Court Opinion

ID: 9468106
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:04:53.067624+00
Date Added: 2024-06-11T17:40:41.377240
License: Public Domain

NICHOLS, Judge,
concurring:
I join in Judge Tamm’s opinion, but wish to add the following:
We are concerned with application of a remarkable rule of the FCC. Normally they do not allow a broadcast licensee to make a “distress sale,” i. e., one effected while renewal of the broadcast license was challenged and under FCC review. In theory he has nothing to sell. Presumably they could not prevent sale of the physical facilities but would not recognize assignment of the license. A purchaser therefore would not have the license and would have to apply for one on equal terms with other applicants. The reason for such a policy is to enforce licensees’ good behavior, by holding over them a catastrophic loss in case the license extension is denied for misconduct. If licensees, confronted with imminent revocation of their licenses, could cut their losses by timely sales, they might emerge with some loss, to be sure, but short of bankruptcy. Thus the negative reward for evil doing would be diluted and fear of FCC disap-propriation would be made less.
But the FCC has mitigated its policy in order to entice more minority broadcasters into the business. If the erring licensee sells to minority buyers at a material discount under fair market value, and if the buyers qualify for a license, the “distress” nature of the sale will be overlooked provided the inquest into license renewal has not gone too far. A ratemaker similarly might encourage minority users of electricity and increase their consumption of it, by prescribing for them lower rates than nonmi-nority users must pay. The intended effect is to make bargain basement acquisitions of valuable broadcast facilities available to minorities only.
*1032The FCC has however selected a point beyond which it will not carry this policy. That is when the challenge to license renewal has reached the stage when an administrative law judge has found facts adversely to the licensee, concluded it has been guilty of misconduct as a licensee, and recommended against renewal. This is the latest stage allowed. The stopping point is apparently earlier for sales effected after the basic policy was announced. The FCC feels that allowance of a “distress sale” even at a bargain price, and even to minority buyers, when the license is under that great a cloud, would so weaken the usual sanctions that the desire to increase minority ownership must take a subordinate place.
The instant allegedly erring licensee having negotiated a bargain sale to minority buyers, he and the buyer say it is arbitrary and capricious to make the allowability of one of these sales turn on an event otherwise without legal significance, the unveiling of an administrative law judge’s decision, which is only tentative, since the FCC can reject or modify it at will.
As the opinion of the court rightly points out, the validity of allowing distress sales to minorities only is not before us in an adversary context. Appellants would benefit from the policy and would push it further than the FCC would agree to, and the FCC of course does not attack its own policy as far as it goes. Those, if any, who deem the policy itself anomalous in our system of laws, are not likely to find it arbitrary and capricious for the FCC in applying it to draw the line at some point. To such persons, whether it is drawn at the closing of proof, at the completion of requests for findings, or of briefs, or at whatever subsequent procedural step the rules may recognize, or on the first Tuesday after the first Friday of the first month lacking an “R,” will be matters of indifference. They may say the FCC looks ridiculous in trying so hard to be only a little pregnant, but looking ridiculous and being arbitrary and capricious are not the same.
Who is a minority is not defined in the appellate record, nor does it appear whether the definition is the same in all parts of the country. It is conceded that the coappel-lant, being black-owned, is one by all definitions. I use the term, therefore, without knowing exactly what it means, but nothing turns on precision here.