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In re Council Tree Investors, et al., No. 11-9569 (10th Cir.)

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Released: December 7, 2011
Appellate Case: 11-9569 Document: 01018758028 Date Filed: 12/07/2011 Page: 1

IN THE UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

In re Council Tree Investors, Inc.


)
and Bethel Native Corporation,

)
No. 11-9569








)
Petitioners.
)

OPPOSITION OF THE FEDERAL COMMUNICATIONS COMMISSION

TO PETITION FOR MANDATORY INJUNCTION

Pursuant to this Court’s order dated November 7, 2011, the Federal
Communications Commission (“FCC” or “Commission”) submits this opposition
to the petition for mandatory injunction filed by Council Tree Investors and Bethel
Native Corporation. Petitioners “request that this Court issue a mandatory
injunction directing the FCC to issue” an order addressing their pending petition
for FCC reconsideration “as soon as possible.” Pet. 30. But their petition does not
come close to satisfying the stringent standard required to justify the extraordinary
relief they seek. Indeed, the subject of petitioners’ reconsideration petition has
become moot. Petitioners ask the Court to compel the FCC to reconsider an earlier
decision to waive a Commission rule that has since been vacated. Moreover, the
FCC’s staff has already drafted a reconsideration order for the Commission’s
consideration. Thus, the remedy sought by petitioners is unnecessary.
In seeking a mandatory injunction, petitioners hope to revive a legal claim
that the D.C. Circuit, the Third Circuit, and the Supreme Court have already
considered and rejected. Specifically, petitioners hope to overturn the results of an
auction of electromagnetic spectrum licenses that the FCC conducted more than
three years ago – an auction that yielded $19 billion in revenues for the federal

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government. This Court should reject petitioners’ latest attempt to upset the
auction results and should deny their petition for a mandatory injunction.

BACKGROUND

A.

Spectrum License Auctions And “Designated Entities”

The Communications Act of 1934 authorizes the FCC to award licenses to
use the electromagnetic spectrum to provide communications services. See 47
U.S.C. §§ 307, 309. Since 1993, the Act has required the Commission to award
many spectrum licenses “through a system of competitive bidding,” i.e., by
auction. 47 U.S.C. § 309(j)(1).

The statute directs the Commission to design auction rules and procedures
that “balance a number of potentially conflicting objectives.” Fresno Mobile
Radio, Inc. v. FCC, 165 F.3d 965, 971 (D.C. Cir. 1999). These objectives include:
developing and deploying new technologies and services “for the benefit of the
public … without administrative or judicial delays,” 47 U.S.C. § 309(j)(3)(A);
avoiding “unjust enrichment,” id. § 309(j)(3)(C); ensuring the “efficient and
intensive use of the electromagnetic spectrum,” id. § 309(j)(3)(D); and “promoting
economic opportunity and competition … by avoiding excessive concentration of
licenses,” id. § 309(j)(3)(B). In particular, the Act requires the agency to adopt
rules that avoid “excessive concentration of licenses … by disseminating licenses
among a wide variety of applicants,” including several statutorily prescribed
groups commonly referred to as “designated entities”: “small businesses, rural
telephone companies, and businesses owned by members of minority groups and
women.” 47 U.S.C. § 309(j)(3)(B).

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To promote the participation of these designated entities (or “DEs”) in
spectrum license auctions, the Commission has made them eligible for bidding
credits, which discount DEs’ required payments for licenses they win at auction “in
an amount measured as a percentage” of their winning bids. Council Tree
Commc’ns, Inc. v. FCC, 619 F.3d 235, 239 (3d Cir. 2010) (“Council Tree III”),
cert. denied, 131 S. Ct. 1784 (2011). For example, if a company that meets the DE
criteria qualifies for a 20 percent bidding credit in a particular auction, and if the
company makes a winning bid of $500,000 for a license in that auction, it will be
required to pay only $400,000 to obtain the license.1
To qualify for bidding credits, a prospective DE must demonstrate that its
gross revenues, in combination with those of its “attributable” interest holders, fall
below certain service-specific caps. See Implementation of the Commercial
Spectrum Enhancement Act and Modernization of the Commission’s Competitive
Bidding Rules and Procedures, 21 FCC Rcd 4753, 4757 ¶ 9 (2006) (“Second
Report & Order”). For purposes of assessing an applicant’s eligibility for bidding
credits, the Commission since 2000 has attributed to the applicant its own gross
revenues as well as those of its affiliates, its “controlling interests” (i.e., those
1 Although FCC rules define “designated entities” to include “businesses owned by
members of minority groups and/or women,” 47 C.F.R. § 1.2110(a), the
Commission eliminated any DE benefits that were based on the race or gender of
an applicant’s owners after the Supreme Court ruled in Adarand Constructors, Inc.
v. Pena,
515 U.S. 200 (1995), that certain federal affirmative action programs were
unconstitutional. See Omnipoint Corp. v. FCC, 78 F.3d 620 (D.C. Cir. 1996).
Since Adarand, bidding credits have been available only to eligible small
businesses based on specific size standards.

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entities that have de jure or de facto control over the applicant), and the affiliates
of its controlling interests. Id. at 4758-59 ¶ 12.
The agency has also taken further 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 and Modernization
of the Commission’s Competitive Bidding Rules and Procedures, 21 FCC Rcd
1753, 1757 ¶ 6 (2006) (“Further Notice”). For example, under the FCC’s unjust
enrichment rules, a DE that has used bidding credits to acquire a license must
return some or all of those credits if it subsequently transfers its license to a non-
DE or otherwise loses its eligibility for bidding credits. At various times, FCC
rules have required repayment of the bidding credits if the licensee lost its DE
eligibility at some point during the ten-year license term.2 The rules in effect at the
beginning of 2006, however, required repayment of bidding credits only if a
licensee lost its DE eligibility within the first five years after it won the license.
See Council Tree III, 619 F.3d at 240-41.

B.

The 2006 Amendments To The DE Rules

In the course of administering its auction program, the FCC discovered
several instances of fraud and abuse by applicants improperly claiming eligibility
2 See, e.g., Implementation of Section 309(j) of the Communications Act –
Competitive Bidding
, 11 FCC Rcd 136, 180 (1995) (requiring total reimbursement
of bidding credits if eligibility was lost at any time during the ten-year license
term); Amendment of the Commission’s Rules to Establish Part 27, the Wireless
Commc’ns Serv.,
12 FCC Rcd 10785, 10918-19 (1997) (providing for 100 percent
reimbursement for loss of eligibility during the first five years of the license term,
with declining reimbursement obligations for years six through ten).

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for DE benefits. For example, some putative DEs were “put[ting] themselves
forward as small companies in order to qualify for auction discounts,” even though
they had entered into agreements to lease their prospective spectrum rights to
larger firms that were not entitled to such benefits. See Further Notice, 21 FCC
Rcd at 1771 (Statement of Comm’r Copps). Other bidders reportedly had acquired
discounted licenses “not for the legitimate objective of developing or offering
spectrum services,” but rather “as investments to be later sold for profit in the
after-market.” United States ex rel. Taylor v. Gabelli, 345 F. Supp. 2d 313, 321-22
(S.D.N.Y. 2004) (internal quotation marks and brackets omitted).
In February 2006, after petitioner Council Tree Communications, Inc.
submitted a proposal to tighten some of the eligibility rules for DE benefits, the
Commission issued a notice of proposed rulemaking. That notice sought comment
on measures to “prevent companies from circumventing the objectives of the
designated entity eligibility rules” and to ensure that DE benefits are “available
only to bona fide small businesses.” Further Notice, 21 FCC Rcd at 1757 ¶¶ 6-7.
After reviewing comments submitted in response to the Further Notice, the
FCC in April 2006 issued the Second Report and Order. In an effort to prevent
fraud and abuse in the DE program, that order amended and tightened the agency’s
auction rules for designated entities in two respects. First, with regard to leasing
and resale arrangements, the Commission adopted two new eligibility restrictions
designed to ensure that every recipient of DE benefits uses its licenses to provide
telecommunications services directly to the public. Second Report and Order, 21
FCC Rcd at 4762-64 ¶¶ 21-27. One restriction – the 25% Attribution Rule –

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provided that “if a DE leases or resells (including at wholesale) more than 25% of
its spectrum capacity to any single lessee or purchaser, it must add that lessee’s or
purchaser’s revenues to its own to determine its continued eligibility for DE
credits.” Council Tree III, 619 F.3d at 251. The other restriction – the 50%
Impermissible Relationship Rule – disqualified license applicants or licensees for
DE benefits “if they lease[d] or [resold] (including at wholesale) more than 50% of
their spectrum capacity” on an aggregate basis. Id. at 253.
Second, the Commission strengthened its unjust enrichment rule by
returning to a ten-year (rather than five-year) repayment period. Under the Ten-
Year Repayment Schedule, a DE that transferred its license to a non-DE or
otherwise lost eligibility for DE benefits at any time during the first ten years of its
license would have to repay some or all of its bidding credits. See Council Tree
III, 619 F.3d at 240-41.
On May 5, 2006, petitioners Council Tree and Bethel Native, along with the
Minority Media and Telecommunications Council (“MMTC”), jointly filed a
petition for expedited reconsideration of the Second Report and Order. See
Implementation of the Commercial Spectrum Enhancement Act and Modernization
of the Commission’s Competitive Bidding Rules and Procedures, 21 FCC Rcd
6703, 6704 n.2 (2006) (“Reconsideration Order”). Because a major auction (the
Advanced Wireless Services (“AWS”) auction, also known as “Auction 66”) was
scheduled to commence shortly, the Commission on its own motion issued an
order on reconsideration before the comment period on Council Tree’s
reconsideration petition had closed. In that order, the agency clarified certain

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aspects of the new DE rules and addressed the issues raised by Council Tree’s
reconsideration petition. Id. at 6706-20 ¶¶ 7-44. But that order did not formally
grant or deny Council Tree’s reconsideration petition, which remained pending
before the Commission.

C.

Previous Litigation Initiated By Council Tree

On June 7, 2006, Council Tree, Bethel Native, and MMTC filed a petition
for review in the Third Circuit, challenging the Second Report and Order, the
Reconsideration Order, and a public notice regarding the timing of the AWS
auction.3 Petitioners also asked the Third Circuit to stay the FCC’s new DE rules
and the upcoming AWS auction pending judicial review on the merits. On June
29, 2006, the Third Circuit denied petitioners’ stay request, concluding that “[t]he
public interest … militates strongly in favor of letting the auction proceed without
altering the rules of the game at this late date.” Council Tree Commc’ns, Inc. v.
FCC, No. 06-2943, slip op. at 6 (3d Cir. June 29, 2006). After briefing on the
merits, the court dismissed the petition for review as “incurably premature”
because petitioners had filed it (1) while their request for reconsideration of the
Second Report and Order was still pending before the FCC and (2) before the
Reconsideration Order had been published in the Federal Register. Council Tree
Commc’ns, Inc. v. FCC, 503 F.3d 284, 287-91 (3d Cir. 2007) (“Council Tree I”).
As a result of their jurisdictional misstep in Council Tree I, petitioners did
not obtain a judicial ruling on the merits of their challenge to the new DE rules
3 Although MMTC participated in the Third Circuit litigation, it has not joined
Council Tree and Bethel Native in seeking a mandatory injunction from this Court.

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until 2010. See Council Tree III, 619 F.3d at 248-59. In the meantime, the FCC
conducted a number of spectrum auctions while the revised DE rules – including
the 25% Attribution Rule, the 50% Impermissible Relationship Rule, and the Ten-
Year Repayment Schedule – were in effect.
In 2006, the Commission held Auction 66 (the AWS auction). That auction
yielded “nearly $14 billion in winning bids.” Council Tree III, 619 F.3d at 248.
DEs accounted for “57 of the 104 winning bidders” in Auction 66, “winning 20%
of the individual licenses auctioned.” Id.
Of particular relevance here, the Commission conducted another major
auction, known as Auction 73, in early 2008. That auction involved the
reallocation of the 700 MHz spectrum that television broadcasters had relinquished
in converting from analog to digital broadcast format. The Commission decided to
apply its newly revised DE rules to Auction 73. It found that its “existing
competitive bidding rules” – including the new DE rules – did not “require
modification for purposes of an auction of commercial 700 MHz Band licenses.”
Service Rules for the 698-746, 747-762 and 777-792 MHz Bands, 22 FCC Rcd
8064, 8067 ¶ 6 (2007) (“700 MHz First Report and Order”). In a separate
rulemaking decision, the Commission adopted additional service-specific rules
governing the licenses that would be made available at Auction 73. Service Rules
for the 698-746, 747-762 and 777-792 MHz Bands, 22 FCC Rcd 15289 (2007)
(“700 MHz Second Report and Order”).
On its own motion, the agency decided to grant a limited waiver of its 50%
Impermissible Relationship Rule with respect to Auction 73. Specifically, it

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waived application of that rule to arrangements for lease or resale (including
wholesale) of the spectrum capacity of one particular license, the Upper 700 MHz
Band D Block license. Waiver of Section 1.2110(b)(3)(iv)(A) of the Commission’s
Rules For the Upper 700 MHz Band D Block License, 22 FCC Rcd 20354 (2007)
(“Waiver Order”).
Auction 73 “generated about $19 billion in winning bids.” Council Tree
III, 619 F.3d at 248. DEs, which comprised 56 of the 101 winners in that auction,
won 35% of the individual licenses. Id. But no bidder – DE or otherwise – won
the D Block license (the license that was the subject of the Waiver Order).
Because bidding for the D Block license in Auction 73 “did not meet the
applicable reserve price of $1.33 billion” under the FCC’s rules, “there was no
winning bid for that license.” Service Rules for the 698-746, 747-762 and 777-792
MHz Bands, 23 FCC Rcd 8047, 8049 ¶ 1 (2008) (“Second Further Notice”).4
Council Tree filed a petition for review of the 700 MHz Second Report and
Order in the D.C. Circuit. It sought to challenge the FCC’s application of the
revised DE rules to Auction 73. Like the Third Circuit in Council Tree I, the D.C.
Circuit held that Council Tree’s claim was jurisdictionally barred. Council Tree
4 The Commission decided “not to re-offer the D Block license immediately in
order to provide additional time to consider options with respect to the D Block
spectrum.” Second Further Notice, 23 FCC Rcd at 8049 ¶ 1 (internal quotation
marks omitted). In the Second Further Notice, the Commission sought comment
on possible modifications to the various rules governing the D Block license,
including the adoption of a rule that would codify the waiver granted in the Waiver
Order
. See id. at 8105-06 ¶¶ 166-67. The agency has yet to make any changes to
the D Block rules, and the D Block spectrum license remains unassigned.

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Commc’ns, Inc. v. FCC, 324 F. App’x 3 (D.C. Cir. 2009) (“Council Tree II”). The
D.C. Circuit concluded that Council Tree could not challenge the Commission’s
decision to use its existing DE rules in a particular auction because the 700 MHz
Second Report and Order had not “reopened” the agency’s original decision to
adopt those rules. Id. at 4-5. Less than two months later, the D.C. Circuit denied
Council Tree’s petition for rehearing en banc.
After the FCC formally denied Council Tree’s petition for reconsideration of
the Second Report and Order in March 2008,5 petitioners filed a second petition
for review of the Second Report and Order in the Third Circuit. They contended
that the new DE rules violated the Communications Act, were arbitrary and
capricious, and were issued in violation of the notice-and-comment requirements
of the Administrative Procedure Act (“APA”). Not only did petitioners ask that
the rules be vacated; they also urged the court to nullify both the AWS and 700
MHz auctions and to order that those auctions be conducted again under new DE
rules.
The Third Circuit granted the petition in part and denied it in part. Council
Tree III, 619 F.3d at 248-59. The court rejected petitioners’ argument that the
revised DE rules were inconsistent with the Communications Act. It noted that,
although the Act required that the FCC’s rules allow for the “disseminat[ion] [of]
licenses among a wide variety of applicants, including small businesses [and] rural
5 Implementation of the Commercial Spectrum Enhancement Act and
Modernization of the Commission’s Competitive Bidding Rules and Procedures,
23
FCC Rcd 5425 (2008) (“Second Reconsideration Order”).

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telephone companies,” the statute also included other competing requirements. Id.
at 249 n.7 (quoting 47 U.S.C. § 309(j)(3)(B)). The court went on to explain:
“Given the general agreement that the DE program can be abused, as well as the
continuing participation by DEs in auctions held under the new rules, we cannot
conclude that the FCC has failed to promote small-business participation at all.”
Id.
Turning to petitioners’ APA claims, the court reached different conclusions
for different rules. It upheld the 25% Attribution Rule, rejecting petitioners’
notice-and-comment and arbitrary-and-capricious challenges to that rule. Council
Tree III, 619 F.3d at 251-53. With respect to the 50% Impermissible Relationship
Rule and the Ten-Year Repayment Schedule, however, the court determined that
the Commission had provided inadequate notice under the APA. Id. at 253-56.6
Despite that finding, the Third Circuit expressly declined petitioners’ request
that the court “rescind Auctions 66 and 73.” Council Tree III, 619 F.3d at 257. It
reasoned that rescission of those auctions “would involve unwinding transactions
worth more than $30 billion, upsetting what are likely billions of dollars of
additional investments made in reliance on the results, and seriously disrupting
existing or planned wireless service for untold numbers of customers.” Id. In the
court’s judgment, “the possibility of such large-scale disruption in wireless
communications would have broad negative implications for the public interest.”
6 Having reached that conclusion, the court found it unnecessary to consider
petitioners’ further argument that those rules were arbitrary and capricious. Id. at
255 n.8, 256 n.10.

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Id. The court further observed that nothing in the record indicated that the winners
of Auctions 66 and 73 “were anything but innocent third parties in relation to the
FCC’s improper rulemaking.” Id. “Under these circumstances,” the Third Circuit
concluded that “it would be imprudent and unfair to order rescission of the auction
results.” Id. at 258. Instead, the Third Circuit concluded that the appropriate
remedy for the APA notice violations was vacatur of the defective rules, leaving
the auction results undisturbed. Id.
Petitioners sought Supreme Court review of Council Tree III. In their
petition for certiorari, they asserted that, once the Third Circuit ruled that two of
the challenged DE rules violated the APA, that court was obligated to rescind
Auctions 66 and 73. The Supreme Court denied certiorari on March 28, 2011.
Council Tree Investors, Inc. v. FCC, 131 S. Ct. 1784 (2011).

D.

Council Tree’s Pending Petition For Reconsideration

As discussed in Part C above, the FCC on its own motion waived the
application of the 50% Impermissible Relationship Rule with respect to the D
Block license, one of the licenses offered for bid in Auction 73. Waiver Order, 22
FCC Rcd at 20354 ¶ 1. On December 7, 2007 – the deadline for asking the
Commission to reconsider the Waiver Order – petitioners filed a petition for FCC
reconsideration of that order. They complained that the Commission’s “selective
waiver approach” would result in improperly “disparate treatment of similarly
situated DEs.” Council Tree Petition for Reconsideration, Dec. 7, 2007, at 8, 11
(“Reconsideration Petition”). They argued that the Waiver Order “should be
reconsidered and rescinded.” Id. at 14; see also Council Tree Reply to Opposition,

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Jan. 2, 2008, at 10 (“Reply to Opposition”). Frontline Wireless opposed the
reconsideration petition.
On May 18, 2011 – less than two months after the Supreme Court denied the
petition for certiorari in Council Tree III seeking rescission of the auction results –
petitioners filed a purported “supplement” to their petition for reconsideration. By
petitioners’ own admission, this submission – which was filed more than three
years after the deadline for seeking reconsideration – sought to “[r]efashion[ ]” the
relief that petitioners requested in their original reconsideration petition.
Supplement to Council Tree Petition for Reconsideration, May 18, 2011, at 4
(“May 2011 Supplement”). In the May 2011 Supplement, petitioners argued for
the first time that the Commission should respond to their reconsideration petition
by “vacat[ing] the results of Auction 73.” Id. at 9.
The petition for reconsideration and the May 2011 Supplement remain
pending at the Commission.

ARGUMENT

I.

PETITIONERS’ REQUEST FOR A MANDATORY INJUNCTION IS
GOVERNED BY THE SAME STRINGENT STANDARDS THAT
APPLY TO MANDAMUS PETITIONS.

The APA authorizes a reviewing court to “compel agency action unlawfully
withheld or unreasonably delayed.” 5 U.S.C. § 706(1). This Court has said that
the “availability of a remedy under the APA” for unreasonable agency delay
“technically precludes” the alternative remedy of a writ of mandamus. Mt.
Emmons Mining Co. v. Babbitt, 117 F.3d 1167, 1170 (10th Cir. 1997). At the

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same time, the Court has recognized that a “mandatory injunction” to compel
unreasonably delayed agency action “is essentially in the nature of mandamus
relief.” Id.
Because petitioners here seek relief “essentially in the nature of mandamus,”
they must satisfy the same stringent standards that guide the Court’s analysis of
mandamus petitions. Mandamus “is a drastic remedy” that should “be invoked
only in extraordinary circumstances.” In re Cooper Tire & Rubber Co., 568 F.3d
1180, 1186 (10th Cir. 2009) (internal quotation marks omitted); see also Allied
Chem. Corp. v. Daiflon, Inc., 449 U.S. 33 (1980) (per curiam) (reversing this
Court’s grant of a writ of mandamus). Typically, this Court grants the
“extraordinary remedy” of mandamus “only when the party seeking review is
clearly and indisputably entitled to relief.” McClendon v. City of Albuquerque, 630
F.3d 1288, 1298 n.3 (10th Cir. 2011).
Furthermore, to guard against undue judicial intrusion into an agency’s
legitimate practices and prerogatives, a court typically will not grant the
extraordinary relief sought by petitioners unless an agency’s delay is “egregious.”
See In re Monroe Commc’ns Corp., 840 F.2d 942, 945 (D.C. Cir. 1988);
Telecomm. Research & Action Ctr. v. FCC, 750 F.2d 70, 79 (D.C. Cir. 1984)
(“TRAC”); see also Cutler v. Hayes, 818 F.2d 879, 896 (D.C. Cir. 1987) (“An
agency has broad discretion to set its agenda and to first apply its limited resources
to the regulatory tasks it deems most pressing.”).
Because petitioners have failed to meet these exacting standards, their
petition should be denied.

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II.

PETITIONERS HAVE FAILED TO SHOW THAT THE FCC HAS
UNREASONABLY DELAYED ACTION IN THIS CASE.

Since petitioners filed their petition for reconsideration and May 2011
Supplement, the FCC has not engaged in any unreasonable delay, much less a
delay that is “so egregious as to warrant mandamus.” TRAC, 750 F.2d at 79. For
purposes of determining whether an agency’s delay is sufficiently egregious to
justify a grant of mandamus, courts examine the six factors identified in TRAC,
750 F.2d at 80. Contrary to petitioners’ argument (Pet. 19-29), none of those
factors supports petitioners’ contention that extraordinary relief is warranted here.
“Rule of Reason.” When Congress does not set a specific deadline for
agency action, as is the case here (see pages 18-22 below), “the time agencies take
to make decisions must be governed by a rule of reason.” TRAC, 750 F.2d at 80
(internal quotation marks omitted). Petitioners maintain that the amount of time
the FCC has taken to act on their reconsideration petition “violates any conceivable
rule of reason.” Pet. 19. In assessing “whether the time the [FCC] is taking to act
upon the [reconsideration] petition satisfies the rule of reason,” however, this Court
cannot decide the issue “in the abstract, by reference to some number of months or
years beyond which agency inaction is presumed to be unlawful.” Mashpee
Wampanoag Tribal Council, Inc. v. Norton, 336 F.3d 1094, 1102 (D.C. Cir. 2003).
Rather, the reasonableness of the agency’s conduct depends on the specific factual
context surrounding the proceeding in question.
Viewed in context, the FCC’s conduct in this proceeding easily satisfies the
rule of reason. The petition for reconsideration that petitioners filed in December

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2007 requested only that the Waiver Order “be reconsidered and rescinded.”
Reconsideration Petition at 14; see also Reply to Opposition at 10. The Waiver
Order was narrow in scope. It waived the application of the 50% Impermissible
Relationship Rule with respect to just one license offered in Auction 73: the D
Block license. The waiver would have become relevant only if a DE had won the
D Block license during Auction 73. But Auction 73 produced no winning bid for
that license. Second Further Notice, 23 FCC Rcd at 8049 ¶ 1. Because the D
Block license was not awarded to a DE at the conclusion of Auction 73, the waiver
granted by the Waiver Order had no effect. Under these circumstances, the
Commission properly perceived no pressing need to act quickly on the petition for
reconsideration of the Waiver Order.
In the aftermath of Auction 73, there were two good reasons why the
Commission refrained from ruling on the pending reconsideration petition. First,
the agency was actively considering adoption of a rule that would have specifically
exempted the D Block license from the 50% Impermissible Relationship Rule (and
thereby rendered a waiver of the rule unnecessary in a future D Block auction).
See Second Further Notice, 23 FCC Rcd at 8105-06 ¶¶ 166-67; see also Service
Rules for the 698-746, 747-762 and 777-792 MHz Bands, 23 FCC Rcd 14301,
14383 ¶ 243 (2008) (the Commission tentatively concluded that it “should codify
the substance of the previously granted waiver” of the 50% Impermissible
Relationship Rule with respect to DE eligibility “in connection with the D Block”).
Second, the Commission recognized that the then-pending Council Tree III
litigation in the Third Circuit could produce a ruling that might make

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reconsideration of the Waiver Order unnecessary. “The very essence of waiver is
the assumed validity of the general rule.” WAIT Radio v. FCC, 418 F.2d 1153,
1158 (D.C. Cir. 1969). The Commission understood that if Council Tree III
resulted in vacatur of the 50% Impermissible Relationship Rule, the Waiver Order,
which had granted a waiver of that rule, would become moot. For that reason, the
agency chose not to act on the petition for reconsideration of the Waiver Order
before the Third Circuit issued a decision in Council Tree III.
The wisdom of the Commission’s approach became apparent in August
2010 when the Third Circuit vacated the 50% Impermissible Relationship Rule.
See Council Tree III, 619 F.3d at 257-59. By vacating the rule that had been
waived by the Waiver Order, the decision in Council Tree III obviated the need for
a waiver and thereby rendered the Waiver Order moot. Thus, in the wake of
Council Tree III, it was reasonable for the Commission to conclude that there was
no urgent need to address petitioners’ request that the Waiver Order be rescinded.
In May 2011 – nearly three and a half years after the deadline for filing a
timely petition for reconsideration of the Waiver Order – petitioners filed a
“supplement” to their reconsideration petition. In that “supplement,” petitioners
asked the Commission, as part of its reconsideration of the Waiver Order, to
“vacate the results of Auction 73.” May 2011 Supplement at 9. Having made that
sweeping request only a little more than six months ago, petitioners cannot
plausibly claim that the FCC has unreasonably delayed action on their
supplemental request for relief. Indeed, petitioners’ claim of unreasonable delay is
particularly meritless given that their May 2011 Supplement purported to

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“[r]efashion[ ]” their request for relief, May 2011 Supplement at 4, and urged the
agency for the first time in this proceeding to rescind the results of an auction that
generated over $19 billion in revenues for the federal government.7

No Statutory Timetable.

“[W]here Congress has provided a timetable or
other indication of the speed with which it expects the agency to proceed in the
enabling statute, that statutory scheme may supply content for [the] rule of reason.”
TRAC, 750 F.2d at 80. In this case, however, the Communications Act prescribes
no deadline for FCC action on petitioners’ reconsideration petition. Consequently,
there is no merit to petitioners’ assertion that the APA “requires the Court to
compel agency action” in this case. Pet. 18. Petitioners base that claim on a
misunderstanding of this Court’s decision in Forest Guardians v. Babbitt, 174 F.3d
1178 (10th Cir. 1999). That case is very different from this one.
Unlike this case, Forest Guardians “involved agency inaction in the face of
a mandatory statutory deadline.” 174 F.3d at 1191. There, the Fish and Wildlife
7 Given the fact-specific nature of the Court’s inquiry here, petitioners are incorrect
in asserting that “an administrative agency’s delay of action for nearly four years is
per se unreasonable.” Pet. 14. Indeed, courts previously have ruled that agency
delays of more than twice that length did not warrant extraordinary relief in some
cases. See, e.g., Qwest Commc’ns Int’l Inc. v. FCC, 398 F.3d 1222, 1239 (10th
Cir. 2005) (even though “nearly nine years ha[d] passed” since Congress directed
the FCC to adopt universal service rules, this Court declined to impose a deadline
for FCC action on remand to correct legal defects in those rules); Her Majesty the
Queen in Right of Ontario v. EPA,
912 F.2d 1525, 1534 (D.C. Cir. 1990) (the
EPA’s delay of “more than nine years” in resolving an issue was not unreasonable
given “the unusual complexity of the factors facing the agency”). In any event, as
we explain above, this proceeding does not involve a four-year delay. The only
meaningful issue in this case has been pending before the agency for less than
seven months.

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19
Service failed to act within a statutorily prescribed time frame to issue a final rule
regarding the critical habitat of the silvery minnow. Id. at 1181-84. Faced with a
clear violation of an express statutory deadline, the Court reached an unremarkable
conclusion: “When an agency fails to meet a concrete statutory deadline, it has
unlawfully withheld agency action.” Id. at 1191.

In reaching that conclusion, the Court drew a critical distinction between
“unlawfully withheld” and “unreasonably delayed” agency action – a distinction
based on “whether Congress imposed a date-certain deadline on agency action.”
Forest Guardians, 174 F.3d at 1190 (emphasis added). The Court explained that
“when an entity governed by the APA fails to comply with a statutorily imposed
absolute deadline” – as the agency did in Forest Guardians – “it has unlawfully
withheld agency action and courts, upon proper application, must compel the
agency to act.” Id. By contrast, where (as here) “an agency has no concrete
deadline establishing a date by which it must act, … a court must compel only
action that is delayed unreasonably.” Id. In this context, the APA “leaves in the
courts the discretion to decide whether agency delay is unreasonable.” Id.
Petitioners next contend that Section 405 of the Communications Act
“contains multiple ‘indication[s]’ of Congress’ overall expectation of FCC
promptness” in addressing petitions for reconsideration. Pet. 20. But nothing in
Section 405 provides any indication that the FCC acted unreasonably in this case.
Petitioners make much of “the relatively short 30- and 90-day deadlines set
in Section 405 for certain key actions.” Pet. 20. Those deadlines, however, do not
impose any time constraints on the FCC in this particular proceeding.

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20
The 30-day deadline cited by petitioners applies not to the FCC, but to
applicants for administrative reconsideration: “A petition for reconsideration must
be filed within thirty days from the date upon which public notice is given of the
order, decision, report, or action complained of.” 47 U.S.C. § 405(a). That
express time limit on prospective reconsideration petitioners provides no support
for the notion that Congress implicitly placed a deadline on FCC deliberations after
a reconsideration petition is properly filed.
To be sure, Section 405 requires the FCC to act within 90 days of the filing
of a reconsideration petition in a narrow subset of proceedings, such as “where
such petition relates to an instrument of authorization granted without a hearing,”
47 U.S.C. § 405(a), or where the petitioner seeks “reconsideration of an order
concluding a hearing under section 204(a)” or “an investigation under section
208(b)” into the reasonableness of a common carrier’s rates, terms, and practices in
providing service. 47 U.S.C. § 405(b)(1). As petitioners themselves acknowledge,
however, their reconsideration petition falls within none of those categories. Pet.
16 n.21. For the large majority of reconsideration petitions – including the one at
issue here – neither Section 405 nor any other provision of the Communications
Act establishes a deadline for FCC action on reconsideration.
Petitioners further observe that Section 405 gives the FCC “the discretion to
conserve time and resources by providing only ‘concise’ reasons” for the grant or
denial of reconsideration petitions. Pet. 20 (quoting 47 U.S.C. § 405(a)). But
nothing in Section 405 precludes the agency from providing a more detailed
explanation of its reasoning when it concludes that such an explanation is

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21
necessary. Thus, the provision offers no support for petitioners’ argument that the
FCC must expedite disposition of all reconsideration petitions.
Finally, petitioners assert that because Section 405 “mak[es] reconsideration
a prerequisite for seeking judicial review in certain cases,” Congress must have
intended for the FCC to act swiftly on all reconsideration petitions. Pet. 20. That
conclusion does not follow from petitioners’ premise. The requirement cited by
petitioners is designed to ensure the exhaustion of administrative remedies, not to
impose a time limit on FCC reconsideration proceedings. See Electronic Eng’g
Co. v. FCC, 140 F.3d 1045, 1053 (D.C. Cir. 1998) (construing Section 405 “as
codifying the exhaustion of administrative remedies doctrine, which requires
complainants, before coming to court, to give the FCC a fair opportunity to pass on
a legal or factual argument”) (internal quotation marks omitted). Nothing in the
text or legislative history of Section 405 suggests that this exhaustion requirement
was intended to expedite Commission action.
In sum, Section 405 does not advance petitioners’ argument that the FCC
has unreasonably delayed action in this case. Only one statutory deadline governs
this proceeding, and that deadline applies to petitioners, not the FCC. To obtain
reconsideration of the Waiver Order, petitioners had to file a reconsideration
petition within 30 days of the order’s release. While their original reconsideration
petition was timely filed, their May 2011 Supplement was filed more than three
years too late. Insofar as petitioners argue that the FCC has unreasonably delayed
action on their supplemental request to rescind Auction 73, the Court should reject
that claim because, among other things, petitioners’ request was plainly untimely.

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22

Economic Regulation.

In TRAC, the D.C. Circuit observed that “delays that
might be reasonable in the sphere of economic regulation are less tolerable when
human health and welfare are at stake.” TRAC, 750 F.2d at 80. This proceeding
does not implicate human health and welfare. Petitioners seek rescission of
Auction 73 in the hope that a re-auction of the 700 MHz licenses will give
petitioners an opportunity to acquire some of those licenses. Because “the interests
at stake here are commercial, not directly implicating human health and welfare,
… the need to protect them through the exceptional remedy of mandamus is
therefore lessened.” Monroe, 840 F.2d at 945.8

Competing Priorities.

In assessing petitioners’ request for a mandatory
injunction, the Court “should consider the effect of expediting delayed action on
agency activities of a higher or competing priority.” TRAC, 750 F.2d at 80. The
Court should also consider whether any delay in this proceeding was attributable to
a reasonable decision by the FCC to “first apply its limited resources” to other
“regulatory tasks” that it deemed more “pressing.” Cutler, 818 F.2d at 896.
In the Waiver Order that is the subject of petitioners’ reconsideration
petition, the FCC in November 2007 granted a limited waiver of its 50%
Impermissible Relationship Rule. The waiver applied only to a single license (the
D Block license) and a single auction (Auction 73). In December 2007, petitioners
asked the agency to reconsider and rescind that waiver. As discussed above, two
8 Petitioners note that the FCC had planned to use the D Block to create a public
safety communications network for use in emergencies. Pet. 21. But there was no
winning bid for the D Block license in Auction 73; and none of the licenses that
were won at that auction were reserved for public safety communications.

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23
subsequent developments have effectively rendered the waiver moot. First,
Auction 73 produced no winning bid for the D Block license. Then in 2010, the
Third Circuit in Council Tree III vacated the rule that the Commission had waived
in the Waiver Order.
In light of these events, there has been no urgent need to address the pending
reconsideration petition, and the agency has sensibly devoted its limited resources
to more important matters. For example, the Commission recently issued a 750-
page order that comprehensively reforms its universal service and intercarrier
compensation systems. See Connect America Fund, FCC 11-161 (released
November 18, 2011), available at
http://transition.fcc.gov/Daily_Releases/Daily_Business/2011/db1122/FCC-11-
161A1.pdf. That order seeks to promote economic growth by ensuring that all
Americans are served by broadband networks that support high-speed Internet
access.
In addition, earlier this year, the Commission adopted “a rule that requires
facilities-based providers of commercial mobile data services to offer data roaming
arrangements to other such providers on commercially reasonable terms and
conditions, subject to certain limitations.” Reexamination of Roaming Obligations
of Commercial Mobile Radio Serv. Providers and Other Providers of Mobile Data
Servs., 26 FCC Rcd 5411, 5411 ¶ 1 (2011), petition for review pending, Cellco
P’ship v. FCC, Nos. 11-1135 & 11-1136 (D.C. Cir. filed May 13, 2011). This rule
was designed to promote “[w]idespread availability of data roaming capability” by
enabling “consumers with mobile data plans to remain connected when they travel

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24
outside their own provider’s network coverage areas by using another provider’s
network.” Id.
The FCC has also expended extensive resources over many months in
reviewing AT&T’s request for approval of license transfers associated with its
proposed acquisition of T-Mobile. See Applications of AT&T Inc. and Deutsche
Telekom AG, DA 11-1955 (released November 29, 2011) (agreeing to allow AT&T
to withdraw its application before the FCC, but issuing a 110-page staff report
analyzing AT&T’s proposed merger with T-Mobile).
There is no merit to petitioners’ argument that the FCC should have moved
more expeditiously on petitioners’ reconsideration petition because it entails the
same policy “priority” (regarding competition) as the proposed merger of AT&T
and T-Mobile. Pet. 22-25. The competitive impact of Auction 73 cannot
reasonably be equated with AT&T’s attempted acquisition of T-Mobile.
Regardless of its outcome, a single auction involving just one segment of the
electromagnetic spectrum does not raise the same competitive issues as an
attempted merger by two of the four largest competitors in the wireless market. In
any event, the Commission already considered the competitive effects of awarding
the 700 MHz licenses to the winning bidders in Auction 73 when, consistent with
its obligation under 47 U.S.C. § 309(a), the agency determined that granting the
licenses to those bidders would serve the public interest. See Union Tel. Co., 23
FCC Rcd 16787 (2008).

No Prejudice.

In weighing the need for extraordinary relief in this case, the
Court “should also take into account the nature and extent of the interests

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25
prejudiced by delay.” TRAC, 750 F.2d at 80. Petitioners argue that they are
prejudiced as long as the results of Auction 73 remain in place. Pet. 25-26. But
even the immediate release of a reconsideration order by the FCC will not bring
them any closer to accomplishing their hitherto unsuccessful goal of unwinding
Auction 73.
Petitioners are under the mistaken impression that if the FCC issues an order
denying their reconsideration petition, they can seek rescission of Auction 73 when
they challenge that order in court. This assumption is incorrect for two reasons.
First, petitioners did not request rescission of Auction 73 in this proceeding
until May 2011 – more than three years after the statutory deadline for seeking
FCC reconsideration of the November 2007 Waiver Order. See pages 20-21
above. Typically, in the absence of extremely unusual circumstances, the
Commission would dismiss such an untimely pleading without considering its
merits. In the event that the agency dismisses the May 2011 Supplement as
untimely, Section 405 of the Communications Act would bar petitioners from
raising on appeal any claims that were first presented in the untimely Supplement.
See 21st Century Telesis Joint Venture v. FCC, 318 F.3d 192, 199-200 (D.C. Cir.
2003); Virgin Islands Tel. Co. v. FCC, 989 F.2d 1231, 1236-37 (D.C. Cir. 1993).
Second, even if petitioners had a viable argument on the merits for seeking
rescission of Auction 73 (a claim that three courts have already rejected), this
proceeding would be an improper vehicle for obtaining that remedy. Petitioners
claim that Auction 73 must be unwound because the FCC conducted that auction

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26
using DE rules that were subsequently invalidated.9 But the Commission decided
to apply those rules to Auction 73 in an order that was released several months
before the Waiver Order. See 700 MHz First Report and Order, 22 FCC Rcd at
8067 ¶ 6. Petitioners never petitioned for judicial review of the 700 MHz First
Report and Order. The Waiver Order, in contrast, merely waived one of the DE
rules with respect to a single license offered at Auction 73. Petitioners cannot seek
review of the agency’s decision to apply certain rules by challenging a separate
order that waived one of those rules.
More specifically, petitioners cannot use a petition for review of the Waiver
Order to mount a challenge to the FCC’s decision to apply its DE rules to Auction
73 unless “the FCC has somehow ‘reopened’ [that] decision” in the Waiver Order.
See Council Tree II, 324 F. App’x at 4. For jurisdictional purposes, the agency’s
“intention to initiate a reopening must be clear from the administrative record.” Id.
(quoting Biggerstaff v. FCC, 511 F.3d 178, 185 (D.C. Cir. 2007)). The record here
reveals no such clear intention.
The Waiver Order neither addressed nor reopened the FCC’s previous
decision to apply its existing DE rules to Auction 73. That order resolved just one
narrow issue: whether to waive application of a particular DE rule to the D Block
license. The Waiver Order had no bearing on any of the licenses that were actually
awarded at the conclusion of Auction 73. Consequently, neither the Waiver Order
9 In invalidating the underlying DE rules, the Third Circuit rejected petitioners’
request to unwind Auction 73. Council Tree III, 619 F.3d at 257.

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27
nor any subsequent reconsideration order in this proceeding can provide petitioners
with an appropriate vehicle for seeking the rescission of Auction 73.
Given these procedural impediments, delay in this reconsideration
proceeding would not prejudice petitioners. Even if the Commission issued the
requested reconsideration order immediately, that order would not afford
petitioners any chance to achieve the objective they have repeatedly pursued –
without success – before three other courts: overturning the outcome of Auction
73.10

No Agency “Lassitude.”

Finally, there is no “agency lassitude” in this case.
TRAC, 750 F.2d at 80 (internal quotation marks omitted). According to
petitioners, the issue of paramount importance in this proceeding is whether the
results of Auction 73 should be rescinded. But petitioners did not raise that issue
before the Commission until May 2011.11 In the relatively short time since
petitioners filed their May 2011 Supplement, the Commission’s staff has drafted an
order for the Commission’s consideration that resolves both the original
reconsideration petition and the late-filed “supplement.” While the Commission
has not yet adopted the draft order, the agency has already made considerable
progress toward resolving an issue that was first presented to the FCC less than
10 This would not be the first time that petitioners have stumbled over jurisdictional
hurdles in their long-running quest to overturn Auction 73. See Council Tree I,
503 F.3d at 287-91; Council Tree II, 324 F. App’x at 4-5.
11 Petitioners filed their May 2011 Supplement less than two months after the
Supreme Court denied certiorari in Council Tree III. By that point, three different
courts – the D.C. Circuit, the Third Circuit, and the Supreme Court – had rejected
petitioners’ repeated attempts to undo Auction 73.

Appellate Case: 11-9569 Document: 01018758028 Date Filed: 12/07/2011 Page: 28
28
seven months ago. “Certainly this is not an instance where the agency has taken
no action. Mandamus would be premature.” Environmental Def. Fund v. NRC,
902 F.2d 785, 790 (10th Cir. 1990).

CONCLUSION


For the foregoing reasons, the Court should deny the petition for mandatory
injunction.
Respectfully
submitted,







Austin C. Schlick
General
Counsel







Peter Karanjia







Deputy General Counsel







Richard K. Welch
Deputy
Associate
General
Counsel







/s/James M. Carr
James M. Carr
Counsel
Federal
Communications
Commission
Washington,
DC

20554
(202)
418-1740
December 7, 2011

Appellate Case: 11-9569 Document: 01018758028 Date Filed: 12/07/2011 Page: 29
11-9569

IN THE UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

In re Council Tree Investors, Inc. and Bethel Native Corporation,
Petitioner

v.

Federal Communications Commission and United States of America,
Respondents.

CERTIFICATE OF SERVICE

I, James M. Carr, hereby certify that on December 7, 2011, I electronically
filed the foregoing Opposition of the Federal Communications Commission
to Petition for Mandatory Injunction with the Clerk of the Court for the
United States Court of Appeals for the Tenth Circuit by using the CM/ECF
system. Participants in the case who are registered CM/ECF users will be
served by the CM/ECF system.
Dennis P. Corbett
S. Jenell Trigg
Lerman Senter PLLC
2000 K Street, NW
Suite 600
Washington, D.C. 20006
/s/ James M. Carr

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