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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 Padre Serra Communications, Inc. Licensee, Station KRQK(FM), Lompoc, CA 296 H Street Third Floor Chula Vista, CA 91910 In re: Station KRQK(FM), Lompoc, 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 transferred control of the station without Commission authorization; 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 further raised the question of whether, due to the serious and repeated nature of these rule violations, the recent grant of your license renewal application for this station should be rescinded, and the application should be designated for evidentiary hearing.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 application of Station KRQK(FM), Lompoc, 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 apparently violated the pertinent Commission rules by neglecting to obtain Commission approval of a pro forma transfer of licensee control during a bankruptcy proceeding, and by failing to properly maintain the station's public inspection file. Unauthorized Transfer 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. It is well settled that "control," as used in the Act and pertinent Commission rules, encompasses all forms of control, actual or legal, direct or indirect, negative or affirmative, and that passage of de facto as well as de jure control demands the prior consent of the Commission. See, e.g., Stereo Broadcasters, Inc., 55 FCC 2d 819, 821 (1975), citing WWIZ, Inc., 36 FCC 561, 2 RR 2d 169 (1964). Thus, even when a transfer of control results in nothing more than a change in the form of the entity holding the license, and the same individual continues to control the license, the transfer must receive prior approval from the Commission. See Section 73.3540(f). In the case of an involuntary transfer of control, consent must be obtained within thirty days of the occurrence of the event or legal disability triggering that transfer. See Section 73.3541(b). In its objection, COBE alleges that your company, Padre Serra Communications, Inc. ("Padre"), entered into bankruptcy in May 1997, and that it did not file the required pro forma application for assignment of the station's license. In your response, you acknowledge that the company entered debtor-in-possession status in May 1997, and emerged from that status in June 1998, when its Chapter 11 bankruptcy proceedings concluded. Because you were unaware of the requirement to seek Commission authorization for this status, you did not file an application. You contend that in situations where, as here, licensees entered debtor-in- possession status, and then voluntarily dismissed their bankruptcy proceedings without reorganization, but neglected to file the appropriate pro forma application, the Commission has "excused such transfers without sanction." We find that an apparent unauthorized transfer of de jure control of the subject station occurred in this case, and that you failed to file the pro forma applications required by Section 310(d) of the Act and Section 73.3541(b) of the Commission's Rules. Moreover, contrary to your allegations, we have imposed monetary forfeitures for similar rule violations. See, e.g., Liability of Pacific Telestations, Inc., DA 98-1513 (MMB July 30, 1998). In this case, the first apparent rule violation occurred more than one year ago, in June 1997, when you failed to file the first pro forma assignment application within thirty days after entering bankruptcy. However, we note that where there has been an intervening license renewal and the violation occurred more than one year prior to issuance of the notice of apparent liability, as here, Section 503(b)(6) of the Act prohibits the imposition of a forfeiture. See, e.g., Liability of Evergreen Media Corporation, 6 FCC Rcd 5950 (MMB 1991). Notwithstanding the foregoing, this violation continued until June 1998, during the current license term, when dismissal of the bankruptcy proceeding removed the condition you were required to report. Accordingly, we find that you apparently violated Section 73.3541 of the Commission's Rules, and that, for the reasons discussed, infra, this failure warrants the imposition of an appropriate monetary sanction for the period of the violation that falls within the license term. KRQK(FM) 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 by denying a member of the public, COBE's investigator, immediate access to it. COBE also alleges that you falsely certified compliance with the rule in your current license renewal application. During his December 16, 1997 visit, COBE's investigator claims that station personnel denied him acces to the station's public file, and required him to wait one week to obtain documents he sought. Thus, COBE argues that the station violated the public file rule by refusing to allow its investigator immediate access to the file. In response, you deny that the station intended to refuse COBE's investigator access to the file, explaining that the station's manager, Mr. Serrano, merely attempted to confirm with Mr. Bonilla that inspection of the documents requested was permissible before allowing COBE's investigator to proceed. You further represent that Mr. Serrano misunderstood the nature of the research request, and was under the impression that the investigator sought the immediate production of copies of numerous documents contained in the file. On this point, you were advised by the station's counsel that Section 73.3526(f) of the Commission's Rules provides broadcast licensees one week to furnish copies of public file documents to those requesting them. With regard to the public file's contents, you admit that, at the time of the investigator's initial visit, it lacked important material, which you did not discover until subsequent review. As COBE observes, however, you had earlier represented in the July 30, 1997, license renewal certification that the station's public file was complete. On this issue, 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 admittedly was incorrect when made. Nevertheless, you contend that the certification was made in good faith, and without any intent to deceive the Commission. Specifically, you explain that, at the time the renewal certification was made, you assumed mistakenly 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. However, in connection with your overall review of the Bonilla stations' public files, you discovered that many elements of those public files were deficient for a period of several years. You contend that the lapses at Station KRQK(FM) 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, new procedures were instituted and that Station KRQK(FM)'s public file was reconstructed during the period February through March 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, you admit that the station's management personnel denied COBE's investigator immediate access to the public file on December 16, 1997. Even accepting, as true, your explanation that this denial resulted from your management personnel's ignorance of the Commission's rule requirements, and confusion as to the nature of the specific request made by the investigator, we do not find these factors mitigating. If we routinely condoned the practices you describe, we would render an important aspect of the public inspection process meaningless, by affording unscrupulous licensees advance notice so that they might reconstruct deficient public files and destroy evidence of existing rule violations without detection. Consequently, for these reasons, we are not persuaded by your explanation concerning this issue. Moreover, your reliance on employees or agents to maintain and to ensure the completeness of the public file is not an exculpating or mitigating factor. Where 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 efficient administration of the Commission's license renewal process. The Commission's analysis of a licensee's renewal application is totally 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. Although the record suggests that a separate monetary sanction would be appropriate for this apparent rule violation, we note that where there has been an intervening license renewal and the violation occurred more than one year prior to issuance of the notice of apparent liability, as here, Section 503(b)(6) of the Act prohibits the imposition of a forfeiture. See, e.g., Liability of Evergreen Media Corporation, supra. Consequently, we will admonish you for this apparent rule violation, and caution you to take greater care with regard to future filings of this type. Sanction. For the reasons set forth above, we find that a monetary forfeiture is warranted for the apparent violation of Sections 73.3541 and 73.3526 of the Commission's Rules. Accordingly, pursuant to Section 503(b) of the Act, you, Padre Serra Communications, Inc., licensee of the above-captioned radio station, are hereby advised of your apparent liability for a forfeiture of Eleven Thousand Dollars ($11,000.00) for your apparent willful, repeated violations of Sections 73.3541 and 73.3526 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 forfeitures of $1,000 and $10,000, respectively, as the base amounts for engaging in an unauthorized pro forma transfer of control and for violating the public inspection file rule. In the instant case, you apparently violated Section 73.3541 of the Commission's Rules from December 19, 1997 until June 1998. You also apparently violated Section 73.3526 of the Commission's Rules by failing to include required materials for a period of time that, while indeterminate, appears to have begun before the station's license was renewed on December 19, 1997, and continued through early 1998. Although our records indicate that the station has maintained an unblemished past enforcement record, we believe that these factors nevertheless warrant monetary forfeitures. 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 omissions occur). Therefore, we believe that imposition of the base forfeiture amount for these apparent violations is warranted. In addition, we hereby ADMONISH you for your apparent violation of Section 73.1015 of the Commission's Rules for falsely certifying the completeness of the station's public file in its license renewal application filed July 30, 1997, for the reasons discussed above. You are further cautioned to take greater care with regard to future filings of these types. 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.