1672 Federal Communwations Commission Reports
Agreement, Licensee And Public Interest Groups
Reimbursement Agreement
Petitions filed by citizens groups for approval of the reimburse 
ment provisions in six Iicensee-citizens group settlement agree 
ments, granted. Reimbursement provisions will be approved only if
the expenses claimed were incurred in the representation of the
citizens groups before the Commission and are documented.
FCC 78--875
BEFORE THE
FEDERAL COMMUNICATIONS COMMlSSION
WASHINGTON, D.C. 20554
In re Petitions for Special Relief of Citizens
Communications Center Requesting Express
Commission Approval of Reimbursement Pro 
visions Contained in Licensee-Citizens Group
Agreements in Certain Cases.
MEMORANDUM OPINION AND ORDER
(Adopted: December 21, 1978; Released: January 2, 1979
By THE CoMMISSION: COMMISSIONERS LEE A,'lD WASHBURN
CONCURRING IN TIlE RESULT; COMMISSIONER QUELLO CONCURRING
AND ISSUING A STATEMENT; CoMMISSIONER BRO\VN ISSUING A
SEPARATE STATEMENT.
1. On April 12, 1978, and June 15, 1978, Citizens Communications
Center (Citizens), a public interest law firm, filed petitions for special
relief requesting the Commission to expressly approve the reimburse 
ment provisions contained in the licensee-citizens group agreements in
the following cases: Starr WQIV, Inc., 59 FCC 2d 257 (1976) (hereafter
WNCN): Wa.shington Star Communications, Inc., 61 FCC 2d 223 (1976)
(hereafter WMAL); New South Radio, Inc., DN 20463 (1977) (hereaf 
ter, WACT); WGAL Television, Inc., DN 21034, (1977) (hereafter
WGAL); F70wer City Television Corp., FN BTC-S341, (1977) (hereaf 
ter WOKR); Newhouse Br<Jalka.sting Co., FN BTC-8372 (1977)
(hereafter KOIN). Since Citizens is classified as a tax-exempt
charitable and educational organization pursuant to Section 501(c)(3)
of the Internal Revenue Code, it is subject to IRS guidelines regarding
acceptance of fees for legal services rendered. On March 8, 1978, the
IRS ruled that Citizens may not accept reimbursement of its legitimate
and prudent expenses which a licensee has agreed to pay without
70 F.C.C. 2d
Licensee-Citizen Group Agreements
1673
jeopardizing its tax-€xempt status unless the Commission expressly
approves the reimbursement. Media Access Project (MAP) has filed
comments in support of Citizens' petitions for special relief. No
opposition to the petitions has been filed.
2. In each of the above cases, Citizens represented community
groups objecting to the Commission's grant of pending renewal and/or
assignment applications.' The agreements reached between the
citizens groups and licensees included provisions for improved broad 
caster performance in areas such as ascertainment of community
problems, minority employment and local programming. As part of the
overall agreement between the licensee and community group, each
licensee agreed to reimburse the legitimate and prudent expenses
incurred by the challenging community group, and, in fact, the
licensees already have paid the agreed upon amounts to Citizens, which
has placed the funds in escrow.
2
In each case the Commission granted
the application subsequent to the filing of the licensee-citizens'
agreement with the Commission,' doing so only after finding that "the
public interest, convenience, and necessity would be served" by the
granting of each application.
4
3. The Commission, while granting the applications, did not
expressly uapprove" the licensee-citizens group agreements. Instead,
citing its Srotement of Policy re: Agreements Between Broadcast
Licensees and tlw Public, 57 FCC 2d 42 (1975), the Commission neither
approved nor disapproved the terms of the agreements, in whole or in
part. In the Srotement of Policy, the Commission determined that it
would not prescribe nor prohibit particular terms of licensee-citizens
1 The Civil Liberties Union of Alabama in the WACT case; Feminists for Media Rights
in the WGAL case; Action for Better Media and Rochester Black Media Coalition in
the WOKR case; National Organization for Women, Portland, Oregon Chapter, in the
KOIN case; D.C. Media Task Force and Adams-Morgan Organization in the WMAL
case; and WNCN Listeners Guild of N.Y. in the WNCNcase.
2 The amounts paid to Citizens pursuant to the tenns of the reimbursement provisions
and placed in escrow are $5,200 (the WACT case), $36,057.50 (the WGAL case), $1,975
(the WOKR case), $10,390 (the KOIN case). $50,000 (the WNCN case), and $15,000
(the WMAL case). Citizens' petitions contain affidavits and accompanying itemized
statements which detail the hours spent by each attorney and paralegal and the
hourly rate charged for each person's time, along with a detailed accounting of out 
of~pocketexpenses, for each case except the WACT case. There apparently is no
affidavit submitted in connection with the WACT case, although Citizens has
submitted an itemized statement deta:t1ing the time expended and out-of-pocket
expenses.
3 The WAC".[' case, Summary Decision of. Administrative Law Judge Byron E.
Harrison, Docket No. 20463, File No. B1Wl690 (November 11,1977); the WGAL case,
Summary Decision of Administrative Law Judge Reuben Lozner, Docket No. 21034,
File No. BRCT-50 (August 18,1977); the WOKR case. Consent to Transfer Control 
Form 732, File No. BTG-8341 (August 15, 1977); the KOIN case, Consent to Transfer
Control-Form 732, File No. BTG-1l372 (August 26, 1977); the WMAL case, 51 FCC
2d 223 (July 30,1976); and the WNCN case, 59 FCC 2d 257 (May 5,1976).
• 47 U.S.C. See. 309(a). This provision mandates such a public interest finding by the
Commission before an application is granted.
70 F.e.e. 2d
1674
Federal Communwations Commission RR:pm-ts
group agreements, as long as the terms are not unlawful or violative of
particular Commission rules.
s
4. Subsequent to the grant of the licensees' applications by the
Commission, Citizens requested a ruling from the IRS that acceptance
of the funds paid by the licensees to reimburse its legitimate and
prudent expenses incurred in connection with the application proceed 
ings would not jeopardize its Section 501(c)(3) tax-exempt status, since
the FCC had "accepted" the agreements.
6
On March 8, 1978, the IRS
ruled that Citizens could not accept the funds paid by the licensees
pursuant to the reimbursement provisions of the settIemelit agree 
ments since the Commission did not "approve" the reimbursement
provisions.7 Since the fees had not been "approved by an administra 
tive agency" as required by Rev. Rul. 75--76, acceptance of the fees by
Citizens would jeopardize its tax-exempt status.
8
5. As a result of the IRS ruling, Citizens has filed these two
petitions requesting our approval of the reimbursement provisions
contained in the citizens' agreements in these cases.
9
We believe the
public interest would be served best by granting Citizens' petitions and
expressly approving the fees paid pursuant to the reimbursement
provisions in the subject agreements.
6. In a recent decision, Zenith Radio Corp., 42 RR 2d 468, 471
(February 17, 1978), the Commission, while expressly disapproving one
aspect of a licensee-eitizens group agreement,'O held that the
reimbursement provision was "compatible with Commission objec 
tives." The Commission, citing the .decision of the Court of Appeals in
Office of Communwation of United Church of Christ v. FCC, 465 F.2d
519 (D.C. Cir. 1972), stated that "the provision for reimbursement of
Citizens Committee's expenses is not contrary to Commission policy, as
it appears that such reimbursement is limited to legitimate and
~The Commission stated that it would review agreements "to determine whether they
improperly delegate nondelegable licensee responsibilities, whether they improperly
bind future exercise of the Iicen..'::ee's non-delegable discretion, and whether they
othen\'ise comply with applicable statutes, rules, and policies." 57 FCC 2d at 54.
e Citizens informed the Commission in a letter dated June 4, 1976, that it intended to
request a ruling from the IRS concerning the sufficiency of the Commission's action
in "accepting" the agreements and that it might become necessary to return to the
Commission at a laterdate depending upon the outcome of the IRS ruling.
7 Letter from Jeanne S. Gessay, Chief, Ruling Section, Exempt Organizations,
Technical Branch, IRS, to Citizens Communications Center, dated March 8, 1978.
S ld.
9 As pointed out above, the licensees already have paid Citizens the amounts stated in
the settlement agreements, and the funds have been deposited by Citizens in an
escrow aeeount. Therefore, Commission approval of the reimbursement provisions
will in no way require the reopening of existing agreements, or require the
Commission to reconsider whether the granting of the applications was in the public
interest.
10 The Commission disapproved the provision of the agreement which required the
licensee to go silent for six hours preceding a format change since this provision
improperly curtailed the future exercise of the licensee's nondelegable discretion.
70 F.C.C. 2d
Licensee-Citizen Group Agreements
1675
prudent expenses incurred by the Committee as a party to this
proceeding." Moreover, in examining the agreements before us in the
renewal proceedings, we determined that they "otherwise comply with
applicable statutes, rules and policies" (note 5, supra). Both Citizens
and the licensees in question determined that the reimbursed fees were
reasonable and prudent. In the 1975 Stat£ment ofPoliey licensees were
instructed to reject proposals they feel are not in the public interest (57
FCC 2d 48 at para. 21) and we have stated that "[w]herever possible,
we will construe the provisions of citizen agreements in a manner
favorable to their implementation." 57 FCC 2d 49 at para. 25.
Obviously, in light of IRS policy, Commission refusal to give express
approval to the reimbursement provisions before us constitutes de facto
disapproval since Citizens may not accept the funds payable under
these provisions. This is a frustration of our policy, and we therefore
expressly approve the reimbursement provisions of the licensee-citizen
agreements listed in paragraph 1, supra, and the fees paid thereunder.
7. Accordingly, for the foregoing reasons, IT IS ORDERED, that
the Petitions for Special Relief filed by Citizens Communications
Center in the cases herein ARE GRANTED.
FEDERAL COMMUNICATIONS COMMISSION,
WILLIAM J. TRICARiCO, &cretary.
CONCURRING STATEMENT OF FCC COMMISSIONER JAMES H. QUELLO
RE: PETITIONS FOR SPECIAL RELIEF FILED BY CITIZENS
COMMUNICATIONS CENTER REQUESTING APPROVAL OF
REIMBURSEMENT PROVISIONS CONTAINED IN CERTAIN LICENSEE 
CITIZENS GROUP AGREEMENTS.
I reluctantly concurred because (1) I believe the entire subject of
legal reimbursement raises serious questions that should be resolved by
comprehensive rulemaking not by an ad hoc special exception; (2) the
intrusion of the FCC into this particular agreement violates the spirit
and intent of our 1975 policy statement stating the FCC would
maintain neutrality and neither prescribe nor prohibit any particular
agreement terms; and (3) 1 question the propriety and legality of
reimbursing legal expenses for longtime adversary activist groups who
do not represent the overall public but use legal processes to
promulgate their own private, self-serving version of public interest.
I am particularly concerned about Commission sanction of private
agreements and reimbursements because the overall real public is
usuaIly unaware of the agreement provisions which significantly
affect what it sees and hears on television and radio. I remain
concerned that a single, highly vocal group, with an indeterminate
constituency can exert disproportionate influence over programming
for the entire community.
The preferences of one group might well be antithetical to a far
greater majority of others. If many minority, civic or citizens groups
70 F.G.C. 2d
1676 Federal Communications Commis:>ion Reparts
all prevailed upon a station for special agreements, (with the added
inducement of reimbursement for litigation), the resulting chaos could
threaten the quality and stability of broadcast service.
Public interest law firms enjoy tax exempt status under Section
501(c)(3). The IRS has ruled that "...public interest law firms are
charities only so long as they provide representation in cases of
important public interest that are not economically feasible for private
firms." Revenue Rule 75-76 notes that"...the likelihood or certainty
of an award of fees is a factor affecting the appropriateness of the
particular ·litigation for a public interest law firm...As legal
precedent is developed indicating the strong possibility of the recovery
of fees, certain issues may become economically feasible for private
litigants and thus inappropriate for public interest law firm participa 
tion."
I would, again, like to make the point that "public interest law
firms" is often a misnomer. These firms represent private groups who
often seek special treatment and consideration for their own view 
points at the overall public's expense. It is questionable whether tax
exemption is valid for some "public interest" groups that promote their
own narrow,private version of public interests.
I will be watching with interest as further requests are made for
express "approval" of reimbursement agreements. Ifsuch requests are
granted in the future they will serve to further develop the precedent
spoken of in Revenue Rule 75-76. Once it becomes obvious that a
"likelihood or certainty of an award of fees" does, in fact, exist, then I
would expect that the IRS will review the charitable status of the
petitioners.
Therefore, I reluctantly concur in this result.
SEPARATE STATEMENT OF COMMISSIONER TYRONE BROWN
RE: PETITIONS FOR SPECIAL RELIEF OF CITIZENS COMMUNICATIONS
CENTER REQUESTING EXPRESS COMMISSION APPROVAL OF
REIMBURSEMENT PROVISIONS CONTAINED IN LICENSEE-CITIZENS
GROUP AGREEMENTS IN CERTAIN CASES
The Commission's decision today to approve the reimbursement
provisions contained in these licensee-eitizens group agreements is long
overdue. There is no compelling reason in law or policy to deny explicit
approval to these agreements.
It should be emphasized that no substantive Commission policy is
affected by today's action. The substance of licensee-citizen group
agreements will still be a matter for the parties to negotiate and the
Commission will continue to review such agreements to assure that
they do not delegate nondelegable licensee responsibilities nor
otherwise contravene applicable statutes, rules or policies.
In the past, we have "accepted" or "not accepted" these agreements.
As Commissioner Hooks said in a case wherein the Commission
70 F.e.C. 2d
Licen.see-Citizen Group Agreements
1677
det:rn:ine~that it would not "object" to a withdrawal agreement after
reVlewmg Its terms:
"Although the Commission may be chary of putting its express imprimatur on this
agreement and emits a flutter of disinterested ambiguities, its actions speak: louder
than its words. . . . The agreement herein is de facto and de jure approved. Anyone
doubting that result is wearing blinkers," Star WQIV, Inc., 59 FCC 2d 257, 261
(1976) (dissenting).
The failure to explicitly approve reimbursement provisions has
adversely affected only two public interest communications law firms
which are exempt from taxation under Section 50l(c)(3) of the Internal
Revenue Code. Through the semantic adjustment we make today, with
respect to these cases, these firms will be permitted to be reimbursed
for their expenses under these particular agreements without jeopard 
izing their tax-exempt status.
The refusal to expressly "approve" the reimbursement agreements
in these cases could only have been motivated by two factors. The first
is disapproval of the activities of these public interest firms in
representing views and groups which traditionally have gone unrepre 
sented in Commission deliberations. The Commission has never claimed
this as the basis for indirectly inhibiting participation by public
interest law firms, and I doubt that a majority of Commissioners, at
least in recent years, would have been willing to go on record as
subscribing to that view.
The second-and more generolis-reason for not technically "ap 
proving" these agreements in appropriate circumstances is that
requiring the Commission to examine and approve reimbursement
provisions will place a substantial burden on the Commission's
processes. The short anSwer to this contention is that such agreements
are not numerous enough to cause concern about burdening our
processes and, moreover, failure to grant approval may prolong
challenges which themselves place burdens on our staff.
And, of course, we already have a mechanism for approval of similar
reimbursement provisions in cases where an applicant for a construc 
tion permit drops out of a comparative proceeding for a new facility
and is permitted to be reimbursed for its "expenses" by the remaining
applicant. Those decisions, though mandated by statute, 47 U.S.C. §
3U(c), require the Commission to get even further involved in
reviewing the judgments of the parties since the agreements are often
accompanied by lucrative "consultancy" agreements for the applicant
which bows out of the competition. We analyze such provisions to make
certain that they are not disguised "pay offs" for .dismissing a
competing application. This procedure certainly can be modified to deal
with the simpler issues raised by reimbursement agreements in the
petition-to-deny context.
Thus, a desire to limit the burdens on our processes does not stand in
the way of approving these agreements. There are substantial public
policy arguments in favor of our approving these agreements. While I
70 F.e.c. 2d
1678 Federal Communications Commission &ports
applaud the belated action we take today in these particular cases, I
hope that we may soon revisit the general question of "approving"
such agreements in name as well as in fact.
70 F.C.C. 2d