[Congressional Record Volume 141, Number 33 (Wednesday, February 22, 1995)]
[Extensions of Remarks]
[Pages E400-E401]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                      FCC TAX CERTIFICATE PROGRAM

                                 ______


                          HON. BILL RICHARDSON

                             of new mexico

                    in the house of representatives

                      Wednesday, February 22, 1995
  Mr. RICHARDSON. Mr. Speaker, yesterday the House unwisely voted to 
eliminate the Federal Communications Commission's tax certificate 
program to encourage minority ownership of telecommunications entities. 
This program has successfully allowed minorities to add their voice to 
society through our Nation's vast array of communications media. All 
Americans must have access to the means of communication and FCC's tax 
certificate program ensures diversity of content. My friends at the 
Minority Media and Telecommunications Council have put together a list 
of 14 points on the importance of this program. I urge my colleagues on 
the House and Senate side to consider the following points.
        Why The FCC's Tax Certificate Policy Should Be Retained

       1. The policy benefits taxpayers. By involving otherwise 
     excluded minorities in media ownership, more broadcast and 
     cable properties reach their highest valued use, thereby 
     creating jobs and generating investment and tax revenues. The 
     policy's reinvestment feature retains capital in the media 
     industries, where it helps build the communications 
     infrastructure. Furthermore, the policy helps minority 
     business succeed and ultimately become taxpayers.
       2. The FCC was justified in adopting the policy in 1978. It 
     had before it an extensive staff report documenting the need 
     for minorities to participate in the broadcasting industry as 
     owners, and the need for marketplace intervention to help 
     achieve that objective. The Reagan FCC supplemented that 
     record in 1982. Even when the Commission suspended the 
     comparative hearing and tax certificate policies in 1986, it 
     preserved the tax certificate policy, noting that it is only 
     minimally intrusive while being highly cost effective.
       3. Congress has thoroughly overseen the Commission's 
     implementation of the policy, and has repeatedly expressed 
     its endorsement. Support for the policy has been consistently 
     nonpartisan, both in Congress and at the Commission.
       4. The policy is consistent with the original intent of 
     Section 1071, and with the Commission's interpretation of 
     Section 1071. Congress gave the Commission wide discretion in 
     the implementation of Section 1071. In applying Section 1071 
     to other diversity-promoting contexts, the Commission 
     exercised its discretion with Congressional endorsement. The 
     Commission followed the same procedures in using tax 
     certificates to promote minority ownership.
       5. The policy has delivered important benefits to the 
     public. Extensive research cited in Metro Broadcasting, Inc. 
     v. FCC, 497 U.S. 547, 579-84 (1990) demonstrates that the 
     minority ownership promotes diversity in service to the 
     public. Minority owners are industry leaders in hiring and 
     training minorities, and in providing information which is 
     unavailable from other outlets. The policy has delivered 
     value far beyond the public's investment.
       6. The policy evolved as a highly desirable substitute for 
     intrusive content-based regulation. Any weakening of the 
     policy will severely undermine--and could prompt 
     reexamination--of the FCC's reliance on its minority 
     ownership policies as a substitute for content-based 
     regulation in promoting First Amendment values.
       7. The policy is fair. It has never been seriously accused 
     of disadvantaging whites, since it is neither a quota nor a 
     set aside.
       8. The policy is very cost effective. It goes to the heart 
     of the problem--access to capital. Moreover, it is very 
     inexpensive to administer.
       9. The policy is especially valuable to the cable industry. 
     Cable operators possess unique power to select the range of 
     programming available to viewers and to stimulate diversity 
     in the national programming marketplace. Thus, diversity in 
     cable ownership is especially critical to cable viewers.
       10. Weakening the policy would make it commercially 
     irrelevant. The policy's incentive to sell properties to 
     minorities is only moderate, having been primarily 
     responsible for increasing minority broadcast ownership from 
     almost zero to 2.7% in 15 years. That is very significant but 
     hardly indicative of a massive rush by sellers to trade with 
     minority buyers.
       11. The policy should be applied to transactions regardless 
     of size. The policy was designed to help minorities enter the 
     mainstream of American commerce. While tax certificates have 
     been primarily used for small transactions, one might 
     occasionally be used for a larger transaction, given the 
     growth in the communications industry. Because other 
     companies had such a long headstart in spectrum access and 
     media ownership, no minority broadcaster or cable system 
     owner has yet attained sufficient size and influence to 
     justify ``graduation'' out of the program.
       12. Third parties have a fair chance to challenge applicant 
     bonafides. In questions from the bench in Adarand 
     Constructors v. Pena, No. 93-1841 (argued January 17, 1995), 
     Justice O'Connor expressed concern that third parties should 
     have a meaningful opportunity to challenge specific 
     transactions. The FCC's well established petition to deny 
     process affords challengers that right. Indeed, abuses 
      [[Page E401]] have been very rate. Most minorities who have 
     used the policy are hand-on operators.
       13. The FCC, working closely with the IRS, possesses the 
     expertise to review and improve upon the tax certificate 
     policy. The FCC is obtaining public comment on the policy, 
     with comments due on April 17. Among the matters the FCC 
     might consider are the need for additional data on the 
     policy's long and short range tax consequences, the optimal 
     holding period for facilities obtained under the policy, and 
     procedures for additional scrutiny of the bonafides of tax 
     certificate applicants. Congress should receive the FCC's 
     report before considering statutory modifications to the 
     policy.
       14. If policy changes are considered, they absolutely 
     should not be made retroactively. Strong businesses develop 
     operating plans based on the reasonable assumption that 
     government regulations will be changed only prospectively and 
     with reasonable notice. Retroactive decision making is anti-
     business, and is virtually unknown in business regulation.
     

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