21ST Century Telesis Joint Venture v. F.C.C.

• Decision Date: 31 January 2003
• Docket Number: No. 01-1435.,01-1435.
• Citation: 318 F.3d 192
• Parties: 21st CENTURY TELESIS JOINT VENTURE and 21st Century Bidding Corporation, Appellants, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee. Salmon PCS, LLC, Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 192

318 F.3d 192

21st CENTURY TELESIS JOINT VENTURE and 21st Century Bidding Corporation, Appellants, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee.

Salmon PCS, LLC, Intervenor.

No. 01-1435.

United States Court of Appeals, District of Columbia Circuit.

Argued November 5, 2002.

Decided January 31, 2003.

As Amended January 31 & February 6, 2003.

Rehearing and Rehearing En Banc Denied March 14, 2003.

COPYRIGHT MATERIAL OMITTED

Appeal of Orders of the Federal Communications Commission.

Russell D. Lukas argued the cause for appellants. With him on the briefs was George L. Lyon, Jr. Thomas Gutierrez entered an appearance.

Stanley R. Scheiner, Counsel, Federal Communications Commission, argued the cause for appellee. With him on the brief were John A. Rogovin, Deputy General Counsel, and Daniel M. Armstrong, Associate General Counsel.

Before: RANDOLPH and ROGERS, Circuit Judges, and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge ROGERS.

Opinion concurring in part and dissenting in part filed by Senior Circuit Judge STEPHEN F. WILLIAMS.

ROGERS, Circuit Judge:

The Federal Communications Commission canceled nineteen broadband licenses held by 21st Century Telesis Joint Venture and 21st Century Bidding Corporation (collectively "21st Century") following 21st Century's failure to make timely installment payments on its licenses. 21st Century appeals Commission orders determining that 21st Century was provided adequate notice before cancellation of its licenses, and declining to consider 21st Century's late filed arguments that the automatic cancellation rule exceeds the Commission's statutory authority and as applied violates due process. In re Request for Extension of Installment Payment Due Date, 15 F.C.C.R. 14,814, 2000 WL 1114286 (2000) ("Division Order"), reconsideration denied, In re Licenses of 21st Century, 15 F.C.C.R. 25,113, 2000 WL 1862889 (2000) ("Reconsideration Order"), further reconsideration denied, In re Licenses of 21st Century, 16 F.C.C.R. 17,257, 2001 WL 1104570 (2001) ("Second Reconsideration Order"). We dismiss the appeal in part and we affirm the Commission's decision. Because 21st Century's challenges to the automatic cancellation of its C block licenses are either moot or unripe, 21st Century lacks standing to bring those challenges, and we dismiss that part of the appeal. Because 21st Century fails to show with respect to its F block licenses either that the Commission abused its discretion under 47 U.S.C. § 405 and 47 C.F.R. § 1.106(f) by declining to consider late filed hearing arguments, thus making it improper for the court to address those contentions, or that the Commission failed to provide sufficient notice of 21st Century's payment obligations we affirm the Commission's orders.

I.

The Communications Act of 1934 ("Act"), as amended in 1993, authorizes the Commission to award radio licenses "through a system of competitive bidding." 47 U.S.C. § 309(j)(1). In designing such a system, Congress directed the Commission to "promot[e] economic opportunity ... by disseminating licenses among a wide variety of applicants, including small businesses." Id. § 309(j)(3)(B). Consistent with this goal, Congress further directed the Commission to "consider alternative payment schedules and methods of calculation, including lump sums or guaranteed installment payments." Id. § 309(j)(4)(A). Pursuant to this mandate, the Commission reserved two blocks of licenses, the "C" and "F" blocks, for bidding by small businesses, as defined in terms of annual gross revenues and total assets. In re Implementation of Section 309(j) of the Communications Act, 9 F.C.C.R. 5532 ¶ ¶ 12, 115, 1994 WL 372170 (1994). Noting that the "primary impediment to participation" in license auctions by small businesses is "lack of access to capital," id. at ¶ ¶ 10, 135, the Commission adopted an installment payment plan to allow successful bidders in the C and F blocks to "pay their winning bid over time." Id. at ¶ ¶ 16, 136-38. In announcing these measures, the Commission stated that "[t]imely payment of all installments will be a condition of the license grant and failure to make such timely payment will be grounds for revocation of the license." Id. at ¶ 138.

In May 1996 and January 1997, 21st Century was a successful bidder, ultimately obtaining thirteen C block licenses and six F block licenses. Each license stated on its face that it was "conditioned upon the full and timely payment of all monies due [under the Commission's installment plan]" and that "[f]ailure to comply with this condition will result in automatic cancellation of this authorization." Under the Commission's installment plan C block licensees were required to pay 90% of their net bid price over ten years, with interest only paid for the first six years and interest and principal paid for the remaining four, 47 C.F.R. § 24.711(b)(3) (1996), and F block licensees were required to pay 80% of their net bid price over ten years, with interest only paid for the first two years and interest and principal paid for the remaining eight. 47 C.F.R. § 24.716(b)(3) (1996).

After receiving numerous requests for relief from financially troubled licensees, the Commission, on March 31, 1997, suspended installment payment obligations for C block licensees, and on April 28, 1997, extended the suspension to F block licensees. In re Amendment of the Comm'n's Rules Regarding Installment Payment Financing for PCS Licensees, Second Report and Order and Further Notice of Proposed Rule Making, 12 F.C.C.R. 16,436 ¶ ¶ 6, 14, 1997 WL 643811 (1997) ("Restructuring Order"). The suspensions ended on September 25, 1997, when the Commission adopted three new payment methods "designed to assist C block licensees experiencing financial difficulties." Id. at ¶ ¶ 1, 31-69. The Commission gave licensees until June 8, 1998 to choose one of the three restructuring schemes, and until July 31, 1998 to resume installment payments. Public Notice, Wireless Telecommunications Bureau Announces June 8, 1998 Election Date for Broadband PCS C Block Licensees, 13 F.C.C.R. 7413, 1998 WL 180790 (1998). Among the restructuring options, 21st Century chose disaggregation, which required it to return half of its 30 MHz of spectrum to the Commission in return for forgiveness of the outstanding debt associated with the returned 15 MHz, Restructuring Order, 12 F.C.C.R. 16,436 ¶ ¶ 39-40, and the Commission sent 21st Century a Note Modification dated July 15, 1998, setting the dates for future installment payments as "October 31, January 31, April 30, and July 31 of each year."

Several months before licensees were to resume payment, the Commission adopted rules regarding untimely payments. 47 C.F.R. § 1.2110(f) (1999). Under the new regulations, licensees have an automatic 90-day "non-delinquency" period after the installment payment due date, during which time payment can be made with a five percent late fee. Id. at § 1.2110(f)(4)(I). If the licensee fails to remit the missed installment during this first grace period, the rule provides for a second automatic 90-day period in which the licensee can remit payment with an additional late fee of ten percent. Id. at § 1.2110(f)(4)(ii). Failure to submit an installment by the last day of the second 90-day period results in automatic cancellation of the license without further action by the Commission. Id. at § 1.2110(f)(4)(iii).

21st Century made timely installment payments through April 30, 1999. On July 20, 1999, 21st Century received a payment notice from the Commission reminding it of the July 31, 1999 payment deadline. 21st Century missed this deadline, and in accordance with 47 C.F.R. § 1.2110(f)(4)(I), received a ninety-day extension. On October 19, 1999, 21st Century received a notice from the Commission reminding it to make its October 31 payment and its July 31 payment with the requisite late fee. 21st Century again failed to make its July 31 payment, and in accordance with 47 C.F.R. § 1.2110(f)(4)(ii), received a second ninety-day extension, making the final deadline for payment January 27, 2000. When 21st Century did not submit its July 31, 1999 payment by January 27, 2000, its licenses were automatically cancelled.

Thereafter, beginning on February 2, 2000, 21st Century sought an extension of the payment deadline or a waiver of the automatic cancellation rule. In the first of three letters, James LaBelle, 21st Century's Chief Executive Officer, explained that 21st Century was "unable to ensure that wire transfers would be received [by the Commission by] January 27, 2000," but that as of February 2, 2000, such funds were available to be sent upon assurance from the Commission that the licenses had not been canceled; the letter also stated that some of the payment notices from the Commission had not been received or had been received late. See Letter from James A. LaBelle to Magalie Roman Salas (Feb. 2, 2000). The second letter did not mention the payment notices, but reiterated that 21st Century had the funds to cover the payment if the Commission could assure it that its licenses had not been canceled. See Letter from James A. LaBelle to Magalie Roman Salas (Apr. 25, 2000). The third letter stated both that the Commission had not met its responsibility of sending payment notices to 21st Century, and that 21st Century had sufficient funds to make payment. See Letter from James A. LaBelle to Magalie Roman Salas (July 25, 2000). On August 7, 2000, the Commission's Auction and Industry Analysis Division ("Division") denied 21st Century's request for an extension of the January 27, 2000 late payment deadline and its request for waiver of the Commission's automatic cancellation rule, stating that "21st Century was aware of the deadline for submission of the installment payment and had ample time to secure financing." Division Order, 15 F.C.C.R. 14,814 (referred to by 21st Century as "Division Letter Ruling"). The...