Before: Wald, Sentelle and Randolph, Circuit Judges.
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Appeal of an Order of the Federal Communications Commission
Opinion for the court filed by Circuit Judge Sentelle.
Channel 51 of San Diego, Inc. (Channel 51), the licensee of Television Broadcast Station KUSI-TV, which operates on UHF Channel 51 in San Diego, California, appeals an order of the Federal Communications Commission (FCC) granting a permit to Fox Television Stations, Inc. (Fox), to electronically transmit television programming from the United States to Station XETV, Tijuana, Mexico, for rebroadcast into the United States. Because we hold that the FCC misinterpreted the effect of the North American Free Trade Agreement (NAFTA) on the meaning of the relevant provisions of the Communications Act of 1934, we vacate the portion of the FCC Order granting Fox permission to electronically transmit to XETV and remand the case to the FCC for further proceedings consistent with this opinion.
I. Statutory and Regulatory Background
Congress enacted the Communications Act of 1934 for the express purpose of "regulating interstate and foreign commerce in communication by wire and radio so as to make available, so far as possible, to all the people of the United States a rapid, efficient, Nation-wide, and world-wide wire and radio communication service." 47 U.S.C. Section(s) 151. In keeping with that purpose, the statutory scheme incorporated a licensing system for radio and television stations that broadcast within the United States. Section 309 sets forth the license application procedure and standards to guide the FCC in determining whether to grant an application. Section 309(a) requires the FCC to inquire as to whether the "public interest, convenience, and necessity will be served by the granting" of the application. 47 U.S.C. Section(s) 309(a). Section 309(d) and (e) require the FCC to hold an evidentiary hearing if a substantial or material question of fact arises or if the Commission is unable to determine whether the public interest, convenience and necessity justify the granting of the license.
Because broadcasters in many areas of the country could evade the strictures of the act by transmitting their signals across the United States border to a foreign station which could then rebroadcast the signal back into the United States, Section(s) 325(c) specifically prohibits such transmissions for rebroadcast without an FCC permit. Section 325(d) provides that the procedures of Section(s) 309 shall govern FCC consideration of applications for permits to conduct the cross-border electronic transmission otherwise prohibited by Section(s) 325(c). Accordingly, in a Section(s) 325 proceeding, the FCC must determine whether the "public interest, convenience, and necessity will be served by the granting" of the Section(s) 325 permit. Prior to the present case, the FCC applied the same criteria for meeting the programming standards component of the "public interest, convenience, and necessity" requirement to both a domestic broadcast license proceeding under Section(s) 309 and a cross-border broadcast license proceeding under Section(s) 325. The issue in this case is whether the FCC has adequately explained its determination that relevant provisions of NAFTA now permit application of a different, more lenient standard in a Section(s) 325 proceeding.
In 1972, the FCC addressed the public interest requirement for Section(s) 325 permits in American Broadcasting Cos., Inc., 35 F.C.C.2d 1, 24 R.R.2d 471 (1972) [hereinafter ABC 1972], aff'd per curiam, 26 R.R.2d 203 (D.C. Cir.), cert. denied, 412 U.S. 939 (1973). In 1956, the FCC had granted a Section(s) 325 permit to American Broadcasting Companies (ABC) "to transmit its network programming to XETV, Channel 6, Tijuana, Mexico, for broadcast to San Diego, California." ABC 1972, 35 F.C.C.2d at 3. The FCC based its 1956 grant on the public interest as it existed at the time, stressing that unless the permit were granted, ABC would have no primary affiliate in San Diego. San Diego viewers would thereby be deprived of a significant increase in programming choice. On appeal, we set aside the 1956 determination on the grounds that the FCC had failed adequately to consider whether XETV's programming was objectionable by United States standards. Wrather-Alvarez Broadcasting, Inc. v. F.C.C., 248 F.2d 646 (D.C. Cir. 1957). On remand, however, the FCC again granted ABC's application after considering XETV's programming. American Broadcasting-Paramount Theatres, Inc., 24 F.C.C. 296 (1958).
In 1968, when ABC filed its annual application for renewal, a new station, KCST, UHF channel 39, filed a petition to deny the permit. KCST argued that it could become a San Diego ABC affiliate, that XETV's local programming was "blatantly defective," and that KCST's existence removed the rationale for the original granting of the permit in 1956. ABC 1972, 35 F.C.C.2d at 4. Among other things, the FCC determined that XETV's locally oriented programming was "deficient in that it renders no local service meeting the needs and interests of the community" of San Diego. Id. at 11. Specifically, the FCC noted that XETV had not produced any local news programming since 1967, did not intend to resume such programming, and had never interrupted its broadcast schedule to air any bulletins of local interest. XETV simply served as "little more than a passive conduit of national network programming." Id. The FCC determined that the public interest no longer supported the ABC permit, noting especially that (1) KCST was then present in San Diego and capable of serving as an ABC affiliate, (2) KCST was a UHF station, and denying the XETV permit would further the FCC's policy of encouraging the development of UHF television, and (3) "KCST's programming would meet the needs and interests of the community more effectively" than XETV's. Id. at 12. The FCC accordingly denied ABC's permit renewal application, and we affirmed. American Broadcasting Cos., Inc., 35 F.C.C.2d 1, 24 R.R.2d 471 (1972), aff'd per curiam, 26 R.R.2d 203 (D.C. Cir.), cert. denied, 412 U.S. 939 (1973).
II. History of Current Proceedings
XETV is still broadcasting today, but it is now affiliated with Fox. Before Fox filed the application at issue in these proceedings, it physically transported network programming destined for the San Diego market to ...