Council Tree Investors, Inc. v. Fed. Commc'ns Comm'n

• Decision Date: 03 January 2014
• Docket Number: No. 12–9543.,12–9543.
• Citation: 739 F.3d 544
• Parties: COUNCIL TREE INVESTORS, INC. and Bethel Native Corporation, Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION and The United States of America, Respondents. Cellco Partnership, d/b/a Verizon Wireless, Intervenor. Asian American Justice Center, a member of the Asian American Center for Advancing Justice; Steven R. Bradley; Media Alliance; National Association of Multicultural Digital Entrepreneurs; National Hispanic Media Coalition; Public Knowledge; Rainbow Push Coalition; Gilbert H. Scott, Sr.; Women's Institute for Freedom of the Press; Arizona Hispanic Newswire LLC; Business Intelligence Solutions, LLC; Brian O'Reilly; Dempster Group, LLC; Kinex Networking Solutions, Inc.; National Association for the Advancement of Colored People; National Indian Telecommunications Institute; National Organization for Women Foundation; Office of Communication of the United Church of Christ, Inc.; CTIA—The Wireless Association; The Telecommunications Industry Association; Mobile Future, Amici Curiae.
• Court: U.S. Court of Appeals — Tenth Circuit

739 F.3d 544

COUNCIL TREE INVESTORS, INC. and Bethel Native Corporation, Petitioners,

v. FEDERAL COMMUNICATIONS COMMISSION and The United States of America, Respondents.Cellco Partnership, d/b/a Verizon Wireless, Intervenor.Asian American Justice Center, a member of the Asian American Center for Advancing Justice; Steven R. Bradley; Media Alliance; National Association of Multicultural Digital Entrepreneurs; National Hispanic Media Coalition; Public Knowledge; Rainbow Push Coalition; Gilbert H. Scott, Sr.; Women's Institute for Freedom of the Press; Arizona Hispanic Newswire LLC; Business Intelligence Solutions, LLC; Brian O'Reilly; Dempster Group, LLC; Kinex Networking Solutions, Inc.; National Association for the Advancement of Colored People; National Indian Telecommunications Institute; National Organization for Women Foundation; Office of Communication of the United Church of Christ, Inc.; CTIA—The Wireless Association; The Telecommunications Industry Association; Mobile Future, Amici Curiae.

No. 12–9543.

United States Court of Appeals, Tenth Circuit.

Jan. 3, 2014.

Dennis P. Corbett (S. Jenell Trigg with him on the briefs), Lerman Senter PLLC, Washington, D.C., for Petitioners.

Richard Welch (Sean A. Lev, Peter Karanjia, Jacob M. Lewis, and Laurence N. Bourne, Federal Communications Commission, Office of General Counsel; and Joseph F. Wayland, Robert B. Nicholson, and Robert J. Wiggers, United States Department of Justice, Antitrust Division, Appellate Section, with him on the brief), Federal Communications Commission, Office of General Counsel, for Respondents.

Thomas R. McCarthy (Andrew G. McBride, Brett A. Shumate, Wiley Rein LLP, Washington, D.C.; Michael E. Glover, Verizon Communications, Inc., Arlington, VA; and John T. Scott, III, and Catherine M. Hilke, Verizon Communications, Inc., Washington, D.C., with him on the brief), Wiley Rein LLP, Washington, D.C., for Intervenor.

Jeneba Jalloh Ghatt, The Ghatt Law Group LLC, College Park, Maryland, filed an amicus curiae brief for Arizona Hispanic Newswire LLC, Business Intelligence Solutions, LLC, Brian O'Reilly, Dempster Group, LLC, Gilbert H. Scott, Sr., Kinex Networking Solutions, Inc., Steven R. Bradley, Asian American Justice Center, Media Alliance, National Association for the Advancement of Colored People, National Association of Multicultural Digital Entrepreneurs, National Hispanic Media Coalition, National Indian Telecommunications Institute, National Organization for Women Foundation, Office of Communication of the United Church of Christ, Inc., Public Knowledge, Rainbow PUSH Coalition, and Women's Institute for Freedom of the Press, in support of Petitioners.

Michael Altschul, Senior Vice President and General Counsel, CTIA—The Wireless Association, Washington, D.C., David H. Solomon, Bryan N. Tramont, and Russell P. Hanser, Wilkinson Barker Knauer, LLP, Washington, D.C., and Danielle Coffey, Vice President Government Affairs, Telecommunications Industry Association, Washington, D.C., filed an amicus brief for CTIA—The Wireless Association, The Telecommunications Industry Association, and Mobile Future, in support of Respondents.

Before KELLY, McKAY, and HOLMES, Circuit Judges.

HOLMES, Circuit Judge.

Petitioners Council Tree Investors, Inc., a communications investment firm, and Bethel Native Corporation, a small wireless carrier based in Alaska (collectively, “Council Tree”), seek our review of two orders issued by the Federal Communications Commission (“FCC” or “the Commission”)—the D Block Waiver Order (the “Waiver Order”) issued in 2007 and the Waiver Reconsideration Order issued in 2012. In so doing, Council Tree specifically requests nullification of Auction 73, the FCC's auction of the 700–MHz wireless spectrum conducted in early 2008 pursuant to the Waiver Order. Council Tree filed a Petition for Reconsideration of the Waiver Order (the “Waiver Reconsideration Petition”) with the FCC in 2007, as well as a Supplement to the Waiver Reconsideration Petition (the “Supplement”) in 2011. In its Waiver Reconsideration Order, the FCC dismissed the Waiver Reconsideration Petition as moot and dismissed the Supplement as untimely. For the reasons set forth below, we dismiss Council Tree's petition, as it pertains to the Waiver Order, and deny its petition, as it relates to the Waiver Reconsideration Order.

I

The Communications Act of 1934 authorizes the FCC to award licenses to use the electromagnetic spectrum in order to provide communications services. See47 U.S.C. §§ 307, 309. In 1993, Congress enacted section 309(j), which directs the Commission to award spectrum licenses “through a system of competitive bidding,” e.g., by auction. Id. § 309(j)(1). Pursuant to section 309(j), the Commission must design systems of competitive bidding that, among other objectives, “promot[e] economic opportunity and competition ... by avoiding excessive concentration of licenses and by disseminating licenses among a wide variety of applicants, including small businesses, rural telephone companies, and businesses owned by members of minority groups and women.” Id. § 309(j)(3)(B). These statutorily-prescribed groups are commonly referred to as “designated entities,” or “DEs.” ¹

To promote the participation of DEs in spectrum-license auctions, the Commission awards “bidding credits” that reduce by a specified percentage the amounts that DEs would otherwise pay for licenses won at auction. 47 C.F.R. § 1.2110(f). To prevent abuse of the bidding-credits system, the Commission is required to seek the “avoidance of unjust enrichment through the methods employed to award” spectrum licenses, 47 U.S.C. § 309(j)(3)(C), and to establish “such ... antitrafficking restrictions and payment schedules as may be necessary to prevent unjust enrichment as a result of the methods employed to issue licenses and permits,” id. § 309(j)(4)(E).

Accordingly, the Commission took steps to ensure that “only legitimate small businesses reap the benefits of the Commission's designated entity program.” Implementation of the Commercial Spectrum Enhancement Act & Modernization of the Comm'n's Competitive Bidding Rules & Procedures, Further Notice of Proposed Rule Making, 21 FCC Rcd. 1753, 1757 ¶ 6 (2006). Under the Commission's unjust-enrichment rules, a DE that has used bidding credits to acquire a license must return some or all of those credits if, during the first five years of the license term, it loses its eligibility for bidding credits or subsequently transfers its license to an entity that is not eligible for DE status. See id. at 1763 ¶ 20;see also47 C.F.R. § 1.2111(d).

In April 2006, the Commission issued the Implementation of the Commercial Spectrum Enhancement Act and Modernization of the Commission's Competitive Bidding Rules and Procedures, Second Report and Order, 21 FCC Rcd. 4753 (2006) (“DE Second Report & Order”). That document made two primary revisions to the auction rules for DEs (collectively, the “2006 Rules”). First, it increased the repayment period for the unjust-enrichment rules from five years to ten years, such that if a DE transferred its license to a non-DE or otherwise lost eligibility for DE benefits during the first ten years of its license, it would have to repay some or all of its bidding credits (the “Ten–Year Rule”). 47 C.F.R. § 1.2111(d)(2)(i) (2006) (vacated 2010). And, second, it disqualified license applicants or licensees from eligibility for DE benefits if they leased or resold (including at wholesale) more than 50% of their aggregate spectrum capacity (the “Fifty–Percent Rule”). Id.§ 1.2110(b)(3)(iv)(A) (2006) (vacated 2010).

In May 2006, three petitioners—Council Tree Communications, Inc., Bethel Native Corporation, and the Minority Media and Telecommunications Council—jointly filed a petition for expedited reconsideration of the DE Second Report & Order. SeeImplementation of the Commercial Spectrum Enhancement Act & Modernization of the Comm'n's Competitive Bidding Rules & Procedures, Order on Recons. of Second Report & Order, 21 FCC Rcd. 6703, 6703–04, 6721 n.2 (2006) (“Order on Reconsideration”). Before the FCC published its order addressing that petition, in June 2006, the three petitioners filed for review in the Third Circuit of the DE Second Report & Order. The Third Circuit dismissed the petition as premature.²See Council Tree Commc'ns, Inc. v. FCC (Council Tree I), 503 F.3d 284, 287 (3d Cir.2007) (“We have no jurisdiction to consider an incurably premature petition for review. A petition to review a non-final agency order is incurably premature.” (citation omitted)).

Several months before the Third Circuit issued this decision, the Commission had stated on April 27, 2007 that it would apply the 2006 Rules promulgated in the DE Second Report & Order to Auction 73, in which the FCC would auction several 700–MHz blocks of the spectrum. SeeServ. Rules for the 698–746, 747–762 & 777–792 MHz Bands, Report & Order, 22 FCC Rcd. 8064, 8067 ¶ 6 (2007) (“700 MHz First Report & Order”) (“With regard to auctions-related issues, we find that our existing competitive bidding rules do not require modification for purposes of an auction of commercial 700 MHz Band licenses.”). Council Tree did not seek judicial review of this order.

However, in August 2007, the Commission issued another order in the same proceeding. SeeServ. Rules for the 698–746, 747–762 & 777–792 MHz Bands, Second Report & Order, 22 FCC Rcd. 15289 (2007) (“700 MHz Second Report & Order”). There, the focus was not on DEs and the application of the 2006 Rules to Auction 73; rather, the Commission (among other things) addressed a topic, as to which it had previously sought comment, relating to “establishing a public/private partnership between a commercial licensee and a single public safety licensee with respect to developing a nationwide, shared interoperable broadband network for use by public safety users.” Id. at 15292 ¶ 2;see Council Tree Commc'ns, Inc. v. FCC ...