|
Strong and effective enforcement is
critical to implementation of the Telecommunications Act of 1996. Chairman
Powell has emphasized on numerous occasions his strong commitment to enforcement
as a central part of his vision for a more effective FCC dedicated to
implementing the competitive and deregulatory vision of Congress in the 1996
Act. Within the scope of responsibilities Congress has delegated to the
Commission, he has charged the Enforcement Bureau to move quickly to respond to
complaints or requests for investigations that we receive. Only in partnership
with the states can we facilitate compliance with the local competition
provisions of the 1996 Act and we will continue to work with the states to do
so.
As Chairman Powell recently indicated in a letter
to the leaders of the House and Senate Commerce and Appropriations Committees,
attached to my testimony, the effectiveness of the Commission’s enforcement
efforts could be increased with the help of Congress. We are pleased that H.R.
1765 incorporates certain proposals made by Chairman Powell and, not
surprisingly, we strongly support these measures.
Statutory Forfeiture Caps. Given the vast
resources of the nation’s large common carriers, including incumbent local
exchange carriers and long distance carriers, the existing caps on common
carrier forfeitures of $120,000 per violation or per day of a continuing
violation, up to $1.2 million overall for a continuing violation, are an
insufficient sanction or deterrent in many instances.
The proposed 10-fold statutory increases – to
$1 million and $10 million – would significantly strengthen our enforcement
authority against incumbent local exchange carriers and other common carriers.
Through deterrence as well as the impact of sanctions that are imposed, we
believe this should increase compliance with the Act and the Commission’s
rules, to the overall benefit of consumers.
Statute of Limitations. As Chairman Powell
has noted, the one-year statute of limitations for common carriers has often
proved an impediment to the Commission’s enforcement actions. While it is
certainly important that the Commission commence forfeiture proceedings before
the evidence relating to the alleged violation becomes stale, it is imperative
that the Commission have enough time to conduct a meaningful investigation into
the matter before issuing a publicly available notice charging the carrier with
apparent misconduct. The proposed extension of the statute of limitations to two
years would give the Commission the needed flexibility to proceed with its
investigations without running up against an artificially short deadline.
Good morning Mr. Chairman and members of the
Subcommittee. I am pleased to appear today on behalf of FCC Chairman Michael K.
Powell regarding H.R. 1765. We appreciate the interest of Chairman Upton and
others on the Subcommittee and the full Committee in enhancing our enforcement
tools.
Strong and effective enforcement is critical to
implementation of the Telecommunications Act of 1996. Chairman Powell has
emphasized on numerous occasions his strong commitment to enforcement as a
central part of his vision for a more effective FCC dedicated to implementing
the competitive and deregulatory vision of Congress in the 1996 Act. Within the
scope of responsibilities Congress has delegated to the Commission, he has
charged the Enforcement Bureau to move quickly to respond to complaints or
requests for investigations that we receive. Only in partnership with the states
can we facilitate compliance with the local competition provisions of the 1996
Act and we will continue to work with the states to do so.
Our common carrier enforcement efforts generally
take place in one of three contexts. First, through the formal complaint process
set out in section 208 of the Communications Act, the Commission decides formal
complaints between private parties. These are generally the equivalent of
private law suits filed in court. Second, as an adjunct to the formal complaint
process, Enforcement Bureau staff provides mediation assistance to litigants or
potential litigants in an effort to help them reach a private settlement of
their disputes where feasible. Third, the FCC conducts informal investigations
pursuant to sections 218, 403 and 503(b) of the Communications Act. These
investigations may lead to monetary forfeitures or consent decrees. While
outside entities sometimes informally bring information to our attention in
connection with such investigations, they are not parties to the investigation
or any subsequent forfeiture proceeding. The only party to this type of FCC
investigation is the subject of the investigation.
As Chairman Powell recently indicated in a letter
to the leaders of the House and Senate Commerce and Appropriations Committees,
which I have attached to my testimony, the effectiveness of the Commission’s
enforcement efforts could be increased with the help of Congress. We are pleased
that H.R. 1765 incorporates certain proposals made by Chairman Powell and, not
surprisingly, we strongly support these measures.
Specifically, I’d like to focus my remarks on
two provisions of H.R. 1765 that would amend section 503(b) of the
Communications Act: (1) the increase in the caps on the Commission’s
forfeiture authority for common carriers; and (2) the lengthening of the statute
of limitations period for such forfeitures. Both of these provisions relate to
the informal investigation process I mentioned before.
Statutory Forfeiture Caps
Right now, under section 503(b) of the
Communications Act and the inflationary adjustments provided for under the Debt
Collection Improvement Act of 1996, the Commission can fine common carriers only
$120,000 per violation or per day of a continuing violation. In the case of a
continuing violation, the total fine cannot exceed $1.2 million. Given the vast
resources of the nation’s large common carriers, including incumbent local
exchange carriers and long distance carriers, this amount is an insufficient
sanction or deterrent in many instances.
H.R. 1765 would increase the statutory caps
10-fold to $1 million per violation or per day of a continuing violation and $10
million for continuing violations. We think these statutory increases would
significantly strengthen our enforcement authority against incumbent local
exchange carriers and other common carriers. Through deterrence as well as the
impact of sanctions that we impose, we believe compliance with the Act and the
Commission’s rules should be increased, to the overall benefit of consumers.
We thus strongly support this provision. For similar reasons, we also support
the proposal to increase the caps to $2 million and $20 million in situations
where a carrier has violated a cease and desist order or where there has been a
repeated violation that has caused harm to competition.
Statute of Limitations
In addition to setting out forfeiture caps,
Section 503(b) of the Communications Act spells out the procedure for the
imposition of forfeitures and the timetable for the initiation of such actions.
Under the statute, the Commission may impose a forfeiture through a hearing that
begins with a Notice of Opportunity for Hearing or through a paper process that
begins with a Notice of Apparent Liability. Under either process, the Commission
may not impose a forfeiture penalty unless the carrier is notified of the
charges and provided an opportunity to respond. For common carriers, the
requisite notice must be issued within one year of the violation or violations
at issue.
As Chairman Powell has noted, this one-year
limitations period has often proved an impediment to the Commission’s
enforcement actions. While it is certainly important that the Commission
commence forfeiture proceedings before the evidence relating to the alleged
violations becomes stale, it is imperative that the Commission have enough time
to conduct a meaningful investigation into the matter before issuing a publicly
available notice charging the carrier with apparent misconduct.
Let me explain some of the practical constraints
that the one-year limitation creates. In some situations, the Commission first
hears about a violation from information informally provided by a competitor
that has been harmed by the alleged violation. This can take several months as
the harmed competitor determines whether there is a serious violation or pattern
of violations at issue. In other instances, we are first notified of potential
violations through incumbent carriers’ required filings with the Commission,
which often cover time periods dating back many months. Thus, when the
Commission receives these reports, we are often already fairly deep into the
limitations period. Moreover, once we start an investigation, much of the
evidence relating to the alleged violation resides with the carrier whose
conduct is under investigation. Accordingly, in both types of situations, to
determine whether there is sufficient evidence of a violation to proceed, the
Bureau is often required to send a letter to the carrier requiring the
submission of relevant information and documents, and then await the carrier’s
response. Moreover, because some carriers employ mechanisms to slow the progress
of our investigations, the Bureau is often required to send follow-up letters to
the carrier before obtaining the information sought. This cuts still further
into the limitations period.
Because of the one-year statute of limitations
for forfeiture proceedings, there have been instances in which the Commission
has been constrained from commencing forfeiture proceedings. In other instances,
we have been put in the unfortunate position of requesting that the subject
carrier enter into an agreement to toll the running of the limitations period.
While carriers often agree to such arrangements when they believe it is in their
interest to do so, they do sometimes refuse. When they refuse, the Commission is
left racing against the clock to make a decision on whether or not to initiate a
forfeiture proceeding before the limitations period expires.
These problems would be largely solved if the
Congress were to extend the statute of limitations in Section 503(b)(6)(B) of
the Communications Act to two years. Thus, we thus strongly support this
provision in H.R. 1765 as well.
Thank you again for this opportunity to testify.
I would be happy to answer any questions you may have.
|
