Articles Posted in Fees

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Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others.  This month’s issue includes:

  • FCC Revokes License for Unpaid Regulatory Fees; Warns Other Stations of Similar Fate
  • Texas Station Warned Over Multiple Tower and Transmission Violations
  • FCC Nabs Massachusetts Pirate While Commission Continues to Push for Anti-Piracy Legislation

Winter Comes for FM Station With Unpaid Regulatory Fees

The FCC’s Media Bureau published a trio of orders this month relating to the unpaid regulatory fees of three unrelated FM stations.  In the most severe case, the Media Bureau revoked the license of a Massachusetts station, ordering it to cease operations immediately.  The Bureau also initiated license revocation proceedings for overdue fees from stations in Illinois and Louisiana.

The Communications Act requires the FCC to assess and collect regulatory fees for certain regulated activities, including broadcast radio.  The FCC assesses a 25 percent penalty on any late or missing payments.  Failure to pay these regulatory fees or related penalties is grounds for license revocation.

The Media Bureau initially sent the Massachusetts licensee several Demand Letters requiring payment of delinquent fees.  The licensee did not respond to them.  Subsequently, in November 2018, the Media Bureau issued an Order to Pay or to Show Cause, which required the licensee to either pay its overdue fees or demonstrate why it did not owe them.  As we discussed at the time, between fiscal years 2014 and 2018, the licensee had accumulated a debt to the FCC of $9,641.73 in unpaid fees and related charges.  After the licensee failed to respond to the November Order, the Media Bureau issued a Revocation Order.  This “death sentence” terminates the licensee’s authority to operate the station and deletes the station’s call sign from FCC databases.

Shortly after releasing the Revocation Order, the Media Bureau issued two separate Orders to Pay or to Show Cause to the licensees of FM stations in Louisiana and Illinois.  According to the Media Bureau, the Louisiana licensee owes the FCC $11,386.77 in regulatory fees, interest, penalties, and other charges for fiscal years 2009, 2011-2014, and 2017, and the Illinois licensee owes $17,296.21 for fiscal years 2007, 2009, 2010, 2012, and 2013.  The Media Bureau had previously sent various notices and Demand Letters to the licensees regarding the overdue amounts without success.

The Louisiana and Illinois licensees each have 60 days in which to submit evidence showing that either full payment has been made, or that payment should be waived or deferred, lest they suffer the same fate as the Massachusetts FM station.

Who Monitors the Monitoring Points?  FCC Warns Texas AM Station Over Multiple Tower and Transmission Violations

The FCC’s Enforcement Bureau issued a Notice of Violation (“NOV”) against the tower owner and licensee of a Dallas-area AM station for improper tower painting and lighting and for operating at variance from its license. Continue reading →

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One of the intriguing aspects of posting on CommLawCenter is the level of interest a particular post generates.  Posts announcing something of vital importance to broadcasters will sometimes make hardly a ripple, while more mundane posts attract surprising interest.

Indeed, one of CommLawCenter’s most-read posts in its early years was a discussion of the first national EAS test.  It wasn’t that non-broadcasters had suddenly become infatuated with EAS; it was because the first national EAS test happened to coincide with a near-miss between Earth and what was described as a “huge asteroid”.  There apparently was a sizable contingent of conspiracy theorists who thought that a national EAS test being held at the same time as the asteroid’s arrival indicated a government cover-up of the asteroid’s imminent collision with Earth.  I never understood the logic of that claim, but a four-month-old post on CommLawCenter announcing the national EAS test date suddenly became red hot in web readership until the asteroid peacefully passed by Earth.

So it was when we recently reported that shortly after the FCC shut down, some stations were getting calls claiming to be on behalf of the FCC and asking for payment of “FCC fees”.  When stations pressed for more information, the callers became belligerent or hung up.  In response, we alerted stations to be wary of such calls and to be especially leery of any caller that requested payment by gift card, which is the most common form of payment demanded by scammers (because they can’t be traced).

That brief alert received a lot of trade press coverage afterwards, and I certainly hope it saved a few stations some headaches.  We subsequently sought more information to see if there was anything that could be learned about the calls (were they all actually scams, were there multiple approaches, or just one unified effort?).  Unfortunately, there wasn’t much more information available, as it seemed most stations had just hung up and moved on with their lives.  However, we did get an interesting tidbit from one station—the callback number the caller had left on voicemail.  While that may seem odd, it’s common for phone scammers to leave a toll-free number behind so that those called can run out, obtain the necessary gift cards to make payment, and have a number they can call back to relay the gift card payment information to the scammer.

This particular number didn’t generate any useful information from a web search, but the way this particular call had been described seemed more formal and organized than you would expect the typical scam call to be (although the caller apparently still became belligerent when pressed).  As noted in the original post, the FCC (particularly when shut down) doesn’t make collection calls itself, but it does typically send a written “Past Due Notice” to licensees when a debt has stayed unpaid for 30 days.

I checked my files for a Past Due Notice a client received a few years ago, and sure enough, at the very bottom of the Notice was the phone number the station had provided.  Now we were getting somewhere.  As it turns out, despite being on a piece of FCC correspondence, it was not an FCC telephone number, but one associated with the Department of Treasury.  While the FCC does refer past due amounts to Treasury for collection (a questionable practice given that when you want to sell your station or renew its license, the FCC already has all the leverage it needs to get paid), the Treasury Department shut down long before the FCC.  Since the FCC doesn’t make collection calls, and both the FCC and Treasury were closed when this particular call was made, who was doing the calling?

Making the circumstances even more curious is the fact that the FCC actually pays Treasury to handle the collection of overdue FCC accounts.  If the FCC and Treasury are both shut down because they have no appropriated funds to operate, then the obvious question is: Who is paying a Treasury employee to do FCC collections if neither agency has funding to operate in the first place?

So I called the number to ask.  A very pleasant person (not belligerent at all, at least to me) answered the phone and indicated that she wasn’t sure exactly how the contract between the FCC and Treasury worked, but that money was apparently available for their continued operations, as they had not been informed they were at risk of being furloughed anytime soon.  She also said that any of the calls to stations in which the caller hung up when pressed would not have come from Treasury, as they are used to people thinking they are a scam caller and therefore work hard to persuade people that the call is a legitimate one.

I told her that with the FCC shut down, stations couldn’t access the FCC’s Fee Filer or Red Light systems to determine the validity of any claimed debt, so there were some serious concerns about which callers were scammers and which might be legitimate outreach from Treasury.  She responded that they were was unaware the FCC had taken the Fee Filer and Red Light systems down, and appreciated knowing that.  She added that she certainly understood why a broadcaster might be skeptical of a call given the shutdown and the inability to verify the existence of a debt until the FCC reopens.  I suggested Treasury might want to focus its collection efforts on other types of debts until the FCC reopens, but in any event, that Treasury should be aware that their calls might be viewed with more than the typical amount of skepticism until the government reopens.

As we finished the conversation, she confirmed that Treasury only takes traditional forms of payment, so again, if a caller asks to be paid in gift cards, the call is a scam.

But what if the call successfully passes that first test?  How do you tell if the call is legitimate, and equally important, whether you actually owe the amount claimed?  Under normal circumstances, the first thing you should do is log into the FCC’s Fee Filer and Red Light systems to determine whether any debt is outstanding and the amount of it (if there are amounts due, you’ll be able to pull up a “Remittance Advice – Bills for Collection (Form 159B) for the amounts owed).  Since those systems are currently unavailable during the shutdown, if you aren’t aware of any outstanding payment due, you may want to wait until the FCC reopens and the debt can be confirmed before sending any payment.

Alternatively, if you get a call from someone claiming to be with the Department of Treasury, ask them to send you their copy of your Form(s) 159B, which is also used by Treasury as the basis for their collection process.  Once you are satisfied that you owe the debt (and interest), they will walk you through the payment options (again, no gift cards).  If you believe the debt claim to be an error, you can challenge it, but be aware that if you earlier received a Past Due Notice from the FCC and did not challenge it within 30 days of the date on the Notice, the government may take the position that you waived your right to challenge it.

So if you get a suspicious call claiming you owe FCC fees, whether you think it is a scam or not, it’s wise to check the FCC’s Fee Filer to make sure you are all paid up.  If not, the call might be legitimate, particularly if the amount the caller is saying you owe is similar to the amount the Fee Filer is indicating.  Note that the amounts may not be identical, as the Fee Filer indicates the initial amount owed plus any payment penalty (for example, missing a regulatory fee payment results in an immediate 25% penalty), but may not include all accrued interest, which Treasury will also insist on collecting.

But what happens if you still don’t pay?  Well, you will continue to have “Red Light” status at the FCC, which means the FCC will place a hold on processing your applications.  You won’t be able to sell your station, get its license renewed, etc., until the Red Light status is removed.  Also, once the FCC refers the debt to the Department of Treasury, if Treasury fails to collect it within a certain period of time, it will actually hand the bill to private debt collection agencies for collection.  Those entities are renowned for their skill at harassing debtors (sometimes legally, sometimes not) into paying.  If you have the misfortune to reach that state of affairs, you’ll dream of the days when you were only getting calls from scammers.

 

 

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Proving once again that nature abhors a vacuum, we’ve just learned of another bit of fallout for broadcasters from the federal shutdown—scammers are apparently calling broadcast stations pretending to be calling on behalf of the FCC and seeking to collect “FCC fees” over the telephone.  The first of these calls that we heard about occurred within six hours of the FCC shutting down.

With the FCC largely closed at this point, these callers are likely assuming that it will be very difficult for a broadcaster to ascertain the veracity of a fee claim or to confirm whether a caller is actually connected to the FCC.  As detailed in our earlier post, however, the FCC, along with the rest of the federal government, is operating only at a bare-bones “protecting life and property” level at this point.  While it could certainly use the money given the current absence of congressional funding, a closed FCC is not seeking to collect it from broadcasters, and certainly not over the telephone.

So if you get a call claiming to be on behalf of the FCC and demanding money, be skeptical.  Be even more skeptical if the caller wants you to pay with gift cards—the preferred payment method of phone scammers.  The FCC is really more of a check and credit card operation, and has very complex systems for processing those forms of payment.  It will not allow you to pay your regulatory fees with gift cards, and certainly doesn’t do it over the telephone.

If you do get such a call, one place you can report it to is the Federal Trade Commission, but you may have to wait until the federal shutdown is over, as processing complaints regarding phone scammers is one of the many FTC activities that have ceased due to the government shutdown.

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Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others.  This month’s issue includes:

Headlines:

  • Unpaid Regulatory Fees Bring License Revocation Proceeding for Massachusetts FM Station
  • Unregistered Tower and Unauthorized Silence Spell Trouble for North Carolina AM Station
  • FCC Issues Warning to Denver Trucking Company for Unauthorized Transmissions on Public Safety Frequency

The Check is (Not) in the Mail: Massachusetts Station Risks Revocation over Missing Regulatory Fees

The FCC’s Media Bureau issued an Order to Pay or to Show Cause (“Order”) to the licensee of a Massachusetts FM station for failing to pay five years’ worth of regulatory fees and the corresponding penalty fees.  In response to the Order, the licensee must either pay the overdue fees or demonstrate why it does not owe regulatory fees.  The Order also launches a proceeding to revoke the station’s broadcast license.

Section 9 of the Communications Act (“Act”) requires the FCC to “assess and collect regulatory fees” for certain regulated activities, including broadcast radio.  Should a party fail to timely pay such fees, the FCC will assess a 25% late fee, as well as interest, penalties and administrative costs.  The FCC may also revoke licenses for failure to pay.

The licensee failed to pay its regulatory fees between fiscal years 2014 and 2018, and has accumulated a debt of $9,641.73 in unpaid fees and related charges.  The FCC repeatedly sent the licensee Demand Letters calling for payment but received no response.  The FCC eventually transferred the licensee’s debt for fiscal years 2014-2017 to the Treasury Department for collection.  At the FCC’s request, the Treasury Department recently transferred this debt back to the FCC in order to consolidate the collection process.

The licensee has 60 days to either: (1) provide the FCC with documented evidence that all its regulatory fee debt has been paid, or (2) show cause for why such payment is either “inapplicable or should otherwise be waived or deferred.”

Failure to provide a satisfactory response to the Order may result in the revocation of the licensee’s sole FM station license.

Silent Night: FCC Investigates North Carolina Licensee for Unregistered Tower and Other Violations

The FCC’s Enforcement Bureau issued a Notice of Violation (“NOV”) to the licensee of a North Carolina AM radio station for failing to register and light its tower, and for failure to operate its station in accordance with the FCC’s Rules.

Part 17 of the FCC’s Rules requires a tower owner to comply with various registration, lighting and painting requirements.  With limited exceptions, a tower that exceeds 200 feet in height above ground level must be registered with the FCC.  Further, towers must be painted and lighted in compliance with FAA requirements, and any extinguished or improperly functioning lights must be reported to the FAA if the problem is not corrected within 30 minutes.

Part 73 of the FCC’s Rules sets minimum operating hours for commercial broadcast stations.  A commercial AM station must operate for at least two-thirds of the total hours it is authorized to operate between the hours of 6 a.m. and 6 p.m., and two-thirds of the total hours it is authorized to operate between 6 p.m. and midnight every day except Sunday.  A station that expects to be silent for over 30 days must seek and obtain Special Temporary Authority (“STA”) from the FCC to be silent for such an extended period. Continue reading →

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Today the FCC publicly released a Report and Order eliminating TV stations’ annual obligation to report whether they have provided feeable ancillary or supplementary services on their spectrum during the past year unless they have actually provided such services.  The order was originally slated for discussion and a vote at next week’s FCC Open Meeting, but the Commission wound up adopting this widely supported change early, unanimously voting for it on circulation.

Previously, all digital television stations had to report by December 1 of each year whether they had provided feeable ancillary or supplementary services in the past year, what those services were, and then submit payment to the government of 5% of the gross revenue derived from such services.  Ancillary and supplementary services are any services provided on a TV station’s digital spectrum that is not needed to provide the single free over-the-air program stream required by the FCC.  The reason the word “feeable” is important is that broadcast video streams (i.e., multicast streams) do not trigger payment of the 5% fee.  Examples previously provided by the FCC of feeable ancillary and supplementary services include computer software distribution and data transmissions.

Observers had expected this rule change for a while.  In the spring of 2017, FCC Chairman Ajit Pai spearheaded the “Modernization of Media Regulation Initiative,” which aimed to institute a massive review of potentially outdated or irrelevant regulations affecting broadcasters, cable system operators, and satellite providers.  At Commissioner Michael O’Rielly’s urging, the Commission originally proposed today’s changes in a Notice of Proposed Rulemaking (NPRM) in October 2017.  The following month, the Media Bureau spontaneously waived the December 1, 2017 filing deadline for TV stations that had not provided feeable services over the prior twelve-month reporting period, signaling that the proposed rule change was likely coming.

Indeed, the FCC received broad support from commenters for the change.  In last year’s NPRM, the FCC noted that of 1,384 full-power commercial TV stations, fewer than 15 reported revenues from ancillary or supplementary services, netting the Commission around $13,000 in fees.

As a result, today’s Order amends Section 73.624(g) of the FCC’s Rules to require that only TV stations actually providing feeable ancillary or supplementary services need file the report in the future.  The FCC could find no justification for the immense expense incurred in having broadcasters submit, and the FCC collect and process, forms merely indicating the station hadn’t provided such services.  It wasn’t so much the FCC concluding that the expense outweighed the public interest benefit; it was the FCC being unable to point to a public interest benefit.

Which just makes you wonder just how this rule stayed in place for nearly 20 years, and no prior FCC bothered to ask that fundamental question.

 

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The FCC today released an Order waiving, at least for this year, the requirement that full power, Class A and low power television stations file what has traditionally been known as a Form 317 report by December 1.  More formally known as the DTV Ancillary/Supplementary Services Report, and due each December 1 for the past two decades, the reports are now actually filed on Form 2100, Schedule G rather than on the discontinued Form 317 (small wonder that everyone still refers to it as the Form 317 report).

The purpose of the report is to inform the FCC if a TV station has used its spectrum to provide non-broadcast services during the past year, and if so, to submit a payment to the government equivalent to 5% of the gross revenues derived from that service.  Ancillary or supplementary services are all services provided on any portion of a DTV station’s digital spectrum that is not necessary to provide the single free over-the-air program stream required by the FCC.  Any video broadcast service that is provided with no direct charge to viewers is exempt.  According to the FCC, examples of services that are considered ancillary or supplementary include “computer software distribution, data transmissions, teletext, interactive materials, aural messages, paging services, audio signals, subscription video, and the like.”  If the station charges a fee for such a service, it must pay the government 5% of the gross revenues derived from that service when it files its report.

The FCC first adopted the requirement in 1999 as a result of a directive contained in the Telecommunications Act of 1996.  Since then, the rule has required digital full power commercial and noncommercial TV stations, and later Class A and low power television stations, to report annually “whether they provided ancillary or supplementary services in the 12-month period ending on the preceding September 30.”  The rule requiring the filing of these reports mandates that TV stations file them whether or not they have any non-broadcast services to report.  In fact, the rule pointedly says that failure to file “regardless of revenues from ancillary or supplementary services or provision of such services may result in appropriate sanctions.”  As a result, many thousands of these reports have been filed over the years despite the fact that very few stations have ever offered such services.

When the FCC this summer opened the door in its Modernization proceeding for suggestions as to how to eliminate unnecessary regulatory burdens, a chorus rang out in support of modifying this particular rule.  In one of those now glaringly obvious “how could someone not have thought of this twenty years ago?” moments, first Commissioner O’Rielly and then numerous commenters suggested modifying the rule to eliminate the requirement for all stations except those that actually provide such services.  That led to the FCC voting last month to issue a Notice of Proposed Rulemaking proposing to eliminate the filing requirement for all stations that do not offer ancillary or supplementary services.

Buried in a footnote to that NPRM was the answer to a question many of us had asked over the years; namely, what is the percentage of stations indicating they are actually providing such services?  Having been involved in the filing of well over a thousand of these reports over the years, we had yet to file one indicating a station has actually provided ancillary or supplementary services.  Now we know that, according to the NPRM, fewer than 15 stations nationwide offered such services in 2016, yielding a total payment to the government of roughly $13,000.  That’s fewer than fifteen out of more than 6600 reports filed in 2016 (0.2%).

Stated differently, if the FCC had just asked each of those 6600 stations to mail in $2.00 rather than a report, the government would have garnered more revenue while wasting far less station resources.  Of course, that doesn’t take into account the resources the FCC was forced to expend processing 6600 reports looking for the 15 that actually reported revenues, ensuring that fulfilling this congressional mandate currently costs the FCC more than it brings in.

For that reason, today’s Order waiving this year’s filing requirement for stations not offering such services will likely be welcome news not just for those broadcasters, but for FCC staff as well.  It does, however, remain a short-term fix.  The FCC’s proceeding to permanently change the rule is still underway, with the comment deadline not yet set.  Based on today’s waiver, the odds seem pretty good that by the time December 1, 2018 rolls around, a waiver will no longer be necessary as the change will have been incorporated into the rule.  In a time when even the most mundane proposals for change can generate fervent opposition, this may be the rare Commission rule that lacks a constituency to defend it to the death.

So the vast majority of stations that had been drafting their 2017 report can stop right now.  Of course, if your station is one of the lonely 15 that provided ancillary and supplementary services during the past year, the waiver doesn’t apply and you will still need to file the report and pay the FCC 5% of the gross revenues generated.  Then Congress can debate at length where to spend the $13,000.

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[Breaking News: Moments before the release of this post, the FCC issued a Public Notice announcing an extension of time to the end of the government’s fiscal year for regulatory fee payors in areas affected by Hurricanes Harvey and Irma to make their regulatory fee payments.  Regulatees in Florida, Puerto Rico, the US Virgin Islands, and affected portions of Texas, Louisiana, Alabama, and Georgia have until midnight on September 29, 2017 to file and pay their fees.  While that only provides an additional three days to pay, the FCC indicates that anyone needing additional relief can file a request using the Commission’s established deferral/reduction request procedures.]

With the end of the government’s fiscal year comes the obligation to pay the annual regulatory fees that defray the cost of FCC activities for which a separate fee, such as an application processing fee, is not paid.  These activities include, ironically enough, rulemaking and enforcement activities that regulatees might prefer not to fund.

Each year, the FCC is required to conduct a proceeding determining how to allocate the cost of its operations among the various industries and types of entities it regulates.  After soliciting comments on each year’s proposed fees, the FCC releases a final order stating how it will apportion the fees among various regulatee categories for the fiscal year.  Thereafter, it issues a Public Notice announcing the deadline for paying the fees, and releases Fact Sheets for each category of regulatee providing more detailed information about how to pay those particular fees.

Over the course of last week, the FCC released its Report and Order setting this year’s annual regulatory fee amounts and almost immediately thereafter announced that annual regulatory fees are due by September 26, 2017.  It also announced that its Fee Filer system is now open to receive payments.  For Media Bureau regulatees, the FCC released this Fact Sheet setting forth the fees for each class and category of broadcast license.  Licensees subject to the fees must file a report listing the fees they owe through the Fee Filer system and then pay that amount by 11:59 pm (ET) on September 26.

This year’s Regulatory Fee Order contained at least some good news for certain broadcasters in the form of reduced fees.  Specifically, television stations in all market sizes saw modest decreases in their fees over last year, although the FCC continues to question whether there are television stations paying the lower satellite station fee that are not entitled to do so and whether the fee for satellite television stations should be increased substantially next year.

On the radio side, all radio broadcasters with a population served of 75,000 or less also saw a decrease in their fees.  However, that was balanced by an increase in fees for radio stations serving a population of more than 3,000,000, with some of those fees increasing by as much as $5,000.  Radio stations between these two extremes received a mixed bag of increases and decreases, apparently as a result of the FCC’s efforts to make the increments between tiers more proportional.

The Regulatory Fee Order contained particularly good news for some small market “singleton” stations.  The FCC increased the de minimis fee exemption from $500 (it had been $10 before 2014) to $1,000.  When it was $500, the exemption only helped a few licensees of stand-alone translator, booster and low power television stations.  With a $1,000 exemption, many stand-alone AM and some stand-alone FM stations in smaller markets are now also relieved of both the obligation to file the report of fees owed and to pay those fees.  Note that in determining whether the exemption applies, the FCC adds together all of the regulatory fees owed by a regulatee, so a small market licensee will lose the exemption if it has other regulatory fees due that, along with the radio station regulatory fee, add up to more than $1,000.

Regulatees who owe less than $25,000 can pay using a credit card.  Those owing $25,000 or more must use wire transfer, debit card, or bank ACH to pay.  Department of Treasury rules prohibit a single entity from paying more than $24,999.99 to a single government agency in a single day by credit card.  This limit applies whether the payment is made as a single payment or as a series of smaller payments that together add up to $25,000 or more.

Failure to timely pay regulatory fees brings with it a 25% penalty, administrative fees, and should the fees remain unpaid for any length of time, rather merciless fee collection activity from outside collection agencies.  Failure to pay regulatory fees at all (as opposed to paying them late) can bring even greater woes, up to and including loss of license.

So, unless you are in a hurricane-affected area, mark September 26th on your calendar as “Reg Fee Day”.  Like death and taxes, annual regulatory fees have become another certainty of life for those regulated by the FCC.  Unlike death, however, some may qualify for an exemption.

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Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:

Headlines:

  • Broadcaster Loses Appeal of $20,000 FCC Fine
  • FCC Issues Citation for Violations of Radio Frequency Equipment Authorization and Labeling Rules
  • FCC Proposes $392,930 Fine to Telecom Provider for Excessive USF Fees, Unauthorized Transfers, and Delinquent Regulatory Fees

Ninth Circuit Upholds $20,000 Fine Against FM Broadcaster for Unauthorized Operation

The U.S. Court of Appeals for the Ninth Circuit upheld a $20,000 FCC fine against a New Mexico FM broadcaster for operating outside the parameters of the broadcaster’s construction permit.

Section 301 of the Communications Act bans the unlicensed transmission of “energy or communications or signals by radio.” Section 503 of the Act authorizes monetary fines where the FCC finds “willful[] or repeated[]” failure to comply “with the terms and conditions of any license, permit, certificate, or other instrument or authorization” issued by the FCC.

In November 2009, the FCC issued a $20,000 fine to the broadcaster for operating at variance from the broadcaster’s construction permit. Specifically, the FCC found that the station was broadcasting without authorization, and was being operated at a facility 34 miles from its authorized location.

When the broadcaster failed to pay the $20,000 fine, the FCC referred the matter for collections to the Department of Justice (“DOJ”), which, in turn, sued the broadcaster in Nevada District Court to recover the $20,000. The District Court granted the DOJ’s motion for summary judgment, and in doing so upheld the fine against the broadcaster. The broadcaster, representing himself in court, subsequently appealed the District Court’s ruling to the Ninth Circuit.

The Ninth Circuit affirmed the District Court’s ruling, stating that the DOJ provided “substantial” evidence that, for more than a year, the broadcaster “willfully and repeatedly” transmitted radio signals from a different location and at different technical parameters than those specified in the broadcaster’s construction permit. In contrast, the court explained, “taking his submissions in the most generous light, [the broadcaster has] not shown a genuine issue of material fact for trial.” The broadcaster failed to contradict any of the facts underlying the alleged unauthorized operation: (1) because his construction permit required FCC approval before commencing program testing—which the FCC never granted—the transmissions were not valid under the FCC’s Rules; and (2) because the broadcaster transmitted at variance from the terms of the permit, he was not conducting valid equipment tests, which only allow transmission to assure compliance with the permit’s terms. In reviewing the amount of the fine, the Ninth Circuit found the FCC’s decision to impose the full $10,000 base fine for each of the two instances of unauthorized operation “reasonable and not an abuse of discretion.”

Going, Going, but Not Gone: FCC’s Parting Gift to Company Winding Down Business Is Citation for Equipment Authorization and Labeling Violations

The FCC’s Enforcement Bureau issued a citation to a company for marketing radio frequency (“RF”) transmitters that were not properly certified or labeled.

Section 302 of the Communications Act prohibits the manufacture, import, sale, or shipment of home electronic equipment and devices that fail to comply with the FCC’s regulations. Section 2.803 of the FCC’s Rules provides that a device subject to FCC certification must be properly authorized, identified, and labeled in accordance with Section 2.925 of the Rules before it can be marketed to consumers. Continue reading →

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Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:

Headlines:

  • FCC Revokes Company’s Authorizations for Failure to Pay Regulatory Fees
  • Failure to Disclose Felonies in License Applications Yields $175,000 Fine
  • Cable Operator Settles Investigation into Unlawful Billing for $2.3 Million

Pay Up or Shut Down: Failure to Pay Regulatory Fees Leads to License Revocation 

In a rare move, the FCC revoked the domestic and international 214 authorizations of a Florida telecommunications company to provide facilities-based and international telecommunications services.

Section 9 of the Communications Act directs the FCC “to assess and collect regulatory fees” to recover costs of certain FCC regulatory activities. When a required payment is not made or is late, the FCC will assess a monetary penalty. Further, Section 9(c)(3) of the Act and Section 1.1164(f) of the FCC’s Rules permits the FCC to revoke authorizations for failure to make timely regulatory fee payments. Under Section 1.1917 of the Rules, a non-tax debt owed to the FCC that is 120 days delinquent is transferred to the Secretary of the Treasury for collection.

In December 2008, the company was authorized to provide facilities-based and resold international telecommunications services. In October 2014, the FCC sent the company a Demand Letter notifying the company of delinquent regulatory fees for fiscal year 2014 and demanding payment. The company failed to respond to the Letter and, as required by Section 1.1917 of the Rules, the FCC transferred the FY 2014 debt to the Secretary of the Treasury. As of July 1, 2016, the company had unpaid regulatory fees of $711.40 for FY 2014, and $3,025.34 for FY 2012. According to the FCC, the company does not appear to have any current customers.

In July 2016, the FCC issued an Order to Pay or Show Cause, instructing the company to demonstrate within 60 days that it paid the regulatory fees and penalties in full, or show why the payment was inapplicable or should be waived or deferred. The Order also explained that failure to comply could result in revocation of the company’s international and domestic authorizations. The company neither responded to the Order nor made any payments.

Citing the company’s failure to either pay its regulatory fees or show cause to remove, waive, or defer the fees, the FCC revoked the company’s international and domestic authorizations. The Revocation Order explicitly stated that such revocation did not relieve the company of its obligation to pay the delinquent fees or “any other financial obligation that has or may become due resulting from the authorizations held until revocation.”

Companies Settle Investigation Into Subsidiaries’ Failure to Disclose Felony Convictions in Wireless Applications With $175,000 Fine

Two engineering corporations, on behalf of themselves and their subsidiaries, entered into a Consent Decree with the FCC to end an investigation into the subsidiaries’ failure to disclose two corporate felony convictions in several wireless license applications. Continue reading →

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Just before the Labor Day weekend, the FCC issued its Report and Order launching the annual regulatory fee payment process for Fiscal Year 2016.  The FCC has also opened the “Fee Filer” system that must be used to pay regulatory fees.  More information and FAQs about the FY 2016 regulatory fees can be found here.

Payment in full of regulatory fees must be made by 11:59 p.m. Eastern Time on September 27, 2016. Late payment of regulatory fees will result in a 25% penalty and “red light” status, which restricts the FCC’s processing of a late payer’s applications until payment of the fees and penalties has been made.  The FCC specifically reminded participants in the ongoing TV broadcast Incentive Auction that they must pay regulatory fees for FY 2016 if they held a license or construction permit as of October 1, 2015 (and will be liable for next year’s fees if they hold a license or CP as of October 1, 2016).  The FCC also noted that payment of regulatory fees is required before Incentive Auction participants can receive any proceeds resulting from the auction, although given the pace at which the auction is proceeding, that seems unlikely to be an issue until well into next year.

As expected, regulatory fees for broadcast stations generally increased over last year, and the total fees assessed rose from $339,844,000 in FY 2015 to $384,012,497 in FY 2016.  Although the fees assessed for “operational expenses” remained the same as last year, the FCC (in a move which some might find ironic) assessed an additional $44,168,497 to offset FCC “facilities reduction costs.”  According to the FCC, those costs reflect the one-time expense of reducing the FCC’s office footprint and/or moving the FCC to a new location, and are required by Congress to be collected.

Despite the increase in total fees, middle market TV stations caught a break, with fees for stations in markets 51-100 falling from $16,275 last year to $15,200 this year. Fees for TV stations in markets 1-10, on the other hand, took the biggest jump — going from $46,825 to $60,675.

As for radio, rates increased over last year for most, but not all, stations.  In light of comments asserting that the regulatory fees proposed by the FCC last May were too burdensome for small independent radio stations, the FCC reduced the fees in the two lowest population tiers for AM and FM broadcasters.  Stations located in markets with populations of more than 3 million, previously the highest of the radio fee tiers, have been split into two groups by the FCC: (1) markets of 3,000,000-6,000,000, and (2) markets over 6,000,000.  Charts showing the regulatory fees for the various TV and radio groups are below:

Broadcast Television and TV/FM Translators and Boosters

Markets 1-10 $60,675
Markets 11-25 $45,675
Markets 26-50 $30,525
Markets 51-100 $15,200
Remaining Markets $5,000
Construction Permits $5,000
Satellite TV Stations (all markets) $1,750
Low Power TV, Class A TV, TV/FM Translators & Boosters $455

 

Broadcast Radio (AM and Full Power FM)

Population AM Class A AM Class B AM Class C AM Class D FM Classes A, B1 & C3 FM Classes B, C, C0, C1 & C2
25,000 or fewer $990 $715 $620 $685 $1,075 $1,250
25,001-75,000 $1,475 $1,075 $925 $1,025 $1,625 $1,850
75,001-150,000 $2,200 $1,600 $1,375 $1,525 $2,400 $2,750
150,001-500,000 $3,300 $2,375 $2,075 $2,275 $3,600 $4,125
500,001-1,200,000 $5,500 $3,975 $3,450 $3,800 $6,000 $6,875
1,200,001-3,000,000 $8,250 $5,950 $5,175 $5,700 $9,000 $10,300
3,000,001-6,000,000 $11,000 $7,950 $6,900 $7,600 $12,000 $13,750
Greater than 6,000,000 $13,750 $9,950 $8,625 $9,500 $15,000 $17,175

In addition, initial AM Construction Permits were assessed a $620 regulatory fee per station for FY 2016, with initial FM Construction Permits drawing a regulatory fee of $1,075 per station.

Finally, the FCC rejected a proposal by the Puerto Rico Broadcasters Association to reduce regulatory fees for stations located in Puerto Rico by 30% to reflect the economic hardships being experienced there.  The FCC responded that individual stations in Puerto Rico may request waivers of regulatory fees if they believe their conditions warrant such relief, but the Commission was unwilling to reduce the fees on a blanket basis.