Opinion for the Court filed by Circuit Judge MIKVA.
Opinion filed by Circuit Judge WILLIAMS, dissenting in part and concurring in part of the judgment.
MIKVA, Circuit Judge:
In these consolidated cases, three companies comprised of Hispanic investors, an association claiming concern with preserving Hispanic broadcasting, and an Hispanic individual petition this court for judicial review of two orders of the Federal Communications Commission ("FCC" or "Commission"). The first order approved a settlement agreement providing for the grant of license renewal applications for Spanish International Communications Corporation ("SICC") and Bahia De San Francisco ("Bahia") subject to the prompt transfer of the licenses to a holding company controlled by Hallmark Cards, Inc. ("Hallmark"). The first order also denied petitions for acceptance of competing applications for the SICC and Bahia stations by two of the companies bringing petitions in this case. See Spanish International Communications Corporation, 2 FCC Red. 3336 (1987). The second order granted applications to transfer control of the licenses to Hallmark and denied applications which sought to block the transfer. See Spanish International Communications Corporation, 3 FCC Red 4319 (1988).
The settlement agreement was approved after an AU determined that the stations in question were subject to the de facto control of an alien in violation of § 310(b)(3) of the Communications Act of 1934, 47 U.S.C. § 310(b)(3) (1982). The principal question presented is whether the Commission's approval of a full market value sale to Hallmark prior to the final resolution of the renewal proceedings contravenes the Commission's policy forbidding assignment at full value of broadcast stations by a licensee, whose qualifications are under investigation, until the Commission has determined that the licensee has not forfeited its broadcast authorization. See Jefferson Radio Company v. FCC, 340 F.2d 781, 783 (D.C.Cir.1964). If indeed the Commission has changed its Jefferson Radio policy, we must determine whether it has explained adequately its departure from existing policy. We affirm the Commission's rulings declining to accept the competing applications and declining to review the actions of another federal court in administering a bidding process that led to the selection of Hallmark as the transferee. However, we hold: (1) that the three companies, as prospective competitors for the licenses, have standing to challenge the Commission's approval of the settlement and transfer; and (2) that the Commission departed from the policy upheld in Jefferson Radio. Because this case does not fall within any of the established exceptions to Jefferson Radio, we remand this case to the Commission to complete the renewal proceedings that were pending at the time the transfer was approved or to enunciate and explain a new policy that would modify Jefferson Radio.
I
A. Statutory Background
Section 310(b) of the Communications Act precludes the Commission from grant ing a broadcast license to foreign nationals or their representatives or to foreign corporations. 47 U.S.C. § 310(b)(1), (2). In addition, under the provision at issue in this case, "[n]o broadcast . license shall be granted to or held by [a United States corporation] of which any officer or director is an alien or of which more than one-fifth of the capital stock is owned . or voted by aliens or their representatives." 47 U.S.C. § 310(b)(3). Congress' motivation in passing this restriction was based primarily " 'upon the idea of preventing alien activities against the Government during the time of war.' " Noe v. FCC, 260 F.2d 739, 741 (D.C.Cir.), cert. denied, 359 U.S. 924, 79 S.Ct. 607, 3 L.Ed.2d 627 (1959) (quoting 68 Cong.Rec. 3037 (1927)).
B. Procedural History
1. Proceeding before the ALJ
SICC and Bahia (collectively, "SICC") were the licensees of six television stations broadcasting in the Spanish language. A seventh Spanish language station was licensed to the Seven Hills Television Company, which was controlled by many but not all of the principals who controlled SICC. SICC's corporate predecessors began acquiring broadcast stations in 1961. Prior to initiating in 1983 the renewal hearing at issue in this case, the Commission, with knowledge of the relationships giving rise to the hearing, unconditionally granted various applications by SICC to acquire stations and repeatedly renewed SICC's broadcast licenses. After a staff investigation precipitated by an outside complaint, the Commission designated for hearing the renewal applications for each SICC station. The principal issue was whether the corporate licensees of the stations were controlled by aliens or their representatives in violation of Section 310(b) of the Act. After a full evidentiary hearing, the AU found that SICC had violated § 310(b)(3) because Reynald V. Anselmo, president and a director of SICC, had acted as the representative of the Azcarraga family, Mexican citizens and owners of a Mexican media empire. Spanish International Communications Corporation, FCC 86D-1, Initial Decision at ¶ 176 (January 8, 1986). While the Azcarragas' stock holdings in SICC did not exceed the 20% statutory limitation, the AU concluded that the family's financial and personal relationships with American principals of SICC, particularly Anselmo, gave the family a degree of influence and control over the SICC stations which "greatly exceeded that permitted by Section 310(b)."
According to the AU this influence manifested itself at several levels. The composition and ownership of the board of directors of licensee corporations were affected by the Azcarragas' financing of stock purchases for selected principals. For example, Anselmo, a former employee in the Azcarragas' media empire, purchased interests in SICC stations with Azcarraga financing. As president and a director of all of the licensee companies, Anselmo personally selected all station managers. In addition, a major portion of programs broadcast by SICC stations originated from Televisa, a Mexican production company in which the Azcarragas had a controlling interest. The AU regarded Anselmo as the chief conduit of the Azcarragas' influence and as a "representative of aliens" within § 310(b)(3). These facts, coupled with the "historic financial and personal ties between [licensees and the Azcarraga family," resulted in "an abnormal relationship . whereby the [SICC] stations were dependent on foreign subsidiaries" for financing, programming and management. Thus the AU denied the renewal applications. He invited the parties, however, to seek "a less drastic remedial solution, such as a corporate restructuring" by raising the matter in an application for review of his decision.
2. The Settlement Agreement
The licensees appealed the AU's decision to the Commission's Review Board and several third parties filed exceptions to the AU decision. The exceptions challenged: (1) the AU's refusal to consider whether SICC abused the Commission's processes by filing lawsuits against Spanish Radio Broadcasters of America ("SRBA") (one of the excepting parties) and other potential witnesses in the proceeding against SICC; and (2) the AU's refusal to consider whether there was misconduct or misrepresentation sufficient to violate the Commission's policy on character qualifications.
While the exceptions were pending before the Board, SICC submitted a proposed settlement agreement whereby the SICC licenses would be renewed for the limited purpose of promptly transferring the stations to an unrelated, qualified buyer. SICC proposed to sell the stations to Hallmark, an American corporation having no ties to the Azcarragas. The selection of Hallmark arose from the settlement of an unrelated, ongoing stockholders' derivative suit brought against SICC, Fouce Amusement Enterprises, Inc. v. Spanish International Communications Corp., No. CV 76-3451-MRP (C.D.Cal.). After SICC agreed to settle the stockholders' suit by selling the stations, the federal district court for the Central District of California supervised bidding for the stations and ultimately accepted Hallmark's bid.
The Commission's Review Board approved the proposed settlement without ruling on the merits of the exceptions. On review, the Commission agreed with the Review Board that the proposed assignment of SICC licenses was in the public interest notwithstanding its general policy under Jefferson Radio. The Commission reasoned that under the circumstances of the case, the proposed sale would "not unacceptably diminish" the deterrence of licensee wrongdoing — the rationale under-girding Jefferson Radio. Spanish International Communications Corporation, 2 FCC Red. 3336, 3338-39 (1987). The Commission deemed the settlement in the public interest because: the "technical" nature of the violations found by the ALJ suggested that SICC had no intention of violating the statute or deceiving the Commission; and by providing for the removal of SICC as licensees, the settlement constituted an effective means to implement prospectively the statutory policy against alien control. Noting that SICC and its predecessor had been allowed to broadcast for the past twenty-five years and citing the "unique contributions" that these stations made to broadcasting in this period, the Commission concluded that this was an appropriate case in which SICC should be removed from broadcasting, but without the harshness attending an outright denial of its renewal applications. The Commission also found that the settlement agreement served the public interest by simplifying a complex case, saving administrative costs, removing a "cloud" of uncertainty that can adversely affect a station's performance, and facilitating the resolution of the Fouce stockholder's derivative suit and the antitrust litigation directed at SRBA. Prior to this decision, SRBA withdrew its exceptions to the AU decision and filed a petition in support of the SICC settlement agreement, noting that SRBA and SICC were "executing an agreement that is intended to result in settlement as among themselves of the Antitrust Litigation." At no stage of these proceedings did the Commission rule on the merits of the exceptions.
Subsequently, the FCC considered Hallmark's qualifications and approved the applications to transfer the stations to Hallmark.
3. Challenges Below by Petitioners
The Hispanic Broadcasting Limited Partnership ("HBLP") filed a petition for review of the Review Board's approval of the settlement agreement along with an application for acceptance of its competing license applications. The Commission denied both requests. Regarding the competing applications, the Commission concluded that because HBLP failed to file in accordance with Commission time limits the applications properly were rejected. The Commission declined to waive its cut-off rule "absent a compelling justification" which it did not find.
Hispanic Broadcasting Systems, Inc. ("HBS") also petitioned below for accept anee of competing applications. Although the Commission denied this petition, HBS does not challenge that ruling before this court. The Coalition for the Preservation of Hispanic Broadcasting ("the Coalition"), HBS, and Susan M. Jaramillo submitted a consolidated petition for review in this case. Each party petitioned below for denial of the application to transfer SICC stations to Hallmark. These petitions also were denied.
TVL Corporation, comprised of Hispanic investors and one of the two finalists in the shareholder derivative settlement process, petitioned the Review Board to deny applications to transfer SICC's licenses to Hallmark. In its petition TVL argued that the transfers should be denied without prejudice and that an order should be issued by the Commission directing SICC to request the Ninth Circuit, which had jurisdiction over the SICC stockholders derivative suit, to remand that litigation with instructions: (1) to vacate its selection of Hallmark as the prevailing bidder; and (2) to consider the final bids of Hallmark and TVL as of July 23, 1986.
TVL argued that the bidding process discriminated against minority-controlled entities seeking to purchase SICC. By requiring bidders to sign a confidentiality agreement precluding signers from seeking to acquire SICC by means other than the market value bidding process, TVL asserts that minority parties contemplating a "distress sale" were discriminated against. Pursuant to the Jefferson Radio policy of prohibiting a licensee facing qualification issues in a renewal hearing from profiting on the sale of broadcast interests, TVL believed it was highly unlikely that a full market sale would be allowed. When TVL learned that the Commission's Mass Media Bureau had acceded to the "full value" sale, TVL quickly gathered the financing for a full value bid, timely filed its bid, and was selected as a second round bidder. On July 18, 1986 the TVL and Hallmark bids were submitted to the district court as the two finalists. Evidence of the final TVL financing commitments was not yet available when the bids were placed before the court, although TVL had advised SICC that it would be available as it ultimately was on July 23, 1986. The court entered an order conditionally approving the Hallmark bid on July 18, 1986. TVL then filed a motion to intervene in the shareholder suit and Hallmark moved for an affirmance of the order entered on July 18. The district court rejected TVL's motion to intervene and approved Hallmark on several grounds, one of which was that Hallmark had unequivocal financial backing. The Ninth Circuit affirmed the denial of the motion to intervene without comment on the merits of TVL's claims. Fouce Amusement Enterprises, Inc. v. Spanish International Communications Corp., 819 F.2d 1145 (9th Cir.) (table), cert. denied sub nom. TVL Corp. v. Spanish International Communications Corp., 484 U.S. 1028, 108 S.Ct. 754, 98 L.Ed.2d 766 (1988).
TVL argued that the settlement agreement between SICC and the Bureau lacked appropriate measures to protect adequately potential minority purchasers who had previously been pursuing the possibility of a "distress sale" acquisition. The Commission rejected this claim, reasoning, inter alia, that the relief requested would be "entirely inappropriate and at variance with the Commission's long-standing policy of declining to adjudicate matters properly pending in another forum." Spanish International Communications Corporation, 3 FCC Red 4319, 4320 (1988).
II
A. Standing
The Commission concedes that petitioner HBLP has standing to challenge the Commission's dismissal of its competing applications. The Commission argues, however, that if this court upholds the dismissal of the competing applications, then HBLP does not have standing to challenge the settlement agreement or the transfer of SICC stations to Hallmark. In addition, the Commission argues that all other petitioners lack standing to bring their respective claims. We find that the three companies have standing; therefore we need not resolve the question of whether the Coalition or Ms. Jaramillo can claim standing as viewers.
The law of standing is based on a set of constitutional and prudential requirements. To establish standing under article III of the Constitution a litigant must plead an injury in fact fairly traceable to the conduct complained of and likely to be redressed by the relief requested. Allen v. Wright, 468 U.S. 737, 751, 104 S.Ct. 3315, 3324, 82 L.Ed.2d 556 (1984). Under statutory and prudential standing requirements, standing to challenge an order of the Commission is conferred by § 402 of the Communications Act, which allows appeal to this court by "any . person who is aggrieved or whose interests are adversely affected" by such order. 47 U.S.C. § 402(b)(6) (1982).
1. Standing as Viewers
In their consolidated brief, the Coalition, HBS and Susan M. Jaramillo (collectively, "Consolidated Petitioners") claim standing as viewers under Office of Communication of the United Church of Christ v. FCC, which allows responsible representatives of the broadcast audience to assist the Commission in vindicating the public interest. 359 F.2d 994, 1004-05 (D.C.Cir.1966). Consolidated Petitioners suggest that the settlement threatens the public's interest in the continuation of Spanish language programming. Their claim of standing is problematic because there is no evidence to suggest that the anti-alien control provisions of the Act were implemented to advance the public's interest in programming content. We need not resolve this issue, however, because we find that HBLP, HBS, and TVL have standing as prospective competitors to challenge the Commission's approval of the settlement agreement. Since the relief sought by those petitioners encompasses the relief sought by the other Consolidated Petitioners, it is of no moment whether "viewer" standing exists in this case.
2. Standing as Prospective Competitors
As a threshold matter we must address the nature of the action brought by petitioner TVL. TVL does not challenge the settlement agreement per se but the process which led to the selection of Hallmark as the transferee. It asks us to reverse the Commission's approval of the settlement agreement on the grounds that the Commission failed to address its claim that the bidding process was discriminatory. This cause of action is not reviewable in this court, however, because it essentially seeks a review of the judicial proceedings which occurred in the Ninth Circuit. Neither the Commission nor this court can engage in such review.
The Commission argues that, assuming we uphold its denial of the competing applications, none of the petitioners have standing as prospective competitors for the SICC licenses. It conceded at oral argument that if a reversal of its orders would result in vacant licenses, companies eligible to file applications for those licenses would have standing to challenge the Commission's order. See, e.g., MG-TV Broadcasting v. FCC, 408 F.2d 1257, 1264 n. 24 (D.C.Cir.1968) (prospective applicant had standing to challenge assignment of a construction permit where denial of the application would have left the station vacant and available for other applications). The Commission argued, however, that MG-TV is limited to cases where the license could become available directly as a result of the court's order. We reject this distinction.
While MG-TV involved a substantive challenge which, if accepted, immediately would have rendered the relevant license open to competition, the rationale for prospective competitor standing does not require that we restrict it to such circumstances. This court recently allowed a would-be competitor for a license to challenge an FCC order granting the incumbent licensee permission to sell its broadcast properties to a minority-controlled enterprise pursuant to the Commission's distress sale policy. See Shurberg Broadcasting of Hartford, Inc. v. FCC, 876 F.2d 902 (D.C.Cir.1989). There, similar to this case, the Commission's order sanctioned a sale that would have avoided a renewal hearing. Yet the Shurberg court's ruling that the distress sale policy was unconstitutional did not create a vacant frequency but reverted the incumbent licensee to its prior designated-for-hearing status. Apparently the FCC did not contest Shurberg's standing in that case. See id. at 906-07. While the Shurberg court did not address the issue of standing explicitly, this result is consistent with the general principle under lying standing for frustrated competitors. Cf. National Maritime Union of America v. Commander, Military Sealift Command, 824 F.2d 1228, 1237-38 (D.C.Cir.1987) ("[IJnjury to a bidder's right to a fair procurement is obviously an injury both traceable to the alleged illegality in a procurement and redressable by any remedy that eliminates the alleged illegality.").
By analogy, HBLP and HBS claim an injury to their right to a fair license award process both traceable to the Commission's wrongful conduct in approving the transfer to Hallmark and redressable by our remedy which eliminates that conduct, i.e., remand for continuance of the qualification hearing or articulation of a new policy. Similarly, TVL claims a "fair procedure" injury traceable to the Commission's approval of the transfer and redressable, if we were willing to review the merits, by reopening the settlement to permit a reopening of the bidding process. HBLP, HBS, and TVL have all made unsuccessful attempts to become the licensee for the stations at issue in this dispute. While there is no certainty that this opportunity will be regained upon remand, that possibility is far from remote. Moreover these parties were entitled to expect that a proceeding which was insulating the licenses from competition until its conclusion would not be truncated by an illegal transfer of the licenses to a third party. We therefore find a redressable injury, meeting the constitutional requirements for standing to challenge the Commission's approval of the settlement and transfer.
We disagree with the dissent's suggestion that HBLP and HBS should not be afforded article III standing because they were not within "the zone of active consideration" for the licenses in question. As the dissent correctly notes, this "active consideration" requirement has been imposed as a condition for standing to challenge government contract awards. See National Maritime Union, 824 F.2d at 1237-38 n. 12. But to export this reasoning wholesale to the license renewal context ignores critical differences between the license renewal and contract bidding processes. In the classic disappointed bidder case, all potential parties started with a level playing field whereby each applicant brought its resources to bear in vying for a "vacant" contract. In contrast, the typical "frustrated competitor" for an FCC license has had to vie with the incumbent licensee (as well as other competitors) in a process which obviously creates institutional biases toward the incumbent. It is not an "open" bidding contest per se. More importantly, once an incumbent's qualifications have been designated for hearing, as was the case here, the incumbent is insulated from competition. For example, HBLP timely filed a competing application for SICC's Miami station license at a time when SICC's renewal application for that license was in hearing on the issue of alien control. Although we hold below that the FCC correctly declined to accept this application during the pendency of the hearing, this fact illustrates the inappropriateness of the "active consideration" requirement in the FCC licensing context. The dissent's suggestion that SICC somehow was rendered vulnerable once its qualifications were challenged, opening the door to free and fair competition, could not be further from the actual circumstances of this case. Once SICC's qualifications were in hearing all possibility of competition for the licenses was precluded until the Commission finally resolved the hearing.
The bidding process administered in the Ninth Circuit as a remedy for the shareholder derivative suit can hardly be viewed as an exclusive (or even appropriate) place for applicants to demonstrate their "standing" in the licensing dispute. It was not an official FCC forum for competing for the licenses; indeed FCC policy appeared to prohibit the consummation of any transfer until the conclusion of the hearing. The dissent proceeds to argue that once the FCC decided to truncate the hearing process with the Hallmark settlement, HBS and HBLP could have demonstrated the seriousness of their commitment to obtaining the licenses by at least petitioning to intervene in that proceeding. But this action, too, would not have enabled these companies to gain the FCC's "active consideration" of their own applications.
Such arguments illustrate how the dissent misconstrues the standing inquiry. Standing does not amount to some kind of largesse dispensed at the discretion of article III judges. This circuit has never explicitly imposed a requirement that a "frustrated competitor" for an FCC license demonstrate its prospects for succeeding in the license award process. In Orange Park Florida T.V., Inc. v. FCC, on which the dissent heavily relies, this court stated that "contingencies may arise" which could cause the petitioner to "decide not to reapply" or could "defeat its [renewed] application." 811 F.2d 664, 673 n. 18 (D.C.Cir.1987). The Orange Park court further stated that it could discern no " 'absolute barriers' " to the petitioner's competing for the license in the future — the outer limit imposed by this court in determining whether an injury is redressable by the relief the petitioner seeks. Id. (quoting Greater Tampa Chamber of Commerce v. Goldschmidt, 627 F.2d 258, 264-65 (D.C.Cir.1980)). It was in this redressability context that the Orange Park court noted that the petitioner had "devised plans sufficiently detailed to enable it to compete for the facility." 811 F.2d at 673 n. 18. While a would-be competitor certainly could simplify the reviewing court's standing analysis by providing such detail, this statement does not constitute a legal requirement for standing under the law of this circuit. The dissent also cites Public Citizen v. Lockheed Aircraft Corp., 565 F.2d 708 (D.C.Cir.1977), for the proposition that a would-be competitor lacks standing where it fails to demonstrate its capacity to compete in the future. In that case, however, members of a trade association of machinery dealers sought to challenge a sale by the federal government of a manufacturing plant to the Lockheed Corporation. Because none of the members of the association, which were in the business of machinery sales and not defense contracting, had displayed a realistic intent to purchase an entire plant, the foundation for standing was deemed too speculative. Id. at 717-19. In contrast, the three companies at issue in this case have actually attempted in the past to bid or compete for the licenses in question.
Equally insupportable is the dissent's attempt to relegate this court's standing ruling in MG-TV Broadcasting to the status of a "superseded" case. Despite its appearance in a footnote, until the case is overruled or limited, the MG-TV court's reasoning on standing has the force of precedent.
The three companies also satisfy the statutory and prudential requirements for standing. Frustrated license applicants are parties "aggrieved" within the meaning of § 402(b)(6) of the Communications Act because they have a "concrete, economic interest that has been perceptibly damaged by the Commission's award [of licenses to another competitor.]" See Orange Park, 811 F.2d at 673. Having disposed of TVL's claim, we turn then to the substance of the complaints made by HBLP and HBS.
B. Competing Applications
Petitioner HBLP presents a threefold argument as to why its competing applications should have been accepted by the Commission at the time the SICC settlement agreement came up for review before the Commission. HBLP reasons: (1) that its application for SICC's Miami facility (WLTV) should have been accepted as a matter of right without the need for a waiver of the cutoff rule; (2) that its application for SICC's San Antonio facility (KWEX-TV) should have been accepted because, due to confusion in the Commission's notices, no valid cut-off date was established; and (3) that the remaining HBLP applications should have been accepted pursuant to a waiver of the cutoff rule because the Commission has not applied its "compelling justification" policy consistently in the past. We reject each of these arguments.
1. The Miami Application
HBLP invites this court to address a question left open in a previous case, Committee for Open Media v. FCC, 543 F.2d 861, 872-73 (D.C.Cir.1976): whether the Commission properly can reject an otherwise timely competing application because of the pendency of a non-comparative renewal hearing. The "window" was open for filing competing applications in the state of Florida at the time SICC's WLTV renewal application was in hearing on the issue of alien control. But because HBLP's application was mutually exclusive with SICC's, the Commission barred HBLP from filing its application. HBLP argues that the Commission's Ashbacker doctrine favoring comparative hearings in broadcast licensing decisions, Ashbacker Radio Corp. v. FCC, 326 U.S. 327, 66 S.Ct. 148, 90 L.Ed. 108 (1945), compels acceptance of its com peting application. The Commission replies that its longstanding policy against accepting competing applications when qualification issues are under active prosecution is a necessary means for achieving administrative finality. In Shurberg, Judge Silberman spoke with approval of this policy rationale, reasoning that designated-for-hearing applications should be protected from competitive filings so long as the FCC is engaged in ongoing administrative activity. See Shurberg, 876 F.2d at 908-09.
We conclude that the Commission acted within its discretion in barring HBLP's competing application for WLTV. While we are not unsympathetic to the argument that an extended qualifications proceeding inadvertently benefits the licensee by insulating it from competition, the circumstances of the case sub judice do not give rise to public interest concerns which outweigh the public's interest in administrative finality and efficiency. In New South Media Corp. v. FCC, this court held that "with no renewal hearing ongoing ., no evidence-taking underway, [and] no proceeding in midstream or even launched," the Commission erred in barring competing applications because doing so would not "require reopening of 'matters once decided,' or 're-litigation' of issues already aired." 685 F.2d 708, 716 (D.C.Cir.1982) (citation omitted). In reaching this decision, the New South court relied on a case in which the Commission ruled that competing applications should be entertained where prosecution of a renewal application had been deferred for three years. Id. (citing Carlisle Broadcasting Associates, 59 FCC2d 885, 885 n. 1, 889 n. 16 (1976)). In contrast, the New South court suggested that if a renewal application were actually "in hearing throughout most of the license term and past its expiration," competing applications should not be allowed until conclusion of the proceeding. Id. (distinguishing Committee for Open Media, 543 F.2d 861).
The two other cases relied upon by HBLP are unavailing. In La Rose v. FCC, 494 F.2d 1145 (D.C.Cir.1974), a renewal hearing was reopened in order to protect innocent creditors by enabling a court-appointed receiver to pursue an opportunity to sell the station in question. In MG-TV Broadcasting Company v. FCC, this court held that the Commission erred in extending a construction permit where the holder of the permit had made no significant progress toward construction and lacked good faith. Instead, a comparative hearing was required. 408 F.2d 1257 (D.C.Cir.1968). Unlike the cases discussed thus far, HBLP's argument offers no countervailing interest, other than the public's broad interest in competition, for opening an ongoing qualifications hearing to competing applications. Moreover, HBLP does not offer any specific evidence to support its claim that its application would only marginally extend the renewal proceeding. Yet, a qualifications hearing might extend into the next license period if competing applications dictated the "reopening of the hearing record for cross-examination of previous witnesses, objection to exhibits already admitted, introduction of new evidence, and retrial of issues." Committee for Open Media, 543 F.2d at 873. In light of these considerations, the Commission did not abuse its discretion in refusing to accept HBLP's application for the WLTV facility.
2. The San Antonio Application
HBLP claims that no valid cutoff date was established for applications competing for one of SICC's licenses — that of KWEX-TV. It argues that the Commission failed to follow proper procedure in alerting potential applicants that the filing period for competing applications would not be truncated by its order designating for hearing SICC's KWEX-TV renewal application. HBLP effectively concedes that the Commission's official notice in the Federal Register was accurate. Petitioner argues, however, that the Commission erred in issuing a news release, prior to the official notice, which announced the designation for hearing without noting that the normal window for competing applications would be maintained. In its order below, the Commission rejected this claim because HBLP failed to demonstrate that it or any other applicants were actually confused or deterred by the news release; alternatively the Commission relied on its official notice.
We affirm the Commission's ruling because: (1) HBLP did not attempt to file a competing application at the relevant time and no prejudice has been demonstrated to any other applicants; cf. Salzer v. FCC, 778 F.2d 869, 875 (D.C.Cir.1985) (filing in structions were vague and ambiguous and 44 of 53 applicants apparently were misled by them); and (2) the official notice was accurate and was released before the close of the window.
3. Denial of Waivers
HBLP asserts that the Commission erred in denying waivers of its cutoff rule for its remaining competing applications (and for the Miami and San Antonio applications in light of the failure of the above claims). It argues that the Commission has not applied its "compelling justification" basis for waivers consistently in the past and reasons that the lack of an established "strict" waiver policy impels the Commission to grant waivers in the case sub judice. We find this argument without merit.
The FCC precedents relied upon by HBLP upheld waivers based upon persuasive showings of impossibility, hardship, or other arguments demonstrating a clear public interest in allowing the waiver. HBLP has not identified any Commission precedent similar to this case where applicants seek waivers as much as three years after the cutoff date and offer only the public's interest in competition as a justification for the waiver. Moreover, HBLP has not offered any explanation as to why, with the exception of the Miami application, the competing applications were not timely filed. We affirm the Commission's ruling because it has offered a reasonable distinction between this case and occasions in the past when waivers of filing deadlines have been granted.
C. Deviation from Jefferson Radio
As a threshold matter petitioner HBLP argues that by approving the settlement agreement the Commission violated § 301 and 304 of the Act, which preclude property rights in broadcast licenses. Similarly, HBS argues that § 310(b) absolutely precluded the Commission from granting a license to SICC for any purpose after the AU's finding of de facto alien control. We need not resolve these questions, however, because we find that the Commission violated its policy as upheld in Jefferson Radio. HBLP also argues that the Commission, pursuant to § 309 of the Act, should have provided notice and an opportunity for public participation prior to consideration of the settlement because the settlement raised issues of substantial public concern. We reject this argument. Nothing in § 309 requires the Commission to solicit public comment on settlement agreements in adjudicatory proceedings. See 47 U.S.C. § 309 (1982). On the contrary, the Act limits the right of petition to deny an application to a "party in interest." 47 U.S.C. § 309(d)(1).
Petitioner HBLP charges that by approving a full market sale to Hallmark prior to the conclusion of the renewal proceeding, the Commission made an ad hoc exception to the policy upheld in Jefferson Radio without articulating a clear rationale for this departure. We agree.
The content and rationale of the Jefferson Radio policy are adequately explained in a previous opinion of this court:
Under a long-standing policy formulated by the [Commission] and upheld by this court, Jefferson Radio Co. v. FCC, 340 F.2d 781, 783 (D.C.Cir.1964), radio station licensees whose licenses have been designated for revocation hearing, or whose renewal applications have been designated for hearing on basic qualification issues, are forbidden to transfer control of these licenses. Established on the premise that "a licensee . has nothing to assign or transfer unless and until he has established his own qualifications," Northland Television, Inc., 42 Rad. Reg.2d 1107, 1110 (1978), the policy stems from the Commission's concern for the continued effectiveness of the deterrent provided by, in the appellant's words, the "awesome potential for economic loss that attends deprivation of license."
Stereo Broadcasters, Inc. v. FCC, 652 F.2d 1026 (D.C.Cir.1981). As the. Commission has observed:
[W]here an evidentiary hearing has been designated on a renewal application or show cause order to determine disqualification questions, permitting the suspect ed wrongdoer to evade sanction by transferring his interest or assigning the license without hearing will diminish the deterrent effect which revocation or renewal proceedings should have on broadcast licensees. Only under exceptional circumstances giving rise to compelling equitable considerations will the Commission grant renewal to such an applicant and authorize a concomitant license assignment or transfer of control____ Additionally the assignor must show he will derive no unwarranted [financial] benefit from a grant of renewal . conditioned upon the proposed transfer or assignment.
Northland Television, 42 Rad.Reg.2d at 1110 (emphasis added).
The Commission has found compelling equitable circumstances in cases where the assignor is disabled or where the licensee's assets are held by a receiver in bankruptcy for the benefit of innocent creditors. Id. at 1110 n. 4. In those rare cases where the Commission, prior to final resolution of a renewal hearing, has approved transfers falling outside these recognized exceptions, the transfer was made with a substantial monetary penalty to the transferor. See, e.g., RKO General, Inc. (KHJ-TV), 3 FCC Red 5057, 5062 (1988) (assignor to get $105 million less than purchase price and settlement would avoid years of further litigation); A.S.D. Answering Service Inc., 1 FCC Red 753, 754 (1986) (surrender of a construction permit and three licenses and dismissal of all low band licensing application plus firing of all employees whose conduct was at issue); George E. Cameron Jr. Communications, 56 Rad.Reg.2d 825, 828 (1984) (transferee assumed $6.5 million in debt, relinquished rights in another station, and returned a silent, failed station to the air and transferors received no compensation whatsoever).
The Commission presents three arguments in support of its claim that its actions are consistent with Jefferson Radio. First, it argues that the policy prohibits transfers only when the potential benefits in the proposed assignment are outweighed by a countervailing and overriding public interest in the Commission retaining effective control over the conduct of its licensees. The Commission's reliance on Northwestern Indiana Broadcasting Corp., 60 FCC2d 205 (1976), as precedent for this balancing approach, however, is misplaced. In Northwestern, the Commission declined to accept a settlement proposal which would have avoided a lengthy qualification hearing by transferring the station to a third party. The Commission reached this conclusion even though the proposed transfer was approved by the party which precipitated the qualification hearing and would have given a majority black community its first black radio station. Id. at 209-10. The Commission invoked balancing language to explain the deterrence rationale underlying Jefferson Radio, reasoning that despite its potential benefits, the settlement was precluded by the "countervailing and overriding public interest" in maintaining the deterrence function of its hearing processes. Rather than establishing a balancing test, the Commission in Northwestern unequivocally adhered to Jefferson Radio, precluding the settlement because it did not fall within established exceptions. Id. at 210-11.
The dissent suggests that this court has constructed Jefferson Radio as some kind of rigid doctrine to frustrate the Commission's desire to distribute justice in its licensing process. We take the doctrine as the Commission established it. Obviously the Commission is free to change the doctrine, as long as it explains why and what it is doing, and complies with its process requirements.
Thus the Commission's argument that it properly weighed the factors favoring approval of the settlement agreement against its interest in deterrence is without merit. Equally unavailing is the Commission's second argument that there are no guiding precedents in this case because it involves subjective inferences of de facto control under § 310(b) and because SICC was an incumbent licensee of 20 years. The Commission reasons that the "illusive nature" of defacto control counsels against a harsh remedy in the absence of specific precedent to guide a licensee. The authority upon which the Commission relies, however, does not support this contention. This court in Greater Boston Television Corp. v. FCC, 444 F.2d 841, 861 (D.C.Cir.), cert. denied, 403 U.S. 923, 91 S.Ct. 2233, 29 L.Ed.2d 701 (1971), upheld the Commission's decision to impose a remedy having a harsh effect even though there was not an explicit precedent giving notice to the licensee that it was required to report a change in de facto control. The Greater Boston court did state that use of a sweeping rather than a more refined administrative remedy may in some instances represent an improvident use of administrative discretion. Id. It did not, however, provide examples of such instances and its holding counsels against the position which the Commission asserts in this case.
Third, the Commission attempts to use the fact that this case involves de facto control to distinguish it from precedents requiring sales in exception to Jefferson Radio to be made at diminished value. The Commission argues that the misconduct at issue in those cases was more egregious than in this case because: (1) with no alien having exceeded the 20% stock ownership limitation or having served as an officer or director, SICC complied with the two statutory benchmarks for de jure control; and (2) SICC made no attempt to conceal the relationships at issue nor did its conduct involve any misrepresentations or character violations. Offsetting the allegedly "technical" misconduct against, inter alia, the "unique" contributions of SICC to broadcasting and the administrative convenience of the settlement, the Commission concluded that the equities of the case distinguished it from other cases warranting harsher treatment.
This distinction is specious for two reasons. First, none of the "diminished value" cases turn on the egregiousness of the conduct in question. As described above, all of these cases are premised on a clear requirement that exceptions to Jefferson Radio falling outside the established categories of insolvency or disability be made only at substantial monetary cost to the assignor. Even under the established exceptions the Commission has required adequate showings not only of compelling equitable circumstances but also of reduced financial benefit for the assignor. See Northland Television, 42 Rad.Reg.2d 1107 (licensee had to make adequate showing that its principal suffered disability and that the proposed transfer would not result in a profit to the assignor).
Second, SICC's conduct is not rendered less serious simply because the ALJ found that the violation involved de facto control. Clearly, the complex pattern of interlocking relationships scrutinized by the ALT were developed for the precise purpose of avoiding the de jure restrictions in § 310(b). The ALJ's extensive findings demonstrate that conduits for alien influence can be created that have the potential to be just as effective as de jure violations. For example, in the early days of SICC's tenure as a broadcaster, the Azcarragas advanced emergency funds to the stations, provided programming to the stations while deferring payment for years, and opened collateral deposit accounts for the stations to draw upon in order for the stations to receive financing from United States banks. In addition, a number of the officers and directors of the SICC stations had significant pre-existing associations with the Azcarraga media empire and became principal investors in various licensee stations with the benefit of Azcarraga financing. Initial Decision at ¶ 80-114. While we reach no conclusions as to whether such conduct constitutes a violation of § 310(b), we are unpersuaded that the distinction between de jure and de facto conduct has any relevance for the purposes of maintaining the deterrence rationale which informs the Jefferson Radio policy.
The abuse-of-process allegations raised in the exceptions to the ALJ's decision also undercut the Commission's assertion that SICC's conduct was distinguishable from that addressed in the other diminished value cases. The Commission's own Mass Media Bureau attempted to add an abuse-of-process issue to the hearing before the AU — a petition which the AU denied. The Bureau then filed an exception which charged that SICC harassed and intimidated SRBA and other potential witnesses for having brought information about SICC's conduct to the attention of the Commission. For example, SRBA alleged that SICC filed more than thirteen apparently baseless antitrust suits against potential witnesses to chill adverse petitioning before the Commission. The Commission asserts that because SRBA withdrew its exception — pursuant to a settlement of the antitrust litigation brought by SICC against SRBA and associated parties — it did not feel com pelled to investigate this claim. The terms of SRBA's settlement with SICC are not in the record; hence we do not know what induced SRBA to withdraw the abuse-of-process claim and to file a petition in support of the transfer to Hallmark. Certainly, if SICC intended to "buy" its way out of the abuse-of-process charges, the Commission ought not to facilitate such a result by not investigating the charges. While we are not suggesting that the Commission is obliged to reopen the abuse-of-process claims, these circumstances further persuade us that this was not a case of mere "technical" allegations sufficient to escape the requirements of Jefferson Radio.
Finally, the Commission urges a "remedy" for a possible violation of § 310(b), prior to the final resolution of the issue, which is an extreme departure from prior precedents: a full market sale at $300 million with no apparent burdens to SICC other than barring SICC principals from becoming officers or directors of the assignee for two years. Intervenors, indirect subsidiaries of Hallmark, point out that in the past the Commission has ratified unauthorized transfers of control by approving a subsequent application to transfer while exacting only a $10,000 fine against the incumbent licensee. See Bartell Broadcasters, Inc., 19 FCC2d 890 (1969); Areawide Communications, Inc., 12 FCC2d 170 (1968). Yet in neither of these cases had the qualifications or renewal application of the incumbent licensees been designated for hearing prior to the request for official authorization of the transfers. Moreover, in both cases the Commission made a final determination that there had been a willful violation of the Act's restriction on unauthorized transfers before approving the transfer and assessing a fine. In contrast, in this case the Commission truncated a renewal proceeding prior to finally resolving the issues which had been designated for hearing. We also note that the qualifications of the incumbent licensees were not at issue in Bartell and Areawide. Instead of a substantive qualifications violation, those cases dealt with the fact that ostensibly acceptable transfers had been effected by the incumbent licensee without the official authorization of the Commission.
We agree with petitioners that the relief granted by the Commission in this case constitutes a substantive departure from Jefferson Radio which warrants a reasoned explanation. Moreover, if on remand the Commission chooses to modify this policy, it must articulate clearly the content and scope of the new policy. In particular, if the former bar to transfers at full market value is to be replaced with a "balancing" test that weighs, inter alia, the degree of misconduct in question (even though a final determination will not have been made on this issue), the Commission should explain what constitutes serious misconduct sufficient to bar profits. Alternatively, the Commission may complete the proceedings that were pending at the time it approved the settlement agreement and then fashion a remedy that furthers the goals of its stated and known policies.
Ill
We find that HBLP, TVL, and HBS have standing as prospective competitors to challenge the Commission's approval of the settlement agreement and transfer to Hallmark. We uphold the Commission's decision not to accept competing applications for the licenses in question. We find that the Commission violated its policy, as upheld in Jefferson Radio, of precluding assignment at full value of a broadcast license until it has finally determined that the assignor has not forfeited its right to a license. Therefore, we remand to the Commission to complete the proceeding pending at the time the settlement agreement was approved or to articulate a new policy that explains why Jefferson Radio is no longer an appropriate precedent and to justify the transfer to Hallmark without completing the pending renewal proceeding.
It is so ordered.