WASHINGTON – Federal Communications Commission administrative law judge Jane Halprin denied a stay of license revocation proceedings against Bob Romanik, grim reaper of radio, on Oct. 4.
“Rather than a stay, the public interest demands that this proceeding continue in due course,” Halprin wrote.
She ruled that the bankruptcy of Entertainment Media Trust shouldn’t delay a hearing she set for June.
Four stations obtained licenses through the trust, which Romanik created.
Belleville lawyer Dennis Watkins holds the licenses as trustee.
Romanik can’t hold the licenses because his conviction for bank fraud and obstruction of justice disqualifies him.
The FCC intends to prove that the trust’s ownership concealed Romanik’s control.
Halprin’s order doesn’t guarantee a hearing, because bankruptcy trustee Donald Samson of Belleville moved for a stay at bankruptcy court in East St. Louis.
The commission opposes his motion and urges bankruptcy Judge Laura Grandy to sign an order like the one Halprin signed.
“Courts including the Supreme Court have consistently held that administrative proceedings such as this are not automatically stayed by a party’s bankruptcy filing,” Halprin wrote.
She cited a precedent finding the communications commission could implement policies and adopt orders directed at industry participants as long as it didn’t seek a money judgment outside of bankruptcy court.
“Concerns about a reduction in the value of the licenses are not part of our inquiry and do not operate to convert this licensing matter into the type of action to enforce a monetary judgment to which the automatic stay applies,” Halprin wrote.
She rejected arguments in favor of a stay from bankruptcy trustee Samson, who represents the trust’s creditors by court appointment.
He has stated in bankruptcy court that he had already found buyers for the stations and could bring applications for assignment to the commission in 30 days.
In the proceedings before Halprin, he argued that liquidation of the licenses would accomplish the result the commission seeks.
Halprin disagreed, writing, “The commission’s long standing policy is that it will not, absent exceptional circumstances, renew or approve assignment or transfer of licenses when the licensee’s qualifications to hold a license are in question.”
She wrote that the policy deters misconduct by preventing a licensee from avoiding the loss that would result from revocation or nonrenewal.
Samson asserted an exception to the policy, but she didn’t grant it.
Halprin wrote that the exception applies if a licensee or other alleged wrongdoer gains no substantial benefit, “putting the licensee in the same position as if its license had been revoked or not renewed.”
She wrote that Samson appeared to assume he would prevail on that point.
“In so doing, the trustee loses sight of the fact specific and detailed analysis inherent in this very narrow, discretionary exception to the general rule,” she wrote.
She wrote that according to Samson, mounting attorney fees would leave little for the commission should it seek forfeiture, but that nowhere in her proceedings did anyone discuss forfeiture, and it isn’t an issue designated for the hearing.
“Moreover, apart from the FCC regulatory fees now due, the only debts cited in Entertainment Media Trust’s bankruptcy filing are owed to the attorneys who have represented it in this proceeding,” Halprin wrote.
Four days later, in bankruptcy court, assistant U. S. attorney Adam Hanna of Fairview Heights opposed Samson’s motion to stay the license proceedings.
Hanna wrote that Congress gave the commission exclusive jurisdiction over civilian use of the electromagnetic spectrum.
He further wrote that the system depends on qualified, honest and straightforward licensees who comply with the Communications Act; that circumstances of the case reflect the use of bankruptcy court to circumvent a regulatory process; that the trust’s responses before the commission were frustratingly vague and contradicted by other sources and that a hearing order was necessary to provide effective discovery tools.
“This bankruptcy was filed on the eve of the debtor’s required response to those more effective tools,” Hanna wrote.
He claimed Samson’s plan would frustrate the commission’s purpose.
“There would be no ruling on whether the debtor or those associated with the various arrangements violated commission rules,” he wrote.
“Instead, proceeds of the sale would be used to pay the legal fees of the debtor without any contribution from the entity that has enjoyed all the income from the stations, and the participants in the alleged violations would receive the balance of the sale price.
“Such an outcome would provide a road map for how to use the bankruptcy code to evade the most serious consequences of being designated for hearing on character issues.
“The FCC’s goal is to fulfill its Congressional mandate.”
“The trustee’s goal is to seek a sale of approximately $2 million of assets to satisfy approximately $100,000 in legal fees, with an excess going to an alleged wrongdoer.
“Any cancellation of the licenses as a result of a final order by the FCC would occur without the need for any additional action by the Chapter 7 trustee or this court.”