Foreign-Sponsored ID Order Expected Soon, Language Still Shifting

Broadcasters expect a draft order that updates the foreign-sponsored content rules to contain language requiring entities buying political issue ads to certify that they aren’t foreign agents (see 2403210071). However, the final version of the order remains in flux, an FCC official told us.

“The Commission may at the eleventh hour be contemplating imposing burdens on political advertisers beyond those imposed on commercial advertisers,” said NAB Monday in an ex parte filing warning that such a rule change would violate the Administrative Procedure Act and the First Amendment. The item has circulated since February, but broadcasters expect approval this week, several broadcast attorneys said.

The draft order is expected to require standardized certifications from broadcasters and entities leasing programming time on their channels on whether the lessee is a foreign governmental entity. Broadcasters have requested the FCC clarify that this requirement wouldn't apply to advertisements, and their concern about political issue ads stems from the way the draft order would respond to the request for clarification. FCC and industry officials have told us the language in the draft order would exempt programming already covered by Section F of the FCC’s sponsorship ID rules, which applies only to “broadcast matter advertising commercial products or services.” That wouldn’t include political issue ads, which are covered under a different section of the rules. Such a change would require that broadcasters get certification from entities such as political action committees or groups seeking to push local referendums that they aren’t foreign agents, broadcast attorneys told us.

Requiring certifications for political issue ads and public service announcements “would create substantial operational burdens and legal costs for all local broadcast stations that sell advertising, while also encouraging advertisers to cease using broadcast outlets and instead place their advertising on unregulated Internet and social media platforms,” said the Fox, CBS, NBC and ABC affiliate associations said in an ex parte filing posted Tuesday. Those groups were behind the 2021 petition for clarification that prompted the draft order. If the FCC approves the order, it should delay implementation until after the 2024 election, the affiliate groups said. It “would be particularly onerous for broadcasters if new diligence and record-keeping requirements were imposed in the midst of the political advertising season,” the groups said.

If the order loops in political issue ads, multiple broadcast attorneys told us it would almost certainly be challenged in court, as was the 2021 foreign-sponsored content order. The NPRM on updating the foreign-sponsored content rules didn’t give notice of possible changes to the political advertising rules, and the original foreign-sponsored content order in 2021 expressly said advertisements weren’t leases, said NAB and the affiliate groups in ex parte filings. The 2022 NPRM “asked only how to distinguish advertising from leasing,” NAB said. “No reasonable regulated party could anticipate” that the FCC would “modify the rule to distinguish commercial from political advertising, and exempt only the former from the sponsor certification requirements.” No political action groups or political advertising industry entities commented on the 2022 NPRM because there was no reason the FCC’s rule change would affect them, a broadcast attorney told us.

NAB also said the change would violate broadcasters' First Amendment rights, and “is not likely to pass constitution muster under any standard.” The draft item’s certification requirement is also an overreach, and outside what the agency can require of broadcasters, NAB said.

FCC officials wouldn’t comment on whether the draft order includes additional exemptions to the foreign-sponsored content rules that might address broadcasters' concerns, but said the final language is being worked out. Broadcast industry officials told us they haven’t seen the draft item's language because it was released on circulation. While draft items to be voted at FCC meetings are released ahead of the vote, items that go directly to circulation are not. Communications attorneys told us that lacking access to draft language makes it harder for entities to provide useful feedback (see 2404010062).