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Nonprofit Loses LPFM CP After Internal Battles

FCC dismisses appeal after major board reshufflings and a confused request for cancellation

Sometimes internal squabbles at an organization can do more than upset individuals gathered around the water cooler.

Disputes among directors of a nonprofit that led to ousting of board members and a major restructuring have also cost the group its construction permit for an LPFM station in Hazleton, Pa.

La Casa Dominicana de Hazleton wanted the commission to reconsider an unfavorable Media Bureau decision. The bureau had ruled that Casa had undergone a prohibited major of change of control and failed to disclose those changes in its application paperwork. But the FCC now is backing the bureau; and commenting on the outcome, Commissioners Mignon Clyburn and Ajit Pai, while expressing support for nonprofit organizations looking to establish LPFMs, agreed that FCC rules must be followed in situations like this.

The process all started with Casa filing its application and identifying seven board members as part of its leadership, each with 14.3 percent of the board’s votes. In late 2014, the Media Bureau granted the application and issued Casa a construction permit. It did so based on the understanding that the information on the application remained the same.

Unbeknownst to the Media Bureau, internal squabbles had shuffled the Casa board multiple times; first in August of that year when three board members were removed and three others added; then again in September, when Casa again reconstituted its board by adding more members.

The organization did submit a letter informing the Media Bureau of the changes, but according to a commission summary, Casa failed to amend its original application as required. It also failed to include key information in the letter including addresses and voting shares of the new board members, as well as proof of the legal qualifications of this revised board.

Things got even messier. In February 2015, four board members submitted a letter stating that they — as a majority of the board — were requesting that the construction permit be rescinded. The permit was pulled just before it was revealed that three of those board members had actually been dismissed; thus, Casa’s board told the FCC, the others had had no authority to surrender Casa’s permit.

It was here that the Media Bureau put on the brakes, declining to reinstate the permit because of the previous violations and returning the application to “pending” status so that Casa could amend it. But more shuffling ensued; and instead of sending information on the revised, seven-member board, Casa identified yet a different board of 14 members, presenting a 79 percent change from the original board. Then the bureau acted to dismiss Casa’s reapplication outright, saying the latest amendment, received in August 2015, specified a major change in the board in violation of FCC rules.

Got all that? It may be no surprise the commission this month now has upheld the Media Bureau and said the final, major change was a fatal defect. “Only 21 percent of the board’s votes remain with original parties to the application,” the commission said — a violation because more than 50 percent of control changed to individuals not party to the original application. Moreover, the commission said, this was not a gradual change but a sudden addition of new members, reportedly as a result of a conflict within the organization.

Commenting on the outcome, Clyburn did not dispute that the company failed to follow the rules but she said she is “sympathetic” to internal challenges facing the organization. The low-power FM radio service has the power to serve local and/or underrepresented groups within communities, she said, expressing support for organizations like Casa that “represented an opportunity to enhance viewpoint diversity that is so desperately needed in our country.”

Pai, too, has voiced concern about the rule requiring dismissal of a nonprofit organization’s radio station application when a majority of a board’s membership changes hands. In this case, however, the change was not the result of routine turnover, he said. “And when there are such substantial changes to the board as the result of a battle for control of the organization, I believe that dismissing an applicant’s permit is not only mandated by the commission’s rules, it is also the correct policy outcome.”