Opinion ID: 186105
Heading Depth: 2
Heading Rank: 2

Heading: The FCC's Decision to Deny Petitioners' Refund Request

Text: 31 The FCC's order in this case may not be overturned unless it is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. 5 U.S.C. § 706(2)(A). Pursuant to this standard, our review is highly deferential; we must presume the validity of [the] agency['s] action. Kisser v. Cisneros, 14 F.3d 615, 618 (D.C.Cir.1994) (citation omitted). The court may reverse only if the agency's decision is not supported by substantial evidence, or the agency has made a clear error in judgment. Id. at 619 (citing Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 415-16, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971)). Moreover, we must defer to an agency's reasonable application of its own precedents. See Global Crossing Telecomm., Inc. v. FCC, 259 F.3d 740, 746 (D.C.Cir.2001). 32 What is at issue in this case is the Commission's fee-refund policy that was promulgated in conjunction with the August 1998 Report and Order implementing the agency's auction authority, and then explained and enforced by the Commission in Wade Communications, Inc., 16 F.C.C.R. 20,708 (2001). Petitioners present essentially two arguments in support of their challenge to the fee-refund policy. First, they contend that the Commission's failure to grant Vernal's refund request is inconsistent with the fee-refund policy. Second, petitioners contend that the Commission subjected Vernal to unjust disparate treatment in granting fee refunds to other parties who, like Vernal, sought dismissal of their applications pursuant to settlement agreements entered into prior to the issuance of the August 1998 Report and Order. Petitioners' arguments are without merit. 33 At bottom, the petitioners' principal argument is that the fee-refund policy that was promulgated in conjunction with the August 1998 Report and Order clearly contemplated fee refunds for parties such as Vernal. The FCC's response is straightforward: The fee-refund policy adopted in conjunction with the August 1998 Report and Order 34 made clear that [fee] refunds would be available only in the case of applicants who withdrew their applications after the applications had become subject to resolution by competitive bidding and the applicant had file[d] a pleading disavowing any interest in participating in the auction and seeking the dismissal of their application[]. 35 Respondents' Br. at 13 (alterations in original) (quoting Report and Order, 13 F.C.C.R. at 15,957 ¶ 102). The Commission's position is unassailable. 36 Petitioners' press for an expansive interpretation of the fee-refund policy is entirely unconvincing, both because their suggested interpretation is belied by the clear words of the policy and, also, because it ignores the Commission's subsequent decision in Wade Communications. In petitioners' view, the Report and Order established a policy of refunding filing fees to all pre-July 1, 1997 applicants who opted not to participate in the auction mandated by the Balanced Budget Act of 1997.... Petitioners' Br. at 12. According to petitioners, refunds may be claimed by parties, like Vernal, who sought dismissals pursuant to settlement agreements entered into before the FCC's adoption of the August 1998 Report and Order subjecting pending pre-July 1997 applicants to competitive bidding. In other words, petitioners contend that the FCC adopted a policy of refunding fees retroactively to all pre-July 1997 applicants with applications pending at the time the Balanced Budget Act was passed, regardless of whether they settled and sought dismissal prior to August 1998. See id. Petitioners contend that when the FCC denied Vernal's refund application, it departed from this policy without a reasoned articulation of its reasons for doing so. See id. 37 We have no trouble concluding that the Commission order in this case rests on the policy promulgated by the FCC in conjunction with the August 1998 Report and Order and subsequently enforced in Wade Communications. The analysis is not complicated. Section 309( l ) of the Communications Act authorized the Commission, in its discretion, to use competitive bidding or comparative hearings to award licenses to mutually exclusive broadcast applicants who, like Vernal, filed their applications prior to July 1, 1997. The Commission did not determine that it would subject pre-July 1997 applications to auction until it issued the August 1998 Report and Order implementing § 309(j). Consequently, applicants like Vernal, who settled before the August 1998 Report and Order, were never subject to auction. 38 The discussion of the fee-refund policy promulgated in conjunction with the August 1998 Report and Order focused on applicants who elect[] not to participate in [an] auction. 13 F.C.C.R. at 15,957 ¶¶ 101 & 02. See also id. at 15,957-58 ¶ 103. When Vernal entered into a settlement agreement it surely was not electing not to participate in an auction, because the Commission had yet to determine that pre-July 1997 applicants would be subject to auction. Moreover, there is no mention in the fee-refund discussion of applicants who, like Vernal, obtained the benefit of § 309( l )(3)'s suspension of FCC settlement caps by entering into agreements during the six months immediately following enactment of the 1997 amendments. In short, the Commission order denying petitioners' refund request is in no manner inconsistent with the policy set forth in conjunction with the August 1998 Report and Order. 39 Petitioners raise several arguments in an attempt to stave off this conclusion. None is persuasive, and only two merit discussion. First, petitioners assert that the FCC's refund of filing fees was undertaken as part of its obligation under § 309( l )(3) of the Act to waive regulations necessary to permit pre-July 1, 1997 applicants to enter into agreements resolving mutually exclusive applications. Petitioners' Br. at 13. The portion of the Notice of Proposed Rulemaking cited by petitioners does not support this assertion, and we find no support for it in the Report and Order, the Notice of Proposed Rulemaking, or anywhere else in the record. 40 Petitioners also point to paragraph 49 of the Report and Order. That paragraph, which references the refund provision only in response to a compensation clause issue raised during the notice and comment period, states: 41 [W]e will refund upon request all hearing fees actually paid by applicants in proceedings in which the construction permit is awarded by auction rather than by comparative hearing, and all filing fees paid by pre-July 1, 1997 applicants within the scope of Section 309( l ) who elect not to participate in the auction. 42 Petitioners' Br. at 14 (quoting 13 F.C.C.R. at 15,939 ¶ 49). Noting the differing language used to describe the refund of hearing and filing fees, petitioners assert that the rule made it clear that the refund of filing fees would not be contingent on whether an application was withdrawn pursuant to a settlement leading to the grant of an application without auction or as a result of a unilateral decision by an applicant to dismiss an application in a proceeding wherein the permit was eventually awarded by auction. Petitioners' Br. at 13-14. This argument ignores the common sense observation that no applicant could elect not to participate in an auction until being subject to auction. No one was subject to auction until the Commission's issuance of the August 1998 Report and Order, months after Vernal's application had been dismissed. 43 As noted above, if there were any doubts about the meaning of the Commission's fee-refund policy, they were resolved conclusively when the FCC enforced the policy in Wade Communications in November 2001. In Wade Communications, the Commission explicitly held that applicants like Vernal may not seek refunds of filing fees. See 16 F.C.C.R. 20,708. The Commission explained: 44 [B]oth the general context and specific language of the [ Report and Order ] clearly state our intention that refunds of filing fees would only apply to the remaining pre-July 1, 1997 applicants for licenses or permits who had not resolved mutual exclusivity through negotiated agreements during the 180-day period and whose pending mutually exclusive applications would therefore be resolved pursuant to our decision to use competitive bidding. 45 Id. at 20,710-11 ¶ 7 (citations omitted). Explaining the rationale behind the distinction it drew, the Commission stated: 46 [A]ny applicants that settled within the 180-day period were entitled to negotiate payments from the other mutually exclusive applicants that would cover their costs, including their filing fees, and moreover, pursuant to the statutorily mandated waiver requirement in section 309( l ), could also negotiate payment amounts that exceeded their costs. Therefore, any equities that might apply to non-settling applicants and warrant refund of filing fees do not apply with the same force to these applicants. 47 Id. at 20,711-12 ¶ 9. 48 Wade Communications eliminates any conceivable ambiguity as to the FCC's refund policy. It also makes clear that the Commission, in denying petitioners' refund request, did not depart from its established precedent regarding fee application refunds. Moreover, in its discussion of the benefits available to applicants who settled within the 180-day period, Wade Communications demonstrated the reasonableness of the FCC's decision to distinguish between applicants who took advantage of the settlement opportunity created by § 309( l ) and those who waited to see whether the Commission would use comparative hearings or competitive bidding to resolve pending pre-July 1997 applications. See Cassell v. FCC, 154 F.3d 478, 484 (D.C.Cir.1998). 49 Petitioners' disparate treatment argument bears little discussion. We recently reaffirmed our well-established view that an agency is not bound by the actions of its staff if the agency has not endorsed those actions. See Cmty. Care Found. v. Thompson, 318 F.3d 219, 227 (D.C.Cir.2003) (citing Amor Family Broad. Group v. FCC, 918 F.2d 960 (D.C.Cir.1990)). See also Jelks v. FCC, 146 F.3d 878, 881 (D.C.Cir.1998); MacLeod v. ICC, 54 F.3d 888, 891 (D.C.Cir. 1995). The Commission has acted consistently with respect to the refund of application fees to parties in a position similar to Vernal's. In the August 1998 Report and Order, the Commission adopted a policy against refunding fees to applicants who resolved their exclusivity by settlement during the 180-day period provided for in the Communications Act. Petitioners point to no order in which the Commission has acted contrary to this policy. In Wade Communications and in the order now before this court, the Commission denied the requested fee refunds. It is true that, in a few instances, staff in the Commission's OMD, without authorization from the Commission, granted fee-refund requests. But staff error cannot bind an agency and force it, in effect, to continue such errors. 50 The Commission's order in this case convincingly explains why the fee-refund policy adopted in conjunction with the August 1998 Report and Order and enforced in Wade Communications required denial of Vernal's request. The Commission's order clearly survives scrutiny under the arbitrary and capricious standard of review. Therefore, the petitioners' challenge must fail.