FCC ENFORCEMENT BUREAU CHALLENGED ON ORDER ON ENRON LICENSES
Calling Enron “America’s most corrupt company,” the United Church of Christ (UCC) challenged FCC Enforcement Bureau decision fining company $7,500 for failing to get FCC approval when it bought firms with private radio and microwave licenses. Last month, FCC said it had completed investigation of Enron’s failure to obtain regulatory approvals of those licenses, problem that bankrupt energy giant had informed Commission about in 1998 (CD Jan 17 p9). At time, Enron said responsibility for getting licenses was decentralized among its subsidiaries, which in some cases didn’t know such approvals were needed. FCC handled Enron violations with “a stunningly light hand,” UCC attorney Andrew Schwartzman said. He said “stealthy manner” in which FCC handled case “reduces confidence in Commission processes.” Deals, collectively, were “big deal,” Schwartzman said, and involved “public health and safety, so this has to be taken seriously.” Entire compliance process and early termination of investigation are “highly questionable,” he said.
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In petition for special relief at FCC that UCC plans to file today (Fri.), church’s Office of Communication expresses outrage that Enron “got less than a slap on the wrist” for violations. Filing will ask that Commission either vacate Jan. 16 order or treat petition as application for review, in part because it conflicts with FCC rules and case precedent. “Despite this record of incredible and probably false representations to the Commission, Enron was not set for hearing, and was fined nothing,” according to advance copy of UCC petition obtained by Communications Daily.
Petition points to what it characterizes as false representations that Enron gave to Commission about status of its licenses and efforts to correct them. Filing says that on “near-record” 149 occasions, 7 Enron units had violated Sec. 310(d) of Communications Act, which requires companies using FCC-regulated facilities to have FCC licenses. UCC filing says Enron told Commission it had discovered most of violations in 1997 and informed Commission in 1998 that it had rectified them. “That was not true: in 2000, Enron ‘discovered’ more violations and again Enron told the Commission it had corrected them,” UCC said. UCC said that again in late Dec. 2001, Enron found another round of violations and informed Commission for 3rd time it had corrected all of them. Enron case was not set for hearing and was fined nothing, petition said. “Instead, it was permitted to make only a ‘voluntary payment to the Treasury’ of $7,500 -- $50.33 per violation -- and promise not to break the law anymore,” UCC said. “In exchange, the Bureau promised Enron that it would stop its investigation.”
Citing Enron consent decree, UCC petition said Enron top brass “almost surely knew that the company was operating wireless, airplane and maritime facilities without FCC licenses, and that these executives repeatedly and falsely assured the FCC that all of the rule violations had been corrected.” Petition said Enron was familiar with FCC regulations because of its role as large-scale broadband operator. Referring to “notorious” Enron reputation for violating federal rules, UCC said General Services Administration on Jan. 25 began investigation to ascertain whether company was qualified to be govt. contractor.
Petition said one of UCC’s key concerns about Enron order was that it “threatens to set a precedent for nonenforcement of a myriad of regulations designed to guarantee the integrity of the Commission’s ownership and structural regulations.” If regulations such as those weren’t enforced, UCC said FCC’s “diligent efforts over the past 5 decades to diversify the media and telecom industries through ownership regulation will have been in vain.” Petition cited 5 reasons why Enron order should be overturned: (1) Enforcement Bureau lacked authority to issue order because it had to refer to full Commission matters that presented novel questions of fact or couldn’t be resolved under existing precedent. (2) Facts didn’t allow Commission to conclude that Enron “did not intend to violate the Communications Act and the Commission’s rules.” (3) Enron might not be qualified to hold govt. contracts. (4) “Enron, of all companies, should not be permitted to pay the Treasury to stop a live investigation.” (5) Consent decree is “so gross an abuse of prosecutorial discretion as to engender public disrespect for the rule of law,” even if Enron were qualified as licensee. UCC petition said Enron committed what appeared to be 2nd largest number of licensing violations of that type.
UCC said ownership violations warranted evidentiary hearing because of their sheer number. Enron “probably violated the law intentionally” and “in no sense” complied with regulations at later date voluntarily, UCC said.