FHH, State Associations head to court; Bureau indicates that revised form may impose “unanticipated” practical burdens on filers
Two days before Christmas, and all was neither calm nor bright for Form 323 at the FCC. On December 23 the agency’s troubled efforts to launch its revised Form 323 – the Ownership Report for commercial broadcasters – got more troubled on a couple of fronts. In the morning, FHH, together with ten state broadcaster associations, asked the U.S. Court of Appeals for the D.C. Circuit to stay the implementation of the form pending Court review of the new burdens that form imposes. And hours later, the Media Bureau issued an order postponing indefinitely the deadline for filing biennial (but not other, non-biennial) Ownership Reports on the new form in order to fix mechanical problems that have cropped up with the form. While the two events were not directly related to one another, they both shone a glaring and none too favorable light on the FCC’s six-month (and counting) campaign to impose, without notice or comment, new and intrusive reporting obligations on commercial broadcasters.
We have already chronicled the history of, and major league flaws underlying, that campaign in considerable detail. Need a refresher? Click here and start reading. When last we checked in on things a couple of weeks ago, the FCC had finally taken the wraps off its revised form six months after first announcing in the Federal Register that the new form had been designed. (The FCC has never explained its reluctance to let us all kick the tires on the new form before having to drive it off the lot.) While the Commission had initially mandated in May, 2009, that the revised form would have to be filed by all commercial broadcast licensees by November 1 (reflecting their ownership as of October 1), that date had slipped to December 15, and then to January 11 (with the October 1 “as of” date moving to November 1).
Meanwhile, in November FHH had filed, with the Commission, a motion to stay the implementation of the new form, and then a separate “Petition for Reconsideration or Such Alternative Relief As May Be Appropriate”.
With the January 11 deadline closing in fast and no sign at all that the FCC was giving any serious consideration to the issues which FHH’s pleadings raised, FHH headed to court, along with the broadcaster associations from Alabama, Alaska, Arkansas, Kentucky, Louisiana, Mississippi, New Mexico, Puerto Rico, South Carolina and Tennessee.
Normally you go to the Court of Appeals only after the agency has taken some action which the Court can then review. But in certain extraordinary circumstances, the Court is authorized to step in even absent agency action, to make sure that the Commission is doing what it’s required by Congress to do. The revised Form 323 requires the submission of social security number (SSN)-based FRNs for every individual having an attributable interest/position in connection with any commercial broadcast licensee. As we see it, the FCC’s efforts to steamroll that requirement into place have fallen demonstrably short of Congressionally-imposed criteria, even though affected broadcasters have no conventional way to secure judicial review before they are required to comply – a situation perfectly suited for the “extraordinary writ” process.
So away we went to Court, asking it to stay the implementation of the new form. Since, when we filed the petition, the deadline was still January 11, we asked the Court to treat this as an “emergency” situation, the goal being a ruling by January 4, i.e., a week ahead of the January 11 deadline.
Meanwhile, back at the FCC, representatives from a number of law firms had met with Bureau staffers on Friday, December 18, to demonstrate to the staff that the new Form 323 was, as a purely practical matter, a nightmare. The group served up multiple horror stories of cumbersome on-line processes, system timeouts and losses of “saved” data, all of which contributed to massive amounts of time spent completing the form. (How massive? The group told of cases, involving “moderately complex” ownership structures, where the completion of a single form took 500 to 800 hours. 800 hours? Wrap your mind around that. That’s the equivalent of 20 40-hour weeks – about five months – all dedicated 100% to the completion of a single form. Where’s the Paperwork Reduction Act when you really need it?)
Following the meeting, the group – ably led by Wiley Rein’s Kathleen Kirby, who deserves big props for leading the charge – followed up with a letter requesting an extension of the January 11 deadline as well as various mechanical modifications to the form to alleviate the problems that have been encountered. The letter focused exclusively on the mechanics of the form; it made no reference to the more fundamental legal questions that FHH had raised and the FCC had declined to address.
The Bureau, apparently convinced that their form does have glitches and hiccups, agreed in the Order released on the afternoon of December 23 to suspend the January 11 deadline for biennial Ownership Reports. The suspension is indefinite, and is intended to allow the staff to “investigate what changes can be made” to get the form to work more efficiently without compromising the “completeness, quality, usefulness and aggregability of the data.” The Order provides that, once the dents have been knocked out of the revised form, the FCC will announce a new deadline which will be at least 90 days from the date the New(er) and (More) Improved form is made available.
Note, though, that the form, flawed as it is, is still required to be completed and filed in non-biennial reporting circumstances. Those include consummation reports relative to assignments or transfers of control. (Check out Section 73.3615 if you have any doubts.) But if the form as it currently stands is problematic, why use it at all? That’s just one more question the Commission has declined to answer.
Also, note that, when the biennial form is eventually filed, it will (according to the Bureau’s Order) still have to reflect ownership as of November 1, 2009. That means that, if the new form were to become available on, say, February 1 (that’s just an optimistic guess on our part), reports would be due 90 days later, i.e., by (let’s see, 30 days hath September . . .) May 3, the first business day in May. That’s six months after November 1. While many licensees may not have changed during that time, it’s reasonable to assume that a significant number will have changed – meaning that those changed licensees will be reporting outdated information likely relating to entities or individuals with which the reporting licensees have no connection at all. That is not a recipe for complete and accurate data collection.
Be that as it may, the deadline for filing biennial reports on the revised Form 323 has now been suspended indefinitely.
But hold on – what does that suspension do to the Petition filed with the Court? Well you might ask. With the January 11 deadline gone, the immediate threat to all commercial broadcasters was obviously removed. But the deadline suspension does nothing to cure the underlying unlawfulness of the new SSN-based FRN reporting requirement. And notwithstanding the suspension, non-biennial Ownership Reports must still be filed on the new form, with the unlawful SSN-based FRN requirement. And the FCC continues to show no inclination to address, much less resolve, the issues which FHH has raised about that unlawfulness.
In other words, the suspension does absolutely nothing to correct what we believe to be the more fundamental flaws in the new form. (Not surprisingly, in its Order the Bureau claimed that FHH’s motion for stay, filed with the Commission in November, was rendered moot by the Order. We disagree with that example of bureaucratic wishful thinking.)
Obviously, the Bureau’s Order was a late-breaking development that the Court should know about, so within a couple of hours of the release of the Bureau’s suspension Order, we were back in Court, supplementing our Petition. In our Supplement we advised the Court of the Bureau’s Order and acknowledged that, because of the deadline suspension, there is no longer any need for “emergency” relief, i.e., a ruling by January 4. BUT we emphasized that the form is still seriously flawed, that non-biennial filers are currently being harmed by those flaws despite the suspension, and that those flaws are still not susceptible to judicial review through conventional means. In other words, while we withdrew the request for “emergency” relief, we emphasized that prompt extraordinary intervention by the Court is still called for here. Accordingly, we renewed our request that the Court consider our Petition.
With the arrival of Christmas weekend, we can all expect at least a couple of days of peace and quiet on the Form 323 front. But we should not expect that to last long. Stay tuned.