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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In re Applications of ) MM Docket No. 90-48 ) HIGHLANDS BROADCASTING CO., INC. ) File No. BPH-880211MK ) Stoddard Johnson and Sherrie ) File No. BPH-880211MN McCullough d/b/a ) J&M BROADCASTING COMPANY ) ) For Construction Permit for ) a New FM Station on Channel ) 238A at Carmel, California ) MEMORANDUM OPINION AND ORDER Adopted: August 20, 1997 ; Released: August 22, 1997 By the Commission: 1. This Memorandum Opinion and Order denies a Petition for Extraordinary Relief, filed January 11, 1996, by Highlands Broadcasting, Co., Inc. I. BACKGROUND 2. Highlands and J&M Broadcasting Co. are the remaining applicants for a new FM radio station in Carmel, California. The Commission originally granted J&M's application and denied that of Highlands in Lone Cypress Radio Associates, Inc., 7 FCC Rcd 4403 (Rev. Bd. 1992), rev. denied, 8 FCC Rcd 972 (1993), recon. denied, 8 FCC Rcd 6635 (1993). Highlands appealed the Commission's action on October 8, 1993. Highlands Broadcasting Co., Inc. v. FCC, No. 93-1681 (D.C. Cir. Oct. 8, 1993). On December 6, 1993, while Highlands' appeal was still pending, the Commission issued J&M a construction permit for its new facilities, and the station began operating later that month under the call sign KBOQ-FM. Soon thereafter, however, on December 17, 1993, the court of appeals found the Commission's integration criterion, under which J&M had been preferred over Highlands, arbitrary and capricious and therefore unlawful. Bechtel v. FCC, 10 F.3d 875 (D.C. Cir. 1993). On May 16, 1994, the court, in response to a motion by Highlands, reversed and remanded this case for further consideration in light of Bechtel. 3. Shortly after the remand of this proceeding, Highlands filed a petition for extraordinary relief with the Commission that asserted that it would be inequitable and unlawful to permit J&M to continue operating KBOQ-FM pending the ultimate resolution of this proceeding. Relying principally on Consolidated Nine, Inc. v. FCC, 403 F.2d 585 (D.C. Cir. 1968), Highlands argued that once the court reversed the Commission's grant to J&M, J&M lacked any valid authorization to remain on the air and that, moreover, continued operation by J&M would prejudice its right to a fair post-remand hearing as guaranteed by Ashbacker Radio Corp. v. FCC, 326 U.S. 327 (1945). Highlands urged the Commission to select an independent interim operator to broadcast in J&M's place or, alternatively, to require J&M to operate on a non-profit basis. 4. The Commission denied Highlands' petition in Highlands Broadcasting Company, Inc., 9 FCC Rcd 5746 (1994). We held that despite the fact the court reversed the grant of the construction permit to J&M, we had the discretion to maintain J&M's existing service in the public interest, provided that it did not prejudice Highlands' hearing rights, and that the public interest did not favor withdrawing J&M's existing local service. We found it unlikely that temporary maintenance of J&M's service would cause prejudice to Highlands since we anticipated evaluating J&M and Highlands under criteria that would give J&M no credit for that service. Accordingly, we authorized J&M's continued operation. 5. Subsequently, in the Biltmore Forest, North Carolina, comparative licensing proceeding which had also been remanded in light of the Bechtel decision, the Commission distinguished that case from Highlands and rescinded the construction permit awarded to Orion Communications, Ltd., pending further proceedings. Orion Communications, Ltd., 10 FCC Rcd 13066 (1995), recon. denied, FCC 96-402 (Oct. 11, 1996), appeal pending sub nom. Orion Communication, Ltd. v. FCC, D.C. Cir. No. 96-1430 (D.C. Cir. Nov. 20, 1996). To maintain existing service, the Commission gave interim operating authority to an entity composed of four of the five competing applicants in that proceeding. (Orion had declined to participate.) We distinguished Orion from Highlands on the basis of the specific facts presented, noting that Orion, unlike J&M, did not construct its station and commence operation until months after the court had reversed and remanded the Biltmore Forest proceeding. Thus, unlike J&M, Orion had not "validly relied on a Commission grant." 10 FCC Rcd at 13067  6, citing, 9 FCC Rcd at 5747  10. We found that Orion's construction under these circumstances was "clearly unreasonable," FCC 96-402 at  6, and we concluded that the joint interim arrangement both ensured continuation of service and balanced the respective equities of the parties. Id. at  10. II. PETITION 6. In the petition now before us, Highlands reiterates its argument that J&M has no valid authorization, and it complains that it is suffering "both legal and economic prejudice" from J&M's continued operation of the broadcast station, citing Consolidated Nine. It also claims that the decision to leave J&M on the air is at odds with the Commission's decision in Orion Communications. Specifically, it notes that J&M and Orion both built their stations pursuant to construction permits that were conditional on the outcome of the pending appeals, and it contends that it makes no difference that J&M built its station prior to the court's reversal of the grant and that Orion built its stations after the court's reversal of its grant. Accordingly, Highlands asks the Commission to rescind J&M's construction permit, and it asserts that the Commission should either: (1) authorize Highlands to operate the station for a period equal to that J&M has already operated, (2) authorize joint operation by Highlands and J&M, or (3) select an independent third party interim operator. Highlands also maintains that the Commission should immediately require J&M to operate on a non-profit basis. If necessary, Highlands concludes, the Commission should terminate the station's operation because, it contends, the equities among competing applicants outweigh the public interest in continuing service where, as in Carmel, other broadcast service is available. III. DISCUSSION 7. We will not grant Highlands' requested relief. To the extent that Highlands is arguing that the Commission is without authority under Consolidated Nine to maintain J&M's operation, the argument is redundant. We considered and addressed that argument, and we rejected the options proposed by Highlands, in response to Highlands' first petition for extraordinary relief. We held there that "nothing in Consolidated Nine [deprives] the Commission of the discretion to allow the existing service to continue if we find, as we do, that the mandatory termination of the service would not serve the public interest." See Highlands Broadcasting Co., Inc., supra, 9 FCC Rcd at 5747  12. No further discussion is required. 8. We note however, by way of clarification, that in Consolidated Nine the Commission argued to the court that the general rule requiring joint interim operation does not apply to the situation presented where, as in that case, the permittee was operating the station pursuant to a lawful grant of authority before the court reversed the FCC's order granting that authority. The court did not appear to reject the Commission's argument but nevertheless remanded the decision on other grounds. Although the issue has thus not been settled whether our decision to allow J&M to remain in operation is consistent with Ashbacker, we continue to believe that nothing in Consolidated Nine precludes us from holding that the public interest is furthered by maintaining the status quo that was established prior to the court's remand. 9. Likewise, the Commission's decision in Orion Communications does not provide Highlands with a basis for relief, because the factual situations presented in the two cases are fundamentally different. J&M built the station and commenced operation in valid, good faith reliance on its construction permit well before the court of appeals reversed and remanded the Commission's decision to grant the construction permit. In Orion's case, the permittee completed construction and commenced operation months after the court's decision in Bechtel and months after the court's order reversing and remanding the grant of its permit. By contrast, in J&M's case the balance of equities militates against a termination of J&M's operation, and for the reasons set forth in our prior order, we continue to believe that the continuation of J&M's operation will not prejudice Highlands. 10. We wish to underscore the importance of the differences in the timing of the permittees' construction and operation in the instant case and in Orion, and in so doing, we wish to correct an erroneous statement in Orion that is at odds with this standard. In Orion Communications, Ltd., supra, 10 FCC Rcd at 13067 n.6, we said that the permittee in David J. Bott (incorrectly cited as Germantown Broadcasting Corp.), 9 FCC Rcd 6426 (1994), was allowed to continue its broadcast operation because it, like J&M, constructed the station and commenced operation prior to the post-Bechtel judicial remand. That statement is wrong; the station in Bott was in fact built after the remand. Accordingly, that broadcast operation, like the operation in Orion, should have been terminated. However, the possibility of corrective action in that case is now moot because that proceeding has been terminated by a settlement agreement. IV. ORDERING CLAUSE 11. ACCORDINGLY, IT IS ORDERED, That the Petition for Extraordinary Relief, filed January 11, 1996, by Highlands Broadcasting Company, Inc. IS DENIED. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary