Levine/Schwab Partnership v. FCC

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 1, 2022 Decided March 3, 2023
No. 22-1016
LEVINE/SCHWAB PARTNERSHIP,
D/B/A SCHWAB MULTIMEDIA LLC,
APPELLANT
v.
FEDERAL COMMUNICATIONS COMMISSION,
APPELLEE
On Appeal from an Order of the
Federal Communications Commission
Keenan P. Adamchak argued the cause for appellant. With
him on the briefs was Davina S. Sashkin.
Rachel Proctor May, Counsel, Federal Communications
Commission, argued the cause for appellee. With her on the
brief was Sarah E. Citrin, Deputy Associate General Counsel.
Jacob M. Lewis, Associate General Counsel, entered an ap-
pearance.
Before: MILLETT, WILKINS, and WALKER, Circuit Judges.
Opinion for the Court filed by Circuit Judge WALKER.
2
WALKER, Circuit Judge: To build a radio station, a broad-
caster must obtain a construction permit from the Federal Com-
munications Commission. Those permits have time limits.
Absent an extension from the FCC, a broadcaster must build
the station within three years.
Here, Schwab Multimedia received a construction permit
from the FCC. But Schwab never built its station. Though the
FCC granted Schwab’s first three requests for more time, it de-
nied Schwab’s fourth.
Schwab appealed the FCC’s decision, claiming that it was
arbitrary and capricious. Because the agency’s decision was
reasonable and reasonably explained, we affirm.
I
In 2016, Schwab obtained an FCC permit to build a radio
station in Culver City, California. An FCC rule gave Schwab
three years to complete construction. 47 C.F.R. § 73.3598(a).
But the FCC does not apply that rule inflexibly. When certain
events “not under the control of the permittee” prevent con-
struction, the FCC will toll (pause) the three-year clock, giving
the permittee more time. Id. § 73.3598(b).
Schwab requested, and the FCC’s Media Bureau granted,
three such tolling requests. But it denied Schwab’s fourth.
Schwab asked the Bureau to reconsider. It claimed that the
landlord of its original site had withdrawn permission to build.
It also submitted an application to modify its construction per-
mit so it could build at a new site at the Culver City Mall. The
Media Bureau denied Schwab’s petition for reconsideration.
3
Schwab then filed an Application for Review before the full
FCC. The FCC affirmed the Bureau. It found that site loss was
the “cause of Schwab’s inability to construct.” JA 288. And
site loss is not a reason for tolling recognized in FCC regula-
tions. It also dismissed as moot Schwab’s application to mod-
ify its construction permit because, without tolling, the permit
had expired.
Schwab appealed.
II
Before we consider the merits, we briefly explain why we
reject the FCC’s argument that Schwab lacks standing.
To have standing, Schwab must show that it was injured by
the FCC’s order and that “a favorable decision” from this court
would redress that injury. See Lujan v. Defenders of Wildlife,
504 U.S. 555, 560-61 (1992) (cleaned up).
Schwab meets that test. It suffered an injury caused by the
FCC: The agency’s refusal to give Schwab more time meant
that it lost its chance to build a radio station. And an order from
this court could redress that injury: Reversing the FCC’s deci-
sion would reinstate Schwab’s construction permit and give it
more time to build.
True, Schwab told the FCC that it cannot build at its origi-
nal site. But when it submitted its tolling request, it also asked
the FCC to modify its permit to let it build at a new site, the
Culver City Mall. And it has a lease for that site ready to be
executed. So if it won on tolling here — giving it six months
and twenty-two days to build — and the FCC approved
Schwab’s modification request, Schwab could still complete
construction of its radio station.
4
To be clear, even if Schwab won here, we aren’t certain
that it could build its radio station. Perhaps the new site
wouldn’t pan out. But a showing of certainty is not required; a
“mere likelihood will do.” National Wildlife Federation v. Ho-
del, 839 F.2d 694, 705 (D.C. Cir. 1988).
III
We now turn to the merits.
The FCC denied Schwab’s Application for Review because
site loss is not a legitimate reason for tolling under the FCC’s
rules. It also refused to grant Schwab a waiver of the FCC’s
three-year deadline on construction permits.
Those decisions were not arbitrary and capricious.
5 U.S.C. § 706(2)(A). They were “reasonable and reasonably
explained,” and the FCC’s factual findings are supported by
substantial evidence. FCC v. Prometheus Radio Project, 141
S. Ct. 1150, 1158 (2021).
A
The FCC based its denial of Schwab’s tolling request on
three underlying determinations. All three were reasonable.
First, the FCC reasonably found that Schwab had no con-
struction site. Indeed, Schwab admitted as much. It told the
Media Bureau that the landlord of the original site had “re-
scinded [its] verbal agreement . . . to use the site.” JA 131.
And it offered no evidence to suggest that it had since secured
the landlord’s permission. See PSSI Global Services, LLC v.
FCC, 983 F.3d 1, 7 (D.C. Cir. 2020) (we “accept the [FCC’s]
5
findings of fact so long as they are supported by substantial ev-
idence on the record as a whole” (cleaned up)).
True, Schwab claimed that it had found a “new home” at
the Culver City Mall. JA 131. But when the FCC considered
Schwab’s tolling request, Schwab had not secured the FCC’s
permission to build at that new site.
Second, it was reasonable for the FCC to conclude that site
loss was the real reason Schwab could not build. Pointing to
wildfires and COVID-19, Schwab claimed that “act[s] of God”
prevented construction. 47 C.F.R. § 73.3598(b)(1). But even
absent those obstacles, construction was impossible. You can’t
build a radio station without a place to put it. See BDPCS, Inc.
v. FCC, 351 F.3d 1177, 1183 (D.C. Cir. 2003) (“When an
agency offers multiple grounds for a decision, we will affirm
the agency so long as any one of the grounds is valid.”).
Third, the FCC reasonably held that site loss is not a legit-
imate basis for tolling. See 47 C.F.R. § 73.3598(b). FCC rules
say: “The period of construction for an original construction
permit shall toll when construction is prevented by the follow-
ing causes not under the control of the permittee.” Id. The
provision goes on to specify five causes. They are: (1) acts of
God; (2) administrative or judicial review; (3-4) certain unan-
swered requests to Canada or Mexico for international coordi-
nation; and (5) failure of a condition imposed by the FCC. Id.;
see also In re JNE Investments, Inc., 23 FCC Rcd. 623, 631
(2008) (“tolling is inapplicable outside of the circumstances
identified in Section 73.3598(b)”).
Those causes do not include site loss. Rather, the FCC
views site selection as an “independent business decision
within a permittee’s control.” In re Royce International Broad-
casting Co., 23 FCC Rcd. 9010, 9016 (2008). So it has
6
declined to add “site-related difficulties” to its list of criteria
for tolling. Id.; see also In re Birach Broadcasting Corp., 18
FCC Rcd. 1414, 1415 (2003) (affirming a finding that site loss
and high land prices, which slowed the process of securing a
new site, do not qualify for tolling).
B
Finally, Schwab claims the FCC erred because it did not
waive its three-year deadline on construction permits. See 47
C.F.R. § l.3.
The FCC may waive its rules “where particular facts would
make strict compliance [with a rule] inconsistent with the pub-
lic interest.” Northeast Cellular Telephone Co. v. FCC, 897
F.2d 1164, 1166 (D.C. Cir. 1990) (cleaned up); see also 47
C.F.R. § 1.3 (FCC may “waive[ ]” its rules for “good cause
shown”).
But Schwab never urged the FCC to hold that site loss jus-
tified a waiver of the three-year construction deadline. That
failure prevents us from considering waiver now. The FCC
must be “ ‘afforded [an] opportunity to pass’ on all arguments
made to a court.” NTCH, Inc. v. FCC, 841 F.3d 497, 508 (D.C.
Cir. 2016) (quoting 47 U.S.C. § 405(a)). So parties must first
“reasonably flag[ ]” their arguments “for the agency’s consid-
eration.” Id. (cleaned up). Schwab did not. 1
1
Because the exhaustion requirement is not jurisdictional, we may
overlook a failure to exhaust. NTCH, 841 F.3d at 508. But here,
“none of the traditional exceptions” apply. Action for Children’s
Television v. FCC, 906 F.2d 752, 755 (D.C. Cir. 1990) (cleaned up)
(listing exceptions).
7
And even if the issue was before us, Schwab produced no
evidence to show that good cause would support a waiver. See
In re Birach Broadcasting Corp., 18 FCC Rcd. at 1415 (“The
Commission will not waive its rules absent good cause.”).
* * *
We affirm the FCC’s order. 2
So ordered.
2
The FCC dismissed as moot Schwab’s application to modify its per-
mit to let it build at a new site. The FCC reasoned that Schwab’s
permit had expired and that the agency could not modify an expired
permit. See In re JNE Investments Inc., 23 FCC Rcd. at 632. That
may have been a mistake. Schwab filed its modification application
“four days before the end of the . . . construction period,” while the
permit was still valid. JA 286. And at oral argument, the FCC said
it would pause the construction clock while it reviewed Schwab’s
modification application. If that is true, then the clock could not have
expired, as the FCC claimed, mooting Schwab’s modification appli-
cation. But even if the FCC erred, Schwab did not mention that error
in its appellate briefing. So it forfeited any objection. See United
States v. All Assets Held at Credit Suisse (Guernsey) Ltd., 45 F.4th
426, 434 (D.C. Cir. 2022) (arguments not raised in an “opening
brief” are “forfeited”).