FCC Proposes Rules for Distributing Repack Funds to LPTV, TV Translator, and FM Stations; Part II: FM Stations

(Editor's Note: If you're looking for information on LPTV and TV Translators review Part One here.)

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 FM radio stations, and directed the Commission to adopt rules governing the details of how the reimbursement program would work for these stations. The Commission has now adopted a Notice of Proposed Rulemaking detailing how it intends to parcel out those funds. While the Commission notes that its proposed procedures to request reimbursement are "substantially similar" to those that have applied to full-power stations, there are some important differences, especially in the types of stations and expenses that will be eligible for reimbursement.

In the REA, Congress allocated a total of an additional $1 billion, with $600 million for 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 subject to repacking, the REA did authorize the Commission to award, in 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 fiscal year 2019, the REA did not provide any specific allocations of the $400 million total, and in the NPRM, the Commission requests comment on whether it has the authority to award any of these funds to LPTV, TV translator, and FM stations, and, if so, how it should allocate those funds.

In the NPRM, the Commission proposed 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. Because the proposed rules on eligibility for LPTV and TV translators differ from those for FM stations. Here is part two on the proposed FM rules. For all you LPTV and TV translators out there, review Part One here.

In proposing rules to govern 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. This somewhat more restrictive standard results in different eligibility rules than those applied to television stations, with the Commission concluding that some disruption to FM operations is "reasonable" and therefore not subject to reimbursement.

I. Eligible Stations

The NPRM tentatively proposes to provide reimbursement to both full-power FM stations and FM translators, finding that both were anticipated by the REA. Although the Commission does not believe reimbursement to LPFM stations is required by the REA, the NPRM requests comment on whether such stations should be eligible nonetheless. Eligibility will be limited to stations that were licensed and operating as of April 13, 2017 with facilities that are being impacted by a repacked television station or one that is relinquishing its spectrum rights as part of the auction. The NPRM proposes reimbursement only for costs associated with the location of a facility that is collocated with, adjacent to, or in close proximity to a repacked (or relinquishing) television station. As with the television reimbursement programs, FM stations will not be reimbursed for expenses related to relocating or modifying studio-transmitter links or other broadcast auxiliary facilities. Also as with LPTV/TV translator stations, the NPRM requests comment on whether FM stations impacted by television station maximizations should be eligible for reimbursement under the program.

For purposes of allocating reimbursement funds, the FCC divides these eligible 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 predicated 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 proposes reimbursing licensees for up to 100 % of their eligible costs (as detailed below), provided sufficient funds are available. For Category 3 stations, however, the Commission proposes a more complicated priority system for reimbursements based on how long a station is forced to operate from a temporary facility. Under the procedure proposed in the NPRM, reimbursements would be allocated as follows:

• Stations off-air (or at reduced power) for under 24 hours, only between 10 p.m. and 6 a.m., or for less than five non-peak broadcast hours per day would not be reimbursed, with the Commission considering such disruption of service to be de minimis.
• Stations forced to operate from temporary facilities to avoid being off-air or at reduced power for between 24 hours and 10 days would be reimbursed up to 50 percent of eligible costs.
• Stations forced to operate from temporary facilities to avoid being off-air or at reduced power for between 11 and 30 days would be reimbursed up to 75 percent of eligible costs.
• Stations forced to operate from temporary facilities to avoid being off-air or at reduced power for more than 30 days would be reimbursed up to 100 percent of eligible costs.

For each class of station eligible to receive reimbursements, the Commission would reimburse the licensee for the costs of constructing new or upgraded temporary auxiliary facilities covering at least 80 percent of the station's licensed service area (measured by area or by population). 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). Any station eligible for reimbursement will be reimbursed only for costs incurred in constructing facilities comparable to the station's licensed facilities. To the extent possible, licensees will be expected to re-use existing equipment, and they will need to provide justification for any replacement or upgraded equipment. Finally, the Commission, as it believes is required by the REA, would not reimburse any licensees for lost revenues during any time off-air or operating with reduced facilities.

II. Reimbursement Procedures

In the NPRM, the Commission also proposes to adopt reimbursement procedures for LPTV, TV translator, and FM stations similar to those applied to full power and Class A television stations. These procedures would require that all stations believing they are, or will be, eligible to receive funds 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 also 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 proposes creating a new catalog of approved cost amounts to apply to FM stations, as was done for full power and Class A stations, and incorporating 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 NPRM suggests that licensees may submit actual costs where applicable instead of estimated costs.

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. In the NPRM, the Commission requests comment on whether this allocation should be based on a percentage of anticipated and approved costs (as it was for television stations), or on some other calculation, such as a fixed allocation amount for licensees facing similar circumstances (e.g. a similar amount for each radio station forced off-air for 11-30 days). In the event the total amount of reimbursement funds is not sufficient to fulfill all requests, the Commission proposes delegating to the Media Bureau the task of determining what costs should be prioritized. The NPRM suggests that hard costs will be prioritized over soft costs such as project management fees, but requests comment on the priority guidelines the Commission should direct the Media Bureau to apply, if any.

Once allocations are made, licensees will be entitled to draw down on those allocations by submitting documentation of actual incurred costs. As with full power and Class A stations, this will be done by updating 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 is supposed to occur by November 13, 2020, but may be extended until no later than July 3, 2023, the NPRM proposes requiring that licensees 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. Comments

The FM station reimbursement program will clearly be very important to affected licensees, and anyone impacted by these rules may want to consider submitting comments on the NPRM. Comments will be due 30 days after the NPRM is published in the Federal Register, with Reply Comments due an additional 30 days after that. The REA directs the Commission to complete the rulemaking by March 23, 2019. Keep an eye on CommLawBlog.com for those specific deadlines once they are announced.

Although the Commission is attempting to move expeditiously in implementing the reimbursement program, it will likely still be some time before funds are available. Even after receiving Comments and Reply Comments, and adopting final rules, the Commission will need to finalize, and receive approval from the Office of Management and Budget for the Eligibility Certifications and Reimbursement Forms before they can be filed. 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.