Outcome Unclear for Foreign-Sponsored Content Argument Tuesday

Broadcast groups and the FCC will face off in oral argument before the U.S. Court of Appeals for the D.C. Circuit Tuesday over the agency’s foreign-sponsored content disclosure rules, and broadcast and appellate attorneys told us it's especially difficult to predict how the matter will play out, with rules that were unanimously approved and with the Russian invasion of Ukraine as a backdrop. “There is simply no need -- and it is unlawful -- to force broadcasters leasing to churches, schools and local businesses, among others, to do pointless research as to whether those lessees are foreign agents,” said an NAB spokesperson Friday. NAB is challenging the rules alongside the National Association of Black Owned Broadcasters and the Multicultural Media, Telecom and Internet Council.

One reason it's difficult to handicap the case's outcome is that the issue doesn’t break across clear partisan lines, industry attorneys said. The NPRM that teed up the 2021 order was approved by commissioners from both parties in 2020 under then-Chairman Ajit Pai, and the order was unanimously approved under Chairwoman Jessica Rosenworcel. Frequent NAB ally FCC Commissioner Brendan Carr said he stands by his vote for the disclosures. The three-judge panel that will hear the case is composed of Judges Cornelia Pillard and Justin Walker and Senior Circuit Judge Raymond Randolph. The panel denied a request by the broadcasters to stay the rules, but “I wouldn’t read too much into that,” said Wiley’s Tom Johnson, who was FCC general counsel under Pai. “The court used a boilerplate order and could very well have thought a stay was unnecessary to protect the equities of the parties.”

The FCC is “well-within” its authority to require broadcasters to air the disclosures and require the database checks for foreign government agents, said Smithwick & Belendiuk’s Art Belendiuk, who's seeking license revocations for a broadcaster airing Russian-sponsored news (see 2204060070). Under existing rules, the agency already doesn’t allow foreign citizens to own stations without requesting special permission, Belendiuk said. “If you’re a government and you're purchasing time, you don’t get to conceal that.” NAB urged all U.S. broadcasters to cease airing Russian-sponsored content (see 2203010067).

“The D.C. Circuit always puts the commission through its paces, and we can expect this panel to zero in on the statutory text at oral argument,” said Johnson. He said the FCC’s position is “challenging” because of the way the Communications Act provisions on the required diligence are worded. “While the commission cites its general rulemaking authority, the D.C. Circuit has been loath to allow the commission to use that when doing so would contradict clear statutory text.”

The rules require broadcasters to air disclosures when broadcasting content sponsored by agents of foreign governments and to determine when disclosures are required by asking would-be lessors if they’re foreign agents and verifying their answers using federal databases. The court challenge hinges on the limits of the sponsorship ID provisions of the 1996 Communications Act, and language directing broadcasters to use “reasonable diligence” to determine the identity of programming sponsors, according to D.C. circuit filings from both sides in docket 21-1171.

​​​​​​​That language limits that diligence to broadcast employees and those the broadcaster deals with directly, said the broadcast groups in their final brief. Requiring broadcasters to investigate lessors using FCC websites and the Foreign Agents Registration Act database is burdensome and “beyond the FCC’s statutory authority,” said the broadcaster brief. The broadcast groups also argued that broadcasters airing foreign-sponsored content in the U.S. are extremely rare and any entity that would lie about being a foreign agent is unlikely to have signed up as one on a federal database.

​​​​​​​A “simple name search requirement” is within the bounds of “reasonable diligence” and doesn’t violate the First Amendment because it serves a strong governmental interest and requires disclosures instead of preventing speech, said the FCC in its own final brief in the case. “First Amendment review of broadcast regulation is less rigorous than in other contexts,” said the brief. “The government has a compelling interest in ensuring that the public is aware when a foreign government or its agent sponsors broadcast programming,” the FCC said. “The new rule is appropriately tailored to satisfying that interest.

Attorneys told us it's possible the conflict in Ukraine could influence the panel’s reaction to the rules. “How could it not?” said United Church of Christ Media Justice Ministry Policy Counsel Cheryl Leanza, a frequent NAB opponent on media ownership. When the rules took effect in March, Rosenworcel said the invasion highlighted their importance, and Rep. Anna Eshoo, D-Calif., chided NAB over the case at an oversight hearing last week. “I think it shows the FCC was pretty forward-thinking,” in implementing the foreign sponsorship rules when it did, she said. “Russia’s deplorable attack on the people of Ukraine has nothing to do with our case, and the esteemed panel hearing the case no doubt understands that,” the NAB spokesperson said. “Our challenge is focused on the stations that do not and have never aired any foreign government-sponsored programming, which is 99.9% of all broadcasters.” The FCC declined to comment.

Though the foreign-sponsored content rules took effect last month, multiple attorneys said they haven’t had much practical effect on broadcasters yet and the industry is waiting to see the outcome of the D.C. Circuit case. Broadcasters have until the fall to bring existing leases into compliance, pointed out Lerman Senter broadcast attorney David Burns. “I think a lot of broadcasters are still trying to get their arms around the new rules.”