Environmentel , LLC v. Federal Communications Commission

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 e-
mail, 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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