Form 323: So Long, SUFRNs; Hello, RUFRNs?
Another ownership reporting cycle, another acronym: the FCC continues to struggle to devise an ownership reporting mechanism that will give the Commission what it wants.
The Commission has once again waded into the muck of how individual interest holders listed in broadcast ownership reports should be required to identify themselves. Six years after a failed effort to require all such interest holders to provide social security number-based FCC Registration Numbers (FRNs), five years (and three full ownership reporting cycles) after implementing an alternative ID approach based on "Special Use FRNs" (SUFRNs), and two years after proposing to scrap SUFRNs altogether, the Commission is now proposing to require use of something it calls a "Restricted Use FRN" (RUFRN). To get an RUFRN, an individual would have to provide his or her name, residence address, date of birth and the last four digits of his/her social security number (SSN).
For readers who missed the initial rounds of this long-running matter (and who aren't inclined to read through our archives explaining it all - like here, here, here and here, for openers), some background. In 2009, at the Commission's direction, the Media Bureau attempted to revise its commercial broadcast ownership reports (Form 323). One goal of the revision was to insure that every individual interest holder identify himself or herself with an FRN - which would have required that each such interest holder provide the FCC with his or her personal SSN. That proposal met with significant opposition arising not only from security concerns but also from the inappropriate and less-than-transparent manner in which the Bureau attempted to make the change.
The Commission responded by allowing individuals to obtain an SUFRN in lieu of a full SSN-backed FRN (a so-called "CORES FRN" obtained through the Commission Registration System, a/k/a CORES). After additional litigation which succeeded in clarifying important aspects of the use of the SUFRN, the revised Form 323 featuring the SUFRN function was deployed in mid-2010. It has been used for three rounds of biennial Ownership Reports, in 2010 (postponed from 2009), 2011 and 2013.
In imposing the FRN/SUFRN reporting requirement, the FCC was hoping to develop a comprehensive, reliable, searchable database reflecting the identities of everybody who holds an attributable interest in any commercial broadcast station. The Commission sees such a database as critical to measuring diversity in ownership and ultimately in supporting any regulations designed to increase that diversity.
Now, however, after three biennial reporting cycles, the Commission has determined that use of SUFRNs may be undermining the usefulness of the information being obtained from its ownership reports.
In a new Notice of Proposed Rulemaking (NPRM, although technically its title is "Second Further Notice of Proposed Rulemaking and Seventh Further Notice of Proposed Rulemaking", for those keeping count), the Commission proposes to abandon (or at least sharply curtail) use of the SUFRN and replace it with the RUFRN.
According to the Commission, since SUFRNs first became available at least 25 percent of individuals have used them. Moreover, some individuals have obtained multiple SUFRNs while some SUFRNs have been used in connection with multiple persons. As a result, the Commission concludes that it "cannot confidently determine" how many individuals are in fact using SUFRNs. And regardless of the precise number of SUFRN users, the Commission believes that that number is high enough to undermine the utility of the information collected in ownership reports. To enhance its data collection efforts (or at the least to expand its acronym collection efforts), the Commission now proposes the RUFRN.
Historically, an SUFRN was assigned within the Form 323 itself, and its use has theoretically been limited to that form. By contrast, the RUFRN would be obtained through the separate CORES system in the same manner as a "traditional" CORES FRN. Unlike a CORES FRN, which requires disclosure of the individual's SSN, the RUFRN would be obtained by submitting an individual's address, birth date, and only the last four digits of their SSN. An individual's RUFRN would then consistently be used by that individual any time he or she appears in a broadcast station's ownership report. The RUFRN would be available only to individuals, not to entities, and (like the SUFRN) could be used only for the purpose of completing ownership reports.
To avoid duplication, CORES would be revised to check the information submitted to ensure that no individual is allowed to obtain multiple FRNs (whether CORES FRNs or RUFRNs). The Commission tentatively concludes that use of the RUFRN would provide reasonable assurance that individuals are uniquely identified across all ownership reports in which they appear, but requests comment on this. The Commission also concludes that use of a consistent identifier by each individual will improve the quality of the data collected in ownership reports by making it easier to identify and correct errors, as well as to track individuals across multiple reports.
In the NPRM, the Commission acknowledges that a parallel proceeding is already underway looking to revise the CORES system itself. That system, in place for more than a decade, has historically allowed individuals to obtain more than one FRN for a given SSN, and even permits assignment of FRNs without any SSN at all. While the use of SUFRNs may have undermined the Commission's ability to develop a reliable database of broadcast ownership interests, the design of the CORES FRN system itself may have posed an even greater problem on that front. In any event, the Commission's efforts to revise CORES will proceed on a parallel track regardless of the ultimate fate of the RUFRN proposal.
While the Commission blames the SUFRN for many of its problems in achieving the reliable database it had hoped for, the FCC also candidly acknowledges multiple times in the NPRM that many of its data problems stem from the "complexity of the information required to accurately file" Form 323. But the Commission also optimistically concludes that use of the RUFRN may enable "burden-reducing form modification". Specifically, the NPRM notes that commenters in other proceedings have requested that the Commission eliminate the obligation to disclose, in each Form 323,all the other attributable interests held by each attributable interest holder listed in the form. So elimination of that requirement would, at least theoretically, simplify Form 323 and, also theoretically, improve the reliability of the data collected on that form. But such elimination would require an ability to consistently identify individuals across all filed ownership reports - which is the Commission's intended goal for RUFRNs.
Even if the RUFRN were to be adopted, the SUFRN might still be retained for limited purposes. In particular, the Commission asks whether the SUFRN should be available to individuals who simply refuse to provide their identifying information. Under the current SUFRN system, filers are required to use "reasonable and good faith" efforts to obtain from each individual interest holder the information required to obtain a CORES FRN before obtaining a SUFRN. The NPRM asks whether, if any use of a SUFRN is retained, substantiation of such efforts should be required, or if other steps should be required to encourage all interest holders to provide the information necessary to obtain a CORES FRN or RUFRN. Whether or not such a requirement would be consistent with the FCC's assurance to the Court of Appeals back in 2010 that no one would be required to submit a social security number to obtain an FRN for Form 323 purposes is unclear.
The NPRM also addresses use of the RUFRN in non-commercial ownership reports (Form 323-E). In a separate proceeding the Commission is considering the possible overhaul of that form, an overhaul that could impose the same type of unique identification of all individuals listed in the form as is used in commercial ownership report forms. In the NPRM, the FCC asks whether the proposed RUFRN system should be applied to non-commercial reports in the event that those reports are modified (in the separate proceeding) to mirror commercial ownership reports in the information they collect. The NPRM requests comment on whether any different concerns would be raised by applying the RUFRN to non-commercial ownership reporting.
Asserting, as it has in the past, that its CORES system is highly secure and well protected from any possible security breach, the Commission also requests comment on any data security concerns raised by the RUFRN proposal, including whether the specific information required to obtain a RUFRN reduces concerns over any security breach or potentially raises any new concerns. (Although the Commission claims to have learned from the experience, its confidence in the security of its data systems may be a tad over-optimistic in view of the fact that the FCC was apparently hacked in a less-than-highly-publicized incident back in 2011.) The Commission tentatively concludes that the RUFRN proposal would not violate the Privacy Act, but also requests comment on this conclusion.
Broadcasters should be aware that, If the Commission adopts these proposals, SUFRNs may become a thing of the past. If that were to happen, it may require significant effort on the part of reporting licensees to cajole reluctant interest holders to provide their information to the Commission. With the next round of biennial ownership for commercial stations due later this year, broadcasters would do well to focus on these matters now. It's not clear that the FCC can or will act so fast as to eliminate SUFRNs before the next round of Form 323s is due, but that possibility at least exists.
The comment deadlines for the new RUFRN proposal have not yet been announced. Anyone interested in letting the Commission know their thoughts should check back here for updates.