Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-15-01145/USCOURTS-caDC-15-01145-0/pdf.json

Parties Involved:
Federal Communications Commission
Appellee
NTCH, Inc.
Appellant
Verizon
Intervenor for Appellee

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 9, 2016 Decided November 15, 2016

No. 15-1145

NTCH, INC.,

APPELLANT

v.

FEDERAL COMMUNICATIONS COMMISSION,

APPELLEE

VERIZON,

INTERVENOR

On Appeal of Orders of the 

Federal Communications Commission

Donald J. Evans argued the cause for appellant. With him 

on the briefs was Ashley Ludlow. 

Maureen K. Flood, Counsel, Federal Communications 

Commission, argued the cause for appellee. With her on the 

brief were Jonathan B. Sallet, General Counsel, David M. 

Gossett, Deputy General Counsel, and Jacob M. Lewis, 

Associate General Counsel. Richard K. Welch, Deputy 

Associate General Counsel, entered an appearance.

USCA Case #15-1145 Document #1646031 Filed: 11/15/2016 Page 1 of 21
2

Catherine E. Stetson argued the cause for intervenor. With 

her on the brief were Mary Helen Wimberly, William H. 

Johnson, and Katharine R. Saunders.

Before: PILLARD, Circuit Judge, and EDWARDS and 

RANDOLPH, Senior Circuit Judges.

Opinion for the Court filed by Senior Circuit Judge 

EDWARDS.

EDWARDS, Senior Circuit Judge: This appeal involves 

challenges to two orders – referred to herein as the 

“Memorandum Order” and the “Reconsideration Order” –

issued by the Federal Communications Commission (“FCC” or 

“Commission”). In these orders, the Commission approved the 

transfer of radio spectrum licenses to Verizon Wireless 

(“Verizon”), a national telecommunications company, granted 

Verizon forbearance from a statutory provision, and refused to 

initiate proceedings to revoke other licenses held by Verizon. 

Appellant NTCH, Inc., a company that provides wireless phone 

and internet services, challenges these orders. Verizon has 

intervened in support of the FCC.

The FCC administers the Communications Act of 1934 (the 

“Act”). 47 U.S.C. §§ 151 et. seq. As part of its duties, the 

Commission oversees the assignment and sale of radio spectrum 

licenses. 47 U.S.C. § 310(d). “Spectrum” is “[t]he range of 

electromagnetic radio frequencies used in the transmission of 

sound, data, and television,” and is crucial to cell phone 

companies. See GLOSSARY OF TELECOMMUNICATIONS TERMS,

https://www.fcc.gov/general/glossary-telecommunications-terms 

(last visited Oct. 18, 2016). Section 310 of the Act limits who 

may hold spectrum licenses, and bars or restricts ownership for 

companies with certain levels of foreign control. In 2012, the 

USCA Case #15-1145 Document #1646031 Filed: 11/15/2016 Page 2 of 21
3

Commission issued a “Forbearance Order” detailing when and 

how it would refrain from applying section 310(b)(3).

In late 2011, a number of companies seeking to sell 

spectrum licenses petitioned the FCC to approve the transfer of 

their licenses to Verizon. The Commission sought public

comment on these applications, eventually grouping them

together for consideration. In the Memorandum Order, the 

agency approved a “Spectrum Assignment,” authorizing a series 

of license assignments between various entities, with the 

greatest share going to Verizon. The agency found that the 

Spectrum Assignment promised significant public interest 

benefits, but also threatened some detriments. However, the 

Commission determined that the potential harms could be offset, 

and approved the arrangement subject to several conditions. 

Because Verizon was then governed by section 310(b)(3), the 

Commission also granted Verizon prospective forbearance from 

that subsection.

NTCH petitioned for reconsideration and claimed, for the 

first time, that Verizon had illegally obtained hundreds of 

spectrum licenses between 2000 and 2012 in violation of section 

310(b)(3). NTCH argued that the Commission had unlawfully 

granted retroactive forbearance under section 310(b)(3) to cover 

this up, and that proceedings to revoke those licenses must be 

initiated. NTCH also claimed that the FCC had failed to follow 

its own standards in granting Verizon prospective forbearance. 

The FCC rejected all of these claims in the Reconsideration 

Order.

NTCH now appeals to overturn the FCC’s orders. It asserts 

that the FCC unlawfully granted Verizon retroactive 

forbearance, that the agency should be required to initiate show 

cause license revocation proceedings against Verizon, and that 

the agency’s grant of prospective section 310(b)(3) forbearance 

USCA Case #15-1145 Document #1646031 Filed: 11/15/2016 Page 3 of 21
4

violated its own procedures. Additionally, NTCH arguesthat the 

Commission’s approval of the Spectrum Assignment should be 

overturned because it is not in the public interest.

We reject NTCH’s claims. The FCC’s decision not to 

initiate proceedings to revoke Verizon’s licenses is not subject 

to judicial review. Furthermore, any questions about the licenses 

Verizon obtained before the Spectrum Assignment are not 

properly before the court. NTCH’s challenge to the FCC’s grant 

of prospective forbearance is moot because no foreign entity 

now has any ownership of Verizon. Finally, the Commission’s 

determination that the Spectrum Assignment was in the public 

interest was reasonable and therefore survives arbitrary and 

capricious review.

I. Background

A. Section 310(b) and Verizon’s Ownership Structure

Section 310 places restrictions on who may own radio 

licenses, including spectrum licenses. At issue in this case are 

sections 310(b)(3) and (b)(4). These provisions state that 

No broadcast or common carrier . . . license shall be 

granted to or held by—

(3) any corporation of which more than one-fifth of 

the capital stock is owned of record or voted by 

aliens or their representatives or by a foreign 

government or representative thereof or by any 

corporation organized under the laws of a foreign 

country;

(4) any corporation directly or indirectly controlled 

by any other corporation of which more than oneUSCA Case #15-1145 Document #1646031 Filed: 11/15/2016 Page 4 of 21
5

fourth of the capital stock is owned of record or 

voted by aliens, their representatives, or by a 

foreign government or representative thereof, or by 

any corporation organized under the laws of a 

foreign country, if the Commission finds that the 

public interest will be served by the refusal or 

revocation of such license.

47 U.S.C. § 310(b)(3), (4). 

The Commission has interpreted section 310(b)(3) to bar 

possession of a radio spectrum license by an entity in which 

aliens hold more than a twenty-percent interest, including

indirectly through an intervening, U.S.-organized entity that 

itself does not own more than fifty-percent of that licensee. 

Request for Declaratory Ruling Concerning the Citizenship 

Requirements of Sections 310(b)(3) and (4) of the Commc’ns Act 

of 1934, as amended, 103 F.C.C. 2d 511, 520–22 ¶¶ 16–19

(1985). Section 310(b)(4) bars possession of spectrum licenses 

where aliens hold more than twenty-five percent interest in a 

U.S.-organized entity that does control a licensee, but only if the 

Commission determines that refusing ownership would serve the 

public interest. 47 U.S.C. § 310(b)(4). In 2012, the Commission 

issued an order detailing the circumstances in which it would 

forbear from applying section 310(b)(3), and the procedures it 

would follow in doing so. In the Matter of Review of Foreign 

Ownership Policies for Common Carrier and Aeronautical 

Radio Licensees Under Section 310(b)(4) of the Commc’ns Act 

of 1934, as Amended, 27 FCC Rcd. 9832 (2012).

In 2000, the FCC granted Bell Atlantic (Verizon’s 

predecessor-in-interest) and Vodafone (a foreign company)

permission to jointly assign their wireless licenses to Cellco, a 

U.S.-organized company that does business under the name 

“Verizon Wireless.” In re Applications of Vodafone AirTouch, 

USCA Case #15-1145 Document #1646031 Filed: 11/15/2016 Page 5 of 21
6

PLC and Bell Atlantic Corp., 15 FCC Rcd. 16507 (2000). 

Vodafone initially owned a controlling share in Verizon. 

Consequently, the FCC evaluated Verizon’s eligibility to hold 

licenses under § 310(b)(4).

At some point after this, however, Vodafone’s ownership of 

Verizon became non-controlling. At that point, Verizon’s 

eligibility to own spectrum licenses should have shifted from 

being governed by section 310(b)(4) to being controlled by 

section 310(b)(3)’s absolute prohibition. But between 2000 and 

2012, when the Commission granted Verizon forbearance, 

Verizon obtained a significant number of licenses. In 2014, 

Verizon bought out Vodafone’s interest. As a result, Verizon is 

now wholly owned by a domestic corporation, and no part of 

section 310(b) applies to it.

B. The Spectrum Assignment and NTCH’s Challenge

In late 2011, the Commission received a number of 

applications from companies seeking to assign spectrum licenses 

to Verizon. These transfers would have resulted in Verizon 

significantly increasing its spectrum holdings in markets across 

the country. The Commission sought and received public 

comment on these proposals, and consolidated them for its 

consideration. NTCH opposed the transfers, asserting that it 

would harm the public interest.

On August 21, 2012, the Commission adopted its 

Memorandum Order approving the Spectrum Assignment. In the 

Matter of Applications of Cellco P’ship d/b/a Verizon Wireless 

and SpectrumCo LLC and Cox TMI, LLC for Consent to Assign 

AWS-1 Licenses, 27 FCC Rcd. 10698, 10699 ¶ 6 (2012). It 

determined that the assignments of spectrum licenses to Verizon

would, overall, be in the public interest, so long as conditions 

were imposed to mitigate potential threats to the public interest. 

USCA Case #15-1145 Document #1646031 Filed: 11/15/2016 Page 6 of 21
7

These threats included the dangers of Verizon “warehousing” 

the spectrum, thereby foreclosing competitor access and leaving 

the spectrum unused. Id. at 10723–24 ¶ 68. The Commission 

was also aware that the assignments might increase Verizon’s 

market dominance and harm competition. Id. at 10711 ¶ 31. To 

allay these concerns, Verizon committed to quickly develop and 

make use of the spectrum it would receive, and agreed to 

transfer a significant amount of spectrum to T-Mobile. Id. at

10743–44 ¶¶ 121–22.

The Commission also addressed the issue of “roaming.” All 

wireless carriers are required to provide phone service to people

who are outside of their home markets. See Reexamination of 

Roaming Obligations of Commercial Mobile Radio Serv.

Providers, 22 FCC Rcd. 15817, 15818 ¶ 1 (2007). To achieve 

this, providers must negotiate deals with one another in order to 

ensure continuous service to customers. The Commission does 

not set the prices that carriers may charge each other for this 

service, however. 

In the Memorandum Order, the FCC acknowledged that 

small carriers had, in the past, experienced difficulty negotiating 

roaming arrangements with Verizon, and that the transfer would 

further enlarge a national telecommunications company that has 

“little incentive” to negotiate favorable roaming deals with 

smaller competitors. 27 FCC Rcd. at 10730 ¶ 84, 10742–43 ¶ 

120. To address this problem, the FCC required Verizon to 

agree to comply for five years with a newly adopted rule 

requiring carriers to offer roaming arrangements on 

commercially reasonable terms and conditions, even if that rule 

was overturned on appeal. Id. at 10743 ¶ 121. Finally, because 

Verizon would have been barred from holding licenses under 

section 310(b)(3), the Commission granted it forbearance from 

that section. 

USCA Case #15-1145 Document #1646031 Filed: 11/15/2016 Page 7 of 21
8

NTCH petitioned for reconsideration on September 24, 

2012. It asserted, for the first time, that the Commission had

impermissibly allowed Verizon to acquire and retain hundreds

of licenses between 2000 and 2012, in violation of section 

310(b)(3). NTCH thus pressed for the agency to initiate an 

investigation into Verizon’s license acquisition and ownership. 

NTCH also claimed that the FCC had improperly granted 

retroactive forbearance to Verizon in an attempt to rectify the 

licensing mistakes made between 2000 and 2012. Finally, 

NTCH claimed that the FCC failed to follow its own procedures 

in granting prospective forbearance.

Two and a half years later, the Commission issued its 

Reconsideration Order denying NTCH’s claims. In the Matter of 

Applications of Cellco P’ship d/b/a Verizon Wireless and 

SpectrumCo LLC and Cox TMI, LLC for Consent To Assign 

AWS-1 Licenses, 30 FCC Rcd. 3953 (2015). The Commission

held that it had followed its own forbearance procedures, and 

that the issue was moot in any event because Verizon had 

bought out Vodafone’s ownership interest in 2014. Id. at 3954 ¶ 

4, 3956–57 ¶¶ 10–11. In the alternative, the Commission held 

that the licenses obtained by Verizon prior to the Memorandum

Order were not at issue, and that NTCH had not demonstrated 

why its argument regarding Verizon’s ineligibility to obtain 

those licenses could not have been raised sooner. Id. at 3957 ¶ 

12. Finally, the FCC declined to initiate show cause revocation 

proceedings against Verizon. Id. at 3957–58 ¶ 13.

NTCH now appeals from the Memorandum Order and the 

Reconsideration Order, advancing three claims. First, NTCH 

contends that, because the FCC granted Verizon hundreds of 

spectrum licenses in violation of section 310(b)(3), and 

unlawfully granted Verizon retroactive forbearance to justify 

these prior illegal actions, the Commission should institute 

revocation proceedings. Second, NTCH asserts that the FCC 

USCA Case #15-1145 Document #1646031 Filed: 11/15/2016 Page 8 of 21
9

violated its own procedures in granting Verizon prospective 

forbearance, which must be reversed. Finally, NTCH argues that 

the FCC’s approval of the Spectrum Assignment was not in the 

public interest and, therefore, must be undone.

II. Analysis

A. Standard of Review

The Commission’s orders are subject to reversal if they are 

arbitrary and capricious. 5 U.S.C. § 706(2)(A). To survive 

arbitrary and capricious review, an agency must “examine the 

relevant data and articulate a satisfactory explanation for its 

action including a rational connection between the facts found 

and the choice made.” Motor Vehicle Mfrs. Ass’n v. State Farm 

Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (internal quotes and 

citation removed). A court may not “substitute its judgment for 

that of the agency,” but must instead evaluate whether the 

agency’s decision considered relevant factors and whether it 

reflects a clear error of judgment. Id.

B. The Commission’s Refusal to Initiate Revocation 

Proceedings and its Alleged Grant of Retroactive 

Forbearance Are Not Reviewable

NTCH claims that the FCC should have initiated

proceedings to revoke all of Verizon’s licenses issued since 

2000 because they were allegedly obtained in violation of 

section 310(b)(3). It also claims that the Commission unlawfully 

granted Verizon retroactive forbearance from section 310(b)(3) 

in order to validate and rectify this mistake. We address these 

allegations together because the requested remedy is the same: 

that the Commission be ordered to initiate show cause 

revocation proceedings against Verizon under 47 U.S.C. § 312. 

USCA Case #15-1145 Document #1646031 Filed: 11/15/2016 Page 9 of 21
10

We reject NTCH’s demand for two reasons. First, the 

Commission’s decision not to initiate revocation proceedings is 

discretionary and thus unreviewable. Although there is a “basic 

presumption of judicial review” of agency action, Abbott Labs.

v. Gardner, 387 U.S. 136, 140 (1967), section 701(a)(2) of the 

Administrative Procedure Act (“APA”) bars judicial review of 

agency actions that are “committed to agency discretion by 

law,” 5 U.S.C. § 701(a)(2). In Heckler v. Chaney, 470 U.S. 821, 

831 (1985), the Court made it clear “that an agency’s decision

not to prosecute or enforce, whether through civil or criminal 

process, is a decision generally committed to an agency’s 

absolute discretion.” The Court then went on to hold that “an 

agency’s decision not to take enforcement action should be 

presumed immune from judicial review under § 701(a)(2).” Id. 

at 832.

The Commission’s decision not to initiate revocation 

proceedings “was equivalent to a decision not to commence an 

enforcement action” and, thus, presumptively unreviewable. 

Drake v. F.A.A., 291 F.3d 59, 70 (D.C. Cir. 2002). Issuing a 

show cause order is the first step towards addressing a violation 

of section 310(b). See 47 U.S.C. § 312(a)(2), (c). The FCC’s

refusal to do so was thus a decision not to pursue an 

enforcement action under the Act, and is presumed 

unreviewable. See Chaney, 470 U.S. at 831–32.

This conclusion is reinforced by the terms of the Act. 

Section 312(a) provides, in seven instances, that “[t]he 

Commission may revoke any station license.” 47 U.S.C. 

§ 312(a) (emphasis added). Generally, “[w]hen a statute uses a 

permissive term such as ‘may’ rather than a mandatory term 

such as ‘shall,’ this choice of language suggests that Congress 

intends to confer some discretion on the agency.” Dickson v. 

Sec’y of Defense, 68 F.3d 1396, 1401 (D.C. Cir. 1995). The 

simple point here is that the Act “provides the agency broad 

USCA Case #15-1145 Document #1646031 Filed: 11/15/2016 Page 10 of 21
11

discretion in enforcement decisions,” N.Y. State Dep’t of Law v. 

FCC, 984 F.2d 1209, 1215 (D.C. Cir. 1993), and requires the 

conclusion that the FCC’s decision here is not reviewable. See

Starr v. FCC, No. 96-1295, 1997 WL 362730, at *1 (D.C. Cir. 

May 20, 1997) (per curiam) (stating that enforcement decisions 

under 47 U.S.C. § 312(a) are committed to agency discretion by 

law). 

NTCH attempts to rebut this presumption of 

unreviewability, but its arguments fail. NTCH asserts that 

section 312(a) of the Act provides manageable standards by 

which to evaluate any Commission action taken pursuant to its 

authority to initiate show cause proceedings. This argument 

misses the point. Merely because the statute indicates situations 

with respect to which the agency may take enforcement actions 

does not mean that the agency must act in all such situations. 

Section 312(a) merely states that for each of the cited situations 

the Commission “may” act to revoke a license, clearly leaving 

the ultimate decision to the Commission’s discretion. Nothing in 

the statute requires the agency to initiate an enforcement action.

NTCH also points to two prior Commission decisions that it 

argues require the Commission to initiate revocation 

proceedings here. In the Matter of Mario Loredo, 11 FCC Rcd. 

18010 (1996); In the Matter of KOZN FM Stereo 99, Ltd., 59 

Rad. Reg. 2d (P & F) 628 (1986). But these decisions do not 

rebut the conclusion that the FCC has full discretion to decide 

whether to initiate revocation proceedings. Instead, they are 

merely examples of occasions when the FCC has invoked its 

enforcement authority.

In summary, the Commission’s decision not to initiate

revocation proceedings against Verizon was committed to the 

agency’s discretion, and NTCH has not rebutted the presumption 

of unreviewability. Chaney, 470 U.S. 821. 

USCA Case #15-1145 Document #1646031 Filed: 11/15/2016 Page 11 of 21
12

NTCH’s claims contesting the FCC’s refusal to initiate 

revocation proceedings and its alleged grant of retroactive 

forbearance also fail because the matter of Verizon’s previouslyobtained licenses is not properly before the court. The licenses 

already held by Verizon were not at issue in the FCC’s 

proceedings below. NTCH did not contest Verizon’s eligibility 

to hold the licenses until it filed a Petition for Reconsideration.

And NTCH’s claims regarding these licenses are rooted in two

innocuous sentences in the Memorandum Order, in which the 

Commission stated:

We note that our action today removes any 

uncertainty as to whether the current foreign 

ownership of Verizon Wireless, as a common carrier 

licensee, complies with our foreign ownership 

policies. We find that Verizon Wireless is qualified 

under the foreign ownership provisions of Section

310(b) of the Communications Act to hold, in its own 

right, its current common carrier licenses and the 

common carrier licenses it is being assigned in the 

applications being approved today. 

27 FCC Rcd. at 10766–67 ¶ 177.

The forgoing statement is dicta, however, entirely 

unnecessary to the Commission’s resolution of the issues that 

were before it and resolved by the Memorandum Order. It is 

certainly apparent that the Memorandum Order had the effect of 

putting to rest any uncertainty about the legality of Verizon’s 

existing licenses; but this did not mean that the legality of the 

licenses was an issue in the Spectrum Assignment proceeding.

See US West v. FCC, 778 F.2d 23, 27–28 (D.C. Cir. 1985) 

(dismissing appeal to FCC order where challenged language was 

dicta).

USCA Case #15-1145 Document #1646031 Filed: 11/15/2016 Page 12 of 21
13

In short, we dismiss NTCH’s revocation and retroactive 

forbearance claims because the Commission’s refusal to initiate 

show cause revocation proceedings is unreviewable under 

Chaney. Furthermore, any licenses held by Verizon prior to the 

Spectrum Assignment were not the subject of the proceedings

below, and so NTCH’s challenge is not properly before us.

C. NTCH’s Prospective Forbearance Challenge is Moot

NTCH asserts that the Commission’s grant of section 

310(b)(3) forbearance to Verizon must be overturned because 

the agency failed to follow its own procedures. We dismiss this 

claim because it has been mooted by intervening events.

Federal courts are authorized to adjudicate only “actual, 

ongoing controversies” that are within the jurisdiction of the 

court. Honig v. Doe, 484 U.S. 305, 317 (1988). A live 

controversy must exist at all stages of judicial review, not only 

when a complaint is filed. See Friends of the Earth v. Laidlaw 

Env. Servs., 528 U.S. 167 (2000). “If events outrun the 

controversy such that the court can grant no meaningful relief, 

the [claim] must be dismissed as moot.” McBryde v. Comm. to 

Review Circuit Council Conduct & Disability Orders of the 

Judicial Conference of the U.S., 264 F.3d 52, 55 (D.C. Cir. 

2001). That is exactly what has happened with NTCH’s claim 

that the Commission’s grant of section 310(b)(3) forbearance 

violated its own procedural requirements.

As discussed above, section 310(b)(3) bars entities in which 

aliens have more than a 20% indirect, non-controlling interest 

from owning spectrum licenses. At the time of the 

Memorandum Order, Vodafone had a 45% ownership interest in 

Verizon, and so Verizon’s authority to hold radio licenses was 

governed by section 310(b)(3). In 2014, however, Verizon 

USCA Case #15-1145 Document #1646031 Filed: 11/15/2016 Page 13 of 21
14

bought out Vodafone’s interest. Verizon is now wholly owned 

by a domestic company, and so there is no longer any alien 

ownership issue.

As a result, the court “can grant no meaningful relief” to 

NTCH. Id. at 55. Even if we were to find that the Commission 

violated its own procedures and wrongly granted Verizon 

forbearance, there would be no consequences whatsoever. On 

remand, the agency could not re-evaluate the question of 

forbearance because section 310 no longer applies to Verizon. 

NTCH asserts that the “voluntary cessation” exception to 

mootness applies, but that exception has no play in this case.

As a general rule, a defendant's “voluntary cessation 

of allegedly illegal conduct does not deprive [a court] 

of power to hear and determine the case.” Cty. of Los 

Angeles v. Davis, 440 U.S. 625, 631 (1979). 

Voluntary cessation will only moot a case if “there is 

no reasonable expectation . . . that the alleged 

violation will recur” and “interim relief or events have 

completely and irrevocably eradicated the effects of 

the alleged violation.” Id.

EDWARDS, ELLIOTT, & LEVY, FEDERAL STANDARDS OF 

REVIEW—REVIEW OF DISTRICT COURT DECISIONS AND AGENCY 

ACTIONS 135 (2d ed. 2013).

The act of “voluntary cessation” to which NTCH points is 

Verizon’s purchase of Vodafone’s ownership interest, but

NTCH is challenging the FCC’s grant of forbearance to 

Verizon. The FCC did not “voluntarily” terminate that grant. 

Rather, Verizon’s intervening action nullified the FCC’s 

forbearance determination. This situation does not give rise to 

the voluntary cessation exception to mootness. See Am. Bar 

USCA Case #15-1145 Document #1646031 Filed: 11/15/2016 Page 14 of 21
15

Ass’n v. FTC, 636 F.3d 641, 648 (D.C. Cir. 2011) (no voluntary 

cessation where intervening legislation nullified challenged 

policy statement, because the agency had not acted voluntarily).

D. The Commission’s Approval of the Spectrum Assignment 

Was Not Arbitrary and Capricious

1. NTCH has standing to challenge the Spectrum 

Assignment.

As an initial matter, Verizon argues that NTCH does not 

have standing to challenge the FCC’s approval of the Spectrum 

Assignment. We disagree. “To satisfy the requirements of 

Article III standing in a case challenging government action, 

[NTCH] must allege an injury in fact that is fairly traceable to 

the challenged government action, and it must be likely, as 

opposed to merely speculative, that the injury will be redressed 

by a favorable decision.” Nat’l Wrestling Coaches Ass’n v. 

Dep’t of Educ., 366 F.3d 930, 937 (D.C. Cir. 2004) (internal 

quotes and citation removed). NTCH has satisfied these 

requirements. 

NTCH contends that the Spectrum Assignment will foster 

an anticompetitive telecommunications environment because it 

grants Verizon a vast swath of spectrum to the potential 

detriment of smaller competitors. NTCH asserts, for example, 

that under the Spectrum Assignment, it will be more difficult for 

it to negotiate reasonable roaming arrangements because 

Verizon holds a disproportionate share of market power. These 

plausible allegations suffice to show injury to achieve standing 

under Article III. Indeed, the FCC acknowledged these potential

dangers to competition in its Memorandum Order. 27 FCC Rcd. 

at 10730 ¶ 84, 10742–43 ¶ 120. 

USCA Case #15-1145 Document #1646031 Filed: 11/15/2016 Page 15 of 21
16

NTCH’s asserted injury is also causally related to the 

Commission’s approval of the Spectrum Assignment because

that decision granted Verizon a significant amount of spectrum

in a large number of markets. Finally, redressability is satisfied 

because a decision reversing the Commission’s approval of the 

Spectrum Assignment would likely lead to Verizon holding 

fewer spectrum licenses, or the FCC imposing new conditions 

on the Spectrum Assignment. A party need not demonstrate with 

certainty that its injury will be redressed, and standing is not 

defeated by the possibility that an agency might ultimately wield 

its discretion in a way that does not fix a party’s alleged injury. 

FEC v. Akins, 524 U.S. 11, 25 (1998). 

Because NTCH has articulated an injury that is traceable to 

the Commission’s order and might be redressed by a favorable 

decision from the court, it has met the requirements of Article 

III so as to achieve standing to challenge the Spectrum 

Assignment.

2. The FCC’s approval of the Spectrum Assignment 

survives arbitrary and capricious review.

NTCH’s argument that the Spectrum Assignment must be 

reversed because it is arbitrary and capricious lacks merit. The 

agency acted reasonably, fairly considered the evidence and 

arguments before it, and adequately explained its rationale. We 

therefore reject NTCH’s challenge.

Under section 310(d) of the Act, the Commission may 

approve assignments of licenses upon finding that “the public 

interest, convenience, and necessity will be served thereby.” 47 

U.S.C. § 310(d). While the Act itself does not define how the 

FCC should decide what is in the “public interest,” the Supreme 

Court has stated “that Congress had granted the Commission 

broad discretion in determining” this, so long as the agency’s 

USCA Case #15-1145 Document #1646031 Filed: 11/15/2016 Page 16 of 21
17

determination “is based on consideration of permissible factors 

and is otherwise reasonable.” FCC v. WNCN Listeners Guild, 

450 U.S. 582, 594 (1981) (internal quotation marks and citation 

omitted). To that end, we will uphold the Commission’s 

application of the Act’s “public interest” standard unless we find 

it to be arbitrary and capricious. Transp. Intelligence, Inc. v. 

FCC, 336 F.3d 1058, 1064 (D.C. Cir. 2003). In making this 

assessment, we “evaluate the agency’s rationale at the time of 

decision.” Pension Benefit Guar. Corp. v. LTV Corp., 496 U.S. 

633, 654 (1990). 

The Memorandum Order reflects a reasonable consideration 

of the evidence, arguments, and issues presented to the 

Commission. Following its investigation of the issues, the 

Commission found that approving the Spectrum Assignment 

would benefit the public interest in a number of ways. Most 

importantly, the Commission determined that the Spectrum 

Assignment would enable the development of a large amount of 

fallow spectrum.

SpectrumCo held the lion’s share of the licenses that were 

transferred to Verizon. SpectrumCo was formed in 2006, and in 

2007 it purchased a significant number of spectrum licenses. 

The company never entered the telecommunications business, 

however, and so its holdings had not been utilized in any way. 

The Commission determined that the Spectrum Assignment 

would provide “significant public interest benefits” by allowing 

the development of this neglected resource. It also found that the 

Spectrum Assignment would result in more efficient use of 

existing spectrum holdings. This, in turn, would benefit both 

carriers and consumers, as it would enable the companies 

involved to expand and develop their networks and serve their 

customers’ growing demands. 

USCA Case #15-1145 Document #1646031 Filed: 11/15/2016 Page 17 of 21
18

As part of its analysis, however, the FCC identified three 

potential risks. First, the agency was concerned that the 

concentration of spectrum with Verizon would harm 

competition. Second, the FCC was also concerned that Verizon

might warehouse the spectrum, leaving it unused and 

foreclosing competitor access. Finally, the FCC determined that 

the transfer might hurt smaller carriers, like NTCH, who are 

dependent upon other companies to provide roaming capability. 

The Commission observed that granting Verizon more spectrum 

would further empower “a nationwide provider that has little 

incentive” to negotiate roaming arrangements with “competitors 

with less than national footprints.” 27 FCC Rcd. at 10730 ¶ 84.

To mitigate these potential harms, the Commission imposed 

three conditionsto its approval of the Spectrum Assignment. To 

address the concern over spectrum concentration, the FCC 

required Verizon to divest a significant number of licenses to TMobile. In addition to limiting Verizon’s overall and locationspecific spectrum holdings, the Commission determined that this 

would enable T-Mobile to develop its own technology and 

infrastructure, enabling it to expand the coverage of its network. 

Second, the Commission remedied the prospect of Verizon 

hoarding the spectrum by requiring it to follow a timeline for the 

spectrum’s rapid development and use. 

Finally, the FCC addressed the issue of roaming in two 

ways. It required Verizon to agree to abide by the agency’s thennew data roaming rule requiring providers to offer roaming 

arrangements on commercially reasonable terms. At the time of 

the Memorandum Order, Verizon was challenging the legality of 

the data roaming rule before this court. See Cellco P’ship v. 

FCC, 700 F.3d 534 (D.C. Cir. 2012) (upholding the rule).

Verizon agreed to abide by it, however, even if it were 

overturned on appeal. In addition, the FCC found that the 

USCA Case #15-1145 Document #1646031 Filed: 11/15/2016 Page 18 of 21
19

transfer of spectrum to T-Mobile would eventually allow TMobile to be a roaming alternative to Verizon. 

After examining the evidence before it and imposing these 

conditions, the Commission reasonably determined that the 

Spectrum Assignment would, overall, serve the public interest. 

In challenging the Commission’s approval of the Spectrum 

Assignment, NTCH does not address the bulk of the 

Commission’s analysis, instead focusing solely on the 

Commission’s finding that the Spectrum Assignment could 

further harm the ability of smaller carriers to obtain data 

roaming agreements from Verizon. In claiming that the FCC did 

nothing to ameliorate this problem, NTCH makes two primary 

arguments. 

First, NTCH claims that the data roaming rule had already 

failed to compel Verizon to offer reasonable roaming rates, and 

so it was irrational for the Commission to think that requiring 

Verizon to abide by it would fix the problem. This is an unfair 

criticism of the rule, however, which had only been in effect for 

eleven months when the Commission approved the Spectrum 

Assignment. See 76 Fed. Reg. 63561-01 (Oct. 13, 2011). We 

“evaluate the agency’s rationale at the time of decision.” 

Pension Benefit Guar. Corp., 496 U.S. at 654. At the time of 

decision, it was too early to declare the rule ineffective,

especially considering that it was unclear whether the rule would 

survive legal challenge. The terms of the rule are facially 

reasonable and the underlying rationale for the rule makes sense. 

NTCH next argues that Verizon’s divestment of spectrum to 

T-Mobile could do nothing to resolve the problem because 

companies that are able to roam on Verizon’s network are not 

able to roam on T-Mobile’s network. The two are incompatible. 

Specifically, T-Mobile uses the “Global System for Mobile 

USCA Case #15-1145 Document #1646031 Filed: 11/15/2016 Page 19 of 21
20

Communications” (“GSM”) protocol, whereas Verizon (and 

NTCH) use the “Code Division Multiple Access” (“CDMA”) 

protocol. Therefore, according to NTCH, T-Mobile could not 

serve as a roaming alternative for those carriers who had been 

having difficulty negotiating agreements with Verizon.

This argument appears to raise a legitimate concern, but the 

issue is not properly before us. Section 405(a) of the Act states 

that the FCC must be “afforded [an] opportunity to pass” on all 

arguments made to a court. 47 U.S.C. § 405(a). NTCH admits 

that it did not explicitly raise with the FCC its argument about 

the incompatibility of CDMA and GSM carriers. It is true that 

our precedent construing section 405(a) does not require an 

argument to be brought up with specificity, but only reasonably 

“flagged” for the agency’s consideration. Time Warner Entm’t. 

Co. v. FCC, 144 F.3d 75, 81 (D.C. Cir. 1998). The question here 

is “whether a reasonable Commission necessarily would have 

seen the question raised before us as part of the case presented 

to it.” Id. We think not. 

The closest that NTCH came to making the argument was 

in its petition to deny the Spectrum Assignment. There, it 

referred to Verizon’s dominance among CDMA operators, 

discussed the difficulties faced by smaller CDMA carriers who 

must roam with Verizon, and asserted that granting Verizon 

more spectrum would worsen this situation. But these points 

were only vague allusions to NTCH’s current argument and, 

therefore, they do not serve to satisfy the requirements of section 

405(a). The issue that NTCH now raises was never reasonably 

flagged for the FCC because no reference was made to TMobile in NTCH’s petition to deny the Spectrum Assignment.

This case does not involve a situation in which the issue 

could not have been raised, see Action for Children’s Television

v. FCC, 906 F.2d 752, 755 (D.C. Cir. 1990); nor a situation in 

USCA Case #15-1145 Document #1646031 Filed: 11/15/2016 Page 20 of 21
21

which it would have been futile to raise the issue, see All Am.

Cables & Radio, Inc. v. FCC, 736 F.2d 752, 761 (D.C. Cir. 

1984); nor a situation in which the challenged action is “patently 

in excess of [the agency’s] authority,” Washington Ass’n for 

Television and Children v. FCC, 712 F.2d 677, 682 (D.C. Cir. 

1983). Therefore, because NTCH did not raise the issue in its 

petition to deny or in its petition for reconsideration, section 

405(a) applies.

In summary, the Commission’s approval of the Spectrum 

Assignment reflects a reasonable consideration of relevant 

factors. NTCH believes that the FCC’s decision was not in the 

public interest, and that the remedial actions it took to mitigate 

the threatened public interest harms were inadequate. The 

Commission, in its expert judgment, disagrees. It is well 

understood that “[a]gency discretion is often at its ‘zenith’ when 

the challenged action relates to the fashioning of remedies.” 

Towns of Concord, Norwood & Wellesley, Mass. v. FERC, 955 

F.2d 67, 76 (D.C. Cir. 1992) (quoting Niagara Mohawk Power 

Corp. v. Fed. Power Comm’n, 379 F.2d 153, 159 (D.C. Cir. 

1967)). For the reasons enumerated above, we cannot say that 

the Commission’s findings and fashioned remedies are arbitrary 

and capricious. Accordingly, we deny NTCH’s challenge.

III. Conclusion

For the reasons stated above, we reject the claims raised by 

NTCH in the appeal.

So ordered.

USCA Case #15-1145 Document #1646031 Filed: 11/15/2016 Page 21 of 21