Opinion ID: 185900
Heading Depth: 3
Heading Rank: 2

Heading: Loss of bidding credit

Text: Section 1.2105(b)(2) provides that ‘‘[m]ajor amendments cannot be made to a short-form application after the initial filing deadline,’’ and states that such amendments include 11 ‘‘changes in an applicant’s size which would affect eligibility for designated entity provisions.’’ Similarly, the July 9 Notice, citing this provision, stated that ‘‘[a]s described more fully in the Commission’s Rules, after the TTT short-form filing deadlineTTTT [a]pplicants will not be permitted to make major modifications to their applications (e.g., TTT change bidding credits).’’ 14 F.C.C. Rcd. at 10644. Biltmore claims that because Liberty’s amendment (after the filing deadline) of its short form application to reflect the loan from Cumulus affected its eligibility for a bidding credit, the change was a ‘‘major amendment’’ and therefore untimely. Further, it argues, allowing the change in bidding credits would affect the integrity of the auction by altering one of its ‘‘core circumstances.’’ The Commission responds that the new entrant bidding credit does not depend upon an applicant’s ‘‘size’’ but upon its other attributable media interests; the ‘‘size’’ criterion applies only to the ‘‘small business bidding credit,’’ which is based upon the bidder’s revenues. See 47 C.F.R. §§ 90.810, 90.814. The Commission points out that the definition of a ‘‘major amendment’’ in the regulation, which predates the introduction of the new entrant bidding credit, refers only to certain changes in ownership, certain changes in size, and changes in the intended service areas. 16 F.C.C. Rcd. 12061 ¶ 25. Because the loan from Cumulus did not effect a change in Liberty’s ownership or size, the Commission argues, its resulting loss of eligibility for a new entrant bidding credit is not a ‘‘major amendment’’ and therefore does not disqualify it from the auction. As for the July 9 Notice, the Commission argues that it purported merely to restate the regulation. To the argument that the integrity of the auction was undermined by Liberty’s loss of the bidding credit, the Commission responds that whereas a post-auction increase in bidding credits may change the ‘‘core circumstances’’ of an auction, a post-auction reduction in such credits does not.  Liberty adopts the Commission’s position but also claims that, because the July 9 Notice specified that attributable interests were to be ‘‘determined as of the short form TTT filing deadline – August 12 The Commission’s interpretation of § 1.2105 is neither plainly erroneous nor inconsistent with the regulation. The provision describing major amendments certainly addresses the small business bidding credit, and the Commission reasonably so interpreted it. Whether the provision also applies to other bidding credits, such as that for new entrants, is not clear on the face of the regulation. Although Biltmore argues that for purposes of the new entrant credit we should construe ‘‘changes in size’’ to include the number of media interests attributable to an applicant, we do not think that is the only permissible construction of the regulation. On the contrary, we think the Commission’s narrower interpretation of the regulation is quite reasonable. Nor does the July 9 Notice, which specifically referred to § 1.2105 as authority for the proposition that ‘‘changes in bidding credits’’ are major amendments, require (or perhaps even allow) the Commission to treat as a major amendment a change that § 1.2105 does not define as such. Biltmore argues that the Commission’s prior determinations limit its discretion to find that a change in the new entrant credit is not a major amendment. In Two Way Radio of Carolina, Inc., 14 F.C.C. Rcd. 12035, ¶ 8 (1999), the Commission held that modification of an applicant’s small business status does not constitute a minor change under our competitive bidding rules, and that providing Two Way Radio with more favorable financial benefits after the close of the auction, based on information not available to other bidders during the auction, would adversely affect the integrity of the auction process. The rationale for the holding was that ‘‘other bidders placed bids based upon their understanding of the specific bidding credit and the type of installment payment plan to which Two 20, 1999,’’ 14 F.C.C. Rcd. at 10639, whereas the loan from Cumulus was effective after that date, Liberty should not have been denied the bidding credit. Because no party appealed that determination, however, Liberty’s claim is not properly before the court. See p. 8, above, at n.. 13 Way Radio, as well as other bidders, were entitled.’’ Id. ¶ 9. See also Clearcall, Inc., 12 F.C.C. Rcd. 965 (WTB 1997). The Commission’s rationale seems at first blush to apply with equal force to the new entrant credit. The Commission, however, distinguishes this precedent by pointing out that the proposed amendment in Two Way Radio would have increased the applicant’s bidding credit, while this case involves an amendment that decreases the applicant’s bidding credit. In its Order the Commission stated that it ‘‘fail[ed] to see how [Liberty’s] mistake would have deprived the other auction participants of information as to Liberty’s valuation of the frequency, or would have otherwise influenced their bidding strategies.’’ 16 F.C.C. Rcd. 12061, ¶ 39. Nor do we see any such problem. Indeed, it is not clear to us – and the Commission does not explain – why even a post hoc increase in bidding credits would raise a question about the integrity of an auction. But the Commission is under no obligation in this case to justify its holding in Two Way Radio, whereas Biltmore has the burden of persuading us that Liberty’s post-auction loss of the bidding credit was, as the Commission said of the change in Two Way Radio, prejudicial to other bidders. To the extent Biltmore claims it was prejudiced because, if it had ‘‘known that it was bidding with cheaper dollars than Liberty, it might very well have been willing to press the bidding higher,’’ it makes no sense: Liberty’s cost could not rationally affect Biltmore’s willingness to pay. Accepting for the sake of the argument Biltmore’s suggestion that Liberty might ‘‘not have bid as high as it did if it had known that it was paying full dollars,’’ we see only that Liberty’s error may have been costly to it, not that it could ‘‘adversely affect the integrity of the auction process,’’ Two Way Radio, 14 F.C.C. Rcd. ¶ 8.