******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. 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 the Matter of ) ) Liability of Aurio A. Matos ) and Juan Carlos Matos, a General Partnership ) ) Permittee of Station WXZX(FM), ) Culebra, Puerto Rico ) ) For a Forfeiture ) MEMORANDUM OPINION AND ORDER AND FORFEITURE ORDER Adopted: September 30, 1999 Released: October 1, 1999 By the Chief, Mass Media Bureau: 1. The Commission, by the Chief, Mass Media Bureau, acting pursuant to authority delegated by Section 0.283(c)(3) of the Commission's Rules, has before it for consideration: (1) a Notice of Apparent Liability ("NAL") for a forfeiture in the amount of $14,500, issued on July 7, 1999, to Aurio A. Matos ("Matos"), permittee of commercial radio station WXZX(FM), Culebra, Puerto Rico; and (2) a August 20, 1999, response thereto submitted by the Matos general partnership. Matos requests that the forfeiture be rescinded or, alternatively, reduced. For the reasons that follow, we deny Matos's request for rescission, but grant its request for reduction of the original forfeiture amount, pursuant to Section 503(b) of the Communications Act of 1934, as amended, 47 U.S.C.  503(b) (the "Communications Act"). 2. In the NAL, we determined that Matos had constructed and operated the station on the wrong frequency, Channel 293A, instead of its authorized frequency, Channel 254A, in apparent violation of Section 73.1620 of the Commission's Rules. That rule requires that program tests conducted by permittees be done on facilities that have been built in accordance with the terms of the construction permit and the relevant technical rules. We also found that the permittee had failed to maintain the station's main studio within its community of license, Culebra, or within its principal community contour. In this connection, it appeared that Matos had relocated the station's main studio to Fajardo, outside its principal community contour, without having first obtained required Commission authorization, in apparent violation of Section 73.1125 of the Commission's Rules ("the main studio rule"). In support of the monetary forfeiture, the NAL specifically cited the substantial duration of the violations, which occurred continuously from April 7, 1998 until June 1, 1998. 3. In its response to the NAL, Matos contends that the forfeiture should be reduced or rescinded because its actions were taken in response to the unusual circumstances surrounding the Culebra allocation, and the specific terms of its original authorization. Matos explains that it was first awarded a permit to construct on Channel 293A. At the time that permit was issued, however, the Commission amended the FM Table of Allotments to substitute Channel 254A for Channel 293A. Matos notes that, under then-extant Section 1.420(f) of the Commission's Rules, the implementation of that channel substitution was effectively stayed pending resolution of the rulemaking's appeals. Therefore, consistent with the terms of its original authorization, Matos claims that it was reasonable for it to conclude that it could construct and operate on either frequency until the rulemaking had become final. In this connection, Matos argues that, although it complied with the Audio Services Division's ("ASD") May 29, 1998 order to "cease and desist" its operation on Channel 293A, the issuance of the order at that time was inappropriate, because the rulemaking was not then final. Moreover, Matos contends that because ASD later granted it special temporary authority ("STA") to recommence operation on Channel 293A, the Commission implicitly acknowledged that operation on that frequency had no actual preclusive effect against other broadcast stations. In view of the foregoing, Matos argues that the NAL's assessment of a monetary forfeiture for unauthorized operation was erroneous, and should be rescinded. 4. Matos also argues that the portion of the forfeiture imposed for violation of the main studio rule should be rescinded or reduced. Matos contends that it was "forthcoming" in its license application as to where it had located its main studio and why it had done so. Matos was certain that, due to the unique circumstances involving the community of license, Culebra, a "small residential island off the coast of Puerto Rico," which made location of a main studio there "impossible," the Commission would have granted a main studio waiver if it had been requested. Matos further notes that site chosen in Fajardo complies with the amended main studio rule, and might have complied with the former rule if an "alternative propagation showing" had been submitted. Matos further argues that the forfeiture amount should be mitigated because it has an unblemished prior enforcement history, because of its economic status as a small business, because the foregoing rule violations engendered no complaints, and because it did not cause any actual objectionable interference to other broadcasters. 5. We have reexamined the forfeiture imposed in view of the statutory factors set forth in Section 503(b(2)(D) of the Communications Act pertaining to the nature, circumstances, extent and gravity of the apparent violations. We agree that the $7,500 forfeiture for violation of Section 73.1620 of the Commission's Rules regarding unauthorized operation should be rescinded, but affirm our prior finding that the permittee violated Section 73.1125 of the Commission's Rules, the main studio rule. For the reasons set forth below, we further conclude that rescission of the monetary forfeiture imposed for violation of the main studio rule is not warranted, but that reduction of the amount proposed in the NAL, from $7,000 to $5,000, is appropriate. 6. In rescinding the forfeiture for unauthorized operation, we recognize that the circumstances surrounding this case are novel. Because Matos's original construction permit specified operation on Channel 293A, its substitution for Channel 254A was, by operation of law, tolled by the automatic stay provisions of then-extant Section 1.420(f) of the Commission's Rules. Thus, we believe that Matos had a legitimate basis to conclude that construction and operation on either frequency, pending finality of the rulemaking, was permissible. 7. With regard to the main studio rule violation, even accepting Matos's explanation as true, we cannot ignore that Section 73.1125 of the Commission's Rules, in effect at the time of the violation, specifically required that, in cases where location is sought to a point outside the community of license, or at a point situated outside the principal community contour, prior authorization must be obtained. It is undisputed that Matos neither sought nor secured such authorization. Moreover, even accepting as true Matos's assertion that the Fajardo site has been rendered acceptable by the Commission's recent main studio rule amendment, that development does not nullify the apparent violation that occurred prior to the new rule's effective date. See Report and Order, "In the Matter of Review of the Commission's Rules Regarding the Main Studio and Local Public Inspection Files of Broadcast Television and Radio Stations," 13 FCC Rcd 15691 (1998), recon. granted in part, denied in part (FCC 99-118) (May 28, 1999). However, we acknowledge that the permittee has maintained an unblemished enforcement history prior to the instant violation. Accordingly, we believe that a downward adjustment from $7,000 to $5,000 is appropriate in this case. 8. Finally, we note that while Matos alleged that it is unable to pay the forfeiture, it has not provided evidence that the forfeiture amount in this case poses a hardship. See Paragraph I(B) of the Attachment to the NAL. See also Liability of Springtown Educational Broadcasting Foundation, 7 FCC Rcd 2588 (MMB 1992). Specifically, Matos claims that complete mitigation is appropriate because it has derived no economic gain from the station's limited operation. Matos also contends that it is eligible for mitigation because of the general partnership's status as a "small entity" under the Small Business Regulatory Fairness Act, viz., one with annual receipts of less than $5,000,000. While the Commission has considered an examination of a party's gross receipts as a "starting point" in determining the ability to pay, Matos provided no documentation with its response to enable us to verify its assertion. See Report and Order, "In the Matter of the Commission's Forfeiture Policy Statement and Amendment of Section 1.80 of the Rules to Incorporate the Forfeiture Guidelines," 12 FCC Rcd 17087, 17106 (1997); PJB Communications of Virginia, Inc., 7 FCC Rcd 2088 (1992). Moreover, while the Commission is cognizant of the concerns raised by small entities as to the burden and expense of documenting inability to pay a forfeiture by means of audited financial statements, we nevertheless require probative, objective evidence in support of such claims. Report and Order, supra, at 17107. In this regard, even accepting as true Matos's assertion that its general partnership is a "small entity," this does not demonstrate, without more, its inability to pay the instant forfeiture. 9. Consequently, we have no basis to reduce or rescind the fine under this factor. We are, however, willing to entertain a request for an installment plan. If Matos wishes to arrange a payment plan, it should address its request to: Regina Dorsey, Chief, Credit & Debt Management Center, Financial Operations Division, Office of Managing Director, Federal Communications Commission, 445 12th Street, S.W., Washington, D.C. 20554. 10. Accordingly, IT IS ORDERED that, pursuant to Section 503(b) of the Communications Act of 1934, as amended, 47 U.S.C. Sec. 503(b), Aurio A. Matos and Juan Carlos Matos, a General Partnership, FORFEIT to the United States the sum of Five Thousand Dollars ($5,000) for the willful and repeated violation of Section 73.1125 of the Commission's Rules, 47 C.F.R. Sec. 73.1125, as described above. Matos may take any of the steps outlined in the attachment to this letter regarding payment of the forfeiture pursuant to Section 1.80 of the Commission's Rules. 11. The Mass Media Bureau will send by Certified Mail -- Return Receipt Requested, copies of this Memorandum Opinion and Order and Forfeiture Order to Aurio A. Matos and Juan Carlos Matos, a General Partnership. FEDERAL COMMUNICATIONS COMMISSION Roy J. Stewart Chief, Mass Media Bureau