Office of Communication of United Ch. of Christ v. FCC

• Decision Date: 28 March 1972
• Docket Number: No. 24672.,24672.
• Citation: 465 F.2d 519
• Parties: OFFICE OF COMMUNICATION OF the UNITED CHURCH OF CHRIST, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents.
• Court: U.S. Court of Appeals — District of Columbia Circuit

465 F.2d 519 (1972)

OFFICE OF COMMUNICATION OF the UNITED CHURCH OF CHRIST, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents.

No. 24672.

United States Court of Appeals, District of Columbia Circuit.

Argued November 2, 1971.

Decided March 28, 1972.

Mr. Albert H. Kramer, Washington, D. C., for petitioner.

Mr. Joseph A. Marino, Counsel, Federal Communications Comm., with whom Messrs. Richard E. Wiley, Gen. Counsel at the time the brief was filed, and John H. Conlin, Associate Gen. Counsel at the time the brief was filed, were on the brief, for appellee Federal Communications Comm.

Mr. Robert B. Nicholson, Atty., Dept. of Justice, for appellee United States. Mr. Howard E. Shapiro, Atty., Dept. of Justice, also entered an appearance for appellee United States.

Mr. Charles R. Halpern, Washington, D. C., with whom Mr. Geoffrey Cowan, Washington, D. C., was on the brief, for Friends of the Earth as amicus curiae urging reversal.

Before BAZELON, Chief Judge, DANAHER, Senior Circuit Judge, and ROBINSON, Circuit Judge.

BAZELON, Chief Judge:

In this appeal we are asked to review the Federal Communications Commission's refusal to permit the voluntary reimbursement of expenses to the appellant, the Office of Communication of the United Church of Christ, by a broadcast licensee. The proposed reimbursement was for legal advice and other services rendered by the Church to several civic associations in Texarkana, Texas in filing a petition to deny the license of KTAL-TV in Texarkana, negotiating a settlement with the licensee of KTAL, and subsequently withdrawing the petition to deny.

We specifically overrule the Commission's principle of general application that in no petition to deny situation is it in the public interest to permit reimbursement, and remand this case to the Commission for a determination of whether reimbursement should be allowed in accordance with this opinion.

I. The Facts

In August of 1968, KCMC, Inc., the licensee of KTAL-TV in Texarkana, applied to the Commission for renewal of its license. On January 10, 1969, twelve civic associations in the Texarkana area filed a petition to deny renewal of the KTAL license on the grounds that KTAL had ignored Negroes, who constituted a substantial portion of the listening public in Texarkana, in the development and presentation of its programs. The appellant Church, whose work in providing technical and legal assistance to community groups is well known to this court,¹ had at the request of several Texarkana groups provided assistance in the preparation of the petition to deny, and in responding to the licensee's opposition to the petition.

While the petition was pending, the Texarkana organizations together with the Church held a series of discussions with the licensee in an attempt to resolve their dispute. An agreement was reached wherein the licensee undertook to assure that it would meet the programming needs of minorities, would improve the balance, scope and tone of its programs dealing with minorities, and would consult with local groups to achieve these goals. This agreement, dated June 8, 1969, was filed as an amendment to the renewal application with the Commission.²

The Texarkana organizations subsequently requested the Commission to give no further consideration to their petition to deny, and requested that it renew the license of KTAL in consideration of the specific undertakings of the licensee.

On July 29, 1969, the Commission renewed the license of KTAL in reliance on the agreement reached between the Texarkana groups and the licensee.³ After recounting the circumstances behind the petition to deny and the negotiations ending in agreement, the Commission stated:

"We believe that this Commission should encourage licensees to meet with community oriented groups to settle complaints of local broadcast service. Such cooperation at the community level should prove to be more effective in improving local service than would be the imposition of strict guidelines by the Commission."⁴

Shortly after the Commission's decision, Earle K. Moore, counsel for the appellant Church, submitted a request to the Commission for approval of KCMC, Inc.'s agreement to reimburse the Church for its expenses incurred on behalf of the Texarkana organizations — a total of $15,137.11. The Church's request for reimbursement from KCMC, Inc. had been approved by the public groups in Texarkana, and was a term of the negotiations with KCMC, Inc. However, the Church had specifically indicated that reimbursement was not a condition precedent to any agreement on the substantive issues. When the settlement was reached, counsel for KCMC, Inc. stated that his client would reimburse the Church provided that the Commission approved the settlement agreement first, and later approved the reimbursement.⁵

The settlement agreement was therefore submitted to the Commission with no mention of reimbursement. Mr. Moore's subsequent request in October of 1969 for the Commission's approval of reimbursement was in full accord with the understanding between the parties.

Almost a year later, in September of 1970, the Commission issued its decision denying approval of the reimbursement agreement.⁶ Briefly, a majority of four considered that the issue raised was whether the public interest is served by permitting payment of expenses to those who file petitions to deny under 47 U.S.C. § 309⁷, and subsequently seek to withdraw them after settlement. The majority recognized that the Communications Act was designed to facilitate filing of petitions to deny, and that "the settlement of the issues between the station and the petitioner listener group is generally a desirable goal."⁸ However, the majority was of the opinion that reimbursement of expenses was not "necessary" to effectuate either goal, and that the potential for abuse if reimbursement were allowed outweighed any benefit to the public interest. In discussing abuses, the majority mentioned two possibilities:

"First . . . overpayments (e. g. inflated fees) or even opportunists motivated to file insubstantial petitions in order to obtain substantial fees. . . .

Second . . . the possibility that settlement of the merits of the dispute might be influenced by the ability to obtain reimbursement of expenses from the licensee."⁹

In light of these dangers, the majority determined that it was in the public interest to formulate a principle of general application — "namely, that in no petition to deny situation, whatever the nature of the petitioner, will we permit payment of expenses or other financial benefit to the petitioner."¹⁰

Chairman Burch and Commissioner Johnson joined in dissent to state that the Commission had previously allowed reimbursement where it facilitated public interest goals, and there was no reason to forbid it when the settlement and withdrawal of "petition to deny" litigation served the public interest. To prevent abuse, the Commissioners formulated rules to be enforced by the Commission.¹¹

Commissioner Cox wrote separately in dissent that permitting reimbursement in this case served still another public interest goal — namely, facilitating the participation of public interest groups in the license renewal process.¹²

It is necessary to focus on these dissents since the Commission's initial objection to the Church's appeal is that the issues raised in this court were never presented to the Commission.

II. Exhaustion of Administrative Remedy

Appellant Church challenges the decision of the Commission primarily on the grounds that: (1) The Commission is required by statute to facilitate citizen participation in the renewal process, and denial of reimbursement to the Church is in direct violation of this mandate; (2) the Commission's decision unjustly discriminates against the Church since it has allowed reimbursement in other situations; and (3) the Commission's decision is unreasoned and lacks factual support in the record.¹³

Section 405 of the Communications Act provides that:

"The filing of a petition for rehearing shall not be a condition precedent to judicial review of any . . . order, decision, report, or action, except where the party seeking such review . . . (2) relies on questions of fact or law upon which the Commission . . . has been afforded no opportunity to pass." (Emphasis added.)

The Commission contends that the Church raised none of these arguments before it, and did not file a petition for rehearing. Therefore, § 405 would preclude judicial review.

It is true that the Commission decided this case only on the basis of letters from counsel outlining the facts behind the request for reimbursement, and affidavits enumerating the Church's expenses. However, the majority's decision analyzed and interpreted the Communications Act and Commission precedent as mandating a general rule that reimbursement in petition to deny situations would not serve the public interest. The Church argues to us the opposite result — that the statute and precedents mandate reimbursement in this case. This was an alternative interpretation of the authorities which was surely before the Commissioners at the time of their decision.

Indeed, the dissenting Commissioners Burch and Johnson raise the very argument pressed here by the Church.¹⁴ It would be blindly ignoring the realities of administrative decision-making to say that the majority had no opportunity to consider the objections raised by the dissenters, and to make its ruling in light of these objections.¹⁵

On its face, § 405, commands only that the Commission be afforded the opportunity to pass on issues.¹⁶ There is no requirement that this opportunity be afforded in any particular manner, or by any particular party. Thus to allow the Church to seek review of issues raised by the majority and challenged by the dissenters complies with both § 405's requirements and its objectives.¹⁷

In light of the record before us, the...