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FCC Amends Foreign Sponsorship ID Rules

The rules were designed to prevent foreign influence on U.S. elections

“Today we clarify our rules for broadcasters by establishing a process to inform consumers when what they hear or see over the air has been provided by a foreign government,” FCC Chairwoman Jessica Rosenworcel said. (Image credit: FCC/YouTube)

The FCC has issued a Second Report and Order clarifying its rules regarding the disclosure of foreign sponsorship of programming on broadcast stations.

Worried about the influence of Russian, Chinese and foreign government disinformation on recent U.S. elections, the FCC implemented new rules in 2022 imposing additional requirements on how stations investigate the sources of their programming and determine whether the programming was sponsored by foreign governments.

However, the NAB filed suit against the expanded rules in 2022 and the U.S. Court of Appeals for the District of Columbia Circuit vacated some of those rules. “We hold that the FCC cannot require radio broadcasters to check federal sources to verify sponsors’ identities,” the court ruled. “We therefore vacate that aspect of the challenged Order.” The decision would not remove the requirement that stations tell viewers when they are airing foreign government-sponsored programming.

In a statement regarding the updated rules, FCC Chairwoman Jessica Rosenworcel argued that “the principle that the public has a right to know the identity of those who use the public airwaves is a long-standing tenet of broadcasting. Today we clarify our rules for broadcasters by establishing a process to inform consumers when what they hear or see over the air has been provided by a foreign government. Our action today is about supporting transparency and democratic values. For instance, if a foreign government (like the Chinese government) pays to broadcast programming or campaign advertising, a disclosure is required at the time it is aired (simply saying it is from the Chinese government). As listeners, viewers, and citizens this is something we are entitled to know.”

In the Second Report and Order (Second R&O) issued on June 10, the FCC noted that “we address a ruling by the U.S. Court of Appeals for the District of Columbia Circuit that vacated one of the foreign sponsorship identification requirements established in the First R&O. We replace the vacated verification requirement with an approach that avoids the investigatory obligation on the part of licensees that was at issue in NAB v. FCC. The new approach provides licensees with two options for demonstrating that they have met their duty of inquiry in seeking to obtain the information needed to determine whether the programming being provided by a lessee is sponsored by a foreign governmental entity. Our adopted approach addresses concerns about burdens and complexity raised by commenters in response to the Second Notice of Proposed Rulemaking (Second NPRM).”

“Furthermore, in this Order, we clarify that our foreign sponsorship identification rules do not apply to sales of advertising for commercial goods and services to the extent such programming falls within the exemption contained in section 73.1212(f) of our general sponsorship identification rules,” the FCC said. “In addition, we find that our foreign sponsorship identification rules will not apply to political candidate advertisements, but will apply to issue advertisements and paid public service announcements (`paid PSAs’). We also confirm that our rule changes do not alter our finding in the First R&O that noncommercial and educational broadcast stations (NCEs) are not likely to fall within the ambit of the foreign sponsorship identification rules.”

But the FCC declined “to create an exemption from the rules for religious programming and locally produced and/or distributed programming. We also conclude that, when a lessee and licensee enter into recurring leases for the same programming, the licensee will be required to exercise its reasonable diligence obligations under the rule only once per year with respect to that particular lessee and that particular programming. With respect to the rule changes adopted today, we grandfather lease agreements already in effect at the time of the required compliance date for these newly-adopted modifications, determining that such leases will need to come into compliance either at the time of renewal or when the parties to the agreement enter into a new lease. Finally, we clarify the obligations of section 325(c) permittees under the foreign sponsorship identification rules.”

Both Commissioner Nathan Simington and Commissioner Brendan Carr issued separate statements opposing parts of the revised rules.

“On appeal, the D.C. Circuit vacated a separate portion of the 2021 rules that required broadcasters to affirmatively investigate potential foreign sponsors,” Carr wrote. “Today’s Order fixes that defect—lawfully so, in my view.  If the Order were limited to correcting this narrow issue on remand, I would have supported it in full. But this Order goes further.  It changes the 2021 definition of `lease’ by eliminating the `short-form advertisement’ exception. The Order now requires broadcasters to comply with the foreign sponsorship rule for all third-party use of airtime, with two key exceptions: (1) political candidate advertisements; and (2) advertisements that meet the commercial exemption provisions in section 73.1212(f) of our rules.”

“In my view, the FCC did not provide fair notice that it might redefine `lease’ in this fundamental way.  After the 2021 rules were adopted, broadcast interests filed a petition seeking clarification on the meaning of `short-form advertisement.’ The petition asked for a clearer and less burdensome definition, not for the FCC to eliminate the exception altogether. A single paragraph in the Second NPRM seeks comment on this petition. As that paragraph makes clear, the FCC did not contemplate eliminating the `short-form advertisement’ carveout.  And to my knowledge, no party in this proceeding asked the FCC to do so.  Adopting rule changes nobody could have reasonably anticipated is a textbook example of unfair surprise.”

“This was avoidable,” Carr noted. “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.  So, while this Order fixes one legal infirmity highlighted at the D.C. Circuit, it creates new problems that may require us to revisit our foreign sponsorship rules in a future proceeding following another appeal.  I approve in part and dissent in part.”

The Second Report & Order and the statements from the commissioners can be found here.

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