FCC Order Sets New Rules to Address Unlawful 911 Fee Diversion

States and local governments that impose fees and charges on consumers for 911 emergency communications should use those revenues for their designated purpose. But some states and local governments disregard the law and spend them for other purposes. On June 25, the FCC released an order to adopt rules intended to better address diversion of 911 fees by state and local authorities. The order implements the Don't Break Up the T-Band Act of 2020 (which is part of the Consolidated Appropriations Act of 2021), in which Congress directed the Commission to help address the problem of states and local governments spending revenues from 911 fees on things that are not related to 911. 

The FCC's new rules lay some necessary groundwork in for the agency to more accurately ascertaining state and local governments' use of 911 fees and better ensuring their compliance. Among other things, the Commission's definition of "diversion" now includes "distribution of 911 fees to a political subdivision that obligates or expends such fees for a purpose or function other than those designated as acceptable by the Commission." In its order, the Commission offered the following sensible justification for this definition: 

We find that it is consistent with the intent of section 902 to hold states responsible for fee diversion by localities within their boundaries. Absent such a policy, states or taxing jurisdictions could have an incentive to avoid oversight or accountability for expenditures by political subdivisions. We also decline to require that local units report directly to the Commission, as NASNA requests. The NET 911 Act requires the Commission to report on the “status in each State” of the collection and distribution of 911 fees or charges and the agency’s annual 911 fee report questionnaire is consistent with this directive. We note that states may disclose limitations on their authority over local 911 fee collection or use in their responses to the fee report questionnaire and that these questionnaires are publicly available on the Commission’s website. We also note that the petition for determination process established by section 902 provides a mechanism for further consideration of this issue in the context of specific fact patterns. 

As indicated in the above quote, the Commission's order establishes a petition process for state and local governments to petition for determine that the use of 911 fees in specific instances are for 911-related purposes. 

Finally, as the order points out, the Commission has established the 911 Strike Force to explore further steps that can be taken to address 911 fee diversion. The 911 Strike Force will examine: 

(i) the effectiveness of any federal laws, including regulations, policies, and practices, or budgetary or jurisdictional constraints regarding how the federal government can most expeditiously end 911 fee diversion; (ii) whether criminal penalties would further prevent 911 fee diversion; and (iii) the impacts of 911 fee diversion. 

The 911 Strike Force will issue a report to Congress by September 23, 2021. And later this year the Commission will issue its 13th Annual Report on State 911 Fees and Charges. The 12th Annual report was the subject of my blog from December 2020. 

FCC Report Spotlight State's Noncompliance with NET 911 Act

On December 8, the FCC released its 12th Annual Report on State 911 Fees and Charges. In the report, the Commission found that a handful of states diverted nearly $200 million in 911 taxes and fees to non-911 purposes in 2019 as defined by the NET 911 Act. Once again, New Jersey, New York, and Rhode Island were among the worst offenders. 

The Commission found that New Jersey spent nearly $93.6 million in 911 taxes and fees – or over 75% of the 911 taxes and fees it collected – on non-911 public safety and unrelated matters. West Virginia also made the list of states that diverted funds to non-911 purposes. And state law in Nevada apparently permitted two or more local jurisdictions to divert funds to non-911 purposes. 

The report did observe that Rhode Island and West Virginia have more recently amended their laws regarding the handling of 911/E911 taxes and fees. So there is reason to anticipate 2020 results that are more consistent with the NET 911 Act.

 

The FCC's State 911 Fees and Charges Report has again provided a useful public service that hopefully will encourage greater accountability for proper use of 911 taxes and fees in the future.