Earl Warren: Number 94, United States of America and Federal Communications Commission versus Storer Broadcasting Company. Mr. Connelly.
Albert R. Connelly: Your Honors, in answer to a question yesterday by Mr. Justice Frankfurter concerning the scope of the hearing required by Section 309 (b) of the Act, I misspoke myself in referring the Court to the Nelson Brothers case, the case which I intended to refer to is one which is also cited in our brief, Commission against National Broadcasting Company KOA 319 U.S. 239. In that case, there was an application by a Boston Station for an increase in power, the effect of which if granted would be to constitute an interference with the Denver Station KOA and to that extent a modification of the KOA clear channel license. And under then Section 312 (b) of the Act a modification of license could not be effected without affording the licensee an opportunity to show cause why it should not be modified.
Felix Frankfurter: You didn't -- you did not have in that case, did you, general rules for which this was deemed to be a deviation?
Albert R. Connelly: Yes, sir. There were general rules from -- which excluded the application or the consideration of KOA's application to intervene in that hearing. This Court held that under 312 (b) the Commission could not preclude KOA from becoming a party to that proceeding.
Felix Frankfurter: I didn't -- I didn't make myself clear. There weren't general rules of policy under which the Commission rejected the consideration to the applicant --
Albert R. Connelly: No, sir. I -- I refer to the case only to indicate the scope and extent of the hearing required by 309. And the Court -- this Court held that -- that KOA was entitled to participate in that hearing, to offer evidence and to exercise the other rights of the party, Your Honor dissented from that decision on the ground that 312 (b) did not require making KOA a party. But there was no dissent from the view at the hearing contemplated by Section 309 and other sections of the Act contemplated and required that the parties be afforded an opportunity to introduce evidence and that merely argument, the submission of briefs was not compliance with the statutory requirement of the hearing.
Felix Frankfurter: Where a hearing is required, you say it's that kind of a hearing.
Albert R. Connelly: It is that kind of hearing --
Felix Frankfurter: (Voice Overlap) --
Albert R. Connelly: Yes, sir.
Felix Frankfurter: -- and the question of whether assuming the Commissioner's power to lay down general rules of policy, exclusionary rules in a normal instance, they say, however, anyone who wants to be part of conditional rules made by appropriate applications by brief et cetera.
Albert R. Connelly: No. My -- my reference to that case was with specific reference.
Felix Frankfurter: I understand that.
Albert R. Connelly: Well, but no, it does not.
Felix Frankfurter: (Voice Overlap) -- I've just put to you.
Albert R. Connelly: The question that I put -- that you just put, Your Honor, it seems to me is -- is meant very clearly by the proposition that the Act itself requires a hearing for the purpose of determining the public interest in the grant of the application. And therefore, unless that statutory provision is subject to some implied qualification which has not yet been read into, then the applicant is entitled to a hearing with all of the consequences of that hearing to show what the public interest is. That KOA case is an interest in another rather collateral respect, in that, it points out the congressional interest. In the conduct of those hearings by the Commission itself in order that it may keep abreast of a dynamic and developing industry in radio broadcasting which that Congress quite clearly considered and properly considered could not be determinative of the public interest on any static basis.
Speaker: I wonder if you would state again just what the proceedings of these defendants (Inaudible)
Albert R. Connelly: I can see that the limits of -- of the Commission's rule making power are those which are set forth in the only sections of the Act which empowers it to -- to adopt rules. Number one, that the rule must not be inconsistent with the Communications Act. Number two, that it must be necessary to carry out the provisions of the Act. I have not attempted, if Your Honor pleases --
Speaker: (Inaudible)
Albert R. Connelly: I have not attempted to suggest or attempt to define here all of the situations in which the Commission may properly adopt rules because I apprehend that that question is not before this Court. I simply state here that the particular rules under attack, the numerical proscription rules are inconsistent by their very terms that Section 309 (b) of the Act. And that they have not been shown to be necessary to carry out any other provision of the Act. I have also pointed out that in the only cases which it thus far been decided where any question is raised as to that right to a hearing that that -- those situations are completely answered by the fact that in those cases that Congress itself has declared what the public interest is, as for example, a grant of a license to an alien so that the hearing would be a futile gesture because Congress hasn't left to the Commission the determination of the public interest in that case.
Speaker: (Inaudible) where they would violate the anti-trust provision.
Albert R. Connelly: Well, they would be violative of any law, yes, sir.
Speaker: Now, that is a (Inaudible) that it would justify the proper regulations during -- will exclude the hearings of the regulations in progress.
Albert R. Connelly: Yes, sir. I can give you an illustration precisely along that line which is Section 311 of the Act which prohibits the Commission from granting a license to anyone whose license has been revoked under Section 313 of the Act in an anti-trust proceeding by a court. Now, that's a situation where quite clearly a hearing, if the facts were admitted about the revocation of the license, there couldn't be any -- there wasn't -- wouldn't be any question of public interest open for determination by the Commission because the Congress itself has said that that would (Voice Overlap) --
Speaker: Well, all I'm (Inaudible) is whether or not really (Inaudible)
Albert R. Connelly: I think not, sir. I think not, sir, because the Commission itself concedes that the number, numerical ownership, which the rules prescribe, are not in violation of any law. And once that concession has been made and indeed there can't be any question about the mere ownership of five or six nations doesn't violate the anti-trust laws. Once that concession has been made, then there is no showing which would deprive, operate to deprive the applicant of the right to a hearing under 309 (b) to determine what the public interest is in that question of ownership. If it were violative of the anti-trust law, then, I would have no question at all, as Your Honor had suggested. Clearly they could adopt the rule which prohibited a license under those circumstances. Now, Your Honors, at the (Inaudible) --
Speaker: (Voice Overlap) -- did that result in this that you -- what you've said that only those rules are necessary which are based on the Act itself like an alien or of some types of prohibition of that kind.
Albert R. Connelly: Not necessarily.
Speaker: Do you think -- you think the very narrow --
Albert R. Connelly: The -- no --
Speaker: -- the narrow (Inaudible)
Albert R. Connelly: No, I think not, sir. The lottery rules, for example, are not to the lottery, the prohibition against lotteries and not contained in the Federal Communications Act. That's in the criminal code. And yet this Court held it proper to adopt rules excluding a license to one who proposed to operate in violation of that section of the criminal code. I don't -- I don't -- it isn't as narrow a position as that. I say where the Congress has determined the public interest in question either in the Communications Act or elsewhere, then it has taken away from the Commission the power to make that determination of public interest because the Congress has itself determined the public interest. But I do not restrict my argument merely to the specific provisions of the Communications Act.
Stanley Reed: I -- I was thinking that the broadcast rules were here before.
Albert R. Connelly: The Chain Broadcasting rules for the most part did involve problems of conflict with the Communications Act itself. As for example question of operation --
Stanley Reed: What would (Voice Overlap) -- what would be interpreted to be a conflict with them as -- with proper conduct on the part of some of the stations?
Albert R. Connelly: Yes. For example one such rule in the Chain Broadcasting rules had to do with the control exercise by a non-licensee over the operation of the station and that involves a violation of Section 301 of the Act. That while it is true that those Chain Broadcasting regulations did involve that type of conflict with the Communications Act, I -- I do not suggest to Your Honors that that is the only situation in which the Congress could have declared or has declared the public interest. Now to --
Stanley Reed: Aren't -- aren't there many rules that -- aren't there rules that will say that you won't have high frequency, we'll have stations operating on the same frequencies.
Albert R. Connelly: As -- as I call Your Honors' attention yesterday, there is another section of the Act, 307 (b) which requires the Commission to allocate frequencies on a nationwide basis to provide efficient, fair, and equitable distribution among the States and communities. Now, that is a provision of the Act which admittedly involves an inconsistency with the public interest involved in an individual application because if the Commission has carried out that mandate of the Congress and has allocated the frequencies so that there isn't a frequency available for an individual community or a frequency of a particular kind available to individual community, then it is not in a position to determine the public interest in an application by me for example for a frequency that just doesn't exist. Now what --
Felix Frankfurter: Isn't going to be -- would it be fair to say that your controversy in this case was down to this, that it is your contention that the Commission to its rule making power cannot make class determination of what constitutes public interest.
Albert R. Connelly: Where -- where the Congress has not itself done it and (Inaudible) and the Congress hasn't done that.
Felix Frankfurter: Congress cannot -- well, if the Commission cannot make class determination of public interest so as to preclude an individual from showing the particular instance that the public interest is -- would be serve by a grant.
Albert R. Connelly: Yes, sir.
Felix Frankfurter: That's the controversy.
Albert R. Connelly: That is on the -- on the one branch of the argument. They can't put us, they can't put newspaper owners, they can't put lawyers, they can't put anybody in a proscribed class ineligible to receive licenses without regard to the facts as the public interest in the particular case.
Felix Frankfurter: Is -- is there a way to attack this specific act or -- or rule of the record?
Albert R. Connelly: I --
Felix Frankfurter: To say -- to say this rule has been valid and (Inaudible) you're not attacking the rule --
Albert R. Connelly: Yes, sir.
Stanley Reed: -- as -- as impossible under any circumstances.
Albert R. Connelly: We are attacking this provision of the rule as being an invalid rule under the Commission's powers.
Stanley Reed: The provision which fixes the maximum number of stations which they proscribe.
Stanley Reed: That no matter what the maximum was taken.
Albert R. Connelly: No matter what the maximum fix, yes. That leads me directly into -- into the second branch of the argument. Because it is our contention here as it was in the court below that these numerical proscription rules are invalid not only because they deny the hearing under Section 309 (b) but because they are arbitrary in that they exclude required consideration of relevant factors and their basis is not adequately disclosed. Now, I pointed out to Your Honors yesterday that the order promulgating these rules was founded upon the anti-trust sections of the Communications Act and that the Commission had had ceased two aspects of that, the program diversification policy and the policy preventing undue concentration of economic control. I think I also pointed out that the anti-trust provisions of the Communications Act merely declare applicable to radio, all the laws of the United States relating to unlawful restraints and monopolies and the combinations, contracts or agreements in restraint of trade. In other words, there isn't any legislation, anti-trust legislation applicable to radio which is not also applicable to all industry. And the anti-trust laws, both statutory and as they have been construed by the Court do not proscribe any acquisition except upon the basis of actual or potential effect upon competition. And determination of the effect upon competition requires consideration of a variety of factors, requires consideration of the purpose of the acquisition. The size and location of the acquiring interest and of the acquired interest, the existence and strength of competitors in the market affected as this Court pointed out in the Columbia Steel case. We look to the percentage of business control, the strength of the remaining competition whether the action springs from business requirements or purpose to monopolize the probable development of the industry, consumer demands, and other characteristics of the market. These rules make one factor, multiple ownership controlling to the exclusion of all other relevant factors, although the multiple ownership rules themselves in the sections immediately preceding the numerical proscription hereunder attack expressly recognize differences as the rule state in size, extent, and location of areas served, differences in numbers of people served, differences in the extent of other competitive service to the areas in question. I ask Your Honors to consider these numerical proscription rules in the light of those three factors. First, size, extent, and location of areas served. These rules do not take that factor into account at all. Indeed, they create an arbitrary and false presumption that a T.V. station in say, Butte, Montana is to be equated because it's one with the T.V. station in New York City. The rules ignore completely the factor of the number of people served. Now, in that connection, Your Honor, there is a footnote reference in the Government's reply brief at page 14 -- at page 14, referring presumably in an effort to show the salutary effect of these rules in preventing undue expansion of Storer to the fact that the metropolitan areas served by Storer's television stations have a population of some seven million persons. Now, that statistic is not in the record. It is not -- it has not been referred to previously in this proceeding, but it is based upon the 1950 census of the metropolitan areas which are, in fact, served by Storer's T.V. station. And therefore, I think it appropriate to call to Your Honors' attention, using the same 1950 census figures, the fact that there are other multiple owners operating under exactly the same multiple ownership rules serving vastly larger populations. DuMont for example, 14 million, General Teleradio, 20 million, Columbia Broadcasting, 23 million, National Broadcasting, 27 million, American Broadcasting, 28 million. I think that illustrates one of the points of attack here. Because if for example, American Broadcasting gave up one of its five T.V. stations, say in San Francisco, with a metropolitan population of approximately two million, thereby reducing its population statistic to 26 million, it would be eligible to receive a license for a new station for which Storer, with its seven million statistic would be ineligible to receive. The third factor and perhaps the most important in the light of the -- of our purposes of these rules, the extent of other competitive service to the areas in question, a factor which is totally disregarded by these numerical proscription rules that points out the fact that they are not at all related to the alleged policy, I shouldn't say alleged policy, to the policy of program diversification which is alleged as a basis for the rules. Because they preclude consideration of the view points and programs available in any given area that they operate and apply only the stations serving different areas. Let me illustrate that. The service area of the T.V. station can be measured by a radius of approximately 60 miles maximum. An application is made for a license to operate a station in Miami, Florida. The fact that an applicant has an interest in a station, a T.V. station in Detroit, Michigan, and have no possible relationship, the program diversification either in Miami or in Detroit or in anywhere else. These rules exclude a multiple owner from areas in which there are more facilities when there are applicants. Indeed, by their expressed terms, they would exclude an otherwise qualified applicant, a multiple owner, in an area not served by any existing facility, even if there were not any other applicant for facility there. If those factors which I have referred to and which are in the multiple ownership rules themselves are relevant in considering an increase in number of stations from four to five, why aren't they equally relevant in considering an increase from five to six. What is the magic of the number five or the number seven? I hope Your Honors will direct that questions specifically to Mr. Baker because up to this point there hasn't been the slightest attempt to meet that problem. There isn't any attempt by the Commission here to relate the specific limitations which they have adopted, either to the anti-monopoly policy or to the program diversification policy. Now, in that connection, I don't want to be unfair to the Commission in any respect and I would like therefore to confine my comments here for those reasons. That the precise language used by the Commission in its report, in ostensible support for these limitations. First, in the case of AM, the number seven was selected, why? In order that the present holdings of such stations be not unduly disrupted, clearly, no relationship in that to the avowed purposes of the rules. In the case of FM, this is at page 31 of the record, the number seven was selected, why? Because it is considered desirable to have the same limitation applicable to both AM and FM. Now what relationship does that have to the avowed purposes of the rules? And finally at page 30 of the record in the case of T.V. the number five is selected because it is the existing limitation on T.V. station ownership which in our judgment based on extensive experience with the problems of multiple ownership have proven practicable and desirable and that's it and that's all. Not only is that unrelated to the avowed purposes of the rule, that statement with reference to television is a meaningless abstraction. The Commission points to and can point to, no instance whatever of any experience with ownership in more than the specified number of television stations. There isn't any basis shown in the Commission's report or in the record for the specific limits which the Commission has imposed. The reason they're stated could apply with equal force or lack of force in my view that the number 17 or 77 or any other number that might be pulled out of a hat. In that connection I should like to call Your Honors' attention to a statement which I think significant by Commissioner Dorfman in 1954 in connection with the modification so as to provide two additional ultrahigh frequency stations as distinguished from VHF stations. Commissioner Dorfman said, “I have grave doubts as to the wisdom of picking a number without more reliable and persuasive evidence that the number chosen within all cases mark the upper limit of what will safeguard the public interest.” There is not much more than intuition as the basis for the present rule."
Felix Frankfurter: Once you cross, Mr. Connelly, once you cross the line of power, did I understood the exercises then I think most exercises a discretional power that are largely in the case or rather is there intuitions (Inaudible) Would be drawn out of the -- as you say, drawn out of the hat but it's the Commission's hat, assuming they have the power. I do not believe on this part of your argument, they could make any rule that wouldn't be punishable to a critical examination like this.
Albert R. Connelly: If Your Honor concludes from that, nevertheless, that any rule they might adopt would be valid --
Felix Frankfurter: Well, I don't --
Albert R. Connelly: -- and I find that a very shocking statement.
Felix Frankfurter: I -- I am not -- that is to the inference. I am saying that whatever rule they take other than obviously rules that have no relation to any experience on which presumably to the state the outside limit on a clearer point. Once you get away from here -- from here outward, that they want to say -- suppose they make a rule, no more than one. I shouldn't think -- I shouldn't think that Congress not having dealt with that problem before, they could -- nobody could have more than one station. I shouldn't think of that. Once you get beyond those, is that a general -- whether five or nine, I state what Mr. Justice Holmes said in the (Inaudible) case way back -- unfair of that power dressed on considerations that are not susceptible, not only not approved but even a formal definition or formal expedition. That's what we're talking about when we talk about expression, maybe that they know something, somehow rather out of the air because there are a lot of stuff in their heads that aren't in my head.
Albert R. Connelly: I don't believe with all deference, Mr. Justice Frankfurter, that any Court is going quite that far, I certainly concur.
Felix Frankfurter: I'm not saying --
Albert R. Connelly: That the judgments --
Felix Frankfurter: -- that there is no limit. There's always -- maybe they made -- they made new things, they've seen the general gamut, the general lawsuit of another state of authority. And I'm not -- I understood my judgment to be true, indifferent from excesses of power on their part. But this -- this line of argument is asking -- assuming -- I say, what you call power, to say that wouldn't make facts that I think partly of any class which is defined by them which as I have said couldn't be subject -- couldn't be vulnerable to a critical examination such as the differences there (Inaudible)
Albert R. Connelly: Is there not a difference, the Court please, between a conclusion reached by the Commission on the basis of facts before them, on the basis of considerations expressed by them, a conclusion with which this Court or some other court might differ. It's quite clear in that case that the courts will not interfere with the action taken by the administrative agency because they are supposed to have the expertise so long as there as a reasonable basis upon which they might have acted. Then the courts will leave and properly leave the determinations of the administration -- administrative agency alone. But the Congress has not said that anything that the administrative agency determines is automatically free from inquiry on the contrary. They have specifically written into the law, provisions for judicial review. And I submit that those provisions for judicial review are meaningless unless they enable the Court to insist that if there are rules adopted like this, there must be some basis shown so that the Court itself can determine whether the figures selected are within a reasonable range, not that there is a right figure. That isn't the point but so that there is some basis for tying up in making the relationship between the number that they select and the interest that they are suppose to subserve.
Felix Frankfurter: Suppose -- let me try to reduce in your (Inaudible) Suppose Congress had written into this statute, either three or nine that the Commission tells -- find that public interest to this is existing and occur, giving the permission, you think classification to discourage or prohibit undue concentration, may I present another -- I can't think of anything, undue concentration. What I'm suggesting is the determination of that and subsequently the justification of this whole case.
Albert R. Connelly: That is what is asserted as to justification, that's right.
Felix Frankfurter: Now, assume that's written into the statute and then you -- you have to argue whether the rules formulated by the Commission is an allowable exercise of that undefined, and to my point of view undefined view category, undue concentration and they get on five rather than nine. Do you think we could say, well five -- if nine, yes, five no?
Albert R. Connelly: On this record where there is no basis shown where the selection of five, I say that Your Honors have to strike that down. Because the test in the statute is still the public interest convenience and necessity and that's the one they're (Voice Overlap) --
Felix Frankfurter: I'm assuming of course, the Court would say undue is not so indefinite for -- for a review of what has been given.
Albert R. Connelly: Our precise point though, one of our precise points in this case is that the Commission in its order here, adopting these rules has not laid bear its mind in such a fashion that this Court can properly come to a determination as to whether its within the realm of reason or not. Now, the Commission --
Harold Burton: Wasn't this rule -- wasn't this rule formulated after a long hearing?
Albert R. Connelly: A proposed rule was announced back in 1948, not the rule which is actually adopted but in general covered the same area. Hearings were held in 1949 and then nothing else happened. Until the end was a hearing, arguments were made. Until the end of 1953, some four years after the -- the arguments on the question, the Commission came out with these rules effective 1954. The hearing and the record of that hearing to the extent that either party has thought it important is included in the records and appeals so that if there's anything at all that took place in that hearing which justifies the action the Commission took is in this little brown record here. And I submit that Your Honors will find absolutely nothing beyond what I have read to you which purports to support those limitations. Now the Commission, in its report, did take cognizance of the widespread criticism of the proposed rules that they were arbitrary. They -- they gave no answer to that argument which said simply, “well anything else would be unsatisfactory or unworkable.” But again, to use the Commission's own language and this is at page 22 of the record, paragraph 11. In view of the arguments advanced by some party that the proposed rules are arbitrary and that they give no effect to class and size of stations, geographical locations, populations served, and similar factors, we have considered alternatives to the present proposal. But as a result of the study of the present holdings of multiple owners, we have concluded that any proposal to limit multiple ownership on the basis of such factors as class of station, geographical location is either unsatisfactory or unworkable. Now, I submit that that observation would reasonably justify a conclusion that no formula should be adopted but it clearly does not justify the conclusion that an arbitrary formula can be adopted. These rules in our view are invalid because they repudiate the congressional intent that anti-trust questions be determined on the basis of the facts with respect to competition and because they repudiate the congressional intent that the public interest, convenience and necessity in the ground of licences be determined with reference to the relevant and all the relevant facts. As this Court stated in the Miller case in 294 U.S. involving administrative regulation equating the loss of a hand with total disability, the Court said the vice of the regulation therefore, is that it assumes to convert what in the view of the statute is a question of fact requiring proof into a conclusive presumption which dispenses with proof and precludes dispute. This is beyond administrative power. We submit that the court below correctly set aside the numerical prescription provisions of these rules.
Earl Warren: Mr. Baker.
Warren E. Baker: May it please the Court. Mr. Connelly's answer to various questions instigated by a question from Mr. Justice Harlan as to the nature of a hearing which would be required on a request for a waiver yesterday points out the basic difference between Storer and the Commission. Mr. Connelly made it quite clear that the hearing that Storer is asking is a full hearing under Section 309 (b) in every case irrespective of the showing which might be made as to why the otherwise binding rule should not be applicable. Now, this Section 309 (b) case hearing, is a hearing in which it is required that you have an evidentiary hearing with cross-examination before a hearing examiner with an initial decision or an opportunity to file exceptions and briefs to the Commission and a required oral argument and the final decision of the Commission and an opportunity to file a petition for reconsideration. This is not just what is sometimes referred to as due process hearing which varies greatly with the circumstances of the particular case. Now, we think it clear, that if this type of hearing can be secured upon the mere request by filing an application without setting forth any reasons as to why the rule should not be applied to a particular person, and irrespective of the showing he makes then the rules and any rule which is subject to such a requirement has no binding effect and has no practical value to an agency.
Hugo L. Black: May I ask you a question, I'm -- your argument confuses me a little. Are you depending on the ground that the pleading is improper because they did not set out the facts? Are you depending on the ground that the rule is valid?
Warren E. Baker: I'm starting out on the ground that the rule is valid and that the rule itself has a certain flexibility in it, just as did the Chain Broadcasting rules which permits a party to show if there are special considerations as to why the rule should not be applied to him. Just as in the Chain Broadcasting regulations, the Commission has on the books a rule which permits an application -- I mean, a petition for waiver. As we have stated in our reply brief, this is not of necessity mean that the kind of hearing which a party is entitled to upon a petition for waiver is the full evidentiary hearing set forth in Section 309 (b). It is the kind of hearing, the kind of consideration which the pleadings themselves and the nature of the circumstances alleged justified.
Hugo L. Black: Then you are depending, as I presume, what you say now on the ground that, not that the rule is valid but that no man could get a -- no company can get more than five. That you're depending on the ground that there are circumstances under which they can but they didn't properly -- they didn't set out proper facts --
Warren E. Baker: I am depending --
Hugo L. Black: -- would justify -- which were debarred hearings to determine whether they all have more than five?
Warren E. Baker: I am depending on the basis that the Commission, under its rule making authority, may adopt general rules which in and of themselves, if there is no question of compliance with the rules does not require a hearing.
Hugo L. Black: Well, I'm --
Warren E. Baker: But I am saying that those do contemplate that if there are extraordinary circumstances and special circumstances because of the fact that we have always had on the books petition for waiver rules, those special circumstances can be alleged. And the consideration of what kind of consideration and hearing is necessary has to be determined upon those pleadings and I might say --
Hugo L. Black: (Voice Overlap) --
Warren E. Baker: -- they're not here.
Hugo L. Black: -- to get the hearing to just a moment, but I still don't (Inaudible)
Warren E. Baker: Yes.
Hugo L. Black: Is your rule as you construe it was which said that no one can get more than five television stations?
Warren E. Baker: Our rule --
Hugo L. Black: (Inaudible)
Warren E. Baker: No, sir. Our rules and every rule we have on the books sets forth a general proposition subject, of course, to the implied and in fact express opportunity if there are special circumstances that justify a different treatment in a particular case an opportunity to seek a waiver of a rule.
Hugo L. Black: Well, then -- then as I gather it, all these argument is over -- whether they have alleged enough to justify to call for a hearing under a rule which permits the -- which -- which it acted on by the Commission to grant some people more than five stations and denied some others.
Felix Frankfurter: The question of procedural pleading, administrative procedural or pleadings of that.
Warren E. Baker: We think that there is --
Felix Frankfurter: (Inaudible)
Warren E. Baker: Yes.
Hugo L. Black: That seems to be what I -- I understand. Now --
Warren E. Baker: Respond --
Hugo L. Black: I had thought you were depending on the ground that you had a rule. The Commission had a rule, claimed to had authority to enact or to promulgate it to the effect that no company could have more than five television stations.
Warren E. Baker: We do have that rule.
Hugo L. Black: Period.
Warren E. Baker: But we also have --
Hugo L. Black: That's how I understood it.
Warren E. Baker: We also have other rules which provide --
Hugo L. Black: Well, then that's a rule --
Warren E. Baker: -- that any rule may be waived for good cause shown.
Hugo L. Black: Well that rule, along with others, means that you can't consider it wrong, as I gather.
Warren E. Baker: No, you cannot.
Hugo L. Black: That if they have setup the facts showing special circumstances, a circumstance to which you thought was special, then you would've grant them a hearing to determine whether they ought to have more than five.
Warren E. Baker: Well, the question of what kind of a hearing they would have received would have depended upon whether or not --
Hugo L. Black: But the (Voice Overlap) --
Warren E. Baker: First of all, there was a factual dispute.
Hugo L. Black: Could they have gotten more than five if they'd setup the right kind of facts?
Warren E. Baker: Yes. That leads me to an illustration which we have not put in our brief, but I think it's quite pertinent. First of all, we did not set forth the kinds of circumstances in which someone might obtain a waiver simply because at no time in this case has there ever been a request for a waiver. Contrary to what Mr. Connelly said, the language in the decision dismissing his application which said, “We will treat the application as if it were for a waiver,” is with respect to a different rule entirely. Had nothing to do with the question of whether or not it was an application to waive the multiple ownership rules. In fact, he has never urged that in his application.
Hugo L. Black: Now --
Warren E. Baker: But --
Hugo L. Black: -- let me ask you this question in addition because this is rather truthful to me. I have misunderstood your argument. Suppose they would be denied this now, could they file a new application asking more than five, asking for television stations and setup the facts which would justify -- or show a waiver?
Warren E. Baker: Yes, they may file such an application. Our rules provide that an application which on its face is consistent with the rule will not be accepted or if it has been accepted will be dismissed unless it is accompanied by a petition to amend the rules or a petition to waive the rules. In such an event, it will be accepted and consideration will be given to the reasons relating to the waiver and a determination made there as to whether or not there are factual matters which need a factual hearing, whether or not, assuming all the facts they have submitted any reason which justifies finding that in this case an exception to the rule should be made.
Hugo L. Black: Now, what's the difference then and there from a case between ordinary lawsuits? Where you haven't quite an appeal and it gets up here and defense is, well, they didn't treat this properly, they should've amended it but they didn't do it. It seems to me that you have -- from what you say, it's -- maybe I just didn't understand the closing of it. Certainly, it seems to review some questions of -- about that here.
Warren E. Baker: That reduces it to a rather narrow question but for one thing. We happen to have a decision which states a broad proposition of law, a decision of the Court of Appeals which, if sustained, means that no rule the we have maybe applied to dismiss an application --
Hugo L. Black: And your --
Warren E. Baker: When someone merely files an application without suggesting reasons why in the particular circumstances it should be considered different from the rule.
Hugo L. Black: Well, then that is the -- that is the real issue which you -- that I suppose you --
Warren E. Baker: That is correct. It is the --
Hugo L. Black: It is the statement on which the Court decided this to be -- that you wrote as a matter of law because you wants to have a rule and I suppose should they be allowed to have a rule which requires people to setup the facts, to state their claims of certain advantages under the Act?
Warren E. Baker: That is correct. The question is not only one of procedure, however, it is one of what kind of a hearing. Respondent here insist that the hearing must be the kind under 309 (b).
Felix Frankfurter: You point it on to the hearing. Suppose you did not have these rules then the application which you in fact has filed up here would have required a hearing without law, is it not?
Warren E. Baker: If we did not have these rules --
Felix Frankfurter: Yes.
Warren E. Baker: -- and the application which was filed was not inconsistent with another rule which we have many of them. In other words, if on its face --
Felix Frankfurter: But that would make a --
Warren E. Baker: -- it was consistent with the rules --
Felix Frankfurter: But it would mean --
Warren E. Baker: -- it would then have been given a hearing.
Felix Frankfurter: (Voice Overlap)
Warren E. Baker: What sir?
Felix Frankfurter: (Inaudible) but I'm sure --
Warren E. Baker: No, sir. I was --
Felix Frankfurter: -- (Voice Overlap) it's not there, that this application would not have had to go through a hearing for what rules the other or the infraction of rules other than the one that can, is that what you're getting at?
Warren E. Baker: Well, no. All I was saying, sir, was that the mere fact that it didn't conflict with this rule does not mean that it necessarily would go through a hearing because it must be consistent with all the rules which pertain to it.
Felix Frankfurter: But in -- In the case before us, we haven't got any -- if this -- if the refusal to grant a hearing of this application, the Court go off on conflict with some other unquestioned rules of the Commission then we better not pass on these rules.
Warren E. Baker: I do not know of any other rules which would have prohibited it.
Felix Frankfurter: (Inaudible)
Warren E. Baker: As a matter of fact, however, I was going to go further and say if it did not conflict with another rule in all probability in the absence of this rule rather than having to go through a hearing, it might have been granted without going though a hearing on the basis that the Commission could find that it was in the public interest.
Felix Frankfurter: On the face of the application?
Warren E. Baker: That's correct. Well not -- it's just not simply on the face of an application. There's a great deal of papers required to be filed with every application, background, programs, plans and many things.
Felix Frankfurter: Did they file all those things?
Warren E. Baker: That's right. Yes, sir.
Felix Frankfurter: I suppose the claimed interest all those data justified, showing that even though your rules maybe general policy rules, they're not legally excluding rules. You said they've just said, “We want to come in.” And you now say they haven't found a lot of stuff showing that it enters the public interest except for these rules. And I suggest that in the state of this authority indicate that in this particular case, the rule are against the public interest and not for.
Warren E. Baker: Well, I suggest that the papers they have filed are directed to all other aspects of the public interest which are not considered in these rules themselves. I know of nothing in which they have filed in which they have alleged or suggest, that because of the particular needs of Miami or the particular circumstances with respect to Storer's multiple ownership, there was a reason why this broad policy which the Commission has embodied in the rule should not be applied.
Felix Frankfurter: Suppose they put in all these arguments that Mr. Connelly made of the arbitrariness and effect of the rules with reference to Storer compared to the National Broadcasting, American Broadcasting, etcetera, suppose they put all that in?
Warren E. Baker: Then you would have to consider that with respect to whether those circumstances justified.
Felix Frankfurter: Well, if that's before a hearing or if you just put out on a case?
Warren E. Baker: Well, when I say that -- when you say doesn't have to go to a hearing, we're talking about whether or not there are facts or disputes, whether or not, it could be resolved on a mere oral argument with respect to the legal questions or the policy questions and whether or not those determinations would be arbitrary abuse of discretion.
Felix Frankfurter: Consider that the Commission itself have -- have obtained revolved rules and thought that agreeing might be on this concentration, if that's the proper phrase and five rather seven, certainly, that's an argumentative area, are they not? Maybe you want to show them in our case, five is not in the public interest. Now, would that -- would they be entitled to show that or (Inaudible)
Warren E. Baker: If they had alleged those things, I think, the Commission would have had to consider them.
Felix Frankfurter: But I should think --
Warren E. Baker: I think --
Felix Frankfurter: -- the nature of things, that's what the application means.
Warren E. Baker: I don't believe that the normal application is addressed to those things. The normal application and its one which was filed here are addressed to the things which the Commission says, “You must meet also, such as what kind of programs do you intend to broadcast? What other ownership do you have? What do you intend to do with respect to network affiliation?” And many of those facets and certainly are not directed to the question of whether or not, there are special circumstances in Miami or special circumstances with respect to Storer which justify a waiver of the rule.
Felix Frankfurter: Since they can -- since nobody can get an application granted unless they can mean the public interest. And the man files an application, he presumably dependent on the issue that this isn't about the (Inaudible) And therefore, he says, this isn't the public interest although you may have the general policy against more than five.
Warren E. Baker: That is an implied tender but certainly it needs more than an implied tender that this isn't the public interest to raise questions where you have adopted a rule which says, “This is not in the public interest.” If this is a valid exercise of the legislative, the quasi legislative rule making power, a policy determination that we should not permit more than five except on unusual circumstances, certainly, someone is required to allege those unusual circumstances to justify the Commission waiving the rules.
Felix Frankfurter: Another clearer way to (Inaudible) Justice Black then, your position then is that the restriction complied here as though Congress had written it into the statute.
Warren E. Baker: That is correct. Except for the fact that it is because we have also the waiver provision, it is if Congress had written it in into the statute with the provision that in appropriate circumstances we could waive it.
Earl Warren: But Mr. Baker, what -- what circumstances can you conjure up which would have been entitled these people to a hearing?
Warren E. Baker: Well, I can give you one right off, I believe, Chief Justice. For example, if we take the horrible example of Mr. Connelly illustrates in which out in the Rocky Mountain area, there happens to be an assigned channel which no one has seen so far fit to apply them. And a party who has the maximum comes in and said, “Here is a channel, here is a need for service and no one else wants it.” And we, because we have multiple ownerships, can absorb what temporary losses there might be, justify your waiving the rule to give service to these people. Under those circumstances, I think, the Commission might well consider that this was exceptional circumstance of justifying waiver. But I submit that is not the fact here. In no instance has the Commission had to turn down a request for more than the maximum in an area where they were not many well-qualified applicants seeking the facilities. In the very case here, where did Storer apply for this six VHF. In Miami, Florida, where there were seven applicants for the only two channels that were available and every one of them was well-qualified.
Earl Warren: Well now, that -- that isn't exactly what I want. Would that one fact alleged be sufficient to waive the rule?
Warren E. Baker: It might well be. It would raise the question which the Commission would have to address itself to.
Earl Warren: All right. Now, would he have a -- would he have a hearing on that?
Warren E. Baker: If the Commission were to deny that the desirability of providing service to a place in which no else sought an -- sought to provide service, this --
Earl Warren: Yes.
Warren E. Baker: -- Court or another court might well say. But that's an abuse of discretion not to have a hearing with respect to that matter. But there are many factual questions which might also be involved. That is whether or not other parties did seek one there because applications are in many stages of processing.
Hugo L. Black: May I ask you one other question? Now, what would you ask the Court to do if it -- if you ask to reverse this case? What -- what is your (Inaudible) What I meant -- I meant for this reason, if it -- if as I understand now, they can't -- could have been given if -- and the sole consequences between here as to whether they alleged to the (Inaudible) Are you asking that -- what -- what would be your idea of the kind of judgment they would render and what would happen to this case?
Warren E. Baker: We would suggest that this Court find that the rule of law propounded by the court below is incorrect, which says that the Commission may not adopt a valid rule which without any specific allegation of reasons for waiver, does not provide a full hearing under Section 309 (b). We also would suggest that because the court's opinion below infers that this is not a reasonable exercise of our discretion, that this is not a subject which is susceptible of being handled by rule, that you pass upon the question of whether or not, this subject of multiple ownership is an appropriate subject to be handled by rule making. We see no reason why this Court should pass upon what circumstances would if a waiver had been requested, require a hearing. We think that should be handled when appropriate circumstances are alleged and when those circumstances are found by the Commission in its discretion not to justify a hearing. Under those circumstances, the courts below will pass upon whether or not there was an abuse of discretion.
Hugo L. Black: Don't have that in this case so far as they're concerned.
Warren E. Baker: In this case, I think it really makes no difference what this Court does with respect to the particular application. The failure of respondent to appeal a particular application when it was dismissed and the fact that those other competing applications for the specific channel were then processed and going through to a grant, which will take place in the near future, precludes there being any reliable of such an application.
Hugo L. Black: Your idea in which to decide this question of law which I (Voice Overlap) --
Warren E. Baker: That is correct.
Hugo L. Black: -- this question of law --
Warren E. Baker: That is correct.
Hugo L. Black: -- that the Commission made a desire, promulgate a rule that in the absence of allegation showing special circumstances no -- no applicant could be granted more than five television stations.
Felix Frankfurter: May I ask you before you sit down? You indicated and I should try to correct this. That the -- it was -- your prediction is as though Congress had written in a specific provision authorizing the Commission to determine -- prohibiting undue concentration of question subject, however, with the provision, a further provision that this restriction maybe waived by the Commission?
Warren E. Baker: That is correct.
Felix Frankfurter: That's your answer.
Warren E. Baker: We believe that the Commission --
Felix Frankfurter: Now -- now --
Warren E. Baker: I mean that is correct.
Felix Frankfurter: Now, are you -- am I to take it as a matter of cause if Congress had written in such a provision, an application maybe made for -- to call a waiver that a hearing would be required, is that the application? Am I to take that as a matter of such a provision within the -- in the legislation which requires a hearing?
Warren E. Baker: The question of whether that would require a hearing would be whether or not that is the kind of an application which Section 309 relates to. Section 309 does not relate to every application filed for any relief with the Commission. It relates to --
Felix Frankfurter: No. But --
Warren E. Baker: -- specific applications.
Felix Frankfurter: I'm talking about a statutory prohibition, statutory proscription of “undue concentration” which is determined by the position but its determination should be -- should evoke to a particular aspect an opportunity to -- ask the Commission to waive. Now, what I'm asking you --
Warren E. Baker: Well, that's possible.
Felix Frankfurter: -- whether you think such a statutory -- such a statutory provision wouldn't require a hearing by an application whether if I want my application, to constitute a waiver of what Congress has generically out there.
Warren E. Baker: It wouldn't require the kind of a hearing which this Court and which other courts will determine is necessary to dispose of the kind of allocations and the circumstances of the case. It would not, of necessity, require this complete full evidentiary hearing which is contemplated by Section 309 (b) of the Act and the Administrative Procedures Act in Sections 7 and 8.
Hugo L. Black: It would require here as to show or giving him an opportunity to show, what they could, they came within the (Inaudible) or ambit of the allowable more than five stations under your special circumstances.
Warren E. Baker: That is correct.
Stanley Reed: Well, Mr. Baker --
Warren E. Baker: Yes, sir.
Stanley Reed: -- in that -- in opinion on page 48, there's an italicized words of your rule that I take it to be (Inaudible) And on page 6 of your petition for rehearing where the sections of -- are those consistent? Were you saying the Commission however will in any event consider that there would be such a concentration before if they were filed?
Felix Frankfurter: (Inaudible)
Stanley Reed: That's right. There were five stations. And in Section 172, you say that it's got a waiver of that rule. Now, are those two rules inconsistent?
Warren E. Baker: We do not think so. We think that by the very nature, the language exception or waiver means --
Felix Frankfurter: What?
Warren E. Baker: -- that in the general application, a rule is applied but that, of course, if someone comes along and alleges there are special extraordinary circumstances which in this case are good cause for waiving the general rule, you may then waiver. We don't think those things are inconsistent anymore that the rules of this Court or every other court on which have general rules as to respected dates of filing and other things and also contain provisions which say, “Upon good cause shown, the Court may waive the rules.” This is a traditional concept of general rule with exceptional circumstances relating to waiver.
Stanley Reed: That in -- in other words, will in any event if the words that are rather vague on each and will in any event (Inaudible) as though you're taking away the power to allow a waiver.
Warren E. Baker: Well, I think that must be read with respect to the language before this which says, that in any case in which someone applies for more than the first station, the Commission will consider the question of undue concentration relating to certain factors. But in any event when it reaches a certain maximum, the Commission will consider this as undue concentration.