Petition for Writ of Certiorari — Powell v. James

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Opinions Below ...........eeeeeereeeeeeeneeeeeeees 1

De 5 nck ccdancercecssuscteeeneseseeaesses 2

Question Presented ..........--.eeceee cence eeeeeee 2

Geatube TewebwGd ... oo cc cccccccccscccccensceuccess 3

ES Ee Perr err rE rr ry Tyrer eee Te oT 4

Reasons For Granting The Writ ............+-.eeees 6

Cee cnc i's haus HARK OR RED Ca see iaeeen ees 14

CITATIONS

CasEs:

Baker v. Carr, 369 U. S. 186 (1962) ............+-5-. 11

Interstate Broadcasting Co. v. FCC, 285 F. 2d 270

ee. Ss. | ower errrrrerrs eer tree ts 8

Norwegian Nitrogen Products Co. v. United States, 288

ia % Ti ,iPeerrrrrrr ce rer re eee 8

Roccaforte vy. Mulcahey, 169 F. Supp. 360 (D. Mass.

eee eRe re TTS herr ny rere isos 10, 11

Schechter v. United States, 295 U. S. 495 (1935) ...... 8

United States v. Ballin, 144 U. 8.1 (1592) ............ 10

United States v. Dickerson, 310 U.S. 554 (1940) ..... 10, 11

United States v. Smith, 286 U. S. 6 (1932) ............ 10

Wong Sang Sung v. McGrath, 339 U.S. 33 (1950) ..... 10

Yakus v. United States, 321 U. S. 414 (1944) ........ 5, 8,9

STATUTES :

Sok Fa Serer errr Terre: Terr rrr er 2,3

eh foe: Peery rr rrerrereT rT rrr Tres e 4, 6,7

90 07,0 © SIT) obs can ansnccesae cedersecd savas 2

Legislative Reorganization Act of 1946, 60 Stat. 812

CRIED acidic the sbi esas es nwaneen camensqess 10, 11

REGULATIONS:

47 C. FP. RG ULIGL-LAUDD ccc ccc decceeceeess 2,3

47 C. F. B. $ 1.2208 (b), (d) ....- ce cccccccceccccceces Hy)

IN THE

Supreme Court of the Anited States

OcroBER TERM, 1964

Cm

No.

AERONAUTICAL Rapto, INc., ATR TRANSPORT ASSOCIATION

or AMERICA, AIRCRAFT OWNERS AND Prtots Asso-

CIATION, Branirr Arrways, INc., HEART O’WIis-

CONSIN BROADCASTERS, INc., Davip INGLE, JR., LAKE

CENTRAL ArRuings, INc., NortTH CENTRAL AIRLINES,

Inc., NortTHwest AIRLINES, INC., AND UNITED AIR

Lins, Inc., Petitioners,

Vv.

Untrep States or AMERICA, AND FEDERAL COMMUNICA-

TIONS COMMISSION, Respondents,

American Truckrne Association, Inc., NATIONAL

ASSOCIATION OF BROADCASTERS, AMERICAN MER-

CHANT Marine Institute, INC., AND AMERICAN

Rapio Revay Leaave, Inc., Intervenors.

PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE

SEVENTH CIRCUIT

OPINIONS BELOW

The opinion of the Court of Appeals entered July 10,

1964 (Appendix A, infra, pp. la-12a) is reported at

935 F. 2d 304. The FCO’s Report and Order of May

8. 1962 and its Memorandum Opinion and Order of

2

October '!, 1963 (R. 140-172, 202-225)' are reported at

34 F.C.C. 811 and 28 F.R. 10911.

JURISDICTION

The judgment of the Court of Appeals (Appendix

B, infra, pp. 13a-15a), styled ‘‘Decree,”’ was entered

on August 5, 1964. The jurisdiction of this Court is

invoked under 28 U.S.C. § 1254(1).

QUESTION PRESENTED

Title V of the Independent Offices Appropriation

Act of 1952, (5 U.S.C. § 140, 65 Stat. 290), approved

August 31, 1951,’ expresses the “‘sense of the Con-

gress’’ that a wide variety of activities of all federal

agencies should be ‘‘self-sustaining to the full extent

possible’’ and purports to authorize the ‘*head of each

federal agency’’ to prescribe ‘‘such fee, charge, or

price, if any, as he shall determine . . . to be fair and

equitable’? for any activity falling within the broad

scope of the statute, ‘taking into consideration”’ cer-

tain specified factors and ‘‘other pertinent facts,’’ with

all collections to be ‘‘paid into the Treasury as mis-

cellaneous receipts.”” FCC Regulations, 47 C.F.R.

§ 1.1101-1.1119,* impose charges on the filing of applica-

tions for radio licenses, permits and certificates of

public convenience or necessity. The question pre-

sented is whether said Section 140, the appropriation

act rider, together with FCC regulations, Section

1‘¢R ’? refers to Petitioners’ Appendix in the Court of Appeals.

2‘‘Seetion 140” is used as a short designation for Title V, a

‘‘Fees and Charges’’ rider to the Independent Offices Appropria-

tion Act of 1952, 5 U.S.C. § 140. Unless otherwise indicated, all

emphasis herein is supplied.

* Originally numbered § 1.600 et seq.

3

1.1101 through 1.1119, are constitutionally effecti.e as

valid legislative authority for the FCC’s imposition cf

charges against petitioners for the filing of applications

for radio licenses.

STATUTE INVOLVED

Title V of the Independent Offices Appropriation

Act of 1952, 5 U.S.C. § 140, 65 Stat. 280 (August 31,

1951), reads as follows:

“T73E V—FEES AND CHARGES

“Tt is the sense of the Congress that any work,

service, publication, report, document, benefit,

privilege, authority, use, franchise, licerise, permit,

certificate, registration, or similar thing of value

or utility performed, furnished, provided, granted,

prepared, or issued by any Federal agency (includ-

ing wholly owned Government corporations as

defined in the Government Corporation Control

Act of 1945) to or for any person (including

groups, assocations, organizations, partnerships,

corporations or businesses), except those engaged

in the transaction of official business of the Gov-

ernment, shall be self-sustaining to the full extent

possible and the head of each Federal agency is

authorized by regulation (which, in the case of

agencies in the executive branch, shall be as uni- -

form as practicable and subject to such policies as

the President may prescribe) to prescribe therefor

such fee, charge, or price, if any, as he shali deter-

mine, in case none exists, or redetermine, in case of

an existing one, to be fair and equitable taking

into consideration direct and indirect cost to the

Government, value to the recipient, public policy

or interest served, and other pertinent facts, and

any amount so determined or redetermined shall

be collected and paid into the Treasury as miscel-

laneous receipts: Provided, That nothing con-

4

tained in this section shall repeal or a.

isting statutes prohibiting the collection, fixi

the amount or directing the disposition of any fee,

charge, or price: Provided further, That nothing

contained in this section shall repeal or modify

existing statutes prescribing bases for calculation

of any fee, charge or price, but this proviso shall

not restrict the redetermination or recalculation in

accordance with the prescribed bases of the amount

of any such fee, charge or price. Aug. 31, 1951,

ec. 376, Title V, § 501, 65 Stat. 290.”

STATEMENT

Petitioner Aeronautical Radio, Inc. (ARINC), a

corporation operated not for profit and engaged in

rendering radio communication service to the nation’s

airlines for the safety and convenience of their opera-

tions, is required by the Communications Act of 1934,

47 U.S.C. § 301 et. seq., to obtain licenses and license

renewals from the FCC in order to continue its opera-

tions. Other petitioners (or the members of petitioner

associations) are similarly required by the Com-

munications Act to obtain and maintain FCC licenses.

The airline petitioners are required by the CAB and

FAA to have FCC licensed airborne radio stations in

order to engage in public air transportation.

In February, 1962, by a 4-3 vote, the FCC instituted

a rule making proceeding in Docket 14507, looking

toward the establishment of a comprehensive schedule

of filing fees to accompany all applications for licenses,

certificates. and permits which it issues (R. 3-9). As

authority for this proposal, the FCC majority cited

Section 140 (R. 3, 8).

Although the FCC invited written comments on its

fee proposals, it did not permit oral argument or hold

5

a hearing, although requested to do so by ARINC (RB.

66). ‘The vast majority’ of the written comments

received ‘were in opposition to the proposed schedule

of fees” (R. 142). Despite this opposition, and the

questionable statutory foundation, the FCC, with two

Commissioners strongly dissenting, adopted a schedule

of fees. (R. 140-172). Petitions for Rehearing were

filed by certain petitioners and others (R. 173-193),

which the FCC, by a divided vote, rejected in its

Memorandum Opinion and Order (R. 202-225).*

As finally approved by the Commission, fees are

required to accompany each application for most of

the licenses, permits, ete., issued by the FCC. ‘All fees

collected will be paid into the United States Treasury

as miscellaneous receipts” and ‘‘will be charged irre-

spective of the Commission’s disposition of the ap-

plication.”” (47 C.F.R. § 1.1103(b), (d), R. 218).

Under this initial FCC fee schedule, ARINC will

thus be forced to pay more than $10,000 annually into

the United States Treasury ir order to carry on its

airlines communications business. Other petitioners

will be similarly affected in varying degrees.

These petitioners appealed and the Court below up-

held the FCC’s action in all respects. The Court first

considered, independently, whether Section 140 was

a constitutionally valid delegation of legislative power,

and it found that Section 140 complied with the con-

stitutional essentials as set forth in Yakus v. United

States, 321 U.S. 414 (1944). The Court next con-

sidered, independently, whether the Commission’s rule

making action imposing charges was valid, and it con-

«A more complete discussion of the FCC opinions is contained

in Appendix C, infra, pp. 18a-20a.

6

cluded that the FCC’s regulations were not arbitrary

or lacking in authority, despite an admitted disparity

between Broadcast fees, which recover only 8% of

applicable costs, and Safety and Special Service fees,

which recover 72%.

REASONS FOR GRANTING THE WRIT

Under Section 140 and the FCC’s rule making action,

the long standing rights of petitioners under the Com-

munications Act of 1934, as amended,’ to obtain radio

station licenses or permits, which are essential to the

conduct of their operations, have now been modified,

without any amendment to the FCC’s charter statute,

by the imposition of charges upon the filing of FCC

applications. Petitioners contend that Section 140 and

the agency’s rule making action, considered together,

and in light of a combination of delinquencies relat-

ing to both, constitute an ineffective legislative base

for the imposition of charges against them.

Section ]40 is unprecedented in the government-

wide sweep of its delegation to all agencies of govern-

ment. It is unprecedented by reason of the revenue

raising natiire of the delegation. It is unprecedented

as an indirect-amendment of all charter statutes of

federal agencies. The grant of such broad power to the

agencies in the casual manner of a discredited legisla-

tive rider to a 13-year old appropriation act is unpre-

cedented. Section 140 is unprecedented by the absence

of any provision for protesting the imposition of a

levy or obtaining any refund or other procedure. The

FCC’s rule making action is unprecedented as the first

effort of any federal agency over the intervening 13-

year period to impose a comprehensive schedule of

5 47 U.S.C. § 301 et. seq.

T

charges under Section 140 for the purpose of making

its total regulatory activities partially self-sustaining.

Section 140 and the FCO’s rule making action, con-

sidered together, are vaprecedented extremes in the

maximum of delegation with a minimum of legislative

consideration; and in the maximum of agency discre-

tion with no procedural safeguard.

A consideration of Section 140 and the FCC’s rule

making action reveals ai inversion of the legislative

process. It was the FCC, not the Congress, which de-

termined that charges would be imposed. The FCC,

not Congress, decided to impose charges on the filing

of applications, not on the granting of licenses or per-

mits. The FCC, not Congress, decided who and what

would be subject to charges and who and what would

be exempt. The FCC, not Congress, determined the

amount of charges to be levied. The FCC, not Con-

gress, decided that charges for the filing of applica-

tions in the broadcasting service would be ‘¢nominal,’’

but self-sustaining, or nearly so, in the safety and

special radio services. It was the FCC, not Congr. ss,

which decided to levy flat charges rather than cost-

related fees. The FCC, under the Court of Appeals

opinion, may now legislate the imposition of new

charges in any amount or for any purpose. Indeed, the

FCO, with such uncontrolled discretion, is made a

government unto itself in the matter of imposing

charges.

The Court, in its opinion below, acknowledged that

petitioners’ challenge to the validity of Section 140,

and the FCC’s rule making action, was based on a

‘‘eombination of factors.’”” (App. A infra, p. 3a).

But the Court, nevertheless, proceeded with a frag-

mentea consideration, first, of the validity of Section

8

140 viewed as a normal delegation of regulatory power

considered independently and in the abstract, and,

second, with a consideration of the FOC’s rule making

action, considered independently and viewed as in con-

formity with a fully competent legislative enactment.

In this fragmented consideration of the case, the Court

below disregarded the multiple defects asserted by peti-

tioners and shoved no appreciation of the synergistic

effect of the combination of delinquencies in Section

140 and the FCC’s rule making action.’ The opinion

of the Court below reveals no awa: 2nets of the unprece-

dented nature and scope of the issues presented in this

ease, and it failed to make any distinction between this

untoward delegation’ of power for the purpose of

raising revenue and the usual delegation of regulatory

powers in regulatory statutes subject to proceedings

before agencies and opportunity for judicial review.’

6Cf. Mr. Justice Cardozo in Norwegian Nitrog-n Products Co.

v. United States, 288 U.S. 294, 319 (1932) (‘‘Tne tokens of in-

tention set down in this opinicn have a force in combination that

is denied to any one of them standing alone.’’); cf. also Inter-

state Broadcasting Co. v. FC, 285 F. 2d 270, 272 (D.C. Cir. 1960).

7If Section 140 is not a case of ‘‘delegation running riot,’’ it

would be difficult to imagine suck a case. See Mr. J ustice Cardozo,

concurring, Schechter v. United States, 295 U.S. 495, 553 (1935).

8'The Yakus case, 321 U.S. 414 (1944), which the Court below

principally relied upon, far from-being a parallel with the instant

proceeding, is actually a study in contrast. The Emergency Price

Control Act and Inflation Control Act, under consideration in the

Yakus case, were the products of fully considered legislation by

responsible legislative Committees of the House and Senate on Baak-

ing and Currency, no* a superficially considered legislative rider

to an appropriation act. The delegation was to a single agency

for a single purpose—the fixing of maximum prices—not a blunder-

buss delegation to all agencies of government to impose charges, if

they chose, on a variety of different activities. The Emergency

Price Control Act, unlike Section 140, expressly provided for a

9

The problem of authorizing the imposition of charges

by agencies is one which has been of active concern to

the various Committees of the Congress for more than

a decade. One aspect of this problem has to do with

the distinction between proprietary and regulatory

functions and the distinction between services of a

private benefit nature in contrast to functions funda-

mentally governmental in character. Studies by

various Committees of the Congress, as shown by Part

1 of Appendix C, have concluded that this problem is

one which should be dealt with on an individual agency

basis by the several legislative Committees of the Con-

gress. The single exception to this policy is the 1951

action of the House Subcommittee on the Independent

Offices Appropriation Act which reported out the ‘‘ Fees

and Charges” rider. That action was in violation of

the rules and organization of the House and of the

Senate, and in conflict with one of the main purposes

of the Legislative Reorganization Act of 1946, 60 Stat.

812 (1946). In this instance, it was a gross circum-

vention of the regular legislative process. (House

Rule XXI, § 2; Senate Rule XVI, §§ 2, 4).

The efforts by the Congress to outlaw the appro-

priation act rider abuse are detailed in Part 3 of Ap-

hearing before the Price Administrator upon a protest to any

maximum price regulation with a right to contest the agency’s

regulation and to obtain judicial review of that determination.

Indeed, this due process provision was a key element in saving

the delegation in the Yakus case. The opinion of the Court below

showed no awareness that the specification of procedural safe-

guards is an essential feature in the permissibility of a delegation

of authority to deprive persons of their rights or property. The

omission from Section 140 of any right to protest the levy of a

charge or to obtain a refund, or to be heard, on the agency’s ap-

plication of its levy in any particular case, is a fatal defect in

the instant delegation.

10

pendix C. Experience has shown that the most formal

efforts by the Congress to eliminate this abuse have

proved ineffective. This is demonstrated by the en-

actment of Section 140 which far and away exceeds

anything which has ever beei attempted by a legisla-

tive rider to an appropriation act.’ The versatility of

the rider device is illustrated by the rider attached to

the Supplemental Appropriation Act of 1951 for the

purpose of rendering ineffective this Court’s decision

in Wong Sang Sung v McGrath, 339 U.S. 33 (1950).

See Roccaforte v. Mulcahey, 169 F. Supp. 360, 362-3

(D. Mass. 1958). When the rider device is used for

comprehensive legislation such as Section 140, all op-

portunity for careful or responsible consideration of

its import is lost, with the result that the performance

of legislative functions is simply abdicated, and citizens

are deprived of any opportunity to participate in the

legislative process.”

® United States v. Dickerson, 310 U.S. 554, 555-6 (1940) was de-

cided before enactment of the Legislative Reorganization Act.

Moreover, Dickerson, and the cases on which it relied, involved

true ‘‘economy limitations’, permitted under applicable Con-

gressional rules, rather than substantive legislation granting new

and sweeping revenue raising authority.

10'The validity of the rules of the House and of the Senate is

not at issue here, but rather the legal effect of their nonobservance

and violation in this particular instance. The nonobservance of a

House or Senate Rule is a justiciable issue. United States v. Ballin,

144 US. 1 (1892); United States v. Smith, 286 U.S. 6 (1932).

Under the Legislative Reorganization Act, legislative powers are

distributed among the various standing Committees, excluding the

Appropriations Committees, and the rules of both houses prohibit

the inclusion of any provision in appropriation bills ‘‘ proposing

new or general legislation’’ or ‘‘changing existing law’’. This is

not merely a rule of procedure or interna! convenience. Congress,

by enacting the Legislative Reorganization Act of 1946, has done

all that is practical for the legislative branch to do to eliminate the

appropriation rider abuse, the most extreme example of whick is

11

The FCC’s rule making action demonstrates that all

significant legislative-type determinations were left

open-ended by Section 140. (R. 3-7; 140-164; 202-217).

The FCC’s action reveals also a disregard of key pro-

visions of Section 140, aud a disposition by the FCC

to proceed on its own whether within or beyond the —

provisions of Section 140. In part, this is a reflection

on the ambiguity, vagueness and incompleteness of the

statute.

The things enumerated in Section 140 include

‘license, permit certificate,’”’ and the verbs used in-

clude “granted” and ‘‘issued.”’ Nevertheless, the FCC

chose to disregard these provisions and determined in-

stead to levy charges on the mere filing of applications,

regardless of whether acted upon or granted. But

Section 140 contains no provision authorizing the im-

position of charges on applications for any of the things

listed.

The statute states an objective of making those things

enumerated ‘‘self-sustaining to the full extent pos-

sible.’ But the FCC elected, at least in its initial

action, to impose charges only at a level which would

return to the government something less than 25% of

the FCC’s annual budget.

Section 140. Fullfillment of this intention of the Congress to

set ite own house in order is being obstructed by decisions of

lower courts in reliance on the rule in the Dickerson case, 310 1.8.

554, without any consideration of the supervening enactment of the

Legislative Reorganization Act, as for example in the opinior of

the court below and in the Roccaforte case, supra. A reconsidera-

tion of the rule in the Dickerson case is warranted if the expressed

intention of the Congress is to be realized. The nature of the

legislative rider abuse is such that its effective elimination requires

action by the jud‘sial branch. Cf. Baker v. Carr, 369 U.S 1°6

(1962).

12

With respect to the provisions on ‘‘cost to the Gov-

erpment’’ and “value to the recipient,” the FCC, at

least with respect to the Broadcast services, conceded

that its charges ‘‘do not accurately reflect cost to the

government,’’ or ‘‘the value conferred upon a recipient

of a license.” (R. 149). Instend, the FCC states, “The

fees adopted herein resolve this dilemma by establish-

ing flat charges. The Commission believes the flat

fees to be a reasonable compromise because they are

nominal.” (ibid). Section 140, however, does not use

the term ‘‘flat charges,” or ‘‘nominal charges.’’

In the case of the numerous Safety and Special

Radio Services, the FCC characterized its charges as

‘‘nominal,”’ but it observed, ‘‘The net result is that the

total fees to be collected bear a fair relationship to the

cost of administering the Safety and Special Radio

Services.”” (R. 152). Thus, the FCC, in the same rule

making action under the same statute, conceded that

its charges in the case of the Broadcasting services

were not cost-related, whereas in the case of the Safety

and Special Radio Services they were deemed cost-

related. Whatever cost studies may have been made

by the FCC in this matter, they were not made a part

of the record, nor were they made available to the

parties participating in the rule making proceeding.

Another illustration is the FCC’s disregard of the

statutory provision ‘‘fair and equitable’? as between

charges for the Broadcast class of applications and

those in the Safety and Special Radio Services. It

was revealed for the first time in Respondents’ brief,

filed with the Court below on April 11, 1964, that the

FOC, in 1961, had made a cost study of operations in

13

‘its major areas of responsibility.’™ This study:

essentially confirmed the facts which were presented to

the Court below by petitioners and intervenors, namely

that there was an inequitable disparity in the revenues

to be derived from applications of the Broadcast

services as contrasted to the revenues to be derived

from applications in Safety and Special Radio

Services. These facts established that the charges

levied on applications in the Broadcasting services were

so nominal that they would gross only 8% of the cost

of administering the broadcast services, whereas the

charges levied on applications on the Safety and Special

Radio Services would yield 72%. This gross disparity,

which is confirmed in the opinion of the Court below

(App. A. infra, pp. 10a-11a), surprisingly was not con-

sidered by it to transgress the ‘‘fair and equitable”’

provision of the statute.”

Approval of such a breadth of discretion over mat-

ters legislative in nature as exercised in the FCC’s

rule making action now confirms in the FCC, and for

that matter in other agencies of government, com-

plete and total discretion over the imposition cf charges

in any amount for any reason, notwithstanding the

absence of any provision on procedural rights. Indeed,

11The FCC, so far as known, did not ascertain the cost of

processing applications, e.g. in the <viation service, or ascertain the

cost difference in processing applications for new stations in con-

trast to routine license renewals, the charges for which are the

same. The FCC does not know whether its charges in some in-

stances are in excess of processing costs.

12 Indeed, under the holding below, the FCC, if it chose, eovld

revise its charges so that 72% or more of the costs of Broadcast

application processing would be recovered and 8% or less of those

in the Safety and Special Radio Services. If the same criteria

were followed in both classes, the charge on broadcasting appli-

cations would have to be increased tenfold. Appendix C infra,

p. 20a.

14

the opinion of the Court below is without limitation or

qualification in upholding not only Section 140, but

even » broader sweep of agency discretion transcend-

ing its vague provisions.

CONCLUSION

This is a case of first importance directly to the FCC

and all persons subject to its regulation, and indirectly

to all other agencies in the executive and independent

establishments and persons subject to their regulation.

At issue here is the first action that any federal agency,

without express authorization of the Congress, has

taken to levy charges on persons regulated to offset

agency expenditures for performing governmental

regulatory functions. The introduction of such a radi-

cal depaixture into the federal regulatoi , systems, pre-

dicated solely on the claimed authority of Section 140,

the above stated novel and important questions

which should be considered and determined by this

Court.

Respectfully submitted,

Joun 8. Yopice Donatp C. BEELAB

5151 Wisconsin Ave., N.W. James M. JOHNSTONE

Washington, D. C. 800 World Center Building

Of Counsel for Aircraft Washingiou, D.C. 20006

Owners and Pilots Association Attorneys for Petitioners

Joun E. STEPHEN

1000 Connecticut Ave., N. W.

Washington, D. C.

Of Counse! for Air Transport

Association of America

October 21, 1964