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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of
)
) File Number 98080351
)
KENNETH PAUL HARRIS, SR. NAL/Acct. No. x32080019
)
)
)
Proposed Assignee, Station
KSRW(FM) )
)
)
Childress, Texas
)
)
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: July 13, 2000 Released: July 14,
2000
By the Chief, Enforcement Bureau:
I. INTRODUCTION
1. In this Notice of Apparent Liability for Forfeiture
("NAL"), we find that Kenneth Paul Harris, Sr. (``Harris'')
apparently violated Section 310(d) of the Communications Act of
1934 (``Act''), as amended1, and Section 73.3540 of the
Commission's rules2, by assuming control of commercial radio
Station KSRW(FM), Childress, TX, from licensee Kevin Hackler
(``Hackler'') without first obtaining Commission approval. We
conclude that Harris is apparently liable for a forfeiture in the
amount of eight thousand dollars ($8,000).
II. BACKGROUND
2. By inquiry letter dated September 23, 1999, we
commenced an investigation into allegations that Hackler,
licensee of commercial radio Station KSRW(FM), Childress, TX,
violated Section 310(d) of the Communications Act of 1934, as
amended ("the Act"), and Section 73.3540 of the Commission's
rules by transferring control of the station to Harris without
obtaining the prior authorization of the Commission. The
allegations were contained in a confidential complaint filed on
August 12, 1999. The complaint cites locally published lien
transfer and sale documents which suggest that transfer of the
station to Harris took place on or about July 8, 1999, even
though the licensee had not obtained Commission authorization.3
We made further inquiry by letter dated April 6, 2000. Hackler
and Harris filed submissions in response to our inquiries on
October 18, 1999, February 11, 2000, and May 11, 2000.
III. DISCUSSION
3. Unauthorized Transfer of 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
47 C.F.R. §§ 73.3540 and 73.3541. 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 the
passage of de facto as well as de jure control requires the prior
consent of the Commission. See, e.g., Stereo Broadcasters, Inc.,
55 FCC 2d 819, 821 (1975), modified, 59 FCC 2d 1002 (1976).
4. 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). A licensee may
delegate certain functions on a day-to-day basis to an agent or
employee, but such delegation cannot be wholesale. See, e.g.,
Southwest Texas Public Broadcasting Council, 85 FCC 2d 713, 715
(1981). That is, those persons assigned a task must be guided by
policies set by the permittee or licensee. See David A. Davila,
6 FCC Rcd 2897, 2899 (1991). Moreover, the standards by which we
measure control are equally applicable in situations involving
``time brokerage'' or ``management agreements.'' Choctaw
Broadcasting Corporation, 12 FCC Rcd 8534, 8538 (1997).
5. Review of our records reveals that Hackler has been the
station's licensee since approximately August 20, 1996.4 In
response to our query, Harris explains that in June 1999, Hackler
experienced financial difficulties and took steps to sell the
station to him, a long-time station employee. In this connection,
Hackler first assigned his outstanding promissory note and
station equipment lien, held by NationsBank, to Harris in July,
1999 to avoid foreclosure. Hackler argues, however, that,
pursuant to an oral management agreement, he retained the right
to ``full and unlimited access to [the] equipment'' until such
time as the Commission approved Harris as the assignee. Hackler
emphasizes that he has remained in control of the station at all
times, notwithstanding contrary representations that he made in
bank financing documents. Both Hackler and Harris acknowledge
that because they entered this agreement without having first
obtained legal counsel, their actions were ``unconventional'' and
did not always observe the pertinent Commission policies
concerning station control. However, it was not until October 6,
1999, subsequent to the complaint and our September 23, 1999,
inquiry, that the parties entered into a revised, written
management agreement that purports to comply with those policies.
6. In this case, we find that an unauthorized transfer of
control took place at Station KSRW(FM) on or about July 8, 1999,
and has continued since that time. While accepting the parties'
representations that de facto control of the station was
ultimately restored to the status quo ante, we note that the
record indicates that de jure control of the station shifted from
the licensee to Harris on July 8, 1999, and has not been
restored. In this regard, the lien transfer documents executed
by and between Hackler and Harris on July 8, 1999 and July 12,
1999, indicate that Hackler conveyed all pertinent station
``equipment, accounts receivable, inventory, furniture, fixtures
. . . radio tower equipment, transmitters, FCC licenses, and all
other properties related thereto'' to Harris. Moreover, the
documents specifically refer to Harris as the radio station's
``owner.'' Hackler contends that the documents in question do
not truly reflect events at the station, because they were
executed merely to appease the station's lenders. However,
Hackler's argument ignores that the documents' execution
improperly transferred de jure control of the station from him,
which we cannot overlook. Moreover, neither Harris nor Hackler
has provided evidence that this transaction was ever nullified.
Accordingly, we believe a forfeiture is warranted for
unauthorized de jure transfer of control.
7. Based on the evidence before us, we find that Harris
assumed station control without obtaining prior authorization,
and apparently willfully and repeatedly violated Section 310(d)
of the Act and Section 73.3540 of the Commission's rules.5 The
Commission's Forfeiture Policy Statement6 sets a base forfeiture
amount of $8,000 for the unauthorized transfer of control. We
have reviewed both Hackler's and Harris' responses to our letter
of inquiry, and we find no reason to decrease the instant penalty
from the base forfeiture amount. In this connection, Harris's
explanation that he was ignorant of the Commission's rules does
not excuse or mitigate his actions. Empire Broadcasting Corp.,
25 FCC 2d 68 (1970); Victor Valley Broadcasting, Inc., 2 FCC 2d
495 (1966). Moreover, Harris does not indicate that he took
specific steps prior to entering his arrangement with Hackler to
ensure that his actions complied with the Commission's rules.
Rather, it appears that relevant legal advice was not sought
until after the instant complaint was filed and the Commission's
inquiry was made. See, e.g., Liability of Monte Corporation, 11
FCC Rcd 20535 (MMB 1996) (reliance upon prior advice given by
recognized authority may, in appropriate cases, demonstrate
licensee's ``good faith'' effort to comply with Commission rules
and justify mitigation). In sum, we believe that the nature of
the apparent violation requires the imposition of the base
monetary forfeiture amounts.
IV. ORDERING CLAUSES
8. Accordingly, IT IS ORDERED THAT, pursuant to Section
503(b) of the Communications Act of 1934, as amended7, and
Sections 0.111, 0.311 and 1.80 of the Commission's rules8,
Kenneth Paul Harris, Sr. is hereby NOTIFIED of his APPARENT
LIABILITY FOR A FORFEITURE in the amount of eight thousand
dollars ($8,000) for violating the provisions of the Act and the
Commission's rules requiring persons to obtain Commission
authorization prior to assuming substantial station control,
pursuant to Section 310(d) of the Act and Section 73.3540 of the
Commission's rules.
9. IT IS FURTHER ORDERED THAT, pursuant to Section 1.80 of
the Commission's rules9, within thirty days of the RELEASE DATE
of this NOTICE OF APPARENT LIABILITY, Kenneth Paul Harris, Sr.
SHALL PAY the full amount of the proposed forfeiture or SHALL
FILE a written statement seeking reduction or cancellation of the
proposed forfeiture.
10. Payment of the forfeiture may be made by credit card
through the Commission's Credit and Debt Management Center at
(202) 418-1995 or by mailing a check or similar instrument,
payable to the order of the Federal Communications Commission, to
the Forfeiture Collection Section, Finance Branch, Federal
Communications Commission, P.O. Box 73482, Chicago, Illinois
60673-7482. The payment should note the NAL/Acct. No. referenced
above.
11. The response, if any, must be mailed to the
Commission's Investigations and Hearings Division, Enforcement
Bureau, 445 Twelfth Street, S.W., Room 3-B443, Washington, D.C.
20554, and MUST INCLUDE the file number referenced above.
12. The Commission will not consider reducing or canceling
a forfeiture in response to a claim of inability to pay unless
the petitioner 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 reflects the petitioner's current financial status.
Any claim of inability to pay must specifically identify the
basis for the claim by reference to the financial documentation
submitted.
13. Requests for payment of the full amount of this Notice
of Apparent Liability under an installment plan should be sent
to: Chief, Credit and Debt Management Center, 445 12th Street,
S.W., Washington, D.C. 20554.10
14. IT IS FURTHER ORDERED THAT a copy of this NOTICE OF
APPARENT LIABILITY shall be sent by Certified Mail -- Return
Receipt Requested-- to Counsel for Kenneth Paul Harris, Sr., Cary
Tepper, Esq., Booth, Freret, Imlay & Tepper, P.C., 5101 Wisconsin
Avenue, N.W., Suite 307, Washington, D.C. 20016-4120.
FEDERAL COMMUNICATIONS COMMISSION
David H. Solomon
Chief, Enforcement Bureau
_________________________
1 47 U.S.C. § 310(d).
2 47 C.F.R § 73.3540.
3 In response to the complaint and our query, the parties filed a
Form 314 application proposing assignment of the station's
license from Hackler to Harris (File No. BALH-990927AAM) and
entered into a written interim ``Management Agreement'' which
specifies Harris as the station's manager. That application
remains pending with the Mass Media Bureau.
4 This reflects the date that the Commission's staff granted
assignment of the station's license to Hackler from Eddie J.
Leary. Our records do not reflect that the date of consummation
of that transaction was ever reported to the Commission through
an updated Form 323 ownership report, as required. However,
noting grant of the subsequent license renewal to Hackler, we
infer that the parties consummated the sales transaction. See
File No. BRH-970404WO.
5 We note that the statute requires only that the conduct in
question, in order to be sanctionable, be either ``willful'' or
``repeated.'' See 47 U.S.C. § 503(b)(1)(B). In this case,
Harris's apparent violation of Section 73.3540 of the
Commission's rules is both ``willful'' and ``repeated'' because
he intended to engage in the transaction that resulted in the
unauthorized transfer of de jure control, and the violation has
been continuous. See Southern California Broadcasting Co., 6 FCC
Rcd 4387-88 (1991).
6 See Report and Order, The Commission's Forfeiture Policy
Statement and Amendment of Section 1.80 of the Commission's
Rules, 12 FCC Rcd 17087 (1997), recon. denied, 15 FCC Rcd 303
(1999).
7 47 U.S.C. § 503(b).
8 47 C.F.R. §§ 0.111, 0.311, 1.80.
9
47 C.F.R. § 1.80.
10
47 C.F.R. § 1.1914.