Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-96-01094/USCOURTS-caDC-96-01094-0/pdf.json

Parties Involved:
Bartholdi Cable Company, Inc.
Intervenor
Federal Communications Commission
Respondent
Paragon Communications
Petitioner
Time Warner Cable of New York City
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 9, 1997 Decided June 3, 1997 

No. 96-1030

BARTHOLDI CABLE COMPANY, INC.,

PETITIONER

v.

FEDERAL COMMUNICATIONS COMMISSION AND 

UNITED STATES OF AMERICA,

RESPONDENTS

TIME WARNER CABLE OF NEW YORK CITY AND 

PARAGON COMMUNICATIONS,

INTERVENORS

Consolidated with

No. 96-1094

-

Petitions for Review of an Order of the 

Federal Communications Commission

-

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Clifford M. Sloan argued the cause for petitioner Bartholdi 

Cable Company, Inc., with whom Robert L. Pettit and Robert 

L. Begleiter were on the briefs. Larry S. Solomon entered 

an appearance.

R. Bruce Beckner argued the cause for petitioner Time 

Warner Cable of New York City and Paragon Communications, with whom Arthur H. Harding and Jill Kleppe McClelland were on the briefs.

Joel Marcus, Counsel, Federal Communications Commission, argued the cause for respondent, with whom William E. 

Kennard, General Counsel, and Daniel M. Armstrong, Associate General Counsel, were on the brief. Catherine G. 

O'Sullivan and Nancy C. Garrison, Attorneys, United States 

Department of Justice, entered appearances.

Clifford M. Sloan argued the cause for Bartholdi Cable 

Company, Inc., as intervenor, with whom Robert L. Pettit and 

Robert L. Begleiter were on the brief. Larry S. Solomon

entered an appearance.

Arthur H. Harding, R. Bruce Beckner, and Jill Kleppe 

McClelland filed a brief for Time Warner Cable of New York 

City and Paragon Communications as intervenors.

Before: SILBERMAN, SENTELLE and GARLAND, Circuit Judges.

Opinion for the Court filed by Circuit Judge SENTELLE.

SENTELLE, Circuit Judge: Bartholdi Cable Co. ("Bartholdi") 

and Time Warner Cable of New York City ("Time Warner") 

petition for review of a Federal Communications Commission 

("FCC" or "Commission") order rejecting Bartholdi's claim 

that material it submitted to the Commission was protected 

from public disclosure by the attorney-client and workproduct privileges as well as Exemptions 4 and 6 of the 

Freedom of Information Act ("FOIA"), 5 U.S.C. § 552. For 

the reasons discussed below, we deny Bartholdi's petition for 

review and dismiss Time Warner's petition for lack of jurisdiction.

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I. Background

In 1991, the FCC authorized the licensing of radio frequencies known as operational fixed microwave service ("OFS") 

for the distribution of video programming to the public. 

Since that time, Bartholdi (formerly known as Liberty Cable 

Co., Inc.) has used OFS "paths" to provide multi-channel 

video programming to approximately 30,000 subscribers in 

apartment buildings in the New York metropolitan area.

In order for Bartholdi to provide its service lawfully, it 

must first obtain from the Commission an OFS license for 

each microwave path between a radio station and a receiver 

located on the roof of the building that contracted to receive 

Bartholdi service. In order to expedite provision of service to 

subscribers, Bartholdi has applied for and the Commission 

has granted Special Temporary Authority pursuant to 47 

U.S.C. § 309(f) and 47 C.F.R. § 101.31, allowing Bartholdi to 

provide service pending license approval.

In March 1995, Bartholdi applied to the FCC for a number 

of OFS licenses. Time Warner, a competitor of Bartholdi, 

petitioned to deny the applications. On May 5, 1995, in one of 

its petitions to deny Bartholdi's OFS license applications, 

Time Warner informed the Commission of its discovery that 

Bartholdi had begun using two OFS paths without licenses.

In the meantime, Bartholdi purportedly discovered that it 

had begun providing service to some buildings in New York 

without prior authorization from the Commission. Bartholdi 

admitted premature activation of service to the two buildings 

identified by Time Warner and "immediately" began investigating the cause of the premature activations. Bartholdi also 

disclosed to the Commission the existence of thirteen other 

prematurely activated buildings. As a result of these revelations, Bartholdi's chairman retained outside counsel to determine the cause of the premature activations and to institute a 

compliance program.

Outside counsel conducted an "exhaustive" investigation of 

Bartholdi's company records and interviewed all persons with 

relevant knowledge. Outside counsel then prepared a comUSCA Case #96-1094 Document #276163 Filed: 06/03/1997 Page 3 of 13
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prehensive report. The report contains a description of 

Bartholdi's internal business and licensing operations, information concerning Bartholdi's customers, the history of management breakdown that led to the premature activations, 

and the identity, functions, and performance evaluations of 

various Bartholdi personnel.

In light of Bartholdi's disclosed violations, the Chief of the 

FCC's Microwave Branch sent a letter to Bartholdi on June 

9, 1995, requesting that Bartholdi provide additional information concerning its unlicensed operations. In response to this 

request, Bartholdi submitted, inter alia, a chart showing the 

addresses, dates of commencement of service, and number of 

subscribers at each of the fifteen buildings that received 

unauthorized service. On the same day, Bartholdi's president 

informed the Wireless Telecommunications Bureau ("WTB") 

that "[a] complete investigation of this administrative foul-up 

is currently being conducted by outside counsel." Shortly 

thereafter, Bartholdi revealed an additional four instances of 

unlicensed service, bringing the total number to nineteen.

After that revelation, the Chief of the Enforcement Division of the WTB directed Bartholdi "to submit to the Commission the results of its recently conducted internal audit." 

Specifically, Bartholdi's report to the Commission was to list 

(1) "all of the OFS paths which [Bartholdi] has constructed 

and/or operated without authority," (2) "which of these unauthorized paths were not disclosed to the Commission in 

response to its letter of June [9], 1995," (3) "the date each 

unauthorized path was constructed and placed in operation," 

(4) "the number of subscribers currently being served by each 

new path," and (5) "whether [Bartholdi] is charging subscribers for service received via these unauthorized paths."

Several days later Bartholdi responded to the WTB's request by submitting a letter summarizing the findings of 

Bartholdi's outside counsel; a detailed list of unauthorized 

operations, number of subscribers, commencement dates, and 

charged subscribers; and the full text of the outside counsel's 

report as well as certain documents and communications 

attached to the report. These submissions were accompanied 

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by a request that they remain confidential under Exemptions 

4 and 6 of FOIA. Alternatively, to the extent the WTB 

determined that the submissions should not remain confidential, Bartholdi requested that the submissions be returned 

without consideration pursuant to 47 C.F.R. § 0.459(e). Bartholdi's request for confidentiality also made passing reference to the attorney-client and work-product privileges.

On September 13, 1995, the WTB denied Bartholdi's request for confidentiality and ordered that Bartholdi disclose 

the submitted materials to Time Warner and the general 

public. Bartholdi filed an application for review with the 

Commission on September 20, 1995, seeking reversal of the 

WTB's ruling. The application for review contained extensive 

discussion of Bartholdi's claims for confidentiality under Exemptions 4 and 6 of FOIA. However, the application contained no discussion of the attorney-client or work-product 

privileges, nor did it make mention of 47 C.F.R. § 0.459(e).

The Commission denied Bartholdi's application for review 

and "affirm[ed] the WTB's ruling in all ... respects." Liberty Cable Co., Inc., 11 F.C.C.R. at 2475, 2475 (1996). The 

Commission rejected Bartholdi's Exemption 4 confidentiality 

claim on the ground that Bartholdi failed to establish that 

disclosure of the information submitted to the Commission 

would result in "competitive harm." Id. at 2476. Alternatively, the Commission rejected the Exemption 4 claim on the 

ground that "public interest considerations favoring openness 

in ... licensing proceedings ... outweigh any need to protect 

the audit report from disclosure." Id. at 2477. Similarly, the 

Commission rejected Bartholdi's Exemption 6 claim on the 

ground that "significant public policy considerations warrant 

disclosure." Id. As for Bartholdi's privilege claims, the 

Commission noted that Bartholdi's application for review 

"does not even mention, let alone discuss, these privileges." 

Id. In any event, the Commission rejected the privilege 

claims on the ground that Bartholdi had failed "to provide 

any specific information or explanation to substantiate its 

generalized claims of privilege." Id. Bartholdi then sought 

and obtained an emergency stay from this court. This petition for review followed.

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II. Analysis

Bartholdi maintains that the Commission's decision was 

arbitrary and capricious. 5 U.S.C. § 706(2)(A). Under the 

arbitrary and capricious standard of review, we do not "substitute [our] judgment for that of the agency." Motor Vehicle 

Mfrs. Ass'n of the United States, Inc. v. State Farm Mutual 

Auto. Ins. Co., 463 U.S. 29, 43 (1983). Rather, we look only 

to see whether the agency action reflects a " 'clear error in 

judgment.' " Bell Atl. Tel. Cos. v. FCC, 79 F.3d 1195, 1202 

(D.C. Cir. 1996) (quoting Citizens to Preserve Overton Park v. 

Volpe, 401 U.S. 402, 416 (1971)).

A. Attorney-client and Work-product Privileges.

Bartholdi first contends that the Commission's rejection of 

the privilege claims does not reflect reasoned decisionmaking. 

We need not reach that issue as we conclude that Bartholdi's 

claims of privilege were not properly raised before the Commission. Section 405 of the Communications Act provides 

that the Commission must be afforded an "opportunity to 

pass" on an issue as a condition precedent to judicial review. 

47 U.S.C. § 405(a)(2). In this case, Bartholdi raised its 

privilege claims, if at all, only before the WTB. Bartholdi's 

application for review to the Commission made no mention of 

either the attorney-client or work-product privilege. Under 

the plain language of Section 405, an issue cannot be preserved for judicial review simply by raising it before a Bureau 

of the FCC. It is "the Commission" itself that must be 

afforded the opportunity to pass on the issue. Id.; cf. 

Parsippany Hotel Management Co. v. NLRB, 99 F.3d 413, 

418 (D.C. Cir. 1996) (holding that issue raised before ALJ, 

but not NLRB, was not preserved).

Bartholdi contends that it preserved the privilege claims by 

attaching an affidavit discussing the issue to its application 

for review filed with the Commission. In a similar vein, 

Bartholdi claims that a footnote in its application for review 

incorporating all claims made before the WTB was sufficient 

to preserve the issue for our review. We reject each of these 

arguments. The Commission "need not sift pleadings and 

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documents to identify" arguments that are not "stated with 

clarity" by a petitioner. See WAIT Radio v. FCC, 418 F.2d 

1153, 1157 (D.C. Cir. 1969), cert. denied, 409 U.S. 1027 (1972). 

It is the petitioner that has the "burden of clarifying its 

position" before the agency. Northside Sanitary Landfill, 

Inc. v. Thomas, 849 F.2d 1516, 1519 (D.C. Cir. 1988), cert. 

denied, 489 U.S. 1078 (1989). In this case, Bartholdi failed to 

carry that burden. Bartholdi "should have assumed at least a 

modicum of responsibility for flagging the relevant issues 

which its documentary submissions presented." Id.; see also 

Vermont Yankee Nuclear Power Corp. v. NRDC, 435 U.S. 

519, 553 (1978). By failing to do so, Bartholdi waived its 

privilege claims. Bartholdi, however, argues that even if it 

failed to raise the privilege claims before the Commission, the 

claims are properly before us because they were actually 

addressed by the Commission. We disagree. The mere fact 

that the Commission discusses an issue does not mean that it 

was provided a meaningful "opportunity to pass" on the issue. 

It is only through the adversarial process (or analogous 

circumstances) that the Commission is afforded such an opportunity within the meaning of § 405.

We, of course, recognize that § 405 does not require that 

the party seeking judicial review of an issue be the party that 

provided the Commission with the opportunity to pass on the 

issue. As a result, we have considered issues that were 

addressed by the Commission after being presented by someone other than the petitioner. E.g., Office of Communication 

of the United Church of Christ v. FCC, 779 F.2d 702, 707 

(D.C. Cir. 1983) (considering issue raised before the Commission by another party); Office of Communication of the 

United Church of Christ v. FCC, 465 F.2d 519, 523-24 (D.C. 

Cir. 1972) (considering issue raised by dissenting commissioners). But petitioner cites no case in which we held that the 

mere fact that the Commission addressed an issue was sufficient to preserve the issue for judicial review. Indeed, we 

have rejected such arguments in analogous contexts. Cf. 

Local 900 Int'l Union of Elec., Radio and Mach. Workers v. 

NLRB, 727 F.2d 1184, 1191 (D.C. Cir. 1984) (holding that 

discussion of an issue by the NLRB did not necessarily prove 

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1

Petitioner cites our opinion in Washington Ass'n for Children 

& Television, 712 F.2d 677, 682 & n.10 (D.C. Cir. 1983), where we 

stated that "it is not always necessary for a party to raise an issue, 

so long as the Commission in fact considered the issue." But that 

statement was at most dicta. Moreover, none of the cases cited in 

support of that statement involved the consideration of an issue by 

this or any other circuit in an adjudicatory proceeding when the 

issue was not presented to the Commission. 

compliance with § 10(e) of the NLRA requiring that issues be 

raised before the Board in order to obtain judicial review of 

such); Parsippany Hotel, 99 F.3d at 418 (holding that discussion of an issue in an ALJ opinion adopted by the Board was 

"insufficient to satisfy the requirements" of § 10(e) of the 

NLRA); Burkhart v. WMATA, No. 96-7163, slip op. at 15 

(D.C. Cir. May 16, 1997) (holding that district court's discussion of an alternative ground for its decision did not undermine its ruling that appellant's claim was untimely raised).1

In any event, Bartholdi's challenge to the Commission's 

ruling on the privilege claims must fail. The Commission 

rejected Bartholdi's claims of privilege on the ground that 

they were not "substantiate[d]." 11 F.C.C.R. at 2477. We 

have repeatedly held that the party claiming a privilege has 

the burden of "present[ing] to the court sufficient facts to 

establish the privilege." In re Sealed Case, 737 F.2d 94, 99 

(D.C. Cir. 1984). Bartholdi's application for review filed with 

the Commission made no mention of the attorney-client or 

work-product privileges, much less attempted to establish the 

existence of such. Under these circumstances, we cannot find 

the Commission's rejection of the privilege claims to be 

arbitrary or capricious.

B. FOIA.

Bartholdi further argues that its submissions to the Commission are protected from disclosure by FOIA. FOIA "requires agencies to comply with requests to make their records 

available to the public, unless the requested records fit within 

one or more of nine categories of exempt material." Oglesby 

v. United States Dep't of the Army, 79 F.3d 1172, 1176 (D.C. 

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Cir. 1996); 5 U.S.C. § 552. Bartholdi contends that its 

submissions fall within FOIA Exemptions 4 and 6.

1. Exemption 4.

Exemption 4 of FOIA provides that an agency need not 

disclose information that is "trade secrets and commercial or 

financial information obtained from a person and privileged or 

confidential." 5 U.S.C. § 552(b)(4). The test for whether 

information is "confidential" depends in part on whether the 

information was voluntarily or involuntarily disclosed to the 

government. If the information was voluntarily disclosed to 

the government, it will be considered confidential "if it is of a 

kind that would customarily not be released to the public by 

the person from whom it was obtained." Critical Mass 

Energy Project v. NRC, 975 F.2d 871, 879 (D.C. Cir. 1992) (en 

banc), cert. denied, 507 U.S. 984 (1993). If the information 

was obtained under compulsion, it will be considered confidential only "if disclosure ... is likely to have either of the 

following effects: (1) to impair the Government's ability to 

obtain necessary information in the future; or (2) to cause 

substantial harm to the competitive position of the person 

from whom the information was obtained." National Parks 

and Conservation Ass'n v. Morton, 498 F.2d 765, 770 (D.C. 

Cir. 1974).

Of course, the mere fact that information falls within a 

FOIA exemption does not of itself bar an agency from 

disclosing the information. Chrysler Corp. v. Brown, 441 

U.S. 281, 293 (1979). But we have held that information 

falling within Exemption 4 of FOIA also comes within the 

Trade Secrets Act, 18 U.S.C. § 1905, which prohibits the 

disclosure of, inter alia, "trade secrets" and "confidential 

statistical data." CNA Fin. Corp. v. Donovan, 830 F.2d 1132, 

1151 (D.C. Cir. 1987) (holding that "the scope of the [Trade 

Secrets] Act is at least co-extensive with that of Exemption 4 

of FOIA"), cert. denied, 485 U.S. 977 (1988). Thus, generally 

when "a party succeeds in demonstrating that its materials 

fall within Exemption 4, the government is precluded from 

releasing the information by virtue of the Trade Secrets Act." 

McDonnell Douglas Corp. v. Widnall, 57 F.3d 1162, 1164 

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(D.C. Cir. 1995). However, information otherwise protected 

by the Trade Secrets Act may be disclosed if "authorized by 

law." See 18 U.S.C. § 1905. The Supreme Court has held 

that the release of otherwise protected information to the 

public is "authorized by law" if permitted by a regulation that 

is: (1) "rooted in a grant of power by the Congress" to limit 

the scope of the Trade Secrets Act; (2) "substantive," rather 

than interpretive or procedural; and (3) consistent "with any 

procedural requirements imposed by Congress" such as the 

APA. Chrysler, 441 U.S. at 302-03.

Section 0.457 of the Commission's regulations permits disclosure of exempt materials to the extent "the policy considerations favoring non-disclosure" are outweighed by factors 

favoring disclosure. 47 C.F.R. § 0.457. The Commission has 

held that this regulation is "authorized by law" as that phrase 

was defined by the Supreme Court in Chrysler. In the 

Matter of Examination of Current Policy Concerning the 

Treatment of Confidential Information Submitted to the 

Commission: Notice of Inquiry, 11 F.C.C.R. 12406 (1996). 

Pursuant to § 0.457, the WTB ruled that "the public interest 

in disclosure of [Bartholdi's] materials would justify disclosure as a matter of our discretion even if the materials could 

be withheld under the FOIA." See Letter from Ralph A. 

Haller, Deputy Chief, WTB, to Henry M. Rivera et al., 

Counsel for Bartholdi 4 (Sept. 13, 1995). The Commission 

affirmed this conclusion in its order, holding that "public 

interest considerations favoring openness in our licensing 

proceedings outweigh any potential difficulty that the Government might experience in obtaining access to information in 

similar circumstances." 11 F.C.C.R. at 2477.

Bartholdi argues that § 0.457 of the Commission's regulations does not meet the definition of "authorized by law" 

under Chrysler. But Bartholdi did not raise this challenge 

before the Commission. Bartholdi's application for review 

made no mention of Chrysler. Because Bartholdi failed to 

challenge the validity of § 0.457 before the Commission, we 

decline to consider the issue. 47 U.S.C. § 405.

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Therefore, assuming the validity of § 0.457, we cannot 

conclude that the Commission acted arbitrarily in concluding 

that the public interest considerations in disclosure outweighed those in favor of confidentiality. As the Commission 

now explains, much of the information for which Bartholdi 

seeks confidential treatment is already publicly available. 

Moreover, the Commission concluded that the public has a 

compelling interest in the information at issue as it bears 

directly on Bartholdi's fitness as a license applicant. Bartholdi chastises the Commission for failing to articulate these 

rationales in its order. But a more explicit discussion in the 

Commission's order would have risked disclosure of the information Bartholdi was attempting to keep confidential. We 

cannot fault the Commission for attempting to maintain the 

confidentiality of Bartholdi's submissions pending judicial review.

2. Exemption 6.

Exemption 6 of FOIA permits the Government to withhold 

from public disclosure "personnel and medical files and similar files the disclosure of which would constitute a clearly 

unwarranted invasion of personal privacy." 5 U.S.C. 

§ 552(b)(6). The Commission held that "[t]he documents at 

issue are not medical files nor do we find them to be the type 

of records typically found in personnel files." 11 F.C.C.R. at 

2477. The Commission declined to determine whether Bartholdi's submissions constituted "similar files," because "even 

assuming a protectable privacy interest does exist," the Commission concluded "that significant public policy considerations warrant[ed] disclosure." Id. (footnote omitted).

Bartholdi does not challenge the Commission's conclusion 

that the submissions are not personnel or medical files. 

Rather, Bartholdi argues that the Commission improperly 

balanced the competing privacy and public interests at issue 

in deciding to release the submissions. In United States 

Dep't of Defense v. FLRA, the Supreme Court explained 

that to determine whether requested information falls within 

Exemption 6, " 'a court must balance the public interest in 

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disclosure against the interest Congress intended the [e]xemption to protect.' " 510 U.S. 487, 495 (1994) (quoting 

Department of Justice v. Reporters Comm. for Freedom of 

the Press, 489 U.S. 749, 776 (1989)) (alteration in original). 

"[T]he only relevant 'public interest in disclosure' to be 

weighed in this balance is the extent to which disclosure 

would serve the 'core purpose of the FOIA,' which is "contribut[ing] significantly to public understanding of the operations or activities of the government.' " Id. (quoting Reporters Comm., 489 U.S. at 775 (internal quotation marks 

omitted)) (alteration and emphasis in original). According 

to Bartholdi, the Commission's decision to allow public access to its submissions does not serve this core purpose of 

FOIA. We disagree.

Bartholdi's submissions consist of descriptions of Bartholdi's mismanagement of its employees. This information is 

clearly relevant to the public's understanding of the type of 

entities to which the government is distributing a valuable 

public asset, FCC licenses. On the other side of the scale, 

the Commission found only a "minor" privacy interest in 

protecting the identity of the individuals responsible for 

Bartholdi's violation given that these individuals have been 

identified in public documents filed with the Commission by 

Bartholdi. 11 F.C.C.R. at 2477. We cannot say that the 

Commission's balancing of these competing interests was arbitrary or capricious.

Moreover, even were Bartholdi correct that its submissions 

fall within Exemption 6, the Commission is not required to 

withhold the information from public disclosure. The fact 

that information falls within one of the FOIA exemptions does 

not necessarily mean that the agency cannot disclose the 

material. FOIA's exemptions simply permit, but do not 

require, an agency to withhold exempted information from 

the public. Chrysler Corp., 441 U.S. at 293. Unlike information falling within Exemption 4, information falling within 

Exemption 6 is not necessarily protected from disclosure by 

the Trade Secrets Act.

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C. 47 C.F.R. § 0.459(e).

Finally, Bartholdi contends that the Commission acted 

arbitrarily when it failed to return Bartholdi's submissions 

after rejecting its request for confidentiality. The Commission's regulations provide that when information is voluntarily 

submitted to the FCC, the Commission will "ordinarily" 

return the information "without consideration if the request 

for confidentiality should be denied." 47 C.F.R. § 0.459(e). 

Even assuming, arguendo, that Bartholdi's submissions to the 

Commission were voluntary, we need not determine whether 

the Commission acted arbitrarily in failing to return Bartholdi's submissions. This claim was not raised in Bartholdi's 

application for review to the Commission, and was thus 

waived. 47 U.S.C. § 405.

D. Ex Parte Rules.

Time Warner also petitions for review of the Commission's 

order, arguing that the Commission arbitrarily concluded that 

Bartholdi had not violated the FCC's ex parte rules. Because 

a ruling in Time Warner's favor would alter the reasoning, 

but not the outcome of this case, we dismiss Time Warner's 

petition for lack of jurisdiction. Radiofone, Inc. v. FCC, 759 

F.2d 936, 940 (D.C. Cir. 1985) (holding that "no standing 

exists to litigate an abstract dispute over the Commission's 

reasoning").

III. Conclusion

For the foregoing reasons, we conclude that Bartholdi's 

challenges to the Commission's order are without merit. Its 

petition for review is therefore denied. We also dismiss Time 

Warner's petition for lack of jurisdiction.

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