FCC Adopts Revised Foreign Government Sponsorship ID Rules

On June 10, 2024, the FCC released a Second Report and Order (Second R&O) revising and expanding requirements to identify and disclose whether any "leased" broadcast programming is sponsored by an agent of a foreign government. The Second R&O follows, and addresses, a decision in 2022 by the U.S. Court of Appeals for the D.C. Circuit that struck down a component of the original FCC rules that required broadcast licensees to check federal sources to verify sponsors' identities. The revised rules continue to impose diligence, certification, and recordkeeping requirements regarding certain leases of programming time, as well as political issue advertisements and paid public service announcements (PSAs). The revised foreign government sponsorship ID rules (FGSID Rules) will now provide broadcasters with two options for determining whether programming is sponsored by a foreign governmental entity. The new rules will take effect 30 days after they are published in the Federal Register, absent any stay following an appeal of the new rules.

Diligence and Certification Requirement

The revised FGSID Rules will afford licensees two options to satisfy their duty of inquiry in obtaining information about whether programming is sponsored by a foreign governmental entity.

The first, and more practical, option involves both the lessee and the station licensee completing written certifications documenting the diligence required by the FGSID Rules. The Second R&O provides standardized certification templates for use by licensees and lessees (see Appendices C and D of the Second R&O), although parties may craft their own certification language so long as it fully satisfies the requirements of Section 73.1212(j)(3)(i)-(iii) of the FGSID Rules. A licensee's certification should confirm that the licensee:

• informed the lessee of the foreign sponsorship disclosure requirement;
• asked the lessee whether it falls into any of the categories that would qualify it as a "foreign governmental entity";
• asked the lessee whether it knows if anyone involved in the chain of producing and/or distributing the programming to be aired pursuant to the lease agreement, or a sublease, qualifies as a foreign governmental entity and has provided some type of inducement to air the programming;
• sought from the lessee a written certification of its responses; and
• if applicable, obtained from the lessee the information needed to add the following disclosure to the lessee's programming: "The [following/preceding] programming was [sponsored, paid for, or furnished], either in whole or in part, by [name of foreign governmental entity] on behalf of [name of foreign country]."

A lessee's certification must include the information necessary to determine whether a broadcast disclosure is required and, if so, the information needed for the disclosure.

Under the second option, a licensee may ask a lessee to provide screenshots of the lessee's search of two federal government websites that the FGSID Rules rely upon. Under this option, a licensee should ask a lessee whether the lessee is a registered "FARA agent" or is listed in the FCC's U.S.-based foreign media outlet report. (FARA refers to the Foreign Agents Registration Act.) If the lessee responds in the negative, the licensee should then ask the lessee to provide screenshots reflecting the results of the lessee's searches of the two relevant government websites. The requirement that licensees consult these two websites was struck down by the D.C. Circuit, so under this option in the new rules, lessees will have to prove they consulted the websites.

Licensees also should include in their lease agreements a requirement for lessees to provide notice of any change in status that would trigger a need for a foreign government sponsorship disclosure.

Under both options, licensees must memorialize all communications required under the FGSID Rules and retain any certifications and screenshots provided by lessees for the length of a station's broadcast license term or one year, whichever is longer. Such documentation may be retained either in a licensee's Online Public Inspection File or its internal files. Licensees must make such documents available promptly upon request by the FCC.

If a lessee indicates that programming is sponsored by a foreign governmental entity, the programming must contain an enhanced sponsorship ID disclosing it as such and the licensee must file both the disclosure and a description of the programming to which it pertains in the FCC's International Communications Electronic Filing System (ICFS).

Lack of Adequate Response From Lessee

If a lessee does not provide a response or responds inadequately to a licensee's reasonable diligence inquiries, the licensee may continue to air the lessee's programming and will not be required to report such non-responses to the Commission. However, if it is later determined that the programming should have included a foreign sponsorship disclosure, the Commission may conduct a fact-specific inquiry to determine whether the licensee failed to meet its diligence obligation, for example, by not making further inquiry of the lessee.

Agreements Subject to the FGSID Rules

The FGSID Rules apply to any agreement, whether written or not, under which a licensee grants to another party the right to present programming on its station in exchange for some form of consideration, regardless of either the terms or duration of the agreement or whether the parties treat the agreement as a time brokerage agreement, local marketing agreement, or otherwise. The applicability of the rules is not determined by the title, terms, or duration of an agreement. Consequently, an agreement is not excluded from the definition of "lease" for purposes of the FGSID Rules merely because it is informal or short-term. However, where a licensee and the same lessee enter into recurring leases for the same programming within a one-year period, the licensee need only perform its reasonable diligence obligations once during the year, subject to the lessee's obligation to provide notice of any change in its status that would trigger the need for a foreign government sponsorship disclosure.

Existing lease agreements are grandfathered. However, any lease agreement that is entered into, or renewed, on or after the effective date of the Second R&O must comply with the new requirements.

Exemptions

The FGSID Rules contains two important exemptions.

• Advertisements for commercial goods and services are exempt from the FGSID Rules. If broadcast matter for a commercial product or service meets the requirements for a disclosure exemption under Section 73.1212(f) of the Commission's rules – which calls for the advertisement to include the sponsor's corporate or trade name, or the name of the sponsor's product – then, so long as it is clear that the mention of the name of the product constitutes a sponsorship identification, the licensee need not make the inquiries or air the disclosure required under the FGSID Rules.
• The purchase of broadcast time by or on behalf of legally qualified candidates or their authorized committees (i.e., political candidate advertisements) are exempt. In contrast, political issue advertisements and paid PSAs are subject to the FGSID Rules. Issue advertisements are defined as any paid political matter or matter involving the discussion of a controversial issue of public importance, regardless of the length of the programming.

The FCC declined to exempt religious programming and locally produced and/or locally distributed programming from the FGSID Rules on the grounds, respectively, that an exemption for religious programming would not be content-neutral, and that the mere fact that programming is locally produced and/or locally distributed does not signify that the programming lacks material provided by a foreign governmental entity.

Takeaway

The FCC has greatly expanded its scrutiny of foreign persons' and companies' participation in U.S. media and telecommunications, flexing muscle that some would argue still exceeds its statutory authority. With the approaching presidential election and widely reported attempts by foreign actors to influence the election's outcome, it is safe to assume that the Commission will be on the lookout for, and ready to take stern action against, violations of its FGSID Rules.  

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If you have any questions, please contact Burt Braverman or Sharon Mathis, broadcast paralegal.

Disclaimer

This advisory is a publication of Davis Wright Tremaine LLP. Our purpose in publishing this advisory is to inform our clients and friends of recent legal developments. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may only be given in response to inquiries regarding particular situations.

David Silverman is a contract attorney and former partner of DWT. Broadcast paralegal Sharon Mathis also contributed to this advisory.