[00:00:00] Speaker 00:
Case number 24-1108, Indian Peak Properties LLC Petitioner versus Federal Communications Commission and United States of America.

[00:00:09] Speaker 00:
Mr. Gaiman for the petitioner.

[00:00:11] Speaker 00:
Mr. Green for the respondents.

[00:00:13] Speaker 02:
Good morning, counsel.

[00:00:15] Speaker 02:
Mr. Gaiman, please proceed when you're ready.

[00:00:19] Speaker 05:
Good morning, your honors.

[00:00:21] Speaker 05:
May it please the court?

[00:00:23] Speaker 05:
Julian Gaiman on behalf of Indian Peak Properties, the petitioner.

[00:00:29] Speaker 05:
I would like to address two key points in this case.

[00:00:35] Speaker 05:
The first is that the FCC bureaus did not follow the rule that the FCC had promulgated to handle Indians Peaks petitions.

[00:00:48] Speaker 05:
And furthermore, the bureaus did not have authority to do what they did.

[00:00:54] Speaker 05:
They acted outside of the rule, and they acted outside of delegated authority.

[00:01:00] Speaker 05:
The second point is that notice and comment rulemaking was required for the human contact part of the order that's under review now.

[00:01:14] Speaker 05:
So turning to the first question of delegated authority, I think the commission has... There's one question before you go on just to clarify.

[00:01:23] Speaker 04:
So when you argue, your argument is about your second point about the failure to follow notice and comment rulemaking.

[00:01:32] Speaker 05:
Yes.

[00:01:32] Speaker 04:
Other than that, you do not challenge the substance of their human presence requirement.

[00:01:40] Speaker 04:
You just, it's the procedure, and this can be valid claims obviously, but it's the procedure that they didn't do it the right way, that they didn't go through notice and comment rulemaking.

[00:01:50] Speaker 05:
That's correct, Judge Millett.

[00:01:52] Speaker 05:
We believe the FCC had the authority to make that ruling.

[00:01:57] Speaker 05:
They just did not give notice, and they did not do it in a notice and comment proceeding.

[00:02:05] Speaker 04:
Thank you.

[00:02:06] Speaker 05:
Sorry to interrupt you.

[00:02:08] Speaker 05:
So on the question of delegated authority, the rule sets out some rather detailed procedures.

[00:02:16] Speaker 05:
In fact, the larger part of the rule

[00:02:21] Speaker 05:
covers procedure, and the smaller part of the rule covers the substantive requirements of the rule.

[00:02:29] Speaker 05:
The FCC pretty much has conceded that it did not follow the rule.

[00:02:34] Speaker 05:
However, the FCC relies on Section 4J of the Communications Act.

[00:02:41] Speaker 05:
Briefly, Section 4J says the Commission may conduct its proceedings in such a manner as will best conduce to the proper dispatch of business

[00:02:50] Speaker 05:
and to the ends of justice.

[00:02:54] Speaker 05:
That does not apply here because this was a bureau action.

[00:02:59] Speaker 05:
This was a kind of an ad hoc action taken by two of the bureaus of the FCC.

[00:03:08] Speaker 05:
Section four of the Communications Act.

[00:03:10] Speaker 03:
I would say, frankly, that I think you have a strong argument on the merits on this claim.

[00:03:18] Speaker 03:
But I think there's a procedural issue, which is we're reviewing what the commission did.

[00:03:24] Speaker 03:
You're arguing that the Bureau violated these provisions.

[00:03:30] Speaker 03:
And before the commission, you didn't get a ruling on how these procedures are supposed to work.

[00:03:38] Speaker 03:
And in the record, it appears that you told the commission that you didn't need a ruling about the public notice and the procedure.

[00:03:49] Speaker 03:
So I'm looking at JA 676 and JA 753.

[00:03:53] Speaker 03:
And you, in your application for review, said placing Indians' OTAR petitions on public notice at this late date would add nothing new.

[00:04:06] Speaker 03:
753 said there is no need for further public notice.

[00:04:10] Speaker 03:
Indians petitions are ripe for grant.

[00:04:13] Speaker 03:
So it just seems to me that procedurally, we can't reach this issue, which I think could well be meritorious.

[00:04:20] Speaker 03:
But procedurally, we have nothing to review from the commission because you didn't get a ruling from the commission about how these procedures are supposed to work.

[00:04:29] Speaker 05:
So I would respectfully disagree that we did not ask for a ruling.

[00:04:36] Speaker 05:
on how the procedure is supposed to work.

[00:04:40] Speaker 05:
What we said was that because all of this proceeding has been going on for a couple of years now, and the harm has already been done for a lack of a proceeding, that it wouldn't help us any to have a proceeding now.

[00:05:02] Speaker 05:
We raised the issue of

[00:05:05] Speaker 05:
failure to follow the rule.

[00:05:07] Speaker 05:
We raised that repeatedly through the petition for reconsideration and the application for review stage.

[00:05:17] Speaker 05:
So we contend.

[00:05:19] Speaker 03:
I know that you raised it, but then did you at some point abandon it by telling the commission that you didn't need a ruling on that and that you didn't want that relief anymore.

[00:05:28] Speaker 05:
We did not say we do not need a ruling.

[00:05:32] Speaker 05:
We just said

[00:05:33] Speaker 05:
At this point, we do not need further public notice, because this had been going on for some time.

[00:05:41] Speaker 05:
We did not say no ruling needed on the rule violation.

[00:05:47] Speaker 02:
And what could it do for you to prevail on this at this point?

[00:05:53] Speaker 02:
Because it doesn't seem like the relief you've asked for, or just understanding what the process would be that would unfold, could change anything.

[00:06:04] Speaker 05:
The first thing is that the proceeding would be ruled unlawful, and under the Administrative Procedure Act, the order would be reversed.

[00:06:21] Speaker 05:
So this would definitely give us relief.

[00:06:26] Speaker 02:
But you're not asking for the proceeding actually to be reopened or anything, right?

[00:06:34] Speaker 05:
We're asking for it to be returned to the commission with instructions to do not inconsistent with the court's order.

[00:06:45] Speaker 02:
And then what would happen that would benefit you?

[00:06:48] Speaker 02:
Because if the underlying substantive determination is OK, then how is this going to benefit you?

[00:07:00] Speaker 05:
Again, the commission needs to go through its

[00:07:04] Speaker 05:
notice and comment proceeding in order to make that substantive ruling.

[00:07:18] Speaker 04:
Okay.

[00:07:25] Speaker 04:
I just want to clarify one thing.

[00:07:27] Speaker 04:
There's sort of two notice and comments going on here.

[00:07:30] Speaker 04:
One is the one in the rule about a proceeding and then they put a petition out for notice.

[00:07:38] Speaker 04:
And then there's what we traditionally just call ordinary notice and comment rulemaking.

[00:07:44] Speaker 05:
Right.

[00:07:45] Speaker 05:
where they solicit comments from the public.

[00:07:47] Speaker 04:
Before you change the substance, so if they were amending this rule, the rule that issue here, the 1.4 thousand rule.

[00:07:56] Speaker 04:
Just now you were talking about the procedural one under the rule that comes with your petition, putting it out for comment, is that right?

[00:08:03] Speaker 05:
No, just now I was talking about the rulemaking proceeding.

[00:08:10] Speaker 05:
In order to reach the substantive result that the FCC reached,

[00:08:15] Speaker 05:
it has to go through APA notice and comment rulemaking.

[00:08:21] Speaker 04:
And when did you argue that to the commission?

[00:08:26] Speaker 05:
We did not.

[00:08:29] Speaker 05:
But it's still before the court, under an exception to the exhaustion principles, the commission has already rejected our arguments about continental airlines.

[00:08:47] Speaker 05:
So it would be futile to bring it up again.

[00:08:52] Speaker 05:
Also, the commission has a rule that strongly discourages a petition for reconsideration after an application for review has been denied.

[00:09:09] Speaker 05:
Okay.

[00:09:13] Speaker 05:
So turning to the second point of the notice and comment rulemaking, this really was a new rule.

[00:09:25] Speaker 05:
Under the commission's Continental Airlines case, the analysis stopped at the company being the user that is recognized by the rule.

[00:09:39] Speaker 05:
Now the order goes beyond that and says we're going to look beyond the company

[00:09:43] Speaker 05:
and look at the users.

[00:09:45] Speaker 05:
There has to be human presence below the company.

[00:09:49] Speaker 05:
So this is a new rule.

[00:09:51] Speaker 05:
I'm out of time, and so I will wrap up there.

[00:09:57] Speaker 02:
OK, thank you.

[00:09:58] Speaker 02:
We'll give you a little time for rebuttal.

[00:10:00] Speaker ?:
Sure.

[00:10:15] Speaker 01:
Grimm.

[00:10:17] Speaker 01:
Thank you, Your Honor.

[00:10:18] Speaker 01:
May it please the court.

[00:10:19] Speaker 01:
I'm John Grimm on behalf of the FCC in the United States.

[00:10:24] Speaker 01:
The FCC's otard rule was never intended to protect a house full of antennas with no people in it.

[00:10:32] Speaker 01:
And this morning, I believe we heard Indian Peak concede that the substantive decision that the FCC made in this case was a decision that it had the authority to make.

[00:10:43] Speaker 01:
So I understand that Indian Peak is really raising procedural issues.

[00:10:50] Speaker 01:
And I'd like to briefly address several of those.

[00:10:53] Speaker 01:
The first is the question about whether or not the bureaus had the authority to act in the way that they did and whether they were required to put the petition out for public comment.

[00:11:06] Speaker 01:
I think that Judge Pan's question correctly identified the problem here, which is that there is no final FCC decision one way or the other.

[00:11:15] Speaker 01:
So I want to stress that the commission has not

[00:11:20] Speaker 01:
endorsed what the bureaus did.

[00:11:21] Speaker 01:
It has not affirmed what the bureaus did.

[00:11:24] Speaker 01:
It didn't address whether or not the bureaus were required or whether or not the bureaus had violated the rule because it found an alternate basis for ruling on the petition because it found that that issue had been rendered moot.

[00:11:41] Speaker 01:
In terms of the mootness point, I also would like to

[00:11:46] Speaker 01:
Again, emphasize the point that judge pan asked the language Indian peak used when it pulled the commission that there would be no need for further comment does not read as language you use if you're saying.

[00:12:02] Speaker 01:
Well, we're going to cut our losses.

[00:12:04] Speaker 01:
It would just be futile at this point.

[00:12:07] Speaker 01:
There's no point wasting any more time.

[00:12:09] Speaker 01:
They didn't say those things.

[00:12:11] Speaker 01:
They said there's no need for further review.

[00:12:14] Speaker 01:
They said that the petition was ripe for grant, which suggests that they're satisfied with the record to the point that they believe the record would allow them to win.

[00:12:25] Speaker 01:
And they also emphasize that the city, which is the only evident party in interest, had had an opportunity to take full advantage of the proceedings back and forth.

[00:12:36] Speaker 01:
So in every practical sense, this was functionally the same as a notice and comment proceeding where the parties submitted their briefs back and forth.

[00:12:49] Speaker 01:
I'd also like to address the issue.

[00:12:53] Speaker 04:
Is that how this notice is supposed to work?

[00:12:55] Speaker 04:
I mean, I thought the point of the notice was to obtain public comment.

[00:12:59] Speaker 04:
In ordinary APA notice and comment rulemaking, one party couldn't sort of say, let's just skip that.

[00:13:07] Speaker 04:
I'm content.

[00:13:08] Speaker 04:
The agency has an obligation to hear from not just that party, but the public.

[00:13:13] Speaker 04:
How is that different under this rule?

[00:13:16] Speaker 01:
Oh, Your Honor, I'm not suggesting that it is different under this rule.

[00:13:20] Speaker 01:
I think that the comment referred to in the rule refers to public comment as you described.

[00:13:25] Speaker 04:
So why does it matter that he said, I don't think we need public comment?

[00:13:31] Speaker 01:
Because he is the, they're the petitioner.

[00:13:35] Speaker 01:
They're the ones who are, who were originally the proponent of the argument that the agents that the Bureau had violated the rule.

[00:13:43] Speaker 04:
And so when they then say- It would be a waiver argument, not a mutinous argument.

[00:13:48] Speaker 04:
I think that- They waved the argument on appeal, not a mutinous argument, because if an agency has an obligation to obtain public input, the fact that a particular party doesn't want it,

[00:14:01] Speaker 04:
would seem not to albeit that duty.

[00:14:03] Speaker 01:
Well, Your Honor, I think in terms of the waiver versus mootness point, the commission found that it was moot not just because of what Indian Peak said about the need for further comment, but also because it found that Indian Peak hadn't demonstrated a sufficient human presence to trigger the rule.

[00:14:22] Speaker 01:
And so since it found that the petition should be denied on its merits, that that argument was rendered moot.

[00:14:30] Speaker 04:
Um, and I'd also, I'm just asking, as you said there, he's not contesting the human presence requirement in this appeal or this review petition for review.

[00:14:39] Speaker 04:
Um, and so all we're focused on is this notice issue, and I'm trying to understand how it is at a particular party that maybe doesn't want public input for some, I'm not saying that's true here, but if you can imagine a case where someone doesn't want the public to weigh in on what they're doing, why the commission

[00:14:58] Speaker 04:
would think that's fine.

[00:14:59] Speaker 04:
That obviates their duty to do what their rule provides, which is public input before we decide.

[00:15:06] Speaker 04:
It's an incomplete record.

[00:15:09] Speaker 01:
Your Honor, I don't read the commission as saying that it is able to obviate that duty.

[00:15:16] Speaker 01:
I think that the commission, in this case, simply didn't

[00:15:21] Speaker 01:
make a decision one way or the other on whether that rule had been followed by the bureaus.

[00:15:28] Speaker 01:
And I think that, again, Indian Peak did not.

[00:15:33] Speaker 04:
But it thought it could go ahead and make a substantive decision without having the type of record before it that its rule requires.

[00:15:39] Speaker 04:
I mean, you just said that's what they did next.

[00:15:42] Speaker 04:
And that's what I'm curious about, and particularly why then I'm curious about how we could call it a

[00:15:47] Speaker 04:
a mood, rather than maybe an argument waived on appeal, but a moodness issue, when in fact the agency then did make a substantive decision on the record.

[00:15:56] Speaker 04:
But it was not the record that the rule requires.

[00:15:59] Speaker 01:
Well, Your Honor, I think that, you know, in the first place, the Commission, you know, if there was a

[00:16:13] Speaker 01:
If the commission was incorrect, for example, that it had the record it needed, that may be a matter for the commission on remand.

[00:16:25] Speaker 01:
But the point here is that Indian Peak didn't challenge that issue.

[00:16:31] Speaker 01:
Indian Peak didn't press the issue after the commission ruled substantively on its petition.

[00:16:39] Speaker 01:
And so there isn't an agency decision

[00:16:43] Speaker 01:
as to the propriety of the Bureau's actions before the Court today.

[00:16:49] Speaker 01:
Indian Peak doesn't dispute that it didn't file a petition for reconsideration.

[00:16:54] Speaker 01:
And under this Court's precedent, even if the need for a reconsideration petition

[00:17:03] Speaker 01:
doesn't appear until you get that order from the Commission, you still have to file it.

[00:17:07] Speaker 01:
It's a statutory requirement.

[00:17:10] Speaker 01:
They've argued that the FCC's rules discourage reconsideration petitions.

[00:17:16] Speaker 01:
I'm not exactly sure what they think discourages them, but the statute requires the reconsideration petition.

[00:17:23] Speaker 01:
And there's certainly no reason to think that the futility exception would apply here, that there's any reason why the agency wouldn't consider that in its ordinary course.

[00:17:34] Speaker 03:
So the bureaus resolved this issue on a different ground.

[00:17:39] Speaker 03:
They said that instead of saying there's a regular human presence requirement, they said that service providers are not users under the rule.

[00:17:52] Speaker 03:
And that seems like a much more straightforward way of addressing this issue.

[00:17:57] Speaker 03:
And I'm just wondering if you have any sense of why that would be abandoned and this new regular human presence requirement instead was adopted.

[00:18:08] Speaker 01:
Well, Your Honor, I think that perhaps the best way to look at the

[00:18:14] Speaker 01:
reasoning that the commission used is to remember the context in which this case arose.

[00:18:20] Speaker 01:
This was a petition for a declaratory ruling.

[00:18:23] Speaker 01:
Indian Peak asked the commission to decide whether under its unique set of facts, the Otard rule applied to it.

[00:18:31] Speaker 01:
And so, you know, it presented the commission with a house that had

[00:18:38] Speaker 01:
no real regular human activity, and by all appearances seem to just be an empty building hosting a bunch of antennas.

[00:18:47] Speaker 01:
And so I think that the commission properly recognized that the OTAR rule has historically been intended to protect people's access to certain wireless services.

[00:18:59] Speaker 03:
And so if- So why doesn't the Bureau's reasoning also address that same issue, which is service providers are not users under the rule?

[00:19:08] Speaker 01:
Well, I think that in some ways, the commissions

[00:19:16] Speaker 01:
ruling is a bit broader than the bureaus because a service provider could have a physical presence at the house.

[00:19:26] Speaker 01:
And if the service provider's employees were there using the equipment, it might fall within.

[00:19:32] Speaker 01:
So I think what the commission was trying to distinguish is that dividing line isn't so much, are you a provider versus?

[00:19:41] Speaker 03:
That doesn't make sense though, because if they're a service provider, whether they're present or not under the bureaus,

[00:19:46] Speaker 03:
reasoning, they're not subject to the rule.

[00:19:49] Speaker 01:
Well, I think that what the bureau was focusing on is language in the order that says that a service provider can't put an antenna on a house that doesn't have a user and then claim the protection of the rule.

[00:20:04] Speaker 01:
But I think that the commission wanted to reorient the focus away from who's the entity putting the antenna on the house toward who's the entity or the person using the

[00:20:16] Speaker 01:
So I think that the point of the human presence requirement is that.

[00:20:23] Speaker 03:
But who's using the antenna?

[00:20:25] Speaker 03:
There's a separate requirement that it has to be the user has to be the person who owns the house.

[00:20:36] Speaker 03:
Well, the person who owns the house or property or leasehold has to also be a user.

[00:20:44] Speaker 03:
But that's a separate requirement

[00:20:46] Speaker 01:
That's correct.

[00:20:47] Speaker 03:
But I'm using between service providers are not providers.

[00:20:50] Speaker 01:
That's correct, your honor.

[00:20:52] Speaker 01:
I think under the commission's decision in Continental Airlines, that would expand beyond just the person who has the actual lease or deed to their invitees, their business invitees.

[00:21:05] Speaker 03:
I understand that.

[00:21:06] Speaker 03:
It just doesn't answer my question of choosing between these two theories, why they would choose one versus the other.

[00:21:12] Speaker 01:
I think it's because the commission was focused on the history of the rule, which originated as a protection of individual viewers, access to broadcast systems.

[00:21:24] Speaker 01:
And then over the years, as the commission expanded it to reach different types of technology, it always emphasized that it was retaining the rules core protections and hadn't changed the core functionality of it.

[00:21:42] Speaker 02:
I do see that.

[00:21:45] Speaker 02:
So we have the one paragraph in the commission's order that deals with the argument that the procedures weren't appropriately followed, and that paragraph culminates in a statement about moodness.

[00:22:03] Speaker 02:
And there's a challenge now before us about the procedures.

[00:22:09] Speaker 02:
And your argument, what's your ground by which to reject that argument in light of the fact that the commission's order grounds it in mootness?

[00:22:19] Speaker 01:
Well, I think, Your Honor, if the commission's order and finding of mootness

[00:22:26] Speaker 01:
is before the court.

[00:22:28] Speaker 01:
And so certainly the court could disagree with the commission and reverse it on that basis.

[00:22:34] Speaker 01:
It would still, I believe, need to be the commission's decision in the first instance whether or not its rules were followed because it didn't render a final decision on that point.

[00:22:45] Speaker 01:
Right.

[00:22:45] Speaker 01:
But you're asking us to reject the petition for review.

[00:22:49] Speaker 01:
Well, correct.

[00:22:50] Speaker 01:
We are.

[00:22:50] Speaker 01:
But I recognize that if the court disagrees with the commission as to that mootness point, the commission would still need to be able in the first instance to decide affirmatively whether or not the bureaus had violated that rule.

[00:23:09] Speaker 02:
But if you want us to reject the petition for review, then in light of this paragraph, I just want to make sure I understand.

[00:23:16] Speaker 02:
Because you had the procedural argument that there should have been a petition for reconsideration that wasn't made.

[00:23:21] Speaker 02:
It should have been.

[00:23:23] Speaker 02:
Is that the route, or what's your?

[00:23:24] Speaker 01:
Well, yes, yes.

[00:23:26] Speaker 01:
And I'm sorry, Your Honor.

[00:23:28] Speaker 01:
We certainly don't think that there is a need to reverse because of the fact that they didn't file a petition for reconsideration and they didn't challenge the things that the commission did in the final order.

[00:23:39] Speaker 01:
I was simply addressing the component of your question about what happens if you don't think it was a correct ruling that the decision was moved.

[00:23:51] Speaker 01:
I see that my time is up.

[00:23:52] Speaker 01:
Happy to answer any further questions.

[00:23:55] Speaker 01:
I'll take my seat.

[00:23:57] Speaker 01:
Thank you, counsel.

[00:23:58] Speaker 02:
Thank you.

[00:24:01] Speaker 02:
Give you two minutes for rebuttal.

[00:24:08] Speaker 05:
I would like to address the mootness question.

[00:24:14] Speaker 05:
So what we've discussed is that the commission declined to rule on

[00:24:23] Speaker 05:
the procedural shortcomings of the bureaus saying that the whole thing is moot.

[00:24:30] Speaker 05:
And in our reply brief, we listed three reasons why it's not moot.

[00:24:37] Speaker 05:
So I would just simply refer you to the reply brief that addresses the mootness.

[00:24:44] Speaker 05:
It's not moot.

[00:24:45] Speaker 05:
It's very much alive.

[00:24:46] Speaker 04:
Would you argue to the commission that it was not moot?

[00:24:49] Speaker 05:
No.

[00:24:56] Speaker 05:
All right, thank you.

[00:24:57] Speaker 02:
Okay.

[00:24:58] Speaker 02:
Thank you, counsel.

[00:24:59] Speaker 02:
Thank you to both counsel.

[00:25:00] Speaker 02:
We'll take this case under submission.