Southwestern Cable Co. v. United States

• Decision Date: 28 April 1967
• Docket Number: No. 21183,21192.,21183
• Citation: 378 F.2d 118
• Parties: SOUTHWESTERN CABLE CO., Petitioner, v. UNITED STATES of America and Federal Communications Commission, Respondents, Jack O. Gross et al., Intervenors. MISSION CABLE TV, INC., Pacific Video Cable Co. and Trans-Video Corp., Petitioners, v. UNITED STATES of America and Federal Communications Commission, Respondents, Jack O. Gross et al., Intervenors.
• Court: U.S. Court of Appeals — Ninth Circuit

378 F.2d 118 (1967)

SOUTHWESTERN CABLE CO., Petitioner, v. UNITED STATES of America and Federal Communications Commission, Respondents, Jack O. Gross et al., Intervenors.

MISSION CABLE TV, INC., Pacific Video Cable Co. and Trans-Video Corp., Petitioners, v. UNITED STATES of America and Federal Communications Commission, Respondents, Jack O. Gross et al., Intervenors.

Nos. 21183, 21192.

United States Court of Appeals Ninth Circuit.

April 28, 1967.

Frank U. Fletcher, Robert L. Heald, Edward F. Kenehan, Fletcher, Heald, Rowell, Kenehan & Hildreth, Washington, D. C., Tuttle & Taylor, Los Angeles, Cal., for appellants Mission Cable TV, Inc., Pacific Video Cable Co. and Trans-Video Corp.

Arthur Scheiner, Gilbert B. Lessenco, Nicholas Kittrie, Washington, D. C., Richard A. Moore, Tuttle & Taylor, Los Angeles, Cal., for appellant Southwestern Cable Co.

Henry Geller, Gen. Counsel, Daniel R. Ohlbaum, Deputy Gen. Counsel, Ruth V. Reel, Robert D. Hadl, Stuart F. Feldstein, Counsel, F. C. C., Washington, D. C., Donald R. Turner, Asst. Atty. Gen., Howard E. Shapiro, Atty., Dept. of Justice, Washington, D. C., for appellee.

Ernest W. Jennes, Charles A. Miller, John E. Vanderstar, Covington & Burling, Washington, D. C., Miller & Spiegelman, San Francisco, Cal., for intervenors, Midwest Television, Inc. (KFMB-TV), Jack O. Gross (KJOG-TV), and San Diego Telecasters, Inc. (KAAR).

Before BARNES and ELY, Circuit Judges, and PECKHAM,^* District Judge.

BARNES, Circuit Judge:

This is a consolidation of two petitions to review and set aside portions of an order of the Federal Communications Commission (hereinafter "FCC" or "Commission"). Our jurisdiction rests upon 5 U.S.C. § 1032 and 47 U.S.C. § 402(a).

Southwestern Cable Company owns a community antenna television system (commonly designated a CATV system) in the San Diego area. Mission Cable TV, Inc. and Pacific Video Cable Company own CATV systems in the San Diego area which are operated by Trans-Video Corporation which owns all of Pacific and a majority of Mission.

CATV is a way of delivering good television reception to areas greatly removed from the originating station. The concept includes the building of a large antenna in an area where reception is good. The antenna picks up the signal of one or more stations and transmits it or them, either by wire or microwave, to the area of poor reception. In the poor reception area the signal is distributed to individual television receivers by wire, each receiver paying installation and monthly service fees. Southwestern, Mission and Pacific, petitioners here, all use cable systems rather than microwave for transmission of the signals.

San Diego is about 120 miles south of Los Angeles. San Diego is served by two VHF and one UHF television stations in San Diego and two VHF stations in nearby Tijuana, Mexico. A construction permit has been issued for another UHF station, and an application is pending for still another. For the most part, San Diego receivers cannot receive the signals of Los Angeles stations through the air. It is by CATV that many San Diegans can now watch Los Angeles programs.

The recent growth of CATV systems has come to the attention of the FCC. At first the FCC, without dissent, held it had no jurisdiction over CATV. 26 F.C.C. 403, 427-28 (1959). It next held it was authorized to deny a CATV microwave transmission license for economic reasons. Carter Mountain Transmission Corp., 32 F.C.C. 459 (1962, aff'd 116 U.S.App.D.C. 93, 321 F.2d 359 (1963)), cert. denied 375 U.S. 951, 84 S.Ct. 442, 11 L.Ed.2d 312 (1963). It then asserted jurisdiction only over CATV systems using microwave facilities to transmit their signals. See First Report and Order, 38 F.C.C. 683, 30 Fed.Reg. 6038 (1965). On April 23, 1965, the Commission released a Notice of Inquiry and Notice of proposed Rule Making (1 F.C.C.2d 453, 30 Fed.Reg. 6078 (1965)) looking toward regulation of all CATV systems. On February 15, 1966, the Commission issued a news release announcing that new rules would shortly be adopted applying to non-microwave CATV systems. These rules were adopted on March 8, 1966, and published on March 17, 1966. Second Report and Order, 2 F.C.C.2d 725, 31 Fed.Reg. 4540 (1966). The rules provided, inter alia, that (1) CATV systems must carry the signals of local and nearby stations, (2) CATV systems cannot carry on the same day a signal which duplicates a program of a local station, and (3) Commission approval is required for a CATV system to carry a signal beyond its Grade B contour.¹

In addition to the foregoing rules, the Commission adopted Rule 74.1109 (47 C.F.R. § 74.1109), which provides that on petition by a CATV system, television station or other interested person the Commission may waive any of its rules or impose additional requirements. Rule 74.1109(f) provides in part:

"In the event that an evidentiary hearing is required, the Commission will determine, on the basis of the pleadings and such other procedures as it may specify, whether temporary relief should be accorded to any party pending the hearing and the nature of any such temporary relief."

On March 17, 1966, Midwest Television, Inc., a licensee of a San Diego VHF station (and herein an intervenor) petitioned under Rule 74.1109(f) for temporary relief pending a hearing on the effects of CATV on the television stations in San Diego. On July 25, 1966, the Commission, in the order under review here, granted Midwest the temporary relief it sought by limiting the CATV systems, petitioners here, to (1) delivering Los Angeles signals to subscribers in the area which they served on February 15, 1966; (2) adding subscribers in other areas, but to them carrying only San Diego-Tijuana signals; and (3) continuing to provide the service they had been providing prior to the date of the order.

Petitioners sought review by this court of the July 25, 1966 order, and asked for a stay of the Commission's order. After argument we issued an interlocutory injunction against enforcement of the order as it prevents the addition of new subscribers to the trunk and feeder lines in existence on August 23, 1966.

Petitioners have specified many grounds for setting aside the Commission's order, some of constitutional dimension. Initially we must consider the assertion that the Commission did not have the power to issue the order in question. We agree with the petitioners that the Commission was without power to act as it did.²

The order issued by the Commission was prohibitory in nature. Though petitioners contend that it was in truth a cease and desist order, the Commission has expressly denied that it is such an order and disclaimed the authority of 47 U.S.C. § 312 which authorizes such orders. The Commission tells us that its only sources of authority for the order in issue are section 4(i) of the Act³ and section 303(r) of the Act.⁴

"The Commission may perform any and all acts, make such rules and regulations, and issue such orders, not inconsistent with this chapter, as may be necessary in the execution of its functions." 47 U.S.C. § 154(i).

"* * * The Commission * * shall —

(r) Make such rules and regulations and prescribe such restrictions and conditions, not inconsistent with law, as may be necessary to carry out the provisions of this chapter, or any international radio or wire communications treaty or convention, or regulations annexed thereto, including any treaty or convention insofar as it relates to the use of radio, to which the United States is or may hereafter become a party." 47 U.S.C. § 303(r).

These provisions are general, couched in broad and indefinite terms.⁵ There is no doubt that Congress intended by these provisions to provide the Commission with a degree of flexibility in performing its important tasks. Such provisions, however, by their own terms, are to be measured by the Act and its structure and purpose.

The method of regulation of broadcasting chosen by Congress was licensing. The Commission was created and charged with supervising the licensing function, to the end of promoting the development of the best radio (and later television) service in the public interest. To fulfill its duties the Commission was given two weapons under section 312, revocation of the license and (since 1952) the cease and desist order. Restricting these powers, however, Congress specified certain procedural safeguards, 47 U.S.C. § 312 (c), (d) and (e).

We are fully aware of the authorities which have sustained grants of power to agencies and interpreted such powers so as to give those agencies a high degree of flexibility. In Clear Channel Broadcasting Service v. United States, 109 U.S.App.D.C. 88, 284 F.2d 222 (1960), the FCC's powers, specifically including section 303(r), were described as "broad" in reference to an order regarding skywave interference. In Public Service Comm'n v. FPC, 117 U.S. App.D.C. 195, 327 F.2d 893 (1964), the District of Columbia Circuit discussed the powers of the Federal Power Commission with language which we feel is equally applicable to the authority of the FCC.

"All authority of the Commission need not be found in explicit language. * * * While the action of the Commission must conform with the terms, policies and purposes of the Act, it may use means which are not in all respects spelled out in detail." 327 F.2d at 897.

We cannot, however, extend this language to include the power claimed by the Commission in the case at bar. We note some of the cases in which the Commission's authority has been sustained. Bendix Aviation Corp., etc. v. FCC, 106 U.S.App.D.C. 304, 272 F.2d 533 (1959), cert. denied, Aeronautical Radio, Inc. v. United States, 361 U.S. 965, 80 S.Ct. 593, 4 L.Ed.2d 545 (1960), concerned an application by Bendix for authority to use the 430 Mc radio frequency in developing an aircraft collision prevention system. Prior to the application, frequencies in the 420-450 Mc band had been reserved exclusively for government use....