The Commission’s enforcement procedures and actions have been receiving attention of late, but there is a deficiency in the process that has not been mentioned. To the extent that the Commission has rules in an area, applicable parties are required to comply. Those who don’t are subject to enforcement actions, with due process rights for alleged violators, including the option of settling the matter through a consent decree. For the enforcement process to work, however, all of its steps must be carried out efficiently and swiftly from beginning to end. One problem with the current process – and another area for the newly formed Process Review Task Force and/or Congress to examine – is that the Commission has no idea whether parties are actually satisfying the terms of its enforcement actions, particularly those that go to the forfeiture stage.
Under the current structure, the Commission does not have a process in place to know whether entities actually pay the fines or penalties assessed pursuant to an enforcement action. In other words, once a Forfeiture Order is finalized, it somehow seems to drop off the FCC’s radar. This came as a surprise to me as I prepared for recent Congressional hearings. I requested that Enforcement Bureau provide a detailed spreadsheet of the 75 most recent Notices of Apparent Liability (“NAL”) and Forfeiture Orders. Disappointingly, the bureau answered that it didn’t track collections resulting from Forfeiture Orders as a matter of course.
This whole situation reminds me of an early episode of the sitcom Seinfeld. In it, Jerry has a dispute with a car rental agent over whether the car he reserved is actually available. One of television’s most classic exchanges went as follows:
Jerry: I don’t understand, I made a reservation, do you have my reservation?
Agent: Yes, we do, unfortunately we ran out of cars.
Jerry: But the reservation keeps the car here. That’s why you have the reservation.
Agent: I know why we have reservations.
Jerry: I don’t think you do. If you did, I’d have a car. See, you know how to take the reservation, you just don’t know how to *hold* the reservation and that’s really the most important part of the reservation, the holding. Anybody can just take them.
To be fair, one reason for the lack of information on forfeiture collections is due to the distribution of responsibilities between the Commission, the Department of the Treasury, and the Department of Justice. Under the statute and current procedures, the Forfeiture Order is the last official step in the Commission’s workload. Under section 504 of the Communications Act, violators that accept their forfeitures are required to make payments to the U.S. Treasury. To the extent that an entity does not pay a forfeiture that has been upheld by a court of competent jurisdiction, DOJ is responsible for pursuing restitution via a civil suit on behalf of the U.S.
Needless to say, I would think that the Commission can build a sufficient relationship with the Departments of Treasury and Justice, without undermining our independence as an agency, to receive ongoing updates on the status of our forfeitures. Tracking such information is important for ensuring that the American people are compensated under the law. Violators should actually pay fines and penalties as required to rectify their past illegal practices and prevent reoccurrences. Additionally, our Enforcement Bureau actions are a deterrent to others and prevent future incidences of rule violations. The communications community at large and the public must be informed of our actions and know that when a fine or penalty is issued, it is collected.
Equally important, the Commission’s fines and penalties are sometimes used as precedent or guideposts for determining the size of other enforcement fines and penalties. If our past work is used as the basis for future decisions, consideration must be given to what was actually collected. For instance, the Commission has issued a number of NALs and eventual forfeitures against purveyors of slamming and cramming. It would be extremely helpful to know whether those entities actually paid the amounts assessed, or just closed down shop to reopen under a new name.
Moreover, it would be helpful to know the number and types of cases and the circumstances in which the U.S. Justice Department has sought collection over the years for unpaid Commission forfeiture orders. The FCC could use this information to analyze potential procedural improvements to its items that would invite greater DOJ involvement. In other words, are there are a high percentage of cases not being pursued and is there a way can we increase the likelihood that DOJ will seek collection? This needs to be taken into account when determining the most effective enforcement action, including whether to seek settlements at a lower figure or earlier in the process.
Even if the Commission’s enforcement fines and penalties are appropriate, if the collection remains unknown, overall enforcement will suffer. The potential discrepancy between issuing an enforcement action and collecting any financial fine or penalty needs to be addressed. To the extent that the Enforcement Bureau needs assistance facilitating the necessary relationships with the Treasury and Justice Departments, I would be happy to help in any way I can.