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Federal Register / Vol. 86, No. 115 / Thursday, June 17, 2021 / Rules and Regulations licensee memorialize its inquiries to track compliance and create a record in the event of any future Commission inquiry.
43. The Commission requires that a licensee investigate the nature of the party to whom it is leasing airtime both at the time the agreement between the parties is executed and at renewal. As part of its inquiries, the licensee should also inquire whether the lessee is aware of anyone further back in the chain of producing/transmitting the programming who might qualify as a foreign governmental entity and has provided some form of consideration as an inducement to air the programming.
To the extent that the lessee confirms that it still qualifies as a foreign governmental entity, no other investigation on the part of the licensee is necessary beyond ensuring that the disclosures specified by the rules continue to be made. If the lessee indicates that it is no longer a foreign governmental entity, then programming disclosures are no longer required under the rules after the licensee independently verifies that this is the case.
44. The Commission requires reasonable diligence to be conducted not only at the time of the agreement is entered into, but also at renewal time.
The Commission recognizes the lessees status may change, particularly if the duration of the lease agreement is for a term of years. That is, over the course of the lease, not only might the lessee in fact become, due to actions on its part, a foreign governmental entity, for example, by entering into an agency relationship pursuant to FARA, but it may also be the case that the lessee contests the Department of Justices designation of the lessee as a FARA
agent such that the lessees name only appears on the FARA list subsequent to the establishment of the lease agreement. Moreover, the Commission requires the licensee to memorialize the results of its diligence in some manner for its own records and maintain this documentation for the remainder of the then-current license term or one year, whichever is longer. In this manner, the licensee will have the necessary documentation should the Commission inquire about a particular lease agreement or particular programming aired on the licensees station pursuant to the lease of time.
45. In addition, the Commission strongly encourages licensees to include a provision in their lease agreements requiring the lessee to notify the licensee about any change in the lessees status such as to trigger the foreign sponsorship identification rules. The
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Commission expects that inclusion of such a provision will impress upon the lessee the importance of its rules and result in a statement to the licensee if there is a change in status. Some commenters assert that in lieu of the clear objective steps laid out above for meeting the statutory reasonable diligence requirement, the Commission should instead require broadcasters to engage in reasonable diligence only if they have reason to believe that their lessee is affiliated with a foreign governmental entity. The Act does not, however, contain a threshold showing of reason to believe in advance of requiring that broadcasters engage in reasonable diligence. Moreover, the adoption of such a subjective standard would make the rules adopted in the instant Order virtually ineffectual and unenforceable by leaving it up to the broadcasters discretion whether to check the status of a lessee, rather than relying on quick objective searches of reliable government databases. Some of those that propose this reason to believe standard assert by way of example that there is no reason to believe that a church or school group with whom a licensee has had an extended relationship is likely to be, or have any connection with, a foreign governmental entity, and, hence there is no reason to inquire about such a lessees status or its programming. The practical implication of linking the reasonable diligence steps described above to a broadcasters belief based on its previous long-term relationships with given lessees, however, is that only new lessees or perhaps those with characteristics unknown to the broadcaster will be subject to reasonable diligence, an approach that would seem to favor existing lessees at the expense of new and diverse entrants and to jeopardize the Commissions efforts to ensure broadcast audiences know who is seeking to persuade them.
46. Some commenters suggest that the requirement to check the FARA list is unduly burdensome. The Commission finds that limiting the application of its foreign sponsorship disclosure rules to situations involving leasing agreements and also narrowing the scope of the term political program to align with prior interpretations, should greatly diminish the overall compliance burden on licensees by limiting the circumstances in which such searches will be necessary to those areas that raise important issues of public concernas compared to the proposal laid out in the NPRM, which applied to all programming arrangements and
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required a special disclosure for all programming provided by a foreign governmental entitywhile taking necessary steps to ensure broadcasters will identify those instances where foreign sponsorship identification is necessary. In addition, the objective tests laid out above should facilitate compliance, by specifying what licensees have to do to comply with the reasonable diligence requirement in terms of straightforward and limited search requirements that minimize the burden on broadcasters and are necessary to ensure that the public is adequately informed about the true identity of a programmers ties to a foreign government. Thus, the Commission finds that these reasonable diligence inquiries do not pose undue burden on broadcast licensees and, more importantly, will help ensure that the licensee is cognizant of whether the entity seeking to lease time on its station is a foreign governmental entity.
47. Lessees Obligations. As previously discussed, pursuant to section 507, the lessee also holds an independent obligation to communicate information to the licensee relevant to determining whether a disclosure is needed. In this regard, the Commission adopts the tentative conclusion contained in the NPRM that sections 507b and c of the Act impose a duty on the broker/lessee to inform the licensee to the extent it is aware of any payments or other valuable consideration associated with the programming such as to trigger a disclosure. No party commented on the Commissions tentative conclusion that sections 507b and c of the Act impose a duty on the broker/lessee to inform the licensee to the extent it is aware of any payments or other valuable consideration associated with the programming. As stated in the NPRM, in its 1960 amendments to the Act, Congress imposed on non-licensees associated with the transmission or production of programming a requirement to disclose any knowledge of consideration paid as an inducement to air particular material. Congress added this provision in recognition that individuals other than the licensee were increasingly involved in programming decisions. Thus, consistent with the statute, the Commission concludes that it is incumbent on a lessee to convey to the licensee its knowledge of any payment or consideration provided by, or unpaid programming received as an inducement from, an entity or individual that triggers the foreign sponsorship identification rules laid out in this Order.

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