Mum’s still the word at the FCC, more than a year after word surfaced about its questionable collection, and retention, of certain fees.
Gee, has it already been more than a year?
In June, 2011, we posted an item about how the FCC had, for seven years or so, been pocketing certain application filing fees which weren’t really owed by the applicants. The Commission did quietly issue a refund in response to one request in March, 2011 (notation on the refund check’s memorandum line: “not required to pay fees”). But it didn’t publicly announce that refund; instead, it quietly tried to change the rule that forbade collection of the fees.
During the summer of 2011, we filed a number of such requests on behalf of various clients, citing the refund that was issued. We understand that other law firms did as well. In the intervening year or so, however, no further refunds have been issued.
Last March, Jack Mullaney, the consulting engineer who (through our friends at Radio World) first called our attention to the FCC’s, um, sticky fingers, emailed the folks in the Office of the Managing Director (OMD) – which normally handles fee-related matters – inquiring about where things stand. Opting not to respond in writing, OMD offered to speak with Jack by phone. Jack agreed, and asked us if we’d like to sit in. You betcha, we said.
You can read the formal version of how the conversation went here. That’s an ex parte report that we filed with the Commission, at OMD’s request, the day after the call. (Frankly, we didn’t think that the conversation was subject to the ex parte rules for a number of reasons, but OMD thought otherwise and who were we to say them nay?)
As the folks at OMD seem to see things, there are three separate but related items sitting on their desks: (1) petitions for reconsideration (three in all) of the June, 2011 Second Report and Order in which the Commission changed the law to allow it to collect future application fees; (2) the various refund requests filed in 2011 relating to fees paid between 2004-2011; and (3) the refund that was issued in March, 2011.
As to the three petitions for reconsideration (one of which was filed by us at Fletcher Heald on behalf of one of our clients), all OMD would say is that those petitions are under consideration. Fair enough, although it’s hard to see why it would take OMD a year (and still counting) to work its way through three unopposed petitions consisting of a whopping total of 15 pages of argument.
As to our refund requests, we were assured that they would be resolved “shortly”, either by order or by letter. Why an order or letter, when the one refund that had been granted required neither? (In that case, the Commission simply sent the refund requester a check.) We were told, without elaboration, that OMD figured it would be “preferable” to send an order or letter.
And as to that earlier refund – the folks at OMD said that they’re taking a second look at that, too. Not that anybody has asked them to do so by, like, filing a petition for reconsideration or anything. No, the staff has apparently decided on its own to review the earlier refund. Of course, that refund was issued more than 15 months ago – good luck trying to get any of the money back.
Question: Don’t FCC actions get to a point where it’s too late for even the FCC to reach back and jigger with history? Answer: Yes, but the shot-clock count-down to get to that point doesn’t start ticking until "public notice" of the action in question. In this case – hold onto your seats – OMD has not yet issued a "public notice" of the March, 2011 fee refund. Why it’s taken so long to issue a simple notice like that is anybody’s guess. Maybe OMD lost the paperwork; maybe OMD forgot; maybe OMD has been so completely overwhelmed by other vastly more important things for the last 16 months that it couldn’t find the time to include a two-three line notice in with the other, similar notices it still somehow managed to crank out; maybe OMD’s dog ate it. Or maybe OMD, by purposely not issuing a public notice, figures that it can thereby retain ad infinitum the ability to rescind the refund, once it manages to come up with some non-risible justification for doing so. (Whether that interpretation would hold up is far from clear; the FCC's procedural rules can be read to say that, if OMD wanted to re-think its issuance of the initial refund, it had to do so within 30 days of the date shown on the check.)
Of course, OMD’s – and the Commission’s – biggest problem here is that they haven’t come up with any non-risible justification for holding onto the relatively small universe of application fees that they collected in seemingly clear violation of the FCC’s own rules. And that puts the Commission in a bind.
To recap what appears to have happened:
More than a decade ago, the Commission figured it might start collecting application fees from successful broadcast auction applicants; to do so it would have had to change its rule expressly exempting such applicants from such fees. Don't take our word for that: the rule in question provided that
[n]otwithstanding any other provision in title 47 of the Code of Federal Regulations to the contrary, high bidders [in the types of auctions at issue here] need not submit an additional application filing fee with their long form applications. [emphasis added]
But if the FCC did want to go ahead and collect fees, somebody must have messed up because the rule never got changed, and it remained as a bar to such fees. Nevertheless, the Commission insisted that those fees be paid. The first request for a refund of any those fees arrived in 2009, citing the rule that hadn’t been changed. OMD granted that request in 2011, but then the Commission tried to address the problem going forward by secreting a rulemaking proceeding in an otherwise routine order revising the application fee schedule. In that rulemaking the Commission repeatedly characterized the change – from “no fee is required” to “of course a fee is required” – as a “clarification”. The Commission also baldly asserted that the changed rule would not “substantially affect the rights of non-agency parties”, even though the change plainly opened the door for fees that previously been foreclosed.
And, since FCC rules generally do not have retroactive effect, even if the rule change is valid going forward, it does not legitimize the FCC's collection of these particular fees prior to the rule change.
Not a pretty picture, with plenty of potential for agency embarrassment on several levels.
Multiple parties focused on this unfortunate situation a year ago and called on the Commission to set things right – through refund requests and petitions for reconsideration. The fact that the Commission has not yet taken advantage of that opportunity suggests that the agency may still be casting about for some excuse that might allow it to hold onto the improperly collected fees. That will be difficult – as the Commission has presumably already figured out – since the FCC’s own rules specified that the applicants in question were not obligated to pony up application fees, an undeniable fact confirmed by the 2011 fee refund.
In March, OMD staffers advised us that they’d be acting on our refund requests “shortly”. Four months later, we’re still waiting. We recently wrote to OMD (with copies to all the Commissioners, as well as folks in the General Counsel’s office) expressing concern about the continuing delay. We’ll report back on their response . . . if we get one.