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
__________
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).