Court Opinion

ID: 185521
Source: CourtListenerOpinion
Date Created: 2011-02-05 02:33:01+00
Date Added: 2024-06-11T17:26:16.436220
License: Public Domain

272 F.3d 585 (D.C. Cir. 2001)
Celtronix Telemetry, Inc., Appellant/Petitionerv.Federal Communications Commission, et al., Appellee/Respondents
Nos. 00-1400 & 00-1401
United States Court of Appeals  FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 18, 2001Decided November 16, 2001

Appeal from and Petition for Review of an Order of the Federal Communications Commission
Richard S. Myers argued the cause and filed the briefs for  appellant/petitioner.
Stewart A. Block, Counsel, Federal Communications Commission, argued the cause for appellee/respondents.  With  him on the brief were Jane E. Mago, General Counsel,  Daniel M. Armstrong, Associate General Counsel, Catherine G. O'Sullivan and Andrea Limmer, Attorneys, U.S. Department of Justice.
Before:  Ginsburg, Chief Judge, Henderson, Circuit Judge,  and Williams, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge  Williams.
Stephen F. Williams, Senior Circuit Judge:

1
In 1994 the Federal Communications Commission auctioned off a group of Interactive  Video and Data Service ("IVDS") licenses.  In 1997 it  changed the rules governing grace periods for winning bidders who made late installment payments.  Celtronix, a winning bidder for such a license, alleges that the change was  unlawfully retroactive.  We affirm the Commission's decision.

2
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3
In a June 1994 auction Celtronix (then known as Community Teleplay, Inc.) won an IVDS license for the NorfolkVirginia Beach Metropolitan Service Area.  As a small business, Celtronix was allowed to pay its winning bid in installments over the term of the license.  47 C.F.R.  1.2110(d)  (1994).  The regulation provided that any payment would be  in default after 90 days delinquency, but allowed a licensee to  request a three-to-six-month grace period.  Id.   1.2110(d)(4)(i), (ii).  In considering whether to grant the  grace period, the Commission could consider the licensee's  payment history, the reasons for default, the licensee's financial condition, and other circumstances.  Id.  Though its  regulations were not exactly clear on the availability of additional grace periods, the Commission issued a public notice  claiming discretion to "extend or grant additional grace periods where circumstances warrant."  Public Notice, "Wireless  Telecommunications Bureau Staff Clarifies 'Grace Period'  Rule for IVDS 'Auction' Licensees Paying By Installment  Payments," 10 FCC Rcd 10724 (1995).

4
In 1997 the Commission changed its grace period rule in  the Third Report and Order and Second Further Notice of  Proposed Rule Making, 13 FCC Rcd 374 (1997) ("Grace Period Order").  Under the new regulation, a licensee who  missed a payment would automatically have 90 extra days to  do so without being considered delinquent.  47 C.F.R.   1.2110(f)(4)(i) (1998).  This came at the price of a 5% late  fee on the amount past due.  Id.  Failure to make payment at  the end of the first 90-day period would result in a second  automatic 90-day grace period and a 10% late fee.  Id.   1.2110(f)(4)(ii). (Formerly, there had been an interest  charge, amortized over the term of the license.)  Any licensee  failing to make payment after 180 days delinquency (or failing  to pay the late fee) would then be in default.  Id.   1.2110(f)(4)(iii), (iv).1

5
Celtronix filed a petition for reconsideration of the Grace  Period Order in January 1998 and, in July of that year, an  emergency motion for stay pending review of the petition. But in September 1998, just before the final date on which  Celtronix's license would have been permanently defaulted,  the Commission announced a notice of a proposed rulemaking  aimed at introducing new flexibility for spectrum occupied by  IVDS licensees;  to reflect the change it immediately redesignated the service as the "218-219 Mhz Service."  Amendment  of Part 95 of the Commission's Rules to Provide Regulatory  Flexibility in the 218-219 MHz Service, Order, Memorandum  Opinion and Order and Notice of Proposed Rulemaking, 13  FCC Rcd 19064 p 16 (1998).  For the duration of that rulemaking the Commission suspended all installment payments  for licensees who were paid up through March 16, 1998 or had  properly filed grace period requests.  Id. p 13.

6
In its final order on the 218-219 Mhz Service, Amendment  of Part 95 of the Commission's Rules to Provide Regulatory  Flexibility in the 218-219 MHz Service, Report and Order  and Memorandum Opinion and Order, 15 FCC Rcd 1497  (1999) ("218-219 MHz Service Order"), the Commission dismissed Celtronix's grace period requests and its emergency  stay motion, saying that parties that had properly filed grace period requests had already received "an extended grace  period."  Id. p p 45, 133.  It also provided three options for  licensees in Celtronix's situation:  (1) reamortization and the  resumption of installment payments;  (2) amnesty, under  which the licensee could return the license, have its debt  forgiven, and receive a partial refund of prior payments;  and  (3) prepayment of the entire amount.  Id. p 34.  Additionally,  the Commission provided that the former 5year term would  be extended to 10 years.  Id. p p 25-32.

7
Celtronix sought reconsideration of the 218-219 MHz Service Order in December 1999.  While that was pending, the  Commission denied Celtronix's petition for reconsideration of  the Grace Period Order.  Amendment of Part 1 of the  Commission's Rules--Competitive Bidding Procedures, Order  on Reconsideration of the Third Report and Order, Fifth  Report and Order, and Fourth Further Notice of Proposed  Rule Making, 15 FCC Rcd 15293, p 27 (2000).  Then, in  December 2000, the Commission denied reconsideration of  the 218-219 MHz Service Order, and reaffirmed that IVDS  licensees must decide among the three options of amnesty,  resuming repayment, or prepayment of the entire amount. See Amendment of Part 95 of the Commission's Rules to  Provide Regulatory Flexibility in the 218-219 MHz Service,  Second Order on Reconsideration, 15 FCC Rcd 25020, p p 1,  34 (2000).  It rejected Celtronix's proposal of a fourth option  under which licensees could disaggregate, i.e., could retain  part of their 218-219 Mhz spectrum for a given market and  return the rest to the Commission.  Id. at p p 14-20.

8
Celtronix chose to return the license to the Commission for  amnesty, subject to its claim for a disaggregation alternative. It filed a petition for reconsideration of this order, which is  still pending before the Commission.

9
As to the Grace Period Order, Celtronix filed a petition for  review under  402(a) of the Communications Act (No. 001401) and an appeal under  402(b) (No. 00-1400).  Since  these jurisdictional provisions are mutually exclusive, see  Freeman Engineering Associates, Inc. v. FCC, 103 F.3d 169, 177 (D.C. Cir. 1997), and because Celtronix's case falls into  none of the categories in  402(b)(1) through (8), we dismiss  appeal No. 00-1400 and take jurisdiction for No. 00-1401  under  402(a).

10
There is another jurisdictional concern.  Given Celtronix's  election of amnesty in the event that its disaggregation  proposal does not prevail (either by Commission change of  heart or by judicial reversal of the Commission), there is a  distinct chance that Celtronix would not benefit from a victory here;  absent disaggregation, it would simply take its  amnesty and depart.  But we do not see this possibility as  impairing its standing.  Compare a standard two-issue case: If a plaintiff presents two or more alternative grounds as  routes to its hoped-for ultimate victory, a court does not lose  jurisdiction over the second claim once it has ruled in the  plaintiff's favor on the first claim;  victory on the first claim  doesn't moot the second.  Air Line Pilots Ass'n Int'l v. UAL  Corp., 897 F.2d 1394, 1397 (7th Cir. 1990).  Conversely, if a  party must prevail on both of two theories to achieve a  meaningful win (e.g., knock out a regulation), its loss on the  first does not moot the second.  Worldcom, Inc. v. FCC, 246  F.3d 690, 695 (D.C. Cir. 2001).  For both situations, the  continued exercise of jurisdiction by the court is based on a  practical consideration:  Disposition of both bases has the  potential of achieving judicial economies, as higher-level review might remove the first basis for the outcome.  See id.

11
Just as the contingent character of the ruling on the second  issue in the above cases does not spell mootness, so too the  fact that here Celtronix's ultimate success may depend on the  outcome of pending administrative litigation should not be  seen as rendering the harm inflicted on it by the Commission's grace period decision too "conjectural" for purposes of  standing.  City of Los Angeles v. Lyons, 461 U.S. 95, 102  (1983).  Otherwise, a party requiring victory on two fronts in  two fora could easily lose his chance for review on the first  claim to be put forward for adjudication, see 28 U.S.C.  2344  (requiring petition for review to be filed within 60 days), thus  destroying his chance of prevailing, regardless of the merits.

12
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13
Celtronix argues that the new grace period rule, 47 C.F.R.   1.2110(g)(4), violates the Administrative Procedure Act,  which limits "rules" to agency prescriptions of "future effect." 5 U.S.C.  551(4);  see Bowen v. Georgetown University  Hospital, 488 U.S. 204, 216-25 (1988) (Scalia, J., concurring); Bergerco Canada v. U.S. Treasury Department, 129 F.3d 189,  192-93 (D.C. Cir. 1997) (treating Justice Scalia's concurring  opinion as substantially authoritative, though noting that  "[t]he Bowen majority, to be sure, neither embraced nor  rejected Justice Scalia's view").  To a large extent Celtronix  invokes the criteria applied in Landgraf v. USI Film Products, 511 U.S. 244 (1994), a case that explored the question of  what sort of retroactivity was subject to the longstanding  presumption against retroactive statutes.  Id. at 263-80. Here, of course, there is no issue of intent at all:  the  Commission indisputably intended its new grace period rule  to apply to payment delays occurring after the rule's adoption  but in connection with previously issued licenses.  Nonetheless, the tests formulated in Landgraf are indeed pertinent to  the APA issue.  See, e.g., Bergerco Canada, 129 F.3d at 193; DIRECTV v. FCC, 110 F.3d 816, 825-26 (D.C. Cir. 1997).

14
According to Justice Scalia, a retroactive rule forbidden by  the APA is one which "alter[s] the past legal consequences of  past actions."  Bowen, 488 U.S. at 219.  In Landgraf, the  Court said that retroactivity occurred where a statute "would  impair rights a party possessed when he acted, increase a  party's liability for past conduct, or impose new duties with  respect to transactions already completed."  511 U.S. at 280.

15
It seems impossible to characterize the rule change here as  "alter[ing] the past legal consequences" of a past action.  It  altered the future effect of the initial license issuance, to be  sure, but that could not be viewed as "past legal consequences."  Nor could the change be said to impair rights  possessed by Celtronix when it acted, as it could have had no  grace period rights before it "acted" to acquire the license,  and any payment delay covered by the new rule, i.e., any  delay not already excused, necessarily occurred after the rule change.  If the rule could be viewed as "impos[ing] new  duties" at all (in the sense of making the duty to pay  installments more stringent), it would run afoul of Landgraf's  concept only if it imposed them with regard to a "transaction[ ] already completed."  That would be so if the "transaction" at issue were the issuance of the license itself, as  Celtronix urges, rather than the delay in payments.

16
The examples used in the cases make clear that we should  focus on the payment delays and not on initial issuance of the  license.  As Justice Scalia noted in Landgraf, a new ban on  gambling would not involve retroactivity in its application to  existing casinos (which presumably would have been licensed  by a state), because the "relevant retroactivity event is the  primary activity of gambling, not the primary activity of  constructing casinos."  Landgraf, 511 U.S. at 293 n.3 (Scalia,  J., concurring).  Similarly, Justice Scalia made clear in Bowen that there would be no violation of the APA's insistence on  rules of "future effect" if the Secretary there had promulgated new reimbursementformulas for future services, even  though the hospitals in question were operating under longterm contracts negotiated in reliance on a prior, more generous rule.  488 U.S. at 220.

17
Celtronix claims to have had a "vested right" to keep  requesting additional grace periods and to force the Commission to consider any unique circumstances.  To this end, it  cites Landgraf's statement that the judicial clear statement  rule would apply where a statute would otherwise "impair  rights a party possessed when he acted."  511 U.S. at 280.2  But Celtronix never explains where this vested right came  from.  The pre-auction license system offered no vested right to any specific terms.  Rather, it is undisputed that the  Commission always retained the power to alter the term of  existing licenses by rulemaking.  See, e.g., United States v.  Storer Broadcast Co., 351 U.S. 192, 205 (1956);  National  Broadcasting Co. v. United States, 319 U.S. 190, 225 (1943); Committee for Effective Cellular Rules v. FCC, 53 F.3d 1309,  1319-20 (D.C. Cir. 1995);  WBEN, Inc. v. FCC, 396 F.2d 601,  617-18 (2d Cir. 1968).

18
The introduction of auctions made no change in this aspect  of the licensing regime.  In fact, Congress provided both that  the Commission would retain its authority "to regulate or  reclaim spectrum licenses," 47 U.S.C.  309(j)(6)(C), and that  nothing in the use of auctions would "be construed to convey  any rights ... that differ from the rights that apply to other  licenses...."  Id.  309(j)(6)(D).

19
Of course the grace period change may have altered the  value of the rights Celtronix acquired by its winning bid and  commitment to make the required payments.  This sort of  retroactivity--characteristic of a rule having exclusively "future effect" but affecting the desirability of past transactions--has become known as "secondary retroactivity."  See  Bowen, 488 U.S. at 219-20 (Scalia, J., concurring).  Under  our authority to set aside rules that are arbitrary and capricious, we review such rules to see whether they are reasonable, "both in substance and in being made retroactive." U.S. Airwaves, Inc. v. FCC, 232 F.3d 227, 233 (D.C. Cir. 2000)  (emphasis added).

20
Here it's easy to find the rule reasonable in both respects. The Commission merely replaced the possibility of two (or  maybe more) three-month grace periods, available only on a  successful appeal to the Commission's discretion, with the  assurance of two 90-day periods subject to 5% and 10%  penalties on the delayed payments.  Looking at licensees as a  class, there is no reason to think the change disadvantageous. Indeed, the Commission described the change as a "liberalization."  Grace Period Order, p 108.  Nor does Celtronix suggest that the rule change would inflict material injuries on  any set of licencees (such as ones whose circumstances made receipt of Commission grace especially likely) that would  offset its beneficial effects, or indeed that the Commission has  ever exercised its discretion favorably.  Moreover, it seems  utterly improbable that the old grace provisions could have  induced reliance, either in the form of higher bids by licensees at the bidding stage (as the change is so trivial and likely  beneficial), or of any different conduct thereafter (as both old  and new rule provide substantially equal motivations to avoid  default).  See Bergerco, 129 F.3d at 195.  In sum, when one  considers both the interests of licensees generally and of the  Commission, the rule change's harms (the amorphous injury  to hypothetical successful pleaders for discretionary grace,  and the penalty fees) seem outweighed by its benefits (the  certainty and clarity for all concerned and the elimination of a  possibly long and costly decisionmaking process under vague  criteria).  So, at least, the Commission could reasonably have  concluded.

21
Celtronix also urges a somewhat makeshift argument that  the FCC's rule change was a breach of contract, citing United  States v. Winstar Corp., 518 U.S. 839 (1996).  But there the  government had contractually bound itself to bear the risk of  specified regulatory change adverse to certain firms that had  acquired failed saving and loan associations in reliance on that  promise.  Id. at 868-71.  Here, far from there being any such  promise, there was, as we've noted, a long tradition of Commission authority to change rules governing already-issued  licenses and congressional provision for the application of the  prior understandings to licenses acquired by auction.

22
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The order of the Commission is

23
Affirmed.

Notes:

1
  The current version of the rule provides that the grace period  shall be a quarter year, rather than 90 days, but is otherwise similar  in substance.  47 C.F.R.  1.2110(g)(4)(i) (2000).

2
  The passage cited by Celtronix in fact makes no reference to  "vested" rights, but other parts of the opinion do.  See 511 U.S. at  268-69 & n.23 (quoting "vested rights" language from Justice  Story's opinion in Society for Propagation of the Gospel v. Wheeler,  2 Gall. 105, 22 F. Cas. 756, 767 (No. 13,156) (CC NH 1814), and  from Sturges v. Carter, 114 U.S. 511, 519 (1885));  id. at 275 n.29; see also id. at 290-94 (Scalia, J., concurring) (critiquing "vested  rights" usage).