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July 2012
Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:

  • FCC Assesses $68,000 in Fines for Unauthorized STL Operations
  • EAS Failures Lead to $8,000 Fine

Licensee in Wyoming Slammed with $68,000 in Proposed Fines for STL Operations
July was not a good month for the licensee of FM radio stations located in Casper, Wyoming. The FCC issued four separate Notices of Apparent Liability for Forfeiture (“NAL”) against the licensee for a total forfeiture amount of $68,000.

In August 2011, an agent from the FCC’s Enforcement Bureau inspected the main studios of the licensee’s four FM radio stations and the corresponding studio transmitter links (“STL”) for each station. In the first of the four NALs, the agent discovered that although the station’s STL was operating on its authorized frequency, the STL was operating at the site of the station’s main studio, 0.3 miles away from the STL’s authorized location.

In December 2011, the Enforcement Bureau issued a Letter of Inquiry (“LOI”) to investigate. In the licensee’s delayed response to the LOI in April 2012, the licensee admitted that the STL had been the primary delivery mechanism for the FM station’s programming since 2001 and that an application to change the location of the STL “should have been filed” when the station moved its main studio ten years earlier. Only after the fact (in May 2012) did the licensee file an application to modify the STL’s authorized location. According to Section 1.903(a) of the FCC’s Rules, stations must operate in accordance with applicable rules and with a valid authorization granted by the FCC, and the base forfeiture for operating at an unauthorized location is $4,000. Here, the FCC decided that an upward adjustment of an additional $4,000 was warranted because the STL had been operating at the unauthorized location for ten years.

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Late this afternoon, the United States Court of Appeals for the District of Columbia Circuit denied the Stay requested by the National Association of Broadcasters that would have prevented the FCC’s new online Public Inspection File posting requirement from becoming effective. As a result, television broadcast stations must be prepared to comply with this new requirement effective on August 2, 2012.

As we have previously reported here, the FCC has moved with great speed to create a new filing system to house television stations’ online Public Inspection Files. Until now, broadcasters have had only a brief glimpse of the system they must begin using in less than one week.

This afternoon, the FCC announced that it will hold two public online “screensharing” sessions that will “provide high resolution views of the application screens and cover the material presented during the July 17, 2012 demonstration.”

The sessions will occur at 9:00 am on Monday and 4:00 pm on Tuesday. Those interested in viewing the demonstrations must visit the FCC’s site in advance and join the teleconference prior to its scheduled start time. While the online demonstration will provide the visuals, the audio portion will be done via the teleconference.

We have prepared an Advisory for clients to help them understand which specific items must be uploaded and what steps they should take to make a successful transition to the online Public Inspection File. The next week promises to be chaotic for TV broadcasters, but we hope the Advisory will help alleviate some of the regulatory pain.

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The FCC has released a Report and Order which includes its final determinations as to how much each FCC licensee will have to pay in Annual Regulatory Fees for fiscal year 2012 (FY 2012). The FCC collects Annual Regulatory Fees to offset the cost of its non-application processing functions, such as conducting rulemaking proceedings.

In May of this year, the FCC issued a Notice of Proposed Rulemaking (“NPRM”) regarding its FY 2012 payment process and the proposed fee amounts for each type of FCC license. In large part, the FCC adopted its proposals without material changes. With respect to the non-fee related proposals, the FCC imposed a new requirement that refund, waiver, fee reduction and/or payment deferment requests must be submitted online rather than via hardcopy. The FCC also adopted its proposal to use 2010 U.S. Census data in calculating regulatory fees. With respect to fees, Commercial UHF Television Station fees increased across the board, except for the fee associated with stations in Markets 11-25. In contrast, Commercial VHF Television Station fees decreased across the board, except for those stations in Markets 11-25. The fees for most categories of radio stations increased modestly. A chart reflecting the fees for the various types of licenses affecting broadcast stations is provided here.

The FCC will release a Public Notice announcing the window for payment of the regulatory fees. As has been the case for the past few years, the FCC no longer mails a hardcopy of regulatory fee assessments to broadcast stations. Instead, stations must make an online filing using the FCC’s Fee Filer system reporting the types and fee amounts they are obligated to pay. After submitting that information, stations may pay their fees electronically or by separately submitting payment to the FCC’s Lockbox.

Finally, as Paul Cicelski of our office noted earlier this year, the FCC is re-examining its regulatory fee program and has initiated the first of two separate NPRM proceedings seeking comment on issues related to how the FCC should allocate its regulatory costs among different segments of the communications industry. The FCC expects to release the second NPRM “in the near future” and implement any changes from those rulemakings in time for FY 2013.

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By Lauren Lynch Flick and Paul A. Cicelski

As promised, yesterday morning the FCC conducted a public demonstration and webcast of the interface it has developed to host the online public inspection files for television broadcast stations. As we noted last week, the database is being developed in connection with the FCC’s recent Order requiring television broadcast stations to post their public inspection files online in a central, Commission-hosted database. These rules go into effect August 2, 2012. An archived version of the FCC’s webcast can be found here.

FCC Media Bureau Chief Bill Lake opened the demonstration by emphasizing that the FCC is focused on making it easier for broadcasters to use the system and for the public to access it than has been the case with the FCC’s legacy databases and paper-based public files. Greg Elin, the FCC’s Chief Data Officer, echoed Lake’s comments and demonstrated how the new interface brings together in one place items that have historically been stored in different locations on the FCC’s website, such as having the station’s contour map from the engineering database and its current authorization accessible from the main page for the station. The new system also replaces FCC Form numbers and abbreviations with plain English and will permit stations to upload documents in most major formats to make it more “user-friendly.” Elin also said that the FCC plans to use dedicated hardware for broadcasters to use to upload items so that surges in interest on the public side will not prevent broadcasters from managing their online file pages.

The FCC has been working on such issues for some time in connection with a planned Consolidated Licensing System (CLS) which it has demonstrated on a number of occasions over the past few years. The CLS is intended to consolidate and replace the FCC’s legacy filing databases, providing uniformity in electronic filing across all of the different Bureaus and types of authorizations. Media Bureau licensees are slated to be the first to use the new system when it’s ready. It appears that the FCC has integrated the public file interface with that on-going work, providing a uniform “look and feel” between the public file interface and what might ultimately become the sole online filing location on the Commission’s website.

It remains to be seen after watching the presentation the extent to which the interface will be ready to go by the FCC’s August 2 deadline. Lake and Elin each indicated that they expected that the interface would “evolve” over time as experience with its use is gained. Moreover, Elin stated that, while most issues for the August 2 launch have been ironed out for Mozilla and Firefox users, a number of applications associated with the interface do not yet function properly with Internet Explorer. It also appears that, although the database will be connected real-time to the FCC’s current Consolidated Database System (CDBS) allowing applications that are filed to be instantaneously included in the new database, the ability to effectively “search” the new database is still a way off. Finally, it was not clear how stations will be able to both (i) allow multiple employees, engineers and counsel to access the station’s page to upload and police the contents of the public file and (ii) monitor those various agents that might act on its behalf, especially if online electronic filing of applications is integrated with this interface.

Regarding the political file, which network affiliates in the top-50 markets must begin populating with newly created political documents beginning August 2, Elgin said that the FCC intends to establish a series of files and sub-files for stations to use based on data imported from the Federal Election Commission’s website. Specifically, the FCC’s database will include separate files for federal, state, and local election ad buys. Under those, FCC proposes to include sub-folders, such as one for each Congressional district, then further sub-folders for each candidate as well as for non-candidate specific issue ads. Stations will be given tools that will allow them to retain some flexibility when designing their individual online political files, but how much customization the new database will allow remains to be seen. The FCC will support file-sharing programs that can allow multiple employees at a station to upload information about ad buys, but stations will still have to address the issues regarding user identification noted above.

Given the FCC’s efforts to make the interface useable in a variety of ways, TV stations would benefit from the opportunity to test the system, to see which file formats work best for them, to learn and implement file sharing programs, and to set up internal controls for employee access to the station’s page. Unfortunately, while Elgin did indicate that the system would be up and running by August 2, he was unable to provide a date specific regarding when the database will be available for such testing. Remembering the difficulties encountered with the roll out of the new commercial ownership report, early testing will likely be key to the success of the new database.

Historically, each time the FCC has introduced an electronic filing form to replace a paper-based form, it has allowed broadcasters a significant transition time period to acclimate to the new form. Clearly, such a timeframe has not been contemplated here so far. Therefore, at a minimum, it would be appropriate if the FCC withheld all public inspection file enforcement activity against television stations until such a time as it is certain that the new interface is functioning smoothly and broadcasters have had an opportunity to familiarize themselves with the new system.

Of course, there is the issue of the NAB’s pending emergency request with the D.C. Circuit Court of Appeals to stay the August 2 effective date of the rules, which could have the same effect. Check back frequently for updates as there is sure to be plenty of additional news prior to August 2.

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As I reported last week, the FCC’s new rules requiring television stations to replace the public files they maintain at their studios with electronic files to be hosted online by the FCC are currently set to become effective on August 2, 2012. Since that report, a lot of events have occurred, and the focus of this proceeding has officially shifted from the FCC to the U.S. Court of Appeals for the D.C. Circuit.

To no one’s surprise, the FCC earlier today issued an Order denying the National Association of Broadcaster’s (NAB) Petition for Stay of the FCC’s new online public inspection file rules. In its Order, the FCC states it is denying the NAB’s request because the NAB was unable to satisfy any of the four factors factors supporting grant of a stay. According to the FCC, the NAB failed to show (1) that the new rules would cause irreparable injury; (2) that the NAB is likely to prevail on the merits in its appeal; (3) that other interested parties will not be harmed if a stay is granted; and (4) that a stay would serve the public interest. Essentially, the FCC regurgitated its prior findings in deciding to move full speed ahead with the new rules. However, TV broadcasters have been seeking relief from the new rules, which will, without question, increase compliance burdens on TV stations while needlessly duplicating records already required to be maintained online by the Federal Election Commission.

As a practical matter however, today’s action by the FCC is more of a procedural hurdle that had to be cleared by broadcasters on their way to court rather than a true substantive analysis of the merits of the court appeal. As I reported last month, the NAB has already filed a Petition for Review asking the U.S. Court of Appeals for the D.C. Circuit to vacate the FCC’s action “on the grounds that it is arbitrary, capricious, in excess of the Commission’s statutory authority, inconsistent with the First Amendment, and otherwise not in accordance with law.” Also, earlier this week, in anticipation of today’s denial by the FCC, the NAB filed a separate Emergency Motion with the court asking the court to hold the new rules in abeyance. The NAB is asking the court to stay the August 2 effective date of the rules until the court has had an opportunity to consider the NAB’s Petition for Review.

According to the NAB’s request for a stay, the FCC has “engaged in arbitrary and capricious decisionmaking by disregarding the competitive harm that is likely to result from the Order and departing from the provisions of the Bipartisan Campaign Reform Act (BCRA.)” The NAB also states that its “members will suffer irreparable harm absent a stay because the Order compels television stations to post the prices for specific advertisements to a public website immediately after the sales occur.” The NAB’s request also noted that the new rules “will place NAB’s members at a distinct disadvantage to their non-broadcast competitors, who will not be required to post rate information on the Internet.”

While all of this is going on, the FCC has announced that it will be conducting a public demonstration of its proposed online public inspection file database next Tuesday, July 17, 2012, at 10:00 a.m., only two weeks or so prior to the date the new rules are scheduled to go into effect. Those of you interested in participating online can do so by logging in to www.fcc.gov/live. I will be posting a follow-up piece summarizing next week’s demonstration.

As the levels of activity on multiple fronts indicate, this proceeding is far from over. To be sure, obtaining a court stay is not an easy task. That said, this is the rare case where (despite the FCC’s contrary ruling), the irreparable harm to broadcasters is apparent, and the case on the merits is strong. While the court ponders the stay request, TV broadcasters need to be preparing themselves for the the process of uploading their public inspection files by the August 2 deadline. Whether or not a last-minute stay is granted, the next two weeks will be a white-knuckle ride for TV broadcasters.

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Earlier today, the FCC announced in the Federal Register that the Office of Management and Budget (OMB) has approved the FCC’s new rules requiring television stations to replace the public files that they maintain at their studios with electronic files that will be hosted online by the FCC. As a result of today’s announcement, the online file rules become effective on August 2, 2012. Included among the documents that must be made available online are stations’ ad sales records for political ads–a requirement widely speculated to be a response to the Supreme Court’s decision in the Citizens United case.

As I reported recently, what this means is that all full-power and Class A television stations will be required to upload any newly created public file documents to a not-yet-disclosed database managed by the FCC starting August 2. Stations will have until January 3, 2013, to post their current public file documents online, with the exception of letters and emails from the public which are not required to be uploaded.

With respect to political file documents, affiliates of ABC, CBS, NBC or Fox located in the top-50 television markets will have to begin uploading all newly created political file documents to the FCC’s database on August 2, 2012. The political file requirement will be phased in so that all other television stations must comply with the political file uploading requirement by July 1, 2014. Until July 1, 2014, stations not in the top-50 markets and all stations not affiliated with the top-four networks, regardless of the size of the market they serve, are exempt from the requirement. The FCC has stated that it plans to issue a Public Notice no later than July 1, 2013 seeking comments on the impact that the posting requirement has had on television stations to that point and to evaluate the effectiveness of the process. Items placed in a station’s political file prior to August 2 will not have to be posted online.

Whether any of these dates will hold remains to be seen.

First, the National Association of Broadcasters (NAB) has already filed a Petition for Review of the rules in the U.S. Court of Appeals for the District of Columbia Circuit, even though the deadline to do so is not until July 10. The NAB, along with 46 State Broadcasters Associations and others, had opposed the rules when the FCC proposed them, stating that they were riddled with omissions, greatly underestimated the burden on television stations, and were otherwise duplicative of reporting required by the Federal Election Commission (FEC). However, the FCC and the OMB rejected these claims, seemingly turning a blind eye to the voluminous record in the proceeding indicating that the proposed rules will increase burdens on television stations while merely duplicating records already required to be filed with the FEC. As a result, the NAB’s court challenge argues that the FCC’s action in adopting the rules “infringes on . . . First Amendment free-speech rights, exceeds statutory authority, and is arbitrary and capricious.” In addition, the NAB filed a motion for stay with the FCC earlier today asking the Commission to delay implementation of the rules until the court has had an opportunity to review the NAB’s Petition for Review.

Second, and of more practical concern, the FCC will now have to scramble to ready its online filing database and educate the public in its use before the August 2 effective date rolls around. The FCC has not yet announced when the database will be available for stations to “test” the system in advance of the rules going into effect as it claimed it would do when it adopted the new rules. The Commission did announce today that it will soon schedule user testing and educational webinars for the online public file to ensure that the uploading of materials by broadcasters can be done “smoothly and efficiently”.

Many will remember the chaos that occurred in 2009 and 2010 as a result of the FCC’s decision to adopt a new electronic Ownership Report filing requirement that increased both the amount of data to be collected and the number of reports to be submitted, but promised to mitigate the increased burden by making the data easy to copy into multiple filings. Repeatedly, the FCC’s system ground to a halt under the heavy load, precluding filers from working with the data they had painstakingly entered. As a result, the filing deadline had to be repeatedly extended until the bugs were worked out. Glitches such as this are inevitable with an untested system, which makes one wonder how the FCC believes it can make it all work before the August 2 deadline. It would be unfortunate if the combination of the Citizens United ruling and the impending November 6 election drove the FCC to once again implement a filing database that is not ready for prime time, forcing broadcasters to serve as beta testers.

Needless to say, given the NAB’s Petition at the court, the other likely court and FCC challenges to the rules, and the hurdles the FCC faces in implementing the online database, the odds are not high that stations will be fully uploaded by the August 2, 2012 deadline. Unfortunately, though, television stations can’t afford to wager on the speed with which the FCC will move in this case. Stations will therefore need to start moving now to ensure they are ready to post their files by August 2, 2012, and should remain alert to any FCC announcements informing them exactly how the new filing system will work.