# Petition for Writ of Certiorari — Mobile Telecommunication Technologies Corp. v. Federal Communications Commission > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386002_1516%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1996 - **Citation:** 519 U.S. 823 ## Text Suneame Court, US FIL JUN 20 1996 ant . a, — (1) 952048 WN 20 9% ) CLE! ' Poe htt ten Coane. IN THE Supreme Court of the United States OCTOBER TERM, 1995 MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.; DESTINEER CORPORATION, Petitioners, Vv. FEDERAL COMMUNICATIONS COMMISSION, Respondent. Petition for Writ of Certiorari to the United States Court of Appeals for the District of Columbia Circuit PETITION FOR WRIT OF CERTIORARI RICHARD E. WILEY * R. MICHAEL SENKOWSKI DANIEL E. TROY BRYAN N. TRAMONT WILEY, REIN & FIELDING 1776 K Street, N.W. Washington, D.C. 20006 (202) 429-7000 Counsel for Mobile Telecommunication Technologies Corp. Dated: June 20, 1996 * Counsel of Record WILSON - Epgs PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001 QUESTION PRESENTED Did the Federal Communications Commiss.n (“FCC” or “Commission” ) exceed its statutory authorsty by charg- ing Mtel $33.3 million based on the ager«y's supposed inherent authority under 47 U.S.C. § 154°:) (1994), even though no part of the Communications Act author- izes such a char,*, the Act expressly deline«tes the nar- row circumstances under which the Commission can re- quire payments from licensees, and no agency has ever invoked its inherent, general authority to impose a mas- sive payment of this kind? (i) ii PARTIES TO THE PROCEEDING The petitioner is Mobile Telecommunication Tech- nologies Corp. (“Mtel”), a publicly traded company en- gaged in the business of telecommunications; Destineer Corporation, previously known as “Nationwide Wireless Network Corp.” is a privately held corporation in the business of communications that is majority owned and controlled by Mtel. Mtel also has an interest in the following subsidiaries: Mtel Paging, Inc.; SkyTel Corp.; Destineer Corporation; United States Paging Corporation; Mtel Technologies, Inc.; Mtel Maine, Inc.; Mtel International, Inc.; Mtel Latin America, Inc.; Mtel Puerto Rico, Inc.; Mobile- Comm Europe Inc.; Mtel Space Technologies Corpora- tion; Mtel Space Technologies, L.P.; COM/NAV Realty Corp.; Intelligent Investment Partners, Inc.; Mtel Ameri- can Radiodetermination Corporation; Mtel Cellular, Inc.; Mtel Digital Services, Inc.; Mtel Microwave, Inc.; Mtel Service Corporation; Internet Cafe Inc.; Sky Telecom Services Limited; Mtel China, Inc.; SkyTel (UK) Limited; Mtel (UK) Limited; Mtel do Brasil Participagées Ltda.; Mtel Argentina S.A.; Mtel Chile S.A.; Mtel Costa Rica S.A.: Mtel del Ecuador S.A.; Telecomunicaciones Sky- Tel S.A.; Comunicaciones Racotec; Mtel Colombia S.A.; Radio Aviso S.A.; and Nubal S.A. The Respondent is the Federal Communications Com- mission. Paging Network, Inc. and Cox Enterprises, Inc. inter- vened in Mtel’s case (94-1552) before the United States Court of Appeals for the District of Columbia Circuit. BellSouth Corporation, BellSouth Telecommunications, Inc., BellSouth Cellular Corporation, and Mobile Com- munications Corporation of America (collectively, “Bell- South”) were appellants in two consolidated cases (94- 1553 and 94-1518) before the United States Court of Appeals for the District of Columbia Circuit. The court of appeals denied BellSouth’s petition for review in those cases and those mandates have issued. TABLE OF CONTENTS QUESTION PRESENTED ............-..-.02:-:000000+ Sb ea Cr es | PARTIES TO THE PROCEEDING .............-.---------eceeeeee0- TABLE OF AUTHORITIES ....................... salahicmdeaeiaineien PETITION FOR WRIT OF CERTIORARI ..................... OPINIONS AND ORDERS BELOW ............ ROAAne Ltes ce FEIT ascetic sawse teeta eksiihencdinrtoncipecbynesctanporeterebess STATUTORY PROVISIONS INVOLVED ...................... STATEMENT OF THE CASE ...............-..00--eessecceeseenseeees A. The Pioneer’s Preference Rules Do Not Contem- plate Charging Licensees an Amount in Excess of Nominal, Statutorily Prescribed Fees _......... . The FCC Rewarded Mtel for Its Innovative Service by Granting It a Pioneer’s Preference Subject Only to Statutory Licensing Fees .......... Following Congress’s Grant of Auction Author- ity, the FCC Repeatedly Concluded Mtel Should Not Be Required to Pay an Extraordinary ELL aE Ts LO RE Nes oer CO Following a Letter and Proposed Legislation from an Influential Congressman, the FCC Abruptly Reversed Course and Imposed an Un- precedented Charge on Mtel ...................-........ as . Congress Adopted a Statute Explicitly Granting the Commission Fee Authority to Charge Cer- tain Pioneers, But Not Mtel, Auction-Based iv TABLE OF CONTENTS—Continued Page F. The Court of Appeals Invalidated the Payment Requirement as Arbitrary and Capricious, But Upheld the FCC’s Authority to Impose Such a RRS SI SRO MORE BIO RL 10 REASONS FOR GRANTING THE WRIT ....................... 13 I. DUE TO THE SIMILARITY OF MANY AD- MINISTRATIVE AGENCIES’ STATUTORY SCHEMES, THE LOWER COURT'S DECI- SION REPRESENTS A SWEEPING EXPAN- SION OF AGENCY POWER ...................220020---- 14 II. THE MAJORITY’S UNPRECEDENTED DE- CISION THAT AN AGENCY HAS THE AU- THORITY TO TAKE ANY ACTION NOT EXPRESSLY PROHIBITED CONTRAVENES THE STATUTORY SCHEME AND IS CON- TRARY TO FUNDAMENTAL PRINCIPLES OF ADMINISTRATIVE LAW .......00 000. 18 A. Agencies May Not Impose Multi-Million Dol- lar Payment Requirements Without Express Authorization From Congress ........................ 19 E. The FCC’s Assertion of Power Is “Inconsist- ent With” the Communications Act and Con- gress’s Traditional Role in Limiting Agency Authority to Levy Fees ....................20........------ 20 C. Congress’s General Intention to Raise Monies Cannot Support the Commission’s Broad Assertion of Section 4(i) Authority in the Face of More Specific Statutory Directions.... 22 FC sicisb sschcnctpanitinineicbninainitiindaiatiniatniniiie tia ata 24 APPENDIX A March 8, 1996 Opinion of the United States Court of Appeals for the Distriet of Columbia .................. la Vv TABLE OF CONTENTS—Continued APPENDIX B Page July 18, 1994 Memorandum Opinion and Order of the Federal Communications Commission for a Nationwide Authorization in the Narrowband Per- sonal Communications Service ............... 29a APPENDIX C May 8, 1996 Order of the United States Court of Appeals for the District of Columbia Circuit Deny- ing Mobile Telecommunications Technologies Cor- poration’s Petition for Rehearing... 72a May 8, 1996 Order of the United States Court of Appeals for the District of Columbia Circuit Deny- ing Mobile Telecommunications Technologies Cor- poration’s Suggestion for Rehearing In Banc...... 73a APPENDIX D May 22, 1996 Order of the United States Court of Appeals for the District of Columbia Circuit Grant- ing Mobile Telecommunications Technologies Cor- poration’s Motion for Stay of Mandate... 74a APPENDIX E Statutory and Regulatory Provisions... 75a vi TABLE OF AUTHORITIES CASES Page Caminetti v. United States, 242 U.S. 470 (1917)... 23 Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 887 (1984) ..........-....-..-... 22 Holder v. Hall, 114 S. Ct. 2581 (1994) ..................... 18 Industrial Union Department v. American Petro- leum Institute, 448 U.S. 607 (1980) —.................. 20 Leatherman v. Tarrant County Narcotics Intelli- gence & Coordination Unit, 507 U.S. 163 (1993) .. 18 ee Lyng v. Payne, 476 U.S. 926 (1986) ......................... 21 MCI Telecommunications Corp. v. AT&T, 114 8. Ct. BORE CIGD) vsescntitasihinilidlitln ttn albinos 22 National Cable Television Association, Inc. v. : United States, 415 U.S. 386 (1974) ....................... 19 National Cable Television Association, Inc. v. FCC, / 554 F.2d 1094 (D.C. Cir. 1976) ...................2..----- 19 New England Telephone v. FCC, 826 F.2d 1101 | (D.C. Cir. 1987), cert. denied, 490 U.S. 1039 ; 0), SERENA SOMO RU Ke ne SE SARS A ETS Pee Ca 15 i Railway Labor Executives’ Association v. National { Mediation Board, 29 F.8d 655 (D.C. Cir. 1994), cert. denied, 115 S. Ct. 1892 (1995) ..............--.. 21 Rake v. Wade, 508 U.S. 464 (1998) -..............-....... 23 : Skinner v. Mid-America Pipeline Co., 490 U.S. 212 (1000) cs ee ee 20 Stark v. Wickard, 321 U.S. 288 (1944) ................... 21 ' Telecommunications Research and Action Center v. FCC, 886 F.2d 1849 (D.C. Cir. 1988) .................. 15 Transamerica Mortgage Advisors, Inc. v. Lewis, GGG TE, FS ee wished codeicienitebitittatd shee ieiaicnsatan 21 Turner v. FCC, 514 F.2d 1354 (D.C. Cir. 1975) ...... 15 United States v. Munoz-Flores, 495 U.S. 385 tf , RROB ARE abea tee Bite SSS AE 19 ADMINISTRATIVE DECISIONS Amendment of the Commission’s Rules to Estab- lish New Personal Communications Services, 7 PO Fan GRO CR cecliceecBetecabdncqstttitciinilstesticccn 5 vii TABLE OF AUTHORITIES—Continued Page Amendment of the Commission’s Rules to Estab- lish New Narrowband Personal Communications Services, 8 FCC Red 7162 (1998) ................-........ 5 Amendment of the Commission’s Rules to Estab- lish New Narrowband Personal Communications Services, 9 FCC Red 1809 (1994) ...................... 7 Establishment of Procedures to Provide A Prefer- ence to Applicants Proposing an Allocation for New Services, 6 FCC Red 3488 (1991) ................ 4 Nationwide Wireless Network Corp., 9 FCC Red BRIAR, Ceiedinae R Na sieied led Deitel passim Procedures to Provide a Preference to Applicants Proposing an Allocation for New Services, 5 I Ee HE eI le terprctcrn seen cenicpransecientcdeenctapsxtnnen 3,4 Review of the Pioneer's Preference Rules, 8 FCC Sk RISA Re SR Sala ce aa 7 Review of the Pioneer’s Preference Rules, 9 FCC I I nr cen meapunec 7 THE CONSTITUTION AND STATUTES ey se nnn cccuemmiamene 19 Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 108-66, 107 Stat. 388 (1993) 2.00000. 5, 6 Be ion iekscsecrsikscecnsdedennseb ined 3, 4, 16, 19 BO se I sco ern cdbecemeierc cecencscusoaceoasiains 14 ee CE I oo 18, 19 ye Te | | PIR cera anne alle eae 2 Be Cre ae ee ET eines vccedecddeesncctetendcsecanienensosiencs 3, 14, 16 42 U.S.C. § 2214 (1994) 0... eet Saks Se apf Teh 16 ais Te COD eceseccesececececsvstusecosessenenssbeeesoen 19 A rn enum 14 nn cncccuomavnmaes 18 es 14,17 Se ee He Cases 17 43 U.S.C. § 1718 (1994) .....000.. or PRON Oo SOL ICT ee 15 ee Be I ann cas saiscccoeechcccecsssecsnkeccceeesmocus 3 Sr 15 en nn 14, 15 eR I hai sees ps tonnes nsocloncbiceninccesasiivds passim viii TABLE OF AUTHORITIES—Continued Page Oe Te I cereal passim Ee yi iti hitiicdnbiticiaeninnienal passim AE Ts ee I ii ecreeictbteseteciisitleninceenansininipaaned passim OF ee ini ctciich sccsrerciintclcnaeviaonitail 10 \ ak eee 17 a I oe reccenecustlnninnsictiicesinnituadseicinitn 14,17 ie ee ID ctecenstheccertetcneseevaiivenvescontineen 17 MISCELLANEOUS get ft HF | 8) | Ram nners aemnT Osea ere 4 Pi gee Et Sa: 5 RRP eter ee 4 H.R. 1407, 102d Cong., Ist Sess. (1991) —.......-...0-...... 6 H.R. 4700, CCH Congressional Index, 103d Cong., Ts a tae 8 H.R. 531, 102d Cong., 1st Sess. (1991) ..................... 10 H.R. Doc. No. 316, 103d Cong., 2d Sess. (1994) ...... 10 H.R. Rep. No. 826 (II), 108d Cong., 2d Sess. (1994), reprinted in 1994 U.S.C.C.A.N. 4013...... 10 H. Conf. Rep. No. 213, 108d Cong., 1st Sess. (1993), reprinted in 1993 U.S.C.C.A.N. 1088...... 6 Spectrum Auctions: FCC Proposals for the Air- waves, 1986: Hearing on H.R. 170 Before the Subcomm. on Telecommunications, Consumer Protection, and Finance of the House Comm. on Energy and Commerce, 99th Cong., 2d Sess. CO ea Siviteccnid Lace tiankdadishaimddia eben aids 6 FCC Public Notice, Mimeo #41645 (February 3, | TR RN, eee aie tee Pee na ee ee Lee 7 FCC Public Notice, Mimeo #41908 (February 25, FOE wkveSetecccnciinicccaasstbircadcienlectauiiaind Maidan te cata sk. 10 Letter from the Hon. John D. Dingell to William E. Kennard, General Counsel, Federal Communica- tions Commission (May 3, 1994) ........00.000000000000.... 8 In THE Supreme Court of the United States OCTOBER TERM, 1995 No. 95- MOBILE TELECOMMUNICATION TECHNOLOGIES CorpP.; DESTINEER CORPORATION, " Petitioners, FEDERAL COMMUNICATIONS COMMISSION, Respondent. Petition for Writ of Certiorari to the United States Court of Appeals for the District of Columbia Circuit PETITION FOR WRIT OF CERTIORARI Mtel’ respectfully petitions this Court for a writ of certiorari to review the determination of the United States Court of Appeals for the District of Columbia Circuit that the Commission has the authority under 47 U.S.C. section 154(1) (1994) to require Mtel to pay $33.3 million for a paging license despite the unprecedented nature of the charge and despite the agency’s lack of authority to impose such a fee. 1 Mobile Telecommunication Technologies Corp. (‘Mtel”) was the original pioneer’s preference applicant in this case. Upon re- ceiving a pioneer’s preference, it requested that the license granted pursuant to the preference be issued in the name of Nationwide Wireless Network Corp. (“NWN Corp.”). NWN Corp. was, at the time, a wholly owned subsidiary of Mobile Telecommunication Technologies Corp. Since then, NWN Corp. has been renamed “Destineer Corporation.” 2 OPINIONS AND ORDERS BELOW The court of appeals panel opinion granting in part and denying in part Mtel’s petition for review is reported in Mobile Communications Corp. of Amer. v. FCC, 77 F.3d 1399 (D.C. Cir. 1996) (“Mtel’) and is reproduced at Appendix A (“App.”) bound with this petition. Chief Judge Harry T. Edwards concurred in the panel’s conclu- sion that the FCC’s decision was arbitrary and capricious, but dissented from the majority’s determination that the FCC had the authority to impose a $33.3 million charge. The May 8, 1996, order of the court of appeals denying Mtel’s petition for rehearing and suggestion for rehearing en banc is unreported and is reproduced at App. C. The court of appeals stayed the mandate on May 22, 1996. (App. D) The FCC’s July 13, 1994 order under review is published at Nationwide Wireless Network Corp., 9 FCC Red 3635 (1994) (“Licensing Order’), and repro- duced at App. B. JURISDICTION The Court of Appeals for the District of Columbia Cir- cuit issued its decision on March 8, 1996. On May 8, 1996, Mtel’s petition for rehearing and suggestion for rehearing en banc were denied. On May 22, 1996, the court of appeals stayed the mandate for 30 days, until June 21, 1996. This petition is being filed within 90 days of the date the court of appeals denied Mtel’s peti- tion for rehearing. The jurisdiction of this Court is proper under 28 U.S.C. § 1254(1) (1994). STATUTORY PROVISIONS INVOLVED This case primarily involves 47 U.S.C. § 154(i) (1994) of the Communications Act of 1934 (hereinafter “section 4(i)”), which provides that: The Commission may perform any and all acts, make such rules and regulations, and issue such orders, not inconsistent with this chapter, as may be neces- sary in the execution of its functions. 3 The other sections of the Communications Act in- volved in this case are 47 U.S.C. §§ 158, 159, 309(a), and 309(j) (1994). These statutory provisions are set out in relevant part at App. E. STATEMENT OF THE CASE Mtel is a small Jackson, Mississippi company that was awarded a “pioneer’s preference’ in recognition of a path-breaking innovation in paging technology. Although the “preference entitled Mtel to bypass what had been the traditional mechanism for allocating licenses, through a ‘comparative hearing,’ after which the successful appli- cant would receive a license free of charge,” Mtel, App. 2a, the FCC required Mtel to pay the United States Treasury $33.3 million for its license. The Communications Act does not expressly authorize the Commission to compel Mtel’s payment. Recognizing the FCC’s lack of express authority, the agency and the lower court instead invoked the Commission’s general authority under section 4(i), its so-called “necessary and proper clause.” The unprecedented nature of the lower court’s action is highlighted by the fact that, although gen- eral grants of authority like section 4(i) are not uncom- mon, see, é.g., 43 U.S.C. § 1733 (1994) (Bureau of Land Management), 15 U.S.C. § 77s(a) (1994) (Secu- rities and Exchange Commission), 42 U.S.C. § 2201(p) (1994) (Nuclear Regulatory Commission), neither the FCC nor any other federal agency has ever charged enor- mous sums for a license based only on such a grant of authority. A. The Pioneer’s Preference Rules Do Not Contemplate Charging Licensees an Amount in Excess of Nominal, Statutorily Prescribed Fees. On April 27, 1990, the FCC proposed a “pioneer’s preference” policy to reward entrepreneurs who “under- take the effort and risk associated with the development of new services and technologies.” Procedures to Provide 4 a Preference to Applicants Proposing an Allocation for New Services, 5 FCC Rcd 2766 (1990). The grantee was to receive a license “without having to face competing applications and, under the assumption prevailing when the preference was awarded, without having to pay.” Mtel, App. 22. The FCC ultimately a»pted a pioneer’s preference policy that set forth specific, highly restrictive criteria that, if met, would entitle an innovator to a preference in the licensing of the new service. Establishment of Proce- dures to Provide a Preference to Applicants Proposing an Allocation for New Services, 6 FCC Rcd 7488 (1991). That preference was meant to be dispositive; the rules provided that a pioneer would “not be subject to mutually exclusive applications.” Jd. at 3498 (codified as amended at 47 C.F.R. § 1.402(b) (1994) (App. 101la)). Mutu- ally exclusive applications are those where the applicants’ conflicts are such that “the grant of one application would effectively preclude . . . the grant of one or more of the other[]” applications. 47 C.F.R. § 22.131 (1995) (“Mutually Exclusive Applications”) (App. 106a). When the Commission established the preference policy, the only fees it had ever charged were those expressly set forth in the Communications Act (the “Act”). Sec- tions 158 and 159 of the Act, along with the Commis- sion’s newly granted auction authority, establish a com- prehensive schedule of fees and charges. Section 158’s language is mandatory: “Until modified [to reflect changes in the CPI], the Schedule of Application Fees which the Federal Communications Commission shall prescribe pursuant to subsection (a) of this section shall be as follows.” 47 U.S.C. § 158(g) (1994) (App. 77a- 78a) (emphasis added); see also 47 U.S.C. § 159(g) (1994) (App. 83a-85a) (setting forth schedule of annual fees). Additional charges may be imposed only “as a penalty for late payment of charges.” 47 U.S.C. § 158 (c)(1) (1994) (App. 76a). The statutorily prescribed edition etdaitacs aaa 5 application fee for Mtel’s license was $230, with an addi- tional annual fee of 2 cents for every unit deployed.” B. The FCC Rewarded Mtel for Its Innovative Service by Granting It a Pioneer’s Preference Subject Only to Statutory Licensing Fees. Relying on the FCC’s promise that a sufficiently inno- vative technological advance would be rewarded with a pioneer’s preference, Mtel initiated an ambitious research project it called the Nationwide Wireless Network (“NWN”) in the spring of 1991. Mtel invested some $50 million in research and development to create a revolu- tionary two-way messaging service that permits lengthy messages to be sent wirelessly at a rate ten times that of then-existing paging systems. Amendment of the Com- mission’s Rules to Establish New Personal Communica- tions Services, 7 FCC Red 5676, 5735 (1992). On July 23, 1993, the FCC “grant[ed] a [final] pio- neer’s preference to Mtel for a nationwide license.” Amendment of the Commission’s Rules to Establish New Narrowband Personal Communications Services, 8 FCC Red 7162, 7175 (1993). The agency found that “Mtel’s development of [NWN] . . . is a significant communica- tions innovation of the sort the Commission established the pioneer’s preference rules to recognize.” Jd. at 7174. C. Following Congress’s Grant of Auction Authority, the FCC Repeatedly Concluded Mtel Should Not Be Required to Pay an Extraordinary Charge. Months after Mtel’s pioneer’s preference was finalized, the FCC received long sought-after authority from Con- gress to auction radio licenses. Omnibus Budget Recon- 2 After the FCC had adopted its pioneer’s preference policy, and after Mtel’s preference was finalized, Congress conferred on the Commission the authority to dispose of licenses via auction. See infra pp. 5-7. Prior to 1998, however, the FCC did not have the authority to conduct such auctions. 6 ciliation Act of 1993, Pub. L. No. 103-66, § 6002, 107 Stat. 388 (1993) (codified at 47 U.S.C. § 309(j)(1)) (1994) (App. 86a).* For the first time, the Commission was authorized to collect, through “competitive bidding,” charges in excess of the statutory application fees. “This right was a major development for an agency that, for almost sixty years, had been confined by statute to charg- ing nominal license fees.” Mtel, App. 23a (Edwards, C.J., dissenting in part). The grant of auction authority was not unconstrained, however. Although Congress obviously could not specify the amounts that would be bid for licenses auctioned pur- suant to section 309(j), it carefully limited the Commis- sion’s authority to use competitive bidding. See, e.g., 47 U.S.C. §§ 309(j)(1), (2), (10), (11) (1994) (App. 86a-87a, 93a-94a). Specifically, Congress restricted the use of competitive bidding to situations where “mutually exclusive applications are accepted for filing.” 47 U.S.C. § 309(j)(1) (1994) (App. 86a) (emphasis added). Be- cause pioneer’s preference licenses are, as noted above, by definition not mutually exclusive, this provision neces- sarily excludes pioneers such as Mtel from the statute’s ambit. Congress also made clear that its grant of auction au- thority did not “alter” the traditional manner in which the Commission was to allocate spectrum or the other proce- dures set forth in the rest of the Act. 47 U.S.C, § 309 (j)(6)(A) (1994) (App. 89a-90a); H. Conf. Rep. No. 213, 103d Cong., Ist Sess. 484-85 (1993), reprinted in 8 The FCC had pursued auction authority at least since the mid- 1980s. See, e.g., Spectrum Auctions: FCC Proposals for the Air- waves, 1996: Hearing on H.R. 170 Before the Subcomm. on Tele- communications, Consumer Protection, and Finance of the House Comm. on Energy and Commerce, 99th Cong., 2d Sess. (1986). Although Congress had often contemplated giving the agency such authority, it did not actually confer this authority until 1993. See also H.R. 531, 102d Cong., Ist Sess. (1991); H.R. 1407, 102d Cong., lst Sess. (1991). 7 1993 U.S.C.C.A.N. 1088, 1173-74. Nor was the con- ferral of such authority to “be construed to prevent the Commission from awarding licenses to those persons who make significant contributions to the development of a new telecommunications service or technology.” 47 U.S.C. § 309(j)(6)(G) (1994) (App. 90a).* Subsequently, the Commission began a rulemaking pro- ceeding to assess how the pioneer’s preference rules should be applied in the new auction era. The FCC noted that “[iJnasmuch as we have determined that a pioneer’s pref- erence application will be the sole application acceptable for filing . . . we believe that the statutory language, combined with our pioneer’s preference regulatory scheme as it currently exists, exempts pioneer’s preference licen- sees from payment for a license so issued.” Review of the Pioneer’s Preference Rules, 8 FCC Red 7692, 7693 (1993) (emphasis added). On three occasions over the next six months, the Commission reaffirmed its conclusion that the statutory and regulatory scheme, as well as equita- ble considerations, required that Mtel not be charged an extraordinary fee. Id. at 7694-95; Review of the Pioneer's Preference Rules, 9 FCC Red 605, 610 n.21 (1994); Amendment of the Commission's Rules to Establish New Narrowband Personal Communications Services, 9 FCC Red 1309, 1316 1994); see Mtel, 22a-23a (Edwards, C.J., dissenting in part). The Commission then invited Mtel to apply for a license. FCC Public Notice, Mimeo # 41645 (rel. Feb. 3, 1994). * Congress also reiterated the FCC’s “obligation in the public interest to continue to use engineering solutions, negotiations, threshold qualifications, and other means in order to avoid mutual exclusivity in application and licensing proceedings.” 47 U.S.C. § 309(j) (6) (E) (1994) (App. 90a). 8 D. Following a Letter and Proposed Legislation from an Influential Congressman, the FCC Abruptly Reversed Course and Imposed an Unprecedented Charge on Mtel. Expecting its license to be routinely granted in accord- ance with the Commission’s rules, Mtel applied to convert its finalized preference into a license on February 9, 1994. Three months after Mtel applied for its license, the then-Chairman of the Subcommittee on Oversight and Investigations of the United States House of Representa- tives Committee on Energy and Commerce sent the FCC a letter expressing concerns about the absence of payment obligations on recipients of pioneer’s preferences. Letter from the Hon. John D. Dingell to William E. Kennard, General Counsel, Federal Communications Commission (May 3, 1994). On June 30, 1994, Congressman Dingell sponsored H.R. 4700 (which eventually died in commit- tee). See CCH Congressional Index, 103d Cong., 2d Sess., 28, 428-28, 429 (1994). Had it passed, H.R. 4700 would have required Mtel and other pioneer’s pref- erence holders to pay 90 percent of the highest bid re- ceived for a comparable license at auction. H.R. 4700, 103d Cong., 2d Sess. (1994). Approximately two months after this letter and the introduction of H.R. 4700, the Commission abruptly reversed course on the payment issue. Licensing Order, 9 FCC Rcd 3635 (App. B); Mtel, App. 24a (“The FCC [then] got weak-kneed and turned tail on Mtel when a member of Congress cried ‘wolf’.”) (Edwards, C.J., dis- senting in part). The agency granted Mtel’s license, but conditioned that license on payment “to the United States Treasury [of] an amount equal to ninety (90) percent of the lowest winning bid for a nationwide narrowband [personal communications service (“PCS”)] license or three million dollars ($3,000,000) less than the lowest winning bid for a nationwide narrowband PCS license, wae ne mm 9 whichever is less.” Licensing Order, App. 66a." Given that the lowest winning bid for a comparable license was $37 million, the FCC order would require Mtel to pay 90 percent of that figure, or $33.3 million. Because no statutory provision explicitly authorized such an extraordinary payment obligation, the Commis- sion relied on its so-called “necessary and proper” author- ity in section 4(i). 47 U.S.C. § 154(i) (1994). AI- though concurring in the result, Commissioner Quello found “problematic” the FCC’s “statutory basis for im- posing this payment requirement on Mtel.” Licensing Order, App. 67a. He candidly conceded that: “[{The FCC’s] legal analysis, although plausible, certainly entails what may best be described as an aggressive interpreta- tion of Section 4(i) of the Communications Act.” Jd. (emphasis added). E. Congress Adopted a Statute Explicitly Granting the Commission Fee Authority to Charge Certain Pioneers, But Not Mtel, Auction-Based Fees. In response to concerns about the agency’s power to require pioneers to pay, in November 1994 Congress enacted legislation explicitly authorizing the FCC to com- pel payment from certain pioneer’s preference licensees. This legislation, which was integrated into the financ- ing package of the Uruguay Round Agreements Act (“GATT”), thus required payments, calculated accord- ing to a statutorily prescribed formula, from existing 2 GHz pioneers and from all future pioneers. 47 U.S.C. § 309(j)(13)(B) (1994) (App. 96a).° ® Although the FCC’s Licensing Order acknowledged receiving the letter and described the recently introduced legislation, the Commission denied that it had been influenced by the bill. /d. at 48a n.66. ® Mtel’s “narrowband” PCS service is in the 900 MHz band and is suitable for paging-type services. The FCC also separately awarded pioneer’s preferences in the broadband, or 2 GHz, fre- quency band, which is appropriate for voice transmissions. 10 The House Ways and Means Committee incorporated language into GATT expressly authorizing such a pay- ment in the fear that “there may be some question about the authority of the Commission to require pioneer pref- erence holders to pay.” H.R. Rep. No. 826 (II), 103d Cong., 2d Sess. 7 (1994), reprinted in 1994 U.S.C.C.A.N. 4013, 4019. Similarly, the Statement of Administrative Action in the President’s Message on GATT asserted that “Section 801 eliminates the uncertainty arising from cur- rent legislation by mandating” payments for some licenses. H.R. Doc. No. 316, 103d Cong., 2d Sess. (1994). Importantly, the GATT legislation does “not apply to applications that have been accepted for filing on or before September 1, 1994.” 47 U.S.C. § 309(j)(13) (D)(iv) (1994) (App. 97a). By its own terms, there- fore, the GATT legislation did not grant the authority to charge for Mtel’s application, which was accepted for filing on February 25, 1994 (FCC Public Notice, Memo #41903 (February 25, 1994)), and finalized in July 1994. Licensing Order, App. 29a, 32a. F. The Court of Appeals Invalidated the Payment Re- quirement as Arbitrary and Capricious, But Upheld the FCC’s Authority to Impose Such a Charge. Pursuant to 47 U.S.C. § 402(b)(1) (1994), Mtel appealed the FCC’s payment condition to the court of appeals. On March 8, 1996, the panel issued an opinion finding that the FCC “failed to engage in reasoned decision-making in deciding to impose the payment re- quirement.” Mtel, App. 12a. The majority believed, however, that section 4(i) gave the FCC authority to impose a payment on Mtel. The majority acknowledged “the specificity of Con- gress’s grants of authority to charge applicants for li- censes”—namely, “certain administrative fees in connec- 1] tion with the licensing process” and monies from “auctions of specified types of licenses where [the Commission ] has accepted competing applications.” Mtel, App. 7a. But it rejected Mtel’s argument that “because the statu- tory scheme ‘limits a thing to be done in a particular mode, it includes the negative of any other mode.’ ” /d. (quoting Botany Worsted Mills v. United States, 278 U.S. 282, 289 (1929)). The majority characterized this argument as mere “reliance on the expressio unius maxim” which “has little force in the administrative setting where we defer to an agency’s interpretation of a statute unless Congress has directly spoken to the precise question at issue.” Jd. (quotation marks and citations omitted ). The majority held that “the nature of Congress’s auc- tion authorization more supports than undermines the Commission’s” assertion of authority to charge Mtel. /d. The court concluded that Congress intended auction-like fees to be applied to “valuable” licenses like that of Mtel. Id. Charging Mtel an auction-based payment, the court said, “would enable the Commission to reap many of the benefits of Congress’s own new policy.” Jd. at 9a. The majority also found that the Commission’s assertion that a payment was in the “public interest” made it not “incon- sistent with” the Communications Act, and therefore per- mitted under section 4(i). Jd. at 10a. The court re- manded the case to the Commission to reconsider “whether Mtel’s license should be conditioned on payment in light of its claims of reliance and inconsistent treatment of others.” Jd. at 20a. Chief Judge Edwards agreed that the Commission had acted arbitrarily and capriciously in imposing the pay- ment. He disagreed, however, that the FCC had the power under section 4(i) to mandate such a charge. “It is undisputed that the FCC has never before in its history imposed a licensing fee absent explicit authorization,” he noted. Id. at 25a (Edwards, C.J., dissenting in part) 12 (emphasis in original). “Jt is also conceded that there is no such authorization in this case.” Id. (emphasis in original). Judge Edwards therefore rejected the FCC’s effort “[iJn the absence of statutory authorization for the fee it sought to impose,” to “concoct[] an argument to support its action by bridging together its general author- ity to administer the Communications Act, found in 47 U.S.C. § 154(i) (1994) (‘section 4(i)’), and the auction framework that Congress established in 1993 to govern non-pioneer’s preference licensees in 47 U.S.C. § 309(j) (‘section 309(j)’).” Id. at 26a. Judge Edwards continued: “[c]haritably speaking, the [FCC’s] argument is something akin to the FCC saying that it has the power to do whatever it pleases merely by virtue of its existence, a suggestion that this court normally would view as incredible.” Jd. (citations and quotation marks omitted). Judge Edwards noted that Congress itself “apparently did not share such an expan- sive view of the FCC’s authority under the existing law, because, in late 1994, it decided to pass a statute spe- cifically authorizing the FCC to collect fees from [other] pioneer’s preference license recipients.” Id. Explicating the implications of the majority’s decision, Chief Judge Edwards concluded: Under the FCC’s logic, as soon as Congress grants the agency permission to engage in certain conduct, such as charging market-value license fees, on an explicitly-defined basis, section 4(i) automatically confers the right to apply that power across the board. If this reading were correct, it would com- pletely eviscerate the power of Congress to determine the scope of the statutes it passes. Id. at 27a. a 13 REASONS FOR GRANTING THE WRIT As Judge Edwards said, at stake in this case is “the power of Congress to determine the scope of the statutes it passes.” Mtel, App. 27a. Congress’s ability to control agencies is particularly important in the present context, where an agency has for the first time asserted the author- ity to impose a multi-million dollar charge based on a residual grant of general authority shared by many agen- cies. Although Congress limited the FCC’s auction author- ity to licenses that were mutually exclusive—which neces- sarily excludes Mtel—the lower court relied on the FCC’s public interest authority, an overly expansive view of Con- gress’s intent, and section 4(i) to override that limitation. It is simply too dangerous to let stand a ruling that could allow every agency with a residual grant of authority to claim the untrammelled power to charge monies, or other- wise act as it pleases, unless Congress has specifically prohibited that agency from taking such action. The FCC’s statutory scheme shows that Congress has specifically and narrowly circumscribed the Commission’s power to impose fees and conduct auctions. The auction authority is limited to licenses that, unlike Mtel’s, are mutually exclusive. The Commission’s fee authority sets highly specific charges for licenses that do not contem- plate or authorize Mtel’s $33 million charge. These con- straints, as well as sixty years of agency practice, manifest a strong congressional intention not to give the FCC such broad authority. In fact, when Congress sought to have the agency charge other pioneer’s preference recipients, it gave the agency the power to do so explicitly. This illustrates Congress’s belief that the agency does not hold the power that the lower court has now found the Com- mission to possess. This Court’s review is therefore warranted to ensure that agencies do not rely on general grants of authority to collect multi-million dollar fees from regulated entities (or take whatever other action they wish) simply because 14 Congress has. not expressly forbidden them from doing so. I. DUE TO THE SIMILARITY OF MANY ADMINIS- TRATIVE AGENCIES’ STATUTORY SCHEMES, THE LOWER COURT'S DECISION REPRESENTS A SWEEPING EXPANSION OF AGENCY POWER. The lower court’s validation of the FCC’s use of its so-called necessary and proper clause, section 4(i), to authorize Mtel’s fee would grant sweeping new powers to other administrative agencies that have similar au- thority. By giving this common provision such a broad interpretation, the lower court has opened the door to a wide array of unauthorized administrative actions. In- deed, the lower court’s ruling grants agencies a roving commission to raise funds by administrative fiat simply by invoking their necessary and proper authority. The abundance of “necessary and proper” clauses in other agencies’ organic statutes makes the lower court’s decision especially dangerous. Among the agencies pos- sessing such authority are the Securities and Exchange Commission, 15 U.S.C. § 77s(a) (1994); the Bureau of Land Management, 43 U.S.C. § 1740 (1994); the Nu- clear Regulatory Commission, 42 U.S.C. § 2201(p) (1994); the Food and Drug Administration, 21 U.S.C. § 363 (1994); the Environmental Protection Agency, 42 U.S.C. § 7601 (1994) (Clean Air Act); the Department of Transportation, 49 U.S.C. § 40113(a) (1994); and the Federal Energy Regulatory Commission, 42 U.S.C. § 7172(a)(2) (1994). Congress granted these agencies so-called “necessary and proper” authority in order to fill in the gaps left in statutory schemes and to prevent agencies from having to obtain congressional approval whenever they seek to “stray[] a little way beyond the apparent boundaries of the Act—to the extent necessary to regulate effectively those matters already within its —— a 15 borders.” Licensing Order, App. 55a. Congress did not grant such authority to allow agencies to rewrite statutory constraints on their power, particularly constraints on imposing monetary charges." The assertion by an agency of “the power to do what- ever it pleases merely by virtue of its existence,” Mtel, App. 26a (Edwards, C.J., dissenting in part), has dramatic implications. For example, the Bureau of Land Management (“BLM”), has a necessary and proper clause not unlike that of the FCC; BLM may “promul- gate rules and regulations to carry out the purposes of this Act and of other laws applicable to the public lands .” 43 US.C. § 1740 (1994). Like the FCC, BLM may also auction off a public good (land) to advance public interest objectives. 43 U.S.C. §§ 1713, 1734 (1994). Congress has decreed that BLM must sell agricultural lands in parcels “no larger than necessary to support a family-sized farm.” 43 U.S.C. § 1713(e) (1994). But the rationale of the lower court’s decision would enable BLM to use its necessary and proper authority to sell larger than family-sized parcels to corporate agricultural purchasers, for example. These corporations would pre- sumably pay a higher price for the land, thereby advanc- ing one of Congress’s goals in passing the auction legisla- tion: to raise monies for the Treasury. Under the lower court’s logic, barring such a sale would prevent BLM from “reap[ing] many of the benefits of Congress’s own 7 Previous judicial decisions support this interpretation of sec- tion 4(i). See Telecommunications Research and Action Center v. FCC, 836 F.2d 1849 (D.C. Cir. 1988) (rejecting reliance on section 4(i) to justify lotteries absent preferences for media diversifica- tion) ; New England Telephone v. FCC, 826 F.2d 1101, 1107-08 (D.C. Cir. 1987) (permitting the FCC to employ a remedy under section 4(i) because it was “absolutely necessary” to achieve a congres- sionally mandated goal), cert. denied, 490 U.S. 1039 (1989) ; Turner v. FCC, 514 F.2d 1854, 1855 (D.C. Cir. 1975) (agency lacked au- thority under section 4(i) to assess attorney fees). 16 new policy—including obtaining reimbursement for the transfer of a valuable entitlement.” Mrtel, App. 9a (re- jecting Mtel’s assertion that Congress excluded Mtel from the FCC’s auction authority). Plainly, such a sale should not be permitted even if it were to comport with one of Congress’s objectives in pass- ing auction legislation—raising funds—because it vio- lates a limitation on BLM’s auction authority—i.e., requiring family-sized farm parcels. Similarly, subjecting a non-mutually exclusive applicant to an auction-based fee based on Congress’s general intention to raise reve- nues is inconsistent with the limitations on the FCC’s authority. The lower court also utilizes the general public interest provision in the Communications Act to undercut the explicit statutory language. See Mtel, App. 10a. Here, too, the prevalence of general public interest mandates opens the door for other agencies to expand their au- thority. For example, in addition to having section 4(1)- type authority, see 15 U.S.C. § 77s(a) (1994), the SEC also has the power to exempt certain securities from registration and the corresponding fees, if registration is “not necessary in the public interest and for the protec- tion of investors.” 15 U.S.C. § 77c(b) (1994). Con- gress has limited this exemption authority to securities whose aggregate amount is less than $5 million. /d. Under the lower court’s rationale, the SEC could invoke its necessary and proper authority, together with its gen- eral public interest mandate, to exempt certain securities that are valued at more than $5 million. Such an asser- tion of power is, again, no different than subjecting non- mutually exclusive licenses to auction-based fees based on the public interest. Other agencies could also assert enhanced authority under the lower court’s sweeping interpretation of the FCC’s necessary and proper clause. Thus, 17 * Based on the Nuclear Regulatory Commission’s general mandate to regulate “to protect [the] health” of the public, 42 U.S.C. § 2201(b) (1994), the NRC could use its necessary and proper authority and general public safety man- date to place license charges on research reactors, despite a statutory fee exemption for reactors “used primarily for educational training and aca- demic research purposes.” 42 U.S.C. § 2214 (c)(4) (1994). Using “necessary and proper” authority, and de- spite the mandate that the Secretary of Transpor- tation may not collect fees other than those that were in effect on January 1, 1973, 49 U.S.C. § 45301(a) (1994), the Secretary could impose new fees or charge a completely new class of aviation authorizations. The Secretary could con- tend that new fees are “necessary to carry out” air commerce and safety programs, 49 U.S.C. § 40113(a) (1994), and are required to meet the Department’s “public interest” obligations. 49 U.S.C. § 40101 (a) (1994). The EPA could use its “necessary and proper” authority, 42 U.S.C. §7601(a) (1994), to change the way it administers acid rain “pollu- tion allowances” under the Clean Air Act. Under the lower court’s reasoning, despite specific direc- tions from Congress on auction procedures and applicability, 42 U.S.C. §765lo (1994), the EPA might require that allowances be bought in minimum blocks, or give bidding credits to certain parties, if the Administrator were to find that such regulations are “necessary to carry out his functions” under the Act.* 8 As noted above, Congress drew a line in the GATT legislation that the pioneer’s preference fees do “not apply to applications that have been accepted for filing on or before September 1, 1994.” 47 U.S.C. § 309(j) (18) (D) (iv) (1994) (App. 97a). The FCC nonetheless determined that Mtel should be charged an auction- 18 The similarity of many regulatory regimes to that of the FCC, most notably the widespread existence of neces- sary and proper clauses, makes the lower court’s decision -a dangerous precedent. There are sound reasons for the statutory maxims that the specific controls the general, see, e.g., Holder v. Hall, 114 S. Ct. 2581, 2604 (1994) (citing Cleveland v. United States, 329 U.S. 14, 18 (1946) ), and that the specific grant of a particular power implies the negative of another, closely related power. See, e.g., Leatherman v. Tarrant Cty. Narcotics Intel. & Coordination Unit, 507 U.S. 163, 168 (1993). Agencies cannot be permitted to assert the power to do anything that Congress has not explicitly prohibited them from doing. The lower court’s decision warrants review and reversal. Il. THE MAJORITY’S UNPRECEDENTED DECISION THAT AN AGENCY HAS THE AUTHORITY TO TAKE ANY ACTION NOT EXPRESSLY PROHIB- ITED CONTRAVENES THE STATUTORY SCHEME AND IS CONTRARY TO FUNDAMENTAL PRINCI- PLES OF ADMINISTRATIVE LAW. In addition to being unprecedented, the charge to Mtel for its license is also unauthorized. Moreover, it is “in- consistent with” the carefully circumscribed power that Congress has given the Commission to collect monies via fees and auctions. 47 U.S.C. § 154(i) (1994). As such, it contravenes the principle that agencies are limited to the powers Congress granted them. Where Congress has based fee even though Mtel filed its application in February, well before the September cut-off date. Congress has often drawn temporal lines on fee-charging authority. See, e.g., 42 U.S.C. § 7178 (a) (1) (1994) (granting FERC fee authority beginning in fiscal year-1987); 21 U.S.C. §379h(a)(1)(A) (1994) (granting FDA fee authority after September 1, 1992). The lower court’s decision thus suggests that an agency need not adhere to these temporal restrictions on their fee authority where the agency finds that the public interest warrants continued (or earlier) imposition of the once authorized charges. SIR hha ccna 19 narrowly limited the power of an agency to take a par- ticular action under certain defined circumstances only, the agency may not rely on its residual grant of authority to act in dramatically different circumstances of its own choosing. A. Agencies May Not Impose Multi-Million Dollar Payment Requirements Without Express Authoriza- tion From Congress. The lower court’s opinion fails to recognize the limited and narrowly defined role that Congress has granted ad- ministrative agencies in levying fees and charges. The Constitution permits only one branch of government to impose taxes and otherwise raise revenue, and through one procedure only: “All Bills for raising Revenue shall Originate in the House of Representatives.” U.S. Const., art. I. sec. 7. See, e.g., United States v. Munoz-F lores, 495 U.S. 385, 396 (1990) (discussing importance of provision). For this reason, Congress has carefully spelled out the circumstances under which, agencies can exact payments from those they regulate. See, e.g., 15 U.S.C. §77f(b) (1994) (SEC); 42 USC. § 4370c (1994) (EPA); 21 U.S.C. § 379h(b) (1994) (FDA). Absent a clear statement, courts will not presume that Congress has authorized a federal agency to levy charges on regulated entities in excess of the administrative costs associated with that agency’s functions. Thus, in National Cable Television Ass’n, Inc. v. United States, 415 US. 336, 342 (1974), this Court held that the relevant statute must be construed “narrowly to avoid constitu- tional problems” that would arise from an open-ended delegation to the FCC of authority to impose charges higher than mere “fees” for services rendered by the agency. See also National Cable Television Ass’n, Inc. v. FCC, 554 F.2d 1094, 1106 (D.C. Cir. 1976) (“fees” are based on “a reasonable approximation of the at- tributable costs which the Commission identifies as being expended to benefit the recipient” ). 20 Nor does Section 4(i) set forth “standards guiding [the agency’s] actions such that a court could ascertain whether the will of Congress has been obeyed” in levying a charge on Mtel. Skinner v. Mid-America Pipeline Co., 490 U.S. 212, 218 (1989) (quotation marks omitted). As such, “[a] construction of the statute that avoids this kind of open-ended grant should certainly be favored.” Industrial Union Dep’t. v. American Petroleum Inst., 448 U.S. 607, 646 (1980). Yet the lower court construed the statute in precisely such an impermissibly “open- ended” way. Here, as Chief Judge Edwards explained, “[i]t is un- disputed that the FCC has never before in its history imposed a licensing fee absent explicit authorization from Congress. It is also conceded that there is no such au- thorization in this case.” Mtel, App. 25a (Edwards, C.J., dissenting in part) (emphasis in original). Given the absence of authorization to impose this multi-million dol- lar fee, such a charge must be considered beyond the agency’s power. B. The FCC’s Assertion of Power Is “Inconsistent With” the Communications Act and Congress’s Tra- ditiona! Role in Limiting Agency Authority to Levy Fees. Not only was the multi-million dollar charge to Mtel unauthorized, it was also “inconsistent with” the fee col- lection and auction provisions of the Act in violation of section 4(i). 47 U.S.C. § 154(1) (1994). These two congressional grants—license fees and the monies from competitive bidding—are the only types of assessments the Commission is authorized to collect in connection with telecommunications licenses. See 47 U.S.C. §§ 158, 159 (1994) (App. 75a-85a). This statutory backdrop suggests that the payment requirement is “inconsistent with” the Communications Act. What is more, when Congress wanted to authorize the agency to require payments from pioneers, it did so ex- ee 21 pressly, in the form of Title VIII to the GATT legisla- tion. Title VIH permitted the FCC to charge pioneer’s preference recipients who filed their applications after September 1, 1994. Congress thus excluded Mtel’s license application, which was filed almost eight months before. As Chief Judge Edwards observed, had Congress shared the majority’s expansive view of the FCC’s authority under the existing law, it presumably would not have deemed it necessary “to pass a statute specifically au- thorizing the FCC to collect fees from [other] pioneer’s preference license recipients.” Mrtel, App. 26a. “ “When a statute limits a thing to be done in a par- ticular mode, it includes the negative of any other mode.’ ” Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 20 (1979) (quoting Botany Worsted Mills v. United States, 278 U.S. 282, 289 (1929)). Contrary to the lower court’s decision, this rule applies with special force in the administrative context, for administrative agencies possess only the power Congress has delegated to them. See, e.g., Stark v. Wickard, 321 U.S. 288, 309 (1944) (“When Congress passes an act empowering administra- tive agencies to carry on governmental activities, the power of those agencies is circumscribed by the authority granted.”); Railway Labor Executives’ Ass’n v. National Mediation Bd., 29 F.3d 655, 671 (D.C. Cir. 1994) (“the extent of [an agency’s] powers can be decided only by considering the powers Congress specifically granted it;” “the duty to act under certain carefully defined circumstances simply does not subsume the discretion to act under other, wholly different, circumstances’), cert. denied, 115 S. Ct. 1392 (1995). An agency thus does not possess “plenary authority to act within a given area simply because Congress has endowed it with some authority to act in that area.” 29 F.3d at 670. In short, an agency may not unilaterally ignore conditions that Congress has placed on a particular action. See, e.g., Lyng v. Payne, 476 U.S. 926, 937 (1986) (“[A]n agency's power is no greater than that delegated to it by Congress.”’). ye The lower court’s assertion that charging Mtel is “con- sistent” with the Communications Act because the Com- mission found the fee in the “public interest” as required under section 309 ignores the rest of the statute. 47 U.S.C. § 309 (1994) (App. 86a) While Congress has mandated that the FCC grant or deny licenses based in part on the public interest, convenience and necessity, this statutory charge does not negate the rest of the statute. The public interest language cannot trump sixty years of congressional limitations on the Commission’s authority to charge fees and the specific language of the auction statute. A Commission rule or order purporting to im- pose multi-million dollar charges on a licensee without any hint of congressional authorization is therefore “in- consistent with” Congress’s specification of fees and charges in Sections 158, 159, and 309(j) of the Act. Moreover, because the FCC is acting in a manner inconsistent with the terms of the Communications Act, there is no occasion to defer to the agency under step two of Chevron, U.S.A., Inc. v. Natural Resources De- fense Council, Inc., 467 U.S. 837, 842-44 (1984). “[A]n agency’s interpretation of a statute is not entitled to deference when it goes beyond the meaning that the statute can bear.” MCI Telecommunications Corp. v. AT&T, 114 S. Ct. 2223, 2231 (1994) (citing cases). Here, the FCC’s interpretation goes well beyond the point at which it is due any deference. C. Congress’s General Intention to Raise Monies Can- not Support the Commission’s Broad Assertion of Section 4(i) Authority in the Face of More Specific Statutory Directions. The court of appeals also attempted to support its broad interpretation of the agency’s authority by relying on some general aspects of Congress’s intentions in pass- ing the auction statute. Mtel, App. 7a-9a. Intention must be viewed in the context of, and certainly cannot override, 23 the plain terms of the statute. “The meaning of a statute must, in the first instance, be sought in the language in which the act is framed, and if that is plain, . . . the sole function of the courts is to enforce it according to its terms.” Caminetti v. United States, 242 U.S. 470, 485 (1917). See also Rake v. Wade, 508 U.S. 464, 471 (1993). Those terms are clear; auctions are permitted only “[{i]f mutually exclusive applications are accepted for filing . . .” and fees for preference holders are only permitted if the preference was accepted for filing after September 1, 1994. 47 U.S.C. § 309(j)(1) (1994) (App. 86a).° In analyzing congressional intent, the lower court as- serts that auctions usually only “make sense” when mu- tually exclusive applications are accepted because such licenses are valuable. Mtel, App. 6a-7a. The court then contends that, since Mtel’s license is valuable, Congress would have intended Mtel to be subject to a fee. In essence, the lower court has rewritten the statute to sub- stitute the word “valuable” for the words “mutually ex- clusive.” But this is not the statute Congress passed. Moreover, section 4(i) does not authorize either the FCC or the courts to ignore clear limitations on the agency’s authority in the guise of advancing one aspect of congressional intent.” ° The lower court’s discussion of legislative intent passes over Congress’s intent in setting defined limits on the FCC’s auction authority. 10 The lower court analyzes congressional intent as if Congress was simply not aware of the non-mutually exclusive pioneer’s pref- erence program. This assumption is belied by the fact that Con- gress specifically addressed the program in the auction statute, stating that the auction authority should not “be construed to prevent the Commission from awarding licenses to those persons who make significant contributions to the development of a new telecommunications service or technology.” 47 U.S.C. § 309(j) (6) (G) (1994) (App. 90a). 24 CONCLUSION Whether agencies with general grants of authority have sweeping implied authority to impose multi-million dollar payments, or to act as they please, is of sufficient importance to warrant plenary review by this Court. A\l- though Mtel will have an opportunity to remand to con- test the reasonableness of the FCC’s $33.3 million charge, the question of whether the Commission has the authority to impose such a non-statutorily based charge should be determined by this Court now. For the reasons set forth above, Mtel respectfully requests that the Court grant its petition for certiorari. Dated: June 20, 1996 Respectfully submitted, RICHARD E. WILEY * R. MICHAEL SENKOWSKI DANIEL E. TROY BRYAN N. TRAMONT WILEY, REIN & FIELDING 1776 K Street, N.W. Washington, D.C. 20006 (202) 429-7000 Counsel for Mobile Telecommunication Technologies Corp. * Counsel of Record APPENDICES la APPENDIX A UNITED STATES COURT OF APPEALS DISTRICT OF COLUMBIA Nos. 93-1518, 94-1552 and 94-1553 MoBILE COMMUNICATIONS CORPORATION OF AMERICA, et al., 7" Appellants, FEDERAL COMMUNICATIONS COMMISSION, Appellee, MosBILE TELECOMMUNICATIONS TECHNOLOGIES CORPORATION, Intervenor. MoBILE TELECOMMUNICATIONS TECHNOLOGIES CORPORATION, et al., ¥ Appellants, FEDERAL COMMUNICATIONS COMMISSION, Appellee, Cox ENTERPRISES, INC., et al., Intervenors. Appeals of an Order of the Federal Communications Commission Argued Dec. 8, 1995 Decided March 8, 1996 2a Before: EDWARDS, Chief Judge, BUCKLEY and WILLIAMS, Circuit Judges. Opinion for the Court filed by Circuit Judge WIL- LIAMS. Opinion concurring in part and dissenting in part filed by Chief Judge EDWARDS. STEPHEN F. WILLIAMS, Circuit Judge: Petitioner Mobile Telecommunications Technologies Corp. (“Mtel”) received a “pioneer’s preference” in 1993 as a reward for developing technology making it possible to transmit information through the airwaves much fas- ter than had formerly been possible. See Notice of Pro- posed Rule Making and Tentative Decision, Amendment of the Commission’s Rules To Establish New Personal Communications Services, 7 F.C.C.R. 5676, 5735-36 qq 149-51 (1992) (“Tentative Preference Order”); First Report and Order, Amendment of the Commission’s Rules To Establish New Personal Communications Services, 8 F.C.C.R. 7162, 7172-75 9457-77 (1993) (“Final Pref- erence Order”). The preference entitled Mtel to bypass what had been the traditional mechanism for ai‘ocating licenses, through a “comparative hearing,” after which the successful applicant would receive a license free of charge. Mtel would instead receive a communications li- cense, specifically a narrowband personal communications service (“PCS”) license, without having to face compet- ing applications, and, under the assumptions prevailing when the preference was awarded, without having to pay. Unfortunately for Mtel, Congress drastically changed the background norm for licensing before Mtel could ac- tually receive its license. It amended the Communications Act to allow the Federal Communications Commission to use auctions for allocation of some kinds of licenses (in- cluding PCS licenses) when “mutually exclusive applica- tions are accepted for filing,” see Omnibus Budget Re- conciliation Act of 1993, Pub.L. No. 103-66, § 6002 3a (codified at 47 U.S.C. § 309(j)), i.e., on occurrence of the event that formerly would have triggered a comparative hearing. In the case of a pioneer’s preference, this con- dition for licensing via auctions was not satisfied, as the preference gave its holder a pass on any such competition. But as other parties receiving similar licenses would have to pay for them at market rates, the Commission con- fronted the issue of how to treat Mtel’s prefrence: Should it escape not only competition with other applicants for a license but also the necessity of payment? The Commission originally ruled that Mtel would not be required to pay. Notice of Proposed Rule Making, Review of the Pioneer’s Preference Rules, 8 F.C.C.R. 7692, 7694-95 418 (1993) (“Pioneer’s Preference Re- view I”); see also First Report and Order, Review of the Pioneer's Preference Rules, 9 F.C.C.R. 605, 610 n. 21 (1994) (“Pioneer’s Preference Review II”) (reaffirming original determination); Memorandum Opinion and Or- der, Amendment of the Commission’s Rules To Estab- lish New Narrowband Personal Communications Services, 9 F.C.C.R. 1309, 1316 4 45 (1994) (“Narrowband Or- der”) (same). It then reversed itself, requiring payment of what amounted to a substantially discounted auction price—the lesser of “ninety (90) percent of the lowest winning bid for a nationwide narrowband PCS license” and “three million dollars ($3,000,000) less than the lowest winning bid for a nationwide narrowband PCS li- cense.” Nationwide Wireless Network Corp., 9 F.C.C.R. 3635, 3639-41 44 15-20 (1994) (“Licensing Decision”). Mtel objects that the Commission lacks statutory au- thority to impose a payment requirement, and that in any event it failed to engage in reasoned decision-making in reaching the determination to impose the payment require- ment. We agree with the Commission that it has statu- tory authority to require payment but find its explana- tion of imposing the requirement on Mtel inadequate— particularly in its back-of-the-hand treatment of Mtel’s 4a argument that its reliance on the preference as originally conceived called for granting a license free of charge. Accordingly, we remand the case to the Commission for reconsideration of Mtel’s contentions. In addition, petitioner Mobile Communications Cor- poration of America (“Mobile-Comm”), an unsuccessful applicant for a pioneer’s preference, challenges both the original preference grant and the Licensing Decision, basically on the ground that the Commission failed to provide an adequate basis for its award of a preference and, then, a license to Mtel. We reject these contentions. I. Imposition of a Payment Requirement on Mtel’s License A. Jurisdiction Over Mtel’s Appeal. Section 402(b)(1) of the Communications Act gives this court jurisdiction over an appeal of a decision or order of the Commission brought by an “applicant for a construction permit or station license, whose application is denied by the Commission.” 47 U.S.C. § 402(b)(1). “Station” is defined by the Communications Act as “a Station equipped to engage in radio communication or radio transmission of energy,” id. § 153(k), and includes mobile as well as land stations. See id. § 531(1) & (m). Further, § 153 defines “mobile service” in language imply- ing that narrowband PCS is a service involving mobile or land stations or both: (n) “Mobile service” means a radio communica- tion service carried on between mobile stations or receivers and land stations, and by mobile stations communicating among themselves, and includes .. . (3) any service for which a license is required in a personal communications service established pur- suant to the proceeding entitled “Amendment to the Commission’s Rules to Establish New Personal Com- munications Services” [i.e., the Tentative Preference Order]... . Tn ee ee eet eee ah mies Sa Id. §153(n) (emphasis added). Thus, we have juris- diction over Mtel’s appeal under § 402(b)(1) if, as re- quired by that section, its “application [was] denied by the Commission.” If Mtel’s application were an application for a license subject to any sort of condition the Commission might choose to impose, then the Licensing Decision would not be a denial of the application; Mtel was granted a license, though subject to the payment requirement. On the other hand, if, as we think is the case, Mtel was applying for a license of a specific sort—here, one free of charge, as had traditionally been the case—then the Licensing De- cision is a denial. Several considerations support this view of Mtel’s application. First, it made specific refer- ence to its financial terms, namely the associated admin- istrative fee of $230, implying that it was an application for a license at the price of the administrative fee. Second, interpreting an application as one for a license subject to any condition of the Commission’s choosing would permit the Commission to foreclose judicial review of a de facto denial by couching its decision as an approval subject to some intolerable condition. At least it would have this effect unless § 402(a), allowing review under the Hobbs Act, specifically 28 U.S.C. § 2342, of any attack on an order of the Commission under the wire or radio communications chapter of its authority “except those appealable under [§ 402(b)]” is a general catch-all that picks up anything that falls through the cracks of § 402(b). Whether or not this is true is immaterial for present purposes because Mtel’s application is more prop- erly viewed as being for a free license, so that the Com- mission’s order qualifies as a “denial” within the meaning of § 402(b) (1). Nonetheless, a party whose license application has been denied by approval subject to conditions (other than ones requested by the applicant) must normally comply with the applicable administrative exhaustion requirements. 6a These include 47 CFR § 1.110, which states that an ap- proval subject to conditions “shall be considered as a grant of such application unless the applicant” files a timely request “rejecting the grant as made,” thereby pre- cipitating Commission reconsideration. Normally failure to comply with this requirement bars judicial review. Central Television, Inc. v. FCC, 834 F.2d 186, 190-91 (D.C.Cir.1987). Here, however, the Commission explic- itly waived the § 1.110 requirement, see Licensing De- cision, 9 F.C.C.R. at 3644 439, thereby negating the basic reason for the requirement of this form of exhaus- tion—-protecting the Commission’s interest in crystallizing its position prior to review. See Central Television, 834 F.2d at 191; cf. Darby v. Cisneros, 509 U.S. 137 , 113 S.Ct. 2539, 2542-45, 125 L.Ed.2d 113 (1993) (agency regulation specifying that party “may request” review of hearing officer’s determination did not “require” exhaustion within the meaning of § 10(c) of the APA, 5 U.S.C. § 704). B. Commission's Authority To Impose a Payment Requirement. The Commission based its decision to require payment from Mtel on § 4(i) of the Communications Act, 47 U.S.C. § 154(1), which we have described as the “neces- sary and proper clause” of the Act. New England Tel. & Tel. v. FCC, 826 F.2d 1101, 1108 (D.C.Cir.1987) (quoting North Am. Telecommunications Ass'n v. FCC, 772 F.2d 1282, 1292 (7th Cir.1985)). Section 4(i) authorizes the Commission to “perform any and all acts, . .. and issue such orders, not inconsistent with [the Com- munications Act], as may be necessary in the execution of its functions.” Mtel believes the section inapplicable here. Mtel points first to the specificity of Congress’ grants of authority to charge applicants for licenses. Those grants a pens ae oe i i Daa Ata a 7a take two forms. The Commission is under an obligation to impose certain administrative fees in connection with the licensing process. See 47 U.S.C. §§ 158, 159. And, as we have seen, the Commission is empowered under the 1993 amendment to the Communications Act to con- duct auctions of specified types of licenses where it has accepted competing applications. Mtel offers up the tra- ditional argument that because the statutory scheme “limits a thing to be done in a particular mode, it includes the negative of any other mode.” Botany Worsted Mills v. United States, 278 U.S. 282, 289, 49 S.Ct. 129, 132, 73 L.Ed 379 (1929). Thus, the payment requirement is “inconsistent with” the Communications Act and not within the Commission’s power under § 4(i). We agree with the Commission, however, that Mtel’s reliance on the expressio unius maxim—that the expres- sion of one is the exclusion of others—is misplaced. The maxim “has little force in the administrative setting,” where we defer to an agency’s interpretation of a statute unless Congress has “ ‘directly spoken to the precise ques- tion at issue.”” Texas Rural Legal Aid, Inc. v. Legal Serv. Corp., 940 F.2d 685, 694 (D.C.Cir.1991) (quot- ing Chevron v. NRDC, 467 U.S. 837, 842, 104 S.Ct. 2778, 2781, 81 L.Ed.2d 694 (1984)). Expressio unius “is simply too thin a reed to support the conclusion that Congress has clearly resolved [an] issue.” Jd.; see also Cheney R.R. Co. v. ICC, 902 F.2d 66, 68-69 (D.C.Cir. 1990) (similar). Indeed, we think the nature of Con- gress’s auction authorization more supports than under- mines the Commission’s decision here. See Texas Rural Legal Aid, 940 F.2d at 694 (“[A] congressional prohibi- tion of particular conduct may actually support the view that the administrative entity can exercise its authority to eliminate a similar danger.” ). The event Congress identified as justifying auctions— the acceptance of mutually exclusive applications—norm- 8a ally defines the type of license where an auction makes sense: In such cases, there is every reason to believe that the entitlement that the Commission has carved out from de facto ownership by the general public is quite valuable. Thus, an auction will yield reimbursement to the public for the transfer of the entitlement; it will save the public and private expense involved in a comparative hearing; and, because the party able to use the license most effi- ciently will be able to bid the most, the license will end up in the hands of the firm best able to develop its poten- tial. See H.R.Rep. No. 111, Ist Sess., 1993 U.S.Code Cong. & Admin.News 1993, pp. 378, 767. WL 181528, at *535 (1993) (listing, as goals of auction regime, “promot[ing] the development . . . of new technologies . without administrative or judicial delays” and “pro- mot[ing] economic opportunity and competition”); 139 Cong. Rec. $1437-38 (1993) (statement of Sen. Inouye introducing original version of auction legislation) (re- ferring to goals of “promot[ing] economic efficiency, re- duc[ing] the administrative burden of issuing licenses, and allow[ing] the Government to receive significant revenues from the use of this public asset”); id. $1442 (statement of Sen. Stevens, co-sponsor of the original auction legis- lation) (similar). By contrast, in the typical case where mutually exclusive applications are not accepted, the li- cense would have negligible value, there would be no need for any comparative hearing (much less a costly one), and the selection of the license recipient would be a fore- gone conclusion. The license sought by Mtel clearly fits the first set of cases, where the principles supporting an auction are powerful; indeed, but for the Commission’s pioneer’s preference policy, that license clearly would have fit Congress’s criteria for an auction. Mtel is therefore in essence asking us to read congressional intent as follows: Because the Commission before the 1993 amendment of the Communications Act had provided for an exception to what was then its only way of issuing licenses for which 9a there was competition, Congres forbade it from qualifying that exception, even where doing so would enable the Commission to reap many of the benefits of Congress’s own new policy—including obtaining reimbursement for the transfer of a valuable entitlement. We think such a reading untenable. To put the same point slightly differently: The pioneer’s preference itself was a creation of the Commission, not an act of subservience to a mandate of Congress. But the congressional provision for auctions sharply widened the incremental benefit accruing to a preference, vis-a-vis other would-be license holders. Before, the preference re- cipient enjoyed an assured free license, while its competi- tors enjoyed a chance at a free license; after Congress’s provision for auctions, and in the absence of a decision to charge a preference recipient, the recipient would en- joy an assured free license, while its competitors enjoyed only a chance to buy a license at the market price (i.e., by paying the government for all the estimated economic rents attributable to the license). This change in the rela- tion between preference recipients and other would-be license holders might properly have led the Commission to drop the preference altogether (at least if it took into account reliance interests based on the prior policy); in- stead the Commission adjusted the terms of the preference to reduce the gulf between recipients of preferences and other license aspirants. Contrary to Mtel’s contention, our decision in Railway Labor Executives’ Ass'n v. Nat'l Mediation Bd., 29 F.3d 655 (D.C.Cir.1994) (en banc), did not enshrine expressio unius as a maxim of universal and conclusive application. The conclusion in RLEA that the agency lacked authority for its action followed a careful exegesis of the entire statutory context, the statute’s legislative history, and the agency’s unvarying practice over a 60-year history. /d. at 664-71. In the very different context of the case before 10a us, we see no conflict between the language and structure of the Communications Act and the imposition of a pay- ment requirement on Mtel.” Mtel argues that even if requiring payment is not di- rectly “inconsistent with” the Communications Act, the lack of affirmative statutory support for the Commission’s action proves that it was not “necessary in the execution of [the Commission’s] functions” under the Act, as re- quired by § 4(i). In imposing the payment requirement, the Commission relied on its duty to determine “whether the public interest, convenience, and necessity will be served” by the granting of a license application. 47 U.S.C. § 309(2); Licensing Decision, 9 F.C.C.R. at 3639 415 & n. 53. In light of that requirement, the payment condition would be “necessary in the execution of [the Commission’s] functions” under § 4(i) so long as the Commission properly found it necessary to “ensure the achievement of the Commission’s statutory responsibilit[y]” to grant a license only where the grant would serve the 1 Congress further amended the regime for auctioning licenses after the Commission had issued the Licensing Decision. See Dis- sent at 1413; Uruguay Round Agreements Act, Pub.L. No. 103- 465, § 801 (1994) (codified at 47 U.S.C. § 309(j) (18)). It is not clear to us how the later legislative developments would shed light on the pre-existing legal situation, but even assuming they could, they do not do so here. The amendment required—as opposed to merely authorizing—the Commission to charge for future licenses issued to pioneer’s preference recipients at rates discounted under a statutorily specified formula. See Uruguay Round Agreements Act § 801 (codified at 47 U.S.C. § 309(j) (18) (A) & (B)). Con- gress also required that preference recipients of certain already- awarded broadband licenses be charged for their licenses. See id. (codified at 47 U.S.C. §309(j) (13) (E)). Congress was silent about the treatment of narrowband license recipients such as Mtel. Thus, if one were to infer from the amendment that congressional intent may have been in some way different with respect to already- issued narrowband licenses than with respect to licenses to which the amendment spoke, then the Commission’s decision—that it was authorized but not directed to charge—would nevertheless be con- sistent with the amendment. lla public interest, convenience, and necessity. F CC v. Mid- west Video Corp., 440 U.S. 689, 706, 99 S.Ct. 1435, 1444-45, 59 L.Ed.2d 692 (1979) (citing United States v. Southwestern Cable Co., 392 U.S. 157, 88 S.Ct. 1994, 20 L.Ed.2d 1001 (1968)); see also Southwestern, 392 USS. at 180 n. 46, 88 S.Ct. at 2006 n. 46 (relying on § 4(i) as basis for Commission’s authority to act in fur- therance of its statutory purpose). We accord substantial deference to “the Commission’s judgment regarding how the public interest is best served.” FCC v. WNCN Listen- ers Guild, 450 U.S. 582, 596, 101 S.Ct. 1266, 1275, 67 L.Ed.2d 521 (1981). Here, a finding of the required sort might rest on the unjust enrichment of Mtel from receipt of a free license while, under the new auction regime, others would be required to pay, or (less plausi- bly) on the prospect of predation by a deep-pocketed Mtel, flush with its free license—both concerns alluded to by the Commission in its Licensing Decision. See 9 F.C.C.R. at 3639-40 94 15-18. Thus, the Commission's present reasoning, coupled with an adequate response to Mtel’s special objections discussed in part I.C. below, would support a finding that the payment requirement is “necessary in the execution of [the Commission’s] func- tions.” Mtel suggests that this conclusion is belied by Con- gress’s amendment of the Communications Act to author- ize auctions of communications licenses. It argues that if the Commission could charge Mtel for its license (apart from the nominal administrative fees) in the absence of explicit statutory authorization, then amendment of the Act to authorize charges would have been unnecessary. But the amendment of the Communications Act neces- sarily alters any analysis of what is in the “public interest,” which is not an issue of abstract political economy but of fulfilling the congressional view of the public interest. Thus, assessment of whether imposition of a charge ad- vances the public interest was quite different against the backdrop of the traditional comparative hearing proce- 12a dure for allocating licenses than it is against the backdrop of the new auction regime. We are therefore unpersuaded by Mtel’s argument that the Commission lacks affirmative authority to impose a payment requirement on Mtel. C. Failure To Give Adequate Consideration to Mtel’s Reliance Interests. Mtel argues that the Commission failed to engage in reasoned decision-making in deciding to impose the pay- ment requirement, and we agree. Given the route by which the Commission reached its decision, the inadequacy is unsurprising. After stating repeatedly that Mtel would not be required to pay, the Commission reversed itself at the eleventh hour. Because the issue appeared settled prior to the Licensing Decision’s announcement of the reversal, Mtel did not offer—and thus the Commission did not consider—arguments that imposing a payment requirement would be against the public interest. Mtel’s submission to the Commission stated simply—and quite accurately—that “the question of whether Mtel should be required to pay auction level fees [was] addressed on reconsideration in the Narrowband PCS proceeding [Nar- rowband Order, 9 F.C.C.R. at 1316 445], as well as extrajudicially in the Pioneer’s Preference review proceed- ing [Pioneer’s Preference Review II, 8 F.C.C.R. at 7694- 95 4 18].” Opposition of Mtel, Nationwide Wireless Net- work Corp., Docket No. 22888-CD-P/L-94. When the Commission reversed course, it failed to address such questions as whether its new position was consistent with the reliance interests of Mtel or with the Commission’s decision not to charge for certain other paging system licenses.” 2 The mere fact that the Commission reversed its position in an adjudicatory proceeding after announcing its initial view in a rule-making proceeding (without, however, actually promulgating a rule on the matter) does not invalidate the shift, contrary to Mtel’s contention. “An agency’s view of what is in the public interest may change, either with or without a change in circum- 13a The Commission did address itself to reliance interests of pioneer’s preference recipients in a related proceeding— concerned with the payment obligations of broadband pioneers. See Memorandum Opinion and Order on Re- mand, Amendment of the Commission's Rules To Estab- lish New Personal Communications Services, 9 F.C.C.R. 4055, 4059 417 (1994). The pioneers there argued that the public interest would be best served by granting them “free licenses as a reward for investments and dis- closure of information they have made in reliance on their expectation of a preference.” Id. The Commission rejected this argument, saying that there was no evidence in the record to suggest that the pioneers would not have made the investment and information disclosure if they had known they would have to pay for their licenses. Id. But Mtel has had no opportunity to put forth arguments and evidence on the question of reliance, having been lulled into a false sense of security by the Commission’s repeated disavowal of intent to charge Mtel. See Pioneer’s Preference Review I, 8 F.C.C.R. at 7694-95 4 18; Pio- neer’s Preference Review II, 9 F.C.C.R. at 610 n. 21; Narrowband Order, 9 F.C.C.R. at 1316 445. We think Mtel is entitled to an opportunity to state its reliance concerns and to have the Commission address whatever Mtel may say. Mtel also suggests that the Commission has undercut its own case for charging Mtel by its contrary decision as to certain other paging system licenses. The Commis- sion notes several distinctions between these licenses and the one granted to Mtel, see Response of FCC to Post- Argument Submission of Mtel, but did not do so in the Licensing Decision, where the surprise move to require payment was made. Accordingly, we remand the case to the Commission for consideration of these issues. See stances,” as long as the agency “suppl[ies] a reasoned analysis indicating that prior policies and standards are being deliberately changed, not casually ignored.” Greater Boston Television Corp. v. FCC, 444 F.2d 841, 852 (D.C.Cir.1970) (footnotes omitted). l4a SEC v. Chenery Corp., 318 U.S. 80, 93-94, 63 S.Ct. 454, 461-62, 87 L.Ed. 626 (1943). II. Grant of Preference and License to Mtel While Mtel challenges the imposition of a payment condition on its license, MobileComm challenges the grant of both the pioneer’s preference and the license to Mtel. We address and reject these claims in turn. A. Grant of a Preference to Mtel. MobileComm’s challenge to the preference grant may be viewed as an attack on the grant of a license, which the pioneer’s preference was intended to “guarantee,” see Report and Order, Establishment of Procedures To Pro- vide a Preference to Applicants Proposing an Allocation for New Services, 6 F.C.C.R. 3488, 3492 432 (1991) (“Pioneer’s Preference Order”) and thus within our juris- diction under 47 U.S.C. § 402(b)(6), which provides for review at the behest of persons aggrieved by the grant or denial of a license application. Alternatively, the chal- lenge may be viewed as an attack on an order not appeal- able under § 402(b) and thus within our jurisdiction under § 402(a) and 28 U.S.C. § 2342(1). There being no other apparent possibilities, and the timing and venue provisions of both subsections being satisfied, we have jurisdiction. According to MobileComm, the Commission, in grant- ing a preference to Mtel, failed to provide an adequate justification for the grant and thus behaved in an arbitrary and capricious fashion in violation of § 10(e)(B)(1) of the Administrative Procedure Act, 5 U.S.C. § 706(2)(A). Under that section, we must set aside the Commission’s action if the Commission failed to “articulate a satisfac- tory explanation for its action” or reached a conclusion “so implausible that it could not be ascribed to a differ- ence in view or the product of agency expertise.” Motor Vehicle Mfrs. Ass'n v. State Farm Mutual Auto. Ins. Co., 15a 463 U.S. 29, 43, 103 S.Ct. 2856, 2867, 77 L.Ed.2d 443 (1983). The Commission adopted its pioneer’s preference rules in order to encourage and reward the development of new and innovative communications services. See Notice of Proposed Rule Making, Establishment of Procedures To Provide a Preference to Applicants Proposing an Alloca- tion for New Services, 5 F.C.C.R. 2766, 2766-67 44 1-5 (1990); Pioneer’s Preference Order, 6 F.C.C.R. at 3488 41. Here, it granted a preference to Mtel on the basis of its having “developed. . . what [Mtel] has named ‘Multi-Carrier Modulation’ (“MCM”) technology that is capable of transmitting 24 kilobits per second simulcast in a single 50 kHz channel.” See Tentative Preference Order, 7 F.C.C.R. at 5735 4 149; see also Licensing Decision, 9 F.C.C.R. at 3644 4 41 (reiterating basis for preference award). In its effort to show that the Com- mission’s explanation was defective, MobileComm at- tempts to recast the award as one based on Mtel’s use of two specific MCM technologies, “MOOK” and “PSFK.” In fact the Commission never explained why MOOK or PSFK might deserve a preference, for the simple reason that it never rested the award on those technologies. In- deed, it never mentioned MOOK or PSFK in its explana- tion for making the preference award. See Tentative Preference Order, 7 F.C.C.R. at 5735 149; Final Prefer- ence Order, 8 F.C.C.R. at 7172-75 44 57-77. Further- more, Mtel said in its preference application that it was “experimenting with” MOOK and PSFK, as well as with “an innovative FM multitone modulation technique,” and that it did not want to tie itself to MOOK or any other 8 MobileComm also argues that the Commission violated § 309 (d) of the Communications Act, 47 U.S.C. § 309(d), in granting Mtel’s preference request. We need not decide whether § 309(d), which governs contested license grants, applies to the grant of a pioneer’s preference; MobileComm’s argument under § 309(d)—that the Commission failed to specify the basis for its decision—is the same as its argument under the APA. 16a specific MCM technology. See Mtel’s Petition for Rule- making, Mobile Telecommunication Technologies Corp., ET Docket No. 92-100 (emphasis added); Mtel’s Tech- nical Feasibility Demonstration, Mobile Telecommunica- tions Technologies Corp., ET Docket No. 92-100. Thus, the preference award clearly rested, as the Commission said, on Mtel’s having developed and applied MCM< tech- nology in a simulcast environment. See Tentative Prefer- ence Order, 7 F.C.C.R. at 5735 4 149; Final Preference Order, 8 F.C.C.R. at 7174 4 68. The Commission can- not be faulted for failing to justify a decision it never made. MobileComm also contends that one cannot understand the award to have been based, as the Commission said, on the development and application of MCM technology in a simulcast environment, because, it says, the Com- mission failed to answer its claims that Mtel’s proposed integration of MCM technology and simulcast paging was neither “new” nor “innovative.” See MobileComm’s Nar- rowband PCS Pioneer’s Preference Comments, Amend- ment of the Commission’s Rules To Establish New Per- sonal Communications Services, ET Docket No. 92-100. In fact the Commission responded at some length. See Final Preference Order, 8 F.C.C.R. at 7173-75 44] 64-74; see also Tentative Preference Order, 7 F.C.C.R. at 5737- 38 4150. When a party seeks to persuade a non-tech- nical court of the inadequacies of a specialized agency’s treatment of a highly technical issue, its burden, as a practical matter, is necessarily quite heavy. Here Mobile- Comm has not begun to pinpoint gaps in the Commission’s response that this court could characterize as material. Finally, MobileComm argues that the Commission’s decision to base the preference grant on Mtel’s integration of MCM and simulcast paging, rather than on the de- velopment and use of specific MCM technologies such as MOOK and PSFK, will “vitiat{e] the FCC’s intent and [give] Mtel an opening to use a range of technologies that 17a did not form the basis for the preference award.” Brief of Petitioner at 16. The argument seems to be that the apparently broad basis for the preference grant may limit the force of the Commission’s requirement that Mtel use the technology on which the preference is based. Narrow- band Order, 9 F.C.C.R. at 1316 44 46-48. But Mobile Comm at most identifies a practical issue the Commission will confront in enforcing the preference’s limits. We are in no position to say the Commission was arbitrary or capricious in its choice of the level of generality at which to define the preference-winning technology. B. License Grant. MobileComm recasts its last objection to the preference grant as a challenge under 47 U.S.C. § 402(b) (6) to the Licensing Decision, saying that the Commission failed to respond adequately to its claim that Mtel did not intend to use the technology on which Mtel’s preference was based. As to this contention, the Commission found that MobileComm had not raised any substantial and material question of fact, a finding that (if correct) would justify, under 47 U.S.C. § 309(d)(2), the denial of Mobile- Comm’s petition to deny Mtel a license. In fact the claims raised by MobileComm were no more than a regurgitation of its previous argument about the techno- logical basis of Mtel’s preference. In the licensing venue, MobileComm pointed to various clues that Mtel would not use the MOOK and PSFK modulation techniques that, according to MobileComm but no one else, were the foundation of Mtel’s preference. See Licensing Decision, 9 FC.CR. at 3644 §41; MobileComm’s Petition To Deny, Nationwide Wireless Network Corp., File No. 22888-CD-P/L-94; id. Att. C. As we have seen, however, the Commission based the grant of a preference to Mtel on its having developed and applied MCM technology in a simulcast environment, not on its having developed any specific MCM technique. Thus the Commission was quite correct in concluding that MobileComm’s evidence 18a about Mtel’s possible non-use of MOOK and PSFK cre- ated no substantial and material question of fact under § 309(d)(2). For the same reason, the Commission “articulate[d] a satisfactory explanation for its action” under 5 U.S.C. § 706(2)(A). See Motor Vehicle Mfrs. Ass'n, 463 U.S. at 43, 103 S.Ct. at 2866. Its substantive point being feeble, MobileComm en- | deavors to ensnare the Commission, Mtel and the court in a procedural jumble that turns out to be completely irrelevant. The Communications Act’s provision on peti- tions to deny a license application, § 309(d), is divided into two subsections, which we have read as assigning distinct tasks to the Commission. We have described sub- section (1) as instructing the Commission to determine whether a petition to deny sets forth “specific allegations of fact sufficient to show that . . . a grant of the appli- cation would be prima facie inconsistent with subsection (a) of this section [requiring that granting the application serve the public interest, convenience, and necessity],” and subsection (2) as telling the Commission (if the first “requirement” is met) to consider whether “on the basis of the application, the pleadings filed, or other matters which [the Commission] may officially notice,” “a sub- stantial and material question of fact is presented.” Citi- zens for Jazz on WRVR v. FCC, 775 F.2d 392, 394 (D.C.Cir.1985). MobileComm says that the Commission failed to perform step one of this process. In the first place we note that, despite Citizens for Jazz, we are unable to identify any words in § 309(d)(1) it- self that assign any task at all to the Commission. On their face, the words say simply that the petitioner is to do various things, against a background set of ancillary rules about the Commission’s power to set time limits and the applicant’s opportunity to respond. The Commission comes into the picture in § 309(d)(2), which specifies how it is to handle the materials produced under subsec- tion (1). If it finds that no “substantial and material 19a question of fact is presented,” it is to deny the petition and make the grant, and that, as we have seen, is just what the Commission did (with, of course, the added wrinkle that the grant was conditioned). Nevertheless, it is quite true that in Citizens for Jazz we construed § 309(d) as establishing a two-step process. But we have never said that the Commission must plod through the two steps on pain of being reversed. Quite the opposite. In Citizens for Jazz we noted that § 309(d) determinations “are typically made concurrently: Whether the peti- tion to deny meets the statutory requirements [and] whether the application under consideration raises a factual issue substantial enough to call for a hear- ing . . . are discussed in the same opinion—/f, in- deed, they are discussed separately at all, which is rarely, since a negative resolution of the second ques- tion alone makes the first question moot... .” Citizens for Jazz, 775 F.2d at 396 (first emphasis in original; second emphasis added). This, of course, is exactly what happened here. Astroline Communications Co, v. FCC, 857 F.2d 1556, 1562 (D.C.Cir.1988), is not to the contrary. While we stressed the importance of the two-step process, we did not reverse any conclusion of the Commission based on its failure to perform step one. On none of the four issues to be addressed by the Commission on remand had it performed a proper analysis under step two that would have mooted the supposed error under step one. See Astroline, 857 F.2d at 1567 (first issue) (“unrefuted factual record” belied Commission’s conclusion that the petitioner had presented no substantial and material ques- tion of fact); id. at 1570 (second issue) (Commission “failed to articulate adequately its reasons” for conclud- ing that no substantial and material question cf fact was presented); id. at 1572 (third issue) (Commission’s con- 20a clusion that petitioner had failed to raise a substantial and material question of fact was potentially arbitrary and Capricious when viewed in light of substantial issue raised in the petition as to de facto control of applicant); id. at 1572-73 (fourth issue) (although decision under step one was not arbitrary or capricious viewed in isolation, context of “persistent misapplication of the statutory man- date” called for a remand, there being no step-two deci- sion at all). * ok * * Accordingly, the case is remanded to the Commission for consideration of whether Mtel’s license should be con- ditioned on payment in light of its claims of reliance and inconsistent treatment of others. In all other respects the etitions for review are denied. So ordered. 2lia HARRY T. EDWARDS, Chief Judge, dissenting in part and concurring in part: I agree with the majority that the Federal Communica- tions Commission (“FCC” or “Commission”) failed to engage in reasoned decision-making in reaching a deter- mination to require Mobile Telecommunications Tech- nologies Corporation (“Mtel”) to pay over $33 million for a license to operate a narrowband personal communi- cations service. As the majority correctly holds, the FCC’s “back-of-the-hand treatment” of Mtel surely cannot survive judicial review. However, the FCC’s flippant and unreasoned treatment of Mtel is the least of its sins. On the record before us, it is clear that the Commission lacked statutory authority to require Mtel to pay for the license at issue, so there was no legal basis for the action taken. Accordingly, I believe that we must reverse the Commission’s action and grant the relief sought by Mtel. In all other respects, I concur in the judgment of the majority. This case involves a small corporation, Mtel, and its efforts to develop and market a two-way data communi- cations service that promised to improve existing data transmission rates by a factor of ten. Mtel invested ap- proximately $50 million in developing this service; its reward was a “pioneer’s preference” grant from the FCC that, in the words of the agency, was to be the equivalent of a guarantee of a license to operate its new. service.’ In granting Mtel a pioneer’s preference, the FCC ap- plauded Mtel for “solv[ing] significant technical engineer- ing problems” that had stumped its competitors, and described the company’s work as “a significant communi- cations innovation of the sort the Commission established 1See Establishment of Procedures to Provide a Preference to Applicants Proposing an Allocation for New Services, 6 F.C.C.R. 3488, 3492 [32 (1991) (report and order). 22a the pioneer’s preference rules to recognize.” * On Febru- ary 3, 1994, after consideration of comments regarding Mtel’s receipt of a pioneer’s preference, the FCC invited Mtel to apply for a license based on its pioneer’s prefer- ence.* At all times during consideration of Mtel’s pioneer’s preference (a process that spanned more than two years), the FCC repeatedly assured Mtel that the license it needed to operate its pioneer’s preference technology would be issued for no charge other than the nominal statutory fee due from all licensees. However, at the last stage of the pioneer’s preference licensing process, when all that re- mained was for the FCC to issue a license to Mtel, the Commission suddenly reversed course and made an en- tirely unprecedented determination that Mtel should be required to pay a fee of over $33 million for its license. Because the FCC has no basis for demanding this pay- ment from Mtel, I must dissent. There is no dispute that, while Mtel’s pioneer’s prefer- ence and licensing proceedings were underway, dramatic changes were being made in the FCC’s operations; how- ever, none of these changes gave the FCC the authority to extort a multi-million-dollar payment from Mtel. Mtel filed for a pioneer’s preference in November 1991; the FCC adopted a tentative finding that Mtel’s application was successful in July 1992, and affirmed this decision in an order adopted in June 1993. Then, in August 1993, while reconsideration of Mtel’s pioneer’s preference was 2 Amendment of the Commission’s Rules to Establish New Nar- rowband Personal Communications Services, 8 F.C.C.R. 7162, 7174 {| 72-78 (1993) (first report and order). 3 See Commission Invites Filing of Narrowband Personal Com- munications Service Pioneer’s Preference Application, FCC Public Notice (Feb. 3, 1994), reprinted in Joint Appendix (“J.A.”) 672. 23a underway, the FCC for the first time received permission from Congress to auction spectrum licenses at market value.* This right was a major development for an agency that, for almost sixty years, had been confined by statute to charging nominal license fees. Even though pioneer’s preference licenses were not af- fected by the 1993 change in the law,° the FCC sought to evaluate its pioneer’s preference program under the auc- tion framework. Part of this evaluation involved consid- eration of whether the auction process would be adversely affected if pioneer’s preference licenses were awarded for nominal fees. Throughout this process, the FCC repeat- edly confirmed that Mtel would not be subjected to auction-based fees. The FCC noted that, because Mtel’s pioneer’s preference had already been granted at the time that Congress gave the Commission auction authority, it would be inequitable to charge Mtel an auction-based fee. Thus, before Mtel applied for the license to operate 4 See 47 U.S.C. § 309(j) (Supp. V 1993). 5 See 47 U.S.C. § 309(j) (6) (G) (Supp. V 1993) (“Nothing ... in the use of competitive bidding, shall . . . be construed to prevent the Commission from awarding licenses to those persons who make significant contributions to the development of a new telecom- munications service or technology. . . .”); H.R.REP. No. 111, 103d Cong., Ist Sess. 257 (1993) U.S.Code Cong. & Admin.News 1993 pp. 378, 584. (“The provisions of section 309(j) are .. . expressly neutral with respect to [pioneer’s preferred] policies.”). 6 See Review of the Pioneer's Preference Rules, 8 F.C.C.R. 7692, 7694-95 18 & n. 19 (1998) (notice of proposed rulemaking) (“{I]t would be inequitable to apply any change in our rules in [Mtel’s] pioneer’s preference proceeding.”); Review of the Pio- neer’s Preference Rules, 9 F.C.C.R. 605, 610 79 & n. 21 (1993) (first report and order) (“We previously determined that, as a matter of equity, nothing in our pioneer’s preference review will affect [Mtel’s] proceeding, and we adhere to that decision.’’) ; Amendment of the Commission’s Rules to Establish New Narrow- band Personal Communications Services, 9 F.C.C.R. 1309, 1316 45 (1994) (memorandum opinicn and order) (“We continue to believe that as a matter of equity we should not apply any new 24a its pioneer’s preference technology in February 1994, the FCC had assured the company on several occasions that, not only would it not be charged a market-value fee for its license, but also that the FCC recognized that the imposition of any such fee would be inequitable. The FCC got weak-kneed and turned tail on Mtel when a member of Congress cried “wolf.” In May of 1994, Congressman John D. Dingell sent a letter to the FCC’s General Counsel intimating that pioneer’s prefer- ence recipients should pay for their licenses;* he also proposed legislation to that effect, which would have sub- jected pioneer’s preference licensees to a charge equal to 90% of the highest auction price of similar licenses.* This legislation was never enacted, but Congressman Dingell’s threats apparently succeeded: in July 1994, when the FCC issued Mtel’s final licensing order, the Commission suddenly reversed course and essentially adopted Con- pioneer’s preference rules in this proceeding, because a final order addressed the preference prior to enactment of the 1993 Budget Reconciliation Act. Accordingly, except for our normal established fees, we will not charge Mtel for the license that it may receive pursuant to its preference grant.” ) Although the FCC did not specifically address whether Mtel had relied on the existing pioneer’s preference framework in pursuing its application, the FCC did observe that other, similarly situated pioneer’s preference recipients submitted pioneer’s preference re- quests and “publicly disclosed substantial detail of their system de- signs in reliance on the continued applicability of the pioneer’s preference rules.” Review of the Pioneer’s Preference Rules, 9 F.C.C.R. 605, 610 79 (1998) (first report and order). The FCC also noted that, “[h]ad the rules been different, these applicants might have structured their requests differently; or conducted research, development, and experimentation differently; or elected not to disclose detailed information about their systems.” /d. 7 See Letter from John D. Dingell, Chairman, House Subcomm. on Oversight and Investigations of the Comm. on Energy and Com- merce, to William Kenard, General Counsel, FCC (May 3, 1994), reprinted in J.A. 902-08. 8 See H.R. 4700, 103d Cong., 2d Sess. (1994). 25a. gressman Dingell’s suggestion by requiring Mtel to pay 90% of the lowest auction price of similar licenses. The results of an auction conducted shortly thereafter set this amount at $33.3 million.’ Recognizing that it had repeatedly promised Mtel a “free” license, and that it had on numerous occasions ex- pounded on the inequity of charging Mtel an auction- based license fee, the Commission was forced to explain its about-face. Not surprisingly, no good explanation was forthcoming. The best the Commission could offer was an obtuse discussion regarding its evolving understanding of the auction process accompanied by an unsupported suggestion that Mtel’s “free” license might possibly harm the auction market." The FCC summarized its changed position by declaring that “previously we overvalued .. . equities [favoring Mtel] and undervalued the countervail- ing competitive concerns.” *' At the end of the FCC's new “valuation,” Mtel was the party that ended up short, by over $33 million. Not only did the FCC fail to justify the inequitable action taken against Mtel, it also failed to locate a statu- tory basis for the fee Mtel was to pay. It is undisputed that the FCC has never before in its history imposed a licensing fee absent explicit authorization from Congress. It is also conceded that there is no such authorization in this case. Obviously, the FCC could not rely on Repre- sentative Dingell’s proposed but unenacted legislation as authority for its sudden decision to charge Mtel. In the ® The FCC’s licensing order required Mtel to pay 90% of the low- est winning bid for a narrowband personal communications service license, or $3,000,000 less than the lowest winning bid for such a license, whichever was less. See Nationwide Wireless Network Corp., 9 F.C.C.R. 3635, 3646 § 50(4) (1994) (memorandum opinion and order). As it turned out, the lesser of these options was for Mtel to pay 90% of the lowest auction bid, or $33.3 million. 10 See id. at 3640 {If 17-19. 11 Jd, at 3640 {[ 19. 26a absence of statutory authorization for the fee it sought to impose, the FCC concocted an argument to support its action by bridging together its general authority to admin- ister the Communications Act, found in 47 U.S.C. § 154(i) (“section 4(i)”), and the auction framework that Congress established in 1993 to govern non-pioneer’s preference licensees in 47 U.S.C. § 309(j) (“section 309(j)”). Charitably speaking, the argument is some- thing akin to the FCC saying that it “has the power to do whatever it pleases merely by virtue of its existence,” a suggestion that this court normally would view as “in- credible.” Railway Labor Executives’ Ass'n v. National Mediation Bd., 29 F.3d 655, 659 (D.C.Cir.1994) (en banc), cert. denied, U.S. ——, 115 S.Ct. 1392, 131 L.Ed.2d 243 (1995). Congress apparently did not share such an expansive view of the FCC’s authority under the existing law, be- cause, in late 1994, it decided to pass a statute specifically authorizing the FCC to collect fees from pioneer’s pref- erence license recipients.” Under any other circumstances, Mtel would likely have celebrated this legislation, because the effective date of the provision served to exclude Mtel’s pioneer’s preference license from the new fees.“ However, the FCC's decision to charge Mtel a fee a few months earlier, irrespective of whether Congress had authorized such a payment, deprived Mtel of the exemption Congress provided. 12 See 47 U.S.C.A. § 309(j) (18) (B) (Supp.1995). This provi- sion sets forth a very detailed formula by which the FCC is to compute the fee that pioneer’s preference license recipients are to pay. 18 As the FCC has acknowledged, the pioneer’s preference pay- ment statute does “‘not apply to applications that have been accepted for filing on or before September 1, 1994.’” Brief for Appellee at 18 (quoting 47 U.S.C. § 809(j) (18) (D) (iv)). Mtel’s license was issued in July 1994, subject to the disputed fee. 27a Counsel for the FCC conceded at oral argument that neither of the sections upon which the FCC relies permit it to charge Mtel a fee: section 4(i), which speaks in general terms, does not alone authorize the imposition of such a fee, and, it is clear that section 309(j) does not permit a fee in Mtel’s case. Thus, the FCC claims that, because it has general authority over the communica- tions industry and because it can assess fees to parties other than Mtel, it is therefore free to charge Mtel as well. As noted above, this kind of argument was rejected in Railway Labor Executives’ Association where the en banc court categorically dismissed the idea that an agency “possesses plenary authority to act within a given area simply because Congress has endowed it with some au- thority to act in that area.” 29 F.3d at 670. Under the FCC’s logic, as soon as Congress grants the agency per- mission to engage in certain conduct, such as charging market-value license fees, on an explicitly-defined basis, section 4(i) automatically confers the right to apply that power across the board. If this reading were correct, it would completely eviscerate the power of Congress to determine the scope of the statutes it passes. As this court has held, “it is beyond cavil that ‘an agency’s power is no greater than that delegated to it by Congress,’” /d. (quoting Lyng v. Payne, 476 U.S. 926, 937, 106 S.Ct. 2333, 2341, 90 L.Ed.2d 921 (1986)), and “[t}he duty to act under certain carefully defined circumstances does not subsume the discretion to act under other, wholly different, circumstances, unless the statute bears such a reading,” id. at 671. Even if I were to assume the fallacious premise that section 4(i) could bestow upon the FCC the authority to charge Mtel for its license, there is no indication that the charge is “necessary” to the FCC’s functions. The Commission’s justification for the charge is that granting Mtel a free license could harm the public interest by jeopardizing competition in the communications industry. 28a This justification is belied by the fact that the FCC is presently awarding licenses to competitors of Mtel with no such fee attached.”* Further, Mtel and other pioneer’s preference appli- cants made large investments in research and development of new products in reliance on the pioneer’s preference framework as it existed before the FCC’s auction au- thority. Mtel asserts that it continued to invest in improv- ing the capabilities of its system after the pioneer’s prefer- ence was granted.” Only an extraordinarily naive person could believe that the FCC’s repeated promises that Mtel would not be charged an auction-based license fee did not affect Mtel’s allocation of its resources to this endeavor. At oral argument, counsel for the FCC was disinclined to address the agency’s various guarantees that Mtel would not be charged an auction-based fee.” There was nothing of substance for him to offer by way of explanation, so counsel’s reluctance was savvy. Nonetheless, counsel’s inability to respond in no way obscures the obvious: in addition to being lawless, the FCC’s action in this case borders on outrageous. I dissent. 14 As the majority concedes, Mtel has submitted information in- dicating that the FCC has recently issued paging licenses without subjecting the recipients to auction-based fees. 15 See, e.g., Letter from R. Michael Senkowski & Eric W. DeSilva, counsel for Mtel to William Caton, Acting Secretary, FCC 3 (Apr. 26, 1994), reprinted in J.A. 879 (“Mtel has kept its commitments to the Commission by strengthening its financing and improving the service’s technological capabilities since the award was made.”) 16 Transcript of Oral Argument at 28. 29a APPENDIX B BEFORE THE FEDERAL COMMUNICATIONS COMMISSION WASHINGTON, D.C. 20554 File No. 22888-CD-P/L-94 In re Application of Nationwide Wireless Network Corp. For a Nationwide Authorization in the Narrowband Personal Communications Service MEMORANDUM OPINION AND ORDER Adopted: July 13, 1994; Released: July 13, 1994 By the Commission: Commissioncr Quello concurring and issuing a statement at a later date; Commissioner Ness issuing a statement; Commissioner Chong not participating. I. INTRODUCTION 1. On February 10, 1994, Nationwide Wireless Net- work Corp. (NWN Corp.)’ filed the above-captioned ap- 1NWN Corp. is a wholly-owned subsidiary of Mobile Tele- communication Technologies Corporation (Mtel). We note that petitioners express some confusion regarding applicant’s name. See BellSouth Companies Reply at n.41 and PageNet Reply at n.2. Mtel filed a minor amendment to the application stating that NWN Corporation had changed its name to Nationwide Wireless Network Corporation. See Letter from Jai P. Bhagat to James H. Bennett (March 25, 1994). Mtel later filed a minor amendment to its application stating that the Delaware corporation records state that the applicant’s name is Nationwide Wireless Network Corp. rather than Nationwide Wireless Network Corporation. Mtel 30a plication for a 50 kHz unpaired nationwide license in the narrowband Personal Communications Service (PCS). Two petitions to deny (Petitions) were filed, one by BellSouth Corporation, BellSouth Telecommunications, Inc., BellSouth Cellular Corporation, and Mobile Com- munications Corporation of America (the “BellSouth Companies”) and one by Paging Network, Inc. (Page- Net) (jointly “Petitioners”).? For the reasons set forth below, we deny the Petitions to the extent indicated here and grant NWN Corp.’s application subject to the con- ditions set forth here. 2. By this action, we award the first commercial license for Personal Communications Service. We expect this service to contribute to the development of the National Information Infrastructure by providing Americans with ubiquitous access to wireless data and voice services. We further expect the introduction of commercial narrowband PCS will result in the creation of new jobs, increase pro- ductivity, and provide the basis for more effective U.S. competition in the global telecommunications market.* asserts they have elected to notify the Commission of the use of the Corp. abbreviation in order to “ensure the complete accuracy of the Commission’s records.” See Letter from Jai P. Bhagat to James H. Bennett (April 26, 1994). We refer to Mtel and NWN Corp. interchangeability in this order. 2 PageMart, Inc. also filed a Petition to Deny that was subse- quently withdrawn. Withdrawal of Petition to Deny filed June 16, 1994 by PageMart, Inc. Mtel challenges the Petitioners’ legal standing under Section 309 of the Act to file petitions to deny given, among other things, the Petitioners “ineligibility to file competing applications and the different markets to be served by their proposed PCS offerings.” Opposition of Mobile Telecommunication Technologies Corporation and Nationwide Wireless Network Corporation (Mtel Opposition) at n.4. Mtel has not persuaded us that Petitioners do not have standing. 3 See Amendment of the Commission’s Rules to Establish New Narrowband Personal Communications Services, GEN Docket No. 90-314 and ET Docket No. 92-100, Memorandum Opinion and 3la ll. BACKGROUND 3. In July 1992, the Commission tentatively granted to Mtel a pioneer’s preference for having developed and demonstrated the feasibility of significant innovations that will permit the delivery of existing and new advanced paging and messaging service in a spectrum-efficient man- ner. In June 1993, the Commission granted a final pio- neer’s preference to Mtel and determined that it should receive a nationwide license for a 50 kHz unpaired block. The grant was affirmed on reconsideration with the im- position of a number of conditions.’ Specifically, the Com- mission directed the licensing bureau to condition any license granted to Mtel based on its pioneer’s preference upon Mtel’s agreement to build a system that substan- tially uses the design and technologies upon which that award is based;* and to hold the license for a minimum of three years or until the construction requirement appli- cable to the five-year build-out period has been satisfied, whichever occurs first.” Order, 9 FCC Red 1309, at para. 8 (1994) (“Narrowband Recon- sideration”), recon. pending. 4 Amendment of the Commission’s Rules to Establish New Per- sonal Communications Services, GEN Docket No. 90-314 and ET Docket No. 92-100, Notice of Proposed Rule Making and Tentative Decision, 7 FCC Red 5676, 5735-36 (1992). 5 Amendment of the Commission’s Rules to Establish New Nar- rowband Personal Communications Services, GEN Docket No. 90- 814 and ET Docket No. 92-100, First Report and Order, 8 FCC Red 7162, 7172-75 (1993) (“Narrowband Order”) ; recon. granted in part, Narrowband Reconsideration, 9 FCC Red at 1315-17 (1994) ; further recon. pending; appeal pending sub nom. BellSouth Corp. v. FCC, No. 98-1518 (D.C. Cir. filed Aug. 20, 1993). 6 This condition applies only for the nationwide channel for which the preference has been granted and only until Mtel has satisfied the initial five-year build-out requirement in the rules. Narrowband Reconsideration, 9 FCC Red at 1316, para. 47. 7 Id. at para. 48. 32a 4. The Commission also directed the Common Carrier Bureau (Bureau) to issue a Public Notice inviting Mtel to submit an application.* In addition, the Commission directed the Bureau to consider conditioning any license granted to Mtel as a result of its pioneer’s preference on Mtel’s agreement to a stricter build-out requirement than the requirement generally applicable in the ten-year build- out period for licenses in the narrowband PCS service.’ In February 1994, the Bureau issued the Public Notice and, as directed by the Commission, stated that it would consider the possibility of imposing a stricter build-out requirement on Mtel, such as requiring the construction of base stations that serve 90 percent of the United States population within 10 years after the grant of the license.” On February 10, 1994, Mtel submitted its appli- cation, which was placed on Public Notice on February 25, 1994." The two petitions to Deny were filed on March 28, 1994. Mtel’s Opposition was filed on April 7, 1994, and replies to its Opposition were filed on April 19, 1994,” 8 Id., 9 FCC Red at 1316 n.26. * Td. 10 Commission Invites Filing of Narrowband Personal Communi- cations Service Pioneer’s Preference Application, Public Notice, No. 41645 (released Feb. 3, 1994) (“February 3 Public Notice’). 11 Common Carrier Public Mobile Services Information, Public Notice, No. 41908 (released February 25, 1994). File No. 22888- CD-P/L-94 was assigned to the application. A subsequent Public Notice was issued reminding interested parties that the Commission will consider the imposition of stricter build-out requirements on Mtel than applicable to other narrowband PCS licensees and invit- ing interested parties to address this issue in petitions to deny. Common Carrier Public Mobile Service Information Supplemental Notice Inviting Comments, Public Notice, No. 42032 (released Mar. 7, 1994). 12J.n addition to the amendment to its application noted above, supra note 1, on April 26, 1994, Mtel also filed a letter in response to a claim made by the BellSouth Companies in their Reply regard- 33a Ill. DISCUSSION A. Petitions to Deny, Opposition, and Replies 5. Petitioners advance a number of arguments to sup- port their contention that we should not grant Mtel’s application.” Petitioners argue that we should deny the application because Mtel does not intend to offer service using the specific technology for which it was awarded a pioneer’s preference. Petitioners request that we investi- gate Microsoft Corporation’s investment in Mtel * to de- ing the applicant’s identity, existence, and corporate status. Mtel contends that we should accept its letter response because the BellSouth Companies improperly raised this claim for the first time in their Reply to Mtel’s Opposition. Letter from R. Michael Senkowski to William Caton, Acting Secretary (April 26, 1994) (“Mtel Response”). To the extent the Mtel Response addresses the issue raised for the first time in BellSouth Reply, we will accept the Mtel Response for filing in order to assure that we have a complete record in this proceeding. The BellSouth Companies filed a Reply to the Mtel Response on May 6, 1994 (“Reply to Response”). We accept BellSouth’s Reply to Response for filing. 18 The arguments made by the Petitioners are, for the most part, identical in their essentials. To the extent that individual Petition- ers make unique or separate arguments, we address them accord- ingly. 14 BellSouth Companies Petition at 6-16 and Reply at 4-11; PageNet Petition at 2-6 and Reply at 2-6. 1% On March 23, 1994 Mtel entered into agreements contemplating investments in NWN Corp. by Microsoft, William Gates, Pau) Allen, Integral Capital Partners (Integral), and Kleiner Perkins. Caufield & Byers (KPCB). Concurrent with the consummation of the trans- actions, NWN Corp.’s Board of Directors would be expanded to six members with Mtel having the right to appoint four directors and Microsoft and KPCB each having the right to appoint one director. Mtel would designate the officers of NWN Corp. The appointment of the President, Chief Operating Officer, and Chief Financial Officer of NWN Corp. would require the approval of either the Director appointed by KPCB or the Director appointed by Micro- soft, which could not unreasonably be withheld. The proposed agreement provides for certain minority shareholder protections 34a termine whether a de jure or de facto transfer of control of NWN Corp. to Microsoft would take place if these transactions are consummated.” In addition, the BellSouth Companies and PageNet contend that the application can- not be granted because application requirements, filing rules, and procedures for narrowband PCS have not been adopted by the Commission and, because such require- ments, rules, and licen [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386002_1516%3A1. Public record. Not legal advice.