Articles Posted in FCC Enforcement

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August 2014

Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:

  • Nonexistent Studio Staff and Missing Public Inspection File Lead to $20,000 Fine
  • Failure to Route 911 Calls Properly Results in $100,000 Fine
  • Admonishment for Display of Commercial Web Address During Children’s Programming

Missing Public Inspection File and Staff Result in Increased Fine

A Regional Director of the FCC’s Enforcement Bureau (the “Bureau”) issued a Forfeiture Order against a Kansas licensee for failing to operate a fully staffed main studio as well as for failing to maintain and make available a complete public inspection file.

Section 73.1125(a) of the FCC’s Rules requires that a broadcast station have a main studio with a “meaningful management and staff presence,” and Section 73.3526(a)(2) requires that a broadcast station maintain a public inspection file. In July of 2012, a Bureau agent from the Kansas City Office tried to inspect the main studio of the licensee’s station but could not find a main studio. Although the agent was able to find the station’s public inspection file at an insurance agency in the community of license, the file did not contain any documents dated after 2009. After the inspection, the licensee requested a waiver of the main studio requirement, which the FCC’s Media Bureau ultimately denied.

In May of last year, the Bureau issued a Notice of Apparent Liability for Forfeiture (“NAL”) against the licensee. In the NAL, the Bureau noted that the base fine for violating the main studio rule is $7,000 and the base fine for violating the public file rule is $10,000. However, due to the over two-year duration of the public inspection file violation and the 14 month duration of the main studio violation, the Bureau increased the base fines by $2,000 and $1,000, respectively, resulting in a total proposed fine of $20,000.

In its response to the NAL, the licensee did not deny the facts asserted in the NAL. Therefore, the Forfeiture Order affirmed the factual determinations that the licensee had violated Sections 73.1125(a) and 73.3526(a)(2) of the FCC’s Rules. However, in its NAL Response, the licensee requested that the proposed fine be reduced because the licensee’s station serves a small market and it would face competitive disadvantages if it were required to fully staff the main studio.

The Bureau rejected the licensee’s request to reduce the fine based on an inability to find qualified staff because there is no exception to Section 73.1125(a)’s requirement of a main studio due to staffing shortages. The Bureau also pointed out that the licensee had no staff presence at the main studio for more than a year. The Bureau briefly entertained the idea that the licensee had intended to argue that it was financially unable to maintain a fully staffed studio; however, since the licensee did not submit any financial information with its response to the NAL, the Bureau dismissed the possibility of reducing the fine amount based on the licensee’s inability to pay.

The Bureau also rejected the licensee’s argument that maintaining a main studio would place the station at a competitive disadvantage because the licensee’s main studio waiver request was based only on financial considerations, which is not a valid basis for a waiver of the main studio rule. Moreover, the Bureau pointed out that even if the waiver had been granted and the licensee had then staffed the studio, corrective action after an investigation has commenced is expected by the FCC, and does not warrant reduction of cancellation of a fine. Therefore, the Bureau affirmed the fine of $20,000.

Automated Response to 911 Calls Leads to Substantial Fine

The Enforcement Bureau issued an NAL against an Oklahoma telephone company for routing 911 calls to an automated operator message in violation of the 911 Act and the FCC’s Rules.

Under Section 64.3001 of the FCC’s Rules, telecommunications carriers are required to transmit all 911 calls to a Public Safety Answering Point (“PSAP”), to a designated statewide default answering point, or to an appropriate local emergency authority. Section 64.3002(d) of the FCC’s Rules further requires that if “no PSAP or statewide default answering point has been designated, and no appropriate local emergency authority has been selected by an authorized state or local entity, telecommunications carriers shall identify an appropriate local emergency authority, based on the exercise of reasonable judgment, and complete all translation and routing necessary to deliver 911 calls to such appropriate local emergency authority.”
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July 2014

Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:

  • Multi-Year Cramming Scheme Results in $1.6 Million Fine
  • Violation of Retransmission Consent Rules Leads to $2.25 Million Fine
  • $25,000 Fine for Failure to Respond to FCC

Continued Cramming Practices Lead to Double the Base Fine

The FCC recently issued a Notice of Apparent Liability for Forfeiture (“NAL”) against a Florida telephone company for “cramming” customers by billing them for unauthorized charges and fees related to long distance telephone service.

The FCC had received more than 100 customer complaints against the company. The complaints alleged that the company had continued to bill the customers and charge them late fees after they had paid their final bills and canceled their service with the company. The FCC opened an investigation in response to the complaints and issued a Letter of Inquiry (“LOI”) to the company in July 2011, but the company did not submit a timely response. The FCC issued an NAL in 2011 proposing a $25,000 fine against the company for its failure to reply to the LOI, and ultimately issued a Forfeiture Order fining the company $25,000.

Section 201(b) of the Communications Act of 1934 (the “Act”) requires that that “[a]ll charges . . . in connection with . . . communication service shall be just and reasonable.” Prior decisions of the FCC have determined that placing unauthorized charges and fees on consumers’ phone bills is an “unjust and unreasonable” practice and is therefore unlawful.

The NAL provides information from 11 customer complaints detailing instances where customers attempted to cancel their service and continued to be charged late fees and other fees by the company. The FCC determined that the phone company did not have authorization to continue billing these customers after they canceled their service.

Although the FCC’s Forfeiture Guidelines do not provide a base fine for cramming, the FCC has settled on $40,000 as the base fine for a cramming violation. The NAL addressed 20 cramming violations, which would create a base fine of $800,000. However, the FCC determined that an upward adjustment of the fine was appropriate in this case because the unlawful cramming practices had been occurring since 2011, the company did not respond to the 2011 LOI, and there was a high volume of customers who received cramming charges. Therefore, the FCC increased the proposed fine by $800,000, resulting in a total proposed fine of twice the base amount, or $1.6 million.

Cable Operator’s Retransmission of Six Texas TV Stations Results in Multi-Million Dollar Fine

Earlier this month, the FCC issued an order against a cable operator for rebroadcasting the signals of six full-power televisions stations in Texas in violation of the FCC’s retransmission consent rules.

The cable operator serves more than 10,000 subscribers in the Houston Designated Market Area (“DMA”) in 245 multiple-dwelling-unit buildings and previously had retransmission consent agreements with the stations. However, those agreements expired in December 2011 and March 2012. The cable operator continued retransmitting the signals of those stations without extending or renewing the retransmission consent agreements, and the licensees notified the cable operator that its continued retransmissions were illegal. Subsequently, each licensee filed a complaint with the FCC.

In its May 2012 response to the complaints, the cable operator did not deny that it had retransmitted the stations without the licensee’s express written consent, but said that it had relied on the master antenna television (“MATV”) exception to the retransmission consent requirement. The cable operator noted that it had begun converting its buildings to MATV systems in November 2011 and had hoped to complete the installations before the retransmission agreements expired in December 2011, but did not complete the MATV installation until July 26, 2012.
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June 2014

Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:

  • Bad Legal Advice Leads to Admonishment for Public File Violations
  • $10,000 Fine for Tower Violation
  • Missing Emergency Alert System Equipment Results in $6,000 Fine

Licensee’s Poor Financial Condition and Reliance on Bad Legal Advice Fend Off Fines

Earlier this month, the FCC’s Enforcement Bureau issued an order against the former licensee of a Texas radio station admonishing the licensee but declining to impose $40,000 in previously proposed fines relating to public inspection file violations.
In December of 2010, agents from the Enforcement Bureau’s local office reviewed the station’s public inspection file and determined that, among other things, the file did not contain any quarterly issues-programs lists. In response, the FCC issued a Notice of Apparent Liability for Forfeiture (“NAL”), and ultimately a Forfeiture Order, imposing a fine of $25,000, which the licensee subsequently paid.

After the original NAL was issued, the station hired an independent consultant to assist it in ensuring that the station’s public inspection file was complete. In August of 2011, the licensee submitted a statement to the FCC in which it certified that all of the required documents had been placed in the station’s public inspection file. However, field agents visited the station again in October of 2011, and found that the public inspection file still did not contain any issues-programs lists. In response, the FCC issued two more NALs in June of 2012 (the “2012 NALs”) for the still-incomplete public inspection file and for the false certification submitted in response to the original NAL. The 2012 NALs proposed a $25,000 fine for providing false information to the FCC and a $15,000 fine for the still-missing issues-programs lists.

In this month’s order, the FCC analyzed the now-former licensee’s claim that it had engaged an independent consultant to assist it in responding to the original NAL and that it had subsequently placed documentation regarding issues-programs in its public inspection file. The FCC noted that the outside consultant’s advice that placing copies of the station’s daily program logs in the file would be adequate to meet the requirement was erroneous. However, since the licensee had sought to fix the problem by hiring a consultant and had relied on the consultant’s advice, the FCC concluded that the licensee had not negligently provided incorrect information to the Enforcement Bureau, and therefore the FCC did not impose the originally-proposed $25,000 fine for false certification.

In contrast, the FCC concluded that the former licensee had indeed willfully violated Section 73.3526 of the FCC’s Rules by not including issues-program lists in its public inspection file. The former licensee had, however, submitted documentation of its inability to pay and asked that it not be required to pay the proposed $15,000 fine. The FCC agreed that the former licensee had demonstrated its inability to pay, and therefore declined to impose the $15,000 fine.

In doing so, the FCC also noted that while “[r]eliance on inaccurate legal advice will not absolve a licensee of responsibility for a violation, [it] can serve as evidence that the licensee made an effort to assess its obligations, that its assessment was reasonable, if erroneous, and was made in good faith.” In light of all the facts, the FCC elected to formally admonish the former licensee, and warned that, should the former licensee later acquire broadcast licenses, it could face substantial monetary penalties, regardless of its ability to pay, for future rule violations.
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May 2014

Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:

  • FCC Proposes $11,000 Fine for Marketing of Unauthorized Device
  • $2,944,000 Fine for Robocalls Made Without Recipients’ Consent
  • Sponsorship Identification Complaint Leads to $185,000 Consent Decree
  • Premature Consummation of Transaction Results in $22,000 Consent Decree

Modifying Design of Parking Meter Requires New FCC Certification and Warning to Users

Earlier this month, the Spectrum Enforcement Division of the FCC’s Enforcement Bureau issued a Notice of Apparent Liability for Forfeiture (“NAL”) against a company that designs, develops, and manufactures parking control products (the “Company”). The NAL indicated the Company had marketed one of its products without first obtaining an FCC certification and for failing to comply with consumer disclosure rules. The FCC’s Enforcement Bureau proposed an $11,000 fine against the Company.

In August of 2013, the FCC received a complaint that a particular product made by the Company did not have the required FCC certification and that the product did not comply with consumer disclosure requirements. After receiving the complaint, the FCC’s Spectrum Enforcement Division issued a Letter of Inquiry (“LOI”) to the Company. The Company responded in the middle of March, at which time it described the product in question as a “parking meter that accepts electronic payments made with credit cards, smart cards, or Near Field Communications-enabled mobile device applications.” The response to the LOI indicated that the Company had received an FCC authorization in 2011 but had since refined the design of the product. Although one refinement involved relocating the antenna on the device, which increased the field strength rating from the level authorized in 2011, the Company assumed that the changes to the device qualified as “permissive changes” under Section 2.1043 of the FCC’s Rules. In addition, the Company admitted to marketing the refined product before obtaining a new FCC certification for the increased field strength rating, and that its user manual did not contain required consumer disclosure language. However, the Company had not actually sold any of the new parking meters in the U.S.

Section 302(b) of the Communications Act prohibits the manufacture, import, sale, or shipment of home electronic equipment and devices that fail to comply with the FCC’s regulations. Section 2.803(a)(1) of the FCC’s Rules provides that a device must be “properly authorized, identified, and labeled in accordance with the Rules” before it can be marketed to consumers if it is subject to FCC certification. The parking meter falls under this requirement because it is an intentional radiator that “can be configured to use a variety of components that intentionally emit radio frequency energy.” The Company’s product also meets the definition of a Class B digital device, in that it is “marketed for use in a residential environment notwithstanding use in commercial, business and industrial environments.” Under Section 15.105(b) of the FCC’s Rules, Class B digital devices “must include a warning to consumers of the device’s potential for causing interference to other radio communications and also provide a list of steps that could possibly eliminate the interference.”

The base fine for marketing unauthorized equipment is $7,000, and the base fine for marketing devices without adequate consumer disclosures is $4,000. The Company argued that even though it had marketed the device before it was certified, it had not sold any, and it promptly took corrective action after learning of the issue. The Enforcement Bureau declined to reduce the proposed fines because the definition of “marketing” does not require that there be a sale, and “corrective measures implemented after the Commission has initiated an investigation or taken enforcement action do not nullify or mitigate past violations.” The NAL therefore assessed the base fine for both violations, resulting in a total proposed fine against the Company of $11,000.

Unsolicited Phone Calls Lead to Multi-Million Dollar Fine

Earlier this month, the FCC issued an NAL against a limited liability company (the “LLC”) for making unlawful robocalls to cell phones. The NAL followed a warning issued more than a year earlier, and proposed a fine of $2,944,000. The LLC provides a robocalling service for third party clients. In other words, the LLC’s clients pay it to make robocalls on their behalf to a list of phone numbers provided by the client.

The Telephone Consumer Protection Act (“TCPA”) prohibits robocalls to mobile phones unless there is an emergency or the called party has provided consent. These restrictions on robocalls are stricter than those on live calls because Congress found that artificial or prerecorded messages “are more of a nuisance and a greater invasion of privacy than calls placed by “live” persons.” The FCC has implemented the TCPA in Section 64.1200 of its Rules, which mirrors the statute.

The LLC received an LOI in 2012 from the Enforcement Bureau’s Telecommunications Consumers Division (the “Division”) relating to an investigation of the LLC’s services. The Division required the LLC to provide records of the calls it had made, as well as to submit sound files of the calls. This preliminary investigation revealed that the LLC had placed 4.7 million non-emergency robocalls to cell phones without consent in a three-month period. After making these findings, the Division issued a citation to the LLC in March of 2013, warning that making future calls could subject the LLC to monetary penalties and providing an opportunity to meet with FCC staff and file a written reply. The LLC replied to the citation in April of 2013, and met with FCC staff.

However, in June of 2013, the Division initiated a second investigation to ensure the LLC had stopped making illegal robocalls. The LLC objected, but produced the documents and audio files requested. The Division determined, by analyzing the materials and contacting customers who had received the prerecorded calls made by the LLC, that the Company made 184 unauthorized robocalls to cellphones after receiving the citation. Continue reading →

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The FCC just gave broadcasters another reason to answer the door graciously. Earlier this week, the FCC whacked a Pennsylvania Class A Television broadcaster with an $89,200 Notice of Apparent Liability (NAL) for refusing to allow FCC inspectors to inspect the station’s facilities, not just once, but on three different occasions. It is rare to see the FCC show its irritation in an NAL, but the language used by the FCC in this particular NAL leaves no doubt that the Commission was not happy with the licensee, particularly with what the FCC believed was blatant disregard for its authority. As the FCC put it, “this is simply unacceptable.”

Regarding specific rule violations by the licensee, the FCC alleged violations of Section 73.1225(a), which requires a broadcaster to make its station available for inspection by the FCC during normal business hours or at any time of operation; Section 73.1125(a), which requires a broadcaster to maintain a main studio location staffed with at least two employees during regular business hours; and Section 73.1350(a), which requires a broadcaster to operate its station in compliance with the FCC’s technical rules and in accordance with its current station authorization.

The NAL indicated that local field agents from the Enforcement Bureau’s Philadelphia Office attempted a station inspection during regular business hours once on August 17, 2011, and twice on September 30, 2011, without success. Physical access to the main studio of record was blocked by a locked gate.

After calling the station, the field agents were met at the locked gate by the station manager, who indicated that he was on his way to a doctor’s appointment, that no one else was available at the station to facilitate an inspection, and that the field agents would have to return the next day in order to gain access to the station. After leaving the site of the main studio, one field agent attempted to call the sole principal of the licensee but was forced to leave a voicemail requesting that the owner return the call to discuss the inaccessibility of the main studio. The field agent also called the main studio and left a voicemail. The call was later returned by the station manager, who indicated that he was still at his doctor’s appointment. According to the NAL, the agent identified the caller ID number on the returned call as being that of the main studio. When questioned about it, the station manager indicated “that the Station used his personal cellular number as the Station’s main studio number.”

On the second inspection attempt, the field agents again encountered the locked gate. The station manager, who met them at the gate, asked the field agents to wait outside the gate until he returned from the main studio building. The field agents left “after waiting more than ten minutes for the Station Manager to return….” The field agents returned later that day and once again encountered the locked gate. An agent called the main studio and spoke to the station manager, who indicated that, the “gate must remain locked for security reasons and that the public must contact the station to obtain access.” The field agents noted that there was no signage or other information posted at the locked gate to indicate such a requirement.

After their departure, one of the agents again attempted to contact the station owner in order to discuss the inaccessibility of the main studio. The agent was forced to leave a second voicemail, reiterating his request for a return call. Neither call was returned by the owner.

In March 2012, a local field agent determined that, after monitoring the station’s transmissions, the station was operating from a tower structure that was not specified in its current authorization. The agent, with the collaboration of the tower owner, determined that the station was operating from a tower approximately two-tenths of a mile away from its authorized transmitter site. Both towers were owned by the same tower company.

The NAL noted that the FCC has previously fined broadcasters for failure to provide access for inspection, but that “none of those cases involved repeated, direct, in-person refusals of access by the highest level of a broadcast station’s management, as well as multiple failures by the licensee’s sole principal to return FCC agent calls concerning the refusals.” The NAL also stated that, “continued refusal…is an egregious violation of the Commission’s rules warranting stringent enforcement action.” These events led to the maximum fine of $37,500 for each day the field agents were refused access. The $75,000 was then added to the fines for the main studio and unauthorized operation violations. The main studio base forfeiture is $7,000. The unauthorized operation base forfeiture is $4000, but the FCC elected to upwardly adjust that amount by another $3200. At the end of the day, the licensee was assessed a fine of $89,200.

In hindsight, it seems very unlikely that, even had the station been in a state of disarray or total chaos, any potential fine from the FCC could have exceeded the nearly $90,000 fine the licensee instead received for refusing access.

The obvious lesson learned here if is that if the FCC comes knocking at your door, let them in.

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April 2014

Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:

  • FCC Proposes $12,000 in Fines for Contest Violations
  • $20,000 Fine for Unlicensed Operation and Interference
  • Violations of Sponsorship Identification and Indecency Rules Lead to $15,000 Consent Decree

Changing Rules and Delay in Conducting Contest Lead to $12,000 in Fines

Late last month, the FCC’s Enforcement Bureau issued two essentially identical Notices of Apparent Liability for Forfeiture (“NALs”) against two radio station licensees for failure to conduct a contest as advertised. Although the stations have different licensees, one licensee provided programming to the second licensee’s station through a time brokerage agreement. The brokering station’s response to a letter of inquiry (“LOI”) addressed both licensees’ actions with regard to the contest. In the subsequent NALs, the FCC’s Enforcement Bureau proposed a $4,000 fine against the brokered licensee and an $8,000 fine against the brokering licensee.

In July of 2009, the FCC received a complaint that several radio stations held a weekly contest called “Par 3 Shoot Out” but did not conduct the contest substantially as announced or advertised. Specifically, the complaint maintained that at least one participant did not receive a promised prize of a golf hat and was not entered into a drawing to win a car or other prizes (as was promised in the contest’s rules). About four months later, the FCC issued an LOI to the licensee conducting the contest about the claims made in the complaint. In its response to the LOI, the licensee conducting the contest indicated that the contest consisted of two phases. The first was an 18-week, online golf competition where the highest-scoring contestant each week would win a hat from a golf club. Each weekly winner and one write-in contestant would be able to participate in the second phase of the contest, a real golf competition consisting of taking one shot at a three par hole. As was publicized online, the prize for the winner of the second phase was a $350 golf store gift certificate, and if anyone hit a hole-in-one, they would win a Lexus car.

According to the brokering licensee, the first phase of the contest took place between June and November 2008. The contest took place entirely online, and although the second phase was scheduled to begin in November 2008, it was postponed due to inclement weather and ultimately did not occur at all because the employee who was tasked with running the live golf competition was fired, and the remaining staff never resumed the contest. The brokering licensee further indicated that it forgot about the contest until it received the FCC’s LOI, and, after receiving the LOI, the second phase of the contest occurred and was completed by January 2010. The brokering licensee indicated that it had provided additional prizes of a $25 golf store gift card and a catered lunch to each finalist in the second phase given the delay in conducting the contest.

Section 73.1216 of the FCC’s Rules requires that a station-sponsored contest be conducted “substantially as announced or advertised” and must fully and accurately disclose the “material terms,” including eligibility restrictions, methods of selecting winners, and the extent, nature and value of prizes involved in a contest.

The Enforcement Bureau determined that the contest was not conducted as announced or advertised because the rules were changed during the course of the contest and the contest was not conducted within the promised time frame. The Bureau further found that the licensees failed to fully disclose the material terms of the contest as required by the Commission’s rules. According to the Bureau, the on-air announcements broadcast by the stations failed to mention all of the prizes the licensee planned to award and failed to describe any of the procedures regarding how prizes would be awarded or how the winners would be picked. The brokering licensee argued in its response to the LOI that the full rules were included online, which was a better way to make sure that potential contest participants were not confused. However, the Bureau found that while licensees can supplement broadcast announcements with online rules, online announcements are not a substitute for on-air announcements.

The base fine for failure to conduct a contest as announced is $4,000. The Bureau determined that, contrary to the argument presented in response to the LOI, “neither negligence nor inadvertence” due to the overseeing employee’s departure “can absolve licensees of liability.” The Bureau also said that providing additional prizes to make up for the delay does not overcome the violation of Section 73.1216. Finally, the FCC found that the licensees had failed to disclose the material terms of the contest because the advertisements that were broadcast over the air did not mention certain prizes.

The FCC proposed to impose the base fine amount of $4,000 against the time-brokered station after determining that the licensee had violated Section 73.1216. For the brokering licensee, the FCC proposed an increased fine of $8,000 because of the licensee’s “pattern of violative conduct, and because it conducted the Contest over four stations, not one, thus posing harm to a larger audience.”

Nine Years of Unauthorized Operation and Interference to Wireless Operator Lead to Large Fine

The FCC recently issued a Forfeiture Order to the former licensee of a Private Land Mobile Radio Service (“PLMRS”) station. The Forfeiture Order follows an NAL that the FCC released in July of 2012 proposing a fine of $20,000 for the former licensee of the facility for operating without a license for nine years and causing interference to another wireless service provider.

The former licensee initially received the license for the PLMRS station in April 1997 for a five-year term. Three months before the expiration of the license, the FCC sent the licensee a reminder to renew the license, but the licensee never filed a renewal application. Therefore, the license expired in April of 2002. Nevertheless, the licensee continued operating the station, and on July 31, 2011, filed a request for Special Temporary Authority (“STA”) with the Wireless Telecommunications Bureau of the FCC. The licensee stated in the application that it had recently discovered that its license had expired and that it needed an STA to continue operating the station. The Wireless Bureau granted the STA three days later for a period of six months, until the end of January 2012. Continue reading →

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March 2014

Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:

  • FCC Proposes $40,000 Fine for Public Inspection File/License Renewal Violations
  • Short-Term License Renewal and Hefty Fine for Missing QIP Lists
  • $5,000 Fine for FM Station’s Failure to Maintain Minimum Operating Hours


Failure to Disclose Rules Violations Leads to $40,000 Fine

Late last month, the FCC issued two essentially identical orders against co-owned Milwaukee and Chicago Class A TV stations in response to a number of missing Quarterly Issues/Programs Lists and Children’s Television Programming Reports and for not reporting the missing issues/programs lists in the stations’ license renewal applications. The FCC’s Media Bureau proposed a $20,000 fine against each station, for a total fine of $40,000.

In late December of last year, the FCC issued Notices of Apparent Liability for Forfeiture (“NAL”) for the two stations, noting that the stations had mentioned in their license renewal applications that they had failed to timely file numerous Children’s Television Programming Reports, but had not disclosed the absence from their online public files of over a dozen (each) Quarterly Issues/Program Lists. Section 73.3526 of the FCC’s Rules requires licensees to maintain information about station operations in their public inspection files so the public can obtain “timely information about the station at regular intervals.”

The base fine for failure to file a required form is $3,000, and the base fine for public file violations is $10,000. After considering the facts, the FCC concluded in each NAL that the respective station was liable for $9,000 for the missing Quarterly Issues/Programs Lists, $9,000 for the missing Children’s Television Programming Reports, and an additional $2,000 for failing to disclose the missing Quarterly Issues/Program Lists in their renewal applications.

After receiving the NALs, each station requested that the fine be reduced due to an inability to pay. The FCC will not consider reducing a fine based on a claimed inability to pay unless the licensee submits federal tax returns for the last three years, financial statements, or other documentation that accurately demonstrates its financial status. In this case, each station submitted appropriate documentation about its financial condition. However, the FCC was not persuaded that the amount of the fines exceeded each station’s ability to pay, and declined to reduce the fines.

Public Inspection File Violations Lead to $46,000 in Fines and Limited License Terms
In connection with recent license renewal applications, the FCC issued four essentially identical Memorandum Opinions and Orders and Notices of Apparent Liability for Forfeiture, resulting in $46,000 in fines for a Washington radio licensee. In addition, three of the licensee’s four stations’ license renewal applications were granted for only a four-year term rather than the normal eight-year term.

The first three of the licensee’s stations were missing, respectively, 24, 26, and 20 Quarterly Issues/Programs Lists for various periods during the license term. The fourth station’s public inspection file was missing 12 reports for a two-year period spanning from 2006 to 2008. Continue reading →

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There was quite a stir today when the FCC, despite being closed for a snow day, issued a Notice of Apparent Liability proposing very large fines against Viacom ($1,120,000), NBCUniversal ($530,000), and ESPN ($280,000) for transmitting false EAS alert tones. According to the FCC, all three aired an ad for the movie Olympus Has Fallen that contained a false EAS alert tone, with Viacom airing it 108 times on seven of its cable networks, NBCUniversal airing it 38 times on seven of its cable networks, and ESPN airing it 13 times on three of its cable networks.

The size of the fines certainly drew some attention. Probably not helping the situation was the ad’s inclusion of the onscreen text “THIS IS NOT A TEST” and “THIS IS NOT A DRILL” while sounding the EAS tone. The FCC launched the investigation after receiving complaints from the public.

All three entities raised a variety of arguments that were uniformly rejected by the FCC, including that “they had inadequate notice of the requirements and applicability of the rules with respect to EAS violations.” What particularly caught my eye, however, was that all three indicated the ad had cleared an internal review before airing, and in each case, those handling the internal review were apparently unaware of Section 325 of the Communications Act (prohibiting transmission of a “false or fraudulent signal of distress”) and Section 11.45 of the FCC’s Rules, which states that “No person may transmit or cause to transmit the EAS codes or Attention Signal, or a recording or simulation thereof, in any circumstance other than in an actual National, State or Local Area emergency or authorized test of the EAS.”

Back in 2010, I wrote a post titled EAS False Alerts in Radio Ads and Other Reasons to Panic that discussed the evolution of the FCC’s concerns about false emergency tones in media, which originally centered on sirens, then on Emergency Broadcast System tones, and now on the Emergency Alert System’s digital squeals. Two months later, I found myself writing about it again (The Phantom Menace: Return of the EAS False Alerts) when a TV ad for the movie Skyline was distributed for airing with a false EAS tone included in it.

That was the beginning of what has since become a clear trend. Those initial posts warned broadcasters and cable programmers to avoid airing specific ads with false EAS tones, but were not connected to any adverse action by the FCC. After three years of EAS tone tranquility, the issue reemerged in 2013 when hackers managed to commandeer via Internet the EAS equipment of some Michigan and Montana TV stations to send out false EAS alert warnings of a zombie attack. The result was a rapid public notice from the FCC instructing EAS participants to change their EAS passwords and ensure their firewalls are functioning (covered in my posts FCC Urges IMMEDIATE Action to Prevent Further Fake EAS Alerts and EAS Alerts and the Zombie Apocalypse Make Skynet a Reality), but no fines.

From there we moved in a strange direction when the Federal Emergency Management Agency distributed a public service announcement seeking to educate the public about the Emergency Alert System, but used an EAS tone to get that message across. Because it did not involve an actual emergency nor a test of the EAS system, the PSA violated the FCC’s rule against false EAS tones and broadcasters had no choice but to decline to air it. The matter was resolved when the FCC quickly rushed through a one-year waiver permitting the FEMA ad to be aired (Stations Find Out When Airing a Fake EAS Tone Is Okay).

Late last year, however, the evolution of the FCC’s treatment of false EAS alerts turned dark (FCC Reaches Tipping Point on False EAS Alerts) when the FCC issued the first financial penalties for false EAS alerts. The FCC proposed a $25,000 fine for Turner Broadcasting and entered into a $39,000 consent decree with a Kentucky radio station for airing false EAS alert tones. The FCC indicated at the time that other investigations were ongoing, and more fines might be on the way.

We didn’t have to wait long, as just two months later, the FCC upped the ante, proposing a fine of $200,000 against Turner Broadcasting for again airing false EAS alert tones, this time on its Adult Swim network. The size of the fine was startling, and according to the FCC, was based upon the nationwide reach of the false EAS tone ad, as well as the fact that Turner had indicated in connection with its earlier $25,000 fine that it had put in place mechanisms to prevent such an event from happening again. When it did happen again, the FCC didn’t hesitate to assess the $200,000 fine.

Today’s order, issued less than two months after the last Turner decision, ups the ante once again, proposing fines of such size that only some of the FCC’s larger indecency fines compare. The FCC is clearly sending a signal that it takes false EAS tones very seriously, and the fact that the ads containing the EAS tones were produced by an independent third party didn’t let the programmers off the hook. In other words, it doesn’t matter how or why the ads got on the air; the mere fact that they aired is sufficient to create liability.

So what lesson should broadcasters and cable networks take away from this? Well, the all too obvious one is to do whatever it takes to prevent false EAS tones from making it on air. However, an equally useful lesson is to make sure that your contracts with advertisers require the advertiser to warrant that the spots provided will comply with all laws and to indemnify the broadcaster or network if that turns out not to be the case. That won’t save you from a big FCC fine and a black mark on your FCC record, but it will at least require the advertiser to compensate you for the damages you suffered in airing the ad and defending yourself. Unfortunately, many advertising contracts are not particularly well drafted (and some are just a handshake), which can expose you to a variety of liabilities like this unnecessarily.

It is therefore wise to have both your ad contracts and your advertising guidelines carefully reviewed by counsel experienced in this area of the law. Vigilant review of ads submitted for airing is an excellent first line of defense, but as demonstrated in today’s decision, it won’t do much good if the individuals reviewing the ads don’t know what to look for.

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February 2014

Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:

  • FCC Limits License Renewal to Two Years and Assesses $4,000 Fine
  • $24,000 Consent Decree for Incomplete Public Inspection File
  • Hotels Cited for Exceeding Signal Leakage Limits in Aeronautical Bands

Station Assessed Fine for Public File Violations and Granted Short-Term License Renewal
In reviewing the license renewal application for a Meridian, Texas radio station, the FCC’s Media Bureau proposed a $4,000 fine for public inspection file violations. It also granted the station’s license renewal application, but only for a period of two years (rather than the normal eight), based upon the station’s extended periods of silence during the prior license term.

Section 73.3526 of the FCC’s Rules requires licensees to maintain information about station operations in the station’s public inspection file so the public can obtain “timely information about the station at regular intervals.” In its license renewal application, the station indicated that it could not locate a number of its quarterly issues-programs lists. The base forfeiture amount for public inspection file violations is $10,000, but the FCC has authority to adjust that amount up or down based on a licensee’s circumstances. Here, the FCC noted that “the violations were extensive, occurring over a period of nearly two years and involving at least 6 issues/programs lists.” Despite this, the FCC ultimately imposed a forfeiture amount of only $4,000 since the violations were not “evidence of a pattern of abuse.”

The station was also dark for lengthy periods during the prior license term. Section 312(g) of the Communications Act prohibits long periods of silence by licensed stations because licensees have an obligation to provide service to the public by broadcasting on their allocated spectrum. When the FCC reviews a station’s renewal application, it considers whether the licensee has adequately served its community of license. Section 309(k) of the Communications Act provides that the renewal application should be granted if “(1) the station has served the public interest, convenience and necessity; (2) there have been no serious violations of the Act or the Rules; and (3) there have been no other violations which, taken together, constitute a pattern of abuse.” In this case, the FCC pointed out that the licensee had two periods of silence, each lasting nearly a year, and that the station had been dark for almost half of the license term. Since the licensee had failed to provide “public service programming such as news, public affairs, weather information, and Emergency Alert System notifications” during these long periods of inactivity, the FCC determined that granting a renewal of only two years would be the most effective sanction because it would incentivize the licensee to maintain its broadcast operations and not go silent in the future.

License Agrees to Pay $24,000 Under Terms of Consent Decree for Missing Public File Documents
The FCC has entered into a consent decree with an Atlanta LPTV licensee after conducting a lengthy investigation. Almost two years ago, in March of 2012, the FCC sent a letter to the licensee asking for specific information to determine the station’s eligibility for Class A television status. The requested information included the location of the main studio, a description of production equipment, names of employees, the location of the public inspection file, a copy of the quarterly issues/programs lists, and a copy of the public inspection file documentation. In its response, submitted in June of 2012, the licensee informed the FCC that the station had been vandalized and provided police reports and other documentation to account for its failure to produce a public inspection file. In another letter dated almost one year after the licensee’s explanatory letter, the FCC asked for further clarification from the licensee regarding the location of the station’s public inspection file and why the police report did not mention vandalism of the public inspection file. The licensee replied one month later in July of 2013 and provided another police report to explain the theft of equipment.

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January 2014

Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:

  • FCC Admonishes Television Stations for “Host-Selling” to Children
  • $7,500 Fine Imposed for Documents Missing From Public Inspection File
  • $17,000 Fine for Unauthorized Operation of a Radio Transmitter

Admonishment Issued for Program Characters Promoting a Product

The FCC continues to enforce its restrictions on commercial content during children’s shows. Section 73.670 of the FCC’s Rules restricts the amount of commercial matter that can be aired during children’s programming to 10.5 minutes per clock hour on weekends and 12 minutes per clock hour on weekdays. The Commission most often examines compliance with these limitations when acting on a television station’s license renewal application.

Earlier this month, the FCC issued identical admonishments to two commonly-owned Wisconsin TV stations for failing to comply with the limits on commercial matter in children’s programming. The stations disclosed in their license renewal applications that they had aired a commercial for cereal during a children’s program seven years ago, and the commercial contained “glimpses of characters from the program on the screen.” The licensee noted that the appearance was “small, fleeting, and confined to a small area of the picture,” and that the software used by the CW Network to prevent such appearances failed to catch this particular incident. Where a program character appears during a commercial in that program, the FCC’s approach is to treat the entire program as a commercial, which by definition exceeds the FCC’s commercial time limits in children’s programming.

The licensee argued that the images did not appear “during the commercial part of the spot but during a portion of the material promoting a contest.” The FCC disagreed, but only issued an admonishment to each of the stations because the violation was an isolated incident. Nevertheless, the FCC warned that it would impose more serious sanctions if the licensee committed any similar violations in the future.

License Assessed $7,500 Fine for Failing to Provide Quarterly Issues/Programs Lists for Seventeen Quarters

Earlier this month, the FCC imposed a $7,500 fine on a Pennsylvania station for willfully and repeatedly violating the Commission’s rule regarding the public inspection file. Under Section 73.3526(e)(12) of the FCC’s Rules, a licensee must create a list of significant issues affecting its viewing area in the past quarter and the programs it aired during that quarter to address those issues. The list must then be placed in the station’s public inspection file by the tenth day of the month following that quarter.

In April of 2010, an agent from the Enforcement Bureau’s Philadelphia office found during an inspection that the licensee was missing fifteen quarters of issues/programs lists. The licensee explained in response to a subsequent Letter of Inquiry that some of the lists had been stolen or removed from the public inspection file and promised to replace the missing lists. However, in February of 2011, a follow-up investigation revealed that the public inspection file contained only one issues/programs list, which meant that there was a total of seventeen quarters of missing lists. At the time of the follow-up, the licensee said that part of the roof of a neighboring building had collapsed and destroyed the records.

In June of 2011, the FCC issued a Notice of Apparent Liability for Forfeiture (“NAL”) for $15,000. In response, the licensee argued that the fine should be reduced because the missing records were outside his control and that he did not have the ability to pay such a fine. In January of 2014, the FCC determined that a reduction of the fine was warranted based on the licensee’s inability to pay, but noted that the failure to maintain issues/programs lists was not outside of the licensee’s control and that the licensee’s explanations as to the cause of the missing documents conflicted with each other. Although the FCC reduced the fine from $15,000 to $7,500, the Enforcement Bureau cautioned that it has previously rejected inability to pay claims for repeated or egregious violations and that in the event this licensee commits future violations, it may result in significantly higher fines that may not be reduced merely because of the licensee’s inability to pay.

Licensee Fined for Interfering with United States Coast Guard Operations

Last month, the FCC issued an NAL against a California licensee for operating a radio transmitter on a frequency not authorized by its license and failing to take precautionary measures to avoid causing interference. The base fine for operating on an unauthorized frequency is $4,000, and the base fine for interference is $7,000.

In January of last year, the United States Coast Guard complained to the FCC of interference with its operations in the 150 MHz VHF band. An agent from the Enforcement Bureau’s Los Angeles office used radio direction-finding methods to determine that the interference was coming from the licensee’s building. The agent located a transmitter at that location that was operating on a frequency different than that indicated on the transmitter’s label. After the Bureau contacted the licensee and informed it of the agent’s findings, the licensee turned off the transmitter, and the interference to the Coast Guard stopped.

Subsequently, the Enforcement Bureau’s Los Angeles office issued a Notice of Violation (“NOV”) to the licensee for failing to operate in accordance with its authorization and not taking reasonable precautions to avoid interference to licensed services. The NOV noted that the licensee’s authorization specified operation on frequencies that included neither the transmitter’s labeled frequency nor the frequency on which the transmitter was actually operating. In response, the licensee argued that the transmitter was unstable and operating about .8 MHz on both sides of the designated frequency.

Under Section 1.903(a) of the FCC’s Rules, a licensee can only operate a station in compliance with a valid authorization granted by the Commission. The FCC rejected the licensee’s argument that the malfunctioning transmitter was operating on the licensee’s assigned frequency, finding that its agent’s investigation indicated otherwise. The FCC also noted that Section 90.403(e) of the FCC’s Rules requires that licensees take appropriate measures to avoid causing harmful interference, and that the licensee here failed to offer any evidence in response to the NOV that it had taken such precautions.

In determining the appropriate fine, the FCC considered the facts and circumstances and found that the violations warranted proposing a fine higher than the base amount for these violations. Because the licensee caused harmful interference to the Coast Guard’s operations and the licensee was not aware of its spurious signal until the FCC notified it, the FCC assessed a total fine of $17,000, increasing the fine by $6,000 over the base amount for such violations.

A PDF version of this article can be found at FCC Enforcement Monitor.