Bell County Broadcasting Company, Appellant, v. Federal Communications Commission, Appellee, Progressivecommunications, Inc., Intervenor.mary Mcfaddin Pyle D/b/a Mary Mc Broadcasting Company, Appellant, v. Federal Communications Commission, Appellee,progressive Communications, Inc., Intervenor, 950 F.2d 797 (D.C. Cir. 1991)

These appeals were considered on the records of the Federal Communications Commission and on the briefs filed by the parties. The court has determined that the issues presented occasion no need for a published opinion. See D.C. Cir. Rule 14(c). It is

ORDERED AND ADJUDGED that these orders be affirmed for the reasons stated in the accompanying memorandum.

The Clerk is directed to withhold issuance of the mandate herein until seven days after disposition of any timely petition for rehearing. See D.C. Cir. Rule 15.

MEMORANDUM

Bell County Broadcasting Co. ("Bell") and MaryMc Broadcasting Co. ("MaryMc") appeal final orders of the Federal Communications Commission ("FCC") disqualifying their applications for an FM station license and granting the license to Progressive Communications, Inc. ("Progressive"). After reviewing their claims, we have determined that the FCC orders are supported by substantial evidence, and we therefore affirm.

Bell, MaryMc, and Progressive filed mutually exclusive applications with the FCC for an FM radio station to be located in Temple, Texas. In his initial decision, the Administrative Law Judge ("ALJ") ranked the proposals in order of merit as MaryMc, Bell, and Progressive. However, after receiving guidance from the FCC Review Board to examine more closely several issues, the ALJ disqualified MaryMc and Bell and awarded the channel to Progressive.

Specifically, the ALJ found that MaryMc had failed to show reasonable assurance of obtaining a transmitter site and had not exercised due diligence in amending its application to identify a new site. As to Bell, the ALJ determined that the company's integration credit proposal did not accurately reflect the role the husband of Bell's president would play in the operation. The Review Board and then the Commission upheld these findings, from which decisions MaryMc and Bell have filed a consolidated appeal with this court pursuant to 47 U.S.C. § 402(b). For the reasons set out below, we affirm the decision of the Commission.

In reviewing FCC decisions made on the record, our task is to determine if they are supported by substantial evidence. Millar v. FCC, 707 F.2d 1530, 1539-40 (D.C. Cir. 1983). We sit not as the original decision maker, but as a reviewer of the Commission's actions, which we are bound to uphold if " 'the agency ... could fairly and reasonably find the facts as it did.' " Chritton v. National Transp. Safety Bd., 888 F.2d 854, 856 (D.C. Cir. 1989) (construing substantial evidence test required by the Administrative Procedure Act, 5 U.S.C. § 706(2) (E)) (quoting Western Air Line, Inc. v. CAB, 495 F.2d 145, 152 (D.C. Cir. 1974)).

As part of a station license application, the FCC requires applicants to demonstrate that they have "reasonable assurance" of obtaining a transmitter site. Processing of FM and T.V. Broadcast Applicants, 50 Fed.Reg. 19,936, 19,939-40 (May 13, 1985). In Elijah Broadcasting Co., 5 F.C.C.R. 5350 (1990), the FCC reviewed its past discourses on reasonable assurance and explained that the requirement will be fulfilled when the applicant can show "some clear indication from the landowner that he is amenable to entering into a future arrangement with the applicant for use of the property as its transmitter site, on terms to be negotiated, and that he would give notice of any change of intention." Id. at 5351 (citations omitted). Thus, under the FCC's precedents, applicants need not prove the existence of a binding agreement or implied contract, but simply that they can "obtain assurance 'sufficient ... to justify ... belief that the site [is] suitable and available until advised otherwise.' " Id. (quoting National Innovative Programming Network Inc. of the East Coast, 2 F.C.C.R. 5641, 5643 (1987)).

Mary McFadden Pyle, doing business as MaryMc, claimed in her station application that she had received reasonable assurance from the Scott & White Memorial Hospital ("S & W") that they would agree to the placement of an FM antenna on their roof if she were chosen by the FCC. In a supplemental initial decision, the ALJ reviewed MaryMc's claim and concluded from the record that MaryMc had never obtained reasonable assurance of site availability from S & W. Progressive Communications, 3 F.C.C.R. 386, 390-91 (Supp.Initial Dec. 1988). This conclusion was affirmed by the FCC Review Board at 3 F.C.C.R. 5758 (Rev.Bd.1988), which decision the Commission affirmed and declined to review. Progressive Communications, 5 F.C.C.R. 7058 (1990), reconsideration denied, 6 F.C.C.R. 1383 (1991).

Our examination of the record and the administrative decisions below satisfy us that the Commission's conclusion on this issue is supported by substantial evidence. When MaryMc submitted its station application on December 15, 1982, Ms. Pyle had done no more than send S & W a letter seeking permission to use their roof as an antenna site, to which request S & W had not yet replied. Accordingly, the ALJ found aptly that " [t]he basis of [Ms. Pyle's] certification of site availability on [December 15] was surmise, and surmise or conjecture does not constitute reasonable assurance." Progressive Communications, 3 F.C.C.R. at 390-91.

In addition, we find no reversible error in the FCC's judgment that S & W's subsequent communications did not meet the Elijah standard of clearly indicating S & W's amenability to entering into a future arrangement with MaryMc. We therefore affirm the Commission's order disqualifying MaryMc's application for failure to provide reasonable assurance of site availability.

Since we have affirmed the FCC's determination that MaryMc never had reasonable assurance, we also affirm the FCC's rejection of MaryMc's motion to name an alternative transmitter site for failure to exercise due diligence. See Royce International Broadcasting Co. v. FCC, 820 F.2d 1332, 1335-37 (D.C. Cir. 1987) (discussing the due diligence requirement for filing postdesignation amendments in 47 C.F.R. § 73.3522(b) (1)). Even if MaryMc had some belief, however reasonable, regarding the availability of S & W's roof, this belief should have been disabused by the November 1, 1984, letter from S & W's counsel, which stated that S & W had given "an assurance" only to Progressive and that S & W had "decided to take no action to approve or to disapprove" MaryMc's request. We therefore find reasonable the FCC's conclusion that MaryMc's delay in filing its amendment petition, in the face of its noncommittal discussions with S & W and the November 1, 1984, letter, did not demonstrate the required due diligence.

The final issue before us is the contention that the FCC erred by denying Bell any integration credit for its business organization proposal. In comparative license hearings, the FCC will award integration credit to applicants who can demonstrate full-time participation in station operation by the owners. Policy Statement on Comparative Broadcast Hearings, 1 F.C.C.2d 393, 395-96 (1965). This credit may be "enhanced" if the owners are minorities or female, thereby furthering the Commission's public interest mandate to diversify "control of the media of mass communications." Id. at 394; see also TV 9, Inc. v. FCC, 495 F.2d 929, 938 (D.C. Cir. 1973) (holding that "when minority ownership is likely to increase diversity of content, especially of opinion and viewpoint, merit should be awarded") (footnote omitted), cert. denied, 419 U.S. 986 (1974); Mid-Florida Television Corp., 69 F.C.C.2d 607, 652 (Rev.Bd.1978) (holding that "merit for female ownership and participation is warranted upon essentially the same basis as the merit given for black ownership and participation, but that it is a merit of lesser significance"), set aside on other grounds, 87 F.C.C.2d 203 (1981).¹ 

Since integration credit and special enhancements can provide an applicant with an important competitive advantage, the FCC has been plagued by applicants "gaming" their organizational structures to reflect sham participation by minorities and females. See Susan S. Mulkey, 3 F.C.C.R. 590, 590-91 (Rev.Bd.1988) (discussing cases involving attempts to obtain integration credit). In an effort to combat this abuse of an important diversity tool, the FCC in Royce International Broadcasting, 5 F.C.C.R. 7063 (1990), established a rule that "where the applicant has ... left fundamental uncertainty about the true nature of its organizational structure, we have no basis for awarding any integration credit at all." Id. at 7064 (footnote omitted).

Based on the findings developed by the ALJ and the Review Board, the Commission determined that the husband of Bell's president had maintained an undisclosed and active participation in Bell's activities. Progressive Communications, 5 F.C.C.R. at 7058-59. Applying the Royce rule, the Commission then affirmed the Review Board's decision to deny Bell all integration credit because "Bell's specified ownership and integration proposal is fundamentally uncertain." Id. at 7058.

While this case does not represent an egregious example of integration abuse, and we trust that the Commission recognizes that its rule in Royce should be used prudently,²  we find substantial record evidence supports the FCC's action, and we therefore affirm.

For the reasons discussed above, we deny the appellants' claims in Nos. 90-1611 and 91-1138. Accordingly, the orders of the FCC under review in this action are

Affirmed.