**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In the Matter of )

)

Review of the Commission's ) MM Docket No. 98-204

Broadcast and Cable )

Equal Employment Opportunity )

Rules and Policies )

**SECOND NOTICE OF PROPOSED RULE MAKING**

**Adopted: December 12, 2001 Released: December 21, 2001**

Comment Date: 60 Days After Publication in Federal Register

Reply Comment Date: 90 Days After Publication in Federal Register

By the Commission: Chairman Powell and Commissioners Copps and Martin
issuing separate statements.

#########  I. INTRODUCTION

1.  We issue this *Second Notice of Proposed Rule Making* ("*Second
    NPRM*") to propose, and request comments concerning, a new broadcast
    equal employment opportunity ("EEO") rule and policies consistent
    with the decision of the U.S. Court of Appeals for the District of
    Columbia Circuit in *MD/DC/DE Broadcasters Association v. FCC*, 236
    F.3d 13, *rehearing den.* 253 F.3d 732 (D.C. Cir. 2001), *pet. for
    cert. filed*, MMTC v. MD/DC/DE Broadcasters Association, No. 01-639
    (October 17, 2001) ("*Association*"). The Court therein found
    unconstitutional one of two options for achieving broad outreach
    provided by the broadcast EEO outreach requirements adopted in the
    *Report and Order in MM Docket Nos. 98-204 and 96-16*, 15 FCC Rcd
    2329 (2000) ("*Report and Order*") *recon. denied* 15 FCC Rcd
    22548 (2000) ("*Recon*"), and codified as Section 73.2080 of the
    Commission's Rules, 47 C.F.R. § 73.2080. In addition to considering
    a new broadcast EEO Rule, we will also consider new rules applicable
    to cable entities, including multichannel video program distributors
    ("MVPDs").[^1] In the *Report and Order*, we adopted EEO
    requirements applicable to cable entities which were generally the
    same as the requirements applicable to broadcasters, except where
    necessary to comply with statutory requirements applicable only to
    cable entities.[^2] Finally, we will dismiss as moot a petition for
    reconsideration of the *Recon* filed by Fletcher, Heald & Hildreth,
    P.L.C. ("FHH"). We will consider the issue raised by FHH in this
    *Second NPRM*.

    **II. BACKGROUND**

2.  We have administered regulations governing the EEO responsibilities
    of broadcast licensees since 1969.[^3] Our responsibilities in this
    area were extended to cable television operators in 1984.[^4] They
    were further codified with respect to television broadcast licensees
    and extended to MVPDs in 1992.[^5] However, in 1998, the U.S. Court
    of Appeals for the District of Columbia Circuit found that the
    outreach provisions of the broadcast EEO Rule then in effect were
    unconstitutional in *Lutheran Church-Missouri Synod v. FCC*.[^6]

3.  In *Lutheran Church*, the Court focused on the Commis­sion's
    "pro­cessing guide­lines disclosing the criteria it used to select
    stations for in-depth EEO review when their licenses came up for
    renewal." 141 F.3d at 352. The Court concluded that because "\[n\]o
    rational firm -- particularly one holding a government-issued
    license -- welcomes a govern­ment audit," the processing guideline
    "induces an employer to hire with an eye toward meeting the
    numerical target." 141 F.3d at 353, 354. The Court thus con­cluded
    that the EEO regulations were unconstitutional because they
    "pressure -- even if they do not explicitly direct or require --
    sta­tions to make race-based hiring decisions." 154 F.3d at 491. The
    Court made clear that "\[i\]f the regulations merely required
    stations to implement racially neutral recruiting and hiring
    pro­grams, the equal protection guarantee would not be implicated."
    141 F.3d at 351. And it reite­rated in response to the government's
    rehearing petition that it had not held that a regulation
    "encourag­ing broad outreach to, as opposed to the actual hiring of,
    a particular race would neces­sarily trig­ger strict scrutiny." 154
    F.3d at 492.

4.  In 1998, we issued a *Notice of Proposed Rule Making*[^7] in this
    proceeding for the purpose of adopting EEO rules for both broadcast
    licensees and cable entities consistent with the Court's decision in
    *Lutheran Church*. In 2000, we adopted the *Report and Order* that
    included the EEO program requirements for broadcasters that were
    vacated by the Court in *Association*. Substantially the same
    program requirements were also applied to cable entities.

5.  The revised rules adopted by the *Report and Order*, the Commission
    explained, required more "than merely refraining from
    dis­­crimination." They also required broadcasters, cable systems and
    other MVPDs "to reach out in recruiting new employees beyond the
    confines of their circle of business and social contacts to all
    sectors of their communities \[because\] ... repeated hiring without
    broad outreach may unfairly exclude minority and women job
    candidates ...." The Commission con­cluded that non­discrimination in
    hiring was not enough. "Outreach in recruitment must be coupled with
    a ban on discrimination to effectively deter discrimination and
    ensure that a homo­ge­nous workforce does not simply replicate itself
    through an insular recruitment and hiring pro­cess."[^8]

6.  The revised rule contained two primary require­ments -- a prohibition
    on race or gender discrimination in hiring and a require­ment that
    broad­casters reach out in recruiting new emplo­yees to all sectors of
    their communities to assure that all qualified individuals have an
    oppor­tunity to apply for and be considered as job candidates. The
    core of the recruitment require­ment was that broadcasters widely
    disseminate infor­mation con­cerning all job vacancies. The Commis­sion
    con­cluded that this basic require­ment "is essential to meaningful
    outreach."[^9] The Commis­sion left it largely to broad­casters'
    discretion how they fulfill this requirement, so long as their
    procedures were sufficient to ensure wide dissemination of
    informa­tion about all job openings to the entire com­munity. "A
    broadcaster may widely disseminate job postings through any
    combination of methods sufficient to ensure that its recruitment
    efforts are inclusive."[^10]

7.  In addition to the basic requirement of wide dissemination of
    information concerning job openings, the revised rule provided
    broadcast licensees with two options. Under "Option A," they were
    required to undertake two types of supplemental recruitment
    mea­sures. The first measure required licensees to provide
    notifica­tion of job vacancies to any recruitment organization that
    requested such notice from the broadcaster.[^11] The second
    supple­mental mea­sure under Option A required broadcasters to
    participate in additional recruitment activities beyond the
    traditional recruitment that occurs in response to individual
    vacancies. These additional measures were to be selected from an
    open-ended menu of types of activities that included: job fairs, job
    banks, scholarship programs, in-house training programs, mentor­ing
    pro­grams, and com­munity events related to employment oppor­tunities
    in the industry, among others.[^12] Broadcasters were permitted to
    participate in activities other than the listed ones so long as such
    activities were "designed to further the goal of dissemi­nat­ing
    infor­mation about employment opportunities in broadcasting to job
    candidates who might otherwise be una­ware of such
    opportunities."[^13]

8.  Broadcasters who selected Option A were required to maintain, but
    not submit routinely to the Commission, records docu­ment­ing their
    compliance with the wide dissemination and supple­mental recruitment
    require­ments. However, they were not required to maintain any data
    on the race, ethnicity or gender of applicants, interviewees or
    individuals they hired.[^14]

9.  In response to commenters who urged the Commission to give them the
    broadest possible discre­tion to recruit in a manner best suited to
    their individual operations and local communities, the Commis­sion
    adopted an "Option B" for recruitment that permitted licensees to
    forego the sup­ple­­mental recruitment measures required under Option A
    "and to design their own outreach pro­gram to suit their needs, as
    long as they can demonstrate that their program is inclusive,
    *i.e.*, that it widely disseminates job vacancies throughout the
    local community."[^15] Broadcasters who chose this option and
    designed their own recruitment program were required to keep "data
    tracking the recruitment sources, gender, and race/ethnicity of its
    applicant pools so that the broadcaster, the public and the
    Commission can evaluate whether the program is effective in reaching
    the entire community."[^16] The Commission emphasized that "there is
    no requirement that the composition of applicant pools be
    proportionate to the compo­sition of the local work force," but that
    "few or no females or minorities in a broadcaster's appli­cant pools
    may be one indica­tion (and only one indication) that the station's
    outreach efforts are not reach­ing the entire com­munity."[^17] The
    "only purpose" of collecting this data, the Commission stated, was
    to give the "broadcaster, the public, and the Commission more
    informa­tion by which to monitor the effectiveness of a station's
    outreach efforts so that the broadcaster can take appropriate action
    to modify its outreach efforts should the information indicate that
    they are not reaching the entire community."[^18]

10. In *Association*, the D.C. Circuit rejected the broadcasters'
    statutory challenges to the new EEO rule and held that the rule was
    not arbitrary and capricious. It found, first, that the
    broadcasters' contention that the rule relied on the goal of
    promoting programming diversity -- the legitimacy of which had been
    questioned in *Lutheran Church* -- was "beside the point" because
    the Commission had made clear "that its primary and assertedly
    sufficient goal in issuing the EEO rule was to prevent invidious
    discrimination." 236 F.3d at 18. It found nothing arbitrary or
    capricious in the Commission's pursuit of that goal. Second, the
    court found that the broadcasters had failed to support their claim
    that because the new rule allegedly increased the regulatory burden
    imposed on stations, it was arbitrary and capricious. *Id*.

11. The court agreed in part, however, with the broadcasters'
    constitutional challenge to the new rule. It held that Option B of
    the rule was subject to strict scrutiny because those broadcasters
    who elected Option B were required to report the race, sex and
    referral source of each job applicant. The court reasoned that this
    requirement would pressure broadcasters to focus their recruitment
    efforts on minorities and women because the FCC might investigate
    them if their recruitment efforts attracted few or no minorities or
    women. It believed that this would disadvantage nonminority job
    candidates because they would be "less likely to receive
    notification of job openings solely because of their race . . ."
    *Id*. at 21. The court concluded that the EEO rule could not
    withstand strict scrutiny because, even if there were a compelling
    government interest in preventing discrimination -- an issue the
    court did not resolve -- the rule was not narrowly tailored to
    further that interest. *Id*. at 21-22. Therefore, it held that
    Option B was unconstitutional under the equal protection component
    of the Due Process Clause of the Fifth Amendment. *Id*. at 22.

12. The court found no constitutional defect in recruitment Option A of
    the EEO rule. Since Option A did not require broadcasters to report
    the race or sex of job applicants or interviewees, and allowed them
    to select supplemental recruitment measures that do not "place
    special emphasis upon the presence of women and minorities in the
    target audience," it held that broadcasters were not "meaningfully
    pressured under Option A to recruit women and minorities." *Id*. at
    19.

13. Although the court found only Option B unconstitutional, it held
    that Option B could not be severed from the rest of the EEO rule.
    The court acknowledged that the Commission had made clear its intent
    that the regulation be severable. It concluded, however, that the
    "core of the rule, by Commission design, is to provide broadcasters
    with two alternatives," and that the Commission had not considered
    the "loss of flexibility" that eliminating Option B would entail.
    *Id*. at 22. Thus, it reasoned that severing the unconstitutional
    portion of the rule "would severely distort the Commission's program
    and produce a rule strikingly different from any the Commission has
    ever considered or promulgated. . ." *Id*. at 23. Since it concluded
    that it could not sever the unconstitutional portion, it vacated the
    entire rule.

14. The Commission filed for hearing and rehearing *en banc*, arguing
    that Option B was not essential to achieving its goal of ensuring
    that broadcasters engage in broad outreach in recruiting new
    employees and that it had made plain its intent that Option B be
    severable. The court denied rehearing. 253 F.3d 732. However, it
    noted that the Commission was free, in a new rulemaking proceeding,
    to adopt other EEO measures that would "accommodate the concerns
    \[the Commission\] expressed about broadcasters\' need for
    flexibility in general and about the burden Option A would impose
    upon broadcasters in small markets in particular" or to "change its
    goals." *Id*. at 736.[^19] A petition for certiorari has been filed
    by one of the parties to the case, Minority Media and
    Telecommunications Council.

    **III. DISCUSSION**

    **Summary of Proposed EEO Rules and Their Purpose**

15. It is important that the Commission have EEO rules that prohibit
    discrimination in broadcast and cable employment and also require
    broadcasters and cable entities to reach out to all segments of the
    community in filling vacancies. To this end, the Commission proposes
    EEO rules that deter discrimination and achieve broad outreach in
    broadcast and cable practices. As we indicated in the *Report and
    Order,* and noted above, "\[o\]utreach in recruitment must be
    coupled with a ban on discrimination to effectively deter
    discrimination and ensure that a homogenous workforce does not
    simply replicate itself through an insular recruitment and hiring
    process."[^20] Broad outreach in recruitment practices will ensure
    fairness to all potential applicants, including all races and both
    genders, without infringing on the rights of any group. Further, the
    rules are designed to be flexible enough to avoid imposing an undue
    burden of the outreach requirements and to apply reasonably and
    effectively to broadcasters and cable entities operating in
    differing circumstances.

16. Accordingly, we propose new rules that incorporate the prohibition
    against discrimination included in the prior rules, as well as an
    EEO outreach program that contains the components of the program
    formerly known as Option A. As noted, Option A was affirmed by the
    Court on both statutory and constitutional grounds.[^21] The
    following is a summary of the three-pronged outreach requirement as
    it relates to broadcasters:

    Prong 1: widely disseminate information concerning each full-time
    job vacancy;

    Prong 2: provide notice of each full-time job vacancy to recruitment
    organizations that have requested such notice; and

    Prong 3: complete two (for broadcast employment units with five to
    ten full-time employees) or four (for employment units with more
    than ten full-time employees) longer-term recruitment initiatives
    within a two-year period including, *e.g.*: participating in at
    least 4 job fairs by station personnel who have substantial
    responsibility in making hiring decisions; hosting at least one job
    fair; participating in scholarship programs directed to students
    desiring to pursue a career in broadcasting; participating in
    internship programs; sponsoring at least two events in the community
    designed to inform the public as to employment opportunities in
    broadcasting.[^22]

    The following is a summary of recordkeeping and reporting
    requirements that would apply under the rules:

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(a) collect, but not routinely submit to the Commission: (i) listings of
    all full-time jobs filled, identified by job title; (ii) the
    recruitment sources used to fill each vacancy, including any
    organizations which requested notification; (iii) the address,
    contact person and telephone number of each recruitment source used
    to fill each position; (iv) dated copies of all advertisements,
    letters, e-mails, faxes, etc. used to fill each vacancy; (v)
    documentation necessary to demonstrate performance of supplemental
    outreach initiatives, *e.g*., job fairs, mentoring programs; (vi)
    the total number of interviewees for each vacancy; and (vii) the
    date each job was filled. As reflected in paragraph 32 below, we are
    requesting comments as to whether additional data, such as the
    recruitment sources of interviewees and/or hires, should be
    retained.

(b) place in the station public file annually a report including the
    following: (i) all full-time jobs filled during the previous
    year; (ii) recruitment sources used to fill those vacancies; (iii)
    address, contact person, and telephone number of each recruitment
    source; and (iv) description of any supplemental initiatives
    implemented during the previous year. As reflected in paragraph 36
    below, we are requesting comments as to whether additional data,
    such as the recruitment sources of interviewees and/or hires, should
    be included in the annual public file report.

(c) submit the contents of their stations' EEO public inspection file to
    the Commission as part of the renewal application and midway through
    the license term for the Commission's mid-term review for those
    stations subject to mid-term review. (Broadcasters would limit their
    submissions to cover only the last 12 months of EEO activity.)

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17. The same requirements would apply to cable television entities,
    except as necessary to comply with statutory requirements applicable
    to cable. Thus, Section 634 of the Communications Act of 1934, as
    amended ("Communications Act")[^23] requires that cable entities
    file reports on an annual basis containing information specified in
    the statute. The Commission has implemented this annual reporting
    requirement by FCC Forms 395-A (cable television) and 395-M (MVPDs).
    The Commission is also required to certify that cable employment
    units are in compliance with the EEO requirements on an annual
    basis. *See* Section 634(e)(1) of the Communications Act.
    Accordingly, to comply with the Prong 3 requirements, cable
    employment units with six to ten full-time employees would be
    required to undertake one recruitment initiative each year and
    larger employment units two recruitment initiatives per year. Cable
    employment units are also not subject to a renewal process at the
    Commission. However, pursuant to Section 634((e)(2) of the
    Communications Act, the Commission is required to conduct a more
    thorough review of each cable employment unit's EEO compliance every
    five years. Hence, cable entities with six or more full-time
    employees would submit copies of their EEO public inspection file to
    the Commission every five years.

    **Anti-Discrimination Provisions**

18. The broadcast EEO Rule adopted by the Commission in the *Report and
    Order* includes a provision prohibiting discrimination based on
    race, color, religion, national origin, or sex, with the exception
    that religious radio broadcasters may establish religious belief or
    affiliation as a job qualification for station employees.[^24] The
    anti-discrimination provision was not challenged in *Association*.
    Nonetheless, in rejecting the contention that the unlawful Option B
    could be severed from the EEO rule, the Court stated that the
    "entire rule" must be vacated. 236 F.2d at 23. In order to avoid any
    confusion arising from this language, we propose to recodify the
    anti-discrimination provision, which we continue to believe is an
    essential component of every licensee's obligation as a trustee of a
    valuable public resource. However, we reiterate that our
    anti-discrimination provisions are still in effect.[^25]

19. We also propose to retain our policy of generally deferring action
    on individual complaints of employment discrimination against
    broadcasters and cable entities pending final action by the Equal
    Employment Opportunity Commission ("EEOC") or other government
    agencies and/or courts established to enforce nondiscrimination
    laws.[^26] However, we propose to retain the discretion to take
    action, notwithstanding the absence of a final decision by the EEOC
    or other agency/court, where the facts of a particular case so
    warrant.[^27]

    **Outreach Requirements**

20. We previously concluded, and continue to believe, that the outreach
    program proposed herein will ensure broad outreach in recruitment.
    We also believe that it will afford broadcasters and cable entities
    considerable flexibility in fashioning a recruitment program that is
    effective and suitable in their markets. Thus, under Prong 1, we
    leave broadcasters and cable entities free to select the number and
    type of recruitment sources that will achieve broad outreach in
    their communities. Also, with respect to the Prong 3 supplemental
    recruitment activities, we afford them a broad menu of activities
    from which to choose, including the option of designing an activity
    not specifically included in the menu. While we propose to adopt
    this outreach requirement, we nonetheless welcome proposals to
    improve the proposed rules, including proposals to eliminate any
    unnecessary burdens and to incorporate greater flexibility,
    consistent with the underlying goal of ensuring broad outreach. We
    also welcome proposals to provide relief to small broadcasters or
    cable entities or those in smaller markets.

21. We emphasize, however, that we do not intend to modify the rules in
    a way that would compromise our goal of ensuring broad and inclusive
    outreach in the community for virtually all full-time job vacancies.
    In addition, we caution commenting parties that we do not intend to
    modify the proposed rule in any respect that would make it
    vulnerable to attack on constitutional or statutory grounds.
    Accordingly, we urge parties to give careful consideration, and
    explain in their comments, how their proposals will comply with
    constitutional and statutory strictures, particularly those imposed
    by the equal protection component of the Due Process Clause of the
    Fifth Amendment and Sections 334 and 634 of the Communications Act.

22. Pursuant to the *Report and Order*, religious broadcasters that
    elected to apply a religious qualification to all of their employees
    were not required to comply with the broad outreach recruitment
    requirement or the menu options. However, they were required to make
    reasonable, good faith efforts to recruit widely among their
    co-religionists.[^28] We propose to readopt this policy.

23. **Outreach Prong 1 -- Recruitment for All Full-time Vacancies**. We
    propose to retain the requirement that broadcasters and cable
    entities recruit for all full-time vacancies. Our rules will
    continue to afford broadcasters and cable entities the flexibility
    to determine the number or type of recruitment sources to be
    utilized. The recruitment sources selected by the employment unit
    must be, taken as a whole, reasonably calculated to reach the entire
    community. We propose to define "community" as, at a minimum, the
    county where a station is licensed or cable employees are primarily
    located, or Metropolitan Statistical Area ("MSA") if the county is
    part of an MSA. Broadcasters and cable entities are, of course,
    welcome to recruit beyond those areas. We invite comment on
    alternative definitions of "community." We do not propose to require
    the use of recruitment sources that are specifically targeted at
    minorities, women or any other group. As with the requirements
    adopted by the *Report and Order*, joint recruitment efforts
    involving more than one employment unit will be permitted, provided
    that each employment unit remains responsible for achieving broad
    outreach.[^29] Such joint efforts may involve commonly owned
    employment units, employment units operating through trade
    organizations, or independent employment units operating jointly on
    an *ad hoc* basis.

24. We propose to continue the policy for broadcasters and cable
    entities reflected in the *Report and Order* that recruitment is not
    required in the case of internal promotions and temporary hires.
    However, if an individual is hired for a temporary position after
    full recruitment, he or she may thereafter be promoted to full-time
    status in the same or substantially the same job without further
    recruitment.[^30] On the other hand, a person hired on a temporary
    basis without recruitment may not be promoted to a full-time
    position without full recruitment. We also propose to continue the
    policy concerning hires for part-time positions as reflected in the
    *Report and Order*. As indicated therein, broadcasters and cable
    entities need only substantially comply with the requirement to
    recruit for every part-time vacancy.[^31] However, as indicated in
    the *Recon*, if a part-time position is filled following full
    recruitment, the person hired may thereafter be promoted to
    full-time status in the same manner as a temporary employee.[^32]

25. We also recognized in the *Report and Order* that, in limited
    instances, circumstances might arise where recruitment would not be
    feasible. For instance, there may be a legitimate need to replace
    immediately an employee who departs without notice and whose duties
    cannot be fulfilled, even briefly, by other station or cable
    employees. We indicated that, in such circumstances, a vacancy could
    be filled without recruitment. However, we made clear that we
    expected such circumstances to be rare and that licensees or cable
    operators should elect to proceed without recruitment only in
    exceptional circumstances.[^33] We propose to continue this policy
    under our new rules and apply it also to cable entities.

26. In the *Report and Order,* we concluded that the use of the internet
    as a recruiting tool was a promising development that should be
    encouraged. However, we did not find that, as of that time, internet
    recruitment could be relied upon, by itself, to widely disseminate
    job vacancy information. Although we rejected reliance on the
    internet as a sole method of recruitment, we nonetheless recognized
    the internet as a valuable recruitment resource and did not preclude
    reliance on the internet as one of several recruitment methods that
    would collectively achieve broad outreach. We indicated that we
    would be prepared to revisit our position in this regard at a future
    time.[^34] We now note that more than two years have passed since
    the record compiled in the prior proceeding. We, therefore, request
    comment addressing the current situation of internet recruitment. We
    solicit comments as to whether the availability of the internet has
    expanded to the extent that it could be relied upon, by itself, to
    disseminate vacancy information through some or all communities. We
    particularly welcome comments documenting the development of the
    state association web sites during that period and the internet job
    site maintained by the Broadcast Executive Directors Association
    ("BEDA"). We also welcome input from individual broadcasters or
    cable operators concerning their experience in using the internet as
    a recruitment tool. In this regard, we would welcome specific
    information about the number of hits a broadcaster's or cable
    entity's web site has received on a monthly basis, the types of jobs
    that are routinely listed and the number of interviewees that were
    referred by the internet site. We also request input as to general
    methods of internet recruitment pertinent to broadcast and cable
    employment that have developed in recent years, the efficacy of
    these methods and how any such methods might be incorporated into an
    outreach requirement.

27. **Outreach Prong 2 -- Notification to Community Groups**. Under the
    rules adopted by the *Report and Order*, we required, under Option
    A, that broadcasters and cable entities provide notification of
    full-time job vacancies to organizations involved in assisting job
    seekers upon request by such organizations. This requirement
    provides a "safety valve" to ensure that no segment of the community
    is inadvertently omitted from recruitment efforts. We propose to
    continue this requirement. We welcome comments as to how this
    measure worked during the eight months it was in effect under our
    former rules.

28. **Outreach Prong 3 -- Menu Options**. Under the Rules adopted by the
    *Report and Order,* we required, under Option A, that broadcasters
    and cable entities engage in a specified number of activities
    selected from a menu of options, such as job fairs, community events
    relating to broadcast employment, internship programs, scholarships,
    and similar activities. These activities are designed to go beyond
    the normal recruitment activities directed at filling particular
    vacancies. They are designed to encourage outreach to persons who
    may not yet be aware of the opportunities available in broadcasting
    or cable or have not yet acquired the experience to compete for
    current vacancies. Such persons in the past may not have been aware
    of available opportunities because of word-of-mouth recruitment
    practices.[^35]^1^ Thus, interested members of the community will
    not only have access to information concerning specific job
    vacancies but also will be encouraged to develop the knowledge and
    skills to pursue them. We believe that this approach remains
    justified and is not unduly burdensome. As noted above, under this
    approach, broadcasters and cable entities have great flexibility to
    design the types of recruitment activities best suited to their
    organizations and communities. We will accordingly incorporate it
    into our proposed rules. We welcome comments as to how these
    outreach activities worked during the eight months this requirement
    was in effect under our former rules.

29. We nonetheless request comments concerning the number of menu
    options required to be performed. Previously, we required
    broadcasters employing more than ten full-time employees to perform
    at least four menu options over a two-year period and broadcasters
    with five to ten full-time employees to perform two menu options
    over the two-year period. Cable entities with more than ten
    full-time employees were required to perform two menu options
    annually and cable entities with six to ten full-time employees were
    required to perform one menu option annually. These levels appear to
    remain generally reasonable. However, we note that small
    broadcasters or cable entities may have viewed the menu options as a
    burden, which may have motivated them to select Option B, which did
    not require the performance of menu options. We welcome comments as
    to the extent this may have been the case. If so, would an increase
    in the ten full-time employees threshold be warranted or would it be
    justified to increase the threshold for smaller markets where the
    community resources to perform the full complement of menu options
    may not be readily available? We also welcome comments on our
    proposal to continue to allow station employment units with fewer
    than five full-time employees, and cable employment units with fewer
    than six full-time employees, to be exempt altogether from the
    rule's requirements, with the exception of the nondiscrimination
    requirement.

30. The menu options adopted in the *Report and Order* included twelve
    specific options and one more general option designed to permit
    activities not specifically provided for in the first twelve:
    participation in at least four job fairs by station personnel who
    have substantial responsibility in the making of hiring decisions;
    hosting of at least one job fair; co-sponsoring at least one job
    fair with organizations in the business and professional community
    whose membership includes substantial participation of women and
    minorities; participation in at least four events sponsored by
    organizations representing groups present in the community
    interested in broadcast employment issues (including conventions,
    career days, workshops, and similar activities); establishment of an
    internship program designed to assist members of the community to
    acquire skills needed for broadcast employment; participation in job
    banks, internet programs, and other programs designed to promote
    outreach generally; participation in scholarship programs designed
    to assist students interested in pursuing a career in broadcasting;
    establishment of training programs designed to enable station
    personnel to acquire skills that could qualify them for higher level
    positions; establishment of a mentoring program for station
    personnel; participation in at least four events or programs
    sponsored by educational institutions relating to career
    opportunities in broadcasting; sponsorship of at least two events in
    the community designed to inform and educate members of the public
    as to employment opportunities in broadcasting; listing of each
    upper-level category opening in a job bank or newsletter of media
    trade groups whose membership includes substantial participation of
    women and minorities; and participation in other activities designed
    by the station employment unit reasonably calculated to further the
    goal of disseminating information as to employment opportunities in
    broadcasting to job candidates who might otherwise be unaware of
    such opportunities. The specification of these menu options is
    necessarily general because we wish to afford maximum leeway to
    broadcasters and cable operators in planning their activities. We
    welcome comments on whether we should further refine the menu
    options or address any ambiguities in them.

31. We also propose to continue our policy of permitting the
    implementation of menu options on a joint basis where appropriate.
    These would include activities engaged in by commonly owned
    employment units owned by a single broadcast or cable company. It
    could also encompass activities engaged in by independently owned
    employment units working through a trade association or through an
    *ad hoc* group put together by the employment units themselves. The
    central point of this policy as developed under our prior rules is
    that, where activities are done jointly, each employment unit
    seeking credit must nonetheless have had some degree of
    participation in the activity. Thus, in the *Recon*, we indicated
    that broadcasters could jointly host a job fair, provided that all
    broadcasters claiming credit participated in a meaningful way,
    beyond merely lending the station's name or providing money.
    Similarly, we held that a corporate licensee could maintain a joint
    scholarship program for all of its employment units, provided that
    each commonly-owned employment unit was involved in at least some
    (not necessarily all) of the tasks involved in implementing the
    program, such as designing the program, soliciting prospective
    scholarship recipients, interviewing and selecting scholarship
    recipients, on-air promotion of the program, or evaluating the
    effectiveness of the program. Thus, an employment unit owned by a
    corporate licensee could not claim credit for having a scholarship
    program merely because its corporate parent maintained such a
    program without any involvement by the unit claiming credit. We also
    required that the number of employment units seeking credit for a
    scholarship program should bear a reasonable relationship to the
    number or type of scholarships awarded by the corporate licensee. We
    applied a similar policy to joint scholarships implemented by
    unrelated broadcasters, such as a scholarship program operated by a
    state broadcast association on behalf of its membership. Further, we
    held that corporate licensees could conduct mentoring, internship or
    training programs or job fairs for their individual employment
    units, but only those units that actually participated in the
    corporate activity could claim credit.[^36] We propose to continue
    these policies. We nonetheless welcome comments concerning them and
    suggestions for alternate methods of providing for joint activities
    that involve meaningful participation by each employment unit.

32. **Recordkeeping Requirements*. ***Under former Option A, employment
    units were required to keep, but not routinely submit to the
    Commission records documenting the employment unit's recruiting
    efforts and its compliance with the supplemental recruitment
    measures. We believe that the justification for this documentation
    is self-evident. An employment unit must be able to demonstrate that
    it in fact took the steps required by our rules. Therefore, we
    propose to maintain this recordkeeping requirement. This data is
    valuable to us and the public to validate whether the employment
    unit is achieving broad outreach and for the employment unit to
    self-assess its recruitment efforts. We welcome comments as to
    whether this recordkeeping information is sufficient for these
    purposes. Should we also require employment units to track the
    recruitment sources of their interviewees and/or hires? Under our
    former rules*,* we required data concerning referral sources for
    interviewees and hires because we believed this information was
    necessary in order for the employment units to ensure that they were
    in fact achieving broad outreach.[^37] We welcome comments as to the
    necessity of these requirements and as to possible less burdensome
    alternatives that will achieve our objectives.

33. **Reporting and Enforcement Requirements*.*** We propose to readopt
    the following reporting requirements, with one significant
    modification pertaining to broadcasters. Because the requirements
    differ for broadcasters and cable entities, we will address them
    separately.

34. Broadcasters were required under our former rule to prepare a report
    concerning their EEO outreach efforts and place it in the station's
    public file annually on the anniversary of the licensee's renewal
    filing date. Under former Option A, the public file report
    included 1) a list of full-time vacancies filled during the
    preceding year; 2) the recruitment source(s) utilized for each such
    vacancy; 3) the recruitment source that referred the person hired
    for each vacancy; 4) data reflecting the total number of persons
    interviewed for each vacancy and the total number of interviewees
    referred by each recruitment source utilized; and 5) a list and
    brief description of supplemental recruitment activities selected
    from the menu options that were performed by the employment unit
    during the preceding year. As noted, this information was to be
    placed in the station's public file. It was not filed with the
    Commission, except as discussed below. In addition to placing the
    report in the public file, a broadcaster was required to place the
    report on its web site, if it had one.

35. Broadcasters were also required to prepare and file on the second,
    fourth and sixth anniversary of the date when the licensee's last
    renewal application was due to be filed a Statement of Compliance
    utilizing FCC Form 397. The form required only that the licensee
    certify that it had complied with the EEO Rule during the preceding
    two years. If the licensee could not make this certification, or was
    uncertain as to whether it could, it could provide an explanation.
    In the case of television stations and radio stations with more than
    ten full-time employees, the licensee also was required to file with
    its Statement of Compliance filed in the fourth year of its license
    term a copy of its most recent EEO public file report for use in
    conducting a mid-term review. Finally, at renewal time, broadcasters
    were required to file an EEO Program Report on FCC Form 396. This
    report was designed to provide the Commission and the public an
    overview of the licensee's EEO efforts. It required a certification
    as to compliance with the EEO Rule as well as a narrative statement
    as to how the station achieved broad and inclusive outreach during
    the preceding two years. A copy of the EEO public file report for
    the preceding year was also to be submitted with the Form 396. The
    form also solicited information as to pending discrimination
    complaints.

36. We propose to readopt the annual public file report requirement,
    including the requirement that broadcasters and cable entities place
    the report on their web sites if they have one. The annual public
    file report would include at least: (1) all full-time jobs filled
    during the previous year; (2) recruitment sources used to fill those
    vacancies; (3) address, contact person, and telephone number of each
    recruitment source; and (4) description of any supplemental
    initiatives implemented during the previous year. As indicated in
    paragraph 32 above, we have requested comments as to whether
    broadcasters and cable entities should retain information such as
    the recruitment sources of interviewees and/or hires. We also
    request comments as to whether such information should be included
    in the annual public file report.

37. We continue to believe that the annual public file report is
    necessary and reasonable to ensure that EEO programs are
    meaningfully implemented on a continuing basis. We believe it
    important that broadcasters focus on their EEO obligations
    throughout the eight-year license terms currently applicable in the
    broadcast services. Thus, we seek to ensure that broadcasters do not
    intentionally or inadvertently ignore our EEO requirements until
    shortly prior to renewal time. This is particularly important in
    light of the frequent number of sales and consolidations that have
    occurred in the broadcast industry in recent years. The annual
    public file report is designed to ensure that each licensee, not
    just the licensee that holds a license at renewal time, will
    implement a meaningful EEO program.

38. We also believe that the annual public file report is useful as a
    means of facilitating public input into the EEO process. If current
    information is available concerning an employment unit's EEO
    program, members of the public will be in a position to make known
    any problems they may perceive in a timely manner. As a result,
    issues concerning an employment unit's EEO program can be
    expeditiously resolved, which may prevent their becoming the source
    of a petition to deny or Commission-initiated sanction at renewal
    time.

39. We further believe that the annual public file report will be useful
    to broadcasters by enabling them to identify and correct any
    problems in their programs in an expeditious manner. By monitoring
    the success of their EEO efforts throughout the license term,
    broadcasters will be able to avoid major problems at renewal time.

40. Finally, we do not believe that the annual public file report is
    unduly burdensome. The primary complaint arising under our former
    rule related to the Option B requirement that broadcasters track the
    ethnicity and gender of applicants. That concern is, of course, no
    longer pertinent because the tracking of applicants' ethnicity and
    gender is not included in Option A.

41. We propose to readopt the requirements pertaining to mid-term review
    adopted by the *Report and Order*. We are required to conduct
    mid-term review of television employment units with five or more
    full-time employees pursuant to Section 334 of the Communications
    Act. We also believe it appropriate to extend this requirement to
    radio employment units with more than ten full-time employees
    because review at renewal time is insufficient in light of the
    eight-year license terms currently applicable.[^38]

42. We propose to modify the requirements pertaining to the Statement of
    Compliance (FCC Form 397). One purpose served by that form was to
    enable broadcasters to change the recruitment option that they
    wished to utilize every two years. This purpose is no longer
    pertinent because there is no longer a need to choose between
    options. The other purpose served by the Statement of Compliance was
    the certification as to compliance with the EEO Rule. However, we do
    not believe this purpose is of sufficient importance to require a
    filing every two years. Broadcasters are routinely expected to
    comply at all times with all Commission Rules, including the EEO
    Rule. Therefore, we propose to abandon the requirement that a
    Statement of Compliance be filed in the second and sixth years of a
    broadcaster's license term. We will, however, require the filing of
    FCC Form 397, which we will rename the "Broadcast Mid-term Report,"
    in the fourth year of the license term by those broadcast employment
    units that are subject to mid-term review, i.e, television stations
    with five or more full-time employees and radio stations with more
    than ten full-time employees. As at present, the filer will certify
    as to its compliance with the EEO Rule and will also attach a copy
    of its most recent annual public file report. This information will
    be used as the basis for our mid-term review of the employment unit.

43. The purpose of the foregoing procedures is not to impose sanctions
    for minor inconsistencies with our requirements. Rather, especially
    in the initial stages of the implementation of our EEO requirements,
    we expect to rely upon guidance and advice more than sanctions to
    ensure achievement of our underlying goal of the continuing
    implementation of effective EEO programs. However, if we lack the
    ability to monitor the developments in the industry, we will be
    unable to provide the necessary guidance that will enable the
    industry to ensure that its efforts are consistent with our
    expectations. We nonetheless welcome comments from interested
    parties as to ways in which meaningful enforcement of our
    requirements could be achieved in a less burdensome manner, bearing
    in mind the considerations discussed above. Thus, one alternative
    might be to rely entirely on random audits by the Commission without
    requiring the filing of periodic reports. Our concern with this
    alternative would be that it would reduce the opportunity for
    participation by the public. In addressing these issues, it would be
    helpful if commenters could provide specificity as to any claims of
    burden, i.e., tell us precisely how great a burden a given
    requirement is perceived as creating and what other method might
    achieve our objective with less burden. Additionally, we welcome
    comments concerning other ways to provide information to the public
    concerning broadcasters' and cable entities' outreach programs.

44. We note in particular that, upon reconsideration, it was suggested
    that the requirement that a broadcaster place its EEO public file
    report on its web site, if it had one, was unduly burdensome because
    some broadcasters might experience difficulties in incorporating the
    EEO public file report onto their existing web sites. However, we
    declined to reconsider this requirement because no information was
    provided as to the extent of any such difficulties or the costs
    involved in addressing them.[^39] We are willing to revisit this
    matter, if commenters provide documentation necessary to assess
    their claims of burden.

45. In the *Report and Order*, we adopted reporting requirements for
    cable entities that are similar in substance to the broadcast
    reporting requirements. However, they differed in some respects in
    order to comply with statutory requirements specified in Section 634
    of the Communications Act. Thus, cable entities were required to
    file reports as to their EEO programs on an annual basis, which we
    must evaluate as to their compliance with our EEO rules. We are also
    required to investigate each cable employment unit at least once
    every five years. We propose to readopt the reporting and
    enforcement provisions adopted in the *Report and Order*, except for
    those relating to the former Option B. We welcome comments from
    cable entities as to any respects in which these procedures can be
    improved, consistent with the requirements of the Communications
    Act.

46. **Forms Relating to the EEO Outreach Requirements**. In the *Report
    and Order*, we adopted forms designed to implement our EEO outreach
    requirements. For broadcasters, these include the FCC Form 396 (EEO
    Program Report to be filed with renewal applications) and FCC Form
    397 (biannual Statement of Compliance), which are discussed above.
    In addition, FCC Form 396-A (Model EEO Program Report) was to be
    utilized by applicants for new broadcast stations or for
    assignment/transfer of an existing station to provide preliminary
    information as to the EEO program they intended to implement. All of
    these forms included blocks wherein the respondent could elect
    between Option A and Option B. We propose to retain these forms,
    except for the blocks and accompanying instructions providing for an
    election. We invite comments as to the need for and contents of
    these forms. The *Report and Order* also provided for an unnumbered
    Initial Election Statement that was utilized by broadcasters and
    cable operators to declare their initial election between Option A
    and Option B. That form will not be continued since there is no
    longer any need for an election.

47. The *Report and Order* also adopted forms for annual reports by
    cable systems (FCC Form 395-A) and MVPDs (FCC Form 395-M). These
    reports are required in part by Section 634 of the Communications
    Act. They relate in part to the EEO outreach requirements.[^40] They
    also collect data concerning the ethnicity and gender of the
    reporting unit's workforce that is required by statute[^41] but is
    not related to the EEO outreach requirements, as discussed below. We
    propose to retain these reports except, again, we will delete
    references to the election between Option A and Option B from the
    forms and their instructions. We nonetheless welcome comments from
    cable entities as to any possible modifications of the forms that
    could be implemented consistent with the statute.

    **Small Employment Unit Relief**

48. It has been our longstanding policy to exempt from our EEO outreach
    (but not nondiscrimination) rules broadcasters with fewer than five
    full-time employees and cable entities with fewer than six full-time
    employees. In the *Report and Order*, we declined to increase the
    exemption to ten full-time employees because such stations have an
    important role in providing entry level opportunities into the
    broadcast industry. We also felt that the reduced number of menu
    options required of small stations provided relief.[^42] We are
    prepared to revisit this matter in order to consider broadcasters'
    and cable entities' general experience during the time the rules
    were in effect, and the impact of substantial consolidations within
    the broadcast and cable industries since the *Report and Order* was
    issued. Accordingly, we request comments as to whether we should
    increase the threshold to exempt broadcast and cable employment
    units of ten or fewer full-time employees from the outreach
    requirements. We initially request comments as to whether we could
    do so in the case of television licensees and cable entities in
    light of the requirements of Section 334 and 634 of the
    Communications Act. We also request comments as to the impact of the
    Court's decision in *Office of Communications of the United Church
    of Christ v. FCC*, 560 F2d. 529 (2d Cir. 1977), in which the Court
    rejected a similar change in the threshold for the exemption.
    Further, we request comments addressing the impact of increasing the
    exemptions, especially in terms of the number of broadcast and cable
    employment units that would be affected by such relief. Finally, we
    request parties to consider whether relief for small employment
    units is warranted under proposals they wish to advocate.

49. In the *Recon*, we clarified one policy that, in many cases, has the
    effect of providing relief to small employment units. We indicated
    in the *Recon* that owners with a 50 percent or greater voting
    control of an entity would not be counted as employees, even if they
    in fact held a position at the station. We propose to continue this
    policy, which would also apply to cable entities. This policy could
    assist small operators by reducing the number of full-time employees
    an entity would have for the purpose of assessing its eligibility
    for a small entity exemption or other relief. Our reason for
    adopting this policy was that, in the case of a controlling
    principal, any position will generally be an incident of ownership
    rather than a normal employment relationship. Thus, it is unlikely
    that a controlling principal could in any normal sense be hired or
    fired.[^43] Consequently, outreach would not pertain to a position
    filled by an owner who maintains this level of ownership. As noted
    above, FHH filed a petition for reconsideration of the *Recon*
    urging that this policy be extended to persons holding voting
    control of 20 percent or more and who have in fact made a capital
    contribution to the company. FHH contends that positions held by
    such principals would also not constitute normal employment
    relationships. As noted, we will dismiss FHH's petition for
    reconsideration as moot since it relates to a former rule. We
    propose at least to maintain the policy established in the *Recon*
    (which would also apply to cable entities). We welcome comments on
    our policy and FHH's proposal to expand the policy.

    **Annual Employment Report**

50. The *Report and Order* continued the Broadcast Annual Employment
    Report (FCC Form 395-B). This form consists of data as to the
    ethnicity and gender of the reporting entity's workforce. We made
    clear in the *Report and Order* and in the *Recon* that the
    collection of this data was intended only for analyzing industry
    trends and reporting to Congress. We indicated, and specified in
    rules, that the data would not be utilized for the purpose of
    assessing any aspect of an individual entity's compliance with the
    EEO rules.[^44] *See* Note to Section 73.3612 of the Commission's
    Rules. Thus, the FCC Form 395-B is not a part of our EEO program
    requirement and is in fact required pursuant to a separate provision
    of our rules, Section 73.3612.

51. The Court in *Association* did not directly address the propriety of
    collecting the FCC Form 395-B data for the limited purpose for which
    it is intended. The Court did uphold all of the reporting
    requirements adopted by the Commission in the *Report and Order*,
    including the requirement for filing FCC Form 395-B, in the face of
    the broadcasters' challenge that those requirements were arbitrary
    and capricious. 236 F.3d at 17. In addressing the constitutionality
    of race and gender reporting requirements, the Court found that the
    requirement that licensees who elected Option B report the race and
    gender of applicants pressured those licensees to focus their
    recruiting efforts on women and minorities. Id. at 18-19. Therefore,
    it held that Option B was subject to strict scrutiny. Nothing in the
    Court's opinion, however, suggests that the collection of the FCC
    Form 395-B data for the limited purposes for which it is intended is
    subject to strict scrutiny or is unconstitutional. Furthermore, we
    have previously concluded that we have authority to collect the data
    and, indeed, are required to do so for broadcast television by
    Section 334 of the Communications Act.[^45] Accordingly, we propose
    to continue the FCC Form 395-B filing requirement. Nevertheless, we
    welcome comment on whether we can or should revise that form. For
    example, can or should we allow these forms to be submitted
    anonymously?

52. We also propose to continue those portions of the cable forms, FCC
    Form 395-A and FCC Form 395-M, that require data for cable entities
    comparable to that required on FCC Form 395-B. As noted, this data
    is required by Section 634 of the Communications Act. However, we
    have also made clear that the data will not be utilized for the
    purpose of assessing any aspect of an individual entity's compliance
    with the EEO rules. *See* Note to Section 76.77(a) of the
    Commission's Rules.

    **IV. CONCLUSION**

53. We remain committed both to prohibiting discrimination in employment
    and requiring broad and inclusive outreach in recruitment by
    broadcasters and cable entities. As we said in the *Report and
    Order*, it is not enough to say that one will not discriminate
    against those who apply for a job when not all have been given a
    fair opportunity to apply.[^46] While we believe that the
    requirements proposed in this *Second NPRM* will ensure fair
    opportunity to all job seekers, we welcome any suggestions
    commenting parties may have to make our proposed rules more
    effective, more flexible or less burdensome, consistent with our
    purpose in this proceeding -- to deter discrimination and achieve
    broad outreach in broadcast and cable recruitment practices. Given
    the years that have passed since our EEO program requirements were
    first struck down, and the fact that since that time we have had
    such requirements in place for only eight months, we need to move
    expeditiously to complete this proceeding and to put in place rules
    that effectively protect equal employment opportunity and that are
    sustainable in court as early as is practicable.

# **V. ADMINISTRATIVE MATTERS** {#v.-administrative-matters .unnumbered}

54. [Ex Parte Rules]{.underline}. This is a permit-but-disclose notice
    and comment proceeding. Ex parte presentations are permitted except
    during the Sunshine Agenda period, provided they are disclosed as
    provided in the Commission\'s Rules. *See generally* 47 CFR Sections
    1.1202, 1.1203, and 1.1206(a).

55. [Initial Regulatory Flexibility Analysis]{.underline}. With respect
    to this *Second NPRM*, an Initial Regulatory Flexibility Analysis
    (\"IRFA\") is contained in the Appendix hereto. As required by
    Section 603 of the Regulatory Flexibility Act, the Commission has
    prepared an IRFA of the possible significant economic impact on
    small entities of the proposals contained in this *Second NPRM*.
    [^47] Written public comments are requested on the IRFA. Comments on
    the IRFA must be filed in accordance with the same filing deadlines
    as comments on the *Second NPRM*, but they must have a distinct
    heading designating them as responses to the IRFA.

56. [Comments and Reply Comments]{.underline}. Pursuant to Sections
    1.415 and 1.419 of the Commission\'s rules, 47 C.F.R. §§ 1.415,
    1.419, interested parties may file comments on or before 60 days
    after publication of the item in the Federal Register, and reply
    comments on or before 90 days after publication of the item in the
    Federal Register. Comments may be filed using the Commission\'s
    Electronic Comment Filing System (ECFS) or by filing paper copies.
    *See Electronic Filing of Documents in Rulemaking Proceedings*, 63
    Fed. Reg. 24,121 (1998).

57. Comments filed through the ECFS can be sent as an electronic file
    via the Internet to \<http://www.fcc.gov/e-file/ecfs.html\>.
    Generally, only one copy of an electronic submission must be filed.
    If multiple docket or rulemaking numbers appear in the caption of
    this proceeding, however, commenters must transmit one electronic
    copy of the comments to each docket or rulemaking number referenced
    in the caption. In completing the transmittal screen, commenters
    should include their full name, Postal Service mailing address, and
    the applicable docket or rulemaking number. Parties may also submit
    an electronic comment by Internet e-mail. To get filing instructions
    for e-mail comments, commenters should send an e-mail to
    ecfs@fcc.gov, and should include the following words in the body of
    the message, \"get form \<your e-mail address\>.\" A sample form and
    directions will be sent in reply. Parties who choose to file by
    paper must file an original and four copies of each filing. If more
    than one docket or rulemaking number appear in the caption of this
    proceeding, commenters must submit two additional copies for each
    additional docket or rulemaking number. All filings must be sent to
    the Commission\'s Secretary, Magalie Roman Salas, Office of the
    Secretary, Federal Communications Commission, 445 Twelfth Street,
    S.W., TW-A325, Washington, D.C. 20554.

58. Parties who choose to file by paper should also submit their
    comments on diskette. These diskettes should be submitted to: Wanda
    Hardy, 445 Twelfth Street, S.W., Room, 2-C221, Washington,
    D.C. 20554. Such a submission should be on a 3.5 inch diskette
    formatted in an IBM compatible format using Word 97 or compatible
    software. The diskette should be accompanied by a cover letter and
    should be submitted in \"read only\" mode. The diskette should be
    clearly labeled with the commenter\'s name, proceeding (including
    the docket number in this case, MM Docket No. 98-204), type of
    pleading (comment or reply comment), date of submission, and the
    name of the electronic file on the diskette. The label should also
    include the following phrase \"Disk Copy - Not an Original.\" Each
    diskette should contain only one party\'s pleadings, preferably in a
    single electronic file. In addition, commenters must send diskette
    copies to the Commission\'s copy contractor, Qualex International,
    Portals II, 445 12th Street, S.W., Room CY-B402, Washington, DC
    20554.

59. Comments and reply comments will be available for public inspection
    during regular business hours in the FCC Reference Center, Federal
    Communications Commission, 445 Twelfth Street, S.W., CY-A257,
    Washington, D.C. 20554. Persons with disabilities who need
    assistance in the FCC Reference Center may contact Bill Cline
    at (202) 418-0270, (202) 418-2555 TTY, or <bcline@fcc.gov>. Comments
    and reply comments also will be available electronically at the
    Commission's Disabilities Issues Task Force web site:
    [www.fcc.gov/dtf](http://www.fcc.gov/dtf). Comments and reply
    comments are available electronically in ASCII text, Word 97, and
    Adobe Acrobat.

60. This document is available in alternative formats (computer
    diskette, large print, audio cassette, and Braille). Persons who
    need documents in such formats may contact Brian Millin at (202)
    418-7426, TTY (202) 418-7365, or <bmillin@fcc.gov>.

61. [Initial Paperwork Reduction Act of 1995 Analysis]{.underline}. This
    *Second* *NPRM* contains either a proposed or modified information
    collection. As part of our continuing effort to reduce paperwork
    burdens, we invite the general public and the Office of Management
    and Budget (OMB) to take this opportunity to comment on the
    information collections contained in this *Second* *NPRM*, as
    required by the Paperwork Reduction Act of 1995, Pub. L. No. 104-13.
    Public and agency comments are due at the same time as other
    comments on this *Second* *NPRM*; OMB comments are due 60 days from
    the date of publication of this *Second* *NPRM* in the Federal
    Register. Comments should address: (a) whether the proposed
    collection of information is necessary for the proper performance of
    the functions of the Commission, including whether the information
    shall have practical utility; (b) the accuracy of the Commission's
    burden estimates; (c) ways to enhance the quality, utility, and
    clarity of the information collected; and (d) ways to minimize the
    burden of the collection of information on the respondents,
    including the use of automated collection techniques or other forms
    of information technology. In addition to filing comments with the
    Secretary, a copy of any comments on the information collections
    contained herein should be submitted to Judy Boley, Federal
    Communications Commission, Room 1-C804, 445 Twelfth Street, S.W.,
    Washington, D.C. 20554, or via the Internet to <jboley@fcc.gov> and
    to Edward Springer, OMB Desk Officer, 10236 NEOB, 725 17^th^ Street,
    N.W., Washington, D.C. 20503, or via the Internet to
    Edward.Springer@omb.eop.gov.

62. [Authority]{.underline}. This *Second NPRM* is issued pursuant to
    authority contained in Sections 1, 4(i), 4(k), 257, 301, 303(r),
    307, 308(b), 309, 334, 403, and 634 of the Communications Act of
    1934, as amended, 47 U.S.C. §§ 151, 154(i), 154(k), 257, 301,
    303(r), 307, 308(b), 309, 334, 403, and 554.

    **VI. ORDERING CLAUSES**

63. Accordingly, **IT IS ORDERED** that, pursuant to the authority
    contained in Sections 1, 4(i), 4(k), 257, 301, 303(r), 307, 308(b),
    309, 334, 403, and 634 of the Communications Act of 1934, as
    amended, 47 U.S.C. §§ 151, 154(i), 154(k), 257, 301, 303(r), 307,
    308(b), 309, 334, 403, and 554, this *Second Notice of Proposed Rule
    Making* **IS ADOPTED**.

64. **IT IS FURTHER ORDERED** that the Petition for Partial
    Reconsideration filed in this proceeding on December 18, 2000 by
    Fletcher, Heald & Hildreth, P.L.C. with respect to the *Memorandum
    Opinion and Order*, 15 FCC Rcd 22548 (2000) **IS DISMISSED** as
    moot.

65. **IT IS FURTHER ORDERED** that the Commission's Consumer Information
    Bureau, Reference Information Center, **SHALL SEND** a copy of this
    *Second Notice of Proposed Rule Making*, including the Initial
    Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy
    of the Small Business Administration.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

APPENDIX

**INITIAL REGULATORY FLEXIBILITY ANALYSIS**

As required by the Regulatory Flexibility Act ("RFA"),[^48] the
Commission has prepared this present Initial Regulatory Flexibility
Analysis ("IRFA") of the possible significant economic impact on small
entities by the policies and rules proposed in this *Second* *Notice of
Proposed Rule Making (\"Second NPRM\").* Written public comments are
requested on this IRFA. Comments must be identified as responses to the
IRFA and must be filed by the deadlines for comments on the *Second
NPRM* provided above. The Commission will send a copy of the *Second
NPRM*, including this IRFA, to the Chief Counsel for Advocacy of the
Small Business Administration.[^49] In addition, the *Second NPRM* and
IRFA (or summaries thereof) will be published in the Federal
Register.[^50]

**A.** **Need for, and Objectives of, the Proposed Rule Changes:**

This *Second NPRM* requests comments concerning a new broadcast equal
employment opportunity ("EEO") rule and policies consistent with the
decision of the U.S. Court of Appeals for the District of Columbia
Circuit in *MD/DC/DE Broadcasters Association v. FCC*, 236 F.3d 13,
*rehearing den.* 253 F.3d 732 (D.C. Cir. 2001), *pet. for cert. filed*,
MMTC v. MD/DC/DE Broadcasters Association, No. 01-639 (October 17, 2001)
("*Association*"). The Court therein found unconstitutional one of two
options for achieving broad outreach provided by the broadcast EEO
outreach requirements adopted in the *Report and Order in MM Docket Nos.
98-204 and 96-16*, 15 FCC Rcd 2329 (2000) ("*Report and Order*") *recon.
denied* 15 FCC Rcd 22548 (2000), and codified as Section 73.2080 of the
Commission's Rules, 47 C.F.R. § 73.2080. The Court found the option
invalid because nonminority job applicants were less likely to receive
notification of job openings under that recruitment option. The Court
further found that the other option provided by the Rule, although not
invalid, could not be severed from the one unconstitutional option and
therefore it vacated the entire Rule. The outreach provisions adopted by
the *Report and Order* were designed to ensure that all persons have the
opportunity to participate in the broadcasting industry by requiring
that broadcasters engage in broad and inclusive outreach in connection
with their hiring efforts.

Because the Commission continues to believe in the importance of
achieving broad and inclusive outreach and that this can be achieved in
a manner consistent with the Court's decision, we are issuing this
*Second NPRM* for the purpose of developing EEO rules to replace those
found unlawful by the Court. In addition to considering a new broadcast
EEO Rule, we will also consider new rules applicable to cable entities,
including multichannel video program distributors ("MVPDs"). Thus, in
the *Report and Order*, we adopted EEO requirements applicable to cable
entities which were generally the same as the requirements applicable to
broadcasters, except where necessary to comply with statutory
requirements applicable only to cable entities. The Court in
*Association* did not address our requirements applicable to cable
entities. However, it remains our belief that the EEO requirements for
cable entities should, to the extent possible, conform to the
requirements applicable to broadcasters. The Court in *Association* did
not address those aspects of our broadcast and cable EEO rules that
prohibit discrimination in hiring practices and we do not believe the
Court intended to invalidate such requirements. The *Second NPRM*
accordingly proposes to readopt our antidiscrimination requirements.

Hence, the *Second NPRM* seeks comment on proposed EEO rules and
policies for broadcast and cable entities, including multichannel video
programming distributors. The rules are designed to replace existing
requirements that were found to be unconstitutional in part by the Court
in *Association*, or are, in light of the Court's decision,
constitutionally suspect in part. Specifically, we request comment on
our proposal to retain the anti-discrimination prong of our EEO rules.
In addition, we request comment on proposals to require broadcasters and
cable entities to establish and maintain an EEO program that would
emphasize recruitment outreach; discourage entities from preferring
members of any racial, ethnic, or gender group in hiring or recruitment
practices; and provide administrative relief to small entities that meet
proposed qualifying factors.

**B. Legal Basis:**

Authority for the actions proposed in this *Second NPRM* may be found in
Sections 1, 4(i), 4(k), 257, 301, 303(r), 307, 308(b), 309, 334, 403,
and 634 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151,
154(i), 154(k), 257, 301, 303(r), 307, 308(b), 309, 334, 403, and 554.

**C. Recording, Recordkeeping, and Other Compliance Requirements:**

As noted, the purpose of this rule making is to replace our prior EEO
rule that was found to be unconstitutional in part by eliminating that
portion determined to be unconstitutional. Hence, this *Second NPRM*
anticipates that any recording, recordkeeping and compliance
requirements of the new rule will not exceed those provided for in the
former rule.

Specifically, the *Second NPRM* proposes that some EEO materials be kept
in the public inspection file, that all broadcasters and cable entities
adhere to the EEO rules' general anti-discrimination provisions, and
that broadcasters and cable entities widely disseminate information
concerning job vacancies.

The *Second NPRM* also proposes that broadcasters and cable entities
undertake two supplemental recruitment measures described herein. As
proposed, the first supplemental recruitment measure would require
broadcasters and cable entities to provide notification of full-time job
vacancies to any requesting organization if the organization regularly
distributes information about employment opportunities or refers job
seekers to employers. Depending on the size of a station's staff, the
second supplemental recruitment measure would require broadcasters to
engage in at least four (for station employment units with more than ten
full-time employees) or two (for station employment units with five to
ten full-time employees) of the following menu options every two years:
participation in at least four job fairs by station personnel who have
substantial responsibility in the making of hiring decisions; hosting of
at least one job fair; co-sponsoring at least one job fair with
organizations in the business and professional community whose
membership includes substantial participation of women and minorities;
participation in at least four events sponsored by organizations
representing groups present in the community interested in broadcast
employment issues (including conventions, career days, workshops, and
similar activities); establishment of an internship program designed to
assist members of the community to acquire skills needed for broadcast
employment; participation in job banks, internet programs, and other
programs designed to promote outreach generally; participation in
scholarship programs designed to assist students interested in pursuing
a career in broadcasting; establishment of training programs designed to
enable station personnel to acquire skills that could qualify them for
higher level positions; establishment of a mentoring program for station
personnel; participation in at least four events or programs sponsored
by educational institutions relating to career opportunities in
broadcasting; sponsorship of at least two events in the community
designed to inform and educate members of the public as to employment
opportunities in broadcasting; listing of each upper-level category
opening in a job bank or newsletter of media trade groups whose
membership includes substantial participation of women and minorities;
and participation in other activities designed by the station employment
unit reasonably calculated to further the goal of disseminating
information as to employment opportunities in broadcasting to job
candidates who might otherwise be unaware of such opportunities. Cable
employment units with more than ten full-time employees would engage in
at least two options from the supplemental recruitment measures menu
every year and cable employment units with six to ten full-time
employees would engage in at least one option every year.

In addition, the *Second NPRM* proposes that broadcasters and cable
entities retain records to demonstrate that they have recruited for all
full-time permanent positions. Under the proposal, such recordkeeping
would include: listings of all full-time vacancies filled, listings of
recruitment sources, the address/contact person/telephone number of each
recruitment source, dated copies of advertisements and other
documentation announcing vacancies, listings of those organizations
which requested notification of vacancies, the total number of
interviewees for each vacancy, the date of each hire, and proof of
participation in menu options. The *Second NPRM* notes that our former
rule required licensees and cable entities to keep track of the referral
source of all interviewees and hirees. The *Second NPRM* requests
comments as to whether this information is necessary in order to
validate that outreach is actually effective, or if other information
should be required. The *Second NPRM* further proposes that
broadcasters' records be maintained until grant of the renewal
application for the term during which the hiring activity occurred.
Cable entities would retain their records for a minimum of seven years.

The *Second NPRM* also proposes that stations and cable employment units
place annually the following EEO records in their local public
inspection file: listings of full-time vacancies filled, recruitment
sources used for each vacancy during the preceding year, the
address/contact person/telephone number of each recruitment source, an
indication of the organizations requesting notification, the total
number of persons interviewed for full-time vacancies during the
preceding year, and a brief description of the menu option items
undertaken during the preceding year. The *Second NPRM* asks if stations
and cable employment units should track the recruitment source of all
full-time hirees and/or interviewees referred by each recruitment source
for a vacancy. Such information would also be updated in the local
public inspection file on an annual basis. Further, under the proposal,
station units are to retain the materials in their file until final
action has been taken on the station's next license renewal application,
and cable entities are to retain their materials for a period of five
years.

Further, the *Second NPRM* proposes that most broadcasters submit the
contents of their station's EEO public inspection file to the FCC as
part of their renewal application and midway through the license term
for the Commission's mid-term review (for those subject to mid-term
review), and that cable entities with six or more full-time employees
submit copies of their EEO public inspection file to the Commission
every five years. However, broadcasters would limit their submissions to
cover only the last 12 months of EEO activity.

Also, the *Second NPRM* proposes that broadcasters file a Broadcast
Mid-Term Report (Form 397) and place a copy of the Report in the public
inspection file. Broadcasters would also continue placing a copy of Form
396 ("Broadcast EEO Program Report") in the public inspection file.
However, broadcasters would no longer be required to place a copy of
their station's Form 395-B ("Broadcast Station Annual Employment
Report") in the public file. Cable employment units would continue
placing a copy of Forms 395-A ("Cable Television Annual Employment
Report") or 395-M ("Multi-Channel Video Program Distributor Annual
Employment Report") in their public file.

The *Second NPRM* proposes that all broadcasters and cable entities,
with the exception of small entities, comply with these recordkeeping
and recording requirements. The proposed exception for small businesses
would provide them with some relief of any disparate recordkeeping and
reporting costs.

**D. Description and Estimate of the Number of Small Entities to Which
the Rules Would Apply:**

1\. Definition of a \"Small Business\"

The RFA directs the Commission to provide a description of and, where
feasible, an estimate of the number of small entities that may be
affected by the proposed rules.[^51] Under the RFA, small entities may
include small organizations, small businesses, and small governmental
jurisdictions.[^52] The RFA, 5 U.S.C. § 601(3), generally defines the
term \"small business\" as having the same meaning as the term \"small
business concern\" under the Small Business Act, 15 U.S.C. § 632. A
small business concern is one which: (1) is independently owned and
operated; (2) is not dominant in its field of operation; and (3)
satisfies any additional criteria established by the Small Business
Administration (\"SBA\"). Pursuant to 5 U.S.C. § 601(3), the statutory
definition of a small business applies \"unless an agency, after
consultation with the Office of Advocacy of the \[SBA\] and after
opportunity for public comment, establishes one or more definitions of
such term which are appropriate to the activities of the agency and
publishes such definition(s) in the Federal Register.\"[^53] The new
rules would apply to broadcast stations and cable entities, including
MVPDs.

2\. Issues in Applying the Definition of a \"Small Business\"

As discussed below, we could not precisely apply the foregoing
definition of \"small business\" in developing our estimates of the
number of small entities to which the rules will apply. Our estimates
reflect our best judgments based on the data available to us.

An element of the definition of \"small business\" is that the entity
not be dominant in its field of operation. We are unable at this time to
define or quantify the criteria that would establish whether a specific
radio or television station is dominant in its field of operation.
Accordingly, the following estimates of small businesses to which the
new rules will apply do not exclude any radio or television station from
the definition of a small business on this basis and are therefore
overinclusive to that extent. An additional element of the definition of
\"small business\" is that the entity must be independently owned and
operated. As discussed further below, we could not fully apply this
criterion, and our estimates of small businesses to which the rules may
apply may be overinclusive to this extent. The SBA\'s general size
standards are developed taking into account these two statutory
criteria. This does not preclude us from taking these factors into
account in making our estimates of the numbers of small entities.

With respect to applying the revenue cap, the SBA has defined \"annual
receipts\" specifically in 13 C.F.R § 121.104, and its calculations
include an averaging process. We do not currently require submission of
financial data from licensees that we could use in applying the SBA\'s
definition of a small business. Thus, for purposes of estimating the
number of small entities to which the rules apply, we are limited to
considering the revenue data that are publicly available, and the
revenue data on which we rely may not correspond completely with the SBA
definition of annual receipts.

Under SBA criteria for determining annual receipts, if a concern has
acquired an affiliate or been acquired as an affiliate during the
applicable averaging period for determining annual receipts, the annual
receipts in determining size status include the receipts of both
firms.[^54] The SBA defines affiliation in 13 C.F.R. § 121.103. In this
context, the SBA\'s definition of affiliate is analogous to our
attribution rules. Generally, under the SBA\'s definition, concerns are
affiliates of each other when one concern controls or has the power to
control the other, or a third party or parties controls or has the power
to control both.[^55] The SBA considers factors such as ownership,
management, previous relationships with or ties to another concern, and
contractual relationships, in determining whether affiliation
exists.[^56] Instead of making an independent determination of whether
television stations were affiliated based on SBA\'s definitions, we
relied on the databases available to us to provide us with that
information.

3\. Estimates Based on Census Data

The rules to be adopted pursuant to this *Second NPRM* will apply to
television and radio stations. The SBA defines a television broadcasting
station that has no more than \$10.5 million in annual receipts as a
small business.[^57] Television broadcasting stations consist of
establishments primarily engaged in broadcasting visual programs by
television to the public, except cable and other pay television
services.[^58] Included in this industry are commercial, religious,
educational, and other television stations.[^59] Also included are
establishments primarily engaged in television broadcasting and which
produce taped television program materials.[^60] Separate establishments
primarily engaged in producing taped television program materials are
classified under other North American Industry Classification (NAICS)
numbers.[^61]

There were 1,509 full-service television stations operating in the
nation in 1992.[^62] That number has remained fairly constant as
indicated by the approximately 1,686 operating full-service television
broadcasting stations in the nation as of September 2001.[^63] For
1992[^64] the number of television stations that produced less than
\$10.0 million in revenue was 1,155 establishments.[^65] Thus, the
proposed rules will affect approximately 1,686 television stations;
approximately 77%, or 1,298 of those stations are considered small
businesses.[^66] These estimates may overstate the number of small
entities since the revenue figures on which they are based do not
include or aggregate revenues from non-television affiliated companies.
We recognize that the proposed rules may also affect minority and women
owned stations, some of which may be small entities. In August 1998,
minorities owned and controlled 32 (2.6%) of 1,209 commercial television
stations in the United States.[^67] According to the U.S. Bureau of the
Census, in 1987 women owned and controlled 27 (1.9%) of 1,342 commercial
and non-commercial television stations in the United States.[^68]

The proposed rule changes would also affect radio stations. The SBA
defines a radio broadcasting station that has no more than \$5 million
in annual receipts as a small business.[^69] A radio broadcasting
station is an establishment primarily engaged in broadcasting aural
programs by radio to the public.[^70] Included in this industry are
commercial, religious, educational, and other radio stations.[^71] Radio
broadcasting stations which primarily are engaged in radio broadcasting
and which produce radio program materials are similarly included.[^72]
However, radio stations which are separate establishments and are
primarily engaged in producing radio program material are classified
under another NAICS number.[^73] The 1992 Census indicates that 96
percent (5,861 of 6,127) of radio station establishments produced less
than \$5 million in revenue in 1992.[^74] Official Commission records
indicate that 11,334 individual radio stations were operating in
1992.[^75] As of September 2001, official Commission records indicate
that 13,012 radio stations are currently operating.[^76]

The rule changes would also affect small cable entities, including
MVPDs. SBA has developed a definition of a small entity for cable and
other pay television services, which includes all such companies
generating \$11 million or less in annual receipts.[^77] This definition
includes cable system operators, closed circuit television services,
direct broadcast satellite services (\"DBS\"), multipoint distribution
systems (\"MDS\"), local multipoint distribution service ("LMDS"),
satellite master antenna systems, and subscription television services.
According to the Bureau of the Census, there were 1,423 such cable and
other pay television services generating less than \$11 million in
revenue that were in operation for at least one year at the end of
1992.[^78] Below we discuss these services to provide a more succinct
estimate of small entities.

*Cable Systems*: The Commission has developed, with SBA\'s approval, its
own definition of small cable system operators. Under the Commission\'s
rules, a \"small cable company\" is one serving fewer than 400,000
subscribers nationwide.[^79] Based on our most recent information, we
estimate that there were 1,439 cable operators that qualified as small
cable companies at the end of 1995.[^80] Since then, some of those
companies may have grown to serve over 400,000 subscribers, and others
may have been involved in transactions that caused them to be combined
with other cable operators. Consequently, we estimate that there are
fewer than 1,439 small entity cable system operators that may be
affected by the rules proposed herein.

The Communications Act also contains a definition of a small cable
system operator, which is \"a cable operator that, directly or through
an affiliate, serves in the aggregate fewer than 1% of all subscribers
in the United States and is not affiliated with any entity or entities
whose gross annual revenue in the aggregate exceeds
\$250,000,000.\"[^81] The Commission has determined that there are
67,700,000 subscribers in the United States.[^82] Therefore, we found
that an operator serving fewer than 677,000 subscribers shall be deemed
a small operator, if its annual revenues, when combined with the total
annual revenues of all of its affiliates, do not exceed \$250 million in
the aggregate.[^83] Based on available data, we find that the number of
cable operators serving 677,000 subscribers or less totals approximately
1,450.[^84] Although it seems certain that some of these cable system
operators are affiliated with entities whose gross annual revenues
exceed \$250,000,000, we are unable at this time to estimate with
greater precision the number of cable system operators that would
qualify as small cable operators under the definition in the
Communications Act.

*MDS:* MDS involves a variety of transmitters, which are used to relay
programming to the home or office.[^85] The Commission has defined
\"small entity\" for purposes of the 1996 auction of MDS as an entity
that, together with its affiliates, has average gross annual revenues
that are not more than \$40 million for the preceding three calendar
years.[^86] This definition of a small entity in the context of MDS
auctions has been approved by the SBA.[^87] These stations were licensed
prior to implementation of Section 309(j) of the Communications Act of
1934, as amended.[^88] Licenses for new MDS facilities are now awarded
to auction winners in Basic Trading Areas ("BTAs") and BTA-like
areas.[^89] The MDS auctions resulted in 67 successful bidders obtaining
licensing opportunities for 493 BTAs. Of the 67 auction winners, 61 met
the definition of a small business. There are approximately 2,000
MDS/MMDS/LMDS stations currently licensed. We conclude that there are
1,595 MDS/MMDS/LMDS providers that are small businesses as deemed by the
SBA and the Commission's auction rules.

*LMDS*: The auction of the 1,030 LMDS licenses began on February 18,
1998, and closed on March 25, 1998. The Commission defined "small
entity" for LMDS licenses as an entity that has average gross revenues
of less than \$40 million in the three previous calendar years.[^90] An
additional classification for "very small business" was added and is
defined as an entity that, together with its affiliates, has average
gross revenues of not more than \$15 million for the preceding three
calendar years.[^91] These regulations defining "small entity" in the
context of LMDS auctions have been approved by the SBA.[^92] There were
93 winning bidders that qualified as small entities in the LMDS
auctions. A total of 93 small and very small business bidders won
approximately 277 A Block licenses and 387 B Block licenses. On March
27, 1999, the Commission reauctioned 161 licenses; there were 40 winning
bidders. Based on this information, we conclude that the number of small
LMDS licenses will include the 93 winning bidders in the first auction
and the 40 winning bidders in the reauction, for a total of 133 small
entity LMDS providers as defined by the SBA and the Commission's auction
rules.

*DBS:* Because DBS provides subscription services, it falls within the
SBA-recognized definition of "Cable and Other Pay Television
Services."[^93] This definition provides that a small entity is one with
\$11.0 million or less in annual receipts.[^94] Currently, there are
four DBS providers, though there are only two DBS companies in operation
at this time. We neither request nor collect annual revenue information
for DBS services, and are unable to determine the number of DBS
operators that would be considered a small business under the SBA
definition.

An alternative way to classify small entities is by the number of
employees. Based on available data, we estimate that in 1997 the total
number of full-service broadcast stations with four or fewer employees
was 5186, of which 340 were television stations.[^95] Similarly, we
estimate that in 1997, 1900 cable employment units employed fewer than
six full-time employees. Also, in 1997, 296 MVPD employment units
employed fewer than six full-time employees. We also estimate that in
1997, the total number of full-service broadcast stations with five to
ten employees was 2145, of which 200 were television stations.
Similarly, we estimate that in 1997, 322 cable employment units employed
six to ten full-time employees. Also, in 1997, 65 MVPD employment units
employed six to ten full-time employees.

**E. Steps Taken to Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered:**

The RFA requires an agency to describe any significant alternatives that
it has considered in reaching its proposed approach, which may include
the following four alternatives (among others): (1) the establishment of
differing compliance or reporting requirements or timetables that take
into account the resources available to small entities; (2) the
clarification, consolidation, or simplification of compliance or
reporting requirements under the rule for small entities; (3) the use of
performance, rather than design, standards; and (4) an exemption from
coverage of the rule, or any part thereof, for small entities.[^96]

One of the alternatives that this *Second NPRM* proposes is that
broadcasters with station employment units of five to ten full-time
employees be provided some relief from EEO program requirements, and
that station employment units of fewer than five full-time employees be
exempt altogether, with the exception that all broadcasters be subject
to the nondiscrimination requirement and report any employment
discrimination complaints filed against them. In addition, cable
employment units, including MVPD employment units, employing six to ten
full-time employees would be provided some relief from the proposed EEO
program requirements, and cable employment units with fewer than six
full-time employees would not be required to demonstrate compliance with
the proposed EEO program requirements. We consider this alternative
because entities with small staffs have limited personnel and financial
resources to carry out EEO requirements. Furthermore, these proposed
rules streamline and clarify recordkeeping requirements, thereby
benefiting all entities, including those with fewer employees. It is our
belief that the proposed alternative balances the importance of
deterring discrimination and achieving broad outreach in broadcast and
cable employment practices against the need to maintain minimal
regulatory burdens and the ease and clarity of administration.

**F.** **Federal Rules that Overlap, Duplicate, or Conflict with the
Proposed Rules**:

The proposed rules do not overlap, duplicate or conflict with any other
rules.

**SEPARATE STATEMENT OF**

# **CHAIRMAN MICHAEL K. POWELL** {#chairman-michael-k.-powell .unnumbered}

Re: Review of the Commission's Broadcast and Cable Equal Employment
Opportunity Rules and Policies (MM Docket No. 98-204).

I am proud that we have adopted this Notice of Proposed Rulemaking
(NPRM), which looks for ways to revise the equal opportunity rules to be
consistent with the holding of the D.C. Circuit in *Association*[^97].
It is imperative that the Commission forge ahead to establish effective,
legally sustainable rules. Today we have taken an important step towards
achieving that goal.

The public benefits of individuals in our society having equal
employment opportunities, based on merit rather than discriminatory
factors, are so numerous they are impossible to list. I believe few
would disagree with this proposition. Thus, it is only right and proper
for this agency to expect its licensees to afford equal opportunities
for everyone. Indeed, I believe it is our obligation to attempt to widen
the circle of those Americans that benefit from the fruits spawned by
those licenses. If the public interest benefit means anything at all it
cannot possibly tolerate the use of a government license to discriminate
against the citizens from whom the license ultimately is derived. Thus,
we will remain vigilant in our pursuit of establishing rules. While this
has been a challenging endeavor, it is nonetheless a noble one well
worth undertaking. I am confident that we are now heading in the right
direction.

In the NPRM we adopt today, we introduce a broad outreach program that
is squarely race and gender neutral and, thus, not constitutionally
suspect. The proposed EEO rules focus on increasing the possibility that
more minorities and women get the opportunity to compete fairly for
employment. No one is entitled to rewards they did not earn. No one is
entitled to jobs for which they are not qualified. But, *everyone* is
entitled to an equal opportunity to vie for those rewards and compete
for those jobs. The proposed outreach program provides for the simple
opportunity to compete for employment vacancies. All Americans,
regardless of stripe, benefit when our workforce captures the rich
talent of our great nation.

SEPARATE STATEMENT

OF COMMISSIONER MICHAEL J. COPPS

In the Matter of the Commission's Broadcast and Cable

*Equal Employment Opportunity Rules and Policies*

In my six months on this Commission I have often stated my strong desire
to see the Commission quickly put in place effective EEO rules in the
wake of the D.C. Circuit decision striking down our EEO rules for the
second time. I have just as often encouraged broadcasters and cable
entities to continue their efforts to reach out into the community to
seek new and diverse talent as they build their workforce, and to keep
the Commission apprised of their efforts in this regard.

I have been encouraged by the responses of some broadcasters and cable
companies that have continued their outreach efforts in the absence of
EEO rules. I hope they will pursue these endeavors as the Commission
considers new EEO rules. Their actions have translated into positive
results in building a workforce with more resemblance to our nation's
diversity.

I have also been encouraged by my Chairman's commitment to institute a
proceeding to put new rules in place by the end of the year -- a
commitment he fulfills with the adoption of this item today.

For those reasons, I support the Second Notice of Proposed Rulemaking we
adopt today. The NPRM makes clear -- if there was any confusion -- that
the Commission's rules prohibiting discrimination will remain in effect.
In addition, I hope that this NPRM will form the basis of an extensive
record that will result in strong EEO rules that I will be able to
support with enthusiasm and with pride.

While I support the NPRM before us today, I do not feel that it reflects
the deep and passionate commitment to a diverse workplace that America
must have if it is to fulfill its potential. Our country's strength
***is*** its diversity. Diversity is not a problem to be accommodated;
it is an opportunity to be developed. We will succeed in the Twenty
first century not in spite of our diversity, but because of our
diversity.

Diversity should be America's song, and the FCC, standing at the
forefront of the great transforming forces of our generation, should be
leading the choir. But this notice does not sound the trumpet and, as it
was written of old, if the sound of the trumpet be uncertain, then who
shall respond to the call of the battle? I know my fellow Commissioners,
and I believe each of us is dedicated to the advancement of equal
opportunity, here at the Commission and across the industries with which
we work. But I am afraid that the reversals by the D.C. Circuit have
imparted too much caution about even approaching the borders of
circumscription established by the Court.

I understand full well that the decisions of the D.C. Circuit have
limited the scope of any EEO rules the Commission may adopt, and I am
saddened by any retreat in the area of equal employment opportunity and,
indeed, in civil rights generally. But when civil rights are at stake,
the stakes are high. Our responsibility is to press the cause, to push
the edge of the envelope and not to be deflected by a court decision
that is, in fact, being vigorously contested at this very moment.

We can do better. We can push the envelope farther than this and still
be within the safe harbor of legal and judicial boundaries. The
Constitution has brought us a long ways in civil rights and equal
opportunity in the past half century, and I just don't believe it's out
of gas yet.

Here is our challenge. Let us take this proceeding as a port of
embarkation and set sail to develop a record of breadth and depth that
is in consonance with the breadth and depth of this great land. I ask
all of our stakeholders to help us. Lend us your experience, your
insight, your creativity to help us craft rules that are first of all
effective and transforming, but that will also pass the muster of the
courts. A tall order? Yes -- but America was built on filling tall
orders. So I believe it can be done. This is the time, this is the
place, to do it.

As we move to rules in this proceeding, let us search out uncharted
paths to achieve equal employment opportunity. Let us reach out to all
of our stakeholders \-- I trust the court will let us do ***that*** --
and put America's genius to work in the cause of equal opportunity. And
let's do so with a sense of urgency. We have been without rules here for
far too long. We need to have this Commission on record with forthright
equal employment opportunity rules \-- and the sooner the better.

In furtherance of that cause, I hope that the Commission will give this
issue the extra attention it deserves by convening an *en banc* hearing
to address our broadcast and cable EEO rules. Such a hearing would
create a forum for discussion among broadcasters, cable system
operators, advocates, legal scholars and, most importantly of all,
concerned citizens from every corner of the country. And it would make
an eloquent statement about the importance the Commission attaches to
the job at hand. This discussion, in addition to the comments we receive
in response to this NPRM, would form a record on which we can base
strong, effective and legally sustainable equal employment opportunity
rules.

For my part, I look forward in the next few months to intensive
engagement on a subject that goes to the core of our national being and
upon which hinges our ability to open the doors of opportunity for our
fellow citizens. This is something, my friends, that we need to do and
do right.

**SEPARATE STATEMENT OF**

COMMISSIONER KEVIN J. MARTIN

Re: Review of the Commission\'s Broadcast and Cable Equal Employment
Opportunity Rules and Policies (MM Docket Nos. 98-204).

I support initiating this proceeding to craft equal employment
opportunity rules that will withstand constitutional scrutiny. I believe
an effective outreach program will benefit our society tremendously.
Enhanced recruitment increases the probability that individuals from all
backgrounds will learn about industry openings. Likewise, by expanding
their recruitment sources, broadcasters and cable entities, including
multi-channel video programming distributors, are more likely to find
the best-qualified candidate. And when broadcasters and cable entities
have a more talented workforce, we all reap the benefits.

I am, however, cognizant of the Commission's history in this area. Twice
the courts have struck down this agency's EEO rules as unconstitutional
and we must make sure that we give proper heed to the courts'
instructions. In that regard, I would have been more cautious about
reaching some of the tentative conclusions contained in the Notice we
release today. I appreciate my colleagues' willingness to request
comment on several issues, particularly whether we should permit
entities to submit some information in their annual employment reports
anonymously, in light of our commitment to look at this data only to
"analyze industry trends."

I look forward to working with my colleagues and the public to design
effective, constitutional rules promoting equal employment opportunity
for all.

[^1]: "A multichannel video programming distributor is an entity such
    as, but not limited to, a cable operator, a multipoint distribution
    service, a multichannel multipoint distribution service \["MMDS"\],
    a direct broadcast satellite service \["DBS"\], a television
    receive-only satellite program distributor, or a video dialtone
    program service provider\..." 47 C.F.R. § 76.71(a). The term "cable"
    in this *Second NPRM* includes multichannel video programming
    distributors that control the programming that they distribute. 47
    U.S.C. § 554(h)(1); 47 C.F.R. § 76.71(a).

[^2]: Cable entities and trade associations did not seek judicial review
    of the cable EEO rules.

[^3]: *See Nondiscrimination in Employment Practices*, 18 FCC 2d 240
    (1969).

[^4]: *See Cable Communications Policy Act of 1984*, Pub. L. No. 98-549,
    98 Stat. 2779 (1984).

[^5]: *See Cable Television Consumer Protection and Competition Act of
    1992*, Pub. L. No. 102-385, 106 Stat. 1460, 1498 (1992).

[^6]: 141 F.3d 344 (D.C. Cir. 1998), *pet. for reh'g denied*, 154 F.3d
    487, *pet. for reh'g en banc denied*, 154 F.3d 494 (D.C. 1998)
    ("*Lutheran Church*").

[^7]: 13 FCC Rcd 23004 (1998).

[^8]: *Report and Order*, para. 3, 15 FCC Rcd at 2331.

[^9]: *Report and Order*, para. 85, 15 FCC Rcd at 2368.

[^10]: *Id.*

[^11]: *Report and Order*, para. 95-98, 15 FCC Rcd at 2371-72.

[^12]: *Report and Order*, para. 99-103, 15 FCC Rcd at 2372-74.

[^13]: *Report and Order*, para. 102, 15 FCC Rcd at 2373.

[^14]: *Report and Order*, para. 111-13. 116-18, 15 FCC Rcd at 2376-78.

[^15]: *Report and Order*, para. 104, 15 FCC Rcd at 2374.

[^16]: *Id.*

[^17]: *Report and Order*, para. 120, 15 FCC Rcd at 2378.

[^18]: *Id.*

[^19]: As a result of the Court's decision, the Commission suspended the
    effectiveness of portions of its broadcast and cable EEO rules
    concerning EEO outreach program requirements and the annual
    employment reporting requirement until further order of the
    Commission. *Suspension of the Broadcast and Cable Equal Employment
    Outreach Program Requirements*, 16 FCC Rcd 2872 (2001). The rules
    prohibiting discrimination in broadcast and cable employment were
    not suspended.

[^20]: *Report and Order,* para. 3, 15 FCC Rcd at 2331.

[^21]: The rules proposed in this *Second NPRM* are based on the same
    statutory authority set forth in the *Report and Order*. *See Report
    and Order*, para. 17-62, 15 FCC Rcd at 2335-58.

[^22]: A broadcast employment unit is a station or a group of commonly
    owned stations in the same market that share at least one employee.

[^23]: 47 U.S.C. § 554.

[^24]: *See* Section 73.2080(a). Pursuant to the *Report and Order*,
    religious television broadcasters may also, as a matter of policy,
    apply a religious condition to their employees. This is not
    specified in the Rule because of restrictions on the revision of the
    Commission's regulation of television EEO practices resulting from
    Section 334 of the Communications Act. *See Report and Order*, para.
    149, 15 FCC Rcd at 2389.

[^25]: *See supra* note Error: Reference source not found.

[^26]: *Report and Order*, para. 67,69, 15 FCC Rcd at 2359-61.

[^27]: *Report and Order*, para. 69, 15 FCC Rcd at 2360-61.

[^28]: *Report and Order*, para. 149, 15 FCC Rcd at 2389.

[^29]: *Report and Order*, para. 88, 15 FCC Rcd at 2369.

[^30]: *Report and Order*, para. 109, 15 FCC Rcd at 2375.

[^31]: *Report and Order*, para. 110, 15 FCC Rcd at 2375-76.

[^32]: *Recon*, para. 67, 15 FCC Rcd at 22567.

[^33]: *Report and Order*, para. 89, 15 FCC Rcd at 2369; *Recon*, para.
    61-63, 15 FCC Rcd at 22565-66.

[^34]: *Report and Order,* para. 86-87, 15 FCC Rcd at 2368-69.

[^35]: ^41^ *Report and Order*, para. 99, 15 FCC Rcd at 2372.

[^36]: *Recon*, para. 54-60, 15 FCC Rcd at 22564-65.

[^37]: *Report and Order*, para. 118, 15 FCC Rcd at 2378.

[^38]: *Report and Order*, para. 139, 15 FCC Rcd at 2386.

[^39]: *Recon*, para. 33, 15 FCC Rcd at 22558.

[^40]: *Report and Order*, para. 202-209, 15 FCC Rcd at 2407-2411.

[^41]: *See* Section 634(d)(3) of the Communications Act, 47 U.S.C. §
    554(d)(3).

[^42]: *Report and Order*, para. 126, 15 FCC Rcd at 2380-81

[^43]: *Recon*, para. 82, 15 FCC Rcd at 22571.

[^44]: *Report and Order*, para. 164, 15 FCC Rcd at 2394-95; *Recon*,
    para.35-37, 15 FCC Rcd at 22558-59.

[^45]: *Report and Order*, paras. 63-64, 15 FCC Rcd at 2358

[^46]: *Report and Order*, para. 3, 15 FCC Rcd at 2331.

[^47]: *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. § 601 *et. seq*.,
    has been amended by the Contract With America Advancement Act of
    1996, Pub. L. No. 104-121, 110 Stat. 847 (1996). Title II of the
    CWAAA is the Small Business Regulatory Enforcement Fairness Act of
    1996.

[^48]: ^?^ *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. § 601 *et.
    seq*., has been amended by the Contract With America Advancement Act
    of 1996, Pub. L. No. 104-121, 110 Stat. 847 (1996) ("CWAAA"). Title
    II of the CWAAA is the Small Business Regulatory Enforcement
    Fairness Act of 1996 ("SBREFA").

[^49]: ^?^ *See* 5 U.S.C. § 603.

[^50]: ^?^ *See* *id.*

[^51]: ^?^ 5 U.S.C. § 603(b)(3).

[^52]: ^?^ 5 U.S.C. § 601(6).

[^53]: ^?^ 5 U.S.C. § 601(3).

[^54]: ^?^ 13 C.F.R. § 121.104(d)(1).

[^55]: ^?^ 13 C.F.R. § 121.103(a)(1).

[^56]: ^?^ 13 C.F.R. § 121.103(a)(2).

[^57]: ^?^ 13 C.F.R. § 121.201, North American Industry Classification
    System (NAICS) code 513120.

[^58]: ^?^ Economics and Statistics Administration, Bureau of Census,
    U.S. Department of Commerce, 1992 Census of Transportation,
    Communications and Utilities, Establishment and Firm Size, Series
    UC92-S-1, Appendix A-9 (1995).

[^59]: ^?^ *Id.; see* Executive Office of the President, Office of
    Management and Budget, *Standard Industrial Classification Manual*
    (1987), at 283, which describes "Television Broadcasting Stations"
    (SIC code 4833, now NAICS code 51312) as: "Establishments primarily
    engaged in broadcasting visual programs by television to the public,
    except cable and other pay television services. Included in this
    industry are commercial, religious, educational and other television
    stations. Also included here are establishments primarily engaged in
    television broadcasting and which produce taped television program
    materials."

[^60]: ^?^ 1992 Census, Series UC92-S-1, at Appendix A-9.

[^61]: ^?^ *Id*.; formerly SIC code 7812 (Motion Picture and Video Tape
    Production) (NAICS code 512110); formerly SIC code 7922 (Theatrical
    Producers and Miscellaneous Theatrical Services) (producers of live
    radio and television programs) (NAICS codes 512110, 512191, 512290).

[^62]: ^?^ FCC News Release No. 31327, Jan. 13, 1993; Economics and
    Statistics Administration, Bureau of Census, U.S. Department of
    Commerce, Appendix A-9.

[^63]: ^?^ FCC News Release, Broadcast Station Totals as of September
    30, 2001 (released October 30, 2001).

[^64]: ^?^ Census for Communications\' establishments are performed
    every five years ending with a \"2\" or \"7\". *See* Economics and
    Statistics Administration, Bureau of Census, U.S. Department of
    Commerce, note 53, III.

[^65]: ^?^ The amount of \$10 million was used to estimate the number of
    small business establishments because the relevant Census categories
    stopped at \$9,999,999 and began at \$10,000,000. No category for
    \$10.5 million existed. Thus, the number is as accurate as it is
    possible to calculate with the available information.

[^66]: ^?^ We use the 77 percent figure of TV stations operating at less
    than \$10 million for 1992 and apply it to the 2001 total of 1,686
    TV stations to arrive at stations categorized as small businesses.

[^67]: ^?^ *Minority Commercial Broadcast Ownership in the United
    States*, U.S. Dep\'t. of Commerce, National Telecommunications and
    Information Administration, The Minority Telecommunications
    Development Program (\"MTDP\") (August 1998). MTDP considers
    minority ownership as ownership of more than 50% of a broadcast
    corporation\'s stock, voting control in a broadcast partnership, or
    ownership of a broadcasting property as an individual proprietor.
    *Id*. The minority groups included in this report are Black,
    Hispanic, Asian, and Native American.

[^68]: ^?^ *See* Comments of American Women in Radio and Television,
    Inc. in MM Docket No. 94-149 and MM Docket No. 91-140, at 4 n.4
    (filed May 17, 1995), *citing* 1987 Economic Censuses, *Women-Owned
    Business*, WB87-1, U.S. Dep\'t of Commerce, Bureau of the Census,
    August 1990 (based on 1987 Census). After the 1987 Census report,
    the Census Bureau did not provide data by particular communications
    services (four-digit Standard Industrial Classification (SIC) Code),
    but rather by the general two-digit SIC Code for communications
    (#48). Consequently, since 1987, the U.S. Census Bureau has not
    updated data on ownership of broadcast facilities by women, nor does
    the FCC collect such data. However, the Commission recently amended
    its Annual Ownership Report Form 323 to require information on the
    gender and race of broadcast license owners in future filings. *See*
    *1998 Biennial Regulatory Review \-- Streamlining of Mass Media
    Applications, Rules and Processes, Report and Order*, MM Docket No.
    98-43, 13 FCC Rcd 23,056 (1998).

[^69]: ^?^ 13 C.F.R. § 121.201, NAICS codes 513111 and 513112.

[^70]: ^?^ Economics and Statistics Administration, Bureau of Census,
    U.S. Department of Commerce, Appendix A-9.

[^71]: ^?^ *Id.*

[^72]: ^?^ *Id*.

[^73]: ^?^ *Id*.

[^74]: ^?^ The Census Bureau counts multiple radio stations located at
    the same facility as one establishment. Therefore, each co‑located
    AM/FM combination counts as one establishment.

[^75]: ^?^ FCC News Release No. 31327, Jan. 13, 1993.

[^76]: ^?^ FCC News Release, Broadcast Station Totals as of September
    30, 2001 (released October 30, 2001).

[^77]: ^?^ 13 C.F.R. § 121.201 (NAICS codes 513210 and 513220).

[^78]: ^?^ 1992 Economic Census Industry and Enterprise Receipts Size
    Report, Table 2D, SIC 4841 (U.S. Bureau of the Census data under
    contract to the Office of Advocacy of the U.S. Small Business
    Administration).

[^79]: ^?^ 47 C.F.R. § 67.901(3). The Commission developed this
    definition based on its determination that a small cable system
    operator is one with annual revenues of \$100 million or less.
    *Implementation of Sections of the 1992 Cable Act: Rate Regulation,
    Sixth Report and Order and Eleventh Order on Reconsideration*, 10
    FCC Rcd 6393 (1995).

[^80]: ^?^ Paul Kagan Associates, Inc., Cable TV Investor, Feb. 29, 1996
    (based on figures for Dec. 30, 1995).

[^81]: ^?^ 47 U.S.C. § 543(m)(2).

[^82]: ^?^ FCC Announces New Subscriber Count for the Definition of
    Small Cable Operator, Public Notice DA 01-158 (January 24, 2001).

[^83]: ^?^ 47 C.F.R. § 76.1403(b) (SIC 4833).

[^84]: ^?^ Paul Kagan Associates, Inc., Cable TV Investor, Feb. 29, 1996
    (based on figures for Dec. 30, 1995).

[^85]: ^?^ For purposes of this item, MDS includes the single channel
    Multipoint Distribution Service (MDA) and the Multichannel
    Multipoint Distibution Service (MMDS).

[^86]: ^?^ 47 C.F.R. § 1.2110(a)(1).

[^87]: ^?^ *See Amendment of Parts 21 and 74 of the Commission\'s Rules
    With Regard to Filing Procedures in the Multipoint Distribution
    Service and in the Instructional Television Fixed Service and
    Implementation of Section 309(j) of the Communications Act -
    Competitive Bidding,* MM Docket No. 94-131 and PP Docket No. 93-253,
    Report and Order, 10 FCC Rcd 9589 (1995).

[^88]: ^?^ 47 U.S.C. § 309(j). (Hundreds of stations were licensed to
    incumbent MDS licensees prior to implementation of Section 309(j) of
    the Communications Act of 1934, 47 U.S.C. § 309(j). For these
    pre-auction licenses, the applicable standard is SBA's small
    business size standard for "other telecommunications" (annual
    receipts of \$11 million or less). *See* 13 C.F.R. § 121.201.

[^89]: ^?^ *Id*. A BTA is the geographic area by which the MDS is
    licensed. *See* Rand McNally, *1992 Commercial Atlas and Marketing
    Guide*, 123rd Edition, pp. 36-39.

[^90]: ^?^ *See Local Multipoint Distribution Service, Second Report and
    Order*, 12 FCC Rcd 12545 (1997).

[^91]: ^?^ *Id*.

[^92]: ^?^ *See* Letter to Daniel Phythyon, Chief, Wireless
    Telecommunications Bureau, FCC, from A. Alvarez, Administrator, SBA
    (January 6, 1998).

[^93]: ^?^ 13 C.F.R. § 121.201, NAICS codes 513210 and 513220.

[^94]: ^?^ *Id*.

[^95]: ^?^ We base these estimates on a compilation performed by the
    Equal Employment Opportunity Staff, Mass Media Bureau, FCC.

[^96]: ^?^ 5 U.S.C. § 603(c).

[^97]: MD/DC/DE Broadcasters Association v FCC, 236 F.3d 13, reh'g den.
    253 F. 3d 732 (D.C. Cir. 2001) pet for cert. Filed, MMTC v MD/DC/DE
    Broadcasters Association. No. 01-639 (October 17, 2001).