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As I wrote back in February, the federal government has decided to conduct the first-ever national test of the Emergency Alert System. Today, FEMA and the FCC announced that the test will occur on November 9, 2011, at 2pm Eastern Standard Time. On that date, the public will hear a message indicating “This is a test,” but FEMA and the FCC indicate that the entire test could last up to three and a half minutes.

Because the test is a presidential EAS test, it must be retransmitted by radio and television broadcasters, cable operators, satellite radio service providers, direct broadcast satellite service providers, and wireline video service providers. In the announcement, FEMA took pains to note that the test will not simply be a pass/fail exercise, but an opportunity to find out what is working and what isn’t, so that the system can be tweaked and improved.

It is likely that the national EAS test will become an annual event following this initial test. One issue that was not discussed in the announcement, however, is how the current September 30, 2011 deadline for EAS participants to install EAS equipment compatible with the Common Alerting Protocol (CAP) could affect the test. The FCC had originally said that the intent of a national test was to assess the existing EAS operation, as opposed to testing the implementation and functionality of the new CAP-compliant EAS equipment soon to being purchased and installed by broadcast, cable, and satellite operators.

As the FCC just last week announced the commencement of a rulemaking to adopt rules and processes for the implementation of CAP, there is a growing feeling that the September 30, 2011 CAP implementation deadline may need to be extended in order to prevent a situation where EAS participants are required to immediately purchase and install new EAS equipment that may or may not comply with the CAP requirements ultimately adopted by the FCC. Whether intended or not, a national EAS test just six weeks after the CAP deadline will likely end up being more about the teething pains of CAP implementation than about how reliably the current EAS infrastructure functions.

As a result, preventing the national test from being sidelined by the inevitable implementation glitches of CAP may be the strongest reason yet for extending the CAP implementation deadline to a date beyond November 9, 2011. It will be good to know how the never-before-tested national EAS infrastructure functions before adding the additional complexities of CAP-compliant EAS equipment to it.

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The FCC today announced a freeze on the acceptance of any petitions for rulemaking seeking to change a station’s assigned channel in the Post-Transition Table of DTV Allotments. While application freezes were once relatively rare at the FCC, they became quite common as a planning mechanism during the years when the FCC was creating a new Table of Allotments to initiate and complete the transition to digital television.

Given the FCC’s announced intent to begin reclaiming broadcast television spectrum for wireless broadband as part of the National Broadband Plan, and to then repack the remaining television stations into a smaller chunk of spectrum, today’s announcement was not a surprise. The Commission’s brief announcement stated that the freeze is necessary to “permit the Commission to evaluate its reallocation and repacking proposals and their impact on the Post-Transition Table of DTV Allotments….”

The freeze will put a stop to the steady migration of stations from the VHF to the UHF band, where reception is generally better and the opportunities for successful mobile DTV operations greater. While not discussed in the FCC’s announcement, proponents of transferring broadcast spectrum to wireless broadband have no interest in VHF spectrum, so each station that moves from the VHF band to the UHF band makes the FCC’s efforts to clear UHF spectrum for broadband that much more difficult. The FCC noted in its announcement that since the lifting of the last freeze in 2008, it has processed nearly 100 television channel changes, and that it therefore believes most stations interested in making a channel change have had sufficient time to do so. The FCC indicated that it would continue to process channel change requests filed before the new freeze commenced.

And so it begins. While the prospects for legislation to implement the National Broadband Plan’s broadcast spectrum incentive auctions remain murky, the FCC does not need the blessing of Congress in order to commence the process of spectrum repacking. Now well over a year old, the National Broadband Plan remains mostly that–a plan. Today’s freeze marks one of the first concrete steps by the FCC to implement at least some aspects of that plan. Setting aside the issue of whom the ultimate winners and losers in the spectrum debate will be, the painful and expensive process of implementing a new Table of Allotments for digital television is still far too fresh a memory for many broadcasters to want to be subjected to a similar process now.

At least with the transition to digital, broadcasters could see the benefits of enduring the difficult process in order to be able to garner the benefits of high definition programming, multicasting, and datacasting. Unfortunately, for broadcasters not interested in selling spectrum in an incentive auction, repacking means all pain and no gain. The best case scenario for a television broadcaster in a repacking is just to survive the disruption and distraction without losing signal coverage of viewers and cable headends. That doesn’t leave broadcasters with much light at the end of the tunnel to guide them through the difficult days ahead.

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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 Fines FM Broadcaster for Excessive Power and RF Radiation Levels
  • Forfeiture More Than Triples After Consent Decree Default

Missing Fence Yields $10,000 Fine for Utah FM Broadcaster
During a routine inspection in April 2010, Denver field agents cited a Utah FM broadcaster for excess radio frequency radiation (“RFR”) exposure and failure to operate the station as authorized by the FCC. The citations resulted in a combined $14,000 fine.

According to the Notice of Apparent Liability (“NAL”), the station and its antenna tower were located at the top of a hill easily accessible by foot and all terrain vehicles. The station and tower were enclosed by a chain link fence, but access from the base of the hill to the station’s fence was unobstructed. The field agents visited the station on two separate occasions and determined that the station was exceeding permitted RFR exposure levels, with actual RFR ranging from 165 to 315% of the legally acceptable levels at distances between 12 and 28 feet outside the chain link fence. At the time of the inspection, Denver field agents did not observe any posted RFR warning signs on or near the site. Failure to maintain acceptable levels of public RFR exposure is a direct violation of Section 1.1310 of the FCC’s Rules, which mandates that broadcasters comply with the RFR exposure limits established by the National Council on Radiation Protection and Measurements as outlined in the tables provided in the FCC’s Rules.

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A Notice of Apparent Liability released today by the FCC’s Enforcement Bureau provides 25,000 reasons that you don’t want to bounce a check when making a payment at the FCC. As I noted in a post this time last year, there has been a conspicuous effort by the FCC to increase the size of fines for various rule violations. Equally apparent has been an effort by the FCC in recent years to rely more heavily on “consent decrees” rather than fines to resolve allegations of rule violations.

In a typical case, the FCC will commence an investigation of alleged rule violations, and rather than completing the investigation and (where appropriate) issuing a fine, the FCC and the licensee will negotiate a consent decree to resolve the matter. For the FCC, the benefit of resolving an investigation through a consent decree is that it conserves agency resources that would otherwise have to be expended to complete the investigation, issue sanctions, and defend those sanctions if the licensee appeals them. For the licensee, a consent decree can be attractive as well, cutting short a potentially embarrassing investigation and eliminating the risk of being socked with a far larger fine.

An FCC consent decree generally has two components: a “voluntary” financial contribution to the federal government, and the implementation of a multi-year compliance program, complete with reports to the FCC to ensure that the alleged rule violations do not recur. While there is no shortage of people who argue that consent decree negotiations can quickly devolve into a “shakedown,” the consent decree process can sometimes be an efficient means of resolving what would otherwise be a resource-draining process for both the FCC and the licensee.

If you enter into a consent decree, however, be prepared to live up to it. In an enforcement action released today, a consent decree ended badly for the licensee of an AM station in Puerto Rico. The licensee entered into a consent decree in May 2008 to resolve allegations of rule violations involving tower fencing, the station’s public inspection file, and operating with an unauthorized antenna pattern. The consent decree required the licensee to make an $8,000 contribution to the U.S. Treasury, and to file a compliance report in May 2010 certifying compliance with all of the other terms of the consent decree. The licensee entered into the consent decree after the FCC issued a Notice of Apparent Liability indicating that it was prepared to issue a $15,000 fine for the alleged violations.

According to the Enforcement Bureau, the licensee attempted to make the $8,000 contribution with a check that bounced for “insufficient funds.” When the licensee also failed to file its compliance report, the FCC lost patience, resulting in the issuance today of a new Notice of Apparent Liability against the station licensee for $25,000.

Perhaps the licensee thought that once the consent decree is signed, the FCC has too much else on its hands to bother following up to ensure that the licensee lives up to its consent decree promises. If so, the licensee misjudged the FCC. It may take some time for the long arm of the FCC to catch up with you, but as happened in this case, it eventually does.

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Broadcasters don’t know it yet, but recent actions by the Department of Justice suggest that the federal government may be moving closer to raining on their upcoming license renewals. The reason? Medical marijuana advertising. While it seems like a recent phenomenon, the first state laws permitting medical marijuana go back some 15 years. The movement by states to permit the use of medical marijuana has grown steadily since then, with half the states in the U.S. (and the District of Columbia) now having medical marijuana laws on the books or under consideration.

Of course, when an entrepreneur sets up a medical marijuana dispensary, the next step is to get the word out to the public. In the past few years, these dispensaries began approaching broadcast stations in growing numbers seeking to air advertising. In the depths of the recent recession, medical marijuana dispensaries were one of the few growth industries, and many stations were thrilled to have a new source of ad revenue.

However, marijuana, medical or otherwise, is still illegal under federal law. When we first began receiving calls a few years ago from broadcast stations asking if they could accept the ads, the federal government’s position was ambiguous. Many stations, and in some cases, their counsel, concluded that as long as the activity was legal in the state in which the station was located, airing medical marijuana ads was fine. In 2009, the Department of Justice gave some comfort, if not support, to this school of thought when it internally circulated a memo to some U.S. attorneys suggesting that the DOJ was not interested in pursuing medical marijuana businesses as long as they operated in compliance with state law.

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Headlines:

  • FCC Begins to Move on Pending Video News Release Complaints
  • Failure to Monitor Tower Lighting Results in $12,000 Penalty

Video News Releases Garner $4,000 Fines for Two Television Broadcasters
After a flurry of complaints from advocacy groups a few years ago raised the issue at the FCC, the Commission has been pondering how to treat Video News Releases (VNRs) with respect to its sponsorship identification rule. The result has been a growing backlog of enforcement investigations involving VNRs. However, the release of two decisions proposing fines for stations that aired all or part of a VNR without identifying the material on-air as being sponsored appears to indicate that the dam is about to break. In its first VNR enforcement actions in years, the FCC fined two unrelated television stations $4,000 each for violating the sponsorship identification requirements found in Section 317 of the Communications Act and Section 73.1212 of the FCC’s Rules.

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Caught between a rock and the Second Circuit, the FCC hesitantly took the defense of its indecency policy to the Supreme Court today. The FCC filed a petition seeking the Court’s review of the Second Circuit’s decisions in indecency cases involving Fox and ABC programs. Last year, the Second Circuit found the FCC’s interpretation of indecency to be arbitrary and capricious. On appeal, the Supreme Court disagreed, and lobbed this perennial hot potato back over the net to the Second Circuit for an assessment of the constitutionality of the FCC’s indecency policy.

Whether intentional or not, the Supreme Court’s return of the matter to the Second Circuit was the legal equivalent of a high lob, and the Second Circuit enthusiastically slammed the ball back across the net, ruling that the FCC’s current indecency policy is unconstitutionally vague. In light of its earlier ruling, the Second Circuit’s conclusion was hardly a surprise. More curious, however, was the government’s reaction to it. Rather than again storming to the Supreme Court to defend its indecency policy, the FCC first asked the Second Circuit to reconsider its decision (a request that was denied in November 2010), and then sought not one, but two extensions of the deadline for requesting Supreme Court review.

The FCC waited until the end of even that extended period before seeking joint review of the Fox and ABC decisions (the deadline for the Fox decision was today, while the FCC actually had until May 4th to seek review of the ABC decision). In asking that the cases be considered together, the FCC is making the calculation that “scripted nudity” in ABC’s NYPD Blue presents a more compelling case for government regulation than the Fox case, where the agency concluded that fleeting expletives (during the Billboard Music Awards) were a form of actionable indecency despite years of precedent to the contrary. That new interpretation, which the FCC first announced with regard to an NBC broadcast of the Golden Globe Awards, gave everyone (including FCC staff) a case of regulatory whiplash, whereas the FCC’s ongoing, if erratic, feud with broadcast nudity was hardly a surprise (and therefore less controversial).

The government’s hesitance to bring all of this to the Supreme Court’s doorstep a second time is even more curious after reading the petition, which bluntly states that “The court of appeals has effectively suspended the Commission’s ability to fulfill its statutory indecency enforcement responsibilities unless and until the agency can adopt a new policy that surmounts the court of appeals’ vagueness rulings.” The petition then suggests that no functional indecency policy could overcome that hurdle. It is therefore apparent that the FCC’s delay in bringing the challenge (which to be fair, necessarily involves getting the Department of Justice on board) is not the result of any belief that the agency might have been able to “live with” or “work around” the Second Circuit’s ruling by revising its policy. There is clearly something else at work here.

From a legal perspective, the FCC’s petition is well written. However, in reading through it, you can’t avoid the impression that even the FCC is trying to convince itself that the technological and cultural shifts of the last decade or two have not rendered the notion of government second-guessing broadcast content an anachronism. In particular, it is hard to escape the irony of the FCC seeking to bring high speed Internet into every home by reallocating broadcast spectrum based on the argument that only 10% of Americans are viewing over-the-air television. If true, then the government is expending a lot of effort to control what that 10% sees on their televisions, while racing to use those airwaves to bring these same households the wonders of the Internet–including all of that content that they aren’t allowed to see on their TV’s.

The convergence of distribution technologies is upon us, and whether that claimed 10% of households uses their TV’s V-Chip, or an Internet software filter on their computer, to prevent unwelcome content from entering their home, the result is hardly different. The FCC’s sudden shyness in defending its indecency policy suggests that it is concerned that the Supreme Court may note that incongruity as well.

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I wrote last week about the FCC’s announcement that broadcasters must certify in their license renewal applications that their advertising contracts have, since March 14, 2011, had a nondiscrimination clause in them. Specifically, broadcasters must certify that their “advertising sales agreements do not discriminate on the basis of race or ethnicity and that all such agreements held by the licensee contain nondiscrimination clauses.” The good news from last week’s announcement was that the FCC chose to apply the advertising nondiscrimination certification (which was originally announced in 2008), prospectively, rather than announcing that stations would have to certify their contracts included such language since 2008 or 2009.

That was the good news, and what government giveth with one hand, it can taketh away with the other. Today the FCC released an FCC Enforcement Advisory and News Release emphasizing how seriously it intends to treat that certification. The FCC’s Advisory states that broadcasters unable to make that certification will need to “attach an exhibit identifying the persons and matters involved and explaining why the noncompliance is not an impediment to a grant of the station’s license renewal application.”

The Advisory goes on to state that “Licensees must have a good faith basis for an affirmative certification” and notes that “a licensee that uses a third party to arrange advertising sales is responsible for exercising due diligence to ensure that the advertising agreement contains the nondiscrimination clause and does not discriminate on the basis of race or ethnicity.”

Lawyers are perhaps unique in their ability to acknowledge the validity of a legal requirement while still questioning the logic of it. Make no mistake–this new certification is the law and broadcasters need to make sure that they can truthfully make this certification at license renewal time. The goal itself is admirable. Indeed, as Univision’s Washington counsel during the time that it grew from only seven TV stations to 162 TV and radio stations, I saw first hand the challenges of persuading advertisers (and others) that Spanish-language viewers and listeners are an important group of consumers worthy of advertisers’ dollars.

However, as I noted in last week’s post, trying to use the FCC’s authority over broadcasters as a method to modify the conduct of advertisers (who are generally beyond the FCC’s authority) is a futile approach. Advertisers aren’t too worried about a broadcaster’s license renewal. As a result, the only one to be hurt here is the broadcaster, not the discriminatory advertiser.

The FCC can counter that preventing broadcasters from accepting ads of discriminatory advertisers ensures such advertisers will cease their discriminatory ad practices if they want air time. This assertion suffers, however, from two debilitating flaws. First, if the current FCC’s view is accurate that broadband,and not broadcasting, is the way of the future, then there will be plenty of non-broadcast venues for advertisers wishing to engage in discriminatory ad buys. Indeed, the FCC’s certification will not even prevent the same advertiser from making discriminatory ad buys in non-broadcast media while avoiding such discrimination on the broadcast side.

That brings us, however, to the bigger flaw in this approach, and that is the simple fact that clauses in a contract can generally only be enforced by the parties to that contract. As a result, a broadcaster can place the required nondiscrimination clause in its contract, and if the advertiser proceeds to purchase ads in a discriminatory manner (e.g., splitting its ad buying money among all of the broadcaster’s local radio stations except the one with the Spanish-language format), the FCC can’t really do anything about it. The only party in a position to enforce the nondiscrimination clause in the contract is the broadcaster, who will understandably be hesitant to spend precious resources suing an advertiser. There is no financial incentive to spend money on litigation, and there is obviously a huge disincentive for the broadcaster to sue a revenue source that can readily take its advertising dollars elsewhere (and who won’t care what happens to the broadcaster’s license renewal application).

Even today’s FCC Enforcement Advisory seems to overlook this, asserting that “a broadcaster that learns of a violation of a nondiscrimination clause while its license renewal application is pending should update its license renewal application so that it continues to be accurate.” However, whether an advertiser has proceeded to engage in discriminatory ad buying practices in violation of the contractual nondiscrimination clause would not necessarily affect the accuracy of the broadcaster’s certification that its “advertising sales agreements do not discriminate on the basis of race or ethnicity and that all such agreements held by the licensee contain nondiscrimination clauses.” The broadcaster could certainly volunteer to the FCC that it had discovered an advertiser discriminating, but the FCC has no authority to punish the advertiser, and punishing the broadcaster who uncovered the advertiser’s discriminatory efforts doesn’t make much sense. As a result, the new certification adds to the regulatory thicket surrounding broadcasters, but leaves discriminatory advertisers free to roam.

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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:

  • Florida FM Translator Fined $13,000 for Unauthorized Operations
  • Latest Public Inspection File Violation Nets Upwardly Adjusted Fine
  • Failure to Monitor Inactive Tower Results in $6,000 Penalty

Failure to Operate as Authorized Costs Florida Broadcaster an Additional $4,000

A recent FCC Notice of Apparent Liability (“NAL”) for $13,000 against a Florida broadcaster serves as a costly reminder that stations must operate in accordance with the FCC’s Rules, and more notably, as specifically authorized in their station license. According to the NAL, the Florida broadcaster failed to heed a verbal warning from Tampa field agents that its station was operating beyond the technical parameters of its authorization. The NAL stated that the Tampa field agents, pursuant to an investigation and following two complaints, took field strength measurements on five separate occasions and visited the station’s transmitter site on two separate occasions over approximately 11 months between October 2009 and September 2010. Field measurements undertaken in October 2009 and early February 2010 indicated that the station was operating with a power level well in excess of its authorization in violation of Section 74.1235(e) of the FCC’s Rules, which states, “[i]n no event shall a station authorized under this subpart be operated with a transmitter power output (TPO) in excess of the transmitter certificated rating and the TPO shall not be more than 105 percent of the authorized TPO.”

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The next Quarterly Issues/Programs List (“Quarterly List”) must be placed in stations’ local public inspection files by April 10, 2011, reflecting information for the months of January, February and March, 2011.

Content of the Quarterly List

The FCC requires each broadcast station to air a reasonable amount of programming responsive to significant community needs, issues, and problems as determined by the station. The FCC gives each station the discretion to determine which issues facing the community served by the station are the most significant and how best to respond to them in the station’s overall programming.

To demonstrate a station’s compliance with this public interest obligation, the FCC requires a station to maintain, and place in the public inspection file, a Quarterly List reflecting the “station’s most significant programming treatment of community issues during the preceding three month period.” By its use of the term “most significant,” the FCC has noted that stations are not required to list all responsive programming, but only that programming which provided the most significant treatment of the issues identified.

Given that program logs are no longer mandated by the FCC, the Quarterly Lists may be the most important evidence of a station’s compliance with its public service obligations. The lists also provide important support for the certification of Class A station compliance discussed below.

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