“Permanent” exemptions granted in 2006 prove to be less than advertised, as FCC reverses grants and announces new, more stringent exemption standards

What a difference five years make. Back in 2006, over the course of about a month, more than 300 video programmers were granted permanent exemptions to the closed captioning rules. But now the Commission has taken another look and – bad news for 298 of those lucky programmers – has decided that the wrong standard was applied in 2006. Good-bye “permanent” exemptions (although the Commission has invited those programmers to ask for new exemptions, which could be granted if a newly-revised standard is satisfied) – and hello to a new set of standards for determining when captioning may be deemed “economically burdensome”.

The problem dates back to the 1996 Telecommunications Act, which allowed the Commission to grant two separate types of exemption to the captioning requirements. One type would exempt entire categories of programming; the other involved individual programs or program providers, assessed on a case-by-case basis. To obtain an individual exemption, a program provider had to demonstrate that providing captions would impose an “undue burden” (the language of the statute has since been revised to require a demonstration that captioning would be “economically burdensome.”)

In late 2005 the Commission’s rules requiring captioning of 100% of non-exempt English and Spanish-language programming were about to go into effect. Since that would impose a significantly heavier burden on program providers, a large number of providers sought individual exemptions. Two of those providers were Anglers for Christ Ministries and New Beginning Ministries. 

In September, 2006, the Consumer and Governmental Affairs Bureau (CGB) granted permanent exemptions to Anglers for Christ and New Beginning.

The CGB found that requiring them to caption programs they produced would cause “significant hardship” and would create a risk that they’d cease producing programming. The CGB relied in particular on findings that (a) the programs in question were not produced primarily for a commercial purpose – indeed, the producers either offered it for free or paid for it to be broadcast – and (b) the petitioners were both non-profit organizations.

In granting those two exemptions, the CGB announced the standard that would be applied generally to requests for individual exemptions. The standard involved a presumption: exemptions would ordinarily be granted to non-profit program providers receiving no compensation where compliance with the captioning requirement could result in termination of the programming or a “curtail[ment] of other activities important to [the petitioner’s] mission.” Relying on this standard, the CGB proceeded to grant an additional 301 pending exemption requests. 

The captioning rules are designed primarily to benefit deaf and hard-of-hearing people. So it should not have surprised anybody when a group of advocacy organizations for the deaf and hard-of-hearing promptly asked the full Commission to overturn 298 of the CGB-granted exemptions, including the ones to Anglers for Christ and New Beginning.

Now, five years later, the Commission has determined that the CGB applied the wrong standard and didn’t follow the necessary procedural steps. As a result, all 298 exemptions have been reversed (as for those lucky five petitioners whose exemptions were not appealed for whatever reason, their exemptions continue to stand). The parties who received those now-reversed exemptions (and may have been relying on them for five years) must now file new requests under the newly-announced standards if those parties want to have their exemptions restored. Those new requests will be due 90 days after the order is published in the Federal Register, although the affected program providers will continue to be exempt until that time. If they file new requests for exemption, those temporary exemptions will continue until the CGB rules on their updated requests.

In overturning the CGB’s 2006 decision, the Commission concluded that the CGB inappropriately focused on the claims that the programming was non-commercial and did not have any remunerative value. As the Commission sees things now, the CGB instead should have taken into account all of the program producer’s available resources, not just those allocated for the programs. The CGB also should not have relied on the programmer’s non-profit status; rather, it should have considered the provider’s economic strength regardless of its for-profit or non-profit status. 

The Commission also faulted the CGB for creating a presumption that closed captioning exemptions should be granted when the expense of captioning would cause the programmer to “curtail other activities important to [their] mission.” In the FCC’s view, creating any presumption was contrary to the intent of the Act and the Commission’s Rules, which contemplate a case-by-case analysis. Not stopping with that, the Commission further announced that it isn’t even appropriate to consider whether the costs of captioning would curtail any other activities of the programmer. To the contrary, the relevant consideration is whether the expense would curtail the production of programming. Any effect on other activities is, essentially, irrelevant. 

According to the FCC, the CGB also was wrong in granting permanent, rather than temporary, exemptions of the closed captioning requirements. Particularly in light of anticipated technological advancements that make captioning cheaper, the Commission has now held that, going forward, exemptions should be limited in duration, absent compelling circumstances.

Finally, the Commission noted that, in granting the exemptions in 2006, the CGB failed to consider whether the programmers had asked the distributors of their programs for assistance with the expense of captioning. While distributors aren’t required to provide such assistance (although they are ultimately responsible for providing captioning), a programmer cannot make the crucial showing that captioning would impose an undue burden if the programmer fails to ask for such assistance.

Having effectively trashed pretty much the entirety of the CGB’s 2006 action, the Commission next explored what standards should be applied to individual exemption requests which are subject to the “economically burdensome” test. The FCC looked at the legislative history and the potential differences between the meaning of the statutory terms “undue [economic] burden” and “economically burdensome”. (In 2006, the Communications Act included the “undue burden” standard, which has since been changed to “economically burdensome.”) 

Ultimately, the Commission’s answer is a four-factor analysis to be applied to such requests. The factors to be considered:  (1) the nature of the captions required and the cost of providing them; (2) the impact of providing captions on the operations of the program provider requesting the exemption; (3) the financial resources of the program provider; and (4) the type of operations of the program provider. 

Specifically not included among the relevant factors are the program provider’s audience or market share, its non-profit status, its geographic location, or the existence of alternatives to traditional captioning. While those may have been appropriate factors for the Commission to consider in granting categorical exceptions to the captioning rules (e.g., the exceptions for certain late-night programming and for new networks), they are not to be considered by the CGB in evaluating case-by-case exemptions.   

While the Commission’s conclusion regarding the factors to be considered in determining what constitutes an “undue burden” are to be applied on an interim basis to both existing and new requests for individual exemptions, the Commission requests comment on whether these are in fact the correct factors, and whether any other matters should be considered in evaluating closed captioning exemption requests. Comments will be due 30 days after the Commission’s order is published in the Federal Register, reply comments a couple of weeks later. Check back here for updates.