**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In re: Applications for Station ) NAL/Acct. No. 20031810005

WKVE, Semora, North Carolina )

)

HARRYCO, INC. (ASSIGNOR) and ) File No. BAPH - 19941209GK

SOUTHERN ENTERTAINMENT, INC. )

(ASSIGNEE) )

For Assignment of Construction Permit )

)

HARRYCO, INC. ) File No. BMPH - 19950127JA

For Extension of Construction Permit )

)

SOUTHERN ENTERTAINMENT, INC. ) File No. BMPH-19960307IC

for Modification of Construction Permit )

)

SOUTHERN ENTERTAINMENT, INC. ) File No. BLH-20010417AAD

For License to Cover Modified Permit )

)

SOUTHERN ENTERTAINMENT, INC. ) File No. BALH-20010329AAK

(ASSIGNOR) and )

EDUCATIONAL MEDIA FOUNDATION )

(ASSIGNEE) )

For Assignment of License )

)

EDUCATIONAL MEDIA FOUNDATION ) File No. BMLHED-20010502ABA

For Modification of License )

**MEMORANDUM OPINION AND ORDER**

**AND NOTICE OF APPARENT LIABILITY**

**Adopted: October 30, 2003 Released: November 10, 2003**

By the Commission:

Number range level0Number range level1Number range level2Number range
level3Number range level4Number range level5Number range level6Number
range level71. The Commission has under consideration the captioned
applications concerning station WKVE(FM), Semora, North Carolina.[^1]
The station, currently licensed to Southern Entertainment, Inc.
("Southern"), is the subject of multiple challenges by Piedmont
Broadcasting Corporation ("Piedmont"), the licensee of two competing
broadcast stations.[^2] Two of the pleadings before us are Applications
for

Review.[^3] The other pleadings have been referred to the Commission
because they concern similar issues and facts.[^4]

2\. At issue in this proceeding is the staff's extension of the initial
WKVE(FM) construction permit, under rules that have since been
superseded, and the concurrent grant of an application to assign the
permit from HarryCo, Inc. ("HarryCo") to Southern over Piedmont's
objection. Piedmont's first application for review challenges the
rationale for the extension, as well as the character qualifications of
HarryCo and Southern. Piedmont requests that the Commission rescind the
station's permit and the assignment to Southern. Piedmont did not
contest the grant of WKVE(FM)'s initial license. Piedmont did, however,
file a second application for review and other pleadings challenging
subsequent licensing actions relating to WKVE(FM). In these documents
Piedmont opposes many of Southern's subsequent applications, including
those for a construction permit to upgrade the station, for a license to
cover the upgraded facilities, and for consent to assign the station's
license to Educational Media Foundation ("EMF"). EMF seeks to convert
the station from commercial to noncommercial educational operations.
Piedmont does not specifically contest the proposed change to
noncommercial educational status or challenge the qualifications of EMF.
Rather, Piedmont's position is that Southern has nothing to sell to EMF
because Southern built at its own risk pursuant to a construction permit
that was not properly extended, and that Southern lacks the character
qualifications needed to assign the authorization. For the reasons
discussed below, we affirm prior staff actions, and grant pending
applications for license, assignment, and noncommercial status. We also
issue a Notice of Apparent Liability to Southern for its submission of
two letters with altered dates in violation of Section 1.17 of our
rules.[^5]

**I. Discussion**

**A. Extension Application**

3\. **Effect of Rule Change.** A central issue in this proceeding is the
validity of WKVE(FM)'s construction permit under the rules in effect
when construction was completed in February 1996. We have since changed
those rules significantly, and the parties dispute whether the changes
moot this central question. They do not. In the 1999 *Streamlining*
proceeding we automatically extended certain expired permits for which
forfeiture was not yet final.[^6] Southern believes that action extended
WKVE's permit without regard to the matters at issue here. The
*Streamlining* extension applied, however, only to permits that were
valid, as previously extended.[^7] The validity of WKVE's last extension
is in dispute. We will resolve questions of the permit's validity using
the rules in effect at the time the permit was last extended.[^8]

4\. **Waiver of Construction Deadline.** During the relevant time
period, the Commission granted 18-month broadcast construction permits
and extended permits for six-month intervals if, among other reasons,
construction had not been completed due to circumstances beyond the
applicant's control.[^9] Whether permittee HarryCo lost financing for
reasons beyond its control was a pivotal issue in a January 27, 1995,
application for extension of the permit.[^10] The staff initially ruled
in HarryCo's favor, extending the permit and allowing its assignment to
Southern, which completed construction of the station and began to
broadcast pursuant to program test authority. In considering Piedmont's
petition for reconsideration based on newly available evidence, however,
the staff agreed with Piedmont that HarryCo's loss of financing was not
beyond HarryCo's control under prevailing case law.[^11] Piedmont argued
for a reversal of the earlier extension grant, thereby terminating all
authority of the station. The staff, instead, waived the requirements of
the extension rule.[^12]

5\. The Commission and its staff may waive a rule for good cause.[^13]
The staff based the WKVE waiver on the following facts: (1) the
assignment from HarryCo to Southern had already been consummated (for
slightly more than a year); (2) construction was complete; (3) Southern
had commenced program tests (more than five months before the staff's
decision on reconsideration) instituting first local service in Semora;
(4) reversal would have impacted innocent parties, including Southern\'s
employees and creditors; and (5) although HarryCo had fallen short of
demonstrating that its loss of funding was beyond its control, HarryCo
nevertheless demonstrated diligence.

6\. Piedmont asserts that the staff erred in finding that WKVE provides
first local service to Semora, North Carolina. It maintains that the
station really serves Danville, Virginia, which already has radio
service. Piedmont alleges that Southern selects WKVE's programming for
Danville audiences and showed its allegiance to Danville by joining the
broadcasters association in Virginia rather than in North Carolina. The
record, however, contains adequate evidence of service that the station
provides to Semora.[^14] It would not be unreasonable for WKVE also to
cover issues concerning nearby communities in Virginia. Semora, North
Carolina is a small community of fewer than 200 people, located less
than one mile from the Virginia border. Danville is the largest
community in WKVE\'s licensed service area. When the Commission
determined that Semora was a community for allotment purposes, it
recognized that Semora has a small population, and limited commercial
activity.[^15] It is longstanding Commission policy to promote
initiation of broadcast service in small communities.[^16] Stations must
provide informational programming to address significant issues and
problems of their communities of license, but also have the discretion
to cover additional issues that may be of interest to their wider
audience. Piedmont has not demonstrated that WKVE failed to provide
local service to Semora, North Carolina.

7\. Piedmont also alleges that the staff erred in basing the waiver on
potential harm to innocent parties associated with Southern. Piedmont
maintains that canceling WKVE\'s permit would not harm innocent parties
because: (1) Southern owned twenty-four percent of HarryCo, and
therefore cannot be considered unrelated; (2) Southern consummated the
assignment at its own risk; (3) Southern\'s creditors and employees
should have been aware that HarryCo's extension application and
assignment applications fell short of the requirements for grant; and
(4) Southern is not entitled to the equitable relief of a waiver because
it had "unclean hands." We reject each of these arguments. Southern's
twenty-four percent interest in HarryCo does not necessarily impute to
Southern's creditors and employees knowledge of all matters concerning
HarryCo's extension application, nor does it demonstrate that
Southern\'s creditors and employees had reason to believe that the
staff's grant of Southern\'s assignment application was improper. The
allegation of unclean hands is based in part on an *ex parte* letter
from Southern\'s Vice President to the Commission during the petition
for reconsideration stage in this proceeding.[^17] The Commission\'s
Office of the Secretary has determined with respect to the letter that
\"it does not appear that there was any intent to violate the \[*ex
parte*\] rules \[and\] that no harmful prejudice occurred.\"[^18]
Furthermore, the letter was not a part of the record upon which the
staff based its waiver decision, and the *ex parte* letter does not
warrant denial of equitable relief. Nor, as discussed further below, are
we persuaded by Piedmont's other arguments that equitable relief is
unwarranted. Southern built the station based on authority contained in
the initial staff decision, which found that an extension request
complied with the rules then in effect and relevant precedent. Southern
was not unreasonable in relying on that authority to proceed.[^19] It is
true that Southern proceeded at its own risk in consummating the
assignment and in constructing the station while Piedmont's
reconsideration request was pending. Nevertheless, we find no error in
the staff's determination that the facts supported a waiver of the
construction rules then in effect.[^20]

8\. Piedmont next alleges that the staff exceeded its delegated
authority by issuing the waiver.[^21] The Commission reserves for itself
authority to consider petitions and waiver requests that "contain new or
novel arguments not previously considered by the Commission or present
facts or arguments which appear to justify a change in Commission
policy.\"[^22] Piedmont asserts that only the Commission itself can
consider waiver requests based on equitable principles. According to
Piedmont, such waivers always involve new and novel arguments that the
Commission has not previously considered because waivers involve unique,
case-specific factors that must be weighed and balanced.

9\. We disagree. Piedmont does not cite any case in support of its
argument that the application of equitable principles always involves a
\"new or novel\" issue. The staff has long applied equitable principles
on a case-by-case basis, without referring such cases to the
Commission.[^23] There is nothing necessarily novel or policy-oriented
about waivers of broadcast construction deadlines.[^24] In fact, the
Commission has clearly stated that waivers of the construction deadlines
will be entertained, without limiting the staff's ability to consider
such requests.[^25] In any event, since we are considering and affirming
the staff's waiver, the delegated authority issue is moot.

10\. Finally, Piedmont maintains that HarryCo was not entitled to a
waiver under the doctrine of unclean hands -- the principle that
wrongdoers are not entitled to equitable relief.[^26] Piedmont alleges
that HarryCo had unclean hands because it made misrepresentations to the
Commission. Piedmont makes identical arguments of misrepresentation in
connection with HarryCo's assignment of the construction permit to
Southern. Those arguments are discussed in greater detail below, and
rejected.[^27] For the same reasons, we conclude that those allegations
do not warrant denial of equitable relief to HarryCo. Accordingly, we
conclude that WKVE was constructed pursuant to a valid permit.

**B. Assignments of Permit and License**

11\. **Alleged Misconduct by Assignor HarryCo.** Piedmont claims that
HarryCo misrepresented facts to the Commission and was thus unqualified
to assign WKVE\'s construction permit to Southern. HarryCo made two
different showings of its reasonable and prudent expenses in connection
with a "no profit" showing it was required to submit with its assignment
application.[^28] Piedmont argues that the showings conflict with one
another and that one of the two showings must have been falsified.[^29]
Piedmont also maintains that the staff did not adequately explain its
rejection of that argument.

12\. HarryCo first listed expenses totaling \$155,749.37. In response to
Piedmont\'s petition to deny, HarryCo revised its claim to \$156,783.14.
The staff approved only \$63,137.02 of these expenses, the portion that
HarryCo adequately documented as reasonable and prudent expenses related
to acquisition and disposition of the permit. The staff observed that
HarryCo's revised summary significantly reallocated expenses within
certain categories, and that HarryCo had not explained some of those
revisions, but concluded that there was no misrepresentation. As the
staff explained, misrepresentation is a false statement of fact made
with intent to deceive the Commission.[^30] No intent to deceive was
shown here. HarryCo adjusted its claims upon learning, from Piedmont\'s
petition to deny, that some of the original amounts were not recoverable
or lacked required documentation.[^31] The staff properly addressed the
matter by approving reimbursement only of fully documented, legitimate
and prudent expenses associated with the acquisition and sale of the
WKVE permit. The figures in HarryCo's original showing are not
necessarily false merely because HarryCo amended them in response to
Piedmont's challenge. Piedmont's suggestion that amendments always
indicate known falsehoods is incorrect. Our acceptance of that argument
would discourage correction of legitimate mistakes or
misunderstandings.[^32]

13\. Piedmont also alleges that HarryCo submitted a forged document to
the Commission, *i.e.*, a February 5, 1993, lease that the property
owner, Mr. Gus Dyer, claimed not to have signed.[^33] Dyer claims that
he did not sign the actual lease until March 21, 1993, and that the
signature on the earlier document is not his own.

14\. Upon reviewing the pertinent facts we conclude that Piedmont has
failed to raise a substantial and material question of fact concerning
any intent by HarryCo to deceive the Commission. HarryCo submitted the
lease in connection with four requests for an extension of time, the
earliest of which we received on September 27, 1993, well after the
lease was signed, which Dyer acknowledges was in March of that year. It
is not clear who signed Dyer\'s name to the February lease, and HarryCo
states that it mistakenly submitted a draft of the lease. This claim is
credible because HarryCo could have filed a copy of the final March
lease when it filed its extension application in September, six months
later. Accordingly, we reject Piedmont's allegations that HarryCo
misrepresented facts to the Commission or lacked the requisite character
qualifications to assign the permit to Southern.[^34]

15\. **Alleged Falsification of Documents by Southern***.* Piedmont also
alleges that Southern falsified documents submitted with its Opposition
to the Application for Review.[^35] Piedmont maintains that the altered
documents were designed to influence the Commission in its consideration
of the assignment of the station's construction permit. We have
considered Piedmont's submissions under the two-step analysis in
*Astroline Communications Co. v. FCC*.[^36] We find that Piedmont has
made a *prima facie* case that documents submitted to us were altered
with an intent to deceive, that Southern does not adequately rebut
Piedmont's showing, and that a monetary forfeiture for misrepresentation
appears appropriate. We conclude, nevertheless, that Piedmont has failed
to raise a substantial and material question of fact as to Southern's
basic qualifications or as to whether grant of any of the applications
would serve the public interest.[^37]

16\. A misrepresentation is a false statement made with intent to
deceive the Commission.[^38] Intent can be inferred from motive.[^39] At
issue here is whether Southern made misrepresentations to the Commission
by changing the dates of two letters from local officials prior to
submitting them to the Commission, without the knowledge or consent of
the signatories. Southern submitted the letters on October 22,
1996,[^40] as part of its Opposition to the Application for Review. The
purpose of the letters was to refute Piedmont's October 7, 1996,
allegation, discussed previously, that the station did not "serve"
Semora. Piedmont alleges that Southern falsified the dates so that the
letters would seem to have been unsolicited and written before
Piedmont's programming-related allegation.[^41] It submits a declaration
under penalty of perjury from Piedmont\'s president, T. David Luther
("Luther"), describing his meetings with the two signatories, Caswell
County Manager, Paul C. Tax ("Tax") and Caswell County Sheriff, J. J.
Smith ("Smith"). According to that declaration, Tax told Luther that he
wrote a letter at the request of Southern's President, Samuel Cooper, so
that Southern could show that WKVE served Semora.[^42] Luther presented
Tax with a copy of the letter as submitted to the Commission, and states
that Tax noticed a change in the letter's date from October 15, 1996, to
July 23, 1996. As further proof that the date of Tax\'s letter was
altered, Luther states that two Caswell County officials mentioned in
Tax\'s letter were not guests on the station until August, more than two
weeks after the date on the allegedly altered letter. Luther submits a
copy of the letter as obtained from Tax, which is dated October 15,
1996, in a typeface identical to the rest of the letter. The typeface of
the July 23, 1996, date in the letter that Southern submitted to the
Commission does not match the body of the letter. Luther's declaration
also relates his conversation with Sheriff Smith, signatory to a second
letter that Southern submitted to the Commission. According to the
declaration, Smith told Luther that the date of Smith's letter was
changed from October 14, 1996, to September 27, 1996. Piedmont does not
submit a copy of a Smith letter bearing the alleged October date, but
observes that the September date in the letter filed with the Commission
also uses a different typeface than the body of the letter.[^43] The
typefaces of the two allegedly altered dates in the Smith and Tax
letters are identical to each other, but do not match the text of either
letter. The date of the Smith letter is also misaligned with the text
and letterhead of that letter. Southern does not dispute the validity of
the documentary evidence suggesting that the dates of the letters were
altered. In fact, a document that Southern was required to maintain in
the station's public inspection file and which it submitted to the
Commission in a related proceeding supports Piedmont's arguments that
the dates were altered.[^44] The station's list of its most significant
issue-responsive programs for the third quarter of 1996 indicates that
Tax appeared as a guest on July 11, 1996. If Tax's letter referred only
to his own appearance on WKVE(FM), the letter's July 23, 1996, date as
submitted by Southern might appear reasonable. However, Tax's letter
also refers to appearances by Jeff Rudd, County Economic Development
Director, and Lee Fowlkes, Director of the Caswell County Civic Center.
The station's issues/program list indicates that Mr. Fowlkes and Mr.
Rudd did not appear on the station until August 6, 1996, and August 7,
1996, respectively. It would have been impossible for Tax to reference
those appearances if the July 23, 1996, date of the letter submitted by
Southern were correct.

17\. Luther's statements about conversations with local officials are
hearsay, to which we would generally afford little, if any, value.
Nevertheless, Luther's declaration provides useful background for our
consideration of highly unusual documentary evidence in this record,
*i.e.*, documents submitted for our consideration that are inconsistent
with undisputed facts and appear plainly to have been altered. As we
have already stated, intent to deceive is a factual question that can be
inferred from motive.[^45] Piedmont submits that intent to deceive may
be inferred from the fact that Piedmont had previously put in issue
whether Southern was adequately serving Semora. Letters of community
support from Semora-area officials written months or weeks prior to
Piedmont's allegation and Southern's response might appear more genuine
or spontaneous than letters written after that time. We find that
Piedmont has made a *prima facie* showing of misrepresentation, *i.e.*,
that Southern submitted altered documents with a motive to deceive the
Commission. Accordingly, we next consider the entire record, including
Southern's replies, to determine whether there remain any substantial
and material questions appropriate for resolution in hearing.

18\. Southern submits May 20, 1997, affidavits from Samuel Cooper and
James Hill, Southern's President and Vice-President respectively,
stating that they did not alter the dates or ask anyone else to do so.
They state that at the time the letters were submitted to the Commission
they were unaware of any alterations and have no knowledge of who may
have altered the letters. Southern also claims that the letters were not
submitted to establish the dates on which the programming aired.
Southern argues that the letters in question were provided solely as
\"ancillary evidence\" supporting Southern\'s own declaration as to the
programming it directs to Semora and the surrounding area. According to
Southern, the relevant point is program content, and the dates of the
letters are not material to the Commission's review of this issue.
Southern does not dispute that local officials did not appear as guests
on the station until after the dates of the letters, as submitted to the
Commission. Even if we concede that the actual dates of the letters
would have had little impact on Southern\'s overall position in this
contested proceeding, Southern\'s argument ignores the Commission's
longstanding policy that requires truthfulness and candor by all
licensees in dealing with the Commission.[^46] Southern's President and
Vice-President may not have altered the dates, but we cannot from the
record exclude others associated with the company from having taken such
action.

19\. Southern states that, assuming *arguendo* that the dates of the
letters were changed, we should nevertheless find it qualified as a
licensee. It alleges that the facts of this case are similar to several
cases in which the Commission found no actionable misrepresentation
despite factual inconsistencies in the record.[^47] The facts of the
cases that Southern cites differ from the facts of the present case. In
those cases the Commission found no motive or intent to deceive the
Commission, whereas we believe that Piedmont has shown a motive to make
the letters appear more genuine as unsolicited testimonials, rather than
as documents written to refute recent statements of an opposing party.

20\. Southern does not adequately rebut Piedmont's *prima facie* showing
of misrepresentation. We conclude that Southern violated Section 1.17 of
our rules because the altered letters submitted in Southern's Opposition
to the Application for Review were untruthful written statements, made
in a pleading submitted to the Commission, bearing on a matter within
the Commission's jurisdiction.[^48] We have studied possible actions,
including whether to convene a hearing on Southern's qualifications to
remain a broadcast licensee, and on its qualifications to assign the
permit to EMF. We find, however, that the particular factual questions
raised in this case are not significant enough to warrant a hearing as
to Southern's basic qualifications to be a Commission licensee.[^49]
Specifically, the conduct was isolated to one pleading, was not
decisionally significant,[^50] and the letters in question were not
submitted in response to any Commission question or inquiry.[^51]
Moreover, the licensee is seeking to sell its only station, and the
proposed assignee is a non-profit organization whose character
qualifications have not been challenged. In several other cases
involving misstatements of a generally similar magnitude, we found it
unnecessary to convene a hearing to consider the applicant's basic
qualifications, and instead took appropriate action to sanction the
applicant's conduct.[^52] Consistent with that precedent, we will not
designate Southern's applications for hearing.

21\. We conclude, however, that a forfeiture is appropriate for
Southern's misrepresentation. The guidelines contained in the
Commission's *Forfeiture Policy Statement*[^53]specify that the base
forfeiture for misrepresentation is the statutory maximum for the
service, which for broadcast stations is \$27,500. The guidelines permit
the Commission to issue a higher or lower forfeiture based upon the
factors set forth in Section 503(b)(2)(D) of the Communications Act of
1934, as amended.[^54] The facts of the current case meet two
circumstances for downward adjustment of forfeitures. First, although
any misrepresentation to the Commission is a serious matter, this
particular violation is relatively minor. As indicated previously, the
misrepresentation appeared in two letters addressing the same issue, and
was limited to the letters' dates rather than content. The second factor
for downward adjustment of the forfeiture is history of overall
compliance. The Commission has not previously found Southern in
violation of our rules. In weighing these factors for reduction,
however, we also consider the necessity that the Commission must rely on
the truthfulness of applicants and licensees, and therefore that any
deceptive submission or omission in a Commission proceeding is thus of
great concern.[^55] Considering the totality of these factors, we find
that the appropriate forfeiture in the current case is \$19,250, a 30
percent reduction of the base forfeiture amount.

22\. In view of the above, pursuant to 47 U.S.C. § 503(b), Southern
Entertainment, Inc. IS HEREBY ADVISED of its apparent liability for
forfeiture of Nineteen Thousand Two Hundred Fifty Dollars (\$19,250.00)
for its apparent willful or repeated violation of 47 C.F.R. § 1.17. In
regard to this forfeiture, Southern is afforded a period of thirty (30)
days of this Notice "to show, in writing, why a forfeiture penalty
should not be imposed or pay the forfeiture. Any showing as to why the
forfeiture should not be imposed or reduced shall include a detailed
factual statement and such documentation and affidavits as may be
pertinent."[^56]

**C. Upgrade of Technical Facilities**

23\. In a second Application for Review, filed October 29, 1998,
Piedmont alleges that the staff erroneously granted Southern's
application for a minor modification to upgrade the station's facilities
from Class A to Class C2 ( the "Upgrade Application"). On similar
grounds, Piedmont, on May 24, 2001, objected to Southern's April 17,
2001, application for a license to cover the completed facility.[^57]

24\. According to Piedmont, the Upgrade Application was defective as
filed because it proposed a facility that was short-spaced to the
licensed facilities of station WEND(FM), Salisbury, North Carolina.[^58]
At the time of filing the Upgrade Application was fully spaced to a
pending license application to cover a WEND(FM) downgrade. Relying on a
staff decision in *Cut and Shoot, Texas,*[^59] Piedmont argues that the
staff should have dismissed the Upgrade Application. Alternatively,
Piedmont argues that the staff should have considered the Upgrade
Application as filed on the date the staff granted a license to cover
WEND(FM)'s downgrade. The suggested change in filing date would make
Southern's Upgrade Application secondary to a rulemaking petition filed
by Greater Lynchburg Stereo for an allotment in Amherst, Virginia. That
rulemaking proponent is not a party to this proceeding but is
represented by the same counsel as Piedmont. Piedmont argues that the
staff's handling of the Upgrade Application conflicts with a policy
enunciated in the Commission's *Technical Streamlining* decision,
requiring that applicants continue to protect the authorized facilities
of a downgrading station until the modified facilities are
licensed.[^60]

25\. The following dates are important to our resolution of this issue.
On February 14, 1995, WEND, Salisbury, North Carolina, filed a one-step
application to downgrade its facilities. The staff granted a
construction permit for the downgrade on January 16, 1996. Thereafter,
on March 7, 1996, Southern filed a one-step minor change application for
WKVE, Semora, North Carolina, to upgrade from a Class A to a Class C2 FM
station. The Upgrade Application protected the approved downgrade of
WEND, but not WEND's then-licensed facilities. On March 13, 1996,
Greater Lynchburg Stereo filed the Amherst rulemaking petition. The
staff issued a Notice of Proposed Rulemaking on May 1, 1996, proposing
to grant the Amherst proposal with a site restriction to protect the
Class A facilities of WKVE, Semora, but without mentioning the Semora
station's proposed Class C2 upgrade.[^61] The rulemaking proceeding
remains pending. On September 24, 1997, WEND filed an application for
license to cover the permit specifying the downgraded facilities.[^62]
The staff granted WEND's application to license its downgraded
facilities on December 21, 1997. The staff, on December 23, 1997,
granted a construction permit for Southern's upgrade of WKVE.

26\. Under the Commission's rules, an application must generally protect
licensed facilities, construction permits and prior-filed
applications.[^63] In the case of modifications to licensed facilities,
applications must continue to protect the formerly licensed facilities
until the grant of the covering license application for the modified
facility. As Piedmont correctly notes, rulemaking petitions also must
continue to protect licensed facilities, notwithstanding the fact that a
modification application has been granted or a covering license
application for a modified facility is pending.[^64] At the time the
Upgrade Application was filed, our rules also prohibited contingent
applications for interrelated modifications of FM stations.[^65] For the
reasons stated above, the acceptability of the WKVE upgrade on the date
of filing was contingent on the grant of the WEND downgrade. Thus, we
agree with Piedmont that the Upgrade Application was unacceptable at the
time of filing. Had the staff first considered the Upgrade Application,
it would have issued a deficiency letter. At that point, Southern would
have been required to amend its proposal and would have been given a
date certain by which such an amendment was due. Failure to amend by the
deadline would have resulted in dismissal of the Upgrade
Application.[^66] However, before the staff could examine Southern's
Upgrade Application and set any deadline for corrective amendments, the
staff acted on the WEND license application. Grant of the WEND license
application, eliminated the requirement to protect the formerly licensed
WEND facilities, and thus, cured the Upgrade Application's acceptability
defect. Our broadcast licensing procedures do not require the return of
applications that were unacceptable at the time of filing but which came
into compliance with our technical rules prior to the deadline for
corrective amendments. We will not take adverse action on Southern's
Upgrade Application based solely on its acceptability as filed, when
subsequent events prior to staff review resulted in a fully acceptable
application.

27\. We also reject Piedmont's contention that we should consider the
staff's licensing of WEND's downgrade as an "amendment" to the Upgrade
Application, thereby making the Upgrade Application subject to our
conflicts rules with regard to mutually exclusive petitions for
rulemaking filed prior to the date of amendment. Minor change
applications take priority over subsequently filed rulemaking
petitions.[^67] If, however, the application is amended to conflict with
a rulemaking request filed prior to the date of the amendment, the
application is treated as filed on the date of the amendment and thereby
loses its priority to the rulemaking.[^68] Piedmont cites no support for
its *de facto* amendment theory, and we are aware of none. We decline to
adopt in this adjudicatory proceeding a change in our processing
policies that would tie an application's cut-off rights to the date on
which the application became "acceptable." The staff followed
established licensing procedures in this case, granting the WKVE upgrade
without consideration of the formerly licensed facilities of WEND.[^69]

**III. Ordering Clauses**

28\. Accordingly, IT IS ORDERED, that pursuant to Section 503(b) of the
Communications Act of 1934, as amended, and Section 1.80 of the
Commission's rules, 47 C.F.R. § 1.80, Southern Entertainment, Inc.
licensee, Station WKVE(FM), Semora, North Carolina, is hereby NOTIFIED
of its APPARENT LIABILITY FOR FORFEITURE in the amount of Nineteen
Thousand Two Hundred Fifty (\$19,250.00) for willfully and repeatedly
violating Section 1.17 of the Commission's rules, 47 C.F.R. § 1.17.

29\. IT IS FURTHER ORDERED, pursuant to Section 1.80 of the Commission's
rules, that within thirty days of the release of this Notice, Southern
Entertainment, Inc., SHALL PAY to the United States the full amount of
the proposed forfeiture or SHALL FILE a written statement seeking
reduction or cancellation of the proposed forfeiture.

30\. Payment of the forfeiture may be made by credit card through the
Commission's Credit and Debt Management Center at (202) 418-1195, or by
mailing a check or similar instrument, payable to the order of the
Federal Communications Commission, to the Federal Communications
Commission, P.O. Box 73482, Chicago, Illinois 60673-7482. The payment
should note the file numbers of this proceeding.

31\. The response, if any, must be mailed to Peter H. Doyle, Chief,
Audio Division, Media Bureau, 445 Twelfth Street, S.W., Room 2-A360,
Washington, D.C. 20554, and MUST INCLUDE the NAL/Account number
referenced in the caption of this document (20031810005).

32\. 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 accordingly to generally accepted
accounting practices; 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.

33\. 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 Twelfth Street, S.W., Washington, D.C.
20554.[^70]

34\. IT IS FURTHER ORDERED, that the Complaint filed by Piedmont
Broadcasting Corp. on November 14, 1996, IS GRANTED TO THE EXTENT
INDICATED HEREIN AND DENIED in all other respects.

35\. IT IS FURTHER ORDERED, that pursuant to Section 1.115(g) of the
Commission\'s Rules, 47 C.F.R. § 1.115(g), the Applications for Review
filed by Piedmont Broadcasting Corp. on October 7, 1996, and on October
29, 1998, concerning extension of HarryCo's permit, assignment of that
permit to Southern, and an additional permit to upgrade WKVE's
facilities, ARE HEREBY DENIED.

36\. IT IS FURTHER ORDERED, that Piedmont's objection to the application
for a license to cover (File No. BLH-20010417AAD) the modified
facilities IS DENIED and that application IS GRANTED.

37\. IT IS FURTHER ORDERED, that the Petition to Deny filed by Piedmont
Broadcasting Corp. concerning the application to assign the license of
WKVE(FM) from Southern Entertainment, Inc. to Educational Media
Foundation (File No. BALH-20010329AAK), IS DENIED.

38\. IT IS FURTHER ORDERED, that having found the parties qualified and
the transaction consistent with the public interest, that the
application to assign the license of WKVE(FM) from Southern
Entertainment, Inc. to Educational Media Foundation (File No.
BALH-20010329AAK) IS GRANTED.[^71]

39\. IT IS FURTHER ORDERED, that the application to license WKVE(FM) as
a noncommercial educational station (File No. BMLHED-20010502ABA) IS
GRANTED conditioned upon the consummation of the assignment to
Educational Media Foundation.

40\. IT IS FURTHER ORDERED that a copy of this Notice shall be sent, by
Certified Mail - - Return Receipt Requested, to Southern Entertainment,
Inc., 4902 N. Ocean Blvd., Myrtle Beach, South Carolina, 29577 and to
its counsel John. S. Neely, 6900 Wisconsin Ave., Suite 704, Bethesda,
Maryland 20815.

FEDERAL COMMUNICATIONS COMMISSION

Marlene H. Dortch

Secretary

[^1]: At earlier stages of this proceeding, the station was also known
    as WPXX(FM) and WQVA(FM).

[^2]: Piedmont is the licensee of WBTM(FM) and WAKG(FM), Danville,
    Virginia. According to Piedmont, these stations compete with
    WKVE(FM) for audience and revenues.

[^3]: These include (1) Piedmont's October 7, 1996, Application for
    Review, alleging that the extension of WKVE's construction permit
    (File No. BMPH-19950127JA) and assignment of that permit to Southern
    (File No. BAPH-19941209GK) should be rescinded, and responsive and
    supplemental pleadings; and (2) Piedmont's October 29, 1998,
    Application for Review concerning the grant of a permit to Southern
    to upgrade the station's constructed facilities from Class A to
    Class C2 (File No BMPH-19960307IC), and responsive pleadings.

[^4]: *See* 47 C.F.R. § 0.5(c). *See also, Nassau Community College*, 12
    FCC Rcd 12234, n.1 (1997); *Little Rock Radio Telephone Co., Inc.*,
    50 R.R.2d 1535 (1982) (referring cases to Commission when cases
    involving the same facts, parties, or issues are pending before the
    Commission). The related matters referred to us in the present case
    are (1) Piedmont's November 14, 1996, complaint, which alleges that
    Southern's October 23, 1996, Opposition to the Application for
    Review contained falsified documents, and responsive pleadings; (2)
    Southern's April 17, 2001, application for a license to cover its
    upgrade to Class C2 (File No. BLH-20010417AAD) and responsive
    pleadings; (3) Southern's March 29, 2001, application to assign the
    authorization to Educational Media Foundation ("EMF") (File No.
    BALH-20010329AAK) and related pleadings; and (4) EMF's uncontested
    application to modify the station's license to specify noncommercial
    educational operations (File No. BMLHED-20010502ABA). To the extent
    that parties have requested extensions in which to file or respond
    to pleadings, those requests are granted.

[^5]: 47 C.F.R. § 1.17.

[^6]: *Streamlining of Mass Media Applications,* 14 FCC Rcd 17525, 17536
    (1999) ("*Streamlining"*).

[^7]: *Id.*

[^8]: *See Manahawkin Communications Corporation,* 17 FCC Rcd 342 (2001)
    (compliance with rule prohibiting the sale of an unbuilt station at
    a profit considered after that rule's elimination in the
    *Streamlining* decision, because compliance with the rule was
    mandated when the parties entered into the financial arrangement on
    review).

[^9]: *See* 47 C.F.R. § 73.3534(b)(1996). That process has since been
    replaced with a construction period of three unencumbered years.
    *See Streamlining of Mass Media Applications,* 13 FCC Rcd 23056
    (1998), *recon. granted in part and denied in part*, 14 FCC Rcd
    17525 (1999).

[^10]: Under the revised rules, loss of financing is no longer a ground
    for receipt of additional time. *See* 47 C.F.R. § 73.3538(b).

[^11]: Specifically, the staff found that under the principles
    enunciated in *Horseshoe Bay Centex Broadcasting Co.,* 5 FCC Rcd
    7125 (1990), HarryCo's loss of financing after refusal of its
    creditors to meet a lender requirement would be viewed as HarryCo's
    own inability to meet its loan commitment rather than as an external
    event beyond its control. *Letter from Chief, Audio Division, to
    John F. Garziglia, Esq.*, Ref. No. 1800B3-KDY (M.M.B. Aug. 30,
    1996).

[^12]: *Id.*

[^13]: 47 C.F.R. § 1.3. *See* *WAIT Radio v. FCC*, 418 F.2d 1153 (D.C.
    Cir. 1969), *cert. denied,* 409 U.S. 1027 (1972).

[^14]: For example, Southern provides an affidavit from Southern\'s
    president, which describes the ways in which the station's
    issue-responsive programming addresses the needs and interests of
    Semora residents, as well as those of Caswell County, North
    Carolina, in which Semora is located. It also submits letters from
    the County Manager and Sheriff of Caswell County thanking the
    station for offering informational programming addressing the needs
    of Caswell County. As will be discussed *infra*, those letters
    appear to have been solicited rather than written spontaneously, and
    the dates of the letters were altered. However, the letters
    accurately reflect that the station aired informational programming
    featuring Caswell County officials.

[^15]: *See* *Implementation of BC Docket No. 80-90*, 5 FCC Rcd 934
    (1990) (affirming order allotting channel to the community of
    Semora).

[^16]: *See* 47 U.S.C. § 307(b); *Faye and Richard Tuck, Inc.,* 3 FCC
    Rcd 5374 (1988).

[^17]: Letter from James W. Hill, Vice President, Southern, to
    Secretary, FCC (May 5, 1995), included as Exhibit N to Application
    for Review.

[^18]: Letter from Acting Secretary, FCC to James Hill, Vice President,
    Southern (Sept. 20, 1995) included as Exhibit R to Application for
    Review.

[^19]: *Compare, WDBS, Bolingbroke, Georgia*, 11 FCC Rcd 5320 (1996)
    (denying authorization to applicant that constructed with no
    authority after staff denial of its extension request).

[^20]: *See generally* *Hooten Broadcasting*, 13 FCC Rcd 15023 (1998)
    (waiver of former extension rules upheld over "unclean hands"
    objection).

[^21]: *See* 47 C.F.R § 0.283.

[^22]: 47 C.F.R. § 0.283(b)(4).

[^23]: *See, e.g., North Pittsburgh Telephone Co.,* 11 FCC Rcd 7626,
    7630-32 (C.C.B. 1996) (considering and rejecting showing of
    \"special circumstances\" in connection with request for waiver of
    rules defining eligibility as \"small\" telephone company). Staff
    consideration of waiver requests in broadcast cases dates back to
    the early days of the industry. *See* *Amendment of Part O to
    Delegate to the Chief, Broadcast Bureau, Authority to Waive the
    Provisions of Section 73.117 and 73.287,* 11 R.R.2d 1627 (1967).

[^24]: *See William J. Kitchen,* 7 FCC Rcd 4169, 4170 (1992), quoting
    *New Orleans Channel 20, Inc. v. FCC,* 830 F.2d 361, 365-66 (D.C.
    Cir. 1987) (\"\[T\]he Commission has the discretion to evaluate
    extension requests on a case-by-case basis, and so long as there is
    no evident disregard for Commission precedent, the staff retains the
    flexibility to bring its informed discretion to bear in resolving
    close cases and accommodating special circumstances.\'\").

[^25]: *Streamlining*, 14 FCC Rcd at 17541. *See also* *Wendell &
    Associates*, 17 FCC Rcd 18576 (2002) (affirming the staff's denial
    of a request to waive the construction deadline). *See generally*
    *Peninsula Communications, Inc.,* 13 FCC Rcd 23992, 23997 (1998)
    (staff waiver of translator ownership rule to avoid loss of service
    to the public in "white area" upheld by Commission), 16 FCC Rcd
    11364, 11370 (2001) (order to show cause why the waivers should not
    be discontinued due to operational status of new FM station), 18 FCC
    Rcd 4027 (A.L.J. 2003) (terminating translator waiver based on newly
    operational first FM service in the community).

[^26]: Piedmont alleges that several cases support use of the unclean
    hands doctrine in administrative proceedings such as this one. *See
    Carroll Touch, Inc. v. Electro Mechanical Sys., Inc.,* 15 F.3d 1575,
    1581 (Fed. Cir. 1993); *Consolidated Aluminum Corp. v. Foseco
    Int\'l, Ltd.,* 910 F.2d 804, 812 (Fed Cir. 1990); *WKAT, Inc. v.
    FCC,* 296 F.2d 375, 383 (D.C. Cir. 1961).

[^27]: *See TCI Cablevision of Oakland County, Inc.*, 13 FCC Rcd 16400
    (1998) (unclean hands argument will not be considered where it
    duplicates an argument already rejected); *See also Hooten
    Broadcasting, Inc.*, 13 FCC Rcd 15023 (1998) (where petitioner did
    not demonstrate character violations by an applicant, it did not
    show that the unclean hands doctrine precluded waiver of the
    broadcast construction rules).

[^28]: Under the rules in effect at the time, the staff could not
    approve an application to assign the construction permit for an
    unbuilt station if the parties would receive consideration exceeding
    reasonable and prudent expenses. *See* 47 C.F.R. § 73.3597(c)
    (1996).

[^29]: Piedmont highlights changes such as HarryCo's claim of a van as a
    \$16,875 expense on the first statement, and exclusion of this item
    on its second statement after Piedmont noted that the van had been
    repossessed and was not being assigned.

[^30]: *See Fox River Broadcasting, Inc.,* 93 F.C.C.2d 127, 129 (1983);
    *see also LUJ, Inc.*, 17 FCC Rcd 16980 (2002).

[^31]: HarryCo maintains that its changes were an appropriate response
    to Piedmont\'s assertions, which alerted it to the need to submit
    additional documentation for some matters and to adjust the amounts
    claimed for others. For example, HarryCo states that it reduced its
    claims for employee salary in half, in recognition of the fact that
    the employees worked for an additional HarryCo station as well as
    WKVE. In response to Piedmont\'s statement that HarryCo's claim of
    \$9,535 for studio lease costs was overstated, HarryCo states that
    it determined that the amount was understated because the lessor was
    maintaining that it owed more than \$48,000 for the studio lease,
    including late fees, and that it therefore adjusted its claim upward
    to the larger amount.

[^32]: *See generally, Fatima Response, Inc.*, 14 FCC Rcd 18543 (1999),
    *recon dismissed*, 15 FCC Rcd 10520 (2000) (no misrepresentation
    found where submission of inaccurate information was due to
    carelessness, and applicant was willing to correct its mistake).

[^33]: These matters were alleged in a Petition for Reconsideration of
    the HarryCo/Southern assignment filed by Dyer. The staff dismissed
    Dyer's petition because he failed to demonstrate pursuant to 47
    C.F.R. § 1.106(b)(1) why he was not able to participate in earlier
    stages of the proceeding. Piedmont, which has been a party
    throughout this proceeding, also raised this forgery issue in its
    Reply to Petition to Deny, and we will thus consider the issue
    herein.

[^34]: *See Character Qualifications in Broadcast Licensing,* 102 FCC 2d
    1179, 1193-95 (1986), *recon. granted in part, denied in part,* 1
    FCC Rcd 421, *modified,* 5 FCC Rcd 3252 (1990).

[^35]: Piedmont makes these allegations in a Consolidated Reply and in a
    Complaint, both filed November 14, 1996. The Consolidated Reply
    seeks adverse action on applications, while the Complaint requests
    investigation into Southern\'s qualifications, and criminal charges.
    *See* 47 C.F.R. § 1.17 (truthful written statements); 18 U.S.C. §
    1001 (fraud and false statements in federal proceedings).

[^36]: *Astroline Communications Co. v. FCC,* 857 F.2d 1556, 1561 (D.C.
    Cir. 1988).

[^37]: *See* *Serafyn v FCC*, 149 F.3d 1213, 1216 (D.C. Cir. 1998).

[^38]: *Fox River Broadcasting*, *Inc.,* 93 F.C.C.2d 127, 129 (1983).

[^39]: *Black Television Workshop*, 8 FCC Rcd 4192, 4198 n.41 (1993)
    (subsequent history omitted).

[^40]: The submission was made within the current term of WKVE's
    license. The license was granted on September 11, 1996, and will not
    expire until December 1, 2003. Accordingly, consideration of a
    forfeiture for any misconduct in connection with this submission is
    timely. *See* 47 C.F.R. § 1.80(c).

[^41]: *See* note 14 *supra*.

[^42]: The staff has a pending application on FCC Form 316 to transfer
    control of Southern from Samuel Cooper to James Hill (File
    BTCH-19980827EC).

[^43]: The Smith letter refers to Hurricane Fran as occurring "a few
    weeks ago" but that reference is not conclusive as to the date of
    the letter. We take notice that Hurricane Fran hit North Carolina on
    September 6, 1996. *See*
    <http://lwf.ncdc.noaa.gov/oa/reports/fran/fran.html#INTRO>. Either
    the September 27, 1996, date on the letter as submitted to the
    Commission or the October 14, 1996, date claimed in the affidavit
    are plausible.

[^44]: *See* 47 C.F.R. § 73.3526(e)(12). Southern submitted
    issues/programs lists from its public inspection file in response to
    Piedmont's petition to deny a 1997 application to assign the
    station's license to Pinnacle Southeast, Inc. Southern intended the
    lists to rebut Piedmont's argument in that case concerning the
    adequacy of Southern's issue-responsive programming. Action on the
    application to assign the license to Pinnacle Southeast was deferred
    and Southern has since applied to assign the license to EMF instead.

[^45]: *Black Television Workshop*, 8 FCC Rcd 4192, 4198 n.41 (1993)
    (subsequent history omitted).

[^46]: *See Character Qualifications in Broadcast Licensing,* 102
    F.C.C.2d at 1190-91 (Commission is concerned with \"misconduct which
    demonstrate\[s\] the proclivity of an applicant to deal truthfully
    with the Commission and to comply with our rules and policies\").

[^47]: *See Broadcast Associates of Colorado, Inc.,* 104 F.C.C.2d 16
    (1986) (applicant did not make actionable misrepresentation when it
    certified that all information in application was true and complete,
    although at time of certification, applicant had not reviewed
    engineering portion of application); *OPUS Media Group, Inc.,* 11
    FCC Rcd 15485 (1996) (allegations of misrepresentation unsupported
    by documentation); *Joseph Bahr,* 10 FCC Rcd 32 (Rev. Bd. 1994) (no
    *prima facie* case of intent to deceive).

[^48]: 47 C.F.R. § 1.17.

[^49]: Similarly, the nature of the matters here are not, as Piedmont
    claims, appropriate for referral to the Department of Justice for
    prosecution under 18 U.S.C. § 1001. *Cf. Berlin Communications, Inc.
    v. FCC,* 626 F.2d 869, 875 (D.C. Cir. 1979) (urging the Commission
    to refer to the U.S. Attorney for prosecution cases \"of the
    magnitude and as obvious as" one in which a broadcaster\'s license
    was revoked for fraudulent practices).

[^50]: The misrepresentation was limited to the date of the letters, not
    their content.

[^51]: *See* 47 C.F.R. § 73.1015 (truthful written statements in
    response to Commission inquiries).

[^52]: *See Edwin L. Edwards, Sr.,* 16 FCC Rcd 22236, 22248-49 (2001)
    (monetary forfeiture appropriate when principal temporarily
    abdicated control, but warning sufficient for misstatement); *Knox
    Broadcasting, Inc.,* 12 FCC Rcd 3337 (1997) (admonishing permittee
    for isolated failure in extension application to provide accurate
    information regarding its finances, zoning, and construction time
    frame); *Zephyr Broadcasting, Inc.,* 11 FCC Rcd 19627 (1996)
    (admonishing permittee for isolated failure to disclose loss of
    financial qualifications). *Compare* *Contemporary Media, Inc.*, 14
    FCC Rcd 8790 (1999) *subsequent history omitted* (revocation of
    broadcast license after hearing based in part on licensee's
    knowingly false statements to Commission concerning involvement of a
    convicted child molester in station operations); *Chameleon Radio
    Corp.,* 11 FCC Rcd 11088 (1996), *license revoked in* *hearing* 12
    FCC Rcd 19348 (ALJ 1997) (license revocation based on licensee's
    false statement of involuntarily site loss in connection with
    request to operate from a different location, when licensee
    abandoned the original site because it preferred to serve a
    different community).

[^53]: *Forfeiture Policy Statement and Amendment of Section 1.80 of the
    Rules to Incorporate the Forfeiture Guidelines*, 12 FCC Rcd 17087,
    17115 ("*Forfeiture Policy Statement"*).

[^54]: 47 U.S.C. § 503(b)(2)(D); *see also* 47 C.F.R. § 1.80(b)(4).

[^55]: *Cf. Federal Communications v. WOKO, Inc.,* 329 U.S. 223, 227
    (1946) (even seemingly "useless" deceptions are of concern).

[^56]: 47 C.F.R. § 1.80(f)(3).

[^57]: The construction permit for the upgrade had been tolled pursuant
    the Commission's revised construction rules. *See* 47 C.F.R. §
    73.3589.

[^58]: *See* 47 C.F.R. § 73.207.

[^59]: *Cut and Shoot, Texas*, 11 FCC Rcd 16383 (M.M.B. 1996).

[^60]: *Streamlining of Radio Technical Rules*, 14 FCC Rcd 5272, n.45
    (1999).

[^61]: *Amendment of Table of Allotments (Amherst and Lynchburg,
    Virginia)*, 11 FCC Rcd 5247 (M.M.B. 1996).

[^62]: *See* File No. BLH-19970924KE.

[^63]: 47 C.F.R. § 73.207.

[^64]: *Cut and Shoot, Texas*, 11 FCC Rcd at 16383-84.

[^65]: *See* 47 C.F.R. § 73.3517 (1996), *modified* *Streamlining of
    Radio Technical Rules, Report and Order,* 14 FCC Rcd 5272 (1999).

[^66]: *See, e.g.*, *State of Oregon, Memorandum Opinion and Order*, 15
    FCC Rcd 15456 (2000) (affirming dismissal of application for a new
    construction permit that would conflict with another station's
    licensed facilities, despite the existing station's pending
    application to license different facilities).

[^67]: 47 C.F.R. § 73.208 (a)(3)(iii).

[^68]: *Id.; See also Conflicts Between Applications and Petitions for
    Rule Making to Amend the FM Table of Allotments*, 8 FCC Rcd 4743
    (1993).

[^69]: Piedmont has not demonstrated standing as a party in interest
    with respect to the Amherst rulemaking. No party in interest to that
    proceeding filed an objection to the Upgrade Application.

[^70]: *See* 47 C.F.R. § 1.1914.

[^71]: The assignment authorization shall contain the following
    condition: The parties shall not consummate this transaction prior
    to a grant of the pending license renewal application for station
    WKVE(FM), File No. BRH-20030801AJL.