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 Federal  Communications  Commission  FCC  03-  268 
 1 
 Before  the  Federal  Communications  Commission 
 Washington,  D.  C.  20554 
 In  re:  Applications  for  Station  )  NAL/  Acct.  No.  20031810005  WKVE,  Semora,  North  Carolina  ) 
 )  HARRYCO,  INC.  (ASSIGNOR)  and  )  File  No.  BAPH  -  19941209GK 
 SOUTHERN  ENTERTAINMENT,  INC.  )  (ASSIGNEE)  ) 
 For  Assignment  of  Construction  Permit  )  ) 
 HARRYCO,  INC.  )  File  No.  BMPH  -  19950127JA  For  Extension  of  Construction  Permit  ) 
 )  SOUTHERN  ENTERTAINMENT,  INC.  )  File  No.  BMPH-  19960307IC 
 for  Modification  of  Construction  Permit  )  ) 
 SOUTHERN  ENTERTAINMENT,  INC.  )  File  No.  BLH-  20010417AAD  For  License  to  Cover  Modified  Permit  ) 
 )  SOUTHERN  ENTERTAINMENT,  INC.  )  File  No.  BALH-  20010329AAK 
 (ASSIGNOR)  and  )  EDUCATIONAL  MEDIA  FOUNDATION  ) 
 (ASSIGNEE)  )  For  Assignment  of  License  ) 
 )  EDUCATIONAL  MEDIA  FOUNDATION  )  File  No.  BMLHED-  20010502ABA 
 For  Modification  of  License  ) 
 MEMORANDUM  OPINION  AND  ORDER  AND  NOTICE  OF  APPARENT  LIABILITY 


 Adopted:  October  30,  2003  Released:  November  10,  2003 
 By  the  Commission: 
 1.  The  Commission  has  under  consideration  the  captioned  applications  concerning  station  WKVE(  FM),  Semora,  North  Carolina.  1  The  station,  currently  licensed  to  Southern  Entertainment,  Inc. 
 (  Southern),  is  the  subject  of  multiple  challenges  by  Piedmont  Broadcasting  Corporation  (  Piedmont),  the  licensee  of  two  competing  broadcast  stations.  2  Two  of  the  pleadings  before  us  are  Applications  for 


 1  At  earlier  stages  of  this  proceeding,  the  station  was  also  known  as  WPXX(  FM)  and  WQVA(  FM). 
 2  Piedmont  is  the  licensee  of  WBTM(  FM)  and  WAKG(  FM),  Danville,  Virginia.  According  to  Piedmont,  these 
 stations  compete  with  WKVE(  FM)  for  audience  and  revenues. 
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 Review.  3  The  other  pleadings  have  been  referred  to  the  Commission  because  they  concern  similar  issues  and  facts.  4 
 2.  At  issue  in  this  proceeding  is  the  staffs  extension  of  the  initial  WKVE(  FM)  construction  permit,  under  rules  that  have  since  been  superseded,  and  the  concurrent  grant  of  an  application  to  assign  the  permit 
 from  HarryCo,  Inc.  (  HarryCo)  to  Southern  over  Piedmonts  objection.  Piedmonts  first  application  for  review  challenges  the  rationale  for  the  extension,  as  well  as  the  character  qualifications  of  HarryCo  and 
 Southern.  Piedmont  requests  that  the  Commission  rescind  the  stations  permit  and  the  assignment  to  Southern.  Piedmont  did  not  contest  the  grant  of  WKVE(  FM)  s  initial  license.  Piedmont  did,  however,  file  a 
 second  application  for  review  and  other  pleadings  challenging  subsequent  licensing  actions  relating  to  WKVE(  FM).  In  these  documents  Piedmont  opposes  many  of  Southerns  subsequent  applications,  including 
 those  for  a  construction  permit  to  upgrade  the  station,  for  a  license  to  cover  the  upgraded  facilities,  and  for  consent  to  assign  the  stations  license  to  Educational  Media  Foundation  (  EMF).  EMF  seeks  to  convert  the 
 station  from  commercial  to  noncommercial  educational  operations.  Piedmont  does  not  specifically  contest  the  proposed  change  to  noncommercial  educational  status  or  challenge  the  qualifications  of  EMF.  Rather, 
 Piedmonts  position  is  that  Southern  has  nothing  to  sell  to  EMF  because  Southern  built  at  its  own  risk  pursuant  to  a  construction  permit  that  was  not  properly  extended,  and  that  Southern  lacks  the  character 
 qualifications  needed  to  assign  the  authorization.  For  the  reasons  discussed  below,  we  affirm  prior  staff  actions,  and  grant  pending  applications  for  license,  assignment,  and  noncommercial  status.  We  also  issue  a 
 Notice  of  Apparent  Liability  to  Southern  for  its  submission  of  two  letters  with  altered  dates  in  violation  of  Section  1.  17  of  our  rules.  5 


 I.  Discussion 
 A.  Extension  Application 
 3.  Effect  of  Rule  Change.  A  central  issue  in  this  proceeding  is  the  validity  of  WKVE(  FM)  s  construction  permit  under  the  rules  in  effect  when  construction  was  completed  in  February  1996.  We  have 
 since  changed  those  rules  significantly,  and  the  parties  dispute  whether  the  changes  moot  this  central  question.  They  do  not.  In  the  1999  Streamlining  proceeding  we  automatically  extended  certain  expired 


 3  These  include  (1)  Piedmonts  October  7,  1996,  Application  for  Review,  alleging  that  the  extension  of  WKVEs 
 construction  permit  (File  No.  BMPH-  19950127JA)  and  assignment  of  that  permit  to  Southern  (File  No.  BAPH-19941209GK)  should  be  rescinded,  and  responsive  and  supplemental  pleadings;  and  (2)  Piedmonts  October  29,  1998, 


 Application  for  Review  concerning  the  grant  of  a  permit  to  Southern  to  upgrade  the  stations  constructed  facilities  from  Class  A  to  Class  C2  (File  No  BMPH-  19960307IC),  and  responsive  pleadings. 


 4  See  47  C.  F.  R.    0.5(  c).  See  also,  Nassau  Community  College,  12  FCC  Rcd  12234,  n.  1  (1997);  Little  Rock  Radio 
 Telephone  Co.,  Inc.,  50  R.  R.  2d  1535  (1982)  (referring  cases  to  Commission  when  cases  involving  the  same  facts,  parties,  or  issues  are  pending  before  the  Commission).  The  related  matters  referred  to  us  in  the  present  case  are  (1) 


 Piedmonts  November  14,  1996,  complaint,  which  alleges  that  Southerns  October  23,  1996,  Opposition  to  the  Application  for  Review  contained  falsified  documents,  and  responsive  pleadings;  (2)  Southerns  April  17,  2001, 
 application  for  a  license  to  cover  its  upgrade  to  Class  C2  (File  No.  BLH-  20010417AAD)  and  responsive  pleadings;  (3)  Southerns  March  29,  2001,  application  to  assign  the  authorization  to  Educational  Media  Foundation  (  EMF)  (File 
 No.  BALH-  20010329AAK)  and  related  pleadings;  and  (4)  EMFs  uncontested  application  to  modify  the  stations  license  to  specify  noncommercial  educational  operations  (File  No.  BMLHED-  20010502ABA).  To  the  extent  that 
 parties  have  requested  extensions  in  which  to  file  or  respond  to  pleadings,  those  requests  are  granted. 
 5  47  C.  F.  R.    1.  17. 
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 permits  for  which  forfeiture  was  not  yet  final.  6  Southern  believes  that  action  extended  WKVEs  permit  without  regard  to  the  matters  at  issue  here.  The  Streamlining  extension  applied,  however,  only  to  permits  that 
 were  valid,  as  previously  extended.  7  The  validity  of  WKVEs  last  extension  is  in  dispute.  We  will  resolve  questions  of  the  permits  validity  using  the  rules  in  effect  at  the  time  the  permit  was  last  extended.  8 


 4.  Waiver  of  Construction  Deadline.  During  the  relevant  time  period,  the  Commission  granted  18-  month  broadcast  construction  permits  and  extended  permits  for  six-  month  intervals  if,  among  other  reasons, 
 construction  had  not  been  completed  due  to  circumstances  beyond  the  applicants  control.  9  Whether  permittee  HarryCo  lost  financing  for  reasons  beyond  its  control  was  a  pivotal  issue  in  a  January  27,  1995, 
 application  for  extension  of  the  permit.  10  The  staff  initially  ruled  in  HarryCos  favor,  extending  the  permit  and  allowing  its  assignment  to  Southern,  which  completed  construction  of  the  station  and  began  to  broadcast 
 pursuant  to  program  test  authority.  In  considering  Piedmonts  petition  for  reconsideration  based  on  newly  available  evidence,  however,  the  staff  agreed  with  Piedmont  that  HarryCos  loss  of  financing  was  not  beyond 
 HarryCos  control  under  prevailing  case  law.  11  Piedmont  argued  for  a  reversal  of  the  earlier  extension  grant,  thereby  terminating  all  authority  of  the  station.  The  staff,  instead,  waived  the  requirements  of  the  extension 
 rule.  12 
 5.  The  Commission  and  its  staff  may  waive  a  rule  for  good  cause.  13  The  staff  based  the  WKVE  waiver  on  the  following  facts:  (1)  the  assignment  from  HarryCo  to  Southern  had  already  been  consummated 
 (for  slightly  more  than  a  year);  (2)  construction  was  complete;  (3)  Southern  had  commenced  program  tests  (more  than  five  months  before  the  staffs  decision  on  reconsideration)  instituting  first  local  service  in  Semora; 
 (4)  reversal  would  have  impacted  innocent  parties,  including  Southern's  employees  and  creditors;  and  (5)  although  HarryCo  had  fallen  short  of  demonstrating  that  its  loss  of  funding  was  beyond  its  control,  HarryCo 
 nevertheless  demonstrated  diligence. 
 6  Streamlining  of  Mass  Media  Applications,  14  FCC  Rcd  17525,  17536  (1999)  (  Streamlining). 


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


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


 10  Under  the  revised  rules,  loss  of  financing  is  no  longer  a  ground  for  receipt  of  additional  time.  See  47  C.  F.  R. 
   73.  3538(  b). 
 11  Specifically,  the  staff  found  that  under  the  principles  enunciated  in  Horseshoe  Bay  Centex  Broadcasting  Co.,  5  FCC 
 Rcd  7125  (1990),  HarryCos  loss  of  financing  after  refusal  of  its  creditors  to  meet  a  lender  requirement  would  be  viewed  as  HarryCos  own  inability  to  meet  its  loan  commitment  rather  than  as  an  external  event  beyond  its  control. 


 Letter  from  Chief,  Audio  Division,  to  John  F.  Garziglia,  Esq.,  Ref.  No.  1800B3-  KDY  (M.  M.  B.  Aug.  30,  1996). 
 12  Id. 


 13  47  C.  F.  R.    1.  3.  See  WAIT  Radio  v.  FCC,  418  F.  2d  1153  (D.  C.  Cir.  1969),  cert.  denied,  409  U.  S.  1027  (1972). 
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 6.  Piedmont  asserts  that  the  staff  erred  in  finding  that  WKVE  provides  first  local  service  to  Semora,  North  Carolina.  It  maintains  that  the  station  really  serves  Danville,  Virginia,  which  already  has  radio  service. 
 Piedmont  alleges  that  Southern  selects  WKVEs  programming  for  Danville  audiences  and  showed  its  allegiance  to  Danville  by  joining  the  broadcasters  association  in  Virginia  rather  than  in  North  Carolina.  The 
 record,  however,  contains  adequate  evidence  of  service  that  the  station  provides  to  Semora.  14  It  would  not  be  unreasonable  for  WKVE  also  to  cover  issues  concerning  nearby  communities  in  Virginia.  Semora,  North 
 Carolina  is  a  small  community  of  fewer  than  200  people,  located  less  than  one  mile  from  the  Virginia  border.  Danville  is  the  largest  community  in  WKVE's  licensed  service  area.  When  the  Commission  determined  that 
 Semora  was  a  community  for  allotment  purposes,  it  recognized  that  Semora  has  a  small  population,  and  limited  commercial  activity.  15  It  is  longstanding  Commission  policy  to  promote  initiation  of  broadcast 
 service  in  small  communities.  16  Stations  must  provide  informational  programming  to  address  significant  issues  and  problems  of  their  communities  of  license,  but  also  have  the  discretion  to  cover  additional  issues 
 that  may  be  of  interest  to  their  wider  audience.  Piedmont  has  not  demonstrated  that  WKVE  failed  to  provide  local  service  to  Semora,  North  Carolina. 


 7.  Piedmont  also  alleges  that  the  staff  erred  in  basing  the  waiver  on  potential  harm  to  innocent  parties  associated  with  Southern.  Piedmont  maintains  that  canceling  WKVE's  permit  would  not  harm  innocent 
 parties  because:  (1)  Southern  owned  twenty-  four  percent  of  HarryCo,  and  therefore  cannot  be  considered  unrelated;  (2)  Southern  consummated  the  assignment  at  its  own  risk;  (3)  Southern's  creditors  and  employees 
 should  have  been  aware  that  HarryCos  extension  application  and  assignment  applications  fell  short  of  the  requirements  for  grant;  and  (4)  Southern  is  not  entitled  to  the  equitable  relief  of  a  waiver  because  it  had 
 unclean  hands.  We  reject  each  of  these  arguments.  Southerns  twenty-  four  percent  interest  in  HarryCo  does  not  necessarily  impute  to  Southerns  creditors  and  employees  knowledge  of  all  matters  concerning 
 HarryCos  extension  application,  nor  does  it  demonstrate  that  Southern's  creditors  and  employees  had  reason  to  believe  that  the  staffs  grant  of  Southern's  assignment  application  was  improper.  The  allegation  of  unclean 
 hands  is  based  in  part  on  an  ex  parte  letter  from  Southern's  Vice  President  to  the  Commission  during  the  petition  for  reconsideration  stage  in  this  proceeding.  17  The  Commission's  Office  of  the  Secretary  has 
 determined  with  respect  to  the  letter  that  "it  does  not  appear  that  there  was  any  intent  to  violate  the  [ex  parte]  rules  [and]  that  no  harmful  prejudice  occurred."  18  Furthermore,  the  letter  was  not  a  part  of  the  record  upon 


 14  For  example,  Southern  provides  an  affidavit  from  Southern's  president,  which  describes  the  ways  in  which  the 
 stations  issue-  responsive  programming  addresses  the  needs  and  interests  of  Semora  residents,  as  well  as  those  of  Caswell  County,  North  Carolina,  in  which  Semora  is  located.  It  also  submits  letters  from  the  County  Manager  and 


 Sheriff  of  Caswell  County  thanking  the  station  for  offering  informational  programming  addressing  the  needs  of  Caswell  County.  As  will  be  discussed  infra,  those  letters  appear  to  have  been  solicited  rather  than  written  spontaneously,  and 
 the  dates  of  the  letters  were  altered.  However,  the  letters  accurately  reflect  that  the  station  aired  informational  programming  featuring  Caswell  County  officials. 


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


 16  See  47  U.  S.  C.    307(  b);  Faye  and  Richard  Tuck,  Inc.,  3  FCC  Rcd  5374  (1988). 


 17  Letter  from  James  W.  Hill,  Vice  President,  Southern,  to  Secretary,  FCC  (May  5,  1995),  included  as  Exhibit  N  to 
 Application  for  Review. 
 18  Letter  from  Acting  Secretary,  FCC  to  James  Hill,  Vice  President,  Southern  (Sept.  20,  1995)  included  as  Exhibit  R  to 
 Application  for  Review. 
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 which  the  staff  based  its  waiver  decision,  and  the  ex  parte  letter  does  not  warrant  denial  of  equitable  relief.  Nor,  as  discussed  further  below,  are  we  persuaded  by  Piedmonts  other  arguments  that  equitable  relief  is 
 unwarranted.  Southern  built  the  station  based  on  authority  contained  in  the  initial  staff  decision,  which  found  that  an  extension  request  complied  with  the  rules  then  in  effect  and  relevant  precedent.  Southern 
 was  not  unreasonable  in  relying  on  that  authority  to  proceed.  19  It  is  true  that  Southern  proceeded  at  its  own  risk  in  consummating  the  assignment  and  in  constructing  the  station  while  Piedmonts 
 reconsideration  request  was  pending.  Nevertheless,  we  find  no  error  in  the  staffs  determination  that  the  facts  supported  a  waiver  of  the  construction  rules  then  in  effect.  20 


 8.  Piedmont  next  alleges  that  the  staff  exceeded  its  delegated  authority  by  issuing  the  waiver.  21  The  Commission  reserves  for  itself  authority  to  consider  petitions  and  waiver  requests  that  contain  new  or  novel 
 arguments  not  previously  considered  by  the  Commission  or  present  facts  or  arguments  which  appear  to  justify  a  change  in  Commission  policy."  22  Piedmont  asserts  that  only  the  Commission  itself  can  consider 
 waiver  requests  based  on  equitable  principles.  According  to  Piedmont,  such  waivers  always  involve  new  and  novel  arguments  that  the  Commission  has  not  previously  considered  because  waivers  involve  unique,  case-specific 
 factors  that  must  be  weighed  and  balanced. 
 9.  We  disagree.  Piedmont  does  not  cite  any  case  in  support  of  its  argument  that  the  application  of  equitable  principles  always  involves  a  "new  or  novel"  issue.  The  staff  has  long  applied  equitable  principles 
 on  a  case-  by-  case  basis,  without  referring  such  cases  to  the  Commission.  23  There  is  nothing  necessarily  novel  or  policy-  oriented  about  waivers  of  broadcast  construction  deadlines.  24  In  fact,  the  Commission  has  clearly 
 stated  that  waivers  of  the  construction  deadlines  will  be  entertained,  without  limiting  the  staffs  ability  to  consider  such  requests.  25  In  any  event,  since  we  are  considering  and  affirming  the  staffs  waiver,  the 


 19  Compare,  WDBS,  Bolingbroke,  Georgia,  11  FCC  Rcd  5320  (1996)  (denying  authorization  to  applicant  that 
 constructed  with  no  authority  after  staff  denial  of  its  extension  request). 
 20  See  generally  Hooten  Broadcasting,  13  FCC  Rcd  15023  (1998)  (waiver  of  former  extension  rules  upheld  over 
 unclean  hands  objection). 
 21  See  47  C.  F.  R    0.283. 


 22  47  C.  F.  R.    0.  283(  b)(  4). 
 23  See,  e.  g.,  North  Pittsburgh  Telephone  Co.,  11  FCC  Rcd  7626,  7630-  32  (C.  C.  B.  1996)  (considering  and  rejecting 
 showing  of  "special  circumstances"  in  connection  with  request  for  waiver  of  rules  defining  eligibility  as  "small"  telephone  company).  Staff  consideration  of  waiver  requests  in  broadcast  cases  dates  back  to  the  early  days  of  the 


 industry.  See  Amendment  of  Part  O  to  Delegate  to  the  Chief,  Broadcast  Bureau,  Authority  to  Waive  the  Provisions  of  Section  73.  117  and  73.  287,  11  R.  R.  2d  1627  (1967). 


 24  See  William  J.  Kitchen,  7  FCC  Rcd  4169,  4170  (1992),  quoting  New  Orleans  Channel  20,  Inc.  v.  FCC,  830  F.  2d 
 361,  365-  66  (D.  C.  Cir.  1987)  ("[  T]  he  Commission  has  the  discretion  to  evaluate  extension  requests  on  a  case-  by-case  basis,  and  so  long  as  there  is  no  evident  disregard  for  Commission  precedent,  the  staff  retains  the  flexibility  to 


 bring  its  informed  discretion  to  bear  in  resolving  close  cases  and  accommodating  special  circumstances.  '"). 
 25  Streamlining,  14  FCC  Rcd  at  17541.  See  also  Wendell  &  Associates,  17  FCC  Rcd  18576  (2002)  (affirming  the 
 staffs  denial  of  a  request  to  waive  the  construction  deadline).  See  generally  Peninsula  Communications,  Inc.,  13  FCC  Rcd  23992,  23997  (1998)  (staff  waiver  of  translator  ownership  rule  to  avoid  loss  of  service  to  the  public  in  white  area 


 upheld  by  Commission),  16  FCC  Rcd  11364,  11370  (2001)  (order  to  show  cause  why  the  waivers  should  not  be  discontinued  due  to  operational  status  of  new  FM  station),  18  FCC  Rcd  4027  (A.  L.  J.  2003)  (terminating  translator 
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 delegated  authority  issue  is  moot. 
 10.  Finally,  Piedmont  maintains  that  HarryCo  was  not  entitled  to  a  waiver  under  the  doctrine  of  unclean  hands    the  principle  that  wrongdoers  are  not  entitled  to  equitable  relief.  26  Piedmont  alleges  that 
 HarryCo  had  unclean  hands  because  it  made  misrepresentations  to  the  Commission.  Piedmont  makes  identical  arguments  of  misrepresentation  in  connection  with  HarryCos  assignment  of  the  construction  permit 
 to  Southern.  Those  arguments  are  discussed  in  greater  detail  below,  and  rejected.  27  For  the  same  reasons,  we  conclude  that  those  allegations  do  not  warrant  denial  of  equitable  relief  to  HarryCo.  Accordingly,  we 
 conclude  that  WKVE  was  constructed  pursuant  to  a  valid  permit. 
 B.  Assignments  of  Permit  and  License 
 11.  Alleged  Misconduct  by  Assignor  HarryCo.  Piedmont  claims  that  HarryCo  misrepresented  facts  to  the  Commission  and  was  thus  unqualified  to  assign  WKVE's  construction  permit  to  Southern. 
 HarryCo  made  two  different  showings  of  its  reasonable  and  prudent  expenses  in  connection  with  a  no  profit  showing  it  was  required  to  submit  with  its  assignment  application.  28  Piedmont  argues  that  the 
 showings  conflict  with  one  another  and  that  one  of  the  two  showings  must  have  been  falsified.  29  Piedmont  also  maintains  that  the  staff  did  not  adequately  explain  its  rejection  of  that  argument. 


 12.  HarryCo  first  listed  expenses  totaling  $155,749.  37.  In  response  to  Piedmont's  petition  to  deny,  HarryCo  revised  its  claim  to  $156,783.14.  The  staff  approved  only  $63,137.02  of  these  expenses,  the  portion 
 that  HarryCo  adequately  documented  as  reasonable  and  prudent  expenses  related  to  acquisition  and  disposition  of  the  permit.  The  staff  observed  that  HarryCos  revised  summary  significantly  reallocated 
 expenses  within  certain  categories,  and  that  HarryCo  had  not  explained  some  of  those  revisions,  but  concluded  that  there  was  no  misrepresentation.  As  the  staff  explained,  misrepresentation  is  a  false  statement 
 of  fact  made  with  intent  to  deceive  the  Commission.  30  No  intent  to  deceive  was  shown  here.  HarryCo 


 waiver  based  on  newly  operational  first  FM  service  in  the  community). 
 26  Piedmont  alleges  that  several  cases  support  use  of  the  unclean  hands  doctrine  in  administrative  proceedings  such  as 
 this  one.  See  Carroll  Touch,  Inc.  v.  Electro  Mechanical  Sys.,  Inc.,  15  F.  3d  1575,  1581  (Fed.  Cir.  1993);  Consolidated  Aluminum  Corp.  v.  Foseco  Int'l,  Ltd.,  910  F.  2d  804,  812  (Fed  Cir.  1990);  WKAT,  Inc.  v.  FCC,  296  F.  2d  375,  383  (D.  C. 


 Cir.  1961). 
 27  See  TCI  Cablevision  of  Oakland  County,  Inc.,  13  FCC  Rcd  16400  (1998)  (unclean  hands  argument  will  not  be 
 considered  where  it  duplicates  an  argument  already  rejected);  See  also  Hooten  Broadcasting,  Inc.,  13  FCC  Rcd  15023  (1998)  (where  petitioner  did  not  demonstrate  character  violations  by  an  applicant,  it  did  not  show  that  the 


 unclean  hands  doctrine  precluded  waiver  of  the  broadcast  construction  rules). 
 28  Under  the  rules  in  effect  at  the  time,  the  staff  could  not  approve  an  application  to  assign  the  construction  permit  for  an 
 unbuilt  station  if  the  parties  would  receive  consideration  exceeding  reasonable  and  prudent  expenses.  See  47  C.  F.  R.    73.3597(  c)  (1996). 


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


 30  See  Fox  River  Broadcasting,  Inc.,  93  F.  C.  C.  2d  127,  129  (1983);  see  also  LUJ,  Inc.,  17  FCC  Rcd  16980  (2002). 
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 adjusted  its  claims  upon  learning,  from  Piedmont's  petition  to  deny,  that  some  of  the  original  amounts  were  not  recoverable  or  lacked  required  documentation.  31  The  staff  properly  addressed  the  matter  by  approving 
 reimbursement  only  of  fully  documented,  legitimate  and  prudent  expenses  associated  with  the  acquisition  and  sale  of  the  WKVE  permit.  The  figures  in  HarryCos  original  showing  are  not  necessarily  false  merely 
 because  HarryCo  amended  them  in  response  to  Piedmonts  challenge.  Piedmonts  suggestion  that  amendments  always  indicate  known  falsehoods  is  incorrect.  Our  acceptance  of  that  argument  would 
 discourage  correction  of  legitimate  mistakes  or  misunderstandings.  32 
 13.  Piedmont  also  alleges  that  HarryCo  submitted  a  forged  document  to  the  Commission,  i.  e.,  a  February  5,  1993,  lease  that  the  property  owner,  Mr.  Gus  Dyer,  claimed  not  to  have  signed.  33  Dyer  claims 
 that  he  did  not  sign  the  actual  lease  until  March  21,  1993,  and  that  the  signature  on  the  earlier  document  is  not  his  own. 


 14.  Upon  reviewing  the  pertinent  facts  we  conclude  that  Piedmont  has  failed  to  raise  a  substantial  and  material  question  of  fact  concerning  any  intent  by  HarryCo  to  deceive  the  Commission.  HarryCo 
 submitted  the  lease  in  connection  with  four  requests  for  an  extension  of  time,  the  earliest  of  which  we  received  on  September  27,  1993,  well  after  the  lease  was  signed,  which  Dyer  acknowledges  was  in  March  of 
 that  year.  It  is  not  clear  who  signed  Dyer's  name  to  the  February  lease,  and  HarryCo  states  that  it  mistakenly  submitted  a  draft  of  the  lease.  This  claim  is  credible  because  HarryCo  could  have  filed  a  copy  of  the  final 
 March  lease  when  it  filed  its  extension  application  in  September,  six  months  later.  Accordingly,  we  reject  Piedmonts  allegations  that  HarryCo  misrepresented  facts  to  the  Commission  or  lacked  the  requisite  character 
 qualifications  to  assign  the  permit  to  Southern.  34 
 15.  Alleged  Falsification  of  Documents  by  Southern.  Piedmont  also  alleges  that  Southern  falsified  documents  submitted  with  its  Opposition  to  the  Application  for  Review.  35  Piedmont  maintains  that 


 31  HarryCo  maintains  that  its  changes  were  an  appropriate  response  to  Piedmont's  assertions,  which  alerted  it  to  the  need 
 to  submit  additional  documentation  for  some  matters  and  to  adjust  the  amounts  claimed  for  others.  For  example,  HarryCo  states  that  it  reduced  its  claims  for  employee  salary  in  half,  in  recognition  of  the  fact  that  the  employees  worked 


 for  an  additional  HarryCo  station  as  well  as  WKVE.  In  response  to  Piedmont's  statement  that  HarryCos  claim  of  $9,535  for  studio  lease  costs  was  overstated,  HarryCo  states  that  it  determined  that  the  amount  was  understated  because  the 
 lessor  was  maintaining  that  it  owed  more  than  $48,000  for  the  studio  lease,  including  late  fees,  and  that  it  therefore  adjusted  its  claim  upward  to  the  larger  amount. 


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


 33  These  matters  were  alleged  in  a  Petition  for  Reconsideration  of  the  HarryCo/  Southern  assignment  filed  by  Dyer.  The 
 staff  dismissed  Dyers  petition  because  he  failed  to  demonstrate  pursuant  to  47  C.  F.  R.    1.106(  b)(  1)  why  he  was  not  able  to  participate  in  earlier  stages  of  the  proceeding.  Piedmont,  which  has  been  a  party  throughout  this  proceeding,  also 


 raised  this  forgery  issue  in  its  Reply  to  Petition  to  Deny,  and  we  will  thus  consider  the  issue  herein. 
 34  See  Character  Qualifications  in  Broadcast  Licensing,  102  FCC  2d  1179,  1193-  95  (1986),  recon.  granted  in  part, 
 denied  in  part,  1  FCC  Rcd  421,  modified,  5  FCC  Rcd  3252  (1990). 
 35  Piedmont  makes  these  allegations  in  a  Consolidated  Reply  and  in  a  Complaint,  both  filed  November  14,  1996.  The 
 Consolidated  Reply  seeks  adverse  action  on  applications,  while  the  Complaint  requests  investigation  into  Southern's  qualifications,  and  criminal  charges.  See  47  C.  F.  R.    1.17  (truthful  written  statements);  18  U.  S.  C.    1001  (fraud  and 
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 the  altered  documents  were  designed  to  influence  the  Commission  in  its  consideration  of  the  assignment  of  the  stations  construction  permit.  We  have  considered  Piedmonts  submissions  under  the  two-  step  analysis  in 
 Astroline  Communications  Co.  v.  FCC.  36  We  find  that  Piedmont  has  made  a  prima  facie  case  that  documents  submitted  to  us  were  altered  with  an  intent  to  deceive,  that  Southern  does  not  adequately  rebut 
 Piedmonts  showing,  and  that  a  monetary  forfeiture  for  misrepresentation  appears  appropriate.  We  conclude,  nevertheless,  that  Piedmont  has  failed  to  raise  a  substantial  and  material  question  of  fact  as  to  Southerns 
 basic  qualifications  or  as  to  whether  grant  of  any  of  the  applications  would  serve  the  public  interest.  37 
 16.  A  misrepresentation  is  a  false  statement  made  with  intent  to  deceive  the  Commission.  38  Intent  can  be  inferred  from  motive.  39  At  issue  here  is  whether  Southern  made  misrepresentations  to  the 
 Commission  by  changing  the  dates  of  two  letters  from  local  officials  prior  to  submitting  them  to  the  Commission,  without  the  knowledge  or  consent  of  the  signatories.  Southern  submitted  the  letters  on 
 October  22,  1996,  40  as  part  of  its  Opposition  to  the  Application  for  Review.  The  purpose  of  the  letters  was  to  refute  Piedmonts  October  7,  1996,  allegation,  discussed  previously,  that  the  station  did  not  serve  Semora. 
 Piedmont  alleges  that  Southern  falsified  the  dates  so  that  the  letters  would  seem  to  have  been  unsolicited  and  written  before  Piedmonts  programming-  related  allegation.  41  It  submits  a  declaration  under  penalty  of 
 perjury  from  Piedmont's  president,  T.  David  Luther  (  Luther),  describing  his  meetings  with  the  two  signatories,  Caswell  County  Manager,  Paul  C.  Tax  (  Tax)  and  Caswell  County  Sheriff,  J.  J.  Smith 
 (  Smith).  According  to  that  declaration,  Tax  told  Luther  that  he  wrote  a  letter  at  the  request  of  Southerns  President,  Samuel  Cooper,  so  that  Southern  could  show  that  WKVE  served  Semora.  42  Luther  presented  Tax 
 with  a  copy  of  the  letter  as  submitted  to  the  Commission,  and  states  that  Tax  noticed  a  change  in  the  letters  date  from  October  15,  1996,  to  July  23,  1996.  As  further  proof  that  the  date  of  Tax's  letter  was  altered, 
 Luther  states  that  two  Caswell  County  officials  mentioned  in  Tax's  letter  were  not  guests  on  the  station  until  August,  more  than  two  weeks  after  the  date  on  the  allegedly  altered  letter.  Luther  submits  a  copy  of  the  letter 
 as  obtained  from  Tax,  which  is  dated  October  15,  1996,  in  a  typeface  identical  to  the  rest  of  the  letter.  The  typeface  of  the  July  23,  1996,  date  in  the  letter  that  Southern  submitted  to  the  Commission  does  not  match  the 
 body  of  the  letter.  Luthers  declaration  also  relates  his  conversation  with  Sheriff  Smith,  signatory  to  a  second  letter  that  Southern  submitted  to  the  Commission.  According  to  the  declaration,  Smith  told  Luther  that  the 
 date  of  Smiths  letter  was  changed  from  October  14,  1996,  to  September  27,  1996.  Piedmont  does  not  submit  a  copy  of  a  Smith  letter  bearing  the  alleged  October  date,  but  observes  that  the  September  date  in  the  letter 


 false  statements  in  federal  proceedings). 
 36  Astroline  Communications  Co.  v.  FCC,  857  F.  2d  1556,  1561  (D.  C.  Cir.  1988). 


 37  See  Serafyn  v  FCC,  149  F.  3d  1213,  1216  (D.  C.  Cir.  1998). 
 38  Fox  River  Broadcasting,  Inc.,  93  F.  C.  C.  2d  127,  129  (1983). 
 39  Black  Television  Workshop,  8  FCC  Rcd  4192,  4198  n.  41  (1993)  (subsequent  history  omitted). 


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


 41  See  note  14  supra. 
 42  The  staff  has  a  pending  application  on  FCC  Form  316  to  transfer  control  of  Southern  from  Samuel  Cooper  to 
 James  Hill  (File  BTCH-  19980827EC). 
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 filed  with  the  Commission  also  uses  a  different  typeface  than  the  body  of  the  letter.  43  The  typefaces  of  the  two  allegedly  altered  dates  in  the  Smith  and  Tax  letters  are  identical  to  each  other,  but  do  not  match  the  text 
 of  either  letter.  The  date  of  the  Smith  letter  is  also  misaligned  with  the  text  and  letterhead  of  that  letter.  Southern  does  not  dispute  the  validity  of  the  documentary  evidence  suggesting  that  the  dates  of  the  letters 
 were  altered.  In  fact,  a  document  that  Southern  was  required  to  maintain  in  the  stations  public  inspection  file  and  which  it  submitted  to  the  Commission  in  a  related  proceeding  supports  Piedmonts  arguments  that  the 
 dates  were  altered.  44  The  stations  list  of  its  most  significant  issue-  responsive  programs  for  the  third  quarter  of  1996  indicates  that  Tax  appeared  as  a  guest  on  July  11,  1996.  If  Taxs  letter  referred  only  to  his  own 
 appearance  on  WKVE(  FM),  the  letters  July  23,  1996,  date  as  submitted  by  Southern  might  appear  reasonable.  However,  Taxs  letter  also  refers  to  appearances  by  Jeff  Rudd,  County  Economic  Development 
 Director,  and  Lee  Fowlkes,  Director  of  the  Caswell  County  Civic  Center.  The  stations  issues/  program  list  indicates  that  Mr.  Fowlkes  and  Mr.  Rudd  did  not  appear  on  the  station  until  August  6,  1996,  and  August  7, 
 1996,  respectively.  It  would  have  been  impossible  for  Tax  to  reference  those  appearances  if  the  July  23,  1996,  date  of  the  letter  submitted  by  Southern  were  correct. 


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


 18.  Southern  submits  May  20,  1997,  affidavits  from  Samuel  Cooper  and  James  Hill,  Southerns  President  and  Vice-  President  respectively,  stating  that  they  did  not  alter  the  dates  or  ask  anyone  else  to  do  so. 
 They  state  that  at  the  time  the  letters  were  submitted  to  the  Commission  they  were  unaware  of  any  alterations  and  have  no  knowledge  of  who  may  have  altered  the  letters.  Southern  also  claims  that  the  letters  were  not 
 submitted  to  establish  the  dates  on  which  the  programming  aired.  Southern  argues  that  the  letters  in  question  were  provided  solely  as  "ancillary  evidence"  supporting  Southern's  own  declaration  as  to  the  programming  it 


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


 44  See  47  C.  F.  R.    73.  3526(  e)(  12).  Southern  submitted  issues/  programs  lists  from  its  public  inspection  file  in 
 response  to  Piedmonts  petition  to  deny  a  1997  application  to  assign  the  stations  license  to  Pinnacle  Southeast,  Inc.  Southern  intended  the  lists  to  rebut  Piedmonts  argument  in  that  case  concerning  the  adequacy  of  Southerns  issue-responsive 


 programming.  Action  on  the  application  to  assign  the  license  to  Pinnacle  Southeast  was  deferred  and  Southern  has  since  applied  to  assign  the  license  to  EMF  instead. 


 45  Black  Television  Workshop,  8  FCC  Rcd  4192,  4198  n.  41  (1993)  (subsequent  history  omitted). 
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 directs  to  Semora  and  the  surrounding  area.  According  to  Southern,  the  relevant  point  is  program  content,  and  the  dates  of  the  letters  are  not  material  to  the  Commissions  review  of  this  issue.  Southern  does  not 
 dispute  that  local  officials  did  not  appear  as  guests  on  the  station  until  after  the  dates  of  the  letters,  as  submitted  to  the  Commission.  Even  if  we  concede  that  the  actual  dates  of  the  letters  would  have  had  little 
 impact  on  Southern's  overall  position  in  this  contested  proceeding,  Southern's  argument  ignores  the  Commissions  longstanding  policy  that  requires  truthfulness  and  candor  by  all  licensees  in  dealing  with  the 
 Commission.  46  Southerns  President  and  Vice-  President  may  not  have  altered  the  dates,  but  we  cannot  from  the  record  exclude  others  associated  with  the  company  from  having  taken  such  action. 


 19.  Southern  states  that,  assuming  arguendo  that  the  dates  of  the  letters  were  changed,  we  should  nevertheless  find  it  qualified  as  a  licensee.  It  alleges  that  the  facts  of  this  case  are  similar  to  several  cases  in 
 which  the  Commission  found  no  actionable  misrepresentation  despite  factual  inconsistencies  in  the  record.  47  The  facts  of  the  cases  that  Southern  cites  differ  from  the  facts  of  the  present  case.  In  those  cases  the 
 Commission  found  no  motive  or  intent  to  deceive  the  Commission,  whereas  we  believe  that  Piedmont  has  shown  a  motive  to  make  the  letters  appear  more  genuine  as  unsolicited  testimonials,  rather  than  as  documents 
 written  to  refute  recent  statements  of  an  opposing  party. 
 20.  Southern  does  not  adequately  rebut  Piedmonts  prima  facie  showing  of  misrepresentation.  We  conclude  that  Southern  violated  Section  1.17  of  our  rules  because  the  altered  letters  submitted  in  Southerns 
 Opposition  to  the  Application  for  Review  were  untruthful  written  statements,  made  in  a  pleading  submitted  to  the  Commission,  bearing  on  a  matter  within  the  Commissions  jurisdiction.  48  We  have  studied  possible 
 actions,  including  whether  to  convene  a  hearing  on  Southerns  qualifications  to  remain  a  broadcast  licensee,  and  on  its  qualifications  to  assign  the  permit  to  EMF.  We  find,  however,  that  the  particular  factual  questions 
 raised  in  this  case  are  not  significant  enough  to  warrant  a  hearing  as  to  Southerns  basic  qualifications  to  be  a  Commission  licensee.  49  Specifically,  the  conduct  was  isolated  to  one  pleading,  was  not  decisionally 
 significant,  50  and  the  letters  in  question  were  not  submitted  in  response  to  any  Commission  question  or  inquiry.  51  Moreover,  the  licensee  is  seeking  to  sell  its  only  station,  and  the  proposed  assignee  is  a  non-  profit 


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


 47  See  Broadcast  Associates  of  Colorado,  Inc.,  104  F.  C.  C.  2d  16  (1986)  (applicant  did  not  make  actionable 
 misrepresentation  when  it  certified  that  all  information  in  application  was  true  and  complete,  although  at  time  of  certification,  applicant  had  not  reviewed  engineering  portion  of  application);  OPUS  Media  Group,  Inc.,  11  FCC  Rcd 


 15485  (1996)  (allegations  of  misrepresentation  unsupported  by  documentation);  Joseph  Bahr,  10  FCC  Rcd  32  (Rev.  Bd.  1994)  (no  prima  facie  case  of  intent  to  deceive). 


 48  47  C.  F.  R.    1.  17. 
 49  Similarly,  the  nature  of  the  matters  here  are  not,  as  Piedmont  claims,  appropriate  for  referral  to  the  Department  of 
 Justice  for  prosecution  under  18  U.  S.  C.    1001.  Cf.  Berlin  Communications,  Inc.  v.  FCC,  626  F.  2d  869,  875  (D.  C.  Cir.  1979)  (urging  the  Commission  to  refer  to  the  U.  S.  Attorney  for  prosecution  cases  "of  the  magnitude  and  as  obvious  as 


 one  in  which  a  broadcaster's  license  was  revoked  for  fraudulent  practices). 
 50  The  misrepresentation  was  limited  to  the  date  of  the  letters,  not  their  content. 


 51  See  47  C.  F.  R.    73.1015  (truthful  written  statements  in  response  to  Commission  inquiries). 
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 organization  whose  character  qualifications  have  not  been  challenged.  In  several  other  cases  involving  misstatements  of  a  generally  similar  magnitude,  we  found  it  unnecessary  to  convene  a  hearing  to  consider  the 
 applicants  basic  qualifications,  and  instead  took  appropriate  action  to  sanction  the  applicants  conduct.  52  Consistent  with  that  precedent,  we  will  not  designate  Southerns  applications  for  hearing. 


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


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


 52  See  Edwin  L.  Edwards,  Sr.,  16  FCC  Rcd  22236,  22248-  49  (2001)  (monetary  forfeiture  appropriate  when  principal 
 temporarily  abdicated  control,  but  warning  sufficient  for  misstatement);  Knox  Broadcasting,  Inc.,  12  FCC  Rcd  3337  (1997)  (admonishing  permittee  for  isolated  failure  in  extension  application  to  provide  accurate  information  regarding  its 


 finances,  zoning,  and  construction  time  frame);  Zephyr  Broadcasting,  Inc.,  11  FCC  Rcd  19627  (1996)  (admonishing  permittee  for  isolated  failure  to  disclose  loss  of  financial  qualifications).  Compare  Contemporary  Media,  Inc.,  14  FCC 
 Rcd  8790  (1999)  subsequent  history  omitted  (revocation  of  broadcast  license  after  hearing  based  in  part  on  licensees  knowingly  false  statements  to  Commission  concerning  involvement  of  a  convicted  child  molester  in  station  operations); 
 Chameleon  Radio  Corp.,  11  FCC  Rcd  11088  (1996),  license  revoked  in  hearing  12  FCC  Rcd  19348  (ALJ  1997)  (license  revocation  based  on  licensees  false  statement  of  involuntarily  site  loss  in  connection  with  request  to  operate  from  a 
 different  location,  when  licensee  abandoned  the  original  site  because  it  preferred  to  serve  a  different  community). 
 53  Forfeiture  Policy  Statement  and  Amendment  of  Section  1.80  of  the  Rules  to  Incorporate  the  Forfeiture 
 Guidelines,  12  FCC  Rcd  17087,  17115  (  Forfeiture  Policy  Statement). 
 54  47  U.  S.  C.    503(  b)(  2)(  D);  see  also  47  C.  F.  R.    1.80(  b)(  4). 


 55  Cf.  Federal  Communications  v.  WOKO,  Inc.,  329  U.  S.  223,  227  (1946)  (even  seemingly  useless  deceptions  are  of 
 concern). 
 56  47  C.  F.  R.    1.  80(  f)(  3). 
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 C.  Upgrade  of  Technical  Facilities 
 23.  In  a  second  Application  for  Review,  filed  October  29,  1998,  Piedmont  alleges  that  the  staff  erroneously  granted  Southerns  application  for  a  minor  modification  to  upgrade  the  stations  facilities  from 
 Class  A  to  Class  C2  (  the  Upgrade  Application).  On  similar  grounds,  Piedmont,  on  May  24,  2001,  objected  to  Southerns  April  17,  2001,  application  for  a  license  to  cover  the  completed  facility.  57 


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


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


 57  The  construction  permit  for  the  upgrade  had  been  tolled  pursuant  the  Commissions  revised  construction  rules. 
 See  47  C.  F.  R.    73.  3589. 
 58  See  47  C.  F.  R.    73.207. 


 59  Cut  and  Shoot,  Texas,  11  FCC  Rcd  16383  (M.  M.  B.  1996). 
 60  Streamlining  of  Radio  Technical  Rules,  14  FCC  Rcd  5272,  n.  45  (1999). 
 61  Amendment  of  Table  of  Allotments  (Amherst  and  Lynchburg,  Virginia),  11  FCC  Rcd  5247  (M.  M.  B.  1996). 


 62  See  File  No.  BLH-  19970924KE. 
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 26.  Under  the  Commissions  rules,  an  application  must  generally  protect  licensed  facilities,  construction  permits  and  prior-  filed  applications.  63  In  the  case  of  modifications  to  licensed  facilities, 
 applications  must  continue  to  protect  the  formerly  licensed  facilities  until  the  grant  of  the  covering  license  application  for  the  modified  facility.  As  Piedmont  correctly  notes,  rulemaking  petitions  also  must  continue  to 
 protect  licensed  facilities,  notwithstanding  the  fact  that  a  modification  application  has  been  granted  or  a  covering  license  application  for  a  modified  facility  is  pending.  64  At  the  time  the  Upgrade  Application  was 
 filed,  our  rules  also  prohibited  contingent  applications  for  interrelated  modifications  of  FM  stations.  65  For  the  reasons  stated  above,  the  acceptability  of  the  WKVE  upgrade  on  the  date  of  filing  was  contingent  on  the  grant 
 of  the  WEND  downgrade.  Thus,  we  agree  with  Piedmont  that  the  Upgrade  Application  was  unacceptable  at  the  time  of  filing.  Had  the  staff  first  considered  the  Upgrade  Application,  it  would  have  issued  a  deficiency 
 letter.  At  that  point,  Southern  would  have  been  required  to  amend  its  proposal  and  would  have  been  given  a  date  certain  by  which  such  an  amendment  was  due.  Failure  to  amend  by  the  deadline  would  have  resulted  in 
 dismissal  of  the  Upgrade  Application.  66  However,  before  the  staff  could  examine  Southerns  Upgrade  Application  and  set  any  deadline  for  corrective  amendments,  the  staff  acted  on  the  WEND  license 
 application.  Grant  of  the  WEND  license  application,  eliminated  the  requirement  to  protect  the  formerly  licensed  WEND  facilities,  and  thus,  cured  the  Upgrade  Applications  acceptability  defect.  Our  broadcast 
 licensing  procedures  do  not  require  the  return  of  applications  that  were  unacceptable  at  the  time  of  filing  but  which  came  into  compliance  with  our  technical  rules  prior  to  the  deadline  for  corrective  amendments.  We 
 will  not  take  adverse  action  on  Southerns  Upgrade  Application  based  solely  on  its  acceptability  as  filed,  when  subsequent  events  prior  to  staff  review  resulted  in  a  fully  acceptable  application. 


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


 63  47  C.  F.  R.    73.  207. 
 64  Cut  and  Shoot,  Texas,  11  FCC  Rcd  at  16383-  84. 


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


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


 67  47  C.  F.  R.    73.  208  (a)(  3)(  iii). 
 68  Id.;  See  also  Conflicts  Between  Applications  and  Petitions  for  Rule  Making  to  Amend  the  FM  Table  of  Allotments, 
 8  FCC  Rcd  4743  (1993). 
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 formerly  licensed  facilities  of  WEND.  69 
 III.  Ordering  Clauses 
 28.  Accordingly,  IT  IS  ORDERED,  that  pursuant  to  Section  503(  b)  of  the  Communications  Act  of  1934,  as  amended,  and  Section  1.80  of  the  Commissions  rules,  47  C.  F.  R.    1.80,  Southern  Entertainment,  Inc. 
 licensee,  Station  WKVE(  FM),  Semora,  North  Carolina,  is  hereby  NOTIFIED  of  its  APPARENT  LIABILITY  FOR  FORFEITURE  in  the  amount  of  Nineteen  Thousand  Two  Hundred  Fifty  ($  19,  250.00)  for 
 willfully  and  repeatedly  violating  Section  1.17  of  the  Commissions  rules,  47  C.  F.  R.    1.17. 
 29.  IT  IS  FURTHER  ORDERED,  pursuant  to  Section  1.80  of  the  Commissions  rules,  that  within  thirty  days  of  the  release  of  this  Notice,  Southern  Entertainment,  Inc.,  SHALL  PAY  to  the  United  States  the 
 full  amount  of  the  proposed  forfeiture  or  SHALL  FILE  a  written  statement  seeking  reduction  or  cancellation  of  the  proposed  forfeiture. 


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


 31.  The  response,  if  any,  must  be  mailed  to  Peter  H.  Doyle,  Chief,  Audio  Division,  Media  Bureau,  445  Twelfth  Street,  S.  W.,  Room  2-  A360,  Washington,  D.  C.  20554,  and  MUST  INCLUDE  the  NAL/  Account 
 number  referenced  in  the  caption  of  this  document  (20031810005). 
 32.  The  Commission  will  not  consider  reducing  or  canceling  a  forfeiture  in  response  to  a  claim  of  inability  to  pay  unless  the  petitioner  submits:  (1)  federal  tax  returns  for  the  most  recent  three-  year  period;  (2) 
 financial  statements  prepared  accordingly  to  generally  accepted  accounting  practices;  or  (3)  some  other  reliable  and  objective  documentation  that  accurately  reflects  the  petitioners  current  financial  status.  Any 
 claim  of  inability  to  pay  must  specifically  identify  the  basis  for  the  claim  by  reference  to  the  financial  documentation  submitted. 


 33.  Requests  for  payment  of  the  full  amount  of  this  Notice  of  Apparent  Liability  under  an  installment  plan  should  be  sent  to:  Chief,  Credit  and  Debt  Management  Center,  445  Twelfth  Street,  S.  W., 
 Washington,  D.  C.  20554.  70 
 34.  IT  IS  FURTHER  ORDERED,  that  the  Complaint  filed  by  Piedmont  Broadcasting  Corp.  on  November  14,  1996,  IS  GRANTED  TO  THE  EXTENT  INDICATED  HEREIN  AND  DENIED  in  all  other 
 respects. 
 35.  IT  IS  FURTHER  ORDERED,  that  pursuant  to  Section  1.115(  g)  of  the  Commission's  Rules,  47  C.  F.  R.    1.115(  g),  the  Applications  for  Review  filed  by  Piedmont  Broadcasting  Corp.  on  October  7,  1996, 
 and  on  October  29,  1998,  concerning  extension  of  HarryCos  permit,  assignment  of  that  permit  to  Southern,  and  an  additional  permit  to  upgrade  WKVEs  facilities,  ARE  HEREBY  DENIED. 


 69  Piedmont  has  not  demonstrated  standing  as  a  party  in  interest  with  respect  to  the  Amherst  rulemaking.  No  party  in 
 interest  to  that  proceeding  filed  an  objection  to  the  Upgrade  Application. 
 70  See  47  C.  F.  R.    1.1914. 
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 36.  IT  IS  FURTHER  ORDERED,  that  Piedmonts  objection  to  the  application  for  a  license  to  cover  (File  No.  BLH-  20010417AAD)  the  modified  facilities  IS  DENIED  and  that  application  IS  GRANTED. 
 37.  IT  IS  FURTHER  ORDERED,  that  the  Petition  to  Deny  filed  by  Piedmont  Broadcasting  Corp.  concerning  the  application  to  assign  the  license  of  WKVE(  FM)  from  Southern  Entertainment,  Inc.  to 
 Educational  Media  Foundation  (File  No.  BALH-  20010329AAK),  IS  DENIED. 
 38.  IT  IS  FURTHER  ORDERED,  that  having  found  the  parties  qualified  and  the  transaction  consistent  with  the  public  interest,  that  the  application  to  assign  the  license  of  WKVE(  FM)  from  Southern 
 Entertainment,  Inc.  to  Educational  Media  Foundation  (File  No.  BALH-  20010329AAK)  IS  GRANTED.  71 
 39.  IT  IS  FURTHER  ORDERED,  that  the  application  to  license  WKVE(  FM)  as  a  noncommercial  educational  station  (File  No.  BMLHED-  20010502ABA)  IS  GRANTED  conditioned  upon  the  consummation 
 of  the  assignment  to  Educational  Media  Foundation. 
 40.  IT  IS  FURTHER  ORDERED  that  a  copy  of  this  Notice  shall  be  sent,  by  Certified  Mail  -  -  Return  Receipt  Requested,  to  Southern  Entertainment,  Inc.,  4902  N.  Ocean  Blvd.,  Myrtle  Beach,  South 
 Carolina,  29577  and  to  its  counsel  John.  S.  Neely,  6900  Wisconsin  Ave.,  Suite  704,  Bethesda,  Maryland  20815. 


 FEDERAL  COMMUNICATIONS  COMMISSION 
 Marlene  H.  Dortch  Secretary 


 71  The  assignment  authorization  shall  contain  the  following  condition:  The  parties  shall  not  consummate  this 
 transaction  prior  to  a  grant  of  the  pending  license  renewal  application  for  station  WKVE(  FM),  File  No.  BRH-20030801AJL. 
15