FCC Proposes $15,000 Penalty for LPFM Violations of Underwriting Rules

On July 2, 2020, the Federal Communications Commission (FCC" or the Commission") issued a Notice of Apparent Liability for Forfeiture (NAL") against low power FM (LPFM) broadcast station KELS-LP, Greeley, Colorado, in which it assessed a $15,000 civil penalty for the station's apparent violations of the prohibition on noncommercial educational (NCE) and LPFM broadcast stations underwriting acknowledgements that the FCC deems to be forbidden commercial advertisements. The announcements in this case were not like some of the outright commercials that have been the subject of past NCE forfeitures. There were no specific dollar prices or outright exhortations to come on down and spend your money with us" that we have seen in other cases. The KELS-LP case focuses mostly on qualitative statements about the underwriter and the number of products or services mentioned. While it does not establish any new forbidden types of content that have not been previously announced in policy statements and forfeiture cases, it is the first case we have seen in a while where the actual on-air copy was included in the NAL, and it finds fault with some underwriting copy that does not jump off the page as being over the legal line; so the case is worthwhile reading to provide guidance to the staff of NCE and LPFM stations.

Section 399B of the Communications Act of 1934, as amended (the Act"), and Section 73.503(b) of the Commission's rules prohibit NCE and LPFM stations from airing advertisements," which are defined as any programming material broadcast in exchange for any remuneration" and intended to promote any service, facility, or product" of for-profit entities. While NCE and LPFM stations are permitted to make on-air acknowledgments of financial donations and other support, such announcements must be for identification purposes only and must not promote the contributors' products, services, or businesses.

While the Commission allows NCE broadcast licensees to exercise reasonable good faith" judgment in determining whether an announcement is promotional (and thus an impermissible advertisement), it has long-established several categories of promotional announcements which violate Section 399B of the Act and Section 73.503(b) of its rules:

• Comparative or Qualitative Descriptions - Announcements containing comparative or qualitative descriptions are impermissible. This includes announcements which favorably distinguish their underwriters from their competitors.
• Price Information - Announcements containing price information or other information relevant to a buying decision are not permissible.
• Calls to Action - Announcements must not serve to induce listeners to do business with a sponsor.
• Lists of Products and Services - The announcement may not serve as a menu" of the sponsor's products or services.
• Lengthy Promotions - The FCC has found that the length of an announcement can, if too long, be in and of itself overly promotional.

In the NAL, the Commission found that KELS-LP aired announcements 1,600 times for 14 different for-profit entities that contained impermissible promotional material. The Commission noted that none of the 14 announcements were within the scope of reasonable licensee discretion, because each contained clearly promotional" language that fell within one or more of the above categories. While the Commission published the announcements with which it found fault, it did not pinpoint the exact language in each announcement that was problematic. It did find that at least 6 of the announcements were between 30 and 60 seconds in length, which it deemed to be clearly promotional." This approach was consistent with prior guidance that while there is no set maximum on the length of an announcement, announcements longer than 30 seconds are presumptively suspect, as they are more likely to contain material inconsistent with the identification only" purpose of underwriting acknowledgement.

Here are some of the types of content that the FCC found to be impermissible:

1. For restaurants, lists of 8 and 11 items on the menu, and reference to serving the community for almost 30 years" (menu and qualitative claim).
2. For auto repair shops, references to providing personalized, full service" with ASE certified master technicians using state-of-the-art equipment," being in business for 110 years, a knowledgeable staff," a comfortable waiting area," and quality workmanship" (qualitative claims). One spot included a musical jingle, which almost always sets off an FCC alarm. Another offered a $30 discount off the repair bill if the customer donated money to a certain charity (price information).
3. For a realtor, references to being one of the fastest growing real estate companies in the county, with some of the most well-known agents" with a combined experience of over 300 years" (qualitative claims).
4. For computer repair services, don't waste your time when you have a professional nerd to help make our life easier and your computer run better...we're not your average nerds," and a menu of 9 services available for 11 types of hardware" (qualitative claims and menu).
5. For a garage door repair company, we are not just sponsoring Pirate radio, we are also fans of the most wonderful music ever recorded" (qualitative claims).
6. For pet care, over 5,000 pet products...and a new state-of-the-art grooming studio...and a 4,000 square foot daycare center" (qualitative claims).
7. For a shoe store, they will professionally measure the right length and width of your feet...offering [numerous men's and women's sizes in 3 widths]" (qualitative claims and possibly a menu violation).
8. For a property manager, over 25 years of...experience...up on the continuing changes of the fair housing laws,... and with the latest most innovative solutions concerning all of your property's management needs" (qualitative claims).
9. For a jeweler, make that old piece of jewelry look new again...your headquarters for all your jewelry and watch repair needs (call to action and qualitative claim).

FCC enforcement of its underwriting restrictions has been infrequent in recent years, and some NCE and LPFM stations have been aggressive in pushing FCC limits, although not often to the extent that KELS-LP did. There is no indication that the KELS-LP case is the start of a new wave of enforcement actions, but the case does serve as a reminder to underwriting copywriters that the FCC has its ears open and continues to take its NCE regulations seriously. It also reminds us that competitor commercial stations are listening and willing to file complaints triggering an FCC investigation, which was what happed in the KELS-LP case.

Should you have any questions regarding your station's compliance with the underwriting rules, please feel free to contact Keenan Adamchak at (703) 812-0415 or at adamchak@fhhlaw.com.