by the U.S. Commission on Civil Rights".32 At present FCC is conducting a field investigation of radio station WMUU.33

The agency showed a further indication of lack of vigorous enforcement of its rule on other occasions. In November 1969, the FCC Acting Director of the Conglomerate Study Group, Louis C. Stephens, in speaking about the FCC equal employment requirement, was quoted as informing the Delaware, Maryland, and District of Columbia Broadcasters' Association: "No one that I know of can look at an employment profile and say whether or not a station is obeying or disobeying the law." 34 He urged broadcasters to "make a decision which you feel is fair in your mind, and if you do, you will probably find the decision is fair as far as the Commission [FCC] is concerned." 35 Although he substantially disclaimed his statement in a letter to the newspaper which quoted it, there was no public statement by the FCC, itself, concerning the importance it placed on its nondiscrimination rule.37

36

On June 3, 1970, the FCC adopted implementing procedures for this rule. As of July 10, 1970, it announced that it would require an annual report from its broadcast licensees of employment statistics broken down by racial and ethnic groups. It would also henceforth require the preparation of equal employment opportunity programs to be furnished by existing stations and to be included in all applications for construction permits, assignments, or transfers of control and renewals of licenses.38 As of August 1970, the proposed FCC forms, to implement the rule,

32 Letter from George S. Smith, Chief, Broadcast Bureau, FCC, to Bob Jones University, radio stations WMUU and WMUU-FM, June 5, 1970.

"Letter from Ben F. Waple, Secretary, FCC to Howard A. Glickstein, Staff Director, U.S. Commission on Civil Rights, Aug. 5, 1970.

"The Washington Post, Nov. 10, 1969, at A55.

35 Id. 36 The Washington Post, Jan. 23, 1970, at A22. "The U.S. Commission on Civil Rights urged the FCC Chairman to issue an official statement denying the accuracy of the coverage of the remarks cited in the newspaper article, and affirmatively setting forth the policy of the FCC. Letter from Isaiah T. Creswell, Jr., Acting Staff Director, U.S. Commission on Civil Rights, to Dean Burch, Chairman, FCC, Dec. 18, 1969.

35 FCC 70-545, Docket No. 18244, released June 3, 1970.

had not been approved by the Bureau of the Budget.39

While the FCC has requested comments from different organizations, including civil rights groups, public interest law firms, and the broadcasting industry concerning the most appropriate mechanism for enforcing the rule, the agency currently relies exclusively on the processing of complaints. It has not established any formal coordination with other agencies concerned with equal employment opportunity, such as the Equal Employment Opportunity Commission and the Department of Justice.

If the FCC rule is to be meaningful in opening employment opportunities for minority group members, it must be effectively implemented. Because it is the first regulatory agency to take a stand against employment discrimination by the industry it regulates, its performance under this rule should be a model from which other regulatory agencies, that have not yet instituted such a rule, can profit.

In addition to the rule prohibiting employment discrimination by broadcasting stations, the FCC adopted a "Notice of Proposed Rulemaking," on November 19, 1969, which stated that its policy prohibiting employment dis

39

At a meeting held at the Bureau of the Budget on June 25, 1970, to discuss FCC's application forms for broadcast licensees, the FCC representatives stated: (a) that their Commission had not adopted standards as to what would constitute full compliance with their rule; (b) it was proposed that the FCC would set up within the Broadcast Bureau a full-time staff of nine people, to review affirmative action plans received by the FCC from the broadcasting stations; (c) that the FCC presently did not have the manpower to review the affirmative action plans of the stations because the necessary funds were not included in the FCC's 1971 fiscal budget, and they did not have enough staff now on board in order to transfer people into the unit on a temporary basis. A representative from the U.S. Commission on Civil Rights suggested that the FCC request a supplemental application from the Bureau of the Budget, so that it could hire the necessary staff as soon as possible.

In addition, a representative from the U.S. Commission on Civil Rights suggested that all statements or posters announcing equal employment opportunity in the broadcast industry should be written in both English and Spanish, in order to afford Spanish-speaking citizens an opportunity to share in the full benefits of the rule.

crimination would also be extended to the common carriers (telephone and telegraph companies). The FCC statement indicated that the same considerations of public policy on which the decision to cover the employment practices of the broadcasting stations were based, were applicable to common carriers subject to their jurisdiction. As of May 1970, the rule had not yet been adopted.40

The FCC's extension of its rule to telephone and telegraph companies would have special significance. Its regulatory relationship to broadcasting stations is much closer than to telephone and telegraph companies, involving periodic license renewals based on a number of considerations, including a finding of whether the licensee's programing is satisfactory to the various elements of the community. With respect to telephone and telegraph companies, while FCC approval is required before they may begin or discontinue operations, there is no provision for renewal of such approval.

Thus, if the FCC's action with respect to the broadcasting industry could be considered unique because of its special relationship to the members of that industry, its extension of the rule to telephone and telegraph companies would have potentially far-reaching significance as precedent for other regulatory agencies. Just as the FCC's approval of these companies, once given, is generally permanent, certificates of authority granted by other regulatory agencies also are, for the most part, permanent. Accordingly, their legal relationship to the industries they regulate, while perhaps distinguishable from the legal relationship between the FCC and the broadcasting industry, is closely analogous to that of the FCC and telephone and telegraph companies. The analogy also exists in a practical sense. Because of the enormous financial investment required, certificate to operate a telephone company is not the readily salable commodity that a radio or television license is. By the same token, a certificate to operate a major airline or a power or natural gas company, is not readily salable. While other agencies, therefore, might dis

The issue was still pending in the FCC's Common Carrier Bureau. It was expected to reach the Commissioners for a final vote by the end of June. Interview with Tracy Western, legal assistant to Commissioner Nicholas Johnson, May 26, 1970.

tinguish FCC's action regarding the broadcasting industry on practical grounds, such a distinction cannot be made with respect to telephone and telegraph companies.

2. INTERSTATE COMMERCE COMMISSION, CIVIL AERONAUTICS BOARD, AND FEDERAL POWER COMMISSION

Although the ICC, CAB, and FPC are governed by the same criteria of serving the public interest as the FCC, none of the three has taken similar action to prevent employment discrimination in the industries they regulate. Indeed, none has gone so far as to assert that it has authority to take such action. In this

41

"Of the three regulatory agencies, the FPC and the CAB have demonstrated some degree of interest in issuing a policy statement similar to the FCC. The FPC, under the chairmanship of Lee White, determined that the FPC should begin to assume the responsibility of eliminating discrimination in the utilities industry. A proposal was sent to the General Counsel's office for consideration in early 1969. Interview with Lee White, former Chairman, FPC, Feb. 17, 1970.

As of August 1970, there has been no decision from the General Counsel's office. The reason provided as to why no action has been taken is that the FPC is considering the petition made by the California Rural Legal Assistance (CRLA), requesting a denial of a license renewal to the Pacific Gas and Electric Co. (P.G.&E.) for allegedly utilizing discriminatory employment practices. (See p. 301 infra, for further comment on this case.) The FPC is expected to pass on the extent of its power in this area, which would therefore relate to any rule prohibiting employment discrimination by the industries it regulates. Interview with Drexel Journey, Deputy General Counsel, FPC, June 5, 1970.

A copy of the FCC's policy statement prohibiting employment discrimination was provided to Charles Keifer, former Executive Director of the CAB, by a representative of the Commission on Civil Rights in December of 1969. He indicated that he had not heard of the FCC action and had not comtemplated the possibility of the CAB's taking similar action until that time. He sent a copy of the rule to the General Counsel's office for legal research. Interview with Charles Keifer, former Executive Director, CAB, Dec. 5, 1969. As of May 1970, the CAB had taken no action on the proposed rule. Interview with Oral D. Ozment, Deputy General Counsel, May 27, 1970.

The Deputy General Counsel of the ICC, Fritz Kahn, told Commission staff that the FCC's jurisdiction did not cover the employment practices of the regulated industries. He felt this was the responsibility of the EEOC, the U.S. Commission on Civil Rights, and the Department of Justice. Interview with Fritz Kahn,

Deputy General Counsel, ICC, Jan. 14, 1970. The ICC's position was recently restated:

"The Motor Carrier Act of 1935 is a remedial statute under which this Commission possesses only that jurisdiction which is specifically delineated or which may be reasonably inferred as necessary and incidental to regulation of the dynamic character of the Nation's surface transportation system and its inherent problems. That jurisdiction relates solely and directly to the regulation of transportation. In my opinion, neither the act nor its legislative history provide any indication of a congressional intent to convey to this Commission any jurisdiction over the employment practices of regulated carriers-matters which appear to be the sole responsibility of the EEOC, the U.S. Commission on Civil Rights, and the Department of Justice. To convey such jurisdiction to this Commission, an amendment to the Interstate Commerce Act would be required."

Letter from George M. Stafford, chairman, ICC, to Howard A. Glickstein, Staff Director, U.S. Commission on Civil Rights, July 23, 1970.

249 U.S.C. 304 (6) (Interstate Commerce Commission). 16 U.S.C. 825 (h) (Federal Power Act). 15 U.S.C. 717 (e) (National Gas Act). 49 U.S.C. 1324 (Federal Aviation Act).

43

The ICC and CAB not only regulate, but license, through certificates of authority, the industries over which they have jurisdiction. The ICC regulates and issues certificates of authority to interstate railroads, bus and trucking companies, inland water carriers and freight forwarders. The CAB regulates and issues certificates of authority to interstate "trunk line" carriers conducting long-haul passenger and cargo operations, local air carriers (e.g., Mohawk and Allegheny Airlines), and helicopters. The FPC issues licenses for the planning, construction, and operation of non-Federal hydroelectric projects. Hydroelectric projects are licensed for a maximum period of 50 years and at the expiration of the period are subject to being taken over by the U.S. Government or licensed to a new licensee or licensed to the original licensee. In addition, the FPC issues permanent certificates of authority to natural gas companies in interstate commerce. While the FPC regulates the rates and services of companies selling electricity in interstate commerce at wholesale rates, it does not license these companies. Although, an electric company whose electric rates and services the FPC regulates may also be a licensee and therefore regulated on both scores.

the same regulatory authority and are governed by the same principle of serving the public interest.

For example, when railroads, airlines, or natural gas companies apply to respective regulatory agencies for certificates of authority they must establish the following: (1) that their services are a public convenience and necessity; (2) that they are willing and able to render service; and (3) that they will conform to the provisions of governing law and to rules and regulations adopted by the regulatory agencies.**

Further, although all three agencies have power to issue certificates of authority for a period of time, in practice they issue permanent certificates. All three also have authority to revoke certificates of authority for failure to comply with their rules and regulations. They seldom have had to resort to use of this sanction; industry members generally come into compliance with agency rules and regulations rather than defy them and risk losing their certificates.

Thus, the three agencies have the power to delineate, through administrative decisions and rules and regulations, the scope of their responsibilities, guided by the principle of serving the public interest. In fact, this principle governs every decision and action taken by the three agencies. While regulatory agencies, themselves, frequently have tended to interpret their public interest responsibility narrowly, over recent years the courts have viewed the responsibility more broadly. For example, the courts have made it clear that the agencies' primary responsibility is not the mere protection of the regulated industries,45

44

"See, e.g., 49 U.S.C. 307 (ICC). 49 U.S.C. 1371 (CAB). 15 U.S.C. 171(j) (e) (FPC).

45 ICC: "The Outlook of the Commission and its powers must be greater than the interest of the railroads, or of that which may affect those interests. It must be as comprehensive as the interest of the whole country," Interstate Commerce Commission v. Chicago, R.I. & Pac. Ry. Co., 218 U.S. 88, 103 (1910).

FCC: In Banzhaf v. Federal Communications Commission 405 F. 2d. 1082 (D.C. Cir. 1968) the court decided that in the public interest the FCC, under its fairness doctrine, had to demand from the television and radio stations time for anti-smoking organizations to present to the public their case against the dangerous health consequences of smoking. "Whatever else it may mean, however, we think the public interest

but lies in serving and protecting the general public.46

In view of these judicial decisions, the agencies would appear to have clear legal authority to use their broad rulemaking power in support of the established national policy of equal employment opportunity, concerning which all three branches of the Government have acted. There is no question that the adoption of fair employment practices is in the public interest. Further, it is well established that a licensee or holder of a certificate of authority is a trustee for the public interest and that the regulatory agencies may refuse to renew their

undisputedly includes the public health. The public health has in effect become a kind of basic law, both justifying new extensions of old powers and evoking the legitimate concern of government wherever its regulatory power otherwise extends." Id., at 1097.

FPC: In Scenic Hudson Preservation Society v. Federal Power Commission, 354 F. 2d 608 (2nd Cir. 1965) and in Udall v. Federal Power Commission, 387 U.S. 428 (1967) the courts showed an awareness that environmental preservation must not only be considered but must be given primary consideration by the Federal Power Commission and its regulated industries.

"FPC"... the Commission has claimed to be the representative of the public interest. This role does not permit it to act as an umpire blandly calling balls and strikes for adversaries appearing before it; the right of the public must receive active and affirmative protection at the hands of the Commission." Scenic Hudson Preservation Society v. Federal Power Commission, 354 F. 2d. 608, 620 (2d Cir. 1965).

"We agreed that the Federal Power Commission has an active and independent duty to guard the public interest and that this may require consideration of alternative courses, other than those suggested by the applicant." Citizens for Allegan Company v. Federal Power Commission, 414 F. 2d 1125, 1133 (D.C. Cir. 1968).

CAB: "It is the Board's duty under the Civil Aeronautics Act to ascertain, promote and protect the public interest, as to which the Board is the final arbitrar," Western Airlines v. Civil Aeronautics Board, 184 F. 2d 545, 549 (9th Cir. 1950).

ICC: "The National Transportation Policy has recently been authoritatively summarized by Congress. That declaration requires administration so as to preserve the inherent advantages of each method of transportation and to promote 'safe, adequate, economical, and efficient service.' Such broad generalizations, while well expressing the congressional purpose, must frequently produce overlapping aims. In such situations, the solution lies in the balancing by the Commission of the public interests in the different types of carriers with due regard to the declared purposes of Congress." ICC v. Parker, 326 U.S. 60, 66 (1945).

or

Aside from the matter of the authority of these agencies to require their licensees to be equal opportunity employers, there is a serious question whether failure to do so places them in the position of violating the U.S. Constitution. Through the issuance of licenses certificates of authority, the agencies confer upon the regulated industries an exclusive right to enjoy the use of part of public domain. The FCC permits licensees to make exclusive use of particular airwaves; the CAB and the ICC give airlines and railroads the right to provide service, free of the extensive competition they ordinarily would have if the industries were not regulated; and the FPC permits gas companies to offer their services, free from similar competition. In view of the substantial and close involvement of the regulatory agencies in the affairs of the industries they regulate, through licensing and control of their activities, acquiescence to employment discrimination would appear to represent a violation of the fifth amendment to the Constitution.48

III. MINORITY GROUP OWNERSHIP AND MANAGEMENT OF REGULATED INDUSTRIES

A. Introduction

In this section, only the FCC and the ICC will be treated in detail. The industries over which they exercise jurisdiction-the radio, television, and motor carrier industries-are ones that offer substantial opportunities for entrepreneurship by individual minority group citizens or minority group organizations. The cost of purchase of a radio station or a trucking company, for example, is not so prohibi

"Television Corporation of Michigan v. Federal Communications Commission, 294 F. 2d 730, 733-34 (D.C. Cir. 1961); McIntire v. William Penn Broadcasting Co., 151 F. 2d 597, 599 (3d Cir. 1945).

"See Legal Appendix, for a discussion of the Constitutional issues involved in discrimination by regulated industries.

tive as to continue to bar minorities from taking part in this aspect of the business world. In these industries, which do not require enormous initial investments, many minority group members are in a position to seek new certificates or challenge existing licensees or holders of certificates of authority. In short, lack of sufficient capital investment is not the only reason minorities are not better represented in those industries. Failure of the FCC and ICC to change their institutional procedures to enable minority groups, barred from entry into ownership circles by decades of discrimination, to compete on an equal basis with existing licensees or certificate holders also explains their underrepresentation.

Because of the nature of the industries they regulate, the CAB and the FPC do not appear to have much opportunity to facilitate minority ownership of their regulated industries, such as gas and water power companies and airlines. These require an initial capital investment of many millions of dollars. In these industries there are few new or competing applicants-minority or majority group-in search of licenses or certificates of authority. B. Interstate Commerce Commission and Federal Communications Commission

1. INTERSTATE COMMERCE COMMISSION 49 There are more than 15,000 certified motor transportation companies in the United States. There is no firm estimate of the number of certified motor carriers owned totally or in part by minority group members. The ICC does not maintain statistics on the racial or ethnic ownership of motor carriers. According to senior ICC staff, however, the number of minority owned motor carriers is extremely small.50 The motor transport industry offers special opportunities for minority ownership. Entrance into this industry requires a relatively low capital investment-in some cases,

"This section on the ICC will deal only with the agency's regulation of motor carriers, which is more important for purposes of the Commission's study than inland water carriers or freight forwarders, which play a less significant economic role.

50 Interview with Martin E. Foley, Managing Director of the ICC, Dec. 23, 1969. Jack Anderson's column in the Washington Post, Mar. 20, 1970, at D15, stated that there are only 18 motor carriers owned entirely or partly by minority group members.

as little as $25,000 is sufficient-which fre quently is available to individuals or groups either through savings or through loans under Government minority entrepreneurship pro

grams.

The ICC's present policy, however, has the effect of maintaining the status quo and thus precluding minority ownership. The ICC requires applicants to show "public convenience and necessity" for their services, before a certificate is granted. The principal criterion on which the agency bases its evaluation of new applications, however, is not the need to provide service to the public, but rather, the need to guarantee the solvency of present certified motor carriers. Thus, the ICC interprets its duty to the public as requiring it to protect the existing certified motor carriers. As one commentator has observed:

In its decision, the Commission (ICC) emphasized repeatedly that where existing carriers have expanded their energy and resources in developing facilities to handle all available traffic and where their service is adequate, they are entitled to protection against the establishment of a new, competitive operation."

As long as the certified motor carriers show economic solvency and necessary equipment, the ICC will bar any new competitors, even if they offer a service which is lower-priced, more efficient, and more responsive to the needs of the shippers.52

The ICC policy is to allow entry only to those applicants whose presence would not create unreasonable competition for companies already certified, a policy that necessarily limits competition. Under this policy, it is unlikely that a program of increasing minority business ownership can be success

51 Adams A Critical Evaluation of Public Regulation by Independent Commission. Vol XLVIII, Am. Econ. Rev., 529 (May 1958).

52 "Another difficulty for new carriers was an early ruling by the Commission that the offer of lower rates to shippers cannot be considered a factor in determination of adequacy and efficiency of existing service." Robert Nelson, The Economic Structure of the Highway Carriers Industry in New England, submitted to the New England Governors on Public Transportation, 31 (July 20, 1956).

Center for Study of Responsive Law, Surface Transportation, The Public Interest and the ICC, vol. III, 4-5 (1970). Chs. III, IV, V, and VI of the report give a detailed analysis of the impact on the industry and on the consumer of ICC's policy to limit competition.