Mtn Solu LTD Inc v. FCC

                  United States Court of Appeals

               FOR THE DISTRICT OF COLUMBIA CIRCUIT

       Argued October 12, 1999    Decided December 3, 1999 

                           No. 98-1503

                 Mountain Solutions, Ltd., Inc., 
                            Appellant

                                v.

               Federal Communications Commission, 
                             Appellee

                    Appeal of an Order of the 
                Federal Communications Commission

     Michael K. Kurtis was on the briefs for appellant.

     Christopher J. Wright, General Counsel, Federal Commu-
nications Commission, Daniel M. Armstrong, Associate Gen-
eral Counsel, and Pamela L. Smith, Counsel, were on the 
brief for appellee.

     Before:  Ginsburg, Rogers and Tatel, Circuit Judges.

     Opinion for the Court filed by Circuit Judge Rogers.

     Rogers, Circuit Judge:  Mountain Solutions Ltd., Inc. was 
the winning bidder for ten licenses in the broadband personal 
communications service C block auction.  Under the rules of 
the Federal Communications Commission, Mountain Solu-
tions was required to make a 10% down payment for the 
licenses, payable in two installments.  See 47 C.F.R. 
ss 24.711(a)(2), 24.809(b).  Mountain Solutions paid the first 
installment but was unable to make timely payment of the 
second down payment.  On the due date, Mountain Solutions 
petitioned the Commission for a thirty-day waiver of its rules 
in order to allow completion of financing discussions.  Al-
though Mountain Solutions supplemented its waiver request 
within twenty-three days to state that financing discussions 
had been successfully concluded and then, following the Com-
mission's grant of other waivers, tendered an irrevocable 
letter of credit, the Commission denied the waiver request for 
lack of financing on the due date.  On appeal Mountain 
Solutions contends that the Commission was arbitrary and 
capricious in denying a waiver when it granted waivers to 
similarly situated entities, and that changed regulatory proce-
dures make recission an appropriate remedy for such arbi-
trary and capricious action.  Alternatively, Mountain Solu-
tions asks the court to enjoin the Commission's enforcement 
of any default penalties against it.  Because the Commission 
did not abuse its broad discretion in denying a waiver and 
because the claim for injunctive relief is not ripe, we deny the 
petition in part and dismiss the petition in part.

                                I.

     In 1993, Congress authorized the Federal Communications 
Commission ("Commission") to allocate radio spectrum by 
auction.  See Omnibus Budget Reconciliation Act of 1993, 
Pub. L. No. 103-66, tit. VI, s 6002(a), 107 Stat. 312, 387-392 
(1993) codified in principal part at 47 U.S.C. s 309(j).  Con-
gress directed the Commission to design its implementing 
rules to "ensure that smaller businesses ... and businesses 
owned by members of minority groups and women are given 
the opportunity to participate in the provision of spectrum-
based services," and thus "to consider the use of ... [such 

procedures as] bidding preferences...." 47 U.S.C. 
s 309(j)(4)(D).  Accordingly, the Commission set aside two 
blocks of personal communications service ("PCS") spectrum, 
the 30 MHz C block and the 10 MHz F block, for bidding by 
"designated entities," defined as "small businesses, businesses 
owned by members of minority groups and/or women, and 
rural telephone companies."  47 C.F.R. s 1.2110(a) (1999);  
see also Implementation of Section 309(j) of the Communica-
tions Act--Competitive Bidding, Fifth Report and Order, 9 
F.C.C.R. 5532 p p 93-95, 113 (1994).  In recognition of the 
challenges faced by designated entities in obtaining financing, 
the Commission adopted a special payment program for C 
block licenses, reducing both the upfront bid amount and the 
percentage down payment at the close of the auction.  Thus, 
the licensees were required to submit a 5% down payment 
within five days of the close of the auction and a second 5% 
down payment within five days of the conditional grant of 
their licenses, with the remaining 90% and interest payable in 
quarterly installments over ten years.  See 47 C.F.R. 
s 24.711(a)(1), (2), (b) (1996).

     Mountain Solutions was the successful bidder for ten licens-
es in the Commission's original C block auction held from 
December 1995 through May 1996.  It timely paid approxi-
mately $1.2 million as its initial 5% down payment.  Its 
license applications were conditionally granted on September 
17, 1996, and thus its second down payment was due on 
September 24th.  On the due date, Mountain Solutions filed 
an emergency petition for a waiver, seeking a thirty-day 
extension of the second down payment deadline.  Asserting 
that an agreement providing the necessary financing was 
imminent and was expected within the following thirty days, 
Mountain Solutions stated that it was negotiating an agree-
ment with a major United States financier to obtain the 
financing required to meet its obligations but was not yet in 
possession of the funds.  On October 17, 1996, Mountain 
Solutions supplemented its waiver petition to advise that it 
had secured the necessary financing from its current inves-
tors, while noting that a public notice released August 28, 
1996, which gave guidance to D, E, and F Block bidders on 
the Commission's anti-collusion rule, had contributed to 

"Mountain Solutions' inability to remit its second down pay-
ment within the prescribed time period."1

     Mountain Solutions was one of seventeen applicants for 
various spectrum licenses seeking a waiver of the down 
payment deadlines, including seven other C block applicants.  
The Wireless Telecommunications Bureau ("the Bureau") and 
the Mass Media Bureau issued a Public Notice seeking 
comment on how it should evaluate these waiver requests.  
On February 4, 1997, the Bureau granted other waiver re-
quests, subject to a 5% late penalty, of the other C block 
applicants as well as other waiver petitions.  In each order 
granting a partial waiver, the Bureau noted that the failure to 
pay timely was inadvertent.  In a number of cases, the 
inadvertence occurred because the first down payment was 
sufficient to cover both the first and second down payments, 
and the bidder had assumed that the Commission retained 
sufficient funds to cover the latter.2  Two other bidders had 
miscalculated the amount of their down payments.3  The 

__________
     1  Specifically, Mountain Solutions asserted that "Mountain So-
lutions' investors are bidders in the D, E and F block auction," and 
that the Commission's anti-collusion guidelines were "confusing and 
unclear regarding the extent to which bidders in the D, E and F 
block auction could enter into business-related discussions with C 
block auction winners."

     2  See In the Matter of Cenkan Towers, L.L.C. Request for 
Waiver of Section 90.811 of the Comm'n's Rules, 12 F.C.C.R. 1516, 
p p 5-8 (1997);  In the Matter of CSS Communications Co. Request 
for a Waiver of Section 90.811 of the Comm'n's Rules, 12 F.C.C.R. 
1507, p p 5-8 (1997);  Elec. SMR Communication Services Request 
for Waiver of Section 90.811 of the Comm'n's Rules, 12 F.C.C.R. 
1520, p p 5-8 (1997);  In the Matter of Hickory Telephone Co., Inc. 
Request for Waiver of Section 90.811 of the Comm'n's Rules, 12 
F.C.C.R. 1528, p p 5-8 (1997);  In the Matter of Independence 
Excavating, Inc. Request for Waiver of Section 90.811 of the 
Comm'n's Rules, 12 F.C.C.R. 1524, p p 5-8 (1997);  In the Matter of 
The Wireless, Inc. Request for Waiver of Section 90.811 of the 
Comm'n's Rules, 12 F.C.C.R. 1821, p p 5-8 (1997).

     3  See In the Matter of Roberts-Roberts & Associates, LLC 
Request for Waiver of Section 24.711(a)(2) of the Comm'n's Rules, 

remaining partial waivers were granted in circumstances 
where the bidder was either unaware of the payment dead-
line4 or, due to payment submission complications, made 
payment one day late.5  In each order, the Bureau made note 
of two circumstances:  first, the importance the Commission 
attached to the first and second down payment obligations for 
"discouraging insincere or financially unqualified bidders 
from 'shopping' a winning bid in order to obtain financing for 
a down payment,"6 and second, that the inadvertent nature of 
the missed second payment deadline, combined with the fact 
that payment was submitted promptly upon discovery of the 
mistake in each case, demonstrated "that, but for the [inad-
vertent error, each bidder] would have been able to meet its 
payment obligations on time."7

__________
12 F.C.C.R. 1825, p p 2, 5-8 (1997);  In the Matter of RFW, Inc. 
Request for Waiver of Section 24.711(a)(2) of the Comm'n's Rules, 
12 F.C.C.R. 1536, p p 2, 5-8 (1997).

     4  See In the Matter of Longstreet Communications Int'l., Inc. 
Request for Waiver of Section 24.711(a)(2) of the Comm'n's Rules, 
12 F.C.C.R. 1549, p p 2, 5-8 (1997);  In the Matter of Southern 
Communications Systems, Inc. Request for Waiver of Section 
24.711(a)(2) of the Comm'n's Rules, 12 F.C.C.R. 1532, p p 2, 5-8 
(1997);  In the Matter of Wireless Telecommunications Company 
Request for Waiver of Section 24.711(a)(2) of the Comm'n's Rules, 
12 F.C.C.R. 1544, p p 2, 5-8 (1997);  In the Matter of AMK Interna-
tional Inc. and Mobilecall, Inc. Requests for Waiver of Section 
90.811 of the Comm'n's Rules, 12 F.C.C.R. 1511, p p 5-8 (1997).

     5  In the Matter of MFRI, Inc. Request for Waiver of Section 
24.711(a)(2) of the Comm'n's Rules, 12 F.C.C.R. 1540, p p 2, 5-8 
(1997);  In the Matter of Paradise Cable, Inc. Request for Waiver of 
Section 21.955(B) of the Comm'n's Rules, 12 F.C.C.R. 9760, p p 6-8 
(1997).

     6  See, e.g., Longstreet Communications, 12 F.C.C.R. 1549, p 6 
(quoting Implementation of Section 309(j) of the Communications 
Act--Competitive Bidding, PP Docket No. 93-253, Second Report 
and Order, 9 F.C.C.R. 2348, 2382 (1994));  Roberts-Roberts, 12 
F.C.C.R. 1825, p 6 (same).

     7  See, e.g., Longstreet Communications, 12 F.C.C.R. 1549, p 7;  
Roberts-Roberts, 12 F.C.C.R. 1825, p 7.

     On February 12, 1997, Mountain Solutions filed a second 
supplement to its waiver request, asserting that the Bureau 
had indicated for the first time in its February 4th waiver 
orders that it places positive weight on an applicants' late 
tendered second down payment in determining whether to 
grant a waiver request, and negative weight on an applicants' 
apparent inability to pay its second down payment on the due 
date.  In light of the former, Mountain Solutions tendered an 
irrevocable letter of credit demonstrating that it could meet 
its second down payment obligation.  As to the latter, Moun-
tain Solutions asserted that "the Commission has never sug-
gested [previously] that fundraising efforts to satisfy the 
second down payment are an indication of 'insincerity' or lack 
of financial qualifications."

     On April 28, 1997, the Bureau denied Mountain Solutions' 
waiver request on the ground that "[t]he failure to secure 
financing does not serve as a justification for a waiver," and 
observed:

     [W]e have not granted a request for an extension of a 
     down payment deadline for a license won through com-
     petitive bidding in any case where it appeared that the 
     party requesting the extension did not have the funds on 
     hand on the date of the payment deadline.  We have 
     granted partial relief to licensees only where a delay in 
     making payment on the payment due date and the failure 
     to make payment was either inadvertent or due to mis-
     calculation or administrative complications.  Mountain 
     Solutions' failure to make its payment resulted from a 
     lack of funds, not miscalculation, inadvertence, or admin-
     istrative complications.
     
In the Matter of Mountain Solutions Ltd., Inc. Request for 
Waiver of Section 24.711(a)(2) of the Comm'n's Rules, 12 
F.C.C.R. 5904 p p 6-7 (1997).  Mountain Solutions unsuccess-
fully sought review by the Commission, which noted that 
"[o]ur second down payment deadline is critical to our licens-
ing process," and that "Mountain Solutions has failed to 
demonstrate its financial viability at the time its second down 
payment was due."  In the Matter of Mountain Solutions 

Ltd., Inc. Emergency Petition for Waiver of Section 
24.711(a)(2) of the Comm'n's Rules, 13 F.C.C.R. 21983, 
p p 14-15, 17 (1998) ("Commission Order").  By contrast, the 
Commission noted, "[i]n other instances where we have par-
tially granted a payment deadline waiver request, the peti-
tioner receiving relief had the money at the time it was due."  
Id. at p 16.

                               II.

     Contending that the Commission was arbitrary and capri-
cious in denying its waiver request, Mountain Solutions main-
tains that (1) all other "similarly situated" parties were 
granted waivers, making the Commission's treatment of simi-
larly situated parties inconsistent, and undermining the sup-
posed policy basis behind the Commission's treatment of 
Mountain Solutions;  (2) the Commission's revision of its 
second down payment rule during the pendency of Mountain 
Solutions' waiver request to make the deadline more flexible 
indicates that denial of Mountain Solutions' waiver request 
was unnecessarily harsh and the purported policy basis be-
hind this refusal disingenuous;  and (3) the unique circum-
stances of Mountain Solutions' case renders strict application 
of the second down payment rule inequitable and contrary to 
the public interest.

     According to the Commission's rule:

     Waivers will not be granted except upon an affirmative 
     showing:
     
          (i) That the underlying purpose of the rule will not be 
     served, or would be frustrated, by its application in a 
     particular case, and that grant of the waiver is otherwise 
     in the public interest;  or
     
          (ii) That the unique facts and circumstances of a par-
     ticular case render application of the rule inequitable, 
     unduly burdensome or otherwise contrary to the public 
     interest.  Applicants must also show the lack of a reason-
     able alternative.
     
47 C.F.R. s 24.819(a)(1)(i), (ii) (1996).8  Under the Adminis-
trative Procedure Act, the court must " 'hold unlawful and set 
aside agency action' that is 'arbitrary, capricious, an abuse of 
discretion, or otherwise not in accordance with law.' "  Bell-
South Corp. v. F.C.C., 162 F.3d 1215, 1221 (D.C. Cir. 1999) 
(quoting 5 U.S.C. s 706(2)(A)).  As to waiver of agency rules, 
however, the agency's strict construction of a general rule in 
the face of waiver requests is insufficient evidence of an abuse 
of discretion.  See, e.g., BellSouth, 162 F.3d at 1225.  Instead, 
"an agency's refusal to grant a waiver will not be overturned 
unless the agency's reasons are 'so insubstantial as to render 
that denial an abuse of discretion.' "  Green Country Mobile-
phone, Inc. v. F.C.C., 765 F.2d 235, 238 (D.C. Cir. 1985) 
(quoting Thomas Radio Co. v. F.C.C., 716 F.2d 921, 924 (D.C. 
Cir. 1983)).  "[T]his burden is a heavy one ..." but "it is 
carried when an agency arbitrarily waives a deadline in one 
case but not in another."  Id. (citing WAIT Radio v. F.C.C., 
459 F.2d 1203, 1207 (D.C. Cir. 1969));  see also BellSouth, 162 
F.3d at 1222.  Mountain Solutions contends it has met this 
burden, focusing primarily upon the fact that, of the high 
bidders in the original C block auction which requested 
waiver of the second down payment deadline, only it was 
denied a waiver.

     Mountain Solutions' contention that it was treated arbi-
trarily and capriciously is unpersuasive.  Of the bidders 
granted partial waivers, only Mountain Solutions (by its own 
admission) lacked funds to make the second down payment on 
the due date (or one day later).  Indeed, when the Bureau 
was initially confronted with a similar circumstance by Car-
olina PCS I Limited Partnership, the Bureau denied its 
waiver request.  The Bureau reversed itself only after Car-
olina had submitted affidavits indicating that it had a firm 
financial commitment from its lending institution equal to the 
amount of its second down payment on or about the due 
date.9  See In the Matter of Carolina PCS I Ltd. Partnership 

__________
     8  Section 24.819 since has been replaced by 47 C.F.R. s 1.925 
(1999).

     9  Carolina petitioned for a waiver rather than making a late   

Request for Waiver of Section 24.711(a)(2) of the Comm'n's 
Rules, 12 F.C.C.R. 22938, p 14 (1997).  Mountain Solutions, 
by contrast, had no firm financial commitment as of the 
September 24th due date.  Although Mountain Solutions, like 
Carolina, sought to allay Commission concerns about financial 
viability by proffering a firm financing commitment, the 
salient distinction remains:  Carolina had adequate financing 
to make a timely second down payment on the due date;  
Mountain Solutions did not.  The Bureau repeatedly relied in 
its February 4th orders granting partial waivers to other 
bidders on the Commission's position that

     the integrity and functioning of the auction process is 
     dependent on having payment obligations on winning 
     bids promptly met.  Timeliness of such payments is a 
     necessary indication to the Commission that the winning 
     bidder is financially able to meet its obligations on the 
     license and intends to use the license for the provision of 
     services to the public.  In the Second Report and Order 
     in the competitive bidding docket, the Commission noted 
     that this requirement would also deter defaults by dis-
     couraging insincere or financially unqualified bidders 
     from 'shopping' a winning bid in order to obtain financing 
     for a down payment.
     
Southern Communications Systems, Inc, 12 F.C.C.R. 1532 
p 6.  Other bidders receiving waivers demonstrated their 
financial qualifications both by the circumstances surrounding 
the failure to meet that payment deadline and by tendering 
payment immediately upon being notified of their delinquency 
or mistake.  See, e.g., Longstreet Communications, 12 
F.C.C.R. 1549, p 7;  Roberts-Roberts, 12 F.C.C.R. 1825, p 7.  
By contrast, the Commission noted, "Mountain Solutions has 
failed to demonstrate its financial viability at the time its 
second down payment was due."  Commission Order, 13 
F.C.C.R. 21983, p 16.

     For these reasons, the rationale articulated by the Commis-
sion is not so insubstantial as to render its denial of Mountain 
Solutions' waiver request an abuse of discretion.  See, e.g., 

__________
payment due to "investor uncertainty about the terms under which 
a payment might be accepted."  Id. p 15.

BellSouth, 162 F.3d at 1222.  Given the salient distinction 
relied on by the Commission and supported by the record 
between the circumstances surrounding Mountain Solutions' 
failure to meet its second down payment obligation and those 
surrounding the failure of other bidders granted partial waiv-
ers, this is not a case in which the Commission has failed to 
explain its different treatment of similarly situated parties.  
See Melody Music v. F.C.C., 345 F.2d 730, 732 (D.C. Cir. 
1965).  Having established a more lenient payment structure 
for designated entities, which by definition usually faced 
problems of accessing financial resources, the Commission 
could reasonably focus on the importance of meeting payment 
deadlines to deter such entities from abusing the lenient 
structure by " 'shop[ping]' a winning bid in order to obtain 
financing for a payment."  Commission Order, 13 F.C.C.R. 
21983, p 17.  The Commission also could reasonably rely on 
strict enforcement of the deadlines to provide an "early 
warning" that a winning bidder unable to comply with the 
payment deadlines may be financially unable to meet its 
obligation to provide service to the public.  See id.

     Mountain Solutions' reliance upon the Commission's deci-
sion to allow NextWave to use proceeds acquired in violation 
of statutory foreign ownership limitations to meet its second 
down payment is somewhat misplaced.  The Commission 
granted NextWave's application conditioned on implementa-
tion of a restructuring plan that would bring NextWave into 
compliance with the Commission's foreign ownership rules.  
In granting an extension of time, the Commission took into 
consideration the fact that external events might well cause it 
to revise its ownership rules.  While Mountain Solutions and 
NextWave were both seeking an exception from Commission 
rules, granting a waiver by allowing a timely down payment 
in violation of foreign ownership restrictions entails a differ-
ent set of considerations than those involved in the decision to 
waive a payment deadline while a bidder secures financing.  
Thus, NextWave does not appear any more similarly situated 
to Mountain Solutions than do those licensees who were 
granted second down payment deadline waivers in light of the 
inadvertence of their mistakes.

     More problematic is Mountain Solutions' contention that 
the Commission's restructuring proceeding, while Mountain 
Solutions' waiver request was pending, was a de facto waiver 
of its C block obligations, effectively designed to assure that 
no C block bidder would find itself in Mountain Solutions' 
situation.  The Commission received numerous requests for 
some form of debt relief.10  As part of the restructuring 
proceeding, the Commission afforded licensees three alterna-
tives to continuing to make payments for the licenses.  The 
alternatives were designed to "provide limited relief for C 
block licensees having difficulty meeting their financial obli-
gations to the Commission...."11  Thus, Mountain Solutions 
asserts, all C block bidders were given an amnesty option, 
under which they could return their C block licenses and face 
no additional monetary penalties from the Commission, or at 
most a 10% penalty, while Mountain Solutions was offered no 
similar relief.  Although, as Mountain Solutions concedes in 
its brief, not all of the entities that took advantage of the 
relief offered under the restructuring had filed waiver re-
quests, Mountain Solutions notes that all other licensees that 
had missed their second payment deadlines and received 

__________
     10  See In the Matter of Amendment of the Comm'n's Rules 
Regarding Installment Payment Fin. For Personal Communica-
tions Services (PCS) Licensees, Second Report and Order and 
Further Notice of Proposed Rulemaking, 12 F.C.C.R. 16436, p p 11, 
14-15 (1997) ("Restructuring Order").  Some C block auction win-
ners had been able to make timely first and second down payments, 
or had successfully obtained waivers in that regard, but faced 
financial difficulties in complying with the terms of the ten-year 
schedule for paying the balance due.  Id.

     11  Restructuring Order, 12 F.C.C.R. 16436, p 6.  The three 
alternatives were:  (1) Disaggregation:  returning 15 MHz of PCS 
spectrum to the Commission with a corresponding 50% reduction in 
outstanding debt;  (2) Amnesty:  returning PCS licenses to the 
Commission with forgiveness of all outstanding C Block debt;  and 
(3) Prepayment:  applying 70% of the down payment amount from 
surrendered licenses toward prepayment of any remaining licenses, 
as well as the ability to use any additional financing to prepay any 
licenses.  Id.

waivers were allowed to make elections.  Consequently, 
Mountain Solutions contends that the Commission abused its 
discretion by offering C block licensees amnesty, with a 
relatively modest penalty, while refusing to allow Mountain 
Solutions additional time to submit its second down payment, 
leaving it potentially liable for substantial default penalties.

     There remains, nonetheless, the salient distinction that only 
Mountain Solutions, unlike the licensees granted restructur-
ing relief, was in default for missing its second down payment 
at the time of the restructuring.  As the Commission noted in 
its Order denying Mountain Solutions' application for review, 
the entities offered restructuring relief "had met their second 
down payment obligations, bec[o]me licensees, and signed 
note and security agreements with the Commission."  Com-
mission Order, 13 F.C.C.R. 21983, p 23.

     Furthermore, contrary to Mountain Solutions' contention, 
the Commission did not improperly articulate a new rule in 
distinguishing between Mountain Solutions and the entities 
granted partial waivers.  Mountain Solutions maintains that 
the "determinative factor" in granting waivers was the late 
tendering of payment, and that Mountain Solutions was dis-
advantaged because it was unaware of this "rule".  As noted, 
however, in granting waivers the Bureau relied primarily on 
the inadvertent nature of the mistakes causing the missed 
deadline;  the late tendering of payment was an additional but 
not a determinative factor in demonstrating the financial 
viability of the bidders.  See, e.g., Longstreet Communica-
tions, 12 F.C.C.R. 1549, p 7;  Roberts-Roberts, 12 F.C.C.R. 
1825, p 7.  To the extent that Mountain Solutions contends 
that the Bureau was obliged to provide notice before giving 
weight, in considering a waiver petition, to a bidder's access 
to funds as of the second down payment date, the contention 
is unpersuasive.  The Commission has long noted the impor-
tance it attaches to timely payment.12

__________
     12  As early as its Second Report and Order, In the Matter of 
Implementation of Section 309(j) of the Communications Act, 
Second Report & Order, 9 F.C.C.R. 2348 (1994) ("Second Report 
and Order"), the Commission explained that a timely down payment 

     Mountain Solutions' contention that the Commission abused 
its discretion by not giving Mountain Solutions the benefit of 
two rule changes made subsequent to the filing of Mountain 
Solutions' waiver petition is also unpersuasive.  In February 
1997, the Commission extended the deadline for second down 
payments from five to ten business days following license 
approval.  See 47 C.F.R. ss 24.711(a)(1)(2) (1998), 1.2107(b), 
1.2109(a).  In December 1997, after having denied Mountain 
Solutions' waiver request in September, the Commission 
adopted a rule allowing an additional ten-business-day grace 
period for second down payments, albeit with a 5% penalty.  
47 C.F.R. ss 24.711(a)(1)(2) (1998), 1.2107(b), 1.2109(a).  In 
explaining these changes, the Commission "recognize[d] that 
applicants may encounter certain difficulties when trying to 
arrange financing and make substantial payments under 
strict deadlines."  In the Matter of Amendment of Part I of 
the Comm'n's Rules, 12 F.C.C.R. 5686, p 61 (1997).  Because 
rulemakings are generally prospective, MCI v. F.C.C., 10 F.3d 

__________
requirement would deter defaults "by discouraging insincere or 
financially unqualified bidders from 'shopping' a winning bid in 
order to obtain financing for a down payment."  Longstreet Com-
munications, 12 F.C.C.R. 1549, p 6 (citing Second Report and 
Order, 9 F.C.C.R. at 2382).  Contrary to Mountain Solutions' con-
tention, such concerns were not limited to the timely submission by 
bidders of a first down payment;  the Second Report and Order 
noted generally that "strong incentives," such as deadlines and 
penalties for down payments, "must be in place to deter frivolous 
bids or unqualified bidders...."  9 F.C.C.R. 2348, p 197.  In any 
event, even if the Commission had not previously articulated the 
policy rationale that formed the primary basis for granting or 
denying the waiver requests, the Commission's exercise of its wide 
discretion in denying Mountain Solutions' waiver request on this 
rationale, which was clearly and evenhandedly articulated in the 
February 4th orders granting partial waivers and in the denial of 
Mountain Solutions' request, was in the nature of an adjudicatory 
decision rather than the announcement of a new rule.  See, e.g., 
F.C.C. v. WOKO, Inc., 329 U.S. 223, 227-228 (1946);  City of Chicago 
v. Fed. Power Comm'n, 385 F.2d 629. 647-638 (D.C. Cir. 1967);  
Leedom v. Int'l Brotherhood of Elec. Workers, Local Union No. 
108, 278 F.2d 237, 241-244 (D.C. Cir. 1960).

842, 846 (D.C. Cir. 1993);  see also, e.g., AT & T v. F.C.C., 978 
F.2d 727, 732 (D.C. Cir. 1993);  Gersman v. Group Health 
Ass'n., Inc., 975 F.2d 886, 897-98 (D.C. Cir. 1992), there 
would appear to be no basis for the court to fault the 
Commission for failing to give Mountain Solutions the benefit 
of its new rule.  Furthermore, had the Commission applied 
its more lenient payment rule retroactively, Mountain Solu-
tions still would not have gained the thirty days that it 
requested in its emergency petition for a waiver.  Even 
assuming that Mountain Solutions may have come within the 
new twenty-business-day grace period as a consequence of its 
October 17, 1997, supplemental filing, the Commission did not 
abuse its discretion in refusing to deem as a sufficient basis 
for waiver Mountain Solutions' inability to secure financing as 
of the deadline then in effect.

     Finally, Mountain Solutions contends that application of the 
second down payment rule to it will not serve the purposes of 
the rule "to deter default and ensure that winning bidders are 
sincere and have the financial capability to build out their 
systems," that the grant of Mountain Solutions' waiver would 
have been in the public interest, and that the circumstances 
surrounding Mountain Solutions' waiver, including the treat-
ment accorded purportedly "similarly situated" bidders and 
the devaluation of the licenses at issue, demonstrate that the 
Commission's denial of a waiver was arbitrary and capricious.  
With regard to devaluation, Mountain Solutions maintained in 
its request for reconsideration that the terms of the reauc-
tioning procedures were likely to result in lower bids, thereby 
increasing the amount of any default penalty.13  Mountain 

__________
     13  See Mountain Solutions' Petition for Reconsideration of the 
Fourth Report and Order at 2, In the Matter of Amendment of the 
Comm'n's Rules Regarding Installment Payment Financing for 
Personal Communications Services (PCS) Licenses (WT Docket 
No. 97-82).  Mountain Solutions contended that the C block licenses 
had been "devalued" because (1) the Commission had changed the 
financing options available to C-block bidders, (2) market conditions 
had changed, and (3) the reauction did not include licenses held by 
successful C block bidders in the initial auction that were in 
bankruptcy proceedings.  Id. at 3-6.  Mountain Solutions contend-

Solutions represents in its brief that seven of its licenses were 
sold in the reauction for between 5% and 9.75% of the net 
price Mountain Solutions had bid in the initial auction.  This 
means, Mountain Solutions asserts, that it could be subject to 
nearly $18 million in default penalties.  See 47 C.F.R. 
ss 24.704(a)(2) and 1.2104(g)(2).

     Parsing each of Mountain Solutions' contentions for its 
flaws does not detract from their combined strength, nor 
from the possibility that the Commission could have viewed 
Mountain Solutions' waiver request differently than it did.  
The relief Mountain Solutions sought was not violative of 
other rules, as, for example, in the case of NextWave.  Moun-
tain Solutions in fact secured the financing it needed within 
the thirty-day period it requested in petitioning for a waiver 
of the payment deadline, and, following the February 4th 
orders granting partial waivers, it proffered an irrevocable 
letter of credit adequate to cover the second down payment, 
plus a 5% late payment penalty.  As in the Carolina case, 
there was confusion among Mountain Solutions' potential 
investors about what the anti-collusion guidelines permitted.  
See supra n.1.  Furthermore, Mountain Solutions maintains 
that its investors were uncertain whether a late-tendered 
second down payment would be accepted or seized in satisfac-
tion of default penalties.  It also was unclear to bidders how 

__________
ed that the Commission had contributed to the "devaluation" of the 
C block licenses by deciding not to offer bidders in the C block 
reauction the option of paying for their licenses on an installment 
basis.  See In the Matter of Amendment of the Comm'n's Rules 
Regarding Installment Payment Fin., Fourth Report and Order, 
13 F.C.C.R. 15743, p 50 (1998).

 In the Fourth Report and Order, the Commission had recognized 
that conditioning receipt of a license upon full payment would 
require that a bidder have greater resources than had been the case 
in auctions in which installment financing was available.  See id. 
Mountain Solutions contended that an additional impact would be 
that bids would be lower because bidders could bid a greater 
amount if payment could be made over time rather than in one 
lump sum.  See Mountain Solutions' Petition for Reconsideration at 
3.

they should proceed;  Carolina, for example, was told not to 
submit a late payment but to place funds in an escrow 
account.  Likewise, with respect to financial viability, submis-
sion of an irrevocable letter of credit might well afford 
assurances comparable to escrowed funds.14

     Because Mountain Solutions' bid occurred in the first auc-
tion under newly established procedures, there is nothing of 
record to indicate that bidder or investor confusion constitut-
ed either bad faith or the type of misuse of licenses that was 
of concern to the Commission.  Indeed, the Commission 
eventually recognized in establishing a more extensive grace 
period that its second down payment rule required more 
flexibility.  Under the new grace periods, Mountain Solutions 
apparently would have been able to make a timely second 
payment.  Inasmuch as Mountain Solutions was confronted 
with the type of difficulty in financing that Congress had 
anticipated and that the Commission acknowledged in estab-
lishing special procedures, and because the Commission came 
to acknowledge that a more flexible payment schedule was 
necessary and not inconsistent with other policy goals, the 
Commission would have acted within its discretion to grant 
Mountain Solutions a partial waiver.

     To conclude that the Commission abused its discretion in 
denying Mountain Solutions a waiver, however, would require 
retroactive application of the Commission's second ten-day 
grace period, an unusual procedure for rulemaking, see, e.g., 
MCI v. F.C.C., 10 F.3d at 846, and thus hardly a basis to find 

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     14  Mountain Solutions indicated that its proffered letter of 
credit would have been irrevocable for thirty days and could 
immediately have been drawn upon by Mountain Solutions for 
payment to the Commission upon the grant of Mountain Solutions' 
licenses.  While the Commission distinguished a letter of credit 
from the placing of funds into an escrow account on the basis that 
Mountain Solutions did not actually relinquish control of the funds 
so that they could have been drawn upon absent action by Mountain 
Solutions, the letter of credit would nonetheless have demonstrated 
Mountain Solutions' ability to pay the required funds.  See, e.g., 
U.C.C. s 5-103(1)(a) (1999);  50 Am. Jur.2d Letters of Credit s 3 
(1992);  Black's Law Dictionary 813-814 (5th ed. 1979).

an abuse of discretion here.  Nothing suggests that the 
Commission would have been any more receptive to waiver 
requests based upon inability to secure payment for failure to 
meet its revised payment deadlines than it was to such 
requests under its original deadline rules.  In amending its 
payment rule the Commission continued to associate strict 
enforcement of payment deadlines with preservation of "the 
integrity of the auction and licensing process by ensuring that 
applicants have the necessary financial qualifications."  
Amendment of Part I of the Comm'n's Rules, 12 F.C.C.R. 
5686, p 61.  As a result, finding an abuse of discretion would 
not be based on an alteration of the Commission's approach 
toward payment deadlines, but rather would amount to a 
requirement that the Commission make retroactive the exact 
number of grace period days presently allowed.

     The abuse of discretion standard presents a heavy burden 
for a petitioner in this court.  See, e.g., BellSouth, 162 F.3d at 
1222.  Recognizing the limits of our proper role, see WOKO, 
329 U.S. at 228, the court has defined the outer limits of such 
discretion but left to the decision-maker the determination of 
which of the permissible alternative outcomes should apply in 
a particular case.  Cf. Kickapoo Tribe of Indians of the 
Kickapoo Reservation in Kansas, et al. v. Babbitt, 43 F.3d 
1491, 1497 (D.C. Cir. 1995).  Because the Commission ex-
plained its reasoning in denying Mountain Solutions' waiver 
request, gave fair notice of the importance it attached to 
meeting payment dates, and acted consistently under the then 
applicable procedures, we hold that it did not abuse its 
discretion in denying Mountain Solutions' waiver request.15

__________
     15  Because we do not find the Commission's denial of its waiver 
request arbitrary and capricious, we need not address the question 
of remedy.  Thus, we do not reach Mountain Solutions' contention 
that rescission of its bids from the original auction and return of 
any monies paid for the licenses on which it bid is appropriate in 
view of the devaluation of bids for its licenses and the fundamental 
restructuring relief afforded to others.  Furthermore, if remedy 
were at issue, we would not address Mountain Solutions' request for 
rescission because this relief was not sought from the Commission;  
nor was the argument presented to the Commission in relation to 

                               III.

     The default penalty rule provides that "when a winning 
bidder defaults on a license, the bidder becomes subject to a 
default payment equal to the difference between the amount 
bid and the winning bid the next time the license is offered by 
the Commission, plus a payment equal to three percent of the 
subsequent winning bid or the amount bid, whichever is 
lower."  Commission Order, 13 F.C.C.R. 21983, p 24 (citing 
47 C.F.R. ss 24.704(a)(2), 1.2104(g)(2)).  In denying Mountain 
Solutions' application for review of the Bureau's denial of its 
waiver request, the Commission noted first, that it "will 
assess an initial default deposit of between three percent and 
twenty percent of the defaulted bid amount where a winning 
bidder of licensee defaults and the defaulted license has yet to 
be reauctioned," and second, that, "[i]f additional payment is 
required, following the reauction of licenses, a second order 
will assess such payment."  Commission Order, 13 F.C.C.R. 
21983, p p 24-25.  No second order is in the record before the 
court.  While Mountain Solutions did not seek reconsidera-
tion of the denial, it did seek reconsideration of the Fourth 
Report and Order on reauctioning procedures.16  See supra 
n. 13.

     Mountain Solutions contends that it should not be liable for 
any default penalties based on the price paid for its licenses 
at reauction.  Because, in its view, the Commission has 
granted a de facto waiver of the default penalty rules as they 
relate to prices subsequently bid at reauction to every other 

__________
the order under review.  United Transp. Bd. v. Surface Transp. 
Bd., 114 F.3d 1242, 1244 (D.C. Cir. 1997);  47 U.S.C. s 405(a).

     16  On November 12, 1998, the Bureau announced its intent to 
include Mountain Solutions' licenses in a reauction on March 23, 
1999.  Mountain Solutions states in its brief on appeal that it filed 
an application for review, which was pending at time of briefing in 
the court.  Mountain Solutions also filed petitions with the Commis-
sion and in this court seeking a stay of the reauction.  The petition 
before the Commission remained pending as of briefing, and the 
court denied the request.  See Mountain Solutions v. FCC, 1999 
WL 229027 (D.C. Cir. Mar. 22, 1999).

C block applicant that timely made its first payment, the 
Commission's restructuring of C block debt and allowing C 
block licensees to return some or all of their license without 
default penalties "indicates how inequitable it would be for 
the [Commission] to strictly enforce its default penalty rules 
against [Mountain Solutions]."  Further, Mountain Solution 
maintains, the Commission's restructuring of the C block 
auction process "dictate[d] lower spectral values on any 
reauction occurring subsequent to those changes," and its 
promulgation of the default penalty rules never considered 
that bidders would be subject to spectral devaluation caused 
by a post-auction restructuring of the process.  Without 
benefit of the Commission's analysis, Mountain Solutions' 
position that it should not be liable for a default penalty 
created in part by the Commission's decision to change the 
rules for reauction after Mountain Solutions had been a 
successful bidder under a prior regime, has some persuasive 
force.  But therein lies the problem;  we have yet to hear 
from the Commission.

     Indeed, the Commission responds that Mountain Solutions' 
request for injunctive relief is not ripe.  The Commission 
explains that:

     [it] has not issued any order imposing [any portion of the 
     default penalty beyond the initial 3% penalty assessed] 
     on Mountain Solutions.  There is no administrative order 
     to which Mountain Solutions must comply, nor does 
     Mountain Solutions face any sanctions for non-
     compliance.
     
Acknowledging that no order imposing the balance of the 
default penalties has issued, Mountain Solutions protests that 
this is purely a ministerial matter given the Commission's 
statements of intent (in other proceedings), and that the 
denial of a waiver, combined with the reauction of seven of 
Mountain Solutions' licenses at specified prices, provides suf-
ficient basis for the court to grant equitable relief.

     We take the Commission at its word.  While the Commis-
sion's order denying Mountain Solutions' waiver request im-

plied that Mountain Solutions ultimately could be liable for 
the difference in amount between its own winning bids and 
the winning bids upon reauction, Commission Order, 13 
F.C.C.R. 21983, p p 24-25, the Commission did not state that 
this necessarily would be the case.  Rather, the Commission 
required Mountain Solutions to pay a 3% penalty prior to the 
reauction of its licenses, and stated only that "[i]f additional 
payment is required, following the reauction of licenses, a 
second order will assess such payment."  Id. at p 25.  To 
date, no such order has issued.  Nor has the Commission 
suggested that it is without authority to waive all or a part of 
Mountain Solutions' potential default penalties.17  Conse-
quently, the question of whether equitable relief may be 
granted is not ripe.  See, e.g., Diamond Shamrock Corp. v. 
Costle, 580 F.2d 670, 673 (D.C. Cir. 1978).

     Accordingly, we deny the petition insofar as it challenges 
the denial of the waiver request and we dismiss as unripe that 
part of the petition seeking injunctive relief.

__________
     17  See 47 CFR ss 1.2104(g)(2);  24.704(a)(2).