[Federal Register Volume 62, Number 157 (Thursday, August 14, 1997)]
[Rules and Regulations]
[Pages 43474-43477]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-21115]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[FCC 97-218]


Forfeiture Proceedings

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: This order amends the Commission's rules to incorporate, as a 
note to the rule, the Commission's policy statement regarding 
forfeitures and a suggested schedule of base forfeiture amounts. The 
policy statement and schedule of base forfeiture amounts is intended to 
provide a measure of predictability and uniformity to the process of 
assessing forfeitures.

EFFECTIVE DATES: Effective October 14, 1997.

FOR FURTHER INFORMATION CONTACT: Pamera D. Hairston, Compliance and 
Information Bureau, (202) 418-1160.

SUPPLEMENTARY INFORMATION:

    Adopted: June 19, 1997.
    Released: July 28, 1997.
    1. This rule making responds to the concerns expressed by the U.S. 
Court of Appeals for the District of Columbia Circuit when it vacated 
the Commission's previous policy statement in the decision, United 
States Telephone Association v. FCC. <SUP>1</SUP> In that decision, the 
Court stated that the forfeiture guidelines used by the Commission 
constituted a rule that was adopted without notice and comment 
proceedings as required by the Administrative Procedure Act. In light 
of the court's decision, the Commission initiated a Notice of Proposed 
Rule making proceeding, <SUP>2</SUP> proposing that the prior policy 
statement be adopted, but requesting comments on all aspects of the 
proposal. In addition, the Commission requested specific comment on: 
(a) Whether the Commission should use guidelines to assess forfeitures 
instead of the traditional case-by-case approach; (b) whether the 
guidelines proposed in the notice of proposed rule making should be 
modified; and (c) whether adjustment factor ranges should be adopted.
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    \1\ United States Telephone Association v. FCC, 28 F.3d 1232 
(1994).
    \2\ In the Matter of the Commission's Forfeiture Policy 
Statement and Amendment of Section 1.80 of the Rules to Incorporate 
the Forfeiture Guidelines, 10 FCC Rcd 2945 (1995), 60 FR 10056 
(February 23, 1995).
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    2. After evaluation of the record, the Commission adopted a 
Forfeiture Policy Statement on June 19, 1997. The majority of the 
commenters agreed that a guideline based approach was preferable to the 
traditional case-by-case approach. One commenter disagreed with the 
guideline approach and argued that too much Commission discretion or 
flexibility in the guidelines would invite litigation. The Commission 
agreed with the majority that guidelines would add a measure of 
predictability and uniformity to the forfeiture process. Regardless of 
which approach is used, Section 503 of the Act provides the violators 
an opportunity to litigate the facts underlying the violation in an 
administrative law hearing or a trial de novo. We do not believe, 
therefore, that the potential for litigation should preclude us from 
providing necessary guidance in the forfeiture process. Thus, the 
Commission expressly retains its discretion to depart from the 
guidelines where warranted by the facts of the case.

[[Page 43475]]

    3. Some commenters suggested that the Commission revise its 
forfeiture guidelines in view of the changes in the telecommunications 
industry since the Commission developed its original Forfeiture Policy 
Statement. Commenters argued that the base amounts were too high, and 
discriminatory because they were established according to the nature of 
the service or identity of the violator rather than the nature of the 
violation. They suggested that the base forfeiture amounts for 
identical violations should be uniform for all services. We agreed and 
have made revisions to the base forfeiture structure. We also agreed 
with the commenters that the adjustment factor percentage ranges were 
difficult to apply, and we are therefore eliminating the percentage 
ranges. The Commission will continue to use the adjustment factors to 
increase or decrease a forfeiture based on the unique facts of the 
case.
    4. In sum, unless a violation is unique to a particular service, 
the base forfeiture amount for a violation will be the same for all 
services, regardless of the identity of the violator. We believe this 
is a more fair approach than our prior guidelines. There are two 
exceptions, however, to this methodology. The base amount for 
misrepresentation is set at the statutory maximum for each service. 
Moreover, base forfeiture amounts for violations that are unique to 
each service are established relative to the statutory maximum for that 
service. The schedule of forfeitures adopted with this Forfeiture 
Policy Statement does not constitute a comprehensive listing of all 
potential violations and concomitant base amounts. Omission from the 
forfeiture schedule does not mean that a violation is unimportant or 
that a forfeiture for an omitted violation would be less than those 
outlined in the schedule. We also note that assessing forfeitures for 
violations of the Commission's Broadcast Equal Employment Opportunities 
(EEO) rules will be addressed in a separate proceeding. <SUP>3</SUP>
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    \3\ Streamlining Broadcast EEO Rules and Policies, Vacating the 
EEO Forfeiture Policy Statement and Amending Section 1.80 of the 
Commission's Rules to Include EEO Forfeiture Guidelines, Order and 
Notice of Proposed Rule Making, 11 FCC Rcd 5154 (1996), 61 FR 9964 
(March 12, 1996).
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    5. To create base amounts that could be applied uniformly to all 
services, we used the statutory maximum for services other than those 
in the broadcasting, cable, and common carrier categories as the common 
denominator for developing base forfeiture amounts. Base forfeiture 
amounts may be increased or decreased upon evaluation of the unique 
facts of the case in light of the adjustment factors. These factors 
mirror the concerns outlined in Section 503 of the Act regarding the 
violation as well as the violator. Thus, a highly profitable entity can 
expect that its forfeiture may ultimately be assessed higher than the 
base amount in light of its ability to pay whereas a less profitable 
entity may be assessed a lesser amount. Factors such as degree of harm 
of the violation as well as the nature and circumstances surrounding 
the violation may mitigate or increase a forfeiture. We also believe 
that the guidelines established in this Forfeiture Policy Statement 
comport with the requirements of the Small Business Regulatory Fairness 
Enforcement Act (SBREFA) of the Contract with America Advancement Act 
of 1996. <SUP>4</SUP>
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    \4\  Public Law. 104-121, section 110 Stat. 847 (1996).
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    6. The Forfeiture Policy Statement also addresses several other 
issues raised in the proceeding. In response to the recommendation that 
warnings be issued for all first time violations, the Commission will 
continue to use its discretion in deciding whether to issue warnings, 
rather than assessing forfeitures, on a case-by-case basis. The 
commenters also contended, with respect to the issue of ability to pay 
a forfeiture, that the Commission focused solely on gross revenues in 
its evaluation and that the documentation required by the Commission to 
demonstrate inability to pay a forfeiture proved burdensome. The 
Commission noted, however, that it would look to the totality of the 
violator's circumstances and that it would consider objective 
documented evidence in evaluating a violator's ability, or lack 
thereof, to pay a forfeiture. With respect to use of prior forfeitures 
in subsequent proceedings, the Commission reiterated that the 
legislative history of Section 504 supports its use of the underlying 
facts of a prior violation in its evaluation of subsequent violations.
    7. With respect to administrative matters, several commenters 
suggested that the Commission rescind all pending forfeitures imposed 
under the prior Forfeiture Policy Statements. The Commission explicitly 
stated that the pending forfeitures would not be cancelled because the 
forfeitures were assessed in full accord with Section 503 of the Act. 
Thus, the Commission will use the case-by-case approach in evaluating 
pending cases. This approach will also be used in cases where the 
violation occurred prior to the release of the Forfeiture Policy 
Statement but where the Commission commences forfeiture action after 
the effective date of the instant rule making.
    8. Accordingly, pursuant to sections 4 (i) and 303 (r) of the 
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303(r), it is 
ordered  that 47 CFR Sec. 1.80 is amended  as set forth below, 
effective October 14, 1997. For copies of the Final Regulatory 
Flexibility Statement, contact International Transcription Services, 
Inc., (202) 857-3800.

List of Subjects in 47 CFR Part 1

    Penalties.

Federal Communications Commission.
William F. Caton,
Acting Secretary.

Rule Changes

    Title 47 of the Code of Federal Regulations, Part 1, is amended as 
follows:
    1. The authority citation for Part 1 continues to read as follows:

PART 1--PRACTICE AND PROCEDURE

    Authority: 47 U.S.C. 151, 154, 303, and 309(j); unless otherwise 
noted.

    2. Section 1.80 is amended by adding a note following paragraph 
(b)(4) to read as follows:


Sec. 1.80  Forfeiture proceedings.

* * * * *
    (b) * * *
    (4) * * *

    Note to paragraph (b)(4):

Guidelines for Assessing Forfeitures

    The Commission and its staff may use these guidelines in 
particular cases. The Commission and its staff retain the discretion 
to issue a higher or lower forfeiture than provided in the 
guidelines, to issue no forfeiture at all, or to apply alternative 
or additional sanctions as permitted by the statute. The forfeiture 
ceiling per violation or per day for a continuing violation stated 
in Section 503 of the Communications Act and the Commission's Rules 
are $25,000 for broadcasters and cable operators or applicants, 
$100,000 for common carriers or applicants, and $10,000 for all 
others. These base amounts listed are for a single violation or 
single day of a continuing violation. 47 U.S.C. 503(b)(2); 47 CFR 
1.80. For continuing violations involving a single act or failure to 
act, the statute limits the forfeiture to $250,000 for broadcasters 
and cable operators or applicants, $1,000,000 for common carriers or 
applicants, and $75,000 for all others. Id. Pursuant to the Debt 
Collection Improvement Act of 1996 (DCIA), Public Law 104-134, 
section 31001, 110 Stat. 1321 (1996), civil monetary penalties 
assessed by the federal government, whether set by statutory maxima 
or specific dollar amounts

[[Page 43476]]

as provided by federal law, must be adjusted for inflation at least 
every four years based on the formula outlined in the DCIA. Thus, 
the statutory maxima increased to $27,500 for broadcasters and cable 
operators or applicants; $110,000 for common carriers or applicants, 
and $11,000 for others. For continuing violations, the statutory 
maxima increased to $27,500 for broadcasters, cable operators, or 
applicants; $1,100,000 for common carriers or applicants; and 
$82,500 for others. The increased statutory maxima became effective 
March 5, 1997. There is an upward adjustment factor for repeated or 
continuous violations, see Section II, infra. That upward adjustment 
is not necessarily applied on a per violation or per day basis. Id. 
Unless Commission authorization is required for the behavior 
involved, a Section 503 forfeiture proceeding against a non-licensee 
or non-applicant who is not a cable operator or common carrier can 
only be initiated for a second violation, after issuance of a 
citation in connection with a first violation. 47 U.S.C. 503(b)(5). 
A prior citation is not required, however, for non-licensee tower 
owners who have previously received notice of the obligations 
imposed by Section 303(q) and part 17 of the Commission's rules from 
the Commission. Forfeitures issued under other sections of the Act 
are dealt with separately in Section III of this note.

          Section I.--Base Amounts for Section 503 Forfeitures          
------------------------------------------------------------------------
                         Violation                              Amount  
------------------------------------------------------------------------
Misrepresentation/lack of candor...........................        (\1\)
Construction and/or operation without an instrument of                  
 authorization for the service.............................      $10,000
Failure to comply with prescribed lighting and/or marking..       10,000
Violation of public file rules.............................       10,000
Violation of political rules: reasonable access, lowest                 
 unit charge, equal opportunity, and discrimination........        9,000
Unauthorized substantial transfer of control...............        8,000
Violation of children's television commercialization or                 
 programming requirements..................................        8,000
Violations of rules relating to distress and safety                     
 frequencies...............................................        8,000
False distress communications..............................        8,000
EAS equipment not installed or operational.................        8,000
Alien ownership violation..................................        8,000
Failure to permit inspection...............................        7,000
Transmission of indecent/obscene materials.................        7,000
Interference...............................................        7,000
Importation or marketing of unauthorized equipment.........        7,000
Exceeding of authorized antenna height.....................        5,000
Fraud by wire, radio or television.........................        5,000
Unauthorized discontinuance of service.....................        5,000
Use of unauthorized equipment..............................        5,000
Exceeding power limits.....................................        4,000
Failure to respond to Commission communications............        4,000
Violation of sponsorship ID requirements...................        4,000
Unauthorized emissions.....................................        4,000
Using unauthorized frequency...............................        4,000
Failure to engage in required frequency coordination.......        4,000
Construction or operation at unauthorized location.........        4,000
Violation of requirements pertaining to broadcasting of                 
 lotteries or contests.....................................        4,000
Violation of transmitter control and metering requirements.        3,000
Failure to file required forms or information..............        3,000
Failure to make required measurements or conduct required               
 monitoring................................................        2,000
Failure to provide station ID..............................        1,000
Unauthorized pro forma transfer of control.................        1,000
Failure to maintain required records.......................        1,000
------------------------------------------------------------------------
\1\ Statutory Maximum for each Service.                                 


                                        Violations Unique to the Service                                        
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                       Violation                                      Services affected                 Amount  
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Unauthorized conversion of long distance telephone       Common Carrier............................      $40,000
 service.                                                                                                       
Violation of operator services requirements............  Common Carrier............................        7,000
Violation of pay-per-call requirements.................  Common Carrier............................        7,000
Failure to implement rate reduction or refund order....  Cable.....................................        7,500
Violation of cable program access rules................  Cable.....................................        7,500
Violation of cable leased access rules.................  Cable.....................................        7,500
Violation of cable cross-ownership rules...............  Cable.....................................        7,500
Violation of cable broadcast carriage rules............  Cable.....................................        7,500
Violation of pole attachment rules.....................  Cable.....................................        7,500
Failure to maintain directional pattern within           Broadcast.................................        7,000
 prescribed parameters.                                                                                         
Violation of main studio rule..........................  Broadcast.................................        7,000
Violation of broadcast hoax rule.......................  Broadcast.................................        7,000
AM tower fencing.......................................  Broadcast.................................        7,000
Broadcasting telephone conversations without             Broadcast.................................        4,000
 authorization.                                                                                                 
Violation of enhanced underwriting requirements........  Broadcast.................................        2,000
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[[Page 43477]]

Section II. Adjustment Criteria for Section 503 Forfeitures

Upward Adjustment Criteria

    (1) Egregious misconduct.
    (2) Ability to pay/relative disincentive.
    (3) Intentional violation.
    (4) Substantial harm.
    (5) Prior violations of any FCC requirements.
    (6) Substantial economic gain.
    (7) Repeated or continuous violation.

Downward Adjustment Criteria

    (1) Minor violation.
    (2) Good faith or voluntary disclosure.
    (3) History of overall compliance.
    (4) Inability to pay.

Section III. Non-Section 503 Forfeitures That Are Affected by the 
Downward Adjustment Factors

    Unlike Section 503 of the Act, which establishes maximum forfeiture 
amounts, other sections of the Act, with one exception, state 
prescribed amounts of forfeitures for violations of the relevant 
section. These amounts are then subject to mitigation or remission 
under Section 504 of the Act. The one exception is Section 223 of the 
Act, which provides a maximum of $50,000 per day. For convenience, the 
Commission will treat the $50,000 set forth in Section 223 as if it 
were a prescribed base amount, subject to downward adjustments. The 
following amounts were adjusted for inflation pursuant to the Debt 
Collection Improvement Act of 1996 (DCIA) Public Law 104-134, section 
31001, 110 Stat 1321 (1996). The new amounts became effective on March 
5, 1997. These non-Section 503 forfeitures may be adjusted downward 
using the ``Downward Adjustment Criteria'' shown for Section 503 
forfeitures in Section II of this note.

------------------------------------------------------------------------
                Violation                      Statutory amount  ($)    
------------------------------------------------------------------------
Sec. 202(c) Common Carrier                6,600 330/day.                
 Discrimination.                                                        
Sec. 203(e) Common Carrier Tariffs......  6,600 330/day.                
Sec. 205(b) Common Carrier Prescriptions  13,200.                       
Sec. 214(d) Common Carrier Line           1,200/day.                    
 Extensions.                                                            
Sec. 219(b) Common Carrier Reports......  1,200.                        
Sec. 220(d) Common Carrier Records &      6,600/day.                    
 Accounts.                                                              
Sec. 223(b) Dial-a-Porn.................  55,000 maximum/day.           
Sec. 364(a) Ship Station Inspection.....  5,500 (owner).                
Sec. 364(b) Ship Station Inspection.....  1,100 (vessel master).        
Sec. 386(a) Forfeitures.................  5,500/day (owner).            
Sec. 386(b) Forfeitures.................  1,100 (vessel master).        
Sec. 634 Cable EEO......................  500/day.                      
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[FR Doc. 97-21115 Filed 8-13-97; 8:45 am]
BILLING CODE 6712-01-P