NAB Aims at Foreign-Sponsored Content Rules in DC Circuit, Again

The FCC’s June rules for foreign-sponsored content violate the Administrative Procedure Act because the agency didn’t provide notice of plans for expanding the 2021 rules to cover political ads and public service announcements, said NAB in a petition for review filed Monday with the U.S. Court of Appeals for the DC Circuit. The 2024 order was a response to a D.C. Circuit ruling in favor of an NAB-backed challenge to portions of the FCC's 2021 foreign-sponsored content rules. The FCC “did not even attempt to provide a rationale for changing course,” to go after PSAs and issue ads, NAB said in the filing, which echoes arguments Commissioners Nathan Simington and Brendan Carr raised in dissents back in May. “Adopting rule changes nobody could have reasonably anticipated is a textbook example of unfair surprise,” Carr wrote at the time.

The 2024 order for foreign-sponsored content requires standardized certifications from broadcasters and entities leasing programming time on whether a lessee is a foreign governmental entity. The rules don’t consider “sales of advertising for commercial goods and services” to be leases of programming time; however, they cover political issue ads and paid PSAs. The 2021 order said that the rules didn’t apply to short-form advertising, and the 2022 NPRM that led to the 2024 order didn’t specifically seek comment on applying the rules to political ads, NAB said in Monday’s filing. The 2024 order “states for the first time that only political candidate advertising” and “advertising for commercial products and services are exempt from the Rule,” NAB said. The FCC didn’t comment.

In the 2024 order, the FCC said its definition of “lease” covered any agreement in which an entity pays to program a discrete block of broadcast time on its station and was therefore sufficiently broad to encompass PSAs and political issue ads. Filings from network affiliate groups in 2021, which asked the FCC to clarify whether the rules applied to ads, are an indication that the broadcasters understood the breadth of the rules, the FCC said. The agency “failed to engage in reasoned decision-making, offering no evidence to support the Rule’s expansion and drawing nonsensical distinctions between exempt and non-exempt advertising,” NAB said in Monday’s filing.

In targeting PSAs and political issue ads, the order violates the First Amendment, NAB said. It is “a content-based regulation of speech,” NAB said. “The FCC does not point to a single instance of a foreign governmental entity engaging in covert political or public service advertising on television or radio stations,” NAB said. The original 2021 order “excluded advertising from the Rule’s coverage due to the lack of any evidence that ads were a source of foreign government-sponsored programming.”

The 2024 order is also outside the FCC’s authority because it requires that broadcasters seek certifications from lessees that they aren’t foreign agents, it added. The agency lacks authority over entities leasing airtime and can’t require that stations “demand corroboration” from lessees, NAB said. The D.C. Circuit ruled against the portions of the original foreign-sponsored content order in part because it overreached in requiring broadcasters to verify lessees’ foreign agent status (see 2207120069). “The FCC’s verification requirement ignores the limits that the statute places on broadcasters’ narrow duty of inquiry,” the 2022 opinion from Judge Justin Walker said. NAB said Monday the order “unreasonably and unnecessarily burden[s] the operations, resources and programming arrangements of both broadcast licensees and the wide range of entities seeking to speak via radio and television stations.”