# Pamela C. Cooper, Esq.

Mary L. Plantamura, Esq. DA 01-1476

Davis Wright Tremaine LLP 1800E3-SMH

1500 K Street, NW

Suite 450

Washington, DC 20005

A.  Wray Fitch, III, Esq.

Gammon & Grange, P.C.

8280 Greensboro Drive, 7^th^ Floor

# McLean, Virginia 22102-3807

Re: Channel 41, Coos Bay, Oregon

File No. BPCT-970805KN

Facility ID No. 89710

Dear Counselors:

This letter addresses a Petition to Deny ("Petition") filed by Gary
Stevens ("Stevens") against the application of Todd P. Robinson, d/b/a
Pacific Bay Broadcasting ("Robinson"), for authority to construct and
operate a new television station on Channel 41 at Coos Bay, Oregon.
Robinson was the high bidder for Channel 41 in the Commission's Closed
Broadcast Auction No. 25 ("Auction"). Stevens was the only other bidder
for the Coos Bay station. Stevens claims that Robinson should have been
ineligible to participate in the auction because his application was
defective as originally filed, and subject to dismissal prior to the
auction. Stevens requests that the Commission set aside the results of
the auction and award him the permit for Channel 41.

[Background.]{.underline} In 1987, the Commission imposed a freeze on
the creation of new conventional television allotments and on the
acceptance of applications for vacant television allotments in order to
preserve spectrum for high definition television and advanced television
service.[^1] The Freeze Order affected each of the top 30 television
markets. Despite the freeze, the Commission recognized that new
television channels could be allotted to affected communities in the top
30 television markets (including Coos Bay, a suburb of Portland, one of
the top 30 markets) if certain restrictions were imposed in the
allocation orders that limited the areas within which the transmitter
sites for the proposed channels could be located. In 1990, Channel 41
was allotted to Coos Bay with the restrictions that any application
filed for the channel must specify at least a 175 mile separation to
Portland, and provide a site restriction of 12.2 kilometers (7.6 miles)
south.[^2]

In July 1996, the Commission announced that it would no longer accept
applications for any vacant NTSC allotment, but it provided an
additional period (until September 20, 1996) to file such
applications.[^3] Stevens timely filed his application for Channel 41 at
Coos Bay on September 20, 1996. However, the staff returned his
application after it determined that the application did not comply with
the distance restrictions specified in the Allotment Order. Stevens
filed a petition for reconsideration on November 6, 1996, and on March
27, 1997, the staff granted his petition, stating that its previous
calculations had been in error. The Commission accepted Stevens'
application for filing on June 13, 1997, by Public Notice, which
established July 30, 1997 as the date by which any competing
applications were required to be filed against it.[^4] Two mutually
exclusive applications were timely filed on July 30, 1997, one by
Robinson (File No. BPCT-970805KN) and a second by Mollywanna, LLC (File
No. BPCT-970730KU).[^5] Although the competing applications did not meet
the same distance restrictions, the staff did not dismiss them.

On August 5, 1997, President Clinton signed the Balanced Budget Act of
1997, Pub. L. No. 105-33, 111 Stat. 251 (1997), which expanded the
Commission's auction authority under Section 309(j) of the
Communications Act of 1934 to include mutually exclusive applications
for certain types of broadcast services.[^6] Except for certain pending
applications, and for categories of broadcast service expressly exempted
from the Commission's auction authority, the Act required the Commission
to use auctions to resolve mutually exclusive applications for
construction permits for commercial broadcast stations. On November 26,
1997, the Commission released a *Notice of Proposed Rulemaking*,
proposing new rules and procedures to implement its new auction
authority.[^7] Among other issues, the *NPRM* stated that the Commission
intended to amend its application processing and review procedures to
relax the standards for filing amendments to broadcast applications. On
August 18, 1999, the Commission released its *First Report and
Order*,[^8] which provided new procedures allowing applicants for new
facilities and for major changes to liberally correct previously fatal
defects in their applications. In accordance with these new procedures,
Robinson, after winning the auction, amended his pending application on
November 12, 1999, thereby complying with the distances required by the
Allotment Order.

[Discussion.]{.underline} Stevens argues that Robinson's application
should have been dismissed long before the Commission held the auction
because it was technically defective as originally filed. However, the
Commission expressly rejected the argument that it should address issues
regarding the acceptability of an application prior to an auction.
Specifically, the Commission stated:

> We will not, prior to the auction, review the long form applications
> previously filed by the pending applicants, nor will we accept
> amendments to these previously filed long forms. In addition, before
> the auction we will not consider petitions to deny already filed, or
> accept additional petitions against pending applications, or consider
> any questions raised in such petitions relating to the tenderability
> or acceptability of the pending long form applications. [^9]

The Commission explained that the public interest would best be served
by not delaying the commencement of an auction to litigate potentially
irrelevant issues.[^10] Furthermore, it determined that deferring these
issues would conserve the resources of the private litigants as well as
of the Commission, thereby expediting service to the public.[^11]

Stevens also argues that the language of Section 309(j), the auction
statute, prohibits Robinson's participation in the auction because his
application was purportedly not acceptable for filing. Section 309(j)
provides that, "The Commission shall grant the license or permit to a
qualified applicant through a system of competitive bidding
...\[i\]f...mutually exclusive applications are *accepted* for any
initial license or construction permit." (emphasis added).[^12] Based on
this language, Stevens contends that his application was the only one
*acceptable* and, therefore, an auction was not permissible under the
statute. Contrary to Stevens's claims, Section 309(j) did not require
the dismissal of Robinson's application. Stevens misconstrues the Act as
requiring applications to be acceptable for filing in order to
participate in an auction. The language of the Act, however, speaks of
applications that are accepted, not acceptable. The Act does not
establish any prerequisite for acceptability, which is left to the
Commission's complete discretion. In the *Reconsideration Order*, the
Commission reiterated that Section 309(j)(1) accords it with the
discretion to resolve acceptability either before or after an auction,
and reaffirmed its decision to defer this determination until after an
auction. Accordingly, the Commission was well within its statutory
authority to include in the auction an application such as Robinson's.

Stevens likewise contends that because Robinson's application was
defective as originally filed, it could not be amended under our new
procedures. We find this argument unpersuasive, and conclude that
Robinson was entitled to file a corrective amendment under our new
processing rules. In the *First Report and Order*, the Commission
modified its application procedures to assist winning bidders in
resolving Commission concerns relating to their technical proposals or
other matters contained in their long form applications. Specifically,
the Commission adopted "a more lenient approach toward the processing of
defective broadcast applications for new facilities and major changes,
employing staff deficiency letters, and permitting multiple corrective
amendments, if necessary."[^13] The Commission concluded that such
applications "will no longer be immediately returned for defects
pertaining to completeness or technical or legal acceptance criteria,
without ample opportunity to correct the deficiency."[^14] The
Commission noted that, unlike its old procedures, "the new processing
standards for broadcast long-form applications will enable applicants
for new facilities and for major changes to avoid dismissal and to
liberally correct heretofore fatal defects in application
information."[^15] Robinson has fully complied with the Commission's new
procedures for amending his long form application.

Stevens next alleges that even if the Commission's new procedures are
applicable, the long form applications to which they apply are those
containing engineering and other data being filed for the first time by
auction winners. In other words, the new processing rules apply only to
an auction winner who did not have a pending long form application on
file prior to winning the auction. We disagree. With respect to Section
309(j) applicants, the Commission stated that "following the close of
the auction, a winning bidder will, if a new applicant, be required to
submit a complete long-form application, and, *if a* *pending applicant,
be required to make any necessary amendments to its pending long form."*
(emphasis added). [^16] Clearly, the Commission was referring to two
separate classes of applicants\--those filing long forms for the first
time, and those with pending long forms, like Robinson.

Moreover, Stevens' assertion that the Commission's new processing rules
do not apply to applicants like those in the Coos Bay proceeding, "whose
long form applications were initially filed long before auctions to
award frequency were ever considered," is simply wrong.[^17] In fact,
the Commission expressly stated that its general competitive bidding
procedures, with minor exceptions, apply to Section 309(j)
applicants.[^18] It is also worth noting that Robinson filed his
application for Channel 41 only six days prior to the date that Congress
enacted the Balanced Budget Act on August 5, 1997, which authorized the
Commission to grant broadcast licenses by auction. This legislation was
enacted before Robinson's application was listed on public notice as
tendered for filing and before staff processing would have occurred.
Therefore, it can not legitimately be argued that Robinson's application
was filed long before auctions to award frequency were ever considered.

Stevens also claims that the application of our new procedures to
pending long form applicants would retroactively and improperly change
the Commission's filing rules. However, as a matter of law it is well
settled that changes in procedural rules may be applied in cases arising
before their promulgation without raising concerns about
retroactivity.[^19] In any event, our processing rules do not meet the
test commonly used to determine whether a rule has retroactive effect,
because they do not "impair rights a party possessed when he acted,
increase a party's liability for past conduct, or impose new duties with
respect to transactions already completed."[^20] Stevens does not
complain that our new procedures increased his liability for past
conduct or imposed new duties with respect to completed transactions.
Nor could they have impaired a right possessed by Stevens, because none
vested on the filing of his application. Instead, our new procedures
reduce a party's liability for filing a defective application, by
allowing the applicant to correct defects that were previously subject
to automatic dismissal.

Stevens finally argues that the Commission is violating its mandate to
treat applicants equally and fairly by applying different standards of
review to the two mutually exclusive applications. In analyzing an
allegation of disparate treatment, "Courts have long held that an agency
must provide an adequate explanation before it treats similarly situated
parties differently."[^21] As explained in detail below, when the
mutually exclusive applications of Robinson and Mollywanna were filed,
both were subject to an application processing freeze, which suspended
the processing of these applications.

The Commission traditionally used comparative hearings to decide among
mutually exclusive applications for commercial broadcast services. To
determine which of several applicants would best serve the public, the
Commission developed a variety of comparative criteria, including the
"integration" of ownership and management, which presumed that a
broadcast station would offer better service to the extent that its
owner(s) were involved in the station's day-to-day management. However,
in *Bechtel v. FCC*, 10 F.3d 875, 878 (D.C. Cir 1993), the United States
Court of Appeals for the District of Columbia Circuit held that the
"continued application of the integration preference is arbitrary and
capricious, and therefore unlawful." As a result, on February 25, 1994,
the Commission issued a *Public Notice* announcing a freeze on various
aspects of its processes until it determined what action it would take
in response to *Bechtel ("Application Processing Freeze").* The
Commission subsequently decided not to appeal the decision. However, in
order to permit the continued authorization of broadcast service
consistent with *Bechtel*, on August 4, 1994, the Commission narrowed
the scope of the application processing freeze to include only mutually
exclusive applications.

Because Stevens' application was the first one filed for the Channel 41
permit, the staff proceeded to process it, as the *Bechtel* decision and
application processing freeze did not apply to singleton applications.
When Robinson and Mollywanna filed their mutually exclusive applications
on July 30, 1997, the application processing freeze required suspension
of the processing of these applications. The application processing
freeze was imposed precisely because the Commission had no authorized
method of selecting between mutually exclusive applicants. Indeed, the
Coos Bay proceeding was effectively frozen until the Commission was
granted auction authority under Section 309(j) to resolve the competing
applications. Therefore, the Commission was not required to conduct an
acceptability review of Robinson's application when it was originally
filed as it did for Stevens' application. The comparable treatment
advanced by Stevens would strip the Commission of any flexibility to
bring its informed discretion to bear in accommodating changes in policy
made in accordance with judicial and congressional mandates.

[Conclusion.]{.underline} Accordingly, for the reasons stated above,
having failed to raise a substantial and material question regarding the
qualifications of Robinson, the petition to deny filed by Gary Stevens
**IS DENIED**. Robinson's application will be granted by Public Notice,
once all applicable post-auction requirements have been satisfied.

Sincerely,

####  Barbara A. Kreisman

### Chief, Video Services Division

Mass Media Bureau

[^1]: *Advanced Television Systems and Their Impact on the Existing
    Television Broadcast Service*, 52 FR 28346 (released July 29, 1987)
    ("*Freeze Order*").

[^2]: *In the Matter of Amendment of Section 73.606(b), Table of
    Allotments, Television Broadcast Stations (Coos Bay, Oregon*), 5 FCC
    Rcd 999 (MMB 1990) ("*Allotment Order*").

[^3]: *Advanced Television Systems and Their Impact on the Existing
    Television Broadcast Service (Sixth Further Notice)*, 11 FCC Rcd
    10968, 10992 (1996).

[^4]: *Public Notice, TV Broadcast Applications Accepted for Filing and
    Notification of Cut Off Date*, Mimeo No. 74657.

[^5]: Mollywanna, LLC became ineligible to participate in the auction
    because it did not submit the required upfront payment. The
    application will, therefore, be dismissed.

[^6]: 47 U.S.C. § 309(j).

[^7]: *Implementation of Section 309(j) of the Communications Act*,
    *Notice of Proposed Rulemaking*, MM Docket No. 97-234, GC Docket No.
    92-52 and GEN Docket No. 90-264, 12 FCC Rcd 22363 (1997) *("NPRM"*).

[^8]: *First Report and Order*, MM Docket No. 97-234, GC Docket No.
    92-52 and GEN Docket No. 90-264, 13 FCC Rcd 15920 (1998), *on
    recon*., 14 FCC Rcd 8724 (1999) ("*Reconsideration Order*").

[^9]: *First Report and Order* at 15951. In its *Reconsideration Orde*r,
    14 FCC Rcd at 8732, the Commission rejected similar challenges to
    its decision to defer consideration of basic qualifications issues
    until after the auction. For example, the Commission was not
    persuaded by a petitioner's argument that conducting an auction
    before resolving a petition to deny against the only other applicant
    violates due process and is contrary to the requirements of Section
    309(j)(1). The Commission also declined to institute pre-auction
    procedures to verify the bona fides of certain pending applications.

[^10]: *Reconsideration Order* at 8732.

[^11]: *Id.*

[^12]: The mutually exclusive applications of Stevens and Robinson are
    subject to the Commission's mandatory auction authority set forth in
    Section 309(j)(1). The Commission determined that the pending group
    of applicants subject to Section 309(j)(1) include those situations
    where one broadcast application was filed before July 1, 1997
    *(i.e.,* Stevens) and the other mutually exclusive application(s) is
    filed on or after that date (*i.e.,* Robinson).

[^13]: *First Report and Order* at 15986.

[^14]: *Id*.

[^15]: *Id.* at 15987.

[^16]: *Id.* at 15961.

[^17]: Reply to Opposition at page 4.

[^18]: *First Report and Order* at 15958.

[^19]: *See Landgraf v. USI Film Products*, 511 US 244, 275 (1994)
    (*citing Ex parte Collett*, 337 US 55, 71 (1949)).

[^20]: *See* *Bowen v. Georgetown University Hospital*, 488 US 204
    (1988*). See also Chadmoore Communications, Inc. v. FCC*, No.
    96-1061 (D.C. Cir. May 20, 1997) (upholding the denial of an
    application for an extension of the construction period based on a
    subsequently adopted rule disallowing such extensions, because no
    right to an extension vested upon the filing of the application)).

[^21]: *Chadmoore Communications, Inc. v. FCC*, 113 F.3d 235 (D.C. Cir.
    1997) *(citing Petroleum Communications, Inc*. v. FCC, 22 F.3d 1164,
    1172 (D.C. Cir. 1994)).