Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

In the Matter of ) EB Docket No. 02-21

)

PENINSULA COMMUNICATIONS, INC. ) File No. EB 01-IH-0609

) FRN: 0001-5712-15

Licensee of stations )

KGTL, Homer, Alaska; ) Facility ID Nos. 52152

KXBA(FM), Nikiski, Alaska; ) 86717

KWVV-FM, Homer, Alaska; and ) 52145

KPEN-FM, Soldotna, Alaska. ) 52149

)

Licensee of FM translator stations )

K292ED, Kachemak City, Alaska ) 52150

K285DU, Homer, Alaska; ) 52157

K285EG and K272DG, Seward, Alaska ) 52158 and 52160

)

Former licensee of FM translator stations )

K285EF, Kenai, Alaska; )

K283AB, Kenai/Soldotna, Alaska; )

K257DB, Anchor Point, Alaska; )

K265CK, Kachemak City, Alaska; )

K272CN, Homer, Alaska; and )

K274AB and K285AA, Kodiak, Alaska )

**Appearances**

# *Jeffrey D. Southmayd, Esquire*, on behalf of Peninsula Communications, Inc.; *James W. Shook*, *Esquire* and *Judy Lancaster, Esquire,* on behalf of the Enforcement Bureau

**INITIAL DECISION**

**OF**

CHIEF ADMINISTRATIVE LAW JUDGE RICHARD L. SIPPEL

**Issued:** June 17, 2003 **Released:** June 19, 2003

PRELIMINARY STATEMENT

1.  On February 6, 2002, pursuant to Section 312(a) of the
    Communications Act of 1934, as amended (the "Act"), the Commission
    commenced this proceeding to determine whether all broadcast
    licenses held by Peninsula Communications, Inc. ("PCI") should be
    revoked. *In the Matter of Peninsula Communications, Inc*., *Order
    to Show Cause,* 17 F.C.C. Rcd 2838 (2002) ("*OSC*").

**Order to Show Cause**

2.  The Commission specified the following issues:

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(a) To determine the facts and circumstances surrounding Peninsula
    Communications, Inc.'s operation of former FM translator stations
    285EF, Kenai; K283AB Kenai/Soldotna; K257DB Anchor Point; K265CK,
    Kachemak City; K272CN, Homer; and K274AB and K285AA, Kodiak, all in
    Alaska, subsequent to August 29, 2001, contrary to the Commission's
    order in *Peninsula Communications, Inc.*, 16 F.C.C. Rcd 11364
    (2001), and related violation of § 416(c) of the Act;

(b) To determine, in light of the evidence adduced pursuant to issue
    (a), whether Peninsula Communications, Inc. has the requisite
    character qualifications to be a Commission licensee and thus
    whether its captioned broadcast and FM translator licenses,
    including any former licenses reinstated, should be revoked.

*OSC, ¶ 6***.** The burden of the introduction of evidence and the
burden of proof were assigned to the Enforcement Bureau ("Bureau").
*OSC, ¶ 9.*

3.  By *Order*, FCC 02M-42, released May 24, 2002, the Presiding Judge
    permitted PCI to offer proof on a state of mind defense, the burdens
    of proceeding and proof resting with PCI. *Order*, FCC 02M-69,
    released July 19, 2002 (proof on state of mind permitted).

4.  A hearing was conducted in Washington, D.C. from September 24
    through 26, 2002.[^1] A supplementary admissions session was
    conducted on October 16, 2002, and the Presiding Judge closed the
    record on October 18, 2002.[^2] The parties filed Proposed Findings
    on December 24, 2002, and Reply Findings on January 23, 2003.

**Overview**

5.  On May 18, 2001, the Commission directed PCI to terminate operations
    of seven of the captioned FM translators. [^3] *Memorandum Opinion
    and Order to Show* Cause, 16 F.C.C. Rcd 11364 (2001) ("*Termination
    Order*"). On June 15, 2001, PCI filed an appeal with the United
    States Court of Appeals for the District of Columbia Circuit ("D.C.
    Circuit") seeking to overturn the *Termination Order*. PCI continued
    operations but never succeeded in obtaining a stay from the
    Commission or from the D.C. Circuit.

6.  On August 29, 2001, the Commission warned that operation of the
    seven FM translators would raise questions about PCI's
    qualifications to be a Commission licensee and could result in
    proceedings leading to license revocation. Nonetheless, PCI declared
    that it intended to operate the FM translators until such time as
    the D.C. Circuit ruled on its appeal. PCI continued operating for
    fifteen months and only ceased operations on August 28, 2002, after
    a federal court injunction became final.[^4]

7.  On February 6, 2002, the Commission commenced this proceeding
    realizing the possibility that the D.C. Circuit could reinstate the
    seven FM translator licenses. Whether or not reinstated, PCI's
    operation of the FM translators after a Commission order to
    terminate raised substantial questions as to whether PCI should be
    entitled to continue as a licensee. *OSC*, case caption n.2.

8.  PCI contends that it continued operating its seven FM translators in
    reliance on legal advice and a Commission practice that generally
    permits broadcasting to continue while an appeal is pending. PCI
    pleads that it already has incurred a substantial forfeiture
    penalty, and that its past record is sufficiently good to permit
    keeping its four full-power station licenses and its remaining four
    translator licenses.

**FINDINGS OF FACT**

**FM Translators**

9.  FM translators are low-power stations that receive the signals of
    full service FM stations and retransmit those signals on another
    frequency. The Commission first authorized translators in 1970 to
    provide FM service to those unable to receive satisfactory service
    due to distance or terrain obstructions. The enabling rule provides:

> FM translators provide a means whereby the signals of FM broadcast
> stations may be retransmitted to areas in which direct reception of
> such FM broadcast stations is unsatisfactory due to distance or
> intervening terrain barriers.

47 C.F.R. § 74.1231(a).

10. FM translators are a secondary service intended to supplement, but
    not a substitute for, full-service stations. Translators were never
    intended for full service power commercial stations to rebroadcast
    signals beyond their primary service areas into service areas of
    competitors. *Monroe County Commn'rs.*, 72 F.C.C. 2^nd^ 683, 685
    (1979). This case concerns seven FM translator stations operating in
    "other areas" in the state of Alaska at Kenai, Soldotna, Anchor
    Point, Kachemak City, Homer, and Kodiak, by retransmitting the
    programming of two full service stations, KPEN-FM, Soldotna, and
    KWVV-FM, Homer.

**Translator Waivers**

11. In 1990, the Commission adopted strict FM translator waiver rules
    and standards. *See* discussion at Paras. 20-21, *infra.* After
    1990, waivers were favored only in areas which otherwise received no
    signal called "white" areas. The Commission continued to make
    special allowance for waivers in Alaska, finding that its "unique
    terrain, its remoteness and isolation, justify special treatment."
    *Wrangell Radio Group*, 75 F.C.C. 2d 404, 407 (1980). There still
    were "sufficient public interest reasons for waiver of the
    translator rules to allow small, remote Alaska communities the
    opportunity to receive off-the-air broadcast programming". *Id*.
    at 408. But the new stricter rules also applied to Alaska, and PCI
    was bound by those rules from 1994 forward.

**PCI's Principals**

12. Mr. David Becker, president of PCI, has decision-making authority at
    PCI, and is in charge of all operations and sales. He holds a BS
    degree in Electrical Engineering from California State Polytechnic
    University. He received a Masters of Science Degree in Electrical
    Engineering from the University of California. He was employed for
    six years by Raytheon Company. (Tr. 94, 115-116.)

13. In 1976, David Becker and his wife Eileen Becker moved from
    California to Alaska. They immediately became active in local church
    matters, and so remain. Mr. Becker served on the board of directors
    of Alaska Village Missions which operates the Alaska Bible
    Institute. He personally hosted a religious radio program for 23
    years. He professes to have great respect for legal authority and to
    have an appreciation for good moral and ethical conduct. (PCI Exh.1
    at pages 3-4.)

**PCI's Business**

14. PCI was formed in 1978. David and Eileen Becker are sole owners,
    each holding 50 percent. In September 1979, PCI started broadcasting
    on KGTL-FM (now KWVV-FM), which became Homer Alaska's first
    commercial FM venture. In 1984, PCI added a second full service FM
    station, KPEN-FM, licensed to the community of Soldotna. (PCI Exh. 1
    at 4.) PCI has not been directly penalized with respect to its full
    power FM stations. But PCI was sanctioned for unauthorized
    operations of the seven FM translators which were ordered terminated
    by the Commission. (EB Exh. 30 at 304; PCI Exh. 1 at 4-11; Off.
    Notice Exh. 13.)

**PCI's Translator "Network"**

15. By the mid 1980s, PCI had assembled a "network" of FM translators to
    broadcast programming of "primary" FM stations[^5] KWVV-FM, Homer,
    and KPEN-FM, Soldotna, into three major communities of Alaska's
    Kenai Peninsula: Kenai, Soldotna and Homer. The "primary"
    programming was received via translators that were licensed to PCI
    at Kenai/Soldotna, Homer, Anchor Point and Kachemak City. (EB Exh. 3
    at 17, and EB Exh. 5 through Exh. 8.) PCI also provided "primary"
    programming to Kodiak via translators.[^6] (EB Exh. 4 at 60; EB

Exh. 9 at 41.) The "network" of translators retransmitting programming
of KPEN-FM and KWVV-FM are identified in PCI's chart:

> [Call Sign]{.underline} [Community]{.underline} [Grant
> Date]{.underline} [Hearing Exhibit]{.underline}
>
> K285EF Kenai 09/06/1991 EB Exh. 7\
> K283AB Kenai/Soldotna 04/13/1984 PCI Exh. 6\
> K257DB Anchor Point 06/26/1986 PCI Exh. 7\
> K265CK Kachemak City 06/26/1986 EB Exh. *5\
> *K272CN Homer 06/26/1986 PCI Exh. 4\
> K274AB Kodiak 09/13/1984 PCI Exh. 5\
> K285AA Kodiak 07/31/1988 PCI Exh. 8

*See* PCI Proposed Findings and Conclusions at Para. 6.

**PCI's Other Stations**

16. PCI also holds licenses for full power stations KXBA-FM, Nikiki, and
    KGTL(AM), Homer, and licenses for FM translator stations K292ED,
    Kachemak City, K285DU, Homer, and FM translator stations K285EG and
    K272DG, Seward. These stations were not part of the "network," were
    not terminated under the *Termination Order*, and were not found to
    have operated illegally or to have aided or abetted illegal
    transmissions, or retransmissions.

**PCI's Business Strategy**

17. PCI's "network" was able to reach potential customers in competition
    with full-power stations operating without translator
    supplementation. Therefore, there was a clear economic incentive for
    PCI to keep its low cost translator "network" operating for as long
    as possible. PCI's income was almost forty percent derived from ad
    sales in Anchorage which was outside PCI's primary FM coverage
    areas. (EB Exh. 23A, "Stipulation re Enforcement Bureau Exhibit
    23.)[^7] Any ad agency using PCI's "network" could purchase time in
    Homer that reached the Kenai Peninsula and Kodiak Island. Coverage
    was paramount and ratings were less of an incentive to advertise
    with PCI than was PCI's superior reach to customers. (Tr. 509,
    514-15, 535-42.)

18. Convincing empirical evidence shows that PCI's translator signal
    into Kodiak split revenues between Kodiak's full-service competitor
    and PCI, a condition that corrected itself once PCI ceased
    translator operations in Kodiak. (PCI Exh. 6 at 13; EB Exh. 34 at 3;
    Tr. 205.) PCI's "network" realized savings through PCI's staff in
    Homer using Kenai/Soldotna facilities for sales. Concurrently, in
    Kenai, Soldotna, Kodiak and Seward, PCI reduced staffing costs below
    costs of competing full stations. (EB Exh. 31 at 4; EB Exh. 32 at 3;
    Tr. 556-58.) Competing full service public service broadcasting
    spots became economically marginalized as revenues were siphoned off
    by PCI's translators in Kenai/Soldotna and Kodiak. (EB Exhs. 32 at
    3; 33 at 2, 34 at 3-4.)

19. Translators were essential to the "network" strategy, but PCI
    preferred to operate without waivers. Before June 1, 1991, PCI had
    not even submitted a waiver request for its "other area"
    translators. (Tr. 119.) And on April 24, 1992, without requesting a
    waiver, PCI received a permit and a license for a new Kenai FM
    translator. (EB Exh. 7 at 15, 18; 29; Tr. 166-67.) By

letter dated February 18, 1992, the staff waived ownership and signal
delivery rules for PCI, citing *Wrangell*.[^8] (Off. Notice Exh. 5; Tr.
306.) As a result, PCI identifies its "network" as the "Wrangell FM
translator stations." *See* PCI Proposed Findings and Conclusions
*supra, passim.*

**Stricter Waiver Rules**

20. New waiver rules were adopted in 1990. *See Amendment of Part 74 of
    the FM Commission Rules Concerning Translator* Stations, *Report and
    Order,* 5 F.C.C. Rcd 7212, 7221, 7223, and 7245 n. 59 (1990)
    ("*Report and Order*") *recon. denied*, *Memorandum, Opinion and
    Order*, 8 F.C.C. Rcd 5093 (1993). The rules set ownership and
    financial conditions for translators, and established a stricter
    waiver standard. *See Memorandum Opinion and Order*, 8 F.C.C. Rcd
    5093, 5095 (1993) (affirming and clarifying stricter FM translator
    rules). These rules were stricter in order to protect existing FM
    stations from adverse, anticompetitive effects of translators, such
    as PCI's "network."

21. The *Report and Order* distinguished between "fill-in" translators
    (coverage remains within primary station's coverage) and "other
    area" translators (coverage extends beyond primary station's
    contour). FM translators that were operating before March 1, 1991,
    could continue to operate until March 1, 1994, including those owned
    by full service stations that had signals reaching beyond authorized
    contours, i.e., "other areas." 47 C.F.R. § 74.1232(d). Only where a
    licensee wishing to use "other area" translators could demonstrate
    that adequate service is otherwise unavailable, would the Commission
    grant waivers. *Memorandum Opinion and Order,* 8 F.C.C. Rcd. at
    5095.

**Translator Renewals -- 1995**

22. On November 22, 1995, PCI filed renewal applications for its
    translators. (EB Exh. 3 at 8; EB Exhs. 4-9, *passim*, Tr. 312-13.)
    In each application, PCI responded "yes" to questions about
    compliance with § 74.1232. (EB Exh. 6 at 11; Tr. 371-72.)[^9] PCI
    believed that in approving initial construction permits and licenses
    for translators, the Commission had granted

waivers. (*See* Stipulation on-the-record at Tr. 311 and Tr. 313.) In
1995 -- 1996, PCI believed that it was authorized through waivers to
operate the translators in their present mode. (EB Exh. 3 at 15.)[^10]
PCI had not received "blanket" rule waivers as it states in Para. 6 of
its Proposed Findings and Conclusions. But it does appear that in 1995,
PCI had reason to believe that it was authorized to operate its
translators. (Tr. 311-13.) For example, PCI did not request or receive a
waiver for Kodiak and Kenai translators, and there were no rulings on
waiver requests for Anchor Point, Kachemak City and Homer in connection
with license renewals. (Tr. 315.) At that time, there did not appear to
be any rigid application or strict observance of the waiver rules.

**Renewals Challenged**

23. On March 4, 1996, after having filed its renewal requests, PCI was
    informed by letter that it may be in violation of the Commission's
    stricter 1990 FM translator rules. (Off. Notice Exh. 7 at 1.) The
    letter stated that prior waivers had been granted based on an
    assumption that the translators would be for service to isolated
    communities in Alaska, and on the further assumption that no
    existing or potential full service stations would be adversely
    affected. (*Id.*) The letter also noted that PCI waivers had been
    granted before the 1990 rules went into effect. It was made clear
    that if PCI wished to continue to operate translators, it would have
    to show that they were providing fill-in service to "white areas,"
    or service to small, isolated Alaskan communities that were
    otherwise deprived of aural services. (Off. Notice Exh. 7 at 2.)

Understandably, PCI's competitors felt a need to take action. In early
1996, two years after the grace period for complying with new waiver
rules, petitions to deny were filed against PCI's translator renewal
applications.[^11] Each competitor complained that PCI was violating

§ 74.1232(d) with translators that rebroadcast KPEN-FM or KWVV-FM
signals beyond their respective authorized contours. (Off. Notice Exh. 8
at 1-2; Tr. 524.) On September 11, 1996,

a Division Chief notified PCI's counsel in a letter that left no doubt
of the Chief's conclusion, that PCI had operated the seven FM
translators since June 1, 1994, without benefit of valid waivers. (Off.
Notice Exh. 8.) Mr. Becker admitted that he received and understood the
letters. (Tr. 169-171.)

24. In an effort to be fair to PCI, it was given a "benefit of the
    doubt" regarding operation of translators after June 1, 1994. (Off.
    Notice Exh. 8 at 7.) The staff concluded that PCI could have
    reasonably, but mistakenly, believed that the staff had implicitly
    waived

§ 74.1232(d). (*Id*. at 6-7.) The staff acknowledged that it had granted
waivers for the Seward translators on February 18, 1992. (*Id*. at 7.)
However, it was made clear to PCI that prospective

waivers were not warranted for other translators, including the two in
Seward, and PCI was to divest ownership interests in those
translators.[^12] (*Id*. at 9.) The staff deferred action on the renewal
applications, allowing PCI sixty days to file applications to assign the
nine licenses to unaffiliated parties. Should any assignment
applications be granted, grants of the renewal applications would be
conditioned upon consummation of the assignments. (*Id*. at 10.)

25. PCI accepted the condition and did not seek reconsideration. But
    competitors were not satisfied and filed an application for review.
    In an Opposition to Application for Review, PCI declared
    unequivocally that it would honor the assignment condition within
    sixty days. (EB Exh. 10 at 3; Tr. 173-74.) PCI also acknowledged
    that divestiture of non-compliant translators was required by June
    1, 1994, but still contended that it was operating under waivers.
    (EB Exh. 10 at 5-6.) PCI argued that it could continue to operate
    the FM translators until a final determination was made with respect
    to the renewal applications. (*Id*. at 6-7; Tr. 173.)

**Assignment Applications**

26. In November 1996, PCI applied to assign the challenged translators
    to Coastal Broadcast Communications, Inc. ("Coastal"). (EB Exh. 11;
    Tr. 174-75.) Coastal is owned by David Buchanan and Judy Buchanan.
    (Off. Notice Exh. 10 at 3.) The Buchanans reside outside of
    Anchorage, about 200 miles from Homer. The Beckers and the Buchanans
    are long-time acquaintances. (EB Exh. 11 at 5; Tr. 176.)

27. The assignment applications included an Asset Purchase Agreement
    ("APA"). (EB Exh. 11 at 10-43; Tr. 175-76.) It proposed the sale of
    PCI's nine translators at a price determined by cost averaging. (EB
    Exh. 11 at 15.) PCI agreed to make financing available, with PCI
    receiving a security interest in equipment. (EB Exh. 11 at 12, 15,
    38, 40-43.) PCI agreed to air commercials produced by Coastal on its
    two primary stations. (Tr. 188-92.) The business plan contemplated
    commercials to be produced by Mr. Buchanan for broadcast over PCI's
    primary stations and retransmitted over the assigned FM translators.
    (Tr. 189-90 "\-- the same ad plays on all the translators".)

28. On June 17, 1997, the staff denied the assignments because the
    intended financing left the assigned stations having a connection
    with the primary stations controlled by PCI. (Off. Notice Exh. 9; 47
    C.F.R. § 74.1232(d)(e).) Section 74.1232(d) prohibits assignment to
    any entity having any connection with the primary station and
    therefore PCI financing was not allowed. On July 1, 1997, PCI and
    Coastal refiled applications deleting the seller-financing
    provisions while Coastal obtained tentative approval for a Small
    Business Administration loan. But nothing more was done to finalize
    and complete the assignments. (EB Exhs. 12, 16.)

To PCI's benefit, on November 6, 1997, the nine renewal applications
were granted, conditioned on completing assignments to Coastal, and the
petitions to deny the assignments were denied. (Off. Notice Exh. 10 at
4.) The renewal grants were continued to be conditioned on consummation
of the assignments. (*Id*. at 3-4.) Coastal soon found that due to an
antenna's destruction by the Air Force, PCI's translators were no longer
able to receive KWVV-FM (clearly) or KPEN-FM (at all). In June, 1997,
Coastal sought to modify PCI's Kodiak translator to receive a satellite
signal, and also sought a waiver of § 74.1231(b). (EB Exhs. 4, 9.)
Coastal argued unsuccessfully for Kodiak satellite waivers based on the
staff having allowed satellite feeds for the Seward applications.

**Unauthorized Satellite Operation in Kodiak**

29. On November 12, 1997, PCI reported that the Kodiak translators were
    "silent." (PCI Exh. 5 at 13; PCI Exh. 8 at 9.) But prior to leaving
    the air, the Kodiak translators had operated via satellite without
    authorizations. In explanation of Kodiak's unauthorized satellite
    transmission, PCI claimed that it was seeking to avoid the lapse of
    licenses from non-use. Still, Mr. Becker admitted that satellite
    delivery without a waiver was in violation of the Commission's
    rules. *See* 47 C.F.R. § 74.1231(b). (Tr. 205, 240-41.) More likely,
    the true motive for the unauthorized use of a satellite feed was
    profit, made apparent by the fact that when PCI's Kodiak translators
    were silent (or were rebroadcasting programming of the Kodiak
    Community Church) competing full power commercial stations licensed
    to Kodiak increased their advertising revenues. (EB Exh. 34 at 3; EB
    Exh. 23A/Stipulation.)

**Renewal Applications - 1997**

30. In September 1997, due to a rule modification providing for FM
    translator license terms to run concurrently with FM primary
    stations,[^13] PCI refiled renewal applications for FM translator
    licenses simultaneously with applications to renew its full service
    licenses. (EB Exh. 3 at 9 through EB Exh. 9 at 1-7.) As contrasted
    with its 1995 applications, PCI acknowledged that the FM translator
    operations were noncompliant with § 74.1232(d), but offered as
    justification its expectation that approval of pending assignment
    applications to Coastal would effect compliance. (EB Exh. 3 at 7.)
    On November 6, 1997, the Division Chief granted PCI's 1995 renewal
    applications and the assignment applications. (Off. Notice Exh. 10.)
    Chief Blair's letter also denied the petitions to deny the
    assignment. (*Id.*) On December 17, 1997, the competitors filed
    petitions to deny the 1997 renewal applications. (Off. Notice Exh.
    11 at 1, 3-4, Tr. 210.)

**Renewal Applications Granted -- 1998**

31. On December 10, 1998, the Commission renewed PCI's applications for
    the two Seward translators, and applications for the Kenai and
    Kenai/Soldotna translators as to which no signal delay issues were
    presented, and applications for the unchallenged translators in
    Anchor Point, Homer and Kachemak City. *Memorandum Opinion and
    Order*, 13 F.C.C. Rcd 23992, 23999-24000 (1998). (Off. Notice Exh.
    11.) The Commission affirmed the staff's determina-tions with
    respect to conditionally granting PCI's 1995 renewal applications,
    and with respect to the PCI/Coastal assignment applications. The
    Commission also granted PCI's 1997 renewal applications for six of
    nine translators, conditioning renewals on consummation of
    assignments, thereby eliminating any possible violations of §
    74.1232(d). But the Commission concluded that the staff's findings
    rendered PCI ineligible to continue to hold any of its "other area"
    FM translator licenses which made the seven FM translators
    vulnerable for termination. *Id., passim.*

**No Right to Waivers**

32. Post-1990 waivers were limited to "white areas" in order to promote
    full-service broadcasting while preventing translators from unfairly
    competing with full-service stations. Consistent with its new
    policy, the Commission denied Coastal's applications to modify the
    Kodiak translators for satellite signals because the translators
    served no "white areas." However, because the situation in Seward
    had not changed since the initial grant, the Commission allowed the
    continuation of waivers for the Seward translators, allowing for a
    revisit if a prospective full-service FM station became operational
    in Seward. *Memorandum Opinion and Order*, 13 F.C.C. Rcd at at
    23997-98. (Off. Notice Exh. 11.)

**No Assignment**

33. But the die was cast, and by March 1, 2000, the assignment was dead.
    (Tr. 220; 409.) Four of the nine translators had become "worthless"
    because Kodiak translators were being denied satellite waivers and
    were no longer receiving primary station programming, while Seward
    translators would lose commercial value when a full service station
    goes on-the-air. Coastal had concluded that the Kodiak translators
    were "useless" and that the Seward translators would soon become
    valueless. As a result, Coastal would purchase PCI's translators
    only at a substantially reduced price. (EB Exh. 19 at 4-5; Tr. 220,
    409-10.) Recognizing that the assignment option was lost, as a last
    resort, in February -- March 2000, PCI unsuccessfully sought stays
    from the Commission and from the D.C. Circuit. (EB Exhs. 18, 19, 26;
    Tr. 236, 331.)

**Untimely Rejection of Condition**

34. On February 14, 2000, the Commission dismissed PCI's petition for
    reconsideration and motion for stay. *Memorandum Opinion and Order,*
    15 F.C.C. Rcd 3293 (2000). (Off. Notice Exh. 12.) The Commission
    found that PCI had unduly delayed consummation of the assignments.
    *Id.* at 3294. The Commission ordered that if PCI did not divest
    within thirty days, the staff would rescind the conditional grants
    of renewal, cancel the FM translators' call signs, and terminate
    PCI's operating authority. *Id*. Since the translators did not serve
    any "white areas," the Commission concluded that continuing PCI's
    waivers would be detrimental to the full service broadcast stations
    operating in Seward, and the Commission ordered termination of the
    Seward waivers within sixty days. *Id*. at 3296.

35. Under the Commission's regulatory regimen, if PCI had timely
    rejected the condition, PCI would have been entitled to a renewal
    hearing. 47 C.F.R. § 1.110 (hearing required when conditions of
    grant are not accepted). The Commission determined that by accepting
    conditional renewals, PCI waived its right to reject the condition
    of assignment, and also its right to a hearing. The licenses were
    rescinded for failure to meet a condition that PCI had accepted more
    than two years earlier, and by PCI accepting that condition, there
    was no right to a hearing on the FM translators' renewals.
    *Memorandum Opinion and Order and Order to Show Cause*, 16 F.C.C.
    Rcd 11364, 11369 (2001).

36. Mr. Becker knew that the Commission required consummation of
    translator assignments and that otherwise PCI risked loss of the
    licenses. (Tr. 237.) On March 15, 2000, in a last ditch effort, PCI
    filed a pleading styled "Rejection of Conditional License Renewal
    and Assignment of License Grants" ("Rejection"). That pleading was
    PCI's first and only attempt to reject conditional renewals issued
    in 1997 and 1998. (EB Exh. 20; Tr. 238-39, 423.) PCI argued that as
    a consequence of its Rejection pleading, the Commission was required
    to set the translator renewal applications for hearing. PCI also
    tried to convince the staff in that pleading that the Commission's
    conditional grants were void. (EB Exh. 20 at 2; Tr. 424.) Upon
    learning that PCI had filed its Rejection, the D.C. Circuit
    dismissed PCI's appeal without prejudice to its re-filing following
    the Commission's resolution of PCI's recently filed Rejection.[^14]
    (Off. Notice Exh. 13 at 5; Tr. 425.)

37. On May 18, 2001, the Commission dismissed PCI's Rejection as
    untimely, noting that PCI's filing was made years after the thirty
    day limitation for rejecting conditional renewals. *Termination
    Order* at Para. 11. (Off. Notice Exh. 13 at 5.) The Commission also
    rescinded the conditional renewals and assignment grants because of
    default. *Termination Order* at Para. 13. (Off. Notice Exh. 13 at
    6.) As a consequence, the Commission deleted the call signs of the
    FM translator stations serving Kenai, Kenai/Soldotna, Anchor Point,
    Homer, Kachemak City and the

two FM translator stations in Kodiak, and ordered PCI to cease
operating. *Termination Order* at Para. 21.[^15] (Off. Notice Exh. 13 at
8.) The Commission's refusal to accept PCI's late-filed Rejection in the
*Termination Order* has been approved by the D.C. Circuit. *See
Peninsula Communications, Inc. v. F.C.C.*, No. 01-1273, *per curiam
Judgment and Memorandum*, filed January 30, 2003.[^16]

**Termination**

38. The "*Termination Order*" directed PCI to cease operating the seven
    FM translators by May 19, 2001. *Memorandum Opinion and Order and
    Order to Show Cause*, 16 F.C.C. Rcd 11364, 11371 (2001). (Off.
    Notice Exh. 13 at 8.) PCI received the *Termination Order*, read it,
    understood it, and continued to operate unlawfully for fifteen
    months. (Tr. 221-23; EB Exhs. 1 and 3 -- PCI admits receipt by May
    30, 2001.) In June 2001, PCI filed an appeal with the D.C. Circuit
    seeking to overturn the *Termination Order*. PCI never obtained a
    stay of the *Termination Order* from the Commission or from the D.C.
    Circuit. The D.C. Circuit denied PCI's appeal and upheld the
    legality of the *Termination Order*. *Peninsula Communications, Inc
    .v. F.C.C.,* Case No. 01-1273, *per curiam* *Judgment* *and
    Memorandum* filed January 30, 2003 (ordered and adjudged that the
    *Termination Order* be affirmed).

**Forfeiture**

39. On August 29, 2001, in a clear shot across the bow, the Commission
    released its *Notice of Apparent Liability for Forfeiture and
    Order*, 16 F.C.C. Rcd 16124 (2001) ("*NAL*"), notifying PCI that
    further operation of the seven FM translators might raise serious
    questions about PCI's qualifications to be a Commission licensee,
    and also might result in proceedings leading to revocation of PCI's
    licenses. PCI received the *NAL*, read it, understood it, but
    nonetheless continued operating the seven FM translators. (Tr.
    222-23.)

40. On February 6, 2002, the Commission released its *Forfeiture Order*,
    17 F.C.C. Rcd 2832 (2002), finding that PCI "willfully and
    repeatedly" failed to comply with Section 301 of the Communications
    Act of 1934. PCI was assessed a base amount forfeiture of \$10,000
    for each of the seven stations (\$70,000), adjusted upward because
    of PCI's intentional and continued illegal operations. *Id*.
    at 2836. The *Forfeiture Order* in the amount of \$140,000 is being
    enforced by a

United States Attorney. 47 C.F.R. § 1.80(f)(5) (judicial enforcement of
forfeiture order). A *de novo* collection action is pending in the
United States District Court for the District of Alaska, Case No.
A02-295 (JWS). (Off. Notice Exh. 22.)

**Notice of Unlawfulness**

41. After the assignments failed, PCI reversed field and argued to the
    Commission and to the D.C. Circuit that the Commission lacked
    statutory authority to issue conditional grants of renewal. In its
    motion for stay, PCI also argued that Commission rulings had found
    that its operation of "other area" translators had been in the
    public interest, that there had been no serious violations of the
    rules, and that there had been no other violations that showed a
    pattern of abuse. (EB Exh. 18 at 6-7.) But that argument omits the
    fact that beginning in September 1996, the staff and the Commission
    had found that the seven FM translators were operating in violation
    of § 74.1232(d) since June 1, 1994, and that the orders to divest
    were issued to cure those violations prospectively. (Off. Notice
    Exh. 8 at 1; Off. Notice Exh. 11 at 5; EB Exh. 3; EB Exh. 10.) The
    Commission did not act on PCI's motion for stay, and on March 14,
    2000, the D.C. Circuit denied PCI's emergency motion for stay. *See
    Termination Order* at Para. 9. (Off. Notice Exh. 13 at 5.)

**Continuing Violation**

42. On September 10, 2001, in response to the *NAL*, *supra,* PCI
    submitted an affidavit wherein Mr. Becker acknowledged its continued
    operation of the seven FM translators. (EB Exh. 27; Tr. 245-46.) PCI
    contended that despite the *Termination Order*, PCI's renewal
    applications remained pending by virtue of the appeal to the D.C.
    Circuit. (*Id.*) PCI continued to assert that the pendency of
    renewal applications allowed PCI to continue operating the FM
    translators until the D.C. Circuit decided the appeal. (EB Exh. 27
    at 2-3.) PCI was relying on two non-applicable Commission rules: §
    1.62(a)(1) (operation authorized pending action on renewal
    applications) and § 73.3523(d)(a) (application deemed pending until
    order becomes not subject to further review by courts). (EB Exh. 27
    at 2-3.)

43. Mr. Becker also asserted that continuation of broadcasting over the
    translator stations was needed to avoid automatic license
    termination. Section 312(g) of the Act provides:

> If a broadcasting station fails to transmit broadcast signals for any
> consecutive 12-month period, then the station license granted for the
> operation of that broadcast station expires at the end of that period
> ....

But since the translators' call signs were deleted, PCI could not have
been further adversely impacted under the Act by complying with the
*Termination Order* because PCI would have no designated licenses to
automatically terminate. *See Termination Order* at Para. 21. (Off.
Notice

Exh. 13 at 6.) PCI continued to operate the FM translators on erroneous
legal advice that PCI could operate the translators so long as the
*Termination Order* was on appeal, or until a court injunction became
final. (Tr. 222-23, 266; EB Exh. 30 at 339-41.) If PCI were correct in
its automatic stay argument, then § 312(g) of the Act would have no
relevance. Under either *scenario*, there is no relevance to this case
of § 312(g) of the Act.[^17]

44. Mr. Becker knew soon after release of the *Termination Order* that
    the Commission had ordered PCI to discontinue using the seven FM
    translators. (Tr. 221-22.) Yet PCI continued to operate them. (Tr.
    222-23; EB Exh. 30 at 340-41.) Mr. Becker instructed counsel to
    inform the Commission that PCI would not terminate its translator
    transmission. (Tr. 227.) The Beckers knew that PCI was disobeying a
    Commission order. (Tr. 223-25; EB Exh. 30 at 340-42.) On June 15,
    2001, PCI filed an appeal with the D.C. Circuit and continued
    operating without obtaining a stay of the *Termination Order*. (Off.
    Notice Exh. 17 at 5; Tr. 229, 232.) Counsel had notified the
    Commission that PCI intended to operate translators while pursuing
    an appeal to the D.C. Circuit in accordance with the general
    Commission practice allowing operations to continue while appeals
    are pending. (Tr. 224, 227-232; Off. Notice 14 at 4.)

**Injunction**

45. In July 2001, the United States Attorney for Alaska filed an action
    to enjoin PCI and to enforce the *Termination Order*. (PCI Exh. 1 at
    9.) On October 17, 2001, a United States District Court issued a
    preliminary injunction, affirmed on April 22, 2002, by the United
    States Court of Appeals for the Ninth Circuit ("Ninth Circuit").
    *United States of America v. Peninsula Communications, Inc.*, 287
    F.3d 832 (9^th^ Cir. 2002). The Ninth Circuit held that filing an
    appeal with the D.C. Circuit did not excuse compliance with a
    Commission order, absent a stay. 287 F.3d at 836. (Off. Notice Exh.
    17 at 7.) And the Ninth Circuit rejected the argument that under

§ 1.62(a)(1) and § 73.3523(d)(2) its renewal applications remained
pending. 287 F. 3d at 839.[^18] (Off. Notice Exh. 17 at 12.) Even after
the Ninth Circuit affirmance, PCI advised the United States Attorney
through its local counsel that PCI "cannot voluntarily cease operation
because that will destroy the business and livelihood of the owners and
employees." (EB Exh. 21.)

46. On July 3, 2002, the Ninth Circuit denied PCI's petition for
    rehearing. (Off. Notice Exh. 19.) On August 13, 2002, the D.C.
    Circuit denied PCI's last request for a stay of the *Termination
    Order*. (Off. Notice Exh. 20.) On August 28, 2002, PCI shut down the
    seven FM

translators, announcing that it had "temporarily" suspended operation of
the translators until the legality of the *Termination Order* was
decided by the D.C. Circuit. (EB Exh. 22; Tr. 331.) The D.C. Circuit has
upheld the *Termination Order*, and it is conclusively established that
PCI had been operating the seven translators illegally until August 28,
2002. (EB Exh. 27 at 2-3.)

*See* *Peninsula Communications, Inc. v. F.C.C.*, No. 01-1273, *per
curiam Judgment and Memorandum* filed January 30, 2003.

**State of Mind**

47. PCI has shown its state of mind to be primarily focused on arguing
    reasons for not obeying the *Termination Order*. (*See* PCI Exhs.
    1-C-I through 11.)[^19] In telling testimony,

Mr. Becker asserted: "If the injunction had never been issued, I would
be continuing to operate today under authority of § 307(c)(3)."[^20]
(Tr. 266.) Section 307 of the Act has no relevance. The *Termination
Order* was a final order and there was no pending petition for
reconsideration under Section 405 of the Act. *See United States v.
Peninsula Communications, Inc.,* 287 F. 3d at 839, holding that PCI's
renewal applications were "finally determined by the FCC" as of the date
of issuance of the *Termination Order.*

48. Shortly after May 19, 2001, PCI counsel advised the Commission by
    telephone that it would continue to operate the seven FM translator
    stations while appealing to the D.C. Circuit, believing that it was
    conforming with Commission precedent. (Tr. 224, 227; *Forfeiture
    Order* at Para. 10, and Off. Notice Exh. 14 at 4.) On September 10,
    2001, Mr. Becker stated PCI's belief that it could continue to
    operate while its appeal was pending before the court. (EB Exh. 1 at

30-35.) PCI was relying on a Commission general practice of permitting
continued broadcasting pending completion of an appeal.

> Generally, we permit a disqualified broadcast licensee to continue
> operations during judicial appeals to ensure service to the public
> until the court resolves the licensee's qualifications.

*Pinelands, Inc*., 7 FCC Red 6058, 6061 n.12 (1992). The Commission
acknowledged this policy. *See OSC* at 3 n. 10. However, in this case
the Commission opted to refuse staying the *Termination Order* pending
appeal. *See,* OSC at 3-4. The Commission's authority to refuse a stay
was a point on appeal to the D.C. Circuit which held:

> \[T\]he Commission was well within its authority when it prohibited
> \[PCI\] from operating during its appeal.

*Peninsula Communications, Inc. v. F.C.C.,* No. 01-1273, *per curiam
Judgment and Memorandum*, filed January 30, 2003.

49. The word "generally" used by the Commission in *Pinelands, supra,*
    is a qualifier that shows a selective decision for allowing interim
    broadcast operation pending appeals. The D.C. Circuit acknowledged
    the fact that the Commission "normally allows licensees whose
    renewal applications have been denied to continue operating pending
    the exhaustion of any appeal \-\-- \[but\] only as a matter of
    discretion," citing *Pinelands, Inc., supra*. *See Peninsula
    Communications, Inc. v. F.C.C.* (No. 01-1273), *supra*. When it
    advised the Commission in May 2001, PCI did not know how the D.C.
    Circuit would rule and was relying only on its own belief as to
    authority under *Pinelands, Inc.* to continue operations. Discretion
    for the Commission to decide who can and who cannot operate pending
    judicial appeal does not appear in the Act, the rules, or Commission
    policy. And Mr. Becker was being advised that there has never been a
    case where a licensee was denied the right to continue licensed
    operations pending appeal. As a result, he believed that it was
    wrong for the Commission to order PCI off the air with a
    determination that it would have been inappropriate for the
    Commission to give PCI continued authority to operate. *See OSC* at
    3 n. 10. Substantially the same argument was reiterated in

Mr. Becker's testimony. (*See* Tr. 154, 231-232, 370, 412-414, 420-422.)

50. Mr. Becker claims to have "agonized" over continuing the operation
    of the translators because he did not "want to disobey the
    Commission\..." (Tr. 224.) In the course of his "agonizing," Mr.
    Becker saw not terminating under the *Termination Order* as being
    consistent with the Commission actions in connection with the Seward
    translators. On

February 14, 2000, the Commission ordered PCI to terminate the two
Seward translators by

April 14, 2000. *Memorandum Opinion and Order*, 15 F.C.C. Rcd 3293, 3296
(2000). (Tr. 415.) PCI appealed to the D.C. Circuit, did not terminate
the Seward translators, and the Commission took no action to either
enforce its order or to penalize PCI. (Tr. 419.) Mr. Becker argues that
the reason the Commission took no action was because PCI had timely
filed an appeal with the D.C. Circuit, thinking that the appeal
automatically postponed further compliance with the order regarding the
Seward translators. (Tr. 416, 420-21.) But Mr. Becker's reasoning is not
supported by the record. The appeal to the D.C. Circuit did not result
in an automatic stay, no stay was requested, and no stay was obtained.
Thus, there was no reasonable basis for PCI to rely on unrelated Seward
procedures as precedent for not obeying the *Termination Order*.

51. The Commission acknowledged in the *Termination Order* that PCI had
    challenged the earlier decision to terminate Seward and determined:

> We believe that Section 316 of the Act affords the most direct and
> expedient means of resolving the matter.

*Termination Order* at Para. 14. (Off. Notice Exh. 13 at 8.) The
Commission then granted PCI's renewals for the two Seward stations. The
Commission also ordered a proceeding under § 316 of the Act requiring
PCI to show cause why the waivers should not be discontinued. *Id.* As
found above, the Commission ultimately discontinued the Seward waivers.
*See* Para. 38 n. 16, *supra.* Mr. Becker now concludes that it was
fortuitous not to have terminated the two Seward translators because, in
the *Termination Order* of May 2001, the Commission excluded termination
of the two Seward translators from its termination directive.
*Termination Order* at Para. 14. (Tr. 416-418.) Mr. Becker believes that
had PCI terminated the two Seward translators in April 2000, under §
312(g) of the Act, the licenses for the Seward translator stations would
have been automatically terminated by the date of the release of the
*Termination Order*. (Tr. 417-418.)

52. Mr. Becker simply calculated that PCI's appeal to the D.C. Circuit,
    filed in July 2001, could not be prosecuted to a conclusion within
    twelve months. (Tr. 224-225, 233, 360.) Mr. Becker therefore
    concluded that compliance with the *Termination* Order would
    effectively moot the appeal by operation of the automatic forfeiture
    provision of § 312(g) of the Act. (Tr. 360-361.) PCI now contends
    that advice of counsel and Mr. Becker's views on the law made it
    reasonable to conclude that PCI was entitled to operate the seven FM
    translators after May 18, 2001, pending the exhaustion of its appeal
    to the D.C. Circuit, and as a legitimate measure to protect the
    translators from automatic forfeiture. Mr. Becker justifies
    non-compliance because of the so called Seward "precedent." As found
    in Paragraph 43 *supra*, the *Termination Order* cancelled the call
    signs of the seven translators, and if PCI had complied timely with
    the *Termination Order*, there would be no application of §312(g) of
    the Act to the facts of this case. There is absolutely no basis for
    Mr. Becker to have relied on unrelated Seward procedures in deciding
    not to obey the *Termination Order* which concerns the termination
    of only "network" licenses, none of which were concerned with
    Seward.

**Ultimate Fact Findings**

53. In launching its "network during the 1980s, PCI obtained waivers to
    retransmit primary signals over seven translators in "other areas"
    which were primary areas of full service competitors. The waiver
    standards tightened in 1990, and under grandfathering rights, PCI
    was able to operate its "other area" translators until 1994, relying
    primarily on *Wrangell*, *supra*. PCI should have been down sizing
    its "other areas" broadcasting, but instead was motivated to keep
    operating its "network" by the economics of PCI's business plan. The
    "network" enabled PCI to expand primary station coverage through low
    cost translators, thereby unfairly competing for advertising in
    "other areas" that were already receiving full service. Through its
    "network", PCI was able to provide advertising time for lucrative
    clients. PCI's translators also siphoned business from full service
    FM stations. Motivated strictly by profit, PCI unilaterally decided
    to continue broadcasting through unauthorized translators after
    being ordered on May 19, 2001, to cease operations.

54. Prior to the *Termination Order,* the Commission had concerns about
    PCI when challenges were filed to staff renewal grants. *Memorandum
    Opinion and Order*, 13 F.C.C. Rcd 23992 (1998). (Off. Notice Exh.
    11.) By then, the Commission would not grant waivers for "other
    area" translators to entities interested in or connected with
    commercial FM stations, and only "white areas" were eligible for
    waivers. *Id.* As a result, PCI's renewal applications fell into
    jeopardy and valid waivers could be obtained only for two Seward
    translators which at the time were filling legitimate needs. Other
    PCI translators that were up for renewal had been found to be
    operating in violation of § 74.1232(d). *Memorandum Opinion and
    Order,* 13 F.C.C. Rcd 23994. But *see* *also* Division Chief Blair's
    earlier, highly instructive letter dated September 11, 1996, to
    PCI's counsel with copies directed to challenger's counsel. (Off.
    Notice Exh. 8).

55. To resolve the situation, in 1998, the Commission granted PCI's
    renewal applications subject to a condition of assignment, and
    rejected competitors' petitions to deny. *Memorandum Opinion and
    Order,* 13 F.C.C. Rcd 23992 (1998), *recon. denied*, *Memorandum
    Opinion and Order*, 15 F.C.C. Rcd 3293 (2000). PCI could not meet
    the assignment condition because the potential value of the
    translators, which was based on their ability to retransmit primary
    signals into "other area" Alaskan communities, had diminished
    significantly. The assignment condition not being met, in May 2001,
    the Commission issued its *Termination Order* which PCI knowingly
    failed to honor, on a daily basis, for more than one year.

56. PCI defended its misconduct on a mistaken belief that a timely
    appeal of the *Termination Order* to the D.C. Circuit gave it an
    absolute right to continue to broadcast until the appeal became
    final. (EB Exh. 27.) PCI's intransigence required the Commission to
    obtain an injunction in a United States District Court that was
    affirmed by the Ninth Circuit. On

August 28, 2002, and only after affirmance of the injunction and refusal
to hear *en banc* reconsideration, did PCI finally honor the
*Termination Order.* To its detriment, from May 19, 2001 to August 28,
2002, PCI was daily violating the Commission's *Termination Order.*

(Tr. 142.) [^21]

**CONCLUSIONS OF LAW**

**Violations of the Act**

57. Section 301 of the Act provides:

> It is the purpose of this Act, among other things, to maintain the
> control of the United States over all the channels of radio
> transmission; and to provide for the use of such channels \-\-- under
> licenses granted by Federal authority, and no such license shall be
> construed to create any right, beyond the terms, conditions, and
> periods of the license.
>
> Section 312(a)(4) of the Act provides:
>
> The Commission may revoke any station license or construction permit
> --
>
> for willful or repeated violation of, or willful or repeated failure
> to observe any provision of this Act, or any rule or regulation of the
> Commission authorized by this Act or by a treaty ratified by the
> United States.

Section 416(c) of the Act provides:

> It shall be the duty of every person, its agents and employees, and
> any receiver or trustee thereof, to observe and comply with such
> orders so long as the same shall remain in effect.

The totality of this record shows that PCI willfully violated the Act by
knowingly operating its seven FM translators for more than a year after
notice of the *Termination Order,* and for nearly a year after notice
through the *NAL* of a forfeiture of \$140,000. On the basis of this
record, PCI is found, by a preponderance of the evidence, to have
violated § 301, § 312(a)(4) and § 416(c) of the Act by knowingly failing
from May 19, 2001 to August 28, 2002, to observe and comply with a
Commission order terminating seven FM translator licenses in Alaska.

**Discussion**

58. The *Termination Order,* released on May 18, 2001, became effective
    on May 19, 2001. *Memorandum Opinion and Order to Show Cause*, 16
    F.C.C. Rcd 11364, 11368-70 (2001). The law is clear that notice was
    effected on the release date. 47 C.F.R. § 1.103(a) and § 1.4(b)(2)
    (date of notice is date of Commission action and public notice is
    document release date). *Cf*. *United States v.* Szoka, 260 F.3d
    516, 529-30 (6^th^ Cir. 2001) (cease and desist order effective on
    release and enforceable by injunction before appellate finality).
    The testimony also shows that PCI had actual knowledge of the
    *Termination Order* soon after its release. (Tr. 221-22) There was
    never any stay, and the D.C. Circuit has categorically rejected
    PCI's challenge to its validity. *Peninsula Communications, Inc. v.
    F.C.C.,* No. 01-1273, *per curiam* *Judgment and Memorandum*,
    January 30, 2003. It is now the law of the case, as decided in two
    circuits, that the *Termination Order* was effective upon its
    release, that PCI received timely notice, and that the *Termination
    Order* was a valid Commission order. *Id. See also United States v.
    Peninsula Communications, Inc.,* 287 F.3d at 836 (*Termination
    Order* "regularly made" under § 401(b) of the Act).

59. Nonetheless, PCI made clear its intention not to honor the
    *Termination Order*.

And so, in July 2001, the United States Attorney for Alaska filed an
action for preliminary injunction.[^22] In October 2001, an injunction
was issued by the United States District Court for Alaska. PCI appealed
the injunction to the Ninth Circuit. PCI also filed an appeal of the
*Termination Order* with the D.C. Circuit.

60. In April 2002, the Ninth Circuit held:

> Filing an appeal \[with the D.C. Circuit\] under Section 402 does not
> excuse a broadcaster from complying with the FCC \[*Termination
> Order*\] absent a decision by the D.C. Circuit to stay the order.

*United States v. Peninsula Communications, Inc.*, 287 F3d at 836.
Therefore, any formal or informal stays of the injunction had no effect
to stay the *Termination Order.* There never has been a stay of the
*Termination Order* by the Commission or by any court having
jurisdiction to stay the *Termination Order*. Therefore, it must be
concluded that PCI was in clear violation of the *Termination Order*
continuously from May 19, 2001, to August 28, 2002. To its credit, PCI
ceased to violate the *Termination Order* on August 28, 2002, and has
since been in compliance.

61. For an affirmative defense, PCI relies on a general practice at the
    Commission of allowing licensees to continue broadcasting pending
    appeals. The Act provides:

> Continuation pending decision. Pending any hearing and final decision
> on such an application and the disposition of any petition for
> rehearing pursuant to section 405 \[47 USC § 405\], the Commission
> shall continue such license in effect.

*See* 47 U.S.C. § 307(c)(3). The Commission has acknowledged the
practice:

> Generally, we permit a disqualified broadcast licensee to continue
> operation during judicial appeals to ensure service to the public
> until the court resolves the licensee's qualifications.

*Pinelands, Inc.*, 7 F.C.C. Rcd 6058, 6061 n.12 (1992). First, it is
noted that since full power FM signals were already broadcasting in the
"network" areas, there was no signal gap to fill by continuing PCI's
translator retransmissions. In addition, as a matter of law there is no
statutory mandate requiring the Commission to permit operations pending
appeals. Nor was PCI entitled to continue operations as a "pending"
renewal application because "pending" does not apply to the renewal
application process under § 1.62(a)(1) (applications continue in effect
until Commission "final determination). *Compare* 47 C.F.R. §
73.3523(d)(2) (in settlement of comparative renewal, an application is
deemed "pending" from filing to "final" order). It has been judicially
held that PCI "cannot revive its licensing by importing §
73.3523(d)(2)'s definition of 'pending' into § 1.62(a)(1)." *United
States v. Peninsula Communications, Inc.,* 287 F. 3d at 839. The Ninth
Circuit's analysis, stated with a clarity for all to understand, is
consistent with the Commission's rejection of the interplay of § 1.62
and § 73.3523. *See OSC* at Para. 3 (neither rule justified continued
operation of PCI's translators after May 19, 2001).

62. PCI also seeks to justify non-compliance on a statutory provision
    for automatic forfeiture of licenses for stations that fail to
    broadcast for twelve months. Section 312(g) of the Act provides:

> If a broadcasting station fails to transmit broadcast signals for any
> consecutive 12 month period, then the station license granted for the
> operation of that broadcast station expires at the end of that
> period....

The Commission has already considered this point and rejected it. *See
OSC*, at Para. 4,17 F.C.C. Rcd at 2840-41. The Commission found that
"the seven FM translator licenses are no longer in effect." *Id.* The
Commission's rulings on the law in the *OSC are* binding on the
Presiding Judge. *Fort Collins Telecasters*, 103 F.C.C. 2d 978, 983-84
(Review Bd 1986), *citing Atlantic Broadcasting Co.*, 5 F.C.C. 2d 717,
720-21 (1966). *Cf. Echrenhaft v. Malcolm Price, Inc.,* 463 A. 2d 1192
(D.C. App. 1984) (question of law already decided in same case is
binding at trial level). Furthermore, since § 312(g) of the Act applies
to licenses that are "in effect" and remain silent for one year, there
could not be any right or obligation for PCI to continue broadcasting as
licensee of seven terminated translators which were after May 19, 2001,
no longer licenses that were "in effect." *Id.* Therefore, since PCI had
no duty or right to broadcast over terminated stations, there was no
basis to apply § 312(g) of the Act as justification for PCI's failure to
comply with the *Termination Order*.

63. Finally, PCI offers as a defense Mr. Becker's reliance on advice of
    counsel. The evidence shows that despite stern warnings from the
    Commission, PCI continued to violate the *Termination Order* until
    August 2002. During the period of daily disobedience, Mr. Becker was
    receiving legal advice that he could continue to operate lawfully
    pending all appeals. However, it is well established that "advice of
    counsel cannot excuse a clear breach of duty by a licensee." *RKO
    General v. F.C.C.*, 670 F.2d 215, 231 (D.C. Cir. 1981). *Cf. United
    Broadcasting*, 94 F.C.C. 2d 938, 954 (1983); *Asheboro Broadcasting
    Co.,* 20 F.C.C. 2d 1, 3 (1969).

64. Advice of counsel possibly qualifies as an affirmative defense if
    there is a "technical issue in a complex area of the law, making
    reliance on specialized counsel particularly appropriate." *Fox TV
    Stations, Inc.*, 10 F.C.C. Rcd 8452, 8500 (1995). In a sense, there
    was for a short time a technical legal issue on whether a terminated
    licensee on appeal may continue broadcasting. The D.C. Circuit
    recognizes that "the Commission normally allows licensees whose
    renewal applications have been denied to continue operating pending
    the exhaustion of any appeal." *Peninsula Communications, Inc. v.
    F.C.C.,* No. 01-1273, *per curiam Judgment and Memorandum*, *supra*.
    Here, any remnant of a "technical legal issue" vanished when Mr.
    Becker was graphically warned by the *NAL* that PCI's licenses were
    at risk if the *Termination Order* was not obeyed. The Commission
    then showed an increasingly grave concern for PCI's disobedience
    when it sought an injunction. In view of these red flag warnings of
    how serious the Commission was taking its clear and concise readily
    understandable *Termination Order*, there was no longer a
    discernable "technical issue" that required "specialized" advice.
    Therefore, PCI cannot defend its willful defiance of the
    *Termination Order* by relying on a legal advice defense. If Mr.
    Becker relied on his attorney's advice, the advice is that of an
    agent and Mr. Becker must accept the consequences if the agent's
    advice turns out to be wrong. *Cf.* *Carol Sue Bowman*, 6 F.C.C. Rcd
    4723 (1991); and *Hillebrand Broadcasting Corp.* 1 F.C.C. Rcd 419,
    420 n. 6 (1986).

65. It is concluded that without any legal justification, PCI committed
    a "clear breach of duty" to immediately obey the unambiguous
    *Termination* Order. While there are extenuating circumstances that
    are discussed below, it must be concluded as a matter of law that
    PCI willfully violated both the letter and the spirit of the
    *Termination Order* from May 19, 2001 to August 28, 2002, in
    violation of § 301, § 312(a)(4) and § 416(c) of the Act.

**Appropriate Sanction**

66. The Commission has broad discretion in its choice of remedies and
    sanctions. *RKO General, Inc. v. F.C.C.*, 670 F. 2d 215, 237 (D.C.
    Cir. 1981); *Leflore Broadcasting Co. Inc. v. F.C.C.*, 636 F. 2d
    454, 463 (D.C. Cir. 1980); *Lorain Journal Co. v. F.C.C.*, 351 F.2d
    824, 831 (D.C. Cir. 1965). The Commission relies on truthfulness and
    reliability of licensees. These traits are demonstrated by
    willingness or unwillingness to comply with the law generally and
    the Communications Act and the Commission's rules in particular.
    *Policy Regarding Character Qualifications In Broadcast Licensing*,
    102 F.C.C. 2d 1179, 1188-91 (1986) ("*Character Policy Statement*").
    *See also* *Policy Regarding Character Qualifications In Broadcast
    Licensing*, 5 F.C.C. Rcd 3252 (1990), *modified*, *Memorandum
    Opinion and Order*, 7 F.C.C. Rcd 6564 (1992).

67. In assessing a sanction, willfulness of misconduct, its frequency
    and its currency are considered, along with the seriousness of
    misconduct and efforts made to remedy wrongs, noting particularly
    the licensee's record of compliance with the Act and Commission
    rules and policies. *Character Policy Statement*, 102 F.C.C. 2d at
    1227-28. For a period of several weeks in 1997, PCI operated its
    Kodiak translators through an unauthorized satellite delivery
    system. However, to PCI's credit, the evidence shows that STAs were
    sought and PCI stopped commercial broadcasting in Kodiak after the
    Commission failed to address the STA requests. The record does not
    support a conclusion that PCI was a total scofflaw with respect to
    seeking to comply with rules and regulations. And far more serious
    than an unauthorized short-term satellite signal

in Kodiak is PCI's intentionally violating the *Termination Order* over
a substantial period of time. PCI's misconduct related to the
*Termination Order* warrants a severe sanction of license revocation
because it resulted from a knowing and intentional decision to disobey
daily a lawful order from May 2001 to August 2002.

68. Contrary to Mr. Becker's claim of an "agonized" act of disobedience,
    PCI operated from an economic motive to avoid the *Termination
    Order* for as long as possible*.* Through a carefully crafted
    "network," PCI captured revenues that otherwise would have gone to
    competing full-service licensees operating properly within their
    assigned service areas. Through the seven offending translators, PCI
    placed its own economic interests ahead of the Commission's
    regulatory scheme and the public interest in having honest
    competition. After losing an extended joust with the staff on waiver
    authorizations and then failing to effect an assignment, PCI turned
    to the appeal process to postpone compliance with the *Termination
    Order*. This was a particularly cynical abuse of the fairness shown
    by the Commission and the Commission staff in giving PCI the benefit
    of several doubts.

69. In December 1998, the Commission rejected license revocation for
    PCI's translator licenses, the sanction that was sought by competing
    broadcasters who were opposing PCI/Coastal assignments. *Memorandum
    Opinion and Order*, 13 F.C.C. Rcd 23992 (1998). Petitioners argued
    the *Jefferson Radio* policy which requires assignment applications
    to be deferred where there are unresolved basic character
    qualifications. *Jefferson Radio Co. v. F.C.C.*, 340 F2d 781, 783
    (D.C. Cir. 1964). *Cf. RKO General, Inc.*, 3 F.C.C. Rcd 5057,
    5060-61 (1988). PCI accepted the Commission's rulings regarding
    assignment, an acceptance which it later unsuccessfully tried to
    reject. Although loss of the seven FM translators was a possibility
    in December 1998, the Commission probably would not have placed
    PCI's full-power licenses into a revocation hearing merely for
    violations of translator waiver rules. PCI's exposure to revocation
    of its full-power licenses first arose after May 19, 2001, when PCI
    received and failed to obey the *Termination Order*. PCI's licensing
    then became continuously more vulnerable as it continued to violate
    the *Termination Order*.

70. In the final analysis, this record demonstrates that PCI has
    questionable "reliability" in obeying any future Commission order
    with which it disagrees. Such an unreliable licensee does not meet
    the standards for licensees set by the *Character Policy Statement,
    supra*. PCI clearly deserves to lose all licenses used in connection
    with its "network" operations, which include two full service
    primary FM stations. However, in view of a Commission policy to
    revoke only offending licenses, it is concluded that under the
    particular facts of this case, revocation of non-"network" PCI
    licenses would be inappropriate, and also would be inconsistent with
    Commission precedent.

**Revocation**

71. In weighing the relevant character traits of truthfulness and
    reliability, truthfulness is paramount.

> The act of willful misrepresentation not only violates the
> Commission's Rules; it also raises immediate concerns over the
> licensee's ability to be truthful in any future dealings with the
> Commission.

*Character Policy Statement, supra* at 1209. PCI and the Beckers have a
clean slate insofar as actionable misrepresentation and lack of candor
are concerned.[^23] Therefore, there should be no significant concern
about PCI dealing honestly with the Commission in the future with
respect to its Commission licenses. In fact, PCI's conduct was so
transparent, which is the antithesis of fraud and deception, as to
amount to a contempt of the Commission's regulatory authority under §
301 of the Act.

72. The Commission treats any violation of the Act or rules as "possibly
    predictive of future conduct" and, to that extent, any violation
    raises concerns about future truthfulness and reliability.
    *Character Policy Statement* at 1209-10. However, the sanction for
    any misconduct not involving misrepresentation need not be universal
    license revocation. And particularly pertinent to this case, the
    Commission has rejected any presumption that misconduct at one
    station means a licensee is not qualified to operate other stations.
    *See* *Character Policy Statement, supra* at 1224 (no presumption
    that misconduct at one station means a licensee is unqualified to
    operate others).

**Mitigation and Deterrence**

73. There are circumstances of changing waiver rules and shifting waiver
    policies uniquely applicable to translator stations in Alaska, that
    diminish the degree of concern for PCI's future compliance in
    operating its non-"network," full-power and translator stations.
    Such ameliorating circumstances do not dilute the seriousness of
    PCI's willful violation of the Commission's *Termination Order*. But
    the projected future impact of PCI's misconduct is tempered by
    attempts to obtain stays, appeals to the courts, and PCI's ultimate
    compliance once an injunction became final and the D.C. Circuit
    denied PCI's final stay request. PCI was exhausting all available
    legal remedies. And in the context of discretionary sanctions, it
    cannot be ignored that there was no scheme or attempt to conceal an
    illegal activity that was uncovered by a whistleblower or staff
    investigation. PCI was simply parlaying waiver rules and the
    *Wrangell* case for retransmitting into "other areas" through a
    transparent "network." Now with

the loss of its transparent "network" it cannot be predicted that this
would ever happen again. In paying the piper, PCI has deservedly
foregone a translator "network" while receiving a *Forfeiture Order* of
\$140,000, which it will most likely be required to pay after costly
litigation. Under these circumstances, deterrence in PCI operating
full-power stations and translator stations that are not part of a
predatory-like "network" can be reasonably assured by "sanctions short
of \[total\] revocation." *Character Policy Statement* at 1228.

**Multiple Revocations**

74. The Commission found in its study of revocation sanctions:

> *Suffering the loss of one station, with the costs thereby imposed,
> will likely serve to deter all but the most unrepentant from serious
> future misconduct*.

*Character Policy Statement* at 1228. (Emphasis added.) Mr. Becker seems
to be somewhat "repentant." He creditably testified: "I did not want to
disobey the Commission." He also admitted to deliberately disobeying the
*Termination Order*, gratuitously adding, "and I was greatly troubled by
that because I am an ethical person." (Tr. 155, 224-225.) While Mr.
Becker has not proven himself to be "most repentant," he is not found to
be "most unrepentant." PCI has incurred serious "costs" incident to
terminating the "network". PCI currently has substantial exposure to
forfeiture in the amount of \$140,000 which it is litigating as a matter
of right in a federal district court. Finally, serious attention must be
paid, in the context of the record in this case, to the Commission's
admonition:

> *Only in the most egregious case need termination of all rights be
> considered.*

*Character Policy Statement* at 1228. (Emphasis added.) As discussed
below, in the absence of fraud or misrepresentation, PCI's transparent
non-compliance with a Commission order pending appeals does not reach
the level of "most egregious." Thus, it is concluded that the
Commission's sanction policy does not contemplate a universal revocation
of the totality of PCI's licenses.

**Rehabilitation**

75. Another important factor in assessing sanctions is rehabilitation,
    and the efforts of PCI to remedy the situation. *See Character
    Policy Statement* at 1229. While it is too early to determine with
    precision whether and to what extent PCI and the Beckers are truly
    "rehabilitated," there is substantial evidence showing that the
    *Termination Order* was not blithely ignored. PCI availed itself of
    lawful remedies by timely appealing to an appropriate forum (D.C.
    Circuit). Generally, the Commission permits broadcasting to continue
    pending such court appeals. PCI relied on that practice and on legal
    advice that the practice would apply in this case.

Those circumstances cannot be totally ignored. Of course, PCI has not
proven exculpation because without a stay from the Commission or from
the D.C. Circuit, PCI was flaunting the *Termination Order*. But there
was recognition and appreciation shown by PCI for established legal
processes, and that recognition and appreciation indicates a degree of
reliability and rehabilitation.

76. Other circumstances must be weighed. Assuming that PCI was acting on
    a good faith mistaken belief that it could operate pending its D.C.
    Circuit appeal, once served with injunction papers, the Beckers had
    to realize that the Commission was taking very seriously its
    *Termination Order*. Misguided or mischievous as its strategy was,
    PCI litigated the injunction in the Ninth Circuit. PCI succeeded in
    obtaining formal and informal stays from the Ninth Circuit and an
    informal stay from an Assistant United States Attorney, pending
    appeals of the injunction. Of course, those Ninth Circuit injunction
    stays have nothing to do with whether or not to obey the non-stayed
    *Termination Order.* It is concluded that PCI's misplaced reliance
    on a general Commission practice of permitting operations pending
    appeal was insufficient to completely mitigate operating its
    "network" without a stay.

77. However, in PCI's favor, there was a good faith appeal pending in
    the D.C. Circuit in August 2002. After an injunction became final in
    the Ninth Circuit, and with stays being denied by the D.C. Circuit,
    PCI belatedly met its duty to cease operating its seven FM
    translators. This leads to the probability that by August 28, 2002,
    PCI and the Beckers had gotten the message and began to
    rehabilitate. PCI has evidenced a *modicum* of compliance which
    deserves recognition and at least a slight credit in considering a
    demand by the Bureau for full license revocation.

**Equal Treatment of Licensees**

78. The Commission reserves "termination of all rights" to "the most
    egregious cases" which are usually those with an element of
    misrepresentation or flagrant "piracy," elements that are not
    present here.

79. In a Commission decision cited and relied on by the Bureau,
    *James A. Kay, Jr.*, 17 F.C.C. Rcd 1834 (2002), *recon.*, 17 F.C.C.
    Rcd 8554 (2002), [^24] the Commission held:

> The misconduct found here \-\-- involves only stations operating on
> the 800 MHz band. We find that the revocation of \-\-- licenses for
> stations operating on this band will serve as a significant deterrent
> to future misconduct. \-\-- We therefore limit the sanction \-\-- to
> revocation of the 25 licenses for his stations operating on the 800
> MHz band.

17 F.C.C. Rcd at 1865, and 17 F.C.C. Rcd at 8558. Before sanctioning,
the Commission made independent adverse findings on credibility. *See*
*James A. Kay, Jr.*, 17 F.C.C. Rcd at ¶¶71-99. As a result of those
findings, the Commission revoked 25 licenses for SMR stations on the 800
MHz band. But the Commission did not revoke all licenses. *Id*. at Para.
108. In a companion case, also on appeal, the Commission revoked 15
licenses for SMR stations on the 800 MHz band but again did not revoke
all licenses. *Cf. Marc Sobel*, 17 F.C.C. Rcd 1872, 1894 (2002). The
reasons for not revoking all licenses were Commission conclusions that
the misconduct, which involved misrepresentation, did not affect all
licensed facilities of the licensees. *See Marc Sobel*, 17 F.C.C. Rcd at
1893.

80. In *KQED, Inc.,* 5 F.C.C. Rcd 1704 (1990), wherein the Commission
    denied a license renewal for station KQEC(TV) in San Francisco, the
    licensee had "committed serious misconduct by lacking candor about
    and misrepresenting the reasons for deactivation of KQEC(TV)." *Id*.
    The Commission held that "\[s\]uch conduct violates the fundamental
    duty of a licensee to deal honestly with the Commission." \[Citation
    omitted.\] *Id*. at 1785. The Commission found that mitigation
    evidence had little weight in the face of more critical evidence of
    dishonesty in informing the Commission. *Id*. The *KQED* case shows
    that a misrepresentation is more likely to result in revocation than
    will technical problems in operating a station. In this case, the
    open and transparent violation of the *Termination Order*, foolish
    though it was and being much more than a mere technicality, did not
    equate with a disqualifying misrepresentation or conduct that would
    warrant revoking PCI licenses not involved with operating the
    offending "network."

81. In *Contemporary Media, Inc.*, 13 F.C.C. Rcd 14437 (1998), also
    cited by the Bureau, the Commission affirmed the revocation of three
    commonly owned licenses "because of violations of law relating to
    repeated sexual abuse of children by the station's sole owner and
    misrepresentations by the licensees." In the case of those
    convictions (repeated child sexual abuse) the Commission found a
    form of criminal behavior amounting to such "egregious misconduct"
    that it was not necessary to find a specific relationship to
    truthfulness. *Id*. at 14442. In fact, the conduct was more than
    extremely serious. These were "heinous crimes" characterized by
    "moral turpitude" in the category of those that "shock the
    conscience." *Id*. at 14444. Yet the principal of *Contemporary
    Media*, who was found to have committed those "heinous crimes," was
    permitted to operate for almost four years pending "finality." As
    brazen as PCI was in not obeying the non-stayed *Termination Order*,
    the transparent conduct of PCI does not approach the standard of
    "heinous crimes" that "shock the conscience" which did not mandate
    the licensee to cease operations while appeals were pending.

82. The Bureau also relies on the cases of *Star Stations of Indiana,
    Inc.,* 51 F.C.C. 2d 95, 97 (1975) and *Leslie D. Brewer*, 16 F.C.C.
    Rcd 12878, 12883 (Enf. Bureau 2001). In *Star Stations,* a case
    involving a renewal applicant for Amateur FM stations, the
    Commission concluded that the record showed "a reprehensible course
    of misconduct" that included "improper campaign contributions,
    slanted news broadcasts, and misrepresentations to the Commission."
    In that case, the renewal applicant had the burden of proof, which
    it failed to meet thereby losing its license renewals. Here, the
    Bureau was assigned the burden of proof which it readily met in
    proving the violations. But the Bureau also must carry a burden of
    persuading that revocation of unrelated licenses is part of an
    appropriate sanction.

83. *Brewer* was a "pirate radio" case in which the "pirate" operator
    was also licensee of Amateur Radio and General Mobile Radio Service
    stations. In sharp contrast to PCI, Brewer had never even filed for
    a license to operate his unauthorized "pirate" facility. The
    Commission had warned Mr. Brewer to cease operating unlicensed
    broadcast facilities. Mr. Brewer refused to cease and brazenly
    continued operating unapplied for and unlicensed broadcast
    facilities for over four years. When called to defend his conduct,
    Mr. Brewer failed to file a notice of appearance, failed to appear,
    and was found to be in default. Mr. Brewer's unrelated Amateur and
    GMRS licenses were revoked *in absentia* based on unopposed findings
    made of his "cavalier disregard toward his licensee obligations."
    *Id* at 12883. None of those circumstances apply to PCI or to this
    case.

84. *Star Stations* is distinguished from this case because it involved
    "reprehensible conduct" of misrepresentations and cheating, adverse
    character findings which are not sought

and are not made here. *Brewer* does not provide authority for
revocation of all PCI stations because Mr. Brewer, unlike Mr. Becker,
was one of those "pirates" who blatantly carried on unlicensed
broadcasting activities for four years. Mr. Brewer had never even
applied for a license to operate the "pirate" station. Mr. Brewer then
intentionally defaulted on a Commission show cause order, and suffered
the natural consequences of a buccaneering broadcaster. Conversely, PCI
was acting under a changing regimen of waivers, had received a pass on
revocation in 1998, and was at all times engaged in appeals to the
Commission and to the courts, showing a *modicum* of appreciation for
the legal process. The "pirate" operator, on the other hand, showed none
of those attributes. The *Brewer* case provides analogous authority only
for revoking the full power "network" stations that illegally
retransmitted through the terminated seven FM translators. However,
neither *Star Stations* nor *Brewer* provide convincing authority for
revocation of PCI's non-offending full-power licenses or non-offending
translator licenses which were not used in connection with the offending
"network".

**Ultimate Conclusions**

85. PCI has paid a heavy price in losing seven FM translators, and
    probably will be required after *de novo* collection litigation to
    pay a hefty forfeiture. PCI's conduct was seriously misguided,
    bordered on contemptuous, and was deserving of those sanctions, in
    addition to revocation of two full service FM stations that were
    used in operating the "network." But under the circumstances of this
    case, PCI's misconduct was not such a "cavalier disregard" of
    licensee obligations so that PCI should lose unrelated full-power FM
    licenses or unrelated translator licenses, a sanction that would not
    be in keeping with Commission policy.[^25]

86. PCI had run afoul of stricter Commission waiver rules and made
    efforts to rectify the violations through a Commission sanctioned
    assignment. The reasons for not assigning the licenses were
    seemingly legitimate business concerns about loss of earlier granted
    waiver relief, unexpected loss of an antenna, denial of authority to
    operate by satellite, and projected commercial loss of otherwise
    valuable Seward translators. Those circumstances indicate that PCI
    initially had reason to believe that it was attempting in good faith
    to comply with Commission rules and directives, until making the
    foolhardy miscalculation to not obey the Commission's *Termination
    Order* while attacking the assignment remedy that Mr. Becker had
    once embraced.

87. But it is concluded that PCI's transparent transgressions, which did
    not include acts of deception or misrepresentation, do not call for
    the revocation of PCI's non-offending licenses. The combination of a
    likely substantial money forfeiture, the costs of litigating the
    collection of the forfeiture, the costs of multiple appeals, the
    costs of this hearing, the revocation here of licenses for two
    income producing full-power FM stations coupled with the loss of a
    "network," and adverse findings against PCI in this *Initial
    Decision* should, in their totality, provide adequate assurance of
    PCI's reliability in its future dealings with the Commission.

**ORDER**

IT IS ORDERED that licenses held by Peninsula Communications, Inc. for
FM full-power stations KWVV-FM, Homer and KPEN-FM, Soldotna ARE
REVOKED.[^26]

IT IS FURTHER ORDERED that the remaining licenses held by Peninsula
Communications, Inc. ARE NOT REVOKED, i.e., full-power stations
KGTL(AM), Homer, and KXBA-FM, Nikiski; and FM translator stations
K292ED, Kachemak City, K285DU, Homer, K285EG and K272DG, Seward.[^27]

FEDERAL COMMUNICATIONS COMMISSION

Richard L. Sippel

Chief Administrative Law Judge

[^1]: Enforcement Bureau exhibits are referred to as EB Exh.\_\_\_;
    Official Notice exhibits are referred to as as Off. Notice Exh.
    \_\_; PCI exhibits are referred to as PCI Exh. \_\_\_; hearing
    transcript pages are cited as Tr. \_\_\_.

[^2]: EB Exh. 23 was modified by stipulation to address confidentiality
    concerns. *See Order*, FCC 02M-97, released October 18, 2002
    (Stipulation re Enforcement Bureau Exhibit 23 received in evidence
    as EB Exh. 23A). The record was reopened and closed to accept Off.
    Notice Exh. 21, which was received by *Order,* FCC 03M-12, released
    April 18, 2003 (intention to assign two Seward translators to Moody
    Bible Institute). The record was again reopened and closed to accept
    Off. Notice Exh. 22. *See* *Order*, FCC 03M-17, released May 16,
    2003 (status of PCI licenses).

[^3]: PCI's seven FM translator stations that appear in the caption of
    this case include: K285EF (Kenai); K283AB (Kenai/Soldotna); K257DB
    (Anchor Point); K265CK (Kachemak City); K272CN (Homer); K274AB and
    K285AA (Kodiak).

[^4]: *United States v. Peninsula Communications, Inc.,* 287 F. 3d 832
    (9^th^ Cir. 2002) (rehearing denied July 3, 2002). (Off. Notice Exh.
    19.) On August 13, 2002, the D.C. Circuit denied PCI's final motion
    for stay. (Off. Notice Exh. 20.)

[^5]: A "primary FM station" is the station whose signal a translator
    retransmits. 47 C.F.R. § 74.1201(d).

[^6]: Section 74.1232(d) did not apply to Kodiak because there was no
    other commercial FM station serving Kodiak when PCI began operating
    its two Kodiak translators. (Off. Notice Exh. 8 at 3-4.) In 1998,
    the staff approved Special Temporary Authority ("STA") for the
    operation of Kodiak translators under *Wrangell* waivers. (PCI Exh.
    5 at 6-14; PCI Exh. 8 at 1-10.)

[^7]: To provide PCI with protection, the data in proposed EB Exh. 23
    was reduced to a Stipulation that was received in evidence as EB
    Exh. 23A.

[^8]: The Seward translators were not subject to the *Termination
    Order*. But after the *Termination Order,* the Commission revisited
    Seward and found waivers were not warranted due to a change of
    material facts, and that continuation of waivers would result in
    discriminatory application of Commission rules. *Memorandum Opinion
    and Order* FCC 03-47, released March 10, 2003. PCI has committed to
    assign the Seward licenses to a non-profit operator. *See Order* FCC
    03M-12, released April 18, 2003, admitting into evidence Off. Notice
    Exh. 21. Seward assignments were under consideration as of the
    issuance of this *Initial Decision.*

[^9]: The parties stipulated on-the-record that EB Exhibits 8 through 15
    contained identical disclosure for each of the seven translator
    stations. (Tr. 311.)

[^10]: In PCI's renewal application filed on September 30, 1997, seeking
    renewal for translator license KZ72CN, Homer, PCI answered in
    response to Questions 5(a) and 5(b) (compliance with § 74.1232) that
    PCI was authorized by waiver of §§ 74.1232(d) and (e) to operate the
    translator. *Id*.

[^11]: The petitioners were KSRM, Inc., White Falcon Communications,
    Inc., King Broadcasters, Inc., and Cobb Communications, Inc.,
    competitors in Kenai/Soldotna, Kodiak and Seward, Alaska.

[^12]: Section 74.1232(h) provides for termination of any waiver upon 60
    days notice where the circumstances in the area served are so
    altered as to have prohibited grant of the application had such
    circumstances existed at the time of its filing. (Off. Notice Exh. 8
    at 8.)

[^13]: *See Report and Order*, 9 F.C.C. Rcd 6504 (1994). As a result of
    the modification, the renewal period for PCI's FM translators was
    extended to February 1, 1998. To comply, PCI filed renewals for the
    nine translators on September 30, 1997. Under circumstances that
    applied in 1997, the policy was to grant otherwise grantable
    assignment applications prior to the time for acting on renewal
    applications, provided that consummation of assignments not occur
    until grant of renewals. (Division Chief Blair's letter of November
    6, 1997; Off. Notice Exh. 10 at 4 n.7.)

[^14]: The Ninth Circuit noted that "proceedings before the FCC took
    another complex procedural turn" and "because of procedural
    complications, the D.C. Circuit had dismissed Peninsula's appeal."
    *U.S. v. Peninsula Communications, Inc.,* 287 F 3d at 382-383.

[^15]: The Seward translators were not terminated under the *Termination
    Order*. Instead, the Commission commenced a proceeding under § 316
    of the Act to determine whether licenses for the Seward translators
    should be modified by termination of the waivers. *Termination
    Order* at Para. 24. (Off. Notice Exh. 13 at 8.) As a result, Seward
    lost its rights to continued waivers. *Memorandum Opinion and
    Order*, FCC 03-47, released March 10, 2003.

[^16]: The unpublished *per curiam Judgment and Memorandum* of the D.C.
    Circuit is cited herein only as fact and for legal conclusions that
    are uniquely relevant to this case, and not cited for precedential
    legal authority.

[^17]: *See* further discussion below on PCI's State of Mind, Paras. 48
    -- 53, *infra.*

[^18]: The Ninth Circuit held: "Peninsula is wrong. The definition of
    "pending" in 47 C.F.R. § 73.3523(d) (2) is limited to proceedings
    under that section of the regulations, and thus does not apply to
    the renewal application procedure set forth in 47 C.F.R. §
    1.62(a)(1). *See* 47 C.F.R. § 73.3523(d) (introducing definitions in
    that subsection with the limited phrase "\[f\]or the purpose of this
    section ..."). Therefore, Peninsula cannot revive its licenses by
    importing 47 C.F.R. § 73.3523(d)(2)'s definition of "pending" into
    47 C.F.R. § 1.62(a)(1)."

[^19]: Because Mr. Becker was relying on his understanding of the law
    concerning finality, this fact finding analysis also requires
    consideration of Mr. Becker's legal arguments.

[^20]: Section 307 (c) (3) provides:

    > Continuation Pending Decision -- Pending any hearing and final
    > decision on such an application and the disposition of any
    > petition for rehearing pursuant to Section 405, the Commission
    > shall continue such license in effect.

    47 U.S.C. § 307 (c) (3).

[^21]: August 28, 2002, was a date selected by PCI to terminate
    operations. (Tr. 142-43.) The final ruling of the Ninth Circuit was
    an order denying PCI's petition for rehearing *en banc*, filed by
    the Clerk on July 3, 2002. (Off. Notice Exh. 19.) The last request
    for stay of the *Termination Order* was denied by the D.C. Circuit
    on August 13, 2002. (Off. Notice Exh. 20.) In a final act of flaunt,
    Mr. Becker negotiated with the United States Attorney to continue
    broadcasting in violation of the *Termination Order* during a local
    primary election that ended on August 27, 2002. (Tr. 269-70.)

[^22]: Section 401(b) of the Act provides that if any person fails to
    obey a Commission Order, the United States Attorney General may
    apply to a federal district court for an injunction.

[^23]: There are no Commission decisions finding that PCI or the Beckers
    misrepresented or lacked candor, and the Bureau has not sought the
    adding of such issues or adverse findings of lack of candor in the
    course of this hearing.

[^24]: Appeal pending *sub nom. James A. Kay, Jr. v. F.C.C.,* No.
    02-1175 (D.C. Cir. June 5, 2002).

[^25]: In concluding that PCI's non-"network" licenses may be retained,
    the principle of equal treatment of licensees for similar conduct
    also is a consideration. *See e.g. Garnett v. F.C.C.,* 513 F2d 1056,
    1060 (D.C. Circuit 1975).

[^26]: The licenses for the seven FM translator stations were terminated
    by the *Termination Order* released on May 18, 2001, and the D.C.
    Circuit has upheld the *Termination Order*. As a result, the
    contingent return of the seven FM translator licenses provided for
    in the *OSC* is moot.

[^27]: This Initial Decision shall become effective and this proceeding
    shall be terminated 50 days after its release if exceptions are not
    filed within 30 days thereafter, unless the Commission elects to
    review the case on its own motion. 47 C.F.R. § 1.276(b).