Pacific National Cellular v. United States

41 Fed. Cl. 20, 1998 U.S. Claims LEXIS 90, 1998 WL 214259
CourtUnited States Court of Federal Claims
DecidedApril 28, 1998
DocketNo. 95-305C
StatusPublished
Cited by9 cases

This text of 41 Fed. Cl. 20 (Pacific National Cellular v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pacific National Cellular v. United States, 41 Fed. Cl. 20, 1998 U.S. Claims LEXIS 90, 1998 WL 214259 (uscfc 1998).

Opinion

OPINION

HORN, Judge.

The above-captioned case comes before the court on the defendant’s motion to dismiss pursuant to Rule 12(b)(1) and Rule 12(b)(4) of the Rules of the United States Court of Federal Claims (RCFC), and on cross-motions for summary judgment by the parties pursuant to RCFC 56. The plaintiff, Pacific National Cellular (Pacific) filed a complaint against the United States which seeks relief in the amount of $221,384.60, consisting of commitment fees, legal fees and settlement costs, plus economic loss of business for a four-year period on both claims. Plaintiff claims that the defendant violated the Paperwork Reduction Act by imposing penalties which are prohibited by that Act. 44 U.S.C. § 3507(a), (f), 44 U.S.C. § 3512 (1994). Plaintiff contends that the FCC imposed a penalty on the plaintiff when it improperly dismissed Pacific’s application and caused Pacific to incur additional fees and the loss of business during the delay in the grant of the application. Plaintiff further requests relief from the defendant for an alleged violation of the Takings Clause of the Fifth Amendment to the United States Constitution.1 Plaintiff alleges that the Federal Communications Commission (FCC) denied all economically viable use of Pacific’s private contracts, specifically, firm financial commitment letters with lenders that were viable from the date of the plaintiffs lottery selection, on May 26, 1989, until the date of the grant of a nonwireline, cellular license for the Illinois 9 Rural Service Area on May 27, 1993.2 As a result, plaintiff alleges the defendant took plaintiffs property without just compensation in violation of the Takings Clause of the Fifth Amendment to the United States Constitution.

FACTS

During the 1980’s, the FCC utilized a lottery system to issue construction permits for cellular radio telephone systems. As part of its plan to grant such permits, the FCC divided the country into service areas, some of which were designated as Rural Service Areas. In the process of creating rules for the filing of applications for construction permits, the FCC undertook administrative rule-making procedures.

On February 19, 1988, the FCC released a Third Notice of Proposed Rulemaking (Third Notice) regarding rules for filing applications for construction permits. The Third Notice proposed a regulation, published as amended at 47 C.F.R. § 22.917(c) (1988), which required applicants to submit a “firm financial commitment” letter from lenders that guaranteed the funding necessary to build a cellular system.

The Paperwork Reduction Act of 1980, Pub.L. No. 96-511, 94 Stat. 2812 (codified as amended at 20 U.S.C. §§ 1221-23; 44 U.S.C. §§ 2904, 2905, 3501-3520 (1994)), requires federal agencies to obtain approval and a control number from the Office of Management and Budget (OMB) for any new or [23]*23modified collection of information requirements, and requires the agency to display the control number on any published information request. 44 U.S.C. § 3507(a), (f). Section 3512 of the Paperwork Reduction Act, however, prohibits an agency from imposing “any penalty” on a person who fails to comply with an information requirement which did not receive OMB approval or, in the words of the statute, “does not display a current control number assigned by the Director, or fails to state that such request is not subject to this chapter.” 44 U.S.C. § 3512.

On February 18, 1988, the FCC requested that OMB approve the collection of information requirement contained in the proposed regulation, 47 C.F.R. § 22.917(c), as required by the Paperwork Reduction Act. On March 16, 1988, the FCC received OMB approval for proposed section 22.917(c). On May 18, 1988, the FCC released its Fourth Report and Order (Fourth Report), 4 F.C.C. Red 2542 (1988), which adopted a revised section 22.917(c). In the Fourth Report, the FCC stated, “[t]he Office of Management and Budget has approved the collection [sic] of information requirement contained in this rule. The OMB control number for is [sic] collection of information requirement is 3060-0046.” 4 F.C.C. Red at 2548.

However, as stipulated by the parties in the above-captioned case, the FCC had not sought OMB approval for the collection of information request as it appeared in the revised section 22.917(c) of the Fourth Report. The rule adopted by the Fourth Report was not the same rule proposed in the Third Notice. The FCC had changed the definition of acceptable funding sources and had added new subsections that established requirements for different types of contracts for financial commitments. It is these provisions that were found by the FCC to have been “so substantively and materially modified as to render the rule, as a whole, unenforceable under the PRA [Paperwork Reduction Act] because of our failure to comply with PRA requirements in adopting the rule.” In re Kent S. Foster, F.C.C. 92-531 at 2 (1992) (footnote omitted).

Pacific is a California general partnership. On September 23, 1988, Pacific filed a number of Rural Service Area applications, including an application with the FCC for a non-wireline cellular license in the Illinois 9 Rural Service Area. The FCC conducted a lottery for the award of the non-wireline cellular license for the Illinois 9 Rural Service Area. On May 26, 1989, the FCC announced that Pacific’s application was selected for award, provided Pacific could meet the license requirements.

On July 6, 1988, prior to the selection of Pacific’s application, Pacific entered into a contract with Brad Peery, Inc. (Peery) for the funding commitment required by section 22.917(c). In addition to the application filed for the Illinois 9 Rural Service Area, Pacific also filed a number of other service area applications that contained a copy of the same Peery firm financial commitment letter as support for the funding commitment on those contracts. On March 15, 1990, Pacific obtained a firm financial commitment letter from Provident National Bank (Provident) for the purpose of obtaining cellular financing. Pacific submitted the Provident letter to the FCC on March 19, 1990 in an amendment to its Illinois 9 Rural Service Area application.

On June 28, 1990, the FCC notified Pacific by letter that the FCC was dismissing Pacific’s application, which included the Peery commitment letter, for failure to comply with section 22.917(c) of the FCC rules. The notification indicated that the Peery letter was “not a firm financial commitment” and that the Provident letter would not be accepted as a substitute because “[t]he referenced application cannot be amended to include the new source of funding....”

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Bluebook (online)
41 Fed. Cl. 20, 1998 U.S. Claims LEXIS 90, 1998 WL 214259, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pacific-national-cellular-v-united-states-uscfc-1998.