**Before the**

FEDERAL COMMUNICATIONS COMMISSION

**Washington, D.C. 20554**

In the Matter of )

)

JAMES A. KAY, JR. ) WT Docket No. 94-147

)

Licensee of One Hundred Fifty Two )

Part 90 Licenses in the )

Los Angeles, California Area )

# APPEARANCES

[Robert J. Keller]{.underline} and [Aaron P. Shainis]{.underline} on
behalf of James A. Kay, Jr.; and [Charles W. Kelley]{.underline}, [Gary
P. Schonman]{.underline}, [William H. Knowles-Kellett]{.underline} and
[John J. Schauble]{.underline}, on behalf of the Wireless
Telecommunications Bureau and the Enforcement Bureau,[^1] Federal
Communications Commission.

# DECISION

**Adopted:** November 20, 2001 **Released:** January 25, 2002

By the Commission: Commissioner Martin concurring in part, dissenting in
part, and issuing a statement.

# I. INTRODUCTION

1\. This decision modifies an Initial Decision by Chief Administrative
Law Judge Joseph Chachkin concluding that James A. Kay, Jr. is qualified
to remain the licensee of 152 Part 90 land mobile stations. [James A.
Kay, Jr.]{.underline}, FCC 99D-04 (ALJ Sept. 10, 1999). We find that Kay
failed to respond to Commission inquiries and filed a pleading that
lacked candor. We will therefore revoke Kay's stations in the 800 MHz
band and assess a forfeiture of \$10,000 against Kay.

# II. BACKGROUND

2\. On December 13, 1994, the Commission designated this proceeding for
hearing to determine whether Kay, a licensee of land mobile radio
facilities under Part 90 of the Commission\'s rules, has complied with
those rules and whether he possesses the character qualifications to
remain a Commission licensee. [James A. Kay, Jr.]{.underline}, 10 FCC
Rcd 2062 (1994), [modified]{.underline}, 11 FCC Rcd 5324 (1996). Kay was
ordered to show cause why his licenses should not be revoked or
cancelled, why he should not be ordered to cease and desist from certain
violations of the Communications Act, and why an order for forfeiture
should not issue.

3\. The Commission had received numerous complaints about Kay\'s
operations, including allegations that he was falsely reporting the
number of mobile units he serves in order to avoid the channel sharing
and recovery provisions of the rules. [James A. Kay, Jr.]{.underline},
10 FCC Rcd at 2062 ¶ 2. On January 31, 1994, the Bureau, pursuant to 47
U.S.C. § 308(b), served Kay with a letter of inquiry requesting him to
provide certain information, including information about the loading of
his stations. [Id]{.underline}. at 2063-64 ¶¶ 6-7. After an exchange of
correspondence and extensions of time, the Bureau, on June 10, 1994,
repeated its request. Kay responded on June 24, 1994 that: \"\[T\]here
is no date . . . for which the submission of the requested information
would be convenient.\" [Id]{.underline}. at 2064 ¶ 8. The Commission
thereupon designated this case for hearing. [Id]{.underline}. Of the
eight issues originally designated, four remain before us:

a\) To determine whether James A. Kay, Jr. has violated Section 308(b)
of the Act and/or Section 1.17 of the Commission\'s Rules by failing to
provide information requested in his responses to Commission inquiries;

. . . .

> c\) To determine if Kay has willfully or repeatedly violated any of
> the Commission\'s construction and operation requirements in violation
> of Sections 90.155, 90.157, 90.313, 90.623, 90.627, 90.631, and 90.633
> of the Commission\'s Rules;
>
> d\) To determine whether \[Kay\] has abused the Commission\'s
> processes by filing applications in multiple names in order to avoid
> compliance with the Commission\'s channel sharing and recovery
> provisions in violation of Sections 90.623 and 90.629;
>
> . . . .
>
> g\) To determine, in light of the evidence adduced pursuant to the
> foregoing issues, whether \[Kay\] is qualified to remain a Commission
> licensee . . . .

4\. This matter was originally assigned to Administrative Law Judge
Richard L. Sippel, who, following further proceedings, issued a summary
decision in which he revoked Kay\'s licenses and ordered Kay to forfeit
\$75,000. [James A. Kay, Jr.]{.underline}, 11 FCC Rcd 6585 (ALJ 1996).
That decision was subsequently vacated and the proceeding was remanded
for a full hearing. [James A. Kay, Jr.]{.underline}, 12 FCC Rcd 2898
(OGC 1997). After the remand, Judge Sippel added a further issue against
Kay based on findings made in another proceeding (WT Docket No. 97-56),
that an individual named Marc D. Sobel had transferred control of
several Part 90 stations to Kay without Commission authorization and
that he made misrepresentations and lacked candor. [James A. Kay,
Jr.]{.underline}, FCC 98M-15 (Feb. 2, 1998). [See]{.underline} Paragraph
71, [infra]{.underline}. On October 19, 1998, the Commission ordered the
appointment of a new administrative law judge to preside over this case.
[James A. Kay, Jr.]{.underline}, FCC 98-274 (Oct. 19, 1998). Then-Chief
Administrative Law Judge Joseph Chachkin (ALJ)[^2] appointed himself to
preside. [James A. Kay, Jr.]{.underline}, FCC 98M-122 (Oct. 30, 1998).

5\. In his Initial Decision (ID), the ALJ concluded that the Bureau
failed to demonstrate any misconduct by Kay that would warrant
revocation of his licenses. ID at ¶ 223. On the contrary, the ALJ
strongly faulted the Bureau's own conduct, finding:

This Judge has never seen prosecutorial misconduct of this magnitude in
the twenty years he has presided over Commission cases. Such misconduct
can not be countenanced. It is completely contrary to the Commission's
duty and responsibility to treat all of its licensees in a fair and
evenhanded manner.

ID at n.49.[^3]

6\. The ALJ found no basis to fault Kay under the § 308(b) issue. ID at
¶¶ 175-81. He found that the Bureau did not allege that Kay's responses
to the Bureau's inquiry contained misrepresentations or lacked candor.
He further found that (1) the Bureau's inquiry was excessively broad and
constituted an impermissible "fishing expedition,"(2) that Kay
ultimately produced the information requested after designation for
hearing, and (3) that Kay had legitimate concerns as to whether the
Bureau would keep the sensitive business information requested
confidential.

7\. The ALJ rejected the Bureau's contention that Kay had underutilized
the frequencies on which he was licensed. ID at ¶¶ 186-98. He found that
the Bureau had not shown that Kay was subject to any specific loading
requirement. He also found significant flaws in the manner that the
Bureau analyzed the evidence in attempting to support its claims.

8\. Additionally, the ALJ rejected allegations that Kay abused the
Commission's processes by filing applications in multiple names. ID at
¶¶ 199-207. Although the ALJ found that Kay was involved in filing
applications on behalf of four individuals, the ALJ found that Kay had a
factual basis for believing that these individuals had a bona fide
intention to use the radio facilities applied for. Moreover, the ALJ
questioned the credibility of the witnesses against Kay. According to
the ALJ, Kay had no motive to acquire facilities in the manner alleged,
since he could have legitimately applied for them in his own name.

9\. Finally, although the ALJ accepted the conclusion in WT Docket No.
97-56, that Sobel transferred control of the facilities in question to
Kay without authorization, he found no basis for disqualifying Kay. ID
at ¶¶ 209-18. In this regard, he found that Kay did not make any
misrepresentation or engage in other deception in connection with the
alleged transfer.

10\. Now before the Commission are: (1) the Wireless Telecommunications
Bureau's Exceptions and Brief, filed October 12, 1999; (2) the Reply of
James A. Kay, Jr., to the Wireless Telecommunications Bureau's
Exceptions and Brief; and (3) related procedural matters. For the
reasons set forth below, we will modify the initial decision. We find
that Kay's responses to the Bureau's 308(b) request failed to provide
information that he was obligated as a licensee to produce. We also find
that Kay filed a pleading concerning Sobel that lacked candor. We will
therefore revoke Kay's stations in the 800 MHz band and assess a
forfeiture of \$10,000 against Kay.

**III. PROCEDURAL MATTERS**

11\. Before turning to the merits of this case, we wish to address two
procedural matters. First, Kay contends that the "clear and convincing
evidence" standard of proof applies in this case, rather than the more
lenient "preponderance of evidence" test. We disagree. Since the Supreme
Court's ruling in [Steadman v. SEC]{.underline}, 450 U.S. 91 (1981), it
is well established that the preponderance of the evidence test applies
in administrative proceedings. [See]{.underline} [Silver Star
Communications-Albany, Inc.]{.underline}, 6 FCC Rcd 6905, 6907 n.3
(1991); [Fox River Broadcasting, Inc.]{.underline} , 88 FCC 2d 1132,
1136 n.9 (Rev. Bd. 1982). [Citizens for Jazz on WRVR, Inc. v.
FCC]{.underline}, 775 F.2d 392, 395 n.1 (D.C. Cir. 1985), cited by Kay,
does not hold to the contrary.

12\. Second, Kay argues that the Bureau's exceptions and brief should be
stricken as violating the provisions of 47 C.F.R. §§ 1.276 and 1.277.
According to Kay, the Bureau's pleading lacks a separate statement of
the questions of law presented as required by 47 C.F.R. § 1.276(a)(2).
Moreover, Kay submits that the pleading exceeds the limit of 30
pages[^4] because, in addition to 29 pages of text, the pleading has
seven pages of attachments. 47 C.F.R. § 1.277(c). The Bureau's pleading
does not exceed the page limitation. Attachments consisting of materials
that factually support exceptions are not counted in determining the
page limit. [See]{.underline} [Belo Broadcasting Corp.]{.underline}, 61
FCC 2d 10, 11 ¶ 4 (1976); [Gross Broadcasting Co.]{.underline}, 65 FCC
2d 514, 514 ¶ 3 (Rev. Bd. 1977); 47 C.F.R. § 1.48(a). While, the
Bureau's pleading does not have a separate statement of the questions of
law presented, as required by the rule, a statement does precede the
discussion of each individual issue. The Bureau indicates that a
"reformatted" pleading could be refiled without exceeding the page
limitation. We see no reason to disrupt the proceeding at this point
merely to require such a "reformatting."

**IV. § 308 ISSUE**

13\. The ALJ found that Kay operated Part 90 land mobile radio
facilities in the Los Angeles, California, area and that he began
providing two-way mobile service to others on a commercial basis in
approximately 1982-84. He operated a sole proprietorship under the name
of Lucky\'s Two-Way Radio. Lucky\'s sold repeater service, rented
repeater site space, and provided technical consulting services. ID at
¶¶ 8-9. He offered these services through Specialized Mobile Radio (SMR)
stations that operated in the 800 MHz band,[^5] and through private
carrier stations that operated in the 470-512 MHz or "UHF" band. Kay\'s
UHF stations were licensed in the Business Radio Service.[^6] ID at ¶
84.

14\. On January 31, 1994, the Bureau requested, pursuant to 47 U.S.C. §
308(b), that Kay furnish the Bureau various information concerning his
licensed facilities. ID at ¶ 10. The Bureau stated that:

> The Commission has received complaints questioning the construction
> and operational status of a number of your licensed facilities.
> Specifically, the complaints allege that numerous facilities licensed
> to you are on U.S. Forest Service Land, but do not have the requisite
> permits for such use. The presumption is that those facilities were
> not constructed and made operational as required by the Commission's
> rules and therefore, the licenses have canceled. In addition, the
> Commission has also received complaints questioning the actual loading
> and use of your facilities. The complaints allege that the
> [licensed]{.underline} loading of your facilities does not
> realistically represent the [actual]{.underline} loading of the
> facilities, thereby resulting in the warehousing of spectrum.
> \[Emphasis in the original.\]

[Id]{.underline}.; WTB Exh. 1 (the "308(b) Letter").

15\. The 308(b) Letter directed Kay to produce: (1) an alphabetical list
of the call signs and licensee names for all facilities owned or
operated by Kay or any companies under which he does business, annotated
to show which facilities are located on U.S. Forest Service land, (2)
the original license grant date for each call sign, the date the
facility was constructed and placed into operation, and the type of
station, (3) copies of all U.S. Forest Service permits, (4) an
explanation for the lack of a U.S. Forest Service permit for any station
located on U.S. Forest Service land, (5) a list of all of Kay\'s
customers, including \"the user name, business address and phone number,
and a contact person\" along with the number of mobile units and, for
trunked systems, the number of control stations operated by the user,
and (6) a list of the total number of mobile units operated on each of
Kay\'s stations, substantiated by business records. ID at ¶11; WTB Exh.
1.

16\. Kay's then attorney, Dennis C. Brown, a partner at Brown &
Schwaninger, responded on February 16, 1994. Brown sought \"written
assurance that any information which Kay submits in response to the
Commission's request will be held in strictest confidence and will not
be disclosed under any circumstances to any person who is not a
Commission employee.\" WTB Exh. 348 at 1. Brown further requested that
Kay be afforded immunity from any forfeiture action or criminal
prosecution based on any information supplied, and asked that the
running of the sixty day response period be tolled pending action on the
requests set forth in the letter. ID at ¶ 15; WTB Exh. 348.

17\. The Bureau responded with a letter, dated March 1, 1994, addressed
to Brown. The Bureau stated that, pursuant to 47 C.F.R. § 0.459, if Kay
wished to have submitted material withheld from public inspection, he
would be required to submit such a request concurrently with the
submission of the materials. The Bureau further stated that Brown\'s
February 16, 1994, letter did not comply with 47 C.F.R. § 0.459 and
therefore \"is not considered a request that information submitted . . .
be withheld from public scrutiny.\" The request for immunity was denied
on the grounds that \"Congress has not provided for immunity when
responding to \[Section 308(b)\] requests.\" The deadline for responding
to the 308(b) Letter was extended to April 14, 1994. ID at ¶ 16; WTB
Exh. 349.

18\. On April 7, 1994, Brown wrote two letters to the Bureau. In the
first letter, Brown specifically requested confidential treatment
pursuant to 47 C.F.R. § 0.459. Brown sought confidential treatment to
prevent an unwarranted invasion of privacy in that Kay was submitting
(via Brown\'s second April 7 letter) personal information, such as the
extent of his resources and how his business was affected by a recent
earthquake. Brown also requested confidentiality on competitive grounds.
The letter specifically advised the Bureau that some of Kay's
competitors obtained copies of the 308(b) Letter and used it to
disparage Kay's reputation in the radio communications service market.
Brown expressed concern that Kay\'s competitors would obtain the
information which he is submitting and distribute it in an effort to
disparage Kay among his customers, and would use the information to
probe for weaknesses in his business strategy, and to solicit his
current customers directly. ID at ¶ 17; WTB Exh. 2.

19\. In the second letter dated April 7, 1994, Brown addressed the
substance of the 308(b) Letter. He presented a number of legal
objections and challenges to the scope of the request and provided none
of the requested information. In response to item (1), he asserted that
the Commission already knew the call signs of Kay's stations and
declined to "duplicate that information" or perform "secretarial sorting
tasks" that the Commission could "more expeditiously" perform itself.
WTB Exh. 3 at 1. He denied that the Commission had jurisdiction to
inquire into the status of Kay\'s U.S. Forest Service Permits, and
suggested that the Commission could "plot each station on a map" if it
desired to ascertain which facilities were located on U.S. Forest
Service Land. [Id]{.underline}. As to item (2), he asserted that the
Commission records already showed the dates the licenses were granted,
and that Kay was not required to keep any records of when they were
constructed. Addressing items (3) and (4), he declined to provide
information about Forest Service permits, claiming that such information
was irrelevant to the Commission's jurisdiction and that a presumption
that facilities lacking a permit were not constructed was unreasonable.
ID at ¶ 18; WTB Exh. 3.

20\. As to item (5), Brown characterized the Bureau's request for
customer lists and usage data as "an unlawful fishing expedition," since
it was not directly related to specific complaints. WTB Exh. 3 at 5. He
denied that Kay was required to maintain any record of user names or of
the other information about users that was requested. He complained that
the Bureau's March 1, 1994 letter (paragraph 17, [supra]{.underline})
did not provide the requested confidentiality. Brown also asserted that
item (6) essentially required Kay to "tell the Commission everything
about everything" and complained that the March 1 letter declined to
provide Kay with immunity. WTB Exh. 3 at 4. He further protested that
the request did not specify the time frame for which the data was to be
supplied and that, in any event, the usage of Kay's facilities
fluctuated over time. For that reason, and because many of Kay's
customers had access to multiple facilities, Brown maintained that Kay
might not know the number of mobile units in operation on each station.
Additionally, Brown asserted that Kay was not required by the
Commission's rules to supply loading information except in connection
with certain applications and that Kay had provided such information
when appropriate. Brown also deemed the request unduly burdensome in
light of local conditions, since Kay was still recovering from the
Northridge Earthquake, which occurred on January 17, 1994 and severely
damaged Kay's home and business, and since he was adversely affected by
the difficult economic conditions in the Los Angeles market. ID at ¶
19-20; WTB Exh. 3.

21\. Thereafter, on May 11, 1994, the Bureau responded with a letter
addressed directly to Kay. The Bureau told Kay that it required answers
to the Bureau's January 31 letter in order to act on several pending
applications and that these applications would be dismissed unless Kay
responded within 14 days. The letter also noted that the April 7
responses contained copyright notices at the bottom.[^7] The Bureau told
Kay that if he claimed copyright protection he would be required to file
50 copies of his response and justify why the copyright laws apply. ID
at ¶ 24; WTB Exh. 4.

22\. Brown replied on May 17, 1994. He specifically challenged the
Bureau's request for 50 copies, which is more than required by section
1.51 of the Commission's rules. [See]{.underline} 47 C.F.R. § 1.51. He
stated: "Since the Commission could not possibly require 50 copies for
its own internal use, the only reasonable conclusion is that the
Commission intends to make further circulation of Mr. Kay\'s response
beyond the Commission." With respect to the copyright notice on Kay's
response, Brown stated that the notice was intended to prevent
distribution of the response outside of the Commission, but otherwise
declined to "advise the Commission as to its obligations under the law
of copyright." ID at ¶ 26, WTB Exh. 5 at 2. Brown also reiterated some
of the same legal objections to the 308(b) Letter that he had set forth
in the second April 7, 1994, letter. Brown complained that the
Commission had declined to furnish him with information about specific
complaints under the Freedom of Information Act and suggested that
progress could be made on the matter if the Bureau would request
specific information concerning each of the specified facilities. He
further complained that the Bureau had no justification for threatening
to dismiss Kay's applications to get information. ID at ¶ 27; WTB Exh.
5.

23\. The Bureau thereupon, on May 20, 1994, responded to Brown\'s April
7, 1994, letters. The Bureau characterized Brown\'s April 7 letter as
\"inadequate, evasive, and contrived to avoid full and candid disclosure
to the Commission.\" WTB Exh. 6 at 1. The Bureau called it \"a studied
effort to avoid producing any information.\" [Id]{.underline}.; ID at ¶
28. The Bureau stated that:

With respect to Kay\'s request that information provided to the
Commission in response to our inquiry be withheld from public
inspection, we will not make those materials which are specifically
listed under the provisions of \[the Commission regulations implementing
the Freedom of Information Act\] routinely available for inspection to
the public. Therefore, materials which include any information
containing trade secrets or commercial, financial, or technical data
which would customarily be guarded from competitors, will not be made
routinely available to the public.

WTB Exh. 6 at 1. The Bureau specifically responded to an allegation,
made in Brown's first April 7 letter, that the Commission had improperly
disclosed confidential information about an individual named Joe Hiram.
The Bureau observed that Hiram had consented to the release of the
information and that Brown & Schwaninger had been so informed. The
Bureau clarified its January 31 request to indicate that Kay should
provide loading information as of January 31, 1994 and extended the
response date to June 3, 1994. [WTB Exh. 6.]{.underline}

24\. On May 25, 1994, Brown made a further response asking the Bureau to
"clarify" its request by specifying the facilities involved in specific
complaints. He suggested that Commission employees could inspect
relevant records at Kay's office. He also suggested that: "\[t\]he
Commission might want to scrutinize the complaints to assess the likely
validity of each item in light of its knowledge of the credibility of
the complaining parties and in light of its knowledge of the benefits of
which they may hope to gain by harassing Mr. Kay." WTB Exh. 7 at 2. He
proposed that "While Mr. Kay might not be convinced that the
complainants had presented a *prima facie* case . . . Mr. Kay would not
need to raise such procedural objections were the Commission to clarify
its request as suggested." WTB Exh. 7 at 2. Brown asked the Commission
to defer the response date until 14 days after the conclusion of Kay's
FOIA litigation seeking to obtain copies of the complaints against him.
ID at ¶¶ 38-39; WTB Exh. 7.

25\. On the next day, May 26, 1994, the Bureau issued a short letter
summarily rejecting the request for clarification, stating:

The Commission\'s request asks for basic information that Mr. Kay would
have readily available if he is indeed providing communication services
to customers. In fact, such information would be a necessity in order to
even issue monthly bills to users of the many systems for which he is
apparently licensed.

The Bureau refused to extend the response date beyond June 3. ID at ¶
40; WTB Exh. 8.

26\. Brown responded to the Commission the same day. Brown again sought
"clarification" of items in the January 31 308(b) Letter. With respect
to specific items, he asked for the following clarifications: (1) what
licensee information the Commission did not possess, (2) what
information about the grant and construction of the licenses the
Commission did not have, (3) and (4) the relevance of the Forest Service
permits, and (5) whether the Commission would keep Kay's user
information confidential. As to item (6), Brown did not seek further
clarification, but stated that: "Mr. Kay states that his business
records substantiate that a total of in excess of 7,000 mobile units and
control stations operate in association with all of the facilities which
he and his companies own and operate." WTB Exh. 10 at 3. Brown urged
that a failure to provide further information did not warrant a
revocation proceeding. ID at ¶ 40; WTB Exh. 10.

27\. The following day, May 27, 1994, the Bureau answered that no
clarification was required. ID at ¶ 40; WTB Exh. 10. The Bureau further
stated:

Regarding the request for user information, we have no intention of
disclosing Mr. Kay's proprietary business information, such as customer
lists, except to the extent that we would be required by law to do so.
Our intent is not to divulge Mr. Kay's proprietary business information
to competitors or any non-Commission personnel . . . .

WTB Exh. 10 at 1. The Bureau termed Brown's answer to item (6)
"ludicrous" and "frivolous." [Id]{.underline}. at 1-2.

28\. On June 2, 1994, Brown again responded to the Bureau. As to item
(1), Brown explained that Kay, in addition to holding licenses in his
own name, had an interest in two closely held corporations, Buddy Corp.
and Oat Trunking Group, Inc., and that Kay \"does not operate any
station of which either he or the two above named corporations is not
the licensee." WTB Exh. 11 at 1. The letter further explained that Kay
did not hold any license that the Commission would not already have in
its own records. ID at ¶ 43; WTB Exh. 11.

29\. Brown also renewed his various legal objections to the Bureau\'s
request for information regarding Kay\'s U.S. Forest Service permits,
including relevancy and the Bureau\'s refusal to disclose the
particulars of the alleged complaints against Kay. Brown claimed that
there is no requirement that Kay maintain records of license grant
dates, that the Commission already had the license grant dates in its
own records, and, to the extent

Commission rules required Kay to report construction completion dates,
he had already done so at the appropriate times. ID at ¶ 43; WTB Exh.
11. Brown stated that: "Had any license held by Mr. Kay cancelled
automatically because he failed to construct an authorized station in a
timely manner, we respectfully submit that such an automatic action of
law could not, in any way, raise a question concerning his
qualifications to be a Commission licensee." ID at ¶ 43; WTB Exh. 11 at
3.

30\. In response to the Bureau\'s request for Kay\'s loading numbers,
Brown again stated that Kay\'s combined systems served a grand total of
7,000 units, but he asserted that providing specific loading information
as of January 31, would not prove or disprove any complaint the Bureau
may have received, because the systems were in continual churn with
customers being added and deleted all the time. Brown again claimed that
loading was not a factor as to any of the specific pending applications.
ID at ¶ 44; WTB Exh. 11.

31\. Brown once again stated that Kay was not "convinced that the
Commission would keep confidential any information that the Commission
requested." WTB Exh. 11 at 5. Brown again cited Bureau\'s unexplained
request for 50 copies of Kay's response. Brown submitted only the number
of copies of his June 2, 1994, letter required by 47 C.F.R. § 1.51. He
also included the copyright notice across the bottom of each page. ID at
¶ 45; WTB Exh. 11.

32\. Finally, Brown asserted that the Bureau's refusal to disclose the
complaints on which the 308(b) Letter was based, its refusal to postpone
the response date until a court resolved Kay's FOIA litigation, its
refusal to grant Kay criminal immunity, and its stated intention to
initiate hearing proceedings against Kay violated Kay's constitutional
rights. ID at ¶ 46; WTB Exh. 11.

33\. The Bureau sent Brown a responsive letter on June 10, 1994. The
Bureau

labeled Kay's response \"woefully inadequate\" and threatened that it
\"places Mr. Kay in jeopardy of Commission sanctions which include
revocation of licenses, monetary forfeiture, or both.\" WTB Exh. 12
at 1. The Bureau stated that any information submitted would be kept
confidential and dropped its demand for 50 copies of any response,
requiring only 1 original and 1 copy. The Bureau again claimed that
loading information was readily available to Kay and required a further
response by July 1. The Bureau indicated that it would accept a user
list as of any date "[convenient to Mr. Kay]{.underline}." WTB Exh. 12
at 1. \[Emphasis in the original.\] ID at ¶ 47; WTB Exh. 12.

34\. On June 17, 1994, Brown wrote to the Bureau, informing it that a
Federal District court had required the Commission to submit a "Vaughn
Index" of documents withheld from Kay's FOIA request. Brown requested
that Kay's disclosure date be extended until 30 days after conclusion of
the FOIA litigation. ID at ¶ 48; WTB Exh. 13. The Bureau refused on June
22, 1994, noting that it had released over 1,000 documents to Kay. The
Bureau characterized Brown's requests as "dilatory tactics" that exposed
Kay to the threat of revocation. ID at ¶ 49; WTB Exh. 14 at 1. Finally,
on June 30, 1994, Brown responded again. As to each of the specific
items in the 308(b) Letter, Brown referred the Bureau to earlier
responses filed on behalf of Kay. Brown reiterated his legal objection
on the ground that the specifics of the alleged complaints had not been
disclosed to Kay. He stated that: "Mr. Kay respectfully reports that
there is no date subsequent to January 31, 1994 for which the submission
of the requested information would be convenient." WTB Exh. 15 at 3.

35\. The ALJ found that Kay's responses did not violate either 47 U.S.C.
§ 308(b) or 47 C.F.R. § 1.17. He found that the Bureau had not alleged
that Kay's responses constituted misrepresentations or lacked candor. ID
at ¶¶ 175-76. He criticized the Bureau's 308(b) Letter as exceeding the
permissible bounds of Commission inquiry, as defined by [Stahlman v.
FCC]{.underline}, 126 F.2d 123 (D.C. Cir. 1942), in that they did not
specifically inform Kay of the conduct in question and narrowly focus to
obtain necessary information. ID at ¶ 177-79. The ALJ held that,
instead, the Bureau had engaged in a "fishing expedition with the hope
that something would turn up." ID at ¶ 179. He faulted the Bureau for
not explaining particular complaints, for requiring sensitive
information, such as customer lists and technical configurations, and
for ignoring Kay's requests for modification. He said that Kay's actions
cannot be viewed as an "act of defiance." ID at ¶ 179. The ALJ also
found that Kay disclosed nearly 36,000 documents during discovery and
that Kay's ability to respond to the 308(b) Letter had been impaired by
his limited computer capabilities and the aftereffects of the Northridge
earthquake. The ALJ also found that Kay had legitimate concerns about
whether data would be kept confidential. These included the breadth of
the Bureau's request, the Bureau failure to provide requested
assurances, its demand for 50 copies of responses, and an incident in
which the Bureau apparently frustrated a finder's preference request
filed by Kay. ID at ¶¶ 180-81.

36\. The Bureau challenges the ALJ's adverse findings. The Bureau denies
that the 308(b) Letter constitutes an unlawful fishing expedition.
According to the Bureau, the Commission has already indicated its
approval of the 308(b) Letter in the hearing designation order and other
rulings in this proceeding. The Bureau asserts that charges of Bureau
misconduct are irrelevant to the issues in this proceeding. The Bureau
disputes the ALJ's findings that the 308(b) Letter sought excessive
detail about Kay's technical operations or that compliance was
excessively burdensome. The Bureau asserts that Kay could have complied
with the request by furnishing: (1) a chart of call signs and license
names, (2) copies of Forest Service permits, (3) a user list showing the
number of mobile units for each user, and (4) invoices supporting the
loading of Kay's systems on one specified date. The Bureau also takes
issue with the suggestion that it should have limited its inquiry to the
facilities involved in specific complaints.

37\. The Bureau discounts Kay's various excuses for noncompliance with
the 308(b) request. The Bureau contends that Kay had no valid concerns
about confidentiality, since the Bureau twice assured Kay in writing
that sensitive material would be kept confidential. The Bureau also
argues that the Northridge earthquake did not justify noncompliance.
According to the Bureau, Kay did not rely on the earthquake to justify
noncompliance and Kay could have complied despite the earthquake.

38\. Kay responds that the Commission intended to permit inquiry into
the propriety of the 308(b) Letter and to permit Kay to show that he was
aggrieved by the Bureau's conduct. Kay argues that Congress did not
intend 308(b) to be a "blank check" for requesting information. He
further argues that compliance with a 308(b) Letter is voluntary and
that the Commission can issue a subpoena, enforceable in the federal
courts, if it wants to compel disclosure. Kay characterizes the 308(b)
Letter as overbroad and excessively burdensome, requiring production of
billing records, contracts, and invoices regarding more than 150
facilities. In Kay's view, the Bureau should have limited its requests
to the facilities involved in specific complaints.

39\. Additionally, Kay cites several mitigating factors. He observes
that he provided some 38,000 documents after designation for hearing,
which demonstrates that he had no intention to deceive the Commission.
He asserts that the Bureau gave him ample reason to be concerned about
confidentiality, especially in light of its apparent bad faith and
animosity towards Kay. Kay asserts that the Northridge earthquake
severely disrupted his business, personal life, and computer system,
making it difficult for him to comply with the request. In this regard,
he submits that compliance with the request required three months of
staff time.

40\. We find that Kay violated his obligations under 47 U.S.C. § 308(b)
and 47 C.F.R. § 1.17. Licensees have an obligation to respond to
Commission inquiries. [See]{.underline} [Fox Television Stations,
Inc.]{.underline}, 10 FCC Rcd 8452, 8508 ¶ 139 (1995). [See
also]{.underline} 47 C.F.R. § 1.17 ("The Commission or its
representatives may, in writing, require . . . written statements of
fact. . . . No applicant, permittee or licensee shall in any response to
Commission correspondence or inquiry . . . make any . . . willful
material omission bearing on any matter within the jurisdiction of the
Commission.") We recognize that a licensee must be free to assert a
principled basis for resisting requests for information, such as a
contention that the information is privileged or that production would
be unduly burdensome. However, a licensee's belief that the request is
immaterial under its own interpretation of law is not a sufficient basis
for failing to answer questions. [Fox Television Stations,
Inc.]{.underline}, 10 FCC Rcd at 8508 ¶¶ 138-39. "The Commission is not
required to bargain with its licensees for the information to which it
is entitled in order properly to carry out its functions." [Carol Music,
Inc.]{.underline}, 37 FCC 379, 384 (1964). Although the Commission has
the authority to seek information by formal means, such as subpoena,
where necessary, the Commission expects its licensees to recognize its
authority and to cooperate with staff-conducted informal investigations.
[See]{.underline} [PTL of Heritage Village]{.underline}, 71 FCC 2d 324,
329 ¶ 12 (1979). [See also]{.underline} [RKO General, Inc. v.
FCC]{.underline}, 670 F.2d 215, 229 (D.C. Cir. 1981) ("As a licensing
authority, the Commission is not expected to 'play procedural games with
those who come before it in order to ascertain the truth' . . . .
license applicants may not indulge in common-law pleading strategies of
their own devise"). Moreover, the failure to provide information known
to be relevant or a failure to respond based on a facially implausible
theory may constitute lack of candor. [Fox Television Stations,
Inc.]{.underline}, 10 FCC Rcd at 8508 ¶¶ 137.

41\. Kay's responses to the Bureau's inquiries disclosed virtually none
of the information requested. He failed to provide a list of calls signs
based solely on his belief that the Bureau should look up the
information itself and because he declined to perform "secretarial
sorting tasks." WTB Exh. 3 at 1. He declined to provide information
about which of his facilities were located on Forest Service land and
whether he had permits for the use of such land, based on the unavailing
theory that the Commission lacked authority to inquire whether a
licensee has obtained necessary governmental authorizations, such as
permits from the U.S. Forest Service. In fact, the Commission clearly
has jurisdiction to determine whether licensees are violating federal
permit requirements and whether the licensees have constructed
facilities without authorization. The case cited by Kay, [Fort Collins
Telecasters]{.underline}, 103 FCC 2d 978, 980-81 ¶ 3 (Rev. Bd. 1986),
does not hold, as Kay asserted in his response (WTB Exh. 3 at 2), that
governmental consent to operation of a facility on its land was
irrelevant; it holds that the applicant in that case had demonstrated
reasonable assurance of obtaining such consent. [See also]{.underline}
[Arizona Number One Radio, Inc.]{.underline}, 103 FCC 2d 550, 553-54 ¶¶
3-4 (Rev. Bd. 1976). In any event, as noted above, Kay's unilateral
belief that the information is not relevant does not justify
nondisclosure. His suggestion that "if the Commission desires to
ascertain \[which facilities are located on U.S. Forest Service land\],
we respectfully suggest that it may desire to plot each station on a map
which shows the boundaries of the U.S. Forest Service land" was
inconsistent with the licensee's responsibilities and likely intended to
be sarcastic rather than a legitimate suggestion.[^8] Equally unavailing
is Kay's response that he was not required to maintain certain records,
such as documentation of grant dates. WTB Exh. 3 at 2. Investigations
frequently require examination of material not required to be maintained
by Commission rules. [PTL of Heritage Village]{.underline}, 71 FCC 2d at
327 ¶ 8.

42\. Kay's failure to provide this information, as well as that
regarding customers and loading was also based on three more general
rationales: (1) the argument that the requests were overbroad because
they were not based on specific complaints, (2) concerns over
confidentiality, and (3) issues regarding the burden and practicality of
providing the information. We disagree with Kay and with the ALJ's
treatment of these factors.[^9] As to the first issue, both Kay and the
ALJ rely on the following dictum in [Stahlman v. FCC]{.underline}, 126
F.2d 124, 128 (D.C. Cir. 1942), as indicating that the Bureau's inquiry
was impermissibly broad:

. . . \[W\]e do not mean to hold or to suggest that the Commission is
authorized to require appellant or other witnesses whom they may summon
to bare their records, relevant or irrelevant, in the hope that
something will turn up . . . but only that the Commission may, without
interference, seek through an investigation of its own making
information properly applicable to the legislative standards set up in
the \[Communications\] Act.

43\. We do not read that case as saying that the Commission may only
seek information relevant to specific complaints. We believe that it is
reasonably within our discretion (and the Bureau's) to determine that
the existence of numerous complaints about a licensee may warrant a
broad investigation of that licensee's compliance. [See]{.underline}
[Tidewater Radio Show, Inc.]{.underline}, 75 FCC 2d 670, 677 ¶ 15 (1980)
(". . . full authority and power are given to the Commission to
institute an inquiry on its own motion, with or without complaint, as to
any matter falling within its jurisdiction. \[Footnote omitted\].
[See]{.underline} [Stahlman]{.underline} . . . . "). In any event, as
noted above, Kay's unilateral belief that the Bureau's inquiry was
overbroad did not justify a failure to respond. If Kay objected to the
scope of the Bureau's inquiry, he should have sought Commission review,
as he did following designation for hearing. [See]{.underline} [James A.
Kay. Jr.]{.underline}, 13 FCC Rcd 16369 (1998).

44\. We also disagree with the ALJ's treatment of confidentiality. The
Commission's rules provide procedures under which a person submitting
information may request confidentiality. 47 C.F.R. § 0.459. These rules
do not, however, authorize a person to withhold information from the
Commission on that basis. [See]{.underline} 47 C.F.R. § 0.459(e) (where
the Commission denies a request for confidentiality, the person
submitting the information may request its return only if the material
was submitted absent any direction by the Commission). Thus, Kay's
concerns about confidentiality did not justify withholding information.
In any event, the Bureau twice expressly granted Kay's request for
confidentiality. WTN Exh. 6 at 1-2; WTB Exh. 10 at 1. The ALJ's
extensive analysis of Kay's doubts about the Bureau's intention to
provide confidentiality (ID at ¶¶ 16, 23-37, 45, 181) are beside the
point. Whatever doubts Kay might have had did not justify nondisclosure.
As noted, Kay should have sought Commission intervention if he desired
to pursue this issue.

45\. As a related matter, Kay provides no support for justifying the
withholding of information because the Commission did not grant him
immunity from criminal prosecution or forfeiture. Kay's lawyer stated:

In view of the reason stated by the Commission \[[i.e.]{.underline}, to
determine Kay's qualifications to be a licensee\] . . . please also
assure us in writing that that the information requested will be used
solely to determine whether Mr. Kay is qualified to be a licensee and
that submission of the requested information will immunize Mr. Kay
against any forfeiture action by the Commission or any criminal
prosecution."

Kay did not claim, however, that providing the requested information
would, in fact, subject him to criminal prosecution in violation of his
Fifth Amendment right against self-incrimination. [See]{.underline}
[Lefkowitz v. Cunningham]{.underline}, 431 U.S. 801, 805 (1977) (the
state may not compel testimony by threatening to impose administrative
sanctions unless the constitutional privilege against self-incrimination
is surrendered). He therefore had no foundation for requesting immunity.
In any event, the right against self-incrimination applies only to the
threat of criminal prosecution and not to administrative or civil
action, such as forfeiture. [See]{.underline} [United States v.
Balsys]{.underline}, 524 U.S. 666, 671 (1998). Thus, Kay had no basis to
request immunity against forfeiture.

46\. We reject Kay's suggestion, apparently endorsed by the ALJ,[^10]
that licensees of the channels in question here are not required to
track the loading on their facilities. The provisions of 47 C.F.R. §
90.135(a)(5) (1994), in effect at the time,[^11] specified that:

\(a\) The following changes in authorized stations require an
application for modification of license:

. . . .

\(5\) . . . for systems operating on non-exclusive assignments in the
470-512 MHz, 800 MHz or 900 MHz bands, a change in the number of mobile
transmitters . . . .

47\. In retaining this provision for shared channels, such as Kay's,
while eliminating it for exclusive channels, the Commission observed
that the provision is intended "to maintain the integrity of our
licensing records . . . . " [Amendment of Part 90 of the Commission's
Rules]{.underline}, 7 FCC Rcd 6344, 6347 n.40 (1992). It clearly
contemplates that the licensee must keep track of the loading on its
facilities in order to file the necessary modification applications so
that the Commission's records accurately reflect the availability of the
channels. In that same report and order, which eliminated the routine
submission of end user lists, the Commission further noted:

Information regarding eligibility of end users and confirmation of
whether a system is really serving those end users or is "paper loading"
are important parts of our spectrum management responsibilities. These
issues, however, generally arise in the context of compliance action
and, in such instances, we obtain information directly from the
licensee, pursuant to \[308(b)\] . . . .

[Id]{.underline}. at 6345 n.21. Moreover, for the shared channels
involved in this case, it is appropriate to examine "snapshots" of
loading on particular days. The six-month averaging rule applicable to
trunked SMR stations (47 C.F.R. § 90.658) does not apply to conventional
stations, because it is necessary to know whether the channels involved
are available for shared use. [See]{.underline} [Amendment of Part 90 of
the Commission's Rules]{.underline}, 7 FCC Rcd 5558, 5562 ¶ 24 (1992).
It should therefore come as no surprise to Kay or others to be required
to produce such documentation. Over the past several years, the
Commission has attempted to reduce the routine reporting requirements of
its licensees. As a result, operators, such as Kay, do not have to
submit annual or other periodic reports of their loading, such as the
Commission otherwise might have seen fit to impose in the past. The
Commission has made clear, however, that licensees must be able to
produce such information when requested. Limiting the demand for such
information to situations in which a licensee's compliance has been
questioned represents a reasonable balancing of the need for this
information to effectuate the Commission's public interest
responsibilities and the burden on licensees of submitting this
information.

48\. Although Kay's responses raised some legitimate points, such as the
need to specify a relevant time period and the practical difficulties
involved in assembling large amounts of data, especially in light of the
disruption caused by the Northridge earthquake, they do not manifest a
good faith intent to provide the requested information. The April 7,
1994 response asserts that as a result of fluctuations in use and other
factors: ". . . at any given instant of time, Mr. Kay may not know the
number of mobile units operated on each of his stations." WTB Exh. 3 at
5. That response further asserts:

. . . the Commission's Rules require a licensee to know the loading on a
given channel only at the time he requests additional channels or at the
time he requests renewal of the authorization . . . . Since the
Commission's rules do not require Mr. Kay to know the loading on his
stations except at those specified times, we respectfully submit that
the Commission is not authorized to request such information . . . .

[Id]{.underline}. at 6.

49\. On June 3, having been given additional time and clarification, Kay
did not give an adequate response. He merely indicated that: "Mr. Kay
states that his business records substantiate that a total in excess of
7,000 mobile units and control stations operate in association with all
of the facilities which he and his companies own and operate." WTB Exh.
9 at 3. When the Bureau aptly pointed out that this response was "hardly
helpful" (WTB Exh. 10 at 1), Kay declined to supply information as to
loading on the specified date of January 31, 1994. He instead complained
that the Bureau did not specify the date and facilities involved in each
individual complaint and stated that because of the continual churn of
customers: "such information would neither prove nor disprove the
complaints which served as the expressly stated basis for the \[308(b)
request\]." WTB Exh. 11 at 5. Kay thus refused to provide information on
the loading of his systems generally.

50\. Kay's failures to give productive responses to the Bureau's
inquiries warrant a finding that he acted in a recalcitrant manner in
violation of 47 U.S.C. § 308(b) and 47 C.F.R. § 1.17, and thereby failed
to meet his responsibilities as a licensee. We note, in this regard, as
did the ALJ, that the Bureau does not make the further case that Kay's
responses contained misrepresentations or lacked candor. The Bureau has
not demonstrated that Kay's unresponsiveness reflected a conscious
intent to conceal known violations of the Commission's technical
rules.[^12] Accordingly, we do not deem Kay's violations disqualifying.
We will discuss the ultimate impact of his violations at paragraph 100,
[infra]{.underline}.

# V. SYSTEM LOADING ISSUE

51\. Of the various issues originally designated concerning the
construction and operation of Kay's stations, only the question of Kay's
system loading remains before us.[^13] The ALJ made findings concerning
the legal relevance of system loading, [i.e.]{.underline}, the number of
mobile units operating in connection with a licensed facility. At
relevant times, one of the items on an application for a private carrier
UHF repeater license or a conventional SMR 800 MHz repeater license
requested the number of mobile units to be authorized. ID at ¶ 85. Thus,
Kay filed applications specifying the pertinent number of mobile units.
ID at ¶ 87.

52\. The ALJ found that the Bureau submitted into evidence two exhibits
(WTB Exhs. 19 and 347) that were intended to document the actual loading
of Kay's licensed facilities in contrast to the numbers specified in
Kay's applications and licenses. ID at ¶ 88. The data contained in these
exhibits were derived from Kay's computer-based billing system. The ALJ
found that the billing system did not provide a complete or accurate
accounting of the loading on Kay's system. ID at ¶¶ 88-89, 91-92. Of the
152 call signs at issue in this proceeding, the ALJ made findings as to
the specific number of mobiles operating on seven of Kay's trunked SMR
systems, which he found to be fully loaded. ID at ¶ 90. He made no
findings as to the specific number of mobiles operating on any of Kay's
non-trunked systems.

53\. The ALJ rejected the Bureau's assertion that adverse findings
should be made against Kay based on 47 C.F.R. §§ 90.313 or 90.633, both
relating to conventional ([i.e.]{.underline}, non-trunked) facilities.
He concluded that these rules do not impose loading requirements per se.
ID at ¶¶ 186-89.

54\. According to the ALJ, the record does not show that Kay submitted
any application that would have required Kay to provide information as
to the loading on a particular channel. The ALJ rejected the Bureau's
assertion that Kay did not maintain the information that would be needed
to demonstrate loading in the event that he filed such an application.
According to the ALJ, Kay could have made such a showing based on his
billing system and various paper records, although it was impractical
for him to do so for all 152 stations at once, as the Bureau required.
ID at ¶ 190.

55\. The ALJ further found that, even assuming that the rules contained
a specific loading requirement, the Bureau used invalid means to measure
Kay's loading. In the ALJ's view, loading cannot validly be measured
based on a snapshop of a single point in time. Rather, loading should be
measured based on average loading over a six month period. ID at ¶ 191.
Moreover, the ALJ found that the Bureau erred in measuring loading based
solely on Kay's computerized billing records and ignoring other, paper
records that Kay disclosed. The ALJ found that the billing records did
not include "loaner" or "demo" units, did not include non-current
customers, and did not take into account access to multiple repeater
sites. ID at ¶¶ 88-89, 192-93.

56\. Finally, the ALJ found that the Bureau had failed to demonstrate
that Kay violated 47 C.F.R. § 90.135, which, in any event, was not
mentioned in the Commission's hearing designation order. That section
requires certain licensees to modify their licenses to reflect a
reduction in the number of mobile units. He held that, for the reasons
discussed above, the Bureau failed to make a valid demonstration that
Kay's facilities were underutilized. He also held that the Bureau had
not shown when Kay was supposed to seek modification of his licenses. ID
at ¶¶ 194-98.

57\. The Bureau asserts that the ALJ failed to appreciate the
significance of Kay's underutilization of his facilities. The Bureau
observes that the channels in question are used on a shared basis.
According to the Bureau, it is fundamental to the licensing of shared
channels that licensees must not seek to retain unused authorizations.
In this regard, the Bureau claims that the data disclosed by Kay
indicate that the number of mobile units actually used in connection
with his facilities is several thousand less than authorized. The Bureau
asserts that the various factors cited by the ALJ do not begin to
account for a shortfall of this magnitude, indicating that Kay had no
intention of sharing the channels in question. The Bureau maintains that
Kay had an obligation under the rules to substantiate the loading on his
facilities.

58\. Kay replies that the Bureau has not shown when he would be required
to amend his authorizations to reflect reductions in the number of
mobile units served and argues that he should not be required to amend
to show temporary fluctuations in use. He further argues that the Bureau
ignores factors that explain the apparent shortfall in utilization, such
as economic conditions, the need to consult records other than billing
records, and channel sharing.

59\. We have no basis to find that Kay violated either 47 C.F.R. §
90.313 or 47 C.F.R. § 90.633. As the ALJ correctly notes, neither of
these rules imposes any specific requirements on licensees. Section
90.313, applicable to the 470-512 MHz band, provides that until a
channel is loaded to 90 mobile units it will be available for assignment
to other users in the same area on a shared basis. Section 90.633
similarly provides for SMR facilities that where a channel is not loaded
to 70 mobile units it will be available for assignment to other users.
As the Bureau suggests, the application of these rules requires that the
Commission's licensing records accurately reflect whether the channels
are loaded to the benchmarks specified in the rules, and thus whether
they are available for sharing. The relevant provisions do not, however,
contain any language imposing a particular duty on individual licensees
in this regard. The Bureau offers no support for its assertion that: "To
comply with these rule sections ([i.e.]{.underline}, §§ 90.313 and
90.633), a licensee must not seek or retain authorization for unused
slots." Wireless Telecommunications Bureau's Exceptions and Brief at 12.

60\. Rather, as discussed in paragraphs 46-47, [supra]{.underline}, the
provisions of 47 C.F.R. § 90.135(a)(5) (1994), which during the relevant
time period, required licensees on shared channels to seek modification
of license to reflect changes in loading, protected the integrity of the
Commission's licensing records in this regard. The Bureau's attempted
showing that Kay's actual loading did not conform to that specified in
his licenses appears relevant to Kay's compliance with § 90.135. This
provision was not, however, included in the hearing designation order,
and the Bureau expressly denies that it is attempting to demonstrate a
violation of 47 C.F.R. § 90.135:

Contrary to the conclusion at I.D., ¶¶ 194-195, the Bureau never sought
to present evidence to prove a Section 90.135 issue that was never
designated. The evidence presented by the Bureau demonstrated violations
of Sections 90.313 and 90.633, the rules that require channel sharing.
The fact that the Bureau's evidence would also support a showing that
Section 90.135 was violated is inconsequential.

Wireless Telecommunications Bureau's Exceptions and Brief at 14 n.10.
The difficulty with the Bureau's statement is that the relevant
provisions of 47 C.F.R. §§ 90.313 and 90.633 do not impose any explicit
requirements on licensees.

61\. We decline to consider the issue of Kay's § 90.135 compliance
absent the designation of an issue.[^14] To do so would risk depriving
Kay of basic due process rights. [See]{.underline} [RKO General, Inc. v.
FCC]{.underline}, 670 F.2d 215, 229 (D.C. Cir. 1981) (". . . reasonable
notice of a charge and an opportunity to be heard in defense before
punishment is imposed are 'basic to our system of jurisprudence. . . .
'"). Moreover, 47 U.S.C. § 503(b)(4) requires that forfeitures may be
imposed only pursuant to a notice of apparent liability that shall
"identify each specific provision, term, and condition of any . . . rule
. . . which such person apparently violated or with which such person
failed to comply. . . . " We will therefore not address this matter
further.[^15]

# VI. ABUSE OF PROCESS ISSUE

62\. The ALJ made findings concerning allegations that Kay filed
applications in multiple names to avoid compliance with the Commission's
channel sharing and recovery provisions. He found that four individuals
testified that Kay had engaged in relevant conduct.

63\. Roy Jensen was a former general manager of Southland from 1990-92.
He testified that Kay asked him to sign an application for a land mobile
end user license in the name of Roy Jensen dba Consolidated Financial
Holdings. Jensen denied that Consolidated Financial Holdings ever
operated any radio devices and denies that he intended to operate 37
mobile units, as specified in the application. ID at ¶¶ 94-96. Kay
testified that he intended to help Jensen pursue his own business
interests. ID at ¶ 97.

64\. Kevin Hessman was an employee of Southland from 1990-93 and a
friend of Jensen's. Hessman testified that Kay and Jensen approached him
and asked him to sign some FCC application forms to "help \[Kay\] . . .
. " Hessman claims that the entity specified on the license, Hessman
Securities, did not exist and never operated mobiles. ID at ¶¶ 99-102.
Kay testified that Hessman approached him to use radio devices in
connection with an off-hours security operation. ID at ¶ 104.

65\. Vincent Cordaro worked for Southland from 1991-95 in various
capacities including general manager. He formerly owned his own two-way
radio business. In November/December, 1994 Kay and Cordaro entered into
a "Radio System Management and Marketing Agreement" under which Kay
would manage a repeater station licensed to Cordaro. A few months
earlier, in April 1994, Kay filed an application (which was, however,
dated November 11, 1992) for the assignment of the repeater station from
Cordaro to Kay. Cordaro claimed that Kay induced him to sign a blank
application form and did not consent to the assignment. He also
testified that Kay had asked him to sign blank forms on other occasions.
ID at ¶¶ 107-13. Kay participated in filing applications in the name of
Vince Cordaro dba VSC Enterprises. Cordaro testified that VSC in fact
never used radio devices. ID at ¶¶ 115-16, 121.

66\. Carla Marie Pfeifer and Kay were friends. In 1990, Kay assisted
Pfeifer in obtaining a repeater license, pursuant to an arrangement
under which Kay constructed the station and marketed its services. Kay
and Pfeifer shared in the revenues. A number of documents were entered
into evidence that purported to bear Pfeifer's signature, but, as to
which, Pfeifer questioned whether the signature was hers. Kay denied
signing any document in Pfeifer's name. ID at ¶¶ 125-30.

67\. The ALJ found that Kay had a factual basis for believing that
Jensen, Hessman, and Cordaro were engaged in or intended to engage in
their own pursuits in which they desired to use radios. ID at ¶ 201. He
also questioned the credibility of these witnesses. He found that both
Jensen and Hessman made misrepresentations to the Office of Appeals of
the California Unemployment Insurance Appeals Board regarding the
circumstances of their discharge from Kay's employ. ID at ¶¶ 98, 106,
202. Additionally, the ALJ found that Cordaro had filed a sworn
statement with the Commission in another proceeding inconsistent with
his testimony in this proceeding that he was not using radio devices as
part of his independent business activities. ID at ¶¶ 121-22, 202.
Although the ALJ did not question Pfeifer's veracity, he nevertheless
questioned whether she was a reliable witness because of her vague and
incomplete recollection. ID at ¶¶ 128-29, 203. Additionally, the ALJ
found that Kay had not attempted to conceal his involvement in various
applications. ID at ¶ 204. He also found that the Bureau had not shown
that Kay was ineligible to apply for the facilities in question in his
own name. Thus, according to the ALJ, the Bureau failed to show that Kay
had a motive to abuse the Commission's processes. ID at ¶¶ 205-07.

68\. The Bureau faults the ALJ for discounting the testimony of Jensen,
Hessman, Cordaro and Pfeifer. The Bureau suggests that even if there is
reason to question their credibility individually, the consistency of
their testimony should be taken into account. Moreover, the Bureau
asserts that the circumstances indicate that Jensen, Hessman, and
Cordaro really did not require radio devices. The Bureau accuses the ALJ
of ignoring evidence that Pfeifer and Cordaro were not involved in the
management of stations supposedly licensed to them and were simply
surrogates for Kay. The Bureau denies that it needed to show a motive
for Kay's abuse of process.

69\. Kay retorts that the ALJ had ample reason to credit Kay's testimony
over that of Jensen, Hessman, Cordaro, and Pfeifer. He denies that he
had a motive to abuse the Commission's processes and claims that he made
no attempt to conceal his involvement in the various applications. He
characterizes the Bureau's position as mere speculation.

70\. This issue presents a difficult factual question. In many respects,
it boils down to a determination of the relative credibility of Kay and
his chief accusers, Jensen, Hessman, and Cordaro. Under these
circumstances, the ALJ's findings concerning the relative credibility of
witnesses are generally entitled to great weight. [See]{.underline},
[e.g.]{.underline}, [TeleSTAR, Inc.]{.underline}, 2 FCC Rcd 5, 13 ¶ 23
(Rev. Bd. 1987), [citing]{.underline} [Penasquitos Village, Inc. v.
NLRB]{.underline}, 565 F.2d 1074, 1078-80 (9^th^ Cir. 1977)
(administrative law judges' factual determinations based on testimonial
inferences are entitled to special deference). Here, however, the Bureau
correctly points to factors that tend to undermine the ALJ's treatment
of this issue. The fact that three independent witnesses testified
consistently concerning Kay tends to bolster their crediblity.
[See]{.underline} [Black Television Workshop of Los Angeles,
Inc.]{.underline}, 8 FCC Rcd 4192, 4194-95 ¶ 19 (1993). Moreover, we are
unable to discern the evidentiary foundation for the ALJ's conclusion
that "the undisputed record establishes" that Kay had a "factual basis"
to believe that Jensen, Hessman, and Cordaro "were engaged in or
intended to engage in pursuits beyond the scope of their employment by
Kay in which they desired to use Kay's radios and repeaters." ID at ¶
201 [citing]{.underline} Kay's Proposed Findings of Fact and Conclusions
of Law at ¶¶ 95-97, 104, 115. As the Bureau aptly observes, Jensen,
Hessman, and Cordaro denied that they had any need for the
authorizations applied for, and there is no independent evidence that
they did. Tr. 1488, 1797, 1844. Nevertheless, because this issue depends
critically on an evaluation of Kay's state of mind, as to which the
ALJ's demeanor findings have considerable weight, as well as his
conduct, we are reluctant to overturn the ALJ's assessment of Kay's
testimony based solely on the circumstances set forth above. Moreover,
like the ALJ, we find that the record does not sufficiently demonstrate
that Kay had a motive for abusing the Commission's processes in this
context. We note, however, that evidence under this issue concerning
Kay's agreements with Pfeifer, and Cordaro reflects a pattern of
conduct, relevant to the de facto control and misrepresentation issues,
and we will consider it in that context.

# VII. DE FACTO CONTROL/MISREPRESENTATION ISSUES

71\. Judge Sippel, the original presiding judge in this proceeding,
added the following issues:

> To determine, based on the findings and conclusions of [Initial
> Decision]{.underline} FCC 97D-13 reached in WT Docket No. 97-56
> concerning James A. Kay, Jr.\'s (Kay) participation in an unauthorized
> transfer of control, whether Kay is basically qualified to be a
> Commission licensee.

To determine whether James A. Kay, Jr. misrepresented facts or lacked
candor in

> presenting a Motion To Enlarge, Change, or Delete Issues that was
> filed by Kay on January 12, 1995, and January 25, 1995.

To determine whether in light of the evidence adduced under the
aforementioned

> added issues whether James A. Kay, Jr. is qualified to hold a
> Commission license.

[James A. Kay, Jr.]{.underline}, FCC 98M-15 (Feb. 2, 1998).

72\. In WT Docket No. 97-56, then Administrative Law Judge John M.
Frysiak[^16] concluded that Marc Sobel was unqualified to be a
Commission licensee because he had transferred control of 15 SMR
stations to Kay without authorization. [Marc Sobel]{.underline}, 12 FCC
Rcd 22879 (ALJ 1997). He found that the transfer occurred pursuant to an
arrangement between Sobel and Kay reflected in a document called "Radio
System Management Agreement and Marketing Agreement" (Management
Agreement). [Marc Sobel]{.underline}, 12 FCC Rcd at 22899-900 ¶¶ 65-68.
Pursuant to this arrangement, Kay managed the stations, paid the
station's construction and operating expenses, and shared the revenues
of the stations. Kay also had a purchase option for the stations. The
ALJ found based on an analysis of the facts and circumstances
surrounding Kay's management of the stations that Kay had ultimate
control of the facilities.

73\. Judge Frysiak, in the Sobel proceeding, further found that an
affidavit executed by Sobel in connection with a Motion To Enlarge,
Change, or Delete Issues that was filed by Kay in this proceeding,
misrepresented Kay\'s relationship to the Management Agreement stations.
[Marc Sobel]{.underline}, 12 FCC Rcd at 22900-902 ¶¶ 69-78. Kay had
filed the motion in this proceeding because the Commission had initially
included 11 licenses held by Sobel in the hearing designation order in
this proceeding (WT Docket No. 94-147), based on the belief that Kay was
doing business in Sobel's name. [James A. Kay, Jr.]{.underline}, 10 FCC
Rcd at 2063 ¶ 3.

74\. The affidavit stated:

I, Marc Sobel, am an individual, entirely separate and apart in
existence and identity from James A. Kay, Jr. Mr. Kay does not do
business in my name and I do not do business in his name. Mr. Kay has no
interest in any radio station or license of which I am the licensee. I
have no interest in any radio station or license of which Mr. Kay is the
licensee. I am not an employer or employee of Mr. Kay, am not a partner
with Mr. Kay in any enterprise, and am not a shareholder in any
corporation in which Mr. Kay holds an interest. I am not related to Mr.
Kay in any way by birth or marriage.

12 FCC Rcd at 22893-94 ¶ 51.

75\. Judge Frysiak found that the affidavit and pleading did not provide
any description of the actual relationship between Sobel and Kay,
although it was purportedly prepared in part because Sobel believed that
the Commission was delaying the processing of his pending applications
due to confusion about the relationship between Sobel and Kay. 12 FCC
Rcd at 22894-95 ¶¶ 52-53. The ALJ rejected as false the statement in the
affidavit that Kay had no \"interest\" in stations or licenses
assertedly held by Sobel. The ALJ did not credit Sobel\'s attempts to
reconcile this statement with the fact that Kay owned the stations\'
equipment, had an option to purchase the stations, and had a stake in
the stations\' revenues, holding that this arrangement constituted \"a
fair amount of interest.\" 12 FCC Rcd at 22895-96 ¶¶ 56-58, 22901 ¶ 73.
The ALJ concluded that the affidavit was intended to \"ward off\" the
Commission from being apprised of the true nature of the Kay-Sobel
business relationship and that it therefore lacked candor. 12 FCC Rcd at
22901 ¶ 73.

76\. Judge Frysiak further found that Sobel also lacked candor both by
failing to submit voluntarily the Management Agreement to the Commission
and in correspondence with the Commission. 12 FCC at 22897 ¶ 62,
22901-02 ¶ 74. The ALJ therefore revoked Sobel\'s licenses, denied his
applications, and dismissed his finder\'s preference requests.

77\. Based on the foregoing, Judge Sippel held that the issue of control
in the Sobel proceeding should not be relitigated in this proceeding and
that Kay should be permitted to offer evidence only on the issue of
whether his exercise of control over the Sobel stations has an impact on
his qualifications to hold a Commission license. FCC 98M-15 at ¶ 5. As
to the issue of misrepresentation, Judge Sippel ruled that the initial
decision in WT Docket No. 97-56 raised a substantial question of
misrepresentation or lack of candor and provided the factual basis for
adding an issue against Kay. [Id]{.underline}. at ¶¶ 6-11.

78\. In his initial decision in this proceeding, Chief Judge Chachkin
observed that the issues as framed did not permit him to make
independent findings as to whether the Management Agreement constituted
an unauthorized transfer of control.[^17] ID at n.48. In any event,
however, the ALJ found that an unauthorized transfer was not
disqualifying misconduct unless accompanied by deception. ID at ¶ 211.
He found that in this case Kay did not intend to conceal the Management
Agreement, since he voluntarily gave a copy to the Bureau on March 24,
1995, after this case was designated for hearing, in response to a
Bureau discovery request. ID at ¶¶ 165, 213. He also found that Kay and
Sobel had been advised by counsel that the Management Agreement complied
with FCC requirements. ID at ¶¶ 161, 213. The ALJ therefore found no
basis to impose sanctions against Kay.

79\. As to the issue of misrepresentations, Judge Chachkin found that
Judge Frysiak's initial decision in the [Sobel]{.underline} proceeding
was "tainted" because the Bureau misrepresented to Judge Frysiak that
Sobel did not disclose the Management Agreement until his July 3, 1996
response to a 308(b) letter from the Bureau, and that the Bureau
concealed from Judge Frysiak that Kay voluntarily disclosed the
Management Agreement to the Bureau during discovery in March 1995. ID at
¶¶ 168-69, 210.

80\. Turning to the specific facts, the ALJ found that Kay's allegedly
false statement with respect to this matter occurred in the Motion to
Enlarge, Change, or Delete Issues filed by Kay on January 12 and 25,
1995. [See]{.underline} Paragraph 73, [supra]{.underline}. Kay's motion
states:

James A. Kay, Jr. is an individual. Marc Sobel is a different
individual. Kay does not do business in the name of Marc Sobel or use
Sobel's name in any way. As shown by the affidavit of Marc Sobel
attached as Exhibit II, hereto, Kay has no interest in any of the
licenses or stations held by Marc Sobel. Marc Sobel has no interest in
any of the licenses or stations authorized to Kay or any business entity
in which Kay holds an interest. Because Kay has no interest in any
license or station in common with Marc Sobel and because Sobel was not
named as a party to the instant proceeding, the presiding officer should
either change the HDO to delete the reference to the stations \[licensed
to Sobel\] or should dismiss the HDO with respect to those stations.

ID at ¶ 170; WTB Exh 343 at 3-4.

81\. The ALJ found that Kay understood that his lawyers meant that Kay
had no "interest" in the sense that Kay had no legal or ownership
interest in the licenses, such as by being a partner. Kay testified that
he and his then attorney, Brown, used the terms "license" and "station"
interchangeably. ID at ¶ 171. The ALJ also found that the motion was not
primarily intended to address the Management Agreement, since only two
of the 11 stations sought to be deleted were Management Agreement
stations. Moreover, Kay's lawyer specifically advised him that the
Management Agreement did not constitute an "interest." ID at ¶ 172. The
ALJ found that Kay and Sobel testified in a candid and forthright
manner. ID at ¶ 173. Additionally, he found that Kay had disclosed the
Management Agreement in March 1995 during discovery. ID at ¶ 174. The
ALJ observed that the Bureau did not seek the addition of a
misrepresentation issue against Sobel until April 1997. ID at ¶ 174,
n.31.

82\. The ALJ concluded that Kay had not attempted to deceive the
Commission. The ALJ found that Kay believed that the statement
concerning "interest" was accurate and did not attempt to conceal the
Management Agreement. In the absence of deceptive intent, the ALJ
resolved the misrepresentation issue in Kay's favor. ID at ¶¶ 214-18.

83\. The Bureau observes that the ALJ's treatment of this issue is
inconsistent with Judge Frysiak's analysis in the Sobel proceeding. The
Bureau claims that Judge Frysiak was aware of the disclosure of the
Management Agreement in March 1995, but considered the disclosure
outside the relevant time period (since the Management Agreement was not
disclosed until two months after Sobel's affidavit was submitted in
January 1995). The Bureau contends that the statement that Kay had no
"interest" in Sobel's stations is plainly false in light of the
financial claims he had under the Management Agreement and that Kay's
attempts to reconcile the statement are unpersuasive. The Bureau asserts
that Kay had no basis for his claimed reliance on counsel and that he
deceitfully intended to conceal his relationship with Sobel from the
Commission.

84\. Kay maintains that the motion reflects no intent to deceive.
According to Kay, the motion merely intended to show that, contrary to
the representation in the hearing designation order, Kay did not conduct
business in Sobel's name. Kay observes that only two of the 11 stations
listed in the hearing designation order were Management Agreement
stations. He asserts that arguments over the meaning of the words
"interest" and the like are merely quibbles. Kay observes that he
disclosed the Management Agreement during discovery and suggests that he
would not even have put it in writing if he intended to deceive the
Commission. He also argues that he legitimately relied on advice of
counsel. Kay maintains that the Bureau has been disingenuous about his
disclosure of the Management Agreement in March 1995.

85\. In a companion decision to this one, we have today ruled on
exceptions filed by Sobel and Kay to the initial decision in WT Docket
No. 97-56. [Marc Sobel]{.underline}, FCC 01-342 (adopted Nov. 20, 2001)
(Decision). Because Kay is a party in WT Docket No. 97-56, he is bound
by the determinations made in that proceeding to the extent that they
involve findings and conclusions common to the two proceedings.
[See]{.underline} [Westel Samoa, Inc.]{.underline}, 13 FCC Rcd 6342,
6346 ¶ 13 (1998) (doctrine of collateral estoppel). In the
[Sobel]{.underline} decision, we affirmed the ALJ's determination that
under the Management Agreement, Sobel transferred de facto control of
his facilities to Kay without Commission authorization. We noted that
some ambiguity existed as to the applicable standard for determining
control in this context and found that the same result obtained under
the holdings of both [Intermountain Microwave]{.underline}, 24 RR 98
(1963) (which we intend to apply in the future) and [Motorola,
Inc.]{.underline}, File Nos. 50705 (PRB 1985) (unpublished). Decision at
¶¶52-59.

86\. We further found that Sobel's January 24, 1995 affidavit lacked
candor. In this regard, we were not swayed by Chief Judge Chachkin's
finding in this proceeding that "Kay and Sobel testified in this
proceeding and answered questions put to them in a candid and forthright
manner. Their testimony that they did not intend to deceive the
Commission concerning their business dealings is entirely candid and is
accepted." ID at ¶ 173. These findings are not entitled to deference
([see]{.underline} paragraph 70, [supra)]{.underline} in view of the
fact that Judge Frysiak, who heard essentially the same testimony in the
[Sobel]{.underline} proceeding, clearly did not find these witnesses
credible. We believe that the existence of these conflicting findings
bears on whether such findings are supported by substantial evidence.
[See]{.underline}, [e.g.]{.underline}, [Bauzo v. Bown]{.underline}, 803
F.2d 917, 922 (7^th^ Cir. 1986). In view of the apparent conflict
between the two judges' assessment of the witnesses' credibility, we did
not defer to either ALJ but based our decision on our own independent
assessment of the nature of the representations made and the
circumstances that were involved.[^18]

87\. In this regard, we do not accept Kay's suggestion that Judge
Frysiak's evaluation of the witnesses' credibility should be accorded
less weight than Chief Judge Chachkin's because the former's initial
decision was "tainted." Kay bases this contention on Chief Judge
Chachkin's finding that:

> Judge Frysiak\'s decision was tainted because the Bureau deliberately
> concealed the fact that Kay had given a copy of the Management
> Agreement to the Bureau on March 24, 1995. Thus, in reaching his
> conclusion, the Judge was unaware of the March 24, 1995 filing and
> erroneously assumed that the Commission first received a copy of the
> Management Agreement on July 3, 1996.

ID at ¶ 169. [See also]{.underline} ID at ¶ 210. Chief Judge Chachkin
also listed several pleadings and orders, which he found, demonstrated
the Bureau's "elaborate scheme" to conceal the March 24, 1995 submission
from Judge Frysiak. ID at ¶ 169.

88\. Our examination of the record, however, provides no support for the
assertion that Judge Frysiak's decision was "tainted" or that the Bureau
engaged in an "elaborate scheme." Initially, we find no reason to
believe that Judge Frysiak would have changed his view of Sobel's state
of mind based on the March 1995 submission. He had already ruled that
the relevant timeframe for determining Sobel's state of mind was when
Sobel executed his affidavit in January 1995, not afterwards. Tr. WT
Docket No. 97-56 at 297-99. The mere fact that the Management Agreement
was produced in discovery in March 1995 thus would not have had material
impact on Judge Frysiak's analysis.

89\. The record also undercuts the suggestion that the Bureau engaged in
an "elaborate scheme" to conceal the March 1995 submission from Judge
Frysiak, inasmuch as Sobel himself could readily inform Judge Frysiak of
the submission and did so explicitly at least twice during the
proceeding. During discovery, Sobel sought the Bureau's admission that:
"A copy of the Radio System Management and Marketing Agreement . . . has
been in the possession of the Bureau since 24 March 1995." Sobel's
Request for Admission of Facts and Genuineness of Documents by the
Bureau, filed March 19, 1997 at 3 ¶ 7. Judge Frysiak denied Sobel's
requested admission as irrelevant, based on the timing of the
disclosure. ([see]{.underline} paragraph 88, [supra]{.underline}).
[See]{.underline} [Marc Sobel]{.underline}, FCC 97M-57 (Apr. 17,
1997).[^19] Later, the Bureau sought the addition of the
misrepresentation/lack of candor issue now under discussion. (The
hearing designation order in the Sobel proceeding specified only the
transfer of control issue.) Sobel argued in opposition that he could not
have intended to deceive the Commission because he: ". . . was aware
that Kay intended to produce a copy of the agreement in response to
Bureau discovery requests and assumed that this had already been done."
Opposition to the Bureau's Motion to Enlarge Issues, filed April 21,
1997 at 5 n.8. Apparently referring to his earlier request for
admission, Sobel further stated:

Sobel has attempted in discovery in this proceeding to determine
precisely when the Bureau became aware of and received a copy of the
agreement, but the Bureau has thus far refused to provide such
information.

[Id]{.underline}. As the request for admission filed a month earlier
indicated, however, Sobel already knew the precise date; the Bureau did
not conceal it.

90\. At the hearing Sobel had the opportunity to testify as to this
point. Sobel testified that at the time he signed the affidavit he
expected that the Bureau would obtain a copy of the Management Agreement
or become aware of it, if they had not already done so. Tr. WT Docket
No. 97-56 at 302. Judge Frysiak then asked Sobel whether he filed the
Management Agreement with the Commission. Sobel answered that Kay filed
it along with the January 1995 motion. Tr. WT Docket No. 97-56 at 303.
Sobel's attorney (who represents Kay in this proceeding) stipulated that
Sobel was incorrect in this assertion, without mentioning the March 1995
submission. [Id]{.underline}. Later, Bureau counsel specifically asked
Sobel: "when was the first time you provided a copy of \[the\]
management agreement to the Commission." Tr. WT Docket No. 97-56 at 313.
Sobel responded: "In reference to the Commission's request for
information under 308(b)." [Id]{.underline}. Sobel's attorney (Kay's
here) stipulated that the date was July 3, 1996, again without
mentioning the March 1995 submission. Tr. WT Docket No. 97-56 at 314.

91\. Judge Frysiak's finding that: ". . . Sobel did not submit the
Management Agreement to the Commission until July 3, 1996 . . . . " (12
FCC Rcd at 22897 ¶ 62) was based on and consistent with the above-cited
evidence. It does appear that neither the Bureau[^20] nor Judge Frysiak
addressed Sobel's contention in a footnote to his reply findings and
conclusions, that:

The Presiding ALJ may take official notice that a copy of the written
agreement was produced to the Commission on 24 March 1995, as an
attachment to Kay's Responses to Wireless Telecommunications Bureau's
First Request for Documents in WT Docket No. 94-147, the Kay license
revocation proceeding.

Reply to the Wireless Telecommunications Bureau's Proposed Findings of
Fact and Conclusions of Law, filed October 27, 1997 at 9 n. 5.[^21] The
record does not disclose why the Bureau and Judge Frysiak did not
address this footnote. As explained in paragraph 88,
[supra]{.underline}, however, we have no basis to find that this
omission had a material impact on Judge Frysiak's initial decision.
Moreover, the Bureau could hardly have "concealed" the footnote,
especially since the Bureau discussed and cited the paragraph containing
the footnote in its reply. Wireless Telecommunications Bureau's Comments
on Replies to Proposed Findings of Fact and Conclusions of Law, filed
October 31, 1997 at 5-6 ¶ 9.

92\. In our decision, we found that Sobel's affidavit went beyond
denying that Sobel was Kay's alter ego and made several factual
assertions that were misleading. Most notably, we found that the claim
that Kay had no "interest" in Sobel's stations was false in light of the
substantial financial interests he had under the Management Agreement.
Decision at ¶ 71. We also found that several other statements, while
perhaps technically correct, tended to be misleading, such as that Sobel
was not an "employee" or "partner" of Kay. [Id]{.underline}. at ¶ 73. We
found that, in light of the facts as fully disclosed, the affidavit, and
the pleading it supported, left the false impression that ". . . Kay has
no interest in any license or station in common with Marc Sobel . . . .
" [Id]{.underline}. at ¶ 74.

93\. We found that Sobel appreciated the questionable nature of the
claim that Kay had no "interest" in his stations, since Kay had told him
that the word connoted "a direct financial stake." Decision at ¶ 72.
Additionally, we found that Sobel and Kay understood that the Commission
would want to know the true relationship between them. [Id]{.underline}.
at ¶ 74-75. Because Sobel could appreciate the nature of the
representation, we rejected his attempt to rely on advice of counsel.
[Id]{.underline}. at ¶ 77.

94\. In determining the sanction to be imposed against Sobel, we found
that an unauthorized transfer of control accompanied by deception
constituted disqualifying misconduct. Decision at ¶ 80. We took into
account, however, that the Management Agreement and the misleading
affidavit concerned only some of Sobel's facilities and that he had
operated most of his facilities for over twenty years without any record
of misconduct. [Id]{.underline}. at ¶ 80. We therefore revoked or denied
only those facilities on the 800 MHz band, the band on which the
Management Agreement Stations operated.

95\. We find that our conclusions regarding Sobel reflect adversely on
Kay. The representations that we found false and misleading were made in
a pleading filed by Kay. For the reasons discussed in the Sobel decision
(Decision at ¶ 74), we reject Kay's argument that the case against him
represents mere "quibbles" over the meaning of the words used. We do not
believe that a reasonable reader could square the language used with the
facts as fully disclosed. Moreover, Kay, like Sobel, understood the
questionable nature of the claim that he had no "interest" in Sobel's
stations and knew that the Commission would want to know the true
relationship between Sobel and Kay. Accordingly, Kay too has no basis to
rely on advice of counsel as a defense.

96\. We also reject Kay's argument that his disclosure of the Management
Agreement during discovery negates any possible intent to deceive. While
Kay subsequently disclosed the Management Agreement after specifically
being requested by the Bureau during discovery to produce all management
documents, he did not disclose the Management Agreement in connection
with the pleading at issue here (submitted two months earlier), although
it would have served to clarify his relationship with Sobel.
[See]{.underline} [Wireless Telecommunications Bureau's First Request
for Documents]{.underline}, filed February 17, 1995, at 6-7 ¶ 12
(requesting all management documents).

97\. Moreover, a finding that Kay deliberately intended to conceal his
relationship with Sobel is consistent with other instances in the record
indicating that Kay was not forthcoming about stations he managed. For
example, beginning in the early 1990s, Kay managed stations that were
licensed to Pfeifer, Cordaro, and Sobel. ID at ¶¶ 108-09, 123-24, 126.
In Pfeifer's case, the ALJ found that in 1987, Kay assisted Pfeifer in
obtaining a license pursuant to an arrangement whereby Kay was to
construct the station and market service when it was filled with users.
ID at ¶ 126. The ALJ did not question Pfeifer's testimony[^22] that, to
document to the Commission that the station had been constructed, Kay
prepared an invoice (WTB Exh. 301) and had Pfeifer issue a check (WTB
Exh. 302) for \$1,511.87, but had then reimbursed Pfeifer for the amount
of the check. Tr. 1556-57. The purported payment was thus not a real
payment but was designed merely to generate documentation for the
Commission. Although Pfeifer and Kay entered into a lease agreement
calling for Pfeifer to pay Kay \$600 a month rent for the transmitter
site (WTB Exh. 300), Pfeifer testified that Kay did not actually expect
any payment. Tr. 1544-45. Pfeifer testified that Kay told her he "needed
to have \[the lease\] to comply with FCC regulations." Tr. 1544.

98\. Similarly, the record in the Sobel proceeding showed that Kay
prepared responses to application return notices (which are sent to
indicate problems with land mobile applications) on Sobel\'s behalf. On
customer invoices attached to the responses, Kay blacked out the name of
his business, \"Lucky\'s Two-Way Radios.\" [Marc Sobel]{.underline}, 12
FCC Rcd at 22898-99 ¶ 64, 22902 ¶ 76. [^23]

99\. Finally, Kay's June 2, 1994, response to the Bureau's 308(b) Letter
contained the following language: "Mr. Kay states that he does not
operate any station of which either he or \[Buddy Corp. or Oat Trunking
Group, Inc.\] is not the licensee." WTB Exh. 11 at 1. Kay was in fact
operating Sobel's stations under an oral agreement at the time. [Marc
Sobel]{.underline}, 12 FCC Rcd at 22883 ¶ 12. We believe the
aforementioned matters are relevant to the designated issues because
they confirm the existence of a pattern of conduct. [See]{.underline}
[Ismail v. Cohen]{.underline}, 706 F. Supp. 243, 252-53 (S.D.N.Y. 1989);
Fed. R. Evid. 404(b).[^24]

**VIII. SANCTIONS**

100\. The record in this proceeding indicates that Kay has violated his
obligations as a licensee. Under the 308(b) issue we found that Kay
deliberately withheld material information from the Commission without
justification in violation of 47 C.F.R. § 1.17. As discussed previously,
Kay's inadequate responses do not warrant disqualification. The hearing
designation order, however, also served as a notice of apparent
liability for forfeiture. [James A. Kay, Jr.]{.underline}, 10 FCC Rcd
2062 ¶ 16 (1994). [See]{.underline} [Abacus Broadcasting
Corp.]{.underline}, 8 FCC Rcd 5110, 5114-15 ¶¶ 16-18 (Rev. Bd. 1993)
(appropriateness of forfeiture for violation of 47 C.F.R. § 1.17 absent
a finding of deception). We believe that, under the Commission's
forfeiture standards, the category most relevant to Kay's misconduct is
"Failure to respond to Commission communications," for which the base
forfeiture amount is \$4,000 per instance. 47 C.F.R. § 1.80(b)(4) Note.
Because Kay's nonresponsiveness was of a continuous nature, we adjust
the forfeiture upwards to \$10,000. [Id]{.underline}.

101\. The record also shows that Kay's Motion to Enlarge, Change, or
Delete Issues filed by Kay on January 12 and 25, 1995 lacked candor.
Although lack of candor may warrant revocation of all licenses, we
believe that it is appropriate to limit the sanction imposed here. In
particular, we note that deterrence is an important element of the
character qualifications process. [See]{.underline} [Character
Qualifications]{.underline}, 102 FCC 2d 1179, 1128 ¶ 103 (1986). The
misconduct found here, concerning Sobel's stations, involves only
stations operating on the 800 MHz band. We find that the revocation of
Kay's licenses for stations operating on this band will serve as a
significant deterrent to future misconduct. Moreover, because we found
that the control of Sobel's Management Agreement stations had been
transferred to Kay and that Kay shared in the value of these stations,
the revocation of these stations also serves to deter future misconduct
by Kay as well as by Sobel. We will therefore limit the sanction
applicable to Kay to revocation of the 25 licenses for his stations
operating on the 800 MHz band.

**IX. ORDERING CLAUSES**

102\. ACCORDINGLY, IT IS ORDERED, That, good cause for filing an
additional pleading concerning his November 2, 1999 Motion to Strike not
having been shown, the Request for Leave to File Reply, filed November
5, 1999, by James A. Kay, Jr., IS DENIED, and, for the reasons set forth
in paragraph 12, [supra]{.underline}, the Motion to Strike, filed
November 2, 1999, by James A. Kay, Jr. IS DENIED.

103\. IT IS FURTHER ORDERED, That, for the reasons set forth in note 13,
[supra]{.underline}, the Motion for Leave to File Supplement to Reply
Exceptions, filed December 30, 1999, and the Motion for Leave to File a
Reply to the Bureau's Opposition to the December 30, 1999 Filing , filed
January 20, 2000, by James A. Kay, Jr. ARE DISMISSED as moot.

104\. IT IS FURTHER ORDERED, That, because oral argument would not
materially assist the Commission, the Request for Oral Argument, filed
November 2, 1999, by James A. Kay, Jr. IS DENIED.

105\. IT IS FURTHER ORDERED, That the Wireless Telecommunications
Bureau's Exceptions and Brief, filed October 12, 1999, IS GRANTED in
part and IS DENIED in part.

106\. IT IS FURTHER ORDERED, That the [Initial Decision of Chief
Administrative Law Judge Joseph Chachkin, FCC]{.underline} 99D-04 (ALJ
Sept. 10, 1999) IS MODIFIED to the extent indicated above.

107\. IT IS FURTHER ORDERED that, pursuant to Section 1.80(h) of the
Rules, 47 C.F.R. § 1.80(h), James A. Kay, Jr. shall, within thirty (30)
days of the release of this Decision, pay the amount of \$10,000 for the
violations described above.[^25] Payment of the forfeiture shall be made
by check or money order drawn on a U.S. financial institution payable to
the Federal Communications Commission. Payment may also be made by
credit card with the appropriate documentation.[^26] The remittance
should be marked \"NAL/Acct. No. 915KC0002\" and mailed to the following
address:

Federal Communications Commission

##  P.O. Box 73482

Chicago, Illinois 60673‑7482

Forfeiture penalties not paid within thirty (30) days will be referred
to the U.S. Attorney for recovery in a civil suit. 47 U.S.C. § 504(a).

108\. IT IS FURTHER ORDERED, That the following licenses of James A.
Kay, Jr., ARE REVOKED: WNIZ676, WNMT755, WNVL794, WNVW779, WNWB268,
WNWB332, WNWK982, WNWN703, WNWQ651, WNXB280, WNXQ372, WNXQ353, WNXQ911,
WNXS450, WNXS753, WNXW280, WNXW549, WNYQ437, WNYR747, WNZY505, WNZZ731,
WPAP683, WPAZ639, WPBW517, WNXW487.

109\. IT IS FURTHER ORDERED, That the licensee IS AUTHORIZED to continue
operation of the stations mentioned in paragraph 108 until 12:01 A.M. on
the ninety-first day following the release date of this decision to
enable the licensee to conclude the stations\' affairs; PROVIDED,
HOWEVER, that if the licensee seeks reconsideration or judicial review
of our action revoking its license, it is authorized to operate the
stations until final disposition of all administrative and/or judicial
appeals.

110\. IT IS FURTHER ORDERED that a copy of this order shall be sent by
certified mail, return receipt requested, to James A. Kay, Jr., P.O. Box
7890, Van Nuys, California 91409-7890.

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

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

**CONSOLIDATED SEPARATE STATEMENT OF\
COMMISSIONER KEVIN J . MARTIN,**

**CONCURRING IN PART AND DISSENTING IN PART**

*Re: James A. Kay, Jr., Licensee of One Hundred Fifty Two Part 90
Licenses in the Los Angeles, California Area*, Decision, WT Docket No.
94-147;

*Marc Sobel and Marc Sobel d/b/a Air Wave Communications, Licensee of
Certain Part 90 Stations in the Los Angeles Area*, Decision, WT Docket
No. 97-56

I dissent in large part from this item. I am unwilling to approve, based
on the conflicting and confusing record before us, the determination
that James A. Kay, Jr. improperly failed to respond to requests for
information and that Kay and Marc Sobel lacked candor in filings they
made to the Commission. In the information request decision, the
Commission reverses an ALJ's explicit findings that Kay acted reasonably
in the face of a demanding inquiry by the Bureau -- findings that are
ordinarily accorded great deference. In the lack of candor decision,
upon which two ALJs reached opposite conclusions, the Commission
essentially sides with the first ALJ, even though he did not have
accurate information on all of the relevant facts. In my view, the
Commission does itself a disservice by making these decisions on the
cold record before it. At the very least, the Commission should have
referred this proceeding to a new ALJ to reconcile the conflicting
decisions and make definitive findings.

**I. Failure To Respond to Commission Inquiries**

This case began as an investigation into whether Kay was falsely
reporting the number of mobile units he served in order to avoid certain
channel sharing and recovery rules. Having received several complaints
making such allegations, the Wireless Bureau served Kay with a request
for information. A lengthy exchange ensued, in which Kay and the Bureau
wrestled over what information Kay would provide and when he would
provide it. Kay's actions during the course of this exchange are the
basis for the Commission's determination that Kay improperly failed to
respond to the Bureau's inquiries in violation of 47 U.S.C. § 308(b) and
47 C.F.R. § 1.17.

The Commission makes this determination in the face of a contrary
decision and express findings by the ALJ. That ALJ, Judge Chachkin,
found that "the Bureau was engaged in a fishing expedition with the hope
that something would turn up," that "Kay was being asked to provide
virtually every detail regarding the operation of his business\[,\] . .
. include\[ing\] sensitive information such as his entire customer list
and details regarding the technical configuration of each of his
customers' system\[s\]," and that "all of Kay's reasonable requests for
modification of the extremely broad inquiry were arbitrarily ignored."
*James A. Kay, Jr., Licensee of One Hundred Fifty Two Part 90 Licenses
in the Los Angeles, California Area*, Initial Decision of Chief
Administrative Law Judge Joseph Chachkin, WT Docket No. 94-147, FCC
99D-04, ¶ 179 ("*Chachkin Decision*"). In addition, Judge Chachkin found
that the Bureau's request for information "was received by Kay only two
weeks after the Northridge earthquake, a devastating natural disaster
that did substantial damage to his business and personal residence" and
that, ultimately, "Kay turned over some 36,000 documents." *Id.* ¶ 180.
Finally, Judge Chachkin ruled that Kay's actions were based on
"legitimate concerns in Kay's mind whether the data sought would be kept
confidential" (*id.* ¶ 181), because, among other things, Kay's
competitors had received a copy of the Bureau's inquiry letter to Kay
(*id.* ¶ 29) and the Bureau at one point demanded 50 copies of Kay's
response (*id.* ¶ 181).

In my view, the Commission goes too far in reversing Judge Chachkin's
conclusions. There can be no question that Kay and the Bureau were
engaged in a heated dispute. Judge Chachkin made a number of factual
determinations to resolve that dispute and determine that Kay did not
violate the statute or Commission rules. In such situations, I am
reluctant to reverse an ALJ's determinations based on a cold record. It
is well established that, generally, the initial trier of fact is
"closer to the course of the litigation," *Bonds v. District of
Columbia*, 93 F.3d 801, 808 (D.C. Cir. 1996), and "has a better 'feel' .
. . for the litigation" than a reviewing tribunal, *Founding Church of
Scientology v. Webster*, 802 F.2d 1448, 1457 (D.C. Cir. 1986). Thus, the
Commission routinely defers to the ALJ on these sorts of decisions.
*See*, *e.g.*, *Applications of WWOR-TV, Inc. for Renewal of License of
Station WWOR(TV), Secaucus, New Jersey and Garden State Broadcasting
Limited Partnership for Construction Permit, Secaucus, New Jersey*,
Memorandum Opinion and Order, 5 FCC Rcd 4113, ¶ 11 (1990) ("\[W\]e are
reluctant to reverse the ALJ, to whom broad discretion is ceded in
ordering discovery . . . ."); *Applications of Mid-Ohio/Capitol
Communications Limited Partnership et al. for Construction Permit for a
New FM station on Channel 298A in Columbus, Ohio*, Memorandum Opinion
and Order, 4 FCC Rcd 8125, ¶ 6 (1989) ("\[T\]he Commission routinely
entrusts the determination of the scope of such discovery in comparative
hearings to the broad discretion of the ALJ."). Indeed, this principle
of deference extends well beyond the FCC; in the similar arena of
discovery disputes, appellate tribunals traditionally afford great
deference to the decisions of the trial court. *See*, *e.g.*, *United
States v. Davis*, 244 F.3d 666, 670 (8th Cir. 2001) ("The district court
has broad discretion in imposing sanctions on parties for failing to
comply with discovery orders."); *accord Bonds*, 93 F.3d at 807.
Accordingly, on this record, I would not have reversed the ALJ's
decision.

**II. Lack of Candor**

The Commission's lack of candor decisions against Kay and Sobel stem
from other events in this case. During the course of the Bureau's
investigation of Kay, it received information indicating that Kay may
have conducted business under several other people's names, including
Marc Sobel's. The Commission thus included Sobel's licenses in the order
designating Kay's licenses for hearing. Kay filed a motion to remove
Sobel's licenses from the hearing designation and attached an affidavit
signed by Sobel stating that Kay had no interest in any of Sobel's
stations. Based on this submission, the Commission removed Sobel's
licenses from the Kay proceeding.

The Bureau subsequently discovered that Kay operated a number of Sobel's
stations pursuant to a management agreement. Accordingly, the Commission
designated Sobel's licenses for hearing, asking whether Sobel had
engaged in misrepresentation or lack of candor. The ALJ assigned to
Sobel's case, Judge Frysiak, concluded that Sobel's actions showed a
lack of candor. Judge Frysiak based that determination on, among other
things, statements in the affidavit and on Sobel's apparent failure to
provide the Bureau the management agreement in a timely manner.

However, Judge Chachkin, in *later* reviewing the same conduct in Kay's
case, came to the opposite conclusion. Judge Chachkin found that Kay
understood the affidavit's statement that Kay had no interest in any of
Sobel's stations to mean that Kay had no ownership interest in any
licenses that were issued to Sobel. *Chachkin Decision* ¶ 216. Judge
Chachkin determined that "Kay was specifically advised, by counsel, that
. . . the management agreement did not constitute an interest." *Id.* ¶
172. He thus concluded that "Kay's testimony as to what he meant by the
word 'interest' and the phrase 'stations or licenses' is entirely
reasonable and credible." *Id.* ¶ 216.

Judge Chachkin also found that Kay's and Sobel's actions showed no
intent to deceive the Bureau or conceal the management agreement. He
pointed out that Kay and Sobel provided the management agreement to the
Bureau just two months after they filed the challenged motion and
accompanying affidavit, long before anyone raised any questions about
lack of candor. *Id.* ¶ 217.

Finally, Judge Chachkin addressed Judge Frysiak's prior decision on the
lack of candor issue and concluded that Judge Frysiak had been misled by
the Bureau. Judge Chachkin explained that, although Kay had provided the
Bureau a copy of the management agreement in March of 1995, the Bureau
represented to Judge Frysiak that no copy was provided until late 1996.
*Id.* ¶ 210. "There is no doubt," Judge Chachkin concluded, "that
\[Judge Frysiak's\] ultimate conclusion that 'Sobel made
misrepresentations and lacked candor . . .' was based on his erroneous
assumption as to when the Agreement was given to the Bureau." *Id.* ¶
210.

Based on these conflicting decisions and on Judge Chachkin's view that
Judge Frysiak was misled, I cannot support this decision. As the
Commission acknowledges, determinations of credibility must rest in
large part on factual determinations made by an ALJ. I am unable, on the
record before us, to reconcile the ALJ's conflicting decisions and
determine that Judge Frysiak was not misled.[^27] Particularly given the
severity of the sanctions at issue, I would not find that Kay and Sobel
lacked candor.

**III. Conclusion**

At best, this is a case of conflicting opinions by ALJs that ought to be
remanded to a third ALJ to reconcile their determinations. Even worse,
however, this case involves allegations that Commission staff misled a
judge into reaching an erroneous conclusion. While I am confident that
Commission staff engaged in no misconduct in this case, we do them a
disservice by depriving them of an opportunity, in a new hearing, to
explain what occurred. Such a hearing would defend the reputation of our
staff and ensure the integrity of our process. Thus, for all of these
reasons, the more reasonable course would be to refer this case for a
hearing in front of a new ALJ. Accordingly, I dissent from parts IV,
VII, VIII, and IX of the Kay Order and from parts V, VI, and VII of the
Sobel Order. I concur with respect to the other parts of these Orders.

[^1]: The Enforcement Bureau was established effective November 8, 1999.
    [See]{.underline} [News Release]{.underline} [FCC Reshapes for the
    Future]{.underline} (Oct. 26, 1999). Its responsibilities include
    serving as trial staff in formal Commission hearings. It has
    participated in this proceeding in lieu of the Wireless
    Telecommunications Bureau beginning in November 1999.

[^2]: Chief Judge Chachkin retired from the Commission on October 31,
    1999.

[^3]: In [James A. Kay, Jr.]{.underline}, 13 FCC Rcd 16369 (1998), [pet.
    for recon. dismissed]{.underline}, 14 FCC Rcd 14 FCC Rcd 1291
    (1998), we considered Kay's allegations of "prosecutorial
    misconduct" against the Bureau. Without endorsing all aspects of the
    Bureau's conduct, we found that Kay had not shown that the Bureau's
    conduct was outrageous or shocking or that Kay had suffered material
    prejudice. Having reviewed the record of this proceeding, we adhere
    to this conclusion. We therefore disavow the ALJ's conclusions
    regarding the Bureau. Similarly, we find no reason to adopt the
    dissent's suggestion that we remand for new hearings as to this
    matter.

[^4]: The provisions of 47 C.F.R. § 1.277 limits exceptions and briefs
    to 25 pages. The General Counsel granted the parties a five page
    extension in this case. [James A. Kay, Jr.]{.underline}, FCC 99I-19
    (Oct. 7, 1999).

[^5]: SMR stations are classified as either conventional or trunked.
    When trunking is used, channel access is controlled by a computer,
    which gives the user access to the first available channel or places
    the user in a waiting line to be served. [See]{.underline}
    [Amendment of Part 90]{.underline}, 10 FCC Rcd 7970, 7974-75 ¶¶ 3-4
    (1994); [Amendment of Part 90]{.underline}, 60 RR 2d 867, 868 ¶ 2
    (1986).

[^6]: Kay was also the President and sole shareholder of Buddy Corp.,
    which operated under the business name of Southland Communications.
    Southland was engaged primarily in the sales, service, installation,
    and maintenance of mobile radios and two-way mobile radio systems.
    Some, but not all, customers of Lucky's were customers of Southland,
    and vice versa. ID at ¶ 8-9.

[^7]: The notice, included at the bottom of each page of several of
    Brown's letters, stated: "Entire contents copyright, James A. Kay,
    Jr., 1994. All rights reserved. No portion of this document may be
    copied or reproduced by any means."

[^8]: We are similarly troubled by Kay's response to the Bureau's
    request that he explain the applicability of the copyright law to
    his use of a copyright notice on his correspondence. Kay's former
    attorney responded: ". . . we must respectfully decline to advise
    the Commission concerning its obligations under the law of
    copyright. We can, if the Commission requests, refer the Commission
    to a firm which practices in the field of copyright and with whose
    services some of our clients have expressed satisfaction." WTB Exh.
    5 at 2. This response is anything but "respectful."

[^9]: The dissent asserts that the Commission should defer to Judge
    Chachkin\'s findings regarding the adequacy of Kay\'s responses to
    the Bureau\'s 308(b) letter of inquiry. We, however, disagree with
    the legal standards applied by Judge Chachkin in evaluating Kay\'s
    responses and therefore find that deference is unwarranted

[^10]: [See]{.underline}, [e.g.]{.underline}, ID at ¶ 179, in which the
    ALJ concludes: "Under the circumstances, Kay cannot be faulted for
    raising legal objections and for failing to provide all of the
    information sought \[involving all of Kay's 152 licenses\]. In this
    connection, the findings establish that Kay did not have the
    computer capability to provide the Bureau the information it
    sought." The ALJ thus treated Kay's failure to have a computer
    system capable of tracking the loading on his stations as a
    mitigating circumstance.

[^11]: The section was later amended. [See]{.underline} [Biennial
    Regulatory Review]{.underline}, 13 FCC Rcd 21027 (1998).

[^12]: As to the statement in the June 24 letter, that Kay did not
    operate stations other than those licensed to him, we believe that
    this matter is best considered in the context of the
    misrepresentation issue. [See]{.underline} paragraph 99,
    [infra.]{.underline}

[^13]: The ALJ made findings under an issue concerning the timely
    construction and permanent discontinuance of operation of Kay's
    facilities. He found that the parties stipulated that 69 facilities
    licensed under 53 call signs were not in operation as of May 11,
    1995 and thus subject to automatic cancellation. ID at ¶¶ 219-222.
    [See]{.underline} WTB Exh. 290. [See also]{.underline} Wireless
    Telecommunications Bureau's Proposed Findings of Fact and
    Conclusions of Law (WTB PF&C) at 44-46 ¶¶ 107-08. Kay indicated that
    these facilities were control stations or secondary base stations,
    rather than primary base stations. The ALJ accepted the Bureau's
    suggestion that these facilities be referred to the staff for
    "appropriate license maintenance." ID at ¶ 222. PF&C at 111 n.23. He
    therefore took no other action based on these findings and the
    Bureau suggests no other action.

[^14]: As our discussion at paragraphs 46-47, [supra]{.underline},
    suggests, however, we disagree with the ALJ's analysis with regard
    to Kay's obligations under § 90.135. We believe that the rules
    clearly required Kay to track the loading of his facilities and to
    seek modification of his licenses to reflect changes in loading. We
    expect Kay to comply with all relevant rules in the future with
    respect to his remaining UHF stations.

[^15]: Because we do not reach the merits of the loading issue, Kay's
    Motion for Leave to File Supplement to Reply Exceptions, which seeks
    to further address this issue, is moot and will be dismissed.

[^16]: Judge Frysiak retired on December 31, 1999.

[^17]: Despite this acknowledgment, Judge Chachkin made 35 paragraphs of
    findings (ID at ¶¶ 143-74) that largely overlap Judge Frysiaks's
    findings in the [Sobel]{.underline} proceeding, and also questioned
    the legal standard applied by Judge Frysiak (ID at n.48). Because
    Kay was a party to the [Sobel]{.underline} proceeding and had a full
    opportunity to litigate the transfer of control issue there, we have
    not set forth Chief Judge Chachkin's duplicative findings at length.
    In our review of the [Sobel]{.underline} proceeding, discussed at
    paragraph 85, [infra]{.underline}, we address the question of the
    relevant legal standard.

[^18]: The dissent suggests that a new hearing should be held to allow a
    new ALJ to make credibility findings. We believe that no further
    hearing is necessary given the Commission\'s power of de novo
    review. [See]{.underline} [FCC v. Allentown Broadcasting
    Corp.]{.underline}, 349 U.S. 358, 364-65 (1955); [Parker v.
    Bowen]{.underline}, 788 F.2d 1512, 1520 (11th Cir. 1986); [Moore v.
    Ross]{.underline}, 687 F.2d 604, 608-09 (2d Cir. 1982) (agency has
    the power to make findings of fact in the first instance and is not
    bound by the credibility determinations of an ALJ). Moreover,
    additional hearings would be wasteful and time consuming. No matter
    how the new ALJ ruled, there would still be conflicting credibility
    determinations that the Commission would have to resolve. We don\'t,
    for example, see a justification for adopting an automatic
    \"majority rules\" policy. We therefore choose to exercise our power
    of de novo review.

[^19]: The dissent suggests that it is not possible to assess after the
    fact the potential impact of the March 1995 disclosure on Judge
    Frysiak's decision. We see no reason, however, to disregard Judge
    Frysiak's own rulings discounting the significance of subsequent
    disclosure of the Management Agreement. Moreover, the ultimate
    question, of course, is not whether Judge Frysiak would have reached
    a different decision, but whether the record, on review, warrants a
    different decision. In this regard, as indicated below, our
    evaluation of the record as a whole is consistent with Judge
    Frysiak's assessment that Kay and Sobel made intentional deceptive
    representations about their relationship, notwithstanding the March
    1995 disclosure.

[^20]: The Bureau stated in its reply to the relevant pleading that:
    "None of Sobel's or Kay's filings in 1994 or 1995 disclosed the
    relationship between Sobel and Kay with respect to the Management
    Agreement stations." Wireless Telecommunications Bureau's Comments
    on Replies to Proposed Findings of Fact and Conclusions of Law,
    filed October 31, 1997 at 3 ¶ 4. The record does not disclose
    whether the Bureau believed that the production of the Management
    Agreement in discovery on March 24, 1995 was not a "filing," or
    whether the Bureau inadvertently overlooked the March 24, 1995
    submission in making this statement.

[^21]: The associated text in the body of the pleading states: "By this
    time \[when the Commission modified the hearing designation order to
    delete Sobel's stations\], the Bureau had been provided, in
    discovery, with a copy of the written agreement between Sobel and
    Kay."

[^22]: The ALJ did not question Pfeifer's credibility, although he did
    question her "reliability" as to some matters. ID at ¶ 203.

[^23]: We found that this matter was irrelevant with respect to Sobel
    because Kay, not Sobel, had blacked out the information. Decision at
    n.6. We believe it is relevant here as demonstrating a pattern of
    conduct. We therefore reverse Judge Chachkin's rejection of WTB
    Exhs. 332-33 based on his determination that this matter was
    irrelevant to the alleged misconduct here. [See]{.underline} Tr.
    783-90.

[^24]: In view of this pattern of conduct, we do not believe that it is
    necessary to reach the question of whether this representation by
    itself constitutes disqualifying misconduct.

[^25]: Claims of inability to pay should be supported by tax returns or
    other financial statements prepared under generally accepted
    accounting principles for the most recent three year period.

[^26]: Requests for installment plans should be mailed: Chief, Credit &
    Debt Management Center, Mail Stop 1110A2, 445 Twelfth Street, S.W.,
    Washington, D.C. 20554. Payment for the forfeiture in installments
    may be considered as a separate matter in accordance with Section
    1.1914 of the Rules, 47 C.F.R. § 1.1914. Please contact Chief,
    Credit & Debt Management Center for information regarding credit
    card payments.

[^27]: I also take issue with the Commission's conclusion that Judge
    Frysiak would not have made a different decision had he known Kay
    and Sobel provided the Bureau a copy of the management agreement in
    March of 1995, long before lack of candor was an issue. Judge
    Frysiak's decision explicitly rests in part on the determination
    that "even though the Management Agreement fully disclosed their
    relationship, Sobel did not voluntarily submit it to the Commission
    until requested by the Commission to do so in \[1996\]." *Marc Sobel
    and Marc Sobel d/b/a Air Wave Communications, Licensee of Certain
    Part 90 Stations in the Los Angeles Area*, Decision, WT Docket No.
    97-56, FCC 97D-13, ¶ 74. While this may not have been the largest
    factor in Judge Frysiak's decision, I find it impossible to assess
    its impact after the fact. I do not understand how my colleagues, on
    the record before us, can make such a conclusion on Judge Frysiak's
    state of mind.