National Cable Television Association, Inc. v. FCC

• Decision Date: 17 April 1973
• Docket Number: No. 24786.,24786.
• Citation: 479 F.2d 183
• Parties: NATIONAL CABLE TELEVISION ASSOCIATION, INC., Appellant, v. FEDERAL COMMUNICATIONS COMMISSION.
• Court: U.S. Court of Appeals — District of Columbia Circuit

479 F.2d 183 (1973)

NATIONAL CABLE TELEVISION ASSOCIATION, INC., Appellant, v. FEDERAL COMMUNICATIONS COMMISSION.

No. 24786.

United States Court of Appeals, District of Columbia Circuit.

Argued June 13, 1972.

Decided April 17, 1973.

COPYRIGHT MATERIAL OMITTED

Charles S. Walsh, Washington, D. C., with whom Gary L. Christensen, Washington, D. C., was on the brief, for appellant.

Leonard Schaitman, Atty., Dept. of Justice, with whom L. Patrick Gray, III, Asst. Atty. Gen., at the time the brief was filed, Thomas A. Flannery, U. S. Atty., at the time the brief was filed, and Walter H. Fleischer, Atty., Dept. of Justice, were on the brief, for appellee. Richard E. Wiley, Gen. Counsel, F. C. C. at the time the record was filed, John H. Conlin, Associate Gen. Counsel, F. C. C., and Robert V. Zener, Atty., Dept. of Justice, also entered an appearance for appellee.

Before BAZELON, Chief Judge, ROBINSON, Circuit Judge, and WILLIAM J. JAMESON,^* Senior U. S. District Judge for the District of Montana.

BAZELON, Chief Judge:

This appeal involves the meaning of the requirement under the Freedom of Information Act that documents be "identifiable" before disclosure is required.¹ On March 2, 1970, the National Cable Television Association (NCTA) requested that the Federal Communications Commission allow inspection of several classes of documents that related to a proposed Commission rulemaking. When the Commission refused, the NCTA brought this suit in the District Court for a stay of the rulemaking and for an order to produce the documents.

Immediately before the hearing for preliminary relief in the District Court, but after the period allowed by the Commission for comments on the rules, the Commission filed a motion and memorandum alleging that "circumstances" had changed, proffering a number of the documents theretofore denied, and requesting dismissal or summary judgment.

The District Court denied the motion for preliminary relief and no appeal was noted.² It held two hearings, received testimony from Commission staff members, and granted summary judgment for the Commission on the following oral statement:

To me, what you are seeking are the work papers and internal memoranda of this agency to which I do not believe you are entitled. What you want are the tapes, the yellow work sheets and possibly to pick somebody\'s brain. I do not think you have made out a case.³

We reverse. Summary judgment may be granted only if the moving party proves that no substantial and material facts are in dispute and that he is entitled to judgment as a matter of law.⁴ To prevail, the defending agency must prove that each document that falls within the class requested either has been produced, is unidentifiable, or is wholly exempt from the Act's inspection requirements.

Measured against this requirement, summary judgment was improper. Some of the facts necessary to the Commission's defenses find no support in the evidence and others of those facts are directly contradicted by evidence elicited by the NCTA.

I. The Rulemaking Proceeding

On February 19, 1970, the Federal Communications Commission released a Notice of Proposed Rule Making which set forth an alteration—and substantial increase—in its license "fee schedule."⁵ The February Notice proposed extension of fees beyond applicants for licenses to also include operators of community antenna television (CATV) systems and users of the Commission's radio frequency equipment testing services. It also proposed that the fees, which had previously been designed to reimburse the government for twenty-five percent of the Commission's budget, be raised approximately three hundred percent, thus making the Commission self-supporting.

The result was a predictable storm of protest. At first directed at the Commission's power to impose the fees, the attack eventually shifted to the way in which the proposed scheme would allocate the costs of regulation among the regulated industries and their constituent members. In response to the latter, the Commission issued a Supplemental Notice in March of 1970.⁶ The March Notice purported to provide a breakdown of the costs of operating the Commission into the cost of operating each of its six major offices and bureaus.

Taken together, the February and March notices asserted that the proposed schedule would assess each Commission-regulated industry in accordance with a formula that may be briefly described. The cost of operating each office with direct responsibility for regulating an industry was computed. Next, that part of the cost of each office without a direct regulatory responsibility that could be directly traced to a particular industry was charged to that industry. Then all remaining costs were lumped together and each was assigned a share of that cost equal to its percentage share of the directly assigned costs. Finally, the sum of these items, called the "cost factor," was adjusted to reflect certain intangibles, such as the "value to the recipient" of the privileges granted it by the Commission.⁷

After setting forth this generalized explanation of its approach, however, the Commission failed to supply specifics, either as to the facts from which it had reasoned or as to the mechanical steps it had taken in deriving the final schedule.⁸

Without data concerning the Commission's costs, it is not possible to determine the basis upon which the Commission allocated its direct and indirect costs among the regulated industries. Without disclosure of the final amount the Commission intended to recover from each industry, it is not possible to determine what, if any, noncost adjustments were made and whether the final schedule had any relation to the cost allocation. And without a definition and quantification of "value to the recipient"⁹ it is not possible to determine why and how the Commission might be deviating from a pure system of cost allocation. Thus, the Commission insulated itelf from external criticism of its method and rationale, leaving nothing open to challenge except the legality of its result.

The NCTA, as the chief trade association of the CATV industry, wished to file comments concerning the proposed fee schedule. Faced with the opaque notices just described, it requested an opportunity to inspect several categories of documents that the NCTA believed the Commission would have in its files.¹⁰ One category was "the documents, listings and records used to determine the `"value to the recipient" of the privileges granted' as referred to in the February Notice." The other categories all related to the facts and reasons that supported the "cost factor."

II. The Documents Sought by the NCTA

As a consequence of the Commission's midnight production of most of the requested materials, after the close of the rulemaking but prior to the first hearing in the District Court, only three of the categories remained to be considered by the Court.¹¹ Since the District Court's ruling does not indicate the grounds on which it based its grant of summary judgment, we must examine the record on each of these categories.

A. The Two "Cost Factor" Categories

The February Notice stated that the total cost of regulation was that stated in the Commission's budget for the relevant year.¹² Thus, the NCTA's request to inspect documents was phrased in terms of classes of documents that supported the budget and the allocation of budgeted costs among the regulated industries. The first two categories requested were:

1. The supportive documents used to arrive at the Commission\'s budget for fiscal year 1971;

2. The documents, listings and records used to determine the "direct and indirect cost to the Government" of the privileges granted the CATV industry for fiscal year 1971.¹³

Access to the first group of documents would permit the NCTA to check the accuracy of the Commission's breakdown of its costs. Access to the second would enable it to determine which parts of the budget had been assigned to the cost of CATV regulation, and compare them with the budget breakdown to determine whether all of the costs assigned to CATV were consistent with the budget. By adding together the costs listed under the second category, the NCTA would be able to challenge both the fairness of the charge and the accuracy of the Commission's addition.

In response to the first item, the Commission provided the NCTA with a copy of its budget "request," a document prepared for the Bureau of the Budget. The "request" itemized the Commission's proposed expenditures for fiscal year 1971, but requested fifty percent more money than the Bureau finally cleared for submission to Congress as the "budget." The Commission produced nothing in response to the second item.

At the hearing in the District Court, the Commission produced the head of its budget office for examination by the NCTA. Asked for an explanation of the Commission's procedures, he testified that he had prepared the budget "request" from a variety of documents submitted by the Commission's various organizational units, in accordance with a memorandum of instruction from the Commission itself. He further testified that these documents were still in the possession of the Commission, but he argued that these were not "supporting" documents to the final budget, apparently on the theory that the budget "request" had intervened. The latter, he said, "is really the supportive document" for the Congressional budget.

The second request was for the documents that supported the assignment of part of the Commission's budgeted costs to CATV. The Commission's witness testified that there were no such documents. He said that he had compiled the relevant data from the budget by using yellow sheets of paper and adding machine tapes, and had preserved only the final totals. These, he testified, were the figures included in the March Notice. The NCTA avowed that it could not duplicate the Commission's figures by this means. While we can...