UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


TRINITY BCAST FL INC

v.

FCC


99-1183a

D.C. Cir. 2000


*	*	*


Tatel, Circuit Judge: This case presents a recurring ques- tion of
administrative law: What constitutes sufficiently fair  notice of an
agency's interpretation of a regulation to justify  punishing someone
for violating it? The Federal Communica- tions Commission interpreted
its now-superseded minority  preference regulation as requiring not
only that a majority of  an applicant's board of directors be
minorities, but also that  an applicant demonstrate actual control by
minorities. Act- ing on this interpretation, the Commission denied
appellants'  application to renew a commercial television broadcast
license  as a sanction for their earlier claim to a minority
preference  based on a majority-minority board. Although we defer to 
the Commission's interpretation of its regulation as requiring  actual
minority control, we find that neither the regulation  nor the
Commission's related statements gave fair notice of  that requirement.
We therefore vacate the Commission's  denial of appellants' license


I


"Congress found that 'the effects of past inequities stem- ming from
racial and ethnic discrimination have resulted in a 


severe underrepresentation of minorities in the media of mass 
communications.' " Metro Broad., Inc. v. FCC, 497 U.S. 547,  566
(1990) (quoting H.R. Conf. Rep. No. 97-765 at 43 (1982)),  overruled
by Adarand Constructors, Inc. v. Pena, 515 U.S.  200, 227 (1995). In
1971, minorities owned not a single  television station anywhere in
the United States. Id. at 553.  Having found that "the viewing and
listening public suffers  when minorities are underrepresented among
owners of tele- vision and radio stations," the Federal Communications
Com- mission has undertaken various measures "to encourage mi- nority
participation in the broadcast industry." Id. at 554.  Congress also
acted to promote minority ownership, directing  the Commission to:


establish rules and procedures to ensure that, in the  administration
of any system of random selection under  this subsection used for
granting licenses or construction  permits for any media of mass
communications, signifi- cant preferences will be granted [to certain
applicants to  increase diversification of ownership]. To further
diver- sify the ownership of the media of mass communications,  an
additional significant preference shall be granted to  any applicant
controlled by a member or members of a  minority group.


Pub. L. No. 97-259, s 115(c)(1), 96 Stat. 1087 (1982), (codified  at 47
U.S.C. s 309(i)(3)(A)).


Responding to this directive, the Commission issued a  regulation
granting preferences to minority applicants in  lotteries for
low-power and translator television station licens- es. 47 C.F.R. s
1.1622(b). Low-power and translator televi- sion stations operate "on
UHF channels at much lower power  than full service (conventional)
television stations." Neigh- borhood TV Co., Inc. v. FCC, 742 F.2d
629, 631 (D.C. Cir.  1984). Section 1.1622(b) of the Commission's
regulations  granted lottery preferences to "[a]pplicants, more than
50%  of whose ownership interests are held by members of minori- ty
groups." 47 C.F.R. s 1.1622(b)(1). In a statement ex- plaining section
1.1622(b), the Commission provided several 


entity-specific definitions of this standard. With respect to  "stock
corporations," the Commission said: "If a majority of  the voting
shares are held by minorities, the corporation is  entitled to a
minority preference." Public Notice, Mimeo No.  6030 at 4 (released
August 19, 1983). Of particular signifi- cance to this case, the
Commission said that for "non-stock  corporations" (for instance
non-profit corporations), "[i]f a  majority of the governing board ...
are minorities, the entity  is entitled to a minority preference." Id.
See also Random  Selection Lotteries, 93 F.C.C.2d 952, 977 (1983) ("We
agree  ... that nonstock corporations ... should be judged as to 
minority status on the basis of the composition of the  board.").


Limited to lotteries for low-power/translator television  station
licenses, section 1.1622 did not address minority un-
derrepresentation in the lucrative full-power, commercial  television
station market. A Commission advisory commit- tee exploring the causes
of underrepresentation in that mar- ket concluded that minority
broadcasters faced serious  shortages of capital. See Strategies for
Advancing Minori- ty Ownership Opportunities in Telecommunications 19 
(May 1982). To address this problem, the committee sug- gested that
the FCC encourage partnerships between mi- nority entrepreneur
broadcasters and established broadcast- ers. Id. at 24. The advisory
committee warned, however,  that the Commission's multiple ownership
regulation--which  limited the number of commercial broadcast licenses
in  which a particular entity could have an interest--posed a 
significant barrier to such partnerships. Because estab- lished
broadcasters holding the maximum permissible num- ber of licenses
would be unable to have "interests" in addi- tional licenses, minority
entrepreneurs with whom they  formed partnerships would be ineligible
for television licens- es. The advisory committee recommended that the
Com- mission grant "waivers or expansion of multiple ownership  and
diversification requirements to established entrepre- neurs who
participate in telecommunications ventures with  minorities.... For
example, FCC policies should allow an  established entrepreneur to


minority-controlled property that otherwise would exceed  multiple
ownership limits...." Id. at 32.


In 1985, the Commission took a step toward facilitating the 
partnerships the advisory committee had recommended. It  granted an
exception to the multiple ownership limits for  "minority-controlled"
broadcast stations. As amended, the  regulation stated:


No license for a ... TV broadcast station shall be  granted,
transferred or assigned to any party (including  all parties under
common control) if the grant, transfer  or assignment of such license
would result in such party  or any of its stockholders, partners,
members, officers or  directors, directly or indirectly, owning,
operating or  controlling, or having a cognizable interest in,


(i) more than fourteen (14) stations in the same ser- vice, or (ii)
more than twelve (12) stations in the same service  which are not
minority-controlled.


47 C.F.R. s 73.3555(d)(1) (1990). In other words, section  73.3555
essentially limited broadcasters to having interests in  twelve
licenses, except that they could have interests in two  additional
licenses for "minority-controlled" stations. In lan- guage central to
this case, section 73.3555 continued: " '[M]i- nority-controlled'
means more than 50 percent owned by one  or more members of a minority
group." Id.  s 73.3555(d)(3)(iii). Although section 73.3555 provided
no  further definition of "minority-controlled," it concluded with 
this note: "The word 'control' as used herein is not limited to 
majority stock ownership, but includes actual working control  in
whatever manner exercised." Id. s 73.3555 note 1.


Congress has since eliminated the multiple ownership lim- its. See
Telecommunications Act of 1996, Pub. L. No. 104- 104, s 202(c)(1)(A),
110 Stat. 56. But because the events  leading up to this case occurred
during the period section  73.3555 was in effect, that section
controls the disposition of  this case, as all parties agree.


Created by Dr. Paul Crouch in 1973, appellant Trinity  Christian Center
of Santa Ana, Inc., d/b/a Trinity Broadcast- ing Network ("TBN"), is a
non-profit "electronic evangelical 


ministry." Crouch serves as TBN's President. TBN pro- duces its own
religious programming, which it uses as the  core of its twenty-four
hour broadcast. Its broadcasts also  include religious programs
produced by other ministries--"a  wide variety of Protestant and
Episcopalian denominations,  as well as Catholic, Seventh Day
Adventist, and Messianic  Jewish programs." Reaching viewers
throughout the coun- try, TBN's programming is broadcast on TBN's own
commer- cial and translator television stations and on stations
operated  by smaller non-profit corporations like appellant Trinity 
Broadcasting Florida, Inc. ("TBF"), which Crouch created to  carry TBN


Pearl Jane Duff, an African American minister, started as a  volunteer
at TBN but was quickly hired as a salaried employ- ee. She became
Crouch's assistant in 1981 and has worked at  TBN in that capacity
ever since. Shortly after Duff began  working for TBN, she was
appointed to the boards of TBN  and TBF. She remained on those boards
until resigning in  the summer of 1984.


In 1980, Crouch formed Translator TV, Inc. ("TTI"), prede- cessor to
intervenor National Minority Television, Inc., a non- profit,
non-stock religious broadcast corporation. Crouch  explained his
creation of TTI as follows: In a conversation  with Richard Wiley,
former Chairman of the FCC, Wiley  "impressed upon me very strongly
that the emerging policy of  the FCC was to foster the integration of
minorities into  broadcasting. He encouraged me to ... begin thinking
of  directions that TBN could take as our network grew to assist  in
the implementation of this emerging policy." According to  Crouch, he
"conceived of the idea to organize a new company  that would integrate
minorities into broadcasting and further  promote the emerging policy
Mr. Wiley spoke to me  about.... I felt that TTI would both help to
implement the  FCC's minority ownership policy and hopefully allow TBN
to  develop, as new affiliates, stations that TTI might acquire."  Two
of TTI's three board members were minorities: Duff  served as Vice
President and Secretary, and Phillip Espinoza,  an Hispanic pastor,
served as Chief Financial Officer. 


Crouch, a non-minority and President of TTI, served as the  third board
member.


Focusing on the translator television market, TTI filed  seventeen
applications for FCC permits to construct transla- tor television
stations to rebroadcast TBN programming.  The Commission, however, had
frozen all new translator  television applications, so it took no
action on TTI's. When  the Commission promulgated section
1.1622(b)(1)'s minority  preference for translator television
licenses, TTI amended its  pending applications and filed
certifications with the FCC  claiming entitlement to minority
preferences based on its  majority-minority board. Because translator
television sta- tion license applications were still frozen, the
Commission had  no occasion to assess TTI's eligibility for a minority
prefer- ence. TTI held no other licenses and conducted very little 
business while waiting for the Commission to act on its  applications,
functioning for all intents and purposes as a part  of TBN: TTI
maintained no separate bank account, it had no  accountant or lawyer
of its own, and its board conducted its  annual meetings jointly with


Meanwhile, the Commission had promulgated section  73.3555, the
minority exception to the high-power multiple  ownership limit. At
that time, Crouch and TBN held licenses  for twelve high-power
stations. TBN's counsel, intervenor  Colby May, advised Crouch that
TBN could acquire interests  in two additional stations as long as
those stations were  "minority-controlled." May testified that he
thought TTI was  minority-controlled because a majority of its board
members  were minorities, and he so advised Crouch.


Deciding to broaden its focus from translator television to  commercial
television, TTI changed its name to National  Minority Television,
Inc. ("NMTV") and applied for a license  for a commercial high-power
station in Odessa, Texas.  NMTV was the first minority broadcaster to
claim section  73.3555's minority exception to the multiple ownership
limit.  In an attachment to its Odessa application entitled "Broad-
cast Interests and Statement of Compliance with Rule  73.3555(d),"
NMTV asserted that issuing it the license was 


consistent with the multiple ownership regulation: "[W]hile  one of
NMTV's principals, Paul F. Crouch, presently has an  interest in 12
commercial television facilities ... a majority of  its directors are
minorities, and NMTV is therefore minority  controlled and in
compliance with rule 73.3555(d)(1)." The  application did not mention
that NMTV board member Duff  was employed by TBN, or that she had
previously served on  TBN's board.


An attorney in the Commission's Mass Media Bureau as- signed to review
NMTV's application contacted May, asking  for more detail about NMTV.
May explained that Trinity  would provide NMTV's financing and
programming and that  Duff worked for Trinity. "Concerned" about the
overlap  between Trinity and NMTV, the Commission attorney went  to
his supervisor, who asked May for NMTV's bylaws. May  testified that
the supervisor "was interested in determining  that NMTV's affairs
were governed by the majority vote of  its directors, and that
unanimous votes were not required."  After May provided the requested
information, the Mass  Media Bureau and ultimately the Commission
approved the  application.


Having obtained the Odessa license and acting on May's  advice, NMTV
began observing more of the formalities of a  corporate entity. See
Trinity Broad. of Florida, Inc., 14  F.C.C.R. 13570, 13591 p 56 (1999)
("Trinity"). It opened its  own bank accounts, began paying TBN for
accounting and  legal services, and conducted regular board meetings.
Id. at  13591 pp 56-57. NMTV also applied for a second license,  this
one for a station in Portland, Oregon. Like the Odessa  application,
the Portland application asserted that granting  NMTV the license
would not violate the multiple ownership  regulation because NMTV was
minority-controlled. Again,  the Commission approved the application.
The Portland and  Odessa licenses gave Crouch interests in fourteen
stations,  the limit under the multiple ownership rules.


Shortly after acquiring the Portland license, NMTV sold  the Odessa
license, freeing it to purchase another station,  which it attempted
to do by bidding on a license for a 


bankrupt Wilmington, Delaware station. In its application to  the FCC
for approval of the Wilmington purchase, NMTV  asserted, as it had in
the Odessa and Portland applications,  that approving its license
acquisition would not violate the  multiple ownership limits because,
since minorities constitut- ed a majority of its board, it was
minority-controlled. A  petition filed by a challenger to NMTV's
application asserted  that Crouch and TBN (not a minority-controlled
corporation)  actually controlled NMTV and that Crouch had therefore 
violated the multiple ownership regulation by having interests  in
more than twelve stations, none of which was minority- controlled.
Before the FCC could resolve the question of  NMTV's minority status,
NMTV withdrew its application  because its authorization from the
Delaware bankruptcy court  to purchase the license had expired.


The question of NMTV's minority status arose again, this  time in the
proceedings that led to the Commission's denial of  the commercial
television license renewal at issue in this case.  When TBN's Florida
affiliate, TBF, filed an application to  renew its license for WHFT,
Channel 45, a commercial televi- sion station in Miami, a competitor
for the license asserted, as  had the party opposing the Delaware
license, that Crouch had  violated the multiple ownership regulation
by exerting control  over NMTV. The Commission issued a Hearing
Designation  Order, instructing an Administrative Law Judge to deter-
mine, among other things, whether Crouch and TBN "exer- cised de facto
control over" NMTV, whether Crouch and TBN  abused the FCC's processes
"by using NMTV to evade the  provisions" of the multiple ownership
regulation, and whether  TBF "is qualified to remain a Commission
licensee" in light of  any evidence adduced on the preceding two
questions. Hear- ing Designation Order, 8 F.C.C.R. 2475, 2481 p 48


Examining Crouch's and TBN's conduct from 1987 to 1991  (the period
during which TBF held the Miami license), the  ALJ concluded that TBN
and Crouch exercised de facto  control over NMTV and that NMTV was
therefore not "mi- nority-controlled." Trinity Broad. of Fla., Inc.,
Initial Deci- sion of Administrative Law Judge, 10 F.C.C.R. 12020
(1995).  The ALJ also ruled that "NMTV, Crouch and TBN abused 


the Commission's processes" not only by creating NMTV as a  "sham
corporation" to evade the multiple ownership regula- tion, but also by
repeatedly concealing material facts from the  Commission that would
have demonstrated that TBN con- trolled NMTV--primarily Duff's
employment relationship  with TBN and the extensive interrelationship
between TBN  and NMTV. Id. at 12061 pp 329-30 & n.47. The ALJ 
concluded that Crouch's conduct in connection with TTI and  TTI's
representations in its low power applications also sup- ported an
abuse of process finding. Id. at 12060 pp 325-26.  The Commission's
Mass Media Bureau Trial Staff thought  section 73.3555's actual
control requirement insufficiently  clear to justify denying TBF's
license, but the ALJ disagreed,  finding that because of TBN's and
Crouch's "willful" and  "egregious" misconduct, TBF was unqualified to
hold the  Miami license. Id. at 12062 pp 331, 333.


By a three to two vote, the Commission upheld the ALJ's  abuse of
process determination with respect to NMTV's high- power Odessa and
Portland television station applications.  Trinity, 14 F.C.C.R. 13570.
Ruling that section 73.3555  required de facto minority control, the
Commission found that  TBN, not NMTV's minority board, actually
controlled NMTV.  "Commission rules and precedent have always given
fair  notice that de facto control is required to take advantage of 
the special provision concerning minority ownership in the  multiple
ownership rules." Id. at 13602 p 86. "[T]he princi- pals knew," the
Commission concluded, "that, because of the  relationship between NMTV
and TBN, their claim of minority  control was at best doubtful and at
worst false." Id. at 13601  p 83. This "serious abuse of process with
respect to NMTV's  full power applications" warranted denying TBF's
license  renewal application. Id. at 13601 p 85, 13610 pp 100-01. In 
view of that conclusion, the Commission addressed only brief- ly the
ALJ's abuse of process determination with respect to  the
low-power/translator television license applications, re- versing the
ALJ because "applicants may well have been  confused ... that the
exercise of de facto control by nonmi- norities subverted the purposes
of the minority ownership  policy...." Id. at 13601 p 85. Dissenting


power abuse of process determination and the denial of TBF's  renewal
application, two commissioners disagreed with the  majority that
section 73.3555 provided fair notice: "[Section  73.3555] certainly
did not make clear that a de facto control  showing was necessary...."
Id. at 13632 (Commissioners  Furchgott-Roth and Powell, dissenting in
part). "In these  circumstances," they said, "we find that imposition
of the  'death penalty' of disqualification is both unfair and unwar-
ranted." Id. at 13634.


Appellants TBN and TBF, joined by intervenors NMTV  and Colby May
(throughout this opinion, we shall refer to  these appellants and
intervenors as "Trinity"), challenge both  the Commission's
determination that TBN and Crouch  abused Commission processes when
NMTV filed high-power  applications asserting that it was
"minority-controlled," and  the Commission's denial of TBF's renewal
application. Trini- ty does not challenge the Commission's finding
that TBN  exercised de facto control over NMTV. Instead, it contends 
that TBN's exercise of de facto control did not justify denying  TBF's
license renewal. In support of this claim, Trinity  makes several
arguments, only two of which require our  attention: (1) the
Commission's interpretation of section  73.3555 as requiring de facto
minority control is unreasonable;  and (2) even if the Commission's
interpretation is reasonable,  the regulation failed to provide fair
notice that de facto  minority control was required. We consider each


II


Trinity argues that section 73.3555 requires only that a  majority of a
non-profit entity's board members be minori- ties. According to
Trinity, the regulation does not require  that the minority board
members exercise "actual," i.e., de  facto, control over the entity.
Acknowledging our traditional  deference to an agency's interpretation
of its own regula- tions, Trinity contends that no deference is
warranted in this  case because the Commission's interpretation of
section  73.3555 as requiring de facto minority control conflicts with
 the regulation's plain language. See Thomas Jefferson Univ. 


v. Shalala, 512 U.S. 504, 512 (1994) (holding that agency's in-
terpretation may not be entitled to deference if an alterna- tive
interpretation "is compelled by the regulation's plain  language")
(internal quotation marks omitted). Trinity relies  on the fact that
section 73.3555's only definition of "minority- controlled"--"more
than 50 percent owned by one or more  members of a minority group," 47
C.F.R. s 73.3555(d)(3)(iii)  (1990)--says nothing about de facto


As the Commission points out, however, its de facto control 
requirement derives directly from the term being defined, i.e., 
"minority-controlled." As the Commission also points out,  the
definition of "minority-controlled" does not even apply to  Trinity,
for it speaks only in terms of "ownership," a concept  having no
meaning with respect to non-profit entities. For  these reasons, we
agree with the Commission that no conflict  exists between section
73.3555's plain language and the Com- mission's ruling that
majority-minority boards of directors of  non-profit entities must


The question, then, is this: Does the Commission's inter- pretation
"sensibly conform" to both the purpose and the text  of the
regulation? Buffalo Crushed Stone, Inc. v. Surface  Transp. Bd., 194
F.3d 125, 128 (D.C. Cir. 1999) (internal  quotation marks omitted). In
answering this question, we  "accord [the Commission's] interpretation
of its own regula- tions a high level of deference, accepting it
unless it is plainly  wrong." General Elec. Co. v. EPA, 53 F.3d 1324,
1327 (D.C.  Cir. 1995) (internal citations and quotation marks
omitted).  "Our task is not to decide which among several competing 
interpretations best serves the regulatory purpose;" rather,  "we must
defer to the [agency's] interpretation unless an  alternative reading
is compelled by the regulation's plain  language or by other
indications of the [agency's] intent at  the time of the regulation's
promulgation." Thomas Jeffer- son Univ., 512 U.S. at 512 (internal
quotation marks omitted).  "[E]ven where the petitioner advances a
more plausible read- ing of the regulations than that offered by the
agency, it is  the agency's choice that receives substantial
deference." GE,  53 F.3d at 1327 (internal quotation marks omitted).


this exceedingly deferential standard of review, we conclude  that the
Commission's requirement that majority-minority  boards of non-profit
entities exercise de facto control repre- sents a reasonable
interpretation of section 73.3555.


We begin with the concept of "minority-controlled." As the  Commission
points out, interpreting section 73.3555 as not  requiring de facto
minority control would not only read the  word "controlled" out of the
regulation, but would run counter  to the Commission's "longstanding
focus on control" and real  parties in interest. The Commission put it
this way in its  brief: "The agency has consistently looked beyond the
owner- ship structure of licensees to determine who is the 'real party
 in interest'--whether a person 'is or will be in a position to 
actually or potentially control the operation of the station.' " 
Trinity's interpretation, moreover, would undermine the regu- lation's
purpose. "[I]t is hard to imagine," the Commission  reasoned, "how an
entity controlled by minorities in name  only or in which the
minorities' interests are totally passive  could foster the objective
of the Commission's policies to  broaden minority voices and spheres
of influence over the  airwaves." Trinity, 14 F.C.C.R. at 13602 p 87
(internal quo- tation marks omitted). According to the Commission,
inter- preting the regulation to require only a majority-minority 
board "would provide an incentive for non-minorities to hire 
front-men." The Commission's position has intuitive logic:  How could
an entity actually controlled by non-minorities be 


In support of its interpretation of section 73.3555 as requir- ing that
non-stock corporations demonstrate actual minority  control, the
Commission points to two additional authorities:  (1) Note 1 of
section 73.3555, which provides that "[t]he word  'control' as used
herein is not limited to majority stock  ownership, but includes
actual working control in whatever  manner exercised," and (2) a
footnote to the Commission's  1985 Order adopting section 73.3555's
minority exception, see  Amendment of Section 73.3555, 100 F.C.C.2d
74, 95 n. 59  (1985), which cites a 1982 Policy Statement saying that
pref- erential treatment in the form of tax certificates would be 
granted " 'where minority ownership is in excess of 50% or 


controlling. Whether certificates would be granted in other  cases will
depend on whether minority involvement is signifi- cant enough to
justify the certificate in light of the purpose of  the policy
announced herein.' " Trinity, 14 F.C.C.R. at 13603  p 88 (quoting
Minority Ownership in Broad., 92 F.C.C.2d  849, 853 p 7 (1982))
(emphasis added). Both statements de- fine control in terms of either
majority stock ownership or  actual control. Because non-profits like
Trinity, having no  stockholders, are unable to demonstrate "majority
stock own- ership," we think it not unreasonable for the Commission to
 read Note 1 and the 1982 Policy Statement to require non- profits to
show actual control by minorities.


Relying on Southwest Texas Public Broadcasting Council,  85 F.C.C.2d
713, 715 (1981), the Commission also contends  that it has
"long-standing precedent, applicable to non-stock  corporations such
as NMTV, that 'control' encompasses every  form of actual or legal
control over basic operating policies."  Trinity, 14 F.C.C.R. at 13602
p 86. In Southwest Texas, the  agency "looked beyond legal title" at
who actually controlled  the operation of a station licensed to a
non-profit entity in  order to determine whether the non-profit had
illegally trans- ferred control of the station. 85 F.C.C.2d at 715.
Although  Southwest Texas involved a provision of the Communications 
Act not at issue here, the case supports the Commission's  general
argument that it goes beyond legal formalities--legal  title in that
case and boards of directors here--to determine  control.


Urging us not to defer to the Commission's interpretation  of section
73.3555, Trinity argues that requiring de facto  minority control
conflicts with prior Commission statements.  It points first to the
Commission's statement that "[i]n a non- stock corporation the
Commission normally looks to directors  in evaluating ownership and
control." Hearing Designation  Order, 8 F.C.C.R. at 2475 p 4 n.1
(citing Roanoke Christian  Broad., Inc., 52 R.R.2d 1725 (Rev. Bd.
1983)) (emphasis  added). The Commission has a persuasive response:
Look- ing first to the board of directors as one indicator of control
is  not at all inconsistent with its interpretation of section 
73.3555 as requiring that majority-minority boards actually  control


Trinity next points to the Commission's statement in con- nection with
section 1.1622 (the low-power regulation) that  "[i]f a majority of
the governing board ... are minorities,  the entity is entitled to a
minority preference." Public  Notice, Mimeo No. 6030 at 4 (released
August 19, 1983). This  statement, Trinity argues, forecloses the
Commission from  interpreting section 73.3555 as requiring de facto
minority  control. We disagree. The statement was made in connec- tion
with the Commission's regulation governing minority  preferences in
the low-power market, and until this proceed- ing the Commission had
never addressed how section 73.3555  applies to non-stock
corporations. As the Commission itself  said when it promulgated
section 73.3555, it "has adopted  different standards of minority
control depending on the  mechanism used to foster its minority
policies." Amendment  of Section 73.3555, 100 F.C.C.2d at 95 p 46.


We are equally unpersuaded by Trinity's contention that  the
Commission's interpretation of section 73.3555 conflicts  with the
agency's position before the Supreme Court in Metro  Broadcasting, 497
U.S. 547, where the Commission defended  the intrinsic value of
minority ownership. Not only does  Trinity's argument rely on an
incorrect assumption--that the  Commission's previous recognition of
minority ownership's  value bars it from taking a different position
when interpret- ing a different regulation--but the Commission's
interpreta- tion here is not necessarily inconsistent with its prior
empha- sis on ownership. Because this case involves the definition of 
"controlled" in the context of non-profits for which the con- cept of
"ownership" has no meaning, the Commission's prior  emphasis on
ownership casts no doubt on its interpretation of  section 73.3555.


Trinity next argues that the Commission's definition of 
"minority-controlled" undermines section 73.3555's purpose. 
Acknowledging that section 73.3555 was designed to encour- age
established broadcasters to provide support to minority  broadcasters,
Trinity says that "a de facto control standard  could lead to
exceedingly difficult interpretive questions. A  bright line
'ownership' standard [is] more workable than a  more nebulous


[Bright-line] rules prevent 'controversy and confusion,' there- by
'encourag[ing] settled expectations and, in doing so, fos- ter[ing]
investment by businesses and individuals.' "


Perhaps Trinity is correct. Perhaps requiring de facto  minority
control will discourage established broadcasters, or  at least
non-profit established broadcasters, from providing  the kinds of
assistance that the Commission had hoped sec- tion 73.3555 would
foster and that Trinity made available to  NMTV. A challenge to an
agency's interpretation of its own  regulation, however, turns not on
whether the challenger has  articulated a rationale to support its
interpretation, but on  whether the agency has offered an explanation
that is reason- able and consistent with the regulation's language and
histo- ry. See GE, 53 F.3d at 1327. In this case, we have no doubt 
that the Commission's desire to promote true minority control  and to
prevent sham arrangements is sufficient to justify its  interpretation
of section 73.3555 as requiring de facto minori- ty control.


Finally, Trinity observes that, in a dissent from the Com- mission's
Order adopting section 73.3555, Commissioner Pat- rick interpreted the
regulation as not requiring de facto  minority control: "Under the
majority's scheme, the right to  purchase broadcast stations over the
established ceiling turns  upon the race of the proposed owners alone.
No further  showing is required with respect to how these new owners 
may contribute to diversity. No concern is given as to  whether the
51% minority owners will exert any influence on  the station's
programming or will have any control at all."  Amendment of Section
73.3555, 100 F.C.C.2d at 104 (Commis- sioner Patrick dissenting in
part). Because the majority  adopting section 73.3555 neither
responded to this concern  nor offered a contrary interpretation,
Trinity argues that the  Commission may not now interpret section
73.3555 to give  any "concern" to whether the minority owners "will
have any  control at all." In the decision on appeal in this case, 
however, the Commission interpreted section 73.3555 as re- quiring de
facto minority control, and it is to that decision, not  to the


To sum up, requiring de facto minority control of non-profit 
corporations represents a reasonable interpretation of section 
73.3555. Although Trinity offers a plausible alternative inter-
pretation, we cannot say, in view of the regulation's language  and
underlying policy, that the Commission's interpretation is  "plainly


III


Were we simply reviewing the Commission's interpretation  of its
regulation, our task would be at an end. But the  Commission has not
just interpreted section 73.3555. Con- cluding that Trinity had abused
Commission processes by  exercising de facto control over NMTV in
violation of section  73.3555, the Commission imposed a severe
penalty--denial of  Trinity's application to renew its commercial
television station  license. Because "[d]ue process requires that
parties receive  fair notice before being deprived of property," we
have re- peatedly held that "[i]n the absence of notice--for example, 
where the regulation is not sufficiently clear to warn a party  about
what is expected of it--an agency may not deprive a  party of property
by imposing civil or criminal liability." GE,  53 F.3d at 1328-29. We
thus ask whether "by reviewing the  regulations and other public
statements issued by the agency,  a regulated party acting in good
faith would be able to  identify, with ascertainable certainty, the
standards with  which the agency expects parties to conform...." Id.
at  1329 (internal quotation marks omitted).


In Satellite Broadcasting Co., Inc. v. FCC, 824 F.2d 1 (D.C.  Cir.
1987), for example, the Commission had dismissed as  untimely
applications to operate radio stations, finding that  the applications
had been filed in the wrong location. Be- cause the rules addressed
the filing of applications "in a  baffling and inconsistent fashion,"
we held that the FCC had  failed to give fair notice of its
interpretation and thus could  not "use that interpretation to cut off
a party's right." Id. at  2, 4. In GE, EPA had fined General Electric
for distilling  used solvents and incinerating only the contaminated
portion  instead of immediately incinerating the entire solution. 53


F.3d at 1326-27. Although we deferred to EPA's interpreta- tion of its
regulations as requiring immediate incineration of  the entire
solution, we held that the agency could not fine GE  for its failure
to comply with an interpretation that was "so  far from a reasonable
person's understanding of the regula- tions that [the regulations]
could not have fairly informed GE  of the agency's perspective." Id.
at 1330. See also, e.g.,  United States v. Chrysler Corp., 158 F.3d
1350, 1354-57 (D.C.  Cir. 1998) (holding that agency failed to provide
fair notice of  specific requirements of compliance testing and
government  therefore could not seek an automobile recall on the
ground  that Chrysler had failed properly to perform the testing); 
Rollins Envtl. Svcs. (NJ) Inc. v. EPA, 937 F.2d 649, 653  (D.C. Cir.
1991) (rescinding fine assessed by EPA because  regulation was
ambiguous); Gates & Fox Co., Inc. v. OSHRC,  790 F.2d 154, 156 (D.C.
Cir. 1986) (holding that agency failed  to give fair notice of its
interpretation that breathing equip- ment was required where the
regulation "would reasonably  be read" not to require the


Conceding that the denial of a broadcast license triggers  due process
protection, the Commission argues that section  73.3555 gave fair
notice that non-profit entities had to demon- strate de facto minority
control. Trinity disagrees. Not only  did section 73.3555 itself fail
to make clear that non-profits  had to show anything other than a
majority-minority board,  Trinity argues, but Commission statements in
connection with  the low-power minority preference regulation,
together with  Commission action on Trinity's high-power applications,
led it  to believe that a majority-minority board was sufficient.


We begin again with section 73.3555's requirement that an  entity be
"minority-controlled." This time we ask not wheth- er interpreting the
term "minority-controlled" as requiring de  facto minority control in
the non-profit context is "plainly  wrong," but whether that
interpretation is "ascertainably  certain." Although section 73.3555
never defines "minority- controlled" in the context of non-profit
organizations, the  Commission maintains that section 73.3555's use of
the word  "controlled" should have made clear to Trinity that the


cy was interested in actual control. Under the circumstances  of this
case, we disagree.


To begin with, the Commission never clearly articulates its  theory of
where or how section 73.3555 requires "actual  minority control." At
various points in both its decision and  in its brief here, the
Commission appears to contend that the  term "minority-controlled"
requires an entity to show that  minorities have either majority stock
ownership or actual  control; since non-profits lack stock owners and
cannot show  that they are "more than 50 percent owned by one or more 
members of a minority group," they must demonstrate actual  minority
control. See, e.g., 14 F.C.C.R. at 13603-04 p 88  ("[W]hat the
Commission had in mind was 50 percent owner- ship that constitutes
voting control or an equivalent degree of  interest."). Elsewhere,
however, the Commission seems to  agree with Trinity that "stock
ownership" means board mem- bership in the non-profit context. Viewed
this way, the actual  control requirement stems from the word
"ownership"--enti- ties must demonstrate not only that minorities own
more than  fifty percent of the stock or that they have
majority-minority  boards, but also that those "ownership" interests
are bona  fide. Id. at 13604 p 90 ("[T]he Commission has consistently 
required that minorities have both a substantial equity inter- est and
actual control of the station."). In other words, both  non-profits
and stock corporations would have to show de  facto minority control.
As we said of a similar situation in  GE, "[s]uch confusion does not
inspire confidence in the  clarity of the regulatory scheme." 53 F.3d


The Commission argues that "[a] reasonable reader could  have
ascertained that a regulation requiring 'minority control'  by
implication forbade control by non-minorities." This argu- ment might
have some force but for the fact that the Com- mission's only clear
statements (until it refused to renew  Trinity's Florida license)
about what constituted minority  control over "non-stock corporations"
like Trinity were these:  "If a majority of the governing board ...
are minorities, the  entity is entitled to a minority preference,"
Public Notice,  Mimeo No. 6030 at 4 (released August 19, 1983); and
"[w]e  agree ... that nonstock corporations ... should be judged 


as to minority status on the basis of the composition of the  board."
Random Selection Lotteries, 93 F.C.C.2d at 977. To  be sure, the
Commission made these statements in connection  with section 1.1622,
the low-power minority preference rule,  but section 1.1622's language
is virtually identical to section  73.3555's: the former granted
minority preferences to "[a]p- plicants, more than 50% of whose
ownership interests are  held by members of minority groups," 47
C.F.R.  s 1.1622(b)(1); the latter granted preferences to entities 
"more than 50 percent owned by one or more members of a  minority
group." 47 C.F.R. s 73.3555(d)(3)(iii) (1990). Appli- cants could thus
have assumed, quite reasonably we think,  that section 1.1622's
statements regarding non-stock corpora- tions applied equally to
section 73.3555. And just as those  statements "may well have ...
confused" low-power appli- cants, as the Commission itself found,
Trinity, 14 F.C.C.R. at  13601 p 85, they may have "confused"


The Commission responds that the absence of a similar  statement in
connection with section 73.3555 should have  alerted Trinity that a
majority-minority board was insuffi- cient for section 73.3555
purposes. But the standard is  "ascertainable certainty." Although we
agree with the Com- mission that its statements in the low-power
context do not  "carr[y] over automatically" into the full-power
realm, we also  think that where, as here, the agency failed to
provide a  relevant definition for the key regulatory term--"minority-
controlled"--the applicant is entitled to rely on the agency's  prior
interpretation of a nearly identical regulation. See  Satellite
Broad., 824 F.2d at 4 ("The Commission through its  regulatory power
cannot, in effect, punish a member of the  regulated class for
reasonably interpreting Commission rules.  Otherwise the practice of
administrative law would come to  resemble 'Russian Roulette.' ").


Given the facts of this case, Trinity's interpretation of  section
73.3555 as requiring only a majority-minority board is  particularly
understandable. After NMTV's predecessor,  TTI, applied for
low-power/translator television licenses, the  Commission issued its
low-power/translator television minori-


ty preference regulation along with its statement "that non- stock
corporations ... should be judged as to minority status  on the basis
of the composition of the board." Random  Selection Lotteries, 93
F.C.C.2d at 977. Issuing a Public  Notice informing TTI and other
low-power/translator televi- sion license applicants of section
1.1622's passage and in- structing them to complete supplemental forms
regarding  their eligibility for minority preferences, the Commission 
reiterated: For "non-stock corporations ... [i]f a majority of  the
governing board ... are minorities, the entity is entitled  to a
minority preference." Public Notice, Mimeo No. 6030 at  4 (released
August 19, 1983). When NMTV moved into the  high-power, commercial
television realm with its Odessa li- cense application, nothing in
section 73.3555 signaled that the  Commission might require non-stock
corporations to demon- strate anything beyond a majority-minority
board. No won- der Crouch, acting on the advice of counsel, assumed
that if  the company was entitled to a minority preference under the 
low-power regulation, the Commission would consider it "mi-
nority-controlled" under the virtually identical high-power 
regulation. NMTV's commercial television station license 
applications, moreover, disclosed that NMTV was operating  on exactly
that belief. In support of NMTV's claims to  minority preferences, the
applications stated that "a majority  of its directors are minorities,
and NMTV is therefore minori- ty controlled." Based on both these
representations and its  own investigation into NMTV's license
application, the Com- mission awarded NMTV the Odessa license. May
testified  that the award of the Odessa license "further confirmed my 
belief that NMTV's structure complied with Commission poli- cy." Not
until the Commission began inquiring into NMTV's  application for the
Wilmington license did the agency give  NMTV any reason to believe


Neither Note 1 nor the Commission's footnote reference to  its 1982
Policy Statement gave Trinity "fair notice" that the  Commission was
abandoning its low-power approach and  interpreting section 73.3555 to
require minority directors of  non-profit organizations to demonstrate
actual control. Even 


setting aside the fact that the 1982 Policy Statement appears  only in
a footnote, see McElroy Electronics Corp. v. FCC, 990  F.2d 1351, 1366
(D.C. Cir. 1993) (cautioning the Commission  "not to bury what it
believes to be the heart of its order in the  last line of a
footnote"), because the Commission has equated  seats on non-profit
boards with "ownership" in other contexts,  see Hearing Designation
Order, 8 F.C.C.R. at 2475 p 4 n.1  ("In a non-stock corporation the
Commission normally looks  to directors in evaluating ownership and
control.") (citing  Roanoke, 52 R.R.2d 1725), a non-profit applicant
could rea- sonably interpret Note 1 and the 1982 Policy Statement to 
mean that a non-profit entity would have to show either that  it had a
majority-minority board or that minorities had actual  control, not
both. See Trinity, 14 F.C.C.R. at 13628-30  (Commissioners
Furchtgott-Roth and Powell, dissenting in  part).


Nor can we find "ascertainable certainty" in Southwest  Texas. Perhaps
in hindsight the Commission's action in that  case--determining
whether an unauthorized transfer of con- trol had occurred by going
beyond the formality of legal title  to examining a television
station's actual operations--could  reflect a "long-standing" policy
of looking at actual, rather  than formal, control. But the Commission
had given no  indication that a general policy expressed in Southwest
Texas,  a case arising in a different factual setting under a
different  provision of the Communications Act, would transfer to sec-
tion 73.3555's definition of "minority-controlled."


Finally, section 73.3555's underlying purpose cannot pro- vide the fair
notice required by due process. Before an  agency can sanction a
company for its failure to comply with  regulatory requirements, the
agency "must have either put  this language into [the regulation]
itself, or at least refer- enced this language in [the regulation]."
Chrysler, 158 F.3d  at 1356. General references to a regulation's
policy will not  do.


We find the Commission's insistence that section 73.3555  provided fair
notice particularly problematic in view of the  Commission's failure
to explain satisfactorily how denying 


Trinity's license can be reconciled with cases where it found 
regulatory requirements too unclear to justify sanctioning  other
broadcasters. In Fox Television Stations, Inc., 10  F.C.C.R. 8452
(1995), on reconsideration, 11 F.C.C.R. 5714  (1995), for example, the
Commission ruled that when deter- mining whether a licensee had
exceeded a twenty-five percent  statutory benchmark for alien
ownership, it would measure  "ownership" by considering the percentage
of alien equity  capital contributions rather than the percentage of
outstand- ing shares of all classes of stock held by aliens. Measured
by  that standard, Fox's alien ownership far exceeded the statuto- ry
benchmark because "foreign interests contributed more  than 99% of the
capital of all classes of stock," a fact that  Fox's applications
failed to reveal. Id. at 8474 p 50. Con- cluding, however, that Fox's
interpretation of the statute as  requiring it to report only the
percentage of alien stock  ownership was "not facially implausible,"
id. at 5808 p 137,  and that "our reported decisions ... would not
necessarily  have led a reasonable applicant" to the conclusion that
the  Commission would measure ownership in terms of equity 
contributions, the Commission chose not to deny Fox's license 
renewal. Id. at 8486 p 82 (emphasis added). The Commis- sion reached a
similar result in CBS, Inc., 69 F.C.C.2d 1082,  1092-93 (1978),
refusing to deny CBS licenses in spite of the  company's
"misrepresentations" to the Commission: "Since  there have been no
prior cases of a similar nature to serve as  examples ... network
management heretofore has not been  made aware ... of the grave
consequences to the licensee  which can result from such
misrepresentations of facts to the  Commission." See also Roy M.
Speer, 11 F.C.C.R. 18393,  18422-23 (1996) (concluding that Silver
King, a Home Shop- ping Network spin-off, had violated the FCC's
ownership  attribution rules, but refusing to revoke its license


If Fox's "not facially implausible" interpretation did not  warrant
denying its license renewal application, how can  Trinity's "perhaps
literally accurate" (the Commission's own  words) interpretation
justify denying its license renewal ap-


plication? If the absence of "prior cases of a similar nature  to serve
as examples" persuaded the Commission not to  sanction CBS for its
misrepresentations, how can the Com- mission justify penalizing
Trinity in view of the fact that not  only was there no agency
precedent regarding control of non- profits, but Commission statements
supported Trinity's belief  that a majority-minority board was
sufficient to obtain a  minority preference? The Commission never
answers these  questions--not in its decision, not in its brief, not
at oral  argument. See Orion Communications Ltd. v. FCC, 131  F.3d
176, 181 (D.C. Cir. 1997) ("Although the Commission is  not
necessarily bound by its prior decisions, ... the Commis- sion is
bound to provide an explanation when it departs from  a clear


For all of these reasons, our conclusion in GE applies here  as well:
"Where, as here, the regulations and other policy  statements are
unclear, where the petitioner's interpretation  is reasonable, and
where the agency itself struggles to pro- vide a definitive reading of
the regulatory requirements, a  regulated party is not 'on notice' of
the agency's ultimate  interpretation of the regulations, and may not
be punished."  53 F.3d at 1333-34.


IV


The Commission contends that even "[i]f the Court dis- agrees with our
assessment" that the regulation clearly re- quired de facto minority
control, "it may still find that TBN  intended to mislead the
Commission by creating a sham  ownership structure...." Conceding that
the commercial  television station application asked for information
about nei- ther the TBN/NMTV relationship nor Duff's employment  with
TBN, the Commission faulted Trinity because "[a] rea- sonable person
could appreciate that if all the circumstances  had been made clear,
the Commission would have had ample  reason to inquire further and
ultimately to deny NMTV's  application." Trinity, 14 F.C.C.R. at 13601
p 84. But this  argument rests entirely on the Commission's flawed
conclu- sion that the regulation clearly required de facto minority 


control. Unless the de facto control requirement was ascer- tainably
certain, a "reasonable person" would not have been  able to
"appreciate" the need to disclose these facts. Indeed,  in view of the
low-power regulation's statement that a majori- ty-minority board
entitled an entity to a minority preference,  a "reasonable person"
might well have thought that informa- tion about the relationship
between NMTV and TBN was  irrelevant. Asked about this at oral
argument, Commission  counsel candidly conceded that if the regulation
was not clear,  Trinity would have had no obligation to disclose the
omitted  information because it would not have known that the infor-
mation was at all "material."


The Commission also argues that Trinity had actual notice  of the de
facto control requirement. Not only does this  amount to a post-hoc
rationalization--the Commission no- where relied on actual knowledge
as a basis for finding abuse  of process, see SEC v. Chenery, 318 U.S.
80, 95 (1943) ("[A]n  administrative order cannot be upheld unless the
grounds  upon which the agency acted in exercising its powers were 
those upon which its action can be sustained.")--it also rests  on the
Commission's misleading use of a fragment of the  testimony of
Trinity's lawyer, Colby May. The Commission's  brief quotes May as
saying: " 'I understood always that the  Board of Directors of [NMTV]
had to be the parties that were  in fact controlling and operating
[NMTV].' " The Commis- sion neither quotes nor acknowledges the second
half of  May's sentence: "... and they did that by coming to meet-
ings, participating in the discussions at meetings, voting at 
meetings, and generally directing the policies and affairs of  the
company." It was because of this advice that, after  NMTV was awarded
the Odessa license, its board began  observing these formalities.
Asked about all of this at oral  argument, Commission counsel conceded
that there was no  actual notice and that if we were to disagree with
the  Commission's conclusion that the regulation was clear, "that's 


The Commission's denial of Trinity's license renewal appli- cation is
vacated.


So ordered.