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This October has more than its share of filing deadlines for broadcasters to worry about. Of course, it is the end of the quarter, so broadcasters should be prepared for their routine quarterly filings. Additionally, certain states will have EEO and noncommercial ownership filing obligations. This year is also a radio license renewal year and a triennial must-carry/retransmission consent election year for television stations. All in all, there are a number of deadlines to keep track of, so read on.

October 1 (weekend)

  • Must-Carry/Retransmission Consent Elections: Deadline for commercial full power television stations to notify by certified mail all cable and satellite providers in their markets of their election between must-carry and retransmission consent for the next three-year period. More information on this election can be found here. Noncommercial stations must make requests for carriage, as they do not have retransmission consent rights.
  • EEO Public File Reports: Deadline for radio and television station employment units with five or more employees in the following states to prepare and place in their public inspection file, and on their website if they have one, their annual EEO Public File Report: Alaska, Florida, Hawaii, Iowa, Missouri, Oregon, and Washington, as well as American Samoa, Guam, Mariana Islands, Puerto Rico, Saipan, and the Virgin Islands.
  • FCC Form 323-E: Deadline for the following noncommercial stations to electronically file their biennial ownership report on FCC Form 323-E: Radio stations licensed to communities in Alaska, Florida, Hawaii, Oregon, and Washington, as well as American Samoa, Guam, Mariana Islands, Puerto Rico, Saipan, and the Virgin Islands, and television stations licensed to communities in Iowa and Missouri.
  • Pre-filing Renewal Announcements: Date on which radio stations licensed to communities in Alabama and Georgia must begin airing their pre-filing license renewal announcements. The remaining announcements must air on October 16, November 1 and November 16.
  • License Renewal Filing: Deadline for radio stations licensed to communities in Florida, Puerto Rico, and the Virgin Islands to electronically file their license renewal applications. These stations must also commence their post-filing renewal announcements to air on October 1 and 16, November 1 and 16, and December 1 and 16.

October 10 (holiday)

  • Quarterly Issues/Programs Lists: Deadline for all radio, full power television and Class A television stations to place their Quarterly Issues/Programs List in their public inspection file.
  • Children’s Television: Deadline for all commercial full power and Class A television stations to electronically file FCC Form 398, the Children’s Television Programming Report, with the FCC and place a copy in their public inspection file. These stations must also prepare and place in their public inspection files their documentation of compliance with the commercial limits in programming for children 12 and under.

October 23 (weekend)

  • License Renewal Documentation: Date on which radio stations licensed to communities in North and South Carolina must place in their public inspection file documentation of having given the required public notice of their August 1st license renewal filing.
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Paul A. Cicelski

As I reported last month, my colleague Dick Zaragoza and I filed a Petition with the FCC asking for a further extension of the deadline for EAS Participants to implement the Common Alerting Protocol (CAP) standard for the Emergency Alert System (EAS).

We filed the Petition on behalf of representatives of all EAS Participants, which included the State Broadcasters Associations, representing all fifty States and the District of Columbia, the National Association of Broadcasters, the Broadcast Warning Working Group, the National Cable and Telecommunications Association, the American Cable Association, National Public Radio, the Association of Public Television Stations, and the Public Broadcasting Service. Today, the FCC released an Order agreeing with the need for an extension and changing the CAP deadline from September 30, 2011 to June 30, 2012.

The extension means that the thousands of EAS Participants across the country now have additional time to acquire and install the equipment needed to become CAP-compliant. In its Order, the FCC agreed with the arguments made in the Petition by the broadcast and cable industries that a later deadline was necessary in light of the regulatory uncertainty that remains regarding what is necessary for CAP compliance, particularly because the FCC’s EAS Third Further Notice of Proposed Rulemaking (released in May and which we reported on here) will undoubtedly lead to significant EAS rule changes that could alter the requirements for EAS Participants in a way that would impact the manner in which they will go about buying, installing, testing and operating new CAP-compliant EAS equipment. In short, the extension will enable EAS Participants to review and adapt to the final rules adopted or altered in the EAS proceeding.

According to the FCC’s Order, the extension is warranted because “until the Commission has completed its rulemaking process, it cannot meaningfully impose a deadline by which EAS Participants must be able to receive CAP-formatted alerts.” The Commission further stated that no one “can comply with section 11.56 yet, because the Commission has not finalized all the key technical specifics necessary for receiving CAP-formatted alerts” and that it is “unlikely that the Commission can address all of the issues raised in the Third FNPRM and ensure that the corresponding Part 11 rule amendments are adopted and effective prior to the current September 30, 2011 deadline.” Primarily for these reasons, the FCC extended the deadline to allow “adequate time to evaluate the impact of any changes to Part 11 before being required to comply with regulations the full impact of which cannot yet be known.”

On another positive note, the Commission’s extension of the CAP-compliance deadline may allow the first-ever National EAS Test scheduled by FEMA and the FCC (set for November 9, 2011) to run more smoothly. The hope is that, as argued in the Petition, the extension of the CAP-compliance deadline until June of next year will allow participants in the scheduled November 9, 2011 National EAS test to focus on the success of that test instead of being concerned with the functioning of newly-installed EAS equipment. For those interested in more background on the National EAS test, we previously reported on it here and here). With this most recent extension of the EAS CAP deadline, we hope we will be able to later report that the national test went smoothly.

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For those of you who remember the sense of relief you felt as a kid when you forgot to study for a test and later found out that class was cancelled, the FCC is giving you a chance to enjoy that feeling again. Despite the fact that annual regulatory fees were due yesterday, September 14, 2011, the FCC announced late today that the filing deadline is being extended until 11:59 pm ET tomorrow, September 16, 2011.

That may be a relief to many, as this year the FCC did not send out individual notices of the fee filing deadline to licensees, meaning that the number of licensees who forgot to file is likely higher this year than is typically the case. However, that is not the reason for the extension. Those who waited until the last minute to file their fees discovered that the FCC’s electronic filing system was struggling under the load. Because of this, the FCC decided to grant the extension to make sure no one can complain that they tried to file on time but were prevented by the system from meeting the filing deadline. In other words, there’s no excuse for missing the filing deadline now!

Because regulatory fees paid by check must reach the FCC’s lockbox in St. Louis by the deadline, the more practical way of meeting the new deadline is through the use of a credit card for payment. Fees received after the deadline are subject to the automatic 25% late fee.

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In an uncertain economy, obtaining financing for business transactions can be a challenge. It can be even more challenging for FCC licensees, since FCC rules prohibit granting a security interest in an FCC license. Because lenders want an enforceable lien on all of a borrower’s assets, when those assets include FCC licenses, agreements must be structured carefully to give a lender all of the economic benefits of holding a security interest in the FCC license, without taking a security interest in the license itself.

The standard approach has been to provide the lender with a security interest in the “proceeds” of a license sale. That approach was called into question last October after a decision by the Colorado Bankruptcy Court (In re Tracy), which held that a security interest in the proceeds of an FCC license does not survive bankruptcy. While many communications lawyers saw this decision as an aberration, and the New York Bankruptcy Court (In re Terrestar Networks) rejected it outright in reaching an opposite conclusion last month, just a few days after that New York decision, on appeal, the Colorado U.S. District Court affirmed the reasoning in Tracy, once again opening the issue to debate.

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The FCC today filed its Brief at the U.S. Supreme Court defending its actions against Fox and ABC programming it found to be indecent. In the case of Fox, the alleged indecency was celebrity expletives uttered during the 2002 and 2003 Billboard Music Awards, while ABC was fined for rear nudity shown during an episode of NYPD Blue. As I wrote earlier, the fact that the Court is reviewing such disparate forms of indecency (fleeting expletives during live programming versus nudity during scripted programming) increases the likelihood of a broader ruling by the court regarding indecency policy, as opposed to a decision limited to the very specific facts of these two cases.

When the Supreme Court was contemplating whether to hear the FCC’s appeal of the lower court decisions, some broadcasters urged the Court to look beyond these particular cases and rule on the continued viability of Red Lion. The Red Lion case is a 1969 decision in which the Supreme Court ruled that it was constitutional to limit broadcasters’ First Amendment rights based upon the scarcity of broadcast spectrum. The logic behind Red Lion was that since there isn’t enough spectrum available for everyone to have their own broadcast station, those fortunate enough to get a broadcast license must accept government restrictions on its use. Red Lion is the basis for many of the FCC regulations imposed on broadcasters, but the FCC’s indecency policy is Red Lion‘s most obvious offspring.

While Red Lion is the elephant in the room in any case involving broadcasters’ First Amendment rights, its emergence in the Fox/ABC case was particularly unsurprising. In an earlier stage of the Fox proceeding, the Supreme Court reversed a lower court ruling that the FCC’s indecency enforcement was an arbitrary and capricious violation of the Administrative Procedure Act. The Court’s decision was not, however, a show of unanimity. The 5-4 decision included a main opinion from Justice Scalia, but also two concurrences and three dissents. The most interesting aspect of the fractured decision came from Justice Thomas, who joined the majority in finding that the FCC had not violated the Administrative Procedure Act, but who also noted the “deep intrusion into the First Amendment rights of broadcasters” and questioned whether Red Lion was still viable in the Internet age.

It is certainly true that much of the logic supporting Red Lion has been undercut by a changing world. There are now far more broadcast stations than newspapers, but no one argues that the scarcity of newspapers justifies limiting their First Amendment rights. Similarly, the Internet has given those seeking not just a local audience, but a national or even international audience a very low cost alternative for reaching those audiences. While broadcast stations may still be the best way of reaching large local audiences, they are no longer the only way.

These are just a few of the many changes occurring since 1969 that weaken the foundation of Red Lion. If you put two communications lawyers in a room and give them five minutes, they will be able to generate at least a dozen other reasons why Red Lion‘s day has passed. Try this at your next cocktail party. It’s far better than charades and communications lawyers need to get out more anyway.

It is therefore not surprising that broadcasters accepted Justice Thomas’s invitation and urged the Court to reconsider Red Lion in evaluating the constitutionality of indecency regulation. What is interesting, however, is that when the Court agreed to review the lower court decisions, it explicitly limited its review to the constitutionality of the FCC’s indecency policy, and declined to consider the broader questions raised by Justice Thomas with regard to Red Lion.

While some saw that as a defeat for broadcasters, I am inclined to think it was something else entirely. Although the composition of the Court has changed a bit since 2009, it is worth noting that four justices questioned the FCC’s indecency policy then, and a fifth justice explicitly questioned Red Lion, the very foundation of that policy. Given that it only takes the votes of four justices for the Court to agree to hear an appeal, the exclusion of Red Lion from that review is curious, and it is certainly possible that Justice Thomas is alone in his concern about the continued viability of Red Lion.

More likely, however, is that the Court is adhering to its long-held doctrine of keeping decisions as narrow as possible when addressing the constitutionality of a particular law or regulation. If that is the case, then the justices may well have concluded that the FCC’s indecency policy, at least in its current form, cannot survive constitutional review, and that there is no need to consider the broader issue of whether the government has any viable basis for regulating broadcasters and broadcast content. Stated differently, If the Court was inclined to uphold the constitutionality of the FCC’s indecency policy, an assessment of the continued viability of Red Lion would be critical to that decision, since a constitutional policy for which the government lacks a constitutional basis to impose on broadcasters is still unconstitutional.

While it is always a risky endeavor to attempt to “read” the Court, the entire basis of indecency policy is to protect children from content the government finds unsuitable for them. It is therefore telling that on the very day the Court agreed to hear the FCC’s appeal, it also released a decision overturning a California law prohibiting the sale of violent video games to minors, finding in a 7-2 decision that the law infringed upon the First Amendment, regardless of its intent to protect children. That decision makes clear that the Court will not merely accept “protecting children” as a valid basis for limiting First Amendment activities.

Of course, the California ban on sales of violent video games to minors affected only minors, whereas the FCC’s restriction on indecency limits the broadcast content that everyone–adults and minors alike–can access from 6am-10pm every day (the hours during which indecent broadcast content is prohibited). That fact, combined with the reality that there is far more “First Amendment” speech (political and otherwise) on radio and television than in most video games, means that the FCC may have a tough job convincing the Court that the FCC’s indecency policy can coexist with the First Amendment.

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By Peter M. Gillon, Vince Morgan and James P. Bobotek

9/6/2011

Hurricane Irene has caused immense damage to the East Coast with loss estimates in the billons. Those affected face many challenges as they begin the recovery process, including impaired utility services, water damage, accessibility problems and supply-chain disruptions. Fortunately, many corporate policyholders have insurance coverage available to assist in the aftermath of this tragic event. Taking a few proactive steps will help maximize that coverage.

Insurance claims arising out of natural disasters such as Hurricane Irene can be very complex, both in terms of sheer scope and the legal issues involved. Irene caused not only billions of dollars in property damage through wind, rain, and flooding, but also exacted a heavy toll on commercial business operations as a result of power outages, evacuations, and transportation route closures. To help with the claim process, we have prepared this Advisory to provide a basic outline of some key issues to keep in mind as restoration and recovery efforts continue.

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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:

  • Late-Filed License Application Garners $7,000 Fine
  • FCC Fines Noncommercial Broadcaster $5,000 for Alien Ownership Violation

“Inadvertent Error” Results in $7,000 Fine for West Virginia Broadcaster

The FCC recently issued a combined Memorandum Opinion and Order and Notice of Apparent Liability (the “Order”) fining a West Virginia FM broadcaster for unauthorized operation and failure to file a required form. The base fines associated with these types of rule violations total $13,000. However, based on the circumstances detailed below, the FCC decided to reduce the overall fine to $7000.

The licensing process begins with the grant of a construction permit and concludes with the grant of a station license authorizing permanent operation of the newly-constructed facilities. Pursuant to Section 73.3598(a) of the FCC’s Rules, construction must be completed within three years and a license application must be promptly filed with the FCC when construction is completed. Subsection (e) of this rule provides that a construction permit will be automatically forfeited upon its expiration if construction is not completed and a license to cover application has not been filed within the allotted three year period.

In the instant case, the FM broadcaster was forced to utilize an emergency antenna as a consequence of a 2002 tower collapse. In June 2004, the FM broadcaster sought to modify its station to relocate its authorized tower site to a location less than two miles away. As part of this process, the FM broadcaster filed an application for a construction permit. The FCC granted the application in July 2004 and issued a construction permit slated to expire in July 2007.

According to the Order, the FM broadcaster filed its license application in May 2011, almost four years beyond the expiration of the 2004 construction permit. The license application included a request for a waiver of Section 73.3598(e), indicating that the authorized construction had been completed by April 2006, well in advance of the three year expiration date, but that due to an “inadvertent error”, the license application was not filed prior to the construction permit’s July 2007 expiration.

In support of its waiver request, the FM broadcaster cited a May 2011 case in which the FCC had “affirmed the staff’s practice of waiving Section 73.3598(e) of the Rules in situations where the applicant conclusively demonstrates that it completed construction prior to the expiration of the construction permit, notwithstanding the tardy filing of the license to cover application.” In response, the FCC’s Order noted that the prior waivers occurred where the delay in meeting the deadline was “relatively minor”, as was the case in the cited May 2011 decision, where a license application was filed three days after the expiration of the construction permit. The FCC concluded that a four year delay could not be considered minor.

Ultimately, the FCC rejected the FM broadcaster’s waiver request, dismissed the license application, and on its own motion, granted the station special temporary authority to operate while it reapplied for a new construction permit. The FCC levied the full $3,000 fine for failure to timely file a license application, but reduced the unauthorized operation fine (for the period the station operated with modified but unlicensed facilities) from $10,000 to $4,000 since the station had previously held a valid license.

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In 2009, the FCC adopted an Order which expanded the types of commercial broadcast licensees required to file ownership reports on FCC Form 323 biennially. The FCC also established November 1 (of odd-numbered years) as the single national ownership report filing date for all commercial broadcast stations. As a result, all commercial full-power AM, FM, TV, and Class A and LPTV stations, as well as entities with attributable interests in those stations, were due to file their next biennial ownership reports on November 1 of this year. However, the Media Bureau issued an Order yesterday which moves the November 1, 2011 filing deadline to December 1, 2011. The FCC indicates that despite the change in filing date, the ownership reports should still include a snapshot of station ownership as it existed on October 1, 2011.

Keep in mind that the ownership report filing requirement does not apply to TV translators, FM translators, or low power FM stations. The FCC’s action also does not affect noncommercial stations, which continue to file their biennial reports on FCC Form 323-E by a filing deadline determined based upon the state in which they are licensed (rather than a single national date).

According to the FCC, the filing date was moved because “some licensees and parent entities of multiple stations may be required to file numerous forms and the extra
time is intended to permit adequate time to prepare such filings.” Despite providing the extra time, the FCC is still encouraging parties to prepare and file their ownership reports as soon as possible.

Having provided the extra filing time, the FCC will not be too pleased with broadcasters that fail to meet this new deadline. Broadcasters should therefore accept the FCC’s advice and try to avoid last minute ownership filings, which increase the likelihood of technical and other problems that can interfere with a successful filing.

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8/15/2011

The FCC has announced that full payment of all applicable Regulatory Fees for Fiscal Year 2011 must be received no later than September 14, 2011.

As of this date, the FCC has not released a Public Notice officially announcing the deadline for payment of FY 2011 annual regulatory fees. However, the FCC’s website indicates that the 2011 annual regulatory fees must be paid no later than 11:59 pm (EST) on September 14, 2011.

As reported in July 2010, beginning in 2011, the Commission has discontinued mailing assessment notices to licensees/permittees. It is the responsibility of each licensee/permittee to determine what fees are due and to pay them in full by the deadline. Information pertaining to the annual regulatory fees is available online at https://www.fcc.gov/fees/regfees.html.

Annual regulatory fees are owed for most FCC authorizations held as of October 1, 2010 by any licensee or permittee which is not otherwise exempt from the payment of such fees. Licensees and permittees may review assessed fees using the FCC’s Media Look-Up website – http://www.fccfees.com. Certain entities are exempt from payment of regulatory fees, including, for example, governmental and non-profit entities. Section 1.1162 of the FCC’s Rules provides guidance on annual regulatory fee exemptions. Broadcast licensees that believe they qualify for an exemption may refer to the FCC’s Media Look-Up website for instructions on submitting a Fee-Exempt Status Claim.

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While our monthly editions of FCC Enforcement Monitor have continued to grow in popularity over the past decade, I’m never quite sure if it is because readers rely on it to better understand the FCC’s Rules, or if it is more akin to going to the races to see who crashes. Every month, FCC Enforcement Monitor highlights some of the FCC’s recent enforcement actions, and the penalties imposed. Having edited every issue since it launched in 1999, I find it useful in spotting enforcement trends before our clients find out about those trends the hard way.

One of the trends that is increasingly apparent is the FCC’s hardening line on public inspection file violations. In fact, we just did a major update to our Client Advisory on public file compliance to help broadcast stations avoid that pitfall, and I’ll be in Austin this week at the Texas Association of Broadcasters/Society of Broadcast Engineers convention with Stephen Lee of the FCC’s Houston regional office discussing the public file rule and other FCC compliance issues.

One of the questions on the broadcast license renewal form requires applicants to certify that they have fully complied with the public file rule and that their files are complete. Once upon a time, a station that could not make that certification and was therefore required to disclose its file’s shortcomings to the FCC might well get an admonition from the FCC to do better in the future, combined with an acknowledgement that the applicant had at least voluntarily disclosed its infraction. Then the FCC began issuing $2000 fines for public inspection violations, which crept upward in the last license renewal cycle to $3000 and then to $4000. During this time, there was much consternation among broadcasters who had sought to comply with the rule, admitted to the FCC any shortcomings in their public file, and felt that they were being unfairly punished for being forthright with the FCC.

In 1997, the FCC established a base fine of $10,000 for public inspection file violations, but tended not to issue fines for the full $10,000 unless it was an egregious violation, such as a station that failed to keep a public file at all for some period of time. However, in the past decade, $10,000 has become the standard “go to” fine for even minor public file violations. In fact, the most recent FCC Enforcement Monitor details a recent case where the FCC chose to adjust its base fine upward and issue a $15,000 fine for a public inspection file violation.

Of equal interest in that same issue of FCC Enforcement Monitor is a case in which the FCC fined a student-run noncommercial station $10,000 for documents missing from the public file. In assessing the fine, the FCC made clear that the station’s “voluntary” disclosure of public file problems in its license renewal application no longer earns any sympathy from the FCC. The FCC stated that “although the Licensee has admitted to the violations, it did so only in the context of the question contained in its captioned license renewal application that compelled such disclosure.” When the station later asked that the fine be cancelled or reduced given its student-run and noncommercial nature, the FCC once again had no sympathy, and reaffirmed the $10,000 fine.

Since submitting a false certification on a federal form can lead to far worse penalties than a fine, broadcasters have but one option for avoiding a $10,000 (or worse) fine, and that is by making sure their stations’ public inspection files are above reproach. With the next license renewal cycle now upon us, broadcasters would be wise to ensure their public file is getting the attention it deserves. If that leaves us with no FCC public inspection file fines to discuss in a future issue of FCC Enforcement Monitor, I’ll be happy with that result.