Continued use of expired licenses leads to enforcement action

The FCC recently released an Order and Consent Decree that, with a $60,000 fine, acts as a bold reminder to manufacturers, utilities, and other companies that they must seek prior Commission approval to transfer FCC dispatch/internal communications licenses when the licensee company is purchased by or merged into another company.  Similarly, companies must pay attention to the expiration dates of those licenses, and either renew them on a timely basis, or discontinue using them after expiration.

This sad story apparently began when the FCC sent a letter to Precision Castparts Corp. (PCC), inquiring about a number of expired radio licenses held by subsidiaries of PCC; the agency asked whether the company continued to operate any of those licenses after expiration. Sure enough, a number of licenses used for remote control overhead cranes and for cross-campus communications were still being used.  That’s a violation of FCC rules and the Communications Act.

As part of its subsequent internal audit, PCC also realized that when it had been previously acquired by Berkshire Hathaway Inc. (BHI), applications to transfer control of its FCC licenses to BHI had not been filed at the FCC. Oops! … that was also a violation of the Communications Act and the FCC’s rules.  Now there was a really big mess to clean up.

Occasionally, big and small companies to enter into a sale or merger and forget to seek prior FCC approval of the transfer of the company’s FCC licenses, or to just ignore the issue. But sooner or later, the FCC figures this out on its own, or the newly merged company has to address the matter when it needs to renew the licenses.  Filing at the FCC before a sale or merger is relatively quick, easy and inexpensive.  But as PCC discovered, cleaning up the mess after failing to do so is anything but:  in addition to the $60,000 fine, they must fulfill an extensive on-going FCC compliance and reporting plan.

These situations are not limited to manufacturers: in August of 2016, an affiliate of the Canadian Pacific Railroad settled with the FCC and paid a fine of $1.2 million, for failing to obtain prior approval of the purchase of carriers with FCC licenses, as well as for constructing, operating, modifying, and relocating FCC-authorized wireless facilities without prior FCC approval.

At Fletcher Heald & Hildreth, we have deep experience filing the sort of assignment/transfer of control and renewal applications that could have kept PCC out of trouble.  We also have deep experience in helping companies navigate the FCC’s processes if they have failed to make the proper filings. Call us if you have any questions.