Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-10-01344/USCOURTS-caDC-10-01344-0/pdf.json

Parties Involved:
Environmentel, LLC
Petitioner
Federal Communications Commission
Respondent

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 7, 2011 Decided November 18, 2011

No. 10-1344

ENVIRONMENTEL, LLC,

PETITIONER

v.

FEDERAL COMMUNICATIONS COMMISSION,

RESPONDENT

On Petition for Review of an Order of 

the Federal Communications Commission

Tamir Damari argued the cause and filed the briefs for

petitioner.

Maureen K. Flood, Counsel, Federal Communications

Commission, argued the cause for respondent. With her on the

brief were Austin C. Schlick, General Counsel, Peter Karanjia, 

Deputy General Counsel, and Richard K. Welch, Acting

Associate General Counsel. Daniel M. Armstrong III, Associate

General Counsel, entered an appearance.

Before: SENTELLE, Chief Judge, WILLIAMS and RANDOLPH,

Senior Circuit Judges.

Opinion for the Court filed by Chief Judge SENTELLE.

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SENTELLE, Chief Judge: Environmentel, LLC, appeals a

licensing order of the Federal Communications Commission

(“FCC” or “the Commission”). The Commission’s Order

affirmed a decision of the Wireless Telecommunications Bureau

(“Wireless Bureau”) denying reconsideration of licensing

actions taken by the Wireless Bureau’s Mobility Division. The

Mobility Division granted Thomas Kurian’s request to withdraw

a radio spectrum assignment application and dismissed

Environmentel’s notification of consummation of that same

assignment. Environmentel argues the FCC’s Order should be

reversed because the FCC and Kurian engaged in unlawful ex

parte communications; the FCC failed to give proper public

notice of its decision to grant Kurian’s withdrawal request; and

the FCC acted arbitrarily and capriciously in rendering the

Order.

We affirm the FCC. Environmentel waived its ex parte and

public notice arguments, and the FCC acted neither arbitrarily

nor capriciously in rendering its Order affirming the Wireless

Bureau’s order.

I. Background

In September 2004, Thomas Kurian bid on, and acquired,

a license to provide Automated Maritime Telecommunications

System (“AMTS”) service, a radio spectrum primarily used to

facilitate wireless radio communications between tugs, barges,

and other vessels on the waterways. In June 2005, Kurian

applied to the FCC for consent to assign a portion of that

spectrum to Environmentel (at that time known as “AMTS

Consortium, LLC” or “ACL”). The Wireless Bureau consented

to the application. Kurian’s ex-wife opposed the assignment in

administrative litigation procedures, which, although she

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ultimately was unsuccessful, caused the Wireless Bureau’s

Mobility Division to grant requests for extensions of time until

November 10, 2007, to consummate the assignment. 

On October 12, 2007, Kurian filed an FCC Form 603

request seeking FCC approval to withdraw his assignment

application. The Mobility Division processed his request on

October 18, 2007, and the assignment application then was

listed in the FCC’s online Universal Licensing System (“ULS”)

as “withdrawn.” 

Environmentel stated to the FCC that it first learned of the

withdrawal request via an October 17, 2007, e-mail between the

FCC and Environmentel’s president, Warren Havens. In that email, the FCC stated, “[A] request was filed in ULS last week to

withdraw application 0002198858 to assign WQCP809 from

Thomas Kurian to ACL. Is the withdrawal request legitimate?” 

Havens responded that same day that Environmentel had not

received any information about the withdrawal request and it

intended to file a notification of consummation “soon” because

the assignment agreement already had been entirely satisfied. 

The FCC replied that it was investigating the matter and noted

that Kurian’s ex-wife had Kurian’s ULS password. The FCC

confirmed later that day that Kurian himself had filed the

withdrawal.

The next day, October 18, 2007, the FCC processed

Kurian’s withdrawal application. That same day, at 4:54 p.m.,

Environmentel filed a notification of consummation via e-mail,

representing that the consummation had occurred on October 10,

2007. The Mobility Division dismissed Environmentel’s

notification of consummation on the grounds that it already had

granted Kurian’s request to withdraw the assignment

application, and, therefore, there no longer was an approved

assignment to consummate. See In re Kurian, 24 FCC Rcd.

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4849, 4850 (Wireless Bureau 2009). 

Environmentel then filed two petitions for reconsideration

with the Wireless Bureau, the first, to reconsider the Mobility

Division’s decision to grant Kurian’s request to withdraw the

assignment application, and the second, to reconsider the

Mobility Division’s dismissal of Environmentel’s notification of

consummation. The Wireless Bureau denied both petitions,

concluding that Environmentel’s grievance was “in the nature of

a private contractual dispute of the sort that the Commission

does not attempt to adjudicate” and that Environmentel “must

instead seek redress from a court of competent jurisdiction.” Id. 

Environmentel filed an application for FCC review of the

Wireless Bureau’s denial of the petitions, which the

Commission denied. In re Kurian, 25 FCC Rcd. 13863 (2010)

(“FCC Order”). This appeal followed.

II. Analysis

Environmentel offers three reasons why this Court should

reverse the FCC Order. First, Environmentel argues that the

FCC and Kurian engaged in an unlawful ex parte

communication because Environmentel was not officially

informed of Kurian’s assignment withdrawal request. Second,

Environmentel argues that the FCC failed to give timely public

notice of its decision to grant the withdrawal request. Third,

Environmentel contends the Mobility Division acted arbitrarily

and capriciously in processing Kurian’s withdrawal request and

dismissing Environmentel’s consummation notification.

We determine that Environmentel waived its right to raise

the ex parte and public notice issues because it failed to raise

those issues before the full Commission, and the FCC, through

the Mobility Division, acted neither arbitrarily nor capriciously

in processing Kurian’s withdrawal request and dismissing

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Environmentel’s consummation notification.

Waiver of Ex Parte and Public Notice Issues

Environmentel raises one argument here—the ex parte

issue—that it raised in its petition for reconsideration to the

Wireless Bureau, but not in its application for review to the full

Commission. It raises another argument—the public notice

issue—that it never raised before either the Wireless Bureau or

the Commission. In response to the FCC’s argument that

Environmentel waived both arguments, Environmentel does not

contend it preserved the public notice issue, but does maintain

it preserved the ex parte issue on two primary grounds. First,

Environmentel argues it only needed to raise the ex parte issue

before either the Wireless Bureau or the FCC, but not both, to

preserve it for this Court’s review. Second, the FCC,

Environmentel urges, “expressly acknowledged” the ex parte

issue when it stated in its Order, “Environmentel filed petitions

for reconsideration. . . . It argued that the withdrawal request

was procedurally defective, and that the Division erred in

processing it because the transaction had been consummated

. . . .” FCC Order at 13864. Neither of these arguments are

persuasive.

The Federal Communications Act (codified at 47 U.S.C.

§ 151 et seq.) and Commission rules establish two

complementary review procedures to ensure parties exhaust

their administrative remedies before appealing to this Court. 

The original deciding body may hear “petitions for

reconsideration.” The full FCC may consider “applications for

review.” Under 47 U.S.C. § 405(a), 

[a]fter an order, decision, report, or action has been made or

taken in any proceeding by the Commission, or by any

designated authority within the Commission pursuant to a

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delegation under section 155(c)(1) of this title, any party

thereto, or any other person aggrieved or whose interests

are adversely affected thereby, may petition for

reconsideration only to the authority making or taking the

order, decision, report, or action.

The filing of a petition for reconsideration “shall not be a

condition precedent to judicial review of any such order,

decision, report, or action” except when the party seeking

review was not a party in the original proceeding or “relies on

questions of fact or law upon which the Commission, or

designated authority within the Commission, has been afforded

no opportunity to pass.” 47 U.S.C. § 405(a)(1)-(2). Thus, the

statute requires at the very least that any argument to be made

before this Court must have been raised either to the full

Commission or the designated authority.

On the other hand, applications for review are designed to

ensure that if a delegated authority, such as the Wireless Bureau,

renders a decision, the Commission itself has the opportunity to

review the decision before this Court considers it. The FCC

Rules provide that “[a]ny person aggrieved by any action taken

pursuant to delegated authority may file an application

requesting review of that action by the Commission.” “The

filing of an application for review shall be a condition precedent

to judicial review of any action taken pursuant to delegated

authority.” FCC Rules § 1.115(a), (k) (47 C.F.R. § 1.115(a),

(k)). This rule prevents a party from appealing directly to this

Court from a decision made by a delegated authority.

Under these two provisions, the full FCC must have the

opportunity to review all cases and all aspects of those cases

before parties may exercise their statutory right to appeal to this

Court under 47 U.S.C. § 402(b) (providing that “[a]ppeals may

be taken from decisions and orders of the Commission to the

United States Court of Appeals for the District of Columbia” in

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ten categories of cases). 

Here, Environmentel never presented its public notice

argument to either the Wireless Bureau or the FCC prior to

raising it in this Court. Although it did present its ex parte

argument to the Wireless Bureau, it never raised it before the

FCC. As the statutes and rules discussed above demonstrate,

however, raising an issue before a designated authority is not

enough to preserve it for review before this Court; a party must

raise the issue before the Commission as a whole, which

Environmentel did not do here.

Environmentel’s second contention, that the FCC actually

did consider the ex parte issue, also lacks merit. The FCC

mentioned in its summary of the proceedings before the

Wireless Bureau that Environmentel had argued that Kurian’s

withdrawal request was “procedurally defective.” This Court

has held that “[t]he mere fact that the Commission discusses an

issue does not mean that it was provided a meaningful

‘opportunity to pass’ on the issue.” Bartholdi Cable Co. v. FCC,

114 F.3d 274, 280 (D.C. Cir. 1997). The FCC’s passing

reference to procedural deficiencies hardly qualifies as “a

meaningful opportunity to pass on the issue” of inappropriate ex

parte communication. 

While Bartholdi itself relied on § 405(a), we find a more

direct statement of the applicable requirement to preservation of

an issue in 47 C.F.R. § 1.115. That regulation requires that

applications to the Commission for a review of delegated

authorities “shall concisely and plainly state the questions

presented for review.” 47 C.F.R. § 1.115(b)(1). The Supreme

Court has recognized similar language as establishing an issue

exhaustion requirement. Sims v. Apfel, 530 U.S. 103, 108

(2000) (discussing 20 C.F.R. § 802.211(a) (1999), which

specified “petitioner shall submit a petition for review to the

[Benefits Review] Board which lists the specific issues to be

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considered on [agency] appeal . . . .”).

We conclude that Environmentel waived its arguments

regarding the ex parte issue and public notice issue. 

Arbitrary and Capricious Review

Environmentel maintains that the FCC, through the Wireless

Bureau, acted arbitrarily and capriciously when it accepted

Kurian’s withdrawal request and dismissed Environmentel’s

consummation notification. When assessing the reasonableness

of the FCC’s decision, the Administrative Procedure Act requires

this Court to affirm the decision unless it is “arbitrary,

capricious, an abuse of discretion, or otherwise not in accordance

with law.” 5 U.S.C. § 706(2)(A). “Nevertheless,” this Court

must look to whether “the agency examine[d] the relevant data

and articulate[d] a satisfactory explanation for its action

including a rational connection between the facts found and the

choice made.” Motor Vehicle Mfrs. Ass’n v. State Farm Mut.

Auto. Ins. Co., 463 U.S. 29, 43 (1983) (citation and internal

quotation marks omitted). The Commission enjoys broad

latitude to establish its own procedures, FCC v. Pottsville Broad.

Co., 309 U.S. 134, 138 (1940), but it also must comply with its

own regulations. See Army & Air Force Exch. Serv. v. Sheehan,

456 U.S. 728, 733 (1982).

Environmentel’s argument boils down to the contention that

because Environmentel had told the FCC it planned to file its

notification of consummation “soon,” per Havens’s e-mail with

the FCC on October 17, 2007, the FCC should have disregarded

Kurian’s request to withdraw the assignment application, filed

October 12, 2007. But the FCC did not have any responsibility

to investigate circumstances surrounding the assignment

application beyond reviewing the documents formally filed with

the FCC. Moreover, FCC regulations provide that once an

assignment application has been filed, the proposed assignor may

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request withdrawal of that application. Upon the applicant’s

request, the regulations mandate that “the Commission will

dismiss that application.” 47 C.F.R. § 1.934(a)(1) (emphasis

added). The Mobility Division properly complied with this

regulation by dismissing Kurian’s assignment application upon

his request. 

Although the above reasoning disposes of Environmentel’s

challenge to the Mobility Division’s determinations, we address

below Environmentel’s main arguments on this point for

completeness.

Environmentel first argues that when a withdrawal request

is opposed, “it must be supported by facts which prima facie

support such a withdrawal request,” and Kurian’s withdrawal

request was not supported by any facts. Brief for Appellant at

22. Environmentel, however, cites no authority for the

proposition that a withdrawal request must be supported by facts,

and this Court has found no such authority. The FCC had no

reason to require Kurian to support his withdrawal request with

facts.

Next, Environmentel attempts to distinguish the two

authorities the FCC relied on to refrain from determining the

Environmentel-Kurian dispute on the grounds that the dispute is

a private contractual matter. The Supreme Court and this Circuit

have held that the FCC does not have authority “to determine the

validity of contracts between licensees and others.” Regents v.

Carroll, 338 U.S. 586, 602 (1950); Listeners’ Guild, Inc. v. FCC,

813 F.2d 465 (D.C. Cir. 1987). Environmentel argues it did not

ask the FCC to determine the validity of its contract with Kurian

because there is no question as to its validity. That, in fact, is

exactly what Environmentel asked of the FCC. Environmentel

itself explains that “once the Withdrawal Request was approved,

[Environmentel’s] only recourse to preserve its contractual rights

would be to file a specific performance suit and then (only after

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obtaining a favorable result in such a suit), commencing the

license assignment review process anew before the Wireless

Bureau.” Brief for Appellant at 32. Environmentel explicitly

admits that it wants the FCC and this Court “to preserve its

contractual rights.” Whether consummation actually occurred

prior to Kurian’s request for withdrawal, and if so, whether the

contract should be enforced, are matters for a state court’s

review.

Environmentel contends the FCC should have acted under

one of its exceptions to its general rule that it does not interject

itself into contractual disputes. One such exception arises when

a party violates one of the Commission’s rules. See In re

Pappammal Kurian, 25 FCC Rcd. 3686, 3687 (Mobility Div.

2010) (“[T]he Commission has a long-standing policy of not

interfering in private contractual matters absent a showing of a

violation of a Commission rule or a federal statute . . . .”). Here,

Environmentel argues Kurian violated Commission ex parte

rules. As discussed above, Environmentel has waived any

argument relating to ex parte communications. 

Finally, Environmentel argues the FCC should invoke its

“exception” to its general rule to refrain from determining

contract disputes based on spurious allegations that Kurian

lacked candor when he filed his withdrawal request. 

Environmentel infers this “exception” to the general rule from

inapposite cases in which the FCC invalidated assignments

because it discovered a purported assignee had no authority to

execute the assignment. See, e.g., In re Pac. Wireless Tech, Inc.,

18 FCC Rcd. 7833 (Wireless Bureau 2003). Here, there was no

question Kurian had authority to assign a portion of the AMTS

spectrum or to withdraw his assignment application. Nor was

there any question regarding Kurian’s candor before the FCC. 

Environmentel suggests the FCC doubted Kurian’s candor by

pointing to the FCC’s query regarding whether the withdrawal

request was legitimate. A review of the full e-mail clearly

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demonstrates, however, that the FCC’s concern stemmed from

its knowledge that Kurian’s ex-wife possessed Kurian’s ULS

password, not from reservations about Kurian’s honesty. 

This Court concludes the Mobility Division acted according

to Commission rules in accepting Kurian’s request to withdraw

the assignment application and dismiss Environmentel’s

notification of consummation.

III. Conclusion

For the reasons set forth above, we affirm the FCC’s order

affirming the Wireless Bureau’s orders granting Kurian’s

assignment application withdrawal request and dismissing

Environmentel’s notification of consummation.

So ordered.

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