Rule2026-06866
Review of Foreign Ownership Policies for Broadcast, Common Carrier and Aeronautical Radio Licensees
Primary source
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Published
April 9, 2026
Effective
May 11, 2026
Issuing agencies
Federal Communications Commission
Abstract
In this document, the Federal Communications Commission (Commission or FCC) adopted a Report and Order to update foreign ownership rules for common carrier and broadcast licensees to clarify the Commission's review under section 310(b) of the Communications Act of 1934. With regard to common carrier licensees, the Report and Order adopted rules to codify existing policy regarding which entity is the controlling U.S. parent; codify the Commission's advance approval policy regarding certain deemed voting interests; require identification of trusts and trustees; extend the remedial procedures and methodology to privately held companies; add requirements regarding the contents of remedial petitions; require the filing of amendments as a complete restatement to petitions for declaratory ruling; and clarify U.S. residency requirements. For broadcast licensees only, the Report and Order covers: how the Commission should process applications filed by a broadcast licensee during the pendency of a remedial petition for declaratory ruling under section 310(b)(4); and other foreign ownership considerations related to processing applications for NCE and LPFM stations. Regarding broadcast licensees only, the Report and Order directs the Media Bureau to issue processing guidelines detailing how the Commission would process applications filed by a broadcast licensee during the pendency of a remedial section 310(b)(4) petition; and clarifies other foreign ownership considerations related to processing applications for noncommercial educational (NCE) and low power FM (LPFM) stations.
Full Text
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[Federal Register Volume 91, Number 68 (Thursday, April 9, 2026)]
[Rules and Regulations]
[Pages 17863-17887]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-06866]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 1
[GN Docket No. 25-149; FCC 26-3; FR ID 294037]
Review of Foreign Ownership Policies for Broadcast, Common
Carrier and Aeronautical Radio Licensees
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this document, the Federal Communications Commission
(Commission or FCC) adopted a Report and Order to update foreign
ownership rules for common carrier and broadcast licensees to clarify
the Commission's review under section 310(b) of the Communications Act
of 1934. With regard to common carrier licensees, the Report and Order
adopted rules to codify existing policy regarding which entity is the
controlling U.S. parent; codify the Commission's advance approval
policy regarding certain deemed voting interests; require
identification of trusts and trustees; extend the remedial procedures
and methodology to privately held companies; add requirements regarding
the contents of remedial petitions; require the filing of amendments as
a complete restatement to petitions for declaratory ruling; and clarify
U.S. residency requirements. For broadcast licensees only, the Report
and Order covers: how the Commission should process applications filed
by a broadcast licensee during the pendency of a remedial petition for
declaratory ruling under section 310(b)(4); and other foreign ownership
considerations related to processing applications for NCE and LPFM
stations. Regarding broadcast licensees only, the Report and Order
directs the Media Bureau to issue processing guidelines detailing how
the Commission would process applications filed by a broadcast licensee
during the pendency of a remedial section 310(b)(4) petition; and
clarifies other foreign ownership considerations related to processing
applications for noncommercial educational (NCE) and low power FM
(LPFM) stations.
DATES: Effective date: These rules are effective May 11, 2026.
FOR FURTHER INFORMATION CONTACT: Brenda D. Villanueva,
Telecommunications and Analysis Division, Office of International
Affairs, at <a href="/cdn-cgi/l/email-protection#480a3a2d262c29661e21242429263d2d3e29082e2b2b662f273e"><span class="__cf_email__" data-cfemail="9ad8e8fff4fefbb4ccf3f6f6fbf4efffecfbdafcf9f9b4fdf5ec">[email protected]</span></a> or (202) 418-7131. For additional
information concerning the Paperwork Reduction Act (PRA) information
collection requirements contained in this document, contact Cathy
Williams at 202-418-2918, or via the internet at
<a href="/cdn-cgi/l/email-protection#a2e1c3d6cadb8cf5cbcececbc3cfd1e2c4c1c18cc5cdd4"><span class="__cf_email__" data-cfemail="efac8e9b8796c1b8868383868e829caf898c8cc1888099">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report
and Order, in GN Docket No. 25-149; FCC 26-3, adopted on January 29,
2026, and released on January 30, 2026. The full text of this document
is available for public inspection and copying via ECFS at <a href="http://apps.fcc.gov/ecfs">http://apps.fcc.gov/ecfs</a> and the FCC's website at <a href="https://docs.fcc.gov/public/attachments/FCC-26-3A1.pdf">https://docs.fcc.gov/public/attachments/FCC-26-3A1.pdf</a>. Documents will be available electronically
in ASCII, Microsoft Word, and/or Adobe Acrobat. Alternative formats are
available for people with disabilities (Braille, large print,
electronic files, audio format), by sending an email to <a href="/cdn-cgi/l/email-protection#62040101575256220401014c050d14"><span class="__cf_email__" data-cfemail="a9cfcaca9c999de9cfcaca87cec6df">[email protected]</span></a>
or calling the Commission's Consumer and Governmental Affairs Bureau at
(202) 418-0530 (voice), (202) 418-0432 (TTY).
Final Regulatory Flexibility Analysis. As required by the
Regulatory Flexibility Act (RFA), the Commission has prepared this
present Final Regulatory Flexibility Analysis (FRFA) of the possible
significant economic impact on small entities by the policies and rules
proposed in this Report and Order. The Commission will send a copy of
this Report and Order, including this FRFA, to the Chief Counsel for
Advocacy of the Small Business Administration (SBA). In addition, the
Report and Order and FRFA (or summaries thereof) will be published in
the Federal Register.
Synopsis
Discussion
In this Report and Order, we codify and clarify longstanding
policies and practices with respect to the Commission's foreign
ownership requirements and streamline its review processes under
Section 310(b) of the Act. Certain updates apply to common carrier and
broadcast licensees, and others apply only to broadcast licensees
subject to section 310(b), as discussed below. Through these
streamlining efforts, we promote efficiency, clarity, and consistency
of our rules while continuing to analyze foreign investment to ensure
that it complies with statutory requirements.
A. Common Carrier and Broadcast Licensees
For common carrier and broadcast licensees,\1\ we adopt the
proposals in the Notice of Proposed Rulemaking 90 FR 26684 (Section 310
NPRM) to codify certain longstanding foreign ownership policies and
practices to streamline the Commission's review process under Section
310(b). Specifically, we: (1) codify existing policy regarding which
entity in the ownership chain should be designated as the controlling
U.S. parent; (2) codify the Commission's advance approval policy
regarding certain deemed voting interests; (3) amend our rules to
clarify the requirement to identify trusts and trustees in petitions;
(4) amend our rules to extend the remedial procedures to privately held
companies and continue to allow privately held companies to use the
methodology on a case-by-case basis; (5) amend our rules to clarify
requirements regarding the contents of remedial Section 310(b)
petitions; (6) specify the process of filing amendments to Section
310(b) petitions; and (7) clarify U.S. residency requirements.
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\1\ We refer to broadcast, common carrier wireless, aeronautical
en route and aeronautical fixed radio station applicants and
licensees (including broadcast permittees) and to common carrier
spectrum lessees collectively as ``licensees'' unless the context
warrants otherwise. We also use the term ``common carrier'' or
``common carrier licensees'' to encompass common carrier wireless,
aeronautical en route and aeronautical fixed radio station
applicants and licensees, and spectrum lessees. ``Spectrum lessees''
is defined in Sec. 1.9003 of part 1, Subpart X (``Spectrum
Leasing''). 47 CFR 1.9003.
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1. Controlling U.S. Parent Definition
As proposed in the Section 310 NPRM, we adopt a definition of
controlling U.S. parent to provide regulatory certainty, ease
administrative burdens, and codify the Commission's longstanding
practice. For purposes of Section 310(b)(4), we define the controlling
U.S. parent as ``the first controlling entity organized in the United
States that is directly above the
[[Page 17864]]
licensee(s) in the vertical chain of control and does not itself hold a
license subject to [S]ection 310(b).'' NCTA agrees with the
Commission's proposal and no commenter opposes it. NCTA states the
definition ``would provide regulatory certainty for petitioners in
determining how to appropriately factor the controlling U.S. parent in
foreign ownership analyses.''
Importantly, identifying the controlling U.S. parent is the basis
for assessing foreign ownership in all Section 310(b)(4) petitions.
With the correctly identified controlling U.S. parent, entities can
properly calculate the aggregate foreign ownership interests, ascertain
all the disclosable interest holders, and determine which interests
require specific and/or advance approval. As explained in the Section
310 NPRM, we have encountered mixed approaches where some petitions
correctly identify the controlling U.S. parent as the first controlling
entity organized in the United States that is directly above the
licensee(s) in the vertical chain of control that does not itself hold
a license subject to Section 310(b), while others incorrectly identify
the entity higher up in the vertical ownership chain where there is
first direct foreign ownership. By adopting the proposed controlling
U.S. parent definition, we simply codify our existing practice to bring
clarity to our rules. Finally, we remind petitioners that they continue
to have the flexibilities provided in Sec. Sec. 1.5004(c)(1)
(insertion of new controlling foreign organized company), 1.5004(d)(1)
(insertion of new non-controlling foreign organized company), 1.5001(e)
and (f) (disclosable interest holders), 1.5001(i) (specific approvals),
and 1.5001(k) (advance approval)--which all rely on properly
identifying the controlling U.S. parent.
2. Deemed Voting Interest and Advance Approval
We adopt the proposals in the Section 310 NPRM and amend the rules
to codify the Commission's existing practice regarding the treatment of
entities that hold a deemed voting interest and are limited partners in
a limited partnership (LP) or are members of a limited liability
company (LLC). We adopt these rules to provide regulatory certainty to
petitioners, streamline the review process, and ensure that the
Commission's long-standing approach is reflected in the foreign
ownership rules. As discussed in detail in the Section 310 NPRM, a
foreign individual or entity that receives specific approval under
Sec. 1.5001(i) may request advance approval to increase the ownership
interest in the future without the need to request additional
authority. Limited partners and LLC members may be deemed to hold a
greater voting interest in the controlling U.S. parent than their
actual interests. Under the deemed voting interest analysis for voting
interests held by limited partners and LLC members, the Commission
assesses whether the interests held in the limited partnership and LLC
are or are not insulated. The Commission determines whether interests
are insulated for limited partnerships, limited liability partnerships,
and LLCs in accordance with 47 CFR 1.5003. If the limited partnership
or LLC is considered to be insulated under the Commission's rules, the
limited partner or LLC member is deemed to hold a voting interest equal
to its equity interest. On the other hand, if the limited partnership
or LLC is determined to be uninsulated, the limited partner or LLC
member is deemed to hold the same voting interest as the limited
partnership or LLC holds in the next lower tier in the licensee's
vertical ownership chain. If the limited partnership or LLC holds its
interest directly in the controlling U.S. parent, it is deemed to hold
a 100 percent voting interest. Although a foreign individual or entity
with a de jure or de facto controlling interest in the controlling U.S.
parent may request advance approval for 100 percent of the direct and/
or indirect equity and/or voting interests in the controlling U.S.
parent, a foreign individual or entity with a deemed voting interest of
50 percent or greater may only request advance approval for up to a
non-controlling 49.99 percent direct and/or indirect equity and/or
voting interests in the controlling U.S. parent. The Commission
utilizes deemed voting interests to measure foreign influence separate
from its analysis of whether a particular investor has actual decision-
making power. As such, a determination that a foreign investor has
deemed voting interests in the controlling U.S. parent does not
necessarily mean that such foreign investor also has de jure or de
facto control of the controlling U.S. parent. The current rules
regarding advance approval under Sec. 1.5001(k) do not specifically
address deemed voting interests for limited partnerships and LLCs.
To provide certainty to petitioners and investors, we codify our
long-standing practice concerning the amount of advance approval that
interest holders with deemed voting interest may request for interest
held in LPs and LLCs. Deemed voting interest is only used in a Section
310(b) review to determine which entities require specific approval,
and for which advance approval may be requested. A finding of a deemed
voting interest of 50 percent or more is not a finding of de jure or de
facto control of the controlling U.S. parent. Rather, it is an
indication of the potential influence of the limited partner or LLC
member in the partnership or LLC. The new rules clarify that foreign
individuals and/or entities, including LPs and LLCs, requesting
specific approval pursuant to Sec. 1.5001(i) of the Commission's rules
that have a deemed voting interest but not an actual controlling voting
interest, may request advance approval under Sec. 1.5001(k) to
increase their interest at a future time to a non-controlling 49.99
percent. However, if the Commission determines that there is an actual
controlling interest then the petitioner may request advance approval
of up to and including a controlling 100 percent interest. NCTA
supports the proposals stating that ``[c]odifying these current
practices would add needed clarity to the Commission's rules.'' No
commenter opposes the proposals.
Therefore, we adopt our proposal and codify our long-standing
practice that under Sec. Sec. 1.5001(i) and 1.5001(k) of the
Commission's rules, a finding of deemed voting interest of 50 percent
or more is not a finding of control in and of itself. First, we amend
the specific approval rule in Sec. 1.5001(i) to codify our long-
standing practice that a finding that a foreign individual or entity is
deemed to hold a 100 percent voting interest in the controlling U.S.
parent for purposes of Sec. 1.5001(i)(4)(ii)(C)(1) or a 50 percent or
greater voting interest in the controlling U.S. parent pursuant to
Sec. 1.5001(i)(4)(ii)(C)(2), does not indicate that the interest
constitutes de jure control for purposes of compliance with section
310(d) of the Act. Second, we amend the advance approval rule in Sec.
1.5001(k) to state that a foreign individual or entity that has a
deemed voting interest of 100 percent pursuant to Sec.
1.5001(i)(4)(ii)(C)(1) or a 50 percent or greater voting interest in
the controlling U.S. parent pursuant to Sec. 1.5001(i)(4)(ii)(C)(2),
but that does not have de jure or de facto control of the controlling
U.S. parent, may request advance approval for the foreign individual or
entity to increase its interests, at some future time, up to any non-
controlling amount not to exceed a 49.99 percent equity and/or voting
interest.
3. Trust and Trustees Requirements
As proposed in the Section 310 NPRM, we amend the rules to codify
the existing practice to require that
[[Page 17865]]
petitioners identify the trustees of trusts that are disclosable
interest holders in the controlling U.S. parent. The rule changes will
provide clarity about the type of information required for trusts and
trustees in a petition, streamline the filing process, and enable the
Commission to more efficiently review petitions. In the Section 310
NPRM, the Commission proposed to amend our rules to conform with policy
and practice that the trustees must be disclosed under Sec. 1.5001(e),
(f), and (i), as applicable. We received no comments on this proposal.
Under Sec. 1.5001(e) and (f) of the rules, a petitioner must
disclose trusts, as well as any other entity or individual, U.S. or
foreign, as a disclosable interest holder, if the entity or individual
holds, or would hold, a direct or indirect interest of 10 percent or
more, or a controlling interest, in the controlling U.S. parent of the
petitioning common carrier and broadcast applicant or licensee. In the
broadcast context, the petitioner must utilize the attribution rules
and policies applicable to broadcasters to determine the U.S. and
foreign interests that must be disclosed in a section 310(b)(4)
petition. To analyze whether a particular trust holds an equity and/or
voting interest in the controlling U.S. parent for purposes of
compliance with section 310(b), Commission staff have required the
petitioners to provide the identity of trustees of a trust through
supplemental filings. Therefore, we codify our practice and amend Sec.
1.5001(e), (f), and (i), to require petitioners to provide the name(s)
of the trustee(s) in petitions.
4. Extending the Methodology and Remedial Process to Privately Held
Entities
We amend the Commission's rules in Sec. 1.5004(f)(3) and (f)(4) to
extend the remedial process available for U.S. public companies to
privately held entities for inadvertent non-compliance with the foreign
ownership benchmarks. In the Section 310 NPRM, the Commission sought
comment on extending the Commission's remedial process available to
U.S. public companies for inadvertent non-compliance with the foreign
ownership benchmarks to privately held U.S. companies for all services
subject to section 310(b)(4). The Commission explained that since the
2016 Foreign Ownership Report and Order, it has observed increasingly
complex ownership structures of its licensees, including both U.S.
public and privately held companies. Notably, licensees whose
controlling U.S. parents are privately held companies have reported
that they experience similar issues as public companies, including the
``up-the-chain'' ownership structures that include entities, such as
equity funds, that may themselves either be public companies or have
diverse ownership interests (including other funds). These licensees
also have indicated that they have experienced difficulty in
controlling or preventing changes in these funds, even when the
entities are privately held. Absent the safe harbor available to U.S.
public companies with existing foreign ownership, however, privately
held U.S. companies are subject to potential enforcement action if
there is an inadvertent violation of the foreign ownership benchmarks.
NAB supports the Commission extending its remedial filing process to
privately held companies, and welcomes this development to
``modernize'' the rules to ``reflect the increasing complexity of
ownership structures among regulated entities.'' NAB is ``not aware of
specific data to suggest that broadcasters are any more or less likely
to have complex ownership structures,'' but asserts that the change
would ``reduce burdens on privately held licensees with complex
ownership structures and lower their risk of enforcement actions from
inadvertent violations of the foreign ownership limits.'' No other
comments were received on this topic.
Accordingly, we amend our rules to allow privately held licensees
to use the remedial filing process and will require them to adhere to
the remedial filing requirements applicable to publicly held companies.
We clarify that in the event that the licensee, regardless of whether
its controlling U.S. parent is a privately held or U.S. public company,
satisfies the elements of this safe harbor for remedial action in the
Commission's rules, the Commission would not expect to take enforcement
action related to the non-compliance. This approach will provide
privately held U.S. companies with a safe harbor for non-compliance
with the rules for changes in ownership beyond the licensee's control
and that were not reasonably foreseeable by, or known to, the licensee.
Finally, we find that no action is necessary on the separate issue
of formally extending the blanket methodology used by U.S. public
companies to privately held companies. As discussed in the Section 310
NPRM, the Commission has allowed privately held licensees to use the
calculation methodology that is applicable to U.S. public companies on
a case-by-case basis, when, for example, ``there are significant
impediments that prevent a privately held entity from conducting an up-
the-chain analysis to ascertain all of its indirect ownership
interests, including non-voting equity interests held by remote,
insulated investors.'' Neither the record nor the Commission's own
experience indicates a need to depart from this case-by-case approach.
Accordingly, we find that it is appropriate to continue to allow
privately held entities to use this methodology applicable to U.S.
public companies on a case-by-case basis. We note that the Commission
staff frequently works with private entities to address and resolve
impediments to identifying ownership interests, and we expect that this
collaborative process will continue as private entities explore whether
it is appropriate to rely on the methodology available for U.S.
publicly traded companies.
5. Contents of Remedial Petitions
We adopt the proposal in the Section 310 NPRM to add Sec.
1.5004(f)(5) of the rules to clarify that, consistent with current
practice, remedial petitions must contain all of the information
required for an initial petition for declaratory ruling (Sec. 1.5001
of the Commission's rules sets out the required information to be
disclosed by petitioners) and not just the information related to the
newly discovered non-compliant interest(s) with respect to all services
subject to Section 310(b). As the Commission explained in the Section
310 NPRM, the Commission's foreign ownership rules already require that
remedial petitions must be filed as new petitions and set forth the
required contents of petitions for declaratory ruling. Thus, when an
eligible licensee opts to file a remedial petition under Sec. Sec.
1.5004(f)(3) or (f)(4) to address an instance of non-compliance with
the Commission's foreign ownership rules, the Commission has required
that the remedial petition contain all the information required for an
initial petition and not just the information related to the non-
compliant interest(s). And while the Commission has observed that most
petitioners voluntarily submit a full petition, staff has observed
instances where some petitioners initially provided only the
information related to the non-compliant interest(s), resulting in
added correspondence and coordination with staff and additional
petitioner submissions. We believe that failure to provide all relevant
information unduly delays and frustrates efficient processing of
remedial petitions.
NCTA supports the Commission's proposal, asserting it would
``reduce the need for follow-up questions from Commission staff and
would align with the Commission's current practice.''
[[Page 17866]]
NCTA also suggests that since this proposal echoes similar requirements
in other sections of the Commission's foreign ownership rules, this
proposed rule change would result in a more streamlined process. In
contrast, NAB asserts that even if this proposed amendment reflects
current staff practice, NAB believes this practice ``unnecessarily
compounds filing burdens and increases processing timelines for
petitioners that are subject to an existing Section 310(b) declaratory
ruling that authorizes a certain level of foreign ownership and may
approve individual foreign investors.'' NAB essentially takes issue
with what our rules already require, suggesting that under the
Commission's proposal, ``every remedial petition would be considered a
new petition that would need to include information concerning not only
new foreign investor(s), but also foreign investor(s) that may already
be authorized by the FCC through a declaratory ruling.'' NAB adds that
``[t]he proposal would also require petitioners to re-justify existing
foreign ownership that has already been carefully considered and
approved by the FCC in a previous proceeding.'' As an alternative to
the Commission's proposal, and to ``alleviate filing burdens,'' NAB
urges the Commission to codify an exception for petitioners subject to
existing Section 310(b) rulings, requiring such petitioners to
``provide information and public interest justifications in a remedial
petition with respect to only new foreign investors for which
Commission approval is required under Section 310(b).'' Further, ``NAB
encourages the FCC to extend this exception to section 310(b) petitions
seeking prior FCC consent for prospective new foreign investment where
the petitioner is already subject to a Section 310(b) declaratory
ruling.''
We agree with NCTA's assertions and therefore, we adopt our
proposal to codify the existing practice by adding Sec. 1.5004(f)(5)
to clarify that remedial petitions must contain all of the information
required for an initial petition and not just the information related
to the newly discovered non-compliant interest(s) with respect to all
services subject to Section 310(b). Consistent with our decision to
extend the Commission's remedial process for inadvertent violations of
the foreign ownership benchmarks to U.S. privately held companies, we
clarify that our requirements regarding the contents of remedial
petitions apply to both U.S. public companies and U.S. privately held
companies. This approach allows us to view the comprehensive picture of
foreign ownership at the outset of our review as opposed to solely the
new foreign investors for which Commission approval is required.
Further, as NCTA asserts, this approach will reduce the need for
follow-up questions. We disagree with NAB's concern that the proposal
would be burdensome because it would require that every remedial
petition be re-justified as a new petition, including existing foreign
ownership. While remedial petitions are filed as new petitions, the
Commission staff's review will focus on the new, non-compliant
interests in the context of the information submitted via the remedial
petition, limiting the burden of that review on licensees participating
in the proceeding. Furthermore, with respect to the filing of
information regarding existing foreign ownership, we find that any
burden would be mitigated by the fact that such information was filed
previously and that NAB's comment has not quantified any additional
burden from refiling such information. On the other hand, we believe
that requiring that a remedial petition contain the same information as
an initial petition is of significant value because it will enable
staff to review a complete filing and to more efficiently and
effectively make the appropriate determination under the Section 310(b)
public interest analysis. Therefore, we reject NAB's proposed
categorical exemption for reviewing and approving only the new foreign
investors, as we find that this limitation could frustrate our ability
to conduct a comprehensive analysis as required under Section 310(b).
On balance, we find that the benefits of adopting the proposal to
codify the existing practice outweigh any unquantified additional
filing burdens. Obtaining complete information in the first instance,
in turn, will streamline the review process for remedial petitions and
reduce the processing timelines that are also of significant concern to
NAB. Nonetheless, we encourage applicants to consult with Commission
staff to discuss particular facts and circumstances if they believe
that a different approach is warranted or if there are specific factors
that will help facilitate staff's review of the petition.
6. Filing Amendments to Petitions for Declaratory Ruling
To ensure that the public and Commission staff can access accurate
and complete ownership information without undue confusion about which
filings or portions of filings are active and/or current, we reaffirm
and codify existing amendment filing practices in Sec. 1.5000(b)(1)-
(2). In the Section 310 NPRM, the Commission sought comment on whether
to codify Commission staff's practice of having petitioners file a
complete restatement of the Section 310(b) petition in cases involving
substantial changes to the petition along with a cover letter providing
a narrative description of what is being amended. To further minimize
burdens, the Commission sought comment on whether certain ministerial
changes could be filed as an amendment or supplement rather than as a
complete restatement.
No commenter opposes a requirement that any amendments to a pending
petition must be filed as a complete restatement of the initial
petition, but NAB urges that if the Commission does so, it should
``codify an exception allowing for ministerial changes to be filed as a
supplement in the relevant docket that details the minor amendments.''
NAB suggests that ministerial changes could include ``changes made to:
correct lists of attributable interest holders to remove duplicate
entries; update such lists to add additional interest holders or revise
identifying information; or update equity and voting interests to
reflect slight changes to entities or individuals that have already
been disclosed in the initial petitions consistent with the FCC's
foreign ownership or attribution rules.'' NCTA is broadly supportive of
requiring that amendments be filed as a complete restatement of the
initial petition, agreeing with the Commission's reasoning for adopting
such a requirement.
Based on the record, we codify our existing practices.
Specifically, for substantial changes, an amendment to a pending
petition must be filed as a complete restatement in the International
Communications Filing System (ICFS) (for common carriers) or Electronic
Comment Filing System (ECFS) (for broadcasters) of the initial petition
with a cover letter providing a narrative description of the
substantial change. The ICFS homepage is located at <a href="https://www.fcc.gov/icfs">https://www.fcc.gov/icfs</a>. The ECFS homepage is located at <a href="https://www.fcc.gov/ecfs">https://www.fcc.gov/ecfs</a>. Also, consistent with existing practice, in the case of
ministerial change(s), petitioners must file an amendment in ICFS (for
common carriers) or in ECFS (for broadcasters) under the relevant
application or docket detailing only the relevant change(s). Similar to
what NAB suggests, we provide as guidance the following non-exhaustive
list of ministerial changes: (1) correcting lists of attributable
interest holders to remove duplicate entries; (2) updating such lists
to revise identifying information; (3) correcting
[[Page 17867]]
equity and voting interests amounts to reflect any changes to entities
or individuals that have already been disclosed in the initial petition
consistent with the Commission's foreign ownership or attribution
rules; or (4) correcting misspellings or incorrect addresses. For all
other types of changes not covered by this list, we encourage
applicants to contact Commission staff to review whether a particular
change is substantial or ministerial in nature. For such ministerial
changes, we expect that petitioners will submit a new version of the
relevant exhibit or attachment with the necessary corrections and
provide a brief explanation of the ministerial change in the corrected
exhibit/attachment or by cover letter. For common carriers, petitioners
will submit amendments to a petition under Form 235, ISP-AMD via ICFS.
Ministerial changes to fields in the online application form can be
submitted by changing the response in the application form itself.
Ministerial changes to attachments can be submitted by uploading a new
attachment to the amendment application. We find that this flexible
approach will reduce undue filing burdens on applicants and promote
prompt processing. We caution applicants that filing multiple
amendments or supplements for ministerial changes may increase
Commission staff processing time and/or create undue confusion about
which aspects of the filings are active and/or current. Therefore, in
those instances, we urge applicants to detail the totality of the
ministerial change(s) in a complete restatement of the initial
petition.
7. U.S. Residency Requirements
We affirm the proposed clarification in the Section 310 NPRM that
there is no Commission requirement that foreign investors in companies
seeking a petition must maintain U.S. residency. We received no
comments on this topic and therefore adopt our proposed clarification.
As we stated in the Section 310 NPRM, a foreign investor's lack of a
U.S. residence is not a factor in the Commission's assessment of
whether a petition is in the public interest. We find that requiring a
foreign investor to maintain U.S. residency would be antithetical to
the Commission's policy of allowing certain levels of foreign ownership
that are not contrary to the public interest. As proposed in the
Section 310 NPRM, this clarification applies to all services subject to
Section 310(b).
C. Broadcast Licensees Only
As discussed below, regarding broadcast licensees only, we: (1)
direct the Media Bureau to issue processing guidelines as appropriate
detailing how the Commission will process applications filed by a
broadcast licensee during the pendency of a remedial petition under
Section 310(b)(4); and (2) clarify other foreign ownership
considerations related to processing applications for NCE and LPFM
stations.
1. Processing Broadcast Licensee Applications During the Remedial
Process
We adopt our tentative conclusion in the Section 310 NPRM that the
broadcast industry will be best informed by processing guidelines
establishing how the Commission will process broadcast applications
during the pendency of a remedial petition filed pursuant to Sec.
1.5004(f) of the Commission's rules. We therefore direct and delegate
authority to the Media Bureau to specify such processing guidelines.
In the Section 310 NPRM, the Commission explained that when an
eligible licensee files a remedial Section 310(b)(4) petition seeking
approval of above-benchmark, aggregate foreign ownership interests or
new specific approval not covered under the licensee's existing Section
310(b)(4) ruling, the Commission does not, as a general rule, expect to
take enforcement action related to the licensee's non-compliance with
the foreign ownership rules, provided the licensee satisfies certain
requirements. Nonetheless, the Commission may ultimately determine that
the licensee was not actually entitled to use the remedial process, or
the Commission may ultimately reject the proposed foreign ownership.
Therefore, as the Commission further explained in the Section 310 NPRM,
the existence of the remedial process, on its own, does not necessarily
resolve the issue of whether the broadcast licensee is in compliance
with the Commission's rules during the pendency of a remedial petition
or following remedy of the non-compliance. This is significant because
it has been the Media Bureau's practice, often in consultation with the
Enforcement Bureau, to place a hold on certain types of applications
while a broadcast licensee is subject to an investigation for a
potential violation of the Commission's rules. As a result, any
unresolved foreign ownership questions presented by non-compliance with
our rules or the terms of a prior declaratory ruling may impede the
processing of pending license applications. The Commission therefore
sought comment in the Section 310 NPRM on whether the Commission should
grant the licensee new authorizations or allow a licensee to dispose of
certain authorizations while the remedial petition is pending. The
Commission also sought comment on whether any grant of an authorization
should be explicitly conditioned on the grant of the pending remedial
petition or subject to any enforcement action that may be warranted if
the remedial petition is deemed inadequate, or, alternatively, if staff
should hold pending applications until review of a remedial petition is
complete. Also, the Commission asked if there are certain types of
applications that should or should not be processed in the ordinary
course during the pendency of the remedial process. Finally, the
Commission sought comment on whether to adopt processing guidelines for
this purpose or instead adopt rules.
In a written ex parte, NAB states that it ``anticipates that the
establishment of specific standards for the processing of broadcast
applications during the pendency of a remedial petition may benefit,
not burden, broadcast licensees.'' No other commenters addressed this
issue.
We find that processing guidelines would benefit the Commission's
treatment of broadcast license applications, and we direct and delegate
authority to the Media Bureau to specify processing guidelines for
applications filed by a broadcast licensee during the pendency of the
remedial process. Consistent with our decision to extend the
Commission's remedial process for inadvertent violations of the foreign
ownership benchmarks to privately held entities, we consider
``broadcast licensees'' to encompass broadcast station licensees and
permittees that are controlled by U.S. public companies as well as
broadcast station licensees and permittees that are controlled by U.S.
privately held entities. The processing guidelines will provide
guidance on the topics discussed in the Section 310 NPRM, including:
(1) routine types of applications that should continue to be processed
in the normal course during the pendency of the remedial process, such
as applications related to the continued operations of currently
authorized broadcast facilities (e.g., applications for special
temporary authority or minor modifications); and (2) non-routine
applications such as major modifications, license renewals, and
assignments/transfers of control, that would require heightened
scrutiny during the pendency of a remedial
[[Page 17868]]
petition. We find that guidelines are preferable to rules for this
purpose, as guidelines will provide the necessary flexibility to permit
individualized approaches to specific cases as warranted by the facts
and circumstances.
2. Assessing Foreign Ownership of Noncommercial Educational (NCE) and
Low Power FM (LPFM) Stations
To better incorporate the governance structures of NCE and LPFM
licensees seeking approval for proposed foreign ownership into our
Section 310(b) reviews and to provide regulatory certainty to such
licensees, we clarify how we determine the foreign ownership levels of
these particular stations. In the Section 310 NPRM, the Commission
sought comment on changes to the Commission's foreign ownership rules
that would assess the foreign ownership levels of NCE stations,
including full-service FM radio and television stations and LPFM
stations, by considering their unique governance structures. The
Commission noted that while there have been relatively few requests for
proposed foreign ownership of NCE and LPFM stations, several
applications were pending before the Media Bureau involving NCE
applicants with foreign ownership. We received no comments on this
issue.
As the Commission explained in the Section 310 NPRM, the ownership
of NCE and LPFM stations is subject to the provisions of Section
310(b), just like commercial stations. As such, the Commission's
foreign ownership rules are not limited to commercial stations, though
the rules discuss ownership in terms of the voting and equity shares of
individuals and entities. This characterization of ownership, however,
is rarely applicable in the NCE/LPFM context, as these entities are
often governed by a board of directors or an unincorporated association
without traditional voting or equity shares in the entity. The
Commission's rules and policies, however, have long recognized that
these governing bodies--and, by extension, the individual board
members--direct the operations of these stations. The Commission has
addressed this in the broadcast ownership report context, for
attribution purposes, by looking to the composition of the respondent's
governing board or other governing entity, and whether it is directly
or indirectly under the control of another entity.
Consistent with our approach in the broadcast ownership reporting
context, for purposes of determining the voting shares of NCE stations
in the course of our Section 310(b) review, we adopt the proposal in
the Section 310 NPRM to consider the composition of the governing board
or other governing entity, and whether it is directly or indirectly
under the control of another entity for purposes of assessing
compliance with the foreign ownership limits set forth in the Act and
the Commission's rules. For example, if an NCE station licensee (or
applicant) is governed by a board with five members, each member of the
governing board would be deemed to hold a 20 percent voting interest in
the licensee absent provisions in the bylaws or other governance
document that formally allocates voting power to governing board
members on something other than a pro rata basis, only if such voting
arrangements are permitted under the laws of the state where the
licensee or applicant was incorporated. In any such cases, each
governing board member would be deemed to hold the voting interest
designated in the governing documents. If the record indicates that the
governing documents are inconsistent with state law, we will consider
the relevance of this information in light of facts and circumstances
presented by the case and any applicable precedent or policies. If
there are four governing board members, each member would be deemed to
hold a 25 percent voting interest, and so forth, absent provisions in
the governing document allocating voting power to governing board
members on a non-pro rata basis. In the event that greater than 25
percent of the controlling interest holders in the licensee's
controlling U.S. parent would be non-U.S. citizens, the licensee would
first need to seek approval for such foreign ownership consistent with
Section 310(b)(4) and the Commission's foreign ownership rules. Direct
and indirect foreign interests in the licensee, other than those held
through a controlling U.S. parent, remain subject to the 20 percent
limits in Section 310(b)(3).
We also acknowledge that, as with the broadcast ownership context,
there may be station-specific agreements or circumstances that could
impact how the ownership percentages are calculated. For example, the
governing board could cede its decision-making authority over the
station to an executive in the operating organization. Such
circumstances will continue to be subject to individual, case-by-case
review under Section 310(b). In addition, while governing board members
in NCE entities do not typically have equity interests in the licensee,
any such equity interests specific to a particular licensee are subject
to the 310(b) benchmarks. We will recognize weighted governance
structures (i.e., non pro rata) to the extent they are permitted by
applicable federal and state laws regarding the incorporation and
governance of NCE entities. In the course of our review of the
structures referenced in this paragraph, applicants, upon request, must
file a copy of the bylaws, or other written organizational document as
appropriate, to accompany their Section 310(b) analysis, either in a
Section 310(b)(4) petition or when certifying compliance with Section
310(b). The Commission reserves the right to ask for such other
information as necessary to verify that the documentation is consistent
with the relevant state law requirements. We caution applicants that
should it be determined that sham agreements are being filed, the
Commission will act within its enforcement authority. Such
organizational documents must substantiate the entity's governance
structure, as well as establish that the structure is permitted under
relevant state law.
3. NCE/LPFM Application Processing Issues
As discussed below, to promote regulatory consistency, we make
several clarifications to address various foreign ownership
considerations in the context of filing windows for construction
permits for NCE authorizations. In the Section 310 NPRM, the Commission
sought comment on whether and how to clarify the Commission's rules and
procedures related to filing windows for NCE construction permits with
respect to the application of Section 310(b). No commenters addressed
these issues.
As discussed in the Section 310 NPRM, entities with foreign
interest holders above the statutory benchmarks in Section 310(b)(4)
are eligible to apply for new construction permits that are available
for application during a filing window, including NCE filing windows,
provided they are covered by an existing foreign ownership declaratory
ruling, or have filed a Section 310(b)(4) petition. While the
Commission observes it to be a rare occurrence for such entities to
apply for new construction permits, to offer some further clarity, we
adopt the clarification proposed in the Section 310 NPRM that, with
respect to construction permit applications, under the current
requirements in Sec. 1.5000(b), entities with foreign ownership in
excess of the statutory benchmarks in Section 310(b)(4) and without an
existing declaratory ruling can participate in an NCE/LPFM filing
[[Page 17869]]
window so long as they file a Section 310(b)(4) petition seeking
approval of the foreign ownership interest at the same time they file
the application required for participation in the filing window.
Moreover, for participants in these windows with foreign ownership
above the benchmarks in Section 310(b)(4), we clarify that we will
apply the same processing guidelines we use in the commercial context
for applications that include a Section 310(b)(4) petition for
declaratory ruling, which we will specify in any subsequent procedures
public notice for an NCE window, while allowing for a tailored
approach, if appropriate, in the context of a particular filing window.
Accordingly, we find that we need not consider at this time the other
issues raised in the Section 310 NPRM regarding how we will process
applications from entities with foreign ownership in excess of the
benchmarks, to the extent relevant, as those issues will be resolved in
the context of a particular filing window. In addition, because the
Commission's forbearance authority, and thus its Section 310(b)(3)
forbearance approach, does not extend to broadcast licensees, all NCE
and LPFM filing window participants are subject to the 20 percent
limits on foreign ownership under Section 310(b)(3) of the Act.
D. Other Improvements to the Foreign Ownership Rules
In the Section 310 NPRM, the Commission sought comment generally on
other opportunities to improve the foreign ownership rules or reduce
regulatory burdens. The Commission also sought comment on opportunities
to alleviate unnecessary regulatory burdens consistent with the Delete,
Delete, Delete Proceeding. We received several proposals from NAB and
an individual commenter, Erik Cudd. Although, as discussed more fully
below, we do not accept certain specific proposals offered by NAB and
Erik Cudd that those commenters assert could reduce burdens, we note
that nevertheless the decisions in this Report and Order reduce
regulatory burdens overall. Specifically, in this Report and Order, we
find that clarifying our rules, codifying existing requirements and
practices related to foreign ownership, and providing guidance with
respect to filing of petitions will reduce uncertainty for applicants,
which in turn should reduce the need to revise or refile requests and
thus will reduce regulatory burdens.
NAB Suggestions. NAB urges the Commission to establish a limit on
the amount of time from the filing of a Section 310(b) petition to the
Commission's issuance of a public notice announcing that the Section
310(b) petition has been accepted for filing, as well as a timeline for
ruling on a petition. NAB also urges the Commission to consider
exempting certain applications from Executive Branch review, for
example those involving applicants that have been approved in the
recent past, and to adopt expedited or streamlined Executive Branch
reviews for known foreign investors or for foreign interest holders
from countries allied with the United States.'' NAB states that this
approach ``would be consistent with other Administrative initiatives''
such as the Treasury Department's Committee on Foreign Investment in
the United States (CFIUS) fast-track pilot program, which has ``a
`known investor' portal where CFIUS can collect information from
foreign investors prior to a filing'' that is ``intended to help
effectuate the President's America First Investment Policy.'' NAB also
urges the Commission to consider ``excluding certain applications from
referral to the [Committee for the Assessment of Foreign Participation
in the United States Telecommunications Services Sector (Committee)] if
they involve applicants that have been approved in the recent past, as
well as streamlining the Commission's own review under such
circumstances.'' We did not receive any reply comments on NAB's
suggestions.
We decline to adopt NAB's proposals at this time. First, we decline
to specify a timeframe to place petitions on accepted for filing public
notice. While we strive to adhere to the Commission's 180-day
transaction review timeline, our review of petitions depends on the
complexity of the underlying transaction, the completeness of the
information provided, and the timeliness of the petitioner in
responding to staff inquires. Second, we reject NAB's proposal for the
Commission to adopt a streamlined process for known foreign investors
or from allied countries. This proposal raises many complex issues,
including determining who would qualify as known foreign investors,
defining what constitutes an allied country, and establishing a
Commission `known foreign investor portal' similar to that of the
Treasury Department's known investor portal. We note that the CFIUS
fast-track pilot program is still in its nascent stages. Third, we
decline to exclude certain petitions from referral to the Committee as
we currently exclude referral of petitions to the Committee when the
only foreign ownership is through intermediate holding companies and
U.S. individuals or entities that have ultimate control. NAB states
that it ``understands from members and their counsel that the amount of
time from the filing of petitions to their placement on public notice
varies significantly. Petitioners would benefit from greater
predictability in the initial stages of processing.'' We note that we
have, on a discretionary basis, excluded petitions with only minor
ownership changes after consultation with Committee staff. We will
continue to use our discretion to exclude petitions from referral to
the Committee when appropriate. We believe that our current approach is
adequate to alleviate burdens and expedite review of Section 310(b)
petitions.
Individual Commenter Suggestions. Erik Cudd, an individual
commenter opposes any foreign ownership of U.S. broadcasters and favors
stricter broadcast ownership limitations. Erik Cudd states that foreign
ownership of U.S. broadcasters ``poses serious risks to national
interests,'' including potential foreign influence over content and
editorial direction, lack of transparency regarding ownership and
controlling parties, and ``[i]ncreased [difficulty] in holding parties
accountable to the American public and legal standards.'' We did not
receive any comments on these suggestions. We decline to adopt these
suggestions. The summary comment without any analysis or data has not
persuaded us that it is necessary to prohibit all foreign ownership of
broadcasters in the context of this rulemaking which is focused
specifically on streamlining, clarifying, and codifying procedures and
processing requirements. Erik Cudd's views about ownership
concentration among broadcasters are not relevant to this proceeding.
As explained at the outset, our decisions carefully balance the dual
public interest objectives of prohibiting potentially harmful foreign
investment and promoting non-harmful foreign investment. Instead of
prohibiting foreign ownership outright, our rules, as improved herein,
provide transparency regarding ownership and controlling parties so
that we can hold relevant individuals and entities accountable for
compliance with our rules and the Act. Our foreign ownership review
process includes Executive Branch review aimed at identifying and
addressing potential harms to national security. Erik Cudd has not
provided any evidence or particularized reasons for his concerns.
[[Page 17870]]
Corrections and Updates. Additionally, we hereby adopt as proposed
in the Section 310 NPRM various ministerial, non-substantive changes
reflected throughout Appendix A, including shifting the language in
existing notes and examples into the text of the relevant rules as
subsections, which practice conforms to the publishing conventions of
the National Archives and Records Administration's Office of the
Federal Register. These changes also include, among other things,
revisions to language and terms to ensure consistency of references
used in Sec. Sec. 1.5000 through 1.5004 of the Commission's rules.
Appendix A contains a complete republication of Subpart T (47 CFR
1.5001 through 1.5004).
E. Pending Proceedings
In the Section 310 NPRM, the Commission noted that applications
were pending before the Media Bureau that might be affected by the
outcome of this proceeding and sought comment on how to treat such
pending applications. No commenter addressed this issue, nor the larger
issue of the potential impact of our Report and Order on any other
pending applications or petitions, if any. Accordingly, we determine
that the rules we adopt herein will apply to petitions and applications
filed on or after the effective date of the Report and Order. Petitions
and applications that have not been the subject of any staff decision
as of the effective date of this Report and Order and that are still
pending on the effective date will be decided based on the rules in
existence at the time the respective petition or application was filed.
F. Cost/Benefit Analysis
In the Section 310 NPRM we sought comment on the costs and benefits
associated with the proposals made in the NPRM. The record reflects
that the commenters generally support the proposals in the Section 310
NPRM and no commenters addressed or opposed the cost and benefit
assessments. As such, in this Report and Order, we find that clarifying
our rules, codifying existing requirements and practices related to
foreign ownership, and providing guidance with respect to filing of
petitions will reduce uncertainty for applicants, which in turn should
reduce the need to revise or refile requests and thus will reduce
regulatory burdens. Overall, the rules and policies adopted will
expedite the application approval process without creating additional
burdens for petitioners. More broadly, by clarifying the rules and
potentially streamlining processes, we find that the adopted rules,
clarifications, and processing guidelines will ensure continued robust
investment in the U.S. market, while simultaneously reducing any risks
to national security, law enforcement, foreign policy, and trade policy
interests. Additionally we find that the costs associated with the
adopted rules are likely negative as a result of an anticipated
reduction in application revisions and enforcement, thus enabling
potential increased investment in the U.S. economy.
Procedural Matters
A. Paperwork Reduction Act
This document does not contain new or substantively modified
information collections subject to the Paperwork Reduction Act of 1995
(PRA), 44 U.S.C. 3501-3521. Therefore it also does not contain any new
or modified information collection burden for small business concerns
with fewer than 25 employees, pursuant to the Small Business Paperwork
Relief Act of 2002, 44 U.S.C. 3506(c)(4). This document may contain
non-substantive modifications to approved information collections. Any
such modifications will be submitted to OMB for review pursuant to
OMB's non-substantive modification process.
Congressional Review Act. The Commission has determined, and the
Administrator of the Office of Information and Regulatory Affairs,
Office of Management and Budget concurs, that this rule is ``non-
major'' under the Congressional Review Act, 5 U.S.C. 804(2). The
Commission will send a copy of this Report and Order to Congress and
the Government Accountability Office pursuant to the Congressional
Review Act, see 5 U.S.C. 801(a)(1)(A).
B. Legal Basis
The proposed action is authorized pursuant to sections 1, 2, 4(i),
4(j), 303, 307, 308, 309, 310, of the Communications Act of 1934, as
amended, 47 U.S.C. 151, 152, 154(i), 154(j), 303, 307, 308, 309, and
310.
Final Regulatory Flexibility Analysis
As required by the Regulatory Flexibility Act of 1980, as amended
(RFA), the Federal Communications Commission (Commission) incorporated
an Initial Regulatory Flexibility Analysis (IRFA) in the Review of
Foreign Ownership Policies for Broadcast, Common Carrier and
Aeronautical Radio Licensees under Section 310(b)(4) of the
Communications Act of 1934, as Amended (Section 310 NPRM), released in
April 2025. The Commission sought written public comment on the
proposals in the Section 310 NPRM, including comment on the IFRA. No
comments were filed addressing the IRFA. This Final Regulatory
Flexibility Analysis (FRFA) conforms to the RFA and it (or summaries
thereof) will be published in the Federal Register.
A. Need for, and Objectives of, the Rules
In the Report and Order, the Commission seeks to balance promoting
technical innovation, creating jobs, and strengthening the U.S. economy
with national security risks and other concerns by streamlining and
clarifying the Commission's foreign ownership rules for broadcast and
common carrier wireless and aeronautical licensees under Section
310(b)(4) of the Communications Act of 1934, as amended (the Act). Over
the past decade, the Commission developed policies to ensure entities
with foreign ownership comply with Section 310(b) and adopted precedent
for evaluating complex ownership structures. The Commission adopts in
the Report and Order rules to largely codify existing practices,
including relevant definitions and concepts, clarify the information
required in filings, minimize the need for additional filings, and
promote efficient and shorter processing times of Section 310(b)
petitions for declaratory ruling (petitions). Overall, these actions
further the Commission's efforts to encourage investment in the United
States while preserving the Commission's ability to comprehensively
review foreign investment in its licensees ``to protect the United
States from new and evolving threats.''
B. Summary of Significant Issues Raised by Public Comments in Response
to the IRFA
No comments were filed addressing the impact of the proposed rules
on small entities.
C. Response to Comments by the Chief Counsel for the Small Business
Administration Office of Advocacy
Pursuant to the Small Business Jobs Act of 2010, which amended the
RFA, the Commission is required to respond to any comments filed by the
Chief Counsel for the Small Business Administration (SBA) Office of
Advocacy, and also provide a detailed statement of any change made to
the proposed rules as a result of those comments. The Chief Counsel did
not file any comments in response to the proposed rules in this
proceeding.
[[Page 17871]]
D. Description and Estimate of the Number of Small Entities to Which
the Rules Will Apply
Our actions, over time, may affect small entities that are not
easily categorized at present. We therefore describe three broad groups
of small entities that could be directly affected by our actions. In
general, a small business is an independent business having fewer than
500 employees. These types of small businesses represent 99.9% of all
businesses in the United States, which translates to 34.75 million
businesses. Next, ``small organizations'' are not-for-profit
enterprises that are independently owned and operated and are not
dominant in their field. While we do not have data regarding the number
of non-profits that meet that criteria, over 99 percent of nonprofits
have fewer than 500 employees. Finally, ``small governmental
jurisdictions'' are defined as cities, counties, towns, townships,
villages, school districts, or special districts with populations of
less than fifty thousand. Based on the 2022 U.S. Census of Governments
data, we estimate that at least 48,724 out of 90,835 local government
jurisdictions have a population of less than 50,000.
The rules adopted in the Report and Order will apply to small
entities in the industries identified in the chart below by their six-
digit North American Industry Classification System (NAICS) codes and
corresponding SBA size standard. Based on currently available U.S.
Census data regarding the estimated number of small firms in each
identified industry, we conclude that the proposed rules will impact a
substantial number of small entities. Where available, we also provide
additional information regarding the number of potentially affected
entities in the identified industries below.
Table 1--2022 U.S. Census Bureau Data by NAICS Code
----------------------------------------------------------------------------------------------------------------
Regulated industry (footnotes
specify potentially affected Total small % Small
entities within a regulated industry NAICS code SBA size standard Total firms firms firms
where applicable)
----------------------------------------------------------------------------------------------------------------
Radio Broadcasting Stations......... 516110 $47 million........... 2,616 2,136 81.65
Television Broadcasting Stations.... 516120 $47 million........... 413 316 76.51
Wireless Telecommunications Carriers 517112 1,500 employees....... 1,184 1,081 91.30
(except Satellite).
Telecommunications Resellers........ 517121 1,500 employees....... 955 847 88.69
----------------------------------------------------------------------------------------------------------------
Table 2--Telecommunications Service Provider Data
----------------------------------------------------------------------------------------------------------------
2024 Universal service monitoring report telecommunications service SBA size standard (1,500 employees)
provider data (data as of December 2023) --------------------------------------------
-------------------------------------------------------------------- Total # FCC
Form 499A Small firms % Small
Affected entity filers entities
----------------------------------------------------------------------------------------------------------------
Local Resellers.................................................... 222 217 97.75
Toll Resellers..................................................... 411 398 96.84
----------------------------------------------------------------------------------------------------------------
E. Description of Economic Impact and Projected Reporting,
Recordkeeping and Other Compliance Requirements for Small Entities
The RFA directs agencies to describe the economic impact of
proposed rules on small entities, as well as projected reporting,
recordkeeping and other compliance requirements, including an estimate
of the classes of small entities which will be subject to the
requirement and the type of professional skills necessary for
preparation of the report or record.
The Commission finds that the costs associated with the adopted
rules and clarifications are likely negative as a result of an
anticipated reduction in application revisions and enforcement, thus
enabling potential increased investment in the U.S. economy. As a
result, we cannot estimate the cost of complying with the rules, or
compare such costs for large and small entities. The Commission
believes that these clarifications will make the rules more transparent
and accessible to small entities and reduce the time and cost
associated with compliance and reporting requirements related to
Section 310(b) petitions.
In determining the economic impact and projected compliance
requirements for small and other entities, in the Section 310 NPRM, the
Commission sought comment on the costs and benefits associated with the
proposals made in the Section 310 NPRM. As discussed above, the record
reflected some comments supporting the Commission's proposals to
clarify the foreign ownership rules and reduce burdens on petitioners
and other comments opposing certain aspects of the proposals. No
commenters addressed or opposed the cost and benefit assessments. As
such, in the Report and Order, the Commission finds that clarifying its
rules, codifying existing requirements and practices related to foreign
ownership, and providing guidance with respect to filing of petitions
will reduce uncertainty for applicants, and, in turn, these actions
should reduce the need to revise or refile requests. Overall, the rules
and policies adopted will expedite the application approval process
without significantly burdening petitioners. We estimate that the rule
changes discussed in this Report and Order will result in a reduction
in the time and expense associated with filing petitions and will not
result in significant, material changes to reporting, recordkeeping, or
compliance obligations for small and other Commission licensees. For
example, the Report and Order clarifies and streamlines the Section
310(b) foreign ownership rules as applied to both broadcast and common
carrier licensees by defining the terms ``controlling U.S. parent'' to
make the Commission's rules consistent with its longstanding practices
without disturbing or contradicting the substantive requirements in
Section 310(b)(4). Other amendments to the rules clarify, for example,
the disclosure requirements for trusts and trustees and the treatment
of deemed voting interests for specific and advance approval requests
to avoid duplicative filings and reduce the burdens imposed on
petitioners subject to Section 310(b).
[[Page 17872]]
In addition, for all licensees subject to Section 310(b), the
Report and Order amends the Commission's rules to clarify that,
consistent with current practice, remedial petitions must contain all
of the information required for an initial petition and not be limited
to the information related to the newly discovered non-compliant
interest(s). We do not expect this existing procedure to result in any
additional burdens for small businesses entities. In addition, the
Report and Order clarifies that, with respect to petitions that request
approval for certain foreign investors to increase their equity and/or
voting interests in the controlling U.S. parent, for both common
carrier and broadcast licensees, there is no Commission requirement
that such foreign investors must reside within the United States, which
would have no regulatory burden on small entities. Although U.S.
residency status has not previously been required or expected under the
Commission's foreign ownership rules, the Report and Order clarifies
that a foreign investor's lack of a U.S. residence is not a factor in
the Commission's assessment of whether a granting a petition in the
public interest. We therefore believe that this rule clarification will
not have an impact on any small business entities.
The Report and Order also extends the Commission's remedial process
for inadvertent violations of the foreign ownership rules to privately-
held entities for licensees subject to Section 310(b), which would
significantly ease the regulatory and enforcement burdens on small
entities. The Report and Order also formalizes the existing petition
amendment filing practices by codifying a requirement that an amendment
to a pending petition must be a complete restatement of the initial
petition and filed in the International Communications Filing System
(ICFS) (for common carrier licensees) or Electronic Comment Filing
System (ECFS) (for broadcast licensees) with a cover letter providing a
narrative description of the substantial change. We do not expect this
existing procedure for substantial amendments to result in any
additional paperwork obligations for small business entities. In the
case of ministerial change(s), the Commission will continue to allow
petitioners to instead file an amendment in ICFS (for common carriers)
or in ECFS (for broadcasters) under the relevant application or docket
detailing only the relevant change(s). We believe that the guidance in
the Report and Order regarding what counts as ``ministerial'' may
reduce the burdens on small entities by providing regulatory certainty.
With respect to potentially affected small entities within the
radio and television broadcasting station industries, the Report and
Order directs the Media Bureau to issue processing guidelines as
appropriate detailing how the Commission will process applications
filed by a broadcast licensee during the pendency of a remedial
petition under Section 310(b)(4); and clarifies other foreign ownership
considerations related to calculating foreign ownership interests of
NCE and LPFM stations and in the context of filing windows for
construction permits for NCE authorizations.
F. Discussion of Steps Taken To Minimize the Significant Economic
Impact on Small Entities, and Significant Alternatives Considered
The RFA requires an agency to provide, ``a description of the steps
the agency has taken to minimize the significant economic impact on
small entities . . . including a statement of the factual, policy, and
legal reasons for selecting the alternative adopted in the final rule
and why each one of the other significant alternatives to the rule
considered by the agency which affect the impact on small entities was
rejected.''
In the Section 310 NPRM, the Commission considered alternatives
such as extending the remedial process to privately owned entities to
provide a clearer path for foreign investment in licensees by aligning
Commission rules with developments in the market, which will minimize
the impact of the regulations on small entities by reducing burdens
associated with noncompliance. In addition, the Commission sought
comment on whether there are certain ministerial changes to petitions
for declaratory ruling that could be filed by an amendment without
filing a complete restatement. In the Report and Order, to minimize the
impact on small and other entities, in the case of ministerial
change(s) to a petition, the Commission decided to codify the existing
practice of allowing petitioners to file an amendment in ICFS (for
common carrier licensees) or in ECFS (for broadcaster licensees) under
the relevant application or docket detailing only the relevant
change(s).
The Commission sought comment on whether any of the burdens
associated with the filing, recordkeeping and reporting requirements
described in the Section 310 NPRM could be minimized for small
entities. As noted above, the Commission did not receive any comments
on the IRFA.
G. Report to Congress
The Commission will send a copy of the Report and Order, including
this Final Regulatory Flexibility Analysis, in a report to Congress
pursuant to the Congressional Review Act. In addition, the Commission
will send a copy of the Report and Order, including this Final
Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of
the SBA and will publish a copy of the Report and Order, and this Final
Regulatory Flexibility Analysis (or summaries thereof) in the Federal
Register.
Ordering Clauses
Accordingly, it is ordered that, pursuant to the authority found in
sections 1, 2, 4(i), 4(j), 303, 307, 308, 309, 310 of the
Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i),
154(j), 303, 307, 308, 309, 310, this Report and Order is adopted.
It is further ordered that, pursuant to the authority found in
sections 1, 2, 4(i), 4(j), 303, 307, 308, 309, 310 of the
Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i),
154(j), 303, 307, 308, 309, 310, the Commission's rules are amended as
set forth in Appendix A of the Report and Order.
It is further ordered that the Report and Order shall become
effective 30 days after publication in the Federal Register. Such
publication which will not occur until after the Office of Management
and Budget (OMB) has completed review, pursuant to the Paperwork
Reduction Act of 1995, Public Law 104-13, of any non-substantive
changes to current information collection requirements contained in
Sec. Sec. 1.5000 through 1.5004, 47 CFR 1.5000 through 1.5004.
It is further ordered that the Commission's Office of the
Secretary, shall send a copy of this Report and Order, including the
Final Regulatory Flexibility Analysis, to the Chief Counsel for the
Small Business Administration (SBA) Office of Advocacy.
It is further ordered that the Office of the Managing Director,
Performance Program Management shall send a copy of the Report and
Order in a report to be sent to Congress and the Government
Accountability Office pursuant to the Congressional Review Act, see 5
U.S.C. 801(a)(1)(A).
It is further ordered that should no petitions for reconsideration
or petitions for judicial review be timely filed, GN Docket No. 25-149
shall be terminated, and the docket closed.
[[Page 17873]]
List of Subjects in 47 CFR Part 1
Administrative practice and procedure, Authority delegations
(Government agencies), Communications, Communications common carriers,
Organization and functions (Government agencies).
Federal Communications Commission.
Marlene Dortch,
Secretary, Office of the Secretary.
Final Rules
For the reasons discussed in the preamble, the Federal
Communications Commission amends 47 CFR part 1 to read as follows:
PART 1--PRACTICE AND PROCEDURE
0
1. The authority citation for part 1 continues to read as follows:
Authority: 47 U.S.C. chs. 2, 5, 9, 13; 28 U.S.C. 2461 note; 47
U.S.C. 1754, unless otherwise noted.
0
2. Revise and republish subpart T, consisting of Sec. Sec. 1.5000
through 1.5004, to read as follows:
Subpart T--Foreign Ownership of Broadcast, Common Carrier, Aeronautical
En Route, and Aeronautical Fixed Radio Station Licensees
Sec.
1.5000 Citizenship and filing requirements under section 310(b) of
the Communications Act of 1934, as amended.
1.5001 Contents of petitions for declaratory ruling under section
310(b) of the Communications Act of 1934, as amended.
1.5002 How to calculate indirect equity and voting interests.
1.5003 Insulation criteria for interests in limited partnerships,
limited liability partnerships, and limited liability companies.
1.5004 Routine terms and conditions.
Sec. 1.5000 Citizenship and filing requirements under section 310(b)
of the Communications Act of 1934, as amended.
The rules in this subpart establish the requirements and conditions
for obtaining the Commission's prior approval of foreign ownership in
broadcast, common carrier, aeronautical en route, and aeronautical
fixed radio station licensees and common carrier spectrum lessees that
would exceed the 25 percent benchmarks in section 310(b)(4) of the Act.
These rules also establish the requirements and conditions for
obtaining the Commission's prior approval of foreign ownership in
common carrier (but not broadcast, aeronautical en route or
aeronautical fixed) radio station licensees and spectrum lessees that
would exceed the 20 percent limit in section 310(b)(3) of the Act.
These rules also establish the methodology applicable to eligible U.S.
public companies for purposes of determining and ensuring their
compliance with the foreign ownership limitations set forth in sections
310(b)(3) and 310(b)(4) of the Act.
(a)(1) Section 310(b)(4). A broadcast, common carrier, aeronautical
en route or aeronautical fixed radio station licensee or common carrier
spectrum lessee shall file a petition for declaratory ruling to obtain
Commission approval under section 310(b)(4) of the Act, and obtain such
approval, before the aggregate foreign ownership of any controlling
U.S. parent exceeds, directly and/or indirectly, 25 percent of the
controlling U.S. parent's equity interests and/or 25 percent of its
voting interests. An applicant for a broadcast, common carrier,
aeronautical en route or aeronautical fixed radio station license or
common carrier spectrum leasing arrangement shall file the petition for
declaratory ruling required by this paragraph at the same time that it
files its application.
(i) Paragraph (a)(1) of this section implements the Commission's
foreign ownership policies under section 310(b)(4) of the Act, 47
U.S.C. 310(b)(4), for broadcast, common carrier, aeronautical en route,
and aeronautical fixed radio station licensees and common carrier
spectrum lessees. It applies to foreign equity and/or voting interests
that are held, or would be held, directly and/or indirectly in a
controlling U.S. parent that itself directly or indirectly controls a
broadcast, common carrier, aeronautical en route, or aeronautical fixed
radio station licensee or common carrier spectrum lessee. A foreign
individual or entity that seeks to hold a controlling interest in such
a licensee or spectrum lessee must hold its controlling interest
indirectly, in a controlling U.S. parent that itself directly or
indirectly controls the licensee or spectrum lessee. Such controlling
interests are subject to section 310(b)(4) and the requirements of
paragraph (a)(1) of this section. The Commission assesses foreign
ownership interests subject to section 310(b)(4) separately from
foreign ownership interests subject to section 310(b)(3).
(ii) [Reserved]
(2) Section 310(b)(3). A common carrier radio station licensee or
spectrum lessee shall file a petition for declaratory ruling to obtain
approval under the Commission's section 310(b)(3) forbearance approach,
and obtain such approval, before aggregate foreign ownership, held
through one or more intervening U.S.-organized entities that hold non-
controlling equity and/or voting interests in the licensee, along with
any foreign interests held directly in the licensee or spectrum lessee,
exceeds 20 percent of its equity interests and/or 20 percent of its
voting interests. An applicant for a common carrier radio station
license or spectrum leasing arrangement shall file the petition for
declaratory ruling required by this paragraph at the same time that it
files its application. Foreign interests held directly in a licensee or
spectrum lessee, or other than through U.S.-organized entities that
hold non-controlling equity and/or voting interests in the licensee or
spectrum lessee, shall not be permitted to exceed 20 percent.
(i) Paragraph (a)(2) of this section implements the Commission's
section 310(b)(3) forbearance approach adopted in the First Report and
Order in IB Docket No. 11-133, FCC 12-93 (released Aug. 17, 2012), 77
FR 50628 (Aug. 22, 2012). The section 310(b)(3) forbearance approach
applies only to foreign equity and voting interests that are held, or
would be held, in a common carrier licensee or spectrum lessee through
one or more intervening U.S.-organized entities that do not control the
licensee or spectrum lessee. Foreign equity and/or voting interests
that are held, or would be held, directly in a licensee or spectrum
lessee, or indirectly other than through an intervening U.S.-organized
entity, are not subject to the Commission's section 310(b)(3)
forbearance approach and shall not be permitted to exceed the 20
percent limit in section 310(b)(3) of the Act, 47 U.S.C. 310(b)(3). The
Commission's forbearance approach does not apply to broadcast,
aeronautical en route or aeronautical fixed radio station licenses.
(ii) [Reserved]
(3) Examples under paragraphs (a)(1) and (2) of this section--(i)
Example 1. U.S.-organized Corporation A is preparing an application to
acquire a common carrier radio license by assignment from another
licensee. U.S.-organized Corporation A is wholly owned and controlled
by U.S.-organized Corporation B. U.S.-organized Corporation B is 51
percent owned and controlled by U.S.-organized Corporation C, which is,
in turn, wholly owned and controlled by foreign-organized Corporation
D. The remaining non-controlling 49 percent equity and voting interests
in U.S.-organized Corporation B are held by U.S.-organized Corporation
X, which is, in turn, wholly owned and controlled by U.S. citizens.
Paragraph (a)(1) of this section requires that U.S.-organized
Corporation A file a petition for
[[Page 17874]]
declaratory ruling to obtain Commission approval of the 51 percent
foreign ownership of its controlling U.S. parent, Corporation B, by
foreign-organized Corporation D, which exceeds the 25 percent
benchmarks in section 310(b)(4) of the Act for both equity interests
and voting interests. Corporation A is also required to identify and
request specific approval in its petition for any foreign individual or
entity, or ``group,'' as defined in paragraph (d) of this section, that
holds directly and/or indirectly more than 5 percent of Corporation B's
total outstanding capital stock (equity) and/or voting stock, or a
controlling interest in Corporation B, unless the foreign investment is
exempt under Sec. 1.5001(i)(3).
(ii) Example 2. U.S.-organized Corporation A is preparing an
application to acquire a common carrier radio license by assignment
from another licensee. U.S.-organized Corporation A is 51 percent owned
and controlled by U.S.-organized Corporation B, which is, in turn,
wholly owned and controlled by U.S. citizens. The remaining non-
controlling 49 percent equity and voting interests in U.S.-organized
Corporation A are held by U.S.-organized Corporation X, which is, in
turn, wholly owned and controlled by foreign-organized Corporation Y.
Paragraph (a)(2) of this section requires that U.S.-organized
Corporation A file a petition for declaratory ruling to obtain
Commission approval of the non-controlling 49 percent foreign ownership
of U.S.-organized Corporation A by foreign-organized Corporation Y
through U.S.-organized Corporation X, which exceeds the 20 percent
limit in section 310(b)(3) of the Act for both equity interests and
voting interests. U.S.-organized Corporation A is also required to
identify and request specific approval in its petition for any foreign
individual or entity, or ``group,'' as defined in paragraph (d) of this
section, that holds an equity and/or voting interest in foreign-
organized Corporation Y that, when multiplied by 49 percent, would
exceed 5 percent of U.S.-organized Corporation A's equity and/or voting
interests, unless the foreign investment is exempt under Sec.
1.5001(i)(3).
(iii) Example 3. U.S.-organized Corporation A is preparing an
application to acquire a common carrier radio license by assignment
from another licensee. U.S.-organized Corporation A is 51 percent owned
and controlled by U.S.-organized Corporation B, which is, in turn,
wholly owned and controlled by foreign-organized Corporation C. The
remaining non-controlling 49 percent equity and voting interests in
U.S.-organized Corporation A are held by U.S.-organized Corporation X,
which is, in turn, wholly owned and controlled by foreign-organized
Corporation Y. Paragraphs (a)(1) and (a)(2) of this section require
that U.S.-organized Corporation A file a petition for declaratory
ruling to obtain Commission approval of foreign-organized Corporation
C's 100 percent ownership interest in U.S.-organized parent,
Corporation B, and of foreign-organized Corporation Y's noncontrolling,
49 percent foreign ownership interest in U.S.-organized Corporation A
through U.S.-organized Corporation X, which exceed the 25 percent
benchmark and 20 percent limit in sections 310(b)(4) and 310(b)(3) of
the Act, respectively, for both equity interests and voting interests.
U.S.-organized Corporation A's petition also must identify and request
specific approval for ownership interests held by any foreign
individual, entity, or ``group,'' as defined in paragraph (d) of this
section, to the extent required by Sec. 1.5001(i).
(b) [Reserved]
(1) Except for petitions involving broadcast stations only, the
petition for declaratory ruling required by paragraph (a) of this
section, or any amendments thereto, shall be filed electronically
through the International Communications Filing System (ICFS) or any
successor system thereto. For information on filing a petition through
ICFS, see subpart Y of this part and the ICFS homepage at <a href="https://www.fcc.gov/icfs">https://www.fcc.gov/icfs</a>. Petitions for declaratory ruling required by
paragraph (a) of this section, or any amendments thereto, involving
broadcast stations only shall be filed electronically on the internet
through the Media Bureau's Licensing and Management System (LMS) or any
successor system thereto when submitted to the Commission as part of an
application for a construction permit, assignment, or transfer of
control of a broadcast license; if there is no associated construction
permit, assignment or transfer of control application, petitions for
declaratory ruling should be filed with the Office of the Secretary via
the Commission's Electronic Comment Filing System (ECFS).
(2) Amendments to petitions for declaratory ruling required by
paragraph (a) of this section must be filed in the following form:
(i) Substantial amendments to pending petitions for declaratory
ruling shall be filed as a complete restatement of the initial
petition, with a cover letter providing a narrative description of the
substantial change(s).
(ii) Ministerial amendments to pending petitions for declaratory
ruling shall be filed as an amendment to the petition, detailing only
the relevant change(s).
(c)(1) Each applicant, licensee, or spectrum lessee filing a
petition for declaratory ruling required by paragraph (a) of this
section shall certify to the information contained in the petition in
accordance with the provisions of Sec. 1.16 and the requirements of
this paragraph. The certification shall include a statement that the
applicant, licensee and/or spectrum lessee has calculated the ownership
interests disclosed in its petition based upon its review of the
Commission's rules and that the interests disclosed satisfy each of the
pertinent standards and criteria set forth in the rules.
(2) Multiple applicants and/or licensees shall file jointly the
petition for declaratory ruling required by paragraph (a) of this
section where the entities are under common control and
contemporaneously hold, or are contemporaneously filing applications
for, broadcast, common carrier licenses, common carrier spectrum
leasing arrangements, or aeronautical en route or aeronautical fixed
radio station licenses. Where joint petitioners have different
responses to the information required by Sec. 1.5001, such information
should be set out separately for each joint petitioner, except as
otherwise permitted in Sec. 1.5001(h)(2).
(i) Each joint petitioner shall certify to the information
contained in the petition in accordance with the provisions of Sec.
1.16 with respect to the information that is pertinent to that
petitioner. Alternatively, the controlling parent of the joint
petitioners may certify to the information contained in the petition.
(ii) Where the petition is being filed in connection with an
application for consent to transfer control of licenses or spectrum
leasing arrangements, the transferee or its ultimate controlling parent
may file the petition on behalf of the licensees or spectrum lessees
that would be acquired as a result of the proposed transfer of control
and certify to the information contained in the petition.
(3) Multiple applicants and licensees shall not be permitted to
file a petition for declaratory ruling jointly unless they are under
common control.
(d) The following definitions shall apply to this section and
Sec. Sec. 1.5001 through 1.5004.
Aeronautical radio licenses refers to aeronautical en route and
aeronautical fixed radio station licenses only. It does
[[Page 17875]]
not refer to other types of aeronautical radio station licenses.
Affiliate refers to any entity that is under common control with a
licensee, defined by reference to the holder, directly and/or
indirectly, of more than 50 percent of total voting power, where no
other individual or entity has de facto control.
Control includes actual working control in whatever manner
exercised and is not limited to majority stock ownership. Control also
includes direct or indirect control, such as through intervening
subsidiaries.
Controlling U.S. parent is the first controlling entity organized
in the United States that is directly above the licensee(s) in the
vertical chain of control and that does not itself hold a license
subject to section 310(b).
Entity includes a partnership, association, estate, trust,
corporation, limited liability company, governmental authority or other
organization.
Group refers to two or more individuals or entities that have
agreed to act together for the purpose of acquiring, holding, voting,
or disposing of their equity and/or voting interests in the relevant
licensee, controlling U.S. parent, or entity holding a direct and/or
indirect equity and/or voting interest in the licensee or controlling
U.S. parent.
Individual refers to a natural person as distinguished from a
partnership, association, corporation, or other organization.
Licensee as used in Sec. Sec. 1.5000 through 1.5004 includes a
spectrum lessee as defined in Sec. 1.9003.
Privately held company refers to a U.S.- or foreign-organized
company that has not issued a class of equity securities for which
beneficial ownership reporting is required by security holders and
other beneficial owners under sections 13(d) or 13(g) of the Securities
Exchange Act of 1934, as amended, 15 U.S.C. 78a et seq. (Exchange Act),
and corresponding Exchange Act Rule 13d-1, 17 CFR 240.13d-1, or a
substantially comparable foreign law or regulation.
Public company refers to a U.S.- or foreign-organized company that
has issued a class of equity securities for which beneficial ownership
reporting is required by security holders and other beneficial owners
under sections 13(d) or 13(g) of the Securities Exchange Act of 1934,
as amended, 15 U.S.C. 78a et seq. (Exchange Act) and corresponding
Exchange Act Rule 13d-1, 17 CFR 240.13d-1, or a substantially
comparable foreign law or regulation.
Subsidiary refers to any entity in which a licensee owns or
controls, directly and/or indirectly, more than 50 percent of the total
voting power of the outstanding voting stock of the entity, where no
other individual or entity has de facto control.
Voting stock refers to an entity's corporate stock, partnership or
membership interests, or other equivalents of corporate stock that,
under ordinary circumstances, entitles the holders thereof to elect the
entity's board of directors, management committee, or other equivalent
of a corporate board of directors.
Would hold as used in Sec. Sec. 1.5000 through 1.5004 includes
interests that an individual or entity proposes to hold in an
applicant, licensee, or spectrum lessee, or their controlling U.S.
parent, upon consummation of any transactions described in the petition
for declaratory ruling filed under paragraphs (a)(1) or (2) of this
section.
(e)(1) This section sets forth the methodology applicable to
broadcast, common carrier, aeronautical en route, and aeronautical
fixed radio station licensees and common carrier spectrum lessees that
are, or are directly or indirectly controlled by, an eligible U.S.
public company for purposes of monitoring the license's or spectrum
lessee's compliance with the foreign ownership limits set forth in
sections 310(b)(3) and 310(b)(4) of the Act and with the terms and
conditions of a licensee's or spectrum lessee's foreign ownership
ruling issued pursuant to paragraph (a)(1) or (2) of this section. For
purposes of this section:
(i) An ``eligible U.S. public company'' is a company that is
organized in the United States; whose stock is traded on a stock
exchange in the United States; and that has issued a class of equity
securities for which beneficial ownership reporting is required by
security holders and other beneficial owners under sections 13(d) or
13(g) of the Securities Exchange Act of 1934, as amended, 15 U.S.C. 78a
et seq. (Exchange Act) and corresponding Exchange Act Rule 13d-1, 17
CFR 240.13d-1;
(ii) A ``beneficial owner'' of a security refers to any person who,
directly or indirectly, through any contract, arrangement,
understanding, relationship, or otherwise has or shares voting power,
which includes the power to vote, or to direct the voting of, such
security; and
(iii) An ``equity interest holder'' refers to any person or entity
that has the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, a share.
(2) An eligible U.S. public company shall use information that is
known or reasonably should be known by the company in the ordinary
course of business, as described in this paragraph, to identify the
beneficial owners and equity interest holders of its voting and non-
voting stock:
(i) Information recorded in the company's share register;
(ii) Information as to shares held by officers, directors, and
employees;
(iii) Information reported to the Securities and Exchange
Commission (SEC) in Schedule 13D (17 CFR 240.13d-101) and in Schedule
13G (17 CFR 240.13d-102), including amendments filed by or on behalf of
a reporting person, and company specific information derived from SEC
Form 13F (17 CFR 249.325);
(iv) Information as to beneficial owners of shares required to be
identified in a company's annual reports (or proxy statements) and
quarterly reports;
(v) Information as to the identify and citizenship of a beneficial
owner and/or equity interest holder where such information is actually
known to the public company as a result of shareholder litigation,
financing transactions, and proxies voted at annual or other meetings;
and
(vi) Information as to the identity and citizenship of a beneficial
owner and/or equity interest holder where such information is actually
known to the company by whatever source.
(3) An eligible U.S. public company shall use information that is
known or reasonably should be known by the company in the ordinary
course of business to determine the citizenship of the beneficial
owners and equity interest holders, identified pursuant to paragraph
(e)(2) of this section, including information recorded in the company's
shareholder register, information required to be disclosed pursuant to
rules of the Securities and Exchange Commission, other information that
is publicly available to the company, and information received by the
company through direct inquiries with the beneficial owners and equity
interest holders where the company determines that direct inquiries are
necessary to its compliance efforts.
(4) A licensee or spectrum lessee that is, or is directly or
indirectly controlled by, an eligible U.S. public company, shall
exercise due diligence in identifying and determining the citizenship
of such public company's beneficial owners and equity interest holders.
(5) To calculate aggregate levels of foreign ownership, a licensee
or spectrum lessee that is, or is directly or indirectly controlled by,
an eligible U.S. public company, shall base its foreign
[[Page 17876]]
ownership calculations on such public company's known or reasonably
should be known foreign equity and voting interests as described in
paragraphs (e)(2) and (3) of this section. The licensee shall aggregate
the public company's known or reasonably should be known foreign voting
interests and separately aggregate the public company's known or
reasonably should be known foreign equity interests. If the public
company's known or reasonably should be known foreign voting interests
and its known or reasonably should be known foreign equity interests do
not exceed 25 percent (20 percent in the case of an eligible publicly
traded licensee subject to section 310(b)(3)) of the company's total
outstanding voting shares or 25 percent (20 percent in the case of an
eligible publicly traded licensee subject to Section 310(b)(3)) of the
company's total outstanding shares (whether voting or non-voting),
respectively, the company shall be deemed compliant, under this
section, with the applicable statutory limit.
(i) Example. Assume that a licensee's controlling U.S. parent is an
eligible U.S. public company. The publicly traded controlling U.S.
parent has one class of stock consisting of 100 total outstanding
shares of common voting stock. The licensee (and/or the controlling
U.S. parent on its behalf) has exercised the required due diligence in
following the methodology described in paragraph (e) for identifying
and determining the citizenship of the controlling U.S. parent's
``known or reasonably should be known'' interest holders and has
identified one foreign shareholder that owns 6 shares (i.e., 6 percent
of the total outstanding shares) and another foreign shareholder that
owns 4 shares (i.e., 4 percent of the total outstanding shares). The
licensee would add the controlling U.S. parent's known foreign shares
and divide the sum by the number of the controlling U.S. parent's total
outstanding shares. In this example, the licensee's controlling U.S.
parent would be calculated as having an aggregate 10 percent foreign
equity interests and 10 percent foreign voting interests (6 + 4 foreign
shares = 10 foreign shares; 10 foreign shares divided by 100 total
outstanding shares = 10 percent). Thus, in this example, the licensee
would be deemed compliant with Section 310(b)(4).
(ii) [Reserved]
Sec. 1.5001 Contents of petitions for declaratory ruling under
section 310(b) of the Communications Act of 1934, as amended.
The petition for declaratory ruling required by Sec. 1.5000(a)(1)
and/or (2) shall contain the following information:
(a) Applicant or licensee information. With respect to each
petitioning applicant or licensee, provide its name; FCC Registration
Number (FRN); mailing address; place of organization; telephone number;
facsimile number (if available); electronic mail address (if
available); type of business organization (e.g., corporation,
unincorporated association, trust, general partnership, limited
partnership, limited liability company, other (include description of
legal entity)); name and title of officer certifying to the information
contained in the petition.
(b) Third party information. If the petitioning applicant or
licensee is represented by a third party (e.g., legal counsel), specify
that individual's name, the name of the firm or company, mailing
address and telephone number/electronic mail address.
(c) Services covered. (1) For each named licensee, list the type(s)
of radio service authorized (e.g., broadcast service, cellular radio
telephone service; microwave radio service; mobile satellite service;
aeronautical fixed service). In the case of broadcast licensees, also
list the call sign, facility identification number (if applicable), and
community of license or transmit site for each authorization covered by
the petition.
(2) If the petition is filed in connection with an application for
a radio station license or a spectrum leasing arrangement, or an
application to acquire a license or spectrum leasing arrangement by
assignment or transfer of control, specify for each named applicant:
(i) The File No(s). of the associated application(s), if available
at the time the petition is filed; otherwise, specify the anticipated
filing date for each application; and
(ii) The type(s) of radio services covered by each application
(e.g., broadcast service, cellular radio telephone service; microwave
radio service; mobile satellite service; aeronautical fixed service).
(d) Type of Declaratory Ruling. With respect to each petitioner,
include a statement as to whether the petitioner is requesting a
declaratory ruling under Sec. 1.5000(a)(1) and/or (2).
(e) Disclosable interest holders--direct U.S. or foreign interests
in the controlling U.S. parent. Paragraphs (e)(1) through (4) of this
section apply only to petitions filed under Sec. 1.5000(a)(1) and/or
(2) for common carrier, aeronautical en route, and aeronautical fixed
radio station applicants or licensees, as applicable. Petitions filed
under Sec. 1.5000(a)(1) for broadcast licensees shall provide the name
of any individual or entity that holds, or would hold, directly, an
attributable interest in the controlling U.S. parent of the petitioning
broadcast station applicant(s) or licensee(s), as defined in the Notes
to Sec. 73.3555 of this chapter. Where no individual or entity holds,
or would hold, directly, an attributable interest in the controlling
U.S. parent (for petitions filed under Sec. 1.5000(a)(1)), the
petition shall specify that no individual or entity holds, or would
hold, directly, an attributable interest in the controlling U.S.
parent, applicant(s), or licensee(s).
(1) Direct U.S. or foreign interests of ten percent or more or a
controlling interest. With respect to petitions filed under Sec.
1.5000(a)(1), provide the name of any individual or entity that holds,
or would hold, directly 10 percent or more of the equity interests and/
or voting interests, or a controlling interest, in the controlling U.S.
parent of the petitioning common carrier or aeronautical radio station
applicant(s) or licensee(s) as specified in paragraphs (e)(4)(i)
through (iv) of this section.
(2) Direct U.S. or foreign interests of ten percent or more or a
controlling interest. With respect to petitions filed under Sec.
1.5000(a)(2), provide the name of any individual or entity that holds,
or would hold, directly 10 percent or more of the equity interests and/
or voting interests, or a controlling interest, in each petitioning
common carrier applicant or licensee as specified in paragraphs
(e)(4)(i) through (iv) of this section.
(3) No direct U.S. or foreign interests of ten percent or more or a
controlling interest. Where no individual or entity holds, or would
hold, directly 10 percent or more of the equity interests and/or voting
interests, or a controlling interest, in the controlling U.S. parent
(for petitions filed under Sec. 1.5000(a)(1)) or in the applicant or
licensee (for petitions filed under Sec. 1.5000(a)(2)), the petition
shall state that no individual or entity holds or would hold directly
10 percent or more of the equity interests and/or voting interests, or
a controlling interest, in the controlling U.S. parent, applicant or
licensee.
(4) Organization of controlling U.S. parent. (i) Where a
controlling U.S. parent, applicant, or licensee is organized as a
corporation, provide the name of any individual or entity that holds,
or would hold, 10 percent or
[[Page 17877]]
more of the outstanding capital stock and/or voting stock, or a
controlling interest.
(ii) Where a controlling U.S. parent, applicant, or licensee is
organized as a general partnership, provide the names of the
partnership's constituent general partners.
(iii) Where a controlling U.S. parent, applicant, or licensee is
organized as a limited partnership or limited liability partnership,
provide the name(s) of the general partner(s) (in the case of a limited
partnership), any uninsulated partner, regardless of its equity
interest, and any insulated partner with an equity interest in the
partnership of at least 10 percent (calculated according to the
percentage of the partner's capital contribution). With respect to each
named partner (other than a named general partner), the petitioner
shall state whether the partnership interest is insulated or
uninsulated, based on the insulation criteria specified in Sec.
1.5003.
(iv) Where a controlling U.S. parent, applicant, or licensee is
organized as a limited liability company, provide the name(s) of each
uninsulated member, regardless of its equity interest, any insulated
member with an equity interest of at least 10 percent (calculated
according to the percentage of its capital contribution), and any non-
equity manager(s). With respect to each named member, the petitioner
shall state whether the interest is insulated or uninsulated, based on
the insulation criteria specified in Sec. 1.5003, and whether the
member is a manager.
(5) Information about trustee. With respect to trusts holding
equity and/or voting or controlling interests in the petitioner,
applicant/licensee, a non-controlling intervening U.S. entity, or the
controlling U.S. parent, provide the name(s) of the trustee(s)
regardless of the amount of equity and/or voting or controlling
interests.
(6) General partner interest. The Commission presumes that a
general partner of a general partnership or limited partnership has a
controlling (100 percent) voting interest in the partnership. A general
partner shall in all cases be deemed to hold an uninsulated interest in
the partnership.
(f) Disclosable interest holders--indirect U.S. or foreign
interests in the controlling U.S. parent. Paragraphs (f)(1) through (3)
of this section apply only to petitions filed under Sec. 1.5000(a)(1)
and/or Sec. 1.5000(a)(2) for common carrier, aeronautical en route,
and aeronautical fixed radio station applicants or licensees, as
applicable. Petitions filed under Sec. 1.5000(a)(1) for broadcast
licensees shall provide the name of any individual or entity that
holds, or would hold, indirectly, an attributable interest in the
controlling U.S. parent of the petitioning broadcast station
applicant(s) or licensee(s), as defined in the Notes to Sec. 73.3555
of this chapter. Where no individual or entity holds, or would hold,
indirectly, an attributable interest in the controlling U.S. parent
(for petitions filed under Sec. 1.5000(a)(1)), the petition shall
specify that no individual or entity holds, or would hold, indirectly,
an attributable interest in the controlling U.S. parent, applicant(s),
or licensee(s).
(1) Indirect U.S. or foreign interests of 10 percent or more or a
controlling interest. With respect to petitions filed under Sec.
1.5000(a)(1), provide the name of any individual or entity that holds,
or would hold, indirectly, through one or more intervening entities, 10
percent or more of the equity interests and/or voting interests, or a
controlling interest, in the controlling U.S. parent of the petitioning
common carrier or aeronautical radio station applicant(s) or
licensee(s). Equity interests and voting interests held indirectly
shall be calculated in accordance with the principles set forth in
Sec. 1.5002.
(2) Indirect U.S. or foreign interests of 10 percent or more or a
controlling interest. With respect to petitions filed under Sec.
1.5000(a)(2), provide the name of any individual or entity that holds,
or would hold, indirectly, through one or more intervening entities, 10
percent or more of the equity interests and/or voting interests, or a
controlling interest, in the petitioning common carrier radio station
applicant(s) or licensee(s). Equity interests and voting interests held
indirectly shall be calculated in accordance with the principles set
forth in Sec. 1.5002.
(3) No indirect U.S. or foreign interests of 10 percent or more or
a controlling interest. Where no individual or entity holds, or would
hold, indirectly 10 percent or more of the equity interests and/or
voting interests, or a controlling interest, in the controlling U.S.
parent (for petitions filed under Sec. 1.5000(a)(1)) or in the
petitioning applicant(s) or licensee(s) (for petitions filed under
Sec. 1.5000(a)(2)), the petition shall specify that no individual or
entity holds indirectly 10 percent or more of the equity interests and/
or voting interests, or a controlling interest, in the controlling U.S.
parent, applicant(s), or licensee(s).
(4) Information about trustee. With respect to trusts, provide the
name(s) of the trustee(s) of the trust regardless of the trustee(s)'
equity interests and/or voting interests, or a controlling interest in
the petitioner or applicant/licensee, or any interest in a non-
controlling intervening U.S. entity, or the controlling U.S. parent.
(5) General partner interest. The Commission presumes that a
general partner of a general partnership or limited partnership has a
controlling interest in the partnership. A general partner shall in all
cases be deemed to hold an uninsulated interest in the partnership.
(g) Citizenship and other information--(1) Citizenship and other
information for disclosable interests in common carrier, aeronautical
en route, and aeronautical fixed radio station applicants and
licensees. For each 10 percent interest holder named in response to
paragraphs (e) and (f) of this section, specify the equity interest
held and the voting interest held (each to the nearest one percent); in
the case of an individual, his or her citizenship; and in the case of a
business organization, its place of organization, type of business
organization (e.g., corporation, unincorporated association, trust,
general partnership, limited partnership, limited liability company,
other (include description of legal entity)), and principal
business(es).
(2) Citizenship and other information for disclosable interests in
broadcast station applicants and licensees. For each attributable
interest holder named in response to paragraphs (e) and (f) of this
section, describe the nature of the attributable interest and, if
applicable, specify the equity interest held and the voting interest
held (each to the nearest one percent); in the case of an individual,
his or her citizenship; and in the case of a business organization, its
place of organization, type of business organization (e.g.,
corporation, unincorporated association, trust, general partnership,
limited partnership, limited liability company, other legal entity
(include description)), and a description of the principal
business(es).
(h) Ownership information--(1) Estimate of aggregate foreign
ownership. For petitions filed under Sec. 1.5000(a)(1), attach an
exhibit that provides a percentage estimate of the controlling U.S.
parent's aggregate direct and/or indirect foreign equity interests and
its aggregate direct and/or indirect foreign voting interests. For
petitions filed under Sec. 1.5000(a)(2), attach an exhibit that
provides a percentage estimate of the aggregate foreign equity
interests and aggregate foreign voting interests held directly in the
petitioning applicant(s) and/or licensee(s), if any, and the aggregate
foreign equity interests and aggregate foreign voting interests held
indirectly in the petitioning applicant(s) and/or
[[Page 17878]]
licensee(s). The exhibit required by this paragraph must also provide a
general description of the methods used to determine the percentages,
and a statement addressing the circumstances that prompted the filing
of the petition and demonstrating that the public interest would be
served by grant of the petition.
(2) Ownership and control structure. Attach an exhibit that
describes the ownership and control structure of the applicant(s) and/
or licensee(s) that are the subject of the petition, including an
ownership diagram and identification of the real party-in-interest
disclosed in any companion applications. The ownership diagram should
illustrate the petitioner's vertical ownership structure, including the
controlling U.S. parent named in the petition (for petitions filed
under Sec. 1.5000(a)(1)) and either:
(i) For common carrier, aeronautical en route, and aeronautical
fixed radio station applicants and licensees, the direct and indirect
ownership (equity and voting) interests held by the individual(s) and/
or entity(ies) named in response to paragraphs (e) and (f) of this
section; or
(ii) For broadcast station applicants and licensees, the
attributable interest holders named in response to paragraphs (e) and
(f) of this section. Each such individual or entity shall be depicted
in the ownership diagram and all controlling interests labeled as such.
Where the petition includes multiple petitioners, the ownership of all
petitioners may be depicted in a single ownership diagram or in
multiple diagrams.
(i) Requests for specific approval. Provide, as required or
permitted by this paragraph, the name of each foreign individual and/or
entity for which each petitioner requests specific approval, if any,
and the respective percentages of equity and/or voting interests (to
the nearest one percent) that each such foreign individual or entity
holds, or would hold, directly and/or indirectly, in the controlling
U.S. parent of the petitioning broadcast, common carrier or
aeronautical radio station applicant(s) or licensee(s) for petitions
filed under Sec. 1.5000(a)(1), and in each petitioning common carrier
applicant or licensee for petitions filed under Sec. 1.5000(a)(2).
(1) Each petitioning broadcast, common carrier or aeronautical
radio station applicant or licensee filing under Sec. 1.5000(a)(1)
shall identify and request specific approval for any foreign
individual, entity, or group of such individuals or entities that
holds, or would hold, directly and/or indirectly, more than 5 percent
of the equity and/or voting interests, or a controlling interest, in
the petitioner's controlling U.S. parent unless the foreign investment
is exempt under paragraph (i)(3) of this section. Equity and voting
interests held indirectly in the petitioner's controlling U.S. parent
shall be calculated in accordance with the principles set forth in
Sec. Sec. 1.5002 and 1.5003. Equity and voting interests held directly
in a petitioner's controlling U.S. parent that is organized as a
partnership or limited liability company shall be calculated in
accordance with paragraph (i)(4)(ii)(C)(1) of this section.
(2) Solely for the purpose of identifying foreign interests that
require specific approval under this paragraph (i), broadcast station
applicants and licensees filing petitions under Sec. 1.5000(a)(1)
should calculate equity and voting interests in accordance with the
principles set forth in Sec. Sec. 1.5002 and 1.5003 and not as set
forth in the Notes to Sec. 73.3555 of this chapter, to the extent that
there are any differences in such calculation methods. Notwithstanding
the foregoing, the insulation of limited partnership, limited liability
partnership, and limited liability company interests for broadcast
applicants and licensees shall be determined in accordance with Note
2(f) of Sec. 73.3555 of this chapter.
(3) Each petitioning common carrier radio station applicant or
licensee filing under Sec. 1.5000(a)(2) shall identify and request
specific approval for any foreign individual, entity, or group of such
individuals or entities that holds, or would hold, directly, and/or
indirectly through one or more intervening U.S.-organized entities that
do not control the applicant or licensee, more than 5 percent of the
equity and/or voting interests in the applicant or licensee unless the
foreign investment is exempt under paragraph (i)(3) of this section.
Equity and voting interests held indirectly in the applicant or
licensee shall be calculated in accordance with the principles set
forth in Sec. Sec. 1.5002 and 1.5003. Equity and voting interests held
directly in an applicant or licensee that is organized as a partnership
or limited liability company shall be calculated in accordance with
paragraph (i)(4)(ii)(C)(1) of this section.
(i) Foreign interests of 5 percent or less. Certain foreign
interests of 5 percent or less may require specific approval under
paragraphs (i)(1) and (2). See paragraph (i)(4)(ii)(C)(2) of this
section.
(ii) Interest held by a ``group.'' Two or more individuals or
entities will be treated as a ``group'' when they have agreed to act
together for the purpose of acquiring, holding, voting, or disposing of
their equity and/or voting interests in the licensee and/or controlling
U.S. parent of the licensee or in any intermediate company(ies) through
which any of the individuals or entities holds its interests in the
licensee and/or controlling U.S. parent of the licensee.
(iii) Example. Assume a common carrier (``Petitioner'') is
preparing a petition for declaratory ruling to request Commission
approval for foreign ownership of its controlling U.S. parent to exceed
the 25 percent benchmarks in section 310(b)(4) of the Act and section
1.5000(a)(1) of the Commission's rules. The Petitioner identifies that
Trust A, a U.S. entity, will indirectly hold 40 percent equity and
voting interests in the Petitioner's controlling U.S. parent. Trust A
has three trustees, each with equal interests in the trust, one of
which is a foreign citizen. None of the trustees have a controlling
interest in the trust. In such a case, the Applicant must disclose all
the name(s) of the trustees to Trust A and provide the information
required under Sec. 1.5001(e) for each trustee. Pursuant to Sec.
1.5001(i), if the foreign trustee(s) holds or will hold more than five
percent equity and/or voting interests, as is the case in this example,
the trustee(s) must request specific approval for its equity and/or
voting interests in the Applicant's controlling U.S. parent prior to
its interests exceeding five percent.
(4) A foreign investment is exempt from the specific approval
requirements of paragraphs (i)(1) and (2) of this section where:
(i) The foreign individual or entity holds, or would hold, directly
and/or indirectly, no more than 10 percent of the equity and/or voting
interests of the controlling U.S. parent (for petitions filed under
Sec. 1.5000(a)(1)) or the petitioning applicant or licensee (for
petitions filed under Sec. 1.5000(a)(2)); and
(ii) The foreign individual or entity does not hold, and would not
hold, a controlling interest in the petitioner or any controlling
parent company, does not plan or intend to change or influence control
of the petitioner or any controlling parent company, does not possess
or develop any such purpose, and does not take any action having such
purpose or effect. The Commission will presume, in the absence of
evidence to the contrary, that the following interests satisfy this
criterion for exemption from the specific approval requirements in
paragraphs (i)(1) and (2) of this section:
(A) Where the petitioning applicant or licensee, controlling U.S.
parent, or entity holding a direct or indirect equity and/or voting
interest in the applicant/
[[Page 17879]]
licensee or controlling U.S. parent is a ``public company,'' as defined
in Sec. 1.5000(d), provided that the foreign holder is an
institutional investor that is eligible to report its beneficial
ownership interests in the company's voting, equity securities in
excess of 5 percent (not to exceed 10 percent) pursuant to Exchange Act
Rule 13d-1(b), 17 CFR 240.13d-1(b), or a substantially comparable
foreign law or regulation. This presumption shall not apply if the
foreign individual, entity or group holding such interests is obligated
to report its holdings in the company pursuant to Exchange Act Rule
13d-1(a), 17 CFR 240.13d-1(a), or a substantially comparable foreign
law or regulation.
(1) Example. Common carrier applicant (``Applicant'') is preparing
a petition for declaratory ruling to request Commission approval for
foreign ownership of its controlling U.S. parent to exceed the 25
percent benchmarks in section 310(b)(4) of the Act. Applicant does not
currently hold any FCC licenses. Shares of controlling U.S. parent
trade publicly on the New York Stock Exchange. Based on a review of its
shareholder records, controlling U.S. parent has determined that its
aggregate foreign ownership on any given day may exceed an aggregate 25
percent, including a 6 percent common stock interest held by a foreign-
organized mutual fund (``Foreign Fund''). Controlling U.S. parent has
confirmed that Foreign Fund is not currently required to report its
interest pursuant to Exchange Act Rule 13d-1(a) and instead is eligible
to report its interest pursuant to Exchange Act Rule 13d-1(b).
Controlling U.S. parent also has confirmed that Foreign Fund does not
hold any other interests in controlling U.S. parent's equity
securities, whether of a class of voting or non-voting securities.
Applicant may, but is not required to, request specific approval of
Foreign Fund's 6 percent interest in controlling U.S. parent.
(2) Example. Where an institutional investor holds voting, equity
securities that are subject to reporting under Exchange Act Rule 13d-1,
17 CFR 240.13d-1, or a substantially comparable foreign law or
regulation, in addition to equity securities that are not subject to
such reporting, the investor's total capital stock interests may be
aggregated and treated as exempt from the 5 percent specific approval
requirement in paragraphs (i)(1) and (2) of this section so long as the
aggregate amount of the institutional investor's holdings does not
exceed 10 percent of the company's total capital stock or voting rights
and the investor is eligible to certify under Exchange Act Rule 13d-
1(b), 17 CFR 240.13d-1(b), or a substantially comparable foreign law or
regulation that it has acquired its capital stock interests in the
ordinary course of business and not with the purpose nor with the
effect of changing or influencing the control of the company. In
calculating foreign equity and voting interests, the Commission does
not consider convertible interests such as options, warrants and
convertible debentures until converted, unless specifically requested
by the petitioner, i.e., where the petitioner is requesting approval so
those rights can be exercised in a particular case without further
Commission approval.
(B) Where the petitioning applicant or licensee, controlling U.S.
parent, or entity holding a direct and/or indirect equity and/or voting
interest in the applicant/licensee or controlling U.S. parent is a
``privately held'' corporation, as defined in Sec. 1.5000(d), provided
that a shareholders' agreement, or similar voting agreement, prohibits
the foreign holder from becoming actively involved in the management or
operation of the corporation and limits the foreign holder's voting and
consent rights, if any, to the minority shareholder protections listed
in paragraph (i)(6) of this section.
(C) Where the petitioning applicant or licensee, controlling U.S.
parent, or entity holding a direct and/or indirect equity and/or voting
interest in the licensee or controlling U.S. parent is ``privately
held,'' as defined in Sec. 1.5000(d), and is organized as a limited
partnership, limited liability company (``LLC''), or limited liability
partnership (``LLP''), provided that the foreign holder is
``insulated'' in accordance with the criteria specified in Sec.
1.5003.
(1) For purposes of identifying foreign interests that require
specific approval, where the petitioning applicant, licensee, or
controlling U.S. parent is itself organized as a partnership or LLC, a
general partner, uninsulated limited partner, uninsulated LLC member,
and non-member LLC manager shall be deemed to hold a controlling (100
percent) voting interest in the applicant, licensee, or controlling
U.S. parent.
(2) For purposes of identifying foreign interests that require
specific approval, where interests are held indirectly in the
petitioning applicant, licensee, or controlling U.S. parent through one
or more intervening partnerships or LLCs, a general partner,
uninsulated limited partner, uninsulated LLC members, and non-member
LLC managers shall be deemed to hold the same voting interest as the
partnership or LLC holds in the company situated in the next lower tier
of the petitioner's vertical ownership chain and, ultimately, the same
voting interest as the partnership or LLC is calculated as holding in
the controlling U.S. parent (for petitions filed under Sec.
1.5000(a)(1)) or in the applicant or licensee (for petitions filed
under Sec. 1.5000(a)(2)). See Sec. 1.5002(b)(2)(ii)(A) and
(b)(2)(iii)(A). Where a limited partner or LLC member is insulated, the
limited partner's or LLC member's voting interest in the controlling
U.S. parent (for petitions filed under Sec. 1.5000(a)(1)), or in the
applicant or licensee (for petitions filed under Sec. 1.5000(a)(2)) is
calculated as equal to the limited partner's or LLC member's equity
interest in the controlling U.S. parent or in the applicant or
licensee, respectively. See Sec. 1.5002(b)(2)(ii)(B) and
(b)(2)(iii)(B). Thus, depending on the particular ownership structure
presented in the petition, a foreign general partner, uninsulated
limited partner, LLC member, or non-member LLC manager of an
intervening partnership or LLC may be deemed to hold an indirect voting
interest in the controlling U.S. parent or in the petitioning applicant
or licensee that requires specific approval because the voting interest
exceeds the 5 percent amount specified in paragraphs (i)(1) and (2) of
this section and, unless the voting interest is otherwise insulated at
a lower tier of the petitioner's vertical ownership chain, the voting
interest would not qualify as exempt from specific approval under this
paragraph (i)(4)(ii)(C) even in circumstances where the voting interest
does not exceed 10 percent.
(3) A finding that a foreign individual or entity is deemed to hold
a 100 percent voting interest in the controlling U.S. parent for
purposes of Sec. 1.5001(i)(4)(ii)(C)(1) or a 50 percent or greater
voting interest in the controlling U.S. parent pursuant to Sec.
1.5001(i)(4)(ii)(C)(2), does not indicate that the interest constitutes
de jure control for purposes of compliance with Section 310(d) of the
Act.
(5) A petitioner may, but is not required to, request specific
approval for any other foreign individual or entity that holds, or
would hold, a direct and/or indirect equity and/or voting interest in
the controlling U.S. parent (for petitions filed under Sec.
1.5000(a)(1)) or in the petitioning applicant or licensee (for
petitions filed under Sec. 1.5000(a)(2)).
(6) The minority shareholder protections referenced in paragraph
(i)(3)(ii)(B) of this section consist of the following rights:
(i) The power to prevent the sale or pledge of all or substantially
all of the
[[Page 17880]]
assets of the corporation or a voluntary filing for bankruptcy or
liquidation;
(ii) The power to prevent the corporation from entering into
contracts with majority shareholders or their affiliates;
(iii) The power to prevent the corporation from guaranteeing the
obligations of majority shareholders or their affiliates;
(iv) The power to purchase an additional interest in the
corporation to prevent the dilution of the shareholder's pro rata
interest in the event that the corporation issues additional
instruments conveying shares in the company;
(v) The power to prevent the change of existing legal rights or
preferences of the shareholders, as provided in the charter, by-laws or
other operative governance documents;
(vi) The power to prevent the amendment of the charter, by-laws or
other operative governance documents of the company with respect to the
matters described in paragraph (i)(6)(i) through (v) of this section.
(7) The Commission reserves the right to consider, on a case-by-
case basis, whether voting or consent rights over matters other than
those listed in paragraph (i)(6) of this section shall be considered
permissible minority shareholder protections in a particular case.
(j) Specific approval information. For each foreign individual or
entity named in response to paragraph (i) of this section, provide the
following information:
(1) In the case of an individual, his or her citizenship and
principal business(es);
(2) In the case of a business organization:
(i) Its place of organization, type of business organization (e.g.,
corporation, unincorporated association, trust, general partnership,
limited partnership, limited liability company, other legal entity
(include description)), and a description of the principal
business(es);
(ii)(A) For common carrier, aeronautical en route, and aeronautical
fixed radio station applicants and licensees, the name of any
individual or entity that holds, or would hold, directly and/or
indirectly, through one or more intervening entities, 10 percent or
more of the equity interests and/or voting interests, or a controlling
interest, in the foreign entity for which the petitioner requests
specific approval. Specify for each such interest holder, his or her
citizenship (for individuals) or place of legal organization (for
entities). Equity interests and voting interests held indirectly shall
be calculated in accordance with the principles set forth in Sec.
1.5002.
(B) For broadcast applicants and licensees, the name of any
individual or entity that holds, or would hold, directly and/or
indirectly, through one or more intervening entities, an attributable
interest in the foreign entity for which the petitioner requests
specific approval. Specify for each such interest holder, his or her
citizenship (for individuals) or place of legal organization (for
entities). Attributable interests shall be calculated in accordance
with the principles set forth in the Notes to Sec. 73.3555 of this
chapter.
(iii)(A) For common carrier, aeronautical en route, and
aeronautical fixed radio station applicants and licensees, where no
individual or entity holds, or would hold, directly and/or indirectly,
10 percent or more of the equity interests and/or voting interests, or
a controlling interest, the petition shall specify that no individual
or entity holds, or would hold, directly and/or indirectly, 10 percent
or more of the equity interests and/or voting interests, or a
controlling interest, in the foreign entity for which the petitioner
requests specific approval.
(B) For broadcast applicants and licensees, where no individual or
entity holds, or would hold, directly and/or indirectly, an
attributable interest in the foreign entity, the petition shall specify
that no individual or entity holds, or would hold, directly and/or
indirectly, an attributable interest in the foreign entity for which
the petitioner requests specific approval.
(k) Requests for advance approval. The petitioner may, but is not
required to, request advance approval in its petition for any foreign
individual or entity named in response to paragraph (i) of this section
to increase its direct and/or indirect equity and/or voting interests
in the controlling U.S. parent of the broadcast, common carrier or
aeronautical radio station licensee, for petitions filed under Sec.
1.5000(a)(1), and/or in the common carrier licensee, for petitions
filed under Sec. 1.5000(a)(2), above the percentages specified in
response to paragraph (i) of this section. Requests for advance
approval shall be made as follows:
(1) Petitions filed under Sec. 1.5000(a)(1). Where a foreign
individual or entity named in response to paragraph (i) of this section
holds, or would hold upon consummation of any transactions described in
the petition, a de jure or de facto controlling interest in the
controlling U.S. parent, the petitioner may request advance approval in
its petition for the foreign individual or entity to increase its
interests, at some future time, up to any amount, including 100 percent
of the direct and/or indirect equity and/or voting interests in the
controlling U.S. parent. The petitioner shall specify for the named
controlling foreign individual(s) or entity(ies) the maximum
percentages of equity and/or voting interests for which advance
approval is sought or, in lieu of a specific amount, state that the
petitioner requests advance approval for the named controlling foreign
individual or entity to increase its interests up to and including 100
percent of the controlling U.S. parent's direct and/or indirect equity
and/or voting interests.
(2) Petitions filed under Sec. 1.5000(a)(1) and/or (2). Where a
foreign individual or entity named in response to paragraph (i) of this
section holds, or would hold upon consummation of any transactions
described in the petition, a non-controlling interest in the
controlling U.S. parent of the licensee, for petitions filed under
Sec. 1.5000(a)(1), or in the licensee, for petitions filed under Sec.
1.5000(a)(2), the petitioner may request advance approval in its
petition for the foreign individual or entity to increase its
interests, at some future time, up to any non-controlling amount not to
exceed 49.99 percent. The petitioner shall specify for the named
foreign individual(s) or entity(ies) the maximum percentages of equity
and/or voting interests for which advance approval is sought or, in
lieu of a specific amount, shall state that the petitioner requests
advance approval for the named foreign individual(s) or entity(ies) to
increase their interests up to and including a non-controlling 49.99
percent equity and/or voting interest in the licensee, for petitions
filed under Sec. 1.5000(a)(2), or in the controlling U.S. parent of
the licensee, for petitions filed under Sec. 1.5000(a)(1).
(3) Request for advance approval. Foreign individuals or entities
that are deemed to hold 100 percent voting interest pursuant to Sec.
1.5001(i)(4)(ii)(C)(1) or a 50 percent or greater voting interest in
the controlling U.S. parent pursuant to Sec. 1.5001(i)(4)(ii)(C)(2),
but do not have de jure or de facto control of the controlling U.S.
parent, may request advance approval in the petition for declaratory
ruling for the foreign individual or entity to increase its interests,
at some future time, up to any non-controlling amount not to exceed
49.99 percent.
(l) Certification. Each applicant, licensee, or spectrum lessee
filing a petition for declaratory ruling shall certify to the
information contained in
[[Page 17881]]
the petition in accordance with the provisions of Sec. 1.16 and the
requirements of Sec. 1.5000(c)(1).
(m) Submission of petition and responses to standard questions to
the Committee for the Assessment of Foreign Participation in the United
States Telecommunications Services Sector. For each petition subject to
a referral to the executive branch pursuant to Sec. 1.40001, the
petitioner must submit:
(1) Responses to standard questions, prior to or at the same time
the petitioner files its petition with the Commission, pursuant to
subpart CC of this part, directly to the Committee for the Assessment
of Foreign Participation in the United States Telecommunications
Services Sector (Committee). The standard questions and instructions
for submitting the responses are available on the FCC website. The
required information shall be submitted separately from the petition
and shall be submitted directly to the Committee.
(2) A complete and unredacted copy of its FCC petition(s),
including the file number(s) and docket number(s), to the Committee
within three (3) business days of filing it with the Commission. The
instructions for submitting a copy of the FCC petition(s) to the
Committee are available on the FCC website.
(n) Certifications. (1) Broadcast applicants and licensees shall
make the following certifications by which they agree:
(i) To designate a point of contact who is located in the United
States and is a U.S. citizen or lawful U.S. permanent resident, for the
execution of lawful requests and as an agent for legal service of
process;
(ii)(A) That the petitioner is responsible for the continuing
accuracy and completeness of all information submitted, whether at the
time of submission of the petition or subsequently in response to
either the Commission or the Committee's request, as required in Sec.
1.65(a), and that the petitioner agrees to inform the Commission and
the Committee of any substantial and significant changes while a
petition is pending; and
(B) After the petition is no longer pending for purposes of Sec.
1.65, the petitioner must notify the Commission and the Committee of
any changes in petitioner information and/or contact information
promptly, and in any event within thirty (30) days; and
(iii) That the petitioner understands that if the petitioner or an
applicant or licensee covered by the declaratory ruling fails to
fulfill any of the conditions and obligations in the certifications set
out in paragraph (n)(1) of this section or in the grant of an
application, petition, license, or authorization associated with the
declaratory ruling and/or that if the information provided to the
United States Government is materially false, fictitious, or
fraudulent, the petitioner, applicants, and licensees may be subject to
all remedies available to the United States Government, including but
not limited to revocation and/or termination of the Commission's
declaratory ruling, authorization or license, and criminal and civil
penalties, including penalties under 18 U.S.C. 1001.
(2) Common carrier applicants, licensees, or spectrum lessees shall
make the following certifications by which they agree:
(i) To comply with all applicable Communications Assistance for Law
Enforcement Act (CALEA) requirements and related rules and regulations,
including any and all FCC orders and opinions governing the application
of CALEA, pursuant to the Communications Assistance for Law Enforcement
Act and the Commission's rules and regulations in subpart Z of this
part;
(ii) To make communications to, from, or within the United States,
as well as records thereof, available in a form and location that
permits them to be subject to a valid and lawful request or legal
process in accordance with U.S. law, including but not limited to:
(A) The Wiretap Act, 18 U.S.C. 2510 et seq.;
(B) The Stored Communications Act, 18 U.S.C. 2701 et seq.;
(C) The Pen Register and Trap and Trace Statute, 18 U.S.C. 3121 et
seq.; and
(D) Other court orders, subpoenas, or other legal process;
(iii) To designate a point of contact who is located in the United
States and is a U.S. citizen or lawful U.S. permanent resident, for the
execution of lawful requests and as an agent for legal service of
process;
(iv)(A) That the petitioner is responsible for the continuing
accuracy and completeness of all information submitted, whether at the
time of submission of the petition or subsequently in response to
either the Commission or the Committee's request, as required in Sec.
1.65(a), and that the petitioner agrees to inform the Commission and
the Committee of any substantial and significant changes while a
petition is pending; and
(B) After the petition is no longer pending for purposes of Sec.
1.65 of the rules, the petitioner must notify the Commission and the
Committee of any changes in petitioner information and/or contact
information promptly, and in any event within thirty (30) days; and
(v) That the petitioner understands that if the petitioner or an
applicant or licensee covered by the declaratory ruling fails to
fulfill any of the conditions and obligations set forth in the
certifications set out in paragraph (n)(2) of this section or in the
grant of an application, petition, license, or authorization associated
with this declaratory ruling and/or that if the information provided to
the United States Government is materially false, fictitious, or
fraudulent, the petitioner, applicants, and licensees may be subject to
all remedies available to the United States Government, including but
not limited to revocation and/or termination of the Commission's
declaratory ruling, authorization or license, and criminal and civil
penalties, including penalties under 18 U.S.C. 1001.
Sec. 1.5002 How to calculate indirect equity and voting interests.
(a) Calculating indirect equity and voting interests. The criteria
specified in this section shall be used for purposes of calculating
indirect equity and voting interests under Sec. 1.5001.
(b) Indirect equity and voting interests--(1) Equity interests held
indirectly in the licensee and/or controlling U.S. parent. Equity
interests that are held by an individual or entity indirectly through
one or more intervening entities shall be calculated by successive
multiplication of the equity percentages for each link in the vertical
ownership chain, regardless of whether any particular link in the chain
represents a controlling interest in the company positioned in the next
lower tier.
(i) Example (for rulings issued under Sec. 1.5000(a)(1)). Assume
that a foreign individual holds a non-controlling 30 percent equity and
voting interest in U.S.-organized Corporation A which, in turn, holds a
non-controlling 40 percent equity and voting interest in U.S.-organized
Parent Corporation B. The foreign individual's equity interest in U.S.-
organized Parent Corporation B would be calculated by multiplying the
foreign individual's equity interest in U.S.-organized Corporation A by
that entity's equity interest in U.S.-organized Parent Corporation B.
The foreign individual's equity interest in U.S.-organized Parent
Corporation B would be calculated as 12 percent (30% x 40% = 12%). The
result would be the same even if U.S.-organized Corporation A held a de
facto controlling interest in U.S.-organized Parent Corporation B.
(ii) [Reserved]
[[Page 17882]]
(2) Voting interests held indirectly in the licensee and/or
controlling U.S. parent. Voting interests that are held by any
individual or entity indirectly through one or more intervening
entities will be determined depending upon the type of business
organization(s) in which the individual or entity holds a voting
interest as follows:
(i) Voting interests that are held through one or more intervening
corporations shall be calculated by successive multiplication of the
voting percentages for each link in the vertical ownership chain,
except that wherever the voting interest for any link in the chain is
equal to or exceeds 50 percent or represents actual control, it shall
be treated as if it were a 100 percent interest.
(A) Example (for rulings issued under Sec. 1.5000(a)(1)). Assume
that a foreign individual holds a non-controlling 30 percent equity and
voting interest in U.S.-organized Corporation A which, in turn, holds a
controlling 70 percent equity and voting interest in U.S.-organized
Parent Corporation B. Because U.S.-organized Corporation A's 70 percent
voting interest in U.S.-organized Parent Corporation B constitutes a
controlling interest, it is treated as a 100 percent interest. The
foreign individual's 30 percent voting interest in U.S.-organized
Corporation A would flow through in its entirety to U.S. Parent
Corporation B and thus be calculated as 30 percent (30% x 100% = 30%).
(B) [Reserved]
(ii) Voting interests that are held through one or more intervening
partnerships shall be calculated depending upon whether the individual
or entity holds a general partnership interest, an uninsulated
partnership interest, or an insulated partnership interest as specified
in paragraphs (b)(2)(ii)(A) and (B) of this section.
(A) General partnership and other uninsulated partnership
interests. A general partner and uninsulated partner shall be deemed to
hold the same voting interest as the partnership holds in the company
situated in the next lower tier of the vertical ownership chain. A
partner shall be treated as uninsulated unless the limited partnership
agreement, limited liability partnership agreement, or other operative
agreement satisfies the insulation criteria specified in Sec. 1.5003.
(B) Insulated partnership interests. A partner of a limited
partnership (other than a general partner) or partner of a limited
liability partnership that satisfies the insulation criteria specified
in Sec. 1.5003 shall be treated as an insulated partner and shall be
deemed to hold a voting interest in the partnership that is equal to
the partner's equity interest.
(C) General partner interests. The Commission presumes that a
general partner of a general partnership or limited partnership has a
controlling interest in the partnership. A general partner shall in all
cases be deemed to hold an uninsulated interest in the partnership.
(iii) Voting interests that are held through one or more
intervening limited liability companies shall be calculated depending
upon whether the individual or entity is a non-member manager, an
uninsulated member or an insulated member as specified in paragraphs
(b)(2)(iii)(A) and (B) of this section.
(A) Non-member managers and uninsulated membership interests. A
non-member manager and an uninsulated member of a limited liability
company shall be deemed to hold the same voting interest as the limited
liability company holds in the company situated in the next lower tier
of the vertical ownership chain. A member shall be treated as
uninsulated unless the limited liability company agreement satisfies
the insulation criteria specified in Sec. 1.5003.
(B) Insulated membership interests. A member of a limited liability
company that satisfies the insulation criteria specified in Sec.
1.5003 shall be treated as an insulated member and shall be deemed to
hold a voting interest in the limited liability company that is equal
to the member's equity interest.
Sec. 1.5003 Insulation criteria for interests in limited
partnerships, limited liability partnerships, and limited liability
companies.
(a) A limited partner of a limited partnership and a partner of a
limited liability partnership shall be treated as uninsulated within
the meaning of Sec. 1.5002(b)(2)(ii)(A) unless the partner is
prohibited by the limited partnership agreement, limited liability
partnership agreement, or other operative agreement from, and in fact
is not engaged in, active involvement in the management or operation of
the partnership and only the usual and customary investor protections
are contained in the partnership agreement or other operative
agreement. These criteria apply to any relevant limited partnership or
limited liability partnership, whether it is the licensee, a
controlling U.S. parent, or any partnership situated above them in the
vertical chain of ownership. Notwithstanding the foregoing, the
insulation of limited partnership and limited liability partnership
interests for broadcast applicants and licensees shall be determined in
accordance with Note 2(f) of Sec. 73.3555 of this chapter.
(b) A member of a limited liability company shall be treated as
uninsulated for purposes of Sec. 1.5002(b)(2)(iii)(A) unless the
member is prohibited by the limited liability company agreement from,
and in fact is not engaged in, active involvement in the management or
operation of the company and only the usual and customary investor
protections are contained in the agreement. These criteria apply to any
relevant limited liability company, whether it is the licensee, a
controlling U.S. parent, or any limited liability company situated
above them in the vertical chain of ownership. Notwithstanding the
foregoing, the insulation of limited liability company interests for
broadcast applicants and licensees shall be determined in accordance
with Note 2(f) of Sec. 73.3555 of this chapter.
(c) The usual and customary investor protections referred to in
paragraphs (a) and (b) of this section shall consist of:
(1) The power to prevent the sale or pledge of all or substantially
all of the assets of the limited partnership, limited liability
partnership, or limited liability company or a voluntary filing for
bankruptcy or liquidation;
(2) The power to prevent the limited partnership, limited liability
partnership, or limited liability company from entering into contracts
with majority investors or their affiliates;
(3) The power to prevent the limited partnership, limited liability
partnership, or limited liability company from guaranteeing the
obligations of majority investors or their affiliates;
(4) The power to purchase an additional interest in the limited
partnership, limited liability partnership, or limited liability
company to prevent the dilution of the partner's or member's pro rata
interest in the event that the limited partnership, limited liability
partnership, or limited liability company issues additional instruments
conveying interests in the partnership or company;
(5) The power to prevent the change of existing legal rights or
preferences of the partners, members, or managers as provided in the
limited partnership agreement, limited liability partnership agreement,
or limited liability company agreement, or other operative agreement;
(6) The power to vote on the removal of a general partner, managing
partner, managing member, or other manager in
[[Page 17883]]
situations where such individual or entity is subject to bankruptcy,
insolvency, reorganization, or other proceedings relating to the relief
of debtors; adjudicated insane or incompetent by a court of competent
jurisdiction (in the case of a natural person); convicted of a felony;
or otherwise removed for cause, as determined by an independent party;
(7) The power to prevent the amendment of the limited partnership
agreement, limited liability partnership agreement, or limited
liability company agreement, or other organizational documents of the
partnership or limited liability company with respect to the matters
described in paragraph (c)(1) through (c)(6) of this section.
(d) The Commission reserves the right to consider, on a case-by-
case basis, whether voting or consent rights over matters other than
those listed in paragraph (c) of this section shall be considered usual
and customary investor protections in a particular case.
Sec. 1.5004 Routine terms and conditions.
Foreign ownership declaratory rulings issued pursuant to Sec. Sec.
1.5000 through 1.5004 shall be subject to the following terms and
conditions, except as otherwise specified in a particular declaratory
ruling:
(a)(1) Aggregate allowance for declaratory rulings issued under
Sec. 1.5000(a)(1). In addition to the foreign ownership interests
approved specifically in a licensee's declaratory ruling issued
pursuant to Sec. 1.5000(a)(1), the controlling U.S. parent named in
the declaratory ruling (or a U.S.-organized successor-in-interest
formed as part of a pro forma reorganization) may be 100 percent owned,
directly and/or indirectly through one or more U.S.- or foreign-
organized entities, on a going-forward basis (i.e., after issuance of
the declaratory ruling) by other foreign investors without prior
Commission approval. This ``100 percent aggregate allowance'' is
subject to the requirement that the licensee seek and obtain Commission
approval before any foreign individual, entity, or ``group'' not
previously approved acquires, directly and/or indirectly, more than 5
percent of the controlling U.S. parent's outstanding capital stock
(equity) and/or voting stock, or a controlling interest, with the
exception of any foreign individual, entity, or ``group'' that acquires
an equity and/or voting interest of 10 percent or less, provided that
the interest is exempt under Sec. 1.5001(i)(3).
(2) Aggregate allowance for declaratory rulings issued under Sec.
1.5000(a)(2). In addition to the foreign ownership interests approved
specifically in a licensee's declaratory ruling issued pursuant to
Sec. 1.5000(a)(2), the licensee(s) named in the ruling (or a U.S.-
organized successor-in-interest formed as part of a pro forma
reorganization) may be 100 percent owned on a going forward basis
(i.e., after issuance of the declaratory ruling) by other foreign
investors holding interests in the licensee indirectly through U.S.-
organized entities that do not control the licensee, without prior
Commission approval. This ``100 percent aggregate allowance'' is
subject to the requirement that the licensee seek and obtain Commission
approval before any foreign individual, entity, or ``group'' not
previously approved acquires directly and/or indirectly, through one or
more U.S.-organized entities that do not control the licensee, more
than 5 percent of the licensee's outstanding capital stock (equity)
and/or voting stock, with the exception of any foreign individual,
entity, or ``group'' that acquires an equity and/or voting interest of
10 percent or less, provided that the interest is exempt under Sec.
1.5001(i)(3). Foreign ownership interests held directly in a licensee
shall not be permitted to exceed an aggregate 20 percent of the
licensee's equity and/or voting interests.
(3) Obligation to monitor foreign ownership. Licensees have an
obligation to monitor and stay ahead of changes in foreign ownership of
their controlling U.S. parent (for declaratory rulings issued pursuant
to Sec. 1.5000(a)(1)) and/or in the licensee itself (for declaratory
rulings issued pursuant to Sec. 1.5000(a)(2)), to ensure that the
licensee obtains Commission approval before a change in foreign
ownership renders the licensee out of compliance with the terms and
conditions of its declaratory ruling(s) or the Commission's rules.
Licensees, their controlling parent, and other entities in the
licensee's vertical ownership chain may need to place restrictions in
their bylaws or other organizational documents to enable the licensee
to ensure compliance with the terms and conditions of its declaratory
ruling(s) and the Commission's rules.
(4) Example 1 (for declaratory rulings issued under Sec.
1.5000(a)(1)). U.S. Corp. files an application for a common carrier
license. U.S. Corp. is wholly owned and controlled by U.S. Parent,
which is a newly formed, privately held Delaware Corporation in which
no single shareholder has de jure or de facto control. A shareholder's
agreement provides that a five-member board of directors shall govern
the affairs of the company; five named shareholders shall be entitled
to one seat and one vote on the board; and all decisions of the board
shall be determined by majority vote. The five named shareholders and
their respective equity interests are as follows: Foreign Entity A,
which is wholly owned and controlled by a foreign citizen (5 percent);
Foreign Entity B, which is wholly owned and controlled by a foreign
citizen (10 percent); Foreign Entity C, a foreign public company with
no controlling shareholder (20 percent); Foreign Entity D, a foreign
pension fund that is controlled by a foreign citizen and in which no
individual or entity has a pecuniary interest exceeding one percent (21
percent); and U.S. Entity E, a U.S. public company with no controlling
shareholder (25 percent). The remaining 19 percent of U.S. Parent's
shares are held by three foreign-organized entities as follows: F (4
percent), G (6 percent), and H (9 percent). Under the shareholders'
agreement, voting rights of F, G, and H are limited to the minority
shareholder protections listed in Sec. 1.5001(i)(6). Further, the
agreement expressly prohibits G and H from becoming actively involved
in the management or operation of U.S. Parent and U.S. Corp.
(i) As required by the rules, U.S. Corp. files a section 310(b)(4)
petition concurrently with its application. The petition identifies and
requests specific approval for the ownership interests held in U.S.
Parent by Foreign Entity A and its sole shareholder (5 percent equity
and 20 percent voting interest); Foreign Entity B and its sole
shareholder (10 percent equity and 20 percent voting interest), Foreign
Entity C (20 percent equity and 20 percent voting interest), and
Foreign Entity D (21 percent equity and 20 percent voting interest) and
its fund manager (20 percent voting interest). The Commission's
declaratory ruling specifically approves these foreign interests. The
declaratory ruling also provides that, on a going-forward basis, U.S.
Parent may be 100 percent owned in the aggregate, directly and/or
indirectly, by other foreign investors, subject to the requirement that
U.S. Corp. seek and obtain Commission approval before any previously
unapproved foreign investor acquires more than 5 percent of U.S.
Parent's equity and/or voting interests, or a controlling interest,
with the exception of any foreign investor that acquires an equity and/
or voting interest of ten percent or less, provided that the interest
is exempt under Sec. 1.991(i)(3).
(ii) In this case, foreign entities F, G, and H would each be
considered a previously unapproved foreign investor (along with any new
foreign investors).
[[Page 17884]]
However, prior approval for F, G, and H would only apply to an increase
of F's interest above 5 percent (because the ten percent exemption
under Sec. 1.5001(i)(3) does not apply to F) or to an increase of G's
or H's interest above 10 percent (because G and H do qualify for this
exemption). U.S. Corp. would also need Commission approval before
Foreign Entity D appoints a new fund manager that is a non-U.S. citizen
and before Foreign Entities A, B, C, or D increase their respective
equity and/or voting interests in U.S. Parent, unless the petition
previously sought and obtained Commission approval for such increases
(up to non-controlling 49.99 percent interests). (See Sec.
1.5001(k)(2).) Foreign shareholders of Foreign Entity C and U.S. Entity
E would also be considered previously unapproved foreign investors.
Thus, Commission approval would be required before any foreign
shareholder of Foreign Entity C or U.S. Entity E acquires (1) a
controlling interest in either company; or (2) a non-controlling equity
and/or voting interest in either company that, when multiplied by the
company's equity and/or voting interests in U.S. Parent, would exceed 5
percent of U.S. Parent's equity and/or voting interests, unless the
interest is exempt under Sec. 1.5001(i)(3).
(5) Example 2 (for declaratory rulings issued under Sec.
1.5000(a)(2)). Assume that the following three U.S.-organized entities
hold non-controlling equity and voting interests in common carrier
Licensee, which is a privately held corporation organized in Delaware:
U.S. corporation A (30 percent); U.S. corporation B (30 percent); and
U.S. corporation C (40 percent). Licensee's shareholders are wholly
owned by foreign individuals X, Y, and Z, respectively. Licensee has
received a declaratory ruling under Sec. 1.5000(a)(2) specifically
approving the 30 percent foreign ownership interests held in Licensee
by each of X and Y (through U.S. corporation A and U.S. corporation B,
respectively) and the 40 percent foreign ownership interest held in
Licensee by Z (through U.S. corporation C). On a going-forward basis,
Licensee may be 100 percent owned in the aggregate by X, Y, Z, and
other foreign investors holding interests in Licensee indirectly,
through U.S.-organized entities that do not control Licensee, subject
to the requirement that Licensee obtain Commission approval before any
previously unapproved foreign investor acquires more than 5 percent of
Licensee's equity and/or voting interests, with the exception of any
foreign investor that acquires an equity and/or voting interest of 10
percent or less, provided that the interest is exempt under Sec.
1.5001(i)(3). In this case, any foreign investor other than X, Y, and Z
would be considered a previously unapproved foreign investor. Licensee
would also need Commission approval before X, Y, or Z increases its
equity and/or voting interests in Licensee unless the petition
previously sought and obtained Commission approval for such increases
(up to non-controlling 49.99 percent interests). (See Sec.
1.5001(k)(2).)
(b) Subsidiaries and affiliates. A foreign ownership declaratory
ruling issued to a licensee shall cover it and any U.S.-organized
subsidiary or affiliate, as defined in Sec. 1.5000(d), whether the
subsidiary or affiliate existed at the time the declaratory ruling was
issued or was formed or acquired subsequently, provided that the
foreign ownership of the licensee named in the declaratory ruling, and
of the subsidiary and/or affiliate, remains in compliance with the
terms and conditions of the licensee's declaratory ruling and the
Commission's rules.
(1) The subsidiary or affiliate of a licensee named in a foreign
ownership declaratory ruling issued under Sec. 1.5000(a)(1) may rely
on that declaratory ruling for purposes of filing its own application
for an initial broadcast, common carrier or aeronautical license or
spectrum leasing arrangement, or an application to acquire such license
or spectrum leasing arrangement by assignment or transfer of control
provided that the subsidiary or affiliate, and the licensee named in
the declaratory ruling, each certifies in the application that its
foreign ownership is in compliance with the terms and conditions of the
foreign ownership declaratory ruling and the Commission's rules.
(2) The subsidiary or affiliate of a licensee named in a foreign
ownership declaratory ruling issued under Sec. 1.5000(a)(2) may rely
on that declaratory ruling for purposes of filing its own application
for an initial common carrier radio station license or spectrum leasing
arrangement, or an application to acquire such license or spectrum
leasing arrangement by assignment or transfer of control provided that
the subsidiary or affiliate, and the licensee named in the declaratory
ruling, each certifies in the application that its foreign ownership is
in compliance with the terms and conditions of the foreign ownership
declaratory ruling and the Commission's rules.
(3) The certifications required by paragraphs (b)(1) and (2) of
this section shall also include the citation(s) of the relevant
declaratory ruling(s) (i.e., the DA or FCC Number, FCC Record citation
when available, and release date).
(c)(1) Insertion of new controlling foreign-organized companies.
Where a licensee's foreign ownership declaratory ruling specifically
authorizes a named, foreign investor to hold a controlling interest in
the licensee's controlling U.S. parent, for declaratory rulings issued
under Sec. 1.5000(a)(1), or in an intervening U.S.-organized entity
that does not control the licensee, for declaratory rulings issued
under Sec. 1.5000(a)(2), the declaratory ruling shall permit the
insertion of new, controlling foreign-organized companies in the
vertical ownership chain above the controlling U.S. parent, for
declaratory rulings issued under Sec. 1.5000(a)(1), or above an
intervening U.S.-organized entity that does not control the licensee,
for declaratory rulings issued under Sec. 1.5000(a)(2), without prior
Commission approval only where the foreign investor approved in the
declaratory ruling maintains 100 percent ownership and control of any
new foreign-organized company(ies).
(2) Notification to Office of International Affairs of insertion of
new previously unapproved controlling foreign-organized companies
without prior Commission approval. Where a previously unapproved
foreign-organized entity is inserted into the vertical ownership chain
of a licensee, or its controlling U.S. parent, without prior Commission
approval pursuant to paragraph (c)(1) of this section, the licensee
shall file a letter to the attention of the Chief, Office of
International Affairs, within 30 days after the insertion of the new,
foreign-organized entity. The letter must include the name of the new,
foreign-organized entity and a certification by the licensee that the
entity complies with the 100 percent common ownership and control
requirement in paragraph (c)(1) of this section. The letter must also
reference the licensee's foreign ownership declaratory ruling(s) by
ICFS File No. and FCC Record citation, if available. This letter
notification need not be filed if the ownership change is instead the
subject of a pro forma application or pro forma notification already
filed with the Commission pursuant to the relevant broadcast service
rules, wireless radio service rules or satellite radio service rules
applicable to the licensee.
(3) Pro forma filing required for insertion of new previously
unapproved controlling foreign-organized companies
[[Page 17885]]
in broadcast licensee without prior Commission approval. For broadcast
stations, in order to insert a previously unapproved foreign-organized
entity in which the foreign investor approved in the declaratory ruling
maintains 100 percent common ownership and control into the vertical
ownership chain of the licensee's controlling U.S. parent, as described
in paragraph (c)(1) of this section, the licensee must always file a
pro forma application requesting prior consent of the FCC pursuant to
section 73.3540(f) of this chapter.
(4) No affect on forbearance from the requirements of 47 U.S.C.
310(d). Nothing in this section is intended to affect any requirements
for prior approval under 47 U.S.C. 310(d) or conditions for forbearance
from the requirements of 47 U.S.C. 310(d) pursuant to 47 U.S.C. 160.
(5) Example (for declaratory rulings issued under Sec.
1.5000(a)(1)). Licensee of a common carrier license receives a foreign
ownership declaratory ruling under Sec. 1.5000(a)(1) that authorizes
its controlling, U.S. parent (``U.S. Parent A'') to be wholly owned and
controlled by a foreign-organized company (``Foreign Company'').
Foreign Company is minority owned (20 percent) by U.S.-organized
Corporation B, with the remaining 80 percent controlling interest held
by Foreign Citizen C. After issuance of the declaratory ruling, Foreign
Company forms a wholly-owned, foreign-organized subsidiary (``Foreign
Subsidiary'') to hold all of Foreign Company's shares in U.S. Parent A.
There are no other changes in the direct or indirect foreign ownership
of U.S. Parent A. The insertion of Foreign Subsidiary into the vertical
ownership chain between Foreign Company and U.S. Parent A would not
require prior Commission approval, except for any approval otherwise
required pursuant to section 310(d) of the Communications Act and not
exempt therefrom as a pro forma transfer of control under Sec.
1.948(c)(1).
(6) Example (for rulings issued under Sec. 1.5000(a)(2)). An
applicant for a common carrier license receives a foreign ownership
ruling under Sec. 1.5000(a)(2) that authorizes a foreign-organized
company (``Foreign Company'') to hold a non-controlling 44 percent
equity and voting interest in the applicant through Foreign Company's
wholly-owned, U.S.-organized subsidiary, U.S. Corporation A, which
holds the non-controlling 44 percent interest directly in the
applicant. The remaining 56 percent of the applicant's equity and
voting interests are held by its controlling U.S.-organized parent,
which has no foreign ownership. After issuance of the ruling, Foreign
Company forms a wholly-owned, foreign-organized subsidiary to hold all
of Foreign Company's shares in U.S. Corporation A. There are no other
changes in the direct or indirect foreign ownership of U.S. Corporation
A. The insertion of the foreign-organized subsidiary into the vertical
ownership chain between Foreign Company and U.S. Corporation A would
not require prior Commission approval.
(d) Insertion of new non-controlling foreign-organized companies.
(1) Where a licensee's foreign ownership declaratory ruling
specifically authorizes a named, foreign investor to hold a non-
controlling interest in the licensee's controlling U.S. parent, for
declaratory rulings issued under Sec. 1.5000(a)(1), or in an
intervening U.S.-organized entity that does not control the licensee,
for declaratory rulings issued under Sec. 1.5000(a)(2), the
declaratory ruling shall permit the insertion of new, foreign-organized
companies in the vertical ownership chain above the controlling U.S.
parent, for declaratory rulings issued under Sec. 1.5000(a)(1), or
above an intervening U.S.-organized entity that does not control the
licensee, for declaratory rulings issued under Sec. 1.5000(a)(2),
without prior Commission approval where the foreign investor approved
in the declaratory ruling maintains 100 percent ownership and control
of any new foreign-organized company(ies).
(i) Insertion of new, foreign-organized companies in the vertical
ownership chain. Where a licensee has received a foreign ownership
declaratory ruling under Sec. 1.5000(a)(2) and the declaratory ruling
specifically authorizes a named, foreign investor to hold a non-
controlling interest directly in the licensee (subject to the 20
percent aggregate limit on direct foreign investment), the declaratory
ruling shall permit the insertion of new, foreign-organized companies
in the vertical ownership chain of the approved foreign investor
without prior Commission approval where the approved foreign investor
maintains 100 percent ownership and control of any new foreign-
organized company(ies).
(ii) Example (for declaratory rulings issued under Sec.
1.5000(a)(1)). Licensee receives a foreign ownership declaratory ruling
under Sec. 1.5000(a)(1) that authorizes a foreign-organized company
(``Foreign Company'') to hold a non-controlling 30 percent equity and
voting interest in Licensee's controlling, U.S. parent (``U.S. Parent
A''). The remaining 70 percent equity and voting interests in U.S.
Parent A are held by U.S.-organized entities which have no foreign
ownership. After issuance of the declaratory ruling, Foreign Company
forms a wholly-owned, foreign-organized subsidiary (``Foreign
Subsidiary'') to hold all of Foreign Company's shares in U.S. Parent A.
There are no other changes in the direct or indirect foreign ownership
of U.S. Parent A. The insertion of Foreign Subsidiary into the vertical
ownership chain between Foreign Company and U.S. Parent A would not
require prior Commission approval.
(iii) Example (for declaratory rulings issued under Sec.
1.5000(a)(2)). Licensee receives a foreign ownership declaratory ruling
under Sec. 1.5000(a)(2) that authorizes a foreign-organized entity
(``Foreign Company'') to hold approximately 24 percent of Licensee's
equity and voting interests, through Foreign Company's non-controlling
48 percent equity and voting interest in a U.S.-organized entity, U.S.
Corporation A, which holds a non-controlling 49 percent equity and
voting interest directly in Licensee. (A U.S. citizen holds the
remaining 52 percent equity and voting interests in U.S. Corporation A,
and the remaining 51 percent equity and voting interests in Licensee
are held by its U.S.-organized parent, which has no foreign ownership.
After issuance of the declaratory ruling, Foreign Company forms a
wholly-owned, foreign-organized subsidiary (``Foreign Subsidiary'') to
hold all of Foreign Company's shares in U.S. Corporation A. There are
no other changes in the direct or indirect foreign ownership of U.S.
Corporation A. The insertion of Foreign Subsidiary into the vertical
ownership chain between Foreign Company and U.S. Corporation A would
not require prior Commission approval.
(2) Where a previously unapproved foreign-organized entity is
inserted into the vertical ownership chain of a licensee, or its
controlling U.S.-parent, without prior Commission approval pursuant to
paragraph (d)(1) of this section, the licensee shall file a letter to
the attention of the Chief, Office of International Affairs, within 30
days after the insertion of the new, foreign-organized entity; or in
the case of a broadcast licensee, the licensee shall file a letter to
the attention of the Chief, Media Bureau, within 30 days after the
insertion of the new, foreign-organized entity. The letter must include
the name of the new, foreign-organized entity and a certification by
the licensee that the entity complies with the 100 percent common
ownership and control requirement in paragraph (d)(1) of this section.
The letter must also reference the licensee's foreign ownership
declaratory ruling(s) by ICFS File No.
[[Page 17886]]
and FCC Record citation, if available; or, if a broadcast licensee, the
letter must reference the licensee's foreign ownership declaratory
ruling(s) by LMS File No., Docket No., call sign(s), facility
identification number(s), and FCC Record citation, if available. This
letter notification need not be filed if the ownership change is
instead the subject of a pro forma application or pro forma
notification already filed with the Commission pursuant to the relevant
broadcast service, wireless radio service rules or satellite radio
service rules applicable to the licensee.
(e) New petition for declaratory ruling required. A licensee that
has received a foreign ownership declaratory ruling, including a U.S.-
organized successor-in-interest to such licensee formed as part of a
pro forma reorganization, or any subsidiary or affiliate relying on
such licensee's declaratory ruling pursuant to paragraph (b) of this
section, shall file a new petition for declaratory ruling under Sec.
1.5000 to obtain Commission approval before its foreign ownership
exceeds the routine terms and conditions of this section, and/or any
specific terms or conditions of its declaratory ruling.
(f) Continuing compliance. (1) Except as specified in paragraph
(f)(3) of this section, if at any time the licensee, including any
successor-in-interest and any subsidiary or affiliate as described in
paragraph (b) of this section, knows, or has reason to know, that it is
no longer in compliance with its foreign ownership declaratory ruling
or the Commission's rules relating to foreign ownership, it shall file
a statement with the Commission explaining the circumstances within 30
days of the date it knew, or had reason to know, that it was no longer
in compliance therewith. Subsequent actions taken by or on behalf of
the licensee to remedy its non-compliance shall not relieve it of the
obligation to notify the Commission of the circumstances (including
duration) of non-compliance. Such licensee and any controlling
companies, whether U.S.- or foreign-organized, shall be subject to
enforcement action by the Commission for such non-compliance, including
an order requiring divestiture of the investor's direct and/or indirect
interests in such entities.
(2) Any individual or entity that, directly or indirectly, creates
or uses a trust, proxy, power of attorney, or any other contract,
arrangement, or device with the purpose or effect of divesting itself,
or preventing the vesting, of an equity interest or voting interest in
the licensee, or in a controlling U.S. parent, as part of a plan or
scheme to evade the application of the Commission's rules or policies
under section 310(b) shall be subject to enforcement action by the
Commission, including an order requiring divestiture of the investor's
direct and/or indirect interests in such entities.
(3) Where the controlling U.S. parent of a broadcast, common
carrier, aeronautical en route, or aeronautical fixed radio station
licensee or common carrier spectrum lessee is an eligible U.S. public
company within the meaning of Sec. 1.5000(e), or where the controlling
U.S. parent of a broadcast, common carrier, aeronautical en route, or
aeronautical fixed radio station licensee or common carrier spectrum
lessee is a U.S. privately held company within the meaning of Sec.
1.5000(d), the licensee may file a remedial petition for declaratory
ruling under Sec. 1.5000(a)(1) seeking approval of particular foreign
equity and/or voting interests that are non-compliant with the
licensee's foreign ownership declaratory ruling or the Commission's
rules relating to foreign ownership; or, alternatively, the licensee
may remedy the non-compliance by, for example, redeeming the foreign
interest(s) that rendered the licensee non-compliant with the
licensee's existing foreign ownership declaratory ruling. In either
case, the Commission does not expect to take enforcement action related
to the non-compliance subject to the requirements specified in
paragraphs (f)(3)(i) and (ii) of this section and except as otherwise
provided in paragraph (f)(3)(iii) of this section.
(i) The licensee shall notify the relevant Bureau by letter no
later than 10 days after learning of the investment(s) that rendered
the licensee non-compliant with its foreign ownership ruling or the
Commission's rules relating to foreign ownership and specify in the
letter that it will file a petition for declaratory ruling under Sec.
1.5000(a)(1) or, alternatively, take remedial action to come into
compliance within 30 days of the date it learned of the non-compliant
foreign interest(s).
(ii) The licensee shall demonstrate in its petition for declaratory
ruling (or in a letter notifying the relevant Bureau that the non-
compliance has been timely remedied) that the licensee's non-compliance
with the terms of the licensee's existing foreign ownership ruling or
the foreign ownership rules was due solely to circumstances beyond the
licensee's control that were not reasonably foreseeable to or known by
the licensee with the exercise of the required due diligence.
(iii) Where the licensee has opted to file a petition for
declaratory ruling under Sec. 1.5000(a)(1), the Commission will not
require that the licensee's controlling U.S. parent redeem the non-
compliant foreign interest(s) or take other action to remedy the non-
compliance during the pendency of the licensee's petition. If the
Commission ultimately declines to approve the petition, however, the
licensee must have a mechanism available to come into compliance with
the terms of its existing declaratory ruling within 30 days following
the Commission's decision. The Commission reserves the right to require
immediate remedial action by the licensee where the Commission finds in
a particular case that the public interest requires such action--for
example, where, after consultation with the relevant Executive Branch
agencies, the Commission finds that the non-compliant foreign interest
presents national security or other significant concerns that require
immediate mitigation.
(4) Where a publicly traded common carrier licensee is an eligible
U.S. public company within the meaning of Sec. 1.5000(e), or where a
common carrier licensee is a U.S. privately held company within the
meaning of Sec. 1.5000(d), the licensee may file a remedial petition
for declaratory ruling under Sec. 1.5000(a)(2) seeking approval of
particular foreign equity and/or voting interests that are non-
compliant with the licensee's foreign ownership declaratory ruling or
the Commission's rules relating to foreign ownership; or,
alternatively, the licensee may remedy the non-compliance by, for
example, redeeming the foreign interest(s) that rendered the licensee
non-compliant with the licensee's existing foreign ownership
declaratory ruling. In either case, the Commission does not, as a
general rule, expect to take enforcement action related to the non-
compliance subject to the requirements specified in paragraphs
(f)(3)(i) and (f)(3)(ii) of this section and except as otherwise
provided in paragraph (f)(3)(iii) of this section.
(i) For purposes of this paragraph, the provisions in paragraphs
(f)(3)(i) through (f)(3)(iii) that refer to petitions for declaratory
ruling under Sec. 1.5000(a)(1) shall be read as referring to petitions
for declaratory ruling under Sec. 1.5000(a)(2).
(ii) [Reserved]
[[Page 17887]]
(5) For all remedial petitions for declaratory ruling, as specified
in paragraphs (f)(3) and (f)(4) of this section, the licensee must
include all applicable information required by Sec. 1.5001 for all
interest holders in addition to identifying the non-compliant
interest(s).
[FR Doc. 2026-06866 Filed 4-8-26; 8:45 am]
BILLING CODE 6712-01-P
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</html>Indexed from Federal Register on April 9, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.