FCC to Convenience Stores: Oops!

Procedural stumble results in withdrawal of citations and proposed fines

We reported last year on FCC citations against convenience store chains Circle-K and 7-Eleven. We don’t usually think of convenience stores as being subject to FCC regulation. But because the stores stocked prepaid cell-phone handsets, the FCC designated them “resellers of wireless services,” and went on to fault them for failing to file certain reports relating to compatibility of the handsets with hearing aids.

The FCC has now withdrawn those citations along with eight others, plus nine proposed fines.

When the FCC or any federal agency adopts a rule that imposes new paperwork burdens, the hilariously-named Paperwork Reduction Act requires the rule to be approved by the Office of Management and Budget (OMB) before it can go into effect. The FCC ships the newly-adopted rule over to OMB for review, a process which normally takes just a few weeks. OMB almost always approves the rule, even if it triggers staggering amounts of new paperwork, and gives the rule a “control” number. The FCC then puts a notice in the Federal Register saying the rule is effective.

Unfortunately, this seemingly simple process has been breaking down with increasing frequency.

If someone at the FCC forgets to send the rule to OMB, or forgets to publish the notice of OMB approval once it’s received, the rule cannot be legally effective. Often these small details are overlooked by the public, who understandably think the rule is in force. Sometimes even the FCC makes the same mistake.

Back in 2008, the FCC required wireless service providers to carry a line of hearing aid compatible handsets. It also – and here’s where the paperwork comes in – required an annual report detailing the handsets offered, along with other efforts to make service more accessible to the hearing impaired. The industry by and large has provided these reports since January 2009, assuming the rule was in effect, and indeed, was helped along by reminders from the FCC of the need to file. A few hapless entities, including Circle-K and 7-Eleven, selling handsets next to the Slim Jims and hotdogs, did not even know they were “service providers” subject to FCC rules. Yet in 2010, the long arm of the FCC reached out and tapped them on the shoulder. Both received “citations,” warning them of fines of up to $150,000 per violation, per day, for not filing the report.

But then, last December 13, the FCC published a public notice indicating that the 2008 rule had just then become effective. OMB had approved the rule back in July 2008, but the FCC neglected to publish the necessary notice of its effectiveness. (The FCC did publish the fact of the OMB approval on July 21, 2008, but forgot to say that the rule was effective.) In any event, since the FCC cannot issue citations and other punitive actions based on supposed violations of the then-not-yet-in-effect reporting rule, the citations and proposed fines had to be quietly withdrawn.

So the Paperwork Reduction Act, which so often seems to create mounds of additional paperwork for all concerned, for once did its job. It spared a few innocent members of the public from the horrors of reporting. But while Circle-K and 7-Eleven are now vindicated, the thousands of poor souls who spent an average of 13.2 hours per year filling out unnecessary reports (by the FCC’s estimate) will never get that time back. 

And as of December 13, the reporting requirement is officially on the books, so failure to file the reports from here on out will lead to forfeitures that probably won’t be rescinded.

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