DC Circuit Judges Skeptical of FCC in 15-Year-Old GLH Auction Case
Judges for the U.S. Court of Appeals for the D.C. Circuit appeared skeptical of the FCC’s position on a 15-year-old defaulted debt by former C-block spectrum licensee GLH, during oral argument Wednesday. Courts are operating during the shutdown (see 1901080004) but FCC attorneys were able to proceed only because the hearing concerned a spectrum auction, and spectrum auction matters are funded independently of other commission operations, the agency said.
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“Why are we belaboring this?” Judge Judith Rogers asked FCC Deputy General Counsel David Gossett in one of her frequent interruptions of him. GLH seeks a decision it no longer owes the FCC $6.87 million for four spectrum licenses it failed to complete installment payments on in 2003. Company attorney Donald Evans of Fletcher Heald argued possible liability is “a cloud” over his client. Gossett said such a decision is premature since GLH hasn’t requested an FCC compromise on the debt and the agency never sought to collect it. “Isn’t that on you?” responded Judge Cornelia Pillard to Gossett.
The plaintiff bought the licenses from Leap Wireless in the mid-1990s, under an agreement that GLH would assume responsibility for the installment payments to the FCC, but that Leap would give the buyer quarterly the money to make the payments. After Leap declared bankruptcy and ceased paying, GLH defaulted, according to GLH’s brief (in Pacer). GLH asked the FCC for a waiver of the installment payment schedule, the FCC denied it and Wednesday’s case stems from the appeal.
GLH said the FCC subsequently sold the defaulted licenses for over $2 million more than was owed, so the company’s debt is wiped out, and the FCC possibly owes GLH the additional funds. The hearing didn’t involve much discussion of an FCC payout to GLH. Rogers and Judge Sri Srinivasan repeatedly pressed Gossett to explain what GLH could do to spur the FCC to decide if the company still owes the agency money. Rogers compared GLH’s situation to homeowner defaulting on a home purchase because the bank lender failed “through no fault of their own.” Gossett said the company should petition the FCC for a debt compromise to trigger that determination, after Rogers asked him to make a statement on the record about how GLH should proceed. When he hesitated to say a petition for debt compromise would lead to a determination in GLH’s favor, she spoke sternly to him. The question wasn’t about the result, she told Gossett. “I was very clear about that,” Rogers said.
There’s no standard operating procedure here, Gossett told the court, saying the FCC allowed installment payments for spectrum auction winners only for three years roughly 20 years ago. GLH’s appeal to the D.C. Circuit of an FCC denial of its requested waiver of the installment payment schedule is the last outstanding holdover from that time, he said. “We’re the last of the Mohicans,” Evans said, conceding that the circumstances of GLH’s debt are unlikely to apply to other licensees.
Evans said though Gossett says seeking a debt compromise would lead to an FCC decision on the debt, GLH is unlikely to file such a petition until the court rules. Argument didn’t shed much light on how the judges perceive GLH’s arguments that the FCC owes the company the overage from the sale of the defaulted licenses, he told us. The agency declined to comment.