# United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

_________

Argued November 9, 2004 Decided January 11, 2005

No. 04-1014

James A. Kay, Jr.,

Appellant

v.

Federal Communications Commission,

Appellee

_________

Appeal of an Order of the Federal Communications

Commission

_________

Robert J. Keller

argued the cause for the appellant.

Gregory M. Christopher , Counsel, Federal Communications

Commission, arg

ued the cause for the appellee. J ohn A.

Rogovin

, General Counsel, and Daniel M. Armstrong

, Associate General Counsel, Federal Communications

Commission, were on brief for the a ppellee. R oberta L. Cook

, Counsel, Federal Communications Commission, entered an

appearance.

Before: E

DWARDS

, H

ENDERSON and G ARLAND

, C ircuit

Judges

.

Opinion for the court filed by Circuit Judge H ENDERSON

.2

1 See 47 C.F.R. § 90.173(k) (“This paragra ph is only applicable to

e ntities with Finder’s Preference requests pending before the

Commission as of July 29, 1998.”). K AREN L

E C RAFT H

ENDERSON

, Circuit Judge : James Kay

(Kay) appeals an order of the Federal C ommunications

Commissio n (Commission) denying his application for review

of the decision of the Commission’s Wireless

Telecommunicati

ons 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

supporte d by substantial record evidence, s ee 5 U.S.C.

§ 706(2)(E), an

d is based on a misinterpretation of the

applicable Commission rule, see id. § 706(2)(A). We reject

both challenges and, accordingly, affirm.

I.

In Octobe r 1993 Kay filed a finder’s preference request

regarding SMR station WNPA325, operating o n frequency

854.7125 in Banning, California, pursuant to section

90.173(k) of the Commission rules. That section then 1

provided:

Notwithstanding any other provisions of this Part, any

elig ible person may seek a dispositive preference for an

exclusive chan

nel assignment in the 220-222 MHz, 470-

5 12 MHz, and 800/900 MHz bands by submitting

information tha t 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 e xisting 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).3

2 The version of section 90.157 in force at the time provided that

“ any station which has not operate d for [one] year or more is

considered to have been permanently dis continued,” 47 C.F.R. §

90.157(b) (1992 version)

, and that a station’s license “sh all cancel

automatically upon permanent discontinuance of oper ations.” I d.

§ 90.157(a).

3 An SMR system—consisting of base station s, transmitters

,

antennas and mobile radio equipment— provides two- way mobile

communications services to customers cal led “end users.” S ee

Amendment of Part 90 of the Commission’s Rules to Eliminate

Separate Licensing of End Users of Specialized Mobile Radio Systems

, Report & Order, 7 FCC Rcd 5558, ¶ 2 (1992) (hereina fter E nd User

Order ); James A. Kay, Jr., Licensee of One Hundred Fift y Two Part

90 Licenses in the Los Angeles, CA Area

, Memorandum Opinion &

Order, 12 FCC Rcd 2898, 2899, ¶ 4 (Gen. Counsel 1 997). The

Commission initially li c ensed an SMR system’s base station

frequencies and an end user’s operations separately, but in 1992 ended

this two-tier licen se regime by allowing end users to operate under a

“blanket license issued to an SMR base station licensee.” End User

Order , 7 FCC Rcd at 5559, ¶ 8, 5562, ¶ 26.

4 As the co-channel licensee of frequency 854.7125, AVCOM

shared the channel wit h Kay’s trunked station, WNJL306. S ee J.A.

139, 208. 47 C.F.R. § 90.173(k) ( 1992 version). Relying on two parts

of another Comm

ission rule—section 90.157 2 —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-u

s er licensee, 3 Cardin Asphalt (Cardin),

left AVCOM’s SMR system.

Approximately

one year before Kay filed his finder’s

p reference request with the Commission, he had filed with it

an application for modificationseeking to add AVCOM’s cochannel freque ncy 4 for station WNPA325 (854.7125) to his4

5 SMR syst ems are either “trunked” or “conventional.” S ee End

User Order

, 7 FCC Rcd at 5558, ¶ 2. “ Trunked systems, which are

more common in the SMR service and generally more spectrally

efficient than conventional systems, automatically locat e available

channels for communication. Conventi onal systems require users to

search manually for an open channel or to wait until a particular

channel becomes available for use.” I d. at 5558 n.2. S ee generally

Cal. Metro Mobile Communications v. FCC

, 365 F.3d 38, 39 n.1

(D.C. Cir. 2004) (“trunking” increases efficiency in spectrum use). own trunked 5 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 fra u dulently assigned by a Cardin

employee to L.A. Scrap Iron & Metal Corporation (L.A.

Scrap), one of Kay’s cus tomers. They further alleged that this

fraudulent assig nment led the Industrial Telecommunications

Association to mistakenly certify that station WNPA325 was

non-operational, which certification, in turn, provided Kay the

basis to seek modifica

tion without first obtaining AVCOM’s

writ t en consent. S ee 47 C.F.R. § 90.615(b)(2)(ii) (1992

version). AVCOM and Cardin therefore requested the

Commissio n to invalidate the assignment and return the

license to Cardin.

By letter dated October 5, 1995, the Bureau’s Office of

Operati ons (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 targe t license

was the subject of a Commission compliance action at the

time of the fil

ing of the finder’s preference request.” J.A. 60.

La t er 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 p etitioned for reconsideration of the Office’s decision

t he following month, November 1995. The Bureau’s Policy5

and Rules Branch (Branch) did not act on the petition,

however, until seven years l ater when it denied the petition.

The Branch agreed with th e Office that Kay’s request was

un timely under former section 90.173(k)(2) of the

Commission rule s, 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 re view or

investigation.” 47 C.F.R. § 90.173(k)(2) (19 92 version). It

concluded that “Kay’s request targeted a license that was

already under Commission review in connection with the

alleged frau

dulent assignment of an end user license from

Cardin to L.A. Scrap.”

J.A. 87. The Branch countered Kay’s

claim that secti

o n 90.173(k)(2) was inapplicable because the

Commi ssion’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 Commis sion 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 applicatio n for review of

the Branch’s decision with the Commission. The

Commission subsequently denied review in an order released

in December the following ye ar. See Request of James A.

Kay, Jr., Seeking a Finder’s Preference f or Call Sign

WNPA325

, Order, 18 FCC Rcd 26, 4 68 (Dec. 11, 2003)

[hereinafter Kay Order

], reprinted in J.A. 9 7-102. The

Commission concluded, as had both the Office and the

Branch, t

hat Kay’s request was untimely under section

90.173(k)(2). S ee id. at

46,471, ¶ 7, 46,473, ¶ 11. According

to the Commission, former s ection 90.173(k)(2) applied to

Kay’s finder’s preference request because tha t section6

“provided, without limitation, that a finder’s prefe rence is not

available if the find er’s request is related to any case . .

. under Commission review or investigatio n.” I d. 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 connec tion 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 Commiss ion offered a two-fold response to Kay’s

contention that sect ion 90.173(k)(2) was inapplicable because

the section covered only those i nvestigations “directly”

related to the violation(s) alleged in a finder’s preference

request and the Cardin as signment proceeding was merely

“peripheral” to sta

tion WNPA325’s non-operational status.

Id. at 46,472, ¶ 8. The Commission first explained that “there

is no authority for such a narro w reading of the rule,” and

then, on the facts, concluded that “th e alleged unauthorized

assignment of Cardin’s license provided the direct basis for

Kay’s Finder’s Preference Request alleging that station

WNPA325 permanently discontinu ed operations in violation

of the Commission’s rules.” Id.

The Commission al

so 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 finde r’s preference.

See id. at 46,472, ¶ 9. It explained that “ [ t]he f act that the

Commission review or investigation arose from Kay’s

separate attempt to obtain the frequency associated with call

sign WNP A325 through the filing of a modification

application does not

invalidate rule 90.173(k)(2), nor its

appli cation to a filing involving an allegation of permanent

discontinuance of operat ions.” I d. F inally, the Commission

observed that it never intended to off er the finder’s preference7

“on an unrestricted basis.” Id. (internal quotation marks

omitted).

Kay now appeals the Commission’s order.

II.

Kay asserts that we must set aside th e 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 sup ported by substantial evidence in the

record. S ee 5 U.S.C. § 706(2)(E); Commun i cations 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 render s 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 substan tial measure of deference to the

Commission’s interpretation of the Communications Act, s ee Chevron U.S.A. Inc. v. Natural Res. Def. Council , 467 U.S.

837, 842-43 (1984); Cal. Metro Mobil e Communications,

Inc. v. FCC

, 365 F.3d 38, 43 (D.C. Cir. 2004), we give it

even great

er interpretative latitude with respect to the rules it

promulgates. S ee Thomas Jefferson Univ. v. Shalala, 512

U.S . 504, 512 (1994); M artin v. Occupational Safety &

Health Review Comm’n, 499 U.S. 144, 150-51 (1991)

. Indeed, the Commis sion’s interpretation of its own regulation

receives “controlling weight” unless it is “plainly erroneous

or inconsistent with the regulation.” C ommunications

Vending Corp. of Ariz.

, 365 F .3d at 1069 (internal quotation

marks omitted); accord S.A. Storer & Sons Co. v. Sec’y of8

6 T HE A

MERICAN H

ERITAGE D ICTIONARY OF THE E NG LISH

L ANGUAGE 81 (4th ed. 2000). Labor, 360 F.3d 1363, 1368 (D.C. Cir. 2004); cf. M artin, 499

U. S. at 150-51 (“court should give effect to the agency’s

i nterpretation

. . . so long as the interpretation ‘sens ibly

conforms to the purpose and wording of the regu lations’”

(quoting N. Ind. Pub. Serv. Co. v. Porter County Ch. of Izaak

Walton League of Am., Inc., 423 U.S. 12, 15 (1975)))

.

We think the Commissi on’s interpretation of former

section 90.173(k)(2) fits quite comfortably with its plain

language as well as with the policy it advances . In essence,

Kay argues that, in basing its finding of untimeliness on the

Cardin/L.A. Scrap assignment investigation, the Commi ssion

erroneously interpreted section 90.173(k)(2) becaus e, in his

view, the “

case under Commission review or investigation

”

to which the rule refers must involve either a “failure to

time l y construct and commence operation” or “permanent

discontinuance of operations.” Appellant’s Br. at 22. But

Kay’s crabbed interpretation ignores the plain language of

section 90.173(k) (2) that a finder’s preference is unavailable

in “ any case under Commission review or investigation.” 47

C.F.R. § 90.173(k)(2) (1992 version) (emph a sis added).

Thus, because section

90.173(k)(2) uses “any”—meaning

“[o]ne, some, every, or a l l without specification” 6 —to

modify “case,” the Commissi on’s interpretation of “case” to

include not only the two types that Kay identified bu t instead,

“with out limitation,” K

ay Order

, 18 FCC Rcd at 26,471, ¶ 7,

any case under review perfectly accords w ith the text. S ee 47

C.F.R. § 90.173(k)(2) (1992 version).

The Commission’s interpretation also comports with the

rationale underlying the finder’s preference. The

Commission adopted the preferen ce to carry out its statutory

mandate to “encourage th e larger and more effective use of

radio in the public i

nterest,” 47 U.S.C. § 303(g) , by9

responding to two related concerns: Firs t, the increasing

demand for the scarce frequencies in t he private land mobile

radio se rvices; and second, the Commission’s limited

resources available for compliance activities aimed at

rec apturing and reassigning unused or underutilized

frequencies. S ee Amendment of Parts 1 & 90 of the

Commission’s Rules Concerning the Con struction, Licensing

& Operation of Private Land Mobile Radio Stations , Report

& Order, 6 FCC Rcd 7297, 7302, ¶ 30 ( 1991) [hereinafter

PLMRS Report & Order ] ; Amendment of Part 90 of the

Commission’s Rules Concerning the Construction, Licen sing

& Operation of

Private Land Mobile Radio Stations , Notice

of Proposed Rulemaking, 5 FCC Rcd 6401, ¶ 2, 6403, ¶ 18

(1990) [hereinafter PLMRS Proposed Rulemaking ]. Thus, by

providing the incentive of “ dispositive preference” to become

the licensee of a recovere d frequency, the Commission

sought to promote the efficient allocation of the spectrum by

supplementing its own enforcement activities with the selfinterested poli cing efforts of those in the private land mobile

radio industry. S e e PLMRS Report & Order , 6 FCC Rcd at

7302-03, ¶¶ 30, 33, 7309, ¶ 77; P LMRS Proposed

Rulemaking

, 5 FCC Rcd at 6403-04, ¶¶ 18, 2 1. It did not

adopt the finder’s preference, as Kay seems to suggest, to

serve th e public interest by assigning unused spectrum to

those who m

anaged to be first in line. S ee PLMRS Report &

Order

, 6 FCC Rcd

at 7303, ¶ 33, 7309, ¶ 77; P LMRS

Proposed Rulemaking

, 5 FCC Rcd at 6404-05, ¶¶ 22, 28. A

first come, first served spectrum giveaway would not

advance section 90. 173(k)’s objective of encouraging

industry members to help the Commissio n identify unused

private radio spectrum so that the unused frequency could be

re allocated to a licensee that would use it effectively as this

so rt of “preference” would reward an aspiring licensee

simply for his haste, and not, in addit ion, for “constructively

and effectively,” PLMRS Proposed Rulemaking

, 5 FCC Rcd10

at 6405, ¶ 28, providing t he Commission with information it

did not po ssess. See PLMRS Report & Order , 6 FCC Rcd at

7303, ¶ 33, 7309, ¶ 77 (“Through [the finder’s preference]

program, we will enhanc e spectrum efficiency by identifying

more unus ed channels and reassigning them to persons who

will use them effectively.”); PLMRS Proposed Rulemaking

, 5

FCC Rcd at 6404-05, ¶¶ 22, 2 8 (“[W]e want to encourage the

industry to assist us in mon itoring the use of private radio

spectrum and believe it is in the public interest to reward

those who constructively and effectively help us.”).

Kay also purports to assail the factual basis for the

Commission’s order. He alleges that “nothing under

consideration” in th

e license modification proceeding could

have rendered his finder’s preference request unti mely and

that “there is absolutely no evidence in the r ecord below to

support the contention that, prior to October 11, 1993, when

Kay submitted his finder’s request, the C ommission was

already investigating station WNPA325.” Appellant’s Br. at

23. Nor, to his mind, could there have been as the predicate

for his request—station WNPA325’s permanent

discontinuance of operations—did not occur until two

business days before he filed his req uest. This argument

amounts to little more than a reformulation of the one we

have already r ejected. It is in effect a collateral attack on the

Commission’s legal conclus ion that its scrutiny of the

assignment of Cardin’s end-user license to L.A. Scrap put

station WNPA325 “under Commission review or

investigation” wi

thin the meaning of section 9 0.173(k)(2)

. The target station’s status was in fact on the Commission’s

radar screen for more

than eight months before Kay filed his

request as a result of AVCOM’s and Cardin’s petitions to

deny Kay’s application to modify his trunked station. K ay

overlooks the fact that the a llegedly fraudulent license

assignment of Cardin’s end-user license to L.A. Scrap of

which AVCOM and Cardin complained in their petitions11

created the very discon t inuance of station WNPA325’s

operations on which Kay based his finder’s preference

request

. The Commission’s investigation into the transfer of

the sole end-user license for station W NPA325 (thereby

making it “non-op erational”) p lainly supports its finding that

Kay’s req uest was untimely because the request “targeted a

station with a licensing sta tus that was the subject of an

existing Commission review or investigation.” K ay Orde r

, 18 FCC Rcd at 26,471, ¶ 7.

Accordingly, b e cause the facts fit the Commission’s

interpretatio n of section 90.173(k)(2) and that interpretation

fits the rule’s plain language, we affirm the Commission’s

order denying Kay’s application for review of the Bureau’s

decision finding his finder’s preference request untimely.

So ordered

.