**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the matter of                 | *  | DA 01-2565                   |
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| Lorillard Tobacco Company        | ** |                              |
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| Motion for Declaratory Ruling    | *  |                              |
| Re: Section                      | *) |                              |
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| 73.1206 of the Commission's      |    |                              |
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**ORDER**

**Adopted: March 12, 2007 Released: March 13, 2007**

By the Chief, Media Bureau:

# introduction

1.  Lorillard Tobacco Company ("Lorillard") filed a Motion for
    Declaratory Ruling ("Motion") regarding application of the
    Commission's rule concerning the broadcast of telephone
    conversations.[^1] The American Legacy Foundation ("ALF") filed an
    Opposition to Lorillard's Motion,[^2] and Lorillard responded.[^3]
    Broadcasters, public interest groups and other interested parties
    filed comments, and ALF and Lorillard submitted reply comments.[^4]
    For the reasons discussed below, we deny Lorillard's Motion.

# background

2.  In its motion, Lorillard asks that we rule that: (1) Section 73.1206
    of the Commission's rules[^5] prohibits the broadcast of an
    advertisement or other programming material supplied to a broadcast
    licensee by a third party if the licensee learns or has reason to
    know that the material includes a telephone conversation recorded
    "without the knowledge or permission of one of the parties to that
    telephone conversation"; and (2) the advertisement sponsored by ALF
    and broadcast on various radio stations during the summer of 2001
    (the "Advertisement") violates Section 73.1206.[^6] Lorillard
    complains that radio broadcasts of the Advertisement, which included
    the recorded response of Lorillard's employees to a telephone call
    offering to sell dog urine as a source of urea to be used as an
    additive to tobacco products, were "obviously intended to embarrass
    and hold its employees up to public ridicule by implying that those
    employees knew of and somehow condoned the ridiculous and unfounded
    allegation that Lorillard uses dog urine in the manufacture of
    cigarettes."[^7] Lorillard reports that although the Advertisement
    is no longer being broadcast,[^8] ALF has stated that future
    advertisements could make similar use of other secretly taped
    telephone conversations.[^9] Lorillard concedes that Section
    73.1206, by its plain language, appears to "confine its applications
    to situations where the licensee is the party who places the
    telephone call to be broadcast."[^10] Lorillard argues, however,
    that the regulatory history of the rule's adoption and prior
    interpretations demonstrate that the rule was "designed to cover --
    and does encompass --situations where the telephone call is placed
    by a third party and then made available to the licensee for
    broadcast over the licensee's stations."[^11] Lorillard contends
    that the rule would thus "comport with common sense and preclude a
    licensee from indirectly engaging in an activity that the licensee
    is otherwise prohibited from doing directly, thus protecting
    citizens against having their telephone conversations broadcast
    without their knowledge or consent."[^12]

3.  ALF states that it is a non-profit foundation created in 1999 as a
    result of the Master Settlement Agreement between tobacco
    manufacturers and attorneys general from 46 states and five
    territories, and that its principal purposes include reduction of
    youth smoking.[^13] ALF explains that, as part of its advertising
    campaign targeted to teenagers, it recorded a telephone call placed
    by a representative of ALF from New York to Lorillard in North
    Carolina.[^14] ALF's representative did not notify Lorillard
    employees that the call was being recorded, but ALF contends that
    New York, North Carolina, and federal law permit such recordings
    with one-party consent.[^15] ALF argues that the Advertisement,
    which included the recorded telephone call, does not violate Section
    73.1206, pointing out that the commenters "overwhelmingly" agree
    that, by its plain language, Section 73.1206 encompasses only
    telephone recordings made by licensees.[^16] According to ALF,
    Lorillard's motion is fundamentally misguided and is an attempt to
    bypass the statutory and regulatory requirements for agency
    rulemaking.[^17] ALF also points out that, although the Commission
    may issue a declaratory ruling to terminate a controversy or remove
    uncertainty,[^18] there is no controversy to terminate because the
    Advertisement "involves a single spot that is no longer running, nor
    is there uncertainty to remove about the application of the rule in
    question."[^19] ALF maintains that its Advertisement, designed to
    reduce youth smoking, is a matter of public concern, similar to that
    validated in a recent Supreme Court case, *Bartnicki v. Vopper*, and
    broadcasters should not be prohibited from airing it.[^20]

4.  ALF and most of the commenters argue that granting Lorillard's
    requests would violate the First Amendment's protection of free
    speech.[^21] They contend that implementing Lorillard's requested
    interpretation of the rule would place an enormous burden on
    broadcasters, who would need to ascertain that all recorded
    advertisements and material provided by third parties did not
    include telephone conversations that were recorded without the other
    party's knowledge or permission to broadcast.[^22] Lorillard and the
    two parties that support its position argue that requiring
    broadcasters to refrain from broadcasting materials supplied by
    third parties that include telephone conversations recorded without
    the knowledge or consent of the other party will not impose a
    substantial burden, and the benefits conveyed by securing the
    privacy of telephone calls outweigh that burden to
    broadcasters.[^23]

# discussion

5.  Under section 1.2 of the Commission's rules, the Commission "may . .
    . issue a declaratory ruling terminating a controversy or removing
    uncertainty."[^24] The Commission has broad discretion whether to
    issue such a ruling.[^25] In the instant case, we conclude that no
    declaratory ruling is warranted. There is no pressing controversy,
    and no uncertainty in light of the plain language of Section 73.1206
    and Commission precedent.

# Ordering Clause

6.  Accordingly, IT IS ORDERED that the Motion for Declaratory Ruling
    filed by Lorillard Tobacco Company IS DENIED.

7.  This action is taken pursuant to authority delegated by Section
    0.283 of the Commission's rules.[^26]

    FEDERAL COMMUNICATIONS COMMISSION

    Monica Shah Desai

    Chief, Media Bureau

    **APPENDIX A**

    **List of Filings**

    **Motion**

    Lorillard Tobacco Company

    **Opposition**

    American Legacy Foundation

    **Reply to Opposition**

    Lorillard Tobacco Company

    **Comments**

    American Legacy Foundation

    Arnold Worldwide, Inc.

    CBS Broadcasting, Inc., Belo Corp., and Fox Television Stations,
    Inc.

    Infinity Broadcasting Corporation

    Media Access Project

    National Association of Attorneys General

    National Association of Broadcasters

    Philip Morris Incorporated

    Radio One

    Saga Communications, Inc.

    Washington Legal Foundation

    **Reply to Comments**

    American Legacy Foundation

    Lorillard Tobacco Company

[^1]: Motion for Declaratory Ruling filed by Lorillard Tobacco Company
    (October 1, 2001). The Mass Media Bureau released a Public Notice
    seeking comment on Lorillard's Motion. *Public Notice*, DA 01-2565
    (Nov. 5, 2001); *Public Notice*, *Erratum,* replacing Public Notice
    dated November 5, 2001 (Nov. 7, 2001).

[^2]: Opposition of ALF (October 16, 2001).

[^3]: Response of Lorillard (October 26, 2001).

[^4]: *See* Appendix A for a list of filings in this matter.

[^5]: Section 73.1206 provides that:

    Before recording a telephone conversation for broadcast, or
    broadcasting such a conversation simultaneously with its occurrence,
    a licensee shall inform any party to the call of the licensee's
    intention to broadcast the conversation, except where such party is
    aware, or may be presumed to be aware from the circumstances of the
    conversation, that it is being or likely will be broadcast. Such
    awareness is presumed to exist only when the other party to the call
    is associated with the station (such as as \[sic\] employee or
    part-time reporter), or where the other party originates the call
    and it is obvious that it is in connection with a program in which
    the station customarily broadcasts telephone conversations.

    47 C.F.R. § 73.1206.

[^6]: Motion at 1.

[^7]: *Id*. at 1-2, 11.

[^8]: Motion at 2-3. Lorillard reports that it filed letters of
    complaint with the stations it could identify as having broadcast
    the Advertisement, and that in late August, 2001, it was advised by
    some stations and ALF that the Advertisement is no longer being
    broadcast by any radio station. *Id*.

[^9]: Motion at 3.

[^10]: *Id*.

[^11]: *Id*.

[^12]: *Id*.

[^13]: Opposition of ALF at 1. ALF states that its funding from the
    national tobacco settlement must be used, among other things, to
    "carry\[\] out a nationwide sustained advertising and education
    program to: (A) counter the use by Youth of Tobacco Products, and
    (B) educate consumers about the causes and prevention of disease
    associated with the use of Tobacco Products." *Id*.

[^14]: Opposition of ALF at 3. *See* Comments of Arnold Worldwide, Inc.
    (the lead advertising agency for ALF) at 2.

[^15]: *Id*.

[^16]: Reply Comments of ALF at 1.

[^17]: Opposition of ALF at 5. ALF states that the Commission has long
    made clear that "\[i\]n the interest of preserving its limited
    resources, \[it\] will not issue declaratory rulings to resolve
    abstract questions of law," or "where there is no pending
    controversy and parameters of and 'uncertainty' are yet to be
    established." *Id*. at 6.

[^18]: Pursuant to Section 1.2 of the Commission\'s rules, the
    Commission may issue a declaratory ruling to terminate a controversy
    or remove uncertainty. 47 C.F.R. § 1.2; 5 U.S.C. § 554(e).

[^19]: Opposition of ALF at 6. ALF states that the Advertisement was
    broadcast on radio stations in a variety of markets in July 2001,
    but that it has not been broadcast since that time and there are no
    current plans to run it in the future. *Id*. at 3.

[^20]: Opposition of ALF at 10, *citing Bartnicki v. Vopper*, 532 U.S.
    514, 121 S.Ct. 1753 (May 21, 2001) (court held that a broadcaster
    who aired a recording of a cellular phone conversation concerning a
    matter of public concern that was recorded by an unknown third party
    in violation of federal and Pennsylvania wiretap acts, and who
    lawfully received the recording from that individual, could not be
    held liable under the acts\' prohibition of intentional disclosure
    of contents of illegally intercepted communications).

[^21]: *See, e.g.*, Comments of Media Access Project at 1-2; Comments of
    the National Association of Broadcasters ("NAB") at 12-14; Comments
    of National Association of Attorneys General at 2.

[^22]: *See, e.g.*, Comments of Saga Communications, Inc. ("Saga") at
    3-4; Comments of Radio One at 1-2; Comments of NAB at 9-11.

[^23]: Reply to Opposition of Lorillard at 8. *See* Comments of Philip
    Morris at 4-5; Comments of Washington Legal Foundation ("WLF") at
    8-12.

[^24]: 47 C.F.R. § 1.2.

[^25]: Telephone Number Portability, Order, CC Docket No. 95-116, 19 FCC
    Rcd 6800, 6810 ¶ 20 (2004). See Yale Broadcating Co. v. FCC, 478
    F.2d 594, 602 (1973).

[^26]: 47 C.F.R. § 0.283.