FCC to crack down on fee delinquents

February 1, 2003


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

It is not immediately clear how the Commission would implement thenew rules. The easiest way would be to have the Commission'sapplication processors check for any payment delinquencies associatedwith the applicant's Federal Registration Number (FRN). The Commissionnow requires that all applications contain the FRN of the applicant,which should make it easy for the staff to cross check against missingfees associated with any particular FRN. It was inevitable that oncethe FCC got everyone registered with a unique FRN, it would use thatnumber to track whether the companies it regulates are delinquent inpayments 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 havemultiple FRNs. So perhaps the Commission will also insist thatapplicants provide some other unique identifier — their taxpayerID numbers, for instance — to permit a more reliable check of thefiles. And, the Commission might also revise its application forms torequire the applicant to certify that there are no outstandingfees.

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

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

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

But under the concept that the FCC has proposed, parties would neverbe able to say for sure that an action had been finalized because theCommission would reserve the right to rescind any action at any time inthe future, should it determine that money was owed by the applicant atthe time of the action.

It also is unclear from the proposed rules whether the taint ofdelinquency for old debts can spread from the delinquent payer toinnocent parties who own the station in the future. For example, if astation owner sells it without paying regulatory fees for severalyears, 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 paySESAC more than $1.2 million for playing SESAC-licensed arrangements of“Grandma Got Run Over By A Reindeer” and “SilentNight” without a SESAC license. The damages were awarded againstthe two stations and the president of the station's licenseecorporation as an individual.

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

This was one of the first jury trials involving copyrightinfringement by a broadcaster since 1998, when the Supreme Court ruledthat litigants in copyright cases have a right to jury trial. Beforethat, judges awarded damages that were typically $1,000 to $5,000 persong. In 1999, the limit on damages per song was raised from $100,000to $150,000. SESAC reports that a blanket license would have cost eachstation 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 inthe District of Columbia, Virginia, West Virginia and Maryland.Pre-filing renewal announcements must begin April 1, 2003, for stationsin those locations. In February, the FCC will be sending renewalpackets to affected stations.



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