Ajit Pai at Senate Hearing on March 10

Broadcasters would likely call it money well-spent, but it’s still cash coming from the federal government’s hands. The Federal Communications Commission estimates it will cost the agency at least $11 million to enforce the newly-adopted law that requires it to step up pirate radio enforcement. “Specifically, in order to combat the problem of illegal radio operations, the statute requires a sweeping process that will require new equipment and a substantial number of additional field agents to implement fully,” FCC Chair Ajit Pai told a Senate Appropriations subcommittee during a hearing on Tuesday. Pai said he hoped congressional budget writers would determine a “reasonable funding level” for the FCC that reflects that added cost, suggesting the agency’s budget for the upcoming fiscal year should be raised to $354 million.

Signed into law by President Trump last month, the Preventing Illegal Radio Abuse Through Enforcement Act, or “PIRATE” Act (S.1228) was unanimously approved by both the Senate and House. The new law raises fines on unlicensed station operators to $100,000 per day per violation, up to a maximum of $2 million. In addition to tougher fines on violators, the FCC would also be required to conduct sweeps in the five cities where pirate radio is the biggest problem—New York, Los Angeles, Chicago, San Francisco and Dallas—at least once a year. And then, within six months, field agents would be mandated to return to those markets to conduct “monitoring sweeps” to determine whether the unlicensed operators simply powered back up or changed frequencies. The agency would also be required to issue a report to Congress on an annual basis about its pirate-fighting efforts.

Pai told the Financial Services and General Government Subcommittee that the FCC is already gearing up for implementing the new law. “We are submitting a formal amendment to the Office of Management and Budget concerning costs associated with the full implementation of the PIRATE Act,” said Pai.

Three Hundred Pirates

There are currently an estimated 300 pirates on the air, according to FCC estimates provided to the subcommittee by Commissioner Michael O’Rielly. Although he didn’t testify during Tuesday’s hearing, in a letter he urged lawmakers to give the FCC the money it needs to combat unlicensed radio operations.

“Having proliferated in certain parts of the country, especially in the key markets of Boston, New York/Northern New Jersey, and Miami, pirate operators threaten the livelihood of legitimate stations, suppressing audience reach and advertising revenues,” said O’Rielly. He also alerted senators about the public safety implications posed by the interference pirates could cause for legal stations. “The Commission has its work cut out to meet expectations under the PIRATE Act,” said O’Rielly. But substantially increasing allowable penalties and requiring annual sweeps, among other changes, will help the FCC address the problem, he added.

During a two-hour hearing dominated by 5G and broadband issues, Subcommittee Chair John Kennedy (R-LA) said he planned to call the commissioners back to Capitol Hill another time to specifically address the proposed 2021 budget.

The White House has proposed a $343.07 million budget for the FCC in the fiscal year that begins Oct. 1. That’s a 1.2% increase from the $339 million that Congress appropriated the FCC in the current fiscal year that runs through Sept. 30. The increase would cover higher costs tied to a 1% across-the-board pay increase for staff as well as investments in new technology and infrastructure.

Unlike most federal agencies, the FCC offsets much of what it spends with the collection of fees on services it regulates. That includes the annual fees charged to radio stations. The agency has not yet specified what the fees on radio would be for 2021 but the budget blueprint proposes a small increase in fees collected from industries that fall under the Media Bureau.

The Trump administration is also reviving a proposal that the FCC charge the industries it regulates a spectrum license fee in addition to the annual regulatory fees. If adopted, the spectrum fee would be phased-in over time. If they begin in 2021, the FCC estimates it would bring in $4 billion through 2030. The White House tried a similar move a year ago in what has become an annual proposal that has never gained traction. Groups like the National Association of Broadcasters have successfully convinced lawmakers that it would threaten the ability of local radio and television stations to serve the public.