In Re Applications of: WTAR RADIO-TV CORP. (WTAR-TV), NORFOLK, VA. For Renewal of Broadcast License; HAMPTON ROADS TELEVISION CORP., NORFOLK, VA. For Construction Permit for New Television Broadcast Station
Docket No. 18791 File No. BRCT-54; Docket No. 18792 File No. BPCT-4281
FEDERAL COMMUNICATIONS COMMISSION
32 F.C.C.2d 506
RELEASE-NUMBER: FCC 71-1151
November 22, 1971 Released
Adopted November 10, 1971
BY THE COMMISSION: COMMISSIONER BARTLEY DISSENTING AND ISSUING A STATEMENT IN WHICH COMMISSIONER JOHNSON JOINS; COMMISSIONER JOHNSON DISSENTING AND ISSUING A STATEMENT; COMMISSIONER REID ABSENT.
[*506] 1. The Commission has before it for consideration: (a) a request for clarification or reconsideration of its Order herein (FCC 71-819, released August 20, 1971) filed on September 20, 1971, by Hampton Roads Television Corporation (Hampton Roads); (b) and opposition thereto, filed September 23, 1971, by WTAR Radio-TV Corporation (WTAR-TV); (c) an opposition of the Chief, Broadcast Bureau, filed October 5, 1971; and (d) a reply to the oppositions, filed October 7, 1971, by Hampton Roads. In its Order, adopted on August 4, 1971 and released on August 20, 1971, the Commission amended the designation order in this proceeding (FCC 70-97, adopted January 21, 1970, released January 27, 1970) to delete reference therein to the Policy Statement on Comparative Hearings Involving Regular Renewal Applicants, 22 FCC 2d 424, and held that such Policy Statement shall not be applied in this comparative renewal proceeding. This action was taken pursuant to the decision of the United States Court of Appeals for the District of Columbia Circuit in Citizens Communications Center, et al. v. FCC, et al. (Case Nos. 24,471 and 24,491, decided June 11, 1971) which ordered that the Policy Statement, being contrary to law, "shall not be applied by the Commission in any pending or future comparative renewal hearings." The Court also directed the Commission to redesignate all such hearings to which the Policy Statement was deemed applicable, to reflect the Court's judgment.
[*507] 2. Attaching significance to the Court's directive "to redesignate all such hearings," Hampton Roads requests that the Commission clarify its Order by confirming that it is to be given the effect of a redesignation for the purposes of Section 1.522(a) of the Rules n1 and of permitting Hampton Roads to amend its application. If the Commission decides that its Order does not have the effect of a redesignation, then Hampton Roads requests that the Commission reconsider its action, revoke the Order, and formally redesignate this case for hearing. In this event, Hampton Roads requests a waiver of the provisions of Section 1.111 of the Rules relating to when a petition for reconsideration may be entertained.
n1 Section 1.522(a) provides, in substance, that any application may be amended as a matter of right prior to the adoption date of an order designating such application for hearing
3. We must reject the relief requested by Hampton Roads, for the reasons which follow. While it is true that the Court of Appeals directed the Commission to redesignate all such hearings as this one, we do not believe that the Court intended a formal redesignation if that is unnecessary to accomplish the purpose of the remand. For the same reason, we do not believe that for our action to be fully consistent with the Court's directive, our order amending the earlier designation order must be construed to have all of the effects of a redesignation. The critical consideration here is that such amendment indeed reflects the Court's judgment, i.e., this proceeding is now in a posture where the 1970 Policy Statement on Comparative Hearings Involving Regular Renewal Applicants, which the Court has held to be contrary to law, is very clearly no longer a matter for consideration in this proceeding. This being so, we think that insofar as the Court of Appeals is concerned it makes no difference whether deletion of any reference to such Policy Statement is accomplished by way of amendment of an earlier-issued designation order or by formal redesignation of the proceeding for hearing. The particular manner of complying with the Court's judgment is, we believe, within the Commission's discretion.
4. Amending the designation order rather than formally redesignating the proceeding for hearing does, of course, have a significant bearing upon Hampton Roads' success respecting the amendment which it seeks to file regarding the addition of two subscribers to its proposal. Thus, amendment of the designation order precludes the filing of amendments to applications as a matter of right. See Section 1.522(a) of the Rules. However, we are persuaded that ample opportunity has existed heretofore to file such an amendment. Thus, Hampton Roads' application was filed on August 28, 1969, the Policy Statement was released on January 15, 1970, and this proceeding was designated for hearing by order adopted January 21, 1970. n2 At any time before January 21, 1970, Hampton Roads could have amended its pending application as a matter of right. It chose not to do so, and any suggestion that either the Policy Statement itself or the advance notice in the industry press that such change in policy was coming prevented Hampton Roads from forming a better applicant prior to adoption of the designation order herein simply can not be fully credited. Hampton Roads now urges that as a result of the Court's decision in this proceeding, Hampton Roads has been able to obtain [*508] additional subscribers from the community which it proposes to serve and that it should, therefore, be permitted to amend its application to include such subscribers. This is, in essence, a request that Hampton Roads' lack of diligence in submitting its amendment, when it could have done so as a matter of right, be excused because of the happenstance of the Court's decision being handed down subsequent to the release of the Commission's designation order. We think that it was incumbent upon Hampton Roads to perfect its application in this regard prior to the designation of this proceeding for hearing. As we have indicated above, we were not required to formally redesignate this proceeding for hearing in order to comply with the Court's decision. Thus, Hampton Roads cannot now amend its application as a matter of right.
n2 We note that the application filed was not influenced in any way by the Policy Statement, since the application was filed before the Policy Statement was adopted.
5. For the reasons given above, we shall deny Hampton Roads' request for clarification of our order herein, released on August 20, 1971. We shall also deny Hampton Roads' alternative request that we reconsider such order, revoke that order, and formally redesignate this case for hearing. Hampton Roads recognizes that its request for reconsideration does not fall within the provisions of Section 1.111 of the Rules, and it accordingly requests a waiver of those provisions. However, no valid grounds have been demonstrated which would warrant a waiver of the provisions of Section 1.111.
6. Accordingly, IT IS ORDERED, That the request for clarification or reconsideration, filed September 20, 1971, by Hampton Roads Television Corporation IS DENIED.
FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.
DISSENTBY: BARTLEY; JOHNSON
DISSENTING STATEMENT OF COMMISSIONER ROBERT T. BARTLEY IN WHICH COMMISSIONER JOHNSON JOINS
In my opinion, it should be our policy to redesignate for hearing, on a formal basis, all cases in which there is involved the Court's invalidation of our said 1970 Policy Statement.
Putting aside the question of whether the Court decision requires such redesignation, I believe that fairness and the public interest dictate it.
Pursuant to our 1970 Policy Statement, an application for renewal of license would have been granted automatically in a hearing with a newcomer's application for the same facility if the licensee showed program service substantially attuned to meeting the needs and interests of the area and otherwise had no serious deficiencies -- without comparative consideration of the applications on the merits, regardless of a superior proposal as to qualifications and programming service by the newcomer.
In our 1970 Policy Statement, we reasoned that the new procedure "retains the competitive spur provided by the Communications Act yet assures predictability and stability of broadcast operations." Experience shows that the competitive spur was not retained. The Court stated, "Unfortunately, instead of stability, the Policy Statement has [*509] produced rigor mortis"; and that "for over a year now, since the Policy Statement substantially limited a challenger's right to a full comparative hearing on the merits of his own application, not a single renewal challenge has been filed."
Thus, in face of the 1970 Policy Statement, it appears that potential newcomers thought better of wasting time and money on applications which were foredoomed. From the release of our Policy Statement on January 15, 1970 to its invalidation by the Court on June 11, 1971, no applications by newcomers have been accepted for filing. Since the date of the Court's invalidation, six have been filed. Accordingly, it seems that many newcomers who would have applied, did not do so because of the 1970 Policy Statement.
The Court held that our 1970 Policy Statement violated Section 309 (e) of the Communications Act and denied newcomers their right to a full comparative hearing under Ashbacker (326 U.S. 327, 1945).
Accordingly, I would favor considering each such redesignation as a new hearing order and permit the filing of competing applications and amendments to existing applications as a matter of right.
In the Hampton Roads case now before us, I do not agree with the majority's reasoning that petitioner's application was not influenced in any way by the Policy Statement or by advance notice of a new policy since the application was filed before release of the Policy Statement. Petitioner claims that its application was in fact influenced adversely; that members of the public were deterred from joining Hampton Roads as an applicant; and that, "Indeed, Hampton Roads could not, in good faith, represent to other members of the public that there was a reasonable chance of success in the venture from the time the Commission's new policy became known."
Advance notice of a new renewal procedure emerged as early as April of 1969. The Court's order invalidating the 1970 Policy Statement footnotes (26) a New York Times article entitled "F.C.C. License Renewals: A Policy Emerges," April 27, 1969; Senator Pastore introduced on April 29, 1969, S. 2004, a bill to revise and restrict FCC renewal-newcomer procedures; and Subcommittee Hearings on S. 2004 were begun on August 5, 6 and 7, 1969.
Thus for some time prior to petitioner's filing its application on August 28, 1969, there was, in my opinion, sufficient advance notice, that reasonable men could conclude that there was too little chance for success to risk capital and time on challenging a renewal; and Hampton Roads' claim to that effect cannot be swept aside in disbelief.
I join Commissioner Bartley in his dissent. But because of the importance of the issues involved in this case, I wish to state further my reasons for dissenting.
The issue in this case is whether Hampton Roads, applicant for a mutually-exclusive construction permit, will be allowed to amend its application by right. Under Section 1.522(a) of our Rules, we allow an application to be amended by right at any time prior to the adoption of an order designating the application for hearing. n1
n1 47 C.F.R. § 1.522(a).
[*510] The issue arises at this time as a result of the Court of Appeals' over-turning our Policy Statement on Comparative Hearings Involving Regular Renewal Applicants, 22 F.C.C. 2d 424 (1970). n2
n2 Citizens Communications Center v. FCC, F. 2d (D.C. Cir. 1971).
Hampton Roads filed its application for a construction permit in August 1969, and the Commission issued its Policy Statement in January 1970, approximately one week before this case was set for hearing. When the case was set for hearing, the designation order stated that the Policy Statement would control the procedure. n3
n3 FCC 70-97.
On June 11, 1971, the Court of Appeals for the D.C Circuit, in Citizens Communications Center v. FCC, held that the Policy Statement was illegal, under Ashbacker Radio Corp. v. FCC, 326 U.S. 327 (1945) and Section 309(e) of the Communications Act. n4 The Court ordered:
n4 Citizens Communications Center v. FCC, supra, n. 2.
(1) that the Policy Statement, being contrary to law, shall not be applied by the Commission in any pending or future comparative renewal hearings;... (3) that these proceedings are remanded to the Commission with directions to redesignate all comparative renewal hearings to which the Policy Statement was deemed applicable to reflect this court's judgment. (emphasis added) n5
n5 Citizens Communications Center v. FCC, supra.
This case was one of those to which the Policy Statement had been applied. In fact, Hampton Roads was one of the petitioners in the case before the Court of Appeals.
On August 19, 1971, Hampton Roads filed an amendment to its application, adding two additional stockholders.
On August 20, 1971, we announced we had amended the designation order in this and eight other cases, deleting all reference to the 1970 Policy Statement and ordering that it not be applied. When I joined with the Commission in this action, I assumed that the effect of this amendment would be a "redesignation" -- in other words, that, in accordance with the opinion of the Court of Appeals, we would be returning, afresh, to status quo ante Policy Statement. If so, then Hampton Roads, under Section 1.522(a) of our Rules, would be allowed to amend its application by right, since it would not have had notice of our response to the Court of Appeals mandate at the time of its filing the amendment.
On the other hand, if we decide, as does the majority, that the Court of Appeals did not mean for us to start afresh with this proceeding and in effect return to the day before our Policy Statement, then Hampton Roads would not be allowed to amend its original application because the January 27, 1970 designation order would still be in effect. This is because no amendments can be filed after the designation order is released. n6
n6 47 C.F.R. § 1.522(a).
This case cannot be adequately understood without reference to WHDH, Inc., 16 F.C.C. 2d 1 (1969), the proposed "Pastore Bill" of 1969 (S. 2004), and the Federal Communications Act, which states in no uncertain terms that "no [broadcast]... license shall be construed [*511] to create any right, beyond the terms, conditions, and periods of the license." n7
In WHDH, the FCC, for the first time in applying comparative criteria in a renewal proceeding, awarded the license to a challenger. The Court of Appeals in the Citizens Communications Center case describes the reaction to WHDH:
n7 47 U.S.C. § 301.
The WHDH decision became the immediate subject of a fierce attack, provoking criticism from those who feared that it represented a radical departure from previous law [citation omitted] and that it threatened the stability of the broadcast industry by undermining large financial investments made by prominent broadcasters in reliance upon the assumption that licenses once granted would be routinely renewed. n8
n8 Citizens Communications Center v. FCC, supra, at .
In a footnote to the passage just quoted, the Court cited "$3 Billion in Stations Down the Drain" in Broadcasting, February 3, 1969, at 19 and Jaffe, WHDH: The FCC and Broadcasting License Renewals, 82 Harv. L. Rev. 1693 (1969). n9
n9 Id., n. 24.
By the time Hampton Roads had filed the application for a construction permit in August, 1969, hearings had already been held on S. 2004, a bill proposed by Senator Pastore, Chairman of the Senate Commerce Committee's Subcommittee on Communications. S. 2004 would have had the effect of immunizing licensees from challenge, by having the Commission hold a two-part hearing whenever a challenge was filed: first, a hearing as to whether the past record of the licensee merited renewal; second, only if the Commission answered "no" to the first question, a comparative hearing between the licensee and his challenger. As Commissioner Bartley points out in his separate statement today, the atmosphere surrounding the renewal process was substantially affected by the prospect of S. 2004's passage. Apparently Hampton Roads had difficulty convincing financiers to back their application, considering the likelihood it would face easy defeat.
S. 2004 was never brought to a formal vote, but the Commission went ahead on its own, and without any formal hearing process, issued its Policy Statement in January 1970. The Policy Statement enacted through the administrative process what S. 2004 had been designed to achieve: the effective immunization of broadcasters from competing applicants.
When the Court of Appeals found the Policy Statement unlawful under Ashbacker and § 309(e) of the Communications Act, it stated that "instead of stability the Policy Statement has produced rigor mortis." n10
n10 Citizens Communications Center v. FCC, supra, at .
Our decision today restores healthy competition by repudiating a Commission policy which is unreasonably weighed in favor of the licensees it is meant to regulate, to the great detriment of the listening and viewing public. n11
n11Id. at .
Faced with the clear intent of the Court of Appeals to wipe out not only the language but the effect of the Policy Statement and the posture of the Commission before WHDH, we have today taken just one more step designed to thwart the spirit of the Communications Act, which states in no uncertain terms that "no... license shall be construed [*512] to create any right, beyond the terms, conditions, and periods of the license." n12 Choosing to read the Court's mandate in as niggardly a fashion as possible, the Commission has, I believe, acted in defiance of the Court's mandate.
n12 47U.S.C. § 301.
I thought one would need not belabor the obvious, that the Commission is responsible to the United States Court of Appeals and that it, like any other litigant, must obey the order of the Court of Appeals when such an order is issued. The majority in this case, however, apparently believe that strict accordance with the Court of Appeals dictate is not required. Thus, the majority states:
[We] think that insofar as the Court of Appeals is concerned it makes no difference whether deletion of any reference to such Policy Statement is accomplished by way of amendment of an earlier-issued designation order or by formal redesignation of the proceeding for hearing. The particular manner of complying with the Court's judgment is, we believe, within the Commission's discretion.
This is news to me, and I would suppose, the Court of Appeals. The law on this subject is clear.
First there is the age-old rule of law, about which there can be no question, that the agency is bound to respect the mandate of the appeals court. FPC v. Pacific Co., 307 U.S. 156 (193).
Next there is Section 402(h) of the Communications Act which states that, upon reversal by the Court of Appeals, "it shall be the duty of the Commission... to forthwith give effect [to the judgment of the court]...." n13
n13 47 U.S.C. § 302(h).
Ordinarily, therefore, the rule is that when the Court of Appeals issues a mandate to the Commission, we are bound by the terms of the mandate, and it is error for us to act in a manner contrary to the Court of Appeals' mandate. However, in FCC v. Pottsville Broadcasting Co., 309 U.S. 134 (1940), the Supreme Court opened the door to some administrative discretion in following the appellate court's mandate. I assume that the majority have presumed to follow Pottsville in claiming the discretion to follow the Court of Appeals' mandate in the manner they wish. Inasmuch as no authority is cited for the Commission's having such discretion, I must imagine and search for the precedent they might have had in mind. Let us, therefore, assume for a moment the majority intended to rely, sub silentio, on the Pottsville case. I should like to state why I think that Pottsville is no such authority, and why, in fact, the Commission has no discretion whatever regarding the court of Appeals' order to us to "redesignate."
Pottsville involved an application for a broadcast license. The Commission decided that the applicant was not financially qualified. The applicant appealed. The Court of Appeals decided that the Commission was in error on this point as a matter of Pennsylvania law. The case was ordered back to the Commission "for reconsideration in accordance with the views expressed." Pottsville Broadcasting Co. v. FCC, 98 F. 2d 288 (D.C. Cir. 1938). On remand, instead of granting the application, the Commission set the case for a comparative hearing involving Pottsville and two other mutually exclusive applicants. [*513] Pottsville appealed again to the Appeals Court, which issued a writ of mandamus ordering the Commission to set aside its order for a comparative hearing and to consider Pottsville's application alone. Pottsville Broadcasting Co. v. FCC, 105 F. 2d 36 (D.C. 1939).
The Commission appealed to the Supreme Court. The Court, in an opinion by Mr. Justice Frankfurter, stated the "familiar doctrine" that a lower court is bound by the dictates of the appeals court, but then proceeded to distinguish the relationship of a trial court and the appeals court from that of an administrative agency and the appeals court. The Court stressed the fact that the administrative agency is not to be bound by the tight procedural rules applicable to the courts of law, that they "should be free to fashion their own rules of procedure and to pursue methods of inquiry capable of permitting them to discharge their multitudinous duties." n14 The Court then went on to hold:
n14 FCC v. Pottsville Broadcasting Co., 309 U.S. 134, 143 (1940).
On review the court may thus correct errors of law and on remand the Commission is bound to act upon the correction. [citation omitted] But an administrative determination in which is imbedded a legal question open to judicial review does not impliedly foreclose the administrative agency, after its error has been corrected, from enforcing the legislative policy committed to its charge. [citation omitted] n15
n15 Id. at 145.
Needless to say, this language does not mean that the Commission has any discretion as to whether or not to correct its error of law. If the Court of Appeals has ordered the Commission to "redesignate" certain comparative renewal proceedings, because it had been acting in "error of law," then the Commission must redesignate. (This is especially so considering the Court's clear intention to purge the air of the effects of prior Commission policy discussed below.) What the Supreme Court meant in 1940 was that if the Commission wanted to, it could correct its error of law and then recast the proceeding, adding new issues. In other words, if the agency has decided the case on one ground and has been reversed, it can then, on remand reconsider the case on new grounds. 2 K. Davis, Administrative Law Treatise § 18.11 at 625 (1958). n16
n16 Of course, there is some question whether even this narrow, correct reading of Pottsville still applies to the FCC. In 1952, Congress amended Section 402 of the Communications Act, dealing with judicial review, to state that the Commission must give effect to the Court of Appeals' order, "unless otherwise ordered by the court,... upon the basis of the proceedings already had and the record upon which said appeal was heard and determined." 47 U.S.C. § 402(h). Professors Jaffe and Nathanson have stated their opinion that the 1952 amendment "apparently repeal in some measure the rule in Pottsville, so far, at least, as it applies to the FCC." Jaffe and Nathanson, Administrative Law, Cases and Materials 1081-2 (3d ed., 1968). See also Jaffe, Judicial Control of Administrative Action 714, n. 30 (1965). For the purpose of this case, of course, it makes no difference whether Pottsville is still good law, inasmuch as it is clear that the rationale of Pottsville -- the power of the Commission to introduce new issues on remand -- is not applicable here.
Nor is FPC v. Idaho Power Co., 344 U.S. 17 (1952), any help to the Commission. There, the Federal Power Commission granted a license to construct, operate, and maintain a hydroelectric project, with the condition that the applicant permit interconnection with the United States' transmission lines. The applicant appealed to the Court of Appeals, which held that the Commission lacked the authority [*514] to attach such a condition. The Commission moved for a clarification, and the Court ordered the Commission to grant the license, absent the condition as to interconnection.
The Supreme Court held that the Court of Appeals has usurped the Commission's functions in ordering the condition-free license granted. In other words, it was up to the Commission to decide whether to grant the license at all once it was told that it could not attach the condition. Citing Pottsville, the Court stated: "But the guiding principle, violated here, is that the function of the reviewing court ends when an error of law is laid bare. At that point the matter once more goes to the Commission for reconsideration." n17
n17 Federal Power Commission v. Idaho Power Co., 344 U.S. 17 at 20 (1952).
Here, the "error of law [to be]... laid bare" is the Commission's use of the 1970 Policy Statement in this proceeding. The Court cannot tell the Commission how to decide the controversy between WTAR and Hampton Roads. But the Commission cannot ignore the clear mandate of the Court of Appeals and decide how it is to lay the error of law bare.
Administrative discretion is a term widely used but also widely abused. It does not mean that this agency, or any other, is free to act in an unlawful manner. The reason is that substantial rights of parties are often affected adversely by unlawful procedural action.
I had thought that "redesignation" meant "redesignation," so that Hampton Roads would be allowed, if it wished, to start anew. I believe the majority acts unlawfully when it reads the Court of Appeals mandate in the way it has. Accordingly, I dissent.