These settlements agreements provide for payments to competing applicants and opponents of the relevant license renewals that far exceed the amounts permitted under our regulations. Contrary to the assertion of the item, there is no compliance with the regulation governing the withdrawal of petitions to deny the license application because the petitioners to deny are in fact receiving consideration in excess of their expenses. As to the withdrawal of the competing applications, the Commission's waiver of the relevant regulation on the grounds provided guts the very rule, in contravention of governing administrative law. Furthermore, in this item, the Commission places itself in the indefensible position of passing on the merits and demerits of private charitable or advocacy organizations in the course of approving settlement agreements.

Accordingly, I cannot vote to approve these settlements, which only sanction the filing of license applications and petitions to deny in hopes of rich pay-offs, ultimately undermining the integrity of the Commission's licensing processes.

Settlement with Petitioners to Deny: LULAC, SALAD, and NAACP

Section 73.3588 limits the reimbursements that can be made to petitioners who filed in opposition to the license renewal. Such parties, in order to withdraw, must certify that "neither [they], nor any person or organization related to the petitioner[s], has received or will receive any money or other consideration in connection with the citizens' agreement other than legitimate and prudent expenses incurred in prosecuting the petition to deny." 47 C.F.R. section 73.3588(b)(1).

The purpose of this rule was to "effectively remove the economic incentive present in the renewal system to file . . . petitions to deny for the principal purpose of extorting settlements in exchange for dismissing these challenges." Comparative Renewal Report & Order, 4 FCC Rcd 4780 at para. 2. (1988). "By placing limitations as to . . . amount on payments that can be made in exchange for withdrawing . . . petitions to deny," the Commission meant to "remov[e]the profit incentive for filing these challenges." Id. at para. 71; see also Amendment of Sections 1.420 and 73.3584 of the Commission's Rules Concerning Abuses of the Commission's Processes, 5 FCC Rcd. 3911 (1990).

An express and documented concern that motivated the Commission to adopt this limit on payments to petitioners to deny was record evidence of the "reported abuse" of broadcasters being "threatened with license renewal challenges unless they contributed to the challenger's organization" and evidence that broadcasters "regularly contribute[d] to certain groups to avoid license renewal challenges." 4 FCC Rcd. at para. 24. Thus, contributions to particular organizations or groups was precisely the type of conduct that this rule was meant to prevent.

Here, those who filed to deny are directing payment to entities personally designated by them as payees in the amount of $2 million. In exchange for that act by the license renewal applicant, the filers will withdraw their petitions. Even if the money is not being paid directly to the filers, the payment of money to third parties designated by the filers is equally problematic in terms of procedural abuse. As a general matter, the fact of third party payment does not remedy the impropriety of prohibited exchanges. For instance, if a government official does not personally receive money in return for voting a particular way, but agrees that the money be paid to somebody else, that is bribery nonetheless. See 18 USC section 201(b) (b). So long as the quid of withdrawal is given for the quo of payment, it does not matter, in so far as the prevention of procedural abuse is concerned, who the payment goes to. A corrupt exchange -- the payment of cash to induce the withdrawal of a petition to deny -- has occurred. And in both cases, the initial filing is motivated by the prospect of cash payments, whether to the filer personally or an entity picked by the filer. Thus, I would attribute to the filers themselves the payment of funds to parties expressly designated by the filers as recipients.

Even if one does not accept the argument that designation of third party payees by the filers is tantamount to receipt of the funds by the filers, the creation of the endowments picked by the petitioners is quite clearly "other consideration" for the withdrawal of the petitions to deny. Under the regulation, consideration is defined as

financial concessions, including but not limited to the transfer of assets or the provision of tangible pecuniary benefit, as well as non-financial concessions that confer any type of benefit on the recipient.

73.3588(c)(4) (emphasis added). Thus, consideration does not require economic benefit; peace of mind, personal satisfaction, or any other kind of advantage not previously enjoyed is sufficient.

Trinity clearly has made a "financial concession" to petitioners: they have agreed to give away money. This is something that Trinity had no preexisting obligation to do. The petitioners, in turn, have received "any type of benefit." Even though the money will not flow directly to petitioners, they have personally received consideration under the agreement in at least two ways.

First, petitioners have been given the power to tell Trinity to whom they must transfer the funds in question. This is something that petitioners had no preexisting right to do. If someone comes along and tells me that I can decide how to give away $1 million, that person has conferred an advantage on me -- the power of allocating those funds -- that I did not previously enjoy. The ability to allocate the funds may not, in the view of some, be as good as receiving the money personally, but that ability is itself a real benefit. And if the giving away of that other person's money gives me personal satisfaction or happiness or a feeling of well-being, that counts as consideration too.

Second, and perhaps more importantly, petitioners are clearly benefitted by the settlement agreement in that their public policy goals have been advanced by the creation of the endowments. The very raison d'etre of petitioners' organizations is to promote certain social and political ideas and causes. And every time one of these ideas or causes is advanced -- by, for instance ,a donation to a fund that they support and in which they believe -- petitioners and presumably their membersip are benefitted by that advancement.

Of course, petitioners must perceive some value to them in the right of designation and in the creation of the scholarship funds in question, or they would never have agreed to the settlement. Thus, when the Order states that "[b]y specifying the recipients of the grants, the parties eliminated the possibility that the grants could be awarded in a manner that benefits" them, supra at para. 15, it gets things exactly backwards. By designating the recipients of the grants (which the ability to do itself benefitted petitioners) the petitioners were able to ensure that the money would go to a cause that advanced their policy goals and thus inured to the benefit of the petitioning organizations.

In sum, I think it obvious--and thus a violation of our regulation--that petitioners are getting value out of this deal. For these reasons, and contrary to the conclusion of the item, there is in my view no compliance with section 73.3588.

I am also troubled by the conclusion in this item that "the endowments that would be established pursuant to the LULAC, SALAD, and NAACP agreements would . . . benefit the public." Supra at para. 12. This Commission should not be in the business of evaluating the merits or demerits of private charitable or political organizations and encouraging the flow of money to some groups over others. Suppose for a moment that the shoe were on the other foot: what if a settlement agreement directed payments to a group that espoused a political, legal or social philosophy inconsistent with that of the Commission's? Would we deny that settlement on the ground that the causes being funded did not serve the public? Either way, these are wholly inappropriate determinations for the Commission to be making. We are supposed to be implementing and enforcing federal communications law, not directing payments to favored organizations, however laudable, in exchange for the withdrawal of official papers in licensing proceedings.

Settlement with Competing Applicants: Glendale/Maravillas

Section 73.3535(c) of our regulations, which addresses the dismissal of applications in renewal proceedings, provides that competing applicants who with to withdraw their application can do so only after the initial decision and must certify "that neither the applicant nor its principals has received or will receive any money or other consideration in excess of the legitimate and prudent expenses of the applicant in exchange for" such withdrawal. 47 C.F.R. section 73.3535(c).

Here, competing applicants are being paid $28 million -- a number far in excess of the parties' costs. Nor was an initial decision ever rendered. With no possibility that the rule could be satisfied, the Commission instead waives the rule for "good cause." As the D.C. Circuit has explained, however,

a waiver is appropriate only if special circumstances warrant a deviation from the general rule and such deviation will serve the public interest. The agency must explain why deviation better serves the public interest and articulate the nature of the special circumstances to prevent discriminatory application and to put future parties on notice as to its operation.

Northeast Cellular Telephone Company, 897 F.2d 1164, 1166 (D.C. Cir. 1990)(citing Industrial Broadcasting Co. v. FCC, 437 F.2d 680 (D.C. Cir. 1970) (requiring showing of special circumstances other than those considered in general rulemaking)).

There is articulated no "good cause" for waiver here that would not exist in virtually any case in which a competing applicant wanted to withdraw an application from a comparative hearing proceeding. If, as the Commission states, the limitation on payments to settling parties no longer serves any deterrent purpose, supra at para. 14, then the rule itself is useless in all applications and should simply be repealed. But it does not mean that there is something about the facts of this particular case that warrant a waiver.

And while it may be true that settlements should be encouraged because they decrease uncertainty and litigation, id. at para. 12, that is an argument for relaxing or eliminating the rule constraining settlements. In fact, it was an argument that was rejected in the course of the rulemaking that resulted in the instant regulations. See 4 FCC Rcd at para. 14. It is not, in any event, a case-specific consideration. Similarly, the fact that settlements in comparative license renewal proceedings in general are to be encouraged, supra at para. 14, goes to the need for the rule itself, not the justifiability of a waiver on the facts of this case.

Finally, the Commission says that it has no reason to believe that these competing applicants filed their documents with any improper intent. Id. at para. 14. But the fact that there is no specific evidence of intent to abuse Commission processes is likewise a general point that it not tied to anything about this particular case. This rule, adopted as a "safeguard[]" against procedural abuses, 5 FCC Rcd. at para. 1, is not premised on actual evidence of bad intent. (Of course, if the rule were anything but prophylactic, it would simply be redundant of the rules that prohibit actual abuse of the Commission's processes.) Rather, the rules establishes a limit on settlement payments in order to decrease the likelihood of such filings. If the rule can be waived anytime a party certifies that it had no bad intent, then the rule would achieve none of its preventative purpose.

This state of affairs is very much like that in Northeast Cellular Telephone Company, 897 F.2d 1166. There, the Court of Appeals vacated the Commission's waiver of the rule requiring a licensee to establish its financial qualification. The licensee did not meet the standard set forth in the rule for such qualification, but the Commission waived the rule on the ground that it knew from experience with the party that it was financially capable of operating the proposed systems. Id. at 1166. Because there was "no speculation" as to the party's financial qualifications, enforcement of the rule would not serve its intended purpose. Id.

The Court rejected this reasoning, holding that "[i]t does not articulate any standard by which we can determine the policy underlying its waiver. . . . The record reveals nothing unique about [the licensee's] situation." Here, as explained above, the Commission has not pointed to anything about this specific case that warrants departure from the general rule. It simply reasons, in essential part, that it has no reason to believe these applicants acted in bad faith; but this is no more of a waiver standard than the Commission's belief that the party in Northeast Cellular could pay.

In sum, I believe that the settlement in this case raises a most unseemly appearance of payoffs to favored political or charitable organizations -- precisely the kind of situation that the relevant rules were intended to prevent. The reasoning of the Commission in approving the settlement as in conformity with our rule strains credulity: when a petitioner in opposition can require the transfer of cash payments to an entity hand-picked by the filer, that is just as much an abuse of the filing process as a transfer of cash to the filer itself, and the withdrawing party is clearly receiving a benefit under the agreement. Nor do I believe that the reasons given for the waiver of the rule governing competing applicants pass muster under the relevant judicial precedents. Accordingly, I respectfully dissent.