LEGAL MEMO BY MICHAEL D. BERG

Noncom Political Ad Ruling: What’s It Mean?

If the recent court decision allowing paid candidate and issue ads on noncommercial TV and radio is upheld, there are a myriad of ramifications for both commercial and public stations. For now the court’s ruling affects only the Ninth Circuit, which includes Alaska, Arizona, California, Guam, Hawaii, Idaho, Montana, Nevada, Oregon and Washington, but everyone should stay attuned to further developments, especially from the FCC. Better to anticipate potential changes than to be surprised by them.

The general election looms and political ad spending rivals the Olympics for breaking records. At the same time, there are developments since an April federal court ruling (Minority Television Project Inc. v. FCC) that have the potential to bring paid candidate and issue ads to noncommercial television and radio stations for the first time.

Whether that happens, and when, are difficult to predict. Will the ruling take effect before the November elections? Probably not, but it is possible. It depends how the appeal plays out, what the FCC does or does not do, and what happens “in the field,” such as whether candidates and issue advertisers seek to buy time on public stations, and whether the stations offer time.

In any event, the impact could be significant for commercial and noncommercial broadcasters.

Candidates and issue advertisers may welcome the opportunity to advertise on public stations to reach their demographics. Noncommercial stations would likely have discretion whether to air them, and, as discussed here, there are competing considerations on that.

For decades, Section 399B of the federal Communications Act has prohibited public TV and radio stations from making their facilities “available to any person for the broadcasting of any advertisement.” The act’s definition of “advertisement” has three parts:

  1. Paid announcements that promote any service, facility or product that is offered for profit (i.e., the commercials aired by commercial stations).
  2. Paid public issue advertising.
  3. Paid content that supports or opposes any candidate for public office.

The FCC enforces a rule that implements Section 399B. Enforcement is complaint-driven and focused on No.1 of the above definition, in the absence of complaints on No. 2 and No. 3 up to now.

BRAND CONNECTIONS

Public broadcasters may, and are required by FCC sponsorship identification rules to, air announcements that identify underwriters that contribute financial or other support to public station operations and programs.

Upon complaints from members of the public, including other stations, the FCC decides whether a particular announcement identifies, in a value-neutral, nonpromotional way, the underwriter and its products or services, or whether it crosses the line to a prohibited advertisement. A body of complaint-driven FCC case law provides some guidance as to what language is allowed or prohibited.

Exercising its enforcement power, in 2002 the FCC fined Minority Television Project, the noncommercial licensee of KMTP San Francisco, $10,000 for broadcasting prohibited No. 1 ads 1,911 times over a three-year period. The FCC ruled that these were prohibited commercials for Chevrolet and other cars, airlines (some offering special deals), plumbers, etc. The court quoted from one of these ads: “Mileage benefits with the best airline in the world.” (Full disclosure: I represented one of the complainants before the FCC).

The public station appealed to the Ninth Circuit courts in San Francisco, challenging the commercial, issue and candidate bans as free speech violations under the First Amendment.

Note that for now the court’s ruling affects only the Ninth Circuit, which includes Alaska, Arizona, California, Guam, Hawaii, Idaho, Montana, Nevada, Oregon and Washington. It is the nation’s largest judicial circuit.

The U.S. Court of Appeals for the Ninth Circuit upheld the constitutionality of the act’s commercial ad ban, but struck down the bans on paid issue and candidate ads as violations of free speech. The court agreed with the FCC that the government’s interest in preserving the noncommercial nature of public stations justifies the ban on commercial ads.

On June 29, the FCC and the Justice Department appealed the strike-down of the public issue and candidate ad bans. The strike-down was heard by a 3-judge panel, one of whom sided with the FCC. This rehearing, if granted, could be by the same three-judge panel or by the full Court of Appeals sitting “en banc.” There is no set timetable for the court’s grant or denial of the FCC petition.

On July 9, PBS and NPR filed a joint “friend of the court” brief supporting the FCC appeal and the constitutionality of the ban on issue and candidate ads.

They argued: “If left standing, the panel’s decision would subject NCE [noncommercial educational] radio and television stations to unprecedented commercial pressure to alter the distinctive nature and content of NCE broadcast programming and would undermine the congressional policy underpinning the foundation of the public broadcasting system….”

That may come as a surprise to some readers, especially at a time of deep and perhaps increasing cuts in government funding for public stations. But many in public broadcasting are concerned about preserving the legal framework for governmental funding, and for the reservation of channels for noncommercial use.

On July 23, MTP filed its response to the FCC’s appeal of the voided issue and candidate bans. Among other things, it argued that NCE stations would not be required to accept the political ads allowed after the court ruling. (The reasonable access right of candidates for federal office exempts NCE stations. Whether the voiding of the issue and candidate ad bans will affect that remains to be seen. Congress presumably will await the appeal results before making any federal law changes.)

Notably, MTP did not appeal the court’s upholding of the commercial ad prohibition, though that was the origin of its FCC and court disputes.

In a Notice of Proposed Rulemaking issued on a different NCE topic after the court ruling, the FCC said: “We note that on April 12, 2012, the Ninth Circuit Court of Appeals struck down as unconstitutional Section 399B’s ban on public interest and political advertisements by NCE stations. Accordingly, we will not enforce Section 399B’s ban on public interest and political advertisements in the Ninth Circuit once the court’s mandate goes into effect.”

Not entirely clear is whether the FCC would enforce the voided bans in the Ninth Circuit before the court’s mandate issues. For now the “mandate” is postponed pending further appeal action. That could change soon if the court perceives a need to provide further guidance before the election. Or the court could let the appeal take its normal course.

So, what happens next?

In the appeal, the Ninth Circuit will rehear the case, or deny the FCC’s petition. There is no deadline for either. Each could take months beyond the Nov. 6 election. If the Ninth Circuit denies the FCC petition, then the mandate will issue, and the April decision will take effect within seven days, unless the government can convince the Ninth Circuit to postpone it while the FCC petitions the Supreme Court to review the case. If the Ninth Circuit did that, the court ruling would likely not take effect until after the election, as the government will have 90 days to file for Supreme Court review.

Many, perhaps most, public stations are unlikely to run the ads for two main reasons:

  • Station support for the PBS/NPR view that the most important thing is to preserve the programming and regulatory differences between public and commercial broadcasting.
  • Important questions remain. How do you set rates with no prior experience? Would equal opportunities and lowest unit charge apply, and, if yes, how would you implement them? The FCC’s rules on this apply only to commercial stations because Section 399B has been part of federal law for so long.

Other noncommercial stations, however, may prefer to welcome the new revenue opportunities from candidate and issue ads. They may also see the end of the bans as an opportunity to further serve their communities.

Ninth Circuit public stations interested in accepting candidate and issue ads can develop written policies stating the terms (including rates, time being offered (e.g., 30-second spots, etc.) and conditions under which they will do that. Commercial stations now have such policies for candidate and issue advertisers.

Both public and commercial stations in the Ninth Circuit, and candidates and issue advertisers there, may find it useful to follow the court case closely. Candidates and issue advertisers may want to plan for when the court ruling takes effect in case that’s before the election.

Stations outside the Ninth Circuit can probably sit tight for now. The FCC might be hard pressed to oversee two different regulatory regimes, one for Ninth Circuit states and the status quo in the rest of the country.

For all those with a stake in the outcome, staying attuned to further developments, especially from the FCC but also from the court, makes sense. Better to anticipate potential changes than to be surprised by them.

This column on TV law and regulation by Michael D. Berg, a veteran Washington communications lawyer and the principal in the Law Office of Michael D Berg appears periodically. He is also the co-author of FCC Lobbying: A Handbook of Insider Tips and Practical Advice. He represents commercial and noncommercial broadcasters. He can be reached at 1200 New Hampshire Ave., Suite 800, Washington, D.C. 20036-6802; [email protected]aelberglaw.com; or 202-776-2523. Read more of Berg’s Legal Memos here.

Dashiell Milliman-Jarvis, a legal intern in Berg’s firm, contributed to this article. He expects to have his Juris Doctor degree next spring from the Georgetown University Law Center. His email address is [email protected]

Note: This column provides general guidance only and is not a substitute for individualized legal advice for particular situations.


Comments (1)

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Jaclyn Hansen says:

August 7, 2012 at 11:27 am

I thought part of the rules for “underwriting” NPR and PBS programming was that there couldn’t be a call to action or a comparative claim. You can’t say, “So get over to your Ford dealer during August Dog Days” and you can’t say, “The Ford Escape has better MPG ratings than any other SUV.” But you can say, “The Ford Escape gets an estimated 36 miles per gallon.” So, right now, couldn’t a candidate say something like, “Obama is fighting for the middle class” or “Romney wants to give American businesses a tax break.” Neither of those are explicitly comparative.


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