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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued December 4, 2003 Decided January 27, 2004
No. 02-1297
VERNAL ENTERPRISES, INC. AND
LARRY L. SCHRECONGOST,
PETITIONERS
v.
FEDERAL COMMUNICATIONS COMMISSION AND
UNITED STATES OF AMERICA,
RESPONDENTS
On Petition for Review of an Order of the
Federal Communications Commission
John M. Pelkey argued the cause and filed the briefs for
petitioners. Larry L. Schrecongost entered an appearance.
Harry M. Wingo, Jr., Counsel, Federal Communications
Commission, Robert H. Pate III, Acting Assistant Attorney
General, U.S. Department of Justice, Robert B. Nicholson
Bills of costs must be filed within 14 days after entry of judgment.
The court looks with disfavor upon motions to file bills of costs out
of time.
2
and Andrea Limmer, Attorneys, John A. Rogovin, General
Counsel, Federal Communications Commission, and Daniel
M. Armstrong, Associate General Counsel were on the brief
for respondents. Jane E. Mago, Assistant General Counsel,
C. Grey Pash, Jr., Counsel, and Adam D. Hirsh, Attorney,
U.S. Department of Justice, entered appearances.
Before: EDWARDS, SENTELLE, and TATEL, Circuit Judges.
Opinion for the Court filed by Circuit Judge EDWARDS.
EDWARDS, Circuit Judge: Petitioners Vernal Enterprises,
Inc., and Larry L. Schrecongost, the company’s President,
seek review of an order of the Federal Communications
Commission (‘‘FCC’’ or ‘‘the Commission’’) denying their re-
quest for refund of a $2,335.00 filing fee paid in connection
with a permit application for construction of a broadcast
station. See Vernal Enter., Inc., 17 F.C.C.R. 14,826 (2002).
Vernal was one of a number of mutually exclusive applicants
vying for a permit to construct a radio station in Brookville,
Pennsylvania. In January 1998, Vernal and the other appli-
cants filed a settlement agreement with the FCC pursuant to
which the construction permit was awarded to another appli-
cant. In April 2000, two years after the FCC approved the
settlement agreement and dismissed Vernal’s application, pe-
titioners requested a refund of the fee paid when Vernal filed
its application in 1996.
The Commission denied the refund request by memoran-
dum opinion and order on July 23, 2002. The Commission
held that, under the applicable agency policy, application fees
would be refunded only to applicants who had not resolved
their mutually exclusive applications through negotiated
agreements within 180 days of August 5, 1997, and whose
pending mutually exclusive applications would therefore be
resolved pursuant to the agency’s newly implemented compet-
itive bidding process. Petitioners now seek review of the
Commission’s order, claiming that the agency’s denial of the
refund request was arbitrary and capricious. 5 U.S.C.
§ 706(2)(A) (2000).
The Commission first contends that the court is without
jurisdiction to hear this case, because petitioners failed to
3
appeal within the 30 days allowed under 47 U.S.C. § 402(b)
(2000). See 47 U.S.C. § 402(c). We reject this argument.
Petitioners are properly seeking review under 47 U.S.C.
§ 402(a), and their petition for review was filed within the 60-
day limitation applicable to that statutory provision.
The Commission argues, in the alternative, that the agen-
cy’s enforcement of the disputed fee-refund policy was rea-
sonable and did not violate the arbitrary and capricious
standard of the Administrative Procedure Act. We agree.
We therefore deny the petition for review.
I. BACKGROUND
In August 1997, Congress amended § 309(j) of the Com-
munications Act (‘‘the Act’’) to require the FCC to use
competitive bidding (also known as auctions), rather than
comparative hearings, in connection with mutually exclusive
applications for commercial broadcast authorizations. See
Balanced Budget Act of 1997, Pub. L. No. 105-33,
§ 3002(a)(1), 111 Stat. 251, 258-59 (1997). Congress also
added a new section to the Communications Act, 47 U.S.C.
§ 309(l), allowing the Commission to determine whether to
use competitive bidding or comparative hearings in connec-
tion with mutually exclusive applications pending as of July
1, 1997. See § 3002(a)(3), 111 Stat. at 260. This new sec-
tion also provided a 180-day period during which pre-July
1, 1997 applicants who entered into settlement agreements
resolving mutual exclusivity would not be subject to FCC
rules limiting the amount of settlement payments between
applicants. See id.
In a notice of proposed rulemaking issued in November
1997, the FCC ‘‘tentatively’’ concluded that the use of auc-
tions to resolve pending comparative licensing cases would
‘‘better serve[ ] the public interest than deciding them by
comparative hearingTTTT’’ Implementation of Section 309(j) of
the Communications Act – Competitive Bidding for Commer-
cial Broadcast and Instructional Television Fixed Service
Licenses, Notice of Proposed Rulemaking, 12 F.C.C.R. 22,363,
22,369-70 ¶ 14 (1997) [hereinafter Notice of Proposed Rule-
4
making]. The Commission noted that it was seeking ‘‘com-
ment on whether we should continue to use comparative
hearings for some or all of these cases.’’ Id. at 22,370 ¶ 14.
In conjunction with its tentative decision to subject pending
applications to competitive bidding, the Commission also pro-
posed to refund the filing fees paid by applicants who chose
not to participate in the auction process. Id. at 22,370-71
¶ 16.
In August 1998, the FCC issued a report and order imple-
menting its auction authority. See Implementation of Section
309(j) of the Communications Act – Competitive Bidding for
Commercial Broadcast and Instructional Television Fixed
Service Licenses, First Report and Order, 13 F.C.C.R. 15,920
(1998), on reconsideration, Memorandum Opinion and Order,
14 F.C.C.R. 8,724 (1999), aff’d. mem., Orion Communica-
tions, Ltd. v. FCC, 221 F.3d 196 (D.C. Cir. 2000) [hereinafter
Report and Order]. The Commission also promulgated a fee-
refund policy in conjunction with the Report and Order. The
policy provided:
On or before the date for filing a short-form application,
pending applicants in all comparative licensing cases
subject to resolution by competitive bidding pursuant to
§ 309(l) may file a pleading disavowing any interest in
participating in the auction and seeking the dismissal of
their applications. Once dismissal of any such applica-
tion is final, we will entertain requests for refunds of any
hearing and filing fees actually paid by such applicants.
Id. at 15,957 ¶ 102.
In May 1996, Vernal Enterprises, Inc., a closely held
corporation owned by Larry L. Schrecongost and his wife,
filed an application for a permit to construct a new FM radio
station in Brookville, Pennsylvania. Vernal payed a $2335.00
filing fee in connection with the application. Several other
parties, including Robert Stevens and Renda Radio, Inc., also
filled applications to construct a station in the Brookville
community. Because the applicants sought to use the same
FM frequency, the Commission was required to decide to
whom the construction permit should be awarded. The
5
Brookville applications were pending in August 1997 when the
relevant amendments to the Communications Act were
adopted.
In January 1998, within the 180-day period during which
FCC limitations on settlement agreements were waived and
over six months before the FCC determined that all pending
pre-July 1997 applications would be subject to competitive
bidding, Vernal entered into a settlement agreement with the
other Brookville applicants. In April 1998, the FCC issued a
public notice announcing that, pursuant to the settlement,
Renda Radio, Inc. would be awarded the construction permit
and all other applications, including Vernal’s, would be dis-
missed. FM Broadcast Settlement Agreements and Applica-
tions, 1998 WL 174,855 (Apr. 16, 1998). The dismissals
became final in May 1998.
In October 1998, Stevens, who, like Vernal, sought dismiss-
al of his permit application pursuant to the settlement, re-
quested a refund of his filing fee. A staff member of the
Commission’s Office of Managing Director (‘‘OMD’’) granted
Stevens’ request in July 1999, and notice of the refund was
released in February 2000. Fee Decisions of the Managing
Director, 15 F.C.C.R. 2826, 2829 (2000).
Vernal filed a request for a refund of its filing fee in April
2000. The OMD denied the request in a January 14, 2002
letter order. See Letter from Mark A. Reger to Larry S.
Schrecongost, reprinted in Joint Appendix (‘‘J.A.’’) 24. The
staff letter explained that, in implementing the competitive
bidding rules, the FCC had contemplated refunds of filing
fees in ‘‘circumstances where a permit is ultimately awarded
pursuant to the auction process, not where a permit is
awarded as a result of a settlement agreement among com-
peting applicants.’’ Id. at 25 (emphasis in the original). The
letter indicated that a 1999 public notice had made the FCC’s
intention clear and had stated that, ‘‘to the extent Settlements
contain provisions requesting that the Commission refund
previously paid filing fees, those provisions are inconsistent
with the Commission’s decision in the auction proceedings
concerning filing fee refunds.’’ Id. at n.2. The staff letter
6
acknowledged that the OMD had granted a refund request
made by another dismissed Brookville applicant and indicated
that that decision ‘‘was in error.’’ Id. at 25.
Petitioners filed an application for review before the Com-
mission on February 13, 2002. Application for Review (File
No. BPH-960520MD), reprinted in J.A. 27. The Commission
issued a memorandum opinion and order on July 23, 2002
denying the application for review. Vernal Enter., Inc., 17
F.C.C.R. 14,826 (2002). Citing to Wade Communications,
Inc., 16 F.C.C.R. 20,708 (2001), the FCC explained that the
fee-refund policy promulgated in conjunction with the Report
and Order made it clear that fees would be refunded only ‘‘to
the remaining pre-July 1, 1997 applicants for licenses or
permits who had not resolved their mutual exclusivity
through negotiated agreements during the 180-day period TTT
and whose pending mutually exclusive applications would
therefore be resolved pursuant to our decision to use competi-
tive bidding.’’ Vernal 17 F.C.C.R. at 14,827 ¶ 5. The FCC
concluded that Vernal, whose application was dismissed pur-
suant to a settlement agreement entered into during the
specified 180-day period and before the Commission’s decision
to subject all remaining pre-July 1997 applications to auction,
was not entitled to a refund. See id. The FCC acknowledged
that, prior to its decision in Wade Communications, staff
persons in OMD had granted some fee refunds to parties, like
petitioners, who had withdrawn their applications pursuant to
settlement agreements entered into before the applications
became subject to competitive bidding. See id. at 14,827-28
¶ 6. The FCC explained, however, that Wade Communica-
tions made it clear that these staff actions were not author-
ized by the Commission and that they were at odds with
agency policy. See id. at 14,828 ¶ 6. On September 23, 2002,
within 60 days of the issuance of the Commission’s order,
petitioners filed the instant petition for review.
II. ANALYSIS
A. Jurisdiction
As an initial matter, the FCC contends that this court is
without jurisdiction to hear this case. The Commission ar-
7
gues that petitioners incorrectly petitioned for review within
the 60-day filing period applicable to 47 U.S.C. § 402(a),
rather than seeking review within the 30 days applicable to
§ 402(b). The FCC’s position is unavailing. Petitioners
properly pursued their claim under 47 U.S.C. § 402(a), and
we consequently have jurisdiction to hear this matter.
Section 402 describes two mutually exclusive channels for
the review of FCC decisions. See Tribune Co. v. FCC, 133
F.3d 61, 66 (D.C. Cir. 1998); Friedman v. FCC, 263 F.2d 493,
494 (D.C. Cir. 1959). Section 402(b) provides for appeal of
FCC orders in nine enumerated situations. All but one,
which is not relevant here, involve the Commission’s licensing
authority. For all other final orders of the Commission,
§ 402(a) provides that review shall be sought ‘‘as provided by
and in the manner prescribed in Chapter 158 of Title 28.’’
See 28 U.S.C. §§ 2341-2351 (2000). Under § 402(b), an ap-
peal must be taken within 30 days of the date of public notice
of the order at issue. See 47 U.S.C. § 402(c). Section 402(a)
petitions for review must be filed within 60 days of the date of
public notice. See 28 U.S.C. § 2344. Under either provision,
an appeal filed out of time ‘‘must be dismissed’’ for lack of
jurisdiction. Waterway Communications Sys., Inc. v. FCC,
851 F.2d 401, 405 (D.C. Cir. 1988) (emphasis in original)
(citation and internal quotations omitted).
The FCC admits that the refund order at issue here does
not fall within one of the enumerated categories of § 402(b).
However, relying primarily on the ‘‘ancillary to’’ rationale of
Tomah-Mauston Broadcasting Co. v. FCC, 306 F.2d 811
(D.C. Cir. 1962), the agency argues that the order here is so
‘‘intimately associated with’’ the application process as to
require review under § 402(b). According to the FCC, the
refund order was issued ‘‘solely because Vernal filed an
application for a construction permitTTTT The FCC would
never have received the fee but for the filing of Vernal’s
application, and Vernal’s application would not have been
accepted for filing if it had not been accompanied by the filing
fee.’’ Respondents’ Br. at 11. The Commission’s reliance on
the ‘‘ancillary to’’ notion is misplaced. The applicable law
simply is not what the FCC suggests.
8
National Ass’n of Broadcasters v. FCC, 554 F.2d 1118
(D.C. Cir. 1976), provides the initial framework for our analy-
sis. There we held reviewable under § 402(a) a variety of fee
orders, including those denying refund of ‘‘certain filing and
grant fees that [were] submitted with various types of appli-
cations for grant of license or other authority.’’ Petitions for
Refund of Fees, 50 F.C.C.2d 730 ¶ 2, cited in Nat’l Ass’n of
Broadcasters, 554 F.2d at 1123 n.11. See id. at 1121 n.1. At
least some of the fees at issue in National Ass’n of Broad-
casters were, like the construction permit fee at issue here,
paid in connection with applications described in § 402(b).
Nevertheless, the court found that ‘‘[t]he statute itself ap-
pears quite clear: except for the eight specific cases listed in
§ 402(b) (none of which concerns refunds or fee assessments),
‘[a]ny proceeding to enjoin, set aside, annul or suspend any
order of the [Federal Communications] Commission under
this chapter TTT shall be brought [by a petition for review
under 28 U.S.C. § 2342.]’ 47 U.S.C. § 402(a)TTTT’’ Id. at
1121 n.1 (alterations in original). The court specifically de-
clined to rely on Tomah-Mauston to require review under
§ 402(b), stating:
[W]e do not believe (nor does any party allege) that the
order presented for our consideration here can be consid-
ered ‘‘ancillary’’ to one of the actions listed under section
402(b), since the fees assessed were to reimburse the
agency for the costs associated with rendering its ser-
vices (as mandated by 31 U.S.C. § 483a) rather than for
a reason connected in any way with the purposes speci-
fied in section 402(b).
Id.
The FCC argues that the fee order at issue here is
distinguishable from the fee orders at issue in National Ass’n
of Broadcasters, because the fee here was paid in connection
with an application for a permit enumerated in § 402(b). In
other words, the FCC suggests that none of the fees at issue
in National Ass’n of Broadcasters was paid in connection
with one of the application procedures enumerated in
§ 402(b). This is plainly wrong. Although the opinion is not
9
entirely clear with respect to all of the matters at issue in the
case, there is no doubt that some of the fees at issue in
National Ass’n of Broadcasters were paid in connection with
application procedures enumerated in § 402(b).
In any event, if National Ass’n of Broadcasters leaves any
doubt over the reach of § 402(b), Tomah-Mauston makes
clear that a petition for review under § 402(a) is the appropri-
ate channel for judicial review in this case. In that case,
‘‘[t]he appellant had sought to have intervenor’s construction
permit revoked before intervenor could commence opera-
tions.’’ Tomah-Mauston, 306 F.2d at 812. Relying on two
cases involving orders that resolved what, in effect, were
requests that the Commission reconsider the grant of various
applications enumerated in § 402(b) and a third case involv-
ing an order granting a request to allow a broadcast permit to
continue in effect pending a decision in a protest filed against
that authorization, the court held that the order was ‘‘ancil-
lary to’’ the grant of the construction permit and should be
reviewed under § 402(b). See id. The decision noted that
because the Commission had ‘‘considered appellant’s petition
on its merits TTT its order denying the petition was in
substance a re-affirmation of [the FCC’s] earlier grant’’ of the
construction permit. Id. The court also distinguished an
earlier decision in which § 402(b) was apparently found not to
provide the remedy for appeal on the grounds that ‘‘the
orders there sought to be reviewed did not grant or deny an
application.’’ Id.
The order denying the fee-refund request here similarly
does not grant or deny an application. Nor does it, in any
way, reaffirm or undermine the Commission’s decision to
grant the construction permit to Renda Radio or otherwise
affect Renda Radio’s activities with respect to the Brookville
permit. Thus, under Tomah-Mauston, the refund order can-
not be characterized as ‘‘ancillary to’’ an order appealable
under § 402(b).
It is also noteworthy that recent decisions of the court have
declined to broaden the ‘‘ancillary to’’ rationale of Tomah-
Mauston to extend the reach of § 402(b) beyond its pre-
10
scribed boundaries. See, e.g., Coalition for Noncommercial
Media v. FCC, 249 F.3d 1005 (D.C. Cir. 2001); Freeman
Eng’g Assocs., Inc. v. FCC, 103 F.3d 169 (D.C. Cir. 1997). In
Freeman, the court found that the Commission’s grant of a
‘‘pioneer’s preference’’ was not ‘‘ancillary to’’ the grant of a
license, even though ‘‘[a] preference ‘effectively TTT guaran-
tee[s] the innovating party a license in the new service
(assuming it is otherwise qualified) by permitting the recipi-
ent of a pioneer’s preference to file a license application
without being subject to competing applications.’ ’’ 103 F.3d
at 174 (alterations in original) (quoting Establishment of
Procedures to Provide a Preference to Applicants Proposing
an Allocation for New Services, 6 F.C.C.R. 3,488, 3,492 ¶ 32
(1991)). Quoting Waterway Communications, 851 F.2d at
403, the court explained:
‘‘[R]elief TTT under § 402(b) requires as a trigger the
grant or denial of a license application.’’ The Commis-
sion does not grant licenses at the time a pioneer’s
preference is awarded. Nor does the grant of a prefer-
ence irrevocably commit the Commission to grant a
license. The recipient of a pioneer’s preference must
still be ‘‘otherwise qualified’’ in order to obtain a license.
It therefore appears that our jurisdiction to review a
denial of a pioneer’s preference application is not gov-
erned by § 404(b), but falls within § 404(a).
Freeman, 103 F.2d at 177 (citations omitted). Thus, even in a
situation in which the order at issue ‘‘strongly foreshadow[ed]
the grant of a 402(b) application,’’ Coalition for Noncommer-
cial Media, 249 F.3d at 1008, we declined to apply the
‘‘ancillary to’’ rationale of Tomah-Mauston in the absence of
the ‘‘trigger[ing] TTT grant or denial of a license application.’’
Freeman, 103 F.2d at 177.
The necessary ‘‘triggering’’ action was absent in this case
as well. The FCC never granted or denied petitioners’
permit application. Rather, it simply agreed, at petitioners’
request, to dismiss the application after Vernal reached a
settlement agreement with the other applicants for the
Brookville permit. Moreover, although the FCC did grant
11
the Brookville permit to another applicant, Renda, that grant
cannot function as the necessary ‘‘triggering’’ event with
respect to petitioners’ refund order since, unlike in Tomah-
Mauston, the refund order did not and could not in any way
affect that construction permit.
In Coalition for Noncommercial Media, the court was
presented with a Commission order which, since it modified
two television licenses, arguably fell within the ambit of
§ 402(b). See Coalition for Noncommercial Media, 249 F.3d
at 1006-08. However, the court declined to require review
under § 402(b), because the Commission had modified the
licenses in question on its own initiative. See id. at 1008.
The license holder had requested modification of channel
assignments via a petition for a rulemaking that allowed it to
avoid seeking modification of its licenses. See id. at 1006-08.
The decision explained that had the license holder submitted
an application seeking the modification of its license, review
would have been required under § 402(b)(6), pursuant to
which a party may seek review if it can show that it ‘‘ ‘is
aggrieved or [its] interests are adversely affected by an order
of the Commission granting or denying any application de-
scribed in paragraphs (1) to (4) and (9) of this subsection.’ ’’
Id. at 1007 (emphasis in original) (quoting 47 U.S.C.
§ 402(b)(6)). The fact ‘‘[t]hat the Commission leapt forward
and on its own hook eliminated the need for such an applica-
tion does not create an application where none was made.’’
Id. at 1008. We thus found appeal under § 402(a) proper.
As noted in Coalition for Noncommercial Media, ‘‘we have
never extended Tomah-Mauston.’’ 249 F.3d at 1008. We
find no reason to do so here. Accordingly, we conclude that
the order at issue here was not ‘‘ancillary to’’ the grant or
denial of an order appealable under § 402(b). Consequently,
we find that petitioners properly and timely petitioned the
court for review under § 402(a).
B. The FCC’s Decision to Deny Petitioners’ Refund Re-
quest
The FCC’s order in this case may not be overturned unless
it is ‘‘arbitrary, capricious, an abuse of discretion, or other-
12
wise not in accordance with law.’’ 5 U.S.C. § 706(2)(A).
Pursuant to this standard, our review ‘‘is highly deferential;
we must presume the validity of [the] agency[’s] action.’’
Kisser v. Cisneros, 14 F.3d 615, 618 (D.C. Cir. 1994) (citation
omitted). The court may ‘‘reverse only if the agency’s deci-
sion is not supported by substantial evidence, or the agency
has made a clear error in judgment.’’ Id. at 619 (citing
Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 415-
16 (1971)). Moreover, we must defer to an agency’s reason-
able application of its own precedents. See Global Crossing
Telecomm., Inc. v. FCC, 259 F.3d 740, 746 (D.C. Cir. 2001).
What is at issue in this case is the Commission’s fee-refund
policy that was promulgated in conjunction with the August
1998 Report and Order implementing the agency’s auction
authority, and then explained and enforced by the Commis-
sion in Wade Communications, Inc., 16 F.C.C.R. 20,708
(2001). Petitioners present essentially two arguments in
support of their challenge to the fee-refund policy. First,
they contend that the Commission’s failure to grant Vernal’s
refund request is inconsistent with the fee-refund policy.
Second, petitioners contend that the Commission subjected
Vernal to unjust disparate treatment in granting fee refunds
to other parties who, like Vernal, sought dismissal of their
applications pursuant to settlement agreements entered into
prior to the issuance of the August 1998 Report and Order.
Petitioners’ arguments are without merit.
At bottom, the petitioners’ principal argument is that the
fee-refund policy that was promulgated in conjunction with
the August 1998 Report and Order clearly contemplated fee
refunds for parties such as Vernal. The FCC’s response is
straightforward: The fee-refund policy adopted in conjunction
with the August 1998 Report and Order
made clear that [fee] refunds would be available only in
the case of applicants who withdrew their applications
after the applications had become ‘‘subject to resolution
by competitive bidding’’ and the applicant had ‘‘file[d] a
pleading disavowing any interest in participating in the
auction and seeking the dismissal of their application[ ].’’
13
Respondents’ Br. at 13 (alterations in original) (quoting Re-
port and Order, 13 F.C.C.R. at 15,957 ¶ 102). The Commis-
sion’s position is unassailable.
Petitioners’ press for an expansive interpretation of the fee-
refund policy is entirely unconvincing, both because their
suggested interpretation is belied by the clear words of the
policy and, also, because it ignores the Commission’s subse-
quent decision in Wade Communications. In petitioners’
view, the Report and Order established a policy of refunding
filing fees to ‘‘all pre-July 1, 1997 applicants who opted not to
participate in the auction mandated by the Balanced Budget
Act of 1997TTTT’’ Petitioners’ Br. at 12. According to peti-
tioners, refunds may be claimed by parties, like Vernal, who
sought dismissals pursuant to settlement agreements entered
into before the FCC’s adoption of the August 1998 Report and
Order subjecting pending pre-July 1997 applicants to compet-
itive bidding. In other words, petitioners contend that the
FCC adopted a policy of refunding fees retroactively to all
pre-July 1997 applicants with applications pending at the time
the Balanced Budget Act was passed, regardless of whether
they settled and sought dismissal prior to August 1998. See
id. Petitioners contend that when the FCC denied Vernal’s
refund application, it departed from this policy without a
reasoned articulation of its reasons for doing so. See id.
We have no trouble concluding that the Commission order
in this case rests on the policy promulgated by the FCC in
conjunction with the August 1998 Report and Order and
subsequently enforced in Wade Communications. The anal-
ysis is not complicated. Section 309(l) of the Communications
Act authorized the Commission, in its discretion, to use
competitive bidding or comparative hearings to award licens-
es to mutually exclusive broadcast applicants who, like Ver-
nal, filed their applications prior to July 1, 1997. The Com-
mission did not determine that it would subject pre-July 1997
applications to auction until it issued the August 1998 Report
and Order implementing § 309(j). Consequently, applicants
like Vernal, who settled before the August 1998 Report and
Order, were never subject to auction.
14
The discussion of the fee-refund policy promulgated in
conjunction with the August 1998 Report and Order focused
on applicants who ‘‘elect[ ] not to participate in [an] auction.’’
13 F.C.C.R. at 15,957 ¶¶ 101 & 02. See also id. at 15,957-58
¶ 103. When Vernal entered into a settlement agreement it
surely was not ‘‘electing not to participate in an auction,’’
because the Commission had yet to determine that pre-July
1997 applicants would be subject to auction. Moreover, there
is no mention in the fee-refund discussion of applicants who,
like Vernal, obtained the benefit of § 309(l)(3)’s suspension of
FCC settlement caps by entering into agreements during the
six months immediately following enactment of the 1997
amendments. In short, the Commission order denying peti-
tioners’ refund request is in no manner inconsistent with the
policy set forth in conjunction with the August 1998 Report
and Order.
Petitioners raise several arguments in an attempt to stave
off this conclusion. None is persuasive, and only two merit
discussion. First, petitioners assert that the FCC’s refund of
filing fees was undertaken as part of its obligation under
§ 309(l)(3) of the Act to waive regulations necessary to permit
pre-July 1, 1997 applicants to enter into agreements resolving
mutually exclusive applications. Petitioners’ Br. at 13. The
portion of the Notice of Proposed Rulemaking cited by
petitioners does not support this assertion, and we find no
support for it in the Report and Order, the Notice of Pro-
posed Rulemaking, or anywhere else in the record.
Petitioners also point to paragraph 49 of the Report and
Order. That paragraph, which references the refund provi-
sion only in response to a compensation clause issue raised
during the notice and comment period, states:
[W]e will refund upon request all hearing fees actually
paid by applicants in proceedings in which the construc-
tion permit is awarded by auction rather than by compar-
ative hearing, and all filing fees paid by pre-July 1, 1997
applicants within the scope of Section 309(l) who elect not
to participate in the auction.
15
Petitioners’ Br. at 14 (quoting 13 F.C.C.R. at 15,939 ¶ 49).
Noting the differing language used to describe the refund of
hearing and filing fees, petitioners assert that the rule ‘‘made
it clear’’ that the refund of filing fees would not be contingent
on whether an application was withdrawn pursuant to a
settlement leading to the grant of an application without
auction or as a result of a unilateral decision by an applicant
to dismiss an application in a proceeding wherein the permit
was eventually awarded by auction. Petitioners’ Br. at 13-14.
This argument ignores the common sense observation that no
applicant could ‘‘elect not to participate in an auction’’ until
being subject to auction. No one was subject to auction until
the Commission’s issuance of the August 1998 Report and
Order, months after Vernal’s application had been dismissed.
As noted above, if there were any doubts about the mean-
ing of the Commission’s fee-refund policy, they were resolved
conclusively when the FCC enforced the policy in Wade
Communications in November 2001. In Wade Communica-
tions, the Commission explicitly held that applicants like
Vernal may not seek refunds of filing fees. See 16 F.C.C.R.
20,708. The Commission explained:
[B]oth the general context and specific language of the
[Report and Order] clearly state our intention that re-
funds of filing fees would only apply to the remaining
pre-July 1, 1997 applicants for licenses or permits who
had not resolved mutual exclusivity through negotiated
agreements during the 180-day period and whose pend-
ing mutually exclusive applications would therefore be
resolved pursuant to our decision to use competitive
bidding.
Id. at 20,710-11 ¶ 7 (citations omitted). Explaining the ratio-
nale behind the distinction it drew, the Commission stated:
[A]ny applicants that settled within the 180-day period
were entitled to negotiate payments from the other
mutually exclusive applicants that would cover their
costs, including their filing fees, and moreover, pursuant
to the statutorily mandated waiver requirement in sec-
tion 309(l), could also negotiate payment amounts that
16
exceeded their costs. Therefore, any equities that might
apply to non-settling applicants and warrant refund of
filing fees do not apply with the same force to these
applicants.
Id. at 20,711-12 ¶ 9.
Wade Communications eliminates any conceivable ambigu-
ity as to the FCC’s refund policy. It also makes clear that
the Commission, in denying petitioners’ refund request, did
not depart from its established precedent regarding fee appli-
cation refunds. Moreover, in its discussion of the benefits
available to applicants who settled within the 180-day period,
Wade Communications demonstrated the reasonableness of
the FCC’s decision to distinguish between applicants who
took advantage of the settlement opportunity created by
§ 309(l) and those who waited to see whether the Commission
would use comparative hearings or competitive bidding to
resolve pending pre-July 1997 applications. See Cassell v.
FCC, 154 F.3d 478, 484 (D.C. Cir. 1998).
Petitioners’ disparate treatment argument bears little dis-
cussion. We recently reaffirmed our well-established view
that an agency is not bound by the actions of its staff if the
agency has not endorsed those actions. See Cmty. Care
Found. v. Thompson, 318 F.3d 219, 227 (D.C. Cir. 2003)
(citing Amor Family Broad. Group v. FCC, 918 F.2d 960
(D.C. Cir. 1991)). See also Jelks v. FCC, 146 F.3d 878, 881
(D.C. Cir. 1998); MacCleod v. ICC, 54 F.3d 888, 891 (D.C.
Cir. 1995). The Commission has acted consistently with
respect to the refund of application fees to parties in a
position similar to Vernal’s. In the August 1998 Report and
Order, the Commission adopted a policy against refunding
fees to applicants who resolved their exclusivity by settlement
during the 180-day period provided for in the Communica-
tions Act. Petitioners point to no order in which the Commis-
sion has acted contrary to this policy. In Wade Communica-
tions and in the order now before this court, the Commission
denied the requested fee refunds. It is true that, in a few
instances, staff in the Commission’s OMD, without authoriza-
tion from the Commission, granted fee-refund requests. But
17
staff error cannot bind an agency and force it, in effect, to
continue such errors.
The Commission’s order in this case convincingly explains
why the fee-refund policy adopted in conjunction with the
August 1998 Report and Order and enforced in Wade Com-
munications required denial of Vernal’s request. The Com-
mission’s order clearly survives scrutiny under the arbitrary
and capricious standard of review. Therefore, the petitioners’
challenge must fail.
III. CONCLUSION
For the reasons noted above, the petition for review is
dismissed.