As a follow up to a 2007 Notice of Apparent Liability (“NAL”), the FCC issued a Forfeiture Order fining a Texas noncommercial broadcaster $8,700 for violations of the alien ownership provisions of the Communications Act of 1934, and Section 73.3527, the Public Inspection File Rule for noncommercial stations.
The 2007 NAL stated that the noncommercial broadcaster timely filed its 2005 license renewal application. However, the application indicated that the licensee was unable to certify that the station’s public inspection file was complete, noting that the file was missing four years of issues/programs lists. Section 73.3527(e)(8)(i) of the FCC’s Rules requires noncommercial broadcasters to prepare and place in their public inspection file a report each quarter identifying the station’s programming response to significant community issues during the prior quarter.
The FCC also received an objection to the station’s license renewal application. The objector alleged violations of the Public Inspection File Rule and the foreign ownership restrictions, unauthorized transfers of control, financial misdeeds, fraud, theft, misappropriation of funds, and other criminal activity. The noncommercial broadcaster opposed the individual’s objection as meritless.
According to the NAL, the FCC concluded that the objection “contain[ed] a number of conclusory allegations unsubstantiated by any extrinsic evidence” since the individual “fails to invoke any provision of the Act or the Rules” and “fails to provide specific evidence.” However, the FCC determined that at least two of the allegations—pertaining to violations of the foreign ownership restrictions and the Public Inspection File Rule—were substantiated and warranted a penalty under the FCC’s forfeiture policies.
In its response to the NAL, the noncommercial broadcaster, a non-stock, non-profit entity, admitted that during the prior license term, its board of directors included two foreign nationals for a period of time, which resulted in a “voting interest above the 20% benchmark” permitted by the Communications Act of 1934. The noncommercial broadcaster corrected this violation two years prior to submitting its 2005 license renewal application. Due to the proactive nature of the correction, the FCC elected to reduce the base forfeiture from $8,000 to $5,000. The FCC did not elect to reduce the $10,000 base forfeiture associated with the violation of the Public Inspection File Rule since the disclosure was made in response to a question contained in a required form and the “violations were extensive, occurring over a four-year period and involving at least 16 missing issues/programs lists.”
According to the Forfeiture Order, the noncommercial broadcaster’s response to the NAL requested the proposed fines be cancelled based on its inability to pay fines totaling $15,000. The response provided “copies of tax returns from 2004 and 2005, an audited financial statement for 2006 and a profit and loss statement for the first six months of 2007.” Based on the supporting documentation, and the FCC’s policy that fines in the amount of five percent of gross revenues are reasonable (and up to 7.9 percent is not deemed excessive), the fine was reduced to $8,700, equaling five percent of the average gross revenues for the combined period covering 2004, 2005 and 2006.