Articles Posted in FCC Administration

Published on:

By

Let’s state the obvious.  The FCC’s use of mandatory Federal Registration Numbers was a bad idea from the start.  It became monumentally worse today, when the FCC quietly announced that anyone whose Federal Registration Number contact information isn’t updated within 10 business days is subject to a $1,000 per day fine until it is updated, up to the current statutory maximum of $628,305.

Our story begins on December 3, 2001, when the FCC began requiring that all applications and fee payments to the FCC use a Federal Registration Number (FRN) so that it could better track payments to the FCC:

The collection of regulatory and application fees, auction payments, auction loan payments, and other monies due to the United States must be processed expeditiously and recorded properly.  We tentatively conclude that the FRN will provide us with an improved mechanism for properly recording and tracking payments made to the Commission.

The FCC explained the new requirement in an FAQ:

Why must I register with the FCC?

Effective Dec. 3, 2001, all applications and remittance must use an FRN.  Registering via the FCC Registration site is how you provide the FCC with basic information.  Each individual or organization doing business with the FCC is required to provide and maintain current official contact information.  The contact information you provide will be used to communicate important FCC-related information to you.

So FRNs got their nose under the tent as a financial tracking mechanism for those “doing business with the FCC.”  If a licensee needed to file an application or pay a fee, it needed an FRN to do so.  Where things started going off the rails was in 2009, when the FCC forgot about the “doing business” part.  In revising Form 323, the Biennial Ownership Report form for broadcasters, it announced:

The revised Form 323 requires that individuals and entities reported on the form obtain and provide an FCC Registration Number (FRN). Obtaining an FRN requires submission of a Taxpayer ID Number (a Social Security Number, or SSN, for individuals and an Employer ID Number, or EIN, for entities).

As a result, not just the licensee, but every entity in its chain of ownership up to and including the ultimate parent company, every officer and director of each one of those entities, and every 5% or greater shareholder in those entities, suddenly needed to have an FRN merely so the licensee could meet its obligation to file an Ownership Report every two years and after transactions.  To get those FRNs, these entities and individuals, many of whom had never had any contact with the FCC, needed to navigate the FCC’s clunky filing systems and provide their social security number to the FCC at a time when identity theft was skyrocketing and even the Pentagon had been hacked.

The broadcast communications bar rose as one, decrying such a terrible idea and the many complications it would cause for no apparent benefit.  I was at the seminal meeting with the FCC where we ran through the long list of problems with the concept, including that individuals with no prior contact with the FCC were going to be challenged in navigating the registration system, didn’t want to give their social security number to the FCC (or anyone for that matter, including the broadcast company’s lawyer to register on their behalf), and did not have FCC counsel since they were not the broadcast company with the filing obligation.  In addition, while a broadcast company arguably had some (but not unlimited) influence over its officers and directors to ensure they obtained an FRN, they had no such influence over the 5% or greater shareholders that also needed to be listed in the reports.

The FCC’s response in that meeting was that it can’t be that bad, since big telecom companies had already been living with such a requirement, and FRNs were necessary because the FCC needed to be able to tell whether two people with the same name were the same person.  When the communications lawyers in the room noted that the Ownership Report already required the reporting of each individual’s address, nationality, and relationship to the filer, the FCC responded that there was still the situation where two people had the same address, had the same name, and one didn’t include “Jr.” in their name.  So to solve for that extreme edge case, most every person connected to a broadcaster has had to hand over their social security number and obtain an FRN ever since.

It turned out to be an even worse idea in practice.  The filing of thousands of Ownership Reports and other documents have been delayed because of FRN problems, including hours spent begging your client to get that last director or shareholder to provide enough information to get them an FRN, or because the FRN provided isn’t being accepted by the FCC’s systems for some reason.  Trying to navigate these roadblocks, many parties end up with multiple FRNs.  The lawyer sets up an FRN for the licensee in order to make its filings.  The licensee’s accountant trying to pay its regulatory fees ends up setting up a new FRN rather than asking the lawyer for the existing FRN.  The station’s engineer sets up yet another FRN because he or she needs to make a deadline filing and is blocked because they aren’t associated with the licensee’s existing FRN in the FCC’s systems.

A party may not ever realize they have multiple FRNs until they try to make a filing or pay a fee and find that the FRN they have in hand is different than the FRN that particular FCC system is expecting to see and therefore blocks the filing.  Even worse, often the employee that set up the FRN has left the company, and no one is able to access it to make a filing or payment with the FCC.  Where a licensee becomes aware it has multiple FRNs, or a person that has left the broadcast community wants to cancel its FRN rather than update it for the rest of their life, the FCC has not provided an obvious method of cancelling it.  Even if it had, licensees would be hesitant to cancel “extra” FRNs since they can’t be sure they won’t need that FRN for whatever FCC system that FRN was previously used to access.  The problem is compounded because applicants often apply for a new FRN when they can’t get the old one to work when making a filing or payment.

Nor is there much assistance for the FCC-inexperienced.  The FCC has published over 200 Compliance Guides for Small Businesses on a variety of topics, but not one on FRNs.  Making matters worse is the complicated two-step process a party must now go through to access its FRN and update the information.  When the FRN was originally introduced, a person established a password for the FRN and could simply sign in with it to update the information.  In the FCC’s efforts to enhance security, it has established a new system in which the person must first create a personal account using their own email and set up a personal password associated with that account.  Then, their personal account must be linked to the FRN by an Administrator who can grant them different levels of permission to view, manage or administer the FRN.  As a result, a person may, despite their best efforts, be unable to access and update their own FRN, particularly where the FRN Administrator (often a communications lawyer) has retired or otherwise left the company.

So don’t get a communications lawyer started on the subject of FRNs at a cocktail party; you will never get back to the bar for a second drink.

The only saving grace was that while FRNs created added headaches, friction, and delays in interacting with the FCC, they at least weren’t the subject of many enforcement actions.  They were a procedural hurdle to everything; not a fine waiting to happen.

That changed today when the FCC quietly announced in a Robocall Mitigation Database proceeding that it had received approval from the Office of Management and Budget (OMB) to require every holder of an FRN to update its FRN information within ten business days of a change or face a $1,000 a day fine.  The underlying Order was actually adopted in the waning days of the Biden Administration, but took over a year to obtain OMB approval under the Paperwork Reduction Act.  That delay is actually surprising, since the FCC in its analysis did not even mention the impact on FRN holders other than telecom “providers” involved in robocall matters, and vastly understated the burden imposed:

In [making these changes], we align section 1.8002 with section 64.6305 of the Commission’s rules, which requires providers to update submissions to the Database within 10 business days of any changes to required content.  Consistent with our view stated in the Notice that such a rule would impose no significant costs on CORES users or present any significant countervailing burdens, no commenters opposed our proposal.

Hidden in a robocall proceeding, the requirement slipped by most of the broadcast community until today’s Federal Register announcement.  Notably, the FCC’s Public Notice announcing the Order a year ago gave no hint of the impact on anyone but robocallers:

“Companies using America’s phone networks must be actively involved in protecting consumers from scammers,” said FCC Chairwoman Jessica Rosenworcel. “We are tightening our rules to ensure voice service providers know their responsibilities and help stop junk robocalls….  The Report and Order increases accountability by requiring timely updates to company information, and instituting base fines of $10,000 for submitting false or inaccurate information, and $1,000 for failure to keep information current.

It makes sense that those involved in propagating robocalls need to keep their contact information up to date in case the FCC needs to reach out in a crisis, and that some robocallers might be incentivized to make themselves hard to reach, hence the need to fine those that “forget” to update their FRN information.  None of that logic applies to retired broadcast officers and directors, minority shareholders that have moved on (and those that haven’t), or board members of a nonprofit operating a noncommercial radio station who obtained an FRN before the FCC acknowledged FRNs were too burdensome for volunteers.  Once again, the FCC has incentivized both individuals and investors to stay far away from broadcasting lest they face financial penalties for inadvertence.

All because two people in the same household might have the same name.

Published on:

By and

Pillsbury’s communications lawyers have published the 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 is a special edition:

FCC Enforcement Monitor—The Government Shutdown Edition
While shutdowns of the federal government have become depressingly common, the FCC has generally been less affected than most government agencies because it is not funded by taxpayer dollars but by regulatory fees paid by broadcasters and others regulated by the FCC. However, because the FCC collects those fees in arrears—at the end of the fiscal year they fund rather than the beginning—the FCC must borrow operating funds from the federal government to operate and then repay that debt when regulatory fees are collected at the end of the fiscal year. That is the reason the FCC is never able to extend its regulatory fee collection deadline beyond September 30, the last day of the federal fiscal year.

Continue reading →

Published on:

By and

Earlier this year, FCC Chairman Brendan Carr initiated a sweeping initiative to review “every rule, regulation, or guidance document” that could be eliminated “for the purposes of alleviating unnecessary regulatory burdens.”  At its July Open Meeting, the Commission voted 2-1 to adopt a Direct Final Rule framework to enable it to act expeditiously in the In re: Delete, Delete, Delete proceeding to repeal certain legacy regulations that have become “outdated, obsolete, unlawful, anticompetitive, or otherwise no longer in the public interest.”  The principal feature of the Direct Final Rule approach is to permit the elimination of rules without the notice and comment procedures typically required under the Administrative Procedure Act (APA).  The FCC’s lone Democrat, Commissioner Anna Gomez, dissented, expressing concern that the Direct Final Rule process circumvents essential transparency and due process safeguards, sidestepping a mechanism for public involvement.

At the highest level, the APA establishes the framework by which federal agencies like the FCC propose, adopt, modify, and revoke regulations, thereby ensuring transparency and public participation in the process.  In adopting the Direct Final Rule, the FCC explained that there is “good cause” under the APA to forgo this notice and comment process where it is “unnecessary,” such as where the administrative rules to be modified or eliminated are insignificant or inconsequential to the public.  In its recent efforts, the FCC deleted 11 rule provisions comprising 39 regulatory “burdens” it said related to obsolete technology, outdated marketplace conditions, expired deadlines, or repealed legal obligations, and which therefore no longer serve the public interest. Continue reading →

Published on:

By , and

At its final Open Meeting of 2024, the FCC on December 11 adopted a Notice of Proposed Rulemaking (“NPRM”) seeking comment on the elimination or updating of several rules applicable to broadcast stations, as well as other changes intended to clarify ambiguities and to make the rules consistent with current procedures.

The NPRM covers minor rule updates, including:

  • Replacing references to the Consolidated Database System (CDBS), with references to the Licensing Management System (LMS);
  • Updating Form Names;
  • Updating inconsistent terminology referring to the Table of Assignments/Allotments;
  • Removing obsolete television Incentive Auction rule language; and
  • Consolidating rules for petitions to deny under Section 73.3584.

The FCC is also proposing to codify existing Commission interpretations and practices into the rules.  For example, the NPRM proposes to:

  • Codify the current practice of interpreting Section 73.870(e) to mean that LPFM minor modification applications received on the same day will be treated as simultaneously filed;
  • Update Section 73.807 to reflect the existing interpretation of the term “authorized” station as including construction permittees in addition to licensees;
  • Codify when applicants for new NCE FM, NCE TV, or LPFM construction permits must give local public notice of their applications; and
  • Codify the existing interpretation of the “Signature Rule” (Section 73.3513) allowing “directors” of corporations to sign FCC applications, and to expand the universe of who may sign an FCC application on behalf of a corporation, partnership, or unincorporated association to include a “duly authorized employee.”

With respect to more substantive revisions, the NPRM is proposing to: Continue reading →

Published on:

By and

If there was any doubt that the late-2023 confirmation of Anna Gomez as the fifth commissioner would bring a flurry of FCC activity in 2024, the FCC has laid those questions to rest. In addition to a $150,000 good faith NAL, $500,000 sponsorship ID consent decree, $26,000 EEO report NAL, and some public file NALs, the FCC this week released two Notices of Proposed Rulemaking of potential interest to broadcast licensees.

Continue reading →

Published on:

By

This past Friday, the FCC released a Third Report and Order and Fourth Further Notice of Proposed Rulemaking (Multicast Licensing Order), setting forth rules regarding Next Gen multicast hosting arrangements and seeking further comment on ATSC 3.0-related patent issues.

Continue reading →

Published on:

By

For those racing to meet tonight’s deadline to file your 2021 Regulatory Fees, we have some good news.  The FCC just released a Public Notice announcing that the deadline for submitting those fees has been extended to 11:59pm on September 27, 2021.  The Notice is silent as to whether the extension is based on filing system problems or other causes.  However, it was apparently released in a rush as it doesn’t include the FCC’s standard language specifying that the deadline is 11:59pm Eastern Daylight Time (for those wishing to file at 11:59pm Pacific Time, we wouldn’t advise it).

So if you have already paid your regulatory fees, congratulations, you got in ahead of whatever issue is driving this extension.  If not, now you have something to do this weekend.

Published on:

By and

Each year with the end of summer comes an announcement from the FCC as to how it is divvying up its operating costs to then charge its regulatees in the form of regulatory fees. This annual ritual, required by Congress, makes the FCC virtually unique among federal agencies in funding its operations by passing the hat among those it regulates (and then charging them a fee to process each application to boot).

Continue reading →

Published on:

By

The FCC announced this afternoon that “effective immediately, [we] will no longer allow visitors into our facilities, absent special permission from the Office of Managing Director.”  However, that announcement, strange as it would be under normal circumstances, was of no particular importance.  That’s because the same document noted that, starting tomorrow, the FCC is asking its staff to telework.  Whether you get through the front door isn’t too important when there is no one inside the building to meet.

Broadcasters are also moving quickly to adapt to a world where no matter how strange your day was, tomorrow’s developments will make it seem unremarkable.  For example, noncommercial college radio stations whose campuses have suddenly shut down are learning about Section 73.561(a) of the FCC’s Rules, which eliminates the requirement that such stations maintain a minimum operating schedule “during those days designated on the official school calendar as vacation or recess periods.”

Meanwhile, NAB, among many, many others, is looking to mitigate the damage resulting from cancelled or postponed events.  If you are a broadcaster that was sponsoring a concert or other event that now isn’t going to happen, you might want to check out the Advisory from Pillsbury’s Insurance Practice regarding the scope of Event Cancellation Insurance policies (and kudos to that group for presciently publishing an Advisory over a month ago titled Insuring Against the Business Risks of Coronavirus).

But what about broadcasters just doing their best to go forward with their day to day business?  Well, some may go into a pool reporting model with other local stations to minimize the number of reporters being crammed into rooms with newsmakers while keeping the public informed.  Others are putting together contingency plans for when a staffer starts coughing, returns from an international trip, or is bragging about how much they enjoyed their recent cruise ship vacation.

Such planning is, however, quite complicated, as employment laws won’t necessarily let you send someone home for two unpaid weeks just because they coughed.  For those doing such planning, you might want to take a look at this recent Advisory, which discusses effective steps you can take in the workplace without simultaneously putting your station in violation of labor laws.

Hopefully by now you’ve begun to pick up a theme, which is simply that dealing with the fallout of coronavirus is a complex and diverse endeavor for all businesses, but particularly so for broadcasters.  Those with significant news operations don’t have the option of sending everyone to work from home for a couple of weeks.  That makes the task of keeping your employees safe, your audience informed, and your station solvent all the more challenging.  The FCC may be able to telework efficiently, but for those that can’t, the days ahead will be difficult, and more so for those that aren’t planning ahead now.

 

Published on:

By

The FCC has released its finalized schedule of annual Regulatory Fees for Fiscal Year 2019, and thanks to the collective efforts of all 50 State Broadcasters Associations and the National Association of Broadcasters, there is some good news for radio stations and satellite television stations.

But before we get to that, some information for you from the FCC’s Public Notice released today on filing requirements.  Fees will be due by 11:59 p.m. EDT on September 24, 2019.  You must file via the FCC’s Fee Filer system, which is available for use now.  You may pay online via credit card or debit card, or submit payment via Automated Clearing House (ACH) or wire transfer.  Remember that $24,999.99 is the daily maximum that can be charged to a credit card in the Fee Filer system.  As a result, many stations may have to pay their fees using the other methods.

Television broadcast stations will see an unfamiliar number in the “Quantity” box when they go to pay.  This relates to the FCC’s phase-in of a population-based methodology for calculating television station fee amounts.  It cannot be changed and should not be a cause for concern.  Regulatees whose total fee amount is $1,000 or less are once again exempt and do not need to pay.

In most years, the outcome of the annual Regulatory Fee battle ends with the FCC’s various regulatees rolling their collective eyes and murmuring “just tell me how much I have to fork over.”  This year’s Regulatory Fee proceeding had some surprises, however.  When the proposed fee amounts were first announced, they contained a dramatic increase in year-over-year fee amounts for most categories of radio stations.  Yet, the reason for this sudden increase was neither addressed by the FCC nor readily apparent from the FCC’s brain-numbing summary of its calculation process.

In response, all 50 State Broadcasters Associations and the NAB filed comments pressing the FCC to revisit its fee methodology and to explain or correct what appeared to be flawed data used to calculate broadcast Regulatory Fee amounts.  In particular, they pressed the FCC to explain why the estimated number of radio stations slated to cover radio’s share of the FCC’s budget had inexplicably plummeted between 2018 and 2019, resulting in each individual station having to shoulder a significantly higher fee burden.

In its regulatory fee Order, the Commission acknowledged that its estimate of the number of radio stations that would be paying Regulatory Fees in 2019 had been “conservative”, and failed to include 553 of the nation’s commercial radio stations.  Once these stations were added to the total number of radio stations previously anticipated to pay Regulatory Fees, the impact was to reduce individual station fees from those originally proposed by 9% to 13%, depending on the class of radio station.

This adjustment prevented what would have otherwise been a roughly $3 million dollar overpayment by radio stations nationwide, significantly exceeding the FCC’s cost of regulating radio stations in FY 2019.  The fact that the FCC listened to the concerns of broadcasters, investigated the discrepancy between 2019 station data and that of prior years, and made appropriate changes to fix the problem, is heartening, particularly given that stations’ only options are paying the fees demanded, seeking a waiver, or turning in their license.

Terrestrial satellite TV stations also received a requested correction to their fee calculations.  As noted above, the FCC is transitioning from a DMA-based fee calculation methodology to a population-based methodology for TV stations.  To phase in this new methodology, the Commission proposed to average each station’s historical and population-based Regulatory Fee amounts and use that average for FY 2019 before moving to a fully population-based fee in FY 2020.

In calculating the average of the “old” and “new” fees, however, the FCC neglected to use the reduced fee amount historically paid by TV satellite stations, which is much lower than that paid by non-satellite TV stations in the same DMA.  As a result, a TV satellite station might have seen its 2019 fees jump by tens of thousand of dollars over FY 2018, only to see them drop again in FY 2020.  The FCC acknowledged that its intent in adopting the phase-in was not to unduly burden TV satellite stations in FY 2019, and it therefore recalculated those fees using the lower historical fee amounts traditionally applied to such stations.

While these reductions are a rare win against ever-increasing regulatory fees, there remain big picture issues that Congress and the FCC need to address in the longer term.  Significant among these is the FCC’s reliance on collecting the fees that support its operations from the licensees it regulates (a burden not a benefit), while charging no fees to those that rely on the FCC’s rulemakings to launch new technologies on unlicensed spectrum or obtain rights against other private parties via the FCC’s rulemaking processes (a benefit not a burden).  Such a narrow approach to funding the FCC makes little sense, particularly where it unduly burdens broadcasters, who, unlike most other regulatees, have no ability to just pass those fees on to consumers as a line item on a bill.

We live in a time of disruption.  Disruption affects all areas of the economy, but surely the most affected has to be the communications sector.  If any government agency can claim to be the regulator of this disruption, it must surely be the FCC.  Yet despite the FCC’s position at the forefront of these changes, its Regulatory Fee process is mired in a system in which broadcasters are left holding the bag for more than 35% of the FCC’s operating budget (once again, burden not benefit).  Even as the FCC spends more of its time and resources on rulemakings, economic analysis, and technical studies surrounding new technologies and new entrants into the communications sector whose main goal is to nibble away at broadcasters’ spectrum, audience, and revenue, it still collects regulatory fees only from the licensees and regulatees of its four “core” bureaus – the International Bureau, Wireless Telecommunications Bureau, Wireline Competition Bureau, and Media Bureau.  It’s an old formula, and it no longer works.