# Petition for Writ of Certiorari — Schultz v. Federal Communications Comission > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385009_2765%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1991 - **Citation:** 502 U.S. 974 ## Text -- — 4 ou wo, ref ry Ble sts 2m | N2 ; US Va ¢ 3 SESE SSESESESEESEESESEESEEEEEEEESESEEESEEEESEEESEEEESESD e28 eoeeeeeede e . : er ai THE bi & ot) In The Supreme Court of the United States October Term, 1991 PEPPER SCHULTZ, Petitioner, vs FEDERAL COMMUNICATIONS COMMISSION, et al Respondent, PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT Pro Se: Pepper Schultz 527-10th Street Sparks, Nevada Zip 89431-0811 (702) 331-0101 hm (702) 331-6101 wk SESEESESESSESESCEEESESEEEEEEEERE EES ES EEEEEEEEEESEEEESEESEESEEEEED May an applicant as an individual or corporate entity, amend a proceeding after an issue(s) is presented during Judicial Review, respecting the powers of the Constitution of the United States, Article III, Section 1, and Section 2, Clause 1? May an agency or employee of the Federal Government, require an applicant for a prospective advertising business construction permit, by the use or threat of use of force, violence, intimidation, or duress, to coerce, compel or constrain or attempt to coerce, compel or constrain an applicant for a radio-broadcasting construction permit to employ or agree to employ, in connection with the conduct of the applicant’s broadcasting business, any person or persons "in excess of the number of employees needed by such permit to perform actual services?” When the government requires a potential business person to have employees when he does not want or intend to, and being denied a construction permit under burdens of proof in Judicial Review, it violates the Constitution of the United States, Fifth Amendment, Due Process Clause, and Ninth Amendment. May an individual or entity claim redress, to defray attorney costs for parties involved, and economic loss of money and livelihood, and for reasons of duress imposed on an applicant, incurred by unfair Judicial practice and procedures, perverse humor and regulation of Commerce, resulting from a government agency or employee, causing economic hardship, pursuant to the Constitution of the United States, First Amendment, and Fifth Amendment, Due Process Clause? May a Judicial Review Board member of an agency of government, reverse an Administrative Law Judge’s decision of the same agency for review, when a Review Board panel of three, in which one is not participating, one is dissenting the reversal, and one is reversing the decision? Is this not impeding justice, violating the Constitution of the United States, Fourteenth Amendment, Section 1? May a private corporate entity, regulated by the State of Nevada provided by Article IV of the Constitution, prevail over a citizen of the United States in a Judicial comparative hearing regulating commerce, violating the Constitution of the United States, Fourteenth Amendment, Section 1? May an individual or entity cause Judicial due process interference, by a physical letter of ex parte communication, to an Administrative Law Judge? This action results in usurpation of Judicial powers of the Constitution of the United States, Article III, Section 1, and Section 2. May an agency or employee thereof, use public derision, to coerce a worthy applicant from a livelihood through regulating commerce by Judicial due process, and that government entity or employee be lizble for such actions, for violating the Constitution of the United States, First Amendment, and Fourteenth Amendment, Section 1? LIST OF PARTIES The parties to the proceedings below were the petitioner Pepper Schultz and respondents Federal Communications Commission, Comstock Broadcasters, Inc. (Principals Robert William Carroll and William Bennet Akert, er al.), and the respondents of the District Court of Appeals, District of Columbia. iv TABLE OF CONTENTS PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT QUESTIONS PRESENTED. Opening page LIST OF PARTIES ........ ili TABLE OF AUTHORITIES .. v OPINIONS BELOW ....... 1 ps i ot l CONSTITUTIONAL AND STATUTORY PROVISIONS VOU 6 hes eee ee z STATEMENT OF iHECASE 2 REASONS FOR GRANTING WE ee eee es 9 ee 8 ra 10 APPENDIX (Index to Appendix includes the Judgement and Order of Court of Appeals, District of Columbia Circuit, Memorandums, Opinions and Orders of case, and other appended materials pertaining to the Questions Presented)....... ia TABLE OF AUTHORITIES CASES PEPER v. FORDYCE, Pe IN iis ckirnsnisvecgnveusdwaveuesiackosaxses FEDERAL COMMUNICATIONS COMMISSION _v. SANDERS BROTHERS RADIO STATION, NT PI con ce ser ttes ciicenceviseswsaevckesias UNITED STATES v. PETRILLO, EE OI aired suncsuesnavuessvontckveesaecevens STATUTES United States Code Te Bey SOUT BI OID is dvivvadivecsiccdcssehicaied Title 28, Section 1291, 1292 (c) & (d), & 1295........... United States Constitution Pe adi daniiiritenveccnecessikeususecoreancieen IN THE SUPREME COURT OF THE UNITED STATES October Term, 1991 PEPPER SCHULTZ, Petitioner, V. FEDERAL COMMUNICATIONS COMMISSION, et al Respondent, PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT Pepper Schultz pro se, pursuant to Supreme Court Rule 34.2, hereby requests earnestly that the Supreme Court grant this writ of certiorari to review the judgement of the court below. OPINIONS BELOW - The Judgement of the Court of Appeals for the District of Columbia Circuit of case No. 90-1318 is reprinted in the Appendix hereto, p. 2a, infra. The Order of the United States Court of Appeals for the District of Columbia Circuit of case No. 90-1318 is reprinted in the Appendix hereto, p. la, infra. JURISDICTION a Invoking federal jurisdiction under Section 402 (b) of the Communications Act of 1934 (47 U.S.C. Section 402 (b)), and Rule 15 of the Federal Rules of Appellate Procedure, the petitioner brought this case from the Federal Communications Commission jurisdiction, to the United States Court of Appeals for the District of Columbia Circuit by 2 notice of appeal on June 22, 1990 (DATE DOCKETED June 25, 1990). On petitioners appeal, the District of Columbia Circuit on March 21, 1991, filed a Judgement stating the appeal does not warrant a further opinion for reasons stated by the Commission in its Memorandum Opinion and Order released May 30, 1990 (Presented in Appendix, p. 2a, infra). Invoking federal jurisdiction under Section 402 (b) (1) of the Communications Act (47 U.S.C. Section 402 (b) (1)), the petitioner submitted a brief titled On Appeal from Orders of the Federal Communications Commission, dated November 27, 1990 (Date of "Final Brief" February 15, 1991), the Court of Appeals for the District of Columbia Circuit issued an Order denying petition for rehearing, filed May 29, 1991 (Presented in Appendix, p. la, infra). The jurisdiction of the United States Supreme Court to review the judgement of the Court of Appeals for the District of Columbia Circuit is invoked under 28 U.S.C. 1254 (1). CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED * 28 U.S.C. § 1291. Finai decisions of district courts The courts of appeals (other than the United States Court of Appeals for the Federal Circuit) shall have jurisdiction of appeals from all final decisions of the district courts of the United States, the United States District Court for the Canal Zone, the District Court of Guam, and the District Court of the Virgin Islands, except where a direct review may be had in the Supreme Court. The jurisdiction of the United States Court of Appeals for the Federal Circuit shall be limited to the jurisdiction described in sections 1292(c) and (d) and 1295 of this title. Article III, Section 1, and Section 2, First Amendment, Fifth Amendment, Ninth Amendment, and Fourteenth Amendment, Section 1 are presented in the appendix, infra. STATEMENT OF CASE * Petitioner pro se, began tendering for filing his application for a construction permit on May 3, 1982, with conscience of confidence in thought, knowledge and responsibility. The application was received by the Federal Communications Commission on May 19, 1982. A number of briefs were filed before (Presented in Appendix, pp. 180a-182a) the 3 Hearing Designation Order, Released: November 10, 1983 (Presented in Appendix, p. 3a), stating the issues for the proposed hearing, two of which prevailed for iiearing: a) To determine which of the proposals would, on a comparative basis, best serve the public interest; and b) To determine, in the light of the evidence adduced, which of the applications should be granted, if any. The Petitioner then obtained legal representation. An Order naming the Administrative Law Judge (Presented in Appendix, p. 9a) to the proceedings and setting the hearing date of February 13, 1984, was released. Notice of Appearances were then submitted. The hearing commenced on March 27, 1984, in Washington, D.C. (Volume II, presented in Appendix, p. 191a) where Pepper Schultz and Comstock Broadcasters, Inc. (Principal Robert W. Carroll) were present. The Initial Decision of Administrative Law Judge James F. Tierney was Released: July 30, 1984 (Presented in Appendix, p. 10a), granting application of Pepper Schultz and denying Comstock Broadcasting, Inc. The Review Board hearing commenced on December 12, 1984, in Washington, D.C. (Volume III, presented in Appendix, p. 193a), where Pepper Schultz was present. The Petitioner tried to amend the Review Board hearing, relating to information discussed at the Review Board hearing, immediately after. That amendment was rejected by the Review Board. NOTE: Question Presented where violation may appear. May a private corporate entity, regulated by the State of Nevada provided by Article IV of the Constitution, prevail over a citizen of the United States in a Judicial comparative hearing regulating commerce, violating the Constitution of the United States, Fourteenth Amendment, Section 1? A Memorandum Opinion and Order was Released: January 28, 1985 (Presented in Appeadix, p. 28a), by the Review Board, remanding Pepper Schultz to the Administrative Law Judge on the following issues: (1) To determine whether the staff proposed by Pepper Schultz is adequate to effectuate his proposal; and (2) To determine whether Pepper Schultz has sufficient funds to cover his costs of construction and initial three months operation. EXCERPTS trom this MO & O: "It seems Schultz now concedes that his original proposal would shortly grind Pepper down with a workload not to be sneezed at." (n. 6) IT IS FURTHER ORDERED, That the burden of proceeding with the introduction of evidence and proof under the issues added herein SHALL BE upon Pepper Schultz. NOTE: Question Presented where violation may appear. May an agency or employee of the Federal Government, require an applicant for a prospective advertising business construction permit, by the use or threat of use of force, violence, intimidation, or duress, to coerce, compel or constrain or attempt to coerce, compel or constrain an applicant for a radio-broadcasting construction permit to employ or agree to employ, in connection with the conduct of the applicants broadcasting business, any person or persons "in excess of the number of employees needed by such permit to perform actual services?" When the government requires a potential business person to have employees when he does not want or intend to, and being denied a construction permit under burdens of proof in Judicial Review, it violates the Constitution of the United States, Fifth Amendment, Due Process Clause, and Ninth Amendment. The Petitioner then presented a Motion for Leave to Amend, dated February 22, 1985, and an Amendment (Presented in Appendix, p. 183a, p. 187a), to the presiding Administrative Law Judge, which was accepted and unopposed by Comstock Broadcasters, Inc. NOTE: Question Presented where it may appear. May an applicant as an individual or corporate entity, amend a proceeding after an issue(s) is presented during Judicial Review, respecting the powers of the Constitution of the United States, Article III, Section 1, and Section 2, Clause 1? 5 A hearing commenced on April 9, 1985, before the presiding Judge in Washington, D.C. (Volume V, Presented in Appendix, p. 201a), where only Pepper Schultz was present as a witness. A Memorandum Opinion and Order was Released: April 12, 1985 (Presented in Appendix, p. 36a), by the Deputy Chief Administrative Law Judge, denying a Motion for Summary Decision and a Motion for Leave to File Supplement. A Memorandum Opinion and Order was Released: May 7, 1985 (Presented in Appendix, p. 39a), by the Deputy Chief Administrative Law Judge, denying Comstock Broadcasters, Inc., Motion to Enlarge. A Supplemental Initial Decision of Deputy Chief Administrative Law Judge James F. Tierney was Released: June 26, 1985 (Presented in Appendix, p. 43a). This Supplemental Initial Decision SHALL FIND IN FAVOR of Pepper Schultz application and denying Comstock Broadcasters, Inc. An Order was Released: January 24, 1986 (Presented in Appendix, p. 56a), by Norman B. Blumenthal Member, Review Board, reversing the Deputy Chief Administrative Law Judge’s decision and granting application of Comstock Broadcasters, Inc. The following Excerpts are in this Order: "[W]e all but ignore counsel’s flummery suggesting that Schultz’s insistence that he would utilize no "employees did not necessarily negate a reliance on friends and volunteers.” (n. 5) "Schultz was either distantly out of touch with reality or singularly qualified for the laurel of "FCC Fabulist of the Decade." (p. 5) "Schultz’s February 22, 1985 amendment (George Washington’s Birthday, no less) indicating funds on deposit of $101,000 contained no such qualification." (n. 9) "Raising additional doubt is the amazing fact that, despite the claims of a ‘no strings attached’ conveyance of $101,000, Schultz testified at subsequent hearing that he might not draw upon this windfall for financing the station, but might instead use it solely as ’collateral’ for a cash bank loan. Tr. 237-239. Just why Schultz might offer the bank his freefound $101,000 ready cash for a lesser cash loan is unexplained, but we are certain the hard-pressed banking industry would gladly rather receive tribute than pay it. We'd take the deal ourselves." (n. 9) "[W]e have not previously encountered so threadbare an applicant as Schultz. . ." (p. 10). "{S]ome of the fault' for the unnecessary prolongation of this case must be placed on the presiding ALJ, a decent man whose well-known patience and mercy were here taken advantage of by an applicant more to be pitied than pampered." (n. 10) "Schultz has now apparently abandoned the uneducated illusion that ATS equipment was the panacea. It is not known whether Schultz completed his computer “correspondence courses,” or whether he had merely advanced sufficiently to realize* that neither R2-D2 nor C3-PO was a ’stock’ equipment item." (n. 13) "Even now, Schultz urges that he be permitted a construction permit to operate with not much more in the way of resources than might be required for, say, a modest roadside fruitstand, and in an environment that would have daunted and depressed the desperate denizens of Devil’s Island." (p. 12) "We do not know if Schultz was (or is) serious about his proposals, is incurably deluded, or merely covets the permit in the hope of quick enrichment." (p. 13) An Order was Released: March 9, 1987 (Presented in Appendix, p. 72a), by the Commission, denying Pepper Schultz’ Review of a Review ' This appears to be a “personal attack” by Norman B. Blumenthal, directed to the presiding Administrative Law Judge. ? This appears to be a “personal attack” by Norman B. Blumenthal, on Pepper Schuliz’ competence. Board Decision. An Order was Released: June 29, 1987 (Presented in Appendix, p. 75a), by Associate General Counsel John I. Riffer, denying Pepper Schultz’ Petition for Reconsideration and upholding a Review Board Decision granting Comstock Broadcasters, Inc. application for a new FM radio station at Sparks, Nevada. A Memorandum Opinion and Order was Released: March 11, 1988 (Presented in Appendix, p. 78a), by the Commission, granting a Petition for Reconsideration and remanding Pepper Schultz to the Presiding Judge for further evidentiary hearings. A Memorandum Opinion and Order was Released: May 4, 1988 (Presented in Appendix, p. 83a), by the Deputy Chief Administrative Law Judge, requiring a need for a further hearing to resolve the open question whether Pepper Schultz possesses the basic qualifications to construct and operate his proposed station at Sparks, Nevada. An Order was Released: June 22, 1988 (Presented in Appendix, p. 89a), by the Deputy Chief Administrative Law Judge, granting an amendment of Comstock Broadcasters, inc.(Principal Robert W. Carroll), advising of a change in the official mailing address of Comstock. A Memorandum Opinion and Order was Released: June 28, 1988 (Presented in Appendix, p. 90a), by the Deputy Chief Administrative Law Judge, granting a Motion to Enlarge Issues by Pepper Schultz and further enlarged, to wit: To determine whether Comstock Broadcasters, Inc. solicited a prohibited ex parte presentation in this proceeding and, if so, under the evidence adduced, whether Comstock Broadcasters, Inc. is qualified to become a Commission licensee. NOTE: Question Presented where violation may appear. May an individual or entity cause Judicial due process interference, by a physical letter of ex parte communication, to an Administrative Law Judge? This action results in usurpation of Judicial powers of the Constitution of the United States, Article II], Section 1, and Section 2? An Order was Released: July 11, 1988 (Presented in Appendix, p. 97a), by the Deputy Chief Administrative Law Judge, granting a Joint Motion seeking receipt in evidence of the transcript of deposition of Pepper Schultz on May 17, 1988, and to be discussed at the further 8 prehearing conference. A hearing commenced on November 15, 1988, before the presiding Judge in Washington, D.C. (Volume VIII, Presented in Appendix, p. 206a), where William B. Akert and Robert Carroll were witnesses and Pepper Schultz was present, only as an observer. A Further Supplemental Initial Decision of Deputy Chief Administrative Law Judge James F. Tierney was Released: March 16, 1989 (Presented in Appendix, p. 99a), granting application of Pepper Schultz and denying application of Comstock Broadcasters, Inc. An Order was Released: August 17, 1989 (Presented in Appendix, p. 133a), by Review Board Member Norman B. Blumenthal, reversing the presiding Administrative Law Judge’s decision, granting application of Comstock Broadcasters, Inc. In this case the Review Board, normally a panel of three, consisted of only two members, one reversing and the other dissenting the reversal. NOTE: 1) Questions Presented where violation may appear. May a Judicial Review Board member of an agency of government, reverse an Administrative Law Judge’s decision of the same agency for review, when a Review Board panel of three, in which one is not participating, one is dissenting the reversal, and one is reversing the decision? Is this not impeding justice, violating the Constitution of the United States, Fourteenth Amendment, Section 1? NOTE: 2) May an agency or employee thereof, use public derision, to coerce a worthy applicant from a livelihood through regulating commerce by Judicial due process, and that government entity or employee be liable for such actions, for violating the Constitution of the United States, First Amendment, and Fourteenth Amendment, Section 1? NOTE: 3) Question Presented pertaining to redress may appear here. May an individual or entity claim redress, to defray attorney costs for parties involved, and economic loss of money and livelihood, and for reasons of duress imposed on an applicant, incurred by unfair Judicial practice and procedures, perverse humor and regulation of Commerce, resulting from a government agency or employee, causing economic hardship, pursuant to the Constitution of the United States, First Amendment, and Fifth Amendment, Due Process Clause? A Memorandum Opinion and Order was Released: May 30, 1990 9 (Presented in Appendix, p. 172a), by the Commission, agreeing with the Review Board’s resolution of the case, denying application of Pepper Schultz. On March 18, 1991, Pepper Schultz was present at a hearing brought before the United States Court of Appeals for the District of Columbia Circuit, in Washington, D.C. A Judgement was Filed: March 21, 1991 (Presented in Appendix, p. 2a), by the Circuit Judges, stating that the appeal does not warrant a further opinion. Pepper Schultz, by counsel, petitioned the United States Court of Appeals for the District of Columbia Circuit for rehearing. The petition was denied by an Order Filed: May 29, 1991 (Presented in Appendix, p. la), from the Circuit Judges. REASONS FOR GRANTING THE WRIT * Certiorari should be granted for the following reasons: A. The possibility of rulings derived from this case regarding Judicial review and the acceptance of a curative amendment after the issues are determined. This is pertaining to procedures of due process for an applicant’s business of a limited public resource nature. B. A possible violation of the U.S. Constitution by a government agency, requiring an applicant for a construction permit to have employees, should be recognized in this case. Re: United States v. Petrillo, 332 U.S. 1 (1946), (Presented in Appendix p. 234a). C. For possible rulings derived from this case regarding the function and powers of the Federal communication Commission imposed on broadcast applicants, resulting in economic injury through due process. Re: Federal Communications Commission v. Sanders Brothers Radio Station 309 U.S. 470 (1940), (Presented in Appendix p. 225a). D. The possibility of redress for legal fees for both parties involved in this case and the possibility of reversal of a decision. Re: Peper v. Fordyce, 119 U.S. 469 10 (1886), (Presented in Appendix p. 221a). E. The Federal Communications Commission should be required to adhere to their own rules regarding ex parte communication. CONCLUSION x The Federal Communications Commission acted in error by denying Pepper Schultz’ application and accepting Comstock Broadcasters, Inc. application. Respectfully submitted,’ 7, gpl — hea Pepper Schultz pro se Dated: August 23, 1991 * Original Writ of Certiorari received for filing August 26, 1991 and an improper Writ was also received for filing September 6, 1991 by the Supreme Court Clerk and both were returned to petitioner pursuant to Supreme Court § 33.2 (4). This corrected substitute Writ for the original is being tendered for filing on September 25, 1991, in the U.S. mail for acceptance pursuant to § 33.7. APPENDIX INDEX OF APPENDIX ORDER, filed May 29, !991, by the United States Court of Appeals for the District of Columbia Circuit Judges, No. 90-1318....1a JUDGEMENT, filed March 21, 1991, by the United States Court of Appeals for the District of Columbia Circuit, No. 90-1318..2a MEMORANDUMS, OPINIONS AND ORDERS, from the Federal Communications Commission HEARING DESIGNATION ORDER Released: November 10, 1983, by the Mass Media Bureau, aes vevuseranssesevevseccsvossouses 3a ORDER Released: November 18, 1983, from Administrative Law Judge Chief Lenore G. Ehrig, FCC 83M-4256..................00000: 9a INITIAL DECISION OF ADMINISTRATIVE LAW JUDGE JAMES F, TIERNEY fi Released: July 30, 1984, by Administrative Law Judge James F. Tierney, Nc vasenesenvowsrdacesses 10a MEMORANDUM OPINION AND ORDER Released: January 28, 1985, by Review Board Member Norman eM ss cevnccnsvecececssccesscnces 28a MEMORANDUM OPINION AND ORDER Released: April 12, 1985, by Deputy Chief Administrative Law Judge James F. Tierney, FCC 85M-1599.................... 36a MEMORANDUM OPINION AND ORDER Released: May 7, 1985, by Deputy Chief Administrative Law Judge James F. Tierney, FCC 85M-1994..................... 39a iia SUPPLEMENTAL _INITIAL DECISION OF DEPUTY CHIEF ADMINISTRATIVE LAW _ JUDGE JAMES F. TIERNEY Released: June 26, 1985, by Deputy Chief Administrative Law Judge James F. Tierney, FCC 85D-43.............0....0.02.. 43a DECISION Released: January 24, 1986, by Review Board Member Norman B. Biumenthal, FCC 86R-2........................065 56a ORDER Released: March 9, 1987, by the Commission, PE TEE cehccei caxcdinenindes ccudcashascaudamieneeousin 72a ORDER Released: June 29, 1987, by Associate General Counsei John Be a Be: I cons vanaietstyesswtanenkeveredaennens 75a MEMORANDUM OPINION AND ORDER Released: March 11, 1988, by the Commission, Pas Mi ceclhunestestdnsuacinnscctasveansmeuvisiiesses’ 78a MEMORANDUM OPINION AND ORDER Released: May 4, 1988, by the Deputy Chief Administrative Law Judge James F. Tierney, FCC 88M-1334............... 83a ORDER Released: June 22, 1988, by the Deputy Chief Administrative Law Judge James F. Tierney, FCC 88M-1942............... 89a MEMORANDUM OPINION AND ORDER Released: June 28, 1988, by the Deputy Chief Administrative Law Judge James F. Tierney, FCC 88M-2012............... 90a ORDER Released: July 11, 1988, by the Deputy Chief Administrative Law Judge James F. Tierney, cco iat capes ch nunaceavcasneuncasceusbauvs 97a ilia FURTHER SUPPLEMENTAL INITIAL DECISION OF DEP HIEF _ ADMINISTRATIVE LAW GE AMES F. TIERNEY Released: March 16, 1989, by the Deputy Chief Administrative Law Judge James F. Tierney, FCC 89D-10.................. 99a DECISION Released: August 17, 1989, by Review Board Member Norman RR a. 133a MEMORANDUM OPINION AND ORDER Released: May 30, 1990, by the Commission, cred na dtslmeeodacseavuance ss eeldasabceaes 172a OTHER APPENDED MATERIALS relating to Questions Presented CONSTITUTION of THE UNITED STATES. ..... 178a DOCKET NO. 90-1318, parts thereof COD Bete OU BUI icc civciicsceccnscscces 180a Motion For Leave to Amend of Pepper Schultz.. 183a Amendment of Pepper Schultz..................... 187a PORTIONS OF TRANSCRIPTS of nine (9) Volumes and two (2) Deposition of Pepper Schultz VORLUBE i, BERGE 27, TFO4..........2..00.000000s. 19la VOLUME III, December 12, 1984.................. 193a poe ee eee 20la VOLUME VIII, November 15, 1988............... 206a CASE, PEPER v. FORDYCE Pe sts dediieincuncnedvscavideseseveess 221a CASE, FEDERAL COMMUNICATIONS COMMISSION v. SANDERS BROTHERS RADIO STATION, ne is cca swistasscxtndenisvrensoernes 225a iy CASE, UNITED STATED v. PETRILLO, f rs IE da taveccenccta scenes vevnvecssesvivees 234a iva COMMUNICATIONS ACT OF 1934, Sec. 506 (a)... 252a CODE OF FEDERAL REGULATIONS, Title 47, § 73.346, October 1, 1984............. 254a Title 47, § 73.1500, October 1, 1990............ 25Sa STATE OF NEVADA CORPORATION LAWS (Excerpts), Portion of NRS Chapter 78, 1981................. 257a Portion of NRS Chapter 78, 1989................. 258a State and Local information regarding such..... 259a pt SR ii 296a la UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT No. 90-1318 September Term, 1990 Filed May 29, 1991 ; CONTANCE L. DUPRE CLERK Pepper Schultz, Vv. Federal Communications Commission, Appellees BEFORE: Wald, Ruth B. Ginsburg and Thomas, Circuit Judges Upon consideration of appeilant’s petition for rehearing, filed May 3, 1991, it is ORDERED, by the Court, that the petition is denied. Per Curiam FOR THE COURT: ; CONSTANCE L. DUPRE, CLERK BY: /s/ Robert A. Bonner Deputy Clerk 2a NOT TO BE PUBLISHED - SEE LOCAL RULE 14 UNITED STATES COURT OF APPEALS FOR THE DISTRICT GF COLUMBIA CIRCUIT No. 90-1318 September Term, 1990 FILED MAR 21, 1991 CONSTANCE L. DUPRE, Clerk PEPPER SCHULTZ, Appellant Vv. FEDERAL COMMUNICATIONS COMMISSION, Appellee COMSTOCK BROADCASTERS, INC., Intervenor Appeal from the United States District Court for the District of Columbia Before: WALD, RUTH B. GINSBURG and THOMAS, Circuit Judges JUDGMENT This case was considered on the record from the Federal Communications Commission and on the briefs and oral arguments of counsel. After full review of the issues preserited, the court is satisfied that appropriate disposition of the appeal does not warrant a further opinion. See D.C. Cir. Rule 14 (c). Substantially for reasons stated by the Commission in its Memorandum Opinion and Order released May 30, 1990, it is ORDERED and ADJUDGED that the orders from which this appeal has been taken be affirmed. The Clerk is directed to withhold issuance of the mandate herein until seven days after disposition of any timely petition for rehearing. See D.C. Cir. Rule 15(b) (2). Per Curiam FOR THE COURT: /s/ CONSTANCE L. DUPRE 3a BEFORE THE Federal Communications Commission Washington, D.C. 20554 MM-662 In re Application RED ROCK BROADCASTING CORP. MM Docket No. 83-1205 (hereafter RRB) File No. BPH-820423AR Sparks, Nevada Req: 92.1 MHz, Channel 221A _3kW (H&V), 440 feet PEPPER SCHULTZ MM Docket No. 83-1206 (hereafter Schultz) File No. BPH-820519AK Sparks, Nevada Req: 92,1 MHz, Channel 221A _3 kW (H&V), -630 feet COMSTOCK BROADCASTERS,INC. MM Dccket No. 83-1207 (hereafter CBI) File No. BPH-820628AQ Sparks, Nevada Req: 92.1 MHz, Channel 221A _1 kW (H&V), 530 feet For Construction Permit for a New FM Station a HEARING DESIGNATION ORDER Adopted: October 28, 1983 Released: November 10, 1983 By the Chief, Audio Services Division: 1. The Commission has before it the above-captioned mutually exclusive applications for a new FM station. 2. In the interest of administrative efficiency and resource a 4a economy, portions of this Order had been standardized. Consequently, opinion paragraphs, issues and ordering clauses will only apply where an "X" appears in an appropriate box. If the paragraph is directed to some, but not all, of the captioned applicants, those affected will be specified. In addition, non-standardized text in this Order, if any, will be set forth in an Appendix. OPINION PARAGRAPHS Inapplicable paragraphs omitted. Late Filed Amendments 12. The applicant(s) below has petitioned for leave to amend its application on the date(s) shown. The accompanying amendment(s) was filed after the "B" cut-off date, the last day for filing minor amendments as of right. Under Section 1.65 of the Commission’s Rules the amendment(s) is accepted for filing. However, an applicant may not improve its comparative position after the time for amendments as of right has passed. Therefore, any comparative advantage resulting from the amendment(s) will be disallowed. APPLICANT(S) DATE AMENDMENT(S) FILED RRB 12/27/82 Areas & Populations 13. Data submitted by the applicants indicate that there would be significant difference in the size of the areas and populations which would receive service from the proposals. Consequently, the areas and populations which would receive FM service of 1 mV/m or greater intensity, together with the availability of other primary aural services in such areas, will be considered under the standard comparative issue for the purpose of determining whether a comparative preference should accrue to any of the applicants. 5a ISSUES m iV 2. To determine which of the proposals would, on a comparative basis best serve the public interest. Itim 3. To determine, in the light of the evidence adduced pursuant to the foregoing issues, which of the applications should be granted, if any. RDERING CLAUSES Late Filed Amendments 26. IT IS FURTHER ORDERED, That the petition for leave to amend filed by the following applicant(s) IS GRANTED, and the corresponding amendment(s) IS ACCEPTED to the extent indicated herein: RRB 28. IT IS FURTHER ORDERED, That, to avaii themselves of the opportunity to be heard, the applicants and any party respondent herein shall, pursuant to Section 1.221(c) of the Commission’s Rules, in person or by attorney, within 20 days of the mailing of this Orde, file with the Commission, in triplicate, a written appearance stating an intention to appear on the date fixed for hearing and to present evidence on the issues specified in this Order. 29. IT IS FURTHER ORDERED, That the applicants herein shall, pursuant to Section 311(a)(2) of the Communications Act of 1934, as amended, and Section 73.3594 of the Commission’s Rules, give notice of the hearing within the time and in the manner prescribed in such Rule, and shall advise the Commission of the publication of such notice as required by Section 73.3594(g) of the Rules. FEDERAL COMMUNICATIONS COMMISSION /s/ W. Jan Gay, Assistant Chief Audio Services Division Mass Media Bureau 6a APPENDIX(ES) [x] IS [| ] IS NOT ATTACHED. APPENDIX Additiona! Opinion Paragraphs 30. Schultz has filed a petition for leave to amend its application. The petition and the accompanying amendment were filed July 12, 1983; the last day for filing amendments as a matter of right was October 22, 1982.*/ Schultz states that the amendment was necessitated by a Federal Aviation Administration (FAA) determination, dated May 18, 1983, that the proposed antenna would "cause brute force interference to the Instrument Landing System at Reno-Cannon International Airport." CBI and RRB both have filed an opposition to petition for leave to amend the Schultz petition. CBI states that the Schultz amendment constitutes a major change within the meaning of Section 73.3573(a)(1) of the Commission’s Rules, thus requiring the application to receive a new file number, and be returned to the processing line without cut-off protection. Additionally, CBI states that good cause has not been proffered by Schultz for the acceptance of his amendment. RRB opposes Schultz’s petition as being late and states that Schultz failed to "take steps to correct what he knew or should have known to be an unacceptable proposal.” RRB also notes the grounds of opposition of CBI regarding the amendment as being major, and concurs with CBI’s proposed method for handling the application. 31. Review of the amendment shows that it is a major amendment pursuant to Section 73.3573(a)(1) of the Commission’s Rules. Section 73.3573(b) of the Rules requires the application to receive a new file number, and consequently, be assigned a new cut-off date, thereby preventing the application from receiving comparative consideration with the other applications on file. We note that the amendment was in response to an adverse FAA determination, and not of Schultz’s own personal volition. Therefore, good cause exists for the filing of the amendment. It appears that Schultz was first informed of his proposal’s */ The Commission initially returned the petition and the opposition’s thereto, but on its own motion reconsidered its action, and has addressed the pleadings in the body of this Order. 7a adverse effects to air navigation by the FAA letter daied May 18, 1983. Prior to that time, Schultz had no way of knowing the adverse effects of his proposed tower, and RRB does not provide any facts that Schultz was actually aware of such. Schultz acquired a new site and filed a new amendment on July 12, 1983, which in light of the circumstances appears to be timely. 32. Accordingly, since the petition and the ensuing amendment relocating the tower were filed in response to an adverse FAA determination, we will waive Section 73.3573 as it relates to the cut-off rules and accept the amendment for filing. However, Schultz may not profit comparatively from his new proposal, for an applicant may not improve its comparative position after the time for amendments as a matter of right has passed. Therefore, any comparative advantage resulting from the amendment by Schultz will be disallowed. 33. Schultz has filed two petitions to deny, and motion to dismiss the application of RRB dated June 21, 1982, September 1, 1983 and September 12, 1983, respectively. Schultz also has filed a petition to deny and a motion to dismiss the application of CBI dated August 27, 1983 and September 9, 1983 respectively. However, Schultz’s petitions and motions are essentially petitions to specify issues. Since the Commission’s Report and Order in re Revised procedures for the Pr ing of Con Broz ing Applications: Amendments of Part 1 of the Commission’s Rules, 72 FCC 2d 202, 45 RR 2d 1220 (1979), directed the deletion of all issue pleadings in pending cases, the matters sought to be raised in these pleadings have not been considered. Accordingly, an opportunity to raise any allegations contained therein will be afforded the parties post-designation pursuant to Section 1.229 of the Commission’s Rules. 34. RRB has petitioned for leave to amend its application. See Paragraph 12, above. The accompanying amendments were filed December 27, 1982; the last day for filing amendments as a matter of right (the "B" cut-off date) was October 22, 1982. The applicant’s amendments report: an increase in the corporate president’s percentage of stock from 20% to 46.7%; a reduction in the corporate vice president’s percentage of stock from 40% to 26.7%; the departure of one shareholder; an increase in its effective radiated power from 1.2 kW to 1.350 kW; and a proposal to maintain auxiliary power at its studio and transmitter site. RRB states that the amendments report events to 8a the Commission that were in existence prior to the "B" cut-off date. However, RRB amended its application more than two months after the "B" cut-off date. 35. Applicants are required, pursuant to Section 1.65 of the Commission’s Rules, to keep their respective applications substantially accurate and complete in all significant respects. The section requires the filing of such amendments to be as prompt as possible, but in no event more than 30 days after the occurrence of such event(s), unless good cause is shown. If the matters contained in the amendments occurred prior to the "B" cut-off date, then pursuant to Section 1.65 of the rules, RRB should have filed the amendments promptly, within 30 days, not more than two months later. RRB does not provide a showing of good cause as to why the amendments could not have been filed promptly as required by Section 1.65 of the rules. Accordingly, an issue will be specified. Additional Issue Paragraphs 1. To determine whether RRB has failed to comply with the provisions of Section 1.65 of the Commission’s Rules, with respect to keeping the Commission advised of ownership and engineering changes to its application, and if so, the affect of such noncompliance on the applicant’s comparative qualifications. Additional Ordering Paragraphs 36. IT IS FURTHER ORDERED, That the petition for leave to amend filed by Schultz IS GRANTED, and the corresponding amendment IS ACCEPTED to the extend indicated herein. 37. IT IS FURTHER ORDERED, That oppositions to petition for leave to amend filed by RRB and CBI ARE DENIED. 38. IT IS FURTHER ORDERED, That the petition to deny the RRB application filed by Schultz IS HEREBY DENIED. 9a FCC 83M-4255 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In re Applications of PEPPER SCHULTZ MM DOCKET NO. 83-1206 Sparks, Nevada File No. BPH-820519AK COMSTOCK BROADCASTERS,INC. MM DOCKET NO. 83-1207 Sparks, Nevada File No. BPH-820628AQ For Construction Permit for a New FM Station ORDER Issued: November 17, 1983 ; Released: November 18, 1983 IT IS ORDERED, That Administrative Law Judge James F. Tierney shall serve as Presiding Judge in the above-entitled proceeding; that the hearing therein shall be convened on February 13, 1984, at 10:00 a.m., and the prehearing conference shall be held on January 12, 1984, commencing at 9:00 a.m.; and, IT IS FURTHER ORDERED, That all proceedings shall take place in the Offices of the Commission, Washington, D.C. All parties are put on notice that they are expected to be fully cognizant of Part I of the Commission’s Rules and Regulations concerning Practice and Procedure. FEDERAL COMMUNICATIONS COMMISSION /s/ Lenore G. Ehrig Chief Administrative Law Judge 10a FCC 84D-49 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In re Applications of PEPPER SCHULTZ MM DOCKET NO. 83-1206 Sparks, Nevada File No. BPH-820519AK COMSTOCK BROADCASTERS,INC. MM DOCKET NO. 83-1207 Sparks, Nevada File No. BPH-820628AQ For Construction Permit for a New FM Station Appearances Herbert D. Miller, Jr., Esq. (Koteen and Naftalin) on behalf of Pepper Schultz; David M. Hunsaker and Denise B. Moline, Esqs. (Putbrese and Hunsaker) on behalf of Comstock Broadcasters, Inc.; and Norman Goldstein, Esq. on behalf of the Chief, Mass Media Bureau, Federal Communications Commission. INITIAL DECISION OF ADMINISTRATIVE LAW_JUDGE JAMES F. TIERNEY Issued: July 23, 1984 ; Released: July 30,1984 Preliminary Statement 1. Originally, this proceeding involved three mutually exclusive applicants. By Memorandum Opinion and Order, FCC 84M-1615, released April 3, 1984, Red Rock Broadcasting Corp.’s application, following approval of a Settlement Agreement with Pepper Schultz, was dismissed, with prejudice. 2. By Hearing Designation Order, MM-662, released November 10, 1983, the Chief, Mass Media Bureau under delegated authority designated the mutually exclusive applications of Red Rock Broadcasting lla Corp. (since dismissed, supra.); Pepper Schultz (Schultz) and Comstock Broadcasters, Inc. (Comstock) for authority to construct a new FM station in Sparks, Nevada for hearing on the following issues: a) To determine which of the proposals would, on a comparative basis, best serve the public interest; and b) To determine, in the light of evidence adduced, which of the applications should be granted, if any. 3. With the surviving applicants Schultz and Comstock, a hearing was held in Washington, D.C. on March 27, 1984 and the record of the proceeding was closed on that date. Timely proposed findings of fact and conclusions of law as well as reply findings were filed by Schultz and Comstock on June 4, 1984 and June 18, 1984, respectively. 4. For the reasons set forth hereinafter this, as an Initial Decision, SHALL GRANT the application of Pepper Schultz. Findings of Fact A. Schultz: 5. Mr. Schultz is an individual applicant. He proposes to be the full- time general manager of his proposed station and to devote at least forty hours per week to those duties (Schultz Exhibit No. 1). 6. Mr. Schultz has lived in Sparks, Nevada since 1942, with the exception of the period 1960-1970, when he resided in Reno, Nevada. He owns no interest in any medium of mass communication (Schultz Exhibit No. 1), and is presently employed by the United States Government as an electronics technician with the Department of the Interior, Bureau of Land Management (Tr. 32). In that position, Mr. Schultz installs and maintains two-way radio equipment (Tr. 34). He will resign that employment in order to work at his proposed station (Schultz Exhibit No. 1). 7. Mr. Schultz’s prior broadcast experience is as listed below: Station Position Dates KONE(AM), Reno Disc Jockey - announcer 1965 KTVN-TV, Reno Switcher - Ist class 1968 operator KCRL(AM), Reno Account Executive 1972-74 KOLO-TV, Reno Transmitter Engineer 1974-76 The first two position were part-time and Mr. Schultz held them for less than one year. The last two positions were full-time, and Mr. Schultz held each for the periods indicated (Schultz Exhibit No. 1). As an account executive with KCRL, Mr. Schultz’s duties included supervising production personnel in the preparation of commercials for his accounts, and he occasionally represented the station at meetings of civic organization (Tr. 38-40). Mr. Schultz also worked as an account executive for Donrey Outdoor Advertising for a period of time between 1976 and 1978 (Tr. 41-42). He holds a first-class radio operator’s license (Tr. 45). 8. Mr. Schultz proposed to equip his proposed station with auxiliary power facilities to permit the transmitter and necessary studio facilities to operate during commercial power failures (Schultz Exhibit No. 1). B. Comstock: 9. Comstock Broadcasters, Inc. is a Nevada common stock corporation, with the following ownership and management structure: Robert W. Carroll, President, Director and 51% shareholder, with 100% Voting Rights William B. Akert, Director and 49% Beneficial Owner Marva D. Carroll, Secretary (Comstock Exhibit 1, p. 1). Through a Voting Trust Agreement executed October 18, 1982, William B. Akert assigned his 49% Ownership interest in Comstock to be held in Trust by Mr. Carroll. Pursuant to the Agreement, Mr. Carroll is empowered to vote Mr. Akert’s interest at all meetings of Comstock on any resolution, matter, or business submitted at any such meeting (Comstock Exhibit 1, pp. 1; 4). The Trust may not be revoked by the Grantor earlier than the first renewal filing date for the Comstock station subsequent to the issuance a ee 13a of a construction permit (Comstock Exhibit 1, p. 3). Under the Voting Trust Agreement, Mr. Akert has left the complete control of the station to Mr. Carroll (Tr. 87-88). y 10. Mr. Akert was not a stockholder in Comstock at the time the corporation was formed. At that time, two other parties and Mr. Carroll were the original subscribed stockholders (Tr. 71). The two other stockholders, partners of Mr. Carroll in another business venture, subsequently decided they did not wish to become involved in an application for a radio station, and at that point, Mr. Carroll contacted Mr. Akert, whom he has known for approximately six years, and asked him to join with Carroll in filing the application (Tr. 71, 73-74; 76-77). 11. While acknowledging that one of the objectives of the Voting Trust Agreement was to enhance Comstock’s comparative position in the proceeding (Tr. 68; 74), Carroll stated that a primary objective was the importance of having one person in complete control of the station and answerable to the FCC (Tr. 66-68). Since Carroll had previous broadcast experience, it was logical that he should be the one in control (Tr. 68). 12. While Mr. Akert is nominally a director of the corporation (Comstock Exhibit 1, p. 1; Tr. 69), he has, by the Voting Trust Agreement, left complete control of the station to Carrol! (Tr. 87-88). As a beneficial shareholder and director, Mr. Akert’s role would be limited to attending a combined annual meeting of the stockholders and directors for purposes of review (Tr. 69, 86-87). The nature of such a meeting might take the form of a luncheon with Mr. Akert, wherein Mr. Carroll would provide Akert with a general review of the radio station with regard to programming, serving the needs of the community of license, personnel, and profit and loss (Tr. 86-87). Unless votes are required to be taken and recorded pursuant to the terms of the Articles of Incorporation or By-Laws of Comstock, there would be no votes taken at the annual lunch meeting (Tr. 88-89). Mr. Akert would not have a vote, but would simply be in the position of a non-voting stockholder receiving information about the financial status of his company (Tr. 90). As stated by Mr. Carroll, Mr. Akert’s role at the lunch meeting will be quite limited: "Mr. Akert will either receive a bonus or come up with his checkbook at that meeting” (Tr. 87). l4a Robert W. Carroll 13. Robert W. Carroll was born February 6, 1937 in Chicago, Illinois. He attended area schools, and later moved to California, where he attended Los Angeles City College, majoring in broadcasting. While attending college, Mr. Carroll worked part-time as a production assistant at KTLA-TV (Channel 5), Los Angeles (Comstock Exhibit 4, me 3S 14. In 1956, Mr. Carroll took a position as a staff radio announcer at KSUE(AM), Susanville, California. His duties included other phases of broadcast operations, including sales, engineering, logs, programming, billing procedures, management, sports announcing (including play-by-play) and news (Id.). 15. In 1958, Mr. Carroll moved to Reno, where he took a job as disc jockey and News Director with KDOT(AM). After one year in that position, he was appointed Television News Director for KOLO-TV in Reno. From 1959 through 1967 he was the primary news anchorman for the station with duties that included gathering and writing the news, field interviews, shooting and editing film and working as a play-by- play sports announcer for KOLO radio on many remote sports events. Mr. Carroll was also appointed News Director for KOLO(AM), from 1962 to 1967. During this time, Mr. Carroll also wrote and produced a number of television and radio documentaries for KOLO(AM) and TV (id.). 16. In 1967, Mr. Carroll joined Reno’s new television station KTVN- TV as News and Special Events Director. From 1967 through 1970 he ran the station’s news department, was the anchorman on the evening news, wrote and produced a number of documentary shows, and was the play-by-play announcer for University of Nevada football, basketball, and baseball games. He also functioned as the station’s Operations Director for the period of one year. During this time, Mr. Carroll was honored by several organizations (including the Reno/Sparks chapter of the NAACP) for out standing reporting coverage of civil rights activities in the State of Nevada. Mr. Carroll also hosted a morning radio show on KCBN(AM) during the same period (Id., pp. 1-2). 17. From 1970 through 1981, Mr. Carroll, a licensed pilot, produced —————— 15a an irregular basis, throughout that period (Comstock Exhibit 4, p. 2). 18. For the past fifteen years, Mr. Carroll has been a frequent guest lecturer at the University of Nevada, Reno, speaking on the subjects of broadcasting, advertising and public relations. For the past three years, Mr. Carroll has taught a weekly class in the field of advertising and public relations at Truckee Meadows Community College (Id,). 19. Currently, Mr. Carroll is President and 40% shareholder in Media Consultants, Inc.. a Reno advertising and public relations firm (Comstock Exhinit 4, p. 2; Tr. 78-79). Media Consultants designs and produces advertising, buys time on media, conducts publicity and advertising research on behalf of clients - "people who have something that they want to sell and want to advertise it" (Tr. 78-79). Media Consultants places ads on radio, television, billboards, newspapers, and other media (Tr. 79). In the event Comstock is awarded the construction permit, Mr. Carroll intends to sever his relationship with Media Consultants entirely. He would resign as officer and director, and have the company buy out his 40% ownership interest (Tr. 81; Comstock Exhibit 3, p. 1). Carroll has discussed the matter of his disassociation from Media Consultants with his partner, and assumes that his partner will take over Carroil’s present duties with the company (Tr. 80-81). Upon his withdrawal as an officer, director and stockholder, Mr. Carroll would no longer participate in any decision- making process or business affairs of Media Consultants, Inc. (Tr. 80, 83). 20. Mr. Carroll has contributed in excess of 51% of the funds spent thus far in filing and prosecuting the Comstock application, and intends to contribute 51% of the funds necessary to build and operate the station (Tr. 83-84). Diversification (Comstock) 21. William B. Akert is the owner of 160 shares (approximately 0.0001999%), of Gannett Co., Inc., which holds interests in a number of broadcast stations and newspapers. Gannett Co., is a publicly held company with more than fifty shareholders (Comstock Exhibit 2, p. 1). Gannett owns the Nevada State te-Journal, which serves Reno, Nevada (Tr. 77-78). While the Gazette-Journal is the only daily newspaper in the area, there are several weekly newspapers (Tr. 78). 16a Nevada (Tr. 77-78). While the Gazette-Journal is the only daily newspaper in the area, there are several weekly newspapers (Tr. 78). 22. Apart from Mr. Akert’s nominal interest in Gannett Co., Inc., neither Comstock nor any of its principals hold any ownership or management interest in any broadcast station, MDS facility, STV station, CATV system, newspaper, publishing house, or other medium of mass communication (Comstock Exhibit 2, p. 1). Integration of Ownership With Management (Comstock) 23. In the event Comstock is awarded the construction permit in this proceeding, Robert W. Carroll, a holder of 100% of the voting stock of Carroll, will become the full-time General Manager of the proposed station (Comstock Exhibit 3, p. 1). Mr. Carroll intends to devote in excess of 40 hours per week to these duties (Id.). As General Manager, Mr. Carroll will supervise the construction and start-up of the station, and thereafter supervise and oversee all station functions (Id.). 24. As noted above, Mr. Carroll intends to sever all connections with his present business, Media Consultants, Inc., in order to ensure that his responsibilities toward the proposed station are effectively met (Tr. 80- 81; 83; Comstock Exhibit 3, p. 1). Because of a long relationship with two clients of the firm, however, Mr. Carroll stated that he might continue to be a "commercial spokesperson" for them on a freelance basis (Tr. 80, 82), not related to the business affairs of Media Consultants, Inc. (Id.). Carroll indicated that this was not an unusual practice for media personalities in an area of the size of Reno (ld.). While Mr. Carroll would e calling on accounts in the area as part of his duties as General Manager, this would be solely on behalf of the new Station, and not connected in any way to media Consultants, Inc. (Tr. 80, 83). Local Residence and Civic Activities 25. Robert W. Carroll resides in Reno, Nevada, which is within the 1 mV/m contour of Comstock’s proposed station. Mr. Carroll has been a resident of Reno since 1958 (Comstock Exhibit 3, p. 1). 26. Mr. Carroll is, and has been involved in local civic affairs in the Reno-Sparks area. He is past President and current member of the 17a President of the Washoe County Library Board of Trustees (whose jurisdiction includes the Sparks library), as board member of the United Way, Salvation Army and Nevada Civil Defense Advisory Board, as past President of the Reno Kiwanis, and as past Lt. Governor of the Kiwanis Division 23 (northern Nevada, including Reno and Sparks, and Susanville, Caiifornia) (Comstock Exhibit 3, pp. 1-12). Previous Broadcast Experience 27. Mr. Carroll has held the following positions at the broadcast Stations indicated: Dates ' Station/Location Position 1954-55 KTLA-TV Part-Time employee Los Angeles, CA Production Department 1956-58 KSUE(AM) Staff Radio Announcer Susanville, CA 1958-59 KDOT(AM) Disc Jockey and News Director Reno, NV 1959-67 KOLO-TV TV News Director - Anchorman Reno, NV reporter, sportscaster, Operations Director 1962-66 KOLO(AM) News Director Reno, NV 1967-70 KTVN-TV News & Special Events Director: Reno, NV documentaries, sportscasting Operations Director 1967-70 KCBN(AM) Announcer, Morning Radio Reno, NV Show (simultaneous with work at KTVN-TV) ' Dates are approximate and constitute the best recollecuon of the witness (Comstock Exhibit 3, p. 2) Ee 18a 1967-70. KCBN(AM) Announcer, Morning Radio Reno, NV Show (simultaneous with work at KTVN-TV) 1970-81 KOLO(AM) Program Producer, production Reno, NV and airing of "Skywatch" - traffic report Auxiliary Pow ) k 28. Comstock proposed to acquire and maintain auxiliary power facilities sufficient to provide emergency power for both the transmitter and the studio, so that its proposed station may remain operational during a power blackout or other emergency situation (Comstock Exhibit 5, p. 1). LTIMATE FINDINGS AND CONCLUSION Diversification 1. Neither Schultz nor Comstock, nor Comstock’s principals hold any cognizable interests in other media of mass communications that would warrant the imposition of a significant demerit to one applicant or a preference to the other. 2. Comstock’s William B. Akert, is 49% beneficial owner, holds 160 shares (approximately 0.0001999%) of Gannett Co., Inc. which holds interests in a number of broadcast stations and newspapers. Nominal interests are de minimis and are of little consequence in comparative evaluation between competing applicants for broadcast facilities. Cannon’s Point Broadcasting Co.,53 RR 2d 953, 958 (1983), among others. Since Mr. Akert is a non-voting stockholder of Comstock, and plans not to be involved in any way in the policy-making or programming of the station, his nominal interest in Gannett, a publicly held company, has no comparative significance. Nor does the fact that Gannett publishes a local daily newspaper in Reno, Nevada, elevate Mr. Akert’s interest into a significant role. 3. Also Mr. Carroll's current ownership and management interest in Media Consultants, Inc., an advertising and public relations firm, no 19a Television Corp., 43 RR 2d 857 (Rev. Bd. 1978); Iden St Broadcasting Corp., 54 RR 2d 348 (Rev. Bd. 1983). In any event, the record reflects that Mr. Carroll will divest himself of his entire interest in the company. 4. Mr. Schultz holds no ownership interest in a medium of mass communication. Schultz intends to proceed with construction immediately upon a grant, and would, in any event, have construction completed within three years time. | ice - Integration of Ownership With Managemen The Schultz Proposal 5. Pepper Schultz has proposed to be the full-time General manager of his proposed station. As an individual applicant, he would be entitied to 100% quantitative integration 6. Schultz for an indefinite initial period, would be the sole employee and operator of the station: he would do all of the announcing, sell all of the commercials, do all of the engineering, billing, etc. until such time as the station had a cash flow sufficient to hire personnel. He stated he has given no thought to what personnel he might hire at that time. Comstock would have it that a significant and legitimate question is raised about the efficacy of Mr. Schultz’s integration pledge. Despite the fact that the station would be operating 24 hours a day, Comstock says, Schultz claimed no other operator besides himself was needed. He acknowledged, that Commission Rules require station identification every hour, which he would be obliged to perform. Yet, continues Comstock, at the same time, "he would be out in the street 20 hours a week calling on potential accounts.” Schultz should also recognize that the Commission requires an operator on duty at all times, adds Comstock. His plans to operate the station, while "perhaps admirable", Comstock notes, appear impossible of effectuation. Because Schultz’s speculations of hiring additional personnel at a later time when the cash flow comes in are based on the initial efficacy of his one-man operation, Comstock suggests that the Schultz proposal "is factually defective” for both the short and the long term. When promises, on their face cannot be carried out, an award of integration credit cannot be justified, Comstock argues. 20a both the short and the long term. When promises, on their face cannot be carried out, an award of integration credit cannot be justified, Comstock argues. 7. Even if Mr. Schultz’s "Herculean expectations could somehow be fulfilled," Comstock urges, it is clear that many of the duties that he would be performing wouid not be management functions; e.g., non- managerial functions, such as announcing, routine maintenance and technical functions, and/or clerical duties. Citing High Sierra Broadcasting, Inc., 55 RR 2d 627 (Rev. Bd. 1983); Bradley, Hand and Triplett, 51 RR 2d 383 (Rev. Bd. 1982); Grand Broadcasting Co., 2 RR 2d 327 (1964). 8. Yet, Mr. Schultz, an individual applicant, proposed to be the full- time General Manager of his station. His past activities respecting earlier an unconstructed station is not, as Comstock would have it, a comparative imperfection or blemish and, without more, he is clearly entitled to credit for one hundred percent full-time integration. 9. Mr. Carroll, who owns 51% of Comstock beneficially and an additional 49% as trustee under a voting trust, also proposed to be the full-time General Manager of Comstock’s station. 10. It seems clear and admitted that the principal reason for the Comstock voting trust arrangement is to confer legal title to one ‘ ondred percent of Comstock’s stock on Mr. Carroll so that Comstock an claim credit for 100% full-time integration in this proceeding. In the absence of that voting trust, Comstock could claim only the 51% integration credit to which it is entitled by virtue of Mr. Carroll's legal and beneficial ownership of 51% of Comstock’s stock. 11. Schultz argues that in Anax Broadcasting, Inc., 87 FCC 2d 483, 49 RR 2d 1589 (1981), it was observed that where limited partners "have no authority to participate in the management of an applicant, are required to maintain a purely passive role," and "are passive investors and have no authority to control the licensee, their integration or lack of integration is inconsequential" (49 RR 2d at 1594). In these circumstances, Schultz notes, only the integration of the general partners is considered and, in an extreme example, a sole general partner having 1% equity position but proposing to work full-time as the general manager of a limited partnership’s proposed radio station, would be able 21a participation of the holders of its voting stock, and the proposed participation of its non-voting, purely passive investors, preferred stockholders is not considered, see Bradley, Hand and Triplett, 89 FCC 2d 657 (Rev. Bd. 1982). 12. These cases, however, are not dispositive of the present question. First, under Commission policy and precedent extant, limited partners are merely passive investors, with no say in the manner in which the partnership is run. The same is generally true of holders of non-voting preferred stock. Mr. Akert, however, is not merely a passive investor. He is also one of Comstock’s three directors, and has all of the rights and obligations incident to that position, regardless of where he can "vote" his stock.’ Schultz relates: "In the exercise of their duty of management, the directors, usually as a board, are required to use their best judgement and independent discretion, and are responsible for the determination and execution of corporate policy. Their management functions usually include: (a) policy decisions with respect to products, services, prices, wages, labor relations, (b) selection, supervision, and removal of officers and possibly other executive personnel, (c) fixing of executive compensation, pension, retirement, etc., plans (d) determination of dividends, financing and capital changes; (e) delegation of authority for administrative and possibly other action, (f) possible adoption, amendment, and repeal of by-laws, (g) possible participation, along with shareholders, in approving various extraordinary corporate matters, and (h) supervision and vigilance for the welfare of the whole enterprise" (Handbook of the Law of Corporation, Henn, 1961, p. 338 (footnotes omitted)). As 4 director of Comstock, Akert would therefore have duties and rights of a substantial nature, which takes him out of the "passive ? Mr. Carroll could think of no circumstances in which he would vote Mr. Akert out as a director. 22a As a director of Comstock, Akert would therefore have duties and rights of a substantial nature, which takes him out of the “passive investor" category.” 13. Second, Schultz asserts, limited partnerships are recognized investment vehicles and have valid commercial purposes; that the same is true of the various classes of common and preferred stock. But is not true of the present arrangement. As Mr. Carroll stated, there is no way in which the existence of the trust will impact upon either the day-to-day operation of the proposed station or the adoption of policies governing that day-to-day operation. Mr. Carroll will have no more "say" in the operation of the station than he would in the absence of the trust agreement. And the trust beneficiary, Mr. Akert, will have no less say in those matters. 14. Schultz states that the answer to the question posed by the voting trust agreement must, therefore, be searched for in the light of the purpose stated by the Commission for placing great significance upon integration of ownership and management: "We consider this factor to be of substantial importance. It _is_ inherently desirable that legal responsibility an - rforman losel associated. In addition, there is a likelihood of greater sensitivity to an area’s changing needs, and of programming designed to serve those needs, to the extent ion’s proprietor ivel icipate in the day-to-day operation of the station. This factor is thus important in securing the best practicable service. It also frequently complements the objective of diversification, since concentrations of control are n il hiev xpen integr ownership." Poli tatement on mparative Broadcast Hearings, 5 RR 2d 1901 (1965) (Emphasis added in the original). * The Initia! Decision in Bradley, Hand and Triplett, supra., specifically noted that "None of the preferred stockholders is an officer or director of OCR" (89 FCC 2d at 682). 23a Akert’s stock to Mr. Carroll did not produce a closer association of legal responsibility and day-to-day performance. Mr. Carroll already had the power to control the affairs of the corporation, by virtue of his 51% stock interest; Akert, in his capacity as a 49% stockholder, had no power to prevent Mr. Carroll from doing so. By virtue of the trust arrangement, however, Carroll will have a fiduciary responsibility to Akert which he would not otherwise have. That fiduciary obligation may well require him to be, at least, somewhat more attentive to Mr. Akert’s interests than he would have to be in the absence of the trust. 16. Since Akert retained full powers as a director of Comstock, he will still be able to exert substantial influence over Comstock, and will have substantial legal responsibility for its conduct, even though he will not participate in its day-to-day operations, Schultz adds. 17. Schultz suggests that the particular trust relationship between Carroll and Akert may have detrimental attributes as far as being able to fully respond to the needs of the community here. Schultz speculates that, for example, if Mr. Carroll must decide whether Comstock should spend corporate profits on public service programming instead of declaring a dividend, it would appear that his fiduciary obligations to Mr. Akert would require him to "vote" Mr. Akert’s stock in favor of the declaration of the dividend, since that would be the course most beneficial to Mr. Akert’s private interests. Scott on Trusts, third edition, Section 193.1 (1967). Schultz contends, the least Mr. Carroll would have a difficult choice to make and there is no way on the present record to determine which choice he would make. And, of course, Mr. Akert, as one of Comstock’s directors, would continue to have a substantial influence over the making of such decisions. 18. Without doubt, the craftsmanship or design by Comstock of the trust instrument, otherwise permissible if not somewhat resourceful, seeks to fashion the best possible integration posture vis a vis its opponent. Yet, as Schultz argues, quite well and convincingly, the Shadow of the trust and its traditional duties is immanent and while perhaps not the “artificial procedural gimmick" Schultz describes, it cannot, in reason, achieve its flawed purpose and, thus, for reasons stated in greater detail, infra, it may be concluded that Comstock can be credited only with full-time integration of its 51% stockholder. 24a Integration as Enh By Local Residen 19. While both Mr. Carroll and Mr. Schultz are residents of the Sparks area, Mr. Carroll resides and apparently will continue to reside in Reno. Only Mr. Schultz resides in Sparks, of which he has been a resident for more than thirty of his forty two years. Both applicants are entitled to enhancement by virtue of local residence. The slight differences of Sparks versus Reno is hardly of significance. 20. Since the record is silent as to any civic activities of Mr. Schultz, Schultz is entitled to no enhancement on that basis. 21. Prior broadcast experience is the least significant of the factors enhancing integration credit, because, if given greater significance, it might very well discourage and dissuade the entry of newcomers in the enterprise of broadcasting. Yet, however, disparaged as of little moment by Schultz, Comstock’s Carroll’s considerable broadcast experience be it part-time or other, far exceeds that of Schultz, is a plus factor and would entitle Comstock, on any measure, to a moderate preference over Schultz. 22. Though Schultz would denigrate Comstock’s Carroll civic activities as being in the "distant past," hence of little value, Comstock characterized this argument as "nonsense." The evidence would support Comstock’s position and Comstock would be entitled and is credited with a moderate preference over Mr. Schultz. Walter Broadcasting Corp., 52 RR 2d 1063 (1982). Likewise,as noted above, respecting broadcast experience, Comstock terms Schultz’s suggestion of very little difference between two applicants as “nothing short of an insult." While it does not have that harsh ring, it is mistaken and the some thirty years of Carroll’s broadcast experience, be it part-time or other is clearly creditable and a positive or clear preference can be assigned to Comstock in this qualitative category. Also, little distinction can be attributed in the matter of local residence of the parties. Both reside in the proposed service area; indeed Sparks (Schultz) and Reno (Comstock) are contiguous communities. See Minority Broadcasters or East St. Louis, Inc., FCC 84R-45, released June 5, 1984. 23. Diversification attributes between the applicants, likewise are virtually equal, Schultz would not deserve the modest preference he seeks simply because the Gannett interests of Comstock being of aad 25a inscrutable dimension to assess its effect - less than 2/10,000th of one percent of Gannett Co., - would be tantamount to setting forth precision to the extreme outer limits if pi (a7) 3.14159265+, the + being mathematically infinite. In a word, such an extremely small interest could have no appreciable effect on what the comparative process respecting diversification seeks. Again, on this score the parties stand equal. 24. The critical and dispositive question of comparative choice here appears to rest on the full appraisal of the parties’ claims to 100% integration of ownership with management. There is no obstacle or impediment in the evidence which would undermine Schultz’ claim of 100% integration, albeit Comstock would have it that the proposed one- man operation by Schultz of the many duties affecting a business of an FM station is an impossible feat; hence, Schultz’s proposal on integration must be greatly diminished. Without doubt, as he concedes, he “will be very busy during the first month or two of station operation" but that the necessary functions are not beyond his capabilities. The evidence would support that Schultz even “after the perhaps somewhat hectic months” will be able to perform as expected and required. Thus, as to Schultz, a 100% integration can be and is credited. 25. Respecting Comstock’s claim for 100% integration, the question is not that simple to resolve. A full appraisal must be made of the trust agreement whereby the 49% stockholder Akert has placed that interest in trust with Carroll, the 51% owner. Comstock argues in its Reply "there is nothing unfair, prejudicial or gimmicky about a legal instrument enabling Comstock to_obtain the comparative benefit_it deserves" (emphasis in original). And though it may be the case that the ownership attribution rules need "some overhauling," as Comstock Suggests, nevertheless by devising the trust instrument Comstock may have perhaps unwittingly created its own monster. 26. Why? Even though the trust instrument may have attributes of a "legal fiction,” as Schultz urges - legal fictions abound in our system of jurisprudence, which have proven historically convenient and at times, necessary - a private corporation is a fictionalized person for a simple example - under the trust, a trustee such as Comstock’s Carroll, by virtue of that office is infused with much more than the bare legal title of the corpus of the trust - 49% voting rights - the trustee is also charged with the very high duty in a fiduciary relationship with the 26a trust’s beneficiary. All acts of the trustee must redound to and be reflective of the best interests of the beneficiary. Thus, while the law may recognize that “legal title" rests in the trustee, that fact does not strip the beneficiary of all recourse should impairment, potential or real, be visited upon the trust and its objects by the acts of the trustee. 27. Hence, the shadow of the immanence of the beneficiary casts fettered, not infettered, restraints upon the trustee here, Carroll; such would not be the case where Carroll’s stock ownership of the 49% unqualified. And this condition is a far different situation or circumstance of voting and non-voting stock in a private corporation of the rights of a partnership comprised of general and limited partners, both well established and well recognized legal concepts. Here, besides the beneficiary remaining a Director of the corporation, as pointed out by Schultz, there persists a trustee/benecficiazy relationship between two fully emancipated, presumably compos mentis persons who additionally appear to be both close social as well as business friends. These conditions, to this mind, fatally affects the true ownership of the trust stock by Carroll and whatever the supposed imperfections of the Ownership attribution rules, footnoted by Comstock, in the sometime Never Never Land of comparative choice and absent thcse well recognized legal conditions of tenancy-by-the entirety or joint tenency and the like, 100% ownership attribution in integration of management with ownership must be equated with flawless, unqualified ownership - which is not the case here. 28. Trust instruments are, of course, greatly different than proxy instruments where the stock owner retains ownership but, from time to time, gives to another party authority or power to vote as he or she sees fit; in a trust, the cestui que trust, or beneficiary’s interest is paramount, not that of the trustee; and surely trustee instruments are not in the legal category of lenders of capital, private or public, who may require collateral conditions or directorships as prerequisites of lending; such parties, presumably, consider their interests paramount but they are neither trustees nor owners; at best, lien holders. 29. Having noted this and finding the arguments of Schultz respecting the trust arrangement fully persuasive, Comstock cannot be given the 100% integration credit it seeks; rather and compellingly Comstock’s claim of full-time management/ownership posture must be rejected and it is concluded to be 51% and nothing more. 27a 30. On the other qualitative aspects of integration e.g. local residence, prior broadcast experience, civic activities etc., the difference between the parties, while cognizable in favor of Comstock, on grounds of broadcast experience and civic activities, they are not dispositive of the choice to be made. This contest must be decided on the integration posture of the parties and, on that premise, it is clear that the applicant Schultz must prevail by his being accorded 100% full-time integration versus 51% for his opponent. For the foregoing reasons, the application of Pepper Schultz for the captioned facilities at Sparks, Nevada may be AND IS HEREBY GRANTED; that being so, the application of Comstock Broadcasting, Inc. for those same facilities, must be AND IS HEREBY DENIED.‘ IT IS SO ORDERED. /s/ James F. Tierney Administrative Law Judge Federal Communications Commission * In the event exceptions are not filed within 30 days after the release of this Initial Decision and the Commission does not review the case on its own motion, this Initial Decision shall become effective 50 days after its public release pursuant to Section 1.276(d) of the governing Rules. 28a FCC 85R-5 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In re Applications of PEPPER SCHULTZ MM DOCKET NO. 83-1206 Sparks, Nevada File No. BPH-820519AK COMSTOCK BROADCASTERS,INC. MM DOCKET NO. 83-1207 Sparks, Nevada File No. BPH-820628AQ For Construction Permit for a New FM Station MEMORANDUM OPINION AND ORDER Adopted: January 22,1985 ; Released: January 28, 1985 By the Review Board: 1. The Review Board has under consideration exceptions filed August 29, 1984 by Comstock Broadcasters, Inc. (Comstock) and a reply thereto filed by Pepper Schultz (Schultz); "contingent" exceptions filed August 29, 1984 by Schuitz and Comstock’s reply; a Motion for Leave to Amend filed December 26, 1984 by Schultz and comments thereon filed by Comstock; a Petition for Leave to Amend filed December 31, 1984 by Comstock and Schultz’s opposition thereto; and a Motion for enlargement of Issues filed December 31, 1984 by Comstock and Schultz’s opposition thereto. Previously, after a comparative hearing, presiding Administrative Law Judge James F. Tierney (ALJ) found Schultz to be the comparatively superior of these two remaining applicants for a new FM broadcast station at Sparks, Nevada, and granted his application. Initial Decision (L.D.), FCC 84D-49 released July 30, 1984. Oral argument was held before the Review Board on December 12, 1984. For reasons that follow, we find that this proceeding must be remanded to the ALJ to explore patent inadequacies in Schultz’s proposed staffing and on a related financial qualifications issue against Schultz. 29a 2. To begin, Comstock’s exceptions fault the ALJ for crediting Schultz’s ownership integration proposal, contending - as it did below - that the proposal is patently impossible of effectuation.' The specific findings and conclusions under exception are set forth at LD., Ultimate Fdgs. and Conclus., para. 6, and state: Schultz for an indefinite initial period, would be the sole employee and operator of the station: he would do all of the announcing, sell all of the commercials, do all of the engineering, billing, etc. until such time as the station had a cash flow sufficient to hire personnel. He stated he has given no thought to what personnel he might hire at that time. Comstock urges *: Despite the fact that at commencement of operations, Schultz’s station would be operating 24 hours a day (Tr. 44), Schultz stated he had no present plans to hire any personnel. (Tr. 43-44). He represented in his initial application that he would hire zero employees, and confirmed this on cross examination. (Tr. 49). Schultz indicated that he would be the sole operator for an indefinite period of time. (Tr. 44). He stated that he might, in time, hire some people when the cash flow starts coming in. (Tr. 43-44). He estimated that it would take at least one to two months of operation before he could hire any staff to perform some of those duties that he personally would be undertaking after commencement of operations (Tr. 46-47), but he had given no thought as to how many employees he ultimately might need. (Tr. 48). When asked how he expected to operate the station totally by himself for a period of time, Schultz stated that he would use pre- recorded commercials produced by local advertising agencies (Tr. 44). He acknowledged, however, that he would have to do the required station identification announcements every hour. ' Comstock Exceptions at 6-9. ? Id., at 7 (emphasis in original) 30a Comstock asks the Board to judicially notice that Schultz cannot do without sleep for two or three months, that he cannot be on the street selling advertising for the twenty hours per week Schultz proposed while also manning the technical and operational controls of the station, and that Schultz has flatly admitted that he cannot afford employees until advertising revenues reach adequate levels. Faced with this unusual exception, the Board has consulted the underlying record. The transcript citations fully support Comstock.* > For example: Q. I see. Now would you briefly describe for us what your duties as general manager - what you envision your role as general manager would be at the station? A. To keep the station operating; to obtain advertising revenues; provide programming and do billing; and supervise the personnel the station has. Q. When you say keep operating, are you referring to the technical operation of the station? A. Yes sir. Q. When you say obtain advertising revenues, does that mean you intend to do sales yourself? A. Yes, I do. Q. And would the same answer be true for providing programming? A. Yes. Q. And doing the billing? A. Yes. Q. And your last duty described as supervising personnel, do you plan to hire a program director? A. At the present time, | don’t have anybody planned jor hiring. I may in time hire some people as soon as the cash flow starts coming in, hire somebody to do these duties. (continued...) 3la 3(.. continued) Q. Make sure I understand your answer. You're saying initially, upon first Starting the station up and getting on the air, in essence it will be just yourself? A. Yes. Q. A.nd that later, if cash flow is generated, you anticipate possibly hiring some employees? A. Yes. Q. How many hours a day will the station be on during this period that you in essence are going to be the sole operator? A. 24 hours. Tr. 43-44. At further questioning, Schultz testified: Q. Thank you, your Honor. To refresh your recollection of the question, Mr. Schultz, I ask you if you had given any thought to ultimately how many employees would be working for you on a full-time basis? A. None. Q. None, meaning you have noi given any thought, or none - A. None. Q. Or none that would not be working for you. A. None in the respect that | haven't considered it, as far as the number of people to work for me. In other words, I didn’t set down and write out | need this many people to do this job and this many people to do that job. Q. Is it not a fact that when you initialiy applied to the Commission for this frequency, you indicated in that application filed in October of 1981 that you would employ 0 employees. A. Myself. It wouid be 0 employees because the owner would be myself. In other words, hiring somebody else, | wouid not. Q. Other than yourself, you would hire 0 employees. A. Yes, nght. (continued...) 32a 3. Atoral argument, Schultz’s counsel candidly and properly conceded the damaging hearing representations of his client, * but nonetheless argued that Schultz "has friends who can help him out" on a volunteer basis.© When the Board pointed out that, throughout Schultz’s entire hearing testimony, he made not the slightest reference whatever to volunteer assistance, counsel responded °: It’s not on the record, because there’s no issue. (_. continued) Id., at 48-49. * For example, while acknowledging that Schultz repeatedly insisted at hearing that he alone would operate the station on a 24 hour per day basis (see supra note 3), counsel submitted “that Mr. Schultz does not propose to operate this station 24 hours a day all by his lonesome forever." Tr. of Oral Arg. of December 12, 1984 at 120. Yet, counsel also admitted: He did testify that he was planning to operate the station 24 hours a day. He did testify that that was his intention during the first month or two of operation. Id. Further, counsel understood that FCC rules require “a licensed operator orn duty somewhere,” id.; that Schultz has averred that "he is going to be the only employee ... [djuring the first initial phase of the station operation,” id., at 121; and that "when the money started rolling in, he [Schultz] could hire people." Id., at 123. + Id., at 121. | * id. Indeed, on December 26, 1984, Schultz filed a Motion for Leave to Amend to reflect that Schultz intends “to rely on a automated transmission system (ATS) and on help provided without charge by friends to permit his proposed station to operate twenty-four hours per day with no ‘employees’." Id., at 1. Putting aside for the moment precisely what Schultz seeks to “amend,” the motion will be denied. Post- hearing designation amendments are governed by 47 CFR §73.3522(b), and an amendment will not be accepted unless it meets all six of the “good cause" elements set out in Erwin O'Conner Broadcasting Co., 22 FCC 2d 140, 143 (Rev. Bd. 1970). Schultz 's Motion does not show "good cause"; in general, it simply asserts that "Mr. Schultz has given considerable additional thought to his proposal, and has concluded that the slight modifications made in the attached amendment are necessary.” Id., at 2. It seems Schultz now concedes that his original proposal would shortly grind Pepper down with a workload not to be sneezed at. For similar lack of a “good cause" showing, Comstock’s Petition for Leave to Amend (to remedy serious problems with the bona fides of its own integration proposal), filed December 31, 1984, will be denied, and all responsive pleading's of both parties’ motions are, therefore, dismissed as moot 33a Had a motion to enlarge issues been filed, we would have had an opportunity to respond with an affidavit of Mr. Schultz saying what he proposed to do. 4. While some might ague that Schultz’s unambiguous representations summarily nullify his “ownership integration" proposal, which - in totality - appears "inherently incredible"’, others would contend that the arcane protocols of communications law demand that the addition of a discrete "“staffing"* issue was necessary before Schultz could be negatively affected by finding that his operational plans are not to be credited. See Tr. of Oral Arg., supra note 4, at 121-122 (Schultz counsel). 5. At the risk of some derision, we will remand this case on appropriate issues to assure that Schultz has adequate notice and ” Cf. Hudson C. Miller, Jr. v. FCC, 707 F.2d 1530, 1539 (D.C. Cir. 1983) (citing Gamble-Skogmo, Inc. v. FTC, 211 F.2d 106,115 (8th Cir. 1954). On the other hand - and technically speaking - a “full-time” integration proposal denotes only that an applicant's principal proposes to devote 40 hours per week to station mamagement. Sec, ¢.g., Vacationland Broadcasting Co., Inc., 55 RR 2d 1299, 1303 n.1 and 1304, recon. denied, 56 RR 2d 1260 (Rev. Bd. 1984). and cases cited therein. Comstock does not trifle with the 40 hour per week aspect per se; it is the remaining 128 hours at issue. * “[UJniess an applicant's plans are, on their face, incapable of effectuation, a staffing issue will not be specified in the absence of specific allegations tending to demonstrate that those plans cannot be effectuated.” KOWL, Inc., 49 FCC 2d 962, 966 (Rev. Bd. 1974), and cases cited therein. Accord, Brookhaven Broadcasting Co., Inc., 50 FCC 2d 703, 708 (Rev. Bd. i975) ("where effectuation of a proposal is not inherently improbably,” no staffing issue will be specified "absent specific allegations demonstrating that the proposal cannot be effectuated"), and cases cited therein. However, the Commission has specified staffing issues in cases where the proposed staffing has been larger and better defined than the solo 24-hour per day operation proposed in the case at bar. See, ¢.g., Mace Broadcasting Co., 13 RR 2d 753, 755-756 (1968) (staff of 5 persons proposed for 125 hour weekly schedule was “marginal! at best"); Clarkston Broadcaster, 12 RR 2d 1203, 1207-1208 (1968) (staff of 5 persons, only 3 of whom will be actually involved in station on-the-air activities, proposed for 83 hour weekly programming schedule); Sunset Broadcasting Corporation, 5 FCC 2d 321, 323 (1966) (8 person staff; proposed station operation of 71 hours and 45 minutes per week), compare United Broadcasting Company (KBAY-FM, MO&O, 58 FCC 2D 1346, 1357-1358 (Rev. Bd. 1976) (4 fulltime employees plus vague reliance on volunteers; issue specified) with id., Decision, 93 FCC 2d 482, 511-515 (1983) (Comm'n) (issue resolved favorably to applicant based on specific hearing evidence demonstrating “reasonable likelihood" of effectuation). 34a opportunity to be heard on the obvious concerns. We admonish in advance, however, that contradictions in evidence and testimony will be construed in their ordinary legal fashion and that no comparative “upgrading” over original proposals will be permitted. Furthermore, Schultz’s indication that he can hire no employees to help him operate the station until “the money started rolling in" after several months ineluctably raises the issue of whether he has the financial resources to qualify for licenseeship. The Commission requires: ... that a new aural applicant must demonstrate that he has a sufficient capital reserve to cover construction costs and that initial start-up period between inauguration of broadcast service and the point where advertising accounts begin to ‘pay-off.’ We believe that a fairly conservative 90-day standard will serve adequately. Financial Qualifications Standards For Aural Broadcast Applicants, 69 FCC 2d 407, 408 (1978) (emphasis added). To the extent that Schultz needs to rely on eventual advertising revenues to hire those necessary to operate the station (as proposed for the initial start-up period of several months), he is prima facie out of compliance with our financial standards. And appropriate issue will be added. 6. ACCORDINGLY, IT IS ORDERED, That the petitions for leave to amend filed December 26 and 31, 1984 by Pepper Schultz and Comstock Broadcasters, Inc., respectively, ARE DENIED; and 7. IT IS FURTHER ORDERED, That the motion to enlarge issues filed December 31, 1984 by Comstock Broadcaster, Inc. IS DISMISSED as moot; and 8. IT IS FURTHER ORDERED, That this proceeding IS REMANDED to the presiding Administrative Law Judge for adduction of evidence on the following issues and the issuance of a Supplemental Initial Decision: (1) To determine whether the staff proposed by Pepper Schultz is adequate to effectuate his proposal; and (2) To determine whether Pepper Schultz has sufficient funds to cover his costs of construction and initial three months operation. 9. IT IS FURTHER ORDERED, That the burden of proceeding with the introduction of evidence and proof under the issues added herein SHALL BE upon Pepper Schultz. FEDERAL COMMUNICATIONS COMMISSION /s/Norman B. Blumenthal Member, Review Board 36a FCC 85M-1599 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In re Applications of PEPPER SCHULTZ MM DOCKET NO. 83-1206 Sparks, Nevada File No. BPH-820519AK COMSTOCK BROADCASTERS,INC. MM DOCKET NO. 83-1207 Sparks, Nevada File No. BPH-820628AQ For Construction Permit for a New FM Station MEMORANDUM OPINION AND ORDER Issued: April 10, 1985 : Released: April 12, 1985 1. This will memorialize a ruling at the hearing April 9, 1985, denying Motion for Summary Decision, filed March 19, 1985, by Pepper Schultz (Schultz) seeking, on the grounds urged, resolution in his favor of the two issues added, on remand, by the Review Board. An Opposition was filed on April 2, 1985 by Comstock Broadcasters, Inc. (Comstock). Schultz on April 5, 1985, filed a Motion for Leave to File Supplement to its Motion for Summary Decision, also denied. 2. The added issues are: To determine whether the staff proposed by Pepper Schultz is adequate to effectuate his proposal; and To determine whether Pepper Schultz has sufficient funds to cover his costs of construction and initial three months operation. (FCC 85R-5, released January 28, 1985). Schultz predicates its instant Motion on information contained in the Amendment, unopposed, filed February 22, 1985, and listed as Attachment A to the instant Motion. That proposed Amendment reflects 37a the financial and staffing proposal which Schultz contends fully satisfies and resolves the questions posed in the added issues. Construction and staffing costs would amount to $67,622.60 and, Schultz states, "he has cash on hand in excess of $101,000" with “a cushion in excess of $33,000." 3. In Opposition, Comstock, citing the Review Board’s admonition that "contradiction in evidence and testimony will be construed in their ordinary legal fashion and no comparative ‘upgrading’ over originai proposals will be permitted," (FCC 85R-5, at 5), and, argues Comstock, the condition of "co-ownership" of a bank account with his brother, among other imperfections, make the grant of Schultz’s Motion impermissible. Schultz would have it that the bank account is freely available to him without condition; that the money advance of his brother is an unqualified "gift" and not a "loan". Not so, argues Comstock, "co-ownership at least casts a shadow of qualification on Schultz’s freedom of choice in the use of those funds." 4. But more, Comstock urges, that the Review Buard’s admonition is ignored by Schultz in "his attempt to reconfigure his plan" and that "his credibility [is] squarely in question"; that, indeed, Schultz is little more than “an incredible, unreliable and wholly unrealistic applicant." In a word, Comstock contends that material questions of fact remain to be resolved concerning both the financial and staffing issues, thus, precluding favorable disposition of Summary Decision in Schultz’s favor. 5. Schultz, on the other hand urges that the Review Board’s admonition should not be permitted to suggest that he could not change his staffing or financial proposals. Rather, Schultz urges that admonition "means simply that contradiction in evidence will [be] dealt with as they are customarily dealt with." Since Mr. Schultz’s staffing proposal has been completely changed (with the exception that Mr. Schultz still intends to be the general manager and chief engineer of his proposed station), there is no contradiction to be found, adds Schultz. This is more so, argues Schultz, that the changes in staffing proposal would not amount to a comparative upgrade because Schultz continues to claim the maximum quantitative integration since he will be the full- time general manager of the facility of which he will be the 100% owner. 38a 6. In summary then, serious and germane questions of fact remain to be determined, particularly respecting the newly proposed staffing system for Schultz, as well as the real nature of the earlier "co-owned" bank account. Hence, clearly a need for direct and cross-examination on those points arise, and thus, Summary Decision may not be granted. 7. Schultz’s unopposed Petition for Leave to Amend his application, filed February 22, 1985, seeking to reflect staffing and financial updated information may be AND IS HEREBY GRANTED; and _ the Amendment tendered therewith ACCEPTED, with the caveat that no comparative advantage is to be gained thereby. For the foregoing reasons and those reflected in the record at the hearing April 9, 1985, Schultz’s Motion for Summary Decision, March 19, 1985, and Motion for Leave to File Supplement, April 15, 1985, must be AND ARE HEREBY DENIED. SO ORDERED. FEDERAL COMMUNICATIONS COMMISSION /s/James F. Tierney Deputy Chief Administrative Law Judge 39a FCC 85M-1994 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In re Applications of PEPPER SCHULTZ MM DOCKET NO. 83-1206 Sparks, Nevada File No. BPH-820519AK COMSTOCK BROADCASTERS,INC. MM DOCKET NO. 83-1207 Sparks, Nevada File No. BPH-820628AQ For Construction Permit for a New FM Station MEMORANDUM OPINION AND ORDER Issued: May 6, 1985 ; Released: May 7, 1985 1. At hand is a Motion to Enlarge Issues, filed April 5, 1985, by Comstock Broadcasters, Inc. (Comstock) seeking additional issues against its opponent Pepper Schultz (Schultz). Schultz filed an Opposition on April 18, 1985 and Comstock filed its Reply on April 30, 1985. 2. Comstock’s Motion urges that four additional issues are warranted against Schultz: (1) a false certification issue; (2) a misrepresentation or lack of candor issue regarding Schultz’s financial qualifications growing out of Schultz’s February 18, 1985 amendment to his application; (3) a real party in interest issue to determine whether three other persons are undisclosed parties to the Schultz application; and (4) a lack of candor issue regarding Schultz’s "various" staffing proposals. 3. False Certification Issue. Briefly, Schultz in his Opposition while conceding that he did not "personally own" all of the resources needed to construct his proposed station in 1982, adds that Comstock’s contention "simply does not hold water" in that all that is demonstrated is that Schultz, while exploring various financial options after the release of the Initial Decision, “was fortunate enough to have several options 40a and that he was prudent enough to explore them." That "[aJll that is required is that an applicant have a viable plan of financing at the time of filing and continuously thereafter. Flexibility is permitted and that the plan need not remain static . . .". In sum, Schultz states under earlier lease proposals contingent upon credit approval and not then represented by counsel whatever "the fine points of Commission policy. Schultz "believed that the assurances he had received were sufficient to establish his financial qualifications"; that he had been financially qualified in 1982 and, as at this time, his belief "regardless of his actual financial qualifications," was and is sufficient to support his certification and that no basis exists to suggest he intended to mislead the Commission. 4. Misrepresentation Issue. Schultz submits, his representation on February 22, 1985, concerning his financial situation "was entirely accurate." He had funds on deposit in excess of $101,000, and the fact that the account was "co-owned" by his brother, his sister-in-law and a family friend did not preclude Schultz from withdrawal of that sum by him at any time. Indeed, adds Schultz, the fact that the funds are now, since April 1, 1985, in an account owned solely by him answers any contention that the gift from his brother was without substance and a sham. Whatever the speculation of Comstock, Schultz argues, he has "sole access" to the funds, a fact gained by "merely telling his brother that he desired it." 5. Real Party in Interest Issue. Next Schultz states, he “has exclusive control of the funds in an account in his name only. That, whatever Comstock’s speculation, there is no evidence that Schultz’s brother, or any one else wishes to or can exert any degree of control whatever "over his operation of the proposed station." "Comstock may, of course, entertain such suspicions as it wishes," notes Schultz, but the evidence does not support the notion that "he iied during his deposition." Speculation on the part of Comstock, Schultz argues, does not sustain the premise that someone else “is the real party in interest." 6. Lack of Candor as to Staffing. First, says Schultz, a recital of the facts which led the Review Board to specify a staffing issue, do not disclose that the Board, which might have saw fit to specify lack of candor issue. At least, Schultz would have it, when the staffing issue was added, he "re-thought his staffing plans" and that the better plan “would be simply to hire employees"; and that nothing "sinister" was 4la conceived by him in his change of plans; hence, it was not meant to mislead any one. 7. Comstock’s Reply in essence, claims that ignorance of "fine points" of Commission policy cannot be credited; that this is Schultz’s third application for a Sparks, Nevada FM facility and second comparative hearing for the same facility, in which a financial qualification issue was designated against him; that Schultz’s failure to disclose the “co- ownership" of his proposed funds at the time of his February 22, 1985 amendment, does permit the premise of non-disclosure of material facts- -amounting to misrepresentation--lack of candor; that Schultz is required to meet, not his own subjective standard of financial qualifications, but the Commission’s objective standard. 8. On the Real Party in Interest Issue, Comstock further submits in is Reply that under a recent Initial Decision in Virginia Beach Television, Ltd., FCC 84D-87, released December 28, 1984, it was found that despite absence of evidence of actual control of a parent over his child’s application and the parties’ protestation of no future control or influence, the father was found to be the real party in interest based upon the complete financing by the father of his daughter’s venture, albeit there, as footnoted by Comstock, a loan rather than, as here a gift, was involved. 9. Finally, Comstock’s Reply concerning the Lack of Candor in Staffing Issue, notes that Schultz does not basically dispute the fact that he has changed his staffing proposals. Actually, says Comstock, Schultz's Opposition when compared with his hearing testimony “corroborates rather than contradicts" Comstock’s conclusions that Schultz’s proposal of "volunteer" help was a mere fabrication. These inconsistencies alone warrant inquiry into the veracity of his earlier and current proposal on staffing as well, Comstocks urges. Schultz is one who “will tell the Commission anything . . .," whose behavior makes his application a "moving target," concludes Comstock. 10. Though the seeming and various shifting of his positions respecting control of his financial resources and the nature of his staffing proposals appear to make Schultz, what Comstock characterizes as a "moving target," what, at most, remains is an applicant re-grouping to bolster imperfectly articulated positions and proposals; proposals, in part at least, naively thought out and constructed, e.g., Schultz’s earlier 42a notion of wearing “all hats" in his proposed facility for all times and hours until expected revenues would permit other plans. Credulity, a tendency to believe too readily may be subject to an uncommonly rough road here; yet, Schultz’s shifting tactics would not be tantamount to incredulous. Certainly, they would not rise to the level of intentional deceit, a cardinal premise to the conditions of misrepresentation and/or lack of candor. "“Misrepresentation, both legally and conventionally connotes a false statement of an objective fact intentionally made to deceive," Fox River Broadcasting, Inc., FCC 82R-3, released February 1, 1982 at para. 6. 11. Lack of Candor, on the other hand, is a separate historical wrong or offense, at least in these proceedings, albeit rooted in common theme with misrepresentation, conduct "this side of misrepresentation can be found not forthcoming. Lack of candor, unlike misrepresentation, does not arise directly out of the more universal requirement, that intentionally false statements not be made in connection with an application or adjudicatory proceeding before any federal agency. It arises rather, out of the special status of licensees as trustees of a scared public resources . . . Thus, in proceedings before the Commission involving a licensee or ’would be licensee’ misleading conduct which Goes not necessarily amount to a misrepresentation actionable in other departments may nonetheless warrant a penalty for breach of the standard of complete candor expected by the Commission . . ."_ Ibid at para. 7. Various examples of the characteristics of lack of candor are also set out there, noting that the core of lack of candor is "omission." 12. In the full light of scrutiny by the guiding precedent of Fox river, supra, neither would Comstock’s urgings reach the level of lack of candor on the part of Schultz, whatever misgivings one might have on the embellishments or "re-grouping” pursued by him here. In a word, even though Comstock premises certain of its arguinents on sworn testimony in Discovery and at trial, the necessary premise of evidence of high persuasion underlying Rule 1.229 does not appear; hence, on all ground urged, comstock’s Motion to Enlarge must be AND IS HEREBY DENIED. SO ORDERED. FEDERAL COMMUNICATIONS COMMISSION /s' James F. Tierney Deputy Chief Administrative Law Judge ee 43a FCC 85D-43 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In re Applications of PEPPER SCHULTZ MM DOCKET NO. 83-1206 Sparks, Nevada File No. BPH-820519AK COMSTOCK BROADCASTERS,INC. MM DOCKET NO. 83-1207 Sparks, Nevada File No. BPH-820628AQ For Construction Permit for a New FM Station Appearances Herbert D. Miller, Jr., Esq. (Koteen and Naftalin) on behalf of Pepper Schultz; David M. Hunsaker (Putbrese and Hunsaker) on behalf of Comstock Broadcasters, Inc.; and Norman Goldstein, Esq. on behalf of the Chief, Mass Media Bureau, Federal Communications Commission. SUPPLEMENTAL INITIAL DECISION OF DEPUTY CHIEF ADMINISTRATIVE LAW_JUDGE JAMES F. TIERNEY Issued: June 21, 1985 : Released: June 26, 1985 Preliminary Statement 1. By Memorandum Opinion and Order, FCC 85R-S, released January 28, 1985, the Review Board remanded this proceeding and added the following issues: a. To determine whether the staff proposed by Pepper Schultz is adequate to effectuate his proposal; and b. To determine whether Pepper Schultz has sufficient funds to cover his costs of construction and initial three months ell operation. 2. A further prehearing conference was held on February 25, 1985 principally setting dates for the hearing of the added issues. On May 19, 1985, Pepper Schultz (Schultz) filed a Motion for Summary Decision which was later denied by Order, FCC 85M-1599, released April 12, 1985. The hearing was held on April 9, 1985 and the record was closed on that date. Proposed Findings of Fact and Conclusions of Law were filed, as directed, by the parties applicant on June 3, 1985; Reply findings were filed on June 14, 1985. 3. Where factual proposals of the parties faithfully reflect the evidence of record, they not only serve the efficient expedition of the administration of justice, they are welcome augurs to the customary burdens of the trier-of-fact, hence, effectively serve the principal objects of the governing rule--rule 1.263 (47 CFR 1.263). Here, the parties have, in the main, honored those notions and liberal use and adoption of the proposals most fine-tuned have been made and adopted, save at times, for preference of language, largely editorial in nature. Proposed conclusions are usually another matter where the poetic license of advocacy permits greater let in the strivings for truth. 4. For the reasons set forth hereinafter, this, as a Supplemental Initial Decision SHALL GRANT the application of Pepper Schultz; that being so, the application Comstock Broadcasters, Inc. MUST BE DENIED. Findings of Fact I. Staffing Issue. 5. Schultz, at the time of filing his original application, and until December 12, 1984, intended to operate his proposed station completely by himself, at least initially, by the use of studio automation equipment and an ATS (automatic transmission system). (Tr. 220, 221-222). He did not intend then to use any personnel, hired employees or volunteer help. (Id., p. 220) When Schultz was thinking of using automated equipment, he was relying on information gained through correspondence courses on computers to decide what kind of equipment to buy to run the station as far as billing, selecting proper tape machines, commercials and transmitter parameters. He was not going to write his own programs or build his own equipment. (Tr. 239). 45a 6. Schultz’s intention to automate and use no personnel changed after oral argument before the Review Board in December, perhaps due to remarks that remand on a staffing issue was a possibility. (Tr. 221). Prior to the issuance of the remand Order Schultz sought to amend his application to preempt such remand possibility: So I amend [made] an amendment at that time, or a brief,to try to get out from having the remand process. So I took an avenue, and I went to some of my friends to get them, I asked them if they would help me out, and they said they would, on staffing of the station. So I was just trying to correct a possible deficiency, which I didn’t know if it would come true or not at the time. (Tr. 221-222). 7. Schultz then proffered an amendment to the Review Board (filed on December 26, 1984) indicating that (a) he might not operate 24 hours per day initially as he had previously testified, and (b) he now intended to rely on the volunteer help of six acquaintances.’ (id). This amendment was rejected by the Review Board in its Remand Order for failure to make a sufficient good cause showing. FCC 85R-S, p. 4, n. 6; (Tr. 223-224). Thereafter, on February 22, 1985, Schultz petitioned to amend his application, proposing to hire four full-time and six part- time employees. It is on this latest amendment, that Schultz relies to meet the staffing issue added by the Board. (Tr. 223-224). 8. while he has now abandoned the idea of using automation equipment and an ATS system, he may decide to use such a system after the station is operational. (Tr. 225). While he had no timetable for changeover, he indicated that such a move would likely be made after the station is making a profit. (Tr. 226). Alternatively, he stated that he might invest in new equipment for the station. (Tr. 226). 9. According to Schultz’s Exhibit No. 2, the proposed staff will have the following duties: The three full time announcers will take care of the announcing and will also perform required equipment monitoring functions Mondays through Fridays in eight hour shifts. One announcer ' Schultz's Amendment of December 26, 1984; Official Notice Taken will perform the same duties on weekends, in three eight hour shifts on Saturdays and in three eight hour shifts on Sundays. I will fill in as necessary. In addition to such announcing duties as it may be necessary for me to perform, and in addition to my responsibilities as owner and General Manager, I am qualified to and will perform the duties of Chief Engineer. I will also devote approximately twenty hours per week to selling time on the station. Ali employees will, of course, perform their duties under my supervision and subject to my direction. (Schultz Ex. 2, p. 5) 10. Schultz does not propose to hire any additional personnel for the first three months other than those listed above. (Tr. 195). Schultz’s staff will be required to work in a studio space of 200 square feet, which will accommodate a studio control room, Schultz’s office, the bookkeeper/traffic person’s office and a production room. (Tr. 188). Schultz does not intend to provide air conditioning in an area where the temperature sometimes climbs to as high as 101 0- 1020. (Tr. 190). He does not intend to hire any sales staff or news personnel. Id. Schultz proposed to do all of the sales for the station himself. (Tr. 195- 196). He expects that he will devote approximately 20 hours per week to selling. (Tr. 196). 11. Schultz would not produce his own commercials. (Tr. 204). He proposes to sell an advertising contract to an advertiser, and then direct the advertiser to one or more local advertising agencies which have facilities to make commercials. The agency would write the copy and produce the commercial, charging the advertiser a fee for the service. (Tr. 204-205). Schultz did not know, and has not asked any agencies what they would charge the advertiser for the writing and production service. (Tr. 206). He has inquired of several agencies whether they have production facilities available (Tr. 205), and has asked agency personnel to "get their tape recorders ready." (Tr. 206). Schultz would ask that the commercials be produced on a tape cassette, if the agency can do it (Tr. 208), as he does not have on hand, and does not plan to purchase initially any cartridge or “cart” record/playback. 12. Schultz described his typical day of getting up at 6:15 a.m., going to work at 7:20 - 7:30 a.m. until 4:30 p.m. He usually goes downtown for dinner and is back home by 6:30 - 7:00 p.m. He takes correspondence course or works at reading FCC materials and planning 47a for the present proceeding. He normally retires at 10:00 p.m. (Tr. 231-234). 13. On occasion, Schultz’s duties as a communications installer and repairer for the Bureau of Land Management requires him to work long hours. This occurs when there is a range fire in the area, and two-way communications equipment is necessary to be installed and maintained for the firefighting command center. (Tr. 235). Il. The Financial Issue. 14. Schultz has $101,000 on deposit in a money market account with First Federal Savings, in Sparks, Nevada. * the funds are not in a time deposit, no penalty will be payable for early withdrawal. (Tr. 216). The funds are in his name alone, and while he has the unrestricted ability to withdraw those funds at any time, he has “earmarked” them for the specific purpose of construction and initial operation of his proposed radio station (Tr. 237). He also has $3,500 on deposit in a savings account, and will receive a lump sum payment of $7,500 for his accrued retirement contributions when he resigns from the Department of the Interior Bureau of Land Management (Schultz Ex. No. 2, p. 6). 15. Schultz has no debts other than $20,720.40 owed to communications counsel, which he is paying off at the rate of $600.00 per quarter. (Schultz Ex. No. 2, p. 3; Tr. 200) 16. the funds on deposit with First Federal Savings were a gift from Schultz’s brother Marc Simoncini (Tr, 210). There is no expectation, ? The funds were initially in an account held in the name of Mr. Schultz, his brother, his sister-in-law, and a family friend. On April 1, 1985, the funds were withdrawn from that account and placed in an account in Mr. Schultz's name alone. (Tr. 210-215). * If Federal Gift Tax is payable on the funds given to him by his brother, he rather than his brother, will pay the tax (Tr. 212-213). However, it seems apparent that no such tax will be payable, because Section 2505 of the Internal Revenue Code provides for a credit of $121,000. (A copy of the pertinent provision of the Code was provided by Schultz, Official Notice Taken.) The gift to Schultz of $101,000 was less than the amount of the available credit. Accordingly, only an information return will have to be filed. This rationale is disputed in Comstock's Reply Findings, infra, it appears. 48a by Schultz or by Simoncini, that the gift will be “repaid,” because it is not a loan (Tr. 215). Schultz does, however, feel that he is under a moral obligation to repay his brother’s kindness at some time in the future (Tr. 215). Despite this feeling of moral obligation on Schultz’s part, Schultz stated that there will be no “repayment” of the gift until after the station becomes profitable and that he has no intention of taking any steps which would impair the ability of his radio station to operate. (Tr. 215). 17. Schultz proposes to construct his radio station as follows: (a) He will purchase a used transmitter and associated equipment from KTDY(FM), in Lafayette, Louisiana for $10,000, in cash. (Tr. 238). The equipment is presently in use by KTDY(FM) but will no longer be needed when the station improves its facilities in June of 1985 (Schultz Ex. No. 2, p. 1). Schultz has discussed the purchase of the equipment with KTDY(FM)’s chief engineer, Pat Shirley, who agreed to advise him should anyone else make an offer on the equipment. Schultz has a “right of first refusal" on the equipment. (Tr. 182). Schultz estimates that the cost of transporting the equipment from Lafayette, Louisiana to Sparks, Nevada will not exceed $2,500 * and states that should the equipment no longer be available when he obtains a construction permit other comparable equipment is readily available at comparable prices (Schultz Ex. No. 2, p. 1). (b) Schultz will obtain additional equipment, including an antenna transmission line, and STL system, from Broadcast Services Company, in Sparks, for $17,961.05 plus shipping charges of $200. Auxiliary power equipment will be acquired from Nevada Generator Systems, in Sparks, for $4,957 plus freight ($317.76) and taxes ($298.50) (Schultz Ex. No. 2, pp. 1-2). (c) Schultz already owns the following studio equipment, which he testified will be all that he requires to operate the station initially: * This figure was obtained by doubling and then adding $500 to a previously received quote on shipping more equipment from Greely, Colorado to Sparks. Mr. Schultz testified that Lafayette is approximately 710 miles from Sparks, while Lafayette is approximately 1500 miles from Sparks (Official Notice Requested). 49a | Item Microphones (broadcast quality) Microphones (voice grade) Turntables Tonearms Reel-to-reel tape recorders Cassette record and playback Cassette playback only Blank tape Broadcast mixer board Monitor que amp Line amplifiers Speakers Mixers Over air monitors boxes NN BN KK NWNN S SN LY All of the above listed equipment is broadcast quality, with the exception of the two voice quality microphones and one of the two cassette recorders, which is adequate for playback purposes but does not record adequately for broadcast use (Schultz Ex. No. 2, p. 3). Schultz also owns studio and office equipment, including four tables, four chairs, a book shelf, and a four drawer filing cabinet. He has a library of in excess of five hundred phonograph records (Schultz Ex. No. 2, p. 3). (d) The equipment is to be acquired by Schultz will be installed under his supervision and with his assistance by Broadcast Services Company, at a total cost of $1,130 (Schultz Ex. No. 2, p. 2). (e) Electrical and telephone installation will cost a total of $1,744.00 (Schultz Ex. No. 2, p. 2). Schultz’s total construction costs will, therefore, be $39,126.26 (Schultz Ex. No. 2, p. 3). ° Schultz costs to operate the facility for the initial three-month period will be as follows: * There may be additional costs of no more than $2,500.00 for spare parts for the transmitter and associated equipment (Tr. 184). 50a Studio and office rental (S months) $3,000.00 ° Telephone service 266.40 Electric power 2,381.60 ’ Office supplies 1,100.00 * Employee costs 18,720.00 Automobile expenses 258.00 ” Total 25,726.00 18. Schultz needs $910.00 per month for personal living expense (Schultz Ex. No. 2, p. 6), and is obligated to pay his attorneys $600 every three months in respect of prior legal fees (Schultz Ex. No. 2, p. 3). He has no other financial obligations. (Schultz Ex. No. 2, p. 3). 19. Schultz’s total costs of construction and initial operation of $64,852.26, plus $2,500 worth of spare transmitter parts, five months living expenses ($4,550) and payments to his attorney of $200 per month over a period of one year ($2,400), will amount to $74,302.26 which is $37,697.74 less than the $112,000 cash available to him from the account at First Federal Savings, his $3,500 savings account and the * This is based on a charge of $1.00 per square foot per months for three hundred square feet of transmitter space and three hundred square feet of studio-office space. The $1.00 per square foot figure was obtained from the proposed lessor of Schultz's transmitter space, in a “high rent district" of Reno. Schultz testified that rental charges in Sparks, where his studio-o ‘fice will be located are significantly lower, on t [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385009_2765%3A1. Public record. Not legal advice.