McElroy Electronics Corp. v. Federal Communications Commission

990 F.2d 1351, 301 U.S. App. D.C. 81
CourtCourt of Appeals for the D.C. Circuit
DecidedApril 23, 1993
DocketNos. 91-1545, 91-1552 and 91-1606
StatusPublished
Cited by1 cases

This text of 990 F.2d 1351 (McElroy Electronics Corp. v. Federal Communications Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McElroy Electronics Corp. v. Federal Communications Commission, 990 F.2d 1351, 301 U.S. App. D.C. 81 (D.C. Cir. 1993).

Opinion

Opinion for the Court filed by Circuit Judge WALD.

WALD, Circuit Judge:

These consolidated cases involve what could be considered the “second wave” of cellular licenses in metropolitan areas. Over a decade ago, the Federal Communications Commission (“FCC” or “Commission”) launched its “initial” cellular licensing period, during which it granted licenses and permits primarily to companies committed to serving the larger part of a standard metropolitan statistical area (“MSA”), and permitted those companies to expand within their service areas, largely free from competition, for a period of five years. According to the Commission’s scheme, after this five-year expansion period, which ran from the grant of the first construction license in each MSA, competitors would be permitted to file applications to serve areas within the MSA that were not being served by the incumbent.

The petitioners in this action, McElroy Electronics Corporation (“McElroy”), JAJ Cellular (“JAJ”), Price Communications Cellular Inc. (“Price”), and Los Angeles SMSA Limited Partnership ("L.A. Partnership”), are companies that filed applications to serve unserved areas in targeted MSAs a little more than five years after the grant of the first construction license in that MSA. The Commission returned those applications as “premature.” While not disputing that the requisite five years had passed, the Commission found the applications untimely because it had neither given the notice of the date certain for filing in each MSA that it had announced that it would give, nor established procedures for accepting, processing and selecting the applications. At the heart of this dispute is whether a 1987 Commission order can reasonably be construed to give adequate notice that applications for unserved areas could not be filed after five years had lapsed but before the Commission had announced that it would receive applications. Because we conclude that even a careful reader of the order in question could not have been expected to understand that a further announcement by the Commission was a condition precedent to any applicant’s filing of an unserved area application, we remand with instructions to reinstate the applications of at least three of the petitioners nunc pro tunc. An agency cannot ignore its primary obligation to state its directives in plain and comprehensible English. When it does not live up to this obligation, we will not bind a party by what the agency intended, but failed to communicate. We do not reach petitioners’ other challenges, which are briefly described below.

I. Background

A. General Background

When the FCC started granting licenses for cellular communications, it undertook to do so in two (somewhat overlapping) steps. Its first priority was to receive and process applications for the initial licenses, primarily from firms wanting to serve all or a core part of an MSA. Each such applicant had to define as its service area [84]*84(or Cellular Geographic Service Area (“CGSA”)) a substantial part of that MSA.1 These first licensees were selected through a streamlined comparative “paper hearing” for the thirty largest MSAs, and by lottery for the rest. For the ninety largest MSAs, the Commission adopted special filing and cut-off procedures, including specified dates for filing, which were designed to reduce administrative burdens, permit orderly processing of applications, and discourage applicants from reading and copying competitors’ proposals. Cellular Reconsideration Order, 89 F.C.C.2d 58, ST-88 (1982).

The Commission’s second focus has been to accept and process applications for areas within an MSA that are not being served by the initial licensee; these applications have been termed “fill-in” applications, as they generally fill in around the initial CGSA, serving fringe areas or pockets.2 For the top 90 MSAs, the Commission received these “fill-in” applications on the due date for the initial MSA applications. Once the FCC expanded beyond these 90 MSAs, however, it postponed an opening date for the filing of such supplementary applications by nonincumbents. Amendment of the Commission’s Rules to Allow Random Selection or Lotteries, 98 F.C.C.2d 175, 205 (1984) (“Cellular Lottery Rulemaking”). In 1986, the Commission initiated a notice and comment rulemaking to determine when it should allow nonincumbents to compete with incumbents seeking to expand their CGSAs. Amendment of the Commission’s Rules for Rural Cellular Service (Further Notice of Proposed Rulemaking), 1 F.C.C.Rcd. 499 (1986). In 1987, it declared that the “fill-in period” during which existing licensees or permittees could expand service within their CGSAs or expand their CGSAs within their MSAs, without competing applications, would last five years. See Second Report and Order, 2 F.C.C.Rcd. 2306, 2309 (April 1987) (“Second Report and Order ”). The expansion period for each MSA was set at five years from the grant date of the first construction permit in that MSA. Id. This “fill-in” or “expansion” period for existing licensees was promoted by the FCC as the most efficient and expeditious means to get cellular service to the public and to permit the incumbents “to adjust their systems to meet unpredicted and unforeseen technical changes and market forces,” id. at 2308. This court upheld virtually all of this application scheme. Maxcell Telecom Plus, Inc. v. FCC, 815 F.2d 1551, 1560-61 (D.C.Cir.1987).

The order announcing this rule, the so-called Second Report and Order, is at the heart of this dispute, so it bears quoting at some length. First, it announced the modification of the Commission “fill-in” rule to state:

Notwithstanding any other provision of this rule section and rule provision of this Part, applications by other than licensees or permittees for a Metropolitan Statistical Area (MSA) to serve unserved [85]*85areas outside the presently authorized CGSA but within the MSA are prohibited from being filed and will not be considered as mutually exclusive with a licensee’s or permittee’s application filed under § 22.903(d) herein until five years from the date of the first construction permit granted in that MSA.

47 C.F.R. § 22.31(a)(l)(i) (1987). The text of the order further provided the following:

We are establishing a period of five years from the date the first construction permit is granted in each MSA for licensees/permittees to expand their CGSAs within the MSAs. A date certain filing date will thus be established for each MSA market.

Second Report and Order, 2 F.C.C.Rcd. at 2307.

We are providing that licensees/permit-tees will have five years from the date of the first construction permit granted in each of the 305 MSAs ... to file applications to modify or expand their CGSA within the MSA____ After five years from such a date, parties desiring to serve unserved areas beyond the CGSA but within the MSA may file fill-in applications for an MSA.

Id. at 2308 (emphasis added).

Based on our experience in processing initial cellular applications, and later, the fill-in applications, we are reserving our right to set future dates certain for the filing of fill-in applications in RSAs [Rural Service Areas].

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Bluebook (online)
990 F.2d 1351, 301 U.S. App. D.C. 81, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcelroy-electronics-corp-v-federal-communications-commission-cadc-1993.