importance of following this precept is height-

ened because ‘‘ Balancing the various First Amendment

interests involved in the broadcast media and determin-

ing what best serves the publiec’s right to be informed

*3 Cf. ational Broadcasting Co. v. United States, supra, 319

U.S. at 218, where the Court stated: ‘‘We would be asserting our

personal views regarding the effective utilization of radio were we

to deny that the Commission was entitled to find that the large

public aims of the Communications Act of 1934 comprehend the

considerations which moved the Commission in promulgating the

Chain Broadcasting Regulations.’’ Accord: Public Interest Re-

search Group v. FCC, 522 F.2d 1060, 1066 (1st Cir. 1975), cert.

denied, 424 U.S. 965 (1976), where the court warned that it could

not reverse the Commission ‘‘{unless) the standard of rationality

is to be narrowed to a circle no wider than a court’s private judg-

ments... .’’

is a task of great delicacy and difficulty.’’ Columbia

Broadcasting System, Inc. v. Democratic National Com-

mittee, supra, 412 U.S. at 102. Thus, the Court con-

cluded, a reviewing court ‘‘must afford great weight

to the decisions of Congress and the experience of the

Commission.’’ Ibid. In short, a reviewing court, within

the context of ‘‘the vaguish, penumbral bounds ex-

pressed by the standard of ‘public interest’ ’? must do

no more than ‘‘to say whether the Commission has been

guided by proper considerations in bringing the de-

posit of its experience, the disciplined feel of the ex-

pert, to bear on applications for licenses in the public

interest.’’ FCC v. RCA Communications, Inc., 346 U.S.

86, 91 (1953).** The court of appeals did more. It there-

fore went beyond the boundaries of proper judicial

review.”

“ See FCC v. WOKO, Inc., 329 U.S. 223, 229 (1946): ‘‘But it

is the Commission, not the courts, which must be satisfied that the

public interest will be served by renewing the license. And the

fact that we might not have made the same determination on the

same facts does not warrant a substitution of judicial or adminis-

trative discretion since Congress has confided the problem to the

latter.’’ This precept applies as much to rulemaking as to adjudi-

cation. See also Public Interest Research Group v. FCC, 522 F.2d

1060, 1064 (1st Cir. 1975), cert. denied, 424 U.S. 965 (1976) : ‘‘ We

have no license to regulate broadcasting nor to impose our private

views of the public welfare.’’ Accord: Radio Relay Corp. v. FCC,

409 F.2d 322, 326 (2d Cir. 1969) ; National Ass’n of Independent

Television Producers and Distributors v. FCC, 516 F.2d 526, 534

(2d Cir, 1975).

*° Of. Vermont Yankee Nuclear Power Corp, v. Natural Resources

Defense Council, Inc., No. 76-419, to be argued November 28, 1977,

reviewing Natural Resources Defense Council, Inc. v. Nuclear Regu-

latory Commission, 547 F.2d 633 (D.C. Cir. 1976).

3. The Court Below Exceeded the Proper Scope Of

Judicial Review By Commanding The Commis-

ston To Adopt A Specific Rule Selected By It.

The court of appeals ordered the Commission to

adopt (FCC App. A, p. 60) a rule that would afford

‘controlling weight”’ to diversification. (FCC App. E,

p. 167.) As this Court has said, it is a “guiding princi-

ple... that the function of the reviewing court ends

when an error of law is laid bare. At that point, the

matter once more goes to the Commission for recon-

sideration.’’ FPC v. Idaho Power Co., 344 U.S. 17, 20

(1952). The reviewing court having corrected an error

of law, ‘‘.. . on remand the Commission is bound to act

upon the correction.’’ FCC v. Pottsville Broadcasting

Co., 309 U.S. 134, 145 (1940). Here, contrary to the

Court’s instruction in FPC vy. Idaho Power Co., supra,

the court of appeals itself determined what rule the

Commission should promulgate after remand. But the

court of appeals had exhausted its congressionally- °

granted powers * when it laid bare what it regarded

as the Commission’s error, and compelled obedience

to its correction. FCC v. Pottsville Broadcasting Co.,

supra, 309 U.S. at 145.

The Memorandum of the United States concedes this

point. The Solicitor General states:

‘*The United States agrees with the Commission,

however, that the court of appeals exceeded its au-

thority to the extent that it went beyond setting

aside the Commission’s order and purported finally

to decide administratively unresolved questions

concerning cross-ownership in advance of their

consideration by the Commission in proceedings on

* See 28 U.S.C. § 2342, which provides for judicial review of

final orders of the Commission in rulemaking proceedings.

remand. See South Prairie Construction Co. Vv.

Local 627, Operating Engineers, 427 U.S. 800; Fed-

eral Power Commission v. Idaho Power Co., 344

U.S. 17, 20. After identifying the deficiencies in

the Commission’s reasoning, the court of appeals

should have remanded the case to the Commission,

leaving that agency free, in the exercise of its dis-

cretion, to formulate a new rule properly based on

he wn ae application of the governing legal prin-

ciples.’”’

Memorandum of the United States, p. 3.

As the Memorandum of the United States makes

clear, the court below could not properly ‘‘write the

principle of priority into the statute as an indirect

result of its power to scrutinize legal errors. ...’? FCC

v. Pottsville Broadcasting Co., supra, 309 U.S. at 145."

The court was in error when—in derogation of the sep-

aration of powers—it wrote into law its own percep-

tion of the proper weights to be assigned to diversity

and divestiture, in the guise of correcting purported

Commission irrationality.”

In FCC v. Pottsville Broadcasting Co., supra, 309 U.S. at 135,

the Court said that ‘‘an administrative determination in which is

imbedded a legal question open to judicial review does not impli-

edly foreclose the administrative agency, after its error has been

corrected, from enforcing the legislative policy committed to its

charge.’’ See also NLRB v. Food Store Employees Union, 417 U.S.

1, 9 (1974). This principle permits the agency to hew to its legisla-

tive policy determinations corrected only for legal, rather than

policy, errors.

* See National Broadcasting Co. v. FCC, 516 F.2d 1101, 1159,

n. 8 (D.C. Cir. 1975), cert. denied sub nom. Accuracy in Media,

Inc. v. National Broadcasting Co., 424 U.S. 910 (1976), where

Bazelon, J., in his dissent from the order vacating the previous

order granting rehearing en banc, noted that this principle had too

often been honored in the breach.

C. The Court Below Trespassed On The Principle Of

Separation Of Powers.

Limitations on judicial review have been mandated

by this Court for substantial, practical, and more im-

portantly, constitutional reasons. These limitations can-

not—and should not—now be overturned. To do so

would be to do violence not only to the constitutional

doctrine of separation of powers, but also to wise judi-

cial administration.

The Constitution sets up three branches of govern-

ment, the Legislature, the Executive and the Judiciary.

Judicial overreaching transgresses these constitution-

ally required boundaries. Rulemaking is closely akin

to legislation. Some would argue that it is essen-

tially delegated authority to legislate. If Congress were

to pass a statute identical to the rules promulgated

by the Commission, it is highly unlikely that such a

statute would be challenged as irrational because it in-

eluded a grandfather provision. A court cannot so

challenge a legislative rule without transgressing the

Constitutional boundaries.

In addition, selection of the appropriate policies to

achieve the mandate of a statute, and of the particular

means to promote these policies are an ‘‘administra-

tive not a judicial decision.’’ FPC v. Idaho Power Co.,

supra, 344 U.S. at 21." A court may not make such

administrative decisions under the guise of holding

regulations to be ‘‘arbitrary and capricious’’ or irra-

tional as a means of cloaking its underlying determina-

tion that the regulations ‘‘are unwise, that they are not

%® Additionally, licensing, which is what the Commission’s orders

were dealing with, is a ‘‘purely administrative’’ function. Federal

Radic Commission v. General Electric Co., 281 U.S. 464, 467 (1930).

likely to sueceed in accomplishing what the Commis-

sion intended. .. . ‘We certainly have neither technical

competence nor legal authority to pronounce upon the

wisdom of the course taken by the Commission’.’’ Na-

tional Broadcasting Co. v. United States, supra, 319

U.S. at 244, citing Board of Trade v. United States,

314 U.S. 534, 548 (1942). See also Radio Corp. of

America vy. United States, 341 U.S. 412, 420 (1951).“

A constitutional court ‘‘cannot ... participate in the

exercise of functions which are essentially legislative

or administrative.’’ Federal Radio Commission v. Gen-

eral Electric Co., 281 U.S. 464, 469 (1930).

The Chain Broadcasting Regulations, which inter

alia limited the number of stations which could be

owned by a network, were designed to ensure that li-

censees make the fullest and most effective use of avail-

able channels. National Broadcasting Co. v. United

States, supra, 319 U.S. at 218. In reviewing those Reg-

ulations, this Court said: ‘It is not for us to say that

the ‘public interest’ will be furthered or retarded by

the . . . regulations. The responsibility belongs to the

Congress for the grant of valid legislative authority

and to the Commission for its exercise.’’ National

Broadcasting Co. v. United States, supra, 319 U.S. at

224. See also American Telephone & Telegraph Co. v.

*° In the RCA case, which involved standards for color television

transmission, the Court noted that although the wisdom of the

Commission's decision might be contested, and indeed, that two

Commissioners had dissented from it, ‘‘the courts should not over-

rule an administrative decision merely because they disagree with

its wisdom.’’ Accord: Radio Relay Corp. v. FCC, 409 F.2d 322, 326

(2d Cir. 1969); Cornell v. United States, 427 F.2d 680, 683-684

(2d Cir. 1970) ; FCC v. Schreiber, 381 U.S. 279 (1965). Cf. Skelly

Wright, ‘‘The Courts and The Rule Making Process: The Limits

of Judicial Review,’’ 59 Corn, L. Rev, 375, 391 (1974).

United States, 299 U.S. 232, 236-237 (1936). By or-

dering that the Commission must give diversification

‘controlling weight’? (FCC App. E, p. 167), the court

below disregarded these precepts and ‘‘usurped an

administrative function.’’ FPC v. Idaho Power Co.,

supra, 344 U.S. at 20."

This Court has noted that there are practical rea-

sons, as well as constitutional reasons, which should

prevent judicial overreaching and rulemaking. For ex-

ample, ad hoc determination by a reviewing court

should not foreordain or disturb an agency’s orderly

development of policy. United States v. Saskatchewan

Minerals, 385 U.S. 94 (1966); FPC v. Idaho Power

Co., supra. *‘[T]he exercise of [the Commission’s]

functions gives it accumulating insight not vouchsafed

to courts dealing episodically with the practical prob-

lems involved... .’”’ FCC v. RCA Communications,

Inc., 346 U.S. 86, 96 (1953). Judicial imposition of a

rule improperly impinges on the agency’s duty to re-

consider the entire case. United States v. Saskatche-

wan Minerals, supra. Judicial assumption of the power

to make ultimate policy decisions is ‘‘not conducive to

the development of habits of responsibility in admin-

istrative agencies.’’ FCC v. Pottsville Broadcasting

Co., supra, 309 U.S. at 146. It is similarly not conducive

"Cf. National Ass’n of Independent Television Producers and

Distributors v. FCC, 516 F.2d 526, 543 (2d Cir. 1975), where the

court held that the Commission cannot be compelled to adhere

to an order with certain parts deleted by the court. Accordingly,

the case was remanded to the Commission to be reconsidered in

light of the court’s opinion. A similar result was reached in National

Ass’n of Motor Bus Owners v. FCC, 460 F.2d 561 (2d Cir. 1972),

where the court found that remand was the only course when it

had determined that the Commission had not made the requisite

finding. It did not make that finding itself.

to orderly and sound judicial administraticn. This

Court has warned that the administrative process and

the courts ‘tare to be deemed collaborative instrumen-

talities of justice and the appropriate independence of

each should be respected py the other.’’ United States

v. Morgan, 313 U.S. 409, 422 (1941). ‘*Courts and

administrative agencies are not to be regarded as com-

petitors in the task of safeguarding the public inter-

est.’? Scripps-Howard Radio, Inc. v. FCC, 316 U.S.

4,15 (1942). The court below, in commanding the Com-

mission to adopt a certain rule, failed to respect the

independence and the assigned function of the Com-

mission.

Il.

THE COURT OF APPEALS ERRED IN CONCLUDING THAT THE

COMMISSION'S DETERMINATION THAT ITS NEW RULE

SHOULD NOT GENERALLY BE APPLIED RETROACTIVELY WAS

IRRATIONAL.

The court of appeals upheld the Commission’s pro-

hibition of new cross-ownerships of daily newspapers

and broadeast facilities. But it then coneluded that

failure to give this prohibition retroactive effect and

eliminate all existing cross-ownership was irrational.

(FCC App. E, p. 165.) This conclusion, extrapolated

from the Commission’s orders, and assertedly based

on logic, was not and cannot be supported. It flies in

the face of settled ideas about the desirability of retro-

active administrative action, and the long-established

proper practices of the Commission, the Congress and

many courts, including this Court.

A. Rationality Does Not Require Retroactivity.

An agency may give retroactive effect to a regula-

tion. Indeed, as this Court has noted, every new ad-

ministrative principle may have some retroactive ef-

fect. SEC v. Chenery Corp., 332 U.S. 194, 203 (1946).

But retroactivity is not compelled in order for a regu-

lation to be considered rational and valid. The usual

question is not whether reason compels retroactivity,

but whether retroactivity can meet the test of reason-

ableness. Ibid. See, e.g., General Telephone Co. of the

Southwest v. United States, 449 F.2d 846, 863 (5th

Cir. 1971) (‘‘Where a rule has retroactive effects, it

may nonetheless be sustained in spite of such retro-

activity if it is reasonable.’’) (emphasis added) ; Ni-

agara Mohawk Power Corp. v. FPC, 379 F.2d 153

(D.C. Cir. 1967). The court of appeals has held that

even though the agency charged with administering

the statute has found no harm to the public from mak-

ing its new rule with respect to cross-ownership gen-

erally prospective only, the absence of retroactive op-

eration is not rational. This stands logic, experience

and precedent on its head.

This Court’s decisions show that retroactivity is not

mandatory for administrative actions. Nearly a cen-

tury and a half ago, in United States v. McDaniel, 7

Peters 1, 14 (1833), this Court dealt with administra-

tive practices affected by a later statute. It said: ‘‘ And

no change of such usages can have a retrospective ef-

fect, but must be limited to the future.’’ More recently,

this Court has said that in administrative action, ‘‘law

should avoid retroactivity as much as possible.’’ Addi-

son V. Holly Hill Fruit Products, Inc., 322 U.S. 607,

620 (1944). In determining whether it is permissible

—not mandatory—for an administrative agency to

give retroactive effect to its actions, ‘‘Retroactivity

must be balanced against the mischief of producing a

result which is contrary to a statutory design or to

legal and equitable principles.’’ SEC v. Chenery Corp.,

supra, 332 U.S. at 203."

Retroactive application of the Commission’s order

must also be balanced against equitable and legal prin-

ciples—a process the court below eschewed. The prac-

tice of the Commission in regard to cross-ownership

had been well-settled when the order at issue here was

adopted. (FCC App. B, p. 90.) No change in cireum-

stances had occurred. The Commission carefully con-

sidered and balanced the potential mischief which

might result from retroactive application of its order.

See pp. 22-24, supra, and FCC App. B, pp. 89, 93, 95.

A court cannot rightly undertake to restrike that

balance.

Legal considerations also support non-retroactive

application of the Commission’s order. The Commis-

sion was engaged in a rulemaking proceeding. This

is essentially legislative action. Legislation takes a

prospective course. This Court has upheld legislative

‘“‘grandfathering,’’ or prospective-only application of

a statute, as a permissible means to respond to ‘‘the

felt need for regulating .. . through familiar adminis-

trative devices, while at the same time [satisfying]

the dictates of fairness by affording sanction for enter-

prises theretofore established.’’ United States v.

Maher, 307 U.S. 148, 153 (1939). The same considera-

tions are applicable to rulemaking. Prospective-only

operation for legislation is derived from an enduring

and strongly felt distaste for retroactive lawmaking,

rooted in concepts of due process and, as the Court

** See also Retail, Wholesale and Dep’t Store Union v. NLRB,

466 F.2d 380, 390 (D.C. Cir. 1972), for a reformulation and appli-

cation of this test by the court of appeals.

noted in United States v. Maher, supra, fairness.“

One expression of this basic distaste for retroactive

lawmaking has been the general rule that ambiguous

statutes are presumed, in the absence of contrary in-

tent, to operate prospectively only. ‘‘Retroactivity,

even where permissible, is not favored, except upon

the clearest mandate.’’ Claridge Apartments Co. V.

Comm’r, 323 U.S. 141, 164 (1944). See also Hassett v.

Welch, 303 U.S. 303, 314 (1938), where this Court said

that settled rules of statutory construction ‘‘teach that

a law is presumed, in the absence of clear expression

to the contrary, to operate prospectively .. .’’ The

court of appeals would reverse this presumption

against retroactive application of legislation. It would

require retroactivity without any statutory mandate

whatever, in the absence of a showing in support of

non-retroactivity which it deems compelling. In effect,

the court below created a presumption in favor of retro-

activity which, it concluded, the Commission failed to

overcome.

B. Retroactivity Has Not Been Required For The Validity Of

Rulemaking, Legislation Or Judicial Action.

The novel and unsupported position of the court of

appeals that prospective-only rulemaking is irra-

tional and therefore invalid contravenes past prece-

dents in regard not only to the Commission’s actions,

and those of other administrative agencies, but also in

** ‘*Retrospective laws are, indeed, generally unjust; and as has

been forcibly said, neither accord with sound legislation nor with

fundamental principles of the social compact.’’ Story, Constitution,

§ 1398 (1898). In the area of criminal laws, this principle is so

fundamental that the Constitution, Art. I, § 9, el. 3, prohibits the

making of ex post facto laws. See Calder v. Bull, 3 Dal). 386 (1798).

regard to the Congress, state courts, and indeed this

Court.

1. Prospective-only Commission Rules.

Not only is prospective-only application of Commis-

sion regulations commonplace,“ but also such pro-

spective-only applications of Commission regulations

‘*In changing policies, previously approved non-conforming

arrangements have frequently been grandfathered by the Com-

mission. Other distinctions between prospective and retroactive ap-

plications of Commission regulations have frequently been made.

See, e.g., Revision of FM Broadcast Rules, 40 F.C.C. 660, §¥ 91-100

(1962) (adoption of 'M table of assignments with grandfathering

of existing stations having non-conforming antenna height or broad-

cast power) ; Distribution of Television Broadcast Signals by CATV

Systems, 2 ¥.C.C.2d 725, 784 (1966) (rules limiting signal carriage

by cable television systems with grandfathering of non-conforming

systems already in operation) ; Cable Television Report and Order,

36 F.C.C.2d 143, 185 (1972) (revision of cable signal carriage rules

with grandfathering of non-conforming existing systems); Tele-

phone Terminal Equipment Rules, 59 F.C.C.2d 83 (1976) (certain

types of terminal equipment grandfathered under registration

program).

The Commission has made similar distinctions in regard to new

rules to promote diversification of ownership. See, e.g., Multiple

Ownership of Standard, FM, and Television Broadcast Stations,

45 F.C.C. 1476 (1964); Hearings on Application for Second

VHF Station, 3 P&F Radio Reg. 2d 909 (1964) ; Interim Policy

on Television Multiple Ownership, 5 P&F Radio Reg. 2d 271

(1965); Multiple Ownership of Television Broadcast Stations, 12

P&F Radio Reg. 2d 1501, 1507 (1968); Multiple Ownership of

Standard, FM & TV Broadcast Stations, 22 F.C.C.2d 306 (1970) ;

Multiple Ownership Rules, Docket 20548, 63 F.C.C, 2d 824 (1977).

The Commission also adopted a rule essentially identical to the

one at issue here in regard to cable television and television cross-

ownership. CATV-TV Cross-Ownership Rules, 55 F.C.C.2d 540

(1975), reconsideration denied, 58 F.C.C.2d 596 (1976), appeal

pending, No. 75-1933, et al. (D.C. Cir. 1975), motions for partial

stay granted, June 10, 1977.

have been frequently upheld by the courts without any

equation of prospectivity with irrationality.”

2. Prospective-only Rules By Other Agencies.

In regard to other agencies, prohibition of—rather

than reyvirement of—retroactive application of new

agency rules has been mandated by the courts in rec-

ognition of the potential for unfairness inherent in

retroactive rules. See, e.g., Retail, Wholesale and Dep’t

Store Union v. NLRB, 466 F.2d 380, 390 (D.C. Cir.

1972); NLRB v. E&B Brewing Co., 276 F.2d 594, 600

(6th Cir. 1960); Maceren v. District Director, Immi-

gration & Naturalization Service, 509 F.2d 934, 940

** Commission regulations involving prospective-only application

or ‘‘grandfathering’’ have been upheld in the following cases:

National Broadcasting Co. v. United States, supra, 319 U.S. at

207 (prohibition of ownership of two stations in the same area

by one network and network ownership of stations in communi-

ties with so few stations or unequal coverage that competition

would be restricted was upheld without requiring divestiture

of all such network-owned stations) ;

United States v. Storer Broadcasting Co., 351 U.S. 192 (1956)

(Multiple Ownership Rules prohibiting granting of new li-

censes to owners of 7 AM, 5 FM and 5 TV stations upheld

without requirement of divestiture, even —— the rules

were designed to ‘‘avoid overconcentration of broadcasting

facilities.’’ Id., at 193.) ;

Committee for Open Media v. FCC, 533 F.2d 1 (D.C. Cir.

1976) (grant of grandfather status to cable television system

with fewer than 50 subscribers at effective date of Commission

regulation requiring cable television systems to have a certifi-

eate of compliance upheld) ;

Columbus Broadcasting Coalition v. FCC, 505 F.2d 320, 324

(D.C. Cir. 1974) (implicit approval of inter-

ests which did not conform to ‘‘one to a market rule,’’ Multiple

Ownership of Standard, FM and TV Broadcast Stations, 22

F.C.C. 2d 306 (1970) ;

Buckeye Cablevision, Inc. v. FCC, 387 F.2d 220 (D.C. Cir.

1967) (grandfathering cable television system importation of

(9th Cir. 1974). Cf. NLRB vy. Majestic Weaving Vo.,

355 F.2d 854, 860-861 (2d Cir. 1966). Indeed, this

Court has expressly held that an agency may use its

adjudicatory powers to promulgate requirements that

are purely prospective in effect. NLRB v. Wyman-

Gordon Co., 394 U.S. 759 (1969) ; “ NLRB vy. Bell Aero-

space Co., 416 U.S. 267, 294 (1974).

3. Prospective-only Legislation.

As discussed above, legislation, the functional and

legal parent of rulemaking, can take a prospective

course, and, indeed, in the absence of contrary intent,

is deemed not to admit of a retroactive effect. Prospec-

tivity in legislation is not equated with irrationality.

4. Prospective-only Holdings By This and Other

Courts.

This Court has held that state courts need not give

their decisions retroactive effect in other cases. Great

Northern Railway Co. v. Sunburst Oil & Refining Co.,

287 U.S. 358 (1932). State courts have frequently

overruled decisions by prospective-only application of

their holdings.” It seems rather difficult to sustain the

distant signals permissible in order to avoid unnecessary dis-

ruption of viewing habits) ;

Jefferson Standard Broadcasting Co. v. FCC, 297 F. Supp.

784, 785 (W.D.N.C. 1969) (recognition of grandfathering in

regard to prohibition of improvement of broadcast television

signals under common ownership).

**Qne comment has suggested, in analyzing this case, that ‘‘the

vesting of rulemaking power in agencies suggests that Congress was

willing to have them act prospectively in general.’’ ‘‘The Supreme

Court, 1968 Term,’’ 83 Harv. L. Rev. 62, 224 (1969).

‘’ State court prospective overrulings have dealt with a number

of legal principles with substantial consequences. Among these are

governmental tort immunity, see, e.g., Dawson v. Olsen, 94 Idaho

suggestion that this Court’s decision, by failing to re-

quire retroactivity, was irrational.”

This Court, in civil as well as in criminal litigation,

has held that its decisions can be applied prospec-

tively.” For example, in Cipriano v. City of Houma,

395 U.S. 701, 706 (1969), the Court, in order to avoid

‘injustice or hardship,’’ applied prospectively only its

decision that a state law providing that only ‘‘ property

636, 496 P.2d 97 (1972); Molitor v. Kaneland Communiiy Unit

Dist. No. 302, 18 Ill.2d 11, 163 N.E.2d 89 (1959); charitable tort

immunity, see, ¢.g., Burns v. Owens, 459 S.W.2d 303 (Mo. 1970) ;

Parker v. Port Huron Hospital, 361 Mich. 1, 105 N.W.2d 1 (1960) ;

Kojis v. Doctors Hospital, 12 Wis.2d 367, 107 N.W.2d 131, modified

on rehearing, 107 N.W.2d 193 (1968) ; intra-family tort immunity,

see, ¢.g., Vickers v. Vickers, 109 N.H. 169, 242 A.2d 57 (1968);

Schwartz v. U.S. Rubber Corp., 112 N.J. Super. 595, 272 A.2d 310

(1971) ; Fountain v. Fountain, 214 Va. 347, 200 S.E.2d 513 (1973),

cert. denied, 416 U.S. 939, rehearing denied, 417 U.S. 927 (1974) ;

Balts v. Balts, 273 Minn. 419, 142 N.W.2d 66 (1966); Goller v.

White, 20 Wis.2d 402, 122 N.W.2d 193 (1963) ; and allocation of

income between life tenant and remainderman, see, e.g., Langdell v.

Dodge, 100 N.H. 118, 122 A.2d 529 (1956). For other examples of

state court prospective-only rulings, see Comment Note, ‘‘ Prospec-

tive or Retroactive Operation of Overruling Decision,’’ 10 A.L.R.

3d 1371 (1966).

See also Schaefer, ‘‘The Control of ‘Sunbursts’: Techniques of

Prospective Overruling,’’ 42 N.Y.U. L. Rev. 631 (1967).

** See also Action for Children’s Television v. FCC, Case No.

74-2006 (D.C. Cir., July 1, 1977), in which one panel of the court

of ~ refused to apply another decision of the court retro-

actively.

“See Beytagh, ‘‘Ten Years of Non-Retroactivity: A Critique

and a Proposal,’’ 61 Va. L. Rev. 1577 (1975) for a thorough dis-

cussion of this subject. Dean Beytagh distinguishes between (1)

‘“pure prospectivity,’’ decisions which govern ‘‘only future cases

and [apply to) neither the parties before the court nor any previous

or pending cases,’’ (2) ‘‘non-retroactivity,’’ or decisions which gov-

ern ‘‘future cases as well as litigants at bar but not previous or

pending cases,’’ and (3) ‘‘retroactivity’’ or decisions which govern

taxpayers”’ could vote in elections called to approve is-

suance of bonds by a municipal utility system was in-

valid under the Fourteenth Amendment. Similarly, in

City of Phoenix v. Kolodziejski, 399 U.S. 204, 213-215

(1970), the Court applied prospectively its decision

that a state could not restrict to real property tax-

payers the vote to approve general obligation bonds, on

the ground that giving retroactive effect to its decision

would be ‘‘unjustifiably disruptive.’’ England v. Louisi-

ana State Bd. of Medical Examiners, 375 U.S. 411, 422

(1964), involved the prospective-only application of a

decision in regard to the presentation of federal claims

in a state court after an abstention order of a federal

court. Allen v. State Bd. of Elections, 393 U.S. 544, 572

(1969), involved the prospective-only application of a

decision interpreting the application of Section 5 of

the Voting Rights Act of 1965, 79 Stat. 437, 42 U.S.C.

§ 1973 et seq. (1964 ed., Supp. I), and refusing to in-

validate elections challenged pursuant to this section.

Chevron Oil Co. v. Huson, 404 U.S. 97, 105-107 (1971),

where the Court thoroughly discussed the principles of

non-retroactivity, involved a decision not to apply ret-

roactively a state one year statute of limitations in

personal injury actions. Cf. Hanover Shoe, Inc. v.

United Shoe Machinery Corp., 392 U.S. 481, 496

(1968) ; United States v. Estate of Donnelly, 397 U.S.

286, 295 (1970) ; Simpson v. Union Oil Co., 377 US. 13,

25 (1964) ; Chicot County Drainage District v. Baxter

State Bank, 308 U.S. 371 (1940) ; Lemon v. Kurtzman,

411 U.S. 192 (1973).

Cases in which the Court refused to apply its deci-

sions in criminal matters retroactively are perhaps

‘future cases, the present litigants, and all fact situations arising

before the date of the law-changing decision that are reviewable

either by direct appeal or by collateral attack.’’ Jd., at 1157, n. 2.

better known, and certainly more numerous. This Court

held that embezzled funds were income, but limited that

holding to prospective effect only. James v. United

States, 366 U.S. 213 (1961). Among the Court’s other

decisions in the criminal area are: Linkletter v. Walker,

381 U.S. 618 (1965) ;° Tehan v. United States ex rel.

Shott, 382 U.S. 406 (1966) ;" Johnson v. New Jersey,

384 U.S. 719 (1966) ;* Stovall v. Denno, 388 U.S. 293

(1967); Desist v. United States, 394 U.S. 244

(1969) ;°* Halliday v. United States, 394 U.S. 831

(1969) ;° Williams v. United States, 401 U.S. 646

(1971) ;°° Mackey v. United States, 401 U.S. 667

*° Exelusionary rule announced in Mapp vy. OPtio,:367 U.S, 643

(1961), held inapplicable to cases in which convictions had become

final before the date Mapp was announced. The Court noted also

that the rule of non-retroactivity could be applied in constitutional

as well as non-constitutional cases, Linkletter v. Walker, supra, 381

U.S. at 628, and that ‘‘the Constitution neither prohibits nor re-

quires retroactive effect.’’ Jd. at 629.

*' Prohibition of proseeutor’s comment on defendant’s failure to

testify, announced in (@riffin v. California, 380 U.S. 609 (1965), not

applied retroactively.

*? Rules about self-incrimination announced in Escobedo vy, /Ili-

nois, 378 U.S. 478 (1964), and Miranda vy. Arizona, 384 U.S. 436

(1966), not applied retroactively. See also Jenkins v. Delaware, 395

U.S. 213 (1969).

** Requirements of counsel in regard to pretrial line-ups, an-

nounced in United States v. Wade, 388 U.S. 218 (1967), and Gil-

bert v. California, 388 U.S. 263 (1967), not applied retroactively.

** Rule that physical trespass need not be shown to establish

Fourth Amendment search-and-seizure violation, announced in

Katz v. United States, 389 U.S. 347 (1967), not applied retroac-

tively. See also Michigan v. Tucker, 417 U.S. 483 (1974).

*® This decision, construing Rule 11 of the Federal Rules of Crim-

inal Procedure concerning guilty pleas, held non-retroactive.

*°-Rules in regard to search-and-seizure, enunciated in Chimel v.

California, 395 U.S. 752 (1969), held non-retroactive.

(1971);"" Adams v. Illinois, 405 U.S. 278 (1972);™

Michigan v. Payne, 412 U.S. 47 (1973) ;* Gosa v. May-

den, 413 U.S. 665 (1973);° Daniel v. Louisiana, 420

U.S. 31 (1975) ;" United States v. Peltier, 422 U.S. 531

(1975)."* Recently the Court decided that the Miller

definition of obscenity could not constitutionally be

applied retroactively against the interest of an accused.

Marks v. United States, 430 U.S. 188 (1977).

As the Court noted in Chevron Oil Co. v. Huson, 404

U.S. 97, 106 (1971), ‘*. . . in the last few decades, we

have recognized the doctrine of non-retroactivity out-

side the criminal area many times, in both constitu-

tional and nonconstitutional ecases.’’ (Citations omit-

ted.) The Court said, id., at 106-107, that three separate

factors guide its decisions:

** Rules in regard to self-inerimination enunciated in Marchetti

v. United States, 390 U.S. 39 (1968), and Grosso v. United States,

390 U.S. 62 (1968), held not retroactive.

** Coleman v. Alabama, 399 U.S. 1 (1970) requirement of counsel

at pretrial hearing held non-retroactive.

** Resentencing rule enunciated in North Carolina v. Pearce, 395

U.S. 711 (1969), held non-retroactive.

* Decision in O'Callahan v. Parker, 395 U.S, 258 (1969), that

persons in armed forces are entitled to a civilian trial for non-

service-connected offenses held non-retroactive.

* Decision in Taylor v. Louisiana, 419 U.S, 522 (1975), in regard

to discrimination against women in jury service held non-retro-

active.

** Decision in Almeida-Sanchez v. United States, 413 U.S, 266

(1973), invalidating warrantless searches by border patrol agents

acting without probable cause held non-retroactive. Cf. Bowen v.

United States, 422 U.S. 916 (1975).

* Miller v. California, 413 U.S, 15 (1973) (setting new stand-

ards to isolate ‘‘hard-core pornography’’ from speech protected by

the First Amendment.)

[1] ‘‘the decision to be applied non-retroactively

must establish a new principle of law, either

by overruling clear past precedent on which

litigants may have relied, ... or by deciding

an issue of first impression whose resolution

was not clearly foreshadowed .. .’’ (citations

omitted) ;

[2] ‘‘it has been stressed that ‘we must... weigh

the merits and demerits in each case by look-

ing to the prior history of the rule in question,

its purpose and effect, and whether retro-

spective operation will further or retard its

operation’,’’ citing Linkletter v. Walker, 381

8. 618, 629 (1965) ;

[3] ‘‘Finally, we have weighed the inequity im-

posed by retroactive application, for ‘[w]here

a decision of this Court could produce substan-

tial inequitable results if applied retroactive-

ly, there is ample basis in our cases for avoid-

ing the ‘injustice or a. by a holding of

non-retroactivity’,’’ citing Cipriano v. City of

Houma, 395 U.S. 701, 706 (1969).

In reaching the conclusion that its new rule in re-

gard to cross-ownership should be applied prospec-

tively-only, except in certain limited circumstances,

the Commission dealt with—and complied with—each

of these guidelines. Its new rule did establish a ‘‘new

principle’’ in that it overruled the past precedent of

permitting and in many instances, encouraging cross-

ownership. See discussion p. 13, supra and n. 19,

supra. The Commission balanced the history, purpose

and effect of prospective only application of the rule.

(FCC App. B, pp. 93-98.) The Commission clearly

was concerned not only with the potential inequitable

results of applying its rule retroactively (FCC App.

B, p. 93), but also with its overall effect on the public

interest.

Having followed each of the standards which this

Court has set forth to guide its own decisions in re-

gard to retroactivity, it cannot reasonably be con-

tended that this decision of the Commission was irra-

tional.

CONCLUSION

The decision of the court below amounts to usurping

the administrative functions of the Commission. There

is no basis, either legal or practical, for the court’s

conclusion that the Commission’s determination to

make its rule prospective-only except in limited cir-

cumstances was irrational. Accordingly, this Court

should reverse the decision of the court of appeals.

Respectively submitted,

Erwin N. Griswoip

Victor E. Ferraty, Jr.

Linpa K. SmItTH

Attorneys for Amici Curiae

Dispatch Printing Company

and The Journal Company

Of Counsel:

Jones, Day, Reavis & Poaue

November, 1977

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.