Last week, the Federal Communications Commission (“FCC”) adopted a treble damages methodology to assess forfeitures for violations of federal program payment rules, including failure to file required forms and non-payment of required contributions. The penalty can apply to contributors to the Universal Service Fund (“USF”); the Telecommunications Relay Service (“TRS”); and the cost recovery mechanisms for local number portability (“LNP”) and the North American Numbering Plan (“NANP”).
Previously, USF and TRS contributors would be assessed a 50 percent upward adjustment based on the highest debts owed, in addition to a fine for each unpaid invoice. Now, the FCC argues that calculating that upward adjustment was both “time-consuming” and “resource-intensive,” as well as ineffective. The Commission chose to apply treble damages as a deterrent from realizing economic gains from customer surcharges.
The new policy comes on the heels of other changes in how the FCC handles USF matters. In its E-Rate Order issued last year, the FCC added an additional step to the appeals process, announcing that parties seeking review of Universal Service Administrative Company (“USAC”) decisions must appeal the decision to USAC before seeking FCC review. Parties can no longer appeal directly to the FCC. The FCC also revised comment procedures related to the review of USAC decisions, reducing the opportunity for public review and comment. The new comment cycles leaves just ten days for comments after an appeal, and five days for reply comments.
The FCC’s latest move adopting treble damages is a policy statement, not a notice of proposed rulemaking (“NPRM”), and therefore takes immediate effect without a notice and comment period. The new policy allows the FCC to streamline its enforcement review, and contributors should be prepared for higher penalties that could result. If you have questions regarding compliance with contribution obligations or FCC regulatory compliance questions generally, please contact Chris Canter at firstname.lastname@example.org or Jonathan Marashlian at email@example.com.