[Editor’s Note: This is part 2 of a 2-part series. Part 1, addressing repack funds for LPTV and TV Translator stations, is available here]
As we reported in August 2018, the Federal Communications Commission (“FCC” or “Commission”) at that time released a Notice of Proposed Rulemaking laying out how it would parcel out reimbursement funds for Low Power TV (LPTV), TV Translator, and FM stations impacted by the post-incentive auction repacking of full-power television stations. The Commission has now adopted an Order with the final rules governing such reimbursements. While the rules are largely as proposed in the NPRM, there are a few crucial differences. This post provides an updated report on how reimbursements will be issued.
Back in March 2018, Congress passed the Reimbursement Expansion Act (REA), which allocated additional funds to be used to reimburse broadcasters involuntarily affected by the post-incentive auction repacking of television stations. In addition to providing additional money for full-power and Class A stations, the REA for the first time expanded the universe of stations eligible to receive reimbursements to include LPTV and TV translator stations, as well as full power FM radio stations, FM translators, and Low Power FM stations (together “FM stations”).
In the REA, Congress allocated a total of 1 billion additional dollars, with $600 million for the fiscal year 2018 and an additional $400 million in 2019. While the majority of these funds are reserved for full-power and Class A stations TV subject to repacking, the REA did authorize the Commission to award, in the fiscal year 2018, up to $150 million to LPTV and TV translators, and up to $50 million for FM stations – along with $50 million for the Commission’s own consumer education efforts. For the fiscal year 2019, the REA did not provide any specific allocations of the $400 million total. In the Order, the Commission determines that it has the authority to include LPTV, TV Translator, and FM stations as recipients of those funds, but also determines that it will prioritize payments to full power and Class A TV stations and Multichannel Video Programming Distributors (MVPDs) before reimbursing LPTV, TV translator, or FM stations from 2019 funds.
As was proposed in the NPRM, the Order adopts rules governing which stations are eligible for reimbursement, and what kinds of expenses can be reimbursed, as well as the procedures eligible stations must use to receive funds. For FM stations, while the Order retains the three main categories of eligible stations proposed in the NPRM, the treatment of “Category 3” stations (those that will need to temporarily suspend operations or reduce power) is significantly simplified from that proposed in the NPRM. Because the rules on eligibility for LPTV/TV translators differ from those for FM stations, we will be posting two separate articles – one addressing the LPTV/Translator rules and one the FM rules.
In adopting rules to govern the reimbursement to FM radio stations, the Commission takes as a baseline the direction in the REA to reimburse those costs that are “reasonably incurred” by the station as necessary to “reasonably minimize disruption” of service to the station’s listeners. The inclusion of this “reasonably minimize disruption” language for FM stations results in somewhat different eligibility rules than those applied to television stations, with the Commission concluding that some disruption to FM operations is “reasonable,” and costs related to those disruptions will not be eligible for reimbursement.
I. Eligible Stations
The rules adopted in the Order will provide reimbursement to full power FM stations, FM translators, and LPFM stations. Eligibility will be limited to stations that were licensed and operating as of April 13, 2017, with facilities that are impacted by a repacked television station or a TV station that is relinquishing its spectrum rights as a result of the auction. Reimbursement will be provided only for costs associated with a facility that is co-located with, adjacent to, or in close proximity to a repacked (or relinquishing) television station. As with the LPTV/TV Translator reimbursement program (but differing from the full-power television program), FM stations may – on a case-by-case basis – request and receive reimbursements related to relocating or modifying studio-transmitter links or other broadcast auxiliary facilities. As with LPTV/TV translator stations, the Order also confirms that FM stations impacted by television station maximizations should be eligible for reimbursement under the program. For purposes of allocating reimbursement funds, as proposed in the NPRM, the Order divides eligible FM stations into three categories:
Category 1: Stations that are being permanently relocated as a result of a television station that is being repacked or relinquishing its spectrum. For example, an FM station that was co-located with a television station relinquishing its license and disassembling a shared tower could be a Category 1 station.
Category 2: Stations that are required to temporarily dismantle their facility or make changes that do not require prior FCC approval. Examples of Category 2 stations would be those that needed to temporarily remove their antenna from a tower, or were required to replace a transmitter.
Category 3: Stations that are required to temporarily suspend operations or reduce power to allow workers to safely complete work on a repacked full-power or Class A television station. This is predicted to be by far the largest category of impacted FM stations, with the time each station will be off-air or at reduced power to vary greatly among stations.
For Category 1 and 2 stations, the FCC will, as proposed in the NPRM, reimburse licensees for up to 100 % of their eligible costs (as detailed below), provided sufficient funds are available. However, for Category 3 stations the Commission in the Order abandons the 4-tier graduated priority system it had proposed in the NPRM. Instead, the Commission will now reimburse all stations that are forced to suspend or modify operations or reduce power for more than a de minimis amount of time in the same manner.
Under the rules adopted in the Order, service disruptions lasting less than 24 hours, or occurring only between midnight and five a.m., will be considered de minimis and ineligible for reimbursement. For all other stations in Categories 1, 2, and 3, up to 100 percent of eligible expenses will be reimbursed. In the event that there are insufficient funds to fully reimburse all eligible expenses, all stations’ reimbursements will be decreased proportionately.
The Commission clarifies in the Order that Category 3 stations will include those forced to go off-air entirely at their licensed location or to reduce power to the point that they cannot reach 80 percent of their licensed service area or population. If a station is not able to reach both 80 percent of the authorized service area and 80 percent of its normal population coverage, then such station would be eligible for reimbursement for the costs of constructing new or upgraded temporary or auxiliary facilities. However, the Commission will not base reimbursement eligibility on the extent of coverage provided by those interim facilities, reasoning that licensees will be sufficiently incentivized to maximize coverage even absent such a requirement.
As an alternative to constructing new auxiliary facilities, a station that operates FM translators could receive reimbursement for the operation of those facilities from new sites constructed pursuant to special temporary authority (STA). For any interim facilities, the Commission finds that licensees who must enter into leases for such facilities will only be reimbursed for lease expenses during the time they are subject to a service disruption, even if the term of any such interim lease is longer than that period. This period of disruption will be measured from the first day of disruption to the last, even if the site is only used intermittently during that time.
Any station eligible for reimbursement in Categories 1 and 2 will be reimbursed only for costs incurred in constructing facilities that “replicate as closely as feasible” the station’s signal contours as licensed before the service disruption. All licensees requesting reimbursement will be expected to re-use existing equipment to the extent possible, and they will need to provide justification for any replaced or upgraded equipment. Finally, the Commission, as it believes is required by the REA, will not reimburse any licensees for lost revenues during any time off-air or operating with reduced facilities. As is the case with LPTV and TV translator licensees, FM licensees will be expected to seek funding from such other sources, where available, prior to requesting reimbursement from the Commission and will be required to certify in any reimbursement requests that the licensee has not received, and does not expect to receive, reimbursement from any other source. Licensees will be allowed to seek reimbursement for costs that exceed the amounts paid by third-party sources.
II. Reimbursement Procedures
As proposed in the NPRM, the Commission also adopts reimbursement procedures for FM stations similar to those applied to full power and Class A television stations. These procedures require that all stations believing they are or will be, eligible to receive funds first to file an Eligibility Certification using the FCC’s online LMS system. These Eligibility Certifications will document that the applicable station is, in fact, eligible for reimbursement. FM stations would need to identify the full power or Class A station(s) that would force it off-air, and provide some documentation (e.g., a letter from the applicable full-power station) to support its certifications.
Licensees seeking reimbursement will next be required to file an initial Reimbursement Form identifying their existing broadcasting equipment, along with the types of costs they expect to incur and for which they will seek reimbursement. The Commission has also adopted a new catalog of approved cost amounts to apply to LPTV, TV translator, and FM stations, as was done for full power and Class A stations, and intends to incorporate that catalog into the revised Reimbursement Form. Because many licensees will have incurred significant actual costs by the time the FCC adopts and releases these reimbursement forms, the Order confirms that licensees may submit actual costs where applicable instead of estimated costs. Stations seeking more than the amounts in the FCC’s catalog will be required to demonstrate why they cannot reasonably remain within the catalog limits.
Once all Eligibility Certifications and initial Reimbursement Forms have been submitted and reviewed by the Media Bureau, the Commission plans to issue an initial allocation to each eligible licensee. As was the case with full-power television reimbursements, this allocation will be based on a to-be-determined percentage of anticipated and approved costs. In the event the total amount of reimbursement funds is not sufficient to fulfill all requests, the Commission delegates to the Media Bureau the task of determining what costs should be prioritized, although it directs that hard costs not be prioritized over soft costs generally.
Once allocations are made, licensees will be entitled to draw funds by submitting documentation of actual incurred costs. As with full power and Class A stations, this will be done by updating online a licensee’s Reimbursement Request form. Prior to receiving any reimbursements, eligible licensees will also need to file confidential information about their destination bank account for payments, using the FCC Form 1876 and the CORES Incentive Auction Financial Module.
Once a licensee’s final payment is made, which should be done by November 13, 2020, but may be extended until no later than July 3, 2023, the licensee will be required to retain relevant documentation for a period of ten years. To attempt to prevent fraud, waste, and abuse, the Commission also – as it has done with television licensees – reserves the right to audit licensees who have requested and received reimbursement funds.
III. Effective Dates
The Order is due to become on April 25, 2019. However, the filing process will not begin until the Commission has finalized, and received Office of Management and Budget approval for, the Eligibility Certifications and Reimbursement Forms. Those submissions will then need to be reviewed, along with required financial information, before licensees can receive reimbursements. Nonetheless, any licensee expecting to claim reimbursement money should begin confirming their eligibility and should retain documentation of any expenses it incurs in the meantime.