Before the

**FEDERAL COMMUNICATIONS COMMISSION**

Washington, D.C. 20554

In re Application of ) MM Docket No. 85-269

)

DOROTHY O. SCHULZE and ) File No. BPCT-850320KG

DEBORAH BRIGHAM, A General )

Partnership )

)

For a Construction Permit for )

a New Television Station )

at Blanco, Texas )

**MEMORANDUM OPINION AND ORDER**

Adopted: February 12, 1998 ; Released: February 17, 1998

By the Commission:

1\. This order denies a Petition for Reconsideration, filed March 26,
1997, by Dorothy O. Schulze and Deborah Brigham, A General Partnership
(DSDB) and SL Communications, Inc. (SL) (collectively Petitioners).[^1]
Petitioners seek reconsideration of a Memorandum Opinion and Order
declining to approve their proposed settlement in this proceeding.
[Dorothy O. Schulze and Deborah Brigham, A General
Partnership]{.underline}, 12 FCC Rcd 2602 (1997). We find that
Petitioners provide no basis for reconsideration.

**I. BACKGROUND**

2\. DSDB is the remaining applicant in what was once a three-party
comparative proceeding for a new UHF television station on Channel 52 in
Blanco, Texas. It was disqualified based on a finding that its
principals had engaged in misrepresentations. [Opal
Chadwell]{.underline}, 2 FCC Rcd 5502 (Rev. Bd. 1987), [rev. granted in
part]{.underline}, 4 FCC Rcd 1215 (1989), [recon. granted in
part]{.underline}, 5 FCC Rcd 3227 (1990). Following the extensive
proceedings described at 12 FCC Rcd 2602-03 ¶¶ 2-6, DSDB and SL, which
is not a party to this proceeding, filed a proposed settlement intended
to terminate the proceeding.

3\. Under the proposed settlement, DSDB would amend its application to
substitute SL as the applicant in return for reimbursement of its
expenses, and the amended application would be granted. The Commission,
however, disapproved the proposed settlement because of DSDB\'s lack of
qualifications. The Commission agreed with the Mass Media Bureau not to
elevate form over substance by ignoring the fact that the requested
relief was the equivalent of granting DSDB\'s application and
authorizing an assignment of the construction permit to SL. Because DSDB
had not shown itself qualified to receive the grant of a construction
permit, the Commission found that DSDB had nothing to assign. Given
these circumstances, the Commission found no good cause \-- as is
required by 47 C.F.R. § 73.3522(b) \-- for accepting an amendment to
DSDB\'s application.

**II. PETITION FOR RECONSIDERATION**

4\. [Petition]{.underline}. Petitioners argue that disapproval of the
settlement was contrary to the public interest. They contend that
despite the lengthy pendency of this proceeding, the settlement
represents the only prospect for bringing a new television service to
Blanco by an unquestionably qualified licensee. They assert that as a
result of the freeze on the filing of new television applications
related to Commission consideration of new digital television Systems
(DTV) in MM Docket No. 87-268, it is unlikely that a construction permit
will be awarded for the Blanco facility in the foreseeable future.
[See]{.underline} [Advanced Television Systems and Their Impact upon the
Existing Television Broadcast Service]{.underline}, 11 FCC Rcd 10968
(1996) (Sixth Further Notice of Proposed Rulemaking).

5\. Petitioners also argue that approving the settlement would be
consistent with Commission precedent. According to Petitioners, cases
such as [Rebecca Radio of Marco]{.underline}, 4 FCC Rcd 830 (1989),
[modified]{.underline}, 5 FCC Rcd 937 (1990), [recon.
denied]{.underline}, 5 FCC Rcd 2913 (1990), and [James U.
Steele]{.underline}, 4 FCC Rcd 4700 (1989), [reaffirmed]{.underline}, 5
FCC Rcd 4121 (1990), permit third party settlements, such as that
proposed here under circumstances where it would not encourage the
filing of abusive applications. In this regard, they assert that, since
DSDB prosecuted its application for many years, the application was not
filed for the purpose of securing a settlement and cannot be considered
abusive. Petitioners assert that under these circumstances only the
qualifications of the prospective permittee concern the Commission, not
those of the withdrawing applicant.

6\. The Bureau responds that Petitioners have shown no material error or
omission in the Commission\'s action. On the contrary, the Bureau
contends that the Commission\'s action is consistent with the policy of
deterring misconduct by applicants and that approving the settlement
would simply reward DSDB\'s persistence and undermine the Commission\'s
policy of deterring misconduct. The Bureau submits that the potential
impact of the DTV proceeding on the Blanco facility was known at the
time of the Commission\'s order and that the Commission has the
discretion to preclude new service in Blanco for that reason.[^2]

7\. In reply, Petitioners reiterate their contention that the
Commission\'s decision is inconsistent with [Rebecca Radio]{.underline}
and [Steele]{.underline}. Moreover, they deny that DSDB would be
enriched by approval of the settlement since it would receive no more
than its out-of-pocket expenses and that an adverse decision concerning
its qualifications would remain outstanding. Thus, they argue that
approval of the settlement would not undermine the Commission\'s
character policy. Petitioners note that if SL had been one of the
original applicants, instead of a newcomer, DSDB could dismiss its
application and receive reimbursement pursuant to [Allegan County
Broadcasters, Inc.]{.underline}, 83 FCC 2d 371, 372-74 ¶¶ 4-7 (1980).

8\. [Discussion]{.underline}. We find the petition without merit. We
agree with the Bureau that for the most part Petitioners\' arguments
were before us and fully considered at the time we adopted our
Memorandum Opinion and Order. Reconsideration will not be granted merely
for the purpose of again debating matters on which we have once
deliberated and spoken. [WWIZ, Inc.]{.underline}, 37 FCC 685, 686 ¶ 2
(1964), [aff\'d sub nom.]{.underline} [Lorain Journal Co. v.
FCC]{.underline}, 351 F.2d 824 (D.C. Cir. 1965), [cert.
denied]{.underline}, 383 U.S. 967 (1966). Certain matters raised in the
petition, however, warrant discussion.

9\. We first consider Petitioners\' claim that, unless we approve their
proposed settlement, the Commission\'s actions in the DTV proceeding
will effectively preclude a long-awaited new service to Blanco. We also
consider the Bureau\'s suggestion that the impact of the DTV proceeding
should be taken into account in ruling on Petitioners\' request. By way
of background, when we initiated the DTV proceeding, we were concerned
that limitations on the availability of broadcast spectrum might
interfere with the development of high definition television or other
enhanced video technologies. Accordingly, we imposed a freeze on the
creation of new conventional (NTSC) television allotments and on the
acceptance of applications for vacant television allotments. [Advanced
Television Systems and Their Impact on the Existing Television Broadcast
Service]{.underline}, Mimeo No. 4074 (Jul. 17, 1987) at ¶ 2. [See
generally]{.underline} [Advanced Television Systems and Their Impact on
the Existing Television Broadcast Service]{.underline}, 2 FCC Rcd 5125
(1987) (Notice of Inquiry). Initially, the freeze covered only the 30
largest television markets (and did not include Blanco), but we
subsequently broadened the freeze to all areas of the country. [Advanced
Television Systems and Their Impact upon the Existing Television
Broadcast Service]{.underline}, 11 FCC Rcd 10968, 10991-93 ¶¶ 57-62
(1996) (Sixth Further Notice of Proposed Rulemaking). We also proposed
to delete all unused allotments. Petitioners\' argument is premised on
the assumption that, if this proceeding does not result in a grant, any
future applications on Channel 52 in Blanco would be barred and the
Channel 52 allotment would be deleted.

10\. While we agree with Petitioners\' premise that it would be
equitable to take action to ensure that Blanco is not deprived of this
long-awaited television service, we need not grant the relief
Petitioners\' seek to achieve that result. Recently, our deliberations
in MM Docket No. 87-268 have resulted in the adoption of technical
standards and an allotment plan for DTV, and we have now completed the
initial allotment of DTV channels. [Advanced Television Systems and
Their Impact upon the Existing Television Broadcast
Service]{.underline}, 12 FCC Rcd 12809 (1997) (Fifth Report and Order);
[Advanced Television Systems and Their Impact upon the Existing
Television Broadcast Service]{.underline}, 12 FCC Rcd 14588 (1997)
(Sixth Report and Order). The Table of Allotments that we adopted
effectuated our primary objective of fully accommodating the transition
of all existing licensees from NTSC to DTV by pairing, during a
transition period, a DTV channel with each NTSC channel used by an
existing broadcaster. 12 FCC Rcd at 14595 ¶ 11, 14460 ¶ 113. We were
able to do this while, at the same time, maintaining and protecting all
vacant NTSC allotments subject to pending applications, such as Channel
52 in Blanco. [Id]{.underline}. at 14639 ¶ 112. As proposed, we
eliminated all other vacant NTSC allotments.[^3]

11\. In light of all the circumstances in this case, and to ensure that
the people of Blanco have an opportunity to receive television service
without undue delay, we believe that Channel 52 should be preserved.
Although we found that eliminating vacant NTSC allotments would
generally further our goals in the development of DTV allotments, we
recognize the countervailing public interest in protecting the Channel
52 allotment in Blanco. Continuing to protect this channel will not
jeopardize our plans with respect to DTV, because this allotment is not
necessary to effectuate those plans. [See]{.underline} 12 FCC Rcd at
14639 ¶ 112. Further, applications for this channel have been on file
since 1985. In view of the foregoing, we conclude that both the public
interest and basic fairness warrant taking further steps to provide
service on Channel 52 in Blanco. We hold that Channel 52 in Blanco is
exempt from the general provisions of the Sixth Report and Order
deleting vacant NTSC allotments. We direct the Bureau, therefore, to
take appropriate steps to permit the filing of applications for Channel
52.

12\. A second matter we wish to address is the relevance of
[Allegan]{.underline} to this proceeding. The facts here are
distinguishable from [Allegan]{.underline} in at least two ways. First,
SL is not an original applicant for the construction permit. In
contrast, in [Allegan]{.underline}, the recipient of the construction
permit, Allegan County Broadcasters, was an original applicant in the
proceeding to select a permittee from mutually exclusive applications.
If Petitioners\' settlement were approved and SL were granted the
construction permit, other potential applicants would not have had an
opportunity to compete with SL for the license. Second, DSDB has been
adjudged and found to be unqualified by an ALJ, whose decision has been
reviewed and affirmed by a Review Board, as well as by the full
Commission. Conversely, in [Allegan]{.underline}, charges of
disqualifying conduct had been made against the party seeking to
withdraw from the proceeding, but at the time of settlement, the charges
had not been fully resolved by the Commission. Indeed, central to the
Commission\'s decision in [Allegan]{.underline}, was that Commission
resources would not be needlessly wasted to conduct a hearing on charges
of disqualifying conduct when the challenged applicant was willing to
voluntarily withdraw and when another qualified applicant in the
proceeding stood ready to construct the station. In these circumstances,
we decline to extend the [Allegan]{.underline} policy to the
Petitioners\' proposed settlement.

**III. SUPPLEMENTS TO PETITION**

13\. [Supplement]{.underline}. On September 2, 1997 and December 8,
1997, SL filed supplements to the petition contending that recent events
have strengthened the grounds for reconsideration. SL observes that the
Balanced Budget Act of 1997, Pub. L. No. 105-33, 111 Stat. 251 (1997),
added Section 309(l) to the Communications Act of 1934, which grants the
Commission authority to use competitive bidding, in lieu of comparative
hearings, to resolve proceedings involving mutually exclusive
applications. Thus, SL contends, granting the parties settlement here
will have no precedential impact, because SL anticipates that the
authority granted by the Balanced Budget Act \"will mean the end of
comparative hearings.\" \[First\] Supplement to Petition for
Reconsideration at 3. Moreover, the Act also provides that, for a
180-day period, the Commission \"shall waive any provisions of its
regulations necessary\" to allow persons filing competing applications
before July 1, 1997 to enter into agreements to eliminate conflicts
\"between their applications.\" SL notes that in [Gonzales Broadcasting,
Inc.]{.underline}, FCC 97-283 (Aug. 12, 1997), the Commission waived the
limits on reimbursement in 47 C.F.R. § 73.3525 to approve a settlement
involving a non-applicant and contends that the Commission should be
willing to waive other rules and policies so that the third-party
settlement here can be granted. Similarly, SL suggests that the
Commission could waive the requirements of 47 C.F.R. § 73.3522(b), which
requires that DSDB demonstrate good cause to substitute SL as the
applicant. SL notes that in [Implementation of Section 309(j) of the
Communications Act]{.underline}, FCC 97-397 (Nov. 26, 1997) at ¶ 26
(NPRM), the Commission specifically indicated that the Balanced Budget
Act warrants waiving policies that might otherwise bar third-party
settlements.

14\. [Discussion]{.underline}. We find that neither the passage of the
Balanced Budget Act, the NPRM, nor our decision in
[Gonzales]{.underline} supports reconsideration here. We reject SL\'s
argument that the Balanced Budget Act eliminates the possibility that
approval of the settlement would have adverse precedential impact.
Whether or not comparative hearings continue to be held for pending
mutually exclusive applications, a settlement proposal that effectively
grants an authorization to an applicant that lacks character
qualifications potentially has precedential significance outside the
context of comparative hearings. In addition, the provisions of the
Balanced Budget Act applying to settlements do not apply to this case.
That Act provides for the waiver of provisions to \"procure the removal
of a conflict between \[competing\] applications,\" in pending cases
that otherwise might be resolved by the Commission\'s newly-authorized
competitive bidding authority. [See]{.underline} Balanced Budget Act of
1997, Pub. Law No. 105-33, § 3003(a)(3), 111 Stat. 251 (1997). [See
also]{.underline} NPRM at ¶ 26. Because DSDB is the only remaining
applicant in this proceeding, there are no \"competing applications\"
entitled to the settlement relief contained in the Balanced Budget Act.
By contrast, [Gonzales]{.underline}, in which pending competing
applicants who might otherwise have been subject to an auction entered
into a settlement, does fall within the class of cases addressed by the
Balanced Budget Act. The Balanced Budget Act thus has no relevance to
whether the proffered settlement here should be approved.

15\. If anything, passage of the Balanced Budget Act, which provides for
the use of competitive bidding instead of comparative hearings for
future competing applications, lends further support for our public
interest determination that the license here should not simply be
awarded to a non-party who seeks to obtain the permit from a
disqualified applicant. As discussed in the NPRM, use of competitive
bidding will expedite new service and conserve administrative resources
in selecting a new licensee. It will also afford other applicants the
opportunity to compete for this channel and reimburse the public for use
of the spectrum, consistent with the congressional objectives underlying
the Commission\'s auction authority.

**IV. ORDERING CLAUSES**

16\. ACCORDINGLY, IT IS ORDERED, That, good cause having been shown, the
Petition for Leave to Supplement Petition for Reconsideration, filed
September 2, 1997, by SL Communications, Inc. IS GRANTED.

17\. IT IS FURTHER ORDERED, That the Petition for Reconsideration, filed
March 26, 1997, by Dorothy O. Schulze and Deborah Brigham, A General
Partnership and SL Communications, Inc., as supplemented, IS DENIED.

18\. IT IS FURTHER ORDERED, That this proceeding IS TERMINATED.

19\. IT IS FURTHER ORDERED, That the Mass Media Bureau IS DIRECTED to
take further action consistent with paragraph 11, [supra]{.underline}.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

[^1]:     ^?^ Also before the Commission are (1) the Mass Media
    Bureau\'s Opposition to Petition for Reconsideration, filed April 9,
    1997, and Petitioners\' reply, filed April 17, 1997, and (2) a
    Petition for Leave to Supplement Petition for Reconsideration, and a
    Supplement to Petition for Reconsideration, both filed September 2,
    1997.

[^2]:     ^?^ The Bureau suggests that \"the Commission consider \[the
    DTV\] decisions when weighing the public interest arguments raised
    by Petitioners.\" Mass Media Bureau\'s Opposition to Petition for
    Reconsideration at n.2.

[^3]:     ^?^ We originally proposed to make pending applicants in such
    proceedings initially eligible for a DTV channel along with existing
    licensees. [See]{.underline} [Advanced Television Systems and Their
    Impact Upon the Existing Television Broadcast Service]{.underline},
    10 FCC Rcd 10540, 10544 ¶ 25 (1995). Provisions of the
    Telecommunications Act of 1996, however, limited eligibility to
    those currently holding licenses or construction permits.
    [See]{.underline} 47 U.S.C. § 336(a)(1). Nevertheless, we decided to
    give pending applicants special consideration because of their
    possible reliance on our original proposal. 12 FCC Rcd at 14632
    n.161. Thus, if a grant had resulted from this proceeding, the new
    licensee would have been entitled to \"particular consideration\" in
    the award of any unused DTV spectrum in the future.
    [Id]{.underline}. at 14632 ¶ 95 and n.161.