Orange Park Florida T.V., Inc. v. F.C.C.

• Decision Date: 13 February 1987
• Docket Number: No. 85-1816,85-1816
• Parties: ORANGE PARK FLORIDA T.V., INC., Appellant, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee, Clay Television, Inc., Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 664

811 F.2d 664

258 U.S.App.D.C. 322

ORANGE PARK FLORIDA T.V., INC., Appellant, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee Clay Television, Inc., Intervenor.

No. 85-1816.

United States Court of Appeals District of Columbia Circuit.

Argued Nov. 17, 1986.

Decided Feb. 13, 1987.

As Amended Feb. 13, 1987.

Notice of Appeal from an Order of the Federal Communications commission.

John R. Feore, Jr., with whom Alan C. Campbell, Washington, D.C., was on brief, for appellant. Christopher C. Smallwood Washington, D.C., entered an appearance for appellant.

Jane E. Mago, Counsel, Federal Communications Commission, Washington, D.C., for respondent. Jack D. Smith, Gen. Counsel, Daniel M. Armstrong, Associate Gen. Counsel and Gregory M. Christopher, Counsel, Federal Communications Commission, Washington, D.C., were on brief, for respondent.

Thomas L. Root, Washington, D.C., was on brief, for intervenor.

Before STARR and BUCKLEY, Circuit Judges, and ROBINSON, ^* Chief Judge.

Opinion for the Court filed by Circuit Judge STARR.

STARR, Circuit Judge:

Orange Park Florida T.V., Inc. appeals a decision by the Federal Communications Commission denying its application for a construction permit to construct a UHF television station and granting the competing application of the intervenor, Clay Television, Inc. Orange Park challenges the denial of its application as arbitrary and capricious and the award to Clay as contradictory of Commission regulations. We conclude that the Commission reasonably found Orange Park unqualified for comparative consideration and therefore affirm that portion of the FCC's decision. We also hold, however, that the FCC erred in the course of granting Clay's application and therefore remand that matter to the Commission.

I

The chain of events leading to this appeal began in November 1980, when Clay Television filed an application with the FCC to construct a television station to broadcast over UHF channel 25 in Orange Park, Florida. See 47 U.S.C. Secs. 308, 309 (1982 & Supp. III 1985). ¹ Orange Park filed a competing application for channel 25 shortly thereafter. After a hearing, an administrative law judge determined that neither application satisfied the Commission's threshold requirements and therefore made no award. ²

The ALJ found Orange Park "basically unqualified" under 47 C.F.R. Sec. 73.610(c)(1) (1983). ³ That provision sets forth minimum spacing requirements for TV broadcast antennas, and specifically requires UHF television antennas to be 55 miles apart. ⁴ Orange Park ran afoul of the 55-mile rule by proposing an antenna site 52.36 miles from that already proposed in an application for a different channel. Thus, in the parlance of broadcast regulation, Orange Park's proposed site was "short-spaced" by 2.64 miles.

The ALJ went on to deny Orange Park's request for a waiver of the minimum spacing requirements. Orange Park's primary argument in this respect was that broadcasting from a short-spaced site with the proposed 1,000-foot antenna and contemplated signal strength would create no more interference than would be occasioned by broadcasting from a fully-spaced site with a maximum height antenna and a maximum-strength signal permitted under the Commission's regulations. The ALJ rejected this "equivalent protection" rationale, holding that that notion, under settled Commission precedent, was inapplicable to UHF broadcasting. Initial Decision, supra, note 2, 95 F.C.C.2d at 1198, J.A. at 12. As an independent reason, the ALJ found that Orange Park had failed to demonstrate that no fully-spaced sites were available, a showing that waiver applicants had to satisfy as a threshold matter. Id. The Commission's Review Board and the full Commission did not disturb this aspect of the ALJ's decision. ⁵

Clay's application for a construction permit fared no better than Orange Park's in the ALJ's initial decision, for Clay was found in violation of another Commission regulation, 47 C.F.R. Sec. 73.3572(b) (1983). That rule removes an application from consideration when it is amended to effect a major transfer of ownership from the ownership structure proposed in the original application. ⁶ Of especial significance in this case, Clay had carried out a 50% ownership change in two filings. ⁷ The first shift, amending Clay's application to reflect a 26% change in ownership, occurred on the so-called "A cut-off" date. That is the final date for filing applications for a channel. See 47 C.F.R. Sec. 73.3572(c) (1983); see also Revised Procedures for the Processing of Contested Broadcast Applications, 72 F.C.C.2d 202, 207-08, 210-11 (1979). Clay's second filing changed the originally proposed ownership structure by an additional 24% and took place on the "B cut-off" date. The latter date is the last day for those opposing any application to file a petition to deny. See 47 C.F.R. Sec. 73.3584 (1983).

Clay did not dispute that its two amendments, if considered together, effected a major change in ownership under the Commission's rules. Instead, it argued before the ALJ that for purposes of the ownership-change provision only amendments filed after the A cut-off should be counted. To buttress its interpretation, Clay pointed out that it could have withdrawn its original application and filed a new one altogether prior to the A cut-off date without being removed from consideration; therefore, Clay reasoned, a mere amendment of the original application before that date should not be the basis for dismissing an otherwise proper application. The ALJ nonetheless rejected Clay's interpretation, concluding that the plain language of the regulation and longstanding Commission precedent required considering all amendments affecting ownership, whenever filed. Initial Decision, supra note 2, 95 F.C.C.2d at 1199, J.A. at 13.

Unlike Orange Park, however, Clay enjoyed success in seeking review of the ALJ's determination. In interlocutory review of the ALJ's ruling on the ownership transfer issue, the full Commission concurred with the ALJ's determination that both the language of section 73.3572 and Commission precedent brought Clay within the strictures of that rule and would normally necessitate dismissal of its application. ⁸ The Commission determined, however, that under the circumstances presented, Clay should be permitted to cure its violation rather than suffer the Draconian sanction of dismissal. The basis for its decision was that the FCC staff responsible for processing construction permit applications (then known as the "Broadcast Bureau," now as the "Mass Media Bureau") had, since the use of A and B cut-off dates was adopted in 1979, interpreted section 73.3572 as had Clay, namely to require consideration only of ownership amendments filed after the A cut-off date. ⁹ In light of the confusion sown by the staff's interpretive practices, the Commission concluded that the rule should not be applied to Clay under the circumstances of this case. ¹⁰ Accordingly, the FCC remanded the case to the ALJ, who subsequently found Clay otherwise qualified and, as the sole surviving applicant, entitled to the construction permit. ¹¹

After exhausting its administrative remedies, Orange Park brought this appeal pursuant to 47 U.S.C. Sec. 402(b)(1), (6). Clay has intervened.

II

On appeal, Orange Park mounts a two-pronged attack on the Commission's decision. First, it challenges the FCC's denial of its request for a waiver of the Commission's minimum spacing rules as an arbitrary and capricious departure from precedent. See 5 U.S.C. Sec. 706(2)(A) (1982); see also Motor Vehicle Manufacturers Association v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29, 50, 103 S.Ct. 2856, 2870, 77 L.Ed.2d 443 (1983); Airmark Corp. v. FAA, 758 F.2d 685, 692 (D.C.Cir.1985). Second, Orange Park attacks the Commission's decision allowing Clay to cure its violation of the ownership-change provision as violative of that rule and, accordingly, as offensive to the fundamental principle that an agency is bound by its rules. See Reuters Limited v. FCC, 781 F.2d 946 (D.C.Cir.1986). Clay, of course, supports the Commission's orders in all respects. In addition, it argues that were we to decide that Orange Park was properly disqualified because of its failure to comply with the minimum spacing rules, then we are obliged to conclude that Orange Park lacks standing to contest the award to Clay.

A

Orange Park's objections to the Commission's determination that it was unqualified to obtain a construction permit need not long detain us. Its violation of the minimum spacing rules is clear and undisputed. That being so, Orange Park's only hope lay in the possibility of a Commission-granted waiver from its rules. But it is elementary that the judiciary may disturb a Commission refusal to waive its rules only in the event of an abuse of discretion. See North Texas Media, Inc. v. FCC, 778 F.2d 28, 32 (D.C.Cir.1985); City of Angels Broadcasting, Inc. v. FCC, 745 F.2d 656, 665 (D.C.Cir.1984); see also Basic Media, Ltd. v. FCC, 559 F.2d 830, 833-34 (D.C.Cir.1977) (applicant for waiver of agency's rule carries a heavy burden). Measured under that generous standard, the Commission's decision in this instance easily withstands attack.

In essence, Orange Park argues that in two respects the FCC departed without justification from prior precedent addressing the showing necessary to obtain a waiver: first, by requiring it to prove as a threshold matter that no fully-spaced sites were available; and second, by rejecting the "equivalent protection" rationale upon which Orange Park relied to prove that its operations from a short-spaced site would not cause significant interference.

Commission precedent makes clear that an applicant seeking waiver of the minimum spacing rules must, as an initial matter, establish the nonavailability of fully-spaced sites. See Townsend Broadcasting Corp., 62 F.C.C.2d 511, 512 (Comm'n 1976). This court has...