Delta Radio, Inc. v. Federal Communications Commission

Notice: This opinion is subject to formal revision before publication in the
Federal Reporter or U.S.App.D.C. Reports. Users are requested to notify
the Clerk of any formal errors in order that corrections may be made
before the bound volumes go to press.
United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 13, 2004 Decided November 5, 2004
No. 03-1295
DELTA RADIO, INC.,
APPELLANT
v.
FEDERAL COMMUNICATIONS COMMISSION,
APPELLEE
MONDY–BURKE BROADCASTING NETWORK,
INTERVENOR
Appeal of an Order of the
Federal Communications Commission
Stuart W. Nolan, Jr. argued the cause for appellant. With
him on the briefs were Barry D. Wood and Ronald D.
Maines.
C. Grey Pash, Jr., Counsel, Federal Communications Com-
mission, argued the cause for appellee. On the brief were
Bills of costs must be filed within 14 days after entry of judgment.
The court looks with disfavor upon motions to file bills of costs out
of time.

-- 1 of 10 --

2
John A. Rogovin, General Counsel, Daniel M. Armstrong,
Associate General Counsel, and Louis E. Peraertz, Special
Counsel.
Lauren A. Colby was on the brief for intervenor.
Before: S ENTELLE , TATEL and ROBERTS , Circuit Judges.
Opinion for the Court filed by Circuit Judge SENTELLE.
SENTELLE, Circuit Judge: Delta Radio, Inc. (‘‘Delta’’) ap-
peals from a Federal Communications Commission’s (‘‘FCC’’
or ‘‘Commission’’) order denying its request for a waiver of
the payment deadline of its winning auction bid. See Memo-
randum Opinion and Order, In re Application of Delta Radio,
Inc., 18 FCC Rcd 16,889 (2003) (‘‘Order’’). In the Order, the
FCC held that lack of finality and ‘‘other intervening events’’
did not excuse late payment, either singly or in combination.
Delta Radio contends that the FCC abused its discretion by
failing to give Delta’s waiver application a ‘‘hard look,’’ incon-
sistently applying a strict waiver policy, and denying the
waiver when there was still an outstanding application for
review and the attacks of September 11, 2001 had affected the
economy. Because the FCC adequately considered Delta’s
arguments and applied its waiver policy consistently, we
affirm the order of the Commission.
I. Background
Delta’s appeal arises from its winning bid for an FM
broadcast construction permit in an FCC auction. In 1998,
the Commission adopted rules governing the post-auction
processing of broadcast applications. See Implementation of
Section 309(j) of the Communications Act — Competitive
Bidding for Commercial Broadcast and Instructional Fixed
Services, 13 FCC Rcd 15,920 (1998) (‘‘Implementation’’).
These rules are designed to ‘‘ensure that only serious, finan-
cially qualified applicants receive licenses and construction
permits, and to expedite provision of service to the public.’’
In re Application of Abundant Life, 17 FCC Rcd 4006, 4008
(2002).

-- 2 of 10 --

3
At several stages in the auction process participants are
required to make payments to ensure their continued finan-
cial capability and sincerity. Before bidders may participate,
they must submit an upfront payment to be held on deposit
with the FCC until the end of the auction. 47 C.F.R.
§ 1.2106; 47 U.S.C. § 309(j)(8)(C); Implementation at 15,-
951. Within ten days of being notified that it is the high
bidder, the auction winner must deposit a 20% down payment
to prove that it is still financially capable of building a station.
47 C.F.R. at § 1.2107(b); Implementation at 15,983. The
final payment deadline is set by Public Notice once the FCC
has dismissed all petitions to deny the high bidder’s applica-
tion. 47 C.F.R. at §§ 1.2109(a), 73.5006(d). If the auction
winner is late but makes its final payment within a ten-day
grace period, it will be charged an additional 5% late fee. Id.
at § 1.2109(a). After ten days, the high bidder is considered
in default, subject to an additional penalty charge, and the
FCC may offer the permit to the next highest bidder or hold
a new auction. Id. at § 1.2109(b).
The FCC considers timely payment important for several
reasons: it contributes to the overall integrity of the auction
process, Abundant Life, 17 FCC Rcd at 4012; serves as an
‘‘objective indicator’’ of a winning bidder’s financial qualifica-
tions, id.; and evidences the sincerity and financial capability
of the winning bidder to actually ‘‘build out’’ its system to
ensure prompt service reaches the public. See In re Moun-
tain Solutions, Ltd., 133 FCC Rcd 21,983, 21,993 (1998).
In April 1995, Delta and Mondy–Burke Broadcasting Net-
work (‘‘MBN’’) filed mutually exclusive applications for an
FM broadcast construction permit in Greensville, Missouri.
This permit was to be awarded by an auction ending October
8, 1999. Public Notice, ‘‘Closed Broadcast Auction No. 25
Closes,’’ 14 FCC Rcd 17,186 (1999). Delta placed the winning
bid of $397,000 and made its post-auction down payment of
$79,400. See Letter to Mr. Larry G. Fuss and Mr. Barry D.
Wood, Esq. from Peter H. Doyle, Chief, Audio Division,
Office of Broadcast License Policy, Media Bureau, 17 FCC
Rcd 19,029, 19,032 (2002). On December 10, 1999, MBN filed
a petition to deny Delta’s application, arguing that Delta had

-- 3 of 10 --

4
violated FCC ownership rules, was not financially qualified,
and did not intend to build the Greenville Station but only to
block competitors from doing so. The FCC denied the
petition on May 17, 2000. MBN filed an application for
review of that denial on June 15, 2000. While this application
was still pending and the permit had not yet been granted,
the September 11 terrorist attacks on the United States
occurred, triggering a sudden downturn in the national econo-
my.
On March 7, 2002, the Media Bureau (‘‘Bureau’’) released a
Public Notice stating that Delta’s final payment, as well as
those of two other winning bidders, would be due on March
21, 2002. Public Notice, ‘‘FCC Announces it is Prepared to
Grant Broadcast Construction Permits After Final Payment
is Made,’’ 17 FCC Rcd 4278 (2002). The other two winning
bidders timely paid the balance of their bids. On April 4, at
the end of the ten-day grace period, Delta submitted to the
Bureau a petition for reconsideration and waiver requesting
either rescission of the Public Notice triggering the deadline,
or a temporary waiver of the payment deadline. It argued
that several factors contributed to its inability to pay, includ-
ing some created or exacerbated by the FCC itself. First,
Delta claimed that it was unable to secure financing due to
the uncertainty of its claim on the permit because MBN’s
application for review was still pending before the Commis-
sion. It also alleged that the FCC’s delayed action on this
application for review exacerbated the uncertainty surround-
ing the permit. Delta pointed next to the economic downturn
following the attacks of September 11 as the reason its
financing had fallen through and argued that this was so
unique as to warrant a waiver. In the alternative Delta
claimed the uniqueness of all these factors occurring simulta-
neously should be enough to support a waiver, even if the
individual factors were not. Finally, it argued that the FCC
had previously granted a ‘‘de facto’’ waiver to another Auction
25 participant by not setting the payment date until after the
award became final, and thus it would not be fair to deny a
waiver to Delta. The Bureau rejected Delta’s petition on
August 27, 2002 and offered the permit to MBN as the

-- 4 of 10 --

5
second-highest bidder, assessing a default penalty against
Delta. Letter to Mr. Larry G. Fuss, et al., from Peter H.
Doyle, Chief, Audio Division, Office of Broadcast License
Policy, Media Bureau, 17 FCC Rcd 16,324 (2002).
On September 26, 2002, Delta applied for review of the
Bureau’s decision on the grounds that it used an improper
standard of review and was again denied on October 2.
Letter to Mr. Larry G. Fuss, et al., 17 FCC Rcd 19,029
(2002). Delta filed a petition for reconsideration with the
FCC on November 1, 2002 that was denied August 20, 2003.
Order, 18 FCC Rcd 16,889. The Commission held that the
proper standard of review had been used. It further ad-
dressed Delta’s concerns about lack of finality because of
delay in responding to the application for review, the econom-
ic effects of September 11, and the presence of multiple
factors at once arguably mitigating Delta’s default. It also
distinguished the cases Delta claimed were similar in which
waivers had been granted and pointed to other similar bid-
ders whose payment deadlines had not been waived. Delta
sought timely appeal.
II. Analysis
We review the FCC’s denial of a waiver in an ‘‘extremely
limited’’ fashion, and will ‘‘vacate such denials only when the
agency’s reasons are so insubstantial as to render that denial
an abuse of discretion.’’ BDPCS, Inc. v. FCC, 351 F.3d 1177,
1181–82 (D.C. Cir. 2003) (internal quotation marks omitted).
The FCC may grant a waiver when ‘‘special circumstances’’
warrant it and the waiver will ‘‘serve the public interest.’’
Northeast Cellular Telephone Co., L.P. v. FCC, 897 F.2d
1164, 1166 (D.C. Cir. 1990). We will not compel the Commis-
sion to grant a waiver, however, as long as the request was
given at least a ‘‘hard look’’ to ensure that the agency is not
rigidly applying a rule where it is not in the public interest.
See BDPCS, 351 F.3d at 1182; BellSouth Corp. v. FCC, 162
F.3d 1215, 1224 (D.C. Cir. 1999). This does not require that
the agency ‘‘author an essay’’ in response to every allegation;

-- 5 of 10 --

6
rather, it must explain itself in enough detail so that a court
can determine ‘‘the why and wherefore’’ of the denial —
explaining, for example, why strict rule application serves the
public interest. BellSouth, 162 F.3d at 1224–25. Given this
limited review, we hold that the FCC did not abuse its
discretion in failing to grant Delta a waiver of its payment
obligations or in assessing the statutory default penalty when
Delta failed to meet payment deadlines.
Delta first argues that the FCC was in error because it
failed to grant the requested waiver of the payment deadline
and default payment when Delta presented numerous reasons
for such a waiver to be granted, including allegations that the
Commission’s own delay in action in the case made timely
payment impossible. It insists that the FCC’s policy goal of
ensuring sincere and adequately financed bidders would be
better served by a rule judging financial fitness based on a
company’s track record than by the current rule that empha-
sizes timely payment of auction obligations. This argument,
however, misunderstands the nature of our review. We sit
not to judge the wisdom of the FCC’s payment rules but to
determine whether this decision was an abuse of discretion.
Thus we will only examine the record to determine whether
the Commission has given support for its decision, not to
second-guess its conclusions.
More to the point, Delta argues that the FCC’s decision is
an abuse of discretion because it failed to give Delta’s argu-
ments a ‘‘hard look’’ and did not follow its own precedent.
Delta contends that the Commission did not adequately con-
sider the waiver request, but simply reasserted its desire to
strictly apply its payment rules, ‘‘trumping’’ the possibility of
granting waivers altogether. This misrepresents the Com-
mission’s actual order which adequately considered all of
Delta’s arguments in turn and explained its reasoning. We
cannot conclude that the FCC did not adequately consider
Delta’s arguments simply because it did not agree with them.
Nor do we find that the Commission has been inconsistent in
its application of the rules.

-- 6 of 10 --

7
The FCC’s policy is to grant waivers only for cases in
which administrative error caused the due date to be missed.
In re Application of Winstar, 17 FCC Rcd 6126, 6128–29
(2002). It has determined that a policy of strict adherence to
payment deadlines is necessary to serve the public interests
of ‘‘integrity, fairness, and efficiency of the auction process.’’
Id. at 6130. While Delta insists that this interpretation
unjustly eliminates the possibility of waiver altogether, the
strict application of a rule is not per se an abuse of discretion
but ‘‘may be justified by the gain in certainty and administra-
tive ease, even if it appears to result in some hardship in
individual cases.’’ BellSouth, 162 F.3d at 1225 (quoting Turro
v. FCC, 859 F.2d 1498, 1500 (D.C. Cir. 1988)). As long as the
agency has articulated a not ‘‘insubstantial’’ reason for its
strict application of a rule and applies the rule consistently,
we will not overturn it. Mountain Solutions, 197 F.3d at 517.
The FCC’s policy is clearly articulated in this case. True,
the Commission does not elaborate on the reasoning behind
its waiver policy in the Order. But it refers Delta to its
holdings in previous decisions, quoting the text that explains
its limitations on waivers. Order, 18 FCC Rcd at 16,892 n.23.
The decisions it cites give further support for the FCC’s
policy. The Order separately analyzes each factor cited by
Delta to support a waiver, and shows why it did not find them
persuasive singly or in combination to create an exception to
the normal payment rules. Id. at 16,892–94. There can be
no doubt that the Commission gave all Delta’s arguments
sufficient consideration in its Order.
Delta further asserts that the FCC’s policies were not
consistently applied. Yet, as the FCC points out, there is
ample precedent involving other Auction 25 bidders who were
refused waivers while their permits, like Delta’s, were still
subject to administrative challenge. See In re Abundant
Life, 17 FCC Rcd at 4012; Winstar, 17 FCC Rcd at 6128–29.
The winning bidder in Abundant Life faced nearly identical
circumstances to Delta’s, including an almost year-and-a-half
delay between auction and notice of time for final payment.
Abundant Life, 17 FCC Rcd at 4006–07. Similarly, another
bidder had challenged Abundant Life’s bid, was rejected, and

-- 7 of 10 --

8
submitted an application for review. Id. During the pen-
dency of judicial review of the Commission’s determination,
Abundant Life was required to make its final payment. Id.
at 4007. The FCC explained that to delay issuing permits
until all possible administrative and judicial review was com-
plete would be a blow to the Commission’s stated goals of
efficiency and quick delivery of service to the public. Id. at
4008–09. Furthermore, although Abundant Life could lose its
permit in the judicial proceedings, prior payments would then
be refunded eliminating the risk of forfeiture. Id. at 4012.
The facts in Winstar are similar, and the FCC’s ruling was
the same: a lack of finality is not proper grounds to warrant
a waiver of payment requirements. Winstar, 17 FCC Rcd at
6127–29.
The same answer holds true in the instant case. When
payment was due, MBN’s petition to deny Delta’s application
had been rejected and its application to review was pending.
When the Public Notice was given, almost two-and-a-half
years after the auction, Delta realized it would not be able to
pay on time and requested a waiver. The FCC had already
applied its strict payment rules to other participants in the
same auction and simply followed its own precedent with
Delta’s request. It would have been arbitrary and inequita-
ble to do otherwise.
Delta argues that the FCC has granted waivers under
similar circumstances in previous decisions. The cases cited
by Delta, however, are distinguishable. In one, high bidders
who had made substantial down payments on their licenses
were prepared to pay, but their licenses could not be issued
because of a Supreme Court challenge by a former licensee.
In re Disposition of Down Payment and Pending Applica-
tions By Certain Winning Bidders in Auction No. 35, 17
FCC Rcd 23,354, 23,355–59 (2002). The FCC offered to
refund deposits and down payments of those bidders who
wanted to relinquish their rights to the auctioned licenses to
obtain closure in the matter. Id. at 23,359–62. That case
represents a unique circumstance in which the FCC offered
relief to a group of affected bidders by dismissing their
applications, not delaying payment. Delta, in contrast, faced

-- 8 of 10 --

9
no such challenge and was simply unprepared to make its
final payment when it came due.
Delta also inappropriately analogizes its case to In re
Application of Anchor Broadcasting, 16 FCC Rcd 8167
(2001). In that case, before the Public Notice was issued
Anchor Broadcasting sought a declaration that payment
would not be due until all appeals were final. Id. The FCC
did not grant the waiver, but later dismissed the case as moot
because by the time of the Public Notice’s issuance, Anchor
Broadcasting was able to pay. Id. at 8168. While Delta
argues that this constituted a ‘‘de facto’’ waiver, in reality it
simply represents another example of a bidder who was not
given a waiver despite outstanding appeals. Delta fits
squarely into the FCC’s precedent for circumstances that do
not warrant a waiver of payment.
The FCC rightly refuses to grant waivers when a winning
bidder’s action is ‘‘the sort [its] rules are intended to deter.’’
BDPCS, 351 F.3d at 1182. Thus waivers are not granted
‘‘where it appeared that the party requesting waiver did not
have funds on hand on the date of the payment deadline.’’
Abundant Life, 17 FCC Rcd at 4011. Delta complains that
the FCC’s strict deadlines would require a high bidder to
‘‘horde (sic) an amount of cash equal to its bid in a fire-proof
vault’’ until payment became due, but in fact it requires no
more than any contract. When a company agrees to make a
payment in the future, it is assuming the risk that the
economy will change. It is free to safeguard its payment any
way it likes, by locking it in a vault, putting it in a bank
account, or trusting it to the stock market, but if the money is
not available when payment becomes due there are conse-
quences. The uncertain date of payment does not change
this business reality; it is simply one more factor Delta
should have taken into consideration when making its auction
bid. Neither is the unpredictable nature of the September 11
attacks an excuse: Delta does not claim that it had secured
financing and then lost it as a direct result of the attacks, but
blames the general market downturn for its inability to pay.
All bidders must take market volatility into account; Delta
apparently failed to do so. Entering the auction unprepared

-- 9 of 10 --

10
to pay on schedule is precisely the kind of conduct the FCC
rules are designed to deter.
III. Conclusion
For the reasons expressed above, we affirm the order of
the Commission.

-- 10 of 10 --