Last week, the FCC adopted an order making numerous changes to its processes for selecting winning applicants among mutually-exclusive applicants for new noncommercial broadcast stations, including noncommercial, reserved band full power FM stations and LPFMs. Applicants are “mutually exclusive” when their technical proposals are in conflict – meaning that if one is granted it would create interference to the other so that the other cannot also be allowed to operate. The changes adopted by the FCC, which we wrote about when first proposed here, affect not only the process of applying for new noncommercial stations and the system for resolving conflicts, but also address the holding period for new stations once construction permits are granted, and the length of permits for LPFM stations.
In cases involving mutually exclusive applications for new noncommercial stations, the FCC uses a “points system” to determine which of the mutually-exclusive applicants should have its application granted. The point system relies on paper hearings to determine which applicant has the most points, awarding preferences on factors such as whether they have fewer interests in other broadcast facilities, whether they are local organizations, and whether they are part of state-wide networks.
The changes to the FCC process are described below.
- The FCC eliminated the current requirement that NCE applicants include in their governing documents specific provisions obligating the applicant to maintain localism and diversity in order to receive points as “established local applicants” and for “diversity of ownership.” The current obligation requires that, in order to receive a “diversity credit” in their application, applicants need to have articles of incorporation or bylaws that specifically state that they cannot acquire new stations that would affect the credit they received in the FCC review of the applications. Localism must be maintained by provisions in organizational documents restricting the residence of board members. The FCC determined that including provisions in governing documents was unnecessary – the actual conduct of the applicant can be weighed by the FCC whether or not the company’s governing documents contain explicit restrictions.
- The FCC will impose new transmitter site certification obligations on applicants for new stations – requiring applicants to certify on their application that they have received reasonable assurance of the availability of their proposed transmitter sites, and to provide a contact person for the entity that has provided such assurance. This decision merely clarifies an obligation that is already imposed on noncommercial applicants (see our articles here and here).
- The FCC changed the NCE tie-breaker process by adding a new criterion favoring the grant of applications that were unsuccessful in receiving stations in prior FCC filing windows, if an applicant has no other broadcast interests. This criterion will be applied last, if all other tie-breaking criteria have not broken the points system tie.
- It also changed the process for establishing mandatory time-sharing plans where ties in the comparative process remain after the points system was applied. Currently, full-power NCE station applicants who are tied in the FCC points system end up in a tie-breaker process (see, for instance, our article here that discusses the process). Where that process does not produce a clear winner, parties are often allowed to negotiate for years over the terms of a time-sharing agreement before the FCC intervenes to force a sharing arrangement. The FCC’s order sets a 90-day period in which such negotiations are to occur before mandatory time-sharing is imposed by the FCC. If there are more than three applicants, those that have the longest continuous period of existence will be included in the time share, with other applications dismissed.
- The FCC modified the “holding period” during which NCE permittees must maintain the characteristics for which they received comparative credit. Specifically, if an applicant receives a “307(b) preference” for serving areas that have no noncommercial service or service from only one other noncommercial station, the applicant in the past has been forbidden from changing transmitter sites where it would lose service to some or all of the areas of proposed coverage for which it received a preference, even if that lost service is made up by service to new noncommercial white or grey areas. This restriction has prevented some successful noncommercial applications from constructing their new stations when proposed transmitter sites became unavailable and no alternative sites covering the exact same underserved areas were available. The Commission decided to do away with the prohibition, and will allow winning applicants to change sites as long as the underserved area in the new service area is as great as that from the site at which the permit was initially granted.
- The FCC decided to reclassify as “minor” (1) all ownership changes to governmental applicants, provided that the change has little or no effect on such applicant’s mission, and (2) gradual board changes in non-stock and membership LPFM and NCE applicants. This eliminates issues that sometimes arise with long-pending applications when gradual Board changes result in a majority of the governing board of an applicant changing, which under FCC processing rules would result in dismissal of an application. The FCC has from time to time been forced to waive that rule (for instance in connection with the processing of applications from the 2003 FM translator window that ended up being dealt with in settlements more than a decade after they were filed). In the case of existing NCE stations, the FCC has taken the position that gradual changes in the Board of an applicant do not require a “long-form” transfer application that would otherwise apply to a major change in ownership (see our article here). The FCC decided to apply the same rules to the processing of applications for new stations.
- The FCC eliminated certain tolling notification requirements and will toll NCE and LPFM broadcast construction deadlines without notification from the permittee, based on certain pleadings pending before, or actions taken by, the agency, including the need for international coordination (often an issue with applications in the Southwestern portion of the country where Mexican authorities are sometimes slow to clear proposals for new stations near the border that could impact current or planned Mexican stations). Currently, an applicant must ask the FCC for tolling to stop the clock on the time before the expiration of a construction permit. Inexperienced applicants acting without counsel often don’t realize that they need to request tolling, as do applicants who wrongly think that a tolling event may be able to be resolved quickly. By forgetting to ask for tolling, these permittees can lose out on potential time in which to construct their new stations. That will no longer be an issue with this change in the rules.
- The FCC decided to extend LPFM construction permits from 18-months to a full three years, the same period that applies to other construction permits (a construction period which LPFM permittees can currently receive – but they have to timely request such extensions at the end of the initial 18-month construction period).
- The FCC eliminated the current rules prohibiting the sale of unbuilt LPFM construction permits and requiring a 3-year holding period for newly licensed LPFM stations. The FCC instead will allow the assignment/transfer of LPFM permits and stations after an 18-month holding period as long as certain safeguards are met – including that there is no profit in the sale and as long as the new owner satisfies all FCC eligibility criteria (including offering the same comparative attributes as the original applicant if the CP was granted after a point-system analysis).
Obviously, there are many other details to these changes that should be carefully reviewed by any potential applicant for a new noncommercial station. These changes will become effective after the later of 60 days after publication in the Federal Register or after review under the Paperwork Reduction Act. But, once effective, these new rules should allow the FCC to once again open windows for applications for new noncommercial FM stations, something that has not occurred in many years.
Courtesy Broadcast Law Blog