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‘Financial Hardship’ Must Be Demonstrated the Right Way

FCC staff upholds fine against former California FM owner

If you face a fine from the FCC but hope to get it reduced by arguing financial hardship, be aware there’s certain specific information the FCC staff is going to want.

That’s a lesson from the case of Trinity Church of the Nazarene. The church, former owner of KRQZ(FM) in Lompoc, Calif., will have to pay $7,000 in a licensing rule violation case.

The license renewal application should have been filed on Aug. 1, 2005, four months before the license expired. The station missed the deadline; it filed for an STA in December of that year, shortly after the license ran out, then filed the renewal application.

The FCC issued a notice of apparent liability at the end of 2007, three years ago this month. Trinity then appealed. The church didn’t dispute that it failed to file a timely renewal or that it operated without authority until it got an STA; but it asked for a cancellation or reduction based on significant financial hardship.

In rejecting the appeal now, the commission staff says Trinity did not submit federal tax returns, financial statements “or any other reliable and objective documentation setting forth Trinity’s finances in support of its request.” The church only provided financial documentation relating to operation of the station, showing three years of income and expenses (with losses each year), and stated that the financial records for the station are accounted for separately.

“We require a licensee’s financial information, not an accounting of the station’s separate funding, in order to entertain a request for reduction of forfeiture based on inability to pay,” the FCC wrote. It cited earlier cases finding that a one-page document setting forth station income and expenditures for one year, but providing no information regarding licensee’s finances, was “an insufficient basis on which to assess a licensee’s ability to pay.”

The commission reiterated that it will not consider reducing or canceling a forfeiture in response to inability to pay “unless the licensee submits: (1) federal tax returns for the most recent three-year period; (2) financial statements prepared according to generally accepted accounting practices; or (3) some other reliable and objective documentation that accurately reflect the licensee’s current financial status.”

The station is now licensed to Spirit Communications, but the fine is against the earlier licensee.