Before: Silberman, Henderson and Randolph, Circuit Judges.
Karen LeCraft Henderson, Circuit Judge
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Rainbow Broadcasting, Ltd., Intervenor
On Appeal from Orders of the Federal Communications Commission
Opinion for the court filed by Circuit Judge Henderson.
This case is the latest in a decade-long series of disputes over a permit the Federal Communications Commission (FCC or Commission) awarded to Rainbow Broadcasting, Inc. (Rainbow) to construct a television station in Orlando, Florida. At issue is the FCC's reversal of its Video Services Division decision and the extension of Rainbow's construction permit over the objection of Press Broadcasting Company, Inc. (Press) that improper ex parte contacts influenced the proceeding. Press now petitions for review, renewing its challenge to the ex parte contacts and arguing that the Commission's decision was arbitrary and capricious. Although we conclude that the Commission's decision was not tainted by the contacts, we believe that substantial and material questions regarding Rainbow require reconsideration. We therefore grant Press's petition and remand the matter to the Commission.
The FCC awarded the construction permit to Rainbow in 1984 following a competitive proceeding with two other applicants. Rainbow delayed the start of construction pending a lengthy and ultimately unsuccessful challenge to the license adjudication in this court and the Supreme Court that lasted through 1990 based on the FCC's policy of giving preference in license adjudications to minority applicants. Winter Park Communications, Inc. v. FCC, 873 F.2d 347 (D.C. Cir. 1989), aff'd sub nom. Metro Broadcasting, Inc. v. FCC, 497 U.S. 547 (1990). The permit expired in April 1988 during the pendency of the litigation, Joint Appendix (JA) 19, and the Commission cancelled it in June 1988. See JA 20. The FCC reinstated the permit after Rainbow explained the ongoing litigation but did so on the condition that Rainbow file a formal application for extension of time. Id. The FCC explained "[s]ince the pendency of an appeal does not operate as an automatic stay, you should have filed an application ... for additional time within which to construct." Id. Rainbow subsequently applied for and received four extensions at six-month intervals. JA 21 (July 1988 application); JA 33 (May 1989 application); JA 36 (November 1989 application); JA 40 (May 1990 application).
The Supreme Court denied rehearing of the minority preference case in August 1990, ending the litigation. 497 U.S. 1050 (1990). Rainbow did not begin construction of the station but instead started another round of litigation, suing Guy Gannett Publishing Company (Gannett), the owner of the transmission tower it planned to use. Rainbow claimed that it had the exclusive right to use the tower's top television broadcasting space, which Gannett had also rented to Press. See Rey v. Guy Gannett Publishing Co., 766 F. Supp. 1142, 1143 (S.D. Fla. 1991). Soon afterward, Rainbow asked the FCC for a fifth extension of its construction permit on the ground that "[a]ctual construction has been delayed by a dispute with the tower owner which is the subject of legal action in the United States District Court for the Southern District of Florida." JA 45. The Commission in February 1991 granted an extension through August 5, 1991. JA 64.
Unaware that Rainbow's application for an extension had been granted, Press filed an "informal objection" with the Commission arguing that the dispute over the tower did not prevent Rainbow from beginning construction. JA 67. When it learned that the FCC had approved Rainbow's application, Press filed a petition for reconsideration. JA 95. The FCC did not rule on the petition. The Florida district court denied Rainbow's motion for an injunction in the tower dispute in June 1991. Rey, 766 F. Supp. at 1143. The district court denied the motion based in part on its conclusion that Rainbow had not demonstrated irreparable harm inasmuch as it "has yet to obtain financing, has not selected or purchased an antenna, has not selected a wave guide, has not selected a transmitter, has not obtained building plans for a broadcast building and has not gone on the air." Id. at 1148. Rainbow then filed for a sixth extension in June 1991, promising to begin construction immediately and to commence operation by December 31, 1992. JA 116. Rainbow began construction of its transmitter building in July 1991 and continued construction through and after the August 5th expiration of its previous extension. JA 128-29.
Rainbow completed construction of the transmitter building in November 1991. Id. During the same month, Rainbow petitioned the FCC for permission to assign its permit to a new Rainbow group reorganized to provide additional financing. JA 132. Press again objected, arguing that Rainbow had misrepresented the nature of the tower litigation and was not financially qualified to construct the station. JA 143-44. Nothing happened for nearly eighteen months. In March 1993 the FCC's Video Services Division wrote Rainbow to inquire as to the status of the project, noting Rainbow's earlier commitment to complete construction by December 1992. JA 168. Rainbow responded that it could not use its new capital until the Commission approved its petition to transfer the permit to the new ownership group. JA 170. On June 18, 1993 the Video Services Division finally granted Press's objections and cancelled Rainbow's permit. JA 13-14.
The ex parte contacts arose from attempts to reverse the cancellation. The first contact involved Antoinette Cook, senior counsel to the Subcommittee on Communications of the United States Senate Committee on Commerce, Science and Transportation. *fn1 In re Rainbow Broadcasting Co., 9 F.C.C.R. 2839, 2843 (1994). In late June 1993, at the request of Rainbow's counsel, Margot Polivy, Cook telephoned Roy Stewart, the chief of the FCC Mass Media Bureau (which includes the Video Services Division). *fn2 Id. at 2843. Cook asked Stewart to explain whether the cancellation was consistent ...