Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:
- FCC Fines Kentucky Men $144,344 for Illegally Operating LPTV Station for 18 Years
- North Carolina Radio Station Settles With FCC Over Decades of Unauthorized Transfers
- Connecticut Radio Station Warned for Inspection and Antenna Violations
Pay Up: FCC Fines Two Kentucky Men for Illegally Operating LPTV Station for 18 Years
The FCC issued a Forfeiture Order imposing a $144,344 penalty against the operators of a Kentucky unlicensed low-power television (“LPTV”) station. The station had been operating without FCC authorization since 1998. The Communications Act prohibits the operation of a broadcast station without FCC authorization. As we reported in 2017, the FCC previously adopted a Notice of Apparent Liability (“NAL”) against the individuals. This Forfeiture Order affirms the NAL.
The first individual (“Individual 1”) initially applied for and was granted the LPTV license in 1990, as well as a subsequent renewal term that ran from July 1993 through August 1998. By the time that term expired, however, the individual licensee had failed to file a license renewal application or seek special temporary authorization to operate the station, and by August 1998, the station was operating without any FCC authorization. In 2004, the FCC’s Media Bureau sent a letter to the individual asking whether he had filed a license renewal application. Receiving no response, the Media Bureau sent a letter notifying the licensee that the station’s license had been cancelled.
Fast forward eight years, to 2016, when the Media Bureau learned that the station might still be operating. The matter was referred to the Enforcement Bureau, which confirmed that the station was still on the air. During the investigation, Enforcement Bureau field agents interviewed Individual 1 as well as a second individual who identified himself as the station’s studio manager and operations manager (“Individual 2”). During their meeting with Individual 2 at the station, the agents issued a Notice of Unlicensed Radio Operation (“NOUO”) demanding the station cease operations and warning of possible further enforcement action. In Individual 2’s response to the NOUO, he argued that the station was actually still licensed and referred to the NOUO as only a “request” to shut down.
Field agents returned a few months later to find the station still operating. The Enforcement Bureau subsequently issued the NAL.
Both men responded individually to the NAL. Individual 1 claimed, among other things, that the license should still be in effect because he filed a license renewal application in 2004 and included $1,155 to cover license renewal fees for three of his stations through 2022. He further claimed that the station should remain on air because of the benefits it provides to local residents. At the same time, however, Individual 1 also claimed to have “never operated a TV station” in the area and had not visited the station in over 15 years. Finally, Individual 1 sought a reduction in the proposed penalty due to an inability to pay.
The FCC outright rejected all of Individual 1’s claims. Regarding the late license renewal application, besides filing the application six year late, the filing would only have covered the preceding license term. Further, the Media Bureau could not have accepted the application because while the funds could have covered the stations’ accumulated annual regulatory fees, Individual 1 did not include application processing fees, without which the Media Bureau cannot review an application.
In response to the claims about benefiting the local community, the FCC stated that any alleged benefit from operations “does not absolve [the operator] from liability.” The FCC also rejected Individual 1’s claim that he never operated the station, noting that the claim conflicted with the evidence, which included filings and statements made by both individuals to the contrary.
Individual 2’s response to the NAL similarly did not gain much traction with the FCC, despite a few novel theories. In his response, Individual 2 claimed that the FCC lacks jurisdiction over the station because its signal was not intended to reach beyond the state of Kentucky. Further, Individual 2 included a petition signed by over 100 local residents urging the FCC to allow the station to continue operating. Individual 2 also claimed that he lacked the financial resources to pay the penalty.
The FCC rejected Individual 2’s federalism argument as contradicting the plain language of the Communications Act, which prohibits making unauthorized intrastate or interstate transmissions. Further, the Commission gave no weight to the station’s “community support,” as it had no bearing on the unlicensed operation of a broadcast station.
The FCC also declined to reduce the penalty amount for either party, who it found jointly and individually liable. Beyond a lack of evidence of inability to pay, the FCC determined that the severity of the violation warranted the penalty, which was calculated by multiplying the $10,000 per day base penalty amount by 22 days of unauthorized operations. In fact, the Forfeiture Order states that the only reason the penalty was not greater is because $144,344 is the statutory maximum permitted under the Communications Act for a continuing violation. The FCC also reminded the parties that an ability to pay is only one consideration in adjusting a penalty amount. Here, the violation lasted over 18 years, and the parties were notified or directly warned at several points over that period about the consequences of operating without a license.
History of an Error: North Carolina Licensee Settles with FCC Over Decades of Unauthorized Transfers and Missing Ownership Reports
The Media Bureau entered into a Consent Decree with the licensee of a North Carolina AM radio station and FM translator station for violating the FCC’s rules governing transfers of control and the filing of ownership reports.
Section 310 of the Communications Act and Section 73.3540 of the FCC’s Rules prohibit the transfer of control of broadcast licenses from one individual, entity, or group to another without prior FCC approval. In the case of full-power broadcast stations, parties must file FCC Form 315 applications and receive FCC consent before a transfer of control can be consummated.
The transfer of control applications ultimately leading to the Consent Decree were filed with the FCC in April 2018, but the licensee’s problems began over thirty years earlier, shortly after the FCC approved an assignment of the AM station’s license. The FCC believes that, in 1986, the licensee had five attributable shareholders (the FCC states in a footnote that it is unable to locate the licensee’s original assignment application). However, over the next few years, over 50% of the licensee’s stock changed hands without FCC consent. Again, in 1992, more than 50% of the licensee’s stock was transferred without consent, and new directors were appointed to control the licensee. In 1994, another unauthorized transfer transpired when a minority shareholder acquired a 66% interest in the licensee without prior Commission approval. Continue reading →