As we wrote on Friday, the government shutdown affects many aspects of FCC operations – and could affect the ability of the FCC to hold its regular monthly meeting, now scheduled for January 30. With the FCC likely shut down for most of this week, just before closing, the FCC released its agenda for the January 30 meeting (which would normally have been released this week – 3 weeks before the meeting). One interesting item on the agenda was a Notice of Proposed Rulemaking to change certain aspects of the criteria used to evaluate applicants for new noncommercial broadcast stations and LPFMs, and the operations of those new stations after a construction permit is issued. The draft NPRM is here. As with all draft items released with the agenda of an upcoming FCC meeting, the draft is subject to change before that meeting.

It appears that the NPRM was not prompted by any single group representing noncommercial broadcasters, but instead raises a number of issues and problems that have been raised before the FCC in comparative cases in the last decade, which use a “points system” process to determine which mutually-exclusive noncommercial applicant should have its application granted. The point system relies on paper hearings to determine which applicant has the most points, awarding applicants preferences on factors such as whether they have few other broadcast interests, whether they are local organizations, and whether they are part of state-wide networks. The NPRM also looks at the restrictions on what successful applicants can do, once they receive their construction permits to build new stations – including the length of LPFM CPs, the transferability of those CPs, and restrictions imposed on changes to certain NCE technical facilities after a CP grant.

The FCC looks for comments on the following issues:

  • Whether it should eliminate the current requirement that NCE applicants include in their governing documents specific provisions obligating the applicant to maintain localism and diversity in order to receive points as “established local applicants” and for “diversity of ownership.”  The current obligation requires that applicants, to receive a “diversity credit” in their application, need to have articles of incorporation or by-laws that specifically state that they cannot acquire new stations that would affect the credit they received in the FCC review of the applications. Localism must be maintained by provisions in organizational documents restricting the residence of board members. The FCC suggests that these obligations are unnecessary – the actual conduct of the applicant can be weighed by the FCC whether or not the company’s governing documents contain explicit restrictions.
  • Can the FCC improve the NCE tie-breaker process and reform the process for establishing mandatory time-sharing plans where ties in the comparative process remain? Full-power NCE station applicants who are tied in the FCC points system end up in a tie-breaker process (see, for instance, our article here that discusses the process). Where that process does not produce a clear winner, according to the NPRM, parties are often allowed to negotiate for years over the terms of a time-sharing agreement before the FCC intervenes to force a sharing arrangement. The FCC asks if there should be a hard time limit on sharing negotiations. Should the FCC set the sharing restrictions if there is no resolution? Should there be circumstances where, if no settlements can be reached, all applicants should be dismissed? The Commission notes that in the LPFM process, a more definitive process exists for forcing time sharing, and asks if portions of that process should apply to full-power NCEs as well. Minor changes to the LPFM time sharing process are also proposed.
  • Should the FCC clarify aspects of the “holding period” during which NCE permittees must maintain the characteristics for which they received comparative preferences.  One of the specific issues to be reviewed is the requirement that, if an applicant receives a “307(b) preference” for serving areas that have no noncommercial service or service from only one other noncommercial station, the applicant cannot change transmitter sites where it would lose service to some or all of the areas of proposed coverage for which it received a preference, even if that lost service is made up by service to new noncommercial white or grey areas. This restriction has prevented some successful noncommercial applications from constructing their new stations when proposed transmitter sites became unavailable and no alternative sites covering the exact same underserved areas were available.
  • The FCC proposes to reclassify as “minor” (1) all ownership changes to governmental applicants, provided that the change has little or no effect on such applicant’s mission, and (2) gradual board changes in non-stock and membership LPFM and NCE applicants.  This eliminates issues that sometimes arise with long-pending applications when gradual Board changes result in a majority of the governing board of an applicant changing, which under FCC processing rules would result in a dismissal of an application. The FCC has from time to time been forced to waive that rule (for instance in connection with the processing of applications from the 2003 FM translator window that ended up being dealt with in settlements more than a decade after they were filed). In the case of existing NCE stations, the FCC has taken the position that gradual changes in the Board of an applicant do not require a “long-form” transfer application that would otherwise apply to a major change in ownership (see our article here). The FCC is proposing to apply the same rules to the processing of applications for new stations.
  • The FCC proposes to eliminate certain tolling notification requirements and toll NCE and LPFM broadcast construction deadlines without notification from the permittee, based on certain pleadings pending before, or actions taken by, the agency. Currently, an applicant has to ask the FCC for tolling to stop the clock on the expiration of a CP from running. Inexperienced applicants acting without counsel often don’t realize that they need to request tolling, as do applicants who wrongly think that a tolling event may be able to be resolved quickly. By forgetting to ask for tolling, these permittees can lose out on potential time in which to construct their new stations.
  • The FCC proposes to extend LPFM construction permits from 18-months to a full three years, the same period that applies to other construction permits (a construction period which LPFM permittees can currently receive – but they have to timely request such extensions at the end of the initial 18 month construction period).
  • The FCC proposes to eliminate the current rules prohibiting the sale of unbuilt LPFM construction permits and requiring a 3-year holding period for newly licensed LPFM stations. The FCC proposes instead to allow the assignment/transfer of LPFM permits and stations after an 18-month holding period as long certain safeguards are met – including that there is no profit in the sale and as long as the new owner satisfies all FCC eligibility criteria (including offering the same comparative attributes as the original applicant if the CP was granted after a point-system analysis).

Interested parties will have the opportunity to comment on these proposals once the FCC adopts the final NPRM and the NPRM is published in the Federal Register. Theoretically, interested parties can now ask the FCC to make changes in the NPRM before it is adopted – perhaps suggesting other NCE rule changes that should be considered. However, with the FCC shutdown, opportunities to reach the appropriate people to implement such changes may be limited. Stay tuned to see when and whether this tentative proposal matures into a final NPRM.