On Friday, March 21, the FCC released a Forfeiture Order in the amount of $7000 to CB Shop and More in Loveland, Colorado for "willful and repeated violations of Section 302(b) of the Communications Act of 1934, as amended (Act), and Section 2.803(a)(1) of the Commission's Rules." According to the FCC, CB Shop and More was selling a "non-certified Citizens Band ('CB') transceiver."

Section 302(b) of the Act states: "No person shall manufacture, import, sell, offer for sale, or ship devices or home electronic equipment and systems, or use devices, which fail to comply with regulations promulgated pursuant to this section." Section 2.803(a)(1) reads that "Except as provided elsewhere in this section, no person shall sell or lease, or offer for sale or lease (including advertising for sale or lease), or import, ship, or distribute for the purpose of selling or leasing or offering for sale or lease, any radio frequency device unless in the case of a device subject to certification such device has been authorized by the Commission."

Background

On November 25, 2002, an agent from the Enforcement Bureau in the FCC's Denver Office inspected the CB Shop & More in Loveland, Colorado and observed that the store "displayed and offered for sale twelve models of CB transceivers, specifically, one Super Star 121 transceiver, one General Longstreet transceiver, one Connex CX3300HP transceiver, one Connex CX4400HP transceiver, and eight Galaxy transceivers models DX33HML, DX44V, DX55V, DX66V, DX73, DX77HML, DX88HL, and DX99V." After the agent reviewed FCC records, it was discovered that these devices "had not received an equipment authorization from the Commission."

The next day, the FCC Denver Office issued a Citation to CB Shop and More for violation of Section 302(b) of the Act and Section 2.803(a)(1) of the Commission's Rules by selling non-certified CB transceivers. The Citation warned the CB Shop that "future violations may subject CB Shop to civil monetary forfeitures not to exceed $11,000 for each violation for each day of a continuing violation, seizure of equipment through forfeiture action, and criminal sanctions including fines and imprisonment."

According to the FCC, lawyers for CB Shop and More disputed the Citation, stating that the transceivers listed in the Citation were legal to sell. Their attorneys further requested that the Denver Office withdraw the Citation within 14 days from December 3, 2002. In a response to the CB Shop, dated December 18, 2002, the Denver Office "reaffirmed the violation and warned that the marketing of the non-certified CB transceivers should cease immediately."

On January 26, 2007, and March 8, 2007, the Denver Office received complaints alleging that CB Shop and More was selling non-certified CB transmitters and modified 10 meter band radios. On March 30, 2007, the Denver agents again visited CB Shop and More and noted that one of the CB transceivers offered for sale was a Galaxy Model DX99V and asked if they could purchase the transceiver. "The Denver agents subsequently identified themselves as FCC agents, and proceeded to interview the owner of the CB Shop. The owner acknowledged that he once received a Citation from the FCC, but he thought it was still legal for them to sell the referenced CB transceivers."

On August 28, 2007, the Denver Office issued a Notice of Apparent Liability (NAL) in the amount of $7000 to CB Shop and More. In the NAL, the Denver Office found that CB Shop and More "apparently willfully and repeatedly violated Section 302(b) of the Act, and Section 2.803(a)(1) of the Rules by offering for sale a non-certified CB transceiver." CB Shop and More filed a response on September 17, 2007 (Response). In its Response, CB Shop argued that "Galaxy Model DX99V does not require certification by the Commission because it is not a CB transceiver." Consequently, CB Shop and More argued that the forfeiture should be cancelled.

Determining the Forfeiture Amount

According to the FCC, the proposed forfeiture amount in this case was assessed in accordance with Section 503(b) of the Act, Section 1.80 of the Rules and The Commission's Forfeiture Policy Statement and Amendment of Section 1.80 of the Rules to Incorporate the Forfeiture Guidelines. In examining CB Store and More's Response, Section 503(b) of the Act requires that "the Commission take into account the nature, circumstances, extent and gravity of the violation and, with respect to the violator, the degree of culpability, any history of prior offenses, ability to pay, and other such matters as justice may require."

CB radio transceivers are subject to the equipment certification process and must be certified and properly labeled prior to being marketed or sold in the United States. Unlike CB radio transceivers, radio transmitting equipment that transmits solely on Amateur Radio Service frequencies is not subject to equipment authorization requirements prior to manufacture or marketing; however, some radio transmitters that transmit in a portion of the 10 meter band of the Amateur Radio Service (28.000-29.700 MHz) are equipped with rotary, toggle or pushbutton switches mounted externally on the unit, allowing operation in the CB bands after completion of minor and trivial internal modifications to the equipment.

To address these radios, the Commission adopted changes to the CB-type acceptance requirements by defining a CB transmitter as "a transmitter that operates or is intended to operate at a station authorized in the CB." Section 95.655(a) of the Rules also states that "no transmitter will be certificated for use in the CB service if it is equipped with a frequency capability not listed in Section 95.625 of the Rules" (CB transmitter channel frequencies). Also, the Commission's Office of General Counsel released a letter on the importation and marketing of Amateur Radio transmitters, clarifying that transmitters that "have a built-in capacity to operate on CB frequencies and can easily be altered to activate that capacity, such as by moving or removing a jumper plug or cutting a single wire" fall within the definition of a CB transmitter under Section 95.603(c) of the Rules and therefore require certification prior to marketing or importation. The Commission's Office of Engineering and Technology "evaluated Galaxy Model DX99V here and determined that it could easily be altered for use as a CB transceiver."

CB Shop and More argued that the Galaxy DX99V transceiver does not require Commission certification "because it is not a CB transceiver." They state that "the Galaxy DX99V is manufactured to operate solely on the 10 meter amateur band, and its intent in selling the Galaxy DX99V was that the transceivers be used only as amateur equipment." Consequently, CB Shop and More argued that Section 95.603 of the Rules defines a CB transmitter as "a transmitter that operates or is intended to operate at a station authorized in the CB," therefore, "the Galaxy DX99V, as manufactured by Galaxy and as marketed by CB Shop is not a CB transceiver, as defined by the Commission's Rules."

The FCC did not agree with CB Shop and More's reasoning. The Commission felt CB Shop and More "fail[ed] to consider the OGC Letter, also discussed above and in the NAL, which clarified that Amateur Radio Service transmitters that can easily be altered to operate on CB transmitter channel frequencies fall within the definition of 'CB transmitter' under Section 95.603(c) of the Rules." Consistent with Sections 95.603(c) and the OGC Letter, and as stated in the NAL, the FCC's "Office of Engineering and Technology evaluated the Galaxy Model DX99V and determined that it was a non-certified CB transceiver. CB Shop provided no evidence to show that the Galaxy Model DX99V it offered for sale was not easily modified. Therefore, we find that Galaxy Model DX99V is a CB transmitter pursuant to Section 95.603(c), regardless of CB Shop's now stated intent regarding the sale of the Galaxy Model DX99V."

CB Shop and More also argued that more than 10 years ago, the FCC's "Office of Engineering and Technology issued a public notice, 'trying to expand the definition of a Citizen Band transmitter to transceivers capable of being "easily modified" to work on the Citizen Band service.'" CB Shop and More contended, however, that this was "an amendment to the CB Rules, that the Commission cannot amend the Rules by merely putting out a public notice, and that its attempt to do so violates the APA and due process."

The FCC, in assessing CB Shop's liability in the NAL, said "the Denver Office relied on the OGC Letter and its interpretation of Section 95.603(c), as well as Office of Engineering and Technology's specific determination concerning Galaxy Model DX99V, and did not rely on the public notice cited to by CB Shop. We note that CB Shop does not argue that the enactment of Section 95.603(c) violated the APA nor does CB Shop object to the clarification offered by the OGC Letter. Therefore, we find no merit to this argument either."

CB Shop and More further stated that whether a transceiver can be "easily modified" is one of degree and referred to an e-mail from a Commission staffer. The FCC did not agree with that conclusion. "First, the Commission has consistently held that regulatees are responsible for compliance with the Commission's Rules and that they should not rely on informal opinions from Commission staff. Additionally, when the staff advice is contrary to the Commission's rules, the Commission may still enforce its rules despite any reliance by the public. Second, the OGC Letter explains the concept of 'easily modified' as including moving or removing a jumper plug or cutting a single wire. Third, CB Shop was on notice that the Galaxy transceivers it was offering for sale were considered to be 'easily modified,' and therefore, non-certified CB transceivers for years prior to the issuance of the NAL." The FCC noted that CB Shop and More received a Citation on November 26, 2002 that explained that if the store "continued to offer these transceivers for sale, it would be subject to civil monetary forfeitures. After its attorney questioned the Citation, it received a follow-up notice from the Denver Office, on December 18, 2002, warning that it should no longer offer for sale the Galaxy transceiver at issue. Despite these notices and warnings, CB Shop continued to sell the non-certified CB transceivers."

Conclusion

The FCC examined the Response to the NAL "pursuant to the statutory factors above," and in conjunction with the Forfeiture Policy Statement. As a result of the review, the Commission concluded that CB Shop and More "willfully and repeatedly violated Section 302(b) of the Act, and Section 2.803(a)(1) of the Rules. Considering the entire record and the factors listed above, we find that neither reduction nor cancellation of the proposed $7,000 forfeiture is warranted." The Commission ordered that, pursuant to Section 503(b) of the Act and Sections 0.111, 0.311 and 1.80(f)(4) of the Commission's Rules, "CB Shop and More is liable for a monetary forfeiture in the amount of $7,000 for willfully and repeatedly violating Section 302(b) of the Act, and Section 2.803(a)(1) of the Rules."