The Federal Communications Commission’s (“FCC”) cumbersome nature has been a bit of sore spot with telecommunications providers and their counsel. Does an order issued by the FCC Enforcement Bureau (“EB” or “Bureau”) last week, however, demonstrate that the FCC’s cumbersome processes might occasionally work to the benefit of telecommunications providers?
On July 22, 2016, the FCC EB issued an admonishment order (“Order”) to Momentum Telecom, Inc. (“Momentum” or “Company”), chastising the Company for failing to timely and fully contribute to the federal Universal Service Fund (“USF”) for over twelve (12) months. The Order expressed explicit concern with Momentum’s pattern of habitual late payment of its federal USF obligations.
Although Momentum exhibited behaviors commonly on the FCC EB’s “naughty” list, Momentum managed to escape an FCC forfeiture penalty altogether. Specifically, even though Momentum had been delinquent in its federal USF contributions for nearly two years, the FCC EB determined that the one-year statute of limitations set forth in FCC Rule 1.80(c)(4) prevented the Bureau from pursuing a forfeiture penalty because the “appropriate notice” was not issued within one (1) year of the violation.
Of particular interest is the fact that the FCC EB seems to have pegged July 1, 2015 (the date on which Momentum had been delinquent in its federal USF contributions for nearly two years) as the applicable date for purposes of calculating the statute of limitations. Although not discussed in any detail, presumably the “appropriate notice” in this case is the Order (adopted on July 21, 2016 and released on July 22, 2016). So, it appears that the Momentum Order just barely squeaked in past the one-year deadline, saving Momentum a minimum forfeiture penalty of $322,665.75.
Make no mistake – the FCC EB’s Order did not exempt Momentum from making all of its delinquent federal USF contributions. Nor did it create a statute of limitations for those contributions. In fact, the FCC EB was adamant that Momentum should be “sanctioned” for its habitual late payment of its federal USF contributions and warned the Company that future violations could result in substantial monetary fines.
Nonetheless, the Momentum Order provides some valuable lessons regarding the statute of limitations for forfeiture penalties related to federal USF contributions. First, make sure you know the start date the FCC EB is using for purposes of the statute of limitations. Knowing this information, and being able to refute it, could come in handy in enforcement negotiations or an appeal. Second, make sure you are clear about what the FCC considers “appropriate notice.” As with the statute of limitations start date, this information could help potentially reduce or eliminate a penalty. Finally, before you submit to a treble damage penalty calculation (as established in the FCC’s 2015 Forfeiture Policy Statement), do some quick math to determine whether you can avail yourself of the one-year forfeiture penalty deadline exemption.