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A. a.(1)(a) i) a)DocumentgPleadingHeader for Numbered Pleading PaperE!n    X X` hp x (#%'0*,.8135@8:><q*"xxxxWWxxxWWkkxxx J2J>8 &>>,,,,,,,,`` 8888,,,,,,,,,,zz&&>>>r",tB^ f ^Ydddddddddd,,dddddSSSSrrSr,NdSdSdSdSdSfTdTlTTrrrrrlTrrrddddW,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNdiiddSS,,,,doi",,,,,,,,,,,,,,,V'dd,,,,,,d,,,d,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,ddddrdSddddd,,8VnDVVbbJDDPD\> J2J>8 &>>,,,,,,,,`` 8888,,,,,,,,,,zz&&>>>r Y4  -Og Y4#Xw PE37|XP#W  FEDERAL COMMUNICATIONS COMMISSION ăxxX FCC 98342   yxdddy-  #Xw P7|XP#` `  hhC#Xw P7|XP#qBefore the  Y4 V FEDERAL COMMUNICATIONS COMMISSION ă BV6Washington, D.C. 20554  Y4In re Applications of hhCq)ppMM Docket No. 90638 ` `  hhCq)  Yw4HEIDI DAMSKY hhCq)ppFile No. BPH880816MW ` `  hhCq)  YI4WEDA, LTD. hhCq)ppFile No. BPH880816NR ` `  hhCq)  Y 4HOMEWOOD PARTNERS, INC.hhCq)ppFile No. BPH880816NU ` `  hhCq)  Y 4  +For Construction Permit for hhCq)pp  *xxX   Y 4an FM Station on Channel 247AhhCqpp)  Y 4Homewood, AlabamahhCq)  Y4V^ ORDER ă  Yd4` ` Adopted: December 23, 1998 ;ppReleased: January 6, 1999 %& F  By the Commission:  "  #Xx P7|XP#1. This Order denies a Further Petition to Enlarge Issues and to Remand For Further  x8Hearing Proceedings filed July 29, 1998 by Heidi Damsky, which seeks a hearing to determine  Y4 xhwhether Homewood Radio Co., LLC ("Homewood Radio") knowingly made an ex parte  xpresentation to a member of the FCC staff and whether Homewood Radio is basically qualified  xto be a Commission licensee. We also deny Damsky's Further Petition for Reconsideration filed  x/September 21, 1998, and dismiss her Emergency Motion for Stay, Pendente Lite filed September 14, 1998. .  YP4 "2. By Memorandum Opinion and Order, the Commission approved a settlement  xuagreement between Homewood Partners, Inc. ("HPI"") and WEDA, Ltd. ("WEDA"), and  xaffirmed an initial decision which found that the third applicant in this proceeding, Damsky, was  Y 4 xfinancially disqualified. Heidi Damsky, 12 FCC Rcd 11688 (1998). The settlement provided  xthat HPI and WEDA would merge to form a new entity, Homewood Radio, in which each would  xhave a fifty percent interest. WEDA's application would be amended to substitute Homewood  Y 4 xRadio and HPI's application would be dismissed. In a subsequent Order, FCC 98202, released  xAugust 25, 1998, the Commission denied Damsky's first Petition for Reconsideration, filed May  Y"422, 1998, and dismissed an earlier Emergency Motion for Stay, filed June 1, 1998." Y%4 xЍ#Xw P7|XP#On August 3, 1998 the Mass Media Bureau issued a construction permit to Homewood  x8Radio. Thereafter, on August 13, 1998, Damsky filed an Application for Review, which seeks  xto set aside the Bureau's action. Damsky requests "rescission of the construction permit until"&0*n(n(&"  xthe Commission has acted upon Damsky's pending [May 22, 1998] Petition for Reconsideration  xand [June 1, 1998] Emergency Motion for Stay." In view of the Commission's August 25, 1998  Yb4Order, FCC 98202, acting on these matters, Damsky's Application for Review is now moot.""K0*n(n(rr "Ԍ "~ԙ3. In support of her Further Petition to Enlarge Issues, Damsky relies on a July 14, 1998  xletter from David H. Solomon, Deputy General Counsel, to all counsel in this case, which is  xaccompanied by a statement by John I. Riffer, Assistant General Counsel, concerning an oral  Y4 xpresentation that occurred in this proceeding.7K Y4 xЍ#Xw P7|XP#Pursuant to 47 C.F.R.  1.1212(b), Commission personnel who receive ex parte  xpresentations are required to prepare a statement and forward it to the Office of General Counsel.7 According to Damsky, John F. Garziglia and  xStephen Diaz Gavin, counsel for WEDA and Homewood Partners, respectively, met with Riffer  xon July 8, 1998 and falsely informed him that the matter they wished to discuss was not covered  Yv4 xhby the ex parte rules. Damsky asserts that counsel then sought to persuade Riffer to tell the  x_Mass Media Bureau to issue a construction permit to Homewood Radio. Noting that she had  xfiled a motion to stay the proceeding pending Commission action on her Petition for  Y14 xReconsideration, see  2, supra, Damsky argues that the ex parte presentation was deeply  xprejudicial to Damsky's interests. Damsky asserts that her counsel was not notified of the  xmeeting or given an opportunity to attend. Accordingly, Damsky concludes that the facts adversely impact Homewood Radio's qualifications to be a Commission licensee.  "4. In opposition to Damsky's request, Homewood Radio argues that Damsky has not  xdemonstrated a substantial likelihood of proving disqualifying misconduct so as to justify  xreopening the record for further hearing. Specifically, Homewood Radio contends that it did  Yy4 xnot make an ex parte presentation at the July 8 meeting. It states that it requested the meeting  xbecause it was concerned that the Bureau had not issued a construction permit for the station,  xeven though the Commission had granted its application two months earlier, and that the Bureau  x/might not act on its application for minor modification of the permit for the Homewood station  xthat it had filed June 2, 1998. Homewood Radio states that its sole purpose was to seek  xguidance on the issuance of the permit and action on the modification application. It further  xmaintains that there was no discussion of the merits or outcome of Damsky's Petition for  xReconsideration or Motion for Stay and that counsel informed Riffer that it had no intention of  Y4 x/raising matters prohibited by the ex parte rules. Homewood Radio asserts that counsel explained  x}Homewood Radio's view that issuance of a construction permit following grant of an application,  xas opposed to the grant itself, is a ministerial act, and counsel inquired as to whether this point  Y|4 xcould be clarified with the Bureau. Even assuming arguendo that the meeting constituted an ex  Ye4 xyparte contact, Homewood Radio states, Damsky has not shown a basis for disqualification. In  x8this regard, Homewood Radio attaches declarations from Ouida J. Fritschi, general partner of  xRWEDA, and Willie R. Huff, president of Homewood Partners, who state that neither they nor"70*&&rr"  Y4 xany other principals of their applicants knew of the July 8 meeting until after it occurred.6 Yy4 M   Ѝ#Xx P7|XP#Attorneys acting on behalf of their FCC clients must adhere to our ex parte rules.  Yb4See Rainbow Broadcasting Co., FCC 98185, released August 5, 1998,  18.6 In these circumstances, Homewood Radio concludes, Damsky's Further Petition should be denied.  "5. Damsky has not satisfied the traditional test for reopening a hearing record by showing  Y4 xthat the new evidence, if true, would have a substantial decisional effect. See The NewsSun  Y4 xBroadcasting Co., 27 FCC 2d 61 (1971); KayeSmith Enterprises, 98 FCC 2d 670 (Rev. Bd.  Yv4 xN1984), rev. denied, FCC 85192, released April 19, 1985. Here, we find that the meeting in  Y_4 xquestion, even though a prohibited ex parte contact, does not raise a substantial and material question as to Homewood Radio's qualifications. 6. In pertinent part, Riffer's July 9, 1998 memorandum states:  XOn July 8, 1998 at approximately 3:00 p.m., . . . counsel for WEDA . . . and  Homewood Partners . . . came to my office, saying that they were aware of the  ex parte restrictions applicable to this hearing case and that they wanted to discuss  Ba matter that was not covered by the ex parte rules. Mr. Garziglia proceeded to  tell me that he had talked to Mass Media Bureau staff and that the Bureau had  5said that it would not, in light of the motion for stay, issue a construction permit  in the absence of clearance from the Office of General Counsel. Mr. Garziglia  then said to me that he believed that there should be no impediment to the  >Bureau's issuance of a construction permit merely because of the filing of the  motion for stay. I responded that I understood the question being raised, that I  would check with others, and that I would get back to them with our response. . . . Our conversation concerning this matter lasted approximately 510 minutes.  @V***  XOn reflection, I believe that the question concerning the Bureau's issuance of a  construction permit raised during my conversation with counsel is so closely  irelated to the relief requested by the motion, which seeks to stay the effectiveness  of the Commission's Memorandum Opinion and Order, that this conversation should be treated as an ex parte conversation.   "7. The foregoing recitation is fully consistent with Homewood Radio's contention that  x_counsel for WEDA and Homewood Partners did not attempt to discuss directly the merits or  xoutcome of Damsky's Petition for Reconsideration or Emergency Motion for Stay in their July  x8 meeting with Riffer. Counsel expressed the opinion at the meeting that the motion for stay  xEdid not pose a legal impediment to issuance of the construction permit and asked Riffer if this  xpoint could be clarified with the Bureau. Nevertheless, in spite of counsel's belief, and as  xdexplained in Riffer's statement, there was a close correlation between the question raised"!b0*&&rr"  xregarding the appropriateness of issuing the permit and the substance of the stay motion, which  Y4 xsought to stay the effectiveness of the underlying Memorandum Opinion and Order approving  Y4 xhthe settlement agreement pending action on Damsky's Petition for Reconsideration. See 47  xlC.F.R.  1.106(n) (Commission may stay effectiveness of its order pending decision on petition  xfor reconsideration). Had we granted a stay, there would have been no basis for issuance of the  Y4 x8permit. We believe this contact therefore constituted an ex parte presentation under 47 C.F.R.  x1.1202(a), whether or not counsel meant to violate the rules. The communication, however,  xwas not intended to influence our decision whether or not to grant the Petition for  x9Reconsideration, and indeed, would not be relevant to the merits of the Petition for  xRReconsideration. It is clear from the facts, including the sworn declarations from Homewood  x[Partners and WEDA, that none of their respective principals knew of or participated in the  xmeeting between counsel and Riffer. Furthermore, this episode is an isolated event in the course  xof a lengthy proceeding. In view of these circumstances, we find that Damsky has not raised  xa substantial and material question that disqualification is warranted. Accordingly, there is no  Y 4 xbasis for addition of the requested issue. See Rainbow Broadcasting Co., FCC 98185, released  Y 4 xAAugust 5, 1998 (even if counsel intended to violate ex parte rules, no disqualification where  Y4 xprincipals did not knowingly do so), notice of appeal filed, August 11, 1998; Pepper Schultz,  Yy4 x84 FCC Rcd 6393, 6403 (Rev. Bd. 1989) (and cases cited therein) (isolated ex parte contacts are  Yb4not disqualifying), rev. denied, 5 FCC Rcd 3273 (1990).  "8. In her Emergency Motion for Stay, Pendente Lite, Damsky requests that the  Y4 xCommission stay the effectiveness of the Order, FCC 98202, which denied reconsideration of  Y4 xthe Memorandum Opinion and Order approving the settlement agreement and disqualifying  xDamsky, until the United States Court of Appeals for the District of Columbia Circuit has acted  xon an appeal from these actions filed by Damsky on September 2, 1998. In opposition,  xHomewood Radio argues that Damsky has not satisfied the standards for obtaining a stay set  Y4 xforth in Virginia Petroleum Jobbers Ass'n v. FPC, 259 F.2d 921 (D.C. Cir. 1958). Although  xit appears that Damsky has not met the applicable stay requirements, we need not decide this  xpoint at this time because Damsky's request is rendered moot by her Further Petition for  xReconsideration, in which Damsky states that she will dismiss her court appeal because she is  YN4now seeking further reconsideration of the Commission's Order.  "9. In her Further Petition for Reconsideration, Damsky requests that the Commission set  Y 4 xaside its Order, declare that the winner of this proceeding will be selected by competitive  xbidding, and rule that Damsky is qualified to participate in the bidding. In support of her  Y4 xrequest, Damsky cites the Commission's First Report and Order, Implementation of Section  xA309(j) of the Communications Act Competitive Bidding for Commercial Broadcast and  Y!4 x Instructional Television Fixed Service Licenses, FCC 98194, released August 18, 1998,  Y"4 xpetitions for recon. pending, for the proposition that all pending comparative cases must be  xdecided by a system of competitive bidding. Specifically, Damsky relies on the language in   Yh$489 of the First Report and Order, as follows: "Q%0*&&rre#"Ԍ XAt the outset we clarify that, where the Commission has denied or dismissed an  Y4 iapplication and such denial or dismissal has become final (e.g., when an applicant   failed to seek further administrative or judicial review of that ruling), such an  entity is not entitled to participate in the auction. Among those remaining in the  rproceeding, we will permit all pending applicants to participate in the auction,  without regard to any unresolved hearing issues (or outstanding petitions to  enlarge) as to the basic qualifications of a particular applicant. We will do so  regardless of the number of remaining applicants or whether the adverse  resolution of outstanding basic qualifying issues would eliminate all but one  applicant. This serves the public interest by not delaying the selection of an  auction winner to resolve potentially irrelevant issues. It also comports with  Section 309(j)(5) of the Communications Act authorizing the prescription of  expedited procedures for the resolution of any issues pertaining to the winning  bidder's basic qualifications. It is more efficient to decide basic qualifying issues only against the winning applicant. (Footnote omitted).  " Y4 x+"Damsky asserts that the First Report and Order excludes from participation in future auctions  xonly those applicants whose denial or dismissal has become final and that Damsky does not fall  xin this category because her initial Petition for Reconsideration was pending when the  xCommission released its decision. Finally, although she continues to dispute her financial  Y44 xdisqualification in this proceeding, Damsky maintains that the First Report and Order also makes  x0clear that she will not be required to demonstrate her financial qualifications if she is the successful bidder.  "(10. In opposition, Homewood Radio argues that Damsky's Further Petition for  xReconsideration should be dismissed because it is unauthorized and repetitious. Furthermore,  xHomewood Radio contends that there are no unresolved questions remaining with regard to  xDamsky's financial qualifications and no more mutually exclusive applications that would require  xRan auction. Homewood Radio also asserts that it would be contrary to congressional intent to  xhhold an auction where none is necessary. Finally, Homewood Radio maintains that, if there  xwere an auction, and Damsky made the winning bid, there would be further delay because of the need to examine whether Damsky falsely certified her financial qualifications. " Y 4 ""11. We disagree with Damsky that the First Report and Order indicates that we must,  xor should, apply our new competitive bidding procedures to resolve this proceeding. As  Y4 xexplained in the First Report and Order, Section 3002(a)(3) of the Balanced Budget Act of 1997  xu("Balanced Budget Act"), Pub. L. No. 10533, 111 Stat. 251 (1997), added Section 309(l) to  xthe Communications Act of 1934. Section 309(l) authorizes the Commission to conduct  x<competitive bidding proceedings with respect to competing applications for construction permits  xfor new commercial broadcast stations that were filed before July 1, 1997. It is pursuant to this  Yh$4 x/authority that the First Report and Order adopted procedures for competitive bidding to resolve  xthese pending comparative licensing cases. Section 309(l) also provides, however, that, for a"Q%0*&&rre#"  x180day period, the Commission "shall waive any provisions of its regulations necessary" to  xpermit these applicants to enter into settlement agreements. Thus, the statute also provides a  x180day window for competing applicants who filed before July 1, 1997 to remove voluntarily  xthe conflict between their applications and encourages settlement through its waiver mandate.  xIn accordance with this congressional intent, the other applicants in this case, Homewood  xPartners and WEDA, reached a settlement within the statutory framework of 47 U.S.C.  309(l).  Yv4 xThe Commission's Memorandum Opinion and Order approving the settlement therefore obviates  xthe need for an auction to resolve this proceeding unless the court of appeals ultimately reverses Damsky's disqualification. As we explicitly stated therein (at  8):  XThus, the settlement here would avoid mutual exclusivity and the potential need  for competitive bidding to award the license, thereby falling squarely within the underlying purpose of the waiver provision.   "12. Where, as here, the Commission has, in the context of considering a settlement  xagreement filed pursuant to Section 309(l) of the Act, adversely adjudicated a pending applicant's  xbasic qualifications based on a review of the hearing record, it would serve no useful purpose  x+to set aside that adverse determination and proceed to an auction that includes the disqualified  xapplicant. Moreover, to do so would frustrate the intent of Congress as reflected in Section  x309(l). Congress manifested an intent to afford applicants that had filed and litigated their  xAapplications under the old comparative system the opportunity to have their cases resolved  xwithout recourse to competitive bidding. To conduct an auction that would not otherwise be  xnecessary and permit Damsky to participate would deny Homewood Partners and WEDA the  Y4 x+relief that Congress intended to provide. See First Report and Order,  73. Our statement in  Y4 x/ 89 of the First Report and Order upon which Damsky relies was not intended to apply to such  xJsituations but rather to situations where an auction would otherwise be held because no settlements were reached.  " 13. It is clear from the context of our discussion that our intention was not to proceed  Ye4 xto auctions where all qualifying applicants had settled. In the underlying Notice of Proposed  YN4Rulemaking, 12 FCC Rcd 22363, 22376  29 (1997), we stated:  5XWe also anticipate that many of the pending cases currently in hearing status, and  esome of the nonhearing cases, will be settled under the provisions of Section  309(l)(3). In the event that these cases are not settled, we believe it is appropriate to adopt special procedures to govern them.   Y!4 xUnder the topic heading entitled "Hearing Cases" in the Notice, we proposed preauction  xprocedures "if no settlement has been filed within the 180 day period" and asked for comments  Y#4 xdon procedures to be utilized if a proposed settlement is denied. Id. at 22376  30. The  Yh$4 xCommission's discussion in the First Report and Order under the section "General Rules and  x"Procedures for Competitive Bidding" contains a subsection entitled "Pending Comparative Initial"Q%0*&&rre#"  xdLicensing Cases Subject to Section 309(l)." Thereunder there is a topic heading (at  71)  xentitled "Settlements," and a topic heading (at  78) entitled "White Knight Settlement  xdAgreements." In contrast to these discussions of settlement issues,  89 is contained in a  xdiscussion under the topic heading (at  88) entitled "Special Auction Procedures for Frozen  xNHearing Applicants," which continues through  95. The latter paragraph specifically refers  Y4 x/back to  30 of the Notice and prescribes the procedures to be followed if a settlement is denied  xor withdrawn prior to the deadline for shortform applications that applicants desiring to  xEparticipate in the auction must submit. (In these circumstnces, the Commission will follow the  xsame procedures outlined for cases in which no settlement is filed during the 180day waiver  xperiod.) Similarly under the topic heading (at  80) entitled "Special Auction Procedures for  xhFrozen NonHearing Cases," which immediately precedes the discussion of procedures for  xWfrozen hearing cases, we expressly referred to cases that "did not settle under the special  x provisions of Section 309(l)(3)." In sum, it is evident that  89 was not addressing cases in  xwhich settlements were filed within the 180day period and thereafter approved. We therefore deny Damsky's Further Petition for Reconsideration.  "  14. Because we have resolved this proceeding without the need for competitive bidding,  xwe do not address what further showing Damsky would be required to make regarding her  Yb4 xfinancial certification if she were the winning bidder. See First Report and Order,  99  x(Commission will not adjudicate financial qualifications of winning bidder, but will consider  xunresolved issue of whether winner falsely certified financial qualifications). We also deny  xdDamsky's Motion to Supplement Record, filed October 26, 1998, which requests that a  Y4 xContingent Petition for Reconsideration filed by Homewood Radio with respect to the First  Y4 x<Report and Order and an Opposition thereto filed by Damsky be made a part of the record and  x4taken into account in this proceeding. These pleadings are not pertinent to, and would not materially assist, our resolution of this proceeding.  "h15. ACCORDINGLY, IT IS ORDERED, That the Further Petition to Enlarge Issues and  xto Remand For Further Hearing Proceedings filed July 29, 1998, the Further Petition for  xReconsideration filed September 21, 1998, and the Motion to Supplement Record filed October  x26, 1998 by Heidi Damsky ARE DENIED, and the Application for Review filed August 13,  x1998 and the Emergency Motion for Stay, Pendente Lite filed September 14, 1998 by Heidi Damsky ARE DISMISSED.   ` `  FEDERAL COMMUNICATIONS COMMISSION   ` `  Magalie Roman Salas ` `  Secretary