March 7, 2017
Petition for Review of Orders of the Federal Communications
Commission (FCC 15-80 & DA 15-1183)
Russell [Argued] Goldstein & Russell Attorney for
M. Lewis Clifford G. Pash, Jr. [Argued] Federal
Communications Commission Attorneys for Respondent Federal
B. Nicholson Robert J. Wiggers United States Department of
Justice, Appellate Section Attorneys for Respondent United
States of America
W. Northrop Telecommunications Law Professionals Attorney for
Before: SMITH, Chief Judge, HARDIMAN, and KRAUSE, Circuit
HARDIMAN, Circuit Judge.
case involves the regulation of electromagnetic spectrum by
the Federal Communications Commission. In 1993, Congress
amended the Communications Act of 1934, 47 U.S.C.
§§ 151-622, to allow the FCC to grant spectrum
licenses through a system of competitive bidding. 47 U.S.C.
§ 309(j)(1), (3). The Act requires the FCC to pursue
certain objectives required by statute, including promoting
economic opportunity and
competition and ensuring that new and innovative technologies
are readily accessible to the American people by avoiding
excessive concentration of licenses and by disseminating
licenses among a wide variety of applicants, including small
businesses, rural telephone companies, and businesses owned
by members of minority groups and women.
47 U.S.C. § 309(j)(3)(B). In FCC parlance, these groups
are known as designated entities (DEs). 47 C.F.R. §
1.2110(a). At this time, the FCC's "principal means
of fulfilling the statutory objectives for DEs" is to
confer bidding credits upon small and rural businesses that
participate in FCC auctions. Updating Competitive Bidding
Rules, 80 Fed. Reg. 56764, 56766 (September 18, 2015).
Bidding credits operate as a discount on the spectrum DEs
purchase, allowing them sometimes to outbid companies that
make higher bids. Council Tree Comm'ns, Inc. v.
FCC, 619 F.3d 235, 239 (3d Cir. 2010) (Council Tree
question presented here is whether the FCC acted legally when
it limited the bidding credits available to DEs. We hold that
2014, the FCC began a rulemaking proceeding in advance of a
special 2016-17 Incentive Auction of "scarce low-band
radio spectrum." FCC Br. 13. According to its Notice of
Proposed Rulemaking, the FCC thought it appropriate to
revisit the Commission's small business eligibility rules
and evaluate whether to rebalance our competing goals in
order to provide small businesses additional opportunities to
gain access to new sources of capital necessary for
participation in the provision of spectrum-based services in