FCC to crack down on fee delinquents


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The FCC has proposed new rules that will significantly upsize the downside of trying to stiff the Commission when it comes to paying regulatory and other fees. In particular, the FCC has proposed to withhold action on any application filed by anyone who is delinquent on any filing fees, regulatory fees or other debt owed to the Commission.

It is not immediately clear how the Commission would implement the new rules. The easiest way would be to have the Commission's application processors check for any payment delinquencies associated with the applicant's Federal Registration Number (FRN). The Commission now requires that all applications contain the FRN of the applicant, which should make it easy for the staff to cross check against missing fees associated with any particular FRN. It was inevitable that once the FCC got everyone registered with a unique FRN, it would use that number to track whether the companies it regulates are delinquent in payments due to the agency.

Of course, the FCC's FRN system might not be a perfect way to check, because the Commission permits a single entity or person to have multiple FRNs. So perhaps the Commission will also insist that applicants provide some other unique identifier — their taxpayer ID numbers, for instance — to permit a more reliable check of the files. And, the Commission might also revise its application forms to require the applicant to certify that there are no outstanding fees.

The so-called “red light” rule would have a couple of safety provisions to prevent major hardship or unfairness. For example, it would not apply if the delinquent payment is being challenged or in emergency situations, nor would it apply to fines imposed by the FCC that have not been enforced in court.

Still, the proposal has some scary elements. For example, the FCC proposes to be able to rescind actions on granted applications — even years after their approval — if it discovers that it was owed money at the time the application was granted.

Historically, once the Commission has acted, it has 40 days to rescind or modify its decision. If it does not act within that time frame, and if no one seeks reconsideration or review of the decision, then the decision becomes final and the parties subject to the decision can move ahead, knowing that the Commission's decision was final.

But under the concept that the FCC has proposed, parties would never be able to say for sure that an action had been finalized because the Commission would reserve the right to rescind any action at any time in the future, should it determine that money was owed by the applicant at the time of the action.

It also is unclear from the proposed rules whether the taint of delinquency for old debts can spread from the delinquent payer to innocent parties who own the station in the future. For example, if a station owner sells it without paying regulatory fees for several years, would the FCC apply the red light rule to the new owner?

SESAC gets tough

A federal jury has ordered two FM stations in Pittsburgh to pay SESAC more than $1.2 million for playing SESAC-licensed arrangements of “Grandma Got Run Over By A Reindeer” and “Silent Night” without a SESAC license. The damages were awarded against the two stations and the president of the station's licensee corporation as an individual.

The AC and classic rock stations were ordered to pay damages for repeatedly playing 31 SESAC songs. The stations used to have SESAC licenses, but let them expire in 1989.

This was one of the first jury trials involving copyright infringement by a broadcaster since 1998, when the Supreme Court ruled that litigants in copyright cases have a right to jury trial. Before that, judges awarded damages that were typically $1,000 to $5,000 per song. In 1999, the limit on damages per song was raised from $100,000 to $150,000. SESAC reports that a blanket license would have cost each station only $5,000 per year. The jury awarded damages ranging from $1,000 to $150,000 per song.


Martin is an attorney with Fletcher, Heald & Hildreth, PLC., Arlington, VA. E-mail martin@fhhlaw.com.

Dateline:

On June 1, 2003, renewal applications are due for radio stations in the District of Columbia, Virginia, West Virginia and Maryland. Pre-filing renewal announcements must begin April 1, 2003, for stations in those locations. In February, the FCC will be sending renewal packets to affected stations.




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