Contemporary Media, Inc. v. Federal Communications Commission

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 18, 2000 Decided June 16, 2000

No. 99-1198

Contemporary Media, Inc., et al.,

Appellants

v.

Federal Communications Commission,

Appellee

Appeal of an Order of the

Federal Communications Commission

Howard J. Braun argued the cause for appellants. With

him on the briefs were Jerold L. Jacobs and Shelley Sadow-

sky.

Lisa A. Burns, Counsel, Federal Communications Commis-

sion, argued the cause for appellee. With her on the brief

were Christopher J. Wright, General Counsel, and Daniel M.

Armstrong, Associate General Counsel.

Before: Silberman, Henderson, and Garland, Circuit

Judges.

Opinion for the Court filed by Circuit Judge Garland.

Garland, Circuit Judge: Three radio licensees appeal the

Federal Communications Commission's (FCC's) revocation of

their licenses and construction permits, as well as its denial of

their application for a new station. The FCC took those

actions after the licensees' sole owner and president was

convicted of sexually abusing children, and after the licensees

made misrepresentations to the Commission about the own-

er's continued involvement in station affairs. In the end, the

case is no more difficult than this recitation of the facts

suggests, and we therefore affirm the FCC in all respects.

I

The appellant licensees own and operate five radio stations

in Missouri and Indiana, hold two construction permits for

radio stations in Missouri, and have an application pending

for another Missouri station. Michael Rice is the sole share-

holder, president, and treasurer of all three licensees and

serves on each licensee's board of directors. In November

1990, Rice was arrested for criminal conduct involving sexual

acts with a teenager. In April of the following year, he was

formally charged with three felony counts of sexual assault on

an individual between fourteen and sixteen years of age. The

prosecutor subsequently amended the charges to include

eight felony counts of sexual assault on individuals between

fourteen and sixteen years of age, and four felony counts of

forcible sodomy of individuals under fourteen years of age.

The sexual abuse involved five children and occurred between

December 1985 and October 1990. Two days after the

charges were filed, Rice checked himself into a St. Louis

hospital for in-patient psychiatric treatment.

In June 1991, two of the licensees filed reports notifying

the FCC of the charges against Rice. The reports were filed

pursuant to 47 C.F.R. s 165(a), which requires FCC license

applicants to maintain "the continuing accuracy and complete-

ness of information furnished" in pending applications. Each

report stated that:

Since Mr. Rice's hospitalization on April 3, 1991, he has

had absolutely no managerial, policy, or consultative role

in the affairs of the three broadcast corporations in which

he has ownership interests and officer positions. In

other words, pending a resolution of the referenced

criminal charges, Mr. Rice is being completely insulated

and excluded from any involvement in the managerial,

policy, and day-to-day decisions involving any of the four

licensed stations and three construction permits held by

the three corporations.

J.A. at 15-16, 120 (citation omitted). In October 1991, Rice

was discharged from the hospital. On May 14, 1992, one of

the licensees filed another report with the FCC, stating:

There has been no change in Mr. Rice's status with [the

reporting licensee] or in the status of the proceedings

against him.... Mr. Rice is no longer hospitalized, but

he continues to be treated by his physicians as an

outpatient, and he continues to have no managerial or

policy role in the affairs of the three broadcast corpora-

tions ... in which he has ownership interests and corpo-

rate positions.

Id. at 126-27 (citation omitted).

On August 31, 1994, Rice was convicted of all twelve felony

counts against him: four counts of forcible sodomy, six counts

of deviate sexual assault in the first degree, and two counts of

deviate sexual assault in the second degree. The court

sentenced him to a total of eighty-four years in prison.

Because the sentences were set to run concurrently, his

maximum term of confinement amounted to eight years.

Rice began his incarceration on September 30, 1994, and is

currently eligible for release.

On October 10, 1995, the FCC ordered an evidentiary

hearing at which the licensees were directed to show cause

why their licenses and construction permits should not be

revoked and their pending application denied. The central

issues at the hearing were: (1) the effect of Rice's felony

convictions on the basic character qualifications of the licen-

sees, and (2) whether the licensees had misrepresented to the

FCC that, subsequent to his arrest, Rice had been excluded

from the management and operation of the stations. After

the hearing, the Administrative Law Judge (ALJ) concluded

that revocation of the licensees' authorizations was appropri-

ate due to the egregious nature of Rice's misconduct and to

the misrepresentations made by the licensees in their reports

to the Commission. The FCC affirmed.

II

The licensees' appeal raises a number of challenges, which

we address in turn. First, they challenge the legality of the

character policy upon which the FCC's decision was based.

We must sustain that policy unless we find it to be "arbitrary,

capricious, an abuse of discretion, or otherwise not in accor-

dance with law." Administrative Procedure Act (APA), 5

U.S.C. s 706(2)(A); see ACLU v. FCC, 823 F.2d 1554, 1574

(D.C. Cir. 1987).1

Section 308(b) of the Federal Communications Act provides

that "[a]ll applications for station licenses, or modifications or

renewals thereof, shall set forth such facts as the Commission

by regulation may prescribe as to the citizenship, character,

... and other qualifications of the applicant to operate the

station." 47 U.S.C. s 308(b). For many years, the FCC had

no express policy concerning the character qualifications of its

applicants; the Commission considered a wide range of fac-

tors in evaluating character, and as a consequence its evalua-

__________

1 The licensees rely on our decision in Bechtel v. FCC, 10 F.3d

875 (D.C. Cir. 1993), which stated that agencies must be prepared to

defend the underlying validity of policy statements because those

statements "are exempt from the Administrative Procedure Act's

notice-and-comment requirements and hence may take effect with-

out the rigors--and presumed advantages--of that process." Id. at

878 (citation omitted). Because we conclude that the FCC did

adequately justify its policies in the decision under review, Bechtel

does not affect our analysis.

tions sometimes yielded inconsistent results. See Policy Re-

garding Character Qualifications in Broadcast Licensing, 87

F.C.C.2d 836, 836-37 (1981) (notice of inquiry). The Commis-

sion responded to this problem in 1986 with the adoption of a

comprehensive character policy statement. See Policy Re-

garding Character Qualifications in Broadcast Licensing,

102 F.C.C.2d 1179 (1986) [hereinafter 1986 Character Policy

Statement]. The statement announced that the FCC's char-

acter analysis would focus on "misconduct which violates the

Communications Act or a Commission rule or policy, and ...

certain specified non-FCC misconduct which demonstrate[s]

the proclivity of an applicant to deal truthfully with the

Commission and to comply with [its] rules and policies." Id.

at 1190-91. The relevant non-FCC misconduct was limited to

adjudicated cases involving: fraudulent representations to

government agencies, criminal false statements or dishonesty,

and broadcast-related violations of antitrust laws or other

laws concerning competition. See id. at 1195-1203. The

FCC noted, however, that "there may be circumstances in

which an applicant has engaged in nonbroadcast misconduct

so egregious as to shock the conscience and evoke almost

universal disapprobation." Id. at 1205 n.60. "Such miscon-

duct," the Commission stated, "might, of its own nature,

constitute prima facie evidence that the applicant lacks the

traits of reliability and/or truthfulness necessary to be a

licensee, and might be a matter of Commission concern even

prior to adjudication by another body." Id.2 The 1986

statement also listed mitigating factors that the Commission

would consider in evaluating specific acts of misconduct. See

id. at 1227-28.

In 1990, the FCC determined that its 1986 policy had taken

"an overly narrow view of the range of misconduct that

should be relevant in licensing decisions." Policy Regarding

Character Qualifications in Broadcast Licensing, 5 F.C.C.R.

__________

2 In addition, the FCC explicitly reserved the option of expand-

ing the range of relevant misconduct "[s]hould [its] future experi-

ence indicate that [it had] erred ... in narrowing the range of non-

FCC misconduct to be considered for character purposes." 1986

Character Policy Statement, 102 F.C.C.2d at 1208 n.75.

3252, 3252 (1990) [hereinafter 1990 Character Policy State-

ment]. It therefore amended that policy with a new state-

ment, which explained:

[U]pon further reflection, we believe a propensity to

comply with the law generally is relevant to the Commis-

sion's public interest analysis, and that an applicant's or

licensee's willingness to violate other laws, and, in partic-

ular, to commit felonies, also bears on our confidence that

an applicant or licensee will conform to FCC rules and

policies.... Thus, evidence of any conviction for mis-

conduct constituting a felony will be relevant to our

analysis of an applicant's or licensee's character.

Id. The FCC further stated that although "not all convic-

tions for serious crimes are equally probative" of propensity

to obey the law, it would not "establish a 'hierarchy' of

felonies that may arise in individual cases." Id. Rather, the

Commission would analyze misconduct on a case-by-case basis

through the examination of mitigating factors. As in 1986,

the Commission stated that for non-FCC conduct it generally

would consider only adjudicated cases. However, it "contin-

ue[d] to believe that, where an applicant has allegedly en-

gaged in nonbroadcast misconduct 'so egregious as to shock

the conscience and evoke almost universal disapprobation,'

such conduct 'might be a matter of Commission concern even

prior to adjudication by another body.' " Id. at 3252 n.5

(quoting 1986 Character Policy Statement, 102 F.C.C.2d at

1205 n.60).

The licensees' challenge to the legitimacy of the current

character policy is threefold. First, they contend that there

is "no justification for license revocation based on non-FCC-

related criminal misconduct of a licensee's principal, even if

such misconduct was 'egregious.' " Br. of Appellants at 17.

According to the licensees, such revocation is particularly

inappropriate in this case because "there was no nexus

between Mr. Rice's sexual misconduct and the Licensees'

broadcast activities." Id. at 16 (emphasis in original).

We disagree, both as a general matter and with regard to

the specifics of this case. As to the former, it should be noted

that the FCC's policy is not automatically to disqualify a

license holder or applicant who commits a felony, but rather

to consider the felony as a relevant factor in evaluating

propensity to obey the law. See 1990 Character Policy

Statement, 5 F.C.C.R. at 3252. We see nothing irrational in

the conclusion that a violation of the criminal laws is relevant

to that evaluation and to the issue of character in general.

See generally DiCola v. FDA, 77 F.3d 504, 507-08 (D.C. Cir.

1996). The FCC relies heavily on the honesty and probity of

its licensees in a regulatory system that is largely self-

policing. See Leflore Broad. Co. v. FCC, 636 F.2d 454, 461

(D.C. Cir. 1980) ("[E]ffective regulation is premised upon the

agency's ability to depend upon the representations made to

it by its licensees...."). Under such a regime, a felony

conviction--any felony conviction--is certainly a factor to be

considered. It may not necessarily be a dispositive factor,

and all such convictions may not be equally probative--as the

FCC recognizes. See 1990 Character Policy Statement, 5

F.C.C.R. at 3252. But it is hard to see the argument that a

felony conviction is not relevant at all.

In this case, moreover, the argument is particularly weak.

It is hardly irrational to conclude that if an individual is

unwilling to obey the law with respect to such patently

criminal behavior as sexual assault on children, he will be

equally unwilling to obey FCC rules that require openness

and honesty with the Commission. Indeed, as discussed

below, that connection was borne out in this case. Because

the policy of considering felonious misconduct was clearly

permissible as applied to the licensees, they cannot succeed in

their attempt to challenge it on its face. Cf. Romer v. Evans,

517 U.S. 620, 643 (1996); Steffan v. Perry, 41 F.3d 677, 693

(D.C. Cir. 1994) (en banc).

Second, the licensees argue that the FCC's character policy

is arbitrary and capricious because it does not provide any

criteria for determining which non-FCC-related misconduct is

sufficiently serious to affect a licensee's propensity for relia-

bility in its dealings with the agency. Given the myriad

forms of criminal misconduct, the FCC's decision is not

unreasonable. The Commission cannot be required to fore-

see the variety of criminal behavior in which licensees or their

owners may partake. And once again, whatever the issue

with respect to crimes that might be regarded as being on the

boundary of "egregiousness," the reasonableness of the

FCC's decision in the instant case is clear. There is no

question but that the crimes at issue here are, as the FCC

found, "characterized by moral turpitude" to such an extent

that they "fall[ ] in the category of those that 'shock the

conscience' and summon almost universal disapproval," Con-

temporary Media, Inc., 13 F.C.C.R. 14,437, 14,444 (1998)--a

category that the FCC expressly warned would be the subject

of special agency concern. See 1990 Character Policy State-

ment, 5 F.C.C.R. at 3252. n.5.

The licensees' third contention is that the FCC's character

policy is inconsistent with the precedent of both this circuit

and the Commission itself. The licensees cite Wilkett v. ICC,

in which this court reversed a license revocation based on the

sole proprietor's convictions for second-degree murder and

conspiracy to distribute a controlled substance. See 710 F.2d

861 (D.C. Cir. 1983). That case, however, is readily distin-

guishable. In Wilkett, the court's analysis focused on the fact

that the Interstate Commerce Commission had "disregarded

its own standards for evaluating [licensee] fitness." Id. at

864. The court found that the Commission had failed to

"carefully scrutinize[ ] the past violations and consider[ ] miti-

gating circumstances," as it had in "numerous cases" in the

past. Id. Here, by contrast, the FCC not only gave careful

consideration to Rice's crimes, but it did so pursuant to and in

accordance with its published character policy. After scruti-

nizing the misconduct at issue, the FCC concluded that it was

"extremely serious" and involved "numerous acts." Contem-

porary Media, 13 F.C.C.R. at 14,444. Then, as discussed

below, the Commission closely evaluated the licensees' claims

of mitigation and reasonably rejected them. Moreover, the

convictions were not the sole ground for the revocation

decision as they were in Wilkett; here the licensees were also

found to have violated the Commission's candor requirements

in connection with the very matter now before us.

The licensees also cite Kravis Co., 11 F.C.C.R. 4740 (1996),

in which the FCC renewed radio licenses despite the fact that

the company's president and sole shareholder had been

charged with possession and exhibition of child pornography.

As the Commission explained in its decision below, however,

in that case neither a conviction nor a judgment of guilt had

been entered against the defendant; instead, the court had

placed him on probation pursuant to the state's deferred

judgment procedure, which permitted the expungement of the

charges after successful completion of a probation period.

See Contemporary Media, 13 F.C.C.R. at 14,442-43. As

noted above, the FCC's character policy states that the

Commission generally will consider only instances of adjudi-

cated misconduct. See 1990 Character Policy Statement, 5

F.C.C.R. at 3252. Regardless of whether it would be reason-

able to erase that line, it is not unreasonable to draw it.3

III

Having found no merit to the licensees' challenges to the

FCC's character policy itself, we now consider their chal-

lenges to the application of that policy in this case. The

licensees argue that even if the character policy is legitimate,

the Commission erred both in failing to consider numerous

mitigating factors that are relevant under the policy, and in

concluding that the licensees misrepresented Rice's continued

__________

3 The licensees seek further support from Alessandro Broad-

casting Co., in which the FCC determined that no demerit was

warranted for an applicant whose majority shareholder had been

convicted of second-degree murder. See 99 F.C.C.2d 1 (1984).

That decision, however, was rendered before the Commission's 1990

character policy statement gave import to felonies unrelated to

dishonesty or broadcast-industry conduct. Moreover, in Alessan-

dro, the agency noted that "the crime was an isolated event that

occurred in the remote past and the state authorities connected

with [the] conviction ... [had] determined officially that [the share-

holder was] rehabilitated and [had] restored his civil rights." Id. at

11 n.13. None of those factors is present in this case.

involvement in station affairs. We address each argument

below. Once again, we are mindful that we must sustain the

FCC's order unless the challenged action is "arbitrary, capri-

cious, an abuse of discretion, or otherwise not in accordance

with law," 5 U.S.C. s 706(2)(A), and that we must uphold its

findings of fact if they are supported by substantial evidence,

see id. s 706(2)(E); Damsky v. FCC, 199 F.3d 527, 533 (D.C.

Cir. 2000).

A

The FCC's character policy sets forth a number of mitigat-

ing factors to be considered in evaluating misconduct: "the

willfulness of the misconduct, the frequency of the miscon-

duct, the currentness of the misconduct, the seriousness of

the misconduct, the nature of the participation (if any) of

managers or owners, efforts made to remedy the wrong,

overall record of compliance with FCC rules and policies, and

rehabilitation." 1990 Character Policy Statement, 5 F.C.C.R.

at 3252. Although the FCC credited the licensees' record of

regulatory compliance, it rejected all of the other potential

bases for mitigation. We agree with the FCC's judgment;

indeed, it is hard to regard most of the licensees' contrary

arguments as anything but insubstantial.

First, the licensees note that although Rice could have been

sentenced to eighty-four years in prison, he was instead

sentenced to concurrent terms of "only" eight years. Br. of

Appellants at 21. We do not understand the argument. We

have no idea, and the licensees have offered none, as to why

the state court showed such mercy. Indeed, we have no idea

whether it did show mercy--that is, whether the court had

sentencing discretion, or whether Rice's crimes were subject

to state sentencing laws or guidelines that dictated the sen-

tence he received. Furthermore, we do not regard a sen-

tence of "only" eight years as indicating that Rice's felonies

were somehow "less serious," or that the sentencing court

found them so. And finally, we do not understand how the

repeated sexual assault of five children could be regarded as

anything less than egregious; perhaps wisely, licensees do

not suggest what misconduct they would regard as more

serious than that described in this record.

Second, the licensees argue that they were entitled to

benefit from the "participation of management or owners"

mitigation factor. Again, we do not understand the argu-

ment. Although it is true that no other "owner" participated

in Rice's misconduct, it is only true because there is no other

owner: Rice owns all of the equity in each of the licensees.

Nor was Rice a minor player in management; he was the

president of all of the licensees and sat on the board of

directors of each. And while the other corporate managers

did not participate in the sexual assaults for which Rice was

convicted, they did--as we discuss below--participate in oth-

er serious misconduct: namely, intentional misrepresenta-

tions to the FCC regarding Rice's continued role.

Third, the licensees appeal to the "rehabilitation" factor,

observing that the record contains no evidence of criminal

activity subsequent to October 1990, and claiming that Rice's

sexual misconduct ceased on that date. The lack of further

misconduct after October, however, is hardly coincidental. In

November, Rice was arrested on the assault charges. His

forbearance from criminal activity during the period in which

he awaited trial and was subject to the conditions of pretrial

release is hardly indicative of rehabilitation.4 Moreover,

again as discussed below, the evidence shows that he partici-

pated in intentional misrepresentations to the FCC during

this supposed rehabilitation period.

Fourth, the licensees point to Rice's "reputation in the

community," noting that "four individuals who have known

Mr. Rice personally and/or professionally for many years"

submitted statements attesting to his good character and

reputation. Br. of Appellants at 22. The ALJ properly

refused to credit these statements, however, since only one

mentioned Rice's felony conviction and none expressed any

familiarity with its details. We cannot fault the FCC for

concluding that those who vouched for Rice's character while

__________

4 It goes without saying that Rice's forbearance while in prison

is not indicative of rehabilitation at all.

evidencing little if any knowledge of his egregious acts cannot

be regarded as credible on the subject.

Finally, the licensees complain that the FCC failed to

award mitigation credit for the measures they took to prevent

Rice from engaging in future misconduct, while simultaneous-

ly allowing him to "rehabilitate" himself through gainful

employment. The licensees emphasize that they adopted

resolutions prohibiting Rice from having any "managerial,

policy, or consultative role" in their affairs, but that they also

permitted him some "limited participation" in accordance with

his physician's recommendations. Id. at 23-24. The problem

with this argument is that the FCC concluded it was factually

untrue, finding that Rice participated extensively in station

affairs even after the resolutions were passed and that the

licensees intentionally misrepresented that participation. As

discussed in Part III.B below, we find substantial evidence to

support the FCC's findings in this regard. The actions taken

by the licensees, therefore, become elements of aggravation

rather than mitigation.

In sum, we find no error in the FCC's evaluation of

possible mitigating factors. The FCC considered each of the

relevant factors set forth in its character policy, and it

reasonably rejected all save one--the licensees' "overall rec-

ord of compliance with FCC rules and policies." We agree

with the Commission's conclusion that "[t]he fact that the

Licensees have had a good overall record of FCC rule compli-

ance is not alone sufficient to mitigate the overwhelming

negative weight of all the other evidence" in this case. Con-

temporary Media, 13 F.C.C.R. at 14,445.

B

At oral argument, the licensees conceded that if we were to

sustain the FCC's finding of intentional misrepresentation,

that alone would be sufficient ground for the revocation of

their licenses. That concession was plainly correct, as "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." Schoenbohm v. FCC, 204

F.3d 243, 247 (D.C. Cir. 2000); see also FCC v. WOKO, Inc.,

329 U.S. 223, 225-27 (1946); Swan Creek Communications,

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). We now turn to an examination of that issue.

The ALJ found, and the FCC affirmed, that the licensees

"misrepresented and lacked candor in reporting to the Com-

mission that, subsequent to his arrest, Rice was completely

excluded from any further involvement in the management

and operation of the Licensees' radio stations." Contempo-

rary Media, 13 F.C.C.R. at 14,454; see Contemporary Media,

Inc., 12 F.C.C.R. 14,254, 14,295 (1997) (initial decision of

ALJ). The licensees counter by claiming that they never

promised "to completely exclude Mr. Rice from having any

involvement in their stations' activities, only to exclude him

from having any involvement in the management, policy, and

day-to-day decisions involving the stations." Br. of Appel-

lants at 25 (emphasis in original). They admit that this

distinction is "subtle." Id. That is an understatement.

As previously recounted, in June 1991 the licensees report-

ed to the FCC that:

Since Mr. Rice's hospitalization on April 3, 1991, he has

had absolutely no managerial, policy, or consultative

role in the affairs of the three broadcast corporations in

which he has ownership interests and officer positions.

In other words, pending a resolution of the referenced

criminal charges, Mr. Rice is being completely insulated

and excluded from any involvement in the managerial,

policy, and day-to-day decisions involving any of the four

licensed stations and three construction permits held by

the three corporations.

J.A. at 15-16, 120 (citation omitted) (emphasis added). There

is no dispute that from April until October 1991, the period of

his hospitalization, Rice had no involvement with the stations.

The licensees concede, however, that several weeks after

Rice's release from the hospital, their vice-president permit-

ted him to undertake a number of station-related tasks, which

they describe as "occasional and isolated technical projects."

Br. of Appellants at 26. Nonetheless, the next report to the

FCC, filed on May 14, 1992, stated:

There has been no change in Mr. Rice's status with [the

reporting licensee] or in the status of the proceedings

against him.... Mr. Rice is no longer hospitalized, but

he continues to be treated by his physicians as an

outpatient, and he continues to have no managerial or

policy role in the affairs of the three broadcast corpora-

tions ... in which he has ownership interests and corpo-

rate positions.

J.A. at 126-27 (citation omitted) (emphasis added).

According to the licensees, Rice's conceded involvement in

"technical projects" is consistent with this representation

because that involvement did not comprise managerial or

decision-making activities but rather "mere opining and mus-

ings." Br. of Appellants at 28. The key point that the

"hypertechnical" FCC overlooked, they claim, is that the May

1992 report deleted the word "consultative" from the list of

roles from which the June 1991 report had said Rice was

being excluded. Id. at 26. In their eyes, this "critical

distinction" between the two reports should have put the

Commission on notice that Rice had moved from having no

role to having an "opining and musing" role. Id. at 27.

Indeed, the licensees maintain that this distinction rendered

their representations "fully forthcoming" and candid. Id. at

26.

By this time, it should be quite clear who is being "hyper-

technical." Only a side-by-side, line-by-line comparison of the

two filings--conducted with some skepticism of the licensees'

candor--would have detected the subtle difference in lan-

guage upon which the licensees now rely. In 1992, however,

the FCC had no reason to conduct such a forensic comparison

of the two representations, particularly in light of the May

report's opening declaration that "[t]here has been no change

in Mr. Rice's status." That declaration, alone, was plainly

false.5

Moreover, even if we were to accept that the licensees

effectively advised the Commission that Rice was involved in

__________

5 At oral argument, the licensees argued that their intention

was only to indicate that there had been no change in Rice's

consultation but had no role in management, there is substan-

tial evidence in the record that Rice was involved in manage-

ment as well. Cf. WBER, Inc. v. FCC, 420 F.2d 158, 164

(D.C. Cir. 1969) (holding that questions regarding misrepre-

sentations are factual questions subject to substantial evi-

dence review). As the ALJ stated:

Apart from Rice's consultative role, the evidence estab-

lishes that, after his release from the hospital in October

1991, Rice was also involved in at least some of the

programming matters and personnel decisions of the

Licensees, rejected offers to purchase one of the Licen-

sees' construction permits, invited an offer to purchase a

station once it went on the air, suggested the trade of

specific broadcast properties, and directed the group

program director and two of the general managers of the

Licensees' stations to perform certain tasks.

Contemporary Media, 12 F.C.C.R. at 14,298.

The licensees contend that there was only "conflicting"

evidence on these matters, pointing out that their witnesses

disputed much of the testimony upon which the ALJ's conclu-

sions were based. As a consequence, they argue, "[w]itness

credibility findings played a predominant role in the ALJ's

and the FCC's adverse rulings under the misrepresentation

issue." Br. of Appellants at 30. It is true, of course, that

when witnesses present conflicting testimony an agency's

decision must be based on an evaluation of their credibility.

Under our precedents, however, we defer to credibility find-

ings affirmed by the Commission unless they are "patently

unsupportable." E.g., SL Communications, Inc. v. FCC, 168

F.3d 1354, 1357 (D.C. Cir. 1999). That is not the case here.

Finally, the licensees contend that "intent to deceive" is a

necessary element of proving misrepresentation or lack of

candor in FCC proceedings, see Swan Creek Communica-

tions, 39 F.3d at 1222; Fox River Broad., Inc., 93 F.C.C.2d

127, 129 (1983), and that there is no credible record evidence

__________

"ownership or managerial" status. The quoted words, however, do

not appear in the declaration, which was completely unqualified.

of any intent on their part to mislead or deceive the agency.

The evidence discussed above, however, is more than suffi-

cient to support the Commission's finding that there was an

intent to deceive. As we have stated before, "the fact of

misrepresentation coupled with proof that the party making it

had knowledge of its falsity [is] enough to justify a conclusion

that there was fraudulent intent." Leflore Broad. Co., 636

F.2d at 462. The licensees concede that they intentionally

deleted the word "consultative" from the 1992 filing, and we

cannot credit the claim that they did not realize the resulting

report would affirmatively mislead the agency as to Rice's

resumption of such activities. Moreover, as noted above,

there is substantial evidence that the licensees' representa-

tions concerning Rice's exclusion from non-consultative (i.e.,

managerial and policy) activities were themselves false.

There is also substantial evidence that the licensees' manage-

ment knew the representations were false, since management

was on the receiving end of Rice's directives.6 Accordingly,

we uphold the FCC's finding of intent to deceive, and with it

the Commission's determination that the licensees' misrepre-

sentations warranted revocation.

IV

Finally, we turn to the licensees' contention that the revo-

cation of their licenses and construction permits violates the

__________

6 To take just a few examples:

Rice informed [vice president] Cox that he wanted Rhea [the

general manager of two of his radio stations] fired, and Cox

told Rhea that he was being fired because of Rice's displeasure

... ; Cox told Rhea that Rice wanted [radio announcer] Steel

fired after Steel changed [his station's] reporting status in a

trade publication; after Rice asked Rhea for information about

the cost of the Satellite Music Network, Cox told Rhea that

Rice thought [one of the stations] could be programmed for less

money by bringing in Rice's own music; and Leatherman [the

general manager of another licensee station] responded to Cox

after Rice asked him about the need for sound effects CDs.

Contemporary Media, 13 F.C.C.R. at 14,458.

Excessive Fines Clause of the Eighth Amendment.7 In sup-

port of this contention, the licensees cite Austin v. United

States, which held that the Excessive Fines Clause applies to

forfeitures under 21 U.S.C. s 881(a)(4) and (a)(7) of property

used to facilitate drug transactions. See 509 U.S. 602, 604

(1993). Austin has no application here.

In Austin, the Court held that the central question under

the Excessive Fines Clause is whether the government action

at issue is "punishment for some offense." Id. at 609-10; see

United States v. Bajakajian, 524 U.S. 321, 327-28 (1998). In

concluding that the forfeitures in that case constituted pun-

ishment, the Court focused on the historical understanding of

forfeiture as a penal measure, an understanding reflected in

prior Supreme Court precedents and in the legislative history

of the forfeiture statute. See Austin, 509 U.S. at 614-20.

These considerations do not apply to the case at bar.

First, the Court's precedents do not reflect an understanding

that FCC license revocations or nonrenewals based on char-

acter considerations constitute punishment. To the contrary,

in FCC v. WOKO, the Court rejected just such a claim. See

329 U.S. at 228. There, an FCC licensee who had made

misrepresentations to the agency contended that the resulting

nonrenewal order "inflict[ed] a penalty, that the motive [was]

punishment." Id. The Court disagreed, stating: "A denial

of an application for a license because of the insufficiency or

deliberate falsity of information lawfully required to be fur-

nished is not a penal measure." Id. Nor have the licensees

cited anything in the legislative history of the Federal Com-

munications Act to suggest that Congress had a punitive

purpose.

The FCC revokes a license not to punish a licensee for its

conduct, but because that conduct indicates to the Commis-

sion that the licensee is no longer qualified to hold it. See 47

U.S.C. ss 303(l), 308, 312; Contemporary Media, 13 F.C.C.R.

at 14,459-60. Revocation comes when the Commission con-

cludes that the licensee can no longer be trusted to deal with

__________

7 See U.S. Const. amend. VIII ("Excessive bail shall not be

required, nor excessive fines imposed....").

it honestly, to follow its regulations, and to operate in the

public interest. See, e.g., Syracuse Peace Council v. FCC, 867

F.2d 654, 659 n.2 (D.C. Cir. 1989); Leflore Broad. Co., 636

F.2d at 461-62. While the revocation of FCC license privi-

leges "may hurt and ... may cause loss," WOKO, 329 U.S. at

228, it does not implicate the Excessive Fines Clause of the

Eighth Amendment.

V

For the foregoing reasons, we affirm the decision and order

of the Federal Communications Commission.