Broke licensee who can’t pay $8K fine gets extra $25K fine for not paying first fine.

The FCC has demanded $25,000 from a licensee who failed to make a “voluntary contribution” which it had committed to pay as part of a consent decree (i.e., a settlement agreement in an enforcement proceeding). That earlier payment wasn’t made because the licensee said it didn’t have the $8,000 which it had promised to pay. Tough, says the FCC – mere financial distress will not justify relief if you break your promise.

An AM licensee in Puerto Rico was fined $15K in 2005 for various violations. After several years of back and forth, the licensee and the FCC entered into a Consent Decree, which included an $8K “voluntary contribution” to the U.S. Treasury (we love the way the government uses the term “voluntary” – it reminds us of the things we “volunteered” to do for Uncle Sam in basic training).

Things weren’t going so well business-wise for the licensee (more on that below), and it never paid the eight grand. Wow, the FCC said – short changing the government is no-go in spades. So last year the FCC proposed an additional $25,000 forfeiture for failure to pay the $8,000. 

“Can’t pay,” the licensee responded. How come? According to the licensee, all but two of its owner’s companies are in bankruptcy, and it’s facing “overwhelming debt and almost nonexistent cash”. But the FCC didn’t have to take the licensee’s word for all this – the licensee gave the Commission a number of financial documents. The Commission grudgingly acknowledged that those documents “may arguably support [the licensee’s] asserted inability to pay”.

But so what?

The Commission has now issued a Forfeiture Order for the full $25K. The FCC acknowledges that inability to pay is a factor that can warrant reduction of a forfeiture. (In fact, in our experience that’s usually the only consideration that will cause the FCC to reduce a forfeiture by any significant amount.) But not this time. According to the Commission, where conduct is especially egregious, you will feel our pain – and reneging on a consent decree is egregious, ranking right up there with lying to the agency. (In the FCC’s words, “a consent decree violation, like misrepresentation, is particularly serious.”) 

So a licensee that’s already down and out gets kicked one more time. And to what end – does the Commission seriously think that piling on more fines is going to result in payment from a guy who doesn’t have the resources?

Probably not, but that’s irrelevant. Our hunch is that this is really about respect. The FCC doesn’t like being crossed. As they see it, stiffing the Commission on a consent decree commitment “demonstrates bad faith and a complete disregard for Commission and Bureau authority”. So upping the forfeiture even when collection is likely futile is justified to send a message. And that message is clear: If you make any promise to the FCC to do anything, especially a promise to pay, do what you said you would do. If you know – or even suspect – that you won’t be able to follow through on your promise, don’t make the promise in the first place.