United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 18, 2001 Decided November 16, 2001

Nos. 00-1400 & 00-1401

Celtronix Telemetry, Inc.,

Appellant/Petitioner

v\.

Federal Communications Commission, et al.,

Appellee/Respondents

Appeal from and Petition for Review of an Order

of the Federal Communications Commission

Richard S. Myers argued the cause and filed the briefs for
appellant/petitioner.

Stewart A. Block, Counsel, Federal Communications Commission, argued the
cause for appellee/respondents. With him on the brief were Jane E. Mago,
General Counsel, Daniel M. Armstrong, Associate General Counsel,
Catherine G. O\'Sullivan and Andrea Limmer, Attorneys, U.S. Department
of Justice.

Before: Ginsburg, Chief Judge, Henderson, Circuit Judge, and Williams,
Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge Williams.

Williams, Senior Circuit Judge: In 1994 the Federal Communications
Commission auctioned off a group of Interactive Video and Data Service
(\"IVDS\") licenses. In 1997 it changed the rules governing grace
periods for winning bidders who made late installment payments.
Celtronix, a winning bidder for such a license, alleges that the change
was unlawfully retroactive. We affirm the Commission\'s decision.

\* \* \*

In a June 1994 auction Celtronix (then known as Community Teleplay,
Inc.) won an IVDS license for the Norfolk-Virginia Beach Metropolitan
Service Area. As a small business, Celtronix was allowed to pay its
winning bid in installments over the term of the license. 47 C.F.R. §
1.2110(d) (1994). The regulation provided that any payment would be in
default after 90 days delinquency, but allowed a licensee to request a
three-to-six-month grace period. Id. § 1.2110(d)(4)(i), (ii). In
considering whether to grant the grace period, the Commission could
consider the licensee\'s payment history, the reasons for default, the
licensee\'s financial condition, and other circumstances. Id. Though its
regulations were not exactly clear on the availability of additional
grace periods, the Commission issued a public notice claiming discretion
to \"extend or grant additional grace periods where circumstances
warrant.\" Public Notice, \"Wireless Telecommunications Bureau Staff
Clarifies \'Grace Period\' Rule for IVDS \'Auction\' Licensees Paying By
Installment Payments,\" 10 FCC Rcd 10724 (1995).

In 1997 the Commission changed its grace period rule in the Third Report
and Order and Second Further Notice of Proposed Rule Making, 13 FCC Rcd
374 (1997) (\"Grace Period Order\"). Under the new regulation, a
licensee who missed a payment would automatically have 90 extra days to
do so without being considered delinquent. 47 C.F.R. § 1.2110(f)(4)(i)
(1998). This came at the price of a 5% late fee on the amount past due.
Id. Failure to make payment at the end of the first 90-day period would
result in a second automatic 90-day grace period and a 10% late fee. Id.
§ 1.2110(f)(4)(ii). (Formerly, there had been an interest charge,
amortized over the term of the license.) Any licensee failing to make
payment after 180 days delinquency (or failing to pay the late fee)
would then be in default. Id. § 1.2110(f)(4)(iii), (iv).[^1]

Celtronix filed a petition for reconsideration of the Grace Period Order
in January 1998 and, in July of that year, an emergency motion for stay
pending review of the petition. But in September 1998, just before the
final date on which Celtronix\'s license would have been permanently
defaulted, the Commission announced a notice of a proposed rulemaking
aimed at introducing new flexibility for spectrum occupied by IVDS
licensees; to reflect the change it immediately redesignated the service
as the \"218-219 Mhz Service.\" Amendment of Part 95 of the
Commission\'s Rules to Provide Regulatory Flexibility in the 218-219 MHz
Service, Order, Memorandum Opinion and Order and Notice of Proposed
Rulemaking, 13 FCC Rcd 19064 p 16 (1998). For the duration of that
rule-making the Commission suspended all installment payments for
licensees who were paid up through March 16, 1998 or had properly filed
grace period requests. Id. p 13.

In its final order on the 218-219 Mhz Service, Amendment of Part 95 of
the Commission\'s Rules to Provide Regulatory Flexibility in the 218-219
MHz Service, Report and Order and Memorandum Opinion and Order, 15 FCC
Rcd 1497 (1999) (\"218-219 MHz Service Order\"), the Commission
dismissed Celtronix\'s grace period requests and its emergency stay
motion, saying that parties that had properly filed grace period
requests had already received \"an extended grace period.\" Id. p p 45,
133. It also provided three options for licensees in Celtronix\'s
situation: (1) reamortization and the resumption of installment
payments; (2) amnesty, under which the licensee could return the
license, have its debt forgiven, and receive a partial refund of prior
payments; and (3) prepayment of the entire amount. Id. p 34.
Additionally, the Commission provided that the former 5-year term would
be extended to 10 years. Id. p p 25-32.

Celtronix sought reconsideration of the 218-219 MHz Service Order in
December 1999. While that was pending, the Commission denied
Celtronix\'s petition for reconsideration of the Grace Period Order.
Amendment of Part 1 of the Commission\'s Rules\--Competitive Bidding
Procedures, Order on Reconsideration of the Third Report and Order,
Fifth Report and Order, and Fourth Further Notice of Proposed Rule
Making, 15 FCC Rcd 15293, p 27 (2000). Then, in December 2000, the
Commission denied reconsideration of the 218-219 MHz Service Order, and
reaffirmed that IVDS licensees must decide among the three options of
amnesty, resuming repayment, or prepayment of the entire amount. See
Amendment of Part 95 of the Commission\'s Rules to Provide Regulatory
Flexibility in the 218-219 MHz Service, Second Order on Reconsideration,
15 FCC Rcd 25020, p p 1, 34 (2000). It rejected Celtronix\'s proposal of
a fourth option under which licensees could disaggregate, i.e., could
retain part of their 218-219 Mhz spectrum for a given market and return
the rest to the Commission. Id. at p p 14-20.

Celtronix chose to return the license to the Commission for amnesty,
subject to its claim for a disaggregation alternative. It filed a
petition for reconsideration of this order, which is still pending
before the Commission.

As to the Grace Period Order, Celtronix filed a petition for review
under § 402(a) of the Communications Act (No. 00-1401) and an appeal
under § 402(b) (No. 00-1400). Since these jurisdictional provisions are
mutually exclusive, see Freeman Engineering Associates, Inc. v. FCC, 103
F.3d 169, 177 (D.C. Cir. 1997), and because Celtronix\'s case falls into
none of the categories in § 402(b)(1) through (8), we dismiss appeal No.
00-1400 and take jurisdiction for No. 00-1401 under § 402(a).

There is another jurisdictional concern. Given Celtronix\'s election of
amnesty in the event that its disaggregation proposal does not prevail
(either by Commission change of heart or by judicial reversal of the
Commission), there is a distinct chance that Celtronix would not benefit
from a victo-ry here; absent disaggregation, it would simply take its
amnesty and depart. But we do not see this possibility as impairing its
standing. Compare a standard two-issue case: If a plaintiff presents two
or more alternative grounds as routes to its hoped-for ultimate victory,
a court does not lose jurisdiction over the second claim once it has
ruled in the plaintiff\'s favor on the first claim; victory on the first
claim doesn\'t moot the second. Air Line Pilots Ass\'n Int\'l v. UAL
Corp., 897 F.2d 1394, 1397 (7th Cir. 1990). Conversely, if a party must
prevail on both of two theories to achieve a meaningful win (e.g., knock
out a regulation), its loss on the first does not moot the second.
Worldcom, Inc. v. FCC, 246 F.3d 690, 695 (D.C. Cir. 2001). For both
situations, the continued exercise of jurisdiction by the court is based
on a practical consideration: Disposition of both bases has the
potential of achieving judicial economies, as higher-level re-view might
remove the first basis for the outcome. See id.

Just as the contingent character of the ruling on the second issue in
the above cases does not spell mootness, so too the fact that here
Celtronix\'s ultimate success may depend on the outcome of pending
administrative litigation should not be seen as rendering the harm
inflicted on it by the Commission\'s grace period decision too
\"conjectural\" for purposes of standing. City of Los Angeles v. Lyons,
461 U.S. 95, 102 (1983). Otherwise, a party requiring victory on two
fronts in two fora could easily lose his chance for review on the first
claim to be put forward for adjudication, see 28 U.S.C. § 2344
(requiring petition for review to be filed within 60 days), thus
destroying his chance of prevailing, regardless of the merits.

\* \* \*

Celtronix argues that the new grace period rule, 47 C.F.R.
§1.2110(g)(4), violates the Administrative Procedure Act, which limits
\"rules\" to agency prescriptions of \"future effect.\" 5 U.S.C. §
551(4); see Bowen v. Georgetown University Hospital, 488 U.S. 204,
216-25 (1988) (Scalia, J., concurring); Bergerco Canada v. U.S. Treasury
Department, 129 F.3d 189, 192-93 (D.C. Cir. 1997) (treating Justice
Scalia\'s concurring opinion as substantially authoritative, though
noting that \"\[t\]he Bowen majority, to be sure, neither embraced nor
rejected Justice Scalia\'s view\"). To a large extent Celtronix invokes
the criteria applied in Landgraf v. USI Film Products, 511 U.S. 244
(1994), a case that explored the question of what sort of retroactivity
was subject to the longstanding presumption against retroactive
statutes. Id. at 263-80. Here, of course, there is no issue of intent at
all: the Commission indisputably intended its new grace period rule to
apply to payment delays occurring after the rule\'s adoption but in
connection with previously issued licenses. Nonetheless, the tests
formulated in Landgraf are indeed pertinent to the APA issue. See, e.g.,
Bergerco Canada, 129 F.3d at 193; DIRECTV v. FCC, 110 F.3d 816, 825-26
(D.C. Cir. 1997).

According to Justice Scalia, a retroactive rule forbidden by the APA is
one which \"alter\[s\] the past legal consequences of past actions.\"
Bowen, 488 U.S. at 219. In Landgraf, the Court said that retroactivity
occurred where a statute \"would 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.\" 511 U.S. at
280.

It seems impossible to characterize the rule change here as
\"alter\[ing\] the past legal consequences\" of a past action. It
altered the future effect of the initial license issuance, to be sure,
but that could not be viewed as \"past legal consequences.\" Nor could
the change be said to impair rights possessed by Celtronix when it
acted, as it could have had no grace period rights before it \"acted\"
to acquire the license, and any payment delay covered by the new rule,
i.e., any delay not already excused, necessarily occurred after the rule
change. If the rule could be viewed as \"impos\[ing\] new duties\" at
all (in the sense of making the duty to pay installments more
stringent), it would run afoul of Landgraf\'s concept only if it imposed
them with regard to a \"transaction\[ \] already completed.\" That would
be so if the \"transaction\" at issue were the issuance of the license
itself, as Celtronix urges, rather than the delay in payments.

The examples used in the cases make clear that we should focus on the
payment delays and not on initial issuance of the license. As Justice
Scalia noted in Landgraf, a new ban on gambling would not involve
retroactivity in its application to existing casinos (which presumably
would have been licensed by a state), because the \"relevant
retroactivity event is the primary activity of gambling, not the primary
activity of constructing casinos.\" Landgraf, 511 U.S. at 293 n.3
(Scalia, J., concurring). Similarly, Justice Scalia made clear in Bowen
that there would be no violation of the APA\'s insistence on rules of
\"future effect\" if the Secretary there had promulgated new
reimbursement formulas for future services, even though the hospitals in
question were operating under long-term contracts negotiated in reliance
on a prior, more generous rule. 488 U.S. at 220.

Celtronix claims to have had a \"vested right\" to keep requesting
additional grace periods and to force the Commission to consider any
unique circumstances. To this end, it cites Landgraf\'s statement that
the judicial clear statement rule would apply where a statute would
otherwise \"impair rights a party possessed when he acted.\" 511 U.S. at
280.[^2] But Celtronix never explains where this vested right came from.
The pre-auction license system offered no vested right to any specific
terms. Rather, it is undisputed that the Commission always retained the
power to alter the term of existing licenses by rulemaking. See, e.g.,
United States v. Storer Broadcast Co., 351 U.S. 192, 205 (1956);
National Broadcasting Co. v. United States, 319 U.S. 190, 225 (1943);
Committee for Effective Cellular Rules v. FCC, 53 F.3d 1309, 1319-20
(D.C. Cir. 1995); WBEN, Inc. v. FCC, 396 F.2d 601, 617-18 (2d Cir.
1968).

The introduction of auctions made no change in this aspect of the
licensing regime. In fact, Congress provided both that the Commission
would retain its authority \"to regulate or reclaim spectrum licenses,\"
47 U.S.C. § 309(j)(6)(C), and that nothing in the use of auctions would
\"be construed to convey any rights \... that differ from the rights
that apply to other licenses\....\" Id. § 309(j)(6)(D).

Of course the grace period change may have altered the value of the
rights Celtronix acquired by its winning bid and commitment to make the
required payments. This sort of retroactivity\--characteristic of a rule
having exclusively \"future effect\" but affecting the desirability of
past transactions\--has become known as \"secondary retroactivity.\" See
Bowen, 488 U.S. at 219-20 (Scalia, J., concurring). Under our authority
to set aside rules that are arbitrary and capricious, we review such
rules to see whether they are reasonable, \"both in substance and in
being made retroactive.\" U.S. Airwaves, Inc. v. FCC, 232 F.3d 227, 233
(D.C. Cir. 2000) (emphasis added).

Here it\'s easy to find the rule reasonable in both respects. The
Commission merely replaced the possibility of two (or maybe more)
three-month grace periods, available only on a successful appeal to the
Commission\'s discretion, with the assurance of two 90-day periods
subject to 5% and 10% penalties on the delayed payments. Looking at
licensees as a class, there is no reason to think the change
disadvantageous. Indeed, the Commission described the change as a
\"liberalization.\" Grace Period Order, p 108. Nor does Celtronix
suggest that the rule change would inflict material injuries on any set
of licencees (such as ones whose circumstances made receipt of
Commission grace especially likely) that would offset its beneficial
effects, or indeed that the Commission has ever exercised its discretion
favorably. Moreover, it seems utterly improbable that the old grace
provisions could have induced reliance, either in the form of higher
bids by licensees at the bidding stage (as the change is so trivial and
likely beneficial), or of any different conduct thereafter (as both old
and new rule provide substantially equal motivations to avoid default).
See Bergerco, 129 F.3d at 195. In sum, when one considers both the
interests of licensees generally and of the Commission, the rule
change\'s harms (the amorphous injury to hypothetical successful
pleaders for discretionary grace, and the penalty fees) seem outweighed
by its benefits (the certainty and clarity for all concerned and the
elimination of a possibly long and costly decisionmaking process under
vague criteria). So, at least, the Commission could reasonably have
concluded.

Celtronix also urges a somewhat makeshift argument that the FCC\'s rule
change was a breach of contract, citing United States v. Winstar Corp.,
518 U.S. 839 (1996). But there the government had contractually bound
itself to bear the risk of specified regulatory change adverse to
certain firms that had acquired failed saving and loan associations in
reliance on that promise. Id. at 868-71. Here, far from there being any
such promise, there was, as we\'ve noted, a long tradition of Commission
authority to change rules governing already-issued licenses and
congressional provision for the application of the prior understandings
to licenses acquired by auction.

\* \* \*

The order of the Commission is

Affirmed.

[^1]: The current version of the rule provides that the grace period
    shall be a quarter year, rather than 90 days, but is otherwise
    similar in substance. 47 C.F.R. § 1.2110(g)(4)(i) (2000).

[^2]: The passage cited by Celtronix in fact makes no reference to
    \"vested\" rights, but other parts of the opinion do. See 511 U.S.
    at 268-69 & n.23 (quoting \"vested rights\" language from Justice
    Story\'s opinion in Society for Propagation of the Gospel v.
    Wheeler, 2 Gall. 105, 22 F. Cas. 756, 767 (No. 13,156) (CC NH 1814),
    and from Sturges v. Carter, 114 U.S. 511, 519 (1885)); id. at 275
    n.29; see also id. at 290-94 (Scalia, J., concurring) (critiquing
    \"vested rights\" usage).