[Federal Register Volume 77, Number 55 (Wednesday, March 21, 2012)]
[Rules and Regulations]
[Pages 16470-16471]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-6946]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[WT Docket No. 05-211; FCC 12-12]


Implementation of the Commercial Spectrum Enhancement Act and 
Modernization of the Commission's Competitive Bidding Rules and 
Procedures

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: The Federal Communications Commission removes two 
modifications to its competitive bidding rules pursuant to a mandate by 
the U.S. Court of Appeals for the Third Circuit.

DATES: Effective March 21, 2012.

FOR FURTHER INFORMATION CONTACT: Wireless Telecommunications Bureau, 
Auctions and Spectrum Access Division: Audrey Bashkin at (202) 418-
0660.

SUPPLEMENTARY INFORMATION: This is a summary of an Order released on 
February 1, 2012. The complete text of the Order, including an 
attachment and related Commission documents, is available for public 
inspection and copying from 8 a.m. to 4:30 p.m. Eastern Time (ET) 
Monday through Thursday or from 8 a.m. to 11:30 a.m. ET on Fridays in 
the FCC Reference Information Center, 445 12th Street SW., Room CY-
A257, Washington, DC 20554. The Order and related Commission documents 
also may be purchased from the Commission's duplicating contractor, 
Best Copy and Printing, Inc. (BCPI), 445 12th Street SW., Room CY-B402, 
Washington, DC 20554, telephone 202-488-5300, fax 202-488-5563, Web 
site http://www.BCPIWEB.com. When ordering documents from BCPI, please 
provide the appropriate FCC document number, for example, FCC 12-12. 
The Order and related documents also are available on the Internet at 
the Commission's Web site: http://wireless.fcc.gov/auctions, or by 
using the search function for WT Docket No. 05-211 on the Commission's 
Electronic Comment Filing System (ECFS) Web page at http://www.fcc.gov/cgb/ecfs/.

I. Background

    1. In Council Tree Communications, Inc. v. FCC, 619 F.3d 235 (3d 
Cir. 2010), cert. denied, 131 S. Ct. 1784 (2011), the U.S. Court of 
Appeals for the Third Circuit vacated two modifications the Federal 
Communications Commission (Commission) had made in 2006 to its 
competitive bidding rules for designated entities on the ground that 
the Commission had failed to provide the public an adequate opportunity 
for notice and comment. The Commission removes the two modifications in 
accordance with the Third Circuit's mandate.
    2. The Third Circuit held that the Commission's impermissible 
material relationship rule in 47 CFR 1.2110(b)(3)(iv)(A) and its 
extension of the unjust enrichment period from five years to ten years 
in 47 CFR 1.2111(d)(2) had been adopted without the notice and 
opportunity for comment required by the Administrative Procedure Act. 
The Court thus vacated the impermissible material relationship rule and 
ordered reinstatement of the Commission's previous five year unjust 
enrichment payment schedule. The Court also denied Council Tree's 
petition for review with respect to the attributable-material-
relationship rule articulated in 47 CFR 1.2110(b)(1) and (b)(3)(iv)(B).

II. Discussion

    3. The Order conforms Part 1 of the Commission's rules to the 
Court's mandate by amending 47 CFR 1.2110 to remove paragraph 
(b)(3)(iv)(A) and 47 CFR 1.2111 by removing paragraph (d)(2)(i) as no 
longer applicable and reinstating the previous version of the payment 
schedule in 47 CFR 1.2111(d)(2). The Order also conforms other Part 1 
rules, as necessary, to remove several references to impermissible 
material relationships.
    4. The Commission finds that notice and comment are unnecessary for 
these rule amendments under 5 U.S.C. Section 553(b), because this is a 
ministerial order issued at the direction of the United States Court of 
Appeals for the Third Circuit.

III. Congressional Review Act

    5. The Commission will send a copy of the Order to Congress and the 
Government Accountability Office pursuant to the Congressional Review 
Act, see 5 U.S.C. 801(a)(1)(A).

List of Subjects in 47 CFR Part 1

    Administrative practice and procedures, Auctions, Licensing, 
Telecommunications.

Federal Communications Commission.
Bulah P. Wheeler,
Deputy Manager.

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR part 1 as follows:

PART 1--PRACTICE AND PROCEDURE

0
1. The authority citation for part 1 continues to read as follows:

    Authority: 15 U.S.C. 79 et seq.; 47 U.S.C. 151, 154(j), 160, 
201, 225, 303, and 309.


0
2. Section 1.2110 is amended by removing paragraph (b)(3)(iv)(A) and 
redesignating paragraphs (b)(3)(iv)(B) and (C) as paragraphs 
(b)(3)(iv)(A) and (B) and by revising newly redesignated paragraph 
(b)(3)(iv)(B) and revising paragraph (j) to read as follows:


Sec.  1.2110  Designated entities.

* * * * *
    (b) * * *
    (3) * * *
    (iv) * * *
    (B) Grandfathering (1) Licensees. An attributable material 
relationship shall not disqualify a licensee for previously awarded 
benefits before April 25, 2006, based on spectrum lease or resale 
(including wholesale) arrangements entered into before April 25, 2006.
    (2) Applicants. An attributable material relationship shall not 
disqualify an applicant seeking eligibility in an application for a 
license, authorization, assignment, or transfer of control or for 
partitioning or disaggregation filed before April 25, 2006, based on 
spectrum lease or resale (including wholesale) arrangements entered 
into before April 25, 2006. Any applicant seeking eligibility in an 
application for a license, authorization, assignment, or transfer of 
control or for partitioning or disaggregation filed after April 25, 
2006, or in an application to participate in an auction in which 
bidding begins on or after June 5, 2006, need not attribute the 
material

[[Page 16471]]

relationship(s) of those entities that are its affiliates based solely 
on paragraph (c)(5)(i)(C) of this section if those affiliates entered 
into such material relationship(s) before April 25, 2006, and are 
subject to a contractual prohibition preventing them from contributing 
to the applicant's total financing.
* * * * *
    (j) Designated entities must describe on their long-form 
applications how they satisfy the requirements for eligibility for 
designated entity status, and must list and summarize on their long 
form applications all agreements that affect designated entity status 
such as partnership agreements, shareholder agreements, management 
agreements, spectrum leasing arrangements, spectrum resale (including 
wholesale) arrangements, and all other agreements including oral 
agreements, establishing as applicable, de facto or de jure control of 
the entity or the presence or absence of attributable material 
relationships. Designated entities also must provide the date(s) on 
which they entered into of the agreements listed. In addition, 
designated entities must file with their long-form applications a copy 
of each such agreement. In order to enable the Commission to audit 
designated entity eligibility on an ongoing basis, designated entities 
that are awarded eligibility must, for the term of the license, 
maintain at their facilities or with their designated agents the lists, 
summaries, dates and copies of agreements required to be identified and 
provided to the Commission pursuant to this paragraph and to Sec.  
1.2114.
* * * * *

0
3. Section 1.2111 is revised by removing paragraph (d)(2)(i) and 
redesignating paragraphs (d)(2)(ii) and (iii) as paragraphs (d)(2)(i) 
and (ii) and by revising them to read as follows:


Sec.  1.2111  Assignment or transfer of control: unjust enrichment.

* * * * *
    (d) * * *
    (2) Payment schedule. (i) The amount of payments made pursuant to 
paragraph (d)(1) of this section will be reduced over time as follows:
    (A) A transfer in the first two years of the license term will 
result in a forfeiture of 100 percent of the value of the bidding 
credit (or in the case of very small businesses transferring to small 
businesses, 100 percent of the difference between the bidding credit 
received by the former and the bidding credit for which the latter is 
eligible);
    (B) A transfer in year 3 of the license term will result in a 
forfeiture of 75 percent of the value of the bidding credit;
    (C) A transfer in year 4 of the license term will result in a 
forfeiture of 50 percent of the value of the bidding credit;
    (D) A transfer in year 5 of the license term will result in a 
forfeiture of 25 percent of the value of the bidding credit; and
    (E) For a transfer in year 6 or thereafter, there will be no 
payment.
    (ii) These payments will have to be paid to the United States 
Treasury as a condition of approval of the assignment, transfer, 
ownership change or reportable eligibility event (see Sec.  1.2114).
* * * * *

0
4. Section 1.2112 is amended by revising paragraphs (b)(1)(iii) and 
(b)(2)(iii) to read as follows:


Sec.  1.2112  Ownership disclosure requirements for applications.

* * * * *
    (b) * * *
    (1) * * *
    (iii) List and summarize all agreements or instruments (with 
appropriate references to specific provisions in the text of such 
agreements and instruments) that support the applicant's eligibility as 
a small business under the applicable designated entity provisions, 
including the establishment of de facto or de jure control or the 
presence or absence of attributable material relationships. Such 
agreements and instruments include articles of incorporation and by-
laws, partnership agreements, shareholder agreements, voting or other 
trust agreements, management agreements, franchise agreements, spectrum 
leasing arrangements, spectrum resale (including wholesale) 
arrangements, and any other relevant agreements (including letters of 
intent), oral or written;
* * * * *
    (2) * * *
    (iii) List and summarize all agreements or instruments (with 
appropriate references to specific provisions in the text of such 
agreements and instruments) that support the applicant's eligibility as 
a small business under the applicable designated entity provisions, 
including the establishment of de facto or de jure control or the 
presence or absence of attributable material relationships. Such 
agreements and instruments include articles of incorporation and by-
laws, partnership agreements, shareholder agreements, voting or other 
trust agreements, management agreements, franchise agreements, spectrum 
leasing arrangements, spectrum resale (including wholesale) 
arrangements, and any other relevant agreements (including letters of 
intent), oral or written;
* * * * *
[FR Doc. 2012-6946 Filed 3-20-12; 8:45 am]
BILLING CODE 6712-01-P