Avoid Triggering Enforcement Actions (and Avoid Potential Veil Piercing) When Winding Down Operations


The International Bureau of the Federal Communications Commission (“FCC”) released a notice last week citing an international carrier for failure to comply with requirements related to winding down of operations. The notice was a reminder from the FCC that the agency will continue to enforce carrier compliance responsibilities even when a carrier seeks to stop providing service.

According to the FCC, JuBe Communications, LLC, a holder of an international section 214 authorization, allegedly failed to notify the FCC that it had dissolved.  Under FCC rules, providers of U.S. – international common carrier service must obtain FCC Section 214 authorizations to provide international telecommunications service.  That requirement includes a national security review by the inter-agency group known as “Team Telecom,” comprised of staff from the Department of Homeland Security, the Department of Justice, Federal Bureau of Investigation, and other Executive branch agencies.  Once approved, an authorized carrier has specific, ongoing compliance responsibilities, including ensuring the continued accuracy of the certifications made as part of the original Section 214 application. 

A key requirement of Section 214 authorized carriers is to follow specific obligations when discontinuing service, including notifying affected customers and filing required documents with the FCC.  In the latest action, the FCC wrote that it discovered that JuBe had dissolved without complying with discontinuance rules.  The agency has announced that if JuBe does not respond to the FCC, it could bring an enforcement action for non-compliance in addition to revocation of the company’s Section 214 license.

FCC enforcement actions can have tough repercussions for businesses and their principals.  For example, in February, the FCC released forfeiture orders where it upheld its authority to impose liability on the owners of companies in certain circumstances under a theory of “piercing the corporate veil.”  This type of liability could be a tool for the FCC to recover hefty penalties even from companies that have ceased operations.

To avoid triggering enforcement actions as you wind down your operations, businesses should ensure they comply with all applicable discontinuance FCC regulations.  If you have questions about your ongoing compliance responsibilities or about rules related to dissolution, please contact Jonathan Marashlian at jsm@commlawgroup.com.

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