United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 18, 2001 Decided November 16, 2001
Nos. 00-1400 & 00-1401
Celtronix Telemetry, Inc.,
Appellant/Petitioner
v.
Federal Communications Commission, et al.,
Appellee/Respondents
Appeal from and Petition for Review of an Order
of the Federal Communications Commission
Richard S. Myers argued the cause and filed the briefs for
appellant/petitioner.
Stewart A. Block, Counsel, Federal Communications Com-
mission, argued the cause for appellee/respondents. With
him on the brief were Jane E. Mago, General Counsel,
Daniel M. Armstrong, Associate General Counsel, Catherine
G. O'Sullivan and Andrea Limmer, Attorneys, U.S. Depart-
ment of Justice.
Before: Ginsburg, Chief Judge, Henderson, Circuit Judge,
and Williams, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
Williams.
Williams, Senior Circuit Judge: In 1994 the Federal Com-
munications Commission auctioned off a group of Interactive
Video and Data Service ("IVDS") licenses. In 1997 it
changed the rules governing grace periods for winning bid-
ders who made late installment payments. Celtronix, a win-
ning bidder for such a license, alleges that the change was
unlawfully retroactive. We affirm the Commission's decision.
* * *
In a June 1994 auction Celtronix (then known as Communi-
ty Teleplay, Inc.) won an IVDS license for the Norfolk-
Virginia Beach Metropolitan Service Area. As a small busi-
ness, Celtronix was allowed to pay its winning bid in install-
ments over the term of the license. 47 C.F.R. s 1.2110(d)
(1994). The regulation provided that any payment would be
in default after 90 days delinquency, but allowed a licensee to
request a three-to-six-month grace period. Id.
s 1.2110(d)(4)(i), (ii). In considering whether to grant the
grace period, the Commission could consider the licensee's
payment history, the reasons for default, the licensee's finan-
cial condition, and other circumstances. Id. Though its
regulations were not exactly clear on the availability of addi-
tional grace periods, the Commission issued a public notice
claiming discretion to "extend or grant additional grace peri-
ods where circumstances warrant." Public Notice, "Wireless
Telecommunications Bureau Staff Clarifies 'Grace Period'
Rule for IVDS 'Auction' Licensees Paying By Installment
Payments," 10 FCC Rcd 10724 (1995).
In 1997 the Commission changed its grace period rule in
the Third Report and Order and Second Further Notice of
Proposed Rule Making, 13 FCC Rcd 374 (1997) ("Grace
Period Order"). Under the new regulation, a licensee who
missed a payment would automatically have 90 extra days to
do so without being considered delinquent. 47 C.F.R.
s 1.2110(f)(4)(i) (1998). This came at the price of a 5% late
fee on the amount past due. Id. Failure to make payment at
the end of the first 90-day period would result in a second
automatic 90-day grace period and a 10% late fee. Id.
s 1.2110(f)(4)(ii). (Formerly, there had been an interest
charge, amortized over the term of the license.) Any licensee
failing to make payment after 180 days delinquency (or failing
to pay the late fee) would then be in default. Id.
s 1.2110(f)(4)(iii), (iv).1
Celtronix filed a petition for reconsideration of the Grace
Period Order in January 1998 and, in July of that year, an
emergency motion for stay pending review of the petition.
But in September 1998, just before the final date on which
Celtronix's license would have been permanently defaulted,
the Commission announced a notice of a proposed rulemaking
aimed at introducing new flexibility for spectrum occupied by
IVDS licensees; to reflect the change it immediately redesig-
nated the service as the "218-219 Mhz Service." Amendment
of Part 95 of the Commission's Rules to Provide Regulatory
Flexibility in the 218-219 MHz Service, Order, Memorandum
Opinion and Order and Notice of Proposed Rulemaking, 13
FCC Rcd 19064 p 16 (1998). For the duration of that rule-
making the Commission suspended all installment payments
for licensees who were paid up through March 16, 1998 or had
properly filed grace period requests. Id. p 13.
In its final order on the 218-219 Mhz Service, Amendment
of Part 95 of the Commission's Rules to Provide Regulatory
Flexibility in the 218-219 MHz Service, Report and Order
and Memorandum Opinion and Order, 15 FCC Rcd 1497
(1999) ("218-219 MHz Service Order"), the Commission dis-
missed Celtronix's grace period requests and its emergency
stay motion, saying that parties that had properly filed grace
__________
1 The current version of the rule provides that the grace period
shall be a quarter year, rather than 90 days, but is otherwise similar
in substance. 47 C.F.R. s 1.2110(g)(4)(i) (2000).
period requests had already received "an extended grace
period." Id. p p 45, 133. It also provided three options for
licensees in Celtronix's situation: (1) reamortization and the
resumption of installment payments; (2) amnesty, under
which the licensee could return the license, have its debt
forgiven, and receive a partial refund of prior payments; and
(3) prepayment of the entire amount. Id. p 34. Additionally,
the Commission provided that the former 5-year term would
be extended to 10 years. Id. p p 25-32.
Celtronix sought reconsideration of the 218-219 MHz Ser-
vice Order in December 1999. While that was pending, the
Commission denied Celtronix's petition for reconsideration of
the Grace Period Order. Amendment of Part 1 of the
Commission's Rules--Competitive Bidding Procedures, Order
on Reconsideration of the Third Report and Order, Fifth
Report and Order, and Fourth Further Notice of Proposed
Rule Making, 15 FCC Rcd 15293, p 27 (2000). Then, in
December 2000, the Commission denied reconsideration of
the 218-219 MHz Service Order, and reaffirmed that IVDS
licensees must decide among the three options of amnesty,
resuming repayment, or prepayment of the entire amount.
See Amendment of Part 95 of the Commission's Rules to
Provide Regulatory Flexibility in the 218-219 MHz Service,
Second Order on Reconsideration, 15 FCC Rcd 25020, p p 1,
34 (2000). It rejected Celtronix's proposal of a fourth option
under which licensees could disaggregate, i.e., could retain
part of their 218-219 Mhz spectrum for a given market and
return the rest to the Commission. Id. at p p 14-20.
Celtronix chose to return the license to the Commission for
amnesty, subject to its claim for a disaggregation alternative.
It filed a petition for reconsideration of this order, which is
still pending before the Commission.
As to the Grace Period Order, Celtronix filed a petition for
review under s 402(a) of the Communications Act (No. 00-
1401) and an appeal under s 402(b) (No. 00-1400). Since
these jurisdictional provisions are mutually exclusive, see
Freeman Engineering Associates, Inc. v. FCC, 103 F.3d 169,
177 (D.C. Cir. 1997), and because Celtronix's case falls into
none of the categories in s 402(b)(1) through (8), we dismiss
appeal No. 00-1400 and take jurisdiction for No. 00-1401
under s 402(a).
There is another jurisdictional concern. Given Celtronix's
election of amnesty in the event that its disaggregation
proposal does not prevail (either by Commission change of
heart or by judicial reversal of the Commission), there is a
distinct chance that Celtronix would not benefit from a victo-
ry here; absent disaggregation, it would simply take its
amnesty and depart. But we do not see this possibility as
impairing its standing. Compare a standard two-issue case:
If a plaintiff presents two or more alternative grounds as
routes to its hoped-for ultimate victory, a court does not lose
jurisdiction over the second claim once it has ruled in the
plaintiff's favor on the first claim; victory on the first claim
doesn't moot the second. Air Line Pilots Ass'n Int'l v. UAL
Corp., 897 F.2d 1394, 1397 (7th Cir. 1990). Conversely, if a
party must prevail on both of two theories to achieve a
meaningful win (e.g., knock out a regulation), its loss on the
first does not moot the second. Worldcom, Inc. v. FCC, 246
F.3d 690, 695 (D.C. Cir. 2001). For both situations, the
continued exercise of jurisdiction by the court is based on a
practical consideration: Disposition of both bases has the
potential of achieving judicial economies, as higher-level re-
view might remove the first basis for the outcome. See id.
Just as the contingent character of the ruling on the second
issue in the above cases does not spell mootness, so too the
fact that here Celtronix's ultimate success may depend on the
outcome of pending administrative litigation should not be
seen as rendering the harm inflicted on it by the Commis-
sion's grace period decision too "conjectural" for purposes of
standing. City of Los Angeles v. Lyons, 461 U.S. 95, 102
(1983). Otherwise, a party requiring victory on two fronts in
two fora could easily lose his chance for review on the first
claim to be put forward for adjudication, see 28 U.S.C. s 2344
(requiring petition for review to be filed within 60 days), thus
destroying his chance of prevailing, regardless of the merits.
* * *
Celtronix argues that the new grace period rule, 47 C.F.R.
s 1.2110(g)(4), violates the Administrative Procedure Act,
which limits "rules" to agency prescriptions of "future effect."
5 U.S.C. s 551(4); see Bowen v. Georgetown University
Hospital, 488 U.S. 204, 216-25 (1988) (Scalia, J., concurring);
Bergerco Canada v. U.S. Treasury Department, 129 F.3d 189,
192-93 (D.C. Cir. 1997) (treating Justice Scalia's concurring
opinion as substantially authoritative, though noting that
"[t]he Bowen majority, to be sure, neither embraced nor
rejected Justice Scalia's view"). To a large extent Celtronix
invokes the criteria applied in Landgraf v. USI Film Prod-
ucts, 511 U.S. 244 (1994), a case that explored the question of
what sort of retroactivity was subject to the longstanding
presumption against retroactive statutes. Id. at 263-80.
Here, of course, there is no issue of intent at all: the
Commission indisputably intended its new grace period rule
to apply to payment delays occurring after the rule's adoption
but in connection with previously issued licenses. Nonethe-
less, the tests formulated in Landgraf are indeed pertinent to
the APA issue. See, e.g., Bergerco Canada, 129 F.3d at 193;
DIRECTV v. FCC, 110 F.3d 816, 825-26 (D.C. Cir. 1997).
According to Justice Scalia, a retroactive rule forbidden by
the APA is one which "alter[s] the past legal consequences of
past actions." Bowen, 488 U.S. at 219. In Landgraf, the
Court said that retroactivity occurred where a statute "would
impair rights a party possessed when he acted, increase a
party's liability for past conduct, or impose new duties with
respect to transactions already completed." 511 U.S. at 280.
It seems impossible to characterize the rule change here as
"alter[ing] the past legal consequences" of a past action. It
altered the future effect of the initial license issuance, to be
sure, but that could not be viewed as "past legal conse-
quences." Nor could the change be said to impair rights
possessed by Celtronix when it acted, as it could have had no
grace period rights before it "acted" to acquire the license,
and any payment delay covered by the new rule, i.e., any
delay not already excused, necessarily occurred after the rule
change. If the rule could be viewed as "impos[ing] new
duties" at all (in the sense of making the duty to pay
installments more stringent), it would run afoul of Landgraf's
concept only if it imposed them with regard to a "transac-
tion[ ] already completed." That would be so if the "transac-
tion" at issue were the issuance of the license itself, as
Celtronix urges, rather than the delay in payments.
The examples used in the cases make clear that we should
focus on the payment delays and not on initial issuance of the
license. As Justice Scalia noted in Landgraf, a new ban on
gambling would not involve retroactivity in its application to
existing casinos (which presumably would have been licensed
by a state), because the "relevant retroactivity event is the
primary activity of gambling, not the primary activity of
constructing casinos." Landgraf, 511 U.S. at 293 n.3 (Scalia,
J., concurring). Similarly, Justice Scalia made clear in Bow-
en that there would be no violation of the APA's insistence on
rules of "future effect" if the Secretary there had promulgat-
ed new reimbursement formulas for future services, even
though the hospitals in question were operating under long-
term contracts negotiated in reliance on a prior, more gener-
ous rule. 488 U.S. at 220.
Celtronix claims to have had a "vested right" to keep
requesting additional grace periods and to force the Commis-
sion to consider any unique circumstances. To this end, it
cites Landgraf's statement that the judicial clear statement
rule would apply where a statute would otherwise "impair
rights a party possessed when he acted." 511 U.S. at 280.2
But Celtronix never explains where this vested right came
from. The pre-auction license system offered no vested right
__________
2 The passage cited by Celtronix in fact makes no reference to
"vested" rights, but other parts of the opinion do. See 511 U.S. at
268-69 & n.23 (quoting "vested rights" language from Justice
Story's opinion in Society for Propagation of the Gospel v. Wheeler,
2 Gall. 105, 22 F. Cas. 756, 767 (No. 13,156) (CC NH 1814), and
from Sturges v. Carter, 114 U.S. 511, 519 (1885)); id. at 275 n.29;
see also id. at 290-94 (Scalia, J., concurring) (critiquing "vested
rights" usage).
to any specific terms. Rather, it is undisputed that the
Commission always retained the power to alter the term of
existing licenses by rulemaking. See, e.g., United States v.
Storer Broadcast Co., 351 U.S. 192, 205 (1956); National
Broadcasting Co. v. United States, 319 U.S. 190, 225 (1943);
Committee for Effective Cellular Rules v. FCC, 53 F.3d 1309,
1319-20 (D.C. Cir. 1995); WBEN, Inc. v. FCC, 396 F.2d 601,
617-18 (2d Cir. 1968).
The introduction of auctions made no change in this aspect
of the licensing regime. In fact, Congress provided both that
the Commission would retain its authority "to regulate or
reclaim spectrum licenses," 47 U.S.C. s 309(j)(6)(C), and that
nothing in the use of auctions would "be construed to convey
any rights ... that differ from the rights that apply to other
licenses...." Id. s 309(j)(6)(D).
Of course the grace period change may have altered the
value of the rights Celtronix acquired by its winning bid and
commitment to make the required payments. This sort of
retroactivity--characteristic of a rule having exclusively "fu-
ture effect" but affecting the desirability of past transac-
tions--has become known as "secondary retroactivity." See
Bowen, 488 U.S. at 219-20 (Scalia, J., concurring). Under
our authority to set aside rules that are arbitrary and capri-
cious, we review such rules to see whether they are reason-
able, "both in substance and in being made retroactive."
U.S. Airwaves, Inc. v. FCC, 232 F.3d 227, 233 (D.C. Cir. 2000)
(emphasis added).
Here it's easy to find the rule reasonable in both respects.
The Commission merely replaced the possibility of two (or
maybe more) three-month grace periods, available only on a
successful appeal to the Commission's discretion, with the
assurance of two 90-day periods subject to 5% and 10%
penalties on the delayed payments. Looking at licensees as a
class, there is no reason to think the change disadvantageous.
Indeed, the Commission described the change as a "liberaliza-
tion." Grace Period Order, p 108. Nor does Celtronix sug-
gest that the rule change would inflict material injuries on
any set of licencees (such as ones whose circumstances made
receipt of Commission grace especially likely) that would
offset its beneficial effects, or indeed that the Commission has
ever exercised its discretion favorably. Moreover, it seems
utterly improbable that the old grace provisions could have
induced reliance, either in the form of higher bids by licen-
sees at the bidding stage (as the change is so trivial and likely
beneficial), or of any different conduct thereafter (as both old
and new rule provide substantially equal motivations to avoid
default). See Bergerco, 129 F.3d at 195. In sum, when one
considers both the interests of licensees generally and of the
Commission, the rule change's harms (the amorphous injury
to hypothetical successful pleaders for discretionary grace,
and the penalty fees) seem outweighed by its benefits (the
certainty and clarity for all concerned and the elimination of a
possibly long and costly decisionmaking process under vague
criteria). So, at least, the Commission could reasonably have
concluded.
Celtronix also urges a somewhat makeshift argument that
the FCC's rule change was a breach of contract, citing United
States v. Winstar Corp., 518 U.S. 839 (1996). But there the
government had contractually bound itself to bear the risk of
specified regulatory change adverse to certain firms that had
acquired failed saving and loan associations in reliance on that
promise. Id. at 868-71. Here, far from there being any such
promise, there was, as we've noted, a long tradition of Com-
mission authority to change rules governing already-issued
licenses and congressional provision for the application of the
prior understandings to licenses acquired by auction.
* * *
The order of the Commission is
Affirmed.