United States Court of Appeals, District of Columbia Circuit
January 9, 2019
Appeal of Orders of the Federal Communications Commission
J. Evans argued the cause for appellant. With him on the
briefs was Keenan P. Adamchak.
M. Gossett, Deputy General Counsel, Federal Communications
Commission, argued the cause for appellee. With him on the
brief were Thomas M. Johnson Jr., General Counsel, Jacob M.
Lewis, Associate General Counsel, and Pamela L. Smith,
Counsel. Richard K. Welch, Deputy Associate General Counsel,
entered an appearance.
Before: Rogers, Srinivasan, and Pillard, Circuit Judges.
SRINIVASAN, CIRCUIT JUDGE.
2001, GLH Communications, Inc., a cellular telephone company,
acquired a number of radio spectrum licenses from Leap
Wireless International, another cellular telephone company.
Leap had originally purchased a handful of those licenses
from the Federal Communications Commission under an
installment payment program. When GLH acquired the licenses,
it assumed the obligation to make the installment payments.
GLH, though, failed to make the payments for some of the
licenses, prompting the Commission to cancel those licenses
and reauction the underlying spectrum to new providers.
administrative proceedings before the Commission, GLH
challenged both the Commission's decision to cancel the
licenses and its refusal to give GLH a credit against its
debt for the proceeds of the reauction. The Commission
rejected GLH's arguments, and GLH now appeals. We
conclude that the Commission acted appropriately in
cancelling GLH's licenses for failure to make the
installment payments and in refusing to apply the reauction
proceeds against GLH's debt.
Federal Communications Commission has exclusive authority to
grant licenses to use radio spectrum, and must, as a general
matter, employ an auction system to assign licenses.
See 47 U.S.C. §§ 307(a), 309(j). Congress
identified various purposes that the Commission must seek to
promote when designing an auction system. See id.
§ 309(j)(3). One of those purposes is ensuring that
licenses are disseminated "among a wide variety of
applicants, including small businesses." Id.
end, the Commission developed an installment plan program,
under which qualifying small businesses can pay winning
auction bids in installment payments made over the term of
the license. Such a program, the Commission reasoned, would
enhance the ability of small businesses to participate in
spectrum auctions by reducing the up-front costs of a
license. The structure, however, comes with a condition: any
licenses won with an installment bid "shall be
conditioned upon the full and timely performance of the
licensee's payment obligations under the installment
plan." 47 C.F.R. § 1.2110(g)(4). If an
installment-payment licensee misses a payment (and does not
make up the payment within two quarter-long grace periods),
the licensee "shall be in default, its license shall
automatically cancel, and it will be subject to debt
collection procedures." Id. §
1996, the Commission auctioned off a number of licenses
covering radio spectrum to be used for cellular telephone
service. Two of the winning bidders in that auction were (i)
NTCH, the parent company of GLH at the time, and (ii) a
subsidiary of Leap Wireless International.
years later, NTCH and Leap agreed to trade some of the
licenses each had won in the auction. Although the NTCH
licenses included in the deal had been fully paid at the time
of the auction, six of the Leap licenses had been purchased
using the installment program. In order to secure Commission
approval of the assignment of those licenses, GLH assumed
both the security agreements executed by the Leap subsidiary
when it won the licenses and also the obligation to make all
remaining installment payments. At the same time, Leap agreed
to pay GLH the funds necessary to make the installment
payments each quarter.
arrangement evidently worked without complication for a
couple of years. But in January 2003, Leap failed to make its
payment to GLH, and GLH then failed to make the next
installment payment to the Commission, due on January 31,
2003. Under the Commission's two-grace-period rule, GLH
had until July 31, 2003 to cure the payment delinquency. But
instead of curing the delinquency, GLH filed a waiver
request, in which it explained the circumstances of the
missed payment and asked the Commission for a two-year waiver
of its debt collection rules and payment deadlines to
"allow GLH additional time to try to satisfy its
obligations." Request of GLH Communications, Inc. for
Temporary Waivers of Installment Payment Deadlines (47 C.F.R.
§ 1.2110(g)(4)) and Debt Collection Rules (47 C.F.R.
§ 1.1901 et seq.), at 6 (Apr. 16, 2003), J.A. 42.
18-approximately two weeks before the end of GLH's grace
period-the Commission's Auctions and Industry Analysis
Division released an order denying GLH's request for a
waiver of the payment deadlines. See In re Request of GLH
Commc'ns, Inc. for Temporary Waivers of Installment
Payment Deadlines, 18 FCC Rcd. 14, 695 (2003), J.A. 76.
The Division explained that "strict enforcement of the
installment payment rules enhances the integrity of the
auction and licensing process," and determined that GLH
had not shown any unique circumstances rendering enforcement
of the deadline inequitable. Id. ¶ 11; see
id. ¶¶ 7-18.
the deadline arrived, GLH had paid its outstanding
obligations on only two of the six licenses. The remaining
four licenses automatically cancelled under the governing
regulation. 47 C.F.R. § 1.2110(g)(4). After the
cancellation, GLH filed a petition for reconsideration of the
Division's Order denying a waiver. In addition to the
arguments made in its waiver request, GLH contended that the
Commission had been required by a statute, 47 U.S.C. §
312(c), to provide a hearing before cancelling the licenses,
and further argued that, if the Commission decided to proceed
with cancellation, it should return the payments GLH had
GLH's rehearing petition was pending, the Commission
reauctioned the spectrum covered by GLH's cancelled
licenses to new buyers. The Commission's Wireless
Telecommunications Bureau then released an order denying the
petition for rehearing. See In re GLH Commc'ns,
Inc., 22 FCC Rcd. 2411 (2007), J.A. 104. With respect to
GLH's waiver request, the Bureau's Order largely
repeated the reasoning of the Division. See id.
¶¶ 12-22. With respect to GLH's new arguments,
the Bureau determined that § 312(c)'s hearing
requirement does not apply to automatic ...