Court Opinion

ID: 185276
Source: CourtListenerOpinion
Date Created: 2011-02-05 02:30:00+00
Date Added: 2024-06-11T17:26:14.526217
License: Public Domain

232 F.3d 227 (D.C. Cir. 2001)
U.S. AirWaves, Inc., Petitionerv.Federal Communications Commission and United States of America, RespondentsNextWave Telecom Inc., et al., Intervenors
Nos. 98-1266 & 98-1267
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 5, 2000Decided November 21, 2000

On Petitions for Review of Orders of the Federal Communications Commission
Robert A. Long, Jr. argued the cause for petitioners.  With  him on the briefs was Andrew J. Heimert.
Stanley R. Scheiner, Counsel, Federal Communications  Commission, argued the cause for respondents.  With him on  the brief were Christopher J. Wright, General Counsel, Dan- iel M. Armstrong, Associate General Counsel, Joel I. Klein,  Assistant Attorney General, U.S. Department of Justice,  Catherine G. O'Sullivan, and Andrea Limmer, Attorneys.   John E. Ingle, Deputy Associate General Counsel, and James  M. Carr, Counsel, Federal Communications Commission, en- tered appearances.
Ian Heath Gershengorn argued the cause for intervenor  NextWave Telecom Inc.  With him on the brief was Donald  B. Verrilli, Jr.  David A. LaFuria and Thomas Gutierrez  entered appearances.
Before: Edwards, Chief Judge, Ginsburg and Tatel, Circuit Judges.
Opinion for the court filed by Circuit Judge Ginsburg.
Ginsburg, Circuit Judge:

1
Before us are petitions for review  of two rulemaking orders of the Federal Communications  Commission.  The orders changed the financial terms applica- ble to companies that purchased licenses to provide personal  communications services (PCS) at an auction in which bidding  was limited to small businesses and entrepreneurs.  See  Amendment of the Commission's Rules Regarding Install- ment Payment Financing for [PCS] Licensees, Second Re- port and Order and Further Notice of Proposed Rule Mak- ing, 12 F.C.C.R. 16,436 (1997) (Restructuring Order);  and  Amendment of the Commission's Rules Regarding Install- ment Payment Financing for [PCS] Licensees, Order on  Reconsideration of the Second Report and Order, 13 F.C.C.R.  8345 (1998) (Reconsideration Order).  Petitioners U.S. Air- waves, Inc. (hereinafter Airwaves) and Sprint Spectrum L.P.  characterize the rules as a benefit given retroactively to  incumbent licensees, to the detriment of losing bidders in the   spectrum auction and of competitors in the PCS industry, and  therefore as unauthorized, unreasonable, and arbitrary and capricious.  Intervenor NextWave Inc., a successful bidder in  the original auction, supports the new rules;  it also maintains  that neither petitioner has standing to challenge them.

2
We hold that Airwaves, as a disappointed bidder in the  original auction, does have standing to petition for review of  the new rules;  we therefore do not reach the question  whether Sprint Spectrum L.P. also has standing.  We hold  further that, although the changes to the Commission's fi- nancing rules are indeed retroactive, the Commission had  adequate reasons for adopting them, and that it reasonably  balanced competing goals and acted within its statutory au- thority.

I. Background

3
Broadband PCS are a type of mobile telephone technology.   See Omnipoint Corp. v. FCC, 78 F.3d 620, 626 (D.C. Cir.  1996).  In order to provide PCS a company must get from the  Commission a license to use a portion of the electromagnetic  spectrum.  In 1994 the Commission decided to distribute such  licenses through a system of competitive bidding, pursuant to  47 U.S.C. § 309(j)(1).  See Implementation of Section 309(j)  of the Communications Act--Competitive Bidding, Second  Report and Order, 9 F.C.C.R. 2348, pp 54-58 (1994) (2d  R&O).  The Commission designated a portion of the spec- trum for the provision of PCS and divided that portion into  six blocks, which it labeled A through F.  In keeping with its  statutory mandate to "ensure that small businesses ... are  given the opportunity to participate" in spectrum auctions, 47  U.S.C. § 309(j)(4)(D), the Commission limited the bidding for  "C-block" spectrum to entrepreneurs and small companies.   See Restructuring Order at p 8;  cf. Omnipoint, 78 F.3d at  626 (upholding the limitation).  The Commission offered small  businesses bidding for C-block licenses an "installment pay- ment plan" under which they could pay 10% down and the  balance "over a period of ten years, with interest only paid for  the first six years and interest and principal for the remaining  four."  Restructuring Order at p 8.  (Entrepreneurs who did   not qualify as small businesses were offered less favorable  payment terms.  See id. at n.10.)

4
Between May and July 1996 some 90 different bidders  bought at auction 493 licenses--one for each "basic trading  area" (BTA) in the nation--to use 30 MHz of spectrum for  the provision of PCS.  Their bids totaled $10.2 billion, a  figure some observers attributed to irrational exuberance;  on  average, C-block licensees agreed to pay nearly three times  per potential customer what the winning bidders in the A-  and B-block auctions had paid.  See Restructuring Order at  p 9 & n.11;  Peter Spiegel, Hollow Victory, Forbes, Jan. 27,  1997, at 50.

5
Within nine months of the C-block auction, it became clear  that a number of high bidders might not be able to make  their scheduled payments.  See Wireless Telecommunica- tions Bureau Seeks Comment on Broadband PCS C and F  Block Installment Payment Issues, Public Notice, 12  F.C.C.R. 21,015, 21,015 & n.4 (1997).  In March, 1997 the  Commission suspended the payment obligations of all C-block  licensees pending a review of its installment payment terms.   See Installment Payments for PCS Licenses, Order, 12  F.C.C.R. 17,325, p 2 (1997).

6
In October, 1997 the Commission issued the first of the two  orders challenged in this case.  That order ended the suspen- sion of payments announced the previous March and offered a  "menu" of new financing options to all C-block licensees.  See  Restructuring Order at pp 6, 25.  Upon reconsideration the  Commission retained the menu approach but altered several  of the offerings in important particulars.  See Reconsidera- tion Order at pp 8-10.  The revised scheme also permitted a  licensee to select a different option for licenses it held in each  "Major Trading Area" (MTA)--referring to the 51 geographic  regions into which the Commission has divided the nation--so  long as it applied the same option to all its licenses within  each MTA.  See Reconsideration Order at p 17.  Upon the  promulgation of the order on reconsideration, each licensee  was required, in order to avoid default, to choose a menu  option for each of its MTAs.  See id. at p 23.

7
The menu offered each licensee four choices.  First, the  licensee could continue to make payments under the original  terms of the auction.  See Restructuring Order at p 6.

8
Second, the licensee could surrender all its licenses for a  particular MTA and receive a "prepayment credit" in an  amount equal to 70% of the down payments and 100% of any  installment payments it had made on those licenses, as well as  forgiveness of its debt on the returned licenses.  The prepay- ment credit would be put toward payment for such other PCS  licenses as the licensee continued to hold.  The licensee could  either provide additional funds in order to prepay all the  licenses it retained in a given MTA or, were it to rely solely  upon its prepayment credits, could prepay as many licenses  as possible in a given MTA and surrender any remaining  licenses to be auctioned anew.  See Restructuring Order at  p 64;  Reconsideration Order at pp 38, 41-43.

9
Third, the licensee could elect to "disaggregate" each of its  licenses within a given MTA, returning 15 MHz of spectrum  to the Commission and retaining 15 MHz under license.  The  licensee's outstanding debt to the Commission with respect to  returned spectrum would be forgiven.  The licensee would  also receive a credit equal to 40% of its down payments on the  returned spectrum, which it could apply to the payments due  on the retained spectrum.  A licensee combining disaggrega- tion and prepayment would receive a credit equal to 70% of  its down payment for returned spectrum, which it could use  to prepay the Commission either for the retained 15 MHz of  the disaggregated licenses or for other PCS licenses it re- tained.  See Restructuring Order at pp 38-39;  Reconsidera- tion Order pp 51, 54.

10
Finally, the licensee could simply surrender its licenses for  a particular MTA and be forgiven its outstanding debt with  respect to those licenses.  A licensee electing this so-called  "amnesty" option could either retain the right to rebid when  its licenses were sold at auction again or forego the opportu- nity to rebid and receive a credit of 70% of its original down  payment;  it could apply that credit to payments due in  connection with the prepayment or disaggregation of licenses   that it retained in other MTAs.  See Reconsideration Order  at p 12.

11
The Commission states that in crafting this menu of options  it "considered and balanced" several policy goals:  maintain- ing the integrity of spectrum auctions;  ensuring fairness to  actual and prospective licensees;  resolving all issues prompt- ly;  and complying with its statutory mandates to "[p]romot[e]  economic opportunity and competition in the marketplace,"  and to "ensure 'that new and innovative technologies are  readily accessible to the American people by avoiding exces- sive concentrations of licenses and by disseminating licenses  among a wide variety of applicants, including small busi- nesses.' "  See Restructuring Order at p 2 (quoting 47 U.S.C.  § 309(j)).

II. Analysis

12
Airwaves and Sprint PCS contend that the Commission  changed its original auction rules arbitrarily and capriciously  and without statutory authority.  After analyzing the petition- ers' standing, we consider the Commission's claim that the  new rules were foreshadowed in the original auction rules and  therefore do not represent a significant change in policy.  We  then turn to the questions of arbitrariness and of statutory  authority.

13
A.   Do petitioners have standing?

14
The "irreducible constitutional minimum" for standing in an  Article III courtis that the petitioner was injured in fact, that  its injury was caused by the challenged conduct, and that its  injury would likely be redressed by a favorable decision of the  court.  Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61  (1992).  NextWave Inc., intervening in defense of the Com- mission, argues that Airwaves lacks standing because it can  demonstrate neither that it was injured in fact nor that its  alleged injury is redressable.

15
A bidder in a government auction has a "right to a legally  valid procurement process";  a party allegedly deprived of  this right asserts a cognizable injury.  DIRECTV, Inc. v.  FCC, 110 F.3d 816, 829 (D.C. Cir. 1997).  A disappointed  bidder "need not ... demonstrate that it would be successful   if the contract were let anew" but only that it was " 'able and  ready to bid ... and that the [rule] prevent[ed] it from doing  so on an equal basis.' "  Id. at 829-30 (quoting Northeastern  Fla. Chapter of Assoc. Gen. Contractors of America v. City of  Jacksonville, 508 U.S. 656, 666 (1993)).  Of course, in order to  show that its injury is redressable, a disappointed bidder  must demonstrate that it is "ready, willing, and able" to  participate in a new auction should it prevail;  but it need not  demonstrate that it will participate in such an auction regard- less of the circumstances then prevailing.  See Orange Park  Florida T.V., Inc. v. FCC, 811 F.2d 664, 672 & n.18 (D.C. Cir.  1987).

16
Airwaves meets these requirements.  It submitted bids in  the original C-block auction but dropped out before securing  any licenses.  It claims that it would have bid more had it  known that financial terms more favorable than those an- nounced at the time of the auction would later be offered to  winning bidders.  Airwaves further affirms, in the sworn  declaration of its chief executive, that it "intends" to bid in a  future reauction of PCS spectrum and that it is able to raise  the capital necessary to do so.  That is sufficient.

17
NextWave also argues that Airwaves cannot base its stand- ing upon its participation in the original auction because  Airwaves acknowledges that the original auction was fair;   Airwaves challenges only the way in which the Commission  treated licensees after the auction was completed.  In this  argument, however, NextWave misapprehends Airwaves'  claim, which is that post-auction revisions to the financing  options available to the high bidders constitute impermissibly  retroactive changes to the initial auction rules.  There is no  basis for suggesting, as NextWave seems to do, that ex post  changes can never affect the validity of a government auction.

18
Finally, NextWave argues that Airwaves fails to demon- strate that its claim is redressable by this court because it  does not allege that when it petitioned for review of the new  rules it was ready, willing, and able to bid in a new auction.   NextWave asserts that as of that date Airwaves had returned  all its investment capital to its investors and was not in good   standing in the State of Delaware because of a tax dispute,  for both of which reasons it would have been unable to bid in  any new auction that the Commission might have conducted.   NextWave's premise is correct:  Standing is determined as of  the date an action is filed, see Smith v. Sperling, 354 U.S. 91,  93 n.1 (1957);  but NextWave offers no persuasive reason to  think either that Airwaves lacked access to capital on that  date or that it would not have resolved its tax dispute in  Delaware had that been necessary in order to bid in a new  auction.  (In fact, the tax matter was resolved soon after the  filing.)  Absent any evidence to the contrary, Airwaves' asser- tion that it was ready, willing, and able to participate in a  rerun of the C-block auction satisfies the redressability re- quirement.

19
Having determined that Airwaves has standing, we do not  need to reach the question whether Sprint Spectrum L.P. has  standing as well, for Sprint presents no arguments beyond  those made by Airwaves.  See Railway Labor Executives'  Ass'n v. United States, 987 F.2d 806, 810 (D.C. Cir. 1993)  ("[I]f one party has standing in an action, a court need not  reach the issue of the standing of other parties when it makes  no difference to the merits of the case").

20
B.   Is the rule retroactive?

21
Airwaves argues that the changes in the Commission's  auction rules give a windfall to C-block licensees.  The  Commission and NextWave respond that the original auction  rules anticipate the possibility that the Commission might  revise its financing provisions, making the adoption of the  new rules foreseeable.*  Cf. Small Refiner Lead Phase- Down Task Force v. EPA, 705 F.2d 506, 547, 549 (D.C. Cir.  1983) (holding that final administrative rules that depart from  an agency's initial proposals do not require new notice and  comment if the final rules are a "logical outgrowth" of the  proposals, such that the parties "should have anticipated [that  they] might be imposed").

22
The Commission points out that the original auction rules  provided that "as a general rule" a defaulting bidder's licens- es would be deemed forfeit and reauctioned, 2d R&O at p 204,  which reasonably can be taken to suggest that forfeiture and  reauction were not to be the inevitable consequence of de- fault.  More important, the original rules specifically allowed  a licensee "that has defaulted or that anticipates default  under an installment payment program" to obtain a "three to  six month grace period" during which to "seek from the  Commission a restructured payment plan."  Id. at p 240.  In  addition, the original rules provided that default would occa- sion a "substantial penalty," Implementation of Section 309(j)  of the Communications Act--Competitive Bidding, Fifth Re- port and Order, 9 F.C.C.R. 5532, p 75 (1994), and under the  revised rule every licensee that fails to honor its original  payment obligations forfeits at least 30% of its down payment  on all spectrum that it returns to the Commission.

23
In some respects, however, the new rules clearly do contra- dict the Commission's previously stated policies.  The initial  auction rules provided that the Commission would consider  requests for financial restructuring on a "case-by-case basis."   2d R&O at p 240.  This certainly implied that the Commission  would not proceed by way of a further rulemaking and a new  rule of general application, see Bowen v. Georgetown Univ.  Hosp., 488 U.S. 204, 209 (1988).  The distinction is significant,  for the initial auction rules made only those licensees "that  ha[d] defaulted or that anticipate[d] default" eligible for a  grace period and financial restructuring.  2d R&O at p 240.   The C-block menu, in contrast, is available to all licensees  regardless of their financial condition.  See Restructuring  Order at p 6.

24
The new regulations therefore do not merely fill in the  details of a policy foreseeable at the time of the original  C-block auction;  instead, they constitute a secondarily retro- active change to the rules governing that auction.  See Bow- en, 488 U.S. at 219 (1988) (Scalia, J., concurring) (defining  "secondary retroactivity" as describing "rule[s] with exclu- sively future effect [that] ... affect past transactions") (em- phasis omitted).  A secondarily retroactively rule is valid only   to the extent that it is reasonable--both in substance and in  being made retroactive.  See id. at 220.  It is to reasonable- ness that we turn next.

25
C.   Are the regulations reasonable?

26
Airwaves argues that the rule is invalid for two related  reasons.  First, it contends that the Commission failed to  relate its offering of post-auction refinancing options to its  own stated goals.  Second, it argues that regardless whether  the Commission embraced fairness as a goal, the rule is  simply so unfair that it must be deemed arbitrary and capri- cious.

27
Under the arbitrary and capricious standard, this court  does not substitute its judgment for that of the administrative  agency.  See Motor Vehicles Mfrs. Ass'n of the United States,  Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983).   A regulatory decision in which the Commission must balance  competing goals is therefore valid if the agency can show that  its resolution "reasonably advances at least one of those  objectives and [that] its decisionmaking process was regular."   Fresno Mobile Radio, Inc. v. FCC, 165 F.3d 965, 971 (D.C.  Cir. 1999).  Because Airwaves does not challenge the regular- ity of the Commission's decisionmaking process, the issue now  before us is whether the Commission reasonably justified its  regulations with reference to at least one of its avowed goals.   See Restructuring Order at p 2.

28
The C-block menu withstands review under this standard:   The Commission justified each of the menu options and its  MTA-by-MTA selection principle with reference to one or  more of its stated goals.  In particular, the Commission  justified each of its menu options as "enabling C block  licensees to remain participants in the wireless market,"  which it found would hasten "the delivery of new services to  the public" and promote efficient use of the spectrum.  Re- consideration Order at p 10;  see Restructuring Order at  pp 43, 45 (disaggregation);  id. at p 53 (amnesty);  Reconsider- ation Order at p 40 (prepayment).  In addition, the Commis- sion justified the prepayment option as a way of minimizing  conflicts between the agency's roles as creditor and as regu-  lator.  See Reconsideration Order at p 40.  The Commission  explained disaggregation, as it did the provision for MTA-by- MTA election, in part as an effort to help small licensees plan  their businesses rationally.  See Restructuring Order at p 45;   Reconsideration Order at p 19.

29
Airwaves challenges the Commission's rationale in two  respects.  Its first point proceeds from the observation that  the Commission deemed "essential" two and only two of its  stated goals, namely, maintaining the integrity of the auction  process and ensuring fairness to all market participants.   Restructuring Order at p 3.  Airwaves claims that it is unrea- sonable for the Commission to adopt any policy that under- mines a goal that the agency itself has styled "essential."   This is an unduly cramped reading of the orders, however.   The Commission reasonably can treat fairness and integrity  as "essential" goals and yet recognize that they are matters of  degree.  Thus, the Commission may choose to sacrifice some  degree of fairness or integrity in order to gain other impor- tant objectives.  Several of the goals that the Commission  lists in addition (and therefore potentially in opposition) to  fairness and integrity--such as competition, speedy deploy- ment of services to the public, efficient use of the spectrum,  and participation of small businesses in the market--are  mandated by statute.  See 47 U.S.C. § 309(j)(3).  A more  reasonable construction of the Commission's statement that  fairness and integrity are "essential" goals, therefore, is that  in its view they must be included (along with those specified  in the statute) among the goals to be balanced.  This by no  means requires that they trump all other goals in every case  where there is conflict.

30
Airwaves also argues that, aside from the orders' failure to  advance the Commission's "essential" goals, they also fail to  advance the other goals the Commission invoked as justifica- tions for the menu options.  For example, Airwaves argues  that, contrary to the Commission's claims, the rule will retard  rather than hasten the availability of services to consumers;   instead of forcing a reauction that would transfer spectrum to  competent and solvent firms, the rule allows precisely those  companies that "have demonstrated financial irresponsibility   and undue optimism about their financial capabilities" to  retain their spectrum.  New buyers at auction may, as the  petitioner asserts, be more likely to effectuate a rapid build- out of wireless systems, but the Commission is reasonably of  the view that starting the licensing process all over again  would delay build-out.  We defer to the agency regarding a  predictive matter, such as this, within its expertise.  See  Fresno Mobile Radio, 165 F.3d at 971.

31
In a similar vein, Airwaves complains that, contrary to the  Commission's expectation, the rule will not promote the par- ticipation of small businesses in the wireless industry;  that  goal would be better effected by redistributing licenses to  small businesses in a new auction than by reinforcing the  current concentration of C-block licenses in relatively few  hands.  The petitioner's position is again plausible, but it is  also reasonable, again, for the Commission to expect that  small businesses generally will be better situated to face their  larger competitors in the wireless industry if those that  already have licenses are able to build their businesses in at  least some markets.  Again, we defer to the Commission's  expertise regarding such predictive issues.

32
Notwithstanding the Commission's reasoned justification,  the rule might still be arbitrary and capricious if, as Airwaves  claims, it is sufficiently unfair.  We agree with the petitioner  that the Commission systematically downplays the inequity of  the rule:  it clearly grants a substantial windfall not only to  distressed but also to healthy companies that bought licenses  in the initial auction.  Those companies can now discard the  licenses they have found, with the benefit of hindsight, to be  less valuable--without incurring the ordinary penalty for  default and, indeed, while recouping some of the payments  they have already made.  At the same time they can retain  the licenses they have found to be more valuable, subject only  to the requirement that they elect a single menu option within  each MTA.  Further, the rule allows them not only to concen- trate their resources in the most desirable markets but to  apply to the spectrum they retain some of the payments they  had made on spectrum they returned.  Obviously, those who  were outbid in the original auction would have bid more than   they actually did--and might have bid enough to win licens- es--had they known that the Commission later would make  such options available.

33
Having established that the Commission changed the rules  in a way that could not be foreseen, the question is whether,  under the circumstances, that was so unfair as to be arbitrary  and capricious.  We start from the intuitive premise that an  agency cannot, in fairness, radically change the terms of an  auction after the fact.  At the same time, an agency must be  allowed to adjust its policies to changing circumstances, with- in the framework of rules it established in advance of the  auction.  In this case the Commission determined that the  statutory goals of speeding the delivery of service to the  public and of facilitating the participation of small businesses  in the wireless market required it to liberalize the financial  terms available to C-block licensees.  See Reconsideration  Order at pp 7-8.  Competing goals do not absolve the agency  of its duty to losing bidders, of course, but the Commission  was careful to temper its liberalization accordingly.  The  agency did not simply forgive agreed-upon payments, much  less grant the winning bidders' more sweeping requests for  relief.  Rather, under each of the menu options it imposed  upon every distressed licensee a "substantial penalty"--in  every case at least 30% of the down payment for a returned  license, and up to 60% in the case of a licensee choosing  disaggregation without prepayment.

34
Considering the dramatic and unexpected business rever- sals faced by C-block licensees, and post-auction conditions in  the wireless market, we think the Commission reasonably  exercised its discretion to balance fairness to losing bidders  with the needs of the market and with the public interest.   We therefore conclude that the orders under review are  consistent with the Commission's stated goals, and that such  unfairness as they worked does not render them arbitrary  and capricious.

35
D.   Did the Commission exceed its statutory authority?

36
The Commission conducts spectrum auctions pursuant to  its authority to grant licenses "through the use of a system  of competitive bidding."  47 U.S.C. § 309(j)(1).  Airwaves   argues that post-auction concessions made to the winning  bidders effectively render the auction noncompetitive and  therefore without statutory authorization.  Airwaves argues  further that retroactive changes to auction rules violate the  requirement that the Commission "ensure that ... an ade- quate period is allowed ... after issuance of bidding rules[ ]  to ensure that interested parties have a sufficient time to  develop business plans, assess market conditions, and evalu- ate the availability of equipment."  Id. § 309(j)(3)(E).  Air- waves' argument here is that post-auction rule changes nec- essarily leave no time for interested parties to plan, assess,  or evaluate.

37
These arguments were not put before the Commission and  are therefore not properly before this court.  See Washington  Ass'n for Television & Children v. FCC, 712 F.2d 677, 680  (1983) ("[C]laims not presented to the agency may not be  made for the first time to a reviewing court").  Airwaves  suggests that the issue was adequately raised before the  Commission in the comment of another party, which argued  that "Section 309(j) does not ... contain any provision allow- ing the Commission to change the amount owed the govern- ment as a result of an auction."  The broad and general claim  that the Commission lacks statutory authority "to change the  amount owed" is materially different, however, from Air- waves' specific argument that the Commission violated the  statutory provisions requiring "a system of competitive bid- ding" and "an adequate period" for planning after auction  rules are issued.  Confronted only with the former, broad  claim, the Commission had no notice of the specific objections  now raised by Airwaves.  As we have said more than once  before, a litigant may not " 'sandbag' agencies by withholding  legal arguments ... until they reach the courts of appeal."   USAir, Inc. v. Department of Transp., 969 F.2d 1256, 1260  (D.C. Cir. 1992).

III. Conclusion

38
In summary, we hold that the changes to the Commission's  C-block auction rules are neither arbitrary and capricious,   nor unreasonable, nor without statutory authority.  Therefore  the petitions to review the rules are

39
Denied.

Notes:

*
 The implication of the Commission's account is that the possibil- ity of new rules is fully reflected in the prices paid;  hence there is  no windfall.