P. A. M. News Corp. v. Butz

• Decision Date: 09 June 1975
• Docket Number: No. 73-2096,73-2096
• Citation: 514 F.2d 272,168 U.S.App.D.C. 376
• Parties: P. A. M. NEWS CORPORATION et al., Appellants, v. Earl L. BUTZ, Individually and in his Capacity as Secretary of Agriculture, et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 272

514 F.2d 272

168 U.S.App.D.C. 376

P. A. M. NEWS CORPORATION et al., Appellants, v. Earl L. BUTZ, Individually and in his Capacity as Secretary of Agriculture, et al.

No. 73-2096.

United States Court of Appeals District of Columbia Circuit.

Argued February 21, 1975.

Decided June 9, 1975.

Raymond G. Larroca, Washington, D. C., with whom Nathan Lewin, Washington, D. C., was on the brief for appellants. William H. Jeffress, Jr., Washington, D. C., also entered an appearance for appellant.

Judith S. Feigin, Atty. Dept. of Justice, with whom Carla A. Hills, Asst. Atty. Gen., Earl J. Silbert, U. S. Atty., and Leonard Schaitman, Washington, D. C., were on the brief for appellees.

Before TAMM, LEVENTHAL and ROBINSON, Circuit Judges.

TAMM, Circuit Judge:

In this case, appellant P.A.M. News Corp. (P.A.M.) ¹ challenges on statutory and first amendment grounds an innovation inaugurated by the Market News Service of the United States Department of Agriculture (USDA) which allows subscribers to hook-up directly to USDA's information circulation system. Finding the government's action both statutorily authorized and constitutionally permissible, we affirm the district court's grant of summary judgment for the government.

P.A.M.'s business is the dissemination of agricultural information. Its service focuses upon the fresh fruit and vegetable industry; utilizing data collected both from USDA, its own staff of reporters, and other news sources, P.A.M. collates, edits, analyzes, and assembles the information into its own format and then transmits it to its customers over facilities leased from Western Union Telegraph Company. Topics covered range from prices, market conditions and forecasts to weather reports and business and general news items. A. 54. Similarly, LFM News, Inc., focusing upon the livestock, feed, and meat industries, collates, edits, analyzes, and transmits its information over a teletypewriter circuit leased from American Telephone and Telegraph Company (A.T.&T.) to subscribing packers, brokers, and growers. A. 55-56.

Since its creation, USDA, under its statutory mandate, ² has disseminated agricultural information to the public. Since 1917, it has utilized a wire network leased from A.T.&T., connecting USDA Market News Service branch offices, in order to expedite the collection and dissemination of information. However, prior to August 1, 1963, USDA did not permit any information carried over its wire network to be received directly off that network by anyone utilizing direct extension connections (drops) to the network. A. 61. Certain users of USDA Market News could arrange, at the user's expense, to receive some of the information after it had cleared the wire network. ³

On August 1, 1963, USDA inaugurated a service whereby the public could arrange with A.T.&T. for a direct extension off its wire service and thereby receive news service information directly. ⁴ The innovation was prompted by technological advances which permitted USDA to transmit certain private inter-office information over the network while by-passing the drop customer's receiving machines. 2A. 67.

On November 4, 1963, appellant filed suit against the government and A.T.&T. seeking declaratory and injunctive relief alleging that the direct extension service was not authorized by statute, and even if authorized, violated the first amendment. In 1968, the district court dismissed the complaint and held that appellant, "alleging mere competitive injury, lack(s) standing to complain of the operation of the direct extension service" and that the service resulted in no abridgement of appellant's first amendment rights. ⁵ On appeal, we reversed the district court's holding on standing. P.A.M. News Corp. v. Hardin, 142 U.S.App.D.C. 227, 440 F.2d 255, 257 (1971). However, we did not reach the merits of appellant's constitutional claims because "(c) ourts generally prefer to rule upon constitutional questions which involve the scope of power of an administrative agency only after the agency itself has considered the constitutional issue and made a determination about the weights of competing administrative policies and interests." Id. Since we found that the record did not indicate whether USDA had complied with section 4 of the Administrative Procedure Act (APA), ⁶ by publishing a statement of the basis for its action, we remanded the case with instructions to consider that issue. 440 F.2d at 258-59.

Following that decision, the district court entered an order requiring that appellees comply with the APA and that the rule without an accompanying concise general statement was unlawful, null and void. 2A. 19-20. Thereafter, USDA published a statement of purpose on April 25, 1972. 37 Fed.Reg. 8121 (1972). On February 7, 1973, the district court held that this statement fulfilled USDA's APA obligations and that the case was ripe for consideration on the merits. 2A. 39-40. On cross-motions for summary judgment, the district court found for the government, holding that the direct extension service does not violate appellant's first amendment or statutory rights. 2A. 73. This appeal followed.

Appellant urges four grounds for reversal. It argues that USDA has still failed to comply with APA requirements, that the challenged innovation is in excess of appellee's statutory authority, and that the service must be invalidated since it constitutes an unconstitutional infringement of appellant's first amendment rights. Finally, it asserts that the grant of summary judgment and refusal to allow discovery were improper. We turn first to the procedural argument on which appellant prevailed in its first appeal.

P.A.M. asserts that the Governmental News Service is still being operated under a rule adopted without observance of APA requirements. It charges that the April 25, 1972 general statement was defective in that seventeen of its twenty-two pages were a verbatim reproduction of a document submitted to a United States Senator in 1963 coupled with conclusional and argumentive material. Thus, P.A.M. opines that the statement fails to reflect a "reasoned consideration" of the constitutional questions raised in which the government must engage. Appellant's Br. at 46-49; see 440 F.2d at 257, 258 n. 4.

We disagree. Section 553(c) only requires "a concise general statement;" we have noted that "(w)hen promulgating a rule, an agency is not required to abide by the same stringent requirements of fact findings and supporting reasons which apply to adjudication." Mobil Oil Corp. v. Federal Power Comm'n, 152 U.S.App.D.C. 119, 469 F.2d 130, 139 (1972), cert. denied, 412 U.S. 931, 93 S.Ct. 2749, 37 L.Ed.2d 159 (1973). Our previous decision in this case, while ensuring USDA's complaince with statutory requirements and with the basic administrative rule of reasoned decision-making, was also made in light of our recognition that "(a)ny judicial review of administrative action whether the question is the constitutionality of the relevant action or the statutory authorization is more intelligently undertaken when it is informed by the agency's own view of its authorized powers." 440 F.2d at 259 n. 6. USDA's view has now been placed on the record in the appropriate form and manner. Moreover, we also believe the statement indicates adequate consideration of the potential problems posed by the direct extension system. The statement responds to arguments posited by the American Newspaper Publishers Association which raised similar objections to P.A.M.'s and concludes that "the system does not abridge the constitutional guarantees of any person . . . ." 2A. 64; see id. at 52-63. The incorporation of a 1963 letter does not make the statement defective, as it canvassed the relevant issues, and the 1972 statement affirmed that the letter continues to represent its views. ⁷

We now turn to the gravamen of P.A.M.'s complaint that the direct extension service constitutes an unconstitutional infringement of appellant's first amendment rights. Appellant's argument, grounded upon the free press guarantee, is fourfold. P.A.M. asserts that its service is entitled to first amendment protections; that "unlawful and unfair competition by a government agency with a press entity violates the first amendment;" that the USDA news extension service has seriously damaged it in the exercise of its first amendment rights; and that the government has not demonstrated the necessary compelling interest to override the abridgement of appellant's rights. Appellant's Br. 26-45.

At the outset, we strongly endorse many of P.A.M.'s premises concerning the question before us. Any possible governmental interference with the rights of a free press must be searchingly scrutinized. See, e. g., Ashton v. Kentucky, 384 U.S. 195, 86 S.Ct. 1407, 16 L.Ed.2d 469 (1966). "A broadly defined freedom of the press assures the maintenance of our political system and an open society." Time, Inc. v. Hill, 385 U.S. 374, 389, 87 S.Ct. 534, 543, 17 L.Ed.2d 456 (1967). Among the "evils to be prevented" by the first amendment press guarantee are "not the censorship of the press merely, but any action of the government by means of which it might prevent such free and general discussion of public matters as seems absolutely essential to prepare the people for an intelligent exercise of their rights as citizens. Grosjean v. American Press Co., 297 U.S. 233, 249-50, 56 S.Ct. 444, 449, 80 L.Ed. 660 (1936), quoting 2 Cooley's Constitutional Limitations 886 (8th ed.). Thus, first amendment rights "are protected not only against heavy-handed frontal attack, but also from being stifled by more subtle governmental interference." Bates v. Little Rock,361 U.S. 516, 523, 80 S.Ct. 412, 416, 4 L.Ed.2d 480 (1960).

We also agree with appellant that its wire services fall within the protective umbrella of the first amendment press guarantee. See, e. g., Smith v. California, 361 U.S. 147, 150, 80 S.Ct. 215, 4 L.Ed.2d 205 (...