On August 31, 2020, the Federal Communications Commission (“FCC” or the “Commission”) released its Report and Order (Order) establishing new methodologies for calculating 2020 annual regulatory fees, which are due September 25, 2020. In the Order, the FCC flatly rejected arguments by the National Association of Broadcasters and others that the FCC’s new calculation methodology (which will result in a 2-4% increase for most broadcasters) was flawed. But, while the FCC did not grant any widespread relief from payment of regulatory fees, it did implement several measures to soften the economic blow of the COVID-19 pandemic when it comes to this year’s regulatory fee payments.
In particular, the Commission streamlined its procedures by which regulated entities may request waiver, reduction, deferral, or installment payment terms for regulatory fees due to financial hardship. Typically, the FCC requires such requests to be made through separate pleadings. Given the ongoing pandemic, however, the FCC waived this requirement to permit parties to combine waiver, reduction, deferral, and installment payment requests into a single pleading which now can be filed via email. Nevertheless, the Commission did not waive the requirement that financial documentation must be provided to demonstrate financial hardship, but did state that its Office of Managing Director would work with individual filers to determine what supporting documentation will suffice. While we caution that financial hardship waivers are exceedingly hard to obtain (and there is no reason to think they won’t still be elusive this year), we applaud the FCC’s lowering of the hoops to secure installment payments to spread out the pain of regulatory fees this year.
The Commission also waived the red light rule to permit debtors experiencing financial hardship to request relief with respect to regulatory fees. Typically, the red light rule restricts the FCC from acting on any application or relief request if the requesting party has an unpaid debt owed to the Commission. In light of the pandemic, the Commission waived that rule by permitting regulatees owing money to the Commission to request waiver, reductions, deferrals, and installment payment terms – which the Office of Managing Director will review and approve on a case-by-case basis. Recipients of a red light rule waiver, however, will be required to resolve all delinquent debt with the FCC by either entering into an installment agreement to repay the debt and/or cure all outstanding payments owed the FCC under existing installment agreements.
While the Commission granted limited relief from regulatory fee obligations for regulatees affected by the pandemic, the Commission stated in the order that was constrained by statute from outright waiving this year’s regulatory fees or the 25% late payment penalty. Similarly, the Commission stated that it was unable to extend the regulatory fee deadline beyond September 30th – which marks the end of the agency’s fiscal year. However, the Commission did throw licensees a couple of small bones: it will no longer additionally assess administrative costs on delinquent regulatory fees and it will lower the interest rate charged on outstanding debts.
While the adopted 2020 regulatory fees were largely the same as those proposed in the May 13, 2020 Notice of Proposed Rulemaking (NPRM), the Commission slightly lowered the fees for radio broadcasters due to an undercounting of the number of radio stations subject to regulatory fees. The fees for television stations largely remained the same as proposed in the NPRM.
Should you have any questions or would like any assistance with payment of your regulatory fees – or to request waiver, reduction, deferral, or an installment payment plan – please contact your attorney.