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Parties Involved:
Federal Communications Commission
Appellee
Jersey Shore Broadcasting Corporation
Appellant

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 12, 1994 Decided November 1, 1994

No. 93-1253

JERSEY SHORE BROADCASTING CORPORATION,

APPELLANT

v.

FEDERAL COMMUNICATIONS COMMISSION,

APPELLEE

SEASHORE BROADCASTING CORPORATION AND

MANAHAWKIN COMMUNICATIONS CORPORATION,

INTERVENORS

and consolidated cases 93-1260, 93-1649, 93-1650

Appeals from Orders of the

Federal Communications Commission

-

Alan C. Campbell argued the cause for appellants. With him on the briefs was David A. Irwin.

Lawrence Roberts entered an appearance for appellant Jersey Shore Broadcasting Corporation.

Gregory M. Christopher, Counsel, Federal Communications Commission, argued the cause for

appellee. On the brief for appellee were William E. Kennard, General Counsel, Daniel M.

Armstrong, Associate General Counsel, and C. Grey Pash, Jr., Counsel, Federal Communications

Commission.

Richard M. Riehl argued the cause and filed the brief for intervenor Manahawkin Communications

Corporation. On the brief for intervenor Seashore Broadcasting Corporation was William D. Silva.

Before SILBERMAN, SENTELLE, and ROGERS, Circuit Judges.

Opinion for the Court filed by Circuit Judge SENTELLE.

SENTELLE,Circuit Judge: Jersey Shore Broadcasting Corporation ("Jersey Shore") and Press

BroadcastingCompany("Press") appealfromFederalCommunicationsCommission ordersrejecting

a settlement agreement among parties to a comparative licensing proceeding for a new FM radio

station. Jersey Shore and Press were two of the original twelve applicants for the station. Prior to

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the settlement agreement, an FCC Administrative Law Judge ("ALJ") dismissed applicationsfiled by

JerseyShore as "inconsistent applications" under 47C.F.R. § 73.3518 (1993). In an effort to re-enter

the comparative licensing proceeding, Press negotiated with another applicant, LD Broadcasting, to

be substituted on the LD Broadcasting application. The remaining parties to the comparative

licensing proceeding thereafter agreed to a settlement in which Press would be awarded the

construction permit for the station, while Jersey Shore would hold an option to acquire the station

subsequently. Although the ALJ and the FCC Review Board approved the settlement, the full

Commission reversed, holding that Press and Jersey Shore could not accomplish through a creative

settlement agreement that which the inconsistent application rule directly prohibits. Press and Jersey

Shore challenge that decision as an arbitrary and capricious agency action. Because we find that the

Commission's decision is a reasonable attempt to protect agency processes, we affirm.

I. BACKGROUND

InJanuary1990, twelve parties, including appellantsJerseyShore and Press, filed applications

for a new FM station, Channel 289B1, in Manahawkin, New Jersey. At the time Press filed its

application, it had pending in another proceeding a petition for reconsideration challenging the

dismissal of its application for an FM station in Ocean Acres, New Jersey. Similarly, on the same day

Jersey Shore filed its application for the Manahawkin station, it filed another application for a station

in Tuckerton, New Jersey. The Manahawkin applications were designated for a hearing to an FCC

ALJ. Seashore Broadcasting, licensee of a station located twenty miles north of Manahawkin, filed

a petition to deny Jersey Shore's application. Seashore argued that Jersey Shore's Manahawkin

application violated the inconsistent application rule, 47 C.F.R. § 73.3518 (1993), which provides:

While an application is pending and undecided, no subsequent inconsistent or

conflicting application may be filed by or on behalf of or for the benefit of the same

applicant, successor or assignee.

After designation for hearing but before a Hearing Designation Order ("HDO") issued, the

original applicants reached a settlement agreement in which Press would obtain the construction

permit for the Manahawkin station and Jersey Shore would hold an option to acquire the new facility

from Press. Subsequently, however, the ALJ issued the Manahawkin HDO dismissing the

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applications of both Press and Jersey Shore as inconsistent applications under 47 C.F.R. § 73.3518.

In re Atlantic Radio Communications, Inc., 6 FCCR 4716, 4717-18 (1991). The ALJ held that Press

could not own both the Ocean Acres station, for which a petition for reconsideration was pending,

and the Manahawkin station under applicable multiple ownership rules, and that Jersey Shore's

attempt to prosecute simultaneously the Tuckerton and Manahawkin applications violated the

inconsistent application rule.

After the August 6, 1991, issuance of the HDO, the original applicants submitted a joint

settlement agreement to the ALJ accommodating the dismissal of the original Press application by

Press' agreement with another applicant, LD Broadcasting Limited Partnership, to substitute as

applicant on its application. The ALJ concluded that he did not have jurisdiction over the PressJersey Shore option agreement because those applicants had been dismissed. He therefore referred

that portion of the agreement to the FCC Mass Media Bureau. The ALJ approved the balance of the

settlement agreement, including the substitution of Press for LD Broadcasting. Subsequently, the

Mass Media Bureau approved the Press-Jersey Shore option agreement.

Seashore filed a request to intervene and a consolidated opposition to the joint settlement

proposal before the ALJ. The ALJ dismissed Seashore's petition to intervene and consolidated

opposition as moot in light of his prior approval of the settlement agreement. Seashore filed an

appeal of the ALJ order approving the settlement agreement and a petition to intervene in the

Manahawkin proceeding with the FCC Review Board. The Review Board held that Seashore's

petition to intervene was untimely under 47 C.F.R. § 1.223 (1993), which provides that petitions to

intervene must be filed within thirty days after publication of the hearing issues. Seashore's petition

was tardy by nearly one and one-half months. In re Atlantic Radio Communications, Inc., 7 FCCR

486, 487 (1992). The Review Board further reasoned that even if the petition were timely filed

Seashore could not qualify as a party to object to the ALJ order because Seashore'ssole concern was

the denial of Jersey Shore's application. Since the Press-Jersey Shore option agreement was not

before the ALJ, Seashore could not have party status to challenge the ALJ's decision. Id. After an

unsuccessful petition for reconsideration, Seashore sought review by the fullCommission of both the

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Review Board and the Mass Media Bureau decisions. In separate orders, the Commission reversed

both the Review Board and the Mass Media Bureau.

With respect to the Review Board order, the Commission concluded that the Board should

have considered the merits of Seashore's appeal. Seashore established its status as a party in interest

in light of its original petition to deny Jersey Shore's application. In re Atlantic Radio

Communications, Inc., 7 FCCR 5105, 5105-06 (1992). It retained that status for purposes of

objecting to the Press-Jersey Shore settlement agreement. Consequently, the Review Board should

have applied the time frame for appeals by "parties" of any final ruling under 47 C.F.R. § 1.302

(1993), not for petitionsto intervene under 47 C.F.R. § 1.223. 47 C.F.R. § 1.302, governing appeals

from a final ruling by a presiding officer, provides:

(a) If the presiding officer's ruling terminates a hearing proceeding, any party to the proceeding, as

a matter of right may file an appealfrom that ruling within 30 days after the ruling isreleased.

(b) Any party who desires to preserve the right to appeal shall file a notice of appeal within 10 days

after the ruling is released....

Under this rule, Seashore's appeal was timely filed. 7 FCCR at 5106, 5107 n.10.

On the merits of Seashore's appeal, the Commission held that proper application of the

inconsistent application rule rendered the agreement through which Press would acquire the

construction permit and Jersey Shore would retain an option to acquire the station void. The

Commission reasoned that a violation of the inconsistent application rule, which occurs upon the act

of filing, could not be undone. The ALJ and Review Board decisions "permit[ ] the parties to

accomplish through a creative settlement agreement what they could not have accomplished directly

through the application process." Id. at 5106. The Commission concluded that its precedent

extended to the current situation "so that dismissal of an application for violation of 47 C.F.R. §

73.3518 precludesthe applicant from further participation in a proceeding, including participation in

any settlement." Id. (citing Big Wyoming Broadcasting Corp., 2 FCCR 3493 (1987)). While this

result may tax Commission resources, it reasoned that "we must do so to avoid future abuse of 47

C.F.R. § 73.3518 and to protect the integrity of our rules generally." Id. Finally, in a related order,

the Commission set aside the Mass Media Bureau's approval of the Press-Jersey Shore option

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agreement. In re Atlantic Radio Communications, Inc., 7 FCCR 7205 (1992).

Following the FCC's disallowance of the settlement agreement and remand for further

proceedings, the remaining parties to the licensing proceeding attempted to negotiate another

settlement. A partial settlement, which provided, in part, for the dismissal of the LD Broadcasting

application, was approved by the ALJ.

Press and Jersey Shore appeal the decisions of the Commission effectively dismissing them

from the proceedings, arguing that the Commission wrongly granted party status to Seashore, and

therefore erred in reaching the merits ofits appeal. They contend that the FCC's grant of party status

to Seashore and its ultimate holding that the Manahawkin settlement agreement violated 47 C.F.R.

§ 73.3518 are arbitrary, capricious and an abuse of discretion. Thus, this court should find the

Commission's decisions unlawful. For reasons set out more fully below, we disagree.

II. DISCUSSION

A. Threshold Considerations: Standing and Exhaustion.

Seashore assertsthat this appealshould not be heard because appellants do not have standing

and have not exhausted their administrative appeals. Specifically, it argues, the LD Broadcasting

application no longer exists; therefore, because Press no longer has an application to be prosecuted,

this court cannot redress any injury that might have been suffered by appellants. Consequently,

appellants cannot establishArticle IIIstanding. Further, because appellants did not subsequently seek

a stay of the licensing proceeding so that Press might litigate its substitution agreement with LD

Broadcasting, they did not properly exhaust their administrative remedies. While these arguments

are not frivolous, we hold that appellants have crossed the standing and exhaustion thresholds.

In order to establish Article III standing to appeal this Commission action, appellants must

establish: (1) that they have suffered a concrete and particularized "injury in fact" as the result of the

agency decision; (2) that the injury is fairly traceable to the challenged decision; and (3) that the

injury is likely to be redressed by a favorable decision by this court. Lujan v. Defenders of Wildlife,

112 S. Ct. 2130, 2136 (1992). Appellants have satisfied these standards. Press and Jersey Shore

suffer injuries which are fairly traceable to the Commission decision. As a direct result of the

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Commission decision each is denied the ability to obtain the Manahawkin station through the

settlement agreement. Additionally, as the FCC agrees in its brief, this court could redress those

injuries byremanding to theCommissionwithinstructions eitherto reinstate the settlement agreement

or to allow Press and Jersey Shore to file nunc pro tunc applications with the Commission.

Seashore's exhaustion argument is equallyunavailing. The exhaustion doctrine prescribes that

"no one is entitled to judicial relief for a supposed or threatened injury until the prescribed

administrative remedy has been exhausted." Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41,

50-51 (1938). It serves three distinct purposes: (1) preserving the autonomy of the agency by

allowing it to apply its expertise and to correct its own errors and by discouraging the deliberate

flouting of administrative processes; (2) aiding judicial review by allowing for the development of

a factual record; and (3) promoting judicial and administrative efficiency by prohibiting repeated

interruptions of agency proceedings and by decreasing the need for judicial decision. Athlone

Industries, Inc. v. Consumer Product Safety Comm'n, 707 F.2d 1485, 1488 (D.C. Cir. 1988). In the

present case, none of these three purposes would be served by requiring appellants to seek a stay of

the remanded proceedings. Appellants have respected administrative processes throughout these

proceedings,filing petitionsforreconsiderationofeachfinaldecision. Consequently, the Commission

has had the opportunity to consider appellants' arguments and to develop a sufficient factual record.

Finally, administrative efficiencymayactuallybe disserved byrequiring further exhaustionhere. Such

a requirement would have the undesirable effect ofcloggingCommissionproceedings with contingent

appeals and a multitude of requests for stays for no other reason than to satisfy the exhaustion

doctrine. Under these circumstances, the exhaustion doctrine requires no more than appellants have

already done.

B. Seashore's Party Status.

When an agency interprets its own administrative regulation promulgated under the statute

charged to its administration, this court owes a high degree of deference to that interpretation. Udall

v. Tallman, 380 U.S. 1, 16-17 (1965). The agency's interpretation should be upheld unless it is

"plainly erroneous or inconsistent with the regulation." Id. (quoting Bowles v. Seminole Rock Co.,

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1Appellants' procedural argument that the Commission could not have reached the merits

without granting party status to Seashore is, in any event, probably incorrect. Under existing

Commission rules, the Commission may review a ruling of an ALJ at any time within 50 days of

the ALJ's final order. 47 C.F.R. § 1.302(b) (1993). Consequently, even if the Commission

refused to grant party status to Seashore, it could still have reviewed the ALJ and Review Board

325 U.S. 410, 413-14 (1945)). We find no such error in the Commission's interpretation of its own

party-status rules.

The Commission determined that Seashore achieved "party" statusfor purposes of appealing

the ALJ's order under 47 C.F.R. § 1.302 by virtue of its earlier petition to deny Jersey Shore's

application in the HDO. Appellants maintain that this determination is erroneous, contending that

Seashore could only have achieved party status by filing a timely petition to intervene under

Commission rules, which it did not do. Seashore also did not properly appeal the ALJ's denial of its

intervention petition under 47 C.F.R. § 1.301(c) (1993), which requires appeals from interlocutory

agency ordersto be filed within five days of entry of the order. By granting Seashore party status for

purposes of appeal of the final order, the Commission allegedly reached the merits of Seashore's

appeal improperly.

Although the Commission'sruling does not comply with the Commission'sintervention rules

and 47 C.F.R. § 1.301(c), if we affirmtheCommission's determination that Seashore has party status,

then the intervention rule is not relevant. We do so affirm. An FCC regulation, 47 C.F.R. § 1.302(a),

provides that "any party to the proceeding, as a matter of right, may file an appeal from [a presiding

officer'sfinal] ruling within 30 days after the ruling isreleased." 47 C.F.R. § 1.302(a). We will defer

to the Commission's interpretation of the phrase "any party to the proceeding" unless it is "plainly

erroneous." Udall, 380 U.S. at 17. Here, the Commission reasoned that, although not granted party

status through a petition to intervene, Seashore retained party status as a result of its earlier petition

to deny Jersey Shore's application. It was not unreasonable for the Commission to conclude that

Seashore's interest in seeing Jersey Shore's application denied could have been affected by the

settlement agreement, and therefore, to recognize Seashore status as party to protect that interest.

We defer to the agency's reasonable interpretation of 47 C.F.R. § 1.302(a). Seashore's appeal was

thus timely filed, and the Commission did not err in reaching the merits of Seashore's appeal.1

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decisions for error on its own motion. 

C. The Commission's Disapproval of the Settlement Agreement.

1. Standard of Review.

We review the Commission's disapproval of the settlement agreement under the highly

deferential standard set by section 706 of the Administrative Procedure Act, which provides that a

court must uphold a final agency action unless that action is "arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A) (1988). Under this

standard, we may reverse the Commission's decision only if it "is not supported by substantial

evidence, or the agency has made a clear error in judgment." Kisser v. Cisneros, 14 F.3d 615, 619

(D.C. Cir. 1994) (citing Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 415-16 (1971)).

2. The Commission Decision.

At the heart of their appeal, Press and Jersey Shore challenge the Commission's decision that

neither appellant could participate in the settlement agreement after the dismissal of their original

applications under the inconsistent application rule. Appellants contend that this decision was

arbitrary and capriciousin that the Commission departed fromestablished precedent and well-settled

policy without providing an appropriate explanation. We reject appellants' argument. The

Commission action represents a well- reasoned decision to protect Commission processes and the

integrity ofthe inconsistent application rule, consistent withCommission precedent making clear that

the inconsistent application rule is not to be applied in a lax manner.

The FCC's inconsistent application rule, 47 C.F.R. § 73.3518, bars an applicant from filing

with the Commission two or more applications, all of which cannot be granted because "they are

inconsistent or conflicting." The Commission views the filing of inconsistent applications as a serious

violation of Commission rules. In 1953, the Commission explained that without the rule, applicants

could "flood" the Commission's resources with multiple applications, many of which could not be

granted and require otherwise unnecessary hearings denying "just administration" and fairness to all

other applicants seeking the establishment of broadcast services in the same community. See In re

Storer Broadcasting Co., 43 F.C.C. 1254, 1256 (1953).

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Appellants urge that the inconsistent application rule should be relaxed here, relying upon a

series of cases in which dismissed applicants were later allowed to participate in a settlement

agreement. See In re Judith O. and Larry R. Orkus, 7 FCCR 20 (Rev. Bd. 1992); In re WebsterFuller Communications Assoc., 4 FCCR 4952, 4954 (1989). However, none of the cases cited by

appellants involve violations of the inconsistent application rule. In Orkus, the original application

violated a U.S./Canada agreement regarding power limitations for domestic stations near the

Canadian border. 7 FCCR at 20. The Commission allowed the applicant to participate in the

settlement agreement after the power output ofthe station was cleared by the Canadian government.

Similarly, in Webster-Fuller, anALJ dismissed anapplicant's originalapplicationforfailure to provide

reasonable assurance of a transmitter site. 4 FCCR at 4952. The Commission later reinstated the

dismissed application and allowed the applicant to participate in the settlement agreement. Id. at

4954. While violation of other rules led to the original dismissals of the applications in those cases,

those violations do not implicate Commission procedure. The inconsistent application rule exists

primarily to protect Commission resources and processes. It is not unreasonable for the Commission

consistently to conclude that violation of that rule, unlike the rules in Orkus and Webster-Fuller,

cannot be undone by subsequent amendment. See Big Wyoming Broadcasting Corp., 2 FCCR 3493

(1987).

Even when the Commission in a 1992 decision relaxed its previous "hard look" policy, it

emphasized that certain defects could not be remedied. In re Amendment of Part 73 of the

Commission'sRulesto Modify Processing ProceduresforCommercial FM Broadcast Applications,

7 FCCR 5074 (1992). In that decision, relaxing FM processing rules to permit curative amendments

on a more expansive basis, the Commission noted that its new policy of relaxed filing requirements

"does not alter the fact that under our rules certain defects related to the filing of broadcast

applications are uncorrectable. For example, an applicant cannot cure through amendment the

problems of premature or late filing, inconsistent applications, or failure to pay the required

application fee." Id. at 5078 (emphasis added; footnote omitted).

Approving the settlement agreement in which Press would be substituted as the applicant on

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LD Broadcasting's application, the ALJ and Review Board allowed appellantsto circumvent the rule.

The Commission has a vested interest in prohibiting abuse of its procedural rules. Thus, we uphold

the Commission's decision, that Press and Jersey Shore should not be allowed to participate in the

settlement agreement because to do so would "permit[ ] the partiesto accomplish through a creative

settlement agreement what they could not have accomplished directly through the application

process," In re Atlantic Radio Communications, Inc., 7 FCCR at 5106, as a reasoned attempt to

protect its processes and limited resources. It is neither arbitrary nor capricious. Rather we conclude

that the Commission's analysis is reasonable and well supported by Commission precedent.

Accordingly, the FCC orders denying approval of the settlement agreement and the PressJersey Shore option agreement are 

Affirmed.

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