Governor Looking for Budget Bills

The Associated Press reported  on Tuesday that Governor Gretchen Whitmer urged Republican legislative leaders to quickly send her budget bills before their weekend “getaway” for a GOP political gathering, saying she needs as much time as possible to review and sign them by a September 30 deadline.

Republicans countered that they would take final votes on the measures next week.  On Thursday, the House-Senate conference committees were scheduled to advance remaining bills that were not voted on last week.

As reported in last week’s MAB News Briefs, talks between Whitmer and majority Republicans in the Legislature broke down last week, even after the sides agreed to table discussions over a long-term road-funding plan. At this point, the GOP-led Legislature is planning to send spending measures to her desk, while she is leaving open the possibility of vetoing parts of the budget.

Republicans will meet on Mackinac Island from Friday to Sunday for the biennial Mackinac Republican Leadership Conference. Vice President Mike Pence and Education Secretary Betsy DeVos are among those scheduled to speak.

“Over the summer, you took a two-month-long vacation instead of coming to the table to negotiate a budget,” Whitmer wrote in a letter to Senate Majority Leader Mike Shirkey and House Speaker Lee Chatfield. “Now, time is of the essence and it is your responsibility to pass all of your budgets and send them to me prior to your weekend getaway.”

This past Monday, Michigan Public Radio Network reported that state government notified Michigan’s 48,000 state government workers of potential temporary layoffs in case the budget is not enacted in time. About 32,000 could be temporarily laid off.




FCC Delays Due Date for Biennial Ownership Reports – But Don’t Forget Other Important Dates for Reg Fees, EAS Test Forms, and New FM Application Forms Next Week

David Oxenford - Color

David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

On September 17, the FCC announced that the due dates for Biennial Ownership Reports, which had been December 1 of this year, will now be January 31, 2020. The Order announcing that action is available here. The FCC notice says that this additional time is needed to make updates to the ownership forms in the LMS database in which they are filed. The window for filing these reports will open on November 1. The information to be reported in these biennial ownership reports needs to be accurate as of October 1, 2019, which is unchanged from the requirement before yesterday’s announcement. The FCC is attempting to create a stable database of the ownership of stations, taken on October 1 every two years. While this is not the first time that the FCC has delayed the actual filing date for the Biennial Ownership Reports (see for instance the delay moving the last filing date from the originally scheduled 2017 into early 2018), they always want a snapshot of broadcast ownership as of October 1 of odd numbered years – even wanting reports from owners of stations on October 1 who sold those stations before the report filing deadline.

While the FCC has given broadcasters more time to file the Biennial Ownership Reports, broadcasters should not forget the three important dates next week that we have highlighted in recent days. These dates are:

  1. The FCC also announced last week that FM radio (including translators and LPFM stations) will now use the LMS electronic filing systems for all applications for construction permits and license applications. This is another step in the FCC’s transition from the CDBS database that broadcasters have used for years, to LMS.
  2. Broadcasters need to remember to file by Monday, September 23, their ETRS Form Three. This form reports in detail on the station’s experiences in August’s Nationwide EAS Test. For more details, see our article here.
  3. Finally, commercial broadcasters need to remember to submit their annual regulatory fees by next Tuesday, September 24. For more information, see our articles here and here.

David Oxenford is MAB’s Washington Legal Counsel and provides members with answers to their legal questions with the MAB Legal Hotline. Access information here. (Members only access).

There are no additional costs for the call; the advice is free as part of your MAB membership.




State Budget Talks Stalled

Editor’s note:  Michigan experienced a State Government shutdown over the budget in 2007.   Stations should be prepared that should a shutdown occur again, many services may stop, including writing checks to vendors.

The Associated Press reported Wednesday (9/11) that budget talks between GOP Leaders and Democratic Governor Gretchen Whitmer have broken down
in a dispute centered over how much to direct to roads and bridges in the coming fiscal year after the sides previously could not reach consensus on a tax hike to permanently boost the transportation budget.

This came just days after they agreed to sideline negotiations over a long-term road-funding proposal to focus on passing a spending plan before an October 1 deadline.

GOP lawmakers said House-Senate conference committees will start approving some spending bills Thursday despite Whitmer not being on board. It could set the stage for a veto showdown after Whitmer and Republican leaders said Monday their No. 1 priority was enacting a budget.

“Our sincere efforts to reach consensus on budget targets came to an abrupt end when my governor ended negotiations this afternoon,” Republican Senate Majority Leader Mike Shirkey said in a written statement. “A negotiation must include parties that put forth genuine effort to compromise and reach consensus. We could not have predicted that our talks would break down over my governor wanting less money to fix the roads, but in the end, we could not accommodate her position.”

In response, Whitmer said “Republicans wasted two months by going on vacation this summer instead of staying in Lansing to negotiate. That’s the only reason we don’t have a budget right now. After months of inaction, the best plan they could come up with would steal money from other priorities and doesn’t fix the roads.”




New Concerns About Ads for E-Cigs and CBD (including Vaping Products)

David Oxenford - Color

David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

We’ve written many times about the legal concerns about advertising for various vices – including e-cigs (see, for instance, our article here) and CBD (see for instance our articles here and here). The issues with these products never seem to go away, and in recent days, they have become even more pronounced. On e-cigs and vaping products, we have advised that ads need to avoid health claims, must contain an FDA-required warning that they contain nicotine and can be addictive (see our articles here and here), and that they should not be aired during programming targeting children (see our article here). We recently also added a warning that action might be coming against flavored vaping products. This week, the headlines are full of news announcing a new Federal ban on flavored vaping products that may go into effect in the next few months, following a state ban that was recently instituted in Michigan. On CBD, in addition to concerns about laws that still make the product illegal in many states, we’ve discussed concerns about whether the product is legally produced from hemp (see our article here), and highlighted prohibitions on health claims (see our article here) and ads directed to an underage audience. This week, we saw another set of warnings from the FTC targeting advertisers making specific health claims about their products. These actions should serve as a warning to broadcasters and other media companies to proceed very carefully, only after receiving legal advice, before jumping into advertising for these products.

On the vaping front, Michigan recently became the first state to totally ban flavored e-cigarettes – including mint and menthol flavored vaping products. See the Michigan Department of Health and Human Services “Finding of Emergency” here, and the Governor’s announcement here. While there was some indication that the vaping industry might fight that ban, with the news yesterday that the Trump administration plans to ban these products on a Federal level (see this statement from the FDA indicating that it will soon announce specific rules for the Federal ban on these products), broadcasters need to be concerned about running advertising for products that may be considered illegal. With the recent rash of other serious health consequences of vaping, it is quite possible that further regulation of these products will follow, and so may lawsuits from the vaping industry. In the interim, the FDA notes that it will be running advertising to combat underage vaping and to warn about the potential health issues, so look for those advertising opportunities.

On CBD, we have written about FDA and FTC actions against advertisers who have made specific health claims for those products – a practice banned for essentially all of these products except for the one CBD-based prescription drug that has received FDA approval for use in combatting seizures (Epidiolex). Other health claims, even very general ones, have brought these admonitions from Federal agencies (as well as some state authorities). This week, three additional letters were released targeting the marketing of two other CBD producers (see the FTC statement here and its blog on the action here). These actions reinforce the admonition that, even if you can overcome all of the other potential state and Federal issues about CBD, be sure to avoid taking ads that make health claims.

Both vaping and CBD ads entail risks, and these risks are likely to increase in the near term. As noted, we can expect new rules federally banning flavored e-cigs, and we have been expecting for quite some time rules from the USDA on its framework for approval of state plans to regulate CBD and other hemp production, as well as FDA rules on the sale and marketing of CBD products. Keep a careful eye on these developments and consult with counsel in making any advertising decisions in any medium.

David Oxenford is MAB’s Washington Legal Counsel and provides members with answers to their legal questions with the MAB Legal Hotline. Access information here. (Members only access).

There are no additional costs for the call; the advice is free as part of your MAB membership.




GMR to Offer Commercial Radio Another Extension of Their Interim License – to March 31, 2020 While the Litigation Continues

David Oxenford - Color

David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

Last week, the Radio Music License Committee issued a press release that states that Global Music Rights (“GMR”), the new performing rights organization that collects royalties for the public performance of songs written by a number of popular songwriters (including Bruce Springsteen, members of the Eagles, Pharrell Williams and others) has agreed to extend their interim license for the performance of their music by commercial radio stations until March 31, 2020. The notice says that GMR will be contacting stations that signed their previous extension (through September 30, 2019) to extend the interim license on the same terms now in place. If you don’t hear from GMR by September 15, the RMLC suggests that you reach out to GMR directly (do not contact RMLC as they cannot help) to inquire about this extension.

As we have written before (see our articles here and here), GMR and the RMLC are in litigation over whether or not the rates set by GMR should be subject to some sort of antitrust review, as are the rates set by ASCAP, BMI and even SESAC (see our article here on the SESAC rates). Earlier this year, the lawsuits were consolidated in a court in California, where litigation is ongoing (see our article here about the transfer). In the interim, there is no license to play the GMR music outside the Interim license offered to all commercial stations, or individually negotiated licenses with the company. Commercial stations that play GMR music should either have a license or should discuss carefully with counsel their potential options and liabilities if they continue to play GMR music. Do not ignore the potential liability as, under copyright law, there are substantial “statutory damages” of up to $150,000 per song for infringement. Noncommercial stations are not covered by this license being offered by GMR to RMLC members, as public performance royalties for noncommercial broadcasting are set by the Copyright Royalty Board (see our article here for more details on the royalties for noncommercial stations). Those stations should also discuss their obligations for royalties under the CRB decision with their counsel.

David Oxenford is MAB’s Washington Legal Counsel and provides members with answers to their legal questions with the MAB Legal Hotline. Access information here. (Members only access).

There are no additional costs for the call; the advice is free as part of your MAB membership.




MAB Files Comments on MI Courts Administrative Rules

In an effort to protect media coverage of courtroom proceedings, the MAB has filed comments to a Proposed Amendment to Rule 8.115 of the Michigan Court rules.  In its comments, the MAB respectfully requests the elimination of any language in the Proposed Amendment which encroaches on or conflicts with Administrative Order 1989-1, which provides guidelines shall apply to film or electronic media coverage of proceedings in Michigan courts.

In its comments, the MAB also said that “it would also be helpful if the Proposed Amendment contained a specific disclaimer to the effect that it is not intended to implicate broadcast media coverage of courtroom proceedings as governed by Administrative Order 1989-1.”

Read the MAB comments here.

Photo from Subterranean via Wikipedia. Licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license




Governor Whitmer Bans Flavored E-Cigarettes in State

Governor Gretchen Whitmer

The MAB is researching the ramifications of this law on advertising now and in the future. Once we get guidance from our Washington FCC attorney David Oxenford, we will pass on his advice to MAB members.  Watch this space.

Whitmer announced Wednesday (9/4) she was moving to ban flavored e-cigarettes in Michigan by issuing an emergency rule that would ban their sale in stores and online. She said she was doing so to protect Michigan’s children, who she said are getting hooked on nicotine through vaping products marketed toward children.

The Governor added that she was confident she had the authority to ban the products and had consulted with both her attorneys and the Attorney General prior to the announcement. She said the state was on “solid legal footing” in doing this and is prepared to defend it in court if necessary. Under the emergency declaration, that rule can exist for six months and can be renewed for an additional six months before going through the state’s administrative rules process, which is overseen by the legislature.




FCC Releases Final Regulatory Fees With Some Relief for Broadcasters

Lauren Lynch Flick

By Lauren Lynch Flick, Pillsbury Winthrop Shaw Pittman LLP

The FCC has released its finalized schedule of annual Regulatory Fees for Fiscal Year 2019, and thanks to the collective efforts of all 50 State Broadcasters Associations and the National Association of Broadcasters, there is some good news for radio stations and satellite television stations.

But before we get to that, some information for you from the FCC’s Public Notice released August 28 on filing requirements. Fees will be due by 11:59 p.m. EDT on September 24, 2019. You must file via the FCC’s Fee Filer system, which is available for use now. You may pay online via credit card or debit card, or submit payment via Automated Clearing House (ACH) or wire transfer. Remember that $24,999.99 is the daily maximum that can be charged to a credit card in the Fee Filer system. As a result, many stations may have to pay their fees using the other methods.

Television broadcast stations will see an unfamiliar number in the “Quantity” box when they go to pay. This relates to the FCC’s phase-in of a population-based methodology for calculating television station fee amounts. It cannot be changed and should not be a cause for concern. Regulatees whose total fee amount is $1,000 or less are once again exempt and do not need to pay.

In most years, the outcome of the annual Regulatory Fee battle ends with the FCC’s various regulatees rolling their collective eyes and murmuring “just tell me how much I have to fork over.” This year’s Regulatory Fee proceeding had some surprises, however. When the proposed fee amounts were first announced, they contained a dramatic increase in year-over-year fee amounts for most categories of radio stations. Yet, the reason for this sudden increase was neither addressed by the FCC nor readily apparent from the FCC’s brain-numbing summary of its calculation process.

In response, all 50 State Broadcasters Associations and the NAB filed comments pressing the FCC to revisit its fee methodology and to explain or correct what appeared to be flawed data used to calculate broadcast Regulatory Fee amounts. In particular, they pressed the FCC to explain why the estimated number of radio stations slated to cover radio’s share of the FCC’s budget had inexplicably plummeted between 2018 and 2019, resulting in each individual station having to shoulder a significantly higher fee burden.

In its regulatory fee Order, the Commission acknowledged that its estimate of the number of radio stations that would be paying Regulatory Fees in 2019 had been “conservative”, and failed to include 553 of the nation’s commercial radio stations. Once these stations were added to the total number of radio stations previously anticipated to pay Regulatory Fees, the impact was to reduce individual station fees from those originally proposed by 9% to 13%, depending on the class of radio station.

This adjustment prevented what would have otherwise been a roughly $3 million dollar overpayment by radio stations nationwide, significantly exceeding the FCC’s cost of regulating radio stations in FY 2019. The fact that the FCC listened to the concerns of broadcasters, investigated the discrepancy between 2019 station data and that of prior years, and made appropriate changes to fix the problem, is heartening, particularly given that stations’ only options are paying the fees demanded, seeking a waiver, or turning in their license.

Terrestrial satellite TV stations also received a requested correction to their fee calculations. As noted above, the FCC is transitioning from a DMA-based fee calculation methodology to a population-based methodology for TV stations. To phase in this new methodology, the Commission proposed to average each station’s historical and population-based Regulatory Fee amounts and use that average for FY 2019 before moving to a fully population-based fee in FY 2020.

In calculating the average of the “old” and “new” fees, however, the FCC neglected to use the reduced fee amount historically paid by TV satellite stations, which is much lower than that paid by non-satellite TV stations in the same DMA. As a result, a TV satellite station might have seen its 2019 fees jump by tens of thousand of dollars over FY 2018, only to see them drop again in FY 2020. The FCC acknowledged that its intent in adopting the phase-in was not to unduly burden TV satellite stations in FY 2019, and it therefore recalculated those fees using the lower historical fee amounts traditionally applied to such stations.

While these reductions are a rare win against ever-increasing regulatory fees, there remain big picture issues that Congress and the FCC need to address in the longer term. Significant among these is the FCC’s reliance on collecting the fees that support its operations from the licensees it regulates (a burden not a benefit), while charging no fees to those that rely on the FCC’s rulemakings to launch new technologies on unlicensed spectrum or obtain rights against other private parties via the FCC’s rulemaking processes (a benefit not a burden). Such a narrow approach to funding the FCC makes little sense, particularly where it unduly burdens broadcasters, who, unlike most other regulatees, have no ability to just pass those fees on to consumers as a line item on a bill.

We live in a time of disruption. Disruption affects all areas of the economy, but surely the most affected has to be the communications sector. If any government agency can claim to be the regulator of this disruption, it must surely be the FCC. Yet despite the FCC’s position at the forefront of these changes, its Regulatory Fee process is mired in a system in which broadcasters are left holding the bag for more than 35% of the FCC’s operating budget (once again, burden not benefit). Even as the FCC spends more of its time and resources on rulemakings, economic analysis, and technical studies surrounding new technologies and new entrants into the communications sector whose main goal is to nibble away at broadcasters’ spectrum, audience, and revenue, it still collects regulatory fees only from the licensees and regulatees of its four “core” bureaus – the International Bureau, Wireless Telecommunications Bureau, Wireline Competition Bureau, and Media Bureau. It’s an old formula, and it no longer works.




Bill Introduced to Prevent Local Drone Regulation

State Rep. Michele Hoitenga (R-102)

On August 28, State Representative Michele Hoitenga (R-102) introduced legislation to prohibit local regulations on drones that may be more restrictive than state law.

H.B. 4852 proposes that “except as expressly authorized by statute, a political subdivision shall not enact or enforce an ordinance, regulation, or resolution that regulates the ownership or operation of unmanned aircraft or otherwise engage in the regulation of the ownership or operation of unmanned aircraft. A political subdivision that enacts or enforces an ordinance, regulation or resolution under the exception provided in this subsection shall not enact or enforce an ordinance, regulation or resolution that is more restrictive than the provisions of this act or any other law of this state concerning the ownership or operation of unmanned aircraft.”

The bill has been referred to the Committee on Communications and Technology.




When a Broadcast Advertiser Becomes A Political Candidate, What is a Station to Do?

David Oxenford - Color

David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

In many states, we are in election season for local offices, which has resulted in a question that has come up repeatedly in the last few weeks about local candidates – usually running for state or municipal offices – who appear in advertisements for local businesses that they own or manage. Often times, these individuals will appear in their business’ ads outside of election season, and don’t want to stop appearing in those ads during their bid for elective office. We wrote about this question in an article published two years ago and again a bit more than a year ago. But, as the question continues to come up, it is worth revisiting the subject. What is a station to do when a local advertiser decides to run for office?

While we have many times written about what happens when a broadcast station’s on-air employee runs for office (see, for instance, our articles here, here and here), we have addressed the question less often about the advertiser who is also a candidate. If a candidate’s recognizable voice or, for TV, image appears on a broadcast station in any “positive” way, whether it is political in nature or not, it is considered a “use” by the political candidate. What is a “positive” use? Basically, it is any appearance that is not negative to the candidate (i.e., it is not in an ad attacking that candidate). To be a positive “use” by the advertising candidate, the appearance must also be outside of an exempt program (in other words, outside of a news or news interview program which, as we wrote here, is a very broad category of programming exempt from the equal time rules).. “Uses” can arise well outside the political sphere, so Arnold Schwarzenegger movies were pulled from TV when he was running for office, as were any re-runs of The Apprentice and The Celebrity Apprentice featuring Donald Trump. An appearance by a candidate in a commercial for his or her local business is similarly a positive “use” which needs to be included in a station’s political file (providing all the information about the sponsor, schedule and price of the ad, as you would for any pure political buy). But that does not necessarily mean that a station needs to pull the ad from the air.

A commercial for a business is almost always a paid spot, where the station is receiving money to air the ad (and not an unpaid one like the appearance in an entertainment program, where the station does not get paid to air the comedy program or movie in which a candidate appears). Thus, a “use” arising in a paid commercial gives rise to equal opportunities for other opposing candidates to buy time on the station. The station usually will not be required to provide free time to opposing candidates (but watch for candidate appearances in PSAs, usually by incumbents, as that might give rise to free time for opposing candidates). If the station has plenty of commercial inventory and does not mind selling spots to the opposing candidate for the lowest unit rates that apply during the political windows (45 days before a primary and 60 days before a general election) to spots purchased by a candidate’s authorized campaign committee (the opposing candidate gets lowest unit rate for a spot run in connection with his or her campaign, even if the commercial business bought the spot featuring their employee-candidate at regular commercial rates), a station may decide to continue to air the business spots with the candidate’s appearance. But if inventory is tight, or the station wants to avoid having to sell political ads to candidates in a particular state or local race (as state and local candidates, unlike those running for federal office, have no right to access to buy spots), the station may want to tell the business that the candidate can’t appear in the business’ spots once the candidate becomes legally qualified, as the running of those spots featuring the voice or image of the candidate would require the station to provide equal time to the opposing candidates upon request.

Note that the “no censorship” provision of the Communications Act and the lowest unit rate provisions likely do not apply to the business spots even though they contain the voice or image of a candidate. That is because these spots are not uses by the candidate or the candidate’s authorized campaign committee which are covered by the rules providing for lowest unit rates and the “no censorship” provisions of the law. As the commercial spots are not by the candidate or his or her political committee, but instead they are commercials by a business that happen to be “uses,” normal commercial rates can be applied rather than lowest unit rates (though the opposing candidates do get LUR for their equal time ads run during a political window).

Note, also, that business spots that advertise a business in which the candidate’s name appears, but where the actual candidate does not appear by voice or picture, probably do not trigger any equal opportunity issues. It is the recognizable voice or picture of the candidate that triggers the equal opportunity and public file requirements. For those of us here in the DC area, we are accustomed to seeing ads for the local Volvo dealer even during election season, even though that dealership is named after a politician currently serving in Congress.

As in all areas of political broadcasting, any analysis of the implications of any on-air appearance of a candidate can be a very nuanced matter, and small changes in the facts can result in big changes in the legal conclusions that apply. So if these situations arise, consult with the station’s legal counsel before making any decision as to how to treat these kinds of ads. This article is just meant to note that there may be options for dealing with the candidate-advertiser if he or she wants to stay on their business’ spots during an election period, depending on the station’s circumstances. For more general information about the rules that apply to political broadcasting, see our Guide to Political Broadcasting, here.

David Oxenford is MAB’s Washington Legal Counsel and provides members with answers to their legal questions with the MAB Legal Hotline. Access information here. (Members only access).

There are no additional costs for the call; the advice is free as part of your MAB membership.