The substance of the compromise proposal was approved by the Senate as S. 1898, August 19, 1959.

This proposed legislation would achieve a very substantial improvement over the existing situation. This committee is generally familiar with the procedural provisions introduced into the Communications Act by the 1952 amendments. The revisions to section 309 (b) which required the Commission, in situations when it was unable to find that the public interest would be served by a grant of the application without a hearing, to notify the applicant and other interested parties of the grounds and reasons for its inability to make the public interest findings have proved to be particularly time consuming

and burdensome.

In many situations such notice serves no useful purpose whatsoever and unduly delays the ultimate processing of the application. The proposals contained in S. 1898 give the Commission discretion to decide whether the public interest would be served by engaging in correspondence concerning its questions about the application under consideration.

We believe that the adoption of this proposal would prove to be particularly helpful to the Commission in the processing of the many hundreds of broadcast applications which it must consider each year. The CHAIRMAN. Mr. Chairman, would you permit an interruption. I observed a distinguished group of young people here and I am advised that this very fine looking group of young people are in the freshman class of the Newman High School of New Orleans, La.

On behalf of the committee, I wish to extend to you a cordial welcome here this morning. We feel honored that while you are visiting the Nation's Capital you are taking the time to visit us and observe some of the workings of this great Committee on Interstate and Foreign Commerce of the House of Representatives.

I am told that you are under the watchful care of a very fine and capable chaperon while you are here in Washington, Miss Volker, from the office of our colleague, Mr. Hale Boggs, who represents the district from which you come.

We hope you will profit from your visit here and that it will be helpful to you in your education.

Today we have testifying the Chairman of the Federal Communications Commission, the Honorable Frederick W. Ford; sitting behind him and giving him support are other members of the Federal Communications Commission and the members of his staff.

What you are listening to now is a presentation on behalf of the Federal Communications Commission by the Chairman of the Commission, giving the views of the Commission on legislation which would affect the Commission's work and responsibilities in connection with broadcasting matters.

I am sure all of you have on frequent occasions watched television or listened to radio. It is in connection with this serivce to the public of which you are a part that the presentation is being made here today. Again, we are glad to welcome you and we hope you will stay as long as your time will permit. But in order that you may know what you are listening to, I have taken this time to explain the hearing that is now underway.

Mr. Ford, will you proceed, please.

Mr. FORD. One of the most troublesome of the 1952 amendments to the Communications Act is the 309 (c) provision for protest. This provision which afforded any party in interest an opportunity to file a protest to a Commission grant with an automatic stay of the permit in most cases pending a hearing on issues specified by the protestant. has proved to be a most effective device for delay of potential competition in any community.

The broad interpretation of a party in interest which has been applied by the courts makes it possible for virtually any individual engaged in the communications business to protest the grant of an application for a radio or television station.

S. 1898 would delete this provision of the act and would substitute therefor a procedure which would preclude the Commission from granting any application for a period of 30 days following the issuance of public notice by the Commission of acceptance for filing of such application, or any substantial amendment thereof.

It would further provide that any party in interest may file a petition to deny this application or amendment thereof at any time prior to the day of Commission grant thereof without a hearing or formal designation for hearing.

Such petition would be served on the applicant and contain specific allegations of fact sufficient to show that the petitioner is a party in interest and that a grant thereof would not serve the public interest, convenience, or necessity.

The applicant would then be given an opportunity to file a reply in which allegations of fact or denials thereof would be supported by affidavit.

If the Commission found upon the basis of the pleadings filed, or other matters which it may officially notice, that there were no substantial and material questions of fact, and that a grant of such application would be in the public interest, convenience, and necessity, it could then make the grant, deny the petition and issue a concise statement of reasons for denying the petition which shall dispose of each substantial question presented thereby.

In addition to these general provisions, certain types of applications where a 30-day delay is not appropriate or desirable, are excepted from this provision.

Moreover, the proposed legislation would give the Commission authority to fix by rule a cutoff date by which such a petition to deny must be filed. This cutoff date must be reasonably related to the period of time within which the application concerned might be expected to be reached for Commission processing and might in no instance be less than the 30 days required by the statute.

The adoption of the proposals set forth in S. 1898 would prove to be most helpful to the Commission.

H.R. 11341 also proposes to amend section 309 by adding two new subsections, subsections (d) and (e), respectively, dealing with the so-called payoffs and swapoffs, between applicants.

In the hearings before your subcommittee in 1958, your chairman referred to the fact that

payoff has to do with the elimination of competitive applicants (hearings on investigation of regulatory commissions and agencies, pt. 8, May 15, 1958, p. 2909).

Subsection (d)(1) of such proposed amendment provides that before the earliest date on which an order of the Commission granting a broadcasting station license or permit for construction of a broadcasting station is no longer subject to rehearing by the Commission or review by any court, no applicant for such permit shall pay, directly or indirectly, to any other applicant for the same license or permit any money or other thing of value as consideration for such other applicant's withdrawal unless said applicants both first file with the Commission a petition for Commission approval of such payment.

The Commission is directed to approve such payment if, but only if, the amount thereof is not in excess of the aggregate amount determined by the Commission to have been legitimately and prudently expended for the preparation, filing, and advocating the granting of the application for the license or permit of the applicant to whom the payment is proposed to be made.

Subsection (d) (2) of the proposed amendment to section 309 further provides that if the Commission approves any such proposed payment, it shall give public notice of such approval and shall

(1) Set aside any order granting such license or permit issued before the date on which such notice is given and permit the person to whom such grant was made to file a new application; and

(2) During the period of thirty days after the date on which such notice is given, shall acept aplications which may be filed by other persons for such broadcast station license or construction permit of a broadcast station.

The provisions of subsection (d) (a) would not be applicable should the Commission issue an order granting such license or permit to an applicant other than the applicant proposing to make such payment. Subsection (e) (1) of the proposed amendment to section 309 expresses the "sense" of Congress that swapoffs in the case of broadcast station licenses and permits for construction of broadcast stations are contrary to the public interest, convenience, and necessity.

It defines the term swapoff to mean any arrangement whereby an applicant for a broadcast station license or a broadcast station construction permit, in return for the withdrawal of any other applicant for such license or permit, agrees not to file an application for, or to withdraw as an applicant for, any other broadcast station license or permit.

Subsection (e) (2) of the bill directs the Commission in acting on applications for broadcast station licenses and construction permits therefor, or in acting on applications for approval of transfers of such licenses and permits, to take into account the policy declared in subsection (e) (1), and further directs the Commission, in order to give effect to such policy, to prescribe regulations requiring applicants to file with the Commission such information as the Commission shall deem to be necessary for such purposes.

No separate comment is directed to subsection (e) as the policy questions therein are, it is believed, embraced within the broad outlines of the problems presented in connection with payoffs.

Also, it is noted that subsection (e) is merely declaratory of the sense of Congress and directs the Commission to give effect to such policy by appropriate regulations.

On June 26, 1958, the Commission adopted a notice of proposed rulemaking in docket No. 12509 in which it stated that in an increasing number of broadcast cases designated for comparative hearing competing applications were being amended or dismissed upon agreement for the payment of some consideration or for consolidation of interests, leaving the remaining application free for an unopposed grant.

The Commission expressed concern that such practices may tend to defeat the purpose of hearings on applications for broadcast facilities and would encourage the filing of marginal or strike applications in the hope that payment may be exacted in consideration of amendment or dismissal of such applications.

It therefore proposed to amend the Commission's rules to provide that whenever consideration-including an agreement for consolidation of interests-is paid or promised in connection with the default, dismissal or amendment of a broadcast application in hearing status, the applications of applicants who are parties to the agreement will be dismissed with prejudice.

In the filed comments to such notice of proposed rulemaking, virtual unanimity was expressed in opposition to the proposed rules, primarily because such proposed new rules would in effect prohibit all compromises after applications are designated for hearing and overlook the fact that most compromises are negotiated in good faith between the parties in the public interest and have as one important purpose the expediting of needed broadcast service to the public.

Another major objection made in these comments was that the proposed rules would not be applicable to agreements made before applications are designated for hearing.

We expect to give consideration to, and make an appropriate determination in, this rulemaking proceeding very shortly.

The Commission is concerned with subsection (d) (2) of the proposed amendment to section 309. This would require the Commission, if it approves any payment to an applicant pursuant to subsection (d) (1), to give public notice of such approval and to set aside any order granting such license or permit issued prior to the date of such public notice.

It would also require the Commission to accept applications which may be filed by other persons for such broadcast station license or permit for construction during the period of 30 days after the date on which the public notice of the approval of a compromise payment is given by the Commission.

The Commission believes that the imposition of a statutory 30-day waiting period would discourage bona fide compromise negotiations between competing applicants.

Moreover, if a compromise were effected and approved, the filing of a new competing application would further delay the providing of new broadcast services for the period required by the hearing on the competing application.

In order to increase the efficiency of the administrative process and thereby eliminate unnecessary delays in the furnishing of needed services to the public, the commission, while in agreement with the general objectives of the bill in this area, would prefer to deal with the problems presented by so-called payoffs through its more flexible powers of

rulemaking as it has done in the past and is presently doing in connection with its rulemaking proceedings in docket 12509.

We also point out, as we did with the proposed amendment of section 309 (a), that, since in the present framework of the Communications Act there cannot be competing applicants for the same broadcast license, the reference to station license in paragraphs (d) and (e) of the bill is unnecessary.

II. AMENDMENTS TO SECTIONS 307 AND 312 RELATING TO ADMINISTRATIVE SANCTIONS AND TERMS OF LICENSE

We turn now to the administrative sanctions proposed by these bills. Section 2 of H.R. 11341, amending section 312 of the Communications Act, "Administrative Sanctions"-see appendix 3 attachedwould authorize the Commission to suspend station licenses for a period not in excess of 10 days on grounds similar to those on which the commission is now authorized to revoke a license.

This provision would permit greater flexibility in the Commission's enforcement program and is one of several measures short of revocation which would enhance the ability of the commission to deal with the problems now facing it.

Section 2 would also authorize the Commission to revoke or suspend a station license for violation of sections 1304, 1343, or 1464, of title 18 of the United States Code.

Section 1304 of the Criminal Code prohibits the broadcast of lottery information.

Section 1343 prohibits fraud by radio;

And section 1464 prohibits the utterance of obscene; indecent, or profane language by radio.

Prior to 1952, sections 1304 and 1343 were contained in the Communications Act. The instant amendment restores the situation prior to removal of these sections from the act and is endorsed by the Commission.

The proposed grant of authority to suspend station licenses would add a measure of flexibility and effectiveness to the Commission's enforcement program.

Additional authority to impose small fines or forfeitures in cases where revocation, suspension, or criminal prosecution are inappropriate would complement the suspension provision and greatly increase the effectiveness of that program.

We have proposed legislation authorizing imposition of forfeitures in the nonbroadcast services, and an additional proposal authorizing imposition of forfeitures in the broadcast services is under consideration. The former proposal has been passed by the Senate as S. 1737 and a companion bill is before this committee as H.R. 6574.

We hope to be able to submit the broadcast forfeiture proposal to the Congress at an early date.

May I depart from the written statement and interpose here that we were informed this morning that the Bureau of the Budget has cleared the language of our proposal and we expect to transmit it to the Congress very shortly.