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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of
)
) File Number 98080351
)
KEVIN HACKLER NAL/Acct. No. x32080020
) )
)
Licensee, Station KSRW(FM)
) )
)
Childress, Texas
)
)
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: July 13, 2000 Released: July 14,
2000
By the Chief, Enforcement Bureau:
I. INTRODUCTION
1. In this Notice of Apparent Liability for Forfeiture
("NAL"), we find that Kevin Hackler (``Hackler'') apparently
violated Section 310(d) of the Communications Act of 1934
(``Act''), as amended1, and Section 73.3540 of the Commission's
rules2, by transferring control of commercial radio Station
KSRW(FM), Childress, TX, without first obtaining Commission
approval, and Section 73.3615(c) of the Commission's rules3 by
failing to file an updated ownership report with the Commission.
We conclude that Kevin Hackler is apparently liable for a
forfeiture in the amount of eleven thousand dollars ($11,000).
II. BACKGROUND
2. By inquiry letter dated September 23, 1999, we
commenced an investigation into allegations that Hackler,
licensee of commercial radio Station KSRW(FM), Childress, TX,
violated Section 310(d) of the Communications Act of 1934, as
amended ("the Act"), and Section 73.3540 of the Commission's
rules by transferring control of the station to Kenneth Paul
Harris, Sr. (``Harris'') without obtaining the prior
authorization of the Commission. The allegations were contained
in a confidential complaint filed on August 12, 1999. The
complaint cites locally published lien transfer and sale
documents which suggest that transfer of the station took place
on or about July 8, 1999, even though the licensee had not then
obtained prior Commission authorization.4 After examining our
files, it also appeared that the licensee had not submitted
required station ownership information and documentation to the
Commission, in possible violation of Section 73.3615(c) of the
Commission's rules. We made further inquiry by letter dated
April 6, 2000. Hackler and Harris filed submissions in response
to our inquiries on October 18, 1999, February 11, 2000, and May
11, 2000.
III. DISCUSSION
3. Unauthorized Transfer of Control. Section 310(d) of
the Act prohibits the transfer of control of a station license,
and any rights thereunder, without prior Commission consent. See
47 C.F.R. §§ 73.3540 and 73.3541. There is no exact formula by
which control of a broadcast station can be determined. It is
well settled that "control," as used in the Act and pertinent
Commission rules, encompasses all forms of control, actual or
legal, direct or indirect, negative or affirmative, and that the
passage of de facto as well as de jure control demands the prior
consent of the Commission. See, e.g., Stereo Broadcasters, Inc.,
55 FCC 2d 819, 821 (1975), modified, 59 FCC 2d 1002 (1976).
4. We traditionally look beyond the legal title to whether
a new entity or individual has obtained the right to determine
the basic operating policies of the station in ascertaining
whether a transfer of control has occurred. See WHDH, Inc., 17
FCC 2d 856 (1969) aff'd sub nom. Greater Boston Television Corp.
v. FCC, 444 F.2d 841 (D.C. Cir. 1970) cert. denied, 403 U.S. 923
(1971). Specifically, we look to three essential areas of
station operation: programming, personnel and finances. See,
e.g., Stereo Broadcasters, Inc., 87 FCC 2d 87 (1981), recon.
denied, 50 RR 2d 1346 (1982). A licensee may delegate certain
functions on a day-to-day basis to an agent or employee, but such
delegation cannot be wholesale. See, e.g., Southwest Texas
Public Broadcasting Council, 85 FCC 2d 713, 715 (1981). That is,
those persons assigned a task must be guided by policies set by
the permittee or licensee. See David A. Davila, 6 FCC Rcd 2897,
2899 (1991). Moreover, the standards by which we measure control
are equally applicable in situations involving ``time brokerage''
or ``management agreements.'' Choctaw Broadcasting Corporation,
12 FCC Rcd 8534, 8538 (1997).
5. Review of our records reveals that Hackler has been the
station's licensee since approximately August 20, 1996.5 In
response to our query, Hackler explains that in June 1999, he
experienced financial difficulties and took steps to sell the
station to long-time station employee Harris. In this
connection, Hackler first assigned his outstanding promissory
note and station equipment lien, held by NationsBank, to Harris
in July 1999 to avoid foreclosure. Hackler argues, however,
that, pursuant to an oral management agreement, he retained the
right to ``full and unlimited access to [the] equipment'' until
such time as the Commission approved Harris as the assignee.
Hackler emphasizes that he has remained in control of the station
at all times, notwithstanding contrary representations he made in
bank financing documents. Both Hackler and Harris acknowledge
that because they entered this agreement without first having
obtained legal counsel, their actions were ``unconventional'' and
did not always observe pertinent Commission policies concerning
station control. However, it was not until October 6, 1999,
subsequent to the complaint and our September 23, 1999, inquiry,
that the parties entered into a revised, written management
agreement that purports to comply with those policies.
6. In this case, we find that an unauthorized transfer of
control took place at Station KSRW(FM) on or about July 8, 1999,
and has continued since that time. While accepting the parties'
representations that de facto control of the station was
ultimately restored to the status quo ante, we note that the
record indicates that de jure control of the station shifted from
the licensee on July 8, 1999, and has not been restored. In
this regard, the lien transfer documents executed by and between
Hackler and Harris on July 8, 1999 and July 12, 1999, indicate
that Hackler conveyed all pertinent station ``equipment, accounts
receivable, inventory, furniture, fixtures . . . radio tower
equipment, transmitters, FCC licenses, and all other properties
related thereto'' to Harris. Moreover, the documents
specifically refer to Harris as the radio station's ``owner.''
Hackler contends that the documents in question do not truly
reflect events at the station, because they were executed merely
to appease the station's lenders. However, Hackler's argument
ignores that the documents' execution improperly transferred de
jure control of the station from him, which we cannot overlook.
Moreover, Hackler provides no evidence that this transaction was
ever nullified. Accordingly, a forfeiture is warranted for
unauthorized de jure transfer of control.
7. Failure to File Required Forms or Information. As
noted above, on August 20, 1996, the Commission granted
assignment of the station's license to Hackler from Eddie J.
Leary. Our records do not reflect that the date of consummation
of that transaction was ever reported to the Commission through
an updated Form 323 ownership report, as required by Section
73.3615(c) of the Commission's rules. In response to our query
on this issue, Hackler indicates that he ``believes he forwarded
all documents and ownership reports to the Commission.''
However, despite our specific request that he indicate when
consummation occurred and submit appropriate documentation
therefor, he declined to answer or provide proof that an updated
ownership report was filed within thirty days of consummation, or
at any time. Consequently, it appears that the licensee has
violated Section 73.3615(c) of the Commission's rules
continuously since failing to report consummation of the August
20, 1996, license assignment. Accordingly, we believe a
forfeiture is warranted.
8. Based on the evidence before us, we find that the
licensee transferred station control without obtaining prior
authorization, and apparently willfully and repeatedly violated
Section 310(d) of the Act and Sections 73.3540 and 73.3615(c) of
the Commission's rules.6 The Commission's Forfeiture Policy
Statement7 sets a base forfeiture amount of $8,000 for the
unauthorized substantial transfer of control and $3,000 for the
failure to file required forms or information. We have reviewed
Hackler's response to our letter of inquiry, and we find no
reason to decrease the instant proposed penalty from the base
forfeiture amount. In this connection, Hackler's explanation that
he ``never intended'' to violate the Commission's rules does not
excuse or mitigate his actions. Empire Broadcasting Corp., 25
FCC 2d 68 (1970); Victor Valley Broadcasting, Inc., 2 FCC 2d 495
(1966). Moreover, Hackler does not indicate that he took
specific steps prior to entering into the arrangement with Harris
to ensure that his actions complied with the Commission's rules.
See, e.g., Liability of Monte Corporation, 11 FCC Rcd 20535 (MMB
1996) (reliance upon prior advice given by recognized authority
may, in appropriate cases, demonstrate licensee's ``good faith''
effort to comply with Commission rules and justify mitigation).
In sum, we believe that the nature of the apparent violations
require the imposition of the respective base monetary forfeiture
amounts.
IV. ORDERING CLAUSES
9. Accordingly, IT IS ORDERED THAT, pursuant to Section
503(b) of the Communications Act of 1934, as amended8, and
Sections 0.111, 0.311 and 1.80 of the Commission's rules9, Kevin
Hackler is hereby NOTIFIED of his APPARENT LIABILITY FOR A
FORFEITURE in the amount of eleven thousand dollars ($11,000) for
violating the provisions of the Act and the Commission's rules
requiring licensees to obtain Commission authorization prior to
transferring substantial station control, pursuant to Section
310(d) of the Act and Section 73.3540 of the Commission's rules,
and for failing to file required forms or information with the
Commission, pursuant to Section 73.3615(c) of the Commission's
rules.
10. IT IS FURTHER ORDERED THAT, pursuant to Section 1.80 of
the Commission's rules10, within thirty days of the RELEASE DATE
of this NOTICE OF APPARENT LIABILITY, Kevin Hackler SHALL PAY the
full amount of the proposed forfeiture or SHALL FILE a written
statement seeking reduction or cancellation of the proposed
forfeiture.
11. Payment of the forfeiture may be made by credit card
through the Commission's Credit and Debt Management Center at
(202) 418-1995 or by mailing a check or similar instrument,
payable to the order of the Federal Communications Commission, to
the Forfeiture Collection Section, Finance Branch, Federal
Communications Commission, P.O. Box 73482, Chicago, Illinois
60673-7482. The payment should note the NAL/Acct. No. referenced
above.
12. The response, if any, must be mailed to the
Commission's Investigations and Hearings Division, Enforcement
Bureau, 445 Twelfth Street, S.W., Room 3-B443, Washington, D.C.
20554, and MUST INCLUDE the file number referenced above.
13. The Commission will not consider reducing or canceling
a forfeiture in response to a claim of inability to pay unless
the petitioner submits: (1) federal tax returns for the most
recent three-year period; (2) financial statements prepared
according to generally accepted accounting practices (``GAAP'');
or (3) some other reliable and objective documentation that
accurately reflects the petitioner's current financial status.
Any claim of inability to pay must specifically identify the
basis for the claim by reference to the financial documentation
submitted.
14. Requests for payment of the full amount of this Notice
of Apparent Liability under an installment plan should be sent
to: Chief, Credit and Debt Management Center, 445 12th Street,
S.W., Washington, D.C. 20554.11
15. IT IS FURTHER ORDERED THAT a copy of this NOTICE OF
APPARENT LIABILITY shall be sent by Certified Mail -- Return
Receipt Requested to Kevin Hackler, 1511 Avenue F, P.O. Box 5,
Childress, Texas 79201.
FEDERAL COMMUNICATIONS COMMISSION
David H. Solomon
Chief, Enforcement Bureau
_________________________
1 47 U.S.C. § 310(d).
2 47 C.F.R § 73.3540.
3 47 C.F.R § 73.3615(c).
4 In response to the complaint and our query, the parties filed a
Form 315 application proposing assignment of the station's
license from Hackler to Harris (File No. BALH-990927AAM) and
entered into a written interim ``Management Agreement'' which
specifies Harris as the station's manager. That assignment
application remains pending with the Mass Media Bureau.
5 This reflects the date that the Commission's staff granted
assignment of the station's license to Hackler from Eddie J.
Leary. Our records do not reflect that the date of consummation
of that transaction was ever reported to the Commission through
an updated Form 323 ownership report, as required. However,
noting grant of the subsequent license renewal to Hackler, we
infer that consummation occurred. See File No. BRH-970404WO.
6 We note that the statute requires only that the conduct in
question, in order to be sanctionable, be either ``willful'' or
``repeated.'' See 47 U.S.C. § 503(b)(1)(B). In this case,
Hackler's apparent violation of Section 73.3540 of the
Commission's rules is both ``willful'' and ``repeated'' because
he intended to engage in the transaction that resulted in the
unauthorized transfer of de jure control, and the violation has
been continuous. Hackler's apparent violation of Section
73.3615(c) of the Commission's rules is ``repeated'' because his
failure to file the required information has been continuous.
See Southern California Broadcasting Co., 6 FCC Rcd 4387-88
(1991).
7 See Report and Order, The Commission's Forfeiture Policy
Statement and Amendment of Section 1.80 of the Commission's
Rules, 12 FCC Rcd 17087 (1997), recon. denied, 15 FCC Rcd 303
(1999).
8 47 U.S.C. § 503(b).
9 47 C.F.R. §§ 0.111, 0.311, 1.80.
10
47 C.F.R. § 1.80.
11
47 C.F.R. § 1.1914.