Statutes of limitations apply to FCC enforcement actions
Let’s say you’re a licensee on the wrong end of one (or more) of the several hundred thousand (or more) complaints sitting in piles in the Enforcement Bureau, awaiting some kind of action. You might be frustrated by the glacial pace of the FCC’s processes – after all, many of those complaints have been pending for years.
But wait – there may be a silver lining to that slow-moving dark cloud hanging over you.
Federal law – 28 U.S.C. §2462, if you care to look it up – requires that lawsuits to enforce a civil fine, penalty or forfeiture be initiated within five years after the underlying claims accrue. In other words, if the government’s got a claim against you, they’ve got five years to use it or lose it. The good news is that this “statute of limitations” could shield you from financial penalties even if the FCC eventually decides that you violated FCC rules.
Much of the credit for this potential benefit goes to the byzantine procedural maze the FCC must navigate before it can even start to think about suing a broadcast licensee.
The process generally starts when the Commission receives a complaint about an alleged rule violation, or possibly turns up a violation on its own during a field inspection.
The first step is for the Commission (or one of its Bureaus) to issue a Notice of Apparent Liability (NAL) describing the alleged violation and proposing a penalty amount. The NAL gives the licensee a chance to tell its side of the story. If that story doesn’t convince the Commission to back off (and it almost never does), the next step is a Forfeiture Order recapitulating the facts, addressing any arguments raised in the licensee’s response to the NAL, and ordering payment of the fine within 30 days.
Just because the FCC “orders” a licensee to pay, the licensee doesn’t have to pony up. Instead, it can sit back and do nothing, and the FCC cannot hold that against the licensee. Rather, the burden is then on the Commission to refer the matter to the Department of Justice (DoJ) to sue the licensee for the amount of the fine. And get this – the trial is what they call “de novo”, which means that the burden is on the government to go back to square one and prove that the licensee really did violate the rules. The licensee, in turn, gets to challenge every element of the FCC’s case.
Obviously, this multi-step process tends to drag on, with extended delays possible at each step of the way. The final step – i.e., convincing DoJ to sue – is often the ultimate roadblock, since DoJ tends to have better things to do with its scarce litigation resources than to file nickel-and-dime lawsuits for petty violations of obscure regulations.
Working against the FCC all along the way are two statutes of limitations.
The first limits the time within which the FCC may issue an NAL. The Communications Act (47 U.S.C. § 503(b)(6)) specifies that the FCC cannot issue an NAL for conduct which occurred either (a) more than one year prior to the NAL or (b) prior to the commencement of licensee’s current license term, whichever is earlier. The first aspect of that limit – the one-year cap – is straightforward. The second aspect not so much. A licensee’s “current” license term extends until its next renewal application is granted. That means that the FCC can avoid the one-year limit on NALs simply by sitting on the renewal applications of stations against which complaints have been lodged. Stations caught in that posture are said to be subject to an “enforcement hold” on their renewals. This happens routinely, as many TV licensees targeted by, e.g., indecency complaints can attest.
The second limit is the five-year bar imposed by 28 U.S.C. §2462, mentioned above.
Importantly, it appears that that five-year limit counts down irrespective of any procedural devices (for instance, “enforcement holds”) the FCC may deploy to keep the ball in play. That is, while Section 503 may enable the FCC to delay indefinitely the issuance of an NAL, Section 2462 does not appear to be so forgiving. So while the FCC dilly-dallies with its own processing of alleged violations, the clock is still running against the government’s ability to collect even if a violation is ultimately found to have occurred.
All of this should be of interest to any licensee whose renewal application happens to have subjected to an “enforcement hold” arising from a pending complaint (or a violation which the licensee itself reported in its most recent renewal application). Licensees in that situation might want to get out the calendar and start counting the years. Even if the FCC may have tried to keep its options open by not granting the renewal application, the five-year limit in Section 2462 might still pull the rug out from under the Commission.
The first question is: when does that five-year period start for purposes of the statute of limitations? That’s not cut-and-dried. At least one federal court of appeals has assumed that the five-year period begins when the violation occurs – for example, when the allegedly indecent material is broadcast by the target station. An alternate possible starting point would be the date on which the Commission officially learned of the possible violation (by, e.g., receiving a complaint or inspecting the station).
Unfortunately, the date for calculating the start of the five-year Section 2462 limitation in the context of FCC enforcement actions has not been definitively identified by any court, yet. But while it’s possible that the creative minds at the Commission could conceivably come up with some other alternatives, the two described above are the most obvious. And, indeed, the Enforcement Bureau seemed tacitly to suggest in a couple of high profile indecency forfeiture cases in 2008 (i.e., the “Married by America” and “NYPD Blue” proceedings) that the five-year statute of limitations period begins running on the date of broadcast.
The question has recently been teed up by several licensees who were targeted back in May with five-digit fines for alleged children’s television violations. (We described the NALs in the May, 2010, Memo to Clients.) The licensees have asked that the FCC rescind the NAL’s issued because the supposed violations occurred more than five years ago and were reported to the FCC in the licensees’ respective renewal applications, all of which were filed more than five years ago. The argument is clear: if, because of the passage of time and the operation of Section 2462, the FCC can’t in any event collect any fines even if the violations did occur, then no purpose is served by issuance of an NAL (or Forfeiture Order) at this point. We’ll keep an eye on how that argument fares and report back as developments warrant.