Court Opinion

ID: 4188322
Source: CourtListenerOpinion
Date Created: 2017-07-21 15:01:28.610747+00
Date Added: 2024-06-11T07:47:23.597120
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 3, 2017               Decided July 21, 2017

                       No. 15-1500

                 NUEVA ESPERANZA, INC.,
                      APPELLANT

                             v.

         FEDERAL COMMUNICATIONS COMMISSION,
                     APPELLEE

                  G-TOWN RADIO, ET AL.,
                      INTERVENORS

               On Appeal of an Order of the
           Federal Communications Commission

     Devi M. Rao argued the cause for appellant. With her on
the briefs were John L. Flynn and Matthew S. Hellman

     Scott M. Noveck, Counsel, Federal Communications
Commission, argued the cause for appellee. With him on the
brief were Jonathan B. Sallet, General Counsel, and Jacob M.
Lewis, Associate General Counsel. Richard K. Welch, Deputy
Associate General Counsel, entered an appearance.

    Andrew Jay Schwartzman and Drew T. Simshaw were on
the brief for intervenors G-Town Radio, et al. in support of
appellee.
                              2

    Before: ROGERS and SRINIVASAN, Circuit Judges, and
GINSBURG, Senior Circuit Judge.

    Opinion for the Court filed by Senior Circuit Judge
GINSBURG.

     GINSBURG, Senior Circuit Judge: Appellant Nueva
Esperanza, Inc., a nonprofit corporation based in Philadelphia,
Pennsylvania, applied to the Federal Communications
Commission in 2013 for a license to construct and operate a
Low Power FM Radio (LPFM) station in Philadelphia. The
Media Bureau of the Commission dismissed the Appellant’s
application. The Commission affirmed, LPFM MX Group 304,
NAACP Social Justice Law Project, et al., Application for a
Construction Permit for a New LPFM Station at Philadelphia,
Pennsylvania, 30 FCC Rcd. 13983 (2015) (the Order), and the
Appellant now asks this court to vacate that decision. We
affirm the decision of the Commission.

I. Background

     In 2000, the Commission introduced the LPFM service “to
create opportunities for new voices on the air waves and to
allow local groups, including schools, churches and other
community-based organizations, to provide programming
responsive to local community needs and interests.” Creation
of Low Power Radio Service, 15 FCC Rcd. 2205, 2213 (2000).
To that end, it limited “eligibility for LPFM licenses … to
noncommercial, educational entities and public safety
entities.” Id. at 2209. Although the Commission is required to
resolve “mutually exclusive” applications by commercial
applicants through a competitive bidding process, id. at 2213
(citing 47 U.S.C. § 309(j)), the Commission resolves mutually
exclusive LPFM applications through a point system, in
                                3
keeping with the noncommercial nature of the new service, id.
at 2258.

     Under that system, the Commission gives an applicant one
point for each of six characteristics, such as having an
“established community presence of at least two years.”
Commission Identifies Tentative Selectees in 111 Groups of
Mutually Exclusive Applications Filed in the LPFM Window,
29 FCC Rcd. 10847, 10848 (2014).

    Several community organizations, including the
Appellant, applied during the October 2013 filing period to
construct an LPFM station in Philadelphia, PA. After the
Commission identified eleven applications, including that of
the Appellant, as mutually exclusive, Media Bureau Identifies
Mutually Exclusive Applications, 28 FCC Rcd. 16713, 16715
(2013), it awarded five points to each of seven of the applicants,
thus creating a seven-way tie, 29 FCC Rcd. at 10857-65
(announcing the “tentative selectees, i.e., the single applicant
with the highest point total or the applicants tied for the highest
point total from each [mutually exclusive] group,” id. at
10847). Under the Commission’s procedures, 47 C.F.R.
§ 73.872(c), in order to break a tie “two or more of the tied
applicants in each [mutually exclusive g]roup may propose to
share use of the frequency by filing … a time-share proposal.”
29 FCC at 10852. The Commission then “aggregate[s] the
point totals of applicants that submit acceptable time-share
proposals.” Id.

     Four of the tied applicants, not including the Appellant,
filed a timeshare agreement and received 20 points. This group
comprised G-Town Radio, Germantown United Community
Development Corp., Germantown Life Enrichment Center, and
South Philadelphia Rainbow Committee Community Center,
Inc. (collectively, the Timeshare Applicants). The Appellant,
                               4
together with another applicant, the Social Justice Law Project
of the Philadelphia NAACP, Inc., which had received five
points, also filed a timeshare application, thereby receiving ten
points. Because their point total was higher, the Timeshare
Applicants were awarded the license.

     Two months before the Timeshare Applicants filed their
agreement, the Appellant and the NAACP Project had
petitioned the Commission to deny several applications,
including those of three of the Timeshare Applicants, viz., G-
Town Radio, Germantown United Community Development
Corporation, Germantown Life Enrichment Center, and
Historic Germantown Preserved. In its petition to deny, the
Appellant argued those four applicants had violated the
Commission’s rule prohibiting multiple applications, by or on
behalf of the same applicant, 47 C.F.R. § 73.3520, alleging that
the parties were all acting on behalf of G-Town Radio. The
three Germantown applicants in the Timeshare group filed an
opposition, claiming they were all independent entities, each of
which “pledg[ed] to operate a radio station on their own” but

       recognized their best chance at operating a station
       dedicated to Germantown was by working together at
       the outset with plans to potentially aggregate points
       during the Mutually Exclusive … stage so that they
       might share time on a single station.

    In reply to the opposition, the Appellant argued this pre-
application collaboration by the Germantown entities was
prohibited according to a blog post authored by William T.
Lake, the Chief of the Media Bureau, intended to give guidance
to applicants. Updated: The Low Power FM Application
Window Is Fast Approaching, FCC BLOG (Oct. 21, 2013, 3:13
PM), https://www.fcc.gov/news-events/blog/2013/10/21/updat
                               5
ed-low-power-fm-application-window-fast-approaching. The
Blog Post provided “reminders and highlights” concerning the
application process for the “new low-power FM radio station
licenses during the next window, October 15 – November 14,
2013.” Id. As relevant to this case, Mr. Lake noted:

       Third, we will permit organizations in a community to
       work together to file a single … application.
       Alternatively, organizations in a community could
       apply separately – for the same or different frequency –
       knowing that they may decide later to aggregate points
       so they can negotiate a time-share agreement if the
       Commission determines that they are tied with the
       highest point total in the same mutually exclusive group
       …

       Fourth, please bear in mind that it is the specified
       applicant on the application who must intend to carry
       out the station construction and operation described in
       the application. Therefore, multiple groups should not
       attempt to maximize the chances of receiving an LPFM
       construction permit by submitting multiple applications
       under the different groups’ names with a prior
       understanding that the groups will later share time or
       ownership with each other if just one applicant
       succeeds in getting a construction permit. If this prior
       understanding does exist, then all the applicants must
       be listed as parties to the application, and only one
       application can be filed (our rules only allow for one
       application per organization). The FCC requires
       applicants to be truthful when listing all the parties that
       have control over the applicant entity and, in the event
       the application is granted, would have control over the
       future LPFM station.
                               6
Id. We shall refer to these two paragraphs as the Third and
Fourth Paragraphs.

     The Media Bureau responded to the timeshare applications
and petitions to deny in a single decision, in which it granted
the application of the Timeshare Applicants, dismissed the
applications of the Appellant and others, and denied the
Appellant’s petition to deny the applications of the four
Germantown applicants. The Bureau concluded the Appellant
and the NAACP Project, its timeshare partner, “have not
demonstrated that the Germantown Applicants violated any [of
the Commission’s rules] in coordinating their applications with
the intention of filing a joint time-share agreement or that the
applications were filed for the benefit of G-town.” First, the
Bureau found no evidence of “common control of the
Germantown Applicants as a group,” noting that each had an
“independent corporate history and independent board,” and
also noting the inclusion of a non-Germantown applicant,
South Philadelphia, in the final timeshare group and the
exclusion of Historic Germantown, one of the alleged
colluders. The Bureau went on to say “there is no Rule
prohibiting LPFM applicants from filing separate applications
with the goal of arriving at a timeshare agreement, provided
that each applicant remains under separate control and intends
to construct and operate the proposed station if its application
is granted.” The Bureau also observed that the Third Paragraph
of the Blog Post had “specifically approved of such
agreements,” adding that the Appellant’s

       selective quotation from the Commission’s Blog
       ignores that coordinated applications from multiple
       applicants were prohibited only in cases where there is
       “a prior understanding that the groups will later share
       time or ownership with each other if just one applicant
       succeeds in getting a construction permit.”
                               7

     The Appellant petitioned the Media Bureau for
reconsideration, which the Timeshare Applicants opposed.
The Bureau denied reconsideration, once again concluding
“that the Time-Share Applicants’ filing of separate applications
and aggregation of points were consistent with the relevant
portion of the Blog Post.” The Bureau explained that the
Appellant had misinterpreted the Blog Post:

       Aggregation is explicitly limited by rule to “tied
       applicants” with “the same point total” whereas [the
       Appellant and its co-petitioner] rely on a portion of the
       blog directed at circumstances where “just one
       applicant succeeds in getting a construction permit,”
       e.g., a single applicant with the most points
       nevertheless has previously committed to allow others
       to share time even if the others would be eliminated due
       to fewer points or other problems.

The Appellant sought review by the Commission, which the
Commission denied for the reasons given by the Bureau:
“Neither the [Commission’s rules] nor the LPFM Blog Post
prevented the Germantown Applicants from agreeing to
aggregate their comparative points prior to filing their
applications.” 30 FCC Rcd. 13983, 13983.

II. Analysis

    The question presented by the Appellant is whether the
Blog Post prohibits timesharing arrangements between LPFM
applicants before tentative selectees are announced. Because
we conclude the Appellant’s interpretation of the Blog Post is
not correct, we affirm the Commission’s denial of the
Appellant’s application for review without reaching the
                                8
Appellant’s claim that the Blog Post – as the Appellant
interprets it – is binding upon the agency.

A. The Commission’s Interpretation of the Blog Post

     Under the Administrative Procedure Act, we are to “hold
unlawful and set aside agency action, findings, and conclusions
found to be … arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A).
Although we defer to an agency’s interpretation of its own
regulation if it is not “plainly erroneous or inconsistent with the
regulation,” Auer v. Robbins, 519 U.S. 452, 461 (1997)
(internal quotation marks omitted), “it is the court that
ultimately decides whether a given regulation means what the
agency says.” Perez v. Mortg. Bankers Ass’n, 135 S. Ct. 1199,
1208 n.4 (2015).

     The Appellant argues the Blog Post said entry into
timesharing arrangements was prohibited before the filing of
parties’ applications, and until the Commission has announced
the points awarded to each applicant. For this, the Appellant
relies upon the Fourth Paragraph of the Blog Post, insofar as it
states:

        [M]ultiple groups should not attempt to maximize the
        chances of receiving an LPFM construction permit by
        submitting multiple applications under the different
        groups’ names with a prior understanding that the
        groups will later share time or ownership with each
        other if just one applicant succeeds in getting a
        construction permit.

The Commission argues, as the Media Bureau said, that the
arrangement here was consistent with the Third Paragraph,
which provides:
                               9

       [O]rganizations in a community could apply separately
       – for the same or different frequency – knowing that
       they may decide later to aggregate points so they can
       negotiate a time-share agreement if the Commission
       determines that they are tied with the highest point total
       in the same mutually exclusive group.

Therefore, per the Commission, the Appellant’s proposed
interpretation of the Fourth Paragraph would make it
inconsistent with the Third Paragraph.

     The Appellant discounts the Commission’s reading of the
Third Paragraph, arguing that paragraph merely “explains that
parties are obviously allowed to know that the LPFM licensing
regime allows for aggregation of points upon the awarding of
tied point totals to multiple applicants.” According to the
Appellant, the Fourth Paragraph instead prohibits applications
from parties that have entered into a “preexisting agreement to
share points.” In other words, according to the Appellant,
“know[ledge] that [the applicants] may decide later to
aggregate points,” as permitted by the Third Paragraph, is
different from “a prior understanding that the groups will later
share time,” which is prohibited by the Fourth Paragraph.

     This distinction is seemingly irrelevant considering the
Commission’s determination that the record does not show the
Germantown applicants entered into any sort of binding
agreement. Passing that point, we agree with the Commission
that the Appellant’s distinction between “concrete agreements
to share points” (prohibited) and “discussions” of future plans
(permitted) cannot be drawn from the Blog Post and would be
difficult to enforce. As the Commission persuasively explains,
the phrase in the Third Paragraph, “knowing that they may
decide later to aggregate points,” alludes to the Commission’s
                                10
requirement that timeshare agreements may be filed only after
“tentative selectees” are announced by the Commission.

     Next, the Appellant contends a prohibition of timeshare
arrangements before tentative selectees are announced is
implicit in the Commission’s regulations requiring applicants
to submit timeshare agreements only after that announcement.
As the Commission points out, however, the reason for this
requirement is simply that “[i]t would make little sense to allow
premature submission of time-sharing arrangements that may
turn out to be invalid if one of the parties is found ineligible to
participate.”

     As the Media Bureau stated in its denial of the petition for
reconsideration, the Appellant’s interpretation also requires us
to ignore the phrase in the Fourth Paragraph, “if just one
applicant succeeds in getting a construction permit.”
According to the Commission, the Fourth Paragraph merely
“forbids agreements that would allow an organization that does
not qualify as a tentative selectee (and thus is not eligible to
receive the license or to participate in any time-sharing
arrangement) to nonetheless share in a winning applicant’s
airtime.” The Commission argues this interpretation must be
understood in light of the last sentence, which states
“applicants [must] be truthful when listing all the parties that
have control over the applicant entity and, in the event the
application is granted, would have control over the future
LPFM station”; that disclosure would not be necessary if, as in
this case, each party to a timesharing agreement also had
applied separately and was listed in the agreement as a group
member. We agree.

     The Appellant, however, argues the Commission’s
interpretation is implausible because “when ‘just one applicant
succeeds in getting a construction permit,’” that one applicant
                                11
must have received the highest point total and anticipated with
certainty that it would do so, thus leaving “no way for [a] prior
agreement between the parties to ‘maximize the chances of
receiving an LPFM construction permit.’” The Commission
convincingly responds that the award of points is not always a
straightforward exercise, citing several disputes in LPFM
licensing matters to show the award of points is not as
predictable as the Appellant assumes. Because applications are
also often rejected for technical reasons and applicants cannot
always predict who will be placed in a “mutually exclusive”
group, the Commission persuasively argues that a sole winning
applicant could have rationally sought to “maximize” its
chances by entering into an agreement with others at some
point before tentative selectees are announced.

     Finally, the Appellant contends its reading of the Blog Post
is more sensible than the Commission’s because allowing
agreements to aggregate points before tentative selectees are
announced would invite “gamesmanship.” Here, it argues, the
Germantown applicants “stack[ed] the deck in their favor …
virtually ensur[ing] they would win the license from the
outset”; only the Appellant’s reading would “level[] the
playing field for a strong applicant like Esperanza that applied
in good faith, to ensure that [it] is not shut out of the process,”
and would give “all of the tied entities a shot at teaming up with
others to amass the most aggregated points.”

     The point is not without some merit. In its 2012 Report
and Order the Commission acknowledged “the potential for
gamesmanship in the voluntary timesharing process,” but
decided to stick with that process because “it is one of the most
efficient and effective means of resolving mutual exclusivity
among tied LPFM applicants.” Creation of a Low Power
Radio Service, Sixth Report & Order, 27 FCC Rcd. 15402,
15474 (2012). Had the Commission committed in 2012 to
                               12
reducing gamesmanship at all costs, then the Commission’s
rejection of the Appellant’s interpretation of the Blog Post
would seem anomalous and, if unexplained, perhaps arbitrary
and capricious. But the Commission struck a balance,
accepting the risk of some gamesmanship in order to encourage
voluntary resolutions. Id. The time for objecting to that
determination has long since passed. See 47 U.S.C. § 402.

     In sum, the Appellant has given us no reason to think the
Commission’s interpretation of the Blog Post is arbitrary and
capricious. Therefore, we need not reach the question whether
the Blog Post is binding upon the Commission.

B. Fair Notice

     The Appellant also argues it did not have fair notice of the
Commission’s interpretation of the Blog Post. See, e.g.,
Satellite Broad. Co. v. FCC, 824 F.2d 1, 4 (D.C. Cir. 1987).
We agree with the Commission that the Appellant has forfeited
this argument.

     To preserve the argument for appellate review, the
Appellant was required to present it to the Commission in its
application for review of the Media Bureau’s decision. 47
U.S.C. § 405(a). See, e.g., Bartholdi Cable Co. v. FCC, 114
F.3d 274, 279 (D.C. Cir. 1997) (“It is ‘the Commission’ itself
that must be afforded the opportunity to pass on the issue”).
The Appellant argues it did present the argument in its
application for review when it argued that it would have tried
to make a similar timesharing agreement “[h]ad the policy on
pre-application and pre-mutually exclusive phase agreements
to aggregate points and agree to timeshare agreements been
clear.”
                               13
     That submission did not raise the issue of “fair notice”
with sufficient clarity to require the Commission to pass upon
it. The quoted passage appears at the end of a section entitled
“The Bureau Unlawfully Addressed a Novel Question of Law
or Policy in its July Order,” in which the Appellant argued the
Media Bureau “exceeded its authority” under a Commission
regulation, 47 C.F.R. § 0.283(c), providing that the Chief of the
Media Bureau does not have authority to decide “[m]atters that
present novel questions of law, fact or policy that cannot be
resolved under existing precedents and guidelines.” In denying
review, the Commission disagreed on the point the Appellant
did argue, stating: “The Bureau’s determination that the
applicable rules do not prohibit the subject agreement between
the Germantown Applicants fell squarely within [its]
authority.” 30 FCC Rcd. 13983, 13983 n.10.

      The question of forfeiture vel non under § 405(a) is
“whether a reasonable Commission necessarily would have
seen the question raised before us as part of the case presented
to it.” NTCH, Inc. v. FCC, 841 F.3d 497, 508 (D.C. Cir. 2016)
(internal quotation marks omitted). Here, the Appellant argued
the Media Bureau had exceeded its authority, not that it had
deprived the Appellant of fair notice regarding the meaning of
the Blog Post. Therefore the Commission had no chance to
pass upon the issue of fair notice and the issue is not properly
before the court.

III. Conclusion

    Because the Appellant’s interpretation of the Blog Post is
incorrect and it forfeited its argument regarding fair notice, the
decision of the Commission is

                                                    Affirmed.