Trinity Broadcasting of Florida, Inc. v. Federal Communications Commission

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 29, 2000 Decided May 5, 2000

No. 99-1183

Trinity Broadcasting of Florida, Inc. and
Trinity Christian Center of Santa Ana, Inc., d/b/a
Trinity Broadcasting Network,
Appellants

v.

Federal Communications Commission,
Appellee

Colby May, National Minority Television, Inc.,
Intervenors

Consolidated with
99-1184, 99-1186

Appeals of an Order of the
Federal Communications Commission

Timothy B. Dyk argued the cause for appellants and
intervenors supporting appellants. With him on the briefs

were Howard A. Topel, Kathryn R. Schmeltzer and Lawrence
D. Rosenberg. Barry H. Gottfried entered an appearance.

William H. Crispin, Dean R. Brenner and Katherine
Connor Linton were on the brief of amici curiae Members of
Congress, Senator John Ashcroft and Congressman Randy
Cunningham.

Jordan W. Lorence was on the brief of amici curiae
Evangelical Association of Pastors & Layman, et al.

Joel Marcus, Attorney, Federal Communications Commis-
sion, argued the cause for appellee. With him on the brief
were Christopher J. Wright, General Counsel, and Daniel M.
Armstrong, Associate General Counsel. C. Grey Pash, Jr.,
Counsel, entered an appearance.

Before: Edwards, Chief Judge, Tatel and Garland, Circuit
Judges.

Opinion for the Court filed by Circuit Judge Tatel.

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tions Commission interpreted its now-superseded minority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 renewal application.

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 acquire an equity interest in a

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, either:

(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 programming.

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 TBN's affiliates.

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 (1993).

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 from the high-

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 argument
in turn.

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 control.

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 exercise de facto control.

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). Applying

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
"minority-controlled?"

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 non-profit corporations.

 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 'ownership' and de facto control standard....

[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 earlier dissent, that we owe deference.

 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 wrong."

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 equipment).

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 agen-

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 at 1332.

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" high-power applicants
like Trinity.

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 that "minority-controlled" might
mean something beyond a majority-minority board.

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 "given the
various legal conclusions that can be drawn from Silver
King's documented activities.")

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 precedent.").

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 end of the case."

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

So ordered.