Facilities covered by a permit must in any event be completely constructed by the expiration date.

Attention, everybody who is currently sitting on, or may someday be sitting on, a construction permit for a new radio station. The FCC’s Audio Division has announced, in no uncertain terms, that when the rules say that a covering license application must be filed before the expiration of the underlying construction permit, they really mean it . . . sort of.

The problem here arises from Section 73.3598(e) of the Commission’s rules, a section admirable for its concision and directness:

Any construction permit for which construction has not been completed and for which an application for license has not been filed, shall be automatically forfeited upon expiration without any further affirmative cancellation by the Commission.

Your ordinary person reading that would likely understand it to say that any permittee who doesn’t get the covering license application on file by the permit’s expiration date is out of luck. Period. End of story. That is, after all, precisely what the rule says.

But thanks to the Audio Division’s latest reading of the rule, permittees will have an extra 30 days within which to file their license applications, provided, of course, that they did in fact complete construction before the permit’s expiration.

The underlying story starts back in 2004, when an FM station in West Virginia obtained a CP to construct new facilities after its then-authorized tower had been destroyed. The permit specified the conventional three-year construction period, with an expiration date in 2007. 

Wouldn’t you know it, 2007 came and went, but no license application got filed.

The replacement facilities specified in the 2004 permit had in fact been built within the construction period (this according to the station’s licensee, and we have no reason to doubt it), but the license application was inadvertently overlooked. Four years later, in 2011, the licensee tried to file the covering license application, but the Audio Division refused to accept it because the underlying permit had died in 2007. Instead, the Division made the licensee file for a new CP, which was promptly granted. (The licensee followed up with a very prompt license application.)

In addition to sending the licensee back to Square One, application-wise, the Division also proposed to fine the station for failing to timely file its license application for the 2004 permit, and also for operating without authorization during the time between (a) the expiration of the 2004 permit in 2007 and (b) grant of special temporary authority in 2011.

Hold on there, said the licensee. Despite the seeming clarity of Section 73.3598(e), the Division had historically been willing to waive the automatic expiration provision. According to the licensee, the Division should have done the same here. 

The licensee was correct on its facts: in at least a couple of instances the staff had indeed waived the rule without fanfare. The licensee argued that it would therefore be inappropriate (if not unlawful) for the Division to impose a forfeiture on conduct that the licensee had every reason to believe was lawful.

(Disclosure: In one of the earlier cases cited by the licensee, the waiver had an adverse impact on one of our clients. We took the FCC to court, complaining that the waiver should not have been granted. After an oral argument in which the FCC seemed – to us, at least – to get roughed up pretty badly, the parties were able to resolve the contretemps to everyone’s satisfaction through an amicable settlement before the court issued a decision.)

Faced with this convincing argument, the Division did the Right Thing and canceled the forfeiture. In so doing, though, it took the time to announce a new policy going forward, to wit:

we will only waive the automatic expiration provision of Section 73.3598(e) and accept a late-filed covering license application where: (1) the permittee demonstrates conclusively that construction in accordance with the construction permit was complete and the station was “ready for operation” by the permit expiration date; and (2) the covering license application is filed within 30 days of the expiration date. [Footnote omitted]

In a footnote, the Division made clear that timely completion of construction is an absolutely critical requirement. That is, don’t get cute and try to keep the permit alive simply by filing a license application if any underlying construction remains to be done. That dog won’t hunt.

The Division also emphasized that, “subject to this 30-day grace period”, it will still be issuing fines to folks who operate facilities specified in construction permits which have expired.

The Division’s order provides a welcome measure of certainty in an area that, up until now, had been very loosey-goosey. But in so doing, the order also throws a large burden back onto permittees. They will now have to keep careful track of their permits’ expiration dates and, more importantly, they will have to be extra-careful to get (a) construction completed by the expiration date and (b) the covering license application filed no later than 30 days after that expiration date.

It is particularly important that the permittee keep track of these chores because the FCC won’t. In the Division’s view (and, indeed, in the very language of Section 73.3598), a permit’s expiration occurs automatically, without any further action or notice by the Commission. The 30 extra days the Division has now tacked onto the rule (with respect to the filing of the license application) is a gift that’s not likely to be expanded.  So if you wake up on Day Thirty-One following your CP’s expiration and it suddenly occurs to you that you haven’t filed your license application, don’t expect the Division to cut you any slack.

You have been warned.

(Further cautionary note: The decision described above was issued by the Audio Division, not by the Media Bureau. It thus might be read to announce only that Division’s policy. But bear in mind that Section 73.3598 applies to all broadcast construction permits, including TVs. While one might ordinarily expect – and the law ordinarily requires – similar cases to be treated similarly, it’s not clear that the folks in the Video Division will take the approach the Audio Division has staked out. And it’s also not clear whether, if Video were to adopt a different take on Section 73.3598, that alternative take would ultimately be upheld, either by the Bureau, the Commission or the courts.)