Nonprofits Don’t Have to Bid for Licenses

A federal appeals court Tuesday upheld the right of National Public Radio, religious broadcasters and other nonprofits to apply for government-issued radio and television licenses without having to bid in a costly auction.

In an eight-page opinion, the U.S. Court of Appeals in Washington overturned Federal Communications Commission rules that required noncommercial broadcasters to compete against wealthier for-profit concerns. The opinion applies to cases in which both sides seek to operate on airwaves in the commercial television or radio band.

The amount of money at stake was unclear, but hundreds if not thousands of broadcasters could be affected by the case, which arose from a lawsuit filed in June 2000 by NPR.

But the court decision could delay a planned FCC auction of 350 FM stations in December. It could also prompt the Bush administration to recalculate its federal budget estimates for license auction revenue and force Congress and the FCC to draft new measures to clarify a 4-year-old federal law on airwave auctions that U.S. Court of Appeals Judge A. Raymond Randolph called “a mess.”

“The FCC will have to go back and modify the rules to fairly accommodate noncommercial broadcasters,” said Cheryl Leanza, deputy director of Media Access Project, a nonprofit public-interest law firm that filed a brief supporting NPR’s case.

But she predicted the dispute may not end there. “The FCC probably will face a [further] legal challenge” from some disgruntled party, Leanza said.

An official of the FCC, the defendant in the case, declined to comment, saying the agency was studying the ruling.

The decision affects only commercial airwaves. It does not affect license applications for radio frequencies in the noncommercial 88.1 megahertz to 91.9 megahertz FM band where most NPR stations are located. Nor does it affect the 250 TV station slots reserved for noncommercial use.

Still, the decision leaves the FCC in a quandary over how to allocate licenses to would-be radio and television broadcasters.

The U.S. Court of Appeals struck down as “arbitrary and capricious” an evaluative hearing process the FCC had used to award broadcast licenses. Those hearings, which took into account, among other things, an applicant’s community service and broadcast assets, were dropped in the mid-1990s in favor of the airwave auctions that were challenged by NPR.

NPR spokeswoman Gretchen Michael said the network was “pleased with the court’s decision” and looked “forward to working with the FCC to devise a process for awarding the spectrum space.” But many legal experts say the FCC’s remaining options may prove even more unpleasant and divisive.

The FCC told the appeals court it was considering at least three other methods of awarding licenses: It could use a point system to evaluate station applicants; evaluate nonprofits independent of commercial operators; or it could make nonprofits ineligible to apply for commercial broadcast licenses.

“We are not going to comment on something that is speculative,” Michael said.

But privately nonprofits said they would challenge any FCC decision to exclude them from applying for commercial stations, saying that the noncommercial airwaves are nearly full.

But Jack Goodman, general counsel for the National Assn. of Broadcasters, a Washington trade group, served notice that his group would oppose any FCC move to reserve additional airwaves for nonprofits.

“Congress has put the FCC in a really difficult position . . . but we don’t want a situation where commercial broadcasters have to give up additional spectrum,” Goodman said.