J. SKELLY WRIGHT, Circuit Judge:
Appellants and petitioners
Petitioners contend that this policy is unlawful under Section 309(e) of the Communications Act of 1934
Respondents urge the court to refrain from considering these arguments at this time because the 1970 Policy Statement is neither a final order nor yet ripe for review. In the alternative, respondents take the position that the Policy Statement is a lawful exercise of the Commission's authority.
We find that the judicial review sought by petitioners is appropriate at this time. Without reaching petitioners' other grounds for complaint,
Petitioners argue that the 1970 Policy Statement is "final" in the primary sense of the term because no further proceedings concerning the Policy Statement are contemplated by the Commission or provided for by the Commission's rules. Respondents' position is that neither the Policy Statement nor the order denying the petitions for reconsideration are final orders within the statutory meaning of 28 U.S.C. § 2342(1) and 47 U.S.C. § 402(a). They argue that the Policy Statement sets only general guidelines to be applied in future adjudicatory proceedings where applicable. We find it unnecessary to resolve this particular disagreement because, even if the Policy Statement is characterized as interlocutory, it is still reviewable at this time. Since the Policy Statement is alleged to deprive petitioners in No. 24,491 of their statutory right to a full comparative hearing under the Ashbacker doctrine, the Commission's action in issuing the Policy Statement is reviewable now. Chicago & Southern Air Lines, Inc. v. Waterman Steamship Corp., 333 U.S. 103, 113, 68 S.Ct. 431, 92 L.Ed. 568 (1948); Delta Air Lines v. C.A.B., 97 U.S.App.D.C. 46, 228 F.2d 17 (1955). As this court stated in summarizing the holding of Delta Air Lines in a subsequent case, "when the Commission adopts a procedure which precludes a true comparative hearing of conflicting applications, review may be sought here without awaiting a grant of one of the applications." Midwestern Gas Transmission Co. v. F. P.C., 103 U.S.App.D.C. 360, 366, 258 F.2d 660, 666 (1958).
Petitioners contend that the same line of cases holding an interlocutory order denying a party an Ashbacker hearing to be final for purposes of review necessarily supports the proposition that such an order is also ripe for review before completion of the contemplated hearing. Without deciding whether this proposition holds in every case, we agree that the Policy Statement is ripe for review under the test laid out in Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967). According to the Supreme Court in Abbott Laboratories, the ripeness of a controversy depends upon both "the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration." Id. at 149, 87 S.Ct. at 1515. The Policy Statement controversy is ripe under both halves of this test. Here the Policy Statement has been administratively considered and reconsidered by the Commission. The issues before us are "purely legal."
Moreover, it would work a severe hardship on petitioners for the court to withhold consideration of their appeal. The substantial financial expense
In order to clarify not only the legal issues but also the related substantive policy considerations involved in these consolidated cases, the court will first attempt to put the present controversy in its historical context. The national effort at comprehensive regulation of broadcasting began in 1927 with the Federal Radio Act.
Although the Federal Communications Act does not itself establish any specific licensing criteria, the Supreme Court has noted that "[s]ince the very inception of federal regulation [of] radio, comparative considerations as to the services to be rendered have governed the application of the standard of `public interest, convenience, or necessity.'" National Broadcasting Co. v. United States, 319 U.S. 190, 217, 63 S.Ct. 997, 1009, 87 L.Ed. 1344 (1943). With the great expansion of the broadcast media after World War II, the Commission was under heavy pressure to develop specific criteria for choosing among competitors seeking licenses for the quickly diminishing number of unallocated frequencies. The criteria were developed through a series of comparative hearing decisions and were reviewed and given final statement in the Commission's 1965 Policy Statement on Comparative Broadcast Hearings, 1 F.C.C.2d 393. The 1965 Policy Statement defines the purpose of the comparative hearing as choosing the applicant who will provide the "best practicable service to the public" and who will insure the "maximum diffusion of control of the media of mass communications." The basic criteria relating to the determination of which applicant will provide the best service to the public are listed as full-time participation in station operation by owners, proposed program service, past broadcast record, efficient use of frequency, and character. Diversification of control of the media of mass communication is elevated in the 1965 Policy Statement to a factor of primary significance; and in an effort to resolve the inherent contradiction between the goal of diversification and its tradition of according an advantage to initial applicants with past broadcasting experience, the Commission states that it will not consider a past broadcast record which is "within the bounds of average performance." Only records which demonstrate "unusual attention to the public's needs and interests" are to be given favorable consideration, since average performance is expected of all licensees.
Although the 1965 Policy Statement explicitly refrains from reaching the "somewhat different problems raised where an applicant is contesting with a licensee seeking renewal,"
Nonetheless, the history of Commission decision and of the decisions of this court reflected until recently an operational bias in favor of incumbent licensees;
Then, in the very controversial WHDH
The WHDH decision became the immediate subject of fierce attack, provoking criticism from those who feared that it represented a radical departure from previous law
The impact of such citizen opposition measurably slowed the progress of S. 2004. Then, without any formal rule making proceedings,
Superimposed full length over the preceding historical analysis of the "full hearing" requirement of Section 309(e) of the Communications Act
It is not surprising, therefore, that the Commission's 1970 Policy Statement implicitly accepts Ashbacker as applicable to renewal proceedings. To circumvent the Ashbacker strictures, however, it adds a twist: the Policy Statement would limit the "comparative" hearing to a single issue — whether the incumbent licensee had rendered "substantial" past performance without serious deficiencies. If the examiner finds that the licensee has rendered such service, the "comparative" hearing is at an end and, barring successful appeal, the renewal application must be granted. Challenging applicants would thus receive no hearing at all on their own applications, contrary to the express provision of Section 309(e) which requires a "full hearing."
In Ashbacker the Commission had promised the challenging applicant a hearing on his application after the rival application was granted. The Supreme court in Ashbacker said that such a promise was "an empty thing." At least the Commission here must be given credit for honesty. It does not make any empty promises. It simply denies the competing applicants the "full hearing" promised them by Section 309(e) of the Act. Unless the renewal applicant's past performance is found to be insubstantial or marred by serious deficiencies,
In support of its 1970 Policy Statement the Commission is reduced to reciting the usual litany that "[t]he task of choosing between various claimants for the privilege of using the air waves is essentially an administrative one" consigned by Congress to the Commission. Brief for the Commission at 30. But Congress did not give the Commission carte blanche. To protect the public it limited its mandate with the Section 309(e) "full hearing" requirement. Unless the limitation is observed, any putative exercise of the mandate is a nullity.
Early after Ashbacker this court indicated what a "full hearing" entailed. In Johnston Broadcasting Co. v. F.C.C., 85 U.S.App.D.C. 40, 45-46, 175 F.2d 351, 356-357 (1949), we explained that the statutory right to a full hearing included a decision upon all relevant criteria:
We, as well as the Commission,
We do not dispute, of course, that incumbent licensees should be judged primarily on their records of past performance. Insubstantial past performance should preclude renewal of a license. The licensee, having been given the chance and having failed, should be through. CompareWHDH, supra. At the same time, superior performance should be a plus of major significance in renewal proceedings.
The Policy Statement purports to strike a balance between the need for "predictability and stability"
Petitioners have come to this court to protest a Commission policy which violates the clear intent of the Communications Act that the award of a broadcasting license should be a "public trust."
Wherefore it is ORDERED: (1) that the Policy Statement, being contrary to law, shall not be applied by the Commission in any pending or future comparative renewal hearings; (2) that the Commission's order of July 21, 1970 denying petitioners' petition for reconsideration of the Policy Statement and refusing to institute rule making proceedings is reversed; and (3) that these proceedings are remanded to the Commission with directions to redesignate all comparative
MacKINNON, Circuit Judge.
I concur in the foregoing opinion. While I recognize the desire and need for reasonable stability in obtaining renewal licenses, under the present statute as construed by Ashbacker Radio Corp. v. F.C.C., 326 U.S. 327, 66 S.Ct. 148, 90 L.Ed. 108 (1945), I do not consider it possible to provide administratively that operating licensees who furnish program service "substantially attuned to meeting the needs and interests of its area * * * [without] serious deficiencies * * * will be preferred over the newcomer and his application for renewal will be granted." Such policy would effectively prevent a newcomer applicant from being heard on the merits of his application, no matter how superlative his qualifications. It would also, in effect, substitute a standard of substantial service for the best possible service to the public and effectively negate the hearing requirements of the statute as interpreted by the Supreme Court. If such change is desired, in my opinion, it must be accomplished by amendment of the statute.
Case No. 24,491 is a petition for review filed by Hampton Roads Television Corporation and Community Broadcasting of Boston, Inc., two applicants for television channels who have filed in competition with renewal applicants in Norfolk, Virginia and Boston, Massachusetts. They also seek review pursuant to 47 U.S.C. § 402(a) and 28 U.S.C. § 2342 of the Commission's memorandum opinion and order denying reconsideration of the 1970 Policy Statement and refusing to institute rule making proceedings.
Case No. 24,221 is an appeal filed pursuant to 28 U.S.C. § 1291 from an order of the United States District Court for the District of Columbia dismissing a complaint for permanent and preliminary injunction, Civil Action No. 42-70, for lack of jurisdiction. In their complaint filed January 7, 1970, CCC and BEST sought to enjoin the chairman and members of the Commission from "promulgating any policy, rule or interpretation or making any other change" in the standards applicable to comparative broadcast license renewal proceedings without first giving all interested parties notice and an opportunity to be heard pursuant to § 4 of the Administrative Procedure Act, 5 U.S.C. § 553. A temporary restraining order was denied on January 7, 1970, and following a suggestion of lack of jurisdiction made by the Commission, the District Court on January 23, 1970 dismissed the action. In light of our disposition of Cases 24,471 and 24,491, supra, this case is moot.
RKO General, Inc. and WTAR Radio TV Corporation have both intervened in this controversy and have filed briefs defending the Policy Statement and subsequent Commission actions.
22 F.C.C.2d at 424-425. (Footnote omitted.)
Subsection (a) of § 309 reads:
In order to avoid conflict with Ashbacker Radio Corp. v. F.C.C., 326 U.S. 327, 66 S.Ct. 148, 90 L.Ed. 108 (1945), the Commission characterizes Ashbacker as dealing only with "procedure," and distinguishes the Policy Statement as being in effect substantive. Then, caught between Scylla and Charybdis, the Commission turns around and calls the Policy Statement "procedural rather than * * substantive" in order to avoid conflict with § 4 of the APA. The APA requires the Commission to follow certain procedures (notification, opportunity to file comments, etc.) in all cases of administrative "rule making." Section 2(c) of the APA, 5 U.S.C. § 551(4), defines a "rule" as "the whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency." Section 4(a) of the APA, 5 U.S.C. § 553(a) (3) (A), however, exempts from rule making "interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice." The Commission argues that the January 15, 1970 Policy Statement is an exempted "general statement of policy" under § 4(a) and that it did not therefore have to be developed under the procedural safeguards described in § 4. As was said in Columbia Broadcasting System v. United States, 316 U.S. 407, 416, 62 S.Ct. 1194, 86 L.Ed. 1563 (1942), however, it is not the label placed upon such procedures by the Commission which dictates the procedures to be followed, but rather "the substance of what the Commission has purported to do and has done which is decisive." The issue here turns on whether the January 15, 1970 Policy Statement effected a substantive change in the Commission's comparative renewal standards. And the Commission seems to have decided this issue, sub silentio at least, when it
In Re Petitions Filed by BEST, CCC, and Others for Rulemaking To Clarify Standards in all Comparative Broadcast Proceedings, 24 F.C.C.2d 383, 388 (1970) (dissenting opinion of Commissioner Johnson). In any event, the Commission's suggestion that under the APA it can do without notice and hearing in a policy statement what Congress failed to do when the Pastore bill (see text at pages 1209-1211, infra) died in the last Congress is, to say the least, remarkable.
48 Stat. 1084 (1934). Perhaps to guard against the inference that an incumbent's past broadcast record could not be considered at all at renewal time, Congress in 1952 deleted the provision subjecting renewal applications to "the same considerations and practice" as original applications, substituting the provision of the 1927 Act which subjected renewal and original applications alike to the standard of "public interest, convenience and necessity."
In Chicago Federation of Labor v. Federal Radio Com'n, 59 App.D.C. 333, 41 F.2d 422 (1930), this court affirmed a Federal Radio Commission refusal to change the broadcast frequency of Station WCFL since the change would displace existing licenses. The court said:
50 App.D.C. at 334, 41 F.2d at 423. Cases such as this one established a presumption in favor of license renewals when their past broadcast record was satisfactory, and led some observers to contend, despite clear language in the Act itself requiring that a licensee expressly waive any claim to use of a frequency predicated on prior use, 47 U.S.C. § 301, that "legal rights or equities flow from a license and must be considered by the Commission in the exercise of its jurisdiction." H. Warner, Radio and Television Law 720 (1949). See also Journal Co. v. F.R.C., 60 App.D.C. 92, 48 F.2d 461 (1931); WOKO, Inc. v. F.C.C., 80 U.S.App.D.C. 333, 153 F.2d 623, reversed on other grounds, 329 U.S. 223, 67 S.Ct. 213, 91 L.Ed. 204 (1946). Recently, however, and before the Commission's WHDH decision, this circuit has begun to take a hard look at the presumption in favor of renewals See Note 23, infra.
Although this court affirmed the Commission's WHDH decision on the ground that WHDH was in a "special and unique category" because of its past history of inroads made upon the Commission's rules governing fair and orderly adjudication and consequent grant of a four-month temporary license to operate, we also noted:
143 U.S.App.D.C. at 399, 444 F.2d at 857.
The appropriateness of these decisions is underscored by explicit language in the Communications Act to the effect that no automatic preferential rights are intended to be extended to the renewal applicant. The Act provides, inter alia, that "no * * * license shall be construed to create any right beyond the terms, conditions, and periods of the license" (47 U.S.C. § 301); that an applicant waives any claim to a frequency "because of the previous use of the same" (47 U.S.C. § 304); that a renewal license may be granted for "a term of not to exceed three years" (47 U.S.C. § 307(d)); and that a license does "not vest in the licensee any right * * * in the use of the frequencies * * * beyond the term thereof" (47 U.S.C. § 309(h)). See also F.C. C. v. Sanders Bros. Radio Station, 309 U.S. 470, 475, 60 S.Ct. 693, 697, 84 L.Ed. 869 (1940):
And see F.C.C. v. Pottsville Broadcasting Co., supra Note 10, 309 U.S. at 138, 60 S.Ct. 437; Ashbacker Radio Corp. v. F.C.C., supra Note 5; Transcontinental Television Corp. v. F.C.C., 113 U.S.App. D.C. 384, 386-387, 308 F.2d 339, 341-342 (1962). "[The Federal Communications Act] does not reflect the same concern for `security of certificate' that appears in other laws." WHDH, supra Note 17, 143 U.S.App.D.C. at 396, 444 F.2d at 854.
For a critical scholarly analysis of S. 2004, see Comment, The Aftermath of WHDH: Regulation by Competition or Protection of Mediocrity?, 118 U.Pa.L. Rev. 368, 401-402 (1970): "[T]he Pastore Bill, in its endeavor to promote security in the broadcasting industry and to avoid irrational decision-making, would have the effect of protecting licensees rendering mediocre service and eliminating the most powerful available incentive for better broadcasting."
326 U.S. at 330-333, 66 S.Ct. at 150. (Footnote omitted.)
143 U.S.App.D.C. at 402, 444 F.2d at 860. As new interest groups and hitherto silent minorities emerge in our society, they should be given some stake in and chance to broadcast on our radio and television frequencies. According to the uncontested testimony of petitioners, no more than a dozen of 7,500 broadcast licenses issued are owned by racial minorities. The effect of the 1970 Policy Statement, ruled illegal today, would certainly have been to perpetuate this dismaying situation. While no quota system is being recommended or required, and while the fairness doctrine no doubt does serve to guarantee some minimum diversity of views, we simply note our own approval of the Commission's long-standing and firmly held policy in favor of decentralization of media control. Diversification is a factor properly to be weighed and balanced with other important factors, including the renewal applicant's prior record, at a renewal hearing. For two strong statements by the Commission itself on the importance of diversification, see Bamberger Broadcasting Service, Inc., 3 Pike & Fischer R.R. 914, 925 (1946), and Policy Statement on Comparative Broadcast Hearings, 1 F.C.C.2d 393, 394 & n. 4 (1965).