United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 19, 1999 Decided July 16, 1999
No. 92-1432
PLMRS Narrowband Corp.,
Petitioner
v.
Federal Communications Commission and
United States of America,
Respondents
Consolidated with
92-1440, 97-1329, 97-1330, 97-1339, 97-1340
On Petitions for Review and Appeals of
Orders of the Federal Communications Commission
A. Thomas Carroccio argued the causes for petitioners/
appellants and filed the briefs for petitioner/appellant Colum-
bia Capital Corporation.
Richard S. Becker, James S. Finerfrock and Jeffrey E.
Rummel were on the briefs for petitioner/appellant PLMRS
Narrowband Corp.
K. Michele Walters, Counsel, Federal Communications
Commission, argued the cause for appellees. With her on the
brief were Joel I. Klein, Assistant Attorney General, U.S.
Department of Justice, Robert B. Nicholson and Marion
Jetton, Attorneys, Christopher J. Wright, General Counsel,
Federal Communications Commission, John E. Ingle, Deputy
Associate General Counsel, and Laurel R. Bergold, Counsel.
Before: Ginsburg, Randolph, and Rogers, Circuit Judges.
Opinion for the Court filed by Circuit Judge Ginsburg.
Ginsburg, Circuit Judge: In 1991 the Federal Communica-
tions Commission proposed to grant by lottery four licenses,
each comprising several land mobile radio channels in the
220-222 MHz range, designated for nationwide, non-
commercial use; that is, the chosen licensee could use the
channels for its own internal communications needs but gen-
erally could not lease the channels to others. See Amend-
ment of Part 90 of the Commission's Rules to Provide for the
Use of the 220-222 MHz Band by the Private Land Mobile
Radio Services, 6 F.C.C.R. 2356 (1991) (Original Order); 7
F.C.C.R. 4484 (1992) (Reconsideration Order); 8 F.C.C.R.
4161 (1993) (Second Reconsideration Order). Ultimately,
however, the Commission decided to assign the licenses by
auction rather than by lottery and to permit licensees to use
the channels for commercial as well as non-commercial pur-
poses. See Third Report and Order; Fifth Notice of Pro-
posed Rulemaking, 12 F.C.C.R. 10,943, p 6 (1997).
PLMRS Narrowband Corporation and Columbia Capital
Corporation, each of which filed applications under the Origi-
nal Order, petition for review of the Reconsideration Orders
and of the Third Report and Order. They ask the court to
vacate those orders and to require the Commission to process
their applications under the Original Order. We reject on its
merits the petitioners' challenge to the Third Report and
Order, and hence dismiss as moot their challenge to the
superseded Reconsideration Orders.
I. Background
Land mobile radio is used to send messages via radio
signals between a stationary transmission point and mobile
receiving units, in order to provide such services as cellular
telephony, paging, and the dispatch of taxicabs, delivery
vehicles, and police cars. See Telocator Network of Am. v.
FCC, 691 F.2d 525, 527 (1982). The four nationwide non-
commercial licenses the Commission proposed to grant in
1991 were to be used primarily for the licensees' own internal
communications needs and, only insofar as a licensee had
excess capacity, to be leased to others. See Original Order, 6
F.C.C.R. 2356, p 37 (predicting "non-commercial nationwide
licensees will require full usage of their systems for their own
communications needs in the major metropolitan areas, but
may have excess capacity in [smaller] urban areas and in
rural areas"). In order to "minimize the filing of speculative
applications," id. p 48, the Commission limited the transfer-
ability of licenses, provided for automatic license revocation if
two-and four-year construction benchmarks were not met,
and required licensees to install base stations in at least 70
markets within ten years. Id. pp 49, 68, 83. The Commission
received 34 applications, including those of the two present
petitioners, for the four non-commercial licenses.
The following year the Commission, upon reconsideration,
further restricted the transferability of licenses and the com-
mercial leasing of excess capacity, shortened the construction
deadlines, and required that an applicant demonstrate either
its actual presence, or a long-term business plan requiring
internal communications capacity, in the 70 or more markets
identified in its application. See Reconsideration Order, 7
F.C.C.R. 4484, pp 24-29. In 1993, upon further reconsidera-
tion, the Commission repealed the regulation permitting an
applicant to submit a long-term business plan and simply
required that it have an actual presence in 70 or more
markets. See Second Reconsideration Order, 8 F.C.C.R.
4161, p 10.
Later that year the Congress authorized the Commission to
auction licenses for uses in which the licensee "receiv[es]
compensation from subscribers." Omnibus Budget Reconcili-
ation Act of 1993, Pub L. No. 103-66, s 6002(a), 107 Stat. 312,
388 (formerly codified at 47 U.S.C. s 309(j)(2)(A)). In 1997
the Commission designated for such commercial use and
determined to assign by auction the four licenses it had
originally designated for non-commercial use and assignment
by lottery. The agency returned pending applications filed
under the rules promulgated for non-commercial use of the
four licenses. See Third Report and Order, 12 F.C.C.R.
10,943, pp 183-203.
II. Analysis
The petitioners challenge the Third Report and Order and
the Reconsideration Orders as arbitrary and capricious. See
5 U.S.C. s 706(2)(A). Under this deferential standard of
review we must affirm the Commission's decision if it exam-
ined the relevant information and gave a satisfactory explana-
tion for its action, including a rational connection between the
facts found and the choice made. See Motor Vehicle Mfrs.
Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43
(1983).
A. PLMRS's Challenge to the Third Report & Order
Although it "expressly supports" the Commission's designa-
tion of the licenses for commercial use in the Third Report
and Order, PLMRS claims the Commission acted arbitrarily
and capriciously both in deciding to auction those licenses and
in returning the application it filed under the previously
promulgated rules. Its support for the Commission's desig-
nation of the licenses for commercial use in 1997 places in a
rather odd light its ultimate contention that the agency must
limit the applicant pool to entities that applied for the licenses
in 1991, when they were designated for non-commercial use.
In permitting additional applicants to compete for the
newly-designated commercial licenses, the Commission ex-
plained:
[B]ecause the nature of the 220 MHz service is undergo-
ing such substantial change, it would be unfair to pre-
clude new applicants from having the opportunity to
apply for these 220 MHz licenses. In 1991, when the
pending applications were filed, parties interested in
using the 220 MHz spectrum may have decided not to
apply for these licenses because the rules precluded a
licensee from offering the type of service that these
parties desired to offer, such as primary fixed service,
paging, or nationwide commercial service.
Third Report and Order, 12 F.C.C.R. 10,943, p 200. PLMRS
claims there would be no such unfairness because the Com-
mission had in the Original Order designated four other
licenses for nationwide commercial use. Anyone seeking a
commercial license in 1991, PLMRS reasons, had an opportu-
nity to apply for it, and "nothing in the record supports the
FCC's finding that such entities opted out of the 1991 filing
process because the rules precluded the type of service that
these parties desired to offer."
This is a non sequitur. That one had an opportunity to
apply for other commercial licenses does not justify denying
one an opportunity to file for the formerly non-commercial
licenses once that restriction is lifted. In any case, PLMRS
itself represents that in 1991 there were 140 applicants for
the four commercial licenses. The Commission reasonably
concluded that some of those applicants may have decided not
to apply for the four licenses now at issue because they were
not then designated for commercial use. See id. (PLMRS
acknowledges that a commercial license is more valuable than
a non-commercial license.) When "an agency is obliged to
make policy judgments where no factual certainties exist or
where facts alone do not provide the answer, our role is ...
limited [to requiring] only that the agency so state and go on
to identify the considerations it found persuasive." Melcher
v. FCC, 134 F.3d 1143, 1152 (D.C. Cir. 1998). The Commis-
sion easily meets that standard here.
The Commission also gave an affirmative reason grounded
in public policy for expanding the existing pool of applicants:
"Opening a filing window for all interested applicants ... will
increase the likelihood that competitive processes will trigger
the delivery of a broad array of services to customers at
reasonable prices." Third Report and Order, 12 F.C.C.R.
10,943, p 200. PLMRS does not even attempt to cast doubt
upon this justification for the Commission's change of course.
Instead PLMRS next argues that the Commission, by
returning all pending applications and electing to auction the
licenses, invited unreasonable delay because it was inevitable
that the original applicants would challenge those actions in
court. As the Commission noted in the final rule, however,
had it not returned the applications of PLMRS and others it
would just as certainly have faced a court challenge from
parties interested in obtaining commercial licenses. See id.
p 203. We give such a predictive judgment our deference, of
course. See Melcher, 134 F.3d at 1152; FCC v. National
Citizens Comm. for Broad., 436 U.S. 775, 814 (1978) ("[A]
forecast of the direction in which future public interest lies
necessarily involves deductions based on the expert knowl-
edge of the agency"). Deference aside, we do not endorse
PLMRS's suggestion that an agency must gauge the public
interest with reference to the litigation incentives facing
private parties. To charge an agency with the delay imposed
upon it by others--in effect to encourage the agency to adopt
the course found least objectionable to interested parties--
would hardly seem to further the public interest, and would
create a perverse incentive for parties to threaten the agency
with litigation.
PLMRS also contends that because the Commission in 1993
granted the four licenses it had designated for nationwide
commercial use under the Original Order, the agency acted
arbitrarily and capriciously by failing to process PLMRS's
application at the same time. As the agency explains, howev-
er, it processed the commercial applications in 1993 because
the rules promulgated in the Original Order to govern na-
tionwide commercial licenses had become final and were not
subject to further agency reconsideration. The Commission
did not process the applications for nationwide non-
commercial licenses in 1993 because there were pending
before it three petitions for reconsideration of the rules
governing assignment of those licenses. See Notice: Novem-
ber 19, 1992, Date Established for Commercial Nationwide
220-222 MHz Band Applicants to File Application Amend-
ments to Satisfy Entry Criteria, 57 Fed. Reg. 49,475, 49,475
(1992). We see nothing arbitrary or capricious in the Com-
mission's decision to defer issuing licenses until it has finally
settled upon the rules for doing so. See Chadmoore Commu-
nications v. FCC, 113 F.3d 235, 242 (D.C. Cir. 1997) (holding
disparate treatment arbitrary only if parties are similarly
situated).
PLMRS's final two contentions, made only in passing, may
be rejected in kind; neither raises a question open in this
circuit. First, PLMRS did not, by virtue of filing its applica-
tion, obtain the right to have it considered under the rules
then applicable. See id. at 241. Second, because PLMRS
obtained no such right, the Commission's subsequent change
in the regulations was not retroactive, let alone impermissibly
retroactive, rulemaking. See DIRECTV, Inc. v. FCC, 110
F.3d 816, 825-26 (D.C. Cir. 1997) (holding that because
Commission's original order did not grant right to any partic-
ular broadcast channels, subsequent decision to auction those
channels not retroactive though it upset expectations based
upon prior law).
We therefore conclude that the Commission's decision to
auction the licenses and to return PLMRS's application was
neither arbitrary nor capricious.
B. Columbia's Challenge to the Third Report and Order
The Commission may not base a decision to designate a
band of frequencies for a particular use upon "the expectation
of Federal revenues from the use of a system of competitive
bidding." 47 U.S.C. s 309(j)(7)(A). Columbia claims the
Commission did just that, however, when it designated for
commercial use the channels covered by the four licenses at
issue in this case. For this it relies exclusively upon the
videotape of a meeting at which the five-member Commission
voted unanimously to approve the notice of proposed rule-
making that led a year and one-half later to the Third Report
& Order. See Second Memorandum Opinion and Order and
Third Notice of Proposed Rulemaking, 11 F.C.C.R. 188
(1995).
At that meeting two of the five Commissioners mentioned
the expectation of federal revenues. Commissioner Susan
Ness elicited from the Commission staff the estimate that
proceeds of an auction would be "in the neighborhood of a
quarter-billion dollars." She also commented that the 33
remaining original applicants "include some of the largest
U.S. Companies--AT&T, UPS, GE to name a few. These
national companies can afford to return to the U.S. taxpayer a
little of the value of the spectrum." Chairman Reed Hundt
stated, "I suppose we could hold an auction. I suppose we
could hold a comparative hearing, too, ... on the following
basis. The one who wants to give us the most money wins
the hearing." Columbia argues that these statements show
the Commission violated s 309(j)(7)(A), that is, designated the
licenses to commercial use based "principally, if not exclusive-
ly, [upon] the FCC's commitment to convert the nationwide
220 MHz spectrum into federal revenues."
The Commission claims it did not base its decision upon the
expectation of revenues. It points out that the Third Report
and Order makes no mention of such impermissible consider-
ations, but rests solely upon legitimate justifications, such as
promoting efficient nationwide communication services at rea-
sonable prices, promoting the development of new technolo-
gies, and ensuring that licenses go to those who value them
most. See 12 F.C.C.R. 10,943, pp 47, 202.
It is fundamental that "[a]gency opinions, like judicial
opinions, speak for themselves." Checkosky v. SEC, 23 F.3d
452, 489 (D.C. Cir. 1994). Rendered at the conclusion of all
the agency's processes and deliberations, they represent the
agency's final considered judgment upon matters of policy the
Congress has entrusted to it. Accordingly, "[w]here an agen-
cy has issued a formal opinion or a written statement of its
reasons for acting, transcripts of agency deliberations at
Sunshine Act meetings should not routinely be used to im-
peach that written opinion." Kansas State Network v. FCC,
720 F.2d 185, 191 (D.C. Cir. 1983).
We do not think the evidence that two Commissioners
initially flirted with an impermissible rationale suffices to
demonstrate that the permissible rationale given a year and
one-half later in the Commission's published opinion was a
mere pretext. Otherwise, it would seem, almost any slip of
the tongue during an agency's decisionmaking process could
be fatal, contrary to the settled principle that "[u]p to the
point of announcement, agency decisions are freely changea-
ble, as are the bases of those decisions." Checkosky, 23 F.3d
at 489.
Columbia next claims that Chairman Hundt prejudged the
question whether to assign the licenses by auction. In Au-
gust 1995, before the Commission issued the Third Notice of
Proposed Rulemaking, the Chairman unveiled in a speech the
Commission's "lineup of upcoming auctions," including the
auction in the third quarter of 1996 of the licenses at issue
here. The Washington Legal Foundation then petitioned the
Commission requesting that the Chairman recuse himself
from voting upon the auction issue on the ground that he
would be unable to give meaningful consideration to the
public comments opposing an auction and favoring a lottery.
Chairman Hundt did not recuse himself, and indeed voted to
adopt the Third Report and Order, as did all the Commission-
ers.
The day after the public release of that order Chairman
Hundt responded to the WLF's petition. He explained that
his 1995 statements indicated only his preliminary views, that
his announcement of tentative auction dates "included all
potential services to be licensed" by auction in 1996, and that
the Commission must begin to plan for an auction "well in
advance of any final Commission decision to authorize [one]."
Letter from Chairman Hundt to Washington Legal Found.
(March 13, 1997).
Generally, we are unable to view the motivations of an
agency official except as through a glass, darkly, and the
glass may be tinted not by the official's unalterable prejudg-
ment but by legitimate policy preconceptions; in a particular
instance, the cause may be exceedingly difficult to discern.
In order to avoid trenching upon the agency's policy preroga-
tives, therefore, we presume that policymakers approach
their quasi-legislative task of rulemaking with an open
mind--but not an empty one. See Lead Indus. Ass'n v. EPA,
647 F.2d 1130, 1179 (D.C. Cir. 1980) ("Agency decisionmakers
are appointed precisely to implement statutory programs, and
so inevitably have some policy preconceptions"); United
Steelworkers of Am. v. Marshall, 647 F.2d 1189, 1208 (D.C.
Cir. 1980) ("An administrative official is presumed to be
objective [and] mere proof that [he or] she has taken a public
position, or has expressed strong views, or holds an underly-
ing philosophy with respect to an issue in dispute cannot
overcome that presumption").
Columbia's burden is to make a "clear and convincing
showing that [Chairman Hundt had] an unalterably closed
mind on matters critical to the disposition of the proceeding."
Association of Nat'l Adver. v. FTC, 627 F.2d 1151, 1170 (D.C.
Cir. 1979). That it has not done. Even if we assume
Chairman Hundt was predisposed in favor of auctions as a
matter of policy, that alone would not imply that he was
unwilling to consider arguments to the contrary.
In sum, Columbia has not shown that the Commission
decided to auction the licenses based upon the impermissible
expectation of federal revenues. Neither has it shown that
Chairman Hundt should have disqualified himself because he
had unalterably decided to vote for an auction even before the
period for public comment had opened.
III. Conclusion
For the foregoing reasons, we reject the petitioners' chal-
lenge to the Third Report and Order. Because the Third
Report and Order superseded the disputed portions of the
Reconsideration Orders, see 12 F.C.C.R. 10,943, p 6, their
challenge to the Reconsideration Orders is moot. According-
ly, the petitions for review are
Denied.