Opinion
CIVIL ACTION NO: 00-3405 SECTION: "D" (4).
January 18, 2001.
Before the court are the following motions:
(1) "Motion for Preliminary Injunction" filed by Plaintiff, PetroCom License Corporation (PetroCom); and
(2) "Rule 12(b)(1) Motion to Dismiss" filed by the Federal Communications Commission (FCC).
The motions were set for hearing on Wednesday, January 10, 2001, on which date the court heard oral argument from counsel. Having considered the memoranda and argument of counsel and having reviewed the applicable law, the court now rules.
I. Background
PetroCom is a full-service telecommunications and network solutions company serving the business community, with primary emphasis in the energy industry. On January 23, 1997, the FCC granted PetroCom's predecessor, Gulf Coast MDS Service Company, developmental authorizations to research and test the technical feasibility and commercial viability of a wireless local loop (WLL) system in the Gulf of Mexico. The original authorizations were for a period of one year, and were ultimately extended by the FCC through May 1, 1999.
The developmental authorizations permit the use of facilities utilizing frequency assignments normally allocated to the Multipoint Distribution Service (MDS) and the Instructional Television Fixed Service, (ITES). PetroCom employed the authorizations to provide communications services to offshore oil platforms in the Gulf of Mexico.
On February 25, 1999, three of PetroCom's competitors challenged PetroCom's ability to continue to hold its developmental authorizations. In the meantime, PetroCom submitted a request to further extend the term of its developmental licenses.
On May 15, 2000, the FCC's Mass. Media Bureau (Bureau) ordered PetroCom to cease operations in a two-stage process: (1) by August 15, 2000 for 22 sites; and (2) by November 15, 2000 for 3 cites. On June 14, 2000, PetroCom filed requests for Special Temporary Authority and Interim Operating Authority so that PetroCom could maintain its WLL services in the Gulf of Mexico. On August 15, 2000, the Bureau denied these requests.
On August 23, 2000, PetroCom requested the FCC to review both the Bureau's May 15, 2000 Order and August 15, 2000 Order. These requests remain pending before the FCC. However, without a final order from the FCC, PetroCom cannot seek review of any FCC action in the United States Court of Appeals for the District of Columbia, which has jurisdiction over certain appeals from "decisions and orders" of the FCC. 47 U.S.C. § 402(b).
PetroCom then filed a Writ of Mandamus with the United States Court of Appeals for the District of Columbia asking the court to order the FCC to take action on PetroCom's review applications and a motion to stay the effect of the Bureau's May 15, 2000 and August 15, 2000 Orders until the FCC issues a final order. On November 14, 2000, the Court of Appeals for the D.C. Circuit denied PetroCom's Writ and motion to stay, stating that:
[PetroCom] has not established unreasonable delay warranting the issuance of a writ of mandamus. . . . Moreover, to the extent that the motion for stay is not mooted by the denial of the petition for writ of mandamus, the motion itself is a request for mandamus relief to which [PetroCom] has not established a clear and indisputable right. . . .Nor has [PetroCom] established the irreparable harm required for such relief. . . .
(See November 14, 2000 Order of the United States Court of Appeals for the D.C. Circuit, attached as FCC's Attachment D).
On November 15, 2000, PetroCom filed its "Complaint for Declaratory and Injunctive Relief" with this court. In its Motion for Preliminary Injunction now before the court, PetroCom does not challenge any action (final or otherwise) by the FCC, but rather seeks an order "to enjoin the FCC from unlawfully penalizing [PetroCom] for providing communication services pursuant to [the Administrative Procedure Act, 5 U.S.C. § 558 (c)], or otherwise enforcing, in any regulatory or judicial proceeding, its position that section 558(c) is inapplicable to [PetroCom's developmental license]." (PetroCom's Memo. in Support of Motion for Preliminary Injunction, p. 16).
When PetroCom petitioned the Court of Appeals for the D.C. Circuit for a Writ of Mandamus, PetroCom raised a § 558(c) argument. But that Court had jurisdiction to rule on the § 558(c) claim only if that court found that PetroCom was entitled to mandamus relief, which the court did not find. Further, PetroCom's right to the protection afforded by § 558(c) did not arise until November 15, 2000 (the date when PetroCom had to cease all operations), and the Court of Appeals for the D.C. Circuit denied mandamus relief on November 14, 2000.
At oral argument, the FCC took the position that PetroCom "slept on its rights" by not asking the FCC for a stay and § 558(c) relief when PetroCom asked the FCC for review of the Bureau's Orders of May 15 and August 15, 2000. The FCC argued that if PetroCom had done so, and the FCC had denied the stay and § 558(c) relief, then PetroCom's would have had a procedural vehicle to place its § 558(c) claim squarely before the Court of Appeals for the D.C. Circuit.
In essence, PetroCom contends that under Section 558(c), PetroCom is entitled to continue operating its WLL system pursuant to its developmental license until the FCC makes a final ruling on the renewal process. On the other hand, the FCC argues that this court does not have jurisdiction, and alternatively, PetroCom is not entitled to injunctive relief. As discussed below, the court finds that the FCC'S Motion to Dismiss should be denied, and PetroCom's Motion for Preliminary Injunction should be granted.
At oral argument, counsel for the FCC could not definitively say when the FCC would rule on the Bureau's May 15 and August 15 Orders, and reiterated the Court of Appeals for the D.C. Circuit's finding that thus far, the FCC had not unreasonably delayed its ruling. When the FCC rules, PetroCom's § 558(c) claim will be gone. If the FCC rules against PetroCom, then PetroCom can then appeal that ruling to the Court of Appeals for the District of Columbia.
II. Legal Analysis
A. Jurisdiction
At the outset, the court finds that it has jurisdiction under the Declaratory Judgment Act, 5 U.S.C. § 2201, to decide whether § 558(c) of the Administrative Procedure Act (APA) applies to PetroCom's developmental license. Further, under the APA, 5 U.S.C. § 703, this court has the power to entertain "actions for declaratory judgments or writs of prohibitory or mandatory injunction".
If the court would decline jurisdiction, PetroCom's § 558(c) claim would never be heard. Further, this court's ruling will have no effect on the D.C. Circuit's ultimate jurisdiction to review a final order issued by the FCC.
B. Injunctive Relief
In determining whether to grant injunctive relief, the court considers the following four factors:
(1) a substantial likelihood of success on the merits;
(2) a substantial threat that PetroCom will suffer irreparable harm if relief is not granted;
(3) that the threatened injury to PetroCom outweighs any harm injunctive relief might cause the FCC; and
(4) that injunctive relief will not disserve the public interest.
Ingebretsen v. Jackson Public School District, 88 F.3d 274, 278 (5th Cir. 1996). The court finds that PetroCom has met its burden on each of these factors, and thus is entitled to injunctive relief.
(1) Substantial likelihood of success
Section 558(c) of the Administrative Procedure Act provides in pertinent that:
When the licensee has made timely and sufficient application for a renewal or a new license in accordance with agency rules, a license with reference to an activity of a continuing nature does not expire until the application has been finally determined by the agency.5 U.S.C. § 558(c) (emphasis added).
The Supreme Court has clarified that this section of the APA "is a direction to the various agencies" and:
By its terms there must be a license outstanding; it must cover activities of a continuing nature; there must have been a timely and sufficient application to continue the existing operation; and the application for the new or extended license must not have been finally determined.
Pan-Atlantic Corp. v. Atlantic Coast Line, 353 U.S.436, 439, 77 S.Ct. 999, 1002 (1957). Each of these conditions is satisfied here:
The Pan-Atlantic case specifically dealt with "5 U.S.C. § 1008(b)" which is the predecessor to " 5 U.S.C. § 558(c)".
(1) PetroCom had a license outstanding at the time of the application for renewal (see May 15, 2000 Order);
(2) PetroCom had a license that permits activities of a continuing nature (i.e., providing wireless services to customers paying a fee);
(3) PetroCom timely sought FCC approval to continue those wireless services; and
(4) the matter has not been finally determined by the FCC because there has only been a Bureau-level decision at this time.
The FCC argues that § 558(c) does not apply to "developmental authorizations" and relies on Miami MDS Co. v. FCC, 14 F.3d 658 (D.C. Cir. 1994), which held that expired construction permits did not qualify as "license[s] with reference to an activity of a continuing nature", and thus § 558(c) did not apply. Id. at 659, quoting § 558(c). The D.C. Circuit quoted the following passage from Justice Burton's dissent in Pan-Atlantic:
The policy behind [§ 558(c)] is that of protecting those persons who already have regularly issued licenses from the serious hardships occasioned both to them and to the public by expiration of a license before the agency finds time to pass upon its renewal.
Although the permitees had secured various extensions in the past, a Bureau of the FCC ultimately denied further extensions for want of due diligence. Miami MDS Co., 14 F.3d at 659.
See also fn. 8, infra (discussing Fifth Circuit reference to same).
Pan-Atlantic, 14 F.3d at 659-60 (emphasis added by Miami MDS court). Then, the court reasoned:
Both § 558(c) itself and Justice Burton's reference to "regularly issued licenses" suggest an activity that is normally carried on indefinitely under licenses that as a regular matter are renewed or replaced with new licenses issued to the current holder. . . . Here, . . ., the construction permits involve a one-time activity that was expected to be finished by the licenses' expiration dates, at which time, said the permits, they were to be automatically forfeited.Id. at 660.
However, in Pan-Atlantic, the Supreme Court held that § 558(c) applied to extend the temporary authority of 180 days, which the Interstate Commerce Commission had granted Pan-Atlantic to operate as a common carrier by water between various ports of the United States. Pan-Atlantic, 353 U.S. at 438, 77 S.Ct at 1001-02.
Before the expiration of this 180-day period, the Commission had not concluded the proceedings on Pan-Atlantic's application for a permanent certificate of public convenience and necessity as a common carrier by water. Thus, prior to the expiration of the 180-day period and on application by Pan-Atlantic, the Commission authorized Pan-Atlantic to continue to perform the water carrier service authorized by the temporary service until further order of the Commission, but not beyond the time the application for a permanent certificate had been finally determined. Pan-Atlantic, 3535 U.S. at 437-37, 77 S.Ct. at 1001.
Moreover, the Miami MDS court also found that the subject permits to build a telecommunications facility were similar to a dredge-and-fill permit, which involved a "one-time activity" and would be "void on a specified date if the work was not completed by that date." 14 F.3d at 660. The court cited the Fifth Circuit case of Bankers Life Cas. Co. v. Callaway, 530 F.2d 625, 633-34 634 n. 13 (5th Cir. 1976), to distinguish other activities "such as radio broadcasting or shipping services" which are continuing in nature. 14 F.3d at 660.
In Bankers Life, the Fifth Circuit quoted Justice Friendly who in turn quoted the passage from Justice Burton's dissent in Pan-Atlantic (quoted herein at page 7), and then stated:
This reasoning suggests that the kind of case that the statute [§ 558(c)] was meant to cover was that in which time exigencies within the agency [as opposed to some substantive problem] prevent it from passing on a renewal application, where an activity of a continuing nature such as radio broadcasting or shipping services is involved.530 F.2d at 634.
It appears in this case that the FCC has not issued its final ruling because of time exigencies, and not because of some substantive problem with PetroCom's application for review of the Bureau's Orders or application for renewal that went before the Bureau.
Here, the activity authorized by PetroCom's developmental license — providing wireless telecommunications services to offshore customers — is more similar to the continuing nature of "radio broadcasting" than it is to the one-time activity of building a telecommunications facility as found in Miami MDS.
Thus, the court concludes that PetroCom is likely to succeed on the merits of its claim that § 558(c) applies to PetroCom's developmental license and authorizes PetroCom to re-start/continue operation pending a final order by the FCC.
(2) A substantial threat of irreparable injury
The official legislative history of the APA explains that:
These special [hold-over] provisions are necessary because of the severe consequences of the conferring of licensing authority upon administrative agencies. The burden is on private parties to apply for licenses or renewals. If agencies are dilatory in either kind of application, parties are subjected to irreparable injuries unless safeguards are provided. The purpose of [Section 558(c)] is to remove the threat of disastrous, arbitrary, and irremediable administrative action.
Administrative Procedure Act, Legislative History, S.Doc. No. 248, at 368 (1946) (emphasis added).
Thus, the court finds that Congress has established a presumption of irreparable harm in enacting Section 558(c). Further, without applying Section 558(c) to allow PetroCom to operate the WLL system pending the FCC ruling, PetroCom will be required to either continue to cease operations or face sanctions. As the Pan-Atlantic Court opined:
We see no reason why the provisions of [Section 558(c)] may not be invoked to protect a person from the damage he would suffer by being compelled to discontinue a business of a continuing nature, only to start it anew after the administrative hearing is concluded.353 U.S. at 439, 77 S.Ct. at 1002. Such reasoning is equally applicable here.
(3) The threatened injury to PetroCom outweighs any damage the injunction might cause to the FCC or other parties .
There has been an insufficient showing that the FCC or other parties will be harmed if PetroCom is permitted to maintain its operations pending a ruling by the FCC. The FCC now has the ball in its court — once the FCC makes a final ruling, PetroCom's protection under § 558(c) is gone. PetroCom's competitors, such as
Stratos Offshore Services Company, will still have an opportunity to be heard when the FCC decides the merits of PetroCom's Application for Review of the Bureau's Orders. Further, the court is unpersuaded that the continued operation of PetroCom's system will substantially harm competition, and there has been no showing made that other competitors cannot also apply for developmental licenses.
Stratos Offshore Services Company filed an amicus curiae brief in opposition to PetroCom's Motion for Preliminary Injunction.
(4) The injunction will not disserve the public interest .
To exclude PetroCom from the protections of Section 558(c) is contrary to the public interest underlying Section 558(c). At oral argument, the FCC argued that the FCC has had trouble with parties converting developmental licenses to commercial licenses. However, again, the FCC need only make a final ruling on the Bureau's May 15 and August 15 Orders, and the relief afforded PetroCom by § 558(c) will be gone.
III. Conclusion
For the reasons set forth above,
IT IS ORDERED that the "Rule 12(b)(1) Motion to Dismiss" filed by the Federal Communications Commission (FCC) be and is hereby DENIED; IT IS FURTHER ORDERED that the "Motion for Preliminary Injunction" filed by Plaintiff, PetroCom License Corporation (PetroCom) be and is hereby GRANTED; IT IS FURTHER ORDERED that the FCC be and is hereby ENJOINED from unlawfully penalizing PetroCom for providing communication services pursuant to § 558(c).
The court reiterates that if the FCC would just RULE on PetroCom's Applications to Review the Bureau's May 15, 2000 Order and August 15, 2000 Order (either for or against PetroCom), the relief granted herein would disappear.