The Federal Communications Commission (FCC) has adopted new, higher, fines for violations of its rules and the Communications Act. These new fines go into effect on July 1.
Why the change? The FCC has long been required to update the fines that it assesses on companies that are found to have violated its rules or the Act, and does so periodically. In 2015, however, the President signed into law the 2015 Inflation Adjustment Act, which was designed to improve the effectiveness of civil monetary penalties and maintain their deterrent effect. The new law directs federal agencies to adjust their penalties for inflation each year, and requires agencies to publish “catch up” rules this summer to make up for lost time since the last adjustments. The FCC was required to publish interim final rules by July 1.
What is the impact? The maximum penalties for violating the FCC’s rules or the Act by broadcast stations have increased. With one exception, the maximum penalty has risen nearly $10,000 from $37,500 to $47,340 for each violation or each day of a continuing violation, and from $400,000 to $473,402 for a continuing violation. The statutory maximum penalties for violating the indecency laws have always been higher than the general maximums, and have increased accordingly. After July 1, a broadcaster can be fined $383,038 for any single indecent broadcast (up from $350,000), up to a maximum of $3,535,740 for a continuing violation of the indecency laws (up from $3,300,000). Common carriers, equipment manufacturers, and others regulated by the FCC also saw their maximum potential fines increase.
The changes to the broadcast maximum fines are significant, but pale in comparison to the increases implemented by other agencies. Indeed, because some agencies had not adjusted their maximum fine amounts for 10 years or more, the increases outside of the FCC were even greater. For example, the maximum fines for violating some Federal Trade Commission requirements more than doubled, rising from $16,000 to $40,000, in rule changes that become effective on August 1, 2016. Indeed, prior to the enactment of the new law, it was estimated that its implementation would lead to an increase in government revenue of more than $1.3 billion over the next ten years across all agencies subject to the new law’s terms.
What is the FCC focused on? Recent broadcast-related fines have not been in areas where the FCC tends to impose the statutory maximum penalties. However, a review of FCC Consumer Complaint Data indicates that the backlog of indecency complaints continues to grow, with more than 6500 indecency complaints pending against television stations and more than 1500 indecency complaints pending against radio stations. Other hot-button consumer issues include loud commercials and commercials/promotions. Regardless of what types of complaints the FCC chooses to pursue, the fact is that after July 1 violators will be subject to greater potential liability than before, making compliance with the FCC’s rules and the Communications Act all the more important.