Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-97-01329/USCOURTS-caDC-97-01329-0/pdf.json

Parties Involved:
Federal Communications Commission
Respondent
PLMRS Narrowband Corp.
Petitioner
United States of America
Respondent

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 19, 1999 Decided July 16, 1999

No. 92-1432

PLMRS Narrowband Corp.,

Petitioner

v.

Federal Communications Commission and

United States of America,

Respondents

Consolidated with

92-1440, 97-1329, 97-1330, 97-1339, 97-1340

On Petitions for Review and Appeals of

Orders of the Federal Communications Commission

A. Thomas Carroccio argued the causes for petitioners/

appellants and filed the briefs for petitioner/appellant Columbia Capital Corporation.

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Richard S. Becker, James S. Finerfrock and Jeffrey E.

Rummel were on the briefs for petitioner/appellant PLMRS

Narrowband Corp.

K. Michele Walters, Counsel, Federal Communications

Commission, argued the cause for appellees. With her on the

brief were Joel I. Klein, Assistant Attorney General, U.S.

Department of Justice, Robert B. Nicholson and Marion

Jetton, Attorneys, Christopher J. Wright, General Counsel,

Federal Communications Commission, John E. Ingle, Deputy

Associate General Counsel, and Laurel R. Bergold, Counsel.

Before: Ginsburg, Randolph, and Rogers, Circuit Judges.

Opinion for the Court filed by Circuit Judge Ginsburg.

Ginsburg, Circuit Judge: In 1991 the Federal Communications Commission proposed to grant by lottery four licenses,

each comprising several land mobile radio channels in the

220-222 MHz range, designated for nationwide, noncommercial use; that is, the chosen licensee could use the

channels for its own internal communications needs but generally could not lease the channels to others. See Amendment of Part 90 of the Commission's Rules to Provide for the

Use of the 220-222 MHz Band by the Private Land Mobile

Radio Services, 6 F.C.C.R. 2356 (1991) (Original Order); 7

F.C.C.R. 4484 (1992) (Reconsideration Order); 8 F.C.C.R.

4161 (1993) (Second Reconsideration Order). Ultimately,

however, the Commission decided to assign the licenses by

auction rather than by lottery and to permit licensees to use

the channels for commercial as well as non-commercial purposes. See Third Report and Order; Fifth Notice of Proposed Rulemaking, 12 F.C.C.R. 10,943, p 6 (1997).

PLMRS Narrowband Corporation and Columbia Capital

Corporation, each of which filed applications under the Original Order, petition for review of the Reconsideration Orders

and of the Third Report and Order. They ask the court to

vacate those orders and to require the Commission to process

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their applications under the Original Order. We reject on its

merits the petitioners' challenge to the Third Report and

Order, and hence dismiss as moot their challenge to the

superseded Reconsideration Orders.

I. Background

Land mobile radio is used to send messages via radio

signals between a stationary transmission point and mobile

receiving units, in order to provide such services as cellular

telephony, paging, and the dispatch of taxicabs, delivery

vehicles, and police cars. See Telocator Network of Am. v.

FCC, 691 F.2d 525, 527 (1982). The four nationwide noncommercial licenses the Commission proposed to grant in

1991 were to be used primarily for the licensees' own internal

communications needs and, only insofar as a licensee had

excess capacity, to be leased to others. See Original Order, 6

F.C.C.R. 2356, p 37 (predicting "non-commercial nationwide

licensees will require full usage of their systems for their own

communications needs in the major metropolitan areas, but

may have excess capacity in [smaller] urban areas and in

rural areas"). In order to "minimize the filing of speculative

applications," id. p 48, the Commission limited the transferability of licenses, provided for automatic license revocation if

two-and four-year construction benchmarks were not met,

and required licensees to install base stations in at least 70

markets within ten years. Id. pp 49, 68, 83. The Commission

received 34 applications, including those of the two present

petitioners, for the four non-commercial licenses.

The following year the Commission, upon reconsideration,

further restricted the transferability of licenses and the commercial leasing of excess capacity, shortened the construction

deadlines, and required that an applicant demonstrate either

its actual presence, or a long-term business plan requiring

internal communications capacity, in the 70 or more markets

identified in its application. See Reconsideration Order, 7

F.C.C.R. 4484, pp 24-29. In 1993, upon further reconsideration, the Commission repealed the regulation permitting an

applicant to submit a long-term business plan and simply

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required that it have an actual presence in 70 or more

markets. See Second Reconsideration Order, 8 F.C.C.R.

4161, p 10.

Later that year the Congress authorized the Commission to

auction licenses for uses in which the licensee "receiv[es]

compensation from subscribers." Omnibus Budget Reconciliation Act of 1993, Pub L. No. 103-66, s 6002(a), 107 Stat. 312,

388 (formerly codified at 47 U.S.C. s 309(j)(2)(A)). In 1997

the Commission designated for such commercial use and

determined to assign by auction the four licenses it had

originally designated for non-commercial use and assignment

by lottery. The agency returned pending applications filed

under the rules promulgated for non-commercial use of the

four licenses. See Third Report and Order, 12 F.C.C.R.

10,943, pp 183-203.

II. Analysis

The petitioners challenge the Third Report and Order and

the Reconsideration Orders as arbitrary and capricious. See

5 U.S.C. s 706(2)(A). Under this deferential standard of

review we must affirm the Commission's decision if it examined the relevant information and gave a satisfactory explanation for its action, including a rational connection between the

facts found and the choice made. See Motor Vehicle Mfrs.

Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43

(1983).

A. PLMRS's Challenge to the Third Report & Order

Although it "expressly supports" the Commission's designation of the licenses for commercial use in the Third Report

and Order, PLMRS claims the Commission acted arbitrarily

and capriciously both in deciding to auction those licenses and

in returning the application it filed under the previously

promulgated rules. Its support for the Commission's designation of the licenses for commercial use in 1997 places in a

rather odd light its ultimate contention that the agency must

limit the applicant pool to entities that applied for the licenses

in 1991, when they were designated for non-commercial use.

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In permitting additional applicants to compete for the

newly-designated commercial licenses, the Commission explained:

[B]ecause the nature of the 220 MHz service is undergoing such substantial change, it would be unfair to preclude new applicants from having the opportunity to

apply for these 220 MHz licenses. In 1991, when the

pending applications were filed, parties interested in

using the 220 MHz spectrum may have decided not to

apply for these licenses because the rules precluded a

licensee from offering the type of service that these

parties desired to offer, such as primary fixed service,

paging, or nationwide commercial service.

Third Report and Order, 12 F.C.C.R. 10,943, p 200. PLMRS

claims there would be no such unfairness because the Commission had in the Original Order designated four other

licenses for nationwide commercial use. Anyone seeking a

commercial license in 1991, PLMRS reasons, had an opportunity to apply for it, and "nothing in the record supports the

FCC's finding that such entities opted out of the 1991 filing

process because the rules precluded the type of service that

these parties desired to offer."

This is a non sequitur. That one had an opportunity to

apply for other commercial licenses does not justify denying

one an opportunity to file for the formerly non-commercial

licenses once that restriction is lifted. In any case, PLMRS

itself represents that in 1991 there were 140 applicants for

the four commercial licenses. The Commission reasonably

concluded that some of those applicants may have decided not

to apply for the four licenses now at issue because they were

not then designated for commercial use. See id. (PLMRS

acknowledges that a commercial license is more valuable than

a non-commercial license.) When "an agency is obliged to

make policy judgments where no factual certainties exist or

where facts alone do not provide the answer, our role is ...

limited [to requiring] only that the agency so state and go on

to identify the considerations it found persuasive." Melcher

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v. FCC, 134 F.3d 1143, 1152 (D.C. Cir. 1998). The Commission easily meets that standard here.

The Commission also gave an affirmative reason grounded

in public policy for expanding the existing pool of applicants:

"Opening a filing window for all interested applicants ... will

increase the likelihood that competitive processes will trigger

the delivery of a broad array of services to customers at

reasonable prices." Third Report and Order, 12 F.C.C.R.

10,943, p 200. PLMRS does not even attempt to cast doubt

upon this justification for the Commission's change of course.

Instead PLMRS next argues that the Commission, by

returning all pending applications and electing to auction the

licenses, invited unreasonable delay because it was inevitable

that the original applicants would challenge those actions in

court. As the Commission noted in the final rule, however,

had it not returned the applications of PLMRS and others it

would just as certainly have faced a court challenge from

parties interested in obtaining commercial licenses. See id.

p 203. We give such a predictive judgment our deference, of

course. See Melcher, 134 F.3d at 1152; FCC v. National

Citizens Comm. for Broad., 436 U.S. 775, 814 (1978) ("[A]

forecast of the direction in which future public interest lies

necessarily involves deductions based on the expert knowledge of the agency"). Deference aside, we do not endorse

PLMRS's suggestion that an agency must gauge the public

interest with reference to the litigation incentives facing

private parties. To charge an agency with the delay imposed

upon it by others--in effect to encourage the agency to adopt

the course found least objectionable to interested parties--

would hardly seem to further the public interest, and would

create a perverse incentive for parties to threaten the agency

with litigation.

PLMRS also contends that because the Commission in 1993

granted the four licenses it had designated for nationwide

commercial use under the Original Order, the agency acted

arbitrarily and capriciously by failing to process PLMRS's

application at the same time. As the agency explains, however, it processed the commercial applications in 1993 because

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the rules promulgated in the Original Order to govern nationwide commercial licenses had become final and were not

subject to further agency reconsideration. The Commission

did not process the applications for nationwide noncommercial licenses in 1993 because there were pending

before it three petitions for reconsideration of the rules

governing assignment of those licenses. See Notice: November 19, 1992, Date Established for Commercial Nationwide

220-222 MHz Band Applicants to File Application Amendments to Satisfy Entry Criteria, 57 Fed. Reg. 49,475, 49,475

(1992). We see nothing arbitrary or capricious in the Commission's decision to defer issuing licenses until it has finally

settled upon the rules for doing so. See Chadmoore Communications v. FCC, 113 F.3d 235, 242 (D.C. Cir. 1997) (holding

disparate treatment arbitrary only if parties are similarly

situated).

PLMRS's final two contentions, made only in passing, may

be rejected in kind; neither raises a question open in this

circuit. First, PLMRS did not, by virtue of filing its application, obtain the right to have it considered under the rules

then applicable. See id. at 241. Second, because PLMRS

obtained no such right, the Commission's subsequent change

in the regulations was not retroactive, let alone impermissibly

retroactive, rulemaking. See DIRECTV, Inc. v. FCC, 110

F.3d 816, 825-26 (D.C. Cir. 1997) (holding that because

Commission's original order did not grant right to any particular broadcast channels, subsequent decision to auction those

channels not retroactive though it upset expectations based

upon prior law).

We therefore conclude that the Commission's decision to

auction the licenses and to return PLMRS's application was

neither arbitrary nor capricious.

B. Columbia's Challenge to the Third Report and Order

The Commission may not base a decision to designate a

band of frequencies for a particular use upon "the expectation

of Federal revenues from the use of a system of competitive

bidding." 47 U.S.C. s 309(j)(7)(A). Columbia claims the

Commission did just that, however, when it designated for

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commercial use the channels covered by the four licenses at

issue in this case. For this it relies exclusively upon the

videotape of a meeting at which the five-member Commission

voted unanimously to approve the notice of proposed rulemaking that led a year and one-half later to the Third Report

& Order. See Second Memorandum Opinion and Order and

Third Notice of Proposed Rulemaking, 11 F.C.C.R. 188

(1995).

At that meeting two of the five Commissioners mentioned

the expectation of federal revenues. Commissioner Susan

Ness elicited from the Commission staff the estimate that

proceeds of an auction would be "in the neighborhood of a

quarter-billion dollars." She also commented that the 33

remaining original applicants "include some of the largest

U.S. Companies--AT&T, UPS, GE to name a few. These

national companies can afford to return to the U.S. taxpayer a

little of the value of the spectrum." Chairman Reed Hundt

stated, "I suppose we could hold an auction. I suppose we

could hold a comparative hearing, too, ... on the following

basis. The one who wants to give us the most money wins

the hearing." Columbia argues that these statements show

the Commission violated s 309(j)(7)(A), that is, designated the

licenses to commercial use based "principally, if not exclusively, [upon] the FCC's commitment to convert the nationwide

220 MHz spectrum into federal revenues."

The Commission claims it did not base its decision upon the

expectation of revenues. It points out that the Third Report

and Order makes no mention of such impermissible considerations, but rests solely upon legitimate justifications, such as

promoting efficient nationwide communication services at reasonable prices, promoting the development of new technologies, and ensuring that licenses go to those who value them

most. See 12 F.C.C.R. 10,943, pp 47, 202.

It is fundamental that "[a]gency opinions, like judicial

opinions, speak for themselves." Checkosky v. SEC, 23 F.3d

452, 489 (D.C. Cir. 1994). Rendered at the conclusion of all

the agency's processes and deliberations, they represent the

agency's final considered judgment upon matters of policy the

Congress has entrusted to it. Accordingly, "[w]here an agenUSCA Case #97-1329 Document #449847 Filed: 07/16/1999 Page 8 of 11
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cy has issued a formal opinion or a written statement of its

reasons for acting, transcripts of agency deliberations at

Sunshine Act meetings should not routinely be used to impeach that written opinion." Kansas State Network v. FCC,

720 F.2d 185, 191 (D.C. Cir. 1983).

We do not think the evidence that two Commissioners

initially flirted with an impermissible rationale suffices to

demonstrate that the permissible rationale given a year and

one-half later in the Commission's published opinion was a

mere pretext. Otherwise, it would seem, almost any slip of

the tongue during an agency's decisionmaking process could

be fatal, contrary to the settled principle that "[u]p to the

point of announcement, agency decisions are freely changeable, as are the bases of those decisions." Checkosky, 23 F.3d

at 489.

Columbia next claims that Chairman Hundt prejudged the

question whether to assign the licenses by auction. In August 1995, before the Commission issued the Third Notice of

Proposed Rulemaking, the Chairman unveiled in a speech the

Commission's "lineup of upcoming auctions," including the

auction in the third quarter of 1996 of the licenses at issue

here. The Washington Legal Foundation then petitioned the

Commission requesting that the Chairman recuse himself

from voting upon the auction issue on the ground that he

would be unable to give meaningful consideration to the

public comments opposing an auction and favoring a lottery.

Chairman Hundt did not recuse himself, and indeed voted to

adopt the Third Report and Order, as did all the Commissioners.

The day after the public release of that order Chairman

Hundt responded to the WLF's petition. He explained that

his 1995 statements indicated only his preliminary views, that

his announcement of tentative auction dates "included all

potential services to be licensed" by auction in 1996, and that

the Commission must begin to plan for an auction "well in

advance of any final Commission decision to authorize [one]."

Letter from Chairman Hundt to Washington Legal Found.

(March 13, 1997).

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Generally, we are unable to view the motivations of an

agency official except as through a glass, darkly, and the

glass may be tinted not by the official's unalterable prejudgment but by legitimate policy preconceptions; in a particular

instance, the cause may be exceedingly difficult to discern.

In order to avoid trenching upon the agency's policy prerogatives, therefore, we presume that policymakers approach

their quasi-legislative task of rulemaking with an open

mind--but not an empty one. See Lead Indus. Ass'n v. EPA,

647 F.2d 1130, 1179 (D.C. Cir. 1980) ("Agency decisionmakers

are appointed precisely to implement statutory programs, and

so inevitably have some policy preconceptions"); United

Steelworkers of Am. v. Marshall, 647 F.2d 1189, 1208 (D.C.

Cir. 1980) ("An administrative official is presumed to be

objective [and] mere proof that [he or] she has taken a public

position, or has expressed strong views, or holds an underlying philosophy with respect to an issue in dispute cannot

overcome that presumption").

Columbia's burden is to make a "clear and convincing

showing that [Chairman Hundt had] an unalterably closed

mind on matters critical to the disposition of the proceeding."

Association of Nat'l Adver. v. FTC, 627 F.2d 1151, 1170 (D.C.

Cir. 1979). That it has not done. Even if we assume

Chairman Hundt was predisposed in favor of auctions as a

matter of policy, that alone would not imply that he was

unwilling to consider arguments to the contrary.

In sum, Columbia has not shown that the Commission

decided to auction the licenses based upon the impermissible

expectation of federal revenues. Neither has it shown that

Chairman Hundt should have disqualified himself because he

had unalterably decided to vote for an auction even before the

period for public comment had opened.

III. Conclusion

For the foregoing reasons, we reject the petitioners' challenge to the Third Report and Order. Because the Third

Report and Order superseded the disputed portions of the

Reconsideration Orders, see 12 F.C.C.R. 10,943, p 6, their

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challenge to the Reconsideration Orders is moot. Accordingly, the petitions for review are

Denied.

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