Petition for Writ of Certiorari — Matias v. Federal Communications Commission

Suprem: Court, U.S.

' i ED

941236 JAN 17 1995

No. OFFICE OF THE CLERK

In The

SUPREME COURT OF THE UNITED STATES

October Term, 1994

CARMEN MATIAS AND ANDREW N. WIMBISH, JOINTLY,

Petitioner,

Vv.

FEDERAL COMMUNICATIONS COMMISSION,

MONTGOMERY COUNTY MEDIA NETWORK, INC.

d/b/a IMAGISTS

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the District of Columbia Circuit

PETITION FOR A WRIT OF CERTIORARI

GENE A. BECHTEL *

ANN C. FARHAT

Bechtel & Cole, Chartered

1901 L Street, N.W. - Suite 250

Washington, D.C. 20036

(202) 833-4190

Counsel for Petitioner

Carmen Matias and Andrew N. Wimbish,

Jointly

January 17, 1995

” Counsel of Record

QUESTION PRESENTED

Whether the party aggrieved by the adoption of a

change in policy by an administrative agency in the course of an

adjudication must seek the views of that agency on the question

of "retroactive" application of that policy change before

petitioning the Court of Appeals to review the "retroactivity"

question?

ra es aa a ee ee ee ee rl UCU Clee :|lhlUC lee _— = . a

TABLE OF CONTENTS

QUESTION PRESENTED ........---- ee eee eerrees i

a iii

EE ee eee 1

JURISDICTIONAL STATEMENT ......----- +e eee ees |

CONSTITUTION, STATUTES AND REGULATIONS ......-..-.- 2

STATEMENT OF THE CASE ........-- 02 eeeeeeccee 2

REASONS FOR GRANTING THE WRIT.....-.------+>> 7

The importance of the law of "retroactivity" in relation

to federal administrative jurisprudence. ........- 7

Previous decisions of this Court do not resolve

the issue presented here. .......--++++++05: 9

Previous decisions in the District of Columbia

circuit are at odds with the judgment entered

em ie NRL 6 gee 64 ea Seo ee 11

Decisions in other circuits also are at odds with

the judgment below. .....---+++s+ee0008 13

None of the circuit court decisions expressly

resolves the issue presented here. ......-.---- 15

The time is ripe for the Court to resolve the

"retroactivity" issue presented in this case. ..... 16

ii

TABLE OF AUTHORITIES

Judicial Decisions

Bechtel v. FCC, 10 F.3d 875 (D.C.Cir. 1993) .......... 5

Bowen v. Georgetown University Hosp..,

re 8

C. H. Guenther & Son, Inc. v. NLRB,

ee ee eee 14

Calder v. Bull, 3 Dall. (3 U.S.) 386 (1798) ............ 8

Chenery Corp. v. SEC, 128 F.2d 303

I ek a re 0s id wn Ws 0 06 4 ols 9

Chenery Corp. v. SEC, 154 F.2d 6

PE eee Ce ee eee eee ee 10

Clark-Cowlitz Joint Operating Agency v. FERC,

G26 FOG WOPe GCA. TOG bcc nies. 11, 12

Crosthwait v. FCC, 584 F.2d 550 (D.C.Cir. 1978) ....... 3

FCC v. WOKO, Inc., 329 U.S. 223 (1946) ........... 11

James B. Beam Distilling Co. v. Georgia,

OE oe ig i ee tec ees 8

Laidlaw Corporation v. NLRB, 414 F.2d 99

(7th Cir. 1969) (rehearing denied September 2,

1969), cert. den., 397 U.S. 920 (1970) ............ 14

Lamprecht v. FCC, 958 F.2d 382 (D.C.Cir. 1992) ....... 5

Local 900, Intern. U. of Elec., Etc. v. NLRB,

erie Gof ft Re) Gee 12, 13

NLRB v. Bell Aerospace Co., 416 U.S. 267 (1974) ...... 10

NLRB v. E & B Brewing Company, 276 F.2d 594

a ee a a eo re ee ee ee 14

NLRB v. Guy F. Atkinson Co., 195 F.2d 141

(9th Cir. 1952) (rehearing denied March 21,

1952), cert. den., 366 U.S. 908 (1961) ............ 15

NLRB v. Hartmann Luggage Company, 453 F.2d 178

SR NNR oir US ee 14

NLRB v. International Brotherhood, 225 F.2d 343

I Gs se o's cate SS ie = ee Sk as OK ew 13

ili

TABLE OF AUTHORITIES (continued)

Judicial Decisions (continued)

NLRB v. Majestic Weaving Co., 355 F.2d 854 (1966) .... 14

NLRB v. National Container Corp., 211 F.2d 525 (1954) .. 13

Petroleum Communications, Inc. v. FCC,

Be I oe oo cheb esarecceciia des 6,7

Retail, Wholesale & Department Store Union v.

NLRB, 466 F.2d 380 (D.C.Cir. 1972) ........ 11, 12, 14

SEC v. Chenery Corp., 318 U.S. 80 (1943) ............ 9

SEC v. Chenery Corp, 332 U.S. 194 (1947) ........ 9, 10

Thorpe v. Housing Authority of Durham,

he i cc cn, ES Se ee 10

TV 9, Inc. v. FCC, 495 F.2d 929 (D.C.Cir. 1974),

cert. denied, 419 U.S. 966 (1974)... ...........2... 4

Yakima Valley Cablevision v. FCC, 794 F.2d 737

ee A tol ore ee 12

Administrative Decisions

Anax Broadcasting, Inc., 87 FCC2d 483 (1981) ....... 3, 5

Azalea Corp., 31 FCC2d $61 (1971) ................ 3

Beacon Broadcasting System, Inc.,

ef). 3

C. H. Guenther & Son, Inc., 174 NLRB 1202 (1969) .... 14

Channel 32 Broadcasting Company,

eek 5

E & B Brewing Company, Inc., 122 NLRB 354 (1958)... . 14

Fisher Broadcasting Company, 30 FCC 177 (1961) ....... 3

Gainesville Media, Inc., 72 FCC2d 799

ee sr a oa ob MESS 5

Guy F. Atkinson Co. and J. A. Jones

Comemrecman Cb., SO MIRD 143... ce 15

Hartmann Luggage Company, 183 NLRB 1246

es 6 8 ae Pe ee ee 6 we eee Sew R 14

4

TABLE OF AUTHORITIES (continued)

Administrative Decisions (continued)

Majestic Weaving Co., Inc. of New York,

147 NLRB 859, 149 NLRB 1523 (1964)............ 14

Mid-Florida Television Corp. , 33 FCC2d |

ON eee fi eee eee ee 4

National Container Corporation, 103 NLRB 1544

CR a are Oe bk Pe bby o O06 6 uc tees 00's 13

Pacific Intermountain Express Company,

ff EE Cee UP eee 13

Policy Statement on Comparative Broadcast

po A ee 4

The Laidlaw Corporation, 171 NLRB 1366 (1968) ...... 14

Constitutions, Statutes and Regulations

re I a rua wou 626k 0 009 20 04 Sle l

ae EE so 5-0 60 6 80 0 00 oad ve 2, 12, 13

Sr Dy b's Sao Ch eel be een ae ;

Oe ES Co oo 6 0 0050s 60 ees er eae 2

Spa ss kW alale ea od eS Ns eS 2.

Fe «ORS OF Oe re ere eee 2,8

Cae Ges Oe Oe, I © 8k a aa 6S ER eee wel 2,8

Miscellaneous

Corpus Juris Civilis, Code 11.14.7 .......ccccceeees 8

Greenblatt, Judicial Limitations on Retroactive Civil

Legislation, 51 N.W. L. Rev. 540 (1956) ............. 8

Smead, The Rule Against Retroactive Legislation: A Basic

Principle of Jurisprudence, 20 Minn. L. Rev. 775 (1936) ... 8

In The

SUPREME COURT OF THE UNITED STATES

October Term, 1994

CARMEN MATIAS AND ANDREW N. WIMBISH, JOINTLY,

Petitioner,

Vv.

FEDERAL COMMUNICATIONS COMMISSION,

MONTGOMERY COUNTY MEDIA NETWORK,

INC., D/B/A IMAGISTS,

Respondents. '

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

OPINIONS BELOW

The decision under review is the judgment of the United

States Court of Appeals for the District of Columbia Circuit in

Carmen Matias, et al. v. Federal Communications Commission,

No. 93-1328 (App. 1a) declining to review the decision of that

government agency in Montgomery County Media Network, Inc.

d/b/a Imagists, 8 FCC Red. 2763 (App. 3a).

JURISDICTIONAL STATEMENT

The judgment was entered on October 17, 1994 (App. 1a).

Rehearing was not sought. This Court has jurisdiction pursuant to

28 U.S.C. §1254(1).

' The caption reflects all parties to the proceedings in the court below. The

petitioner is a joint venture of two individuals.

CONSTITUTION, STATUTES AND REGULATIONS

The constitutional provisions, statutes and regulations

involved in this case are: U.S. Const., art. I, §9, cl. 3; U.S.

Const., art. I, §10, cl. 1; 29 U.S.C. §160(e); 47 U.S.C. §§309(a),

402(b), 405. Relevant portions of the texts are set forth verbatim

in the Appendix at pages 72a-73a.

STATEMENT OF THE CASE

The petitioner, Carmen Matias and Andrew N. Wimbish,

Jointly, seeks a writ of certiorari to review the decision of the

United States Court of Appeals for the District of Columbia

Circuit (App. la) declining to review a decision of the Federal

Communications Commission ("FCC" or "the agency") denying

an application of the petitioner for construction permit for a new

television station in Conroe (Houston), Texas (App. 3a). Although

the petitioner had been the favored choice for grant of the

construction permit by the agency’s administrative law judge

(App. 59a) and review board (App. 30a), under a changed policy

announced and applied in the agency decision below, the FCC

disqualified the petitioner from consideration for failure to

establish good cause for an amendment of its transmitter site

proposal (App. 3a).

The former policy in dealing with good cause for

acceptance of amendments of transmitter site proposals, financial

amendments and other amendments that avoid disqualification

(while not improving the comparative posture of the party) was to

liberally allow such amendments so as to provide the FCC with a

wider group of competing applications to choose from, enhancing

the prospect of selecting the application that would most likely

result in programming service in the public interest (App. 67a).

The changed policy, to apply a strict standard for good cause

showings in support of curative amendments, was adopted on the

premise that this would shorten comparative proceedings and result

in the inauguration of new program service at an earlier date

(App. 67a). Both the former policy and the changed policy were

bottomed on the FCC’s statutory obligation to grant construction

permits for broadcast stations based upon a determination that such

a grant would serve “the public interest, convenience and

necessity." 47 U.S.C. §309(a) (App. 73a).

The former policy of leniency in dealing with curative

amendments in order to widen the choice of applicants was in

existence for approximately 30 years dating back to the 1950’s.

E.g., Beacon Broadcasting System, Inc., 19 Rad.Reg. (P&F) 927

(1959); Fisher Broadcasting Company, 30 FCC 177 (1961);

Azalea Corp., 31 FCC2d 561, 563 (1971); Crosthwait v. FCC,

584 F.2d 550, 555 (D.C.Cir. 1978); Anax Broadcasting, Inc. , 87

FCC2d 483, 489 (1981). The first notice that the petitioner had

that the leniency policy would be changed to a strict policy was in

1991 when the FCC announced such a policy change regarding

financial amendments (App. 61a). The FCC’s decision below in

1993 announced the change in policy as it relates to technical

amendments (App. 3a). Thus, the petitioner’s technical curative

amendment was filed (1986) five years before the FCC announced

its policy change regarding curative financial amendments (1991)

and seven years before the FCC announced its policy change

regarding curative technical amendments (1993).

The 16-month period between the filing of the petitioner’s

application and the filing of the curative technical amendment,

referred to in the court’s judgment (App. la), was largely

consumed by 11 months when the application remained pending

before the agency awaiting processing. * The amendment did not

2 The application was filed in November 1984 (App. 32a, caption). It was

processed and designated for hearing in November 1985 (App. 33a). The

amendment was filed in April 1986 and the hearing record was closed in May

1986 (App. 41a, 34a).

delay the proceeding a single day. * Accordingly, acceptance of

the amendment, by both the administrative law judge (App. 49a-

51a) and the review board (App. 25a-27a), did not frustrate the

statutory purpose of avoiding delays and hastening the provision

of new broadcast service. On the other hand, rejection of the

amendment did frustrate the statutory objective of having a choice

available for the selection of the most likely applicant to provide

program service in the public interest, i.e., reducing the field from

two applicants to one applicant, eliminating the petitioner who was

the first choice of the administrative law judge (App. 59a) and the

review board (App. 30a), leaving only the respondent here, who

was the last choice of the administrative law judge (App. 59a) and

the review board (App. 30a), for an uncontested grant of the

construction permit.

Commencing with the 1991 pclicy change regarding

curative financial amendments, and then with the 1993 policy

change regarding curative technical amendments, it was clear that

the FCC was strongly wedded to its new policy to be tough on

curative amendments and weed out applicants rather than

encouraging them to stay in comparative hearings (App. 61a, 3a).

Moreover, in dealing with its policies relative to broadcast

hearing proceedings, for decades the FCC has almost always (1)

adopted or changed policies in adjudications or other non-

rulemaking context and (2) has applied new or changed policies

retroactively. E.g., Policy Statement on Comparative Broadcast

Hearings, 1 FCC2d 393 (1965), comprehensive statement of

policies to govern hearings adopted without notice or comment and

applied retroactively; Mid-Florida Television Curp., 33 FCC2d 1,

18 (Rev. Bd. 1972) and TV 9, Inc. v. FCC, 495 F.2d 929

3 The seven year period from 1986, when the amendment was filed and

comparative hearings were held before the administration law judge, and

1993, when the FCC decided the case, reflected delays for a variety of

reasons that were unrelated to either the petitioner or the filing of its

transmitter site amendment (App. 4a).

4

(D.C.Cir. 1974), cert. denied, 419 U.S. 986 (1974), new policy

to grant a comparative preference to minorities adopted in agency

and court adjudications and applied retroactively; Gainesville

Media, Inc., 72 FCC2d 799, 805 (Rev. Bd. 1978), new policy to

grant a comparative preference to women adopted in agency

adjudication and applied retroactively; * Anax Broadcasting, Inc..,

87 FCC2d 483 (1981), changed policy to allow for two-tiered

ownership structures regarding comparative credit for management

by voting ownership parties, vastly impacting applications and

hearing cases, adopted in agency adjudication and applied

retroactively; ° Channel 32 Broadcasting Company, 6 FCC Rcd.

5188 (1991), changed policy to include educational television

services in determining whether commercial television applicants

will provide service to underserved areas, adopted in agency

adjudication and applied retroactively; the 1991 policy change

from leniency to strictness in accepting curative financial

amendments (App. 61a), was adopted in an agency adjudication

and has been applied retroactively.

Further, the agency is not known for punctuality in dealing

with petitions for reconsideration. In the court below, the

petitioner cited an example of a petition for reconsideration in a

broadcast licensing matter, for which the statute requires agency

action within 90 days, that was then pending for 20 months

notwithstanding inquiries from the petitioning party. (App. 70a).

As of this writing, the petition for reconsideration remains

pending, the delay is now 31 months and still counting.

Under all the foregoing circumstances, and given its

understanding of the law regarding court review of "retroactivity"

4 Until held unconstitutional 14 years later in Lamprecht v. FCC, 958 F.2d

382 (D.C.Cir. 1992).

> The FCC’s comparative credit for management by the voting ownership

parties was held to be arbitrary and capricious in Bechtel v. FCC, 10 F.3d

875 (D.C.Cir. 1993).

cases in agency adjudications, the petitioner elected to proceeding

directly to the court of appeals, rather than seek reconsideration of

the retroactive application of changed policy which had occurred

here.

The exclusive jurisdiction of the Court of Appeals for the

District of Columbia Circuit in this licensing case is derived from

47 U.S.C. §402(b). The sole basis for the appeal by the petitioner

was the error in announcing and applying the changed policy to it

without notice some five to seven years after the operative events

when the petitioner amended its application. Brief of Appellant

Carmen Matias and Andrew N. Wimbish, Jointly, filed June 17,

1994. The respondents argued that the appeal should be denied

for failure to raise this "retroactivity" issue below and also

advanced certain arguments relative to the merits of the

"retroactivity" issue itself. Briefs of FCC filed July 18, 1994

(appellee below) and Intervenor Montgomery County Media

Network, Inc. d/b/a Imagists filed August 2, 1994 (intervenor

below).

The court of appeals did not reach the merits of the

"retroactivity" arguments, denying the appeal for failure to raise

the "retroactivity" issue below (App. 1a). In support, the court of

appeals cited 47 U.S.C. §405 and its recent decision in Petroleum

Communications, Inc. v. FCC, 22 F.3d 1164, 1171 (1994).

47 U.S.C. §405 provides that a petition for reconsideration

is a condition precedent to judicial review where a party relies on

questions of fact or law on which the FCC "has been afforded no

opportunity to pass." (App. 73a). However, this provision, which

dates back to the beginnings of the agency itself some 60 years

ago, has long been held to codify court case law regarding

exhaustion of administrative remedies. Notwithstanding the

apparent unyielding language of the statute, that case law provide

for various situations in which a matter need not be raised with the

FCC before taking an appeal including situations where the agency

in reality had the opportunity to consider the matter or where its

predisposition to rule a given way was clear. That interpretation

of this statute is referred to in the Petroleum Communications

opinion relied on by the court of appeals, 22 F.3d at 1169-1170.

In Petroleum Communications, the court of appeals heid

that an appeal should be dismissed for failure to raise objections

to procedural errors by the FCC regarding the required content

and times of filing certain applications relative to cellular

radiotelephone service in areas not receiving existing cellular

service. This was a straightforward case of FCC rules and

requirements and an appeal therefrom. The court did not have

before it a case of "retroactive" adoption and application of a

changed policy in an agency adjudication, nor did the court

address the long-standing and contrary precedent relative to court

review of “retroactivity” issues to which we now address our

attention.

REASONS FOR GRANTING THE WRIT

The ruling of the court of appeals is contrary to or

inconsistent with decisions of this Court, with other decisions of

the Court of Appeals for the District of Columbia, and with

decisions of courts of appeal in a number of other circuits. The

ruling undermines the principle that the courts, not administrative

agencies, have the primary role in adjudicating the law of

"retroactivity," which is fundamental to our system of

jurisprudence. This Court has not heretofore addressed the precise

question that is now presented.

1. The importance of the law of "retroactivity" in relation

to federal administrative jurisprudence.

The law of "retroactivity" is a fundamental component of

our system of jurisprudence. It is the structure by which fairness

to individual parties is balanced against the needs of the

community or the nation as a whole in legislation, in case-by-case

adjudication and in administrative law which employs both the

legislative and the adjudicatory processes.

Concern with regard to retroactive application of laws to

parties having no prior knowledge of the legal effect at the time of

the operative facts has been traced to the Roman Code, which

provided that statutes should be construed prospectively in the

absence of an express provision to the contrary. Corpus Juris

Civilis, Code 11.14.7. This rule of construction was carried over

into the English law by Bracton and by Coke. Greenblatt, Judicial

Limitations on Retroactive Civil Legislation, 51 N.W. L. Rev.

540 (1956); Smead, The Rule Against Retroactive Legislation: A

Basic Principle of Jurisprudence, 20 Minn. L. Rev. 775, 776-77

(1936). It was reflected in our constitution, which prohibits the

enactment of ex post facto legislation by the Congress, U.S.

Const., art. I, §9, cl. 3, and by the States, ibid, art. I, §10, cl. 1.

From the very outset, this Court has devoted a substantial portion

of its time and energies to the law of retroactivity, commencing

with such early cases as Calder v. Bull, 3 Dall. (3 U.S.) 386

(1798) (interpreting the scope of the term "ex post facto” as used

in these constitutional provisions). Recent decisions by this Court

include, for example, James B. Beam Distilling Co. v. Georgia,

115 L.Ed.2d 481 (1991) (retroactivity in Article II court

adjudications) and Bowen v. Georgetown University Hosp., 488

U.S. 204 (1988) (retroactivity in agency rulemaking pursuant to

Congressional legislation).

The past 50 years has witnessed an explosive development

of administrative law jurisprudence, with the creation of many new

agencies, the expanded role of the executive departments, the

continuing adoption of new or revised legislative programs, and

the continuing adoption of new or revised agency regulations and

policies. In the process, trial examiners, internal review boards

and the top levels of decision-makers at the agencies turn out vast

quantities of adjudications, many of which are reviewed in the

courts. During this period of time, the docket of cases accepted by

this Court has regularly included federal administrative law cases,

as the needs of our nation continue to call for its ultimate judicial

determinations to guide and shape the lawful development of that

burgeoning process. We believe that such a need is reflected in

this case, to decide a question not previously considered by the

Court, to resolve a conflict between the case at bar and decisions

in various of the circuits, and to thusly clarify the respective roles

of the courts and the agencies in deciding "retroactivity" questions

of law.

2. Previous decisions of this Court do not resolve the

issue presented here.

The landmark decision of this Court on the law of

retroactivity in administrative agency adjudications is SEC v.

Chenery Corp, 332 U.S. 194 (1947). There, corporate officials

submitted a reorganization plan to the SEC for approval and while

that was pending they purchased stock of the corporation that

would give them an advantage under the proposed reorganization

plan. At the time of the operative facts, this did not violate any

SEC policy. However, in considering the actions of the Chenery

corporate officials, the SEC adopted a policy that such insider

trading activity should not be permitted. The company appealed to

the court of appeals, which held that the policy was not lawfully

adopted. This decision was on the merits of the adoption of the

policy. There was no consideration of a retroactivity issue at that

time. Chenery Corp. v. SEC, 128 F.2d 303 (D.C.Cir. 1942),

Circuit Judge Miller dissenting. This Court agreed that the policy

had not been lawfully adopted, expressed views regarding matters

which the agency should have considered and returned the case to

the agency for further proceedings. SEC v. Chenery Corp., 318

U.S. 80 (1943), Justices Black, Reed and Murphy dissenting,

Justice Douglas not participating. Again, no consideration was

given to the retroactivity issue.

The SEC considered the additional matters identified by

this Court and again decided to adopt the policy. The circuit court

reversed and held the SEC had done so unlawfully. As before, this

review was of the merits of the policy, not any retroactivity issue.

9

Chenery Corp. v. SEC, 154 F.2d 6 (D.C.Cir. 1946). This Court

reversed the circuit and upheld the lawfulness of the policy. In

addition, this Court for the first time considered and ruled on the

retroactivity issue as well. SEC v. Chenery Corp., supra, Justices

Frankfurter and Jackson dissenting, Justice Burton concurring, the

Chief Justice and Justice Douglas not participating. The Court

gave no indication that the retroactivity issue had been raised

below, or that it needed to know the views of the SEC. Rather,

the Court proceeded to delve into such facts and considerations

that it felt pertinent to balancing the contrasting interests — of the

public in an immediate application of agency policy, and of the

parties to whom a new policy had been applied retroactively.

The Chenery decision suggests that the courts need give

little or no deference to the views of administrative agencies in

deciding retroactivity cases. However, Chenery does not address

the issue of whether a party should be denied access to a court

which otherwise has jurisdiction to litigate a retroactivity question

because it was not explicitly raised by the aggrieved party before

the agency, to whom the retroactive implications were obvious

from the very nature of its action.

Neither do other opinions of this Court dealing with

agency adjudications. In NLRB v. Bell Aerospace Co., 416 U.S.

267 (1974), upholding a policy change by adjudication against an

argument that a rulemaking proceeding should have been

employed, while the agency below had in fact considered the

argument of the aggrieved party upon petition for reconsideration

of its initial decision, 196 NLRB 827 (1972), this was not

discussed or relied upon in the Court’s opinion. In Thorpe v.

Housing Authority of Durham, 393 U.S. 268 (1969), while civil

court litigation was in progress over an eviction from public

housing, a revised policy was adopted and applied to the situation

by the Department of Housing and Urban Development. The

retroactivity issue was addressed by the Supreme Court of North

Carolina and then by this Court without reference to any

proceedings before or deliberations by HUD regarding the pros

10

and cons of giving retroactive effect its revised policy. In FCC v.

WOKO, Inc., 329 U.S. 223 (1946) this Court reversed the court

of appeals and upheld action by the FCC denying a license

renewal application for a radio station for false statements to the

agency, notwithstanding the argument that this was an

"unannounced policy change” from prior cases in which false

statements had not enlisted license denial. Neither the opinion of

this Court, nor the majority and dissenting opinions of the court

of appeals, 153 F.2d 623 (D.C.Cir. 1946), Groner, C.J.

dissenting, made any reference to whether the "retroactivity" issue

had been argued before the agency or whether that mattered.

3. Previous decisions in the District of Columbia circuit

are at odds with the judgment entered here.

In Retail, Wholesale & Department Store Union v. NLRB,

466 F.2d 380 (D.C.Cir. 1972) the court of appeals held that the

agency erred in applying a changed policy (regarding an

employer’s reinstatement and back pay obligations tu former

strikers) because the benefits of an immediate application of that

new policy to the case at bar were outweighed by the detriment to

the parties who had relied on the earlier policy. Throughout the

Court’s opinion, there is no reference to any NLRB decision

below dealing with the law of retroactivity. The Court went to

work on that law itself, detailing five factors to be considered, and

conducting its own analysis of those five factors, saying, "Which

side of this balance preponderates is in each case a question of

law, resolvable by reviewing courts with no overriding obligation

of deference to the agency decision." 466 F.2d at 390.

In Clark-Cowlitz Joint Operating Agency v. FERC, 826

F.2d 1074 (D.C.Cir. 1987), before the entire panel, Judges

Mikva, Robinson and Edwards dissenting, the majority upheld a

retroactive change in factors in comparative proceedings for

licenses issued by FERC to operate hydroelectric power plants.

Again, throughout the entire text of the majority and dissenting

opinions, there is no reference to any decision by the agency

11

addressed to the law of retroactivity. Both opinions went right to

work on the five factors to be considered. The dissenting opinion

added the following comments to the statement in Retail,

Wholesale regarding the ability of the courts to decide retroactivity

issues for themselves:

Several additional principles emerge from cases in which

this court has reviewed agency decisions applying a new

standard retroactively. First, whether a new standard

should be applied is a question of law. Agencies possess

no particular expertise on the issue of retroactivity, and

reviewing courts in turn have "no overriding obligation of

deference” to an agency’s decision to give retroactive

effect to a new rule. [citing Retail, Wholesale]. Second,

agency decisions to apply an order retroactively must be

the product of rational analysis, and "the law requires that

an agency explain...how it determined that the balancing

of the harms and benefits favors giving a change in policy

retroactive application." Yakima Valley Cablevision v.

FCC, 794 F.2d 737, 746 (D.C.Cir. 1986). Third, an

agency’s failure to consider the less drastic alternative of

prospective application may be considered arbitrary and

capricious and thus constitute grounds for reversal. Jd.

826 F.2d at 1094.

In Local 900, Intern. U. of Elec., Etc. v. NLRB, 727 F.2d

1184 (D.C.Cir. 1984), the court of appeals refused to consider a

substantive argument (regarding superseniority rights) because the

argument had not been raised below, as required by a statute

applicable to that agency, Section 10(e) of the National Labor

Relations Act, 29 U.S.C §160(e), providing that issues must be

raised before the agency as a condition to taking an appeal from

12

the agency decision. ° However, the court of appeals did consider

"retroactive" issue, which had not been raised directly below, but

which was implied from the facts and circumstances. On this

score, the court stated: "Retroactivity is necessarily an issue any

time adjudication results in a new rule of law." 727 F.2d at 1193-

94.

4. Decisions in other circuits also are at odds with the

judgment below.

In the eighth circuit, the distinction between substantive

agency issues and "retroactivity" legal issues has been made clear

in NLRB v. International Brotherhood, 225 F.2d 343 (8th Cir.

1955). A substantive agency issue (seniority rights) was not

considered by the court of appeals because it had not been raised

below, following 29 U.S.C. §160(e). 225 F.2d at 346. However,

a retroactivity issue was considered, even though it had not been

raised below either. This is apparent from the text of the court’s

opinion, 225 F.2d at 346-48 and also from agency opinions in

which the trial examiner decided the case under the former policy,

the changed policy was applied in the decision of the Board, and

there is no Board decision reflecting any petition for

reconsideration of that decision. Pacific Intermountain Express

Company, 107 NLRB 837 (1954).

In the second circuit, the case of NLRB v. National

Container Corp., 211 F.2d 525, 534 (1954) is similar. The Board

made a policy change in its decision, reversing the Trial Examiner

who relied on the former policy, and there is no evidence from the

reported opinions that the aggrieved party sought reconsideration

under 29 U.S.C. §160(e), National Container Corporation, 103

NLRB 1544 (1953), nor is there any reference to such

® This provision, reproduced in App. at 72a, is similar to Section 405 of the

Communications Act, 47 U.S.C. §405, relied upon by the court below in the

instant case, reproduced in App. at 73a.

13

reconsideration at the agency in the text of the opinion of the court

of appeals. Yet, the court entertained and considered an appeal of

the "retroactivity" issue. Also in the second circuit, the case of

NLRB v. Majestic Weaving Co., 355 F.2d 854 (1966), agency

decisions reported in Majestic Weaving Co., Inc. of New York,

147 NLRB 859, 149 NLRB 1523 (1964), involved review of a

policy change where the aggrieved party did avail itself of seeking

reconsideration before taking the appeal. While the court of

appeals took this into account, there is nothing to indicate that the

court would have rejected the appeal for failure to raise the

“retroactivity” question in a petition for reconsideration at the

agency below.

Laidlaw Corporation v. NLRB, 414 F.2d 99 (1969)

(rehearing denied September 2, 1969), cert den., 397 U.S. 920

(1970), was decided in the seventh circuit. The Trial Examiner

applied former policy that was changed in the Board’s decision;

there was no reported reconsideration of that ruling, The Laidlaw

Corporation, 171 NLRB 1366 (1968), nor is such reconsideration

referred to in the text of the court’s opinion. The court of appeals

accepted and considered the appeal of the retroactive application

of changed policy.

The Laidlaw policy change was applied to various other

cases including the Retail, Wholesale case in the District of

Columbia Circuit referred to earlier. Other Laidlaw policy change

cases where the change was made by the Board and there is no

reported petition for reconsideration prior to taking an appeal

include C. H. Guenther & Son, Inc. v. NLRB, 427 F.2d 983 (Sth

Cir. 1970), agency action reported in C. H. Guenther & Son, Inc.,

174 NLRB 1202 (1969), and NLRB v. Hartmann Luggage

Company, 453 F.2d 178 (6th Cir. 1971), agency action reported

in Hartmann Luggage Company, 183 NLRB 1246 (1970).

To a similar effect (involving policy changes other than

the Laidlaw policy change) are NLRB v. E & B Brewing Company,

276 F.2d 594 (6th Cir. 1960), agency action reported in E & B

14

Brewing Company, Inc., 122 NLRB 354 (1958), and NLRB v. Guy

F. Atkinson Co., 195 F.2d 141 (9th Cir. 1952) (rehearing denied

March 2, 1952), cert den., 366 U.S. 908 (1961), agency action

reported in Guy F. Atkinson Co. and J. A. Jones Construction

Co., 90 NLRB 143. The Afkinson opinion draws the following

distinction between substantive agency issues and "retroactivity"

law issues:

When an agency’s determination, whether of fact, or of

law, relates to physical or economic facts, with respect to

which the agency’s experience is calculated to give it

special competence, there is reason for assuming that the

determination should, so far as possible, be regarded as

within the discretion of the agency. The matter now before

us, we apprehend, is not one of that kind. We deal with

a problem [retroactive application of new law] which

courts have frequent occasion to consider and upon which

we think it cannot be said that the board or commission

has superior opportunity for knowledge.

195 F.2d at 150-51.

5. None of the circuit court decisions expressly resolves

the issue presented here.

At least some of the circuit court decisions are premised

on the concept that the application of a new or revised policy in

an agency adjudication inherently raises the question of whether

that agency action should be applied "retroactively" to parties that

have proceeded with operative facts under a former policy.

Numerous circuit court decisions, in fact, consider a

"retroactivity" issue that was not raised at the agency below by a

petition for reconsideration of the agency adjudication announcing

the policy change. However, we have found no circuit court

decision addressed squarely to the issue presented here, i.e.,

whether agency review of the pros and cons of the “retroactive”

effect of its policy change is a prerequisite for court review of the

15

"retroactivity" question of law, or by other means. We suspect

that the reason for the absence of any such court holding is that

the courts, agencies and parties have generally assumed such to be

the law.

On the other hand, we have found no circuit court decision

-- before this one -- holding that a party is precluded from

appellate court review of a changed policy in an agency

adjudication for failing to raise the matter before the agency, e.g.,

by seeking reconsideration of the agency decision effecting the

retroactive policy change or in some other manner.

6. The time is ripe for the Court to resolve the

"retroactivity" issue presented in this case.

Accordingly, the time is ripe for this Court to resolve the

matter and this case presents the precise and narrow factual and

legal framework for this Court to do so, providing clear guidance

to all courts, agencies and parties involved in the ongoing, massive

program of administrative agency jurisprudence.

For the foregoing reasons, the writ of certiorari should

issue.

Respectfully submitted,

Gene A. Bechtel, Counsel of Record

Ann C. Farhat

Bechtel & Cole, Chartered

1901 L Street, N.W., Suite 250

Washington, D.C. 20036

202/833-4190

January 17, 1995 Counsel for the Petitioner

16

CONTENTS OF APPENDIX

Judgment, Case No. 93-1328 (D.C.Cir.

SE 2x SO ndebneeindidearintibedernevecess la

Montgomery County Media Network, Inc.

d/b/a Imagists, 8 FCC Red. 2763 (1993)........... 3a

Montgomery County Media Network, Inc.

d/b/a Imagists, 6 FCC Red. 7440

Ss MN Ha heantacdbintndnticevicctenser:ens 16a

DLBS Incorporated, 3 FCC Rcd. 6701

(Admin. Law Judge 1988)...................ceceee 32a

Aspen FM, Inc., 6 FCC Red. 1602 (1991)........... 6la

Friends University and New Life

Fellowship, Inc., Inquiry concerning status

of petition for reconsideration, File No.

BALED-910729HK, dated December 29, 1993....... 70a

Constitutional Provisions, Statutes and Regulations

U.S. CONST., ART. I, §9, CL. 3............ 72a

U.S. CONST., ART. I, §10, CL. 1........... 72a

Be is ED a vteniiccetiisaiidiscctaseren 72a

SF Re tes PUI siKitcccccnnvidisstiniasoness 73a

TF Ren IED Skvennkavisarensuventiseuses 73a

Pe EE Siidckddersnncdncisandsaasonsace 73a

Filed October 17, 1994; Amended October 18, 1994

UNITED STATES COURT OF APPEALS

For the District of Columbia Circuit

No. 93-1328 September Term, 1993

CARMEN MATIAS, ef al., APPELLANT,

Vv.

FEDERAL COMMUNICATIONS COMMISSION, APPELLEE

On Appeal from an Order of the

Federal Communications Commission

BEFORE: WALD, SENTELLE and ROGERS, Circuit Judges

JUDGMENT

This cause came to be heard on appeal from a decision

of the Federal Communications Commission, and it was briefed

and argued by counsel. The issues have been accorded full

consideration by the Court and occasion no need for a published

opinion. See D.C. Cir. Rule 36(b).

The Commission dismissed petitioners’ application for a

permit to construct a new television station because the

application lacked a suitable transmitter site, and petitioners had

not shown "good cause” to file a curative amendment over

sixteen months later. Petitioners contend that the agency’s

refusal to entertain their amendment reflects an impermissible

retroactive application of a new, stringent policy against late

filings.

Section 405 of the Communications Act of 1934, as

amended, provides that a petition to the FCC for

reconsideration is a condition preceent to judicial review when

the party seeking review "relies upon questions of fact or law

upon which the Commission...has been afforded no opportunity

to pass." 47 U.S.C. §405(2). Petitioners’ argument that the

Commission decision resulted from an improper retroactive

application of a new policy was first brought to the

Commission’s attention in petitioners’ brief to this Court; it is

therefore a "question{] of...law upon which the

Commission...has been afforded no opportunity to pass." We

have recently interpreted §405 to require that a similar claim be

presented to the agency before this Court would consider it.

Petroleum Communications, Inc. v. FCC, 22 F.3d 1164, 11171

(1994) (declining to reach the argument that a Commission

decision resulted from a discriminatory application of a

particular policy on the ground that the Commission had not

been given the "first crack" at it). It is therefore

ORDERED and ADJUDGED, by this Court, that in

No. 93-1328 the petition is dismissed.

FURTHER ORDERED, by this Court, sua sponte, that

the Clerk shall withhold issuance of the mandate herein until

seven days after disposition of any timely petition for rehearing.

See D.C.Cir. R. 41(a)(2).

Per Curiam

For the Court:

Ron Garvin, Clerk

[8 FCC Red 2763] FCC 93-196

Before the

Federal Communications Commission

Washington, D.C. 20554

MM Docket No. 85-331

In re Applications of

MONTGOMERY COUNTY MEDIA

NETWORK, INC.

d/b/a IMAGISTS File No. BPCT-841129KF

CARMEN MATIAS AND ANDREW

N. WIMBISH, JOINTLY File No. BPCT-841129KK

WOOD BROADCASTING

COMPANY File No. BPCT-841 129K W

G-A COMMUNICATIONS,

INC. File No. BPCT-841129LE

For Construction Permit

for New UHF Television Station.

Conroe, Texas

Adopted: April 13, 1993; Released: April 21, 1993

MEMORANDUM OPINION AND ORDER

By the Commission: Commissioner Marshall not participating.

1. The above captioned proceeding involving applications for

a new UHF television station in Conroe, Texas is pending before

the Commission. In an Initial Decision, Administrative Law Judge

Edward Luton disqualified Wood Broadcasting Company on a

financial issue, and preferred Carmen Matias and Andrew N.

Wimbish, Jointly (Matias-Wimbish) over Imagists and G-A

Communications, Inc. (GAC), and two other applicants that

3a

subsequently dismissed their applications, on the standard

comparative issue. DLBS Incorporated, 3 FCC Rcd 6710 (ALJ

1988).

2. GAC, Imagists, and Wood filed exceptions to the Initial

Decision with the Review Board. After hearing oral argument, the

Board remanded the proceeding to the ALJ "[t]o determine

whether JoAnn Garcia [a principal of GAC], lied to,

misrepresented facts to, or lacked candor with respect to the

Blanco, Texas comparative television (Channel 52) proceeding

[cite omitted]; and, if so, the effect thereof on the basic

qualifications of [GAC] to be a Commission licensee." /magists,

4 FCC Rcd 3749, 3752-53 { 13 (Rev. Bd. 1989). In a

Supplemental Initial Decision, Judge Luton disqualified GAC on

the misrepresentation issue. /magists, 6 FCC Rcd 2963 (ALJ

1991).

3. The Review Board affirmed both the ALJ’s disqualification

of GAC on the lack of candor and misrepresentation issues, and

those portions of the initial decision disqualifying Wood on the

financial issue and preferring Matias-Wimbish over Imagists on the

standard comparative issue. Jmagists, 6 FCC Red 7440 (Rev. Bd.

1991). GAC and Imagists seek Commission review of the Review

Board’s decision. Wood has not filed an application for review;

the Board’s denial of its application is therefore final.

4. Based upon our review of the pleadings before us, ' we

agree with the Board’s disqualification of GAC on the lack of

' The following pleadings have been filed: (a) application for review, filed

January 17, 1992, by Montgomery County Media Network d/b/a Imagists; (b)

application for review, filed January 22, 1992, by G-A Communications, Inc.;

(c) opposition to application for review, filed February 6, 1992, by the Mass

Media Bureau; (d) opposition to application for review of G-A

Communications, filed February 6, 1992, by the Mass Media Bureau; and (e)

consolidated opposition to applications for review, filed February 6, 1992, by

Carmen Matias and Andrew N. Wimbish.

4a

|

candor and misrepresentation issues. * We find, however, that

Matias-Wimbish’s April 14, 1986 site amendment was not

supported by good cause, as required by section 73.3522(b)(i) of

the Commission’s rules for post-designation amendments. We

therefore dismiss Matias-Wimbish’s application for lack of a

transmitter site and award the construction permit to Imagist,

inasmuch as it is the only basically qualified applicant.

5. Background: When Matias-Wimbish filed its application on

November 29, 1984, it specified a transmitter site that was 22

miles short-spaced. Alerted to the short-spacing by the filing on

January 16, 1985 of an Informal Objection by Association of

Maximum Service Telecasters (AMST), the applicant did not file

an amendment specifying a properly spaced site until April 14,

1986. In response to an "air hazard" determination from the FAA.

Matias-Wimbish filed a second amendment on May 14, 1986,

reducing the height of its proposal tower from 1150 to 750 feet.

6. The ALJ orally accepted the first amendment on May 13,

1986, but initially rejected the second amendment, holding that it

did not meet the requirement of 73.3522(b)(i) that engineering

amendments must be necessitated by events that the applicant

could not have reasonably foreseen. DLBS Incorporated, FCC

86M-2184 44 8-12 (July 8, 1986). In particular, the ALJ faulted

Matias-Wimbish for not discovering that, more than a year before

its April 1986 site amendment, the FAA had refused to approve

a competing applicant’s proposed location of an 1150 foot tower

at a nearby site and ultimately approved only a 745 foot tower at

that site. In the initial decision, however, the ALJ reversed himself

and accepted Matias-Wimbish’s May 1986 height amendment,

concluding that "Matias-Wimbish’s ‘carelessness’ had nothing to

do with its ability to anticipate the FAA’s later expressed

2 Because we agree that GAC is not basically qualified, there is no need to

consider its claim that the ALJ erred in concluding that Matias-Wimbish’s

proposal is comparatively superior to GAC’s.

5a

disinclination to approve a 1,150 foot tower." DLBS Incorporated,

3 FCC Red at 6720 44 129-30. Citing Women’s Broadcasting

Coalition, 59 RR 2d 730 (1986), the ALJ reasoned that "there was

a reasonable possibility of FAA clearance . . . until the time of the

FAA action." Id. at ¢ 130. Quoting extensively from the initial

decision, the Board upheld the ALJ’s acceptance of the

amendment. 6 FCC Rcd at 7450 44 43-45.

7. Discussion: For the reasons set forth below, we reverse the

Board and the ALJ on this point. We find that Matias-Wimbish’s

April 14, 1986 amendment specifying a transmitter in compliance

with the minimum mileage separation requirements of section

73.610 of the Commission Rules is not supported by good cause.

We therefore dismiss Matias-Wimbish’s application for lack of a

suitable transmitter site, without determining whether its

subsequent May 14, 1986 amendment reducing its antenna height

to secure FAA clearance also lacked good cause. ;

8. To establish good cause for a post-designation amendment,

"the applicant must demonstrate that it has acted with due

diligence, that the amendment was not required by its voluntary

act, that no additional issues or parties would be required, that the

hearing process will not be disrupted, that there will be no

prejudice to competing applicants, and that the applicant will not

gain a comparative advantage." California Broadcasting Corp. , 90

FCC 2d 800, 808 4 17 & n.28 (1982), citing Erwin O Conner, 22

FCC 2d 140, 143 4 7 (Rev. Bd. 1970). Section 73.3522(b)(i) of

the Rules provides that, in addition to the usual good cause

requirements, the applicant must also show that engineering

amendments are required by events that the applicant could not

have reasonably foreseen.

9. The April 14, 1986 site amendment meets some of these

criteria without difficulty in that its acceptance did not require the

addition of any parties or issues, and the amending applicant

would not gain a comparative advantage. However, the

amendment was required by the applicant’s voluntary act inasmuch

6a

as it initially selected a grossly short-spaced site. > Likewise, the

applicant failed to exercise due diligence in waiting fifteen months

after learning that its original site was short-spaced to amend to a

properly spaced site. Even the ALJ, who had orally accepted the

amendment, later acknowledged that the applicant had not

displayed diligence "of a high order" in this respect. DLBS

Incorporated, FCC 86M-2184 at { 7. He explained, however, that

"where an applicant is attempting to cure a potentially

disqualifying defect in its application, diligence should be

interpreted in light of the equities of the case." Jd. at { 5, citing

Anax Broadcasting, Inc., 87 FCC 2d 483, 489 (1981). Although

noting that "[iJt is difficult to find . . . any equities in favor of

Matias-Wimbish,” the ALJ found that the applicant had

nevertheless acted with due diligence because "this is not a

situation in which the applicant did absolutely nothing during the

passage of time." Jd. at { 7.

10. To the extent that the ALJ suggested that the diligence

standard is more lenient where an applicant seeks to cure a

potentially disqualifying defect, we have modified our former

practice of liberally accepting post-designation amendments that

cure disqualifying defects, such as the loss of a transmitter site or

> In Eugene Walton, 6 FCC Rcd 6071, 6075 { 16 (Rev. Bd. 1991), review

denied, 7 FCC Red 3237 (1992), the ALJ’s denial of an applicant’s request

for a waiver of the short-spacing rules was held to be reasonably foreseeable

(and the applicant thus failed to establish good cause for a site amendment

under section 73.3522(b)), given Commission precedent that such waivers are

granted only if suitable, properly spaced sites are shown to be unavailable and

strong public interest considerations are shown to support the waiver and

given the applicant’s failure to even attempt either showing. Like the

unsuccessful applicant in Walton, Matias-Wimbish cannot meet the

unforeseeability test of section 73.3522(b): It not only specified a site that was

22 miles short-spaced (Walton’s site was short-spaced by 35 meters), it also

neglected to request a waiver which, given the extent of the short-spacing,

would have likely been denied. Thus, the site amendment was required by

Matias-Wimbish’s voluntary act (i.e., specifying a short-spaced site) and the

need for that amendment was clearly foreseeable.

Ta

a financial commitment. ‘ Originally concerned with promoting

the broadest choice of applicants in an effort to obtain the

optimum in ultimate service to the public, we have tempered this

objective somewhat in view of our "responsibility to provide

service to the public in the most efficient, expeditious manner

possible. ° As we have previously stated, "[t]emporizing with

flawed proposals: has in the past disserved the public interest by

inordinately delaying the initiation of new service." ° This delay

"exact[s] an economic toll on both the Government and the

applicants," ’ in that "the public is deprived of a valued service,

and the ultimate licensee is deprived of the opportunity to provide

that service" during the selection process. ®

11. Thus, we do not allow "applicants . . . to inordinately delay

the processing of applications from applicants who are willing and

able to proceed with the prosecution of their applications." ° In

our view, defective proposals disserve the public interest, even if,

as in this case, any such deficiencies are remedied before the start

of the evidentiary hearings. In this regard, a competing party

* Aspen FM, Inc., 6 FCC Red 1602, 1603-04 44 12, 13 & n.5 (1991).

> Hillebrand Broadcasting, Inc., 1 FCC Red 419 ¢{ 2-3 (1986).

®° Chudy Broadcasting Corp., 58 RR 2d 133, 134-35 n.7 (1985).

” Proposals to Reform the Commission’s Comparative Hearing Process to

Expedite the Resolution of Cases, 6 FCC Red 157, 164 ¢ 53 (1991).

. Proposals to Reform the Commission’s Comparative Hearing Process to

Expedite the Resolution of Cases, 5 FCC Red 4050 { 3 (1990).

° Cuban-American Limited, 5 FCC Red 3781, 3782 4 5 (1990).

10 See, e.g., Eugene Walton, 6 FCC Rcd 6071 (Rev. Bd. 1991), review

denied, 7 FCC 3237 (1992), holding that a site amendment submitted well

before the start of the evidentiary hearings but ten months after the applicant

8a

i

has a valid interest in the prompt resolution of a proceeding that

is prejudiced if it must consider multiple proposals from a single

applicant. '' Indeed, any time and expense that an applicant

devotes to preparing for the evidentiary hearing based on an

opponent’s initial proposal is forfeited if that proposal is amended.

The clear waste of private and public resources that this entails is

exacerbated in multiparty proceedings where a site change by one

applicant affects the hearing preparations of a large pool of

competing applicants. This delays service to the public even if the

amendment does not require additional hearings, additional or

modified issues, or the addition of new parties. Liberally

permitting curative amendments further undermines our efforts to

reduce the time and money devoted to our comparative process to

the extent that it discourages future applicants from exercising the

maximum possible care in formulating their proposals.

12. Given our heightened concern with avoiding undue delays

that retard the provision of new service, we take this opportunity

to review what constitutes due diligence under section 73.3522(b).

As an initial matter, an applicant must show that it acted promptly

after it discovered, or it should have discovered, the potentially

disqualifying deficiency. '* Clearly, an applicant that sits idly by,

discovered the short-spacing was not supported by good cause.

\! See Shoblom Broadcasting, Inc., 93 FCC 2d 1027, 1031 { 6 (Rev. Bd.

1983), aff'd sub nom. Royce International Broadcasting Company, 820 F.2d

1332 (D.C. Cir. 1987).

'2 Compare Texas Communications Limited Partnership, 6 FCC Red 5191,

5193 4 20 (1991) (delay in amending to a new site is not excused where the

applicant had not bothered to check the status of its FAA application, relying

instead on its engineer to advise it of any deficiency) with Radio Lake Geneva

Corporation, 7 FCC Red 5586, 5589-90 44 13-14 (Rev. Bd. 1992), review

denied, FCC 93-155 4 2 & n.3 (rel. March 26, 1993) (applicant that chose to

“fight rather than switch” on the FAA’s tentative air hazard finding exercised

due diligence in amending within 30 days of the final Determination of Air

Hazard, where its dealings with the FAA were sufficiently reasonable, prudent

9a

either doing nothing or pursuing a course of action that is not

likely to resolve the problem expeditiously, lacks diligence. "

13. We recognize that some defects can be cured more readily

than others. Thus, how quickly an applicant must act in order to

establish diligence will necessarily vary depending on the facts of

each case. '* We have accorded the ALjs broad authority to

regulate the course of multiparty proceedings, permitting them to

and diligent to establish good cause for its site amendment); Harrison County

Broadcasting Co., 6 FCC Red 5819 (Rev. Bd. 1991), review denied, 7 FCC

Rcd 2993 (1992) (applicant exercised due diligence in amending to correct the

geographic coordinates of its transmitter site within 30 days of receiving

actual notice in the Hearing Designation Order that its engineer had plotted

coordinates outside of the actual boundaries of the property selected as its

site).

'3 See Texas Communications, 6 FCC Rcd at 5193-94 44 21-22 (applicant

that spent eight months looking for a site that would solve the FAA's

excessive height and EMI problems, rather than immediately reducing its

antenna height, lacked due diligence); Eugene Walton, 6 FCC Rcd 6071 (Rev.

Bd. 1991), review denied, 7 FCC Rcd 3237 (1992) (applicant that waited ten

months for action on its facially deficient waiver request, rather than

immediately amending to a properly spaced site, lacked due diligence);

Goodlettsville Broadcasting Co., 5 FCC Red 4593, 4593-94 { 8 (1990)

(applicant that chose to recalculate its original site based on new rules that it

knew, or should have known, were not yet effective, rather than amending to

a properly spaced site within the time prescribed by the ALJ, lacked due

diligence); Cuban-American Lid, 5 FCC Red 3781, 3782 44 10-12 (1990)

(applicant that sought after the ALJ’s deadline to amend to a new site, rather

than reducing its antenna height upon being advised by its engineer that the

FAA would not approve a tower that tall, lacked due diligence).

'* Compare Elijah Broadcasting, 3 FCC Red 5148 (Rev. Bd. 1988), review

denied, 5 FCC Red 5351 (1990) (site amendment accepted where the six

month delay in amending to a new transmitter site was due to special

problems - that is, the area’s rapid development, strict architectural

standards, and FAA considerations — in locating a complying site); with Texas

Communications, 6 FCC Rcd at 5193 ¢ 19 (site amendment rejected where no

reason offered at the hearing for an eight month delay in amending to new site

after the applicant learned of the FAA’s rejection of its original site).

10a

adopt appropriate procedures to facilitate the prompt performance

of their responsibilities. Cuban-American Limited, 5 FCC Rcd at

3782 9 5. As a result, the ALJs have discretion to decide in the

first instance whether an applicant has acted with sufficient

promptness upon learning of a deficiency in its original proposal,

and we will generally not substitute our judgment for that of a

presiding officer. We emphasize, however, that the general

guide!ine governing such determinations is clear -- that the agency

has a public interest obligation to provide new service to the

public as expeditiously as possible.

14. In view of the foregoing, we urge applicants, whenever

possible, to submit curative amendments no more than 30 days

after they learn, or should have learned, of the deficiency

requiring an amendment. '° An applicant waiting more than 30

days to file a petition for leave to amend should be prepared to

explain the need for additional time, and it may be asked to

document that, despite its failure to amend within 30 days, it took

immediate steps upon learning of the deficiency. '° We note

further that, in the absence of unusual circumstances, a delay of

more than six months has long been presumed to be excessive. "”

'S This is consistent with section 1.65 of the rules, which affords applicants

30 days in which to report any matter of decisional significance, and with

section 73.3522(b), which affords applicants 30 days after the designation

order to file amendments addressing any matter raised therein as a matter of

right and provides that amendments filed more than 30 days after the

designation order must be supported by good cause.

'6 See Capitol City Broadcasting Co., 6 FCC Red 5525 (Rev. Bd. 1991),

rev. denied, 7 FCC Rcd 2629 4 3 & n.2 (1992), in which we upheld the

dismissal of an application for not timely amending its financial proposal,

where the applicant had not documented its claim to have exercised due

diligence in obtaining new financing.

"7 California Broadcasting, 90 FCC 2d at 808 { 19, in which the

Commission agreed that the failure to amend to a new site for more than six

months would ordinarily not constitute due diligence, but nevertheless found

lla .

Therefore, an applicant seeking to amend more than six months

after the defect was, or should have been, discovered would have

a heavy burden of establishing due diligence.

15. Turning to the specific facts of this case, the ALJ found,

and the Board agreed, that Matias-Wimbish had demonstrated due

diligence because "this [wa]s not a situation in which the applicant

did absolutely nothing” upon learning of the short-spacing. DLBS

Incorporated, FCC 86M-2184 at { 7; Imagists, 6 FCC Rcd at

7451-52 n.6. While we do not question the validity of this

observation, '® we find that the “quantity and quality" of

Matias-Wimbish’s efforts to obtain a properly spaced site fall far

short of due diligence. '? It is undisputed that Matias-Wimbish

due diligence because the applicant began exploring new sites promptly after

the unforeseeable creation of a national park deprived it of its original site.

See also Belo Broadcasting Corp., 68 FCC 2d 1313, 1328 (1978) (six month

delay in filing a site amendment held not to constitute due diligence, given the

applicant’s continued reliance on a site that he knew was unavailable).

'8 Compare Texas Communications, 6 FCC Red at 5193 {4 20-21 (delay not

excused where the applicant had not bothered to check on the status of its

request for FAA clearance); Eugene Walton, 6 FCC Rcd 6071 (Rev. Bd.

1991), review denied, 7 FCC Rcd 3237 (1992) (applicant did not display due

diligence waiting 10 months to amend to a properly spaced site in filing a

facially deficient waiver — and waiting for action on that request — instead of

promptly amending to a properly spaced site); with Elijah, (delays attributable

to difficulties in locating new site are not fatal to a finding of due diligence).

'9 There is no merit, however, to Imagists’ claim that the Bureau should

have dismissed Matias-Wimbish’s application pursuant to section 73.3566(a),

which provides for the dismissal of applications that are determined to be

patently not in accordance with FCC rules unless accompanied by an

appropriate waiver request. (Matias-Wimbish specified a short-spaced site, but

it did not file a spacing waiver request.) In the case of television applications,

as opposed to FM applications, it is appropriate to accept a television

application specifying a short-spaced site, and make any waiver determination

relating to that site at the hearing. North Texas Media v. FCC, 778 F.2d 28,

34 (D.C. Cir. 1985); Kenter, 62 RR 2d 1573 (1986).

12a

delayed almost 5 months after the Hearing Designation Order,

FCC MM-0792 (November 13, 1985) - and 15 months after

AMST’s Informal Objection alerted it that the original site was

short-spaced -- before amending to a properly spaced site. As

noted above, even the ALJ, who accepted the amendment,

acknowledged that Matias-Wimbish had not displayed diligence of

a high order in this respect. Memorandum Opinion and Order,

FCC 86M-2184 (July 8, 1986). The Board, on the other hand,

found due diligence because, once the applicant learned of the

deficiency, it hired an engineering firm to find a new site and

"closely superintended their search for a site, contacting them

twelve times by telephone and six times by letter." 6 FCC Rcd at

7451-52 n.6.

16. We disagree with the Board’s characterization of these

efforts as constituting close supervision of the engineering firm’s

site search. Over a period of more than a year, Matias-Wimbish

claims to have contacted the firm a total of eighteen times (that is,

an average of less than twice a month). It does not allege that it

repeatedly reminded the firm of the urgency of this matter, let

alone explored the reason for the delay or discussed how the site

search might have been expedited. Nor does Matias-Wimbish

allege any special problems that would explain its 15-month delay

in amending to a new site, a length of time that far exceeds what

we have long considered excessive. Rather, it states that, after

receiving the Informal Objection in January 1985, it consulted an

engineering firm, which confirmed in February or March 1985

that the specified site was in fact short-spaced and recommended

that a new site be secured. At that time, the applicant hired the

engineering firm to find a new site, believing it to be in a better

position to negotiate with rural landowners than Wimbish who was

concerned that predominantly white rural landowners would be

unwilling to lease to him. The applicant alleges that the firm

contacted six landowners on its behalf, but that the firm did not

locate a suitable site until April 1986. In the 15 months that

elapsed until the site amendment was filed, the applicant

apparently did nothing more than urge the firm, through a series

13a

of letters and telephone calls, to pursue the matter.

17. We do not fault Matias-Wimbish for retaining an

engineering firm to assist in locating a new site. But, in the

absence of any special circumstance explaining why it took 15

months to find a new site, we cannot find that such retention, in

conjunction with the applicant’s relatively meager efforts to

expedite the firm’s site search, establishes due diligence,

particularly since none of the other applicants in this multi-party

proceeding appear to have experienced similar delays in finding

suitable sites. Thus, we reverse the ALJ’s ruling, deny

Matias-Wimbish’s April 14, 1986 Petition for Leave to Amend,

and reject its April 14 amendment. ” Lacking a suitable

fully-spaced site, Matias-Wimbish’s application is not grantable

and must therefore be dismissed.

18. ACCORDINGLY, IT IS ORDERED That, pursuant to 47

C.F.R. § 1.115(g) of the Commission’s Rules, the application for

review filed January 17, 1992 by Montgomery County Media

Network d/b/a Imagists IS GRANTED to the extent indicated

above and DISMISSED in all other respects, *' and that the

application for review filed January 22, 1992 by G-A

Communications, Inc. IS GRANTED in part and DENIED in part.

19. IT IS FURTHER ORDERED, That the ALJ’s ruling

» This case is distinguishable from Radio Associates, Inc., 6 FCC Rcd 2094

(Rev. Bd. 1991), where the Board, having rejected the claim that the applicant

was entitled to file an amendment as a matter of right, remanded the case so

that the applicant could make a good cause showing. In contrast, there was

never a question as to the need for a good cause showing in this case. Aware

that it was required to make such a showing, Matias-Wimbish singularly failed

to establish that it proceeded with due diligence. It is not entitled to a further

opportunity to bolster its showing at this late date.

2! Having concluded that Imagists is the only basically qualified applicant,

those portions of its application for review dealing with the comparative issue

are moot and have not been considered.

l4a

=

:

accepting the amendment, filed on April 14, 1986, by Carmen

Matias and Andrew N. Wimbish, Jointly IS SET ASIDE, the

petition for leave to amend IS DENIED, and that the attached

amendment IS REJECTED.

20. IT IS FURTHER ORDERED, That the Review Board’s

Decision, Imagists, 6 FCC Rcd 7440 (Rev. Bd. 1991), IS

MODIFIED, as set forth herein; that the grant of

Matias-Wimbish’s application (File No. BPCT-841129KK) IS SET

ASIDE; that the application filed by Carmen Matias and Andrew

N. Wimbish, Jointly (File No. BPCT-841129KK) IS DISMISSED;

that the application of Montgomery County Media Network d/b/a

Imagists (File No. BPCT-841129KF) IS GRANTED; and that the

application of G-A Communications, Inc. (File No.

BPCT-841129LE) IS DENIED.

FEDERAL COMMUNICATIONS COMMISSION

Donna R. Searcy

Secretary

15a

[6 FCC Red 7440] FCC 91R-112

Before the

Federal Communications Commission

Washington, D.C. 20554

MM Docket No. 85-331

In re Applications of

Montgomery County Media

Network, Inc., et al.,

d/b/a IMAGISTS File No. BPCT-841129KF

CARMEN MATIAS and ANDREW

N. WIMBISH, Jointly File No. BPCT-841129KK

WOOD BROADCASTING

COMPANY File No. BPCT-841 129KW

G-A COMMUNICATIONS,

INC. File No. BPCT-841129LE

For Construction Permit

for New UHF Television Station,

Conroe, Texas

Appearances

James L. Oyster, Esq. on behalf of Montgomery County Media

Network, Inc. et al, d/b/a Imagists; Ann C. Farhat, Esq. and

Howard W. Simcox, Esq. on behalf of Carmen Matias and Andrew

N. Wimbish, Jointly; Mark N. Uhlfelder, Esq., Mark F. Corriea,

Esq., Howard G. Stavit, Esq. and Philip V. Jackmauh, Esq. on

behalf of Wood Broadcasting Company; Donald E. Martin, Esq.

and Spencer W. Weisbroth, Esq. on behalf of G-A

Communications, Inc.; and Robert A. Zauner, Esq. on behalf of

the Mass Media Bureau.

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DECISION

Adopted: November 27, 1991; Released: December 23, 1991

By the Review Board: MARINO (Chairman), BLUMENTHAL,

and ESBENSEN.

Board Member ESBENSEN:

1. Now before the Review Board are the Supplemental Initial

Decision, 6 FCC Red 2963 (1991) (S.I.D.), and the Jnitial

Decision, 3 FCC Red 6710 (1988) (I.D.), of Administrative Law

Judge Edward Luton (ALJ). Also before us are the Exceptions of

G-A Communications, Inc. (G-A) to the S.I.D., a "Statement in

Support" of the S.1.D. filed by Carmen Matias and Andrew N.

Wimbish (Matias/Wimbish), and replies thereto filed by the

Commission’s Mass Media Bureau (Bureau) and Matias/Wimbish.

All the remaining captioned parties filed Exceptions and

appropriate replies to the I.D.

2. The proceeding below was ultimately heard on the following

(renumbered) issues (I.D., at paras. 1-2, 5-6):

1. To determine whether the applications of G-A

Communications, Inc. and Carmen Matias and Andrew N.

Wimbish, Jointly are consistent with the minimum mileage

separation requirements of Section 73.610 of the

Commission’s Rules and, if not, whether circumstances

exist which would warrant a waiver of the Rule.

2. To determine with respect to each of the applicants,

whether there is a reasonable possibility that the tower

height and location proposed by each would constitute a

hazard to air navigation.

[3]. To determine whether Wood Broadcasting Company

is financially qualified to construct and operate its

17a

proposed television station in Conroe, Texas.

[4]. To determine whether G-A has failed to disclose a

real party-in-interest to its application.

[5]. To determine the effect of the evidence adduced under

[4] above on the basic qualifications of G-A to be a

Commission licensee.

[6]. To determine the areas and populations which would

receive television service of 64 dBu (Grade B) or greater

intensity, together with the availability of other Grade B

television services in such areas, for the purpose of

determining whether a comparative preference should

accrue to any of the applicants.

[7]. To determine which of the proposals would, on a

comparative basis, best serve the public interest.

[8]. To determine, in light of the evidence adduced

pursuant to the foregoing issues, which of the applications

should be granted.

3. Subsequent to our initial review of the record and the hearing

of oral argument (on March 3, 1989), the Board was compelled to

remand this proceeding on the following basic qualifications issue

specified against G-A. See Imagists, 4 FCC Rcd 3749, 3752 (Rev.

Bd. 1989):

[9]. To determine whether JoAnn Garcia lied to,

misrepresented facts to, or lacked candor with the

Commission in the Blanco, Texas comparative television

(Channel 52) proceeding (MM Docket No. 85-269), Opal

Chadwell, 1 FCC Red 120 (ALJ 1986) (Initial Decision.)

2 FCC Red 5502 (Rev. Bd. 1987), (Decision), on review,

65 RR 2d 1498 (1989); and, if so, the effect thereof on

the basic qualifications of G-A Communications, Inc. to

18a

Es

be a Commission licensee.

4. In remanding this proceeding, the Board noted that the ALJ

had resolved Issues [4] and [5], supra, in G-A’s favor in the I.D.

(at paras. 140-143). Nevertheless, we recounted that (4 FCC Rcd

at 3749):

[T]he real-party-in-interest issue herein had its genesis in

the earlier proceeding of Opal Chadwell, 2 FCC Rcd 5502

(Rev. Bd. 1987), remanded on other grounds, 65 RR 2d

1498 (1989). There, applicant Dorothy O. Schulze and

Deborah Brigham, A General Partnership (Schulze and

Brigham) faced an issue to determine whether it

misrepresented or had lacked candor in reporting the

television broadcast applications of Schulze. In response

to the specific allegation that Schulze had failed to report

her ownership interest in the instant G-A application for

Channel 55 in Conroe, Texas, Schulze and Brigham

relied, in part, in the declaration of JoAnn Garcia,

president and sole voting stockholder of G-A. Garcia

testified in the Opal Chadwell proceeding that she did not

previously know Schulze, and had never contemplated

having her as a party to G-A’s application. However, the

ALJ in that proceeding disbelieved the testimony of both

Schulze and Garcia, as well as that of Richard Ozan, the

brother of both Schulze and G-A’s purported sole

non-voting (80% equity) stockholder, Elizabeth Anderson.

Instead, the Opal Chadwell ALJ disqualified Schulze and

Brigham for misrepresentation, finding (inter alia) that

Ozan had filed a number of television applications --

_ including the instant G-A application -- using various

females as false fronts. In reaching that determination, the

Opal Chadwell ALJ specifically found that Garcia’s

testimony about her own participation in the instant G-A

application was a "web of lies." Opal Chadwell, 1 FCC

Red 120, 126 (ALJ 1986). Subsequently the Board

affirmed the ALJ’s disqualification of the Schulze and

Pe ste i Nae Mg i Na i fad UPR RES Be 6 Bate! ‘

19a

Brigham applicant, holding that the "case turns on the

patently misleading testimony presented by Schulze. . .

and Garcia concerning their purported extensive

participation in the preparation and prosecution of the

applications and the absence of any meaningful

participation by Richard Ozan." Opal Chadwell, 2 FCC

Red at 5509.

5. Before returning this proceeding to the ALJ, the Board

requested the parties to file supplemental briefs addressing the

question of the applicability of the doctrine of collateral estoppel

to the real-party-in-interest issue. See Memorandum Opinion and

Order, 4 FCC Rcd 2609 (Rev. Bd. 1989). The applicability of this

doctrine was negatively resolved in our remand Order, 4 FCC Rcd

at 3751, and we there further observed:

Despite the established inapplicability of collateral estoppel

here, we must now address the residual question of

whether Garcia did, in fact, lie as a witness in the Opal

Chadwell proceeding; and, if so, what effect such

misrepresentation has upon G-A’s basic qualifications to

be a licensee. See generally Character Policy Statement,

102 FCC 2d 1179, 1188-1191, 1195-1196, 1210-1211,

1227-1229 (1986). In the Conroe I.D., paras. 107-125,

140-143, the ALJ reviewed the testimony of Garcia and

former G-A counsel, Thomas L. Root. In essence, Garcia

testified that she was the sole active "real party" behind

G-A’s application, and that Richard Ozan (brother of

G-A’s purported limited partner Elizabeth Anderson) had

no role whatsoever in prosecuting the application. Root

testified that he did not recall whether or not he had

certain conversations with Garcia, Ozan, and Anderson,

and he claimed he did not recall the content of those

conversations and various other important matters

concerning the application. The ALJ found Garcia’s

testimony “believable,” and _ resolved the

real-party-in-interest issue favorably to G-A. Jd., para.

20a

143. Garcia’s Conroe testimony was essentially replicative

of the testimony she gave in the Opal Chadwell

proceeding, which testimony was found in that Jnitial

Decision to be a "web of lies," and wholly refuted by

contrary testimony given by Root, Ozan, and Ron Baptist.

Opal Chadwell, 1 FCC Rcd at 124-126. The Commission

cannot blithely ignore an obvious negative "predicative

judgment[ ] relating to an applicant’s propensity to deal

honestly with the Commission and to comply with our

rules and policies." Character Policy Statement, 102 FCC

2d at 1232. Therefore, we shall remand this proceeding to

the presiding ALJ on an issue to determine whether, in the

Opal Chadwell proceeding, Ms. Garcia lied as a witness;

and, if so, the effect thereof upon G-A’s basic

qualifications to be a licensee. Because, as noted above in

paragraph 2, the Opal Chadwell Decision found that

Richard Ozan ran an “application mill" of which the

instant G-A application appeared to be a product, and the

existence of the "mill" was reconfirmed at oral argument

by G-A’s current counsel, we invite the Commission’s

Mass Media Bureau to participate fully in the remanded

proceeding in order to protect the integrity of the

Commission’s processes. See generally Revision of

j Application for Construction Permit for Commercial

Broadcast Station (FCC Form 301) (Gen. Docket No.

88-328), Report and Order, FCC 89-110, released April

20, 1989; Inquiry Into Alleged Abuses of the Commission’s

Processes, 3 FCC Red 4740 (1988).

tne hated tase ae ORK Aer Ra a DS

In his S.I.D., the ALJ resolved Issue [9] against G-A and found

that applicant unqualified to be a Commission licensee. * * *

[material unrelated to the _ instant petition omitted]

21a

IMAGISTS

38. Imagists is a purported Texas limited partnership. The

"general partner" is Montgomery County Media Network, Inc.

(Montgomery), a Texas corporation. The "limited partner" of

Imagists is Humanity Interested Services, Inc. (HIS), a non-profit

tax exempt Texas corporation. At the time of hearing,

Montgomery stock was wholly owned by Dr. Rhonda Saldivar,

President (50%), and Alan William Rossing, Vice

President/Secretary (50%). Montgomery’s total capital contribution

requirement was $ 1,000, with $ 500 each to be provided by

Saldivar and Rossing. However, none of these sums has been

tendered. I.D., paras. 25-28.

39. The shares of profits or other income accruing to Imagists

are proposed to be distributed as follows: Montgomery, 1%; HIS,

99%.1.D., para. 29.

40. Saldivar and Rossing both claim full-time 100% integration

credit, and both seek preferences as minorities. Both are area or

local residents. However, the ALJ ultimately determined that

Imagists was a sham applicant, entitled to less than 1% ownership

integration into management credit. * In so doing, he determined

the following (to which Imagists, as will be discussed, infra, has

generally not excepted) (I.D., paras. 151-156):

The driving force and controlling principal behind

Imagists is Charles Johnson, executive director of the

limited partner, HIS. Charles Johnson is the minister of

the Evangelistic Temple in Conroe, Texas. (Tr. 171).

Under the name of Evangelistic Temple, Mr. Johnson was

> On the "B cut-off” date, Montgomery had three shareholders (each

| purportedly owning a 1/3 interest): Saldivar, Rossing, and Frank Garza.

Garza, originally proposed as President of Montgomery, resigned in

| December 1985. Thus, Saldivar and Rossing now each claim a 50%

ownership interest.

22a

———————————

the original petitioner to have Channel 55 allocated to

Conroe. (Tr. 172). Without consulting either Saldivar or

Rossing, Johnson decided that Imagists would be

structured as a limited partnership. (Tr. 121). In the

Articles of Incorporation filed for the general partner,

Montgomery County Media Network, Charles Johnson

was named as its sole director (Tr. 108), and is still

identified as its resident agent. (Tr. 108). The address

shown on Imagists’ FCC application is "200 Avenue J,

Conroe, Texas, 77301," which is the location of the

offices of HIS. (Tr. 94). In Imagists’ Certification of

Limited Partnership, the address shown for the general

partner is a post office box rented and used by HIS.

Charles Johnson’s involvement in the prosecution of the

Imagists application is to be contrasted with lack of

involvement of Saldivar and Rossing. Both Rossing and

Saldivar were invited to join the applicant after Imagists’

structure had already been decided upon. Neither Rossing

nor Saldivar took part in the preparation and filing of the

application or in the hiring of Imagists’ communications

counsel, consulting engineers, or FAA consultant. (Tr.

92-3, 134-5). Rossing and Saldivar did not know one

another prior to the filing of the application. (Tr. 127).

Saldivar was invited to join by Charles Johnson’s brother,

also a director of HIS. (Tr. 89). Rossing was invited to

join by Charles Johnson after Johnson learned that Rossing

was an American Indian. (Tr. 165). Rossing agreed to

help out in whatever way Johnson saw fit, although he had

no idea of what his involvement might be and was not told

that he would be involved in a managerial capacity at the

station.

While Saldivar and Rossing have each served as secretary

of Montgomery County Media Network, neither has

prepared any minutes of its corporate meetings. (Tr. 97-8,

147). The minutes are prepared by the secretary for HIS.

23a

(Tr. 97-8). The original minutes are retained by Charles

Johnson. (Tr. 148-9). The positions Rossing and Saldivar

are to have at the proposed station were decided upon in

a conference phone call between Rossing, Saldivar,

Charles Johnson and communications counsel. That

decision was made in January 1986, a year and two

months after the Imagists application was filed. Neither

Saldivar nor Rossing played any part in securing FAA

tower approval, which was handled by Charles Johnson's

son, Dowen, the Assistant Executive Director for HIS.

(Tr. 111).

Dr. Saldivar, president of the general partner, did not

know what a public inspection file was (Tr. 101-2), did

not know how many shares of stock she was entitled to

(Tr. 108), and did not know whether money provided by

HIS was to be considered a loan or a contribution to

capital. (Tr. 113-4). Mr. Rossing did not know whether

Imagists had a bank account (Tr. 152), did not know what

the general partners’ liability would be in a law suit (Tr.

158), and has never received correspondence directly from

communications counsel. (Tr. 154).

Viewed collectively, the foregoing facts wholly undermine

Imagists’ representation that it has and will function as a

bona fide limited partnership. Saldivar and Rossing have

done nothing more than loan their names and minority

status to Charles Johnson for his use in obtaining a

television station. The contention that Saldivar and

Rossing will have exclusive managerial control of the

station while Charles Johnson assumes a non-participating

role is not believed.

41. In its Exceptions, Imagists does not substantially contest any

of the specific findings and conclusions of the ALJ. Instead, it

merely argues that where there is a non-profit entity in a

Commission application (here, HIS is purportedly an educational

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$$$ EE Te Te Ne EG! Sul Wants aetetinantes

institution), "the suppositions made in the business context are not

applicable" for determining whether an applicant is a sham.

Imagists also attempts to bolster its position by claiming that

"Johnson would be a good applicant in his own right" and would

be "100% locally owned with extensive civic and religious

activities." Imagist Exceptions at p. 13. However, we note in

passing that this argument ignores the fact that Johnson is already

active in HIS (which operates a school in Conroe), and is its

Executive Director. He is also Pastor of Evangelistic Temple of

Conroe. I.D., para. 45. Further, no claim is made that if Johnson

would have been the sole principal he would have sought full-time

integration credit, or would have been entitled to a minority

preference. Conversely, we believe that the ALJ’s conclusion is

directly on point: "Saldivar and Rossing have done nothing more

than loan their names and minority status to Charles Johnson for

his use in obtaining a television station.” See para. 42, supra.

Indeed, Dr. Saldivar did not know Johnson before being invited

to participate in Imagists’ application; and Rossing had not even

spoken with Saldivar at the time the application was filed. I.D.,

paras. 33, 42.

42. We affirm the ALJ that Imagists is just another prototypical

sham of the type found in such recent cases as Evansville Skywave,

Inc., 6 FCC Red 5373 (Rev. Bd. 1991). See also Poughkeepsie

Broadcasting Limited, 6 FCC Rcd 2497 (1991); Metroplex

Communications, Inc., 5 FCC Rcd 5610 (1990), aff'd per

judgment sub nom. South east Florida Broadcasting Limited

Partnership v. FCC, No. 90-1482 (D.C. Cir. October 28, 1991).

As a result, Imagists is entitled to no integration credit

whatsoever. Royce International Broadcasting, 6 FCC Rcd 2601

(1991).

CARMEN MATIAS and ANDREW N. WIMBISH

43. Section 73.610 (short-spacing) and air hazard issues (Issues

1 and 2) were designated against Matias/Wimbish. Subsequently,

Matias/Wimbish submitted a petition for leave to specify a new,

25a

properly spaced site that was different from the site originally

specified in its application. In this amendment, Matias/Wimbish

specified a tower height of 1150 feet. Matias/Wimbish indicated,

in a supplement to the petition for leave to amend filed April 17,

1986, that another applicant herein (Wood) had proposed the same

site, and that FAA approval had been issued to Wood.

Matias/Wimbish indicated its belief that it, too, would soon obtain

FAA approval (Tr. 390-391). This amendment was accepted at

hearing; however, Matias/Wimbish subsequently learned that, in

fact, Wood had never obtained FAA approval for its 1150 foot

proposal; rather, a height reduction (to 750 feet) was required.

(Tr. 293). Thus, this May 14, 1986 amendment to reduce the

proposed tower height was rejected by the ALJ. See Memorandum

Opinion and Order, FCC 86M-2184, released July 8, 1986. The

ALJ, noting that the May 14, 1986, amendment was required

because of "careless and erroneous reliance on what it unjustifiably

believed to be the proposal of a competitor,” ruled that

Matias/Wimbish had failed to demonstrate good cause for

acceptance of its amendment. As a result, in a further Order, FCC

86M-2183, released July 8, 1986, the ALJ also denied

Matias/Wimbish’s May 14, 1986 Motion for Partial Summary

Decision (where Matias/Wimbish had sought summary decision of

the short-spacing and air hazard issues). I.D., paras. 47-48.

44. Subsequently, however, the ALJ revisited his prior actions

concerning the Matias/Wimbish tower site amendment, and in his

I.D. (at paras. 130-131) specifically held:

By its May 14, 1986 petition, Matias/Wimbish sought

only to reduce its antenna height to obtain FAA approval,

and it should have been permitted to do so. The petition

was rejected because Matias/Wimbish’s "significant

carelessness" in proposing a 1,150 foot tower in the blind

hope that the FAA would approve that height was

inconsistent with the notion of unforeseeability. That

analysis was in error. Matias/Wimbish’s "carelessness"

had noihing to do with its ability to anticipate the FAA’s

26a

En io she aban ate wD

later-expressed disinclination to approve a 1,150 foot

tower. Nothing that Matias/Wimbish did, or failed to do,

caused the FAA action to be foreseeable. Until the time of

the FAA action, there was a reasonable possibility of FAA

clearance (Women’s Broadcasting Coalition, 59 RR 2d

730) and, consequently, no reason for Matias/Wimbish to

have "foreseen" anything else.

Good cause is otherwise shown for Matias/Wimbish’s May

14, 1986 amendment. The amendment: (a) is not

voluntary in nature; (b) confers no comparative advantage;

(c) does not prejudice any party; (d) does not disrupt the

proceeding; (e) does not require the addition of issues or

parties; and (f) was diligently filed.

Memorandum Opinion and Order, FCC 86M-2184

released July 8, 1986, is vacated; the Petition of Carmel

Matias and Andrew N. Wimbish, Jointly, for Leave to

Amend, filed May 14, 1986 is granted, and the

amendment is accepted. Order, FCC 86M-2183, released

July 8, 1986, is also vacated; the Motion for Leave to File

Motion for Partial Summary Decision and Motion for

Partial Summary Decision, both filed May 23, 1986 by

Carmen Matias and Andrew N. Wimbish, Jointly, are

granted, and the Section 73.610 issue designated against

the applicant is resolved in its favor.

The presiding officer officially notices Aeronautical Study

No. 86-ASW-0898-OE submitted as Appendix A to the

Reply of Matias/Wimbish to Oppositions to Petition for

Leave to Amend filed on June 3, 1986. Therein, the FAA

approved Matias/Wimbish’s transmitter site location and

tower height at 750 feet above ground level. The air

hazard issue designated against Matias/Wimbish is

resoived in its favor.

27a

a

nm

j

45. All the remaining captioned parties except to the ALJ’s

resolution of this matter. However, we agree that, under the

particular circumstances here present, the ALJ’s analysis is

correct. We agree that until the entire FAA process had run its

course, there remained at least a "reasonable possibility” of final

FAA determination of no hazard at the site. See Women’s

Broadcasting Coalition, supra. ° Issues 1 and 2 are resolved in

° In addition to its challenges concerning the ALJ’s reconsideration of the

Matias/Wimbish May 14 amendment, Imagists excepts to the ALJ’s

acceptance of their original April 17, 1986 amendment curing the

short-spacing deficiency. It argues that the Commission was overly lenient in

even accepting Matias/Wimbish’s application; that, in comparable cases, the

Commission has rejected short-spaced applications unaccompanied by waiver

requests, citing North Texas Media v. FCC, 778 F.2d 28 (D.C. Cir. 1985);

and, that the ALJ should also have rejected the amendment here. Without

addressing Imagists’ remarks concerning the Commission or HDO, see

generally, Frank H. Yemm, 39 RR 2d 1657 (1977), Imagists’ reliance on

North Texas Media is misplaced. There, the court upheld a Commission order

denying a waiver request of the minimum distance separation rules where a

suitable non-short-spaced site was available. Here, in contrast,

Matias/Wimbish never sought a waiver, nor was it aware that the site was

short-spaced to the reference point for another assigned television channel. Its

consulting engineer prepared the engineering portion of the application without

indicating a short-spacing problem or other deviations from Commission

requirements. Matias/Wimbish’s Petition for Leave to Amend, filed April 14,

1986, at 1 Learning of the short-spacing allegation, Matias/Wimbish hired a

new engineering firm. Jd., at 2. Wimbish, who is an African-American,

determined that it would be prudent to have the engineering firm deal with the

landowners in the rural Texas areas to obtain a new site. Jd. However, he

closely superintended their search for a site, contacting them tweive times by

telephone and six times by letter. Jd., at 3. They spoke with at least six

different landowners before securing the approval of two different landowners

on adjoining parcels of property used for the site. Matias/Wimbish

Supplement, filed April 17, 1986 (affidavit of consulting engineer).

Matias/Wimbish’s efforts are in direct contrast with those found in Texas

Communications Limited Partnership, 6 FCC Red 5191, 5193 (1991), where a

failure to inquire about the status of a site was fatal to a good cause showing.

See also Mableton Broadcasting Co., Inc., 5 FCC Red 6314, 6320-6321 (Rev.

Bd. 1990) (applicant diligent where time was necessary to negotiate even

though efforts ultimately were unsuccessful). Imagists’ exception is denied. As

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IC PPD AE sqrt

Pers

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favor of Matias/Wimbish.

46. With respect to the comparative aspects of Matias/Wimbish,

the ALJ awarded 100% integration credit for both individual’s

promise to work full-time at the proposed facility. Their proposal

was "substantially enhanced" by the minority status of both

principals, and the fact that Matias is female. Wimbish lives in the

proposed service area, and has been active in area civic activities;

both Matias and Wimbish propose to move to Conroe. Wimbish

also received a preference for past broadcast experience, and

neither party has media interests. See Policy Statement on

Comparative Broadcast Hearings, 1 FCC 2d 393 ( 1965).

47. None of the captioned parties (save G-A) excepts to the

ALJ’s comparative evaluation of Matias/Wimbish. G-A argues that

there was insufficient “documentation” of the partnership

arrangement between the two principals and, as a result,

Matias/Wimbish is entitled to no integration credit whatsoever.

G-A Exceptions, pps. 17-22. In reply, Matias/Wimbish notes that

(1) in its proposed findings of fact and conclusions of law filed

with the ALJ on July 21, 1986, G-A averred that Matias/W imbish

for the May 14, 1986 amendment to reduce the Proposed tower height to

secure FAA clearance, the competing parties cannot seriously complain of the

ALJ's ultimate action permitting the amendment. Arguably, Matias/Wimbish

may have been slightly remiss in initially concluding that Wood’s tower at a

similar height and location had received FAA clearance, but the applicant

quickly corrected its error less than 30 days after learning of its

misunderstanding. Moreover, on July 10, 1986, two days after the original

rejection of the May 14 amendment, the ALJ by Order, FCC 86M-2234 (as

corrected), allowed Wood to amend its application to reduce its proposed

tower height from 1145 feet to 745 feet. (G-A, too, was permitted to proffer

its FAA clearance afterwards, i.e., on July 18, 1986. I.D., para. 144.)

Cuban-American Limited, 5 FCC Red 3781, 3782 (1990), cited by G-A as

Support for rejection of Matias/Wimbish’s amendment is inapposite. There,

the Commission upheld an ALJ’s discretion to establish a time limit for

perfecting site proposals. Here, the ALJ was more lenient, and indeed

permitted G-A to submit its FAA clearance even after the close of the record.

These additional exceptions are denied.

29a

Oc ales SN lea

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"earn 100% full-time quantitative integration. Both partners have

pledged to work at the station on a full-time basis. . . ."; (2) both

principals testified at hearing that they each hold their respective

interests and are each proportionately liable for all prosecution

costs, and will share profits and losses accordingly, and

partnership votes will be made on a 51%/49% basis. See Tr.

310-314, 341-342, 365-366, 369-370; (3) the principals have

consistently reported to the Commission and the competing parties

their structure and ownership interests; and (4) they intend to

incorporate upon grant of the construction permit.

48. The ALJ also determined that there was a letter (dated

February 18, 1985) from Matias to Wimbish stating that they are

general partners, describes their respective shares, and expresses

an agreement that both parties will leave current employment

positions to devote full-time to the proposed station. See I.D.,

para. 49. This letter was not introduced into evidence, but was

read into the record. See Tr. 311. At the same time at hearing,

Matias confirmed that the principals had subsequently entered into

a full partnership agreement dated February 18, 1985, and was

executed by both Matias and Wimbish. /d. In light of the

foregoing, G-A’s exceptions will be denied.

CONCLUSIONS

49. Both Wood and G-A are disqualified. Imagists is a sham

applicant, entitled to no integration credit whatsoever. As a result,

the comparative coverage issue (Issue [6]) is of no moment with

respect to G-A (and no new first service to a "white" area is

proposed). As the only applicant entitled to any comparative

preferences pursuant to the Commission’s Policy Statement,

Matias/Wimbish clearly prevails here and will be awarded the

construction permit at contest.

50. ACCORDINGLY, IT IS ORDERED, That the applications

of Montgomery County Media Network, Inc., et al., d/b/a

Imagists (File No. BPCT-84129KF); Wood Broadcasting Company

30a

Desiceeennemenenmeneenaeamaatie

OR PAS Te GIDEA aera Oe) RS Py OVE! ee SO Wie

(File No. BPCT-841129KW); and G-A Communications, Inc.

(File No. BPCT-841129LE) ARE DENIED; and,

51. IT IS FURTHER ORDERED, That the application of

Carmen Matias and Andrew N. Wimbish (File No.

BPCT-841129KK) IS GRANTED. ’

FEDERAL COMMUNICATIONS COMMISSION

Eric T. Esbensen

Member, Review Board

7 The release of this document was delayed by the late reassignment to a

different Board Member.

3la

[3 FCC Red 6710] FCC 88D-38

Before the

Federal Communications Commission

Washington, D.C. 20554

MM Docket No. 85-331

In re Applications of

DLBS INCORPORATED File No. BPCT-840920KJ

Montgomery County Media

Network, Inc. et al.

d/b/a IMAGISTS File No. BPCT-841129KF

CARMEN MATIAS AND ANDREW

N. WIMBISH, JOINTLY File No. BPCT-841129KK

CONROE BROADCASTING

LIMITED PARTNERSHIP File No. BPCT-841129KV

WOOD BROADCASTING

COMPANY File No. BPCT-841129KW

G - ACOMMUNICATIONS,

INC. File No. BPCT-841129LE

For Construction Permit

Conroe, Texas

Appearances

George R. Borsari, Jr., and Howard W. Simocox, Jr., on behalf

of DLBS Incorporated; James L. Oyster, on behalf of Montgomery

County Media Network, Inc. et al, d/b/a Imagists; Ann C.

Farhat0, on behalf of Carmen Matias and Andrew N. Wimbish,

Jointly; Richard J. Bodorff, David D. Oxenford, Janet M. Evans,

Carroll John Yung, and Susan E. Borke, on behalf of Conroe

Broadcasting, Limited Partnership; Howard G. Slavit, and Philip

V. Jackmauh, on behalf of Wood Broadcasting Company; and

Donald E. Martin, on behalf of G-A Communications, Inc.

32a

ices arene eeeientinenemmmmeiiliie

INITIAL DECISION OF

ADMINISTRATIVE LAW JUDGE

EDWARD LUTON

Issued: November 8, 1988; Released: November 17, 1988

I. PRELIMINARY STATEMENT

1. This proceeding involves the mutually exclusive applications

for a new television station in Conroe, Texas, filed by Conroe

Broadcasting (Conroe), Wood Broadcasting Company (Wood),

DLBS Incorporated (DLBS), Carmen Matias and Andrew N.

Wimbish, Jointly (M&W), Montgomery County Media Network,

Inc. et al. d/b/a Imagists (Imagists), and G-A Communications,

Inc. (G-A). The Designation Order, MM-0791, released

November 13, 1985, specified the following issues for hearing:

1. To determine whether the applications of G-A

Communications, Inc. and Carmen Matias and Andrew N.

Wimbish. Jointly are consistent with the minimum mileage

separation requirements of Section 73.610 of the

Commission’s Rules and, if not, whether circumstances

exist which would warrant a waiver of the Rule.

2. To determine with respect to each of the applicants,

whether there is a reasonable possibility that the tower

height and location proposed by each would constitute a

hazard to air navigation.

3. To determine which of the proposals would, on a

comparative basis, best serve the public interest.

4. To determine, in light of the evidence adduced pursuant

to the foregoing issues, which of the applications should

be granted.

2. By Memorandum Opinion & Order, FCC 86M-1254

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j

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(released April 10, 1986), the following issue was added against

Wood:

To determine whether Wood Broadcasting Company is

financially qualified to construct and operate its proposed

television station in Conroe, Texas.

3. Issue 1 was resolved in G-A’s favor pursuant to summary

decision. Order, FCC 86M-1780 (released May 27, 1986). Issue

2 was resolved in favor of DLBS, Conroe Broadcasting, and

Imagists pursuant to summary decision. Order, FCC 86M-1446

(released April 29, 1986) (DLBS): Order, FCC 86M-1257

(released April 10, 1986) (Conroe Broadcasting); Order, FCC

86M-798 (released March 3, 1986) (Imagists).

4. Hearing sessions were held during the period May 13-19,

1986. The record in this proceeding was closed on May 19, 1986.

Order, FCC 86M-1781 (released May 27, 1986).

5. Subsequent to the filing of Proposed Findings of Fact and

Conclusions of Law by the parties, the Presiding Judge designated

additional issues to be tried in this proceeding. In response to a

Motion to Enlarge Issued filed by Conroe Broadcasting, Limited

Partnership, the Presiding Judge added the following issue by way

of a Memorandum Opinion and Order, FCC 87M-344, released

February 18, 1987:

a) To determine whether G-A has failed to disclose a real

party-in-interest to its application.

b) To determine the effect of the evidence adduced under

(a) above on the basic qualifications of G-A to be a

Commission licensee.

6. By Memorandum Opinion and Order, FCC 87M-2010,

released August 25, 1987, a comparative coverage issue was

added:

To determine the areas and populations which would

receive television service of 64 dBu (Grade B) or greater

intensity, together with the availability of other Grade B

television services in such areas, for the purpose of

determining whether a comparative preference should

accrue to any of the applicants.

7. A hearing conference was convened on September 21, 1987.

Further hearing sessions were conducted on December 1, 1987

and May 2, 1988. The record was closed on May 2, 1988. Tr.

1557; Order, FCC 88M-1398, released May 11, 1988.

II. FINDINGS OF FACT

* * *

[Material unrelated to the instant petition omitted]

B. Imagists

25. Montgomery County Media Network. Inc., et al., d/b/a/

Imagists, is a Texas limited partnership. The general partner is

Montgomery County Media Network, Inc. (Montgomery), a

Texas corporation. Imagists Ex. 1, p. 1. It was stipulated at

hearing that as of the B Cut-off date, Montgomery was

structured as follows:

Name Position Ownership Interest

Frank Garza President 33 1/3%

Dr. Rhonda Saldivar Secretary 33 1/3%

Alan William Rossing _ Vice President 33 1/3%

Tr. 84. Subsequent to the B Cut-off, Dr. Saldivar and Mr.

Rossing each came to own a 59 percent share in Imagists. The

minutes of Montgomery’s Board of Directors meeting of

35a

December 13, 1985 show that Imagists’ President, Frank Garza,

tendered his resignation. CBLP Ex. 2; Tr. 100. Dr. Saldivar

assumed Mr. Garza’s position as President, and Mr. Rossing

assumed Dr. Saldivar’s position as Secretary at the December

13, 1985 meeting. The resulting structure of Montgomery is as

follows:

Name Position Ownership Interest

Dr. Rhonda Saldivar President 50%

Alan William Rossing Vice President 50%

Secretary

Imagists Ex. 1. p. 1.

26. Montgomery’s Articles of Incorporation were filed

November 8, 1984. Wood Ex. 1A. Dr. Charles Johnson was

Montgomery’s initial Director, Wood Ex. 1A. p. 2; Tr. 108.

27. The limited partner of Imagists is Humanity Interested

Services, Inc. (HIS), a non-profit tax exempt Texas corporation.

Imagists Ex. 1, p. 1. HIS operates a school in Conroe, grades

K-12. Id. Dr. Charles Johnson is Executive Director of HIS.

Tr. 90-91. David Johnson is Secretary of HIS. Dowen Johnson

is Vice President of HIS. Tr. 114. David and Charles Johnson

are brothers. Dowen is a nephew of David Johnson. Tr. 115.

28. The capital contributions made to the partnership are as

follows:

Name Cash Property

Montgomery $1,000.00 -0-

HIS -0- $ 10,000.00

36a

Conroe Ex. 3. Dr. Saldivar and Mr. Rossing testified that they

are each obligated to contribute $ 500 which will comprise

Montgomery’s $ 1,000 capital contribution to the partnership.

Neither Dr. Saldivar nor Mr. Rossing have actually paid any of

this money thus far. Nor have they made contributions toward

the costs of Imagists’ application. Tr. 108, 140. Neither Mr.

Rossing nor Dr. Saidivar has signed a stock subscription

agreement. Tr. 109, 140-141.

29. The shares of profits or other income accruing to the

partnership are as follows:

Name Share of Profits

Montgomery 1%

HIS 99 %

Conroe Ex. 4.

30. Dr. Rhonda Hill Saldivar proposes to serve as the full

time (minimum 40 hours per week) Program Director of the

station. Imagists Ex. 2, 1. Dr. Saldivar will be chairman of the

program advisory committee, will interview prospective

employees, and make recommendations to the General Manager

regarding the hiring of staff. Dr. Saldivar is a black female.

31. Dr. Saldivar currently resides in Houston, Texas, within

the Grade B contour of the proposed station. There is no record

evidence which shows the length of that residence.

32. Dr. Saldivar has been employed at Texas Southern

University as an Assistant Professor in the English Department.

Imagists Ex. 2. Dr. Saldivar was a reference librarian at the

Houston Public Library from 1984 to 1985. She was a freshman

English instructor at Houston Community College from 1982 to

1983. She was an English teacher at Jersey Village High School

in Jersey Village, Texas, from 1981 to 1982. Between 1979 and

37a

1980, Dr. Saldivar taught English at Jarvis Christian College in

Hawkins, Texas. Imagists Ex. 2, p. 3. Dr. Saldivar also taught

English at Jarvis from June to August, 1977.

33. Dr. Saldivar testified that she became aware of the

availability of a channel in Conroe through David Johnson, a

member of HIS, while she was teaching at Southern Bible

College. (January 1984 to May 1984). Tr. 86; Imagists Ex. 2.

David Johnson invited Dr. Saldivar to become a member of

HIS. Tr. 88. Through David Johnson, Dr. Saldivar became

acquainted with Charles Johnson, Executive Director of HIS.

Tr. 90-91. Following a telephone conference with David

| Johnson in which he asked Dr. Saldivar to participate in the

Conroe application, members of HIS met with Dr. Saldivar to

| discuss the application. Tr. 89-90. At that first meeting, the

relationship between HIS, Montgomery and Imagists was

explained to Dr. Saldivar. Tr. 91. According to Dr. Saldivar,

the idea to form a limited partnership was Dr. Charles

Johnson’s. Tr. 121. Dr. Saldivar had no role in preparing

Imagists’ application, and she does not know who did prepare

that application (Tr. 92).

34. In its application, Imagists lists its address as "200

Avenue J, Conroe, Texas." HIS has offices at that address and

operates the Christian Montessori School on that property. Tr.

93-94, 136.

35. The Certificate of Limited Partnership of Imagists lists its

general partner, Montgomery, as having a principal place of

| business at P.O. Box 42, Conroe, Texas, 77305. Dr. Saldivar,

| the President of Montgomery, testified that P.O. Box 42

belongs jointly to Montgomery and NIS. Tr. 95. However, Dr.

Saldivar does not have a key to that post office box. She

testified that Charles Johnson has the key. Tr. 96.

36. Thus far, all of Imagists’ legal and engineering fees have

been paid by HIS (Tr. 112). Dr. Saldivar has not contributed

38a

any money toward Imagists’ application thus far. Tr. 108. She

has not signed a stock subscription agreement. Tr. 109.

37. Alan William Rossing proposes to serve as full time

(minimum 40 hours per week) General Manager/Sales Manager

of the station. In this position he will be principally responsible

for the day-to-day operation of the station and for management

of the sales staff (Imagists Ex. 1). Mr. Rossing currently resides

in Conroe, Texas, and has resided there since approximately

1984. Mr. Rossing is an American Indian (Imagists Ex. 1).

38. Mr. Rossing is currently employed by Atlas Single-Ply

Inc., a commercial industrial roofing company. Tr. 154-155.

Prior to his employment at Atlas and beginning in July 1985,

Mr. Rossing worked for L & R Personnel, Inc., as an assistant

manager, bartender, and waiter at the Tejas Cafe and Bar in

Conroe. Imagists Ex. 1, p. 3. From April 1985 until his

employment at Atlas, Mr. Rossing was the co-owner and

operator of Curtsinger-Rossing, Inc. d/b/a/ "Old Conroe Deli

and Catering." From September 1984 to March 1985, Mr.

Rossing was the manager of Conroe City Gulf. He was

employed by Ewing Tex Corporation, an industrial roofing

company, from 1983 to 1984 as a general sales manager and

supervisor. From 1982 to 1983, Mr. Rossing was the food and

beverage directorat the Texas River Plantation Country Club in

Conroe, Mr. Rossing has not claimed civic participation in

Conroe.

39. In the Summer of 1984, Mr. Rossing became aware of

the availability of a channel at Conroe through Charles Johnson.

Tr. 132. Mr. Rossing testified that during their first

conversation, Mr. Johnson asked him to be on the board of

directors of an applicant for Conroe. Jd.

40. Mr. Rossing was not involved in the selection of

Imagists’ communications counsel. Tr. 135. He testified that

Frank Garza and Charles Johnson made that selection. To Mr.

39a

Rossing’s knowledge, Messrs. Johnson and Garza selected

Imagists’ engineer. He does not know who selected the

applicant’s FAA consultant.

41. According to Mr. Rossing, he first discussed the form of

the applicant with Charles Johnson and Frank Garza in

November 1984. Tr. 133-134. The idea for forming a limited

partnership originated with Frank Garza and Charles Johnson.

Tr. 134.

42. Mr. Rossing has never met Mr. Garza. Tr. 147. At the

time Imagists’ application was filed, Mr. Rossing had not

spoken with Mr. Garza or Dr. Saldivar. Tr. 149. Dr. Saldivar

and Mr. Rossing first met in December 1985, over a year after

the application had been filed. Tr. 138. At the December 13,

1985 meeting, Mr. Rossing first learned from Charles Johnson

that Mr. Garza had resigned. Tr. 1139, 156. Mr. Garza offered

his resignation on August 31, 1985. Tr. 156-157, 164.

43. When Charles Johnson first approached Mr. Rossing

about becoming a member of the applicant, there was no

discussion of Mr. Rossing’s future role at the proposed station.

Mr. Rossing agreed to help out in whatever way Charles

Johnson saw fit. Tr. 164. Mr. Rossing testified that either

Charles Johnson or Frank Garza chose him as Vice President of

Montgomery in the latter part of 1984. Tr. 159. Mr. Rossing

did not learn that he was chosen for this position until the latter

part of 1985, approximately a year after having been selected.

44. Mr. Rossing testified that all financial responsibilities of

the partnership would be borne by HIS. Tr. 140. Mr. Rossing

testified that Montgomery has no bank account and that he does

not know whether Imagists has a bank account. Mr. Rossing has

pledged $ 500 to Montgomery. He will be obligated to

contribute the money if Imagists receives a grant of construction

permit. Mr. Rossing has not contributed any money toward

Imagists’ application thus far. Tr. 140. Mr. Rossing does not

40a

know the extent of Montgomery’s potential liabilities. Tr. 158.

To his knowledge, possible liabilities of Montgomery have not

been discussed. Mr. Rossing testified that he does not know

how any additional funding beyond HIS’ initial $ 10,000 will be

treated. Tr. 144-145. Mr. Rossing stated that an antenna site

has been located; he does not know the location of the studio

site. Tr. 145-146.

45. Mr. Charles Johnson testified that he is Pastor of

Evangelistic Temple of Conroe. Tr. 171. He stated that one of

the attorneys on the HIS Board of Directors drafted the Articles

of Incorporation for Montgomery. Tr. 172.

46. Mr. Johnson has the key to P.O. Box 42 (actually 421) in

Conroe. Tr. 176-177. Imagists’ mail is delivered to 200 Avenue

J. Conroe, Texas. Tr. 177. Mr. Johnson testified that whenever

mail was of a nature that Imagists needed to receive, he would

deliver it to Imagists. Tr. 178.

C. Matias and Wimbish

47. Section 73.610 (short-spacing) and air hazard issues were

designated against Matias and Wimbish in the Hearing

Designation Order. On April 14, 1988, Matias and Wimbish

submitted a petition for leave to specify a new, properly spaced

site. In this amendment, Matias and Wimbish specified a tower

height of 1150 feet. Matias and Wimbish indicated, in a

supplement to the petition for leave to amend filed April 17,

1986, that another applicant herein, Wood, had proposed the

same site, and that FAA approval had been issued to Wood.

Matias and Wimbish indicated its belief that it, too, would soon

obtain FAA approval (Tr. 390-391). This amendment was

accepted at hearing; however, Matias and Wimbish subsequently

learned that in fact Wood had never obtained FAA approval for

its 1150 foot proposal; rather, a substantial height reduction was

required, as the proposed tower is in the flight path of an

international airport (Tr. 293).

4la

48. Matias and Wimbish’s May 14, 1986, amendment, to

lower the tower height, was rejected. Memorandum Opinion and

Order, FCC 86M-2184 (released July 8, 1986). Noting that the

May 14, 1986, amendment was required only because of

"careless and erroneous reliance on what it unjustifiably

believed to be the proposal of a competitor,” it was ruled that

Matias and Wimbish had failed to demonstrate good cause for

acceptance of the amendment. In a further Order, FCC

86M-2183 (released July 8, 1986), the Presiding Judge denied

Matias & Wimbish’s May 14, 1986. Motion for Partial

Summary Decision, where Matias & Wimbish had sought

summary decision of the Section 77.610 (short-spacing) and air

hazard issues.

49. Carmen Matias and Andrew N. Wimbish, Jointly, is a

general partnership. Matias/Wimbish Ex. 1, p. 1: Tr.311. The

partnership is structured as follows:

Name Position Ownership Interest

Carmen Matias General Partner 51%

Andrew N. Wimbish General Partner 49%

Matias/Wimbish Ex. 1. p. 1; Ex. 2, p. 1.

The only written understanding concerning the structure of the

partnership is a February 18, 1985 letter from Ms. Matias to

Mr. Wimbish. The letter states that the parties are general

partners, describes their respective shares, and expresses an

agreement that both parties will leave their present positions to

devote their full time to the station if they are granted a

construction permit. Tr. 311. This letter is the only formal

documentation of the partnership’s existence. Tr. 362.

50. Ms. Matias testified that her 51 percent share of the

| partnership entitles her to 51 percent of the responsibility in the

station’s operation. She also stated that profits would be

42a

OO

reinvested in the station for programming equipment and

community programs. Tr. 314, 368-369. Further, some profits

would be used to pay the partners’ salaries. Tr. 369.

51. Ms. Matias and Mr. Wimbish testified that Matias and

Wimbish intends to incorporate after Matias and Wimbish is

granted a construction permit. Tr. 311-312, 376, 413-414.

Beyond discussions of intent to incorporate, however, Matias

and Wimbish has taken no steps to form a corporation. Tr.

313-315, 376.

52. Carmen Matias proposes to serve full time (a minimum of

40 hours per week) as the General Manager of

Matias/Wimbish’s proposed station. In that capacity she will

direct and supervise the day-to-day operations of the station and

its employees. In addition, Ms. Matias will implement and

administer the station’s equal employment opportunity program.

Matias/Wimbish Ex. 1, pp. 3-4; Tr. 343.

53. Ms. Matias is an Hispanic female, born in San Juan,

Puerto Rico. In 1976, she received a Bachelor of Arts degree in

Communications from Hunter College of the City University of

New York. Matias/Wimbish Ex. 1, pp. 1-2. Ms. Matias is

currently employed as the Editorial Communications Manager

for The New York Daily News, where her responsibilities

include: the supervision of 12 promotion department

copywriters and graphics personnel; promotion of the news

editorial product, particularly via broadcast media; serving as

media liaison, where Ms. Matias writes and arranges for the

distribution of press releases publicizing editorial and corporate

developments at the newspaper and is involved in the production

of programming for internal use of the company; serving as

liaison between the promotion/public relations departments with

the newspaper’s editorial department; and production of all

internal communications and publications including NewsNotes

(management letter) and NewsPix (employee news magazine)

(since January 1985). Subsequent to January 29, 1986, Ms.

43a

{

Matias has participated in production meetings concerning a

seven-part series on the problems and issues related to mass

transit to be aired by Channel 5 in New York City as part of a

joint venture of Channel 5 and The New York Daily News. Id. at

p. 2; Tr. 345-346. Upon the grant of the construction permit to

Matias/Wimbish, Ms. Matias will terminate her present

employment and relocate to Conroe, Texas. Matias/Wimbish

Ex. 1, p. 4; Tr. 344-345.

54. From September 1982 to April 1983, Ms. Matias was the

Producer of Station WOR-TV’s (New York, New York -- now

Secaucus, New Jersey) daily 60 minute public affairs program

"Straight Talk." As Producer, Ms. Matias supervised a

12-person production staff, wrote on-air copy, developed and

executed program ideas, was responsible for the operating

budget, approved on-location remotes and selected programs for

re-broadcast.

55. From March 1983 to May 1984, Ms. Matias was an

independent freelance producer of a one--hour television pilot

entitled "Women at Work, commissioned by Group W, New

York, New York and aired over cable television. In that

capacity, Ms. Matias wrote the script, hired the production

personnel and supervised ten individuals.

56. From March 1980 to August 1982, Ms. Matias was the

Assistant to the President and Liaison for broadcast production

activities at Public Broadcasting Station WNET, Channel 13,

New York, New York. In that capacity, Ms. Matias was

involved in long-term corporate planning, national and

metropolitan area programming, project development and

underwriting for various programs, and was extensively

involved in foreign co-productions and acquisitions. Ms. Matias

also served as the management representative to the Corporation

for Public Broadcasting (CPB) and Public Broadcasting Service

(PBS).

57. From November 1976 to March 1980, Ms. Matias was

employed by Station WNEW(TV), (now WNYW(TV)), Channel

5, New York, New York, beginning as a production assistant

and working her way up to field producer and, ultimately, the

associate producer of "Midday," a daily 90 minute public affairs

program produced and aired by the station. Ms. Matias was

responsible for the initiation and execution of program topics,

the coordination of segments and shows, conducting preliminary

guest interviews, writing on-air copy and the scheduling of crew

calls.

58. Ms. Matias has been employed as media executive with

Howard J. Rubenstein Associates, Inc., a New York City public

relations firm where she was responsible for the placement of

the firm’s clients on media in the tri-state area, and on at least

one occasion, assisted in the programming production of a

segment featuring the firm’s client on a program entitled "P.M.

Magazine,” which was produced and aired by Channel 5 in

New York City (May 1984 to January 1985). Ms. Matias has

also freelanced as a media specialist and marketing consultant

for various New York City public relations firms where she was

responsible for placing the firm’s clients on television and in

other media, and special events coordination (March 1983 -

March 1984). Matias/Wimbish Ex. 1, pp. 2-3; Tro. 346-349.

59. Andrew N. Wimbish will be employed full time (a

minimum of 40 hours per week) as Director of Finance and

Administration at Matias/Wimbish’s proposed station. In that

capacity Mr. Wimbish will establish and implement the fiscal

policies of the station and he will direct and supervise all

aspects of the station’s financial operations. Mr. Wimbish will

report to Ms. Matias, the station’s General Manager.

Matias/Wimbish Ex. 2, pp. 4-5; Tr. 343-344; 396-397;

414-415.

60. Mr. Wimbish is a black American male, born in

Pittsburgh, Pennsylvania. Since July 1980, Mr. Wimbish has

45a

resided in Houston, Texas, within the proposes service area of

Matias/Wimbish’s station. In 1978, Mr. Wimbish received a

Bachelor of Science degree in Accounting from Point Park

College, Pittsburgh, Pennsylvania. Since August, 1985, Mr.

Wimbish has been self-employed as a certified public accountant

in Houston. Upon the grant of the construction permit to

Matias/Wimbish, Mr. Wimbish will terminate his

self-employment activities and relocate to Conroe, Texas.

Matias/Wimbish Ex. 2, pp. 1-2, 5; Tr. 377-378, 394, 409.

61. Prior to August 1985 and for approximately nine years

(since 1976), Mr. Wimbish was employed by Gulf Oil

Corporation, Houston, Texas in various financial and financial

management positions. Following the acquisition of Gulf by

Chevron, Mr. Wimbish declined an employment opportunity

with the merged company which would have required Mr.

Wimbish and his family to relocate to San Francisco,

Matias/Wirabish E. 2, p. 2; Tr. 377-378.

62. From 1982 until August 1985, Mr. Wimbish held the

position of Supervisor of Management Reporting and Control

for Gulf’s International Trading and Marine Sales Division. In

that position, Mr. Wimbish directly supervised five employees

and was responsible for the review and consolidation of sales

and earnings of subsidiaries for presentation to senior corporate

management; establishing standards and controls for recording

and reporting of company transactions and assets; and

developing financial information for management in order to

facilitate the monitoring and control of operations.

63. From 1980 to 1982, Mr. Wimbish held the position of

Supervisor for Gulf’s Control Unit, In Houston. In that

capacity, Mr. Wimbish directly supervised four employees and

directed, interpreted and coordinated work assignments in

accounts receivables, general ledgers and data control.

64. From 1979 to 1980, Mr. Wimbish was a Senior

46a

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Accountant for Gulf in Pittsburgh, Pennsylvania, supervising six

employees in the preparation of marine fuel billings to Gulf’s

customers worldwide. Mr. Wimbish’s responsibilities also

included the formulation and submission of year-end financial

statements and tax receipts. From 1976 to 1979, Mr. Wimbish

was a Junior Accountant for Gulf, also in Pittsburgh. From

1974 to 1976, he was employed as an accountant with Koppers

Company, Inc., Pittsburgh, Pennsylvania, Matias/Wimbish Ex.

2, pp. 2-3; Tr. 377-378.

65. Mr. Wimbish has been active in the following civic and

community activities in Houston, Texas, located within the

proposed service area of Matias/Wimbish’s station:

Member, National Association of Black Accountants,

Houston Chapter (1984 to present). Projects undertaken

include free income tax return assistance to low income

taxpayers (one hour per week during tax season);

sponsoring of a Christmas party for disadvantaged

children (one hour a week during Christmas); assistance

with the Toys-for-Tots program.

United Way Campaign - solicited funds for years 1982

and 1983 (one hour each day during campaign period --

August to September).

Member, Northglen Civic Association, Financial

Committee -- the committee meets and discusses the

financial development of the Northglen neighborhood of

Houston (part of the northwest section of Houston

where Mr. Wimbish resides) (one hour per week, 1986

to present).

American Heart Association, Houston Chapter --

solicited funds during 1984 (one hour per week during

campaign period -- approximately a one to two-month

period).

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Member, Progressive Missionary Baptist Church (1985

to present).

Subject to Mr. Wimbish’s full time commitment to work at the

proposed station, Mr. Wimbish will remain active in the

National Association of Black Accountants and the Progressive

Missionary Baptist Church and develop new civic and

“community interests in Conroe, devoting a minimum average of

one to two hours each week to the foregoing activities.

Matias/Wimbish Ex. 2, pp. 3-3; Tr. 393-394, 402-403.

* * *

[Material unrelated to the instant petition omitted]

Comparative Coverage Issue

126. Following are the total areas and populations which the

applicants will cover with their respective Grade B contours:

Grade B

Area Sq. Mi. Population

DBLS Incorporated 4,787 935,125

(DBLS)

Imagists 8,381 2,730,210

Matias and Wimbish 6,908 1,916,047

(M&W)

Conroe Broadcasting 7,106 2,449,297

(Conroe)

Wood Broadcasting 6,365 1,650,641

(Wood)

G-A 5,415 2,579,360

~ 127. None of the applicants will provide a first service to any

area. Following are the areas and populations to which the

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aids Sentinel ad

applicants will provide a second through fifth service.

2nd Service 3rd Service 4th Service Sth Service

Applicant Area Area Area Area

Sq. Mi. Pop. Sq. Mi. Pop. Sq. Mi. Pop. Sq. Mi. Pop.

DBLS 12 70 782 38,869 451 6,528 610 16,941

Imagists 83 4,215 1,592 126,769 777 31,820 730 19,916

M&W' 100 717 1,328 120,429 720 31,250 690 18,389

Conroe 43 314 1,066 97,601 617 20,969 712 19,374

Wood 75 586 1,166 117,995 640 29,463 640 17,389

G-A 0 0 45 24,853 272 4,585 583 16,397

Ill. CONCLUSIONS OF LAW

(a) Qualifying Issues

Matias and Wimbish

Section 73.610 Issue/Air Hazard Issue

128. On April 14, 1986, Matias/Wimbish filed an amendment

to its application specifying a transmitter site in compliance with

the minimum mileage separation requirements of Section 73.610

of the Commission’s Rules. Matias/Wimbish was there

proposing a tower height of 1,150 feet, and Federal Aviation

Administration (FAA) approval for a tower of that height was

made to appear to be routine. More specifically,

Matias/Wimbish proposed to locate its tower close to that of

Wood Broadcasting; it claimed to be proposing a tower

approximately equal in height to that proposed by Wood, and

Matias/Wimbish expressed its belief that the FAA had already

issued a "no hazard determination respecting Wood’s proposal.

In light of all this, Matias/Wimbish concluded that FAA

approval of its proposal "is expected within the next few

' These figures for M&W do not take into account the fact that its antenna

height has been substantially reduced.

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weeks".

129. The Matias/Wimbish amendment was accepted as

announced at hearing on may 13, 1986. Matias/Wimbish

subsequently learned that it was mistaken in its belief that the

FAA had approved a 1,150 foot tower height for Wood; in fact,

Wood’s approved tower height is approximately 754 feet. The

FAA informed Matias/Wimbish that it would not approve a

1,150 foot tower, but that it will approve a tower approximately

740 feet in height. As a result, on May 14, 1986

Matias/Wimbish sought to amend its proposal to reduce its

tower height to 750 feet. That Petition for Leave to Amend was

denied and the amendment was not accepted (Order, FCC

86M-2184, released July 8, 1986). On May 23, 1986,

Matias/Wimbish sought summary decision on the short-spacing

issue. That motion was summarily denied (Order, FCC

86M-2183, released July 8, 1986.

130. By its May 14, 1986 petition, Matias/Wimbish sought

only to reduce its antenna height to obtain FAA approval, and it

should have been permitted to do so. The petition was rejected

because Matias/Wimbish’s "significant carelessness” in

proposing a 1,150 foot tower in the blind hope that the FAA

would approve that height was inconsistent with the notion of

unforeseeability. That analysis was in error. Matias/Wimbish’s

“carelessness had nothing to do with its ability to anticipate the

FAA’s later-expressed disinclination to approve a 1,150 foot

tower. Nothing that Matias/Wimbish did, or failed to do, caused

the FAA action to be foreseeable. Until the time of the FAA

action, there was a reasonable possibility of FAA clearance

(Women’s Broadcasting Coalition, 59 RR 2d 730) and,

consequently, no reason for Matias/Wimbish to have "foreseen"

anything else.

131. Good cause is otherwise shown for Matias/Wimbish’s

May 14, 1986 amendment. The amendment: (a) is not voluntary

in nature; (b) confers no comparative advantage: (c) does not

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prejudice any party; (d) does not disrupt the proceeding; (e)

does not require the addition of issues or parties; and (f) was

diligently filed.

132. Memorandum Opinion and Order, FCC 86M-2184

released July 8, 1986, is vacated; the Petition of Carmen Matias

and Andrew N. Wimbish, Jointly, for Leave to Amend, filed

May 14, 1986 is granted, and the amendment is accepted.

ORDER, FCC 86M-2183, released July 8, 1986, is also

vacated; the Motion for Leave to File Motion for Partial

Summary Decision and Motion for Partial Summary Decision,

both filed May 23, 1986 by Carmen Matias and Andrew N.

Wimbish, Jointly, are granted, and the Section 73,610 issue

designated against the applicant is resolved in its favor.

133. The presiding officer officially notices Aeronautical

Study No. 86-ASW-0898-OE submitted as Appendix A to the

Reply of Matias/Wimbish to Oppositions to Petition for Leave

to Amend filed on June 3, 1986. Therein, the FAA approved

Matias/Wimbish’s transmitter site location and tower height at

750 feet above ground level. The air hazard issue designated

against Matias/Wimbish is resolved in its favor.

** *

[Material unrelated to the instant petition omitted]

(b) Standard Comparative Issue

Comparative Coverage

145. In terms of overall areas and population served, Imagists

has an advantage over each of the other applicants. This

advantage ranges from marginal, vis-a-vis Conroe and G-A, to

moderate, vis-a-vis M&W and Wood, to substantial vis-a-vis

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DLBS. Moreover, while each of the applicants, with the

exception of G-A, would provide some second service,

Imagist’s second service to 4,215 persons is substantially greater

than the 717 person which would receive a second service from

the second place applicant, M&W. Imagists also leads each of

the other applicants in the provision of third, fourth and fifth

services, albeit by relatively small margins. Imagists is entitled

to a slight advantage for total coverage over DLBS and Wood.

In each case Imagists serves a significantly larger population.

Similarly, Conroe, M&W and G-A, which will each provide

_ Grade B service to twice as many people as DLBS, deserve a

slight comparative advantage over DLBS. See Simon Geller, 90

FCC 2d 250, 268-9, 276 (1982). The largest preferences,

however, are traditionally awarded for provision of new first or

second (first competitive) service. In this regard, Imagist is

entitled to a moderate advantage over each of its competitors for

its provision of service to a larger total population and for its

provision of a first competitive service to a more significant

population. Christian Broadcasting of Midlands, Inc., 99 FCC

2d 478, 582-83 (Rev. Bd. 1984).

DLBS

146. DLBS is entitled to 100% quantitative integration credit

for its proposal to integrate its three principals in management

positions on a full-time basis. The integration proposal is

enhanced to a minor degree by the broadcast experience of the

three principals. Slight enhancement is awarded for the proposal

of one of DLBS’s principals, 1/3 owner Dr. Schwarzwalder, to

establish future residence in Conroe, Texas.

147. Dr. Schwarzwalder is one of 23 directors of Capital

Broadcasting Association, licensee of non-commercial station

KMFA(FM), Austin, Texas. As such, he has some involvement

in the making of policy for the station and in its management. A

slight diversification demerit will be assessed. San Joaquin

Television Improvement Corp., 54 RR 2d 1206.

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Imagists

148. Were Imagists a bona fide limited partnership, it would

be entitled to an overall quantitative credit of 66 2/3%, based

on the full-time participation of its two remaining integrated

principals. However, the record in this proceeding clearly

establishes that defacto control over the applicant rests with the

limited partners. Thus, the integration credit due Imagists must

be reduced to 2/3% to reflect the 99% ownership of the

unintegrated limited partner.

149. When Imagists filed its application, its general partner,

Montgomery County Media Network, was owned in equal share

by Frank Garza, Alan Rossing, and Rhonda Saldivar. This

structure was still in place as of the "B" cut-off date, January

16, 1985. On August 31, 1985, Frank Garza resigned as a

principal of Montgomery County Media Network and

surrendered his ownership interest. That resignation was

reflected in an Imagists’ amendment filed on December 30,

1985.

150. Under longstanding Commission case law, "an applicant

will not be permitted to retain a comparative advantage if a

principal voluntarily withdraws after the time for amending as a

matter of right has expired." Las Misiones De Bejar Television

Co., 53 RR 2d 119, 123 (Rev. Bd. 1983). In this proceeding,

Mr. Garza’s resignation, due to personal and work problems

(Tr. 157) must be considered as a "voluntary withdrawal."

Thus, Mr. Garza’s resignation caused a 33 1/3% diminution in

Imagists’ integration proposal. This diminution cannot be cured

by the post-designation increase in ownership of Rhonda

Saldivar and Alan Rossing. Barton Broadcasting Co., FCC

86R-31, released May 15, 1986, Central Texas Broadcasting

Co. Ltd., 90 FCC 2d 583, 51 RR 2d 1478 (Rev. Bd. 1982).

Since Frank Garza’s resignation must be held against imagists,

the maximum quantitative integration credit available under

normal circumstances would be 66 2/3% for the full-time

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participation of Saldivar and Rossing.

151. The driving force and controlling principal behind

Imagists is Charles Johnson, executive director of the limited

partner, HIS. Charles Johnson is the minister of the Evangelistic

Temple in Conroe, Texas. (Tr. 171). Under the name of

Evangelistic Temple, Mr. Johnson was the original petitioner to

have Channel 55 allocated to Conroe. (Tr. 172). Without

consulting either Saldivar or Rossing, Johnson decided that

Imagists would be structured as a limited partnership. (Tr. 121).

In the Articles of Incorporation filed for the general partner,

Montgomery County Media Network, Charles Johnson was

named as its sole director (Tr. 108), and is still identified as its

resident agent. (Tr. 108). The address shown on Imagists’ FCC

application is "200 Avenue J, Conroe, Texas. 77301," which is

the location of the offices of HIS (Tr. 94). In Imagists’

Certification of Limited Partnership, the address shown for the

general partner is.a post office box rented and used by HIS.

(Tr. 95). While Charles Johnson has key to the mailbox, no

member of the general partner does. (Tr. 95, 137, 177). Mail

received at the post office box is brought to the offices of HIS,

where it is opened and reviewed by Charles Johnson or the

secretary for HIS. (Tr., 177-78). The public inspection file is

kept at the offices of HIS and is maintained by Charles Johnson.

(Tr. 141). Mr. Johnson attended all formal meetings of the

general partner (Tr. 147-8) and participated in the decision to

make Rhonda Saldivar its president. (Tr. 149).

152. Charles Johnson’s involvement in the prosecution of the

Imagists application is to be contrasted with lack of involvement

of Saldivar and Rossing. Both Rossing and Saldivar were

invited to join the applicant after Imagists’ structure had already

been decided upon. Neither Rossing nor Saldivar took part in

the preparation and filing of the application or in the hiring of

Imagists’ communications counsel, consulting engineers, or

FAA consultant. (Tr. 92-3, 134-5). Rossing and Saldivar did

not know one another prior to the filing of the application. (Tr.

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127). Saldivar was invited to join by Charles Johnson’s brother,

also a director of HIS. (Tr. 89). Rossing was invited to join by

Charles Johnson after Johnson learned that Rossing was an

American Indian. (Tr. 165). Rossing agreed to help out in

whatever way Johnson saw fit, although he had no idea of what

his involvement might be and was not told that he would be

involved in a managerial capacity at the station.

153. While Saldivar and Rossing have each served as

secretary of Montgomery County Media Network, neither has

prepared any minutes of its corporate meetings. (Tr. 97-8, 147).

The minutes are prepared by the secretary for HIS. (Tr. 97-8).

The original minutes are retained by Charles Johnson. (Tr.

148-9). The positions Rossing and Saldivar are to have at the

proposed station were decided upon in a conference phone call

between Rossing, Saldivar, Charles Johnson and

communications counsel. That decision was made in January

1986, a year and two months after the Imagists application was

filed. Neither Saldivar nor Rossing played any part in securing

FAA tower approval, which was handled by Charles Johnson’s

son, Dowen, the Assistant Executive Director for HIS. (Tr.

111).

154. Dr. Saldivar, president of the general partner, did not

know what a public inspection file was (Tr. 101-2), did not

know how many shares of stock she was entitled to (Tr. 108),

and did not know whether money provided by HIS was to be

considered a loan or a contribution to capital. (Tr. 113-4).

155. Mr. Rossing did not know whether Imagists had a bank

account (Tr. 152), did not know what the general partners’

liability would be in a law suit (Tr. 158), and has never

received correspondence directly from communications counsel.

(Tr. 154).

156. Viewed collectively, the foregoing facts wholly

undermine Imagists’ representation that it has and will function

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as a bona fide limited partnership. Saldivar and Rossing have

done nothing more than loan their names and minority status to

Charles Johnson for his use in obtaining a television station.

The contention that Saldivar and Rossing will have exclusive

managerial control of the station while Charles Johnson assumes

a non-participating role is not believed. "The facts of record

overwhelmingly show that [Charles Johnson] has been the

dominant individual in [Imagists] up to the present, and there is

nothing to suggest that he will suddenly become

uncharacteristically inert in the future, other than bald

assertions". Louisiana Super Communications Limited

Partnership, 102 FCC 2d 1293, 59 RR 2d 761, (Rev. Bd.

1985).

157. Ultimately, the limited partnership structure of Imagists

must be disregarded, and the 99% unintegrated ownership of

HIS must be attributed to the applicant for comparative

purposes. NEO Broadcasting Co., 60 RR 2d 125 (Rev. Bd.

1986). Since the only two integrated principals of Imagists

together own a mere two-thirds of 1 percent, Imagists is only

entitled to 2/3% integration credit. The integration proposal is

enhanced by Dr. Saldivar’s minority status, the fact that she is a

female, and by the fact of her residence in Houston, Texas,

within the Grade B contour of the proposed station.

Additionally, enhancement is awarded for the minority status of

Mr. Rossing, and for his local residence.

158. Neither Imagists nor any of its principals has any other

media interests, and receives no diversification demerit.

Matias and Wimbish

159. Matias/Wimbish is entitled to 100% quantitative

integration credit for the proposal to integrate Ms. Matias and

Mr. Wimbish into the management of the station on a full-time

basis. The proposal is substantially enhanced by the minority

status of both Ms. Matias and Mr. Wimbish. Substantial

56a

enhancement is also awarded by virtue of Ms. Matias’ status as

a female. Additional enhancement of the integration proposal

derives from the fact that Mr. Wimbish is presently a resident

of Houston, Texas, within the proposed service area, and both

he and Ms. Matias propose Conroe, Texas, as their residence in

the event of a grant. Finally, the integration proposal is

enhanced by Mr. Wimbish’s participation in civic activities

within the proposed service area, and also by Ms. Matias’

broadcast experience.

160. Matias/Wimbish and its individual general partners have

no media interests and, therefore, receive no diversification

demerit.

Conroe Broadcasting

161. Conroe Broadcasting receives 100% quantitative

integration credit for the full-time integration of its general

partner, Mr. Roosevelt Moore, as its Director of Public Affairs

and Religious Programming. That proposal is substantially

enhanced by Mr. Moore’s minority status. Slight enhancement

is awarded for Mr. Moore’s proposal to establish future

residence in Conroe, Texas, and his broadcast experience

enhances the integration proposal to a minor degree.

162. Conroe Broadcasting has no media interest which are to

be attributed to it in a diversification analysis.

Wood Broadcasting

163. Dr. Wood, a one-third owner who had been proposed as

Wood Broadcasting Company’s general manager, died on

December 3, 1987. The fact of Dr. Wood’s death was reported

by amendment filed January 27, 1988.

164. Even though Commission precedent permits an applicant

to substitute another principal fora deceased principal who had

S71

been proposed as an integrated owner and to maintain, but not

increase, its quantitative integration credit (Rose Broadcasting

Co., 68 FCC 2d 1242, 1248-50), Wood has made no such

substitution on this record. Wood’s quantitative integration

credit is reduced to 66 2/3%.

165. The proposal is enhanced by Mrs. Wood’s service area

residency, her civic activities there, and by her minority and

female status. The proposal is also enhanced by Gina Wood’s

proposed and service area residency, her minority and female

status and, very slightly, by her broadcast experience.

166. Wood receives no diversification demerit.

G-A Communications

167. G-A’s application was filed in November 1984, at a time

when Jo Ann Garcia was its sole principal. The B cut-off date

in this proceeding was January 16, 1985. G-A was incorporated

in the Commonwealth of Virginia in December 1985. Ms.

Garcia received her stock in December 1985. Integration

statements were filed on January 29, 1986. Elizabeth Anderson

received her stock in March 1986. The fact that G-A was not

incorporated until after the B cut-off date does not affect G-A’s

entitlement to 100% quantitative integration credit for the

participation of Ms. Garcia.

168. From the inception of the application until March 17,

1986, when Ms. Anderson acquired her non-voting stock, G-A

had only one principal -- Ms. Garcia. She was the only

principal named in the application and she remained alone

through the time of incorporation. When G-A was incorporated

in December 1985 she was still the sole principal of the

applicant, owning 100% of the outstanding stock. Thus, her

status as the sole principal remained unchanged from the time

the application was filed, through the B cut-off date, and

through the time of incorporation. Unlike the situations in

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Pacific Television, Ltd., 2 FCC Rcd 1101 (Rev. Bd. 1987), and

Hispanic Owners, Inc., 57 RR 2d 695 (Rev. Bd. 1985), there

was only one G-A principal and her status remained constant at

all critical times.

169. G-A’s 100% quantitative integration credit is enhanced

substantially by Ms. Garcia’s status as a member of a racial

minority and her status as a female. The proposal is also

moderately enhanced by Ms. Garcia’s service area residence

and her participation in civic activities there.

170. G-A receives no diversification demerit.

Ultimate Conclusions

171. Wood Broadcasting Company is financially unqualified.

- The quantitative integration credit awarded to Imagists is

sufficiently low to remove it from further consideration. DLBS

(with its 100% quantitative integration, enhanced slightly by the

broadcast experience of its principais, and only very slightly by

the proposed local residence of one of its 1/3 owners) suffers a

slight diversification demerit and can not prevail over any of the

three remaining applicants. Conroe Broadcasting, with its 100%

quantitative integration, substantially enhanced by its 100%

minority participation but enhanced only slightly by its promise

of local residence and broadcast experience, trials both

Matias/Wimbish (100% quantitative integration, 100 substantial

enhancement for minority status, 50% substantial enhancement

for female status, 50% moderate enhancement for service area

residency, 100% slight enhancement for promised local

residency, 50% slight enhancement for service area civil

activities, and 50% slight enhancement for service area civil

activities, and 50% slight enhancement for broadcast

experience), and G-A Communications (100% quantitative

integration, with 100% substantial enhancement for minority

status, 100% substantial enhancement for female status, 100%

moderate enhancement for service area civic activities). The

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enhancement awarded to Matias/Wimbish slightly outweigh

those awarded to G-A, making Matias/Wimbish the preferred

applicant in this proceeding.

Accordingly, IT IS ORDERED that the applications of DLBS

Incorporated, Montgomery County Media Network, Inc. et al.

d/b/a Imagists, Conroe Broadcasting Limited Partnership, Wood

Broadcasting Company, and G-A Communications, Inc., ARE

DENIED, and the application of Carmen Matias and Andrew N.

Wimbish, Jointly, IS GRANTED. ”

FEDERAL COMMUNICATIONS COMMISSION

Edward Luton

Administrative Law Judge

? In the event exceptions are not filed within 30 days after the release cf this

Initial Decision, and the Commission does not review the case on its owr

motion, this Initial Decision shall become effective 50 days after its pubic

release pursuant to Section | .276(d).

60a

[6 FCC Red 1602] FCC 91-68

Before the

Federal Communications Commission

Washington, D.C. 20554

MM Docket No. 87-424

In re Applications of

ASPEN FM, INC. File No. BPH-850712PH

AJAX MOUNTAIN

BROADCASTING CORPORATION File No. BPH-850712PR

For Construction Permit for

New FM Station, Channel 296A,

Aspen, Colorado

ORDER

Adopted: March 11, 1991; Released: March 21, 1991

As Corrected by Erratum, DA 91-1023, August 20, 1991

By the Commission

1. Before the Commission is an Application for Review filed

June 25, 1990, by Ajax Mountain Broadcasting Corporation

(Ajax), and an Opposition and Errata filed July 10 and 11,

1990, by Aspen FM, Inc. (Aspen). These pleadings relate to a

Review Board decision, Aspen FM, Inc., 5 FCC Red 3196

(1990), which granted Aspen’s application and denied Ajax’s

application on the basis that it was not financially qualified. For

the reasons that follow, we reject Ajax’s arguments that the

Board erred in holding that it was financially unqualified.

2. Sue Ann Todhunter, Ajax’s president/treasurer and

majority voting stockholder, certified Ajax’s financial

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qualifications in its application filed July 12, 1985. Todhunter

claimed that Steven P. Hubert, Ajax’s financial backer and

majority non-voting stockholder, had agreed to provide all the

funds Ajax needed to prosecute its application, construct the

station, and operate it for three months without revenue, and

that a loan agreement had been executed by her and Hubert on

July 9, 1985 (Aspen FM Ex. 30). 5 FCC Red 3196, 3197

{4 6-7.

3. The Board found, however, that the loan agreement did

not commit Hubert to provide the entire amount ($ 475,343)

Ajax needed to construct and operate the station because of the

funding conditions specified therein, which

provided that Hubert was to fund Ajax in four distinct and

specific phases, and he had to expressly approve continuing to

each phase of Ajax’s project before the funds needed for the

next phase would be provided. ' The Board also found that

Hubert never made available to Todhunter a balance sheet or

financial statement establishing his ready liquidity. He did,

however, inform Todhunter at the time the agreement was

executed that he intended to use his lines of credit withthe

Maryland National Bank to meet his loan commitment to Ajax,

and that Todhunter could check with the bank to verify those

lines of credit (Tr. 3292-3298). Todhunter did not attempt to

confirm Hubert’s lines of credit (Tr. 3004-3006). When the

records of the Maryland National Bank became available, the

Board found that they showed that Hubert’s 1985 lines of credit

could only be used for real estate investments, and Hubert did

' Phase 1 funding was limited to $ 18,000, which was to be used solely for

prosecuting Ajax’s application through acceptance for filing by the

Commission; Phase II funding was an additional $ 65,000, which was to be

used solely for prosecuting the application through the comparative

proceeding; Phase [I] funding was an additional $ 250,000, which was to be

used solely for constructing the station and start-up operations; and Phase IV

funding was an additional $ 350,000, which was to be used solely for the

continued operation of the station.

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not seek the bank’s approval to use them to invest in Ajax until

1988. 5 FCC Rcd at 3197 4 6-10.

4. Based on the foregoing, the Board found that, when

Todhunter certified Ajax’s financial qualifications, she did not

have reasonable assurance of committed loan funds from Hubert

to construct and operate Ajax’s station for three months without

revenue, nor did she have reasonable assurance of Hubert’s

ready liquidity to meet his loan commitment to Ajax.

Accordingly, the Board concluded that Ajax was not financially

qualified when it filed its appiication and denied its application

on that basis. 5 FCC Rcd at 3199 44 17-20.

5. Ajax argues in its application for review that it

demonstrated at hearing, consistent with Northampton Media

Associates, 4 FCC Red 5517 (1989), that it had reasonable

assurance of committed loan funds from Hubert when it filed its

application, based on Hubert’s hearing testimony that he

intended to fund Ajax’s project through its completion, and on

Todhunter’s hearing testimony that she believed that Hubert

intended to provide all the funds Ajax needed. According to

Ajax, the Commission in Northampton indicated that, when a

financial qualifications issue is specified against an applicant

which has certified its financial qualifications, the applicant can

adduce evidence at hearing to demonstrate that it had reasonable

assurance of financing at the time of certification. Ajax contends

that it did precisely that based on the above testimony of its

witnesses, and that the Board erred in failing to accept its

showing.

6.. We find no merit to Ajax’s argument, inasmuch as it is

based on an erroneous interpretation of the Commission’s

holding in Northampton. While the Commission did indicate

there that an applicant, which certified its financial

qualifications, could show at hearing that it had reasonable

assurance of committed loan funds when it filed its application,

it further explained that the applicant must adduce probative

63a

evidence to do this. Applying the foregoing probative evidence

test to the evidentiary showings submitted by Ajax to establish

that it had reasonable assurance of committed loan funds from

Hubert in 1985, the Board properly concluded that Ajax’s

pre-certification loan agreement, which by its express terms

demonstrated that Hubert was not obligated to provide all of the

funds Ajax needed to construct and operate the station, was

more probative and entitled to more evidentiary weight than the

self-serving testimony of Ajax’s witnesses years later at the

hearing. The Board thus correctly concluded that Ajax failed to

establish that it had reasonable assurance of committed loan

funds at the time of certification. Based on our review, we find

that the Board’s determination is based on substantial record

evidence and reject Ajax’s contention that the Board’s

evaluation of the evidence was either arbitrary and capricious or

inconsistent with the Commission’s pronouncements in

Northampton.

7. Ajax’s further contention that it showed at hearing that

Hubert had sufficient liquid assets to meet his loan commitment

to Ajax at the time it filed its application is similarly flawed. Its

reliance on the testimony of an official of the Maryland Nationa!

Bank, who stated that he knew of no reason why the bank

would not have removed the restrictions on Hubert’s lines of

credit had he requested their removal in 1985, is unavailing. As

the Board aptly pointed out, the records of the bank

contemporaneous with the certification showed otherwise, and

that documentary evidence is more probative and entitled to

more evidentiary weight than the subjective testimony of Ajax’s

witness.

8. Furthermore, as mentioned, Todhunter had not seen a

1985 balance sheet or financial statement evidencing Hubert’s

financial ability to meet his loan commitment to Ajax when she

certified the application; nor had she taken steps to verify the

existence of Hubert’s 1985 lines of credit. See paragraph 3,

supra. Indeed, the most Todhunter knew of Hubert’s financial

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wherewithall at that time was based on second-hand information

derived from Yvonne Schell, who recruited Hubert as an Ajax

investor, acted as his go-between in most of Todhunter’s prior

dealings with him, and informed Todhunter that, based on her

analysis of a copy of Hubert’s financial statement, he was

financially capable of financing Ajax’s entire project (Tr. 2930).

However, as the Commission indicated in Northampton, the

applicant must demonstrate that it has taken the necessary steps

to ascertain that the lender, when not a financial institution, has

sufficient financial resources to meet his loan commitment at the

time of certification, and that reliance on the self-serving

Statement of the indivdual responsible for the certification that

he took the appropriate steps to secure the needed funds would

not be sufficient to demonstrate that it met its burden in this

respect. * For this additional reason, we find that Ajax failed to

demonstrate that it had reasonable assurance of committed loan

funds at the time of certification.

9. In view of the above, and having reviewed the Board’s

decision in conjunction with other pertinent evidence compiled

in this respect, we agree that the financial qualifications issue

specified against Ajax must be resolved against it, and that its

application must be denied for its failure to demonstrate that it

possessed the requisite qualifications to be a licensee when it

filed its application. The Commission has long-held that the

applicant has the burden of demonstrating that it possesses the

qualifications to be a Commission licensee pursuant to 47

U.S.C. § 308(b). See, e.g., Midwest Radio-Television, Inc. , 24

FCC 2d 625, 626 ¢ 4 (1970).

10. A further matter warrants brief discussion. In the Jnitial

? In Northampton, the individual certifying the application had personal

knowledge of the lender’s financial worth (4 FCC Rcd at 5518 44 7-8),

whereas here Todhunter had never met Hubert prior to their execution of the

loan agreement and relied solely on second-hand information as to his

financial ability to meet his loan commitment to Ajax.

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Decision, 4 FCC Red 4642 (1989), the Administrative Law

Judge (ALJ) resolved in Ajax’s favor the financial qualifications —

issue specified against it. > In so doing, the ALJ reasoned that,

because a financial issue looks forward, he could analyze Ajax’s

more recent 1988 financial proposal to determine whether it is

financially qualified to be a licensee. * Jd. at ¢ 6. Based on his

analysis of that financial proposal, the ALJ found that Ajax was

financially qualified (id. at ¢ 7-10) and resolved the financial

qualifications issue favorably to Ajax. Id. at 4648 { 4.

11. In its decision, the Board held that the ALJ’s rationale

that a financial issue is forward looking and does not depend on

the applicant’s financial condition at the time of certification

was plain legal error. 5 Rcd at 3198 ¢ 15. For thé reasons that

follow, we hold that the ALJ not only erred in that respect, but

also erred in accepting Ajax’s new financial proposal into

evidence in the absence of a petition to amend filed pursuant to

47 C.F.R. §73.3522(b) demonstrating the type of good cause

showing required as discussed in paragraphs 12 and 13, infra.

For those same reasons, we reject Ajax’s arguments that the

ALJ correctly held that it was financially qualified.

12. Prior to 1981, before the Commission adopted its-

(now-abandoned) certification procedures, 50 RR 2d 381

3 The ALJ denied Ajax’s application based on misrepresentations, including

knowingly misrepresenting its financial qualifications at the time of

certification, under a misrepresentation/false financial certification issue that

was also specified against it. The Board did not reach, nor have we, the ALJ’s

determination that Ajax should be disqualified under that issue, or Ajax’s

exceptions that the record reflects no intent to deceive.

* Aware that its financial qualifications were being challenged as a result of

the ALJ adding issues against it, Ajax amended its 1985 loan agreement to

remove the conditional funding provisions specified therein, and Hubert also

took steps to have the bank remove the real estate restrictions on his lines of

credit. Ajax then proffered at the hearing its new 1988 financial proposal, and

the ALJ accepted it into evidence.

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(1981), the Commission generally followed a liberal amendment

policy in mutually exclusive broadcast cases, which permitted

applicants to remove fatal deficiencies in their financial

proposals. ° At that time, applicants could amend the financial

proposals during the hearing in response to financial issues

specified against them. However, applicants were then also

required to include a fairly detailed financial proposal as part of

their applications. This practice changed with the adoption of

the certification procedures. Under our certification procedures,

applicants were no longer required to submit any financial

information with the application. This approach, the

Commission realized, was subject to serious abuse, with

applicants having the opportunity to certify their financial

qualifications without any basis or justification and then to

formulate a financial proposal later. In the Matter of

Certification of Financial Qualifications, 2 FCC Red 2122

(1987). To prevent this, the Commission’s focus shifted in cases

where there was a good cause question concerning a revised

proposal, to first determining the validity and substance of the

applicant’s original financial Proposal at the time of certification

in passing on petitions proposing subsequent financial

amendments. Moreover, as mentioned (n.5, supra), the

Commission has also determined that its former liberal

amendment policy was inconsistent with its objective of

stabilizing applicants’ proposals at the beginning of the

proceeding and that that policy had disrupted and delayed

hearing proceedings in conflict with the goal of expeditiously

providing new services to the public which the Commission

sought to achieve in its Revised Procedures for the Processing

* The Commission then sought the broadest choice among applicants in

order to obtain the optimum in ultimate service to the public. More recently,

the Commission has determined that that policy often disserved the public

interest by inordinately delaying new service to the public. See, €.2,

Cuban-American Limited, 5 FCC Rcd 3781, 3782 4 5 (1990), recon. denied,

FCC Rcd (1990), and Chudy Broadcasting Corp 58 RR 2d 133, 134 n.7

(1985).

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of Contested Broadcast Applications, 72 FCC 2d 202 (1979).

See also, e.g., Report and Order, 58 RR 2d 776 (1985),

establishing the Commission’s "hard look" approach for

handling FM applications, and its institution in some services of

entirely new procedures (lotteries) for awarding licenses. 53 RR

2d 1401 (1983).

13. Thus, initial financial qualifications have become a

critical ingredient in a good cause showing for such amendments

and, in the absence of a demonstration by the applicant that it

had reasonable assurance of financing at the time of

certification, subsequent petitions to amend financial proposals

have been disallowed. ° See, e.g., Edwin A. Bernstein, 4 FCC

Red 8420 (Rev. Bd. 1989), rev. denied, 5 FCC Rcd 2843

(1990); and Pepper Schultz, 103 FCC 2d 1052, 1058-59 { 6

(Rev. Bd. 1986), rev. denied, 2 FCC Rcd 1476 (1987), recon.

granted in part, 3 FCC Rcd 1200 (1988), where the

Commission indicated that an applicant may not certify its

financial qualifications and then obtain financing. Given the

above, the Board correctly held that Ajax could not rely on a

modified financial proposal to meet the financial issue specified

against it, in the ab

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