Lead Opinion
Opinion for the Court filed by Circuit Judge ROGERS.
Opinion concurring in part and dissenting in part filed by Senior Circuit Judge STEPHEN F. WILLIAMS.
The Federal Communications Commission canceled nineteen broadband licenses held by 21st Century Telesis Joint Venture and 21st Century Bidding Corporation (collectively “21st Century”) following 21st Century’s failure to make timely installment payments on its licenses. 21st Century appeals Commission orders determining that 21st Century was provided adequate notice before cancellation of its licenses, and declining to consider 21st Century’s late filed arguments that the automatic cancellation rule exceeds the Commission’s statutory authority and as applied violates due process. In re Request for Extension of Installment Payment Due Date, 15 F.C.C.R. 14,814,
I.
The Communications Act of 1934 (“Act”), as amended in 1993, authorizes the Commission to award radio licenses “through a system of competitive bidding.” 47 U.S.C. § 309(j)(1). In designing such a system, Congress directed the Commission to “promot[e] economic opportunity ... by disseminating licenses among a wide variety of applicants, including small businesses.” Id. § 309©(3)(B). Consistent with this goal, Congress further directed the Commission to “consider alternative payment schedules and methods of calculation, including lump sums or guaranteed installment payments.” Id. § 309(j)(4)(A). Pursuant to this mandate, the Commission reserved two blocks of licenses, the “C” and “F” blocks, for bidding by small businesses, as defined in terms of annual gross revenues and total assets. In re Implementation of Section 309(j) of the Communications Act, 9 F.C.C.R. 5532 ¶ ¶ 12, 115,
In May 1996 and January 1997, 21st Century was a successful bidder, ultimately obtaining thirteen C block licenses and six F block licenses. Each license stated on its face that it was “conditioned upon the full and timely payment of all monies due [under the Commission’s installment plan]” and that “[fjailure to comply with this condition will result in automatic cancellation of this authorization.” Under the Commission’s installment plan C block licensees were required to pay 90% of their net bid price over ten years, with interest only paid for the first six years and interest and principal paid for the remaining four, 47 C.F.R. § 24.711(b)(3) (1996), and F block licensees were required to pay 80% of their net bid price over ten years, with interest only paid for the first two years and interest and principal paid for the remaining eight. 47 C.F.R. § 24.716(b)(3) (1996).
After receiving numerous requests for relief from financially troubled licensees, the Commission, on March 31, 1997, suspended installment payment obligations for C block licensees, and on April 28, 1997, extended the suspension to F block licensees. In re Amendment of the Comm’n’s Rules Regarding Installment Payment Financing for PCS Licensees, Second Report and Order and Further Notice of Proposed Rule Making, 12 F.C.C.R. 16,436 ¶ ¶ 6, 14,
Several months before licensees were to resume payment, the Commission adopted rules regarding untimely payments. 47 C.F.R. § 1.2110(f) (1999). Under the new regulations, licensees have an automatic 90-day “non-delinquency” period after the installment payment due date, during which time payment can be made with a five . percent late fee. Id. at § 1.2110(f)(4)(I). If the licensee fails to remit the missed installment during this first grace period, the rule provides for a second automatic 90-day period in which the licensee can remit payment with an additional late fee of ten percent. Id. at § 1.2110(f)(4)(ii). Failure to submit an installment by the last day of the second 90-day period results in automatic cancellation of the license without further action by the Commission. Id. at § 1.2110(f)(4)(iii).
21st Century made timely installment payments through April 30, 1999. On July 20, 1999, 21st Century received a payment notice from the Commission reminding it of the- July 31, 1999 payment deadline. 21st Century missed this deadline, and in accordance with 47 C.F.R. § 1.2110(f)(4)(I), received a ninety-day extension. On October 19, 1999, 21st Century received a notice from the Commission reminding it to make its October 31 payment and its July 31 payment with the requisite late fee. 21st Century again failed to make its July 31 payment, and in accordance with 47 C.F.R. § 1.2110(f)(4)(ii), received a second ninety-day extension, making the final deadline for payment January 27, 2000. When 21st Century did not submit its July 31, 1999 payment by January 27, 2000, its licenses were automatically cancelled.
Thereafter, beginning on February 2, 2000, 21st Century sought an extension of the payment deadline or a waiver of the automatic cancellation rule. In the first of three letters, James LaBelle, 21st Century’s Chief Executive Officer, explained that 21st Century was “unable to ensure that wire transfers would be received [by the Commission by] January 27, 2000,” but that as of February 2, 2000, such funds were available to be sent upon assurance from the Commission that the licenses had not been canceled; the letter also stated that some of the payment notices from the Commission had not been received or had been received late. See Letter from James A. LaBelle to Magalie Roman Salas (Feb. 2, 2000). The second letter did not mention the payment notices, but reiterated that 21st Century had the funds to cover the payment if the Commission could assure it that its licenses had not been canceled. See Letter from James A. LaBelle to Magalie Roman Salas (Apr. 25, 2000). The third letter stated both that the Commission had not met its responsibility of sending payment notices to 21st Century, and that 21st Century had sufficient funds to make payment. See Letter from James A LaBelle to Magalie Roman Salas (July 25, 2000). On August 7, 2000, the Commission’s Auction and Industry Analysis Division (“Division”) denied 21st Century’s request for an extension of the January 27, 2000 late payment deadline and its request for waiver of the Commission’s automatic cancellation rule, stating that “21st Century was aware of the deadline for submission of the installment payment and had ample time to secure financing.” Division Order, 15 F.C.C.R. 14,814 (referred to by 21st Century as “Division Letter Ruling”). The Division referenced notice of the ap
Pursuant to 47 C.F.R. § 1.106(f), providing thirty days from the denial of its requests to submit a “petition for reconsideration and any supplement,” 21st Century timely filed, on September 6, 2000, a petition for reconsideration of the Division Order, arguing that 21st Century had not received clear notice from the Commission with respect to its payments and that the Division did not give the waiver request a “hard look.” After the thirty-day period had expired, 21st Century filed, on November 9, 2000, a motion for leave to file a supplement to its petition for reconsideration and a Supplement to the Petition, which argued that the Commission’s automatic cancellation rule violates due process and that 21st Century had a statutory right to a precancellation hearing. The Commission denied 21st Century’s petition for reconsideration on December 21, 2000, finding that 21st Century had ample notice of the payment deadline and that a waiver would not be in the public interest; the Commission declined to address 21st Century’s hearing arguments because they had not been timely filed. Reconsideration Order, 15 F.C.C.R. 25,113 n. 4. The Commission also denied 21st Century’s second petition for reconsideration on the grounds that 21st Century’s requests for an extension of time or waiver were filed after the payment deadline, that 21st Century had failed to raise any new facts as required for reconsideration, and that the Commission was not required under 47 C.F.R. § 1.106(f) to accept the untimely filed due process claim because 21st Century provided no explanation for its absence from the initial petition. Second Reconsideration Order, 16 F.C.C.R. 17,257 ¶ ¶ 11-24.
II.
Before turning to the merits of 21st Century’s challenges to the Commission orders, the court must address two threshold issues. The Commission contends, first, that 21st Century has neither Article III standing to contest the cancellation of its C block licenses nor prudential standing to raise its due process and hearing contentions before the court. Second, even if 21st Century has standing, the Commission contends that 21st Century’s due process and hearing contentions are time barred and thus unreviewable. Unlike our dissenting colleague, neither we nor the parties find an exception in Steel Co. v. Citizens for a Better Environment,
A.
The “irreducible constitutional minimum” for Article III standing is that the appellant was injured in fact, that its injury was caused by the challenged conduct, and that the injury would likely be redressed by a favorable decision of the
Article III, section 2 of the Constitution limits federal courts to deciding “actual, ongoing controversies.” Honig v. Doe,
When 21st Century filed its appeal to the court, it had suffered a financial injury-in-fact from the loss of its C block licenses; that injury resulted from the Commission’s automatic cancellation of its licenses; and it was seeking reinstatement of its C block licenses. 21st Century’s subsequent decision not to seek reinstatement of its C block licenses, however, rendered moot its claim of financial injury resulting from the loss of those licenses by eliminating any possibility that a decision of the court could redress that injury. Further, contrary to 21st Century’s position, its standing cannot be based on the fact that it remains subject to the Commission’s debt collection procedures and higher bidding requirements in future auctions. First, regarding debt collection, because 21st Century defaulted in making timely payments for its licenses, it is required, under 47 C.F.R. §§ 1.2104(g)(2), 1.2109, to pay the difference between the amount of its outstanding debt and the reauction price of its licenses, as well as a penalty of three percent of the reauction price. See also Mountain Solutions, Ltd. v. FCC,
Accordingly, because “Congress’ decision to grant a particular plaintiff the right to challenge an Act’s constitutionality ... eliminates any prudential standing limitations .... ” Raines v. Byrd,
B.
The second threshold question is whether the court can properly consider 21st Century’s contentions that the Commission’s automatic cancellation rule violates due process and that it was entitled to a pre-cancellation hearing under § 312(c) of the Act. 21st Century points to FCC v. Nextwave Pers. Communications Inc., — U.S. -,
21st Century filed its hearing arguments on November 9, 2000, more than thirty days after the Division Order of August 7, 2000. It never stated any grounds for its failure to meet the filing deadline. Thus, 21st Century failed both to meet the filing deadline and to provide an explanation of why the arguments in its Supplement to the Petition were not part of its initial petition for reconsideration. The Commission explained that 21st Century’s failure to raise its hearing arguments in either its letters or its initial petition “thwarts procedures designed to bring a prompt and final resolution to matters.” 16 F.C.C.R. 17257 ¶ 18.
The court has discouraged the Commission from accepting late petitions in the absence of extremely unusual circum
Nonetheless, 21st Century maintains that the court can review its hearing arguments on the merits even though the Commission declined to do so. Responding to the Commission’s reliance on Virgin Islands for the proposition that “issues must be raised before the Commission as a prerequisite to our review,”
Petitioners contend, however, that section 405’s exhaustion requirement has been met by virtue of the [Commission’s] having enjoyed an “opportunity” ... to address these claims. As we just noted, however, exhaustion principles normally require compliance with the agency’s procedural rules.... The relevant inquiry is thus whether, in light of petitioners’ initial failure to raise constitutional and statutory issues, the Commission erred in not addressing these arguments.... We think not.
Consequently, 21st Century is procedurally barred under § 405 of the Act and § 1.106(f) of the Commission’s rules from presenting its hearing contentions to the court.
Turning to the remaining merits contentions in 21st Century’s appeal, 21st Century challenges the Commission’s orders on the ground the Commission failed to provide it with notice of its payment obligations before' canceling its licenses, as required by the Commission’s rules. The court need not decide if the Commission’s rules require such notice because the record shows that 21st Century had notice of its payment obligations before its F block licenses were canceled.
The Commission notified 21st Century of the terms of its installment plan on at least six different occasions: (1) Each of the installment plan notes, signed by the President or the Secretary of 21st Century, included an amortization table setting forth the specific amounts due and the date by which the payments were due; (2) The face of each license issued to 21st Century stated that full and timely payment was required to avoid license cancellation; (3) The Restructuring Order, 12 F.C.C.R. 16,436, described the new payment deadlines associated with the restructuring scheme, reiterated the importance of full and timely payments, and provided examples of how to calculate those payments; (4) The Note Modification sent after 21st Century elected disaggregation set forth the actual dates for 21st Century’s future installment payments; (5) The Commission’s payment policy, announced by public notice and subsequently codified at 47 C.F.R. § 1.2110(f), stated that licensees that miss a payment deadline by more than 180 days are in default and face automatic license cancellation, see Public Notice, Wireless Telecommunications Bureau Provides Guidance on Grace Period and Installment Payment Rules, 13 F.C.C.R. 18,213,
Notwithstanding these notices of its payment obligations, 21st Century contends that the payment rules were confusing and that it often received incorrect or late payment notices from the Commission, thereby making any notice it did receive ineffective. James LaBelle, 21st Century’s Chief Executive Officer, stated in his declaration that 21st Century was “never clear as to the amount of [its] installment payments;” received payment notices late in January 2000; received payment notices for licenses the company no longer owned; and received notices containing incorrect calculations of late fees and accrued interest. Relying on Trinity Broad. of Florida, Inc. v. FCC,
In Trinity, the court held that a newly announced rule could not be applied against Trinity because the rule was not “aseertainably certain,” and Trinity did not have fair notice of the new requirement.
21st Century’s reliance on Salzer and Satellite Broadcasting is also misplaced. In those cases the failure to follow an unclear rule was excused in fight of an attempt to comply and a genuine question of interpretation. In Salzer, the Commission had not provided the supplemental form required for a filing and thus it was reasonable for Salzer to file an otherwise complete application, only filing the supplemental form when it became available.
In any event, 21st Century may not “turn a clerical error into a windfall of ‘rights it would not otherwise enjoy.’ ” State of Oregon,
Accordingly, because 21st Century lacks standing to challenge the cancellation of its C Block licenses, we dismiss that portion of its appeal; because 21st Century’s hearing contentions are not properly before the court, as 21st Century failed to exhaust its administrative remedies by timely presenting its hearing arguments to the Commission, and its notice contentions fail in light of record evidence that it had sufficient notice of its payment obligations, we affirm the orders of the Commission.
Concurrence Opinion
concurring in part and dissenting in part:
I agree with the majority opinion in every respect except the conclusion that
The rule in Steel Co. is driven by concern that otherwise courts would violate separation of powers by expounding on substantive issues of law where they lack jurisdiction. Steel Co.,
Nor can I understand the reason proffered by the majority for non-application of the exception. See Maj. Op. at 197. It seems to be saying that the exception can apply only where the case of questionable jurisdiction is brought by a party different from the one bringing the other case. Nothing in Steel Co. suggests any such second-party requirement, and no reason for the requirement comes to mind. To the extent that the majority’s wording suggests that different issues are raised with respect to the C and F blocks, that is simply not the case.
