FCC gets tough on debts


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The FCC has adopted new rules in an effort to crack down on deadbeat licensees and applicants. The new rules went into effect on Nov. 1. At that point, the FCC began checking its database to see if anyone seeking a benefit from the FCC is delinquent on any debt to the agency. By comparing the FCC Registration Number (FRN) of the entity seeking the benefit with its roster of reprobate FRNs, the FCC can put a “red light” on the processing of any application by such entities.

Among other things, the FCC indicated that the system will cross-check not only FRNs but the underlying TINs (employer ID numbers or social security numbers) for unpaid debts. This means you can't just open a new FRN to avoid the red light. The Commission explained that debts owed to the Universal Service Fund, the TRS Fund, and other FCC-mandated funds will come under the delinquent debt umbrella, along with the annual regulatory fees and application fees familiar to most broadcasters.

Good news, bad news

On the positive side, the FCC indicated that delinquent applicants will get a notice of their delinquency so that they can cure it (with appropriate penalties) in time to get their application granted. Now is a good time, then, to double-check the contact person on your CORES account because that person alone will receive the FCC delinquency notice. If your account has an outdated address or contact person, you may not receive timely notice that a fee of some sort has not been paid. A new resource called “Red Light Check” became available on the FCC's website as of Oct. 1. Using your FRN and pass code, you can determine instantly whether you are subject to a red light for any reason.

Unfortunately, the data available through a Red Light Check is minimal. It consists of the FRN, FCC bill number and the amount of the debt, but does not identify the nature of the deficiency. The FCC's staff has been working on ways to improve the system by adding full billing data to its Red Light Check system. As of this writing such information was not available and debtors must rely on phone calls or e-mail communication with the FCC if they have questions about the accuracy of the FCC's data.

Applicants who dispute a debt that shows up in the FCC's system may contest the assessment in writing. In the case of documented non-frivolous appeals, the “red-light” will be suspended while the FCC considers the case.

To illustrate the FCC's seriousness about this new initiative, consider the case of one applicant who filed to participate in the FM auction. An auction participant is required to submit upfront payments equal to 50 percent more than the established upfront payment applicable to others if the participant in question “has previously been in default on any Commission license or has been delinquent on any non-tax debt owed to any federal agency.” The applicant asked for a waiver of that requirement. It seems that he had obtained a $2,240 student loan in 1985 to attend broadcasting school. The loan was guaranteed by the Higher Education Assistance Foundation. The loan went into default “due to unemployment and other financial setbacks,” and was referred to the IRS. But by 1992 the loan had been repaid (with interest). In light of the fact that the default was cured more than a decade ago, the applicant argued that he should not be subject to the 50 percent penalty in his upfront auction payment.

The Commission denied the waiver request. According to the FCC, its "rules and the integrity of the competitive bidding process are best served by applying the upfront payment requirement in a fair and consistent manner." While this case arose in a context other than the new debt collection rules, it reflects a certain hard-nosed approach likely to apply under the rules, too.

Persons doing business with the FCC should keep receipts of payments made to the agency. Not only could these help to resolve any mistakes on the FCC's part, but the receipts may well be necessary in the context of a station sale to ensure the buyer that all licenses have been validly issued. Under the new rules, all license grants are contingent on the payment of debts owed to the FCC.


Dateline:

Radio stations in the following states must file their renewal applications by Dec. 1: Colorado, Minnesota, Montana, North Dakota and South Dakota.

Also on Dec. 1 stations in Kansas, Nebraska and Oklahoma must begin broadcasting their pre-filing renewal announcements.


Martin is president of the Federal Communications Bar Association and a member of Fletcher, Heald and Hildreth, Arlington, VA. E-mail martin@fhhlaw.com.




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