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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
)
Skywave Electronics, Inc. ) File No. EB-00-AT-289
Rockford, Illinois ) NAL/Acct. No. X3248003
MEMORANDUM OPINION AND ORDER
Adopted: March 13, 2001 Released: March 15,
2001
By the Chief, Enforcement Bureau:
I. INTRODUCTION
1. In this Memorandum Opinion and Order (``Order''), we
set aside the previously released Memorandum Opinion and Order
in this matter,1 deny a Petition for Reconsideration, and
affirm the Forfeiture Order2 issued against Skywave
Electronics, Inc. (``Skywave''). We issued the Forfeiture
Order against Skywave in the amount of seven thousand dollars
($7,000) for violating Section 302 of the Communications Act
of 1934, as amended (``Act'')3 and Section 2.907 of the
Commission's Rules (``Rules''),4 by marketing a non-compliant
device for use in the FM broadcast band.
2. On May 9, 2000, the District Director of the Atlanta,
Georgia Field Office issued a Notice of Apparent Liability for
Forfeiture (``NAL'') in the amount of seven thousand dollars
($7,000) to Skywave for the referenced violations. Skywave
filed a response to the NAL. On December 14, 2000, the Chief,
Enforcement Bureau (``Bureau'') released a Forfeiture Order
issuing a $7,000 forfeiture to Skywave. On February 26, 2001,
the Bureau released a Memorandum Opinion and Order dismissing
a Petition for Reconsideration (``Petition'') of the
Forfeiture Order, because the petition was not timely filed.
The copy of the Petition in the Bureau's possession bore a
January 18, 2001, date stamp by the Commission's mailroom.
Unbeknownst to the Bureau, Skywave had, in fact, timely filed
a Petition for Reconsideration with the Commission. Skywave
submits a copy of the Petition bearing the Secretary's January
16, 2001, date stamp. However, the Bureau did not become
aware that the Petition was timely filed until March 1, 2001,
when Skywave filed a request that the Bureau set aside its
Memorandum Opinion and Order and consider the Petition on its
merits. Because Skywave actually did file a timely Petition
for Reconsideration, we will set aside the Memorandum Opinion
and Order released on February 26, 2001, and consider the
merits of the arguments Skywave raises in its Petition.
Accordingly, Skywave's request to set aside the previous
Memorandum Opinion and Order in this matter is granted, and we
proceed to consider its arguments.
II. BACKGROUND
3. Skywave holds a Grant of Equipment Authorization
(``Authorization'') for the manufacture and distribution of a
low-power transmitter device, the SKY-2000 Digital FM
Transmitter.5 On August 6, 1999, an agent in the Commission's
Denver Field Office investigated a complaint of an illegal FM
broadcast station. In the course of that investigation, the
agent found that the station was using Skywave's SKY-2000
digital FM transmitter. Field strength measurements taken
during the investigation showed that the SKY-2000 was
operating at 29 times the permitted level authorized by
Section 15.239 of the Rules6 for a non-licensed low-powered
transmitter. Subsequently, the Commission's Office of
Engineering and Technology (``OET'') requested and obtained
two sample transmitters from Skywave to be evaluated for
compliance with its Authorization, and found that one of the
units failed to conform to the emission requirements of the
Authorization. OET issued a citation to Skywave on October 5,
1999 for marketing a non-compliant device.
4. On September 28, 1999, agents from the Commission's
Atlanta Field Office began an investigation into the marketing
of Skywave low power FM transmitters, following local news
reports featuring the transmitters. Agents found several non-
compliant SKY-2000 FM transmitters distributed by Skywave in
operation throughout the Atlanta metropolitan area. During a
telephone conversation that same day, the president of Skywave
advised an agent of the Atlanta Field Office that all units
shipped from Skywave after July 13, 1999 were in compliance
with the revised Authorization issued July 13, 1999. However,
FCC agents obtained evidence that several non-compliant units
were shipped after July 13, 1999.
5. On May 9, 2000, the Atlanta Office issued a NAL in the
amount $7,000 to Skywave for violations of Section 302 of the
Act and Section 2.907 of the Commission's Rules. In its
response to the NAL, Skywave requested waiver or dramatic
reduction of the forfeiture but did not deny violating Section
302 of the Act and Section 2.907 of the Commission's Rules.
6. In its Forfeiture Order, released December 14, 2000,
the Bureau concluded that Skywave violated Section 302 of the
Act and Section 2.907 of the Commission's Rules by marketing a
non-compliant device for use in the FM broadcast band. These
violations involved the sale and distribution of at least 11
FM transmitters that exceeded the power limitations of
Skywave's FCC authorization. The Forfeiture Order assessed a
$7,000 forfeiture for the violations. The Forfeiture Order
also found that as the holder of the Authorization, Skwyave is
responsible for the compliance of its radio frequency devices
with the applicable standards.7 In addition, the Forfeiture
Order stated that although Skywave may have taken prompt
action to rectify the problems, remedial action to correct a
violation, while commendable, will generally not nullify a
forfeiture penalty.8 The Forfeiture Order also stated that
Skywave's contention that it merely distributes the device
does not excuse the offense. Finally, the Forfeiture Order
concluded that there was no evidence in Skywave's response
that would support an inability to pay claim.
7. In its Petition, Skywave argues that we should rescind
the forfeiture because of Skywave's financial circumstance.9
In support of its inability to pay claim, Skywave submitted
copies of its tax returns for 1997, 1998, and 1999, as well as
an income statement and balance sheet for 1998 and profit and
loss statement for 1999. These documents reflect that Skywave
had gross revenues of $128,289 in 1997, $190,879 in 1998, and
$233,795 in 1999. Skywave also includes a copy of a letter
from its bank stating that Skywave's loan matured in June
2000, and that it still owes $61,689.17 in unpaid principal
and $3,310.49 in post maturity interest. Skywave points out
that according to the bank's letter, the amount of the loan
``is secured by several mortgages as well as inventory,
accounts and equipment.'' Skywave argues that if its bank
``calls the loan'' and it cannot pay, ``Skywave will go
under.'' Skywave also contends that the facts of the two
cases cited in the Forfeiture Order are inapposite with
respect to the amount of money involved.10 Skywave complains
that the cited case law fails to prove that Skywave, a company
that loses money annually, is not entitled to leniency because
it cannot afford to pay a forfeiture. If we deem a forfeiture
appropriate on the basis of facts unrelated to Skywave's
financial circumstance, Skywave asserts, the Bureau should
consider reducing the forfeiture amount.
III. DISCUSSION
8. As the NAL explicitly states, the forfeiture amount in
this case was assessed in accordance with Section 503(b) of
the Act,11 Section 1.80 of the Rules,12 and The Commission's
Forfeiture Policy Statement and Amendment of Section 1.80 of
the Rules to Incorporate the Forfeiture Guidelines, 12 FCC Rcd
17087 (1997), recon. denied, 15 FCC Rcd 303 (1999)(``Policy
Statement''). Section 503(b) of the Act requires that the
Commission take into account the nature, circumstances, extent
and gravity of the violation and, with respect to the
violator, the degree of culpability, any history of prior
offenses, ability to pay, and other such matters as justice
may require.13
9. Skywave's arguments do not justify rescission or
reduction of the forfeiture amount on the basis of financial
losses. When a licensee has presented no other persuasive
evidence that payment of a forfeiture would cause financial
difficulty, the presence of financial loss does not by itself
necessarily establish a licensee's inability to pay a
forfeiture.14 Skywave presents a copy of a letter from its
bank regarding an outstanding loan, and states that it will
``go under'' if its bank ``calls the loan''. However, Skywave
does not indicate that its bank has already seized its assets.
Thus, although Skywave claims that it cannot afford to pay the
forfeiture, it has provided no persuasive information other
than financial losses to support this claim.
10. We disagree with Skywave's contention that the two
cases cited in the Forfeiture Order, Hinton and PJB, are
inapposite. The Forfeiture Order did not cite the cases to
compare the underlying facts of those cases to the facts
herein. The Forfeiture Order cited the cases for the
proposition that financial losses alone do not establish that
a business cannot pay a forfeiture where its gross revenues
are sufficiently great.
11. We have examined Skywave's petition for reconsideration
pursuant to the statutory factors set forth above, and in
conjunction with the Policy Statement as well. As a result of
our reconsideration, we conclude that Skywave has failed to
provide a sufficient justification for reduction of the
forfeiture amount.
IV. ORDERING CLAUSES
12. Accordingly, IT IS ORDERED that, the Memorandum
Opinion and Order, DA 01-495, (Enf. Bur., released February
26, 2001), IS SET ASIDE
13. IT IS FURTHER ORDERED that, pursuant to Sections 1.106
of the Rules, Skywave's Petition for Reconsideration of the
Forfeiture Order (NAL/Acct. No. X3248003) released December
14, 2000, IS DENIED.
14. IT IS FURTHER ORDERED that, pursuant to Section 503(b)
of the Act15 and Section 1.80(f) of the Rules,16 Skywave
Electronics, Inc., shall, within 30 days of the release of
this Memorandum Opinion and Order, pay the amount of $7,000
for violating Section 302 of the Communications Act of 1934,
as amended (``Act'')17 and Section 2.907 of the Commission's
Rules. If the forfeiture is not paid within the specified
period, the case may be referred to the Department of Justice
for collection pursuant to Section 504(a) of the Act.18
Payment may be made by credit card through the Commission's
Chief, Revenue and Receivables Operations Group at (202) 418-
1995 or by mailing a check or similar instrument, payable to
the order of the Federal Communications Commission, to the
Federal Communications Commission, P.O. Box 73482, Chicago,
Illinois 60673-7482. The payment should note the NAL/Acct.
No. 915OR0003. Requests for full payment under an installment
plan should be sent to: Chief, Credit and Debt Management
Center, 445 12th Street, S.W., Washington, D.C. 20554. 19
15. IT IS FURTHER ORDERED that, a copy of this Memorandum
Opinion and Order shall be sent by certified mail, return receipt
requested, to counsel for Skywave Electronics, Inc., Lewis H.
Goldman, Esq., Law Offices, Lewis Goldman, P.C., Plaza Suite 9,
4141 North Henderson Road, Arlington, Virignia, 22203, and to
Skwyave Electronics, Inc., 1205 N. Horace Avenue, Rockford,
Illinois 61101.
FEDERAL COMMUNICATIONS COMMISSION
David H. Solomon
Chief, Enforcement Bureau
_________________________
1 Memorandum Opinion and Order, DA 01-495, (Enf. Bur.,
released February 26, 2001) (``MO&O'').
2 Forfeiture Order, NAL/Acct. No. X3248003 (Enf. Bur.,
released December 14, 2000).
3 47 U.S.C. § 302a.
4 47 C.F.R. § 2.907.
5 FCC Identifier NX3SKY2000. The grant was
originally issued on August 18, 1998, and was updated to reflect
a modification of the device on July 13, 1999.
6 47 C.F.R. § 15.239.
7 See 47 C.F.R. § 2.909.
8 See Station KGVL, Inc., 42 FCC 2d 258, 259 (1993).
9 Skywave acknowledges that in its response to the NAL issued
in this proceeding, it included documentation to support its
inability to pay claim, and requested that we keep its financial
information confidential. Specifically, it argues that the
Forfeiture Order did not adequately address its argument on this
issue. For this reason, Skywave now withdraws its prior request
for confidentiality of its financial information, and urges the
Bureau to revisit its financial documents, and to reconsider
whether a forfeiture is appropriate in light of Skywave's
financial condition.
10 The Hinton Telephone Co. of Hinton, Oklahoma, 8 FCC Rcd
5176 (1993)(``Hinton''); PJB Communications of Virginia, Inc., 7
FCC Rcd 2088 (1992)(``PJB'').
11 47 U.S.C. § 503(b)(2)(D).
12 47 C.F.R. § 1.80.
13 47 U.S.C. § 503(b)(2)(D).
14 See Independent Communications, Inc., 14 FCC Rcd 9605,
9610 (1999).
15 47 U.S.C. § 503(b)
16 47 C.F.R. § 1.80(f)
17 47 U.S.C. § 302a.
18 47 U.S.C. § 504(a).
19 See 47 C.F.R. § 1.1914.