Great Falls Community TV Cable Co. v. FCC

• Decision Date: 24 July 1969
• Docket Number: No. 22393.,22393.
• Citation: 416 F.2d 238
• Parties: GREAT FALLS COMMUNITY TV CABLE CO., Inc., Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents. Harriscope Broadcasting Corporation, Garryowen Cascade T.V., Inc., Teleprompter Transmission of Kansas, Inc., Intervenors.
• Court: U.S. Court of Appeals — Ninth Circuit

416 F.2d 238 (1969)

GREAT FALLS COMMUNITY TV CABLE CO., Inc., Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents Harriscope Broadcasting Corporation, Garryowen Cascade T.V., Inc.,^* Teleprompter Transmission of Kansas, Inc., Intervenors.

No. 22393.

United States Court of Appeals Ninth Circuit.

July 24, 1969.

John P. Cole, Jr. (argued), Roger E. Zylstra and Alan Raywid, Washington, D.C., Cole, Zylstra & Raywid, Washington, D.C., of counsel, for petitioner.

Henry Geller (argued), Gen. Counsel, John H. Conlin, Assoc. Gen. Counsel, Joseph A. Marino, Counsel, FCC, Donald F. Turner, Asst. Atty. Gen., Howard E. Shapiro, Atty., Dept. of Justice, Washington, D.C., for respondents.

Stanley B. Cohen, Roy R. Russo, Washington, D.C., of counsel, Law Office of Marcus Cohn, Washington, D.C., for intervenor Harriscope Broadcasting Corp.

Arthur H. Schroeder, John P. Bankson, Jr., Washington, D.C., of counsel, Miller & Schroeder, Washington, D.C., for intervenor Snyder & Associates.

Midlen & Reddy, John H. Midlen, Washington, D.C., for intervenor Garrytown Cascade T.V., Inc.

Before BROWNING and ELY, Circuit Judges, and VON DER HEYDT,^** District Judge.

BROWNING, Circuit Judge.

Great Falls Community TV Cable Co., Inc., filed this petition for review of an order of the Federal Communications Commission (10 F.C.C.2d 656) denying petitioner's application for waiver of the Commission's "nonduplication" rule. 47 C.F.R. §§ 21.712(h), 74.1103(f). This rule provides, in substance, that a CATV system operating in the basic market area of an off-the-air television station must, on request of the station, "refrain from duplicating any program broadcast by such station on the same day as its broadcast by the station * * *"

Disposition of the petition was withheld pending the decisions in United States v. Southwestern Cable Co., 392 U.S. 157, 88 S.Ct. 1994, 20 L.Ed.2d 1001 (1968), and Total Telecable, Inc. v. FCC, 411 F.2d 639 (9th Cir. 1969). In our opinion, the holdings in these cases, and other recent decisions, require affirmance of the Commission's order.

Petitioner challenges the Commission's action on four basic grounds: (1) that the Commission has no jurisdiction over CATV systems; (2) that the non-duplication rule violates the First Amendment; (3) that the rule is an unreasonable restriction upon competition — which the Commission is not authorized to regulate; and (4) that the Commission violated the due process clause of the Fifth Amendment and the applicable statutes by denying petitioner's waiver application without an evidentiary hearing.

Because these contentions were not raised in the administrative proceeding, the Commission argues that consideration of them is barred by 47 U.S.C. § 405, which precludes judicial review of "questions of fact or law upon which the Commission * * * has been afforded no opportunity to pass."¹ We reject this contention as to the first three grounds; we think it is sound as to the fourth.

Section 405 reflects the general rule — itself an aspect of the broader exhaustion of remedies doctrine — that objections to administrative action will not be considered on judicial review unless raised before the agency. Presque Isle TV Co. v. United States, 387 F.2d 502, 504 & n. 3 (1st Cir. 1967). See generally 3 K. Davis, Administrative Law Treatise § 20.06 (1958). Like most rules adjusting relations between courts and administrative agencies, the doctrine expressed in section 405 is not inflexible; it leaves room for the operation of sound judicial discretion to determine whether and to what extent judicial review of questions not raised before the agency should be denied. See L. Jaffe, Judicial Control of Administrative Action 457-458 (1965); 3 K. Davis, supra, § 20.06, at 92.

Where the agency has been afforded a full opportunity to pass on an issue, courts have not always insisted on strict application of the rule. See, e.g., Titusville Cable TV Inc. v. United States, 404 F.2d 1187, 1189 (3d Cir. 1968); Wilson & Co. v. United States, 335 F.2d 788, 794 (7th Cir. 1964); Gerico Inv. Co. v. FCC, 99 U.S.App.D.C. 379, 240 F. 2d 410, 411 (1957); cf. Hennesey v. SEC, 285 F.2d 511, 515 (3d Cir. 1961).

The first three issues were raised, considered, and rejected by the Commission in two separate rule-making proceedings,² notable for the vigor and extent of the participation by spokesmen on every side of the CATV-regulation controversy. It would therefore be wholly unreal to say that the Commission has had "no opportunity to pass" on these issues. Moreover, in the rule-making proceedings, the Commission decided these issues, fully stating the reasons for its conclusions. Thus, we have the benefit of the Commission's expert views on the difficult problems involved.³

We therefore turn to the merits of these three issues.

Petitioner concedes that the decision in United States v. Southwestern Cable Co., supra, 392 U.S. 157, 88 S.Ct. 1994, 20 L.Ed.2d 1001, disposes of its attack upon the general authority of the Commission to regulate CATV systems.

In Total Telecable, Inc. v. FCC, supra, this court rejected an argument that the nonduplication rule violates the First Amendment, expressing agreement with the decisions of other circuits which had held that as a reasonable regulation in the public interest, the rule is constitutional.⁴

Petitioner calls our attention to the subsequent Supreme Court decision in Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 89 S.Ct. 1794, 23 L.Ed.2d 371 (1969).⁵ There, petitioner asserts, the Court upheld the Commission's fairness doctrine on the sole ground that because of the scarcity of available frequencies, the challenged regulations furthered, rather than hindered, free speech. Petitioner argues that since CATV occupies no space on the radio spectrum, the justification for Commission action in Red Lion, and in NBC v. United States, 319 U.S. 190, 226-227, 63 S.Ct. 997, 87 L. Ed. 1344 (1949), is not available here.

In our view, nothing in Red Lion impairs the authority of Total Telecable. Although it is true that the Red Lion opinion proceeded from the scarce-frequency premise, the Court expressly declined to reach arguments justifying the doctrine on other, independent grounds. 395 U.S. at 401 n.28, 89 S.Ct. 1794.⁶

Petitioner also argues that "the factual situation here differs slightly" from that in Total Telecable. The distinction urged is that petitioner provides its subscribers with substantial programming from an earlier, western time zone, thus enabling them to view the same program at different times on the same day and to avoid conflicts between different programs which the local stations offer only simultaneously. By requiring same-day nonduplication in these circumstances, petitioner contends, the Commission's rule limits CATV subscriber access to programs in a manner not present in Total Telecable.⁷

The Commission recognized that same-day exclusivity would work the very deprivation which petitioner asserts; it found, however, that larger public interest considerations outweighed this deprivation. First Report and Order, 38 F.C.C. at 726. See also Second Report and Order, 2 F.C.C.2d at 749.

The crux of the Commission's finding was that unrestricted CATV service, by rendering the operation of local off-the-air stations uneconomic, would impose a far greater limitation upon access to television by the public as a whole than would result from the proposed rule. First Report and Order, 38 F.C.C. at 700. Viewers in outlying areas, where the cost of running a CATV cable is prohibitive, and viewers unable, or unwilling, to pay for television service via cable, would be completely deprived of television service. Id. at 699. Moreover, the Commission found that the demise of local stations would close an important channel for local community self-expression (id.), and would doom the existing commercial television system, which is deliberately "predicated upon the social desirability of having a large number of local outlets, with diversity of control over disseminating sources, rather than a few stations serving vast areas and populations." Id. at 699-700, citing, inter alia, the First Amendment discussion in Associated Press v. United States, 326 U.S. 1, 20, 65 S.Ct. 1416, 89 L.Ed. 2013 (1945). In addition, the Commission feared that unregulated CATV growth would impede the development of UHF television service. Id. at 711-13.

In contrast to the reasonably anticipated harm to the entire viewing public from unrestricted CATV operations, the Commission found that the restriction which a same-day nonduplication rule would impose upon CATV subscribers would be minimal. The regulation would impose no control on program content. Subscribers would not be deprived of the opportunity of seeing a particular program, but only of the choice of seeing that program at different hours, or twice on the same day. See Robinson, supra, note 4, at 95-96.

Petitioner has failed to persuade us that the Commission's judgment was unreasonable. The interests which the Commission reasonably sought to serve in promulgating the same-day nonduplication rule are the dominant First Amendment interests identified in Red Lion. As the Court said, "It is the right of the public to receive suitable access to social, political, esthetic, moral, and other ideas and experiences which is crucial" under the First Amendment. 395 U.S. at 390, 89 S.Ct. at 1807.

The third issue requires only brief comment. The propriety of the Commission's concern for the impact of competition from CATV upon off-the-air broadcasters, and the appropriateness of the Commission's response, have been uniformly sustained in decisions by other Courts of Appeals, with which we agree. E.g., Titusville Cable TV, Inc. v. United States, 404 F.2d 1187, 1190 (3d Cir.1968); Conley Electronics Corp. v. FCC, 394 F.2d 620, 623-624 (10th Cir. 1968); see Community Television, Inc. v. United...