Senate Commerce Committee Approves FCC Reauthorization Bill

June 26, 2003. The Senate Commerce Committee amended and approved S 1264, the Federal Communications Commission Reauthorization Act of 2003. The bill would reauthorize the Federal Communications Commission (FCC) through 2008. However, the bill also contains many significant substantive provisions pertaining to media ownership rules, e-rate fraud, FCC enforcement, lobbying by former FCC officials, and the effect of bankruptcy on spectrum auctions.

Extension of Reauthorization Through 2008. The Committee approved by voice vote a perfecting amendment offered by Sen. John McCain (R-AZ) (at right) and Sen. Ernest Hollings (D-SC) that, among other things, extends the reauthorization of appropriations for the FCC through 2008. The bill as introduced reauthorized the FCC through 2007.

Video Description Rules. This perfecting amendment also requires the FCC to initiate a proceeding to determine whether it is economically and technically feasible to include crawlers in the video description rules. It provides that the FCC "shall initiate a proceeding within 180 days after the enactment of this Act to consider whether it is economically feasible and consistent with the public interest to include ``accessible information´´ in its video description rules". The amendment defines the term "accessible information" as "written information displayed on television screens during regular programming, hazardous warnings and other emergency information, local and national news bulletins, and any other information the Commission deems appropriate."

Private Causes of Action Against FCC and the Conboy Case. This amendment also struck from the bill as introduced a provision regarding private causes of actions against common carriers. The bill, as introduced, would have provided a private right of action, and recovery of damages, for violation of FCC rules and orders by common carriers, and thus address the 2001 holding of Second Circuit in Conboy v. AT&T. The Committee did not debate or discuss this item at the mark up meeting.

47 U.S.C. § 206 currently provides for recovery of damages for violation of the statute, but not for violation of rules or orders. It provides that "In case any common carrier shall do, or cause or permit to be done, any act, matter, or thing in this chapter prohibited or declared to be unlawful, or shall omit to do any act, matter, or thing in this chapter required to be done, such common carrier shall be liable to the person or persons injured thereby for the full amount of damages sustained in consequence of any such violation of the provisions of this chapter, together with a reasonable counsel or attorney's fee, to be fixed by the court in every case of recovery, which attorney's fee shall be taxed and collected as part of the costs in the case." The bill, as introduced, would have changed this to the following: ""A common carrier that does, or causes or permits to be done, any act, matter, or thing prohibited or declared to be unlawful in this Act, or in any rule, regulation, or order issued by the Commission, or that fails to do any act, matter, or thing required to be done by this Act, or by any rule, regulation, or order of the Commission is liable to any person injured by such act or failure for the full amount of damages sustained in consequence of such act or failure, together with a reasonable attorney's fee. The amount of the attorney's fee shall be -- (1) fixed by the court in every case of recovery in a judicial proceeding; or (2) fixed by the Commission in every case of recovery in a Commission proceeding.'' But, the Committee removed this provision from the bill.

On February 26, 2001, the U.S. Court of Appeals (2ndCir) issued its opinion in Conboy v. AT&T, a case regarding the Telecommunications Act of 1996 and electronic privacy. The Appeals Court affirmed the District Court's decision dismissing the plaintiffs' complaint.

The plaintiffs, Edward and Eileen Conboy, filed a class action complaint in U.S. District Court (SDNY) alleging that AT&T improperly disseminated personal information about them to AT&T Universal Card Services (UCS) to help UCS collect credit card debt, in violation of § 222 of the Telecommunications Act of 1996, FCC regulations thereunder, the Fair Debt Collection Practices Act, and New York State law.

Plaintiffs were neither the debtors, nor guarantors of the debt; their daughter is law was the debtor. Nevertheless, AT&T gave UCS their unlisted phone number. UCS made between 30 and 50 harassing phone calls to them, some at unusual hours. The District Court dismissed the entire complaint for failure to state a claim upon which relief can be granted. The Appeals Court affirmed.

The Appeals Court wrote that "The text of the Telecommunications Act contains no language that explicitly provides a private right of action for damages for violations of the two FCC regulation at issue here. Section 401(b) of the Communications Act permits private parties to enforce FCC ``orders,´´ but it does not provide authority for the recovery of damages. Moreover, no private right of action for money damages can be implied." (The Appeals Court also held in Conboy that the Plaintiffs could not sue for violation of the statute, because they "failed to allege recoverable damages". That is, they could not recover for mere harassment.)

Revocation of Broadcast Licenses for Obscene Content. The Committee next approved an amendment offered by Sen. Hollings that requires the FCC to conduct a license revocation proceeding in certain situations involving the "broadcast of obscene or indecent material". Sen. Hollings complained that the FCC "punted" in a recent obscenity matter, and that "I am trying to wake up the FCC".

Broadcast Political Ads. The Committee next approved an amendment offered by Sen. McCain regarding political advertisements on broadcast media. It would require the FCC to conduct a rule making proceeding to address, among other things, "sponsorship identification". Sen. Ted Stevens (R-AK) described this as "transparency in political advertising". Sen. George Allen (R-VA) raised the "question of privacy" in "political speech or advocacy". Nevertheless, the amendment passed by a voice vote.

Digital TV Translators. The Committee next approved by voice vote an amendment offered by Sen. Stevens that amends 47 U.S.C. § 336(f)(4) to provide that "Within 60 days after the date of enactment, the Federal Communications Commission shall initiate a rulemaking implementing this section to authorize the operation of digital television translators and digital on-channel repeaters."

Broadcast Localism. The Committee next debated, but did not approve, an amendment offered by Sen. Byron Dorgan (D-ND) regarding "localism, diversity and competition". Sen. Dorgan withdrew his amendment.

It would have provided that the FCC "shall initiate a proceeding to establish a minimum amount of locally originated programming that each broadcast licensee shall be required to broadcast to satisfy the public interest obligation of a licensee." However, the amendment would also have allowed the FCC to waive the programming requirement "for good cause based on hardship or other unforeseen circumstances."

Sen. Dorgan stated that consolidation has resulted in less local programming content in broadcast media. Sen. Stevens, who urged approval of the amendment, commented that the underlying purpose of "must carry is that there is localism".

Frequency of FCC Reviews of Media Ownership Rules. The Committee next approved an amendment offered by Sen. John Sununu (R-NH) regarding the frequency of the FCC's reviews of its media ownership rules. The statute currently requires that a review be conducted at least every two years. The Committee recently approved a bill that would reduce the frequency to every five years. This amendment sets the frequency at four years.

Citizen Standing to Challenge Broadcast License Renewals. The Committee next debated, but did not approve, an amendment offered by Sen. Maria Cantwell (D-WA) regarding challenges to broadcast license renewals. She complained that about the current automatic renewal of licenses. Sen. McCain stated that "I don't think average citizens are heard enough in this process."

This amendment would have created the possibility of "endless harassment", said Sen. Trent Lott (R-MS), "by just anybody who walks in off the street." He also noted the financial cost to small broadcasters of fighting these challenges.

Sen. Stevens argued that this amendment "will lead to a multiplicity of people claiming to represent the public interest". He argued that all citizens should have the right to comment, but not to challenge. He said that this is normally done by the state, or some elected official.

Sen. Cantwell's (at right) amendment would have amended 47 U.S.C. § 309(d)(1) to provide that "a party of interest shall include any listener or viewer of the specific broadcast station to be licensed or renewed who asserts an interest in vindicating the general public interest, and otherwise makes the specific allegations and showings required by this paragraph".

Sen. Cantwell withdrew her amendment, but added that she will work on revised language to offer when the full Senate takes up the bill.

Public Interest Programming and License Renewals. The Committee next debated, but did not approve, an amendment offered by Sen. Cantwell regarding the broadcast license renewal process. It would have added a new subsection to 47 U.S.C. § 309(k) that provides that "A broadcast license renewal applicant shall provide to the Commission, and make publicly available in such manner and for such time as the Commission shall prescribe, a disclosure of any and all specific programming identified as programming in fulfillment of the obligations of the applicant to provide programming in the public interest, convenience, and necessity."

Sen. McCain, who opposed the amendment, stated that he wants to hold a hearing on this issue in July. Sen. Cantwell withdrew the amendment.

UHF Discount. Finally, the Committee also approved, by a vote of 13-10, an amendment offered by Sen. Frank Lautenberg (D-NJ), regarding the UHF discount. The amendment phases out the attribution discount permitted for UHF television stations.

The bill as approved by the Committee also retains many key provisions that were included in the bill as introduced.

E-Rate Program Fraud. The bill requires to FCC to write annual reports on fraud and abuse in the schools and libraries universal service subsidies program, also known as the e-rate. The bill states that the FCC "shall conduct an investigation into the implementation, utilization, and Commission oversight of activities authorized by section 254(h) of the Communications Act of 1934 (47 U.S.C. 254(h)) ... for each of fiscal years 2004 through 2007, with a particular emphasis on determining the specific fraud or abuse of Federal funds that has occurred in connection with such activities or operations."

Enforcement. The bill increases certain statutory caps on penalties ten fold, and extends statute of limitations on certain actions. Sen. Hollings (at right) stated in a prepared statement that "this bill makes great strides in increasing maximum forfeiture penalties by ten times the current high water mark. It is my hope that the FCC will take the hint and use these tools that we are providing in this bill to benefit consumers."

Lobbying Restrictions. The bill contains two provisions related to lobbying. First, it limits payment of travel costs of FCC officials and staff. Second, it expands the list of FCC positions subject to the one year ban on lobbying.

The one year ban on lobbying is codified at 18 U.S.C. § 207. It provides, at § 207(c)(1) that "... any person who is an officer or employee ... of the executive branch of the United States (including an independent agency), who is referred to in paragraph (2), and who, within 1 year after the termination of his or her service or employment as such officer or employee, knowingly makes, with the intent to influence, any communication to or appearance before any officer or employee of the department or agency in which such person served within 1 year before such termination, on behalf of any other person (except the United States), in connection with any matter on which such person seeks official action by any officer or employee of such department or agency, shall be punished ..."

Paragraph (2), in turn, provides guidance as to which persons the restriction of paragraph (1) applies. The bill adds an enumerated list of FCC positions subject to the one year ban. It lists the chiefs of the bureaus (MB, WCB, WTB, IB, OET, EB, CGAB). It also includes the chief of OSP, the Inspector General, the General Counsel, and the Director of OLA.

Spectrum Licenses, Bankruptcy and Security Interests. The bill also addresses the situation presented in the NextWave case. Specifically, the bill would provide that "The bankruptcy laws shall not be applied (A) to avoid, discharge, stay, or set-off any pre-petition debt obligation to the United States arising from an auction under this Act, (B) to stay the payment obligations of the debtor to the United States if such payments were a condition of the grant or retention of a license under this Act, or (C) to prevent the automatic cancellation of licenses for failure to comply with any monetary or non-monetary condition for holding any license ..."

The bill would also provide that "A debtor in a proceeding under the bankruptcy laws shall have no right or interest in any portion of the proceeds from an auction of any license reclaimed by the Commission for failure to pay a monetary obligation of the debtor to the United States in connection with the grant or retention of a license under this Act."

Finally, the bill would provide that the FCC may "(A) establish rules and procedures governing security interests in licenses, or the proceeds of the sale of licenses, issued by the Commission; and (B) establish an office within the Office of Secretary for the recording and perfection of such security interests without regard to otherwise applicable State law."

These amendments would only apply prospectively. It would only apply "to cases and proceedings commenced on or after the date of enactment of this Act."

See, January 27, 2003 opinion [34 pages in PDF] of the Supreme Court, and TLJ story titled "Supreme Court Rules Against FCC in NextWave Case", January 27, 2003.