Alvin Lou Media, Inc. v. F.C.C., 08-1067.

• Citation: 571 F.3d 1
• Decision Date: 26 June 2009
• Docket Number: No. 08-1067.,08-1067.
• Parties: ALVIN LOU MEDIA, INC., Appellant v. FEDERAL COMMUNICATIONS COMMISSION, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

571 F.3d 1

ALVIN LOU MEDIA, INC., Appellant v. FEDERAL COMMUNICATIONS COMMISSION, Appellee.

No. 08-1067.

United States Court of Appeals, District of Columbia Circuit.

Argued April 17, 2009.

Decided June 26, 2009.

On Appeal from Orders of the Federal Communications Commission.

Dennis J. Kelly argued the cause and filed the briefs for appellant.

C. Grey Pash, Jr., Counsel, Federal Communications Commission, argued the cause for appellee. With him on the brief were Joseph R. Palmore, Deputy General Counsel, and Daniel M. Armstrong, Associate General Counsel.

Before: GINSBURG, ROGERS and KAVANAUGH, Circuit Judges.

Opinion for the Court by Circuit Judge ROGERS.

ROGERS, Circuit Judge:

This appeal involves the Federal Communications Commission's competitive auction procedures for granting construction permits and licenses for AM radio broadcast stations. In contrast to the procedures for comparative hearings, the Commission determined in 1998 to defer full technical reviews of applications until after the auction among mutually exclusive applications is conducted, and then to review only the winning bidder's application. Pre-auction review of engineering data would be limited to determining mutual exclusivity and geographic preferences under 47 U.S.C. § 307(b). Alvin Lou Media ("ALM") appeals the denial of its requests for reconsideration of the mutually exclusive designation of the application filed by Powell Meredith Communications Company ("PMCC") for a radio station in the Las Vegas, Nevada area, and for a stay of the auction. ALM argued to the Commission that because PMCC's application proposed a station that could not be constructed or operated without violating non-interference rules, spectrum protection restrictions, and a treaty with Mexico, the application should have been dismissed. On appeal, ALM contends that the Commission's refusal to consider patent and disqualifying application defects prior to making a § 307(b) determination, 47 U.S.C. § 307(b), was contrary to the mandate in § 309(j)(5) of the Communications Act, 47 U.S.C. § 309(j)(5), and arbitrary and capricious under the Administrative Procedure Act ("APA"), 5 U.S.C. § 551 et seq.

Although ALM refused to participate in the auction, we hold it has standing to appeal the denial of its requests for reconsideration. ALM's refusal was based on its view that the Commission's failure to dismiss a technically infeasible application was an error of law. Absent the alleged error, ALM's application would have been entitled to consideration as a "singleton" and there would have been no auction. The right of a disappointed bidder in a government auction to a legally valid procurement process, see U.S. Airwaves, Inc. v. FCC, 232 F.3d 227, 232 (D.C.Cir.2000), applies no less to a disappointed participant in an auction process challenging rules as placing it at a competitive disadvantage, DIRECTV, Inc. v. FCC, 110 F.3d 816, 829-30 (D.C.Cir.1997).

However, ALM's contentions fail on the merits. Section 309(j)(5), 47 U.S.C. § 309(j)(5), contemplates that the Commission may establish standards of acceptability for filing an application that differ from the standards for granting a license or permit. To participate in an auction, a bidder need only submit "such information and assurances as the Commission may require," to show its application is "acceptable for filing." 47 U.S.C. § 309(j)(5). By contrast, to be granted a license or permit, a bidder must satisfy the standards of 47 U.S.C. §§ 309(a), 308(b), and 310. Id. The Commission's pre-auction procedures, which rely on applicant certifications of feasibility and post-auction monetary sanctions for deficient winning applications, were neither contrary to § 309(j)(5) nor unreasonable. Its explanation of the decision to defer full technical review — to promote expeditious deployment of new broadcasting services to the public and to conserve Commission resources — was "a satisfactory explanation," Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983), for the choice it made. See FCC v. Fox Television Stations, Inc., ___ U.S. ____, 129 S.Ct. 1800, 1810-11, 173 L.Ed.2d 738 (2009). Although ALM's experience points up shortcomings in deferring technical review, the choice made by the Commission was within the broad discretion vested by Congress in 1997 when it expanded the Commission's auction authority.¹ Further, the Commission's denial of ALM's petitions for reconsideration was not arbitrary or capricious or contrary to law. Accordingly, we affirm.

I.

No person may operate or construct a radio station without a license from the Commission. 47 U.S.C. § 301. Prior to the decision in Bechtel v. FCC, 10 F.3d 875 (D.C.Cir.1993), and enactment of section 3002(a) of the Balanced Budget Act of 1997, Pub.L. No. 105-33, 111 Stat. 251, 258-59 (1997), the Commission employed comparative hearings to determine whether permits and operating licenses would be granted. In Bechtel, this court held that the integration preference applied in comparative hearings was arbitrary and capricious. See Bechtel, 10 F.3d at 878-87. In 1997 Congress expanded the Commission's auction authority, amending the Communications Act to provide that "[i]f ... mutually exclusive applications are accepted ..., then ... the Commission shall grant the license or permit to a qualified applicant through a system of competitive bidding...." 47 U.S.C. § 309(j)(1).

In 1998, the Commission promulgated the auction procedures. See Implementation of Section 309(j) of the Communications Act — Competitive Bidding for Commercial Broadcast and Instructional Television Fixed Service Licenses, 13 F.C.C.R. 15,920 (1998) ("Auctions First Report & Order"). The Commission determined that rather than conducting full technical reviews of all applications prior to an auction, it would examine the technical data in advance only to determine whether applications were mutually exclusive and entitled to a preference pursuant to § 307(b). After the auction it would review in detail only the winning bidder's application. All applicants would file a short-form application, FCC Form 175, see id. at 15,974, ¶ 141, certifying they were legally, technically, and otherwise qualified to be granted a permit or license, id. at 15,979, ¶ 152. The winning bidder would file a long-form application, typically FCC Form 301, which would be reviewed for compliance with all relevant requirements, including technical feasibility. Id. at 15,984-86, ¶¶ 163-66. A permit or license would be granted only after any petitions to deny were denied or dismissed and the Commission was satisfied the applicant was qualified. Id. at 15,985-86, ¶ 166. Absent mutual exclusivity, if an applicant was granted a dispositive § 307(b) preference, the application would be deemed a "singleton" and no auction would be conducted. See id. at 15,964-65, ¶ 120. The Commission explained that deferring full technical review until after the auction would minimize delay, encourage more bidders to participate in the auction because only a short-form application would be required to participate, and facilitate expeditious deployment of new broadcasting service to the public, in keeping with § 309(j)(3)(A).² Id. at 15,-978-79, ¶ 151; see also id. at 15,979 n. 167.

The Commission also established procedures to accommodate the new competitive auction regime with § 307(b), which requires the Commission "[i]n considering applications for licenses ... [to] make ... distribution of licenses, frequencies, hours of operation, and of power among the several States and communities as to provide a fair, efficient, and equitable distribution of radio service to each of the same." 47 U.S.C. § 307(b). In keeping with this directive, the Commission determined the staff would undertake a "traditional Section 307(b) analysis" prior to auction. Id. at 15,965, ¶ 120. Thus, in the instant case, upon identifying the mutually exclusive applications, the Media Bureau requested information from applicants regarding the area and population proposed to be served. AM Auction No. 32 Mutually Exclusive Applicants Subject to Auction, Rep. No AUC-00-32-E (Auction No. 32), at 3 (Oct. 27, 2000). Such amendment was to be based on the technical proposal in the AM Auction filing window application. Id.; see also 47 C.F.R. § 1.2105; Auctions First Report & Order, 13 F.C.C.R. at 15,976, ¶ 145. If the § 307(b) determination is dispositive and there are no competing applications for the same community, then staff will grant the application proposing to serve the community with the greater need and dismiss others as ineligible. Auctions First Report & Order, 13 F.C.C.R. at 15,-965, ¶ 120. If no § 307(b) determination is dispositive or there are competing applications, the applications would be included in an auction. Id.

This was the auction regime in place when, during the filing window for Auction No. 32, ALM, PMCC, and Victor A. Michael ("Michael"), along with others, filed applications for new AM broadcast radio stations; ALM and PMCC sought to operate in the Las Vegas area, Michael in Cheyenne, Wyoming. The Media Bureau determined that these three applications were mutually exclusive and that none was entitled to a dispositive § 307(b) preference. ALM's Spring Valley proposal was found not entitled to a first-local-service preference because Spring Valley, Nevada was not sufficiently independent of Las Vegas. The Media Bureau also determined that Las Vegas was entitled to a § 307(b) preference over Cheyenne, and so ALM and PMCC would proceed to auction.

ALM and Michael sought reconsideration, arguing that PMCC's application was technically deficient because it would cause disruptive interference in violation of Commission rules, spectrum protection requirements, and international treaty agreements. ALM argued it was improper for the Media Bureau not to dismiss PMCC's application prior to the...