Opinion ID: 669042
Heading Depth: 2
Heading Rank: 3

Heading: Territorial Scope of Gulf Licenses

Text: 25 Finally, petitioners contend that Sec. 22.903(a) of the FCC's new rules arbitrarily confines the water-based GMSAs to existing areas of actual reliable service, thus failing to differentiate between water-based and land-based licensees despite the substantially different circumstances faced by waterborne carriers. Because FCC rules prevent water-based licensees from placing transmission towers on land, petitioners must locate their equipment on oil and gas platforms, which are frequently repositioned. 8 As a result, petitioners have no permanent or definite service boundaries, and their equipment sites are necessarily limited to areas of current oil or gas exploration. Contending that the FCC's new rule limiting GMSA licensees to areas of actual reliable service is arbitrary and capricious, petitioners ask this court to vacate the revised Sec. 22.903(a) as it applies to Gulf licensees and to remand to the Commission so it may revisit the issue. We agree with petitioners and remand the question whether GMSAs should be circumscribed to areas of actual reliable service to the Commission for reconsideration. 26 Because petitioners clearly presented this issue to the Commission in the Docket 90-6 Rulemaking, this final challenge does not present the intractable exhaustion problems encountered above. In its Further Notice, the FCC invited comments whether Gulf carriers should be treated the same as or different from other cellular licensees in redrawing CGSAs. 6 FCC Rcd at 6160. Petrocom responded in comments dated January 16, 1992 that, because of the unique problems encountered by Gulf licensees, including total dependence on the location of oil and gas platforms, remote equipment sites, fluctuating service areas, and attendant high costs, Gulf licensees should be permitted the continued flexibility to shift their actual service areas within the Gulf and to define their CGSAs to encompass the entire Gulf region. See Petrocom's Comments at 6-17. Petrocom also suggested that the Commission defer action on the scope of GMSAs pending reconsideration of the issue of permitting GMSA licensees to construct on-shore cell sites, but it noted that the transmitter site issue was arguably beyond the scope of the instant rulemaking proceeding. See id. at 10 n. 11. 27 The FCC's treatment of the issue in its Third Report and Order is vexingly terse. The Commission did adjust the reliable-service formula for water-based systems to account for different radio wave propagation properties over water. See 7 FCC Rcd at 7184. Aside from this modest change, however, the Commission required GMSA licensees to adhere to the same standards for redefinition of service areas that it applied to land-based licensees. The Commission dismissed all of Petrocom's arguments to the contrary in a footnote, contending that the carrier sought a substantive change in Commission policy concerning the use of land-based transmitters that it had conceded was beyond the scope of this proceeding. 7 FCC Rcd at 7191 n. 8 (citing Petrocom's Comments at 10 n. 11). 28 Our review is governed by APA Sec. 706(2)(A), under which we set aside agency action found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. 5 U.S.C. Sec. 706(2)(A). We do not set aside agency action lightly. The scope of review under the 'arbitrary and capricious standard' is narrow and a court is not to substitute its judgment for that of the agency. Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 2866, 77 L.Ed.2d 443 (1983). Nonetheless, we intervene to ensure that the agency has examine[d] the relevant data and articulate[d] a satisfactory explanation for its action. Id. Where the agency has failed to provide a reasoned explanation, or where the record belies the agency's conclusion, we must undo its action. See American Tel. & Tel. Co. v. FCC, 974 F.2d 1351, 1354 (D.C.Cir.1992). 29 Such is the case here. We have long held that an agency must provide adequate explanation before it treats similarly situated parties differently. See, e.g., New Orleans Channel 20, Inc. v. FCC, 830 F.2d 361, 366 (D.C.Cir.1987); Public Media Center v. FCC, 587 F.2d 1322, 1331 (D.C.Cir.1978); Melody Music, Inc. v. FCC, 345 F.2d 730, 733 (D.C.Cir.1965). But the converse is also true. An agency must justify its failure to take account of circumstances that appear to warrant different treatment for different parties. The Commission itself recognized the significant differences between land-based and Gulf-based licensees prior to the instant rulemaking when it permitted Gulf-based licensees to define their service areas by reference to the entire Gulf of Mexico. In its Further Notice to this very proceeding, the FCC acknowledged that: 30 The Gulf has been treated differently in large part because there are no permanent population centers in the Gulf, with service being provided largely to offshore oil rigs and boating traffic.... Another reason for different treatment of Gulf cellular systems has been the inability of Gulf carriers to locate antenna towers on land to serve Gulf areas because of the potential for interference caused to land systems. 31 6 FCC Rcd at 6159. Despite the Commission's obvious, longstanding recognition of petitioners' unique plight, the Third Report and Order silently glosses over these differences, mandating that water-based and land-based licensees alike adhere to a uniform actual service area rule. 32 The consequences of the Commission's new rule for Gulf licensees appear to be dire. Limited as they are to water-borne transmitters, petitioners go only where oil and gas sites permit. The new rule freezes petitioners' service areas at the status quo. When oil and gas rigs are deactivated, petitioners must close up shop. If new rigs do not open within reasonable proximity to the old, petitioners effectively lose the ability to serve part or all of their service areas. A recent letter by the FCC to petitioner Petrocom confirms the likelihood of this outcome: after the rig on which Petrocom housed a transmitter was recently deactivated by the oil company, Petrocom sought relocation to another platform. The FCC denied Petrocom's request on the grounds that the new site appears to cover primarily new areas outside of Petrocom's CGSA, rather than the area within the CGSA which was covered by the original cell site. Letter from John Cimko, Chief, Mobile Servs. Div., to Robert M. Jackson, Esq., Counsel for Petrocom (Apr. 12, 1994). 33 We are not at all persuaded by the FCC's argument that Petrocom's comments were entirely beyond the scope of the rulemaking proceeding. Certainly, several of Petrocom's comments were addressed at reopening the battle over allowing GMSA licensees to place transmitters on land. Petrocom itself conceded that these comments were arguably beyond the scope of the instant action. However, the FCC altogether overlooks Petrocom's more critical, clearly articulated point: given the inability of Gulf licensees to place transmitters on land, Gulf service areas should not be frozen at their current dimensions. The FCC utterly distorts the record to suggest that this point somehow is nonresponsive to its solicitation of comments whether Gulf carriers should be treated the same as or different from other cellular licensees in redrawing CGSAs. Further Notice, 6 FCC Rcd at 6160. 34 We remand this issue to the Commission with instructions to vacate Sec. 22.903(a) insofar as it applies to GMSA licensees pending reconsideration. We do not foreclose the possibility that the Commission may develop a convincing rationale for applying a uniform standard to water-based and land-based licensees. We state simply that, after considering the record before us, we remain unpersuaded that the Commission has given due weight to factors bearing sharply on the wisdom or fairness of such a uniform standard.