YOU own it. No, YOU own it. No, YOU own it . . . .
A recent decision from the full Commission teaches us a couple of valuable lessons when it comes to potential liabilities both for tower owners and for those who may not think that they’re tower owners.
It all started in 2006, when Ely Radio, LLC bought KWNA(AM), Winnemucca, Nevada. The deal provided, in standard contractual terms, that the buyer would be acquiring all the “property and fixtures . . . used or useful” in the station’s operation. The average reader might leap to the conclusion that the “property and fixtures” in question would necessarily include the station’s tower. Don’t be so sure.
Fast forward a couple of years. The Enforcement Bureau’s San Francisco Field Office determines that the station’s tower hasn’t been lit at night; making matters worse, the tower’s owner hasn’t been making the required observations and, as a result, hasn’t reported the outage to the FAA. When the Enforcement folks check the FCC’s database, they determine that the tower’s owner is listed not as Ely Radio, LLC, but rather the company that had sold the station back in 2006.
Covering all their bases, the Field Office reps notify both the 2006 seller and buyer of the problem. The seller promptly writes back to advise the Commission that the tower was sold to Ely Radio as part of the 2006 deal, even though the seller did apparently hold onto the land on which the tower is situated. Based on that information, the Enforcement Bureau issues a Notice of Apparent Liability to Ely Radio for the tower lighting, observation and notification violations; the Bureau throws in an additional violation – failure to notify the Commission of the 2006 change in the tower’s ownership. Ely Radio responds that, contrary to what the 2006 seller may be saying, Ely Radio did not acquire the tower as part of its deal, so the seller is the one who should be liable for any tower-related violations.
At this point, let’s recall the Commission’s longstanding policy of refusing to adjudicate issues relating to local law.
The question of who in fact “owns” local property would ordinarily fall comfortably within the scope of that policy – meaning that, confronted with two parties both disclaiming ownership of certain property, the Commission would ordinarily stay out of the dispute and, instead, defer to local authorities.
Not this time. Even though Ely Radio provided the Commission with a letter from its local lawyer explaining local Nevada contract law, the Enforcement Bureau – and, eventually, the full Commission – insisted that, as far as the FCC is concerned, Ely Radio owns the tower and is therefore on the hook for the violations.
Why the agency opted to ignore its own well-established policy of deferring to local authorities is unclear, since it didn’t need to resolve the ownership issue in order to whack Ely Radio for the lighting, observation and FAA-notification violations. As it turns out, the relevant Commission rule imposes tower lighting and maintenance issues both on the tower owner and, if the owner defaults on its regulatory obligations, on any licensee using the tower. Since it had been established that Ely Radio’s is the only station using the tower and Ely Radio personnel had access to the tower lighting controls – indeed, the lighting had apparently been extinguished by Ely Radio employees – the Commission could legitimately beat up on Ely Radio whether or not it was technically the tower’s owner.
Of course, if Ely Radio were not the tower’s owner, the Commission could not fine it for failing to notify the Commission of its acquisition of the tower. By insisting that a change in ownership had indeed occurred, the Commission allowed itself to add that violation to the list. In so doing, though, it may also have handed Ely Radio a valid point on which to challenge the forfeiture order, since the FCC’s willingness to wade into the waters of local law (even while claiming that it wasn’t doing so) seems to fly in the face of its longstanding policy not to do so.
How this will all shake out for Ely Radio remains to be seen. But for everybody else, there are a couple of take-home lessons here. First, when you’re buying or selling a business that involves use of an antenna structure that’s registered in the FCC’s antenna structure registration database, make sure that the sale documents specify who will be responsible for that structure after the closing. And second, as we have previously warned, don’t forget that, if the structure is in fact changing hands, the new owner is required to notify the FCC of that change “immediately”.