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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Federal Communications Commission Washington, D.C. 20554 In Reply Refer To: 1800C1-KS 98100073 June 22, 1999 Released: June 24, 1999 CERTIFIED MAIL -- RETURN RECEIPT REQUESTED Central Coast Communications, Inc. Licensee, Station KIEZ(AM), Carmel Valley, CA 296 H Street Third Floor Chula Vista, CA 91910 In re: Station KIEZ(AM), Carmel Valley, CA Dear Licensee: The Chief, Mass Media Bureau, pursuant to authority delegated under Section 0.283 of the Commission's Rules, has before him for consideration information suggesting that there have been violations of various Commission rules in connection with your principal Jaime Bonilla Valdez's ("Bonilla") control and operation of this station. Specifically, the information suggests that you improperly abdicated station control to a time broker; that you failed to maintain required information in the station's public inspection file; and that you falsely certified the completeness of that file to the Commission. The information raised the question of whether, due to the serious and repeated nature of these rule violations, your pending license renewal and assignment applications for this station should not be granted, but instead be designated for evidentiary hearing. Your pleadings responsive to those charges are also before the Chief, Mass Media Bureau. For the reasons discussed below, we have determined that forfeiture, rather than designation for hearing appears appropriate. Consequently, this letter constitutes a NOTICE OF APPARENT LIABILITY FOR A FORFEITURE, pursuant to Section 503(b) of the Communications Act of 1934, as amended (the "Act"). Background Matters. COBE Laboratories, Inc. ("COBE"), a business creditor of your principal, Bonilla, filed an "Objection to Renewal Applications and Petitions for Rescission of Operating Authorizations" on December 31, 1997, opposing, inter alia, the license renewal and assignment applications of Station KIEZ(AM), Carmel Valley, California. COBE later withdrew that objection pursuant to a "comprehensive settlement" of its legal disputes with Bonilla. By letter under separate cover, we found that it satisfied the requirements of 47 C.F.R. 73.3588, which governs the withdrawal and dismissal of petitions to deny and informal objections. We remain obligated, however, under Booth American Company, 58 FCC 2d 553, 554 (1976), to consider the merits of COBE's charges, notwithstanding the private settlement of that dispute. See Stockholders of CBS, Inc., 11 FCC Rcd 3733, 3741 (1995) (subsequent history omitted). For the reasons set forth below, we find that the matters complained of by COBE, considered in conjunction with your response, indicate that you did not engage in an unauthorized transfer of control, but did apparently violate the pertinent Commission rule concerning the maintenance of the station's public inspection file and falsely certified the file's completeness to the Commission. Abdication of Station Control. Section 310(d) of the Act prohibits the transfer of control of a station license, and any rights thereunder, without prior Commission consent. See Sections 73.3540 and 73.3541 of the Commission's Rules. There is no exact formula by which control of a broadcast station can be determined. We traditionally look beyond the legal title to whether a new entity or individual has obtained the right to determine the basic operating policies of the station in ascertaining whether a transfer of control has occurred. See WHDH, Inc., 17 FCC 2d 856 (1969) aff'd sub nom. Greater Boston Television Corp. v. FCC, 444 F.2d 841 (D.C. Cir. 1970) cert. denied, 403 U. S. 923 (1971). Specifically, we look to three essential areas of station operation: programming, personnel and finances. See, e.g., Stereo Broadcasters, Inc., 87 FCC 2d 87 (1981), recon. denied, 50 RR 2d 1346 (1982). In its objection, COBE alleges that the assistance provided to you by the media brokerage firm Miller & Associates ("Miller"), in connection with a time brokerage agreement and assignment of license application executed between you and KIEZ Radio Corporation in June 1995, resulted in your abdication of station control ever since that time to Miller. COBE claims, in this regard, that Miller's "paying [your] filing fees, handling [your] FCC applications, and arranging a series of local marketing agreements to keep [KIEZ(AM)] on the air" indicate that you "simply turned the property over to Miller to dispose of . . . ," and that you therefore no longer control the station. COBE further contends that because Miller and Bonilla have, in the past, been "charged with" conspiring to avoid the Commission's rules pertaining to the ownership of translator stations, they likely also engaged in the foregoing alleged improper conduct regarding the control of Station KIEZ(AM). You deny the charges, citing the affidavit given by Miller's principal, Brett E. Miller, in support, and argue that all of the foregoing actions described undertaken by Miller were in full compliance with the pertinent Commission rules and policies. A licensee's participation in a time brokerage or local marketing agreement, does not constitute per se evidence that an unauthorized transfer of station control, or violation of the Act or Commission rules, has occurred. See, e.g., WGPR, Inc., 10 FCC Rcd 8141 (1995); Roy F. Russo, Esq., 5 FCC Rcd 7586 (MMB 1990); Joseph A. Belisle, Esq., 5 FCC Rcd 7585 (MMB 1990). Instead, as noted above, we look to whether the licensee continues to have ultimate control over the station regarding its programming, personnel and finances. In this case, Miller acknowledges that it advanced regulatory fees on the station's behalf, assisted in the filing of the station's applications before the Commission, and secured for the station new time brokers when the need arose. However, Miller explains that its role was only that of the station's agent, and that it did not exceed the bounds of that permissible relationship when acting on the station's behalf. We agree that these actions do not constitute evidence demonstrating that Miller exercises control over the station's programming, personnel or finances. Finally, we believe that the inferences COBE has drawn from matters alleged in the Sacramento, California, FM translator proceeding are speculative, baseless, and have no bearing on this case. Consequently, we find that COBE has failed to raise a substantial and material question of fact that you improperly abdicated control of Station KIEZ(AM) to media-broker Miller, or that you violated the Act and applicable Commission rules regarding station control. KIEZ(AM) public inspection file/false certification. COBE alleges that you violated the Commission's public inspection file rule, Section 73.3526 of the Commission's Rules, by failing to include materials required in the station's public file, and that you falsely certified compliance with the rule in your current license renewal application. In response, you explain that, although you represented in the July 30, 1997, license renewal certification that the file was complete, a review of the station's public file was not actually performed until the termination of the station's time brokerage agreement with KIEZ Radio LLC on September 30, 1997. At that time, you discovered that the public file was missing. While you acknowledge that the July 30, 1997, license renewal certification was not based on a then-contemporaneous review of the public file for completeness, and was admittedly incorrect when made, you contend that it was made in good faith, and without any intent to deceive the Commission. In this regard, you explain that at the time the renewal certification was made, you mistakenly assumed that personnel traditionally assigned to this task had kept the public file updated throughout the license term, upon receiving relevant materials from your corporate headquarters. You discovered, however, in connection with your overall review of the Bonilla stations' public files, that many elements of those public files were deficient for a period of several years. You contend that the lapses at Station KIEZ(AM), were due, in part, to the departure, "in late 1994," of Mateo Camarillo, the former corporate officer who monitored this task, and also because the station's subsequent managers were unaware of the necessity to include and update other information required to be contained in the file. You claim that, to correct this problem, Station KIEZ(AM)'s public file was reconstructed "to the extent possible" at an indeterminate time prior to May 9, 1998. Section 73.3526(a) of the Commission's Rules requires broadcast licensees to maintain a public file containing specific types of information related to station operations. The purpose of this requirement is to provide the public with timely information at regular intervals throughout the license period, so that concerned individuals or groups may participate effectively in Commission procedures concerning a broadcast licensee, including the evaluation of its performance. See, e.g., Liability of KLDT-TV 55, Inc., 8 FCC Rcd 6316 (1993), forfeiture reduced, 10 FCC Rcd 3198 (1995). The public file generally must be maintained within the station's community of license even if the station's main studio is located outside of that community. See 47 C.F.R. Section 73.3526(d). The file must be available to the public at any time during regular business hours. Id.; Public Notice, "Availability of Locally Maintained Records for Inspection by Members of the Public," DA 98-1895 (September 28, 1998), citing WBRN, Inc., 32 FCC 2d 729 (1971); Morton L. Berfield, Esq., 71 RR 2d 142 (FOB 1992) (the file must be immediately available for inspection by members of the public, not through appointments or at times most convenient to the licensee). In this case, the fact that you relied on employees or agents to maintain and to ensure the continuing presence and completeness of the public file, is not an exculpating or mitigating factor. Where rule lapses occur, neither the negligent acts or omissions of station employees or agents, nor the subsequent remedial actions undertaken by the licensee, excuse or nullify a licensee's rule violation. See Gaffney Broadcasting, Inc., 23 FCC 2d 912, 913 (1970), citing Eleven Ten Broadcasting Corp., 33 FCC 706 (1962); Morton L. Berfield, Esq., supra; Surrey Front Range Limited Partnership, 71 RR 2d 882 (FOB 1992). Moreover, the evidence available indicates that you failed to keep the station's public inspection file complete and current as required by the rules. It appears, therefore, that you violated Section 73.3526 of the Commission's Rules. It also appears that you falsely certified the public file's completion to the Commission in your current license renewal application. Full and clear disclosure of all material facts is essential to the efficent administration of the Commission's license renewal process. Proper analysis of a licensee's renewal application is critically dependent upon the accuracy and completeness of information and data which only the licensee can provide. Section 73.1015 of the Commission's Rules, states in pertinent part that "[n]o application . . . shall . . . in any application, pleading, or report or any other written statement submitted to the Commission, make any misrepresentation or willful material omission bearing on any matter within the jurisdiction of the Commission." A "willful material omission" need not be accompanied by an intent to deceive. It is sufficient that the omission be conscious and deliberate, regardless of intent. Abacus Broadcasting Corp., 8 FCC Rcd 5110, 5115 (Rev. Bd. 1993). It appears, therefore, that you willfully omitted information concerning the completeness of the station's public file in your license renewal application. Sanction. For the reasons set forth above, we find that a monetary forfeiture is warranted for the apparent violations of Sections 73.3526 and 73.1015 of the Commission's Rules. It appears that, from the information supplied, the public inspection file rule violation at Station KIEZ(AM) first occurred in late 1994, and continued until approximately May 9, 1998. Accordingly, pursuant to Section 503(b) of the Act, you, Central Coast Communications, Inc., licensee of the above-captioned radio station, are hereby advised of your apparent liability for a forfeiture of Fifteen Thousand Dollars ($15,000.00) for your apparent willful, repeated violation of Section 73.3526 and Section 73.1015 of the Commission's Rules. In assessing this monetary forfeiture, we have taken into account the nature, circumstances, extent and gravity of the violation, as well as the degree of culpability and the station's prior enforcement history. Section 503(b)(2)(D) of the Act, 47 U.S.C. Sec. 503(b)(2)(D). We further note that the Report and Order "In the Matter of the Commission's Forfeiture Policy Statement and Amendment of Section 1.80 of the Rules to Incorporate the Forfeiture Guidelines," 12 FCC Rcd 17087 (July 28, 1997) ("Forfeiture Policy Statement"), provides for a forfeiture of $10,000 as the base amount for a violation of the public inspection file rule. In the instant case, you violated the rule by either failing to maintain a public inspection file, or by maintaining it in a deficient manner, for a substantial period of time. Although our records indicate that the station has maintained an unblemished past enforcement record, we believe that these factors nevertheless warrant the imposition of a monetary forfeiture. See, e.g., KLDT-TV 55, Inc., supra, 10 FCC Rcd at 3200 (1995), citing Southern Arkansas Radio Co., 6 FCC Rcd 5130 (MMB 1991) (monetary forfeiture appropriate where, as here, serious public file deficiencies occur). Therefore, we believe that imposition of the base forfeiture amount for this apparent violation is warranted. We note that the Forfeiture Policy Statement, supra, does not enumerate a base forfeiture amount for a "willful material omission." Further, there are no cases which are closely analogous to the situation here. Under these circumstances, the forefeiture must be assessed taking into account the relevant statutory factors under Section 503(b)(2) of the Act, as noted above. Based on our assessment of these factors, we conclude that your apparent violation of Section 73.1015 of the Commission's Rules warrants a separate monetary forfeiture in the amount of $5,000. In regard to this forfeiture proceeding, you are afforded a period of thirty (30) days from the date of this letter "to show, in writing, why a forfeiture penalty should not be imposed or should be reduced, or to pay the forfeiture. Any showing as to why the forfeiture should not be imposed or should be reduced should include a detailed factual statement and such documentation and affidavits as may be pertinent." 47 C.F.R. Section 1.80(f)(3). Other relevant provisions of Section 1.80 are summarized in the attachment to this letter. FEDERAL COMMUNICATIONS COMMISSION Roy J. Stewart Chief, Mass Media Bureau cc: H. Russell, III G. LaVerne Brooks Howard A. Topel, Esq. Theodore D. Kramer, Esq.