19-3: FCC releases draft Order in LPFM/NCE "administrative" rule change proceeding

The FCC has released a draft Report and Order (R&O) in MB Docket 19-3, the Noncommercial Educational (NCE) and Low Power FM (LPFM) administrative proposal.  The R&O will be voted on at the prior to the December 12, 2019 FCC open meeting.  Rules will not be implemented until they are published in the Federal Register.  The following is a run-down of the changes in the draft R&O:

NCE governing documents: Eliminate requirements on new NCE applications that governing documents include provisions that require applicants remain local and that they maintain ownership diversity.  This does not remove the requirements for localism and diversity to obtain those points, just the amendments to the organization's governing documents.

NCE Divestiture pledges: NCE applicants with other NCE holdings that would result in them not being able to take the diversity point would be permitted to make a statement that they would divest of the other facility in order keep the diversity point.  Currently, this rule only applies to NCE applicants who are promising to divest their LPFM station prior to the NCE station going on the air.

NCE MX tie-breaker process: NCE applications that are mutally exclusive and are tied on points currently go into two tie breaker evaluations.  First, the number of other stations that the NCE licensee is looked at.  The applicant with the fewer stations will be the winner. If there is still a tie, then the applicant with the fewer pending applications in the current window is the winner.  If a tie remains, the applicants will go to time sharing.  19-3 adds a "second chace rule", a third tie-breaker which gives priority to an NCE applicant that participated in a previous filing window (2007 or 2010) and was dismissed on points or a time-share showing.  The organization must have been in continious existence since the previous window.  NCE tie-breaker process comes more in line with LPFM where involuntary time shares are issued non-renewable licenses (which could made renewable if the time share groups reach a voluntary agreement), codify the 90-day settlement period in the rules and the use of local presence dates to narrow the field to three when there are more than 3 tied applicants.

Clarify the "holding period" rule for NCE stations: Rules are clarified to state that NCE stations must maintain their comparatve qualifications for at least 4 years if the application was granted through the point process or the Section 307(b) (fair distribution of facilities) process.

LPFMs with a "pirate past": LPFM applications that are dismissed because a party on the applicaiton will not be allowed to amend their application and request nunc pro tunc reinstatement by removing the person(s) who had been previously found to have been engaged in unlicensed operation in violation of 47 USC §301.

LPFM time sharing: FCC partially implements REC's viable time share proposal by limiting the number of applicants in a time share proposal to three applicants.  The limit of three applicants can assure that applicants will be able to meet their 8 hour localism pledges.  We note that the draft NPRM does not change the 10 hour a week minimum for a time share proponent however, the 3 applicant limit will help address the point-stacking issues raised by REC in this proceeding.  FCC will permit time share proponents to reach an agreement during the filing window in addition to reach one after the window closes.  Rejected "mini-windows" (open a restricted filing window if a time share proponent drops out after grant).  Implements a new "do over" process that in the event that an applicant that aggregated their points drops out during the application process, the FCC will perform another time share settlement window consisting of the remaining applicants. 

Certain board changes during application process are now considered "minor":  All board changes involving applicants that are government agencies will be considered "minor".  Gradual board changes would be considered minor even if the overall change exceeds 50% of the board from the original application.

Site assurance: Applications for orginal construction permits must include a contact name and phone number for the owner of the proposed antenna site.

Tolling: Tolling will be automatic (i.e. don't need to be specifically requested by the applicant) for applications that involve conditions on a construction permit (such as contingent program authority), grants subject to administrative or judicial review (such as petitions for reconsideration) and at REC's request, applications near international borders that are conditionally granted while still pending coordination with the foreign administration.

Period of construction: Granted REC's request to extend all construction permit periods from 18 to 36 months.  Upon implementation of the new rules, any pending construction permits will be extended from 18 to 36 months.

Changes to LPFM assignment and transfer policy: Granted REC's request to eliminate the 3-year holding period on the assignment of licenses.  Implemented our "failing station" proposal to permit the assignment of a construction permit after 18 months have elapsed.  Within the first 4 years, licenses where the original construction permit was granted based on the comparative review (points) will only be assigned to another organization with the same or more points and have a local establishment date the same or older than the granted applicant.  The rules regarding consideration (payment) in connection with assignments and transfers was changed from language regarding the depreciated fair-market value of equipment to "legitmate and prudent expenses of the assignor or transferor.  Legitimate and prudent expenses are those expenses reasonable incurred by the assignore or transferor in obtaining and constructing the station (e.g. expenses in preparing an application, in obtaining and installing broadcasting equipment to be assigned or transferred, etc."  Operation costs such as rent, salaries, utilities, music licensing fees, etc. are not recoverable.

REC is still reviewing the details of the R&O but overall, we do support it.  We feel that this R&O is the writing on the wall for a filing window for new reserved-band (88.1~91.9) noncommercial educational FM broadcast stations.  REC would like to see this window sometime in 2020.  The FCC still needs to work out MB Docket 19-193, the LPFM technical proposal and once an order is adopted on that proceeding, we can look at a filing window for new LPFM stations.

Revised December 10, 2019 to clarify the redefined consideration limitations on assignments and transfers.