Federal Communications Commission v. National Broadcasting Co Koa, No. 585

• Court: United States Supreme Court
• Writing for the Court: ROBERTS
• Citation: 87 L.Ed. 1374,63 S.Ct. 1035,319 U.S. 239
• Parties: FEDERAL COMMUNICATIONS COMMISSION v. NATIONAL BROADCASTING CO., Inc., (KOA), et al
• Docket Number: No. 585
• Decision Date: 17 May 1943

319 U.S. 239 63 S.Ct. 1035 87 L.Ed. 1374 FEDERAL COMMUNICATIONS COMMISSION

v.

NATIONAL BROADCASTING CO., Inc., (KOA), et al.

No. 585. Argued April 8, 9, 1943. Decided May 17, 1943.

Mr. Paul A. Freund, of Washington, D.C., for petitioner.

Mr. Philip J. Hennessey, Jr., of Washington, D.C., for respondents.

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Mr. Justice ROBERTS delivered the opinion of the Court.

This case presents important questions of procedure arising under Title III of the Communications Act of 1934.¹

The respondent is licensed to operate Station KOA at Denver, Colorado, on a frequency of 850 kilocycles. Station WHDH, of Boston, Massachusetts, had a license to operate, daytime only, on the same frequency. October 25, 1938, WHDH applied to the Communications Commission for an increase in power and for operation unlimited in time. The Commission set down the application and designated certain issues for hearing, of which the following are pertinent: To determine whether the interests of any other stations may be adversely affected by reason of interference, particularly KOA and other named stations; to determine whether public interest, convenience or necessity would be served by modifying the rules governing standard broadcast stations to authorize the proposed operation of WHDH.

The Commission's rules precluded the operation of a second station at night on KOA's frequency;² provided that an application not filed in accordance with its regulations would be deemed defective, would not be considered, and would be returned to the applicant,³ and also that if an applicant desired to challenge the validity or wisdom of any rule or regulation he must submit a petition setting forth the desired change and the reasons in support thereof. ⁴

The respondent petitioned to intervene. Its petition was denied. It then moved to dismiss WHDH's applica-

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tion for failure to conform to the rules and regulations. The motion was denied. Meantime the Commission evidently believing that, in view of the possible alteration of the rules concerning standard broadcast stations, questions of policy might be involved and that, consequently, under Sec. 409(a), the hearing would have to be conducted by a member of the Commission,⁵ designated Commissioner Case to conduct the hearing.

No hearing was held under the original notice. A new notice was issued which indicated that the Commission did not then contemplate modification of its substantive rules but intended merely to afford the applicant an opportunity to urge that they be construed in the applicant's favor. Issues specified in the second notice were 'to determine whether or not the Commission's Rules Governing Standard Broadcast Stations, particularly Sections 3.22 and 3.25 (Part III) properly interpreted and applied preclude the granting of the application' and to determine the nature, extent, and effect of any interference which would result from a grant of the application, particularly with Station KOA and others named. The inquiry thus limited could be heard before an examiner under Sec. 409(a) and, accordingly, the Commission withdrew the designation of Commissioner Case and assigned an examiner.

A hearing was held January 29 and 30, 1940, but the respondent was not permitted to appear or participate. December 9, 1940, the Commission promulgated proposed findings of fact and conclusions. Two commissioners dissented. All agreed that Secs. 3.22 and 3.25 of the regulations precluded a grant of WHDH's application. Three voted to modify those regulations and to grant the

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application. Respondent then filed its second petition to intervene, which was denied. The Commission subsequently, on its own motion, permitted respondent to file briefs and present an oral argument amicus curiae. April 7, 1941, the Commission adopted a final order amending Sec. 3.25 of the rules and granting the WHDH application, two commissioners dissenting.

Respondent filed a petition for rehearing pursuant to Sec. 405 of the Act. ⁶ This was denied. Thereupon respondent gave notice of appeal to the Court of Appeals of the District of Columbia,⁷ which concluded that the Commission's action effected a modification of respondent's license and consequently the statute entitled the respondent to be made a party and to participate in the hearing. The court below therefore reversed the Commission's order and remanded the case for further proceedings.⁸

The respondent contends that it was entitled, as a matter of right, to participate in the hearing before the Commission on the question of the granting of WHDH's application and that its rights in this respect were not satisfied by permitting it to file a brief and present argument. It further insists that the Commission's proceeding was invalid due to the provisions of Sec. 409(a) of the statute, the failure to comply with the rules then in force, and the arbitrary and capricious action taken. Finally, the respondent asserts § 405 entitled it to a rehearing and § 402(b)(2) granted it an appeal.

The petitioner urges the grant of WHDH's application did not amount to a substantial modification of KOA's license or so affect KOA's rights as to require that KOA be permitted to intervene and that, in any event, KOA was not denied any substantial right of participation in the proceeding.

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First. We are of opinion that respondent was entitled to be made a party.

Section 312(b) of the Act provides:

'Any station license hereafter granted * * * may be modified by the Commission * * *, if in the judgment of the Commission such action will promote the public interest, convenience, and necessity * * *. Provided, however, That no such order of modification shall become final until the holder of such outstanding license * * * shall have been notified in writing of the proposed action and the grounds or reasons therefor and shall have been given reasonable opportunity to show cause why such an order of modification should not issue.'

The Commission found that there would be interference with KOA's broadcast in the eastern part of the United States if WHDH's application were granted. The Commission's own reports to Congress show that at night a small proportion of the urban population and a much larger proportion of the rural population of the country enjoy only such broadcasting service as is afforded by clear channel stations. KOA, one of the stations upon which this service depends, has operated continuously at Denver since 1924 and has used a clear channel upon which only one station is permitted to operate during the night. Under the Commission's regulations (§§ 3.22 and 3.25) KOA had, therefore, little or no channel interference from any station located within the United States. In addition, its signals throughout the United States were free, and entitled to remain free, of channel interference from any station in Canada, Mexico or Cuba, pursuant to the provisions of the North American Regional Broadcasting Agreement.⁹ The Commission's order deprives KOA of freedom from interference in its night service over a large area lying east of the Mississippi River. Furthermore, the order opens the way for Canada, Mexico, and Cuba,

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signatories to the broadcasting agreement, to acquire the right to operate stations which may cause channel interference at night on KOA's frequency within the United States.

The respondent urges that it can be shown that the service of WHDH, while interfering at night with that of KOA, would not be a service equally useful, and that the grant to WHDH adds a new primary service to an area already heavily supplied with such service. In its petitions to intervene, the respondent called attention to the terms of its existing license, asserting that the grant of WHDH's application would cause interference in areas where KOA's signal was interference free; that respondent would be aggrieved and its interests adversely affected by a grant of the application and that the operation proposed by WHDH would not be in the interest of public convenience and necessity; that a grant of the application would result in a modification of respondent's license in violation of § 312(b) and would result in a modification of the Commission's regulations without such a hearing as is required by § 303(f) of the Act. In its petition for rehearing the respondent elaborated and reiterated the reasons embodied in its motions for dismissal of the petition and its petitions to intervene.

The Commission says that the section has no application to this case. It asserts that the proceeding was an application by WHDH for modification of its station license and that, under § 309(a) of the Act, the Commission might have acted on the application without any hearing. So much may be conceded, if nothing more were involved. But the grant of WHDH's application, in the circumstances, necessarily involved the modification of KOA's outstanding license. This petitioner denies, saying KOA's license granted no more than the privilege of operating its station in a prescribed manner and that the grant of WHDH's application in nowise altered the terms

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of KOA's license. This contention stems from the circumstance that KOA's license authorizes it to operate a transmitter of 50 kilowatts on the frequency 850 kilocycles at Denver. The petitioner says that the grant of WHDH's application affects none of these terms. But we think this too narrow a view. When KOA's license was granted the Commission's rules §§ 3.21 and 3.25 embodied these provisions:

'A 'clear channel' is one on which the dominant station or stations render service over wide areas and which are cleared of objectionable interference within their primary service areas and over all or a substantial portion of their secondary service areas.'

'The frequencies in the following tabulation are designated as clear channels and assigned for use by the classes of stations are...