Benkelman Tele. Co. v. Fed Commun. Comm'n, 97-1245

Decision Date28 July 2000
Docket NumberN,No. 99-1331,No. 97-1245,No. 99-1247,97-1245,99-1247,99-1331
Citation220 F.3d 601
Parties(D.C. Cir. 2000) Benkelman Telephone Company, et al.,Petitioners v. Federal Communications Commission and United States of America, Respondents Nationwide Paging, Inc., et al.,Intervenors Metamora Telephone Company, Petitioner v. Federal Communications Commission and United States of America, Respondents. Advanced Paging, Inc, et al.,Petitioners v. Federal Communications Commission and United States of America, Respondents Robert L. Wagner, et al.,Petitioners v. Federal Communications Commission and United States of America, Respondents Personal Communications Industry Association, Petitioner v. Federal Communications Commission and United States of America, Respondents o. 97-1294,o. 99-1251,o. 99-1337
CourtU.S. Court of Appeals — District of Columbia Circuit

On Petitions for Review of Orders of the Federal Communications Commission

Carl W. Northrop argued the cause for the petitioners and intervenors. Timothy E. Welch, Kenneth E. Hardman, John D. Pellegrin, Frederick M. Joyce, Kenneth D. Patrich and Robert L. Hoggarth were on brief. Ray M. Senkowski, Christine M Crowe and David A. Gross entered appearances.

Roberta L. Cook, Counsel, Federal Communications Commission, argued the cause for the respondents. Christopher J. Wright, General Counsel, John E. Ingle, Deputy Associate General Counsel, Federal Communications Commission, Joel I. Klein, Assistant Attorney General, United States Department of Justice, and Robert B. Nicholson and Andrea Limmer, Attorneys, United States Department of Justice, were on brief. Daniel M. Armstrong, Associate General Counsel, and Gregory M. Christopher, Counsel, Federal Communications Commission, entered appearances.

Before: Williams, Sentelle and Henderson, Circuit Judges.

Opinion for the court filed by Circuit Judge Henderson.

Karen LeCraft Henderson, Circuit Judge:

The petitioners challenge a Federal Communications Commission (FCC) rule making that established a geographic area licensing regime for common carrier paging and 929 MHz private carrier paging licenses1 and a competitive bidding procedure for mutually exclusive2 applications filed thereunder. See In re Revision of Part 22 and Part 90 of the Comm'n's Rules to Facilitate Future Dev. of Paging Sys., Second Report and Order and Further Notice of Proposed Rule making, 12 F.C.C.R. 2732 (1997) (Second R&O); In re Revision of Part 22 and Part 90 of the Comm'n's Rules to Facilitate Future Dev. of Paging Sys., Memorandum Opinion and Order on Reconsideration and Third Report and Order, 14 F.C.C.R. 10,030 (1999) (Third R&O). The petitioners and intervenors contend the FCC lacked statutory authority under 47 U.S.C. § 309(j) to auction the new geographic paging licenses, that the FCC arbitrarily failed to require that geographic licensees provide notice of construction to neighboring incumbent licensees and that the algorithm the FCC used to identify pending mutually exclusive applications violates the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. §§ 3501 et seq. For the reasons set out below we reject each of these arguments and deny the petitions for review.

I.

Before 1996 the FCC allocated licenses for common carrier paging and exclusive private carrier paging service spectrum under the traditional site-specific licensing scheme which required a separate license for each paging transmitter site. Each license application proposed a transmission frequency and set out technical information on the proposed station, including its potential for electrical interference with adjacent stations. See 47 C.F.R. § 22.529 (1996); id. § 22.559. Once an applicant filed, the FCC reviewed each site-specific application preliminarily for formal compliance and issued public notice of acceptance of filing. See id. § 22.120. Generally, if an applicant's proposed service would overlap and interfere with an incumbent licensee's transmission, the application was denied. See id. § 22.537(a). When mutually exclusive site specific applications were filed, a single applicant was selected by lottery. See id. § 22.131(c)(1).

In the challenged rule making the FCC replaced the sites pecific licensing process with a scheme of geographic licenses. The new scheme authorizes a licensee to operate a transmitter anywhere within the licensed geographic area without notice to the FCC of the transmitter's operation or of its precise location. The geographic licensee must, however, protect incumbent operators in the geographic area and adjacent areas from harmful electrical interference. In order to bid at a geographic license auction, an applicant must file an FCC Form 175 (Short Form) either identifying individual channels and markets it seeks or checking the "All" box, which allows it to bid on any or all of the channels and markets being auctioned. After filing the Short Form, but before the auction, an applicant must submit an "up front" payment which "bear[s] a relation to the value of the licenses to be awarded." Second R&O, 12 F.C.C.R. at 2794. A successful bidder faces "automatic cancellation" of the license if it does not either (1) "provide coverage to one-third of the population within three years of the license grant, and to two thirds of the population within five years of the license grant" or (2) "provide substantial service to the geographic license area within five years of license grant." Id. at 2765.

In contemplation of the new geographic system, the FCC imposed a filing freeze as of February 8, 1996. On February 19, 1997 the Commission released its Second Report and Order outlining the auction procedures for the new geographic licenses and authorizing the Wireless Telecommunications Bureau to dismiss all pending exclusive paging applications and to either grant or dismiss all pending non-mutually exclusive paging applications. On June 24, 1999 the FCC issued its Third Report and Order affirming the geographic licensing scheme but somewhat modifying its procedures. On August 12, 1999 the FCC issued a public notice announcing the relevant auction procedures for the geographic paging licenses. See Auction of 929 MHz Paging Serv. Spectrum, Public Notice (1999). Applicants for the licenses filed their Short Forms on January 20, 2000 and deposited their up front payments on February 7, 2000. On February 24, 2000 the FCC conducted the auction.

Six petitions for review of the FCC's rule making have been filed at various points in the proceedings and have been consolidated for consideration here.

II.

The petitioners, consisting of incumbent paging licensees and a paging industry trade association (licensee petitioners)3 and dismissed license applicants (applicant petitioners),4 challenge the FCC's new geographic licensing scheme on three grounds. We address--and reject--each ground in turn.

A. Statutory Authority for License Auctions

The petitioning trade association and incumbent licensees, joined by the intervenors,5 challenge the FCC's authority under 47 U.S.C. § 309(j)(1) to require that existing licensees bid at auction when they seek to "modify" their present licenses. Section 309(j)(1) requires:

If, consistent with the obligations described in paragraph(6)(E), mutually exclusive applications are accepted forany initial license or construction permit, then, except asprovided in paragraph (2), the Commission shall grantthe license or permit to a qualified applicant through asystem of competitive bidding that meets the require-ments of this subsection.

47 U.S.C. § 309(j)(1). Section 309(j)(6)(E), in turn, provides:"Nothing in this subsection, or in the use of competitive bidding, shall ... (E) be construed to relieve the Commission of the obligation in the public interest to continue to use engineering solutions, negotiation, threshold qualifications, service regulations, and other means in order to avoid mutual exclusivity in application and licensing proceedings;...." Id. § 309(j)(6)(E). In determining the Commission's authority under this statute, "the court reviews the FCC's interpretation of the Communications Act under the now-familiar standard set forth in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-843, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), by which the court considers 'whether Congress has directly spoken to the precise question at issue,' id. at 842, and if it has not, 'whether the agency's answer is based on a permissible construction of the statute.' Id. at 843." Community Television, Inc. v. FCC, 216 F.3d 1133, 1137 (D.C. Cir. 2000). We conclude that, while the cited statutory language is ambiguous, the Commission has reasonably construed it to authorize the challenged auctions.

The petitioners first argue modified licenses are not "initial" licenses for which section 309(j)(1) authorizes competitive bidding. In order for a license to be considered initial under section 309(j)(1), "a newly issued license must differ in some significant way from the license it displaces." Fresno Mobile Radio, Inc. v. FCC, 165 F.3d 965, 970 (D.C. Cir. 1999). In Fresno we noted that "nothing in the text of [section 309(j)] forecloses [the FCC] from considering a license 'initial' if it is the first awarded for a particular frequency under a new licensing scheme, that is, one involving a different set of rights and obligations for the licensee." Id. The FCC reasonably treated the incumbent licensees' applications for modification under the new geographic system as applications for "initial" licenses under such a "new licensing scheme."Despite some general similarities--the two licensing schemes provide the same paging service on the same frequencies, provide fill-in sites and maintain the same licensee buildout requirements--the FCC pointed out significant fundamental differences. "[G]eographic licensees will gain use of a large, geographic area and the freedom to locate base...

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