Latest Foreign Sponsor Rules Deliver Mixed Results for Broadcaster Concerns

NRB | June 14, 2024 | Advocacy, Advocacy News

This week, the FCC released a Second Report and Order amending and clarifying its requirements for identification and disclosure of foreign government-provided programming. This report and order is the result of a multi-year regulatory action aimed at enhancing the steps that broadcasters must take to ensure that the audience is informed when airtime has been purchased by a foreign government in order to influence the U.S. public.

NRB joined numerous other broadcast interests in submitting input on the proposal in 2023. Read NRB’s full comment here. While NRB’s central recommendation of a religious exemption to the foreign sponsor ID requirements was dismissed, the FCC took other NRB concerns regarding the application of the rule into account. NRB’s comment helped to obtain two significant modifications to the rules to reduce the regulatory strain on licensees and content vendors, which often include local churches and ministries.

In 2022, the U.S. Court of Appeals for the District of Columbia held “that the FCC cannot require radio broadcasters to check Federal sources to verify sponsors’ identities” and vacated that aspect of the expanded rules. The most recent R&O tackles two main objectives: (1) replacing the vacated verification requirement with another method and (2) clarifying what types of content are subject to the foreign sponsorship identification rules. 

The report adopted the following positive changes to the FCC’s original foreign sponsorship rules:

  • Licensees will now have two options for demonstrating that they have fulfilled their duty of inquiry. The first option is the use of certifications. In response to NRB and other stakeholders’ concerns, the FCC will offer a simplified one-page version of its standardized certification language and will also permit broadcasters to use their own certification language. Alternatively, broadcasters may ask their lessees for screenshots to verify that their names do not appear in the DOJ’s FARA database or the FCC’s list of U.S.-based foreign media outlets.
  • Licensees will only have to make such inquiries once a year when the lessee and programming are the same (i.e. weekly broadcasts of services from the same church), even if the lease covers a shorter term. 
  • If broadcasters attempt, but are unable, to obtain this information from lessees, they will not be prohibited from airing the program. They must only retain records demonstrating that they exercised reasonable diligence in seeking the information.
  • The FCC confirmed that the foreign sponsorship rules should not apply to noncommercial and educational broadcast stations.
  • The FCC agreed to grandfather in existing leases and apply the rule modifications only to new leases and lease renewals entered into on or after the effective date (30 days after publication in the Federal Register).

In a surprising reversal of previous indications, the FCC modified its 2021 definition of “lease” by eliminating the “short- form advertisement” exception, announcing that issue advertisements and paid public service announcements (PSA) will be subject to the rules, while commercial products and services and political candidate advertisements are excepted. The FCC argues that Federal Election Commission (FEC) rules would likely already restrict foreign involvement with political ads, therefore rendering the FCC’s rule unnecessary. However, the aforementioned issue ads would also be subject to the FEC’s rules, prompting questions as to why the Commission would not apply the same standard to both. Read more about this issue in section 47 of the Second Report and Order. 

This change drew the particular ire of Commissioner Nathan Simington, who wrote in a sharp dissenting statement, “This is senseless. To ensure maximum transparency for viewers and listeners, we are requiring foreign sponsorship identification for a subset of issue ads already covered by the same FEC rules prohibiting foreign sponsorship that we deemed justification to exclude candidate ads from foreign sponsorship identification?” In a partial dissent, Commissioner Brendan Carr pointed out, “The FCC did not provide fair notice that it might redefine ‘lease’ in this fundamental way. . . . If the FCC wanted to consider rule changes that were not teed up in the Second NPRM, it could have shored up the record through a Further Notice or a supplemental Public Notice. The FCC did not do so here.”

The FCC also dismissed the recommendation of NRB and other broadcast stakeholders to create a religious exemption, citing that an exemption for religious programming would not be “content neutral.” Read more about this issue in sections 57-58 of the Second Report and Order. Therefore, the new rules will apply to religious broadcasters who are not exempted separately under a noncommercial designation.

“The FCC’s latest order corrects several issues, but does not accomplish what NRB recommended—a religious exemption,” commented NRB President & CEO Troy A. Miller. “This order also continues a recent theme at the FCC of raising issues obliquely or bundling in further rule changes that should be addressed directly for public evaluation and comment.”

The FCC’s attention to concerns outlined in four comments and eight reply comments underscores the importance of stakeholder participation in the rulemaking process. Broadcasters should expect the new rules to be rigorously enforced. NRB analysis does not constitute legal advice, and we strongly advise all members and non-members to speak with their attorneys on specific legal and regulatory matters to fully understand their individual obligations and requirements. NRB will continue to monitor issues associated with foreign sponsorship ID as the new rules take effect.

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