Opinion ID: 185067
Heading Depth: 2
Heading Rank: 3

Heading: Background on Auction Provisions

Text: 7 While exceptions to the ALJ's decision were pending, this court held in Bechtel v. FCC, 10 F.3d 875 (D.C. Cir. 1993), that the integration of ownership with management criteria used in FCC comparative hearings was arbitrary and capricious and therefore unlawful. See id. at 878. In response to Bechtel, the Commission froze all ongoing comparative cases, including this case, pending the development of a new regulatory structure. See Memorandum Opinion and Order, 13 F.C.C.R. 11688 p 3. However, the Commission also created an exception to the freeze policy. The exception allowed a frozen case to be adjudicated to completion if the parties to the comparative proceeding reached a settlement agreement even if the settlement were contingent on the resolution of specific basic qualifying issues. See Modification of FCC Comparative Proceedings Freeze Policy, 9 F.C.C.R. 6689 (1994). The agreement resulting in Homewood Radio's receipt of the construction permit constituted such a settlement. 8 However, while the parties here were negotiating for settlement, Congress amended § 309(j) of the Communications Act to require the Commission to grant construction permits through a competitive bidding system. See 47 U.S.C. § 309(j) (Supp. III 1997). Since the mandatory competitive bidding system applied to applications filed after July 1, 1997, newlyenacted § 309(l) covered the applications filed in this case because the filings occurred before July 1, 1997. Subsection 309(l)(1) states that the Commission shall ... have the authority to resolve the pre-July 1, 1997 filings through competitive bidding. In addition, subsection 309(l)(3) required the Commission to waive any provisions of its regulations necessary to permit such persons to enter an agreement to procure the removal of a conflict between their applications during the 180-day period beginning on the date of August 15, 1997. Here, the settlement agreement fell within the 180-day window. 9 Subsequent to the Commission's approval of the Homewood Radio settlement agreement but prior to the Commission's denial of Damsky's Petition for Reconsideration, the Commission adopted rules to implement its new auction authority. In an order, the Commission announced its decision to resolve the pre-July 1, 1997 filings by auction because auctions will generally be fairer and more expeditious than deciding [the pre-July 1, 1997 filings] through the comparative hearing process. In re Implementation of Section 309(j) of the Communications Act, 13 F.C.C.R. 15920 p 34 (1998) (Auction Order). In response to the Auction Order, Damsky sought further administrative remedy and asserted that the Auction Order required the Commission to hold an auction for the Homewood Radio permit. Specifically, Damsky relied upon paragraph 89 of the Auction Order which stated: 10 Where the Commission has denied or dismissed an application and such denial or dismissal has become final (e.g.,when an applicant failed to seek further administrative or judicial review of that ruling), such an entity is not entitled to participate in the auction. Among those remaining in the proceeding, we will permit all pending applicants to participate in the auction, without regard to any unresolved hearing issues ... as to the basic qualifications of a particular applicant. 11 Id. p 89. Thus, Damsky argued that the intervening Auction Order entitled her to participate in an auction for the permit because the original order disqualifying her was still under review and the new auction system allowed her to participate despite any unresolved qualification issues. The Commission rejected her claim because the settling parties reached an agreement in accordance with § 309(l) of the amended statute, the provision ordering the Commission to waive its rules and policies when necessary to permit 180-day window applicants to enter into settlement agreements, and because paragraph 89 did not address cases involving settlements filed within the 180-day waiver period which were thereafter approved contingent upon the Commission resolving specified basic qualification issues. See Further Petition for Reconsideration, 14 F.C.C.R. 370 pp 9-13; see also In re Implementation of Section 309(j) of the Communications Act, 14 F.C.C.R. 8724 p 18 (1999). 12 On appeal, Damsky challenges the Commission's adverse financial qualification determination resulting in the dismissal of her application, the Commission's determination that HPI did not make disqualifying misrepresentations, and the Commission's approval of the Homewood Radio settlement agreement in lieu of an auction.