Skybridge Spectrum Foundation v. FCC. 9th Circuit (FCC Violation of Its Auction Rules) - Response To Order Show Cause

Case: 10-71808 07/06/2010 Page: 1 of 34 ID: 7394395 DktEntry: 18
IN THE
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
Case No. 10-71808
SKYBRIDGE SPECTRUM FOUNDATION, a Delaware Nonprofit

Corporation, INTELLIGENT TRANSPORTATION & MONITORING
WIRELESS LLC, a Delaware Limited Liability Company, V2G LLC, a
Delaware Limited Liability Company, and WARREN HAVENS, an
individual.
Petitioners,
v.
UNITED STATES OF AMERICA, and the FEDERAL

COMMUNICATIONS COMMISSION
Respondents.
RESPONSE TO JUNE 14, 2010 ORDER TO SHOW CAUSE
NOSSAMAN LLP
PATRICK J. RICHARD (SBN 131046)
(Counsel of Record)
prichard@nossaman.com
TAMIR D. DAMARI
50 California Street, 34th Floor

San Francisco, California 94111-4707
Telephone: (415) 398-3600
Facsimile: (415) 398-2438
Attorneys for Petitioners

Table of Contents
Page
I. INTRODUCTION........................................................................... 1
II. RELEVANT FACTS....................................................................... 1
III PROCEDURAL HISTORY ............................................................ 7
IV. ARGUMENT .................................................................................. 7
A. The Rule Change Is Appealable Under

47 U.S.C. §402(a).................................................................. 7
1. The Rule Change Is A Legislative Rule ..................... 8
2. The Rule Change Is Binding..................................... 17

3. The Rule Change Is Final ......................................... 19
4. Ample Precedent Supports This Court’s

Authority To Invalidate an Ultra Vires Rule
Change ...................................................................... 24
B. The Exhaustion Requirements of 47 U.S.C. §155(c)(7)

are not Applicable to this Case ........................................... 27
i
I. INTRODUCTION
This case arises out of an attempt by the Federal Communications
Commission (the “FCC”), through its Wireless Telecommunications Bureau (the
“Bureau”), to modify FCC regulations which limit permissible amendments to
wireless license applications (the “Rule Change”). This Rule Change is ultra
vires, occurring without APA-mandated notice and comment. As described more
fully below, the FCC and the Bureau have promulgated and implemented an
amendment policy directly contradicting the unambiguous language of 47 CFR
§1.2105(b), the regulation governing amendments to final auction applications. As
demonstrated infra, this policy (i.e., the Rule Change) is a binding final legislative
rule and is therefore appealable.
II. RELEVANT FACTS
Petitioners are private nonprofit and for-profit businesses based in Berkeley,
California. They provide wireless communications services for government
entities, critical infrastructure companies and others. To this end, they obtain and
use licenses procured from the FCC. When the FCC receives license applications
for commercial purposes that are mutually exclusive, such as applications for the
same frequency in the same area, (and for other reasons), the Federal
Communications Act (“FCA”) requires it to choose among these applications by
1
using a competitive bidding process. See 47 U.S.C. §309(j)(1).1 Under this
bidding system, so-called “Designated Entities” receive preference pursuant to
FCC regulations. See 47 CFR §1.2110(a).2 Specifically, Designated Entities
obtain bidding credits at FCC-administered auctions based upon their revenue size
(determined by average annual attributable gross revenues, as defined). These
bidding credits permit Designated Entities to in effect "outbid" larger entities
(since the amount of the credit is added to the entity's bid in actual dollars to
determine its competing bid in each round of the auction).3 Thus, the value of a
bidding credit stems from the competitive business advantage it confers – it is only
secondarily a payment discount upon a successful bid.
The purpose of the Designated Entity bidding credit is to further the FCA-
mandated Congressional policy of promoting the development of small and
minority-owned wireless businesses, including by “bidding preferences.” See 47
1
“If . . . mutually exclusive applications are accepted for any initial license or
construction permit, then . . . the Commission shall grant the license or permit
to a qualified applicant through a system of competitive bidding that meets the
requirements of this subsection.”
2
This regulation states: “Designated entities are small businesses, businesses
owned by members of minority groups and/or women, and rural telephone
companies.”
3
Thus, a Designated Entity entitled to a 35% bidding credit which offers a bid of
$650 for a particular license at auction is deemed to have bid $1,000 at the
auction.
2
U.S.C. §309(j)(3)(B), §309(j)(4)(C) and (D).4 Petitioners are small businesses
which qualify for the highest (35%) Designated Entity bidding credit.
The auction process under 47 U.S.C. §309(j)(1) involves three steps: (1) the
FCC’s identification of “qualified bidders” among license applicants on the basis
of certified statements in so-called “short-form applications” (otherwise known as
Form 175s); (2) the participation of qualified bidders in the auction for the
spectrum licenses being sold; and (3) post-auction award of licenses to high
bidders upon the acceptance of the high bidder’s “long form application.”
Several safeguards are built into the auction system to protect its integrity.
First, each applicant which claims on its short-form application Designated Entity
status (to obtain a bidding credit) pursuant to §1.2110 must declare, under penalty
of perjury, that it in fact qualifies as a Designated Entity. See 47 CFR
§1.2105(a)(2)(iv) (“The short-form application must contain the following
information . . . If the applicant applies as a designated entity pursuant to §1.2110,
4
These statutes direct the FCC to design and execute auctions “promoting
economic opportunity and competition . . . by disseminating licenses among a
wide variety of applicants, including small businesses.” To this end, the FCC
is directed to “ensure that small businesses, rural telephone companies, and
businesses owned by members of minority groups and women . . .are given the
opportunity to participate in the provision of spectrum based services and, for
such purposes, consider the use of…bidding preferences.” As described more
fully below, the Rule Change “ensures” precisely the opposite. It deprives
small businesses of the benefits of bidding preferences, since (as discussed
infra) it permits larger companies to take advantage of the bidding preference
system, eliminating the advantage to small businesses the preference system
was designed to promote.
3
a statement to that effect and a declaration, under penalty of perjury, that the
applicant is qualified as a designated entity under §1.2110.”)
Second, 47 CFR §1.2105(b) bars “Major amendments [to short form
applications that] include…changes in an applicant’s size which would affect
eligibility for designated entity provisions,” and provides that “An application will
be considered to be newly filed if it is amended by a major amendment and may
not be resubmitted after applicable filing deadlines.” It further states that “Major
amendments cannot be made to a short-form application after the initial filing
deadline.” (emphasis added).
However, over the course of the past four years, the FCC, through the
Bureau, has undermined these safeguards and Congressional intent, by instituting a
de facto legislative rule change (i.e., the Rule Change), the terms of which directly
contradict the plain language of §1.2105(b). The Rule Change has been
implemented in at least 9 separate public auctions since 2006, most recently in
connection with the FCC’s “Auction of Lower and Upper Paging Bands Licenses,”
AU Docket No. 09-205 (“Auction 87”), which includes Petitioners. Specifically,
in Paragraph 43 of a May 27, 2010 Public Notice associated with Auction 87 (“DA
10-863”), the Bureau states:
43….Bidders must immediately report any change

affecting their eligibility for a bidding credit. Bidders
should clearly state the nature of the change in an
amendment to their short-form application and in the
summary letter referenced above. In cases of diminished
4
bidding credit eligibility, the Commission will make

appropriate adjustments in the bidding credit prior to the
computation of any down and final payment amounts
due [after end of the auction].
See Public Notice DA 10-863, attached hereto as Exhibit 1, at pg. 9
(emphasis added). Identical language is contained in the Public Notices associated
with In re Auction of FM Broadcast Construction Permits; 77 Bidders Qualified to
Participate In Auction 79, 24 FCC Rcd 10782, 10790 (August 19, 2009); In re
Auction of LPTV and TV Translator Digital Companion Channels, 23 FCC Rcd
15274, 15283 (October 24, 2008); In re: 16 Bidders Qualified To Participate In
Auction 86, 2009 FCC LEXIS 5271 at *25 (Oct. 8, 2009); In re Auction of Aws-1
& Broadband PCS Licenses, 23 FCC Rcd 11850, 11858 (August 4, 2008); Auction
of 700 MHz Band Licenses - Auction 73, 23 FCC Rcd 276, 281 (January 14,
2008); In re Five Bidders Qualified to Participate in Auction No. 72, 2007 FCC
LEXIS 4124 at *17 (June 5, 2007); Auction Of Broadband PCS Spectrum
Licenses; 23 Bidders Qualified to Participate in Auction No. 71, 22 FCC Rcd 8347
*17 (May 2, 2007); Auction Of 1.4 Ghz Band Licenses; Nine Bidders Qualified to
Participate in Auction No. 6922, FCC Rcd 605 *14 (January 23, 2007); Auction Of
Advanced Wireless Services Licenses; 168 Bidders Qualified to Participate in
Auction No. 66, 21 FCC Rcd 8585 n. 15 (July 28, 2006).
The Rule Change violates the spirit and letter of §1.2105(b) (and related
parts of §1.2105(a), as shown below) in several crucial respects. Most
5
significantly, under the Rule Change, unscrupulous applicants can: (i) falsely
certify their eligibility for Designated Entity bidding credits; (ii) obtain bidding
credits based upon these false certifications; (iii) outbid competitors at auction
based on these bidding credits; and (iv) thereafter, once they have outbid entities
properly entitled to bidding credits, amend their short-form applications to “down-
grade” their Designated Entity bidding credit status (e.g., from a 35% to a 25%
credit, or from a 25% credit to no bidding credit), subject to the FCC’s
“adjustment” (i.e., increase) of the final payment amount for the license(s).
Unscrupulous applicants are thereby motivated, and in any case allowed, to
misrepresent their bidding credit status at the short-form application stage
(permitting them to outbid competitors at auction) because they know that the FCC
will permit them to correct this misrepresentation with no penalty once they have
already been awarded a spectrum license. In short, bidders that are not small
businesses are allowed to bid with falsely obtained bidding credits – a preference
that Congress intended to confer only upon small businesses and other limited
classes of preferred categories.
Petitioners, who are bona fide small companies with deserved bidding
credits in Auction 87 (and who have participated in past auctions, and intend to
participate in future auctions) have been and continue to be harmed by this Rule
Change. Therefore, by virtue of the instant appeal, they seek an Order of this
6
Court invalidating the Rule Change, thus compelling the FCC to comply with
§1.2105(b) as written.
III. PROCEDURAL HISTORY
On June 8, 2010, Petitioners filed this appeal challenging the Rule Change.
Concurrently, Petitioners filed an Emergency Motion for Stay of Agency Action
or, in the Alternative, Petition for Writ of Mandamus (the “Emergency Motion.”)
in which Petitioners sought an emergency stay of Auction 87, which was
scheduled to commence on June 15, 2010.
On June 11, 2010 the FCC filed an Opposition to the Emergency Motion, to
which Petitioners filed a Reply on June 14, 2010. On June 14, 2010, this Court
denied the Emergency Motion and issued an Order directing Petitioners to show
cause why this appeal should not be dismissed for lack of subject matter
jurisdiction. In its Order, the Court identified two jurisdictional issues:
(i) appealability under 47 U.S.C. §402(a); and (ii) exhaustion of remedies under 47
U.S.C. 155(c)(7). Each of these issues is addressed in turn.
IV. ARGUMENT
A. The Rule Change Is Appealable Under 47 U.S.C. §402(a)
47 U.S.C. §402(a) provides for appellate jurisdiction over “Any proceeding
to enjoin, set aside, annul or suspend any order of the Commission under this
Chapter.” However, not all actions by the Commission are appealable under
7
§402(a). For example, jurisdiction under §402(a) is premised upon a “final” FCC
determination. See 28 U.S.C. §2342 (otherwise known as the “Hobbs Act”).5
Petitioners maintain that three factors militate decisively in favor of the
appealability of the Rule Change6 under §402(a): (i) the Rule Change is a de facto
legislative rule; (ii) the Rule Change is final; and (iii) the Rule Change is binding.
Each of these factors is discussed below.
1. The Rule Change Is A Legislative Rule
The appealability of the Rule Change can only be discerned in view of its
nature, purpose and effect; i.e., whether it is an interpretive rule or a legislative
rule. The status of the Rule Change as a legislative rule is important because
legislative rules are more likely to be deemed “final” appealable orders. See
Mckee, Judicial Review Of Agency Guidance Documents: Rethinking The Finality
5
This statute states: “The court of appeals…has exclusive jurisdiction to enjoin,
set aside, suspend…or to determine the validity of…all final orders of the
Federal Communications Commission made reviewable by section 402(a) of
title 47”.
6
The FCC’s most recent promulgation of the Rule Change was in Auction 87
(discussed above). The most recent known application of the Rule Change also
occurred during the course of this auction, when the Wireless Bureau allowed
two applicant companies to down-grade their bidding credit eligibility status.
This action was referenced in the Emergency Motion as the “Two-Bidder
Determination.” Nonetheless, it should be noted that the Two-Bidder
Determination is not the decision giving rise to this appeal. Rather, it is merely
one recent application of the Rule Change which has been applied for years
since 2005. Thus, to be clear, this case is not an appeal from a licensing
determination under 47 U.S.C. §402(b), but is instead an appeal of a final
agency action under 47 U.S.C. §402(a).
8
Doctrine, 60 Admin. L. Rev. 371, 389-90 (“The legislative/nonlegislative
distinction is also critical . . . where the challenger seeks relief based on a specific
statutory judicial review provision authorizing review only of ‘regulations’ or
‘final regulations.’”). This is because legislative rules, in contrast to non-binding
interpretive rules, “create rights, impose obligations, or effect a change in existing
law pursuant to authority delegated by Congress.” Hemp Indus. Assoc. v. DEA,
333 F.3d 1082, 1087 (9th Cir. 2003).
A finding that a rule is a legislative rule is also important because “An
agency can issue a legislative rule only by using the notice and comment
procedure described in the APA, [whereas] an agency need not follow the notice
and comment procedure to issue an interpretive rule.” Id.7
There are three circumstances under which a rule has the “force of law”
sufficient to render it a legislative rule: (i) when, in the absence of the rule, there
would not be an adequate legislative basis for enforcement action; (ii) when the
agency has explicitly invoked its general legislative authority; or (iii) when the
rule effectively amends a prior legislative rule. Id. The third category is
particularly pertinent to this case. Under the rubric established by this category,
7
In making this determination, the Court need not accept the agency’s
characterization of a rule at face value. Id; see also, Croplife America v. EPA,
329 F.3d 876, 883 (D.C. Cir. 2003) (“The agency’s characterization of its own
action is not controlling if it self-servingly disclaims any intention to create a
rule with the ‘force of law,’ but the record indicates otherwise.”)
9
a rule may be considered legislative even where the agency does not hold out the
rule as such, if it is inconsistent with a prior rule having the force of law. Id. As
noted by the DC Circuit, such ultra vires rule changes are particularly insidious:
Congress passes a broadly worded statute. The agency

follows with regulations . . . Then as years pass, the
agency issues circulars or guidance or memoranda . . .
often expanding the commands in the regulations . .
.Law is made, without notice and comment, without
public participation, and without publication in the
Federal Register or the Code of Federal Regulations. . .
.An agency operating in this way gains a large
advantage. It can issue or amend its real rules, i.e., its
interpretative rules and policy statements, quickly and
inexpensively without following any statutorily
prescribed procedures. . . . The agency may also think
there is another advantage--immunizing its lawmaking
from judicial review.
See Appalachian Power Co. v. EPA, 208 F.3d 1015, 1020 (D.C. Cir. 2000).
As described below, the Rule Change effectively amends a prior legislative
rule. It is therefore a legislative rule, which is invalid because it has been issued
without notice and comment. See Barahona-Gomez v. Reno, 167 F.3d 1228, 1235
(9th Cir. 1999); Yesler Terrace Community Council v. Cisneros, 37 F.3d 442, 449
(9th Cir. 1994); Southern California Aerial Advertisers’ Assoc. v. Federal Aviation
Admin., 881 F.2d 672 (9th Cir. 1989).
As noted above, the prior legislative rule at issue is 47 CFR §1.2105, which
states, in relevant part:
(a)(2)(iv) If the applicant applies as a designated entity

[the applicant must provide], a statement to that effect
10
and a declaration, under penalty of perjury, that the

applicant is qualified as a designated entity.
(b)(2)The Commission will provide bidders a limited
opportunity to cure defects specified herein (except for
failure to sign the application and to make
certifications)….During the resubmission period for
curing defects, a short-form application may be amended
or modified to cure defects identified by the Commission
or to make minor amendments or modifications. After
the resubmission period has ended, a short-form
application may be amended or modified to make minor
changes or correct minor errors in the application. Major
amendments cannot be made to a short-form application
after the initial filing deadline. Major amendments
include changes in ownership of the applicant that would
constitute an assignment or transfer of control, changes
in an applicant’s size which would affect eligibility for
designated entity provisions….Minor amendments
include, but are not limited to, the correction of
typographical errors and other minor defects not
identified as major. An application will be considered to
be newly filed if it is amended by a major amendment
and may not be resubmitted after applicable filing
deadlines.
Thus, §1.2105(b)(2) unambiguously provides that “major amendments” to
final Form 175s are strictly prohibited. Major amendments include any
amendment relating to an applicant’s size which would affect eligibility for
Designated Entity status under FCC rules (made after the Form 175 deadline).8
8
Similarly, under 47 CFR §1.65(a): “Each applicant is responsible for the
continuing accuracy and completeness of information furnished in a pending
application or in Commission proceedings involving a pending application. . .
Whenever there has been a substantial change as to any other matter which may
be of decisional significance in a Commission proceeding involving the
pending application, the applicant shall as promptly as possible and in any
event within 30 days, unless good cause is shown, submit a statement
11
The regulation further provides that in no event is a failure to supply an accurate
certification curable by amendment or otherwise. Id. (“The Commission will
provide bidders a limited opportunity to cure defects specified herein (except for
failure to sign the application and to make certifications).”) Furthermore, “a major
ownership amendment to an application for which the filing window has closed
would normally make that application untimely and therefore unacceptable for
filing.” In Re Biennial Regulatory Review, 13 FCC Rcd 9672, *40-41 (1998).
By its terms, §1.2105(b)(2) applies to any amendments relating to
Designated Entity size. It encompasses amendments in which an applicant avers
that it is a smaller Designated Entity size than originally claimed. It also
encompasses amendments in which an applicant avers that it is larger than
originally claimed. In the course of enacting §1.2105(b)(2), the FCC considered
a proposal that would have permitted applicants after the short-form deadline to
“down-grade” a claim for a bidding credit via an amendment:
[C]ommenters’ opinions differ on what types of

amendments the Commission should categorize as major
or minor. For example, AT&T and ISTA argue that
major amendments should include all changes in
ownership that constitute a change in control, as well as
all changes in size that would affect an applicant’s
eligibility for designated entity provisions. In contrast,
Metrocall contends that all changes in ownership
continued from previous page

furnishing such additional or corrected information as may be appropriate.”
(emphasis added).
12
incidental to mergers and acquisitions, non-substantial

pro forma changes, and involuntary changes in
ownership should be categorized as minor. Metrocall
also states that an applicant should not be permitted to
upgrade its designated entity status after the short form
filing deadline (i.e., go from a “small” to “very small”
business), but should be permitted to lose its designated
entity status as a result of a minor change in control (i.e.,
exceed the threshold for eligibility as a small business).
63 FR 2315, 2322 (January 15, 1998), emphasis added.
The FCC squarely rejected this proposal:
[W]e believe that a definition of major and minor

amendments similar to that provided in our PCS rules is
appropriate. After the short-form filing deadline,
applicants will be permitted to make minor amendments
to their short-form applications both prior to and during
the auction. However, applicants will not be permitted
to make major amendments or modifications to their
applications after the short-form filing
deadline….Consistent with the weight of the comments
addressing the issue major amendments will also include
any change in an applicant’s size which would affect an
applicant’s eligibility for designated entity
provisions….In contrast, minor amendments will include
. . . the correction of typographical errors and other
minor defects, and any amendment not identified as
major.
Id.
Nevertheless, the FCC and Bureau, over the past four years, have
systematically implemented the Rule Change, which directly contradicts (and thus
“effectively amends”) §1.2105(b)(2), and makes a mockery of the sworn
certification required under §1.2105(a)(2)(iv). As noted supra, this Rule Change
13
permits license applicants to: (i) falsely certify their eligibility for Designated
Entity bidding credits; (ii) obtain bidding credits via these false certifications, and
use them to outbid competitors; and (iii) subsequently amend their short-form
applications to effectuate a post hoc cure of the false certification, subject to the
FCC’s adjustment of the purchase price. In short, the FCC has adopted a practice
identical to the proposal considered and rejected by the Commission in
formulating §1.2105(b)(2). The Rule Change turns the small business bidding
credit system envisioned by Congress into a program which fosters false credits
claimed by large applicants. Thus, by re-engineering §1.2105(b) in the Rule
Change, the FCC has attempted to implement a de facto revised regulation without
the notice and comment procedures mandated by the Administrative Procedure
Act.
The provenance of the Rule Change is no mystery. It can be directly traced
to an earlier auction involving certain of Petitioners (FCC Auction No. 61), in
which licenses were awarded to a company known as Maritime Communications
and Land Mobile, LLC (“MCLM”). MCLM, via its sworn short-form application
submitted in this auction, sought and obtained a 35% bidding credit from the FCC
as a small business Designated Entity. After Petitioners revealed that this
representation by MCLM was false (because MCLM had failed to properly
attribute the gross revenues of its principal’s spouse in claiming the bidding
14
credit), Petitioners sought to have the subject licenses denied to MCLM.9
Thereafter, the FCC directed MCLM to amend its auction application and pay a
sum essentially equivalent to its falsely claimed 35% bidding credit, at which point
the FCC granted MCLM the licenses won with the undeserved bidding credits.
Nearly five years later, this case is still on administrative appeal before the FCC,
and the FCC has neither applied §1.2105(b)(2) to MCLM, nor addressed the
perjury of MCLM’s principals. In these appeals, the FCC has steadfastly
maintained (despite the plain language of §1.2105(b)(2)) that MCLM was
permitted to amend its bidding credit eligibility status on the grounds that this
endeavor was purportedly a minor application amendment. See e.g., In re:
Maritime Communications/Land Mobile, LLC, 2I FCC Rcd I 3135 (November 27,
2006).10
9
MCLM’s principals are currently being investigated for misrepresentations
made during this auction. (http://www.scribd.com/doc/28336861/FCC-
Enforcement-Bureau-Letter-of-Investigation-dated-2-26-2010-to-
Sandra-DePriest-of-MCLM)
10
MCLM’s principal (Sandra DePriest) and her spouse are well known at the
FCC. The FCC Chairman at the time of Auction 61 was an appointee under the
Bush administration who also appointed Mrs. DePriest’s spouse, Donald
DePriest, to the board of the Tennessee Valley Authority. (See:
http://epw.senate.gov/public/index.cfm?FuseAction=Hearings.Testimony&Hea
ring_ID=da47ed15-802a-23ad-4341-1ee2229081f8&Witness_ID=4f0478e9-
0482-416a-baec-b11aa87e2efa) Mrs. DePriest was also a former staff attorney
at the FCC. Both Mr. and Mrs. DePriest contributed and raised substantial
funds for the Republican Party, and Mrs. DePriest was a party delegate.
http://www.cbsnews.com/stories/2004/08/31/politics/main639607.shtml.
15
The Rule Change was apparently devised by the FCC in an attempt to place
a post hoc imprimatur on the FCC’s actions in the Auction 61 matter. Thus, in the
Public Notices associated with subsequent auctions, the Bureau began to include
language (identical to the language contained in Paragraph 43 of DA 10-863)
permitting short-form applicants to downgrade their bidding credit eligibility
status:
43….Bidders must immediately report any change

affecting their eligibility for a bidding credit. Bidders
should clearly state the nature of the change in an
amendment to their short-form application and in the
summary letter referenced above. In cases of diminished
bidding credit eligibility, the Commission will make
appropriate adjustments in the bidding credit prior to the
computation of any down and final payment amounts
due [after end of the auction].11
See also In re Auction of FM Broadcast Construction Permits; 77 Bidders
Qualified to Participate In Auction 79, 24 FCC Rcd 10782, 10790 (August 19,
2009); In re Auction of LPTV and TV Translator Digital Companion Channels, 23
FCC Rcd 15274, 15283 (October 24, 2008); In re: 16 Bidders Qualified To
Participate In Auction 86, 2009 FCC LEXIS 5271 at *25 (Oct. 8, 2009); In re
11
This language underscores how the Rule Change is a violation of §1.2105. By
the time the “final payment amount” is due, any reimbursement of the bidding
credit becomes meaningless, particularly where the subject bidder has already
been deemed the high bidder at auction, and has had the opportunity to fully
utilize the bidding credits. In all cases, improperly used bidding credits affect
the auction process, either by permitting the entity falsely-claiming the credit to
outbid others, or by driving up the bids at auction.
16
Auction of Aws-1 & Broadband PCS Licenses, 23 FCC Rcd 11850, 11858 (August
4, 2008); Auction of 700 MHz Band Licenses - Auction 73, 23 FCC Rcd 276, 281
(January 14, 2008); In re Five Bidders Qualified to Participate in Auction No. 72,
2007 FCC LEXIS 4124 at *17 (June 5, 2007); Auction Of Broadband PCS
Spectrum Licenses; 23 Bidders Qualified to Participate in Auction No. 71, 22 FCC
Rcd 8347 *17 (May 2, 2007); Auction Of 1.4 Ghz Band Licenses; Nine Bidders
Qualified to Participate in Auction No. 6922, FCC Rcd 605 *14 (January 23,
2007); Auction Of Advanced Wireless Services Licenses; 168 Bidders Qualified to
Participate in Auction No. 66, 21 FCC Rcd 8585 n. 15 (July 28, 2006). 12 The FCC
apparently recognized that if it endeavored to change §1.2105 via the proper notice
and comment procedures, it would be tacitly admitting that the regulation was not
applied properly in Public Auction 61. Instead, the agency has tried to effectuate a
surreptitious de facto revision to the CFR which plainly violates the APA. For
each of the above reasons, the Rule Change is a legislative rule.
2. The Rule Change Is Binding
The appealability of the Rule Change also stems from the fact that it is
binding. In this regard, courts have recognized that de facto legislative rules can
12
Each of the foregoing auctions has been completed, except for Auction 87.
Bidding in Auction 87 commenced on June 15, 2010. While bidding continues,
“provisionally winning bids” on licenses involving over 80% of eligible
bidding have already been made through 62 bidding rounds (as of July 2,
2010), and the auction is substantially completed.
17
be “binding” (and therefore appealable) in the same manner as rules properly
promulgated under APA notice and comment procedures:
EPA tells us that its Periodic Monitoring Guidance is not

subject to judicial review because it is not final, and it is
not final because it is not "binding." . . .But we have . . .
recognized that an agency's other pronouncements can,
as a practical matter, have a binding effect . . .If an
agency acts as if a document issued at headquarters is
controlling in the field, if it treats the document in the
same manner as it treats a legislative rule . . . then the
agency's document is for all practical purposes
"binding."
Appalachian Power Co. v. EPA, 208 F.3d 1015, 1020-21 (D.C. Cir. 2000).
Under this standard, the Rule Change is clearly binding and therefore
appealable. Firstly, the FCC treats the Rule Change and its associated adjustment
policy as if it were controlling and binding. Among other things, the Rule Change
is expressed in mandatory language (i.e., “Bidders must immediately report any
change affecting their eligibility for a bidding credit . . .In cases of diminished
bidding credit eligibility, the Commission will make appropriate adjustments in
the bidding credit prior to the computation of any down and final payments due
[after the end of the auction]”) (emphasis added).13 Such mandatory language
13
See Exhibit 1, at pg. 9 (emphasis added); In re Auction of FM Broadcast
Construction Permits; 77 Bidders Qualified to Participate In Auction 79, 24
FCC Rcd 10782, 10790 (August 19, 2009); In re Auction of LPTV and TV
Translator Digital Companion Channels, 23 FCC Rcd 15274, 15283 (October
24, 2008); In re: 16 Bidders Qualified To Participate In Auction 86, 2009 FCC
LEXIS 5271 at *25 (Oct. 8, 2009); In re Auction of Aws-1 & Broadband PCS
Licenses, 23 FCC Rcd 11850, 11858 (August 4, 2008); Auction of 700 MHz
18
demonstrates the existence of a binding appealable rule. Community Nutrition
Institute v. Rogers, 818 F.2d 943, 946-47 (D.C. Cir. 1987) (Appellate court
concludes that the use of the word “will” by the FDA indicated that an “action
level” statement was a binding norm, noting that “this type of mandatory,
definitive language is a powerful, even potentially dispositive, factor indicating
that action levels are substantive rules.”).
3. The Rule Change Is Final
As noted above, jurisdiction under §402(a) is premised upon a “final” FCC
determination. See 28 U.S.C. §2342.14 A de facto legislative rule is “final” where:
(i) the rule marks the consummation of the agency’s decision-making process (i.e.,
it is not tentative or interlocutory) and (ii) the action is one “by which rights and
obligations have been determined,” or “from which legal consequences will flow.”

Band Licenses - Auction 73, 23 FCC Rcd 276, 281 (January 14, 2008); In re
Five Bidders Qualified to Participate in Auction No. 72, 2007 FCC LEXIS
4124 at *17 (June 5, 2007); Auction Of Broadband PCS Spectrum Licenses; 23
Bidders Qualified to Participate in Auction No. 71, 22 FCC Rcd 8347 *17
(May 2, 2007); Auction Of 1.4 Ghz Band Licenses; Nine Bidders Qualified to
Participate in Auction No. 6922, FCC Rcd 605 *14 (January 23, 2007);
Auction Of Advanced Wireless Services Licenses; 168 Bidders Qualified to
Participate in Auction No. 66, 21 FCC Rcd 8585 n. 15 (July 28, 2006).
14
A “final agency action” under the APA is analytically equivalent to a “final
order” under the Hobbs Act. See U.S. West Communications, Inc. v. Hamilton,
224 F.3d 1049, 1055 (9th Cir. 2000); see also, State of Oregon v. Ashcroft, 368
F.3d 1118, 1146 (9th Cir. 2004) (J. Wallace dissent). Accordingly, in the
discussion which follows, Petitioners rely, in part, upon precedent construing
“finality” under the APA.
19
Appalachian Power Co. at 1022. However, the definition of “finality” is not rigid.
Indeed, the need for flexibility with regard to finality is particularly important
where, as here, the agency action at issue is an ultra vires legislative rule change.
In such instances, the effective date of an agency’s action for purposes of finality
is not easily-ascertainable precisely because the determination is unauthorized and
procedurally improper.
Furthermore, the mere fact that a policy is “subject to change” does not
prevent it from being binding and final. Appalachian Power Co. at 1022; See also,
General Electric Co. v. EPA, 290 F.3d 377, 380 (D.C. Cir. 2002) (“If the
possibility . . . of future revision in fact could make agency action non-final . . .
then it would be hard to imagine when any agency rule. . . would ever be final as a
matter of law.”); Int’l Union United Automobile, Aerospace & Agricultural
Implement Workers Of America v. Brock, 783 F.2d 237, 248-49 (D.C. Cir. 1986)
(“the relevant considerations in determining finality are whether the process of
administrative decisionmaking has reached a stage where judicial review will not
disrupt the orderly process of adjudication and whether rights or obligations have
been determined or legal consequences will flow from the agency action.”).
Applying this standard, the Rule Change is clearly final. Firstly, the Rule
Change marks the consummation of the Bureau’s decision-making process. It is
neither tentative nor interlocutory; to the contrary, it is expressed in mandatory
language (i.e., “In cases of diminished bidding credit eligibility, the Commission
20
will make appropriate adjustments in the bidding credit prior to the computation of
any down and final payments due”) (emphasis added). Moreover, the Rule
Change has defined and affected rights and obligations of auction participants for
years. As discussed, it has been promulgated in the Public Notices establishing
auction procedures in at least 9 separate wireless auctions since 2006. In at least
one instance known to Petitioners (Auction No. 61), the Rule Change has
permitted a party to wrongfully obtain and retain licenses which were falsely
procured. Absent court intervention, the Rule Change will continue to be used in
the pending Auction 87 and in future auctions. In short, the most recent
implementation of the Rule Change in DA 10-863 does not merely embody an
isolated aberrant decision by the FCC. Rather, it is only the latest in a series of
auction pronouncements in which the Bureau has repeatedly and expressly
permitted parties to falsely obtain bidding credits and then disclaim them later,
even after auction bidding has ended and the disclaimer is essentially moot.
Finally, the Rule Change both “determines rights and gives rise to legal
consequences.” It provides a “free pass” (undeserved right) to license applicants
who either: (i) falsely-certified their bidding credit eligibility status at the outset,
or (ii) changed their gross revenue size (e.g., via merger) after a truthful
certification, rendering them subsequently ineligible for a bidding credit, by
allowing them to amend short-form applications to down-grade bidding credit
eligibility status with impunity. This is a right they would otherwise not have
21
under 47 CFR §1.2105(b). The Rule Change also eliminates the legal
consequences of short-form application perjury.15 It creates in each auction the
real potential that: (i) an entity might win an auction by falsely certifying its
bidding credit eligibility status, only to retain its ill-gotten gains under the
Bureau’s “adjustment” policy (as demonstrated in Auction 61); (ii) bidders using
undeserved bidding credits will artificially inflate the bids of competing bidders
(even if they are not ultimately high bidders). As a result, the Rule Change
undermines the integrity of the auction process as a whole, the FCC as a
trustworthy licensing entity, and the Congressional mandates of 47 U.S.C.
§309(j)(3). It prejudices the small-business applicants (such as Petitioners) who
are legitimately entitled to bidding credits as Congress intended, as well as all
other applicants who have complied with auction rules.
The FCC will undoubtedly argue that this appeal does not stem from a final
agency action, and that this Court therefore lacks jurisdiction. For the reasons
discussed above, any such argument should be summarily rejected in light of, inter
alia, the well-established precedent holding that an ultra vires legislative rule
change is a final appealable agency action. Indeed, any argument by the FCC that
the instant appeal is not ripe would inevitably beg the question: If the Rule
15
A false statement in an FCC license application is not only a violation of 47
C.F.R. §1.2105(a)(2)(iv), but is also a criminal violation of 18 U.S.C. §1001 (as
the short-form application itself notes).
22
Change is not final now (after it has already been promulgated and implemented in
9 separate auctions), when will it become appealable? What further action is
required to ripen these appeals? And if, as the Petitioners suspect, the FCC’s
ultimate position will be that the Rule Change is not final under any
circumstances, what remedy does a private party have when a government agency
institutes a legislative rule change without notice and comment? Petitioners submit
that the answer, at least within the factual context of this case, is self-evident – the
instant appeal should be allowed to go forward in order to forestall any further
corruption of §1.2105(b). Any other determination would unjustly and counter-
intuitively result in a situation where the worst types of agency action (ultra vires
actions which contravene duly enacted regulations) escape judicial scrutiny.16
16
During the course of the administrative proceedings in Auction 61, the FCC has
had ample time to eliminate the Rule Change that originated at the start of that
proceeding, or at a minimum explain the rationale and authority underlying it,
but has failed to do either. In particular, certain Petitioners filed Petitions for
Reconsideration in which they have sought an FCC determination that the Rule
Change was unlawfully utilized in Auction 61 to grant licenses to MCLM
(there is no authority supporting an ad hoc rule-change in the course of a
licensing proceeding, yet this is precisely what the Bureau did). Under 47
C.F.R. §1.106(j), the FCC was required to rule on this Petition within 90 days.
Nevertheless, Petitioners’ most recent Petition has now been pending before the
FCC for several years without an FCC ruling (or a hearing under 47 U.S.C.
§309(d) to which Petitioners are entitled). Had the FCC adjudicated this
Petition in a timely fashion, the validity of the Rule Change (at least within the
context of Auction 61), if maintained by the FCC when deciding on the
Petition, would have become independently appealable under 47 U.S.C.
§402(b). But the FCC’s inaction has delayed the ripening of the license
determinations in Auction 61. In short, it would be disingenuous for the FCC
to contest the instant appeal on the grounds of ripeness/finality, given that they
23
4. Ample Precedent Supports This Court’s Authority To
Invalidate an Ultra Vires Rule Change
Courts have invalidated ultra vires legislative rule changes in a variety of
contexts. For example, in Hemp Indus. Assoc., hemp product manufacturers
challenged a rule banning all naturally-occurring tetrahydrocannabinol (THC),
including that found in hemp seed and oil. The manufacturers maintained that the
DEA had promulgated the rule (characterized by the DEA as an “interpretive
rule”) in an improper effort to change an existing regulation which permitted the
sale of products containing trace amounts of naturally-occurring THC. This Court
agreed and invalidated the rule:
The DEA cites nothing in the legislative history of the

act to show that the 1970 Congress consciously intended
to cover naturally-occurring THC under THC as well as
under marijuana . . . Were there no regulation or
legislative history on the subject, the DEA's position on
the coverage of naturally-occurring THC could be
characterized as an interpretation of the CSA, which lists
THC generally without qualification in Schedule I. . .
However, in this case, the agency is not operating in a
regulatory vacuum. A DEA regulation interpreting the
coverage of THC exists. Thus, the DEA purports to be
interpreting its THC regulation as well as the CSA. To
"interpret" the regulation, the DEA's rule must be

have simultaneously declined the opportunity to pass upon the Rule Change
within the context of Auction 61. Conversely, since the FCC has never
characterized the Rule Change as dependent upon the disposition of the
Petitions for Reconsideration in Auction 61, the FCC cannot now claim that the
appealability of the Rule Change is contingent upon a ruling on those Petitions.
24
consistent with the regulation. We are back to our

original question: whether the DEA's rule is inconsistent
with the current DEA regulation, which has the force of
law and cannot be amended except by another legislative
rule. . . .In light of the regulatory history recounted
above and the plain language of the DEA regulation, it
seems obvious that the DEA's rule covering natural THC
is inconsistent with the current regulation . . . An agency
is not allowed to change a legislative rule retroactively
through the process of disingenuous interpretation of
the rule to mean something other than its original
meaning. . . .Yet here the DEA similarly attempts to
evade the time-consuming procedures of the APA by
interpreting an existing regulation to cover naturally-
occurring THC, which was consciously omitted from the
scope of the current regulation. Consequently, the DEA's
putative interpretive rule is invalid.
Id., at 1089-91 (emphasis added).
See also Appalachian Power Co., at 1023 (EPA “Periodic Monitoring
Guidance for Title V Operating Permits Programs,” relating to monitoring of
emission standards was binding and final; EPA’s characterization of the policy as
a non-final guidance document deemed “a charade, intended to keep the
proceduralizing courts at bay.”); General Electric Co. v. EPA, 290 F.3d 377, 385
(D.C. Cir. 2002) (Court vacates EPA’s “PCB Risk Assessment Review Guidance
Document,” on the grounds that it was a legislative rule promulgated without
appropriate notice and comment); Croplife America (Appellate court vacates EPA
press release banning agency consideration of human studies in evaluating
pesticide safety); Syncor Int’l Corp. v. Shalala, 127 F.3d 90, 95-96 (D.C. Cir.
1997) (“FDA's 1995 publication is not an interpretative rule. It does not purport to
25
construe any language in a relevant statute or regulation . . .Instead, FDA's rule
uses wording consistent only with the invocation of its general rulemaking
authority to extend its regulatory reach . . . This is not a change in interpretation . .
. but rather, is fundamentally new regulation. The reasons FDA has advanced for
its rule . . . are exactly the sorts of changes in fact and circumstance which notice
and comment rulemaking is meant to inform.”); Community Nutrition Institute v.
Rogers, 818 F.2d 943, 948-49 (D.C. Cir. 1987) (FDA “action level” statements
were legislative rules issued without the requisite notice and comment).
In this case, as in Hemp Indus. Assoc., the FCC and Bureau have
implemented a short-form application amendment policy via the Rule Change
which violates the plain language of the relevant regulation (§1.2105(b)) that
implements the intent of Congress. Moreover, in this case, as in Hemp Indus.
Assoc., the rulemaking history of the relevant regulation reflects a “conscious”
rejection by the agency of the very same rule interpretation that it now propounds
(i.e., the interpretation that parties can amend their short-form applications to
down-grade their bidding credit eligibility status). Thus, in this case, as in Hemp
Indus. Assoc., the FCC has attempted “to change a legislative rule retroactively
through the process of disingenuous interpretation of the rule to mean something
other than its original meaning.” For each of the foregoing reasons, this Court has
jurisdiction under 47 USC §402(a).
26
B. The Exhaustion Requirements of 47 U.S.C. §155(c)(7) are not
Applicable to this Case
Furthermore, this appeal is not barred for failure to exhaust administrative
remedies pursuant to 47 U.S.C. §155(c), which states, in relevant part:
(1) [T]he Commission may, by published rule or by

order, delegate any of its functions . . . to . . . an
employee board, or an individual employee, including
functions with respect to hearing, determining, ordering,
certifying, reporting, or otherwise acting as to any work,
business, or matter . . .Any such rule or order may be
adopted, amended, or rescinded only by a vote of a
majority of the members of the Commission then
holding office. . . (4) Any person aggrieved by any such
order, decision, report or action may file an application
for review by the Commission . . . (7) The filing of an
application for review under this subsection shall be a
condition precedent to judicial review of any order,
decision, report, or action made or taken pursuant to a
delegation under paragraph (1) of this subsection. . .
(emphasis added).
As the italicized language makes clear, the exhaustion requirement of
§155(c)(7) only applies to responsibilities delegated under §155(c)(1).
Conversely, it follows, ipso facto, that if a particular function has not been
delegated, the administrative exhaustion requirement of §155(c)(7) is inapplicable
at the outset.
Section 155(c)(1) does not delegate rule-making to the Bureau. In fact, 47
CFR §0.331(d) clearly indicates that the Bureau does not have this authority:
27
Authority concerning rulemaking proceedings. The

Chief, Wireless Telecommunications Bureau shall not
have the authority to act upon notices of proposed
rulemaking and inquiry, final orders in rulemaking
proceedings and inquiry proceedings, and reports arising
from any of the foregoing except such orders involving
ministerial conforming amendments to rule parts, or
orders conforming any of the applicable rules to formally
adopted international conventions or agreements . . .
(emphasis added).
To the contrary, under the FCC’s own regulations, rule-making authority is
vested in the FCC as a whole.17 Since the Bureau does not have any rule-making
authority, it follows, a fortiori, that it does not have the authority to promulgate a
de facto rule (i.e., the Rule Change) which expressly conflicts with a properly
promulgated regulation (i.e., §1.2105(b)). As such, the Rule Change was not an
17
See 47 CFR §1.407 (“If the Commission determines that the petition discloses
sufficient reasons in support of the action requested to justify the institution of
a rulemaking proceeding, and notice and public procedure thereon are required
or deemed desirable by the Commission, an appropriate notice of proposed rule
making will be issued . . .”) (emphasis added); 47 CFR §1.411 (“Rulemaking
proceedings are commenced by the Commission, either on it own motion or on
the basis of a petition for rulemaking.”) (emphasis added); 47 CFR §1.412 (“A
summary of the full decision adopted by the Commission constitutes a ‘Notice
of Proposed Rulemaking’ for purposes of FEDERAL REGISTER
publication.”) (emphasis added); 47 CFR §1.425 (“The Commission will
consider all relevant comments and material of record before taking final action
in a rulemaking proceeding and will issue a decision incorporating its finding
and a brief statement of the reasons therefor.”) (emphasis added).
28
“action made or taken pursuant to a delegation under paragraph (1) of this
subsection”. Accordingly, 47 U.S.C. §155(c)(7) does not bar the instant appeal.18
18
Alternatively, assuming arguendo that the Wireless Bureau is deemed to have
acted within its delegated authority in the course of implementing the Rule
Change, the exhaustion requirements of 155(c)(7) would nonetheless be
inapplicable, in light of 47 U.S.C. §405(a). This statute states that “After an . .
. action has been . . . taken in any proceeding by the Commission, or by any
designated authority within the Commission pursuant to a delegation under
section 155 (c)(1) . . .any party thereto . . .may petition for reconsideration. .
.The filing of a petition for reconsideration shall not be a condition precedent to
judicial review of any such . . .action, except where the party seeking such
review (1) was not a party to the proceedings resulting in such . . . action, or
(2) relies on questions of fact or law upon which the Commission, or
designated authority within the Commission, has been afforded no opportunity
to pass.“ (emphasis added). In this case, both elements are met. While the
Rule Change action did not formally arise out of a specific proceeding per se,
Petitioners were parties both to the Public Auction that engendered the Rule
Change (Auction 61) and the Public Auction in which the Rule Change was
most recently implemented (Auction 87). Moreover, the Wireless Bureau and
the Commission have had the opportunity to “pass upon” (i.e., eliminate) the
Rule Change prior to this appeal (including during the course of the
administrative proceedings in Auctions 61 and 87), but have failed and refused
to do so. Conversely, in its proper implementation of the actual rule (§1.2105),
the Commission did pass upon (it considered and rejected) the position
subsequently adopted by the Bureau via the Rule Change.
29
Respectfully submitted,
Dated: July 6, 2010

/S/
NOSSAMAN LLP
PATRICK J. RICHARD (SBN 131046)
(Counsel of Record)
prichard@nossaman.com
TAMIR D. DAMARI
50 California Street, 34th Floor

San Francisco, California 94111-4707
Telephone: (415) 398-3600
Facsimile: (415) 398-2438
Attorneys for Petitioners
30
CERTIFICATE OF SERVICE
I hereby certify that on July 6, 2010 a copy of the foregoing document has
been served on the following:
Via U.S. Mail and Electronic Filing
Austin Schlick, General Counsel

Daniel M. Armstrong, Associate General Counsel
Office of General Counsel
Federal Communications Commission
445 12th Street S.W.
Washington, DC 20554
Via U.S. Mail
United States Department of Justice

Civil Division, Appellate Staff
950 Pennsylvania Avenue NW
Washington, DC 20530
Marlene Dortch, Secretary

Office of the Secretary
Federal Communications Commission
9300 East Hampton Drive
Capital Heights, Md. 20743
Lester L. Boihem
Two Way Communications, Inc.
1704 Justin Road
Metairie, LA 70001
Frank W Ruth
Two Way Communications, Inc.
2819 East Simcoe Street
Lafayette, LA 70501
1
James D. Silke
Silke Communications, Inc.
680 Tyler Street
Eugene, Oregon 97402
Robert Schwaninger, Esq.

6715 Little River Turnpike, Suite 204
Annandale, Va. 22003
Attorney for Silke Communications, Inc.
/S/
Maura Bonal
249422_1.DOC 2

Skybridge Spectrum Foundation v. FCC. 9th Circuit (FCC Violation of Its Auction Rules) - Response To Order Show Cause

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Skybridge Spectrum Foundation v. FCC. 9th Circuit (FCC Violation of Its Auction Rules) - Response To Order Show Cause

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Case: 10-71808 07/06/2010 Page: 1 of 34 ID: 7394395 DktEntry: 18

SKYBRIDGE SPECTRUM FOUNDATION, a Delaware Nonprofit

UNITED STATES OF AMERICA, and the FEDERAL

RESPONSE TO JUNE 14, 2010 ORDER TO SHOW CAUSE

50 California Street, 34th Floor

Attorneys for Petitioners

II. RELEVANT FACTS....................................................................... 1

III PROCEDURAL HISTORY ............................................................ 7

IV. ARGUMENT .................................................................................. 7

A. The Rule Change Is Appealable Under

2. The Rule Change Is Binding..................................... 17

4. Ample Precedent Supports This Court’s

B. The Exhaustion Requirements of 47 U.S.C. §155(c)(7)

This case arises out of an attempt by the Federal Communications

Commission (the “FCC”), through its Wireless Telecommunications Bureau (the

“Bureau”), to modify FCC regulations which limit permissible amendments to

vires, occurring without APA-mandated notice and comment. As described more

amendment policy directly contradicting the unambiguous language of 47 CFR

§1.2105(b), the regulation governing amendments to final auction applications. As

rule and is therefore appealable.

II. RELEVANT FACTS

Petitioners are private nonprofit and for-profit businesses based in Berkeley,

California. They provide wireless communications services for government

Communications Act (“FCA”) requires it to choose among these applications by

using a competitive bidding process. See 47 U.S.C. §309(j)(1).1 Under this

bidding system, so-called “Designated Entities” receive preference pursuant to

FCC regulations. See 47 CFR §1.2110(a).2 Specifically, Designated Entities

(determined by average annual attributable gross revenues, as defined). These

bidding credits permit Designated Entities to in effect "outbid" larger entities

secondarily a payment discount upon a successful bid.

mandated Congressional policy of promoting the development of small and

minority-owned wireless businesses, including by “bidding preferences.” See 47

U.S.C. §309(j)(3)(B), §309(j)(4)(C) and (D).4 Petitioners are small businesses

FCC’s identification of “qualified bidders” among license applicants on the basis

of certified statements in so-called “short-form applications” (otherwise known as

of perjury, that it in fact qualifies as a Designated Entity. See 47 CFR

§1.2105(a)(2)(iv) (“The short-form application must contain the following

information . . . If the applicant applies as a designated entity pursuant to §1.2110,

applicant is qualified as a designated entity under §1.2110.”)

Second, 47 CFR §1.2105(b) bars “Major amendments [to short form

applications that] include…changes in an applicant’s size which would affect

be considered to be newly filed if it is amended by a major amendment and may

amendments cannot be made to a short-form application after the initial filing

deadline.” (emphasis added).

Bureau, has undermined these safeguards and Congressional intent, by instituting a

implemented in at least 9 separate public auctions since 2006, most recently in

AU Docket No. 09-205 (“Auction 87”), which includes Petitioners. Specifically,

10-863”), the Bureau states:

43….Bidders must immediately report any change

bidding credit eligibility, the Commission will make

See Public Notice DA 10-863, attached hereto as Exhibit 1, at pg. 9

(emphasis added). Identical language is contained in the Public Notices associated

with In re Auction of FM Broadcast Construction Permits; 77 Bidders Qualified to

Auction of LPTV and TV Translator Digital Companion Channels, 23 FCC Rcd

15274, 15283 (October 24, 2008); In re: 16 Bidders Qualified To Participate In

LEXIS 4124 at *17 (June 5, 2007); Auction Of Broadband PCS Spectrum

Advanced Wireless Services Licenses; 168 Bidders Qualified to Participate in

Auction No. 66, 21 FCC Rcd 8585 n. 15 (July 28, 2006).

parts of §1.2105(a), as shown below) in several crucial respects. Most

properly entitled to bidding credits, amend their short-form applications to “down-

credit, or from a 25% credit to no bidding credit), subject to the FCC’s

Unscrupulous applicants are thereby motivated, and in any case allowed, to

misrepresent their bidding credit status at the short-form application stage