- The Washington Times - Tuesday, January 28, 2003

The Supreme Court ruled yesterday that the federal government cannot ignore bankruptcy laws in revoking licenses for communication frequencies, a decision that will allow expansion of mobile-phone networks in several major cities.
In an 8-1 decision, the court ruled that the Federal Communications Commission wrongly seized wireless spectrum it had originally auctioned for $4.7 billion to NextWave Telecom in 1996. NextWave sought Chapter 11 protection in 1998 before it finished paying for the licenses. The FCC resold licenses for those frequencies at auction for $15.9 billion in 2001 to bidders that included Verizon Wireless and VoiceStream Wireless.
"Finally, this Gordian legal knot has been cut. This valuable spectrum, tied up in the courts and thus left fallow for far too long, can now be put to use delivering wireless service to America's consumers," Tom Wheeler, president and CEO of the Cellular Telecommunications & Internet Association, said of a decision that frees up frequencies in such crowded markets as Washington, Chicago, Los Angeles, New York, Philadelphia, San Francisco, and Seattle.
"Applying the fundamental principle that federal agencies must obey all federal laws, not just those they administer, we conclude that the commission violated the provision of the Bankruptcy Code that prohibits governmental entities from revoking debtors' licenses solely for failure to pay debts dischargeable in bankruptcy," the Supreme Court declared in a decision written by Justice Antonin Scalia.
Only Justice Stephen G. Breyer dissented from the ruling, which said regulatory motives do not justify ignoring bankruptcy law protections.
"Every private commercial seller, every car salesman, every residential home developer, every appliance company can threaten repossession of its product if a buyer does not pay, at least if the seller has taken a security interest in the product," Justice Breyer said in an opinion that called the ruling an anomaly.
But the majority said: "It is by no means clear than any anomaly exists. … It is neither clear that a private party can take and enforce a security interest in an FCC license nor that the FCC cannot."
Solicitor General Theodore Olson told the court the decision also would affect 337 other licensees that declared bankruptcy while owing the FCC $6.9 billion.
Yesterday's decision restores 90 contested licenses to NextWave, which presumably may use them or sell them under supervision of the bankruptcy court. The transaction involved 63 so-called C-Block licenses sold to NextWave in 1996 for $4.74 billion, and 27 F-Block licenses that NextWave got after bidding $123 million.
"Everyone will benefit from achieving finality, putting the litigation behind us, and getting the licenses into use as quickly as possible to provide service to the public and help fuel economic recovery," said NextWave Chairman Allen Salmasi.
The court declined to address issues involving the rise and fall of the frequencies' value over the years, and simply decided the FCC lien did not allow it to revoke licenses held by a debtor in bankruptcy simply because payments were not made on time, "whatever the agency's ultimate motive in pulling the trigger may be."
Nothing in FCC rules prescribes license cancellation for failure to pay on time, the court said, adding that nothing requires the FCC to give credit "rather than leaving it to impecunious bidders to finance the full purchase price with private lenders."
Acting in other cases without comment, the justices also:
Turned away the appeal of a man convicted of a murder he committed at age 17 which death penalty opponents saw as the best vehicle to abolish juvenile executions. Four justices (Breyer, John Paul Stevens, David H. Souter and Ruth Bader Ginsburg) called that a "shameful practice" earlier this term but the secret conference vote did not muster the four votes needed to hear the case of Oklahoma inmate Scott Allen Hain, who awaits execution for the 1987 killing of a couple locked in the trunk of their car and burned alive.
Accepted their first case for next term, an attempt to clarify the type of procedural appeals that count as the lone petition for a writ of habeas corpus permitted by the 1996 Antiterrorism and Effective Death Penalty Act. The court accepted an appeal involving Hernan O'Ryan Castro's federal cocaine-trafficking conviction and 20-year sentence.
Refused to revive a lawsuit over a 1997 pop song called "Barbie Girl" "I'm a blonde bimbo girl in a fantasy world" which parodies Mattel Co.'s top-selling product, letting stand a U.S. 9th Circuit Court of Appeals decision that the MCA Records song title was artistic expression and does not violate trademark law.
Declined to hear a plea that federal juries not exclude people who can't speak English, part of an appeal by a doctor and a lawyer who each got five years in prison for embezzling $1.6 million from a Puerto Rico AIDS clinic funded in part by federal taxes.


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