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

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.

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

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 [email protected], and to Timothy Fain,

OMB Desk Officer, 10236 NEOB, 725--17th Street, N.W., Washington, DC

20503 or via the Internet to [email protected].

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

[email protected].

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),1 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).

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

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.'' 2

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

\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.3 A

radio broadcasting station is an establishment primarily engaged in

broadcasting aural programs by radio to the public.4

Included in this industry are commercial, religious, educational, and

other radio stations.5 Radio broadcasting stations which

primarily are engaged in radio broadcasting and which produce radio

program materials are similarly included.6 The 1992 Census

indicates that 96 percent of radio station establishments (5,861 of

6,127) produced less than $5 million in revenue in 1992.7

Official Commission records indicate that 11,334 individual radio

stations were operating in 1992.8 As of September 30, 1997,

official Commission records indicate that 12,227 radio stations and

2836 FM translator/booster stations were licensed.9

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

\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.10

Television broadcasting stations consist of establishments primarily

engaged in broadcasting visual programs by television to the public,

except cable and other pay television services.11 Included

in this industry are commercial, religious, educational, and other

television stations.12 Also included are establishments

primarily engaged in television broadcasting and which produce taped

television program materials.13 There were 1,509 television

stations operating in the nation in 1992.14 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,

1997.15 In 1992,16 there were 1,155 television

station establishments that produced less than $10.0 million in

revenue.17

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

\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 [email protected], and to Timothy Fain,

OMB Desk Officer, 10236 NEOB, 725--17th Street, N.W., Washington, DC

20503 or via the Internet to [email protected].

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