Florida Cellular Mobil Communications Corp. v. F.C.C.
| Decision Date | 28 September 1994 |
| Docket Number | No. 92-1664,92-1664 |
| Citation | 28 F.3d 191 |
| Parties | FLORIDA CELLULAR MOBIL COMMUNICATIONS CORPORATION, Appellant, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee. Wendy C. Coleman, Doing Business As WCC Cellular; JAJ Cellular, Intervenors. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Appeal of an Order of the Federal Communications Commission.
Michael D. Sullivan, argued the cause for appellant. With him on the briefs was Gary Bellow.
Daniel M. Armstrong, Associate Gen. Counsel, Federal Communications Commission, argued the cause for appellee. With him on the brief were William E. Kennard, Gen. Counsel, Jane E. Mago, Asst. Gen. Counsel, and John P. Greenspan, Counsel, F.C.C. John E. Ingle, Deputy Associate Gen. Counsel, and Roberta L. Cook, Counsel, F.C.C., entered an appearance.
John D. Seiver, argued the cause for intervenor Wendy C. Coleman. With him on the brief was James F. Ireland, III.
Harry F. Cole, entered an appearance for intervenor JAJ Cellular.
Before: MIKVA, Chief Judge, SENTELLE, Circuit Judge, and MacKINNON, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge MacKINNON.
Florida Cellular Mobil Communications Corporation ("Florida Cellular") appeals from decisions of the Federal Communications Commission ("Commission" or "FCC") that dismissed the company's application for a license to construct and operate a cellular communications system in southern Maryland and along Maryland's Eastern Shore. The Commission dismissed the application as "unacceptable for filing" because one of Florida Cellular's shareholders held an interest in a competing applicant in violation of the FCC's multiple ownership regulations. Because the regulations clearly provided that multiple ownership interests in competing applicants were prohibited, and Florida Cellular was on notice that its application was subject to dismissal for non-compliance with FCC regulations, we affirm the Commission's decisions.
In the early 1980's the Commission established procedures to determine which applicants would be issued licenses to construct and operate cellular communications systems in the larger metropolitan areas within the United States. The Commission refers to these areas as Metropolitan Service Areas. The Commission permitted parties to these applications to have multiple ownership interests of less than 1% in competing applicants in order to provide some latitude for the parties to form business relationships. Cellular Lottery Order, 98 F.C.C.2d 175, 217-18 (1984), recon., 101 F.C.C.2d 577 (1985), further recon., 59 Rad.Reg.2d (P & F) 407 (1985). The procedures adopted by the Commission allow for licenses to be issued to two carriers within each of the Service Areas, with one license reserved for "wireline" carriers (telephone companies) and the other reserved for "nonwireline" carriers (applicants other than telephone companies).
In order to streamline the licensing process and to provide cellular service to the public in a more timely manner, the Commission has since 1984 selected the tentative licensee from among competing applicants through a lottery, as authorized by section 309(i) of the Communications Act, 47 U.S.C. Sec. 309(i) (1988), rather than through competitive hearings. Each facially complete application is qualified to be included in a lottery for a particular Service Area license upon the applicant's certification that the application is complete and contains all the information required by the application form and the FCC regulations. Cellular Lotteries Further Reconsideration Order, 59 Rad.Reg.2d (P & F) 407, 410 & n. 16 (1985). To speed the selection process, however, once the application is filed, the FCC rules prohibit applicants from filing amendments to their applications until the lottery produces the tentative selectee for the relevant market. 1 Cellular Lottery Order, 98 F.C.C.2d 175, 220 (1984); 47 C.F.R. Sec. 22.918(b) (1993). Once filed, the Commission does not review the applications further until the lottery is completed.
When the lottery produces a tentative selectee, the Commission reviews only the selected application to determine whether it is "acceptable for filing," i.e., whether it complies with the FCC procedural and substantive rules and regulations. 47 C.F.R. Sec. 22.20(a)(2) (1993). One of the Commission's principal cellular rulemaking orders states that "the tentative selectee's application will be carefully reviewed to ensure its compliance with the cellular application standards and will be dismissed for failure to do so." Cellular Lotteries Further Reconsideration Order, 59 Rad.Reg.2d (P & F) 407, 410 (1985). The FCC rules also provide:
(a) Unless the Commission shall otherwise permit, an application will be unacceptable for filing and will be returned to the applicant ... if:
(2) The application does not comply with the Commission's rules, regulations, specific requirements for additional information or other requirements.
47 C.F.R. Sec. 22.20(a)(2) (1993). If it determines that the application is acceptable, the Commission provides public notice as to the identity of the tentative licensee. Competing applicants are then entitled to challenge the application of the tentative licensee by filing petitions to deny the application.
In 1985, the Commission established procedures for processing applications for cellular licenses in the remaining areas of the country, the so-called Rural Service Areas. Although most of the procedures established for the Metropolitan Service Area application process applied, the Commission's experience in processing the applications for the Metropolitan Service Areas convinced the Commission to change some of the regulations for the processing of the applications for the Rural Service Areas. The Commission amended its regulations concerning partial settlements, multiple ownership interests in more than one applicant for the same Rural Service Area license, and transfers of interests in Rural Service Area applications. See Amendment of the Commission's Rules for Rural Cellular Service, 64 Rad.Reg.2d (P & F) 1382, 1383 (1988) [hereinafter "Cellular Amendment" ]. The Commission found that allowing multiple ownership interests of less than 1% in competing cellular applications encouraged applicants to enter into partial settlements 2 whereby the applicants made mutual promises to convey a portion of their interests to other members of the settlement group upon being selected as the tentative selectee. In turn these partial settlements delayed the inauguration of service to the public because they encouraged losing applicants to file petitions to deny the winning applications alleging that the tentative selectees were not the real parties in interest. To prevent this delay in inaugurating cellular service in the Rural Service Areas, the Commission adopted 47 C.F.R. Sec. 22.921 which in relevant part provides:
For Rural Service Areas, no party to a non-wireline application shall have an ownership interest, direct or indirect, in more than one application for the same Rural Service Area, including an interest of less than one percent.
47 C.F.R. Sec. 22.921(b) (1993). The Commission also acted to prevent the delay associated with the pre-licensing transfer or assignment of cellular applications. Noting that such transfers required the Commission to restart the application processing cycle and to issue a new public notice which "results in the disruption of orderly processing, slows the initiation of service to the public, and is not in the public interest," Cellular Amendment, 64 Rad.Reg.2d at 1387, the Commission also adopted 47 C.F.R. Sec. 22.922 which at the relevant time provided:
Notwithstanding any other section of this Part, the sale, transfer, assignment or other alienation of any cellular application to offer service to Rural Service Areas is prohibited prior to the grant of a construction authorization. This restriction on transfers of interests in such cellular applications shall include any form of alienation, including option arrangements and agreements, as well as equity and debt placement plans.
Florida Cellular was organized in 1983 for the purpose of filing applications to provide cellular service in seven of the Metropolitan Service Areas. Yerger Yandell was one of the company's original shareholders, having paid $10,000 for an 0.85% interest in Florida Cellular. Although the company had hired counsel to prepare and file the applications, no applications were ever filed on Florida Cellular's behalf for these areas. In 1984, Mr. Yandell moved to a new residence without notifying the company of his new address, apparently believing that the company was defunct.
Although Florida Cellular began mailing periodic notices to its shareholders in 1984, Mr. Yandell did not receive any of these notices, and at least one was returned to the company marked "Unable to deliver--no forwarding address." In 1987, Florida Cellular reached a settlement with the attorney it had hired to prepare and file its Metropolitan Service Area applications whereby the attorney agreed to prepare and file 125 applications for the Rural Service Areas on behalf of the company.
Many of the notices that Florida Cellular sent to its shareholders in 1988 involved the company's intent to file applications for the Rural Service Areas. These notices also apprised the shareholders of the Commission's new rules for the filing of these applications, including the rule prohibiting the ownership of interests in competing applicants.
The Maryland 2 market, comprised of much of southern Maryland and the Eastern Shore, was among the Rural Service Areas for which Florida Cellular filed an application. Kudzu Cellular...
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