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FCC Auction Fee Questioned

Attorney Harry Cole explores a gripe by engineer Jack Mullaney and concludes that the commission has been collecting money to which it was not entitled

Broadcast attorney Harry Cole says it appears the FCC since 2004 has been collecting some application fees to which it was not entitled.

Cole blogs that the commission recently “clarified” its rules on application fees from successful bidders in auctions for broadcast permits and that it seemed to downplay the significance of this change.

“But thanks to our good friend Jack Mullaney — long-time RF engineer and, apparently, part-time transparency champion — we can report that there is indeed something to see here, and it does not cast the FCC in a particularly favorable light, transparency-wise (or fairness-wise, for that matter).”

The column came about after Mullaney asked Radio World about the issue. RW asked Cole, who writes an RW column, to explore the question further; Cole does so in his Fletcher Heald & Hildreth blog post today.

“The situation arose back when the commission first started auctioning spectrum in the 1990s,” Cole wrote. He cited a rule that stated: “Notwithstanding any other provision in [the commission’s rules] to the contrary, high bidders need not submit an additional application filing fee with their long-form applications.”

When Congress gave the commission authority to auction broadcast spectrum, the FCC indicated successful broadcast bidders would pay application fees when they submitted long-form applications, but it didn’t amend its earlier rule that explicitly states the contrary. “This detail apparently fell through the cracks and the rule never got changed,” Cole wrote, and fee checks from 2004 through 2010 were cashed.

Cole reported that in 2009, a broadcast attorney for one winning bidder asked for a refund and that the FCC this winter sent a check with a notation “not required to pay fees.” This came shortly after the commission announced an updated application fee schedule, which included a Notice of Proposed Rulemaking component looking to change the earlier rule language.

The commission, Cole continued, said its proposed change was intended merely to “clarify” the rules and “to resolve any inconsistency” between the rule and later FCC statements. But Cole took exception, saying “That’s kind of like saying that changing one’s plea from ‘not guilty’ to ‘guilty’ is a ‘clarification’ intended to resolve some ‘possible’ inconsistency.” The commission’s behavior, he said, “might be seen as ever so slightly disingenuous. That’s especially so in view of the refund that was issued pretty much simultaneously with the understated NPRM.” This, he said, establishes that successful bidders for broadcast facilities indeed were not required to pay application fees.

In short: “Since 2004 the commission has routinely advised auction participants that they have to file application fees, and the commission has apparently collected those fees without notifying the payers that the fees would be refunded on request.”

He encouraged the FCC staff to review its records, identify which applicants paid unnecessary fees and how much, and issue refunds without making affected payers have to hire lawyers to seek a refund.

“In the view of this blogger, if the commission wishes to claim the high ground on the transparency and fairness fronts, it for sure owes refunds to those who paid the unnecessary fees — and it also owes the rest of us an explanation.”

A Second Order adopting revised language regarding Section 1.2107 (c) of the commission’s rules was published in the Federal Register today (Tuesday). The order is effective on the publication date, June 28.

For Years FCC Ignores Own Rule, Pockets Filing Fees