Revised Form 323 Out for Comment at OMB

Proposed change in the form would allow individuals to identify themselves as members of as many as five separate racial categories, simultaneously. But the results may not help the Commission get to where it seems to want to go.

The Federal Register on March 1 has informed us that the FCC’s Broadcast Ownership Report (FCC Form 323) is back at the Office of Management and Budget (OMB) for review. According to the notice, the Commission is proposing a change in the question seeking the racial identification of attributable interest holders. You can get to the OMB’s files on the matter at this link.

The form currently in effect lists five racial categories and then a catch-all “Two or more races”; respondents are required to select only one of those six options. Apparently, though, OMB changed its policies governing collection of data relative to race and ethnicity last September. (According to the FCC, that change is reflected in an OMB action dated September 13, 2012, cited by the FCC as “Notice of Office of Management and Budget Action (NOA), dated 09/13/2012”. We were unable to track down a copy of that action, but we’re willing to take the Commission’s word that it exists somewhere. If any reader can point us to a site where we might find the OMB action in question, we’d be much obliged.) As a result, the Commission is proposing to eliminate the “Two or more races” option and to allow respondents to select as many of the other racial options as may apply to the individual who is the subject of the response.

While the elimination of the generally uninformative “Two or more races” might be thought to provide a greater degree of useful data concerning the racial composition of commercial broadcast ownership, we’re not confident of that.

After all, the draft revision of Form 323 doesn’t provide any guidance for determining precisely when an individual may properly deem him/herself to be qualified to check any particular racial category.  Presumably having a parent belonging to one category or another will clearly suffice. But what about more distant levels of racial ancestry? 

The proposed version of the form would allow an individual to identify him/herself as belonging to as many as five different racial groups, simultaneously. (The proposed form provides five separate racial categories, and instructs the respondent to “[c]heck all racial categories that apply.” Note that the form also asks for ethnicity information separate and apart from racial information, injecting a further element of heredity into the mix.) That clearly indicates that the Commission contemplates that claims of racial affiliation can be based on genetic contributions dating back at least three generations (i.e., to the great-grandparent level), which suggests that as little as 1/8 -- and maybe less -- of one’s genetic inheritance may affect one’s response.

The draft version of the Ownership Report submitted to OMB is silent on just how far down the family tree one may permissibly – or is required to – climb in order to determine the correct answer. The form seems to leave it up to the respondent to make the call. But if that’s the case, how reliable will the resulting statistics be? The flap in the Massachusetts senatorial election last fall relative to then-candidate-now-Senator Elizabeth Warren’s ancestry illustrates some of the difficulties attendant to self-identification of racial heritage.

As long as the Commission is trying to clean up its form in the hope of producing useful statistics relative to the racial composition of broadcast ownership, it might want to take this opportunity to do just that. Greater specificity in the instructions to Form 323 would be a start.

Of course, even if the Commission were to refine its form to clearly specify the necessary quantum or degree of racial identity, it would face the problem of verifying the responses. Would it undertake spot checks? Would it investigate allegations of racial misidentification? What type of proof would be necessary, or sufficient, to satisfy the Commission?  If no verification processes are contemplated, then how can the Commission be confident of the accuracy of the data it’s proposing to amass? That’s especially true in view of the seemingly infinite latitude which the revised Form 323 currently accords to respondents relative to racial/ethnic identification claims.

Some – including this blogger in particular – have taken the position that the race and ethnicity of broadcast owners are (in the words of the brief for Brown in Brown v. Board of Education) a constitutional irrelevance. More than 20 years ago, while working for another law firm, I argued to the Supreme Court that the FCC could not constitutionally discriminate in its broadcast licensing policies based on race or ethnicity.   The Court ruled the other way in that particular case (Metro Broadcasting, Inc. v. FCC), but within five years the Court had overruled Metro in a case called Adarand Constructors v. Pena. As a result, the Commission was left constitutionally unable to engage in race- or ethnicity-based decisionmaking unless it could satisfy the “strict scrutiny” standard of review. That standard of review is particularly demanding and ordinarily requires a conclusive demonstration of past discrimination which the challenged race-based scheme would be intended to correct.

In the nearly two decades since Metro was overruled, the FCC has not compiled such a conclusive demonstration. A number of observers suspect that the Commission’s push in recent years to amass (through its revised ownership reporting requirements) extensive information about the racial/ethnic/gender composition of the broadcast industry is an effort to generate data that might support such a so-called “Adarand showing”. If that’s the case, then it would appear even more important for the Commission to take careful steps to assure that any data that it seeks to compile are maximally accurate and reliable. The constitution disfavors race- and ethnicity-based governmental decisionmaking, which explains the high hurdles the Supreme Court has imposed on that practice. If the Commission is planning to try to cross that constitutional minefield, it will have to be prepared to make an overwhelmingly persuasive case.

In its proposed form, it’s far from clear that the revised Ownership Report form currently awaiting OMB review will do the trick.

In any event, anyone interested in sharing their thoughts about the revised Form 323 may submit comments to OMB by April 1, 2013.

(For those readers interested in the fate of the Special Use FRN (SUFRN), the proposed form sitting over at OMB just now does not appear to alter the availability of the SUFRN. The FCC’s Supporting Statement makes no reference to any change in that regard, and the sample form also is silent on the question. Note, however, that the Commission has submitted only a Word version of the form to OMB. Astute readers will recognize that the SUFRN option shows up as a drop-down option relatively deep in the inner recesses of the online version of Form 323. The SUFRN option does not appear in the Word version. Indeed, the last time the Commission revised the SUFRN option, it had to write the changes into the form by hand, as demonstrated in our post at the time.)

Bootstraps Auction Preference Under Consideration

Bureaus seek comments on possible auction preference for those who have “overcome disadvantage”

Holy Horatio Alger!! If you’re a modern day Ragged Dick, looking to pull yourself up by the bootstraps through grit, determination, clean living, etc., your kind benefactor may be none other than the FCC. The Commission (or at least one of its Advisory Committees and two of its Bureaus) is considering the establishment of a spectrum auction “preference” for individuals or entities who have “faced substantial disadvantages and overcome those disadvantages”.

But don’t get your hopes up yet. The idea is in its earliest stages, and raises a host of conceptual and practical problems. Despite that, the Media and Wireless Bureaus have asked for comment on the notion.

The idea was propounded by the Commission’s Advisory Committee on Diversity for Communications in the Digital Age, which submitted recommendations to the Commission back in October. (You can find a link to the recommendations here.) According to the Advisory Committee, the suggested preference would “expand the pool of well-qualified applicants for FCC licenses” and, in the case of broadcast services, possibly enable “applicants who otherwise might not be able to obtain FCC licenses to compete in auctions for broadcast licenses and if successful, contribute to viewpoint diversity”. As the Advisory Committee sees it, folks who have “faced and overcome substantial disadvantage” have certain “unique strengths” that might be “underrepresented and undervalued” in the Commission’s application processes absent some preference program.

If all this sounds just a little vague to you, you’re not alone.

What kind of “unique strengths” are we talking about here? The Advisory Committee is not particularly clear on that. It alludes to “perseverance” and “resourcefulness”, but fails to note that, in all likelihood, the vast majority of successful participants in spectrum auctions could be said to have exhibited both traits simply by toughing it out through the FCC’s processes. The Advisory Committee also cites a study which supposedly found that “‘grit’ is a better predictor of success than IQ score or conscientiousness”. Of course, the FCC has not historically imposed any minimum intelligence standard on its applicants, nor has it routinely inquired into the “conscientiousness” of its applicants. But the Advisory Committee’s citation suggests that, if the FCC had to choose, it might want to pick gritty applicants over smart or conscientious ones.

And what kind of “disadvantages” are we talking about? Again, that question is wide open, although the Advisory Committee has provided a “non-exhaustive” list of “disadvantages which, if substantial, would likely qualify an individual for a preference”. Those include:

  • Psychological disorders which have rendered professional or business advancement “substantially more difficult than for most individuals”;
  • “Social patterns or pressures” which have discouraged the individual from pursuing education or business opportunities;
  • Unequal access to credit due to “substantial economic disadvantage”;
  • Unequal treatment in “business opportunities”.

Call me crazy (which, mind you, might qualify as a “disadvantage”), but the universe of folks who might claim themselves to be subject to one or more such disadvantages could encompass a substantial percentage – maybe even a majority – of the population.

Of course, entitlement to the preference would require that the applicant have “overcome” the disadvantage (however the term “disadvantage” might ultimately be defined). But precisely how one might be said to have achieved that status is also left way up in the air. The Advisory Committee is willing to go only so far as to say that the preference would be available to those who “can show that they have entered into or made some advancement in the professional world or a comparable context.”

While that criterion (“some advancement in the professional world”) would leave would-be preference claimants a lot of room to maneuver, they’d have to be careful not to over-sell their case. The Advisory Committee would deny the preference to anyone who had overcome disadvantage so successfully that he/she has already managed to acquire “considerable financial resources”. But if “perseverance” and “resourcefulness” (and, maybe, “grit”) are the desirable traits, wouldn’t the really successful folks – i.e., the ones who had succeeded in amassing “considerable financial resources” – be the most likely to have those traits? You’d think so – but the Advisory Committee figures that those really successful folks would be able to participate in spectrum auctions without help. But if perseverant, resourceful folks are already able to participate without the need of a preference, how can the Advisory Committee say that such applicants are “underrepresented” and “undervalued”? Indeed, what does “underrepresented” mean here, anyway? What level of “representation” needs to be achieved to avoid “underrepresentation”, and how will we all know when we get there?

The Advisory Committee and the Bureaus also acknowledge that administration of such a preference would entail a variety of practical questions. Since claims for the “overcoming disadvantage” preference would be assessed on a case-by-case basis, and since we can reasonably expect that most claims would feature factors more or less unique to each separate claimant, the process of assessing those claims would be cumbersome, to say the least. And that doesn’t even begin to address the problem of whether – and if so, how – an individual’s success at overcoming disadvantage could or should be allowed to benefit an entity in which that individual has some interest. The need to consider and resolve each such claim before the auction would almost certainly slow the auction process down and introduce a dangerous level of uncertainty to that process. 

With all due respect to the Advisory Committee, its recommendations are difficult to take seriously. The Advisory Committee seems to have concluded that it would be nice to hand out a preference to those who have “overcome disadvantage”, and it is now attempting to justify that some way, somehow. But the Advisory Committee offers no demonstration that the ranks of FCC applicants currently do not include – and historically have not included – perseverant, resourceful, gritty applicants. And even if such a showing could be made, the breadth of the notion of “disadvantage” envisioned by the Advisory Committee would likely make its approach unworkable – even before you factor in the wholesale subjectivity of that notion along with the problem of identifying success in “overcoming disadvantage” (not to mention the related problem of identifying “too much” success).

According to its webpage, the Advisory Committee’s “mission” is to make recommendations that will “further enhance the ability of minorities and women to participate in telecommunications and related industries”. From the 1970s into the 1990s, the FCC adopted and implemented a number of policies expressly designed to promote broadcast ownership by minorities and females. While those policies were initially upheld by the Supreme Court in the 1990 Metro Broadcasting decision, that decision was overruled five years later in the Adarand case. As a result of Adarand, the FCC’s – and, in general, the government’s – ability to engage in race- or gender-based decision making is narrowly circumscribed. That, in turn, limits the range of constitutionally-permissible options available to the Advisory Committee in the advancement of its mission.

That may explain the Advisory Committee’s recommendations here. The recommendations could be read as an effort to devise an ostensibly non-race-, non-gender-based preference system which could, in practice, be implemented to benefit primarily minorities and women. (The recommendations include a somewhat defensive section addressing “why the [proposed] program would meet legal tests”, in which Adarand and other cases are discussed – which suggests that this reading may not be far-fetched.) But the end result is a proposal so amorphous and inchoate that it makes little if any sense at all.

And on a historical note, let’s not forget that for decades the Commission engaged in elaborate processes designed to permit comparisons of the personal qualifications of broadcast applicants. Those processes included preferences for minorities and females.  In the 1993 Bechtel decision, the U.S. Court of Appeals for the D.C. Circuit held that those comparative processes were arbitrary and capricious. Following the decision, the Commission reportedly sought to redesign its comparative policies to accommodate the Court’s criticisms – but then Adarand was issued and the Commission was unable to come up with a comparative approach that could constitutionally afford preferences to minorities and females. Ultimately, the Commission abandoned the effort, opting instead for a simple auction process to dole out broadcast licenses.

The Advisory Committee’s recommendations would in effect return the Commission to the old comparative days, at least to the extent that they would call for examination of the particular and peculiar qualifications of individual applicants. Unless the Commission is prepared to do now what it was either unwilling or unable to do in the wake of Bechtel and Adarand – that is, devise a non-arbitrary and non-capricious mechanism for assessing the individual attributes of applicants – the Commission may want to think long and hard before chasing this concept down the rabbit hole.

The recommendations are now open for comments and reply comments. Comments are due by February 7, 2011; reply comments by February 25.