NAB reports (Jan-Dec 1946)

trative agent of the Congress must be used so as to con¬ tribute to that service, or it will be correctly characterized as arbitrary, if hurt results to anyone. Its decision in the present case constitutes a departure from the course which the Commission has taken in deal¬ ing with misstatements in applications in other cases. It has not heretofore considered itself bound to refuse to issue a license or a renewal because of misstatements in applications ; on the other hand, it has followed the prac¬ tice of weighing all the elements of each situation pre¬ sented to it in deciding whether the public interest would or would not be served, were a license or a renewal granted.9 The doctrine of stare decisis does not apply to decisions of administrative bodies such as the Communi¬ cations Commission, but radical departures from admin¬ istrative interpretation consistently followed cannot be made except for most cogent reasons. Indeed it has been said that the adoption by an administrative agency of different standards for similar situations amounts to acting arbitrarily.10 The Navarro case (8 F. C. C. 198) is an illustration of the manner in which the Commission heretofore has interpreted the statute as to its duty in dealing with misstatements made by applicants for licenses. The Com¬ mission revoked the license of Navarro but, after a hearing had subsequent to the order of revocation, set aside that order. The finding was that the applicant had misrepre¬ sented its purpose as to the financing, construction, control, and operation of the station, in obtaining the original construction permit and station license. The Commission also found that the members of the original partnership which obtained the construction permit and initial license, had transferred those rights to Ulmer and Terry without the consent of the Commission and in violation of the Act. But, because Ulmer and Terry relinquished their rights to others who proceeded to operate the station in the interest of the public and in full compliance with official regulations, the Commission concluded that “there is noth¬ ing in this record to indicate that the respondents, if permitted by this Commission, will not continue to operate in the public interest as they have done since November 1937.” The opinion of the Commission then adds the following statement: “In determining whether to revoke the license of a radiobroadcast station for false representations to the Commission and other violations of the Communications Act, the Commission is faced with competing considera¬ tions. The Commission’s primary duty is to the listening public and, in dealing with a licensee, the Commission must be guided by this primary duty. On the other hand, if the Commission is to carry out its function of granting and denying applications for licenses, it must obtain true and accurate information from those who seek to operate radio stations and must take disciplinary action against those who make false representations to the Commission. But discipline should not be inexorably applied when station licensees demonstrate to the Com¬ mission, as these respondents have now done, that they are ready to act in good faith. “To revoke their license at this time would deprive the community of the service of this station when there is no reason to believe that the respondents will not continue to operate it in the public interest.” In the case at bar, in a petition for rehearing, the appli¬ cant proposed a complete corporate reorganization of WOKO, Inc. The suggested plan included the resignation of all officers and directors who had served as such there¬ tofore; the Phelps stock and other shares aggregating fifty-one per cent were to be held by a new corporation controlled by prominent Albany citizens, and such shares as Smith and Curtis would have left were to be placed in a voting trust under the terms of which those indi¬ viduals would have no voice in a stockholders’ meeting. This arrangement, had it been consummated, would have fit into the reasoning of the Commission in the Navarro case, when it is remembered that the mechanical, scientific and program excellence of the station is not challenged. But the Commission denied the petition for rehearing and adhered to its refusal to renew the license, and so 9 Navarro Broadcasting Association, 8 F. C. C. 198 ; Red Lands Broad¬ casting, 8 F. C. C. 473 ; In the matter of Panamia City Broadcasting Company, 9 F. C. C. 208. 10 National Labor Relations Board v . Mall, 119 F. (2d) 700. departed from its policy of weighing the “competing con¬ siderations” in an effort to find what course will best serve the interest, convenience, or necessity of the public. Moreover, common justice to the owner of the station, who has devoted a considerable investment to serving the public, requires that for no reason less than a “compelling” one should his physical property be rendered valueless except for what it may bring at a sacrificial sale. It is true, as the appellee points out, that by the terms of the Communications Act, a station license does not vest in the licensee any right to operate the station nor any right in the use of the frequencies designated in the license beyond the term thereof, nor in any other manner than authorized therein. In spite of the absence of a vested property right in the continuance of the license, how¬ ever, the Commission may not destroy or diminish the capital investment of the licensee by withholding a renewal of the license, unless in the exercise of a sound discretion it decides that the public interest, convenience, or neces¬ sity requires that such a drastic step be taken. The case of Journal v. Federal Radio Commission, 60 App. D. C. 92, was one in which a radio station had been affected in¬ juriously by the assignment of its frequencies to another station. In the course of the opinion Judge Robb, speaking for this court, said: “The installation and maintenance of broadcasting stations involve a very considerable expense. Where a broadcasting station has been constructed and main¬ tained in good faith, it is in the interest of the public and common justice to the owner of the station that its status should not be injuriously affected, except for com¬ pelling reasons.” If a station should not be injuriously affected save for compelling reasons, certainly it should not be destroyed by a refusal to renew its license for reasons that are less than compelling. To the same effect is the opinion of this court by Chief Justice Martin in Chicago Federation of Labor v. Federal Radio Commission, 59 App. D. C. 333, 41 F. (2d) 422. The appellant there was applying for a frequency of 770 kilo¬ cycles, which already had been granted to Stations WBBM and KFAB. The Commission refused to grant that fre¬ quency to the appellant because to do so would have denied the use of it to the two stations already using it. This court affirmed the action of the Commission and said : “It is not consistent with true public convenience, interest or necessity, that meritorious stations like WBBM and KFAB should be deprived of broadcasting privileges when once granted to them, which they have at great cost prepared themselves to exercise, unless clear and sound reasons of public policy demand such action. The cause of independent broadcasting in gen¬ eral would be seriously endangered and public interest correspondingly prejudiced if the licenses of established stations should be arbitrarily withdrawn from them, and appropriated to the use of other stations. This statement does not imply any derogation of the con¬ trolling rule that all broadcasting privileges are held subject to the reasonable regulatory power of the United States, and that the public convenience, interest, and necessity are the paramount considerations.” Simply stated, the question in this case is whether it is logical and rational to say that a licensee cannot be en¬ trusted with further responsibilities for the sole reason that, over a term of years, one of its officers has con¬ cealed from the Commission the identity of a beneficial owner of twenty-four per cent of its capital stock. It is conceded that the stockholder whose identity was not re¬ vealed was not an alien and, therefore, not disqualified by the express provisions of the statute. It does not appear, as pointed out above, that the concealment influenced or induced the Commission’s action in granting license re¬ newals heretofore, nor that the Commission’s past decisions which granted renewals would have been different had the identity not been concealed. The denial of the renewal because of the applicant’s failure to show the beneficial ownership of twenty-four per cent of its capital cannot be justified as a penalty for making false statements. The Act does not confer upon the Commission any punitive jurisdiction, and a license or ( Continued on next page) JANUARY 28, 1946-61