Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-97-01294/USCOURTS-caDC-97-01294-0/pdf.json

Parties Involved:
Federal Communications Commission
Respondent
Metamora Telephone Company
Petitioner
United States of America
Respondent

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 16, 2000 Decided July 28, 2000

No. 97-1245

Benkelman Telephone Company, et al.,

Petitioners

v.

Federal Communications Commission and

United States of America,

Respondents

Nationwide Paging, Inc., et al.,

Intervenors

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No. 97-1294

Metamora Telephone Company,

Petitioner

v.

Federal Communications Commission and

United States of America,

Respondents

No. 99-1247

Advanced Paging, Inc, et al.,

Petitioners

v.

Federal Communications Commission and

United States of America,

Respondents

No. 99-1251

Advanced Paging, Inc., et al.,

Petitioners

v.

Federal Communications Commission and

United States of America,

Respondents

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No. 99-1331

Robert L. Wagner, et al.,

Petitioners

v.

Federal Communications Commission and

United States of America,

Respondents

No. 99-1337

Personal Communications Industry Association,

Petitioner

v.

Federal Communications Commission and

United States of America,

Respondents

On Petitions for Review of Orders of the

Federal Communications Commission

Carl W. Northrop argued the cause for the petitioners and

intervenors. Timothy E. Welch, Kenneth E. Hardman, John

D. Pellegrin, Frederick M. Joyce, Kenneth D. Patrich and

Robert L. Hoggarth were on brief. Ray M. Senkowski, Christine M. Crowe and David A. Gross entered appearances.

Roberta L. Cook, Counsel, Federal Communications Commission, argued the cause for the respondents. Christopher J.

Wright, General Counsel, John E. Ingle, Deputy Associate

General Counsel, Federal Communications Commission, Joel

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I. Klein, Assistant Attorney General, United States Department of Justice, and Robert B. Nicholson and Andrea Limmer, Attorneys, United States Department of Justice, were

on brief. Daniel M. Armstrong, Associate General Counsel,

and Gregory M. Christopher, Counsel, Federal Communications Commission, entered appearances.

Before: Williams, Sentelle and Henderson, Circuit

Judges.

Opinion for the court filed by Circuit Judge Henderson.

Karen LeCraft Henderson, Circuit Judge: The petitioners

challenge a Federal Communications Commission (FCC) rulemaking that established a geographic area licensing regime

for common carrier paging and 929 MHz private carrier

paging licenses1 and a competitive bidding procedure for

mutually exclusive2 applications filed thereunder. See In re

Revision of Part 22 and Part 90 of the Comm'n's Rules to

Facilitate Future Dev. of Paging Sys., Second Report and

Order and Further Notice of Proposed Rulemaking, 12

F.C.C.R. 2732 (1997) (Second R&O); In re Revision of Part

22 and Part 90 of the Comm'n's Rules to Facilitate Future

Dev. of Paging Sys., Memorandum Opinion and Order on

Reconsideration and Third Report and Order, 14 F.C.C.R.

10,030 (1999) (Third R&O). The petitioners and intervenors

contend the FCC lacked statutory authority under 47 U.S.C.

s 309(j) to auction the new geographic paging licenses, that

the FCC arbitrarily failed to require that geographic licensees provide notice of construction to neighboring incumbent

__________

1 Common carrier paging licensees "gain[ ] the exclusive use of

the licensed frequency within their protected service area." PSWF

Corp. v. FCC, 108 F.3d 354, 355 (D.C. Cir. 1997). Private carrier

paging licensees, on the other hand, "ha[ve] to share their allotted

frequency with other such licensees operating in the same geographic area." Id.

2 Applications are considered "mutually exclusive" if only one can

be granted because they seek the same license or different licenses

that would interfere with each other. See Lakeshore Broadcasting,

Inc. v. FCC, 199 F.3d 468, 470 (D.C. Cir. 1999) (citing Ashbacker

Radio Corp. v. FCC, 326 U.S. 327, 333 (1945)).

licensees and that the algorithm the FCC used to identify

pending mutually exclusive applications violates the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. ss 3501 et seq.

For the reasons set out below we reject each of these

arguments and deny the petitions for review.

I.

Before 1996 the FCC allocated licenses for common carrier

paging and exclusive private carrier paging service spectrum

under the traditional site-specific licensing scheme which

required a separate license for each paging transmitter site.

Each license application proposed a transmission frequency

and set out technical information on the proposed station,

including its potential for electrical interference with adjacent

stations. See 47 C.F.R. s 22.529 (1996); id. s 22.559. Once

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an applicant filed, the FCC reviewed each site-specific application preliminarily for formal compliance and issued public

notice of acceptance of filing. See id. s 22.120. Generally, if

an applicant's proposed service would overlap and interfere

with an incumbent licensee's transmission, the application was

denied. See id. s 22.537(a). When mutually exclusive sitespecific applications were filed, a single applicant was selected

by lottery. See id. s 22.131(c)(1).

In the challenged rulemaking the FCC replaced the sitespecific licensing process with a scheme of geographic licenses. The new scheme authorizes a licensee to operate a

transmitter anywhere within the licensed geographic area

without notice to the FCC of the transmitter's operation or of

its precise location. The geographic licensee must, however,

protect incumbent operators in the geographic area and

adjacent areas from harmful electrical interference. In order

to bid at a geographic license auction, an applicant must file

an FCC Form 175 (Short Form) either identifying individual

channels and markets it seeks or checking the "All" box,

which allows it to bid on any or all of the channels and

markets being auctioned. After filing the Short Form, but

before the auction, an applicant must submit an "upfront"

payment which "bear[s] a relation to the value of the licenses

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to be awarded." Second R&O, 12 F.C.C.R. at 2794. A

successful bidder faces "automatic cancellation" of the license

if it does not either (1) "provide coverage to one-third of the

population within three years of the license grant, and to twothirds of the population within five years of the license grant"

or (2) "provide substantial service to the geographic license

area within five years of license grant." Id. at 2765.

In contemplation of the new geographic system, the FCC

imposed a filing freeze as of February 8, 1996. On February

19, 1997 the Commission released its Second Report and

Order outlining the auction procedures for the new geographic licenses and authorizing the Wireless Telecommunications

Bureau to dismiss all pending exclusive paging applications

and to either grant or dismiss all pending non-mutually

exclusive paging applications. On June 24, 1999 the FCC

issued its Third Report and Order affirming the geographic

licensing scheme but somewhat modifying its procedures. On

August 12, 1999 the FCC issued a public notice announcing

the relevant auction procedures for the geographic paging

licenses. See Auction of 929 MHz Paging Serv. Spectrum,

Public Notice (1999). Applicants for the licenses filed their

Short Forms on January 20, 2000 and deposited their upfront

payments on February 7, 2000. On February 24, 2000 the

FCC conducted the auction.

Six petitions for review of the FCC's rulemaking have been

filed at various points in the proceedings and have been

consolidated for consideration here.

II.

The petitioners, consisting of incumbent paging licensees

and a paging industry trade association (licensee petitioners)3

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3 The incumbent licensees are Benkelman Telephone Co., Frederick W. Hiort dba B&B Beepers, Wauneta Telephone Co., Metamora

Telephone Co., Advanced Paging, Inc., Mark A. Apsley dba Progressive Paging, Capitol Radiotelephone Co., Inc. dba Capitol Paging, Express Message Corp., A. V. Lauttamus Communications, Inc.

and NEP, LLC dba Northeast Paging. The trade association is

Personal Communications Industry Association. For convenience,

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and dismissed license applicants (applicant petitioners),4 challenge the FCC's new geographic licensing scheme on three

grounds. We address--and reject--each ground in turn.

A. Statutory Authority for License Auctions

The petitioning trade association and incumbent licensees,

joined by the intervenors,5 challenge the FCC's authority

under 47 U.S.C. s 309(j)(1) to require that existing licensees

bid at auction when they seek to "modify" their present

licenses. Section 309(j)(1) requires:

If, consistent with the obligations described in paragraph

(6)(E), mutually exclusive applications are accepted for

any initial license or construction permit, then, except as

provided in paragraph (2), the Commission shall grant

the license or permit to a qualified applicant through a

system of competitive bidding that meets the requirements of this subsection.

47 U.S.C. s 309(j)(1). Section 309(j)(6)(E), in turn, provides:

"Nothing in this subsection, or in the use of competitive

bidding, shall ... (E) 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;...." Id.

s 309(j)(6)(E). In determining the Commission's authority

under this statute, "the court reviews the FCC's interpretation of the Communications Act under the now-familiar stan-

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these petitioners or any subgroup of them will be identified as

"licensee petitioners."

4 These petitioners, whose applications, filed between November

15, 1995 and February 8, 1996, were dismissed without action

because the FCC considered them mutually exclusive, are Robert

L. Wagner, Melvia M. Woods, Robert Horn, John Piskor, Mohammed Siddiqui and Lenard Travis.

5 The intervenors include AirTouch Paging, Arch Communications

Group, Inc., Metrocall, Inc., Nationwide Paging, Inc. and PowerPage, Inc.

dard set forth in Chevron U.S.A. Inc. v. Natural Resources

Defense Council, Inc., 467 U.S. 837, 842-843, 104 S.Ct. 2778,

81 L.Ed.2d 694 (1984), by which the court considers 'whether

Congress has directly spoken to the precise question at issue,'

id. at 842, and if it has not, 'whether the agency's answer is

based on a permissible construction of the statute.' Id. at

843." Community Television, Inc. v. FCC, Nos. 98-1106 et

al., slip op. at 5 (D.C. Cir. 2000). We conclude that, while the

cited statutory language is ambiguous, the Commission has

reasonably construed it to authorize the challenged auctions.

The petitioners first argue modified licenses are not "initial" licenses for which section 309(j)(1) authorizes competitive

bidding. In order for a license to be considered initial under

section 309(j)(1), "a newly issued license must differ in some

significant way from the license it displaces." Fresno Mobile

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Radio, Inc. v. FCC, 165 F.3d 965, 970 (D.C. Cir. 1999). In

Fresno we noted that "nothing in the text of [section 309(j)]

forecloses [the FCC] from considering a license 'initial' if it is

the first awarded for a particular frequency under a new

licensing scheme, that is, one involving a different set of

rights and obligations for the licensee." Id. The FCC

reasonably treated the incumbent licensees' applications for

modification under the new geographic system as applications

for "initial" licenses under such a "new licensing scheme."

The petitioners note that the two licensing schemes

provide the same paging service on the same frequencies,

basically provide fill-in sites and maintain the same licensee buildout

requirements. Nevertheless, they themselves acknowledge,

as they must, that the geographic license scheme has wrought

34fundamental alterations to the paging industry's market

structure and licensing schemes.34 Petitioners' Br. 30. Under

the geographic scheme non-incumbents can compete for the

available spectrum, however much remains, on equal footing

with incumbents and successful applicants have far greater

freedom in selecting transmitter locations; yet at the same time

new licensees assume much more responsibility for researching site

locations to protect incumbents from interference. Given the new

scheme's 34fundamental34 alterations, we hold the FCC reasonably

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treated modification applications by incumbents as 34initial34

applications within the meaning of section 309(j)(1).

The petitioners also assert the FCC shirked its duty under

section 309(j)(6)(E) to affirmatively avoid mutual exclusivity

by adopting the new licensing scheme, which necessarily

causes a high rate of mutual exclusivity at certain frequencies, and by creating "phantom" or "artificial" mutual exclusivity through the "All" box option and the "substantial

service" alternative. We reject this argument for substantially the same reason we rejected a similar argument raised in

DIRECTV v. FCC, 110 F.3d 816, 827-28 (D.C. Cir. 1997). In

DIRECTV the petitioners contended that "the Commission

lacked authority to adopt an auction rule under s 309(j)

because it did not first make sufficient efforts, while still

using the [previous] approach to the assignment of licenses, to

avoid mutual exclusivity among their applications."

DIRECTV, 110 F.3d at 828. We concluded, however:

Once the Commission had abandoned [its previous] methodology--for sufficient reasons, as we have seen--it was

faced with mutually exclusive applications. Nothing in

s 309(j)(6)(E) requires the FCC to adhere to a policy it

deems outmoded "in order to avoid mutual exclusivity in

... licensing proceedings"; rather, that provision instructs the agency, in order to avoid mutual exclusivity,

to take certain steps, such as the use of an engineering

solution, within the framework of existing policies.

Id. (quoting 47 U.S.C. s 309(j)(6)(E)). Similarly here, the

FCC reasonably abandoned the site-specific system in favor

of a geographic one, finding that "the public interest is better

served by licensing all remaining paging spectrum through a

geographic licensing scheme than by processing additional

site-specific licenses," Third R&O, 14 F.C.C.R. at 10,043,

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while "it would not be in the public interest to implement

other licensing schemes or other processes that avoid mutual

exclusivity," id at 10,042. The Commission further reasonably found that both the "All" box option and the substantial

service alternative were necessary to effectively implement

the new scheme--the former to "give[ ] bidders the flexibility

to pursue back-up strategies in the event they are unable to

obtain their first choice of licenses" and the latter to encourage service to rural areas as required under section 309(j)(3).

Third R&O, 14 F.C.C.R. at 10,081-82. Having found the

policy changes in the public interest, the Commission was

authorized to implement them without regard to section

309(j)(6)(E) which imposes an obligation only to minimize

mutual exclusivity "in the public interest," 47 U.S.C.

s 309(j)(6)(E), and "within the framework of existing policies," DIRECTV, 110 F.3d at 828. Thus, the FCC's authority

to adopt the new licensing scheme was not foreclosed by its

section 309(j)(6)(E) obligation.6

B. Notice to Incumbent Licensees

Next, the licensee petitioners and two of the intervenors

contend that geographic licensees should be required under

the new system to provide advance notice of new construction

to adjacent site-specific licensees, in order to warn them of

potential interference, as they are required to do for adjacent

geographic licensees. See Second R&O, 12 F.C.C.R. at 2765

App. A, s 22.503(h). Site-specific incumbent licensees, however, do not share geographic licensees' need for such warning because the existing rules furnish interference protection

through requirements "that govern transmitter height and

power, distance between transmission stations, the licensee's

protected service area, and/or the field strength of the licensee's service and interfering signals." Second R&O, 12

__________

6 The petitioners also challenge the "substantial service" standard

as too vague to permit the FCC to provide notice to licensees of

license termination, as required under 5 U.S.C. s 558(c). We find

adequate notice is provided, however, in the review procedure the

FCC requires before automatic termination can occur. See Brief of

Respondents at 28.

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F.C.C.R. at 2767.7 Geographic licensees, by contrast, enjoy no

similar protection from interference. Because of this distinction, we conclude the FCC reasonably accorded the two

groups different treatment.

C. PRA

Finally, the applicant petitioners and two intervenors claim

that the algorithm the FCC used to determine their applications should be dismissed for mutually exclusivity is a "collection of information" for which OMB approval was not obtained as required by the PRA.8 We disagree and hold that

the algorithm is not a "collection of information" under the

PRA.9 The PRA defines "collection of information" as "obtaining, causing to be obtained, soliciting, or requiring the

disclosure to third parties or the public, of facts or opinions

by or for an agency." 44 U.S.C. s 3502(3)(A). To come

within this definition the algorithm must impose a "reporting

requirement" on applicants. See Saco River Cellular, Inc. v.

FCC, 133 F.3d 25, 33 (D.C. Cir. 1998). It does not. The

algorithm simply blocks applications that meet specific criteria for mutual exclusivity. It is true, as the petitioners

assert, that "if an applicant is to ensure its basic acceptabili-

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7 In addition, geographic licensees are required to provide construction information upon request. See 47 C.F.R. s 22.529(c).

8 PRA section 3507(a) provides that "[a]n agency shall not conduct or sponsor the collection of information unless in advance of

the adoption or revision of the collection of information ... the

agency has" submitted the proposed collection of information to the

OMB Director, "the [OMB] Director has approved the proposed

collection of information ...; and ... the agency has obtained from

the [OMB] Director a control number to be displayed upon the

collection of information." 44 U.S.C. s 3507(a).

9 The FCC contests our jurisdiction over the claims of those

applicant petitioners who did not file a petition for reconsideration

of the FCC's dismissal of their applications. See 47 U.S.C.

s 155(c)(7). The FCC concedes, however, that the court has jurisdiction over at least one of the petitions. See Brief of Respondents

at 32. The PRA issue is therefore squarely before the court.

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ty," it must research in advance whether or not the license it

seeks meets the algorithm's criteria, Reply Brief at 24, but

the FCC does not require such research or that its results be

reported.10

For the foregoing reasons, the petitions for review are

Denied.

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10 The petitioners' alternative argument that the algorithm violates the Administrative Procedure Act, 5 U.S.C. s 553, because

promulgated without public notice and comment is waived because

the argument was raised for the first time in the petitioners' reply

brief. See Grant v. United States Air Force, 197 F.3d 539, 543

(D.C. Cir. 1999) ("[A]n argument first made in a reply brief comes

too late.") (citing Fraternal Order of Police v. United States, 173

F.3d 898, 902-03 (D.C. Cir. 1999)).

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