Poole Broadcasting Co. v. Federal Communications Commission
Poole Broadcasting Co. v. Federal Communications Commission
Opinion of the Court
Petitioner, Poole Broadcasting Company, the licensee of VHF television station WJRT-TV in Flint, Michigan, seeks review of two orders of the Federal Communications Commission: (1) an Order and Certificate released November 19, 1969, granting intervenor Michigan Bell Telephone Company authority pursuant to Section 214 of the Communications Act, 47 U.S.C. § 214, to construct and operate CATV channel facilities in and around Flint, Michigan; and (2) a Memorandum Opinion and Order released December 24, 1969, denying petitioner’s request that intervenor Wonderland Ventures, Inc., be prohibited from carrying four Detroit stations and one Windsor, Ontario, station as part of its CATV offering in Flint.
I. The Background of this Litigation
On April 13, 1966, intervenor Wonderland gave notice of an agreement with Michigan Bell for construction of a CATV system serving Flint, Michigan. The proposed system would carry the signals of five stations located in the Detroit-Windsor area and the signals of several other stations located in Flint and neighboring cities. Sixty days later, on June 13, 1966, petitioner Poole filed with the Commission a petition under 47 C.F.R. § 74.1109, seeking an order preventing, Wonderland from carrying the signals of the Detroit-Windsor stations.
Section 74.1109 provides a procedure for television operators to seek from the Commission ad hoe rulings where special factual circumstances may warrant departures from the general rules. Poole, in seeking such relief, alleged that a problem was presented similar to that referred to in footnote 69 of the Commission’s Second Report and Order
With possibly only the rarest exception, CATV activity which does not involve extension of a signal beyond its Grade B contour may freely continue.69
Because Poole’s petition was filed more than thirty days after Wonderland had given notice, the mandatory stay provisions of Section 74.1105(c) of the rules (forbidding implementation of proposed CATV service pending resolution-of requests for relief) were inapplicable. Wonderland filed an opposition pleading on June 29, 1966, urging denial of the Poole petition and stating that “the first twenty-seven mile section of this system is already installed, and negotiations are proceeding with regard to installing additional sections.” The Commission took no action on the matter, and on September 30, 1966, Michigan Bell commenced operation of the initial section of the Flint CATV system.
As of that date, the Commission had asserted jurisdiction over only the rates charged by common carriers for facilities designed to provide local distribution service to CATV operators.
On August 6, 1968, Michigan Bell filed a request for certification pursuant to Section 214 for its CATV local distribution system, existing and proposed, in Flint. After notice of the filing of the application became public, Poole asked that the Commission consider in the Section 214 proceeding the objections that Poole had previously filed to Wonderland’s proposal to transmit the five Detroit-Windsor signals. It further asked for the issuance of an order limiting the carriage of the challenged signals to the CATV system’s then existing dimensions, at least pending resolution of the rule-making proceeding just announced on December 13,1968, in a Notice of Proposed Rule-Making and Notice of Inquiry, Docket No. 18397.
On December 24, 1969, before Michigan Bell was able to complete any further extensions of its Flint facilities as authorized by its Section 214 certificate, the Commission released two separate orders. The first granted Poole’s motion for a stay to the extent of “precluding CATV carriage of Detroit-Windsor signals in areas not presently served, pending judicial review.” The other considered and denied Poole’s basic request for Section 74.1109 relief. It held that the proposed rules were inapplicable to the already existing Flint CATV system so there was no need to defer ruling on Poole’s petition, pending completion of the Docket No. 18397 rule-making proceeding. Applying the previously established policies of the 1966 Second Report and Order, therefore, it found that Poole’s showing was inadequate to justify the relief it sought. On December 31, 1969, Poole filed a petition for review of this second order (No. 23,828), and the case was consolidated with No. 23,-704.
II. The November 10, 1969, Order Granting Michigan Bell Section 21b Certification
Poole made no attempt before the Commission or before this court to argue that the • Commission has a general obligation to condition its Section 214 certifications so as to regulate CATV operators. Poole’s quarrel in these cases is not directly with Michigan Bell, but with Wonderland. Even if the Commission had granted Poole’s Section 74.1109 petition for special relief, there would be no ground for stopping construction by Michigan Bell, since seven of the twelve channels that Wonderland intends to carry are not being challenged. It makes no difference to Michigan Bell how many channels are carried on the lines it sets up.
Poole’s sole interest in intervening in the Section 214 proceeding, then, stemmed from its fear that a grant of certification to Michigan Bell would prejudice its petition for special relief. What it feared was something quite specific: that before a Commission decision on the Section 74.1109 petition came down, Michigan Bell would complete the entire CATV distribution system and Wonderland would commence broadcasting the five Detroit-Windsor signals to all of Flint. Poole feared that once that had happened, it would be much harder to persuade the Commission of the merit of its petition, since a finding in favor of Poole would then require “rolling back” an established set of signals, something which the Commission has shown that it is reluctant to do.
But however well-founded petitioner’s fears, they were not realized. The De
III. The December 24, 1969, Order Denying Petitioner Poole’s Request for Special Relief
Poole’s main contention in attacking this second order is that the Commission erred in holding the Flint system entirely exempt from the proposed rules. It erred, therefore, in holding that the interim policies announced in the 1968 Notice “grandfathered” the entire Flint system — constructed and unconstructed. Paragraph 53 of the 1968 Notice reads :
We are proposing to “grandfather” the present service of CATV systems which would otherwise be prohibited or restricted by the proposed rules, in order to avoid substantial disruption to the CATV subscribers. * * * [A]ny rules adopted would be applicable upon their effective date to all CATV service commenced after December 20, 1968, including service not barred by Section 74.1105(c). However, in the event that the rules finally adopted differ from the proposed rules, service authorized by the Commission to commence during the pend-ency of this proceeding will be grandfathered; also grandfathered is any service previously authorized by the Commission, whatever the commencement date of such service.11
This paragraph certainly lends itself to the interpretation that what could be grandfathered in Flint is only the CATV system as it was in actual operation at the cut-off date of December 20, 1968— that is, the partial CATV system Michigan Bell had been able to complete before it was ordered to stop construction. Wonderland could continue to broadcast the Detroit-Windsor stations to those parts of Flint which were then receiving them, but further expansion of those broadcasts would be “commencing” a “CATV service,” and therefore the new rules would apply.
On the other hand, the Commission might be of the opinion that paragraph 53 must be construed so that a system that was providing signals to any part of a community before December 20, 1968, would be exempt from the proposed rules and could be extended throughout that community. The Commission might have decided to give overriding importance to viewing the community as an entity and ensuring uniformity of service throughout, rather than attempting to impose varying qualities of service within the same community. Under this con-
Alternatively, the Commission might have decided that a CATV service which is not halted by a mandatory stay within thirty days of its initial notice, under Section 74.1105(c), is “authorized” for the purpose of the interim procedures and, by the last clause of paragraph 53, must be permitted to expand to the limits specified in its initial notice.
Having presented the apparent difficulty posed by paragraph 53, and the different ways of construing it, let us examine that part of the Commission’s order which seems to deal with the question of “partial grandfathering”:
In the [1968 Notice], we proposed adoption of a rule, Section 74.1107(e), which would govern Footnote 69 situations in terms of 35-mile zones. * * We expressly stated in paragraph 53 that this proposal was inapplicable to existing systems, in view of the disruption to subscribers which would otherwise occur. We must therefore examine this Section 74.1109 special relief in light of previously established policies and the showing made. [Emphasis added.]
We reluctantly conclude that the flat statement in the above paragraph does not meet the threshold of articulateness that courts have required of administrative agencies.
The baldness of the Commission’s assertion suggests that the Commission may not have considered the question of conflicting constructions of paragraph 53 at all. This suggestion is bolstered by the fact that both the Commission and Wonderland argue on appeal that Poole did not raise the question of partial grandfathering below and that the Commission’s order must be affirmed for that reason. The very fact that the Commission’s order lends itself so easily to the conclusion that the question was not raised below manifests its inadequacy as a reviewable administrative decision.
It may seem wasteful to remand a case to an administrative agency when it appears that there are grounds upon which the agency could have justified its existing decision. But “[i]f an order is valid only as a determination of policy or judgment which the agency alone is authorized to make and which it has not made, a judicial judgment cannot be made to do service for an administrative judgment.”
The claim that Poole failed to raise the issue is at least colorable, since Poole’s original Section 74.1109 petition for special relief sought the prohibition
[W]e submit that relief comparable to that granted in Delaware County (i. e., an order confining the [Wonderland] system’s carriage of Detroit-Windsor signals to those areas of Flint where main trunk cable is now laid, at least pending the resolution of the rule making proceeding in Docket No. 18397) would be the minimum step appropriate in the circumstances.
Second, in its motion for a stay pending judicial review of the Section 214 order, Poole said:
[T]he interim procedures prescribed in [Docket No. 18397] provided that, where a timely petition under Section 74.1109 raises a “footnote 69” issue, the challenged service must be deferred pending completion of the rule making. * * *
* * * In Delaware County Cable Television Co., et al., 13 F.C.C.2d 899 (1968), the Commission dealt with a “footnote 69” request for 74.1109 relief which was filed over a year after the relevant CATV system had given the requisite notice, and the systems had “gone ahead with construction and begun offering service to the public” in “good faith reliance on the lack of objections”. * * * The Commission held that these equities did not wholly override the public policies reflected in “footnote 69” and ordered the carriage of adjacent-market signals confined to the dimensions of the system as of the date of its order, pending a full hearing. * * * Poole asks no more here. [Emphasis added.]
Poole’s many communications with the Commission were all part of a continued effort to get carriage of the Detroit-Windsor stations restricted as much as possible, so it was entitled to expect that its related letters and motions would be read when the Commission finally reached the underlying petition. Since, in addition, the Commission did feel bound to make a statement about the applicability of paragraph 53 in its order, we believe that Poole sufficiently gave the Commission “an opportunity to rule”
IV. The Necessity for Holding an Evi-dentiary Hearing
In addition to the grandfathering question, if on remand the Commission should reaffirm its conclusion that the proposed rules do not apply it would seem that there is an additional issue which should be reexamined and clarified by the Commission.
Poole’s brief combines two related issues: (1) whether the Commission’s order denying the 47 C.F.R. § 74.1109 request for special relief was correct on the merits; and (2) whether the order should have been issued as it was without holding a full evidentiary hearing. When closely examined, however, the brief does present the argument that the Commission was in error in not ordering that an evidentiary hearing be held to explore the facts bearing on the issues raised by Poole’s petition. The Commission denied Poole’s request for relief on the merits, relying almost exclusively on information presented by letter, written comment, and other informal communications of the various affected parties.
Whenever a CATV system proposes to pick up a broadcast signal and extend it beyond the limits of its Grade B contour into a major market area (which is also within the Grade A contour of a broadcast signal originating in that market area), 47 C.F.R. § 74.1107
In footnote 69 cases such as the present one, where the CATV system is not proposing to extend a broadcast signal beyond its Grade B contours but the effect of its operations is to equalize the quality of the more distant signal, the procedural steps are somewhat different. The only burden then on the CATV system is to give notice of its proposed operations to interested parties, including affected broadcasters, and the burden of proceeding and burden of proof in any proceedings challenging the proposed operations are both on the broadcaster instead of the CATV system. The question for the moment is whether the 47 C.F.R. § 74.1107 evidentiary hearing requirement applies in footnote 69 cases, as well as in distant signal cases.
By its express terms, 47 C.F.R. § 74.-1109 is directed toward distant signal situations. However, in the Commission’s leading decision in Midwest Television, Inc.,
The issues as to potential CATV penetration and impact on UHF, the evidence, and the pertinent policy considerations are the same whether San Diego is just within [a footnote 69 situation] or just beyond [a distant signal situation] the fringe of the Grade B contours of the Los Angeles stations. The sole difference is that the burden of proceeding and of proof lies on the CATV system in the ease of distant signal proceedings under Section 74.1107(b) and is largely on the petitioning broadcaster in a footnote 69 proceeding. * * *19
Thus, arguably the hearing requirements should be applicable to footnote 69 cases ... such as the present one.
Previous Commission decisions in footnote 69 cases support this conclusion. For example, in the Midwest Television case, supra, the Commission observed:
However, we concluded that the public interest required thorough exploration of these questions [e. g., potential CATV penetration, and the effect on existing and potential broadcasters] before CATV operations became established or well entrenched in major markets and that evidentiary hearings on the proposals and circumstances in major markets would afford an appropriate vehicle for reaching a policy determination as to the particular market. * * *20
In Midwest Television both distant signal and footnote 69 issues were involved, but in numerous cases where only a footnote 69 question was presented the Commission has required an evidentiary hearing. Thus, in Buckeye Cablevision, Inc
The petition raises questions which, under the policies expressed in the Second Report and Order, requires factual examination. The lack of information concerning the impact of CATV upon UHF activity in Toledo compels that a meaningful record be established before we render a decision. * * * Commission action based on such a record should thus*834 have some valid relationship to the facts of CATV effect in the market.22
In Vision Cable Co. of Rhode Island, Inc.,
In the light of our present policies, and particularly our recent decision in Midwest, swpra * * * we be [sic] believe that a hearing is called for to determine whether the Vision Cable proposal would have a significantly dampening effect on future interest in UHF channel 16. This issue will, therefore, be the subject of a hearing.
And in Delaware County Cable Television Co.,
[W]e have recognized that footnote 69 problems are presented by operation of CATV around Philadelphia carrying New York signals. * * * Beyond this we feel that a hearing is necessary. * * *26
In a number of cases involving the carrying of Detroit-Windsor signals by CATV systems in adjacent areas, the Commission has prevented such carriage “pending our next consideration of these markets.”
Nor has G.T.&E. persuaded us of special circumstances warranting a departure from the determination made in Fetzer Cable Vision, supra, where carriage of Detroit and Windsor signals into the Lansing market was not permitted without hearing.29
Thus it appears that the burden may be on the CATV system in a footnote 69 case to demonstrate that a hearing is not necessary. Finally, and of key importance, in a footnote to the quote above from the G.T.&E. case the Commission noted:
2. There are three UHF channels assigned within the Flint market [the market the present case is concerned with]: Channel 66, Flint; channel 61, Bay City; and channel 42, Saginaw. Thus, the considerations applicable to • the Lansing market [where it was held that a hearing was required] may also apply to the Flint market.
The Commission order involved in No. 23,828 resolves the case on the merits against Poole, without even mentioning the hearing question, and in the face of the Commission’s own recognition in the G.T.&E. case that CATV expansion carrying Detroit-Windsor signals into the Flint area may require a hearing. The order gives no reasons why a hearing was not required in the present case; does not even indicate that the question was considered. Although there have been a few cases where determinations such as the present one were made without a hearing, the Commission has been equally silent in those cases as to why that result was reached.
Furthermore, in resolving the present case against Poole on the merits, the Commission stated that there had been “no sufficient demonstration concerning
There are any number of reasons why a case could be made for not holding a hearing in connection with the present case. For example, despite the suggestion in the G.T.&E. case, adverted to above, that the burden is on the CATV system to demonstrate that a hearing is not necessary, the Commission may take the position that the broadcaster not only has the ultimate burdens of proceeding and proof, but also the burden of showing the necessity of a hearing in footnote 69 cases.
Should the Commission affirm on remand that the new footnote 69 rules do ‘not apply to this case and the system is not grandfathered as to the entire contemplated area of service, then the hearing question becomes important. In that event, whether the CATV system would be permitted to expand its carriage of Detroit-Windsor signals beyond the area presently served would depend on the proper application of the old footnote 69 policies. Therefore, if the above occasion arises the Commission is directed to reconsider whether a hearing is necessary to make the determination, and explain fully why it was or was not necessary.
V. Interim Relief
The stay presently in effect preventing Michigan Bell and Wonderland from broadcasting the Detroit-Windsor stations beyond the limits of the system on December 20, 1968, was issued pending judicial review of the Section 214 certification order, which we are affirming. The Commission may well construe the stay, then, as expiring immediately. But by granting that stay, the Commission showed its willingness to maintain the status quo until the questions involved in this litigation are resolved. A prompt motion by Poole for similar relief, therefore, pending Commission reconsideration of the Section 74.1109 petition and judicial review thereof, may be viewed favorably by the Commission. In any event, we feel that the Commission must
The order in No. 23,704 is affirmed. The order in No. 23,828 is vacated and remanded for reconsideration in light of this opinion.
. The first order is challenged in No. 23,704, the second in No. 23,828.
. 2 F.C.C.2d 725, 786 (1966).
. For a summary of the rules and explanations of the technical terms, see Midwest Television, Inc. v. F. C. C., 138 U.S. App.D.C. 228, 426 F.2d 1222 (Feb. 4, 1970).
. If two major markets each fall within one another’s grade B contour (e. g., Washington and Baltimore), this does not mean that there is no question as to the carriage by a Baltimore CATV system of the signals of Washington; for in doing so and thus equalizing the quality of the more distant Washington signals, it might be changing the viewing habits of the Baltimore population and thus affecting the development of the Baltimore independent UHF station or stations. Such instances rarely arise, and can, we think, be dealt with by appropriate petition or Commission consideration in the unusual case where a problem of this nature might arise.
. 2 F.C.C.2d at 786.
. Common Carrier Tariffs for CATV Systems, 4 F.C.C.2d 257 (1966).
. General Telephone Co. of Cal., 13 F.C.C. 2d 488, aff’d, 134 U.S.App.D.C. 116, 413 F.2d 390, cert. denied, 396 U.S. 888. 90 S.Ct. 173, 24 L.Ed.2d 163 (1969).
. 15 F.C.C.2d 417, 33 Fed.Reg. 19028.
. This requirement would force the CATV operator to compete with local stations for the right to retransmit the Detroit-Windsor stations.
. In other words, the proposed rules, whenever adopted, would not be applied to the “grandfathered” systems. 15 F. C.C.2d at 438 53. This provision is discussed more fully at pp. 830-831 infra.
. Second Report and Order, 2 F.C.C.2d 725, 782, 785 (1966); CATV, 15 F.C.C.2d 417, 435 ¶ 45 (1968).
. 15 F.C.C.2d at 438 [emphasis added].
. The present rules already provide a similar kind of “partial grandfathering.” Section 74.1107(d) reads:
The provisions of paragraphs (a) and (b) of this section shall not be applicable to any signals which were being supplied by a CATV system to its subscribers in a community on February 15, 1966, and pursuant to a franchise (where necessary) issued on or before that date: Provided, however, * * * That no CATV system located in a community in the 100 largest television markets, which was supplying to its subscribers on February 15, 1966, a signal carried beyond its Grade B contour, shall extend such service to new geographical areas within the same community where the Commission * * * determines that the public interest * * * would be served by appropriate conditions limiting the geographical extension of the system to new areas in the community. [Emphasis added.]
. SEC v. Chenery Corp., 318 U.S. 80, 63 S.Ct. 454, 87 L.Ed. 626 (1942); Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962).
. SEC v. Chenery Corp., 318 U.S. 80, 88, 63 S.Ct. 454, 459, 87 L.Ed. 626 (1942).
. See Chae-Sik Lee v. Kennedy, 111 U.S. App.D.C. 35, 294 F.2d 231 (1961).
. If a question of law is raised upon which the Commission “has been afforded no opportunity to pass,” then a petition ■for reconsideration is a condition precedent to judicial review. 47 U.S.C. § 405. Poole filed no such petition, so the Commission order could not be vacated for the above reason if the issue was not sufficiently raised below.
. See 47 U.S.C. § 405 and note 16 supra.
. 13 F.C.C.2d 478 (1968).
. Id. at 489 (emphasis added).
. Id. at 487-88 (emphasis added).
. 10 F.C.C.2d 745 (1967).
. Id. at 740-747 (emphasis added).
. 14 F.C.C.2d 054 (1968).
. Id. at 655.
. 13 F.C.C.2d 899 (1968).
. Id. at 901.
. M. g., Cascade Cable Television Co., 10 F.C.C.2d 611 (1967).
. G. T. & E. Communications, Inc., 10 F.C.C.2d 205, 206 (1967).
. Id. at 206 (emphasis added).
. Id., n. 2 (emphasis added).
. Triangle Cable Co., 17 F.C.C.2d 324 (1969); Cablevision of Dunn, Inc., 12 F.C.C.2d 195 (1968).
. 6 F.C.C.2d 845 (1967).
. Joint Appendix at 122.
. 23. g., Midwest Television, Inc., 13 F.C.C.2d 478 (1968); Buckeye Cablevision, Inc., 10 F.C.C.2d 745 (1967); Midwest Television, Inc., 4 F.C.C.2d 610 (1966).
. 14 F.C.C.2d 654 (1968).
. Id. at 655. See also Midwest Television, Inc., 4 F.C.C.2d 610 (1966).
. This is suggested in General Electric Cablevision Corp., 8 F.C.C.2d 457 (1967).
. Channel 9 Syracuse, Inc. v. FCC, 128 U.S.App.D.C. 187, 193, 385 F.2d 969, 975 (1967).
Reference
- Full Case Name
- POOLE BROADCASTING COMPANY v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Michigan Bell Telephone Company, Wonderland Ventures, Inc., Intervenors POOLE BROADCASTING COMPANY v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Wonderland Ventures, Inc., Intervenor
- Cited By
- 1 case
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- Published