Ranger Cellular v. F.C.C., 02-1093.

• Decision Date: 01 July 2003
• Docket Number: No. 02-1093.,02-1093.
• Citation: 333 F.3d 255
• Parties: RANGER CELLULAR and Miller Communications, Inc., Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 255

333 F.3d 255

RANGER CELLULAR and Miller Communications, Inc., Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents.

No. 02-1093.

United States Court of Appeals, District of Columbia Circuit.

Argued March 11, 2003.

Decided July 1, 2003.

On Petition for Review of an Order of the Federal Communications Commission.

Donald J. Evans argued the cause and filed the briefs for petitioners.

Stanley R. Scheiner, Counsel, Federal Communications Commission, argued the cause for respondents. With him on the brief were R. Hewitt Pate, Acting Assistant Attorney General, U.S. Department of Justice, Catherine G. O'Sullivan, Chief Counsel, Andrea Limmer, Attorney, John A. Rogovin, Deputy General Counsel, Federal Communications Commission, and Daniel M. Armstrong, Associate General Counsel. Pamela L. Smith, Counsel, entered an appearance.

Before: GINSBURG, Chief Judge, and EDWARDS and GARLAND, Circuit Judges.

Opinion for the Court filed by Chief Judge GINSBURG.

GINSBURG, Chief Judge:

Ranger Cellular and Miller Communications, Inc. (sometimes hereinafter referred to collectively as Ranger) petition for review of an order in which the Federal Communications Commission interpreted a provision in the Balanced Budget Act of 1997, Pub.L. No. 105-33, 111 Stat. 251, 47 U.S.C. § 309(l), to allow new applicants to apply for certain cellular telephone licenses. Ranger, which had submitted an application for a cellular license several years beforehand, argues that providers of cellular telephone service are "commercial radio or television stations" within the meaning of 47 U.S.C. § 309(l), for which the Commission may not accept new applications. The petitioner also claims that, even if the statute did not bar new cellular applications, the Commission departed from precedent in holding that the public interest would be served by its accepting new applications, and that the Commission opened the applicant pool with the unlawful purpose of enhancing federal revenues, in violation of 47 U.S.C. § 309(j)(7)(B). We reject Ranger's arguments and deny the petition for review.

I. Background

Prior to 1993 the Commission awarded licenses for use of the radio spectrum through either a comparative hearing or a lottery. Lottery entrants would file a simple application and pay a nominal fee. The Commission then held the lottery and determined a winner, subject to the losing parties' right to file a petition to disqualify the winner. If the winner was disqualified, then the Commission held another lottery. After 1986 the Commission used the lottery system exclusively to assign all cellular licenses.

The comparative hearing process, which required each party to present a detailed case to the Commission showing why it should win the license, was far more complex and often led to protracted litigation. See, e.g., Bechtel v. FCC, 957 F.2d 873 (D.C.Cir.1992); DOUGLAS H. GINSBURG, MICHAEL H. BOTEIN, & MARK D. DIRECTOR, REGULATION OF THE ELECTRONIC MASS MEDIA: LAW AND POLICY FOR RADIO, TELEVISION, CABLE AND THE NEW VIDEO TECHNOLOGIES 85-134 (West 2d ed.1991). The Commission had used the comparative hearing process to choose among competing applications for broadcast stations since the decision in Ashbacker Radio Corp. v. FCC, 326 U.S. 327, 66 S.Ct. 148, 90 L.Ed. 108 (1945).

Ranger and Miller filed applications in 1988 and 1989 respectively to participate in a lottery for certain Rural Service Area (RSA) cellular telephone licenses. The Commission awarded most of the licenses but by the mid-1990s six licenses for RSAs were still pending due to the disqualification or withdrawal of the original winner. The Commission then granted interim operating authority (IOA) to cellular telephone licensees in adjacent areas to provide service until such time as the Commission awarded a permanent license. See In the Matter of Implementation of Competitive Bidding Rules to License Certain Rural Service Areas, Notice of Proposed Rule Making, 16 FCC Rcd. 4296, ¶ 9 & n. 21, 2001 WL 114343 (2001).

Meanwhile, the Congress, in the Omnibus Budget Reconciliation Act of 1993, Pub.L. No. 103-66, § 6002(a), 107 Stat. 312, 387, had amended the Communications Act of 1934 by adding § 309(j), 47 U.S.C. § 309(j), which authorized the Commission to award almost all spectrum licenses by competitive bidding and limited the use of lotteries. With respect to cellular telephone licenses in particular, the 1993 legislation provided that the Commission: "shall not issue any license or permit [by lottery] ... unless ... one or more applications for such license were accepted for filing by the Commission before July 26, 1993." § 6002(e), 107 Stat. at 397. Having been given the option of proceeding by lottery or by competitive bidding to award such grandfathered licenses, the Commission decided initially to use a lottery, see In the Matter of Implementation of Section 309(j) of the Communications Act-Competitive Bidding, 9 FCC Rcd. 7387, 1994 WL 757361 (1994), but then decided to study the matter further. See Public Notice, Wireless Telecommunications Bureau Postpones Cellular Telecommunications Service Lottery for Rural Service Areas, Mimeo No. 65051 (Sept. 10, 1996).

Before the Commission had finally decided how to award cellular telephone licenses, however, the Congress passed the Balanced Budget Act of 1997, Pub.L. No. 105-33, § 3002(a), 111 Stat. 251, which amended § 309(j) by requiring the Commission to use competitive bidding (except in a few specifically enumerated circumstances) and terminated the Commission's authority to use a lottery (except for a small class of broadcast licenses). See 47 U.S.C. § 309(i). More important for the purposes of this case, the Congress amended the Communications Act of 1934 by adding § 309(l), which states, under the heading "Applicability of competitive bidding to pending comparative licensing cases," that:

With respect to competing applications for initial licenses or construction permits for commercial radio or television stations that were filed with the Commission before July 1, 1997, the Commission shall ... treat the persons filing such applications as the only persons eligible to be qualified bidders for purposes of such proceeding.

(Emphasis added). This section bars the Commission from accepting new applications for certain "commercial radio or television stations." The Conference Report on the 1997 Act described the scope of this provision as follows:

The conferees adopted a new provision with respect to the applicability of competitive bidding to pending comparative licensing cases. New section 309(l) of the Communications Act requires the Commission to use competitive bidding to resolve any mutually exclusive applications for radio or television broadcast licenses that were filed with the Commission prior to July 1, 1997.

H.R. Conf. Rep. No. 217, 105th Cong., 1st Sess. at 573 (1997) (emphasis added).

Against this background, the Commission in April 1999 dismissed all pending applications for the cellular telephone licenses at issue in this case because it was "without authority to process the pending mutually exclusive RSA applications pursuant to the rules and requirements [of the lottery system] under which they were filed." In the Matter of Certain Cellular Rural Service Area Applications, 14 FCC Rcd. 4619, ¶ 5, 1999 WL 181812 (WTB 1999). In 2001 the Commission proposed to open eligibility with respect to the auctions it would hold for the pending RSA cellular telephone licenses. See Implementation of Competitive Bidding Rules, 16 FCC Rcd. ¶ 1. After receiving comments the Commission issued the order here under review. In the Matter of Implementation of Competitive Bidding Rules to License Certain Rural Service Areas, 17 FCC Rcd. 1960, 2002 WL 100245 (2002) (Order).

The Commission rejected Ranger's argument that the term "commercial radio or television stations" in § 309(l) included cellular telephone licenses and therefore required the Commission to limit the pool of bidders to those who had filed an application prior to July 1, 1997. The Commission reasoned that the statute — by its terms and in accordance with its purpose and its legislative history — in using the phrase "commercial radio and television stations" referred only to broadcast stations and therefore did not cover cellular telephone services. The Commission went on to decide that competitive bidding with open eligibility would best serve the public interest: "the bidder who is willing to pay the most will be highly motivated to rapidly put the license to a use that the public finds valuable because only such a use will make its investment worthwhile." Id. ¶ 13. The Commission also rejected Ranger's comment that an auction would violate 47 U.S.C. § 309(j)(7)(b), which prohibits the Commission, in making certain regulatory decisions, from "bas[ing] a finding of public interest, convenience, and necessity solely or predominantly on the expectation of Federal revenues from the use of a system of competitive bidding under this subsection." The Commission explained: "Our determination to permit open eligibility in the RSA auction is based on our statutory obligations to promote competition and rapid deployment of services to rural areas, not to enhance the Federal Treasury." Id. ¶ 21.

The Commission conducted the auction for the RSA cellular licenses on June 4, 2002. Ranger did not participate.

II. Analysis

On appeal Ranger argues first that the Commission's interpretation of § 309(l) conflicts with the plain meaning of, and in any event, is not a reasonable reading of, the statute. Second, the petitioner maintains the Commission could not, consistent with precedent specifying the relevant equitable considerations, conclude that the public interest favored opening the auction to new applicants. Finally, the petitioner contends the Commission opened the auction unlawfully in order to maximize federal revenues.

We...