In a unanimous decision, the United States Court of Appeals for the District of Columbia Circuit vacated the EEO rules that became effective in April 2000. While the Commission could appeal the Court's decision, that is unlikely given Chairman William Kennard's departure and his replacement by Republican Chairman Michael Powell. However, it is expected that the public interest groups that participated in the court case will appeal, even if the Commission does not do so. This could delay final dismantling of the EEO rules, which technically remain in effect until the Court's decision is final. Nevertheless, on January 31, the FCC announced the suspension of all EEO reporting and filing requirements until further notice.

The Court found that the rules were unconstitutional because they were not narrowly tailored to further a compelling governmental interest in preventing discrimination. Focusing on Option B of the Commission's rules, the Court concluded that the Commission's requirements pressured broadcasters to focus recruiting efforts on minorities and women in order to induce more applicants from those groups. In this connection, the Court noted that the FCC had clearly indicated it would investigate any licensee that reported few or no employment applications from minorities or women. The requirement in Option B that licensees report the race of each applicant would be relevant to the prevention of discrimination, the Court said, only if the FCC were to assume that minority groups would respond to non-discriminatory recruitment efforts in some predetermined ratio, such as in proportion to their percentage representation in the local work force. Any such assumption, it was found, stands in direct opposition to the guarantee of equal protection under the constitution.

Efforts to promote minority participation in the media are now expected in Congress, where various groups have been seeking the reinstitution of the tax certificate program. Under the previous tax certificate program, companies that sold their stations to minority-controlled entitles were eligible to defer payment of capital gain taxes. In a statement released just before his departure, outgoing Chairman Kennard urged Congress to increase funding for the Telecommunications Development Fund, which provides capital for small minority- and female-owned businesses.

New Chairman in Place

Effective January 23, Michael Powell, the son of Secretary of State Colin Powell, became Chairman of the FCC. Powell has served on the FCC since 1998 when he was nominated by President Clinton to fill a Republican vacancy. Powell, a lawyer, previously worked at the Department of Justice and in private practice. He is a graduate of William and Mary College and Georgetown University Law School.

Kennard resigned effective January 19, 2001, the day before President Bush's inauguration. The other incumbent commissioners are Gloria Tristani and Susan Ness, both Democrats, and Harold Furchtgott-Roth, a Republican. President Bush is expected to appoint another Republican commissioner within the next few months, and replacements for Ness and Furtchgott-Roth, whose terms have expired, may be confirmed by this summer.

The change in administration at the FCC may bring benefits to radio broadcasters. As indicated above, it is unlikely the new Commission will appeal the invalidation of the agency's EEO rules, which were developed under the guidance of Chairman Bill Kennard. Further, the previous administration's efforts to tighten up on the local ownership rules is not likely to be a priority. Indeed, in the pending market definition rulemaking proceeding, then-Commissioner Powell issued a statement saying the Commission should not attempt to restrict local ownership to any extent beyond the limits included in the statutory scheme. (In its market-definition rulemaking notice, the FCC proposed the use of narrow Arbitron-defined market boundaries instead of the broader signal overlap standard now used. This would make it harder for an owner to buy more stations in a market. Powell is on record as opposing this stricter standard.) However, it is still anticipated that some technical changes in the rules will be made to align the current definition of radio market with the methodology used to count the number of stations an owner may have in a market.

Harry Martin is an attorney with Fletcher, Heald & Hildreth, PLC., Arlington, VA. E-mail martin@fhh-telcomlaw.com.

Dateline

Radio stations in the following states must file their biennial ownership reports on or before April 1, 2001: Delaware, Indiana, Kentucky, Pennsylvania, Tennessee and Texas.