FCC Rulemaking To Revise Regulatory Fees

by Womble Carlyle Sandridge & Rice, LLP
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The FCC has initiated rulemaking to reform its policies for assessing and collecting annual regulatory fees.
In past years, when proposing a new schedule of fees, the Commission has regularly noted the need for reform, but never allowed sufficient time before the payment deadline to meaningfully consider possible changes. Now, although the upcoming 2012 fees will not be affected, it has begun the process well in advance of the 2013 fee requirement.
The Commission acknowledges the extensive evolution that has occurred in the communications marketplace since the regulatory fee program was implemented in 1994, and the resulting shifts of its regulatory activities for which these fees are assessed. Thus, the FCC seeks to reallocate its regulatory costs among the various segments of the industry as it now exists.
While Congress establishes through its annual appropriations acts the total amount to be collected each year, the Communications Act generally requires that regulatory fees be assessed in proportion to the extent of benefits derived by the holders of FCC authorizations. Those benefits, in turn, are calculated as a function of the amount and nature of direct and indirect FCC employee work for each type of authorization, divided among the number of facilities in each category.
Beyond reaffirming its abstract policy goals of fairness, administrability (that is, simplification) and sustainability (consistency in future years, to avoid constant recalculation), the Commission seeks to revise its allocation of FCC employee time (both direct and indirect) among its bureaus in proportion to the focus of each employee’s work to regulate licensees of that bureau. The FCC currently estimates that 36% of its staff provides direct services to its bureaus; of those, 22% provide direct service to the International Bureau, 32.9% to the Media Bureau, 27.7% to the Wireline Competition Bureau, and 17.4% to the Wireless Telecommunications Bureau. From there, the calculus gets considerably less tangible in allocating indirect work. Thus, for example, the International Bureau estimates that half of its work covers services falling within the scope of the other bureaus, including such matters as bilateral diplomacy meetings that benefit all licensees. The Commission also wants to consider alternate ways to measure benefits provided to a payor, including, for example, efforts to de-regulate certain areas of industry activity. Another approach would measure the benefits received by each regulated entity as a function of its market share or total revenues.
A corollary concern is how to allocate employee time within each bureau, presumably in proportion to the current distribution of work among classes of regulates. Here, too, the Commission is prepared to consider methods of weighting employee involvement according to less concrete factors that would reflect the “benefits” received by each payor. The Commission also intends to consider how to ameliorate the impact of a sharp increase in the fees to be charged to any segment, especially within the International Bureau.
In that regard, the FCC is required by statute to take steps to minimize the economic impact of its policies upon businesses that fall within the protected category of small businesses. It estimates that 73% of commercial television stations and 97% of commercial radio stations are considered small businesses under the criteria set by the Small Business Administration. The Commission has affirmed that it must assess the impact of regulatory fee adjustments upon small businesses, and suggests phasing in new fees over time as one way to achieve this.
While much of the proposal focuses upon the emergence of non-broadcast technologies, any decision as to new methodology, as well as adjustments in assigning regulatory costs to established categories, will have a direct impact upon all payors. The total amount to be collected each year is fixed by Congress, and so relieving one segment of the industry of a portion of the burden will necessarily increase the load to be carried by others. Consequently, the upcoming decision is of concern to all licensees.
A complete copy of the FCC’s rulemaking proposal is available from the FCC at: http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-12-77A1.pdf.
Comments will be due 30 days after publication in the Federal Register. While the views of individual stations are unlikely to be persuasive, groups or associations may wield substantial influence over the outcome of this matter, which will affect the industry for years to come.
If you have any questions, please contact Peter Gutmann (pgutmann@wcsr.com or (202) 857-4532) or any member of the firm’s Communications Law Group.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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