Steele v. F.C.C.

• Citation: 770 F.2d 1192,248 U.S.App.D.C. 279
• Decision Date: 31 October 1985
• Docket Number: No. 84-1176,84-1176
• Parties: , 54 USLW 2145 James U. STEELE, Appellant, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee, Dale Bell, Intervenor.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

Page 1192

770 F.2d 1192

248 U.S.App.D.C. 279, 54 USLW 2145

James U. STEELE, Appellant, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee Dale Bell, Intervenor.

No. 84-1176.

United States Court of Appeals District of Columbia Circuit.

Argued April 1, 1985.

Decided Aug. 23, 1985.

Rehearing En Banc Granted Oct. 31, 1985. ^*

Appeal from an Order of the Federal Communications Commission (FCC No. 84-161).

Alan B. Kaufman, New York City, with whom Stuart A. Shorenstein, New York City, was on brief, for appellant.

C. Grey Pash, Jr., Counsel, F.C.C., Washington, D.C., with whom Daniel M. Armstrong, Associate Gen. Counsel, F.C.C Washington, D.C., was on brief, for appellee.

Rudolph L. Ennis, Knoxville, Tenn., was on brief for intervenor Dale Bell.

Before TAMM, WALD and SCALIA, Circuit Judges.

Opinion for the court filed by Circuit Judge TAMM.

Dissenting opinion filed by Circuit Judge WALD.

TAMM, Circuit Judge:

The Federal Communications Commission (the "Commission") extends preferential treatment to female applicants for FM radio stations in comparative evaluation proceedings. Appellant James U. Steele contends that this policy discriminates on the basis of sex in violation of the United States Constitution and is an agency action that is arbitrary, capricious, or otherwise unlawful under the Administrative Procedure Act, 5 U.S.C. Sec. 706(2)(A) (1982) (the "APA"). We do not reach the constitutional question because we find that in adopting the female preference policy, the Commission exceeded its statutory authority. We therefore declare the policy invalid, reverse the agency's award of the construction permit to Bell, and remand the case for further proceedings consistent with this opinion.

I. BACKGROUND

In 1981, appellant Steele and intervenor Bell filed mutually exclusive applications for construction permits for new FM broadcast facilities on channel 224A (92.7 MHz) at St. Simon's Island, Georgia. ¹ Channel 224A will be the first local broadcast outlet on St. Simon's Island, a small resort community located off the coast of southeast Georgia.

Steele is originally from the South and plans to reside on St. Simon's Island as full-time general manager of the station if he is awarded the construction permit. He holds B.S. and M.A. degrees in communications and has more than twenty years of broadcast experience in a variety of management and non-management positions at radio and television stations. Steele has never had an ownership interest in any broadcast facility or any other medium of mass communications.

Bell is also from the South and moved to St. Simon's Island approximately one year before filing her application. She does not have a college degree, and her broadcast experience consists of four months at station WUFE-(AM), Baxley, Georgia, a facility owned by her father, Mr. Farnell O'Quinn. Bell holds stock in three family-owned cable television systems located in Georgia, ² but she has committed to divest herself of these interests upon grant of her application. She plans to operate the new station as its full-time general manager. Her husband, Dewayne--who also owns the transmitter site and has committed joint funds for the project--has agreed to serve as his wife's full-time assistant general manager at the station.

An Administrative Law Judge ("ALJ") conducted comparative hearings to determine which applicant would best serve the public interest. The ALJ found that the relative advantages and disadvantages of each application were essentially offsetting but granted Bell's application because her qualitative enhancement as an integrated female owner with past local residence overcame Steele's enhancement for past broadcast experience.

Like the ALJ, the Review Board on appeal found that the merits of Steele's and Bell's applications were close. It found no differences between the two on the three factors of character, proposed program service, and past broadcast experience as an owner. Steele was accorded a "very slight comparative coverage preference" over Bell under the "efficient use of frequency" factor. The Board found the parties equal on the "primary objective" of "diversification of control of the media of mass communications" because the Board accepted Bell's representations that she would sell her cable stock upon grant of her application and that the substantial broadcast interest of Bell's family, while unrefuted, should not be attributed to her in the circumstances of this case. The Board also found Bell and Steele were equal with respect to the "quantitative" measure of integration of ownership and management. The "qualitative enhancements" awarded under the integration factor, then, became pivotal, and the Board concluded that Bell's "credits for 100% female integration and past local residence" were superior to Steele's "credits for previous broadcast experience and proposed future residence." Joint Appendix ("J.A.") at 20-33. In its conclusion, the Board stated that "[u]nder the comparative circumstances of this case, Bell's 100% female integration is decisively important." J.A. at 33 (emphasis added). The Commission affirmed the Review Board's decision without opinion, J.A. at 34-35, but later characterized its denial of review in this case as one "where enhancement credit for female ownership proved to be decisive." Horne Industries, Inc., 98 F.C.C.2d 601, 603 n. 3 (1984). Steele appeals the Commission's decision.

II. THE COMMISSION'S AUTHORITY

A. The Scope of Review

The question confronting this court is whether the Commission exceeded its statutory authority by adopting a gender-based preference for comparative broadcast license proceedings. The APA, 5 U.S.C. Sec. 706(2)(C) (1982), states that a "reviewing court shall hold unlawful and set aside agency action, findings, and conclusions found to be in excess of statutory jurisdiction, authority, or limitations or short of statutory right." In determining whether an action exceeds an agency's statutory authority, the reviewing court's task "necessarily entails a firsthand judicial comparison of the claimed excessive action with the pertinent statutory authority." Western Union Telegraph Co. v. FCC, 541 F.2d 346, 354 (3d Cir.1976), cert. denied, 429 U.S. 1092, 97 S.Ct. 1104, 51 L.Ed.2d 538 (1977).

The Federal Communications Act of 1934 authorizes the Federal Communications Commission to regulate "communication by wire and radio so as to make available ... to all the people of the United States a rapid, efficient, Nation-wide, and world-wide wire and radio communication service." 47 U.S.C. Sec. 151 (1982). The Act further empowers the Commission to prescribe the qualifications of radio station operators and issue broadcasting licenses "as public convenience, interest, or necessity requires." 47 U.S.C. Sec. 303 (1982).

The public interest standard of the Act is not susceptible to precise definition. See FCC v. Pottsville Broadcasting Co., 309 U.S. 134, 138, 60 S.Ct. 437, 439, 84 L.Ed. 656 (1940) (the standard "is as concrete as the complicated factors for judgment in such a field of delegated authority permit"). At the same time, however, the Supreme Court has recognized that Congress did not intend by the Act "to transfer its legislative power to the unbounded discretion of the regulatory body." FCC v RCA Communications, Inc., 346 U.S. 86, 90, 73 S.Ct. 998, 1002, 97 L.Ed. 1470 (1953). See also National Broadcasting Co. v. United States, 319 U.S. 190, 216, 63 S.Ct. 997, 1009, 87 L.Ed. 1344 (1943) (public interest standard " 'not to be interpreted as setting up a standard so indefinite as to confer an unlimited power' ") (quoting Federal Radio Commission v. Nelson Brothers Co., 289 U.S. 266, 285, 53 S.Ct. 627, 636, 77 L.Ed. 1166 (1933)). Thus, while the Commission is entitled to deference in deciding how the public interest will best be served, a reviewing court must ensure that the Commission's action " 'is based on consideration of permissible factors and is otherwise reasonable.' " FCC v. WNCN Listeners Guild, 450 U.S. 582, 594, 101 S.Ct. 1266, 1274, 67 L.Ed.2d 521 (1981) (quoting FCC v. National Citizens Committee for Broadcasting, 436 U.S. 775, 793, 98 S.Ct. 2096, 2111, 56 L.Ed.2d 697 (1978)).

Under the Commission's Policy Statement on Comparative Broadcast Hearings, 1 F.C.C.2d 393 (1965), the public interest standard encompasses as one of its primary goals "a maximum diffusion of control of the media of mass communications, generally referred to as diversification." 1 F.C.C.2d at 394. See West Michigan Broadcasting Co. v. FCC, 735 F.2d 601, 604-06 (D.C.Cir.1984), cert. denied, --- U.S. ----, 105 S.Ct. 1392, 84 L.Ed.2d 782 (1985). Diversification seeks not only to avoid undue concentration of media outlets in the hands of a few individuals or entities but also to promote diversity of programming and viewpoint. The promotion of diverse sources of information through diversification of media ownership is thus well established as an integral part of the Commission's public interest mandate. See Citizens Communications Center v. FCC, 447 F.2d 1201, 1213 n. 36 (D.C.Cir.1971), clarified, 463 F.2d 822 (D.C.Cir.1972). The Supreme Court has recognized on several occasions the connection between diversity of ownership and the diversity of ideas and expression that is the basis of the first amendment. See, e.g., Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 390, 89 S.Ct. 1794, 1806, 23 L.Ed.2d 371 (1969); Associated Press v. United States, 326 U.S. 1, 20, 65 S.Ct. 1416, 1424, 89 L.Ed. 2013 (1945); see also H.R.Rep. No. 765, 97th Cong., 2d Sess. 40 (1982), reprinted in 1982 U.S.Code Cong. & Ad.News 2237, 2261, 2284 ("The nexus between diversity of media ownership and diversity of programming sources has been repeatedly recognized by both the Commission and the courts."). Thus, a vital component of the Commission's public interest determination has been consideration of "the extent to which the ownership of the media will...