Next time get it in writing, says FCC

Here in Washington, regulatory agencies – the FCC is an excellent example – announce official decisions in written orders or public notices. But those official documents are just the tip of the iceberg when it comes to the nitty-gritty task of regulating. Much more agency business goes on informally, in meetings and phone calls between agency staffers and lawyers like us.

That’s generally a good thing. If every little decision had to undergo the agency’s formal review processes, actions would take even longer than they do now. Besides, many regulatory decisions just don’t rise to a level of importance that warrants full-dress agency procedures resulting in detailed decisions memorialized in official documents.

On the other hand, relying on informal staff advice can get people in trouble.

Consider the plight of Kojo Worldwide Corporation. Kojo and three other companies, all located in San Diego, need communications across the Mexican border. They had pending FCC applications for 23 GHz microwave links for that purpose. While their lawyer (not somebody here) was trying to get another client a temporary authorization for similar links, an FCC staffer told him the FCC was not issuing any more such authorizations. And by the way, the staffer added, we’re not enforcing the FCC rules against unlicensed cross-border 23 GHz systems. Based on that seemingly solid and reliable information, the lawyer told Kojo and the other companies to forget the licenses and fire up their systems.

Bad move, it turned out. The FCC’s San Diego office issued a Notice of Unlicensed Operation (NOUO) against the companies and subsequently fined each one $10,000. The companies appealed to the FCC in Washington, which has now upheld the fines.

The case turns on whether the companies were right in relying on the FCC staffer’s informal advice. The staffer was not just some low level employee, the companies note, but the Deputy Chief of the FCC’s International Bureau – high enough in the chain of command, they said, to be a reliable source on FCC policy. Not so, counters the FCC. Didn’t you read that case 20 years ago where we warned against relying on oral statements by the staff? Get it in writing, or forget it. And anyway, says the FCC, you kept on operating after we sent out the NOUOs. Even if you thought unlicensed operation was okay before then, the NOUO should have told you otherwise.   And, yes, a routine NOUO from a field office overrides whatever you heard from a Deputy Bureau Chief.

The main lesson from this case? Don’t listen to your lawyer. No! Just kidding! The actual holding is: don’t listen to a Deputy Bureau Chief.

We hope the FCC doesn’t mean that. Saying to an FCC official, “Can I have that in writing?” is to request a delay of weeks or months. The FCC, for all the things it does well, does not move paper quickly.

It seems wrong to fine a company for doing what an FCC official suggests, even if the official was wrong. An admonishment would be more appropriate. Otherwise, the prudent lawyer will always have to demand written confirmation of everything he or she hears. That would seriously hinder smooth progress in the telecommunications and media industries.

Read the FCC decision here.