Before the

**FEDERAL COMMUNICATIONS COMMISSION**

# Washington, D.C. 20554

In re Applications of ) MM Docket No. 88-577

)

LIBERTY PRODUCTIONS, ) File No. BPH-870831MI

A LIMITED PARTNERSHIP )

)

WILLSYR COMMUNICATIONS ) File No. BPH-870831MJ

LIMITED PARTNERSHIP )

)

BILTMORE FOREST ) File No. BPH-870831MK

BROADCASTING FM, INC. )

)

SKYLAND BROADCASTING ) File No. BPH-870831ML

COMPANY )

)

ORION COMMUNICATIONS ) File No. BPH-870901ME

LIMITED )

)

For A Construction Permit For A )

New FM Broadcast Station on )

Channel 243A At Biltmore Forest, )

North Carolina )

# MEMORANDUM OPINION AND ORDER

**Adopted: April 12, 2001; Released: May 25, 2001**

By the Commission: Commissioner Tristani dissenting and issuing a
statement.

1\. In this order, we reverse the Administrative Law Judge's decision,
*National Communications Industries*, 5 FCC Rcd 2862, 2879 ¶ 8 (ALJ
1990), insofar as it disqualified Liberty Productions, Limited
Partnership (Liberty) on the site certification issue, and we accept the
Amendment that Liberty filed on November 10, 1999. We also deny the
motions to enlarge issues filed on November 12, 1999 by Orion
Communications Limited (Orion) and Biltmore Forest Broadcasting FM, Inc.
(BFBFM) and on November 24, and December 13, 1999 by Willsyr
Communications, Limited Partnership (Willsyr). We also deny the Joint
Request for Approval of Settlement filed November 14, 2000 by BFBFM and
Liberty. For the reasons set forth below, we find that Liberty is
ineligible for the 35 percent New Entrant Bidding Credit that it
received in the closed broadcast auction that commenced on September.28,
1999. Subject to the payment of the full gross amount of its winning bid
in the Closed Broadcast Auction, and compliance with all applicable
payment procedures, we therefore grant Liberty's pending long form
application, as amended, and dismiss the mutually exclusive applications
of the other remaining applicants.

**I. BACKGROUND**.

2\. The above-captioned applicants seek a construction permit for a new
FM station on channel 243A at Biltmore Forest, North Carolina. After an
evidentiary hearing before an Administrative Law Judge, the ALJ issued
an Initial Decision disqualifying Liberty on site availability and site
certification issues.[^1] The Commission affirmed Liberty's
disqualification on the site availability issue without considering the
ALJ's findings on the site certification issue. The Commission also
affirmed the ALJ's determination that Orion was the comparative winner
based on its superior integration proposal.[^2]

3\. Timely notices of appeal of the Commission's decision in this case
were pending before the United States Court of Appeals for the District
of Columbia when that court issued its decision in *Bechtel v. FCC*,[^3]
invalidating the primary comparative criterion on which the Commission
had relied in granting Orion's application. Thereafter, the Commission
stayed all comparative broadcast proceedings[^4] and ultimately
determined to resolve frozen hearing proceedings by competitive bidding
procedures.[^5] The court, on March 15, 1994, remanded this case to the
Commission for further consideration in light of *Bechtel* and, in a
separate action, subsequently ordered the reinstatement of Orion as the
interim operator on Channel 243A pending resolution of the
above-captioned proceeding to select the permanent licensee.[^6]

4\. Pursuant to the Commission's competitive bidding procedures for
mutually exclusive commercial broadcast applications, the above
captioned applicants were identified as the only qualified bidders
eligible to compete for a license for Channel

243A in Biltmore Forest.[^7] The order referring these applications to
the Mass Media Bureau for processing in accordance with our auction
procedures also indicated that, if Liberty were the high bidder, the
hearing proceeding would resume to consider the ALJ's previously
unreviewed findings on the false certification issue.[^8]

5\. Liberty filed its short-form application on August 19, 1999. The
auction commenced on September 28 and closed on October 8, 1999. Liberty
was the high bidder, followed by BFBFM, Orion, and Willsyr,[^9] and the
adjudicatory proceeding was resumed to consider the false certification
issue involving Liberty's transmitter site and Liberty was afforded an
opportunity to file a supplemental brief on that issue.[^10]

6\. In accordance with Section 73.5005 of the Commission's Rules, 47
C.F.R. § 73.5005, Liberty submitted an amendment to its long-form
application on November 10, 1999. Two of the unsuccessful bidders, Orion
and Willsyr, filed oppositions to Liberty's November 10, 1999 amendment
of its long-form application. [^11] Following the resumption of the
adjudicatory proceeding on November 23, 1999, Orion, Willsyr and BFBFM
also filed motions to enlarge the issues against Liberty.[^12]

7\. Pursuant to Section 0.111(b) of the rules, 47 C.F.R. § 0.111(b), the
Enforcement Bureau serves as the Commission's trial staff in this
adjudicatory proceeding. The Assistant General Counsel, Administrative
Law Division, has afforded the Enforcement Bureau an opportunity to file
comments on the above-described pleadings.[^13] The Bureau recommends
that the issues be decided in Liberty's favor, and that the various
motions to enlarge issues should be denied. However, the Bureau believes
Liberty is ineligible for the 35 percent New Entrant Bidding Credit.
Thus, it recommends that Liberty should be required to pay the full
amount of its winning bid at the time of final payment. Separate replies
have been filed by Liberty, Orion, BFBFM, and Willsyr.[^14]

8\. On November 14, 2000, BFBFM and Liberty filed a Joint Request for
Approval of Settlement.[^15] Pursuant to the attached agreement Liberty
would dismiss its application, BFBFM would reimburse Liberty for its
legitimate and prudent expenses,[^16] and BFBFM and Liberty's general
partner would enter into a consulting agreement. The agreement, however,
is contingent on BFBFM being designated the winning bidder based on its
bid of \$643,500 in Round 12 and on Liberty receiving a full refund of
its down payment and not incurring any penalty under 47 C.F.R. §
1.2109(c) for not paying its high bid of \$2,336,000. The settlement
agreement is opposed by the Enforcement Bureau and by unsuccessful
bidders Orion and Willsyr, who ranked third and fourth, respectively, in
the auction. Consolidated replies have been filed by Liberty and by
BFBFM, and Liberty has filed a separate reply to the Enforcement
Bureau's opposition.

**II. DISCUSSION**

II. 

9\. For the reasons set forth below we find no basis to approve a
settlement agreement that is contingent on Liberty and BFBFM being
relieved of obligations incurred during the September 1999 auction. We
also find no basis to dismiss Liberty's short-form application. We
conclude further that its November 10, 1999 amendment specifying a new
transmitter site may be accepted without regard to the Commission's
earlier adverse resolution of the site availability issue, and that the
amendment does not reflect a change of control of the applicant. As to
Liberty's basic qualifications, we find no basis to specify either false
certification or misrepresentation/lack of candor issues against Liberty
and we reverse the ALJ's determinations on the site certification issue
relating to Liberty's original proposal. Finally, we conclude that,
because of the numerous attributable media interests of Cumulus
Broadcasting, Liberty is not eligible for the 35 percent new entrant
bidding credit.

1.  **Settlement Agreement**

10\. We reject the proposed settlement agreement insofar as it is
expressly conditioned on BFBFM being designated the winning bidder for
less than its final net bid of \$1,518,400[^17] and the dismissal of
Liberty's application without a penalty and for a full refund of its
down payment. The parties assert that Liberty participated in the
auction in good faith and remains willing to honor the bids it made in
the auction, but that, in the interest of expediting the resolution of
this proceeding, is now willing to dismiss its application and
relinquish its claim to the construction permit. BFBFM, alleging that
Liberty's short-form application was defective, urges that it should
receive the license for its Round 12 bid of \$643,500 (the final net bid
placed against an applicant other than Liberty), and that Liberty should
not be liable for any default penalty. Liberty, on the other hand,
maintains that its short-form application was not defective, that it has
not defaulted, and that there is, in light of the proposed settlement,
thus no basis for the Commission to impose a penalty or retain its down
payment. The Enforcement Bureau asserts that the possible benefits of
the settlement agreement are too insubstantial to offset the direct and
tangible loss to the treasury as well as the likely damage to the
auction process and the likelihood of additional litigation concerning
BFBFM's basic qualifications. It notes that Liberty's offer to
relinquish its bid for the permit comes after the filing of numerous
pleadings challenging Liberty's eligibility for a claimed bidding
credit, its basic qualifications, and the acceptability of its
short-form application. Waiving the default penalty and offering BFBFM
the license for less than its final bid in these circumstances, the
Bureau predicts, would have broad implications in future auction cases.
Willsyr and Orion urge that, as a matter of fairness, the withdrawal of
Liberty's application would require a second auction. Orion also objects
to various aspects of the settlement agreement.

11\. Section 1.2109(c) provides that, if a winning bidder defaults, "the
Commission may either re-auction the license to existing or new
applicants or offer it to the other highest bidders (in descending
order) at their final bids."[^18] It provides further that "\[a\]
winning bidder who is found unqualified to be a licensee, fails to remit
the balance of its winning bid in a timely manner, or defaults or is
disqualified for any reason after having made the required down payment
will be deemed to have defaulted and will be liable for the payment set
forth in Section 1.2104(g)(2)." The settling parties urge that the
voluntary withdrawal of Liberty's application pursuant to a post-auction
settlement agreement does not constitute a default under Section
1.2109(c), and that no other provision of the Commission's rules
precludes BFBFM from being designated the winning bidder based on its
bid in Round 12 or requires that Liberty be assessed a penalty. But
Section 1.2109(b) provides that "\[i\]f a winning bidder withdraws its
bid after the Commission has declared competitive bidding closed . . .
the bidder will be deemed to have defaulted, its application will be
dismissed, and it will be liable for the default payment specified in
Section 1.2104(g)(2)." Furthermore, default, as defined by Section
1.2104(g) of the rules, includes "bidders ... who default on payments
due after an auction closes or is disqualified." Notwithstanding
Liberty's asserted good faith during the auction and its continued
willingness to make payments due after the auction, Liberty, by virtue
of the settlement, will "withdraw\[\] a bid after the Commission has
declared the competitive bidding closed" and it will not remit "payments
due after an auction closes." Approval of an agreement expressly
conditioned on BFBFM being offered the license for less than its final
bid and Liberty not incurring a default penalty therefore would require
a waiver of Sections 1.2104 and 1.2109.

12\. The settling parties cite the unusual circumstances of this case,
as well as the public interest benefit of expediting the resolution of a
long-pending case, as justifying a waiver of the rules to allow BFBFM to
return to its bid in Round 12 and to allow Liberty to withdraw its
application with a full refund of its down payment and without incurring
any penalty under section 1.2104(g). It is unclear, however, that the
settlement would expedite resolution of this case, given that there are
unresolved questions as to BFBFM's basic qualifications and that the
other applicants would have an opportunity to raise additional issues
against BFBFM following its designation as the winning bidder. [^19]
That this case was litigated through the Commission and the courts
before we decided to use auctions to resolve these cases provides no
basis to distinguish this case from other auction proceedings, and is
therefore not a basis to waive these auction procedures. Indeed, the
Commission specifically advised applicants in the hearing cases to
"carefully consider the impact of auction rules prescribing penalties in
the event of default or disqualification" in deciding whether to
participate in the auction. 14 FCC Rcd at ¶ 16. None of BFBFM's other
equitable arguments persuade us to waive section 1.2109(c) and offer the
license to BFBFM for any amount less than its final bid in Round 27.

13\. It would also not serve the public interest to approve a settlement
agreement expressly conditioned on the license being offered for less
than final net bids placed during the auction. The efficacy of auction
procedures designed to discourage insincere bids would be seriously
impaired if bidders could, without penalty, expunge their bids after the
close of the auction. To permit such post-auction abandonment of final
bids here would clearly be unfair to Orion and Willsyr, who might have
pursued quite different bidding strategies, had they been aware that
bids could be withdrawn after the auction. Similar considerations would
militate against waiving any default penalty owed by Liberty under
Section 1.2104(g)(2). Therefore, because we are not prepared to offer
the license to BFBFM for less than its final net bid of \$1,380,600 in
Round 27 or to permit Liberty to dismiss its application without
penalty, we deny the request to approve the agreement without
considering whether any of its other provisions would provide additional
reasons for its rejection.

**2. Short-Form Application**

14\. There is no merit to BFBFM's contention that because Liberty's
short-form application did not contain all requested information, it
should now be summarily dismissed pursuant to Section 1.2105(b) of the
Rules, 47 C.F.R. § 1.2105(b). The Public Notice, released July 9, 1999
by the Bureaus, announcing the filing procedures for this auction
contains the following instruction that, as BFBFM notes, is addressed to
"All applicants."[^20] "*\[B\]idders or attributable interest holders in
bidders must certify under penalty of perjury that the bidder complies
with the Commission's policies relating to media interests of immediate
family members."* (Emphasis in original.)

15\. This certification was not included in the short-form application
that Liberty filed on August 19, 1999. This omission, however, is not a
basis to now dismiss the application or to set aside the results of the
auction without opportunity for resubmission after the filing deadline,
as BFBFM claims. First, the applicable Commission rules do not expressly
provide that a short-form application omitting this particular
certification is unacceptable for filing and will be dismissed with
prejudice (*i.e*., with no opportunity to supply the missing
certification after the short-form filing deadline). In this regard,
Section 73.5002(b) provides that "\[t\]o participate in broadcast
service or ITFS auctions, all applicants must timely submit short-form
applications (FCC Form 175), along with all required certifications,
information and exhibits, pursuant to the provisions of 47 C.F.R. §
1.2105(a) and any Commission public notices." Also, pursuant to Section
73.5002(c), applicants for a broadcast auction are subject to the
provisions of 1.2105(b) regarding the modification and dismissal of
their short-form applications. Section 1.2105(a) specifies information
that must be included in the short-form application, but Section
1.2105(b) requires the dismissal with prejudice, without the opportunity
to correct after the applicable filing deadline, only of any application
"that does not contain all of the certifications required pursuant to
this section," a narrower category of information. The certification as
to media interests held by family members is not one of the
certifications specified in Section 1.2105(a), the omission of which
renders a short-form application unacceptable for filing and subject to
dismissal under Section 1.2105(b), if provided after the short-form
filing deadline.[^21] Thus, although Section 73.5002(b) specifies that
the short-form application must contain any certification required by a
Public Notice, the rules do not provide notice that the omission of such
a certification, as opposed to a certification required by Section
1.2105(a), will result in the dismissal of the short-form application
with no opportunity to amend.

16\. Second, the Bureaus' July 9, 1999 Public Notice, on which BFBFM
relies, does not expressly state that the omission of this particular
certification or of any certification not specifically listed in Section
1.2105(a) will render the short-form application defective pursuant to
Section 1.2105(b), such that it cannot later be amended. The Public
Notice, although generally admonishing the pending long-form applicants
to file complete short-form applications, only states generally that
"\[f\]ailure to submit required information by the resubmission date
will result in the dismissal of the application and inability to
participate in the auction."[^22] It does not state that failure to
submit all of the requested information will render the application
unacceptable for filing, such that the defect could not be cured after
the filing deadline. Rather, this general admonishment merely echoes the
general requirements applicable to all short-form information. As to
that broader class of information, dismissal may be warranted after the
filing deadline if the information is not provided, but only where the
applicant has been advised by public notice that its application is
defective and has failed to timely supply the information. *See* Section
1.2105(b)(3). The staff, however, did not advise Liberty of the omitted
certification, nor afford it an opportunity to correct its short-form
application by supplying the missing certification.[^23] This
circumstance, while insufficient to preclude the dismissal of an
application subsequently found to have omitted certifications required
by Section 1.2105(a) or to otherwise be in patent conflict with the
Commission's rules,[^24] further militates against BFBFM's suggestion
that the earlier omission of the familial certification from Liberty's
short-form application now warrants setting aside the results of the
auction.

17\. As noted, the record now contains the omitted information regarding
Liberty's compliance with the Commission's policies relating to media
interests held by family members. Liberty has submitted a declaration
under penalty of perjury, dated November 24, 1999, from its sole general
partner certifying that no member of her family has any interest in any
medium of mass communications.[^25] Having supplied the requisite
certification regarding the insulation of the sole limited partner,[^26]
Liberty was generally required to submit ownership information only as
to its sole general partner, Valerie Klemmer. Her declaration is
therefore sufficient to supply the omitted information as to compliance
with the Commission's policies regarding media interests held by family
members. The accuracy of the certification has not been challenged. The
initial omission of information now supplied by her unchallenged
post-auction declaration is therefore not an impediment to the grant of
Liberty's long-form application.[^27]

18\. Furthermore, as discussed above, the July 9^th^ Public Notice,
containing only a general admonishment as to the obligation to file
complete short-form applications without specifying the consequences of
omitting the certification in question, does not provide sufficient
notice that a short-form application not containing the familial
certification must be dismissed at this juncture even though the
requested information has now been provided.[^28] Fairness demands
explicit notice for a severe sanction, such as the dismissal of an
application. *See generally Salzer v. FCC*, 778 F.2d 869, 871-72 (D.C.
Cir. 1985) ("fundamental fairness . . . requires that an exacting
application standard, enforced by the severe sanction of dismissal
without consideration on the merits, be accompanied by full and explicit
notice of all prerequisites for such consideration"); *Trinity
Broadcasting v. FCC*, 211 F.3d 618 (D.C. Cir.2000), vacating the
Commission's denial of an application to renew a license for violation
of a regulation that was insufficiently clear to warn the licensee of
what was expected; *Satellite Broadcasting v. FCC*, 824 F.2d 1 (D.C.
Cir. 1987), setting aside the dismissal of an application that had not
been timely filed in the correct location because Commission rules had
not clearly specified the location at which the applications should be
filed.

19\. The absence of the certification in Liberty's short-form
application is therefore not a basis to dismiss its application. Nor
does fairness demand that we set aside the result of the auction and
hold a second auction to select the permittee. BFBFM claims that it
relied on the omitted certification in Liberty's short-form application
in developing its bidding strategy and that it would be unfair not to at
least reauction the frequency under these circumstances. BFBFM, however,
points to nothing in the Commission's rules, in its orders adopting the
auction rules, or in Public Notices issued by the staff in connection
with this particular auction affirmatively stating that the omission of
the certification in question from a short-form application would
warrant such an action. There were not, for example, conflicting
provisions specifying different consequences for such an omission.
Rather, BFBFM misinterpreted Sections 1.2105 and 73.5002 to require the
dismissal now of Liberty's short-form application, based upon an over
broad reading of the staff's July 9^th^ Public Notice. That
misunderstanding, however, does not warrant dismissing Liberty's
application or impair the integrity of the auction so as to require that
we set aside Liberty's selection as the permittee.

**3. Amendment to Long-Form Application**

20\. Notwithstanding the contentions of Orion, Willsyr and BFBFM, there
is no basis to reject the minor engineering change proposed in the
amendment, filed November 10, 1999, by Liberty. The amendment was timely
filed following Public Notices announcing the results of the auction and
the resumption of the hearing proceeding to consider unresolved issues
relating to the winning bidder's basic qualifications.[^29] The
Enforcement Bureau supports its acceptance, and the competing
applicants, although raising various substantive objections to the
amendment as discussed below, have not identified any technical
deficiency that would bar its acceptance from an engineering standpoint.

21\. [Transmitter Site:]{.underline} When Liberty filed its application
in August 1987, it specified a site located on Busbee Mountain. Upon
learning that the site was unavailable, Liberty sought to amend to
specify a second site. The ALJ, concluding that Liberty never had
reasonable assurance of the original site, rejected the amendment and
ultimately disqualified Liberty on site availability and site
certification issues.[^30] Citing that determination, Orion and Willsyr
challenge the post-auction amendment insofar as it specifies a third
transmitter site. They urge that Liberty should not be permitted to
amend to a new location when it never had reasonable assurance of a
transmitter site in the first place. Willsyr relies on earlier cases
rejecting for lack of good cause site amendments, where the availability
of the original site was not shown. Sections 73.3522(a) and 73.3573,
governing post-auction amendments, do not require that an amendment be
supported by good cause and the unavailability of the original site
would not, in any event, be a basis to reject a site amendment. Now that
competing broadcast applications are to be resolved by competitive
bidding procedures, rather than by comparative hearing, the Commission
has repealed the requirement that broadcast applicants certify the
availability of a suitable transmitter site.[^31] Winning bidders in the
frozen comparative cases face significant monetary penalties if they are
disqualified for any reason (including the inability to secure a
suitable transmitter site).[^32] In these circumstances the Commission
decided to adjudicate unresolved site issues, even against an auction
winner, only to the extent there is a substantial and material question
of false certification.[^33]

22\. The site availability issue, moreover, was never finally
adjudicated. The Review Board affirmed the ALJ's adverse resolution of
that issue, and the Commission denied Liberty's application for review,
as well as its subsequent petition for reconsideration.[^34] Liberty,
however, appealed the denial of its application for lack of a
transmitter site to the United States Court of Appeals for the District
of Columbia Circuit. As noted above, the court remanded this proceeding
to the Commission without considering the merits of any issue raised on
appeal. To reject Liberty's amendment based on our earlier, non-final
determination on the site availability issue would effectively require
that Liberty renew its court appeal of that ruling, and that the parties
litigate an issue that is no longer relevant now that the permittee will
be selected by auction. Such litigation would, as we explained in the
*First Report and Order*, serve only to delay service to the public and
would, thus, disserve the public interest.

23\. [Cumulus Broadcasting:]{.underline} Orion urges that the amendment
should be rejected on the separate ground that it impermissibly brings
in a new investor, Cumulus Broadcasting. It relies in this respect on
Liberty's September 10, 1999 loan agreement with Cumulus, reported to
the Commission on September 27, 1999, the details of which were provided
in the November 10, 1999 amendment. There, Liberty certified that,
although the proceeds of the loan will exceed 33 percent of Liberty's
total asset value, the agreement does not provide Cumulus an option to
acquire the construction permit (or the license) and does not authorize
it to broker time on or manage the station. According to Orion, Cumulus
is the nation's third largest broadcaster with numerous media holdings
and it would have a realistic potential to influence Liberty's conduct
as a licensee. Orion further contends that the loan agreement, funded by
such a large media group owner, undermines the Commission's premise that
the auction price would reflect the applicants' similar prosecution
expenses and circumvents the closed nature of the auction. It also cites
the Commission's recent amendment of Section 73.5008, 47 C.F.R. §
73.5008, to specify that certain debt interests are attributable for
purposes of determining eligibility for the new entrant bidding credit.
The loan agreement with Cumulus, according to Orion, represents the type
of manipulation of the process by a large broadcast group owner that the
rules were intended to prevent. It requests, finally, that the
Commission order Liberty to submit copies of the September 10, 1999 loan
agreement and any amendments to the agreement.

24\. Section 309(l)(2) restricts qualified bidders to applicants who
filed mutually exclusive applications before July 1, 1997. Neither the
statute nor the Commission's implementing rules, however, precludes
applicants from borrowing money from a bank or another lender in order
to participate in the auction. The Commission has specifically rejected
the view that the closed nature of these auctions required the adoption
of special disclosure requirements to ensure against the participation
of new investors. The uniform Part 1 ownership disclosure standards, the
Commission concluded, were sufficient to effectuate the purpose of
Section 309(l)(2)'s requirement that the auction be limited to the
pending applicants. But it agreed that, consistent with the Part 1 rules
providing that a short-form application is considered newly filed and
would be dismissed if it is amended by a major amendment, a change in
the control of an applicant subject to 309(l), would render it
ineligible to participate in the auction.[^35] A major amendment to a
long-form application subject to Section 309(l)(2) would likewise render
the application ineligible to be granted after an auction that is
statutorily restricted to applicants who filed their applications before
July 1, 1997.

25\. In this regard, the applicable auction rule, Section 1.2105(b)(2),
47 C.F.R. § 1.2105(b)(2), provides that "an application will be
considered newly filed if it is amended by a major amendment and may not
be resubmitted after the applicable filing deadline." A major amendment
is defined as including "changes in ownership of the applicant that
would constitute an assignment or transfer of control, changes in an
applicant's size which would affect eligibility for designated entity
provisions, and changes in the license service areas identified on the
short-form application on which the applicant intends to bid." That
provision, significantly, has not been amended to reflect either the New
Entrant Bidding Credit, or eligibility standards requiring the
attribution of media interests of investors holding significant debt
interests, as well as significant equity interests, in an auction bidder
claiming new entrant status.[^36] A change affecting eligibility for the
New Entrant Bidding Credit, in other words, does not necessarily
constitute a major amendment within the meaning of Section 1.2105(b)(2).
Thus, absent evidence that Cumulus has a controlling *ownership*
interest in the applicant, Liberty's September 17, 1999 amendment
reporting the September 10, 1999 loan agreement does not constitute a
major amendment within the meaning of Section 1.2105(b)(2).

26\. The issue, therefore, is whether the September 10, 1999 loan
agreement with Cumulus constitutes a change in the control of the
applicant so as to warrant the dismissal of its application, or the
rejection of the November 10 amendment, pursuant to the Part 1
disclosure standards. We conclude that it does not. The Cumulus loan was
first reported in Liberty's September 27, 1999 amendment to its
short-form application. And, in the November 10, 1999 amendment, Liberty
has certified that, in accordance with the Part 1 rules, the loan
agreement, as amended, does not provide Cumulus with an option to
acquire the license or any right to broker time on or manage the
station.[^37] It has also stated that the agreement never contained such
an option.[^38] In these circumstances, there is no basis to direct
Liberty to submit a copy of the loan agreement to the Commission, as
Orion requests. Such submission would not be required under section
1.2112(a)(4) unless Cumulus had an ownership interest, or an option to
acquire an ownership interest, in Liberty. Orion has not raised a
substantial and material question as to the reliability of Liberty's
certification that would warrant rejecting the November 10 amendment to
Liberty's long-form application, or directing Liberty to submit a copy
of the agreement.

27\. To the extent Orion relies on the amendment of Section 73.5008, the
adoption of special attribution rules governing eligibility for the new
entrant bidding credit did not modify the applicable Part 1 disclosure
rules. In deciding to attribute for this purpose certain debt and equity
interests, the Commission "emphasize\[d\] that this debt/equity standard
does not preclude an individual or entity (including any existing
broadcaster) from investing any amount in a prospective broadcast
auction applicant."[^39] The adoption of special eligibility criteria is
therefore not a basis to reject Liberty's November 10, 1999 amendment.

28\. Orion suggests, nevertheless, that Cumulus may have replaced
Liberty's limited partner and 65 percent equity holder, David Murray.
Only speculation supports the suggestion that there has been an
(unreported) structural change in the applicant, however. Orion relies
on certifications that Liberty made regarding Murray that were intended
to support the claim that no ownership information needed to be provided
for Murray. Specifically, Liberty certified in the November 10, 1999
amendment that Murray has not been involved (and will not be involved)
directly or indirectly, in the management or operation of the
applicant's media-related activities, that he is not a creditor of the
applicant, and that his total equity contribution does not exceed 33
percent of the total asset value of the applicant. These certifications
do not raise a substantial and material question that Murray no longer
has an ownership interest in Liberty, but are completely consistent with
his stated position as limited partner. And, as noted above, Orion has
not raised a substantial and material question as to the reliability of
Liberty's various certifications regarding the Cumulus loan agreement.
In these circumstances, its funding of Liberty's participation in the
auction is not inconsistent with Section 309(l)(2), or with the Part 1
disclosure rules generally, and this funding does not raise a
substantial or material question that Cumulus has an ownership interest
in the applicant. There is thus no basis to reject the amendment. We
address below the separate question of whether media interests of
Cumulus are attributable to Liberty for the purpose of determining
Liberty's eligibility for the new entrant bidding credit. We note,
however, that the provisions of the loan agreement have no relevance to
that question inasmuch as Liberty does not rely on the terms of the
agreement to support its claim that Cumulus' media interests are not
attributable.

29\. In a related context, we deny Willsyr's second motion to enlarge
issues that likewise questions whether there has been an unreported
change in Liberty's ownership structure. Willsyr relies primarily on
representations contained in the November 10 amendment regarding the
lack of involvement in partnership affairs and the extent of the equity
contributions of Liberty's sole limited partner (David T. Murray). On
this basis Willsyr seeks an issue to determine whether Liberty has
misrepresented its ownership structure. (These representations relate to
Liberty's certification that Murray's media interest is not attributable
for purposes of the New Entrant Bidding Credit.[^40]) In this respect,
the motion, filed December 13, 1999 is untimely. *See* Section
1.229(b)(3), 47 C.F.R. § 1.229(b)(3), specifying that motions to enlarge
issues based on newly discovered facts must be filed within fifteen days
after the discovery of such facts.[^41]

30\. Even assuming that the motion had been timely filed, it is without
merit. It does not raise a substantial and material question of fact as
to whether Liberty has misrepresented Murray as a current 65 percent
limited partner. Willsyr focuses on the certification in the November 10
amendment that Murray's total equity contributions are less than 33
percent of the total asset value of the applicant and that there has
been no communication with Murray since 1990.[^42] It also cites the
general partner's November 24, 1999 declaration stating that Murray's
total equity contribution was only \$36,000, although Willsyr's reliance
on this additional information is less than clear. Without mentioning
the Cumulus loan explicitly, Willsyr alleges that the "some \$2 Million
in debt" that Liberty assumed without communicating with Murray
evidently diluted his partnership share.[^43] But the declaration is
clear that the general partner calculated that Murray's total equity
contribution was less than 33 percent of total asset value before she
certified on the short-form application that Liberty was eligible for
the New Entrant Bidding Credit and before the September 10 loan
agreement with Cumulus.

31\. To the extent that Willsyr questions the continued status of Murray
based on the substantial costs Liberty presumably incurred since 1990,
the general partner has exclusive authority to borrow money on behalf of
the partnership. Thus, the assertion that the partnership allegedly
incurred significant expenses without asking for a further capital call
from (or even communicating with) Murray does not raise a substantial
and material question as to Murray's continued status as limited
partner. And, in any event, Liberty disputes the costs alleged by
Willsyr, and states that, thus far, it has only borrowed \$303,680 from
Cumulus. Finally, there would be no motive for Liberty to conceal the
ouster or resignation of Murray as limited partner under the
circumstances before us.

**4. Eligibility for New Entrant Bidding Credit**

32\. [Background:]{.underline} To fulfill its statutory responsibilities
regarding designated entities, the Commission adopted a new entrant
bidding credit for bidders with no, or very few, other media
interests.[^44] Section 73.5007(a) provides that "\[a\] thirty-five (35)
percent bidding credit will be given to a winning bidder if it, and/or
any individual or entity with an attributable interest in the winning
bidder, have no attributable interest in any other medium of mass
communications, as defined in Section 73.5008." Section 73.5008(c) of
the rules specifies that attributable interests in a winning bidder or
in a medium of mass communications shall be determined in accordance
with the broadcast multiple ownership rules (that is, 47 C.F.R. §
73.3555 and note 2). Additionally, on August 5, 1999, the Commission
amended that provision to provide for the attribution of media interests
held by individuals and entities whose interest in the bidder would not
otherwise be attributable under the Commission's multiple ownership
rules (*e.g.*, a lender or a limited partner not materially involved in
the partnership's media activities).[^45] Specifically, section
73.5008(c), as amended, specifies that: "\[i\]n addition, the
attributable mass media interests, if any, held by an individual or
entity with an equity and/or debt interest(s) in a winning bidder shall
be attributed to that winning bidder for purposes of determining its
eligibility for the new entrant bidding credit, if the equity (including
all stockholdings, whether voting or nonvoting, common or preferred) and
debt interest or interests, in the aggregate, exceed thirty-three (33)
percent of the total asset value (defined as the aggregate of all equity
plus all debt) of the winning bidder." The Commission advised that
participants in the September 28, 1999 auction would be subject to the
revised attribution standards. [^46]

33\. To support its claimed eligibility for a 35 percent New Entrant
Bidding Credit, Liberty certified on its August 19, 1999 short-form
application that "neither it nor any of its attributable interest
holders have any attributable interest in any other media of mass
communications as defined in 47 C.F.R. § 73.5008." On September 27,
1999, as noted above, Liberty amended the short-form application to
reflect the September 10 loan agreement with Cumulus. Additionally,
Liberty's November 10, 1999 amendment to the long-form application
reflects that its 65 percent limited partner, David Murray, has a 50
percent interest in the permittee of a station in Colonial Heights,
Tennessee. Liberty asserts that, for purposes of the new entrant bidding
credit, the media interests of Cumulus are not attributable, because the
loan agreement was executed after the August 20, 1999 deadline for
filing short-form applications. The interest of David Murray is not
attributable, according to Liberty, because his limited partnership
interest does not exceed 33 per cent of Liberty's combined debt and
equity.

34\. [Cumulus Broadcasting]{.underline}: Turning first to the September
10, 1999 loan agreement with Cumulus, we reject Liberty's assertion
that, because the loan agreement was executed after the short-form
filing deadline, the lender's numerous media interests are not
attributable for purposes of the New Entrant Bidding Credit. Liberty
relies on language in the July 9, 1999 Public Notice,[^47] advising that
"\[t\]he bidder's attributable interests shall be determined as of the
short form (FCC Form 175) filing deadline -- August 20, 1999." [^48]
That statement, read in context, does not reflect that eligibility for
the New Entrant Bidding Credit is unaffected by subsequent ownership
changes, however. Indeed, the very next sentence in the Public Notice
directs that "\[b\]idders intending to divest a media interest or make
any other ownership changes, such as resignation of positional
interests, in order to avoid attribution for purposes of qualifying for
the New Entrant Bidding Credit must have consummated such divestment
transactions or have completed such ownership changes by no later than
the short-form filing deadline -- August 20, 1999." Both sentences are
in boldface. Read together, they clearly reflect that a bidder could not
qualify for, or upgrade a previously claimed bidding credit, based upon
ownership or positional changes occurring after the short-form filing
deadline. But the impact of subsequent changes that, if recognized,
would eliminate or diminish a previously claimed bidding credit is not
expressly addressed.

35\. That issue, as the Enforcement Bureau notes, was directly addressed
in a later Public Notice, issued September 17, 1999, clearly reflecting
that changes made after the August 20, 1999 short-form filing deadline
could reduce, or completely eliminate, a previously claimed New Entrant
Bidding Credit. In a section advising applicants of their Section 1.65
responsibility to maintain the accuracy and completeness of information
contained in their short-form applications, bidders were "reminded that
if ownership changes result in the diminishment or loss of a New Entrant
Bidding Credit due to the attributable interests of new attributable
interest holders, such information must be clearly stated in the
bidder's amendment material."[^49] "In such cases," the staff advised,
"the Commission will make appropriate adjustments in the New Entrant
Bidding Credit prior to computation of down and final payment amounts
due from any affected winning bidders." Liberty narrowly reads the
September 17, 1999 Public Notice as applying only to ownership
interests. The language, however, expressly encompasses "attributable
interests of new attributable interest holders." Cumulus, by virtue of
its debt interest in Liberty, is a "new attributable interest holder."
Because Cumulus's ownership interest in more than three broadcast
stations is attributable to Liberty, there has been an "ownership change
. . . due to the attributable interests of \[a\] new attributable
interest holder\[\]."

36\. Contrary to Liberty's assertion, the July 9, 1999 Public Notice is
not a final action that became effective upon its release to the public
and that is no longer subject to review or reconsideration. Prospective
bidders were expressly advised in the July 9 Public Notice that "\[t\]he
Commission may amend or supplement its public notices at any time, and
will issue public notices to convey any new or supplemental information
to bidders . . . \[and that\] it is the\[ir\] responsibility . . . to
remain current with all Commission Rules and with all public notices
pertaining to this auction."[^50] Nor does the fact that the Commission
continued to advise prospective bidders in subsequent broadcast auctions
that eligibility for the New Entrant Bidding Credit would be determined
as of the short-form filing deadline support Liberty's claims. Clearly,
material included in public notices for subsequent auctions has no
bearing on the terms governing this particular auction. More
importantly, those notices contain the identical language quoted above
indicating that, in order to avoid attribution for purposes of the New
Entrant Bidding Credit, the divestiture of media interests must have
been consummated by the short-form filing deadline. As in the case of
the July 9, 1999 Public Notice, the cited language does not provide that
eligibility for the New Entrant Bidding Credit is established as of the
short-form filing deadline without regard to the subsequent acquisition
of debt or equity interests.

37\. Furthermore, Section 5008(c), as amended, is clear that the media
holdings of a lender are attributable, for purposes of the New Entrant
Bidding Credit, if the lender's debt interest exceeds 33 percent of the
bidder's total asset value. Liberty has certified in its November 10,
1999 Amendment, Exhibit D, that the proceeds of the Cumulus loan will
exceed 33 percent of Liberty's total asset value. By virtue of its loan
agreement with Cumulus, the numerous media interests of Cumulus are
attributable to Liberty. Liberty is thus ineligible for the New Entrant
Bidding Credit without regard to whether the media interest of its sole
limited partner, David Murray, is also attributable.

38\. Having concluded that Liberty does not qualify for the 35 percent
bidding credit, we next consider the appropriate remedy. As the
Enforcement Bureau notes, the Commission, in implementing its statutory
obligations regarding the prevention of unjust enrichment, previously
determined not to require reimbursement from licensees who utilized a
New Entrant Bidding Credit to obtain a broadcast licensee if they
subsequently acquired media interests that would have rendered them
ineligible for the New Entrant Bidding Credit. The Commission's concern,
13 FCC Rcd at 15998 ¶ 195, was that this would effectively punish the
most successful broadcasters. The attribution of Cumulus' extensive
media holdings, based on the pre-auction loan agreement and pursuant to
the Commission's effort "to insure that only true new entrants qualify
for the bidding credit," 14 FCC Rcd at 12543-45 ¶ 7, does not raise
similar concerns. The stricter attribution standards were based on a
record reflecting "that holders of nonvoting stock and debt interests
may be able to influence broadcast licensees in a significant manner" so
that disregarding such interests "would be contrary to the new entrant
bidding credit's diversification goals." *Id.* at 12545 ¶ 7. In order to
effectuate the intent of the revised attribution standards it is
appropriate to require that Liberty remit in full its winning bid.

39\. It is not appropriate, however, to dismiss Liberty's application or
to set aside the results of the auction because it incorrectly claimed
the 35 percent bidding credit. For the reasons set forth in paragraph 25
above, there is no merit to BFBFM's contention that the change in
Liberty's bidding status is a major amendment warranting the dismissal
of Liberty\'s application pursuant to Section 1.2105(b) of the rules. We
are also not persuaded that the change in Liberty's bidding status so
alters the circumstances under which the auction was conducted as to
require that we set aside its results. BFBFM is correct that we have
generally refused to allow a bidder to change its designated status
after an auction. We have taken this position in recognition of the
facts that bidding credits confer significant advantages on auction
participants and that a post-auction increase in such credits alters
core circumstances likely to have influenced the bidding strategies of
the other auction participants.[^51] The same cannot be said for a
post-auction change that removes a credit believed to have been in place
during the auction. Clearly, Liberty's mistaken belief that it was
entitled to a 35 percent bidding credit could have affected the amount
it was willing to bid for the license. But we fail to see how that
mistake would have deprived the other auction participants of
information as to Liberty's valuation of the frequency, or would have
otherwise influenced their bidding strategies. Indeed, requiring full
payment of Liberty's winning bid preserves the integrity of the auction.

40\. Nor is there a basis to add false certification or character
issues, as requested by BFBFM and Willsyr, because Liberty erroneously
claimed the 35 percent New Entrant Bidding Credit. Motions filed by
BFBFM and Willsyr requesting such issues are therefore denied. Prior to
the start of the auction and prior to the filing of any motions to
enlarge issues, Liberty disclosed its loan agreement with Cumulus,
acknowledged that the proceeds of the loan would exceed 33 percent of
Liberty's total asset value, and explained its belief that Cumulus'
media interests were not attributable. And, although the attribution of
Cumulus' interests is required to effectuate the underlying purpose of
the New Entrant Bidding Credit, Liberty's certification of eligibility
under the circumstances reflected above does not raise a substantial and
material question that the certification was deliberately false, or
otherwise raise a question as to the basic qualifications of either
Liberty or Cumulus.

41\. To raise a substantial and material question of deceit, it is
necessary to show that the statement was inaccurate or materially
incomplete and that there was an intent to deceive. *See Fox River
Broadcasting, Inc.*, 93 FCC 2d 127, 129 (1983). Intent may, as BFBFM
suggests, be inferred from motive. *Joseph Bahr*, 10 FCC Rcd 32, 33
(Rev. Bd. 1994). However, the Commission has generally not found an
intent to deceive where the misstatement resulted from a mistaken
interpretation of the law. *High Country Communications*, 4 FCC Rcd
6237, 6238 (1989). *See also Baker Creek Communications*, 13 FCC Rcd
18709 (WTB 1998) (finding bidder qualified for LMDS license despite its
erroneous assertion of designated entity status, where applicant had
fully disclosed its ownership structure and acted under the erroneous
assumption that the structure comported with the requirements of the
Commission's designated entity provisions).

42\. Significantly, Liberty's view that Cumulus' interests are not
attributable is based on a literal reading of language in the July 9,
1999 Public Notice. That interpretation, although erroneous, is not so
specious or frivolous as to raise a question as to Liberty's
truthfulness and reliability in dealing with the Commission. And, as
noted above, Liberty divulged sufficient facts prior to the auction to
permit a determination as to its eligibility for the New Entrant Bidding
Credit. In these circumstances we find no basis for a false
certification issue, particularly since this is the first case applying
the requirements for entitlement to a bidding credit for new entrants.
At the same time, however, we do not find BFBFM's request for a false
certification issue so frivolous as to warrant, as Liberty suggests, the
imposition of sanctions against BFBFM.

43\. Although the date of the execution of the Cumulus agreement is
irrelevant in determining eligibility for the New Entrant Bidding
Credit, Liberty's truthfulness and reliability is pertinent in assessing
its basic qualifications. *See WOKO, Inc. v. FCC*, 329 U.S. 223 (1946)
(immaterial misrepresentations can be a basis for disqualification).
Here, both BFBFM and Willsyr suggest that, contrary to Liberty's
representation, the loan agreement may have been entered into prior to
the August 20, 1999 filing. Willsyr, for example, intimates that the
agreement may have been "formalized" after the short-form filing
deadline. These allegations, however, are based on sheer speculation. As
such, they likewise do not raise substantial and material questions of
fact that would warrant the specification of misrepresentation or other
character issues against Liberty.

44\. [David T. Murray]{.underline}: We agree with Liberty that, for
purposes of determining eligibility for the New Entrant Bidding Credit,
the media interests of its limited partner, David Murray, are not
attributable, and that its failure to report these interests on its
short-form application is not a basis to specify false certification and
lack of candor issues. As required by Sections 73.5002(b) and 1.2105(a),
governing such filings, Liberty's short-form application accurately
reflected that Murray is a 65 percent limited partner. It also contained
the requisite certification that "no limited partner is or will be
involved, directly or indirectly, in the management or operation of the
media-related activities of the partnership."[^52] Relying on the
Bureaus' July 9, 1999 Public Notice reflecting that "ownership
information need not be provided" with respect to such a limited
partner,[^53] Liberty did not disclose on its short-form application
that Murray has a 50 percent ownership interest in Murray
Communications, the permittee of Station WRZK, located in nearby
Colonial Heights. That information was fully disclosed on Liberty's
November 10, 1999 amendment to the long-form application, however.[^54]

45\. BFBFM asserts that the attribution standards adopted August 5, 1999
made it clear that the media interests of an ostensible limited partner,
such as Murray, are attributable. It surmises further that the media
interest held by Murray renders Liberty ineligible for the claimed
bidding credit, giving it a motive to conceal this interest. Merely
stripping Liberty of its bidding credit, according to BFBFM, is an
inappropriate remedy, because its misrepresentation compromised the
integrity of the auction to the detriment of the other participants.
Orion likewise asserts that the Commission made it expressly clear that
it intended to consider not only the individual equity and debt
interests of an investor, but also the extent of those combined
interests.

46\. As the Enforcement Bureau notes, however, Liberty adhered to
Section 73.5008, as amended, in determining that Murray's media
interests were not attributable for purposes of the New Entrant Bidding
Credit. To the extent that Orion and BFBFM rely on statements in the
text of the order revising Section 73.5008 explaining the rationale for
the revised attribution standards or in notices announcing the revision,
they do not allege that the rule is ambiguous. The rule's underlying
purpose, however, cannot provide the fair notice required by due process
except to the extent it is reflected in the language of the rule.
*Trinity Broadcasting*, 211 F.3d at 631. The actual language of revised
Section 73.5008(c) without regard to any statements as to the intended
impact of the revision, therefore, must govern whether Murray's media
interest is attributable. In this regard, the mass media interests of a
limited partner are attributable within the meaning of Section
73.5008(c) only in two circumstances. First, such interests are
attributable to the winning bidder to the same extent as those of a
general partner, absent a certification of no material involvement by
the limited partner in the management or operation of the partnership's
media-related activities.[^55] Murray's interest in the Colonial Heights
station is not attributable on this basis because Liberty's August 19,
1999 short-form application contained the requisite certification of
noninvolvement.

47\. Second, despite such a certification, a limited partner's media
interests are attributable pursuant to Section 5008(c) insofar as its
equity and/or debt interest(s) in the winning bidder "exceed
thirty-three (33) percent of the total asset value (defined as the
aggregate of all equity plus all debt) of the winning bidder." Murray
has a 65 percent equity interest in Liberty. But Liberty has certified
that Murray is not a creditor of Liberty and that his total equity
contribution to the applicant does not exceed 33 percent of its total
asset value.[^56] Additionally, Liberty has submitted a declaration,
dated November 24, 1999 from its general partner, Valerie Klemmer. The
declaration reflects that, before submitting the short-form application,
she had determined that Murray's total equity investment of about
\$36,000 was substantially less than 33 percent of Liberty's total asset
value of more than \$120,000.[^57] BFBFM has raised no substantial or
material question as to the accuracy of that calculation or the
reliability of Liberty's certification that Murray is not (and will not
be) materially involved in the partnership's media-related activities.
As such, the media interests of Murray are not attributable for purposes
of determining Liberty's eligibility for the bidding credit. It is worth
noting that, if Murray were the general partner, his media interest
would be attributable without regard to his debt/equity contribution. To
the extent that BFBFM suggests otherwise, it has misunderstood that,
pursuant Section 73.5008(c) of the rules, the debt/equity calculus is
relevant only with respect to interests that are not otherwise
attributable under the Commission's multiple ownership rules.

48\. We do not find that Liberty was less than forthcoming in failing to
disclose on its short-form application that David Murray has an
ownership interest in the Colonial Heights station. As Liberty notes,
neither Section 1.2105, nor FCC Form 175 (short-form application), was
amended to reflect the revised standards providing for the attribution,
in certain circumstances, of media interests held by a limited partner.
Having properly concluded that Murray does not have an attributable
interest for purposes of the New Entrant Bidding Credit, Liberty did not
have an affirmative obligation to disclose, on the short-form
application, either Murray's media interests or its basis for the
conclusion that they were not attributable. Disclosure of his
partnership interest, together with the general partner's certification
that he has not been, and will not be, materially involved, directly or
indirectly, in the management or operation of the media-related
activities of the partnership was sufficient. Of course, it would have
been helpful if Liberty's short-form application had also disclosed
Murray's media interest and had included a certification that his 65
percent equity interest (plus no debt interest) was substantially less
than 33 percent of Liberty's total asset value. Such disclosures on the
short-form application might have avoided questions being raised
concerning the media interests held by Murray. We cannot say, however,
that Liberty breached any reporting obligation, or lacked candor, in
failing to include this information on the short-form application.

**5. False Site Certification Issue**

49\. [Background:]{.underline} When Liberty filed its application on
August 31, 1987, it specified a transmitter site on property owned by
Vickey Utter. Liberty's general partner, Valerie Klemmer, certified that
the applicant had reasonable assurance that the site would be available.
In response to a motion to enlarge issues filed by Orion, the ALJ
specified issues to determine whether Liberty has reasonable assurance
of its site and whether it has made misrepresentations about the
availability of the proposed transmitter site.[^58]

50\. After an evidentiary hearing the ALJ resolved both issues against
Liberty. Based upon the statements and deposition testimony of Vickey
Utter that she had never agreed to lease or otherwise promised that
Liberty could use her property as a transmitter site, the ALJ found that
Liberty did not have reasonable assurance of its specified transmitter
site and that Klemmer had misrepresented facts about the availability of
the transmitter site. This misrepresentation, the ALJ determined, was an
independent basis for disqualifying Liberty. The Review Board, although
reciting the ALJ's findings on both the site availability and the false
site certification issues,[^59] affirmed only the ALJ's adverse
resolution of the former issue. Specifically, the Board agreed with the
ALJ that "vague discussions with the site owner, and Liberty's hopes and
expectations, do not support a finding that there was the requisite
meeting of the minds required for reasonable assurance." [^60] Having
affirmed Liberty's disqualification for lack of a transmitter site, the
Board did not consider the separate issue of whether Liberty's
certification was false.[^61] The Commission likewise affirmed Liberty's
disqualification for lack of a transmitter site without addressing the
merits of the false certification issue. Liberty appealed the denial of
its application to the court of appeals. The court remanded the case to
the Commission after *Bechtel*, without considering the merits of any
issue raised on appeal.

51\. As noted in ¶ 21 above, the Commission, in implementing its auction
authority for commercial broadcast services, has repealed the
requirement that broadcast applicants must certify the availability of a
transmitter site.[^62] We must, however, review the ALJ's determination
that Liberty's general partner misrepresented the availability of the
transmitter site when the application was filed, inasmuch as candor
remains important.[^63]

52\. [Discussion:]{.underline} The issue before us concerns the state of
Ms. Klemmer's mind when she certified on the August 31, 1987 application
that Liberty had a transmitter site. We must determine whether that
certification was deliberately false, or whether she believed (even if
such belief was incorrect) that the landowner, Ms. Utter, had made a
commitment to lease the site in the event Liberty secured the
construction permit.

53\. As an initial matter, we decline Liberty's invitation to revisit
the site availability issue. The Review Board denied Liberty's
exceptions on this issue, and the Commission denied Liberty's
application for review and petition for reconsideration. The fact that
it did so without specifying reasons is not, as Liberty submits, a basis
for the Commission to again consider this issue. Although the
Commission's resolution of the site availability issue is not final, it
would be a waste of private and public resources to reconsider an issue
that is no longer relevant to Liberty's basic qualifications, now that
the construction permit is to be awarded after an auction. In this
respect, Willsyr's reliance on *Damsky v. FCC*, 199 F.3d 527 (D.C. Cir.
2000), involving an analogous issue that would be rendered moot under
auction procedures, is misplaced. There, the court affirmed our
adjudication of the financial issue against a non-settling applicant in
the context of a settlement agreement filed before the implementation of
auction procedures. By virtue of the settlement, *Damsky* was decided
without resort to an auction or the policies pertinent to our auction
procedures. In this case, however, there has been no settlement
agreement or other circumstance making it appropriate to adjudicate an
issue that would be relevant only if the licensee were selected through
a process other than an auction.

54\. Despite our determination not to revisit the site availability
issue (that is, whether there was a meeting of the minds sufficient to
establish reasonable assurance of a transmitter site), we recognize that
resolution of the false certification and site availability issues both
entail consideration of the disputed events of August 1987 when Liberty
principal Valerie Klemmer, accompanied by Tim Warner, allegedly
discussed with landowner Vickey Utter the possibility of using her
property for a transmitter site. There is thus some similarity between
Liberty's contentions regarding its disqualification on the false
certification issue and arguments previously rejected by the Commission
in upholding the ALJ's adverse resolution of the site availability
issue. Inasmuch as Liberty's disqualification on the site issue has not
become final (and will never be litigated to a final decision), the
principles of res judicata do not, as BFBFM suggests, preclude
challenges to underlying findings of fact made in connection with the
site availability issue, insofar as they also pertain to the false
certification issue.[^64] Nor are, as Orion suggests, challenges to the
reliability of record evidence barred by the Commission's rejection of
virtually identical claims in upholding the ALJ's adverse resolution of
the site issue. But more important here, as a matter of law the
determination that there was not a meeting of the minds between Klemmer
and the site owner sufficient to establish reasonable assurance of
Liberty's original site does not foreclose a determination that Klemmer
mistakenly believed that the landowner had agreed to lease the property
and thus made the certification in good faith. Resolution of the
misrepresentation issue thus requires us to consider an additional
factual question not previously addressed in either the Board's or the
Commission's disposition of the site availability issue.

55\. Turning to the merits of the false certification issue, it is well
established that substantial evidence of an intent to deceive is
necessary to support a finding of misrepresentation.[^65] For the
reasons that follow we conclude that the ALJ's disqualification of
Liberty on the false certification issue is not supported by substantial
evidence. At the outset, we note that, contrary to the assertions of
BFBFM, Orion and Willsyr, the ALJ made no credibility findings against
Liberty that are entitled to special deference on review.[^66] Indeed,
the Initial Decision is devoid of any specific finding addressing the
credibility of either Ms. Klemmer or Tim Warner, who also testified
about this issue. The ALJ does not acknowledge, let alone assess the
credibility of, Mr. Warner's lengthy testimony about the negotiations
Klemmer claims to have had with Ms. Utter before certifying on Liberty's
application that it had reasonable assurance of a transmitter site
located on her property. Nor does the Initial Decision cite any aspect
of Ms. Klemmer's demeanor \-- including the expression of her
countenance, how she sat or stood, whether she was inordinately nervous,
her coloration during critical examination, or other non-verbal
communication \-- which might convince an observing judge that a witness
was testifying falsely or truthfully but which would be unavailable to a
reader of the written transcript. [^67] Ms. Utter, whose recollection
concerning the site contradicts that of Liberty's witnesses (Klemmer and
Warner), did not testify at the hearing. As such, the ALJ's conclusion,
based on the deposition and statements of Utter, that Klemmer
intentionally deceived the Commission in certifying reasonable assurance
of a transmitter site was not based on any specific credibility findings
that are entitled to special deference on review.[^68] And, as the
Enforcement Bureau notes, the ALJ did credit Klemmer's testimony on
other matters.

56\. The language cited by the competing applicants does not support
their contention that the ALJ made credibility findings against Liberty.
The ALJ, in resolving the false certification issue against Liberty,
found that "Valerie Klemmer has blatantly dissembled in a manner that
doesn't befit a prospective broadcast applicant." *Initial Decision*, 5
FCC Rcd at 2879 ¶ 8. This, however, merely reflects the ALJ's ultimate
resolution of the issue. Ms. Klemmer "had blatantly dissembled," the ALJ
concluded, because "when \[she\] represented to the Commission that
Liberty had available the site specified in their application, she . . .
knew she had no basis for so certifying." He found further that "it
strains credibility . . . \[t\]o argue that her feeble, half-hearted
effort to obtain some of Vicki \[sic\] Utter's land on Busbee Mountain
constitutes 'reasonable assurance.'" What "strain\[ed\] credibility," in
the ALJ's view, was not the testimony of Ms. Klemmer or any other
witness as to the facts and circumstances surrounding her certification,
but that Ms. Klemmer could believe that the landowner had promised to
lease the site. These determinations based upon the ALJ's assessment of
the evidence presented, however, do not constitute credibility findings.
The lack of specific credibility findings, while not undermining the
legal sufficiency of the ALJ's ultimate determination of
misrepresentation, affects the nature of the review pertaining to that
conclusion on appeal. Because that determination is not supported by
specific demeanor findings, we accord it no special deference but assess
whether the ALJ's determination is supported by substantial evidence in
the record. It is the right and the duty of the trier of fact to assess
the credibility of any witnesses based on his observations of their
demeanor. But where, as in this case, the presiding judge has not made
any specific demeanor findings, a reviewing body must proceed to make
its own findings of fact without the benefit of a dispassionate ALJ's
appraisal of the witnesses. [^69]

57\. Based upon our required *de novo* review of the record, we find
that substantial evidence in the record does not support the ALJ's
conclusion that the certification was deliberately false. Relying
primarily on Utter's statements and on the existence of a written lease
for virtually the same transmitter site executed only days before she
purportedly made an oral commitment to lease that property to Klemmer
for the same purpose, the ALJ found that "what appears to have happened"
is that Klemmer, apprised of the need to make an immediate payment to
secure the landowner's commitment to lease her property to Liberty,
declined to do so and went ahead and made the certification on Liberty's
application.[^70] Substantial evidence does not support that finding,
however.

58\. The record reflects that, before certifying reasonable assurance of
a transmitter site, Valerie Klemmer investigated only one site, located
on property owned by Ms. Utter, and that she believed, based upon her
brief August 1987 meeting with Utter, that Utter had agreed to lease her
property for \$4000 per year if Liberty got the license. Klemmer had
contacted Utter at the recommendation of her friend and neighbor, Tim
Warner, who worked at local noncommercial station WCQS. (Tr. 651-52,
849, 851, 933) Warner had dealt previously with Utter and already knew
that her property was desirable as a transmitter site. (Tr. 841, 835,
849) Klemmer's detailed and lengthy testimony as to what transpired when
she met with Utter approximately five days before Liberty's application
was filed, is corroborated in all material respects by the testimony of
Tim Warner, who also attended that meeting.

59\. At the meeting, which Klemmer had arranged, Warner introduced
Klemmer and identified her as an applicant for the Biltmore Forest FM
station. (Tr. 670, 871) Utter remarked that there had been a lot of
recent inquiries about using her property for a site. (Tr. 676-77)
According to the testimony of Klemmer and Warner, however, Utter did not
specifically name anyone who had contacted her regarding a site or
indicate that she had agreed to lease her property for that purpose.
(Tr. 676-77, 679, 876-77, 940-42) Warner is certain he would have
remembered any mention of Brian Lee having a lease with Utter since the
Lee family was well known. (Tr. 940) Both Warner and Klemmer claim that,
when Liberty's application was filed, they were unaware of the written
lease executed August 21, 1987 between Utter and Orion's Brian Lee. (Tr.
659, 676-79, 915, 941, 987) Under the terms of that lease Utter was
entitled to yearly payments of \$1500 that increased to \$4000 once the
tower was constructed. The lease was for three years, and was renewable,
at the lessee's option, for two three-year terms. (Orion Ex. 4; Tr.
2462-64)

60\. Klemmer and Warner testified that they indicated that Klemmer was
interested in leasing a portion of Utter's property for use as a
transmitter site, and that their conversation with Utter included a
discussion of the annual rent and the location of the tower. (Tr. 872)
Klemmer, aware of the need to firm up the cost in order to secure
reasonable assurance, asked Utter how much the rent would be. (Tr. 653,
672, 674, 922) When Utter indicated she would need \$4000 and Warner
indicated that this was a fair price, Klemmer advised Utter that \$4,000
was acceptable.[^71] (Tr. 655-57, 878-80) Both Warner and Klemmer
believed, based on their August 1987 conversation with Utter, that she
had agreed to lease her property for \$4000.00 annually if Liberty got
the license, and that she understood that Klemmer would not need the
site for 18 months to two years, since FCC proceedings tend to be
lengthy. (Tr. 661, 665-67, 680, 810, 884-86, 889, 961) They understood
further that if Liberty received the construction permit, Utter would be
willing to sign a lease at that point. (Tr. 893) Klemmer believed that
the only thing left to work out was the duration of the lease.[^72] (Tr.
810-13)

61\. Further contributing to Klemmer's belief that she had reasonable
assurance of a site was that the August 1987 meeting with Utter included
a discussion, largely between Utter and Warner, as to the general
location of the site. Klemmer, having no experience in selecting
transmitter sites, relied on Warner, who had a great deal of experience
in this area and had dealt previously with Utter. (Tr. 653, 662-63) He
recommended that the site be located at the highest possible elevation
and as close as possible to the television tower already located on
Utter's land, and he pointed to a relatively flat area between the dog
pen and the tower. (Tr. 881-83) Both Warner and Klemmer understood from
the August 1987 meeting that this area was acceptable to Utter, in part
because of its close proximity to the existing television tower. (Tr.
663, 678, 881-83)

62\. After meeting with Utter, Warner and Klemmer discussed whether she
could make a certification of reasonable assurance on Liberty's
application. (Tr. 875) Based on Warner's experience in securing
transmitter sites, Warner's previous dealings with Utter, and the
television tower already located on Utter's property, Warner and Klemmer
believed that Utter's oral commitment to enter into a future lease was
sufficient. (Tr. 681, 809, 905) Warner had had considerable experience
in securing transmitter sites for Station WCQS, and on at least one
occasion he had been the one to certify reasonable assurance on an FCC
application. (Tr. 825, 952-55) Additionally, he had an oral agreement
with Utter allowing station employees to cross her land in order to work
on the station's tower located on adjacent property. (Tr. 845, 846) His
experience was that Utter was willing to enter into verbal agreements,
that she honored such agreements, and that she had never required either
a written agreement or monetary compensation to secure a verbal promise
for a current lease of her property. (Tr. 898-99, 964) Warner was
comfortable advising Klemmer that she had obtained reasonable assurance,
as defined by the Commission, of a future lease of Utter's property for
use as site if Liberty were awarded the construction permit. (Tr.
899-900) His understanding from station WCQS's attorney is that, so long
as a commitment is obtained from the landowner, there is no need for a
written agreement. (Tr. 976) This is what Warner advised Klemmer, but he
also told her to check with her own attorney before making the
certification. (Tr. 906)

63\. Other than Liberty's evident interest in establishing its basic
qualifications, there is little reason to reject the detailed testimony
of Klemmer and Warner. First, the competing applicants urge us to infer
a motive to misrepresent the site's availability from the fact that
Klemmer, having contacted Utter only days before the August 31, 1987
filing deadline, did not investigate any alternative sites. The record
is clear, however, that Warner advised that Utter's was the best site
but that there were other suitable sites. (Tr. 834-35, 957) The
desirability of Utter's property is corroborated by Brian Lee, who
testified that Orion's engineer had likewise advised that a site on
Busbee Mountain would be preferable. (Tr. 2445) The availability of
other suitable sites is illustrated by the fact that the original
thirteen Biltmore Forest applicants specified eleven different sites and
by the ease with which Liberty, upon learning in March 1989 that Utter
was no longer willing to lease her property, specified a second
site.[^73] Significantly, Liberty in its November 10, 1999 amendment has
specified a third site, located on property adjacent to Utter, that it
proposes to share with noncommercial station WCQS. Neither the timing of
the negotiations with Utter, nor the failure to investigate other sites
is probative evidence that Klemmer knew the most desirable site was
unavailable when she certified its availability.

64\. The competing applicants also attack the credibility of Warner's
testimony, asserting that he is not a disinterested witness. But we
discern no basis to infer a motive to deceive on Warner's part. Despite
lengthy cross-examination and repeated questioning by the ALJ, there is
no evidence that Warner has any interest in, or managerial position
with, Liberty. Warner, a career public broadcaster, is fairly committed
to public radio and, although he does not foreclose the possibility of a
really good offer tempting him into commercial radio, he repeatedly
testified that he had no interest in the Biltmore Forest FM station and
no ownership interest in Liberty.[^74] (Tr. 856-57, 951) It is unclear
that friendship, standing alone, would motivate Warner to perjure
himself on Liberty's behalf, particularly given his commitment to public
broadcasting and his station's ongoing contractual relationship with
Utter at the time of the hearing. It is problematic, in our view, that
Warner would have been willing to jeopardize a relationship on which
Station WCQS depended to access its site, and presumably his position as
station manager of that station, by testifying falsely as to the events
surrounding Liberty's specification of a site. Our analysis is not
changed by the fact that Klemmer has apparently retained Warner to
provide engineering services in connection with Liberty's November 10,
1999 filing insofar as it seeks to amend to a new transmitter site that,
as reflected above, is to be shared with Station WCQS. [^75]

65\. We note, moreover, that despite Klemmer's extensive reliance on
Warner in selecting the site and in negotiating with Utter, his
pre-certification efforts on Liberty's behalf were based primarily upon
information already available to Warner and entailed a minimal time
commitment. Warner had been contacted by other potential Biltmore Forest
applicants for advice in locating a site, because of his experience in
selecting sites generally and because of the location of his station's
tower on Busbee Mountain. (Tr. 830-31) He knew that Utter's property
would be suitable for Klemmer's purposes, given his dealings with Utter
and his investigation of other Busbee Mountain sites. (Tr. 833-35, 843,
848-49) He also knew that Utter's property was one of the few without
restrictive covenants precluding the construction of a tower because, in
exploring alternate sites for WCQS, he had researched the deeds in the
spring of 1987. (Tr. 837, 840-41, 843-44) We do not find it incredible
that a neighbor and friend would be willing to give advice, based
largely on his own expertise and involving little time commitment,
without expecting an interest in the application. Neither Warner's
friendship with Klemmer, nor the extent of her reliance on his
expertise, provide a basis to infer that Warner had a motive to deceive
the Commission or to otherwise reject his very extensive testimony as to
what occurred when he and Klemmer met with Utter in August 1987.

66\. There is a direct conflict, we recognize, between the testimony of
Warner and Klemmer and the denials of Vickey Utter that she ever gave
Valerie Klemmer or anyone connected with Liberty any assurance that her
property would be available for a transmitter site. But as noted by the
Enforcement Bureau, based on its independent analysis of this matter,
Utter's deposition testimony and various statements are inconsistent
and, viewed in the best light, reflect only a very sketchy recollection
of the events of August 1987 concerning the possible lease of her
property for construction of a tower.

67\. In this regard, the record shows that Orion's Brian Lee asked
Vickey Utter to explain Liberty's specification of virtually the same
piece of property that was the subject of their August 21, 1987 written
lease. In response, she signed a statement under penalty of perjury on
February 22, 1989, declaring that she did not know Valerie Klemmer, had
never heard of Liberty Productions or given any representative of
Liberty any assurance that her property would be available for use as a
transmitter site.[^76] The substance of that statement was largely
withdrawn, however, after a visit from Warner and Klemmer on March 10,
1989, refreshed Utter's recollection of the August 1987 encounter.
During that visit Utter refused to sign a statement Klemmer had prepared
indicating her willingness to lease the site if Liberty received the
construction permit. But she drafted and signed a second statement on
March 13, 1989, reflecting that she then remembered meeting with Valerie
Klemmer and Tim Warner about one and a half years before and discussing
the possibility of leasing a portion of her land to Klemmer for a
tower.[^77] In that second statement, Utter indicated that "\[a\]t that
time I told them that I had leased a portion of my land to Brian Lee for
a tower to be constructed should he be awarded the new FM station. It
was also discussed the posibility \[sic\] of leasing Valerie a piece of
land for the same purpose but since she never contacted me again I
assumed she found someplace more suitable for her project." At the
request of Brian Lee and Orion's attorney, Utter signed a third
statement on March 29, 1989.[^78] In addition to repeating information
to explain the inaccuracies in the February 22, 1989 declaration, Utter
stated in the March 29, 1989 statement that: "We talked, in my yard, for
a brief period concerning my property lease to Brian Lee. At that time
or any other time I never gave Valerie the promise or assurance that she
could use my land or my name when she filed the application with the
FCC."

68\. Ms. Utter was deposed on April 27, 1989. Her deposition testimony
reflects only a vague memory of the meeting with Klemmer and Warner. She
did not recall being introduced to Klemmer or being told of her
intention to apply for the FM station. She had no idea why Klemmer had
accompanied Warner, and assumed that she was connected with Warner's
station, whose tower was located on property adjacent to Utter's.
(Liberty Ex. 13, p. 24-28). And, despite her March 13, 1989 statement,
she had no recollection of ever discussing the possibility of leasing
Valerie Klemmer a portion of her land for a tower. (Liberty Ex. 13, p.
27). She claims to have included that statement in the March 13, 1989
document because Warner insisted that there had been such a discussion.
(Liberty Ex. 13, p. 41). Yet, according to Brian Lee's testimony, she
remembered this discussion and she had no qualms about entering into a
lease with someone else for another portion of her property. (Tr.
2501-04) Her deposition testimony confirms that, as reflected in her
March 13 and 29, 1989 Statements and as recounted by Brian Lee (Tr.
2499-500), she remembered discussing their written lease with Klemmer
and Warner when they stopped by her house in August 1987. Utter's
recollection is that Warner was aware of the lease, and even knew the
annual rent. Her vivid recollection of a snippet of an otherwise
forgotten conversation is a bit curious. Also troublesome is her
admission in her deposition that she had included information in the
March 13, 1989 statement, of which she had no independent recollection,
based entirely on the recollection of others.

69\. Thus, even crediting only the deposition testimony and various
statements of Ms. Utter (and disregarding entirely the contrary
testimony of Klemmer and Warner), there is not substantial evidence of
an intent to deceive. Utter's statements, rather than providing a
comprehensive and coherent account of the disputed events, reflect only
that she has no clear memory of the August 1987 conversation with
Klemmer and Warner. In her statements and in her deposition she has
variously denied that any meeting occurred at all, or recalled meeting
Klemmer but not being aware that Klemmer intended to apply for the FM
station, or meeting with Klemmer and specifically discussing a lease for
the FM station. In the circumstances, and given Utter's inconsistent
statements, we do not give substantial weight to Utter's assertions that
purport to provide detailed descriptions of what was said or might have
been said, including, for example, her certainty that in any discussion
of leasing her property, she would have insisted on a commitment
(presumably a monetary payment) from Liberty, and would have expected
Klemmer to contact her again. (Deposition at 41-42, 45 (Liberty Exhibit
13); March 13, 1989 Statement; March 29, 1989 Statement) She is likewise
sure that, in August 1987, Warner and Klemmer were aware of her written
lease with Brian Lee. (Deposition at 26-27, 41; March 13, 1989
Statement; March 29, 1989 Statement)

70\. The record reflects, moreover, that Utter understood that only one
applicant would ultimately need a transmitter site and that Brian Lee
would not likely renew the lease unless Orion received the license. (Tr.
2502; Liberty Exhibit 13, p. 14) In these circumstances, there may have
been a casual discussion of a future lease with Klemmer, long forgotten
by Utter, that Klemmer and Warner, not fully understanding that
reasonable assurance requires something more than a possibility of a
future lease, misconstrued as providing reasonable assurance. Consistent
with her only vague recollection of these events, moreover, she might
have felt compelled to reassure Brian Lee that, while she did not feel
constrained from leasing other portions of her property, she had advised
Klemmer and Warner of the written lease agreement for Orion's site**,**
whereas Klemmer and Warner testified that she had not done so. None of
this provides substantial evidence that, when Klemmer certified
reasonable assurance, she knew that the certification was false.

71\. One final matter warrants comment. The existence of the written
lease with Brian Lee is admittedly troublesome. It is somewhat
problematic that Utter, having just signed a lease providing for
up-front payments before the license was awarded, would have been
willing to consider leasing Valerie Klemmer a portion of her property
for the same purpose without requesting a similar monetary
commitment.[^79] For purposes of the false certification issue, however,
the pertinent question is not whether Utter had agreed to lease the site
to Liberty if it received the construction permit. The critical question
instead is Klemmer's understanding at the time of certification.
Particularly in the absence of any reliable evidence that Klemmer was,
or should have been, aware of Brian Lee's lease at that time, its
existence is not probative of false certification. Apart from Utter's
otherwise faulty recollection of her August 1987 conversation with
Klemmer and Warner, however, there is nothing to indicate that anyone
connected with Liberty was aware of the lease at the time of
certification**,** or that, during that conversation, Utter had demanded
a similar written commitment from Liberty. Awareness of Brian Lee's
lease, moreover, cannot be inferred from its recordation on August 21,
1987. Warner's research of the Busbee Mountain properties ended in March
or April 1987, and there is no evidence that Klemmer's former husband, a
real estate attorney, was involved in any transactions concerning Busbee
Mountain during the pertinent time period. (Tr. 944) Nor can awareness
of the lease be inferred, as Willsyr suggests, from the location of
Liberty's originally specified transmitter site. It contends that the
area described in the August 21, 1987 lease is the best possible site,
and that Liberty's specification of a different (less desirable) site
can only be explained by its awareness that Utter had already agreed to
lease the more desirable portion of her property to Orion's Brian Lee.
But the terms of the lease do not include an exact specification of the
site. The location of Orion's site, therefore, could not have been
determined from the August 21, 1987 lease. The coordinates of the sites
specified by Orion and by Liberty, moreover, vary by only one degree.
Furthermore, Warner's detailed testimony reflects that the site's
location was influenced by the terrain of the land and by Utter's desire
that it be as close as possible to the existing television tower, and
that its location on higher ground made Liberty's original site
preferable to Orion's site. (Tr.881-83)

72\. There is, in sum, no basis to reject the consistent testimony of
Klemmer and Warner, contradicted only by Utter's faulty recollection,
that they first learned of the written lease in March 1989 after the
filing of Orion's petition to add the site availability and site
certification issues against Liberty, and that they believed, based upon
their August 1987 conversation, that Utter had expressed a willingness
to lease the land to Klemmer in the event Liberty was the successful
applicant. Only the hearsay testimony of Brian Lee as to what Utter told
him in early 1989 about what had occurred in August 1987, and the
existence of the Utter-Lee lease lend credence to Utter's version of
what occurred. Particularly in light of Utter's admitted lack of
recollection and her clear interest in reassuring Orion's Brian Lee that
her dealings with Liberty were consistent with their written lease
arrangement, neither the existence of the lease nor Utter's various
statements and deposition testimony provides substantial evidence that
Klemmer deliberately misrepresented the availability of the site when
she certified reasonable assurance.[^80] Indeed, if Utter had told
Liberty about her lease agreement with Orion and had then specifically
relied on it to demand a similar commitment from Liberty, it is
difficult to believe that Liberty would have falsely certified about a
matter relating to a site location so well known to a competing
applicant. Because we find no probative evidence of intentional deceit
by Klemmer, let alone substantial evidence of such deceit, we reject the
ALJ's findings on the false certification issue and reverse his
disqualification of Liberty on this issue. We conclude, therefore, that
Liberty is basically qualified to be awarded the construction permit for
a new FM station on channel 243A in Biltmore Forest.

**IV. ORDERING CLAUSES**

73\. ACCORDINGLY, IT IS ORDERED, That the Joint Request For Approval of
Settlement, filed November 14, 2000 by Biltmore Forest Broadcasting FM,
Inc. and Liberty Productions IS DENIED, and the Motion to Strike, filed
January 8, 2001 by Orion Communications, Ltd. IS DISMISSED as moot.[^81]

74\. IT IS FURTHER ORDERED, That the Motions to Strike Reply to
Opposition, filed on December 29, 1999 by Orion Communications Limited
and on January 3, 2000 by Willsyr Communication Limited Partnership, ARE
DENIED;[^82] and the Amendment, tendered for filing on November 10, 1999
by Liberty Productions, A Limited partnership IS ACCEPTED.

75\. IT IS FURTHER ORDERED, That the Motions to Enlarge Issues, filed on
November 12, 1999 by Orion Communications Limited and by Biltmore Forest
Broadcasting FM, Inc. ARE DENIED; and that the Motion to Enlarge Issues
and the Second Motion to Enlarge Issues, filed on November 24, and
December 13, 1999 by Willsyr Communications Limited Partnership ARE
DENIED.

76\. IT IS FURTHER ORDERED, That the Motion to Dismiss Replies, filed on
February 7, 2000 by Orion Communications Limited IS DENIED;[^83] that
*National Communications Industries*, 5 FCC Rcd 2862 (ALJ 1990), is set
aside to the extent reflected herein; and that the hearing proceeding in
MM Docket No. 88-577 IS TERMINATED.

77\. IT IS FURTHER ORDERED, That, subject to full payment of the gross
amount of Liberty's high bid of \$2,336,000 for the permit and full
compliance with all of Commission's payment procedures, the application
filed by Liberty Productions, A Limited Partnership (File No.
BPH-870831MI), as amended, IS GRANTED; and that the

following applications ARE DISMISSED: (a) Willsyr Communications Limited
Partnership (File No. BPH-870831MJ); (b) Biltmore Forest Broadcasting
FM, Inc. (File No. BPH-870831MK); (c) Skyland Broadcasting, Inc. (File
No. BPH-870831ML); and (d) Orion Communications Limited (File No.
BPH-870831ME).

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

Dissenting Statement of Commissioner Gloria Tristani

In Re Applications of Liberty Productions, a limited partnership,
Willsyr Communications limited partnership, Biltmore Forest Broadcasting
company, Orion Communications Limited, *for a construction permit for a
new FM broadcast station on channel 243A at Biltmore Forest, North
Carolina*

Because I do not believe the record justifies reversing both the F.C.C.
Review Board ("Review Board") and the F.C.C. Administrative Law Judge
("ALJ") who held the hearing and heard the witnesses in this matter, I
respectfully dissent. I write separately because the majority's decision
renders our rule against misrepresentation by a licensee almost
unenforceable by requiring direct proof of intent to deceive.[^84]

**I. Procedural History**

The ALJ held a trial-type hearing lasting 8 days.[^85] The ALJ framed
the issue:

> To determine whether Liberty has made misrepresentations to the
> Commission about the proposed transmitter site's availability, and, if
> so, what impact that has on Liberty's basic qualification to be a
> Commission licensee.[^86]

The factual dispute arose from a conversation between the landowner of
the tower site, and two witnesses for Liberty. At the hearing, Liberty's
two witnesses Valerie Klemmer and Tim Warner testified about the meeting
with the site owner.[^87] Liberty subpoenaed the site owner, Ms. Vickey
Utter, but declined to enforce the subpoena, instead relying on her
deposition and sworn statements.[^88] Following the proceeding the
parties submitted findings of fact and conclusions of law.[^89] After
hearing from Liberty's witnesses, the ALJ rejected their testimony
stating:

> When Valerie Klemmer certified to the Commission that Liberty had a
> transmitter site, she had absolutely no basis for doing so. Moreover,
> she knew she had no basis for so certifying.[^90]

After the ALJ's adverse disposition, Liberty sought relief from the
Review Board.[^91] The Review Board affirmed the ALJ stating:

> The ALJ found that Liberty never had reasonable assurance that the
> site which it specified in its application was available, and that its
> *principal falsely certified that the transmitter site was available
> because, "she had absolutely no basis for doing so.* Moreover she knew
> she had no basis for so certifying." His findings and conclusions were
> based on the verified statements and deposition testimony of the site
> owner. Her testimony was in turn corroborated by the fact that other
> applicants who has sought permission to use her land were required to
> enter into a written lease.[^92] (emphasis added)

The Review Board went on to conclude that Liberty's two witnesses
supported, rather than controverted the ALJ's findings, stating:

> Like the ALJ, we find no reason in the record to reject the firm
> denial of the site owner that she had ever given assurance to Liberty
> that the property would be available, especially where twice before
> she had insisted on written agreements.[^93]

Following a remand from the D.C. Circuit for reasons unrelated to the
merits of this dispute, the matter ultimately came before the
Commission. The majority reverses because, "we find that substantial
evidence in the record does not support the ALJ's conclusion that the
certification was deliberately false."[^94] The majority supports this
conclusion saying, "no probative evidence of intentional deceit," exists
and by relying on the failure of the ALJ to make a "specific finding
addressing the credibility" of Klemmer and Warner, Liberty's
witnesses.[^95] The majority thus reaches a different conclusion than
the ALJ who heard the testimony, and the Review Board that examined the
entire record.

####  

**II. Substantial Evidence Exists that Liberty Falsely Certified the
Availability of the Tower Site and is Unqualified to be an F.C.C.
Licensee.**

*De novo* review is not trial *de novo.* Thus, while *de novo* review
authorizes a review of the whole record without deference to facts found
by the ALJ, there can be no doubt that our law universally favors
disposition of questions of credibility or motive by the person or body
that hears the testimony. *De novo* review in the instant case means we
must consider whether the challenged outcome was based on a
consideration of the relevant factors, whether there is record evidence
to support the disposition and whether there has been a clear error of
judgment. While this inquiry must be searching and careful, a hearing on
the merits before an ALJ should be, "the 'main event,' and not simply a
'tryout on the road' to appellate review."[^96]

Here, the property owner swore she did not give any assurance whatsoever
to Ms. Klemmer that the property would be leased to Liberty. If credited
by the factfinder, this fact alone is substantial evidence sufficient to
sustain the adverse determination against Liberty. Moreover, as the
Review Board noted, the rejection of Ms. Klemmer and Mr. Warner's
testimony is supported, rather than controverted by the record. The
sworn testimony of Ms. Utter was not undermined by extrinsic evidence
and was actually supported by the submission of an existing written
lease with Liberty's competitor, Orion. The lease was probative of the
fact that Liberty did not receive the type of site availability
assurance Ms. Utter knew how to give, and in fact had given to Orion. As
found by the ALJ and the Review Board, there is substantial evidence
that Liberty's witness, Ms. Klemmer, knew the representations she made
to the Commission regarding the availability of Ms. Utter's land were
simply false.

> A. The Majority Errs When it Holds No Probative Evidence of Licensee
> Deceit Exists in this Record.

Despite the existence of "admittedly troublesome" documentary evidence,
and a "direct conflict" between the testimony of the site owner and
Liberty's witnesses, the majority makes the surprising claim that the
record contains no "probative evidence" of deceit by Liberty.[^97]
"Probative evidence" has an evidentiary meaning quite distinct from that
which the majority attributes to it.[^98] Careful examination of
paragraphs 58-72 of the majority's opinion discloses not a lack of
probative evidence but instead a complete reweighing of the evidence and
testimony presented. While perhaps permissible, such reweighing is not
advisable. The majority's review of the record proves too much. It is
precisely material inconsistencies and contradictions in and between the
evidence and testimony that is sufficient to support adverse credibility
determinations.[^99]

#### 

#### B. The Majority Errs When it Requires Direct Evidence of Intent to Deceive.

The most troubling aspect of the majority's approach is its conflict
with our cases on the quantum of evidence necessary to find
misrepresentation by licensees. It is well settled that, "intent to
deceive" is a necessary element of proving misrepresentation or lack of
candor in FCC proceedings.[^100] The evidence reviewed by the ALJ and
the Review Board is more than sufficient to support the finding that
Liberty did misrepresent the site's availability *and* intended to
deceive the Commission. The D.C. Circuit has said,

> \[T\]he fact of misrepresentation coupled with proof that the party
> making it had knowledge of its falsity \[is\] enough to justify a
> conclusion that there was fraudulent intent.[^101]

Applying the D.C. Circuit's logic, the majority's preference for an
explicit finding that Liberty's witnesses lied, instead of the existing
finding that Liberty's witnesses had no basis for their representations
to the Commission, is a distinction without a difference. But, it has
the unfortunate effect of suggesting the Commission will not find intent
to deceive unless there is a smoking gun. Questions of credibility,
motive and state of mind are almost universally resolved by reasonable
inferences from direct and circumstantial evidence. The D.C. Circuit has
said, "\[I\]n almost any claim involving motive, a \[civil\]
defendant\'s state of mind is typically established by circumstantial
evidence because of the difficulty in obtaining direct evidence of
motive."[^102] This general understanding also applies in criminal
cases, where the burden of proof is considerably higher than in a civil
action.[^103]

If circumstantial evidence and inferences therefrom suffice to prove
intent beyond a reasonable doubt in criminal trials, it should certainly
satisfy this Agency's standard in a civil licensing matter. Construing
the record before us as lacking "probative evidence" on the question of
deceit amounts to calling for a record that contains a confession of
intent to deceive or requiring the Commission find direct evidence of
deceit. This is a nearly impossible burden to put on the F.C.C.'s
bureaus and judges and renders the bar on misrepresentation
unenforceable except in the most extreme cases. It would also have the
effect of requiring more evidence of deceit at the pleading stage at the
F.C.C. than is required to win a Title VII case or convict a defendant
at trial in Federal court.

#### The Majority Errs when it Requires the ALJ to Enter Findings Stating Witnesses Lack Credibility Prior to Making Adverse Rulings if the Credibility Determinations are Implicit in the Adverse Ruling.

The ALJ found Liberty's arguments, "strained credulity."[^104] The
majority concluded this finding, together with the ALJ's finding that
Liberty lacked "any basis" for certifying the site's availability did,
"not constitute credibility findings."[^105] The majority's conclusion,
that the absence of an express finding regarding the credibility of
Liberty's witnesses weakens the ALJ's ultimate disposition, is
unsupported by any citation to a rule or case that requires that an ALJ
enter an express finding regarding witness credibility.[^106] While such
findings may be preferred, the majority should not create such a duty
out of thin air.

Only the ALJ can be aware of the variations in demeanor and tone of
voice that bear so heavily on the listener\'s understanding of and
belief in what is said. Documents or objective evidence may contradict
the witness' story; or the story itself may be so internally
inconsistent or implausible on its face that a reasonable factfinder
would not credit it. Where such factors are present, the Commission may
well find error even in a finding purportedly based on a credibility
determination.[^107] But when an ALJ's finding is based on a decision to
credit testimony that tells a coherent and facially plausible story that
is not contradicted by extrinsic evidence, that finding, if not
internally inconsistent, can almost never be error.

I am at a loss to explain how the ALJ's rejection of Liberty's testimony
and explicit finding that its position on the evidence, "strained
credulity," can be held to be an inadequate credibility finding.[^108]
The strongly worded findings and conclusions entered by the ALJ, and
affirmed by the Review Board, leave no doubt that Liberty's witnesses
were not only lacking in credibility, but were disbelieved and thought
to have testified falsely. It is an inescapable inference from the ALJ's
findings and conclusions entered that any credibility issues were
resolved against Liberty.

# Conclusion

The majority opinion constitutes an unwise use of our *de novo* review
power. *De novo* review is not for the purpose of retrying the matter.
While the site owner may not have testified at the hearing, the ALJ did
hear from two of three key witnesses*.* The majority has thus exchanged
a result that turned on credibility assessments made by a judge, who
heard the testimony from two of three witnesses, for a result made by
four Commissioners who did not hear from a single witness. Surely the
ALJ is better positioned than this Commission to decide the issue in
question.[^109] The majority's disposition does not reduce the
likelihood of erroneous deprivation of rights in the future nor does it
prescribe improved due process in the future. Thus it does not comport
with the usual purpose of *de novo* review, which is to clarify the
application of legal standards to facts.

Direct conflicts in sworn testimony, and documentary evidence surely
constitutes "probative evidence." A finding that Liberty had, "no
basis," for its certification to the Commission and that its argument,
"strained credulity," is sufficiently clear to constitute any necessary
credibility determination. The Commission, after expending its ALJ
resources in a week long hearing, should be reluctant to substitute its
own view of the facts in the absence of a wildly implausible result.
Here, the majority sends the wrong enforcement message to licensees and
wrong procedural message to its judges. The ALJ's findings and
conclusions, as affirmed by the Review Board, are not implausible and
should be affirmed.

[^1]: The ALJ also disqualified BFBFM on site issues. The parties filed
    exceptions with the Commission's former Review Board. The Board
    affirmed the ALJ's disqualification of both applicants on site
    availability issues. *National Communications Industries*, 6 FCC Rcd
    1978 (Rev. Bd. 1991).

[^2]: ^?^ *National Communications Industries*, 7 FCC Rcd 1703 (1992),
    *recon. denied, Liberty Productions*, 7 FCC Rcd 7581 (1992), *recon.
    dismissed*, 8 FCC Rcd 4264 (1993).

[^3]: 10 F.3d 875 (D.C. Cir. 1993).

[^4]: ^?^ *FCC Freezes Comparative Proceedings*, 9 FCC Rcd 1055 (1994),
    *modified*, 9 FCC Rcd 6689, *further modified*, 10 FCC Rcd 12182
    (1995).

[^5]: ^?^ *Implementation of Section 309(j) of the Communications Act
    \-\-- Competitive Bidding for Commercial Broadcast and Instructional
    Television Fixed Services Licenses (First Report and Order)*, 13 FCC
    Rcd 15920 (1998), *recon. denied*, 14 FCC Rcd 8724 (1999), *aff'd
    sub nom*. *Orion Communications, Ltd. v. FCC*, 213 F.3d 761 (D.C.
    Cir. 2000).

[^6]: ^?^ *Orion Communications Ltd. v. FCC*, 131 F.3d 176 (D.C. Cir.
    1997).

[^7]: ^?^ *Liberty Productions, Inc.*, 14 FCC Rcd 7637 (OGC 1999).

[^8]: ^?^ *Id.*, at 7640 ¶ 6.

[^9]: Each of the above-captioned long-form applicants filed a
    short-form application (FCC Form 175) by August 20, 1999. Skyland,
    however, did not meet the up-front payment deadline and thus was
    unable to bid in the auction. *Public Notice*, DA 99-1912,
    Attachment C (Non-Qualified Bidders) at 3 (Sept. 17, 1999).

[^10]: *Liberty Productions*, FCC 99I-23 (OGC rel. Nov. 23, 1999). The
    following pleadings relating to the site certification issue have
    been filed: (a) Supplemental Brief filed on December 23, 1999 by
    Liberty Productions; (b) Response to Supplemental Brief filed on
    January 7, 2000 by Orion Communications Ltd.; (c) Opposition to
    Supplemental Brief filed on January 7, 2000 by Biltmore Forest
    Broadcasting FM, Inc.; (d) Response to Supplemental Brief filed on
    January 7, 2000 by Willsyr Communications; (e) Reply to (Orion's)
    Response to Supplemental Brief filed on January 24, 2000 by Liberty
    Productions; (f) Reply to BFBFM's Opposition to Supplemental Brief
    filed on January 21, 2000 by Liberty Productions; (g) Reply to
    (Willsyr's) Response to Supplemental Brief filed on January 21, 2000
    by Liberty Productions; (h) Motion to Dismiss Liberty's Replies
    filed on February 7, 2000 by Orion; and (i) Opposition to Motion to
    Dismiss filed on February 17, 2000 by Liberty Productions.

[^11]: ^?^ The following pleadings have been filed: (a) Opposition to
    Amendment filed on November 22, 1999, by Orion Communications Ltd.;
    (b) Reply to (Orion's) Opposition to Amendment filed on December 3,
    1999, by Liberty Productions; (c) Motion to Strike Reply to
    Opposition to Amendment filed on December 29, 1999, by Orion
    Communications Ltd. (d) Opposition to Amendment filed on November
    22, 1999, by Willsyr Communications; (e) Reply to (Willsyr's)
    Opposition to Amendment filed on December 3, 1999, by Liberty
    Productions; (f) Motion to Strike Reply to Opposition filed on
    January 3, 2000, by Willsyr Communications; (g) Consolidated
    Opposition to Motions to Strike filed on January 10, 2000, by
    Liberty Productions; and (h) Reply to Opposition filed on January
    19, 2000 by Willsyr.

[^12]: The following motions to enlarge issues, and responsive
    pleadings, are pending before the Commission: (a) Motion to Enlarge
    Issues filed on November 12, 1999, by Biltmore Forest Broadcasting
    FM, Inc; (b) Opposition to Motion to Enlarge Issues filed on
    November 26, 1999, by Liberty Productions; (c) Reply to Opposition
    filed on December 7, 1999, by Biltmore Forest Broadcasting FM, Inc.;
    (d) Motion to Enlarge Issues Against Liberty Productions filed on
    November 12, 1999, by Orion Communications Ltd.; (e) Opposition to
    Motion to Enlarge Issues and Motion for Leave to File Out Of Time,
    filed on November 29, 1999, by Liberty Productions; (f) Supplement
    to Opposition filed on December 3, 1999, by Liberty Productions; (g)
    Motion to Enlarge The Issues filed on November 24, 1999, by Willsyr
    Communications; (h) Opposition to Motion to Enlarge Issues filed on
    December 3, 1999, by Liberty Productions; (i) Reply to Opposition of
    Liberty filed on December 13, 1999, by Willsyr Communications; (j)
    Second Motion to Enlarge The Issues filed on December 13, 1999, by
    Willsyr Communications; (k) Opposition to Second Motion to Enlarge
    The Issues filed on December 23, 1999, by Liberty Productions; and
    (l) Reply to Opposition of Liberty filed on January 3, 2000, by
    Willsyr Communications.

[^13]: ^?^ *Liberty Productions*, FCC 00I-01 (Jan. 14, 2000).

[^14]: ^?^ The following pleadings have been filed: (a) Comments on
    Basic Qualifications Issues Concerning Liberty Productions, A
    Limited Partnership, filed on February 14, 2000 by the Enforcement
    Bureau; (b) Reply, filed on February 29, 2000 by Liberty
    Productions; (c) Reply to Enforcement Bureau's Comments, filed on
    February 29, 2000 by Biltmore Forest Broadcasting FM, Inc.; (d)
    Response to Comments of the Enforcement Bureau, filed on February
    29, 2000 by Willsyr Communications; and (e) Reply Comments, filed on
    February 29, 2000 by Orion Communications Ltd.

[^15]: The following pleadings have also been filed: (a) Memorandum In
    Support of Joint Request for Approval of Settlement, filed November
    14, 2000 by Biltmore Forest Broadcasting FM, Inc.; (b) Memorandum In
    Support of Joint Request for Approval of Settlement, filed November
    17, 2000 by Liberty Productions; (c) Supplement to Joint Request for
    Approval of Settlement, filed November 20, 2000 by Liberty
    Productions; (d) Opposition to Joint Request for Approval of
    Settlement, filed November 29, 2000 by Willsyr Communications; (e)
    Partial Opposition to Joint Request for Approval of Settlement,
    filed November 29, 2000 by Orion Communications Ltd.; (f) Opposition
    to Joint Request for Approval of Settlement, filed December 5, 2000
    by the Enforcement Bureau; (g) Consolidated Reply to Oppositions,
    filed December 11, 2000 by Biltmore Forest Broadcasting FM, Inc.;
    (h) Consolidated Reply to Oppositions, filed December 11, 2000 by
    Liberty Productions; (i) Reply to Opposition, filed December 15,
    2000 by Liberty Productions; and (j) Motion to Strike, filed January
    8, 2001 by Orion Communications Ltd.

[^16]: Under the proposed settlement Liberty would receive: (a) up to
    \$170,000 in reasonable and prudent expenses in prosecuting its
    application; (b) up to \$27,000 for its potential obligation for
    expenses related to the interim operation; and (c) \$50,000 or such
    lesser amount as the Commission may approve representing interest
    owed on a loan made by Cumulus Broadcasting to Liberty and
    origination costs paid by Cumulus. The agreement also contemplates a
    three-year consulting agreement between BFBFM and Liberty's general
    partner, Valerie Klemmer, whereby she will sign a covenant not to
    compete and will be paid \$75,000 in exchange for providing a
    maximum of 50 hours of consulting services to the station each
    month.

[^17]: ^?^ On its short-form application BFBFM claimed a 35 percent new
    entrant bidding credit, as did each of the other applicants filing
    short-form applications in this proceeding.

[^18]: In adopting auction rules to govern the resolution of the frozen
    comparative cases, the Commission indicated its intent to offer the
    permit to the next highest bidder, rather than conduct a further
    auction, because this would be more expeditious. *First Report and
    Order,*13 FCC Rcd at 15952 ¶ 86, 15953 n.81.

[^19]: *See Liberty Productions,* 14 FCC Rcd 7637, 7640 ¶ 6 (OGC 1999),
    providing that the hearing proceeding would resume to consider,
    *inter alia,* "the question concerning BFBFM's representations as to
    the availability of its transmitter site." The settling parties urge
    that this matter can be expeditiously resolved since no issue was
    ever designated for hearing. Quick resolution of the concerns raised
    by the ALJ as to BFBFM's representations is, of course, possible.
    Another possibility, however, is that the Commission might conclude
    that there is a basis for specifying an issue. In that event, the
    case would be remanded for evidentiary hearings before an
    Administrative Law Judge. This would further delay resolution of
    this case.

[^20]: *Public Notice: Closed Broadcast Auction: Notice and Filing
    Requirements for Auction of AM, FM, TV, LPTV, FM and TV Translator
    Construction Permits Scheduled for September 28, 1999*, 14 FCC Rcd
    10632, 10639 (Jul. 9, 1999).

[^21]: ^?^ The certifications mandated by Section 1.2105(a) include the
    following: (1) certification that the applicant is legally,
    technically, financially and otherwise qualified pursuant to section
    308(b) of the Communications Act; (2) certification that the
    applicant is in compliance with the foreign ownership provisions of
    section 310 of the Communications Act; (3) certification that the
    applicant is and will, during the pendency of the application,
    remain in compliance with any service-specific qualifications
    applicable to the licenses on which it proposes to bid; (4) an
    exhibit, certified as truthful under penalty of perjury, identifying
    all the parties with whom the applicant has an arrangement of any
    kind relating to the license to be auctioned; and (5) certification
    that the applicant has not entered into any arrangements with any
    other party regarding the amount of of their bids or bidding
    strategy. All of these certifications were included in Liberty's
    short-form application.

[^22]: *Public Notice,* Attachment B (Guidelines for Completion of FCC
    Forms and Exhibits), 14 FCC Rcd at 10697.

[^23]: ^?^ *See First Report and Order*[,]{.underline} 13 FCC Rcd at
    15976-47 ¶ 146 ("After reviewing the short-form applications, the
    Bureaus will issue a public notice listing all applications
    containing minor defects, and applicants will be given an
    opportunity to cure and resubmit defective applications").

[^24]: ^?^ *See* 47 C.F.R. § 73.3564, providing that the acceptance for
    filing of an application does not preclude its subsequent dismissal,
    if it is later found to be patently in conflict with the
    Commission's rules.

[^25]: ^?^ The declaration is dated November 24, 1999 and is attached to
    Liberty's November 26, 1999 Opposition to BFBFM's Motion to Enlarge
    Issues.

[^26]: *See* Public Notice, 14 FCC Rcd at 10698 ("\[O\]wnership
    information need not be provided for any limited partner that is not
    materially involved, directly or indirectly, in the management or
    operation of the media-related activities of the partnership. In
    such case(s), the general partner shall certify under penalty of
    perjury, to the limited partner(s)' insulation, in lieu of providing
    the limited partner information").

[^27]: ^?^ *See* Section 1.2105(b)(2), permitting applicants to make
    minor changes in the short-form application after the resubmission
    period.

[^28]: In this regard, the record before us reflects that the short-form
    application filed by Willsyr also omitted this same certification
    and that Willsyr was permitted to participate in the auction with
    impunity. *See Public Notice: CLOSED BROADCAST AUCTION Status of
    Applications to Participate in the Auction*, 14 FCC Rcd 14113, 14140
    (Sept. 3, 1999), including Willsyr Communications, Limited Partner
    on the Accepted List as eligible to participate in the auction.

[^29]: *Public Notice: Closed Broadcast Auction*, DA 99-2153 (Oct. 12,
    1999).(announcing that any amendment to the long-form application
    would be due by November 10, 1999); *Public Notice: Clarification
    Regarding the Resumption of Hearing Proceeding In MM Docket No.
    88-577*, DA 99-2355 (Oct. 28, 1999). *See also Liberty Productions*,
    FCC 99I-23 (OGC 99I-23) (ordering the resumption of the hearing
    proceeding).

[^30]: *National Communications Industries*, FCC 89M-1080 (ALJ rel. Apr.
    5, 1989); *Initial Decision*, 5 FCC Rcd at 2866-67 ¶¶ 39, 49-51.

[^31]: *First Report and Order*, 13 FCC Rcd at 15987-89 (1998), noting
    that the site certification requirement, designed to deter the
    filing of frivolous and speculative applications that frustrated the
    Commission's processing goals, was no longer vital to the
    Commission's goal of expediting the initiation of new service to the
    public. *See also Memorandum Opinion and Order*, 14 FCC Rcd at
    8732-33 ¶ 16 (1999), advising pending applicants to carefully
    consider the impact of auction rules prescribing penalties in case
    of disqualification in deciding whether to participate in the
    auction.

[^32]: Section 73.5004(a) provides generally that broadcast applicants
    are subject to the provisions of 47 C.F.R. §. 1.2104(g) regarding
    payments upon disqualification.

[^33]: *First Report and Order*, 13 FCC Rcd at 15956 ¶ 99.

[^34]: *National Communications Industries*, 5 FCC Rcd at 2866 ¶ 39
    (ALJ), *affirmed,* 6 FCC Rcd at 1979 ¶ 11 (Rev. Bd.), *review
    denied*, 7 FCC Rcd 1703 (1992), *recon denied, Liberty Productions*,
    7 FCC Rcd 7581 (1992), *recon. dismissed*, 8 FCC Rcd 4264 (1993).

[^35]: *First Report and Order*, 13 FCC Rcd at 15942 ¶ 57, *citing* 47
    C.F.R. § 1.2105(b)(2).

[^36]: A new entrant bidding credit of 35 percent is available to
    bidders with no attributable media interests in any medium of mass
    communications. *See* 47 C.F.R. § 73.5007(a). Media interests held
    by an individual or entity with equity and/or debt interests in the
    bidder will be attributed if the equity and debts interest(s), in
    the aggregate, exceed 33 percent of the total asset value of the
    winning bidder. *See* 47 C.F.R. § 73.5008(c).

[^37]: Amendment, Exhibit D.

[^38]: Reply to Opposition, filed December 3, 1999, by Liberty
    Productions, at ¶ 10.

[^39]: *Implementation of Section 309(j) of the Communications Act \-\--
    Competitive Bidding for Commercial Broadcast and Instructional
    Television Fixed Services Licenses*, 14 FCC Rcd 12541, 12545-46 ¶ 10
    (1999) (Hereafter *Eligibility Order*).

[^40]: As discussed in greater detail below, a media interest held by
    Murray would be attributable, pursuant to Section 73.5008(c), if
    Murray were materially involved in the partnership's media-related
    activities, or if his total equity contribution exceeded 33 percent
    of the total asset value (i.e., total debt plus total equity) of the
    applicant.

[^41]: *See also Liberty Productions,* FCC 99I-23, ¶ 4 (OGC Nov. 23,
    1999) ("Motions to enlarge filed in response to Liberty's November
    10, 1999 amendment must be filed by November 26, 1999"). Willsyr
    timely filed a motion to enlarge issues on November 24, 1999.

[^42]: Amendment, filed on November 10, 1999 by Liberty, at Exhibit C.
    The Exhibit also states that its limited partner is not a creditor
    of the applicant.

[^43]: Motion at 2. Elsewhere there is a reference to Liberty having
    "assumed in 1999 some \$2 Million in debt from a broadcast group
    owner." Motion at 1. This makes it evident that Willsyr is referring
    to the Cumulus loan.

[^44]: *First Report and Order*, 13 FCC Rcd at 15994-96 ¶¶ 189-90;
    *Memorandum Opinion and Order*, 14 FCC Rcd at 8761-67 ¶¶ 71-82.

    .

[^45]: *Eligibility Order*, 14 FCC Rcd at 12543-45 ¶¶ 7-8.

[^46]: ^?^ *Memorandum Opinion and Order*, 14 FCC Rcd at 8762 ¶ 71 ("For
    purposes of applying the general broadcast eligibility for the new
    entrant bidding credit in any future auction, we will apply those
    attribution rules as they exist at the time of the short-form filing
    deadline for that auction. "); *Eligibility Order*, 14 FCC Rcd at
    12542 ¶ 3. See also *Public Notice: New Rule Now In Effect
    Concerning Equity/Debt Threshold For Use With Determining
    Eligibility for New Entrant Bidding Credit*, DA-1663 (Aug. 19, 1999)
    ("The purpose of this Public Notice is to provide notification that
    OMB approval has been obtained and Federal Register publication
    occurred today, August 18, 1999. Therefore, the new equity/debt
    threshold rule is now in effect . . . Bidders participating in the
    September 28, 1999 Closed Broadcast Auction and seeking a New
    Entrant Bidding Credit are reminded that they will be subject to the
    \[new\] equity/debt threshold rule").

[^47]: *Public Notice: Notice and Filing Requirements for Auction of AM,
    FM, TV, LPTV, and FM and TV Translator Construction Permits
    Scheduled for September 28, 1999*, 14 FCC Rcd 10632 (Jul. 9, 1999).

[^48]: ^?^ *Id.* at 10639.

[^49]: *Public Notice: Closed Broadcast Auction 224 Qualified Bidders*,
    DA 99-1912, pp. 5-6 (Sept. 17, 1999).

[^50]: 14 FCC Rcd at 10637.

[^51]: ^?^ *See Two Way Radio of Carolina*, 14 FCC Rcd 12035 (1999),
    *affirming*, 12 FCC Rcd 958 (WTB 1997), upholding a staff action
    that had rejected a post-auction amendment purporting to increase
    the bidder's designated entity status, based on the applicant's
    mistaken calculation as to its small business size. *Accord
    Clearcall Inc.*, 12 FCC Rcd 965 (WTB 1997).

[^52]: ^?^ *See* FCC Form 175, filed August 19, 1999, by Liberty
    Productions, Exhibits A and C.

[^53]: *Public Notice*, DA-99-1346, Attachment B (Guidelines for
    Completion of FCC Forms 175 and Exhibits), 14 FCC Rcd at 10698,
    stating that "\[o\]wnership information need not be provided for any
    limited partner that is not materially involved, directly or
    indirectly, in the management or operation of the media- related
    activities of the partnership. In such case(s), a general partner
    shall certify under penalty of perjury, to the limited partner(s)'
    insulation, in lieu of providing the limited partner information."
    *See also Public Notice: Closed Broadcast Auction Ownership
    Disclosure Requirements For Auctions Scheduled For September 28,
    1999*, 14 FCC Rcd 13283 (Aug. 10, 1999).

[^54]: ^?^ Amendment, submitted November 10, 1999, Exhibit C.

[^55]: ^?^ Section 73.3555, note 2(g)(1), of the multiple ownership
    rules provides for the attribution of a limited partnership interest
    unless "th\[e\] partner is not materially involved, directly or
    indirectly, in the management or operation of media-related
    activities of the partnership and the \[applicant\] so certifies."

[^56]: Amendment, submitted for filing on November 10, 1999, by Liberty,
    Exhibit C.

[^57]: ^?^ She calculated total asset value as the combined equity
    investments of the general partner and the limited partner plus all
    debt. See Declaration, dated November 24 1999, at ¶¶ 3-4. The
    Declaration is attached to Liberty's November 26, 1999 Opposition to
    BFBFM's Motion to Enlarge Issues.

[^58]: *Memorandum Opinion and Order*, FCC 89M-1025 (ALJ Mar. 10, 1989).

[^59]: A summary of the Judge's findings, with appropriate citations to
    the Initial Decision, is set forth in paragraph 8 of the Review
    Board's Decision. *National Communications Industries*, 6 FCC Rcd at
    1979 ¶ 8.

[^60]: *National Communications Industries*, 6 FCC Rcd at 1979 ¶ 11,
    noting that the mere possibility that the site will be available is
    insufficient.

[^61]: *Id.* at 1979 ¶ 12 ("Since Liberty is not basically qualified
    because of its disqualification on the site issue, we need not reach
    the issue of whether it misrepresented to the Commission when it
    certified that a transmitter site was available, nor do we have to
    consider whether Liberty is entitled to any comparative credit . .
    .").

[^62]: *First Report and Order*, 13 FCC Rcd at 15956 ¶ 99; *Memorandum
    Opinion and Order*, 14 FCC Rcd at 8732-33 ¶ 16.

[^63]: *First Report and Order*, 13 FCC Rcd at 15956 ¶ 99. *See also
    Dorothy O. Schulze and Deborah Bingham*, 13 FCC Rcd 3259, 3264 ¶ 14
    (1998), aff'd sub nom. *SL Communications v. FCC,* 168 F.3d 1354,
    1359 (D.C. Cir. 1999) (affirming the Commission's refusal to approve
    a settlement agreement that would have effectively granted an
    authorization to an applicant lacking character qualifications).

[^64]: ^?^ *See Georgia Public Telecommunications Commission*, 7 FCC Rcd
    7996, 7999 n.29 (1992), *citing Pantex Towing Corp. v. Glidewell*,
    763 F.2d 1241, 1245 (11^th^ Cir. 1985) (case in which exceptions
    concerning a particular issue were filed but never considered by the
    Review Board, the Commission found that it would be inappropriate to
    give a res judicata or collateral estoppel effect in future
    proceedings to the ALJ's adverse findings on that issue since they
    were not actually litigated to a final decision in which they were
    necessary to the outcome).

[^65]: *Swan Creek Communications v. FCC*, 39 F.3d 1217 (D.C. Cir.
    1994), *citing*, *Weyburn Broadcasting Ltd. Partnership v. FCC,* 984
    F.2d 1220, 1232 (D.C. Cir. 1993) ("'intent to deceive \[is\] an
    essential element of a misrepresentation or lack of candor
    showing'").

[^66]: *See Heidi Damsky*, 13 FCC Rcd 11688, 11693 ¶ 12 (1998), *aff'd
    on other grounds*, *Heidi Damsky v. FCC*, 199 F.3d 527 (D.C. Cir.
    2000), citing *Walnut Creek Honda Associates v. NLRB*, 89 F.3d 645,
    646 (9^th^ Cir. 1996); *Barker v. Shalala*, 40 F.3d 789, 795 (6^th^
    Cir. 1994); *WHW Enterprises, Inc. v. FCC*, 753 F.2d 1132, 1141-42
    (D.C. Cir. 1985).

[^67]: *TeleSTAR, Inc.,* 2 FCC Rcd 7352, 7353 ¶ 11 (1987), *citing
    Penasquitos Village v. NLRB*, 565 F.2d 1074, 1078 (9^th^ Cir. 1977).

[^68]: *See Heidi Damsky*, 13 FCC Rcd at 11693 ¶ 17 (noting specific
    findings by the ALJ that "\[t\]he Presiding Judge has had an
    opportunity to observe \[HPI's\] witnesses and finds their testimony
    forthcoming, candid, and entirely believable"); *Dorothy O. Schulze
    and Deborah Bingham*, 1 FCC Rcd 120, 124 (ALJ 1986), aff'd sub nom.
    *SL Communications v. FCC,* 168 F.3d 1354, 1357 (D.C. Cir. 1999)
    (upholding ALJ's credibility findings rejecting testimony as "sheer
    fabrication" and a "web of lies") (intervening history omitted).

[^69]: *See, e.g., Mid-Florida Television Corp.,* 70 FCC 2d 281, 293-94
    ¶ 25 (Rev. Bd. 1975), *settlement agreement approved,* 49 RR 2d 1477
    (1981)*,* where the ALJ's observations were deemed untrustworthy
    because he had placed presumptive weight on the witnesses' status as
    practicing attorneys.

[^70]: *Initial Decision*, 5 FCC Rcd at 2867 ¶ 50.

[^71]: Warner later explained that, although \$4000 was higher than he
    had hoped, it was not unreasonable. (Tr. 878-79, 904) He knew there
    were other area sites where the rent would be lower. Those sites
    would be less economical in the long run, he advised, because they
    would entail costs that Klemmer would not face with the already
    developed Utter site. He was aware of what was available in the area
    because he had tried to find an alternate site for WCQS when access
    to its current site became a problem.

[^72]: Warner testified that, although the duration of the lease was not
    discussed specifically, he inferred that Utter was amenable to a
    multi-year lease comparable to the lease for the existing television
    tower on her property. (Tr. 963)

[^73]: Liberty's second site was the existing television tower located
    on Utter's property, already specified by Skyland, a competing
    applicant. The ALJ rejected Liberty's site amendment, finding that
    it was not supported by good cause inasmuch as it did not have
    reasonable assurance of the site (on Utter's property) specified in
    its August 31, 1987 application.

[^74]: He did, however, explore the possibility of noncommercial station
    WCQS applying for the Biltmore Forest allotment and then working out
    a channel swap with a commercial station, because this would have
    helped with a third adjacent channel problem at the station's
    current frequency. (Tr. 951) He had also hoped that the owner of the
    station 's current transmitter site would apply for the FM allotment
    and would propose to use that same property for a transmitter site,
    thereby minimizing the possibility of station WCQS having to find
    another transmitter site because of the property's owner's growing
    ambivalence about the use of his property as a transmitter site.
    (Tr. 932)

[^75]: At the time of the hearing, Warner was the general manager of
    station WCQS. We take official notice of the fact that Warner has
    signed the Engineering Exhibit to Liberty's November 10, 1999
    amendment, identifying himself as a technical consultant. The record
    does not reflect whether Mr. Warner is still general manager of
    station WCQS.

[^76]: The February 22, 1989 statement is attached to Liberty Exhibit 13
    and is identified as Exhibit 1. (Liberty Exhibit 13 is a transcript
    of Vickey Utter's deposition.)

[^77]: The March 13, 1989 statement is attached to Liberty Exhibit 13
    (transcript of deposition) as Exhibit 2.

[^78]: The March 29, 1989 statement is attached to Liberty Exhibit 13
    (deposition transcript) as Exhibit 3.

[^79]: But the record contains no evidence as to Utter's precise
    understanding of the lease in 1987; it is not inconceivable that she
    believed that she could agree to (or at least discuss) a future
    lease to be signed only if Orion, having failed to win the license,
    did not renew the lease for a second term.

[^80]: We do not draw any adverse inferences from the fact that Ms.
    Utter, in contrast to Tim Warner and Valerie Klemmer, did not
    testify at the hearing. There is merit to the suggestion that
    Liberty, having subpoenaed Utter and having elected not to enforce
    that subpoena, cannot take advantage of her failure to appear.
    Liberty's failure to enforce the subpoena, however, cannot obscure
    the inconsistencies in Utter's various statements and deposition
    testimony and that, by her own admission, she has little
    recollection of the events in question. Indeed, Liberty was "happy"
    to rely on her deposition and statements precisely because it
    believed that, given her evident lack of recollection, it would get
    nothing further from her by forcing her to testify. We cannot fault
    Liberty for not enforcing the subpoena under these circumstances.

[^81]: Our action herein denying the proposed settlement agreement is
    without regard to the allegedly improper statements contained in the
    responsive pleadings filed by Liberty and by BFBFM.

[^82]: The issue concerns replies that Liberty filed in response to
    oppositions to its November 10, 1999 amendment. These replies,
    according to Willsyr and Orion, are unauthorized under Section 1.294
    of the rules. As the Enforcement Bureau notes, however, Section
    73.3522(b), 47 C.F.R. § 73.3522(b), governing the filing of
    amendments to long-form applications, does not specifically
    authorize the filing of oppositions to such amendments. Furthermore,
    the Order, FCC 99I-23 ¶ 4 (OGC 1999), resuming the hearing
    proceeding in MM Docket No. 88-577contemplated only that motions to
    enlarge issues could be filed in response to Liberty's November 10,
    1999 amendment to its long-form application. Insofar as oppositions
    to that amendment raise questions as to Liberty's basic
    qualifications, or otherwise request the denial of its long-form
    application, they are, in effect, motions to enlarge issues to which
    Liberty, clearly, is entitled to respond. *See First Report and
    Order*, 13 FCC Rcd at 15956 ¶ 98, providing that the auction winner
    will have 15 days to respond to any new petitions to enlarge.
    Instead of dismissing the oppositions as unauthorized, as the
    Enforcement Bureau has suggested, we have considered the arguments
    raised in both the oppositions to the amendment and in the related
    replies. By doing so, we have given the unsuccessful bidders
    multiple opportunities to challenge Liberty's qualifications beyond
    what the rules specifically authorize but have, as a matter of
    fairness, also afforded Liberty ample chance to respond.

[^83]: Orion requests that we dismiss on procedural grounds the separate
    replies that Liberty filed in response to the Oppositions filed by
    Willsyr, BFBFM and Orion. According to Orion, the delegated
    authority order, FCC 99I-23, rel. Nov. 23, 1999, according Liberty
    an opportunity to file a supplemental brief on the site issue
    contemplated that Liberty would file a single, rather than multiple,
    replies in response to any oppositions to its brief. However, the
    Order, ¶ 7, specifies a deadline by which "replies MAY BE FILED,"
    thus reflecting that multiple replies are authorized.

[^84]: *See e.g. American Communications Ass\'n v. Douds*, 339 U.S. 382,
    411 (1950) (noting that "courts and juries every day pass upon
    knowledge, belief and intent \... having before them no more than
    evidence of their words and conduct, from which, in ordinary human
    experience, mental condition may be inferred").

[^85]: *In re Applications,* 5 FCC Rcd. 2862, 2863 (1990)

[^86]: *Id.*

[^87]: *Id.* at 2866-67; 2879; *see also Memorandum Opinion and Order,*
    at para. 55.

[^88]: *See Memorandum Opinion and Order,* at n75.

[^89]: *See In re Applications,* 5 FCC Rcd. at 2863.

[^90]: *See In re Applications,* 5 FCC Rcd. at 2867; *see also Id.* at
    2879 (ultimate conclusion of law).

[^91]: *See In re Applications II,* 6 FCC Rcd.1978 (1991).

[^92]: *Id*. at 1979.

[^93]: *Id.*

[^94]: *Memorandum Opinion and Order,* at para. 57.

[^95]: *Memorandum Opinion and Order,* at para. 72.

[^96]: *Freytag v. Commissioner,* 501 U.S. 868, 895 (1991) (citing
    *Wainwright v. Sykes*, 433 U.S. 72, 90 (1977)).

[^97]: *See Memorandum Opinion and Order* at para. 71 ("admittedly
    troublesome"); para. 66 ("direct conflict").

[^98]: "'Probative value' addresses the tendency of the evidence to
    establish a 'material' proposition." *U.S. v. Bagley,* 473 U.S. 667,
    n.5 (1985) (Marshall, J. dissenting)(citing E. Cleary, McCormick on
    Evidence § 185 (3d ed.1984)); *See also* 1 J. Wigmore, Evidence § 2
    (P. Tillers rev.1982).

[^99]: *See e.g. S&L Communications v. FCC,* 168 F.3d 1354, 1355
    (1999)(affirming FCC decision without explicit credibility findings
    on each witness, "The ALJ rejected as \"sheer fabrication\"\--a
    \"web of lies,\" as he also put it\--the contrary testimony of three
    S&B witnesses, including Schulze*.*"); *Saballo-Cortez v. INS*, 761
    F.2d 1259, 1264 (9th Cir.1984); *de Leon-Barrios v. INS*, 116 F.3d
    391, 393 (9th Cir.1997).

[^100]: *See Swan Creek Communications*, 39 F.3d 1217, 1222 (D.C.Cir.
    1994); *Fox River Broadcasting, Inc*., 93 F.C.C.2d 127, 129 (1983).

[^101]: *Leflore Broadcasting. Co., v. FCC,* 636 F.2d 454, 462 (1980).

[^102]: *Kimberlin v. Quinlan,* 6 F.3d 789, 808 (1993); *see also United
    States v. Jackson*, 513 F.2d 456, 461 (D.C.Cir.1975) (footnotes
    omitted); *see also United States v. Bank of New England, N.A*., 821
    F.2d 844, 854 (1st Cir.) (\"Willfulness can rarely be proven by
    direct evidence, since it is a state of mind; it is usually
    established by drawing reasonable inferences from the available
    facts.\"), *cert. denied*, 484 U.S. 943 (1987); *Mallette v.
    Scully*, 752 F.2d 26, 32 (2d Cir.1984) (\"Because intent is formed
    in the mind in secrecy and silence \..., a determination of whether
    a deliberate intent was formed must be drawn from all the
    circumstances of the case. Circumstantial evidence of this
    subjective fact is therefore indispensable.\"); *United States v.
    Pope*, 739 F.2d 289, 291-92 (7th Cir.1984) (\"Proof of the requisite
    state of mind need not be by direct evidence; it may be inferred
    from the surrounding facts and circumstances.\"); *United States v.
    Hudson*, 717 F.2d 1211, 1213 (8th Cir.1983) (\"Willfulness, intent
    and guilty knowledge may also be proven by circumstantial evidence
    and frequently cannot be proven in any other way.\"); *United States
    v. Childs*, 463 F.2d 390, 392 (4th Cir.) (\"Intent is not
    susceptible of direct proof; it must be proved by circumstances.\")
    (footnote omitted), *cert. denied*, 409 U.S. 966, 93 S.Ct. 271, 34
    L.Ed.2d 232 (1972); 2 Charles A. Wright[, FEDERAL PRACTICE AND
    PROCEDURE]{.smallcaps} § 411 (2d ed. 1982) (\"Though circumstantial
    evidence is used in virtually every criminal case, there are certain
    kinds of cases and issues on which it is almost indispensable,
    because it is so unlikely that direct evidence will be available.
    These include such matters as the existence of a conspiracy,
    criminal intent, or other issues involving state of mind.\")
    (footnotes omitted); 2 John H. Wigmore, EVIDENCE IN TRIALS AT COMMON
    LAW §§ 242, 244, 245 (Chadbourn rev. 1979) (intent, knowledge,
    belief, and state of mind may be evidenced by external circumstances
    and the defendant\'s conduct).

[^103]: *See generally, Kimberlin v. Quinlan;* *see also* *United States
    v. Maggitt*, 784 F.2d 590, 593 (5th Cir.1986) (same*); United States
    v. Harris*, 558 F.2d 366, 369 (7th Cir.1977) (same); *United States
    v. White*, 557 F.2d 233, 236 (10th Cir.1977) (per curiam) (same).

[^104]: *In re Applications,* 5 F.C.C.Rcd. at 2879.

[^105]: *Memorandum Opinion and Order,* at para. 56.

[^106]: The majority seems to be calling for a rule like that used in
    the immigration asylum context, where factfinders must explicitly
    enter findings on witness credibility prior to making an adverse
    determination on a petition. *See e.g. Garcia- Ramos v. INS*, 775
    F.2d 1370, 1374-75 (9th Cir.1985); *Argueta v. INS*, 759 F.2d 1395,
    1397-98 (9th Cir.1985).

[^107]: *See, e.g., United States v. United States Gypsum Co*., 333 U.S.
    364, 396 (1948)(reversing trial court because documentary evidence
    outweighed credibility determinations).

[^108]: *See e.g. Anderson v. Sullivan*, 914 F.2d 1121 (9^th^ Cir.
    1990)(rejecting claim that administrative factfinder must make
    explicit findings in absence of rule compelling such findings);
    *United States v. Mastropierro*, 931 F.2d 905, 906
    (D.C.Cir.1991)(holding agency must apply and consider relevant
    factors rather than list findings on each factor to be in
    compliance).

[^109]: *See e.g. Miller v. Fenton*, 474 U.S. 104, 114 (1985)(noting
    deference is owed to the judicial actor best positioned to decide
    the issue in question.).