Opinion ID: 604767
Heading Depth: 2
Heading Rank: 1

Heading: Prematurity of Applications

Text: 32 Since the Commission dismissed petitioners' applications as premature, the principal issue before us is what notice the Commission's Second Report and Order provided with regard to the filing date for applications to serve unserved areas. The standard of review is important here. We do not require that the agency have made the clearest possible articulation, only that, based on a fair reading of its order, the petitioners knew or should have known what the Commission expected of them. RCA Global Communications, Inc. v. FCC, 758 F.2d 722, 730-31 (D.C.Cir.1985). In this case, we ask whether a fair reading of the order would put the reader on notice that the Commission had not in fact established dates certain for filing applications to serve unserved areas, but was simply indicating its intent to do so in the future. As we recently stated in a similar case: 33 It is beyond dispute that an applicant should not be placed in a position of going forward with an application without knowledge of requirements established by the Commission, and elementary fairness requires clarity of standards sufficient to apprise an applicant of what is expected. As Judge Leventhal stated in Radio Athens, Inc. (WATH) v. FCC, 401 F.2d 398, 404 (1968) (dismissal of applications without hearing for patent non-conformance with Commission rules): The Commission is entitled to expect good faith on the part of the broadcasting industry in supplying data requested. The industry is correspondingly entitled to expect rules defining the required content of applications that are reasonably comprehensible to [people] of good faith. 34 Maxcell Telecom Plus, Inc. v. FCC, 815 F.2d 1551, 1558 (D.C.Cir.1987) (quoting Bamford v. FCC, 535 F.2d 78, 82 (D.C.Cir.), cert. denied, 429 U.S. 895, 97 S.Ct. 255, 50 L.Ed.2d 178 (1976)) (emphasis added by Maxcell court) (footnote omitted). Thus, we look not at the reasonableness of the Commission's intended interpretation, but at the clarity with which the agency made that intent known. That is, we ask whether the interpretation of the order that the Commission now puts forward was--at the time the order was issued--reasonably comprehensible to [people] of good faith. Where the agency's order suffers from a lack of clarity, such that its effect ... upon the [petitioners is] unclear, Kansas Cities v. FERC, 723 F.2d 82, 86 (1983), we will ask what the petitioners justifiably understood and whether anything in the order made it apparent that the Commission meant otherwise. See id. 35 We emphasize that we are not deciding that the Commission could not reasonably and within its discretion issue an order fixing a deadline for the incumbents' protected filing period and, at the same time announce that it would, in the future, set dates certain on which incumbents and nonincumbents alike would be permitted to file applications to serve unserved areas. [301 U.S.App.D.C. 89] We recognize the Commission's broad discretion to make, interpret and apply its own policies. See Marlin Broadcasting v. FCC, 952 F.2d 507, 511 (D.C.Cir.1992) (quoting New South Broadcasting Corp. v. FCC, 879 F.2d 867, 870 (D.C.Cir.1989)). The issue before us is not what the Commission reasonably can do, but what its Second Report and Order can reasonably be construed to have done. 36 In this light we examine the parties' arguments. About the only thing the parties agree on is that the order carved out a five-year fill-in period during which incumbent licensees and permittees could expand without competition. In any event, this point is not in contention here, as no party attempted to breach the protection afforded by this grace period. The FCC goes beyond this, however; in its brief to this court it asserts that the Second Report and Order provided that, [a]fter the protected period ended and after the Commission established a procedure for processing such applications and a date for filing applications, [nonincumbents] should have an opportunity to apply for unserved areas. The Commission insists that the order itself did not set any dates certain for filing applications; instead, it merely foretold the Commission's intention to set these dates. Thus, according to the agency, because the order did not establish, and the Commission had not announced, a date certain and procedures for filing applications for unserved areas, the petitioners' applications were premature. 7 Petitioners, of course, paint an entirely different picture of the Second Report and Order. They read the statement that the date certain for filing applications to serve unserved areas will be set at five years from the grant of the first construction permit in the MSA to establish a date certain for those applications. That is, the date certain for filing coincides with the termination of the expansion period. Then, they read the statement that parties desiring to serve these areas may file after five years from the grant of the first permit to authorize them to file their applications after that date. 37
38 Our own analysis starts with the fill-in rule itself, asking what notice it provides if we give effect to the natural and plain meaning of its words. This rule, as revised by the Second Report and Order, provides that nonincumbents' applications are prohibited from being filed and will not be considered as mutually exclusive with a licensee's or permittee's application filed under § 22.903(d) herein until five years from the date of the first construction permit granted in that MSA. 47 C.F.R. § 22.31(a)(1)(i) (1987). Read by itself, that statement certainly raises a reasonable inference not only that nonincumbents were prohibited from filing until five years from the permit date but that, after the five years was up, they would be permitted to file. That is, once the five-year filing moratorium expired, there remained no further bar to nonincumbents' filing. The plain language does not say that nonincumbents may not file until some time after the expansion period ends or until five years from the permit date and until other conditions are met. If the Commission intended by this sentence to put nonincumbents on notice that they would be permitted to file only at some indefinite point in the future, after the termination of the expansion period and after the Commission had announced the dates certain and procedures for filing, the rule, standing alone, falls short. 39 The Commission does not rely solely on the language of the fill-in rule, however. While maintaining that the rule, by its own terms, provides only for a finite period during which the nonincumbents' applications will not be accepted, not for any [301 U.S.App.D.C. 90] dates when they will, the Commission stops short of arguing that its language alone put petitioners on notice that they could not file until after the Commission announced procedures for and gave public notice of dates certain for filing. For that it looks to other parts of the Second Report and Order, the next stopping point in our analysis.
40 Reading through the text of the Second Report and Order, we find numerous statements from which an attentive reader could and likely would infer that, once the expansion periods had ended, those who wanted to serve unserved areas would be free to file applications for them. The Commission started its discussion by reaffirming its policy that incumbents' unchallenged cellular applications must be filed by a date certain set by the Commission.... Second Report and Order, 2 F.C.C.Rcd. at 2307 (emphasis added). It announced that it was setting a five-year expansion period for incumbents and that [a] date certain filing date will thus be established for each MSA market. Id. Then, after recounting comments it had received, id. at 2307-08, and stating that it was providing that licensees/permittees will have five years from the date of the first construction permit to file unchallenged applications, the Commission made this critical statement: After five years from such a date, parties desiring to serve unserved areas beyond the CGSA but within the MSA may file fill-in applications for an MSA. Id. at 2308 (emphasis added). 41 We find absolutely nothing in the text of the order to alert petitioners to the possibility that this plain statement that those desiring to serve unserved areas may file after the five-year expansion period expired did not authorize them to file their applications after that date. To the contrary, petitioners had every reason to read the announcement of the five-year safe harbor for incumbents as an authorization to file thereafter, based both on the text of the order and on the Commission's prior announcement that after the initial application phase [which became the five-year expansion period], we will reopen any unapplied for areas to any applicant under regular notice and cut-off rules.... Cellular Lottery Rulemaking, 98 F.C.C.2d 175, 204 n. 81 (1984). The Commission's then-existing regular notice and cut-off rules provided that the deadline for accepting mutually exclusive fill-in applications, as they were known at the time, was sixty days after the date of the public notice listing the first of the conflicting applications as accepted for filing (or thirty days after the public notice and one day before the Commission acts on the first application, whichever is earlier). 47 C.F.R. § 22.31(b)(2)(i) and (ii). 42 When the Commission adopted § 22.31(a)(1)(i), providing for the exclusive expansion period, as part of the Second Report and Order, it left intact the remainder of § 22.31, including the notice and cut-off procedures. Thus, the most logical way to read the change is as a discrete exception to or modification of the existing and continuing fill-in procedures. This would mean that, once the five-year moratorium elapsed, the established notice and cut-off procedures would operate. Since the order provided that persons wishing to serve unserved areas may file after the expansion period ended, without clearly mandating or foretelling any specific procedures for filing, the natural conclusion, which is the one petitioners reached, is that they were to file under the Commission's established procedures. 43 We cannot conclude that the clear impression conveyed by the order that applicants could file at the end of the five-year periods is undermined by either of the two provisions of the text that the Commission invokes to counteract that reading. The Commission points first to the statement that this is not the time to establish the process for selecting the fill-in applications. Second Report and Order, 2 F.C.C.Rcd. at 2309. Quite clearly, this statement refers only to selecting among the applications, not accepting them for [301 U.S.App.D.C. 91] filing. 8 Since the Commission frequently accepts and retains applications while deciding on the means for selecting licensees, see, e.g., Cellular Lottery Rulemaking, 98 F.C.C.2d 175 (1984); Amendment of the Commission's Rules to Allow Random Selection or Lotteries, 93 F.C.C.2d 952 (1983); Amendment of Part 90 of the Commission's Rules, 7 F.C.C.Rcd. 4484 (1992), this reservation by itself could not have alerted petitioners that their filings would be premature. 44 Second, the Commission argues that the future tense statement that dates certain will be set at five years signals that they are not actually being set in the order. In the same order, however, the Commission clearly and unambiguously declared that other dates certain would be set in the future: [W]e are reserving our right to set future dates certain for the filing of fill-in applications in RSAs [Rural Service Areas], Second Report and Order, 2 F.C.C.Rcd. at 2308 (emphasis added). Thus, the Commission obviously knew how to convey with clarity that it was postponing a decision or an announcement until some unspecified future date. By contrast, we are unable to conclude that its statement that a date certain will be set at five years after the date of the first construction permit granted in each MSA filing dates, id., could reasonably tip off a reader that this date certain, which the Commission has already fixed at five years from the first permit date, will nonetheless not be set until the Commission compiles and publishes a comprehensive list of dates certain for all MSAs.
45 Having traversed the text of this order, our journey is not yet o'er, for we arrive at the real battleground of this dispute: the footnotes, or more precisely, the last footnote, and particularly the last sentence of this last footnote. It reads: We will also announce later when the fill-in applications must be filed for each MSA. Second Report and Order, 2 F.C.C.Rcd. at 2311 n. 17. In the Biblical mode of saving the best wine for last, the Commission maintains that this terminal sentence provides the real notice that the Commission will announce dates certain for filing unserved area applications at a later time and that no applications will be accepted until after that later announcement. We cannot agree that this is an obvious or even a reasonably apparent reading of that obscurely placed nugget. Even read in isolation, the sentence is ambiguous. When read in the context of the footnote, and especially in the context of the entire order, we find it far too slim a reed to bear the weight the Commission hoists upon it. 46 We focus, then, on the pivotal sentence addressing when the ... applications must be filed. 9 The Commission asserts that this refers to a date certain on which all unserved area applications--or at least the first of these applications--must be filed in each MSA. Petitioners, however, offer what we think is a more natural reading of this term. They claim that, to be consistent with the order as a whole, this statement is best read to refer to the end of the 60-day cut-off period following the first application in each MSA. In other words, it means that the Commission will announce by when competing applications [301 U.S.App.D.C. 92] must be filed. They find the use of the word must significant, as the first applicant may file once the expansion period has ended, while later applicants must file within sixty days of the first public notice of a mutually exclusive application. This is consistent with the common understanding of the word may to connote permission or entitlement, and must to refer to a requirement. 10 47 The footnote as a whole reinforces this interpretation. First, it provides that the Commission will publish a comprehensive list of the dates certain [e]ven though the dates of the first construction permit grants can be gathered from prior public notices.... Second Report and Order, 2 F.C.C.Rcd. at 2311 n. 17 (emphasis added). This suggests that two dates--the date of the first construction permit and the end of the five-year expansion period--were fixed and knowable from the public record. On the heels of the statement that it would announce two already-fixed dates, the Commission volunteered that it would also announce later when the fill-in applications must be filed for each MSA. Id. Even a careful reader would likely conclude that the Commission had undertaken to announce a third date--the expiration of the cut-off period--that also could be calculated from the public record. The much-heralded footnote thus does not, in the final analysis, serve as the beacon the Commission would have us think, illuminating the petitioners' treacherous path through the text and guiding them safely to the conclusion that the Commission now urges.
48 Since our inquiry focuses on the notice provided by the Second Report and Order, the contents of the order itself are the most important consideration. Looking beyond the four corners of the order, however, we find that the Commission's subsequent conduct only reinforces petitioners' argument that the Commission provided them with no notice of the interpretation on which it based its dismissal of their applications. The Commission's initial acceptance of these applications for filing, while not dispositive, see 47 C.F.R. §§ 22.26(a) and (b), 11 is nonetheless relevant, as the Commission staff's misinterpretation of the order undermines the Commission's claim that it gave clear notice of its intended meaning. Moreover, the Commission retained some of petitioners' applications for as long as nine months and entertained a complete petition to deny cycle with respect to all of the unserved area applications before concluding that the applications were untimely. In addition, the Commission has repeated, again with no mention of any public notice requirement, its statement that [a]fter five years, non-licensees may file applications for the unserved portions of the MSA. See Fourth Notice of Proposed Rulemaking, 3 F.C.C.Rcd. 4050 (1988) (emphasis added); Fifth Report and Order, CC Docket No. 85-388, FCC 99-320 (November 1, 1988); see also Public Notice, Report No. CL-88-148 (August 18, 1988) (rescinding the grant of a fill-in application filed by a nonlicensee before the expiration of the five-year period, stating that it could not be filed until after the five-year mark, but not mentioning any other condition precedent). Finally, the Commission has made a number of subsequent statements that seem to reaffirm an intent to accept nonincumbents' applications at the end of the expansion period. See, e.g., Amendment of Section 22.902(b), 3 F.C.C.Rcd. 6614, 6616 n. 5 (1988): (It [301 U.S.App.D.C. 93] bears noting that unserved portions of MSAs where the five year 'fill-in' period has elapsed are available and a few non-wirelines have already applied for these authorizations.); Amendment of the Commission's Rules for Rural Cellular Service (Fifth Report and Order), 3 F.C.C.Rcd. 6401 (1988) (exclusivity period longer than five years would deprive some areas of service while five-year limit will insure prompt service to the public).
49 In sum, having surveyed the relevant provisions of both the text and the footnotes, as well as subsequent acts and statements by the Commission, we conclude that even an alert reader of the Commission's Second Report and Order would likely have understood it to mean that unserved area applications would be received upon the termination of the five-year expansion period. Under this reading of the order, by establishing the date certain for ending the expansion period and lifting the moratorium on filing, the Commission in fact established a date certain for filing. By operation of law and by the Commission's established notice and cut-off procedures, the date certain for filing an unserved area application in an MSA is the first day after the expiration of the protected fill-in period. 12 Since the order did not prescribe specific procedures, such as filing windows, for these applications, petitioners appropriately filed pursuant to the Commission's regular notice and cut-off rules, under which there is no single date for the filing of the first mutually exclusive application. Under this regime, the date certain for filing is, therefore, merely an opening date, the date from which applications may be received, not a particular date on which they must be received. Cf. Cellular Lottery Rulemaking, 98 F.C.C.2d at 204 (after initial filing periods had lapsed, Commission would establish an opening date  for the filing of unserved area applications, which would be processed under regular notice and cut-off procedures) (emphasis added). 50 Our decision today that the Commission's Second Report and Order provided inadequate notice of any intent to postpone acceptance of applications to serve unserved areas until after publication of a future notice falls in line with our prior opinion in Maxcell Telecom Plus, Inc. v. FCC, 815 F.2d 1551 (D.C.Cir.1987). Maxcell involved Commission orders announcing special filing rules during the initial filing period for the ninety largest MSAs. Departing from the Commission's general notice and cut-off procedures, the orders established single filing dates for all applications for each affected market. Petitioners challenged the orders on several grounds, including that they provided inadequate notice of their applicability to unserved area applications, or fill-in applications, as they were known at the time. See supra note 2. We stated that the Commission's public pronouncements on the deadline for fill-in applications ha[d] been needlessly unclear, id., but concluded that they sufficed, though just barely, id. at 1559, to provide notice that they applied to fill-in applications, as well as applications for the core of an MSA. We reached a different result, however, for the one petitioner, La Star Communications, that had filed its fill-in application in response to an incumbent's proposed expansion. Id. at 1560. Because the Commission, at that point, routinely permitted such opposition to an incumbent's proposed expansion, and because nothing in either relevant order informed La Star that it superseded those procedures, we held that the order did not give sufficient notice that competing fill-in applications would not be accepted after the date certain or cut-off date. Id. Turning to the present case, we believe that the [301 U.S.App.D.C. 94] Second Report and Order similarly failed to give sufficient notice that unserved area applications would not be accepted under the Commission's general notice and cut-off procedures upon the termination of the expansion period. 51 We therefore reverse the Commission's dismissal of applications for unserved areas filed after the expiration of the expansion period and before the end of the then-existing sixty-day cut-off period on the ground that they were untimely, and we remand with instructions to reinstate those applications nunc pro tunc. There is no dispute that McElroy, L.A. Partnership, and JAJ filed their applications within this filing window. Petitioner Price's application, however, raises a question as to its timeliness. Price, which filed its application for Los Angeles more than sixty days after McElroy filed its mutually exclusive application, urges that its application should not be barred because the sixty-day cut-off period applies only from the date of public notice that the first application is accepted for filing, and the FCC's public notice concerning McElroy's application did not give sufficient notice that it had achieved this status. 13 We leave it to the Commission to determine on remand the timeliness of Price's application within the context of our discussion as to the comprehensible meaning of the Second Report and Order.