Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-03-01439/USCOURTS-caDC-03-01439-0/pdf.json

Parties Involved:
Federal Communications Commission
Appellee
Carol De La Hunt
Intervenor
Minnesota Christian Broadcasters, Inc.
Appellant

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 22, 2004 Decided June 14, 2005

No. 03-1439

MINNESOTA CHRISTIAN BROADCASTERS, INC.,

APPELLANT

v.

FEDERAL COMMUNICATIONS COMMISSION,

APPELLEE

CAROL DE LA HUNT,

INTERVENOR

Appeal of an Order of the

Federal Communications Commission

Matthew H. McCormick argued the cause for appellant.

With him on the briefs was Dennis F. Begley.

Pamela L. Smith, Counsel, Federal Communications

Commission, argued the cause for appellee. With her on the

brief were John A. Rogovin, General Counsel, and Daniel M.

Armstrong, Associate General Counsel.

Before: EDWARDS, SENTELLE, and GARLAND, Circuit

Judges.

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1

In this case, the appellant submitted its application on June 1,

1995. Although the Communications Act requires the Commission to

use competitive bidding to select among mutually exclusive

applications filed after July 1, 1997, it also authorizes the Commission

to do so for mutually exclusive applications filed prior to that date.

See 47 U.S.C. § 309(j)(1), 309(l)(1). The Commission chose to

exercise that authority, thus triggering the auction in which the

appellant took part. See Implementation of Section 309(j) of the

Communications Act -- Competitive Bidding for Commercial

Broadcast and Instructional Television Fixed Service Licenses, 13

F.C.C.R. 15,920, ¶¶ 34-59 (Aug. 18, 1998). 

Opinion for the court filed by Circuit Judge GARLAND.

GARLAND, Circuit Judge: The winner of a Federal

Communications Commission auction for a construction permit

for a new FM radio station appeals from the Commission’s

refusal to award it a bidding credit available to new entrants into

broadcasting. We affirm the refusal because the Commission’s

determination that the appellant is not a new entrant rests upon

a reasonable interpretation of its own regulations.

I

The Federal Communications Commission (FCC) grants

licenses and construction permits for broadcast radio stations.

When the Commission receives license or permit applications

that are mutually exclusive (such as applications for the same

frequency in the same area), the Communications Act requires

it to choose among them by using a competitive bidding process.

See 47 U.S.C. § 309(j)(1).1 Congress instructed the Commission

to design its bidding rules with an eye toward “avoiding

excessive concentration of licenses and . . . disseminating

licenses among a wide variety of applicants,” id. § 309(j)(3), and

the Commission responded by granting bidding credits to “new

entrants” -- those “holding no or few mass media licenses,”

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2Hunt also argued that MCBI’s application should be denied on

the ground that MCBI was not financially qualified. Mem. Op. &

Order, Application of Minnesota Christian Broadcasters, Inc., 18

F.C.C.R. 614, 614 (Jan. 17, 2003). The FCC rejected that argument,

and this court upheld the Commission’s decision in De La Hunt v.

FCC, 88 Fed. Appx. 418 (D.C. Cir. 2004) (unpublished opinion).

Implementation of Section 309(j) of the Communications Act --

Competitive Bidding for Commercial Broadcast and

Instructional Television Fixed Service Licenses, 13 F.C.C.R.

15,920, ¶ 189 (Aug. 18, 1998).

Minnesota Christian Broadcasters, Inc. (MCBI) and two

other parties each submitted construction permit applications for

an FM station to operate on Channel 261A in Pequot Lakes,

Minnesota. In the ensuing auction, which ended in October

1999, MCBI submitted the high bid and was declared the

winner. MCBI’s bid also sought a new entrant bidding credit

(NEBC) -- notwithstanding that MCBI was already the owner of

three other FM broadcast stations, including one in Pequot

Lakes itself. MCBI believed it was eligible for the credit

because its other stations were noncommercial educational

stations (NCEs), and because it read the Commission’s rules as

excluding such stations for the purpose of determining whether

a bidder is a new entrant.

Carol De La Hunt, another bidder for the Pequot Lakes

construction permit (and an intervenor in this case), filed a

petition to deny MCBI’s post-auction application for the permit,

partly on the ground that MCBI’s noncommercial educational

stations rendered it ineligible for treatment as a new entrant.2

The FCC’s Mass Media Bureau denied De La Hunt’s petition.

On review, however, the Commission held that MCBI’s

ownership of noncommercial educational stations, particularly

the one in Pequot Lakes, made it ineligible for a new entrant

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3Accord Entergy Servs. v. FERC, 375 F.3d 1204, 1209 (D.C. Cir.

2004) (quoting Bowles v. Seminole Rock & Sand Co., 325 U.S. 410,

414 (1945)); Secretary of Labor, Mine Safety & Health Admin. v.

Excel Mining, LLC, 334 F.3d 1, 6 (D.C. Cir. 2003) (quoting Akzo

Nobel Salt, Inc. v. FMSHRC, 212 F.3d 1301, 1303 (D.C. Cir. 2000)

(quoting Thomas Jefferson University v. Shalala, 512 U.S. 504, 512

(1994))).

bidding credit. The FCC permitted MCBI to retain the

construction permit, but required it to pay the balance of its

gross winning bid without deduction for the credit. See Mem.

Op. & Order, Applicationof MinnesotaChristian Broadcasters,

Inc., 18 F.C.C.R. 614, 619 (Jan. 17, 2003). MCBI now appeals

to this court.

II

MCBI contends that we must overturn the FCC’s decision

because the Commission failed to follow its own rules regarding

the attribution of ownership interests in the context of the new

entrant bidding credit. Whether the FCC followed its rules

depends, of course, on what those rules mean. And as we have

said many times, “we defer to an agency’s reading of its own

regulation, unless that reading is ‘plainly erroneous or

inconsistent with the regulation.’” United States Air Tour Ass’n

v. FAA, 298 F.3d 997, 1005 (D.C. Cir. 2002) (quoting Auer v.

Robbins, 519 U.S. 452, 461 (1997)).3 Thus, the only question

for us is whether the FCC’s interpretation of its bidding credit

rules satisfies that test.

Section 73.5007(a) of the FCC’s rules sets forth the

eligibility standards for the new entrant bidding credit as

follows:

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A thirty-five (35) percent bidding credit will be given

to a winning bidder if it . . . [has] no attributable interest in

any other media of mass communications, as defined in §

73.5008. A twenty-five (25) percent bidding credit will be

given to a winning bidder if it . . . [has] an attributable

interest in no more than three mass media facilities. No

bidding credit will be given if any of the commonly owned

mass media facilities serve the same area as the proposed

. . . broadcast station . . . . Attributable interests held by a

winning bidder in existing low power television, television

translator or FM translator facilities will not be counted

among the bidder’s other mass media interests in

determining eligibility for a bidding credit.

47 C.F.R. § 73.5007(a) (emphasis added). As the italicized

phrase indicates, we must turn to § 73.5008 for the meaning of

both “media of mass communications” and “attributable

interest.” The first is straightforward: section 73.5008(b)

defines “medium of mass communications” as “a daily

newspaper; a cable television system; or a license or

construction permit for a television broadcast station, an AM or

FM broadcast station, a direct broadcast satellite transponder, or

a Multipoint Distribution Service station.” Id. § 73.5008(b).

There is no dispute that MCBI’s existing FM stations fall within

that definition. 

Determining the meaning of “attributable interest,”

however, requires another detour. Section 73.5008 does not

itself define the term, but instead provides that an “attributable

interest in a winning bidder or in a medium of mass

communications shall be determined in accordance with §

73.3555 and Note 2.” Id. § 73.5008(c) (emphasis omitted). The

text of the referenced section, § 73.3555, sets forth the

Commission’s “multiple ownership” rules, which, for example,

limit the number of radio and/or TV stations a party may own in

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4Under § 73.5007(a), MCBI would be ineligible for the 35%

credit because it would not be an applicant with “no attributable

interest in any other media of mass communications,” and would be

ineligible for the 25% credit (or any credit, for that matter) because

one of its “commonly owned mass media facilities serve[s] the same

area as the proposed” station, i.e., Pequot Lakes. 47 C.F.R. §

73.5007(a). Indeed, that was the rationale upon which the FCC denied

MCBI’s request for the credit. Mem. Op. & Order, 18 F.C.C.R. at

619.

the same market. See, e.g., id. § 73.3555(a), (c). The multiple

ownership rules, themselves, are not relevant to this case. Note

2 to § 73.3555, however, articulates the criteria by which

“ownership and other interests in [media entities] will be

attributed to their holders” for purposes of the multiple

ownership rules. Id. § 73.3555 note 2. For example, note 2

states that, in general, the owner of 5% or more of the voting

stock of a broadcast station has an attributable interest in that

station. See id. § 73.3555 note 2(a). There is no dispute that if

note 2’s attribution rules apply to MCBI’s stations for purposes

of bidding credit eligibility, those stations -- in which MCBI has

a 100% interest -- would be attributed to it, thereby rendering

MCBI ineligible for the credit.4

MCBI’s contention that its interests in noncommercial

educational stations should not be attributed to it rests upon

subsection (f) of the main text of § 73.3555. That provision (in

its 1999 version) reads: “This section is not applicable to

noncommmercial educational FM and noncommercial

educational TV stations.” 47 C.F.R. § 73.3555(f) (1999). In

MCBI’s view, this means that the whole of § 73.3555 --

including the attribution rules of note 2 -- is inapplicable to

noncommercial educational stations, even for the purpose of

determining bidding credit eligibility.

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The FCC has a different view. According to the

Commission, the role of subsection (f) is only to make clear that

the “various ownership limits” contained in the text of §

73.3555, “such as the local radio ownership rule or the radiotelevision ownership rule, do not apply to NCE stations.” Mem.

Op. & Order, 18 F.C.C.R. at 617. That is, “Section 73.3555

does not limit the number of NCE stations an entity may own.”

Appellee’s Br. at 13 (emphasis added). But subsection (f) is not

intended, the Commission maintains, to suggest that the

attribution rules of note 2 are inapplicable to noncommercial

educational stations for the purpose of determining bidding

credit eligibility. See Mem. Op. & Order, 18 F.C.C.R. at 617.

To the contrary, “all interests held in full-service NCE stations

. . . constitute attributable interests within the meaning of

Section 73.5008(c) for purposes of determining eligibility under

Section 73.5007(a) for a new entrant bidding credit.” Id. at 618.

Although the language of § 73.3555(f) does not compel the

FCC’s reading, neither is the language inconsistent with that

reading. Moreover, as the Commission points out, the rule that

establishes eligibility for the new entrant bidding credit -- §

73.5007(a) -- refers to “attributable interest[s] in any other

media of mass communications, as defined in § 73.5008.” 47

C.F.R. § 73.5007(a) (emphasis added). Indeed, the rule contains

only one express exception: it “excludes only ‘[a]ttributable

interests held by a winning bidder in existing low power

television, television translator or FM translator facilities.’”

Mem. Op. & Order, 18 F.C.C.R. at 617 (quoting 47 C.F.R. §

73.5007(a)). Similarly, the rule to which § 73.5007(a) points for

the definition of “medium of mass communications,” § 73.5008,

“includes an AM or FM station without any indication that

noncommercial educational stations are excluded.” Id.

The FCC also reasonably argues that its reading better

effectuates the policy behind the new entrant bidding credit. Its

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5The section now reads: “The ownership limits of this section are

not applicable to noncommercial educational FM and noncommercial

educational TV stations. However, the attribution standards set forth

in the Notes to this section will be used to determine attribution for

noncommercial educational FM and TV applicants, such as in

evaluating mutually exclusive applications . . . .” 47 C.F.R. §

73.3555(e).

interpretation, the FCC urges, “will promote the NEBC goal of

fostering entry into broadcasting” by truly new entrants. Id. As

the FCC notes, “[a] number of NCE licensees own dozens of

full-power primary service stations,” and “[i]t makes little sense

to treat such licensees as ‘new entrants.’” Id. Moreover,

because “certain licensees can convert a station via routine

application from commercial to NCE status . . . , drawing

distinctions between stations based on their NCE or commercial

status would undermine Congress’s intent to ‘disseminat[e]

licenses among a wide variety of applicants.’” Id. at 617-18

(quoting 47 U.S.C. § 309(j)(3)(B)).

Finally, we note that, subsequent to the 1999 auction held

in this case, the Commission amended § 73.3555(f) in ways that

both parties agree make clear that interests in noncommercial

educational stations are attributable for determining new entrant

bidding credit eligibility.5 MCBI contends the amendments

“illustrate[] that the plain language of that subsection as it

stood” at the time MCBI bid for the station “meant that NCE

interests were not considered attributable interests.” Appellant’s

Br. at 14 n.13 (emphasis omitted). The FCC, by contrast,

contends that the amendments clarify what the Commission had

always intended. See Mem. Op. & Order, 18 F.C.C.R. at 617.

Because as an interpretive aid the amendments can support

either position, we regard them as having only one point of real

relevance here: they render it likely that this court’s opinion --

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based, as it is, on the 1999 version of subsection (f) -- will have

little significance beyond this case.

III

In sum, “[b]ecause the FCC’s interpretation of its own

regulations is reasonable, we defer to it.” Cassell v. FCC, 154

F.3d 478, 484 (D.C. Cir. 1998). Moreover, “because under that

interpretation the decision below does not depart from those

regulations, we find no inconsistency in the Commission’s

actions.” Id. The Commission’s decision that MCBI is

ineligible for a new entrant bidding credit is therefore

Affirmed.

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