Kay v. F.C.C.
| Decision Date | 11 January 2005 |
| Docket Number | No. 04-1014.,04-1014. |
| Parties | James A. KAY, Jr., Appellant v. FEDERAL COMMUNICATIONS COMMISSION, Appellee |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Robert J. Keller argued the cause for the appellant.
Gregory M. Christopher, Counsel, Federal Communications Commission, argued the cause for the appellee.
John A. Rogovin, General Counsel, and Daniel M. Armstrong, Associate General Counsel, Federal Communications Commission, were on brief for the appellee.
Roberta L. Cook, Counsel, Federal Communications Commission, entered an appearance.
Before: EDWARDS, HENDERSON and GARLAND, Circuit Judges.
James Kay (Kay) appeals an order of the Federal Communications Commission (Commission) denying his application for review of the decision of the Commission's Wireless Telecommunications Bureau (Bureau) finding untimely the "finder's preference" request Kay filed involving Specialized Mobile Radio Systems (SMR) station WNPA325. He brings a two-fold challenge to the Commission's order under the Administrative Procedure Act (APA), alleging that it is not supported by substantial record evidence, see 5 U.S.C. § 706(2)(E), and is based on a misinterpretation of the applicable Commission rule, see id. § 706(2)(A). We reject both challenges and, accordingly, affirm.
In October 1993 Kay filed a finder's preference request regarding SMR station WNPA325, operating on frequency 854.7125 in Banning, California, pursuant to section 90.173(k) of the Commission rules. That section then1 provided:
Notwithstanding any other provisions of this Part, any eligible person may seek a dispositive preference for an exclusive channel assignment in the 220-222 MHz, 470-512 MHz, and 800/900 MHz bands by submitting information that ultimately leads to the recovery of frequencies in these bands. Recovery of such frequencies will come about as a result of information provided regarding the failure of existing licensees to comply with various provisions of [sections] 90.155, 90.157, 90.629, 90.631(e) or (f), or 90.633(c) or (d).
47 C.F.R. § 90.173(k) (1992 version). Relying on two parts of another Commission rule — section 90.1572 — Kay asserted that station WNPA325 had cancelled automatically because its licensee, William F. Kelsey d/b/a AVCOM Company (AVCOM), had failed to operate the station for one year after the station's only end-user licensee,3 Cardin Asphalt (Cardin), left AVCOM's SMR system.
Approximately one year before Kay filed his finder's preference request with the Commission, he had filed with it an application for modification seeking to add AVCOM's co-channel frequency4 for station WNPA325 (854.7125) to his own trunked5 SMR station, WNJL306. Kay's application, however, was met by petitions to deny filed by AVCOM and Cardin. They alleged that Cardin's end-user license for station WNPA325 had been fraudulently assigned by a Cardin employee to L.A. Scrap Iron & Metal Corporation (L.A.Scrap), one of Kay's customers. They further alleged that this fraudulent assignment led the Industrial Telecommunications Association to mistakenly certify that station WNPA325 was non-operational, which certification, in turn, provided Kay the basis to seek modification without first obtaining AVCOM's written consent. See 47 C.F.R. § 90.615(b)(2)(ii) (1992 version). AVCOM and Cardin therefore requested the Commission to invalidate the assignment and return the license to Cardin.
By letter dated October 5, 1995, the Bureau's Office of Operations (Office) dismissed Kay's finder's preference request. It explained that no finder's preference was available for station WNPA325's license because "[t]he target license was the subject of a Commission compliance action at the time of the filing of the finder's preference request." J.A. 60. Later that month, the Office also voided the assignment of Cardin's end-user license and reinstated and renewed AVCOM's license for station WNPA325.
Kay petitioned for reconsideration of the Office's decision the following month, November 1995. The Bureau's Policy and Rules Branch (Branch) did not act on the petition, however, until seven years later when it denied the petition. The Branch agreed with the Office that Kay's request was untimely under former section 90.173(k)(2) of the Commission rules, which provided that "[t]he [finder's] preference shall not apply to any case scheduled for regular review during the Private Radio Bureau's normal compliance activities or to any case under Commission review or investigation." 47 C.F.R. § 90.173(k)(2) (1992 version). It concluded that "Kay's request targeted a license that was already under Commission review in connection with the alleged fraudulent assignment of an end user license from Cardin to L.A. Scrap." J.A. 87. The Branch countered Kay's claim that section 90.173(k)(2) was inapplicable because the Commission's investigation into the legitimacy of the assignment of Cardin's license to L.A. Scrap did not constitute a compliance action by explaining that the section "exempted any case under Commission review or investigation, because the finder's preference program was designed to uncover facts of which the Commission was not aware or could not readily ascertain." J.A. 87. Kay's request, the Branch observed, simply "harvested information already known to the Commission." J.A. 88.
In September 2002 Kay filed an application for review of the Branch's decision with the Commission. The Commission subsequently denied review in an order released in December the following year. See Request of James A. Kay, Jr., Seeking a Finder's Preference for Call Sign WNPA325, Order, 18 FCC Rcd 26,468 (Dec. 11, 2003) [hereinafter Kay Order], reprinted in J.A. 97-102. The Commission concluded, as had both the Office and the Branch, that Kay's request was untimely under section 90.173(k)(2). See id. at 46,471, ¶ 7, 46,473, ¶ 11. According to the Commission, former section 90.173(k)(2) applied to Kay's finder's preference request because that section "provided, without limitation, that a finder's preference is not available if the finder's request is related to any case ... under Commission review or investigation." Id. at 46,471, ¶ 7 (internal quotation marks omitted). Kay's request related to such a case, the Commission further explained, as it was already investigating (in connection with Kay's application to modify his trunked station) the allegedly fraudulent assignment of the "sole end user license to the SMR system Kay targeted." Id. at 46,471-72, ¶ 7.
The Commission offered a two-fold response to Kay's contention that section 90.173(k)(2) was inapplicable because the section covered only those investigations "directly" related to the violation(s) alleged in a finder's preference request and the Cardin assignment proceeding was merely "peripheral" to station WNPA325's non-operational status. Id. at 46,472, ¶ 8. The Commission first explained that "there is no authority for such a narrow reading of the rule," and then, on the facts, concluded that "the alleged unauthorized assignment of Cardin's license provided the direct basis for Kay's Finder's Preference Request alleging that station WNPA325 permanently discontinued operations in violation of the Commission's rules." Id.
The Commission also rejected Kay's argument that, because he was the one who supplied the Commission with the information triggering the investigation of station WNPA325 in the first place, he should receive the finder's preference. See id. at 46,472, ¶ 9. It explained that "[t]he fact that the Commission review or investigation arose from Kay's separate attempt to obtain the frequency associated with call sign WNPA325 through the filing of a modification application does not invalidate rule 90.173(k)(2), nor its application to a filing involving an allegation of permanent discontinuance of operations." Id. Finally, the Commission observed that it never intended to offer the finder's preference "on an unrestricted basis." Id. (internal quotation marks omitted).
Kay now appeals the Commission's order.
Kay asserts that we must set aside the Commission's order because it is the product of two fatal errors — one factual, the other legal. He first maintains that the Commission's finding of untimeliness is not supported by substantial evidence in the record. See 5 U.S.C. § 706(2)(E); Communications Vending Corp. of Ariz. v. FCC, 365 F.3d 1064, 1069 (D.C.Cir.2004). Additionally, he maintains that the Commission's failure to correctly apply section 90.173(k)(2) of its rules renders its decision "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A); see City of Brookings Mun. Tel. Co. v. FCC, 822 F.2d 1153, 1164 (D.C.Cir.1987). Kay's two assertions, in effect, raise but a single challenge — i.e., in finding his request untimely, the Commission interpreted section 90.173(k)(2) unreasonably — and one which we reject.
While we accord a substantial measure of deference to the Commission's interpretation of the Communications Act, see Chevron U.S.A. Inc. v. Natural Res. Def. Council, 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984); Cal. Metro Mobile Communications, Inc. v. FCC, 365 F.3d 38, 43 (D.C.Cir.2004), we give it even greater interpretative latitude with respect to the rules it promulgates. See Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512, 114 S.Ct. 2381, 2386, 129 L.Ed.2d 405 (1994); Martin v. Occupational Safety & Health Review Comm'n, 499 U.S. 144, 150-51, 111 S.Ct. 1171, 1175-76, 113 L.Ed.2d 117 (1991). Indeed, the Commission's interpretation of its own regulation receives "controlling weight" unless it is "plainly erroneous or inconsistent with the regulation." Communications Vending Corp. of Ariz., 365 F.3d at 1069 (internal quotation marks...
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