On Monday of this week, the FCC issued a Second Report and Order amending and clarifying its rules concerning the disclosure of foreign sponsorship of programming. 

Amidst growing concerns regarding the potential influence of Russian, Chinese, and other foreign governments on recent U.S. elections, the FCC implemented new rules in 2022 requiring broadcasters to conduct independent research on all program sponsors and disclose any involvement of “foreign governmental entities” in the production and distribution of content.  As part of their research, broadcasters were required to take five specific steps, one of which was to check two specific, government sources to verify the identity of their sponsors: the Department of Justice’s FARA website and the FCC’s semi-annual U.S.-based foreign media outlets reports.  

The rules went into effect in 2022, but they had already been met with legal challenges. Soon after the FCC laid out its new foreign sponsorship ID requirements in 2021, the National Association of Broadcasters (“NAB”) petitioned the U.S. Court of Appeals for the District of Columbia Circuit for review, alleging that the new requirements were “unnecessary and overly burdensome.”  

In particular, the NAB took issue with the requirement to consult specific, government sources, arguing that “nothing in the law affords the Commission the latitude to require broadcasters to conduct research or investigations using any sources of information other than persons with whom broadcasters deal directly.” 

The court agreed with the NAB and decided to vacate the requirement: “Remember the only obligation that § 317(c) places on a broadcaster: It must ‘exercise reasonable diligence to obtain from its employees, and from other persons with whom it deals directly . . .  information to enable [the broadcaster] to make the announcement required by [47 U.S.C. § 317(c)].’ The FCC’s verification requirement ignores the limits that [47 U.S.C. § 317(c)] places on broadcasters’ narrow duty of inquiry.” 

In Monday’s Report and Order, the FCC acknowledged the court’s decision by replacing the “federal sources” requirement with “two options for demonstrating that [broadcasters] have met their duty of inquiry” when leasing airtime. 

Under the first option, “both the licensee and the lessee must complete a written certification,” a form of which is provided in Appendices C and D of Monday’s Report and Order.  

Under the second option, broadcasters must ask “whether the lessee is a registered FARA agent, or is listed in the Commission’s U.S.-based foreign media outlet report. If the lessee responds ‘no,’ the licensee would then ask the lessee to provide screenshots showing the results of lessee’s searches of both of these websites.” 

The FCC further clarified on Monday that the foreign sponsorship ID rules do not apply to “sales of advertising for commercial goods and services” to the extent that the name of the product or service would constitute a sponsorship identification, or to political candidate advertisements. The rules do, however, apply to issue advertisements and paid public service announcements. In addition, while the FCC noted that the foreign sponsorship ID rules “are not likely” to apply to NCE stations, they declined to create an exemption for “religious programming and locally produced and/or distributed programming.” 

Keep in mind: the other requirements contained in the existing foreign sponsorship identification rules remain intact. If you need a refresher on those requirements, read our last blog post on this topic here or feel free to contact an attorney here at FHH.