So, You Received a Letter of Inquiry (LOI) . . .
The Federal Communications Commission (FCC) has always taken violations of the Communications Act and its rules seriously. As with any agency, though, enforcement priorities can shift and change over time. The recent leadership changes at the FCC, both at the Commissioner and staff levels, warrant a watchful eye for shifting priorities at the Enforcement Bureau, both in the areas of focus as well as changes in approach to investigations. We could well see an increase in the number of LOIs or LOIs in new areas over the coming months.
Few letters are more disheartening to a licensee, or other carrier authorized under the Communications Act, than an LOI from the FCC’s Enforcement Bureau. While not every LOI leads to a voluntary contribution to the United States Treasury, the ability of the agency to define what constitutes a rule violation, and how to count those violations, means that any alleged breach of the FCC’s rules can quickly expand into a significant liability exposure for your company. Accordingly, it is important that you take immediate action upon receipt.
What Triggers an LOI: The Enforcement Bureau investigates a wide array of issues stemming from potential non-compliance with the FCC’s rules and the Communications Act. These investigations can range from violations of the Universal Service Fund rules to the Equal Employment Opportunity (EEO) compliance of television and radio broadcast licensees. On a more practical level, however, many LOIs are triggered by press reports. If your company has made negative news in a way that intersects with FCC jurisdiction, you should not be surprised to receive an LOI. Other common sources are audit findings, consumer complaints…and even reports by competitors. Unfortunately, self-reporting of a violation does not mean a company will avoid investigation.
What to do:
Preserving documents. The FCC has broad investigative authority, and an LOI represents the first step in a serious government investigation. Receipt of an LOI puts a company on notice of a potential violation and imposes an obligation to preserve documents. The company must quickly identify those records that are likely to be implicated, as well as the individuals with relevant knowledge. Counsel, whether in-house or outside counsel, should immediately issue a hold notice to all individuals potentially involved as well as the departments or individuals that hold applicable records. While the scope of the ultimate document production may be the result of negotiation between the Enforcement Bureau and counsel for the company, you risk increased exposure if EB believes you have not retained all records they deem relevant. This can be particularly problematic if the LOI touches on call records or other high-volume data streams that tend to be retained for only short periods of time.
Internal Investigation. Once you have received notice of a potential violation, it is critical that you develop an understanding of the facts as quickly as possible. As with any other government investigation, analyzing your potential exposure and responding promptly and accurately to the LOI requires that you know what happened. You should begin thinking about the application of the Communications Act and the FCC’s rules to the facts, along with any potential legal defenses that may apply. Because of the compressed timeframe of an FCC investigation, promptly engaging counsel to help with this process can pay significant dividends as the investigation moves forward.
Timely Written Response. It is not unusual for EB to demand a response to their questions and production of documents within a relatively short period of time. Again, while deadlines may be a subject of negotiation between counsel and EB, prompt action is important. It is equally important, however, that the responses be accurate. Your written responses should be limited to the facts that are available and go no further.
Meeting with EB. Once a response is submitted, it will be an unusual case in which follow up meetings with the EB staff are not required. It is frequently useful to develop a presentation that summarizes the facts collected and sets out your position on the law in a manner that provides the EB with a roadmap to closing the investigation.
What NOT to do:
When an LOI arrives at company, it is not unusual for individual employees to begin speculation regarding its merits, who is responsible, and possible outcomes. Counsel should alert employees to refrain from such speculation. However, if there is one important rule to remember when it comes to the receipt of an LOI it is this:
DON’T IGNORE IT.