Bastian, Senior Circuit Judge, and Leventhal and Robinson, Circuit Judges.
UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE LEVENTHAL
On November 21, 1966, Valley Broadcasting, Inc., filed an application for a new standard broadcast station to be located in Nelsonville, Ohio, requesting operation on 940 kc with 250 watts of power. In a public notice on April 5, 1967, the Federal Communications Commission assigned May 11, 1967, to the Valley application as the cut-off date. The public notice was pursuant to Commission rules *fn1 and advised that an applicant seeking a comparative hearing with any of the listed applications (or with any applications filed before the deadline which were mutually exclusive with the listed applications) must file a "substantially complete" application by May 11. On May 11, appellant, licensee of Radio Station WATH, Athens, Ohio, filed an application for a construction permit to increase the power of its station, operating on 970 kc, from one to five kilowatts. This application is concededly mutually inconsistent with Valley's application.
On June 2, the Commission wrote appellant that there were errors in its engineering data and that an amendment to the application ought to be filed, *fn2 and on June 9 appellant sent the Commission the necessary amended engineering statement. On June 12, the Commission returned appellant's application with a letter explaining that it was "not acceptable for filing." The consequence of rejecting the application was to cause appellant to miss the cut-off date for a comparative hearing with Valley, since consideration of the proposed construction permit would now require a new and necessarily tardy application.
The authority by which the Commission rejected appellant's application was Rule 1.566(a) which provides, in pertinent part:
Applications which are determined to be patently not in accordance with the Commission's rules, regulations, or other requirements, unless accompanied by an appropriate request for waiver, will be considered defective and will not be accepted for filing or if inadvertently accepted for filing will be dismissed. *fn3
The patent defect found after the application had been pending for about a month, and after the engineering flaw had been noted and corrected, *fn4 consisted of an alleged violation of the Commission's duopoly rule. That rule provides, in part:
No license for a standard broadcast station shall be granted to any party (including all parties under common control) if: (a) Such party directly or indirectly owns, operates, or controls one or more standard broadcast stations and the grant of such license will result in any overlap of the predicted or measured 1 mv groundwave contours of the existing and proposed stations. . . . *fn5
The Commission's letter of June 12 rejecting appellant's application explained that the multiple ownership violation was established by Commission records and the overlap violation was revealed by the application.
The Commission records referred to indicated that A. H. Kovlan owned 70% of the stock of Radio Athens and that he was its president and one of five directors. In addition, Commission files indicated that Kovlan owned 32.5% of the stock of Radio Mid-Pom, Inc., and was its treasurer and one of four directors. That company is the licensee of Station WMPO, Middleport-Pomeroy, Ohio. The application revealed that the proposed power increase of WATH would increase the overlap with WMPO beyond the 1 mv contours. These facts, claims the Commission, show that the application was patently in violation of the duopoly rule rendering the application defective and justifying its rejection.
It is with increasing frequency that we have been called upon to review the draconian effects generated by Commission use, in combination, of the cut-off rule and the rule authorizing dismissal of an application containing a patent non-conformance with other Commission rules. *fn6 We have taken occasion to acknowledge and approve the device of cut-off as a reasonable and necessary limitation on the statutory right to a comparative hearing. *fn7 There must be some point in time when the Commission can close the door to new parties to a comparative hearing or, at least hypothetically, no licenses could ever be granted. *fn8 Similarly, we have approved the Commission's power pursuant to its rules to reject applications that are patently defective. *fn9 The Commission will not be required to keep on file applications that cannot be granted, and such requests for facilities can be amended *fn10 or even returned to the applicant for alteration and refiling. *fn11
We are concerned, however, when these two rules, quite different in the purposes they are legitimately designed to advance, are applied so as to deprive a potential broadcaster from a comparative hearing on a timely-filed, substantially complete application. There is a palpable public interest in assuring that the limited remaining broadcast facilities go to the best qualified applicant, and the comparative hearing has evolved as a fair and meaningful procedure for selecting the applicant who is best qualified. *fn12 There is also an interest in procedures and administrative techniques that enable the Commission to handle its work load efficiently, and with optimum use of limited administrative resources. Perhaps the Commission can accommodate the various interests by adopting administrative expedients that, for example, explicitly require all applications to be letter-perfect when filed. The prevailing Commission rules, however, did not give such notice of a fault-free approach as to make the shunting aside of appellant's application, without a hearing, consonant with elemental fairness and the spirit of the legislative requirement of hearing.
The Commission rule against multiple ownership, invoked here to dismiss the application as patently defective, applies by its terms to persons who "own, operate, or control" overlapping facilities. In our view, such a rule cannot be said to apply on its face, without the need for hearing, to disqualify one who owns less than 1/3 of the stock of a close corporation, even though he is an officer and one of four directors. *fn13 These interests may well permit a conclusion that there is control in fact. *fn14 But such a rule by itself does not advise a person that such interests constitute control as a ...