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Texas Educational Broadcasting Co-Operative, Inc

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Released: August 11, 2011

Federal Communications Commission

DA 11-1384

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)

Texas Educational Broadcasting

)
Facility I.D. No. 65320

Co-operative, Inc.

)
NAL/Acct. No. MB200741410342
)
FRN: 0008697245
Licensee of KOOP(FM)
)
File No. BRED-20050331BPC
Hornsby, Texas
)
)

FORFEITURE ORDER

Adopted: August 10, 2011

Released: August 11, 2011

By the Chief, Audio Division:

I.

INTRODUCTION

1. In this Forfeiture Order, we issue a monetary forfeiture in the amount of eight thousand,
seven hundred dollars ($8,700) to Texas Educational Broadcasting Co-operative, Inc. ("Licensee"),
licensee of noncommercial educational station KOOP(FM), Hornsby, Texas ("Station"), for its willful
and repeated violation of Section 73.3527 of the Commission's Rules ("Rules")1 by failing to retain all
required documentation in the Station's public inspection file, and for violating the alien ownership
provisions of Section 310(b) of the Communications Act of 1934, as amended ("Act"). 2

II.

BACKGROUND

2. On July 16, 2007, the Bureau issued a Notice of Apparent Liability for Forfeiture in the
amount of fifteen thousand dollars ($15,000) to Licensee for failing to retain all required documentation
in the Station's public inspection file, and for violating the alien ownership provisions of the Act.3 As
noted in the NAL, Section 73.3527 of the Rules requires a non-commercial broadcast licensee to maintain
a public inspection file containing specific types of information related to station operations.4 Among the
materials required for inclusion in the file are the station's quarterly issues/programs lists, which must be
retained until final Commission action on the station's next license renewal application.5 Section III, Item
3 of the Station's license renewal application form, FCC Form 303-S, requests that the licensee certify
that the documentation required by Section 73.3527 had been placed in its station's public inspection file
at the appropriate times. Licensee indicated "No" to that Item, explaining in an exhibit to the application


1 See 47 C.F.R. 73.3527.
2 See 47 U.S.C. 310(b).
3 See Texas Educational Broadcasting Co-operative, Inc., Memorandum Opinion and Order and Notice of Apparent
Liability, 22 FCC Rcd 13038 (MB 2007) ("NAL"). The Commission also granted the Station's license renewal
application on July 16, 2007. Id. at 13046-47.
4 The purpose of this requirement is to provide the public with timely information at regular intervals throughout the
license period. WEZB(FM), New Orleans, LA, Letter, 13 FCC Rcd 4102, 4105 (MMB 1997), citing License
Renewal Applications of Certain Commercial Radio Stations
, Memorandum Opinion and Order, 8 FCC Rcd 6400
(MMB 1993).
5 See 47 C.F.R. 73.3527(e)(8).

Federal Communications Commission

DA 11-1384

that the issues/programs lists for 1997, 1998, 1999, and 2001 were missing from the public inspection
file.6 Licensee stated, however, that it created the missing lists from archived materials and later placed
them in the public file,7 and noted that the file was current as of March 2005.8 In addition, in response to
an objection filed against the renewal application, Licensee admitted that for two years prior to filing its
renewal application there were two aliens serving on its board, raising its foreign voting interest above the
20 percent benchmark, in violation of Section 310(b) of the Act.9 However, as noted in the NAL,
Licensee spotted its error and took corrective action sua sponte prior to filing the renewal application by
removing one of the aliens from the board to comply with the 20 percent benchmark.10
3. Licensee submitted a response ("Response") to the NAL on August 15, 2007. In its
Response, Licensee asserts that the proposed forfeiture should be cancelled due to its inability to pay the
proposed amount. It supplied federal tax returns for the years 2004 and 2005, audited financial statements
for 2006, and a profit and loss statement for the first six months of 2007.11 The Response does not contest
the NAL's findings with respect to the violations.

III.

DISCUSSION

4.
The forfeiture amount proposed in this case was assessed in accordance with Section
503(b) of the Act,12 Section 1.80 of the Rules,13 and the Commission's Forfeiture Policy Statement.14 In
assessing forfeitures, Section 503(b)(2)(E) of the Act requires that we take into account the nature,
circumstances, extent and gravity of the violation and, with respect to the violator, the degree of
culpability, any history of prior offenses, ability to pay, and such other matters as justice may require.15
5. Licensee argues that the forfeiture should be cancelled because the Station is recovering from
the "financial setback" of a 2006 fire which destroyed its main studio.16 The Commission will not
consider reducing or cancelling a forfeiture in response to inability to pay unless the licensee submits: (1)
federal tax returns for the most recent three-year period; (2) financial statements prepared according to
generally accepted accounting practices ("GAAP"); or (3) some other reliable and objective
documentation that accurately reflect the licensee's current financial status.17 Any claim of inability to


6 See captioned application at Exhibit 11.
7 See id.
8 Id.
9 47 U.S.C. 310(b)(3) ("No broadcast...radio station license shall be granted to or held by any corporation of
which more than one-fifth of the capital stock is owned of record or voted by aliens or their representatives...").
10 Accordingly, we reduced the proposed forfeiture for Licensee's apparent violation of Section 310(b) of the Act
from the $8,000 base amount to $5,000.
11 In the alternative, the Response requests payment by installment plan. Such an option is outlined in paragraph 9
of this order.
12 47 U.S.C. 503(b).
13 47 C.F.R. 1.80.
14 The Commission's Forfeiture Policy Statement and Amendment of Section 1.80 of the Rules to Incorporate the
Forfeiture Guidelines
, Report and Order, 12 FCC Rcd 17087 (1997), recon. denied, 15 FCC Rcd 303 (1999).
15 47 U.S.C. 503(b)(2)(E).
16 Response at 3.
17 NAL, 22 FCC Rcd at 13047.
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Federal Communications Commission

DA 11-1384

pay must specifically identify the basis for the claim by reference to the financial documentation
submitted.18
6. In general, a licensee's gross revenues are the best indicator of its ability to pay a forfeiture.19
In some cases, other financial indicators such as net losses may also be relevant,20 but if gross revenues
are sufficiently great, the mere fact that a business is operating at a loss does not by itself mean it cannot
afford to pay.21 In 2004 and 2005, Licensee reported gross revenues of $105,656 and $105,668,
respectively. The audited financial statement for 2006 reveals gross revenues of $313,947.22 Thus, the
proposed $15,000 forfeiture amount represents approximately nine percent of the Licensee's average
gross revenue for 2004-06. In considering claims of financial hardship, we have found a forfeiture
amount of five percent of gross revenue reasonable,23 and the Enforcement Bureau has found that a
forfeiture as high as 7.9 percent of the violator's gross revenue was not excessive despite claims of
financial hardship.24 Recognizing the financial burden of the proposed $15,000 forfeiture, we reduce the
amount of the forfeiture to $8,700, or approximately five percent of Licensee's average gross revenues for
the three-year period prior to issuance of the NAL.25
7. We have considered Licensee's response and the record of this case in light of the above
statutory factors, our Rules, and the Forfeiture Policy Statement. We conclude that Licensee willfully26


18 See Discussion Radio, Inc., Memorandum Opinion and Forfeiture Order, 24 FCC Rcd 2206 (MB 2009) (reducing
forfeiture amount after review of submitted federal tax returns demonstrated a financial hardship).
19 PJB Communications of Virginia, Inc., Memorandum Opinion and Order, 7 FCC Rcd 2088, 2089 (1992).
20 Id.
21 Id.
22 Licensee asks that we take into account that its inflated 2006 revenue is due to receipt of insurance and emergency
federal grant money related to the fire. Setting aside these contributions, the Station experienced a net loss of
$14,652 in 2006, partly due to the higher cost of rent at its temporary main studio. Response at 2. We do not
consider this `operating at a loss,' but even if we did, Licensee would not qualify for further forfeiture reduction. As
stated above, if gross revenues are sufficiently great, the mere fact that a business is operating at a loss does not by
itself mean it cannot afford to pay. Commission precedent has only accounted for net losses in extraordinary
circumstances, when the losses constituted a much larger percentage of the average gross revenue. See KYKV(FM)
(formerly KQBE(FM)), Selah, Washington, Letter, 25 FCC Rcd 16188 (MB 2010) (cancelling forfeiture because
Licensee's losses exceeded its revenue by nearly seventy percent from 2005 through 2007); KCSY(FM) (formerly
KVLR(FM)), Twisp, Washington Valley Air, LLC (former licensee)
, Letter, 24 FCC Rcd 5505 (MB 2009)
(cancelling forfeiture because Licensee's losses exceeded its revenue by nearly 50 percent from 2003 to 2005).
Here, Licensee's losses are approximately eight percent of average gross revenue, a much smaller percentage that
does not constitute extraordinary circumstances. Accordingly, we do not consider this argument further.
23 See CARE Broadcasting, Inc., Forfeiture Order, 25 FCC Rcd 1411 (MB 2010) (reducing amount of forfeiture to
five percent where the proposed forfeiture amount would have constituted approximately 11 percent of Licensee's
average gross revenues) ("CARE").
24 See Coleman Enterprises, Inc., Order of Forfeiture, 15 FCC 24385, 24389 (EB 2000), recon. denied, 16 FCC Rcd
10023, 10025 (2001).
25 See CARE, supra note 23; Grace Baptist Church, Forfeiture Order, 25 FCC Rcd 7481 (MB 2010) (forfeiture
reduced from 11.4 percent of licensee's average total revenue to five percent based on licensee's ability to pay).
26 Section 312(f)(1) of the Act defines "willful" as "the conscious and deliberate commission or omission of [any]
act, irrespective of any intent to violate" the law. 47 U.S.C. 312(f)(1). The legislative history of Section 312(f)(1)
of the Act clarifies that this definition of willful applies to Sections 312 and 503(b) of the Act, H.R. REP. No. 97-
765, 51 (Conf. Rep.), and the Commission has so interpreted the terms in the Section 503(b) context. See Southern
California Broadcasting Co.
, 6 FCC Rcd 4387, 4387-88 (1991) recon. denied, 7 FCC Rcd 3454 (1992) ("Southern
California
").
3

Federal Communications Commission

DA 11-1384

and repeatedly27 violated Section 73.3527 of the Rules28 and violated Section 310(b) of the Act.29
However, for the reasons set forth above, we find that reducing the forfeiture to eight thousand, seven
hundred dollars ($8,700) is warranted.

IV.

ORDERING CLAUSES

8. Accordingly, IT IS ORDERED, pursuant to Section 503(b) of the Communications Act of
1934, as amended, and Sections 0.283 and 1.80 of the Commission's Rules,30 that Texas Educational
Broadcasting Co-operative, Inc. SHALL FORFEIT to the United States the sum of eight thousand, seven
hundred dollars ($8,700) for willfully violating Section 73.3527 of the Rules31 and Section 310(b)32 of the
Act.
9. Payment of the forfeiture shall be made in the manner provided for in Section 1.80 of the
Commission's Rules within 30 days of the release of this Forfeiture Order. If the forfeiture is not paid
within the period specified, the case may be referred to the Department of Justice for collection pursuant
to Section 504(a) of the Act.33 Payment of the forfeiture must be made by check or similar instrument,
payable to the order of the Federal Communications Commission. The payment must include the
NAL/Acct. No. and FRN No. referenced in the caption above. Payment by check or money order may be
mailed to Federal Communications Commission, at P.O. Box 979088, St. Louis, MO 63197-9000.
Payment by overnight mail may be sent to U.S. Bank--Government Lockbox #979088, SL-MO-C2-GL,
1005 Convention Plaza, St. Louis, MO 63101. Payment by wire transfer may be made to ABA Number
021030004, receiving bank: TREAS NYC, BNF: FCC/ACV--27000001 and account number as expressed
on the remittance instrument. If completing the FCC Form 159, enter the NAL/Account number in block
number 23A (call sign/other ID), and enter the letters "FORF" in block number 24A (payment type
code).34 Licensee will also send electronic notification on the date said payment is made to
Kelly.Donohue@fcc.gov and Maureen.McCarthy@fcc.gov. Requests for payment of the full amount of
the forfeiture under an installment plan should be sent to: Associate Managing Director-Financial
Operations, Room 1-A625, 445 12th Street, S.W., Washington, DC 20554.35


27 Section 312(f)(2) of the Act defines "repeated" as "the commission or omission of [any] act more than once or, if
such commission or omission is continuous, for more than one day." 47 U.S.C. 312(f)(2). See also Southern
California
, 6 FCC Rcd at 4388 (applying this definition of repeated to Sections 312 and 503(b) of the Act).
28 47 C.F.R 73.3527.
29 47 U.S.C. 310(b).
30 47 U.S.C. 503(b); 47 C.F.R. 0.283, 1.80.
31 47 C.F.R. 73.3527.
32 See 47 U.S.C. 310(b).
33 47 U.S.C. 504(a).
34 See 47 C.F.R. 1.1914.
35 Id.
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Federal Communications Commission

DA 11-1384

10. IT IS FURTHER ORDERED, that a copy of this Forfeiture Order shall be sent by Certified
Mail Return Receipt Requested and by First Class Mail, to Texas Educational Broadcasting Co-operative,
Inc., P.O. Box 2116, Austin, TX 78768, and to its counsel, Melodie A. Virtue, Esq., Garvey, Schubert,
Barer, 1000 Potomac Street, N.W., Fifth Floor, Washington, DC 20007.
FEDERAL COMMUNICATIONS COMMISSION
Peter H. Doyle
Chief, Audio Division
5

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