Review of Foreign Ownership Policies for Broadcast, Common Carrier and Aeronautical Radio Licensees, 68815-68833 [2015-28344]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 80, Number 215 (Friday, November 6, 2015)]
[Proposed Rules]
[Pages 68815-68833]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-28344]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1, 25, 73, and 74

[GN Docket No. 15-236; FCC 15-137]


Review of Foreign Ownership Policies for Broadcast, Common 
Carrier and Aeronautical Radio Licensees

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) proposes to extend its foreign ownership rules and 
procedures that apply to common carrier licensees to broadcast 
licensees, with certain modifications to tailor them to the broadcast 
context. The Commission also seeks comment on whether and how to revise 
the methodology a licensee should use to assess its compliance with the 
25 percent foreign ownership benchmark in section 310(b)(4) of the 
Communications Act of 1934, as amended, in order to reduce regulatory 
burdens on applicants and licensees. Finally, the Commission makes 
several proposals to clarify and update existing foreign ownership 
policies and procedures for broadcast, common carrier and aeronautical 
licensees.

DATES: Submit comments on or before December 21, 2015, and replies on 
or before January 20, 2016. The NPRM contains potential information 
collection requirements subject to the PRA, Public Law 104-13. OMB, the 
general public, and other Federal agencies are invited to comment on 
the potential new and modified information collection requirements 
contained in this NPRM. If the information collection requirements are 
adopted, the Commission will submit the appropriate documents to OMB 
for review under Section 3507(d) of the PRA. OMB, the general public, 
and other Federal agencies will again be invited to comment on the new 
and modified information collection requirements adopted by the 
Commission.

ADDRESSES:  You may submit comments, identified by Docket No. 15-236, 
by any of the following methods:

[[Page 68816]]

     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Federal Communications Commission's ECFS Web site: https://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting 
comments.
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by email to FCC504@fcc.gov, phone: 202-418-
0530 (voice), tty: 202-418-0432.
    In addition to filing comments as described above, a copy of any 
comments on the PRA information collection requirements contained 
herein should be submitted to the FCC via email to PRA@fcc.gov and to 
Nicholas A. Fraser, OMB, via email to Nicholas_A._Fraser@omb.eop.gov or 
via fax at 202-395-5167.
    For detailed instructions on submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Kimberly Cook or Denise Coca, Policy 
Division, International Bureau, FCC, (202) 418-1460 or via email to 
Kimberly.Cook@fcc.gov, Denise.Coca@fcc.gov. On PRA matters, contact 
Cathy Williams, Office of the Managing Director, FCC, (202) 418-2918 or 
via email to Cathy.Williams@fcc.gov.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking in GN Docket No. 15-236, FCC 15-137, adopted and 
released on October 22, 2015. The full text of this document is 
available for inspection and copying during normal business hours in 
the FCC Reference Center, 445 12th Street SW., Washington, DC 20554. 
The document also is available for download over the Internet at https://transition.fcc.gov/Daily_Releases/Daily_Business/2015/db1027/FCC-15-137A1.pdf.

Comment Filing Procedures

    Pursuant to Sec. Sec.  1.415, 1.419, interested parties may file 
comments and reply comments on or before the dates indicated above. 
Comments may be filed using the Commission's Electronic Comment Filing 
System (ECFS). See Electronic Filing of Documents in Rulemaking 
Proceedings, 63 FR 24121 (1998).
     Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the Commission's ECFS Web site at 
https://apps.fcc.gov/ecfs/.
     Paper Filers: Parties who choose to file by paper must 
file an original and one copy of each filing. If more than one docket 
or rulemaking number appears in the caption of this proceeding, filers 
must submit two additional copies for each additional docket or 
rulemaking number. Filings can be sent by hand or messenger delivery, 
by commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail. All filings must be addressed to the Commission's 
Secretary, Office of the Secretary, Federal Communications Commission.
     All hand-delivered or messenger-delivered paper filings 
for the Commission's Secretary must be delivered to FCC Headquarters at 
445 12th St. SW., Room TW-A325, Washington, DC 20554. The filing hours 
are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together 
with rubber bands or fasteners. Any envelopes and boxes must be 
disposed of before entering the building.
     Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
     U.S. Postal Service first-class, Express, and Priority 
mail must be addressed to 445 12th Street SW., Washington DC 20554.

Synopsis of Notice of Proposed Rulemaking

    1. The Notice of Proposed Rulemaking (NPRM) proposes to simplify 
the foreign ownership approval process for broadcast licensees by 
extending the streamlined rules and procedures developed for foreign 
ownership reviews for common carrier and certain aeronautical licensees 
under section 310(b)(4) of the Communications Act of 1934, as amended 
(the Act), 47 U.S.C. 310(b)(4), to the broadcast context. For ease of 
reference, the NPRM refers to broadcast, common carrier, aeronautical 
en route and aeronautical fixed radio station applicants and licensees 
(including broadcast permittees) and to common carrier spectrum lessees 
collectively as ``licensees'' unless the context warrants otherwise. 
The NPRM also uses the term ``common carrier'' or ``common carrier 
licensees'' to encompass common carrier, aeronautical en route and 
aeronautical fixed radio station applicants and licensees unless the 
context applies only to common carrier licensees. ``Spectrum lessees'' 
are defined in section 1.9003 of Part 1, Subpart X, 47 CFR 1.9003. The 
NPRM also refers to aeronautical en route and aeronautical fixed 
licensees collectively as ``aeronautical'' licensees. In using this 
shorthand, the NPRM does not include other types of aeronautical radio 
station licenses issued by the Commission.
    2. The changes proposed in the NPRM will facilitate investment from 
new sources of capital at a time of growing need for capital investment 
in this important sector of our nation's economy. The Commission 
believes that adopting a standardized filing and review process for 
broadcast licensees' requests to exceed the 25 percent foreign 
ownership benchmark in section 310(b)(4), as the Commission has done 
for common carrier licensees, will also provide the broadcast sector 
with greater transparency, more predictability, and will reduce 
regulatory burdens and costs.
    3. Specifically, the NPRM proposes to extend the foreign ownership 
rules and procedures established in the 2013 Foreign Ownership Second 
Report and Order \1\ to broadcast licensees, with certain modifications 
to tailor them to this context. The NPRM also seeks comment on whether 
and how to revise the methodology a licensee should use to assess its 
compliance with the 25 percent foreign ownership benchmark in section 
310(b)(4) in order to reduce regulatory burdens on applicants and 
licensees. Finally, the NPRM makes several proposals to clarify and 
update existing policies and procedures for broadcast, common carrier 
and aeronautical licensees.
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    \1\ Review of Foreign Ownership Policies for Common Carrier and 
Aeronautical Radio Licenses Under Section 310(b)(4) of the 
Communications Act of 1934, as Amended, IB Docket No. 11-133, Second 
Report and Order, 28 FCC Rcd 5741 (2013) (2013 Foreign Ownership 
Second Report and Order).
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    4. Section 310(b)(4) of the Act establishes a 25 percent benchmark 
for investment by foreign individuals, governments, and corporations in 
U.S.-organized entities that directly or indirectly control a U.S. 
broadcast, common carrier, or aeronautical radio licensee. Licensees 
request Commission approval of their controlling U.S. parents' foreign 
ownership under section 310(b)(4) by filing a petition for declaratory 
ruling. For the Commission to make the public interest findings 
required by that section of the Act, licensees file the petition and 
obtain Commission approval before direct or indirect foreign ownership 
of their U.S. parent companies exceeds 25 percent. The Commission 
assesses, in each particular case, whether the foreign interests 
presented for approval by the licensee are in the public interest, 
consistent with the Commission's section 310(b)(4) policy framework. 
The Commission's public interest analysis also considers any national 
security, law

[[Page 68817]]

enforcement, foreign policy or trade policy issues that may be raised 
by the foreign ownership. The Commission coordinates as necessary and 
appropriate with the relevant Executive Branch agencies and affords 
appropriate deference to their expertise on these issues.
    5. To the extent the Commission adopts the NPRM's proposal to 
incorporate broadcast licensees into the regulatory framework for 
foreign ownership of common carrier licensees, with certain 
modifications applicable to broadcast licensees, the Commission 
proposes to codify the final rules in Part 1, subpart T, at sections 
1.5000 through 1.5004, 47 CFR 1.5000-1.5004, and to remove sections 
1.990 through 1.994, 47 CFR 1.990-1.994, from Part 1, subpart F. The 
NPRM generally refers to the rules by their current section numbers, 
but also refers as appropriate to the proposed rule sections.

Proposals and Other Options To Modify Current Regulatory Framework

    6. In this NPRM, the Commission proposes to extend the foreign 
ownership rules and procedures applicable to common carrier licensees 
to broadcast licensees, with certain exceptions and proposed 
modifications. Specifically, the NPRM proposes to incorporate broadcast 
licensees into the Commission's rules that apply to petitions filed 
under section 310(b)(4) of the Act. The NPRM seeks comment on these 
proposals, as well as on any alternatives that commenters believe the 
Commission should consider. With respect to each proposal or proposed 
alternative, commenters should discuss, and, if possible, quantify, the 
likely costs and benefits of the proposal or proposed alternative.
    7. In the 2013 Broadcast Clarification Order, the Commission 
signaled that it might elect to create a standardized review process 
for broadcast licensees similar to that adopted in the common carrier 
context to streamline procedures.\2\ The Commission's subsequent 
experience with the 2015 Pandora Declaratory Ruling \3\ illustrated a 
need for greater clarity and certainty in the foreign ownership context 
for broadcasters, as well as those seeking to acquire broadcast 
interests. The Commission believes that broadcasters can benefit from 
the streamlining measures that are applied to common carrier licensees 
that seek to exceed the 25 percent foreign ownership benchmark in 
section 310(b)(4). Furthermore, streamlining the Commission's filing 
and review processes may have the added benefit of attracting financial 
investment from new sources of capital for broadcasters.
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    \2\ Commission Policies and Procedures Under Section 310(b)(4) 
of the Communications Act, Foreign Investment in Broadcast 
Licensees, MB Docket No. 13-50, Declaratory Ruling, 28 FCC Rcd 16244 
(2013) (2013 Broadcast Clarification Order).
    \3\ Pandora Radio LLC Petition for Declaratory Ruling Under 
Section 310(b)(4) of the Communications Act of 1934, as Amended, MB 
Docket No. 14-109, Declaratory Ruling, FCC 15-52, 30 FCC Rcd 5094, 
5095, ] 4 (2015) (2015 Pandora Declaratory Ruling), recon denied, 
FCC 15-129 (rel. Sept. 17, 2015).
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    8. The NPRM tentatively concludes that the considerations 
underlying the adoption of the foreign ownership rules applicable to 
section 310(b)(4) petitions for common carrier licensees are generally 
applicable to broadcast licensees. The Commission's experience applying 
these rules in the common carrier context demonstrates that the process 
is efficient and that filers are benefitting from the formal guidance. 
Moreover, the rules ensure that the Commission is able to satisfy its 
obligations under section 310(b) with respect to foreign ownership, 
while coordinating applications and petitions with the Executive 
Branch, as needed. The NPRM proposes to apply these principles in the 
broadcast context and seeks comment on this approach. Commenters are 
encouraged to review the proposed rules, provide comment on the 
application of these rules to the broadcast sector, and propose 
alternative approaches that would promote the public interest.
    9. Significantly, under the proposed rules, a petitioner would be 
able to request (1) approval of up to 100 percent aggregate foreign 
ownership (voting and/or equity) by unnamed and future foreign 
investors in the controlling U.S. parent of a broadcast licensee, 
subject to certain conditions; (2) approval for any named foreign 
investor that proposes to acquire a less than 100 percent controlling 
interest to increase the interest to 100 percent at some time in the 
future; and (3) approval for any non-controlling named foreign investor 
to increase its voting and/or equity interest up to and including a 
non-controlling interest of 49.99 percent at some time in the future. 
Moreover, a petitioner would only need to obtain specific approval of 
foreign investors (i.e., individuals, entities, or a ``group'' of 
foreign individuals or entities) that hold or would hold, directly or 
indirectly, more than five percent, and in certain circumstances, more 
than ten percent of the U.S. parent's equity and/or voting interests, 
or a controlling interest in the U.S. parent. The Commission will 
continue to coordinate as necessary and appropriate with the Executive 
Branch regarding all petitions for declaratory ruling filed under 
section 310(b).
    10. The Commission believes that applying these rules to broadcast 
licensees in the context of section 310(b)(4) petitions will help 
improve access to capital from foreign investors and promote regulatory 
flexibility; preserve the Commission's statutory obligation, in 
consultation with the relevant Executive Branch agencies, to ensure 
that foreign ownership above the 25 percent benchmark serves the public 
interest; reduce uncertainty regarding the treatment of foreign 
investment in broadcast properties; and reduce burdens on filers by 
providing a streamlined, uniform process.
    11. Disclosable Interest Holders. Section 1.991(e)-(g) of the rules 
requires all section 310(b) petitions for declaratory ruling regarding 
proposed foreign investment in a common carrier licensee to contain the 
name, address, citizenship and principal business(es) of any individual 
or entity, regardless of citizenship, that directly or indirectly holds 
or would hold, after effectuation of any planned ownership changes 
described in the petition, at least ten percent of the equity or voting 
interests in the controlling U.S. parent of the petitioning common 
carrier licensee or a controlling interest. The Commission adopted the 
ten percent threshold to ensure consistency with the ownership 
disclosure requirements that apply to most common carrier applicants 
under the Commission's licensing rules, while preserving a meaningful 
opportunity for the Executive Branch agencies to review petitions for 
national security, law enforcement, foreign policy, and trade policy 
concerns. The NPRM proposes to adopt a similar approach for broadcast 
licensees subject to the modifications described below.
    12. Rather than adopt the ten percent disclosable threshold for 
broadcast licensees, the Commission proposes to require that broadcast 
entities disclose their ownership interests based on the current 
attribution rules and policies applicable to broadcast licensees. The 
Commission's media attribution rules seek to identify those interests 
in or relationships to licensees that confer on their holders a degree 
of influence or control such that the holders have a realistic 
potential to affect the programming decisions of licensees or other 
core operating functions. Given the distinct nature of the services 
provided by common carriers and broadcast stations, different 
attribution standards apply to these services. For example, as noted 
above, the ownership disclosure requirements applicable to most common 
carriers require the

[[Page 68818]]

disclosure of all ten percent interest holders (voting and equity); the 
broadcast attribution rules, however, generally require the attribution 
of individuals or entities that hold five percent or more of the voting 
stock, while non-voting stock interests are typically not attributable. 
The Commission believes that consistency with its broadcast attribution 
rules would ensure certainty and efficiency for broadcast firms with 
foreign ownership interests. Additionally, broadcast industry filers 
are familiar with the Commission's media attribution rules and are 
already required to disclose such interest holders on various 
Commission forms and applications (e.g., FCC Form 323, Ownership Report 
for Commercial Broadcast Stations). Given that familiarity, the 
Commission believes it would pose an undue hardship to establish a 
different disclosure threshold for broadcasters. The NPRM seeks comment 
on this proposal.
    13. Specific Approval of Named Foreign Investors. Section 1.991(i) 
of the rules requires a common carrier licensee filing a section 
310(b)(4) petition to identify and request specific approval for any 
foreign individual or entity, or ``group'' of foreign individuals or 
entities, that holds or would hold directly, or indirectly through one 
or more intervening U.S.- or foreign-organized entities, more than five 
percent of the U.S. parent's total outstanding capital stock (equity) 
and/or voting stock, or a controlling interest. In addition, as a 
condition of the initial ruling, and with respect to any future 
interests that may be acquired by foreign investors, section 
1.994(a)(1) similarly requires the licensee to file a new petition to 
obtain prior approval before any foreign individual, entity, or 
``group'' not previously approved acquires a greater-than-five percent 
interest in the U.S. parent that does not qualify as exempt under 
section 1.991(i)(3). In circumstances where a foreign-organized entity 
requires specific approval, the petition must include the information 
specified in section 1.991(j), including the name and citizenship of 
any individual or entity that holds, or would hold, directly and/or 
indirectly, through one or more intervening entities, ten percent or 
more of the equity interests and/or voting interests, or a controlling 
interest, in the foreign entity for which the petitioner requests 
specific approval. The NPRM proposes to adopt a similar approach for 
broadcast licensees subject to the modifications described below.
    14. Consistent with the NPRM's proposal regarding disclosable 
interest holders in general, the Commission does not believe that it 
would be appropriate to require broadcast petitioners to use the ten 
percent standard specified in section 1.991(j)(ii)(2) for petitions 
filed by common carrier. Instead, the NPRM proposes again to rely on 
the attribution standards set out in section 73.3555 applicable to 
broadcast stations to determine which individuals and entities should 
be listed for each foreign entity for which the broadcast licensee 
seeks specific approval. The Commission believes that consistency with 
the broadcast attribution rules and the familiarity of broadcasters 
with these rules support such an approach. The NPRM seeks comment on 
this proposal.
    15. Insulation Criteria. For broadcast licensees, the NPRM proposes 
to rely on the broadcast insulation criteria set forth in the broadcast 
rules, rather than those applied in the common carrier context. The 
insulation criteria for broadcasters are governed by Note 2(f) of 
section 73.3555. Under the broadcast attribution rules governing 
partnership and limited liability company (LLC) interests, all general 
partners and non-insulated limited partnership and LLC interests are 
attributable. An exception from attribution applies only to those 
limited partners and LLC interest holders that meet the Commission's 
insulation criteria and certify that they are not materially involved 
in the management or operations of the entity's media interests. While 
there are many similarities in the insulation criteria under section 
1.993 and Note 2(f) of section 73.3555, the broadcast criteria contain 
elements that are specific to media-related activities and reflect the 
distinct nature of broadcast operations.
    16. The Commission believes consistency with its broadcast 
insulation policies under its attribution rules is appropriate to apply 
in the foreign ownership context. Broadcast entities are already 
familiar with these insulation criteria, and those entities that have 
insulated certain interests have already executed their organizational 
documents based on these criteria. Adopting different criteria in this 
context may require these entities to revise and re-execute their 
organizational documents, renegotiate the roles of insulated interest 
holders, and operate pursuant to multiple insulation standards when 
seeking approval of foreign ownership above the 25 percent benchmark in 
section 310(b)(4). If the Commission were to adopt different criteria, 
what would the costs associated with applying the common carrier 
foreign ownership insulation criteria be for broadcasters? Are there 
any public interest benefits that would exceed such costs? Are there 
alternative insulation criteria for broadcast entities that might be 
more appropriate in the context of the Commission's foreign ownership 
review pursuant to section 310(b)(4)? Would the benefits of imposing 
any alternative criteria exceed the cost of compliance? The NPRM seeks 
comment on these issues.
    17. Service-Specific Rulings. Foreign ownership rulings issued to 
common carrier licensees cover, unless otherwise specified in a 
particular ruling, any common carrier radio service in any geographic 
location regardless of the particular wireless service(s) (e.g., 
Personal Communications Service) and geographic service area(s) 
authorized under the petitioner's existing license(s). Such rulings may 
also be issued when an applicant seeks authority in a contemporaneously 
filed application for an initial license or for consent to acquire 
licenses by transfer or assignment. The NPRM seeks comment on whether 
there are considerations unique to broadcasting that suggest a 
different approach.
    18. The Commission has noted in the past the important distinctions 
between common carrier services and broadcast media in the context of 
the public interest analysis under section 310(b)(4). For example, the 
Commission has noted that, while common carrier licenses are passive in 
nature and confer no control over the content of transmissions, 
broadcast transmissions have been found to present additional concerns 
because broadcasters exercise control over the content that they air. 
The Commission's approach to the benchmark for foreign investments in 
broadcast licensees has reflected ``heightened concern for foreign 
influence over or control over broadcast licensees which exercise 
editorial discretion over the content of their transmissions.''
    19. Given these considerations, the NPRM seeks comment on how the 
Commission's process should be adapted, if at all, to address service-
specific rulings. The foreign ownership rules that currently apply to 
common carrier licensees allow a ruling for such licensees that applies 
to all types of common carrier wireless services, e.g., satellite, 
CMRS, microwave, AWS. In addition, the rulings are not geographic 
specific. Thus, a licensee does not need separate rulings to provide 
service in the conterminous United States and Puerto Rico. However, 
given the foregoing issues, a broadcast ruling may require different 
parameters. The NPRM seeks comment on whether the

[[Page 68819]]

Commission should issue rulings on a service and/or geographic basis. 
For example, to which services would a ruling apply? If a licensee has 
a ruling covering television licenses, would it need a new ruling if it 
later sought to acquire AM radio station licenses? Would a licensee 
with a ruling for an AM radio station in a small market require a new 
ruling if it sought to acquire a national chain of radio stations or 
additional stations in that small market?
    20. Similar questions arise if a common carrier licensee seeks to 
acquire a broadcast licensee. Would a ruling for common carrier 
licenses apply prospectively to broadcast licenses that the licensee 
sought to acquire? Given that the NPRM proposes to adopt differing 
requirements depending on service (e.g., different disclosable interest 
holders), how would such differences be reconciled if, for example, a 
common carrier ruling also were to cover the subsequent acquisition of 
a television station? The NPRM tentatively concludes that entities 
should not be required to provide the disclosable interest information 
for both common carrier and broadcast licensees if they propose to 
provide only one of those types of services, and that the Commission 
should conduct its public interest analysis for all services only where 
the applicant is to hold licenses as both common carrier and 
broadcaster. The NPRM seeks comment on this issue, including whether 
there is significant interest in the marketplace for entities with 
foreign ownership to hold both common carrier and broadcast licenses.
    21. Filing and Processing of Broadcast Petitions. Section 1.990(b) 
of the rules provides that petitions for declaratory ruling shall be 
filed electronically through the International Bureau Filing System 
(IBFS). For broadcast petitions, however, the NPRM proposes that 
petitions for declaratory ruling be filed electronically as an 
attachment to the underlying applications for a construction permit or 
an assignment or transfer of control that are electronically filed 
through the Commission's Consolidated Database System (CDBS) or any 
successor database. As is the current procedure, such applications 
would be placed on a CDBS-generated public notice denoting that the 
application is ``accepted for filing.'' This public notice initiates 
the formal processing of the application, provides notice to interested 
members of the public who may wish to support or oppose the 
application, and triggers the legal timeframe for the filing of 
petitions to deny. Such a petition for declaratory ruling would 
separately receive a Media Bureau docket number for public notice and 
comment, in addition to the CDBS-generated public notice on the 
associated application.
    22. The NPRM also proposes that, in the absence of an underlying 
broadcast construction permit, assignment or transfer application, the 
broadcast petitioner would file its petition for declaratory ruling 
electronically with the Commission's Office of the Secretary via the 
Commission's Electronic Comment Filing System (ECFS) as a non-docketed 
filing. The petition will subsequently receive a Media Bureau docket 
number and a public notice seeking comment will be released. The 
petition would be reviewed and, after consultation with the relevant 
Executive Branch agencies, a decision issued. This proposal will 
facilitate an efficient, predictable filing and processing scheme for 
broadcast petitions for declaratory ruling whether or not those 
petitions are accompanied by a construction permit, or an assignment or 
transfer application. Broadcasters are familiar with both the 
Commission's CDBS and ECFS filing systems and, as such, the Commission 
expects implementation of these filing and notice measures will provide 
regulatory consistency. The NPRM seeks comment on this proposal.
    23. Methodology for Assessing Compliance with Section 310(b)(4). 
The NPRM proposes to adopt a rule applicable to U.S. public companies 
that would specify the information upon which a licensee's controlling 
U.S. parent may rely for purposes of determining its aggregate level of 
foreign ownership. Such a rule should provide greater clarity for U.S. 
public companies and reduce the burden of determining their aggregate 
levels of foreign ownership given the difficulties in ascertaining the 
citizenship of their shareholders. The NPRM seeks comment on adoption 
of such a rule, including the type of information that would likely be 
known to a U.S. public company in the normal course of business. The 
NPRM also seeks comment on specific alternative proposals to accomplish 
the Commission's goal of providing licensees with a more workable means 
of ensuring compliance with section 310(b)(4).
    24. In the 2015 Pandora Declaratory Ruling proceeding, the National 
Association of Broadcasters (NAB) and the Multicultural Media and 
Telecommunications Council (MMTC) raised concerns that the Commission's 
policies for calculating levels of foreign ownership in broadcast 
entities are ``outdated'' and should be modified to comport with 
current securities laws regarding widely-traded public entities. MMTC 
stated that broadcasters that are public companies need flexible, 
practical, and efficient means to estimate foreign ownership to comply 
with section 310(b)(4), which would attract new foreign capital that 
will be needed to help minority broadcasters ``overcome a severe lack 
of access to domestic capital.'' NAB also contended that the present 
policies tend to frustrate efforts to attract capital to broadcast 
firms. MMTC and NAB raise important issues, and the Commission stated 
in the 2015 Pandora Declaratory Ruling that it would examine whether it 
is appropriate to revise the methodology for assessing broadcaster 
compliance with section 310(b)(4). These issues are not limited to 
broadcast licensees and also affect common carrier licensees' 
compliance with section 310(b)(4). Thus the NPRM seeks to address the 
practices used by any licensee in order to ensure compliance with 
section 310(b)(4). In addition, the NPRM seeks comment on whether any 
changes that the Commission makes regarding what licensees need to do 
to ensure compliance with section 310(b)(4) should also apply to 
ensuring compliance with section 310(b)(3).
    25. NAB maintains that the Commission's compliance policies are 
outdated, in part, because they pertain to regulations of some 40 years 
ago when Securities and Exchange Commission (SEC) regulations related 
to physically holding stock certificates. The current practice involves 
holding shares of publicly traded companies in ``street name'' (i.e., 
the broker holding legal title to a share on behalf of the beneficial 
owner). NAB notes that SEC rules specifically limit brokers from 
providing companies with shareholder information without shareholder 
permission, and, as such, widely-traded public entities have ``little 
recourse'' if the shareholder decides to remain anonymous. According to 
NAB, in light of current industry practices and SEC rules, the 
Commission cannot rationally assume that all unidentified shareholders 
are foreign. NAB claims that as many as 70 to 80 percent of publicly 
traded shares are held in street name, and that it is unlikely that the 
majority of shareholders are aware of, or care, if a brokerage firm 
holds their securities in street name.
    26. Since the issuance of the 2015 Pandora Declaratory Ruling, the 
Commission has further considered the regulatory hurdles to certifying 
compliance with foreign ownership limits and for requesting Commission

[[Page 68820]]

approval to exceed the statutory benchmark of 25 percent foreign 
ownership. In particular, the Commission notes the unique burdens its 
processes may exert on widely-held publicly traded companies, which do 
not necessarily have adequate means to ascertain and certify the 
citizenship of their shareholders. The Commission's aim is to provide 
licensees with greater flexibility in their regulatory filings and 
certifications.
    27. The NPRM seeks comment on what steps licensees should take to 
track their foreign ownership to ensure compliance with section 
310(b)(4). Privately-held companies, partnerships and LLCs should have 
knowledge of all of their owners, and should be able to track their 
foreign ownership relatively easily. The NPRM seeks comment on the 
Commission's view that privately-held entities should have knowledge of 
the citizenship of their owners. The NPRM also seeks comment on whether 
it is appropriate to adopt any measures to facilitate their ability to 
demonstrate compliance with section 310(b)(4), including any or all of 
the proposals described in this NPRM.
    28. Publicly-traded companies face a more complicated challenge to 
demonstrate compliance with section 310 (b)(4). As NAB notes, most 
shares of publicly-traded companies are now held in street name and it 
can be difficult for the licensee to determine the citizenship of the 
beneficial owner of those shares. While publicly traded companies can 
undertake surveys of their shareholders' equity and voting interests, 
those surveys may not be able to ascertain the beneficial shareholders' 
citizenship. The Commission believes a U.S.-organized public company 
should, however, know, or can be expected to know, information about 
certain shareholders. For example, U.S.-organized public companies 
should know about the shareholders that are required to disclose their 
ownership pursuant to SEC rules--generally, those shareholders with 
greater than five percent ownership and institutional investors with 
greater than ten percent ownership. The NPRM states that the companies 
should also know the ownership of the shares registered with the 
company and the shares held by officers and directors. Are there other 
types of shares about which a U.S. public company could be expected to 
know?
    29. The NPRM seeks comment on the Commission's authority to provide 
licensees with greater flexibility to demonstrate compliance with 
section 310(b)(4). The NPRM specifically seeks comment on whether it 
would be consistent with the Commission's obligations under section 
310(b)(4) to permit a licensee with a U.S.-organized public company in 
its ownership chain to rely solely on ownership information that is 
known or reasonably should be known to the public company to determine 
whether the licensee is in compliance with the foreign ownership 
benchmark in section 310(b)(4). If the Commission adopts this proposed 
approach, are there policy or legal reasons to limit its availability 
to U.S.-organized public companies, and/or companies for which a 
certain percentage of their officers and directors are U.S. citizens? 
What amount or type of shareholder data should licensees be required to 
produce to satisfy their ``best efforts'' to comply with section 
310(b)(4)? Should equity and voting ownership in the U.S. public 
company be treated the same or, for example, should there be a 
different, greater obligation to know the voting ownership? 
Additionally, should the Commission accept shareholder street 
addresses, alone, as a proxy for citizenship? If the Commission were to 
adopt such an approach, would there be circumstances under which street 
addresses, without more, would not be an acceptable method of 
certifying foreign ownership levels? Finally, the NPRM seeks comment on 
how frequently a company should be required to assess the extent of its 
foreign ownership if the Commission were to adopt this approach.
    30. The NPRM also requests comment on alternatives to the 
Commission's proposed approach, such as the guidance provided in the 
2015 Pandora Declaratory Ruling. In that proceeding, the Commission 
instructed Pandora on several methods for determining and certifying 
its foreign citizenship levels, including making changes to 
organizational documents. Further, Pandora committed to certify on a 
biennial basis its foreign ownership levels using measures, among 
others: Using The Depository Trust Corporation (DTC) SEG-100 or 
equivalent program; monitoring shares held by current and former 
officers and directors; monitoring relevant SEC filings, obtaining a 
non-objecting beneficial owner (NOBO) list, and requesting that all 
NOBOs provide citizenship information; and making reasonable efforts to 
secure the cooperation of the relevant financial intermediaries in 
obtaining citizenship information. The Commission stated that, 
consistent with existing compliance practices, it expected Pandora 
Media to use sources other than shareholder mailing addresses or 
corporate headquarters locations.
    31. The NPRM seeks comment on whether the use of street addresses, 
coupled with participation in SEG-100, would provide the Commission 
with sufficient information to discharge its public interest 
obligations pertaining to foreign ownership in broadcast licensees, 
while affording a more workable approach that may reduce the burden on 
publicly-traded companies. The NPRM observes that, under SEG-100, stock 
issuers approach DTC and request that their publicly traded securities 
be included in the program. DTC then updates its notations as to those 
requiring SEG-100 treatment and notifies all DTC participants that they 
must apply SEG-100 procedures to trades in the restricted company's 
stock. DTC participants are obligated to make inquiries of their 
account holders and to place the shares of such holders who are non-
citizens in the DTC participant's segregated account. The NPRM asks 
commenters to raise any additional substantive and procedural issues 
that should be considered in modifying and supplementing the 
Commission's processes with regard to compliance with the broadcast 
foreign ownership rules and policies.
    32. The NPRM also solicits comment on NAB's suggestion that the 
Commission eliminate the presumption that unidentified shareholders be 
counted as foreign. In light of the difficulties public companies now 
face in obtaining information about their domestic as well as foreign 
shareholders, as the record in the Pandora proceeding indicated, the 
Commission seeks comment on alternatives to this presumption. If the 
Commission were to change this presumption, should applicants be 
allowed to extrapolate foreign ownership percentages based on known 
shareholders? For example, if ten percent of the identified shares are 
owned by foreign owners, should the Commission presume that ten percent 
of the unidentified shares are held by foreign owners? Alternatively, 
should the Commission extrapolate using a multiple? If so, what should 
that multiple be? Should there be an upper limit on the relative number 
of unknown shareholders that can be estimated under any such approach?
    33. In addition, is there a legal and policy basis for concluding 
in this proceeding, under section 310(b)(4), that the public interest 
would be served by permitting small foreign equity and/or voting 
interests in U.S. public companies--e.g., equity or voting interests 
that are not required to be

[[Page 68821]]

reported under SEC Rule 13d-1, 17 CFR 240.13d-1,--without the 
Commission's individual review and approval, even in circumstances 
where the U.S. public company may have aggregate foreign ownership (or 
aggregate foreign and unknown ownership) exceeding 25 percent? If so, 
does that basis extend to a finding that the public interest would be 
served by permitting a U.S. public company to have up to an aggregate 
less than 50 percent (or some higher level) non-controlling foreign 
investment, even with individual investments that may be required to be 
reported under SEC Rule 13d-1, without individual review and approval? 
The NPRM seeks comment on these approaches and asks commenters to 
provide any other suggestions.
    34. Corrections and Clarifications of Existing Rules. The 
Commission takes this opportunity to make certain technical corrections 
to the foreign ownership rules and seeks comment on proposed clarifying 
changes, as well as on any other changes commenters may suggest to 
improve the structure and clarity of the rules.
    35. First, in section 1.5001 of the proposed rules, which lists the 
required contents of petitions for declaratory ruling, the NPRM 
proposes to include a cross-reference to section 1.5000(c), the 
requirement that each applicant, licensee, or spectrum lessee filing a 
section 310(b) petition for declaratory ruling certify to the 
information contained in the petition in accordance with the provisions 
of section 1.16 of the rules. The Commission has found that it is not 
uncommon for petitions to be filed without the required certification. 
The NPRM therefore includes in proposed rule section 1.5001(l) a cross-
reference to the certification requirement to highlight to filers this 
critical aspect of the rules.
    36. Second, the NPRM proposes to include two Notes in section 
1.5001(i) of the proposed rules to clarify that certain foreign 
interests of five percent or less may require specific approval in 
circumstances where there is direct or indirect foreign investment in 
the U.S. parent in the form of uninsulated partnership interests or 
uninsulated interests held by members of an LLC. Many limited partners 
and LLC members hold small equity interests in their respective 
companies with control of these companies residing in the general 
partner or managing member, respectively. However, for purposes of 
identifying foreign interests that require specific approval (and for 
determining a common carrier licensee's disclosable U.S. and foreign 
interest holders), uninsulated partners and uninsulated LLC members are 
deemed to hold the same voting interest as the partnership or LLC holds 
in the company situated in the next lower tier of the licensee's 
vertical ownership chain. Depending on the particular ownership 
structure presented in the petition, an uninsulated foreign limited 
partner or uninsulated LLC member may require specific approval because 
the voting interest it is deemed to hold in the U.S. parent exceeds 
five percent and, because it is an uninsulated voting interest, it does 
not qualify as exempt from the specific approval requirements. The NPRM 
requests comment on the proposed language and placement of these Notes, 
which are intended to improve the clarity of the specific approval 
requirements as recodified in section 1.5001(i) of the rules.
    37. Third, the NPRM seeks comment on whether Commission precedent 
supports the inclusion of additional permissible voting or consent 
rights in the list of investor protections where the rights do not, in 
themselves, result in a limited partnership or LLC interest being 
deemed uninsulated within the meaning of that section. Similarly, the 
NPRM requests comment on whether Commission precedent supports the 
inclusion of additional permissible minority shareholder protections.
    38. Finally, the NPRM proposes to correct two cross-references, and 
to make additional clarifying changes.
    39. Transition Issues. Consistent with the approach adopted in the 
2013 Foreign Ownership Second Report and Order, the NPRM proposes that 
any changes adopted in this proceeding be applied prospectively. The 
NPRM proposes that existing foreign ownership rulings issued prior to 
the effective date of the rules adopted in this proceeding shall remain 
in effect. Specifically, as is currently the case under the 
Commission's foreign ownership rules for common carrier licensees, 
licensees subject to an existing ruling as of the effective date of the 
rules adopted in this proceeding would be required to continue to 
comply with any general and specific terms and conditions of their 
rulings, including Commission rules and policies in effect at the time 
the ruling was issued. The NPRM proposes that such licensees may, 
however, request a new ruling under any revised rules, but they are not 
required to do so. The NPRM tentatively concludes that this approach is 
appropriate because it will afford the Commission and the relevant 
Executive Branch agencies an opportunity to evaluate the potential 
effects of applying the new rules to licensees that are subject to an 
existing ruling. The NPRM seeks comment on this approach and on how to 
treat any requests for declaratory ruling that are pending before the 
Commission as of the effective date of the rules adopted in this 
proceeding. Should the Commission review these requests under the rules 
adopted in this proceeding? Are there other transition issues that the 
Commission should address?
    40. The NPRM reminds common carrier licensees with an existing 
foreign ownership ruling of their obligation to seek a new ruling 
before they exceed the parameters of their rulings, including those 
rulings issued prior to August 9, 2013, the effective date of the rules 
adopted in the 2013 Foreign Ownership Second Report and Order. The NPRM 
notes, in particular, that a licensee's ruling issued prior to August 
9, 2013, may be limited in scope to the particular wireless service(s) 
and geographic service area(s) of the licenses or spectrum leasing 
arrangements referenced in the petition for declaratory ruling. The 
Commission's decision in the 2013 Foreign Ownership Second Report and 
Order to eliminate its practice of issuing rulings on a service- and 
geographic-specific basis did not apply retroactively to rulings issued 
prior to the effective date of the rules adopted in that proceeding. 
Failure to meet a condition of a foreign ownership ruling may result in 
monetary sanctions or other enforcement action by the Commission.
    41. Other Reforms to Foreign Ownership Review. Finally, the NPRM 
invites comment on any additional reforms that could further streamline 
Commission review of foreign ownership and bring its foreign and 
domestic investment review processes into closer alignment, while 
ensuring that important national security, law enforcement, foreign 
policy, trade policy and other public policy goals continue to be met. 
For example, are there certain types of applications that could be 
reviewed in a more streamlined manner than the proposals outlined in 
the NPRM? The Commission seeks comment on these and any other proposals 
that would streamline its process for analyzing foreign ownership under 
section 310(b)(4), while also serving its public interest goals.

Initial Paperwork Reduction Act of 1995 Analysis

    42. This document contains proposed new and modified information 
collection requirements. The Commission, as a part of its continuing 
effort to reduce paperwork burdens, invites the general public and the 
Office

[[Page 68822]]

of Management and Budget (OMB) to comment on the information collection 
requirements contained in this document, as required by the Paperwork 
Reduction Act of 1995 (PRA), Public Law 104-13. In addition, pursuant 
to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, 
see 44 U.S.C. 3506(c)(4), the Commission seeks specific comment on how 
it might ``further reduce the information collection burden for small 
business concerns with fewer than 25 employees.''

Initial Regulatory Flexibility Analysis

    43. The Regulatory Flexibility Act of 1980, as amended (RFA),\4\ 
requires that an initial regulatory flexibility analysis be prepared 
for notice-and-comment rule making proceedings, unless the agency 
certifies that ``the rule will not, if promulgated, have a significant 
economic impact on a substantial number of small entities.'' \5\ The 
RFA generally defines the term ``small entity'' as having the same 
meaning as the terms ``small business,'' ``small organization,'' and 
``small governmental jurisdiction.'' \6\ In addition, the term ``small 
business'' has the same meaning as the term ``small business concern'' 
under the Small Business Act.\7\ 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 Small Business Administration (SBA).
---------------------------------------------------------------------------

    \4\ See 5 U.S.C. 603. The RFA, see 5 U.S.C. 601-612, has been 
amended by the Small Business Regulatory Enforcement Fairness Act of 
1996 (SBREFA), Pub. L. 104-121, Title II, 110 Stat. 857 (1996).
    \5\ 5 U.S.C. 605(b).
    \6\ 5 U.S.C. 601(6).
    \7\ 5 U.S.C. 601(3) (incorporating by reference the definition 
of ``small business concern'' in the Small Business Act, 15 U.S.C. 
632). Pursuant to 5 U.S.C. 601(3), the statutory definition of a 
small business applies ``unless an agency, after consultation with 
the Office of Advocacy of the Small Business Administration and 
after opportunity for public comment, establishes one or more 
definitions of such term which are appropriate to the activities of 
the agency and publishes such definition(s) in the Federal 
Register.''
---------------------------------------------------------------------------

    44. In the NPRM, the Commission seeks comment on proposed changes 
and other options to incorporate broadcast licenses into the 
Commission's rules and procedures for analyzing foreign ownership of 
common carrier and aeronautical radio licensees under section 310(b)(4) 
of the Act, 47 U.S.C. 310(b)(4), and to clarify certain aspects of 
those rules and procedures for broadcast, common carrier and 
aeronautical licensees while continuing to ensure that the Commission 
has the information it needs to carry out its statutory duties. The 
proposals in the NPRM are designed to reduce to the extent possible the 
regulatory costs and burdens imposed on broadcast, wireless common 
carrier and aeronautical applicants, licensees, and spectrum lessees; 
provide greater transparency and more predictability with respect to 
the Commission's filing requirements and review process; and facilitate 
investment from new sources of capital, while continuing to protect 
important interests related to national security, law enforcement, 
foreign policy, and trade policy.
    45. The Commission estimates that the rule changes discussed in the 
NPRM, if adopted, would result in a reduction in the time and expense 
associated with filing section 310(b)(4) petitions for declaratory 
ruling by broadcast licensees. For example, the NPRM proposes that U.S. 
parent companies of broadcast licensees that seek Commission approval 
to exceed the 25 percent foreign ownership benchmark in section 
310(b)(4) include in their petitions requests for specific approval 
only of foreign investors that would hold a direct or indirect equity 
and/or voting interest in the U.S. parent that exceeds five percent (or 
exceeds ten percent in certain circumstances), or a controlling 
interest. Another proposal would, if adopted, allow the U.S. parent to 
request specific approval for any non-controlling foreign investors 
named in the section 310(b)(4) petition to increase their direct or 
indirect equity and/or voting interests in the U.S. parent at any time 
after issuance of the section 310(b)(4) ruling, up to and including a 
non-controlling 49.99 percent equity and/or voting interest. Similarly, 
the U.S. parent would be permitted to request specific approval for any 
named foreign investor that proposed to acquire a controlling interest 
of less than 100 percent to increase the interest to 100 percent at 
some future time. The NPRM also seeks comment on measures the 
Commission can take to reduce the costs and burdens associated with 
licensees' efforts to ensure that they remain in compliance with the 
statutory foreign ownership requirements, which apply broadly to 
broadcast, common carrier, aeronautical en route and aeronautical fixed 
radio licensees.
    46. The Commission believes that the streamlining proposals and 
other options on which the Commission seeks comment in the NPRM will 
reduce costs and burdens currently imposed on licensees, including 
those licensees that are small entities, and accelerate the foreign 
ownership review process, while continuing to ensure that the 
Commission has the information it needs to carry out its statutory 
duties. Therefore, the Commission certifies that the proposals in the 
NPRM, if adopted, will not have a significant economic impact on a 
substantial number of small entities.\8\ The Commission will send a 
copy of the NPRM, including a copy of this Initial Regulatory 
Flexibility Certification, to the Chief Counsel for Advocacy of the 
SBA.\9\ This initial certification will also be published in the 
Federal Register.\10\
---------------------------------------------------------------------------

    \8\ In the proceeding in which sections 1.990-1.994 were 
adopted, the Commission certified that the rules and procedures for 
analyzing foreign ownership of common carrier and aeronautical radio 
licensees under section 310(b)(4), which this NPRM proposes to apply 
with certain modifications to broadcast licensees, would not have a 
significant economic impact on a substantial number of small 
entities. See 2013 Foreign Ownership Second Report and Order, 25 FCC 
Rcd at 5813-15; 2011 Foreign Ownership NPRM, 26 FCC Rcd 11703, 
11742-44 (2011).
    \9\ 5 U.S.C. 605(b).
    \10\ Id.
---------------------------------------------------------------------------

Ordering Clauses

    47. It is ordered that, pursuant to the authority contained in 47 
U.S.C. Sections 151, 152, 154(i), 154(j), 211, 303(r), 309, 310 and 
403, this Notice of Proposed Rulemaking is adopted.
    48. It is further ordered that notice is hereby given of the 
proposed regulatory changes to Commission policy and rules described in 
this Notice of Proposed Rulemaking and that comment is sought on these 
proposals.
    49. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Notice of Proposed Rulemaking, including the Initial 
Regulatory Flexibility Certification, to the Chief Counsel for Advocacy 
of the Small Business Administration.

List of Subjects in 47 CFR Parts 1, 25, 73 and 74

    Communications common carriers, Radio, Reporting and recordkeeping 
requirements, Satellites, Telecommunications, Television.

Federal Communications Commission.
Gloria J. Miles,
Federal Register Liaison Officer.

Proposed Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission proposes to amend 47 CFR parts 1, 25, 73, and 
74 as follows:

PART 1--PRACTICE AND PROCEDURE

0
1. The authority citation for part 1 is revised to read as follows:


[[Page 68823]]


    Authority: 15 U.S.C. 79, et seq.; 47 U.S.C. 151, 154(i), 154(j), 
155, 157, 160, 201, 225, 227, 303, 309, 310, 332, 1403, 1404, 1451, 
1452, and 1455.


Sec. Sec.  1.990 through 1.994  [Removed]

0
2. In Subpart F, remove the undesignated center heading ``Foreign 
Ownership of Common Carrier, Aeronautical En Route, and Aeronautical 
Fixed Radio Station Licensees'' and Sec. Sec.  1.990 through 1.994.
0
3. Add subpart T to read as follows:

Subpart T--Foreign Ownership of Broadcast, Common Carrier, 
Aeronautical En Route, and Aeronautical Fixed Radio Station 
Licensees

Sec.
1.5000 Citizenship and filing requirements under section 310(b) of 
the Communications Act of 1934, as amended.
1.5001 Contents of petitions for declaratory ruling under section 
310(b) of the Communications Act of 1934, as amended.
1.5002 How to calculate indirect equity and voting interests.
1.5003 Insulation criteria for interests in limited partnerships, 
limited liability partnerships, and limited liability companies.
1.5004 Routine terms and conditions.


Sec.  1.5000  Citizenship and filing requirements under section 310(b) 
of the Communications Act of 1934, as amended.

    The rules in this subpart establish the requirements and conditions 
for obtaining the Commission's prior approval of foreign ownership in 
broadcast, common carrier, aeronautical en route, and aeronautical 
fixed radio station licensees and common carrier spectrum lessees that 
would exceed the 25 percent benchmark in section 310(b)(4) of the Act. 
These rules also establish the requirements and conditions for 
obtaining the Commission's prior approval of foreign ownership in 
common carrier (but not broadcast, aeronautical en route or 
aeronautical fixed) radio station licensees and spectrum lessees that 
would exceed the 20 percent limit in section 310(b)(3) of the Act.
    (a)(1) A broadcast, common carrier, aeronautical en route or 
aeronautical fixed radio station licensee or common carrier spectrum 
lessee shall file a petition for declaratory ruling to obtain 
Commission approval under section 310(b)(4) of the Act, and obtain such 
approval, before the aggregate foreign ownership of any controlling, 
U.S.-organized parent company exceeds, directly and/or indirectly, 25 
percent of the U.S. parent's equity interests and/or 25 percent of its 
voting interests. An applicant for a broadcast, common carrier, 
aeronautical en route or aeronautical fixed radio station license or 
common carrier spectrum leasing arrangement shall file the petition for 
declaratory ruling required by this paragraph at the same time that it 
files its application.
    (2) A common carrier radio station licensee or spectrum lessee 
shall file a petition for declaratory ruling to obtain approval under 
the Commission's section 310(b)(3) forbearance approach, and obtain 
such approval, before aggregate foreign ownership, held through one or 
more intervening U.S.-organized entities that hold non-controlling 
equity and/or voting interests in the licensee, along with any foreign 
interests held directly in the licensee or spectrum lessee, exceeds 20 
percent of its equity interests and/or 20 percent of its voting 
interests. An applicant for a common carrier radio station license or 
spectrum leasing arrangement shall file the petition for declaratory 
ruling required by this paragraph at the same time that it files its 
application. Foreign interests held directly in a licensee or spectrum 
lessee, or other than through U.S.-organized entities that hold non-
controlling equity and/or voting interests in the licensee or spectrum 
lessee, shall not be permitted to exceed 20 percent.

    Note 1 to paragraph (a):  For purposes of calculating its 
foreign ownership to determine whether it is required to file a 
petition for declaratory ruling under paragraph (a)(1) or (2) of 
this section, a U.S.-organized publicly-traded company shall use 
information about its voting and non-voting stock available to it in 
the normal course of business, including ownership information 
required to be disclosed pursuant to rules of the Securities and 
Exchange Commission, shares recorded in the company's shareholder 
register, shares held by the members of the company's Board of 
Directors and shares held by its officers. A U.S.-organized 
publicly-traded company is a company: That is organized in the 
United States; whose stock is traded on a stock exchange in the 
United States; that is headquartered in the United States; with a 
majority of members of its Board of Directors who are citizens of 
the United States; and with a majority of officers who are citizens 
of the United States.


    Note 2 to paragraph (a): Paragraph (a)(1) of this section 
implements the Commission's foreign ownership policies under section 
310(b)(4) of the Act, 47 U.S.C. 310(b)(4), for broadcast, common 
carrier, aeronautical en route, and aeronautical fixed radio station 
licensees and common carrier spectrum lessees. It applies to foreign 
equity and/or voting interests that are held, or would be held, 
directly and/or indirectly in a U.S.-organized entity that itself 
directly or indirectly controls a broadcast, common carrier, 
aeronautical en route, or aeronautical fixed radio station licensee 
or common carrier spectrum lessee. A foreign individual or entity 
that seeks to hold a controlling interest in such a licensee or 
spectrum lessee must hold its controlling interest indirectly, in a 
U.S.-organized entity that itself directly or indirectly controls 
the licensee or spectrum lessee. Such controlling interests are 
subject to section 310(b)(4) and the requirements of paragraph 
(a)(1) of this section. The Commission assesses foreign ownership 
interests subject to section 310(b)(4) separately from foreign 
ownership interests subject to section 310(b)(3).


    Note 3 to paragraph (a):  Paragraph (a)(2) of this section 
implements the Commission's section 310(b)(3) forbearance approach 
adopted in the First Report and Order in IB Docket No. 11-133, FCC 
12-93 (released August 17, 2012), 77 FR 50628 (Aug. 22, 2012). The 
section 310(b)(3) forbearance approach applies only to foreign 
equity and voting interests that are held, or would be held, in a 
common carrier licensee or spectrum lessee through one or more 
intervening U.S.-organized entities that do not control the licensee 
or spectrum lessee. Foreign equity and/or voting interests that are 
held, or would be held, directly in a licensee or spectrum lessee, 
or indirectly other than through an intervening U.S.-organized 
entity, are not subject to the Commission's section 310(b)(3) 
forbearance approach and shall not be permitted to exceed the 20 
percent limit in section 310(b)(3) of the Act, 47 U.S.C. 310(b)(3). 
The Commission's forbearance approach does not apply to broadcast, 
aeronautical en route or aeronautical fixed radio station licenses.

    Example 1.  U.S.-organized Corporation A is preparing an 
application to acquire a common carrier radio license by assignment 
from another licensee. U.S.-organized Corporation A is wholly owned 
and controlled by U.S.-organized Corporation B. U.S.-organized 
Corporation B is 51 percent owned and controlled by U.S.-organized 
Corporation C, which is, in turn, wholly owned and controlled by 
foreign-organized Corporation D. The remaining non-controlling 49 
percent equity and voting interests in U.S.-organized Corporation B 
are held by U.S.-organized Corporation X, which is, in turn, wholly 
owned and controlled by U.S. citizens. Paragraph (a)(1) of this 
section requires that U.S.-organized Corporation A file a petition 
for declaratory ruling to obtain Commission approval of the 51 
percent foreign ownership of its controlling, U.S.-organized parent, 
Corporation B, by foreign-organized Corporation D, which exceeds the 
25 percent benchmark in section 310(b)(4) of the Act for both equity 
interests and voting interests. Corporation A is also required to 
identify and request specific approval in its petition for any 
foreign individual or entity, or ``group,'' as defined in paragraph 
(d) of this section, that holds directly and/or indirectly more than 
five percent of Corporation B's total outstanding capital stock 
(equity) and/or voting stock, or a controlling interest in 
Corporation B, unless the foreign investment is exempt under Sec.  
1.5001(i)(3).

[[Page 68824]]

    Example 2.  U.S.-organized Corporation A is preparing an 
application to acquire a common carrier radio license by assignment 
from another licensee. U.S.-organized Corporation A is 51 percent 
owned and controlled by U.S.-organized Corporation B, which is, in 
turn, wholly owned and controlled by U.S. citizens. The remaining 
non-controlling 49 percent equity and voting interests in U.S.-
organized Corporation A are held by U.S.-organized Corporation X, 
which is, in turn, wholly owned and controlled by foreign-organized 
Corporation Y. Paragraph (a)(2) of this section requires that U.S.-
organized Corporation A file a petition for declaratory ruling to 
obtain Commission approval of the non-controlling 49 percent foreign 
ownership of U.S.-organized Corporation A by foreign-organized 
Corporation Y through U.S.-organized Corporation X, which exceeds 
the 20 percent limit in section 310(b)(3) of the Act for both equity 
interests and voting interests. U.S.-organized Corporation A is also 
required to identify and request specific approval in its petition 
for any foreign individual or entity, or ``group,'' as defined in 
paragraph (d) of this section, that holds an equity and/or voting 
interest in foreign-organized Corporation Y that, when multiplied by 
49 percent, would exceed five percent of U.S.-organized Corporation 
A's equity and/or voting interests, unless the foreign investment is 
exempt under Sec.  1.5001(i)(3).
    Example 3.  U.S.-organized Corporation A is preparing an 
application to acquire a common carrier radio license by assignment 
from another licensee. U.S.-organized Corporation A is 51 percent 
owned and controlled by U.S.-organized Corporation B, which is, in 
turn, wholly owned and controlled by foreign-organized Corporation 
C. The remaining non-controlling 49 percent equity and voting 
interests in U.S.-organized Corporation A are held by U.S.-organized 
Corporation X, which is, in turn, wholly owned and controlled by 
foreign-organized Corporation Y. Paragraphs (a)(1) and (a)(2) of 
this section require that U.S.-organized Corporation A file a 
petition for declaratory ruling to obtain Commission approval of 
foreign-organized Corporation C's 100 percent ownership interest in 
U.S.-organized parent, Corporation B, and of foreign-organized 
Corporation Y's non-controlling, 49 percent foreign ownership 
interest in U.S.-organized Corporation A through U.S-organized 
Corporation X, which exceed the 25 percent benchmark and 20 percent 
limit in sections 310(b)(4) and 310(b)(3) of the Act, respectively, 
for both equity interests and voting interests. U.S-organized 
Corporation A's petition also must identify and request specific 
approval for ownership interests held by any foreign individual, 
entity, or ``group,'' as defined in paragraph (d) of this section, 
to the extent required by Sec.  1.5001(i).

    (b) Except for petitions involving broadcast stations only, the 
petition for declaratory ruling required by paragraph (a) of this 
section shall be filed electronically on the Internet through the 
International Bureau Filing System (IBFS). For information on filing 
your petition through IBFS, see part 1, subpart Y and the IBFS homepage 
at https://www.fcc.gov/ib. Petitions for declaratory ruling required by 
paragraph (a) of this section involving broadcast stations only shall 
be filed electronically on the Internet through the Media Bureau's 
Consolidated Database System (CDBS) or any successor system thereto 
when submitted to the Commission as part of an application for a 
construction permit, assignment, or transfer of control of a broadcast 
license; if there is no associated construction permit, assignment or 
transfer of control application, petitions for declaratory ruling 
should be filed with the Office of the Secretary via the Commission's 
Electronic Comment Filing System (ECFS).
    (c)(1) Each applicant, licensee, or spectrum lessee filing a 
petition for declaratory ruling required by paragraph (a) of this 
section shall certify to the information contained in the petition in 
accordance with the provisions of Sec.  1.16 and the requirements of 
this paragraph. The certification shall include a statement that the 
applicant, licensee and/or spectrum lessee has calculated the ownership 
interests disclosed in its petition based upon its review of the 
Commission's rules and that the interests disclosed satisfy each of the 
pertinent standards and criteria set forth in the rules.
    (2) Multiple applicants and/or licensees shall file jointly the 
petition for declaratory ruling required by paragraph (a) of this 
section where the entities are under common control and 
contemporaneously hold, or are contemporaneously filing applications 
for, broadcast, common carrier licenses, common carrier spectrum 
leasing arrangements, or aeronautical en route or aeronautical fixed 
radio station licenses. Where joint petitioners have different 
responses to the information required by Sec.  1.5001, such information 
should be set out separately for each joint petitioner, except as 
otherwise permitted in Sec.  1.5001(h)(2).
    (i) Each joint petitioner shall certify to the information 
contained in the petition in accordance with the provisions of Sec.  
1.16 with respect to the information that is pertinent to that 
petitioner. Alternatively, the controlling parent of the joint 
petitioners may certify to the information contained in the petition.
    (ii) Where the petition is being filed in connection with an 
application for consent to transfer control of licenses or spectrum 
leasing arrangements, the transferee or its ultimate controlling parent 
may file the petition on behalf of the licensees or spectrum lessees 
that would be acquired as a result of the proposed transfer of control 
and certify to the information contained in the petition.
    (3) Multiple applicants and licensees shall not be permitted to 
file a petition for declaratory ruling jointly unless they are under 
common control.
    (d) The following definitions shall apply to this section and 
Sec. Sec.  1.5001 through 1.5004.
    (1) Aeronautical radio licenses refers to aeronautical en route and 
aeronautical fixed radio station licenses only. It does not refer to 
other types of aeronautical radio station licenses.
    (2) Affiliate refers to any entity that is under common control 
with a licensee, defined by reference to the holder, directly and/or 
indirectly, of more than 50 percent of total voting power, where no 
other individual or entity has de facto control.
    (3) Control includes actual working control in whatever manner 
exercised and is not limited to majority stock ownership. Control also 
includes direct or indirect control, such as through intervening 
subsidiaries.
    (4) Entity includes a partnership, association, estate, trust, 
corporation, limited liability company, governmental authority or other 
organization.
    (5) Group refers to two or more individuals or entities that have 
agreed to act together for the purpose of acquiring, holding, voting, 
or disposing of their equity and/or voting interests in the relevant 
licensee, controlling U.S. parent, or entity holding a direct and/or 
indirect equity and/or voting interest in the licensee or U.S. parent.
    (6) Individual refers to a natural person as distinguished from a 
partnership, association, corporation, or other organization.
    (7) Licensee as used in Sec. Sec.  1.5000 through 1.5004 of this 
part includes a spectrum lessee as defined in Sec.  1.9003.
    (8) Privately held company refers to a U.S.- or foreign-organized 
company that has not issued a class of equity securities for which 
beneficial ownership reporting is required by security holders and 
other beneficial owners under sections 13(d) or 13(g) of the Securities 
Exchange Act of 1934, as amended, 15 U.S.C. 78a et seq. (Exchange Act), 
and corresponding Exchange Act Rule 13d-1, 17 CFR 240.13d-1, or a 
substantially comparable foreign law or regulation.
    (9) Public company refers to a U.S.- or foreign-organized company 
that has issued a class of equity securities for which beneficial 
ownership reporting is required by security holders and other 
beneficial owners under sections 13(d) or 13(g) of the Securities 
Exchange Act of 1934, as amended, 15 U.S.C. 78a et

[[Page 68825]]

seq. (Exchange Act) and corresponding Exchange Act Rule 13d-1, 17 CFR 
240.13d-1, or a substantially comparable foreign law or regulation.
    (10) Subsidiary refers to any entity in which a licensee owns or 
controls, directly and/or indirectly, more than 50 percent of the total 
voting power of the outstanding voting stock of the entity, where no 
other individual or entity has de facto control.
    (11) Voting stock refers to an entity's corporate stock, 
partnership or membership interests, or other equivalents of corporate 
stock that, under ordinary circumstances, entitles the holders thereof 
to elect the entity's board of directors, management committee, or 
other equivalent of a corporate board of directors.
    (12) Would hold as used in Sec. Sec.  1.5000 through 1.5004 
includes interests that an individual or entity proposes to hold in an 
applicant, licensee, or spectrum lessee, or their controlling U.S. 
parent, upon consummation of any transactions described in the petition 
for declaratory ruling filed under Sec.  1.5000(a)(1) or (2) of this 
part.


Sec.  1.5001  Contents of petitions for declaratory ruling under 
section 310(b) of the Communications Act of 1934, as amended.

    The petition for declaratory ruling required by Sec.  1.5000(a)(1) 
and/or (2) shall contain the following information:
    (a) With respect to each petitioning applicant or licensee, provide 
its name; FCC Registration Number (FRN); mailing address; place of 
organization; telephone number; facsimile number (if available); 
electronic mail address (if available); type of business organization 
(e.g., corporation, unincorporated association, trust, general 
partnership, limited partnership, limited liability company, trust, 
other (include description of legal entity)); name and title of officer 
certifying to the information contained in the petition.
    (b) If the petitioning applicant or licensee is represented by a 
third party (e.g., legal counsel), specify that individual's name, the 
name of the firm or company, mailing address and telephone number/
electronic mail address.
    (c)(1) For each named licensee, list the type(s) of radio service 
authorized (e.g., broadcast service, cellular radio telephone service; 
microwave radio service; mobile satellite service; aeronautical fixed 
service). In the case of broadcast licensees, also list the call sign, 
facility identification number (if applicable), and community of 
license or transmit site for each authorization covered by the 
petition.
    (2) If the petition is filed in connection with an application for 
a radio station license or a spectrum leasing arrangement, or an 
application to acquire a license or spectrum leasing arrangement by 
assignment or transfer of control, specify for each named applicant:
    (i) The File No(s). of the associated application(s), if available 
at the time the petition is filed; otherwise, specify the anticipated 
filing date for each application; and
    (ii) The type(s) of radio services covered by each application 
(e.g., broadcast service, cellular radio telephone service; microwave 
radio service; mobile satellite service; aeronautical fixed service).
    (d) With respect to each petitioner, include a statement as to 
whether the petitioner is requesting a declaratory ruling under Sec.  
1.5000(a)(1) and/or (2).
    (e) Disclosable interest holders--direct U.S. or foreign interests 
in the controlling U.S. parent. Paragraphs (e)(1) through (e)(4) of 
this section apply only to petitions filed under Sec.  1.5000(a)(1) 
and/or (2) for common carrier, aeronautical en route, and aeronautical 
fixed radio station applicants or licensees, as applicable. Petitions 
filed under Sec.  1.5000(a)(1) for broadcast licensees shall provide 
the name of any individual or entity that holds, or would hold, 
directly, an attributable interest in the controlling U.S. parent of 
the petitioning broadcast station applicant(s) or licensee(s), as 
defined in the Notes to Sec.  73.3555 of this chapter. Where no 
individual or entity holds, or would hold, directly, an attributable 
interest in the controlling U.S. parent (for petitions filed under 
Sec.  1.5000(a)(1)), the petition shall specify that no individual or 
entity holds, or would hold, directly, an attributable interest in the 
U.S. parent, applicant(s), or licensee(s).
    (1) Direct U.S. or foreign interests of ten percent or more or a 
controlling interest. With respect to petitions filed under Sec.  
1.5000(a)(1), provide the name of any individual or entity that holds, 
or would hold, directly 10 percent or more of the equity interests and/
or voting interests, or a controlling interest, in the controlling U.S. 
parent of the petitioning common carrier or aeronautical radio station 
applicant(s) or licensee(s) as specified in paragraphs (e)(4)(i) 
through (iv) of this section.
    (2) Direct U.S. or foreign interests of ten percent or more or a 
controlling interest. With respect to petitions filed under Sec.  
1.5000(a)(2), provide the name of any individual or entity that holds, 
or would hold, directly 10 percent or more of the equity interests and/
or voting interests, or a controlling interest, in each petitioning 
common carrier applicant or licensee as specified in paragraphs 
(e)(4)(i) through (iv) of this section.
    (3) Where no individual or entity holds, or would hold, directly 10 
percent or more of the equity interests and/or voting interests, or a 
controlling interest, in the controlling U.S. parent (for petitions 
filed under Sec.  1.5000(a)(1)) or in the applicant or licensee (for 
petitions filed under Sec.  1.5000(a)(2)), the petition shall state 
that no individual or entity holds or would hold directly 10 percent or 
more of the equity interests and/or voting interests, or a controlling 
interest, in the U.S. parent, applicant or licensee.
    (4)(i) Where a named U.S. parent, applicant, or licensee is 
organized as a corporation, provide the name of any individual or 
entity that holds, or would hold, 10 percent or more of the outstanding 
capital stock and/or voting stock, or a controlling interest.
    (ii) Where a named U.S. parent, applicant, or licensee is organized 
as a general partnership, provide the names of the partnership's 
constituent general partners.
    (iii) Where a named U.S. parent, applicant, or licensee is 
organized as a limited partnership or limited liability partnership, 
provide the name(s) of the general partner(s) (in the case of a limited 
partnership), any uninsulated partner(s), and any insulated partner(s) 
with an equity interest in the partnership of at least 10 percent 
(calculated according to the percentage of the partner's capital 
contribution). With respect to each named partner (other than a named 
general partner), the petitioner shall state whether the partnership 
interest is insulated or uninsulated, based on the insulation criteria 
specified in Sec.  1.5003.
    (iv) Where a named U.S. parent, applicant, or licensee is organized 
as a limited liability company, provide the name(s) of each uninsulated 
member, regardless of its equity interest, any insulated member with an 
equity interest of at least 10 percent (calculated according to the 
percentage of its capital contribution), and any non-equity manager(s). 
With respect to each named member, the petitioner shall state whether 
the interest is insulated or uninsulated, based on the insulation 
criteria specified in Sec.  1.5003, and whether the member is a 
manager.

    Note to paragraph (e):  The Commission presumes that a general 
partner of a general partnership or limited partnership has a 
controlling interest in the partnership. A general partner shall in 
all cases be deemed

[[Page 68826]]

to hold an uninsulated interest in the partnership.

    (f) Disclosable interest holders--indirect U.S. or foreign 
interests in the controlling U.S. parent. Paragraphs (f)(1) through (3) 
of this section apply only to petitions filed under Sec.  1.5000(a)(1) 
and/or Sec.  1.5000(a)(2) for common carrier, aeronautical en route, 
and aeronautical fixed radio station applicants or licensees, as 
applicable. Petitions filed under Sec.  1.5000(a)(1) for broadcast 
licensees shall provide the name of any individual or entity that 
holds, or would hold, indirectly, an attributable interest in the 
controlling U.S. parent of the petitioning broadcast station 
applicant(s) or licensee(s), as defined in the Notes to Sec.  73.3555 
of this chapter. Where no individual or entity holds, or would hold, 
indirectly, an attributable interest in the controlling U.S. parent 
(for petitions filed under Sec.  1.5000(a)(1)), the petition shall 
specify that no individual or entity holds, or would hold, indirectly, 
an attributable interest in the U.S. parent, applicant(s), or 
licensee(s).
    (1) Indirect U.S. or foreign interests of ten percent or more or a 
controlling interest. With respect to petitions filed under Sec.  
1.5000(a)(1), provide the name of any individual or entity that holds, 
or would hold, indirectly, through one or more intervening entities, 10 
percent or more of the equity interests and/or voting interests, or a 
controlling interest, in the controlling U.S. parent of the petitioning 
common carrier or aeronautical radio station applicant(s) or 
licensee(s). Equity interests and voting interests held indirectly 
shall be calculated in accordance with the principles set forth in 
Sec.  1.5002.
    (2) Indirect U.S. or foreign interests of ten percent or more or a 
controlling interest. With respect to petitions filed under Sec.  
1.5000(a)(2), provide the name of any individual or entity that holds, 
or would hold, indirectly, through one or more intervening entities, 10 
percent or more of the equity interests and/or voting interests, or a 
controlling interest, in the petitioning common carrier radio station 
applicant(s) or licensee(s). Equity interests and voting interests held 
indirectly shall be calculated in accordance with the principles set 
forth in Sec.  1.5002.
    (3) Where no individual or entity holds, or would hold, indirectly 
10 percent or more of the equity interests and/or voting interests, or 
a controlling interest, in the controlling U.S. parent (for petitions 
filed under Sec.  1.5000(a)(1)) or in the petitioning applicant(s) or 
licensee(s) (for petitions filed under Sec.  1.5000(a)(2)), the 
petition shall specify that no individual or entity holds indirectly 10 
percent or more of the equity interests and/or voting interests, or a 
controlling interest, in the U.S. parent, applicant(s), or licensee(s).

    Note to paragraph (f):  The Commission presumes that a general 
partner of a general partnership or limited partnership has a 
controlling interest in the partnership. A general partner shall in 
all cases be deemed to hold an uninsulated interest in the 
partnership.

    (g)(1) Citizenship and other information for disclosable interests 
in common carrier, aeronautical en route, and aeronautical fixed radio 
station applicants and licensees. For each 10 percent interest holder 
named in response to paragraphs (e) and (f) of this section, specify 
the equity interest held and the voting interest held (each to the 
nearest one percent); in the case of an individual, his or her 
citizenship; and in the case of a business organization, its place of 
organization, type of business organization (e.g., corporation, 
unincorporated association, trust, general partnership, limited 
partnership, limited liability company, trust, other (include 
description of legal entity)), and principal business(es).
    (2) Citizenship and other information for attributable interests in 
broadcast station applicants and licensees. For each attributable 
interest holder named in response to paragraphs (e) and (f) of this 
section, describe the nature of the attributable interest and, if 
applicable, specify the equity interest held and the voting interest 
held (each to the nearest one percent); in the case of an individual, 
his or her citizenship; and in the case of a business organization, its 
place of organization, type of business organization (e.g., 
corporation, unincorporated association, trust, general partnership, 
limited partnership, limited liability company, trust, other (include 
description of legal entity)), and principal business(es).
    (h)(1) Estimate of aggregate foreign ownership. For petitions filed 
under Sec.  1.5000(a)(1), attach an exhibit that provides a percentage 
estimate of the controlling U.S. parent's aggregate direct and/or 
indirect foreign equity interests and its aggregate direct and/or 
indirect foreign voting interests. For petitions filed under Sec.  
1.5000(a)(2), attach an exhibit that provides a percentage estimate of 
the aggregate foreign equity interests and aggregate foreign voting 
interests held directly in the petitioning applicant(s) and/or 
licensee(s), if any, and the aggregate foreign equity interests and 
aggregate foreign voting interests held indirectly in the petitioning 
applicant(s) and/or licensee(s). The exhibit required by this paragraph 
must also provide a general description of the methods used to 
determine the percentages; and a statement addressing the circumstances 
that prompted the filing of the petition and demonstrating that the 
public interest would be served by grant of the petition.
    (2) Ownership and control structure. Attach an exhibit that 
describes the ownership and control structure of the applicant(s) and/
or licensee(s) that are the subject of the petition, including an 
ownership diagram and identification of the real party-in-interest 
disclosed in any companion applications. The ownership diagram should 
illustrate the petitioner's vertical ownership structure, including the 
controlling U.S. parent named in the petition (for petitions filed 
under Sec.  1.5000(a)(1)) and either
    (i) For common carrier, aeronautical en route, and aeronautical 
fixed radio station applicants and licensees, the direct and indirect 
ownership (equity and voting) interests held by the individual(s) and/
or entity(ies) named in response to paragraphs (e) and (f) of this 
section; or
    (ii) For broadcast station applicants and licensees, the 
attributable interest holders named in response to paragraphs (e) and 
(f) of this section. Each such individual or entity shall be depicted 
in the ownership diagram and all controlling interests labeled as such. 
Where the petition includes multiple petitioners, the ownership of all 
petitioners may be depicted in a single ownership diagram or in 
multiple diagrams.
    (i) Requests for specific approval. Provide, as required or 
permitted by this paragraph, the name of each foreign individual and/or 
entity for which each petitioner requests specific approval, if any, 
and the respective percentages of equity and/or voting interests (to 
the nearest one percent) that each such foreign individual or entity 
holds, or would hold, directly and/or indirectly, in the controlling 
U.S. parent of the petitioning broadcast, common carrier or 
aeronautical radio station applicant(s) or licensee(s) for petitions 
filed under Sec.  1.5000(a)(1), and in each petitioning common carrier 
applicant or licensee for petitions filed under Sec.  1.5000(a)(2).
    (1) Each petitioning broadcast, common carrier or aeronautical 
radio station applicant or licensee filing under Sec.  1.5000(a)(1) 
shall identify and request specific approval for any foreign 
individual, entity, or group of such individuals or entities that 
holds, or would hold, directly and/or indirectly, more than 5 percent 
of the equity and/or voting interests, or a controlling

[[Page 68827]]

interest, in the petitioner's controlling U.S. parent unless the 
foreign investment is exempt under paragraph (i)(3) of this section. 
Equity and voting interests shall be calculated in accordance with the 
principles set forth in paragraphs (e) and (f) of this section and in 
Sec.  1.5002.
    Note to paragraph (i)(1): Solely for the purpose of identifying 
foreign interests that require specific approval under this paragraph 
(i), broadcast station applicants and licensees filing petitions under 
Sec.  1.5000(a)(1) should calculate equity and voting interests in 
accordance with the principles set forth in paragraphs (e) and (f) of 
this section and in Sec.  1.5002 and not as set forth in the Notes to 
Sec.  73.3555 of this chapter, to the extent that there are any 
differences in such calculation methods.
    (2) Each petitioning common carrier radio station applicant or 
licensee filing under Sec.  1.5000(a)(2) shall identify and request 
specific approval for any foreign individual, entity, or group of such 
individuals or entities that holds, or would hold, directly, and/or 
indirectly through one or more intervening U.S.-organized entities that 
do not control the applicant or licensee, more than 5 percent of the 
equity and/or voting interests in the applicant or licensee unless the 
foreign investment is exempt under paragraph (i)(3) of this section. 
Equity and voting interests shall be calculated in accordance with the 
principles set forth in paragraphs (e) and (f) of this section and in 
Sec.  1.5002.

    Note 1 to paragraphs (i)(1) and (2):  Certain foreign interests 
of 5 percent or less may require specific approval under paragraphs 
(i)(1) and (2). See the Note to paragraph (i)(3)(ii)(C) of this 
section.


    Note 2 to paragraphs (i)(1) and (2): Two or more individuals or 
entities will be treated as a ``group'' when they have agreed to act 
together for the purpose of acquiring, holding, voting, or disposing 
of their equity and/or voting interests in the licensee and/or 
controlling U.S. parent of the licensee or in any intermediate 
company(ies) through which any of the individuals or entities holds 
its interests in the licensee and/or controlling U.S. parent of the 
licensee.

    (3) A foreign investment is exempt from the specific approval 
requirements of paragraphs (i)(1) and (2) of this section where:
    (i) The foreign individual or entity holds, or would hold, directly 
and/or indirectly, no more than 10 percent of the equity and/or voting 
interests of the U.S. parent (for petitions filed under Sec.  
1.5000(a)(1)) or the petitioning applicant or licensee (for petitions 
filed under Sec.  1.5000(a)(2)); and
    (ii) The foreign individual or entity does not hold, and would not 
hold, a controlling interest in the petitioner or any controlling 
parent company, does not plan or intend to change or influence control 
of the petitioner or any controlling parent company, does not possess 
or develop any such purpose, and does not take any action having such 
purpose or effect. The Commission will presume, in the absence of 
evidence to the contrary, that the following interests satisfy this 
criterion for exemption from the specific approval requirements in 
paragraphs (i)(1) and (2) of this section:
    (A) Where the petitioning applicant or licensee, controlling U.S. 
parent, or entity holding a direct or indirect equity and/or voting 
interest in the applicant/licensee or U.S. parent is a ``public 
company,'' as defined in Sec.  1.5000(d)(9), provided that the foreign 
holder is an institutional investor that is eligible to report its 
beneficial ownership interests in the company's voting, equity 
securities in excess of 5 percent (not to exceed 10 percent) pursuant 
to Exchange Act Rule 13d-1(b), 17 CFR 240.13d-1(b), or a substantially 
comparable foreign law or regulation. This presumption shall not apply 
if the foreign individual, entity or group holding such interests is 
obligated to report its holdings in the company pursuant to Exchange 
Act Rule 13d-1(a), 17 CFR 240.13d-1(a), or a substantially comparable 
foreign law or regulation.

    Example. Common carrier applicant (``Applicant'') is preparing a 
petition for declaratory ruling to request Commission approval for 
foreign ownership of its controlling, U.S.-organized parent (``U.S. 
Parent'') to exceed the 25 percent benchmark in section 310(b)(4) of 
the Act. Applicant does not currently hold any FCC licenses. Shares 
of U.S. Parent trade publicly on the New York Stock Exchange. Based 
on a shareholder survey and a review of its shareholder records, 
U.S. Parent has determined that its aggregate foreign ownership on 
any given day may exceed an aggregate 25 percent, including a six 
percent common stock interest held by a foreign-organized mutual 
fund (``Foreign Fund''). U.S. Parent has confirmed that Foreign Fund 
is not currently required to report its interest pursuant to 
Exchange Act Rule 13d-1(a) and instead is eligible to report its 
interest pursuant to Exchange Act Rule 13d-1(b). U.S. Parent also 
has confirmed that Foreign Fund does not hold any other interests in 
U.S. Parent's equity securities, whether of a class of voting or 
non-voting securities. Applicant may, but is not required to, 
request specific approval of Foreign Fund's six percent interest in 
U.S. Parent.

    Note to paragraph (i)(3)(ii)(A): Where an institutional investor 
holds voting, equity securities that are subject to reporting under 
Exchange Act Rule 13d-1, 17 CFR 240.13d-1, or a substantially 
comparable foreign law or regulation, in addition to equity 
securities that are not subject to such reporting, the investor's 
total capital stock interests may be aggregated and treated as 
exempt from the 5 percent specific approval requirement in 
paragraphs (i)(1) and (2) of this section so long as the aggregate 
amount of the institutional investor's holdings does not exceed ten 
percent of the company's total capital stock or voting rights and 
the investor is eligible to certify under Exchange Act Rule 13d-
1(b), 17 CFR 240.13d-1(b), or a substantially comparable foreign law 
or regulation that it has acquired its capital stock interests in 
the ordinary course of business and not with the purpose nor with 
the effect of changing or influencing the control of the company. In 
calculating foreign equity and voting interests, the Commission does 
not consider convertible interests such as options, warrants and 
convertible debentures until converted, unless specifically 
requested by the petitioner, i.e., where the petitioner is 
requesting approval so those rights can be exercised in a particular 
case without further Commission approval.

    (B) Where the petitioning applicant or licensee, controlling U.S. 
parent, or entity holding a direct and/or indirect equity and/or voting 
interest in the applicant/licensee or U.S. parent is a ``privately 
held'' corporation, as defined in Sec.  1.5000(d)(8), provided that a 
shareholders' agreement, or similar voting agreement, prohibits the 
foreign holder from becoming actively involved in the management or 
operation of the corporation and limits the foreign holder's voting and 
consent rights, if any, to the minority shareholder protections listed 
in paragraph (i)(5) of this section.
    (C) Where the petitioning applicant or licensee, controlling U.S. 
parent, or entity holding a direct and/or indirect equity and/or voting 
interest in the licensee or U.S. parent is ``privately held,'' as 
defined in Sec.  1.5000(d)(8), and is organized as a limited 
partnership, limited liability company (``LLC''), or limited liability 
partnership (``LLP''), provided that the foreign holder is 
``insulated'' in accordance with the criteria specified in Sec.  
1.5003.

    Note to paragraph (i)(3)(ii)(C):  For purposes of identifying 
foreign interests that require specific approval, uninsulated 
partners, uninsulated LLC members, and non-member LLC managers are 
deemed to hold the same voting interest as the partnership or LLC 
holds in the company situated in the next lower tier of the 
petitioner's vertical ownership chain. See Sec.  1.5002(b)(2)(ii)(A) 
and (b)(2)(iii)(A). Depending on the particular ownership structure 
presented in the petition, a foreign uninsulated partner, LLC 
member, or non-member LLC manager may be deemed to hold a direct or 
indirect voting interest in the controlling U.S. parent (for 
petitions filed under Sec.  1.5000(a)(1)) or in the petitioning

[[Page 68828]]

applicant or licensee (for petitions filed under Sec.  1.5000(a)(2)) 
that requires specific approval because the voting interest exceeds 
the 5 percent amount specified in paragraphs (i)(1) and (2) of this 
section and, because it is an uninsulated interest, the voting 
interest would not qualify as exempt from specific approval under 
this paragraph (i)(3)(ii)(C) even in circumstances where the voting 
interest does not exceed 10 percent.

    (4) A petitioner may, but is not required to, request specific 
approval for any other foreign individual or entity that holds, or 
would hold, a direct and/or indirect equity and/or voting interest in 
the controlling U.S. parent (for petitions filed under Sec.  
1.5000(a)(1)) or in the petitioning applicant or licensee (for 
petitions filed under Sec.  1.5000(a)(2)).
    (5) The minority shareholder protections referenced in paragraph 
(i)(3)(ii)(B) of this section consist of the following rights:
    (i) The power to prevent the sale or pledge of all or substantially 
all of the assets of the corporation or a voluntary filing for 
bankruptcy or liquidation;
    (ii) The power to prevent the corporation from entering into 
contracts with majority shareholders or their affiliates;
    (iii) The power to prevent the corporation from guaranteeing the 
obligations of majority shareholders or their affiliates;
    (iv) The power to purchase an additional interest in the 
corporation to prevent the dilution of the shareholder's pro rata 
interest in the event that the corporation issues additional 
instruments conveying shares in the company;
    (v) The power to prevent the change of existing legal rights or 
preferences of the shareholders, as provided in the charter, by-laws or 
other operative governance documents;
    (vi) The power to prevent the amendment of the charter, by-laws or 
other operative governance documents of the company with respect to the 
matters described in paragraph (i)(5)(i) through (v) of this section.
    (6) The Commission reserves the right to consider, on a case-by-
case basis, whether voting or consent rights over matters other than 
those listed in paragraph (i)(5) of this section shall be considered 
permissible minority shareholder protections in a particular case.
    (j) For each foreign individual or entity named in response to 
paragraph (i) of this section, provide the following information:
    (1) In the case of an individual, his or her citizenship and 
principal business(es);
    (2) In the case of a business organization:
    (i) Its place of organization, type of business organization (e.g., 
corporation, unincorporated association, trust, general partnership, 
limited partnership, limited liability company, trust, other (include 
description of legal entity)), and principal business(es);
    (ii)(A) For common carrier, aeronautical en route, and aeronautical 
fixed radio station applicants and licensees, the name of any 
individual or entity that holds, or would hold, directly and/or 
indirectly, through one or more intervening entities, 10 percent or 
more of the equity interests and/or voting interests, or a controlling 
interest, in the foreign entity for which the petitioner requests 
specific approval. Specify for each such interest holder, his or her 
citizenship (for individuals) or place of legal organization (for 
entities). Equity interests and voting interests held indirectly shall 
be calculated in accordance with the principles set forth in Sec.  
1.5002.
    (B) For broadcast applicants and licensees, the name of any 
individual or entity that holds, or would hold, directly and/or 
indirectly, through one or more intervening entities, an attributable 
interest in the foreign entity for which the petitioner requests 
specific approval. Specify for each such interest holder, his or her 
citizenship (for individuals) or place of legal organization (for 
entities). Attributable interests shall be calculated in accordance 
with the principles set forth in the Notes to Sec.  73.3555 of this 
chapter.
    (iii)(A) For common carrier, aeronautical en route, and 
aeronautical fixed radio station applicants and licensees, where no 
individual or entity holds, or would hold, directly and/or indirectly, 
10 percent or more of the equity interests and/or voting interests, or 
a controlling interest, the petition shall specify that no individual 
or entity holds, or would hold, directly and/or indirectly, 10 percent 
or more of the equity interests and/or voting interests, or a 
controlling interest, in the foreign entity for which the petitioner 
requests specific approval.
    (B) For broadcast applicants and licensees, where no individual or 
entity holds, or would hold, directly and/or indirectly, an 
attributable interest in the foreign entity, the petition shall specify 
that no individual or entity holds, or would hold, directly and/or 
indirectly, an attributable interest in the foreign entity for which 
the petitioner requests specific approval.
    (k) Requests for advance approval. The petitioner may, but is not 
required to, request advance approval in its petition for any foreign 
individual or entity named in response to paragraph (i) of this section 
to increase its direct and/or indirect equity and/or voting interests 
in the controlling U.S. parent of the broadcast, common carrier or 
aeronautical radio station licensee, for petitions filed under Sec.  
1.5000(a)(1), and/or in the common carrier licensee, for petitions 
filed under Sec.  1.5000(a)(2), above the percentages specified in 
response to paragraph (i) of this section. Requests for advance 
approval shall be made as follows:
    (1) Petitions filed under Sec.  1.5000(a)(1). Where a foreign 
individual or entity named in response to paragraph (i) of this section 
holds, or would hold upon consummation of any transactions described in 
the petition, a de jure or de facto controlling interest in the 
controlling U.S. parent, the petitioner may request advance approval in 
its petition for the foreign individual or entity to increase its 
interests, at some future time, up to any amount, including 100 percent 
of the direct and/or indirect equity and/or voting interests in the 
U.S. parent. The petitioner shall specify for the named controlling 
foreign individual(s) or entity(ies) the maximum percentages of equity 
and/or voting interests for which advance approval is sought or, in 
lieu of a specific amount, state that the petitioner requests advance 
approval for the named controlling foreign individual or entity to 
increase its interests up to and including 100 percent of the U.S. 
parent's direct and/or indirect equity and/or voting interests.
    (2) Petitions filed under Sec.  1.5000(a)(1) and/or (2). Where a 
foreign individual or entity named in response to paragraph (i) of this 
section holds, or would hold upon consummation of any transactions 
described in the petition, a non-controlling interest in the 
controlling U.S. parent of the licensee, for petitions filed under 
Sec.  1.5000(a)(1), or in the licensee, for petitions filed under Sec.  
1.5000(a)(2), the petitioner may request advance approval in its 
petition for the foreign individual or entity to increase its 
interests, at some future time, up to any non-controlling amount not to 
exceed 49.99 percent. The petitioner shall specify for the named 
foreign individual(s) or entity(ies) the maximum percentages of equity 
and/or voting interests for which advance approval is sought or, in 
lieu of a specific amount, shall state that the petitioner requests 
advance approval for the named foreign individual(s) or entity(ies) to 
increase their interests up to and including a non-controlling 49.99 
percent equity and/or voting interest in the licensee, for petitions 
filed under Sec.  1.5000(a)(2), or in the controlling U.S.

[[Page 68829]]

parent of the licensee, for petitions filed under Sec.  1.5000(a)(1).
    (l) Each applicant, licensee, or spectrum lessee filing a petition 
for declaratory ruling shall certify to the information contained in 
the petition in accordance with the provisions of Sec.  1.16 and the 
requirements of Sec.  1.5000(c)(1).


Sec.  1.5002  How to calculate indirect equity and voting interests.

    (a) The criteria specified in this section shall be used for 
purposes of calculating indirect equity and voting interests under 
Sec.  1.5001.
    (b)(1) Equity interests held indirectly in the licensee and/or 
controlling U.S. parent. Equity interests that are held by an 
individual or entity indirectly through one or more intervening 
entities shall be calculated by successive multiplication of the equity 
percentages for each link in the vertical ownership chain, regardless 
of whether any particular link in the chain represents a controlling 
interest in the company positioned in the next lower tier.

    Example under Sec.  1.5000(a)(1).  Assume that a foreign 
individual holds a non-controlling 30 percent equity and voting 
interest in U.S.-organized Corporation A which, in turn, holds a 
non-controlling 40 percent equity and voting interest in U.S.-
organized Parent Corporation B. The foreign individual's equity 
interest in U.S.-organized Parent Corporation B would be calculated 
by multiplying the foreign individual's equity interest in U.S.-
organized Corporation A by that entity's equity interest in U.S.-
organized Parent Corporation B. The foreign individual's equity 
interest in U.S.-organized Parent Corporation B would be calculated 
as 12 percent (30% x 40% = 12%). The result would be the same even 
if U.S.-organized Corporation A held a de facto controlling interest 
in U.S.-organized Parent Corporation B.

    (2) Voting interests held indirectly in the licensee and/or 
controlling U.S. parent. Voting interests that are held by any 
individual or entity indirectly through one or more intervening 
entities will be determined depending upon the type of business 
organization(s) in which the individual or entity holds a voting 
interest as follows:
    (i) Voting interests that are held through one or more intervening 
corporations shall be calculated by successive multiplication of the 
voting percentages for each link in the vertical ownership chain, 
except that wherever the voting interest for any link in the chain is 
equal to or exceeds 50 percent or represents actual control, it shall 
be treated as if it were a 100 percent interest.

    Example under Sec.  1.5000(a)(1).  Assume that a foreign 
individual holds a non-controlling 30 percent equity and voting 
interest in U.S.-organized Corporation A which, in turn, holds a 
controlling 70 percent equity and voting interest in U.S.-organized 
Parent Corporation B. Because U.S.-organized Corporation A's 70 
percent voting interest in U.S.-organized Parent Corporation B 
constitutes a controlling interest, it is treated as a 100 percent 
interest. The foreign individual's 30 percent voting interest in 
U.S.-organized Corporation A would flow through in its entirety to 
U.S. Parent Corporation B and thus be calculated as 30 percent (30% 
x 100% = 30%).

    (ii) Voting interests that are held through one or more intervening 
partnerships shall be calculated depending upon whether the individual 
or entity holds a general partnership interest, an uninsulated 
partnership interest, or an insulated partnership interest as specified 
in paragraphs (b)(2)(ii)(A) and (B) of this section.
    (A) General partnership and other uninsulated partnership 
interests. A general partner and uninsulated partner shall be deemed to 
hold the same voting interest as the partnership holds in the company 
situated in the next lower tier of the vertical ownership chain. A 
partner shall be treated as uninsulated unless the limited partnership 
agreement, limited liability partnership agreement, or other operative 
agreement satisfies the insulation criteria specified in Sec.  1.5003.
    (B) Insulated partnership interests. A partner of a limited 
partnership (other than a general partner) or partner of a limited 
liability partnership that satisfies the insulation criteria specified 
in Sec.  1.5003 shall be treated as an insulated partner and shall be 
deemed to hold a voting interest in the partnership that is equal to 
the partner's equity interest.

    Note to paragraph (b)(2)(ii):  The Commission presumes that a 
general partner of a general partnership or limited partnership has 
a controlling interest in the partnership. A general partner shall 
in all cases be deemed to hold an uninsulated interest in the 
partnership.

    (iii) Voting interests that are held through one or more 
intervening limited liability companies shall be calculated depending 
upon whether the individual or entity is a non-member manager, an 
uninsulated member or an insulated member as specified in paragraphs 
(b)(2)(iii)(A) and (B) of this section.
    (A) Non-member managers and uninsulated membership interests. A 
non-member manager and an uninsulated member of a limited liability 
company shall be deemed to hold the same voting interest as the limited 
liability company holds in the company situated in the next lower tier 
of the vertical ownership chain. A member shall be treated as 
uninsulated unless the limited liability company agreement satisfies 
the insulation criteria specified in Sec.  1.5003.
    (B) Insulated membership interests. A member of a limited liability 
company that satisfies the insulation criteria specified in Sec.  
1.5003 shall be treated as an insulated member and shall be deemed to 
hold a voting interest in the limited liability company that is equal 
to the member's equity interest.


Sec.  1.5003  Insulation criteria for interests in limited 
partnerships, limited liability partnerships, and limited liability 
companies.

    (a) A limited partner of a limited partnership and a partner of a 
limited liability partnership shall be treated as uninsulated within 
the meaning of Sec.  1.5002(b)(2)(ii)(A) unless the partner is 
prohibited by the limited partnership agreement, limited liability 
partnership agreement, or other operative agreement from, and in fact 
is not engaged in, active involvement in the management or operation of 
the partnership and only the usual and customary investor protections 
are contained in the partnership agreement or other operative 
agreement. These criteria apply to any relevant limited partnership or 
limited liability partnership, whether it is the licensee, a 
controlling U.S.-organized parent, or any partnership situated above 
them in the vertical chain of ownership. Notwithstanding the foregoing, 
the insulation of limited partnership and limited liability partnership 
interests for broadcast applicants and licensees shall be determined in 
accordance with Note 2(f) of Sec.  73.3555 of this chapter.
    (b) A member of a limited liability company shall be treated as 
uninsulated for purposes of Sec.  1.5002(b)(2)(iii)(A) unless the 
member is prohibited by the limited liability company agreement from, 
and in fact is not engaged in, active involvement in the management or 
operation of the company and only the usual and customary investor 
protections are contained in the agreement. These criteria apply to any 
relevant limited liability company, whether it is the licensee, a 
controlling U.S.-organized parent, or any limited liability company 
situated above them in the vertical chain of ownership. Notwithstanding 
the foregoing, the insulation of limited liability company interests 
for broadcast applicants and licensees shall be determined in 
accordance with Note 2(f) of Sec.  73.3555 of this chapter.
    (c) The usual and customary investor protections referred to in 
paragraphs (a) and (b) of this section shall consist of:

[[Page 68830]]

    (1) The power to prevent the sale or pledge of all or substantially 
all of the assets of the limited partnership, limited liability 
partnership, or limited liability company or a voluntary filing for 
bankruptcy or liquidation;
    (2) The power to prevent the limited partnership, limited liability 
partnership, or limited liability company from entering into contracts 
with majority investors or their affiliates;
    (3) The power to prevent the limited partnership, limited liability 
partnership, or limited liability company from guaranteeing the 
obligations of majority investors or their affiliates;
    (4) The power to purchase an additional interest in the limited 
partnership, limited liability partnership, or limited liability 
company to prevent the dilution of the partner's or member's pro rata 
interest in the event that the limited partnership, limited liability 
partnership, or limited liability company issues additional instruments 
conveying interests in the partnership or company;
    (5) The power to prevent the change of existing legal rights or 
preferences of the partners, members, or managers as provided in the 
limited partnership agreement, limited liability partnership agreement, 
or limited liability company agreement, or other operative agreement;
    (6) The power to vote on the removal of a general partner, managing 
partner, managing member, or other manager in situations where such 
individual or entity is subject to bankruptcy, insolvency, 
reorganization, or other proceedings relating to the relief of debtors; 
adjudicated insane or incompetent by a court of competent jurisdiction 
(in the case of a natural person); convicted of a felony; or otherwise 
removed for cause, as determined by an independent party;
    (7) The power to prevent the amendment of the limited partnership 
agreement, limited liability partnership agreement, or limited 
liability company agreement, or other organizational documents of the 
partnership or limited liability company with respect to the matters 
described in paragraph (c)(1) through (c)(6) of this section.
    (d) The Commission reserves the right to consider, on a case-by-
case basis, whether voting or consent rights over matters other than 
those listed in paragraph (c) of this section shall be considered usual 
and customary investor protections in a particular case.


Sec.  1.5004  Routine terms and conditions.

    Foreign ownership rulings issued pursuant to Sec. Sec.  1.5000 
through 1.5004 shall be subject to the following terms and conditions, 
except as otherwise specified in a particular ruling:
    (a)(1) Aggregate allowance for rulings issued under Sec.  
1.5000(a)(1). In addition to the foreign ownership interests approved 
specifically in a licensee's declaratory ruling issued pursuant to 
Sec.  1.5000(a)(1), the controlling U.S.-organized parent named in the 
ruling (or a U.S.-organized successor-in-interest formed as part of a 
pro forma reorganization) may be 100 percent owned, directly and/or 
indirectly through one or more U.S- or foreign-organized entities, on a 
going-forward basis (i.e., after issuance of the ruling) by other 
foreign investors without prior Commission approval. This ``100 percent 
aggregate allowance'' is subject to the requirement that the licensee 
seek and obtain Commission approval before any foreign individual, 
entity, or ``group'' not previously approved acquires, directly and/or 
indirectly, more than five percent of the U.S. parent's outstanding 
capital stock (equity) and/or voting stock, or a controlling interest, 
with the exception of any foreign individual, entity, or ``group'' that 
acquires an equity and/or voting interest of ten percent or less, 
provided that the interest is exempt under Sec.  1.5001(i)(3).
    (2) Aggregate allowance for rulings issued under Sec.  
1.5000(a)(2). In addition to the foreign ownership interests approved 
specifically in a licensee's declaratory ruling issued pursuant to 
Sec.  1.5000(a)(2), the licensee(s) named in the ruling (or a U.S.-
organized successor-in-interest formed as part of a pro forma 
reorganization) may be 100 percent owned on a going forward basis 
(i.e., after issuance of the ruling) by other foreign investors holding 
interests in the licensee indirectly through U.S.-organized entities 
that do not control the licensee, without prior Commission approval. 
This ``100 percent aggregate allowance'' is subject to the requirement 
that the licensee seek and obtain Commission approval before any 
foreign individual, entity, or ``group'' not previously approved 
acquires directly and/or indirectly, through one or more U.S.-organized 
entities that do not control the licensee, more than five percent of 
the licensee's outstanding capital stock (equity) and/or voting stock, 
with the exception of any foreign individual, entity, or ``group'' that 
acquires an equity and/or voting interest of ten percent or less, 
provided that the interest is exempt under Sec.  1.5001(i)(3). Foreign 
ownership interests held directly in a licensee shall not be permitted 
to exceed an aggregate 20 percent of the licensee's equity and/or 
voting interests.

    Note to paragraph (a): Licensees have an obligation to monitor 
and stay ahead of changes in foreign ownership of their controlling 
U.S.-organized parent companies (for rulings issued pursuant to 
Sec.  1.5000(a)(1)) and/or in the licensee itself (for rulings 
issued pursuant to Sec.  1.5000(a)(2)), to ensure that the licensee 
obtains Commission approval before a change in foreign ownership 
renders the licensee out of compliance with the terms and conditions 
of its declaratory ruling(s) or the Commission's rules. Licensees, 
their controlling parent companies, and other entities in the 
licensee's vertical ownership chain may need to place restrictions 
in their bylaws or other organizational documents to enable the 
licensee to ensure compliance with the terms and conditions of its 
declaratory ruling(s) and the Commission's rules.

    Example 1 (for rulings issued under Sec.  1.5000(a)(1)).  U.S. 
Corp. files an application for a common carrier license. U.S. Corp. 
is wholly owned and controlled by U.S. Parent, which is a newly 
formed, privately held Delaware Corporation in which no single 
shareholder has de jure or de facto control. A shareholders' 
agreement provides that a five-member board of directors shall 
govern the affairs of the company; five named shareholders shall be 
entitled to one seat and one vote on the board; and all decisions of 
the board shall be determined by majority vote. The five named 
shareholders and their respective equity interests are as follows: 
Foreign Entity A, which is wholly owned and controlled by a foreign 
citizen (5 percent); Foreign Entity B, which is wholly owned and 
controlled by a foreign citizen (10 percent); Foreign Entity C, a 
foreign public company with no controlling shareholder (20 percent); 
Foreign Entity D, a foreign pension fund that is controlled by a 
foreign citizen and in which no individual or entity has a pecuniary 
interest exceeding one percent (21 percent); and U.S. Entity E, a 
U.S. public company with no controlling shareholder (25 percent). 
The remaining 19 percent of U.S. Parent's shares are held by three 
foreign-organized entities as follows: F (4 percent), G (6 percent), 
and H (9 percent). Under the shareholders' agreement, voting rights 
of F, G, and H are limited to the minority shareholder protections 
listed in Sec.  1.5001(i)(5). Further, the agreement expressly 
prohibits G and H from becoming actively involved in the management 
or operation of U.S. Parent and U.S. Corp.
    As required by the rules, U.S. Corp. files a section 310(b)(4) 
petition concurrently with its application. The petition identifies 
and requests specific approval for the ownership interests held in 
U.S. Parent by Foreign Entity A and its sole shareholder (5 percent 
equity and 20 percent voting interest); Foreign Entity B and its 
sole shareholder (10 percent equity and 20 percent voting interest), 
Foreign Entity C (20 percent equity and 20 percent voting interest), 
and Foreign Entity D (21 percent equity and 20 percent

[[Page 68831]]

voting interest) and its fund manager (20 percent voting interest). 
The Commission's ruling specifically approves these foreign 
interests. The ruling also provides that, on a going-forward basis, 
U.S. Parent may be 100 percent owned in the aggregate, directly and/
or indirectly, by other foreign investors, subject to the 
requirement that U.S. Corp. seek and obtain Commission approval 
before any previously unapproved foreign investor acquires more than 
five percent of U.S. Parent's equity and/or voting interests, or a 
controlling interest, with the exception of any foreign investor 
that acquires an equity and/or voting interest of ten percent or 
less, provided that the interest is exempt under Sec.  1.991(i)(3).
    In this case, foreign entities F, G, and H would each be 
considered a previously unapproved foreign investor (along with any 
new foreign investors). However, prior approval for F, G and H would 
only apply to an increase of F's interest above five percent 
(because the ten percent exemption under Sec.  1.5001(i)(3) does not 
apply to F) or to an increase of G's or H's interest above ten 
percent (because G and H do qualify for this exemption). U.S. Corp. 
would also need Commission approval before Foreign Entity D appoints 
a new fund manager that is a non-U.S. citizen and before Foreign 
Entities A, B, C, or D increase their respective equity and/or 
voting interests in U.S. Parent, unless the petition previously 
sought and obtained Commission approval for such increases (up to 
non-controlling 49.99 percent interests). (See Sec.  1.5001(k)(2).) 
Foreign shareholders of Foreign Entity C and U.S. Entity E would 
also be considered previously unapproved foreign investors. Thus, 
Commission approval would be required before any foreign shareholder 
of Foreign Entity C or U.S. Entity E acquires (1) a controlling 
interest in either company; or (2) a non-controlling equity and/or 
voting interest in either company that, when multiplied by the 
company's equity and/or voting interests in U.S. Parent, would 
exceed 5 percent of U.S. Parent's equity and/or voting interests, 
unless the interest is exempt under Sec.  1.5001(i)(3).
    Example 2 (for rulings issued under Sec.  1.5000(a)(2)).  Assume 
that the following three U.S.-organized entities hold non-
controlling equity and voting interests in common carrier Licensee, 
which is a privately held corporation organized in Delaware: U.S. 
corporation A (30 percent); U.S. corporation B (30 percent); and 
U.S. corporation C (40 percent). Licensee's shareholders are wholly 
owned by foreign individuals X, Y, and Z, respectively. Licensee has 
received a declaratory ruling under Sec.  1.5000(a)(2) specifically 
approving the 30 percent foreign ownership interests held in 
Licensee by each of X and Y (through U.S. corporation A and U.S. 
corporation B, respectively) and the 40 percent foreign ownership 
interest held in Licensee by Z (through U.S. corporation C). On a 
going-forward basis, Licensee may be 100 percent owned in the 
aggregate by X, Y, Z, and other foreign investors holding interests 
in Licensee indirectly, through U.S.-organized entities that do not 
control Licensee, subject to the requirement that Licensee obtain 
Commission approval before any previously unapproved foreign 
investor acquires more than five percent of Licensee's equity and/or 
voting interests, with the exception of any foreign investor that 
acquires an equity and/or voting interest of ten percent or less, 
provided that the interest is exempt under Sec.  1.5001(i)(3). In 
this case, any foreign investor other than X, Y, and Z would be 
considered a previously unapproved foreign investor. Licensee would 
also need Commission approval before X, Y, or Z increases its equity 
and/or voting interests in Licensee unless the petition previously 
sought and obtained Commission approval for such increases (up to 
non-controlling 49.99 percent interests). (See Sec.  1.5001(k)(2).)

    (b) Subsidiaries and affiliates. A foreign ownership ruling issued 
to a licensee shall cover it and any U.S.-organized subsidiary or 
affiliate, as defined in Sec.  1.5000(d), whether the subsidiary or 
affiliate existed at the time the ruling was issued or was formed or 
acquired subsequently, provided that the foreign ownership of the 
licensee named in the ruling, and of the subsidiary and/or affiliate, 
remains in compliance with the terms and conditions of the licensee's 
ruling and the Commission's rules.
    (1) The subsidiary or affiliate of a licensee named in a foreign 
ownership ruling issued under Sec.  1.5000(a)(1) may rely on that 
ruling for purposes of filing its own application for an initial 
broadcast, common carrier or aeronautical license or spectrum leasing 
arrangement, or an application to acquire such license or spectrum 
leasing arrangement by assignment or transfer of control provided that 
the subsidiary or affiliate, and the licensee named in the ruling, each 
certifies in the application that its foreign ownership is in 
compliance with the terms and conditions of the foreign ownership 
ruling and the Commission's rules.
    (2) The subsidiary or affiliate of a licensee named in a foreign 
ownership ruling issued under Sec.  1.5000(a)(2) may rely on that 
ruling for purposes of filing its own application for an initial common 
carrier radio station license or spectrum leasing arrangement, or an 
application to acquire such license or spectrum leasing arrangement by 
assignment or transfer of control provided that the subsidiary or 
affiliate, and the licensee named in the ruling, each certifies in the 
application that its foreign ownership is in compliance with the terms 
and conditions of the foreign ownership ruling and the Commission's 
rules.
    (3) The certifications required by paragraphs (b)(1) and (b)(2) of 
this section shall also include the citation(s) of the relevant 
ruling(s) (i.e., the DA or FCC Number, FCC Record citation when 
available, and release date).
    (c) Insertion of new controlling foreign-organized companies. (1) 
Where a licensee's foreign ownership ruling specifically authorizes a 
named, foreign investor to hold a controlling interest in the 
licensee's controlling U.S.-organized parent, for rulings issued under 
Sec.  1.5000(a)(1), or in an intervening U.S.-organized entity that 
does not control the licensee, for rulings issued under Sec.  
1.5000(a)(2), the ruling shall permit the insertion of new, controlling 
foreign-organized companies in the vertical ownership chain above the 
controlling U.S. parent, for rulings issued under Sec.  1.5000(a)(1), 
or above an intervening U.S.-organized entity that does not control the 
licensee, for rulings issued under Sec.  1.5000(a)(2), without prior 
Commission approval provided that any new foreign-organized 
company(ies) are under 100 percent common ownership and control with 
the foreign investor approved in the ruling.
    (2) Where a previously unapproved foreign-organized entity is 
inserted into the vertical ownership chain of a licensee, or its 
controlling U.S.-organized parent, without prior Commission approval 
pursuant to paragraph (c)(1) of this section, the licensee shall file a 
letter to the attention of the Chief, International Bureau, within 30 
days after the insertion of the new, foreign-organized entity. The 
letter must include the name of the new, foreign-organized entity and a 
certification by the licensee that the entity complies with the 100 
percent common ownership and control requirement in paragraph (c)(1) of 
this section. The letter must also reference the licensee's foreign 
ownership ruling(s) by IBFS File No. and FCC Record citation, if 
available. This letter notification need not be filed if the ownership 
change is instead the subject of a pro forma application or pro forma 
notification already filed with the Commission pursuant to the relevant 
broadcast service rules, wireless radio service rules or satellite 
radio service rules applicable to the licensee.

    Note to paragraph (c)(2):  For broadcast stations, in order to 
insert a previously unapproved foreign-organized entity that is 
under 100 percent common ownership and control with the foreign 
investor approved in the ruling into the vertical ownership chain of 
the licensee's controlling U.S.-organized parent, as described in 
paragraph (c)(1) of this section, the licensee must always file a 
pro forma application requesting prior consent of the FCC pursuant 
to section 73.3540(f) of this chapter.

    (3) Nothing in this section is intended to affect any requirements 
for prior approval under 47 U.S.C. 310(d) or conditions for forbearance 
from the

[[Page 68832]]

requirements of 47 U.S.C. 310(d) pursuant to 47 U.S.C. 160.

    Example (for rulings issued under Sec.  1.5000(a)(1)).  Licensee 
of a common carrier license receives a foreign ownership ruling 
under Sec.  1.5000(a)(1) that authorizes its controlling, U.S.-
organized parent (``U.S. Parent A'') to be wholly owned and 
controlled by a foreign-organized company (``Foreign Company''). 
Foreign Company is minority owned (20 percent) by U.S.-organized 
Corporation B, with the remaining 80 percent controlling interest 
held by Foreign Citizen C. After issuance of the ruling, Foreign 
Company forms a wholly-owned, foreign-organized subsidiary 
(``Foreign Subsidiary'') to hold all of Foreign Company's shares in 
U.S. Parent A. There are no other changes in the direct or indirect 
foreign ownership of U.S. Parent A. The insertion of Foreign 
Subsidiary into the vertical ownership chain between Foreign Company 
and U.S. Parent A would not require prior Commission approval, 
except for any approval otherwise required pursuant to section 
310(d) of the Communication+s Act and not exempt therefrom as a pro 
forma transfer of control under Sec.  1.948(c)(1).
    Example (for rulings issued under Sec.  1.5000(a)(2)).  An 
applicant for a common carrier license receives a foreign ownership 
ruling under Sec.  1.5000(a)(2) that authorizes a foreign-organized 
company (``Foreign Company'') to hold a non-controlling 44 percent 
equity and voting interest in the applicant through Foreign 
Company's wholly-owned, U.S.-organized subsidiary, U.S. Corporation 
A, which holds the non-controlling 44 percent interest directly in 
the applicant. The remaining 56 percent of the applicant's equity 
and voting interests are held by its controlling U.S.-organized 
parent, which has no foreign ownership. After issuance of the 
ruling, Foreign Company forms a wholly-owned, foreign-organized 
subsidiary to hold all of Foreign Company's shares in U.S. 
Corporation A. There are no other changes in the direct or indirect 
foreign ownership of U.S. Corporation A. The insertion of the 
foreign-organized subsidiary into the vertical ownership chain 
between Foreign Company and U.S. Corporation A would not require 
prior Commission approval.

    (d) Insertion of new non-controlling foreign-organized companies. 
(1) Where a licensee's foreign ownership ruling specifically authorizes 
a named, foreign investor to hold a non-controlling interest in the 
licensee's controlling U.S.-organized parent, for rulings issued under 
Sec.  1.5000(a)(1), or in an intervening U.S.-organized entity that 
does not control the licensee, for rulings issued under Sec.  
1.5000(a)(2), the ruling shall permit the insertion of new, foreign-
organized companies in the vertical ownership chain above the 
controlling U.S. parent, for rulings issued under Sec.  1.5000(a)(1), 
or above an intervening U.S.-organized entity that does not control the 
licensee, for rulings issued under Sec.  1.5000(a)(2), without prior 
Commission approval provided that any new foreign-organized 
company(ies) are under 100 percent common ownership and control with 
the foreign investor approved in the ruling.

    Note to paragraph (d)(1):  Where a licensee has received a 
foreign ownership ruling under Sec.  1.5000(a)(2) and the ruling 
specifically authorizes a named, foreign investor to hold a non-
controlling interest directly in the licensee (subject to the 20 
percent aggregate limit on direct foreign investment), the ruling 
shall permit the insertion of new, foreign-organized companies in 
the vertical ownership chain of the approved foreign investor 
without prior Commission approval provided that any new foreign-
organized companies are under 100 percent common ownership and 
control with the approved foreign investor.

    Example (for rulings issued under Sec.  1.5000(a)(1)).  Licensee 
receives a foreign ownership ruling under Sec.  1.5000(a)(1) that 
authorizes a foreign-organized company (``Foreign Company'') to hold 
a non-controlling 30 percent equity and voting interest in 
Licensee's controlling, U.S.-organized parent (``U.S. Parent A''). 
The remaining 70 percent equity and voting interests in U.S. Parent 
A are held by U.S.-organized entities which have no foreign 
ownership. After issuance of the ruling, Foreign Company forms a 
wholly-owned, foreign-organized subsidiary (``Foreign Subsidiary'') 
to hold all of Foreign Company's shares in U.S. Parent A. There are 
no other changes in the direct or indirect foreign ownership of U.S. 
Parent A. The insertion of Foreign Subsidiary into the vertical 
ownership chain between Foreign Company and U.S. Parent A would not 
require prior Commission approval.
    Example (for rulings issued under Sec.  1.5000(a)(2)).  Licensee 
receives a foreign ownership ruling under Sec.  1.5000(a)(2) that 
authorizes a foreign-organized entity (``Foreign Company'') to hold 
approximately 24 percent of Licensee's equity and voting interests, 
through Foreign Company's non-controlling 48 percent equity and 
voting interest in a U.S.-organized entity, U.S. Corporation A, 
which holds a non-controlling 49 percent equity and voting interest 
directly in Licensee. (A U.S. citizen holds the remaining 52 percent 
equity and voting interests in U.S. Corporation A, and the remaining 
51 percent equity and voting interests in Licensee are held by its 
U.S.-organized parent, which has no foreign ownership. After 
issuance of the ruling, Foreign Company forms a wholly-owned, 
foreign-organized subsidiary (``Foreign Subsidiary'') to hold all of 
Foreign Company's shares in U.S. Corporation A. There are no other 
changes in the direct or indirect foreign ownership of U.S. 
Corporation A. The insertion of Foreign Subsidiary into the vertical 
ownership chain between Foreign Company and U.S. Corporation A would 
not require prior Commission approval.

    (2) Where a previously unapproved foreign-organized entity is 
inserted into the vertical ownership chain of a licensee, or its 
controlling U.S.-organized parent, without prior Commission approval 
pursuant to paragraph (d)(1) of this section, the licensee shall file a 
letter to the attention of the Chief, International Bureau, within 30 
days after the insertion of the new, foreign-organized entity; or in 
the case of a broadcast licensee, the licensee shall file a letter to 
the attention of the Chief, Media Bureau, within 30 days after the 
insertion of the new, foreign-organized entity. The letter must include 
the name of the new, foreign-organized entity and a certification by 
the licensee that the entity complies with the 100 percent common 
ownership and control requirement in paragraph (d)(1) of this section. 
The letter must also reference the licensee's foreign ownership 
ruling(s) by IBFS File No. and FCC Record citation, if available; or, 
if a broadcast licensee, the letter must reference the licensee's 
foreign ownership ruling(s) by CDBS File No., Docket No., call sign(s), 
facility identification number(s), and FCC Record citation, if 
available. This letter notification need not be filed if the ownership 
change is instead the subject of a pro forma application or pro forma 
notification already filed with the Commission pursuant to the relevant 
broadcast service, wireless radio service rules or satellite radio 
service rules applicable to the licensee.
    (e) New petition for declaratory ruling required. A licensee that 
has received a foreign ownership ruling, including a U.S.-organized 
successor-in-interest to such licensee formed as part of a pro forma 
reorganization, or any subsidiary or affiliate relying on such 
licensee's ruling pursuant to paragraph (b) of this section, shall file 
a new petition for declaratory ruling under Sec.  1.5000 to obtain 
Commission approval before its foreign ownership exceeds the routine 
terms and conditions of this section, and/or any specific terms or 
conditions of its ruling.
    (f) Continuing compliance. (1) If at any time the licensee, 
including any successor-in-interest and any subsidiary or affiliate as 
described in paragraph (b) of this section, knows, or has reason to 
know, that it is no longer in compliance with its foreign ownership 
ruling or the Commission's rules relating to foreign ownership, it 
shall file a statement with the Commission explaining the circumstances 
within 30 days of the date it knew, or had reason to know, that it was 
no longer in compliance therewith. Subsequent actions taken by or on 
behalf of the licensee to remedy its non-compliance shall not relieve 
it of

[[Page 68833]]

the obligation to notify the Commission of the circumstances (including 
duration) of non-compliance. Such licensee and any controlling 
companies, whether U.S.- or foreign-organized, shall be subject to 
enforcement action by the Commission for such non-compliance, including 
an order requiring divestiture of the investor's direct and/or indirect 
interests in such entities.
    (2) Any individual or entity that, directly or indirectly, creates 
or uses a trust, proxy, power of attorney, or any other contract, 
arrangement, or device with the purpose or effect of divesting itself, 
or preventing the vesting, of an equity interest or voting interest in 
the licensee, or in a controlling U.S. parent company, as part of a 
plan or scheme to evade the application of the Commission's rules or 
policies under section 310(b) shall be subject to enforcement action by 
the Commission, including an order requiring divestiture of the 
investor's direct and/or indirect interests in such entities.

PART 25--SATELLITE COMMUNICATIONS

0
5. The authority citation for part 25 is revised to read as follows:

    Authority:  Interprets or applies Sections 4, 301, 302, 303, 
307, 309, 310, 319, 332, 705, and 721 of the Communications Act, as 
amended, 47 U.S.C. Sections 154, 301, 302, 303, 307, 309, 310, 319, 
332, 705, and 721 unless otherwise noted.

0
6. Section 25.105 is revised to read as follows:


Sec.  25.105  Citizenship.

    The rules that establish the requirements and conditions for 
obtaining the Commission's prior approval of foreign ownership in 
common carrier licensees that would exceed the 20 percent limit in 
section 310(b)(3) of the Communications Act (47 U.S.C. 310(b)(3)) and/
or the 25 percent benchmark in section 310(b)(4) of the Act (47 U.S.C. 
310(b)(4)) are set forth in Sec. Sec.  1.5000 through 1.5004 of this 
chapter.

PART 73--RADIO BROADCAST SERVICES

0
7. The authority citation for part 73 is revised to read as follows:

    Authority:  47 U.S.C. 154, 303, 309, 310, 334, 336, and 339.

0
8. Section 73.1010 is amended by revising paragraph (a)(9) and adding 
paragraph (a)(10) to read as follows:


Sec.  73.1010  Cross reference to rules in other parts.

* * * * *
    (a) * * *
    (9) Subpart T, ``Foreign Ownership of Broadcast, Common Carrier, 
Aeronautical En Route, and Aeronautical Fixed Radio Station 
Licensees''. (Sec. Sec.  1.5000 to 1.5004).
    (10) Part 1, Subpart W of this chapter, ``FCC Registration 
Number''. (Sec. Sec.  1.8001-1.8005).
* * * * *

PART 74--EXPERIMENTAL RADIO, AUXILIARY, SPECIAL BROADCAST AND OTHER 
PROGRAM DISTRIBUTIONAL SERVICES

0
9. The authority citation for part 74 is revised to read as follows:

    Authority:  47 U.S.C. 154, 302a, 303, 307, 309, 310, 336 and 
554.

0
10. Section 74.5 is amend by revising paragraph (a)(8) and adding 
paragraph (a)(9) to read as follows:


Sec.  74.5  Cross reference to rules in other parts.

* * * * *
    (a) * * *
    (8) Subpart T, ``Foreign Ownership of Broadcast, Common Carrier, 
Aeronautical En Route, and Aeronautical Fixed Radio Station 
Licensees''. (Sec. Sec.  1.5000 to 1.5004).
    (9) Part 1, Subpart W of the chapter, ``FCC Registration Number''. 
(Sec. Sec.  1.8001-1.8005).
* * * * *
[FR Doc. 2015-28344 Filed 11-5-15; 8:45 am]
 BILLING CODE 6712-01-P