Discussion of FCC, copyright, advertising and other legal issues of importance to radio and television broadcasters and other media companies
Here are some of the regulatory developments of significance to broadcasters from the past week, with links to where you can go to find more information as to how these actions may affect your operations.
Here are some of the regulatory developments of the last week of significance to broadcasters, with links to where you can go to find more information as to how these actions may affect your operations.
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A $4000 fine was levied by the FCC on an FM station owner who failed to file an application for license after completing construction of changes authorized by a construction permit, finally submitting the license applicaiton about 4 years after that permit had expired. When a broadcaster receives a construction permit authorizing technical changes in a station’s facilities, in most cases, it has three years to complete construction. Upon the completion of construction, the licensee must file an application for a license (on FCC Form 302 for commercial stations) certifying that the station was constructed as authorized. In this case, when the license application was finally submitted long after the permit expired, the application stated that construction had in fact been completed within the three year period set out in the construction permit. So the applicant requested retroactive approval of that license, relying on past FCC cases where license applications filed after the end of the construction period were nevertheless granted where the applicant could show that construction had been completed during the period set out in the construction permit.
The FCC decided in this case that a waiver was not appropriate given the time that expired between the expiration of the permit and the filing of the license application. While gaps of a few days or even a few weeks between the expiration of the permit and the filing of the license application are excusable, the Commission concluded that a four year gap was just too much to excuse – not the minor error that can be forgiven without a fine. Waiting four years to file a license application was deemed to be too much to forgive – so the question was whether a fine was appropriate and, if so, how much.…
The failure to follow FCC filing rules when a station finished construction of new facilities under a construction permit will apparently cost a radio station $7000 according to a recent Notice of Apparent Liability released by the Commission’s Media Bureau. Before a broadcast station can make most changes to its technical facilities, it must apply to the FCC for approval, which the FCC grants by way of a construction permit. In most cases, the broadcaster has 3 years to construct the proposed facilities. Once construction is complete, the broadcaster must notify the FCC of that fact by filing an application for a license on FCC Form 302. That form gives details of the construction, so that the FCC can tell that the station was built in the manner authorized by the construction permit, and in accordance with any conditions placed on construction in the permit. In this case, the broadcaster built the new facilities that it proposed within the 3 year period, but forgot to file the Form 302 – and only did so 3 years after the end of the construction period. Under this Notice, the late filing, and the failure to ask for special temporary authority ("STA") to operate the station after the failure to file was discovered, may cost the station $7000.
In the past, the FCC had allowed some stations to file their license application late, if construction had occurred in a timely fashion, and where the licensee provided proof of the timely construction. In this decision, the FCC found that these cases were situations where the late filing was for an insignificant period of time – a few days or weeks at the most, not for the years that went by in the case here. The late filing, and the fact that, as the construction permit had expired and no license had been granted, the station was deemed to have been operating without authority at the new site, warranted the $7000 fine in the FCC’s opinion. The case not only serves as a reminder to those with construction permits to file their license applications on time after they complete construction, but also shows that while the FCC may show some flexibility in enforcing its procedural rules, it will not allow licensees to ignore them for long periods. So be careful to meet the requirements of the rules, or look for big fines from the Commission. …
The recent decision of the Third Circuit Court of Appeals which overturned the FCC’s 2007 rulings on newspaper-broadcast cross ownership and on diversity initiatives, took an unexpected turn today. The FCC issued a Public Notice announcing that it would immediately stop giving "Eligible Entities" an advantage in certain instances – most particularly the extension of construction permits for new stations that are close to their expiration dates. In the FCC’s 2007 Diversity Order, the Commission, to encourage more diversity in broadcast ownership, allowed "eligible entities", i.e. small businesses under SBA definitions, to acquire construction permits for new stations that were close to expiration, and to get an additional 18 months in which to construct the station. In most other circumstances, the FCC will not extend a construction permit (absent some limited "tolling events" that will give applicants a limited amount of time to construct – but just the amount of time that a limited unforeseen event takes out of the usual 3 year construction period). The 18 month extensions given to Eligible Entities have become an important way of saving construction permits about to expire when the original permit holder could not complete construction in the given 3 year construction period.
Today’s decision takes away that opportunity to extend unbuilt construction permits. And the ruling goes even further, pulling the rug out from under recent grants of CP extensions – even ones that have already been granted, unless the extensions have become "final," i.e. no longer subject to reconsideration or appeal. Those extensions granted in the last 40 days are subject to this order, and if these CPs have an initial expiration date that has already passed, they will be canceled. This will no doubt cause some great consternation among parties who have purchased a construction permit in reliance on an FCC order extending the permit by 18 months, and may even have taken steps to construct the station since purchasing it, and now find themselves with a permit that has already expired. The Commission makes no suggestion why some other remedy consistent with the Court’s order, but not so harmful to parties that relied on prior Commission policy, could not have been adopted – perhaps a new "tolling event" giving applicants a limited period of time to get a station on the air before the CP was canceled. Sellers no doubt relied on the prospects of a pending sale (and simultaneous extension) to stop taking last minute extraordinary efforts to get a station constructed before the CP expired, and Buyer’s relied on the FCC order extending a CP to close purchases. Given the potential for some entities to suffer greatly by this ruling, look for appeals to be filed.…
As part of its order in it proceeding to encourage diversity in broadcast ownership, the FCC adopted a number of new rules, including a rule allowing parties holding construction permits for new broadcast stations to sell those permits to "qualified entities." The buying qualified entity would then then get 18 months to construct the new station, even if the construction permit would otherwise expire in less than 18 months. Under prior policy, an FCC construction permit would expire 3 years after it is issued, with no real opportunity for extension (though the construction period could be "tolled" for the period that certain impediments to construction existed, i. e. litigation over zoning, FCC litigation over the validity of the permit, or Acts of God that temporarily stopped construction – but only for the limited period that such an impediment existed). The new rule was adopted to encourage the sale to new entrants to broadcast ownership who could purchase construction permits that might otherwise expire. Today, the FCC issued some clarifications of the new rule.
The clarification was issued principally to set out when the sale must take place in order for the buyer to qualify for the 18 month extension. The FCC’s staff looked at the literal language of the new rule, and concluded that the sale must be approved by the FCC and consummated before the expiration date of the construction permit in order for the buyer to get the 18 month extension. If the sale is not completed before expiration, the permit would expire. Thus, the Commission warned applicants planning to take advantage of this new rule to file for the FCC approval of the sale at least 90 days before the expiration of the permit, to give time for the FCC approval of the sale and a consummation. However, because of the uncertainty of the rule, the Commission decided that it would allow any party wanting to buy an unbuilt construction permit and who files to acquire that permit by May 31 to get the 18 month extension, even if the permit expires while the FCC application for approval of the sale is pending. But after June 1, the buyer will not get the extension if the sale is not completed before the expiration of the permit. …
