United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 19, 2000 Decided June 13, 2000

No. 98-1424

[Orion Communications Limited, ]{.smallcaps}

[Petitioner]{.smallcaps}

v\.

[Federal Communications Commission and ]{.smallcaps}

[United States of America, ]{.smallcaps}

[Respondents]{.smallcaps}

[Liberty Productions, A Limited Partnership, et al., ]{.smallcaps}

[Intervenors]{.smallcaps}

Consolidated with

98-1434, 98-1444, 98-1445, 98-1523, 99-1188,

99-1212, 99-1249, 99-1260, 99-1423

On Petitions for Review of Orders of the

Federal Communications Commission

**-------------**

*Stephen C. Leckar* argued the cause for petitioner Orion Communications
Limited, et al. With him on the briefs were *Richard F. Swift, Donald J.
Evans, Gene A. Bechtel, Stephen T. Yelverton* and *Loren A. Colby*.

*James K. Edmundson* argued the cause and filed the briefs for
petitioners Dewey Matthew Runnels and Howard G. Bill.

*Dennis P. Corbett* argued the cause for petitioner Davis Television
Duluth, LLC., et al. and Intervenors Riverbank Restaurants, Inc., et al.
With him on the briefs were *Loren A. Colby* and *Timothy K. Brady*.

*Daniel M. Armstrong*, Associate General Counsel, Federal Communications
Commission, argued the cause for appellees. With him on the brief were
*Christopher J. Wright*, General Counsel, *C. Grey Pash, Jr.*, Attorney,
*Joel I. Klein*, Assistant Attorney General, United States Department of
Justice, *Robert B. Nicholson* and *Robert J. Wiggers*, Attorneys.

*Stephen T. Yelverton, Timothy K. Brady, Donald J. Evans, Thomas A.
Hart, Jr.* and *Scott C. Cinnamon* were on the brief for intervenors.

Before: [Ginsburg]{.smallcaps}, [Tatel]{.smallcaps} and
[Garland]{.smallcaps}, *Circuit Judges*.

Opinion for the Court filed [Per Curiam]{.smallcaps}.

[Per Curiam]{.smallcaps}: In the Balanced Budget Act of 1997, Congress
amended section 309(j) of the Communications Act of 1934 to require
competitive bidding for commercial broadcast ser‑vices, replacing the
Commission\'s historic practice of awarding such licenses through
comparative hearings. *See* Balanced Budget Act of 1997 § 3002(a)(1),
Pub. L. No. 105-33, 111 Stat. 251, codified at 47 U.S.C. § 309(j).
Following a notice of proposed rulemaking, the FCC issued two orders
implementing section 309(j). *First Report and Order*, 13 FCC Rcd. 15920
(1998); *Memorandum Opinion and Order*, 14 FCC Rcd. 8724 (1999). Various
parties filed petitions for review of these orders. In this opinion, we
consider the petition for review in No. 99-1188. We resolved all of the
issues raised by the other petitions in a separate order issued
herewith.

In the *First Report and Order*, the FCC determined that applicants for
broadcast service auctions would be subject to its anti‑collusion rule,
47 C.F.R. § 1.2105(c)(1), which it had previously applied in sixteen
spectrum auctions. *First Report and Order*, 13 FCC Rcd. at 15980-81 **¶
** 155. This rule provides that, following the filing of short‑form
applications,

applicants are prohibited from cooperating, collaborating, discussing or
disclosing in any manner the substance of their bids or bidding
strategies, or discussing or negotiating settlement agreements, with
other applicants until after the high bidder makes the required down
payment, unless such applicants are members of a bidding consortium or
other joint bidding arrangement identified on the bidder\'s short‑form
application\....

47 C.F.R. § 1.2105(c)(1). In other words, applicants may not negotiate
settlement agreements after their short‑form applications have been
filed.

Petitioners contest the FCC\'s application of its anti-collusion rule,
urging instead that the Commission permit applicants to negotiate
settlement agreements within a reasonable interval---they suggest ninety
days---of the date of filing. They first contend that the anti‑collusion
rule violates section 309(j)(6)(E), which provides:

Nothing in this subsection, or in the use of competitive bidding, shall
be construed to relieve the Commission of the obligation in the public
interest to continue to use engineering solutions, negotiation,
threshold qualifications, service regulations, and *other means* in
order to avoid mutual exclusivity in application and licensing
proceedings.

47 U.S.C. § 309(j)(6)(E) (emphasis added). Making a *Chevron* step one
argument, petitioners claim that \"Congress both intended and expressly
provided that the Commission is obliged in the public interest to use
settlements (*i.e.*, \'other means\') to avoid mutual exclusivity in
broadcast auction proceedings.\"

The question we ask at *Chevron* step one is whether Congress has
\"directly spoken to the precise question at issue.\" *Chevron, U.S.A.,
Inc. v. Natural Resources Defense Council, Inc.*, 467 U.S. 837, 842
(1984). We cannot see how section 309(j)(6)(E) speaks to the precise
question of whether the FCC must permit a reasonable interval for
settlement negotiations when the statute does not even mention
settlements, let alone a specific time interval for negotiations. To be
sure, settlements are \"other means\" of avoiding mutual exclusivity,
but the statute cannot be read to direct the FCC to adopt *all* other
means available.

Petitioners next claim that the Commission\'s application of the
anti‑collusion rule is arbitrary and capricious, arguing that \"the
Commission never explains why, in its view, the provision for a
reasonable interval for settlement is irreconcilable with its policy to
deter collusion.\" We disagree. The Commission more than adequately
explained its reasons for applying the anti‑collusion rule. \"Permitting
competing applicants for new facilities in all broadcast services to
engage in discussions concerning settlements or other resolution of
their mutual exclusivities following submission of their short‑form
applications,\" the Commission said, \"would, we believe, reduce the
effectiveness of the anti‑collusion rule.\" *Memorandum Opinion and
Order*, 14 FCC Rcd. at 8755 ¶ 61. The Commission elaborated:

For example, if competing broadcast auction applicants were permitted to
engage in discussions concerning settlement or other resolution of
mutual exclusivities, these competing applicants would almost inevitably
transfer information at least indirectly affecting bids or bidding
strategies, thereby adversely impacting the competitiveness of the
auction. Moreover, given our statutory obligation to utilize auctions as
a primary licensing tool, the protection of the integrity of the auction
process is of paramount importance, and we are consequently concerned
about actions that compromise the integrity of the process, particularly
behavior that violates the anti-collusion rule. The Commission\'s
experience in conducting numerous previous auctions has demonstrated the
importance of the anti‑collusion rule in preventing and facilitating the
detection of collusive conduct.

*Id.* (internal quotation marks omitted). Finding this explanation
entirely reasonable, we deny the petition for review.

*So ordered.*