9 FCC Red No. 16 . Federal Communications Commission Record FCC 94D-8 Before the Federal Communications Commission Washington, D.C. 20554 MM Docket No. 93-155 In re Application of File No. BAPH-920917GORICHARD BOTT II (Assignor) and WESTERN COMMUNICATIONS, INC. (Assignee) For Assignment of Construction Permit of Station KCVI(FM), Blackfoot, Idaho Appearances James P. Riley, Esquire, and Anne G. Crump, Esquire, on behalf of Richard Bott, II; and Y. Paulette Laden, Esquire, on behalf of the Chief, Mass Media Bureau, Federal Com munications Commission. comparative hearing. The hearing was held on December 7, 1987. (MMB Ex. 2.) During the hearing, Bott claimed an integration preference based on his commitment to move to Blackfoot and serve as the full-time general man ager of his proposed station. (MMB Ex. 1; MMB Ex. 3, pp. 21, 28; Bott Ex. 3, pp. 20. 22.) Bott also testified at the comparative hearing that he had not as yet decided on the format of his proposed station. (MMB Ex. 2, pp. 55-56, 67-68, 89-90.) 3. The following are excerpts of Bolt's testimony at the comparative hearing with respect to his commitment to move to Blackfoot and the format of his proposed station. The testimony was adduced on cross-examination by oppos ing counsel. Q: Approximately when did that decision [to move to Blackfoot] come? A: Last summer [1987] when both facilities became designated for hearing simultaneously for all practical purposes. I realized at that point I was going to have to make a decision where I was going to live and make my home. At that time then I decided that Blackfoot, Idaho would be where I would make my home due to a number of factors including the fact that this is a class C station with much broader coverage as opposed to the class A in Central Valley [California |. It was last summer [1987| that I made my decision to move and live in Blackfoot. (MMB Ex. 2, p. 19.) INITIAL DECISION OF ADMINISTRATIVE LAW JUDGE ARTHUR I. STEINBERG Issued: July 25, 1994; Released: August 4, 1994 PRELIMINARY STATEMENT 1. Richard Bott, II ("Bott"), one of the applicants in the above-captioned proceeding, by his counsel, pursuant to Section 1.1501 el seq. of the Commission's Rules, applies for an award of attorney's fees and other expenses in accordance with the Equal Access to Justice Act ("EAJA"), 5 U.S.C. 504. The Chief. Mass Media Bureau ("Bureau"), by his counsel, opposes grant of the relief sought under the EAJA. 1 FINDINGS OF FACT The Blackfoot Comparative Proceeding 2. On July 11, 1985, Bott filed an application for a construction permit ("CP") for a new FM station in Blackfoot, Idaho. (Tr. 89.) Competing applications were filed by six other applicants, including Radio Representa tives, Inc. ("RRI"). By Hearing Designation Order, 2 FCC Red 3897, released July 1, 1987, the applications of Bott, RRI, and three of the other applicants were designated for Q: Maybe this goes back to an earlier question, but do you intend to leave Bott Communications ir- regardless [sic] of the grant of this [Blackfoot] applica tion or [are] you only intending to leave Bott Communications A: Do you mean Bott Broadcasting? Q: Yes, Bott Broadcasting. A: If I could digress for a moment which will help clarify the question, I think, that you're asking. That is that the situation in Blackfoot represents an op portunity for me to get out into business on my own and to have my own radio station and build some thing for myself. (Id. at p. 51.) 1 Under consideration are an Application for Award Pursuant to the Equal Access to Justice Act, filed on April 18, 1994, by Bott; Mass Media Bureau's Answer to Application for Award Pursuant to the Equal Access to Justice Act, filed on May 11, 1994; and Response to Answer of Mass Media Bureau, filed on May 26, 1994, by Bott. 3663 FCC 94D-8 Federal Communications Commission Record 9 FCC Red No. 16 Q: Okay. The format of the other stations that Bott Broadcasting currently owns is essentially what? How do you best describe it? A: As you characterized it in the deposition, it is essentially a religious-oriented format although I like to think that it's different from the way most reli gious stations are characterized. It's a format that is designed to serve the needs and interests of families including their religious and spiritual needs but also a lot of information, news, talk, public affairs and so forth. So it's a blend of several different things in cluding a good portion of religious programming. Q: Isn't it true that you also intend to engage in a similar sort of format for the Blackfoot facility? A: No, that's not necessarily true. I've not decided exactly the type of format, the type of music or whatever that I would use in that facility. It would be a format tailored to that particular market and the needs of that community. (Id. at pp. 55-56.) [In response to a series of questions as to whether there had been discussions between Bott and his father concerning the programming to be carried on Bolt's Blackfoot station:] A: ... If I could just say that my programming decisions are going to be my own decisions and I'm going to look at the programming sources that are available to me in addition to the programming that we're going to produce locally and make my de cisions at the appropriate time. . . . (Id. at pp. 67-68.) Q: And it's your intention to, for all intents and purposes, for the foreseeable future to live there for ever? Bott's Counsel: Objection, Your Honor. Forever is irrelevant. RRI's Counsel: Your Honor, I disagree because the Commission's policy is that integration proposals should be on a permanent basis. Permanent is equat ed, I believe, to forever. Presiding Judge: I think an indefinite period of time would be enough. I don't think he should commit himself to forever living in any one place. If you want to ask the witness whether he intends to stay in Blackfoot for an indefinite time, that's okay. Q: Do you intend to live in Blackfoot for an indefi nite period of time? A: Yes. (Id. at pp.72-73.) Q: I believe your testimony is you resigned [sic] your position of employment with Bott Broadcasting Inc. Do you intend to resign as either a vice president or a director of Bott Broadcasting Inc.? A: Well, my intention is to quit my job there so I can go move and live in Blackfoot. I don't have an intention specifically to cease being an officer or director; however, they may choose to elect some body to replace me but that would be a decision of the Board of Directors. They haven't made a decision on that one way or the other. (Id. at p. 87.) Q: Okay. Assuming you get this grant do you have any plans right now to only own this property for a finite period of time? A: No, I have no plans to sell it if that's what you mean. Q: That's what I meant. And in your [direct written] testimony you say that you intend to establish a domicile in Blackfoot. Is that correct? A: Yes. Q: Do you intend to maintain any other residences anywhere else in the country at the time that you have your domicile in Blackfoot? A: No, I intend to live in Blackfoot. Q: No other residences anywhere else? A: No. Q. . . . Have you made arrangements for a home or apartment in Blackfoot as of [this] date? A: Well, yes. to a certain extent. That's one of the reasons I went out to visit [Blackfoot in September 1987] because I wanted to see the homes that the real estate agent had been picking out for me. I saw two or three of them with him and he was supposed to get some more possibilities, but I'm working on that. Q: To purchase a home there? A: Yes, it would be premature to buy one before this case is settled but I have been investigating that. Q: I was wondering whether the decision was to purchase a home or to lease an apartment. A: Well, I haven't made a firm decision whether I'd buy or rent, but there's not much available in Blackfoot to rent so it appears that the best thing would be to buy something. The housing is fairly reasonable there. (Id. at pp. 87-88.) 3664 9 FCC Red No. 16 Federal Communications Commission Record FCC 94D-8 Q: Do each of the Bott stations, and again I use an umbrella term for Bott Broadcasting and Bott Com munications, receive the same programming, that is the two talk shows and the news service? A: Yes, they do. Those particular ones. There is some programming similarity. It's not identical but those particular shows they all get. Q: You would consider contracting for these same shows at your Blackfoot facility should you receive it? A: Should it be compatible with the format that I choose. Like I say I've not chosen the exact format and that would be one thing that I would certainly consider. (Id. at pp. 89-90.) 4. Bolt's CP application was granted and that of RRI and one other applicant were denied on the basis of Bolt's integration preference. Thus, Boll was awarded 100 percenl iniegralion credil, which was enhanced by his commitment to move to Blackfool, whereas RRI was awarded no in- tegration credit and the Ihird applicanl was awarded 50 percent credil. Initial Decision, 3 FCC Red 7094 (ALJ 1988). Although RRI appealed lo Ihe Review Board and ihe Commission, Ihe determination reached in ihe Initial Decision was upheld. Richard P. Bott, II, 4 FCC Red 4924 (Rev. Bd. 1989), rev. denied 5 FCC Red 2508 (1990). RRI's subsequenl appeal to the U.S. Court of Appeals was also denied. Radio Representatives, Inc. v. FCC, 926 F.2d 1215 (D.C. Cir. 1991) (aff'd by judgment). In this connection, RRI argued to Ihe Courl of Appeals lhal Boll would nol carry through on Ihe iniegralion pledge he made lo ihe Commission. Boll responded: "This claim is wide of the mark." (MMB Ex. 3, pp. 1-2.) The Petition to Deny and Related Pleadings 5. Bott was issued the CP for his proposed Blackfool facilily on December 18, 1991. (Joini Ex. 1, p. 2.) Nine months laler, on September 17, 1992, Botl filed ihe above- captioned application to assign lhal permil to Western Communications, Inc. ("Western"). (Official notice taken.) A Petition to Deny the assignment application was filed by RRI on October 26, 1992. (MMB Ex. 3.) Botl filed an Opposition to Pelilion to Deny on November 10, 1992 (MMB Ex. 4), to which RRI filed a Reply to Opposition lo Pelilion to'Deny on November 23, 1992 (MMB Ex. 5). On December 8, 1992, Boll filed a Request for Leave to Re spond and Response. (MMB Ex. 6.) RRI filed a Supple ment to Petilion lo Deny on May 14, 1993 (MMB Ex. 7), and by leller daled May 19, 1993. ihen counsel for Bolt notified the Commission that no response to Ihe Supple- meni would be filed (MMB Ex. 8). 6. In its Pelilion lo Deny, RRI conlended lhal ihe assign ment applicalion musl be designaled for hearing pursuant to Section 73.3597(a) of the Commission's Rules because Botl proposed to assign his CP wilhin one year of ils granl. (MMB Ex. 3, p. 3.) RRI furlher argued lhal Ihe sole basis for ihe granl of Boll's applicalion was his receipt of 100 percenl integration credit (id. at pp. 2, 3-4); lhal Boll conlinually represenled lo the Commission, as well as lo Ihe Courl of Appeals, lhat he would move to Blackfoot and fulfill his integralion pledge (id. al pp. 5-6); lhal Boll abandoned his inlegration pledge and his commitment to move to Blackfool (id. at p. 6); lhat Bolt's aclions made a "mockery" of the comparative proceeding in which Botl was awarded Ihe CP (id.); and that a grant of the assign ment application "would undermine the very foundation of the Commission's comparative hearing process" (id. at p. 7)- 7. In his Opposilion lo Pelilion lo Deny, Botl argued lhal "significanl changed circumslances affecting his pro posed construclion and operalion of Ihe Blackfool slaiion occurred subsequent lo Ihe acquisilion of the permil" (MMB Ex. 4, p. 5: emphasis in original); that RRI's reli ance on Section 73.3597(a) of Ihe Rules was misplaced (id. al p. 6); lhat a grant of ihe assignmenl applicalion would do no violence lo the integrity of Ihe Commission's licens ing process (id. al pp. 6-7); and that Botl would nol profil from ihe assignment (id.). 8. In a declaration under penally of perjury appended to his Opposition, Bott stated that throughout the compara tive hearing process "it remained [his) intenlion and plan to build the station in Blackfoot, move there and person ally run the station full time if and when [he] received the C.P." (MMB Ex. 4, p. 9); that after the CP grant was affirmed by the Court of Appeals in February 1991, he "proceeded wilh more detailed planning for the stalion [and] . . . decided lhat [he] would operale Ihe station with a religious formal" (id. al pp. 9-10); that this decision was based upon his prior experience wilh religious formal sla- lions. ihe overall worsening of Ihe economy, his knowledge that he "could still successfully operale Ihe slation and serve the community wilh a religious format," his contacls wilh poieniial clienls, "and there was an opening in the markel for that format" (id. al p. 10). 9. Bolt's declaration further stated that in September 1991 he learned that the opening in the market for a religious format slation had closed. At that time, Bott was informed that The Calvary Chapel Church had just pur chased FM stalion KRSS. Chubbock, Idaho, thai KRSS would serve much the same markel area Boll's station was proposing to serve, thai KRSS was planning lo increase power, and that it would use a formal very similar lo Ihe one Botl was planning to use. (MMB Ex. 4, p. 10.) Botl stated thai ihis "dramatically changed the compelilive silu- alion in ihe market" because Ihe church had a "Iremen- dous head start," and the markel was loo small and Ihe economy loo soft to support Iwo commercial religious stations. (Id.) Nevertheless. Bolt slated, throughoul Ihe re mainder of 1991 and inlo 1992 he proceeded with planning for construction of his station, ultimalely conlacting Kent Frandsen, ihe owner of Bolt's proposed tower, "to proceed with my plans lo inslall my antenna on his tower." (Id. at p. 11.) Boll's declaralion slated lhal, over Ihe course of several conversations, Frandsen inquired about purchasing Ihe CP. After first telling him it was not for sale. Boll elecled lo sell ihe CP after his then attorney advised him that the Commission allowed him lo do so provided lhal he receive as compensalion only his expenses. (Id.) Boll slated that he thought that in the poor economy a duopoly operation, as Frandsen would operate the Blackfoot station, represented the best hope for a successful operation. (Id.) 10. As noled above, RRI filed a Reply lo Opposilion lo Petition to Deny. In the "Summary" seciion of ils Reply, RRI stated: "For the first time, Boll has revealed lhal his integration pledge has always been contingenl on his ability lo establish a profitable, religious stalion, which ilself is 3665 FCC 94D-8 Federal Communications Commission Record 9 FCC Red No. 16 inconsistent with the integration pledge made in this pro ceeding." (MMB Ex. 5, p. 2.) Similarly, in the "Back ground" portion of its Reply, RRI further stated that: "Bott claim[ed] that he pursued the permit in order to construct a commercial religious station, . . ." (Id. at p. 7.) RRI also argued that Bolt's failure to fully disclose the contingent nature of his integration promises constituted "fraud on the Commission's processes" (id. at p. 8), and that Bott had not alleged sufficient changed circumstances to warrant a grant of the assignment application (id. at pp. 13-16). In addition, RRI alleged that Bolt's proposed stalion would serve a much larger area and population than would be served by station KRSS (id. at pp. 16-17), and that Boll's claims of competitive disadvantage and loss of a good mar ket opportunity were, therefore, "false" (id. at pp. 17-18). In support of the latler assertions, RRI attached a lengthy engineering study to its Reply. (Id. at pp. 22-91.) This sludy concluded, inter alia, lhal Bolt's proposed station would serve an area 3.1 times the size and a population 2.1 limes greater than that of station KRSS's upgraded facility. (Id. at p. 22.) Bott did not challenge these figures. (MMB Ex. 6.) The Hearing Designation Order in this Proceeding 11. As a consequence of the Petilion lo Deny and relaled pleadings, by Hearing Designation Order and Notice of Op portunity for Hearing, 8 FCC Red 4074, released June 15, 1993 ("HDO"), the Commission designated for hearing Ihe above-caplioned applicalion of Bolt and Western for assign- menl of the CP of Station KCVI(FM), Blackfoot, Idaho. The following issues were specified: (a) To determine whelher Richard P. Bott II has misrepresented facts to or lacked candor with the Commission, either in connection wilh his integra- lion pledge presented in the course of the Blackfoot, Idaho comparative hearing proceeding, or in his op- posilion to Ihe petition to deny filed in the instanl proceeding. (b) To deiermine, in light of the evidence adduced pursuant to issue (a), whether Richard P. Bott II is qualified lo remain a Commission permittee. (c) To determine, in lighl of Ihe evidence adduced pursuanl to the foregoing issues, whether the cap- tioned application should be granted. (HDO at para. 14.) 12. In its rationale for the specification of the misrepre sentation/lack of candor issue againsl Boll, Ihe HDO noted that "the Commission has clearly indicated its basic con cern wiih the integrily of iis licensing process" (HDO al para. 8; cilation omitted); thai Bott prevailed in the com parative proceeding essentially on the basis of his integra- lion proposal (id. at para. 9); that Botl, in proseculing his CP application, "unambiguously, uncondilionally, and re peatedly" pledged to relocate to Blackfoot and be fully integraled in his proposed siation (id.); and lhal Boll's pledges were not contingeni on ihe praclicality of introduc ing a commercial religious or any other particular format (id.). The HDO also asserted thai, in opposing RRI's Peti tion to Deny, "Bott statefd/ that throughoul the six-year effort to oblain his permil he mainlained a good failh inlenlion to both move to Blackfoot and operate KCVI as a commercial facility with a religious format." (Id. at para. 3; emphasis added.) The HDO further maintained that "Bott hafd} represented in the instant proceeding that, throughout the comparative proceeding, he always intended to operate with a commercial religious format. . ." (Id. at para. 9: emphasis added.) 13. The HDO determined thai Boll's failure to qualify his integralion pledge raised questions as to whelher he had misrepresented facts or lacked candor either in his state ments made during the course of ihe comparalive hearing or in the assignmenl proceeding. Specifically, the HDO slated that "it is proper to inquire into why, if Botl pre viously represented that he intended lo proceed wilhout having chosen a particular format, the format issue became so crilical laler." (HDO al para. 10.) The HDO additionally questioned "the credibilily of Boll's 'juslification' for nol proceeding with his announced plans for KCVI" in lighl of RRI's assertions in iis Reply that KCVI would serve a substantially greater area and population lhan KRSS would serve. (Id. al para. 11.) The HDO found lhal ihis called inlo queslion Boll's ralionale for assigning rather than construcling KCVI. (Id.) The HDO, iherefore, concluded lhat substantial and material questions of fact were raised which required designation of ihe assignment applicalion for hearing. (Id. al para. 13.) 14. In addilion, the HDO slaled lhat, irrespective of whether the hearing record warranied an order denying the assignment application, il shall be determined whelher an order of forfeilure in an amounl nol lo exceed $250.000 shall be issued againsl Bott for willful and repeated viola tions of Section 73.1015 of the Commission's Rules (sub- miiling irulhful wriiten sialements and responses to the Commission). (HDO at para. 15.) Further, if certain cir cumstances occurred, the HDO made provision for ihe issuance of "an order to show cause why an order of revocalion of [Bolt's] construction permit . . . should not be issued." One such circumslance involved a final deler- mination that Botl was not qualified to remain a permittee. (Id. at para. 18, foolnole omilled,' modified, Order, 8 FCC Red 7303, released October 8, 1993.) Between Designation for Hearing and the Hearing 15. On June 25, 1993, len days after ihe release of the HDO, Bott filed a Petilion for Leave to File Petilion for Reconsideration, and a Pelition for Reconsideration. (Of ficial nolice taken.) Both pleadings were addressed to the Commission. In his Petition for Reconsideration, Bott re quested the Commission lo reconsider Ihe HDO, delele Ihe misrepresentadon/lack of candor issue, which would mool ihe olher iwo issues, and granl the assignment applicalion. Botl argued that the HDO's specification of the misrepre- sentaiion/lack of candor issue was based on an erroneous reading of Bolt's Opposition to Petilion to Deny. Boll conlended lhal crilical facls cited in the HDO were inac curate, and thai cerlain allegedly conflicling slatemenls the HDO atlributed to Botl did not exist.2 Bolt furlher asserted 2 The specific statements that Bott alleged as inaccurate were: (a) "Bott states [in his Opposition to Petition to Deny] that throughout the six-year effort to obtain his permit he main tained [an] . . . intention to ... operate KCVI as a commercial facility with a religious format" (HDO at para. 3); (b) "The hearing record does not reveal any qualification to Bott's 3666 9 FCC Red No. 16 Federal Communications Commission Record FCC 94D-8 that the HDO was inconsistent with recent Commission precedent. The Bureau opposed Bolt's Petition for Leave to File, Bott replied to the Bureau's opposition, and the Bu reau moved to dismiss the reply. (Mass Media Bureau's Opposition to Petition for Leave to File Petition for Re consideration, filed on July 8, 1993; Reply to Opposition to Petition for Leave to File Petition for Reconsideration, filed on July 20, 1993, by Bott; Mass Media Bureau's Motion to Dismiss, filed on July 23, 1993; official notice taken.) 16. On July 6, 1993, Bott filed a Motion to Delete Issues, which was addressed to the Presiding Judge. (Official no tice taken.) Bott requested that the Presiding Judge delete the misrepresentation/lack of candor issue for substantially the same reasons he urged upon the Commission for the deletion of that issue. The Bureau opposed Bolt's motion to delele and Boll filed a reply to ihe Bureau's opposilion. (Mass Media Bureau's Opposilion lo Molion lo Delele Issues, filed on July 21, 1993; Reply lo Opposilion lo Molion lo Delele Issues, filed on Augusl 2, 1993, by Boll; official nolice laken.) 17. On July 15, 1993, Boll filed a Peiition for Certifica tion lo Commission, which was addressed lo ihe Presiding Judge. (Official nolice laken.) Boll requesied ihe Presiding Judge lo cerlify lo the Commission the question of whether the hearing in this proceeding should be held. Bott argued, once again, thai Ihis case was designated for hearing on the basis of an error of fact, and that Ihe HDO was inconsislenl with precedenl. Bott maintained thai certification was ap propriate in order to give Ihe Commission Ihe opporlunily to review the HDO with a correct understanding of the critical facts and law. The Bureau opposed the petition for certification. (Mass Media Bureau's Opposilion lo Petition for Certificalion lo Commission, filed on July 27, 1993; official nolice laken.) 18. On July 16. 1993, Boll served on ihe Bureau a Requesl for Admission. (Official nolice laken.) Boll asked Ihe Bureau to admit the trulh of Ihe following stalement: Botl had nol prior lo designalion for hearing in the inslanl proceeding made Ihe statement or representa tion to the Commission that throughoul the six-year effort to oblain his permil he maintained a good failh inienlion lo operate KCVI as a commercial facilily wilh a religious formal (see HDO f 3) or that throughoul ihe comparative proceeding, he always intended lo operale wilh a commercial religious for mal, (see HDO K 9) [sic] 19. On July 20, 1993. ihe Bureau filed ils response lo Ihe admission requesl. The Bureau submitted thai portions of Bolt's request were improper in thai they asked the Bureau lo admil to staiements made or not made by Botl. Inslead, the Bureau stated thai il would admil to Ihe Irulh of ihe following "revised" admission: The Bureau does not possess a copy of a writlen slatement or transcripl of an oral representation by Bott to the Commission in which Boll asserls lhat ihroughoul ihe six-year effort lo oblain his permit he maintained a good faith intenikm to operate KCVI as a commercial facility wilh a religious formal or that throughout the comparative proceeding, he always iniended 'to operale wilh a commercial religious for mat. (Mass Media Bureau's Response to Requesl for Admission, filed on July 20, 1993; official nolice laken.) 20. On July 20, 1993, a prehearing conference was held in Ihis proceeding. (Tr. 1.) Among Ihe matters discussed were Boll's Petition for Reconsideration (Tr. 4), Boll's Molion lo Delele Issues (Tr. 5), Boll's Requesl for Admis sion and Ihe Bureau's response (Tr. 6, 8. 10), Bolt's Peti tion for Certificalion lo Commission (Tr. 6), discovery (Tr. 16), Ihe burden of proceeding and proof (Tr. 22), and summary decision (Tr. 16, 26). With respect to the latter. Bureau counsel raised the possibility of the filing of a motion for summary decision by Botl after the compleiion of discovery (Tr. 16). or premised on Ihe Bureau's response lo Ihe Requesl for Admission (Tr. 26), and counsel for Boll recognized lhal he had such an oplion (id.). 21. By Order, FCC 93M-533, released Augusl 17, 1993, the Presiding Judge deferred rulings on Boll's Motion lo Delele Issues and Pelilion for Certificalion lo Commission, pending aclion by the Commission on Bolt's Petilion for Leave to File Petilion for Reconsideralion and Petition for Reconsideration. This action was taken because the plead ings addressed lo Ihe Presiding Judge (i.e., Ihe Motion to Delete and the Petilion for Certification) requested essen- lially Ihe same relief as ihose addressed to the Commission (i.e., the Petilion for Leave to File and the Petilion for Reconsideralion). (See also Tr. 7-10.) 22. On Augusl 18, 1993, Bott filed a Request for Dis missal of "Petition for Leave to File Petition for Reconsi deration" and "Petition for Reconsideration," which was addressed to the Commission. (Official notice taken.) Bott requested the "immediate dismissal" of those two pleadings. Bell slated thai he took this action in response lo Ihe Presiding Judge's Augusl 17 Order because of Boll's "desire lo have ihe Presiding Judge act on ihose pleadings pending before him." 23. By Order, 8 FCC Red 7303, released Oclober 8, 1993, ihe Commission, inter alia, granled Bolt's Requesl for Dis missal, and dismissed ihe Peiition for Leave lo File Peiition for Reconsideration and ihe Pelilion for Reconsideralion. 24. By Memorandum Opinion and Order, FCC 93M-643, released October 8, 1993, the Presiding Judge denied Bolt's Molion lo Delele Issues and his Petition for Certification to Commission. With regard to the motion lo delele, il was deiermined lhal Commission precedenl precluded Ihe Pre siding Judge from substituting his judgment for that of the Commission, and that the Presiding Judge lacked Ihe au- thority to review the propriety of the designation of a case for hearing or to issue a ruling which would have the pledges, such as being contingent on the practicality of in troducing a commercial religious or any other particular for mat" (id. at para. 9); and (c) "Bott has represented in the instant proceeding that, throughout the comparative proceeding, he always intended to operate with a commercial religious format . . ." (id.). With respect to (a) and (c), Bott claimed that he did not make the statements attributed to him, and that his format decision was made after the CP grant was affirmed by the Court of Appeals in 1991. With respect to (b), Bott main tained that he testified during the comparative hearing that he had not made a format decision. (Petition for Reconsideration at pp. 2-5.) 3667 FCC 94D-8 Federal Communications Commission Record 9 FCC Red No. 16 effect of dismissing a hearing designation order as defective. In denying the petition for certification, the Memorandum Opinion and Order stated: As a practical matter, Bolt's petition for certification is an attempt, through the authority of the Presiding Judge, to have the Commission review and reconsi der the HDO in this proceeding. However, Bott had pending before the Commission itself a Petition for Leave to File Petition for Reconsideration and an accompanying Petition for Reconsideration of the HDO. Those pleadings raised directly before the Commission the identical questions that Bott is now seeking to have the Presiding Judge certify to the Commission. Despite this, Bott voluntarily chose to dismiss his Petition for Leave to File and his Petition for Reconsideration without awaiting Commission ac tion on the merits of his arguments. In other words, Bott willfully and purposely withdrew from the Com mission the opportunity to review and reconsider the HDO in light of his contentions. Yet, at the same time, Bott is maintaining that the Presiding Judge should give the Commission the opportunity to do the same. These positions appear to be completely inconsistent and, given the circumstances, it would not be appropriate to allow Bott to accomplish through indirect means that which he no longer desires or is willing to attempt to do by direct means. The Hearing in this Proceeding and the Summary De cision 25. The hearing in this proceeding was held in Washing ton, D.C., on October 26. 1993. (Tr. 37.) Richard Bott, II, was the only witness to appear and testify. (Tr. 38. 75 et seq.) The record was initially closed at the end of the hearing. (Tr. 193: Order, FCC 93M-683, released October 28, 1993.) However, by Order, FCC 93M-700. released No vember 10, 1993, the record was reopened for the receipt of an additional exhibit, and was then reclosed. 26. By Order, FCC 93M-686. released October 29, 1993, Bott was given permission to file a post-hearing motion for summary decision. Bott filed such a motion on December 6. 1993. and the Bureau filed comments in support thereof on December 9, 1993. (Motion for Summary Decision, filed on December 6, 1993, by Bott; Mass Media Bureau's Comments in Support of Motion for Summary Decision, filed on December 9, 1993; official notice taken.) 27. By Summary Decision, 9 FCC Red 514, released January 28. 1994, all of the issues in this proceeding were resolved in Bolt's favor, and the application for assignment of the CP was granted. The Summary Decision concluded, inter alia, that Bott did not misrepresent facts or lack candor either in connection with the integration pledge he made during the course of the Blackfoot, Idaho, compara tive proceeding, or in the Opposition to Petition to Deny he filed in this proceeding. With respect to the statements Bott was alleged to have made in his Opposition, the Summary Decision stated: Turning first to the statements Bott is alleged to have made in his Opposition to Petition to Deny, the record establishes that those statements were not made by Bott. Specifically, the HDO attributed to Bott the statement that "throughout the six-year ef fort to obtain his permit he maintained a good faith intention to both move to Blackfoot and operate KCVI as a commercial facility with a religious format." (Emphasis added.) The HDO also attributed to Bott the representation that "throughout the comparative proceeding, he always intended to operate with a com mercial religious format . . ." (Emphasis added.) How ever, the italicized statements were not made by Bott in his Opposition, or anywhere else. On the contrary, the statements in question appear to have been de rived from the "Summary" and "Background" por tions of RRI's Reply to Opposition to Petition to Deny, which contained grossly inaccurate character izations of Bolt's actual stalemenls. (Summary Decision at para. 35.) In connection with the format of the proposed station, it was concluded that "there is no record evidence that the format decision was made prior to the summer of 1991, or that Bolt's testimony in the Blackfoot comparative proceeding was untruthful." (Id. at para. 37.) 28. Wilh respect lo Ihe specific quesiions raised by the HDO, the Summary Decision staled: The HDO, at paragraph 10, posed ihe queslion of why. if Bolt intended lo proceed without having cho sen a particular format, the format issue became so critical later. Bott has satisfactorily answered thai question. Specifically, Bott chose the commercial re ligious format largely because of Ihe depressed stale of the economy and the downiurn in ihe radio in- duslry. This formal relied primarily upon the sale of blocks of lime and, for that reason, stood a greater chance of being economically viable in a depressed economy. The alternative formats he considered re lied subslaniially upon spol advertising. In addition, after Bolt became aware of KRSS's plans, he consid ered formal alternalives bul, faced wiih a start-up operalion in a very depressed economy, he believed lhal he would not be financially successful operating a new radio siaiion wiih a format relying heavily upon spot advertising. The HDO, al paragraph 11, also queslioned Boll's conclusion lhat he could not compete with KRSS when Boll's proposed coverage area was greater lhan lhal of KRSS. Boll has credibly answered this ques tion as well. Thus, Bott knew, from the time he first learned about KRSS in Seplember 1991, lhal ihe station was planning to increase power from a moun- laintop site. Based upon his knowledge of broadcast engineering concepls generally, and his prior exper ience wiih a mounlainlop sile. Bolt believed lhal KRSS's signal would serve subslaniially the same market lhat he was targeting. (Bolt's belief was ulli- mately shown to be correct.) Moreover, KRSS was in a posilion lo be on the air before Boll's Blackfool slation, and planned to broadcast many of the same programs Botl had intended to use, rendering them unavailable to his station. Even if Bott had sold time lo competilive programs, Ihe audience would have been splii. Consequenily, given Ihe size and demogra phics of ihe markel, Bolt did not believe he could suslain a financially viable operalion even wiih greai- er coverage. 3668 9 FCC Red No. 16 Federal Communications Commission Record FCC 94D-8 (Summary Decision at paras. 40-41.) CONCLUSIONS OF LAW 29. This proceeding involves the application of Bott for an award of attorney's fees and expenses pursuant to the EAJA. For the reasons which follow, it is concluded that the EAJA does not apply to this proceeding. Moreover, even assuming the applicability of the EAJA, it is also concluded that Bott's application must be denied. 30. Section 1.1501 of the Commission's Rules, which implements the EAJA, provides for the award of attorney's fees and other expenses to an eligible party "when it pre vails over the Commission, unless the Commission's posi tion in the proceeding was substantially justified or special circumstances make an award unjust." Similarly, Section 1.1505(a) of the Rules, entitled "Standards for awards," states, in pertinent part: A prevailing applicant may receive an award for fees and expenses incurred in connection either with a proceeding, or with a significant and discrete substan tive portion of a proceeding, unless the Administra tive Law Judge determines that the position of the Commission over which the applicant has prevailed was substantially justified. The position of the Com mission includes . . . the action ... by the agency upon which the adversary adjudication is based. In addition, Section 1.1526(a) of the Rules provides, in part, that "[w|hether or not the position of the agency was substantially justified shall be determined on the basis of the administrative record, as a whole, which [was] made in the adversary adjudication for which fees and other ex penses are sought." 31. As a preliminary matter, Bott argues that the EAJA is applicable to this case because it is an adversary adju dication within the meaning of the rules. (Application for Award at pp. 1-3.) The Bureau, on the other hand, claims that this is not the type of proceeding to which the EAJA applies because it involves an application for assignment of license, which does not fall within the definition of an adversary adjudication. (Answer at pp. 1-4.) 32. It must be concluded that the EAJA is not applicable to this proceeding. Section 1.1503(a) of the Rules defines "adversary adjudications" as those conducted under a cer tain section of the Administrative Procedure Act in which the position of the Commission, or any component thereof, is presented by an attorney who enters an appearance and participates in the proceeding. Proceedings to grant or renew licenses are expressly excluded from the definition of adversary adjudications, while proceedings to modify, suspend, or revoke licenses are expressly included. Clearly, the position of the Bureau, a component of the Commis sion, was presented by attorneys who appeared and partici pated in this case. However, this case did not involve the modification, suspension or revocation of Bott's CP, pro ceedings which are expressly included in the definition of adversary adjudications. Instead, this case concerned the assignment of Bott's CP to Western, which is manifestly a licensing proceeding. Such proceedings are specifically ex cluded from the EAJA. 33. In this connection, Bott argues that he faced a large forfeiture and a possible judgment that he was not fit to be a Commission permittee. (Application for Award at p. 3.) However, identical questions and sanctions typically arise in comparative proceedings involving misrepresentation and lack of candor issues, but these are licensing proceed ings excluded from the EAJA. Therefore, standing alone, the type of sanction which may be imposed is not deter minative. Further, the HDO made specific provision for the transformation of this case into a revocation proceeding should certain circumstances take place.3 Since such cir cumstances did not come to pass, this case remained a licensing proceeding. In any event, even assuming. arguendo, that the EAJA is applicable to this proceeding, the findings of fact establish, and it is concluded, that the Commission's position was substantially justified and an award of attorney's fees and other expenses is not war ranted. 34. The major premise underlying Bott's application for an award of fees and expenses is his contention that the Commission's actions in designating the assignment ap plication for hearing and in going forward with the hearing were not substantially justified. This is so, Bott contends, because the Commission had no evidence that he ever contradicted the testimony he gave during the comparative proceeding. (Application for Award at pp. 4. 6.) In sup port, Bott relies on the portion of the Summary Decision which concluded that certain statements imputed to him in the HDO were derived from "grossly inaccurate character izations" contained in RRI's Reply to Opposition to Peti tion to Deny. (Id. at pp. 4-5. 7; see also para. 27, supra.) Bott claims that the basis for the misrepresentation/lack of candor issue, and thus the designation of this case for hearing, "rested entirely upon the Commission's unques tioning acceptance of RRI's grossly inaccurate characteriza tions' of Bott's statements to the Commission." (Id. at pp. 5-6: emphasis added.) Bott also argues that even if the Commission made an innocent error in misreading RRI's allegations, "innocent error is not substantial justification." (Response to Answer at p. 7.) Bott further relies for sup port on the Bureau's admission that it did not possess a copy of a written statement or a transcript of any oral representation by Bott containing the statements attributed to him in the HDO. (Application for Award at pp. 5-6; see also paras. 18-19, supra.) Based upon these arguments, Bott maintains that the Commission's designation of this case for hearing "had no reasonable basis in law or fact" and that "a reasonable person making an independent reading of Bott's statements could not have concluded that there was any substantial reason to believe that Bott had made misrepresentations or had lacked candor." (Id. at p. 7.) 35. Bott's premise is misplaced. While there can be no question that Bott did not make the statements ascribed to him in the HDO, it cannot be concluded, as urged by Bott. that the inaccurate attribution constituted the entire basis for the designation of this case for hearing. On the con trary, the findings establish, and it is concluded, that there were ample other grounds for setting this case for hearing. 3 One of those circumstances involved a final determination that Bott was not qualified to remain a permittee. Had such a final determination been made, an order to show cause looking towards the revocation of Bott's CP would have been issued. At that time, this case would have become a revocation proceeding, and the EAJA would have applied. 3669 FCC 94D-8 Federal Communications Commission Record 9 FCC Red No. 16 36. First, Bott obtained his CP in the comparative pro ceeding only because of his integration commitment, and Bott repeatedly, unambiguously, and unconditionally tes tified in that case that he would move to Blackfool to fulfill that promise. Bott maintained this position through the Court of Appeals. Yet, a mere nine months after Bott was issued the CP, he filed an application to assign it to Western. Those circumstances, without more, served to place into question the candor of Bolt's testimony with respect to his integration pledge in the comparative pro ceeding. 37. Second, Bott testified in the comparative proceeding that he had not selected the format for his proposed sta tion. However, when the assignment application was chal lenged by RRI, Bott stated in his Opposition to Petition to Deny that he decided to assign his CP, in part, because another FM station in the market, KRSS, was planning to use a format very similar to the one Bott ultimately de cided to use. This raised the question of why the format issue became so critical to Bott when his integration com mitment was made without consideration of format. This also placed into question the candor of Bolt's teslimony with regard lo formal in Ihe comparalive hearing, and ihe represenlalions he made in his Opposition. 38. Third, the Opposition also stated that KRSS would serve much the same market area as Boll's slalion was proposing to serve, and the market was loo small to sup port two similarly formatled stalions. Bul RRI, in its Reply to Opposilion to Petilion to Deny, argued that Boll's pro posed slalion would serve a much larger area and popula- lion lhan would be served by slalion KRSS, supporled that asserlion wilh a lengthy engineering sludy which was nol challenged by Bott, and alleged lhat Bolt's claims of com- pelilive disadvanlage were false. This, loo, placed inlo ques- lion the candor of Bolt's Opposition, as well as the credibility of his rationale for assigning rather than con- strucling his slalion. 39. Boll also argues lhal even if the Commission had been justified in designating ihis case for hearing, such juslificalion "lerminaied" when il became clear thai Ihe alleged basis for the hearing did nol exisi. Boll implies lhal ihis point came when the Bureau filed its Response lo Requesl for Admission. In addilion, ciling Eagle 22, Ltd., 1 FCC Red 5295 (1992), Boll mainlains lhal the Bureau knew that the law permitled his sale of the unbuill CP at no profil wilhoul ihe need for him to jusiify his decision lo sell. (Response to Answer al pp. 6-7.) 40. Bolt's arguments are withoul meril. Allhough Eagle 22 may permil the sale of an unbuilt CP without the seller providing a justification, the findings establish that Botl, in his Opposition to Petilion lo Deny, volunlarily provided lo Ihe Commission the reasons for his decision to assign ihe CP to Western. As demonstraied above, il was ihose very reasons which raised Ihe misrepresenlalion/lack of candor queslions leading to Ihe designalion of ihis case for hearing, and Ihe Commission could hardly be expected lo overlook Ihe substanlial and material questions raised by Bolt's ex planation. Therefore, ihe slale of Ihe Bureau's knowledge of Eagle 22 is completely irrelevant. Furlher, the Bureau's Response to Request for Admission was not a concession that the alleged basis for ihe hearing did nol exisl. Rather, the Bureau only admitted that it did not have any docu mentation establishing that Botl made certain slatemenis impuled lo him in Ihe HDO. There was no admission by Ihe Bureau wilh respecl lo anylhing else and, as shown above, Ihere were olher grounds for selling ihis case for hearing. ULTIMATE CONCLUSIONS 41. In sum, il must be concluded that the EAJA does not apply to this case because il is a licensing proceeding expressly excluded from Ihe act. Moreover, even assuming the applicability of the EAJA, it must ultimately be con cluded that the Commission's position in this proceeding was substantially justified. Thus, it is abundantly clear thai Ihere were, in facl, ample reasons for designating for hear ing Ihe Boll-Western assignment application and for speci fying a misrepresenlation/lack of candor issue againsl Boll. These reasons were completely independeni of ihe "grossly inaccurate characterizations" contained in RRI's Reply and repeated in ihe HDO. Furlher, conlrary lo Boll's assertions, a reasonable person undertaking an independent analysis of Boll's slalemenls could, indeed, have concluded lhat sub stantial and material questions of fact were raised as to whether Bott misrepresented facts or lacked candor either in his teslimony in ihe comparalive hearing or in his Opposilion lo Petition to Deny. Consequenlly, Boll's unidimensional, consiricted. reading of Ihe HDO is falally flawed, and his application for an award of ailorney's fees and olher expenses must be denied. Accordingly, IT IS ORDERED thai, unless an appeal from this Initial Decision is laken by a parly, or it is reviewed by the Commission on its own motion in accor dance with Sections 1.276 and 1.1528 of the Rules, Ihe Application for Award Pursuant lo the Equal Access to Justice Acl, filed by Boll on April 18, 1994, IS DENIED.4 FEDERAL COMMUNICATIONS COMMISSION Arlhur I. Sleinberg Adminislralive Law Judge 4 (n the event exceptions are not filed within 30 days after the release of this Initial Decision, and the Commission does not review the case on its own motion, this Initial Decision shall become effective 50 days after its public release pursuant to Sections 1.276(d) and 1.1528 of the Rules. 3670