United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 10, 2001 Decided January 11, 2002
No. 00-1292
High Plains Wireless, L.P.,
Appellant
v.
Federal Communications Commission,
Appellee
Digital PCS, LLC and Tritel Communications, Inc.,
Intervenors
Appeal from an Order of the
Federal Communications Commission
Eliot J. Greenwald argued the cause and filed the briefs for
appellant.
Stanley Scheiner, Counsel, Federal Communications Com-
mission, argued the cause for appellee. With him on the brief
were Jane E. Mago, General Counsel, Daniel M. Armstrong,
Associate General Counsel, and Thomas Chandler, Counsel.
Thomas Gutierrez argued the cause for intervenors Digital
PCS, LLC and Tritel Communications, Inc. With him on the
joint brief was Russell D. Lukas.
Before: Ginsburg, Chief Judge, Edwards and Sentelle,
Circuit Judges.
Opinion for the Court filed by Chief Judge Ginsburg.
Ginsburg, Chief Judge: High Plains Wireless, L.P. appeals
an order of the Federal Communications Commission award-
ing 32 licenses to Mercury PCS II, LLC, now called Tritel
Communications, Inc. High Plains and Mercury both bid at
an auction conducted by the Commission for licenses to
provide personal communications services (PCS). See Mercu-
ry PCS II, LLC, 15 F.C.C.R. 9654 (2000) (Mercury). High
Plains asserts that the Commission unreasonably refused to
disqualify Mercury from receiving the licenses even though
Mercury concededly violated the Commission's rule against
collusion. High Plains also alleges that Mercury orchestrated
a slew of unlawful ex parte contacts in an attempt to influence
the investigation into its bidding practices. We hold that,
insofar as High Plains has standing to appeal, it has not
shown that the award to Mercury was arbitrary or irrational,
and we therefore affirm the order of the Commission.
I. Background
Broadband PCS is a group of technologies that allow
mobile communication using the electromagnetic spectrum.
See Amendment of the Comm'n's Rules to Establish New
Personal Comms. Servs., 8 F.C.C.R. 7700 at p 24 (1993) (2d
R&O). Advanced cellular telephones, portable facsimile ma-
chines, and many other methods of wireless communication
are based upon broadband PCS. See id. at p 18. Recogniz-
ing the commercial and technological potential of broadband
PCS, the Commission reserved 120 MHz of spectrum for
provision of these services. See 47 C.F.R. s 24.200.
Before a party may use the spectrum to provide broadband
PCS, it must get a license from the Commission. See 47
U.S.C. s 301. In 1993 the Congress directed the Commission
to choose between mutually exclusive applications for a li-
cense through a system of competitive bidding, see 47 U.S.C.
s 309(j)(1); 47 C.F.R. s 24.701; the Commission has since
held several of the highest value auctions in history. See
Remarks of then-Chairman Reed Hundt at the Inst. for Int'l
Econ., Washington, D.C. (Oct. 23, 1996), at http:
//www.fcc.gov/Speeches/Hundt/spreh647.txt (visited Dec. 18,
2001) (comparing himself to Genghis Khan as one of the
"most profit-generating" officials ever).
The Commission divided the 120 MHz of spectrum re-
served for broadband PCS in two ways. First, it partitioned
the spectrum into six blocks: three of 30 MHz each (A, B,
and C) and three of 10 MHz each (D, E, and F). See 2d R&O
at p 56. Second, it divided the spectrum into geographic
service areas. Licenses for the A and B blocks of spectrum
were established for each of the 51 Market Trading Areas
into which the United States and its territories were divided
in the Rand McNally Commercial Atlas & Marketing Guide
(1992). See id. at p p 64, 76. Licenses for the C, D, E, and F
blocks were established for each of the 493 Basic Trading
Areas (BTAs) defined by the same source. See id. Between
August 26, 1996 and January 14, 1997 the Commission auc-
tioned off the D, E, and F block licenses in all 493 BTAs. See
Mercury, 15 F.C.C.R. 9654 at p 2.
The DEF auction was open, simultaneous, and ascending.
That the auction was "open" means that, in contrast to a
sealed-bid auction, the participants became aware of each
others' bids as they were cast. The auction was "simulta-
neous" in that the D, E, and F licenses for each of the 493
BTAs were open for bidding at the same time, and the
auction was "ascending" in the sense that bidding on the
licenses continued through successive rounds until no new
high bid was cast. The Commission built these features into
the auction to maximize the revenue it would generate and
the allocative efficiency it would achieve. See generally Peter
Cramton, The Efficiency of the FCC Spectrum Auctions, 41 J.
L. & Econ. 727, 728-35 (1998). Because the bidding was
open, however, any bidder could send all other bidders a
message encoded in the digits of its bid. See Peter Cramton
& Jesse A. Schwartz, Collusive Bidding: Lessons from FCC
Spectrum Auctions, 17 J. Reg. Econ. 229, 237 (2000). In this
way, participants could collude through the auction process
itself.
Mercury and High Plains both bid on the licenses for the F
block of spectrum in Lubbock and for the D and F blocks in
Amarillo, Texas. See Mercury, 15 F.C.C.R. 9654 at p 2.
High Plains was the successful bidder for the F block license
in Amarillo. See id. at p 2 & n.9. Mercury acquired the F
block license in Lubbock as well as 31 other licenses for which
High Plains did not bid. See id. at p 2 & n.10.
Mercury used so-called "reflexive bidding," a tactic for
deterring would-be competitors from bidding on a particular
license, to dissuade High Plains from bidding on the F block
license for Lubbock. See id. at p 5 & n.23. Specifically,
Mercury made the last three digits of its bids for the F block
licenses in Lubbock and in Amarillo the same as the Commis-
sion's numeric designations for the Amarillo and Lubbock
BTAs respectively. See Mercury PCS II, LLC, 13 F.C.C.R.
23755 (1998) p 3 (NALF Rescission). In one round of the
auction, for example, Mercury bid $1,375,013 on the F block
license in Lubbock, "013" being the BTA for Amarillo; after
High Plains bid again for the F block license in Lubbock,
Mercury bid $1,615,264 on the F block license in Amarillo,
"264" being the BTA for Lubbock. See id. By repeatedly
thus encoding its bids, Mercury was able to warn High Plains
that if High Plains did not stop bidding, then Mercury would
drive up the price of the F block license in Amarillo. See id.
at p 4.
The message was not lost on High Plains, which stopped
bidding for the F block license in Lubbock, see id., and filed
with the Commission an emergency motion to disqualify
Mercury from the auction. High Plains alleged that Mercury
violated the anti-collusion rule, which prohibited bidders
"from cooperating, collaborating, discussing or disclosing in
any manner the substance of their bids or bidding strategies"
during the auction. 47 C.F.R. s 1.2105(c) (2000), amended by
Competitive Bidding Procedures, 66 Fed. Reg. 54447, 54447-
48 (Oct. 29, 2001). When the auction ended without the
Commission having acted upon the motion, High Plains filed a
motion to deny the award to Mercury of any licenses in the
DEF auction. During ensuing investigations conducted sepa-
rately by the Commission and by the Department of Justice,
the executive responsible for formulating Mercury's bidding
strategy admitted that Mercury had used reflexive bidding to
threaten other bidders. See Mercury, 15 F.C.C.R. 9654 at
p 16 n.57. Mercury claimed, however, that reflexive bidding
was a common practice and did not violate the rule against
collusion. See NALF Rescission, 13 F.C.C.R. 23755 at p 4.
While the investigation into Mercury's bidding practices
was ongoing, High Plains again complained to the Commis-
sion, this time about ex parte contacts between Members of
Congress and the staff of the Commission. At least 27
Members inquired of the Commission about Mercury's licens-
es and the delay in their award. After yet another investiga-
tion, the Office of General Counsel (OGC) dismissed the
charge, finding that the contacts were all congressional "sta-
tus inquiries" exempt from the ban on ex parte contacts
under the Commission's rules. 47 C.F.R. s 1.1202(a).
Also while the investigation into Mercury's bidding prac-
tices was ongoing, the Wireless Telecommunications Bureau
(WTB) of the Commission awarded Mercury all but nine of
the licenses for which the company was the high bidder. See
Mercury PCS II, LLC, 13 F.C.C.R. 5756 (1997) p 1. When
the investigation was over, the Commission imposed upon
Mercury a $650,000 forfeiture, see Notice of Apparent Liabil-
ity for Forfeiture, 12 F.C.C.R. 17970 (1997) p 1 (NALF Or-
der); the WTB granted Mercury the remaining nine licenses,
including the F block license for Lubbock; High Plains filed
an application for review of that order; and the Commission
rescinded its earlier forfeiture order. See NALF Rescission,
13 F.C.C.R. 23755 at p 1. In the rescission order, the Com-
mission found that Mercury was not on notice that reflexive
bidding would violate the rule against collusion, see id. at p 10,
and therefore declined to punish the company. See id.
The Commission consolidated High Plains' applications to
review (1) the OGC's determination that Mercury had not
violated the ban against ex parte contacts and (2) the WTB's
award of licenses to Mercury, and affirmed on both counts.
See Mercury, 15 F.C.C.R. 9654 at p p 13, 26. It also rejected
High Plains' new contention that Mercury had shown a lack
of candor during the investigations into its bidding practices
so egregious as to disqualify it from holding a Commission
license. See id. at p p 14-21. High Plains appealed to this
court and Mercury intervened in the case.
II. Analysis
High Plains presents three issues on appeal. First, it
challenges the Commission's award of licenses to Mercury on
the ground that Mercury violated the rule against collusion
and the Commission had so held. Second, High Plains as-
serts that this court should reverse the decision of the
Commission because it erred in holding that Mercury did not
violate the rules against ex parte communications. Third,
High Plains renews its claim that Mercury exhibited a dis-
qualifying lack of candor. We turn to these claims only after
considering whether High Plains has standing under Article
III of the Constitution of the United States to bring this
appeal. See Steel Co. v. Citizens for a Better Env., 523 U.S.
83, 94-95 (1998); see also United Transp. Union-Ill. Legis.
Bd. v. Surface Transp. Bd., 175 F.3d 163, 165 (D.C. Cir. 1999)
("[W]e must determine whether the court has jurisdiction of
the case before we may turn to the merits").
A. Standing and Jurisdiction
The Commission and Mercury, which has intervened, ad-
vance numerous arguments that High Plains is without stand-
ing to assert some or all of its claims on appeal. We consider
the objections of the litigants, fully aware of our independent
obligation to be sure we have jurisdiction.
The "irreducible constitutional minimum" that High Plains
must show for standing to maintain this appeal is that it
suffered an injury in fact, that the conduct of which it
complains caused the injury, and that a favorable decision of
this court would redress the injury. U.S. Airwaves, Inc. v.
FCC, 232 F.3d 227, 231-32 (D.C. Cir. 2000). This court has
had occasion in prior cases to tailor the application of these
prerequisites specifically to complaints arising from the Com-
mission's auctions of spectrum. We have held that "[a]
bidder in a government auction has a 'right to a legally valid
procurement process'; a party allegedly deprived of this right
asserts a cognizable injury." Id. at 232 (quoting DirecTV,
Inc. v. FCC, 110 F.3d 816, 829 (D.C. Cir. 1997)). A disap-
pointed bidder need not show that it would be successful if
the license were auctioned anew, but only that it was able and
ready to bid and that the decision of the Commission prevent-
ed it from doing so on an equal basis. See id. The bidder
may satisfy the requirement of redressability by showing that
" 'it is ready, willing, and able' to participate in a new auction
should it prevail" in court. Id. (quoting Orange Park Fla.
T.V., Inc. v. FCC, 811 F.2d 664, 672 (D.C. Cir. 1987)).
Insofar as the appellant challenges the award to Mercury
of the F block license for Lubbock, it meets these require-
ments. High Plains complains that it was injured because
the Commission awarded the license to Mercury, which had
violated the anti-collusion rule, instead of holding a new
auction in which High Plains could bid free of the illicit
influence of reflexive bidding. Further, High Plains has
expressed its willingness to bid in a reprise of the vendue for
the F block license in Lubbock; and it is obvious that the
court could redress High Plains' injuries by ordering the
Commission to auction the license anew. High Plains' con-
tentions that Mercury tried to mislead the Commission and to
influence the Commission through illicit ex parte contacts also
assert a cognizable injury, that of deprivation to a valid,
impartial administrative proceeding, which injury this court
could redress by reversing the Commission. Accordingly,
High Plains has standing to appeal the Commission's award
to Mercury of the F block license for Lubbock.
The Commission contends separately that High Plains
does not have standing to challenge the award of the 31 other
licenses that Mercury acquired in the DEF auction, and High
Plains does not counter the Commission's argument. We
agree with the Commission (as does the intervenor, not
surprisingly). High Plains did not compete against Mercury
for those licenses. Nor does it allege that the award of those
licenses somehow deprived it of a valid auction process with
respect to the lots for which it did bid. It follows that
denying those 31 licenses to Mercury will not redress the
injury that High Plains suffered in its attempt to acquire the
F block license in Lubbock. Accordingly, we hold that High
Plains' challenge to the award of licenses other than the F
block license in Lubbock is not within the jurisdiction of this
court.
Standing aside, Mercury argues that the court lacks juris-
diction over the entire dispute, but its objections are predicat-
ed upon technical and not upon constitutional grounds. Mer-
cury's principal claim is that in order to raise to this court any
objection to the award of licenses to Mercury based upon the
anti-collusion rule, High Plains should have sought review of
the NALF Rescission order, which is now barred by the 60-
day limitation in the Hobbs Act. See 28 U.S.C. s 2344. The
point is not well taken: High Plains could not have gotten
review of the NALF Rescission because it did not have
standing to object to the agency's refusal to sanction Mercu-
ry. See Branton v. FCC, 993 F.2d 906, 910-11 (D.C. Cir.
1993) (citing Linda R.S. v. Richard D., 410 U.S. 614 (1973)).
When the Commission later disposed of High Plains' consoli-
dated applications for review, the company had and took its
first opportunity to seek judicial review of the Commission's
award of the Lubbock license to Mercury. For the same
reason, we reject Mercury's second contention, namely, that
High Plains is precluded from asserting its objections in this
appeal because it could have done so when the Commission
issued the NALF Rescission order. See Restatement (Sec-
ond) of Judgments s 28(1).
B. The Anti-Collusion Rule
High Plains argues that the Commission's decision to
award the license to Mercury despite its having violated the
anti-collusion rule was "neither plausible nor reasonable."
We understand High Plains to object to the decision under
two theories: First, that the Commission erred in holding the
rule against collusion too ambiguous to put Mercury on notice
reflexive bidding was a violation; and, second, that the Com-
mission unreasonably departed from a putative policy making
violation of the rule a ground for forfeiture.
As for the first theory, our review is deferential: the
agency's interpretation of its own rule is given "controlling
weight unless it is plainly erroneous or inconsistent with the
regulation." Capital Network Sys., Inc. v. FCC, 28 F.3d 201,
205 (D.C. Cir. 1994). The issue for the court, then, is
whether the Commission plainly erred or contravened the
rule against collusion when it read the rule as not providing
notice that reflexive bidding was prohibited. Here is the rule
in relevant part:
[A]fter the short-form application filing deadline, all ap-
plicants are prohibited from cooperating, collaborating,
discussing or disclosing in any manner the substance of
their bids or bidding strategies ... with other applicants
until after the down payment deadline....
47 C.F.R. s 1.2105(c)(1) (2000). Plainly, the rule does not
refer specifically to reflexive bidding. To engage in reflexive
bidding, however, is to "disclos[e] ... bidding strategies," and
Mercury unquestionably did that during the period covered
by the rule. Therefore, the rule probably did prohibit Mercu-
ry's conduct, but that is not the question before the court.
Our task is to determine only whether the Commission rea-
sonably could conclude the rule failed to put Mercury on
notice that reflexive bidding was impermissible.
The Commission itself did not anticipate that participants
might collude through the bidding process. After High
Plains filed its emergency motion to prevent Mercury from
bidding for licenses at the auction, for example, the WTB
declared that it had "reached no determinations on the merits
of [the] argument" that reflexive bidding violated the anti-
collusion rule. NALF Rescission, 13 F.C.C.R. 23755 at p 10
n.20. As the Commission later noted, this "neutral pro-
nouncement immediately following the initial allegation of
reflexive bid signaling could reasonably have been interpreted
by auction participants as indicative of an undefined position
on whether reflexive bid signaling was covered under the
anti-collusion rule." Id. at p 10.
To the extent the Commission ever contemplated that
participants would convey information about their bidding
strategies through the act of bidding, it considered the ex-
change of information to be a virtue of the open auction. See
2d R&O, 8 F.C.C.R. 7700 at p 83 ("Multiple round bidding
provides information about other bidders' estimates of com-
mon values, allowing all bidders to improve their estimates of
these common values."). The Commission did anticipate that
an auction with multiple rounds of bidding might increase the
opportunity for collusion, but only because the regime could
facilitate enforcement of collusive agreements reached else-
where, see id. at p 85 ("Using a single sealed bid could reduce
the likelihood of such collusive behavior since it provides
colluding bidders greater incentive to defect"), not because
the participants could use the open, iterative bidding process
itself to collaborate. Not until after the DEF auction was
over did the Commission identify the sorts of disclosure that,
if encoded within a bid, would violate the anti-collusion rule.
See NALF Order, 12 F.C.C.R. at 17981 (concurring statement
of Commissioner Ness).
In sum, whether reflexive bidding violated the rule against
collusion appears to have been an unsettled -- indeed, an
unasked -- question before the DEF auction. In this circum-
stance it was not unreasonable for the Commission to have
deemed the rule ambiguous with respect to whether reflexive
bidding was prohibited.
Having determined that the Commission reasonably
deemed the anti-collusion rule ambiguous, we may dispose in
short order of High Plains' argument that the Commission
nevertheless erred in awarding to Mercury the licenses for
which it had bid using that tactic. That the rule did not
afford adequate notice reflexive bidding was unlawful is itself
sufficient justification for the Commission not to penalize
Mercury. See Satellite Broad. Co., Inc. v. FCC, 824 F.2d 1, 3
(D.C. Cir. 1987) ("Traditional concepts of due process incorpo-
rated into administrative law preclude an agency from penal-
izing a private party for violating a rule without first provid-
ing adequate notice of the substance of the rule").
High Plains' other arguments -- for example, that Mercu-
ry's use of reflexive bidding makes it unfit to hold a license
from the Commission -- misconceive the relationship be-
tween the court and the Commission. We do not review the
decisions of the agency de novo. We inquire whether Com-
mission action was arbitrary and capricious, an abuse of dis-
cretion, or otherwise contrary to law; and we uphold the
agency's decision when it is reasonable. See Global Naps,
Inc. v. FCC, 247 F.3d 252, 257-58 (D.C. Cir. 2001). There-
fore, we reject summarily the appellant's other arguments;
aimed only at showing the agency was wrong, they have not
the power to persuade that the agency was unreasonable.
C. The Ex Parte Rules
With certain exceptions clearly not applicable here, the
Commission prohibits "ex parte presentations" during the
pendency of an administrative adjudication and any subse-
quent judicial review. 47 C.F.R. s 1.1208. The regulations
define a "presentation" as a "communication directed to the
merits or outcome of a proceeding." Id. at s 1.1202(a). A
written presentation is "ex parte" if it is "not served on the
parties to the proceeding." Id. at s 1.1202(b). Thus, a
written presentation comes within the prohibition of the rules
only if it is both "directed to the merits or outcome of a
proceeding" and "not served on the parties." Responsibility
for a violation of the ex parte rules extends to a party that
"solicit[s] or encourage[s] others to make any improper pre-
sentation," id. at s 1.1210, as High Plains alleges Mercury did
in this case. See Freeman Eng'g Assocs. v. FCC, 103 F.3d
169, 184 (D.C. Cir. 1997) (listing factors that inform the
analysis whether a proceeding is "irrevocably tainted" by ex
parte contacts and therefore void).
High Plains does not identify a single written contact
between a Member of Congress and the Commission that
meets both criteria. The appellant does refer the court to
some congressional letters that arguably called upon the
Commission to give Mercury the licenses being withheld
during the inquiry into its bidding practices. High Plains
also avers that it was not served with copies of certain
congressional correspondence, but there is no overlap in the
two epistolary lists.
In its brief High Plains also claims it did not receive some
of the congressional letters written on behalf of Mercury
"until the FCC submitted the Certified List of Items in the
Record to the Court," that is, well after the Commission had
closed its inquiry into Mercury's bidding practices. If High
Plains did not receive the letters until then, and if the letters
addressed the merits of the licensing dispute, then reversal of
the order and remand to the Commission might have been
appropriate. At oral argument, however, High Plains ac-
knowledged that it had received the letters long before the
Commission closed the record; indeed, the company attached
the letters as exhibits in a proceeding before the Commission
more than three years ago. See High Plains' Opp. to Mercu-
ry's Pet. for Recons. at Exh. C (Oct. 7, 1997).
In the end High Plains has not proffered a single instance
in which a congressional contact violated the ex parte rules.
We conclude, therefore, that the Commission had substantial
evidence that High Plains did not orchestrate a campaign of
such contacts.
D. Candor
Finally, High Plains argues that Mercury was not candid
with the Commission during the investigation into its bidding
tactics, and that its lack of candor disqualifies Mercury from
holding a Commission license. The Commission found that
Mercury never attempted to mislead the Commission about
its having used bids to convey messages; Mercury's defense
had always been that the rule against collusion did not
prohibit its reflexive bidding.
The gravamen of High Plains' factual claim is that a
representative of Mercury falsely declared in a submission to
the Commission that Mercury had not "utilized trailing num-
bers to send secret signals to anyone as alleged by High
Plains," and that Mercury had used reflexive bidding only to
"bluff or confuse other bidders as to Mercury's overall auction
strategy." In a later deposition this same person admitted he
used reflexive bidding "to threaten High Plains that I was
fixing to come blister their butt in Amarillo." Mercury, 15
F.C.C.R. 9654 at p 17 n.57. The Commission did not consider
the apparent contradiction, but neither did the appellant first
present it to the Commission. The matter is therefore be-
yond our ken. See 47 U.S.C. s 405(a)(2) (requiring a litigant
first to present an argument to the Commission on reconsid-
eration if it "relies on questions of fact or law upon which the
Commission ... has been afforded no opportunity to pass").
High Plains also adduces some lesser inconsistencies in
Mercury's submissions to the Commission as evidence of
Mercury's disdain for the truth. Again, however, High Plains
attempts to persuade the court that the Commission was
wrong, not that it was unreasonable. There being no claims
to the contrary, we must conclude that the decision of the
Commission is reasonable and is supported by substantial
evidence on the record as a whole. See 5 U.S.C. s 706(2)(C).
III. Conclusion
For the foregoing reasons, the decision of the Commission
to award to Mercury the F block license for Lubbock is
Affirmed.