[Federal Register Volume 67, Number 121 (Monday, June 24, 2002)]
[Rules and Regulations]
[Pages 42507-42510]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-15787]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 95

[WT Docket No. 98-169; FCC 02-130]


Regulatory Flexibility in the 218-219 MHz Service

AGENCY: Federal Communications Commission.

ACTION: Final rule; denial of petition for reconsideration.

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SUMMARY: This document denies the Ad Hoc Coalition's (``Coalition'') 
second petition for reconsideration of the Commission's 218-219 MHz 
Second Reconsideration Order. The Coalition's petition contains 
previously raised constitutional and price inflation arguments and a 
newly raised, albeit untimely, Administrative Procedure Act (``APA'') 
argument. The Commission dismisses as repetitious the Coalition's 
constitutional and price inflation arguments because these arguments 
were previously the subject of reconsideration and fully considered in 
the 218-219 MHz Second Reconsideration Order. The Commission also 
dismisses the Coalition's untimely APA argument because the Coalition 
does not plead or otherwise establish new facts, changed circumstances, 
or public interest considerations that would merit review of the 
untimely request for reconsideration.

FOR FURTHER INFORMATION CONTACT: Francis Gutierrez, Auctions and 
Industry Analysis Division, Wireless Telecommunications Commission, at 
(202) 418-0660.

[[Page 42508]]


SUPPLEMENTARY INFORMATION: This is a summary of the Third Order on 
Reconsideration of the Report and Order and Memorandum Opinion and 
Order (Third Report and Order) released on May 8, 2002. The full text 
of this document is available for public inspection and copying during 
regular business hours at the FCC Reference Information Center, Portals 
II, 445 12th Street, SW, Room CY-A257, Washington, DC, 20554. This 
document may also be purchased from the Commission's duplicating 
contractor, Qualex International, Portals II, 445 12th Street, SW, Room 
CY-B402, Washington, DC, 20554, telephone 202-863-2893, facsimile 202-
863-2898, or via e-mail [email protected].

I. Introduction

    1. The Commission has before it the Ad Hoc Coalition's 
(``Coalition'') second Petition for Reconsideration. The Coalition 
seeks reconsideration of the 218-219 MHz Second Reconsideration Order, 
66 FR 9212 (February 7, 2001), that denied the Coalition's first 
Petition for Reconsideration. The Commission dismisses the second 
Petition for Reconsideration for the reasons set forth.

II. Background

    2. On July 28 and 29, 1994, the Commission conducted an auction in 
the 218-219 MHz Service (``Auction No. 2''). The applicable rules at 
the time included provisions to encourage participation by small 
businesses and minority- and women-owned entities. Small businesses 
were entitled to pay eighty-percent of their winning bids in 
installments while businesses owned by minorities and/or women were 
entitled to a twenty-five percent bidding credit that could be applied 
to one of the two licenses available in each market. Bidders that were 
both, small businesses and minority- and/or women-owned entities could 
use installment financing as well as bidding credits.
    3. At the time our rules were adopted for Auction No. 2, the 
standard of review applied to federal programs designed to enhance 
opportunities for racial minorities and women was an ``intermediate 
scrutiny standard.'' In June 1995, almost a year after the conclusion 
of Auction No. 2, the U.S. Supreme Court decided Adarand Constructors 
v. Pena, holding that racial classifications are subject to ``strict 
scrutiny'' and will be found unconstitutional unless ``narrowly 
tailored'' and in furtherance of ``compelling governmental interests.''
    4. On December 5, 1995, the Coalition filed a Petition for Relief 
that alleged that the bidding credits in Auction No. 2 were 
unconstitutional and sought a twenty-five percent reduction of its 
members' winning bids to match the bidding credits provided to 
minority- and women-owned entities. At the same time, members of the 
Coalition sought judicial review as petitioners and intervenors in 
appeal of the Commission's IVDS Omnibus Order, 11 FCC Rcd. 1282 (1996), 
in which the Commission denied a challenge to race- and gender-based 
bidding credits brought by Graceba Total Communications. The Commission 
held the Petition for Relief in abeyance pending the outcome of this 
case.
    5. On June 26, 1996, the U.S. Supreme Court decided United States 
v. Virginia, which held that to successfully defend a gender-based 
program, the government must demonstrate an ``exceedingly persuasive 
justification'' for the program.
    6. On November 21, 1996, the Commission released the Competitive 
Bidding Tenth Report and Order, 61 FR 60198 (November 27, 1996), which 
modified certain competitive bidding provisions concerning the 
treatment of small businesses, businesses owned by members of minority 
groups and women, and rural telephone companies for the then-planned 
second IVDS auction, in order to address the legal requirements of the 
Supreme Court's decisions in Adarand and VMI. Additionally, in order to 
avoid undue delay of future auctions in other services, the Commission 
eliminated the race- and gender-based provisions for those auctions and 
instead employed a similar provision for small businesses.
    7. On June 20, 1997, the D.C. Circuit dismissed the Coalition's 
challenge to the IVDS Omnibus Order, finding that the appeal was not 
ripe due to the Coalition's Petition pending before the Commission. 
Subsequently, on January 9, 1998, the Coalition filed with the 
Commission a Supplement to its Petition for Relief that claimed that: 
(i) failure to provide the twenty-five percent reduction in the license 
payments amounts to an unconstitutional taking of property without due 
process of law; and (ii) finality-related concerns do not bar the 
retroactive application of Adarand. The Coalition also expanded its 
requested remedy to include all Auction No. 2 winning bidders who did 
not receive a 25 percent bidding credit.
    8. On May 28, 1998, the Wireless Telecommunications Bureau 
(``Bureau'') issued the Community Teleplay Order, 13 FCC Rcd. 12426 
(1998), which denied the Coalition's requests based on its finding that 
members of the Coalition had sufficient opportunity to raise a 
challenge in a timely manner, but failed to do so. On June 29, 1998, 
the Coalition filed an Application for Review.
    9. On September 10, 1999, the Commission released the 218-219 MHz 
Order, 64 FR 59656 (November 3, 1999), which, among other things, 
dismissed the Coalition's Application for Review as moot because the 
218-219 MHz Order eliminated from the Commission's rules the bidding 
credit for minority- and women-owned businesses. Thus, all minority- 
and women-owned businesses lost the bidding credit they had previously 
received in Auction No. 2. At the same time, to fulfill the 
Commission's statutory mandate of encouraging participation by small 
businesses, rural telephone companies, and businesses owned by members 
of minority groups and women, the Commission granted a retroactive 
twenty-five percent bidding credit to the accounts of ``every winning 
bidder in the 1994 auction of what is now the 218-219 MHz Service that 
met the small business qualifications for that auction.'' The 
Commission noted that this approach minimized the disruption to 
entities that have previously received a bidding credit and the public, 
and that similar bidding credits had been provided to bidders in other 
services. The Commission also rejected the Coalition's takings 
argument.
    10. On December 3, 1999, the Coalition filed its first Petition for 
Reconsideration (``First Petition for Reconsideration'') alleging that 
the remedial bidding credit adopted in the 218-219 MHz Order 
represented a ``conversion'' of an unconstitutional race- and gender-
based preference to a small business preference and that the new credit 
did not resolve its constitutional claims and should be subject to 
strict scrutiny. The Coalition requested that the Commission extend the 
remedial bidding credit to all Auction No. 2 bidders regardless of 
size.
    11. On December 13, 2000, the Commission denied the Coalition's 
First Petition for Reconsideration in the 218-219 MHz Second 
Reconsideration Order. The Commission rejected the argument that the 
remedial bidding credit was impermissibly motivated and found that the 
remedial bidding credit satisfied rational basis review because it was 
adopted to further Congress's objective to disseminate licenses among a 
wide variety of applicants. Finally, the Commission determined that 
there was no evidence to support the allegation, previously raised by 
Kingdon Hughes (another Petitioner), that the original bidding credits 
inflated the prices paid by auction participants. The

[[Page 42509]]

Commission declined to expand the remedial bidding credit to all 
winning bidders in Auction No. 2.
    12. On February 15, 2001, the Bureau exercised its delegated 
authority and issued a Refund Procedures PN, 16 FCC Rcd. 3453 (2001), 
explaining the procedures relating to the remedial bidding credit. The 
Commission is presently processing the refund requests of all eligible 
requestors.
    13. On March 9, 2001, the Coalition filed its second Petition for 
Reconsideration (``Second Petition for Reconsideration'') seeking 
reconsideration of the Commission's 218-219 MHz Second Reconsideration 
Order. The Coalition, in its Second Petition for Reconsideration, 
argued that the remedial bidding credit was unconstitutional and that 
the price inflation argument (previously raised by Kingdon Hughes in 
his Petition for Reconsideration of the 218-219 MHz Order) was not 
``wholly speculative.'' The Coalition also raised, for the first time 
with sufficient particularity, the argument that the remedial bidding 
credit violated the notice and comment provisions of the Administrative 
Procedures Act (``APA'') because the remedial bidding credit was not 
included in the 218-219 MHz Notice of Proposed Rule Making, 66 FR 9212 
(February 7, 2001).

III. Discussion

    14. The Commission dismisses as repetitious the Coalition's Second 
Petition for Reconsideration with respect to the constitutional and 
price inflation arguments because these arguments were previously the 
subject of reconsideration and fully considered in the 218-219 MHz 
Second Reconsideration Order. The Commission also dismisses the 
Coalition's untimely APA argument because the Coalition does not plead 
or otherwise establish new facts, changed circumstances, or public 
interest considerations that would merit review of this untimely 
request for reconsideration.
    15. Repetitious Arguments. The Commission does not grant 
reconsideration for the purpose of allowing a petitioner to reiterate 
arguments already presented. This is particularly true, where a 
petitioner advances arguments that the Commission previously considered 
and rejected in a prior order on reconsideration. If this were not the 
case, the Commission ``would be involved in a never ending process of 
review that would frustrate the Commission's ability to conduct its 
business in an orderly fashion.'' However, the Commission will 
entertain a petition for reconsideration if it is based on new evidence 
or changed circumstances or if reconsideration is in the public 
interest. In this case, a comparison of the Coalition's Second Petition 
for Reconsideration with the Coalition's First Petition for 
Reconsideration and the Petition of Kingdon Hughes establishes that the 
Coalition's constitutional and price inflation arguments were 
previously raised and fully addressed in the 218-219 MHz Second 
Reconsideration Order.
    16. In its First Petition for Reconsideration, the Coalition argued 
that the remedial bidding credit adopted in the 218-219 MHz Order 
represented a ``conversion'' of an unconstitutional race- and gender-
based preference to a small business preference. The Coalition argued 
that this ``conversion'' failed to resolve its constitutional claims. 
Additionally, the Coalition contended that the remedial bidding credit 
was impermissibly motivated, violated Hunt v. Cromartie, (which states 
that ``a law that is facially neutral with respect to race 
classification warrants strict scrutiny under the Equal Protection 
Clause only if it can be proved that the law was motivated by a racial 
purpose or object, or if it is unexplainable on grounds other than 
race'') and should be subject to strict scrutiny review. The Commission 
rejected these arguments in the 218-219 MHz Second Reconsideration 
Order. The Commission explained that the remedial bidding credit was 
adopted not to remedy the race- and gender-discrimination that 
allegedly occurred in 1994. Rather, the Commission explained that the 
extent of any ``remedy'' for the alleged race- and gender-
discrimination was the elimination of the race and gender-based bidding 
credit. The remedial bidding credit was accorded to small businesses to 
fulfill the Commission's statutory mandate of encouraging participation 
by small businesses and to make the rules consistent with those in 
other services. Thus, the Commission resolved a multi-faceted and 
complex set of regulatory issues by leveling the bidding credit upward. 
Because the remedial bidding credit was not based on race- or gender-
classifications, the Commission found that it is not subject to strict 
scrutiny review and satisfied rational basis review. In its Second 
Petition for Reconsideration, the Coalition reiterated its 
constitutional arguments concerning the remedial bidding credit. 
Because these arguments were fully addressed by the Commission in a 
prior order, these arguments are dismissed as repetitious.
    17. The Coalition also raised in its Second Petition for 
Reconsideration, an argument previously raised by Kingdon Hughes in his 
Petition for Reconsideration of the 218-219 MHz Order, which asserted 
that the bidding credits inflated the prices paid by licensees. The 
Commission rejected this argument as wholly speculative in the 218-219 
Second Reconsideration Order. Again, because this argument was 
previously raised by another petitioner, and fully addressed by the 
Commission in the 218-219 MHz Second Reconsideration Order, this 
argument is dismissed as repetitious.
    18. APA Argument. The Coalition's APA argument is untimely. 
Although the Commission did not previously address this argument, it 
was not originally made with enough particularity in the Coalition's 
First Petition for Reconsideration to merit the Commission's attention. 
The Coalition's inclusion of this argument in its Second Petition for 
Reconsideration does not correct its earlier failure or obviate the 
fact that the argument is now untimely.
    19. The Commission's rules require that petitioners state with 
particularity the grounds on which reconsideration of a Commission 
action is sought. The precedent is clear that the Commission ``'need 
not sift pleadings and documents'' to identify arguments that are not 
``stated with clarity'' by a petitioner. It is the petitioner that has 
the burden of clarifying its petition before the agency.'' The mere 
mention of a legal concept is insufficient to properly raise an 
argument for review. As the Court of Appeals for the D.C. Circuit has 
noted ``even where an issue has been ``raised'' before the Commission, 
if it is done in an incomplete way * * * the Commission has not been 
afforded a fair opportunity [to pass on the issue].'' In the First 
Petition for Reconsideration, the Coalition's passing reference to the 
APA in a section devoted to the constitutionality of the remedial 
bidding credit does not meet the standard. Although the Coalition 
characterized the adoption of the remedial bidding credit as 
``dubious'' under the APA, it did not develop any argument or cite any 
authority. Indeed, the Coalition did not even specifically claim that 
the remedial bidding credit violated the APA. Thus, this passing 
reference in the First Petition for Reconsideration did not comport 
with the requirement that the basis for a petition for reconsideration 
be stated with particularity and, accordingly, the issue was not 
properly raised for our review.

[[Page 42510]]

    20. As previously noted, ``[t]he Communications Act, our rules, and 
the need for administrative orderliness require petitioners to raise 
issues in a timely manner.'' Accordingly, unless the public interest 
would be served by reconsideration, Sec. 1.429(i) of the Commission's 
rules limits subsequent reconsideration to modifications made to the 
original order on reconsideration. The 218-219 MHz Second 
Reconsideration Order did not modify the remedial bidding credit. Thus, 
a petition for reconsideration of the 218-219 MHz Second 
Reconsideration Order that challenges the remedial bidding credit is 
precluded under Sec. 1.429(i). This result is particularly appropriate 
where, as here, the Coalition's Second Petition for Reconsideration did 
not establish that the public interest would be served by review of the 
untimely APA argument. Accordingly, the Coalition's APA argument is 
dismissed.

IV. Ordering Clause

    21. It is ordered that, pursuant to the authority of sections 4(i), 
257, 303(b), 303(g), 303(h), 303(q), 303(r), 309(j) and 332(a) of the 
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 257, 303(b), 
303(g), 303(h), 303(q), 303(r), 309(j) and 332(a), and Sec. 1.429 of 
the Commission's rules the Second Petition for Reconsideration filed by 
the Ad Hoc Coalition is dismissed.
    22. It is further ordered that the Third Report and Order is 
adopted and that a copy be sent to the Ad Hoc Coalition via certified 
mail, return-receipt requested.

    Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 02-15787 Filed 6-21-02; 8:45 am]
BILLING CODE 6712-01-P