U.S. v. Neely, No. 0:08-1370-MJP.

• Decision Date: 29 January 2009
• Docket Number: No. 0:08-1370-MJP.
• Citation: 595 F.Supp.2d 662
• Court: U.S. District Court — District of South Carolina
• Parties: UNITED STATES of America, Plaintiff, v. Frank NEELY, Defendant.

595 F.Supp.2d 662

UNITED STATES of America, Plaintiff, v. Frank NEELY, Defendant.

Civil Action No. 0:08-1370-MJP.

United States District Court, D. South Carolina, Rock Hill Division.

January 29, 2009.

James Michael Carr, Federal Communications Commission, Washington, DC, Susan Z. Hitt, U.S. Attorneys Office, Columbia, SC, for Plaintiff.

Eleazer R. Carter, Carter Law Firm, Columbia, SC, for Defendant.

ORDER

MATTHEW J. PERRY, JR., Senior District Judge.

I. INTRODUCTION

This is an action to enforce a $4000 monetary forfeiture assessed by the Federal Communications Commission ("FCC") against Defendant Frank Neely ("Neely"), for repeated violation of FCC regulations. When Neely failed to pay the administratively-ordered penalty, the United States filed this action, pursuant to 47 U.S.C. § 504(a), for judgment in the amount of the forfeiture plus interest and costs. The Defendant timely answered, admitting all factual allegations in the government's Complaint, but claiming the FCC cannot enforce this forfeiture because the agency has failed to comply with the Small Business Regulatory Enforcement Fairness Act of 1996 ("SBREFA"). Both the United States and Neely filed motions for summary judgment and both parties presented oral arguments on their motions before this Court on October 7, 2008. At the hearing the Court granted 30 days' leave to defendant to supplement the record with documents pertaining to Neely's personal finances. Neely has filed no supplemental pleadings, so this matter is ripe for disposition.

II. STATUTORY AND REGULATORY BACKGROUND

a. Regulation Of Radio Broadcasting

The FCC is an independent federal regulatory agency, created by Congress to regulate interstate and foreign radio communications pursuant to the Communications Act, 47 U.S.C. §§ 151, et seq. Among its statutory duties, the Communications Act gives the FCC the responsibility to ensure that radio stations' signals do not interfere with one another. To that end, the FCC has the authority to require the licensing of all radio stations within U.S. territorial boundaries. See 47 U.S.C. § 301 (prohibiting the transmission of radio signals without a license issued by the FCC). The FCC also has authority to make and enforce such rules and regulations as may be necessary to promote efficient use of the radio spectrum. See 47 U.S.C. §§ 151, 154(i), 303(r). Radio stations licensed by the FCC are subject to conditions set forth in rules adopted pursuant to that authority and as specified in the licenses themselves. Certain classes of AM broadcast radio stations are licensed to transmit at full power only during daytime hours and must reduce their power to levels prescribed in their licenses at nighttime or, in some cases, must cease broadcasting at nighttime. This is to prevent interference that could occur among stations because certain types of radio signals at certain frequencies travel farther at night. See 47 C.F.R. §§ 73.21, 73.99. In the case at hand, the license for Neely's station WLTC(AM) required it to reduce its transmitter power to specified levels at nighttime.

b. Forfeiture

Section 503(b) of the Communications Act authorizes the FCC to levy forfeitures against licensees who willfully or repeatedly fail to comply with the Act or the FCC's rules. 47 U.S.C. § 503(b)(1)(B). Before levying a forfeiture, the agency usually issues a Notice of Apparent Liability ("NAL") and provides the alleged violator with a reasonable opportunity to show why the forfeiture should be cancelled or the penalty reduced. 47 U.S.C. § 503(b)(4); 47 C.F.R. § 1.80(f)(3). If the agency does not cancel the proposed forfeiture, it will issue a formal Forfeiture Order. 47 C.F.R. § 1.80(f)(4).

In determining the amount of the penalty, the FCC must take into account "the nature, circumstances, extent, and gravity of the violation and, with respect to the violator, the degree of culpability, and history of prior offenses, [and] ability to pay...." 47 U.S.C. § 503(b)(2)(E); see also In the Matter of 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)("Forfeiture Policy Statement"), reconsid. denied, 15 FCC Red. 303 (1999). In general, if a party refuses to pay a forfeiture, it is recoverable in a civil suit brought by the United States in the federal district court by a trial de novo. 47 U.S.C. § 504(a).

III. STATEMENT OF FACTS

a. Defendant's Violations

At all times relevant to the Complaint in this case, Defendant Neely was the licensee of radio station WLTC(AM), Gastonia, North Carolina.¹ During April 2003, WLTC(AM) was authorized by the FCC to operate on the frequency 1370 kHz with a power of 12 kilowatts during the day and at various lower power levels after sunset (8:00 p.m. to 8:30 p.m. EDT—500 watts; 8:30 p.m. to 9:00 p.m. EDT—262.3 watts; 9:00 p.m. to 10:00 p.m. EDT—164.7 watts; after 10:00 p.m.—30 watts).²

On April 22, 2003, in response to information alleging overpower operation by Neely's WLTC(AM), an agent of the FCC monitored WLTC(AM)'s signal. Field strength measurements revealed that WLTC(AM) did not reduce its transmitter power at sunset as required by the station authorization, but instead remained at daytime power until 8:16 p.m. EDT, past the local sunset time for April 22nd of 8:00 p.m. EDT. On April 23, 2003, an agent of the FCC again monitored WLTC(AM)'s signal and found that the station again did not reduce its transmitter power at sunset as required by its authorization, but rather stayed at its daytime power for more than an hour beyond the 8:00 p.m. local sunset time. NAL ¶¶ 3-4. On April 24, 2003, an agent of the FCC inspected WLTC(AM)'s transmitter site during daytime hours. The agent observed that the station's transmitter exceeded the authorized operating power by more than 20% in daytime mode and by more than 2000% in nighttime mode. NAL ¶ 5.b

b. Administrative Proceedings Leading To The Forfeiture

On July 16, 2003 the FCC's Enforcement Bureau issued a Notice of Apparent Liability for Forfeiture to Neely in the amount of $4,000, for the alleged repeated violations of Section 73.1745(a) of the agency's rules, 47 C.F.R. § 73.1745(a), based on the overpowered operations observed on April 22, 23, and 24, 2003.³ In his response to the NAL, Neely did not dispute that his radio station, WLTC(AM), operated with excessive power on the dates specified, but opposed the NAL, asserting he had set up procedures to prevent the reoccurrence of the violation and that he had a history of overall compliance with the Commission's Rules. In addition, Neely claimed that he was financially unable to pay the forfeiture.

On August 23, 2004, the Commission, again acting through the Bureau, issued an order finding Neely liable in the amount of $4,000 for repeated violation of Section 73.1745(a). Frank Neely, Forfeiture Order, 19 FCC Rcd. 16135 (EB 2004). In that order, the agency's Enforcement Bureau found that Neely's corrective efforts were insufficient to cancel or to reduce the forfeiture. Id. at 16135 ¶ 3.

The Bureau also rejected Neely's claim that he had no history of violation of FCC rules. The Bureau noted that a separate forfeiture notice had been issued to Neely for violation of different rules between 1998 and 2003. Id. Further, the Bureau found that the proposed forfeiture amount was a very small percentage of the gross revenues of Rejoice, Inc. ("Rejoice"), the company through which Neely operates WLTC(AM), although Neely holds the license in his own name. The Bureau thus held that cancellation or reduction of the proposed forfeiture was not warranted based on the financial information provided. Id.

On September 9, 2004, Neely filed a petition for reconsideration of the Forfeiture Order. He argued that the company financial information submitted with his response to the NAL supported his request for reduction or elimination of the forfeiture based upon an inability to pay. On January 31, 2007, the Bureau denied Neely's petition for reconsideration. Frank Neely, Memorandum Opinion and Order, 22 FCC Red. 1434, 2007 WL 268615 (EB 2007) ("MO & O"). The Bureau noted that under the FCC's Forfeiture Policy Statement, the agency will consider reduction or cancellation of a forfeiture in response to a claim of inability to pay where a petitioner 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 reflects the petitioner's current financial status.⁴ The Bureau observed that "Neely, the licensee of WLTC, and the person whom the Bureau found liable for the violations herein and the forfeiture, has not provided any financial information in support of his own individual inability to pay the forfeiture. Instead, Mr. Neely argues only that his company Rejoice has an inability to pay." 22 FCC Rcd. at 1435. Because Neely had failed to submit any information relating to his personal inability to pay, the Bureau held that he had "failed to make the requisite showing that he has an inability to pay the forfeiture." Id. at 1436. In addition, the Bureau re-examined the financial information concerning Rejoice and concluded that "considering the information on Rejoice in the light most favorable to Mr. Neely, we find that this information also does not demonstrate an inability to pay the forfeiture." Id.

c. Proceedings Before This Court

When Neely failed to pay the forfeiture, the United States filed this action pursuant to 47 U.S.C. § 504(a), seeking judgment in the amount of the forfeiture, together with interest and costs. In his answer, Neely admitted all factual allegations establishing repeated violation of the FCC's regulation limiting the radio station's nighttime transmitter power, but claimed he did not have to pay the forfeiture because the FCC has not...