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, 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.

Opinion for the court filed by Circuit Judge HENDERSON.
2

1

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

entities with Finder’s Preference requests pending before the

Commission as of July 29, 1998.”).

KAREN LECRAFT HENDERSON, Circuit Judge: 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.

I. 

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).
3

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

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

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

90.157(b) (1992 version), and that a station’s license “shall cancel

automatically upon permanent discontinuance of operations.” Id.

§ 90.157(a).

3 An SMR system—consisting of base stations, transmitters,

antennas and mobile radio equipment—provides two-way mobile

communications services to customers called “end users.” See

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) (hereinafter End User

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

90 Licenses in the Los Angeles, CA Area, Memorandum Opinion &

Order, 12 FCC Rcd 2898, 2899, ¶ 4 (Gen. Counsel 1997). The

Commission initially lic ensed an SMR system’s base station

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

this two-tier license 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 with Kay’s trunked station, WNJL306. See J.A.

139, 208. 

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 cochannel frequency4

for station WNPA325 (854.7125) to his
4

5 SMR systems are either “trunked” or “conventional.” See 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 locate available

channels for communication. Conventional systems require users to

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

channel becomes available for use.” Id. at 5558 n.2. See 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 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
5

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
6

“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
7

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

omitted).

Kay now appeals the Commission’s order. 

II.

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 (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 (1994); Martin v. Occupational Safety &

Health Review Comm’n, 499 U.S. 144, 150-51 (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 omitted); accord S.A. Storer & Sons Co. v. Sec’y of
8

6 THE AMERICAN HERITAGE DICTIONARY OF THE ENGLISH

LANGUAGE 81 (4th ed. 2000). 

Labor, 360 F.3d 1363, 1368 (D.C. Cir. 2004); cf. Martin, 499

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

interpretation . . . so long as the interpretation ‘sensibly

conforms to the purpose and wording of the regulations’”

(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 Commission’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 Commission

erroneously interpreted section 90.173(k)(2) because, in his

view, the “case under Commission review or investigation”

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

timely 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) (emphasis added).

Thus, because section 90.173(k)(2) uses “any”—meaning

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

modify “case,” the Commission’s interpretation of “case” to

include not only the two types that Kay identified but instead,

“without limitation,” Kay Order, 18 FCC Rcd at 26,471, ¶ 7,

any case under review perfectly accords with the text. See 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 preference to carry out its statutory

mandate to “encourage the larger and more effective use of

radio in the public interest,” 47 U.S.C. § 303(g), by
9

responding to two related concerns: First, the increasing

demand for the scarce frequencies in the private land mobile

radio services; and second, the Commission’s limited

resources available for compliance activities aimed at

recapturing and reassigning unused or underutilized

frequencies. See Amendment of Parts 1 & 90 of the

Commission’s Rules Concerning the Construction, 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, Licensing

& 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 recovered frequency, the Commission

sought to promote the efficient allocation of the spectrum by

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

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

7302-03, ¶¶ 30, 33, 7309, ¶ 77; PLMRS Proposed

Rulemaking, 5 FCC Rcd at 6403-04, ¶¶ 18, 21. It did not

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

serve the public interest by assigning unused spectrum to

those who managed to be first in line. See PLMRS Report &

Order, 6 FCC Rcd at 7303, ¶ 33, 7309, ¶ 77; PLMRS

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 Commission identify unused

private radio spectrum so that the unused frequency could be

reallocated to a licensee that would use it effectively as this

sort of “preference” would reward an aspiring licensee

simply for his haste, and not, in addition, for “constructively

and effectively,” PLMRS Proposed Rulemaking, 5 FCC Rcd
10

at 6405, ¶ 28, providing the Commission with information it

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

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

program, we will enhance spectrum efficiency by identifying

more unused channels and reassigning them to persons who

will use them effectively.”); PLMRS Proposed Rulemaking, 5

FCC Rcd at 6404-05, ¶¶ 22, 28 (“[W]e want to encourage the

industry to assist us in monitoring 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 the license modification proceeding could

have rendered his finder’s preference request untimely and

that “there is absolutely no evidence in the record below to

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

Kay submitted his finder’s request, the Commission 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 request. This argument

amounts to little more than a reformulation of the one we

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

Commission’s legal conclusion that its scrutiny of the

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

station WNPA325 “under Commission review or

investigation” within the meaning of section 90.173(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. Kay

overlooks the fact that the allegedly fraudulent license

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

which AVCOM and Cardin complained in their petitions
11

created the very discontinuance 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 WNPA325 (thereby

making it “non-operational”) plainly supports its finding that

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

station with a licensing status that was the subject of an

existing Commission review or investigation.” Kay Order,

18 FCC Rcd at 26,471, ¶ 7.

Accordingly, because the facts fit the Commission’s

interpretation 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.