Posted on November 21, 2011 by David Oxenford

Congress and the Commission Look to Make FCC More Responsive and to Take Costs Into Account in Making New Rules - Will It Work?

In recent weeks, there seems to be a competition to make the FCC more responsive, and to mandate that, before it adopts any new regulations, it take into account the costs of the proposed regulations and the burden that they place on those being regulated.  The Communications and Technology Subcommittee of the House Energy and Commerce Committee adopted a bill (The FCC Process Reform Act of 2011) that would, if adopted by the full House and the Senate, require that the FCC, before adopting any new regulations, take several steps to make sure that regulations were really necessary (see a summary of House bill here).  Before adopting any rule, the Commission would have to survey the marketplace, determine that there was a market failure or specific consumer harm, then take into account the cost of complying with regulations before the new regulations are adopted.  The proposed legislation would also require that the FCC adopt deadlines on many FCC actions ("shot clocks"), perhaps in response to a Study commissioned by the House Committee looking at the length of time that many FCC proceedings take.  The FCC adopted its own proposals for making its regulations less burdensome by reviewing the continuing need for existing rules, following the President's call for all agencies to take such action.  The FCC report, after making the seemingly obligatory bows to broadband adoption that the Commission seeks to foster, talked about many of the same issues that the Congressional committee seemed to be addressing - deleting unnecessary regulation wherever possible.  What changes will these efforts bring to the FCC?

Call me cynical, but I doubt that the proposed changes will really lead to any significant differences in the way that the FCC does business.  The FCC is already bound by all sorts of laws that demand that it take into account many of the same considerations that are included in the plans of Congress and the FCC.  The Paperwork Reduction Act has already stopped certain regulations from going into effect, including the Form 355 (which sat in limbo for 4 years and the FCC is only now considering reviving in a somewhat more abbreviated form).  The FCC also must take into account the Regulatory Flexibility Act, looking at the impact of any regulation on small entities who would be subject to any new rule.  Congress itself has already enacted other requirements that the FCC review regulations on a periodic basis - for instance the required Quadrennial Review of the FCC's multiple ownership rules.  And what do these accomplish?

These legal obligations require the FCC to jump through a few more hoops before they adopt any new rule - adding another set of factors to analyze in their decision making.  Addressing these procedural issues usually takes an extra page or two at the end of any FCC decision - often a fairly rote analysis, but once in a while giving rise a point of appeal for some party to a particular case or proceeding.  But many times these appeal issues would be ones that would have been raised based on the merits of the decision in assessing whether the decision served the public interest -even without these statutory obligations. 

As to imposing deadlines on FCC actions, in recent years, the FCC has adopted its own shot clocks for many different kinds of actions.  The Media Bureau several years ago adopted processing standards for routine applications, and the Bureau has done a very good job of meeting those and often exceeding those standards.  It is not the routine processing that is usually the problem for the FCC (at least in recent years).  While everyone wants their application processed faster than it is, for the most part the FCC does a quite good job of disposing of the usual application for regulatory approval.   But it's the novel or complex or highly contested cases which are the ones where artificial deadlines, no matter how well intentioned, may not serve the public.  While in some cases, the regulatory drag does kill transactions, especially in rulemaking proceedings, it can also stop FCC actions before there is a clear path to a decision in the public interest.  A rush to a decision can often lead to a bad decision - or a decision where one side or the other takes a big loss, rather than some sort of compromise decision (or at least a decision where something that the side that might otherwise think that it lost at least gets some protections) that often develops over time. 

As difficult decisions take time, the deadlines sometimes get in the way, or are ignored, or become meaningless or mired in politics.  The constant review of the FCC multiple ownership rules has been going on since the early 1990s (if not before) and recent press reports hint that the Notice of Proposed Rulemaking that may be coming out of the FCC with proposals that will insure that fights continue for the foreseeable future.  While Congress has mandated a Quadrennial Review of the ownership rules, the 2003 decision on these rules ended up, after appeals, being rolled into the 2007 decision, which itself was overturned on appeal, and that action is at least a partial cause of the FCC missing the 2011 date for the current Quadrennial review.  With the Notice of Proposed Rulemaking only being considered - and once released it will require more public comment and further consideration before any final decision - my prediction is that the final decision won't be out until after the 2012 elections. But I'm not sure that this long-term consideration is not better than pushing to complete a review quickly, as who knows what would be the result of a rushed action. 

While legislative fixes for regulatory decision making may sound appealing, they may well just add to that delay but requiring more analysis and I- dotting and T-crossing before any decision can be reached.  Certainly, Congress and the public need to keep up the pressure for expeditious decision-making, but whether more rules and governing statutes need to be added to the thicket that must be navigated before anything is ever done remains to be seen. 
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Posted on April 18, 2011 by David Oxenford

Fines of $9000 for Public File Violations Upheld, But FCC Asks if the Paperwork Burden of the Public File is Justified

Last week, in a frenzy of cleaning up issues left from old license renewal applications, the FCC upheld several $9000 fines for public file violations - most in connection with the failure of licensees to have a complete set of Quarterly Programs Issues lists ("QPIs") in those files.  The broadcasters who were fined came up with a variety of arguments as to why those fines should be reduced or eliminated - which were uniformly rejected by the Commission.  What we find interesting is that, while these large fines were levied against a number of broadcasters, the FCC is at the same time asking whether retention of the public file can be justified under the provisions of the Paperwork Reduction Act.  So which is it - an important tool to keep the public informed about the ways that stations serve their public, or an unreasonable burden on those who are regulated by the FCC?

While this request for comments on the paperwork burden imposed by the public file may be nothing more than a routine review of Commission rules to justify their continuing existence under the provisions of the Paperwork Reduction Act, it is interesting that this rule - long the source of wrath from broadcasters who complain that the file is never visited except by the occasional college broadcasting student who has to do so as a class project, or by the competitor in the market looking for something to complain about (and even those visits are extremely rare for most stations) - is now up for review and comment.  Why was this rule selected for review?  Will there be other rules about which the FCC asks for comment?  Is there any justification for the burden imposed on broadcasters (which the FCC estimates at a cumulative 1,831,706 hours of work annually, but to which it curiously assigns no associated cost burden with the required tasks) when it is routine for the file to be never visited?  You have your chance to voice your comments - with the filing deadline for such comments being June 17, 2011.

The cases issued last week all contained arguments from the licensees as to why the fines issued by the FCC should be reduced.  One applicant, who was fined $9000, contended that its violations were not "willful and repeated violations" worthy of the high fine.  The licensee submitted that they were instead isolated and inadvertent.  The Commission rejected that contention - essentially holding that any failure to follow a rule is willful, and the fact that the failure went on for years made it repeated.  That applicant also contended that the fines were higher than levied on other applicants (as the FCC's fines for public file violations did seem to rise from $3000 to $9000 during the course of the last renewal term), but the FCC rejected that argument, contending that there were factual differences in the cases that merited the lower fines - one station getting the lower fine did not have QPIs, but did keep letters from the public commending certain station programs, and another got the lower fine because the violations in that other case "were for an indiscernible period of time" (if the period was not discerned by the FCC, shouldn't the fine have been higher?).  Even an argument that legal provisions protecting small businesses should protect the station was rejected - the Commission finding that it can protect small businesses by reducing the fines if necessary (which it did not do in this case).  Similar arguments were rejected in connection with another $9000 fine, and in connection with yet another station that only received a $3000 fine (the decision does not explain why this fine was lower than the others).   Another fine was reduced from $9000 to $7200 because of a prior record of compliance by the applicant.  A noncommercial station received a similar "reduced" fine of $7200.  Another University received an $8000 fine, the FCC rejecting arguments of financial hardship even though the University showed that it operated at a loss of over $200 million (as the fine constituted a small portion of the $250 million operating budget of the school).

Given this raft of fines, it is clear that the FCC will continue to take enforcement of the rules regarding the public file to be very important - perhaps right up to the time that they abolish the rule for not justifying the paperwork burden that it places on licensees.  For more information about the requirements, see our most recent advisory on the requirements of the Quarterly Programs Issues lists, here. 
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Posted on October 2, 2009 by David Oxenford

Ownership Report Filing Requirement Officially Suspended Until New Form 323 is Approved by the OMB

Just this morning, we posted a comment about the new FCC Form 323 Ownership Report that was supposed to be required of all commercial broadcasters on November 1 of this year, and then on November 1 of every other year thereafter.  We wrote about how the approval of the form by the Office of Management and Budget under the Paperwork Reduction Act had been held up, and that the November 1 filing deadline looked unlikely.  Well, the FCC today issued an Order officially putting the November 1 filing obligation on hold pending approval of the new form.  There had been a suggestion in the FCC's order issued in late May, which suspended ownership filings for stations in states that had ownership filing obligations between then and November 1, that stations in these states would have to file on the old form on November 1 if the new form was not adopted by that date.  Today's Order suspends even that obligation.  Thus, no station needs to be prepared to file the new Ownership Report until the new version of Form 323 is approved by the Office of Management and Budget - whenever that may be.  Stayed tuned for more developments.

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Posted on October 2, 2009 by David Oxenford

So What Happened to Those New Ownership Reports that Were Supposed to Be Filed on November 1?

Several months ago, we wrote of the FCC's requirements for a new biennial Ownership Report for all commercial broadcast stations - to be filed by all stations in every state on November 1 of every other year - beginning with November 1 of this year.  The FCC has even suspended the requirements for commercial stations to file reports that were due between the date that the rule was adopted and November 1 (reports being due on the even anniversaries of the filing of license renewal applications for stations in the state to which the station is licensed). Yet, here we are, less than a month from the supposed filing deadline for the new forms, and we've not seen any notice from the FCC that the new forms are ready to be used or any reminder for broadcasters to prepare and file those reports.  What gives?  Well, the Paperwork Reduction Act has struck again.

We've written about the Paperwork Reduction Act before, and its obligation that the FCC (or almost any other government agency) has to justify any new paperwork obligation that it is imposing on companies that it regulates - showing that the burden is as minimal as possible and serves a necessary regulatory process.  Here, when the new ownership reports on FCC Form 323 were submitted to the Office of Management and Budget for approval under the Paperwork Reduction Act, several parties, including the NAB, objected that information requested by the new form was unnecessarily complex, and in fact might violate other Federal laws (in particular Federal Privacy laws) as they required not only the filing of information about the companies who own radio stations with identification of their owners, but required that each and every attributable owner of a station (and actually including a few nonattributable owners who must be reported under the new reporting scheme), obtain an FCC "FRN" identification number that would be attached to that person and uniquely identify them in connection with each and every broadcast interest that they have.  In most cases, that would require that the individual provide a social security number (and  corporate entities would have to file Taxpayer ID numbers).  While the FCC promised to keep those identification numbers private, security issues were not addressed and questions were raised why the Commission had to put so many individuals through so much of a burden when the FCC reports had not been adopted to track individual ownership interests, but instead to track the minority ownership of broadcast stations.  Other issues with the new forms were also raised, as the new forms would have required many filings for stations held in independent corporations, but with a common parent company as parent companies cannot simply cross-reference multiple licensee companies that they own, but instead have to file multiple ownership reports for each licensee company in which they have an interest.  In addition, ownership structures and other broadcast interests can no longer be identified by PDF attachments, but they instead needed to be separately entered into their own fields on the new form.  The idea was to make the information searchable - but it would also result in vastly more time to prepare these reports.

With these objections on file (and they were only due in mid-September), it seems unlikely that the November 1 projected deadline for the new forms will hold, as it is already very late for the forms to be released to broadcasters and prepared in time to meet the new filing deadline.  As the FCC also has not yet sorted out the question of whether noncommercial licensees will have to file the new reports, perhaps a new date for this filing obligation will be set once all of these issues have been resolved.  Look for more information on these issues soon.

UPDATE:  See our update as, later in the day that we wrote this artilce, the FCC suspended all of the commercial radio ownership filing deadlines until they can get a new Form 323 approved by the OMB. 
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Posted on September 15, 2008 by David Oxenford

Will the FCC Back off on its TV Enhanced Disclosure Requirements?

Broadcasting and Cable magazine today reported that the FCC is looking to back off some of the requirements for the "enhanced disclosure" of television broadcaster's public interest programming (see our summary of the new requirements of FCC Form 355, here).  B&C reports that the FCC may lessen or at least better explain some of its new reporting requirements to try to avoid having these rules being struck down by the Courts as being arbitrary and capricious, or to avoid further proceedings which might be ordered by the OMB were it to determine that the rules violated the Paperwork Reduction Act.   We have speculated as to the likelihood that these rules, requiring substantial new burdens on television broadcasters, would have difficulty surviving OMB review.  How could these burdensome rules, which the FCC has effectively stated have no regulatory purpose as the Commission has no requirements for any percentages of any particular type of programming (see our post here) possibly be justified under a Paperwork Reduction Act analysis - much more paper for no specific regulatory purpose simply does not seem to provide any justification for the new rules?  A Paperwork Reduction Act analysis focuses on the burden on small entities.  The new enhanced disclosure rules do not exempt small broadcasters.  B&C suggests that an exemption for noncommercial stations may be one of the changes to be made by the FCC - certainly a welcome change but hardly enough to help small market commercial TV operators who will be hardest hit by these rules. 

We would certainly not be surprised by the FCC lessening the burden that they have imposed on television broadcasters.  We have seen Commission staffers in public forums express surprise at the descriptions of the burdens that these rules place on television broadcasters.  And we have noted the slow pace with which these rules have been rolled out - having been adopted in December, the text of the decision coming out in January, and they still are not effective.  We will all have to watch closely to see if this press report is accurate and the FCC in fact reconsiders its Enhanced Disclosure requirements.  Stay tuned. 

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Posted on July 14, 2008 by David Oxenford

OMB Throws Out Leased Access Rules as Violation of Paperwork Reduction Act - Will TV Enhanced Disclosure Be Next?

Last week, the Office of Management and Budget determined that the FCC's new rules on Leased Access to cable channels (see our bulletin describing those rules) violated the Paperwork Reduction Act. This means that the new rules, which would have significantly lowered the cost for parties who wanted to lease cable channels to provide their own programming, will be sent back to the FCC for further consideration.  These rules are also on appeal to the Courts, which had stayed the effectiveness of the rules while the appeal is being considered, which is usually a good indication that the Court had issues with the rules as well.  The OMB action has the effect of returning the rules back to the FCC to be considered anew in light of the OMB findings.  Our firm has prepared a memo detailing the decision, here.  Given the OMB decision that these rules imposed too great a burden on cable systems, one wonders if this decision portends a similar result when the OMB reviews the FCC's rules on Enhanced Disclosure and an on-line public inspection file - rules that would impose a significant burden on television broadcasters (about which we wrote here).

The OMB decision on the leased access rules highlighted some of the perceived shortcomings of the FCC decision, including that the FCC had not shown that they had taken steps to minimize the burden on companies who would have to hire staff to comply with the new rules, and they had not provided reasons why reduced timeframes for responses to requests for leased access were necessary.  Looking at these standards, one would have to think that much of the same reasoning would apply to the FCC's Enhanced Disclosure requirements for TV stations as set out in the new Form 355.  The completion of the Form would clearly require the hiring of new staff.  We've also questioned whether the Commission has given any justification for the increased paperwork requirements, as the information itself has no regulatory purpose as the FCC has not adopted any quantitative standards for public interest programming.  With no purpose and increased costs, how could the OMB treat the enhanced disclosure requirements differently than it did the leased access requirements?

It's also interesting to note that both the leased access decision and the Form 355 were adopted at the Commission's November 2007 meeting.  Yet the Form 355 and the requirements for on-line public files still has not been considered by the OMB.  Perhaps the FCC recognizes its problems and intends to address the issues on reconsideration, in an attempt to minimize the burdens.  If not, watch for the OMB review, and see if indeed this decision portends good news for broadcasters when the the Form 355 is considered under the provisions of the Paperwork Reduction Act.
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