Legal Alerts and Articles
CPNI Consent Decrees Released
The FCC's Enforcement Bureau has begun releasing orders adopting "consent decrees" settling previously-initiated actions against a large number of companies for alleged Customer Proprietary Network Information ("CPNI") violations for failing to submit a compliance certificate on or before March 1, 2008. As of August 3, 2009, twelve such orders have been released, each of which adopts a consent decree which settles the action for a "voluntary contribution" of $1,000. Any entity cited in the Bureau's February 25, 2009 Omnibus Notice of Apparent Liability for Forfeiture ("Omnibus Notice") should consider whether pursuing such a settlement may be in its best interest.
The Bureau's Omnibus Notice assessed a proposed forfeiture in the amount of $20,000 against approximately 650 companies which allegedly failed to file CPNI compliance certifications on or before March 1, 2008, covering the 2007 calendar year. The Bureau found this to be a violation of Section 222 of the Communications Act of 1934, as amended, and Section 64.2009 (e) of the Commission's rules, among other things. Cited companies were given until March 26, 2009 to either a) pay the proposed forfeiture amount; or b) file with the FCC a formal written statement seeking either cancellation or reduction of the proposed forfeiture. Many companies elected to file formal written oppositions contesting the proposed $20,000 penalty.
The twelve orders recently released by the Bureau adopting Consent Decrees signal that the Bureau is apparently receptive to negotiating potentially attractive settlements in these individual cases. Any company facing a proposed $20,000 forfeiture in this matter could potentially benefit by approaching the Bureau to request a meeting to pursue settlement and negotiate a consent decree. This is particularly the case for organizations which failed to submit a compliance certificate, but were otherwise in compliance with the FCC's substantive CPNI rules.
The twelve consent decrees negotiated to date appear to resolve the pending actions in a manner beneficial to the parties involved. First, the consent decrees definitively terminate the investigations (removing the uncertainty associated with a pending federal enforcement investigation) and make clear that the Bureau will not use facts developed in the investigations to take action against the companies. Second, the cases are resolved for a "voluntary contribution" to the United States Treasury in the amount of $1,000, payable within 30 days. This is significant in that the payment is not officially classified as a "forfeiture" or "penalty" but rather a "voluntary contribution." Often, federal and state compliance filings and applications inquire as to whether the filer has ever been subjected to a government penalty or sanction, and the characterization of "voluntary contribution" typically will enable a negative answer to such an inquiry. Finally, the consent decrees include language stating that they do not render a judgment on the merits of the case or a factual or legal finding or determination regarding noncompliance. In other words, each party's record remains untarnished and absent a finding of a violation.
If your company or organization was cited in the Omnibus Notice (and may have also filed a response), please feel to give us a call to discuss whether pursuing a consent decree would be beneficial.
August 2009