Alvin Lou Media, Inc. v. Federal Communications Commission

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 17, 2009 Decided June 26, 2009

No. 08-1067

ALVIN LOU MEDIA, INC.,
APPELLANT

v.

FEDERAL COMMUNICATIONS COMMISSION,
APPELLEE

On Appeal from Orders
of the Federal Communications Commission

Dennis J. Kelly argued the cause and filed the briefs for
appellant.

C. Grey Pash, Jr., Counsel, Federal Communications
Commission, argued the cause for appellee. With him on the
brief were Joseph R. Palmore, Deputy General Counsel, and
Daniel M. Armstrong, Associate General Counsel.

Before: GINSBURG, ROGERS and KAVANAUGH, Circuit
Judges.

Opinion for the Court by Circuit Judge ROGERS.
 2

ROGERS, Circuit Judge: This appeal involves the Federal
Communications Commission’s competitive auction procedures
for granting construction permits and licenses for AM radio
broadcast stations. In contrast to the procedures for comparative
hearings, the Commission determined in 1998 to defer full
technical reviews of applications until after the auction among
mutually exclusive applications is conducted, and then to review
only the winning bidder’s application. Pre-auction review of
engineering data would be limited to determining mutual
exclusivity and geographic preferences under 47 U.S.C.
§ 307(b). Alvin Lou Media (“ALM”) appeals the denial of its
requests for reconsideration of the mutually exclusive
designation of the application filed by Powell Meredith
Communications Company (“PMCC”) for a radio station in the
Las Vegas, Nevada area, and for a stay of the auction. ALM
argued to the Commission that because PMCC’s application
proposed a station that could not be constructed or operated
without violating non-interference rules, spectrum protection
restrictions, and a treaty with Mexico, the application should
have been dismissed. On appeal, ALM contends that the
Commission’s refusal to consider patent and disqualifying
application defects prior to making a § 307(b) determination, 47
U.S.C. § 307(b), was contrary to the mandate in § 309(j)(5) of
the Communications Act, 47 U.S.C. § 309(j)(5), and arbitrary
and capricious under the Administrative Procedure Act (“APA”),
5 U.S.C. § 551 et seq.

Although ALM refused to participate in the auction, we hold
it has standing to appeal the denial of its requests for
reconsideration. ALM’s refusal was based on its view that the
Commission’s failure to dismiss a technically infeasible
application was an error of law. Absent the alleged error,
ALM’s application would have been entitled to consideration as
a “singleton” and there would have been no auction. The right
of a disappointed bidder in a government auction to a legally
 3

valid procurement process, see U.S. Airwaves, Inc. v. FCC, 232
F.3d 227, 232 (D.C. Cir. 2000), applies no less to a disappointed
participant in an auction process challenging rules as placing it
at a competitive disadvantage, DIRECTV, Inc. v. FCC, 110 F.3d
816, 829-30 (D.C. Cir. 1997).

However, ALM’s contentions fail on the merits. Section
309(j)(5), 47 U.S.C. § 309(j)(5), contemplates that the
Commission may establish standards of acceptability for filing
an application that differ from the standards for granting a
license or permit. To participate in an auction, a bidder need
only submit “such information and assurances as the
Commission may require,” to show its application is “acceptable
for filing.” 47 U.S.C. § 309(j)(5). By contrast, to be granted a
license or permit, a bidder must satisfy the standards of 47
U.S.C. §§ 309(a), 308(b), and 310. Id. The Commission’s pre-
auction procedures, which rely on applicant certifications of
feasibility and post-auction monetary sanctions for deficient
winning applications, were neither contrary to § 309(j)(5) nor
unreasonable. Its explanation of the decision to defer full
technical review — to promote expeditious deployment of new
broadcasting services to the public and to conserve Commission
resources — was “a satisfactory explanation,” Motor Vehicle
Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43
(1983), for the choice it made. See FCC v. Fox Television
Stations, Inc., 129 S.Ct. 1800, 1810-11 (2009). Although ALM’s
experience points up shortcomings in deferring technical review,
the choice made by the Commission was within the broad
discretion vested by Congress in 1997 when it expanded the
Commission’s auction authority.1 Further, the Commission’s

1
By notice of proposed rulemaking issued the next business
day following oral argument in the instant case, the Commission has
indicated that its view of pre-auction technical review has evolved to
be more or less aligned with ALM’s views of needed pre-auction
 4

denial of ALM’s petitions for reconsideration was not arbitrary
or capricious or contrary to law. Accordingly, we affirm.

I.

No person may operate or construct a radio station without
a license from the Commission. 47 U.S.C. § 301. Prior to the
decision in Bechtel v. FCC, 10 F.3d 875 (D.C. Cir. 1993), and
enactment of section 3002(a) of the Balanced Budget Act of
1997, Pub. L. No. 105-33, 111 Stat. 251, 258-59 (1997), the
Commission employed comparative hearings to determine
whether permits and operating licenses would be granted. In
Bechtel, this court held that the integration preference applied in
comparative hearings was arbitrary and capricious. See Bechtel,
10 F.3d at 878-87. In 1997 Congress expanded the
Commission’s auction authority, amending the Communications
Act to provide that “[i]f . . . mutually exclusive applications are
accepted . . . , then . . . the Commission shall grant the license or
permit to a qualified applicant through a system of competitive
bidding . . . .” 47 U.S.C. § 309(j)(1).

In 1998, the Commission promulgated the auction
procedures. See Implementation of Section 309(j) of the
Communications Act – Competitive Bidding for Commercial
Broadcast and Instructional Television Fixed Service Licenses,
13 F.C.C.R. 15,920 (1998) (“Auctions First Report & Order”).
The Commission determined that rather than conducting full

technical review. Notice of Proposed Rulemaking, Policies to
Promote Rural Radio Service and to Streamline Allotment and
Assignment Procedures, 74 Fed. Reg. 22,498 (May 13, 2009). This
proposed change, which would govern “applicants in future AM
broadcast auctions,” id. at 22,503, does not affect whether the
Commission’s interpretation of § 309(j)(5) in 1998 was permissible.
Cf. Bechtel, 10 F.3d at 887.
 5

technical reviews of all applications prior to an auction, it would
examine the technical data in advance only to determine whether
applications were mutually exclusive and entitled to a preference
pursuant to § 307(b). After the auction it would review in detail
only the winning bidder’s application. All applicants would file
a short-form application, FCC Form 175, see id. at 15,974, ¶ 141,
certifying they were legally, technically, and otherwise qualified
to be granted a permit or license, id. at 15,979, ¶ 152. The
winning bidder would file a long-form application, typically
FCC Form 301, which would be reviewed for compliance with
all relevant requirements, including technical feasibility. Id. at
15,984-86, ¶¶ 163-66. A permit or license would be granted only
after any petitions to deny were denied or dismissed and the
Commission was satisfied the applicant was qualified. Id. at
15,985-86, ¶ 166. Absent mutual exclusivity, if an applicant was
granted a dispositive § 307(b) preference, the application would
be deemed a “singleton” and no auction would be conducted.
See id. at 15,964-65, ¶ 120. The Commission explained that
deferring full technical review until after the auction would
minimize delay, encourage more bidders to participate in the
auction because only a short-form application would be required
to participate, and facilitate expeditious deployment of new
broadcasting service to the public, in keeping with
§ 309(j)(3)(A).2 Id. at 15,978-79, ¶ 151; see also id. at 15,979
n.167.

The Commission also established procedures to
accommodate the new competitive auction regime with § 307(b),
which requires the Commission “[i]n considering applications

2
Section 309(j)(3)(A) directs the Commission to promote
“the development and rapid deployment of new technologies,
products, and services for the benefit of the public, including those
residing in rural areas, without administrative or judicial delays . . . .”
47 U.S.C. § 309(j)(3)(A).
 6

for licenses . . . [to] make . . . distribution of licenses,
frequencies, hours of operation, and of power among the several
States and communities as to provide a fair, efficient, and
equitable distribution of radio service to each of the same.” 47
U.S.C. § 307(b). In keeping with this directive, the Commission
determined the staff would undertake a “traditional Section
307(b) analysis” prior to auction. Id. at 15,965, ¶ 120. Thus, in
the instant case, upon identifying the mutually exclusive
applications, the Media Bureau requested information from
applicants regarding the area and population proposed to be
served. AM Auction No. 32 Mutually Exclusive Applicants
Subject to Auction, Rep. No AUC-00-32-E (Auction No. 32), at
3 (Oct. 27, 2000). Such amendment was to be based on the
technical proposal in the AM Auction filing window application.
Id.; see also 47 C.F.R. § 1.2105; Auctions First Report & Order,
13 F.C.C.R. at 15,976, ¶ 145. If the § 307(b) determination is
dispositive and there are no competing applications for the same
community, then staff will grant the application proposing to
serve the community with the greater need and dismiss others as
ineligible. Auctions First Report & Order, 13 F.C.C.R. at
15,965, ¶ 120. If no § 307(b) determination is dispositive or
there are competing applications, the applications would be
included in an auction. Id.

This was the auction regime in place when, during the filing
window for Auction No. 32, ALM, PMCC, and Victor A.
Michael (“Michael”), along with others, filed applications for
new AM broadcast radio stations; ALM and PMCC sought to
operate in the Las Vegas area, Michael in Cheyenne, Wyoming.
The Media Bureau determined that these three applications were
mutually exclusive and that none was entitled to a dispositive
§ 307(b) preference. ALM’s Spring Valley proposal was found
not entitled to a first-local-service preference because Spring
Valley, Nevada was not sufficiently independent of Las Vegas.
The Media Bureau also determined that Las Vegas was entitled
 7

to a § 307(b) preference over Cheyenne, and so ALM and PMCC
would proceed to auction.

ALM and Michael sought reconsideration, arguing that
PMCC’s application was technically deficient because it would
cause disruptive interference in violation of Commission rules,
spectrum protection requirements, and international treaty
agreements. ALM argued it was improper for the Media Bureau
not to dismiss PMCC’s application prior to the auction given the
identified defects. ALM, Pet. for Recons., AM Auction No. 32,
MX Group 38, at 8-12, ¶¶ 14-19 (May 10, 2002). Deferring
review of the technical merits until after the auction under the
circumstances, ALM continued, “propagates a sham auction, and
falsely insinuates that the [Commission] has no present
knowledge of the illegal service status of PM[CC]’s Las Vegas
application.” Id. at 14, ¶ 26. The Media Bureau denied ALM’s
request for reconsideration and its motion for a stay of the
auction, noting the Commission’s procedures deferring full
technical review until after an auction. Letter from Peter H.
Doyle, Chief, Audio Division, Office of Broadcast License
Policy, Media Bureau, to Dave Garey, Secretary, Alvin Lou
Media, Inc., et al. (Aug. 15, 2002).

ALM refused to participate in the auction, explaining that
while it remained “an applicant in good standing” for Auction
32, its “legal rights [would be] violated if it did specifically
participate” in the December 10, 2002 auction with PMCC.
ALM, Decl. That It Remains a Participant in Good Standing, AM
Auction No. 32, MX Group 38, at 2 (Dec. 7, 2002). As the only
bidder, PMCC “won,” but its long-form application was
ultimately dismissed at PMCC’s request.3 In 2004, the

3
See FCC, Public Notice, Broadcast Actions, Report No.
46106 (Nov. 7, 2005), available at
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-262051A1
 8

Commission affirmed the Bureau’s 2002 denials of ALM’s
petition and motion to stay the auction. FCC, Mem. Op. & Order
Denying Application for Review 3, ¶ 5 (Jun. 30, 2004). In 2008,
the Commission denied ALM’s petition for reconsideration of
the 2004 Order. See FCC, Mem. Op. & Order on Recons. (Jan.
17, 2008).

II.

We first address two threshold questions, standing and
timeliness.

A.
The Commission maintains that ALM lacks standing
because it voluntarily declined to participate in the auction and
therefore suffered no injury in fact as a result of the auction. We
hold that ALM’s non-participation in the auction does not defeat
its standing. “The ‘irreducible constitutional minimum’ for
Article III standing is that the appellant was injured in fact, that
its injury was caused by the challenged conduct, and that the
injury would likely be redressed by a favorable decision of the
court.” 21st Century Telesis Joint Venture v. FCC, 318 F.3d
192, 197-98 (D.C. Cir. 2003).

.pdf. Despite having its Auction 32 application dismissed, PMCC
filed an application for a new station in a Las Vegas suburb in 2004.
Although its new application also was deemed mutually exclusive
with other applications, PMCC was eligible for settlement and the
Commission formally accepted PMCC’s long-form application in
2008. See FCC, Public Notice, Broadcast Applications, Report No.
26754 (June 10, 2008), available at
http://fjallfoss.fcc.gov/edocs_public/attachmatch/DOC-282767A1.pdf.
 9

Addressing government auctions, this court has held:

“[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.” A
disappointed 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 prevented it from doing so on an equal
basis. 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.

High Plains Wireless, L.P. v. FCC, 276 F.3d 599, 605 (D.C. Cir.
2002) (quoting U.S. Airwaves, Inc. v. FCC, 232 F.3d 227, 232
(D.C. Cir. 2000)) (internal citations omitted); accord DIRECTV,
110 F.3d at 829.

ALM is in much the same position as DIRECTV, which the
court held had standing even though it had not participated in an
auction because the Commission’s rules put DIRECTV at a
“substantial competitive disadvantage” and “as a practical
matter, precluded [it] from participating in the auction.”
DIRECTV, 110 F.3d at 830. Under the rules, had DIRECTV
won the auction it “would have been required to divest itself of
[a] substantial block of [valuable] channels . . . unless it could
get the rule declared unlawful.” Id. The court concluded
DIRECTV “did not have to take the risk that [its] successful bid
would be but a costly misstep.” Id. DIRECTV’s injury — the
Commission’s denial of its right to a legally valid procurement
process — would be redressed if the Commission afforded
DIRECTV an opportunity to bid “in a legally valid bidding
contest.” Id. at 830.
 10

Much like DIRECTV, ALM was a disappointed participant
in the procurement process. ALM timely filed an application
and was denied a § 307(b) preference. The Media Bureau
declined to consider ALM a “singleton,” as ALM would have
been had its interpretation of § 307(b) prevailed and PMCC’s
application been dismissed upon pre-auction review. Assuming
for purposes of standing, as we must, that ALM would prevail on
the merits, see City of Waukesha v. EPA, 320 F.3d 228, 235
(D.C. Cir. 2003), the Commission’s pre-auction procedures
deprived ALM of the right to a valid procurement process. By
allowing a technically deficient application to be designated
mutually exclusive and to compete against ALM’s application,
the Commission’s rules deferring technical review until after the
auction was conducted put ALM at a competitive disadvantage.
ALM argued to the Commission it would have been “forced to
not only bid against PM[CC]’s illegal service, but also to
respond to any mock bids PM[CC] might choose to make to
inflate the price AL[M] would ultimately have to pay.” ALM,
Pet. for Recons., AM Auction No. 32, MX Group 38, at 16, ¶ 31
(May 10, 2002). For standing purposes it suffices that ALM
participated in the auction process up to the point it would have
had to make an up-front payment to participate in the auction and
bid against an invalid application. By the time ALM voluntarily
withdrew from participating in the auction, it had already been
subjected to the purportedly invalid procurement process and
been injured in fact. ALM’s injury would be redressed by an
opportunity to participate in a procurement process involving
pre-auction review for technical merit. See DIRECTV, 110 F.3d
at 829-30.

The Commission’s suggestion that ALM might be
financially disqualified in a new application process and the
injury not redressable is not well taken. Standing “is determined
as of the date an action is filed.” U.S. Airwaves, Inc., 232 F.3d
at 232. The Commission’s August 2008 determination that
 11

ALM’s sole owner was unable to pay certain debts, based on
review of the owner’s financial situation in 2004 and 2005, see
Fireside Media, Order, 23 F.C.C.R. 13,138 (Aug. 22, 2008),
does not speak to ALM’s owner’s financial situation in February
2008, when ALM filed its appeal in this court. Further, that
determination involved the financial situation of Fireside Media,
not ALM. ALM’s statement to the court that it “can demonstrate
that it is financially qualified to construct and operate as
proposed when it files its ‘long form’ 301 application,” Reply Br.
at 17, suffices for purposes of this appeal to show that it is ready,
willing, and able to participate in a new process and that its
injury is redressable. See U.S. Airwaves, Inc., 232 F.3d at 232.

B.
The Commission also appears to suggest that ALM’s
challenge to the competitive auction procedures is not properly
before the court. It offers that the challenge could have been
brought as a petition for review of the rules immediately after
they were promulgated or as a petition for a new rulemaking.
We hold that ALM’s challenge is properly before the court.

Although ALM could have sought immediate review of the
rules or filed a petition for a rulemaking, nothing in Grid Radio
v. FCC, 278 F.3d 1314, 1320 (D.C. Cir. 2002), or Meredith v.
FCC, 809 F.2d 863, 873 (D.C. Cir. 1987), on which the
Commission relies, precluded ALM from seeking review of the
fast-track auction rules once the Commission applied them to
ALM. This court “permit[s] both constitutional and statutory
challenges to an agency’s application or reconsideration of a
previously promulgated rule, even if the period for review of the
initial rulemaking has expired.” Graceba Total Commc’ns, Inc.
v. FCC, 115 F.3d 1038, 1040 (D.C. Cir. 1997); see also NLRB
Union v. Fed. Labor Relations Auth., 834 F.2d 191, 195-97 (D.C.
Cir. 1987); Functional Music, Inc. v. FCC, 274 F.2d 543, 546
 12

(D.C. Cir. 1958). Because the Commission’s threshold
contentions lack merit, we turn to the merits.

III.

ALM’s primary contention is that § 309(j)(5) of the
Communications Act requires the Commission to undertake
technical review of all applications before allowing an applicant
to participate in an auction. It reasons that because Congress
required the Commission not to grant an application unless it is
acceptable for filing, an application that proposes a station that
would cause destructive inference with pre-existing stations is
always unacceptable for filing. In ALM’s view, if, under the
comparative hearings system “a prima facie application defect
required the Commission to deny a hearing to that application,”
Appellant’s Br. at 18; see Saul M. Miller, 1 F.C.C.2d 1388, 1389
(1965), “then it is equally so that a prima facie application defect
requires the Commission to reject that application without it
being included in an auction proceeding with other applications
whose basic qualifications are prima facie not defective,”
Appellant’s Br. at 18.

When the Commission interprets a statute it administers, the
court reviews its interpretation under the familiar two-step
framework of Chevron U.S.A., Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837 (1984). Under step one, where a
statute “has directly spoken to the precise question at issue,” id.
at 842, the court and the agency “must give effect to the
unambiguously expressed intent of Congress,” id. at 843. Under
step two, when the statute is silent or ambiguous regarding the
specific question, the court asks “whether the agency’s answer
is based on a permissible construction of the statute.” Id

Section 309(j)(5), on its face, does not require the
Commission to review an application for technical defects before
 13

designating an application as mutually exclusive and including
it in an auction. The text and structure of § 309(j)(5) draw a
distinction between the prerequisites for participation in an
auction and the requirements for granting a license or permit.4
To participate in an auction, a bidder need only submit “such
information and assurances as the Commission may require,” to
show its application is “acceptable for filing.” 47 U.S.C.
§ 309(j)(5) (emphasis added). By contrast, to be granted a
license or permit, a bidder must satisfy the requirements of 47
U.S.C. § 309(a), regarding “the public interest, convenience, and
necessity”; 47 U.S.C. § 308(b), regarding an applicant’s

4
Section 309(j)(5) provides:

No person shall be permitted to participate in a
system of competitive bidding pursuant to this
subjection unless such bidder submits such information
and assurances as the Commission may require to
demonstrate that such bidder’s application is acceptable
for filing. No license shall be granted to an applicant
selected pursuant to this subsection unless the
Commission determines that the applicant is qualified
pursuant to subsection (a) of this section and sections
308(b) and 310 of this title [setting conditions for
applications and restrictions on license ownership,
respectively]. Consistent with the objectives described
in paragraph (3) [regarding the design of systems of
competitive bidding], the Commission shall, by
regulation, prescribe expedited procedures consistent
with the procedures authorized by subsection (i)(2) of
this section [regarding assignment by random selection]
for the resolution of any substantial and material issues
of fact concerning qualifications.

47 U.S.C. § 309(j)(5).
 14

“citizenship, character, and financial, technical, and other
qualifications”; and 47 U.S.C. § 310, which imposes restrictions
on ownership by foreign governments and aliens. Id. § 309(j)(5).
As § 309(j)(5) contemplates the possibility of different standards
for participation in an auction and the grant of a permit or
license, the merit of ALM’s contention hinges on the
reasonableness of the Commission’s determination of what is
required for an application to be “acceptable for filing.”

By Commission rule, applicants for licenses or permits must
make certifications in the short-form applications as to legal,
technical, financial, and other qualifications of the applicant.
Auctions First Report & Order, 13 F.C.C.R. at 15,975, ¶ 144.
Further, successful bidders are subject to fines if their
applications could not be granted due to technical or legal
defects, id. at 15,979, ¶ 152. While ALM suggests an
intermediate form of up-front technical review, i.e., review of a
short-form application for facial defects, § 309(j)(5) did not
mandate the Commission to adopt such an approach. Although
compliance with the Commission’s technical regulations is one
of the requirements for granting a license or permit, see 47
U.S.C. § 309(j)(5) (cross-referencing § 308(b)), neither
§ 309(j)(5) nor the sections it cross-references mention such a
requirement as a prerequisite for participation in an auction.
Section 308(b) addresses the qualifications for the granting of
licenses and vests discretion in the Commission with respect to
the contents of applications;5 it does not even imply conditions

5
Section 308(b) provides:

All applications for station licenses, or modifications or
renewals thereof, shall set forth such facts as the Commission
by regulation may prescribe as to the citizenship, character,
and financial, technical, and other qualifications of the
applicant to operate the station; the ownership and location of
 15

for eligibility to participate in an auction and consequently has
no bearing on the timing of the Commission’s determination that
an applicant may participate in an auction. Indeed the cross-
reference to § 309(i)(2), governing applications granted through
lottery,6 lends some support for the Commission’s choice of
deferring grantability determinations until after an auction as it
contemplates the Commission will consider an applicant’s
qualifications under § 309(a) and § 308(b) after the successful
applicant has been selected, allowing the Commission to then
conduct a hearing if “substantial and material questions of fact
exist concerning such qualifications”and to forego consideration

the proposed station and of the stations, if any, with which it
is proposed to communicate; the frequencies and the power
desired to be used; the hours of the day or other periods of
time during which it is proposed to operate the station; the
purposes for which the station is to be used; and such other
information as it may require. The Commission, at any time
after the filing of such original application and during the
term of any such license, may require from an applicant or
licensee further written statements of fact to enable it to
determine whether such original application should be granted
or denied or such license revoked. Such application and/or
such statement of fact shall be signed by the applicant and/or
licensee in any manner or form, including by electronic
means, as the Commission may prescribe by regulation.

47 U.S.C. § 308(b).

6
Section 309(i)(2) provides, in relevant part, that “[w]hen
substantial and material questions of fact exist concerning [an
applicant’s] qualifications [to be granted a permit or license], the
Commission shall conduct a hearing . . . .” 47 U.S.C. § 309(i)(2). The
Commission’s lottery authority expired July 1, 1997, except for
licenses or permits for noncommercial educational or public broadcast
stations. See 47 U.S.C. § 309(i)(5)(A).
 16

of the unsuccessful applicants for consistency with the public
interest under § 309(a).

In urging that “an application which proposes to create
destructive interference to pre-existing stations is always
unacceptable for filing,” Appellant’s Br. at 18, ALM overlooks
the broad discretion Congress reposed in the Commission as
evidenced by the phrase “as the Commission may require,” 47
U.S.C. § 309(j)(5), to determine the requirements for an
application to be “acceptable for filing,” and thus eligible to
participate in an auction. Discretion contemplates alternative
choices, and whatever the practicality of ALM’s position may
be, the court’s role is not to second-guess the Commission’s
choice where it lies within the range of reasonable alternatives.
See EarthLink, Inc. v. FCC, 462 F.3d 1, 12 (D.C. Cir. 2006); cf.
Kickapoo Tribes of Indians of Kickapoo Reservation in Kansas
v. Babbitt, 43 F.3d 1491, 1497 (D.C. Cir. 1995). By requiring
the applicants to certify technical feasibility and regulatory
compliance before auctions, and providing for the imposition of
monetary penalties on winning bidders whose applications were
ultimately dismissed, the Commission decreased the chance that
technically defective or otherwise noncompliant applications
would be included in an auction. It balanced the costs of delay
against the benefits of greater assurance that all bidders were
qualified for a license and concluded, reasonably and within an
area of its expertise, that the former outweighed the latter given
Congress’s instruction for expedition.

ALM also contends that a § 307(b) determination, which
the Commission said it would make prior to an auction,
contemplates a finding that an application is technically
feasible. The Commission’s practice, ALM continues, of not
examining the technical feasibility of the proposed operation
before the auction would defeat the purpose of § 307(b), which
requires the Commission to “make such distribution of licenses,
 17

frequencies, hours of operation, and of power among the several
States and communities as to provide a fair, efficient, and
equitable distribution of radio service to each of the same.” 47
U.S.C. § 307(b).

Regardless of the merits of ALM’s view of the purpose
underlying this directive, the Supreme Court has underscored
the scope of the Commission’s discretion in holding the
Commission need not ensure that applicants can equally well
serve the communities they propose to serve before deciding
which community is entitled to a § 307(b) preference. See FCC
v. Allentown Broad. Corp., 349 U.S. 358 (1955). The Court
reasoned the Commission had discretion to conclude that doing
so could harm the community with the greater need by denying
it the opportunity to have increased broadcasting services
simply by the fortuity of which applicant sought to serve that
community. See id. at 362. On similar reasoning, the
Commission need not consider the technical qualifications of
each applicant before making a § 307(b) preference
determination. The text of § 307 is silent regarding both what
the Commission should consider in making § 307(b)
determinations and the order in which the Commission should
address the technical qualifications of an applicant seeking a
§ 307(b) preference. The absence of statutory procedural
mandates supports the conclusion that the Commission’s
auction procedures deferring full technical review of
applications do not conflict with § 307(b).

ALM’s reliance on the comparative hearing precedent does
not advance its position. It maintains that the Commission’s
prior treatment of broadcast applications would have required
dismissal of PMCC’s application because its proposal would
have resulted in destructive interference to existing AM
broadcasting stations. ALM points to Commission precedent
from before § 309(j)(1) was amended in 1997 that only
 18

applications setting forth technically feasible proposals were
entitled to consideration under § 307(b).7 It notes that in
Simmons v. FCC, 145 F.2d 578 (D.C. Cir. 1944), this court
upheld the denial of one of two competing applications because
the proposed operations would cause interference to other
stations, observing that “[r]elative consideration is meaningless
unless there are two applications either of which, considered
alone, might be granted,” id. at 579. But Congress has not
required that competitive auctions include advance technical
review as in the prior comparative hearing regime. The
Commission could reasonably adopt other means to facilitate
§ 307(b) analysis without requiring that short-form applications
be amended to include a further showing of feasibility of the
proposed operations for purposes of a full technical analysis
reserved for applications submitted by winning bidders and
“singletons.” Restricting the additional information the
Commission required to make § 307(b) determinations was
consistent with the two-standard structure embodied in
§ 309(j)(5).

Consequently, as a general matter, the Commission’s rules
deferring full technical review until after an auction are not
unlawful under either § 309(j)(5) or § 307(b), but rather
constitute a reasonable exercise of its discretion. The
Commission explained that deferring detailed technical review
until after the auction would minimize delay, encourage more
bidders to participate in the auction, and facilitate expeditious

7
See, e.g., Wright & Maltz, Inc. v. FCC, No. 18222, 2 Rad.
Reg. (P&F) 2d 2056 (D.C. Cir. 1964) (affirming Wright & Maltz, Inc.,
35 F.C.C. 192 (1963)); Goodson-Todman Broad., Inc., 35 Rad. Reg.
2d 1219 (1975); Martin Lake Broad. Co., 26 F.C.C.2d 963, 969 n.10
(1970); Saul M. Miller, 1 F.C.C.2d 1388, 1389 (1965), Garo W. Ray,
1 F.C.C. 1038, 1039 (1964); Louis Adelman, 28 F.C.C. 432, 434
(1960).
 19

deployment of new broadcasting service to the public. Auctions
First Report & Order, 13 F.C.C.R. at 15920, ¶ 151. Given its
experience with up-front technical review under the
comparative hearing regime, the Commission could reasonably
conclude the benefits of expeditious deployment and expanded
participation in the auction process outweighed the risk that in
a small number of cases, winning bidders’ applications would
ultimately be dismissed even when other bidders might have
been able to secure a license. It was also reasonable for the
Commission to conclude that avoiding the costs and delays
associated with pre-auction technical review was consistent
with its expanded auction authority.

IV.

ALM’s contentions that the Commission’s denials of its
requests for reconsideration were arbitrary and capricious under
the APA fare no better. Under the APA, the court will uphold
an agency’s interpretation and implementation of its own
procedures unless they are “arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.” 5 U.S.C.
§ 706(2)(A). The Commission’s application of its auction
procedures to ALM was not arbitrary and capricious or
otherwise not in accordance with law.

ALM contends, first, that because Commission staff knew
or should have known that the PMCC application was defective
as it would pose destructive interference and operation would be
inconsistent with international treaties, it should have dismissed
the application before the auction. However quickly the
Commission might have detected the defects in PMCC’s
application, the Commission’s goal in setting up the streamlined
and limited pre-auction review procedures was to promote
efficiency across the board in all auctions, not just the one here.
That a more thorough pre-auction review would have been easy
 20

here and possibly even been more efficient does not undermine
the Commission’s conclusion that a deferral procedure would
be sensible in the large majority of cases. Cf. Weinberger v.
Salfi, 422 U.S. 749, 776-77 (1975).

Somewhat more forcefully, ALM contends, second, that
because the Commission does not review applications for
technical feasibility prior to the auction, an applicant can submit
a proposal with unfeasible but seemingly impressive
qualifications in order to participate in and win the auction, but
then change the technical proposal after the auction. ALM
points out that in other contexts, the Commission requires a
successful applicant to construct and operate technical facilities
“substantially as proposed” and does not allow those successful
applicants to “downgrade service to the area on which the
preference is based for a period of four years of on-air
operations, ” 47 C.F.R. § 73.7005(b).

However, ALM overlooks that the Commission has,
through different mechanisms, imposed requirements designed
to deter applicants from submitting over-ambitious and
unrealistic applications and to punish those who do.
Modification of pre-auction applications after auctions by
winning bidders is limited. See, e.g., 47 C.F.R.
§§ 73.3573(f)(5)(iii), 73.3522(a)(3). A winning bidder risks
being subject to withdrawal, default, and disqualification
payments, see 47 C.F.R. § 1.2104(g); Auctions First Report &
Order, 13 F.C.C.R. at 15,979, ¶ 152. Applicants are required to
certify in the short-form application prior to auction that they
are “legally, technically, financially and otherwise qualified
pursuant to section 308(b) of the Communications Act of 1934,
as amended.” 47 C.F.R. § 1.2105. Given these disincentives
for game-playing, the auction procedures established in 1998
deferring full technical review until after the auction are not
arbitrary and capricious. This is true even though comments
 21

during the 1998 rulemaking opposing deferral of technical
reviews until after the auction identified concerns similar to
those ALM raised before the Commission, such as the
opportunity for manipulating the process and the risk of a
resulting “sham auction,” ALM, Pet. for Recons., AM Auction
No. 32, MX Group 38, at 14, ¶ 26 (May 10, 2002). Congress
gave the Commission broad discretion in fashioning an auction
regime and the Commission’s choice lies within the range of its
discretion under its expanded auction authority. That the
Commission may have garnered experience over the years to
bring its view closer to ALM’s position that some form of pre-
auction technical review is necessary, see supra note 1, is of no
moment.

Finally, ALM’s contention that it would be arbitrary and
capricious for the Commission to claim it made a “careful”
analysis of the § 307(b) considerations for the auction in which
ALM was intending to participate appears to reprise its
contention that the Commission acted unlawfully by not
considering the technical feasibility of PMCC’s application
prior to the auction. To the extent it differs, the record shows
that the Bureau received detailed submissions from the parties,
even requesting more information after receiving the initial
submissions, and then made specific findings and conclusions
as to the needs of the relevant communities. ALM’s reliance on
Achernar Broadcasting Company v. FCC, 62 F.3d 1441 (D.C.
Cir. 1995), is misplaced as the Commission in that case had
promulgated a regulation under the National Radio Astronomy
Observatory (“NRAO”) that it “will consider all aspects of the
problem” when addressing an objection on the grounds that
granting a license would cause interference to the NRAO, 47
C.F.R. § 73.1030(a). See 62 F.3d at 1444-48. Although
Achernar is relevant to the extent it stands for the proposition
that the Commission must engage in reasoned decisionmaking
and consider the entire record in an adjudicative hearing, it is
 22

readily distinguished on a variety of grounds, including that,
unlike the fast-track auction regime, there was an “all aspects”
regulatory requirement, and at issue was the Commission’s
decision to grant a construction permit.

Accordingly, we affirm the orders denying reconsideration.