Clay Broadcasting Corp. of Texas v. United States, 71-1621

• Citation: 464 F.2d 1313
• Decision Date: 02 October 1972
• Docket Number: No. 71-1621,71-1990.,71-1621
• Parties: CLAY BROADCASTING CORPORATION OF TEXAS, Petitioner, v. UNITED STATES of America and Federal Communications Commission, Respondents. NATIONAL ASSOCIATION OF BROADCASTERS, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

464 F.2d 1313 (1972)

CLAY BROADCASTING CORPORATION OF TEXAS, Petitioner, v. UNITED STATES of America and Federal Communications Commission, Respondents.

NATIONAL ASSOCIATION OF BROADCASTERS, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents.

Nos. 71-1621, 71-1990.

United States Court of Appeals, Fifth Circuit.

July 21, 1972.

Rehearing Denied October 2, 1972.

COPYRIGHT MATERIAL OMITTED

Frank U. Fletcher, Vincent J. Curtis, Jr., Washington, D. C., Gibbons Burke, New Orleans, La., Robert L. Heald, Washington, D. C. (Fletcher, Heald, Rowell, Kenehan & Hildreth, Washington, D. C., of counsel), for Clay Broadcasting Corp. of Texas.

John B. Summers, Louise O. Knight, Washington, D. C., for National Assn. of Broadcasters.

John N. Mitchell, Atty. Gen., Richard W. McLaren, Asst. Atty. Gen., Dept. of Justice, John H. Conlin, Associate Gen. Counsel, John W. Pettit, Gen. Counsel, F.C.C., Gregory B. Hovendon, Asst. Chief, Appellate Section, Dept. of Justice, Washington, D. C., Charles M. Firestone, Edward J. Kuhlmann, and Kenneth A. Cox, F.C.C., Washington, D. C., for appellees.

Gary L. Christensen, Charles S. Walsh, Washington, D. C., for intervenor, Nat'l Cable T.V. Assn.

Thomas N. Frohack, James R. Cooke, Washington, D. C., for intervenor, Forward Communications Corp.

Alfred C. Cordon and John B. Jacob, Washington, D. C. (Cordon & Jacob, Washington, D. C., of counsel), for WBLI, Inc., and others.

Walter Kaitz, Castro Valley, Cal., for intervenor, Cal. Community T.V. Assn., Inc.

Before GEWIN, AINSWORTH and SIMPSON, Circuit Judges.

GEWIN, Circuit Judge:

These consolidated petitions for review seek to set aside the revised schedule of fees of the Federal Communications Commission which became effective August 1, 1970.¹ The petitioners are representatives of the broadcasting and cable television industries and include several individuals and corporations which have interests in particular broadcast properties. While the contentions of the several parties vary widely the petitioners collectively present a broad challenge to the Commission's authority and the reasonableness of its order imposing the fees adopted July 1, 1970, Schedule of Fees, 23 F.C.C.2d 880, 35 Fed.Reg. 10988. Upon review we find that the revised fee schedule is a reasonable exercise of the authority delegated to the Commission by Congress.

The concept of user charges was explicitly authorized by Congress in Title V of the Independent Offices Appropriation Act of 1952.² The Federal Communications Commission adopted its first fee schedule in 1963 covering all areas of Commission regulation at the time. Report and Order, Fees, 34 F.C.C. 811 (1963). That schedule was challenged before the Seventh Circuit Court of Appeals, which affirmed the Commission's order, Aeronautical Radio, Inc. v. United States, 335 F.2d 304 (7th Cir. 1964), cert. denied, 379 U.S. 966, 85 S.Ct. 658, 13 L.Ed.2d 559 (1965). Shortly thereafter the Commission announced a policy of keeping its fees schedule under continuing review. See Fees, 1 F.C.C.2d 1349 (1965).

On February 18, 1970, the Commission issued a Notice of Proposed Rule Making looking towards the broad revision of its fee schedule. Schedule of Fees, Docket No. 18802, 21 F.C.C.2d 502, 35 Fed.Reg. 3815 (1970). The Commission noted that Congress had urged that the activities of the Commission become more nearly self-sustaining and proposed a new schedule of fees which would generate estimated fees approximating the Commission's budgetary request for fiscal year 1971. These fees included increases in those areas which were already subject to at least nominal fees and proposed new fees in areas where the Commission had only recently exercised jurisdiction to regulate—community antenna television (CATV) and radio frequency equipment testing and approval.

In addition to levying application fees, the Commission proposed to give explicit recognition to the "value to the recipient" of the privileges granted, as well as the public interest served and the direct and indirect cost to the Government by imposing fees relating to the value of the authorization of the license.³ The Commission proposed fees for the grant of applications for assignment of a license or a transfer of interest in a broadcast station which reflected the value which the parties to the transaction placed on the sale. It also proposed an annual fee for broadcast stations based on the licensees' own commercial rates. In the CATV field the Commission proposed to tie the annual fee to the number of subscribers in each system.

After receiving a large number of comments from interested parties, the Commission adopted the revised Schedule of Fees on July 1, 1970. The document was officially released on July 2, 1970, Schedule of Fees, 23 F.C.C.2d 880, and was printed in the July 8, 1970 issue of the Federal Register, 35 Fed.Reg. 10988. As indicated in the earlier Notice of Proposed Rule Making⁴ the revision abolished broadcast license renewal fees in favor of annual operating fees which amounted to 24 times a radio station's highest one-minute spot announcement rate, but not less than $52, and 12 times a television station's highest 30-second spot announcement rate, but not less than $144. The assignment and transfer fee to be paid immediately following the consummation of the transfer was set at 2% of the consideration paid. The new schedule was to be effective August 1, 1970 on all grants made on or after that date. The Commission however excepted from the grant fees those applications filed prior to July 1, 1970, the date of the adoption of the new schedule. The Commission levied an annual fee on CATV systems equal to $0.30 multiplied by the number of subscribers of the system.

Thereafter a number of petitions for reconsideration were filed with the Commission concerning various aspects of its fee schedule. These petitions, in so far as they are material to this case, were subsequently denied, 28 F.C.C.2d 139 (1971). All petitions for review of the Commission's fee schedule rulings, filed pursuant to 47 U.S.C. § 402(a) in this and other circuits, have been transferred to this court and consolidated in this case. We consider each of the challenged fees in turn.

I. Broadcast Annual License Fee

The National Association of Broadcasters (NAB), a national trade organization with a substantial number of radio and television station members, seeks a review of both the annual license fee and the 2% grant fee on assignment and transfer applications. The NAB contends that the annual fee is in effect a discriminatory tax on radio and television. It acknowledges that the Commission may impose fees upon the broadcast services and that the Commission is not limited to the imposition of nominal fees only. However the NAB contends this annual license fee is unreasonable because it reflects that the Commission's concern was only with recovering the full amount of the agency's appropriation. This, it contends, violates the statutory guidelines provided in the act which authorizes agency fees⁵ that are "fair and equitable" taking into account: (1) the cost to the Government; (2) the value to the recipient; and (3) the public policy or interest served. It argues that not all of the Commission's activities in the broadcast section are of specific benefit to the stations. The Commission and the stations themselves expend a significant amount of time and effort in activities which serve the general public at large. But the NAB complains, "the fact is the schedule of fees for the broadcast services hands to commercial licensees all of the costs of commission activities in the broadcast field when in fact all of the services are not rendered for the benefit of commercial licensees."

In our judgment the NAB misconstrues the legal requirements which the Commission must meet in imposing fees and we believe that its position demonstrates a myopic misconception of the "benefits" which the Commission confers on commercial licensees. In the first instance, the weighing of these statutory factors or "whether * * * all * * * must play a quantitative share" in the judgment made, was for the Commission. Aeronautical Radio, Inc. v. United States, 335 F.2d 304, 309 (7th Cir. 1964) citing Secretary of Agriculture v. Central Roig Refining Co., 338 U.S. 604, 611, 612, 70 S.Ct. 403, 407, 94 L.Ed. 381, 388, 389 (1950). Additionally Bureau of the Budget Circular A-25 which provides "The maximum fee for a special service will be governed by its total cost and not by the value of the service to the recipient" does not compel the Commission to precisely pro-rate its costs in performing the various services in the Broadcast Bureau and limit the fee for each service to its precise administrative cost.⁶ Indeed such precision would be difficult if not altogether impossible to achieve.⁷

The record indicates that the Commission estimated the direct and indirect costs of regulating the broadcast industry to be $9,661,200 or 38.8% of the Commission's fiscal year 1971 budget. 23 F.C.C.2d at 882. After giving consideration to the other factors,⁸ the Commission settled on a schedule in which the broadcast fees were estimated to produce $9,600,000. That figure represented less than 0.3% of the approximately $3.5 billion gross revenues generated by the broadcast industry in 1968. In exchange, commercial licensees receive an exclusive right to operate for a profit on a portion of the public's electro-magnetic spectrum. The Commission regulation of the broadcast industry generally provides individual licensees with continuing protection from technical interference as is consistent with the public interest and maintains the market structure which makes it possible for commercial broadcasting to operate at a profit. We therefore are unable to find that the Commission acted unreasonably or arbitrarily in imposing on commercial licensees an annual fee which is part of a...