Federal Register / Vol. 83, No. 167 / Tuesday, August 28, 2018 / Rules and Regulations 43773 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 300 

[EPA–HQ–SFUND–2003–0010; FRL–9982– 

84—Region 7] 

National Oil and Hazardous 

Substances Pollution Contingency 

Plan; National Priorities List: Partial 

Deletion of the Omaha Lead Superfund 

Site 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Final rule. 

SUMMARY: Environmental Protection 

Agency (EPA) Region 7 announces the 

deletion of 101 residential parcels of the 

Omaha Lead Superfund site (Site or 

OLS) located in Omaha, Nebraska, from 

the National Priorities List (NPL). The 

NPL, promulgated pursuant to section 

105 of the Comprehensive 

Environmental Response, 

Compensation, and Liability Act 

(CERCLA) of 1980, as amended, is an 

appendix of the National Oil and 

Hazardous Substances Pollution 

Contingency Plan (NCP). The EPA and 

the State of Nebraska, through the 

Nebraska Department of Environmental 

Quality, determined that all appropriate 

Response Actions under CERCLA were 

completed at the identified parcels. 

However, this deletion does not 

preclude future actions under CERCLA. 

This partial deletion pertains to 101 

residential parcels. The remaining 

parcels will remain on the NPL and are 

not being considered for deletion as part 

of this action. 

DATES: This action is effective August 

28, 2018. 

ADDRESSES: EPA has established a 

docket for this action under Docket ID 

no. EPA–HQ–SFUND–2003–0010. All 

documents in the docket are listed on 

the http://www.regulations.gov website. 

Although listed in the index, some 

information is not publicly available, 

i.e., Confidential Business Information 

or other information whose disclosure is 

restricted by statute. Certain other 

material, such as copyrighted material, 

is not placed on the internet and will be 

publicly available only in hard copy 

form. Publicly available docket 

materials are available either 

electronically through http://

www.regulations.gov or in hard copy at 

the site information repositories. 

Locations, contacts, and viewing hours 

of the Site information repositories are: 

• EPA Region 7, 11201 Renner 

Boulevard, Lenexa, Kansas 66219, open 

from 8 a.m. to 4 p.m. Monday–Friday. 

• W. Dale Clark Library, located at 

215 S 15th Street, Omaha, NE 68102, 

open 10 a.m. to 8 p.m. Monday– 

Thursday; 10 a.m. to 6 p.m. Friday and 

Saturday; and 1 p.m. to 6 p.m. Sunday. 

FOR FURTHER INFORMATION CONTACT: 

Elizabeth Hagenmaier, Remedial Project 

Manager, U.S. Environmental Protection 

Agency, Region 7, SUPR/LMSE, 11201 

Renner Boulevard, Lenexa, KS 66219, 

telephone (913) 551–7939, email: 

hagenmaier.elizabeth@epa.gov. 

SUPPLEMENTARY INFORMATION: The 

portion of the site to be deleted from the 

NPL are 101 residential parcels of the 

Omaha Lead Superfund site, Omaha, 

Nebraska. A Notice of Intent for Partial 

Deletion for this Site was published in 

the Federal Register (83 FR 29731) on 

June 26, 2018. 

The closing date for comments on the 

Notice of Intent for Partial Deletion was 

July 26, 2018. One public comment was 

received which was not site-related and 

EPA has determined it will proceed 

with the partial deletion. 

EPA maintains the NPL as the list of 

sites that appear to present a significant 

risk to public health, welfare, or the 

environment. Deletion of a site from the 

NPL does not preclude further remedial 

action. Whenever there is a significant 

release from a site deleted from the NPL, 

the deleted site may be restored to the 

NPL without application of the hazard 

ranking system. Deletion of portions of 

a site from the NPL does not affect 

responsible party liability, in the 

unlikely event that future conditions 

warrant further actions. 

List of Subjects in 40 CFR Part 300 

Environmental protection, air 

pollution Control, Chemicals, 

Hazardous waste, Hazardous 

substances, Intergovernmental relations, 

Penalties, Reporting and recordkeeping 

requirements, Superfund, Water 

pollution control, Water supply. 

Authority: 33 U.S.C. 1321(d); 42 U.S.C. 

9601–9657; E.O. 13626, 77 FR 56749, 3 CFR, 

2013 Comp., p. 306; E.O. 12777, 56 FR 54757, 

3 CFR, 1991 Comp., p. 351; E.O. 12580, 52 

FR 2923, 3 CFR, 1987 Comp., p. 193. 

Dated: August 10, 2018. 

James B. Gulliford, 

Regional Administrator, Region 7. 

[FR Doc. 2018–18525 Filed 8–27–18; 8:45 am] 

BILLING CODE 6560–50–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Part 73 

[MB Docket No. 17–289, FCC 18–114] 

Rules and Policies To Promote New 

Entry and Ownership Diversity in the 

Broadcasting Services 

AGENCY: Federal Communications 

Commission. 

ACTION: Final action. 

SUMMARY: In this document, the Federal 

Communications Commission 

establishes the requirements that will 

govern the incubator program that the 

Commission decided to adopt to 

support the entry of new and diverse 

voices into the broadcast industry. 

DATES: This action contains information 

collection requirements that have not 

been approved by the Office of 

Management and Budget (OMB). The 

Commission will publish a document in 

the Federal Register announcing the 

approval date for the information 

collection requirements. 

ADDRESSES: Federal Communications 

Commission, 445 12th Street SW, Room 

TW–C305, Washington, DC 20554. 

FOR FURTHER INFORMATION CONTACT: 

Radhika Karmarkar, 

Radhika.Karmarkar@fcc.gov, or 202– 

418–1523. 

SUPPLEMENTARY INFORMATION: This is a 

summary of the Commission’s Report 

and Order, FCC 18–114, in MB Docket 

No. 17–289, adopted on August 2, 2018, 

and released on August 3, 2018. The 

complete text of this document is 

available electronically via the search 

function on the FCC’s Electronic 

Document Management System 

(EDOCS) web page at https://

apps.fcc.gov/edocs_public/ (https://

apps.fcc.gov/edocs_public/). The 

complete document is available for 

inspection and copying in the FCC 

Reference Information Center, 445 12th 

Street SW, Room CY–A257, 

Washington, DC 20554 (for hours of 

operation, see https://www.fcc.gov/ 

general/fcc-reference-informationcenter). To request materials in 

accessible formats for people with 

disabilities (Braille, large print, 

electronic files, audio format), send an 

email to fcc504@fcc.gov (mail to: 

fcc504@fcc.gov) or call the FCC’s 

Consumer and Governmental Affairs 

Bureau at (202) 418–0530 (voice), (202) 

418–0432 (TTY). 


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43774 Federal Register / Vol. 83, No. 167 / Tuesday, August 28, 2018 / Rules and Regulations 

Synopsis 

I. Introduction 

1. With this Report and Order, we 

establish the requirements that will 

govern the incubator program that the 

Commission previously decided to 

adopt to support the entry of new and 

diverse voices into the broadcast 

industry. Last year, the Commission 

decided to adopt an incubator program 

with the goal of creating ownership 

opportunities for new entrants and 

small businesses, thereby promoting 

competition and diversity in the 

broadcast industry. We recognize the 

need for more innovative approaches to 

encourage access to capital, as well as 

technical, operational, and management 

training, for those new entrants and 

small businesses that, without 

assistance, would not be able to own 

broadcast stations. Thus, the incubator 

program is designed with those specific 

entities in mind—small businesses, 

struggling station owners, and new 

entrants that do not have any other 

means to access the financial assistance 

and operational support the incubator 

program seeks to provide. In keeping 

with that goal, the program 

requirements we adopt today will 

enable the pairing of small aspiring, or 

struggling, broadcast station owners 

with established broadcasters. These 

incubation relationships will provide 

new entrants and struggling small 

broadcasters access to the financing, 

mentoring, and industry connections 

that are necessary for success in the 

industry but to date have been 

unavailable to many. 

II. Background 

2. The Commission has long 

contemplated the potential for an 

incubator program to provide new 

sources of capital and support to entities 

that may otherwise lack access to 

financing or operational experience. In 

concept, an incubator program seeks to 

provide an established broadcaster with 

an inducement in the form of an 

ownership rule waiver or similar benefit 

to invest the time, money, and resources 

needed to facilitate broadcast station 

ownership by new and diverse entrants. 

An incubator program contemplates 

that, in exchange for a defined benefit, 

an established company could assist a 

new owner by providing ‘‘management 

or technical assistance, loan guarantees, 

direct financial assistance through loans 

or equity investments, training, or 

business planning assistance.’’ 

3. Although the concept of an 

incubator program has been discussed 

since at least the early 1990s and has 

received general support, the 

Commission had never undertaken the 

creation of such a program, and 

explicitly declined to adopt a program 

as part of its 2010/2014 Quadrennial 

Media Ownership Review. In late 2017, 

however, the Commission reconsidered 

that determination and at long last 

decided to adopt an incubator program 

to help address the lack of access to 

capital and technical expertise faced by 

potential new entrants and small 

businesses. While the Commission 

committed to initiating an incubator 

program, it desired further input 

regarding how best to structure and 

implement a comprehensive program in 

light of current market and regulatory 

conditions. Accordingly, the NPRM 

sought comment on eligibility criteria 

for the incubated entity; appropriate 

incubating activities; potential benefits 

to the incubating entity; how such a 

program would be reviewed, monitored, 

and enforced; and the attendant costs 

and benefits created. See 83 FR 774 (Jan. 

8, 2018). 

4. The record developed in this 

proceeding presents a range of 

thoughtful suggestions and 

recommendations for the incubator 

program. We are particularly grateful to 

the Commission’s Advisory Committee 

on Diversity and Digital Empowerment 

(ACDDE) for the group’s extensive 

consideration of the incubator program 

and the elements that should define it. 

The ACDDE working group members 

devoted many hours to meetings and 

review of empirical data before making 

recommendations to the full committee 

on how to structure the incubator 

program. The resulting extensive 

comments provided invaluable research 

and proposals that the Commission has 

carefully considered. 

5. With this Report and Order, we 

implement a long overdue mechanism 

to address the primary barriers to station 

ownership by new and diverse entities: 

Lack of access to capital and the need 

for technical and operational 

experience. In implementing this 

program, our expectation is that each 

successful incubation relationship will 

result in the acquisition of a broadcast 

radio station by a new entrant or small 

business, or the preservation of an 

existing, but struggling, small 

broadcaster. Accordingly, successful 

implementation of the incubator 

program we adopt today will promote 

ownership diversity by fostering entry 

into the broadcasting sector by 

entrepreneurs and small businesses, 

including those owned by women and 

minorities. 

Services Eligible for Incubator Program 

6. The incubator program we outline 

today will apply to full-service AM and 

FM radio broadcast stations, as we find 

that the radio industry provides the best 

opportunities for successful incubation 

relationships and the best opportunity 

for an appropriate reward. In the NPRM, 

the Commission sought comment on 

whether its incubator program should 

be focused on radio, as the proposal was 

initially conceived, or should apply to 

television as well. The NPRM further 

queried whether the Commission 

should adopt a phased approach, 

whereby the incubator program would 

be implemented on a trial basis in radio 

and then evaluated for possible 

expansion to the television market. 

Based on the record of this proceeding, 

we find that the radio market has 

several advantages over the television 

market as an incubation setting. 

7. Perhaps most importantly, the cost 

of obtaining a radio station is 

significantly lower than the cost of 

obtaining a television station. Indeed, 

the cost of acquiring a television station 

is generally many times that of a radio 

station. For example, in 2016 the 

average sales price of a radio station on 

the secondary market was 

approximately $1 million, and the 

average price of a television station was 

$53 million. Due to their lack of 

broadcasting experience and financial 

collateral, new entrants and small 

broadcasters often face significant 

difficulties in accessing the capital 

needed to purchase broadcast stations in 

the secondary market or to participate in 

Commission broadcast auctions for new 

construction permits. Indeed, the record 

reveals that access to capital is most 

often the barrier to broadcast station 

ownership. Furthermore, given the 

larger numbers of radio stations in the 

country (11,371 commercial, full-service 

AM and FM stations) versus television 

stations (1,377 commercial, full-service 

stations), we find that radio is a more 

accessible entry point than television. In 

addition, the operating costs of running 

a radio station are significantly lower 

than those for operating a television 

broadcast station. As a going concern, 

radio is less cash flow intensive, 

requires fewer personnel to operate, and 

requires programming resources that are 

less costly than those for television 

stations. For these reasons, we find that 

transitioning from a qualifying 

incubation relationship to independent 

ownership will be more feasible for 

incubated entities in the radio service 

than in television. Consequently, for 

entities with already limited capital 

resources and operational experience, 


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Federal Register / Vol. 83, No. 167 / Tuesday, August 28, 2018 / Rules and Regulations 43775 

we conclude that radio is a significantly 

more accessible entry point into the 

broadcasting industry than television. 

7. We expect that implementing an 

incubator program focused on the radio 

market will also motivate the 

participation of incumbent broadcasters, 

who are key to the success of the 

program, as they have the power to 

ensure that the new entrants and small 

businesses attracted to the radio 

industry are able to acquire, operate, 

and grow a broadcast station. As noted 

above, we anticipate that the 

inducement of a waiver of the 

Commission’s Local Radio Ownership 

Rule will provide sufficient incentive 

for incumbent broadcasters to 

participate in the program. That is, we 

expect that radio station group owners 

will seek to incubate a new entrant or 

small broadcaster in order to obtain 

permission to exceed the applicable 

ownership limit in a market. In reaching 

this conclusion, we note that the local 

radio numerical limits and the AM/FM 

service caps have remained unchanged 

since they were prescribed by Congress 

over 20 years ago in the 

Telecommunications Act of 1996. Thus, 

the existing Local Radio Ownership 

Rule has restricted the ability of 

incumbent broadcasters to grow larger 

in any given market for over two 

decades. In addition, Joint Sales 

Agreements (JSAs) for greater than 15 

percent of a station’s time remain 

attributable in radio. Accordingly, given 

the longstanding strictures remaining on 

radio ownership, we believe a waiver of 

the Local Radio Ownership Rule will 

provide an effective incentive for 

incumbent broadcasters to incubate 

either new entities seeking entry into 

the broadcasting industry or small 

broadcasters. 

8. By contrast, the Commission has 

recently revised the rules governing 

local television ownership, including 

eliminating the attribution of television 

JSAs; eliminating the eight voices test, 

which required that at least eight 

independently owned television 

stations remain in the market after 

combining ownership of two stations in 

a market; and, adopting a hybrid 

approach to application of the top-four 

prohibition, permitting case-by-case 

review of the restriction on ownership 

of two top-four ranked stations in the 

same market. In light of these changes 

and the state of the record in this 

proceeding as it pertains to television 

station incubation, we do not believe 

that it would be appropriate at this time 

to offer a waiver of the Local Television 

Ownership Rule as a reward for 

incubating a television station. 

However, we do not foreclose the 

possibility of reaching a different 

conclusion following the completion of 

our next quadrennial review depending 

on the record that is compiled regarding 

the local television marketplace in that 

proceeding. Additionally, were 

Congress to provide an alternative 

benefit for incubating broadcasters, we 

would be strongly inclined to expand 

the program to include television 

stations. 

9. Based on our consideration of the 

record and the current broadcast 

marketplace, including the existing 

broadcast ownership rules, we conclude 

that an incubator program has the 

greatest likelihood of success in the 

radio industry. Although some 

commenters, including NAB, advocate 

for an incubator program for both radio 

and television broadcast services, for the 

reasons stated in this section, we 

determine that the better approach at 

this time is to focus our program on the 

radio market. We note, however, that 

the ‘‘leg up’’ provided to these new and 

small broadcasters via the incubator 

program, by allowing them to establish 

a track record of successful station 

ownership and providing them 

increased access to capital, may 

ultimately position them to add 

television stations to their radio 

holdings. For all the reasons provided 

above, we determine that our initial 

foray into the use of an incubator 

program as a mechanism to increase 

broadcast ownership diversity should be 

limited to full-service radio. As we gain 

more experience with the program and 

assess evolving market and regulatory 

trends in the television sector, we will 

be able to analyze whether it is 

appropriate to expand the program to 

television. 

Defining Entities Eligible for Incubation 

10. In this section, we establish the 

eligibility criteria governing which 

entities may qualify for incubation 

under our program. Our criteria consist 

of both a numeric limit on the number 

of stations a potential incubated entity 

may own prior to entering into a 

qualifying incubation relationship 

(based on our existing new entrant 

bidding credit), as well as a revenue cap 

(based on our existing eligible entity 

definition). Additionally, as discussed 

below, we adopt certain safeguards to 

ensure further that a potential incubated 

entity genuinely lacks the necessary 

resources that would have enabled it to 

enter or succeed in the broadcast 

industry absent the incubation 

relationship. Finally, we also address 

alternative eligibility criteria that were 

proposed in our record. 

11. The NPRM sought comment on 

how to determine eligibility for 

participation in the incubator program 

and put forth several options, including 

the new entrant bidding credit model, a 

revenue-based eligible entity standard, a 

socially and economically 

disadvantaged businesses (SDB) model, 

and an Overcoming Disadvantages 

Preference (ODP) standard. The NPRM 

also sought comment on which of these 

standards best aligns with the 

Commission’s goal of facilitating 

ownership opportunities for entities that 

lack access to capital and operational 

experience and, thereby, best promotes 

competition and viewpoint diversity in 

local markets. 

12. The ultimate goal of the incubator 

program is to encourage new entry into 

the broadcast industry, an industry 

which—as our record demonstrates—is 

extremely capital-intensive. The 

Commission has previously recognized, 

and the record here confirms, that new 

entrants and small businesses have had 

longstanding difficulties accessing the 

needed capital to participate in 

broadcast ownership. For example, 

Diane Sutter, President of ShootingStar 

Inc., notes that ‘‘[t]he size of a deal is 

extremely important to most banks. 

Many entrants are limited to purchasing 

smaller broadcast stations, given their 

resources; however, banks often 

consider it not worth the potential risk 

to finance smaller deals for a new 

owner.’’ For our incubator program to 

redress the lack of access to capital, as 

well as to facilitate operational, 

managerial, and technical support, it is 

critical that our eligibility criteria 

properly identify those entities that are 

most likely to benefit from program 

participation and, thereby, increase 

diversity in the broadcast sector. 

13. After careful consideration of the 

record in this proceeding and the 

various standards discussed in the 

NPRM, we adopt today a two-pronged 

eligibility standard that combines a 

modified version of the existing new 

entrant bidding credit standard, long 

used in the context of broadcast 

auctions, with the revenue-based 

eligible entity definition contained in 

our broadcast rules. As detailed below, 

under the first prong, the potential 

incubated entity, including its 

attributable interest holders, may hold 

attributable interests in no more than 

three full-service AM or FM radio 

stations and no TV stations. The 

ownership limit of three full-service 

radio stations does not include the radio 

station to be incubated. Under the 

second prong of our standard, the entity 

must also qualify as a small business 

consistent with the SBA standards for 


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43776 Federal Register / Vol. 83, No. 167 / Tuesday, August 28, 2018 / Rules and Regulations 

the radio industry based on annual 

revenue, currently $38.5 million or less. 

14. New Entrant Prong. With respect 

to the first prong of our standard, we 

find that modifying the new entrant 

eligibility standard for this purpose by 

limiting permissible interests to three 

full-service AM or FM radio broadcast 

stations (licenses or unbuilt 

construction permits) and no TV 

stations will focus the program on 

entities that are new or comparatively 

new to the broadcasting industry (i.e., 

those with no existing broadcast 

interests) and small broadcasters (i.e., 

those with three or fewer full-service 

radio stations, and no TV stations). The 

record reflects that individuals seeking 

to purchase their first or second 

broadcast station are the ones that often 

face the most challenging financial 

hurdles. Thus, the eligibility standard 

we adopt today is targeted specifically 

to benefit those small entities seeking to 

enter the broadcast industry for the first 

time and to help broadcasters with one, 

two, or three radio stations to secure the 

toehold they have obtained in the 

industry. While we acknowledge that an 

entity with interests in four or more 

radio stations or a television station may 

not necessarily be considered a large or 

established broadcaster, we expect that 

a broadcaster with such interests will 

have more access to traditional 

financing and capital resources 

available, such that the resources 

anticipated to flow through the 

Commission’s incubator program would 

not be as critical to their entry or 

survival. Consequently, limiting the 

eligibility criteria to those who have no 

more than three radio stations 

(consistent with the current new entrant 

bidding credit rule’s limitation to ‘‘three 

mass media facilities’’), and no TV 

stations, best promotes the purposes of 

the program. 

15. Moreover, analyses of Commission 

broadcast auctions data provided in the 

record show that the new entrant 

bidding credit—a modified version of 

which we adopt herein—has increased 

successful participation of small 

businesses owned by women and 

minorities in the auction of construction 

permits for AM, FM, and TV stations. 

NAB performed an analysis of the 

Commission’s broadcast auctions data 

and found that winning bidders relying 

on the Commission’s new entrant 

bidding credits were more likely to have 

indicated that they were owned by 

women and minorities than winning 

bidders who did not use the credit. 

NAB’s analysis focused on nine FM 

broadcast auctions that utilized the new 

entrant bidding credit. Its study 

concluded that winning bidders relying 

on new entrant bidding credits were 93 

percent more likely to be women, and 

40 percent more likely to be minorities, 

than winning bidders who did not use 

the credit. In addition, NAB found that 

collectively winning bidders using new 

entrant bidding credits were 64 percent 

more likely to be minorities or women 

than other winning bidders. 

16. We note that the ACDDE also 

found that the use of the ‘‘new entrant’’ 

standard in auctions revealed a 

statistically significant improvement in 

female and minority participation after 

its review of 20 FCC broadcast auctions, 

more than twice the number evaluated 

by NAB. The ACDDE determined that 

these auctions attracted a total of 2,531 

applicants, of which 1,681 were 

determined to be qualified bidders. Of 

the 1,681 qualified bidders, the ACDDE 

found that (1) 1,457 were new entrants 

(i.e., held three or fewer mass media 

interests); (2) qualified minority new 

entrants (12.4 percent) were more 

prevalent than qualified minorityowned applicants who were not new 

entrants (8.7 percent); and (3) qualified 

women-owned new entrants (10.8 

percent) were more prevalent than 

qualified women-owned bidders who 

were not new entrants (7.9 percent). 

Based on this review, the ACDDE agrees 

that, while not its preferred approach, 

the new entrant definition ‘‘might have 

some utility’’ as a means of determining 

eligibility for participation in the 

incubator program. 

17. Commission staff also evaluated 

data from a number of Commission 

broadcast auctions conducted over the 

past several years, and that data reveal 

that the new entrant bidding credit has 

increased successful participation of 

small businesses owned by women and 

minorities in the auction process for 

AM, FM, and TV construction permits. 

The Commission collects data on 

information voluntarily filed by auction 

participants utilizing FCC Form 175. 

Staff analysis of auctions data for 20 

auctions shows that of the 2,534 total 

applicants for those auctions, 1,457 of 

them, or 57.5 percent of the applicants, 

indicated that they qualified for the new 

entrant bidding credit. A total of 408 

new entrant bidders were successful in 

their auction. The percentage of 

winning bidders that used a new entrant 

bidding credit and identified as womenowned was three times larger (12 

percent) than the percentage of bidders 

that won without a new entrant bidding 

credit and were women-owned (4 

percent). Similarly, the percentage of 

winning bidders that used a new entrant 

bidding credit and identified as 

minority-owned was almost three times 

larger (14 percent) than the percentage 

of bidders that won without the new 

entrant bidding credit and were 

minority-owned (5 percent). 

18. NAB’s and the ACDDE’s 

evaluations of the Commission’s 

broadcast auctions data, like the 

Commission staff’s analysis, suggest that 

the Commission’s use of the new entrant 

bidding credit standard has been 

effective in diversifying the pool of 

successful bidders in the broadcast 

auctions context. Our assessment 

encompassed twice as many auctions as 

those reviewed by NAB, and the overall 

results of those evaluations were 

similar—that the percentage of winning 

bidders who used a new entrant bidding 

credit and identified as either womenowned or minority-owned consistently 

exceeded the percentage of winning 

bidders who did not use a new entrant 

bidding credit and were women-owned 

or minority-owned. Thus, we expect 

that use of a similar new entrant 

eligibility standard will be an effective 

means to diversify the applicant pool for 

the incubator program, by targeting 

those small broadcasters most in need of 

the support provided by the incubator 

program, including minority and female 

applicants. 

19. Small Business Prong. The second 

prong of our eligibility standard requires 

that incubated entities also qualify as 

small businesses consistent with the 

SBA standards for their industry 

grouping, based on annual revenue, 

currently $38.5 million or less for radio. 

NAB supports use of a revenue-based 

eligible entity standard in combination 

with a new entrant standard. The 

ACDDE objects to a revenue-based 

standard standing alone, asserting that 

this type of definition ‘‘has little or no 

value in advancing ownership diversity 

in the broadcast context.’’ We conclude, 

however, that the revenue cap, in 

conjunction with the first eligibility 

prong as well as other safeguards 

discussed herein, will assist in 

identifying entities that are more likely 

to be in need of incubation by 

established broadcasters. The 

combination of the new entrant 

eligibility criteria and the small 

business revenue standard will narrow 

the scope of eligible applicants to those 

applicants most in need of assistance 

via our incubator program. In this way, 

we expect to achieve our overarching 

goal of increasing ownership diversity 

by facilitating entry and developing 

broadcast expertise amongst new and 

small broadcasters. 

20. After close review of the record, 

we find that the eligibility standard set 

forth above is the best means for 

identifying incubated entities whose 

lack of access to capital and operational 


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Federal Register / Vol. 83, No. 167 / Tuesday, August 28, 2018 / Rules and Regulations 43777 

experience has impeded their ability to 

participate successfully in the broadcast 

sector. We expect that pairing such 

entities with established incumbent 

broadcasters who can provide the 

necessary capital, knowledge, and 

operational support will ultimately 

promote competition and viewpoint 

diversity in local markets. The 

combination of a numerical cap on 

broadcast interests and a revenue 

limitation will ensure that incubated 

entities participating in the program are 

truly new or small broadcasters. 

21. Moreover, drawn from existing 

Commission rules, the standard we 

adopt today provides a clear, objective 

metric that is familiar to broadcasters. 

Use of an objective standard has the 

advantage of being straightforward and 

transparent for potential applicants, as 

well as administrable for the 

Commission without application of 

significant additional processing 

resources. Furthermore, unlike some of 

the other proposals contained in the 

record, because the new entrant bidding 

credit standard is race and gender 

neutral, it does not raise constitutional 

concerns. 

22. We decline to adopt an 

Overcoming Disadvantage Preference 

(ODP) standard. The ACDDE advocates 

for such a standard, which it describes 

as a ‘‘race-and-gender-neutral 

preference’’ focused on the experiences 

and efforts of an individual person that 

affords a preference to those who 

strived, through superior individual 

efforts, to attempt to overcome major 

impediments to success. According to 

the ACDDE, ‘‘success or failure in 

overcoming obstacles is not pertinent;’’ 

rather, what would matter is ‘‘effort, the 

steps the person took to persevere.’’ We 

note the concerns raised by NAB that a 

standard such as ODP will require the 

Commission to make subjective 

decisions on the qualifications of 

candidates proposed to be the incubated 

entity, which could be time-consuming, 

complex, and subject to disputes. 

23. The Commission has previously 

assessed ODP and articulated its 

concern that the agency lacks the 

resources to conduct the individualized 

reviews recommended as a central 

component of implementing ODP. In the 

broadcast licensing context, the 

Commission indicated that the type of 

individualized consideration that would 

be required under an ODP standard 

could prove to be ‘‘administratively 

inefficient, unduly resource intensive, 

and inconsistent with First Amendment 

values.’’ We do not find the ACDDE’s 

current filing to have assuaged those 

concerns. In the Part I Competitive 

Bidding Rules proceeding, the 

Commission stated that ‘‘it is not clear 

what proof should be required from 

those individuals or entities seeking to 

receive such a preference or how to 

apply the ODP on a neutral basis. We 

are also concerned that our review of 

such a claim would involve a costly and 

lengthy process.’’ While the ACDDE did 

offer suggestions for the administration 

of an ODP standard, the standard 

remains inherently subjective and, we 

believe, inappropriate for the broadcast 

licensing context. Consequently, we 

affirm our earlier decisions regarding 

the administrative infeasibility of an 

ODP standard. For all of the reasons 

stated above, we decline to implement 

an ODP standard for the incubator 

program. 

24. In addition to advocating for the 

use of ODP as the eligibility standard, 

the ACDDE also proposes that ‘‘missionbased entities’’ and Native American 

Nations be automatically presumed to 

be eligible for incubation. Although the 

ACDDE’s incubator proposal and the 

benefits that it would provide 

incubators—namely the award of tax 

certificates for stations donated to a 

mission-based entity or Native 

American Nation—are not the same as 

the incentives that we adopt today, we 

share the ACDDE’s goal of including 

diverse participants in our incubator 

program. We encourage them to apply 

and establish clearly in their certified 

supplemental statements how their 

participation in the incubator program 

is consistent with the goals of the 

program. We recognize that, unlike 

small, aspiring, and struggling 

broadcasters, many mission-based 

entities and Native American Nations 

have broader missions that encompass 

much more than broadcasting and thus 

these entities may be less likely to learn 

of our incubator program absent 

education and outreach by the 

Commission. Therefore, the 

Commission will conduct outreach to 

help encourage participation in the 

incubator program by mission-based 

entities and Native American Nations 

that meet the program’s eligibility 

requirements. We decline, however, to 

adopt the proposed automatic 

presumption of eligibility. 

25. Safeguards Associated with 

Eligibility Standard. We recognize that 

the ACDDE has raised concerns about 

the potential for abuse of an eligibility 

standard based on the Commission’s 

new entrant bidding credit. In 

particular, the ACDDE references the 

Commission’s comparative broadcast 

hearings, long since discontinued, in 

which the ACDDE asserts spousal and 

parent-child relationships were used to 

‘‘game the system and defeat minority 

new entrants.’’ The ACDDE 

acknowledges, however, that the new 

entrant definition might be useful in 

promoting minority and female 

broadcast ownership if the Commission 

were able to address these ‘‘legacy 

applicant’’ concerns. 

26. To address such concerns, we 

adopt certain safeguards in conjunction 

with our two-pronged eligibility 

standard. As part of the application 

process, which is described in greater 

detail below, potential incubated 

entities must demonstrate that they have 

met both the numeric and revenue 

limitation for the preceding three years. 

Thus, an entity must not only comply 

with the eligibility standard at the time 

it applies to participate in a qualifying 

incubation relationship, but also for the 

three years prior to its application. NAB 

proposed a one-year certification period, 

which would require that applicants 

certify that, for the year prior to 

applying for participation in the 

incubator program, they have met the 

applicable eligibility standards in terms 

of the number of stations owned. Such 

a certification would, in NAB’s view, 

help to discourage any potential 

manipulation of the program by 

applicants who dispose of financial 

interests in additional broadcast 

properties prior to applying for 

participation in the incubator program. 

NAB further proposes that program 

applicants be required to certify 

compliance with any revenue eligibility 

standards that are adopted. We concur 

with NAB that a certification 

requirement will safeguard our 

eligibility concerns; however, we find 

that a longer 3-year period is more likely 

to deter any fraud or manipulation than 

a shorter timeframe. 

27. In addition, as part of the 

incubator program application process, 

we will require a potential incubated 

entity to include in its application a 

certified statement attesting that it 

would be unable to acquire a station, or 

continue to operate successfully a 

station proposed for incubation that it 

already owns, absent the proposed 

incubation relationship and the funding, 

support, or training provided thereby. 

The Commission, in its discretion, may 

investigate the accuracy of the 

certification if it is made aware of 

information that suggests that the 

potential incubated entity does not, in 

fact, need the incubation relationship to 

purchase and operate a broadcast radio 

station. All applicants will further be 

required to detail any attributable 

interests in broadcast stations held by 

family members pursuant to FCC Forms 

301, 314, and 315, thereby revealing any 

familial or spousal relations as part of 


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the application process. If at any point 

the Commission determines that the 

certified statement contained 

misrepresentations, both the incubated 

and incubating entities may suffer 

negative consequences. Pursuant to the 

Commission’s Character Policy 

Statement, we would examine the 

qualifications of both parties to hold or 

retain broadcast licenses. 

28. The incubator program is designed 

to assist those new or small broadcasters 

who do not have access to the necessary 

capital or technical expertise absent a 

qualifying incubation relationship. 

Thus, an individual who provides 

evidence of a meager bank account and 

attests to limited resources might 

subsequently be disqualified from the 

program, while also being subject to any 

penalties associated with making 

misrepresentations to a federal agency, 

if it is later determined that this 

individual also had access to a large 

personal trust fund designed to assist 

him or her in business ventures. 

Likewise, the incubating entity affiliated 

with this incubation relationship may 

find its reward waiver withheld or 

revoked, depending on whether it knew, 

or should reasonably have known, about 

the incubated individual’s access to 

such a trust fund or other assets. We 

expect that the possibility of negative 

consequences for both the incubated 

and incubating entities for any 

misrepresentations regarding the 

incubated entity’s need for the program 

should serve as a sufficient deterrent 

against such behavior. 

Qualifying Incubation Relationships 

29. In this section, we adopt 

requirements for qualifying incubation 

relationships. As discussed below, we 

will require that qualifying incubation 

relationships provide the incubated 

entity with the financial and operational 

support it lacks (including management 

training), that such relationships 

include an option for the incubated 

entity to purchase the incubating 

entity’s equity interest in the incubated 

station and/or terminate the incubating 

entity’s creditor-debtor relationship 

with the incubated entity, and that the 

standard time period for such 

relationships be three years, with the 

option to extend for up to another three 

years. We also adopt certain safeguards 

to ensure that the incubated entity 

retains control of the incubated station. 

30. The NPRM sought comment on 

the combination of activities that should 

be required to qualify as incubation and 

whether there should be any conditions 

or limitations on the financial and 

operational aspects of a qualifying 

incubation relationship. Noting that 

proponents had previously proposed 

that an incubator program include 

management or technical assistance, 

loan guarantees, direct financial 

assistance through loans or equity 

investment, training, and business 

planning assistance, the NPRM asked 

whether the program should also 

include other activities, such as 

donating stations to certain 

organizations or arrangements whereby 

a new entrant gains operational 

experience without first acquiring a 

station (e.g., pursuant to a Local 

Marketing Agreement (LMA)). In 

addition, the NPRM asked what 

additional safeguards the Commission 

should include in order to ensure that 

the incubated station licensee retains 

control of its station. We conclude that 

qualifying incubation relationships are 

those in which an experienced AM or 

FM broadcaster provides an eligible new 

or small broadcaster with support that it 

cannot obtain on its own and that is 

essential to its ability to independently 

own and operate a full-service AM or 

FM station. We expect qualifying 

incubation relationships to provide the 

incubated entity with financial and 

operational support (including 

management training) that it needs and 

that will ultimately enable the 

incubated entity to own and operate 

independently either the incubated fullservice AM or FM station or another 

full-service AM or FM station acquired 

at the completion of the program. We 

allow parties the flexibility to tailor 

each proposed incubation relationship 

to the specific needs of the incubated 

entity while adopting certain safeguards 

to ensure that the incubated entity 

retains full control of the incubated 

station. 

31. Financial and Operational 

Support. Commenters that support an 

incubator program agree that the 

incubating entity should provide the 

financial and operational support that 

the incubated entity needs and that the 

parties should have flexibility to 

determine the specific combination of 

elements needed to support the 

incubated station according to its 

particular circumstances. Requiring the 

incubating entity to provide the 

financial and operational support that 

the incubated entity needs is consistent 

with the goal of the incubator program, 

which is to help address the lack of 

access to capital and operational 

expertise faced by potential new 

entrants and small businesses, as 

discussed above. The record also 

indicates, however, that there may be 

some benefit to requiring an incubated 

entity to make a financial contribution 

to the incubation relationship to solidify 

its own commitment towards the 

endeavor. 

32. Rather than dictate specific 

minimums for the financial and/or 

operational support that an incubating 

entity must provide, we conclude that 

the better approach is to give parties the 

flexibility to tailor an incubation plan to 

the needs of the incubated entity, the 

realities of the marketplace, and the 

needs of the community in which the 

incubated station operates. For example, 

an incubated entity that already owns 

and operates an AM or FM station will 

likely need less financial and 

operational support than a first-time 

owner of a broadcast station. Similarly, 

an incubated entity that has previously 

programmed a station and sold 

advertising time will likely need less 

operational support than a new owner 

with less experience. Thus, the financial 

and operational needs of each incubated 

entity will likely differ depending on 

how much experience it has in 

broadcasting and its other assets. It is 

possible that in some cases, an 

incubated entity will just need one form 

of support or the other—i.e., financial or 

operational. For instance, if a 

broadcaster donates a station to a 

mission-based entity, as suggested by 

the ACDDE, the broadcaster may not 

necessarily need to provide any 

additional financing to fund the 

incubation activities. Nevertheless, a 

broadcaster that chooses to incubate in 

this manner would still be required to 

provide the incubated station with 

operational support, as discussed 

herein, to enable the mission-based 

entity to operate the station 

independently in the long term. 

33. These are just a few examples of 

how the specific financial and 

operational needs of an incubated entity 

may differ depending on the 

circumstances. We emphasize that 

qualifying incubation relationships 

must provide an incubated entity with 

the level of support needed to enable 

the incubated entity to own and operate 

a full-service AM or FM station 

independently at the conclusion of the 

qualifying incubation relationship. 

Depending on the needs of the 

incubated entity, a qualifying 

incubation relationship will likely 

provide or guarantee a substantial share 

of the financing needed to acquire the 

incubated full-service AM or FM station 

and operate it effectively. The 

incubation relationship must ensure 

that the incubated entity has sufficient 

financial resources to hire enough 

employees to oversee the operation of 

the station, acquire and produce station 

programming, acquire and maintain 


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station equipment and facilities, etc. 

While the incubating entity may often 

provide the bulk of the financial 

resources, we do expect the incubated 

entity to contribute a substantial amount 

of funding to support the incubated 

station. We find that requiring the 

incubated entity to assume some of the 

financial risk by making a meaningful 

financial contribution to the incubation 

relationship will provide further 

assurance of the incubated entity’s 

commitment to the success of the 

relationship. Consequently, as discussed 

below, we require the incubated entity 

to hold a minimum equity interest in 

the incubated station consistent with 

the control test contained in our existing 

revenue-based eligible entity definition. 

34. For operational support, a 

qualifying incubation relationship will 

likely also provide operational 

assistance and intensive training in the 

following areas: Engineering/technical 

operations, office support, sales, 

programming, and management, 

including business planning, finances, 

and administration. These areas of 

operational support encompass those 

that commenters have proposed and 

that proponents have traditionally 

conceived of as part of a comprehensive 

incubator program. 

35. The specific components of a 

qualifying incubation relationship may 

vary based on the amount of industry 

experience an incubated entity has 

previously obtained, the incubating 

entity’s existing resources, and the 

specific needs of the station to be 

incubated. Parties may be able to 

demonstrate that an incubated entity 

already has significant experience in 

some of the areas listed above and that 

a qualifying incubation relationship for 

that entity requires fewer components. 

Regardless of which of these specific 

components are included in a particular 

incubation relationship, the support 

required by a qualifying incubation 

relationship must ultimately enable the 

incubated entity to own and operate 

independently either the incubated 

station or another full-service AM or FM 

station at the conclusion of the 

incubation relationship. We expect that 

an incubation relationship where both 

parties have established a plan for the 

incubated entity to own and operate 

independently either the incubated 

station or a newly acquired full-service 

AM or FM station at the end of the 

incubation relationship, with progress 

indicators identified as part of a contract 

between the parties, holds the greatest 

likelihood of success. As discussed 

below, after the second year of 

incubation we will not allow any 

brokering or sharing arrangements 

involving the incubated station to 

ensure that the incubated entity 

demonstrates its ability to operate the 

incubated station independently prior to 

the end of the relationship. 

36. Option to Buy Out Incubating 

Entity or Obtain Assistance in Acquiring 

a New Station. We agree with the 

ACDDE’s proposal that qualifying 

incubation relationships must include 

an option that provides the incubated 

entity with the right, but not the 

obligation, to purchase the incubating 

entity’s equity interest in the incubated 

station, if it holds one. The price and 

terms of this buy-out option must be 

commercially reasonable and must not 

strongly favor the incubating entity, and 

the purchase price must not exceed the 

station’s fair market value. The fair 

market value must be determined 

through customary valuation methods 

that rely on audited financial statements 

prepared by a certified public 

accountant, real estate appraisals, and 

other information such as market size, 

total radio dollars available marketwide, market growth, market 

competition, and the potential for signal 

upgrades, to the extent such information 

is relevant to determining the fair 

market value of the station. At the end 

of the qualifying incubation 

relationship, the incubated entity may 

decide not to exercise this option and 

choose instead to retain its existing 

controlling interest in the incubated 

station. Alternatively, the incubated 

entity may choose to sell its interest in 

the incubated station and use the 

proceeds from sale to acquire another 

full-service AM or FM station. In that 

case, we expect the incubating entity to 

help the incubated entity identify a fullservice AM or FM station to buy and 

obtain the financing necessary to 

purchase the station. Absent a showing 

at the end of the qualifying incubation 

relationship that the incubated entity 

holds a controlling interest in the 

incubated station or a newly acquired 

full-service AM or FM station, the 

incubating entity will not be eligible to 

receive a waiver of the Local Radio 

Ownership Rule. 

37. By requiring an option as 

described in the preceding paragraph, 

we ensure that, before the incubating 

entity is eligible to receive a waiver, the 

incubated entity has acquired 

independent ownership of a full-service 

AM or FM station, consistent with our 

program goal of introducing new, 

independent broadcasters to the 

industry. Because our approach will 

provide multiple paths for an incubated 

entity to achieve the goal of 

independent station ownership, we 

conclude that our approach will not 

unduly direct or limit the incubated 

entity’s activities following its 

participation in the program, thereby 

preserving options as NAB suggests. 

38. Duration of Qualifying Incubation 

Relationships. We agree with the 

ACDDE that in most cases a three-year 

incubation period will provide enough 

time for an incubated entity to develop 

the skills and expertise needed to be 

able to own and operate a broadcast 

station independently. NAB offers a 

similar recommendation, stating that 

broadcasters’ experience in this arena 

suggests that the term of an incubation 

relationship should be no less than 

three years but that an incubated entity 

may need additional time to obtain the 

necessary funds or expertise to be selfsufficient, or that an extension may be 

needed due to marketplace or financing 

conditions. While we agree that an 

incubated entity may need more than 

three years to develop the requisite 

operational expertise or secure the 

financing needed to be self-sufficient, 

we believe we must adopt a maximum 

time limit of six years for qualifying 

incubation relationships so that the 

incubated entity has an incentive to 

develop the skills and expertise needed 

to operate a full-service AM or FM 

station independently. 

39. As the ACDDE notes, there may 

also be instances in which an incubated 

entity makes exceptional progress 

towards becoming an independent 

owner and operator of the incubated 

station and seeks to acquire full equity 

ownership and independent control of 

the incubated station before the 

incubation term ends. In such 

circumstances, we will consider 

granting requests from parties seeking to 

conclude their incubation relationship 

before the end of the term. 

40. Accordingly, we will require that 

the incubation agreement provide that 

the parties must perform the incubation 

activities for three years, although the 

parties may jointly seek to conclude 

their incubation relationship early or 

request a one-time extension of an 

additional three years or less, depending 

on need, upon a showing of good cause. 

The three-year time period will begin on 

the effective date of the incubation 

contract. Extension requests must be 

submitted before the initial term 

expires. We direct the Media Bureau 

(Bureau) to find good cause to grant an 

extension where (1) the parties need 

additional time to incubate the fullservice AM or FM station as discussed 

below, or (2) the parties need more time 

to identify a full-service AM or FM 

station for the incubated entity to 

acquire or additional time for the 

incubated entity to close on the pending 


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acquisition of a full-service AM or FM 

station. The parties to the incubation 

contract must demonstrate that by the 

end of the extended term they will have 

resolved the issues that resulted in the 

need for more time and that the 

incubated entity will be able to own a 

full-service AM or FM station and have 

demonstrated its ability to operate such 

a station independently. Unless 

otherwise specified by the parties and 

approved by the Commission, the terms 

of the initial incubation contract will 

govern the incubation relationship 

during any Commission-approved 

extension period. 

41. Independence of Incubated Entity. 

The incubator program is designed to 

provide a ‘‘hands on’’ learning process 

in which the incubated entity learns by 

‘‘doing’’ with the benefit of a mentor. To 

ensure that the incubated entity derives 

the maximum benefit from the training 

and mentoring provided by the 

incubating entity, we require that the 

incubated entity be the licensee of the 

incubated station and maintain ultimate 

authority over station personnel, 

programming, and finances. It is by 

engaging in station management 

activities independently that the 

incubated entity will best develop its 

skills. As NAB notes, ‘‘this level of 

independence is essential to promoting 

the new entrant’s business growth and 

experience.’’ Indeed, the goals of the 

incubator program, including 

encouraging new and diverse ownership 

of broadcast stations, require that we 

adopt safeguards to ensure that the 

incubated entity retains control of the 

incubated station and remains 

independent of the incubating entity 

and thus develops the skills necessary 

to own and operate the station 

independently. While the incubating 

entity will devote considerable 

financial, operational, managerial, and 

technical resources during the 

incubation relationship, the incubated 

entity must retain control of the 

incubated station and remain 

independent of the incubating entity to 

ensure it derives the full measure of 

intended benefits, in the form of ‘‘hands 

on’’ learning, during the entire 

incubation relationship. 

42. Below, we adopt certain 

safeguards to ensure that the incubated 

entity has the requisite level of 

autonomy during the incubation 

relationship. As a threshold matter, we 

require the incubated entity to satisfy a 

control test as discussed below, 

consistent with our revenue-based 

eligible entity definition. In addition, 

we place limits on the use of brokering 

and sharing arrangements. We agree 

with the ACDDE that JSAs and shared 

service agreements (SSAs) may be used 

only to assist in, and must not be used 

to substitute for, incubation. Finally, 

both to promote the incubated entity’s 

autonomy and to guard from potential 

conflicts of interest, we place limits on 

the ability of individuals to take on 

management or oversight positions in 

both the incubating entity and 

incubated entity. 

43. First, we require the incubated 

entity to satisfy the following control 

test consistent with our existing 

revenue-based eligible entity definition, 

upon which we are basing the second 

prong of the eligibility standard for our 

incubator program as discussed above. 

Specifically, we require that the 

incubated entity hold more than 50 

percent of the voting power of the 

licensee of the incubated station, and if 

the licensee is not a publicly traded 

company (which will almost assuredly 

be the case), a minimum of either 15 

percent or 30 percent of the equity 

interests, depending on whether 

someone else owns or controls more 

than 25 percent of the equity interests. 

Both the ACDDE and NAB agree that the 

incubated entity must hold more than 

50 percent of the voting power to 

control the incubated station. The 

ACDDE, however, also calls for the 

incubated entity to hold a minimum 

equity interest of 20 percent. Veteran 

broadcaster Skip Finley proposes that 

the Commission limit the investment of 

the incubating entity to 25 percent, 

which he argues would not permit 

control or, standing alone, create an 

attributable ownership interest. We 

conclude that applying the control test 

in our existing eligible entity rule will 

best ensure that the incubated entity 

retains control of the incubated station 

while still giving the parties some 

flexibility to establish incubation 

relationships that suit their specific 

needs. Also, as noted above, we find 

that it is important for the incubated 

entity to have some minimum ‘‘skin in 

the game’’ as a sign of its commitment 

to the success of the incubation 

relationship. In this regard, we find that 

the minimum equity holding 

requirements of the control test 

contained in the revenue-based eligible 

entity definition are appropriate. Using 

these existing requirements should 

facilitate both participation in and 

administration of the incubator 

program, as the requirements are 

already familiar to licensees. Hence, as 

discussed more fully below, all 

incubation applications must 

demonstrate that control will rest with 

the incubated entity and that the 

incubated entity meets the requisite 

minimum holding level discussed 

herein. 

44. We remind parties that our rules 

prohibit unauthorized transfers of 

control, including de facto transfers of 

control. Thus, even if the incubated 

entity has a controlling interest in the 

incubated station, we will also look to 

whether the incubated entity maintains 

control over the station’s core 

operations, including programming, 

personnel, and finances, when 

addressing questions relating to control. 

45. To ensure that the incubated 

entity retains autonomy over the 

incubated station’s core operating 

functions so as to gain the necessary 

level of operational expertise, and in 

light of concerns raised by the ACDDE 

and REC Networks, we place certain 

restrictions on the use of LMAs, JSAs, 

and SSAs. Our current attribution 

standards recognize that same-market 

radio LMAs and JSAs above a certain 

percentage of the station’s broadcast day 

may confer on the brokering station the 

potential to exert a significant degree of 

influence over core station operating 

functions (i.e., programming decisions). 

Specifically, our attribution standards 

regard as attributable ownership 

interests same-market radio LMAs and 

JSAs in which the brokering station 

brokers more than 15 percent of the 

broadcast time or sells more than 15 

percent of the advertising time per 

week. Given our rationale for attributing 

these arrangements and the concerns 

raised in the record of this proceeding, 

we adopt the following safeguards. 

46. First, to ensure that the incubated 

entity retains control of the 

programming aired on the incubated 

station, we prohibit LMAs involving the 

incubated station. As defined in our 

rules, an LMA is any agreement that 

involves ‘‘the sale by a licensee of 

discrete blocks of time to a ‘broker’ that 

supplies the programming to fill that 

time and sells the commercial spot 

announcements in it,’’ regardless of how 

the agreement is titled. Second, to 

ensure that the incubated entity is able 

to gain operational expertise by 

performing the core operations of the 

incubated station, we limit any JSAs or 

SSAs involving the incubated station to 

the first two years of the initial 

incubation period. Pursuant to the 

definitions in our rules, we consider a 

JSA to be any agreement with the 

licensee of a brokered station that 

authorizes a broker to sell advertising 

time for the brokered station, and we 

consider an SSA to be any agreement or 

series of agreements in which (i) a 

station provides any station-related 

services to a station that is not directly 

or indirectly under common de jure 


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control permitted under the 

Commission’s regulations, or (ii) 

stations that are not directly or 

indirectly under common de jure 

control permitted under the 

Commission’s regulations collaborate to 

provide or enable the provision of 

station-related services. While our 

attribution standards do not regard 

SSAs as attributable ownership 

interests, we are concerned that 

allowing these arrangements to be used 

for the full duration of an incubation 

relationship could deprive the 

incubated entity of its incentive to gain 

the operational expertise needed to 

operate the station independently at the 

end of the relationship. Permitting 

limited use of JSAs and SSAs 

appropriately balances broadcasters’ 

representations that these arrangements 

can make incubation more successful 

with the need to ensure that each 

incubated entity learns how to perform 

essential station functions 

independently in order to be viable in 

the long term as an independent 

broadcaster. We do not believe that 

prohibiting LMAs and restricting the 

use of JSAs and SSAs will reduce the 

utility of our program for incubated 

entities, as the record and our 

experience indicate that new owners of 

radio stations need assistance primarily 

with financing and technical issues, 

rather than programming and 

advertising sales. 

47. Moreover, these safeguards will 

enable the parties to evaluate whether 

the incubated entity is prepared to 

operate independently before the 

incubation period has ended and while 

the incubating entity remains 

contractually obligated to provide 

support. By requiring that the incubated 

entity actually obtain or produce 

programming, sell advertising, and 

perform other core operating functions 

for the incubated station for at least one 

full year prior to the expiration of the 

incubation relationship, these 

protections will provide for a more 

informed assessment of the incubated 

entity’s progress and any areas where it 

needs additional training and support to 

be viable as an independent owner and 

operator of the incubated station or 

another full-service AM or FM station. 

The incubated entity’s experience 

performing core operating functions 

may provide a persuasive justification 

for extending the incubation 

relationship if the parties determine that 

more time is needed to incubate the 

station; thus, we are likely to rely on the 

parties’ assessment that an extension of 

the incubation relationship is needed. 

While we are allowing limited use of 

JSAs and SSAs, we emphasize that these 

agreements, if used, must be 

accompanied by proper training in the 

relevant area(s)—e.g., administrative, 

technical, sales, etc.—covered by any 

such arrangement(s) involving the 

incubated station. 

48. Finally, we require that none of 

the officers, directors, managing 

partners, or managing members of the 

incubated entity hold an attributable 

interest in or be an employee of the 

incubating entity. We are concerned that 

allowing an employee or an attributable 

interest holder of the incubating entity 

to serve as an officer, director, managing 

partner, or managing member of the 

incubated entity may jeopardize the 

independence of the incubated station 

given the significant conflicts of 

interests that could arise for these 

individuals and the significant authority 

and potential for influence they would 

wield over the incubated station. While 

U.S. antitrust laws prohibit, with certain 

exceptions, one individual from serving 

as an officer or director of two 

competing corporations, we believe that 

an additional safeguard is needed to 

address circumstances that may be 

exempt from or not covered by the 

antitrust laws, such as where the two 

companies are not competitors, where 

either company is not a corporation or 

does not meet certain financial 

thresholds, or where an officer or 

director of one company is an employee 

but not an officer or director of the other 

company. We note that NAB and MMTC 

previously stated that the incubating 

entity and the incubated entity should 

not share common officers or directors. 

As discussed above, we believe that an 

even stronger safeguard is necessary to 

ensure the independence of the 

incubated station. 

49. Limitations on Incubation 

Relationships Per Market. We will allow 

each incubating entity to incubate no 

more than one station per market, as 

defined for purposes of determining 

compliance with the Local Radio 

Ownership Rule. This will help ensure 

that the benefits that flow from our 

incubator program reach multiple 

markets and that our program is not 

used to restrict the limited number of 

local broadcast radio channels to one or 

a few radio station owners. While an 

established broadcaster that is already 

in an approved incubation relationship 

may not concurrently incubate multiple 

stations in the same market, the 

incubating broadcaster may apply to 

incubate a different station in another 

market. Consistent with the 

certifications and other requirements 

discussed herein, the established 

broadcaster would need to demonstrate 

that it will provide the resources 

necessary to incubate the additional 

station(s). Moreover, a prospective 

incubating entity may seek to incubate 

a station in a market where there is 

already an ongoing incubation 

relationship involving a different station 

if the prospective incubating entity is 

not a party to or participant in that 

ongoing relationship. 

Benefit To Incubating Entity 

50. In this section, we discuss the 

benefit that an established broadcaster 

will be eligible to receive for 

successfully completing a qualifying 

incubation relationship, namely a 

waiver of the Local Radio Ownership 

Rule. We discuss below the terms 

associated with the waiver and the 

standard for granting such a waiver. 

51. Acknowledging that proponents of 

a broadcast incubator program have 

previously suggested that incubating 

entities receive a waiver of our local 

broadcast ownership rules in exchange 

for participating in an incubator 

program, the NPRM sought comment on 

how to structure the waiver element or 

other appropriate incentive. In 

particular, the NPRM sought comment 

on whether the waiver should allow the 

incubating entity to obtain an otherwise 

impermissible non-controlling, 

attributable interest in the incubated 

station or to acquire a different station 

in the same market or any similarly 

sized market. Among other things, the 

NPRM also sought comment on whether 

a waiver should be tied to the success 

of the incubation relationship, whether 

the waiver should continue when the 

incubator program ends, and whether 

the waiver should be transferrable if the 

incubating entity sells a cluster of 

stations that does not comply with the 

ownership limits at the time. 

52. Why a Reward Waiver as Opposed 

to Another Type of Benefit. We 

conclude that our incubator program 

must provide a meaningful economic 

incentive in order to encourage 

established broadcasters to commit the 

substantial financial and other resources 

needed to incubate a new entrant 

successfully as discussed below. We 

recognize that, without active 

participation by incumbent 

broadcasters, any incubator program we 

design will be doomed to fail. Both 

supporters and opponents of an 

incubator program agree that a strong 

incentive is needed to entice 

prospective incubating entities. Indeed, 

the ACDDE states that an important goal 

of the incubator program is to create a 

sufficient incentive for established 

broadcasters to incubate new entrants, 

allowing established broadcasters to 


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grow their businesses while sharing 

with others the opportunities they may 

have enjoyed earlier in their careers. 

53. There is, however, a divergence of 

views over what would be the best 

incentive. According to the 

broadcasters, a waiver of the local 

broadcast ownership rules is the 

appropriate incentive. The ACDDE, on 

the other hand, advocates for two forms 

of tax relief: A tax certificate entitling 

the incubating entity to defer capital 

gains taxes on the sale of its interest in 

the incubated station upon reinvestment 

in a comparable property, and a tax 

credit of an amount equal to the 

appraised fair market value of the 

station if the incubating entity donates 

the station to a mission-based entity or 

a Native American Nation. REC 

Networks proposes a regulatory fee 

exemption. 

54. We conclude that allowing an 

incubating entity to seek a waiver of the 

Local Radio Ownership Rule, including 

the AM/FM subcap (reward waiver), in 

exchange for successfully completing a 

qualifying incubation relationship will 

provide a meaningful economic 

incentive to established broadcasters 

and thereby encourage them to incubate 

a new entrant. Those broadcasters who 

have the experience and resources 

needed to incubate a new or small 

broadcaster successfully are likely to be 

longtime station group owners that may 

be at or near the local ownership limits 

in one or more markets. Consequently, 

based on the record in this proceeding, 

we expect that a waiver of the Local 

Radio Ownership Rule will be 

sufficiently attractive to these 

prospective incubating entities to entice 

them to participate in the incubator 

program. While some commenters assert 

that granting waivers of local ownership 

rules to incubating entities could harm 

rather than promote ownership 

diversity, we find that the record 

demonstrates a waiver of the Local 

Radio Ownership Rule is the benefit 

within our authority that will best 

provide a sufficient incentive for 

established broadcasters to participate 

in our incubator program. In 

establishing requirements for the use of 

reward waivers under our incubator 

program for full-service AM and FM 

stations, we balance our goal of 

preserving our local radio ownership 

limits with the need to provide enough 

flexibility to foster participation in our 

program by incubating entities. We 

conclude that the requirements we 

adopt herein regarding the use of reward 

waivers will help ensure that they do 

not work against our local radio 

ownership limits and that our incubator 

program preserves a market structure 

that facilitates and encourages new 

entry into the local media market, as 

discussed below. 

55. We decline to rely on regulatory 

fee exemptions or tax incentives to 

encourage participation in our incubator 

program. With regard to a regulatory fee 

exemption, we agree with the 22 

ACDDE Members who filed reply 

comments that a six-to-twelve-month 

exemption of this sort would not 

provide a sufficient incentive for 

established broadcasters to incubate 

new entrants. In addition, we note that 

the Commission has previously found 

that it does not have the authority to 

waive or defer fees categorically. 

56. As for tax certificates and tax 

credits, we agree that they can provide 

an incentive for established broadcasters 

to enter qualifying incubation 

relationships and that some believe tax 

certificates have been successful in the 

past in bringing new and diverse 

entrants to the broadcasting industry, 

but we are unable to use such measures 

to encourage participation in our 

incubator program absent authorization 

from Congress. Since the prior tax 

certificate program was eliminated in 

1995, supporters have from time to time 

advocated for the return of the program. 

Indeed, the Commission itself has 

previously supported the effort to 

reinstate tax certificates as a means for 

increasing ownership diversity. To date, 

however, those efforts have been 

unavailing. Thus, rather than 

indefinitely delaying implementation of 

an incubator program pending 

Congressional introduction and passage 

of the necessary tax legislation, we find 

that it is in the public interest to 

proceed with the program we 

implement today, which will provide a 

meaningful incentive for established 

broadcasters to incubate new entrants 

that genuinely need financial and/or 

operational support to become 

independent owners. Of course, 

following our action today, Congress 

would be able to adopt legislation either 

authorizing or mandating the use of tax 

certificates and tax credits in our 

incubator program, either in addition to 

or in lieu of reward waivers, should it 

so choose. 

57. Timing and Duration of Reward 

Waiver. The reward waiver will be 

available to the incubating entity after 

the successful completion of a 

qualifying incubation relationship. The 

process for determining whether an 

incubation relationship has been 

successful is described more fully 

below. While NAB proposes that the 

reward waiver be available to the 

incubating entity prior to the end of the 

incubation relationship, we believe that 

an incubating entity will have a much 

stronger incentive to cultivate the 

incubated entity as an independent 

broadcaster if the reward waiver is 

available to the incubating entity only 

after it successfully completes the 

qualifying incubation relationship. To 

use its reward waiver, the incubating 

entity must seek to acquire a full-service 

AM or FM station and file the waiver 

request within three years after the 

successful conclusion of the qualifying 

incubation relationship. We believe it is 

necessary to require that each reward 

waiver be used in proximity to the 

associated incubation relationship in 

order to aid our tracking and 

recordkeeping, and so the Commission 

is able to consider the availability of 

such benefits in the context of 

ownership rules and competition in 

radio markets close in time to when the 

incubation relationship occurs. We also 

believe that the incubating entity will 

have every incentive to acquire a fullservice AM or FM station using the 

reward waiver as quickly as possible 

following the successful conclusion of 

the qualifying incubation relationship. 

Therefore, we reject NAB’s assertion 

that an unused reward waiver should 

not expire. 

58. We do, however, recognize that 

retaining the value of a station cluster 

that includes a reward waiver is an 

important part of the benefit afforded to 

an incubating entity. Consequently, as 

long as the cluster that is initially 

formed using the reward waiver is 

transferred intact, we will permit the 

waiver to be transferred with the station 

group. Permitting transfer of the initial 

cluster preserves any increase in value 

achieved by the incubating entity for its 

efforts in bringing a new broadcaster 

into the market. We do not, however, 

permit the waiver to move separately 

from the station cluster, as we also seek 

to ensure that those who have not 

advanced diversity via participation in 

the program do not receive a windfall. 

Consequently, the waiver will continue 

in effect as long as the cluster remains 

intact. Further, a single party may not 

hold the benefit of more than one 

waiver in a market granted under our 

incubation program, meaning that a 

station cluster that exceeds the 

applicable ownership rule by virtue of 

an incubation reward waiver may not be 

transferred to an entity that already 

holds such a waiver in the market. In 

addition, we will permit the incubating 

entity to use its reward waiver to engage 

in an in-market station swap, which will 

not impact ownership diversity in the 

market or allow a broadcaster to obtain 

a reward waiver without making a 


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countervailing contribution to 

ownership diversity. 

59. Markets Where Reward Waiver 

May Be Used. We will allow an 

incubating entity to use a reward waiver 

to acquire an otherwise impermissible 

attributable interest to: (i) Purchase a 

full-service AM or FM station located in 

the same market as the incubated 

station, (ii) purchase a full-service AM 

or FM station located in a market that 

is comparable to the market in which 

the incubation occurred, as defined 

below, or (iii) if the incubated entity 

chooses not to exercise its option to 

purchase the incubating entity’s noncontrolling interest in the incubated 

station, to retain an otherwise 

impermissible attributable interest in 

the incubated station after the 

incubation relationship ends (including 

acquiring a controlling interest in the 

incubated station if the incubated entity 

acquires a controlling interest in another 

full-service AM or FM station). An 

incubating entity that uses a reward 

waiver in a comparable market may also 

choose to retain its non-controlling 

attributable interest in the incubated 

station if permitted by our ownership 

rules. Commenters that support the use 

of waivers in our incubator program 

agree that we should allow an 

incubating entity to use a reward waiver 

in a market other than the incubation 

market, and we believe this will expand 

opportunities for incubation by not 

limiting participants only to markets 

where the incubating entity is at or near 

the applicable local radio ownership 

limits. To preserve competition in even 

the smallest markets, however, we will 

not allow an incubating entity to use a 

reward waiver in a market where the 

waiver would result in the incubating 

entity holding attributable interests in 

more than 50 percent of the full-service, 

commercial and noncommercial radio 

stations in a market. Thus, consistent 

with our existing Local Radio 

Ownership Rule, an incubating entity 

will not be able to hold an attributable 

interest in more than 50 percent of the 

full-service, commercial and 

noncommercial radio stations in a 

market unless the combination of 

stations comprises not more than one 

AM and one FM station. Given our 

decision to allow a reward waiver to be 

used only if the incubating entity will 

not hold an attributable interest in more 

than 50 percent of the full-service, 

commercial and noncommercial radio 

stations in a market, we do not think it 

is necessary to adopt a cap on the inmarket revenue share of station 

combinations resulting from the use of 

a reward waiver as one commenter 

proposes. We believe that a cap on the 

in-market revenue share of station 

combinations, which is more likely to 

change from year to year, would not be 

as effective as a cap on the share of 

stations that an incubating entity may 

own in a reward market. 

60. We will consider a market to be 

‘‘comparable’’ to the market where the 

incubation relationship occurred if, at 

the time the incubating entity seeks to 

use the reward waiver, the chosen 

market and the incubated market fall 

within the same market size tier under 

our Local Radio Ownership Rule and 

the number of independent owners of 

full-service, commercial and 

noncommercial radio stations in the 

chosen market is no fewer than the 

number of such owners that were in the 

incubation market at the time the parties 

submitted their incubation proposal to 

the Commission. Restricting an 

incubating entity that uses a reward 

waiver to purchase a station in another 

market to a comparable market will help 

ensure that the local impact of the 

reward waiver on the number of 

independent owners is similar to that of 

the incubated station in its market. 

Thus, it balances our desire to limit the 

impact of any potential consolidation 

that could result from the use of a 

reward waiver with our goal of 

expanding broadcast station ownership 

opportunities for small businesses and 

potential new entrants by allowing an 

incubating entity to incubate in markets 

other than those in which it is at or near 

the applicable local radio ownership 

caps. To the extent NAB seeks even 

greater flexibility and proposes that we 

permit an incubating entity to use a 

reward waiver in any market it wishes, 

we reject that element of NAB’s 

proposal. For the reasons discussed 

above, we believe that the better 

approach is to require that a reward 

waiver be used either in the same 

market where the incubation 

relationship occurred or in a 

comparable market. 

61. A group of commenters contend 

that our definition of comparable market 

could result in applying a reward 

waiver in a much larger market than 

that in which incubation occurred and 

propose limiting the definition of a 

‘‘comparable market’’ to those markets 

ranked ‘‘5 Up/5 Down’’ from the 

incubation market based on Nielsen’s 

population rankings. We conclude, 

however that the proposed definition 

would not necessarily lead to 

incubation and use of waivers in 

markets that are truly more 

‘‘comparable’’ with respect to the 

number of stations and independent 

owners than the definition we adopt 

above. As an initial matter, we note that 

the Nielsen rankings are based on the 

population of the relevant market, not 

on the number of stations in a given 

market or the number of independent 

owners. Thus, the markets five up or 

five down from the incubation market 

might not have the same number of 

stations or independent owners as the 

incubation market—the very factors we 

find most relevant in assessing the 

diversity of the market. For example, 

according to Nielsen data from Fall 

2017, Baltimore is ranked as market 21 

and St. Louis is ranked as market 23, yet 

Baltimore has only 35 stations, while St. 

Louis has 68 stations, resulting in the 

markets being subject to different 

ownership caps under our rules. In 

crafting our standard, we focused 

primarily on preventing the potential for 

ownership consolidation in a market 

with fewer stations and independent 

owners than the market in which the 

incubation relationship added a new 

entrant. In addition, we note that 

ownership interests and circumstances 

vary widely among incumbent 

broadcasters, and it is not self-evident 

that an incubating entity will seek to use 

a reward waiver in the market with the 

largest population possible. Rather, we 

expect the decision will be driven by 

where the group owner faces ownership 

restrictions or wishes to grow a 

successful cluster. Finally, it is possible 

that the incubating entity does not own 

any stations in markets that are within 

five up or five down from the 

incubation market, in which case it 

would have no flexibility to use the 

reward waiver. In this regard, we agree 

with NAB that the ‘‘5 Up/5 Down’’ 

proposal is ‘‘unduly restrictive’’ and 

could have the effect of inhibiting 

participation by potential incubating 

broadcasters. For all of the foregoing 

reasons, therefore, we decline to adopt 

the ‘‘5 Up/5 Down’’ proposal. 

62. While we believe that incubating 

entities will have no difficulty using 

reward waivers under our market 

comparability standard, we may allow 

an incubating entity to use a reward 

waiver in a market that does not meet 

our comparability standard if, due to 

changed circumstances following the 

parties’ submission of their incubation 

proposal, there is no longer a 

comparable market in which the 

incubating entity is at the local radio 

ownership cap or AM/FM subcap and 

the incubating entity demonstrates why 

doing so is consistent with the public 

interest. However, we anticipate that 

incubating entities will consider our 

market comparability standard when 

choosing a candidate to incubate given 


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our decision to allow an incubating 

entity to use its reward waiver in a 

market that meets that standard. 

63. We will allow an incubating entity 

that receives multiple reward waivers 

under our program (as a result of 

incubating multiple new entrants) to use 

no more than one reward waiver per 

market. This, as well as our decision 

above to grant an incubating entity a 

reward waiver only after the incubating 

entity successfully completes a 

qualifying incubation relationship and 

only in the same market as the 

incubated station or a comparable 

market, will help ensure that reward 

waivers do not work against our local 

radio ownership limits. Indeed, our 

local radio ownership limits promote 

competition and viewpoint diversity by 

ensuring a sufficient number of 

independent radio voices and by 

preserving a market structure that 

facilitates and encourages new entry 

into the local media market. The 

safeguards that we adopt today will help 

ensure that our incubator program 

preserves such a market structure while 

further promoting the entry of new and 

diverse voices in broadcast radio. 

64. Temporary Waiver for Purposes of 

Qualifying Incubation Relationships. In 

some cases, a prospective incubating 

entity may already hold attributable 

interests in the maximum number of 

radio stations permitted by our Local 

Radio Ownership Rule in the market 

where it seeks to engage in a qualifying 

incubation relationship. To ensure that, 

in such circumstances, a prospective 

incubating entity may still participate in 

our program, we will grant such an 

incubating entity a temporary waiver of 

the Local Radio Ownership Rule 

(including the AM/FM subcap) if the 

incubation relationship would result in 

the incubating entity holding an 

otherwise impermissible, noncontrolling attributable interest in the 

incubated station. If such a waiver is 

necessary, the Bureau will consider and 

approve such a waiver when reviewing 

the incubation proposal. This temporary 

waiver will expire when the incubation 

relationship ends. At that point, if the 

incubating entity has met all its 

obligations under the approved 

incubation relationship and 

demonstrates that the relationship was 

successful as discussed below, the 

incubating entity will be able to obtain 

a reward waiver as discussed herein. 

65. Criteria for Granting a Waiver. We 

will review requests for both the reward 

and temporary waiver pursuant to § 1.3 

our rules, which requires a showing of 

‘‘good cause’’ and applies to all 

Commission rules. With regard to the 

temporary waiver, the incubating entity 

and incubated entity must demonstrate, 

as described in greater detail below, that 

they are both eligible for, and intend to 

engage in, a qualifying incubation 

relationship. To receive a reward 

waiver, the incubating entity must 

demonstrate that it has completed a 

successful qualifying incubation 

relationship. Specifically, the 

incubating entity must certify (i) that it 

complied in good faith with its 

incubation agreement, as submitted to 

and approved by the Bureau, and the 

requirements of our incubator program 

discussed herein; and (ii) either that the 

incubated entity holds a controlling 

interest in the incubated station or a 

newly acquired full-service AM or FM 

station, or if the incubated station was 

a struggling station, that the incubation 

relationship has resolved the financial 

and/or operational difficulties that the 

owner of the previously struggling 

station faced prior to incubation and 

sought to remedy through the 

incubation relationship. If these criteria 

are met, we will consider the qualifying 

incubation relationship to be successful 

even if the incubating entity retains a 

non-controlling attributable interest in 

the incubated station when the 

relationship concludes, provided that 

the incubating entity’s interest in the 

station complies with the applicable 

ownership limits or is permissible 

pursuant to a waiver of the local radio 

ownership limit (including the AM/FM 

subcap). After the incubating entity 

demonstrates that it has completed a 

successful qualifying incubation 

relationship as discussed herein, the 

incubating entity need not engage in any 

other actions to receive a reward waiver, 

beyond seeking to use the waiver in a 

comparable market and otherwise being 

in compliance with Commission rules 

and requirements, and there will be a 

rebuttable presumption that granting the 

waiver is in the public interest. 

66. We find that ‘‘good cause’’ exists 

to grant these temporary and reward 

waivers because doing so yields benefits 

to competition and ownership diversity 

in a local market that outweigh the 

impact on local competition in the 

market in which a waiver is granted. By 

tying grant of the reward waiver directly 

to station ownership by a new or 

previously struggling entity and 

restricting the use of reward waivers as 

discussed herein, any consolidation 

resulting from the use of a reward 

waiver will be limited and accompanied 

by the establishment of a new, or 

stronger, broadcaster in the same or a 

comparable market. Indeed, it is our 

determination herein that the public 

interest would not be served by strictly 

applying the Local Radio Ownership 

Rule (including the AM/FM subcaps) 

where an established broadcaster that 

engages in a qualifying incubation 

relationship seeks a waiver of the rule 

as discussed in this Order. While in the 

context of § 1.3 waiver requests, the 

Commission has considered showings of 

undue hardship, the equities of a 

particular case, or other good cause, in 

this particular context an applicant is 

required to make a narrower showing as 

discussed herein. If the applicant 

demonstrates that it has engaged in a 

successful qualifying incubation 

relationship and that grant of a waiver 

is consistent with the goals of our 

incubator program, there will be a 

rebuttable presumption that granting a 

waiver in the incubation market or a 

comparable market is in the public 

interest. 

Procedures for Filing, Reviewing, and 

Monitoring Compliance of Incubation 

Relationships 

67. Before the parties commence a 

qualifying incubation relationship, the 

Bureau must determine that the 

relationship is designed to help a new 

entrant, small broadcaster, or struggling 

broadcaster gain the ability to own and 

operate a full-service AM or FM station 

independently and that the relationship 

otherwise qualifies for the program. 

This section lays out the process for 

submission and review of incubation 

relationship proposals and how 

compliance will be monitored during 

the incubation relationship. In addition, 

this section describes how the Bureau 

will determine whether a particular 

incubation relationship has been 

successful, such that the incubating 

entity is eligible to seek a reward 

waiver. We direct the Bureau to 

implement these procedures. 

68. As a threshold matter, we note 

that all incubation proposals must be 

based on prospective relationships. 

Incubating broadcasters will derive a 

significant benefit by receiving the 

reward waiver. Consequently, all 

incubation proposals must demonstrate 

a strong likelihood of promoting the 

ultimate program goal of bringing 

greater ownership diversity to the 

broadcast sector. This will be done by 

either enabling the incubated entity to 

own and operate a newly acquired fullservice AM or FM radio station 

independently, or by improving the 

incubated entity’s ability to retain and 

operate independently the struggling 

station it currently owns. To ensure that 

a proposed incubation relationship 

comports with the program’s goal of 

broadening ownership diversity, we 

require prior Bureau review of the 


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Federal Register / Vol. 83, No. 167 / Tuesday, August 28, 2018 / Rules and Regulations 43785 

proposal with an eye towards its 

adherence to the program requirements 

described in the instant order. 

Bureau Review of Incubation Proposals 

69. Process for Submitting Incubation 

Proposals. There are several ways in 

which an incubation proposal might 

come before the Bureau. We expect that 

most incubation proposals will 

accompany an assignment, transfer of 

control, or construction permit 

application. We direct the Bureau 

authority to modify the FCC Forms, 

including instructions and worksheets, 

as needed to enable applicants to 

indicate on the relevant FCC Form that 

the submission involves an incubation 

proposal. Such applications seeking to 

transfer, assign, or obtain an 

authorization are subject to public 

notice and petitions to deny and 

informal objections under the 

Commission’s rules, and in addition to 

reviewing such applications pursuant to 

its routine review processes, the Bureau 

will review accompanying incubation 

proposals and approve or reject such 

proposals. As part of this review, the 

Bureau will also assess whether any 

request for temporary waiver of the 

ownership rules in the incubated market 

should be granted to permit the 

incubation relationship. 

70. For any incubation relationship 

that does not trigger a FCC Form filing 

requirement, the proposal must be filed 

as a Petition for Declaratory Ruling in 

the Incubator docket, MB Docket No. 

17–289, in the Commission’s Electronic 

Comment Filing System (ECFS). Just as 

in the application context, if a 

temporary waiver of the ownership 

rules is needed for the incubation 

relationship, then the waiver request 

must accompany the Petition for 

Declaratory Ruling. The Bureau will act 

on such petitions and temporary waiver 

requests pursuant to its standard 

processes. As described above, any 

temporary waivers needed for the 

incubator program, irrespective of 

whether the proposal comes via an 

application or a Petition for Declaratory 

Ruling, will be granted (or denied) 

pursuant to § 1.3 of the Commission’s 

rules. 

71. The key factors guiding review of 

an incubation proposal will be whether: 

(1) The potential incubated entity has 

the wherewithal to obtain the necessary 

financing and support, absent the 

proposed incubation relationship; (2) 

the proposal provides for an incubation 

relationship addressing the needs that 

the incubated entity has (e.g., financial, 

technical, managerial, etc.) to be able to 

own and operate a full-service AM or 

FM station independently after the 

relationship has ended; and (3) the 

incubated entity retains de jure and de 

facto control over the station to be 

incubated. To assess whether the 

incubation proposal meets these factors, 

the Bureau will review two forms of 

documentation: (1) A written incubation 

contract between the parties; and (2) a 

certified statement that the incubated 

and incubating entities must each 

submit. These submissions will be the 

Bureau’s best indications of whether the 

proposed incubation relationship is 

likely to promote the program’s goals of 

increasing diverse station ownership by 

enabling a qualified incubated entity to 

own and operate a full-service AM or 

FM station independently. The Bureau, 

however, may also require the 

applicants to submit additional 

information if needed to determine 

whether the proposed incubation 

relationship is likely to promote the 

goals of our incubator program as 

discussed herein. 

72. Written Incubation Contract. The 

incubation proposal must contain a 

written contract between the parties 

memorializing all aspects of the 

incubation relationship, so as to 

demonstrate both compliance with 

program requirements (e.g., that the 

incubated entity has both de jure and de 

facto control) and the steps the parties 

will take to put the incubated entity in 

a position to own and operate a fullservice AM or FM radio station 

independently. 

73. The contract must detail the level 

of equity interest each party will bring 

to the relationship. The incubated entity 

must show that it is providing a 

minimum equity stake as detailed 

above. The contract must also detail the 

parties’ plan to unwind the incubation 

relationship and the steps they will take 

to enable the incubated entity to own 

and operate a full-service AM or FM 

station independently, be it the station 

that is the subject of incubation or 

another station to be acquired upon 

conclusion of the incubation 

relationship. The contract must provide 

the incubated entity with the option to 

buy out the incubating entity’s noncontrolling interest in the incubated 

station. As described above, the 

incubated entity can choose not to 

pursue this option and maintain the 

existing relationship along with its 

controlling interest. Alternatively, the 

incubated entity may choose to sell its 

interest in the incubated station and use 

the proceeds from the sale to acquire 

another full-service AM or FM station. 

In that case, we expect the incubating 

entity to help the incubated entity 

identify a full-service AM or FM station 

to buy and obtain the financing 

necessary to purchase the station. The 

contract must also provide for this 

alternative option. We require the 

contract to contain both options because 

we recognize that the incubated entity 

may not be well-positioned at the outset 

of the relationship to determine which 

approach best suits its long-term 

business interests in the broadcast 

sector. The incubated entity’s 

anticipated growth trajectory may 

change as a result of the incubating 

entity’s mentorship and introduction to 

capital sources that may have been 

previously unavailable. Indeed, we hope 

this will be the case. Consequently, 

while still ensuring that the incubated 

entity ultimately independently owns 

and operates a radio station, we do not 

mandate a pre-determined mechanism 

for how this goal will be achieved. As 

described below, however, the parties 

must notify the Bureau no later than six 

months before the end of the contract 

term which option they intend to 

pursue. 

74. Certified Statements. Along with a 

written agreement detailing the terms of 

the incubation relationship and the 

rights and obligations of each party, the 

incubating and incubated entities must 

each file a certified statement 

describing, among other things, each 

party’s background, qualifications, and 

resources, and how these will enable the 

party, via the incubation relationship, to 

promote the goals of the incubator 

program—i.e., enabling a new entrant or 

small business to own and operate a 

full-service AM or FM station 

independently or to place a previously 

struggling station on a firmer footing. As 

part of the statement, the incubated 

entity must certify that its annual 

revenues for the previous three years 

did not exceed the SBA revenue 

standard and that during the preceding 

three years it held attributable interests 

in no more than three full-service AM 

and FM stations (listing the stations, 

community of license, and facility IDs of 

each), and that it did not hold an 

attributable interest in any TV stations, 

consistent with the eligibility standards 

adopted above. In addition, if the 

incubation proposal is being filed as a 

Petition for Declaratory Ruling, the 

potential incubated entity must make 

the same certifications and attribution 

disclosures that it would have had to 

submit were it filing the FCC Form 301, 

314, or 315. We also require a potential 

incubated entity to include in its 

application a certified statement laying 

out why it is unable to acquire a 

controlling interest in the incubated 

station, or successfully operate the 

station, absent the proposed incubation 


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relationship and the funding, support, 

or training provided thereby. 

75. Likewise, the incubating entity 

must certify that it has the resources and 

experience necessary to help the 

incubated entity become an 

independent owner and operator of the 

incubated station or another full-service 

AM or FM station and that it will devote 

those resources and experience to 

achieve that goal. Dedicating executive 

and management personnel to provide 

training, strategic advice, and other 

support to the incubated entity may 

help demonstrate that an experienced 

broadcaster is committed and has the 

resources necessary to incubate a new 

entrant successfully. Longtime 

ownership of radio stations that are in 

the same service as the incubated 

station and in multiple markets is 

another indicator of the owner’s 

potential for success as an incubator. 

Indeed, due to their resources and 

experience, station group owners may 

be in a particularly good position to 

help persons not only become radio 

licensees but also succeed in radio 

station ownership. In addition, the 

incubated and incubating entities must 

both certify that the incubated entity 

will maintain operational and 

management control of the station, 

including decisions regarding 

programming, personnel, and finances. 

These submissions will enable the 

Bureau to verify that the incubated 

entity is a bona fide entity, without 

links to the incubating entity absent the 

incubation relationship, and truly needs 

the resources of the incubator program. 

76. The goal of this program is to 

bring new voices to the local radio 

market and to stabilize those small 

broadcasters that might otherwise drop 

out of the market. While recognizing 

that the waiver the incubating entity 

will receive at the end of the incubation 

relationship is the best way to 

encourage participation in our program 

by established broadcasters, we do not 

grant these waivers lightly. The 

submissions described above provide an 

additional opportunity to ensure that 

both the incubating and incubated 

entities are legitimate participants in the 

program. If the Commission determines 

at a later date that either submission 

contained a misrepresentation this 

could lead to a withholding or 

revocation of a waiver, as well as 

referral to the Enforcement Bureau for 

further action. 

Compliance During Term of Incubation 

Relationship 

77. Once the incubation contract has 

gone into effect, on the annual 

anniversary of the effective date of the 

contract, the incubating and incubated 

entities must jointly file a certified 

statement describing the incubation 

activities during the preceding year and 

how these comport with the 

commitments laid out in the incubation 

contract. The statement must describe 

the progress being made towards the 

ultimate goal of station ownership, or 

greater stability regarding current 

ownership, by the incubated entity. This 

annual certified statement must be filed 

both in the Incubator docket via ECFS 

and the parties’ public inspection files, 

so as to enable public review. These 

statements will be the primary 

mechanism by which the Commission 

and the public can gauge compliance 

with the terms of the incubation 

contract and progress towards the goal 

of independent station ownership. If, 

upon review of an annual statement, the 

Bureau has questions or concerns, staff 

may follow up with the parties. 

78. No later than six months before 

the contract termination date, the 

parties must make a submission to the 

Commission stating which option for 

station ownership the incubated entity 

plans to pursue at the conclusion of the 

relationship—e.g., indicating that the 

incubated entity intends to buy out the 

incubating entity’s non-controlling 

interest in the incubated station or that 

the parties will work together to identify 

and secure another full-service AM or 

FM station for the incubated entity to 

acquire. Accordingly, during the 

remainder of the contract period, both 

parties can devote some resources 

towards effectuating the station 

ownership goal. For example, both 

parties may need to commit some 

resources towards finding a new station 

or obtaining financing for the incubated 

entity or both. 

Final Bureau Review and Grant of 

Reward Waiver to Incubator 

79. At the end of the three-year 

contract period, the parties must again 

file a joint certified statement reporting 

on the previous year’s incubation 

activities. This submission will, 

however, also state whether the 

incubated entity has acquired a new 

station or will continue to retain its 

controlling interest in the incubated 

station, either with or without pursuing 

its option to buy out the incubating 

entity’s non-controlling interest. If the 

goal of the incubation relationship was 

to stabilize a previously struggling 

station, this third annual filing must 

describe the current status of the 

incubated station and whether it is now 

on a firmer footing. In the event of a 

shorter incubation relationship due to 

exceptional progress on the part of the 

incubated entity in becoming an 

independent owner and operator of a 

full-service AM or FM station, the same 

filing requirement will apply, only the 

filing may be made before the third year. 

The Bureau will have 120 days after the 

filing of this statement to review the 

submission and ensure that the 

expectations for the incubation 

relationship and all program 

requirements were met. The Bureau may 

extend the review period if needed. If 

the incubation relationship required a 

temporary waiver of the ownership cap 

and the incubating entity plans to use 

its reward waiver to retain an otherwise 

impermissible attributable interest in 

the incubated station, including buying 

out the incubated entity’s interest in the 

incubated station, then the incubating 

entity must file a waiver request along 

with the final joint statement. The 

temporary waiver will remain in effect 

during the Bureau’s review period. In 

the event that the incubation 

relationship is deemed unsuccessful 

and the incubating entity cannot receive 

a reward waiver, the Bureau will extend 

the temporary waiver for a set time 

period as necessary to give the parties 

an opportunity to unwind the 

relationship. 

80. In the absence of any negative 

determination from the Bureau by the 

end of the 120-day review period, 

following submission of a final joint 

statement, the incubating entity will 

then have three years in which to 

submit a request to use the presumptive 

reward waiver. The request must be 

submitted with a copy of the Bureau 

document(s) that approved the 

qualifying incubation relationship, 

including any document(s) that 

approved an extension of the original 

term as discussed above. If the 

incubation relationship proposal was 

submitted and approved as part of a 

Form 301 construction permit 

application or a Form 314 or Form 315 

assignment or transfer of control 

application, the waiver request must 

also include the file number of the 

approved application. As described 

above, there is a rebuttable presumption 

that granting a reward waiver is in the 

public interest if the incubating entity 

seeks the waiver for either the incubated 

market or a comparable market and the 

incubating entity is otherwise in 

compliance with the Commission’s 

rules and requirements. If the 

incubating entity wishes to use its 

reward waiver to purchase the 

incubated station, it must file its 

application seeking an assignment of 

license or transfer of control application 

contemporaneously with its final annual 


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certified statement. It is necessary for 

the incubating entity to do this to ensure 

that the ownership limits in the 

incubated market are not violated when 

the temporary waiver for the incubation 

period expires. 

81. While incubation contracts are 

intended to last no longer than three 

years, parties may extend the incubation 

relationship for one additional period of 

up to three years subject to Bureau 

approval. For example, if the parties 

believe they need an additional six 

months beyond the initial three-year 

period to complete a new station 

purchase then they must seek an 

extension for six months. Parties that 

wish to extend their relationships must 

file this request no later than 120 days 

before the end of the initial three-year 

contract period. The incubating entity, 

however, may only seek a reward 

waiver, either for the incubated market 

or another market, after the successful 

completion of the incubation 

relationship, whatever the extended 

time period is—be it six months or three 

years. If, as part of the extension, there 

are any revisions to the initial 

incubation contract, the proposed 

revised contract must be filed along 

with the extension request. The Bureau 

will have 120 days to review the revised 

contract and request for extension. 

Absent Bureau action to the contrary 

within the 120-day period, the revised 

contract and request for extension time 

will be deemed effective, assuming they 

do not involve an assignment or transfer 

of control of a station. If there are no 

changes in the ownership/attribution/ 

control structure of the agreement (e.g., 

incubator’s control over the incubated 

station has not increased), it is unlikely 

to raise concerns for the Bureau. As a 

general matter, the requirements for the 

standard three-year contract period will 

apply during this extended period, but 

there may need to be some 

modifications depending on the 

circumstances. For example, an annual 

filing requirement will not make sense 

for a three-month extension. The Bureau 

will notify the parties of any such 

modifications. 

III. Procedural Matters 

82. Paperwork Reduction Act 

Analysis. This Order contains 

information collection requirements 

subject to the Paperwork Reduction Act 

of 1995 (PRA), Public Law 104–13. The 

requirements will be submitted to the 

Office of Management and Budget 

(OMB) for review under Section 3507(d) 

of the PRA. OMB, the general public, 

and other Federal agencies will be 

invited to comment on the information 

collection requirements contained in 

this proceeding. The Commission will 

publish a separate document in the 

Federal Register at a later date seeking 

these comments. In addition, we note 

that, pursuant to the Small Business 

Paperwork Relief Act of 2002, Public 

Law 107–198, see 44 U.S.C. 3506(c)(4), 

the Commission previously sought 

specific comment on how it might 

further reduce the information 

collection burden for small business 

concerns with fewer than 25 employees. 

We have described impacts that might 

affect small businesses, which includes 

most businesses with fewer than 25 

employees, in the Final Regulatory 

Flexibility Act Analysis. 

Final Regulatory Flexibility Analysis 

83. As required by the Regulatory 

Flexibility Act of 1980, as amended 

(RFA), an Initial Regulatory Flexibility 

Analysis (IRFA) was incorporated in the 

Notice of Proposed Rulemaking (NPRM) 

in this proceeding. See 83 FR 774 (Jan. 

8, 2018). The Commission sought 

written public comments on proposals 

in the NPRM, including comment on the 

IRFA. The Commission received no 

comments on the IRFA. The present 

Final Regulatory Flexibility Analysis 

(FRFA) conforms to the RFA. 

84. The Report and Order adopts 

requirements that will govern the 

incubator program that the Commission 

previously decided to adopt to support 

the entry of new and diverse voices into 

the broadcasting industry. The 

incubator program seeks to provide 

established broadcasters with an 

inducement in the form of an ownership 

rule waiver to invest the time, money, 

and resources needed to facilitate 

broadcast station ownership by new and 

diverse entrants. Through the incubator 

program, established broadcasters (i.e., 

incubating entities) will provide new 

entrants or small broadcasters (i.e., 

incubated entities) with the training, 

financing, and access to resources that 

would be otherwise unavailable to these 

entities. At the end of the incubation 

relationship, the incubated entity will 

either own a broadcast station or will 

retain ownership of a previously 

struggling station, now set on firmer 

footing. In return for its support, the 

incubating entity will receive a waiver 

of the Commission’s Local Radio 

Ownership Rule that the incubating 

entity can use either in the incubated 

market or in a comparable market as 

discussed in the Report and Order, 

within three years of the successful 

conclusion of a qualifying incubation 

relationship. 

85. To qualify for participation in the 

incubator program, the parties must 

seek prior approval from the 

Commission that their proposed 

incubation relationship comports with 

the program requirements. The key 

factors guiding review of incubation 

proposals will be whether the potential 

incubated entity would have been able 

to obtain the necessary financing and 

support absent the proposed incubation 

relationship; whether the proposal 

provides the incubated entity with 

adequate financing, training, and 

support over the course of the 

incubation relationship to ensure its 

success; and whether the incubated 

entity retains de jure and de facto 

control over the station to be incubated. 

The standard term required for a 

qualifying incubation relationship will 

be three years, but the relationship may 

be extended up to an additional three 

years. 

86. Qualifying incubation 

relationships must provide the 

incubated entity with an option to 

purchase the incubating entity’s equity 

interest in the incubated station, if it 

holds one, for a price that is no more 

than fair market value and/or terminate 

the incubating entity’s creditor-debtor 

relationship with the incubated entity at 

the conclusion of the incubation 

relationship. At the end of the 

qualifying incubation relationship, the 

incubated entity may decide not to 

exercise this option and choose instead 

to retain its existing controlling interest 

in the incubated station. Alternatively, 

the incubated entity may choose to sell 

its interest in the incubated station and 

use the proceeds from the sale to 

acquire another full-service AM or FM 

station. In that case, the Commission 

expects the incubating entity to help the 

incubated entity identify a full-service 

AM or FM station to buy and obtain the 

financing necessary to purchase the 

station. Absent a showing at the end of 

the qualifying incubation relationship 

that the incubated entity holds a 

controlling interest in the incubated 

station or a newly acquired full-service 

AM or FM station, the incubating entity 

will not be eligible to receive a waiver 

of the Local Radio Ownership Rule. If 

the goal of the incubation relationship 

was to stabilize a previously struggling 

station, then the joint certified filing 

must describe the status of the 

incubated station and whether it is now 

on a firmer footing. If an incumbent 

broadcaster successfully incubates a 

new, small entrant, or a small struggling 

station owner, as part of the incubator 

program, it will be eligible to receive a 

waiver of the Local Radio Ownership 

Rule following the conclusion of the 

qualifying incubation relationship. Such 

a waiver can be used for up to three 


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years after the successful completion of 

the qualifying incubation relationship 

and must be used in either the 

incubated market or a comparable radio 

market, as discussed in the Report and 

Order. To receive a reward waiver, the 

incubating entity must demonstrate that 

it has completed a successful qualifying 

incubation relationship. Specifically, 

the incubating entity must certify (i) that 

it complied in good faith with its 

incubation agreement, as submitted to 

and approved by the Bureau, and the 

requirements of our incubator program 

discussed herein; and (ii) either that the 

incubated entity holds a controlling 

interest in the incubated station or a 

newly acquired full-service AM or FM 

station, or if the incubated station was 

a struggling station, that the incubation 

relationship has resolved the financial 

and/or operational difficulties that the 

owner of the previously struggling 

station faced prior to incubation and 

sought to remedy through the 

incubation relationship. 

87. In addition, to the extent the 

incubating entity needs a waiver of the 

Local Radio Ownership Rule to engage 

in a qualifying incubation relationship 

(for example, if the incubating entity is 

already at the applicable local radio 

ownership limit in the market and its 

investment in the incubated station 

would exceed that limit), we will grant 

the incubating entity a temporary 

waiver of the Local Radio Ownership 

Rule (including the AM/FM subcap) to 

allow the incubating entity to acquire an 

otherwise impermissible 

noncontrolling, attributable interest in 

the incubated station for the duration of 

the qualifying incubation relationship. 

With regard to the temporary waiver, 

the incubating entity and incubated 

entity must demonstrate that they are 

both eligible for, and intend to engage 

in, a qualifying incubation relationship, 

as discussed in the Report and Order. 

88. The Report and Order implements 

a long overdue mechanism to address 

the primary barriers to station 

ownership by new and diverse entities: 

lack of access to capital and the need for 

technical and operational experience. In 

implementing this incubator program, 

the Commission’s expectation is that 

each successful incubation relationship 

will result in the acquisition of a 

broadcast radio station by a new entrant 

or small business, or the preservation of 

an existing, but struggling, small 

broadcaster. Accordingly, successful 

implementation of this incubator 

program will promote ownership 

diversity by fostering new entry in the 

broadcasting sector by entrepreneurs 

and small businesses, including those 

owned by women and minorities. 

Summary of Significant Issues Raised by 

Public Comments in Response to the 

IRFA 

89. The Commission received no 

comments in response to the IRFA. 

Response to Comments by the Chief 

Counsel for Advocacy of the Small 

Business Administration 

90. 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 Advocacy of the Small 

Business Administration (SBA), and to 

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. 

Description and Estimates of the 

Number of Small Entities to Which the 

Rules Will Apply 

91. The RFA directs agencies to 

provide a description of and, where 

feasible, an estimate of the number of 

small entities that may be affected by 

the proposed rules, if adopted. The RFA 

generally defines the term ‘‘small 

entity’’ as having the same meaning as 

the terms ‘‘small business,’’ ‘‘small 

organization,’’ and ‘‘small governmental 

jurisdiction.’’ In addition, the term 

‘‘small business’’ has the same meaning 

as the term ‘‘small business concern’’ 

under the Small Business Act. A small 

business concern is one which: (1) Is 

independently owned and operated; (2) 

is not dominant in its field of operation; 

and (3) satisfies any additional criteria 

established by the SBA. 

92. The rules proposed herein will 

directly affect small radio broadcast 

stations. Below, we provide a 

description of these small entities, as 

well as an estimate of the number of 

such small entities, where feasible. 

93. Radio Stations. This Economic 

Census category ‘‘comprises 

establishments primarily engaged in 

broadcasting aural programs by radio to 

the public. Programming may originate 

in their own studio, from an affiliated 

network, or from external sources.’’ The 

SBA has established a small business 

size standard for this category as firms 

having $38.5 million or less in annual 

receipts. Economic Census data for 2012 

shows that 2,849 radio station firms 

operated during that year. Of that 

number, 2,806 firms operated with 

annual receipts of less than $25 million 

per year. Therefore, based on the SBA’s 

size standard the majority of such 

entities are small entities. 

94. According to Commission staff 

review of the BIA/Kelsey, LLC’s Media 

Access Pro Radio Database on June 22, 

2018, about 11,365 (or about 99.9 

percent) of 11,371 commercial radio 

stations had revenues of $38.5 million 

or less and thus qualify as small entities 

under the SBA definition. The 

Commission has estimated the number 

of licensed commercial AM radio 

stations to be 4,633 stations and the 

number of licensed commercial FM 

radio stations to be 6,738, for a total 

number of 11,371. We note the 

Commission has also estimated the 

number of licensed noncommercial 

(NCE) FM radio stations to be 4,128. 

Nevertheless, the Commission does not 

compile and otherwise does not have 

access to information on the revenue of 

NCE stations that would permit it to 

determine how many such stations 

would qualify as small entities. 

95. We also note, that in assessing 

whether a business entity qualifies as 

small under the above definition, 

business control affiliations must be 

included. The Commission’s estimate 

therefore likely overstates the number of 

small entities that might be affected by 

its action, because the revenue figure on 

which it is based does not include or 

aggregate revenues from affiliated 

companies. In addition, to be 

determined a ‘‘small business,’’ an 

entity may not be dominant in its field 

of operation. We further note that it is 

difficult at times to assess these criteria 

in the context of media entities, and the 

estimate of small businesses to which 

these rules may apply does not exclude 

any radio station from the definition of 

a small business on these bases; thus, 

our estimate of small businesses may 

therefore be over-inclusive. Also, as 

noted above, an additional element of 

the definition of ‘‘small business’’ is that 

the entity must be independently owned 

and operated. The Commission notes 

that it is difficult at times to assess these 

criteria in the context of media entities, 

and the estimates of small businesses to 

which they apply may be over-inclusive 

to this extent. 

Description of Projected Reporting, 

Recordkeeping, and Other Compliance 

Requirements 

96. In this section, we identify the 

reporting, recordkeeping, and other 

compliance requirements adopted in the 

Report and Order and consider whether 

small entities are affected 

disproportionately by any such 

requirements. The Commission decided 

to adopt an incubator program with the 

goal of creating ownership opportunities 

for new entrants and small businesses, 

thereby promoting competition and 

diversity in the broadcast industry. In 

keeping with that goal, the program 


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requirements that the Commission 

adopted in the Report and Order will 

enable the pairing of small aspiring, or 

struggling, broadcast station owners 

with established broadcasters. These 

incubation relationships will provide 

new entrants and struggling small 

broadcasters access to the financing, 

mentoring, and industry connections 

that are necessary for success in the 

industry but to date have been 

unavailable to many. Participation in 

the incubator program is optional, not 

mandatory. The Commission’s 

expectation is that each successful 

incubation relationship will result in 

the acquisition of a broadcast radio 

station by a new entrant or small 

business, or the preservation of an 

existing, but struggling, small 

broadcaster. Therefore, the Commission 

anticipates that the incubator program 

will benefit small entities that 

participate in the program, not burden 

them. 

97. Reporting Requirements. The 

Commission expects that most 

incubation proposals will accompany an 

assignment, transfer of control, or 

construction permit application. The 

Commission directs its Media Bureau 

(Bureau) authority to modify the 

relevant FCC Forms, including 

instructions and worksheets, as needed 

to enable applicants to indicate on the 

form that the submission involves an 

incubation proposal. Such applications 

seeking to transfer, assign, or obtain an 

authorization are subject to public 

notice and petitions to deny and 

informal objections under the 

Commission’s rules, and in addition to 

reviewing such applications pursuant to 

its routine review processes, the Bureau 

will review accompanying incubation 

proposals and approve or reject such 

proposals. For any incubation 

relationship that does not trigger an FCC 

form filing requirement, the proposal 

must be filed as a Petition for 

Declaratory Ruling in the Incubator 

docket, MB Docket No. 17–289, in the 

Commission’s Electronic Comment 

Filing System (ECFS). Just as in the 

application context, if a temporary 

waiver of the ownership cap is needed 

for the incubation relationship, then the 

waiver request must accompany the 

Petition for Declaratory Ruling. 

98. The incubation proposal must 

contain a written contract between the 

parties memorializing all aspects of the 

incubation relationship, so as to 

demonstrate both compliance with 

program requirements (e.g., that the 

incubated entity has both de jure and de 

facto control) and the steps the parties 

will take to put the incubated entity in 

a position to own and operate a fullservice AM or FM radio station 

independently. The contract must detail 

the level of equity interest each party 

will bring to the relationship. The 

incubated entity must show that it is 

providing a minimum equity stake as 

detailed above. The contract must also 

detail the parties’ plan to unwind the 

incubation relationship and the steps 

they will take to enable the incubated 

entity to own and operate a full-service 

AM or FM station independently, be it 

the station that is the subject of 

incubation or another station to be 

acquired upon conclusion of the 

incubation relationship. The contract 

must provide the incubated entity with 

the option to buy out the incubating 

entity’s non-controlling interest in the 

incubated station. The incubated entity 

can choose not to pursue this option 

and instead maintain its existing 

controlling interest in the incubated 

station. Alternatively, the incubated 

entity may choose to sell its interest in 

the incubated station and use the 

proceeds from the sale to acquire 

another full-service AM or FM station. 

In that case, we expect the incubating 

entity to help the incubated entity 

identify a full-service AM or FM station 

to buy and obtain the financing 

necessary to purchase the station. The 

contract must also provide for this 

alternative option. 

99. Along with an agreement detailing 

the terms of the incubation relationship 

and the rights and obligations of each 

party, the incubating and incubated 

entities must each file a certified 

statement describing, among other 

things, each party’s background, 

qualifications, and resources, and how 

these will enable the party, via the 

incubation relationship, to promote the 

goals of the incubator program—i.e., 

enabling a new entrant or small 

business to own and operate a fullservice AM or FM station independently 

or to place a previously struggling 

station on a firmer footing. As part of 

the statement, the incubated entity must 

certify that its annual revenues for the 

previous three years did not exceed the 

SBA revenue standard and that during 

the preceding three years it held 

attributable interests in no more than 

three full-service AM and FM stations 

(listing the stations, community of 

license, and facility IDs of each), and 

that it did not hold an attributable 

interest in any TV stations, consistent 

with the eligibility standards adopted in 

the Report and Order. In addition, if the 

incubation proposal is being filed as a 

Petition for Declaratory Ruling, the 

potential incubated entity must make 

the same certifications and attribution 

disclosures that it would have had to 

submit were it filing the FCC Form 301, 

314, or 315. The Report and Order also 

requires a potential incubated entity to 

include in its application a certified 

statement laying out why it is unable to 

acquire a controlling interest in the 

incubated station, or successfully 

operate the station, absent the proposed 

incubation relationship and the funding, 

support, or training provided thereby. 

Likewise, the incubating entity must 

certify that it has the resources and 

experience necessary to help the 

incubated entity become an 

independent owner and operator of the 

incubated station or another full-service 

AM or FM station and that it will devote 

those resources and experience to 

achieve that goal. 

100. In addition, the incubated and 

incubating entities must each certify 

that the incubated entity will maintain 

operational and management control of 

the station, including decisions 

regarding programming, personnel, and 

finances. These submissions will enable 

the Bureau to verify that the incubated 

entity is a bona fide entity, without 

links to the incubating entity absent the 

incubation relationship, and truly needs 

the resources of the incubator program. 

Once the incubation contract has gone 

into effect, on the annual anniversary of 

the effective date of the contract, the 

incubating and incubated entities must 

jointly file a certified statement 

describing the incubation activities 

during the preceding year and how 

these comport with the commitments 

laid out in the incubation contract. The 

statement must describe the progress 

being made towards the ultimate goal of 

station ownership, or greater stability 

regarding current ownership, by the 

incubated entity. This annual certified 

statement must be filed both in the 

Incubator docket via ECFS and the 

parties’ public inspection files, so as to 

enable public review. These statements 

will be the primary mechanism by 

which the Commission and the public 

can gauge compliance with the terms of 

the incubation contract and progress 

towards the goal of independent station 

ownership. If, upon review of an annual 

statement, the Bureau has questions or 

concerns, staff may follow up with the 

parties. No later than six months before 

the contract termination date, the 

parties must make a submission to the 

Commission stating which option for 

station ownership the incubated entity 

plans to pursue at the conclusion of the 

relationship—e.g., indicating that the 

incubated entity intends to buy out the 

incubating entity’s non-controlling 

interest in the incubated station or that 

the parties will work together to identify 


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and secure another full-service AM or 

FM station for the incubated entity to 

acquire. 

101. At the end of the three-year 

contract period, the parties must again 

file a joint certified statement reporting 

on the previous year’s incubation 

activities. This submission will, 

however, also state whether the 

incubated entity has acquired a new 

station or will continue to retain its 

controlling interest in the incubated 

station, either with or without pursuing 

its option to buy out the incubating 

entity’s non-controlling interest. If the 

goal of the incubation relationship was 

to stabilize a previously struggling 

station, this third annual filing must 

describe the current status of the 

incubated station and whether it is now 

on a firmer footing. In the event of a 

shorter incubation relationship due to 

exceptional progress on the part of the 

incubated entity in becoming an 

independent owner and operator of a 

full-service AM or FM station, the same 

filing requirement will apply, only the 

filing may be made before the third year. 

If the incubation relationship required a 

temporary waiver of the ownership cap 

and the incubating entity plans to use 

its reward waiver to retain an otherwise 

impermissible attributable interest in 

the incubated station, including buying 

out the incubated entity’s interest in the 

incubated station, then the incubating 

entity must file a waiver request along 

with the final joint statement. 

102. While incubation contracts are 

intended to last no longer than three 

years, parties may extend the incubation 

relationship for one additional period of 

up to three years subject to Bureau 

approval. Parties that wish to extend 

their relationships must file this request 

no later than 120 days before the end of 

the initial three-year contract period. 

The incubating entity, however, may 

only seek a reward waiver, either for the 

incubated market or another market, 

after the successful completion of the 

qualifying incubation relationship, 

whatever the extended time period is— 

be it six months or three years. If, as part 

of the extension, there are any revisions 

to the initial incubation contract, the 

proposed revised contract must be filed 

along with the extension request. 

103. In the absence of any negative 

determination from the Bureau by the 

end of the 120-day review period, 

following submission of a final joint 

certified statement, the incubating entity 

will then have three years in which to 

submit a request to use the presumptive 

reward waiver. The request must be 

submitted with a copy of the Bureau 

document(s) that approved the 

qualifying incubation relationship, 

including any document(s) that 

approved an extension of the original 

term as discussed in the Report and 

Order. If the incubation relationship 

proposal was submitted and approved 

as part of a Form 301 construction 

permit application or a Form 314 or 

Form 315 assignment or transfer of 

control application, the waiver request 

must also include the file number of the 

approved application. If the incubating 

entity wishes to use its reward waiver 

to purchase the incubated station, it 

must file its application seeking an 

assignment of license or transfer of 

control contemporaneously with its 

final annual certified statement. It is 

necessary for the incubating entity to do 

this to ensure that the ownership limits 

in the incubated market are not violated 

when the temporary waiver for the 

incubation period expires. 

104. Recordkeeping Requirements. 

Under the Commission’s existing public 

file rules, licensees and permittees of 

commercial and noncommercial AM 

and FM stations are already required to 

retain in their public inspection file a 

copy of any application tendered for 

filing with the Commission and related 

materials as discussed in the rules. 

Thus, in addition to filing with the 

Bureau, parties to incubation contracts 

must retain a copy of all application 

materials, including the proposed 

incubation contract, in their public 

inspection files. Similarly, a copy of 

each annual certified statement 

discussed above must be filed both in 

the Incubator docket via ECFS and the 

parties’ public inspection files. 

Consistent with the Commission’s 

existing public file rules, items in the 

public file that are required to be filed 

with the Commission will be 

automatically imported into the entity’s 

online public file, and entities will only 

be responsible for uploading to the 

online file items that are not also filed 

in the Consolidated Database System 

(CDBS) or Licensing and Management 

System (LMS) or otherwise maintained 

by the Commission on its own website. 

105. Other Compliance Requirements. 

In addition to the other compliance 

requirements discussed above, the 

Report and Order also adopts the 

following: 

To ensure that the incubated entity 

derives the maximum benefit from the 

training and mentoring provided by the 

incubated entity, the Report and Order 

requires that the incubated entity be the 

licensee of the incubated station and 

maintain ultimate authority over station 

personnel, programming, and finances. 

The Report and Order adopts certain 

safeguards to ensure that the incubated 

entity has the requisite level of 

autonomy during the incubation period. 

106. First, the Report and Order 

requires the incubated entity to satisfy 

the following control test consistent 

with the Commission’s existing 

revenue-based eligible entity definition, 

upon which the Report and Order bases 

the second prong of the eligibility 

standard for the incubator program. 

Specifically, the Report and Order 

requires that the incubated entity hold 

more than 50 percent of the voting 

power of the licensee, and if the 

licensee is not a publicly traded 

company (which will almost assuredly 

be the case), a minimum of either 15 

percent or 30 percent of the equity 

interests, depending on whether 

someone else owns or controls more 

than 25 percent of the equity interests. 

The Report and Order concludes that 

applying the control test from the 

Commission’s existing eligible entity 

rule will best ensure that the incubated 

entity retains control of the incubated 

station while still giving the parties 

some flexibility to establish incubation 

relationships that suit their specific 

needs. Moreover, using the existing 

standard should facilitate both 

participation in and administration of 

the program, as the standard is already 

familiar to licensees. 

107. To ensure that the incubated 

entity retains autonomy over the 

incubated station’s core operating 

functions so as to gain the necessary 

level of operational expertise, and in 

light of concerns raised by some 

commenters, the Report and Order 

places certain restrictions on the use of 

local marketing agreements (LMAs), 

joint sales agreements (JSAs), and 

shared service agreements (SSAs). The 

Commission’s current attribution 

standards recognize that same-market 

radio LMAs and JSAs above a certain 

percentage of the station’s broadcast day 

may confer on the brokering station the 

potential to exert a significant degree of 

influence over core station operating 

functions (i.e., programming decisions). 

Specifically, the Commission’s 

attribution standards regard as 

attributable ownership interests samemarket radio LMAs and JSAs in which 

the brokering station brokers more than 

15 percent of the broadcast time or sells 

more than 15 percent of the advertising 

time per week. Given the Commission’s 

rationale for attributing these 

arrangements and the concerns raised in 

the record of this proceeding, the Report 

and Order adopts the following 

safeguards. 

108. First, to ensure that the 

incubated entity retains control of the 

programming aired on the incubated 


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Federal Register / Vol. 83, No. 167 / Tuesday, August 28, 2018 / Rules and Regulations 43791 

station, the Report and Order prohibits 

LMAs involving the incubated station. 

As defined in the Commission’s rules, 

an LMA is any agreement that involves 

‘‘the sale by a licensee of discrete blocks 

of time to a ‘broker’ that supplies the 

programming to fill that time and sells 

the commercial spot announcements in 

it,’’ regardless of how the agreement is 

titled. Second, to ensure that the 

incubated entity is able to gain 

operational expertise by performing the 

core operations of the incubated station, 

the Report and Order limits any JSAs or 

SSAs involving the incubated station to 

the first two years of the initial 

incubation period. Pursuant to the 

definitions in the Commission’s rules, a 

JSA is any agreement with the licensee 

of a brokered station that authorizes a 

broker to sell advertising time for the 

brokered station, and an SSA is any 

agreement or series of agreements in 

which (i) a station provides any stationrelated services to a station that is not 

directly or indirectly under common de 

jure control permitted under the 

Commission’s regulations, or (ii) 

stations that are not directly or 

indirectly under common de jure 

control permitted under the 

Commission’s regulations collaborate to 

provide or enable the provision of 

station-related services. While the 

Commission’s attribution standards do 

not regard SSAs as attributable 

ownership interests, the Commission is 

concerned that allowing these 

arrangements to be used for the full 

duration of an incubation relationship 

could deprive the incubated entity of its 

incentive to gain the operational 

expertise needed to operate the station 

independently at the end of the 

relationship. Permitting limited use of 

JSAs and SSAs appropriately balances 

broadcasters’ representations that these 

arrangements can make incubation more 

successful with the need to ensure that 

each incubated entity learns how to 

perform essential station functions 

independently in order to be viable in 

the long term as an independent 

broadcaster. The Commission does not 

believe that prohibiting LMAs and 

restricting the use of JSAs and SSAs will 

reduce the utility of the incubator 

program for incubated entities, as the 

record and the Commission’s experience 

indicate that new owners of radio 

stations need assistance primarily with 

financing and technical issues, rather 

than programming and advertising sales. 

109. Moreover, these safeguards will 

enable the parties to evaluate whether 

the incubated entity is prepared to 

operate independently before the 

incubation period is complete and while 

the incubating entity remains 

contractually obligated to provide 

support. By requiring that the incubated 

entity actually obtain or produce 

programming, sell advertising, and 

perform other core operating functions 

for the incubated station for at least one 

full year prior to the expiration of the 

incubation relationship, these 

protections will provide for a more 

informed assessment of the incubated 

entity’s progress and any areas where it 

needs additional training and support to 

be viable as an independent owner and 

operator of the incubated station or 

another full-service AM or FM station. 

The incubated entity’s experience 

performing core operating functions 

may provide a persuasive justification 

for extending the incubation 

relationship if the parties determine that 

more time is needed to incubate the 

station. While the Report and Order 

allows limited use of JSAs and SSAs, 

the Report and Order also emphasizes 

that these agreements, if used, must be 

accompanied by proper training in the 

relevant area(s)—e.g., administrative, 

technical, sales, etc.—covered by any 

such arrangement(s) involving the 

incubated station. 

110. Finally, the Report and Order 

requires that none of the officers, 

directors, managing partners, or 

managing members of the incubated 

entity hold an attributable interest in or 

be an employee of the incubating entity. 

The Commission is concerned that 

allowing an employee or an attributable 

interest holder in the incubating entity 

to serve as an officer, director, managing 

partner, or managing member of the 

incubated entity may jeopardize the 

independence of the incubated station 

given the significant conflicts of 

interests that could arise for these 

individuals and the significant authority 

and potential for influence they would 

wield over the incubated station. While 

U.S. antitrust laws prohibit, with certain 

exceptions, one individual from serving 

as an officer or director of two 

competing corporations, the 

Commission believes that an additional 

safeguard is needed to address 

circumstances that may be exempt from 

or not covered by the antitrust laws, 

such as where the two companies are 

not competitors, where either company 

is not a corporation or does not meet 

certain financial thresholds, or where an 

officer or director of one company is an 

employee but not an officer or director 

of the other company. 

Steps Taken To Minimize Significant 

Economic Impact on Small Entities, and 

Significant Alternatives Considered 

111. The RFA requires an agency to 

describe any significant, specifically 

small business, alternatives that it has 

considered in reaching its proposed 

approach, which may include the 

following four alternatives (among 

others): (1) The establishment of 

differing compliance or reporting 

requirements or timetables that take into 

account the resources available to small 

entities; (2) the clarification, 

consolidation, or simplification of 

compliance and reporting requirements 

under the rule for such small entities; 

(3) the use of performance, rather than 

design, standards; and (4) an exemption 

from coverage of the rule, or any part 

thereof, for small entities. 

112. As discussed above, the 

Commission decided to adopt an 

incubator program with the goal of 

creating ownership opportunities for 

new entrants and small businesses, 

thereby promoting competition and 

diversity in the broadcast industry. In 

adopting the requirements that will 

govern the incubator program, the 

Commission considered various options 

and alternatives that were proposed in 

the NPRM and public comments, and 

based on the record, the Commission 

concluded that structuring the incubator 

program as discussed in the Report and 

Order will provide small new entrants 

and struggling small broadcasters access 

to the financing, mentoring, and 

industry connections that are necessary 

for success in the broadcasting industry. 

The Commission’s expectation is that 

each successful incubation relationship 

will result in the acquisition of a 

broadcast radio station by a new entrant 

or small business, or the preservation of 

an existing, but struggling, small 

broadcaster. Participation in the 

incubator program is optional, not 

mandatory, and the Commission 

anticipates that the incubator program 

will benefit small entities that 

participate in the program, not burden 

them. 

Report to Congress 

113. Congressional Review Act. The 

Commission will send a copy of the 

Order, including this FRFA, 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). 

IV. Ordering Clauses 

114. Accordingly, it is ordered that, 

pursuant to the authority contained in 

Sections 1, 2(a), 4(i), 257, 303, 307–310, 


daltland on DSKBBV9HB2PROD with RULES
43792 Federal Register / Vol. 83, No. 167 / Tuesday, August 28, 2018 / Rules and Regulations 

and 403 of the Communications Act of 

1934, as amended, 47 U.S.C. 151, 152(a), 

154(i), 257, 303, 307–310, and 403, this 

Report and Order is adopted. 

115. It is further ordered that this 

Report and Order shall be effective 

thirty (30) days after publication of the 

text or a summary thereof in the Federal 

Register, except for those requirements 

involving Paperwork Reduction Act 

burdens, which shall become effective 

on the date announced in the Federal 

Register document announcing OMB 

approval. 

116. It is further ordered that the 

Media Bureau is hereby directed to 

make all necessary changes to Form 301, 

Form 314, Form 315, and the 

Commission’s electronic database 

system to implement the changes 

adopted in this Report and Order. 

117. It is further ordered that the 

Commission’s Consumer and 

Governmental Affairs Bureau, Reference 

Information Center, shall send a copy of 

this Report and Order, including the 

Final Regulatory Flexibility Analysis, to 

the Chief Counsel for Advocacy of the 

Small Business Administration. 

118. It is further ordered that, 

pursuant to section 801(a)(1)(A) of the 

Congressional Review Act, 5 U.S.C. 

801(a)(1)(A), the Commission shall send 

a copy of the Report and Order to 

Congress and to the Government 

Accountability Office. 

Federal Communications Commission. 

Marlene Dortch, 

Secretary. 

[FR Doc. 2018–18289 Filed 8–27–18; 8:45 am] 

BILLING CODE 6712–01–P 

DEPARTMENT OF COMMERCE 

National Oceanic and Atmospheric 

Administration 

50 CFR Part 216 

RIN 0648–XG408 

Implementation of Import Restrictions; 

Certification of Admissibility for 

Certain Fish Products From Mexico 

AGENCY: National Marine Fisheries 

Service (NMFS), National Oceanic and 

Atmospheric Administration (NOAA), 

Commerce. 

ACTION: Notification. 

SUMMARY: The Secretary of Commerce, 

in cooperation with the Secretaries of 

Treasury and Homeland Security, is, 

under the authority of the Marine 

Mammal Protection Act (MMPA), giving 

notice of import restrictions on fish and 

fish products from Mexico caught with 

gillnets deployed in the range of the 

vaquita, an endangered porpoise. 

Importation into the United States from 

Mexico of fish and fish products 

harvested by gillnets in the upper Gulf 

of California (UGC) within the vaquita’s 

geographic range is now prohibited. 

These import restrictions are being 

implemented as required by a court 

order. These trade restrictions remain in 

effect until further court action amends 

the preliminary injunction. Harmonized 

Tariff Schedule (HTS) codes associated 

with the prohibited fish and fish 

products are identified below. NMFS is 

also requiring that all other fish and fish 

products not within the scope of the 

import restrictions but imported under 

the same published HTS codes be 

accompanied by a Certification of 

Admissibility. 

DATES: Compliance with the import 

restrictions and Certification of 

Admissibility described in this 

document is required beginning August 

24, 2018, and will remain in effect until 

further notice is published in the 

Federal Register indicating otherwise. 

FOR FURTHER INFORMATION CONTACT: 

Nina Young, NMFS F/IASI at email: 

Nina.Young@noaa.gov or phone: 301– 

427–8383. 

SUPPLEMENTARY INFORMATION: In August 

2016, NMFS published a final rule (81 

FR 54390 (August 15, 2016); 50 CFR 

216.24) implementing the fish and fish 

product import provisions (section 

101(a)(2)) of the Marine Mammal 

Protection Act (MMPA). This final rule 

established conditions for evaluating a 

harvesting nation’s regulatory programs 

to address incidental and intentional 

mortality and serious injury of marine 

mammals in its fisheries producing fish 

and fish products exported to the 

United States. 

Under the final rule, fish or fish 

products cannot be imported into the 

United States from commercial fishing 

operations that result in the incidental 

mortality or serious injury of marine 

mammals in excess of U.S. standards 

(16 U.S.C. 1371(a)(2)). NMFS published 

a List of Foreign Fisheries (LOFF) on 

March 16, 2018 (83 FR 11703) to classify 

fisheries subject to the import 

requirements. Effective January 1, 2022, 

fish and fish products from fisheries 

identified by the Assistant 

Administrator for Fisheries in the LOFF 

can only be imported into the United 

States if the harvesting nation has 

applied for and received a comparability 

finding from NMFS. The rule 

established the procedures that a 

harvesting nation must follow and the 

conditions it must meet to receive a 

comparability finding for a fishery on 

the LOFF. The final rule established a 

five-year exemption period, ending 

January 1, 2022, under 50 CFR 

216.24(h)(2)(ii) before imports would be 

subject to any trade restrictions. 

Vaquita are a species of porpoise 

endemic to northern Gulf of California 

waters in Mexico and are listed as an 

endangered species under the U.S. 

Endangered Species Act. In November 

2016, the International Committee for 

the Recovery of the Vaquita (CIRVA)— 

a group of international scientists 

supported by Mexico and led by 

Mexican scientists—reported that less 

than 30 individuals are likely to remain. 

Gillnets deployed in an illegal fishery 

for totoaba (an endangered fish sought 

for its swim bladder due to black market 

demand within China) are the primary 

source of vaquita mortality. NMFS has 

identified products coming from 

fisheries interacting with vaquita as a 

potential focus for import restrictions 

under the MMPA. 

On May 18, 2017, the Natural 

Resources Defense Council (NRDC), 

Center for Biological Diversity (CBD), 

and the Animal Welfare Institute (AWI) 

petitioned the Secretaries of Homeland 

Security, the Treasury, and Commerce 

to ‘‘ban the importation of commercial 

fish or products from fish’’ sourced 

using fishing activities that ‘‘result in 

the incidental mortality or incidental 

serious injury’’ of vaquita ‘‘in excess of 

United States standards.’’ The 

petitioners requested that the 

Secretaries immediately ban imports of 

all fish and fish products from Mexico 

that do not satisfy the MMPA import 

provision requirements, claiming that 

emergency action banning such imports 

is necessary to avoid immediate, 

ongoing, and ‘‘unacceptable risks’’ to 

vaquita. NMFS published a notification 

of the petition’s receipt on August 22, 

2017 (82 FR 39732), and opened a 60- 

day comment period. No final decision 

has been taken on the petition. 

On March 21, 2018, the petitioners 

filed suit before the Court of 

International Trade seeking an 

injunction requiring the U.S. 

Government to ban the import of fish or 

fish products from any Mexican 

commercial fishery that uses gillnets 

within the vaquita’s range. On April 16, 

2018, petitioners filed a motion for a 

preliminary injunction with oral 

arguments held July 10, 2018. The Court 

of International Trade granted the 

motion for preliminary injunction and 

denied the U.S. Government’s motion to 

dismiss the lawsuit. The court has 

required the U.S. Government to ban the 

importation of all fish and fish products 

from Mexican commercial fisheries that 


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