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108th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     108-434

======================================================================



 
               BROADCAST DECENCY ENFORCEMENT ACT OF 2004

                                _______
                                

 March 9, 2004.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

    Mr. Barton of Texas, from the Committee on Energy and Commerce, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 3717]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 3717) to increase the penalties for violations 
by television and radio broadcasters of the prohibitions 
against transmission of obscene, indecent, and profane 
language, having considered the same, report favorably thereon 
with amendments and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     1
Purpose and Summary..............................................     5
Background and Need for Legislation..............................     5
Hearings.........................................................     7
Committee Consideration..........................................     8
Committee Votes..................................................     8
Committee Oversight Findings.....................................    10
Statement of General Performance Goals and Objectives............    10
New Budget Authority, Entitlement Authority, and Tax Expenditures    10
Committee Cost Estimate..........................................    10
Congressional Budget Office Estimate.............................    10
Federal Mandates Statement.......................................    11
Advisory Committee Statement.....................................    11
Constitutional Authority Statement...............................    11
Applicability to Legislative Branch..............................    12
Section-by-Section Analysis of the Legislation...................    12
Changes in Existing Law Made by the Bill, as Reported............    20

                               Amendment

  The amendments are as follows:
  Strike all after the enacting clause and insert the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Broadcast Decency Enforcement Act of 
2004''.

SEC. 2. INCREASE IN PENALTIES FOR OBSCENE, INDECENT, AND PROFANE 
                    BROADCASTS.

  Section 503(b)(2) of the Communications Act of 1934 (47 U.S.C. 
503(b)(2)) is amended--
           (1) by redesignating subparagraphs (C) and (D) as 
        subparagraphs (D) and (E), respectively;
          (2) by inserting after subparagraph (B) the following new 
        subparagraph:
  ``(C) Notwithstanding subparagraph (A), if the violator is (i) a 
broadcast station licensee or permittee, or (ii) an applicant for any 
broadcast license, permit, certificate, or other instrument or 
authorization issued by the Commission, and the violator is determined 
by the Commission under paragraph (1) to have broadcast obscene, 
indecent, or profane material, the amount of any forfeiture penalty 
determined under this section shall not exceed $500,000 for each 
violation.''; and
          (3) in subparagraph (D), as redesignated by paragraph (1) of 
        this subsection--
                  (A) by striking ``subparagraph (A) or (B)'' and 
                inserting ``subparagraph (A), (B), or (C)''; and
                  (B) by adding at the end the following: 
                ``Notwithstanding the preceding sentence, if the 
                violator is determined by the Commission under 
                paragraph (1) to have uttered obscene, indecent, or 
                profane material (and the case is not covered by 
                subparagraph (A), (B), or (C)), the amount of any 
                forfeiture penalty determined under this section shall 
                not exceed $500,000 for each violation.''.

SEC. 3. ADDITIONAL FACTORS IN INDECENCY PENALTIES; EXCEPTION.

  Section 503(b)(2) of the Communications Act of 1934 (47 U.S.C. 
503(b)(2)) is further amended by adding at the end (after subparagraph 
(E) as redesignated by section 2(1) of this Act) the following new 
subparagraphs:
  ``(F) In the case of a violation in which the violator is determined 
by the Commission under paragraph (1) to have uttered obscene, 
indecent, or profane material, the Commission shall take into account, 
in addition to the matters described in subparagraph (E), the following 
factors:
          ``(i) With respect to the degree of culpability of the 
        violator, the following:
                  ``(I) whether the material uttered by the violator 
                was live or recorded, scripted or unscripted;
                  ``(II) whether the violator had a reasonable 
                opportunity to review recorded or scripted programming 
                or had a reasonable basis to believe live or unscripted 
                programming may contain obscene, indecent, or profane 
                material;
                  ``(III) if the violator originated live or unscripted 
                programming, whether a time delay blocking mechanism 
                was implemented for the programming;
                  ``(IV) the size of the viewing or listening audience 
                of the programming; and
                  ``(V) whether the programming was part of a 
                children's television program as described in the 
                Commission's children's television programming policy 
                (47 CFR 73.4050(c)).
          ``(ii) With respect to the violator's ability to pay, the 
        following:
                  ``(I) whether the violator is a company or 
                individual; and
                  ``(II) if the violator is a company, the size of the 
                company and the size of the market served.
  ``(G) A broadcast station licensee or permittee that receives 
programming from a network organization, but that is not owned or 
controlled, or under common ownership or control with, such network 
organization, shall not be subject to a forfeiture penalty under this 
subsection for broadcasting obscene, indecent, or profane material, 
if--
          ``(i) such material was within live or recorded programming 
        provided by the network organization to the licensee or 
        permittee; and
          ``(ii)(I) the programming was recorded or scripted, and the 
        licensee or permittee was not given a reasonable opportunity to 
        review the programming in advance; or
          ``(II) the programming was live or unscripted, and the 
        licensee or permittee had no reasonable basis to believe the 
        programming would contain obscene, indecent, or profane 
        material.
The Commission shall by rule define the term `network organization' for 
purposes of this subparagraph.''.

SEC. 4. INDECENCY PENALTIES FOR NONLICENSEES.

  Section 503(b)(5) of the Communications Act of 1934 (47 U.S.C. 
503(b)(5) is amended--
          (1) by redesignating subparagraphs (A), (B), and (C) as 
        clauses (i), (ii), and (iii), respectively;
          (2) by inserting ``(A)'' after ``(5)'';
          (3) by redesignating the second sentence as subparagraph (B);
          (4) in such subparagraph (B) as redesignated--
                  (A) by striking ``The provisions of this paragraph 
                shall not apply, however,'' and inserting ``The 
                provisions of subparagraph (A) shall not apply (i)'';
                  (B) by striking ``operator, if the person'' and 
                inserting ``operator, (ii) if the person'';
                  (C) by striking ``or in the case of'' and inserting 
                ``(iii) in the case of''; and
                  (D) by inserting after ``that tower'' the following: 
                ``, or (iv) in the case of a determination that a 
                person uttered obscene, indecent, or profane material 
                that was broadcast by a broadcast station licensee or 
                permittee, if the person is determined to have 
                willfully or intentionally made the utterance''; and
          (5) by redesignating the last sentence as subparagraph (C).

SEC. 5. DEADLINES FOR ACTION ON COMPLAINTS.

  Section 503(b) of the Communications Act of 1934 (47 U.S.C. 503(b)) 
is amended by adding at the end thereof the following new paragraph:
  ``(7) In the case of an allegation concerning the utterance of 
obscene, indecent, or profane material that is broadcast by a station 
licensee or permittee--
          ``(A) within 180 days after the date of the receipt of such 
        allegation, the Commission shall--
                  ``(i) issue the required notice under paragraph (3) 
                to such licensee or permittee or the person making such 
                utterance;
                  ``(ii) issue a notice of apparent liability to such 
                licensee or permittee or person in accordance with 
                paragraph (4); or
                  ``(iii) notify such licensee, permittee, or person in 
                writing, and any person submitting such allegation in 
                writing or by general publication, that the Commission 
                has determined not to issue either such notice; and
          ``(B) if the Commission issues such notice and such licensee, 
        permittee, or person has not paid a penalty or entered into a 
        settlement with the Commission, within 270 days after the date 
        of the receipt of such allegation, the Commission shall--
                  ``(i) issue an order imposing a forfeiture penalty; 
                or
                  ``(ii) notify such licensee, permittee, or person in 
                writing, and any person submitting such allegation in 
                writing or by general publication, that the Commission 
                has determined not to issue either such order.''.

SEC. 6. ADDITIONAL REMEDIES FOR INDECENT BROADCAST.

  Section 503 of the Communications Act of 1934 (47 U.S.C. 503) is 
further amended by adding at the end the following new subsection:
  ``(c) Additional Remedies for Indecent Broadcasting.--In any 
proceeding under this section in which the Commission determines that 
any broadcast station licensee or permittee has broadcast obscene, 
indecent, or profane material, the Commission may, in addition to 
imposing a penalty under this section, require the licensee or 
permittee to broadcast public service announcements that serve the 
educational and informational needs of children. Such announcements may 
be required to reach an audience that is up to 5 times the size of the 
audience that is estimated to have been reached by the obscene, 
indecent, or profane material, as determined in accordance with 
regulations prescribed by the Commission.''.

SEC. 7. LICENSE DISQUALIFICATION FOR VIOLATIONS OF INDECENCY 
                    PROHIBITIONS.

  Section 503 of the Communications Act of 1934 (47 U.S.C. 503) is 
further amended by adding at the end (after subsection (c) as added by 
section 6) the following new subsection:
  ``(d) Consideration of License Disqualification for Violations of 
Indecency Prohibitions.--If the Commission issues a notice under 
paragraph (3) or (4) of subsection (b) to a broadcast station licensee 
or permittee looking toward the imposition of a forfeiture penalty 
under this Act based on an allegation that the licensee or permittee 
broadcast obscene, indecent, or profane material, and either--
          ``(1) such forfeiture penalty has been paid, or
          ``(2) a forfeiture penalty has been determined by the 
        Commission or an administrative law judge pursuant to paragraph 
        (3) or (4) of subsection (b), and such penalty is not under 
        review, and has not been reversed, by a court of competent 
        jurisdiction,
then, notwithstanding section 504(c), the Commission shall, in any 
subsequent proceeding under section 308(b) or 310(d), take into 
consideration whether the broadcast of such material demonstrates a 
lack of character or other qualifications required to operate a 
station.''.

SEC. 8. LICENSE RENEWAL CONSIDERATION OF VIOLATIONS OF INDECENCY 
                    PROHIBITIONS.

  Section 309(k) of the Communications Act of 1934 (47 U.S.C. 309(k)) 
is amended by adding at the end the following new paragraph:
          ``(5) License renewal consideration of violations of 
        indecency prohibitions.--If the Commission has issued a notice 
        under paragraph (3) or (4) of section 503(b) to a broadcast 
        station licensee or permittee with respect to a broadcast 
        station looking toward the imposition of a forfeiture penalty 
        under this Act based on an allegation that such broadcast 
        station broadcast obscene, indecent, or profane material, and--
                  ``(A) such forfeiture penalty has been paid, or
                  ``(B) a forfeiture penalty has been determined by the 
                Commission or an administrative law judge pursuant to 
                paragraph (3) or (4) of section 503(b), and such 
                penalty is not under review, and has not been reversed, 
                by a court of competent jurisdiction,
        then, notwithstanding section 504(c), such violation shall be 
        treated as a serious violation for purposes of paragraph (1)(B) 
        of this subsection with respect to the renewal of the license 
        or permit for such station.''.

SEC. 9. LICENSE REVOCATION FOR VIOLATIONS OF INDECENCY PROHIBITIONS.

  Section 312 of the Communications Act of 1934 (47 U.S.C. 312) is 
amended by adding at the end the following new subsection:
  ``(h) License Revocation for Violations of Indecency Prohibitions.--
          ``(1) Consequences of multiple violations.--If, in each of 3 
        or more proceedings during the term of any broadcast license, 
        the Commission issues a notice under paragraph (3) or (4) of 
        section 503(b) to a broadcast station licensee or permittee 
        with respect to a broadcast station looking toward the 
        imposition of a forfeiture penalty under this Act based on an 
        allegation that such broadcast station broadcast obscene, 
        indecent, or profane material, and in each such proceeding 
        either--
                  ``(A) such forfeiture penalty has been paid, or
                  ``(B) a forfeiture penalty has been determined by the 
                Commission or an administrative law judge pursuant to 
                paragraph (3) or (4) of section 503(b), and such 
                penalty is not under review, and has not been reversed, 
                by a court of competent jurisdiction,
        then, notwithstanding section 504(c), the Commission shall 
        commence a proceeding under subsection (a) of this section to 
        consider whether the Commission should revoke the station 
        license or construction permit of that licensee or permittee 
        for such station.
          ``(2) Preservation of authority.--Nothing in this subsection 
        shall be construed to limit the authority of the Commission to 
        commence a proceeding under subsection (a).''.

SEC. 10. REQUIRED CONTENTS OF ANNUAL REPORTS OF THE COMMISSION.

  Each annual report submitted by the Federal Communications Commission 
after the date of enactment of this Act shall, in accordance with 
section 4(k)(2) of the Communications Act of 1934 (47 U.S.C. 
154(k)(2)), include the following:
          (1) The number of complaints received by the Commission 
        during the year covered by the report alleging that a broadcast 
        contained obscene, indecent, or profane material, and the 
        number of programs to which such complaints relate.
          (2) The number of those complaints that have been dismissed 
        or denied by the Commission.
          (3) The number of complaints that have remained pending at 
        the end of the year covered by the annual report.
          (4) The number of notices issued by the Commission under 
        paragraph (3) or (4) of section 503(b) of the Communications 
        Act of 1934 (47 U.S.C. 503(b)) during the year covered by the 
        report to enforce the statutes, rules, and policies prohibiting 
        the broadcasting of obscene, indecent, or profane material.
          (5) For each such notice, a statement of--
                  (A) the amount of the proposed forfeiture;
                  (B) the program, station, and corporate parent to 
                which the notice was issued;
                  (C) the length of time between the date on which the 
                complaint was filed and the date on which the notice 
                was issued; and
                  (D) the status of the proceeding.
          (6) The number of forfeiture orders issued pursuant to 
        section 503(b) of such Act during the year covered by the 
        report to enforce the statutes, rules, and policies prohibiting 
        the broadcasting of obscene, indecent, or profane material.
          (7) For each such forfeiture order, a statement of--
                  (A) the amount assessed by the final forfeiture 
                order;
                  (B) the program, station, and corporate parent to 
                which it was issued;
                  (C) whether the licensee has paid the forfeiture 
                order;
                  (D) the amount paid by the licensee; and
                  (E) in instances where the licensee refused to pay, 
                whether the Department of Justice brought an action in 
                Federal court to collect the penalty.

SEC. 11. SENSE OF THE CONGRESS.

  (a) Reinstatement of Policy.--It is the sense of the Congress that 
the broadcast television station licensees should reinstitute a family 
viewing policy for broadcasters.
  (b) Definition.--For purposes of this section, a family viewing 
policy is a policy similar to the policy that existed in the United 
States from 1975 to 1983, as part of the National Association of 
Broadcaster's code of conduct for television, and that included the 
concept of a family viewing hour.

SEC. 12. IMPLEMENTATION.

  (a) Regulations.--The Commission shall prescribe regulations to 
implement the amendments made by this Act within 180 days after the 
date of enactment of this Act.
  (b) Prospective Application.--This Act and the amendments made by 
this Act shall not apply with respect to material broadcast before the 
date of enactment of this Act.
  (c) Separability.--Section 708 of the Communications Act of 1934 (47 
U.S.C. 608) shall apply to this Act and the amendments made by this 
Act.

  Amend the title so as to read:

      A bill to increase the penalties for violations by 
television and radio broadcasters of the prohibitions against 
transmission of obscene, indecent, and profane material, and 
for other purposes.

                          Purpose and Summary

    The purpose of H.R. 3717, the ``Broadcast Decency 
Enforcement Act of 2004,'' is to provide the Federal 
Communications Commission (FCC) with enhanced authority to deal 
with obscenity, indecency and profanity on broadcast 
television.

                  Background and Need for Legislation

    In 1961, then-FCC Chairman Newton Minow called television a 
``vast wasteland.'' Today, over 40 years later, similar 
complaints continue to be made against broadcast television and 
radio stations. Increasingly, parents, educators, and families 
are concerned about the material that is broadcast on 
television and radio, and the effect the material has on 
America's children.
    Nielsen Media Research shows the average American watches 3 
hours and 43 minutes of television each day--the equivalent of 
56 days of nonstop television watching every year. Such viewing 
habits, particularly for children, have the potential to 
significantly shape their development, their education, and 
their outlook on the world. In a study on foul language on 
television, the Parents Television Council found that such 
language increased overall during every timeslot between 1998 
and 2002. Foul language during the ``family hour'' increased by 
94.8 percent between 1998 and 2002 and by 109.1 percent during 
the 9:00 p.m. time slot.
    Studies also show that parents are increasingly concerned. 
According to the Kaiser Family Foundation, more than four out 
of five parents are concerned that their children are being 
exposed to too much sex on television. A 1996 U.S. News and 
World Report survey found that 88% of Americans thought 
incivility was a serious problem. When asked about the 
consequences of this decline in civility, respondents cited an 
increase in violence, divided communities, and eroding moral 
values.
    These concerns about programming content were exacerbated 
when, on Sunday, February 1, 2004, CBS broadcast the National 
Football League's Super Bowl XXXVIII, viewed nationally and 
internationally by 100 million people. The halftime show, which 
was produced by MTV, featured a performance by, among others, 
singers Janet Jackson and Justin Timberlake that ended in the 
exposure of Ms. Jackson's breast. Many Americans have 
complained that much of the halftime broadcast show, which is 
generally considered a ``family friendly'' event, was 
inappropriate for family viewing, particularly given that so 
many children were apt to be watching it on television. The 
Super Bowl incident garnered attention on its own, but was 
preceded by other television incidents, such as NBC's live 
broadcast of the 2003 Golden Globe Awards where the singer Bono 
used an expletive, and Fox's live broadcast of the 2003 
Billboard Awards where actress Nicole Richie used a string of 
expletives. Broadcast radio is no better, and is arguably worse 
than broadcast television, with ample examples of indecent 
broadcasts by various ``shock jocks.'' For instance, on August 
15, 2002, the ``Opie & Anthony Show'' broadcast descriptions of 
a couple having intercourse in St. Patrick's Cathedral. The 
``Bubba, The Love Sponge Show'' has also been the subject of 
numerous complaints for, among other things, graphic and 
explicit discussions of oral sex, masturbation, and other 
sexual activities. All of these examples have highlighted the 
need for stronger penalties for broadcast obscenity, indecency 
and profanity.
    The outpouring of interest regarding these incidents is 
symptomatic of a larger feeling among many Americans that some 
television and radio broadcasters are engaged in a ``race to 
the bottom'' in order to distinguish themselves in an 
increasingly crowded entertainment field. In addition, 
individual performers and on-air talent appear to be engaged in 
a ``race to the bottom'' even though some licensees have 
instituted policies to prevent such conduct.
    Congress has taken some steps to help parents steer their 
children to appropriate programming. For instance, Congress 
passed legislation requiring ``V-chip'' technology, that reads 
information encoded in the rated program and blocks programs 
from the set based upon the rating selected by the parent. 
Since 2000, all television sets with picture screens 13 inches 
or larger must be equipped with features to block the display 
of television programming based upon its rating. Congress also 
gave the broadcasting industry the first opportunity to 
establish voluntary ratings. The rating system, also known as 
``TV Parental Guidelines,'' rates programming that contains 
sexual, violent or other material parents may deem 
inappropriate. These ratings are displayed on the television 
screen for the first 15 seconds of rated programming and, in 
conjunction with the V-Chip, permit parents to block 
programming with a certain rating from coming into their home. 
Additionally, in 1990, Congress enacted the Children's 
Television Act (CTA) to increase the amount of educational and 
informational programming available to children on television. 
CTA requires each broadcast television station to air at least 
three hours per week of core educational programming and limits 
the amount of time broadcasters may devote to commercial matter 
during children's programming.
    Despite these good efforts, more needs to be done. American 
families should be able to rely on the fact that, at times when 
their children are likely to be tuning in, broadcast television 
and radio programming will be free of indecency, obscenity, and 
profanity. Congress has given the FCC the responsibility to 
help protect American families in this regard. In light of 
recent television and radio events, it is evident that the FCC 
needs additional and enhanced authority to pursue bad actors. 
H.R. 3717 provides the FCC with that authority.
    Although the FCC is prohibited from reviewing or 
prescreening television or radio programming for content, the 
FCC currently has the authority to enforce rules and laws 
restricting the broadcast of obscenity, indecency, and 
profanity. Federal law specifically prohibits the utterance of 
``any obscene, indecent or profane language by means of radio 
communication'' (18 U.S.C. 1464) and the FCC is charged with 
enforcing this statute (47 U.S.C. 503). By regulation, the FCC 
prohibits the broadcast of obscene material at any time, and 
indecent material during the hours of 6 a.m. to 10 p.m. (47 
C.F.R. 73.3999), the time period when children are most likely 
to be watching television and listening to the radio.
    Existing law gives the FCC the ability to pursue forfeiture 
penalties against licensees or permittees for broadcasting 
obscenity, indecency, or profanity. The penalty, however, is 
hardly a deterrent with a cap of only $27,500 for each 
violation. (47 U.S.C. 503(2)(A)). The FCC also has the 
authority to assess forfeiture penalties against nonlicensees, 
but only after first citing an offender, then waiting for a 
second offense to issue a forfeiture order (47 U.S.C. 
503(b)(5)), which makes it virtually impossible for the FCC to 
effectively enforce its indecency rules against nonlicensees. 
The current cap on fines for nonlicensees is only $11,000, 
which, even if the FCC could invoke the two-step process 
necessary to fine nonlicensees, is hardly a deterrent to 
entertainment performers who often make more than ten times 
that amount for each performance. A much greater deterrent for 
nonlicensees is critical. In addition to forfeiture penalties, 
the FCC has the power to revoke any station license or 
construction permit for violations of the law or its 
regulations. (47 U.S.C. 312(a)(6)). License revocation, 
however, has never been utilized by the FCC for obscenity, 
indecency or profanity violations.

                                Hearings

    The Subcommittee on Telecommunications and the Internet 
held one oversight hearing on indecency and two legislative 
hearings on H.R. 3717. On January 28, 2004, the Subcommittee 
received testimony from: David Solomon, Chief of the 
Enforcement Bureau, FCC; Brent Bozell, President, Parent's 
Television Council; Robert Corn-Revere, Partner, Davis Wright 
Tremaine, LLP; and William Wertz, Executive Vice President, 
Fairfield Broadcasting Company. The second hearing was on 
February 11, 2004, and the Subcommittee received testimony 
from: Paul Tagliabue, Commissioner, National Football League; 
Mel Karmazin, President and Chief Operating Officer, Viacom, 
Inc.; and the five FCC Commissioners, Chairman Michael Powell, 
and Commissioners Kathleen Abernathy, Michael Copps, Kevin 
Martin, and Jonathan Adelstein. On February 26, 2004, the 
Subcommittee held a third hearing and received testimony from: 
Alex Wallau, President, ABC Television Network; Gail Berman, 
President of Entertainment, Fox Broadcasting Company; Dr. Alan 
Wurtzel, President of Research and Media Development, National 
Broadcasting Company; Lowell ``Bud'' Paxson, Chairman and Chief 
Executive Officer, Paxson Communications Corporation; John 
Hogan, President and Chief Executive Officer, Clear Channel 
Radio; and Harry J. Pappas, Chairman and Chief Executive 
Officer, Pappas Telecasting Companies.

                        Committee Consideration

    On Thursday, February 12, 2004, the Subcommittee on 
Telecommunications and the Internet met in open markup session 
and approved H.R. 3717 for Full Committee consideration, by a 
voice vote, a quorum being present. On Wednesday, March 3, 
2004, the Full Committee met in open markup session and ordered 
H.R. 3717 favorably reported to the House, as amended, by a 
record vote of 49 yeas and 1 nay, a quorum being present.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. A 
motion by Chairman Barton to order H.R. 3717 reported to the 
House, as amended, was agreed to by a recorded vote of 49 ayes 
to 1 nay. Chairman Barton asked for and received unanimous 
consent to make technical and conforming changes to the bill.


                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held an oversight and 
two legislative hearings and made findings that are reflected 
in this report.

         Statement of General Performance Goals and Objectives

    The goal of H.R. 3717 is to increase the penalties for 
violations by television and radio broadcasters and 
nonlicensees of the prohibitions against transmission of 
obscene, indecent, and profane material, and for other 
purposes.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
3717, the ``Broadcast Decency Enforcement Act of 2004,'' would 
result in changes to budget authority, entitlement authority, 
and tax expenditures and revenues to the extent stated below in 
the Committee Cost Estimate.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:
                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, March 8, 2004.
Hon. Joe Barton,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3717, the 
Broadcast Decency Enforcement Act of 2004.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Melissa E. 
Zimmerman.
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

H.R. 3717--Broadcast Decency Enforcement Act of 2004

    H.R. 3717 would increase the maximum civil penalty for 
broadcasting obscene, indecent or profane material. (Such 
penalties are recorded in the budget as revenues.) Under the 
bill, CBO estimates that revenues resulting from these 
penalties would increase by less than $500,000 in 2004 and by 
around $5 million over the 2005-2009 period. CBO estimates that 
implementing H.R. 3717 would not have a significant effect on 
spending subject to appropriation and would not affect direct 
spending.
    H.R. 3717 would increase the monetary penalties assessed by 
the Federal Communications Commission (FCC) for broadcasting 
obscene, indecent, or profane material. For broadcast 
licensees, the maximum penalty for each violation would 
increase from about $25,000 to $500,000. The maximum penalty 
for individuals would increase from about $10,000 to $500,000. 
According to the FCC, prior assessments for each violation have 
been around $50,000 per year recently--however, annual 
collections have varied widely. For example, the FCC did not 
collect any penalties for indecency violations in 2003 but has 
collected $800,000 during the first five months of 2004.
    CBO estimates that under H.R. 3717, collections of 
penalties for broadcasting obscene, indecent, or profane 
material would increase by less than $500,000 in 2004 and by 
around $1 million per year over the 2004-2009 period. The 
increase in collections could be much higher or lower 
considering that the number of penalties varies widely from 
year to year.
    H.R. 3717 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would be 
unlikely to impose costs on state, local, and tribal 
governments. The bill contains no new private-sector mandates 
as defined in UMRA. To the extent that public broadcasters 
would be affected by the increased penalties for indecency, 
they would incur additional costs. CBO estimates that those 
additional costs, if any, would be minimal because complaints 
regarding indecency against publicly owned broadcasting outlets 
are rare. The bill contains no new private-sector mandates as 
defined in UMRA.
    The CBO contacts for this estimate are Melissa E. Zimmerman 
(for federal costs), Sara Puro (for the state and local 
impact), and Jean Talarico (for the private-sector impact). 
This estimate was approved by Peter H. Fontaine, Deputy 
Assistant Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for this legislation is provided in 
Article I, section 8, clause 3, which grants Congress the power 
to regulate commerce with foreign nations, among the several 
States, and with the Indian tribes.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    Section 1 establishes the short title of the bill, the 
``Broadcast Decency Enforcement Act of 2004.''

Section 2. Increase in penalties for obscene, indecent, and profane 
        broadcasts

    Section 2 of the bill amends section 503(b)(2) of the 
Communications Act of 1934 (47 U.S.C. 503(b)(2)) by increasing 
the existing forfeiture penalty cap for broadcast station 
licensees or permittees (hereinafter ``licensee'') for 
broadcasting obscene, indecent, or profane materials from 
$27,500 per violation to $500,000 per violation. Additionally, 
section 2 increases the existing forfeiture penalty cap for 
other persons (nonlicensees) for uttering obscene, indecent, or 
profane material from $11,000 per violation to $500,000 per 
violation.
    It should be noted that the $500,000 figure, while a 
significant increase from the current statutory penalties, is a 
ceiling, not a floor. The Committee expects that each complaint 
filed with the FCC will present different and unique facts that 
will justify a diverse range of penalties. This increased 
fining authority provides the FCC with the necessary discretion 
to adequately penalize a full range of violations, from, for 
example, particularly egregious offenses by large corporate 
actors to minor offenses by small companies or private 
individuals. Moreover, if the Commission opts to assess 
forfeiture penalties on a ``per utterance'' basis, then the 
Committee expects the Commission to take into account the 
multiplying effect of finding numerous violations when 
determining the level of penalty per utterance.
    In setting the penalties for licensees and nonlicensees, 
the Committee was particularly careful to set a strong but 
appropriate penalty cap. The figure of $500,000 is not so high 
as to be disproportionate to a particularly egregious offense. 
Conversely, the amended penalty is high enough to provide a 
real deterrent to licensees and nonlicensees who may be tempted 
to push the envelope of decency for higher ratings or increased 
advertising revenues. Additionally, the Committee intentionally 
set the same forfeiture penalty cap for licensees as it did for 
nonlicensees. Regardless of the source of the obscene, 
indecent, or profane speech, the harmful impact on children is 
identical. See City of Cincinnati v. Discovery Network, Inc., 
507 U.S. 410 (1993) (finding that a distinction between 
commercial and noncommercial newsracks bore ``no relationship 
whatsoever to the particular interests that the city had 
asserted.'')
    Finally, it is the Committee's hope that these increased 
fines will provide an additional incentive for the Department 
of Justice to institute recovery proceedings to collect the 
outstanding penalties under section 504(a). Unfortunately, 
today's forfeiture penalties are so inconsequential that it 
hardly justifies using the Department's scarce resources. The 
revised penalty scheme in section 2 reverses that. In light of 
this change, it is anticipated that the Department will be more 
diligent in collecting FCC forfeiture penalties.

Section 3. Additional factors in indecency penalties; exception

    Section 3 amends section 503(b)(2) of the Communications 
Act of 1934 (47 U.S.C. 503(b)(2)) by expanding the current 
factors the FCC is required to consider when levying a 
forfeiture penalty for violations of obscenity, indecency, or 
profanity. Under current law, the FCC must, with respect to the 
violator, take into account ``the degree of culpability, any 
history of prior offenses, ability to pay, and such other 
matters as justice may require.'' (47 U.S.C. 503(b)(3)(D)). 
Because this bill significantly increases the forfeiture 
authority of the FCC, the Committee found it necessary to 
provide the Commission with more direction in exercising its 
discretion to set appropriate penalties for indecency 
violations. Specifically, section 3 expands upon two factors: 
degree of culpability and ability to pay.
    With respect to ``degree of culpability,'' section 2 
requires the FCC to consider factors such as (1) whether the 
material uttered by the violator was live or recorded, scripted 
or unscripted; (2) whether the violator had a reasonable 
opportunity to review recorded or scripted programming or had a 
reasonable basis to believe live or unscripted programming 
would contain obscene, indecent or profane material; (3) if the 
violator originated live or unscripted programming, whether a 
time delay blocking mechanism was implemented for the 
programming; (4) the size of the viewing or listening audience; 
and, (5) whether the programming was part of a children's 
television program under the Commission's children's television 
programming policy (47 C.F.R. 73.4050(c)).
    The Committee views these factors as the best way to 
provide the FCC the necessary guidance to assess appropriate 
penalties. Whether the material was live or recorded, scripted 
or unscripted is relevant to the issue of intent of the 
violator who uttered the message. For instance, whether the 
violator had the reasonable opportunity to review programming 
will be a particularly meaningful factor in determining the 
level of culpability. If a licensee had a reasonable basis to 
believe live programming would contain obscene, indecent or 
profane content, perhaps based on previous violations by an 
artist for similar programming, then that is a factor the FCC 
should weigh to determine the culpability of the licensee.
    The decision by an originator of content to institute a 
time delay of live or unscripted programming is also a relevant 
factor in setting the amount of any penalty as it speaks to the 
attempts taken by the network or broadcaster to protect its 
audience. The size of the listening or viewing audience is 
relevant to the scope of the harm. Finally, whether the 
programming was aired as part of a children's television 
program under the Commission's children's television 
programming policy is particularly important since the notion 
underlying the Act's prohibition of indecency is to protect 
children.
    With respect to ``ability to pay,'' section 2 requires the 
FCC to consider factors such as (1) whether the violator is a 
company or individual, and (2) if the violator is a company, 
the size of the company and the size of the market served. 
Generally, it is envisioned that a company will be subject to 
higher penalties than individuals, although certainly that will 
not always be the case. Additionally, the FCC should weigh and 
consider the relative size of a company, including such factors 
as revenues and number of employees, and should further examine 
the geographic size and population density of the market in 
setting any penalty.
    Section 3 also creates a new section 503(b)(2)(G) in the 
Communications Act of 1934 that exempts from forfeiture 
penalties a broadcast station licensee that receives 
programming from a network organization, but is not owned or 
controlled, or under common ownership or control with, a 
network organization, for the broadcast of obscene, indecent, 
or profane material. This exemption only applies if: (1) the 
material was within live or recorded programming provided by 
the network organization to the licensee, and (2) the 
programming was recorded or scripted, and the licensee was not 
given a reasonable opportunity to review the programming in 
advance, or the programming was live or unscripted, and the 
licensee had no reasonable basis to believe the programming 
would contain obscene, indecent, or profane material.
    Congress has given local station licensees special 
responsibilities to serve their local communities. The holder 
of a local station license, as a public trustee, is charged 
under section 73.658 of the Commission's regulations with the 
legal duty of accepting or rejecting network programs 
consistent with standards that are most appropriate for that 
community.
    During its hearings, the Committee heard testimony 
indicating a tension between television networks and their non-
network owned and operated broadcast station licensees 
regarding the licensees' unfettered right to reject programming 
for content reasons. Consistent with current law, a licensee 
should be able to preempt any network programming if it 
believes that such programming is not consistent with its local 
community standards. In order to properly reject programming, 
however, a local broadcaster must either be able to prescreen 
content or have some notice that inappropriate content may be 
included in live programming.
    The new language in section 503(b)(2)(G) is designed to 
insulate local broadcasters from liability if they were not 
provided with a reasonable opportunity to review recorded or 
scripted programming, such as being given an advance copy of a 
show. Similarly, if the licensee has no reasonable basis to 
believe live or unscripted programming will contain 
inappropriate material, as would be suggested by programming 
with prior indecency violations, then fairness dictates that 
the licensee should not be held responsible for the broadcast 
of obscene, indecent, or profane material.
    This provision also requires the FCC to define ``network 
organization'' for purposes of this subparagraph. The Committee 
expects the FCC to define this term to include all television 
networks. To the extent that business arrangements in other 
media, such as those involving radio networks or, perhaps, 
programming syndicators, similarly hinder the ability of 
licensees to reasonably determine whether programming will 
contain obscene, indecent, or profane material, then the 
Committee expects the Commission to determine whether the term 
should be expanded to include radio network or programming 
syndicators as well. The goal of this section is to shield non-
network owned and operated affiliates from liability in 
situations where they have no reasonable opportunity to review 
scripted or recorded programming, or no reasonable basis to 
believe live or unscripted programming will contain obscene, 
indecent, or profane material. The Committee expects that the 
Commission will develop a complete record and define the term 
``network organization'' to effectuate that intent.
    The Committee made the distinction between network owned-
and-operated station licensees (O&O;) and non-network O&O; 
station licensees because of the unique relationship between 
the network and the O&O.; The O&O; licensee is part of the 
network's corporate family; therefore any forfeiture penalty 
from an obscene, indecent, or profane broadcast by an O&O; would 
run to the corporate parent. In light of this relationship, it 
is not unreasonable to expect that O&Os; could receive special 
or favorable treatment as compared to the non-O&O; station 
licensees in receiving advance copies of programming or advance 
notice of controversial content. Given their proximity within 
the same corporate structure, it is reasonable to attribute 
knowledge about programming from the network to an O&O.; For 
this reason, the Committee did not include O&Os; within the 
liability shield contained in the new section 503(b)(2)(G).

Section 4. Indecency penalties for nonlicensees

    Section 4 amends section 503(b)(5) of the Communications 
Act of 1934 (47 U.S.C. 503(b)(5)) to streamline the process 
governing how the FCC may apply the prohibition of broadcasting 
obscene, indecent, or profane material to nonlicensees, such as 
networks and individuals. Section 4 allows the FCC to pursue 
forfeiture penalties against nonlicensees upon a determination 
that a person uttered obscene, indecent, or profane material 
that was broadcast by a broadcast station licensee, if the 
person is determined to have ``willfully or intentionally'' 
made the utterance.
    The FCC currently has the authority to assess forfeiture 
penalties upon nonlicensees, but unlike 503(b)(2)(A) which 
allows the FCC to seek a forfeiture penalty against licensees 
on the first violation, section 503(b)(5) requires a 
cumbersome, two-step process for nonlicensees that first 
requires the issuance of a citation, and then a subsequent 
similar violation before the FCC may issue a Notice of Apparent 
Liability. The current law is particularly unwieldy, making it 
difficult for the FCC to use section 503(b)(5) to enforce 
indecency laws against performers, who are increasingly using 
public broadcast airwaves in inappropriate ways, often in 
violation of the FCC's indecency rules. It is the hope of the 
Committee that amending section 503(b)(5) will make the 
application of obscenity, indecency, and profanity laws against 
networks and individuals less burdensome, thus increasing 
enforcement.
    Under the plain meaning of current 503(b)(5), the language 
applies to both networks and individuals. Section 503(b)(1) 
provides that ``any person'' who violates 18 U.S.C. 1464 shall 
be liable for a forfeiture penalty. ``Person'' is defined in 
section 3(32) of the Communications Act as an ``individual, 
partnership, association, joint-stock company, trust or 
corporation.'' Therefore, any person who under 18 U.S.C. 1464 
``utters any obscene, indecent, or profane language by means of 
radio communication'' can be found liable. Since the creation 
of 18 U.S.C. 1464, the FCC has used this authority to hold 
licensees responsible for obscene, indecent, or profane 
broadcasts that they ``uttered'' using ``radio communication.'' 
Networks can be considered to have ``uttered'' indecent 
material over ``radio communication'' in a similar way that a 
broadcast station does. Networks are originating material that 
comes into the home over-the-air. Accordingly, the Committee 
believes there is no obstacle that would prevent the 
application of section 503(b)(5) to network organizations.
    There is also no bar from using section 503(b)(5) to hold 
individuals responsible for their intentional or willful speech 
on broadcast television or radio. This year's Super Bowl 
halftime show highlighted how the actions of individual 
performers can drastically alter the tenor of programming aimed 
at an audience filled with children. An individual can be held 
liable under this provision because it is clearly the 
individual who ``utters'' the offending language or material 
over ``radio communication.''
    The Committee uses the phrase ``willfully or 
intentionally'' to protect nonlicensees, both networks and 
individuals, from being held liable for inadvertent or 
accidental speech. The willful or intentional standard is meant 
to capture those incidents where an individual intentionally 
utters material, consciously and deliberately, which they know 
will be broadcast. However, the standard is not so strict that 
a person must know that his or her speech is legally obscene, 
indecent or profane. It is enough that he or she intentionally 
makes the utterance that he or she knows is being or will be 
broadcast.
    The Committee believes that the bill poses no danger to the 
First Amendment Constitutional rights of individuals or 
corporations. The underlying statute, 18 U.S.C. 1464, applies 
to ``whoever utters any obscene, indecent, or profane language 
by means of radio communication.'' The FCC has interpreted this 
provision to apply to any over-the-air broadcast, whether by 
television or radio. The language of the statute, on its face, 
applies to the ``utterer'' of speech disseminated by radio 
communication, whether uttered by an individual or corporate 
entity. Courts have held that there is a significant societal 
interest in speech, which is distinct from the speaker. See 
First Nat. Bank of Boston v. Bellotti, 435 U.S. 765, 777 
(1978). ``It is the type of speech indispensable to decision 
making in a democracy, and this is no less true because the 
speech comes from a corporation rather than an individual. The 
inherent worth of the speech in terms of its capacity for 
informing the public does not depend upon the identity of its 
source, whether corporation, association, union, or 
individual.'' Id. (citations omitted).
    The speech by any ``person'' is subject to a strict 
scrutiny analysis if a government regulation is a content-based 
one. Strict scrutiny requires a compelling government interest, 
and a regulation that achieves the goal using the least 
restrictive means. (Sable Communications of California v. FCC, 
492 U.S. 115, 126 (1989)). The Supreme Court has already 
determined that there is a compelling government interest in 
protecting children from indecent speech disseminated by radio 
communication. Because broadcast media has a ``uniquely 
pervasive presence'' in the lives of all Americans and because 
broadcasting is ``uniquely accessible to children,'' the 
government has the power to restrict the over-the-air broadcast 
of indecent language in certain circumstances. (FCC v. 
Pacifica, 438 U.S. 726, 749 (1978)). Additionally, the D.C. 
Circuit has found that restricting indecent speech in over-the-
air broadcasts between the hours of 6 a.m. and 10 p.m. is the 
least restrictive means of achieving the goal of protecting 
children. (Action for Children's Television v. FCC, 58 F.3d 
654, 666 (1995)). Since the D.C. Circuit has upheld reasonable 
restrictions on the broadcast of indecent programming by 
licensees, there is no reason why such reasonable restrictions 
would not also be Constitutional as applied to nonlicensees. As 
noted by the D.C. Circuit Court in the Action for Children's 
Television v. FCC case, ``whatever chilling effect may be said 
to inhere in the regulation of indecent speech, these have 
existed ever since the Supreme Court first upheld the FCC's 
enforcement of section 1464 of the Radio Act.'' Id.

Section 5. Deadlines for action on complaints

    Section 5 amends section 503(b) of the Communications Act 
of 1934 (47 U.S.C. 503(b)) by adding a new paragraph (7) which 
establishes deadlines for action by the FCC on obscenity, 
indecency, or profanity complaints. The language requires the 
FCC to, within 180 days after a complaint is filed, issue the 
required notice to the licensee, permittee or person making the 
utterance under paragraphs (3) (which allows notice and hearing 
before the Commission or an administrative law judge) or (4) 
(which allows the Commission to issue a Notice of Apparent 
Liability), or notify the licensee, permittee or person and 
complainant that the Commission has determined not to issue 
either notice. If the Commission issues a notice, it must 
either issue a forfeiture order or dismiss the complaint within 
270 days after the complaint was filed, unless the penalty has 
been paid or the violator has entered into a settlement.
    The Committee heard testimony indicating there were delays 
in the FCC evaluating and pursuing obscenity, indecency and 
profanity complaints. Indeed, according to the Commission, in 
2002, 13,922 complaints were filed involving 345 programs. In 
2003, 240,350 complaints were filed involving 318 programs. 
According to the FCC, there were 664 complaints pending at the 
end of 2002, and there were 239,982 complaints pending at the 
end of 2003 (although many are multiple complaints about 
specific programs). Additionally, only seven Notices of 
Apparent Liability were issued in 2002 (although one was 
withdrawn) and three Notices of Apparent Liability were issued 
in 2003. Generally, these Notices of Apparent Liability are 
issued over a year from the date of complaint. The Committee is 
hopeful that this new paragraph will ensure that complaints do 
not languish at the FCC and are expeditiously brought to 
completion.

Section 6. Additional remedies for indecent broadcast

    Section 6 adds a new subsection (c) to section 503 of the 
Communications Act of 1934 (47 U.S.C. 503) that provides the 
FCC additional remedies for obscene, indecent, or profane 
broadcasts. If the Commission determines that any broadcast 
station licensee has broadcast obscene, indecent, or profane 
material, the Commission may, in addition to any forfeiture 
penalty, require the violator to broadcast public service 
announcements (PSAs) that serve the educational and 
informational needs of children. These PSAs may be required to 
reach an audience that is up to five times the size of the 
audience that was estimated to have been reached by the 
offending broadcast. It is hoped that this remedial action will 
help to counter the negative effects brought on by the initial 
obscene, indecent or profane broadcast.

Section 7. License disqualification for violations of indecency 
        prohibitions

    Section 7 adds a new subsection (d) to section 503 of the 
Communications Act of 1934 (47 U.S.C. 503) which requires the 
FCC to consider a violation of obscenity, indecency, or 
profanity prohibitions when examining whether the applicant 
lacks the character or other qualifications required to operate 
a station under sections 308(b) and 310(d) of the 
Communications Act of 1934. The FCC may only use the violation 
for such purposes if a forfeiture penalty has been paid or a 
forfeiture penalty has been determined by the Commission or an 
administrative law judge and such penalty is not under review, 
and has not been reversed, by a court of competent 
jurisdiction. This language only requires the FCC to consider a 
violation in its examinations under section 308(b) and 310(d), 
but does not require any particular outcome.
    Section 308(b) states that all applications for station 
licenses, or modifications or renewals of licenses, must set 
forth facts that show the applicant has the character and other 
necessary qualifications to operate the station. Section 310(d) 
states that no station license may be transferred, assigned, or 
disposed of in any manner, without an application to the FCC, 
but that any application shall be disposed of as if an 
application for a license was being made under section 308. 
Therefore, in any request for change of control, or 
modification of, a license, the FCC will now be required to 
consider the effect of an obscenity, indecency, or profanity 
violation to the issue of character. It is the Committee's 
intent that the character considerations under this section 
should be applicable to those persons attempting to purchase 
additional station licenses, or applying to modify their 
existing licenses.

Section 8. License renewal consideration of violations of indecency 
        prohibitions

    Section 8 amends section 309(k) of the Communications Act 
of 1934 (47 U.S.C. 309(k)) by adding a new paragraph (5). This 
language requires the FCC to treat any obscenity, indecency, or 
profanity violation of section 503(b) as a ``serious 
violation'' for purposes of license renewal. Such a violation 
may only be considered as a ``serious violation'' if the 
forfeiture penalty has been paid or a forfeiture penalty has 
been determined by the Commission or an administrative law 
judge and such penalty is not under review, and has not been 
reversed, by a court of competent jurisdiction.
    Under the current section 309(k), a licensee has a 
presumption of renewal if: (1) the station has served the 
public interest, convenience, and necessity; (2) there have 
been no serious violations by the licensee of the Act or the 
rules and regulations of the Commission; and, (3) there have 
been no other violations by the licensee of this Act or the 
rules and regulations of the Commission, which taken together, 
would constitute a pattern of abuse. The amendment to 309(k) 
removes the presumption for entities that violate the 
obscenity, indecency, and profanity restrictions by deeming an 
obscenity, indecency, or profanity offense to be a ``serious 
violation.''
    To be clear, this language reverses the presumption that 
has only been in effect since 1996. Prior to 1996, even without 
a presumption of renewal, broadcast licenses were routinely and 
commonly renewed. This section is designed to add another 
factor to the decision to renew a license. Under the current 
language in section 309(k), the FCC must continue to examine 
mitigating factors and examine other less severe alternatives 
to non-renewal.
    Finally, in the situation where one licensee holds the 
licenses for a number of different stations, it is not the 
intent of the Committee to hold each station responsible for 
the obscene, indecent, or profane conduct of other stations. 
Therefore, in the event of license renewal, the offenses of one 
station should only apply to the renewal or revocation of that 
particular station, and should not be imputed to the other 
stations held by that licensee.

Section 9. License revocation for violations of indecency prohibitions

    Section 9 amends section 312 of the Communications Act of 
1934 (47 U.S.C. 312) by adding a new subsection (h). The new 
language requires the FCC to commence a hearing to consider 
license revocation if, during the term of the license, a 
licensee accrues three or more obscenity, indecency, or 
profanity violations. The FCC may only use the violations for 
such purposes if a forfeiture penalty has been paid or a 
forfeiture penalty has been determined by the Commission or an 
administrative law judge and such penalty is not under review, 
and has not been reversed, by a court of competent 
jurisdiction.
    Nothing in this provision requires the FCC to revoke a 
license upon three indecency violations, but only requires that 
the Commission hold a hearing to consider license revocation. 
Moreover, nothing in this section requires the FCC to wait 
until the third violation to revoke a license. If a first or 
second violation of the obscenity, indecency, or profanity laws 
was egregious enough to warrant holding a revocation hearing or 
actually revoking a license, nothing in the act should be 
construed to prohibit that result.
    Similar to license renewal discussed in section 8, where 
one licensee holds the licenses for a number of different 
stations, it is not the intent of the Committee to hold each 
station responsible for the obscene, indecent, or profane 
conduct of other stations. Therefore, in the event of license 
revocation, the offenses of one station should only apply to 
the renewal or revocation of that particular station license, 
and should not be imputed to the other stations held by that 
licensee.
    Finally, if the Commission opts to assess penalties on a 
``per utterance'' basis, then the Committee urges the 
Commission use caution and to consider that assessing penalties 
on a ``per utterance'' basis may have the highly punitive 
effect of referring a license to a revocation proceeding on the 
basis of a single broadcast program.

Section 10. Required contents of annual reports of the Commission

    Section 10 adds reporting requirements relating to FCC 
action on obscenity, indecency, and profanity complaints to be 
included as part of the Commission's annual report under 
4(k)(2) of the Communications Act of 1934 (47 U.S.C. 
154(k)(2)). Specifically, the FCC must report on: (1) the 
number of annual obscenity, indecency, and profanity complaints 
received by the Commission, and the number of programs to which 
such complaints relate; (2) the number of dismissed or denied 
complaints; (3) the number of complaints pending at the end of 
the year; (4) the number of notices issued by the Commission 
under section 503(b)(3) and (4); (5) for each notice, a 
statement of the amount of the proposed penalty, the program, 
station, and corporate parent (or any non-corporate entity with 
control over the station) to which the notice was issued, the 
length of time between filing of the complaint and the date the 
notice was issued, and the status of the proceeding; (6) the 
number of forfeiture orders issued under section 503(b); and, 
(7) for each forfeiture order, a statement of the amount 
assessed by the order, the program, station and corporate 
parent (or any non-corporate entity with control over the 
station) to which it was issued, whether the licensee paid the 
order, the amount paid, and instances the licensee refused to 
pay, whether the Department of Justice brought an action for 
recovery to collect the penalty.

Section 11. Sense of the Congress

    Section 11 is a sense of Congress that the broadcast 
television station licensees should reinstate a family viewing 
policy for broadcasters. The family viewing policy is a policy 
similar to the policy in the National Association of 
Broadcaster's code of conduct that was in effect from 1975 to 
1983.
    Empirical research shows that 71% of prime time television 
shows on the four major broadcast networks contain some form of 
sexual content, and that of children age 8-18 years, 86% of 
children have radios, and 65% of children have televisions, in 
their bedroom. Therefore, the Committee notes that the need for 
a voluntary industry family viewing policy is an appropriate 
response to the growing threat from indecent programming.

Section 12. Implementation

    Section 12(a) requires the Commission to prescribe 
regulations to implement the amendments made by the act within 
180 days after the date of enactment.
    Section 12(b) makes the act and the amendments made by the 
act prospective in nature. Any material broadcast before the 
date of enactment of the act is not covered.
    Section 12(c) makes clear that section 708 of the 
Communications Act of 1934 (47 U.S.C. 608) relating to 
separability applies to the act and the amendments made by the 
act. The inclusion of this separability clause in no way 
implies that any provision of the act is legally suspect or 
infirm. The Committee strongly believes that every section of 
H.R. 3717 is constitutional and would withstand judicial 
scrutiny.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

COMMUNICATIONS ACT OF 1934

           *       *       *       *       *       *       *



TITLE III--PROVISIONS RELATING TO RADIO

           *       *       *       *       *       *       *


SEC. 309. ACTION UPON APPLICATIONS; FORM OF AND CONDITIONS ATTACHED TO 
                    LICENSES.

  (a) * * *

           *       *       *       *       *       *       *

  (k) Broadcast Station Renewal Procedures.--
          (1) * * *

           *       *       *       *       *       *       *

          (5) License renewal consideration of violations of 
        indecency prohibitions.--If the Commission has issued a 
        notice under paragraph (3) or (4) of section 503(b) to 
        a broadcast station licensee or permittee with respect 
        to a broadcast station looking toward the imposition of 
        a forfeiture penalty under this Act based on an 
        allegation that such broadcast station broadcast 
        obscene, indecent, or profane material, and--
                  (A) such forfeiture penalty has been paid, or
                  (B) a forfeiture penalty has been determined 
                by the Commission or an administrative law 
                judge pursuant to paragraph (3) or (4) of 
                section 503(b), and such penalty is not under 
                review, and has not been reversed, by a court 
                of competent jurisdiction,
        then, notwithstanding section 504(c), such violation 
        shall be treated as a serious violation for purposes of 
        paragraph (1)(B) of this subsection with respect to the 
        renewal of the license or permit for such station.

           *       *       *       *       *       *       *


SEC. 312. ADMINISTRATIVE SANCTIONS.

  (a) * * *

           *       *       *       *       *       *       *

  (h) License Revocation for Violations of Indecency 
Prohibitions.--
          (1) Consequences of multiple violations.--If, in each 
        of 3 or more proceedings during the term of any 
        broadcast license, the Commission issues a notice under 
        paragraph (3) or (4) of section 503(b) to a broadcast 
        station licensee or permittee with respect to a 
        broadcast station looking toward the imposition of a 
        forfeiture penalty under this Act based on an 
        allegation that such broadcast station broadcast 
        obscene, indecent, or profane material, and in each 
        such proceeding either--
                  (A) such forfeiture penalty has been paid, or
                  (B) a forfeiture penalty has been determined 
                by the Commission or an administrative law 
                judge pursuant to paragraph (3) or (4) of 
                section 503(b), and such penalty is not under 
                review, and has not been reversed, by a court 
                of competent jurisdiction,
        then, notwithstanding section 504(c), the Commission 
        shall commence a proceeding under subsection (a) of 
        this section to consider whether the Commission should 
        revoke the station license or construction permit of 
        that licensee or permittee for such station.
          (2) Preservation of authority.--Nothing in this 
        subsection shall be construed to limit the authority of 
        the Commission to commence a proceeding under 
        subsection (a).

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TITLE V--PENAL PROVISIONS--FORFEITURES

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SEC. 503. FORFEITURES IN CASES OF REBATES AND OFFSETS.

  (a) * * *
  (b)(1) * * *
  (2)(A) * * *

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  (C) Notwithstanding subparagraph (A), if the violator is (i) 
a broadcast station licensee or permittee, or (ii) an applicant 
for any broadcast license, permit, certificate, or other 
instrument or authorization issued by the Commission, and the 
violator is determined by the Commission under paragraph (1) to 
have broadcast obscene, indecent, or profane material, the 
amount of any forfeiture penalty determined under this section 
shall not exceed $500,000 for each violation.
  [(C)] (D) In any case not covered in [subparagraph (A) or 
(B)] subparagraph (A), (B), or (C), the amount of any 
forfeiture penalty determined under this subsection shall not 
exceed $10,000 for each violation or each day of a continuing 
violation, except that the amount assessed for any continuing 
violation shall not exceed a total of $75,000 for any single 
act or failure to act described in paragraph (1) of this 
subsection. Notwithstanding the preceding sentence, if the 
violator is determined by the Commission under paragraph (1) to 
have uttered obscene, indecent, or profane material (and the 
case is not covered by subparagraph (A), (B), or (C)), the 
amount of any forfeiture penalty determined under this section 
shall not exceed $500,000 for each violation.
  [(D)] (E) The amount of such forfeiture penalty shall be 
assessed by the Commission, or its designee, by written notice. 
In determining the amount of such a forfeiture penalty, the 
Commission or its designee shall take into account the nature, 
circumstances, extent, and gravity of the violation and, with 
respect to the violator, the degree of culpability, any history 
of prior offenses, ability to pay, and such other matters as 
justice may require.
  (F) In the case of a violation in which the violator is 
determined by the Commission under paragraph (1) to have 
uttered obscene, indecent, or profane material, the Commission 
shall take into account, in addition to the matters described 
in subparagraph (E), the following factors:
          (i) With respect to the degree of culpability of the 
        violator, the following:
                  (I) whether the material uttered by the 
                violator was live or recorded, scripted or 
                unscripted;
                  (II) whether the violator had a reasonable 
                opportunity to review recorded or scripted 
                programming or had a reasonable basis to 
                believe live or unscripted programming may 
                contain obscene, indecent, or profane material;
                  (III) if the violator originated live or 
                unscripted programming, whether a time delay 
                blocking mechanism was implemented for the 
                programming;
                  (IV) the size of the viewing or listening 
                audience of the programming; and
                  (V) whether the programming was part of a 
                children's television program as described in 
                the Commission's children's television 
                programming policy (47 CFR 73.4050(c)).
          (ii) With respect to the violator's ability to pay, 
        the following:
                  (I) whether the violator is a company or 
                individual; and
                  (II) if the violator is a company, the size 
                of the company and the size of the market 
                served.
  (G) A broadcast station licensee or permittee that receives 
programming from a network organization, but that is not owned 
or controlled, or under common ownership or control with, such 
network organization, shall not be subject to a forfeiture 
penalty under this subsection for broadcasting obscene, 
indecent, or profane material, if--
          (i) such material was within live or recorded 
        programming provided by the network organization to the 
        licensee or permittee; and
          (ii)(I) the programming was recorded or scripted, and 
        the licensee or permittee was not given a reasonable 
        opportunity to review the programming in advance; or
          (II) the programming was live or unscripted, and the 
        licensee or permittee had no reasonable basis to 
        believe the programming would contain obscene, 
        indecent, or profane material.
The Commission shall by rule define the term ``network 
organization'' for purposes of this subparagraph.

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  (5)(A) No forfeiture liability shall be determined under this 
subsection against any person, if such person does not hold a 
license, permit, certificate, or other authorization issued by 
the Commission, and if such person is not an applicant for a 
license, permit, certificate, or other authorization issued by 
the Commission, unless, prior to the notice required by 
paragraph (3) of this subsection or the notice of apparent 
liability required by paragraph (4) of this subsection, such 
person [(A)] (i) is sent a citation of the violation charged; 
[(B)] (ii) is given a reasonable opportunity for a personal 
interview with an official of the Commission, at the field 
office of the Commission which is nearest to such person's 
place of residence; and [(C)] (iii) subsequently engages in 
conduct of the type described in such citation. [The provisions 
of this paragraph shall not apply, however,]
  (B) The provisions of subparagraph (A) shall not apply (i) if 
the person involved is engaging in activities for which a 
license, permit, certificate, or other authorization is 
required, or is a cable television system [operator, if the 
person] operator, (ii) if the person involved is transmitting 
on frequencies assigned for use in a service in which 
individual station operation is authorized by rule pursuant to 
section 307(e), [or in the case of] (iii) in the case of 
violations of section 303(q), if the person involved is a 
nonlicensee tower owner who has previously received notice of 
the obligations imposed by section 303(q) from the Commission 
or the permittee or licensee who uses that tower, or (iv) in 
the case of a determination that a person uttered obscene, 
indecent, or profane material that was broadcast by a broadcast 
station licensee or permittee, if the person is determined to 
have willfully or intentionally made the utterance.
  (C) Whenever the requirements of this paragraph are satisfied 
with respect to a paricular person, such person shall not be 
entitled to receive any additional citation of the violation 
charged, with respect to any conduct of the type described in 
the citation sent under this paragraph.

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  (7) In the case of an allegation concerning the utterance of 
obscene, indecent, or profane material that is broadcast by a 
station licensee or permittee--
          (A) within 180 days after the date of the receipt of 
        such allegation, the Commission shall--
                  (i) issue the required notice under paragraph 
                (3) to such licensee or permittee or the person 
                making such utterance;
                  (ii) issue a notice of apparent liability to 
                such licensee or permittee or person in 
                accordance with paragraph (4); or
                  (iii) notify such licensee, permittee, or 
                person in writing, and any person submitting 
                such allegation in writing or by general 
                publication, that the Commission has determined 
                not to issue either such notice; and
          (B) if the Commission issues such notice and such 
        licensee, permittee, or person has not paid a penalty 
        or entered into a settlement with the Commission, 
        within 270 days after the date of the receipt of such 
        allegation, the Commission shall--
                  (i) issue an order imposing a forfeiture 
                penalty; or
                  (ii) notify such licensee, permittee, or 
                person in writing, and any person submitting 
                such allegation in writing or by general 
                publication, that the Commission has determined 
                not to issue either such order.
  (c) Additional Remedies for Indecent Broadcasting.--In any 
proceeding under this section in which the Commission 
determines that any broadcast station licensee or permittee has 
broadcast obscene, indecent, or profane material, the 
Commission may, in addition to imposing a penalty under this 
section, require the licensee or permittee to broadcast public 
service announcements that serve the educational and 
informational needs of children. Such announcements may be 
required to reach an audience that is up to 5 times the size of 
the audience that is estimated to have been reached by the 
obscene, indecent, or profane material, as determined in 
accordance with regulations prescribed by the Commission.
  (d) Consideration of License Disqualification for Violations 
of Indecency Prohibitions.--If the Commission issues a notice 
under paragraph (3) or (4) of subsection (b) to a broadcast 
station licensee or permittee looking toward the imposition of 
a forfeiture penalty under this Act based on an allegation that 
the licensee or permittee broadcast obscene, indecent, or 
profane material, and either--
          (1) such forfeiture penalty has been paid, or
          (2) a forfeiture penalty has been determined by the 
        Commission or an administrative law judge pursuant to 
        paragraph (3) or (4) of subsection (b), and such 
        penalty is not under review, and has not been reversed, 
        by a court of competent jurisdiction,
then, notwithstanding section 504(c), the Commission shall, in 
any subsequent proceeding under section 308(b) or 310(d), take 
into consideration whether the broadcast of such material 
demonstrates a lack of character or other qualifications 
required to operate a station.

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