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 Federal  Communications  Commission  FCC  02-  192 
 1 
 Before  the  Federal  Communications  Commission 
 Washington,  D.  C.  20554 


 In  the  Matter  of 
 Reexamination  of  the  Comparative  Standards  for  Noncommercial  Educational  Applicants 
 )  ) 
 )  ) 
 )  MM  Docket  No.  95-  31 


 MEMORANDUM  OPINION  AND  SECOND  ORDER  ON  RECONSIDERATION 
 Adopted:  June  27,  2002  Released:  July  5,  2002 
 By  the  Commission: 
 I.  INTRODUCTION 
 1.  The  Commission  by  this  decision  disposes  of  five  petitions  for  further  reconsideration  of  the  standards  for  selecting  among  applications  to  construct  noncommercial  educational  (  NCE) 


 broadcast  stations  on  channels  reserved  exclusively  for  NCE  purposes.  1  These  standards  enable  the  Commission  to  select  a  permittee  when  an  NCE  broadcast  application  is  mutually  exclusive,  i.  e.  in 
 technical  conflict,  with  another  timely  filed  NCE  broadcast  application. 
 2.  The  petitions  for  further  reconsideration  suggest  relatively  small  alterations  to,  or  exemptions  from,  the  current  reserved  channel  NCE  selection  standards.  Specifically  petitioners  question: 


 (1)  the  method  for  counting  existing  NCE-  FM  radio  stations  for  determining  whether  a  community  is  underserved;  (2)  the  operative  dates  and  policies  for  determining  whether  an  applicant  is  considered 
 established  for  purposes  of  receiving  points  as  an  established  local  applicant;  and  (3)  whether  we  adequately  clarified  the  scope  of  Section  73.3555(  f)  of  our  rules  concerning  attribution  of  an  applicants 
 other  broadcast  interests.  2  Overall,  however,  petitioners  accept  the  elements  of  our  NCE  comparative  process.  For  the  reasons  stated  herein,  we  conclude  that  reconsideration  is  unwarranted  and  decline  to 
 alter  the  NCE  comparative  standards. 


 1  The  standards  were  adopted  in  April  2000  and  clarified  in  February  2001.  15  FCC  Rcd  7386  (2000) 
 (  NCE  R&  O);  16  FCC  Rcd  5074  (2001)  (  NCE  MO&  O). 
 2  Jimmy  Swaggart  Ministries  (  Swaggart)  and  Real  Life  Educational  Foundation  (  Real  Life)  also 
 question  the  applicability  of  the  new  comparative  procedures  to  terminated  hearing  proceedings.  Swaggart  and  Real  Life  are  the  applicants  in  the  only  such  terminated  hearing.  On  June  14,  2002  Swaggart  and  Real  Life  filed  a 


 settlement  agreement  that,  if  approved,  would  make  that  issue  moot.  Accordingly,  the  Commission  is  not  addressing  the  issue  at  this  time. 
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 II.  DISCUSSION 
 A.  Fair  Distribution  of  Service  (Full  Service  FM  Only) 
 3.  Petitioner  Michiana  Christian  Broadcasting  (  Michiana)  suggests  that  we  modify  our  fair  distribution  analysis,  which  is  performed  as  a  threshold  matter  when  competing  full  service  NCE-  FM 


 applicants  propose  service  to  different  communities.  Pursuant  to  Section  307(  b)  of  the  Communications  Act,  3  our  analysis  favors  the  applicant  proposing  to  serve  a  significant  population  that  currently  receives 
 no  more  than  one  NCE  signal.  4  In  the  NCE  MO&  O  we  clarified  that  the  only  NCE  signals  relevant  for  this  analysis  are  those  operating  on  channels  reserved  exclusively  for  NCE-  FM  use  because  it  is  relatively 
 easy  for  NCE  stations  operating  in  the  nonreserved  band  to  convert  to  commercial  operations.  5  Michiana  objects  to  our  focus  on  reserved  channel  signals  and  suggests  instead  that  we  supplement  this  standard 
 with  a  rebuttable  presumption  that  would  recognize  long-  lived  non-  reserved  channel  NCE  stations.  Under  Michianas  proposal,  an  interested  party  could  rebut  an  opposing  applicants  claim  of  introducing 
 service  to  an  underserved  area  by  showing  that  a  non-  reserved  channel  station  has  provided  ongoing  NCE  service  to  the  community  for  at  least  four  years.  Michiana  believes  that  a  non-  reserved  channel  station 
 that  had  operated  noncommercially  for  four  years  has  demonstrated  a  firm  commitment  to  maintain  its  noncommercial  operations. 


 4.  Spring  Arbor  College  (  Spring  Arbor)  opposes  Michianas  suggestion.  Spring  Arbor  maintains  that  an  inference  of  continued  NCE  operations  by  a  non-  reserved  channel  station  would  be 
 entirely  unreliable.  It  observes  that  stations  on  non-  reserved  channels  are  valuable  resources  that  can  also  be  operated  commercially  or  sold  to  commercial  operators.  Such  options,  it  argues,  become  particularly 
 attractive  when  a  licensee  experiences  a  financial  crisis,  which  can  occur  unexpectedly  and  at  any  time.  Spring  Arbor  also  maintains  that  our  policy  of  considering  only  reserved  channel  service  makes  sense 
 because  most  NCE  stations  operate  in  the  reserved  band,  and  the  public  is  accustomed  to  tuning  there  when  looking  for  NCE  service. 


 5.  We  decline  to  alter  the  types  of  stations  relevant  to  an  NCE  Section  307(  b)  analysis.  The  suggestion  under  consideration  could  result  in  a  finding  that  a  communitys  need  for  NCE  service  is  fully 
 satisfied  by  non-  reserved  channel  stations.  As  discussed  in  earlier  stages  of  this  proceeding,  however,  there  is  the  potential  for  rapid  change  in  the  nature  of  non-  reserved  channel  stations,  because  there  is  no 
 requirement  that  such  stations  currently  operating  noncommercially  continue  such  operations  indefinitely.  6  Stations  operating  with  noncommercial  formats  on  commercially  available  channels  do  so 


 3  47  U.  S.  C.    307(  b). 
 4  Specifically,  when  FM  applicants  propose  different  communities,  an  applicant  receives  a  decisive 
 Section  307(  b)  preference,  as  a  threshold  matter,  if  it  would  provide  the  first  or  second  full  service  NCE  aural  signal  to  10%  of  the  people  within  the  proposed  stations  60dBu  contour,  but  to  no  fewer  than  2,000  people.  If 


 more  than  one  applicant  meets  this  standard,  first  service  prevails  over  second  service.  Among  applicants  proposing  the  same  level  of  service,  the  one  that  would  provide  service  to  5,000  more  people  than  the  next  best 
 proposal  will  prevail.  The  Bureau  has  by  public  notice  provided  examples  of  how  the  fair  distribution  analysis  applies  to  specific  illustrative  situations.  Public  Notice,  Deadline  for  NCE  Settlements  and  Supplements 
 Extended/  Mass  Media  Bureau  provides  Examples  of  Application  of  NCE  Section  307(  b)  Criteria,  16  FCC  Rcd  10892  (2001).  The  NCE  Section  307(  b)  analysis  applies  only  to  full  service  FM  applicants. 


 5  NCE  MO&  O,  16  FCC  Rcd  at  5089. 
 6  NCE  R&  O,  15  FCC  Rcd  at  7431;  NCE  MO&  O,  16  FCC  Rcd  at  5089. 
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 at  the  discretion  of  the  licensee  and  can  easily  convert  to  commercial  operations  by  filing  a  minor  change  application.  In  contrast,  noncommercial  educational  operations  are  mandatory  on  the  channels  reserved 
 for  that  purpose.  7  Thus,  we  believe  the  better  approach  is  not  to  consider  current,  potentially  temporary,  noncommercial  service  to  a  community  on  a  non-  reserved  channel  as  part  of  our  analysis  of  whether  one 
 community  needs  permanent  NCE  service  more  than  another  community. 
 6.  We  recognize  that  the  Commission  has  adopted  in  this  proceeding  a  holding  period  requirement  of  four  years  for  stations  licensed  pursuant  to  the  point  system.  However,  that  requirement  is 


 not  comparable  to  the  one  suggested  by  Michiana.  The  forward-  looking  holding  period  requires  a  reserved  channel  licensee  that  was  selected  by  point  system  to  adhere  to  those  commitments  on  which  its 
 comparative  qualifications  were  established.  It  guarantees  that  selection  factors  will  be  maintained  at  least  four  years  into  the  future.  The  licensee  also  must  include  its  commitment  in  the  organizations 
 governing  documents.  Further,  the  Commission  retains  the  ability  to  disapprove  any  assignment  or  modification  application,  and  to  sanction  stations  for  violating  the  holding  period  requirements.  8  In 
 contrast,  Michiana  would  use  a  backwards-  looking  four-  year  test  to  predict  continued  NCE  operations  by  a  station  that  has  made  no  commitment  of  continued  noncommercial  operation  to  the  Commission,  and 
 which  can  be  converted  to  commercial  status  by  routine  application.  Accordingly,  we  affirm  our  decision  to  count  only  reserved  channel  stations  in  our  NCE  Section  307(  b)  analysis,  and  will  exclude  non-reserved 
 channel  NCE  stations  from  that  analysis  regardless  of  the  amount  of  time  they  may  have  operated. 


 B.  Established  Local  Applicant  Points  for  Pending  Applicants  in  Closed  Groups 
 7.  In  NCE  television  proceedings,  in  FM  translator  proceedings,  and  in  full  service  FM  proceedings  that  are  not  resolved  on  a  threshold  Section  307(  b)  fair  distribution  analysis,  a  point  system  is 


 used  to  comparatively  evaluate  conflicting  proposals.  The  point  system  assigns  a  numerical  value  to  various  aspects  of  each  proposal  and  selects  the  applicant  with  the  highest  score.  9  Three  points  (out  of  a 
 total  of  seven)  are  available  to  established  local  applicants.  Several  petitioners  ask  us  to  reconsider  or  clarify  the  class  of  organizations  that  can  qualify  for  this  credit. 


 8.  Applicants  qualify  for  the  established  local  applicant  credit  if  they  are  both  local  10  and  established  within  the  meaning  of  our  rules.  11  The  petitioners  focus  on  the  requirement  that  applicants 
 7  Id. 
 8  See  47  C.  F.  R.    73.7003(  b)  and  73.7005. 
 9  Points  are  awarded  as  follows:  (a)  3  points  for  applicants  that  have  been  local  to  the  community  for  at 
 least  two  years;  (b)  2  points  for  local  diversity  of  ownership,  i.  e.  if  there  is  no  overlap  of  the  principal  community  contour  of  the  proposed  station  and  any  other  station  attributable  to  the  applicant;  (c)  2  points  for  certain  state-wide 


 networks  providing  programming  to  accredited  schools;  and  (d)  1  to  2  points  for  the  best  technical  proposal  in  terms  of  both  area  and  population  served.  47  C.  F.  R.    73.7003. 


 10  To  be  considered  local,  an  applicant  must  have  a  headquarters,  campus,  or  75  percent  of  its 
 governing  board  residing  within  25  miles  of  the  proposed  community  of  license.  Distances  are  measured  from  the  communitys  center  coordinates.  Only  primary  residences  qualify.  An  applicant  relying  on  a  local  board 


 residence  to  claim  points  as  an  established  local  applicant  must  demonstrate  that  its  governing  documents,  i.  e.  by-laws,  require  that  such  localism  be  maintained  for  at  least  four  years  of  station  operations.  See  NCE  R&  O,  15 
 FCC  Rcd  at  7410,  7419. 
 11  47  C.  F.  R.    73.7000. 
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 be  established  for  a  period  of  two  years  in  the  local  area  and  the  application  of  this  rule  to  pending  applications.  12  The  NCE  MO&  O  established  for  pending  applicants  in  closed  groups  13  a  single  uniform 
 date  of  June  4,  2001,  14  to  compute  their  non-  technical  qualifications.  15  It  also  clarified  that  NCE  organizations  in  existence  for  fewer  than  two  years  by  the  relevant  snap  shot  date  cannot  be  considered 
 established,  even  if  formed  by  long-  term  local  citizens.  16  In  sum,  under  current  policy,  NCE  organizations  involved  in  pending  closed  group  proceedings  are  considered  established  if  they  have  operated  as  local 
 entities  since  June  4,  1999,  i.  e.,  for  at  least  two  years  prior  to  June  4,  2001. 
 9.  Jimmy  Swaggart  Ministries  (  Swaggart)  17  and  Adventist  Radio  Network  (  Adventist)  maintain  that  we  should  alter  the  reference  date  from  which  pending  applicants  calculate  whether  they 


 have  been  established  for  two  years.  Specifically,  Swaggart  and  Adventist  advocate  replacing  the  current  June  4,  2001,  look  back  date  (applicable  to  pending  applicants  in  closed  groups)  with  the  date 
 on  which  each  particular  pending  applicant  filed  its  application.  Adventist  argues  that  using  the  date  of  filing  to  apply  this  point  criterion  is  the  best  way  to  treat  all  applicants  fairly.  Youngshine  Media,  Inc. 
 (  Youngshine)  also  argues  that  relatively  new  local  organizations  should  be  considered  established  if  formed  by  long  time  local  residents.  In  response,  Real  Life  Educational  Foundation  (  Real  Life) 
 supports  maintaining  the  established  local  applicant  credit  in  its  current  form. 
 10.  With  respect  to  use  of  the  June  4,  2001,  look  back  date  for  pending  closed  group  applications,  Swaggart  and  Adventist  note  that  this  policy  differs  from  the  date  of  filing  requirement  that 


 will  apply  to  future  applicants.  Adventist  argues  that  use  of  a  recent  date  is  arbitrary  and  produces 
 12  We  adopted  the  requirement  that  the  applicant  be  established  to  ensure  the  bona  fides  of  local 
 qualification  claims,  to  establish  the  applicants  educational  credentials  in  the  particular  locality,  and  to  foster  participation  by  truly  local  entities  in  noncommercial  educational  broadcasting.  NCE  R&  O,  15  FCC  Rcd  at  7410; 


 NCE  MO&  O,  16  FCC  Rcd  at  5093.  We  also  noted  that  an  organization  that  has  been  local  for  two  years  or  more  can  sooner  respond  to  the  needs  of  the  community. 


 13  We  have,  throughout  this  proceeding  used  the  term  closed  group  to  refer  to  groups  of  pending 
 applications  which  are  no  longer  subject  to  additional  competing  applications.  NCE  MO&  O,  16  FCC  Rcd  at  5084.  In  addition  to  these  closed  group  applications,  there  are  over  200  applications  that  are  not  closed  to  future 


 competition  because  they  were  not  cut-  off  prior  to  elimination  of  our  former  A/  B  cut-  off  procedures. 
 14  The  NCE  MO&  O  refers  to  a  uniform  supplement  date  and  directs  the  staff  to  issue  a  public  notice 
 announcing  a  date  certain.  NCE  MO&  O,  16  FCC  Rcd  at  5085.  The  staff,  by  public  notice,  announced  a  date  of  June  4,  2001.  Public  Notice,  Supplements  and  Settlements  to  Pending  Closed  Groups  of  NCE  Broadcast 


 Applications  Due  by  June  4,  2001,  16  FCC  Rcd  6893  (2001).  See  also,  Public  Notice,  Deadline  for  NCE  Settlements  and  Supplements  Extended  to  July  19,  2001/  Date  for  Calculating  Comparative  Qualifications 
 Remains  June  4,  2001,  16  FCC  Rcd  10892  (2001).  The  June  4,  2001date  will  not  be  used  to  calculate  localism  points  for  pending  applications  that  are  not  in  closed  groups.  NCE  MO&  O,  16  FCC  Rcd  at  5085,  5093.  The 
 Commission  previously  established  that  comparative  qualifications  for  these  applicants  will  be  based  on  the  date  of  the  next  NCE  filing  window,  when  competing  applications  may  be  filed.  NCE  MO&  O,  16  FCC  Rcd  at  5086. 


 15  This  differs  for  applicants  applying  in  future  filing  windows.  Such  applicants  will  count  back  two 
 years  from  the  date  of  application  to  determine  whether  an  applicant  is  established. 
 16  NCE  MO&  O,  16  FCC  Rcd  at  5085,  5093. 


 17  Subsequent  to  initiation  of  this  rulemaking  proceeding,  Jimmy  Swaggart  Ministries  merged  into 
 Family  Worship  Center  Church,  an  organization  with  identical  officers  and  directors.  For  ease  of  identification  of  its  position  throughout  this  proceeding,  we  will  continue  to  refer  to  Swaggart. 
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 inequitable  results.  Specifically,  Adventist  is  concerned  that  the  treatment  of  corporations  formed  by  local  citizens  for  the  sole  purpose  of  applying  for  a  license,  will  differ  depending  on  whether  the 
 corporation  was  formed  before  or  after  June  4,  1999.  It  argues  that  older  corporations,  which  might  exist  on  paper  only,  could  become  established  merely  by  waiting  a  lengthy  period  for  action  on  their 
 applications.  In  contrast,  corporate  applicants  formed  after  June  4,  1999,  would  not  qualify  as  established  due  simply  to  the  shorter  waiting  period.  Swaggart  is  concerned  that  use  of  a  June  4,  2001, 
 look  back  date  engenders  abuse  in  older  groups  of  applications.  It  is  concerned  that  sham  applicants,  that  did  not  become  local  until  well  after  their  application  filing  date  will  now  be  considered  equivalent  to 
 legitimate  long-  established  local  applicants.  Real  Life  contests  Swaggarts  view  that  sham  applicants  will  receive  localism  points  under  our  current  policy.  According  to  Real  Life,  only  applicants  that  have 
 maintained  a  local  presence  for  two  or  more  years  and  that  have  the  required  organizational  documents  mandating  that  they  maintain  local  attributes  into  the  future  will  receive  points. 


 11.  On  reconsideration  we  affirm  our  standards  for  computing  localism  points  for  this  class  of  pending  applications.  Significant  differences  between  pending  applicants  and  future  NCE  applicants 
 justify  different  approaches  for  these  two  classes  of  applications.  Pending  applicants  submitted  their  applications  under  lengthy  A/  B  cut-  off  filing  procedures,  whereas  future  applicants  will  all  file  at  about 
 the  same  time  in  brief  filing  windows.  Under  the  Swaggart  and  Adventist  proposals,  pending  applicants  in  the  same  proceeding  would  have  different  reference  dates  that  could  potentially  vary  by  months  or  even 
 years.  18  Our  decision  to  use  a  single  snap  shot  date  provides  a  level  competitive  field  for  such  applicants,  with  their  qualifications  all  compared  as  of  the  same  time.  Further,  as  many  of  the  pending 
 proceedings  involve  applications  filed  a  considerable  time  ago,  use  of  a  relatively  recent  snap  shot  date  would  more  accurately  reflect  the  current  characteristics  of  the  applicants. 


 12.  We  also  believe  that  the  petitioners  proposal  that  pending  applicants  use  the  filing  date  for  purposes  of  determining  localism  points  would  unnecessarily  complicate  the  comparative  process.  Many 
 applicants  are  competing  in  multiple  groups  and,  to  comply  with  our  new  rules,  were  required  to  submit  separate  point  supplements  in  many  different  proceedings.  Our  use  of  a  common  snap  shot  date  for  all 
 non-  technical  qualifications  has  facilitated  speedy  and  accurate  filings.  Adoption  of  petitioners  proposal  would  add  needless  complexity  and  potential  delay  to  the  process. 


 13.  We  do  not  take  lightly  petitioners  concerns  of  potential  abuse  of  the  established  local  applicant  credit.  Nevertheless,  we  do  not  find  a  significant  potential  for  pending  applicants  to  abuse  the 
 established  local  applicant  credit.  As  Real  Life  notes  in  its  opposition,  it  would  be  incorrect  to  presume  illegitimacy  for  all  pending  applicants  based  solely  on  their  first  becoming  established  some  time  after 
 their  original  date  of  filing.  In  fact,  the  two-  year  look  back  period  at  issue  here  was  designed,  in  part,  to  prevent  such  abuse.  19  Existing  applicants  would  have  had  no  motivation  to  feign  local  qualifications  on 
 June  4,  1999,  (two  years  prior  to  the  snap  shot  date)  because  the  localism  criteria  were  not  adopted  until  April  4,  2000,  almost  a  year  later.  Thus,  any  applicant  with  a  pending  application  trying  to  adopt  local 
 characteristics  in  response  to  our  new  point  criteria  would  fail  to  qualify  because  the  applicant  would  be 


 18  Pending  applications  were  filed  under  A/  B  cut  off  procedures  in  which  there  was  often  considerable 
 lag  time  between  the  filing  of  lead  A  applications  and  conflicting  B  applications.  E.  g.,  NCE  MO&  O,  Appendix  D,  Section  3,  Full  Service  FM  Closed  Groups,  Group  No.  89101E  (  A  applicant  filed  18  months  before 


 B  applicant). 
 19  E.  g.,  NCE  MO&  O,  16  FCC  Rcd  at  5093. 
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 considerably  short  of  the  two-  year  period  needed  to  be  considered  established.  20 
 14.  In  creating  a  recent  snap  shot  date  for  points  we  sought  to  recognize  legitimate  changes  to  applicants  occurring  between  the  date  of  filing  and  the  first  opportunity  to  claim  points.  21  For  example, 


 a  private  college  that  began  offering  classes  at  a  new  local  campus  only  one  year  before  application  (and  thus  not  established  at  that  time),  would  be  treated  as  an  established  local  applicant  if,  by  June  4,  2001, 
 it  had  operated  continuously  at  that  campus  for  two  or  more  years.  Similarly,  we  would  consider  as  established  a  non-  profit  organization  formed  shortly  prior  to  its  time  of  application,  but  which,  by  the 
 June  4,  2001,  snap  shot  date,  had  engaged  in  active  and  continuous  non-  broadcast  activities  in  the  community  for  two  or  more  years.  Thus,  a  new  church,  providing  weekly  worship  services  and  outreach 
 activities  to  the  community  over  two  years  while  its  broadcast  application  was  pending  would  satisfy  this  prong  of  the  localism  test. 


 15.  We  take  note,  however,  of  Adventists  concern  that  some  NCE  organizations  formed  solely  to  apply  for  an  NCE  permit,  and  engaged  in  virtually  no  activities  while  awaiting  our  decision,  might 
 consider  themselves  qualified  as  established  merely  because  the  organization  was  formed  before  June  4,  1999.  The  Commission  designed  the  established  local  applicant  credit,  however,  to  favor  local  applicants 
 that  have  been  operating  in  the  community  prior  to  receiving  a  broadcast  permit.  22  It  has  never  been  our  intent  to  award  the  established  local  applicant  credit  to  organizations  engaged  in  virtually  no  activities  in 
 the  community  of  interest.  In  the  NCE  R&  O,  for  example,  we  indicated  an  expectation  of  "contact  between  the  station's  policy  makers  and  the  area  to  be  served.  23  Similarly,  in  the  NCE  MO&  O,  we  stressed 
 that  an  established  local  applicants  interaction  with  the  community  would  be  continuing,  building  upon  its  past  experiences.  24  For  example,  we  indicated  that  an  organization  that  has  been  local  for  two  or  more 
 years  would  have  already  "become  such  a  part  of  the  community  as  to  have  the  knowledge  and  accountability  needed  to  hit  the  ground  running,  unlike  organizations  that  do  not  begin  operating 
 within  a  community  until  later.  25  A  shell  organizations  mere  paper  existence  for  two  or  more  years  establishes  no  operations,  contact,  or  continuing  interaction  with  the  community  from  which  the 
 organization  might  "hit  the  ground  running."  Paper  existence  serves  neither  to  establish  the  applicants  educational  credentials  in  a  particular  locality  nor  to  foster  participation  by  truly  local  entities  in 
 noncommercial  educational  broadcasting.  26  Further,  with  respect  to  future  applicants,  for  which  feigning  of  qualifications  will  be  a  concern,  an  interpretation  of  our  established  requirement  that  would  allow 
 mere  shell  organizations  to  qualify  would  clearly  be  contrary  to  our  stated  purpose  of  limiting  opportunity  for  such  potential  abuse.  27 


 20  Id.  at  5085. 
 21  Id.  at  5084-  85. 
 22  Id.  at  5091. 
 23  NCE  R&  O,  15  FCC  Rcd  at  7410. 
 24  See  NCE  MO&  O,  16  FCC  Rcd  at  5093. 
 25  Id.  at  5091. 
 26  Id.  at  5093. 
 27  Id. 
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 Federal  Communications  Commission  FCC  02-  192 
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 16.  We  believe  that  most  of  the  local  applicants  claiming  credit  as  established  will  have  had  more  than  a  shell  existence  for  the  two-  year  period  at  issue.  If,  however,  Adventist  correctly  predicts  that 
 some  applicants  may  have  misunderstood  this  factor,  our  existing  petition  to  deny  process  would  provide  a  meaningful  opportunity  to  show  that  a  purportedly  established  applicant  was  only  a  paper 
 organization.  In  the  event  that  a  petitioner  succeeds  in  raising  a  substantial  and  material  question  about  whether  the  applicant  correctly  claimed  to  be  established,  there  would  be  many  ways  for  the  applicant 
 to  demonstrate  that  it  indeed  was  an  established  force  operating  within  the  community  throughout  the  pertinent  two-  year  period.  These  could  include,  for  example,  the  applicants  showing  that  it  convened 
 meetings  with  the  community,  taught  classes  at  its  local  campus,  undertook  community  programs  and/  or  activities,  regularly  generated  income  or  incurred  expenses  from  community-  based  assets,  engaged  in 
 active  planning  of  its  program  service  for  the  community,  or  similar  ongoing  community-  based  operations  by  the  organization  within  the  two-  year  period. 


 17.  Finally,  we  consider  the  views  of  Youngshine,  which  believes  that  an  organization  with  a  75  percent  local  governing  board  composed  of  long-  time  active  residents  should  be  treated  as 
 established  for  purposes  of  awarding  localism  points.  Youngshine  argues  that  the  Commission  adopted  this  provision  to  prevent  future  abuses,  but  that  applications  filed  prior  to  announcement  of  the  new  NCE 
 comparative  standards  had  no  opportunity  to  feign  local  characteristics,  such  as  by  renting  local  citizens  to  make  its  application  appear  local.  Youngshine  maintains  that  pending  applicants  in  closed  groups 
 should  qualify  for  points  as  established  local  applicants  based  on  whether  board  members  had  been  local  for  two  years  at  the  time  of  filing.  It  argues  that  organizations  are  only  local  because  the  individuals 
 behind  them  are  local. 
 18.  Although  we  agree  with  Youngshine  that  organizations  formed  prior  to  announcement  of  our  point  system  had  no  opportunity  to  feign  localism,  as  would  be  the  case  with  organizations  formed 


 later,  we  decline  to  expand,  for  pending  applications,  the  established  component  of  the  local  organization  criterion.  As  specified  in  the  rules,  points  are  awarded  under  this  criterion  for  established 
 local  applicants.  28  This  preference  is  grounded  on  our  conclusion  that  an  applicant  entity  that  has  an  established  local  presence  and  a  track  record  of  serving  the  local  educational  needs  of  a  community  is 
 more  likely  to  be  able  to  serve  those  needs  immediately  than  an  applicant  with  no  such  track  record  or  no  such  local  ties.  29  The  long-  term  residence  of  board  members  is  not,  by  itself,  a  reliable  basis  on  which  to 
 award  a  preference  in  this  context.  While  having  a  board  with  75  percent  local  residents  is  likely  to  ensure  a  level  of  community  awareness  that  may  be  reflected  in  future  station  policies  and  programming, 
 we  cannot  say  that  the  mere  presence  of  local  residents  on  the  board  of  an  applicant  (which  may  be  a  new  organization  or  an  organization  that  has  no  previous  ties  to  the  community)  establishes  the  track  record  of 
 serving  the  communitys  educational  needs  on  which  this  preference  relies  as  a  predictor  of  future  performance.  Thus,  we  will  not  alter  the  qualifications  for  the  established  local  applicant  credit. 
 Applicants  will  continue  to  be  able  to  establish  that  they  are  local  by  demonstrating  that  75  percent  of  their  board  members  are  local  residents,  and  will  continue  to  have  to  show  that  they  were  a  nonprofit 
 educational  organization  established  in  the  community  for  two  years  in  order  to  obtain  a  preference  as  an  established  local  applicant.  30  Youngshines  request  is  therefore  denied. 


 28  47  C.  F.  R.    73.3001(  b)(  1). 
 29  NCE  MO&  O,  16  FCC  Rcd  at  5091  (  an  organization  that  has  already  been  local  for  two  years  or  more 
 .  .  .  can  thus  hit  the  ground  running  ). 
 30  See  NCE  R&  O,  15  FCC  Rcd  at  7409-  10,  affd  NCE  MO&  O,  16  FCC  Rcd  at  5091-  93. 
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 C.  Attribution  of  Station  Interests 
 19.  A  single  petitioner,  DeLaHunt  Broadcasting  (  DeLaHunt),  addresses  the  wording  of  Section  73.3555  of  our  rules,  which  was  modified  in  this  proceeding.  The  primary  purpose  of  that  rule 


 section  is  to  set  out  the  numerical  ownership  limits  for  commercial  stations.  As  there  are  no  such  ownership  limits  on  NCE  stations,  the  rule  at  one  time  entirely  excluded  NCE  stations  from  its 
 provisions.  31  In  the  NCE  R&  O,  the  Commission  recognized  that  the  footnotes  to  Section  73.3555,  which  establish  the  standards  for  determining  whether  broadcast  interests  are  considered  attributable,  are  now 
 of  importance  to  NCE  applicants.  In  particular,  NCE  applicants  now  need  standards  to  determine  whether  they  can  claim  local  diversity  points  and  tiebreaker  preferences,  both  of  which  favor  applicants  with  no 
 attributable  interests  in  other  stations.  Thus,  we  amended  Section  73.3555  to  clarify  for  NCE  applicants  that,  although  the  rules  ownership  provisions  remain  inapplicable,  they  should  use  the  rules  attribution 
 standards  for  the  purpose  of  calculating  diversity  points.  At  DeLaHunts  request  we  further  modified  the  rule  section  in  the  NCE  MO&  O,  phrasing  it  somewhat  more  broadly.  As  modified,  the  rule  section 
 currently  states: 
 .  .  .[  T]  he  attribution  standards  set  forth  in  the  Notes  to  this  section  will  be  used  to  determine  attribution  of  noncommercial  FM  and  TV  applicants,  such  as  in  evaluating  mutually  exclusive 


 applications  pursuant  to  [the  point  system  in]  Subpart  K.  32 
 By  modifying  the  rule  to  use  the  point  system  as  an  example  only,  we  extended  the  rules  attribution  standards  to  any  other  circumstances  in  which  attribution  principles  might  apply  to  NCE  organizations. 


 20.  On  further  reconsideration,  DeLaHunt  seeks  to  make  one  more  subtle  change  in  Section  73.3555.  It  asks  us  to  modify  the  languages  current  focus  on  NCE  applicants,  and  instead  to  phrase  the 
 rule  in  terms  of  NCE  ownership  interests.  DeLaHunt  believes  that  altering  the  rule  in  this  manner  is  needed  to  recognize  that  commercial  applicants  also  may  have  attributable  interests  in  NCE  stations.  For 
 example,  DeLaHunt  is  interested  in  clarifying  that  the  commercial  auction  rule,  47  C.  F.  R.    73.5007(  b),  prohibits  a  commercial  bidder  from  receiving  a  new  entrant  bidding  credit  if  it  has  an  attributable  interest 
 in  an  NCE  station.  DeLaHunt  also  believes  that  its  proposal  would  clarify  that  Subpart  G  of  the  Commissions  rules,  concerning  the  Low  Power  FM  (  LPFM)  Service,  does  not  permit  an  LPFM 
 applicant  to  have  any  other  NCE  or  commercial  broadcast  interests. 
 21.  We  do  not  believe  that  the  proposed  rule  change  is  necessary.  Our  intention  in  amending  Section  73.3555  was  to  clarify  that  henceforth,  whenever  attributable  interests  in  NCE  stations  are 


 relevant,  as  dictated  by  statute,  our  Rules,  or  Commission  precedent,  the  attribution  standards  in  Note  2  to  Section  73.3555  are  to  be  used,  even  though  NCE  stations  are  exempt  from  numerical  local  ownership 
 limits.  33  Thus  we  stated  that  whenever  attribution  issues  are  relevant  for  NCE  purposes,  the  standards  in    73.3555  will  apply.  34  In  other  words,  the  attribution  of  broadcast  interests,  when  relevant  to  a  particular 
 broadcast  application,  will  be  determined  pursuant  to  the  Notes  to  Section  73.3555,  regardless  of  whether  the  interest  to  be  attributed  is  commercial  or  noncommercial,  and  regardless  of  whether  the  applicant 


 31  47  C.  F.  R.    73.3555(  f)  (1999). 
 32  47  C.  F.  R.    73.3555  (emphasis  added). 
 33  NCE  R&  O,  15  FCC  Rcd  at  7418-  19. 
 34  NCE  MO&  O,  16  FCC  Rcd  at  5102,  Erratum,  DA  01-  1351,  (Mass  Media  Bureau  May  4,  2001,  as 
 corrected  June  12,  2001). 
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 holding  that  interest  is  applying  for  a  commercial  or  noncommercial  station.  With  respect  to  DeLaHunts  interest  in  clarifying  an  attribution  issue  that  arose  in  a  particular  commercial  auction  prior  to  our 
 amendment  of  Section  73.3555,  that  matter  goes  beyond  of  the  scope  of  this  proceeding.  We  note  that  DeLaHunt  has  raised  this  identical  issue  in  an  application  proceeding.  See  Letter  to  Ms.  Carol  DeLaHunt 
 and  Minnesota  Christian  Broadcasters,  Inc.,  Ref.  No.  1800B3-  TSN  (Audio  Services  Div.,  Mass  Media  Bureau,  rel.  Sept.  27,  2000),  application  for  review  filed  by  DeLaHunt  (Oct.  27,  2000).  We  will  address 
 that  issue  in  that  proceeding. 
 III.  PROCEDURAL  MATTERS  AND  ORDERING  CLAUSES 
 22.  This  Memorandum  Opinion  and  Second  Order  on  Reconsideration  promulgates  no  additional  final  rules,  and  we  received  no  petitions  for  reconsideration  of  the  Final  Regulatory  Flexibility 


 Certification.  Therefore,  no  additional  Regulatory  Flexibility  Analysis  is  required  by  the  Regulatory  Flexibility  Act,  5  U.  S.  C.    601  et  seq.  The  previous  final  certification  made  in  this  proceeding  remains 
 unchanged.  Specifically,  the  NCE  R&  O  anticipated  the  actions  taken  therein  to  reduce  the  overall  administrative  burden  of  the  Commissions  application  processes  on  applicants  and  the  Commission,  and 
 the  NCE  MO&  O  anticipated  that  a  clarification  therein  may  benefit  small  entities. 
 23.  Authority  for  issuance  of  this  Memorandum  Opinion  and  Second  Order  on  Reconsideration  is  contained  in  Sections  4(  i),  303(  r),  403,  and  405  of  the  Communications  Act  of  1934,  as  amended,  47 


 U.  S.  C.    154(  i),  303(  r),  403,  and  405. 
 24.  The  actions  taken  in  this  Memorandum  Opinion  and  Second  Order  on  Reconsideration  have  been  analyzed  with  respect  to  the  Paperwork  Reduction  Act  of  1995,  and  found  to  impose  no  new  or 


 modified  reporting  and  recordkeeping  requirements  or  burdens  on  the  public. 
 25.  Accordingly,  IT  IS  ORDERED  that  the  petitions  for  further  reconsideration  ARE  DENIED  pursuant  to  Sections  4(  i),  303(  r),  403,  and  405  of  the  Communications  Act  of  1934,  as  amended,  47 


 U.  S.  C.    154(  i),  303(  r),  403,  and  405,  and  Section  1.429(  i)  of  the  Commissions  rules,  47  C.  F.  R.    1.429(  i). 


 26.  For  additional  information  concerning  this  proceeding,  contact  Irene  Bleiweiss,  Media  Bureau,  Audio  Division,  (202)  418-  2700. 
 FEDERAL  COMMUNICATIONS  COMMISSION 


 Marlene  H.  Dortch  Secretary 
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 10 
 APPENDIX  A 
 List  of  Participants 


 De  La  Hunt  Broadcasting  Jimmy  Swaggart  Ministries 
 Michiana  Christian  Broadcasters,  Inc.  Real  Life  Educational  Foundation  of  Baton  Rouge,  Inc. 
 Spring  Arbor  College  Youngshine  Media,  Inc. 
10