Opinion ID: 411857
Heading Depth: 2
Heading Rank: 2

Heading: FCC precedents.

Text: 24 Although an agency has flexibility to reexamine its previous holdings, such changes must be rationally and explicitly justified. Atchison, Topeka & Santa Fe Railway Co. v. Wichita Board of Trade, 412 U.S. 800, 806-09, 93 S.Ct. 2367, 2374-75, 37 L.Ed.2d 350 (1973); Office of Communication etc. v. FCC, 560 F.2d 529, 532 (2d Cir.1977). This requirement ensures that the standard is being changed and not ignored, and ... that [the agency] is faithful and not indifferent to the rule of law. Columbia Broadcasting System, Inc. v. FCC, 454 F.2d 1018, 1026 (D.C.Cir.1971). If a change in policy is explained, however, our review is limited to whether the basis of the change was so unreasonable as to be arbitrary and capricious. Greater Boston Television Corp. v. FCC, 444 F.2d 841 (D.C.Cir.1970), cert. denied, 403 U.S. 923, 91 S.Ct. 2233, 29 L.Ed.2d 701 (1971). West Coast contends that the FCC failed to observe or distinguish precedent in two respects: 1) by not excusing West Coast's programming shortfalls in light of its financial difficulties, and 2) by applying the sanction of nonrenewal in the absence of a finding of misrepresentation. 25
26 Petitioner relies heavily on Hubbard Broadcasting, Inc., 41 R.R.2d 979 (1977), to establish a longstanding FCC policy that financial difficulties excuse programming shortfalls. That policy, according to petitioner, rests on the FCC's premise that the public interest is served by allowing infant stations to reduce non-entertainment programming until their financial position improves. 27 We cannot agree that Hubbard controls this case. 6 More importantly, however, the FCC did not ignore that case. It distinguished that opinion in both its original decision and on petition for reconsideration. Those distinctions were eminently reasonable. Unlike Hubbard, the record in this case established that KDIG was losing money when West Coast acquired it and when it made its programming promises. The programming promises were made in light of and despite those losses. No showing of a dramatic worsening of the financial situation was made. 28 In addition, the record suggested that KDIG programming suffered because of deliberate neglect by its owners in favor of another station. This situation was absent in Hubbard. In light of that evidence, the Commission required that West Coast make a station-specific showing that uncontrollable financial problems at KDIG justified the programming shortfall. 7 No such proof was provided, partly because of the inadequacy of appellant's own record-keeping. Appellant maintains that overall losses for West Coast should be sufficient. We do not agree. The FCC's licensing scheme requires each station to serve the needs of its city of license. The owners of KDIG disserved the citizens of San Diego while they devoted their resources to a station in a different city. It was reasonable for the FCC to conclude that West Coast could only meet its burden by showing the nature of losses experienced by KDIG as a single entity. 8 29 B. Sanction. 30 This case is apparently the first time a license renewal has been denied solely because of a promise-versus-performance failure. Such derelictions in the past have been remedied through fines or short-term renewals. West Coast argues that the Commission did not convincingly explain its decision to impose such a severe sanction. 31 Appellant relies heavily on Steadman v. SEC, 603 F.2d 1126 (5th Cir.1979), aff'd, 450 U.S. 91, 101 S.Ct. 999, 67 L.Ed.2d 69, rehearing denied, 10 S.Ct. 2008 (1981). That decision required the SEC to provide compelling justification for its decision to impose the most potent weapon in the Commission's 'arsenal of flexible enforcement powers.'  Id. at 1139. This case differs from Steadman because of differences in the regulatory schemes at issue. Steadman involved the Commission's decision permanently to bar an investment adviser from further practice of his trade. In FCC license renewal cases, in contrast, the FCC is required to make an affirmative finding that the public interest will be served by granting the license. As Judge Mikva recently explained: 32 [There are] emphatic differences between a broadcast applicant before the FCC and one who faces the possibility of punishment.... [D]enial of a renewal application is not a penal measure. .... [T]he FCC's purpose is not to punish licensees for past wrongs, but to ensure that these fiduciaries of a great public resource will satisfy the highest standards of character commensurate with the public trust that is reposed in them. 33 RKO General, Inc. v. FCC, 670 F.2d 215, 232 (D.C.Cir.1981). This court has often emphasized that in a renewal proceeding, an incumbent licensee must literally 'run on his record.'  United Church of Christ v. FCC, 359 F.2d 994, 1007 (D.C.Cir.1966). In this case, the ALJ concluded that [s]tated simply, the station failed to operate fully in the public interest.... 9 The ALJ tempered his remedy because of the licensee's inexperience. The Commission explicitly disagreed with this justification for leniency, and offered a full explanation of why denial was appropriate. 34 Finally, it should be noted that courts give considerable deference to FCC discretion concerning the appropriate sanction to apply to licensee misconduct. FCC v. WOKO, Inc., 329 U.S. 223, 228-29, 67 S.Ct. 213, 215-16, 91 L.Ed. 204 (1946); Lorain Journal Co. v. FCC, 351 F.2d 824, 831 (D.C.Cir.1965), cert. denied sub. nom. W.W.I.Z., Inc. v. FCC, 383 U.S. 967, 86 S.Ct. 1272, 16 L.Ed.2d 308 (1966). [T]he Commission is [not] bound ... to deal with all cases at all times as it has dealt with some that seem comparable. 329 U.S. at 228, 67 S.Ct. at 215. Given that discretion we cannot say the sanction was inappropriate in this case. 35