[Federal Register Volume 62, Number 239 (Friday, December 12, 1997)]
[Proposed Rules]
[Pages 65392-65401]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32520]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 73 and 74

[MM Docket No. 97-234; GC Docket No. 92-52; GEN Docket No. 90-264, FCC 
97-397]


Competitive Bidding for Commercial Broadcast and Instructional 
Television Fixed Service Licenses; Comparative Broadcast Hearings

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: The Federal Communications Commission (FCC) seeks comment on 
proposed competitive bidding procedures that will apply to mutually 
exclusive applications for licenses to provide commercial AM radio, FM 
radio, analog television, low power television, and FM or TV translator 
service. The proposed auction procedures implement the Balanced Budget 
Act of 1997, which expanded the FCC's auction authority to require that 
it use auctions to award virtually all licenses. The FCC also proposes 
to use auctions to resolve certain pending commercial broadcast 
applications filed before July 1, 1997, which under the statute may be 
resolved by either auction or comparative hearings. Auctions allow the 
FCC to award licenses more efficiently than comparative hearings, and 
using auctions to decide the pre-July 1, 1997 applications for new 
commercial radio or television broadcast stations allows the FCC to end 
the stay in effect since 1994 on comparative broadcast initial 
licensing cases. But the FCC seeks comment on whether there are special 
equitable considerations that warrant using comparative hearings to 
decide some of the pre-July 1 applications. Comment is also sought on 
whether the FCC must or should use auctions to award licenses in the 
Instructional Television Fixed Service, and on how to resolve pending 
comparative renewal cases, which are beyond the FCC's auction 
authority.

DATES: Comments are due January 26, 1998; Reply Comments are due 
February 17, 1998. Written comments by the public on the proposed and/
or modified information collections are due January 26, 1998. Written 
comments must be submitted by the Office of Management and Budget (OMB) 
on the proposed and/or modified information collections on or before 
February 10, 1998.

ADDRESSES: Comments and reply comments should be sent to the Office of 
the Secretary, Federal Communications Commission, Room 222, 1919 M 
Street, N.W., Washington, D.C. 20554. Copies of these pleadings should 
also be sent to the Mass Media Bureau, Video Services Division (Room 
702) and Audio Services Division (Room 302), 1919 M St., N.W., 
Washington, D.C. 20554, and the Office of General Counsel, Room 610, 
1919 M St., N.W., Washington, D.C. 20554. 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 234, 1919 M Street, N.W., Washington, 
DC 20554, or via the Internet to <a href="/cdn-cgi/l/email-protection#bfd5ddd0d3dac6ffd9dcdc91d8d0c9"><span class="__cf_email__" data-cfemail="a8c2cac7c4cdd1e8cecbcb86cfc7de">[email protected]</span></a>, and to Timothy Fain, 
OMB Desk Officer, 10236 NEOB, 725--17th Street, N.W., Washington, DC 
20503 or via the Internet to <a href="/cdn-cgi/l/email-protection#3650575f5869694276575a1853594618515940"><span class="__cf_email__" data-cfemail="c2a4a3abac9d9db682a3aeeca7adb2eca5adb4">[email protected]</span></a>.

FOR FURTHER INFORMATION CONTACT: John Riffer and S. Lee Martin, Office 
of General Counsel, (202) 418-1720, Jerianne Timmerman, Video Services 
Division, Mass Media Bureau, (202) 418-1643, and Lisa Scanlan, Audio 
Services Division, Mass Media Bureau, (202) 418-2720. For additional 
information concerning the information collections contained in this 
Notice contact Judy Boley at 202-418-0214, or via the Internet at 
<a href="/cdn-cgi/l/email-protection#d6bcb4b9bab3af96b0b5b5f8b1b9a0"><span class="__cf_email__" data-cfemail="cda7afa2a1a8b48dabaeaee3aaa2bb">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking, in MM Docket No. 97-234, GC Docket No. 92-52, 
and GEN Docket No. 90-264, adopted November 25, 1997 and released 
November 26, 1997. The complete text of this Notice of Proposed 
Rulemaking is available for inspection and copying during normal 
business hours in the FCC Reference Center (Room 239), 1919 M St., 
N.W., Washington, D.C. 20554, and may also be purchased from the 
Commission's copy contractor, International Transcription Service, 
(202) 857-3800 (phone), (202) 857-3805 (facsimile), 1231 20th Street, 
N.W., Washington, D.C. 20036.

[[Page 65393]]

Paperwork Reduction Act

    This Notice contains either a proposed or modified information 
collection, subject to the Paperwork Reduction Act of 1995 (PRA), Pub. 
L. 104-13. It has been submitted to the Office of Management and Budget 
(OMB) for review under section 3507(d) of the PRA. OMB, the general 
public, and other federal agencies are invited to comment on the 
proposed or modified information collections contained in this 
proceeding. Public and agency comments are due at the same time as 
other comments on this Notice; OMB comments are due February 10, 1998. 
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.
    OMB Approval Number: New.
    Title: Notice of Proposed Rulemaking, Implementation of Section 
309(j) of the Communications Act of 1934 (Competitive Bidding for 
Commercial Broadcast and Instructional Television Fixed Service 
Licenses) (MM Docket No. 97-234).
    Form No.: FCC Form 175, FCC Form 301, FCC Form 346, FCC Form 349.
    Type of Review: New collection.
    Respondents: Business or other for-profit.
    Number of Respondents: 7,289.
    Estimated Time Per Response: Ranges from 45 minutes to 95 hours 
depending on the type of application filed.
    Total Annual Burden: 20,051 hours.
    Needs and Uses: The information contained on FCC Form 175, as well 
as any supplemental engineering information from FCC Forms 301, 346, or 
349 required for various non-Table services (including new AM 
stations), will be used to determine mutual exclusivity for purposes of 
using competitive bidding procedures to award commercial broadcast 
licenses. And, in the event the Commission adopts bidding preferences 
or other measures to foster participation by small businesses, rural 
telephone companies, businesses owned by minority group members or 
women, and non-group owners, the proposed annual certification of 
continuing eligibility for such special measures will be used to 
prevent unjust enrichment resulting from the use of competitive bidding 
to award licenses.

Synopsis of Notice of Proposed Rulemaking

Background

    1. The Commission has traditionally used comparative hearings to 
resolve mutually exclusive applications for new commercial full service 
broadcast stations. In 1992, the Commission initiated a rulemaking to 
reexamine the comparative criteria for resolving such applications, and 
two further notices of proposed rulemaking were adopted after the court 
in Bechtel v. FCC, 10 F.3d 875 (D.C. Cir. 1993) (Bechtel II), 
invalidated the central criterion used to decide such cases.
    2. As part of the Balanced Budget Act of 1997, Congress: (1) 
amended section 309(j) of the Communications Act (Act) to require that 
the Commission award virtually all spectrum licenses, including 
commercial broadcast licenses, by competitive bidding proceedings if 
mutually exclusive applications are accepted; (2) amended section 
309(i) of the Act to terminate Commission's authority to award 
commercial broadcast licenses by random selection after July 1, 1997; 
and (3) adopted new section 309(l) which authorizes (but does not 
require) the Commission to use auctions to resolve pending comparative 
licensing cases involving applications for new commercial radio or 
television stations filed before July 1, 1997.

Proposals to Resolve Comparative Initial Licensing Cases

    3. Citing the advantages of using auctions to award spectrum 
licenses in terms of expediting service to the public, the Commission 
tentatively found that using auctions to resolve the narrow group of 
pending cases in which auctions are not statutorily required would 
better serve the public interest than comparative hearings. It asked 
commenters advocating continued use of comparative hearings for these 
cases to explain how their proposed criteria would be implemented in an 
administratively workable and judicially sustainable manner and how the 
proposed criteria would predict good or better service or serve some 
independent public interest goal. The Commission also sought comment on 
whether, even if auctions are used to resolve mutual exclusivity among 
most pre-July 1, 1997 applications, equitable concerns warrant 
comparative hearings in the few cases that had progressed to either a 
decision by an Administrative Law Judge, the former Review Board or the 
Commission before the court in Bechtel II found that the integration 
criterion was unlawful. Commenters should describe the equitable 
considerations that they believe would support the use of comparative 
hearings and the specific criteria they believe should be used, and 
explain how these criteria would further the equitable interests they 
have identified.
    4. The Commission proposes to refund, upon request, hearing fees 
actually paid by applicants for applications that are ultimately 
decided by competitive bidding; and, as a matter of fairness, it 
proposes to refund, upon request, filing fees paid by applicants that 
do not participate in the auction.

Auction Procedures for Pending Applications Subject to Section 309(l)

    5. Section 309(l) provides that, if the Commission decides to use 
auctions to resolve competing applications for commercial radio or 
television stations filed before July 1, 1997, it shall treat such 
persons as the only eligible bidders qualified to participate in the 
auction. The Commission tentatively found that this provision applies 
only if two or more mutually exclusive applications were filed before 
July 1, 1997. Thus, auctions are mandated by section 309(j) if all 
pending applications were filed after June 30, 1997, or if only one of 
a group of mutually exclusive applications was filed before July 1, 
1997. Where two or more competing applications are filed before July 1, 
1997, however, the Commission tentatively interpreted the provision to 
prohibit the opening of an additional filing window for new mutually 
exclusive applications or including, as eligible bidders, applicants 
who filed mutually exclusive applications after June 30, 1997. 
Recognizing that this could lead to a harsh result, particularly if it 
requires the dismissal of timely filed applications, the Commission 
asked for comment on whether there is any other legally permissible 
interpretation of the statute.
    6. The Commission also concluded that only pre-July 1, 1997 
applicants could take advantage of the provision requiring waiver of 
certain regulations for settlements filed within 180 days after 
enactment of the statute (i.e., by February 1, 1998). It indicated that 
it was also inclined to waive certain settlement policies, such as the 
prohibition against third party settlements set forth in Rebecca Radio 
of Marco, 5 FCC Rcd 937 (1990).
    7. Following the expiration of the settlement period on February 1, 
1998 and once the auction rules are effective, the Commission 
tentatively proposed to

[[Page 65394]]

announce those competing pre-July 1 applications eligible for 
resolution by competitive bidding procedures under section 309(l). It 
tentatively proposed to terminate the hearing proceeding if there are 
unresolved basic qualifying issues against any applicant. It further 
proposed to allow pending applicants to participate in the auction 
despite any unresolved qualifying issues, and to do so by filing a 
short-form application. But it asked whether it would be more efficient 
to decide basic qualifying issues before the auction for the small 
number of hearing cases. Also, the Commission would accept amendments 
to the long-form applications after the auction and then only if filed 
by the winning bidders. It proposed to accept petitions raising new 
issues only after a Public Notice announced any amendments to the 
winning bidder's application. It tentatively proposed to afford the 
winning bidder 30 days to file any amendments to its long-form 
application and 15 days to respond to any new petitions raising new 
issues.
    8. After submission of the required down payment by the winning 
bidder in accordance with the general auction procedures and any 
special rules adopted for broadcast auctions in this proceeding, the 
ALJ or the Commission (in cases pending before the Commission) would 
resolve any unresolved issues in hearing cases, and if appropriate, 
grant the application and dismiss the long-form applications filed by 
the unsuccessful bidders. Where the hearing proceeding has terminated 
(because there are no outstanding hearing issues against any pending 
applicant), the Mass Media Bureau would rule on any new issues raised 
in petitions filed after termination of the hearing proceeding and 
either grant the application or designate it for hearing.
    9. In non-hearing cases, the Commission proposed that all questions 
as to a pending applicant's basic qualifications, including questions 
involving the acceptability and tenderability of the application, would 
be resolved after the auction and only with respect to the winning 
bidder. If pending applicants fail to file short-form applications, the 
Commission proposed to dismiss their previously filed long-form 
applications. It proposed to accept petitions to deny or amendments to 
the long-form application after the auction, and asked for comment on 
affording the winning bidder 30 days to file any amendment to its long-
form application. After the amendment period, it proposed to place the 
winning bidders' long-form applications on public notice, which would 
trigger the filing window for petitions to deny and to dismiss the 
previously filed long-form applications of the unsuccessful competing 
bidders following the grant of the winning bidder's construction 
permit. And, for these non-hearing comparative initial licensing 
proceedings it proposed to follow all other post-auction rules and 
procedures set forth in part 1 of the Commission's Rules and any 
service-specific rules adopted in this proceeding.

Auction Procedures for Other Pending Applications

    10. Based upon the broad language of section 309(j) requiring the 
use of competitive bidding procedures to award initial licenses 
whenever mutually exclusive applications are accepted, the Commission 
tentatively found that section 309(l) is limited to mutually exclusive 
applications for new commercial full service radio or television 
stations filed before July 1, 1997. Thus, it tentatively concluded that 
auctions were required under section 309(j) for pending mutually 
exclusive applications for various secondary commercial broadcast 
services, even if filed before July 1, 1997, and for mutually exclusive 
applications for full service commercial radio and television stations 
filed after June 30, 1997.
    11. Under this tentative interpretation, none of these pending 
applicants may take advantage of the provision requiring waiver of 
regulations for settlements filed before February 1, 1998. The 
Commission noted that these pending applicants could enter into 
settlements that comply with the statute and all applicable Commission 
rules, but it tentatively concluded that such agreements must predate 
the filing of any short-form applications because of the anti-collusion 
rules (which restrict communications among auction participants). The 
Commission asked for comment on whether it should further restrict 
settlement agreements, given that Congress, through the Balanced Budget 
Act, may have established auctions as the preferred method of awarding 
licenses where mutually exclusive applications are filed.
    12. The Commission tentatively concluded that it was not required 
to restrict the class of bidders qualified to participate in auctions 
involving these other pending commercial broadcast applicants that are 
not subject to section 309(l). It asked for comment on how it should 
exercise its discretion under the statute, i.e., whether it should open 
a new filing window for additional applications that could be mutually 
exclusive with pending applications or whether it should keep the 
window closed.
    13. The Commission proposed to conduct auctions in accordance with 
its general auction procedures and any service-specific procedures 
adopted in this proceeding. It proposed to announce by Public Notice 
the groups of pending mutually exclusive (long-form) broadcast 
applications eligible for resolution by competitive bidding, and the 
date by which those applicants must file short-form applications in 
order to participate in the auction. It proposed to dismiss the 
previously-filed, long-form application of any pending applicant who 
fails to file a short-form application. In the interest of efficiency, 
it tentatively proposed to conduct a single auction of all pending 
mutually exclusive broadcast applications that are not subject to the 
special provisions of new section 309(l) (and any application for any 
of these services filed in response to the Public Notice that is 
mutually exclusive with previously filed long-form applications). It 
asked for comment on this proposal, and on whether any changes are 
warranted in the proposed post-auction procedures for these applicants.

General Auction Procedures

    14. The Commission did not propose to modify its existing licensing 
procedures, under which it grants a construction permit and the 
permittee subsequently applies for a license after constructing the 
broadcast facility. It cautioned that a permittee, who obtains a 
construction permit through an auction, must still satisfy the 
requirements for a license. Prospective bidders for various secondary 
broadcast services (i.e., low power television stations, television 
translators, FM translators) were also warned that a licensee does not 
have increased rights vis-a-vis any full service broadcaster because it 
received its authorization through an auction.
    15. It asked for comments on whether to treat applications for 
modifications of existing broadcast facilities as ``initial'' 
applications that are subject to auction if mutually exclusive 
applications are filed, and on whether there are any legal, equitable 
or other considerations that would militate against using competitive 
bidding procedures for certain types of modification applications. 
Comment is also sought on whether to adopt any special procedures, such 
as bidding credits, for applicants proposing significant service to 
unserved or underserved areas, to accommodate section 307(b), 47 U.S.C. 
307(b), of the Communications Act.

[[Page 65395]]

    16. The Commission tentatively proposed to conduct broadcast 
auctions in conformity with the general competitive bidding rules set 
forth in part 1, subpart Q of the Commission's rules, subject to any 
changes that it ultimately makes in those rules in the ongoing part 1 
rulemaking (or this proceeding), and substantially consistent with the 
bidding procedures used in previous Commission auctions. It proposed 
that such general competitive bidding rules should govern all future 
auctions. Amendment of Part 1 of the Commission's Rules--Competitive 
Bidding Proceeding (Notice of Proposed Rulemaking), 62 FR 13570, 13570-
71, March 21, 1997, 12 FCC Rcd 5686, 5698 para. 18 (1997). Commenters 
should review the proposed rules changes, as well as the issues raised 
there, and propose alternatives to any rules or proposed rules they 
believe to be inappropriate in the context of broadcast auctions. 
Comment is specifically sought on the advisability in the broadcast 
context of applying the Commission's anti-collusion rule, which 
strictly limits communications between competing bidders once a short-
form application is filed, see 47 CFR 1.2105(c), and the bid 
withdrawal/default payment rules, which penalize the post-auction 
withdrawal of a high bid and the failure to submit a long form 
application or to pay a winning bid. See 47 CFR 1.2104(g); 1.2109.
    17. The Commission tentatively proposed to use the simultaneous 
multiple-round competitive bidding design for broadcast auctions 
successfully used in previous auctions. But it seeks comment on 
alternate bidding designs that might be appropriate in the broadcast 
context, such as (1) sequential multiple-round auctions, using either 
oral ascending, remote or on-site electronic bidding; and (2) 
sequential or simultaneous single round auctions, using either remote 
and/or on site electronic bidding, or sealed bids. See generally 47 CFR 
1.2103, as amended by Amendment of Part 1 of the Commission's Rules--
Competitive Bidding Proceeding (Order), 62 FR 13540, March 21, 1997, 12 
FCC Rcd 5686, 5691 para. 6 & nn.9-12 (1997). It also noted the 
possibility of using combinatorial bidding, which permits bidders to 
bid on combinations or groups of licenses in a single bid and to enter 
multiple alternative bids within a single bidding round. Comment is 
also sought on whether different bidding methodologies are warranted 
for auctions that, pursuant to section 309(l), must be restricted to 
pre-July 1 applications, than for auctions that may be open to all 
qualified bidders, and whether the type of auction should vary 
depending on the type of service involved, the number of licenses at 
stake, how many bidders are likely to participate, and the degree to 
which interdependence may be important to qualified bidders. The 
Commission does not propose on-site bidding, and it seeks comment on 
whether to require bidders to bid electronically via computer, on 
whether this would be a hardship for certain bidders, and on whether 
bidders should have the option of bidding by telephone.
    18. The Commission proposed that the Mass Media Bureau work in 
conjunction with the Wireless Telecommunications Bureau in setting the 
upfront payment, which will be announced by Public Notice before the 
time for filing short-form applications. It proposed to adhere to the 
part 1 rules on upfront payments, but sought comment on the appropriate 
amount, and method for determining the appropriate amount, of the 
upfront payment for bidders in broadcast auctions. It also proposed 
that the Mass Media Bureau work in conjunction with the Wireless 
Telecommunications Bureau to consider the use of reserve prices or 
minimum opening bids to be announced prior to the time for filing 
short-form applications for auctionable commercial broadcast services, 
unless it is determined, based on comments filed in this proceeding, 
that reserve prices or minimum opening bids would not serve the public 
interest. The Commission also sought comment on the appropriate 
methodology for establishing each of these mechanisms, and on 
alternative methods for estimating the value of the license, such as 
(1) using data on station transactions that are comparable in terms of 
station class and market characteristics, and (2) utilizing a financial 
model derived from data on the performance of operating stations (a) in 
the market that an applicant hopes to serve or (b) from a relevant 
comparable market.
    19. The Commission also seeks comment on how it should deal with 
any ``daisy chains'' presented in auctions of AM radio, LPTV, or 
television or FM translator applications. Daisy chains occur when an 
application is mutually exclusive (i.e., would cause interference) with 
a second application, which is mutually exclusive with a third 
application in the same or adjacent community, and so on, even though 
the first application may not be directly mutually exclusive with any 
application except the second. Depending on which applicant is the 
winning bidder among a mutually exclusive group, another application 
(in addition to the auction winner) may become grantable, or another 
smaller mutually exclusive group may still exist and need to be 
resolved. Comment is requested on the appropriate methods, such as 
combinatorial bidding, to resolve any daisy chains in the auction 
context.
    20. To promote the orderly filing of applications for different 
services and to facilitate the determination of mutually exclusive 
groups for auction purposes, the Commission tentatively proposes to 
establish a specific time period or auction window during which 
applicants for AM, FM, television, LPTV, and television or FM 
translators must file applications in order to participate in an 
upcoming auction. Comment is sought on this more uniform window filing 
approach, which would replace the current disparate filing procedures 
for applications in all of these services.
    21. Under the proposed auction procedures, prior to the auction 
applicants would file short-form applications (FCC Form 175), 
supplemented by any engineering data necessary to determine mutual 
exclusivity in non-table services, and only winning bidders would file 
long-form applications. To relieve prospective applicants of the time 
and expense associated with filing long-form applications (which would 
be reviewed only if an applicant were the high bidder), the Commission 
announced a temporary freeze, effective November 26, 1997, on the 
filing of all commercial broadcast and secondary broadcast applications 
pursuant to our existing procedures. Applications timely filed in 
response to an outstanding AM (or FM translator) cut-off list or an 
open FM window are exempt from the freeze. During the freeze, the 
Commission would continue to accept and process petitions for 
rulemaking requesting the allotment of new FM channels to the FM Table 
of Allotments, and applicants could apply for any such allotments 
during subsequently announced FM auction filing windows. Minor 
modification applications, and all applications for the reserved 
portion of the FM broadcasting band (Channels 200-220) are not subject 
to the freeze.
    22. The Commission tentatively proposes to announce the auction and 
the window for filing short-form applications in a Public Notice. It 
also proposes to announce the window at least 30 days in advance, and 
to keep it open for at least five business days. Comment is sought on 
this proposal and on whether to have a combined filing window or 
separate filing windows for each type of broadcast or secondary

[[Page 65396]]

broadcast service. Except for the FM service, where applicants may only 
file for vacant FM channels reflected in the Commission's Table of 
Allotments, the Commission does not propose to limit filing windows on 
a geographic basis. It proposes to open filing windows for applications 
for commercial broadcast and secondary broadcast services as often as 
its resources allow, and may include certain auctions of construction 
permits for commercial broadcast facilities in the Commission's 
proposed quarterly auctions process. See Amendment of Part 1 of the 
Commission's Rules--Competitive Bidding Proceeding (Order), 62 FR 
13540, March 21, 1997, 12 FCC Rcd 5686, 5691-92 para. 7 (1997). But it 
did not make a commitment to include auctionable broadcast licenses in 
every quarterly auction.
    23. Under the proposed window filing approach, applicants would 
file short-form applications (FCC Form 175), along with any engineering 
data necessary to determine mutual exclusivity in a particular service, 
only during an announced filing window. This procedure would apply to 
all applications for AM, FM, television, low power television, and FM 
or television translator stations, except for minor change 
applications. Thus, prospective applicants could no longer tender new 
FM applications on a ``first come/first serve'' basis, as they may do 
under current procedures. Minor modification applicants in these 
services would not be subject to the window filing requirement even if 
the Commission ultimately decides to use auctions to resolve mutually 
exclusivity among major change applications. But two or more FM, AM, 
television or LPTV minor modification applications can be mutually 
exclusive under current rules. The Commission seeks comment on how to 
resolve such applications.
    24. The Commission proposes that FM applicants would apply by 
submitting during the announced filing window an FCC Form 175 
application for any vacant allotment specified in the public notice 
announcing the opening of the window. Applications specifying the same 
vacant FM allotment(s) would be mutually exclusive, and no supplemental 
engineering data would be necessary to make this determination. 
Applicants for new AM stations, LPTV stations, and television and FM 
translators would file short-form applications specifying a frequency 
or channel upon which the applicant could operate in accordance with 
the Commission's existing interference standards for these services, 
see 47 CFR 73.37, 73.182 and 73.187 (AM interference rules); 47 CFR 
74.703, 74.705, 74.707 and 74.709 (LPTV and television translator 
interference rules); and 47 CFR 74.1203 and 74.1204 (FM translator 
interference rules). The Commission does not propose to change these 
interference standards. To determine which AM, LPTV, and television and 
FM translator applications are mutually exclusive for auction purposes, 
the Commission expects to require applicants for these services to 
file, in addition to their short-form applications, the engineering 
data contained in the pertinent FCC Form (i.e., FCC Form 301, FCC Form 
346 or FCC Form 349). And, if the Commission ultimately decides to 
auction mutually exclusive applications for major modifications of 
existing facilities, analog television licensees filing such 
applications would be required to file both an FCC Form 175 and the 
engineering data contained in an FCC Form 301.
    25. The Commission proposes to require that all FCC Form 175 
applications for broadcast auctions be filed electronically, and asks 
for comment on whether this would be burdensome for applicants for the 
secondary broadcast services. It also seeks comment on its proposal to 
require, as necessary to determine mutual exclusivity in non-table 
services, the filing of the engineering data contained in the FCC Form 
301, FCC Form 346 or FCC Form 349, at the same time that the short-form 
is filed.
    26. Pre-Auction Processing: The Commission seeks comment on whether 
to limit its pre-acceptance review of any engineering data submitted 
with the FCC Form 175 to only what is necessary to determine which 
applications are mutually exclusive with each other, or whether to 
engage in more extensive pre-auction processing, whereby it would 
return as unacceptable applications with technical problems that cannot 
be resolved by amendment. It noted that the first approach would save 
considerable Commission resources, but had a significant downside in 
that it may result in technically unacceptable applicants participating 
and perhaps prevailing in the auction. This, in turn, could require 
that the Commission reauction the license and afford new parties an 
opportunity to file applications. It noted that a more extensive pre-
auction review could slow the auction, but that the auction could 
proceed with the understanding that the rights of any winning bidders 
would be subject to the outcome of any petitions for reconsideration of 
the return of unacceptable applications.
    27. Once it determines mutual exclusivity among the short-form 
applications filed in response to a window, the Commission would 
identify by public notice(s) the applicants in each group of mutually 
exclusive applications who are eligible to bid on construction permits 
for the allotments or channels identified in their short-form 
applications. Such public notices would provide more detail on the 
time, place and method of competitive bidding to be used, as well as 
applicable bid submission and payment procedures, the deadline for 
submitting the upfront payments, the amounts of the upfront payments 
and any minimum opening bid or reserve price, all pursuant to the 
auction rules then in place. A Public Notice would also identify any 
applications submitted in response to an announced window not subject 
to auction (because such applications were not mutually exclusive with 
any other application in the same service), and the date by which such 
applicants must file their long-form applications (FCC Form 301, FCC 
Form 346 or FCC Form 349). The Commission tentatively proposes to 
afford such applicants 30 days to file their complete long-form 
applications, and seeks comment on that proposal.
    28. Post-Auction Procedures: The Commission proposes to follow as 
closely as possible its general post-auction procedures and payment 
requirements set forth in part 1 of the rules, and seeks comment on 
their applicability to auctions of mutually exclusive broadcast 
applications. Specifically, it would announce the high bidder by Public 
Notice and afford it 10 business days to make the required down payment 
and 30 days to file a complete FCC Form 301, FCC Form 346 or FCC Form 
349 long-form application for each construction permit for which it was 
the high bidder. Comment is sought on these proposals and on whether it 
should follow 47 CFR 1.1207, which requires that the down payment (plus 
the upfront payment) must be at least 20% of the winning bid. The 
Commission also seeks comment on whether it would be appropriate to 
establish a period, such as 5 days, for the filing of petitions to deny 
against the winning bidder's long-form application, as is permitted by 
section 3008 of the Balanced Budget Act of 1997. It also proposes to 
require full payment of the balance of the winning bid within 10 
business days of the Public Notice announcing the grant of the 
construction permit. It seeks comment on this proposal and on whether 
to modify any existing service-specific

[[Page 65397]]

rules relating to the processing and reviewing of FCC Form 301, FCC 
Form 346 and FCC Form 349 applications.
    29. To facilitate the auction process, the Commission proposes to 
relax certain rules limiting the number and the timing of filing of 
curative amendments to long-form applications, see 47 CFR 73.3522, 
73.3564, but it does not propose to change the definition of ``major 
amendment'' in the various services. See 47 CFR 73.3571 (AM radio), 47 
CFR 73.3572 (television, LPTV, television translators), 47 CFR 73.3573 
(FM radio), or propose that deficiencies in long-form applications 
would be curable by major amendment. Thus, it proposes that winning 
bidders must file major amendments to long-form applications within an 
announced filing window.
    30. To avoid new instances of mutually exclusivity, which may arise 
if a long-form FM application proposes a site other than one protected 
pursuant to the Table of Allotments, the Commission proposes that 
applicants not be allowed to file FM long-form applications in conflict 
with any previously filed commercial or non-commercial application. It 
proposes further that long-form FM applications would have ``cut-off'' 
protection as of the date they are filed with the Commission, and that 
commercial FM modification applications must protect any previously or 
simultaneously filed application in the reserved band, in order to 
eliminate the possibility of creating a cross-band mutually exclusive 
situation. In addition, the Commission seeks comment on how the auction 
process for FM translators would work in relation to the specific 
provisions of 47 CFR 74.1203(a) & (b) and 74.1232(h), and other rules 
providing for the cancellation of a construction permit under certain 
circumstances and affording FM broadcasters the right to object to 
proposed FM translators likely to interfere with the reception of a 
regularly received existing service, even if there is no prohibited 
contour overlap.
    31. The Commission requests comment on whether any existing 
requirements contained in the FCC Form 301, FCC Form 346 and FCC Form 
349 applications may be eliminated. It proposes to delete the 
``reasonable assurance'' of site certification from the FCC Forms 301, 
346 and 349, and to rely on strict enforcement of the existing 
construction requirements to ensure that winning bidders in future 
broadcast auctions construct their facilities in a timely manner, see 
47 CFR 73.3598 (establishing two-year construction period for 
television stations and 18-month construction period for AM, FM and 
LPTV stations, as well as television and FM translators).

Designated Entities

    32. Small Businesses/Rural Telephone Companies. To fulfill its 
statutory responsibilities under section 309(j)(4)(D), the Commission 
seeks comments on whether it should adopt bidding credits or other 
tools to ensure the participation of small businesses and rural 
telephone companies in the provision of these services, and on how we 
should define small business for any special provisions we may adopt. 
It specifically seeks comment on which of the small business size 
standards based on gross revenue ceilings of $3 million, $15 million, 
or $40 million used in other services is most applicable to auctions of 
commercial broadcast licenses, or whether an alternative size standard 
would be more appropriate.
    33. Minority Ownership. The Commission is concerned about the 
underepresentation of minorities as owners of broadcast stations and 
the implications for program diversity, and tentatively concludes that, 
to the extent that it complies with applicable constitutional 
standards, it should take steps to further the longstanding goal of 
increasing minority ownership of broadcast stations, as well as 
implementing the designated entity provisions of section 309(j)(4) of 
the Act. See Metro Broadcasting, Inc. v. FCC, 497 U.S. 547 (1990), 
finding that broadcast diversity is an important governmental objective 
and upholding our treatment of minority ownership in comparative 
proceedings under an intermediate scrutiny standard. It asks for 
comment on how to do this, consistent with the standards set forth in 
Adarand Constructors, Inc. v. Pena, 515 U.S. 200 (1995), a subsequent 
Supreme Court decision establishing that policies that take race into 
account are reviewed under a strict (as opposed to intermediate) 
scrutiny standard.
    34. In the event special provisions are adopted for businesses 
owned by minorities, the Commission must develop eligibility standards 
to ensure that the scope of its program is appropriate. It thus seeks 
comment on appropriate eligibility standards to further its goal 
specifically. The alternatives include (1) requiring that minorities 
have de facto and de jure control of the applicant, own more than 50 
percent of the equity on a fully diluted basis, and meet the 
eligibility standards set forth in 47 CFR 1.2110(b)(2); and (2) a 
standard similar to what was adopted but never implemented for the 
broadband PCS auctions (i.e., minorities must have the right to receive 
at least 50.1 percent of the annual distribution of any dividends paid 
on the voting stock and the right to receive dividends, profits and 
other distributions from the business in proportion to their equity 
interests). The Commission also seeks comment on whether, to determine 
eligibility, it should attribute fully (a) options or conversion rights 
held by non-minorities unless the decision to exercise the option or 
conversion rights is beyond the control of the ostensibly passive non-
minority owner; (b) the interests of any individual or entity that 
played a significant role as a promoter in forming the applicant; and 
(c) any non-voting stockholder unless the corporate documents 
unequivocally require insulation of the non-voting stockholder from 
participation in the licensee's affairs to the same extent that a 
limited partner must be insulated.
    35. Female Ownership: The Commission also asks for comments on 
whether special policies are warranted for female-owned applicants, and 
whether there is sufficient evidence to justify special provisions for 
women-owned businesses under applicable constitutional standards. See 
United States v. Virginia Military Institute, 116 S.Ct 2264, 2274-76 
(1996) requiring an ``exceedingly persuasive justification'' to support 
a state program that made distinctions based upon gender.
    36. Diversification of Ownership. Diversification of ownership is 
one of the two primary objectives of the Commission's current licensing 
system and remains a viable public interest consideration. Given the 
significant advantage that group owners are likely to have over 
newcomers in auctions, the Commission seeks comment on whether to adopt 
some measure in the competitive bidding process that is specifically 
designed to promote diversification of ownership.
    37. To the extent bidding credits are adopted for small businesses, 
minorities, women, non-group owners or others, the Commission asks for 
comment on what those credits should be and whether, and to what 
extent, any such bidding credits should be tiered, as it has done in 
other auction contexts.
    38. To fulfill its statutory obligation to prescribe rules to 
``prevent unjust enrichment as a result of the methods employed to 
issue licenses and permits,'' 47 U.S.C. 309(j)(4)(E), the Commission 
tentatively proposes to require that, for a period of five years 
following Program Test Authority, broadcast licensees granted a new 
license through any designated entity or

[[Page 65398]]

diversification bidding credits or other special provision must certify 
annually their continuing eligibility for such credit or provision, 
under the rules in effect at the time the license was awarded, and 
report within 30 days any change affecting such eligibility. It seeks 
comment on this proposal. Alternatively, the Commission seeks comment 
on granting a one-time bidding credit, requiring the licensee to hold 
the station for five years but allowing licensees to bid for additional 
licenses during the five-year period.
    39. And, as a condition for Commission approval for the transfer or 
assignment of the license to an entity ineligible for the bidding 
credit or other special provision obtained by the licensee, or for 
other ownership changes rendering the licensee ineligible for a 
previously awarded bidding credit or other provision during that five-
year period, the Commission tentatively proposes to require a monetary 
reimbursement to the Treasury for the previously awarded bidding 
credit. It seeks comment on how to calculate the unjust enrichment 
payment, on whether there are any mitigating circumstances that would 
justify excusing altogether or reducing the unjust enrichment payment, 
and on whether measures other than monetary penalties and reporting 
requirements are necessary.

Auction Authority for Instructional Television Fixed Service

    40. The Instructional Television Fixed Service (ITFS) is a point-
to-point microwave service whose licensees have certain characteristics 
in common with the noncommercial educational and public broadcast 
stations which are specifically exempted from our section 309(j) 
auction authority. There is, however, no express exemption for ITFS 
licenses from the requirement that the Commission must use competitive 
bidding procedures to award licenses if mutually exclusive applications 
are filed, and the Commission seeks comment on whether it must, and if 
not, whether it should, apply competitive bidding to mutually exclusive 
ITFS applications. If it concludes that it must, or should, auction 
mutually exclusive ITFS applications, the Commission tentatively 
proposes to apply the general auction rules adopted in this proceeding 
for broadcast applications to ITFS applications as well. Comment is 
sought on this proposal.

Proposals for Pending Broadcast Comparative Renewal Proceedings

    41. The Commission does not believe that auctions are a legally 
available option in pending comparative renewal proceedings, and it 
seeks comment on how to resolve pending comparative renewal cases. It 
tentatively proposes that, if it decides to use auctions to resolve the 
pending comparative initial licensing cases and if the few remaining 
comparative licensing cases do not settle, it will adopt the two-step 
renewal procedure previously developed for comparative cellular renewal 
proceedings. Commenters should address whether this approach, which 
would be analogous to the procedures for new renewal cases set forth in 
section 309(k), which eliminates comparative renewal proceedings for 
renewal applications filed after May 1995, is judicially sustainable. 
The Commission also asks for comment on whether, as an alternative to 
the two-step procedure, or in conjunction with the two-step hearing 
that reaches the second stage, it should consider any comparative 
factors raised by the applicants on a case-by-case basis.

Procedural Matters

    42. This is a permit-but-disclose notice and comment rulemaking. Ex 
parte presentations are permitted, except during the Sunshine Agenda 
period, provided they are disclosed, as specified in the Commission's 
rules.
    43. Authority for this rulemaking is contained in 47 U.S.C. 154(i), 
154(j), 303(r), 309(g), 309(i), 309(j), 309(l), 403.

Initial Regulatory Flexibility Analysis

    44. As required by the Regulatory Flexibility Act 
(RFA),<SUP>1</SUP> the Commission has prepared this Initial Regulatory 
Flexibility Analysis (IRFA) of the expected significant economic impact 
on small entities by the policies and procedures proposed in this 
Notice of Proposed Rulemaking. Written public comments are requested on 
the IRFA. Comments must be identified as responses to the IRFA and must 
be filed by the deadlines for comments on the Notice. The Secretary 
shall send a copy of the Notice, including the IRFA, to the Chief 
Counsel for Advocacy of the Small Business Administration. See 5 U.S.C. 
603(a). In addition, the Notice and IRFA (or summaries thereof) will be 
published in the Federal Register. See id.
---------------------------------------------------------------------------

    \1\ 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. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA 
is the Small Business Regulatory Enforcement Act of 1996 (SBREFA).
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I. Need for and Objectives of the Proposed Rules

    45. This rulemaking is initiated to implement the Balanced Budget 
Act of 1997, Pub. L. 105-33, 111 Stat. 251 (1997), which amended 
section 309(j) and adopted new section 309(l) of the Communications 
Act. Comments are sought on: (1) proposed auction procedures to award 
initial licenses in the broadcast services and secondary broadcast 
services; (2) whether the Commission should use auctions or comparative 
hearings to resolve pending comparative initial licensing proceedings 
involving competing applications for commercial radio and television 
stations filed before July 1, 1997, as authorized by new section 
309(l); (3) whether amended section 309(j) requires the use of auctions 
to award initial licenses for Instructional Television Fixed Services; 
and (4) how to resolve pending comparative renewal proceedings, which 
cannot be resolved by auction pursuant to amended section 309(j).

II. Legal Basis

    46. This Notice is authorized under the Balanced Budget Act of 
1997, Pub. L. 105-33, 111 Stat. 251, Title III, Section 3002, and 
Sections 4(i), 4(j), 303 (r), 309(g), 309(i), 309(j), 309(l), and 403 
of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 
154(j), 303(r), 309(g), 309(i), 309(j) 309(l), and 403.

III. Description and Estimate of the Number of Small Entities To 
Which the Proposed Rule Will Apply

    47. Under the RFA, small entities include small organizations, 
small businesses, and small governmental jurisdictions. 5 U.S.C. 
601(6). The RFA, 5 U.S.C. 601(3), 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.'' <SUP>2</SUP>
---------------------------------------------------------------------------

    \2\ We tentatively believe that the SBA's definition of ``small 
business'' greatly overstates the number of radio and television 
broadcast stations that are small businesses and is not particularly 
suitable for our purposes, and we specifically seek comment on how 
we should define small business for this purpose. However, for 
purposes of this Notice we are utilizing the SBA's definition in 
determining the number of small businesses to which any auction 
procedures or revised comparative criteria would apply. In this 
regard, we reserve the right to adopt a more suitable definition of 
``small business'' as applied to radio and television broadcast 
stations. See Fifth Report and Order in MM Docket No. 87-268 
(Advanced Television Systems and their Impact upon the Existing 
Television Broadcast Service), FCC 97-116 at 62 (April 27, 1997), 62 
FR 26996, May 16, 1997 ; Report and Order in MM Docket No. 93-48 
(Children's Educational and Informational Programming), 61 FR 43981, 
43992 (August 27, 1996), citing 5 U.S.C. 601 (3). See also Order and 
Notice of Proposed Rulemaking in MM Docket No. 96-16 (Streamlining 
Broadcast EEO Rule and Policies, Vacating the EEO Forfeiture Policy 
Statement and Amending Section 1.80 of the Commission's Rules to 
Include EEO Forfeiture Guidelines), 61 FR 9964, March 12, 1996, 11 
FCC Rcd 5154 (1996), requesting comment as to whether relief should 
be afforded to the stations: (1) based on staff size and what size 
should be considered sufficient for relief (e.g., 10 or fewer full-
time employees); (2) based on operation in a small market; or (3) 
based on operation in a market with a small minority work force.

---------------------------------------------------------------------------

[[Page 65399]]

    48. The SBA defines a radio broadcasting station that has no more 
than $5 million in annual receipts as a small business.<SUP>3</SUP> A 
radio broadcasting station is an establishment primarily engaged in 
broadcasting aural programs by radio to the public.<SUP>4</SUP> 
Included in this industry are commercial, religious, educational, and 
other radio stations.<SUP>5</SUP> Radio broadcasting stations which 
primarily are engaged in radio broadcasting and which produce radio 
program materials are similarly included.<SUP>6</SUP> The 1992 Census 
indicates that 96 percent of radio station establishments (5,861 of 
6,127) produced less than $5 million in revenue in 1992.<SUP>7</SUP> 
Official Commission records indicate that 11,334 individual radio 
stations were operating in 1992.<SUP>8</SUP> As of September 30, 1997, 
official Commission records indicate that 12,227 radio stations and 
2836 FM translator/booster stations were licensed.<SUP>9</SUP>
---------------------------------------------------------------------------

    \3\ 13 CFR 121.201, Standard Industrial Code (SIC) 4832 (1996).
    \4\ Economics and Statistics Administration, Bureau of Census, 
U.S. Department of Commerce, supra note 78, Appendix A-9.
    \5\ Id.
    \6\ Id.
    \7\ The Census Bureau counts radio stations located at the same 
facility as one establishment. Therefore, each co-located AM/FM 
combination counts as one establishment.
    \8\ FCC News Release No. 31327, Jan. 13, 1993.
    \9\ FCC News Release No. 80286, Nov. 6, 1997.
---------------------------------------------------------------------------

    49. Additionally, the Small Business Administration defines a 
television broadcasting station that is independently owned and 
operated, is not dominant in its field of operation, and has no more 
than $10.5 million in annual receipts as a small business.<SUP>10</SUP> 
Television broadcasting stations consist of establishments primarily 
engaged in broadcasting visual programs by television to the public, 
except cable and other pay television services.<SUP>11</SUP> Included 
in this industry are commercial, religious, educational, and other 
television stations.<SUP>12</SUP> Also included are establishments 
primarily engaged in television broadcasting and which produce taped 
television program materials.<SUP>13</SUP> There were 1,509 television 
stations operating in the nation in 1992.<SUP>14</SUP> That number has 
remained fairly constant, as indicated by the approximately 1,563 full 
power television stations, 2027 low power television stations, and 4994 
television translator stations licensed as of September 30, 
1997.<SUP>15</SUP> In 1992,<SUP>16</SUP> there were 1,155 television 
station establishments that produced less than $10.0 million in 
revenue.<SUP>17</SUP>
---------------------------------------------------------------------------

    \10\ 13 CFR 121.201, SIC 4833.
    \11\ Economics and Statistics Administration, Bureau of Census, 
U.S. Dep't of Commerce, 1992 Census of Transportation, 
Communications and Utilities, Establishment and Firm Size, Series 
UC92-S-1, Appendix A-9 (1995).
    \12\ Id.
    \13\ Id.
    \14\ FCC News Release No. 31327, Jan. 13, 1993; Economics and 
Statistics Administration, Bureau of Census, U.S. Dep't of Commerce, 
supra note , Appendix A-9.
    \15\ FCC News Release 80286, Nov. 6, 1997.
    \16\ Census for communications establishments are performed 
every five years, during years that end with a ``2'' or ``7''. See 
Economics and Statistics Administration, Bureau of Census, U.S. 
Dep't of Commerce, 1992 Census of Transportation, Communications and 
Utilities, Establishment and Firm Size, Series UC92-S-1, Appendix A-
9, III (1995).
    \17\ 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.
---------------------------------------------------------------------------

    50. In addition, there are presently 2032 ITFS licensees. All but 
100 of these licenses are held by educational institutions. Educational 
institutions may be included in the definition of a small entity. ITFS 
is a non-pay, non-commercial educational microwave service that, 
depending on SBA categorization, has, as small entities, entities 
generating either $10.5 million or less, or $11.0 million or less, in 
annual receipts. However, we do not collect, nor are we aware of other 
collections of, annual revenue data for ITFS licensees. Thus, we 
tentatively conclude that up to 1932 of these licensees are small 
entities. We seek comment on this conclusion.
    51. In the event the Commission decides, for equitable 
considerations or other reasons, to hold comparative hearings to 
resolve certain mutually exclusive pending applications for new 
commercial radio and television stations filed before July 1, 1997 or 
for a subset of such pending cases, any new comparative criteria 
developed in this proceeding will apply to these pending pre-July 1, 
1997 applications. We estimate that there are approximately 1475 
pending applicants for a new commercial radio or full power television 
station filed before July 1, 1997 that might be decided by comparative 
hearing rather than by auctions.
    52. Any auction procedures developed in this proceeding for all 
licenses to provide commercial broadcast service or secondary broadcast 
service that are presently subject to auction will affect: (1) any 
entity with a pending application for a construction permit for a new 
commercial radio or full power television broadcast station, if all 
mutually exclusive applications were filed after June 30, 1997; (2) any 
entity with a pending application for a construction permit for a new 
commercial radio or full power television station filed before July 1, 
1997, if mutually exclusive applications were filed and none of the 
competing applications is a renewal application and if the Commission 
decides that such initial license applications should be subject to 
auction; (3) any entity that files an application in the future for a 
new commercial radio or full power analog television station if 
mutually exclusive applications are accepted; (4) any entity having a 
pending application on file, or filing an application in the future, 
for a new low power television station, or a television or FM 
translator station, if mutually exclusive applications are accepted; 
(5) any entity that has a pending or future application to make a major 
change in an existing facility in any commercial broadcast or secondary 
broadcast service, if mutually exclusive applications are accepted and 
if the Commission decides to auction such major change applications; 
and (6) any entity that has a pending or future ITFS application, if 
mutually exclusive applications are accepted and if the Commission 
decides that it must, or should, auction mutually exclusive ITFS 
applications.
    53. If auction procedures are adopted in this proceeding, all 
entities that file applications for construction permits to provide 
commercial broadcast service before the effective date of any such 
auction procedures must submit a completed short-form application (FCC 
Form 175) and any engineering information necessary to determine mutual 
exclusivity, if resolution of their applications is subject to 
competitive

[[Page 65400]]

bidding procedures. This requirement would also apply to entities that 
file applications for construction permits to make major changes in 
existing commercial broadcast stations during this period if the 
Commission ultimately decides to resolve mutual exclusivity among 
competing major change applications by competitive bidding. In the 
event that an applicant is the winning bidder, it must submit a long-
form application that would then be reviewed by the agency. We estimate 
that, as of October 31, 1997 there are approximately 1475 pending 
applicants for a new commercial radio or full power television station 
filed before July 1, 1997; approximately 315 pending applications for 
new radio and full power television stations filed after June 30, 1997 
that are mutually exclusive with permit applications filed after that 
date; approximately 100 pending applications for new low power 
television stations/television translator stations; and approximately 
24 pending applications for translator stations. All of these pending 
mutually exclusive applications will be subject to any auction 
procedures for analog broadcast service adopted in this proceeding.
    54. Applicants for construction permits are required to demonstrate 
sufficient financing to construct and initially operate the proposed 
station. However, we do not require the filing of financial information 
concerning the entity seeking a construction permit. Thus, except for 
those applicants already owning a broadcast station that seek a permit 
to construct additional stations, we have no data on file as to whether 
entities with pending permit applications, which are subject to the new 
auction rules for analog broadcast service, meet the Small Business 
Administration's definition of small business concern. We assume for 
the purposes of this IRFA that most of the entities formed for the 
purpose of applying for a permit to construct a new radio broadcast 
station or a television station are small entities, as defined by the 
SBA rules.
    55. In addition to the pending applicants that may be affected by 
the proposed auction procedures for analog broadcast service, any 
entity that applies for a construction permit for a new radio or 
television station in the future will be subject to the proposed 
auction procedures if mutually exclusive applications are filed. The 
number of entities that in the future may seek a construction permit 
for a new analog broadcast station is unknown. We anticipate, however, 
that due to the passage of the Telecommunications Act of 1996 and 
corresponding changes in our multiple ownership and attribution rules, 
the characteristics of future broadcast applicants may be somewhat 
different from those of pending applicants. We invite comment as to the 
number and characteristics of future applicants for new commercial 
analog broadcast stations, and for commercial facilities in the various 
secondary broadcast services.
    56. The new auction procedures would not apply to entities that 
filed applications for construction permits after June 30, 1997 for new 
commercial radio and full power television stations that are mutually 
exclusive with two or more pending initial license applications filed 
before July 1, 1997. We estimate that as of October 31, 1997, there 
were approximately 7 such applications (5 radio and 2 TV) that will be 
ineligible to participate in an auction to choose among mutually 
exclusive pre-July 1 applications for new commercial broadcast 
stations.
    57. In addition, any competitive bidding procedures developed for 
analog broadcast service will not apply to the few pending comparative 
renewal cases. Resolution of these cases will depend on any comparative 
criteria, two-step renewal process or other basis adopted in this 
proceeding for deciding these comparative renewal cases. This will 
affect broadcast station licensees that filed their applications for 
renewal of license on or before May 1, 1995 and any pending initial 
license applications that are mutually exclusive with such renewal 
applications. We estimate that there are approximately 9 initial 
license applications that are mutually exclusive with 8 pending renewal 
applications. This includes approximately 15 television applicants and 
2 radio applicants.

IV. Description of Projected Reporting, Recordkeeping and Other 
Compliance Requirements

    58. Comment is sought on what filing and compliance requirements 
should be associated with any competitive bidding procedures consistent 
with the Commission's statutory obligations to require such transfer 
disclosures and other measures necessary to prevent unjust enrichment 
and the court's concerns in Bechtel regarding reliance on purely 
ephemeral licensing considerations. The Notice tentatively proposes 
that, if bidding credits or other special provisions are adopted for 
any designated entities and/or non-group owners, licensees benefitting 
from such special provisions must annually certify for five years their 
continuing eligibility for such bidding credit or special provision 
under the rules in effect at the time the license was awarded, and 
report any changes in such eligibility within 30 days. In addition, 
applications for construction permits, short-form auction applications, 
and other submissions will be required of those falling within any 
proposed competitive bidding procedures, as described in Section III of 
this analysis.

V. Significant Alternatives To Proposed Rule Which Minimize 
Significant Economic Impact on Small Entities and Accomplish Stated 
Objectives

    59. This Notice contains no significant alternatives because 
amended section 309(j) requires that the Commission use competitive 
bidding procedures to award virtually all licenses, including 
construction permits for new commercial broadcast facilities, and this 
requirement applies to most pending broadcast applications, except for 
comparative licensing cases that involve applications for new full 
service radio and television stations filed before July 1, 1997. See 
Paras. 39-82. As to that narrow category of applications, see 
Paras. 23-28, in which the Commission has the authority to resolve 
mutually exclusivity by comparative hearings rather than by competitive 
bidding procedures, the Commission's discretion is nevertheless 
constrained by the court's decision in Bechtel v. FCC, 10 F.3d 875 
(D.C. Cir. 1993), and the potential difficulty of devising judicially 
sustainable comparative criteria. Although the Notice tentatively 
concludes that, from a public interest standpoint competitive bidding 
procedures are preferable in these cases, see Paras. 13-20, it asks for 
comment on whether there are equitable reasons to decide these cases, 
or a subset of these cases, by comparative hearings. Moreover, we 
believe that the proposed competitive bidding procedures for all 
future, and, potentially, all pending, applications for construction 
permits to provide commercial broadcast service that are presently 
auctionable under the statute will have a minimal impact on small 
entities who apply for and obtain broadcast licenses. Also, to minimize 
any possible impact on small businesses, the Notice asks for comment on 
whether bidding credits or other special provisions are warranted for 
small businesses, including those owned by members of a minority group 
or women and for rural telephone companies. The Notice further 
concludes that, to the extent that it is permissible under applicable 
constitutional standards, the Commission should take steps to further 
its longstanding goal of increasing minority ownership of broadcast

[[Page 65401]]

stations and implementing the designated entity provisions of section 
309(j)(4) of the Act.

VI. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rule

    60. None.

Ordering Clauses

    61. Accordingly, It is Ordered, That Notice is Hereby Given of the 
proposed regulatory changes described above, and that Comment is Sought 
on these proposals.
    62. It Is Further Ordered, That pursuant to applicable procedures 
set forth in sections 1.415 and 1.419 of the Commission's Rules, 47 CFR 
1.415 and 1.419, comments Shall Be Filed on or before January 26, 1998 
and reply comments Shall Be filed on or before February 17, 1998. To 
file formally in this proceeding, commenters must file an original and 
four copies of all comments, reply comments, and supporting documents 
filed in this proceeding. If commenters want each Commissioner to 
receive a personal copy of their comments, they must file an original 
plus nine copies. Comments and reply comments should be sent to the 
Office of the Secretary, Federal Communications Commission, Room 222, 
1919 M Street, N.W., Washington, D.C. 20554. In addition, commenters 
should file copies of any such pleadings with the Mass Media Bureau, 
Video Services Division, Room 702, and Audio Services Division, Room 
302, 1919 M St., N.W., Washington, D.C. 20554, and with the Office of 
General Counsel, Room 610, 1919 M St., N.W., Washington, D.C. 20554. 
Comments and reply comments will be available for public inspection 
during regular business hours in the FCC Reference Center, 1919 M St., 
N.W., Washington, D.C. 20554.
    63. It Is Further Ordered, That written comments by the public on 
the proposed and/or modified information collections are due January 
26, 1998. Written comments must be submitted by the Office of 
Management and Budget (OMB) on the proposed and/or modified information 
collections on or before February 10, 1998. 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 234, 1919 M Street, N.W., Washington, 
DC 20554, or via the Internet to <a href="/cdn-cgi/l/email-protection#b1dbd3deddd4c8f1d7d2d29fd6dec7"><span class="__cf_email__" data-cfemail="016b636e6d6478416762622f666e77">[email protected]</span></a>, and to Timothy Fain, 
OMB Desk Officer, 10236 NEOB, 725--17th Street, N.W., Washington, DC 
20503 or via the Internet to <a href="/cdn-cgi/l/email-protection#1472757d7a4b605475783a717b643a737b62"><span class="__cf_email__" data-cfemail="4c2a2d252213380c2d206229233c622b233a">[email protected]</span></a>.
    64. It is Further Ordered, That, effective upon the close of 
business on the date of release of this Notice of Proposed Rulemaking, 
the Commission Will Not Accept applications for construction permits 
for new stations or for major changes to existing facilities in any 
commercial broadcast or secondary broadcast service. However, the 
Commission Will Accept applications timely filed in response to an 
outstanding cut-off list or an open filing window.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 97-32520 Filed 12-11-97; 8:45 am]
BILLING CODE 6712-01-P


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