$500K Political Ad Fine Cause For Concern

From May through October 2011, a New Hampshire radio station broadcast a paid announcement supporting a proposed local hydroelectric project. The ads were paid for by the company proposing the project and identified the project, which shared its name with the sponsor, but apparently did not also include the so-called “magic words” required by Section 73.1212 of the FCC’s rules — “paid for” or “sponsored by.” 

Last week, the FCC’s Enforcement Bureau and Cumulus Media, the current owner of the station, reached a consent decree under which Cumulus admitted to violating the FCC’s sponsorship identification rule and agreed to pay an eye-popping “civil penalty” of $540,000, an amount the Enforcement Bureau bragged “is the largest payment in FCC history for a single-station violation of the commission’s sponsorship identification laws.”

In addition, Cumulus agreed to a detailed three-year compliance program. The compliance program was not limited to the station involved, but extends to all Cumulus stations previously owned (as was the New Hampshire station) by Citadel. The compliance program requires training for all relevant employees, audits of every station, appointment of a compliance officer, maintaining a hot line for employees to report violations, and annual reports to the FCC.

This appears to represent a stunning reversal of longstanding FCC political broadcasting enforcement policies. For at least 25 years, the FCC has taken a light touch to enforcing the political rules. There were several reasons for this policy. The FCC recognized that the political broadcasting rules are ambiguous and stations could in good faith come to different conclusions about how they apply in particular situations. The FCC believed that, if a station made a good faith error, the agency’s goals would be better achieved by explaining how the rule should be interpreted in the future, rather than punishing what may have been an innocent mistake, particularly where station sales personnel may not have extensive experience in applying the rules.

Since broadcasters do not have to take political or issue ads other than ads for federal candidates, the FCC also wanted to encourage stations to make their facilities available to add to public discourse, rather than discouraging stations if they faced the risk of severe penalties for an error in judgment. And the FCC recognized that the political broadcasting rules regulate not only speech, but speech at the core of the First Amendment, and the agency has been sensitive to the need to leave stations and advertisers considerable “elbow room” to avoid constitutional concerns. In most cases, rather than proceeding to a formal decision, the FCC staff worked with stations to bring them into compliance.

The commission’s enforcement approach has worked well. The number of formal complaints about alleged violations of political broadcasting rules has plummeted to no more than a handful in any political season. The Cumulus consent decree, however, goes in an entirely different direction.

Another question about the Cumulus consent decree is whether enforcement of the political rules, which has been almost entirely handled by the Media Bureau, will now move to the Enforcement Bureau.

There are several reasons why political advertisers, broadcasters and the FCC should worry about the implications of the Cumulus consent decree. First, the language of the rules governing issue advertising rules is ambiguous. Sponsorship identification is required for discussions of “any political matter” or “controversial issues of public importance.”

Numerous court and agency decisions have attempted to define a “controversial issue of public importance,” and the most that can be said is that the courts concluded that it applies to only a far narrower range of disputes than most people might think. While the expanded disclosure rules Congress imposed on ads addressing a “national legislative issue of public importance” did not apply to the Cumulus case, even the Supreme Court recognized that language is ambiguous and upheld it only because, up to that time, there was no record that enforcement had chilled speech.

In this case, the consent decree does not state that the hydroelectric project was the subject of a referendum or even required legislative action. An advertisement advocating a public policy does not necessarily implicate a controversial issue. The consent decree offers no guidance for stations on any new FCC interpretation of its rule.

Further, as the consent decree itself recites, information about the ad’s sponsor and its involvement in the proposed project was available on the Internet. The premise of the FCC’s movement to online public files is that the Internet is the most efficient way to distribute information about programming on broadcast stations. But apparently, even if a simple Google search would provide the relevant information, the commission will give that fact no weight if the ad does not contain the magic sponsor ID words.

The enormous amount of the payment the Enforcement Bureau demanded is also troubling. The consent decree cites no evidence that any member of the public was deceived (and as noted above, complete information was freely available). The incident occurred on only one radio station. And while the ad was aired 178 times, once a station has agreed to accept an issue ad, it rarely reviews the ad copy again unless someone complains.

Here, a complaint was not received by the FCC until almost the end of the ad’s run, and the FCC did not ask the station about it for more than another year. The consent decree does not say wheteer the station had received any earlier complaint. The FCC for the most part has avoided imposing multiple sanctions for what is essentially the same decision unless a broadcaster has repeatedly violated the rules. Nothing in the consent decree indicates that the radio station had previously violated the political rules.

Faced with the potential for draconian sanctions for an error in judgment, might other stations — particularly radio stations that do not often deal with difficult political broadcasting judgments — choose instead to limit political ads to ones they are required to take. That would not serve the interests of advocates or of the public.

But there is an even larger concern about the FCC’s apparent new enforcement stance. When the Supreme Court rejected what lawyers call a “facial challenge” to the expanded issue ad rules imposed by Congress in 2002, it acknowledged that a rule imposing disproportionate burdens on stations would violate the First Amendment. But it left the rules in place because “the regulatory burden, in practice will depend on how the FCC interprets and applies” the provisions. It noted that the FCC “has often ameliorated regulatory burdens by interpretation in the past, and there is no reason to believe it will not do so here.” And it reminded the FCC that parties remain free to challenge the rules as the FCC applies them.

The Cumulus consent decree, if it signals a new policy, would do exactly what the court found the FCC has avoided in its administration of the political broadcasting rules. It would impose huge penalties on stations for a single error of judgment. Other parties have filed complaints urging the FCC to sanction stations for failing to require advertisers to disclose information that, under the complainants’ view of the rules, should be required.

In addressing those complaints and future political broadcasting enforcement decisions, the FCC should remember that a heavy hand may lead to challenges to its entire political broadcasting regime.

Jack Goodman practices communications law in Washington. He was previously general counsel of the National Association of Broadcasters. He can be reached at [email protected].