Opinion ID: 185357
Heading Depth: 2
Heading Rank: 1

Heading: Dismissal of Applications

Text: 5 Once the Commission decided to adopt new licensing rules for the 39 GHz band, it had to choose the effective date of the rules and dispose of applications still pending under the old regime. As appellants see it, the Commission's decision to dismiss all pending mutually exclusive applications was arbitrary and capricious. Naturally, they hoped to avoid having to start the application process all over again in a public auction. We have, however, recognized the Commission's authority to change license allocation procedures midstream. See Maxcell Telecom Plus, Inc. v. FCC, 815 F.2d 1551 (D.C. Cir. 1987) (upholding change from comparative application system to lottery); DIRECTV, Inc. v. FCC, 110 F.3d 816 (D.C. Cir. 1997) (upholding change from pro rata distribution policy to competitive bidding). 6 In deciding to dismiss applications that either did not satisfy the 30-day ripeness requirement or were mutually exclusive, the Commission balanced the need to implement the new regulatory regime against the effect of upsetting the expectations of appellants and others. We perceive no error in its resolution of these opposing interests. The Commission reasonably feared that processing mutually exclusive applications under an antiquated and burdensome comparative application system would diminish the efficiency gains expected from competitive bidding. See 12 F.C.C.R. at 18,642. 7 In appellants' view, their side of the balance weighs much heavier because they obtained rights against prospective competitors who were foreclosed from applying by the Commission's cut-off rules. Under rules existing when appellants filed, public notice of the filing of the first application for a given license triggered a 60-day filing window; that is, competing applicants had to file within 60 days of the public notice or lose their right to file. See 47 C.F.R. § 21.31(b)(2)(i) (1995). 3 Several applicants for 39 GHz licenses filed more than 60 days before the freeze order, yet saw their applications dismissed because of mutual exclusivity. Upon reaching the sixtieth day following public notice of the first application but before the freeze order, the filing rule theoretically should have closed the application pool to competing filers, protecting these applications from additional competition. Appellants complain that the application freeze and subsequent dismissal of pending mutually exclusive applications defeated the cut-off rule by permitting people who would have been closed out of applicant pools in the comparative application system to bid for the same licenses in the public auction. 4 In their words, the Commission's decision effectively required pending mutually exclusive applicants to bid against new applicants filing years after the established cut-off dates. Brief for Appellants at 58. 8 Appellants claim that McElroy Electronics Corp. v. FCC, 86 F.3d 248 (D.C. Cir. 1996), renders the Commission's actions arbitrary. See Brief for Appellants at 57-60. In McElroy, we recognized that as against latecomers, timely filers who have diligently complied with the Commission's requirements have an equitable interest in enforcement of the cut-off rules. 86 F.3d at 257. That equitable interest arose in circumstances not present here. The appellants in McElroy filed cellular applications even though the Commission had not yet formulated rules for those licenses. See id. at 250. The Commission dismissed the applications as premature and later established a one-day filing window. On the filing date, which was approximately five years after the appellants had filed, 517 applicants filed for the Los Angeles licenses and 494 filed for the Minneapolis licenses. See id. at 251. The first time McElroy came to this court, we ordered the Commission to reinstate, nunc pro tunc, the applications previously dismissed as premature. See McElroy Elec. Corp. v. FCC, 990 F.2d 1351 (D.C. Cir. 1993). The Commission then decided that the reinstated applicants would have to enter a lottery with those who filed under the later one-day window, reasoning that the public notices announcing appellants' applications did not establish a deadline for competing applications. See 86 F.3d at 252. We reversed, citing the Commission's notice and cut-off procedure under which the applications at issue ... were filed, [wherein] competing applicants were entitled to participate in a comparative hearing or lottery only if they filed their applications within 'sixty (60) days after the date of the public notice listing the first of the conflicting applications as accepted for filing'. Id. at 253. The issue was whether the public notices gave sufficient notice of [the Commission's acceptance of appellants' applications for filing] to cut off third parties' rights. Id. We found the public notice sufficient to trigger the 60-day cut-off period. See id. at 257. 9 McElroy stands for the proposition that the Commission must follow its own rules. See, e.g., Reuters Ltd. v. FCC, 781 F.2d 946, 950 (D.C. Cir. 1986). It does not create some generalized right to exclude competitors. The equitable interest in McElroy was the applicants' interest in the Commission enforcing its filing and notice rules, not an interest in preventing the Commission from changing them. As we have recognized before, the Commission may make midstream rule adjustments, even though it disrupts expectations and alters the competitive balance among applicants. See Maxcell, 815 F.2d 1551; DIRECTV, 110 F.3d 816. 10 Moreover, any interest in enforcement of cut-off rules is just that--an interest, not a vested right: timely applicants have no 'vested right against challenge from untimely competitors,' in the sense of precluding the FCC from ever granting a cut-off waiver, but they certainly have an equitable 11 interest whose weight it is 'manifestly within the Commission's discretion to consider'. Florida Inst. of Tech. v. FCC, 952 F.2d 549, 554 (D.C. Cir. 1992). The Commission's authority to change rules that affect pending applications is bounded by principles of retroactivity, not by an abstract interest in excluding competitors. McElroy holds only that if the Commission decides to process timely applications, it generally may not also process competing applications filed out of time. The case does not govern the present situation in which the Commission decides, without violating its rules, not to process pending mutually exclusive applications at all. 5 12 Even if McElroy stood for all that appellants read into it, they could not have obtained any equitable interest to immunize their applications against dismissal. The most they could have obtained is the relief we granted in McElroy--an order requiring dismissal of applications filed after the cut-off date. See 86 F.3d at 259. McElroy does not require the Commission to process all applications pending under an obsolete license allocation system just because applicants who were otherwise cut off might re-apply in a new system. 6