While most FCC enforcement actions take the form of a Notice of Apparent Liability, Forfeiture Order, or Consent Decree, recent events have called attention to another means: FCC citations. In summary, current law prevents the FCC from pursuing a fine against a company that is not generally regulated by the Commission unless it is previously issued a written citation. While this additional step is intended to provide more notice and due process for non-regulatees, the recent use of citations seems to provide fewer protections than envisioned by the law. Additionally, I am concerned that citations are being used as another tool to expand the FCC’s reach and thus its mission – a maneuver that amounts to regulation by citation. Both concerns must be remedied and this can occur while working well within the statutory structure that Congress provided.
Section 503(b)(5) of the Communications Act provides that no forfeiture liability shall be determined against any person who does not hold a license, permit, certificate, or other authorization issued by the Commission unless, prior to issuance of any Notice of Apparent Liability, such person is “(A) sent a citation of the violation charged; (B) is given a reasonable opportunity for a personal interview with an official of the Commission at the field office of the Commission which is nearest to such person's place of residence; and (C) subsequently engages in conduct of the type described in such citation.”
The purpose of sending a citation and providing an opportunity for a personal interview – before even contemplating a fine – is to ensure that such businesses understand the FCC rules and have the opportunity to come into compliance. Non-regulatees may not pay close attention to FCC proceedings, nor would they have reason to maintain FCC counsel to keep them apprised of FCC developments.
However, numerous reports indicate companies have been blindsided and treated as guilty before they even know what the supposed violations are. In fact, businesses are not always informed of citations before they are made public. Even more startling, the FCC has been known to issue a press release before the target even receives its citation copy, which can be days later when it is sent by postal mail. In an age of ubiquitous and instantaneous social media reactions to any and every perceived outrage, the impact can be devastating. By the time a company learns of the item, and has a chance to read and understand the supposed violations, it may have already been tried in the court of public opinion based solely on the FCC’s view of the facts, which may or may not be correct.
The Commission should change its procedures so that citations are not publicized until after the target has had the opportunity to avail itself of the interview and respond to the claimed violations, which occurs within 30 days of the issuance of the citation. This would in no way detract from the Enforcement Bureau’s ability to pursue an investigation, or a fine if warranted. The company would still receive the citation and could face further enforcement action. Nor would it detract from the Commission’s ability to use a citation as a deterrent for other companies because the citation (unless rescinded after discussions with the target) would still become public. It would merely delay publication for a reasonable and limited timeframe. Since the goal of enforcement is compliance, not immediate headlines, this should not be a problem.
Disturbing Substantive Direction
Because citations are issued against companies that may not be as familiar with the Act and FCC rules, I am especially troubled that the FCC would use citations to break new legal ground, as it recently did when it issued citations against Lyft and First National Bank.
It is problematic enough when the FCC issues an enforcement action in the absence of any rules. I have opposed the practice on multiple occasions because it is unfair (and unlawful) to expect companies to guess what the Enforcement Bureau might find objectionable. In addition, because such proceedings are shielded from public comment, there is no opportunity for other businesses that could be impacted in the future to object to novel legal theories.
When a new legal argument is put forth in a citation, it is even less likely that a non-regulatee would be able to foresee that its conduct would violate the Act. Moreover, such a company, without the benefit of experience or FCC counsel, may simply assume that the citation is based on settled law. Therefore, they may be even less inclined to challenge something that really amounts to an unlawful expansion of the FCC’s jurisdiction. But that won’t prevent the agency from treating the citation as if it were precedent in other contexts—hence, the reality of regulation by citation.
Instead, the FCC should refrain from issuing citations that have no basis in Commission rules. If the agency spots conduct that it thinks should be unlawful, it is always free to initiate a notice of proposed rulemaking to address it. A simple rule change can be effectuated in a reasonable amount of time while providing fair notice and an opportunity to comment. Any additional time is worth it to ensure that the Commission is on solid legal footing.