According to the source, who spoke only on condition of anonymity, a staff recommendation to the Federal Communications Commission (search) suggests each of the 20 CBS-owned stations be fined the maximum indecency penalty of $27,500 for the incident.
The staff did not recommend fining CBS affiliates that aired the Super Bowl show but are not owned by Viacom Inc., the parent company of CBS, the source said.
The commissioners now must decide whether to accept the recommendation. A decision is expected in the next few weeks.
FCC spokesman David Fiske declined to comment.
Calls to CBS and Viacom seeking comment were not immediately returned.
Produced by MTV, the Feb. 1 Super Bowl halftime show featured Jackson and singer Justin Timberlake (search) performing a flirtatious duet. At the end, Timberlake ripped off a piece of Jackson's black leather top, exposing her right breast to a TV audience of some 90 million.
The commission was flooded with more than 500,000 complaints.
There is no government definition of indecency. Federal law bars radio stations and over-the-air television channels from airing references to sexual and excretory functions between 6 a.m. and 10 p.m., when children may be tuning in. When a complaint is made, the FCC determines whether the incident was indecent.
The rules do not apply to cable and satellite channels or satellite radio.
The FCC stepped up enforcement of indecency standards soon after the Jackson incident, slapping a $755,000 fine on Clear Channel Communications (search) for a "Bubba the Love Sponge" broadcast and a record $1.75 million fine, also against Clear Channel, for indecency complaints against Howard Stern (search) and other radio personalities.
Last week, the Senate voted overwhelmingly to increase the top fine to $275,000 per indecent incident with a limit of $3 million a day. The House passed a bill earlier that would set fines at $500,000. Differences between the two bills must be worked out.