Schoenbohm, Herbert v. FCC

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 18, 1999 Decided February 29, 2000
No. 98-1516
Herbert L. Schoenbohm,
Appellant
v.
Federal Communications Commission,
Appellee
Appeal of Orders of the
Federal Communications Commission
Lauren A. Colby argued the cause and filed the briefs for
appellant.
James M. Carr, Counsel, Federal Communications Com-
mission, argued the cause for appellee. With him on the brief
were Christopher J. Wright, General Counsel, and Daniel M.
Armstrong, Associate General Counsel. Pamela L. Smith,
Counsel, entered an appearance.
Before: Sentelle, Henderson, and Garland, Circuit
Judges.
Opinion for the Court filed by Circuit Judge Garland.
Garland, Circuit Judge: Appellant Herbert Schoenbohm
operates an amateur radio station in the U.S. Virgin Islands.
In 1992, he was convicted of a felony for fraudulently using
counterfeit access codes to obtain long distance telephone
services.1 In 1994, shortly before Schoenbohm's amateur
radio licenses were due to expire, he filed a renewal applica-
tion with the Federal Communications Commission (FCC).
After a series of hearings, an administrative law judge
(ALJ) denied Schoenbohm's application. On June 29, 1998,
the Commission affirmed the denial, finding that Schoen-
bohm's fraud conviction, "in combination with" his misrepre-
sentations and lack of candor during the renewal proceedings,
justified nonrenewal. Herbert L. Schoenbohm, 13 F.C.C.R.
15,028, 15,028 (1998) [hereinafter Decision]. Schoenbohm
filed a petition for reconsideration, reiterating arguments he
had previously made and asking for the first time that the
FCC investigate allegations that some of his detractors may
have had improper ex parte contacts with the ALJ. See J.A.
at 77. The FCC denied reconsideration, restating its previ-
ous justifications for nonrenewal and rejecting the request for
an inquiry into the ex parte allegations. See Herbert L.
Schoenbohm, 13 F.C.C.R. 23,774, 23,777 (1998) [hereinafter
Reconsideration Order].
Schoenbohm contends that the denials of both his renewal
application and his petition for reconsideration were arbitrary
and capricious agency actions, in violation of the Administra-
__________
1 Schoenbohm was found guilty of violating 18 U.S.C.
s 1029(a)(1), which provides that anyone who "knowingly and with
intent to defraud produces, uses, or traffics in one or more counter-
feit access devices" commits a felony. The statute defines "access
device" as "any card, plate, code, account number, ... or other
means of account access that can be used ... to obtain money,
goods, services, or any other thing of value." Id. s 1029(e)(1). An
access device is "counterfeit" if it is "counterfeit, fictitious, altered,
or forged." Id. s 1029(e)(2).
tive Procedure Act, 5 U.S.C. s 706(2)(A). We affirm the
FCC's refusal to renew Schoenbohm's radio licenses and
conclude that we are without jurisdiction to review the rejec-
tion of his petition for reconsideration.
I
We begin with the FCC's denial of Schoenbohm's renewal
application. Before reaching the merits of that decision,
however, we must resolve a preliminary question of jurisdic-
tion. The Commission argues that Schoenbohm did not
appeal from its original decision to deny his renewal applica-
tion, but only from its order denying his petition to reconsider
that decision. Denial of a petition for reconsideration, the
agency correctly notes, is generally nonreviewable unless the
request for reconsideration was based on new evidence or
changed circumstances. See ICC v. Brotherhood of Locomo-
tive Eng'rs, 482 U.S. 270, 279-80 (1987); Southwestern Bell
Tel. Co. v. FCC, 180 F.3d 307, 311 (D.C. Cir. 1999); see also
Entravision Holdings, LLC v. FCC, No. 99-1025, slip op. at 4
& n.* (D.C. Cir. Feb. 11, 2000) (holding that nonreviewability
in this context means lack of jurisdiction).
It is true that the notice of appeal Schoenbohm filed in this
court characterizes his appeal as being from the order deny-
ing the petition for reconsideration. See J.A. at 85. It is also
true that in Southwestern Bell, where the petition for review
designated only the reconsideration order, we held both that
the reconsideration order was nonreviewable and that the
underlying order was not properly before us. See Southwest-
ern Bell, 180 F.3d at 313-14. We did not, however, suggest
that the failure to designate an order in a petition for review
(or notice of appeal) is always fatal. To the contrary, "we
said in Southwestern Bell Telephone Co. v. FCC [that] a party
may demonstrate its intention to appeal from one order
despite referring only to a different order in its petition for
review if the petitioner's intent 'can be fairly inferred' from
the petition or documents filed more or less contemporane-
ously with it." Martin v. FERC, 199 F.3d 1370, 1372 (D.C.
Cir. 2000) (quoting Southwestern Bell, 180 F.3d at 313 (quot-
ing Brookens v. White, 795 F.2d 178, 180 (D.C. Cir. 1986))).
Here, Schoenbohm's intent to appeal from the underlying
decision (as well as from the denial of reconsideration) is
fairly inferable from the "concise statement of reasons,"
required by 47 U.S.C. s 402(c), that he filed together with his
notice of appeal. That statement expressly lists each of his
challenges to the underlying decision, including arguments
that the FCC erred in relying on his criminal conviction and
in finding that he lacked candor in his testimony before the
agency. It also separately challenges the agency's refusal to
investigate his allegations of improper ex parte contacts with
the ALJ. See J.A. at 85-86. Schoenbohm's ancillary filing
therefore makes this case like Damsky v. FCC, in which we
recently inferred an appellant's intent to appeal an underlying
decision from the fact that her concise statement of reasons
challenged the substantive merits of that decision. See 199
F.3d 527, 533 (D.C. Cir. 2000); see also Martin, 199 F.3d at
1373 (holding that petitioner's intent to seek review of under-
lying order was fairly inferable from his contemporaneously
filed motion for stay). At the same time, it makes this case
unlike Southwestern Bell, where there was no such challenge
in any filing "prior to the brief filed in this court." South-
western Bell, 180 F.3d at 313.
Because Schoenbohm's intent to appeal the FCC's underly-
ing decision can reasonably be inferred from his concise
statement of reasons, and because for the same reason the
FCC "cannot claim that any notice defects surprised or
misled it with regard to the issues [appellant] intended to
raise on appeal," we conclude that we have jurisdiction to
review the FCC's decision to deny renewal of Schoenbohm's
amateur radio licenses. Damsky, 199 F.3d at 533.
II
We review the merits of the FCC's decision only to deter-
mine whether the decision was "arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with law,"
5 U.S.C. s 706(2)(A). We review the factual findings upon
which the decision was based to ensure that they were
supported by "substantial evidence," id. s 706(2)(E). See 47
U.S.C. s 402(g); Damsky, 199 F.3d at 533. "Substantial
evidence," in turn, is defined as "such relevant evidence as a
reasonable mind might accept as adequate to support a
conclusion." Consolo v. Federal Maritime Comm'n, 383 U.S.
607, 620 (1966) (quoting Consolidated Edison Co. v. NLRB,
305 U.S. 197, 229 (1938)). Because this standard is "some-
thing less than the weight of the evidence, ... the possibility
of drawing two inconsistent conclusions from the evidence
does not prevent an administrative agency's finding from
being supported by substantial evidence." Id.
In the following sections, we apply these principles to each
of Schoenbohm's challenges to the FCC's refusal to renew his
radio licenses.
A
Schoenbohm's first contention is that it was arbitrary and
capricious for the FCC to deny renewal based on his criminal
conviction. In 1990, the Commission modified its "character"
policy to provide that "evidence of any conviction for miscon-
duct constituting a felony will be relevant to our evaluation of
an applicant's or licensee's character." Policy Regarding
Character Qualifications in Broadcast Licensing, 5 F.C.C.R.
3252, 3252 (1990) (footnote omitted) [hereinafter Character
Policy]. Such evidence is relevant, the FCC said, because it
aids the Commission in ascertaining whether a licensee will
"deal truthfully with the Commission and ... comply with
[its] rules and policies." Id. (quoting 102 F.C.C.2d 1179,
1190-91 (1986)). Rather than establish a " 'hierarchy' of
felonies that might arise in individual cases," the Commission
examines the impact of a conviction on a case-by-case basis.
Id.
There is nothing unreasonable about the FCC's conclusion
that Schoenbohm's felony conviction was relevant to his li-
cense renewal. A conviction for fraudulent conduct plainly
calls into question a licensee's ability to act in a manner
consonant with FCC regulations. As the Commission ob-
served, fraud "is a subject area the Commission has tradition-
ally considered to be pertinent to its evaluation of a licensee's
character." Decision, 13 F.C.C.R. at 15,038. Schoenbohm
argues, however, that the Commission acted arbitrarily in
judging his conviction not just relevant, but sufficient to
justify denial, since in other cases it has renewed a license or
granted a permit despite an applicant's felony conviction
when the applicant showed evidence of rehabilitation. See,
e.g., Richard Richards, 10 F.C.C.R. 3950 (Rev. Bd. 1995);
Alessandro Broad. Co., 99 F.C.C.2d 1 (Rev. Bd. 1984). Ac-
cording to appellant, he too established his rehabilitation.
The FCC's policy does acknowledge rehabilitation as a
mitigating factor in assessing an applicant's character. See
Character Policy, 5 F.C.C.R. at 3252 & n.4. Here, however,
the FCC found that Schoenbohm demonstrated an absence of
rehabilitation by making deliberate misrepresentations and
displaying a lack of candor during the renewal proceedings.
See Decision, 13 F.C.C.R. at 15,038. Moreover, because
these occurred in the course of the agency's own proceedings,
they were a rationale for nonrenewal that went beyond the
felony conviction alone. See id. Commission regulations forbid applicants from "mak[ing] any misrepresentation or
willful material omission bearing on any matter...." 47
C.F.R. s 1.17; see also 47 U.S.C. s 312(a)(1). A licensee's
complete candor is important to the FCC because "effective
regulation is premised upon the agency's ability to depend
upon the representations made to it by its licensees." Leflore
Broad. Co. v. FCC, 636 F.2d 454, 461 (D.C. Cir. 1980); see
also Character Policy, 5 F.C.C.R. at 3253. Accordingly, it is
well recognized that the Commission may disqualify an appli-
cant who deliberately makes misrepresentations or lacks can-
dor in dealing with the agency. See Swan Creek Communi-
cations, Inc. v. FCC, 39 F.3d 1217, 1221-24 (D.C. Cir. 1994);
Garden State Broad. Ltd. v. FCC, 996 F.2d 386, 393-94 (D.C.
Cir. 1993). The FCC's findings with respect to Schoenbohm's
misrepresentations and lack of candor are therefore more
than sufficient to distinguish this case from the precedents he
cites.
B
Schoenbohm does not dispute that if he had made misrep-
resentations to the Commission, that fact, together with his
fraud conviction, would have justified nonrenewal. Instead,
he disputes that he made any misrepresentations. The FCC
found to the contrary in connection with two aspects of his
presentations to the Commission.
First, the Commission determined that Schoenbohm made
misrepresentations and lacked candor in testifying about the
nature of his prior felony. As the Third Circuit noted in
affirming his conviction, Schoenbohm was found guilty of
violating 18 U.S.C. s 1029(a)(1) because he "used a counter-
feit access device." United States v. Schoenbohm, No.
93-7516, slip op. at 3 (3d Cir. Apr. 18, 1994) (emphasis added).
Schoenbohm effectively conceded this in his first written
submission to the Commission, stating that he was "convicted
for defrauding a telephone resale service provider by ...
making unauthorized long distance calls." Schoenbohm Aff.
at 1 (Aug. 8, 1995) (J.A. at 160). In subsequent presenta-
tions, however, Schoenbohm described his conviction differ-
ently. In a July 18, 1995 affidavit he said:
I did not steal any money or cause the account of any
subscriber to be debited. I was convicted solely of
having knowledge in my mind of certain telephone codes
of which 4 of the 6 digits were said to be similar to those
that could be used to make long distance calls without
paying for them.
Schoenbohm Aff. at 2 (J.A. at 185) (emphasis added). And in
oral testimony before the Commission, he characterized his
conviction as based on his possession of "numbers in my
mind," rather than on the performance of any unlawful act.
Decision, 13 F.C.C.R. at 15,031 (quoting Tr. at 38).
On the basis of this evidence, the FCC found that Schoen-
bohm had intentionally portrayed his crime in a misleading
manner in order to minimize its significance. Schoenbohm
maintains that he was not attempting to mislead, but rather
was simply trying to explain that his crime involved numeric
codes rather than mechanical devices. Although that is not
an impossible reading of his testimony, it was certainly rea-
sonable for the FCC to reach a contrary conclusion.
The FCC also found that Schoenbohm misrepresented the
facts and lacked candor in connection with an inquiry the ALJ
made into whether he had attempted to violate the agency's
ex parte rules--by urging others to ask the Virgin Islands'
congressional delegate to intervene with the FCC on his
behalf.2 The ex parte rules prohibit a party in specified
proceedings (including the proceedings at issue here) from
making written presentations to the Commission without
serving them on the other parties, and from making oral
presentations without notice and an opportunity for the oth-
ers to be present. See 47 C.F.R. ss 1.1202, 1.1208. They
also provide that "[n]o person shall solicit or encourage others
to make any presentation which he or she is prohibited from
making...." Id. s 1.1210.
In a radio conversation with another amateur operator,
Schoenbohm was tape recorded as saying:
I'm not allowed under ex-parte rules to ask for assistance
of ... people in political positions but other people if
they feel that government is overbearing or I'm being
treated unfairly, have every right to point this out to
their elected representatives.
J.A. at 175. He also told the other operator:
I'm not permitted at this time because of ex-parte rules
to make any requests of political intervention. Other
people could do it if they are so disposed but I can't do it.
Go ahead.
Id. Schoenbohm then spelled out the congressional dele-
gate's name, and provided an address and telephone number
at which he could be reached. Id.
__________
2 This inquiry is distinct from the inquiry Schoenbohm himself
requested, which would have investigated whether opponents of his
application had engaged in ex parte communications with the ALJ.
See discussion infra Part III.
When asked to explain this conversation, Schoenbohm told
the ALJ that he intended only to share his newly acquired
knowledge regarding the ex parte rules, and that he did not
intend to encourage an ex parte solicitation on his behalf.
See Herbert L. Schoenbohm, 11 F.C.C.R. 1146, 1148-49 (1996)
(initial decision of ALJ). Later, he submitted an affidavit
reiterating that he was simply "expounding on [his] newly
discovered knowledge of the ex parte rules," and was not
asking anyone to make a contact. Schoenbohm Aff. p 8 (Feb.
1997) (J.A. at 191). Once again, although it is not impossible
that Schoenbohm intended to do no more than declare his
understanding of the law, the record provides substantial
evidence to support the FCC's finding that this explanation
was less than candid, and that he was in fact trying to solicit
others to make ex parte submissions on his behalf.
Schoenbohm further contends that because there is no
evidence that any ex parte contacts actually occurred, he "is
being punished simply for uttering words to a friend in the
course of a private amateur radio conversation." Schoen-
bohm Br. at 13-14. This, he argues, violates the First
Amendment. He is wrong for two reasons. First, the agen-
cy's ex parte rules do not interfere with Schoenbohm's right
to discuss the proceedings with others; they merely require
that communications with the agency be on the record. As
the FCC correctly concluded, "rules intended to protect the
integrity of the administrative process by requiring that
presentations to the agency be made on the record and that
solicitations of such presentations be limited to requests for
on-the-record presentations d[o] not violate the First Amend-
ment." Reconsideration Order, 13 F.C.C.R. at 23,775; see
California Motor Transp. Co. v. Trucking Unlimited, 404
U.S. 508, 513 (1972) (stating that although the First Amend-
ment protects the right of access to agencies and courts, it
does not immunize from proscription "practice[s] which may
corrupt the administrative or judicial processes"); cf. Nation-
al Soc'y of Prof'l Eng'rs v. United States, 435 U.S. 679, 697
(1978) (noting that although "an injunction against price
fixing abridges the freedom of businessmen to talk to one
another about prices," the First Amendment does not make it
impossible to enforce the antitrust laws).
Moreover, and more fundamentally, the FCC did not deny
Schoenbohm's renewal application because he violated, or
attempted to violate, the ex parte rules. Nor did it do so
because of what he said to his fellow radio operator. Rather,
the FCC denied the application because Schoenbohm made
misleading statements to the agency itself, and it is well
established that the First Amendment does not protect mis-
representations made in administrative adjudications. See
California Motor Transp., 404 U.S. at 512-13.
For the foregoing reasons, we conclude there was substan-
tial evidence to support the FCC's findings that Schoenbohm
made misrepresentations and lacked candor in his testimony
regarding both his felony conviction and his efforts to induce
ex parte communications with the Commission. We further
conclude that the FCC acted reasonably in deciding that
Schoenbohm's "lack of candor and misrepresentation along
with the felony conviction together" justified nonrenewal of
his licenses. Decision, 13 F.C.C.R. at 15,038.
III
Following the FCC's original decision denying his license
renewal on June 29, 1998, Schoenbohm petitioned the agency
for reconsideration. In addition to restating his previous
arguments, he asked for the first time that the Commission
investigate whether amateur operators who disliked him had
themselves communicated with the ALJ ex parte, seeking to
have his application denied. In support of this request,
Schoenbohm stated that on January 17, 1998 he had made a
tape recording of a conversation between two amateur opera-
tors which, he asserted, indicated that his detractors were
making calls to the ALJ. See Pet. for Recons. pp 5, 6 (J.A. at
77).
The FCC rejected Schoenbohm's request for an inquiry on
two grounds. First, the agency held it untimely because it
was based neither on changed circumstances nor on newly
discovered facts. As the FCC noted, Schoenbohm's request
relied on a conversation he had taped more than six months
before the Commission's decision on his renewal application.
See Reconsideration Order, 13 F.C.C.R. at 23,775. Second,
the FCC rejected Schoenbohm's request on the ground that
the tape-recorded conversation "d[id] not provide probative
evidence that anyone contacted or attempted to contact [the
ALJ], let alone that any such contact reached the Judge."
Id. at 23,776. Schoenbohm's allegation, the FCC said, was
based "solely on hearsay, speculation, and rumor." Id.
In ICC v. Brotherhood of Locomotive Engineers (BLE), the
Supreme Court held that an agency's denial of a petition for
reconsideration is nonreviewable unless the petition was
based on "new evidence or changed circumstances." 482 U.S.
at 284. Included within the ambit of nonreviewable decisions
were those concerning matters that, even though "newly
raised," were "previously available." Id. at 283. The Court
treated nonreviewability under such circumstances as juris-
dictional, see id. at 287, a point this circuit confirmed in
Entravision Holdings, LLC v. FCC, No. 99-1025, slip op. at 4
n.*.
Schoenbohm does not contend that his petition for recon-
sideration was based on "new evidence" in the sense of
evidence not "previously available" to him. To the contrary,
it is apparent on the face of the petition that the evidence
upon which he relied--the tape recording of an amateur radio
transmission--was previously available. As the FCC noted,
the petition states that Schoenbohm made the recording on
January 17, 1998--six months before the FCC rendered its
original decision on his renewal application. Schoenbohm
could have, and under FCC rules should have, submitted this
evidence prior to that decision.3 He failed to do so, and on
__________
3 See 47 C.F.R. s 1.1214 ("Any party to a proceeding ... who has
substantial reason to believe that any violation of [the ex parte
rules] has been solicited, attempted, or committed shall promptly
advise the Office of General Counsel in writing of all the facts and
circumstances which are known to him or her."); see also 47 C.F.R.
s 1.65(a) ("Each applicant is responsible for the continuing accuracy
and completeness of information furnished in a pending application
appeal does not respond to the FCC's contention that this
omission deprives us of jurisdiction. This is not a case,
therefore, in which nonreviewability means that "petitioner
will have been deprived of all opportunity for judicial consid-
eration ... of facts which, through no fault of his own, the
original proceeding did not contain." BLE, 482 U.S. at 279.
Here, the fault is solely that of petitioner, and because his
petition was not based on new evidence or changed circum-
stances, we are without jurisdiction to review its denial.4
IV
The FCC's decision denying appellant's application for
renewal of his amateur radio licenses is affirmed. Insofar as
appellant also appeals from the FCC's refusal to reconsider
that decision, we dismiss that appeal for lack of jurisdiction.
See BLE, 482 U.S. at 284, 287; Entravision Holdings, No.
99-1025, slip op. at 4 n.*.
__________
or in Commission proceedings involving a pending application....
Whenever there has been a substantial change as to any other
matter which may be of decisional significance in a Commission
proceeding involving the pending application, the applicant shall as
promptly as possible ... submit a statement furnishing such
additional or corrected information as may be appropriate....").
4 In this case, little turns on whether we hold that the court lacks
jurisdiction, or whether we consider the issue on the merits. Even
if we were to consider the merits, BLE instructs that we must
uphold an agency's decision to deny reconsideration unless there
was the clearest abuse of discretion. See 482 U.S. at 278; see also
Southwestern Bell, 180 F.3d at 311; Beehive Tel. Co. v. FCC, 180
F.3d 314, 319-20 (D.C. Cir. 1999). It would be difficult to find such
an abuse in a case like this, where the agency's denial was based
both on the unexcused untimeliness of the appellant's submission
and on its lack of probative support.