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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In re Application of ) ) VALLEY PUBLIC TELEVISION, INC. ) File No. BRET-930729KL ) For Renewal of License for ) Station KVPT(TV), ) Fresno, California ) MEMORANDUM OPINION AND ORDER AND FORFEITURE ORDER Adopted: December 15, 1997; Released: January 9, 1998 By the Commission: Commissioner Furchtgott-Roth abstaining. I. INTRODUCTION 1. The Commission has before it for consideration: (i) its decision in In re Application of Valley Public Television, Inc. for Renewal of License of Station KVPT(TV), Fresno, California, 11 FCC Rcd 8953 (1996) ("MO&O"), granting the license renewal application of Station KVPT(TV) subject to reporting conditions and a Notice of Apparent Liability for Forfeiture ("NAL") in the amount of $9,000; and (ii) a pleading styled "Petition for Reconsideration" filed by Valley Public Television, Inc. ("Valley"), licensee of Station KVPT(TV). In its pleading, Valley requests that we rescind or reduce the forfeiture proposed in the MO&O. For the reasons that follow, we find the arguments in support of Valley's request to be unpersuasive. Therefore, we deny Valley's request and impose a forfeiture in the amount of $9,000. II. BACKGROUND/PLEADING 2. In the MO&O, the Commission reviewed the Equal Employment Opportunity ("EEO") program of the licensee of Station KVPT(TV) and found that no substantial and material question of fact existed to warrant a hearing. In addition, we found no evidence that the licensee had engaged in employment discrimination. We determined, however, that the licensee's EEO efforts during the license term were deficient because minorities were absent from a significant number (54.5%) of the station's applicant pools. Further, the licensee failed to maintain applicant and interview pool information and, consequently, to engage in meaningful self-assessment of its EEO program, in violation of the Commission's EEO Rule, 47 C.F.R.  73.2080. Accordingly, the Commission granted the station's license renewal application, subject to reporting conditions and a Notice of Apparent Liability for forfeiture in the amount of $9,000. 3. In support of its request for rescission or reduction of forfeiture, Valley submits the following arguments. First, Valley asserts that a $9,000 forfeiture would impose a "tremendous hardship" on the station's operations and the ability of the station to provide television programming and local productions to its viewership. Second, Valley argues that the reporting conditions and fine were imposed based on an issue -- i.e., the station's self-assessment efforts -- to which it was not given an opportunity to respond. Third, Valley argues that it was "unfair" for the Commission to use In re Application of Tri-Valley Broadcasters, Inc. for Renewal of License of Station KKIQ-FM, Livermore, California, 11 FCC Rcd 4719 (1996) ("Livermore"), as precedent, given that the case was still pending on reconsideration at the time the Commission released its decision in the MO&O. Fourth, Valley contends that the Commission should rescind the forfeiture in this case because the financial circumstances of noncommercial educational television stations, such as KVPT(TV), are analogous to those cases in which the Commission rescinded a forfeiture because the station had filed for bankruptcy. We discuss below each of these issues in turn. III. DISCUSSION 4. Once a Notice of Apparent Liability for forfeiture has been issued, the respondent must show in writing why a forfeiture penalty should not be imposed, why it should be reduced or, in the alternative, must pay the forfeiture. Any showing by the respondent must include a detailed factual statement and such documentation and affidavits as may be pertinent. 47 C.F.R.  1.80(f)(3). 5. In support of its request for rescission or reduction of forfeiture, Valley first contends that a $9,000 forfeiture would impose a "tremendous hardship" on the station's operations and the ability of the station to provide television programming and local productions to its viewership. Valley states that it is a non-profit corporation and derives its operating revenue from public contributions and grants from the Corporation for Public Broadcasting. Valley asserts that it has suffered operational losses for the past two years and, thus, has found it necessary to operate on a "tight budget." It argues that the proposed forfeiture will impact not only local program production costs but also its ability to pay for a new transmitter and to fill certain staff positions. In support of its claim of financial hardship, Valley provided balance sheets; statements of revenues, expenses, and changes in fund balance; and statements of cash flows for the fiscal years ending June 30, 1994 and June 30, 1995. It also provided an accounting firm statement predicting that, based on the station's financial records for the fiscal year ending June 30, 1996, the station was expected to have an operating deficit of approximately $60,000 before deducting depreciation of about $180,000. Valley, however, did not provide financial statements to substantiate these figures. 6. Based on our evaluation of the financial data submitted by Valley, we conclude that Valley has the ability to pay the forfeiture amount of $9,000. Valley's financial statements show that it had excess revenues over expenses for the fiscal year ending June 30, 1995. Further, Valley's fund balance and cash flow analysis for the fiscal year ending in 1995 reflect more than sufficient funds from which to pay the $9,000 forfeiture. Although Valley alleged that it would experience an operating deficit for fiscal year ending June 30, 1996, it failed to furnish financial data to support that claim. Moreover, we have held that if gross revenues are sufficiently great (as we find in this case), the mere fact that a business is operating at a loss does not by itself mean that it cannot afford to pay a forfeiture. PJB Communications of Virginia, Inc., 7 FCC Rcd 2088, 2089 (1992). In addition, Valley argues that payment of the forfeiture "could . . . impact" local productions and its ability to provide additional programming, hire staff, and purchase new equipment. We find this argument unpersuasive because it is not supported by the evidence. Valley's financial data does not demonstrate that a $9,000 forfeiture would threaten continued provision of service to the public. Id. 7. Second, Valley contends that the Commission's decision to impose reporting conditions and a forfeiture was based, in part, on the station's self-assessment efforts, an issue which Valley complains it did not have an opportunity to address. Valley asserts that the "Bilingual letter" sent by Commission staff did not inquire as to what the station had done with respect to self-assessment and, therefore, Valley did not direct its response to that issue. It maintains that, despite the absence of a "paper trail," it had adequate records from which to conduct adequate self-assessment. Further, it asserts that its efforts in this regard are evidenced by its success in hiring several minorities. 8. It is not the Commission's responsibility to request specific information from the licensee regarding self-assessment of its EEO program. Tri-Valley Broadcasters, Inc., 12 FCC Rcd 9938, 9942- 43 (1997) ("Tri-Valley"). Instead, evidence of self-assessment should be reflected in the specific recruitment information requested in the standard inquiry letter sent, where (as here) our initial review of a licensee's EEO record raises questions as to a licensee's EEO efforts. Id. The staff letter to KVPT(TV) requested, in addition to specifically enumerated data, "any additional information" that would be helpful to an evaluation of the licensee's EEO efforts. Furthermore, Section VIII of the Form 396 allows licensees to provide additional information to allow the Commission to more completely evaluate the licensee's efforts at renewal. This information may include, but need not be limited to, training programs, recruitment difficulties identified through self-assessment, and prospective program efforts. Thus, contrary to Valley's assertion, it fully had an opportunity to demonstrate its compliance with our EEO Rule and policies, including its compliance with the Rule's self-assessment requirement. However, as stated in the MO&O, inadequate self-assessment was reflected in the licensee's submissions to the Commission. See MO&O, 11 FCC Rcd at 8955, 8957-58. The record showed that the licensee failed to maintain data reflecting the number, race or ethnic origin, gender, and referral source of its applicants and interviewees. The licensee could provide only the race, gender, and referral source of its hires. In addition, the licensee could document the presence of minorities in only five of its 11 applicant pools. Nonetheless, Valley now claims to have attracted minority applicants "for every opening." However, this is not pertinent to the finding in the MO&O that Valley failed to maintain adequate records to permit meaningful self-assessment. Even with this new claim concerning its applicant pools, which Valley had ample opportunity to present in the renewal proceeding, Valley still cannot provide the number, sex, and race or ethnic origin of these minority applicants it allegedly received and of those candidates who were interviewed. Hence, we are not persuaded that the submission of this untimely information should impact our original decision. Indeed, if the licensee did not discover this new information until after our decision on its renewal application, this would also indicate that the licensee failed to self-assess adequately its EEO efforts throughout the term of the license as required by our EEO Rule. 9. Valley further contends that it conducted self-assessment on a "regular basis," and that its failure to maintain recruitment records did not impede self-assessment of its EEO program. We find this argument to be unpersuasive. Without recruitment records regarding applicants, the licensee could not have fully evaluated the success of its outreach efforts, including the effectiveness of the recruitment sources it contacted to refer female and minority applicants. See Tri-Valley, 12 FCC Rcd at 9942-43; Emmis FM Broadcasting Corporation of Boston, 11 FCC Rcd 8541, 8543-44 (1996) ("adequate self- assessment is ordinarily not possible absent record retention"); NAB Report and Order, 4 FCC Rcd 1715, 1716 (1989) ("If a licensee cannot determine the race and sex of the persons it interviewed, a question may be raised whether the licensee had sufficient information to analyze the effectiveness of its recruitment efforts, critical information for renewal purposes."). Finally, the fact that Valley hired several minorities during the review period does not insulate its program from scrutiny because our focus is not on the number of minority hires, but the licensee's recruitment efforts and its efforts to conduct meaningful self-assessment of its program. See Historic Hudson Valley Radio, Inc., 11 FCC Rcd 7391, 7394 (1996). 10. In its Opposition (at note 8), Valley points out that Stations KROW and KNEV-FM, Reno, Nevada in Price Broadcasting Co., Memorandum Opinion and Order (MMB May 18, 1992) ("Price Broadcasting"), received only reporting conditions and no forfeiture, yet the licensee of those stations also did not maintain complete recruitment information for purposes of self-assessment. We find, however, that, unlike the instant case, the facts and circumstances presented in Price Broadcasting did not warrant imposition of a forfeiture on Stations KROW and KNEV-FM. We note that the deficiencies in KVPT(TV)'s record are magnified by the fact that the station is located in an area with a minority labor force that is more than four times as large as the minority labor force of the area where Stations KROW and KNEV-FM are located. The Reno, Nevada Metropolitan Statistical Area ("MSA"), in which Stations KROW and KNEV-FM are located, has a labor force that is 10.2% minority. The Fresno, California MSA, in which Station KVPT(TV) is located, has a labor force that is 41.9% minority. We can reasonably expect that a station in a market with a larger minority labor force will attract more minority applicants if recruitment, including self-assessment, is properly done. Because of its lack of records, we are unable to determine whether Station KVPT(TV) has met this expectation. Moreover, we find that the facts of Livermore, the precedent we cited, are very similar to those in the instant case. 11. Valley suggests, in its Opposition (at note 11), that the Commission should impose only reporting conditions on Station KVPT(TV) as it did in "a similar case." [Citing The Board of Trustees, Coast Community College District, 11 FCC Rcd 5303 (1996) ("Coast Community College").] We disagree that the case cited by Valley, in which reporting conditions were imposed on Station KOCE-TV, is factually similar to the instant case to justify the same result. Station KOCE-TV maintained more extensive recruitment records and had a more productive EEO program than did KVPT(TV). Station KOCE-TV used over 300 recruitment sources, including 37 minority-oriented sources, while KVPT(TV) used only six minority-oriented sources. Station KOCE-TV attracted a total of 150 minority applicants for 23 hiring opportunities, while KVPT(TV) attracted only 14 minority applicants for 11 hiring opportunities. In addition, KOCE-TV had minority applicants in 76.2% (18 of 21) of its applicant pools, while Station KVPT(TV) could document the presence of minority applicants in only 45.5% (five of 11) of its applicant pools. 12. Third, Valley argues that it was "unfair" for the Commission to use Livermore as precedent, given that the case was still pending on reconsideration at the time the Commission released its decision in the MO&O. We find this argument to be without merit. Commission decisions remain in effect unless the Commission has stayed their effectiveness. 47 C.F.R.  1.106(n). See, e.g., In re Citizens Committee for Expansion of Commercial Television to the State of Delaware, 71 FCC 2d 38 (1979). The Commission's decision in Livermore was not stayed during the pendency of the petition for reconsideration. Further, because a decision on the petition for reconsideration in Livermore has been reached, Valley's argument is now moot. See Tri-Valley, supra (Commission found that arguments in support of Tri-Valley's petition for partial reconsideration were without merit. Accordingly, Tri-Valley's request for rescission or reduction of forfeiture was denied and a Notice of Forfeiture was issued in the amount of $10,000). 13. Fourth, Valley contends that a $9,000 forfeiture is particularly inappropriate in this case because the fine "constitutes a taking from the contributors to Valley for no public interest purpose insofar as the operation of Station KVPT(TV) is concerned." Valley points out that the Commission has reduced forfeitures to a nominal amount or rescinded them because the rule violator had sought bankruptcy protection. [Citing Dennis Elam, Trustee for Bakcor Broadcasting, Inc., Debtor, 11 FCC Rcd 1137 (1996) (proposed forfeiture rescinded); Diamond Broadcasting of California, Inc., 11 FCC Rcd 7388 (1996) ("Diamond Broadcasting") (same); and Transnational Network, Inc., 92 FCC 2d 1494 (1992) (forfeiture reduced from $8,000 to $100)]. In those cases, the Commission reasoned that to require payment of a forfeiture by a bankrupt licensee would punish innocent creditors and serve no public interest purpose. See, e.g., Diamond Broadcasting, 11 FCC Rcd at 7389-90. Valley argues that "innocent creditors are no different from innocent contributors." It states that it "needs every dollar for use in its operations in the public interest and the payment of a $9,000 fine would benefit no one and only punish the public at large." 14. Neither the Communications Act nor the Commission's Rules exempt noncommercial educational television stations from payment of a forfeiture for violation of (or from compliance with) the Commission's EEO Rule and policies. See 47 C.F.R.  73.2080(a) ("Equal opportunity in employment shall be afforded by all licensees or permittees of commercially or noncommercially operated AM, FM, TV, or international broadcast stations . . . ."); Streamlining Broadcast EEO Rule and Policies, 11 FCC Rcd 5154, 5155 (1996) ("We emphasize that compliance with our EEO Rule and policies must be observed by all broadcast licensees."); The Trustees of the University of Pennsylvania Radio Station WXPN(FM), Philadelphia, Pennsylvania, 69 FCC 2d 1394, 1399 (1978) ("Given the nature of our licensing scheme, all licensees -- large and small, commercial or noncommercial -- are considered public trustees. As such, the . . . principles of accountability and responsibility apply with equal vigor to all Commission licensees. We emphasize that while `[t]he noncommercial broadcast service by definition differs markedly from the commercial service, . . . it is a mistake to regard the noncommercial service as something apart from, and outside of, the basic structure of the Communications Act and Commission policies.'") [quoting Ascertainment of Community Problems by Educational Broadcast Applicants, 42 FCC 2d 690, 694-95 (1973)]. We note that forfeitures have been imposed on other noncommercial educational television stations. E.g., Educational Broadcasting Foundation, 10 FCC Rcd 3974 (1995) (reporting conditions and a $15,000 forfeiture imposed on Station WLAE-TV, New Orleans, Louisiana for EEO violations). Furthermore, we are unpersuaded by Valley's argument that a noncommercial educational television station's financial situation is similar to a rule violator who has filed for bankruptcy. Unlike a rule violator who has filed for bankruptcy, Valley is not in a financially distressed situation. Further, the public contributions that Valley receives are strictly voluntary; unlike creditors, contributors have no legal expectation of monetary repayment. Moreover, because Valley has the ability to pay the $9,000 forfeiture, the forfeiture will not have any significant effect on Valley's ability to serve the public interest. 15. Based on the foregoing, we deny Valley's request for rescission or reduction of the forfeiture amount specified in the NAL and issue a Forfeiture Order in the amount of $9,000. IV. ORDERING CLAUSES 16. ACCORDINGLY, IT IS ORDERED that Valley Public Television, Inc.'s request in its pleading styled "Petition for Reconsideration" is DENIED. 17. IT IS FURTHER ORDERED, pursuant to Section 503(b) of the Communications Act of 1934, as amended, 47 U.S.C.  503(b), that Valley Public Television, Inc., licensee of Station KVPT(TV), FORFEIT to the United States the sum of nine thousand dollars ($9,000) for violations of Section 73.2080 of the Commission's Rules, 47 C.F.R.  73.2080. In regard to this forfeiture proceeding, the licensee may take appropriate action as set forth in Section 1.80 of the Commission's Rules, 47 C.F.R.  1.80, and Section 504(a) of the Communications Act, as amended, 47 U.S.C.  504(a), as summarized in the attachment to this Memorandum Opinion and Order and Forfeiture Order. 18. IT IS FURTHER ORDERED that copies of this Memorandum Opinion and Order and Forfeiture Order be sent to Valley Public Television, Inc. by Certified Mail -- Return Receipt Requested. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary