Opinion part two
Again, the Second Circuit reversed. In re FCC, 217 F.3d
125 (2d Cir. 2000). Granting a mandamus petition filed by
the Commission, the court held that "[t]here can be little
doubt that if full payment is a regulatory condition, so too is
timeliness." Id. at 136. In the court's view, "the regulatory
purpose for requiring payment in full--the identification of
the candidates having the best prospects for prompt and
efficient exploitation of the spectrum--is quite obviously
served in the same way by requiring payment on time." Id.
at 135. The conclusion that the Commission's decision "was
in fact regulatory," the court went on, was "reinforced" by the
fact that the bankruptcy court, in deciding that the license
cancellation lacked a regulatory purpose, had explained at
length that the cancellation and re-auction were contrary to
the purposes of section 309(j) of the Communications Act.
Id. at 136. But according to the Second Circuit, these
discussions, rather than explaining why the re-auction deci-
sion was not regulatory, explained why, under the Communi-
cations Act, it was arbitrary, and such a determination, the
Second Circuit pointed out, was "outside the jurisdiction of
the bankruptcy court." Id. "[A] regulatory condition is a
regulatory condition even if it is arbitrary. It is for the FCC
to state its conditions of licensure, and for a court with power
to review the FCC's decisions to say if they are arbitrary or
valid." Id. at 137.
As a consequence, the Second Circuit concluded that the
bankruptcy court had both violated the appellate court's
earlier mandate and exceeded the bankruptcy court's own
jurisdiction. Id. "The bankruptcy court," the Second Circuit
stated, "construes our mandate to mean no more than that
the bankruptcy court may not abrogate the full-payment
requirement on the basis of a fraudulent conveyance holding."
Id. at 139. But this understanding "under-reads our previous
opinion." Id. That opinion "clearly instruct[ed] the bank-
ruptcy court to refrain from interfering with the licensing
decisions of the FCC," id., and as the Second Circuit saw it,
this is exactly what the bankruptcy court did in declaring the
license cancellation null and void. In addition, because "[e]x-
clusive jurisdiction to review the FCC's regulatory action lies
in the courts of appeals" under 47 U.S.C. s 402, In re FCC,
217 F.3d at 139, the Second Circuit found that the bankruptcy
court's license cancellation holding exceeded that court's jur-
isdiction. Id. at 141. The court also noted that "NextWave
remains free to pursue its challenge to the FCC's regulatory
acts" in another forum, pointing out that the company had
already filed "protective notices of appeal" in this court. Id.
at 140-41.
After losing in the Second Circuit, NextWave filed a peti-
tion with the Commission, requesting reconsideration of the
license cancellation. Denying the petition, the Commission
noted first that the public notice of reauction "was not an
order or action of the Commission ... canceling NextWave's
licenses." Order on Reconsideration, FCC 00-335 p 10.
Rather, "[p]ursuant to [Commission] rules, the licenses can-
celed automatically" after NextWave failed to make its first
installment payment. Id. The Commission thus concluded
that NextWave's petition was "late" and its challenge to the
reauction notice "procedurally defective." Id. "Neverthe-
less, because of the importance of the issues raised in
NextWave's petition," id., the Commission went on to address
the company's challenge to the automatic cancellation. The
Commission rejected NextWave's arguments that the cancel-
lation was arbitrary and capricious and barred by estoppel
and waiver, id. p p 11-33, and found that the company's
Bankruptcy Code arguments, having been "summarily reject-
ed by the Second Circuit," were "precluded under the doc-
trine of res judicata." Id. p 26.
NextWave now challenges the Commission's decision on
two basic grounds. First, it claims that the license cancella-
tion is "patently unlawful," Appellants' Opening Br. at 16,
under the provisions of the Bankruptcy Code described ear-
lier: the anti-discrimination provision (section 525), the auto-
matic stay provision (section 362), and the provision of the
Code allowing debtors to "cure" their defaults (section 1123).
Second, citing our decision in Trinity Broadcasting of Flori-
da, Inc. v. FCC, 211 F.3d 618, 631 (D.C. Cir. 2000), where
we held that an agency may not "sanction a company for its
failure to comply with regulatory requirements" without first
providing "fair notice" of those requirements, NextWave ar-
gues that even if the license cancellation is not barred by
the Bankruptcy Code, it is invalid because the Commission
failed to provide adequate notice that the timely payment
regulations apply to Chapter 11 debtors. The Commission,
supported by Intervenors (the Cellular Telecommunications
Industry Association and several telecommunications compa-
nies) defends its decision. |
