Yesterday, the FCC issued a hearing designation order – though one with much lower stakes than the last designation order issued by the FCC which seemingly resulted in the termination of the proposed Sinclair-Tribune merger. Yesterday’s order was at almost the opposite end of the spectrum from a massive merger of TV companies – the upcoming hearing will determine whether to revoke the license of a Low Power FM station. Issues were raised as to whether the licensee in its FCC applications lied to the FCC about whether its board of directors was made up of US citizens – there being substantial evidence that the board members were in fact citizens of other countries.
As we wrote here when the Sinclair acquisition was designated, hearings are most commonly used when the FCC is faced with disputed issues of fact. But hearings are also required in some cases by the Communications Act, including in cases where there is a proposed revocation of an existing license, as appears to be the reason for the order yesterday – though the FCC also lists a number of issues in the LPFM case that need a factual review. These include whether the licensee made misrepresentations to or lacked candor with the FCC (essentially whether the licensee had lied to the FCC in its applications when it said its directors were US citizens), whether the license was controlled by aliens (i.e. foreign citizens), whether the licensee failed to keep information on file at the FCC accurate and up to date, and whether the licensee failed to respond to FCC inquiries (the FCC having asked for information about the apparent foreign ownership and received no response).
The misrepresentation/lack of candor issue is one that can arise in any case where an FCC applicant or licensee does not truthfully answer a question on an FCC form or in some other FCC filing. If the statements made are found to be untrue and made with intent to deceive the FCC, the issue is most serious and can result in the loss of a license. If the case goes to trial, the administrative law judge (called an “ALJ”) will determine the facts with respect to each of the designated issues and whether those facts lead to the ultimate conclusion that conduct was so bad that the license should be revoked. I say “if this case goes to trial” as many times a party facing a designation for hearing will just give up rather than face the often long and costly hearing process (as apparently happened when Tribune decided to terminate the sale to Sinclair, and as happened in the case we wrote about here, even when the FCC tried to shortcut the hearing by doing a “paper hearing” without the ALJ). In yesterday’s order, the applicant is given a specific amount of time to respond and say that it will participate in the hearing, or the right to a hearing will be deemed waived. Why are these cases usually long and costly?
These cases are much like any court proceeding that you see in civil or criminal cases. But they are typically held before an ALJ, an employee of the FCC though with great independence from the normal FCC processes. The judge is not what is known as an Article III judge – one who sits on other Federal courts. But the ALJ runs a hearing with many of the characteristics of any trial you see on TV – with witnesses being sworn in before they testify, cross-examination by attorneys (often representing the FCC), and pre-trial discovery (including the production of piles of relevant documents and the deposition of witnesses). The Judge basically sets the procedure and moves at his (there being only a single male FCC ALJ at present) own pace (as is evident from the Sinclair case where, though the transaction has been terminated and no party has opposed the request to terminate the case since the application being evaluated is gone, the case has not yet been terminated). The one major difference is that appeals from the ALJ decision go to the FCC Commissioners first, before going to Court.
We will see where this LPFM case goes. But more importantly it shows the variety of processes that the FCC has at its disposal to take care of situations where applicants or licensees appear to have violated FCC rules. Whether this order signals a trend in the use of hearings, or is just an outlier necessary to deal with an unusual case, we will see.