FCC proposes changes to foreign sponsorship identification requirements for broadcasters | BakerHotelier
On October 6, 2022, the Federal Communications Commission (FCC) issued a Second Notice of Proposed Rulemaking (Second NPRM) in which it proposes changes to its current foreign sponsorship disclosure requirements for broadcasters. The FCC’s proposed changes are a response to the July 2022 United States Court of Appeals for the District of Columbia Circuit (DC Circuit) ruling of the FCC’s requirement that broadcasters confirm whether the sponsors leasing airtime on their stations were foreign government entities or agents thereof. Through the Second NPRM, the FCC is seeking to implement new measures to ensure that broadcasters proceed with “due diligence” in determining whether or not sponsors of leased airtime on their stations are foreign government entities or agents of those -this. The FCC is also seeking comments on how to respond to an ongoing request for clarification regarding the applicability of foreign sponsorship rules to broadcast advertising.
Last year, the FCC released new rules requiring broadcasters to disclose whether any programming aired on their stations was paid for or provided — directly or indirectly — by a foreign government entity or an affiliate thereof. We discussed the FCC’s Alien Sponsorship Identification Rules in a previous article which can be found here, but here is a quick overview:
Originally, the FCC required broadcasters to undertake a three-step process each time they leased airtime to a third party:
- Ask the tenant if it was a foreign government entity or an agent of one.
- Ask the tenant if anyone in the production or distribution chain of the programming was a foreign government entity or an agent thereof.
- Independently confirm the tenant’s responses by consulting both the Department of Justice’s Foreign Agents Registration Act (FARA) website and US-based FCC foreign media reports.
If, after undertaking such investigation, the broadcaster determines that the leased airtime was paid for or provided directly or indirectly by a foreign governmental entity or an affiliate thereof, then the broadcaster must disclose on-air the nature of foreign sponsorship.
In July 2022, the DC circuit ruled in National Association of Broadcasters v FCC (NAB) that the FCC had no authority under Section 317(c) of the Communications Act of 1934, as amended (the Communications Act), to require broadcasters to confirm the a tenant’s status by independently reviewing either the FARA website or FCC foreign media reports. Instead, the DC Circuit interpreted Section 317(c) as requiring a broadcaster to only request this information. directly tenant or its own employees, eliminating the third step mentioned above.
1. Certification requirement
In the Second NPRM, the FCC is proposing to ensure compliance with its foreign sponsorship identification rules by implementing a new due diligence certification requirement that would apply to both broadcasters and airtime renters. Specifically, the FCC proposes that:
- Broadcast licensees certify that they have made the appropriate investigation of each tenant and requested certification from the tenant regarding its status as a foreign government entity or its agent.
- Airtime Lessees certify whether or not they are a Foreign Government Entity and whether they know of any entity or individual further down the program production/distribution chain that qualifies as a Foreign Government Entity and has provided a form of compensation in exchange for the broadcast of this programming.
The certification requirement would replace the current requirement for broadcasters to log their inquiries regarding the status of their tenants.
To ensure transparency, in the Second NPRM, the FCC is proposing that both certifications be uploaded by the broadcaster to the relevant station’s Online Public Inspection Filing (OPIF) within 30 days of entering into or renewing a lease agreement – a timeframe which, according to the FCC, complied with the existing obligation of broadcasters to upload the lease agreements to the OPIF of its stations within 30 days of their execution. While broadcasters are currently required to commemorate their due diligence efforts, they are not required to upload documentation of those efforts to their stations’ OPIFs or make such documentation publicly available. Therefore, the current rules only require public disclosures when the programming is in fact sponsored by a foreign government entity or an agent thereof.
To minimize compliance burdens for broadcasters and ensure consistency in the certification process, the FCC has proposed standardized language in the Second NPRM for licensee and tenant certifications.
Finally, the FCC would apply a six-month grace period to broadcasters to comply with the proposed certification requirement, similar to what it did when it adopted its original rules for identifying foreign sponsorships.
2. Comments invited on other investigative approaches
Despite proposing a new process to replace the due diligence requirement that the DC Circuit has ruled illegal, the FCC is nonetheless seeking comment in the Second NPRM on whether it should reinstate the third duty of care by requiring a broadcast licensee to ask the airtime lessee to provide documentation of its status in the FARA database or in the FCC’s US-based foreign media report (for example, providing the licensee with a photo screen of the search results in each database). This so-called “alternative approach” has its genesis in a question posed by the DC Circuit during oral argument in NAB as to whether requiring a licensee to request such documentation from its lessee would comply with section 317 of the Communications Act and achieve the same objective as the third diligence requirement cancelled. The FCC invites comments on the feasibility and legality of this approach.
3. Request for clarification
Finally, the FCC is providing an additional opportunity for interested parties to comment on an ongoing request for clarification regarding the applicability of foreign sponsorship identification rules to advertisements sold by local broadcast stations. In its 2021 order establishing foreign sponsorship identification rules, the FCC said “abbreviated traditional advertising” was excluded from the scope of the new rules without providing a clear definition of what constituted “abbreviated traditional advertising.” and what would be considered rented airtime. The petition therefore asked the FCC to clarify whether the foreign sponsorship identification rules applied when a station sold time to advertisers in the normal course of business, as opposed to when it leased separate blocks of airtime. To help the FCC rule on the petition, the FCC is seeking comments on the criteria it should adopt to distinguish between advertising and leased airtime for purposes of compliance with its rules for identifying foreign sponsorships. .
Comments and reply comments are due 30 days and 60 days, respectively, after the posting of the Second NPRM in the federal register. We will provide an update when this happens.