Trinity Broad. of Fl. v. Fed. Commun. Comm'n

• Decision Date: 05 May 2000
• Docket Number: 99-1186,Nos. 99-1183,99-1184,s. 99-1183
• Citation: 211 F.3d 618,341 U.S. App. D.C. 191
• Parties: (D.C. Cir. 2000) Trinity Broadcasting of Florida, Inc. and Trinity Christian Center of Santa Ana, Inc., d/b/a Trinity Broadcasting Network, Appellants v. Federal Communications Commission, Appellee Colby May, National Minority Television, Inc., Intervenors
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 618

211 F.3d 618 (D.C. Cir. 2000)

Trinity Broadcasting of Florida, Inc. and Trinity Christian Center of Santa Ana, Inc., d/b/a Trinity Broadcasting Network, Appellants v. Federal Communications Commission, Appellee

Colby May, National Minority Television, Inc., Intervenors

Nos. 99-1183, 99-1184, 99-1186

United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 29, 2000

Decided May 5, 2000

Appeals of an Order of the Federal Communications Commission

Timothy B. Dyk argued the cause for appellants and intervenors supporting appellants. With him on the briefs were Howard A. Topel, Kathryn R. Schmeltzer and Lawrence D. Rosenberg. Barry H. Gottfried entered an appearance.

William H. Crispin, Dean R. Brenner and Katherine Connor Linton were on the brief of amici curiae Members of Congress, Senator John Ashcroft and Congressman Randy Cunningham.

Jordan W. Lorence was on the brief of amici curiae Evangelical Association of Pastors & Layman, et al.

Joel Marcus, Attorney, Federal Communications Commission, argued the cause for appellee. With him on the brief were Christopher J. Wright, General Counsel, and Daniel M. Armstrong, Associate General Counsel. C. Grey Pash, Jr., Counsel, entered an appearance.

Before: Edwards, Chief Judge, Tatel and Garland, Circuit Judges.

Opinion for the Court filed by Circuit Judge Tatel.

Tatel, Circuit Judge:

This case presents a recurring question of administrative law: What constitutes sufficiently fair notice of an agency's interpretation of a regulation to justify punishing someone for violating it? The Federal Communications Commission interpreted its now-superseded minority preference regulation as requiring not only that a majority of an applicant's board of directors be minorities, but also that an applicant demonstrate actual control by minorities. Acting on this interpretation, the Commission denied appellants' application to renew a commercial television broadcast license as a sanction for their earlier claim to a minority preference based on a majority-minority board. Although we defer to the Commission's interpretation of its regulation as requiring actual minority control, we find that neither the regulation nor the Commission's related statements gave fair notice of that requirement. We therefore vacate the Commission's denial of appellants' license renewal application.

I

"Congress found that 'the effects of past inequities stemming from racial and ethnic discrimination have resulted in a severe underrepresentation of minorities in the media of mass communications.' " Metro Broad., Inc. v. FCC, 497 U.S. 547, 566 (1990) (quoting H.R. Conf. Rep. No. 97-765 at 43 (1982)), overruled by Adarand Constructors, Inc. v. Pena, 515 U.S. 200, 227 (1995). In 1971, minorities owned not a single television station anywhere in the United States. Id. at 553.Having found that "the viewing and listening public suffers when minorities are underrepresented among owners of television and radio stations," the Federal Communications Commission has undertaken various measures "to encourage minority participation in the broadcast industry." Id. at 554.Congress also acted to promote minority ownership, directing the Commission to:

establish rules and procedures to ensure that, in the administration of any system of random selection under this subsection used for granting licenses or construction permits for any media of mass communications, significant preferences will be granted [to certain applicants to increase diversification of ownership]. To further diversify the ownership of the media of mass communications, an additional significant preference shall be granted to any applicant controlled by a member or members of a minority group.

Pub. L. No. 97-259, S 115(c)(1), 96 Stat. 1087 (1982), (codified at 47 U.S.C. S 309(i)(3)(A)).

Responding to this directive, the Commission issued a regulation granting preferences to minority applicants in lotteries for low-power and translator television station licenses. 47 C.F.R. S 1.1622(b). Low-power and translator television stations operate "on UHF channels at much lower power than full service (conventional) television stations." Neighborhood TV Co., Inc. v. FCC, 742 F.2d 629, 631 (D.C. Cir. 1984). Section 1.1622(b) of the Commission's regulations granted lottery preferences to "[a]pplicants, more than 50% of whose ownership interests are held by members of minority groups." 47 C.F.R. S 1.1622(b)(1). In a statement explaining section 1.1622(b), the Commission provided several entity-specific definitions of this standard. With respect to "stock corporations," the Commission said: "If a majority of the voting shares are held by minorities, the corporation is entitled to a minority preference." Public Notice, Mimeo No. 6030 at 4 (released August 19, 1983). Of particular significance to this case, the Commission said that for "non-stock corporations" (for instance non-profit corporations), "[i]f a majority of the governing board ... are minorities, the entity is entitled to a minority preference." Id. See also Random Selection Lotteries, 93 F.C.C.2d 952, 977 (1983) ("We agree ... that nonstock corporations ... should be judged as to minority status on the basis of the composition of the board.").

Limited to lotteries for low-power/translator television station licenses, section 1.1622 did not address minority underrepresentation in the lucrative full-power, commercial television station market. A Commission advisory committee exploring the causes of underrepresentation in that market concluded that minority broadcasters faced serious shortages of capital. See Strategies for Advancing Minority Ownership Opportunities in Telecommunications 19 (May 1982). To address this problem, the committee suggested that the FCC encourage partnerships between minority entrepreneur broadcasters and established broadcasters. Id. at 24. The advisory committee warned, however, that the Commission's multiple ownership regulation--which limited the number of commercial broadcast licenses in which a particular entity could have an interest--posed a significant barrier to such partnerships. Because established broadcasters holding the maximum permissible number of licenses would be unable to have "interests" in additional licenses, minority entrepreneurs with whom they formed partnerships would be ineligible for television licenses. The advisory committee recommended that the Commission grant "waivers or expansion of multiple ownership and diversification requirements to established entrepreneurs who participate in telecommunications ventures with minorities.... For example, FCC policies should allow an established entrepreneur to acquire an equity interest in a minority-controlled property that otherwise would exceed multiple ownership limits...." Id. at 32.

In 1985, the Commission took a step toward facilitating the partnerships the advisory committee had recommended. It granted an exception to the multiple ownership limits for "minority-controlled" broadcast stations. As amended, the regulation stated:

No license for a ... TV broadcast station shall be granted, transferred or assigned to any party (including all parties under common control) if the grant, transferor assignment of such license would result in such party or any of its stockholders, partners, members, officers or directors, directly or indirectly, owning, operating or controlling, or having a cognizable interest in, either:

(i) more than fourteen (14) stations in the same ser-vice, or

(ii) more than twelve (12) stations in the same service which are not minority-controlled.

47 C.F.R. S 73.3555(d)(1) (1990). In other words, section 73.3555 essentially limited broadcasters to having interests in twelve licenses, except that they could have interests in two additional licenses for "minority-controlled" stations. In language central to this case, section 73.3555 continued: " '[M]inority-controlled' means more than 50 percent owned by one or more members of a minority group." Id. S 73.3555(d)(3)(iii). Although section 73.3555 provided no further definition of "minority-controlled," it concluded with this note: "The word 'control' as used herein is not limited to majority stock ownership, but includes actual working control in whatever manner exercised." Id. S 73.3555 note 1.

Congress has since eliminated the multiple ownership limits. See Telecommunications Act of 1996, Pub. L. No. 104104, S 202(c)(1)(A), 110 Stat. 56. But because the events leading up to this case occurred during the period section 73.3555 was in effect, that section controls the disposition of this case, as all parties agree.

Created by Dr. Paul Crouch in 1973, appellant Trinity Christian Center of Santa Ana, Inc., d/b/a Trinity Broadcasting Network ("TBN"), is a non-profit "electronic evangelical ministry." Crouch serves as TBN's President. TBN produces its own religious programming, which it uses as the core of its twenty-four hour broadcast. Its broadcasts also include religious programs produced by other ministries--"a wide variety of Protestant and Episcopalian denominations, as well as Catholic, Seventh Day Adventist, and Messianic Jewish programs." Reaching viewers throughout the country, TBN's programming is broadcast on TBN's own commercial and translator television stations and on stations operated by smaller non-profit corporations like appellant Trinity Broadcasting Florida, Inc. ("TBF"), which Crouch created to carry TBN programming.

Pearl Jane Duff, an African American minister, started as a volunteer at TBN but was quickly hired as a salaried employee. She became Crouch's assistant in 1981 and has worked at TBN in that capacity ever since. Shortly after Duff began working for TBN, she was appointed to the boards of TBN and TBF. She remained on those boards until resigning in the summer of 1984.

In 1980, Crouch formed Translator TV, Inc. ("TTI"), predecessor to intervenor ...