# Petition for Writ of Certiorari — American Trucking Associations v. Federal Communications Commission

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1967
- **Citation:** 386 U.S. 943

## Text

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TATES ¢ T. OF APPEAtS FOR
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‘TABLE OF CONTENTS = *

Poe Page
Opinions : Below biaresiene seeks peeees toveesecusoe §
_ Jurisdiction ............... eae erg oe Cebdeskisde
Questions Presented ...............- eecaewiens 4:
Constitutional and Statutory Provisions swthanitninde —-
Statement of the | Case ... cece eee ecee eee seeeee ere oe
A, On the Discrimination Question vetecccccecece — 3
B. On the Due Process Question .................. F
C. Proceedings Before the Court of ' Appeals oseece eS
‘Reasons for Allowenee of the Writ :..... ee aa. “9

I. The Court of Appeals Has Decided an Important ;
-Question of Federal: Statutory Law Which Has
Not Been, But ‘Should Be, Settled by This
ME STAs TCLS Ch Saab wadaduekeswiNeeveeeatne « 10

A. This Case Presents the First Judicial Review.
-of Section 202(a) of the Communications Act

. of 1934, and Its Applicability to Competitive |
Rate- Making Sonn Oks seb eb ceveheienseshery 10.

B. The Court of Appeals Has Too Narrowly:
Construed Section 202(a)' Without Regard
a to Bemtutery Cemteme 2... cc ccc ccceccces '-10
C. The Court of Appeals’ Interpretation ! is in |
Conflict With Decisions of This Court Inter-

preting Comparable Provisions of the Parent °
Interstate Commerce Act and Other Similar

oat coeur 13.

D. In Striking Down Certain Rates as Discrim-
inatory, Although Only.in Theory, the Com- .
mission Creates a Greater Real Discrimina-

to the Short Range Benefit Only of | -

, AT&T and a Less Efficient Competitor .... 15

E. The Court of Appeals’ Decision Would Im-

_ “pose a Severe Burden Upon Users of Bulk
Communications, and Inhibit National Eco- —

nomic Growth Attributable to the Greater
Reliance Upon Communications Services ..... 17

ii 3 catered Continued 4

, Page

IL The. Court of ‘a Erred in Failing to eonk:
nize That the Federal Communications Commis-
' sion’s Uniqué Procedures ‘Are in Conflict with
Decisions of This Court Applying Principles of
Constitutional Due’Process ...............+035. 20

_A. The Commjssion’s Purported Justification

of Its Procedures as ‘‘Legislative’” Action *°
Be ND ooh onda vn va deh bates xk) coe! — 26 -.
‘B. The Commission’s ‘ Petesbaies Cannot c
Justified by the Administrative Proced
Act eee ener CHEN COTS COE C CSS DO 2 6H 6:08 27
- (. The-Commission’s Procedures ‘Are olen
_——~. Among Federal Rate-Making Agencies, and _ ~
_ Have Been Uniformly Criticized By Leading:
PI ogc tcbeSeapencscksccetecss ass 30
| Conclusion | pain ksilones seaeax See ee aa. 33°
Appendix ‘A—Opinion of the Court of Appeals ...... la

Appendix B-—Jndgment of the-Court of Appeals .... 26a

— C—Constitutional ane Statutory Provisions
: Involved ....ccccccccccsccencvctscees 26a

Appendix D—Aeronautical Radio, Inc., TELPAK Serv- vi
ices in Use or on n Order, July, 1962. (J. A.

: °/ ME cs cUsDkas hes uae cers cunre Kes nie ks 35a
; -* Trucking’ nara Shared TELPAK _-:
Services (JA. 437) ...sscessuseeeeees 36a
Service “to Public Through Airlines
TELPAK (J.A. 1086-1091) .......... 37a

a Appendix 1b Reaniotors and Policy Problems Pre-

sented by the Interdependence of Com- _

"9+. puter and Communication Services and
Facilities, Docket No. 16979, FCC -66- :
BE as cu Phtasccdedtndadsevarabetens 4la —

: panes F—Illustrative Excerpts From Unprinted

| | Transcript ficaVdidedaecednes ees -. 48a-

.
ee f . We cS IESE LE LENE LINE LPNS. | 9

ae

Contents Continued es iii

o ‘INDEX TO. CITATIONS ;
Page

Aiefecigh, Rate Cin, Minimum Rates for Airfreight som.
: -14 ‘\.

Forwarders,’ 26 C.A.B. 339'(1958) .............
Allocations of Frequencies in the Bands Above 890 Mc,
' 27 FC.C. 359 (1959), 29 F.C,C. 825 (1960) ....... 3
Amerittan Airlines, Inc. v. CAB, 235° F.2d 845 (D.C.

_ Cir. 1956), cert. denied, 353 U.S. 905 (1957) *...... 26
American Airlines, Inc. v. CAB, 359 F.2d 624 (D.C.
'' Cir. 1966), cert. douted, 385.U.S. 843 (1966) ...... 14
* American Tel: & Tel. Co., 2 F.C.C. 2d 142 (1965), 2

DAE WET CREED Kecedcivcasivecss .. 9, 21, 29, 31
Amos Treat & Co. v. SEC, 306 F.2d 260 (D.C. Cir,

eee se ee

Baltimore €'0. BR. v. United States, 345 US. 150

(1953) s....seeeeeressseceersheseseeecnseeees 17

Bruce’s diols Inc v. American Can Co., 330 U.S. 143
(+ BERRA RAE ERA RRB ere ease | rae ngs mane gs wee 12

- Chicago, ‘M. & St. P. Ry. v. Minnesota, 134 US. 418,
SEE cuits ou ok axWh shod uedhaeiedscadiceddas

City of/Rochester v. Rochester Gas & Electric Corp., *

83 N.Y. 39, 134 N.E. 828 (1922):................ 12
Columbia Research Corp. v. Schaffer, 256 F.dd 677.
i a Sy ED 8 es02 sev ccapees ss seead hwssevns 23,28
Davis & Randall, Inc. v. United States, 219 F.Supp. |
_ 673 (W.D.N.Y. EE vied che tewnasebuaesaees 25
FEC v. Pottsville cele We Co. . 309 U.S. 134 |
Sg ORS SORE PS et ete a Pe ee = a
Gonzales v. United States, 348 U.S. 407 (1955): . . .23, 26, 28
Gonzales v. United States, 364.U.S. 59 (1960)......... 23
Grain in Multiple-Car Shipments—River Crossings to
the South, 318 I.C.C. 641 (1963) ................ 19
‘Hannah v. Larche, 363 U.S. 420 (1960) ............ 23, 26

ICC v. Baltimore & O. R.R., 145 U.S. 263 (1892) . ..14,15
“ICC v. Delaware, L. & W. RR., 220 U.S. 235 (1911) . :
ICC v. Louisville dN. R-R. 297 US. 88 (1913) ...... 26°

. ICC_v. New York, N. H. é H: R.R. 372 US. 744

(1963) Ap RTE HE Ne ee aS Te 16

ct

ae Michigan Consolidated Gas C6. v. FPC, 283 F.2d 204

A _” Contents cat — .
fi "Page

(D.C. Cir. BENE cane de nntmevr cavesacddes ences 17 .

Mississippi Valley Barge Lime Co. v. ‘United States, coke
292 GS. TE iin kt me deudeaicn be ee tenes 66s 17
‘ Molasses from New Orleans, La., to Peoria and Pekin, )
IU, 235-1.C.C. 485 (19BS) oi iwesvevecececseces
Morgan v. United States, 304 U.S. 1 (1938) .-... 22, 24,28.
Murchison, In re, 349 U.S. 133 (1955) ...2..0....00. 23. =:
NaSMville, C. & St. L. Ry. v. Tennessee, 262 US. 318 *
rp Mr SS. 750s aden baeresk sed bdcbesbanbewsenves 11 --
Opp Cotton Mills, Inc. v. Administrator, 312 U.S.’ 126
{ME Skike bees tabs Race ddkae cheered i eeessiess 26

Pan American World ‘dioiaee Inc. v. CAB, 261 F2d
- 754 (D.C. Cir. 1958), anv. denied, 359 U.S. 912
ES Gb buh eee oe cua Pelese caccaueenentesss 26
Regulatory and Policy Problems Presented by the In-
~ terdependence of Computer and Communication
‘Services and Facilities, Docket’ No. 16797, FCC ae
66-1004 (App.- SEE: susp iesevevausentdvonsweses 19 .

Rules Governing Ex Parte Communications in Hearing
Proceedings,/1 F.C.€: 20:49 (1965) ....... .'. 9, 21, 31.
Saalfield Publishing Co. v. Atchison, T. & S. F. Ry.,
- 274 T.C.C. 584 (1949) ............ jusvcadenwsan 15
Sangamon Valley Televiston Corp v. United States, |
: 269 F.2d ont (D.C. Cir. 1959) occ. ccc cccwlecese 23, 28+
Southern Ry. v.Virginia, 290 U.S. 190 (1933) ......... 26;

Texaco, Inc. v. FTC, 336 F.2d 754 (D.C. Cir. 1964) .. 23

“Trans World Airlines, Inc. v. CAB, 254 F.2d 90 (D. C.

Ge ME Di Sueedeete eh dnb sendsdvesevacahcane's ' 23
United States v. Abilene & So. Ry., 265 US. 4 ~~.
+ (1924) ........ SRST NE eee TI 24,31 _
Vitarelli v. Seaton, 359 U.S. 535 (1959) satimuelh alka 25

Willner v. Committee an.Character, 373 U.S. 96 (1963) 23

Wilson &.Co. v. United States, 335 F.2d. 788 (7th Cir. -

_ 1964), cert. denied, 380 U.S..951 (1965) .....4.. 21
Wine, Pacific Coast to the East, 329 1.C.C. 167 (1966) . 17

Wong Y ang “ny v. McGrath, 339 U.S. 33 venues . .28, 31

a
.

= Comments of Federal Communications Bar Association

‘ a
Contents Continued ¢.\ SH
Constitution and Statutes . | ‘i . Page’,
_ ConsrrrvTIon OF THE Unrrep. StTaTEs, AncexDMENT , Me
CI TEMAS: bce ve ucoctécenvessageedessedees “Rane :
- Administrative Procedure Act. iveeut ewes 3, 27, 98, 29, 32 @
Section 2, 5 U.S.C. $1001 (A yp. 30a)... .: seen 27, 29
Section 5, 5: U.S.C. §.1004 (App. 31a) ........,...27,29
- Section 8, 5 U.S.C. § 1007 (App. 32a) .......%.... 20
Section 12, 5 U.S.C. $1011 (App. 32a-33a) ».......° 29
Communications Act of 1934, as pmended ... -3; 17,19, 29:
- ~ Section’ 1, 47 U.S.C..§ 151 (App. 26a-27a) 2:...... 18
Section 201, 47 U:S.C. 1 (App. 27a) .: "2.5, 6,11-13 |.
-. Sectfon 202, 47 U.S.C. § 202 (App, 27a): 3,5, 10-13, 17
“ Section 204, 47 U.S.C. § 204 (App. 28a)........... 26
. Section 205, 47 U.S.C. §205-(ADY. 28a) ° RADY PREM
“Section 402, 47.1).8.C. § 402 ..... reper ry Seen esie > ee
Section 409, 47 US.C. § 409. (App. 296.308} scekcun ae
Interstate Commerce if” ee Ee cxtchiaaombave: ae
Section 3, 49 U.S.C. §2...... SUSI SO ‘HL 18
Judicial Code, section 1254 (1), 98 v. S.C. .§ 1254(1) . ;
es pve Review Act, section 10, § U.S.C. de 1040 hh :
Other Authorities © ay ane ° in
Administrative Cudlertane of the United a Final
Report, Recommendation No. 19, S. Doo. Now, Se.
. ». 88th Cong., Ist. Sess. (1963) eee wedia ieee ns 31...
- Administrative Conference ittee on ‘Rule ‘Making, :

Improvement in the Cond ct of Federal; Rate Pre |
ceedings, S. Doc. No. 24° 88th Cong: Ist Sess. .
CE ccceen ees ie ieaidaaeeweneetane es cas 124,32
CAB Regulation No. PS-24, Policy Statementé, Amend- |
$e No. ‘3 to Part 399—Statements of General
olicy on Blocked Space Service. (1964),; if €. E.R.
SE th

protests by Western Union Telegraph Company,
' AT&T’s common. carrier .competitor (J.A. 1256-76),
and Motorola, Inc., a private microwave equipment
manufacturer (J.A. 1276-93), the Commission on Sep-
tember 8, 1961, suspended the tariff for the three-
month statutory period and ordered an investigation
’ upon four issues: (1) whether the charges were unjust
and unreasonable under section 201(b) of the Com-
munications Act;* (2) whether there would result any
unjust or amreasonable discrimination or prejudice
under section 202(a) ;*~(3) whether TELPAK would
have. unlawful competitive effects upon other car-
riers or upon private manufacturers; and (4) whether
* the. Commission should prescribe rates (J.A. 6-10). ’

. During hearings before ’ a hearing examiner extend-
ing over thirty-six days in 1961 and 1962, Motorola _
and Western Union intervened in opposition to the _
TELPAK rates. Numerous users of TELPAK serv-

8° All pean practites, Pane me cael for ¢ or in

connection with such communiéation service shall be just and rea-

sonable, and any such charge, practice, classification, or regulation y
that is unjust or unreasonable is deetlared to be unlawful: Provided,

. That communications by wire or radio subject to this chapter may

~ be Classified into day, night, repeated, unrepeated, letter, commer-

cial, press, Government, and such other classes as the Commission

‘may decide to be just and reasonable, and different charges may

be made for the different ‘classes of communications . ea 47
U.S.C. §:201(b). fare a |

4«. ? “ -

q@”
12 2

Volume discounts find everyday ‘acceptance in our
economic system. {‘Quantity discounts are among the
oldest, most widely employed and best known of dis-
count .practices. They are common in retail: trade,
wholesale trade, and manufacture-jobber relations.
They are common in regulated as well.as unregulated
price structures.’ Bruce’s Juices, Inc. v. American
Can Co., 330 U.S. 748, 745-46 (1947). ‘The com-
Seat does. not pay the same rate as the occasional
_ traveler. The shipper by carload is not charged as the

shipper of -a singlé package. Telephone rates -per
message are lowered as the number of messages in-
- creases. Gharges for water: vary- with the quantity .
consumed.’’ City of Rochester v. Rochester Gas &
Electric Corp., 33 N.Y. 39, 48, 134 N.E.'828, 831 (1922).
(Cardozo, J., for the court) (citations omitted).

~The thrust of the Commission’s decision is that
volume rates are discriminatory, and therefore un-
lawful under section 202(a) of the Act, unless affirth-.
atively justified by a difference in costs or competitive
necessity: - This gloss upon,section 202 (a) is no part
of the Act. Indeed, not one of the classes’enumerated
by illustration. in section 201(b) as reasonable dif-
ferentiations can be justified on a cost or competitive
necessity basis, except perhaps to the limited extent it
may be: inferred that cost savings are inherent in
‘ volume uses or users—an inference which is neces- ~
sarily fully. as applicable and valid for TELPAK

- volume rates. ° o 7

_. -Séetion 201(b), however, was oniesialiae encod by
_the Commission and the court below, despite the fact
that the very first j dssue designated by. the Commission
in defining the scope of the hearjng expressly called ©
- for determination of the applicability of section 201 .
(b). of the Act: (J.A. 685). Nevertheless, through

13

three successive opinions of the Commission and the
opinion of the Court of Appeals, not a single reference
was made to the possible reasonableness of TELPAK
rates ‘as a class of rates under section 201(b), much .
‘less was any determination made of that issue.

\ The egregious effect of this narrow interpretation
of section 202(a) out of statutory context is to impinge
upon_basic. priziciples of. communications rate-making
by rejecting virtually every classification as discrimi-—
nation, and virtually every discrimination as invidious

- and as unlawful, despite the express classification and

| _— differentiation prorat of section 201 (b).

Cc. “The Court of Appeals’ Sebioneiittes is in Conflict With De- |
cisions of This Court Interpreting Comparable Provisions
of the Parent Interstate Commerce Act and Other Similar
Acts

The prohibition of section n 202(a) of the Communica- =f
tions Act against unjust or unreasonable discrimina- . ~
tion was purposefully drawn by the Congress to con-
form with comparable provisions of section 2 of the
Interstate Commerce Act, 49 U.S:C. §2. S. Rep. No.
781, 73rd Cong., 2d Sess. 4 (1934); H. R. Rep. No.
1850, 73rd Cong., 2d Sess. 5 (1934). The action strik-
‘ing down TELPAK volume rates under section 202(a),
however, violates the settled interpretation upholding .
the validity of comparable volume shipment rates
under the parent Act:

It is well settled that iin in the quanti-
“ties shipped as a single shipment may afford a
fair and reasonable basis for differences in trans-
portation rates. In railroad transportation, these
differences are currently recognized as between car-
load, less-than-carload, and any-quantity lots. In
truck transportation, in addition to truckload and
less-than-truckload rates there are so-called volume
rates. In connection with the latter, there is no

Sipe Rh te PD aie RN ithe ect A etc Seer er nr

ae | |
requirement as to the loading in a single truck.

[Molasses from New Orleans, La., to Peoria and
Pekin, Ill., 235 1.C.C. 485, 498-99 (1939). ]

There is indeed a striking historical parallel in the
shared use of TELPAK services by various members

of the airline, trucking, and other industries with the |.

traditional shared use of carload rates in railroading;
ICC v. Delaware, L. dé WwW. _R.R.; 220 U. S. 235, 242-43

(1911).

~ The rate “spreads”? between volume ‘id non-volume
rates, based upon a volume classification and not upon
a demonstrated cost differential, have been the life
‘blood of the’ forwarding business in the railroad indus-
try, tbid., as well as the airline industry, where ‘‘ weight
breaks”’ are a usual and normal practice, Airfreight
Rate Case, Minimum Rates for Airfreight Forwarders,
26 C.A.B. 339, 341-42 (1958). — ~

In principle, TELPAK rates are not ‘nities the

- ,commutation ticket rates long upheld, [CC v. Balti-

‘more & O. R.R., 145 U.S. 263, 277- -B (1892), in the
railroad industry, whereby a payment is made at a
discount for tickets whether or not all of the trips
contracted for are taken. Nor - —

ee “i

and scope than here involved will be jeopardized in
their entirety. —

The Commission’s procedures conflict with the. prin-
: ciple that due process is denied when a participant in
-an administrative proceeding—whatever the interest
represe ted by him—is permitted. to intervene ex parte _
in the 50 a ae process.’ . This is the clear hold-
ing of Morgan v. United States, 304 U.S: 1 (1938),

‘whieh involved a rate-making proceeding before the’

Secretary of Agriculture. Counsel from the Depart- °
,ment’s Bureau of Animal Industry participated in the
. hearing, and ther drafted findings for presentation to

the Secretary and participated in several private con- .

ferences with the Secretary with respéct to these find-

ings. Tn this context, this Court said:

The vast. expansion of this field of administrative
- regulation in response to the pressure of social
“needs is made possible under our system by ad-
_ herence to the basic principles that the legislature
shall appropriately determine the standards of ad-
ministrative action and that in administrative pro-
ceedings of a quasi-judicial character the liberty -
and property of the citizen shall be protected by
’ the rudimentary requirements cf fair play. These
demand ‘‘a fair and open hearing,’’—essential
alike-to the legal validity of the administrative
regulation and to the maintenance of public confi-
dencé in the value and soundness of this important
governmental ee [304 U. S. at 14-15. (Em-

ie phasis added.)

In holding thereafter that the ex “parte peendetts s :

tions by Bureau counsel to the Secretary without no-

tice or opportunity to respond being granted to other ©

participants violated due process, this. Court stated :

The right to a hearing embraces not only the. right
to present evidence but also a reasonable oppor-
a to know the claims of the opposing party

ae kr 23

and to meet them. The right to submit argument |
_ implies that opportunity ; otherwise the right may -
‘be but a barren one. Those who are brought into —
“eontest with the Government in a quasi-judicial
proceeding aimed at the control of their activities
are entitled to be fairly advised of what the Gov-
ernment proposes .and to be heard upon its pro-
posals before it issues its final command. [304 .
U.S. at-18-19.] ae

Other applications of this principle are found in,
e.g., Gonzales v. United States, 348-U.S. 407 (1955) ;”°
Willner v. Committee on Character, 373 U.S. 96 (1963) ;

, In re Murchison, 349 U.S. 133 (1955) #Sangafton Val-
ley Television Corp. v. United States, 269 F. 2d 221
(D.C. Cir. 1959); cf. Gonzales v. United States, 364
U.S. 59, 66 (1960) (dissenting ei ; Hannah Vv.

Larche, 363 U.S. 420 A ots - | | ‘

8 In holding there that fairness tequired that a selective service’.
exemption applicant be-allowed to inspect the recomméhdation of .
the Department of Justice, this Court stated: ‘‘The petitioner was ©
entitled to know the thrust of the Department’ Ss recommendation
so he could muster his facts and arguments to meet its contentions. *

. [T]he right to file a statement before the Appeal Board in- ©
éludes the right“to file a meaningful statement, one based on all
the facts in the file and made with awareness of the recommenda- ©
tions and arguments to be Gountered.’’ 848 U.S. at 414-15. ©

16 The decision below is also eesti when measured ‘a
the general march toward fairness in administrative sdoscalinds: :?
See, ¢.g., Amos Treat & Co. v. ‘SEC, 306: F. 2d 260, 266-67" (D.C.
~ Cir. 1962) ; Trans World Airlines, Inc. v. CAB; 254 F. 2d 90, 91 -
~. (D.C. Cir: 1958) ; Columbia Research Corp. v. Schaffer, 256 F- x i

.677 (2d Cir. 1958) ; Texaco, Inc. v. FTC, 336 F. 2d 754 (D. _
Cir. 1964). As the court stated in the Trang World Airlines;case :
‘‘The fundamental requirements of ‘fairness in the performance
of such [quasi-judicial ] functions require at least that one who par-
ticipates in a case on behalf of any party, whether actively: or -
merely formally by being on pleadings or briefs, take no part in TL,
the decision of that case by any tribunal on which he nay there. © on
after sit.’” 254 F. 2d at 91. ; ;

+ © «¢*
.
f » *
. ® "oe

7

, . 24

In the present-.case Bureau counsel who were advo-
cates in the case” also participated ex nite in the
decision-making process. The inherent vice in entrust-
ing the initial selection of evidence and preparation of
. findings to an advoeate is shown in the present case.
The tentative decision (J.A. 681-721) drafted by the
Common Carrier Bureau counsel (and which other
‘parties did not see until its issuance by the Commis-
sion) accorded little or no weight to evidence presented
by numerous’ users of the new communications serv-
ices.* _ The tentative decision was clearly the critical
document in this case. The Court of Appeals stated:
‘*'The findings and conclusions of the Tentative Deci-
sion were in major part affirmed [by the Commission ]
without extended discussion. Our review, therefore, is °

directed . procedurally. to the more comprehensive
Tentative Decision of March 20, 1964.”” (App. lla.) —

“The Commission claims that, the interests of other
parties are protected because if the staff commits
-error, it ‘will show up ‘in the tentative decision and

. 17 The facts in this ease clearly belie the Commission’s conten-
tion that the position of Bureau eounsel in’a rate proceeding is
‘not ‘‘adversary:’’ An argument in Morgan v. United States,.304
U.S. at 20,«that the Bureau ¢éounsel’s position there was not
“adversary”? was dismissed by this Court as one which ‘‘has regard
to the mere form of the proceeding and ignores realities.”* See .
also United States v. Abilene & So. Ry.> 265 U.S. 274 (1924). The
Administrative Conference Committee on Rulemaking noted that
when an agency staff participates in rate cases, ‘it is inevitable
that the staff to.a degree will become merely another adversary
party to the proceeding.”’ S. Dos. No. 24, 88th Cong., 1st Sess.
85 (1963).

18 Thus the General Services Administration, an -agency of the.
United States, stated in its. ‘‘Exceptions and Supporting Reasons’’
that the tentative decision failed ‘‘to consider or give weight to

testimony and eviderice presented by GSA. and other customer

PIRES Th NT

28
plaining that initial license cases and ‘‘cases involving
_ the validity or application of utility or carriers’ rates”’

were exempted from the Act’s separation of functions
requirements, the Committee stated:

There are, however, some instances of either. kind

of case which tend to be accusatory in-form and
involve sharply controverted factual issues, to
which agencies should not. apply the exceptions,
because they are not to be interpreted as preclud-
ing fair procedure where it is requred. [H.R.
Rep. No. 1980, 79th Cong., 2d Sess. 30 bie
(Emphasis added. y}

In accord with the intent of Congress, the courts

~ have not hesitated to require stricter procedures than

_ provided in the Administrative Procedure Act and
similar statutes where needed. for fairness. See, ¢.g.,-
“Wong Yang Sung v. McGrath, 339 U.S. 33 (1950) ;
Gonzales v. United States, 348 U.S. 407 (1955); Co-
lumbia Research Corp. v. Schaffer, 256 F. 2d 677 (2d .
Cir. 1958) ; Amos Treat & Co. v. SEC, 306 F. 2d 260.
(D.C. Cir. 1962); Sangamon Valley Television Corp.

v. United States, 269 F. 2d 221:(D.C.-Cir. 1959). In
the Sangamon Valley case, the court rejected the FCC
argument that ex parte communications were per-
_ missible because the proceeding was ‘‘rule making”

rather than ‘‘adjudication.” The court agreed in-
stead with the Department of J ustice, , which stated: in

its brief:

The ‘néed tn fairness cannot Sens on whether the
label ‘“‘quasi-legislative’’ or. ‘‘quasi-judicial’’ be
applied. The outcome of this proceeding, we em-
phasize, affected particular. interests in a con-
- erete, substantial way. ... From this it seems:
- clear that the Court’s task of ensuring that an

Oe a AS oe ote Fy tary hi dain hehe hesitinie

29 |
agency has acted ‘‘in accordance with the cher-
ished judicial tradition embodying the basic con-
cepts of fair play’’ (Morgan v. United States, 304 -
U.S. 1, 22) is not ended, or necessarily even aided,
by attaching one or the other label to the agency
proceeding under réview. What is important is
the substance of the proceeding and the nature of
the interests involved. [Bricf for . bani
States, p. 10.} al

In short, the proseriptions of the pie
Procedure Act” are not to be equated with due process.
This is expressly recognized in section 12 of the Act,
which declares that ‘‘nothing in this Act shall be held
to diminish the constitutional rights of any person

oe US.C. eS

21 Interestingly enough, the ‘nition relied upon the exemp- |
tion of rate-making from the separation of functions provision,
(section 5(c)) but in doing so, it ignored not only the formal
appearance of the Common Carrier Bureau as a party (J.A.
1337, Tr. 4-5, U.R. 547 (p. 6),.50-51), but also section 2(b) defining
““person’” as other than agencies, and ‘‘party’’ as ‘‘any person
. or agency\named or admitted as a party’? (5 U.S.C. § 1001(b)),
as well as section 12 which expressly provides: ‘‘Except as other-
wise required by law, all requirements or privileges relating to
evidence or procedure shall apply equally to agencies and persons,
- 5 USC. § 1011.

_ 22 Section 409 of the Communications Act of 1934 (47 U.S.C.

§ 409, App. 29a), as amended in 1952 to tighten ‘‘separation of
functions’’ provisions in FCC ‘‘adjudication’’ proceedings only
(as defined in the. Administrative Procedur@ Act), was not cited ©
below by the Commission or the court, but was a secondary point
of reliance by the Commission in American Tel. & Tel. Co., 2
F.C.C.2d 142, 145 (1965). Such statutory provision cannot
legalize any procedure of the Commission which constitutes denial
of due process in a.‘‘sharply controverted’’ rate case. The con-
stitutional guarantee of basic fairness is, of course, no more subject
to repeal or amendment by the Communications’ Act than by the
- Administrative Procedure Act. — 9

——————“—-

C. The Commission’s Procedures Are Unique Among Federal
Rate-Making Agencies, and Have Been. Uniformly
_ Criticized By Leading Authorities

Tt is significant that no other federal rate-making

agency functions as does the FCC. Before the Civil

Aeronautics Board and the Federal Power Commission,
the presiding hearing examiner normally prepares the
initial decision in formal rate cases. While the Inter-
state Commerce Commission normally omits the hear-
ing examiner’s initial decision in eases involving sus-
pension of proposed rates changes, it does not do so
in non-suspension rate cases where a hearing is held.

- Even in ICC suspension eases the presiding examiner

prepares for the Commission a draft of. a proposed .
decision. The staff counsel and other personnel of

‘each of those agencies who: participate in the hearing .
‘have no part in the preparation of. the initial or final

decisions, and are not permitted to consult ex parte
with the examiner or the agency members.”

In recognition of the basic defects in the FCC’s

-rate-making . procedures, leading study groups and

commentators have: generally condemned them. The

_ Federal Communications Bar “Association and the

American Bar Association’s Administrative Law See-
tion have filed presentations with the FCC criticizing
as unfair the Common Carrier Bureau’s participation

23See Starr Srupy,- ADMINISTRATIVE CONFERENCE OF THE
Unirep States, ProceDurREs FoR HANDLING RATE CASES IN THE
CAB 11, 13-14, 34-38, 45, 51-52, 53-56, 57-58 (1962) ; Starr Srupy,
ADMINISTRATIVE CONFERENCE OF THE UNITEp States, THE CoNDUCT ©

- OF Rate PRocEEDINGs IN THE FPC 32-33, 49, 52, 56-63 (1962) 4

Starr Stupy, ADMINISTRATIVE CONFERENCE OF THE UNITED STATES,

- THE Conpuer or RaTE PROCEEDINGS INTHE ICC 51-52, ) 66, 68-70 —

aie

My

——— ee

31

_ in the decisional process in rate-making proceedings.™
\The Administrative Conference of the United States
recommended that in administrative rate eases, ‘‘un-
less special réasons in the particular case require its
-omission, the’ presiding officer should prepare and .
publish a decision.’’ The Conference went on to récom-
_ mend ‘that ‘‘the agency’s. staff ... be required, as are
_ other parties, to produce its evidence and state its
position at an early point and be treated in all other
respects as a party.’’ In particular, ‘‘off-the-record
communications between the presiding examiner and
members of the agency’s staff who participate in the ©

= hearing should be governed by the same principles

3?

made applicable to outside participants . . Recom- -
mendation No. 19, S. Doc. No. 24, 88th Cong., 1st. Sess.
50, 51-52 (1963). (Emphasis added).*

‘ 24See FCC cian 15381; Comments of Federal ‘Communica-

tions Bar Association, pp. 5.6, June 11, 1964; Comments of the Fed- —
eral Communications Bar Association on Petition for Revtonsidera-
tion, p. 2, Oct. 6, 1965; Comments of the American Bar Asso-.
ciation Section on Administrative Law on Petition for Reconsid-:
eration, Mar. 18, 1966. See also 2 Davis, sh eames Law
TREATISE § 13.02 (Supp. 1965). : ;

25 The FCC has adverted to the Administrative iced rec-
ommendation, but ‘says that it has jnsufficient staff personnel to
function otherwise than in its present manner. This plea of
administrative economy is unavailing in light of the express re-
jection of the very same argument in Wong Yang Sung vy. McGrath,
339 U.S. 33, 46 (1950). See also United States v. Abilene & So.
Ry., 265 U.S. 274 (1924). Moreover, the FCC-is not itself unani-
mous in’ approval of its procedures. Commissioner Loevinger
vigorously opposes the path being followed by the Commission. See
American Tel. & Tel. Co., 2 F.C.C. 2d 142, 157 (1965), 2 F.C.C.
2d 877, 883 (1966) (dissenting opinions); Rules Governing Ex
Parte Communications in Hearing Proceedings, 1 F. C.C, 2d 49, 62
(1965) (dissenting haa .

PRB TS OAIEY

32

Cd

The Conference’s. Committee on Rulemaking pub-
lished a report in support of these recommendations in
which it observed that’ ‘‘the basic principle of fair-
ness which underlies separation-of-functions ideas is
. applicable to ex parte consultation with; participants
in rate proceedings,” and stated: | |

‘Discussions with staff members participating in
the case as. lawyers or witnesses should be kept on
the same basis as with cutside participants; that js,
the discussion should be limited to procedural or
other matters falling within the traditional -ex
-parte area or all the ne should be notified or
_ present.”

p

26S. Doc. No. 24, 88th Cong., Ist Sess. 105 (1963). - The Com- .
mittee Report also stated: ‘‘The basic reasons which s@pported
the emphasis in the Administrative Procedure Act on the role of
the hearing examiner in agency decisions remain important today.
Procedures which allow staff members to conduct ex parte inves-

- tigations, render tentative decisions, and then advise the agency

heads with respect to the final decision would tend to ‘be ariitrary
m fact as well as appearance. Use of the independent hearing

examiner protects against one-sided, biased, or arbitrary staff de-_
terminations and eliminates the appearance or ‘actuality of un-.
fairness. ”? Td. at 82. (apiphante added. )

if

e

33

CONCLUSION

For the foregoing reasons, this petition for writ of
certiorari actus be granted. i

Sesdebaly sated,

-<
Wuaiam E. MILLER,
Ritwarp P. Taytor,
' Ropert M. Goo.rick,
HERBERT E. Forres,

1250 Connecticut Avenue, N. W.,
Washington, D. C. 20036

JOHN E. STEPHEN,
Air Transport Association
Se of America,
' - 1000 Connecticut Avenue, N. W.,
Washington, D. C. 20036

Srepror & JOHNSON, DonALp C. BEELAR,

KIRKLAND, ELLIs, HODsON, - 800 World Center Building,

CuaFrerz & MASTERs,*— Washington, D: C. 20006,

. ARNOLD & PorTER, - - se
McKenna & Wiuxmson, - _ Harotb L. Russet,

~~ 825 Citizens & Southern .
; “Wemaiagton, 2:0... | i National Bank Building,
GAMBRELL, HARLAN, RUSSELL Atlanta, Georgia 30303

& Move
’ PavuL A. PORTER,
Atlanta, Georgia, * 1229 ee Street, N. W.,
Of Counsel Washington, D. C. 20036

JEREMIAH COURTNEY,
908 Twentieth Street, N. W.,
Washington, D. C. 20006

JOSEPH M. KITPNER, -
1705 DeSales Street, N. W.,
| Washington, D. C. 20036

Attorneys: oul Petitioners

“December 13, 1966.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385603_0243%3A1. Public record. Not legal advice.