Video Division forfeiture order shows flexibility, but not necessarily in a good way
One thing you can say about the FCC: If they think they’ve caught a licensee in a violation, they can be persistent in their efforts to impose penalties for that violation. Whether those efforts are entirely consistent with the law is another question entirely.
With respect to any fine it issues, the Commission must consider the relevant statute of limitations. FCC forfeitures are subject to two separate such statutes. First, under Section 503 of the Communications Act, it can levy forfeitures for actions going back to the beginning of the current license term or one year, whichever is earlier.
Once the Commission has issued its formal “forfeiture order”, a licensee can simply ignore that order. If the Commission wants to collect the fine in the face of such licensee inaction, it must convince the Department of Justice to sue the target licensee in federal district court. But a second, separate, statute (28 U.S.C. § 2462) says that law suits to enforce penalties must be started within five years of “the date the claim first accrued”.
A recent forfeiture order reflects the Video Division’s awareness of that latter limit and at least one way the Division has devised to try to sidestep it.
The case involves a full-power TV station last renewed in 1998; it filed for renewal in 2005, but that application (as often happens with TV renewals, seemingly so that the FCC can keep an open noose around a station’s neck that they can tighten if they want to) has yet to be granted. In the 2005 renewal application the licensee disclosed that it had failed to prepare its public file EEO report in 2004. In 2013 the station filed a supplemental renewal application, in which it disclosed that it had failed to file eight of its quarterly Children’s Television reports on time during the preceding eight years.
Looking beyond what the licensee reported in its 2013 renewal, the staff checked the FCC’s own records and discovered that, in addition to the admitted late filings, sometime between 1998 and 2005 the licensee had filed 14 other reports late.
In its Notice of Apparent Liability (NAL), the Division recited all those facts and then proposed to lower a $15,000 boom onto the licensee’s head for failure to timely file its kidvid reports “for multiple quarters”.
In response to the NAL, the licensee asked that the forfeiture be reduced because many of the violations occurred more than five years ago, meaning that Section 2462 would appear to prevent the government from trying to collect through the courts. The FCC refused. Instead, it issued a Forfeiture Order in which it added yet another claimed violation (of Section 73.3514, a rule section – not mentioned in the NAL – that requires an applicant to “include all information called for by [the application form]” ). The Forfeiture Order also warned that, in any event, the most recent late-filings (in 2012 and 2013) alone would justify the proposed $15K fine.
The Forfeiture Order is remarkable for a couple of reasons.
First, the Division’s blithe addition of a previously unmentioned violation – the one involving Section 73.3514 – seems to violate Section 503(b)(4) of the Communications Act. Section 503(b)(4) requires the FCC to issue an NAL citing the precise rules supposedly violated before it can impose a forfeiture. The statute does not appear to authorize the Commission to toss into a forfeiture order extra supposed violations that didn’t happen to be mentioned in the initial NAL. So the sudden appearance of Section 73.3514 is unusual, to say the least.
Second, the reference to a supposed violation of Section 73.3514 is plainly an effort to sidestep the five-year statute of limitations. As noted above, Section 73.3514 requires that applicants must provide all the information called for in Commission applications. Recall that the Commission concluded (based on its own review of Commission records) that the licensee had not mentioned in its 2005 renewal application that 14 of its Children’s TV reports between 1998-2005 were filed late.
Having noted the licensee’s argument about the five-year statute of limitations, the Forfeiture Order refers to the 73.3514 “violation” as “an alternative basis for the forfeiture”. Its reasoning: since the licensee failed to report, in its 2005 renewal applications, the 14 late filings that occurred between 1998-2005, that violation is “continuing”, meaning that “a new claim accrued each day that the Licensee failed to report the violation, and therefore the [five-year] statute of limitations does not apply.” That seems a somewhat self-serving interpretation of “continuing violation”, particularly since any failure to report would ordinarily be thought to have occurred back in 2005, when the licensee, um, failed to report.
Third, the staff does not seem to have been especially confident of this fall-back position, because in a footnote in the Forfeiture Order, it opined that the late-reporting violations that occurred in 2012 and 2013 would in any event be sufficient on their own to support the entire $15,000 forfeiture. In other words, even if the older violations are beyond collection, the newer ones – i.e., violations well within the five-year limit – will still enable the Commission to sue for collection.
But if that’s the case, what does that say about the fine calculation process? After all, in its NAL determination that a $15,000 fine was warranted, the Division described a total of 22 late-filing violations. But the footnote in the Forfeiture Order says that 2012-2013 late filings (eight in number, it would appear) warrant precisely the same fine. And let’s not forget that the Forfeiture Order also purports to drag in Section 73.3514 as yet a further violation, the precise cost of which, forfeiture-wise, isn’t indicated. While ‘regulatory flexibility’ is a popular principle often touted by the FCC, flexibility along these lines is troubling.
The Forfeiture Order’s strained effort to dodge the five-year statute of limitations is also troubling. Note that the order does not deny the existence of that limit; to the contrary, the order tries to sidestep it. But what good is a statute of limitations on collection if the FCC can avoid it by the artifice of re-characterizing old time-barred violations as new, not-barred, violations? The Commission’s apparent preference for holding licensees liable indefinitely for potential forfeitures flies in the face of centuries-old pronouncements by such prominent jurists as John Marshall. (FYI – Way back in 1805 Marshall said, “In a country where not even treason can be prosecuted, after a lapse of three years, it could scarcely be supposed, that an individual would remain for ever liable to a pecuniary forfeiture.” Those words have been cited by the current Supreme Court as recently as last year. Marshall’s colleague, Joseph Story, was of a similar mind: “it would be utterly repugnant to the genius of our laws, to allow [civil penalty] prosecutions a perpetuity of existence.”)
As always, though, the problem with fighting FCC forfeitures is that a judicial appeal costs more than the forfeiture. So it’s not surprising that most practical licensees run the cost/benefit numbers and end up caving in and paying the Commission. Eventually, though, we suspect – and certainly hope – that someone will blow the whistle on the Commission’s forfeiture practices.