United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 3, 1997 Decided September 11, 1998
No. 97-1005
James A. Cassell and
Kelley Communications, Inc.,
Petitioners
v.
Federal Communications Commission and
United States of America,
Respondents
Potomac Corporation, d/b/a Crescent Communications,
Intervenor
Consolidated with
No. 97-1006
---------
On Petitions for Review of an Order of the
Federal Communications Commission
---------
Dennis C. Brown argued the cause for petitioners, with
whom Sydney L. Steele was on the briefs. Lewis J. Paper
and Robert H. Schwaniger, Jr. entered appearances.
Nancy L. Kiefer, Counsel, Federal Communications Com-
mission, argued the cause for respondents, with whom Wil-
liam E. Kennard, General Counsel at the time the brief was
file, and Daniel M. Armstrong, Associate General Counsel,
were on the brief.
Before: Silberman, Williams and Garland, Circuit Judges.
Opinion of the Court filed by Circuit Judge Garland.
Garland, Circuit Judge: Petitioners in these consolidated
cases contend that the Federal Communications Commission
("FCC") improperly denied their requests for "finder's pref-
erences" regarding certain private mobile land radio stations.
We find no infirmity in the FCC's decisions and deny the
petitions for review.1
I
The FCC regulates the licensing of portions of the broad-
cast spectrum used to provide one- and two-way communica-
tions services known as private land mobile radio services.
See 47 U.S.C. s 332 (1994 & Supp. 1998). These services
include trunked specialized mobile radio ("trunked SMR")
systems, which operate over several frequencies by means of
centralized stations that send and receive communications
__________
1 Petitioners filed notices of appeal under 47 U.S.C. s 402(b)(1),
rather than petitions for review under s 402(a). Four days after
the notices were filed, we decided Freeman Engineering Associates
v. FCC, 103 F.3d 169 (D.C. Cir. 1997), in which we held that the
FCC's denial of an application for a "pioneer's preference" is
reviewable under s 402(a) rather than s 402(b)(1). See id. at 176-
77. In light of Freeman, all parties now agree that our jurisdiction
over these cases arises under s 402(a). See FCC Br. at 3; Petition-
ers' Reply Br. at 1 n.1. Given the similarity between the two FCC
preference programs, we agree as well. Accordingly, we will treat
the notices of appeal as petitions for review, and will refer to the
parties here as "petitioners."
between mobile radio units. See 47 C.F.R. s 90.7. An
applicant for a license to operate a trunked SMR system must
specify both the street address and the geographic coordi-
nates (longitude and latitude), to the nearest second, from
which it will operate the station. See, e.g., Joint Appendix
("J.A.") at 11; see also FCC 574, Application for General
Mobile Radio Service at 2 (Mar. 1998).
In 1991, after providing notice and an opportunity for
comment, the FCC adopted a finder's preference program
applicable to, inter alia, trunked SMRs on certain frequency
bands. See In re Amendment of Parts 1 and 90 of the
Commission's Rules Concerning the Construction, Licensing,
and Operation of Private Land Mobile Radio Stations, 6
F.C.C.R. 7297, 7302-09 (1991) ("Report and Order").2 The
program was a response to the increased demand for, and
resulting scarcity of, these frequencies. Because of that
scarcity, it was "becoming difficult for new applicants to
become licensed or for existing licensees to expand their
systems." Id. at 7303. The purpose of the finder's prefer-
ence program was to create "new incentives for persons to
provide [the FCC] information about unconstructed, non-
operational, or discontinued private land mobile radio sys-
tems...." Id. at 7309. The program, the FCC said, "would
enhance spectrum efficiency by identifying more unused
channels and reassigning them to persons who will use them
effectively." Id.
Under the finder's preference program, if an applicant
presents the FCC with evidence that leads to the cancellation
of a license due to the licensee's noncompliance with certain
__________
2 Due to changes in the way it now awards licenses, the Commis-
sion has since discontinued the finder's preference program for the
800 and 900 MHz SMR spectrum, proposed eliminating the pro-
gram for services in the 220-222 MHz spectrum, and suggested the
possibility of eliminating it for all services. See generally In re
Amendment of Part 90 Concerning the Commission's Finder's
Preference Rules, 11 F.C.C.R. 13,016, 13,019-22 (1996). These
changes, which apply only prospectively, do not affect the petitions
for review currently before this court.
regulations, the applicant is entitled to seek a dispositive
preference for the recovered frequencies. See 47 C.F.R.
s 90.173(k); see also Keller Communications, Inc. v. FCC,
130 F.3d 1073, 1075 (D.C. Cir. 1997). A finder, however,
must be independently eligible for a license for the frequen-
cies in question, see 47 C.F.R. s 90.173(k), and the FCC
retains the "right to assure that the awarding of the prefer-
ence is in the public interest...." Report and Order, 6
F.C.C.R. at 7303 n.64.
The FCC limited the finder's preference program to those
"rule violations which lend themselves to conclusive and expe-
ditious action." Id. at 7305. Pre-existing FCC regulations
made subject to the finder's program include the requirement
that a licensee of a trunked SMR facility complete station
construction, see 47 C.F.R. s 90.631(e), and place the station
"in permanent operation, in accordance with the technical
parameters of the station authorization," generally within one
year, id. s 90.631(f) (emphasis added). See id. s 90.173(k);
Report and Order, 6 F.C.C.R. at 7305. In the Report and
Order in which it adopted the program, the FCC declared
that it would "continue to apply [these] existing rules," rather
than modify them, but would "now enforce these rules" as
follows: "Construction of the base station must be in substan-
tial accordance with the parameters specified in the station
authorization (e.g., authorized antenna height). All channels
not so 'constructed' will be recovered from the licensee." Id.
at 7299 (emphasis added). The FCC did not define the term
"substantial accordance."
Between 1991 and 1993, the FCC's Wireless Telecommuni-
cations Bureau (formerly known as the Private Radio Bureau,
and hereinafter referred to as "the Bureau") granted approxi-
mately 75 finder's preferences in instances where a licensee
had failed to construct or operate its station in a timely
fashion or had discontinued operations. See FCC Br. at 8
n.7. On January 11, 1994, the Bureau's Licensing Division
ruled for the first time on a preference request based on a
licensee's failure to construct its station at its licensed coordi-
nates. In that case, In Re Fred B. Lott, the existing licensee
had constructed its SMR station more than five miles from
the location at which it was licensed. See 9 F.C.C.R. 225
(1994). The Division canceled the license and awarded a
finder's preference. Citing the Report and Order, the Divi-
sion noted that "failure to construct in substantial accordance
with licensed parameters results in automatic cancellation of a
license," and concluded that a five-mile deviation was not in
"substantial accordance." Id. at 225 (emphasis added). The
Division distinguished an earlier case in which the Bureau
purportedly had permitted a station operating one-fifth of a
mile from its authorized coordinates to remain licensed, say-
ing that the "distances are not comparable." Id. And it
declared that "[a]s a rule of thumb, construction more than
one second, (60 feet), away from the licensed location is not in
accordance with the station's authorization." Id. (emphasis
added).3
On March 11, 1994, petitioner Lawrence Vaughn filed a
finder's preference request for the license held by Ross and
Barbara Shade to operate SMR Station WNXE819 in Sher-
man Oaks, California. Vaughn alleged that the Shades had
violated the trunked SMR construction rule, 47 C.F.R.
s 90.631(f), because the station was located 3100 feet (just
over 1/2 mile) from the coordinates specified in the license.
The Shades responded that the discrepancy was inadvertent:
the street address listed on the license was correct, but they
had relied on the coordinates licensed to the previous opera-
tor of the station at the site. On August 18, 1994, the
Bureau's Licensing Division denied Vaughn's finder's prefer-
ence request, ruling that the Shades were in "substantial
accordance" with the conditions of their license. See In re
Lawrence E. Vaughn, Jr., 9 F.C.C.R. 4438, 4438-39 (1994).
At the same time, the Division concluded that it should no
longer decide "substantial compliance" on a case-by-case ba-
sis, and instead adopted the following benchmark: "With
respect to a variance from authorized coordinates, absent
__________
3 As petitioner Vaughn pointed out below, see J.A. at 77, one
second of latitude is actually the equivalent of approximately 100
feet, while the length of one second of longitude varies depending
upon one's proximity to the earth's poles. See also 7 The New
Encyclopaedia Britannica 184 (15th ed. 1994).
unique circumstances, we will only award a finder's prefer-
ence for a constructed and operating station when a finder
demonstrates that the authorized coordinates are more than
1.6 kilometers (one mile) from the actual location of the
station." Id.
The other applications at issue in these cases were filed in
May 1994, by James Cassell and Kelley Communications.
The two applicants filed nearly identical finder's preference
requests for SMR Station KNEW202 in Golden, Colorado.
The requests alleged that the station antenna was 639 feet
away from its licensed coordinates. As in Vaughn, the
existing licensee did not dispute the discrepancy, but noted
that the street address was correct. On May 11, 1995, the
Bureau denied the requests for finder's preferences, conclud-
ing that a discrepancy of 639 feet was de minimis. See J.A. at
196.
Cassell, Kelley Communications, and Vaughn all filed appli-
cations for review with the Commission. Each argued that
the decision in Lott had established one second or 60 feet as
the definition of "substantial accordance," and that under this
definition the target licensee was not in substantial accor-
dance with its authorized coordinates.
On December 4, 1996, the FCC denied the three applica-
tions for review. See In re James A. Cassell, 11 F.C.C.R.
16,720 (1996). The Commission noted that the Report and
Order indicated frequencies would be recovered from licen-
sees only if their stations were not constructed in "substantial
accordance" with their authorized parameters. See id. at
16,723. It had never previously defined "substantial accor-
dance," the Commission said, but instead had determined its
meaning on a case-by-case basis. See id. Contrary to peti-
tioners' contention, it said the Bureau also had not previously
defined "substantial accordance." The one-second standard
in Lott, the FCC held, "describes a situation where exact
accordance with a licensee's authorization is not met, rather
than defining substantial accordance." Id.
The FCC agreed that some benchmark definition of "sub-
stantial accordance" would "enhance the overall effectiveness
and efficiency of our finder's program." Id. at 16,725. It
rejected the one-second definition advocated by petitioners as
"unnecessarily restrictive." Id. at 16,724. As the FCC ex-
plained, the principal motivation for the finder's preference
program was "to facilitate capturing unused channels so that
licensing opportunities could be provided in those areas
where there is limited available spectrum." Id. (emphasis
added). The program should not be used "as a means to
disrupt service being provided to the public by alleging
license cancellation based on minor variations from authorized
parameters." Id.
After rejecting petitioners' one-second standard, the FCC
concluded that it should instead adopt the 1.6-kilometer
definition used by the Bureau in the Vaughn case. "[T]his
benchmark," the Commission determined, "is consistent with
a variety of relevant factors including: the range of private
land mobile radio systems, our experience with the accuracy
of systems currently licensed, and the type of violation which
evidences an inappropriate disregard for the requirements of
our rules." Id. The FCC also noted that "a 1.6 kilometer
benchmark has been used successfully in the context of
geographic coordinates near certain mountain peaks," id. at
16,724 n.21--that is, under one FCC regulation, a station
within 1.6 kilometers of a mountain peak is considered to be
at the peak. See 47 C.F.R. s 90.621(b).
Finally, the FCC said that it would regard the 1.6-kilome-
ter measure as a benchmark and not an absolute. It recog-
nized that there may be situations where variances below 1.6
kilometers are not "minor," for example when they jeopardize
air safety or when a licensee "knowingly constructed at
another site for purposes of changing its station's coverage
footprint." See 11 F.C.C.R. at 16,724. The 1.6-kilometer
benchmark, the Commission said, would "provide potential
filers of finder's preference requests guidance regarding their
burden of proof." Id. at 16,725. For variations of less than
1.6 kilometers, finder's preferences still would be possible, but
applicants would have the burden of demonstrating why a
particular variance is not minor. The FCC concluded that
the benchmark, together with this qualifier, would provide "a
rational standard that fosters continued provision of service
to the public rather than requiring disruption of service
through cancellation of licenses for minor errors in location of
stations...." Id. at 16,724.
Applying its new benchmark, the Commission concluded
petitioners had failed to establish that the target licensees
were not in "substantial accordance" with their authorized
coordinates. Accordingly, it denied their applications for
review.
II
Petitioners contend that the FCC's denial of their finder's
preference requests violated fundamental principles of admin-
istrative law, in four ways. They argue that the FCC: (1)
failed to follow its own precedents and rules; (2) failed to
provide a rational explanation for its decision; (3) adopted
what amounts to a substantive rule without providing notice
or opportunity for comment; and (4) unlawfully applied its
new benchmark retroactively.4 We consider these arguments
in turn.
A
Petitioners contend that the 1.6-kilometer benchmark an-
nounced by the FCC departs from the one-second standard
announced in Lott. They also contend that the new bench-
mark contradicts 47 C.F.R. s 90.173(k), the regulation gov-
erning the finder's preference program, and 47 C.F.R.
__________
4 Although petitioners do not say so expressly, their first, second,
and fourth arguments ultimately are founded upon the requirement
of the Administrative Procedure Act ("APA") that agency action not
be "arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law." 5 U.S.C. s 706(2)(A). Their third argument
is based on the APA's requirement that, with certain exceptions
(including an exception for interpretive rules), agencies must pro-
vide "[g]eneral notice of proposed rulemaking," id. s 553(b), and an
opportunity for interested persons "to participate in the rulemaking
through submission of written data, views, or arguments," id.
s 553(c).
s 90.631(f), the underlying regulation that mandates cancella-
tion of a license "[i]f a station is not placed in permanent
operation, in accordance with the technical parameters of the
authorization...." Id. (emphasis added). Citing our opinion
in Reuters, Ltd. v. FCC, 781 F.2d 946 (D.C. Cir. 1986),
petitioners contend this failure to follow the agency's own
precedents and rules violates a basic requirement of rational
decision-making.
As noted above, the FCC does not regard its decision as
departing from the one-second standard for "substantial ac-
cordance" set in Lott, because it does not regard Lott as
setting any such standard. Instead, the FCC reads Lott as
setting one second as a standard defining exact "accordance"
for purposes of license applications and authorizations, "rath-
er than defining substantial accordance" for purposes of the
finder's preference program. Cassell, 11 F.C.C.R. at 16,723.
An agency's interpretation of its own precedent is entitled
to deference, see Inland Lakes Management, Inc. v. NLRB,
987 F.2d 799, 805 (D.C. Cir. 1993), and the FCC's reading of
Lott, which distinguishes between "accordance" and "substan-
tial accordance," is a reasonable one. Lott itself used these
two verbal formulations. It referred to the one-second stan-
dard as a rule of thumb for determining when a station is
located in "accordance" with its authorization, but said that a
station deviating by more than five miles was not in "substan-
tial accordance" with its authorization. The FCC's reading is
further supported by the way in which Lott itself distin-
guished an earlier Bureau decision to tolerate a station's one-
fifth mile deviation. If petitioners' reading of Lott were
correct, the one-fifth of a mile deviation should have led to
license cancellation because the location was not in "substan-
tial accordance." Instead, Lott indicated it would tolerate
such a deviation, a result consistent with the FCC's view that
although not in "accordance," a deviation of one-fifth of a mile
remains in "substantial accordance." The three situations
Lott considered describe a continuum that is consistent with
the FCC's reading: a one-second deviation is in "accordance"
with parameters, a one-fifth of a mile deviation is in "substan-
tial accordance," and a five-mile deviation is in neither "accor-
dance" nor "substantial accordance." 5
In addition to Lott, petitioners rely on 47 C.F.R.
ss 90.173(k) and 90.631(f) to argue that the Commission
contravened its own regulations by adopting a 1.6-kilometer
benchmark. Section 90.173(k), petitioners point out, states
that a person may seek a finder's preference by providing
information "regarding the failure of existing licensees to
comply with the provisions" of s 90.631(f). And s 90.631(f)
provides that "[i]f a station is not placed in permanent
operation, in accordance with the technical parameters of the
station authorization, within one year, ... its license cancels
automatically and must be returned to the Commission."
Since section 90.631(f) refers to "accordance" rather than
"substantial accordance," and since the technical parameters
of a station's authorization include geographical coordinates
listed to the second, petitioners insist there is no room for a
reading that permits a target licensee to defeat a finder's
preference by merely being in "substantial accordance."
In its opinion below, the FCC interpreted its own regula-
tions differently than petitioners do, and we are bound to
defer to that interpretation unless it is " 'plainly erroneous or
inconsistent with the regulation.' " Auer v. Robbins, 117
S. Ct. 905, 911 (1997); see also Freeman Eng'g Assocs. v.
FCC, 103 F.3d 169, 178 (D.C. Cir. 1997). The FCC read the
Report and Order that established the finder's program as
indicating that stations would be recovered from their licen-
sees only if they were not "in 'substantial accordance' with
the parameters specified in the station authorization." Cas-
__________
5 In their brief, FCC counsel also contended that even if the
Commission had departed from Lott, such a departure would be of
no consequence because the Commission is not constrained "in any
way" by the decisions of a subordinate division. FCC Brief at 29.
As the Commission itself did not rely on such a contention in its
opinion below, we will not consider it here. See Burlington Truck
Lines v. United States, 371 U.S. 156, 168 (1962); Securities &
Exchange Comm'n v. Chenery Corp., 332 U.S. 194, 196 (1947). In
any event, FCC counsel abandoned this contention during oral
argument.
sell, 11 F.C.C.R. at 16,723 (quoting Report and Order, 6
F.C.C.R. at 7299). This is the same conclusion the Bureau
reached in Lott, the opinion upon which petitioners rely.
There, citing the Report and Order, the Bureau noted that
"failure to construct in substantial accordance with licensed
parameters results in automatic cancellation of a license...."
Lott, 9 F.C.C.R. at 225 (emphasis added).
The FCC's interpretation follows logically from the lan-
guage of the Report and Order. In the Report, the FCC
declared that it would "continue to apply" s 90.631(f), but
would do so subject to a new standard of enforcement:
"Construction of the base station must be in substantial
accordance with the parameters specified in the station au-
thorization.... All channels not so 'constructed' will be
recovered from the licensee." Id. (emphasis added). That
declaration supports the FCC's view that a finder's prefer-
ence is unwarranted unless a station is not in "substantial
accordance" with its licensed parameters, and that the "sub-
stantial accordance" enforcement standard describes a larger
margin of error than the exact "accordance" required by the
underlying rule.
Because the FCC's interpretation of its own regulations is
reasonable, we defer to it. And because under that interpre-
tation the decision below does not depart from those regula-
tions, we find no inconsistency in the Commission's actions.
B
Petitioners' second contention is that the FCC adopted the
1.6-kilometer standard without providing a reasoned explana-
tion that rationally relates the standard to the finder's pro-
gram's purposes and the agency's statutory obligations. We
agree that a rational explanation is required to support
agency decision-making, see, e.g., Motor Vehicles Mfrs. Ass'n
v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983), but
find the explanation offered by the FCC to be perfectly
reasonable.
First, the FCC concluded that deciding on a benchmark
definition of "substantial accordance," rather than continuing
to apply the term on a case-by-case basis, would enhance the
overall effectiveness of the finder's program. See Cassell, 11
F.C.C.R. at 16,724. Petitioners do not dispute the reason-
ableness of that conclusion; to the contrary, they tout their
own preferred benchmark and disparage the alternative of
case-by-case adjudication as inappropriately "subjective."
Petitioners' Br. at 17.
Second, the FCC concluded that petitioners' proposed one-
second standard would be "unnecessarily restrictive." Cas-
sell, 11 F.C.C.R. at 16,724. That threshold, the FCC predict-
ed, would "disrupt service being provided to the public ...
based on minor variations from authorized parameters." Id.
Such a result would be inconsistent with the program's pur-
pose of "enhanc[ing] spectrum efficiency by identifying more
unused channels...." Report and Order, 6 F.C.C.R. at 7309
(emphasis added). Indeed, unlike the revocation of a license
for failing to construct a station, revocation for operating at a
slight variance does little to fulfill the program's underlying
purpose of mitigating the problem of spectrum scarcity.
Third, the FCC concluded that a 1.6-kilometer benchmark
would serve the program's goal of motivating finders, without
needlessly disrupting ongoing service for minor deviations.
The petitioners charge that there is no "rational basis" for
choosing 1.6 kilometers over any other distance. But the
FCC did offer plausible reasons. It found the 1.6-kilometer
benchmark reasonable in relation to the normal range of
private land mobile radio systems, which is generally at least
20 miles. See 47 C.F.R. s 90.635. It found the benchmark
consistent with the Commission's own experience with the
accuracy of systems currently in operation. And it concluded
that a 1.6-kilometer benchmark was large enough to "evi-
dence[ ] an inappropriate disregard for the requirements of
our rules"--for example, an intention to change the station's
coverage footprint from that which was authorized--rather
than a mere inadvertent error. Cassell, at 16,724. Finally,
the Commission noted that the same benchmark had been
"used successfully in the context of geographic coordinates
near mountain peaks." Id. at 16,724 n.21 (citing 47 C.F.R.
s 90.621(b)).
We are generally "unwilling to review line-drawing per-
formed by the Commission unless a petitioner can demon-
strate that lines drawn ... are patently unreasonable, having
no relationship to the underlying regulatory problem."
Home Box Office, Inc. v. FCC, 567 F.2d 9, 60 (D.C. Cir. 1977).
Here, the FCC has provided a reasonable explanation for the
line it has drawn, and demonstrated that line's relationship to
the underlying regulatory problem addressed by the finder's
preference program. It is also a line that is consistent with
the Commission's statutory obligation to "manage the spec-
trum to be made available for use by the private land mobile
services" in a manner that will "improve the efficiency of
spectrum use and reduce the regulatory burden upon spec-
trum users." 47 U.S.C. s 332(a)(2).
C
Petitioners' third contention is that, by defining "substan-
tial accordance" through a benchmark, the FCC effectively
adopted a substantive rule. Under the Administrative Proce-
dure Act, an agency may adopt such a rule only after
providing notice and an opportunity for interested parties to
comment. See 5 U.S.C. s 553. Since the FCC did not follow
such rulemaking procedures here, petitioners contend the
FCC's decision should be invalidated.
This argument, however, comes too late. Section 405(a) of
the Federal Communications Act requires that the Commis-
sion be given an "opportunity to pass" on a question of fact or
law before a petitioner may bring it to this court. 47 U.S.C.
s 405(a); see Time Warner Entertainment Co. v. FCC, 144
F.3d 75, 79 (D.C. Cir. 1998); Bartholdi Cable Co. v. FCC, 114
F.3d 274, 279 (D.C. Cir. 1997). Petitioners knew full well that
the Commission would address the 1.6-kilometer benchmark,
since the Bureau had adopted that benchmark in the proceed-
ing below. Nonetheless, they failed to argue before the
Commission that a benchmark could not be adopted without
notice and comment rulemaking. To the contrary, petitioners
argued that the Commission had already adopted a valid
benchmark through the decision in Lott which, like this case,
was an adjudication rather than a rulemaking. By failing to
give the Commission an opportunity to consider this argu-
ment, petitioners have precluded review in this court.
Petitioners' argument is, in any event, without merit. The
FCC's interpretation of "substantial accordance" arose in the
context of an adjudication of petitioners' applications for
finder's preferences. It is well settled that an agency "is not
precluded from announcing new principles in an adjudicative
proceeding...." NLRB v. Bell Aerospace Co., 416 U.S. 267,
294 (1974). Rather, "the choice between rulemaking and
adjudication lies in the first instance within the [agency's]
discretion." Id.; see also Securities & Exchange Comm'n v.
Chenery Corp., 332 U.S. 194, 203 (1947); City of Orrville v.
FERC, No. 97-1352, 1998 WL 343439, at *11 n.11 (D.C. Cir.
June 30, 1998).
D
Finally, petitioners contend that the FCC acted unlawfully
by applying the 1.6-kilometer benchmark retroactively to
their finder's preference requests. They urge us to analyze
that retroactive application under the five-factor test set forth
in Clark-Cowlitz Joint Operating Agency v. FERC, which we
have used as the "framework for evaluating retroactive appli-
cation of rules announced in agency adjudications." 826 F.2d
1074, 1081 (D.C. Cir. 1987) (en banc).6 Petitioners contend
__________
6 Quoting our earlier opinion in Retail, Wholesale & Department
Store Union v. NLRB, 466 F.2d 380, 390 (D.C. Cir. 1972), Clark-
Cowlitz set forth the following, non-exhaustive list of relevant
factors:
(1) whether the particular case is one of first impression, (2)
whether the new rule represents an abrupt departure from
well-established practice or merely attempts to fill a void in an
unsettled area of law, (3) the extent to which the party against
whom the new rule is applied relied on the former rule, (4) the
degree of the burden which a retroactive order imposes on a
party, and (5) the statutory interest in applying a new rule
despite the reliance of a party on the old standard.
Clark-Cowlitz, 826 F.2d at 1081.
that the retroactive application of the 1.6-kilometer bench-
mark fails to survive that test.
There is no need to plow laboriously through the Clark-
Cowlitz factors here. As we said in that case, the test's
factors "boil down ... to a question of concerns grounded in
notions of equity and fairness." Id. at 1082 n.6. Indeed, that
is the gravamen of petitioners' complaint: it is unfair, they
say, to apply the new 1.6-kilometer benchmark to their
requests when the preexisting one-second benchmark is one
they readily meet. But since we already have concluded that
there was no such preexisting benchmark, most of the force
has gone out of petitioners' appeal to fairness.
To flesh it out, petitioners' fairness argument is that, in
reasonable reliance on Lott 's one-second rule, they hired
surveyors to identify target licensees and lawyers to file their
finder's preference requests. Under the one-second rule,
petitioners contend, they were entitled to finder's prefer-
ences. If the FCC is permitted to apply the new 1.6-
kilometer benchmark, they will have borne the burden of
those expenses for nothing.
If the petitioners truly did rely on a one-second benchmark,
that reliance was badly misplaced and hence inappropriate for
consideration under Clark-Cowlitz. See id. at 1084 (noting
that reliance must be reasonable). There was no "well estab-
lished practice" supporting a one-second benchmark. See id.
at 1083. To the contrary, the status quo ante was not a
benchmark at all, but rather a case-by-case assessment with a
highly uncertain outcome. See, e.g., Lott, 9 F.C.C.R. at 225;
Cassell, 11 F.C.C.R. at 16,723-24 & nn. 15-17. Indeed, Lott
was the first finder's preference case to involve a deviation
from geographic coordinates, and the Lott opinion was re-
leased only two months before petitioner Vaughn filed his
preference application and only four months before petition-
ers Cassell and Kelley Communications filed theirs. More-
over, as the Report and Order made clear, the FCC always
retained the "right to review preference requests to assure
that the awarding of the preference [was] in the public
interest...." Report and Order, 6 F.C.C.R. at 7303 n.64. In
short, petitioners' expenditure of funds on lawyers and sur-
veyors was a gamble; it was not a sure bet. See Clark-
Cowlitz, 826 F.2d at 1084 ("Although hope springs eternal,
hope is no surrogate for reliance.").
If there were any parties in these cases who did have a
reasonable reliance interest, they were the existing licensees
rather than the petitioners. As the Commission's opinion
suggests, the licensees had been operating their stations for
years at what they thought, apparently in good faith, were
the correct geographic coordinates. As far as the record
reflects, no operator had ever before lost a license based on a
deviation as small as those at issue here. Moreover, while
petitioners' investment in surveyors and legal fees was minor,
the burden the existing licensees would bear if the FCC
revoked their licenses would be great. See id. As the
Bureau's Licensing Division noted in making a similar point,
"construction costs associated with a trunked Specialized
Mobile Radio Station can amount to hundreds of thousands of
dollars." Vaughn, 9 F.C.C.R. at 4439.
In sum, because there is no evidence of the kind of "mani-
fest injustice" that would counsel against retroactive applica-
tion of the 1.6-kilometer benchmark, Clark-Cowlitz, 826 F.2d
at 1081, petitioners' final attack on the denial of their prefer-
ence requests falls short of the mark.
III
For the foregoing reasons, the petitions for review 7 are
denied.
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7 See supra note 1.