How are the three character IAU Minor Planet Center's Observatory Codes assigned? Why are some letters so popular?
I asked the at the minor planet center how the codes were decided, and the answer was


  Historically, the observatory codes were assigned ascending by longitude toward east (from prime meridian): 360 degrees were divided by numbers. When three digit numerical codes were not sufficient, letters plus two numbers were used again in bands toward the east. Some bands are already full (e.g. H**). New observatory code is assigned in the available letter+number band (based on its longitude).