DA 04-3065

Audrey P. Rasmussen

Hall, Estill, Hardwick, Gable, Golden & Nelson

1120 20^th^ Street, N.W.

Suite 700, North Building

Washington, D.C. 20036-3406

Re: FM Broadcast Auction No. 37 \-- Tracy Broadcasting Corporation

Request for Expedited Action

Dear Ms. Rasmussen:

This letter denies your September 20, 2004 request that Tracy
Broadcasting Corporation ("TBC") be permitted to bid in Auction No. 37
and to submit a down payment on September 24, 2004.[^1] The Media Bureau
("MB") and the Wireless Telecommunications Bureau ("WTB") (collectively,
the "Bureaus") rejected TBC's application to participate in Auction No.
37 in the *Auction No. 37 Status Public Notice*.[^2] The Bureaus
rejected TBC's application because TBC is in default on a Federal
Communications Commission ("Commission") license, within the meaning of
the Commission's competitive bidding rules.[^3] As discussed below, as
of the filing deadline for applications to participate in Auction No.
37, TBC's affiliate Tracy Corporation II ("Tracy II") was in default on
its installment payment obligations for an F block Personal
Communications Services ("PCS") license issued by the Commission. TBC
therefore could not certify in compliance with Commission rules that it
was not in default on a Commission license at the time of the filing
deadline.[^4] Commission rules consequently require that TBC's
application to participate in Auction No. 37 be rejected.[^5] Nothing
presented in your request alters these facts or requires altering the
Bureaus' prior action.

Pursuant to Commission rules, applicants to participate in an auction,
such as TBC, must certify that the applicant and its affiliates are not
in default on any Commission license.[^6]  The rules expressly provide
that an application "that does not contain all of the certifications
required pursuant to this section is unacceptable for filing and cannot
be corrected subsequent to the applicable filing deadline.  The
application will be dismissed with prejudice and the upfront payment, if
paid, will be returned.\"[^7]  Finally, the rules expressly exclude
failures to make the required certification from a limited opportunity
to cure application defects.[^8] Given Tracy II's default, TBC cannot
comply with the requirement that its application contain an accurate
certification that TBC and its affiliates are not in default on any
Commission license. Accordingly, the Bureaus rejected TBC's
application.[^9]

Tracy II filed a request that the Commission reinstate its F block
license and waive relevant Commission rules in 2001.[^10] This request
is still pending. Nevertheless, Tracy II concedes that it did not pay
for its winning bid in compliance with Commission's rules.[^11]
Commission rules, as well as the Note applicable to Tracy II's winning
bid payments, expressly define this failure as an event of default,
subjecting Tracy II to an obligation to pay all outstanding amounts
immediately in full.[^12] Consequently, until all outstanding amounts
are paid or Tracy II receives some other relief from its obligation,
Tracy II is in default on a Commission license. Tracy II's pending
pleadings do not affect the application of the Commission's rules or the
provisions of Tracy II's Note.

Your letter contends that until the Commission takes final action on
Tracy II's pending reinstatement request, provisions of the
Administrative Procedures Act ("APA")[^13] preclude rejecting TBC's
Auction No. 37 application based on Tracy II's status as a defaulter.
The APA provisions cited in your letter, Sections 556 and 558, are
inapposite to TBC's application to participate in Auction No. 37.
Section 556(d) of the APA concerns hearings required as part of Section
553 rulemakings and Section 554 adjudications.[^14] However, neither
Section 553 nor Section 554 requires a hearing with respect to TBC's
application to participate in Auction No. 37. Section 558 of the APA
concerns the status of licenses, not, however, the status of a
defaulter.[^15] Accordingly, even assuming for the sake of argument that
Section 558 might have some relevance to Tracy II's F block license, it
is not relevant to Tracy II's status as a defaulter on its winning bid
for the license.

Finally, we disagree with your assertion that considering Tracy II in
default for purposes of competitive bidding is inconsistent with taking
into account Tracy II's pending reinstatement request in connection with
collecting Tracy II's outstanding obligations. Awaiting resolution of
pending requests for relief prior to collecting a debt is not
inconsistent with considering the debtor's default in connection with a
related auction application. Indeed, the Commission's recently adopted
"red light rule," regarding how outstanding debts affect certain
applications by debtors, explicitly notes that auction applications will
be dismissed if the applicant cannot certify that it is not in default
and states that "these \[auction\] rules are not affected by the red
light rule."[^16] In brief, uncertainty regarding pending requests for
relief does not alter a debtor's current status, which the Commission
may take into account when considering an application to participate in
an auction.

At the deadline for filing TBC's application to participate in Auction
No. 37, Tracy II was in default, given that at that time it had not paid
all its outstanding obligations in full or obtained other relief from
its obligations pursuant to otherwise applicable law. Under these
circumstances, the Commission's rules compelled the Bureaus to reject
TBC's application to participate in Auction No. 37. Accordingly, the
request in your letter that TBC be permitted to participate in Auction
No. 37 is denied. This action is taken under authority delegated
pursuant to Section 0.331 of the Commission's rules.[^17]

Sincerely,

Gary D. Michaels

Deputy Chief, Auctions and Spectrum Access Division

Wireless Telecommunications Bureau

[^1]: Letter from Audrey P. Rasmussen, counsel to TBC, to Margaret
    Wiener, Chief, Auction and Spectrum Access Division (September 20,
    2004), at 2.

[^2]: Auction of FM Broadcast Construction Permits; Status of FCC Form
    175 Applications to Participate in Auction No. 37, *Public Notice*,
    DA 04-2948 (rel. Sept. 13, 2004) ("*Auction No. 37 Status Public
    Notice*").

[^3]: *Auction No. 37 Status Public Notice,* at 2, n.6 and Attachment C.

[^4]: 47 C.F.R. § 1.2105(a)(2)(x); 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, 15317, n.142 (2000)("If any one of an applicant\'s
    controlling interests or their affiliates as defined by Section
    1.2110 of the Commission\'s rules (as adopted herein) is in default
    on any Commission licenses or is delinquent on any non-tax debt owed
    to any Federal agency at the time the applicant files it Form 175,
    the applicant will not be able to make the certification required by
    Section 1.2105(a)(2)(x) of the Commission\'s rules and will not be
    eligible to participate in Commission auctions. 47 C.F.R. §§ 1.2110
    (as adopted herein), 1.2105(a)(2)(x).")

[^5]: 47 C.F.R. § 1.2105(b)(1).

[^6]: *See* n. 4, *supra.*

[^7]: 47 C.F.R. § 1.2105(b)(1).

[^8]: 47 C.F.R. § 1.2105(b)(2).

[^9]: *Auction No. 37 Status Public Notice*, at 2 and Attachment C.

[^10]: *See* Petition for Reinstatement of F Block License and Request
    for Waiver of 47 C.F.R. 1.2110(g)(4)(filed June 26, 2001)("*Tracy II
    Petition*"), and Supplement to Petition for Reinstatement of F Block
    License and Request for Waiver of 47 C.F.R. 1.2110(g)(4)(filed
    September 10, 2001)("*Tracy II Supplement*").

[^11]: *See Tracy II Petition* at 4 (asserting acknowledged non-payment
    was "an oversight); *Tracy II Petition* at 2 (non-payment was "not
    intentional.")

[^12]: *See* 47 C.F.R. § 1.2110(g)(4)(iv).

[^13]: 5 U.S.C. § 551 *et seq.*

[^14]: 5 U.S.C. § 556(d).

[^15]: 5 U.S.C. § 558.

[^16]: Amendment of Parts 0 and 1 of the Commission\'s Rules;
    Implementation of the Debt Collection Improvement Act of 1996 and
    Adoption of Rules Governing Applications or Requests for Benefits by
    Delinquent Debtors, *Report and Order*, 19 FCC Rcd 6540, 6541 n.11
    (2004).

[^17]: 47 C.F.R. § 0.331.