Among the changes: RUFRNs, static NCE biennial deadlines, increased reporting burdens for NCE licensees
The FCC’s seemingly Sisyphian quest to design the Perfect Broadcast Ownership Report has yielded a number of changes. Whether, as the Commission hopes, they are changes for the better remains to be seen, presumably when the next round of biennial ownership reports need to be filed in late 2017. For now, though, readers should be aware that the SUFRN is out (but not entirely), the RUFRN is in, and individuals in attributable positions with noncommercial (NCE) licensees will be having to get themselves an FRN or an RUFRN or risk some unspecified enforcement comeuppance. Also, NCE licensees will have to adjust their calendars: going forward, their biennial ownership reports will be due on December 1 of every odd-number year (with each report reflecting attributable interest holders as of the previous October 1.) And for those of us who end up actually having to fill in the form and get it filed, the FCC has tweaked the process in a number of ways, at least one of which should be helpful.
(Readers interested in some background on the recent history of ownership reporting may want to check the CommLawBlog archive before proceeding further. We think you’ll find it at least as informative as, and considerably more entertaining than, the 11 single-space pages of background – with 93 footnotes! – provided by the Commission.)
So long, SUFRNs! Hello, RUFRNs!
Since 2009 the Commission has been trying to figure out how those with attributable interests in broadcast licensees should be required to identify themselves in ownership reports so that the FCC (and various outside researchers and analysts) will be able to keep reliable track of who holds what from year to year. The Commission initially left it to the Media Bureau to come up with a plan. The Bureau decided that every attributable owner, officer and director should be required to get his or her own unique FCC Registration Number (FRN). Those attributable principals would then be required to identify themselves in ownership reports with their respective FRNs.
Since individual principals – as distinct from licensees – had not previously had to get their own FRN’s, and since they would have to give the FCC their social security numbers (SSNs) in order to do so, there was considerable opposition to the Bureau’s plan. Before the FRN requirement could be implemented, the Commission came up with Plan B: the option of letting individual principals use a “Special Use FRN” (SUFRN). SUFRN’s would be generated by an FCC computer during the completion of the ownership report, and would be available to anyone who preferred not to have to turn their SSN over to the Commission.
While that seemed to work fine as far as regulatees were concerned, the FCC wasn’t happy. After three rounds of biennial ownership reports using SUFRNs, the Commission found that folks weren’t using SUFRNs the right way and, as a result, the Commission wasn’t getting the useful data it had been hoping for. Some reporting principals were apparently using more than one SUFRN (one was supposed to be the limit), and some SUFRNs were showing up for multiple individuals (again, each SUFRN was supposed to be assigned to, and used by, one and only one individual).
Enter the RUFRN.
The FCC has now adopted the “Restricted Use FRN” (RUFRN). This is a unique ID number assigned to each attributable principal (individuals only, no entities) of a broadcast licensee for use in ownership reports; going forward, each principal (with some limited exceptions – see below) will have to be identified in each report by reference to his or her RUFRN. (Of course, principals can also use full-fledged FRNs if they’re so inclined.)
You’ll get your RUFRN through the Commission’s “Commission Registration System” (CORES) by providing your name, residential address, birth date and the last four digits of your SSN. The Commission figures that requiring just the last chunk of an SSN will assuage the fears of those reluctant to hand over their full nine-digit SSN. Once you’ve got your RUFRN, you’ll have to report it in each ownership report you appear on.
The Commission seems to think that the RUFRN option won’t suffer from the problems encountered with SUFRNs. That thinking may be a bit optimistic. It seems possible, if not likely, that individuals will be able to get themselves more than one RUFRN without much difficulty, whether by accident or design. We shall see.
Meanwhile, the Commission acknowledges that there are still bound to be hold-outs who refuse, for whatever reason, to get their own RUFRNs. For instance, some folks – think, in particular, high-profile celebrities, government officials, and the like – may prefer not to submit their residential addresses into large federal databases. There are also those who believe that, with the information being required by the FCC, miscreants would still have more than a 40% chance at correctly guessing the full SSN. And while the FCC insists that its databases are secure to the max, history suggests otherwise. As Commissioner Pai put it, “To anyone who believes that data stored in federal government IT systems is completely secure, I would respond with three letters: OPM.”
Recognizing that some licensees may encounter “recalcitrant” principals who refuse to get their own RUFRNs (and who also refuse to provide the licensee the necessary information to get RUFRNs for them), the Commission is leaving open the SUFRN option. But a reporting licensee may avail itself of that option ONLY after it has made “reasonable and good faith-efforts” to get the “recalcitrant” principal to get his/her own RUFRN – AND only after the licensee has informed the principals of “their obligations and the risk of enforcement action for failing to provide” their own RUFRN.
Hold on there – “risk of enforcement”? What exactly does that mean? That’s unclear. The Commission merely raises an arched regulatory eyebrow and says that, when an SUFRN is used, “the Commission may take enforcement action against the filer and/or the recalcitrant individual.” Such actions are to be made “on a case-by-case basis based on the facts and circumstances of each unique case.” You have been warned … sort of.
NCE Licensees Must Now Include Unique Identifiers, and Other Personal Information, for Each Attributable Principal
When the Commission started down the road of requiring unique identifiers for all principals, that requirement applied only to commercial licensees. NCE licensees – and, more importantly, their principals – were off the hook.
Not anymore. Going forward, principals of NCE licensees will have to get their own RUFRNs (or FRNs) for inclusion in ownership reports. And, in addition to their unique identifiers, those principals will also have to provide their race, gender and ethnicity, as well as their addresses.
These new requirements may run into some resistance. After all, many (probably most) NCE licensees are non-stock entities whose governing boards consist of volunteers. In a substantial number of cases – state public broadcast licensees, for example – the boards include elected officials in an ex officio role. It seems likely that some will be reluctant to give the Commission all the information it’s looking for, particularly since they haven’t had to do so in the past. Again, we shall see.
No More Rolling Due Dates for NCE’s
The Commission has decided to sync up the biennial filing date with the biennial filing date currently applicable to commercial ownership reports. That means that, going forward, all NCE biennial ownership reports will be due by December 1 of each odd-number year, and the reports will have to reflect the licensee’s attributable principals as of the previous October 1. Historically, of course, NCE biennial reports have been due on the renewal application anniversary, which meant that a station’s deadline depended on what state it happens to be in. No more. (And for all licensees, NCE and commercial, heads up to the December 1 deadline: Since 2009, the technical deadline for commercial reports has been November 1, but each time that deadline has rolled around, the Commission has extended it to December 1. From now on, no extensions will be necessary, because the FCC has decided to move the deadline to December 1 from the get-go for all biennial ownership reports.)
Beyond those major changes, the Commission has also fine-tuned some aspects of the ownership report filing process. For example, to reduce the number of multiple filings that large parent entities with multiple licensee subsidiaries have to submit, the Commission has decided that the parent should be permitted to file one report that covers all of those separate licensees. This should be a welcome change for lots of licensees.
The Commission also mentions a number of other seemingly slight technical changes to the ownership report. Exactly how important those might be will probably not be evident until we all try our hand at completing the revised form. While the Commission’s decision includes drafts of both the revised Form 323 (the commercial broadcasting ownership report) and Form 323-E (the NCE version), those revised versions have not yet been approved by the Office of Management and Budget. Presumably, though, we’ll all have a chance to kick the tires on the form before the 2017 deadline for the next biennial reports.
All these changes, while formally adopted, will not take effect for several months. The new forms will have to be run past the Office of Management and Budget pursuant to the Paperwork Reduction Act, a process which generally takes at least several months. Once OMB has signed off on things, the FCC will issue a notice in the Federal Register formally announcing the effective date. Check back here for updates on that front.