Motion — Columbia Broadcasting System, Inc. v. United States

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COLUMBIA BROADCASTING SYSTEM, INC.,

fe - Appellant,

Hp vs. :

Wd THE. UNITED. STATES OF AMERICA: CFE RAL -> 7

COMMUNICATIONS COMMISSION ‘aa |

TUTUAL

' - BROADCASTING SYSTEM, INC., ” Baa

. Respondents. |

MOTION FOR TEMPORARY ‘RESTRAINING |

. ORDER, NOTICE OF MOTION AND.

‘ -'. AFFIDAVIT INSUPPORT OF MOTION |

. ; e | . :

| CHARLES E. HUGHES, JR.,

‘JOHN J. BURNS,

Counsel for Appellant. eae

Octoser ‘ T ERM, 1941

7 ett

COLUMBIA Baoanc ASTING SY STEM, INc.,

Ate lant,

vs. * age :

3 , No. 1026

THE UNITED STATES OF AMERICA, FEverat- Se

Communications Com MISSION and Mutu AL

_ BROADCASTING SYSTEM, JNC., mates

< _ Respondents. ee

MOTION FOR’ TEMPORARY RESTRAINING ORDER -

Upon the annexed affidavit of William S. Paley, sworn

‘to April 27,1942, the complaint and: all thé affidavits and -

other papers filed herein and.set forth in the,transcript of,

_record’on this appeal, and all the proceedings ‘heretofore

‘had herein, the appellant moves this Court for an order

suspending, and: restraining the operation, enforcement or

execution of, the order of the Federal Communications

Commission, one of the respondents herein, tn Docket No.

5060, made May 2, 1941, as amended October 11, 1941,

the order involved on. said appeal, until ten days after the

filing in the District Court of the mandate upon this Court’s

decision on said appeal ; and for such other and further

_ felief as to this: Court may seem just.

Dated, April re 1942,

: , ae a ‘CHARLES E. HUGHES, JR, ,

1-Wall Street, °

New York, N: y.

: JOHN J. BURNS,.’

.- ; 40 Wall Street,

: New York, N. Y._

Counsel for A ppellant.

- Supreme “Court at: ‘the ited on G

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SUPREME COURT OF THE UNITED STATES

OcToper TERM: 1941... :

Con v MBIA Broape ASTING SYSTEM. INc.,

a ae eae Appellant,

vs.

ae : so ' No. 1026-°

THe UNITED. STATES OF AMERICA, FEDERAL

‘ COMMUNICATIONS COMMISSION and MuTUAL

BROADCASTING SYSTEM, INC; ,

Respondents.

4 ‘NOTICE OF MOTION

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'. Siva: 2

C Prease TAKE NOTICE, that the above motion will be sub-

mitted to the Coyrt at the Courthouse of the Supreme Court -

of the United States, Washington, D. C., on the day on

which the appeal. herein is called for argument, at 12 o’clock

noon on that day or as soon thereafter .as said motion can

be submitted. hae ‘

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‘Dated, April 27, 1942.

- CHARLES E. HUGHES, JR,

ag) Rely i Wall Street,

ai é ; . , / New York, 7 N.Y.

JOHN. J. BURNS, .

40 Wall Street, .

New York, NOY,

~ * Counsel a for Appellant.

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Ne mt eal

ed

|

' CHARLES Fany, Esq.,

Solicitor General, »

Department of Justice, Be ei

: "TELFoRp tance, Esq.,

General Counsel,

Federal Communications Commission, ene ,

Washington, D.C. me aus

. E y

Lous G. CALDWELL, Esq. Op ie uae ty -

- Counsel for Mutual Broadcasting System, Ine. hi

Washington, D. C.

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"SUPREME COURT OF THE UNITED STATES |

. Opratice Tena, 1941

‘COLUMBIA Broanc ASTING Sy: STEM, INc.,

Apps

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SRERPE Jae Get eee eee No. 1026

tHe UNITED. STATES OF AMERICA; FEDERAL

COMMUNICATIONS COMMISSION and MuTUAL

-BroapcastinG SysTEM, ING, ? 2

ears, “Respondents.

AFFIDAVIT IN SUPPORT OF MOTION => *

United States of Atnerica, aie -

- Southern’ District. of New York,

City; County and State of New York, ss.

. WititaM S. Riise: being ‘duly sworn, Geposts -

says: |

I ae Septem ber 26, 1928 have been, the

President of mbia Papedeneaat System, Inc, the ap-

eae herein.

. This is an appeal froma district court decree dismissing,

fér want of jurisdiction. over the subject matter,.a suit by

appellant to set aside an order of respondent, Federal Com-

munications C ommission (hereinafter called the “Commis- :

sion”) promulgating regulations applicable to radio stations

engaged in chain or networ® broadcasting. For a descrip-

tion of the. suit 1 t respectfully refer the Court to the State-

ment in appellant’ s brief on tiis appeal.

~- teeematiarnamerad hat ANNO are At are oli a wes a) a en -

ee

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Pathe

The cbleis ot ‘appellant imate motion, in support

of which this affidavit is made, is to restrain enforcement

of the regulations: for an appropriate period after the ex-

piration of a temporary restraining order which was made _.

by the District Court following the. decision below and prior

to the allowance of thé appeal (R. 482). Although’ appel-

lant had moved in the District Court for restraint of en- *

; forcement pending the hearing” and determination of the e-

appeal (R. 473), thie. District Court restrained enforce- J

~ ment only until May, 1, 1942 or the argument ‘of the appeal,

whichever is~ea cr (R-4825, saying, in its per curiam

- opinion, “For ia St oy stay, the plaintiffs must apply _

__ to the Supreme no ¥ \itself, selfitpr, te to‘ the- Circuit Justice”

-@ R. 481). , Al.

In “holding that appellant was chititled to a das, the .

District Courts in its per curiam opinion, sdid .(R. 480-

sack oe ae

e . >} “* 4 : .

“The Commission is of course right in saying

_ that we have decided that the plaintiffs have ade-

quate protection outside at these actions and in spite.

of their dismissal; nevertheless, in deciding whether

a stay should be granted pending an appeal, we must

assume that we may be mistaken, certainly a not

unréasonable assunfption, in view. of Judge Bright's

‘disserit. If so, the plaintiffs will ndt be adequately

‘protected, and indeed they may not be anyway if

4

the Commission does not withhold enforcemient in |

determined in a ‘renewal prodeeding:: Considering

on the one hand that. if the regulations are enforeed

the networks will be obliged to revise their whole

"plan ef operatibns to their great disadvantage, and

on the other that the Commission itself gave no evi-

all cases until the issues roe once and for all

dence before these actions were commenced that the ©

>‘ proposed ca Bs were of such —— pr *ssing

6

: importance that a tovtet delay of two incnthé wiil

be a serious injury to the public, it seems to us that”

we should use Gur discretion in the plainfiffs’ favor

to stay enforcement of the vent om until they

can argue. their appeal. For these reasons we will

grant such a stay until the argument of the appeal

before. t

1942, whichever comes first.”

. he firidings of fact and conclusion of law upon hich the

action.

(R. 481-482) : net ee

of the Digtrict Court was based, were as follows

.

4

“EUENDINGS OF Fact

o “

>

I. T hat if the Féderal Communications Com-

‘mission, pending the plaintiff's appeal to ‘the Supreme.

Court from the judgment of this court dismissing

the complaint herein, enforces its “regulations, me .,

' sued in their amended. form on October 11, 1941,

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‘and if these are invalid; and if this court—contrary |

to its said judgment-——has in fact jurisdiction over.

the: cause :of action stated im the complaint; the

plaintiff wili, be seriously and irreparably damaged.

oe That the .said Commission has not declared

that it will not ‘enforce such regulations pending the

appeal, except as to a® ‘station itself seeking te test”

their * V alidity. ‘

2

| ing to the said regulations and especially in its con-

°

g

sideration of the evidence. taken thereon, did not in-

_dicate that their immediate enforcement was.a matter:

of urgent public interest.

e IV.-That a further ‘delay i in » such: enforcement

of-two months or until tle appeal can be argued,

whichever is earlier, will not, so far as can be ascer-

tained, involve injury to. the public commensurate

ea

e Supreme Court or the first day of may. ve

TIL. That ine Comamistion, in the hearings naa

with the injury to the plaintiff arising - from einforce-

_ment,-if the conditions mentioned i in the First Find-

ing exist.

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~ CONCLUSION OF r/Law

ne the plaintiff i is entitled to a stay pending its

appeal to the Supreme Court; said stay being an

order. forbidding the Federal” Communications Com-

mission from enforcing the regulations above men=

_ tioned before. the argument of the appeal to the —

- Supreme Court, or the first day of 7 1942, |

whichever is earlier.”

Facts amply supporting these findings and conclusion as

‘to , appellate s right to a stay pending’ the.appeal are fully’

set forth in my affidavits sworn to February 25, 1942

~ (R. 474-478) and October 30, 1941 (R., 223, 249-252) artd |

the affidavits of Herbert V. Akerberg sworn to October,

29, 1941 (R: 260-285) and January 5, 1942 (R. 306; 308- ,

_ 316), to which I respectfully refer the Court in lieu of a

_ repetition of such facts in this affidavit. . The. danger of

irreparable injury to Columbia if enforcement of the regu- -

‘ations is not, restrained is as great now as it was w hen

those affidavits were made. :

Following the allow ance of the appeal the Commission

and the United States were requested to enter into a stipula- .

_tion which would ‘suspend the order promulgating the regu-

lations until ten days after the determination of this appeal.

[f.

They refused to enter into‘such a stipulation but did enter

into a stipulation dated April 27, 1942, a copy of which is,

annexed hereto as. Exhibit A, to the effect that the Com-:

‘mission would suspend and would take rio steps for enforce-

ment or application of the order, with respect to any failure

_ by any radio station to comply therewith, until the last .

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_ decision day of tlie October T erm, 1941, or the determina- . :

tion of this appeal,. whichever is earlier: _

». The present motion was made necessary by the failure 3

oi either the Distriet Court’ s teniporary restraining order

or the ‘stipulation’ referred to above to provide appellant

with protection from enforcement of, the regulations for

~ the period from the end of the present term until the deci-

‘sion of this appeal, if- the af es is not decided at sAis- term,

or for a: reasonable period after the decision of. the appeal,

ow hether it be a reversal or an aftirmance, to permit appel-

lant to seek appropriate temporary restraint 6f enforce-

ment pending “further pursuit of . permanent relief or to’

take steps to minimize the injury which would result from .

the taking. effect of -the regulations.

_I respectfully submit that,: for ‘the: following reasons,

extension O{\the restraint: upon enforcement of the regula-

tions for days after the filing in the District Court of

the mandate upon this Court’s decision on the’ appeal would

be: appfopriate in this case, regardless: of whether the deci-

-sion below is reversed or affirmed f Board of T rade of thé

City of Chicago v. Clyne, 260 U. S. 704, 262 U. S. 1).

If the decision below is rev doied, it is appellant’ s inten- -

tion promptly to seek from the District, C ourt a determina-

tion of appellant's motion for preliminary. injunction, A-

-few days after the commencement.of this suit, appellant

: having moved in the District Court for a temporary re-

straining, ‘order and a preliminary injunction, (R. 221-222),

the Conamission stipulated that; pending the hearing by.

the District Court on the motion for preliminary injunction |

and the cross motion to dismiss the complaint or in the

alternative for summary judgment and the determination

of the motion for preliminary injunction, the Commission

was suspending and would take no steps for enforcement

or application of the order promulgating the regulations,

‘

tod 5 °

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with respect to any failure by any radioStation to comply °

with such order (R. 454-455), and by a letter dated Novem-. ©

Lor 10, 1941 counsel for the Commission, writing to ap--

pellant’s attorney to expres§ the understanding of the par-

ties with respect to matters.not covered in this stipulation,

said (R. 478-479)

“In the event that the Court, in os proceédings :

denies plaintiff's motion for a preliminary injunc-

_. ston will take no steps to enforce or apply ‘its said

\ -° Order for a period of not less than ten days after

te service of an order of the Court with notice of entry.

- so disposing, of plaintiff's motion.”

=

%

It is not clear whether, in view of the District. Court’s

refusal to pass upon the motion for preliminary injunction

(R. 463), the Commission will. recoghize that the stipula-

‘tion has any remaining force, and it may be necessary for

appeilant to apply to the District Court for a temporary

restraining order pending determ*ation of the motion.” '

_.,. Restraint upon enforcement of the regulations should be

extended to permit appellant) to-do this. oer

) If the decision. bélow is albwined, it will-be necessary for

appellant promptly to pursue such remedy as may be avail-

able to it or tu make such. arrangements with its 115 affili-.

ated, stations as would. salvage the surviving benefits of

_ hetwork affiliation’and thus ‘avoid the complete disintegra-

tion of appellant’s network which would otherwise follow

dismissal. of the-present suit. Restraint upon enforcement

- ,of the regulations should be extended to permit oo

to do this.

c

_stion, defendant Federal C ommunications Commis- -

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Maintenance of the status quo until ten days. after-the -

filing in the District Court of the mandate upon this Court’s

decision on this appeal wil! not adversely affect the public

”

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! Stubscribed and ‘nation to before. me

Beier As

interest. ‘As the District Court pointed out in its per

curiam opinion and its findings on appellant’s motion for a

temporary restraining order (R. 480, 481), the Commis-

siop has given no. indication that immiediate’ enforcement

of the regulations i is a matter of tirgent public interest. |

W HEREFORE eutblaas prays that: this. Court | enter an

order granting the relief set forth in the accompanying

motion. .

.

eae ag tree _WILLIAM.S. PALEY:

eee

this 27th day of April, 1942.

Cuartes S. WHITMAN, JR.

' CHARLES S. Warman, me ;

Atto and Counsellor-at-Law mere a REI

W. Y. Co. Cik’s No. 10 Reg. No. 4W216 wae

"Kings Co. Clk’s No. 15 Reg. No. A4007

Bronx Co. Clk’s No. 3 Reg: No. W44-6 hae 2 ‘

Commission expires abies att 1944 .

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BROADCASTING System, INC.,

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at

EXHIBIT A a

_SUPREME COURT OF THE UNITED STATES

OcTOBER TERM, 1941

<3

Pag Broan ASTING SysTEeM, Exc, ae

ATR Wiha: Appellant, Ve

; , ws. ° 2 A

THe UNITED STATES OF AMERICA, Feperat ) No. 1026

a

COMMUNICATIONS COM MISSION and Mutvat | 7.

Respondents. |

a iit eens STIPULATION

_ Iv Is HEREBY STIPULATED by and between all the parties

. by their reSpective counsel that:

Until the last decision day of the-October, 1941 term

‘of the Supreme Cour of the United States or until the

determination of the pending appeal in the above entitled

case by said Court, whichever is earlier, the respondent Fed-

eral Communications Commission is suspending, and will.

take no steps for enforcement or appfication of, the Com-

mission’s Order of May 2, 1941, in Docket No. 5060, as.

last amended October 11, 1941 eWith respect to any failure

by any radio station to comply with such order.

Dated, April fl 1942.

: @warLes Fany ,

Solicitor Ge neral of the United. States pa

TELForpD T AYLOR

:

General Counsel for Federal Communications

Commission bad

Cuartes E. HuGueEs, Jr.

Counsel for C olumbia Broadcasting System,

Inc. a . ff

| Louis G. CALDWELL‘

C ounsel for Mutual sfeihsuarier i, System, eg

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TORS

Columbia hate ‘eeu, Ine.,

SUPREME COURT OF THE UNITED STATES

No. 1026. —OcToBER. TERM, 1941.

Ys 4p pellant, ; a _| Appeal from the District

vs. -

; Court of the United

The United States of America, Fea-\ States for the Southern

eral Communications Conimission

d . ey > Di N

and Mutual Broadcasting System, istrict of New York.

Ine?

* [June 1, 1942.] *

Mr. Chief Justice Stone delivered the opinion of the Court.

, The Federal Communications Commission by its order of, May »

2, 1941, as amended by its order of October 11, 1941, promulgated

regulations which purport to require the Commission, to refuse

to ‘grant a license to any broadcasting station which enters

into certain defined types of contract with any broadcasting net- —

work organization. These regulations, it is alleged, affect ad- -

versely appellant’s contractual relations with broadcasting sta-

tions and impair its ability to earry on its business in maintaining

and operating its nationwide broadcasting network. ~The regu-

lations as amended on October 11, 1941, together with a supple-

mental ‘‘minute’’ promulgated by the Commission on October 31,

1941, are set forth,at the end of this’ opinion. The question for

our decision is whether appellant is entitled to secire a icial

review of the order by a suit brought under § 402(a) ‘of the Com-

‘munications Act of 1934, 48 Sfat. 1093, 47 U. S. C. § 402ta) /and

the Urgent Deficiencies Act, 38 Stat. 219, 28 U. S. C. § 47.

Pursuant to §402(a) appe}lant brought the present suit against

. the United States in the Southern District of New York, to enjoin |

enforcement of the Commission’s order ais contrary to the public

interést and beyond the Commissjon’s statugory authority, and on_

the, further ground, if the order be deemed within that authority, | ‘

: that the” statute is an unconstitutional delegation of legislative

~

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~~

2 Columbia Broadcasting System, Inc. vs. Cnited States et al.

—“pewer by Congress in violation of Article I, §1 of the. Constitu-

tion, and operates to deprive-appellant of property without due

’ process of law in violation of the Fifth Amendment. Tite case

was heard by a court of three judges, which permitted thé Com-

mission and the Mutual Brgadcasting Company to intervene as

defendants. It granted appellees’ metion to dismiss the eomi-

plaint, for want of jurisdiction, —- F. Supp —, “and stayed the

operation of the Commission’ $ order pending direct appeal to this

Court. : °

In 1938 the; Communications Commission authorized an ‘inves- -

. tigation &t6 determine what special regulations applicable to radio

stations engaged in chain .or “other broadcasting are required in

_ the public interest, convenience, or necessity’. Extensive hearings

were held by a committee consisting of three members of the Com-

“Mission, at whose request the national petworks, including appel- —

lant, intervened. _In June, 1940, the committee made a report, on

the basis of which. briefs were filed and oral argument .was pre-

seyted before the full Commission by the three national networks

other ititerested parties. In May, 1941, the Commission issued

' ‘* Report on Chain Broadeasting’’ and- ordered the adoption of

the regulationgwhich, in their ametided form, the went, ¢ of -

the present Biron.

The relevant“facts °tated in the biil of complaint are as follows :

Appellant or it? predecessor has been engaged in the business_of

nationwide network or chain broadcasting, since 1927. It has a

‘ large amount ¢f physical property used in the business and has ;

_ built up a val ablé goodwill. For its broadcasts it maintains a staff

of employees/and expends large amounts for musicians and broad-

casting performers. It has commitments by long-term contracts

_ aggregating more than $4,000,000 for broadcasting expenditures,

' jneluding those for the use of land and buildings and for the

furnishing of news and broadcasting programs in the next few

years. Appellant’ s total property” devoted to its broadcasting

business exceeds $18,000,000 in value: its earnings from the net-

work exceeded $3,000,000 in botli 1939 and 1940. :

Chain broadcasting is the means by which radio programs are

made available to all or a large. part of the nationwide radio

audience. It is defined by the Communications Act, 47 U. $.'C..

§ 153(p), as the ‘‘simultaneous broadcasting of an identical pto-

gram by tio or more connécted stations’. The ¢hain broadcaster

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paaers bendable System, Ine, vs. United States ef al. a

prepares: radio programs, for which it engages performers in ‘ad-

vance, and simultaneously broadcasts them over a large number’ of

radio stations to. which the programs are transmitted from some

central point of origination by wire telephone lines leased by the -

broadcaster, here the appellant. The Programs, which are“pre-

pated well in advance of the broadcast and given by persons em-

ployed for the purpose by appellant, are of two classés—commer-

cial programs ‘sponsored and paid for by advertisers, and sustain-

ing programs furnished by appellant and not pus for by. any i

advertiser.

‘Appellant’ 8 netyrork comprises 123 stations in 122 cities in

the United States; It is so operated as to enable ninety per

-eent of the sradio Gudience of the United States to listen simul--

taneously to programs provided by appellant and broadcasted —

over these stations. Appellant owns and operates seven of the

_-§tations and leases an eighth, all licensed by the Commission. With

the remaining 115 ‘stations it enters into individual contracts

usually for periods of -five years, terminable in dome instances —

by appellant on twelve months’ notice. By these contracts ap-

pellant undertakes to furnish each station with an average -

of at‘least sixty hours per week - of . network sustaining and

sponsored programs. The ‘sustaining programs are: furnished *,

without charge, the station being free to use them or not as

it chooses. Appellant undertakes to the. station with

_all_commereiat—programs which the sponsor requests the sta- °

tion to broadcast and to pay the station a specified’, hourly rate,

for the use of its facilities in broadcasting such programs. Ap-

‘ pellant agrees not to furnish its programs to other stations in the

same city; the affiliated station, with exceptions not now mate-—

rial, agrees not to broadcast the ‘program of any other network.

Of critical importance in tke present litigation is the stipulation

of the affiliated station that it will, upon not’less than twenty-

‘ eight days’ noti¢e from appellant, broadcast the sponsored or.com-

mercial program furnished to it ‘by appellant for .at Teast fifty

““eonverted”’ hours , sevenity-nine regular clock hours) |

* per week. °

These provisions ad appellant’s contracts are . ailegel to ie

indispensable to thé maintenance and efficient operation of its

_hetyork and to the ‘existence of a strong and efficient network

_ broadcasting system, and necessary to enable” appéilant- to com-

a

4 Columbia Broadcastiph System, Inc. v8. United States et al.

pete with other advertising - media. On May 2, 1941 the Com-

‘mission issued its order which,’ as amended by its order of

October 11, 1941, promulgated the ‘‘Chain Broadcasting Regu-

lations’’ of which’ appellant coinplains, and®which the Com-

mission characterized in its Report as ‘‘the expressiof? of the —

general policy we will follow in exercising our,licensing power’’.?

The regulations provide that no license shall be granted to a broad-

cast station having contracts with a rietwork organization, contain-

- ing any of several provisions which are characteristic of appellant’s . A

contracts with its affiliates. ‘These include provisions by which the

‘station is prevented from broadcasting the programs of any

other network organization (3.101); or which prevent another

station serving substantially the same area from broadcasting’

the network programs not taken by the station applying for license,

ér prevent another station serving a substantially different prea

from broadcasting any program of the network. organization =

_ (3.102) ; or by which the station contracts for affiliation with the —

network for a period longer than two years (3. 103); or by which ~—,

+ the station ‘options for‘network programs any time subject to call

on less than 56 days’ notice or more time than a total of-three hours’”’

within.each of four ape ified segments of the broadcast day. the

regulation declaring ** options may rt be exclusive. as against ©

other network ‘aeplbailiids and may not prevent or hirider the

‘station from optioning or selling any or all of the time covered by.

the option; or other time, to other network organizations”’ -(3.104) ;

oo —>.- sen

or which’ prevent the station (a) from rejecting network programs 2

which the station reasonably believes to be unsatisfactory or un- .

suitable or (b) from substituting for the network program a pro- {

gram of outstanding, local or national importanee (3.105) .%

1 The Comtaission in its Report says, p. Si:

‘*We believe that the announcement of/the principles we intend t apply in ;

exercising our anne power wiil expedite. business and further. the ends of

justice. o ’

‘ Announcements of poliey may take. the form of regulations cr of general

public statements. In either case, the applicant's right to a hearing on the

question whether he does in fact propose to operate in the public interest, is

fully prese rved. The regulations we are adopting are nothing more than. the ° .

expression of the general policy we will- follow in exercising our licensing » ~~

power. - The formulation of a regulation in general terms is an important - ie

aid to consistency and predictabiligy and does het prejudice any rights of the

applicant. Good administrative practice sould seem: to demand -that auch a "

statement of policy or. rules and regulations be promulgated wherever mf-

ficient information is available upon | which _they may be based.’

n= O00 ~

Se +c,

2

Columbia Broade asting System, Inc. ys. United States et al, “

After making its order’ of May - 1941, the Commission deferred

its effective date until further pa “oe By jts order of October 11, ©

“1941, the Commission fixed the effective date-as November 15,1941, . =.

and directed ‘‘that the effective date of Regulation 3.106 with. re-.

spect to any stgtion may he extended from time to time in order

to permi# the orderly disposition of properties’’, and -‘‘that the

effective date. of Regulation 3.107 shall ‘be suspended indefinitely

aml any further order of theeCommission placing said Reg ation.

3.107 in wetfect shalj prov ide for not less than six months’ notice

‘ and for ‘further extension of the effective date from nae to time

_ in order to permit the orderiy disposition of properties.”’

° The bill of complaint also alleges that the purpose and effect

of the regulations are to prohibit station licensees from having

‘agreements of the kind which appellant has with its affiliates ;

that prior to the order of May 2, 1941, it was the practice of the

Commission to renew the livenses of stations annually and that thé

licensed stations have had a reasonaltle expectancy of the annual

renewal of their licensés; that 115 licensed stations have such con-

tracts with appeKant expiring at various times between the orig-

, inal effective daté/of the regulations and December 31, 1947, it

is alleged that @when their current, licenses expife, at the latest,

and perhaps earlier through the: revocation of existing licenses, .

such stations ffce the loss of their licenses if they perform or con- -

tinue in force or rene any existing contracts containing the ee

scribed provisions.

_ The bill alleges that since the stations ante the lass of their licenses,

as a result of the regulations, they will not negotiate for or renew ~

affiliation contracts containing such provisiers. wf because they

fear the loss of their licenses the stations have threatened to cancel

and repudiate their affiliation contracts, and many ‘have notified

-appellant that they will net be bound by their contracts after the

regulations become effective. .As a consequence appellant’s abili

to conduet its business and malatans its public broadcasting se

_

_ of appellant’ s business more costly, reduce its earnings and

_.’ « its property and busin ess valuable. — | :

The bill of complsint was filed October 30, 1941. The following

* © day the Commission promulgated a‘ supplementai ‘‘minute’’ ‘set-

ting up a procedure by which the validity of the regulations might

bé tested upon application for-a licepse by an individual licensee.

ntodne, y Prd

+ Al Gat oe, =~ ‘ -. g

| P an “2 . . , >

ow

ec + ® ‘ ; ~

. § @ ;

6 Columbia Broadcasting System, Ine. vs. United Stgtes et al.

The minute declared that if a station wished to chalines: the

regulations the Commission would grant a temporary extension -

of its license until there had been a final court determina-

tion of the issues. In the event of such-litigation, and if the validity

of the regulations were sustained,‘‘‘the Commission will neverthe-

_less)grant a regular license to the licengee, otherwise entitled thereto,

o has unsuccessfully litigated, that issue, if the licensee thereupon —

- eonforms to the decision’’

An affidavit subsequently submitted by inate in support of

its motion for a temporary injunction states that since the Com- -

mission’s minute of October 31st, appellant has continued to re-

ceiye teres that its affiliates will eancel and repudiate their

contracts and refuse to renew them, and hag received no indica-_ iif

tion that the minute has or will have .the effect of infducing sta- .

‘tions to assume the burden of testing the validity of the regula- ©

tions. Attached to the affidavit are letters from five affiliates;

«. written after October 31st, indicating their intention not to be -

bound by the contracts. The affidavit also states appellant’s’

belief that it~ would have received more such letters had it not

been for its circulation of information concerning the penilency

of this suit.

Accepting Popiccstion of the ain as truegs for preserit

purposes we , it is evident that application by the Commission

' of. its regulations in aceurdance with their terms would disrupt

nla ’s broadcasting system and seriously disorganize its busi-

-As the bill alleges, station licenses have been renewable by

the ve: Aababeetin annually,’ whereas appellant’s contracts are for _

five year periods and many of them will survive the expiration of |

the existing licenses to the affiliated stations. Under Regulations

3.101, 3.102, 3.103 and 3.104, each affiliate’ must repudiate his

contreet or be denied the renewal of his license. In either case this

would deprive appellant of the station’s participation in its net-

work, for which ifs contracts eall.

Regulation 3.104 not only requires all options by appellant to

be exercised on 56 days’ rather than 28 days’ notice as at present,

but. provides that no option time is exclusive of other networks,

and thus allows to appellant no option time within which it can

_ command the use of affiliated stations for any program for broad-

easting “on a national scale. These sections together thus operate

1On October 11, 1941, the Commiaion amended Regulation 3.36 to aie

_ the normal Honnse pacipd two yearn ;

A

. ae ;

Columbia Broadcasting ‘System, Inc. vs, United States et al. 7

to break down the network enterprise in which appellant and ‘its

» affiliates are by tMeir contracts cooperating, and’ to substitute a

system in .which-every station is d¥ailable to every network on &

‘‘first come first served basis’’. .

The Commission concedes by-its brief that as provided by §312(a)

‘‘ Any station license may be revoked ~ . . because of conditions

revealed by such statements of fact as may be required [of a licen-

_ ° see] from time tp time which would warrant the Commission .in

refusing to grant & license on an original application’’. Conse-

quently the regulations by, their terms, read in conjunction with

§ 312(a), expose licensees, who, renew their affiliation contracts, to

revocation proceedings by the Commission whenever upon a state-

ment which the Commission may require it appears that the licensee

~ has entered ‘into an eens contract which the regulations pro-

" seribe. :

Bee proceeding to set aside an order of the Gouseslesion under

§ 402(a) and the Urgent Deficiencies Act is a ‘plenary suit in

equity. Hence. the questions raised by the motion to dismiss are

whether.the Commission’s order is an ‘‘order’’, review of which is

authorized by § 402(a): of the Act, and if s0 whether the bill

states a cause of action in equity. The suitegannot be maintained

unless both questions are anawered‘in the affirmative.

_ Section 402(a) makes applicable the provisions of the Ur-

gent Deficiencies Act to ‘‘suits.to enforce, enjoin, set aside, .

annul, or suspend any order of the Commission’’- except orders

‘‘granting or refusing an application for a construction permit

for a radio station, or for a radio station license, or for renewal

of an existing radio station license, or for modification of an exist-

ing radio station license, or suspending a radio operator’s license”’.>

' Reyiew of the orders excepted from § 402(a}) is by appéal to the

- Court of Appeals of the District of Columbia under the provisions

of §402(b). See Scripps-Howard Radio, Inc. v. Federal Communi-

cations Comm’n, 315 U. S. —,: Since the Commission’s order

neither grants, denies nor modifies any license, any review in ad- .

vance or independently of an applicatian for a station license must

be under § 402(a), and then_only if the Commission’s order pro-

mulgating the regulations is an ‘‘order’’ within the meaning of

this' section. The particular label placed upon it by the Commis--

sion is not necessarily conclusive, for it is the substance of what

the Commissien has purported to do and has done which is de-

s

8 Cajumbia Broadcasting System, Inc. vs. United States et al. ,

cisive. ‘ Powell v. United Six’-s, 300 U. S. 276, 284-85; A. ‘F. of 1.

v. Lubor Board, 308 U.S. 401, 408. F

‘The Commission’s investigation of the contractual: relations ho

tween the networks and the stations, which resulted in the order

now under attack, was for the stated purpose of prescribing . regu-

_lations of su¢h reJationships. The order authorizing the investi-

gation recited that the proceeding was taken under § 303(i) of the

Act, which gives tlle Commission “authority to make special

repens applicable to radio stations engaged in chain broad™ —

casting”. Since the Commission is not-4n terms given authority

to regulate contractual relations between the stations and the

networks, regulation ‘of them éould he accomplished only by ‘regu-

lating licensed radio stations whith participate in chain broad-

casting. It was by regulations in terms applicable to such stations.

that the Commission sought to control their contractual relation-

ships with’ the networks. ans .

The order is thus in’ its genesis and on its face, and in its” prac-

c¢

tical operation, an order promulgating regulations which operate ,

to control such contfactual relationships, and it was adopted by

the Commission in the avowed exercise of its rule-making: power.

Such regulations which affeet or determine rights generally, even

though not directed ‘to any particular person or corporation, when

lawfully promulgated by the Interstate Commerce‘ Commission,

have the force of law and are orders reviewable under the Urgent

Deficiericies Act. Assigned Car Cases, 274 U.S. 564; U nited States

v. B.d& OF R. Co., 293 U.S. 454. And regulations of like chatac-

ter, by which 1 the Communications. Commission has prescribed _

generally the records and accounts to Be ‘kept by telephone com-

panies subject to its’ jurisdiction, are similarly reviewable under we

§$402(a). A. T. & TF. .Co, v.. United States, 299 U.S. 232.

_ The regulations here prescribe rules which govern the contractual

relationships between the Stations and the networks. If the appli-

cant. for -a license has enteréd into an affiliation contract, the

regulations require the Commission tg reject his application. If

a licensee renews his contract, the regulations, with the sanction

of § 312(a), authorize the Commissigd to cancel his license. In

fk proceeding for reyocation or canceltation of a license, the de-

‘eisive question is whether the station, by entering into a contract,

“has forfeited its right to a license as the regulations prescribe. It

is the signing of the coniract which, by. virtue of the regulations

alone, has legal consequences to the stations and to appellant,

a

Columbia Broadcasting System, Ine. vs. United States et al. 9

The regtilations are not any the. less reviewable because their’

promulgation did not operate of their own force to deny or cancel

a license. It is eno that failure to comply with them penalizes

licensees, and appellant, with whom they contract. If an adminis-

trative order has that. effect it is reviewable and it does not cease to

. be so merely because it is not certain whethér the Commission will

institute proceedings to enforce the penalty incurred urider its

regulations for non-compliance. Assigned Car Cases, supra; "A; T.

- & T. Co. vy. United States, supra. ;

. The regulations are rules which in, proceedings before the Com-

_ mission require it to reject and authorize it to cancel licenses on

the grounds specified in the regulations without more. If the regu-

‘lations:are valid they alter the status of appellant’s contracts and

~ thus determine their validity in advance of such proceedings. By

‘striking them “down by a @ptermination proclaimed in - advance

that licenses shall be cel or refused because of a preyious -

failure to comply with the tegulations, they impose a penalty

and sanction for noneompliance far more drastic than the fines.

} customarily inflicted for breach of reviewable administrative

orders: |

their sanctions with respect to particular indiv iduals.” ‘Unlike an

administrative order or a court judgment adjudicating the Tights

of individuals; which. is binding only on the parties to-the par-

tieular proceeding, a valid exercise of the rule- making power 18

addressed to and sets atstandard of conduct for'all te whom. its

terms apply. It operates as such in advance of the imposition of

sanctions upon any particular, individual. -It is common experience

that men conform their conduct to régulations by governmental

authority so as to avoid the unpleasant legal consequences which

failure to conform entails. And in this case if*is alleged without

contradiction that. numerous affiliated stations have conformed to

Most rules of conduct having the force of law are not self-_

executing but require judicial or administrative action to impose, °

=

.

the regulations.to avoid loss of their lieénses with consequefit in-'

jury to appellant. ae

Such regulations have the force of law before their sanctions are |

invoked as well as after. When as here they are promulgated by

order of the Commission and the ’ expected, conformity to them

causés injury cognizable by a céurt of equity, they are appro- .

priately the subject of attack under the provisions of § 402(a) and

the Urgent Deficiencies Act. A. T. & T. Co. v. United; States,

>

¢

é

$ fe “A

‘10. Columbia Broadcasting System, Inc. vs. United States ét al.” i

supra; Rochester Tel. Corp. v. United States, 307 U. S..125; Inter-

state Commerce Commission v. Goodrich Transit Co,, 224 U. S, 194;

Kansas City S. Ry. v. United States, 231 U. 8. 423; Assigned Car

Cases, supra; Chicago R, I. & P. Ry. Co. v. United States, 284

U.S. 80; United States v. B. & 0. R. Co., supra. .

It is no answer'to say that the Tegulations are addressed only to

the Commission and merely prohibit it from granting—and author-.

ize it to eancel—licenses ‘in the case of all ‘stations entering into

“such contracts, and that accordingly all stations are left free to

enter into: contracts or not as they vhoose. ‘They are free only in.

the sense that all those who do not choose to conform to. regulations

which may be determined to be lawful are free by their choice to

accept the legal consequences of their acts. Failure to comply P

with the regulations aes sich consequences to the station owner

and to appellant. 6 are the Teas of the affiliated. stations’

licenses if they athens to their contracts, and disruption of ap-

pellant’s’ network through the declared unlawfuiness of the con-

‘tracts, if the regulations are valid. ; :

The purposes sought to be accomplished by § 402(a) | and the

Urgent Deficiencies Act would be defeated if a suitor were unable to

resort to them to avoid. ‘reasonably anticipated ‘irreparable jnjury

_ resulting from such legal eo uences of the Commission’s order,

merely: because the Commissi0n ‘as-yet has nefther refused to renew

a license, as the regulations require, nor ‘eancelied, a license;:as the

regulations permit. Such -an argument addresstd to ‘the form

rather than the substance of the order was rejected in Powell vy.

United States, supra; ef. A..F. of L. v. Labor Board, supra,. 408.

‘The Powell ease likewise repudiates the suggestion that merely

because the order is no? in terms addressed to those whose rights |

any Smvcted, Chey rt seek its/review. See also Western Pacific

vo South. Pac. Co., 984 U.S. af; hy es jiesirmarec te cei tin Co.

v. United States, 285 U. 8! 382.

The order here is not..one, a8 the Government argues and as

, court: below seemed to think, where the’ complainant’s rights

affeeted only on the contingency of future ‘administrative action

as in United States v. Los Angeles R\R., 273 U. 8.299; ef. Roch-

ester Telephone Corp. v. United State: ra, 130. As the Court

declared in the Los Angeles ‘edse, a ‘810, reviewable orders °

aré ‘‘an exercise either of the quasi-judicial function of -deter-

mining coutroversics or of the defevated ‘function of ‘rate mak-

» .

8 . . K

ed

_ Columbia Broadrasting System, Ine. vs. United States-et al. 11

‘*s@-called order’’ in that case did not “dete e any-right or ob-

ligation” or change the plaintiff’s ‘existing or future status or

condition’’, and that it was ‘‘merely ‘the formal record of con-

_ clusions reached after a study of data. collected in the course of

‘ing and rule making’’. And the Court — ‘out -that the

rm

extensive research conducted by the Commission” and “is the ©

exercise solely of the function of investigation.’’

~ Here the Commission exercised its rule-making power by adopt-—

ing. regulations whose operation ig not made subject to future .ad-

ministrative’ determinations, Save ‘only as the Commission may be :

called on to decide incany given cise whether a station’s contract

with a network is within the regulations. © The regulations’ appli-

cability to all who are within their terms does not depend upon

future administrative action, Instead they operate to control such

“action and to determine in advance the rights of others affected os

by it. The Commission gave its own recognition that such is their

‘ ‘operation. by its successive postponements of the effective date of

the order for a period now expired, and by its suspension. of Regu-

lations 3.106 and’3.107, in order to enable the networks to dispose |

of their « ‘properties?

Of cgurse the Commission was at liberty to follow a wholly :

different procedure. Instead ‘of proclaiming general regulations.

applicable to all licenses, in advance of any specific contest over '

a license, it might have awaite d puch a contest to declare that the’

policy which these regulations embody represents its concept of

the publi¢ interest. As a matter of sound administrative prac-

tice, both the rule-making proceeding and the specifie license.

preceeding undoubtedly have much to commend them. But

Uiey are by no means the same; nor do they. necessarily give rise

to the'’same kind of judicial review. Having adopted this order

under its rule-making power, the Commission cannot, insist that”

the’ appellant be relegated to that judicial review whieh would

be exclusive if the Fulé-making power had never been exere ‘ised

‘and vonsquently had. neyer subjected appellant to the threatened

irreparable injury.

The eourt’ below assumed that if appellant h ? any equitable

gaase of action, it must’ be prosecuted in an‘ordin. v suit and not.

under the provisions of the Urgent Deficiencies Act. But ‘we think

this. mistakes both the nature of the regulations and the. phrpose

of suits under that Act, incorporated in § 402(a). Sueh’a cause

of action obviously can rise only because of the’operation of the -

° ; . 4 ’ . <=

12. Columbia Broadcasting System, Inc. vs. United States et.al.

regulations. “The regulations are the effective implement by which -

the injury complained of is wrought, and henee must be the cbject -

of the attack. ~1t is because chey are an exercise of the rule- making

power, gng Because they presently detérmine rights on the basis

of which the Comizission is required to withhold “licenses and

. authorized to candéel them, that there is an order within the mean-

ing of § 402(a) and the Urgent ‘Deficiencies Act.

The Comsission-argues that since its Report characterized the

ulations’ as announvements of policy, the order promulgating

tifem ‘is no niore subject to review than a press release ‘similarly

announcing its, policy. Undoubtedly regulations adppted in the

exercise-of the administrative Pule-making power, like laws enacted

by legislatures, e abody announcements of policy. — But. they may

bb something more,”. When, ay here, the regulations are avowedly

adupted in the. exercise of that power, couche! in terms of com-

mand and accompanied by an \annonncement of the Commission

- that the policy is on ‘which

licensing power’’, they \mpst . be taken by those entitled to rely

upen them as what they \purport)to “be—an exercise of the dele-

gated: legislafive power—whlikh, untyl amended, are controlling alike

* upon the Commission and al gifliets whose rights ntay be affected

by: the Commission’s executioif of them. The Gommissien’s con-

e. will follow in exercising our:

ee]

tention that the regulations are no more’ reviewable.than a press -

release is hardly reconcilable -with its own récognition that the

régulations afford legal basis for. cancellation of the license of a

‘station. if it renews its contract with appellant.

. Appellant’s ‘standing to-maint:wo the present suit in equity:

is unaffected by. the fact that the regulations are not directed, to

appellant and do not in terms ‘compel action by it or impose penal-

ties upon it because of its action or failure to act: 1 is ‘enough that,

‘by. setting the --*+liwe standartls for the Commission’s. action,

the regulations pufry, t to operate ty alter and Affect adversely ap-

pellant’s contractual rights and business telations with station own-

ers whose applications for liéenggs the regulations will cause to.be |

rejected and whose licenses the regulations may cause to’ be re-

‘yoked. Chicago Junction Case, 964 U. 8: 258, 266-68; Western

Pacific v. South. Pde. Cos supra; Clathorne-Annapolis Ferry Co.

v.. United States, supra; compare, in the ease of an attack upon

the’ validity of a ‘statute; Truar v. Raich, 239 U. S. 33, 38-59;

Pierce v. Society of Sisters, ‘968 V.” S. 510. : i

, | Me + le

e Columbia Broadcasting System, Inc. ¥s. United States et al. 18

What wé have said of: the allesttions of the complaint, ond of

. _ the effeet of the Commission’s order if thore ‘all ations are sus-

tained upon the trial, is enough to establish the threat of irre-

parable injury to appellant’s business and to show also that ‘the

injury can not be avoided, as the Commission suggests, by appel-

lant’s intervention in proceedings. upon applications for renewal

of licenses by its affiliates or in proceedings to cancel their licenses.

if ahd when such proceedings ‘are instituted. Appellant has suf-

ficiently alleged that the affiliates ‘are cancelling or threatening to

cancel their contracts in drder to conform to the regulatioris. It

is to avoid the irreparable injury which would result’ from such

ae cancellations of its contracts, induced by thé force. of

othe regulations, that appellant makes its attack on them now rather -.

than i in later proceedings on the’ indiv idual applications for licenses .

in those cases, if any, in’which the stations are willing to seek

licenses without complying with the prerequisites laid down by

. the regulations.: . =

The issues in such: a plbesciing are not necessarily the same

as the issues here. Interyention in it .would affprd appellant no-

‘assurance either of an adjudication of appellant’s contentions or

that the action, of other stations. would -be governed by it. More-

. over, if the Commission's Rader is as we hold a reviewable order,

appellant is free to seek review under §402(a). It is not there-

by, as’ the court below seemedsto. think, improperly substituting a-

different procedure and court for. that which Congress lias pre-

‘seribed for the trial of like issues so far as they may be raised on

review of.an order denying a license. Such issues mfy likewise ,

be inyolved in a proceeding, upon the Commission’s own motion,

for modification or cancellation of a license, which concededly is ©

reviewable under §402(a). See Scripps-Howard Radio, Inc.,.v.

Federal Communications Commission, supra, But review of. the

order by a liceftseé in such a proceeding afford no adequate

remedy. If ever instituted, which is uncertain, it would come too

late to save appellant. from the injury wrought by the outlawry

of, its contracts. . Eat ehh

-. Nor does the Commission’s minute, filed after the present suit

was broughf, afford an adequate basis for requiring appellant to

seek relief by intervention in a proceeding on application for a

license reviewable under § 402(b).. In that event the minute would

not operate to broaden the issues jnvolved in the renewal applica-—

tion. Nor would it afford a basis for restraining. enforefment

e*

ae fol erp oy

* fe

‘

14 Columbia Broadcdsting System, Inc. vs. United States et al.

of the regulations as.to other affiliated’ stations, pending adjudica- .

tion of the validity of the regulations. Without full exploration .

of the subject, such as can be had only at the trial, we cannot say

that the minute will afford a sufficient inducement to persuade

: the affiliated stations to cease cancellations and assume the initiative |

in litigatgng the validity of, the regulations and of the contracts. .

which they undertake to condemn. ‘The affidavit filed ‘in the eourt

below on the application for a stay is to the contrary. And in any |

case we are of the opinion that there are-no equitable principles by

which the right of appellant, upon the showing made by its eom-

plaint, ‘and affidavit, to test the order gunder § 402(a) can jastly be

suspended: to await actjon which the station owners may or may

not take in assuming the burden of challenging the regulations.

We need. not stop to discuss here the great variety of admin-—

istrative rnlings which, unlike this one, are not reviewable—

either ‘because they do not agjudicate rights or declare them legis-

-latively, or because there are adeqyate administrative remedies

which must be pursued before resorting to judicial remedies, or

heecanse there is no occasiqn to resort to equitable remedies. But

we should not for that reason fail to discriminate between them

and this case in Which, because of its peculiar cirenmstances, all

the elements pyrequisite to judicial review are present. The .

ultimate test of réviewability is not to be found in,an overrefined

. technique, but in the need of the review to protect from the irre-

parable injury threatened in the exceptional ease by adminis-

trative rulings which attach legal consequences to action taken

in advance of other hearings and adjudications that may follow,

the results of which the regulations purport. to control. mn

We conclude that the Commission’s promulgation of' the regu-

lations ts an order reviewable under § 402(a) of the Act, and that

the bill of complaint states a cause of actior. in equity. The stay

now in effect will be continued, on terms to be settled by the court

below. |

Reversed.

‘Mr; Tibtice BLack took no pari-in the consideration or decision

of this case.

. ‘ ie

i cee eel ew ne Jas

»

J

4

Columbia Broadcasting Systein, Inc. vs. United States et al. 15 _

ORDER OF MAY 3, 1941, AS AMENDED OCTOBER 11, 1941

New, Ra it is hereby prdered, That a following regula- —

ag be and they are hereby adopted ;

* Sec. 3.101. Ex lusive affiliation of station.—No license shall be

granted to a staftdard browideast station having any contract, ar-

oe ent, or. understanding, express or implied, witha network

anization under which the station is prevented or hindered

from, ot penalized for, broadeasting. the programs of any other

net work | orgariization.

Sec. 4.102. Territorial erclusivity:—No license shall be grafted

. to a standard broadcast station having any contract, arrange-

ment, of understanding, express or implied, with a network organi-

zation which prevents or hinders another station serving substan-

tially the same area from broadcasting the network’s programs

not taken by the former station, or whieh prevents or hinders an-'

other station serving a substantially different area from broad-

casting any program of the network organization.. This regula-

tion shall not be constrned to prohibit any contract, arrangement,

or understanding hetween a station and -a network organization

pursuant to which the station is granted the first call in its primary

service area upon the programs of the network organization. ~

Sec. 3.103. Term of affiliatiqn. —No license shall be granted to a

standard broadcast station having any~contract, arrangement, ér

understanding, expressed or implied, with a network organization

which provides, by origina) term, provisions for renewal, or other-

wise for the affiliation of the station with the network organization

for, 4 period longer than two years: Provided, That a contract, -

ear ement, ot understanding for a period up to two years, may

tered into within 120 days prior to the commencement of

pale period.

Sec. 3.104. Option time. —No license ‘shall be granted to a stand-

ard broadcast station ‘which options for network programs any

time subject to call on less than 56 days’ notice, or more time thah

a total of three hours within each of four segments of the broad-

cast day, as hercin deserihed. The broadcast, day is divided into ,

4 segments, as follows: 8:00 a.m. to 1:00 p.m.; 1:00 p.m. to 6:00

p.m.; 6:00 p.m. to 11:00 p. m.; 1] :00 p. m. to 8:00 a. m. Such

options may not be exelusive as against other network ofganiza-

-tiens and may not prevent or hinder the station from optioning or

selling any or all of the time covered by the option, or other time.

to other network organizations.

_ See.3.105. Right to reject programs. —No license shall be granted

‘ toa standard broadcast station having any contract, arrangement, |

or understanding, express or implied, with a network organization ~

which (a), with respeet to proarame offered pursuant to an affilia-

16. Columbia Broadcasting System, Inc. vs. United States et al.

tion contract, prevents or hinders the station from rejecting or

refusing network programs which, the station reasonably believes —

to be unsatisfactory or unsuitable; or which (b), with respect to

network programs so offered or already contracted for, prevents

the station from rejecting or refusing any program which, in its

opinion, is contrary. to the public interest, cr from substituting a

program of outstanding local or nati®nal importance.

Sec™9N06. Network ownership. of stations—No license shall be

gfanted to a network organization, or to any person directly or

indirectly controlled by or undef common control with a network

~ organization, for mgre than one standard broadcast station where

one of the ‘stations covers ‘substantially the service. area of. the

other station, or for any standard broadcast station in any locality

‘where the existing standard broadéast. stations are g0 few or af

such unequal desirability (in terms of coverage, power, frequency,

or other related. matters) that asd Resend would be stibs antially

restrained by such licensing.

Sec. 3.107; Dual network operation. _No ‘license shall be, issued

to a standard broadcast station affiliated with a network organiza-

tion which maintains more than one network: Provided, That this ~

regulation shall not be applicable if such networks are not operated

simultaneously, or if there is no substantial overlap in the terri-

tory served by the group of. stations | compre each such net- |

- work.

Sec, 3.108: Control by networks of . shdtion rates. x lidetne \

shall be granted to a standard broadcast station having any con-

tragt, arrangement, or understanding, express | or implied, with a

network organization undef which the station is prevented or’ hin-’

dered from, or penalized for, &aing or altering its rates for the

sale of broadeast time for other than the network’s progtams. ©

[Effective date.] These regulations shall become effective im-

anediately : Provided, That, with respect to existing contracts, ar-

rangements, or understandings, or network organization station

- licenses, the effective date shall be deferred until November 15,

1941: Provided further, That the effective date of Regulation 3.106 .

with respect to any station may be exiended from time to time in

_ order toepermit the orderly disposition of properties; And provided

further, That the effective date <-£ Regulation 3.107 shall be sus-

pended indefinitely and any further order gf the Commission plac-

ing said Regulation 3.107 in effect shal! provide’ for fot less than

~six months’ notice and for further extension of the effective date.

from time to- time in orders to permit the orderly dispos ithon, of

properties.

THE OUINU TE OF OCTOBER 31, 1941

The Commision today adopted the “following miffite setting

forth the procedure that it-will follow in applying the policies an-

nounced in the Chain ‘Broadcasting Regulations :

f

©

Columbia Broadcasting System, Inc, vs. United States et al. 7.

If a station wishes: to contest the validity of the Chain Broad-

casting Regulations adopted in Docket No. 5060, or the reasonable- .

ness of their application ‘to the particular station, its, license will |

be set for hearing. In order to insure that the station. may remain

on'the air and be in no way injured by any such. Commission pro-

ceeding and appeal to court from a decision in such proceeding,

the Commission will grant such ‘licensee a temporary extension

of its license, with renewals from time to time until there has

been’ a final determination of the issues raised at such hearing.

In the event of such litigation, and if the validity of the applica-

tion of the Chain Broadeasting Regulations to such licensee is.

sustained by the éourts, the Commission will nevertheless giant

fi lar license to the licensee, otherwise entitled thereto, -vko

has 5 deaniecanfally litigated that issue, if the licensee thereupon

conforms to the decision.

‘The supplementary decision and tie in Docket No. ‘5060 in-

definjtely suspended Regylation 3.107, relating to the operation

of more than ene network by a single network organization. No

similar “suspension was made of that portion of Régulation 3.106,

‘relating to network operation of more than one standard broad-

cast station with substantially overlapping service areas. The

Commission will ‘postpone indefinitely. any action to prevent such

dua! station operation if it is’ shown that the operation of two

stations in any city is indispensable to the continued operation

of: two ‘net works by a single network organization.

The-adoption of the foregoing procedure-is without prejudice

to the rights of any person who may petition the Commission for

modification or stay of the Chain Broadcasting Regulations.

e

Beets

SUPREME COURT OF THE UNITED STATES

‘No 1026. —OcToper TrRM, 1941.

Columbia ‘Brvaiveating System, Ine.

? ) — % Appeal from the District

| Court of the . United.

The United, init 3 of Ameriea, in nit States fexgthe Southern

Commnnications, Commission and} Distr New York. -

- Mutual | Beeadensting System, Ine.

A [Jung 1, 4942) j

—Mr. Justice Faaxkre RTER, dissenting. —

The criteria governing judicial review of ‘‘orders’’ under‘ the

Ugent Deficiencies Act were defined by & unanimous Court’ in ~

United States v. Los Angeles R. R., 273'U, S. 299, 309-10: ‘The

so-called order here complained of is one which does not command

the carrier to do, or to refrain from doing, any thing: which does

not grant or withhold any authority, privilege or license; whieh

does not extend or abridge any power or. facility ; which does not

subject the carrier to any liability, civil or criminal; which does

not, change the carrier’s existing or future status haat condition ;

’ whie h doe does not determine any right or obligation.’ If. ‘* hroad-

castmg compahy ’ were substituted for ‘‘earrier’’, this analysis of

the. legal consequences of the action of the laterite Commerce

Commission in the. Los Angeles case woyld fit perfectly the legal

_ consequences of the action of the Federal Communications, Com-

mission in making puklic the challenged ‘regulations. ‘ |

The fact that an action of an administrative agency oceasions—

even irreparable lbss does not in itself afford sufficient grounds for

* judicial review. Even if the Commission committed a wrong, the

question of judicial reviewability still remains that put.in the Los

Angeles case, 273 U.S. at 3134, to wit, is it ‘‘a wrong for which

Congress provides a remedy under the Urgent Deficiencies Act’’

of October 22, 1913, 38 Stat 208, 219, as incorporated in § 402 (a)

of the © ommunications, Act of 1934?

For Congress has not authorized resort to the federal courts

Merely ‘because someone feels aggrieved, -howevey deeply, by an

Columbia Broadcasting System, Inc. vs. United States et al 2

action of the Federal C onmtinications ‘Commission. A’ Distriet

Court of the United States can take a case only when Con-

gress has authorized that fype of casé to be taken: Congress

did not leave opportunity for reviewing damaging action by the

‘ Federal Communications ‘ComMission to the general equity powers

of the district courts. It cireumseribed the power of the courts in

' telation to the Commission in the most detailed way. Its in-

corporation by reference, in. the Communications Act of 1934,

of the seope of review allow-1 in reviewing an ‘‘order’’ of the.

Interstate Commeree Conmni. io gave all the precise, definite, and

_ technica! boundaries which the concept of a viewable" order”’

. had aequired through the decisions of this Court prior to the en-

" . aetment of the Communiecat fins Act. The precise requirements of

an ‘‘order’’ of the Conimission for purposes of judicial review

are therefore as inflexible as though a were written into the Act

itself, °

’ Our problem, then, is this: Does the issuance ‘of the chain

broadcasting regulations constitute an “ ordpr’® reviewable in a

proceeding bronght under § 402( a) of the Communications Act,

in the light of the settled rules for determining what such an

“‘order’’ is when a determination of the Interstate Commeree Com-

mission is,made the basis of judicial review. It is therefore néées-

- ‘sary to put out of mind what this ease is not. It is not the invoca-

tion of equity jurisdiction-in order to avoid threatened irreparable

harm resulting from the criminal enforcement of ‘an unconstitu-

tional statute, asin Pierce v. Society of Sisters, 268 U. S.. 510. Nor

do we have here a ‘resort to,equity beeanse it is essential for the _

protection of asserted rights that eriminal proseeutions unauthor-

ized by law be_restrained,’ a8 In Bhields v. Utah Idaho R. Co., 305 -

U.S. 177,185.

In promulgating these ‘regulations the Communications Com-

mission merely announced its conception of one aspect of the

publi¢ interest, namely, the relationship of certain provisions in

network-affliation contracts te the dbligation of a station licensee

to render the most effective service to the listening public. The —

‘regulations themselves "determine no rights. They alter the status

of neither the networks nor licensees. As such they require no-

body-—neither the networks, the licensees, nor the ‘Commission—-

to.do anything. ‘ They are merely an announeement to the public

of what the Commissiontintends to do in passing upon future ap-

plicatipns, for station licenses. No action of the stations or the

Ss . 6

>

° es)

.3 Columbia Broadcasting System, Inc. vs. United States et al.

networks can violate the regulations, for there is nothing the reg- °

‘ulations Fequire them to do or refrain. from doing.

Announcements of general policies intended to be followed by

administrative agencies customarily take any one of vaiious forms.

‘Sometimes they are noted in thé ageney’s annual report to Con-

gress, sometimes in'a public announcement or press release, ‘and

some, as was the case here, they afte published as ‘‘rules’’ or

‘‘regulations’’. See Final, Report of the Attérney General’s Com-

mittee on Administrative. Procedure (1941), pp. 26-27. But what-

ever form such announcements’ may take, their nature and effect

is the same.* The reason why the Commission formulated its chain

broadcasting poliey in the form of 4 ‘‘regulation’’ is given in its

report : :4 ** We believe that the announcement of the principles we

“intend to apply in exercising our licensing power will expedite

business and further the ends of justice. . ... Good admimis-

trative ._practice would seem to demand that such @ statement of

. policy or rules and regulations. be promulgated wherever sufficient

information is available upon which they may be based.’’ Port

on Chain Broadcasting, . Federal Communications Cemneen,

Order No. 37, Doe ket No. 5060, p. 85.

St

With respect to its jurisdiction over matters relating to radio -

= :

broadeasting, the ‘Communications Commission is’ ‘essentially a

licensing agency. Its regulatory power over the industry is de-

rived, for the.most part, from its authority to grant and withhold

by s‘ation licenses: Under § 309 of the Communications Act of 1934

i

‘the Commission is: required to examine each application for a sta-

tion license and to determine in each case whether a grant would -

serve public interest, convenience, or necessity. As was noted in

Federal “Communications Commission N. Pottsville Broadcasting

Co., 309 U.S. 134, 138, the Act ‘expresses a desire on the part of ©

Congress to maintain, through appropriate administrative eontrol,

a yrip on the dynamic aspects ci radio transmission.’’ To that

end Congress established’an administrative progedure under which

the. Commission must make a specific determination in each case

w hether the public interest would: be served by granting the par-

, tieular application before it. No announcement of genéral licensing

poliey can relieve the Coramission of its statutory obligation to

examine each application for a license ‘and determine whether a

grant or denial is required by the public interest. °

The Commission recognized this fact inissuing these regulations.

It explicitly stated that a determination of the Tequirements cf

0

_ ° z ‘ . ” i

* Columbia Broadeasting System, Ine, vs. United States etal. 4

the public interest will, in spite of the regulations, . still have to -

be made in passing upon particular applications : ‘« Announce-

ments of policy may take the form of regulations or of general

public statements. ‘In either case, the applicant’ s right to a hear-

ing on the question whether he does itt fact propose to operate in

the public intere$t is fully preserved. The regulations we are

adopting are gs pork es the expression of the general policy

we will follow in exercisifig our licensing power. The formulation

of a régulation in general terms is an important aid to consistency

and predictability and does not prejudice any rights of the ap-

- pplicant.’’ . Report on Chain .Broadcasting, supra; p. 85.

Subsequent to the promulgation of the regulations, the Com-

mission found thats substantial modifications _Were necessary. In

its supplemental report on these amendments the Commission gave

further evidence of the fleatble nature of the regulations : “The |

Commission stands .ready at all times to amend and modify its

regulations upon the petitfon of any network, national or regional,

or any Station or group of stations. if it can be-shown that those

‘ regulations prevent profitable network operations, or unduly dis-

turb any aspect of broadcasting, or that because of special or

“changed ciretumstances the chain , broadcasting regulations should

not be applicable to any particular situation. ** Moreover, in its

Minute of October 31, 1941, designed primarily to protect’ the in-

terests of station, licensees who contest the validity vf the regula-*

- tions, the Commission’ again made it abundantly clear that the

regulations were not final: *‘If a station wishes to contest the

validity of the C hain Broadeasting. Regulations a +2, » OF, the

reasonable wis of their application to the particular station, its

license ,will be set for. hesing. ih :

The ‘Tegulations do net. therefore, commit the Commission “to

any definitive course of action in passing upon .applications for

licenses. Consistently with the. regulations (and, parenthetically,

consistently with the authority of the Commission to depart from.

genefat. regulations where such departure is in the public interest,

see Radio Commission v. Nelson Bros.Co., 239 U. 8. 266, 285), the

Commission is. free to dilute them. with amendments and exceptions.

The coustruétion ofthe regulations and their application to par-

ticular situations is still in the hands of the Commission. ‘“Adfin-

istrative adjudication is-still open. Before its completion it is net.

ripe for judicial review. ois Pts

, a c eo

&

5 Columbia pyle eatin System, Inc. vs. United States et al.

‘The characteriities ‘of the. ‘administrative . determinations in

all the cases on which the Court's opinion relies Were wholly —

different. In each one the force of the law’either through eriminal _

prggge ution ‘or injunetion or fine or some other judicjal remedy

could immediately be brought to bear to enforee the command | °

of the administrative agency. In none of, the eases was an ad-

ministrativé action held’ reviewable which in itself entailed no im-

mediate: ‘légal consequenees.

’ Thus, in the Assigned Car Cases, 274 U. S. 564, suit was bfought

- under the Urgent Deficiencies Act to annual an order of the Inter-

state.Commerce Commission prescribing for all railroads within

its jurisdiction a rule governing distribution of ears for the trans-

portation of bituminous ecal, Under § 402 of the Transportation

‘Aet of 1920, 41 Stat. 456; 476, 49 U.S. C. § 1(12) (14), the carriers

were required ‘“‘to make just and reasonable distribution ef cars’’

and the Commission was authorized to ‘‘establish reasonable vulea,

. regulations, and practices with respect to car service by carriers

by raiftoad’’. Failure of a carrier to comply with sich regula-

tiuns issued ‘by the CommisSioh was declared unlawful, subjecting

the’ carrier-to a fine of $100 for each offense.. Since the order of

_the Commission commanded carriers to take specified actions, and

since the failure to confply with the order would bring immediate

legal sanctions, the order ‘was held rev iewable. ~ o

the Intersta Commerce Commission required railroads subject

"era United. States v. B. & O. K.Co., 293 U:S. 454, 5

to its jurisdic ion to equip. locomotives with°a suitable type of -

power-operated Neverse gear, The Boiler Inspection Act, 36 Stat.

_ 918, 916; exjmressly\prov ided that.violation by a carrier-of any rule

or regulation issued ‘vy the Commission ubder the Act was punish-

able by a fine recoverable - -in a civil aetion, A suit under the

Urgent Deficiencies Aet to set aside the Commission’ s order was

therefore entertained. esi

A. T. & T: Co.-¥. United States, 299 U. 8S. 232, was a suit under

§ 402(a)- of the Communicativns Act of 1934, the same provision

upon which jurisdiction of thw. present litigation is based, to set

aside: an order of the. Federal Communications Commission pre- |

scribing a uniform system of accounts fér. telephone voapanies

within the Aet. Seetion 220(a) authorized ‘the Commission to

preseribe suck forms of accounts, and §2 20(d) made the failure

or rei ‘usal of a company to keep accounts: ‘in the manner: prescribed a

Gp

,

: <=

Columbia Broadcasting System, Inc, vs. United States et al. 6

. by the Commission unlawful, punishable by a $500 forfeiture for.

each day ‘of, the continuance of the offense. Because of the legal.

sanctions immediately 5 EON Pae upon. its violation, the order was

held reviewable...

In Interstate Coiinieres. Codinctusten v. Goodrich Transit Co.,

224 'U. 8. 194, the Commission, under the authority vested in it: by

§ 20 of the Interstate Commerce Act, issued orders prescribing

fot of accounts, records, and, memoranda and calling for annual —

reports of. carriers by water. Section 20(7) made it unlawful for

such carriers to keep any aceounts other than those prescribed by

> the Commission. A suit to set aside the orders was therefore

entertained. Similarly, in. Kansas City So. Ry. v. United States, .

“281 U. S. 423,. suit was brought: to annuk regulations of the

Interstate Commerce. Commission prescribing a uniform bookkeep-

ing ard accounting system for intérstate railway carriers. Sinee

carriers who, failed to keep accounts as ordéred by the regulations

were subject to penalties under § 20(7) of the Act, jurisdiction

was taken. And in Chicago, R. 1. & >P- Ry. Co. v. United

. States, 284 U. 8. 80, the Interstate Commerce Commission’ pre-

seribed car-hire settlement rules governing use by common earriers _-

of each other’s cars. V iolation, of such rules by carriers was de-

clared unlawful and subject to fines. Conseguently, a suit to set

aside the rules was entertained. Z ‘

Of course, the mere fact that an administrative order défermines

a status does not-mear that it is not reviewable. If an adminis-

trative determination of status has the effect of subjecting a person

to legal okligations, whether. embodied in statute or previously |

formulated administrative commands, or otherwise affecting legal

rights, ‘such a determimation possesses the elements of a review-

ips onder. Thus, in Rochester Tel. Corp. v. United States, 307

v. .. 125, the Federal Communications Commission had issued

acts requiring all telephone carriers subject to the Communica-

tions Act of 1934 to file schedules of their charges, copies ef con-

‘tracts with other,carriers, ete: Section 203(¢) of the Act provides

that a carrier which fails or refuses to comply with such rules of

the Commission shall forfeit $500 for each offense, and $25 for eaeh

day of its continnance. After investigation and hearing, the Com-

mission “determined that the Rochester Telephone Corporation was:

a telephone carrier subject to the Act and therefore svbject to the‘

prev iously _promulgated general orders directed to carriers within ;

¢

r

WD

Vs

es ‘olumbia Broadcasting System, Inc. Vs. U nited States et al..

|

.

the Commission’s jurisdiction. “The order ‘of the Communiea-

. tions Coinmission in this case was therefore reviewable. It was not-

a mere abstract declaration ‘of status of the. Rochester under thé

Communications Act, nor was it a stage in an incomplete process

of administrative adjydication, The contested order determining’

the status of the Rochester necessarily and immediately carried di- .

rvction of obedience to previously formulated mandatory: orders ad-. -

dressed genefally to all carriers amenable ‘to the Commission’s

authority. Into this class of carriers the order under: dispute

covered the Rochiester, and by that faet, in conjunetjon with-the

other orders, made determination of the status of @#e Rochester

a reviewable drder of the Commission,’ Rochester Tel, Corp. v.

‘United States, 307 U. 8. .at 143-44. Compare A. Fy. of L.-v.

> Labor Board¥308 U. 8. 401, 408. Unitike the action taken by the

Fyoderal Communications Commission in the Rochester case, its

oo . . ‘ . . . . a + . - bd .

action here carried no directions of obedietice of any kind to anyone.

It is said that the regulations derive legal effect through § 312(a)

giving the Commission authority to.revoke licenses, and that ‘‘by

virtue of the regulations alone’’, the networks and their affiliates

are now subjected to legal detriment. But this is merely another

way of phrasing the main contention. that the regulations at once

and without further action by the Commission release legal sane-

tions. But the: regulations have no such effect. To. be sure, ‘the’

Commission can, revoke a jstation lice se ‘‘because of eonditions

revealed by such statements of fact as may be required from time

to time which would warrant the Commission in refusing to grant

a license on-an original applieation’’. But the Commission may

‘never require a licensee t le a statement of fact under § 312(a) ;

its provisions may rok am never come’ into operation. In any

event, the regulations as such do not subject licensees to any sanc-

tions... A license can be ‘revoked under §312(a) because of the

licensee's failure ‘to operate its station in the public interest, as

‘required by the statute. The regulations adopted by the Commis-

sion cannot ©, erate to revoke-any licensés. It is only after & pro~

ceeding has been started (in which the licensee is entitled to a

hearing dutjng which the re@ocation order’is suspended) and ad-

versely concluded against a party that legal sanctions come into

play—the Commission can bring proceedings to enforce its order

‘of revocation and, corresponding!y, the licensee can bring suit

under §402(a) challenging the validity ‘of the Commission’s ter-

mination of the license. :

¢ 5

‘

Columbia Broadcasting System, Inc. vs. United States e? al. 3

Section 502 of the Communications Aet provides that the

viokition- of ‘‘any rules regulation, restriction, or ,condition made

_ or imposed by the Comn\ission, under authority of this Act’’ shall

- bea criminal offense. Would the renewal by a licensee of its net-

work-affiliation contract subject it to the criminal penalties imposed

by § 502? -Obviously not, for the Yegulations do not forbid a_

licensee from’ taking that or any other’ action. ,And, for the same

reason, a license could not be.revoked under the provision of

eres 1. authorizes revocation ‘‘for violation of or failure

to observ® — any regulation of the,Commission authorized

by this Act: . . 2? Ifthe Commissidn had issued regulations

which ordefed’ licensees to do or refrain from doing something,

the problem would be-entirely different., Violation by a licensee

of such a regulation would be grounds for revocation of its lieense,

under § 312(a), and for the imposition of criminal penalties, under

§ 502; . And, the other requisites being present, such a regulation

could be reviewed, as.a final administrative determjnation

This leaves only theesuggestion that singe’ the action taken by the

Commission, although. not the completion: of its adjudicatory

“

process, nevertheless drastically affects substantial business in- ‘

~ terests, it is’ proper for the courts to intercéde at this stage. Even

if this argument were -to be considered as if it had never before

been made to and rejected by this Court, its infirmities are obvi ious.

As a practical matter, the impact upori the’ business operations

of t® \etworks and their affiiated stations would probably be as

disturbing as if the policies formulated in the regulations had been

expressed through a press release, or if only the report, which is

not only the foundation of. the regulations: but also embodies them, .

had been published without the regulations which are only the sum:

mary of the report, or if Congress ifself' had incorporated these

regulations into the text of the € nynunications Act. It will hardly -

be argued that any of these steps could be the subject of judicial

. review before the ‘Commission acted upon particular applications.

But assume that the greater formality given to. the announcement

of the Commission's. statement of poliey through the regulations

‘intensified the practi ‘al business consequences. Congress has not

conferred upon the district courts jurisdiction over *‘ practical busi-

ness consequences’’, They can review action of administrative

agengjes only when there is an ‘‘order’’, and when Congress in |

§.402 ( ade. only an ‘‘order’’ of the Communications Commis-'

TRE, ie Columbia. Broadcasting System, Inc. vs. United States et al.

sion reviewable, it incorporated the settled doctrine established

“by an unbroken series of decisions in this, Court. that the courts

could Teview only a: final determination by an agency “whereby its

; administrative process has been concluded.

: “This, is not the first time that the, federal courts have been

to « sit in judgment upon ‘‘practical business consequences’’ where ©

the action to be reviewed did not represent the final stage of ad-

ministrative adjudication. The“arguments made in this ease have

been made in the past but heretofore have always been rejected

by this Court. The classic formulation and application of the doe-

trine of finality as to orders under the Urgent Deficiencies . Act. was

contained in United States v. Los Angeles R. R., 273 U. 8S. 299.

In view of the thorougiuness of the argument at the bar, and the -

weightiness of the opinion, that case has ever since been regarded

as furnishing the scearze card in this field of law. It should govern

here.

Suit’ “was brought there to annul and enjoin, an order of the

* Interstate Commerce Commission determining the final valua-

‘ tion for rate-making purposes pf the Los Angeles & Salt Lake

Railroad Company which .operated a thousand miles of rail-

road lines. The valuation fixed by the Commission was $45,-

200,000; the carrier claimed that if the Commission had em-

ployed proper standards Ge valuation, .the figure would be $70,-

00,000, a difference of $24,800,000, At the time suit was brought

approximately 250,000 miles of railroad lines throughout the coun-

. try were undergoing valuation. .The validity of the criteria em-

ployed hy the Commissiongin the case of the Los Angeles & Salt

Lake Railroad Company was therefore of enormous national sig-

nificance. In the words 6&.Commissioner Eastman, ‘This case deals

with an issue of greater moment to the country then any that we

° have ever determined.”’ 75.1. C. C. 523. These issues, involving

practically every phase of valuation law, were canvassed in an

adversary proceeding before the Commission lasting nearly a year

and a half, resulting in a report of one hundred and’ forty pages,

and expressed in a formal ‘‘order’’ of ten pages. Counsel for

the railroad company there, ay do counsel for the broadcasting

company here, relied upon the practical &nality of the order as a

basis for review : ‘*As.a practical matter, the Commission in any

: and all proceedings in which it bas occasion to ase this veluation

will give it not prima facie but conclusive effect. “In the valuation

proceeding before the Commission: which resulted in .this order

‘

!

> j

ZS «

, Columbia Broadcastinig System, Inc. vs. United States etal. 10

petitioner introduced its evidence of the value of the properties

and the proceeding resulted in a valuation greatly at variance with

. the evidence and contentions of petitioner. No greater effect will

be given to evidence which petitioner may introduce in some future.

proceeding before the Commission in an attempt to overcome the

prima facie effect accorded by the Act to this valuation order.

Therefore, unless and until set aside and annulled, this valuation

wifl stand as a continuing menace against petitioner, and may be

repeatedly used to petitioner's prejudice in rate, division, consoli-

dation, security-issue and recapture proceedings.’’ Brief for Ap-

pellee, pp. 64-65.

‘The Court specifically referred to this argumentcof counsel:

“One. [argunient in support of jurisdiction] is that since the

“ Commission has by reason of errors of law and of judgment

grossly undervalued the property, its report will, unless suppressed,

injure the credit of the carrier with the public.”’ Finding, how-

ever, that the order did not finally deterinine any legal rights,

the Court refused review: ‘‘Its [the Commission’s} conclusions,.

if erroneous in law, may be disregarded. But neither its utter-

ances, nor its processes of reasoning, as distinguished from its acts,

are a subject for injunetion.’’ 273 U. S. at 314-15.

To argue thaffirreparable i injury implies reviewability is in effect

.to contend that there must be a remedy because the plaintiff claims

serious damage. But in these situations—in reviewing ‘‘orders’’

under’ the Urgept Deficiencies Act—federal courts;can give a

remedy only to enforce a legal right, and a legal right cannot. *

be derived merely by concluding that a particular claim of hard-

ship should afford «A remedy. While formally we may appear to

be déaling with technicalities,’ behind these considerations lie

deep issues of policy in the division of authority as between ad-

ministrative agencies and courts in carrying out the constitu- ©

_ tional will of Congress, The source of the misconception under- —

lying the claim for equitable relief in this case is the assumption

1 To the same effect is United States v. Iiinois Cent. R. R. Co., 244 U. 8. *

82. There the Interstate Commerce Commission issued an order fixing the

time and place for hearing complaints ‘made by various coal companies seek-

ing damages against railroads for failing to supply a sufficient number of

coal cars for their: shipping needs. ‘The rail brought suit under the

Urgent Deficiencies Act to annul this order, alleging thay unless the hearing

were restrained, the railroads would be put to eno expense and incon-

venience. The Court held that the notice of hea no characteristics

of an order, affirmatice or negative’’, and si i Sir aes tiothene Be’

the proceeding ’’, the suit could not be ente 244 'U. 8. at 9.

\

~~

. : . °

2 if

- * . ,

. s -

° .

a °

; .

il Columbia Broadcasting System, Inc. vs. United States et al.

4

that this is nierely’ an*ordinary invocation” ‘of equity, as though it

Were a controversy between two Jitizants of which only the courts

are or can be seized. What we are here concerned with is due

regard for the proper distribution made by Congress of legal au-

thority as between two law-enforcing agencies of government, the

administrative and the judicial. See United States v. Morgan, 307

U, 8. 183, 190-91, Federal Communications Commission ¥. Potts-

ville Broadcasting Co., 309 U.S. 134, :

_ This case illustrates anew the influence of a particular instance

of félt hardship in dérailing legal principles from customary tracks.

ut this is not an’ isolated case, -If threatened damage through

general prorouncement of policy for future administrative action,

even if vast in the formal lanzuage-of a regulation, is to give rise

‘to equitable review apart ivom the rule that judicial review is *

premature because of want of- administrative finality, the same

basis of irreparable harm which is here equated to jurisdiction will

bear rich Jitigions fruit in the case -of ‘ 5 se aatiees "* issued by the

Securities and Exchange Commission which are damaging i in their

immediate repercussions to stock exchange and holding companies,

or regulations announced by the Treasury for the guidance of

taxpayers but which adversely aflect business interests, or regula-

tions by the Federal Power Commission, ete. Suppose, for ex-

ample, that the Commissioner of Internal ReVenue issues a ruling

that profits derived by radio stations from their network. opera-

tions are subject to a tax deemed by them onerous and illegal.

Could a network successfully bring 4 suit in equity prior to the

imposition of such taxes to invalidate the ruling on the ground that

its’ practical consequence was the cancellation of or refusal fo re-

‘new network affiliations?. One, had supposed, that the apswer was

clearly no. But-surely in principle the problem: is essentially Apat

of the cases before wa.

A- final consideration remains. We are not dealing with the

reviewability of adthinistrative orders in vacuo, The reviewability

of an order of the Federal Communications Commission depends

upon the statutory scheme of jadicial review embodied in 4 402

of the Communications Act of 1934. Therefore, even if the regn-.

lations could be deemed to possess the essential attributes of. a

reviewable order, it would not inevitably follow that the order. is

revieweble in the manrier provided for by § 402(a) of the Act. The

scope and historical background of the provisions for judicial re-

v

Pas

ce

Columbia Broadcasting System, Inc. vs. United States et al. 12

‘view contained in the Communications Act of 1934 have re-

cently been canvassed, see Scripps-Howard Radio, Inc, v. Federal a

Communications Commission, — U. 8. —; Federal Communications

_ Commission v. Qlumbia Bhoadcisting Sinn 311 G. S. 132; Fed-

peral Communtontions Commnissio® vy. Pottsville Broadcasting Co.,

309 U. S. 134, to require detailed consideration here. Briefly, the

Act erested typ avenues by which orders. of the Fedefal Com-

munitations Commission were. open to review by the federal courts.

Under § 402(a), incorporating the provisiqns of the Urgent De-—

ficiencies Act of Oetober 22, 1913, 38 Stat. 208, 219, relating to

Sjudicial review of orders of the Interstate Commerce Commission,

a suit to enforce, set aside, annul, or suspend an order of the Fed-

eral Communications Commission may be brought in .a specially.

constituted district court, with a right of direct appeal to this

Court, only if the order does not fall within the exceptions enu-

merated by § 402(b), namely, orders granting or denying gppli-

cations for station licenses or construction permits and for renewal

or modification of licenses. Review of the orders comprehended ;

within § 402(b) is available only through an appeal to the Court |

- of Appeals for the District of —? with no right of. ares

appeal to this Court. .

. If the regulations do constitute. an order, what kind of an order

can it be? It must be in the nature of a blanket denial, operating . ’

in futuro, to be sure, of applications for renewal of station licenses. _

But the Act expressly precludes judicial review ‘of orders denying

renewal applications of licensees.in any manner other than that

prescribed by § 402(b), to wit, by an appeal to the Court of Ap-_

peals for the District of Columbia, As the court below held, the

effect of taking jurisdiction in these cases-is tO substitute a dif-

ferent court and a different procedure for those specified- by’ Con-

gress. This Court has not in- the past displayed such an*indif- .

ference to the particularities of. legislation defining the jurisdic-

tion of the lower federal courts. On the contrary, only last Term

did the Court insist upon strict compliance with the statutory

scheme for judicial review established by the Gommunications Act

of 1934, See Federal Communications Commiesion ¥. Colambia .

Broadcasting System, 311°U, S. 132. .

Even if we were free to disregard the scheme for jadicial-1 review -

which Congress has established, I could not agree "that an appeal

under § 402(b) would not be an adequate means for. testing the

2

er

13 Columbia Broaleaiting System, Inc. vs. United States et al.

claims made in the present litigation. There is essentially only

one issue on the merits in this proceeding, namely, whether the

adoption by the Commrission of the policies expressed in the regu-

lations transgresses its statutory and constitutional authority. But

this issue could be raised and fully determined in an ‘appeal under

i from an order denying a renewal application. Indeed,

_ jn its Minute of October 31, 1941, the Commission explicitly stated

that the validity of the regulations could be put in issue in a re-

* newal proceeding. If anything, therefore, the issues in an appeal

under § 402(b) would be broader and not narrower than the issues *

here. Moreover, since the reasonableness of the application of the

. regulations to the particular situation would also be in issue in

' the-renewal proceeding, the reviewing court would have before it

‘@ record containing elements of concreteness and — not

present in the record now before us. :

‘ The Commission’s Minute enables a licensee to contest the walid-

ity of the regulations, ‘of the reasonableness of applying them to

the particular case, without fear of losing its license. ‘‘In order

to insure that the station may remain on fhe air and be in no wey

injured by any such Commission. proceeding [contesting the valid-

ity of the regulations] and appeal to court from a decision.in such

proceeding, the Commission will grant such licensee a temporary

eXtension of its license, with renewals from time to time until there

has been a final defermination of the issues raised at such hearing.

In the event of such litigation, and if the validity of the application

of the Chain Broadcasting Regulations to such licensee ‘is sustained

by the courts, the Commission will nevertheless grant a regular

‘license to the licengee, otherwise entitled thereto, who has unsuc- ~

cessfully’ litigated that issue, if the licensee Seay Mh conforms to

the ‘decision.’ ‘

Plainly, .therefore, a licensee is under no “eompulsion to

cancel .of miodify its affiliation contract., Licensees who regarc

the regulations as invalid are free to cmtinns their existing con-

tracts and at the same time challenge the regulations in the orderly

manner provided by the Act—and without any danger of losing

* their right tg continue qcasting. » Similarly, the interests of

the networks may be roteeted through intervention in renewal

proctedings. Under the Commission’s proceduré, Rale 1.102 of

the Rules of Practice and Procedure, where a renewal application

is designated for hearing because of the licensee’s contractual ar-

~s

. Columbia Broadcasting System, Inc. vs. United States ei al. 14

rangements with’ others, the latter are customarily permitted to

intervene. See, for example, Application of E. J. Regan and F.

Arthur Bostwick, Docket No.” 578; Application of John H. Sten-

ger, Jr.;’Docket No. 543°

We need ‘go yo farther than this litigation*to perceive the -un-

fortunate effects of premature judicial review. The chain broad- —

casting regulations were issued on May. 2, 1941, more than a year

ago. They were adopted by the Commission as a consequence of its

finding, after an investigation lasting more than three years, that

certain features of network-affiliation contracts prevented licensees

. from effectively ‘discharging their ovligation to render the fullest '

service to the listening public. The policy formulated by the Com- ’

mission may or may not be wise—that is not our concern. But

we cannot blink the fact that this litigation has for more thar a

year prevented the Commission from testing by experience. the —

practical wisdom of a policy found by it to be required by the

public interest. The commemeement of a proceeding under § 402(b)

would not have - presented the jurisdictional problems present in

Ss

this proceeding? Sypely those desirous of a speedy adjudication

‘of the issue of the validity of the regulations were aware that the

‘ commencement of a proceeding ander § 402(a) would not produce

a prompt adjudication on 4he merits, but that it would instead

result in postponing fora considerable period the effective date of

the regulations, with all the contingent advantages afforded by

such postponement. —

Hardship there may well come through. action ‘of an adminis-

trative agency. But to slide from recognition of a hardship to

assertion of jurisdiction is once more to assume that only the courts

‘are the guardians of the’ right? and liberties of the people. iy}

denying that it had ‘power to review the action of the Federal

“Communications Cémmission because that body had not yet de-

termined a legab right, the court below, as Judge Learned Hand’s

opinion abundantly proves, was not respecting a rule of etiquette.

. On-the contrary, it, merely recognized that the federal courts are

aren

doing only to the extent, of Congressional authorization. To say

that the courts should reject the doctrine“of administrative finality —

and take jurisdiction whenever wa of an administrative agency

. 4

15° Columbia Broadcasting System, Inc. vs. United States et dl.

may seriously affect substanfial businesd interests, regardless of

how intermediate or incomplete the aétion may be, is, in effect, to

imply that the protection of legal interests is entrusted solely to

the cou. The unbroken current ‘of this Court’s decisions in

construing the scope of judicial review under the Urgent Deficien-

‘ cies Act, and which is the only warrant for jurisdiction in this —

case, repele such a contention. The decision’ should therefore be

affirmed.

Mr. Justice Reep and ‘Mr. Justice Dove ss join in this dissent.

*

Bike,’ _— sy - 2 -