Skybridge V FCC, Motion For Rehearing, 9th Circuit, Ultra Vires Rule Change Case

Case: 10-71808 11/08/2010 Page: 1 of 26 ID: 7539414 DktEntry: 27
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.
PETITIONERS’ PETITION FOR PANEL REHEARING OR IN THE

ALTERNATIVE PETITION FOR REHEARING EN BANC
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 AND STATEMENT PURSUANT TO FRAP
35(b)(1) ................................................................................................. 1
II. ARGUMENT........................................................................................ 3
A. The Nature of the Administrative Action Sought to be

Reviewed Is The Wireless Bureau’s Alleged Unauthorized Rule
Change ............................................................................................. 3
B. The Exhaustion Requirements of 47 U.S.C. §155(c)(7) Only

Apply To Administrative Actions Undertaken Pursuant To
Delegated Authority......................................................................... 8
C. The Wireless Bureau’s Actions At Issue Are In the Nature of a

Rule Change, Not In The Nature of a Adjudication........................ 9
D. The Wireless Bureau Undisputedly Has Not Been Delegated

With Rule Change Authority......................................................... 11
E. Accordingly, The Wireless Bureau’s Alleged Ultra Vires Rule

Change Is Not Within the Class of Administrative Actions
Subject to the Exhaustion Requirements of 47 U.S.C.
§155(c)(7) ...................................................................................... 14
F. Alternatively, Assuming Arguendo That The Wireless Bureau
Acted Within Its Delegated Authority, The Exhaustion
Requirements Of 155(c)(7) Are Nonetheless Inapplicable In
Light Of 47 U.S.C. §405(a) ........................................................... 15
III. CONCLUSION................................................................................... 18
i
252785_1.DOC
TABLE OF AUTHORITIES
Page
Cases
Connecticut Dept. of Public Utility Control v. FCC

78 F.3d 842 (2nd Cir. 1996)................................................................................16, 17
Friends of the Bow v. Thompson

124 F.3d 1210 (10th Cir. 1997) ..................................................................................9
Petroleum Communications, Inc. v. FCC

22 F.3d 1164 (D.C. Cir. 1994) .................................................................................17
Statutes
47 U.S.C. §155.............................................................................................................17
47 U.S.C. §155(c) ................................................................................................2, 8, 12
47 U.S.C. §155(c)(1)................................................................................................8, 11
47 U.S.C. §155(c)(3)......................................................................................................2
47 U.S.C. §155(c)(7)............................................................................................ passim
47 U.S.C. §405.......................................................................................................16, 17
47 U.S.C. §405(a) ................................................................................................2, 3, 15
5 U.S.C. §551(4) ............................................................................................................9
5 U.S.C. §551(5) ............................................................................................................9
5 U.S.C. §551(6) ............................................................................................................9
5 U.S.C. §551(7) ............................................................................................................9
Other Authorities
16 Bidders Qualified To Participate In Auction 86

2009 FCC LEXIS 5271 at *25 (Oct. 8, 2009) ...........................................................5
47 C.F.R. §0.331(d) ...............................................................................................11, 14
47 C.F.R. §1.2105 ......................................................................................10, 14, 17, 18
47 C.F.R. §1.2105(a)(2).................................................................................................4
47 C.F.R. §1.2105(b) ........................................................................................... passim
ii
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47 C.F.R. §1.2105(b)(2).................................................................................................5
47 C.F.R. §1.2110 ..........................................................................................................3
47 C.F.R. §1.2110(a)......................................................................................................4
47 C.F.R. §1.407 ..........................................................................................................12
47 C.F.R. §1.411 ..........................................................................................................12
47 C.F.R. §1.412 ..........................................................................................................12
47 C.F.R. §1.425 ..........................................................................................................12
63 FR 2315, 2322-23 (January 15, 1998) ................................................................6, 14
87th Congress, First Session, 1961 ...............................................................................13
Auction Of 1.4 Ghz Band Licenses, FCC Rcd 605 *14 (January 23, 2007) ..................5
Auction of 700 MHz Band Licenses - Auction 73, 23 FCC Rcd 276, 281
(January 14, 2008) .....................................................................................................5
Auction Of Advanced Wireless Services Licenses, 21 FCC Rcd 8585 n. 15

(July 28, 2006) ...........................................................................................................5
Auction of Aws-1 & Broadband PCS Licenses, 23 FCC Rcd 11850, 11858
(August 4, 2008) ........................................................................................................5
Auction Of Broadband PCS Spectrum Licenses, 22 FCC Rcd 8347 *17

(May 2, 2007).............................................................................................................5
Auction of FM Broadcast Construction Permits, 24 FCC Rcd 10782, 10790

(August 19, 2009) ......................................................................................................5
Auction of LPTV and TV Translator Digital Companion Channels

23 FCC Rcd 15274, 15283 (October 24, 2008) .........................................................5
Five Bidders Qualified to Participate in Auction No. 72

2007 FCC LEXIS 4124 at *17 (June 5, 2007)...........................................................5
In Re: Amendment of Part 2 of the Commission’s Rules

22 FCC Rcd 19833 (2007).......................................................................................13
Rules
FRAP 35(a) ....................................................................................................................1
FRAP 35(b)(1) ...............................................................................................................1
FRAP 40(a)(2) ...............................................................................................................1
iii
I. INTRODUCTION AND STATEMENT PURSUANT TO FRAP 35(B)(1)
Petitioners request panel rehearing or alternatively rehearing en banc.
Specifically, Petitioners seek review of this Court’s determination in its order
dated September 13, 2010 (the “Order”) that the Court lacks jurisdiction under 47
U.S.C. §155(c)(7), due to Petitioners’ asserted failure to exhaust administrative
remedies before the Federal Communications Commission (the “Commission”).
A copy of this Order is attached as Exhibit 1.1
FRAP 40(a)(2) authorizes panel reconsideration where the panel has
overlooked or misapprehended a point of law or fact. FRAP 35(a) authorizes en
banc review where “the proceeding involves one or more questions of exceptional
importance.” As described infra, this Court’s conclusion that Petitioners have
failed to exhaust administrative remedies is premised upon an incorrect
assumption as to the types of orders requiring exhaustion. In particular, the Court
appears to have incorrectly presumed that the ultra vires rule change at issue (the
“Rule Change”) was an action undertaken pursuant to the Commission’s properly
1
In the Order, this Court also denied Petitioners’ Motion for Leave to File an
Amended Petition for Review (the “Motion to Amend”). Petitioners presume that
the Court’s denial of the Motion to Amend resulted from its determination that it
lacked jurisdiction, rather than being based upon a consideration of the Motion to
Amend on the merits. To the extent this is not the case (i.e., to the extent the
denial of the Motion to Amend was based upon the Court’s conclusion that
Petitioners failed to meet the liberal standard for amending their Petition for
Review), Petitioners respectfully request that the Court reconsider its denial of the
Motion to Amend, for the reasons set forth in the original Motion.
1
252785_1.DOC
delegated authority to its Wireless Telecommunications Bureau (the “Wireless
Bureau”). As a result of this erroneous threshold determination, the Court further
held that this case was governed by the exhaustion requirements of 47 U.S.C.
§155(c)(3) and (c)(7). Resolution of this issue is of paramount importance
because the ultra vires Rule Change has been, and will inevitably continue to be,
implemented by the Wireless Bureau in each of its Public Auctions, thereby
affecting the rights of many auction participants.
As demonstrated infra, both the C.F.R. and the legislative history of §155(c)
establish that the Wireless Bureau does not have the authority to implement any
rule change. Since the Wireless Bureau has not been delegated with such
authority, and since the exhaustion requirements of §155(c)(7) only apply to
bureau action undertaken pursuant to a properly delegated authority,2 Petitioners
were not required to exhaust administrative remedies before seeking review of the
Rule Change. On this basis alone, dismissal of this appeal was improper.
Alternatively, assuming arguendo that the Wireless Bureau acted within its
delegated authority in the course of implementing the Rule Change, the exhaustion
requirements of §155(c)(7) are nonetheless inapplicable, in light of 47 U.S.C.
§405(a). This statute states that “the filing of a petition for reconsideration shall
not be a condition precedent to judicial review,” except where the party seeking
2
See 47 U.S.C §155(c)(3).
2
such review either: (i) was not a party to the proceedings resulting in the action
sought to be reviewed; or (ii) relies on questions of fact or law upon which the
Commission has been afforded no opportunity to pass. Petitioners were parties to
the proceedings resulting in the action sought to be reviewed - the Wireless
Bureau’s “Auction of Lower and Upper Paging Band Licenses” AU Docket No.
09–205 (“Auction 87”). Moreover, the Commission had the opportunity to “pass
upon” (i.e., eliminate) the Rule Change prior to this appeal, but has refused to do
so. Accordingly, under §405(a), Petitioners were not required to seek further
administrative review before filing this appeal.
II. ARGUMENT
A. The Nature of the Administrative Action Sought to be Reviewed
Is The Wireless Bureau’s Alleged Unauthorized Rule Change
Substantively, this appeal arises out of a de facto legislative Rule Change
instituted by the Wireless Bureau, the terms of which directly contradict the plain
language of the Commission’s regulations with respect to “short form
applications.” These regulations require a short-form applicant who claims so-
called “Designated Entity”status to obtain a bidding credit pursuant to 47 C.F.R.
§1.2110,3 to declare under penalty of perjury that it in fact qualifies as a
3
Under this regulation, “Designated Entities,” which include small
businesses, minority and/or women-owned businesses and rural companies,
receive bidding preferences. These preferences include bidding credits which, in
3
Designated Entity. (See 47 C.F.R. §1.2105(a)(2)). These regulations also bar
certain modifications to short form applications after their submission deadline.
Specifically, 47 C.F.R. §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 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).
As argued in Petitioners’ prior filings, the Wireless Bureau has undermined
these safeguards, by instituting the Rule Change which directly contradicts the
plain language of §1.2105(b). The Rule Change has been implemented in
numerous public auctions since 2006, most recently, in connection with Auction
87, which included 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 bidding credit. Bidders
should clearly state the nature of the change in an
amendment to their short-form application in the
summary letter referenced above. In cases of diminished
bidding credit eligibility, the Commission will make
effect, permit Designated Entities to 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 an auction). See 47 C.F.R. §1.2110(a).
4
appropriate adjustments in the bidding credit prior to the

calculation of any down and final payment amounts due
[after the end of the auction].
(emphasis added).
Identical language is contained in the Public Notices associated with
Auction of FM Broadcast Construction Permits, 24 FCC Rcd 10782, 10790
(August 19, 2009); Auction of LPTV and TV Translator Digital Companion
Channels, 23 FCC Rcd 15274, 15283 (October 24, 2008); 16 Bidders Qualified
To Participate In Auction 86, 2009 FCC LEXIS 5271 at *25 (Oct. 8, 2009);
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); Five Bidders Qualified to Participate in Auction No. 72, 2007
FCC LEXIS 4124 at *17 (June 5, 2007); Auction Of Broadband PCS Spectrum
Licenses, 22 FCC Rcd 8347 *17 (May 2, 2007); Auction Of 1.4 Ghz Band
Licenses, FCC Rcd 605 *14 (January 23, 2007); Auction Of Advanced Wireless
Services Licenses, 21 FCC Rcd 8585 n. 15 (July 28, 2006).
As further noted in Petitioners’ prior filings, the Wireless Bureau’s
“adjustment” scheme reflected in the Rule Change violates the spirit and letter of
§1.2105(b). Indeed, in the course of enacting §1.2105(b)(2), the Commission
expressly considered and rejected a proposal that would have permitted short-form
applicants to change their bidding credit eligibility via amendment:
5
[C]ommenters’ opinions differ on what types of

amendments the Commission should categorize as major
or minor. For example, [some] 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. [Others contend] that all
changes in ownership incidental to mergers and
acquisitions, non-substantial pro forma changes, and
involuntary changes in ownership should be categorized
as minor. [Certain commentators state] 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) . . . [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.
See 63 FR 2315, 2322-23 (January 15, 1998).
The Rule Change is not only inconsistent with the intent of the Commission
in promulgating §1.2105(b), it also fosters anticompetitive practices. Specifically,
under the auction process permitted by the Rule Change, unscrupulous applicants
6
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
modify 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 Bureau’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
Wireless Bureau 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.
Conversely, rule-abiding bidders are discouraged from raising and risking funds at
auction, a result which further undermines Congress’ goal in establishing a
competitive auction framework: to foster qualified licensees who are committed to
play by the rules.
7
B. The Exhaustion Requirements of 47 U.S.C. §155(c)(7) Only Apply
To Administrative Actions Undertaken Pursuant To Delegated
Authority
In reaching its conclusion that Petitioners had failed to exhaust
administrative remedies, this Court relied exclusively upon 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 . . .(4) Any person
aggrieved by any such order, decision, report or action
[undertaken pursuant to delegated authority] 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 properly delegated under §155(c)(1).
Conversely, if a particular function has not been delegated, the administrative
exhaustion requirement of §155(c)(7) is ipso facto inapplicable. Otherwise, the
final phrase of the statute, “pursuant to a delegation under paragraph (1) of this
subsection,” would be rendered entirely superfluous.
Therefore, the exhaustion issue in this case is reduceable to the following
question: “Were the Wireless Bureau’s actions which are alleged by Petitioners as
8
constituting the ultra vires Rule Change within the properly delegated authority of
the Wireless Bureau?” Petitioners maintain that the answer to this question is
clearly “No.”
C. The Wireless Bureau’s Actions At Issue Are In the Nature of a
Rule Change, Not In The Nature of a Adjudication
Under the Administrative Procedures Act (the “APA”), agency action is
typically categorized as either rulemaking or adjudication. 5 U.S.C. §551(4)-(7));
Friends of the Bow v. Thompson, 124 F.3d 1210, 1214 (10th Cir. 1997) (“The APA
governs agency procedures in all administrative proceedings. Under the APA,
agency functions are characterized as either ‘rulemakings’ or ‘adjudications.’”).
The APA defines “adjudication” as “agency process for the formulation of order.”
5 U.S.C. §551(7). The term “order,” in turn, is defined by the APA as “the whole
or a part of a final disposition, whether affirmative, negative, injunctive or
declaratory in form, of an agency in a matter other than rulemaking but including
licensing.” 5 U.S.C. §551(6). The term “rule” is defined in the APA as “the whole
or a part of an agency statement of general or particular applicability and future
effect designed to implement, interpret, or prescribe law or policy or describing the
organization, procedure, or practice requirements of an agency.” 5 U.S.C.
§551(4).
9
The agency action embodied by the “Rule Change,” is in the nature of de
facto rulemaking, not adjudication. The Rule Change is the Wireless Bureau’s
implementation of a specific procedure in connection with 47 C.F.R. §1.2105, and
is concomitantly an interpretation of this regulation. Under this procedure/rule
interpretation: (i) all auction short-form applicants4 are allowed to procure licenses
via undeserved bidding credits obtained through false information in their short-
form applications; (ii) these applicants are allowed to correct their
misrepresentations via de facto short-form application amendment, by disclosing
their true size in their post-auction long form applications; and (iii) the Wireless
Bureau thereupon “adjusts” the payment amount for wrongfully-obtained licenses,
by eliminating the applicant’s bidding credit after the fact. This “Allowance with
Adjustment” scheme established by the Rule Change is intended to have both
“particular applicability” (in individual auctions) and “future effect” (in future
auctions). As to the latter point, this policy has not simply been implemented in a
single isolated auction, but has instead been implemented in a series of auctions
ranging back four years.
The Rule Change is also clearly “designed to implement, interpret, or
prescribe law or policy.” The “allowance and adjustment” system established by
4
The fact that this policy applies across the board to all applications likewise
distinguishes this case from “adjudications” of licensing determinations made in
connection with individual applicants.
10
the Rule Change is essentially the Wireless Bureau’s unilateral policy judgment
that, notwithstanding the “major amendment” bar of 47 C.F.R. §1.2105(b), there is
no harm (to the auction process, or to individual bidders) caused by allowing
parties who have falsely claimed and obtained Designated Entity status and
resultant bidding credits at the inception of an auction, to keep and use the credits
in actual bidding, subject to post-auction adjustment. This allowance and
adjustment policy also is a rule of procedure and practice, since it has been, in fact,
employed by the Wireless Bureau in multiple auctions.
D. The Wireless Bureau Undisputedly Has Not Been Delegated With
Rule Change Authority
Notwithstanding §155(c)(1)’s seemingly broad mandate authorizing the
Commission to delegate “any of its functions” to subordinate bodies, the Wireless
Bureau has not been delegated any rulemaking authority, including to make and
implement the Rule Change. The Commission’s implementing regulation, at 47
C.F.R. §0.331(d), clearly indicates that the Bureau does not have delegated
authority to engage in rulemaking (including any material changes to any rules):
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
11
orders conforming any of the applicable rules to formally

adopted international conventions or agreements . . .
(emphasis added).
To the contrary, under these regulations, rule-making authority is vested in
the Commission as a whole. See 47 C.F.R. §1.407; 47 C.F.R. §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 C.F.R.
§1.412; 47 C.F.R. §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).
The conclusion that the Wireless Bureau lacks rulemaking authority is also
mandated by the legislative history of 47 U.S.C. §155(c). The legislative reports
accompanying this legislation, in the course of discussing the delegation and
administrative review provisions of the statute, presumed that the delegation to the
Wireless Bureau and other subordinate bodies extends only to matters involving
“adjudications,” not to matters involving “rule-making.” For example, Senate
Report 576 began by indicating:
[T]he purpose of this legislation is to amend the

Communications Act of 1934 so that the Federal
Communications Commission will be able . . . to handle
its large workload of adjudication cases with greater
12
speed and efficiency than is presently possible. This

would be done by authorizing the FCC to delegate
functions in adjudicatory cases.
87th Congress, First Session, 1961, at pages 2462-63. (emphasis added).5
The “General Statement” accompanying Senate Report 576 likewise
indicated that the statute “would authorize the Commission to delegate review
functions in adjudicatory cases.” Id., at 2463 (emphasis added). The Senate
Report goes on to state that:
The strengthening of the Communications Act provided

by the grant of additional authority to the Commission to
delegate its adjudicatory review functions should be of
material assistance to the Commission in increasing its
efficiency, cutting down on its backlog of pending cases,
and permitting the Commissioners to concentrate on the
more important and far-reaching policy problems with
which they are faced. . .
Id., at 2465. (emphasis added).
In its own decisions, the Wireless Bureau has itself acknowledged that it has
no rule-making authority. For example, in In Re: Amendment of Part 2 of the
Commission’s Rules, 22 FCC Rcd 19833 (2007), the Wireless Bureau rejected a
Petition for Reconsideration by the Society of Broadcast Engineers requesting a
5
This legislative history also incorporates by reference the APA’s definition
of “adjudication” (described above). See Conference Report 996: “Under this
legislation, the Commission would be authorized delegate review functions in
cases of adjudication (as defined in the Administrative Procedure Act) to boards of
employees.”
13
modification to emission suppression requirements. The Wireless Bureau, citing
to 47 C.F.R. §0.331(d), held “the Clearinghouse Order was released by the Bureau
under delegated authority and SBE’s request for rule changes exceeds the
Bureau’s delegated authority.” Id., at 19839. (emphasis added).
For each of these reasons, it is clear that the Wireless Bureau does not have
rule change authority.
E. Accordingly, The Wireless Bureau’s Alleged Ultra Vires Rule
Change Is Not Within the Class of Administrative Actions
Subject to the Exhaustion Requirements of 47 U.S.C. §155(c)(7)
Since the Wireless Bureau does not have rule-making authority, it logically
follows that it lacks authority to promulgate a de facto rule (i.e., the ultra vires
Rule Change) which expressly conflicts with a properly promulgated regulation
(i.e., 47 C.F.R. §1.2105(b)). As described above, this is exactly what occurred
here. The Wireless Bureau has implemented an “allowance and adjustment”
policy in multiple auctions which directly contravenes the “major amendment” bar
of §1.2105(b). In doing so, the Bureau has flouted the Commission, by adopting
the very same procedure rejected by the Commission in formulating §1.2105; i.e.,
one permitting short-form applicants to change their bidding credit eligibility
status via amendment. See 63 FR 2315, 2322-23 (January 15, 1998). As
discussed, this procedure is essentially the Wireless Bureau’s policy judgment that,
14
notwithstanding the “major amendment” bar of §1.2105(b), there is no harm in
permitting parties who have claimed Designated Entity status at the inception of an
auction to jettison their bidding credit status post-auction. Not only is this
judgment unfounded as a matter of substance (for the reasons discussed above) it
far exceeds the Wireless Bureau’s limited non-adjudicatory authority “involving
ministerial conforming amendments to rule parts.” (emphasis added).
F. Alternatively, Assuming Arguendo That The Wireless Bureau
Acted Within Its Delegated Authority, The Exhaustion
Requirements Of 155(c)(7) Are Nonetheless Inapplicable In Light
Of 47 U.S.C. §405(a)
Alternatively, assuming arguendo that the Wireless Bureau 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), which states:
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
15
(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.
See also, Connecticut Dept. of Public Utility Control v. FCC, 78 F.3d 842,
849 (2nd Cir. 1996) (exhaustion requirements of §405(a) inapplicable where, in the
administrative proceedings below, the Commission “necessarily considered” the
point raised by the petitioner on appeal). In this case, both elements are met.
While the Rule Change did not formally arise out of a specific proceeding,
Petitioners were parties to Auction 87, in which the Rule Change was most
recently implemented. Moreover, the Commission (including the Wireless
Bureau) has had the opportunity to “pass upon” (i.e., eliminate) the Rule Change
prior to this appeal, but has failed to do so. As noted in Petitioners’ previous
filings, prior to the start of Auction 87 (immediately after DA 10-863 was issued),
Petitioners requested that the Bureau rescind the Rule Change.6 Nonetheless, the
Bureau refused to do so, proceeded with Auction 87 (with the Rule Change intact)
and allowed two bidders who had taken advantage of the Rule Change and who
had successfully bid for licenses in Auction 87 (Silke Communications, Inc. and
Two Way Communications, Inc.) to file long-form applications in Auction 87.
Furthermore, exhaustion of administrative remedies is not required under
§405 where “agency action is patently in excess of the agency’s authority.”
6
See Docket No. 3, at 5-6.
16
Petroleum Communications, Inc. v. FCC, 22 F.3d 1164, 1170 (D.C. Cir. 1994).
For the reasons discussed above, the Wireless Bureau patently exceeded its
authority by engaging in rule-making; and, in particular, by effectively amending
§1.2105 in a manner which contradicts the intent of that rule to bar all major
amendments to short-form applications (as described in the regulation’s legislative
history).
Finally, any administrative exhaustion requirements that might otherwise be
applicable are inapplicable here under §155, as they would be futile. Courts have
recognized futility exceptions to administrative exhaustion requirements. In
Connecticut Dept. of Public Utility Control, for example, the Court held that under
§405:
[E]ven if the DPUC should have sought reconsideration

with the Commission, the futility exception to the
exhaustion requirement applies in this instance. Before
this Court, the Commission contends that the DPUC had
full notice that the Commission would rely for its
evaluation on the type of evidence to which petitioner
now objects. Accordingly, by its arguments before this
Court, “the Commission has made clear that it believes
that it had the legal authority to decide what it did and in
the manner it did.” The application of section 405’s
exhaustion requirement would serve no purpose in this
case.
Id.
Likewise, administrative remedies would have been futile to Petitioners. As
in Connecticut Dept. of Public Utility Control, Respondents herein “ha[ve] made
17
clear that [they] believe that [they have] the legal authority to decide what [they]
did and in the manner [they] did.” In their prior filings with the Court,
Respondents have not merely challenged this appeal on procedural exhaustion
grounds, they have also steadfastly maintained that the Rule Change embodied a
proper construction and implementation of §1.2105.7 As such, they have
unambiguously taken the position that the Wireless Bureau had the authority to
take the action embodied by the Rule Change. Petitioners should not be beholden
to the empty formalism of exhausting administrative remedies where it is clear that
such exhaustion would have been utterly futile.8
III. CONCLUSION
For these reasons, the exhaustion requirements of §155(c)(7) are
inapplicable, Petitioners were not required to further exhaust administrative
remedies before filing this appeal and the panel’s dismissal of this case on the
basis of a failure to exhaust administrative remedies should be reconsidered and
vacated.
7
See, e.g., Docket No. 12, at pages 14-18.
8
Similarly, Courts have noted that administrative exhaustion is not required
where an agency is so “wedded to the procedures it has employed” as to establish
futility. See, e.g., Petroleum Communications Inc, at 1170. The Wireless Bureau
is “wedded” to the procedures established via the Rule Change, as evidenced by
the fact that it has implemented the Rule Change in nearly a dozen public auctions
over the past four years. Furthermore, Respondents, by virtue of the positions they
have taken in this appeal, have provided their imprimatur to these procedures. On
this additional basis, exhaustion of administrative remedies would be utterly futile.
18
Dated: November 8, 2010
Respectfully submitted,
/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
19
CERTIFICATE OF COMPLIANCE WITH CIRCUIT RULE 40-1(a)
Pursuant to Circuit Rule 40-1(a), Petitioners report to the Court that the brief
is proportionately spaced, utilizing 14 point Times New Roman typeface and
containing 4,190 words, as indicated by the computerized word count of counsel’s
word processing system.
Dated: November 8, 2010 NOSSAMAN LLP
By: /s/
Patrick J. Richard
1
252785_1.DOC
CERTIFICATE OF SERVICE
I hereby certify that on November 8, 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
252785_1.DOC
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
252785_1.DOC

Skybridge V FCC, Motion For Rehearing, 9th Circuit, Ultra Vires Rule Change Case

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Case: 10-71808 11/08/2010 Page: 1 of 26 ID: 7539414 DktEntry: 27

SKYBRIDGE SPECTRUM FOUNDATION, a Delaware Nonprofit

UNITED STATES OF AMERICA, and the FEDERAL

PETITIONERS’ PETITION FOR PANEL REHEARING OR IN THE

50 California Street, 34th Floor

Attorneys for Petitioners

A. The Nature of the Administrative Action Sought to be

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

C. The Wireless Bureau’s Actions At Issue Are In the Nature of a

D. The Wireless Bureau Undisputedly Has Not Been Delegated

E. Accordingly, The Wireless Bureau’s Alleged Ultra Vires Rule

Connecticut Dept. of Public Utility Control v. FCC

Friends of the Bow v. Thompson

Petroleum Communications, Inc. v. FCC

47 U.S.C. §155(c) ................................................................................................2, 8, 12

47 U.S.C. §155(c)(7)............................................................................................ passim

47 U.S.C. §405(a) ................................................................................................2, 3, 15

5 U.S.C. §551(4) ............................................................................................................9

5 U.S.C. §551(5) ............................................................................................................9

5 U.S.C. §551(6) ............................................................................................................9

5 U.S.C. §551(7) ............................................................................................................9

16 Bidders Qualified To Participate In Auction 86

47 C.F.R. §0.331(d) ...............................................................................................11, 14

47 C.F.R. §1.2105 ......................................................................................10, 14, 17, 18

47 C.F.R. §1.2105(b) ........................................................................................... passim

47 C.F.R. §1.2110 ..........................................................................................................3

47 C.F.R. §1.407 ..........................................................................................................12

47 C.F.R. §1.411 ..........................................................................................................12

47 C.F.R. §1.412 ..........................................................................................................12

47 C.F.R. §1.425 ..........................................................................................................12

63 FR 2315, 2322-23 (January 15, 1998) ................................................................6, 14

87th Congress, First Session, 1961 ...............................................................................13

Auction Of Advanced Wireless Services Licenses, 21 FCC Rcd 8585 n. 15

Auction Of Broadband PCS Spectrum Licenses, 22 FCC Rcd 8347 *17

Auction of FM Broadcast Construction Permits, 24 FCC Rcd 10782, 10790

Auction of LPTV and TV Translator Digital Companion Channels

Five Bidders Qualified to Participate in Auction No. 72

In Re: Amendment of Part 2 of the Commission’s Rules

FRAP 35(a) ....................................................................................................................1

FRAP 35(b)(1) ...............................................................................................................1

FRAP 40(a)(2) ...............................................................................................................1

I. INTRODUCTION AND STATEMENT PURSUANT TO FRAP 35(B)(1)

Petitioners request panel rehearing or alternatively rehearing en banc.

Specifically, Petitioners seek review of this Court’s determination in its order

U.S.C. §155(c)(7), due to Petitioners’ asserted failure to exhaust administrative

remedies before the Federal Communications Commission (the “Commission”).

A copy of this Order is attached as Exhibit 1.1

FRAP 40(a)(2) authorizes panel reconsideration where the panel has

overlooked or misapprehended a point of law or fact. FRAP 35(a) authorizes en

importance.” As described infra, this Court’s conclusion that Petitioners have

failed to exhaust administrative remedies is premised upon an incorrect

assumption as to the types of orders requiring exhaustion. In particular, the Court

“Rule Change”) was an action undertaken pursuant to the Commission’s properly

delegated authority to its Wireless Telecommunications Bureau (the “Wireless

Bureau”). As a result of this erroneous threshold determination, the Court further

§155(c)(3) and (c)(7). Resolution of this issue is of paramount importance

implemented by the Wireless Bureau in each of its Public Auctions, thereby

affecting the rights of many auction participants.