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                           Before the
                     Washington, D.C. 20554

In the Matter of                )
The Commission's Forfeiture     )       CI Docket No. 95-6
Policy Statement and            )
Amendment of Section 1.80       )
of the Rules to Incorporate     )
the Forfeiture Guidelines       )

                        REPORT AND ORDER

     Adopted:              June             19,              1997                                      
Released:  July 28, 1997

     By the Commission:

                        TABLE OF CONTENTS

                                                  Paragraph No. 
 I.  INTRODUCTION                                      1

II.  BACKGROUND                                             2

III. DISCUSSION                                             5
     A.  Forfeiture versus the traditional                       
     case-by-case approach 

     B.  Proposal Modifications                                  
          (i)   Use  of  the  same  base  forfeiture  amount  for 
           violations in different services

          (ii)  Revisions to the proposed base forfeiture amounts

     C.  Adjustment Factors Percentage Ranges                    

     D.  Other Issues                                       28

     E.   Other Matters                                     50

IV.  CONCLUSION                                             53

 V.   ADMINISTRATIVE MATTERS                           54

     A.  Regulatory Flexibility Analysis                         

     B.  Ex Parte Rules -- Permit but Disclose Proceeding        

VI.  ORDERING CLAUSES                                  56


Appendix A.  Amendment to Rules, Forfeiture Guidelines

Appendix B.  List of Commenters

Appendix C.  Final Regulatory Flexibility Analysis
                         I. INTRODUCTION

     1.   This Report and  Order adopts an  amendment to  Section 
1.80 of the Commission's  Rules to add a  note to this rule  that 
incorporates guidelines for assessing forfeitures.  By this  rule 
making proceeding,  we  adopt,  with  revisions,  the  Forfeiture 
Policy Statement and guidelines that were vacated by the  court's 
decision in United States Telephone  Association v. FCC, 28  F.3d 
1232 (D.C. Cir. 1994) (USTA).1 

                         II. BACKGROUND

     2.   In 1989,  Congress amended  the Communications  Act  of 
1934 (the  Act)  to  increase substantially  the  maximum  dollar 
amounts for forfeitures  that the Commission  could impose  under 
Section  503(b)   and  under   other   sections  of   the   Act.2   
Specifically,  Section  503  of   the  Act  sets  forth   maximum 
forfeiture amounts for violations  by licensees or regulatees  in 
three   categories:     broadcasters    and    cable    operators 
("broadcast"), common  carriers  ("common  carrier"),  and  other 
licensees, entities and members of the public that do not  belong 
to the previous  two categories ("other").3   On August 1,  1991, 
the Commission  released  the  Policy  Statement,  Standards  for 
Assessing Forfeitures, 6 FCC Rcd 4695 (1991) (Policy  Statement), 
to assist both the Commission  and licensees in adjusting to  the 
statutory increases.   Prior  to  the  statutory  increases,  the 
Commission determined forfeiture amounts on a case-by-case  basis 
using relevant  precedent.  The  Policy Statement  modified  this 
approach by establishing base forfeiture amounts for a wide range 
of violations.   The  base forfeiture  amount  for each  type  of 
violation was calculated as a percentage of the statutory maximum 
for the service  involved for  each violation  or each  day of  a 
continuing  violation  as  set  forth  in  Section  503(b).   The 
guidelines further provided that the base forfeiture amount could 
be  increased  or  decreased  by  the  adjustment  criteria  that 
corresponded to  the statutory  factors  that the  Commission  is 
required to consider in assessing a monetary forfeiture  penalty. 
47 U.S.C. ' 503(b)(2)(D).4  To determine the degree of the upward 
or downward  adjustment,  the guidelines  recommended  percentage 
ranges for each adjustment criterion.   

     3.   On reconsideration, petitioners argued that the  Policy 
Statement was invalid because it  was a substantive rule  adopted 
without notice and comment rule making procedures required by the 
Administrative Procedure  Act  and  not a  general  statement  of 
policy.  See 5  U.S.C. ' 553.   The Commission disagreed,  noting 
that the Policy  Statement expressly stated  that the  Commission 
retained discretion in individual cases and did not consider  the 
Policy   Statement    a   binding    rule.    Policy    Statement 
Reconsideration  Order,   7   FCC  Rcd   5339   (1992),   denying 
reconsideration of   6  FCC  Rcd 4695  (1991).   In  1993,  after 
reviewing how the  Policy Statement functioned  in practice,  the 
Commission made several modifications to the Policy Statement  to 
ensure  both  consistency   and  flexibility   in  applying   the 
forfeiture amounts and adjustment  criteria in individual  cases.  
Again the Commission  reiterated that it  retained discretion  to 
deviate from  the  guidelines  in specific  cases.   1993  Policy 
Statement, 8 FCC  Rcd 6215 (1993),  (1993 Policy Statement).   In 
1994, the  United States  Court of  Appeals for  the District  of 
Columbia Circuit  vacated  the Policy  Statement  (including  the 
reconsideration order and 1993  Policy Statement), on the  ground 
that it was  a rule  promulgated without notice  and comment  and 
therefore invalid.  United States  Telephone Association v.  FCC, 
28 F.3d 1232 (D.C. Cir.  1994).  Following the court's  decision, 
the Commission and its  staff returned to determining  forfeiture 
amounts on a case-by-case basis, using the statutory factors  set 
forth in Section 503(b) of the Act.

     4.   In the  Notice  of  Proposed Rule  Making  (NPRM),5  we 
followed the court's requirement that the Commission's forfeiture 
policy statement be put out for notice and comment.  We  proposed 
to adopt the same forfeiture  guidelines set out in the  original 
Policy Statement, but requested comments  on all aspects of  that 
proposal.  In  addition, we  requested  specific comment  on  the 
following issues:   

A.  Whether  the  Commission  should  use  guidelines  to  assess 
forfeitures instead of the traditional case-by-case approach; 

B.  Whether the  guidelines proposed  in the  notice of  proposed 
rule making should be modified; 
C.  Whether adjustment factor ranges should be adopted.   

Additionally, we  sought comment  on our  proposal to  apply  any 
newly adopted Forfeiture Policy  Statement and guidelines to  all 
pending forfeiture  proceedings which  were initiated  after  the 
effective date of the Forfeiture Policy Statement.  We received a 
total of 17 comments, 1 informal comment, and 8 reply comments in 
response to the NPRM.6

                        III.  DISCUSSION

A.  Forfeiture versus the traditional case-by-case approach

     5.   In general, most commenters supported the concept of  a 
guideline-based forfeiture  system  rather  than  a  case-by-case 
approach in assessing forfeitures.   Ten commenters and one reply 
commenter explicitly  or generally  supported  the concept  of  a 
guideline-based forfeiture system:  ARRL  at 9-11; Bell  Atlantic 
at 4; MCI at 1; USTA at  1; Infinity at 2; MariTEL at 5;  PageNet 
at 7-10; AMTA at  3; PCIA at 1; Southwestern Bell at 2;  Motorola 
at 1.  In  particular, MCI  Telecommunications Corporation  (MCI) 
noted that  a schedule  of  fines with  discretionary  adjustment 
ranges should  translate into  public  benefit through  fair  and 
prompt resolutions of  violations. MCI Comments,  1.  The  United 
States  Telephone   Association   (USTA)  also   indicated   that 
forfeiture guidelines  can  contain information  that  may  deter 
violations of  important  rules  and  assist  the  Commission  in 
developing priorities among different violations.  USTA Comments, 
2.  One  commenter  supported the  case-by-case  approach  simply 
because it believed the Commission could not oversee a  procedure 
that encompassed both flexible  guidelines and staff  discretion.  
Brown and  Schwaninger  Comments,  2.   Three  commenters  raised 
specific concerns  about the  potential adverse  effect that  the 
guidelines may  have  on businesses  and  their goal  to  provide 
universal services, and claimed that forfeiture guidelines  would 
thus be inconsistent with Section 303(r) of the Act, 47 U.S.C.  ' 
303(r), which  provides the  Commission  with broad  rule  making 
authority  to  further  the  public  interest,  convenience   and 
necessity.  Emery et al.7  at 6.  Emery et  al. suggest that  the 
Commission  not  proceed  with  this  rule  making  because   the 
Republican Party's "Contract with  America" imposes a  moratorium 
on all rule making. Thus, Emery et al. contend that the  issuance 
of any rules would be invalid  and contrary to the express wishes 
of Congress.  See Emery Comments,  9. An informal commenter,  Mr. 
William L.  Dougan, stated  that the  guidelines and  forfeitures 
violate the United  States Constitution because  he cannot get  a 
license for low  power operation on  FM frequencies. Letter  from 
William Dougan to Secretary,  FCC, April 4, 1995,  at 1- 2.   San 
Bernardino  Coalition   of  Low   Power  FM   Broadcasting   (San 
Bernardino), which also favors  a registration program.  See  San 
Bernardino Reply Comments, para. 14. 

     6.   We have considered the specific concerns raised by some 
of the  commenters regarding  the  Commission's exercise  of  its 
discretion under a guideline-based system.  We are satisfied that 
our procedures, as set  out in paragraphs 25  and 26, will  allow 
the Commission to apply its guidelines in a consistent and fairly 
uniform  manner,  while  retaining  discretion  to  look  at  the 
individual  facts  and  circumstances  surrounding  a  particular 
violation.  We have also addressed  the concerns raised by  Emery 
et al.  regarding the  effects of  the proposed  base  forfeiture 
amounts on the provision of universal services.   We have devised 
a forfeiture policy that does not make any distinctions among the 
various common carriers (see discussion in paragraphs 13, 14  and 
15).  Specifically, the  procedures set out  in paragraph 25  are 
sufficient to provide the subject of an NAL with consideration of 
any  mitigating  factors  that  should  be  considered  prior  to 
imposition of a  final forfeiture.   We also do  not believe  our 
forfeiture guidelines will undercut universal service  objectives 
of the Act.  We also note that the moratorium mentioned by  Emery  
et  al. was not enacted  into law.  With respect to the  concerns 
raised by Emery  et al.  however, we note  that Congress  enacted 
legislation that provides an opportunity for Congressional review 
of all major  rules promulgated by  agencies.  The Contract  with 
America Advancement Act of 1996, Pub. L. No. 104-121 ' 110  Stat. 
847 (1996).  

     7.   We  reject   the  constitutional   objections  to   the 
guidelines or to the adoption  of any policy statement as  raised 
by Mr. Dougan or San Bernardino.  The Commission may,  consistent 
with  the  First  Amendment,  impose  forfeiture  penalties   for 
violations of its licensing rules, even when its licensing scheme 
does  not  provide  for  certain  types  of  transmissions.   See 
National Broadcasting Co. v. United States, 319 U.S. 190, 209-217 

     8.   We therefore agree with the commenters that adoption of 
forfeiture guidelines is warranted.   Guidelines will provide the 
needed measure of predictability to the process and uniformity to 
our administrative sanctions while retaining flexibility for  the 
Commission to act  appropriately in particular  cases.  For  this 
purpose, we hereby adopt a base forfeiture amount structure  that 
will serve as  a guideline for  determining forfeiture  liability 
amounts for specific violations of  the Act and the  Commission's 
Rules.  As was our intent with the prior Policy Statement,  these 
guidelines will not be  binding on the  Commission, the staff  or 
the public.   We retain  discretion to  take action  in  specific 
cases as warranted.

B.  Proposal Modifications

     9.   Many commenters concluded that, although guidelines are 
beneficial to the forfeiture process, the guidelines as  proposed 
were not rational  and equitable.8  The  National Association  of 
Broadcasters (NAB)  along  with  several  common  carriers,  both 
wireline and wireless, including MCI, Southwestern Bell Telephone 
Company   (Southwestern    Bell),   MobileMedia    Communications 
Incorporated   (MobileMedia),   USTA,   Personal   Communications 
Industries Association (PCIA), WJGMariTEL Corporation  (MariTEL), 
and Paging Network  (PageNet), urged the  Commission to  consider 
modification of the vacated schedule of forfeitures.9  Commenters 
further contended  that many  of the  assumptions underlying  the 
forfeiture guidelines  are  outdated.  For  example,  MobileMedia 
stated that a Further NPRM  was needed because Commercial  Mobile 
Radio Service (CMRS) licensees and Personal Communication Service 
(PCS) licensees were not in existence when Congress increased the 
statutory forfeiture  amounts  and  were  not  mentioned  by  the 
Commission in the instant NPRM.  MobileMedia Comments, 2-3. 

     10.  American   Mobile    Telecommunications    Association, 
Incorporated (AMTA), echoing  comments submitted by  Southwestern 
Bell, noted  that  as  "service  offerings  merge  among  various 
classes of  licensees,  these widely-differing  base  amounts  no 
longer  make   regulatory  sense,   nor  do   they  reflect   the 
Commission's goal  of  regulatory  parity."10   In  the  face  of  
convergence of  the cable  TV  and telephone  industries,11  Bell 
Atlantic contended  that  "[a]s  competition  among  the  various 
industries  accelerates,  the  legal  requirements  of  providing 
balanced incentives coincide to dictate that the penalties be set 
based on the nature of the  offense, and not the identity of  the 
transgressor."  Bell  Atlantic   Comments,  3-4.   In   addition, 
commenters urged the Commission to consider new ways to implement 
a policy rather  than merely proposing  the same guidelines  that 
the court rejected.  In implementing  any guidelines,  commenters 
asked the Commission  to address  or clarify  how the  guidelines 
affect issues  such as  the  use of  different base  amounts  for 
similar violations in different services,12 the use of  different 
statutory maxima to justify different base amounts,13  the use of 
upward  and  downward  adjustment   factors,14  the  method   for 
ascertaining ability to pay  a forfeiture, and  the weight to  be 
given to  a  previous  violation  in  subsequent  enforcement  or 
transactional proceedings involving the same licensee. 15 

     11.  Inasmuch as  the  NPRM  in this  proceeding  asked  for 
comments on all  aspects of the  Commission's forfeiture  policy, 
including the "other" category, and  given that CMRS and PCS  are 
both common  carrier services,  we believe  that a  Further  NPRM 
concerning the  need to  include new  services is  unnecessary.16 
Upon review, however, we are persuaded that the guidelines should 
be revised.   The  following  paragraphs  discuss  the  two  main 
revisions that we have  made to the  proposed guidelines and  the 
reasons for these revisions.

     i.  Use  of  the same  base  forfeiture amount  for  similar 
violations in different                     services.

     12.  Most commenters  objected  to the  proposed  system  of 
imposing different base forfeiture amounts for similar violations 
depending upon  the service  provided by  the  violator.17   They 
argued this structure was arbitrary because the Forfeiture Policy 
Statement failed to provide an explanation for the different base 
forfeiture amounts.18  USTA pointed out that the court found that 
the Commission did not provide  any rationale for this  action.19   
Other commenters pointed out that the availability of  mitigating 
factors did not remedy the Commission's error in not providing  a 
reasoned analysis for the different base forfeiture amounts among 
services.  See, e.g., Emery Comments, 17; USTA Comments, 4, n. 3.  
They also argued that neither the language of the 1989  statutory 
amendment nor its  legislative history provided  support for  the 
Commission's  action  establishing   different  base   forfeiture 
amounts for each service, or higher base forfeiture amounts  when 
the violation  occurs in  a service  that has  a higher  maximum.  
Commenters argued that  in setting  different forfeiture  amounts 
based on the identity of the  violator rather than the nature  of 
the violation,  the  Commission violated  basic  and  fundamental 
principles of  regulatory parity.   See  e.g., MCI  Comments,  3.  
Several commenters also pointed  out that, with upcoming  changes 
in ownership  rules  and  the  technical  and  legal  ability  of 
different licensees  to provide  the same  type of  communication 
service, implementing different  base amounts  as proposed  would 
result in dissimilar  forfeiture amounts  for similar  violations 
based solely  on  the  identity of  the  licensee  providing  the 
service.  PageNet  Comments,  2-3;  Southwestern  Bell  Telephone 
Company (Southwestern Bell) Comments, 3; Bell Atlantic  Comments, 
3-4.  Bell  Atlantic argued  that, contrary  to the  Commission's 
assertions in the  NPRM, adoption of  the forfeiture schedule  as 
proposed would not "allow  for comparable treatment of  similarly 
situated offenders," but  would levy  forfeitures against  common 
carriers that are four times the amount levied against  broadcast 
or cable TV companies for  the same or similar violations.   Bell 
Atlantic Comments, 2-3. 

     13.  Some common carriers, including commercial mobile radio 
service providers argued  that the  Commission has  no basis  for 
imposing higher  forfeitures  for  common  carrier  violations.20  
Emery et al. argued that the 1989 statutory change only creates a 
higher statutory maximum for common carriers, and no  legislative 
history or  language in  the  statute supports  the  Commission's 
proposal that  common  carriers  be treated  more  severely  than 
broadcasters.  They also contended that adoption of a  forfeiture 
policy which made no distinctions between large and small  common 
carriers  would  also  violate   the  Commission's  mandate   and 
fundamental purpose  as  stated in  Section  1 of  the  Act:   to 
promote communications services and competition.21 

     14.  In  light  of  the  problems  outlined,  most  of   the 
commenters suggested  that  the Commission  implement  a  uniform 
forfeiture system, imposing fines according to the nature of  the 
violation rather than the type of violator.  In the  alternative, 
if the guidelines must be based  on the type of violator as  well 
as the nature of  the violation, several commenters propose  that 
the Commission  make distinctions  among the  types of  violators  
(e.g., large common carriers versus small CMRS) within a group of 
licensees that provides the same type of communication service.22   
Some commenters suggested  that the  guidelines be  based on  the 
degree of injury or harm rather than a percentage of the  maximum 
amount.  Emery et al., for example, urged the Commission to  look 
at the  various  approaches it  took  prior to  implementing  the 
Forfeiture Policy Statement.  It argued that the amounts  imposed 
were  more  reasonable  because  less  serious  violations   were 
assessed on a flat-rate approach and serious violations involving 
aggravating circumstances were  assessed the  per diem  statutory 
maximum, which was then no  more than $2,000. 23  Two  commenters 
even suggested that one base  amount be used for all  violations, 
as was done with tower lighting and marking violations. 24

     15.  While we continue  to believe that  our prior  approach 
was lawful, we have determined that it would be a fairer approach 
for the forfeiture  guidelines to adopt  uniform base  forfeiture 
amounts for similar  violations regardless of  the nature of  the 
service  involved.   We  believe  that  this  decision  is  fully 
supported by the record established  by the commenters, and  will 
result in a generally  fairer approach to forfeiture  proceedings 
in most cases.  

     16.  Our decision reflects  consideration of  the issues  of 
fair treatment raised by several commenters.  First, we  reviewed 
the recommendation made by several commenters that CMRS and other 
services not  mentioned  in  the original  Policy  Statement   be 
treated in  the  "other"  category rather  than  in  the  "common 
carrier" category.25   Although  Section 332  provides that  CMRS 
licensees are common carriers under the Act,26  these  commenters 
argued that it  is unfair  to now impose  higher base  forfeiture 
amounts when these entities would receive smaller fines under the 
earlier Policy Statement  as private  carriers that  were in  the 
"other" category.  MariTEL Comments,  3.   Alternatively, if  the 
Commission does  not  treat  them as  belonging  to  the  "other" 
category, CMRS commenters  argued that a  new category should  be 
created for these services.  We find  this argument unpersuasive.  
Section 332(c)(1) requires that CMRS providers will be treated as 
common carriers  for purposes  of the  Act.27  Accordingly,  CMRS 
providers will  be treated  as common  carriers for  purposes  of 
Section 503  of the  Act  and our  forfeiture guidelines.   As  a 
second issue of fair treatment raised in this proceeding, PageNet 
contends that  the  proposed  forfeitures  did  not  address  the 
discriminatory effect  that  would result  against  Radio  Common 
Carrier (RCC)  paging carriers  because they  are licensed  on  a 
transmitter basis  rather than  a market  basis as  are  Personal 
Communications Service  (PCS) licensees.    PageNet Comments,  2.  
We believe,  however,  that  this concern  relates  to  licensing 
procedures that  are not  within the  scope of  this rule  making 

     17.  We  recognize  that   Congress  established   different 
statutory maxima for  broadcasters and for  common carriers  than 
for other  persons  who  violate  our  rules.   We  believe  this 
permits,  but  does  not  require,  a  forfeiture  schedule  that 
distinguishes among these categories  of entities.  As  discussed 
below (see para. 24), however,  we believe that there are  better 
ways to achieve  Congress's explicit  intention that  forfeitures 
serve  as  "a  meaningful  sanction  to  the  wrongdoers  and  an 
effective deterrent to others." see Omnibus Budget Reconciliation 
Act of 1989,  H.R. Conf. Rep.  386, 101st Cong.,  1st Sess.,  434 

     ii.  Revisions to the proposed base forfeiture amounts.
     18.  The majority  of commenters  took issue  with the  base 
forfeiture amounts.  Some commenters  suggested that the  amounts 
proposed for each violation were unreasonably high, did not deter 
violations, evidenced a punitive rather than a remedial  purpose, 
and only served to hinder entities who were often unaware of  the 
regulatory requirements.28  In particular,  Emery et. al.  argued 
that the proposed base forfeiture amounts of 40-80 percent of the 
statutory maxima  were contrary  to the  Commission's history  of 
assessing reasonable forfeitures to ensure substantial compliance 
by licensees and  therefore, the amounts  should be reduced.   In 
support, they noted that common carrier forfeitures issued before 
the statutory increase were  seldom more than  25 percent of  the 
maximum,  and  that  forfeitures  assessed  after  the  statutory 
increase but  before  the  implementation  of  the  prior  policy 
statement were no more  than 0.5 percent of  the new one  million 
dollar maximum.   Emery Comments, 11-12.  NAB and MCI also agreed 
that the  base  amounts  suggested  in  the  proposed  forfeiture 
guidelines were too high and should be reduced by 50 percent with 
the exception of tower safety violations.  NAB Comments, 5;   MCI 
Reply Comments, 3.  

     19.  The legislative  history  of  Section 503  of  the  Act 
demonstrates that, Congress  recognized the need to authorize the 
Commission to  impose  forfeitures  sufficiently  high  to  deter 
violations and constitute a  meaningful sanction when  violations 
occur.    Specifically,   in   1978,   Congress   increased   the 
Commission's forfeiture authority, stating:
     The maximum amount of forfeitures permitted for  single 
     and multiple violations is unrealistically low to be an 
     effective    deterrent     for    highly     profitable 
     communications  entities  or   to  provide   sufficient 
     penalty  to  warrant  the  Attorney  General's  or  the 
     various  U.S.   district   attorneys'   attention   for 
     prosecuting forfeitures  within  the  Federal  district 

Sen.  Rep. No. 580,  95th Cong. 1st Sess. 3 (1978), reprinted  in 
1978  U.S.C.C.A.N.   109,  111.   Similarly,  in  1989,  Congress 
further increased the  Commission's forfeiture authority  stating 
its intent that forfeitures "serve as both a meaningful  sanction 
to the wrongdoers and  a deterrent to  others."   See H.R.  Conf. 
Rep. 386, at 434  (1989).  We believe that  the increases in  our 
forfeiture authority  as  well as  the  accompanying  legislative 
history of  our forfeiture  authority support  our  determination 
that forfeiture amounts should be set  high enough to serve as  a 
deterrent and foster compliance with our rules.   

     20.  As noted before, however, we have also determined  that 
the guidelines for base forfeitures adopted here will not reflect 
distinctions  based   on   the  traditional   classification   of 
broadcast, common carrier, and  other services.  Consistent  with 
our policy of protecting the public and ensuring the availability 
of reliable, affordable communications,  we based the  guidelines 
on the degree of harm or  potential for harm that may arise  from 
the violation.   Thus,  the  dollar  amount  for  the  violation, 
regardless of service, generally starts at the same amount.   Our 
experience in  assessing forfeitures,  however,  has  shown  that 
although the  type  of violation  is  the same,  each  case  will 
present its own unique facts.  In particular, the identity of the 
licensee or the nature of  the service are not wholly  irrelevant 
to a determination of  the seriousness of  the harm.  We  cannot, 
for example,  say  that  the  degree of  harm  resulting  from  a 
violation of operating  power limits  committed by  a full  power 
broadcast station is  identical to the  degree of harm  resulting 
from the same violation by  an amateur radio operator.   Nor  can 
we conclude  that the  prospect  of a  $10,000 forfeiture  for  a 
particular offense will have the same deterrent effect on a small 
computer vendor, a moderately-sized  radio common carrier, and  a 
$10 billion  per year  local telephone  company or  interexchange 
carrier.  Accordingly,  as  discussed  below,  we  will  use  the 
adjustment factors to  assess the forfeiture  amount in light  of 
all relevant facts.  

     21.  In order to  develop base amounts  that could apply  to 
all services, we  concluded that the  uniform base amounts  could 
not  be  higher  than  the  statutory  maxima  for  any  service.  
Inasmuch as the statutory maxima for broadcast, cable and  common 
carrier are higher than for the remaining services, the statutory 
maxima for  services  other  than  broadcast,  cable  and  common 
carrier was used  as the  common denominator.  Thus, the  uniform 
base forfeiture amounts generally adhere to the higher end of the 
statutory maximum  of $10,000,  which is  the maximum  forfeiture 
amount per violation that may  be assessed against entities  that 
are not classified  as broadcasters, cable  operators, or  common 
carriers.29  Consistent with these  parameters, the uniform  base 
forfeiture amounts  adopted  here and  set  forth in  Appendix  A 
reflect reductions in  most of the  forfeiture amounts that  were 
proposed in the NPRM.  We  have made, however, two exceptions  to 
our determination to use the $10,000 statutory maximum as a basis 
for establishing uniform base forfeiture amounts.  First, we have 
set the  base  forfeiture  amount for  misrepresentation  at  the 
statutory maximum for the particular type of service provided  by 
the violator.  Regardless  of the factual  circumstances of  each 
case, misrepresentation to the Commission always is an  egregious 
violation.  Any entity or individual that engages in this type of 
behavior should expect to  pay the highest forfeiture  applicable 
to the service at issue.   Indeed, the revocation of the  license 
may  well  also  result  from  misrepresentation.   47  U.S.C.  ' 
312(a)(1).  Second, we have made an exception for violations that 
are unique to a  particular service.  In establishing  guidelines 
for base forfeiture  amounts for these  violations, we have  used 
case precedent  developed  by  the  Commission  since  the  Court 
vacated the Policy Statement and,  where no precedent exists,  we 
have  determined  base   amounts  that  reflect   the  level   of 
egregiousness, based on the degree of harm, that we attach to the 
particular violation. 

     22.  We believe  it  is  important  to  make  the  following 
general observations about  the base  forfeiture amounts  adopted 
here.  First, any omission of a specific rule violation from  the 
list  set  forth  in  Appendix  A  should  not  signal  that  the 
Commission considers any   unlisted violation  as nonexistent  or 
unimportant.  The Commission expects,  and it is each  licensee's 
obligation, to  know  and comply  with  all of  the  Commission's 
rules.  Indeed, we believe that  the rigorous enforcement of  the 
minimum  regulatory  requirements   resulting  from  the   recent 
amendments to the Communications Act  will become critical to the 
preservation of  the open  competitive  markets that  the  recent 
amendments seek to create. 30  Although we have adopted the  base 
forfeiture  amounts  as  guidelines  to  provide  a  measure   of 
predictability  to  the   forfeiture  process,   we  retain   our 
discretion to depart from the guidelines and issue forfeitures on 
a case-by-case  basis,  under our  general  forfeiture  authority 
contained in Section 503 of the Act.  See para. 24 infra.  

     23.  Second, we note  that the base  forfeiture amounts  set 
forth in Appendix A may appear high for entities that fall within 
the statutory classification of  "other," for whom the  statutory 
maximum  is  $10,000  per   violation.   In  other  words,   base 
forfeiture  amounts  are  indeed   very  close  to  the   maximum 
forfeiture that  may  be  assessed against  these  entities.   We 
believe, however,  that the  system  of uniform  base  forfeiture 
amounts can  be applied  in  a fair  and equitable  manner,  with 
respect to all licensees, permittees, regulatees, and members  of 
the public. Under the  Act, many of the  services in the  "other" 
category, e.g., citizen band (CB) radio, domestic ship radios and 
aircraft radios are licensed by  rule.  See Section 307(e)(1)  of 
the Communications Act of 1934, 47 U.S.C. ' 307(e)(1).  See  also 
Section 403 of the  Telecommunications Act of  1996, Pub. L.  No. 
104 -104, 110 Stat. 56 (1996).  Except for egregious  violations,  
it has been our general practice to issue warnings to first  time 
violators who are  not licensed  on an  individual basis.   Thus, 
this type of violator  would receive a  forfeiture only after  it 
has violated the  Act or  rules despite the  prior warning.    We 
believe that the  continuation of  this practice  of warnings  to 
entities licensed by  rule, except in  egregious cases  involving 
harm to others or  safety of life  issues, decreases any  adverse 
impact that the adopted base forfeiture amounts may have on these 

     24.  Third, on the  other end of  the spectrum of  potential 
violators, we  recognize  that  for large  or  highly  profitable 
communications entities, the base forfeiture amounts set forth in 
Appendix A are  generally low.   In this regard,  we are  mindful 
that, as Congress has stated, for a forfeiture to be an effective 
deterrent against these entities,  the forfeiture must be  issued 
at a  high level.   See para.  19, supra.   For this  reason,  we 
caution all entities and  individuals that, independent from  the 
uniform base  forfeiture amounts  set forth  in Appendix  A,  and 
pursuant  to  Section  503(b)(2)(D)  of  the  Act,  47  U.S.C.  ' 
503(b)(2)(D),  we  intend  to  take  into  account  the   subject 
violator's  ability  to  pay  in  determining  the  amount  of  a 
forfeiture to guarantee that forfeitures issued against large  or 
highly  profitable  entities   are  not   considered  merely   an 
affordable  cost  of  doing  business.   Such  large  or   highly 
profitable  entities  should  expect  in  this  regard  that  the 
forfeiture amount  set  out in  a  Notice of  Apparent  Liability 
against them may in many cases be above, or even well above,  the 
relevant base amount.

C.  Adjustment Factors Percentage Ranges 

     25.  Several  commenters31   also   took  issue   with   the 
Commission's  guidelines   for  applying   upward  and   downward 
adjustment factors in determining a reasonable forfeiture amount.  
They contended that under the vacated guidelines, violations were 
seldom  considered   "minor   violations"  that   would   require 
reductions of 50  percent to 90  percent of the  base amount  and 
reductions were, therefore, illusory.  For example, NAB indicated 
that a downward  adjustment for  a minor  violation should  apply 
when a  rule  encompasses  multiple  requirements,  for  example, 
maintaining all  necessary  records  in the  "public  files",  47 
C.F.R.  '  73.1212.   NAB  Comments,  6-7.   Additionally,   some 
commenters contended that forfeitures should be upwardly adjusted 
only when the  violator knows that  it has deliberately  violated 
the Commission's rules.  See e.g., PageNet Comments, 8. 

     26.  We  agree   with  the   commenters  that   there   were 
difficulties  associated  with  applying  the  adjustment  factor 
ranges.    Although  the  percentage  ranges  were  designed   as 
guidelines for adjusting  the forfeiture based  on the  statutory 
criteria, the  ranges  still  afforded  the  Commission  and  its 
Bureaus  and  Offices  wide   discretion  to  apply  a   specific 
percentage within the particular range at issue.  To reflect more 
clearly the  Commission's  discretion  to increase  or  reduce  a 
forfeiture penalty as much as warranted based on the unique facts 
of each case, we have  determined that the percentage ranges  for 
the upward and downward adjustment factors should be  eliminated.  
Thus, the Forfeiture Policy  Statement and forfeiture  guidelines 
that we adopt herein no longer provide percentage ranges for  the 
adjustment factors outlined in Section  503 of the Act.  (We  are 
also  eliminating  the  percentage   ranges  for  the   statutory 
forfeitures that are not assessed pursuant to Section 503 of  the 
Act, see 47  U.S.C. ''  202(c), 203(e),  205(b), 214(d),  219(b), 
220(d), 223, 364, 386, 506, 554.  This means that the  Commission 
will initially assess these  violations at the statutory  amount, 
but can adjust downward based  on the adjustment factors set  out 
in Section 503 and the facts of the case.)     

     27.  Although we are eliminating  the percentage ranges,  we 
are required by statute  to consider various adjustment  criteria 
before  determining  a  forfeiture  amount  in  each  case.   The 
adjustment criteria  listed  in  Appendix  A  of  the  guidelines 
reflect the factors  outlined in the  statute.  For example,  the 
statute requires  that we  consider the  "nature,  circumstances, 
extent and  gravity  of  the violation".   Thus,  the  adjustment 
factors regarding the severity of the violation that may increase 
or decrease the  forfeiture are:  substantial  harm, repeated  or 
continuous violation,  or substantial  or economic  gain  derived 
from the violation, and the  minor nature of the violation.   The 
statute also requires  that "with  respect to  the violator,"  we 
consider factors such as "the degree of culpability, any  history 
of prior  offenses, ability  to pay,  and such  other matters  as 
justice may  require."  Accordingly,  the adjustment  factors  we 
evaluate in  considering  the  actions of  the  violator  include 
egregious misconduct, ability  or inability  to pay,  intentional 
violation, prior violation  of same or  other requirements,  good 
faith or voluntary disclosure, and history of overall compliance.  
47 U.S.C. ' 503(b)(2)(D).   In  sum, although the base amount  is 
the starting point in assessing a forfeiture, the forfeiture  may 
be decreased below the base amount or increased to the  statutory 
maximum when the adjustment criteria are considered based on  the 
facts of the case.    

D.  Other Issues 

     28.  Discretion to  depart from  forfeiture guidelines.   We 
sought comment on whether the Commission should retain discretion 
to depart from the guidelines in appropriate circumstances or, in 
the alternative, adopt  the guidelines as  a binding rule.   Both 
USTA and Brown  and Schwaninger indicated  that guidelines  could 
not  provide  effective   notice  to  licensees   or  result   in 
administrative efficiency as stated in the NPRM if the Commission 
is free  to  exercise  its  discretion  and  deviate  from  those 
guidelines.  USTA Comments, 6; Brown and Schwaninger Comments, 2.  
Brown and Schwaninger contended that the guideline system  would, 
in effect, become a  case-by-case system, by prompting  violators 
to seek  exemptions from  the  guidelines for  lesser  forfeiture 
penalties and would invite litigation in forfeitures assessed  by 
staff discretion.  Brown and Schwaninger Comments, 2.    

     29.  We agree  that  the predictability  in  the  forfeiture 
process32  is  an  important  objective  and  adherence  to   the 
guidelines is a  method to  achieve this goal.   Because this  is 
only a guideline and not a binding rule, however, the  Commission 
retains its  discretion  to  depart  from  the  guidelines  where 
appropriate.  As  for the  concerns expressed  by the  Commenters 
that  the  Commission's  exercise   of  discretion  will   invite 
litigation, we note that  regardless of which  method is used  to 
assess the  forfeiture,  parties  who are  dissatisfied with  the 
process have always had  the right to  seek reconsideration of  a 
forfeiture penalty before  the Commission.  Moreover,  in a  case 
initiated by a Notice of Apparent Liability, the party ultimately 
may be  heard  in  a  trial  de  novo  in  a  district  court  of 
appropriate jurisdiction.        

     30.  Use of   warnings  for  first  time  violations.   Some 
commenters suggested that  the Commission  adopt new  enforcement 
methods, including an increased use of warnings for first time or 
minor violations  prior to  issuance of  forfeitures.33  NAB,  in 
particular,  suggested   that   the  Commission's   rule   making 
proceeding should  look into  more  effective methods  to  obtain 
compliance rather than  "better ways to  accomplish the goals  of 
developing guidelines for  determining forfeiture amounts."   NAB 
Comments, 9.
     31.  As the NPRM noted,  it was never our intention that the 
guidelines be  read to  require that  a forfeiture  be issued  in 
every case or in any particular  case.  NPRM, at 2945.  We  agree 
that warnings can be an  effective compliance tool in some  cases 
involving minor  or first  time violations.   The Commission  has 
broad discretion to issue warnings in lieu of  forfeitures.   See 
47 C.F.R. '  1.89.  Nonetheless, an  approach whereby, except  in 
cases of harm to others or safety of life, we would always  issue 
a warning  to first-time  violators would  greatly undermine  the 
credibility and effectiveness of our overall compliance  efforts.  
Licensees must strive  to comply  with rules.   Such an  approach 
could invite some licensees to commit first-time violations  with 
impunity.  Thus, we will continue to determine whether to issue a 
warning  or  assess  a  forfeiture   based  on  the  nature   and 
circumstances of the specific violation. 

     32.  Use of  the issuance  of an  unpaid NAL  in  subsequent 
proceedings.  Several  commenters  stated that  the  Commission's 
proposed forfeiture guidelines did  not indicate the purpose  for 
which the Commission uses pending forfeitures against a  violator 
in subsequent proceedings.  Infinity Broadcasting Inc. (Infinity) 
argued that the use of a Notice of Apparent Liability (NAL) or an 
unpaid Notice of Forfeiture  in a subsequent proceeding  appeared 
to contravene Section 504(c), which  prohibits the use of a  non-
final,  non-adjudicated  forfeiture   proceeding  in  any   other 
proceeding before the Commission, and  also prohibits the use  of 
the underlying facts of the violations to increase the amount  of 
subsequent forfeitures.  Infinity Comments, 5-7.34 Comments  from 
NAB and ARRL also raised this issue. 

33.  Section 504 of the Act provides, inter alia that:

          In any case  where the  Commission issues  a notice  of 
          apparent liability  looking toward the imposition of  a 
          forfeiture under this Act, that fact shall not be used, 
          in any other proceeding  before the Commission, to  the 
          prejudice of the person to whom such notice was issued, 
          unless (i)  the forfeiture  has been  paid, or  (ii)  a 
          court of competent jurisdiction has ordered payment  of 
          such forfeiture, and  such order becomes final. 

           47 U.S.C. ' 504 (c).  

The legislative  history of  Section 504(c),  however,  indicates 
that the Commission may use the facts underlying a violation in a 
subsequent proceeding.   Although the  Senate Commerce  Committee 
Report noted that the Commission could not use the pendency of  a 
forfeiture action prior to final adjudication against a licensee, 
the report went on to say:

          [S]ubsection (c) .  . .  is not  intended to  mean 
          that the facts upon  which a notice of  forfeiture 
          liability against a  licensee is  based cannot  be 
          considered by the Commission in connection with an 
          application for renewal of a license, for example, 
          or  with  respect  to  the  imposition  of   other 
          sanctions authorized by the Communications Act  of 
          1934 . . . .  [F]acts going to the fitness of  the 
          licensee could be  introduced in evidence  against 
          such licensee notwithstanding that such facts  are 
          the basis of an order of forfeiture.

          S. Rep. No. 1857, 86th Cong., 2d Sess. 11 (1960).  

     34.  We  believe   that  we   have  faithfully   implemented 
congressional intent in this  area.  Consistent with Section  504 
of the Act,  the Commission  does not  use the  mere issuance  or 
failure to  pay an  NAL  to the  prejudice  of the  subject.   We 
reiterate here that we  will not do so  in the future unless  the 
forfeiture penalty constitutes a  final action:  in other  words, 
unless the forfeiture  has been  paid or  finally adjudicated  as 
stated in Section 504 of the  Act.  What the Commission has  done 
in the past, and what we  will continue to do where  appropriate, 
is to use the facts underlying the prior violations that may have 
been the subject  of an  NAL.  We  are persuaded  that using  the 
underlying facts of  a prior  violation that shows  a pattern  of 
non-compliant  behavior  against  a  licensee  in  a   subsequent 
renewal, forfeiture, transfer, or other proceeding does not cause 
the prejudice that Congress sought to avoid in Section 504(c).  

     35.  The following example should provide guidance as to our 
use of facts underlying the issuance of an NAL.  Assume that  the 
Commission determined that a  licensee violated the  Commission's 
rules regarding permissible power on March 1, 1996, again on June 
1, 1996, and again on October  1, 1996.   Assume further that  we 
then issue a $5,000  NAL for the March  1 violation and a  second 
$5,000 NAL for the June 1 violation.   In issuing an NAL for  the 
October 1 violation, the Commission  may well view the October  1 
violation as  repeated or  part of  a pattern  of violations,  in 
light of the earlier March 1 and June 1 violations.  Thus, we may 
issue an NAL for $7,500 for  the October 1 violation, citing  the 
apparent March 1 and  June 1 violations as  a basis for a  higher 
forfeiture.  The NAL for  the October 1  violation is not  higher 
because of the  two prior NALs  or because the  licensee has  not 
paid the  prior forfeitures,  but rather  because the  underlying 
facts of  the two  prior  apparent violations  suggest  egregious 
misbehavior by the licensee.  The  licensee will not be  required 
to pay the  $7,500 forfeiture  without having  an opportunity  to 
present evidence before the  Commission or in  court that it  did 
not commit  the earlier  violations.  Obviously,  if it  were  to 
convince the  Commission or  a court  that it  had not  committed 
violations on March 1 and June 1, the licensee's forfeiture would 
be reduced by  the  Commission  or the  court for  the October  1 
violation (assuming it was proven  to be a first time  violation) 
to reflect the fact that it was not a repeated violation or  part 
of a pattern of violations.   The Commission would have  complied 
with  Section  504(c)  because  it  would  have  used  only   the 
underlying facts, not  the existence of  prior NALs, against  the 
licensee, and the licensee would have had the full opportunity to 
present appropriate evidence before having to pay any forfeiture.

     36.  Under this approach, the licensee is not being hurt  in 
any way for its failure to  pay the NAL.  Moreover, the  licensee 
will always have  the opportunity  to present  evidence that  the 
underlying facts relied on by the Commission did not constitute a 
violation, either by  introducing evidence  to that  effect in  a 
Commission hearing (e.g.,  renewal or transfer  hearing) or in  a 
court action to  collect a  subsequent forfeiture that  is for  a 
higher amount because of the earlier violations.  See S. Rep. No. 
1857.  ("The  licensee  could  not, therefore,  complain  of  the 
introduction of such  evidence so  long as  he has  the right  to 
cross-examine the witnesses introducing it and the further  right 
to offer evidence to rebut it").

     37.  Specific rule  violations.  Several  commenters  raised 
concerns about  the  amounts proposed  for  specific  violations.  
MCI, for example,  urged that the  amount of forfeitures  charged 
for unauthorized  conversions,  known as  "slamming"  violations,  
should be reduced  from the  $75,000 proposed in  the NPRM.   MCI 
suggested that because  these violations can  easily result  from 
human error, there  should be a  separate category of  violations 
for "Failure to  verify order to  change long distance  carrier."  
MCI argued  that, although  it is  critical to  deter  fraudulent 
conversions, "it  is  important  that the  Commission  not  deter 
telemarketing invitations  altogether."  See  MCI Comments,  1-2.  
NAB urged reductions in the amounts assessed for violations  that 
involve multiple compliance factors (e.g.,  broadcast files where 
only a few documents may  be missing).  NAB proposed a  provision 
that if a licensee violates only a portion of a rule, e.g., omits 
one document from  the public  file, the  Commission will  assess 
only a portion of  the base forfeiture  amount.  NAB also  sought 
"amnesty" from complying  with the operator  on duty and  lottery 
broadcast requirements inasmuch as  the Commission has  initiated 
rule makings  or made  recommendations to  Congress to  eliminate 
these requirements.   NAB also  requested amnesty  for  Emergency 
Broadcast  System/Emergency  Alert  System  (EBS/EAS)  violations 
during  the  transition  period  until  all  equipment  has  been 
converted.  NAB  Comments, 13-15.   In addition,  NAB urged  that 
amnesty be offered  for violations such  as exceeding  authorized 
antenna height, operation at an unauthorized location, and  other 
tower related violations  that do not  pose safety threats.   See 
NAB  Comments,  11-12.   Motorola   agreed  with  NAB's   amnesty 
proposal, and urged that the ultimate or primary burden for tower 
rules violations  be  placed  on tower  owners.   Motorola  Reply 
Comments, 2-3. 

     38.  We agree with  MCI that the  forfeiture penalty  amount 
proposed for  unauthorized  conversion of  a  consumer's  primary 
interexchange  carrier  should  be  reduced.   A  review  of  the 
forfeitures  issued  for  slamming  violations  since  the   USTA 
decision indicates  that the  Commission has  generally  assessed  
forfeitures at  $40,000 for  violations such  as those  in  which 
fraud is an  issue, or  in cases where  the carrier's  deliberate 
failure to ensure  that letters  of authorization  are valid  and 
properly authorized rise to the  level of gross negligence.   See 
e.g., Excel Telecommunications,  Inc., 11 FCC  Rcd 19765  (1996), 
Long Distance Services,  Inc.,     FCC Rcd      (1997) DA  97-956 
(released May 8,  1997).  Accordingly, we  are reducing the  base 
amount for slamming to $40,000 rather than the $75,000 originally 
proposed in the NPRM.   
     39.  Regarding NAB's contention that  a violation should  be 
reduced as minor when it is  a partial violation of the rule,  we 
note that  the  forfeiture  guidelines  we  adopt  today  provide 
sufficient flexibility to  allow for a  forfeiture less than  the 
base  amount.    In  this   regard,   we  disagree   with   NAB's 
characterization that omission of the issue/program list from the 
public file is a minor violation; such a violation is serious  in 
that it diminishes the public's ability to determine and  comment 
at  renewal  time   on  whether  the   station  is  serving   its 
community.35  Nonetheless, even in these circumstances, we  would 
always look to  the facts  surrounding any  partial violation  to 
determine if it warranted the base forfeiture amount or less.  We 
reject NAB's proposal  that we decline  to issue forfeitures  for 
violations  of  our  operator  on  duty  and  lottery   broadcast 
requirements.  Unless Congress amends  the Communications Act  to 
deregulate the  action in  question, we  will continue  to  issue 
forfeitures for this violation, as warranted in each case.36   We 
note  that  NAB's  arguments   with  respect  to  antenna   tower 
violations have been  largely rendered moot  by the  Commission's 
adoption of  the  Report  and  Order,  Streamlining  the  Antenna 
Structure  Clearance  Procedure   and  Revision   of  the   Rules 
Concerning  Construction,   Marking  and   Lighting  of   Antenna 
Structures, 11  FCC  Rcd  4272  (1995).    Under  the  new  tower 
registration procedures adopted  by the Commission,  it is  tower 
owners rather than  licensees who will  be primarily  responsible 
for registering towers requiring  marking and lighting under  the 
Federal Aviation  Administration  guidelines.   Further,  in  the 
antenna  proceeding,  the  Commission  also  granted  an  amnesty 
period during which  no forfeitures will  be issued to  licensees 
seeking to correct existing tower records.

     40.  With respect to violations for technical and  equipment 
deficiencies resulting from changes from the EBS to the EAS,  the 
request for amnesty  is moot  for broadcasters.37   The issue  of 
violation of the operator on duty  rule is moot because the  rule 
was eliminated by order released October 23, 1995.  Amendment  of 
Parts 73 and 74  of the Commission's  Rules to Permit  Unattended 
Operation of Broadcast Stations  and to Update Broadcast  Station 
Transmitter Control and Monitoring Requirements, 10 FCC Rcd 11479 
(1995).  As to other violations  for which NAB seeks amnesty  for 
licensees (e.g.  operation at  unauthorized location)  we see  no 
public interest basis for such action.  

     41.  Clarification of certain terms.  A few commenters urged 
clarification of  the  term "ability  to  pay" as  an  adjustment 
factor.  Some commenters, echoing small carriers who argued  that 
they should be  guided by  a different  forfeiture scheme,  noted 
that the Commission's apparent definition of "ability to pay"  is 
limited to "gross revenues" and does not adequately consider that 
many carriers  provide high-cost,  high-maintenance,   low-profit 
services  to  rural   communities  as  "an   adjunct"  to   other 
operations.  For this reason, they  note, the revenues from  more 
profitable operations should not  be considered  when  evaluating 
the carrier's ability to pay.38           

     42.  These commenters also argued that the large forfeitures 
in some cases could  be the equivalent  of a license  revocation.  
They argue that "ability to pay"  is based on gross revenues  and 
no consideration is given  to operating or maintenance  expenses.  
A company, they argue, may be considered profitable when in  fact 
it is operating on the margin.  The commenters contend that  this 
approach  to  determining  "ability   to  pay"  contravenes   the 
"universal service" mandate of  Section 1 of  the Act because  it 
disproportionately injures  businesses  who  provide  service  to 
rural or less  profitable areas, and  discourages diversity.   In 
addition, the commenters argue that this approach to "ability  to 
pay" erodes the protections  otherwise given to small  businesses 
in the  Paperwork Reduction  Act and  the Regulatory  Flexibility 
Act.  They argued  that smaller carriers  that now provide  high-
cost, high-maintenance, low-profit services to rural communities, 
e.g., improved mobile telephone services (IMTS) or Basic Exchange 
Telecommunications Radio Service (BETRS),  will be driven out  of 
business  if  they  must  pay  higher  forfeitures   than   other 
licensees for similar violations. 39  Because these services  are 
provided by carriers  as "an  adjunct" to  its other  operations, 
they argue that the Commission would consider the higher  profits 
from their  other operations  and the  forfeitures would  not  be 
reduced based on the subsidiary's ability to pay.  

     43.  As the  commenters  noted, Commission  cases  point  to 
gross revenues as  the starting point  for determining a  party's 
ability to pay.  In PJB  Communications of Virginia, Inc., 7  FCC 
Rcd 2088 (1992) (PJB Communications), we stated:

     [i]n general,  a  licensee's  gross revenues  are  the  best 
     indicator of its ability to pay a forfeiture.  Nevertheless, 
     we recognize that in some cases, other financial indicators, 
     such as net losses, may also be relevant. If  gross revenues 
     are sufficiently  great,  however,  the  mere  fact  that  a 
     business is operating at a loss does not itself mean that it 
     cannot afford to pay a forfeiture.

PJB Communications, At 2089.  Thus, PJB Communications  indicates 
that factors other  than gross revenues  may also be  considered.  
Indeed, the Commission  does not  use  a strict "gross  revenues" 
standard.   For example, the Commission has reduced a  forfeiture 
to  an  amount   adequate  to  deter   future  misconduct   after 
consideration of  the  violators' unprofitable  history, and  the 
relative lower value  of the  licensed operation  at issue.   See 
e.g., First  Greenville  Corporation,  11 FCC  Rcd  7399  (1996); 
Benito Rish, 10 FCC  Rcd 2861 (1995)  (profit and loss  statement 
submitted to reflect  inability to  pay a  forfeiture); see  also 
Pinnacle Communications, Inc., 11 FCC Rcd 15496 (1996)  (analysis 
of  the  balance  sheet  and   the  profit  and  loss   statement 
accompanied  by  the  licensee's  certification  focused  on  net 
liabilities in  light  of  default of  loan  payment).   Although 
forfeiture amounts will  be initially assessed  according to  the 
violation, the Commission's staff  reviews all responses to  NALs 
that claim inability to pay a forfeiture on a case-by-case  basis 
in accordance  with Section  503(b)(2)(D) of  the Act.   In  this 
respect, we  do  not believe  that  focusing on  the  payment  of 
forfeiture will deter service to rural or less profitable  areas, 
discourage diversity or otherwise operate inconsistently with the 
universal service goals of the Communications Act.       

     44.  We  are  cognizant  of the  concerns  raised  by  small 
entities as to the burden and expense of documenting inability to 
pay a forfeiture  by means of  audited financial statements.   In 
this regard, we note that  the Commission has the flexibility  to 
consider  any   documentation,   not   just   audited   financial 
statements, that it  considers probative,  objective evidence  of 
the violator's ability to pay a forfeiture.  See 47 C.F.R. ' 1.80 
(f)(3)40.  The Commission intends to continue its policy of being 
sensitive to  concerns of  small entities  who may  not have  the 
ability to pay a particular  forfeiture amount or the ability  to 
submit  the  same  kind  of  documentation  to  corroborate   the 
inability to pay.  This  is consistent with section  503(b)(2)(D) 
of the Communications  Act and section  1.80(b)(4) of our  rules, 
which provides that the Commission will take into account ability 
to pay in assessing forfeitures,  and with our longstanding  case 
     45.  American Mobile  Telecommunications Association  (AMTA) 
sought clarification of various violations listed in the proposed 
Forfeiture Policy Statement.  AMTA contended that several of  the 
listed violations overlap or are duplicative such as construction 
or operation without a license, using an unauthorized  frequency, 
and construction or  operation at an  unauthorized location,  and 
recommended that the  Commission simplify the  proposed types  of 
violations relating to  the actual  operation of  a station.   In 
addition, AMTA indicated that,  because the Commission's  overall 
regulatory scheme is generally  designed to prevent  interference 
among  entities,  the  Commission  has  failed  to  explain   why 
operating without any license would  be considered four times  as 
egregious  as  operating  at  a  location  not  covered  by   the 
authorization.  Similarly,  AMTA questioned  why forfeitures  for 
using unauthorized  frequencies are  lower than  forfeitures  for 
operating without  a license,  but  higher than  forfeitures  for 
operating at the wrong location.   AMTA noted that it is  unclear 
which violations  would be  applicable  to a  specialized  mobile 
radio (SMR)  licensee authorized  to operate  in the  Washington, 
D.C. area that  initiated service in  Annapolis, MD on  different 
frequencies prior to the grant of an FCC authorization to do  so.  
AMTA asserted that the severity of the forfeiture should be based 
on likelihood  or actuality  of causing  interference to  another 
licensee.   AMTA   believed   that   the  Commission   needs   to 
distinguish         clearly          between          essentially 
ministerial/administrative  violations   and   those   with   the 
potential for  disturbing or  disabling the  operations of  other 
facilities (interference potential).  AMTA Comments, 7-8.

     46.  As  AMTA  noted,  one  of  the  principal  reasons  for 
requiring an FCC license to broadcast is to prevent  interference 
with broadcast signals so  that such signals  can be received  by 
the public.   In the  absence  of a  scheme requiring  a  license 
before  transmitting   can  commence,   it  is   not  clear   how 
interference conflicts would be resolved.  Such an approach would 
be costly, disruptive, inefficient, and directly contrary to  the 
express will   of Congress.  See Turner Broadcasting System  Inc. 
v. FCC, 114  S. Ct.  2445, 2456-57 (1994).   Thus, ensuring  that 
parties operate  in  accord  with the  license  authorization  is 
fundamental  to   successful  implementation   of  our   spectrum 
management  objectives.   Failure  to  receive  authorization  to 
transmit  prior  to  transmission  is  not  a  mere   ministerial 
oversight; it  is an  intentional disregard  of the  Commission's 
efforts to prevent interference.   Thus, in AMTA's example  about 
the SMR licensee, the party  has engaged in unlicensed  operation 
because, regardless  of where  it may  properly transmit,  it  is 
transmitting  from  a  location  on  a  frequency  prior  to  any 
Commission approval for that operation.

     47.  With respect to operating on an unauthorized  frequency 
or unauthorized location, we note that frequency and location are 
very  important  to  our  spectrum  management  and  interference 
prevention functions.  These  types of  violations  arise when  a 
party seeks and receives an FCC license, but does not operate  in 
full  compliance  with  the   authorization  of  license.    Both 
scenarios involve operation under color of a license that creates 
a potential  for  interference or  disruption  of  communications 
between licensed entities.   Therefore, we agree  with AMTA  that 
the base forfeiture amount for each of these types of  violations 
should be the same.  We reiterate, however, that although we  are 
using the same base forfeiture  amount for these violations,  the 
forfeiture  amount  may  be  affected  by  the  severity  of  the 
interference and intentional nature of the violation, as well  as 
all other adjustment factors.     

     48.  Treatment  of  pending  cases.   NAB  stated  that  the 
Commission should rescind any  forfeiture imposed under the  1991 
Policy Statement or 1993 Policy Statement that has not been paid.  
NAB Comments, 8.  Infinity argued that forfeitures for violations 
prior to the effective date of any new policy statement should be 
based on case law decided  under the statutory maximum in  effect 
prior to changes in the statute in 1989.41    Infinity  Comments, 
9 n. 8. 

     49.  We reject these suggestions.   Pursuant to Section  503 
of the  Act,  the Commission  has  full authority  to  apply  the 
increased statutory maximum  in effect since  1989 and to  adjust 
its policies and decisions in specific cases on an ongoing  basis 
to take  account of  increased statutory  amounts or  changes  in 
Commission enforcement priorities, regardless of the existence or 
non-existence of a forfeiture policy statement.  All  forfeitures 
assessed under the 1991 and  1993 Policy Statements conformed  to 
the standards set out in Section  503 of the Act and,  therefore, 
constitute the  Commission's  findings  of  liability  for  those 
violations.  For these reasons, we  will include recent case  law 
in our analysis of pending cases.  With respect to these  pending 
proceedings,  we  will  evaluate  them  under  the   case-by-case 
approach in effect when the violation occurred.  We will also use 
the case-by-case approach for violations arising from facts  that 
occurred before the effective  date of this  order but where  the 
Commission will commence  forfeiture action  after the  effective 

     E. Other Matters

     50.  In cases  where  the Commission  designates  forfeiture 
matters for  hearing (e.g.,  as part  of a  license  application, 
license  revocation   or   license   renewal   proceeding),   the 
Commission's typically  indicates that  the forfeiture  liability 
amount may be assessed up to the relevant statutory maximum.  See 
Ellwood Beach Broadcasting, Ltd., 8 FCC Rcd 453, 454 n. 5 (1993).  
In light of recent amendments to the Equal Access to Justice  Act 
made as  part of  the Contract  with America  Advancement Act  of 
1996, Pub.  L.  No.  104-121,  110  Stat.  847  (1996),  we  will 
discontinue  this  practice.   Instead,   we  will  indicate   an 
appropriate maximum forfeiture  amount in light  of the  specific 
facts at  issue  when  initiating such  hearing  cases  effective 

     51.  We note that Section 223 of the recently enacted  Small 
Business Regulatory Enforcement  Fairness Act  of 1996  (SBREFA), 
enacted as part of the Contract with American Advancement Act  of 
1996, Pub.  L.  No.  104?121,  110  Stat.  847  (1996),  requires 
agencies to establish a policy  providing for the reduction  and, 
under appropriate circumstances,  the waiver  of civil  penalties 
imposed on  small  entities.   As  part  of  this  policy,  under 
appropriate circumstances, the agency may consider ability to pay 
in determining  penalty  assessments  on  small  entities.   Such 
circumstances may  include, among  others, violations  discovered 
because the small entity participated in a compliance  assistance 
or audit program,  and good  faith efforts  demonstrated by   the 
entity to  comply  with  the  law.   Circumstances  that  may  be 
excluded from  the policy's  applicability cover  small  entities 
that have been subject  to multiple enforcement actions,  willful 
or criminal violations, and violations that pose serious  health, 
safety or environmental threats. 

     52.  Our existing policies, as  reflected in our  precedent, 
and  as  retained  here,  comply  with  Section  223  of  SBREFA.  
Warnings, rather than forfeitures, may continue to be appropriate 
in particular cases  involving small businesses  or others.   See 
par. 31, supra.  Under Section 503(b)(2)(D) of the Communications 
Act and  section 1.80(b)(4)  of our  rules, we  will continue  to 
consider  inability  to  pay  a  relevant  factor  in   assessing 
forfeitures.  See par. 44, supra.   See also Appendix A,  Section 
II, downward  adjustment criterion  (4).   Our other  upward  and 
downward adjustment  factors, which  are reflective  of  existing 
policy, encompass many  of the conditions  and exclusions  listed 
and Section 223 of SBREFA.   See Appendix A, Section II.    These 
factors will  continue  to  be applied  in  cases  of  violations 
involving small entities (as well as others) to determine whether 
a waiver or reduction of a forfeiture is warranted.  

                         IV.  CONCLUSION

     53.  The forfeiture guidelines are  intended as a guide  for 
frequently recurring violations.  They are  not intended to be  a 
complete  or  exhaustive  list  of  violations.   Moreover,   the 
guidelines do not  apply to violations  for which the  forfeiture 
amounts are statutorily established.  See  para. 23, supra.   The 
mitigating factors  of Section  503(b)(2) (D)  will, however,  be 
used to make adjustments in all appropriate cases, as  warranted.  
In addition, the fact that  a particular violation is not  listed 
on the forfeiture guidelines schedule should also not be taken to 
mean that  the  violation  is unimportant  or  nonexistent.   The 
Commission retains the discretion to impose forfeitures for other 
violations,  including  new  violations   of  existing  laws   or 
regulations, or  violations  that  arise  from  the  use  of  new 
technologies or services.    

                   V.  ADMINISTRATIVE MATTERS

     A.  Final Regulatory Flexibility Analysis

     54.  Final Regulatory Flexibility Analysis:  As required  by 
Section  604  of  the  Regulatory  Flexibility  Act  (RFA),   the 
Commission prepared  an Initial  Regulatory Flexibility  Analysis 
(IRFA) that was incorporated in the Notice of Proposed Rulemaking 
(NPRM).42  The Commission sought  written public comments on  all 
the proposals  in the  NPRM, including  the IRFA.   Based on  the 
analysis of the  public comments, the  Commission has prepared  a 
final Regulatory Flexibility Analysis  of the expected impact  on 
small entities of  the rule  changes adopted in  this Report  and 
Order.  The Final  Regulatory Flexibility  Analysis is  discussed 
fully in Appendix C of this Report and Order.

     B.  Ex Parte Rules -- Permit-But-Disclose Proceeding
     55.  This is a permit-but-disclose  notice and comment  rule 
making proceeding.  Ex  parte presentations are permitted  except 
during the Sunshine Agenda  period, provided, they are  disclosed 
as outlined in the Commission's rules.  See generally 47 C.F.R.
'' 1.1202, 1.1203, and 1.1206(a).

                      VI.  ORDERING CLAUSES

     56.   ACCORDINGLY,  IT  IS  ORDERED that,  pursuant  to  the 
authority contained in  Sections 4(i), 303(r)  and 503(b) of  the 
Communications Act of 1934, as amended, 47 U.S.C. '' 151, 154(i), 
303(r), 503(b), Part 1, Subpart A, Section 1.80(b), 47 C.F.R.   ' 
1.80(b), is amended  to incorporate  as a  note the  Commission's 
Forfeiture Policy  Statement, and  the Guidelines  for  Assessing 
Forfeitures set forth in Appendix A.

     57.       IT IS FURTHER ORDERED, that this Report and  Order 
will be effective sixty (60) days after publication of a  summary 
thereof in the Federal Register.
     58.  IT IS FURTHER  ORDERED, that a copy  of the Report  and 
Order shall be  sent to  the Chief  Counsel for  Advocacy of  the 
Small Business Administration. 


                         William F. Caton
                         Acting Secretary                           Appendix A

Chapter I  of Title  47 of  the Code  of Federal  Regulations  is 
amended by adding a  footnote to Part  1, Subpart A-Practice  and 
Procedure, as follows:


     1.  The authority citation for  Part 1 continues to read  as 

     Authority: 47  U.S.C.  151,  154,  303,  and  309(j)  unless 
otherwise noted.

     2.  Section 1.80  is amended by  revising subsection (b)  to 
read as follows:

     ' 1.80 Forfeiture Proceedings.

(b) * * * * *
     (4)  * * * 



The  Commission  and  its  staff  may  use  these  guidelines  in 
particular cases.   The  Commission  and  its  staff  retain  the 
discretion to issue a higher or lower forfeiture than provided in 
the guidelines,  to  issue no  forfeiture  at all,  or  to  apply 
alternative or additional sanctions as permitted by the  statute.  
The forfeiture ceiling per violation or per day for a  continuing 
violation stated in Section 503 of the Communications Act and the 
Commission's  Rules  are  $25,000  for  broadcasters  and   cable 
operators  or  applicants,  $100,000   for  common  carriers   or 
applicants, and  $10,000  for  all others.   These  base  amounts 
listed are for a single violation or single day of a   continuing 
violation.   47  U.S.C.  '  503(b)(2); 47  C.F.R.  '  1.80.   For 
continuing violations involving a single  act or failure to  act, 
the statute limits  the forfeiture to  $250,000 for  broadcasters 
and cable operators or applicants, $1,000,000 for common carriers 
or applicants, and $75,000 for all others.  Id.  Pursuant to  the 
Debt Collection Improvement Act of 1996 (DCIA), Pub. L. No.  104-
134, ' 31001,  110 Stat.  1321 (1996),  civil monetary  penalties 
assessed by  the federal  government,  whether set  by  statutory 
maxima or specific  dollar amounts  as provided  by federal  law, 
must be adjusted for inflation at least every four years based on 
the formula outlined  in the  DCIA.  Thus,  the statutory  maxima 
increased to  $27,000 for  broadcasters  and cable  operators  or 
applicants; $110,000  for  common  carriers  or  applicants,  and  
$11,000 for  others.  For  continuing violations,  the  statutory 
maxima increased to $275,000  for broadcasters, cable  operators, 
or applicants; $1,100,000 for common carriers or applicants;  and 
$82,500  for  others.   The  increased  statutory  maxima  became 
effective March 5,  1997.  There is  an upward adjustment  factor 
for repeated or  continuous violations, see   Section II,  infra.  
That upward  adjustment  is  not necessarily  applied  on  a  per 
violation or per day basis.  Id.  Unless Commission authorization 
is required for the behavior  involved, a Section 503  forfeiture 
proceeding against a non-licensee or  non-applicant who is not  a 
cable operator  or common  carrier can  only be  initiated for  a 
second violation, after issuance of a citation in connection with 
a first violation.  47  U.S.C. ' 503(b) (5).   A citation is  not 
required,  however,  for  non-licensee  tower  owners  who   have 
previously received notice of the obligations imposed by  Section 
303(q) and Part 17 of the Commission's rules from the Commission.  
See Streamlining  the  Commission's Antenna  Structure  Clearance 
Procedure and  Revision  of Part  17  of the  Commission's  Rules 
concerning  Construction,  Marking,   and  lighting  of   Antenna 
Structures, 61  Fed.  Reg.  04359 (Feb.  2,  1995).   Forfeitures 
issued under other sections of the Act are dealt with  separately 
in Section III below.  


VIOLATION                          AMOUNT

Misrepresentation/lack                  Statutory   Maximum   for 
                         each Service
of candor                                              

Construction and/or operation                $10,000   
without an instrument of 
authorization for the service

Failure to comply with                       $10,000
prescribed lighting and/or marking                     
Violation of public file rules                    $10,000

Violation of political rules:                     $9,000
reasonable access, lowest unit charge,
equal opportunity, and discrimination

Unauthorized substantial                          $8,000
transfer of control

Violation of children's television                $8,000
commercialization or programming requirements

Violations of rules relating to                   $8,000
distress & safety frequencies

False distress communications                $8,000         

EAS equipment not installed or operational             $8,000

Alien ownership violation                         $8,000

Failure to permit inspection                      $7,000

Transmission of indecent/                         $7,000
obscene materials

Interference                            $7,000

Importation or marketing of                  $7,000
unauthorized equipment

Exceeding of authorized                      $5,000
antenna height

VIOLATION                          AMOUNT

Fraud by wire, radio or                      $5,000

Unauthorized discontinuance                  $5,000
of service

Use of unauthorized equipment                $5,000

Exceeding power limits                       $4,000

Failure to respond to                        $4,000
Commission communications

Violation of sponsorship ID requirements               $4,000

Unauthorized emissions                       $4,000    

Using unauthorized frequency                 $4,000

Failure to engage in required                $4,000     
frequency coordination

Construction or operation at                 $4,000
unauthorized location

Violation of requirements pertaining to           $4,000
broadcasting of lotteries or contests

Violation of transmitter control                  $3,000    
and metering requirements

Failure to file required forms                    $3,000
or information 

Failure to make required measurements             $2,000
or conduct required monitoring

Failure to provide station ID                $1,000
Unauthorized pro forma                       $1,000 
transfer of control

Failure to maintain                     $1,000
required records                Violations Unique to the Service

VIOLATION                          SERVICES       AMOUNT         
Unauthorized conversion of long                   Common Carrier 
distance telephone service

Violation of operator                        Common Carrier      
services requirements

Violation of pay-per-call                         Common Carrier 

Failure to implement rate reduction                    Cable     
or refund order

Violation of cable program                        Cable          
access rules

Violation of cable leased                         Cable          
access rules

Violation of cable cross-ownership rules               Cable     

Violation of cable broadcast                 Cable               
carriage rules

Violation of pole attachment rules                     Cable     

Failure to maintain directional                   Broadcast      
pattern within prescribed 

Violation of main studio rule                     Broadcast      

Violation of broadcast                       Broadcast      
hoax rule

AM tower fencing                             Broadcast      

Broadcasting telephone                       Broadcast      
conversations without

Violation of enhanced                        Broadcast      
underwriting requirements  Section II.  ADJUSTMENT CRITERIA FOR SECTION 503 FORFEITURES 

Upward Adjustment Criteria

(1) Egregious misconduct
(2) Ability to pay/relative disincentive
(3) Intentional violation
(4) Substantial harm
(5) Prior violations of any FCC requirements
(6) Substantial economic gain
(7) Repeated or continuous violation

Downward Adjustment Criteria

(1) Minor violation
(2) Good faith or voluntary disclosure
(3) History of overall compliance
(4) Inability to pay

     Unlike Section  503 of  the Act,  which establishes  maximum 
forfeiture  amounts,  other  sections   of  the  Act,  with   one 
exception, state prescribed amounts of forfeitures for violations 
of the  relevant  section.  These  amounts  are then  subject  to 
mitigation or remission under  Section 504 of  the Act.  The  one 
exception is Section 223 of the Act, which provides a maximum  of 
$50,000 per day.  For convenience, the Commission will treat  the 
$50,000 set forth in Section 223 as if it were a prescribed  base 
amount, subject  to  downward adjustments.   The  amounts  listed 
below were adjusted for inflation pursuant to the Debt Collection 
Improvement Act of 1996 (DCIA) (Pub. L. No. 104-134, ' 31001, 110 
Stat 1321 (1996).  The new  amounts became effective on March  5, 
1997.  These non-Section 503 forfeitures may be adjusted downward 
using the "Downward  Adjustment Criteria" shown  for Section  503 
forfeitures in Section II above.  

Violation                               Statutory Amount

Sec. 202 (c) Common Carrier Discrimination                  
                                        $6,600  $330/day     

Sec. 203 (e) Common Carrier Tariffs                         
                                        $6,600  $330/day

Sec. 205 (b) Common Carrier Prescriptions                   

Sec. 214 (d) Common Carrier Line Extensions            $1,200/day

Sec. 219 (b) Common Carrier Reports                    $1,200

Sec. 220 (d) Common Carrier Records & Accounts              

Sec. 223 (b) Dial-a-Porn                          $55,000 

Sec. 364(a) Ship Station Inspection                         $5,00 

Sec. 364(b) Ship Station Inspection                         
                                        $1,100 (vessel master)

Sec.  386(a) Forfeitures                          $5,500/day 

Sec.  386(b) Forfeitures                          $1,100  (vessel 

Sec. 634  Cable EEO                               $500/day

                           APPENDIX B

A.  Comments

 1.   American Mobile Telecommunications Association, Inc.
 2.   American Radio Relay League 
 3.   Bell Atlantic Telephone Company
 4.   Brown and Schwaninger
 5.   Emery Telephone
 6.   Harrisonville Telephone Company
 7.   Infinity Broadcasting Corporation
 8.   MCI Telecommunications Corporation
 9.   MobileMedia Communications, Inc. 
10.  Mobile Phone of Texas, Inc. 
11.  National Association of Broadcasters
12.  Paging Network, Inc.
13.  Personal Communications Industry Association
14.  San Bernardino Coalition of Low Power FM Broadcasting
15.  Southwestern Bell Telephone Company
16.  United States Telephone Association
17.  WJGMariTEL Corporation

B.   Informal Comment

1.   William Dougan

C.   Reply Comments

1.  American Mobile Telecommunications Association, Inc.
2.  MCI Telecommunications Corporation
3.  Motorola, Inc.
4.  National Telephone Cooperative Association
5.  Personal Communications Industry Association
6.  San Bernardino Coalition of Low Power FM Broadcasting
7.  Southwestern Bell Telephone Company
8.  United States Telephone Association

                           APPENDIX C


Final Regulatory Flexibility Analysis

     1.  As required by Section 603 of the Regulatory Flexibility 
Act (RFA), 5  U.S.C. '  603, the Commission  prepared an  Initial 
Regulatory Flexibility Analysis (IRFA)  that was incorporated  in 
the Notice  of  Proposed  Rule Making  (NPRM).43  The  Commission 
sought written public  comments on  all of the  proposals in  the 
NPRM, including the IRFA.   Based on the  analysis of the  public 
comments,  the  Commission  has   prepared  a  Final   Regulatory 
Flexibility Analysis (FRFA) of the expected impact the Report and 
Order adopted today will have  on small businesses and  entities. 
The FRFA in this Report and Order conforms to the RFA, as amended 
by the Contract with America Advancement Act of 1996, Pub. L. No. 
104-121, 110 Stat. 847 (1996).44

     a.   Need for and Purpose of This Action   

     2.   Section 503 of the  Communications Act, as amended,  47 
U.S.C. ' 503 (the Act)  provides the statutory authority for  the 
Commission to assess  forfeitures for violations  of the Act  and 
the Commission's rules. This Report and Order amends Section 1.80 
of  the  Commission's  rules  to  incorporate  by  reference  the 
Commission's forfeiture policy  statement (Policy Statement)  and 
the schedule of forfeitures as  a note to the rule.   Forfeitures 
are one of the tools available  to the Commission to enhance  and 
ensure compliance by serving  as a sanction to  a violator and  a 
deterrent  to  other  potential  violators  that  are   similarly 
situated.   By adopting  the forfeiture guidelines  as a note  to 
the rule, the Commission will provide guidance and clarity to all 
potential violators,  including  small  businesses,  as  to  base 
forfeiture amounts that can be  expected for a violation of   the 
Communications Act and  the Commission's  rules.  The  guidelines 
will also  provide  an  increased  level  of  predictability  and 
uniformity in  the  forfeiture  process.   We  believe  that  the 
footnote adopted here  today has no  substantial impact on  small 
businesses.  The  footnote  does  not create  a  new  substantive 
Commission rule  with which  small businesses  must comply.   The 
forfeiture policy adopted here today merely provides guidance  as 
to the general forfeiture amount that any violator may expect the 
Commission to assess for  a violation of the  Act and rules.   To 
ensure, however,  that the  forfeiture guidelines  adopted  today 
reflect the  Commission's  understanding  of the  impact  of  its 
regulations on small businesses as well as our efforts to analyze 
what,  if  any,  regulatory  relief  can  be  provided  to  small 
businesses in light of this Report and Order, we will explain the 
steps taken to minimize any significant economic impact on  small 

     b.   Summary of  Significant  Issues Raised  by  the  Public 
Comments  in  Response  to  the  Initial  Regulatory  Flexibility 

     3.   In  responding  to  the  IRFA  in  the  NPRM,   several 
commenters, such as improved mobile telephone services (IMTS)  or 
basic exchange telecommunications radio services (BETRS)  contend 
that the Commission's determination  of an entity's inability  to 
pay  a  forfeiture  based  on  its  gross  revenues  erodes   the 
protections otherwise given to small businesses in the  Paperwork 
Reduction Act and the  Regulatory Flexibility Act.  They  contend 
that these rural services will pay higher forfeitures than  other 
licensees for similar violations because  they are run by  common 
carriers as an adjunct to the main operations whose gross revenue 
would be  considered in  determining the  issue of  inability  to 
pay.45 These arguments were considered and rejected as  discussed 

     4.   At the  outset, we  note that  forfeitures are  imposed 
only against those who fail to comply with our rules.  Thus,  the 
issue of inability to pay a forfeiture or maintaining  additional 
paperwork is moot  as to  small businesses that  comply with  the 
rules.  As to those  that violate the  Act and rules,  Commission 
precedent states  that gross  revenues is  a starting  point  for 
determining a party's ability to pay.  Commission cases, however, 
also indicate  that  factors other  than  gross revenues  may  be 
considered.  Under Section  503 of the  Act, the Commission  must 
look at the  inability to  pay in light  of the  totality of  the 
circumstances affecting the particular entity's ability to pay.46  
This includes whether the company is a small business as  defined 
by the Commission and/or the Small Business Administration  (SBA) 
or whether the  business is  an adjunct of  a larger  corporation 
from  which  it  can  draw  resources.  Moreover,  although   the 
Commission has accepted audited financial statements as a  method 
to  assess  a  company's  inability  to  pay  a  forfeiture,  the 
Commission has flexibility  to consider  any documentation  (e.g. 
balance  sheet,  profit   and  loss   statement  accompanied   by 
licensee's  certification)  that   it  considers  probative   and 
objective evidence of the violator's ability or inability to  pay 
a  forfeiture.  This  also  comports  with  the  requirements  of 

      5.  In the  general  comments  to the  NPRM,  a  number  of 
commenters raised issues that might affect small entities.   Many 
commenters oppose  the system  proposed in  the NPRM  that  would 
impose differing base  amounts based on  the service rather  than 
the  violation   involved.    In   particular,  the   commenters, 
including small commercial  mobile radio  services (CMRS),  noted 
that the system proposed in  the NPRM imposed larger  forfeitures 
on common carriers  without any regard  for the common  carrier's 
business size.  Comments from CMRS entities also contend that, if 
the proposed fines  are adopted,  they should be  treated in  the 
"other" category as they were  in the previous guidelines  rather 
than the "common carrier" category which has higher base  amounts 
and a  higher  statutory  maximum.48   As  adopted,  this  Policy 
Statement would impose forfeitures based on the violation and not 
the service as originally proposed.  Thus, CMRS providers who are 
small businesses will not be treated to higher forfeiture amounts 
simply because of their  "common carrier" status.  Moreover,  the 
base forfeiture amount, i.e., the amount at which the  Commission 
may initially assess a forfeiture, is calculated in light of  the 
lowest statutory maximum  imposed under Section  503 of the  Act, 
rather than  the higher  statutory  maxima for  broadcasters  and 
common carriers.    Thus,  small  broadcast  and  common  carrier 
businesses are  not subject  to base  amounts higher  than  those 
imposed on small businesses in the remaining category, i.e.,  the 
"other " category.  As to  those small businesses in the  "other" 
category, the Commission generally  gives warnings to first  time 
violators, who are licensed by rule rather than on an  individual 
basis, based on the  facts of each case  unless the violation  is 
egregious or  a  serious safety  of  life issue.49   The  adopted 
forfeiture  policy   statement  also   eliminated  the   proposed 
adjustment factor ranges, thus allowing the Commission to  reduce 
a forfeiture to  a minimum amount  against a violator  such as  a 
small business if warranted by the facts of the case in light  of 
the factors outlined  in Section  503 of the  Act.50  Lastly,  we 
note that, in  light of  recent changes  to the  Equal Access  to 
Justice Act made as part of the Contract with America Advancement 
Act of 1996, Pub. L. No.  104-121, 110 Stat. 847 (1996), we  will 
indicate an appropriate maximum forfeiture amount in cases  where 
the  Commission  designates   forfeiture  matters  for   hearing.  
Because this  maximum forfeiture   amount will  be based  on  the 
specific facts at  issue rather  than the  statutory maximum  for 
that  service,  small  businesses  in  the  "broadcast",  "common 
carrier", and  "other"  services  will  not  be  subject  to  the 
statutory maxima in a  hearing unless warranted  by the facts  in 
that case. 51

     c.   Description and Estimate of Number of  Small Businesses 
to Which Rules Will Apply:  

     6.   The RFA generally defines "small entity" as having  the 
same meaning as the terms "small business", "small organization", 
and "small governmental  jurisdiction" and "the  same meaning  as 
the term