Bouncing Checks at the FCC an Expensive Proposition

A Notice of Apparent Liability released today by the FCC’s Enforcement Bureau provides 25,000 reasons that you don’t want to bounce a check when making a payment at the FCC. As I noted in a post this time last year, there has been a conspicuous effort by the FCC to increase the size of fines for various rule violations. Equally apparent has been an effort by the FCC in recent years to rely more heavily on “consent decrees” rather than fines to resolve allegations of rule violations.

In a typical case, the FCC will commence an investigation of alleged rule violations, and rather than completing the investigation and (where appropriate) issuing a fine, the FCC and the licensee will negotiate a consent decree to resolve the matter. For the FCC, the benefit of resolving an investigation through a consent decree is that it conserves agency resources that would otherwise have to be expended to complete the investigation, issue sanctions, and defend those sanctions if the licensee appeals them. For the licensee, a consent decree can be attractive as well, cutting short a potentially embarrassing investigation and eliminating the risk of being socked with a far larger fine.

An FCC consent decree generally has two components: a “voluntary” financial contribution to the federal government, and the implementation of a multi-year compliance program, complete with reports to the FCC to ensure that the alleged rule violations do not recur. While there is no shortage of people who argue that consent decree negotiations can quickly devolve into a “shakedown,” the consent decree process can sometimes be an efficient means of resolving what would otherwise be a resource-draining process for both the FCC and the licensee.

If you enter into a consent decree, however, be prepared to live up to it. In an enforcement action released today, a consent decree ended badly for the licensee of an AM station in Puerto Rico. The licensee entered into a consent decree in May 2008 to resolve allegations of rule violations involving tower fencing, the station’s public inspection file, and operating with an unauthorized antenna pattern. The consent decree required the licensee to make an $8,000 contribution to the U.S. Treasury, and to file a compliance report in May 2010 certifying compliance with all of the other terms of the consent decree. The licensee entered into the consent decree after the FCC issued a Notice of Apparent Liability indicating that it was prepared to issue a $15,000 fine for the alleged violations.

According to the Enforcement Bureau, the licensee attempted to make the $8,000 contribution with a check that bounced for “insufficient funds.” When the licensee also failed to file its compliance report, the FCC lost patience, resulting in the issuance today of a new Notice of Apparent Liability against the station licensee for $25,000.

Perhaps the licensee thought that once the consent decree is signed, the FCC has too much else on its hands to bother following up to ensure that the licensee lives up to its consent decree promises. If so, the licensee misjudged the FCC. It may take some time for the long arm of the FCC to catch up with you, but as happened in this case, it eventually does.