The FCC's abandonment of sponsorship identification regulation & anonymous special interest group political advertising.

• Author: Raju, Sushma

1. INTRODUCTION AND OVERVIEW

   "Voters have a right to know who is really behind all those glossy and sometimes wildly misleading ads we see on TV." (1)

   --Former FCC Commissioner Michael J. Copps, June 9, 2011

   The modern political landscape in the United States is one dominated by increasingly expensive political campaigns, funding from undisclosed donors, and barrages of political advertising. In the 2012 presidential election, candidates Barack Obama and Mitt Romney and their corresponding parties spent a total of $1.8 billion on their campaigns, and outside special interest groups spent an additional $550 million. (2) Both candidates outspent counterparts in all previous presidential elections, and much of that spending went toward television advertisement (3)

   Ensuring that voters know who is behind all those "glossy and sometimes wildly misleading ads" when viewing political advertisements has long been the duty of the Federal Communications Commission ("FCC"), and it is an important one. (4) With the ubiquity of political advertisements in today's election cycles, voters would be hard pressed to escape the constant stream of political propaganda. Federal sponsorship identification law requires broadcasters to identify the individuals or groups sponsoring those persuasive political advertisements, and this area of law has a specific purpose: to protect "[t]he public's basic right to know by whom it is being informed." (5) Theoretically, sponsorship announcements for political advertisements should be clueing viewers in to the identities of the special interest groups; such groups spend significant sums of money to ensure the election of candidates who promise to advance the groups' agendas once in office. And theoretically, sponsorship identification law is written to reveal to viewers the identities of even those groups that would prefer to remain unknown. But in practice, the FCC and federal courts have stripped sponsorship identification law of its power to inform voters about the individuals and entities seeking to influence and persuade them.

   This Note examines the FCC's historical and current approaches to sponsorship identification regulation in political advertisements and the resulting consequences for voting viewers in upcoming elections. Part II offers a brief primer on the development and current status of the sponsorship identification laws. Part III discusses the substance of the 1944, 1963, and 1975 revisions to the law made by the FCC and Congress. This Part also takes note of the events and industry changes that prompted regulation revision and examines prominent enforcement decisions by the FCC and federal courts during that period. Part IV focuses on the growing prevalence of special interest group and political action committee ("PAC") advertising and its effects on voters and the political landscape. Part V examines an FCC decision published in 2014 in which the Commission refused to enforce the regulations for two political advertisements sponsored by special interest groups. The analysis of the 2014 decision situates the FCC's response within the framework of the agency's historical approach to the sponsorship identification regulations detailed in Part III. It also demonstrates how the Commission's enforcement of these regulations has steadily whittled away the responsibilities that broadcasters have to their viewers. Finally, this Note concludes by exploring the consequences of the FCC's current stance on enforcement for the broadcast industry, the public, special interest groups, and the Commission.

2. A BRIEF PRIMER ON SPONSORSHIP IDENTIFICATION LAWS

   The federal government's first attempt at regulating American airwaves occurred in 1927. Congress passed the Radio Act of 1927, (6) implementing a slew of regulations related to the structure and function of the burgeoning radio industry. Among those regulations, the first sponsorship identification requirement slipped uneventfully into section 19 of the statute. The section required stations to orally identify any content for which they received consideration and the "person, firm, company, or corporation" furnishing that consideration or content. (7) Within five years, Congress revisited the regulation of the communications industry and passed the Communications Act of 1934 ("Communications Act"), (8) which provided for the creation of the FCC. The sponsorship identification provision in section 19 of the Radio Act of 1927 migrated into the new statute mostly unchanged. (9) In 1944, the FCC promulgated its own sponsorship identification regulations. (10) Through Commission and Congressional action, sponsorship identification laws have been substantively amended on four occasions--1960, (11) 1975, (12) 1992, (13) and 2012. (14) The current regulations largely match section 317 of the Communications Act, though the former contains additional specifications for the announcements. (15)

   The current regulations can be understood as imposing three general duties on broadcasters: (1) the general announcement requirement; (2) the reasonable diligence requirement; and (3) the duty to disclose the ultimate or true sponsor. First, the general announcement requirement directs broadcasters to make an announcement for any content aired in exchange for money or other consideration, and broadcasters must announce "[b]y whom or on whose behalf' the payment was made. (16) In simpler terms, broadcasters must identify airtime that has been paid for, and they must identify who paid for it. Second, the regulations require broadcasters to "exercise reasonable diligence to obtain from [their] employees" and others any information necessary to make the sponsorship announcement. (17) On its face, this language imposes a duty on broadcasters to go beyond blindly accepting information provided by or about the purported sponsor of a political advertisement. Third, the regulations require broadcasters to "fully and fairly disclose the true identity of the person or persons ... or other entity by whom or on whose behalf [payment or consideration for the advertisement] is made." (18) The regulation further clarifies that where the entity paying for the advertisement acts on behalf of another and "such fact is known or by the exercise of reasonable diligence ... could be known to the station, the announcement shall disclose the identity" of the person or entity on whose behalf the advertisement is placed. (19) The language of this final requirement builds upon the duty imposed by the second to exercise "reasonable diligence." (20) Broadcasters are prohibited from willfully ignoring situations in which a middleman purports to be the true sponsor of an advertisement, and the regulations unequivocally require that broadcasters identity the true sponsor in those instances. Though the regulations impose other requirements on broadcasters, the three aforementioned duties are most relevant for the purpose of this Note. (21)

3. THE HISTORICAL DEVELOPMENT & ENFORCEMENT OF SPONSORSHIP IDENTIFICATION LAW

   In the thirty years following the FCC's promulgation of the 1944 regulations, the Commission inched toward providing the public with greater information about sponsors. (22) After 1975, however, the Commission's enforcement decisions evidenced a sea change. Since that time, the FCC has slowly stripped meaning from the regulatory provisions requiring broadcasters to exercise reasonable diligence and identify the true sponsors of political content, leaving the public with incomplete or inaccurate information about the advertisers who seek to persuade them. (23)

   1. The Early Years of Enforcement Under the Communications Act and the Commission's New Regulations

      In the years leading up to American involvement in World War II, business and labor movement voices competed for the opportunity to present their political viewpoints on the radio. (24) The incidence of unattributed political messaging on the airwaves increased as the 1944 presidential election between Franklin D. Roosevelt and Thomas Dewey neared, prompting the FCC to remind broadcasters that section 317 of the Communications Act applied to political content. (25) In December 1944, the Commission unveiled its first set of regulations governing sponsorship identification for commercial, political, and otherwise "controversial" content. (26) Like the statute, the regulations were limited, only imposing on broadcasters a general duty to identify sponsored content.

      Nevertheless, broadcasters soon sought further clarification as to "the nature of the burden of investigation" imposed on them to identify sponsors and the process by which the FCC would determine whether that burden had been satisfied. (27) The Commission provided guidance in a public letter to the Albuquerque Broadcasting Company, writing that the regulations required broadcasters to take "all reasonable measures" of investigation to determine the sponsors of political messages, and that the measure of the reasonableness of the investigation varied by the circumstances of each case. (28) The Commission's position recognized the public's right to a certain level of information about the identity of a sponsor, but acknowledged that the actions expected of the broadcaster in investigating and providing that information may well vary from one announcement to the next. (29) More importantly, it suggested broadcasters would have to conduct some investigation in order to meet their regulatory burden, a position it has since abandoned. (30)

   2. The Payola Scandal Prompts a Congressional Amendment to the Communications Act and the FCC Abashedly Follows Suit

      In the late 1950s, the "payola" scandal grabbed the attention of the American public and Congress, ultimately prompting a revision of the Communications Act and the FCC's regulations. The term "payola" most often referred to the practice of record companies secretly paying disc jockeys to play certain songs on...