Texas AM whacked $25K for statement that might have been inaccurate.
One of the most fundamental axioms of communications law: correctness is essential, whether you’re filling out an application, filing a pleading, responding to an FCC inquiry, or whatever. When you tell the Commission something, you had better be right. We’re not talking about affirmatively lying to the Commission. That, of course, is even higher up on the list of mortal sins in the FCC’s catechism. But nowadays, any inaccuracy in what you tell the agency – even if it’s not an intentional inaccuracy – can land you in hot water, unless you can show that you had a “reasonable basis” for your statement. The FCC enforcement folks, whose contributions to the government’s coffers have increased dramatically in recent years, have recently driven this point home with considerable vigor.
As we have previously observed, Section 1.17(b) of the Commission’s rules prohibits what we have referred to as “misrepresentation lite”. As my colleague Mitchell Lazarus described it, the misconduct prohibited by the rule
does not involve “misrepresentation” – what many of us know as “lying” – because that requires some element of deceit. No showing of deceit is necessary to trigger Section 1.17. All it takes is the filing of “incorrect” information “without a reasonable basis for believing” that the information is, in fact, correct. This seems to say that any mistake in an application could subject the applicant to a very substantial penalty, even if the mistake is purely unintentional.
An AM licensee in Texas found out about this the hard way.
When the station was inspected in December, 2010, the FCC whacked it for a total of $25K in fines – $10K for main studio violations (since no management personnel were present during any of the three separate inspections conducted) and $15K for public file violations. According to the Notice of Apparent Liability (NAL I) issued back in 2011, the station’s public file was missing a current copy of the station authorization, service contour map, the licensee’s most recent ownership report, a copy of the FCC’s Public and Broadcasting manual, and any issues-programs lists.
In addition to imposing the forfeiture, NAL I required the licensee to certify, under penalty of perjury and within 30 days of the release of NAL I, that the station’s public file was complete.
The station duly complied, stating that “[i]n coordination with [an independent consultant], all missing materials cited in [NAL I]have been placed in the Station’s Public Inspection File.” That was in August, 2011.
Wouldn’t you know it, the FCC inspectors dropped by the station again for another look-see two months later, only to find that issues-programs lists had gone missing again. In response to a letter of inquiry sent by the inspectors, the licensee acknowledged that it was guilty of “oversight”. It seems that the station was being operated pursuant to a time brokerage agreement, and the licensee thought that the broker’s daily program logs had been placed in the public file. The licensee said that it had hired an “outside consultant to review the public file” and that that consultant had indicated that the file was complete.
Wrong, said the FCC in a recent follow-up Notice of Apparent Liability (NAL II): the logs weren’t in the file on the date of the October inspection. NAL II also suggested that even if they had been, mere program logs are not necessarily the same as issues-programs lists, for reasons the FCC didn’t bother to explain.
According to NAL II, the licensee failed to exercise “even minimal diligence prior to the submission of its certification” in August, 2011. Had the licensee done so, “it would not have submitted incorrect and misleading material factual information”. Down came the hammer: another $25K fine for “providing material factual information that was incorrect without a reasonable basis for believing that the information was correct and not misleading”.
On the one hand, the FCC’s response here is understandable: a violation brought to the licensee’s attention in the June, 2011 NAL I, and supposedly corrected within two months, was found to have been repeated again in October, 2011. The Commission might well conclude that the licensee was sticking its regulated thumb in the FCC’s regulatory eye.
But hold on there. Does the fact that the public file lacked issues-programs lists in October really mean that the licensee’s statement two months earlier lacked any “reasonable basis”? After all, the licensee claimed that it was relying on an outside consultant. We all know that licensees are ultimately responsible for failure to comply with the rules, whether the failure was the fault of some employee, the licensee itself, or somebody else. And here, the licensee was held responsible for the public file violation, to the tune of $15,000.
But a public file violation is different from a violation of Section 1.17(b). In the latter case, the existence of a “reasonable basis” is exculpatory. Might not the licensee’s reliance on a consultant have provided a “reasonable basis” for the licensee’s August statement, even if it turned out that the consultant didn’t get it right.
And sure, program logs are not necessarily the same as issues-programs lists . . . but the FCC’s rules no longer specify the contents of program logs (indeed, the Commission doesn’t even require such logs), and the inspectors appear never actually to have seen exactly what information the program logs in question contained. So how can the inspectors be so sure that the logs would not have satisfied the issues/programs list requirement?
In other words, the facts as reported in NAL II seem to support the conclusion that the FCC has the licensee dead to rights on a violation of the public file rule on the date of the October inspection. But it’s far from clear that the facts as reported support the Commission’s conclusion that the August statement was factually incorrect or that it lacked a reasonable basis. The licensee’s statement said only that “in coordination with [an independent consultant], all missing materials” had been placed in the public file and that the file was complete as of the date of the statement.
What are the main take-home lessons here? First, just because you tell FCC inspectors that your house is in order doesn’t mean that they won’t bother to check for themselves. Second, don’t count on program logs as a substitute for issues-programs lists. And third, reliance on consultants may not be enough to avoid a notice of apparent liability for violation of Section 1.17(b).
And the most important lesson: It’s always best to be sure that you are 100% confident, based on your own personal knowledge, of the accuracy of any factual statement you make to the Commission in any context. The Commission relies on representations made by its licensees, and if it determines that a licensee’s assertions are not reliable, that licensee can find itself in deep trouble, quick. As this case demonstrates, Section 1.17(b) provides the Commission with a way of penalizing mere inaccuracy, even if no deceitful intent underlies the inaccuracy. So any time you write anything to the FCC, watch what you say, and be careful if you’re relying on what others tell you, or you too could find yourself in the jaws of the FCC’s enforcement machine.