Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-02-01093/USCOURTS-caDC-02-01093-0/pdf.json

Parties Involved:
Federal Communications Commission
Respondent
Miller Communications, Inc.
Petitioner
Ranger Cellular
Petitioner
United States of America
Respondent

Document Text:

Notice: This opinion is subject to formal revision before publication in the

Federal Reporter or U.S.App.D.C. Reports. Users are requested to notify

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before the bound volumes go to press.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 11, 2003 Decided July 1, 2003

No. 02-1093

RANGER CELLULAR AND MILLER COMMUNICATIONS, INC.,

PETITIONERS

v.

FEDERAL COMMUNICATIONS COMMISSION AND

UNITED STATES OF AMERICA,

RESPONDENTS

On Petition for Review of an Order of the

Federal Communications Commission

Donald J. Evans argued the cause and filed the briefs for

petitioners.

Stanley R. Scheiner, Counsel, Federal Communications

Commission, argued the cause for respondents. With him on

the brief were R. Hewitt Page, Acting Assistant Attorney

General, U.S. Department of Justice, Catherine G. O’Sullivan, Chief Counsel, Andrea Limmer, Attorney, John A.

 Bills of costs must be filed within 14 days after entry of judgment.

The court looks with disfavor upon motions to file bills of costs out

of time.

USCA Case #02-1093 Document #757152 Filed: 07/01/2003 Page 1 of 12
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Rogovin, Deputy General Counsel, Federal Communications

Commission, and Daniel M. Armstrong, Associate General

Counsel. Pamela L. Smith, Counsel, entered an appearance.

Before: GINSBURG, Chief Judge, and EDWARDS and GARLAND,

Circuit Judges.

Opinion for the Court filed by Chief Judge GINSBURG.

GINSBURG, Chief Judge: Ranger Cellular and Miller Communications, Inc. (sometimes hereinafter referred to collectively as Ranger) petition for review of an order in which the

Federal Communications Commission interpreted a provision

in the Balanced Budget Act of 1997, Pub. L. No. 105–33, 111

Stat. 251, 47 U.S.C. § 309(l ), to allow new applicants to apply

for certain cellular telephone licenses. Ranger, which had

submitted an application for a cellular license several years

beforehand, argues that providers of cellular telephone service are ‘‘commercial radio or television stations’’ within the

meaning of 47 U.S.C. § 309(l ), for which the Commission

may not accept new applications. The petitioner also claims

that, even if the statute did not bar new cellular applications,

the Commission departed from precedent in holding that the

public interest would be served by its accepting new applications, and that the Commission opened the applicant pool with

the unlawful purpose of enhancing federal revenues, in violation of 47 U.S.C. § 309(j)(7)(B). We reject Ranger’s arguments and deny the petition for review.

I. Background

Prior to 1993 the Commission awarded licenses for use of

the radio spectrum through either a comparative hearing or a

lottery. Lottery entrants would file a simple application and

pay a nominal fee. The Commission then held the lottery and

determined a winner, subject to the losing parties’ right to

file a petition to disqualify the winner. If the winner was

disqualified, then the Commission held another lottery. After

1986 the Commission used the lottery system exclusively to

assign all cellular licenses.

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The comparative hearing process, which required each

party to present a detailed case to the Commission showing

why it should win the license, was far more complex and often

led to protracted litigation. See, e.g., Bechtel v. FCC, 957

F.2d 873 (D.C. Cir. 1992); DOUGLAS H. GINSBURG, MICHAEL H.

BOTEIN, & MARK D. DIRECTOR, REGULATION OF THE ELECTRONIC

MASS MEDIA: LAW AND POLICY FOR RADIO, TELEVISION, CABLE AND

THE NEW VIDEO TECHNOLOGIES 85–134 (West 2d ed. 1991). The

Commission had used the comparative hearing process to

choose among competing applications for broadcast stations

since the decision in Ashbacker Radio Corp. v. FCC, 326 U.S.

327 (1945).

Ranger and Miller filed applications in 1988 and 1989

respectively to participate in a lottery for certain Rural

Service Area (RSA) cellular telephone licenses. The Commission awarded most of the licenses but by the mid–1990s

six licenses for RSAs were still pending due to the disqualification or withdrawal of the original winner. The Commission

then granted interim operating authority (IOA) to cellular

telephone licensees in adjacent areas to provide service until

such time as the Commission awarded a permanent license.

See In the Matter of Implementation of Competitive Bidding

Rules to License Certain Rural Service Areas, Notice of

Proposed Rule Making, 16 FCC Rcd. 4296, ¶ 9 & n.21 (2001).

Meanwhile, the Congress, in the Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 103–66, § 6002(a), 107 Stat.

312, 387, had amended the Communications Act of 1934 by

adding § 309(j), 47 U.S.C. § 309(j), which authorized the

Commission to award almost all spectrum licenses by competitive bidding and limited the use of lotteries. With respect to

cellular telephone licenses in particular, the 1993 legislation

provided that the Commission: ‘‘shall not issue any license or

permit [by lottery] TTT unless TTT one or more applications

for such license were accepted for filing by the Commission

before July 26, 1993.’’ § 6002(e), 107 Stat. at 397. Having

been given the option of proceeding by lottery or by competitive bidding to award such grandfathered licenses, the Commission decided initially to use a lottery, see In the Matter of

Implementation of Section 309(j) of the Communications

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Act–Competitive Bidding, 9 FCC Rcd. 7387 (1994), but then

decided to study the matter further. See Public Notice,

Wireless Telecommunications Bureau Postpones Cellular

Telecommunications Service Lottery for Rural Service Areas,

Mimeo No. 65051 (Sept. 10, 1996).

Before the Commission had finally decided how to award

cellular telephone licenses, however, the Congress passed the

Balanced Budget Act of 1997, Pub. L. No. 105–33, § 3002(a),

111 Stat. 251, which amended § 309(j) by requiring the

Commission to use competitive bidding (except in a few

specifically enumerated circumstances) and terminated the

Commission’s authority to use a lottery (except for a small

class of broadcast licenses). See 47 U.S.C. § 309(i). More

important for the purposes of this case, the Congress amended the Communications Act of 1934 by adding § 309(l ), which

states, under the heading ‘‘Applicability of competitive bidding to pending comparative licensing cases,’’ that:

With respect to competing applications for initial licenses

or construction permits for commercial radio or television stations that were filed with the Commission before

July 1, 1997, the Commission shall TTT treat the persons

filing such applications as the only persons eligible to be

qualified bidders for purposes of such proceeding.

(Emphasis added). This section bars the Commission from

accepting new applications for certain ‘‘commercial radio or

television stations.’’ The Conference Report on the 1997 Act

described the scope of this provision as follows:

The conferees adopted a new provision with respect to

the applicability of competitive bidding to pending comparative licensing cases. New section 309(l ) of the

Communications Act requires the Commission to use

competitive bidding to resolve any mutually exclusive

applications for radio or television broadcast licenses

that were filed with the Commission prior to July 1, 1997.

H.R. Conf. Rep. No. 217, 105th Cong., 1st Sess. at 573 (1997)

(emphasis added).

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Against this background, the Commission in April 1999

dismissed all pending applications for the cellular telephone

licenses at issue in this case because it was ‘‘without authority

to process the pending mutually exclusive RSA applications

pursuant to the rules and requirements [of the lottery system] under which they were filed.’’ In the Matter of Certain

Cellular Rural Service Area Applications, 14 FCC Rcd. 4619,

¶ 5 (WTB 1999). In 2001 the Commission proposed to open

eligibility with respect to the auctions it would hold for the

pending RSA cellular telephone licenses. See Implementation of Competitive Bidding Rules, 16 FCC Rcd. ¶ 1. After

receiving comments the Commission issued the order here

under review. In the Matter of Implementation of Competitive Bidding Rules to License Certain Rural Service Areas,

17 FCC Rcd. 1960 (2002) (Order).

The Commission rejected Ranger’s argument that the term

‘‘commercial radio or television stations’’ in § 309(l ) included

cellular telephone licenses and therefore required the Commission to limit the pool of bidders to those who had filed an

application prior to July 1, 1997. The Commission reasoned

that the statute – by its terms and in accordance with its

purpose and its legislative history – in using the phrase

‘‘commercial radio and television stations’’ referred only to

broadcast stations and therefore did not cover cellular telephone services. The Commission went on to decide that

competitive bidding with open eligibility would best serve the

public interest: ‘‘the bidder who is willing to pay the most will

be highly motivated to rapidly put the license to a use that

the public finds valuable because only such a use will make its

investment worthwhile.’’ Id. ¶ 13. The Commission also

rejected Ranger’s comment that an auction would violate 47

U.S.C. § 309(j)(7)(b), which prohibits the Commission, in

making certain regulatory decisions, from ‘‘bas[ing] a finding

of public interest, convenience, and necessity solely or predominantly on the expectation of Federal revenues from the

use of a system of competitive bidding under this subsection.’’

The Commission explained: ‘‘Our determination to permit

open eligibility in the RSA auction is based on our statutory

obligations to promote competition and rapid deployment of

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services to rural areas, not to enhance the Federal Treasury.’’

Id. ¶ 21.

The Commission conducted the auction for the RSA cellular

licenses on June 4, 2002. Ranger did not participate.

II. Analysis

On appeal Ranger argues first that the Commission’s interpretation of § 309(l ) conflicts with the plain meaning of, and

in any event, is not a reasonable reading of, the statute.

Second, the petitioner maintains the Commission could not,

consistent with precedent specifying the relevant equitable

considerations, conclude that the public interest favored opening the auction to new applicants. Finally, the petitioner

contends the Commission opened the auction unlawfully in

order to maximize federal revenues.

We consider Ranger’s first argument under the familiar

two-step analysis of Chevron U.S.A., Inc. v. Natural Resource

Defense Council, Inc., 467 U.S. 837 (1984). First we determine ‘‘whether Congress has directly spoken to the precise

question at issue;’’ if the Congress has so spoken, then ‘‘the

court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.’’ Id. at 842–43. If,

however, ‘‘the statute is silent or ambiguous with respect to

the specific issue,’’ then we go on to determine ‘‘whether the

agency’s answer is based on a permissible construction of the

statute.’’ Id. at 843. With respect to Ranger’s other two

arguments, our review is limited to determining whether the

Order is ‘‘arbitrary, capricious, an abuse of discretion, or

otherwise not in accordance with law.’’ 5 U.S.C. § 706(2)(A).

A. Section 309(l )

Section 309(l ) required the Commission, with respect to

pending comparative license cases involving applications ‘‘for

commercial radio or television stations,’’ to limit the pool of

applicants to those who had filed ‘‘competing applications for

initial licenses or construction permits’’ before July 1, 1997.

The Commission determined that a cellular telephone license

is not a license for a ‘‘commercial radio or television station’’

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because the quoted phrase denotes only broadcast stations.

Order, 17 FCC Rcd. ¶ 17.

Ranger offers several non-frivolous arguments that

§ 309(l ) must be read to apply to licenses to provide cellular

telephone service. First, Ranger notes that cellular service is

regulated as a ‘‘commercial mobile radio service,’’ 47 C.F.R.

§ 20.9(a), which seems to place it neatly within the more

general class of ‘‘commercial radio and television stations’’

referenced in § 309(l ). Relatedly, according to Ranger,

when the Congress wanted to refer only to a broadcast

station, it said either ‘‘broadcast station’’ or ‘‘broadcasting

station.’’ See, e.g., 47 U.S.C. §§ 307(c), 311(c)(1), 315. Second, Ranger argues that the inclusion of the phrase ‘‘initial

licenses or construction permits’’ in § 309(l ) indicates the

Congress intended to cover more than just broadcast stations

because the Commission issues a ‘‘construction permit’’ only

for a broadcast station, whereas an ‘‘initial license’’ is issued

for a common carrier radio or a commercial mobile radio

service. Therefore, the argument goes, the Commission’s

reading renders the phrase ‘‘initial license’’ superfluous.

Ranger also points out that the Commission has sometimes

referred to commercial mobile radio service as ‘‘commercial

radio.’’ See, e.g., In re Application of 360 Degrees Communications Company, 14 FCC Rcd. 2005 (1998). Finally, Ranger

argues that we should disregard the legislative history of

§ 309(l ) because it contravenes the plain meaning of the

statute–which, of course, we would do if the meaning of the

statute is plain on its face. See Ratzlaf v. United States, 510

U.S. 135, 147–48 (1994) (‘‘[W]e do not resort to legislative

history to cloud a statutory text that is clear’’).

Although not without force, Ranger’s arguments do not

demonstrate that § 309(l ) simply must be read as applying to

cellular telephone licenses. First, the phrase ‘‘commercial

radio and television stations’’ is not defined, nor is it used, in

the 1997 Act outside the provision adding § 309(l ) to the

Communications Act. The Commission points out that the

phrase ‘‘commercial radio’’ had been used, however, in both

the Communications Act and the regulations promulgated

thereunder, to mean only broadcast radio. See, e.g., 47

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U.S.C. § 158(g), 47 C.F.R. §§ 73.3526(e)(14), 73.3555(c)(2).

The Commission then makes the point that the conjunction of

‘‘television stations,’’ which are unquestionably engaged in

broadcasting, with ‘‘commercial radio’’ in the same phrase

suggests the Congress meant to cover only broadcast media,

and thereby casts serious doubt upon the interpretation advanced by Ranger.

Furthermore, the heading of § 309(l ) strongly favors the

Commission’s view that it does not apply to cellular telephone

service. The heading – which was part of the 1997 Act, not a

later addition by the Reviser – refers to ‘‘pending comparative licensing cases.’’ This implies that the provision is

inapplicable to cellular telephone services, licenses for which

have not been the subject of comparative hearings since at

least 1986. On the other hand, as of 1997 broadcast licenses

had for more than 50 years been awarded through comparative hearings. The reference to comparative licensing in

§ 309(l ) therefore implies the Congress meant to apply that

section only to broadcast stations.

Hence we turn to the legislative history of § 309(l ), which,

although of distinctly lesser weight than an argument from

the text of the 1997 Act, also supports the reading that limits

§ 309(l ) to broadcast licenses. The Committee Report describes § 309(l ) specifically as applying to ‘‘any mutually

exclusive applications for radio or television broadcast licenses,’’ not to the broader category of licenses for all radio and

television stations. H.R. Conf. Rep. No. 217 at 573 (emphasis

added). The use of the modifier ‘‘broadcast’’ in the report

clearly implies that the Congress intended to limit the scope

of § 309(l ) to broadcast licenses.

We are led to conclude that the Congress has not directly

spoken to the question whether § 309(l ) covers only broadcast stations; the statute simply is not unambiguous on that

score. We must go on to determine, therefore, whether the

Commission has offered a reasonable interpretation of

§ 309(l ).

From the foregoing discussion of the parties’ positions, it is

obvious that, for the same reasons the Commission’s arguUSCA Case #02-1093 Document #757152 Filed: 07/01/2003 Page 8 of 12
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ments cast doubt upon the clarity of § 309(l ), the agency

offers a reasonable interpretation of the statute. Not surprisingly, therefore, Ranger proffers no reason to reject the

Commission’s interpretation apart from the reasons for which

it argued the meaning of the statute is plainly otherwise.

Again, the Commission has shown that § 309(l ), viewed in

the context of the 1997 Act, supports a reading that covers

only broadcast stations. Although this reading is not the only

possible interpretation of § 309(l ), it is certainly a reasonable

one and therefore commands our deference.

B. Public Interest

Ranger contends the Commission neither followed nor distinguished its precedents for determining whether to open a

pending applicant pool to newcomers, citing Competitive Bidding in the Broadcast Services, 13 FCC Rcd. 15920 (1998);

and Filing Procedures in the MDS and ITFS Services, 10

FCC Rcd. 9589 (1995) (MDS Order). According to the

petitioner, the Commission failed to take account of the

ordinary equitable considerations applicable to this issue,

namely, the length of time the original applications had been

pending (13 to 14 years), the number of original applicants

(3), the potential for delay occasioned by opening the filing

window, and whether the licenses to be auctioned were identical to those for which the original applications were filed

(which they were). See, e.g., MDS Order, 10 FCC Rcd.

¶ ¶ 87–95. Ranger maintains that consideration of these factors leads inexorably to the conclusion that the Commission

should not have accepted new applications.

We think the Commission reasonably applied appropriate

factors to the circumstances of this case. The Commission

first opined that open eligibility ‘‘generally favor[s]’’ the public interest because ‘‘maximizing the pool of auction applicants

helps to ensure that licenses are awarded to entities that

value them most highly and are, therefore, most likely to

offer prompt service to the public.’’ Order, 17 FCC Rcd.

¶ 10. Opening the pool would be particularly useful in this

case because otherwise there would be only three eligible

bidders. Id. ¶ 19. Another ‘‘important factor in [the ComUSCA Case #02-1093 Document #757152 Filed: 07/01/2003 Page 9 of 12
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mission’s] decision’’ was that the licenses covered rural areas,

for which the Commission has a special responsibility under

§ 309(j)(4)(B) to promote the rapid development of service.

Id. ¶ 14. And, the Commission added, the IOA licensees

‘‘may have a substantial interest in bidding for permanent

authorizations in markets where they have been providing

interim cellular service,’’ id. ¶ 15.

The Commission has also properly distinguished its precedents. The MDS Order, the Commission noted, addresses

not issues of eligibility, see Order, 17 FCC Rcd. ¶ 18 n.61, but

whether to hold an auction or to conduct a lottery for the

licenses there in question. MDS Order, 10 FCC Rcd. ¶ 88.

In addition, the Commission explained that the concern expressed in Competitive Bidding in the Broadcast Services –

that reopening the filing window would not ‘‘expedite TTT the

commencement of service to the public,’’ 13 FCC Rcd. ¶ 108 –

did not obtain in this case because customers in the RSAs

were already receiving cellular telephone service from the

IOA licensees. See Order, 17 FCC Rcd. ¶ 9 n.29. We

conclude the Commission considered the relevant factors and

did not act in an arbitrary and capricious manner in applying

the public interest standard.

C. Revenue Enhancement

Finally, Ranger argues the Commission violated 47 U.S.C.

§ 309(j)(7)(B), which provides that ‘‘in prescribing regulations

pursuant to Paragraph 4(A) of this subsection, the Commission may not base a finding of public interest, convenience

and necessity solely or predominantly on the expectation of

Federal revenues from the use of a system of competitive

bidding under this subsection.’’ Specifically, Ranger contends the Commission opened the bidding to newcomers

‘‘solely or predominantly’’ for the purpose of enhancing what

the licenses would fetch.

The Commission argues first that § 309(j)(7)(B) ‘‘applies

only in specifically-enumerated circumstances, of which determining eligibility to participate in an auction does not appear

to be one.’’ The Commission maintains that, on the contrary,

it ‘‘is charged with assigning spectrum to the party that

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places the highest value on the use of the spectrum, because

that party is presumed to be most likely to use the licenses

efficiently.’’

The Commission clearly has the better of the argument

here: Section 309(j)(7)(B) simply does not apply to this case.

It applies only to regulations concerning ‘‘alternative payment

schedules and methods of calculation’’ to be used in specifying

the methodology of competitive bidding. So far as

§ 309(j)(7)(B) is concerned, therefore, the Commission is free

to consider revenue enhancement when determining whether

to expand the pool of eligible bidders.

Unfortunately, the Commission did not notice that

§ 309(j)(7)(B) was inapplicable to this proceeding until briefing the matter to this court. In the Order itself the Commission instead explained why it was in compliance with that

provision. We do not ordinarily consider an argument made

for the first time on review. District of Columbia v. Air

Florida, Inc., 750 F.2d 1077, 1084 (D.C. Cir. 1984) (‘‘It is well

settled that issues and legal theories not asserted at the

District Court level ordinarily will not be heard on appeal’’).

In this case, however, we have no qualms about doing so: The

statute is clearly inapplicable. Indeed, Ranger does not

suggest otherwise, resting instead upon the Commission’s

tardiness in raising the point.

We would be tilting at a non-existent windmill were we to

consider whether the Commission has complied with an inapplicable statute. Cf. United States Nat’l Bank of Oregon v.

Independent Ins. Agents of America, Inc., 508 U.S. 439, 447

(1993) (‘‘a court may consider an issue antecedent to TTT and

ultimately dispositive of the dispute before it, even an issue

the parties fail to identify and brief’’) (internal quotation

marks omitted); Hormel v. Helvering, 312 U.S. 552, 557

(1941) (‘‘There may always be exceptional cases or particular

circumstances which will prompt a reviewing or appellate

court, where injustice might otherwise result, to consider

questions of law which were neither pressed nor passed upon

by the court or administrative agency below’’). Surely, even

if it has not complied, we would not, knowing that the statute

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is inapplicable, require the Commission to close the auction to

newcomers; to do so would thwart the clearly stated will of

the Congress because of a temporary oversight by the Commission.

III. Conclusion

We conclude that the Commission offered a reasonable

interpretation of an ambiguous statute, justified its decision

under the public interest standard, and was not subject to 47

U.S.C. § 309(j)(7)(B). For those reasons the petition for

review is

Denied.

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