Opinion ID: 185067
Heading Depth: 2
Heading Rank: 2

Heading: Financial Qualifications

Text: 17 We review FCC orders under the deferential standard mandated by section 706 of the Administrative Procedure Act, which provides that a court must uphold the Commission's decision unless it is 'arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.'  Achernar Broad. Co. v. FCC, 62 F.3d 1441, 1445 (D.C. Cir. 1995) (quoting 5 U.S.C. § 706(2)(A)). In this task, we do not 'substitute [our] judgment for that of the agency' [but] [r]ather we look to see 'whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment.'  Freeman Eng'g Assocs., Inc. v. FCC, 103 F.3d 169, 178 (D.C. Cir. 1997) (quoting Motor Vehicle Mfrs. Ass'n, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)). We also review the FCC's factual findings for support by substantial evidence. See, e.g., Millar v. FCC, 707 F.2d 1530, 1540 (D.C. Cir. 1983). Given the relevant standards of review, we hold that the Commission did not act arbitrarily in affirming the ALJ's finding Damsky financially disqualified since the law and substantial evidence in the record support the ALJ and Commission's decisions regarding Damsky's failure to substantiate her financial qualification. More specifically, we hold that the Commission's conclusion that Damsky did not certify funding with a reasonable assurance because she did not engage in serious and reasonable efforts to obtain construction and operating cost figures is not arbitrary or capricious. 18 In In re Northampton Media Assocs., 4 F.C.C.R. 5517 (1989), aff'd sub nom. Northampton Media Assocs. v. FCC, 941 F.2d 1214 (D.C. Cir. 1991), the Commission provided some guidance regarding reasonable assurance in the certification context: 19 [T]he certification procedure was designed to spare[ ][applicants] the time and effort necessary to prepare and submit the documentation previously required to demonstrate their qualifications. ... [R]easonable assurance does not necessarily require that an applicant have the written documentation [previously required] when it certifies its financial qualifications. Although the supporting documentation must be produced upon the Commission's request, the applicant may prepare and submit it after certification, provided that the applicant actually had a reasonable assurance of adequate funds at the time of certification. 20 Id. p 14 (quoting In re Certification of Financial Qualifications by Applicants for Broadcast Station Construction Permits, 2 F.C.C.R. 2122 (1987) (emphasis added)). Specifically, the law required Damsky to establish, upon request, two pre-certification inquiries in order to demonstrate reasonable assurance. First, she had to adduce probative evidence that, prior to certification, [she] engaged in serious and reasonable efforts to ascertain predictable construction and operation costs. Id. p 15; see also Mission Broad. Corp. v. FCC, 113 F.3d 254, 260 (D.C. Cir. 1997) (noting that applicant must first determine how much money is required). Second, she had [t]o establish the availability of funds to meet these estimated expenses, [by] provid[ing] substantial and reliable evidence showing 'sufficient net liquid assets on hand, or committed sources of funds to construct and operate for three months without revenue.'  Northampton, 4 F.C.C.R. 5517 p 15 (quoting Form 301, 50 Rad. Reg. 2d at 388); see also CHM Broad., 24 F.3d at 1458. Here, Damsky's reliance on a vague ballpark cost estimate does not get her over the initial serious and reasonable efforts hurdle. Cf. In re Victorson Group, Inc., 6 F.C.C.R. 1697 pp 18-19 (Rev. Bd. 1991) (finding general sense of estimated costs insufficient for financial qualification purposes); In re Sunbelt Ltd. Partnership, 7 F.C.C.R. 4394 pp 7-10 (Rev. Bd. 1992) (finding bits of information on costs insufficient for financial qualification purposes), aff'd, 8 F.C.C.R. 753 (1993), rev'd and remanded on other grounds sub nom. Sunbelt v. FCC, Nos. 93-1184 & 93-1708, 1994 WL 191656 (D.C. Cir. May 9, 1994). 21 Damsky incorrectly relies on Northampton as support for her position. In Northampton, the Commission found financially qualified an applicant--a three-person corporation including a principal with experience in radio--that had relied on an oral cost estimate which included an itemization of equipment, construction, and salary and other operating costs necessary to cover a low-cost mom and pop operation ($38,800). See In re Northampton Media Associates, 3 F.C.C.R. 570 pp 31, 51-56, 63, 68 (1988); Northampton, 4 F.C.C.R. 5517 pp 5, 17. The applicant had relied on a consulting engineer to prepare the technical portion of the application and to give advice regarding potential construction and operation costs. See 3 F.C.C.R. 570 p 53. Here, unlike in Northampton, Damsky, a person relatively unfamiliar with the radio industry, relied on a consultant's ballpark estimate indicating that the relevant costs would be around $300,000. While Damsky's figure came from an engineer, perhaps even an engineer with experience in radio station management, Damsky could not verify that the figure took into account basic and fundamental expenses. Given the potential magnitude of construction and operation costs at stake, the Commission reasonably concluded that Damsky did not have enough supporting detail at the time of her certification to make her reliance on the $300,000 figure reasonable. The evidence offered by Damsky did not establish that she had made serious and reasonable efforts to secure a cost figure at the time of certification. Thus, the Commission legitimately rejected Damsky's application due to her lackadaisical cost inquiry efforts.