Federal Communications Commission	DA 19-1002


Before the
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON, D.C. 20554


In the Matter of

Results Broadcasting Rhinelander, Inc.

Petition for Waiver of Final Payment Deadline
For Winning Bids in Auction 94
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MM-FM1061-C3
MM-FM969-A




ORDER

Adopted:  October 3, 2019	Released:  October 3, 2019

By the Chiefs, Auctions Division, Office of Economics and Analytics and Audio Division, Media Bureau:

I. INTRODUCTION
1. In this Order, the Auctions Division of the Office of Economics and Analytics, in coordination with the Audio Division of the Media Bureau, denies the request of Results Broadcasting Rhinelander, Inc. (Results) to waive the final payment deadline for two winning bids for construction permits in the Auction of FM Broadcast Construction Permits (Auction 94). Results Broadcasting Rhinelander, Inc., Petition for Waiver of Final Payment Deadline (July 24, 2013) (Waiver Request). 
  Results failed to make its required payments for the permits by the deadline established under sections 1.2109(a) and 73.5003 of the Commission’s rules, and now seeks a waiver of that deadline. 47 CFR §§ 1.2109(a), 73.5003.    
  We conclude that Results has not met the standard for granting a waiver because it has failed to demonstrate special circumstances that warrant deviation from the application of the final payment rule, and that such deviation would serve the public interest. See Northeast Cellular Tel. Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 1990) (Northeast Cellular).  Accord, e.g., NetworkIP, LLC, v. FCC, 548 F.3d 116, 127 (D.C. Cir. 2008) (NetworkIP).  See also 47 CFR § 1.925(a)(3)(i)-(ii).  
    
II. BACKGROUND
2. Auction 94 was an auction of certain construction permits in the FM broadcast service that concluded in 2013. See Auction of FM Broadcast Construction Permits Scheduled for March 26, 2013, Comment Sought on Competitive Bidding Procedures for Auction 94, Public Notice, 27 FCC Rcd 10830 (MB/WTB 2013). 
  Prior to the opening of the filing window for auction applications, Commission staff released a Public Notice announcing the procedures that would govern the conduct of Auction 94. See Auction of FM Broadcast Construction Permits Rescheduled for April 23, 2013; Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments, and Other Procedures for Auction 94, Public Notice, 27 FCC Rcd 14299 (MB/WTB 2012) (Auction 94 Procedures Public Notice).   
  The Auction 94 Procedures Public Notice described the requirements for participation in the auction and explained the post-auction procedures. Id.
  Among other things, that public notice explained that, following the close of bidding, the Commission would issue a public notice declaring the auction closed, identifying the winning bidders, and setting out the specific deadlines for submitting down payments and final payments as well as the deadline for filing a long-form. Id., 27 FCC Rcd at 14340, paras. 166-8; see also 47 CFR §§ 1.2107(a), (b), 1.2109(a).
  The Auction 94 Procedures Public Notice stated that each winning bidder would be required to submit its final payment, the balance of the net amount of its winning bids, within ten business days after the applicable deadline for submitting down payments, consistent with the requirement set forth in section 1.2109(a). Id., 27 FCC Rcd at 14340, para. 168; see also 47 CFR § 1.2109(a).  
  Bidders were advised that pursuant to section 1.2109(a), if a winning bidder failed to pay the balance of its winning bid in a lump sum by the final payment deadline, it would be allowed to make payment within ten business days after the payment deadline, provided that it also paid a late fee equal to five percent of the amount due. 47 CFR §§ 1.2109(a), 73.5003; see also Auction of FM Broadcast Construction Permits Closes, Winning Bidders Announced for Auction 94, Public Notice, 28 FCC Rcd 6973, 6974, paras. 6-7 (MB/WTB 2013) (Auction 94 Closing Public Notice) (announcing close of Auction 94, which raised a total of $4,122,604 (in net bids), with 55 bidders winning a total of 93 construction permits). 
  They were further instructed that if a winning bidder failed to pay the balance of its winning bid by the late payment deadline, it would be considered to be in default on the permits won and subject to applicable default payments. 47 CFR § 1.2109(a); see also 47 CFR §§ 1.2104(g)(2), Auction 94 Closing Public Notice, 28 FCC Rcd at 6974, para. 7.
  
3. Results filed its short-form application to participate in Auction 94, and timely submitted an upfront payment in the amount of $11,500.00.  Subsequently, Results was determined to be a qualified bidder, meaning that it was eligible to participate in the bidding. Auction of FM Broadcast Construction Permits, 85 Bidders Qualified to Participate in Auction 94, Public Notice, 28 FCC Rcd 4382 (MB/WTB 2013).  
  Bidding in Auction 94 began on April 23, 2013, and ended on May 6, 2013.  On May 14, 2013, Commission staff released the Auction 94 Closing Public Notice, which announced the close of Auction 94 and identified the winning bidders. Auction 94 Closing Public Notice, 28 FCC Rcd at 6973.  
  Consistent with usual practice, a copy of the Auction 94 Closing Public Notice was sent via overnight delivery to Results and every other Auction 94 winning bidder. Id. at 6973, para. 2.
  The Auction 94 Closing Public Notice indicated that Results was the winning bidder for two FM broadcast construction permits, MM-FM1061-C3 (Tomahawk, WI) and MM-FM969-A (Crandon, WI), with net winning bids totaling $35,000.00. Id. at 6985-86, 6990.
  
4. The Auction 94 Closing Public Notice also announced winning bidders would be required to make down payments by no later than May 29, 2013, and that final payments would be due by June 12, 2013. Id. at 6974, para. 6.
  Additionally, that Public Notice stated that the late payment deadline for final payments, the last date by which a winning bidder could pay the balance of its winning bid along with the late fee, would be June 26, 2013. 47 CFR §§ 1.2109(a), 73.5003; see also Auction 94 Closing Public Notice, 28 FCC Rcd at 6974, paras. 6-7.
  Finally, the Public Notice announced that each winning bidder was required to submit its long-form application by July 24, 2013. Auction 94 Closing Public Notice, 28 FCC Rcd at 6977, para. 21.

5. Results did not submit its final payment for its winning bids by the deadline of June 12, 2013, and it failed to pay the balance of its winning bids plus the late fee by June 26, 2013.  Instead, on July 24, 2013, Results submitted a payment in the amount of the remaining balance of its winning bids along with an additional amount equal to five percent of the amount due and filed its long form applications. See File Nos. BNPH-20130724AFY (Crandon, Wisconsin); BNPH-20130724AFV (Tomahawk, Wisconsin).
  That same day, Results also filed a request for waiver of the Commission’s final payment deadline. Waiver Request at 2.  
  
6. In its request, Results explains that its payment was late because its Vice President, Donald Grassman mistakenly assumed that final payments would be due on the same day as the long form applications. Declaration of Donald W. Grassman at para. 5.
  In his Declaration, Mr. Grassman states that on Friday, July 19, 2013, during a discussion with a consulting engineer that was assisting Results with its long form application, the engineer inquired whether Results had satisfied it final payment obligation. Id. at para. 6. 
  The Declaration further explains that after reviewing the Auction 94 Closing Public Notice and confirming that the engineer was correct that the payment was past due, Mr. Grassman sought the assistance of communications counsel on the following business day (Monday, July 22, 2013), and two days later, on July 24, 2013, Results rendered its payment along with a request for waiver. Id. at paras. 6-8.
  Results states that the delay in payment was “strictly inadvertent and the result of a horrible mistake.” Waiver Request at 2.
  Moreover, Results maintains that the delay did not occur due to an absence of funds, and that as soon as it realized the payment error, it took immediate action to remedy it. Id.
  Results contends that a waiver of the final payment deadline is warranted because it complied with all prior auction obligations, its error was inadvertent, and it had the necessary financing on hand to render payment at the time of the deadline. Id. at 4-5.
 
III. DISCUSSION
7. The Commission may waive rule provisions “for good cause shown” by the petitioner. 47 CFR § 1.3.  Results specifically filed its request for waiver under section 1.925 of the Commission’s rules.  47 CFR § 1.925.  This waiver standard applied in the context of wireless radio services licenses has been found to be substantially the same as the standard applied in section 1.3 of the Commission’s rules. See 47 CFR § 1.3.  See Delta Radio, Inc., Memorandum Opinion and Order, 18 FCC Rcd 16889, 16891, para. 7 & n.19 (2003) (Delta Radio) (citing BellSouth Corp. v. FCC, 162 F.3d 1215, 1225 n.10 (D.C. Cir. 1999)).  
  As interpreted by the courts, a party seeking waiver of a rule’s requirements must demonstrate that “special circumstances warrant a deviation from the general rule and such deviation will serve the public interest.” See Northeast Cellular, 897 F.2d at 1166.  Accord, e.g., NetworkIP, 548 F.3d at 127.  See also 47 CFR § 1.925(a)(3)(i).  
  In order to demonstrate the required special circumstances, Results must show that the application of the final payment rule would be inequitable, unduly burdensome or contrary to the public interest or that no reasonable alternative existed which would have allowed it to comply with the rule. See 47 CFR § 1.925(b)(3)(ii).  See also Northeast Cellular, 897 F.2d at 1166.
  Alternatively, Results bears the burden of convincing us that a waiver would not conflict with the policy underlying this rule. See WAIT Radio v. FCC, 418 F.2d 1153, 1157-58 (D.C. Cir. 1969), aff’d, 459 F.2d 1203 (1972), cert. denied, 93 S. Ct. 461 (1972). 
  Based on the facts before us, we find that Results has not met either standard.  Accordingly, Results is in default on its winning bids, and subject to applicable default payments. 47 CFR §§ 1.2104(g)(2), 1.2109(a), (c).  

8. We have previously rejected claims, similar to those that Results makes here, that the waiver standard would be met based solely on a winning bidder’s assertion that it was financially capable of making the payment, but inadvertently missed the deadline. Id. at 5. See Silver Palm Communications, Inc., Order, 22 FCC Rcd 3344 (WTB ASAD 2007) (Silver Palm) (denying request for waiver of final payment deadline), recon. denied, Silver Palm Communications, Inc., Order on Reconsideration, 25 FCC Rcd 8041 (WTB 2010).
  Instead, the Commission has long held that the prompt payment of auction obligations is an objective indicator that a winning bidder is financially able to meet its obligations and intends to provide service to the public. Abundant Life, Inc., Memorandum Opinion and Order, 17 FCC Rcd 4006, 4011-12, para. 14 (2002) (Abundant Life) (denying request for waiver of final payment deadline). 
  The Commission has specifically “determined that timely payments of auction obligations are the manner in which [it] can be assured of the financial qualifications, and thus the seriousness, of a winning bidder.” Abundant Life, 17 FCC Rcd at 4008-09, para. 8; Implementation of the Commercial Spectrum Enhancement Act and Modernization of the Commission's Competitive Bidding Rules and Procedures, Notice of Proposed Rule Making, 20 FCC Rcd 11268, 11287-8, para. 49 (2005). 
  Thus, when the Commission adopted the rule allowing a winning bidder to have an additional ten business days to submit its final payment, it explained “that the strict enforcement of payment deadlines enhances the integrity of the auction and licensing process by ensuring that applicants have the necessary financial qualifications.” Amendment of Part 1 of the Commission’s Rules – Competitive Bidding Procedures, Third Report and Order and Second Further Notice of Proposed Rule Making, 13 FCC Rcd 374, 430, para. 96 (1997) (Part 1 Third Report and Order).
  In upholding the policy of strict enforcement of the down payment deadline, the Commission has rejected a claim by a winning bidder that it had the necessary funds in its bank account on the payment deadline, noting that the purposes of the down payment deadline rule:
include not only assurance of ability to pay but also safeguarding the integrity of the auction process by avoiding opportunities to game the auction process.  Moreover, the rule also serves a broader purpose because it eliminates the need for the Commission to undertake an individualized analysis of the financial circumstances of each auction applicant.  If this argument were correct, any winning bidder that could show it had had the required amount of funds in its bank account at the time the initial down payment was due could justify a request for waiver of the deadline seeking an extension for any length of time. Ted W. Austin, Jr., Memorandum Opinion and Order, 30 FCC Rcd 3486, 3491, para. 11 (2015). 


The Commission has long recognized that the two post-auction payment deadlines (i.e., those for down payment and final payments) share the same underlying purpose of ensuring a winning bidder’s financial capability to carry out its obligations as a licensee without requiring the Commission to undertake an individualized analysis of an applicant’s finances. See, e.g., Part 1 Third Report and Order, 13 FCC Rcd at 430, para. 90 (“…a substantial down payment is required to ensure that licensees have the financial capability to attract the capital necessary to deploy and operate their systems, and to protect against default. Because it is due soon after the close of the auction, the down payment is a valuable indicator of a license applicant’s financial viability.”), para. 95 (“…extensive relief from initial payment obligations could threaten the integrity, fairness, and efficiency of the auction process.”), para. 96 (“…strict enforcement of payment deadlines enhances the integrity of the auction and licensing process by ensuring that applicants have the necessary financial qualifications.”); Implementation of the Commercial Spectrum Enhancement Act and Modernization of the Commission’s Competitive Bidding Rules and Procedures, Report and Order, 21 FCC Rcd 891, 909, para. 45 (2006) (CSEA Report and Order) (purpose of final payment rule “is to ensure that only serious, financially qualified applicants receive licenses and construction permits so that the provision of service to the public is expedited.”).  
  Strict enforcement of the final payment deadline in circumstances such as those presented here avoids our need to evaluate whether Results may have possessed the necessary funds when they were due and eliminates our burden of having to assess the merits of the justification proffered by Results regarding the length of its delay. Significantly, in 2006, the Commission amended its final payment rule to enable it to require each winning bidder to make its final payment within ten business days after the down payment deadline.  See id.  Formerly, a winning bidder was required to make a final payment only after its long-form application had been processed, any petitions to deny had been dismissed or denied, and the public notice announcing that the permit or license was ready to be granted had been released, which could mean that a final payment would not be due for many weeks or months after the close of bidding.  Now, with the down and final payment deadlines occurring within a short period after the close of bidding, the Commission “expect[s] (and our rules contemplate) that those entities that plan to participate in an auction will have their financing in place before the start of the auction.”  CSEA Report and Order, 21 FCC Rcd at 909, para. 45.  
  Thus, rather than demonstrate special circumstances which would warrant a deviation from the final payment rule, Results has presented the very arguments that demonstrate why enforcement of the rule is so critical to the efficiency of the post-auction process.  We therefore disagree with Results’ characterization that inadvertent error along with claims of having had the funds on hand at the time of the payment deadline provide a sufficient basis to conclude that the underlying purposes of the rule will be served by the grant of a waiver.  
9. We also reject Results’ suggestion that Silver Palm is somehow inapposite because the missed payment in that case was proffered after a much longer period than was the case here. See Waiver Request at 3-4. 
  Results asserts that the Silver Palm orders and other decisions denying request for waiver of auction payment deadlines “are readily distinguishable from the circumstances presented here,” Id. 
 but it fails to explain how its circumstances warrant a different outcome.  For instance, Results observes that the winning bidder in Silver Palm proffered its missed payment “nearly two years” late, Id.
 but it does not explain why its own failure of paying more than a month late does not equally conflict with the underlying policies of the payment rule.  Similarly, we are also not persuaded by Results’ attempt to compare its circumstances to those where the Commission has granted a waiver of another deadline, such as those for an installment payment or filing a long form application. Id. at 3.  The Commission has long distinguished its analyses of requests for waiver of its post auction payment rules from requests for waiver of the installment payment rules in light of the different functions and underlying purposes of those rules.  Indeed, this precise point is made in Ted Austin, a case cited by Results (see Waiver Request at 3, citing Ted Austin, 25 FCC Rcd 1439, 1443, para. 10 (WTB ASAD 2010)), 
  Both of those rules have their own policy purposes that are distinct from the deadline here.  See Southern Communications Systems, Inc., Memorandum Opinion and Order, 15 FCC Rcd 25103, 25109-11, paras. 13-15 (2000); Vista Communications, Inc., Memorandum Opinion and Order, 18 FCC Rcd 16957, 16963-64, para. 16 (2003).   Similarly, there is no basis for Results’ assertion that Audio Division’s decision in James M. Lout should apply here.  See Waiver Request at 4-5, citing Request of James M. Lout for Waiver of Auction 93 Form 301 Filing Deadline Application for Construction Permit for New FM Station, New Llano, Louisiana, 27 FCC Rcd 7517, 7518, para. 5 (2012).  In that case, the Audio Division’s analysis turned on the separate purpose of the post-auction long-form application filing requirement, and it concluded that the rule would not be undermined by accepting his late application, finding that prior to his late filing of the Form 301 application, the winning bidder had complied with all previous requirements for that auction, including all filing and payment obligations.  See James M. Lout, 27 FCC Rcd at 7518-9, paras. 5-6.   
 
10. The Commission has repeatedly stressed that it is incumbent upon an applicant to diligently prosecute its application by ascertaining and complying with the applicable payment and application deadlines established by public notice.  Here, Results admits that the payment instructions in the Auction 94 Closing Public Notice were clear, and that its failure to meet the payment deadline was due to its own mistake. Declaration of Donald W. Grassman at para. 6.
  We therefore conclude that absent a good faith effort to have made a payment on time, as demonstrated in the limited prior grants of waiver of the final payment deadline, we cannot find that Results has presented special circumstances that warrant a deviation from section 1.2109(a), and that such deviation would serve the public interest. We note that the Commission has granted waiver of section 1.2109(a)’s final payment deadline only in very narrow circumstances, under conditions that differ significantly from those presented here.  In those cases, the winning bidder, unlike Results, made a good faith effort to render its payment in a timely manner on or before the deadline and made at least a partial payment either before or during the late payment timeframe.  See WSS, 21 FCC Rcd 6635, 6638, para. 9 (WTB ASAD 2006) (granting a waiver of section 1.2109(a) where applicant had a good faith misunderstanding of the final payment amount owed, paid what it believed to be due four days before the final payment deadline, and paid in full along with late fees within days of realizing the error); Radio Layne, LLC, Memorandum Opinion and Order, 22 FCC Rcd 2432, 2437, para. 13 (WTB ASAD 2007) (granting a partial waiver of section 1.2109(a) where applicant had a good faith belief that it had paid the full amount due by the final payment deadline, but due to a bank error the Commission received the money one day into the late payment period, and late fees were quickly paid in full after error was realized). 
  We find that excusing mistakes made in the course of trying to make a timely payment is entirely different from granting a waiver to excuse an applicant’s complete inattention to a payment deadline, which would wholly undercut the purposes of the provisions of section 1.2109(a).  
11. We are also not persuaded by Results’ claims that grant of a waiver will expedite service to the public because it “will enable the construction permits to be granted without resort to further time-consuming procedures.” Waiver Request at 5.  
  As the Commission concluded in its denial of waiver in Silver Palm, an asserted intent to provide service to the public does not outweigh the public interest benefit in the consistent enforcement of the competitive bidding rules. Silver Palm, 25 FCC Rcd at 8045, para. 14.
  
12. For all these reasons, we conclude that granting Results a waiver of the Auction 94 final payment deadline would conflict with the policies underlying section 1.2109.  Moreover, insofar as Results admittedly failed to diligently prepare for, and be aware of, its post auction obligations we cannot conclude that it is inequitable, unduly burdensome or contrary to the public interest to enforce the payment deadline. 
IV. ASSESSMENT OF INTERIM DEFAULT PAYMENT
13. The Commission’s rules provide that a bidder who fails to remit the required final payment for a license for which it was the high bidder is subject to a default payment. 47 CFR §§ 1.2109(c), 1.2104(g)(2).  
  These payment obligations include both a deficiency payment, equal to the difference between the amount of the defaulter’s bid and the amount of the winning bid the next time a permit or license covering the same spectrum is won in an auction, plus an additional default payment equal to a percent of the defaulter’s bid or the subsequent winning bid, whichever is less. Id.
  The additional default payment for Auction 94 permits was set to twenty percent of the applicable bid. Auction 94 Closing Public Notice, 28 FCC Rcd at 6976, para. 15.  
  
14. Section 1.2109(b) of the Commission’s rules provides that a winning bidder who fails to remit the required down payment within ten business days after the Commission has declared competitive bidding closed will be deemed to have defaulted, its application will be dismissed, and it will be liable for the applicable default payment obligations specified in 47 CFR § 1.2104(g). 47 CFR §§ 1.2104(g), 1.2109(c).    
  Although we cannot determine Result’s total default payment at this time, Until these permits are won in a subsequent auction, the Commission cannot determine the full amount of the default payment that is owed.  Once subsequent winning bids are established, the Office of Economics and Analytics will determine Results’ final default payment and the remaining amount owed by Results, if any, will be assessed.  See 47 CFR § 1.2104(g)(2)(i).   
 we will assess an interim default payment owed by Result, amounting to twenty percent of its defaulted net winning bids for MM-FM1061-C3 (Tomahawk, WI) and MM-FM969-A (Crandon, WI) or $7,000.00. Consistent with Commission precedent, the disposition of the remaining amount of monies on deposit with the Commission related to this matter will be addressed in a subsequent letter to the payor of record, once a construction permit covering the same spectrum is re-auctioned and the final default payment can be calculated.  See AirCom Communication Consultants, Inc., Order, 16 FCC Rcd 17685, 17691 n.47 (WTB 2001), recon. denied sub nom., AirCom Consultants, Inc., Order on Reconsideration, 18 FCC Rcd 1806 (WTB 2003).  See also 47 CFR § 1.2104(g)(2).
  Pursuant to section 1.2106(e) of the Commission’s rules, we will apply Results’ payment on deposit to satisfy this interim default payment obligation. See 47 CFR § 1.2106(e).  

V. ORDERING CLAUSES
15. Accordingly, IT IS ORDERED that, pursuant to the authority contained in sections 1, 4(i), and 303(r), of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i), 303(r), and sections 0.21, 0.61, 0.271, 0.283, and 1.3 of the Commission’s rules, 47 CFR §§ 0.21, 0.61, 0.271, 0.283, and 1.3, Results Broadcasting Rhinelander, Inc.’s Petition for Waiver of Final Payment Deadline, dated July 24, 2013, is DENIED.
16. IT IS FURTHER ORDERED that, under sections 1.2104 and 1.2106 of the Commission’s rules, 47 CFR §§ 1.2104 and 1.2106, Results Broadcasting Rhinelander, Inc.’s funds on deposit with the Commission will be applied toward satisfying the interim default payment obligation.
17. IT IS FURTHER ORDERED that, under section 1.2104(g)(2) of the Commission’s rules, 47 CFR § 1.2104(g)(2), Results Broadcasting Rhinelander, Inc. will be subject to a final default payment for its defaulted winning bids during Auction 94 for two FM broadcast construction permits, MM-FM1061-C3 (Tomahawk, WI) and MM-FM969-A (Crandon, WI) once the permits are won in a subsequent auction and the full payment amount is determined.
18. IT IS FURTHER ORDERED that Results Broadcasting Rhinelander, Inc.’s FCC Form 301 Applications for Construction Permit for Commercial Broadcast Station at Tomahawk, WI and Crandon, WI are DISMISSED.
19. IT IS FURTHER ORDERED that, pursuant to section 1.102(b)(1) of the Commission’s rules, 47 CFR § 1.102(b)(1), this Order SHALL BE effective upon release.

					FEDERAL COMMUNICATIONS COMMISSION
	



					Margaret W. Wiener
					Chief, Auctions Division
					Office of Economics and Analytics

					


					Albert Shuldiner
					Chief, Audio Division
					Media Bureau

					


					



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